VC&Co. Moves to Ensure Mutual Policyholders Can Vote Their Will Free from Coercion by Economical's Current Board

VANCOUVER, April 15 /CNW/ - VC & Co. Advisory Limited, which is advising the more than 100 mutual policyholders of Economical Mutual Insurance Company seeking to replace its current board of directors, announced today that an order is being sought from the Ontario Court of Appeal to ensure that employees and other mutual policyholders of Economical have the option to vote at the May 26, 2011 policyholders' meeting by written ballot without their individual voting decisions becoming known to Economical.

The action was taken after mutual policyholders of Economical, some of whom are also its employees, voiced concern to VC&Co. in recent days that they felt unfairly pressured and coerced by the current board's proxy solicitation tactics, including the campaign of harassment that has been unleashed on mutual policyholders by the current board's proxy solicitation agent.

VC&Co. wrote to Economical's Special Committee on April 14, 2011 asking it to confirm that the written ballots to be used at the May 26, 2011 meeting would not include the names of those mutual policyholders who choose to attend and vote in person at the meeting, such that employees and others could vote anonymously if they wished, and without fear of retribution.  The inclusion of policyholder names on written ballots is neither necessary nor required by the Insurance Companies Act (Canada) or Economical's by-laws.

In its April 14, 2011 letter to Economical's Special Committee, VC&Co. stated:

"Given that each mutual policy represents one vote, there is of course no reason to require mutual policyholders voting in person at the Meeting to provide their names on the ballots, other than to raise the implicit threat of possible retribution.  As a matter of fairness to all your mutual policyholders (and, in particular your employees), we believe it is fundamentally important that they know now that they can vote in person anonymously by written ballot at the Meeting without their voting decisions being known to either Economical or us, regardless of the outcome of the Meeting.

Given that this is a very simple matter to address and that it plainly involves an easy procedural protection to ensure fairness, including to your own employees, we trust that we are on common ground on this issue."

VC&Co. advised in its April 14, 2011 letter that, in the absence of a commitment from Economical's current board to afford this procedural fairness to its employees and other mutual policyholders, the protection would be sought from the Court of Appeal.

"The basic and straightforward voting protection we urged on Economical clearly makes sense and is intended to ensure a free and fair vote.  We are disappointed by the current board's rejection of that protection and its continuing attempts to entrench itself by whatever means possible, including disregarding basic fairness to Economical's own employees."

VC&Co. will be asking the Court of Appeal to adjudicate this matter on an expedited basis and to render a decision as far in advance of the May 16, 2011 proxy deadline as possible.

The full text of VC&Co.'s April 14, 2011 letter to the Special Committee is appended below.

Mutual policyholders are encouraged to carefully review the dissident circular and to complete and return the YELLOW proxy in accordance with the instructions in the dissident circular.  Mutual policyholders with questions or who require assistance in completing and returning the YELLOW proxy should telephone either Michael D. Woollcombe or Shane A. Priemer of VC & Co. Advisory Limited at 416-864-2274.

*******

April 14, 2011

Special Committee of the Board of Directors
Economical Mutual Insurance Company
111 Westmount Street South
Waterloo, Ontario
N2J 4S4

Dear Sirs/Mesdames:

Annual and Special Meeting Scheduled for May 26, 2011

We are writing to you for the purpose of ensuring that the voting process at the May 26, 2011 annual and special meeting of mutual policyholders (the "Meeting") provides a means by which all employees, brokers and others who have a relationship with Economical are able to vote their mutual policies without fear of retribution or personal consequences regardless of the outcome of the Meeting.

As you are aware, section 157 of the Insurance Companies Act (Canada) provides that any policyholder or proxyholder may require that voting at the Meeting take place by written ballot.  We will of course be requiring that all matters to come before the Meeting be voted upon by written ballot.  The Insurance Companies Act (Canada) does not require that names be used on ballots.

Since Economical's proxy materials were distributed on April 11, 2011, we have been asked repeatedly by policyholders whether Economical intends to include the names of individual mutual policyholders who are voting in person at the Meeting on the ballots that will be distributed at the Meeting (or to require mutual policyholders voting in person to complete their names on ballots distributed at the Meeting).  As you know, your proxy materials were silent on this issue, which is now creating significant uncertainty among employee mutual policyholders and others.

It won't surprise you that employee mutual policyholders in particular are feeling significantly pressured and coerced at the moment by the current board's proxy solicitation tactics.  This is unfortunate. You must surely accept the right of all mutual policyholders, including those who are employed by Economical, to vote at the Meeting as they see fit without fear of retribution.  It is simply not appropriate for any mutual policyholder to perceive that he or she may be subject to any retribution or personal consequences from Economical based upon their voting decisions.

Given that each mutual policy represents one vote, there is of course no reason to require mutual policyholders voting in person at the Meeting to provide their names on the ballots, other than to raise the implicit threat of possible retribution.  As a matter of fairness to all your mutual policyholders (and, in particular your employees), we believe it is fundamentally important that they know now that they can vote in person anonymously by written ballot at the Meeting without their voting decisions being known to either Economical or us, regardless of the outcome of the Meeting.

Given that this is a very simple matter to address and that it plainly involves an easy procedural protection to ensure fairness, including to your own employees, we trust that we are on common ground on this issue.  We would therefore ask that you confirm to us, by 12:00 (noon) tomorrow, that the ballots to be used at the Meeting will allow all mutual policyholders attending and voting in person at the Meeting to cast their votes without including their names on the ballots, such that their individual voting decisions will remain unknown to Economical and us.

In the absence of that confirmation, and so as to fairly protect the interests of your employee and other mutual policyholders, we will be moving immediately to seek that protection from the Court of Appeal.  We trust that will prove unnecessary, and look forward to your prompt response.

 
Yours very truly,
 

VC & CO. ADVISORY LIMITED

 

SOURCE VC

For further information:

Michael D. Woollcombe
Executive Vice-President, VC & Co. Advisory Limited
416-947-1700
mwoollcombe@voorco.com

Media contact:

Alan Bayless
Client Partner, Longview Communications Inc.
604-694-6035
abayless@longviewcomms.ca

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