The Toronto-based insurer yesterday said it planned to demutualise after 36 years as a mutual company, distributing a surplus of C$2.6bn (pounds 1.1bn) to eligible policyholders.
Half a million policyholders worldwide are entitled to a share of the surplus, giving each an average of C$5,200, or pounds 2,189 at current exchange rates. The insurer is expected to pay out almost all of the surplus.
Policyholders are likely to have to wait until 1999 before they receive a windfall. The Canadian government is expected to pass legislation to allow demutualisations by the autumn. It is then expected to take several months before the float can go ahead.
David Nield, chief executive of Canada Life, said: "In today's world of rapid change and globalisation, we believe that, as a publicly traded stock company, Canada Life will gain the financial flexibility necessary to compete aggressively."
The company said the planned flotation was in line with its strategy of snapping up smaller insurance companies as the industry consolidates into fewer, larger companies. In the last five years the company has made eight acquisitions. Three of them - ManuLife, Windsor Life's sales force, and Albany Life - have been British. The company has also bought a number of US insurers and was this year granted permission to open an office in China.
Mr Nield said: "Canada Life's strategic direction calls for bold growth and expansion. The new capital we can raise will allow us to grow more rapidly, both internally and by continuing our acquisition strategy. We intend to use our proven acquisition expertise to undertake more and, perhaps, larger, transactions."
Up to 3 million people in the UK are members of Canada Life schemes and it has 750,000 policyholders in the UK. However, only those with with- profits policies are entitled to a windfall.
Around 100,000 British customers have with-profits policies. The size of the windfall they receive will depend on the length of time they have held the policies and the amount of money they have committed.
Windfalls are expected to take the shape of shares, though some policyholders will be entitled to cash.
Canada Life manages pounds 20bn of investments and employs 4,050 staff, specialising in group life, health and disability insurance.
It is the oldest insurer in Canada and has been selling policies in the UK since 1906. It is one year older than the Prudential, which yesterday celebrated its 150th anniversary.
The company has only been mutual since 1962, when it was bought by its policyholders at the urging of the Canadian government. Canada was worried at the time that its best insurance companies would be gobbled up by US predators.
Sun Life of Canada, which stopped being a listed company at the same time, is also seeking to switch back to its old status.