Definity Financial Corporation reported higher premiums, stronger underwriting and investment income, and a higher operating return on equity in 2025, even as one‑time costs tied to its $3.3-billion Travelers Canada acquisition dragged down reported earnings in the fourth quarter.
The company, which completed the Travelers deal in January, said gross written premiums (GWP) rose 9.2% in the fourth quarter to $1.21 billion and 8.1% for the full year to $4.81 billion. Adjusted for an exited line, full‑year GWP growth was 8.8%.
Personal lines premiums in Q4 were up 10.4%, driven by unit growth and rate increases, while commercial lines GWP rose 6.9% on strong retention, continued rate achievement and expansion in small business and specialty. For 2025, personal lines GWP grew 7.9% and commercial lines 8.6%.
Underwriting, investment and distribution income
Underwriting performance improved year on year. Fourth‑quarter underwriting income was $111.5 million, up from $97.0 million, with a combined ratio of 89.9% versus 90.3% in Q4 2024. The company said the Q4 combined‑ratio improvement was driven primarily by a lower expense ratio, while the claims ratio was broadly flat at 60.6%.
For the full year, underwriting income rose to $354.7 million from $212.4 million, producing a combined ratio of 91.6%, an improvement of 2.9 points from 94.5% in 2024. Definity highlighted strong results in personal property and commercial insurance, both of which delivered sub‑90 combined ratios.
Net investment income also supported results, rising to $61.1 million in Q4 from $51.1 million a year earlier, and to $215.7 million for 2025 from $198.2 million. The company attributed the increase to higher interest income on proceeds from a private placement of senior unsecured notes invested in short‑term instruments, and higher bond holdings.
Distribution income from Definity’s brokerage platform was $10.9 million in Q4, slightly down from $11.4 million, and $62.0 million for the year, up from $54.4 million. The quarterly decline reflected a higher proportion of business written through majority‑owned brokers, which shifts economics between commission and distribution income.
Net income and operating performance
Despite the stronger underlying performance, fourth‑quarter net income attributable to common shareholders fell to $58.0 million from $116.6 million a year earlier. Definity said the decrease was driven by $74 million of pre‑tax expenses related to the Travelers transaction, including the impact of Canadian/US dollar movements on a foreign‑exchange hedge of the purchase price, integration costs and interest expense on the senior notes issued to fund the deal.
For 2025 overall, net income attributable to common shareholders was $418.2 million, down modestly from $430.4 million in 2024.
On an operating basis, which excludes fair‑value changes, realized gains and certain transaction‑related items, results moved higher. Operating net income was $120.7 million in Q4, up from $110.4 million, and $420.7 million for the year, up from $310.2 million. Operating earnings per share were $0.99 in Q4 and $3.53 for 2025, compared with $0.95 and $2.66, respectively. Operating return on equity improved to 12.2% in 2025 from 10.6% in the prior year.
The company raised its quarterly dividend for the fourth consecutive year, increasing it 14.7% to $0.215 per share.
Peer positioning in the Canadian P&C market
With Travelers Canada now consolidated, Definity said its pro forma annual GWP is about $6.3 billion, placing it among the top five P&C carriers in Canada by premium volume. That still trails much larger domestic competitors such as Intact Financial and the Canadian operations of global groups like Aviva and Desjardins, but Definity’s roughly high‑single‑digit GWP growth and low‑90s combined ratio in 2025 put it toward the upper end of the market on both growth and underwriting profitability.
As integration proceeds through 2026, brokers and analysts will be watching whether Definity can maintain sub‑92 combined ratios on a larger book and how its operating ROE compares with top‑quartile Canadian peers once acquisition‑related noise drops out of reported results.
