Economical Insurance hit a big milestone on the journey to becoming a public company after 99% of eligible mutual policyholders of the company voted in favour of moving forward with the demutualization process during a meeting on March 20.
“We are the first Canadian property and casualty company to pursue demutualization under these regulations. It has been a long and complex journey, but we are gratified for the overwhelming support from our eligible mutual policyholders at this important moment in our history. Today we have moved a step closer to achieving our ambitious vision for Economical,” said John Bowey, board chair at Economical Insurance.
Added Rowan Saunders, president and CEO at Economical Insurance: “The confidence shown in today's outcome supports the transformation Economical has been pursuing to become a high-performing, independent Canadian insurer. We are building momentum across our business to unlock our full potential and become a leader in our industry, known for our business innovation and how well we take care of our customers.”
At the start of the year, the Canadian insurer announced details of its conversion plan, which lays out how Economical will transform from a mutual into a share company, including the method of allocating the financial benefits that will come out from demutualization.
The federal regulations that govern the demutualization process state that the next steps following the most recent vote include:
- Getting authorization from OSFI (the Office of the Superintendent of Financial Institutions) to hold a third special meeting of all eligible policyholders;
- Hosting the third special meeting of around 630,000 eligible policyholders to vote on accepting the conversion plan;
- Applying to the federal Minister of Finance for the final regulatory approval to demutualize.
Once these steps are followed and successfully completed, Economical will be ready to complete its planned initial public offering (IPO).
“We are very much focused on realizing benefits from our strategic investments in the business and proving their potential through the IPO, so we can continue to be an innovative leader, a strong partner to our brokers and customers, and participate in industry consolidation,” explained Saunders. “The price of the shares sold in the IPO is ultimately what determines the value of the demutualization benefits distributed to eligible policyholders, and the proceeds from the IPO will also provide the funding for cash benefits distributed to eligible recipients.”