They include the adoption and implementation of the North American Free Trading Agreement, consolidation of financial services companies, globalization of economies, and insurance demutualizations in the United States, the United Kingdom and Australia. The case for demutualization can be compelling, Guloien said. Mutuals need to raise capital for expansion and for acquisitions. Demutualization can help companies achieve market discipline, attract and retain the best and brightest employees, and clarify the role of the customer and owner. Without demutualization, insurers would fall further behind banks in Canada.
Banks already have a stronghold on the financial services market.
The top four mutual insurers combined are smaller than the Royal Bank of Canada, he added. The Canadian government is currently drafting regulations that would make conversion of the four large insurers possible. It also has put together a task force on the Canadian financial services industry, Guloien said. The amount of foreign business the four insurers write, however, is likely to make conversions more difficult. The consulting firm Tillinghast-Towers Perrin is helping the companies with that problem, he added.