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21. DEMUTUALIZATION

Demutualization is the process whereby a mutual company converts into a share company. On July 1, 2015, regulations were published by the federal government’s Department of Finance designed to allow federally-regulated mutual property and casualty insurance companies to demutualize. On November 3, 2015, the Company’s Board of Directors announced its decision to proceed with demutualization within the regulatory framework. At the first special meeting on demutualization held on December 14, 2015, the Company’s eligible mutual policyholders passed a special resolution to authorize the start of negotiations of the allocation of demutualization benefits with eligible non-mutual policyholders. The next step in the demutualization process is for court-appointed policyholder committees to negotiate the allocation of financial benefits, after which demutualization will require a series of distinct approvals, including from the Company’s primary regulator, two policyholder votes and the federal government.