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.
Conservative
Dave Van Kesteren Conservative 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.
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.
Conservative
Dave Van Kesteren Conservative 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?
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.
Conservative
Dave Van Kesteren Conservative 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.
President and Chief Executive Officer, Kings Mutual Insurance Company
We're required to have investment portfolios.
Conservative
Dave Van Kesteren Conservative 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?
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.
Conservative
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.
Conservative
Dave Van Kesteren Conservative Chatham-Kent—Essex, ON
So your argument basically is that they really shouldn't be compensated.
President, Canadian Association of Mutual Insurance Companies
I think so.
Conservative
Dave Van Kesteren Conservative Chatham-Kent—Essex, ON
Do you think that would hold in a court of law?
President, Canadian Association of Mutual Insurance Companies
I think so. They don't own the company.
President and Chief Executive Officer, Economical Insurance Group
I disagree. The mutual policyholders are the true owners of the company, by law, by precedent in the life company demutualizations, and in our own company bylaws. I think any attempt to destroy that ownership or spread it around or take it away will be challenged. That's been our legal advice.
Conservative
Dave Van Kesteren Conservative Chatham-Kent—Essex, ON
Again, your disagreement is that they don't own that policy. This is collectively owned essentially by the community.
President, Canadian Association of Mutual Insurance Companies
Well, it's been built by many generations of all of the policyholders and now you have one-tenth of 1% of the current policyholders who say they own the company.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
I would like to go back to a question my colleague asked earlier. I am surprised to see that the consultations closed on July 31 and we still don't have access to the submissions. Ms. Glover said that there were 80 submissions, but that we didn't know how many people were on either side. So we have a hard time figuring that out.
Why is it that, nine months after the consultations ended, we still don't have access to the submissions that were presented?
Assistant Deputy Minister, Financial Sector Policy Branch, Department of Finance
I am hesitating because I did not hear a question.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
Could you tell me why, nine months after the consultations ended, the public at large still has no access to the submissions that were presented during the consultations?
Assistant Deputy Minister, Financial Sector Policy Branch, Department of Finance
As I explained earlier, this particular situation is slightly more delicate than usual. A number of submissions have to do with the specific circumstances of individuals. Before making those submissions available on the website, we decided to check each case and see if the people were prepared to share that information with the public at large. For the people who were not prepared to do so, we edited their submissions so that they were still intelligible even if some parts were concealed.
In addition, we decided not to post the submissions on the website as they became available, but rather to wait until the end. Having said that, we are working on it.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
I am probably going to come back to that, but I wanted to ask Ms. Gavan a question.
I am going to continue along the same lines as my colleague. We know there is currently a surplus of $1.3 billion. We have made the connection. An article in the Financial Post says that around 943 people could benefit from it. On average, the value of what they could receive is $1.3 million. You are not in agreement because the company's plan is not to lose that money.
Is it not accurate to say that, if the Economical became a corporation, since there is a surplus of $1.3 billion, the value of the company when shares are offered would be around $1.3 billion, which would mean that every mutual policy holder, on average, would receive shares valued at approximately $1.3 million?
