By Chris Munro

May 27 - (The Insurer) - Definity Financial Corporation’s C$3.3 billion ($2.4 billion) acquisition of the bulk of Travelers Canada “is a rare and transformative opportunity”, president and CEO Rowan Saunders has declared.

In a presentation shortly after Definity and Travelers announced the definitive deal, Saunders said the transaction demonstrated the company’s commitment to build “a Canadian champion in the still fragmented P&C insurance industry”, and that it “significantly accelerates our growth profile and delivers on our strategic goal of becoming a top five P&C insurer in Canada”.

As Saunders noted, news of the deal, which is expected to conclude in Q1 2026 given regulatory approval, comes three and half years after Definity’s demutualisation and IPO.

“The primary intention behind demutualising and becoming a public company was to have the access to capital that would allow us to participate meaningfully in a consolidating industry,” said Saunders.

“Now, the years of planning and preparation are coming to fruition as we make this announcement.”

Saunders noted how in the years since Definity’s IPO, the company has discussed its desire to become a larger player in the Canadian P&C industry, while also highlighting that the Waterloo, Ontario-based company has “been clear about our acquisition appetite”.

“What makes this announcement so rewarding is that Travelers Canada has been at the top of our list for years, as it offers us the right combination of size, talent and business mix,” said Saunders.

“It effectively checks off all of our key priorities. We’ve worked for many months to be able to advance to this point. I’m thrilled that Travelers found our offer compelling,” Saunders added.

The executive said that consolidation would put the combined company in a stronger position to succeed in the face of industry challenges such as climate change, along with the increased need to invest in technology and data in order to remain relevant and responsive to customers’ needs.

“This is why I am confident that Travelers Canada’s customers, brokers and employees will benefit from becoming part of the Definity story,” said Saunders.

“We look forward to what we will be able to accomplish together. As two long-established and trusted insurers in the Canadian market, we are guided by a similar purpose and shared values, and we remain committed to making insurance better,” the executive added.

Saunders said the addition of Travelers Canada’s C$1.6 billion in annual gross premiums written (GPW) brings Definity’s proforma GPW to C$6 billion in combined annual premiums, an increase of around a third.

The deal, as Saunders noted, will also move Definity up to fourth in the list of Canada’s largest P&C carriers, up from its current sixth spot.

“Importantly, (the acquisition) strengthens our position in the broker channel and allows us to build on our existing deep broker relationships,” said Saunders.

“We will also be able to enhance our client and broker offering across the combined platform through our technology and data capabilities, expanded product suite and addition of specialised talent,” he added.

Alongside adding scale to its operations, Saunders touted how the “financially compelling” Travelers Canada deal “will be immediately accretive to operating EPS, with double-digit run-rate accretion expected within three years of closing”.

Definity estimates that the internal rate of return will be over 20%, and the company sees significant value creation opportunities through scale benefits and platform efficiencies.

Estimated pre-tax run-rate synergies stand at C$100 million before considering any potential loss cost improvements.

“Further, we can now optimise our previously unlevered balance sheet through the strategic deployment of excess capital and utilisation of financial leverage capacity, which we expect will enhance our run-rate operating ROE by over 200 basis points and enable us to sustainably target mid-teens post integration,” Saunders stated.