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Economical Mutual Insurance Co. is on its way to becoming a publicly traded company after a group of policyholders voted 97 per cent in favour of the insurer’s demutualization plans.

Rowan Saunders, Economical’s chief executive officer, said the confidence shown by both the insurer’s 870 legal owners – clients known as mutual policyholders – and the 630,000 non-mutual policyholders at a special meeting Thursday was “overwhelmingly in support” of the company converting from a mutual into a public company listed on the Toronto Stock Exchange.

The actual price of the stock will be set when the company determines the date for an initial public offering and will reflect the company’s results and financial markets at that time. In 2018, Economical received a potential IPO valuation of $1.9-billion.

Based in Waterloo, Ont., Economical is Canada’s eighth-largest property and casualty (P&C) insurer, with a 4-per-cent market share, according to data compiled by the Insurance Bureau of Canada. The P&C industry has been consolidating around its largest players over the past decade, with several foreign-owned insurers selling their Canadian operations to domestic companies, owing in large part to unpredictable profitability in auto insurance.

Mr. Saunders said his goal is to become a “top five player” in Canada, and going public will allow Economical to better compete with multinational companies. Part of that strategy will include mergers and acquisitions, as well as expanding outside Ontario.

“Having access to the capital markets will allow us to continue to innovate, bring new products to market, invest in our business organically, but also participate in a consolidating insurance sector,” he said in an interview with The Globe and Mail.

Going public will also boost the company’s digital footprint, which is largely found in its Sonnet digital direct insurance line. Sonnet, launched in 2016, allows customers to buy home and auto insurance online. The platform grew 30 per cent in the first quarter of 2021, compared with the same period last year, Mr. Saunders said.

Thursday’s vote was one of the final steps in a process known as demutualization – a move already made by most of Canada’s largest insurers. A mutual insurance company is owned by its participating policyholders, whose stake is typically converted into share ownership when the company demutualizes.

The company will now submit a formal application to the federal Minister of Finance, a step that is required within three months of the vote.

The 150-year-old company has spent the past nine years on an occasionally dramatic journey toward an IPO, which at one point included policyholders locked in a heated debate over how Economical’s capital should be divided.

The company also began a major transformation five years ago, including a profit-improvement plan to boost its financial performance.

“When you think about the impact of COVID and a fairly tough economic environment, we’ve proven to have a resilient business model that is ready to be a strong, highly performing public company,” Mr. Saunders said.

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