Definity enters $2.4bn deal to buy most of Travelers Canada
Definity Financial Corporation has agreed to acquire the majority of Travelers’ Canadian operations for a cash consideration of nearly C$3.3bn ($2.4bn).
The assets to be acquired are the personal insurance business and most of the commercial insurance business of Travelers Canada, excluding its Canadian surety operations.
Travelers Canada, with approximately C$1.6bn in annual gross written premiums, is a national property and casualty (P&C) insurer with a diverse portfolio.
The deal is contingent on regulatory approvals and is due to be completed in the first quarter of 2026 (Q1 2026).
Definity plans to fund the acquisition through C$281m from a bought deal private placement, C$70m from a private placement with the Healthcare of Ontario Pension Plan, C$1.5bn in excess capital and C$1.6bn in new debt.
Upon finalisation, Definity is looking to divest C$1bn of the excess capital to repay a term loan, subject to regulatory approval.
The acquisition is expected to position Definity as one of the five largest P&C insurers in Canada, with around C$6bn in combined annual premiums, the Definity press release said.
It will also accelerate the transformation of Definity’s commercial insurance platform and scale to its personal lines business.
Definity president and CEO Rowan Saunders said: “This is a transformative acquisition that is squarely in line with the growth strategy we have set for Definity, one that will move us into the top four largest P&C insurers in Canada.
“This highly complementary business will diversify our portfolios, provide additional expertise and product offerings, and continue our track record of shareholder value creation.”
Travelers has stated that it intends to use approximately $700m of the net cash proceeds from the transaction for additional share repurchases in 2026, while retaining the balance for ongoing operations and general corporate requirements.
Travelers chairman and CEO Alan Schnitzer stated: “This transaction is a reflection of our steadfast commitment to disciplined capital allocation and long-term value creation.
“The evolution of the Canadian market over the past decade has made Definity a natural long-term owner for this business, a view affirmed by the compelling value of their proposal.”
Meanwhile, in March, Swiss Re agreed to divest its full 10.05% stake, amounting to 11,647,217 common shares, in Definity.
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