Definity Financial (DFY) Q1 2025 earnings summary

Executive summary

• Gross written premiums grew 9.6% year-over-year (adjusted for exited lines) to $1.03B in Q1 2025, driven by strong personal auto and commercial insurance growth and firm market conditions.

• Operating net income reached $75.9 million (CAD 0.65 per share), with operating ROE at 10.3% for the trailing 12 months.

• Book value per share increased 16.2% year-over-year to $29.52, reflecting strong capital generation and investment performance.

• Combined ratio was 94.5% in Q1 2025, in line with the sub-95% target, impacted by winter weather and catastrophe losses but offset by rate actions and expense management.

• Financial capacity rose to $1.8 billion, supporting growth, acquisitions, and resilience.

Financial highlights

• Insurance revenue increased 12.1% year-over-year to $1,111.9 million; net underwriting revenue up 10.7% to $1,001.8 million.

• Underwriting income was $55.0 million, with a combined ratio of 94.5% (up 0.6 pts year-over-year).

• Net investment income rose to $49.8 million, driven by higher bond holdings and defensive portfolio actions.

• Distribution income from the broker platform reached $11.0 million, with expectations for 15% growth in 2025.

• Expense ratio improved to 30.3%, with net operating expense ratio down to 11.8%, targeting 11.5% in 2025.

Outlook and guidance

• Targeting a sub-95% annual consolidated combined ratio for 2025, with GWP growth in the upper single digits to 10%.

• Broker platform operating income expected to grow at least 15% over 2024's $76M, with managed premiums targeted to reach at least $1.5 billion by end of 2026.

• Commercial insurance expected to maintain a low 90s combined ratio and grow at twice the industry rate (~10%).

• Personal and commercial insurance markets expected to remain firm, with inflation and catastrophe losses influencing pricing.

• Management remains confident in delivering 2025 financial targets and advancing strategic objectives.