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Government launches public consultations on P&C demutualization process

Finance Minister Jim Flaherty and the Department of Finance have launched a public consultation process focused on the demutualization of Canadian property and casualty (P&C) insurance companies

“Our Government is committed to providing financial institutions with the flexibility and tools they need to grow and be competitive,” said Minister Flaherty in a statement. “We intend to develop a framework that will allow an orderly and transparent conversion from a mutual company to a share company, while ensuring that policyholders are treated fairly and equitably.”

Mutual P&C companies, which are owned and governed by their policyholders, engage in a number of business lines including automobile, home and commercial insurance. In December 2010, The Economical Mutual Insurance Company announced it intends to demutualize, whether through a sponsored sale or conversion through an initial public offering. To date, no Canadian P&C company has demutualized, though many life insurance companies demutualized in the 1990’s.

In the budget tabled on June 6, 2011, the Government announced its plan to introduce a framework to provide an orderly and transparent process for demutualization. In developing this framework, the Government intends to consult broadly to ensure the interests of all affected parties are reflected.

To help guide the consultations, the Government is releasing a paper entitled Consultation on a Demutualization Framework for Federal Property & Casualty Insurance Companies,  which highlights a number of key issues to be addressed, including:

  • What should be the policy objectives for the demutualization of P&C companies?
  • What should be the process for allowing a P&C company to demutualize? In particular, what should be considered in determining who should have the right to vote on, and receive the benefits of, demutualization?
  • How can companies with a dual policyholder structure ensure that they continue to have effective governance structures?

The Government invites comments from stakeholders on any element of the paper by July 31, 2011.

Comments regarding any element of this paper are invited and can be emailed to

Also, written comments can be forwarded to:

Jane Pearse
Financial Sector Policy Branch
Department of Finance
L’Esplanade Laurier
15th Floor, East Tower
140 O’Connor Street
Ottawa, Canada K1A 0G5


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