Latest news with #propertyandcasualty
Globe and Mail
3 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.
CTV News
28-05-2025
- Business
- CTV News
Definity signs deal to buy Travelers' Canadian operations for $3.3 billion
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. The Canadian Press
Yahoo
08-05-2025
- Business
- Yahoo
HCI Group: Q1 Earnings Snapshot
TAMPA, Fla. (AP) — TAMPA, Fla. (AP) — HCI Group Inc. (HCI) on Thursday reported first-quarter profit of $69.7 million. On a per-share basis, the Tampa, Florida-based company said it had profit of $5.35. The results topped Wall Street expectations. The average estimate of three analysts surveyed by Zacks Investment Research was for earnings of $4.49 per share. The property and casualty insurance holding company posted revenue of $216.4 million in the period, which also beat Street forecasts. Three analysts surveyed by Zacks expected $210.2 million. _____ This story was generated by Automated Insights ( using data from Zacks Investment Research. Access a Zacks stock report on HCI at 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
