WATERLOO, ON, Feb. 27, 2015 /CNW/ - Economical Insurance today welcomed a significant milestone on the path to demutualization with the federal Department of Finance's release of draft regulations that are intended to allow federally regulated mutual property and casualty insurance companies to demutualize.
The draft regulations are available online on the Canada Gazette website at http://www.gazette.gc.ca/gazette/home-accueil-eng.php. There are two sets of draft regulations, one for insurers with only mutual policyholders and one for insurers with both mutual and non-mutual policyholders. As Economical has both mutual and non-mutual policyholders, the draft regulations entitled "Mutual Property and Casualty Insurance Company with Non-mutual Policyholders Conversion Regulations" are relevant to Economical.
Demutualization regulations are needed to allow P&C mutual companies that wish to change their corporate structure to become companies with share capital. Regulations have now been released in draft form and are subject to a comment period that ends on March 30, 2015. According to the Department of Finance, once final regulations have been declared in force, companies may formally begin the demutualization process.
"Reaching this stage of the long and complex process of developing a framework for demutualization is a welcome development," said John Bowey, vice-chair of the board of directors and head of Economical's special committee on demutualization. "Our special committee and our board intend to carefully review the draft regulations with our advisors and if Economical submits comments to the Department of Finance, we will circulate these to our stakeholders. We encourage all interested stakeholders to carefully review the draft regulations as well."
"We have been pursuing demutualization for more than four years to unlock the tremendous strategic potential we see in Economical," said Gerald Hooper, chair of the board of directors. "With the greater access to capital that demutualization can bring, Economical could make the significant investments it needs to compete on an equal footing with other P&C companies that do not face the same constraints on financial flexibility imposed by the mutual structure. Our industry is changing rapidly and those who do not keep pace will be left behind."
Bowey added: "We are now approaching the critical phase of determining what the framework reflected in the demutualization regulations implies for Economical. Working with our financial and legal advisors, we will complete our analysis as soon as possible and, once the regulations are finalized and in force, Economical's board will determine whether the Company will proceed with demutualization under this regulatory framework and, if so, how best to move forward with demutualization."
Economical will provide regular updates on the process and stakeholders are encouraged to visit the company's demutualization website, getthefacts.economicalinsurance.com for information.
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; 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.
This news release is not intended to provide specific insurance, business, legal or other general advice for any individual or business entity and should not be relied on for such advice or otherwise. Persons seeking advice with regard to insurance, business, legal or other matters should contact a licensed professional.
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 December 31, 2014. Based in Waterloo, this Canadian-owned and operated group services the insurance needs of more than one million customers across the country. In 2010, Economical announced its decision to become the first federally-regulated mutual property and casualty insurance company to demutualize. 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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