Co-operators merger; First West insurance change

Summary#

• This issue of the Canada Gazette contains two unrelated notices.
• One says Co-operators General Insurance Company and COSECO Insurance Company plan to apply to merge into a single company called Co-operators General Insurance Company, with a proposed effective date of December 31, 2021.
• The other is a disclosure from First West Credit Union telling its members that, if it becomes a federal credit union, deposit insurance would move from the Credit Union Deposit Insurance Corporation (CUDIC) to the Canada Deposit Insurance Corporation (CDIC) and explaining what that change would mean.

What it does#

• Amalgamation notice for two insurers:
  • Says the two companies intend to apply for letters patent of amalgamation under section 250 of the Insurance Companies Act.
  • The merged company would use the name Co-operators General Insurance Company (English) and La Compagnie d’assurance générale Co-operators (French).
  • The planned head office is in Guelph, Ontario.
  • The stated possible effective date is December 31, 2021, or another date set by the letters patent.
• Continuance / deposit-insurance notice for First West:
  • Informs members that First West Credit Union will ask them to vote on a resolution to apply to become a federal credit union. Voting is scheduled between November 1, 2021 and November 21, 2021.
  • Explains that if First West becomes federal, it would become a member of CDIC and CUDIC insurance would stop applying to First West deposits on the “continuation day.”
  • Describes a transition arrangement where “pre-existing” deposits (deposits held on the continuation day) that are eligible for CDIC would get CDIC coverage equal to the prior CUDIC coverage during a transition period.
  • Sets out that the transition period for demand deposits lasts 180 days, and for term deposits it lasts until the deposit’s maturity.
  • Notes CDIC’s normal limit of $100,000 (principal plus interest) per insurance category per member institution, and lists deposit types that CDIC does not insure.
  • Points out upcoming CDIC changes effective April 30, 2022 adding RESPs and RDSPs as separate insurance categories.

Who's affected#

• The planned insurer merger most directly affects:
  • Customers and policyholders of Co-operators General Insurance Company and COSECO Insurance Company.
  • Employees, brokers, and other business partners of the two companies.
• The First West notice most directly affects:
  • Members (depositors) of First West Credit Union — they are asked to vote and could see changes to how their deposits are insured.
  • The notice also matters to anyone who keeps funds or investments with First West (for example, holders of GICs, chequing/savings accounts, TFSAs, RRSPs).
• Uncertainty noted in the notice:
  • First West had not submitted its application to continue as a federal credit union as of the notice date (September 27, 2021). Regulatory approval by the Minister of Finance and others is still required.

Why it matters#

• For the insurance merger:
  • Merging two insurers can change who handles claims, where decisions are made, and how products are sold. Customers may see operational or branding changes. The notice starts the formal process but does not itself change policies.
• For First West members:
  • The move from CUDIC to CDIC could reduce or change protection for some deposits. Under CUDIC the notice says many deposits were insured in full; under CDIC most eligible deposits would be insured up to $100,000 per category.
  • Some things covered by CUDIC (for example, certain non-equity shares and some traveller’s cheques) are not covered by CDIC. Conversely, CDIC has its own rules and categories (with RESPs and RDSPs added on April 30, 2022).
  • The transition period gives temporary protection for deposits that existed on the day First West becomes a CDIC member. New deposits after that day would be subject to CDIC’s standard rules immediately.
  • Because the change depends on member votes and regulatory approvals, it may or may not happen. Members were given this information to help decide how to vote.