WATERLOO, ON, January 31, 2019 —Economical Insurance has called the second special meeting on its demutualization. This follows authorization from the Office of the Superintendent of Financial Institutions (OSFI) after its review of the company’s demutualization conversion plan and meeting materials. The conversion plan is a detailed document that outlines how Economical intends to convert from a mutual company to a widely-held company with common shares.
At the meeting, eligible mutual policyholders will be asked to pass a special resolution, which is required to continue the demutualization process. It will be held at 10:30a.m. on Wednesday, March 20, in Marshall Hall at Bingemans Conference Centre, 425 Bingemans Centre Drive in Kitchener, ON. Attendance at the special meeting is by invitation only.
“Economical has reached an important milestone in a complex demutualization process that has never been done in the Canadian P&C industry before,” said John Bowey, Board Chair of Economical. “An affirmative outcome from this vote, which has been recommended by both the mutual policyholder committee and our Board of Directors, will allow Economical to proceed in the demutualization process and strengthen its position as a top P&C insurer in Canada.”
Information about the conversion plan
The conversion plan presents the results of an extensive negotiation between court-appointed policyholder committees, who were each supported by their own legal counsel, and actuarial and financial experts. It outlines how Economical will convert from a mutual into a share company, and includes the method of allocating financial benefits resulting from the demutualization.
The document can be read on Economical’s demutualization website, Join in Our Future.
The conversion plan is included in the information circular that has been mailed to all eligible mutual policyholders, along with opinions from actuarial and financial experts and other information that may assist eligible mutual policyholders to make an informed decision. Eligible mutual policyholders are encouraged to review the materials and cast their vote through one of the many advance voting methods that are available.
A unique benefit rooted in our heritage
A new charitable foundation is being established as part of Economical’s planned demutualization – The Economical Insurance Heritage Foundation. If demutualization is successful, the Foundation will receive a $100 million gift from the proceeds of the demutualization, an allocation that was negotiated by the policyholder committees as part of their agreement on financial benefits. The Foundation’s mission will be to honour Economical policyholders and employees, past and present, by working to have the greatest impact in our communities.
“Giving back has been a core value for Economical throughout our 147 year history, so we are heartened to see the policyholder committees come together and make such a significant commitment to our communities,” said Bowey. “This historic step is yet another way our demutualization has broken new ground, and we are privileged to be part of the legacy the Foundation will leave, and the good things it will do for many years to come.”
Next steps: eligible policyholder votes and federal minister approval
If the vote at the second special meeting on demutualization is successful, then Economical will seek authorization from OSFI to hold a third special meeting where all eligible policyholders (both mutual and non-mutual) will have the opportunity to vote together on accepting the conversion plan and making the final application for demutualization.
A successful outcome from both policyholder votes is required before Economical would be in a position to apply to the federal Minister of Finance for the final regulatory approval to demutualize.
Proposed initial public offering
In addition to completing the technical regulatory steps that are required by the demutualization regulations, this demutualization also requires Economical to undergo an initial public offering (IPO), because the value of the demutualization benefits distributed to eligible policyholders will depend on the price of the shares sold in the IPO. The proceeds from the IPO will also provide funding for benefits distributed to eligible recipients as cash..
Economical will continually evaluate market conditions, company performance, and other relevant factors that may impact the timing and success of an IPO and, by extension, the remaining steps in the demutualization process.
About Economical Insurance
Founded in 1871, Economical is one of Canada’s leading property and casualty insurers, with more than $2.3 billion in annualized premium volume and approximately $5.7 billion in assets as at September 30, 2018. Headquartered in Waterloo, Ontario, this Canadian-owned and operated company services the insurance needs of more than one million customers across the country. Economical conducts business under the following brands: Economical Insurance, Economical, Western General, Economical Select, Perth Insurance, Sonnet, Petsecure, Economical Financial, and Family Insurance Solutions.
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