Demutualization is a four-phase process:
Phase 1: Board decision to proceed with the demutualization process. The Economical Board of Directors initiates the process by passing a formal resolution recommending demutualization. This phase is complete. The board passed this resolution 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 proposal development. Two policyholder committees are formed: one representing eligible mutual policyholders and one representing eligible non-mutual policyholders. These two committees, with the assistance of court-appointed lawyers, negotiate the method of allocating the financial benefits from demutualization and determine whether any benefits will be provided to persons other than eligible policyholders. That allocation will then be incorporated into the conversion proposal, which Economical will prepare. The conversion proposal contains all of the detailed terms of the company’s demutualization, including the non-allocation aspects of the demutualization. Once complete, the conversion proposal (including the committees’ determination of allocation) will be 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 has completed its review of the conversion proposal, there will be a second meeting of eligible mutual policyholders. The eligible mutual policyholders will vote on changes to Economical bylaws in order to permit eligible non-mutual policyholders to vote at the third special policyholder meeting. These bylaw changes are necessary because demutualization can only occur if there is a vote to approve the conversion proposal that includes eligible non-mutual policyholders. If this vote passes, there will be a third special meeting where all eligible policyholders vote to approve the conversion proposal 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 proposal, allowing Economical to demutualize and list our shares on a public stock exchange.
Here is a more detailed description of the four phase process of demutualization.