Dividends to policyholders vs dividends to stockholders
What is the difference between dividends to policyholders vs stockholders? I'm familiar with stockholder dividends but I've never heard of a dividend to policyholder.
And why is dividend to policyholders the only dividend piece subtracted out to get our total net investment income? Thanks!
Comments
Policyholder dividends are in essence premium returned to policyholders by a mutual insurance company, in the event of profitability. This excess premium is understood to be policyholders' from the beginning, and not the company's to invest, so investment income is given net of such dividends.