The day has arrived:
Economical Insurance’s board of directors has unilaterally agreed to begin the process of demutualization, a long-awaited move that will see the insurer transition from a mutual company to a stock company with shareholders.
“Today marks a pivotal milestone for Economical,” Gerald Hooper, chairman of Economical’s board of directors, said in a statement. “Demutualization will allow Economical to unlock its full potential and compete with the top players in the P&C insurance industry. Economical is ready and excited for this next phase of the process to begin.”
Under federal regulations, mutual policyholders are eligible if they maintained a policy on November 3, the day that the decision was reached. They may become ineligible, however, if their policy is later cancelled or lapses.
After a “conversion proposal” is approved by the Office of Superintendent of Financial Institutions (OFSI), eligible mutual policyholders will hold a special meeting to vote on whether they want to begin negotiations with non-mutual policyholders on the distribution of benefits.
If passed, Economical will then send a notice to all eligible mutual and non-mutual stakeholders which details the process of those negotiations.
It is expected to take “at least 24 months,” although the board can halt demutualization at any time, if it feels that proceeding no longer serves to benefit the company.
