Definity reports over $200 million in income in 2021

By Aurélia Morvan | Feb. 28, 2022, 10:25 a.m.

Photo: Freepik

Definity Financial Corporation, the parent company of Economical Insurance, Sonnet Insurance, Petline Insurance Company and Family Insurance Solutions, has grown in the past year.

The company reported net income of $213.2 million for all of 2021, up from $153.9 million in 2020. This increase of 38.5 per cent or $59.3 million is primarily due to "improved underwriting performance and realized gains on our equity portfolio," the company says. The result was partially offset by "higher demutualization and IPO-related expenses.”

For the fourth quarter of 2021 alone, Definity reported net income of $33.7 million, compared with $66.7 million in Q4 2020. This result is down 49.5 per cent or $33 million.

Combined ratio

Definity recorded a combined ratio of 93.1 per cent in 2021, versus 94.6 per cent in 2020. It thus improved by 1.5 points.

For the fourth quarter of 2021 alone, the ratio was 94.6 percent, up from 89.1 percent in the fourth quarter of 2020. It deteriorated by 5.5 points.

Underwriting

Definity reported an underwriting gain of $194.5 million in 2021, up from $136.4 million in 2020. This 42.6 per cent or $58.1 million increase was driven by "higher favourable prior year claims development” and “lower claims frequency, due in part to COVID-19-related reduced activity levels (which impacted full year 2021 and only started impacting 2020 in the second quarter),” the insurer explains.

These results were offset by "recognition of inflationary trends across our auto and property lines, which negatively impacted the combined ratio by approximately 3 points in 2021.”

For the fourth quarter of 2021 alone, the company reported an underwriting gain of $40.3 million, compared with $72.7 million in Q4 2020. This decrease of 44.6 per cent or $32.4 million is explained by “higher levels of catastrophe losses in the fourth quarter of 2021,” Definity says, and by “reserve strengthening for auto inflation recorded in the current quarter."

Premiums

Definity's gross written premiums totalled $3.2 billion in 2021, up from $2.8 billion in 2020, for an increase of 14.8 per cent or $416.7 million.

For the fourth quarter of 2021 alone, gross premiums written were $846.6 million, versus $755.9 million in Q4 2020. This represents an increase of 12 per cent or $90.7 million.

The company attributes the growth for both the last quarter and for the year to its “strategic expansions in Sonnet, commercial lines, personal property, and ongoing firm market conditions.”

Looking at the results in closer detail:

In commercial lines, gross written premiums were $910.3 million in 2021, compared with $728.6 million in 2020. They thus rose by 24.9 per cent or $181.7 million. In Q4 2021, gross written premiums were up 17.8 per cent or $38.4 million to $254 million.
In personal lines, gross written premiums were $2.3 billion in 2021, versus $2.1 million in 2020. This amounts to an increase of 11.3 per cent or $235 million. In Q4 2021, they grew by 9.7 per cent or $52.3 million to $592.6 million.