What may stock insurers do regarding dividends?

Stock insurers are owned by shareholders, and their primary goal is to generate profits for these shareholders. One of the ways that stock insurers can reward their shareholders is by paying dividends. However, it is important to understand that these dividends are not guaranteed; they are dependent on the company’s profitability and financial performance. The board of directors of the stock insurer decides whether to declare a dividend and the amount to be distributed. This is a common practice in many corporations, where the management assesses the financial situation before deciding to pay dividends.

In contrast, mutual insurers, which are owned by policyholders, may distribute dividends to policyholders based on the performance of the insurance policies they hold. However, dividends paid by stock insurers to shareholders are specifically tied to the profitability and management’s discretion, thereby making them non-guaranteed. This distinction is key in understanding the operations of stock insurers and their approach to profit distribution. Therefore, the correct answer reflects this practice accurately.