AM Best has affirmed the credit ratings of Definity Financial Corporation and its subsidiary, Definity Insurance Company, following the announcement of a $3.3 billion agreement to acquire the Canadian operations of The Travelers Companies, Inc.
In its statement, AM Best confirmed that Definity Insurance’s financial strength rating of A (Excellent) and long-term issuer credit rating (ICR) of “a” (Excellent) remain unchanged.
Likewise, the long-term ICR of “bbb” (Good) for Definity Financial remains unaffected by the planned transaction. Both companies are headquartered in Waterloo, Ontario.
The acquisition is expected to close in the first quarter of 2026, pending regulatory approvals.
Once completed, it will significantly enhance Definity’s presence in Canada’s property and casualty (P&C) insurance sector, elevating its commercial lines market position from seventh to fourth nationwide.
According to AM Best, the acquired operations will provide Definity Financial with broader access and additional expertise, especially in commercial and specialty lines such as marine and professional liability.
The ratings agency added that “the acquisition enhances the scale of Definity Financial’s core personal lines with the opportunity to realize expense synergies, which should enhance earnings and improve overall returns.”
Travelers will retain certain segments of its Canadian operations, including surety, home warranty, and US-related business. Its Canadian branch, St. Paul Fire and Marine Insurance Company, will also remain operational. Any business not retained will be handled through reinsurance.
The deal will be financed through a combined approach: $1.6 billion in debt, $385 million in common equity issuance, and $1.5 billion from excess capital on the balance sheet. While financial leverage will rise temporarily, AM Best explained that it is expected to return in the near term to a level that is commensurate with Definity Financial’s current ratings.
Despite a projected increase of 40% in commercial premiums and 30% in personal premiums, AM Best expects risk-adjusted capitalization to remain supportive of ongoing business growth. The acquisition is scheduled to close in the first quarter of 2026, pending regulatory approval.
This announcement follows the publication of AM Best’s credit ratings, which are accessible on the agency’s official website.
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