Definity Financial to Acquire Travelers Canada in $3.3 Billion Deal, Reshape Canadian Insurance Landscape

Definity Financial Corporation has announced a definitive agreement to acquire the Canadian personal and commercial insurance operations of The Travelers Companies, Inc. for approximately $3.3 billion CAD (US$2.4 billion). This strategic move is set to elevate Definity to the position of the fourth-largest property and casualty (P&C) insurer in Canada, adding approximately $1.6 billion in annual gross written premiums to its portfolio.

The acquisition encompasses Travelers Canada's personal insurance business and the majority of its commercial insurance operations, excluding the Canadian surety business, which Travelers will retain. The transaction is anticipated to close in the first quarter of 2026, pending regulatory approvals. Definity has committed to retaining all 1,400 employees from Travelers Canada, ensuring continuity for customers and brokers.

Rowan Saunders, President and CEO of Definity, described the acquisition as "a transformative acquisition that is squarely in line with the growth strategy we’ve set for Definity, one that will move us into the top four largest P&C insurers in Canada." He emphasized that the deal would diversify portfolios, provide additional expertise and product offerings, and continue the company's track record of shareholder value creation.

To finance the acquisition, Definity plans to utilize a combination of private placements, excess capital, and new debt. On June 11, 2025, the company completed private placements of common shares totaling approximately $385 million CAD. The Healthcare of Ontario Pension Plan Trust Fund (HOOPP) participated in this financing by exercising its pre-emptive right to purchase additional shares, contributing approximately $76.7 million CAD.

The acquisition is expected to be immediately accretive to Definity's operating earnings per share, with anticipated double-digit growth within 36 months of closing. The internal rate of return is projected to exceed 20%. Additionally, Definity anticipates achieving approximately $100 million in pre-tax run-rate expense synergies, excluding potential improvements in loss costs.

This transaction is poised to significantly reshape the Canadian P&C insurance landscape. By moving from the sixth to the fourth-largest P&C insurer in Canada, Definity enhances its competitive position against industry leaders such as Intact Financial Corporation and Aviva Canada. The deal also reflects a broader trend of consolidation within the Canadian insurance sector, driven by the need for scale to invest in technology, artificial intelligence, and data analytics. Saunders noted that achieving scale is crucial for insurers to remain competitive and relevant to brokers and customers.

The transaction is subject to customary regulatory approvals, including those from the Office of the Superintendent of Financial Institutions (OSFI) and the Competition Bureau of Canada. Given the size and impact of the acquisition, regulators are expected to closely examine the deal to ensure it does not adversely affect competition within the Canadian insurance market.

The retention of all 1,400 Travelers Canada employees is a positive outcome, providing job security and continuity for the workforce. Policyholders may benefit from enhanced product offerings and potentially more competitive pricing due to the increased scale and operational efficiencies resulting from the merger. Brokers may experience changes in their relationships with the combined entity, but the commitment to retaining staff suggests an emphasis on maintaining strong broker partnerships.

The Canadian insurance industry has seen several significant mergers and acquisitions in recent years as companies seek to achieve scale and enhance their competitive positions. However, this acquisition stands out due to its size and the strategic shift it represents for both Definity and Travelers. While Travelers has been a longstanding player in the Canadian market, this divestiture indicates a strategic refocusing on its core markets.

As the transaction progresses toward its anticipated close in early 2026, stakeholders will be closely monitoring the integration process and its impact on the Canadian insurance landscape.