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Definity Financial TSE: DFY reported fourth-quarter and full-year 2025 results marked by strong underwriting performance and initial integration work following the recent closing of its acquisition of Travelers’ Canadian business. Management emphasized that the deal, which closed on January 2, 2026, is intended to increase scale, expand specialty capabilities, and support longer-term operating return on equity (ROE) improvement, while 2026 is expected to be a transition year as the acquired book is converted onto Definity’s platforms.
Full-year 2025 results and fourth-quarter performance
For full-year 2025, Definity reported operating earnings per share of CAD 3.53, up nearly 33% from 2024. The company said it met or exceeded its financial targets, including top-line growth of 8.8% (adjusted for an exited line), a combined ratio of 91.6%, and operating ROE of 12.2%. Management also cited a 16% increase in book value per share during the year, supported by operating performance and private placements of common shares completed in the second quarter of 2025.
In the fourth quarter, Definity posted operating earnings per share of CAD 0.99. The combined ratio was 89.9%, which management attributed to broad-based strength, including particularly strong results in personal property and commercial insurance. Consolidated operating net income for the quarter was CAD 120.7 million, reflecting underwriting income along with contributions from the insurance broker platform and net investment income.
Line-by-line underwriting and premium growth
Chief Financial Officer Philip Mather provided line-of-business updates for 2025 and the fourth quarter:
- Personal auto: Gross written premiums rose 9.7% in Q4 and 8.9% for the year, adjusted for the Sonnet Alberta exit. The Q4 combined ratio improved to 95%, with management citing earned rate increases, improved Sonnet profitability, and a lower expense ratio. For 2026, the company expects a mid- to upper-90s combined ratio as it integrates the acquired book.
- Personal property: Gross written premiums increased 11.6% in Q4 and 9% for the year, supported by higher average written premiums and increased unit growth after actions in higher-peril regions and product enhancements. The combined ratio was 82.7% in Q4 and 88.5% for the year, improving 7.8 points from 2024. For 2026, management expects a low- to mid-90s combined ratio in the first year of integration.
- Commercial: Premiums grew 6.9% in Q4 and 8.6% for full-year 2025, driven by retention, rate achievements, and expansion in small business and specialty. The Q4 combined ratio was 89.1%, while the full-year combined ratio was 89.3%, essentially unchanged from 2024. The company said results reflected lower catastrophe losses and a reduced expense ratio, partly offset by a higher core accident year claims ratio. Management noted that catastrophe losses and the core accident year ratio were impacted in part by a revised definition of a single-claim catastrophe loss.
On the call, management said it expects 2026 combined ratios in the low- to mid-90s across personal property and commercial, and mid- to upper-90s in personal auto, reflecting integration of the acquired Travelers portfolio, which management said operated near break-even in 2025 due to elevated expenses.
Travelers acquisition: scale, synergies, and integration timeline
Chief Executive Officer Rowan Saunders described the acquisition as transformational, adding approximately CAD 1.5 billion in premiums and positioning Definity in the top five Canadian P&C insurers, while reiterating an updated objective of becoming a top three P&C insurer. Saunders said the acquired commercial book expands capabilities in mid-market and specialty, and the personal lines portfolio (close to CAD 1 billion in premiums) is expected to benefit from migration to Definity’s digital buying platform.
Definity reiterated its target of at least CAD 100 million in annual cost synergies to be realized over a three-year integration period. Management said these synergies are expected to come from technology platform consolidation as personal and commercial volumes migrate to the Vyne platform, elimination of U.S. parent company service charges, and operational efficiencies from removing duplicative activities and gaining scale. Mather said these synergy drivers represent six to seven points of combined ratio reduction for the acquired business before considering future loss cost benefits. The company expects roughly two-thirds of integration efforts to be completed in the first 18 months, translating to about one-third of total synergies earned in that period.
On integration progress, Definity said transition services were operational from day one and that it has already begun moving new business intake to Definity. The company expects to start the policy conversion process in the second quarter of 2026.
In Q&A, Saunders said 2026 will be a transition year focused on retention and conversion. He said the Travelers portfolio may contract somewhat in 2026 due to prior underwriting actions and some expected dislocation during conversion, but he characterized the expected impact as not material. Management said it expects Definity’s existing book to continue growing at upper single-digit rates, while acquired portfolio growth is expected to be flatter in early 2026 and improve as conversion progresses.
2026 outlook: premiums, combined ratio, investment income, and brokerage growth
For 2026, Definity guided to gross written premiums exceeding CAD 6.5 billion, representing growth of at least 35% from 2025, driven by the Travelers acquisition and ongoing organic growth. The company also set a target for a sub-95% combined ratio in 2026 despite integrating a near break-even acquired business. Management said it is maintaining its operating ROE target for 2026, noting that synergy realization is expected to begin contributing more meaningfully in 2027, with full realization by the end of the three-year period. Saunders said the company sees a path for the acquired book to operate sustainably in the low 90s combined ratio as integration benefits take hold.
Definity also provided an update on investment income expectations. Net investment income totaled CAD 215.7 million for 2025, up nearly 9% year over year, driven primarily by higher interest income and increased bond holdings. For 2026, management expects net investment income to exceed CAD 300 million, supported by asset growth from the acquisition. In Q&A, Mather said Definity now has just north of CAD 9 billion of invested assets and a blended book yield of about 3.4%, heavily weighted toward fixed income.
On its national broker platform, Definity reported CAD 94 million of operating income before finance costs and minority interests in 2025 and said it expects approximately 20% growth in 2026, with a 60/40 split between distribution income and intercompany commission income. Executives discussed how AI tools are being used to support the broker platform through lead generation, service improvements, customized advice for commercial segments, and operational automation, while also describing consolidation trends in Canadian brokerage.
Separately, management noted it strengthened reserves in exited lines, contributing to a CAD 10 million loss in the quarter, driven by actions related to bodily injury amounts. Executives said the exited book is fully in runoff with no future earned premium and that the company aimed to leave 2025 with a more robust balance sheet position against that business.
About Definity Financial TSE: DFY
Definity Financial Corp is a multi-channel, property, and casualty insurance company. It offers auto, property, liability, and pet insurance products to individual customers.
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