This is about the time of the year when all the major mutual insurance companies announce their annual dividend rate or payout. I just got an email from Ohio National about theirs (which is being reduced by 50 basis points) and I've been hearing about other companies and their announcements. What is a dividend from a mutual insurance company? A dividend is sharing in the profitability of the insurance company. As a participating policyholder, you are entitled to dividends if a dividend is declared.
What are the major components that make up the dividend?
There are three major factors:
General investment account performance
Mortality claims processed (if better or worse than actuarily projected)
Overhead operating expenses