Unlike a cooperative, members usually do not directly contribute to the capital of the organization, but derive their right to profits and votes through their customer relationship.
A mutual is therefore owned by, and run for the benefit of, its members – it has no external shareholders to pay in the form of dividends, and as such does not usually seek to maximize and make large profits or capital gains.
Mutuals exist for the members to benefit from the services they provide and often do not pay income tax.
In mutual insurance companies, what would have been profits are instead rebated to the clients in the form of dividend distributions, reduced future premiums or paid up additions to the policy value.
One example is that mutual companies have no shares to sell and hence no access to equity markets.
The Mutual of Omaha Insurance Company has also investigated demutualization, even though its form of ownership is embedded in its name.
In some markets, mutuals offer very competitive interest rates and fee tariffs on savings and deposit accounts, mortgages and loans.
[4] Demutualization or demutualisation is the reverse process, whereby a mutual may convert itself to a joint-stock company.