Definity Financial Q4 Earnings Call Highlights

Core Insights - Definity Financial reported strong financial results for Q4 and full-year 2025, driven by robust underwriting performance and the integration of the Travelers' Canadian business acquisition [3][6][12] Financial Performance - In Q4, operating earnings per share were CAD 0.99, with a combined ratio of 89.9%, attributed to strong results in personal property and commercial insurance [1] - For full-year 2025, operating earnings per share reached CAD 3.53, a nearly 33% increase from 2024, with a combined ratio of 91.6% and an operating ROE of 12.2% [2][6] - The company achieved top-line growth of 8.8% and a 16% increase in book value per share during the year [2] Acquisition Impact - The acquisition of Travelers' Canadian business, which closed on January 2, 2026, adds approximately CAD 1.5 billion in premiums and is expected to support guidance of over CAD 6.5 billion in gross written premiums (GWP) for 2026, representing a 35% increase [5][12] - Management anticipates at least CAD 100 million in annual cost synergies over three years from the acquisition, with policy conversions starting in Q2 2026 [5][9] Underwriting and Premium Growth - Personal auto gross written premiums rose 9.7% in Q4 and 8.9% for the year, with a Q4 combined ratio of 95% [8] - Personal property gross written premiums increased 11.6% in Q4 and 9% for the year, with a combined ratio of 82.7% in Q4 [8] - Commercial premiums grew 6.9% in Q4 and 8.6% for the full year, with a combined ratio of 89.1% in Q4 [8] Investment Income and Asset Management - Invested assets are just over CAD 9 billion, with a blended yield of approximately 3.4%, and net investment income is expected to exceed CAD 300 million in 2026 [4][13] - Net investment income for 2025 totaled CAD 215.7 million, up nearly 9% year-over-year, driven by higher interest income [13] Integration and Future Outlook - 2026 is expected to be a transition year focused on retention and conversion, with management projecting a combined ratio in the low- to mid-90s across personal property and commercial lines [7][11] - The company aims for a sub-95% combined ratio in 2026, with synergy realization expected to contribute more significantly in 2027 [12]