The only vote on demutualization occurred in late 2010 when the company’s board of directors approved a motion to demutualize the company and convert it to a publicly-traded enterprise.
The vote by mutual policyholders at the 2011 annual meeting was actually between two competing slates of directors, with Economical’s slate winning over one proposed by a dissident group also backing demutualization.
The dissident group of mutual policyholders initially came forward because Economical’s board had shown no public interest in demutualization. The policyholder revolt triggered one of the most tumultuous periods in the company’s history, featuring firings, lawsuits, court battles and angry exchanges in the media.
But the board’s decision to go ahead with demutualization ultimately took the wind from the dissident sails and they were resoundingly defeated at the 2011 annual meeting.
The frustration was palpable at this week’s annual meeting over the lack of urgency in Ottawa about drafting the demutualization regulations.
But Economical’s strategy of continuing to lobby behind the scenes while avoiding any drastic action in the form of litigation or public pressure appears to be the best approach.
The company can only hope it has some answers before next year’s annual meeting rolls around in June 2014.
Chief executive officer Karen Gavan also provided some interesting colour at the annual meeting on why the company laid off 143 employees in May.
Karen Gavan, chief executive officer of Economical Insurance.
“Our information technology function was seriously overstaffed, costing almost twice as much as our industry peers,” she said.
And Economical’s expense ratio was the highest among the top 10 property and casualty companies in Canada “and has been for a very long time,” she said.
One can only wonder how the situation got so out of hand.
Moreover, Gavan hinted that the job is not over and there will be more cuts to come.