Summary of Definity Financial (DFYF.F) 2025 Conference Call Company Overview - **Company**: Definity Financial - **Event**: 2025 Conference Call - **Date**: September 04, 2025 Key Developments - **Acquisition of Travelers Canadian Business**: - Announced in Q2 2025, viewed as a game changer for Definity, enhancing capabilities in personal lines and commercial business [3][4] - Expected to be financially compelling and strategically aligned with Definity's goals [3] - **Investment in Broker Platform**: - Nearly $1 billion invested in building the McDougall broker platform, now a top 10 insurance broker in Canada, diversifying earnings and providing high-margin business opportunities [4] - **Core Business Growth**: - Personal and commercial lines businesses are growing at approximately twice the market rate with good margins [4] Financial Performance and Goals - **Operating ROE Expansion**: - Focus on three internal levers: SONNET, expense optimization, and claims transformation, all on track to improve operating ROE [5][17] - Targeting mid-teens operating ROE with successful integration of Travelers expected to add a couple hundred basis points [17][22] Industry Insights - **Personal Auto Market**: - Currently firm with normalization of loss cost trends; growth expected in both rate and unit count [6][7] - Alberta auto market undergoing reforms expected to improve profitability by 2027 [7] - **Personal Property Market**: - Significant changes in the NATCAT environment, with 2024 losses around $9 billion leading to a firm market and price increases [8][9] - Optimistic about growth due to investments in CAT management and pricing strategies [9] - **Commercial Lines Market**: - Competitive landscape varies; Definity primarily focused on SME and mid-market segments, which are less affected by competition [10][12] - Anticipated growth at twice the industry rate despite challenges in larger accounts [12] Strategic Priorities - **Integration of Travelers**: - Successful integration is a top priority, with a focus on retaining talent and business [16][23] - Strong broker relationships and a smooth transition to Definity's systems are crucial for success [24][25] - **Technology and Innovation**: - Continued investment in technology, including the Guidewire platform and AI tools, to maintain competitive edge and improve operational efficiency [33][36] - Emphasis on automated underwriting and enhanced customer experience through digital platforms [37][39] Future Outlook - **Growth Potential**: - Definity aims to grow at twice the industry rate with a focus on maintaining sub-95% combined ratios [45] - The acquisition of Travelers is expected to enhance capabilities and market standing, with further acquisitions anticipated in the P&C space [46][47] - **Execution Confidence**: - Strong track record in managing simultaneous large-scale initiatives provides confidence in executing organic growth strategies alongside the integration of Travelers [40][42] Conclusion - Definity Financial is positioned for significant growth through strategic acquisitions, technological advancements, and a focus on core business expansion, with a strong emphasis on maintaining operational efficiency and enhancing customer experience. The integration of Travelers is seen as a pivotal step in achieving these goals.

Financial Data and Key Metrics Changes - Operating earnings per diluted share were $0.79, up 52%, and $0.74, up 42%, excluding significant items [5][25] - Book value per diluted share, excluding AOCI, was $37.03, up 6% [7] - Operating return on equity excluding significant items was 11.9% on a trailing twelve-month basis [26] Business Line Data and Key Metrics Changes - Consumer division saw annuity collected premiums up 12%, account values up 7%, and premium per policy up 19% [10] - Health NAP was up 9%, with Medicare Supplement NAP up 24% and Medicare Advantage policies up 42% [13][14] - Worksite insurance sales were up 11%, with critical illness insurance up 37% and life insurance up 17% [19] Market Data and Key Metrics Changes - New money rates exceeded 6% for nine consecutive quarters, with a new money rate of 6.43% [6][28] - Total investment income was up 16% for the quarter, marking the sixth consecutive quarter of growth [29] Company Strategy and Development Direction - The company aims to leverage its business model for sustained profitable growth and drive ROE expansion [8][32] - Focus on reaching the underserved middle-income market through a combination of virtual connections and local agents [9] Management's Comments on Operating Environment and Future Outlook - Management acknowledged deteriorating visibility into macroeconomic drivers but expressed confidence in navigating volatility [7][34] - The company reaffirmed its full-year guidance for 2025, despite acknowledging increased risks due to market volatility [31][32] Other Important Information - The company returned $117 million to shareholders, maintaining strong capital and liquidity levels [6] - A new product, Optimize Clear, was introduced to enhance service offerings [23] Q&A Session Summary Question: On buybacks and macro environment - Management indicated a willingness to continue share buybacks, with $100 million deployed in the first quarter [37] Question: Fee revenue and GAAP accounting - Management explained the impact of ASC 606 on revenue recognition, noting potential future reversals [40][41] Question: Outlook for direct-to-consumer life sales - Management expressed optimism for a bounce back in sales, while acknowledging shifts in advertising strategies [58] Question: Medicare business and potential shifts - Management noted strong growth in Medicare Advantage policies and indicated a potential shift back to Medicare Supplement could be beneficial [72][74] Question: Geographic expansion in worksite - Management confirmed ongoing geographic expansion efforts and expected continued growth from new regions [82]