12 June 2019 13:30
Normand Lafrenière, president of the canadian Association of mutual insurance companies (CAMIC)
The president of thecanadian Association of insurance companies of mutual insurance companies (CAMIC), Normand Lafrenière, welcomes positively the merger between Ledor Assurances and The Capital mutual of public administration, due to the mutualist values of this big player.
He thought that the members of Ledor are going to win on several levels, but at the same time, he hoped that the surplus of the small insurer will not be used to enrich shareholders in this transaction.
Mr. Lafrenière has made these comments in the Journal of the insurance a few hours of the extraordinary general meeting where the members of Ledor had to comment on the merger proposal. The members have finally approved the proposed merger and transformation of the insurer company by shares.
“What I understand is that the board of directors of Ledor and his managers are at the heart of their survival and the long-term success of the company, he said in an interview. This is exactly what is expected of all our members, CAMIC. Mergers between mutual insurance companies or mutual companies of insurance are something that we see frequently. When I joined the association, we had a hundred members and we are now 76. Despite this, our market shares have increased in recent years even if we are less companies than in the past. “
Mr. Lafrenière compares the fusion between Ledor and The Capital movement that is happening within the caisses populaires. “We’re not different,” he comments.
A special situation
The role of the CAMIC is to defend the health insurance fund, and recalls its president, and it is against the démutualisations. In the present case, to carry out this transaction, the structure of The Capital force the creation of a company to capital stock in order to be able to do the merge.
“We understand very well that it is a very special situation that force Ledor to become a company with share capital,” he said. However, it will be superceded by a mutual. “
A life insurance policy of $ 5,000 in gift
The CAMIC applauds the fact that the transaction provides that The Capital is given to some 60 000 members of Ledor insurance accidental death and voting in the amount of $ 5,000 which will enable them to participate in the broad guidelines of the insurer.
“It is hoped that they use their right to vote,” said Normand Lafrenière.
On the plan of operations, he thought that the members of Ledor will win to join a powerful organization such as The Capital city for aspects like the computer. The obligation would have had Ledor Assurances to make major investments in information technology over the next few years is one of the main factors that have led to the proposed merger with The Capital.
Normand Lafrenière also said that the computer is one of the main criteria that lead to smaller insurers, including mutuals, to merge with larger ones. There is also the aspect of operating costs, which plays a major role in these critical decisions : according to the president of CAMIC, these costs are often the same as the big players.
A fear for the surplus Ledor
The president of the CAMIC expresses a single fear vis-à-vis this merger : that the surplus of Ledor Assurances serve to enrich the shareholders. “We hope that the surplus will remain in the health insurance fund, so at Ledor to serve in its growth within the bosom of The Capital “,-he hoped. The thing would be possible if, as he believes it, Ledor becomes a subsidiary of The Capital city as it has others.
There are previous collections of its kind in Canada. We are left with subsidiaries in capital stock, but which have the capacity with a mutual fund. Some are part of the CAMIC even if they do not call for mutuals, because the parent companies are themselves mutuals.
“We are not afraid, said its president, because we have examples already of where this is going well. “He cites the case in New Brunswick of United General Insurance Corporation , which recently became a subsidiary of Farm Mutual Re, a reinsurer belonging to the mutual.
It occurs on the average of a merger by year in Canada at the mutual assurance.
Normand Lafrenière does not believe, however, that movements of the kind will accelerate in the coming years within the mutual insurance companies.