Posted on May 20, 2021

Eligible Policyholders Vote Overwhelmingly to Move Ahead with Demutualization, May 2021

I am pleased to report that Economical has taken a major step forward in our demutualization journey, having secured the overwhelming support of our eligible policyholders at our special meeting on May 20, 2021. More than 97 percent of the votes received were in favour of the resolution to demutualize. This is a strong endorsement of the direction set by our Board of Directors and an incredibly important milestone for Economical as it works to become a public company.

The Path Forward

With the final policyholder approval now in hand, we are ready to take the last steps in our demutualization process. We have already begun work on the first of those steps. Starting next week, a notice will be sent to more than one million current customers to notify them of our intent to demutualize. In parallel, we will continue working closely with our federal regulator and the federal government to obtain the final approval to demutualize from the Minister of Finance.

Both steps are necessary for us to complete our demutualization process and formally launch our Initial Public Offering (IPO). The specific timing of our IPO will depend primarily on market conditions and how quickly the approval process can be completed, among other matters.

The Pattern of Strong Quarterly Results Continues

Our most recent quarterly financial results continue our track record of growth and contribute to the solid growth in the value of Economical. Since the first quarter of 2020, our total equity has increased by more than $350 million and is now approaching $1.9 billion for the first time in our 150-year history. Other important highlights in our most recent quarter include:

  • Gross written premiums increased 14.3% in the first quarter reflecting firm market conditions and our strategic expansions in Sonnet, commercial lines, and personal property
  • Benefits from underwriting actions and a reduction in auto claims frequency led to a combined ratio of 91.3%, representing a substantial year over year improvement of 10.8 points
  • Strong underwriting results drove net income of $82.4 million, bolstering our already solid financial position with Minimum Capital Test (MCT) at 275%

These latest quarterly earnings demonstrate growing strength and positive momentum in Economical’s business performance. It confirms our confidence in the strategic plan set out by our board and management team in recent years and the execution of that plan designed to deliver sustained growth on a consistent basis.

A Bright New Future Rooted in a Proud 150 Year Heritage

As we celebrate 150 years of serving the insurance needs of Canadians, we are excited to embark on a new era as a public company better equipped and prepared to succeed in the years ahead. With the approval of our policyholders now confirmed, we are well positioned to look back proudly on our past and embrace what we believe will be a bright and prosperous future that makes Economical an even more compelling insurance choice for Canadians.

On behalf of our Board of Directors, I want to thank you for your continued support and for helping us to make history at our recent special meeting. We look forward to completing our demutualization together and building the next 150 years of success for Economical.


Sincerely,
John Bowey
Chair of the Board of Directors
Waterloo, Ontario
Economical Mutual Insurance Company
May 20, 2021

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