Travelers maintains its dominant position in the surety sector within Canada.
Travelers Sells Personal and Commercial Insurance Business in Canada
In a notable transaction announced on May 27, 2025, Travelers Companies, Inc. (NYSE: TRV) has entered into a binding agreement to divest its personal insurance and a significant portion of its commercial insurance operations in Canada to Definity Financial Corporation (TSX: DFY) for a sum of approximately US$2.4 billion. The deal values the business at a multiple of 1.8 times its book value, which has been adjusted for about US$0.8 billion in excess local capital that will be repatriated in a tax-advantaged manner as part of this arrangement.
Retention of Surety Business
Travelers is recognized as North America’s largest surety writer and will retain its premier surety offerings within the Canadian market. The completion of this transaction is anticipated for the first quarter of 2026, contingent upon regulatory approval and the fulfillment of standard closing conditions.
Statement from Leadership
Alan Schnitzer, the Chairman and CEO of Travelers, remarked, “This transaction underscores our unwavering dedication to prudent capital allocation and the creation of long-term value. The changes in the Canadian market over the last decade have positioned Definity as a natural long-term steward for this segment, a sentiment echoed by the attractive value offered in their proposal. I am confident that our Canadian clients, brokers, and employees will gain from being part of one of Canada’s leading integrated property and casualty insurance firms.”
Financial Impact and Future Plans
Following the transaction, Travelers aims to allocate around US$0.7 billion of the net cash proceeds for additional stock repurchases in 2026, retaining the remainder for continued operations and general corporate needs. The sale and subsequent share repurchases are projected to have a minor positive impact on the company’s earnings per share over the next few years.
Advisory Support for the Transaction
Jefferies LLC acted as the financial advisor for Travelers in this deal, while Skadden, Arps, Slate, Meagher & Flom LLP and Stikeman Elliott LLP provided legal guidance throughout the process.
Understanding the Book Value Multiple Calculation
The calculation for the price to book value multiple excludes approximately US$0.8 billion of excess capital from both the purchase price and the book value. The book value is determined based on the equity of the entities being sold, measured on an IFRS basis as of December 31, 2024, and takes into account the separation of the surety business.
About Travelers Companies, Inc.
Travelers Companies, Inc. (NYSE: TRV) is a prominent provider of property and casualty insurance across multiple sectors including auto, home, and business insurance. As a component of the Dow Jones Industrial Average, Travelers employs over 30,000 individuals and reported revenues exceeding $46 billion in 2024. For additional details, individuals can visit Travelers’ website.
Forward-Looking Statements
It is essential to note that all statements made in this press release other than those concerning historical facts qualify as “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. These statements may encompass projected timelines for the transaction closure, anticipated use of transaction proceeds, financial ramifications of the sale, and share repurchases. The actual outcomes related to these forward-looking statements may vary greatly due to risks and uncertainties. Factors that could influence actual performance are discussed under “Risk Factors” and “Forward-Looking Statements” in the latest 10-K and 10-Q filings with the Securities and Exchange Commission. Furthermore, the transaction relies on meeting closing conditions, including requisite regulatory authorizations, and might not be executed as planned. The forward-looking statements shared in this release represent the situation only as of the date of the release and carry no obligations for updates in the future.
Conclusion
This significant transaction marks a pivotal moment for Travelers as it reallocates its resources and focuses on its core offerings while ensuring that its Canadian surety business continues to thrive. This strategic decision reflects the company’s long-term vision and commitment to providing value to its shareholders, customers, and employees, reinforcing its position as a leading player in the insurance marketplace.
