What distinguishes a domestic company from a foreign company?

A domestic company is defined as an insurance company that is incorporated and operates within a specific state, whereas a foreign company is one that is incorporated in a different state but conducts business in the state in question. The key distinction lies in the geographic location of the company's incorporation relative to the state where it sells its insurance products.

This geographic aspect is crucial because it determines the regulatory framework the company must adhere to. Domestic companies are subject to the regulations and laws of the state in which they are incorporated, while foreign companies must comply with the laws of their home state as well as the state laws in every state they operate within.

The other options, while related to insurance companies, do not address the defining characteristic of domestic versus foreign companies. Capital structure, the number of insured parties, and the types of policies offered can vary widely among both domestic and foreign companies and do not inherently define their status based on geographic location.