Committee members appointed by court
On February 22, the Ontario Superior Court of Justice appointed members to serve on policyholder committees, based on recommendations by counsel representing each policyholder group. Nine members have been appointed to the mutual policyholder committee and six members have been appointed to the non-mutual policyholder committee. The appointment of committee members starts the process for the committees to negotiate the allocation of financial benefits resulting from the demutualization of Economical, and for the company to prepare its conversion proposal.
Committee application process
In the fall of last year, interested eligible policyholders were invited to submit applications to sit on their respective committees. The appointed counsel for each committee received many strong applications from interested policyholders and thoroughly reviewed each application. In their filing with the court, each counsel recommended applicants based on their experience in negotiations, and business and financial affairs.
Now that the committees have been appointed, the negotiation process can begin. These negotiations will take place over the course of months and may not finish until the end of 2017. Economical will continue to play a supportive role for the committee process and has engaged a former judge to act as process facilitator for the committees. Economical’s objective is for the process to be fair and efficient and result in a successful negotiation. During this time Economical will provide general updates on the progress of the demutualization process. However, the details of the negotiations and the positions of the parties will be confidential as the negotiation process is subject to a court order of strict confidentiality.
During the negotiations, Economical will prepare the conversion proposal — the document that outlines how Economical will demutualize into a share company. The conversion proposal will include the allocation negotiated by the policyholder committees. The conversion proposal must be sent to our federal regulator, the Office of the Superintendent of Financial Institutions (OSFI), before February 22, 2018, which is one year from the date the committee members were appointed. With OSFI approval, eligible mutual policyholders will vote to amend the company’s bylaws to allow eligible non-mutual policyholders to vote on the conversion proposal. If that vote is successful, both eligible mutual and eligible non-mutual policyholders will vote together as a single class to approve the conversion proposal and to proceed with the demutualization. If the vote succeeds, the conversion proposal is then sent to the Minister of Finance on recommendation of OSFI. If the Minister approves the demutualization of Economical, the company can begin the process of initiating an initial public offering.
Online resource: Join in Our Future
Over the negotiation period, interested stakeholders can visit joininourfuture.com to stay updated on the status of the negotiations. Economical appreciates the continued efforts of our broker partners to encourage their eligible clients to sign into their demutualization accounts and for directing clients to contact us at firstname.lastname@example.org or 1-866-302-6046 (toll-free).
There are many steps to complete before we complete our journey to be a public company. But demutualization remains critical to our long term strategy and will enable Economical to grow strategically and profitably for years to come. It is a future we look forward to sharing with our broker partners, employees, and future investors.