Frequently Asked
Questions (FAQs)

1. Now that the IPO is complete, when do I get my financial benefits?

   With the completion of our demutualization and IPO, our benefits distribution will begin in the coming weeks and we expect to complete distribution before the year ends. This process will take several weeks to finish due to the complexity of accurately calculating and sending benefits to all 630,000 eligible policyholders.

   If you are an eligible policyholder and have not yet received your benefits, it is because we have not started our distribution yet. No further action is required on your part at this time.

2. I am an eligible (non-mutual) policyholder. Can I estimate the value of the benefits I will be receiving?

   Due to the large size of the eligible (non-mutual) policyholder group and variance between policy details within the group, it is not possible to generally estimate the value of your demutualization benefits.

   With the completion of our demutualization and IPO, our benefits distribution will begin in the coming weeks and complete before the year ends. As an eligible policyholder, you will receive a package that contains your benefits with the exact amount of cash and/or shares as determined by the Conversion Plan that was approved earlier this year. We kindly ask that you wait to receive the package in the coming weeks.

3. I am an eligible mutual policyholder. How can I estimate the value of the benefits I will be receiving?

   With the completion of our demutualization and IPO, our benefits distribution will begin in the coming weeks and complete before the year ends. As an eligible mutual policyholder, you will receive a package that contains your benefits with the exact amount of cash and/or shares as determined by the conversion plan that was approved earlier this year. We kindly ask that you wait to receive the package in the coming weeks to view your individual benefits.

   In the meantime, you can review the allocation formula for eligible mutual policyholders under the Conversion Plan. The Conversion Plan states that eligible policyholders in total will receive the value of 100 million shares at demutualization, and that eligible mutual policyholders will receive 20 percent of that value. That means that at IPO, eligible mutual policyholders as a group will receive benefits equal to the value of 20 million shares multiplied by our IPO price of $22 per share. This value is split among all eligible mutual policyholders, with small variations between individual mutual policyholders based on their specific policies.

4. How will I take delivery of my Definity shares received as demutualization benefits?

   Where eligible policyholders are receiving Definity shares as part of their demutualization benefits, their shares will be registered directly in their name on the “Direct Registration System” (DRS) at our transfer agent, Computershare.

   Under the Conversion Plan, there are transfer restrictions on the shares for 180 days after the IPO. Shares received as part of demutualization cannot be sold or transferred to an investment broker until after expiry of the 180-day period. Information will be provided to eligible policyholders who received shares closer to that time.

5. How will my benefits be taxed?

   Economical does not give advice on legal, tax, or estate issues. Policyholders should consult their own tax advisors with respect to the income tax consequences to them of the demutualization based on their particular circumstances.

1. Why does this site no longer provide individual account information?

   With the completion of our benefit election activity, we now have all the information we need from eligible policyholders to prepare for distribution of their benefits. In order to finalize information for the distribution, we have removed all access to update policyholder information.

   If you have questions about your account or a need to correct information, please contact our support team through email at joininourfuture@economical.com.

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

2. Who is Definity Financial Corporation?

   Definity Financial Corporation is the new holding company that was created as part of our demutualization, and is publicly-listed under the ticker symbol TSX:DFY.

   You can learn more at definityfc.com.

3. Do you have an investor relations web site?

   Definity Financial (www.definityfc.com) is our new public holding company website. Investor information can be accessed on this website.

4. What is demutualization?

   Economical was a mutual company. This means we did not have any shareholders. Instead, we had mutual policyholders. Demutualization is the process where a mutual company converts into a share company. Now that demutualization is complete, we have shareholders and regular policyholders, but no mutual policyholders.

5. What happened 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.

   The Minister of Finance has approved our conversion plan, which became effective on November 23, 2021. Economical has now demutualized.

6. 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 prescribes the formula for allocating financial benefits to all eligible policyholders, and whether those will be in the form of cash or shares.

   The conversion plan was approved by eligible policyholders at a special meeting in May 2021, and by the Minister of Finance on November 2021.

Eligibility to participate in demutualization

1. Who were the 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 did not receive a letter from us then you were not an eligible policyholder.

2. What were 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. What types of policies were relevant in determining whether a person is eligible?

   All types of policies that Economical Mutual Insurance Company issues were 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 did 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 of Definity Financial Holding that are being distributed to eligible policyholders after our demutualization. The shares are of our publicly-listed holding company were newly created during our demutualization, and the cash came from selling Definity shares to investors in its initial public offering (IPO).

   The conversion plan (that was approved by eligible policyholders at a special meeting in May 2021 and by the Minister of Finance in November 2021) details whether an eligible policyholder’s benefits would be in the form of cash and/or shares.

2. What amount of demutualization benefits did each policyholder receive? Did all policyholders receive the same amount?

   The amount of benefits individuals received depended 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.

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 conversion plan, including the negotiated allocation, was then approved by eligible policyholders at a special meeting in May 2021 and by the Minister of Finance in November 2021.

5. 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.

6. What if I did not submit my preference on how I wanted to receive my financial benefits?

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

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 has been allocated $100 million from the proceeds of demutualization and our recent IPO.

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.

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.

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.