Economical Insurance policyholders voted for demutualization Monday, effectively setting a precedent all but certain to be followed by its competitors.
“Our board and management teams are focused on taking the steps needed to enhance our competitiveness and improve access to capital,” said John Bowey, chair of Economical’s special committee on demutualization. “The work ahead to demutualize the company is significant, but the opportunity to build for growth is equally important.”
The vote came at a special meeting in Kitchener, Ont., with an overwhelming number of mutual policyholders casting ballots in favour of starting negotiations with non-mutual policyholders.
The talks will centre on the allocation of demutualization benefits through court-appointed policyholder committees, and surpassing the required two-thirds majority (of those voting) required for a successful vote.
The next step in the regulatory process will then be for Economical to prepare and mail a formal notice to all eligible policyholders. It falls to OSFI to approve or reject that notice.
With approval in hand, Economical will file an application with the court for an initial order setting out the procedure for the negotiations.
“We have built a strong business within our current structure and are pleased with our progress,” said Gerald Hooper, chair of the board of directors. “Through demutualization, we will be able to drive growth in new and exciting ways.”
