Definity Financial Corporation reported net income attributable to common shareholders of $103.8 million for the second quarter of 2024. This is a 32 per cent increase compared to the $71.6 million reported for the same period in 2023. 

Definity’s CEO, Rowan Saunders, highlighted that the company’s performance in the second quarter significantly exceeded its key financial targets, “from both top- and bottom-line perspectives.” He also pointed to rising premiums, an improved combined ratio, and favourable weather conditions as contributing factors. 

Philip Mather, Definity’s Executive Vice President and Chief Financial Officer, noted that the “seasonally strong second quarter contribution from our broker distribution platform completes the first half of 2024 on track to deliver on our full year expectations for this business.”  

Mather also mentioned that the company has financial capacity approaching $1.4 billion. “We remain confident in our ability to advance our strategic objectives while delivering on our financial targets.” 

Underwriting results 

The underwriting results showed net income of $93.7 million in Q2 2024, up from $41.2 million in Q2 2023, representing a 53 per cent increase year-over-year. 

In Q2 2024, catastrophe losses impacted Definity’s combined ratio by 1.6 percentage points, down 3.8 points from the 5.4 per cent impact recorded during the same period in 2023. 

Premiums 

Gross written premiums (GWP) amounted to $1.2 billion in Q2 2024, an increase of $155 million, or 14 per cent, compared to $1.1 billion reported in the same quarter last year. 

Personal lines GWP reached $852 million in Q2 2024, up from $744 million in Q2 2023, a 14.5 per cent increase year-over-year. As in Q1 2024, much of this growth came from personal auto insurance, where GWP rose by $86 million over the 12-month period. 

Personal lines accounted for 68 per cent of Definity’s total GWP volume, consistent with Q1 2024. 

For the first half of 2024, 58 per cent of premium volume was underwritten in Ontario, according to the company’s management report. Alberta and the Prairies accounted for 15 per cent, followed by British Columbia (12 per cent), Quebec (8 per cent), and Atlantic Canada (7 per cent). 

Approximately 91 per cent of premium volume is distributed through the brokerage network. Sales via the direct channel through Sonnet reached $103.8 million in Q2 2024. 

During an August 2 presentation to financial analysts, the company’s senior management reiterated its goal of reaching $1.5 billion in premiums from the brokerage network within three to five years. 

Commercial insurance 

Definity reported a 14 per cent increase in commercial insurance GWP, reaching $388 million in Q2 2024, up from $341 million in the same quarter the previous year. 

This growth is attributed to strong retention, achieving rate targets in a firm market environment in core segments, and further expanding capacities for small businesses and specialty products. 

In commercial insurance, the combined ratio was 86.6 per cent in Q2 2024, compared to 84.3 per cent in Q2 2023, a 2.3-point deterioration. 

Combined ratio 

The combined ratio stood at 90.1 per cent in the last quarter, compared to 95.3 per cent in the same quarter of 2023, reflecting a 5.2 percentage point improvement. 

The loss ratio was 60 per cent in the last quarter, a decrease of 3.7 percentage points compared to the 63.7 per cent loss ratio recorded in Q2 2023. 

Claims management expenses also improved, with the expense ratio at 30.1 per cent in Q2 2024, compared to 31.6 per cent in the same period in 2023. 

Personal auto insurance 

Definity saw a 19.5 per cent increase in personal auto insurance premiums for the quarter ended June 30, 2024, over a 12-month period. 

The company noted that “core accident year claims ratio continues to benefit from higher earned rates but continued to be impacted by heightened levels of theft and volatility from industry pools. The improvements in the combined ratio were partially offset by lower favourable claims development. Year to date, the personal auto combined ratio improved due to the same factors that impacted the second quarter.” 

In its management report, Definity reiterated its June decision to exit direct distribution of personal auto insurance in Alberta. No policies will be issued or renewed in this province through Sonnet after December 13. 

As of June 30, 2024, Sonnet’s GWP in Alberta for auto insurance totalled $65 million. 

The company stated that this decision should not affect Sonnet’s ability to underwrite home insurance.