Which type of insurance company does not utilize permanent capital stock?

A mutual company is a type of insurance organization that is owned by its policyholders rather than shareholders. This means that its capital is not derived from the issuance of permanent capital stock, which is typically associated with stock companies. Instead, mutual companies generate capital through the premiums paid by their policyholders, who also share in the company’s profits in the form of dividends or reduced future premiums.

In a mutual company, policyholders have voting rights and can influence the direction of the company, contrasting with stock companies, where shareholders primarily seek a return on investment through dividends and potentially increased stock value. This distinction underscores the difference in capital structure; mutual companies rely on the financial contributions and interests of their policyholders, rather than on external investors looking to profit through stock ownership.