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Investing.com - Barclays initiated coverage on Definity Financial Corp (TSX:DFY) with an Equalweight rating and a price target of C$78.00 on Tuesday.
The Canadian property and casualty insurer, which recently completed its C$3.3 billion acquisition of Travelers Canada at 1.4 times price-to-book value, is now positioned as the fourth-largest P&C insurer in Canada.
While the acquisition is expected to be accretive to earnings per share over time, Barclays noted potential near-term underwriting margin pressure as Travelers Canada has historically operated at a 100-101% combined ratio, above Definity’s standalone performance.
Barclays forecasts personal auto combined ratios rising to 96.4% in 2026 and 95.9% in 2027, with commercial lines increasing to 92.6% and 92.2%, respectively, due to the integration of the Travelers portfolio.
Despite acknowledging Definity’s solid underwriting track record, digital capabilities, and growing broker relationships, Barclays believes the current stock price already reflects these strengths and the strategic benefits of the acquisition, limiting near-term return potential.
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