Canadian Underwriter

Economical demutualization committee chairman Bowey becomes chair of the board

January 5, 2016   by Canadian Underwriter

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John Bowey has replaced Gerry Hooper as chairman of Economical Insurance effective Monday, the Waterloo, Ont.-based carrier announced.

Hooper, a former chief financial officer of Schneider Foods, stepped down as chair and “intends to continue serving” on the board of directors of Economical “until the expiry of his current term in 2018,” Economical stated Monday in a press release.

John Bowey is chairman of Economical Insurance effective January 4

From July, 2011 until Monday, Bowey (pictured left) had been chair of the Economical board of directors’ special committee on demutualization. The new special committee chair is David Wilson, who had assisted Manulife Financial Corp. with its demutualization while working for the Bank of Nova Scotia. Bowey will continue to serve on that committee.

Economical’s board voted Nov. 3 to proceed with demutualization – a process approved in December by a majority of Economical’s mutual policyholders. The mutual policyholders now need to negotiate with non-mutual policyholders on the allocation of demutualization benefits.

Bowey was chairman of Deloitte Canada from 2006 through 2010.

Hooper, who joined Economical’s board in 1999, had been chair since March, 2005. He is a former executive vice-president and chief financial officer of Schneider Foods. After Schneider was acquired by Maple Leaf Food in 2003, Hooper was Maple Leaf’s executive vice president until 2005. In addition to Schneider, Hooper had served on the boards of ATS Automation Tooling Systems Inc., Brick Brewing Co. Limited and Wescast Industries. From 1975 through 1986 he was a partner at what is now KPMG.

Gerry Hooper was chairman of Economical Insurance from 2005 until 2016 and continues to serve on the board of directors

In addition to Bowey, Hooper (pictured right) and Wilson, the other Economical board members are: chief executive officer Karen Gavan; Dick Freeborough, chair of the audit committee and chair of the Independent Order of Foresters; Micheál Kelly, dean of Wilfrid Laurier University’s business school; Elizabeth DelBianco, chair of the board’s human resources and compensation committee, and chief administrative legal and administrative officer for Toronto-based electronics manufacturer Celestica Inc.; Dan Fortin, chair of the strategic initiatives committee and former president of IBM Canada; Barbara Fraser, chair of the governance committee and a former senior executive for American Express; Michael Stramaglia, chair of the risk review committee and former president and CEO of Zurich Life Insurance Company of Canada.

Related: OSFI publishes guide for demutualization of certain mutual p&c insurance companies

Wilson, who joined Economical’s board in 2012, is a former chair of the Ontario Securities Commission. Prior to his appointment with the OSC, he was vice-chair of the Bank of Nova Scotia and chair and chief executive officer of Scotia Capital. He is currently chair of the board of the Greater Toronto Airport Authority.

While working for Scotiabank, Wilson (pictured below) “served as a senior member of the advisory group assisting Manulife with its demutualization process,” Economical notes.

David Wilson is the new chair of the board of directors' special committee on demutualization for Economical InsuranceManufacturers Life converted to a stock life insurance company with common shares in September, 1999. The same year, Mutual Life (later renamed Clarica) and Canada Life also demutualized. Canada Life was bought by Great-West Lifeco Inc. in 2003 and Clarica was acquired by Sun Life in 2002. Sun Life had converted from a mutual company to a stock company in 2000.

No federally regulated P&C insurers have demutualized yet because Canada has only had regulations allowing for such a demutualization since the summer of 2015.

In addition to Economical, there are six federally regulated mutual P&C insurers: Wawanesa, Gore Mutual, Portage La Prairie Mutual, Saskatchewan Mutual, The Kings Mutual and North Waterloo Farmers, which agreed to merge with Oxford Mutual to create Heartland Farm Mutual.

Economical stated in December, after the mutual policyholders’ approval, that the “next step in the regulatory process will see Economical prepare and mail a formal notice to all eligible policyholders.” That notice was approved by the federal Office of the Superintendent of Financial Institutions (OSFI).

Related: Economical Insurance mutual policyholders vote to proceed to next step of demutualization

“After approval by OSFI and mailing of the notice, Economical will file an application with the court for an initial order setting out the procedure for the negotiations,” between mutual and non-mutual policyholders, Economical said in December.

The company stated earlier it expects it would 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,” assuming that each step is successful.

The federal regulations “basically preclude anything” other than an initial public offering (IPO) of stock, if the demutualization is successful, Gavan said earlier.

“Our industry is consolidating and we need access to capital to participate in that consolidation, so additional capital would likely be tied around acquisition activity,” Gavan told Canadian Underwriter earlier.

Last year, Desjardins Group closed its acquisition of the Canadian operations of State Farm. In 2013, The Travelers Companies Inc. acquired The Dominion of Canada General Insurance Company. In 2012, Intact Financial Corp. – known until 2009 as ING Insurance Company of Canada – acquired Jevco Insurance Company. A year earlier, Intact acquired the Canadian operations of AXA Group.