Economical Insurance announced May 20 that the third and final special meeting on demutualization, held via webcast, resulted in 97% of eligible policyholders voting in favour of proceeding with demutualization.
Receiving policyholder approval was a required step in the process of converting from a mutual company to a publicly-traded share company.
"Today's tremendous support from eligible policyholders is an affirmation that we are on the right path for our company, policyholders, and community," stated John Bowey, Board Chair, Economical Insurance. "This is an important day in our 150-year history, as we are one significant step closer to completing the demutualization process, which will allow Economical to unlock our full potential as a strong, Canadian competitor in a rapidly changing industry."
A successful demutualization of Economical would result in demutualization benefits distributed to 630,000 eligible policyholders. Economical intends to raise cash for payment of the demutualization benefits in an initial public offering (IPO). The value of demutualization benefits that each eligible policyholder may receive would be based on the price of shares sold in the IPO.
Additionally, $100 million of the proceeds of demutualization have been allocated to fund a new charitable foundation.
The next steps
The final approval needed to demutualize is that of the federal Minister of Finance. The timing for the IPO and the demutualization process will be based on market conditions, governmental approvals, company performance, and other relevant factors, says the insurer.