SSQ: group insurance specialist (1973-1982)
In the early 1950s, SSQ anticipated the many transformations that would go on to alter the fabric of Quebec society.
The company took part in debates on constitutional issues in 1954 and on hospitalization insurance in 1960. In 1962, it experimented with its own regional health insurance program. Thanks to these initiatives and discussions, SSQ defined its strategy and its style: to work in parallel with government programs and to fill in whatever gaps arose. In the company's view, it was the only path to survival; it was also the only path to relevance and profitability.
Many observers believed that SSQ's role as a group insurance specialist should be emphasized, rather than as a health insurance specialist. Insured members would be offered plans covering other individual needs such as life and disability insurance.
It is important to realize that the company had signed up many groups that required extended benefits. By catering to this demand, SSQ expanded its range of group services. This approach may be described as collective because risks and costs were shared; and it may be described as comprehensive because the incidence of unforeseen events was reduced to almost nil.
Updating the cooperative process
In theory, ever since the cooperative was founded, each of its members retained decision-making powers that were exercised when the board member were elected at the annual general meetings, traditionally held in Quebec City or Sainte-Foy. But in practice, since travel expenses were covered by the members themselves, those living outside the Quebec City region rarely exercised their right to vote. It was not until a tumultuous meeting in 1972 that this system of representation was challenged (on that occasion, a small group tried to wrest control of the meeting).
The fact that a tiny group could stack the board with "undesirables" was seen as a major risk. The meeting in 1972 provided crystal-clear evidence of that.
In response, the board created a special committee tasked with examining ways to improve the member representation system at annual general meetings. This committee, made up of R. Dean, V.-B. Laurin, A. Bilodeau, J.-L. Pelletier and J. de la Chevrotière, came to the conclusion that there was a considerable gap between theory and practice. On the one hand, the company's democratic principles were unimpeachable; on the other, there was the undeniable fact that a handful of members could effectively exercise absolute control over the meetings.1 Since many of the company's members were scattered around the province, attending the annual meeting meant they would have to incur out‑of‑pocket expenses they could not afford. The committee concluded that if SSQ wanted to uphold democratic principles and ensure a stable and reassuring management system, it needed to attract members from other regions to the annual general meetings. It would thus have to cover the travel expenses of regional delegates.
The committee also studied an experiment conducted by Artisans-Coopvie, whose members also played a direct role in controlling their company. In that case, participation took the form of regional meetings at which the company's members elected delegates who agreed to vote on their behalf at the annual meeting. In its report to the board, SSQ's special committee recommended that this formula be adopted.2 It was not possible, though, to act immediately on the recommendation because changing the member representation system meant amending the company's bylaws, which would require special legislative action. Moreover, organizing regional meetings entailed significant additional expenses that SSQ could not afford right away. 3
In 1973, the general meeting discussed the committee's report and called for the review process to be extended: "SSQ's board wishes to survey in-house views on this matter".4 An internal committee on member representation at general meetings was formed, made up of L. Marquis, M. Verge, J.-C. Tremblay and J. de la Chevrotière; it resumed its deliberations where the first committee had left off. The committee considered "the possibility and opportunity of structuring participation in general meetings by ensuring that groups are represented on a regional basis".5 It also studied the impacts that this new formula would have in terms of the number of regions and delegates, the nomination process, the conducting of the meetings, etc. In the end, the committee recommended organizing regional meetings on an experimental basis. Member interest in this idea would be assessed and various organizational methods would be tried out.
The recommendation led to concrete action. From 1974 to 1976, "regional meeting committees" convened and organized information sessions for regional members. In 1974, SSQ organized sessions in Jonquière and Montreal, followed by Trois-Rivières and Sherbrooke in 1975 and Rimouski and Rouyn in 1976. These gatherings were primarily designed to provide information on services, as well as on the company's operations and regional presence.6 They also served as workshops for surveying member needs, expectations and perceptions. The results were conclusive: the meetings garnered a good deal of interest and were an outstanding way of disseminating information and promoting the company.
In March 1976, the "trial" meetings were deemed a success. The board was entrusted with amending the bylaws and the member representation model at the annual meetings.
This mandate was assigned to a committee in charge of studying member representation at general meetings. The committee, which included P. Vaillancourt, A. Bilodeau, A. Therrien and J.-D. Duquette, provided a detailed assessment of the previous research and work carried out. Its report offered the following conclusion:
To ensure more complete representation of the company's insured members, it would be advisable for them to elect delegates at the regional meetings. These delegates would have exclusive voting rights at annual and special general meetings. The gatherings would be held annually in eight regions of the province. [...] Each region would initially be entitled to two delegates, as well as one additional delegate per 5,000 insured members, up to a maximum of 20 delegates per region. The 15 board members would be added to the number of the delegates for the province. The sum total of those board members and delegates would constitute the general meeting, which could also be attended by any other member of the company in an observer role. Moreover, any member of the company would be eligible to serve on the board, whether or not they are a delegate.7
These changes to the members' representation system could only be made by amending SSQ's bylaws. The board also took this opportunity to revamp and improve the bylaws and bring them in line with Quebec's new Act respecting insurance by modifying certain provisions.
On November 30, 1976, the committee's proposed amendments were approved at special general meeting. The meeting also authorized the company "to request that Quebec's National Assembly amend the company's charter with a view to enabling the implementation of the new regulatory provisions in their entirety".8 This amendment was approved by Quebec lawmakers on July 11, 1977, with one proviso: the company would have to call a new general meeting in order to approve the amendments. This meeting was held on March 13, 1978, on the same day as the annual general meeting. In the fall of 1978, SSQ members at the regional level elected delegates to the general meeting for the first time.
Cooperation and dialogue
Against this backdrop, SSQ entered into a new phase in its development as a cooperative. During its first phase, the company had been actively committed and engaged. It then combined its cooperative status with the requirements of a modern and vigilant management system. The company now began to restructure its regional meetings, marking its third phase: communication with members.
This democratic practice offered one enormous advantage: it led to constant service improvements because the members now had a forum in which they could express their views. The notion of service took on a whole new meaning when an effective means of disseminating information was adopted in the form of regional meetings.
In addition to facilitating consultations, the regional meetings were used to address issues pertaining to the company's operations, services and standing. In 1978, the members discussed SSQ's "cooperative character". In 1979, the conversation turned to "SSQ's legal powers and limits as an insurance institution". In 1980, the members discussed "SSQ's regional presence"; in 1981, the topic was "the whys and wherefores of SSQ"; and in 1982, "pension plans".
In 1981, SSQ began organizing group insurance seminars. Although open to all, these seminars were known for their challenging technical content. The first seminar, which was held in three different regions, focused on how group insurance premiums were determined. In October 1982, a new seminar on pension plans and inflation was held in six different regions. The company subsequently organized two more of these seminars: "Income protection in the event of disability" and "Life insurance today: why and for whom". SSQ planned to offer two or three more seminars on various topics on a rotating basis.
The regional seminars and meetings offer further proof that SSQ was more focused on "member education" than ever before. The era of holding meetings in church basements and discussing the importance of financial planning in the event of illness was long gone. The times had changed and the company took swift action as a result.
Communication with insured members
SSQ's clientele included groups whose members were scattered around the province, including insured members employed in the civil service, the social affairs sector and the education sector.
Insureds needed to be adequately informed and kept up to date on their insurance plans, which were often complex.
In 1972, SSQ developed a tool for providing groups with relevant general information and individual insureds with more specific information.
Another milestone was reached when audiovisual resources were first used to explain insurance plans to these types of groups. On those occasions, SSQ representatives provided pre-recorded information with diagrams.
Using this structure meant that basic information could be provided without being forgotten, while representatives could also provide more detailed explanations on the spot.
As part of a broader-based initiative, SSQ began issuing a newsletter in 1975 on provincial and federal social legislation. The interconnected nature of SSQ's business and government programs that had accompanied the organization from the start was mentioned on several occasions. This interconnectedness was also evident when it came to developing and updating insurance programs to which groups subscribed. SSQ's newsletter became a much-appreciated reference tool for members of the public.
Although SSQ did embrace change in order to deal with government intervention in the healthcare field, other aspects of its style remained unchanged for many years, including its union and nationalistic leanings. This, however, is hardly surprising: the clientele that gave the company its biggest boost emerged primarily from the union movement.
By force of circumstance, relations between SSQ and the trade unions began to change. In the early 1970s, the Quebec union confederation (CSN) went through an internal crisis; the resulting split led to the birth of the Confederation of Democratic Unions (CSD). This gave SSQ an opportunity to affirm its neutrality and independence in relation to the various confederations; it also ensured that the company's image reflected its longstanding union links. This stance was clearly set out in the following official statement:
SSQ's current board continues to believe that the company's services should be available to all Quebecers who wish to receive them.9
The corporate world also turned to SSQ to insure some of its groups.
In 1982, the company made a significant breakthrough among groups associated with [employer and professional] associations.10
SSQ also offered various group insurance plans to employer and professional associations, as well as to non-union groups and owners of non-union companies.
By 1982, these new groups accounted for more than 5,000 insured members and generated several million dollars in new premiums.11
By this time, the employer and professional associations that made up this institutional market had provided a significant boost to SSQ's business. This clientele's importance grew to such an extent that one half of the company's sales team was devoted to it.12 Of course, the approach in this case was different than that used for the union movement. To break into this new market, the company used intermediaries (including actuarial consultants and brokers), who were paid on a commission basis. SSQ, however, did not neglect the union sector, with which it had longstanding ties.
The company also opened up new markets by extending its operations into Ontario (in 1980) and New Brunswick (in 1981). In so doing, SSQ was not seeking to do business across Canada; it was actually a matter of providing comprehensive service to groups and companies whose workforces were overwhelmingly from Quebec and whose employees sometimes lived in neighbouring provinces.
The main reason for which Québec Health Services apply for a licence to do business in New Brunswick and Ontario is to make it possible for the company to insure national firms having subsidiary branches or factories in New Brunswick, Ontario and Quebec.13
Individual life insurance: An attractive but distant prospect
Although group insurance remained SSQ's main line of business, individual life insurance was not completely ruled out as an option.14 Since 1976, the company had explored two potential mergers with companies operating in that field. A merger was considered because it would avoid having to set up an individual life insurance division (not to mention the related cost) or having to break into a highly competitive market.
Even though individual life-insurance was not a priority for SSQ, branching out would enable it to offer not only group insurance, but also individualoriented services (life insurance was a highly attractive segment). It is easy to understand why this project was regarded with keen interest.
The demands of growth
As we have seen, the growth of SSQ's business was accompanied by improved information channels, along with more specialized functions.
In the 1970s, the company's growth led Jacques de la Chevrotière to appoint Léopold Marquis as his deputy. In 1977, when Mr. de la Chevrotière left his position as general manager during the company's rapid expansion, Mr. Marquis, his successor, suggested making organizational changes. Among other things, this meant delegating more powers to the departmental managers. These changes were approved in even more extensive form, culminating in a top‑to‑bottom administrative shake-up in 1978.15
SSQ headquarters on Boulevard Laurier
In October 1976, the change in the company's legal status also affected its administrative structures:
The Government of Quebec has implemented the new Act respecting insurance, which was adopted by the National Assembly in late 1974. The enactment of this legislation means that our institution is now regarded as a mutual life insurance company. The main impact of the lawmakers' decision has been felt in the company's administrative function and, overall, has had various advantages.16
Although initially hard hit by transformations in the health insurance market and adjustments dictated by technological changes, SSQ managed to stabilize its financial situation and embarked on a period of remarkable growth.
In 1973, the federal and provincial governments introduced a tax proposal that threatened to penalize SSQ significantly. Life insurance revenues would be "isolated", so losses incurred in other business segments could no longer be deducted from them.
As a result, the losses incurred by SSQ in its non-life insurance operations cannot be used to reduce the revenues earned by SSQ in its life insurance operations for tax purposes.17
The company's tax advisors went on to complain: "This decision to only tax life insurance operations and totally exclude other insurance operations for tax purposes places the company in an absolutely untenable position. For the company, there are only two possibilities that (...) seem acceptable: either it should be exempted from paying income tax altogether or income tax should apply to the totality of its business". 18 In the end, the federal and provincial tax authorities agreed to base their tax calculations and requirements on SSQ's total revenues.
Increasing importance of investment
Following this difficult period (1970-1973), the company's business began to take off again. The new group insurance plans were selling well—so much so that in late 1975, the company was ready to pay off the loan from the Union régionale des Caisses populaires Desjardins (Quebec City district). The company also recovered its original purchase option on the SSQ building.19 Since then, the company's assets and profits continued to grow at a rapid pace, with its business volume (see table below).
Main financial statement items (1970-1985)
(in thousands of dollars)
|Premium revenues||Total revenues||Surplus (deficit)||Total assets||Investments||Liabilities||Member equity|
The jump in SSQ's business, particularly in the life and disability insurance and pension sectors, also substantially increased the funds available for investment purposes. The company thus felt the need to put together a more structured policy in this area.
In this regard, SSQ had set up an investment committee back in 1970. The original four-person committee included two board members (P.-H. Plamondon and V.B. Laurin) and two members of the internal management team (general manager J. de la Chevrotière and financial controller M. Poulin).20 The committee was subsequently expanded to include three board members (including the chair), three senior company officers and an investment advisor.
Initially tasked with managing two separate funds serving as the basis for the company's pension plans (equity fund A and bond fund B), this committee also oversaw investments stemming from the company's general funds. "The committee usually meets once a month and strives to invest, in the best possible way, the assets held in the company's various funds."21 These funds were managed in compliance with the principles and priorities established by the board.
The committee's decisions reflected a dual purpose: investing safely while generating the highest possible return. SSQ favoured investments in cooperative enterprises and small businesses based in Quebec, provided that a reasonable return could be expected. In addition, most of its investments were concentrated in the province of Quebec. The company tried to maintain a presence in all regions of the province: to that end, it focused primarily on bond investments. That way, SSQ made loans to municipalities, hospitals, schools and universities. For many years, SSQ preferred this type of investment—high-yield, safe and short-term. "In 1978, the bond portfolio accounted for 83.7% of the total investments managed by the committee." This proportion, however, showed a gradual downtrend (69% in 1984).
New revenues, new investments
In time, the relative proportion of health insurance to the company's revenues declined, while that of disability insurance, life insurance and pension plans grew. Revenues, therefore, came less and less from short-term coverage, while those from extended disability insurance premiums and pension plans gave the company an opportunity to consider longer-term investments. The growth of SSQ's assets gave the investment committee more room to manoeuvre, which it used to diversify the investments even more.
In 1973, the company invested only 5% of its general funds in equity investments. Seven years later (1980), this proportion had risen to 12%. "These investments are readily realizable and can also generate capital gains." Although tax-advantageous, equity investments came with a higher risk and required the involvement of financial market specialists.
In another sign of its evolving revenue base, SSQ's investment committee examined the possibility in 1976 of getting into the mortgage business. The decision was made gradually: in 1979, the committee presented a mortgage marketing program to the board, which gave its immediate approval. The following year, the mortgage division began its operations:
The company can now offer mortgages directly to borrowers. These mortgages are granted for single-family homes as well as for multiple-unit housing. They also cover newly constructed properties, refinancing of existing properties, housing cooperatives and shared-ownership housing [condominiums].
Assets, liabilities and revenues (1964-1985)
(in thousands of dollars)
Member equity and surplus (deficit) (1964-1985)
(in thousands of dollars)
The company established a mortgage committee tasked with authorizing these loans. It certainly had its work cut out for it: at the end of the first year of operations, approved mortgages totalled $1.4 million. These loan-based investments, which were highly profitable in times of high interest rates (as well as being relatively safe), constituted another service for members.
A bridgehead in the real estate sector
In the real estate sector, the company was increasingly focused on property acquisition.
"In financial terms, the most important achievement in 1979 was retaking possession of the SSQ building, five years after the normal acquisition date. The outlay in 1979 was only $2.6 million; we can record as an asset a building that cost $4.1 million but whose value is now significantly greater."
To that end, SSQ bought out the other shareholders of Les Immeubles d'Argenson, the company it had created in 1968 to build its headquarters.
In 1982, the Société immobilière SSQ inc. acquired a 50% share in the Parc Samuel-Holland complex located on Chemin Ste-Foy in Quebec City.
In reality, the expenses that the company now faced as the sole direct owner were roughly the same as it had incurred in the past. SSQ had been financially supporting Les Immeubles d'Argenson by lending it the necessary funds for building maintenance and repairs. For example, it had given Les Immeubles d'Argenson an advance of $800,000 in 1977 to fix condensation problems and water leaks and to repair the roof. Another consequence of buying back the building was the fact that all of Les Immeubles d'Argenson's revenues now flowed back to SSQ. These revenues, which primarily stemmed from leasing out office space, in particular to the Quebec Pension Board (Régie des rentes), totalled $800,000 in 1979. When the building's increasing value was factored in, these revenues made the investment a highly lucrative one.
The prospect of investing in the Parc Samuel-Holland complex also prompted SSQ to move quickly: it subsequently created a subsidiary in charge of real estate operations (known as Société immobilière SSQ Inc.). In 1982, the subsidiary acquired a 50% stake in Parc Samuel-Holland. Wholly owned by SSQ, the subsidiary was managed by a select group of elected board members and company managers (at least 7 but no more than 10 members). That same year, SSQ gave its real estate subsidiary an advance so it could carry out a major investment in the Rockland shopping mall in Montreal. And in 1984, the subsidiary acquired a real estate complex (Les Jardins de Coulonge) located in the Sillery district of Quebec City.
It is clear that SSQ was increasingly drawn to real estate investments. In contrast to the situation 10 or 15 years previously, the company, thanks to its diversified offering and its increased asset base, could dare to make some extremely lucrative investments... and profit from them! The impressive profitability and diversity of the company's investments actually stemmed from its solid financial position, which it had built up by increasingly focusing on long-term investment beginning in the 1970s. These investments led to the accumulation of sizeable funds which in turn provided access to the best opportunities on the financial and real estate markets.
SSQ ultimately invested its long-term revenues in the Quebec economy. At the same time, the company increasingly took on the role of an economic development agent, particularly as regards small businesses and the real estate sector.
Over that same 10-year period (1973-1982), SSQ refined its image as the principles of cooperative democracy were updated and new and different sectors were embraced. The company's expanded operations were reflected in its communications with insured members and its entry into new financial markets.
In the 1940s, SSQ took its first halting steps, with clergy and cooperative support. In the 1950s and 1960s, it thrived following its breakthrough with the union movement. In the 1970s and 1980s, the company was forced to adapt swiftly and constantly to the profound changes that swept through Quebec's economy and society as a whole. All of this required enlightened decision making.
At first, adaptation was inevitable; SSQ's hand was forced, in a way. The advent of public health insurance was a defining moment: drawing on its experience when hospitalization insurance was introduced, the company dealt with this new adjustment better than most. It made up for certain losses by filling in the gaps in government coverage and by developing other group insurance sectors (life insurance, disability insurance, pension plans, etc.). The same strategy was put into action when Quebec's pension plan was launched in 1965.
Despite the rise of the welfare state, SSQ never left the social security field. Even more paradoxically, private activity in this area, instead of diminishing, continued to expand. This is no doubt explained by the fact that SSQ's board proved adept at identifying public aspirations, anticipating government programs and correctly interpreting market fluctuations.
The following fact may be less dramatic but it is no less impressive: the path that SSQ took over the years led it to adopt a management model based on honouring all pledges made, not only internally (staff, administration, etc.) but also externally (clients and members). Under this new model, communication and information were regarded as the twin pillars of "mutualism". Equipped with these new tools and buoyed by this new spirit, the cooperative process at SSQ was better able to meet the imperatives of democracy and efficiency.
In that light, it is easy to understand how the company adapted so successfully to technological change, despite various obstacles along the way. The pressures of computerization and increasingly specialized job descriptions came with certain costs, to be sure, but the company stayed true to its cooperative principles.
By emphasizing the development of long-term coverage, SSQ embarked on a journey, hesitantly at first and then with more purpose, towards solid profitability—an essential trait for a successful insurance company. SSQ finally reached that milestone, gaining access to pools of capital that it could invest for longer periods. Since it was protected by the diversity of its investments, it could also engage in more speculative ventures that were equally profitable. The overall outcome was that the company's investments were more productive.
SSQ had adapted to far-reaching economic change and emerged the stronger for it. But new challenges and unprecedented opportunities lay just around the corner. Would the company survive and continue to flourish as a profitable cooperative? Absolutely!
Next chapter : SSQ, an ongoing tradition (1985-1990)
- Report of the special committee on member representation at the annual meeting (February 22, 1973).
- Jacques de la Chevrotière's memo to J.-C. Tremblay (October 9, 1973).
- Report of the committee examining member representation at the general meeting, February 14, 1974.
- Minutes of the regional meetings committee (December 2, 1974).
- Board minutes (September 23, 1976, pp. 757-758).
- Document used during the information meeting on member representation via delegation.
- Board minutes (November 30, 1976, p. 778).
- Board minutes (June 23, 1972, p. 621).
- SSQ Annual Report (1982, p. 3).
- Ibid., p. 3.
- Interview with J.-C. Tremblay, summer 1984.
- Léopold Marquis (letter to the Superintendent of Insurance of New Brunswick, December 1981).
- Amendment to SSQ's charter (private member's Bill 142, approved on July 15, 1964).
- Executive committee minutes (May 17, 1978, p. 620).
- SSQ Annual Report (1976, p. 7).
- Letter from Letourneau and Associates to Jacques de la Chevrotière, August 16, 1973.
- Letter from Jacques de la Chevrotière to Mr. Larochelle (federal department of revenue), January 7, 1974.
- Board minutes (December 3, 1975, p. 729).
- Board minutes (February 22, 1972, p. 607).