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Definity’s Acquisition of Travelers Canada Building a Canadian Champion May 27, 2025
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2 2 Cautionary Note Regarding Forward-Looking Information This presentation, and any related oral statements, contain “forward-looking information” within the meaning of applicable securities laws in Canada. Forward-looking information may relate to our future business, financial outlook and anticipated events or results and may include information regarding our financial position, business strategy, growth strategies, addressable markets, budgets, operations, financial results, taxes, plans and objectives. In some cases, forward-looking information can be identified by the use of forward-looking terminology such as “plans”, “aims”, “targets”, “expects” or “does not expect”, “is expected”, “an opportunity exists”, “budget”, “scheduled”, “estimates”, “forecasts”, “projection”, “prospects”, “strategy”, “intends”, “anticipates”, “does not anticipate”, “believes”, or variations of such words and phrases or statements that certain actions, events or results “can”, “may”, “could”, “would”, “might”, “will”, “will be taken”, “occur” or “be achieved”. In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information. Specifically, forward-looking information in this presentation includes, among other things, statements in respect of: our financial performance, including gross written premiums and operating return on equity; our competitive position in our industry; our acquisition of Travelers’ Canadian operations excluding select business lines (the “Transaction”); the terms of the Transaction, including the anticipated purchase price, purchase metrics and required regulatory approvals; the anticipated timing of the closing of the Transaction; the characteristics of our business after the completion of the Transaction; certain strategic benefits and opportunities expected to result from the Transaction; the timing for expected synergies resulting from the Transaction to be realized; projected financial measures following the closing of the Transaction, including the expected internal rate of return, the expected leverage ratio, and the estimated one-time integration and restructuring costs following the closing; and our anticipated financial performance following the Transaction. Statements containing forward- looking information are not historical facts, but instead represent management’s expectations, estimates and projections regarding possible future events or circumstances. Our assessment of, and targets for, gross written premiums, combined ratio and operating return on equity constitute forward-looking information. See Section 4 “Operating Environment and Outlook” and “Financial Targets” in our Management’s Discussion and Analysis (“MD&A”) for the year ended December 31, 2024 for additional information concerning our strategies, assumptions and outlook in relation to those assessments. Forward-looking information in this presentation is based on our opinions, estimates and assumptions in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors that we currently believe are appropriate and reasonable in the circumstances. In addition to other estimates and assumptions which may be identified herein, estimates and assumptions have been made regarding, among other things: that the Transaction will be effected as currently proposed; that sources of funding of the Transaction will be available in a timely manner on terms acceptable to Definity; that all requisite approvals will be obtained in a timely manner in form and substance acceptable to Definity; that the Transaction will otherwise proceed on the currently anticipated timing; that the expected benefits of the Transaction will be realized; and that the applicable economic and political environments and current industry conditions will generally continue. Despite a careful process to prepare and review the forward-looking information, there can be no assurance that the underlying opinions, estimates and assumptions will prove to be correct. Forward-looking information is necessarily based on a number of opinions, estimates and assumptions that we considered appropriate and reasonable as at the date such st atements are made, and are subject to many factors that could cause our actual results, performance or achievements, or other future events or developments, to differ materially from those expressed or implied by the forward-looking statements, including, without limitation, the following factors: • Definity’s ability to continue to offer competitive pricing or product features or services that are attractive to customers; • Definity’s ability to appropriately price its insurance products to produce an acceptable return, particularly in provinces where the regulatory environment requires auto insurance rate increases to be approved or that otherwise impose regulatory constraints on auto insurance rates; • Definity’s ability to accurately assess the risks associated with the insurance policies that it writes; • Definity’s ability to assess and pay claims in accordance with its insurance policies; • Definity’s ability to obtain adequate reinsurance coverage to manage risk; • Definity’s ability to accurately predict future claims frequency or severity, including the frequency and severity of weather-related events and the impact of climate change; • Definity’s ability to address inflationary cost pressures through pricing, supply chain, or cost management actions; • the occurrence of unpredictable catastrophe events; • litigation and regulatory actions, including potential claims in relation to demutualization and our IPO and unclaimed demutualization benefits and the tax treatment of related amounts transferred to the Company, and COVID-19-related class- action lawsuits that have arisen and which may arise, together with associated legal costs; • unfavourable capital market developments, interest rate movements, changes to dividend policies or other factors which may affect our investments or the market price of our common shares; • changes associated with the transition to a low-carbon economy, including reputational and business implications from stakeholders’ views of our climate change approach or of our environmental or climate change related representations (i.e. “greenwashing”), that of our industry, or that of our customers; • Definity’s ability to successfully manage credit risk from its counterparties; • foreign currency fluctuations; • Definity’s ability to meet payment obligations as they become due; • Definity’s ability to maintain its financial strength rating or credit rating; • Definity’s dependence on key people; • Definity’s ability to attract, develop, motivate, and retain an appropriate number of employees with the necessary skills, capabilities, and knowledge; • Definity’s ability to appropriately collect, store, transfer, and dispose of information; • Definity’s reliance on information technology systems, software, internet, network, data centre, voice or data communications services and the potential disruption or failure of those systems or services, including disruption as a result of cyber security risk or of a third-party service provider; • failure of key service providers or vendors to provide services or supplies as expected, or comply with contractual or business terms;
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3 3 Cautionary Note Regarding Forward-Looking Information (cont’d) If any of these risks or uncertainties materialize, or if the opinions, estimates or assumptions underlying the forward-looking information prove incorrect, actual results or future events might vary materially from those anticipated in the forward-looking information. The opinions, estimates or assumptions referred to above and described in greater detail in Section 11 – “Risk Management and Corporate Governance” of our MD&A for the year ended December 31, 2024 should be considered carefully by readers. To the extent any forward-looking information in this presentation constitutes a “financial outlook” within the meaning of applicable securities laws, such information is being provided to assist investors in understanding the potential financial impact of the Transaction. Such information may not be appropriate for other purposes. Although we have attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, the factors above are not intended to represent a complete list and there may be other factors not currently known to us or that we currently believe are not material that could also cause actual results or future events to differ materially from those expressed in such forward-looking information. There can be no assurance that such forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information, which speaks only as at the date made. The forward-looking information contained in this presentation represents our expectations as at the date of this presentation (or as at the date they are otherwise stated to be made) and are subject to change after such date. However, we disclaim any intention or obligation or undertaking to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable securities laws in Canada. All of the forward-looking information contained in this presentation is expressly qualified by the foregoing cautionary stateme nts. • Definity's ability to obtain, maintain and protect its intellectual property rights and proprietary information or prevent third parties from making unauthorized use of our technology; • Definity’s ability to effectively govern the use of models, artificial intelligence, and generative AI technology; • compliance with and changes in legislation or its interpretation or application, or supervisory expectations or requirements, including changes in the scope of regulatory oversight, effective income tax rates, risk-based capital guidelines, accounting standards, and generally accepted actuarial techniques; • changes in domestic or foreign government policies, such as cross-border tariffs or trade policies, may negatively impact the Canadian economy and the P&C insurance industry and/or exacerbate other risks to Definity; • failure to design, implement and maintain effective controls over financial reporting and disclosure which could have a material adverse effect on our business; • deceptive or illegal acts undertaken by an employee or a third party, including fraud in the course of underwriting insurance or administering insurance claims; • Definity’s ability to respond to events impacting its ability to conduct business as normal; • Definity’s ability to implement its strategy or operate its business as management currently expects; • general business, economic, financial, political, and social conditions, particularly those in Canada; • the emergence or continuation of widespread health emergencies or pandemics, and their impact on local, national, or international economies, as well as their heightening of certain risks that may affect our business or future results; • the competitive market environment and cyclical nature of the P&C insurance industry; • the introduction of advanced technologies, disruptive innovation or alternative business models by current market participants or new market entrants; • distribution channel risk, including Definity’s reliance on brokers to sell its products; • Definity’s dividend payments being subject to the discretion of the Board and dependent on a variety of factors and condition s existing from time to time; • the discontinuance, modification, or failure to renew or complete Definity’s normal course issuer bid; • Definity’s dependence on the results of operations of its subsidiaries and the ability of the subsidiaries to pay dividends; • Definity’s ability to manage and access capital and liquidity effectively; • Definity's ability to successfully identify, complete, integrate and realize the benefits of acquisitions or manage the associated risks, including with respect to the Transaction; • management’s estimates and judgments in respect of IFRS 17 and its impact on various financial metrics; • periodic negative publicity regarding the insurance industry, Definity, or Definity Insurance Foundation; and • management’s estimates and expectations in relation to interests in the broker distribution channel and the resulting impact on growth, income, and accretion in various financial metrics.
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Definity’s Acquisition of Travelers Canada > Introduction Introduction OUR PURPOSE Building a better world by helping our clients and communities adapt and thrive OUR AMBITION To be one of Canada’s leading and most innovative P&C insurers OUR PROMISE Making insurance better Definity to acquire Travelers’ Canadian operations1 for $3.3 billion Travelers Canada is a national P&C insurer with ~$1.6 billion1 in annual gross written premiums Value creation through scale benefits and cost synergies leads to an enhanced return profile for the combined business Capital structure optimized via strategic deployment of excess capital and utilization of significant leverage capacity Note: all figures in this presentation are in C$ unless specified otherwise 1. Per company reports. Transaction perimeter excludes select business lines (including surety) retained by Travelers with GWP o f ~$200 million. 4 4
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5 5 ✓ Optimizes balance sheet via strategic deployment of excess capital and utilization of financial leverage capacity; expected to enhance operating ROE2 by over 200 bps3 to sustainably target mid-teens ✓ Debt-to-capital ratio2 expected to return to long term target within 24 months of close ✓ Capital ratio remains strong with minimum capital test maintained above 190% operating target Provides a rare combination of size, strategic fit and compelling financial rationale Travelers Canada Accelerates Our Growth Strategy STRONG STRATEGIC FIT COMPELLING FINANCIAL RATIONALE ENHANCED BUSINESS MIX OPTIMIZED BALANCE SHEET, ENHANCED RETURNS ✓ Strengthens commercial insurance offerings and expertise, specifically adding new capabilities in specialty lines ✓ Enhances underwriting capabilities with larger scale within personal insurance ✓ Expanded offerings and consistent service proposition drives enhanced traction and growth within broker channel Definity’s Acquisition of Travelers Canada > Building a Canadian Champion ✓ Establishes Definity as the #4 P&C insurer in Canada1 and strengthens our leadership position in the broker channel ✓ Enables scaling of core commercial lines, while accelerating expansion into highly desirable specialty lines ✓ Increases presence in personal lines leveraging scale benefits and digital platform synergies ✓ Value creation through scale benefits and platform efficiencies with estimated run-rate synergies of $100 million (pre-tax), before considering loss cost improvements ✓ Immediately accretive to operating EPS2, with double-digit accretion expected within 36 months of close3 ✓ Estimated internal rate of return in excess of 20%4 1. MSA Research, based on 2024 insurance revenue. 2. This is a supplementary financial measure, non-GAAP financial measure, or a non-GAAP ratio that does not have a standardized meaning prescribed by GAAP and is not necessarily comparable to similar measures provided by other companies. Refer to “Suppleme ntary Financial Measures and Non-GAAP Financial Measures and Ratios” in this presentation and “Section 11 – Supplementary Financial Measures and Non-GAAP Financial Measures and Ratios” in our latest MD&A, which is incorporated by reference herein, for further details. 3. Includes run-rate expense synergies and excludes impact of non-recurring integration costs. 4. Internal rate of return, based on target capital structure of 75% equity and 25% debt.
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6 6 Travelers Canada strengthens our presence and positions Definity as a prominent player in the Canadian P&C industry Well Established, Highly Complementary Business Definity’s Acquisition of Travelers Canada > Overview Attractive CI / Specialty Lines Portfolio Ranked #12 in Canada2 ~$1.6B in Gross Written Premiums1 1. Based on 2024 GWP, per company reports; Transaction perimeter excludes select business lines (including surety) retained by T ravelers with GWP of ~$200 million. 2. Based on insurance revenue per 2024 MSA data excluding Definity exited lines. Combined Premiums is the combined total gross written premiums of Definity and Travelers Canada from the sale of insurance du ring a specified period, including premiums assumed and excluding exited lines. Definity's total gross written premiums is a supplementary financial measure, non -GAAP financial measure, or a non-GAAP ratio that does not have a standardized meaning prescribed by GAAP and is not necessarily comparable to similar measures provided by other companies. Refer to “Supplementary Financial Measures and Non -GAAP Financial Measures and Ratios” in this presentation and “Section 11 – Supplementary Financial Measures and Non-GAAP Financial Measures and Ratios” in our latest MD&A, whic h is incorporated by reference herein, for further details. ~$6.0B Combined Premiums1,2 Ranked #4 in Canada2 Travelers Canada Standalone Combined Highlights ~$1.6B Enhanced Business Mix Combined Business Mix Repositioning Definity within Canada2 #6 #4 Combined ~$6.0B Personal Auto 40% Personal Property 22% CI / Specialty 38% Personal Auto 42% Personal Property 25% CI / Specialty 33% 5.0% Market Share 6.7% Market Share
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7 7 Enhancing Our Commercial Presence and Expertise Definity’s Acquisition of Travelers Canada > Strategic Fit & Enhanced Business Mix Significant Increase in Commercial Portfolio1 Small Business Middle Market Specialty Lines $1.4B ~$2.0B Scales core CI lines of business while sustaining Definity’s low 90s combined ratio3 run-rate target post integration • Well-positioned to expand Travelers Canada’s business given alignment on core products, geographical spread and broker distribution network Acquisition of specialty and niche in-house capabilities • Significantly bolsters our commercial lines portfolio, adding new capabilities including Management Liability, Ocean Marine and a more comprehensive Specialty offering Grow share of wallet with key brokers while expanding broker reach • A more comprehensive commercial lines offering combined with our deep and long-standing broker relationships will drive traction with our broker partners Enhance technical capabilities in specialty and niche lines • Acquisition of hard-to-source underwriting and claims staff, in particular underwriting expertise in Specialty Lines, including net new segments 1. Based on 2024 GWP, per company reports; Transaction perimeter excludes select business lines (including surety) retained by T ravelers with GWP of ~$200 million. 2. Based on 2024 insurance revenue per MSA data. 3. This is a supplementary financial measure, non-GAAP financial measure, or a non-GAAP ratio. Refer to “Supplementary Financial Measures and Non-GAAP Financial Measures and Ratios” in this presentation and “Section 11 – Supplementary Financial Measures and Non-GAAP Financial Measures and Ratios” in our latest MD&A for further details. >40% increase Positions Definity as the 4th Largest2 Commercial Carrier 22% 44% 33% Definity Commercial 19% 46% 35% Commercial Combined Entity
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8 8 Compelling Scale Benefits in Personal Insurance Definity’s Acquisition of Travelers Canada > Strategic Fit & Enhanced Business Mix Personal Auto Personal Property $3.1B ~$4.0B 1. Based on 2024 GWP, per company reports. 2. Based on 2024 insurance revenue per MSA data. >30% increase Scales and fast tracks personal lines growth while strengthening existing leadership position in Broker Personal Lines • Provides expanded offerings and a consistent service proposition, driving enhanced traction and growth in the broker channel Significant Increase in Personal Insurance1 Positions Definity as the 5th Largest2 Personal Carrier Opportunity to optimize loss ratio performance through a larger combined data set which will drive deeper portfolio insights • Scale benefits allow for enhanced underwriting and pricing segmentation as well as leveraging cost efficiencies • Reinforces long-term outlook for delivering on underwriting targets Optimize Travelers Canada’s portfolio through modernized system capabilities and greater agility to respond to market conditions • Policy conversion to our modernized technology / digital platform (Vyne) • Enhanced productivity in Underwriting and Servicing Operations with greater scale in core PI capabilities e.g., Pricing, Underwriting, Portfolio Management Addition of actuarial and data analytics talent • Acquisition of experienced pricing and data analytics talent to bolster key capabilities available to combined enterprise 61% 39% Definity Personal 62% 38% Personal Combined Entity
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9 9 Run-rate expense synergies expected to be realized within 36 months of closing Thoughtful, senior management led integration plan with experienced personnel overseeing conversion Strong cultural, governance and risk alignment between Definity and Travelers Canada $100 million in run-rate synergies expected to be realized within 36 months Clear Path to Expense Synergies Definity’s Acquisition of Travelers Canada > Compelling Financial Rationale Enhancing Earnings Generation Through Synergy Capture Apply best-in-class digital, data, technology, pricing, risk selection, and claims policies to drive strong growth and profitability Strong Conviction in Our Integration Capabilities Estimated one-time integration costs spread over the integration period totaling 1.5x to 1.7x ultimate run-rate synergies Economies of scale in IT systems and technology platforms Optimized structuring of management and corporate support functions Reduction in administrative and duplicative costs Elimination of parent company charges Significant synergy opportunity ~$100M1 (pre-tax) Run-Rate Overhead & Operational Efficiencies Expected to be realized within 36 months 1. Synergies comprised of savings in general expense, loss adjustment expenses and other non -underwriting operating items.
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Fully Aligned with Our Financial Objectives Definity’s Acquisition of Travelers Canada > Compelling Financial Rationale SIGNIFICANT EARNINGS GENERATION Strategically and financially enhances our Canadian industry presence while delivering long-term shareholder value Significant synergies opportunity with expected $100 million of identified run-rate expense efficiencies Expected to enhance operating ROE1 by over 200 bps to sustainably target mid-teens post integration 1. Trailing 12-month operating ROE was 10.3% as reported in latest MD&A. Includes run -rate expense synergies and excludes impact on non-recurring integration costs. Operating EPS was $2.66 as reported in the annual MD&A for the year ended December 31, 2024. 2. Internal rate of return, based on equity returns and based on target capital structure of 75% equity and 25% debt. ACCRETIVE USE OF CAPITAL Immediately accretive to operating EPS1, with double digit accretion within 36 months of close Attractive internal rate of return in excess of 20%2 10 10
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11 Transaction Summary $3.3 Billion Cash Consideration1 P/BV = ~1.4x2 Internal rate of return in excess of 20%3; Immediately accretive to operating EPS with expected double-digit accretion within 36 months of close4; Adds +200 bps to operating ROE objective Excess Capital: $1.5 Billion; Debt: $1.6 Billion Equity: $350 Million (via private placement and our cornerstone investor HOOPP taking pro-rata share) Sub 30%, deleveraging to 25% within 24 months of close Subject to customary regulatory approvals including Minister of Finance, Competition Bureau 1. Excludes ~$100 million of transaction costs; transaction perimeter excludes select business lines (including surety) retained by Travelers with GWP of ~$200 million; financial performance post Dec 31, 2024 will accrue to Definity. Foreign exchange hedge agreements have been entered into that provide purchase price certainty against the risk of adverse currency movements. 2. Based on December 31, 2024 unadjusted book value of acquired business. Book value is a supplementary financial measure. Refer to “Supplementary Financial Measures and Non -GAAP Financial Measures and Ratios” in this presentation and “Section 11 – Supplementary Financial Measures and Non-GAAP Financial Measures and Ratios” in our latest MD&A for further details. 3. Internal rate of return, based on target capital structure of 75% equity and 25% debt. 4. Includes run-rate expense synergies and excludes impact on non -recurring integration costs. 5. Includes transaction costs. Excess capital: comprised of DFY and target excess capital at close; debt: combination of bank an d bond financing; equity. 6. Debt-to-capital ratio excludes target excess capital, of ~$1 billion, to be financed through an excess capital term loan, expect ed to be repaid within 6 months post transaction close, subject to regulatory approval. Purchase Price Purchase Metrics Return / Economics Financing Plan5 Debt-to-Capital Ratio6 Regulatory Approvals Expected Closing First Quarter of 2026 Definity’s Acquisition of Travelers Canada > Transaction Summary 11 11
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Definity’s Acquisition of Travelers Canada > Executing on Our Inorganic Strategy Proven Execution of Our Inorganic Growth Strategy Continuing to deliver on our strategic objectives Travelers Canada effectively checks off all key priorities, marking our first carrier acquisition post IPO CARRIER ACQUISITIONS Successfully expanding the business with 20 acquisitions since 2022 NATIONAL BROKER PLATFORM • National broker platform successfully built through acquisitions providing a platform for further activity • 10th largest P&C broker in Canada (~$1.3B of GWP)2 • Highly focused on carrier acquisitions to accelerate strategic goal of becoming a top 5 player with key priorities being: • Canadian focused • Specialty lines / CI to supplement franchise • PI to leverage Vyne / Sonnet platforms • Transformational or bolt-on within appetite 1 6 9 2022 2023 2024 Number of Acquisitions Target GWP of $1.5B+ by 2026 2025 YTD1 4 1. Year to date as of May 8, 2025. 2. As per company reports. 12 12
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13 13 Building a Canadian Champion Definity’s Acquisition of Travelers Canada > Key Takeaways Reinforces Definity’s Position as a Leading Canadian P&C Insurer Enhances and Strengthens our Current Business Mix Compelling Financial Rationale with Attractive Economics Achievement of Optimal Capital Structure and Enhanced Returns
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14 14 Supplementary Financial Measures and Non-GAAP Financial Measures and Ratios The Company’s unaudited condensed interim consolidated financial statements and accompanying notes as at and for the quarter ended March 31, 2025 have been prepared in accordance with International Financial Reporting Standards (“IFRS” or “GAAP”). We measure and evaluate performance of our business using a number of financial measures. Among these measures are the “supplementary financial measures”, “non-GAAP financial measures”, and “non-GAAP ratios” (as such terms are defined under Canadian Securities Administrators’ National Instrument 52-112 – Non-GAAP and Other Financial Measures Disclosure) included in this presentation, and in each case are not standardized financial measures under GAAP. The supplementary financial measures, non-GAAP financial measures, and non-GAAP ratios in this presentation may not be comparable to similar measures presented by other companies. These measures should not be considered in isolation or as a substitute for analysis of our financial information reported under GAAP. Certain of the following supplementary financial measures, non-GAAP financial measures and non-GAAP ratios are included in this presentation: Supplementary Financial Measures: Book value per share, catastrophe losses, financial capacity, gross written premiums (“GWP”), leverage capacity, debt-to-capital ratio and underwriting loss from exited lines. Non-GAAP Financial Measures: Core accident year claims and adjustment expenses, distribution income, net claims and adjustment expenses, net commissions, net operating expenses, net premium taxes, net underwriting expenses, net underwriting revenue, non-operating gains (losses), operating income, operating net income, prior year claims development, and underwriting income. Non-GAAP Ratios: Claims ratio, combined ratio, expense ratio, return on equity (“ROE”), operating return on equity (“operating ROE”), operating earnings per common share (“operating EPS”), and certain other ratios. Debt-to-capital ratio: The debt-to-capital ratio is calculated based on total debt outstanding at the end of the period, divided by total debt + shareholders equity. For information on the most directly comparable GAAP measures, composition of the measures, a description of how we use these measures and an explanation of how these measures provide useful information to investors, and applicable reconciliations refer to Section 11 – "Supplementary Financial Measures and Non-GAAP Financial Measures and Ratios" of our MD&A for the quarter ended March 31, 2025, available on Definity's profile on SEDAR+ at www.sedarplus.ca, which is incorporated by reference into this presentation.
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15 15 Contact Us Investor Relations General Investor Inquiries 1-866-902-4724 (TF) IR@definity.com Dennis Westfall VP, Investor Relations 416-435-5568 dennis.westfall@definity.com Definity Financial Corporation 111 Westmount Rd. S., P.O. Box 2000 Waterloo, ON N2J 4S4 1-800-265-2180 (TF) 519-570-8200 Sarah Attwells AVP, Corporate Communication 226-753-1130 sarah.attwells@definity.com Corporate Communications General Inquiries