What type of insurance company is typically characterized by the issuance of both participating and nonparticipating policies?

The correct answer is stock insurance company, which typically issues both participating and nonparticipating policies. A stock insurance company is a for-profit entity owned by shareholders. It provides policies that may or may not provide dividends to policyholders, depending on the company's profitability and corporate structure.

Participating policies are those that allow policyholders to receive dividends based on the company's surplus earnings, while nonparticipating policies do not. Stock insurance companies often issue nonparticipating policies to maintain a straightforward profit-driven model, but they can also offer participating policies as a way to attract customers looking for those extra potential rewards tied to the company’s performance.

This flexibility in product offerings allows stock insurance companies to cater to a broader audience and adapt to market needs. This characteristic sets stock insurance companies apart from mutual insurance companies, which primarily focus on participating policies, given that they are owned by policyholders and aim to return profits to them rather than external shareholders. Fraternal organizations and cooperative insurance entities also have distinct characteristics that do not align with the issuance of both types of policies in the same way as stock companies.