Travelers Maintains Strong Presence in Canada
Travelers continues to lead in its surety services in Canada
Business Announcement
NEW YORK, May 27, 2025— The Travelers Companies, Inc. (NYSE: TRV) has entered into a significant agreement to divest its personal and the majority of its commercial insurance operations in Canada to Definity Financial Corporation (TSX: DFY) for an estimated US$2.4 billion. This transaction values the business at 1.8 times book value, factoring in nearly US$0.8 billion of excess local capital being returned in a tax-efficient manner. Travelers, recognized as North America’s foremost surety writer, will retain its esteemed surety operations in Canada. The completion of this transaction is anticipated in the first quarter of 2026, pending regulatory approvals and customary closing conditions.
Executive Perspectives
Alan Schnitzer, Chairman and CEO of Travelers, remarked, “This move underscores our unwavering commitment to disciplined capital allocation and fostering long-term value.” He highlighted that the evolution of the Canadian insurance market made Definity a suitable long-term steward for the acquired business, and he emphasized the compelling nature of their offer. Schnitzer expressed confidence that this development would be beneficial for Canadian clients, brokers, and employees, as they will become part of one of the country’s leading integrated property casualty insurers.
Use of Proceeds from the Transaction
Following this divestiture, Travelers plans to allocate around US$0.7 billion of the net cash proceeds for share repurchases in 2026, while reserving the remainder to support ongoing operations and for general corporate purposes. The financial impact of this transaction and the subsequent share repurchases is expected to positively affect the company’s earnings per share in the coming years.
Advisory Team
Jefferies LLC has served as the financial advisor for this transaction, while Skadden, Arps, Slate, Meagher & Flom LLP and Stikeman Elliott LLP have acted as legal advisors to Travelers.
Understanding Book Value Multiples
The calculated price to book value multiple excludes approximately US$0.8 billion of excess local capital from both the numerator (purchase price) and the denominator (book value). Book value is determined based on the equity of the entities being sold as of December 31, 2024, and considers the separation of the surety business, evaluated under International Financial Reporting Standards (IFRS).
Company Overview
The Travelers Companies, Inc. (NYSE: TRV) stands as a premier provider of property casualty insurance, covering various sectors such as auto, home, and business insurance. A member of the Dow Jones Industrial Average, Travelers employs over 30,000 individuals and recorded revenues exceeding $46 billion in 2024. Further details can be found at Travelers.com.
Future Outlook and Considerations
In light of the transaction, it’s essential to note that all statements beyond historical facts in this communication are classified as “forward-looking statements” as per the Private Securities Litigation Reform Act of 1995. These statements encompass anticipated transaction closings, the use of proceeds, as well as the financial implications of the sale and associated share repurchases. Consequently, actual outcomes may differ significantly due to various risks and uncertainties. Factors impacting these outcomes are discussed under “Risk Factors” and “Forward-Looking Statements” in the company’s recent filings with the Securities and Exchange Commission.
It is important to recognize that this transaction must satisfy specific closing conditions, including obtaining necessary regulatory approvals. As a result, it may not proceed as planned. The forward-looking statements in this announcement reflect conditions only as of the release date, and no commitment is made to update these statements.
This strategic move by Travelers signals a significant shift in the Canadian insurance landscape, emphasizing the commitment to shareholder value and operational efficiency, while contemplating the evolving needs of the market.
