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General questions about demutualization

  1. Who is Economical Insurance?

    Economical Insurance is a 150 year old mutual insurance company that is changing its corporate structure to become a public company.

    If you would like lean more about Economical Insurance, we would encourage you to use the resources available on our corporate site.

  2. Who is Definity Financial Corporation?

    Economical Mutual Insurance Company is creating a new holding company as part of its demutualization under a new banner – Definity Financial Corporation.

    You can learn more at definityfc.com.

  3. What is demutualization?

    Economical is a mutual company. This means we do not have any shareholders. Instead, we have mutual policyholders. Demutualization is the process where a mutual company converts into a share company. After the demutualization, there will be shareholders and regular policyholders, but no mutual policyholders.

  4. What happens in the demutualization process?

    Demutualization is a four-phase process:

    Phase 1: Board decision to proceed with the demutualization process. The Economical Board of Directors initiated the process by passing a formal resolution recommending demutualization on November 3, 2015.

    Phase 2: First special meeting of eligible mutual policyholders. After the board resolution, there must be a meeting of eligible mutual policyholders to vote on whether to move to the next phase of the demutualization or terminate the process. On December 14, 2015, the eligible mutual policyholders of Economical voted to move to the next phase — negotiations over how to divide up (or “allocate”) the benefits from demutualization. As a result of this vote, a formal notice was mailed to eligible policyholders (both mutual and non-mutual). The notice describes the demutualization process and how eligible policyholders participate.

    Phase 3: Policyholder committee negotiation and conversion plan development. Two policyholder committees were formed: one representing eligible mutual policyholders and one representing eligible non-mutual policyholders. These two committees, with the assistance of court-appointed lawyers, negotiated the method of allocating the financial benefits from demutualization and whether any benefits will be provided to persons other than eligible policyholders. This allocation was incorporated into the conversion plan, which Economical prepared. The conversion plan contains all of the detailed terms of the company’s demutualization, including the non-allocation aspects of the demutualization. The conversion plan (including the committees’ determination of allocation) was submitted to the Office of the Superintendent of Financial Institutions (OSFI) for its review, along with required actuarial opinions.

    Phase 4: Second special meeting of eligible mutual policyholders and third special meeting of all eligible policyholders. After OSFI completed its review of the conversion plan, Economical called the second special meeting of eligible mutual policyholders. On March 20, 2019, eligible mutual policyholders continued the demutualization process by supporting changes to Economical by-laws to permit eligible non-mutual policyholders to vote at the third special meeting. These by-law changes were crucial because demutualization can only occur if there is a vote to approve the conversion plan that includes eligible non-mutual policyholders.

    The third special meeting was held on May 20, 2021, to allow all eligible policyholders to vote to approve the conversion plan and to authorize Economical to seek final approval from the federal Minister of Finance.

    After the four phases, the Minister of Finance decides whether to approve the conversion plan, allowing Economical to demutualize and begin the process of listing our shares on a public stock exchange.

  5. What is the conversion plan?

    The conversion plan is the detailed document that outlines how Economical will transition from a mutual company to a public company. The conversion plan details the creation of a new corporate structure for the company, outlines the immediate effects of our demutualization, and provides a valuation of the company that was done in the spring of 2018.



Impact of the 2021 Canadian Federal Election on the demutualization process

  1. How will the recent announcement of a federal election impact or delay Economical’s demutualization?

    The current federal election does not alter our plan to complete our demutualization, which requires the approval of the Minister of Finance for the issuance of our "letters of patent of conversion".

    The announcement of a federal election for September 20, 2021 may slow down the workings of the government for a short time, but this is not something we can control. Economical continues to work with the government and our regulators to advance the elements of regulatory approval that are within our control. This includes submitting the application to demutualize which we have now completed, as well as ongoing communications with regulators such as OSFI and the completion of our benefit election process.

    We will work with the Minister of Finance and our regulators to complete the process once the federal election is over.

  2. Will the federal election impact the date of Economical’s IPO?

    The federal election may delay ministerial approval of our application to demutualize. However, we will not know the full consequences until after the federal election. While we cannot speculate on specific timing, we are continuing to work towards our plan of completing demutualization and becoming a public company.



Eligibility to participate in demutualization

  1. Who are eligible policyholders?

    Eligibility depends on holding policies of Economical Mutual Insurance Company (including those sold by Family Insurance Solutions and Western General).

    There are two types of eligible policyholders: eligible mutual policyholders and eligible non-mutual policyholders.

    • An eligible mutual policyholder is a person who holds an Economical mutual policy if he or she held it on November 3, 2015 (the date the Economical Board of Directors decided to proceed with demutualization).
    • An eligible non-mutual policyholder is a person who holds an Economical non-mutual policy and has done so for the 12-month period ending on November 3, 2015, or meets the special circumstances defined below.

    Economical mailed a letter to each eligible policyholder (both mutual and non-mutual). The letter describes the demutualization process and states if the person is an eligible mutual policyholder or an eligible non-mutual policyholder. If you have not received a letter from us and you believe you meet the criteria for being an eligible policyholder, contact us as at joininourfuture@economical.com or 1-866-302-6046.

    If you have received a letter from us, you can log in and set up your demutualization account.

  2. What are the special circumstances for eligible non-mutual policyholders?

    There are special circumstances where a person who holds a non-mutual policy will be eligible even if they do not meet the eligibility requirements above. These circumstances are fixed and cannot be changed or expanded.

    1. A person added to a policy that was already in force for at least 12 months: a policyholder can be eligible even if they did not hold their policy for the entire 12-month period, so long as the policy they held on November 3, 2015 was at least 12-months old at the time.
    2. A person who changed Economical policies part way through the 12-month period, so long as they changed to a “similar” policy: a policyholder can be eligible even if they changed Economical policies during the 12-month period before November 3, 2015, so long as they held two or more “similar” Economical policies during that 12-month period which added up to 12 months of coverage. A policy is “similar” to another policy if both policies are personal property policies, both policies are auto policies or both policies are commercial property policies.
    3. A 12-month policyholder with small gaps in coverage: a policyholder can be eligible (including in the above circumstances) even if there are small gaps in coverage (to a maximum of 30 days). A gap in coverage occurs when none of the applicable policies are in force.
  3. Do I have to continue to hold an in force policy to remain eligible?

    The negotiated allocation does not require an eligible policyholder to continue holding a policy to receive benefits. The allocation as drafted will treat the person as eligible, even if they now cancel or lapse their policy or otherwise are removed as a named insured from their policy.

    Nevertheless, Economical cannot guarantee receipt of benefits in this or any circumstances. The demutualization process is still not complete. Ultimately, receipt of benefits depends on final approvals of the demutualization and the conversion plan (without change) by eligible policyholders in a policyholder vote and the Minister of Finance.

    Accordingly, eligible policyholders should consider holding their policy or policies throughout the process as it will ensure eligibility under demutualization for any benefits distribution.

  4. What types of policies are relevant in determining whether a person is eligible?

    All types of policies that Economical Mutual Insurance Company issues are being taken into account in determining eligibility, including auto, property, or commercial policies and those sold under the Family Insurance Solutions and Western General brands. This does not include policies issued by our subsidiaries (Perth Insurance Company, Waterloo Insurance Company [also known as Economical Select], The Missisquoi Insurance Company, and Federation Insurance Company of Canada).



Benefits of demutualization

  1. What are demutualization benefits?

    Demutualization benefits are the cash and shares that would be distributed to eligible policyholders if there is a demutualization of Economical. These cash and shares do not come from the assets of Economical. The shares are newly created during demutualization and the cash would come from selling shares in our new holding company to investors in an initial public offering (IPO).

  2. What amount of demutualization benefits does each policyholder receive? Do all policyholders receive the same amount?

    The amount of benefits individuals receive will depend on various factors including the total amount of benefits to be distributed, the total number of eligible policyholders in each class of policyholder, and the length of time a policyholder held a policy with Economical.

    Details on the allocation of financial benefits, as negotiated by the policyholder committees, is available in the conversion plan. The exact value of the benefits will not be known until demutualization is essentially complete and will be distributed after our initial public offering.

  3. How was the allocation of benefits decided?

    The allocation was negotiated by the two policyholder committees, one representing eligible mutual policyholders and one representing eligible non-mutual policyholders. Each committee was represented by their own counsel as well as their own legal, financial, and actuarial experts. After a complex and extensive negotiation, the outcome was reviewed by both the Appointed Actuary of Economical and an Independent Actuary, both who wrote opinions stating that the benefits and method of allocation are fair and equitable.

    You can read more about the allocation of financial benefits, including an overview of the negotiations, in the conversion plan.

  4. Can the negotiated allocation be changed?

    No, the negotiated allocation cannot be changed. It has been approved by the policyholder committees, and also reviewed by our regulator. The policyholder committees have now been disbanded, and there is no opportunity to reopen negotiations.

  5. When will I receive my benefits?

    Demutualization benefits will be available after the IPO.

  6. What will determine the actual value of my benefits?

    The value of benefits that have been allocated to you will be determined by the share price at the time of IPO. The actual value of our IPO won’t be known until the time of the transaction, and will depend on many factors.

  7. What is the share selling service?

    The share selling service will provide eligible policyholders who receive shares with a convenient and low-cost way to sell their shares. We expect the service will be made available 180 days after the date of the IPO and will remain available for two years after the IPO. You can read more about this service in the conversion plan.



Benefit Election Window

  1. What is the benefit election window?

    The benefit election window is the period of time that eligible policyholders are being asked to verify their contact information for the distribution of their financial benefits after our planned IPO. For those who have the option (as per the Conversion Plan), they are also able to indicate their preference to receive cash, shares, or a combination of both. This window will close on October 1, 2021.

  2. What if I do not submit my preference on how I want to receive my financial benefits?

    If an eligible policyholder does not submit their information by the deadline, financial benefits will be distributed as laid out in the Conversion Plan. Not submitting your preference does not impact your entitlement to financial benefits.

  3. What if my contact information changes after the deadline?

    If your contact information changes after October 1, 2021, please call us at 1-866-302-6046



Definity Insurance Foundation

  1. What is Definity Insurance Foundation?

    Definity Insurance Foundation (formally Economical Insurance Heritage Foundation) is a registered, independent charitable foundation. Recognizing the contributions that Economical’s subsidiaries and ineligible and former policyholders have made to the value of Economical, the policyholder committees agreed to make a meaningful allocation to a new charitable foundation.

    The Foundation will serve as a positive, enduring legacy of this demutualization and the people who participated in it.

    For more information about the Foundation, their governance, and their community investment initiatives, please visit definityfoundation.com.

  2. How will the foundation be funded?

    The Foundation will be allocated $100 million of demutualization proceeds upon successful completion of the demutualization process. Eligible policyholders also have the option to make a personal gift to the Foundation, by donating some or all of the cash or shares they receive from Economical’s demutualization.



Policy changes and impact on insurance coverage, insurance claims, or insurance benefits

  1. Who do I contact to make a change to my policy?

    Changing your policy is the same as it was before demutualization. You should contact your broker to discuss any policy changes.

  2. How will demutualization affect my insurance coverage, claims, or the payment of benefits?

    The demutualization process does not impact coverage, ongoing claims for insurance benefits, ongoing payments of accident or insurance benefits, or the other terms under your insurance policy.

  3. What will happen if I cancel my policy or move to a different insurance company?

    The negotiated allocation does not require an eligible policyholder to continue holding a policy to receive benefits. The allocation as drafted will treat the person as eligible, even if they now cancel or lapse their policy or otherwise are removed as a named insured from their policy.

    Nevertheless, Economical cannot guarantee receipt of benefits in this or any circumstances. The demutualization process is still not complete. Ultimately, receipt of benefits depends on final approvals of the demutualization and the conversion plan (without change) by eligible policyholders in a policyholder vote and the Minister of Finance.

    Accordingly, eligible policyholders should consider holding their policy or policies throughout the process as it will ensure eligibility under demutualization for any benefits distribution..



General questions about the regulations governing demutualization

  1. Where can I find the regulations?

    The regulations are available on the Government of Canada's website for federal laws.

    There are two sets of regulations, one for insurers with only mutual policyholders and one for insurers with both mutual and non-mutual policyholders. As Economical has both mutual and non-mutual policyholders, the Mutual Property and Casualty Insurance Company with Non-mutual Policyholders Conversion Regulations are relevant to Economical.

  2. Why are regulations required in order to demutualize?

    Economical is governed by the Insurance Companies Act and it permits a mutual company like Economical to demutualize, but only if there are regulations that set out the specific requirements for such a demutualization. This means that without regulations, Economical couldn't demutualize.



Other questions

  1. I have a question about a legal/tax/estate matter that relates to demutualization.

    Economical does not give advice on legal, tax, or estate issues. We recommend you contact your own advisors to discuss.



Last updated: August 27, 2021

Please note that new questions and answers may be added as more information becomes available.

Should you have additional questions about demutualization, you can call 1-866-302-6046 or you can submit questions online by clicking on Contact us.

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