Finance Committee on May 1st, 2012

[Scott Brison, Liberal, 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?

[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.

[Scott Brison, Liberal, 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?

[Dan Lister]

Over the last 10, about $1.5 million.

[Scott Brison, Liberal, 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?

[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.

[Scott Brison, Liberal, 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?

[Normand Lafrenière]

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

[Scott Brison, Liberal, Kings—Hants, NS]

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

[Scott Brison, Liberal, Kings—Hants, NS]

Mr. Lister, are your rates competitive in terms of what you charge your members for insurance?

[Dan Lister]

Most of the time, yes. We're competing against everyone in the marketplace, and we are still continuing to move along and grow. I would suggest our company has a majority of the agricultural business in the province.

[Scott Brison, Liberal, Kings—Hants, NS]

You're able to provide policies at competitive rates, invest significantly in the communities you serve, and you're prudentially strong?

[Dan Lister]

Yes. I think in terms of the MCT ratio, which is a ratio the government uses to ensure we are strong, their minimum requirement is 150%. Ours would be somewhere in the order of 900% to 1,000%.

[Scott Brison, Liberal, Kings—Hants, NS]

I think I'm the only member of the committee who was a member in the late nineties when the issue of bank mergers was before committee, and at that time, the argument made—and I agreed with some of the arguments that the idea of needing to build scale to be competitive and also further to that need to deregulate to be competitive....

I'm just making the point that sometimes—

[The Chair, Conservative, James Rajotte]

Thank you.

[Scott Brison, Liberal, Kings—Hants, NS]

—the status quo is not necessarily a bad thing in terms of the way things have worked out, post-financial crisis, in terms of strong regulatory frameworks in Canada.

[The Chair, Conservative, James Rajotte]

Thank you for that statement, Mr. Brison.

We'll go to Mr. Van Kesteren, please.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Thank you all for appearing before us this afternoon.

I'm a participant in a mutual. My son-in-law is an agent, so obviously he's going to get my business. We have two in my riding. We have Howard Mutual, and Kent & Essex with long histories as well. I'm sure, Mr. Lister, you're familiar with those two organizations.

I must say that the correspondence I've received from the organizations themselves are very much in favour of what you're saying.

I don't know if I buy Mr. Brison's arguments completely, although I think he's right.

[Voices]

Oh, oh!

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

The mutuals have participated well in communities, and I can cite some of the good things they've done. I think it's fair to say insurance companies are large—they're big corporate citizens. When we talk about the agents, they all seem to have that. I don't know if that's the only argument.

A sticking point is—and Mrs. Glover was giving an opportunity to both sides and I don't think she had the opportunity to hear the other side and so I'm going to give—why don't we go to Mr. Lister, because you represent....

She was asking about on the one hand, then, Ms. Gavan gave her opinion as a larger mutual, and you never had the opportunity. Did you want to pick up where she left off?

[Dan Lister]

With regard to the distribution of the ownership or....?

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Mrs. Glover, what was your line of questioning on that?

[The Chair, Conservative, James Rajotte]

It's your time, so....

[Shelly Glover, Conservative, Saint Boniface, MB]

I was simply trying to get the two sides to argue it between them in our presence as to what the pros and cons are, and I think both of them had an opportunity, but if you'd like to continue—