Latest news with #Definity
Toronto Star
3 days ago
- Business
- Toronto Star
Definity signs deal to buy Travelers' Canadian operations for $3.3 billion
WATERLOO - Definity Financial Corp. says it will acquire most of the Canadian operations of U.S. insurance firm Travelers for $3.3 billion. Definity says the deal will make it the fourth largest property and casualty insurer in Canada.
Globe and Mail
4 days ago
- Business
- Globe and Mail
Why foreign property and casualty insurers are quitting Canada
In the fragmented domestic auto and home insurance industry, the big question is: Who will be next to exit? Last week, U.S. insurance giant Travelers surprised the market by selling its Canadian operations to Waterloo-based Definity Financial Corp. DFY-T for $3.3-billion. New York-based Travelers is the latest in a string of foreign-owned property and casualty (P&C) insurance company to quit the domestic market. Over the past decade, global insurers such as State Farm, AXA and Hartford opted to exit. While there have been numerous departures, there are still more than 150 P&C players competing in a consolidating sector where scale and marketing heft are increasingly critical to success. The vast majority have single-digit market share – Travelers had roughly 2 per cent of the market – and would need to spend billions to bulk up. There are also a handful of Canadian companies – including market leader Intact Financial Corp., Definity, Desjardins Group, Co-operators, Fairfax Financial Holdings Ltd. and Toronto-Dominion Bank – with ambitions to dominate the sector. Analysts say further auto and home insurer consolidation is as inevitable as highway fender benders on holiday weekends. Toronto-based Intact has moved onto the global stage as part of its consolidation strategy. In 2020, Intact and a Danish insurer acquired London-based RSA Insurance Group PLC, a major player in the Canadian market, for $12.4-billion. Institutional investors are willing to put money into consolidators such as Intact and Definity. Three larger domestic pension plans committed capital to the RSA purchase. Analysis: Why investors love Definity's big acquisition, helping the home and auto insurer extend its hot run For ambitious chief executives such as Intact CEO Charles Brindamour, an accomplished integrator of insurance businesses, the obvious next targets are Allstate Insurance Co. of Canada, which has a Chicago-based parent, and Aviva Insurance Co. of Canada, with an owner in London. Both companies have larger market share than Travelers, but similar challenges when it comes to further expanding their platforms. Both Allstate and Aviva will be looking at the economics behind the Definity deal and making a go-big-or-go-home decision. Travelers built its Canadian platform through acquisitions, highlighted by the 2013 purchase of Dominion of Canada General Insurance Co. for more than $1-billion. (Definity's acquisition of the company brings a business founded by Sir John A. Macdonald in 1887 back into Canadian hands.) Part of Travelers' expansion strategy centred on using a familiar U.S. brand – a red umbrella – to sell insurance north of the border. The campaign never really caught on. In part, that reflects a P&C industry that sells through independent agents, who care more about commissions than umbrellas. It also reflects domestic insurers spending heavily on advertising to sell online through flanker brands such Intact's Belair Direct and Definity-owned Sonnet. These campaigns drowned out Traveler's marketing. Travelers decided to sell at a time when industry dynamics favour P&C insurers, with what's known as a hard market on pricing. The Canadian division sold for 1.8 times its book value, an impressive premium. Travelers plans to use US$700-million of the sale's proceeds to buy back its own stock, a shareholder-friendly move. In soft insurance markets, when P&C insurers discount their rates to win customers, acquirers will offer far smaller premiums to book value on potential purchases. For Allstate and Aviva, this is a seller's market, one that may not last. Definity paid up for Travelers, and devoted the better part of a year negotiating the takeover, because the transaction vaulted the insurer into the country's top five players. The additional scale translates into $100-million a year in annual savings, a significant boost in the company's return on equity and a 30-per-cent increase in premiums. Definity went public in 2021 to do this sort of takeover, after being founded in 1871 as mutual company Economical Insurance, owned by its policyholders. CEO Rowan Saunders said in announcing the Travelers deal that 'this acquisition demonstrates our commitment to long-term growth and competitiveness.' It also avoids having Definity show up on lists of potential takeover targets, alongside Allstate and Aviva. As part of the initial public offering, the company and regulators struck a four-year moratorium on takeovers of Definity. The standstill agreement expires this fall. Buying Travelers should make Definity too large or too expensive for a domestic rival such as Intact to acquire. Or an even more tempting prize.
Yahoo
29-05-2025
- Business
- Yahoo
Definity enters $2.4bn deal to buy most of Travelers Canada
Definity Financial Corporation has agreed to acquire the majority of Travelers' Canadian operations for a cash consideration of nearly C$3.3bn ($2.4bn). The assets to be acquired are the personal insurance business and most of the commercial insurance business of Travelers Canada, excluding its Canadian surety operations. Travelers Canada, with approximately C$1.6bn in annual gross written premiums, is a national property and casualty (P&C) insurer with a diverse portfolio. The deal is contingent on regulatory approvals and is due to be completed in the first quarter of 2026 (Q1 2026). Definity plans to fund the acquisition through C$281m from a bought deal private placement, C$70m from a private placement with the Healthcare of Ontario Pension Plan, C$1.5bn in excess capital and C$1.6bn in new debt. Upon finalisation, Definity is looking to divest C$1bn of the excess capital to repay a term loan, subject to regulatory approval. The acquisition is expected to position Definity as one of the five largest P&C insurers in Canada, with around C$6bn in combined annual premiums, the Definity press release said. It will also accelerate the transformation of Definity's commercial insurance platform and scale to its personal lines business. Definity president and CEO Rowan Saunders said: 'This is a transformative acquisition that is squarely in line with the growth strategy we have set for Definity, one that will move us into the top four largest P&C insurers in Canada. 'This highly complementary business will diversify our portfolios, provide additional expertise and product offerings, and continue our track record of shareholder value creation.' Travelers has stated that it intends to use approximately $700m of the net cash proceeds from the transaction for additional share repurchases in 2026, while retaining the balance for ongoing operations and general corporate requirements. Travelers chairman and CEO Alan Schnitzer stated: 'This transaction is a reflection of our steadfast commitment to disciplined capital allocation and long-term value creation. "The evolution of the Canadian market over the past decade has made Definity a natural long-term owner for this business, a view affirmed by the compelling value of their proposal.' Meanwhile, in March, Swiss Re agreed to divest its full 10.05% stake, amounting to 11,647,217 common shares, in Definity. "Definity enters $2.4bn deal to buy most of Travelers Canada " was originally created and published by Life Insurance International, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
28-05-2025
- Business
- Yahoo
Definity's Travelers Canada deal could prompt consolidation as need for scale key, CEO says
By Nivedita Balu TORONTO (Reuters) -Canadian property and casualty insurer Definity Financial's $2.4 billion purchase of Travelers Cos' Canadian business could spur a wave of consolidation in Canada's insurance sector, its CEO said. The deal announced Tuesday will establish Definity as the fourth-largest property and casualty insurer in Canada and helped shares hit a record high on Wednesday. "In Canada, you need size and scale to keep investing in technology and AI and data and be relevant to your brokers and customers," CEO Rowan Saunders said in an interview. Saunders said the P&C insurance industry in Canada is a lot more fragmented and competitive than the banking industry, which is dominated by six big banks. Several foreign players operate in Canada, offering competitive products as insurance becomes a necessity in wildfire-prone regions in the western part of the country and floods become more regular occurrences due to climate change. "This might be a tipping point where a number of these international players will be paying attention to this deal and saying: 'If Travelers, at C$1.6 billion (in annual premiums), didn't think they had enough scale ... how would these companies that are much smaller than that do the same?'" "I think that could be a decision or a question that's asked around boardrooms, which might be a catalyst for ongoing consolidation in our industry." Scaling up will help insurers invest in technology systems, artificial intelligence, data and build efficient supply chain systems to deal with increasing claims from rising catastrophic events or personal claims. Saunders said deal talks began in New York last May where he discussed with Travelers' CEO Alan Schnitzer the importance of scale in Canada. Definity's purchase of Travelers' Canadian personal insurance and the majority of its commercial insurance business will add roughly C$1 billion in annual premiums to its personal lines business and C$600 million in annual premiums to its commercial unit. Definity's shares were up 13% on Wednesday at C$78.62. Sign in to access your portfolio
Hamilton Spectator
28-05-2025
- Business
- Hamilton Spectator
Definity signs deal to buy Travelers' Canadian operations for $3.3 billion
WATERLOO - Definity Financial Corp. says it will acquire most of the Canadian operations of U.S. insurance firm Travelers for $3.3 billion. Definity says the deal will make it the fourth largest property and casualty insurer in Canada. The agreement will give the Waterloo, Ont.-based firm an additional $1.6 billion in annual gross written premiums. It will add about $1 billion in annual premiums to its personal lines segment and roughly $600 million to its commercial lines business. Definity says the deal excludes Travelers' Canadian surety business. The transaction is subject to approval from the minister of finance and needs clearance under the Competition Act but is expected to close in the first quarter of 2026. This report by The Canadian Press was first published May 28, 2025.
