Canadian Underwriter

When Economical plans to hold final demutualization vote

February 25, 2021   by Greg Meckbach

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An all-policyholders’ vote on demutualization is scheduled this spring, Economical Insurance announced this week.

“The process for getting this meeting on the calendar is on track,” said John Bowey, chairman of Waterloo, Ont.-based Economical, in an update posted Feb. 22 to the insurer’s website.

Anyone who had non-mutual or mutual policies with Economical as of Nov. 3, 2015, is eligible to vote. Before they vote, they will need to register using their policy number and postal code at Economical’s Join our Future web page.

The meeting will be held virtually because of the ongoing COVID-19 pandemic.

“Our planning for the special meeting has entered a new phase focused on ensuring policyholders are kept as up to date as possible,” Bowey wrote in the Feb. 22 update.

Economical is encouraging all eligible policyholders who have not already done so to register online.

Before Economical can send eligible policyholders a meeting notice, the insurer needs to get approval to schedule the meeting from the federal Office of the Superintendent of Financial Institutions. Several more steps are needed before Economical can demutualize; assuming it does, it will be traded on the Toronto Stock Exchange. Demutualization is subject to approval by two-thirds of approximately 630,000 eligible policyholders.

Assuming more than two thirds vote in favour, this would give Economical the green light apply to the federal finance minister for approval to demutualize. Once approval is received, Economical can begin the process to have an initial public offering of stock.

One Economical becomes publicly-traded, it would be able to raise money from capital markets to finance mergers and acquisitions, as well as other strategic investments.

Economical is so far the first and only federally-regulated P&C insurer whose board of directors has voted in favour of demutualization. The insurer currently has roughly 900 mutual policyholders. More than 99% of eligible mutual policyholders voted in favour of demutualization in early 2019. That came shortly after Economical published a long and complex conversion proposal on its website stipulating what benefits mutual and non mutual policyholders could get from demutualization.

Four Canadian life insurers demutualized in 1999-2000.

The federal government passed regulations in 2015 allowing demutualization of P&C insurers, leading Economical’s board to formally start the process in November of that year.


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