Economical Mutual Names CEO With Demutualization Experience as Former CEO Joins Allstate

Economical Mutual Insurance Co., the large Canadian property/casualty insurer looking to demutualize, named industry veteran Karen L. Gavan as its new president and chief executive officer. Gavan, who is overseeing demutualization efforts and held a senior management position with Canada Life Assurance Co. during its demutualization, succeeds Katherine A. Mabe, who served as CEO less than a year.

Mabe, who was appointed CEO in December, is joining Allstate Corp. (NYSE: ALL) as president of Allstate Protection central/west regions. She will report to Joseph P. Lacher Jr., president of Allstate Protection, and will be a member of Allstate's senior leadership team.

The management change comes one month after the Waterloo company scored a major victory in a dispute with dissident shareholders, who had sought to throw out the entire board. At the mutual company's annual policyholder meeting May 26, a 77.2% majority of policyholders rejected a petition to replace the board of directors, and Gavan and two others were elected to the board (BestWire, May 27, 2011).

Gavan has served as an Economical board member since 2008 and served as chairwoman of the Economical's special committee pursuing demutualization. Previously, Gavan served as chief operating officer and chief financial officer of Transamerica Life and Aegon Fund Management Inc. Prior to that, she held senior management positions with Imperial Life Assurance Co. and with Canada Life Assurance.

Last November, Toronto advisory firm VC & Co. began recruiting policyholders, seeking support for its demutualization proposal. On Dec. 14, Economical announced its own demutualization plans. The policyholders' vote in May capped a seven-month proxy fight between Economical and the dissident policyholders.

Economical is pursuing two alternative demutualization tracks. One track, called conversion, would transform Economical into a publicly traded corporation through an initial public offering. The other track, known as sponsored demutualization, would involve another company acquiring control of Economical.

Demutualization would require approval of regulators and policyholders. The move would make Economical the first property/casualty insurance company in Canada to demutualize.

From 1982 to 2010, Mabe held a number of management roles at Nationwide, including president of its specialty products division and president of two Nationwide subsidiaries, Titan Insurance Co. and Victoria Insurance Co., Allstate said in a statement.

Founded in 1871, the Economical Insurance Group has some C$4.5 billion (US$4.55 billion) in assets and policyholders' equity of approximately C$1.3 billion. The group's member companies include Economical Mutual Insurance Co. and its Western General Farm Division, Waterloo Insurance Co., Perth Insurance Co., the Missisquoi Insurance Co., Federation Insurance Co. of Canada, Family Insurance Solutions and the Mattei Cos. Last year, the group posted gross written premiums of C$1.72 billion. Its combined ratio improved to 103.3% from 107.9% in 2009.

(By Diana Rosenberg, senior associate editor, BestWeek)