Demutualization may be a complex process, but understanding some key facts will help you follow our progress. Here are the top 5 things to know as we travel the road to demutualization.
Our industry is changing rapidly and companies that do not keep pace will be left behind. Mutual companies have limited options to raise capital for their business. This means that Economical is limited in its ability to compete with other insurance companies, many of which are share companies. Demutualization will give us access to the capital that will allow us to invest in our business, acquire other companies and strengthen our financial position. A successful demutualization is critical to our long-term strategy.
Economical is demutualizing to position itself for long-term success as the insurance partner Canadians choose to protect what they value most. We have a vision of becoming a top property and casualty insurer in Canada, and demutualization helps us get to that goal.
The demutualization process is set out in regulations from the federal Department of Finance. It is a complex process that involves significant participation by policyholders, government approvals and many steps to complete. As a result, we estimate it will take more than 2 years to complete, assuming all the steps are successful.
In demutualization, eligible policyholders may receive financial benefits such as cash or shares in Economical. These cash and shares do not come from Economical assets. Demutualization is not about dividing up the company’s assets. The shares are newly created during demutualization and the cash would be from selling those shares to investors in an initial public offering (IPO).
After demutualization, we intend to list our shares on a public stock exchange. As well, eligible policyholders may have the opportunity to become our shareholders. If you are an eligible policyholder, you can participate by reading the information you receive from us and, when asked to do so, attend meetings and cast your vote.