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.
President and Chief Executive Officer, Economical Insurance Group
First of all, I'd like to direct you to look at our media release in response to that article because there are factually incorrect items in that article.
Conservative
President and Chief Executive Officer, Economical Insurance Group
He said 30% of policies are held by executives and brokers. That is wrong. Five directors, five out of nine directors, 11 out of 17 senior executives, and about 140 employees at all levels of the company—in head office, in branch offices scattered about—have policies, and 31 brokers. It's a very small number in total.
Conservative
The Chair Conservative James Rajotte
In terms of the 700,000 cash policies, 943 mutual policyholders....
President and Chief Executive Officer, Economical Insurance Group
That includes our wholly owned stock subsidiaries where we, as a mutual company, actually own four federally regulated stock P and C insurance companies. Obviously they don't have a mutual policy. You can't possibly have a mutual policy in a stock company.
Furthermore, mutual policies were very hard to sell. As I said before, the historical requirements in the Ontario Insurance Act limited the types of mutual policies that could be issued to fire, livestock, and weather. So it was only issued on homeowners' policies, on your principal residence. We've never had a mutual automobile insurance policy, and that comes from the historical requirements of the Ontario Insurance Act.
Conservative
The Chair Conservative James Rajotte
Part of your argument in terms of demutualization is to access capital in order to expand in those areas.
President and Chief Executive Officer, Economical Insurance Group
Yes.
Conservative
The Chair Conservative James Rajotte
Can you address though.... I know you've addressed it partly in response to the questions, particularly by Mr. Jean, but the people getting the $1.3 million. Can you just clarify that again for people, as to who would actually benefit from that in the case of demutualization?
President and Chief Executive Officer, Economical Insurance Group
It is our view that the mutual policyholders benefit by selling their ownership interest. They have a legitimate, legal claim and right. They're selling their ownership interest, and they will receive some funds. It's premature to speculate on how it would be allocated and what the actual amount will be until we have regulations, and until we're closer to the marketplace where we would complete the demutualization.
Those mutual policyholders are benefiting because they put forth their guarantee in the form of a premium note, and they did not take the distributions they were entitled to.
Conservative
The Chair Conservative James Rajotte
So your argument in terms of a policy—if I have a policy with your company—is that I may not get a distribution, but the fact that my policy is with the company and that company is solid, that is the benefit that person would ultimately receive. Is that your argument?
President and Chief Executive Officer, Economical Insurance Group
Can you repeat that?
Conservative
The Chair Conservative James Rajotte
If I am one of the 700,000 but not one of the 943, and you go through demutualization, it's that I will have a policy. I will keep a good policy with your company. That's the benefit.
President and Chief Executive Officer, Economical Insurance Group
That's correct.
Conservative
President and Chief Executive Officer, Economical Insurance Group
No. You'll be a policyholder in a stronger, more competitive company going forward.
You have to remember that—
Conservative
The Chair Conservative James Rajotte
Plus, in demutualization, I would have an option to become part owner of the company through the distribution of shares, I'm assuming.
President and Chief Executive Officer, Economical Insurance Group
As a mutual policyholder.
Conservative
The Chair Conservative James Rajotte
All right. My time is up.
I'm firm with everyone else so I'm going to cut it off there, but thank you very much. I think that was a very informative session from all of you. We appreciate it.
If there is anything further you wish the committee to study on this issue.... I know that Mr. Rudin will be looking carefully in regard to when the finance department puts those things on the Internet.
If you could indicate to us when that will be and when it happens, we'd appreciate that as well.
Thanks to all you for being here.
The meeting is adjourned.