WATERLOO, ON, June 30, 2015 /CNW/ - Economical Insurance today announced that the Department of Finance has published final regulations for the demutualization of federally-regulated mutual property and casualty (P&C) insurance companies.
With final regulations in place, P&C mutual companies that wish to demutualize can use this framework to convert into companies with share capital. Entitled "Mutual Property and Casualty Insurance Company with Non-mutual Policyholders Conversion Regulations," the final regulations are available on the Canada Gazette website at http://www.gazette.gc.ca/gazette/home-accueil-eng.php.
"We are pleased to have arrived at the end of a lengthy and complex regulation development process. Economical's special committee and board of directors are carefully reviewing the final regulations in order to determine whether demutualization within the final regulatory framework is in the best interests of the company and how to proceed," said John Bowey, vice-chair of the board of directors and head of Economical's special committee on demutualization. "If the board decides to proceed, we would expect to call a special meeting for early fall to hold the first vote of eligible mutual policyholders."
Conversion proposal responsibilities
The most significant change in the final regulations assigns the demutualizing company responsibility for preparing the conversion proposal. The conversion proposal contains all of the detailed terms for the company's demutualization. The mutual and non-mutual policyholder committees still have the important responsibility of negotiating the allocation of financial benefits, and the demutualizing company is required to include the negotiated allocation in the conversion proposal. Economical believes this is a change that will help to promote the demutualizing company's best interests.
The key factors in determining eligibility remain unchanged in the final regulations. That is, subject to specific exceptions, an eligible policyholder is: a person who holds a mutual policy of the demutualizing company on the date the board decides to proceed with demutualization ("eligible mutual policyholder"), or a person who holds a non-mutual policy of the demutualizing company and has done so for the 12-month period ending on the date the board decides to proceed with demutualization ("eligible non-mutual policyholder").
If the board decides to proceed with demutualization, it will call a special meeting to hold a vote of eligible mutual policyholders to determine whether to open negotiations with eligible non-mutual policyholders. This special meeting is expected to take place in early fall 2015. If eligible mutual policyholders approve, Economical will then prepare and send a notice to all eligible policyholders to inform them of the demutualization.
The demutualization framework in the final regulations is complex and involves many steps. Assuming each step is successful, we estimate at this point that the process will take at least two years from the date the board decides to proceed with demutualization to the date the Minister of Finance approves the final conversion proposal.
Economical will continue to provide regular updates and stakeholders are encouraged to visit the company's demutualization website, http://getthefacts.economicalinsurance.com for information.
This news release is provided for general information purposes only and does not constitute legal, business or other general advice. Persons seeking advice with regard to legal, business or other matters should contact a licensed professional.
Forward looking statements
Certain of the statements in this press release regarding our current and future plans, expectations and intentions, results, levels of activity, performance, goals or achievements, or any other future events or developments constitute forward-looking statements. The words "may", "will", "would", "should", "could", "expects", "plans", "intends", "trends", "indications", "anticipates", "believes", "estimates", "predicts", "likely" or "potential" or the negative or other variations of these words or other similar or comparable words or phrases, are intended to identify forward-looking statements.
Forward-looking statements are based on estimates and assumptions made by management based on management's experience and perception of historical trends, current conditions and expected future developments, as well as other factors that management believes are appropriate in the circumstances. Many factors could cause Economical's actual results, performance or achievements or future events or developments to differ materially from those expressed or implied by the forward-looking statements, including, without limitation, the following factors: Economical's ability to implement its strategy or operate its business as management currently expects; unfavourable capital market developments or other factors; government regulations; litigation and regulatory actions; periodic negative publicity regarding the insurance industry; intense competition; success and timing of the demutualization process; the outcome of a demutualization transaction; and general economic, financial and political conditions.
All of the forward-looking statements included in this press release are qualified by these cautionary statements. These factors are not intended to represent a complete list of the factors that could impact Economical, however, these factors should be considered carefully, and readers should not place undue reliance on forward-looking statements we make. We are under no obligation and have no intention to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Founded in 1871, Economical Insurance is one of Canada's leading property and casualty insurers, with $2.0 billion in annual premium volume and $5.2 billion in assets as at March 31, 2015. Based in Waterloo, this Canadian-owned and operated group services the insurance needs of more than one million customers across the country. Economical Insurance conducts business under the following brands: Economical Insurance, Economical, Western General, Economical Select, Perth Insurance, Family Insurance Solutions, Federation Insurance and Economical Financial.
SOURCE Economical Insurance
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