Board Continues to Recommend Members Reject VC & Co.-sponsored Dissident
WATERLOO, ON, April 13 /CNW/ - Economical Mutual Insurance Company, one
of Canada's largest property and casualty insurance providers, is
advising its mutual policyholders that the Dissident Circular being
sent to them by VC & Co. Advisory Limited contains numerous significant
errors and omissions of fact.
The Dissident Circular provides no alternative to the approach to
demutualization or the actions taken by the Board of Economical. It
simply wants to put the Company into the hands of new directors, a
change that has no purpose other than the financial benefit of VC & Co.
"VC & Co. is making promises it knows, or should know, it cannot keep,"
said Karen Gavan, Chair of the Special Committee of the Board
responsible for Economical's demutualization process. "The dissident
proposal reveals a remarkable ignorance of the Company and the clearly
defined demutualization process that is already well underway. It
ignores the fact that the pace of demutualization and the amount of
proceeds to go to each member are largely dictated by the development
of regulations by the Department of Finance. To promise that a Board
hand-picked by VC & Co can accelerate the process or change the
financial outcome for members is misleading and irresponsible."
Ms. Gavan added: "The dissident proposal is a backward step for
Economical and its mutual policyholders. It would result only in the
delay and the possible derailment of the demutualization process that
is already underway. The Board of Economical has made a public
commitment to demutualization of the Company. That commitment remains
in place and is not in question -- period. The Board also remains
committed to its position that the mutual policyholders are the owners,
and the only owners, of the Company. The Board has also taken major
steps in moving demutualization forward both in aligning the Company's
internal processes and in identifying and signing confidentiality
agreements with strategically aligned third parties."
Economical's Board of Directors will respond in detail in a direct
communication with Members, but notes the following:
No one - not VC & Co. and not the Company - can provide a value for
individual policies until federal regulations are in place for the
demutualization. To suggest otherwise is misleading to mutual
policyholders and betrays a lack of understanding of the process.
The dissident nominees to the Board, as expected, have no experience
with Economical or its business. That lack of experience can undermine
the value of the Company at this crucial time.
The Dissident Circular misstates key facts. Economical has publicly
stated that there are 943 confirmed and valid mutual policies in force
as of December 14, 2010, the day the demutualization decision was
announced. It has also been very clear that it regards the mutual
policyholders as the owners of the Company and it has argued this
position strenuously on behalf of the mutual policyholders with the
Department of Finance as it prepares the necessary regulations.
VC & Co. admits it will expect the Company to pay it millions of dollars
in fees and expenses, a substantial cost that would be borne by all
mutual policyholders, not just those who signed agreements with VC &
Co. That will constitute a significant dilution of value for members.
Economical's Board has doubled the size of the Company's surplus in 10
years to $1.3 billion, providing significant growth in value for mutual
policyholders. VC & Co. fails to acknowledge that it is this very
growth in value that it hopes to exploit for itself.
The Board of Directors of Economical continues to recommend that mutual
policyholders use the BLUE proxy included in the mailing to vote:
FOR Resolution 1 - the election of the Company's nominees to the Board
FOR Resolution 2 - the appointment of the auditors, Ernst & Young LLP,
AGAINST Resolution 3 - the Dissident Proposal to replace the Board of
Directors with Nominees selected by VC & Co. Advisory Limited, the
Toronto firm that organized the dissident mutual policyholders.
The Board also recommends that mutual policyholders disregard the
dissident circular and DO NOT USE the Yellow proxy form that comes with
Mutual Policyholders with questions or who require assistance in
completing and returning the BLUE form of proxy can call Georgeson, the
Company engaged by Economical to assist in proxy solicitation toll-free
at 1-866- 909 6468.
About The Economical Insurance Group
Founded in 1871, The Economical Insurance Group (TEIG) is one of Canada's leading property and casualty insurers, with
over $4.6 billion in assets and policyholders' equity of approximately
$1.3 billion. Canadian-owned and operated, TEIG provides a wide range
of insurance products throughout North America. TEIG Member Companies
include Economical Mutual Insurance Company (including Western General Farm Division), Waterloo Insurance Company, Perth Insurance Company, The
Missisquoi Insurance Company, Federation Insurance Company of Canada,
Family Insurance Solutions and The Mattei Companies.
A mutual insurance company since it was founded, The Economical
Insurance Group, announced its intention to demutualize in December,
2010, making it the first to take this step under current Canadian
legislation. It is currently developing a demutualization plan for
approval by regulators and the Group's mutual policyholders.
For Further Information:
SOURCE Economic Mutual
For further information:
Vice President, Marketing and Communications
The Economical Insurance Group
519-570-8500 ext. 48589
Mutual Policyholder Inquiries: