On December 29, 2015, the Office of the Superintendent of Financial Institutions (OSFI) issued a Guide for the Demutualization of Mutual Property and Casualty Insurance Companies with Non-mutual Policyholders (the Guide). The Guide clarifies how OSFI plans to oversee and regulate the conversion of federally regulated mutual property and casualty insurance companies that have both mutual and non-mutual policyholders (MPCCs), a process called demutualization.

Background on the Demutualization Process

The Mutual Property and Casualty Insurance Company with Non-mutual Policyholders Conversion Regulations (MPCC Regulations), which came into force on July 1, 2015, set out the process for dual structure demutualization:

  1. Board resolution (to initiate the process)
  2. First Special Meeting (vote by eligible mutual policyholders to negotiate with eligible non-mutual policyholders)
  3. Negotiations between policyholder groups to allocate benefits arising from the demutualization (notice to eligible policyholders, initial court applications, formation of policyholder committees)
  4. Second Special Meeting (vote by eligible mutual policyholders to amend the company's by-laws and authorize the conversion)
  5. Third Special Meeting (vote by all eligible policyholders to authorize and implement the conversion proposal)
  6. Completion (letters patent of conversion are issued by the Minister of Finance)

Although final approval is issued by the Minister of Finance, OSFI will play a significant role by overseeing and regulating the entire demutualization process. For additional background information, please see our previously issued e-lert on the demutualization process for property & casualty insurance companies.

Summary of the Guide

The Guide complements the MPCC Regulations by clarifying OSFI's expectations in order for an MPCC to obtain the approvals necessary to proceed through each stage of the demutualization process. The Guide is organized into the following parts:

  1. Summary of the dual structure demutualization process;
  2. Material that must be provided to OSFI in connection with each of the required regulatory approvals;
  3. Additional administrative guidance such as policyholder eligibility, the voting process at each special meeting, and considerations when allocating value to each group; and
  4. Administrative guidance in regards to the roles of the independent and appointed actuaries.


The Guide has particular relevance to MPCCs and their mutual and non-mutual policyholders as OSFI has now clarified the formal requirements under the MPCC Regulations. It is clear that OSFI will be taking a very active role throughout the process by managing the flow of information between the two policyholder groups. The Guide also provides useful references to other applicable regulations, rulings and guidelines that must be considered alongside the MPCC Regulations.

A link to OSFI's Guide can be found here.