Demutualization in Canada

On March 12, 1999, the Department of Finance enacted legislation (Bill C-59) enabling large mutual life insurance companies to issue shares to the public – or "demutualize." Demutualization is the process of converting from a mutual company, owned by its policy holders, to a company with common shares, owned by its shareholders. In exchange for the value of their ownership rights policy holders choose between receiving shares of the company or the equivalent in cash. The primary reason for a company to demutualize is that, as a listed company issuing common shares, it has the flexibility to raise money quickly through the capital markets. Canada's four largest mutual insurance companies have already completed the demutualization process. Interestingly, this reverses a trend in the 1950's and 1960's whereby companies "mutualized" to protect against foreign takeover.
The purpose of this brief guide is to direct you to additional information about demutualization that is available in or accessible through the Western Libraries

Web Sites:

CAIFA - FAQ's on Demutualization

Demutualization & MHC Research Station

THE HOUSE OF COMMONS OF CANADA BILL C-59 An Act to amend the Insurance Companies Act

Office of the Superintendent of Financial Institutions

Reforming Canada's Financial Services Sector: A Framework for the Future. Finance Canada. June 25, 1999

Books:

Relevant Subject Headings:

Insurance Canada
Insurance Companies -- Canada
Insurance, Life -- Canada

The Canadian Life Insurance Industry : Taking Stock : The Demutualization Wave Creates New Options and Challenges in an Already Changing Industry. Industry studies (DBRS). Miller, Jack. HG9010.M535 1999

The Bears are Awake ... but They Aren't Alone : An Industry Overview of Canadian Life Insurance Companies Rated by DBRS. Miller, Jack.  HG9010.M55 1998

Sleeping Bears Awakening? : Canadian Life Insurance Companies Rated by DBRS : An Industry Overview. Jack Miller, Kent Wideman.  HG9010.M55 1997

The Challenge of Change in Canadian Life Insurance : An Industry Overview and Comparison of Canadian Life Insurance Companies Rated by DBRS. Jack Miller, Kent Wideman.  HG9010.M547 1996

Articles:

For assistance in locating the articles listed below, consult with a member of the staff of the Business Library. They will also gladly assist you in finding additional material.

"Now what?" Benefits Canada, Vol. 24, no.5, May 2000, pg.40-49

"Demutualization proceeds" Benefits Canada Vol. 24, no. 4, Apr 2000, pg.21

"Tomorrow's group insurance business: what impact will demutualization have on group insurance providers? Get ready for a greater emphasis on profitability and less choice for national employers" Benefits Canada Vol.24, no.3, Mar 2000 pg 68-70

"Demutualization mania [Survey of Public Offerings in Canada 1999]" Benefits Canada Vol.24, no.3, Mar 2000, pg 14

"The aftermath of demutualization: what does it mean for employers who are policy holders?" Canadian HR Reporter Vol.13 no.4 Feb 28, 2000 pg 20,21

"Life insurers expected to weather challenges: consolidation, demutualization and distribution concerns expected to remain with the industry for some time" Investment Executive Feb 2000, pg B4

"Demutualization: when the honeymoon's over" Money Digest Vol.15, no.2, Feb 2000, pg 13

"Insurers Look at Stocks As a Means of Survival" New York Times Late Edition (East Coast) Jan 23 2000, pg.3

John Greenwood. "Demutualization biggest transfer of wealth yet: windfall twofold: the stock and then the hefty price rise" Financial Post (National Post) Vol.2, no.64, Jan 8 2000, pg C3

"Conversion activity may not change much" National Underwriter (Life & health/financial services ed.) Vol. 104, no.1, Jan 3 2000, pg. 3, 29

John Partridge. "1999: The year the insurers went public. The demutualization started by Canada Life and Clarica is bound to revolutionize the industry through the largest transfer of wealth in Canadian history." The Globe and Mail Report on Business Thursday, December, 30 1999 B1

"Plotting a course" Best's Review (Life/health insurance ed.) Vol. 100, no.8, Dec 1999, pg. 73-77

"What will life be like? Demutualization is now a reality for Canada's life insurance industry" Canadian Insurance, Vol. 104, no.13, Dec 1999, pg.27-30

"Tax planning and demutualization" Canadian Moneysaver Vol.19, no.3, Nov 1999, pg 31-3

"Demutualization is demanding: Pru exec" National Underwriter (Life & health/financial services ed.) Vol. 103, no.44, Nov 1 1999, pg. 6,34

"The big payout: demutualization is one gift horse you should look at very carefully" Report on Business Magazine Vol.16, no.4, Oct 1999, pg 145-148

"A nation on the brink of demutualization" Best's Review (Life/health insurance edition) Vol. 100, no.6, Oct 1999, pg.64-70

"The Europeans Are Coming! U.S. insurers and their bankers are hot targets, prodded by demutualization" The Investment Dealers' Digest : IDD, Sep 27 1999, pg.14-21

"Offerings in the offing: Border breakout" Barron's Vol.79, no.38, Sep 20, 1999, pg.45

"Strategic defense initiatives" Best's Review (Life/health insurance edition) Vol. 100, no.5, Sep 1999, pg. 58-60

"The millennium will see many fewer mutuals" National Underwriter (Life & health/financial services ed.) Vol.103, no.37, Sep 13 1999, pg.38

"TSE to become a new for-profit business" Benefits Canada Vol.23, no.7, Jul 1999, pg.41

John Partridge. "Pros await demutualization bonanza with glee Brokers, lawyers, actuaries expected to share between $250-million and $680-million" The Globe and Mail Report on Business Thursday, April, 15 1999 B1

"Changes in mutual life insurer ownership form" Journal of Financial Service Professionals Vol.53, no.2, Mar 1999, pg.52-58

Kevin Marron. "Demutualization's hard to say, easier to take: Policy holders expect stock or cash windfall when four mutal companies begin public trading." The Globe and Mail Report on Business Special Report Tuesday, February, 23 1999 R3

"Insurer demutualization: Is the grass really greener?" National Underwriter (Property & casualty/risk & benefits management ed.) Vol.4, no.4, Jan 25 1999, pg. 24

"An Old Boys Club No More:To Wall Street's delight, insurance firms are being forced to open up to all sorts of options these days" The Investment Dealers' Digest : IDD , Jan 4 1999, pg.16-21

"The effect of changes in ownership structure on performance: Evidence from the thrift industry" Journal of Financial Economics Vol. 50, no.3, Dec 1998, pg.291-317

"Consumer reps rip demutualization laws" National Underwriter (Property & casualty/risk & benefits management ed.) Vol. 101, no.20, May 19 1997, pg.73, 88

"An economically viable model for insurers to demutualize" Best's Review (Property/casualty insurance edition) Vol.96, no.5, Sep 1995, pg.50

"Some Cogent Reasons for Demutualization", National Underwriter (Life & health/financial services ed.) Vol. 93, no.9, Feb 27 1989, pg.35

"A Look at Demutualization," Best's Review (Life/health insurance ed.) Vol. 84, no.9, Jan 1984, pg.25

"Demutualization -- Wave of the Future or a Passing Fad?" Journal of the American Society of CLU & ChFC Vol.40, no.2, Mar 1986, pg.58+

"Demutualization of Insurance Companies - Advantages and Disadvantages" Journal of the American Society of CLU Vol. 39, no.1, Jan 1985, pg 52+

"Demutualization Is Termed an 'Almost Unbearable' Undertaking" National Underwriter (Property & casualty/risk & benefits management ed.) Vol.88, no.41, Oct 12 1984, pg.2

June 2000