Travelers Retains Leading Surety Business in Canada
NEW YORK, May 27, 2025 – Travelers Companies, Inc. (NYSE: TRV) has made an announcement about a definitive agreement involving its personal and majority of commercial insurance operations in Canada. The company is set to transfer these segments to Definity Financial Corporation (TSX: DFY) in a deal valued at around US$2.4 billion. This transaction reflects a thoughtful strategic move, equating to approximately 1.8 times book value, and includes an adjustment for around US$0.8 billion of surplus local capital, which will be repatriated in a tax-efficient fashion as part of the deal. Notably, Travelers will maintain its status as the leading surety provider in North America while keeping its top-tier Canadian surety division intact. The completion of this transaction is projected for the first quarter of 2026, pending necessary regulatory approvals and customary closing conditions.
Strategic Intent Behind the Transaction
Alan Schnitzer, Chairman and CEO of Travelers, stated that this move underscores the company’s persistent dedication to disciplined capital management and the pursuit of long-term value creation. He emphasized that the changes in the Canadian insurance landscape over the past decade have positioned Definity as an ideal long-term steward for these business units, highlighting the substantial value of their offer. Schnitzer also expressed confidence that this transition will benefit Canadian clients, partners, and employees by aligning them with one of Canada’s foremost property and casualty insurers.
Planned Use of Proceeds
Following the transaction, Travelers plans to allocate approximately US$0.7 billion from the net proceeds toward share repurchases in 2026. The remaining funds will be retained to support ongoing operations and other corporate needs. This strategic move, along with the share buybacks, is anticipated to have a slight positive effect on the company’s earnings per share over the next several years, enhancing overall shareholder value.
Transaction Advisors and Structure
In this significant deal, Jefferies LLC has provided financial advisory services, while Skadden, Arps, Slate, Meagher & Flom LLP and Stikeman Elliott LLP have served as legal counsel for Travelers. The financial structure of the transaction highlights a careful consideration of the book value calculation, which excludes roughly US$0.8 billion of excess local capital from both the numerator (purchase price) and denominator (book value). The book value is determined based on the equity of the entities involved in the sale as of December 31, 2024, while taking into account the separation of the surety business, measured according to IFRS standards.
Overview of Travelers Companies, Inc.
Travelers Companies, Inc. is recognized as a leading provider of property casualty insurance, specializing in various segments such as auto, home, and commercial insurance. The company is also part of the Dow Jones Industrial Average, employing over 30,000 individuals and generating revenues exceeding $46 billion in the year 2024. With a commitment to quality service and customer satisfaction, Travelers aims to long-term relationships with its clients through innovative insurance solutions.
Forward-Looking Statements and Expectations
In line with common practices in the industry, this press release includes forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These statements encompass expectations concerning the transaction’s closing, utilization of proceeds, and financial implications of the sale and resulting share repurchases. The company acknowledges that actual outcomes could vary significantly from those predicted due to inherent risks and uncertainties, with potential discrepancies elaborated under “Risk Factors” within the company’s most recent Form 10-K and Form 10-Q filings with the Securities and Exchange Commission.
Anticipated Benefits and Market Integration
The consolidation of Travelers’ insurance operations is likely to offer enhanced benefits to clients and stakeholders. As the company integrates its services, both Travelers and Definity Financial Corporation can focus on optimizing their operations and improving customer experiences. Travelers continues to stand firm as a prominent player in the surety market, ensuring that its customers will receive sustained support and innovative offerings as it adapts to the evolving insurance landscape in Canada.
Conclusion: A Strategic Shift in the Insurance Sector
This transaction represents a pivotal moment for Travelers Companies, Inc. as it navigates a changing market and seeks to enhance shareholder value while ensuring customer satisfaction. The sale of its personal and commercial insurance business segments in Canada to Definity Financial Corporation underscores a strategic decision aimed at focusing on core operations and streamlining processes to adapt to industry developments. As the insurance landscape continues to evolve, both companies are poised to capitalize on new opportunities, reinforcing their positions within the market.
