Which statement accurately describes de-mutualization?

De-mutualization refers specifically to a process where a mutual insurance company, which is owned by its policyholders, converts into a stock insurance company that is owned by shareholders. This transition allows the mutual company to raise capital by offering shares to the public or private investors, which can facilitate growth, expansion, or additional investments.

In this process, policyholders typically receive shares in the new stock company or cash in exchange for their ownership stake. This is a significant transformation as it alters the company's structure, governance, and the way profits are distributed. Understanding this concept is crucial, as it highlights the change in ownership model and financial approach within the insurance industry.

The other options present different scenarios that do not accurately describe de-mutualization. They focus on relationships between entities or individuals rather than the specific conversion process of an insurance company from a mutual structure to a stock structure.