Definition - What does Affiliated Companies mean?
Affiliated companies refer to a company and a parent company that holds less than 50% ownership and is therefore the minority shareholder. In addition, companies may also be considered affiliated if they are both owned by a parent company. Furthermore, a loose usage of the term may refer to companies that are related to each other. In terms of insurance, insurance companies may be affiliated through interlocking directorates or common ownership.
Insuranceopedia explains Affiliated Companies
In contrast, a subsidiary would refer to a company that the parent company owns more than 50%. Nevertheless, in this way, two subsidiaries may be considered affiliated companies as well. Generally, companies may rely on affiliates or subsidiaries to penetrate foreign markets so they do seem like foreign-owned businesses, which could garner negative perceptions from consumers.
In the context of insurance, affiliation may help insurance companies expand their reach by working with other insurers in different fields.
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