Which of the following statements regarding mutual companies is true?

Mutual companies are unique in that they are owned by their policyholders rather than shareholders. This structure allows mutual companies to focus on the needs of their policyholders since they do not prioritize profit maximization for external investors. When conditions permit, mutual companies may declare dividends based on their financial performance, which can then be distributed to policyholders. This practice aligns the interests of the company with those of its members, fostering a sense of mutual benefit.

The other statements do not accurately reflect the nature of mutual companies. They do not operate solely for profit as they prioritize the well-being of their policyholders. While external investments may play a role in their operations, this is not their primary focus. Additionally, policyholders often have a voice in decision-making processes, contrary to any suggestion that participants are excluded from this aspect. Thus, the correct understanding of mutual companies centers on the potential for policyholder dividends, affirming the cooperative approach they embody.