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NEW YORK - The Travelers Companies, Inc. (NYSE:TRV), a leading property casualty insurer, has reached an agreement to divest its personal and majority of commercial insurance operations in Canada to Definity Financial Corporation (TSX:DFY) for approximately US$2.4 billion. Definity, which currently maintains a market capitalization of US$5.7 billion and boasts a "GREAT" financial health score according to InvestingPro, has demonstrated strong performance with a 57.74% return over the past year. The transaction, which is anticipated to close in the first quarter of 2026 pending regulatory approvals and customary closing conditions, will see Travelers retain its market-leading surety business in the region.
The sale price is calculated at 1.8 times the book value after adjusting for around US$0.8 billion of excess local capital that Travelers plans to repatriate in a tax-efficient manner. Alan Schnitzer, Chairman and CEO of Travelers, expressed confidence in Definity as the natural long-term owner for the businesses being sold, emphasizing the value of the deal and the benefits it would bring to Canadian customers, brokers, and colleagues. Definity’s strong financial position is evident in its healthy current ratio of 2.78 and impressive revenue growth of 12.56% in the last twelve months. According to InvestingPro’s Fair Value analysis, the stock appears to be trading near its fair value, with multiple additional insights available to subscribers.
Travelers intends to allocate approximately US$0.7 billion of the net cash proceeds from the sale to additional share repurchases in 2026, with the remainder to be used to support ongoing operations and for general corporate purposes. The company expects the transaction and subsequent share repurchases to have a slight positive impact on its earnings per share over the next several years.
The financial advisor for Travelers in this deal was Jefferies LLC, with legal counsel provided by Skadden, Arps, Slate, Meagher & Flom LLP and Stikeman Elliott LLP. The book value multiple, which excludes the US$0.8 billion of excess capital, is based on the equity of the entities being sold as of December 31, 2024, following the separation of the surety business.
Travelers, a component of the Dow Jones Industrial Average, has over 30,000 employees and generated revenues exceeding $46 billion in 2024. This transaction is part of the company’s strategic efforts to focus on disciplined capital allocation and long-term value creation.
The information in this article is based on a press release statement. For comprehensive analysis and detailed insights into Definity’s financials, including exclusive ProTips and advanced metrics, explore InvestingPro’s extensive research reports, available for over 1,400 top stocks.
In other recent news, Definity Financial Corporation reported its first-quarter 2025 earnings, missing analyst expectations for both earnings per share (EPS) and revenue. The company posted an EPS of $0.65, which was below the forecasted $0.7823, and recorded revenue of $1.03 billion, falling short of the $1.05 billion projection. Despite these results, Definity Financial’s operating net income for the quarter was $75.9 million, and premiums increased by 9.6%, adjusted for exited lines. The company also reported a combined ratio of 94.5%, slightly up from the previous year’s 93.9%. Definity Financial is targeting a sub-95% consolidated combined ratio in 2025 and expects commercial lines growth of around 10%. Analysts from firms such as BMO Capital and National Bank Financial inquired about the company’s performance during the earnings call, with a focus on the profitability of the SONNET auto portfolio and commercial lines growth. The company remains optimistic about maintaining profitability in personal auto and property lines and anticipates a 15% growth in distribution income.
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