Travelers will maintain its leading position in the surety market in Canada.
NEW YORK, May 27, 2025—The Travelers Companies, Inc. (NYSE: TRV) has announced that it has entered into a definitive agreement to transfer its personal insurance division along with the majority of its commercial insurance operations in Canada to Definity Financial Corporation (TSX: DFY) for an estimated $2.4 billion. This sale price reflects a 1.8 times book value multiple after accounting for around $0.8 billion of excess local capital that will be repatriated in a tax-efficient manner as part of the agreement. Travelers, known as the largest surety writer in North America, will continue to operate its premium surety business in Canada. The deal is anticipated to close in the first quarter of 2026, pending regulatory approvals and usual closing conditions.
Company’s Commitment and Market Landscape
“This transaction exemplifies our unwavering dedication to disciplined capital allocation and the pursuit of long-term value,” stated Alan Schnitzer, Chairman and CEO of Travelers. “The transformation of the Canadian market over the last ten years has positioned Definity as a natural long-term steward for our business, a sentiment supported by the strong value of their proposal. I believe our customers in Canada, as well as our brokers and team members, will experience benefits from being part of one of the country’s leading fully integrated property casualty insurance companies.”
Financial Implications of the Transaction
Travelers plans to utilize approximately $0.7 billion of the net cash proceeds from this sale for additional share repurchases in 2026, while the remaining funds will be allocated to support ongoing operations and general corporate needs. The expected impact of the transaction and subsequent share repurchases is projected to be modestly accretive to the company’s earnings per share in the coming years.
Advisory Support for the Transaction
Jefferies LLC has served as the financial advisor for this transaction, while legal counsel has been provided by Skadden, Arps, Slate, Meagher & Flom LLP and Stikeman Elliott LLP.
Understanding the Book Value Multiple Calculation
Calculation of Book Value Multiple
The calculation for the price-to-book ratio in this transaction excludes approximately $0.8 billion of excess local capital from both the numerator (purchase price) and the denominator (book value). The book value is determined based on the equity of the entities being divested as of December 31, 2024, and accounts for the separation of the surety business, with measurements adhering to IFRS standards.
About Travelers and Its Operations
The Travelers Companies, Inc. (NYSE: TRV) is recognized as a premier provider of property casualty insurance across various sectors, including auto, home, and business insurance. As a component of the Dow Jones Industrial Average, Travelers boasts a workforce of over 30,000 employees and generated revenues exceeding $46 billion in 2024. For more insights about the company and its offerings, further information is accessible through their official channels.
Future Projections and Considerations
The forward-looking statements made in this announcement contemplate various expected developments, including the closing of the transaction, the utilization of proceeds, and the financial effects associated with the sale and share repurchases. Actual outcomes may diverge from those predicted in these forward-looking statements due to inherent risks and uncertainties. Factors that could lead to differing outcomes are elaborated upon in the sections dedicated to “Risk Factors” and “Forward-Looking Statements” in the company’s latest filings with the Securities and Exchange Commission. Moreover, the completion of the transaction is contingent upon fulfilling necessary regulatory approvals and customary closing conditions, meaning that it may not come to fruition as anticipated. These forward-looking statements reflect the situation as of the publication date, with no commitment to update them thereafter.
Conclusion
In summary, Travelers’ strategic decision to divest a significant portion of its Canadian insurance operations is indicative of the company’s adaptive approach to capital management and market dynamics. By transferring the aforementioned business units to Definity Financial Corporation, Travelers aims to enhance its financial standing while continuing to lead in the surety sector. This transaction not only highlights the evolving landscape of the insurance market in Canada but also exemplifies the focus on long-term value creation for stakeholders.
Forward-Looking Statements
All statements made in this press release that do not consist of historical facts are classified as “forward-looking statements” as per the Private Securities Litigation Reform Act of 1995. This encompasses projections regarding the anticipated completion of the transaction, the planned use of proceeds, and the financial implications stemming from the sale and share buybacks. The actual results associated with these forward-looking statements entail various risks and uncertainties, potentially leading to significant differences from what is expressed or implied. Several factors that may influence actual results are described in detail under “Risk Factors” and “Forward-Looking Statements” in the company’s most recent Form 10-K and Form 10-Q submissions to the Securities and Exchange Commission. Additionally, this transaction depends on the fulfillment of specified closing conditions, including acquiring necessary regulatory approvals, meaning it may not proceed as proposed. The forward-looking statements presented here are accurate only as of the date of this press release, and there is no obligation to update these statements as circumstances evolve.
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Contacts
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