What distinguishes stock insurers from mutual insurers?

The distinguishing feature of stock insurers is that they may pay dividends to stockholders, which is a common practice in stock insurance companies. These companies are organized as corporations owned by their shareholders, who invest in the company and expect returns in the form of dividends based on the company’s performance.

In contrast to mutual insurers, which are owned by policyholders and may distribute dividends to policyholders based on the insurance gains or surplus, stock insurers focus on delivering returns to their stockholding investors. This delineation is crucial in understanding the structure and obligations of these two different types of insurance entities.

Other choices highlight characteristics that don't accurately differentiate stock insurers from mutual insurers or misunderstand the operational dynamics of each. For instance, stating that stock insurers do not pay dividends is incorrect since they can indeed distribute dividends to shareholders. The idea that stock insurers operate without shareholders misrepresents their corporate structure, as they are specifically designed to have shareholders. Additionally, the management structure relating to mutual insurers and the role of attorney-in-fact pertains to how mutuals operate rather than serving as a differentiator for stock insurers.