WATERLOO, ON, June 26, 2018 —Economical Insurance today announced that the company’s demutualization conversion plan, a detailed document that outlines how Economical intends to convert from a mutual company to a widely-held company with common shares, has been submitted by Economical to its principal regulator, the Office of the Superintendent of Financial Institutions (OSFI).
The conversion plan contains the agreed-upon method of allocating financial benefits resulting from demutualization, opinions from actuarial and financial experts, and the detailed legal particulars to effect demutualization.
As Economical previously announced, the agreement on allocating financial benefits was reached by court-appointed committees representing eligible mutual policyholders and eligible non-mutual policyholders, supported by their counsel and inputs from a group of experts at top consulting, financial, and actuarial firms. The original deadline for submitting the conversion plan was extended by OSFI earlier this year to allow more time to complete the plan and the professional opinions that are required to accompany the submission.
“The conversion plan is a key piece of our demutualization, and its submission to our principal regulator meets an important deadline and maintains our momentum on the path to becoming a public company,” said John Bowey, Board Chair of Economical. “We are gratified by the effort, creativity, and commitment that has gone into achieving this significant milestone. Now, we remain focused on the considerable work ahead that will be required to complete the demutualization process and a successful initial public offering.”
Next steps: regulator reviews, eligible policyholder votes, and federal minister approval
OSFI will conduct a review of Economical’s submission, which will be supplemented by other information required by the demutualization regulations and updated financial information, when available. During this review the details of the conversion plan will remain confidential.
There is no specific deadline governing this next phase of regulatory review. When approval is granted, Economical expects to be authorized to call the second special meeting on demutualization, where eligible mutual policyholders will decide whether the demutualization process will continue.
A detailed information package will be mailed to eligible mutual policyholders in advance of the second special meeting. If that vote is successful, then all eligible policyholders will be invited to convene at a third special meeting to vote together on acceptance of the conversion plan and proceeding with demutualization.
A successful outcome from both policyholder votes would put Economical in a position to apply to the federal Minister of Finance for a final approval to demutualize. As that process continues, Economical will actively monitor market conditions that may impact the timing and outcome of the initial public offering which would follow demutualization.
Foundation for the future
Economical is concurrently pursuing significant organizational changes that will support a successful initial public offering and a future as a strong, independent, public company. These strategic investments are designed to drive profitable growth, improve operational efficiency, and foster innovation, while continuing to develop the infrastructure required for life as a public company. They include the launch of a multi-channel strategy through Sonnet, the roll-out of the new broker offering VyneTM, the acquisition of Petline, and an updated commercial lines strategy and structure. When taken together, these actions provide the roadmap for strong performance to make Economical an industry leader with a long and bright future.
About Economical Insurance
Founded in 1871, Economical is one of Canada’s leading property and casualty insurers, with more than $2.2 billion in annualized premium volume and more than $5.4 billion in assets as at March 31, 2018. Headquartered in Waterloo, ON, this Canadian-owned and operated company services the insurance needs of more than one million customers across the country. Economical conducts business under the following brands: Economical Insurance, Economical, Western General, Economical Select, Perth Insurance, Sonnet, Petsecure, Economical Financial, and Family Insurance Solutions.
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