Finance Committee on May 1st, 2012
Evidence of meeting #55 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was mutual.
A recording is available from Parliament.
On the agenda
MPs speaking
Also speaking
- Jeremy Rudin Assistant Deputy Minister, Financial Sector Policy Branch, Department of Finance
- Normand Lafrenière President, Canadian Association of Mutual Insurance Companies
- Karen Gavan President and Chief Executive Officer, Economical Insurance Group
- Dan Lister President and Chief Executive Officer, Kings Mutual Insurance Company
- James Wu Chief, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance
4:10 p.m.
Conservative
Dave Van Kesteren Chatham-Kent—Essex, ON
I haven't heard the other side yet. Maybe Normand you gave it, but did you want to give your side? I'd like to hear the other side.
4:10 p.m.
President and Chief Executive Officer, Kings Mutual Insurance Company
I think the overriding concern that we have relates to the ability of a certain smaller group to push forward a demutualization process that may or may not be in the best interest of all the policyholders.
4:10 p.m.
Conservative
Dave Van Kesteren Chatham-Kent—Essex, ON
Let's take that argument a little further. I'm now a policyholder. I remember years ago I was a policyholder with Sun Life too, and we were able to....
Why does that not apply? If somebody wanted to buy your mutual, would the policyholders be given a cash settlement as well, or is it just that select group of directors?
4:10 p.m.
President and Chief Executive Officer, Kings Mutual Insurance Company
Who gets the ownership is really the issue at point here. It's not so much a cash distribution, as Ms. Gavan suggested. The company will go from a mutual company that is owned by all of the policyholders to a certain group of individuals owning shares all of a sudden, and those shares are a marketable security that can be purchased in the open market. The issue really comes down to where that value goes.
4:10 p.m.
Conservative
Dave Van Kesteren Chatham-Kent—Essex, ON
Just to be clear, the value is an accumulative amount of money that through the years has.... So you actually have stocks and bonds that you've bought.
4:10 p.m.
President and Chief Executive Officer, Kings Mutual Insurance Company
We're required to have investment portfolios.
4:10 p.m.
Conservative
Dave Van Kesteren Chatham-Kent—Essex, ON
With regard to that small group I guess it could be argued that they took the risk years ago and they would pay three times the premium, but they would stand to.... It's a fairness issue, am I right?
4:10 p.m.
President and Chief Executive Officer, Kings Mutual Insurance Company
Yes.
4:10 p.m.
President, Canadian Association of Mutual Insurance Companies
If I could add something, as was mentioned before, the last time there was any collection on this was more than 70 years ago. There's no more risk. It has been known for many decades that there is no risk in there.
4:10 p.m.
Conservative
4:15 p.m.
President, Canadian Association of Mutual Insurance Companies
I don't think so. When you have legislation in place that allows the company to have less than 100% voting policyholders, it could possibly bring an organization to think about ways to reduce the number of people who would benefit from this.
4:15 p.m.
Conservative
Dave Van Kesteren Chatham-Kent—Essex, ON
So your argument basically is that they really shouldn't be compensated.
4:15 p.m.
President, Canadian Association of Mutual Insurance Companies
I think so.
4:15 p.m.
Conservative
4:15 p.m.
President, Canadian Association of Mutual Insurance Companies
I think so. They don't own the company.