Board of directors' resolution initiates demutualization process
WATERLOO, ON, Nov. 3, 2015 /CNW/ - Economical Insurance today announced that its board of directors has formally decided to proceed with demutualization, launching the process to convert the company from a mutual to a stock company with shareholders.
"Today marks a pivotal milestone for Economical. Our board and its special committee on demutualization have carefully reviewed the regulations and the impact this process will have on the organization and its stakeholders. With the recommendation of our special committee on demutualization, we have unanimously determined that demutualization is in the best interests of the company," said Gerald Hooper, chairman of Economical's board of directors. "Demutualization will allow Economical to unlock its full potential and compete with the top players in the P&C insurance industry. Economical is ready and excited for this next phase of the process to begin."
Eligibility to participate in demutualization
Economical's policyholders will play an important role throughout the demutualization process, including serving on committees to negotiate the method of allocation among eligible policyholders and any other persons they determine.
The demutualization framework, including eligibility, is set out in regulations enacted by the federal government. Under the regulations, an eligible policyholder must, at a minimum, have held a policy on November 3, 2015, the date of the board decision (non-mutual policyholders would also had to have done so for the 12-month period ending on that date). However, an eligible policyholder might lose their eligibility if their policy is cancelled or lapses after the board decision date.
Economical has requested guidance from the Office of the Superintendent of Financial Institutions (OSFI), on whether policies must be held past the board decision date in order for policyholders to remain eligible. Once Economical receives this guidance, more information will be made available. In the meantime, if it appears a policyholder may be eligible and they do not want to affect that potential eligibility, Economical recommends they maintain their policy beyond November 3, 2015.
More information on eligibility can be found on Economical's demutualization website (www.joininourfuture.com).
Next step — mutual policyholders decision
Under the regulatory framework, the next step is the special meeting of policyholders where eligible mutual policyholders will decide whether to continue with the demutualization process. Details of the meeting will be announced once the meeting has been called by the board.
At this meeting, eligible mutual policyholders will decide whether to continue with the process by authorizing the commencement of negotiations with eligible non-mutual policyholders on the allocation of demutualization benefits. As outlined in the regulations set forth by the Department of Finance, if the vote is passed, Economical will send a notice to all eligible mutual and non-mutual policyholders to inform them of the decision and explain the demutualization process.
The demutualization process is complex and requires many steps to complete. Economical estimates that, from today's date to the date the Minister of Finance approves the conversion, the process will take at least 24 months, assuming all steps are successful.
The board can terminate the demutualization process at any time before completion if the board determines that demutualization is no longer in the best interests of the company.
Demutualization website — www.joininourfuture.com
Economical remains committed to keeping our stakeholders informed throughout the demutualization process. To achieve this, a fresh new website designed specifically with policyholders in mind — www.joininourfuture.com is available. This website provides information about the latest news and access to demutualization-related resources. The website will continue to provide regular updates and stakeholders are encouraged to visit the website.
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 news 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 news 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 $5.3 billion in assets as at September 30, 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
For further information: For media inquiries, contact: Doug Maybee, Economical Insurance, (T) 519.570.8249, (C) 519.404.0989, [email protected]; For general policyholder inquiries, contact: 1-866-302-6046 (toll-free) or 1-514-982-8708 (local/international), [email protected]