Travelers will maintain its leading surety business in Canada
NEW YORK, May 27, 2025–(BUSINESS WIRE)–Travelers Companies, Inc. (NYSE: TRV) has finalized a definitive agreement to divest its personal insurance sector and most of its commercial insurance segment in Canada to Definity Financial Corporation (TSX: DFY) for roughly US$2.4 billion. This valuation equates to 1.8 times book value, with around US$0.8 billion of excess local capital being returned in a tax-efficient manner as part of this deal. Travelers, known as the foremost surety writer in North America, will continue to operate its top-tier Canadian surety business. The agreement is anticipated to conclude in the first quarter of 2026, pending regulatory clearance and other standard closure conditions.
Insights from Travelers Leadership
“This move reflects our ongoing dedication to prudent capital distribution and long-term value generation,” stated Alan Schnitzer, Chairman and Chief Executive Officer of Travelers. “The shifts within the Canadian market over the past decade have positioned Definity as a fitting long-term steward for this business, which is underscored by the clear value of their offer. I believe that our Canadian customers, brokers, and employees will gain advantages from being part of one of the nation’s foremost integrated property casualty insurance providers.”
Financial Implications of the Transaction
Travelers plans to allocate around US$0.7 billion of the net cash proceeds from this transaction for further share repurchases in 2026, while the remainder will be reserved to sustain ongoing operations and for general corporate functions. The transaction and subsequent share buybacks are expected to modestly enhance the company’s earnings per share in the upcoming years.
Advisory Support in the Deal
Jefferies LLC served as the financial advisor for the transaction, while Skadden, Arps, Slate, Meagher & Flom LLP and Stikeman Elliott LLP acted as legal advisors for Travelers during this process.
The Rationale Behind the Valuation
The calculation of the price to book value multiple excludes approximately US$0.8 billion of surplus local capital from both sides of the equation – the purchase price (numerator) and the book value (denominator). This book value is determined based on the equity of the entities being sold as of December 31, 2024, after accounting for the separation of the surety division and evaluated on an IFRS basis.
About Travelers Companies
Travelers Companies, Inc. (NYSE: TRV) stands as a prominent provider of property casualty insurance covering sectors such as auto, home, and business insurance. Incorporated in the Dow Jones Industrial Average, Travelers employs over 30,000 individuals and recorded revenues exceeding $46 billion in 2024. For more information about the company, visit their official website.
Discussion of Forward-Looking Statements
This press release contains “forward-looking statements” that fall under the interpretation set by the Private Securities Litigation Reform Act of 1995. These include, but are not limited to, expectations regarding the completion of the transaction, intended uses of proceeds, and anticipated financial impacts related to the sale and share buybacks. Outcomes from matters encompassed in these forward-looking statements carry risks and uncertainties, which may cause actual results to differ significantly from those anticipated. Factors that could lead to such discrepancies are detailed under “Risk Factors” and “Forward-Looking Statements” sections in the company’s latest Form 10-K and Form 10-Q filed with the Securities and Exchange Commission. Additionally, the transaction is subject to standard closing conditions, including obtaining the necessary regulatory approvals, and may not proceed as planned. The forward-looking statements made in this press release are based on the information available as of the date of the announcement, and the company does not undertake any obligation to update these statements.
Conclusion
The strategic decision by Travelers to divest a substantial portion of its operations in Canada while retaining its surety business demonstrates a robust approach to capital management and an intent to capitalize on emerging opportunities within the insurance landscape. As this transaction unfolds, the insurance industry will be keenly observing how both Travelers and Definity Financial navigate the changing market dynamics in the near future.
