For the third quarter ended September 30, 2024, Definity Financial Corporation reported net income attributable to common shareholders of $104.8 million.

This compares with a net loss attributable to common shareholders of $48.3 million in the third quarter of 2023.

In the press release accompanying the results published on November 7, Definity CEO Rowan Saunders underlined that the quarter was marked by a number of major weather-related claims. “These events had a significant effect on our underwriting performance, representing a more than 17-point impact to our combined ratio, which was well above expectations,” he stated.

Excluding the Alberta personal auto market through its subsidiary Sonnet, Definity reported a 12.2% increase in gross written premiums over a 12-month period.

As was the case at the end of the previous quarter, the company still has nearly $1.4 billion to continue its growth. Some $407 million of this came from surplus capital, with the remaining $972 million representing the leverage that this surplus makes it possible to finance.

Underwriting performance  

In the third quarter of 2024, the underwriting result showed a loss of $33.1 million, compared with a net loss of $10.3 million in the same quarter of the previous year.

On October 10, Definity reported that catastrophe losses totaled $170 million. Some 75% of these losses affected individuals who insure their property with the company.

After the first nine months of 2024, net catastrophe losses totalled $218 million, pointed out Philip Mather, Executive Vice President and Chief Financial Officer. This is equivalent to the same amount recorded for the 12 months of the previous year. 

The catastrophe loss ratio, at 17.3 points last quarter, is 3.8 points higher than the same ratio for the third quarter of 2023, which stood at 13.5 points. The company points out that this deterioration in claims experience was offset by an improvement in claims expenses and claims.

Premiums 

Gross Written Premiums (GWP) totaled $1.1 billion in the third quarter of 2024, up $103 million, or 9.9%, compared with the total of $1.0 billion reported in the third quarter of 2023.

Personal lines GWP reached $816 million in the third quarter of 2024, compared with $749 million in the same period last year. This represents a year-on-year increase of 8.9%. Most of the increase came from personal auto insurance, where GWP climbed 10.3% year-on-year.

Personal auto insurance accounted for 43% of premium volume in the third quarter of 2024. This segment is followed by commercial lines (31%) and personal property (26%), which includes home insurance and pet-related products via the company’s subsidiary Petline. 

As was the case in the previous quarter's financial results, the company reported that 91% of its premium volume is distributed through its broker channel and its 600 independent offices.

Some 58% of premium volume comes from Ontario. The remainder comes from Alberta and the Prairies (13%), British Columbia (13%), the Atlantic provinces (8%) and Quebec (7%).

Commercial lines 

The company reported a 12.6% increase in commercial lines GWP, which reached $327 million in the third quarter of 2024, compared with $291 million in the same quarter of 2023.

As was the case in the second quarter, Definity attributes this increase to “strong retention and rate achievement in a firm market environment in our core segments, and further expansion of our small business and specialty capabilities.” 

In commercial lines, the combined ratio stood at 89.9% in the third quarter of 2024, compared with 86.6% in the same quarter of 2023. This represents a difference of 3.3 points.

Combined ratio  

On the claims side, the combined ratio stood at 103.4% in the third quarter of 2024, compared with 102.5% in the same quarter of the previous year. This represents a difference of 0.9 percentage points.

The claims-to-premiums ratio, or loss ratio, stood at 74.5% in the third quarter. This represents a difference of 1.6 percentage points compared with the loss ratio of 72.9% recorded in the third quarter of last year.

The company reported an improvement in claims management expenses, where the ratio reached 28.9% in the third quarter of 2024, compared with 29.6% in the same period of 2023. This is equivalent to a drop of 0.7 percentage points.