AM Best Comments on Credit Ratings of Definity Financial Corporation and Its Subsidiary Following Announced Acquisition of The Travelers Companies, Inc.’s Canadian Operations

Business Wire

OLDWICK, N.J.--(BUSINESS WIRE)--
AM Best has commented that the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a” (Excellent) of Definity Insurance Company (Definity Insurance), as well as the Long-Term ICR of “bbb” (Good) of Definity Financial Corporation (Definity Financial) remain unchanged following the recent announcement of a CAD 3.3 billion transaction to acquire The Travelers Companies, Inc.’s (Travelers) [NYSE: TRV] Canadian operations. Definity Insurance and Definity Financial are both domiciled in Waterloo, Ontario, Canada.

The acquisition elevates Definity Financial’s market position to fourth overall within Canada’s property/casualty insurance industry, which has been its strategic corporate goal. The acquired entities offer increased product, access and expertise to commercial and specialty lines that should support higher returns, ultimately improving Definity Financial's commercial lines market position from seventh to fourth while adding expertise in marine and professional liability. In addition, the acquisition enhances the scale of Definity Financial’s core personal lines with opportunity to realize expense synergies which should enhance earnings and improve overall returns.

Travelers will retain its Canadian surety, home warranty, and U.S.-related businesses. Furthermore, Travelers will retain its Canada branch, St. Paul Fire and Marine Insurance Company, and business not being retained will be executed through reinsurance.

The transaction will be financed by a combination of debt (CAD 1.6 billion), common equity issuance (CAD 385 million) and utilization of excess capital on the balance sheet (CAD 1.5 billion). Risk-adjusted capitalization is anticipated to remain at a level that is supportive of overall business growth despite a material increase in premiums for both commercial and personal lines of roughly 40% and 30%, respectively.

Financial leverage will be temporarily elevated on a short-term basis to facilitate the acquisition but is expected to return in the near term to a level that is commensurate with Definity Financial’s current ratings. The transaction is expected to close in the first quarter of 2026 subject to customary regulatory approvals.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.