Definity Financial Corporation Reports Fourth Quarter and Full Year 2025 Results

Executive Summary

• Definity Financial Corporation reported strong fourth-quarter and full-year 2025 financial results, with operating net income rising to $120.7 million in Q4 and $420.7 million for the full year, driven by robust underwriting performance and increased net investment income.
• The company successfully closed its transformative acquisition of Travelers' Canadian P&C insurance operations on January 2, 2026, for approximately $3.3 billion, which is expected to increase Definity’s pro forma gross written premiums by $1.5 billion to a combined $6.3 billion, securing a top-5 position in the Canadian market.
• The Board declared a 14.7% increase in the quarterly dividend to $0.215 per share, reflecting confidence in the company’s operational outlook and strong capital position, while book value per share grew 16.0% year-over-year to $33.78.

Key Details

• Financial Performance (Q4 2025 vs Q4 2024):
  • Operating Net Income: $120.7 million (up from $110.4 million).
  • Operating EPS: $0.99 (up from $0.95).
  • Gross Written Premiums (GWP): $1,212.1 million (up 9.2%).
  • Combined Ratio: 89.9% (improved from 90.3%).
  • Net Income Attributable to Common Shareholders: $58.0 million (down from $116.6 million, primarily due to $74 million in pre-tax expenses related to the Travelers Transaction, including FX hedge impacts and integration costs).
• Financial Performance (Full Year 2025 vs 2024):
  • Operating Net Income: $420.7 million (up from $310.2 million).
  • Full Year GWP: $4,808.1 million (up 8.1%).
  • Full Year Combined Ratio: 91.6% (improved from 94.5%).
  • Operating ROE: 12.2% (up from 10.6%).
  • Book Value Per Share: $33.78 (up 16.0% from $29.13).
• Line of Business Results:
  • Personal Insurance: GWP up 10.4% in Q4 (7.9% for the year). Auto combined ratio was 95.0%; Property combined ratio was 82.7%.
  • Commercial Insurance: GWP up 6.9% in Q4 (8.6% for the year). Combined ratio was 89.1%.
• M&A Activity (Travelers Transaction):
  • Closed on January 2, 2026.
  • Acquired St. Paul Fire and Marine Insurance Company and Travelers Casualty and Surety Company’s Canadian P&C operations (excluding surety and select lines).
  • Cash consideration: Approximately $3.3 billion.
  • Impact: Adds ~$1.5 billion to pro forma GWP, bringing total pro forma annual GWP to ~$6.3 billion.
• Capital and Dividends:
  • Dividend increased by 14.7% to $0.215 per share (payable March 23, 2026).
  • Equity attributable to common shareholders reached $4,049.7 million, driven by operating income and a $375.2 million net increase from private placements of common shares in Q2 2025.
  • Financial capacity increased to $2,892.0 million.
• Investment Income:
  • Net investment income was $61.1 million in Q4 2025 and $215.7 million for the year, driven by higher interest income from proceeds of senior unsecured notes and increased bond holdings.

Notable Quotes

• "2025 was a transformational year for Definity, as we delivered strong financial results, while announcing a milestone acquisition... The additional premiums from our recently closed Travelers Transaction bring us to a pro forma $6.3 billion in combined annual gross written premiums, which represents a top-5 position in the industry." – Rowan Saunders, President & CEO
• "We enter 2026 with top and bottom-line momentum in all three lines of business, which is an ideal foundation from which to begin the integration of our recently closed $3.3 billion acquisition. The approximately 15% increase in our quarterly dividend... demonstrates our confidence in our operational outlook and strong capital position." – Philip Mather, EVP & CFO