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.
There will be a third special meeting where all eligible policyholders 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.
Here is a more detailed description of the four phase process of demutualization.