Which of the following statements about a stock insurance company is NOT true?

A stock insurance company is primarily owned by shareholders, not policyholders. This means that the individuals or entities that hold stock in the company have ownership rights and receive profits in the form of dividends. Unlike mutual insurance companies, which are owned by policyholders and may distribute dividends to them, stock companies are accountable primarily to their shareholders.

The concept of a participating company generally refers to mutual insurance companies, where policyholders can receive dividends based on company profits. Although stock companies can pay dividends to their shareholders, they are not structured as participating companies.

Regarding dividends, it’s important to note that while stock companies can pay dividends to stockholders, they are not required to do so by law, and thus, they do not have to declare them consistently. Additionally, stock companies can issue common stock, which allows them to raise capital and distribute ownership to shareholders effectively. Therefore, the statement that a stock company is owned by policyholders is not true, distinguishing it from mutual companies.