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 company.

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 p.m.

President and Chief Executive Officer, Economical Insurance Group

Karen Gavan

That's correct.

They will benefit where the owners sell their ownership interest to outside investors, and outside investors will pay them for that ownership interest.

The $1.3 billion surplus in our company remains in our company; it just has different owners.

4 p.m.

Conservative

Shelly Glover Saint Boniface, MB

Thank you.

4 p.m.

Conservative

The Chair James Rajotte

Thank you, Ms. Glover.

Mr. Brison, please.

May 1st, 2012 / 4 p.m.

Liberal

Scott Brison Kings—Hants, NS

Thank you, Mr. Chair, and thank you, to each of you, for appearing before us today.

Mr. Lister, Kings Mutual is a very important part of the rural Nova Scotian community, a very important part of the Annapolis Valley community, and the agricultural community.

You request that any regulation ensures that it would require at a very minimum a majority of those present, but you're saying a significant majority of policyholders to establish quorum. What do you consider to be a significant majority of policyholders?

4:05 p.m.

President and Chief Executive Officer, Kings Mutual Insurance Company

Dan Lister

I would look at a strong majority of two-thirds to 75%.

4:05 p.m.

Liberal

Scott Brison Kings—Hants, NS

And a clear question—sorry, I was just getting into constitutional politics.

Monsieur Lafrenière from CAMIC has laid out some conditions, as well.

Mr. Rudin, have you had an opportunity at Finance to consider some of these recommendations for any proposed regulation in terms of them being appropriate, enforceable, and realistic?

4:05 p.m.

Assistant Deputy Minister, Financial Sector Policy Branch, Department of Finance

Jeremy Rudin

Yes, indeed. We've looked at the variety of submissions that have been made. We're reviewing those submissions and preparing our recommendations.

4:05 p.m.

Liberal

Scott Brison Kings—Hants, NS

So, it's not that Mr. Lister or CAMIC are saying absolutely no to demutualization. There have to be rules around that, or a framework, from their perspective.

Mr. Lister, approximately how much money has Kings Mutual given to the communities in your area served over the last, let's say, three, four, or five years?

4:05 p.m.

President and Chief Executive Officer, Kings Mutual Insurance Company

Dan Lister

Over the last 10, about $1.5 million.

4:05 p.m.

Liberal

Scott Brison Kings—Hants, NS

Let me see, I have some information here. As a percentage basis of policies, you represent 0.7% market share in Nova Scotia. Economical Insurance represents 5%. How much, Ms. Gavan, has Economical Insurance given to Nova Scotian communities over the last five years?

4:05 p.m.

President and Chief Executive Officer, Economical Insurance Group

Karen Gavan

I only know that our total company charitable giving is approximately a million dollars, but that is spread out from coast to coast.

4:05 p.m.

Liberal

Scott Brison Kings—Hants, NS

There is a difference. One of the benefits of the mutual approach, particularly a community-based, almost co-operative-type model in a mutual system, is an absolute commitment to investing in the community. If you look at the board of Kings Mutual and the boards of a lot of other smaller mutuals, they reflect the local community. They're not just business leaders. They're agricultural leaders. They're people who are committed to the community.

In terms of prudential strength, Mr. Lafrenière, you were saying that your mutual companies are very strong prudentially?

4:05 p.m.

President, Canadian Association of Mutual Insurance Companies

Normand Lafrenière

Yes. In the regions in which they operate, it's not rare to see that they have the majority of the market.

4:05 p.m.

Liberal

Scott Brison Kings—Hants, NS

In many cases, perhaps they are at least as prudentially strong as regular insurance P and C companies?

4:05 p.m.

President, Canadian Association of Mutual Insurance Companies

Normand Lafrenière

Absolutely. It's not rare to see stock companies having a surplus of about 25¢ per dollar of premium when you look at mutuals. Because they do not have access to capital, they have to be more prudent in the way they operate, and so they keep in surplus. It's not rare to have 50¢ to $2.00 per dollar of premium.