Travelers Retains Strong Position in Surety Business in Canada
NEW YORK, May 27, 2025—The Travelers Companies, Inc. (NYSE: TRV) has disclosed a definitive agreement to transfer its personal insurance division and the bulk of its commercial insurance operations in Canada to Definity Financial Corporation (TSX: DFY) for roughly US$2.4 billion. This transaction values the unit at 1.8 times its book value, factoring in around US$0.8 billion in excess local capital that will be efficiently repatriated as part of the deal. Notably, Travelers remains the largest provider of surety bonds in North America and will continue to operate its key surety business in Canada after this sale. The transaction is set to finalize in the first quarter of 2026, pending regulatory approvals and other standard closing conditions.
Strategic Decision for Long-term Value
Alan Schnitzer, Chairman and CEO of Travelers, emphasized that this sale demonstrates the company’s ongoing focus on disciplined capital management and fostering long-term value. He noted that the changing landscape of the Canadian insurance market has positioned Definity as a suitable long-term steward for these operations. Schnitzer expressed confidence that the change will greatly benefit Travelers’ Canadian policyholders, brokers, and employees, as they will become part of one of the nation’s top integrated property casualty insurance companies.
Plans for Proceeds from the Transaction
The net proceeds from the sale, estimated at approximately US$0.7 billion, are anticipated to be utilized for additional share repurchase activities in 2026. The remaining funds will be allocated to support ongoing business operations and various corporate purposes. Travelers expects that the transaction, along with the resultant share buybacks, will modestly enhance the company’s earnings per share over the ensuing years.
Advisory Team for the Transaction
In this strategic transaction, Jefferies LLC served as the financial advisor to Travelers, while Skadden, Arps, Slate, Meagher & Flom LLP and Stikeman Elliott LLP acted as the legal advisory team.
Understanding the Book Value Multiple Calculation
This transaction’s pricing structure, calculated as the book value multiple, excludes the US$0.8 billion in excess local capital from both the purchase price and the book value measurement. The book value is determined based on the equity of the entities being divested as of December 31, 2024, post the segregation of the surety business and measured on an IFRS standard.
Profile of Travelers Companies, Inc.
The Travelers Companies, Inc. (NYSE: TRV) stands out as a leading provider of property casualty insurance, covering auto, home, and business insurance sectors. As a component of the Dow Jones Industrial Average, the company boasts a workforce of over 30,000 employees and reported revenue exceeding $46 billion in 2024. For further details about Travelers and its services, interested parties are encouraged to explore its official website.
Anticipating Future Developments
The recent developments in the insurance industry reflect significant shifts and realignments. As Travelers adapts to these changes, the focus remains on optimizing capital allocation and ensuring sustained growth. The shift of personal and a significant part of commercial insurance operations in Canada to Definity Financial indicates a recognition of evolving market conditions and the strategic importance of being aligned with capable partners who can drive future success in a competitive landscape. Stakeholders can look forward to additional announcements as both companies navigate this transition period.
Forward-Looking Statements and Market Considerations
All comments made in this announcement, apart from those regarding historical facts, are regarded as “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. These statements can encompass expectations regarding the timing of the closing of the transaction, utilization of proceeds, and potential financial impacts stemming from the sale and share buybacks. However, actual outcomes could differ significantly due to various risks and uncertainties.
Factors that may lead to actual results differing are outlined under the “Risk Factors” and “Forward-Looking Statements” sections in the company’s latest Form 10-K and Form 10-Q reports filed with the Securities and Exchange Commission. The consummation of this deal is contingent upon certain closing conditions, including the receipt of regulatory approvals, and may not materialize as planned. Furthermore, no obligation to update any forward-looking statements is undertaken beyond the date of this release.
Conclusion
The transition of Travelers’ personal and a majority of its commercial insurance operations to Definity Financial represents a significant movement in the Canadian insurance market. By aligning with a committed and capable partner like Definity, who is well positioned to leverage the opportunities present in the evolving insurance landscape, Travelers further cements its dedication to optimizing resources and enhancing shareholder value. As market dynamics continue to shift, such strategic decisions will be crucial for maintaining competitiveness and ensuring long-term growth potential as insurance needs evolve in response to both consumer demands and regulatory landscapes.
