New parent company for Economical following demutualization

Economical Mutual Insurance Company will have a new parent company once it demutualizes, the insurer announced Friday.

Definity Financial Corporation, a newly creating entity incorporated under the Insurance Companies Act (Canada), will be the parent company of Economical Insurance, Family Insurance Solutions Inc., Petline Insurance Company, and Sonnet Insurance Company, following the completion of the demutualization of Economical.

“We expect to be a public company by the fall of this year,” Economical CEO Rowan Saunders told Canadian Underwriter in May 2021 after the third and final policyholder vote on demutualization. Over 97% of eligible policyholders voted in favour; a two-thirds majority was required.

Definity and Economical announced Friday that Definity has filed with the securities regulator in each province and territory in Canada, and obtained a receipt for, a preliminary base Post-Receipt Pricing Prospectus (PREP) for a proposed initial public offering of common shares of Definity. The number and price of the common shares to be sold have not yet been determined, Definity said in a press release.

The IPO is in connection with the conversion of Waterloo, Ont.-based Economical from a mutual insurance company to a publicly-traded one. Economical will become the first Canadian federally-regulated property and casualty insurer to demutualize. Four major life insurers — Manulife, Clarica, Sun Life and Canada Life — demutualized in 1999-2000.

The preliminary prospectus contains important information relating to the IPO and has not yet become final for purposes of a distribution of securities to the public, Definity said. The preliminary prospectus will be available under Definity’s profile on SEDAR.

In 2015, the federal government passed regulations allowing the demutualization of P&C insurers. Economical’s board formally started the process of demutualization in November of that year.

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