Posted on February 22, 2021

Getting Ready to Vote – An Update from John Bowey, Chairman of the Board, February 2021

This year promises to be an exciting one for Economical Insurance® as we celebrate 150 years of serving the property and casualty insurance needs of Canadians. If you’re reading this update, you probably share in our excitement to be moving forward with our third and final special meeting on demutualization this spring, marking a key milestone on our journey toward a new era of growth and opportunity as a public company. As you know from my previous updates, improvements in our operating performance and financial results have been critical to our demutualization plans. They are the foundation upon which our future plans must stand.

Economical Enters its Anticipated IPO-Year from a Position of Strength

We have consistently focused on improving our business fundamentals to not only increase the likelihood of a successful initial public offering (IPO), but to build a company that emerges from that IPO positioned for long-term success as a public company.

Under the direction of a committed Board of Directors and a strengthened leadership team, Economical has expanded and transformed its business to become more innovative, efficient, scalable, and profitable, with demonstrated strength and increasing momentum.

The global pandemic made 2020 a particularly challenging year for our customers and our broker partners. Addressing customer needs was at the forefront of our efforts in 2020 with Economical announcing in excess of $70 million of pandemic-related customer relief. In addition, we expanded our corporate social responsibility commitments with more than $1 million in support of causes and charities impacting our community footprint. In keeping with this spirit, we kicked off 2021 by donating $100,000 on Giving Tuesday to the BounceBack program run by the Canadian Mental Health Association (CMHA). The donation will help the CMHA continue to bring this vital mental health program to Canadians during the pandemic.

Despite challenging circumstances, our 2020 financial results demonstrate strong business fundamentals and our success in managing through the uncertainty caused by the ongoing global pandemic. This strength is demonstrated in several key metrics including:

  • Gross written premiums that exceeded $2.8 billion in 2020, increasing 13.3% for the fourth quarter and 12.1% for the full year versus the same periods in 2019
  • A 94.6% full year combined ratio that was ahead of expectations, marking the tenth consecutive quarter of improvement over the prior year
  • Book value of $1.82 billion, having grown by more than $250 million over the past three years

These results demonstrate the positive impact from many years of investment in our business fundamentals and innovation, which have now taken hold on a sustainable basis. It proves that the time we’ve taken in building real and sustainable value for Economical has been worthwhile and puts us on a confident footing as we approach our planned IPO later this year.

Preparing for the Final Special Meeting

Our final special meeting is planned for this spring and we continue to focus on meeting this timeline. Approval from our 630,000 eligible policyholders at this meeting for our demutualization plan will represent the culmination of a thorough and complex process to transform the corporate structure of Economical, and position Economical to launch an IPO before the end of the year.

The process for getting this meeting on the calendar is on track. This requires receiving authorization from our principal regulator, the Office of the Superintendent of Financial Institutions Canada (OSFI), to send to eligible policyholders the notice of the special meeting.

Update to our Online Demutualization Resources

All 630,000 eligible policyholders will have the opportunity to participate in the final special meeting, and their approval is critical to complete our demutualization process. Our planning for the special meeting has entered a new phase focused on ensuring policyholders are kept as up to date as possible. Based on survey research done last year, we have refreshed and updated website content at joininourfuture.com to include new informative visual explanations of demutualization and easy-to-access connections to register online and more easily participate in our demutualization process.

You Can Register to Receive Information Online

Once we receive authorization from OSFI, we will be in a position to announce the date of the special meeting. At that time, all eligible policyholders will be sent a package containing information about the special meeting. Eligible policyholders with a registered account on joininourfuture.com will receive their package promptly by email. If they have not registered their online account, they will receive their package by mail.

For those who have not already done so, we encourage all eligible policyholders to register online now. Doing so will ensure you have fast access to the information and documentation as soon as it becomes available and that you stay connected online throughout the final phase of our process.

As previously announced, the special meeting will be held virtually. If two-thirds of the eligible policyholders who vote do so in support of the resolution to demutualize, the company will proceed with the next steps toward an IPO. Our eligible policyholders’ vote will determine the path forward for Economical and whether we complete the path to becoming a public company.

On behalf of our Board of Directors, I want to thank you for your continued support. We look forward to sharing more details on the special meeting with you soon and completing the rest of our demutualization journey, together.


Sincerely,
John Bowey
Chair of the Board of Directors
Economical Mutual Insurance Company
February 22, 2021

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