Multiple choice general knowledge

Demutualization refer to a process by which:

  1. Stock insurance company becomes a Mutual Insurance Company

  2. Mutual Insurance company stops investing in mutual funds for investment income

  3. Mutual insurance company becomes a stock insurance company

  4. Allows Mutual insurance company to charge its insured an additional premium after the policy has gone into effect
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Demutualization converts a mutual insurance company (owned by policyholders) into a stock company (owned by shareholders). This allows the company to raise capital through stock offerings. Option A describes the reverse process. Options B and D describe unrelated concepts - mutual fund investing and premium adjustments are not demutualization.

Keep practicing — related questions