In December of 2010, Economical Insurance announced their intent to pursue demutualization.
On November 3, 2015, the Economical Board of Directors initiated the demutualization process.
What does this mean?
As a mutual company, Economical does not have shareholders. During the demutualization process, a mutual company, in this case Economical, converts into a company with shareholders and distributes available funds between mutual owners.
According to their website, the demutualization process will be broken out into four phrases:
• Phase 1: First Special Meeting – The Economical Board of Directors initiated the demutualization process on November 3, 2015.
• Phase 2: Eligible mutual policyholders vote on whether to move to the next phase – negotiating with eligible non-mutual policyholders on allocation of benefits.
• Phase 3: Two committees are appointed by the court, one representing eligible mutual policyholders and the other representing eligible non-mutual policyholders. The committees negotiate the allocation of financial benefits and Economical prepares the conversion proposal. The conversion proposal is sent to a regulator for approval.
• Phase 4:
o A: Second Special Meeting – Eligible mutual policyholders vote on changing the bylaws of Economical in order to continue the process. The bylaw change allows eligible non-mutual policyholders to vote on the conversion proposal.
o B: Third Special Meeting – The conversion proposal is sent to all eligible policyholders, who vote together to approve it at the third special meeting. If this vote passes, Economical can then apply to the Minister of Finance to demutualize.
How does this impact you?
As an Economical Insurance policyholder, it is important to be aware that there could be possible financial implications as a result of this process.
We encourage you to visit Economical’s demutualization website to learn more. There you will find helpful information including FAQs that can answer any questions you may have.