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Pending Cdn P&C demutualization


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Very likely more than a passing interest for one or two of the companies on this board!

As always, do your own DD





SD, are you suggesting "one or two of the companies on this board" might be buyers?


My own experience suggest stock valuations increase and premiums harden when insurers demutualize by going public.



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A demultualization is the policy holders receiving shares & the P&C's treasury almost always doing an equity issue to provide the market float. A parent has no say if it agrees to demutualize a P&C sub, & can only offer to buy back the shares (at a control premium) if it wants to go back to 100% ownership. A parent also cannot reject demutualization when the P&C's competitors are doing it - as to do so will force the parent to put up the additional capital, vs the public. The P&C will get the new capital, the value of all P&C's will temporarily rise, & UW profitability of most P&C's will drop as participants price down to vie for market share. Buy, sell, & hold are all possibilities.


In fairness to other board members who are in the industry, other than highlighting the pending development, we would prefer than all do own their DD.





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