Definity Financial Corporation has announced plans to acquire the bulk of Travelers’ Canadian operations in a $3.3 billion all-cash transaction. The deal, disclosed after markets closed on May 27, values the acquired business at approximately 1.4 times its book value.
The acquisition includes Travelers’ Canadian property and casualty operations, representing approximately $1.6 billion in gross written premiums. Travelers will retain its Canadian surety operations. Of the acquired premium volume, close to $1 billion stems from personal lines (auto and home insurance), while over $600 million comes from commercial lines.
According to data compiled by MSA Research and cited by Definity, Travelers ranked 12th nationally in terms of property and casualty insurance revenue in 2024.
With this acquisition, Definity is set to become the fourth-largest property and casualty insurer in Canada, says CEO Rowan Saunders during a conference call with analysts. “This is a transformative acquisition that is squarely in line with the growth strategy we’ve set for Definity,” he says. The company’s market share is expected to rise from 5 per cent to 6.7 per cent once the deal closes.
Personal lines will see a 30 per cent increase in volume, positioning Definity among the leading players in that segment nationwide. The company expects the acquisition to enhance its digital platforms and improve the broker experience, according to its official statement.
Upon regulatory approval, Definity’s annual gross written premiums will reach approximately $6 billion. Roughly one-third of that will come from commercial lines, 42 per cent from auto insurance, and 25 per cent from home insurance.
Commercial lines expansion
The commercial segment acquired from Travelers will grow Definity’s commercial portfolio by 40 per cent, allowing the company to broaden its capabilities in marine, professional liability, and other specialty lines. This will elevate Definity to the fourth-largest commercial insurer in the country.
During the May 27 call, Saunders reiterated that the company’s demutualization in fall 2021 gave it the financial flexibility to participate in the consolidation of the Canadian insurance sector. “More importantly, this strengthens our position within the broker channel and deepens our relationships with existing broker partners,” he says.
“What makes this announcement so rewarding is that Travelers Canada has long been at the top of our list for years, as it offers us the right combination of size, talent, and business mix,” he adds.
Transaction details
The deal is expected to close in the first quarter of 2026. Definity will acquire a holding company (8527512 Canada Inc.), Travelers Insurance Company of Canada, and The Dominion of Canada General Insurance Company.
Travelers will retain its Canadian surety operations as well as the Canadian branch of St. Paul Fire and Marine Insurance Company. According to MSA Research, St. Paul’s net written premiums reached $35.3 million in 2024, about 2.1 per cent of Travelers’ total Canadian net premiums of $1.6 billion. Saunders estimates that approximately $200 million in gross written premiums will remain with Travelers post-transaction.
The acquisition will be financed through two private placements totalling $351 million, about $1.5 billion in excess capital from both companies, and $1.6 billion in new debt. RBC Capital Markets is serving as financial advisor to Definity.
The company expects its debt-to-capital ratio to be just under 30 per cent at closing and aims to bring it down to 25 per cent within two years.
“Since this is Definity’s first large-scale acquisition, the transaction raises integration and execution risks in the short to medium terms. While there have been no large-scale integrations, Morningstar DBRS notes that the company’s management has successfully led large reorganization projects in the past, thereby partially mitigating this concern,” the ratings agency said in a same-day note.
“The resulting increase in leverage (from zero per cent previously), on account of the expected $1.6 billion in new term debt and bank loans, weakens capitalization but is not going to adversely affect the overall credit rating,” the agency added.
As of March 31, 2025, Definity and its subsidiaries had more than $4.5 billion in gross written premiums. Travelers, for its part, employs over 30,000 people and posted revenue exceeding US$46 billion in 2024.
In a separate statement, Alan Schnitzer, chairman and CEO of Travelers, said: “The evolution of the Canadian market over the past decade has made Definity a natural long-term home for this business, as reflected in the compelling value of their offer. I am confident our customers, brokers, and Canadian colleagues will benefit from becoming part of one of the country’s leading fully integrated P&C insurers.”
The U.S. insurer announced it will use approximately US$700 million of the proceeds from the sale to repurchase shares.
