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In theory, the funds provided by shareholders are an extra resource for the proprietary company to draw on if things go wrong; in practice, many of the old-established companies, whether mutual or proprietary, have such large reserves that the amounts of shareholders' funds can be of academic interest only.

Strictly speaking, the management of mutual companies is answerable only to policyholders, while that of proprietary companies is answerable in the first instance to shareholders.

Policyholders are in general less aware of the activities of management than are shareholders, who are likely to react more quickly than policyholders to any decline in the fortunes of their company.

Mutual companies are more inclined to regard themselves as trustees for their policyholders' savings and are therefore less likely to take risks with the introduction of new policies or methods of development than proprietary companies, whose desire for expansion and growth may drive them dangerously fast.

There is overall no real advantage in the type of company in itself; what is important, is that there are very good and very poor companies in both classes and it is highly desirable to avoid the inferior ones.


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Read On: read next:for Unit-linked Companies Versus Friendly Societies


Unit-linked companies are virtually without exception proprietary, and most are much smaller and more recently founded than their larger conventional brethren, though the largest unit-linked companies have now attained considerable size.
Unit-linked offices fall into two categories, those owned by some other large and reputable financial organisation such as a bank or another insurance company, and those owned by private family companies, overseas interests or peripheral financial interests.read next:for Unit-linked Companies Versus Friendly Societies


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