Irish policyholders expecting windfall payments and free shares worth over £2,000 each next year from the flotations of insurers Canada Life and Sun Life of Canada may be disappointed.
Plans by the insurers to float on the Toronto stock market could be delayed, following the decision of the Canadian government to launch public hearings and a shareholder task force to investigate the flotations.
Legislative changes and government guidelines are required before the insurers can move ahead with the flotations. But these changes are not expected to be made before the public hearings are completed. Some sources maintained that the public hearings could take at least a year, which would delay the flotations to 2000. But Canada Life insisted that the latest government moves would not affect its proposed timing of a flotation towards the end of 1999.
Some 50,000 Irish "with-profits" policyholders with Canada Life and 4,000 to 5,000 with Sun Life would get free shares worth over £2,000 each in a flotation. Investors in Canada Life personal pension plans do not qualify for free shares. Canada Life insisted yesterday that its flotation plans were proceeding on schedule. A spokesman said that the government would introduce legislation "at the time that has been expected". "The flotation is going ahead and the legislation is running to schedule," he said. The government moves were expected, he said, insisting that they would not affect the original flotation time frame.
In a statement to The Irish Times yesterday from its British headquarters, Sun Life said it expected the necessary Canadian government regulations to be introduced "later in 1998". The company and the three other life assurers seeking to demutualise "have been and continue to work closely with government officials in Canada to develop the regulations required" to enable them to demutualise, the statement said. Earlier this year, the board of Sun Life directed group management to develop a plan for the conversion from a mutual insurance company into a publicly quoted company.
In Canada, there has been some speculation that Sun Life could abandon its flotation plans. The company is already facing a hefty bill for pension mis-selling.
Four Canadian mutual life insurers are planning conversions and flotations. In addition to Sun Life and Canada Life, ManuLife and Mutual Life want to demutualise when the government gives the go-ahead for a change. But there has been political lobbying by policyholders who are against any change in the ownership structures. Last night, the Finance Department in Ottawa confirmed that it was in the process of working out a new legislative regime for the demutualisations. Draft regulations should be issued in coming months, a spokesman said. This would be followed by wide consultation and adjustments where appropriate before the final rules were published. The process should be completed by the end of the year, he said.
The Office of the Superintendent of Financial Institutions confirmed the setting up of an independent study on the impact of demutualisation on policyholders. This will be carried out by the Insurance Consumer Group and largely funded by the Industry Department, a spokeswoman said.
