Image source: © 2025 Krish Capital Pty. Ltd.

Highlights

  • DFY’s gross written premiums increased by CAD 97.7 million or 7.9% in Q2 FY2025 compared to Q2 FY2024.
  • Meanwhile, operating net income declined to CAD 98.9 million from CAD 109.1 million YoY.
  • Combined ratio rose to 92.9% in Q2 FY2025, reflecting higher catastrophe losses and claims ratios.

Definity Financial Corporation (TSX:DFY) reported its financial results for the second quarter of fiscal year 2025, with gross written premiums (GWP) increasing by CAD 97.7 million or 7.9% compared to the same quarter in 2024. Excluding premiums from exited lines, GWP growth was 9.1%, driven by higher auto rates, unit count growth, and continued expansion across commercial and specialty lines.

The company's Q2 FY2025 operating net income was CAD 98.9 million, down from CAD 109.1 million a year earlier, due to reduced underwriting income linked to higher catastrophe losses. Net income attributable to common shareholders also declined to CAD 75.1 million from CAD 103.8 million in Q2 FY2024. These declines were partially offset by improved expense ratios and increased distribution income.

The combined ratio for the quarter was 92.9%, compared to 90.1% in the same quarter last year. The increase was attributed to higher catastrophe losses and a rise in core accident year claims in commercial lines, though these were mitigated by profitability improvements in Sonnet and cost efficiencies. Year-to-date underwriting income dropped by CAD 18.9 million, with the combined ratio rising to 93.7% from 92.0%.

In personal lines, GWP rose 6.9% in the quarter and 6.8% year-to-date, with notable contributions from the broker channel. Excluding exited business lines, personal auto GWP grew 9.6%, and personal property GWP rose 7.1%. The personal auto combined ratio improved to 94.2% from 95.2% in the prior year, while the personal property combined ratio increased to 94.3% from 86.0%, reflecting a 10.0 percentage point rise in catastrophe losses.

Commercial lines posted a 10.0% increase in GWP both for the quarter and year-to-date, driven by strong client retention, rate increases, and growth in small business and specialty segments. The commercial lines combined ratio was 89.6% in Q2 FY2025, higher than 86.6% in the prior-year quarter due to changes in claim definitions and normalized weather, though partially offset by lower catastrophe losses.

Net investment income reached CAD 50.7 million in Q2, up slightly from CAD 49.9 million in Q2 FY2024, while distribution income increased to CAD 21.9 million from CAD 17.2 million, supported by acquisitions and organic growth.

Book value per share stood at CAD 31.39 at quarter-end, representing a 19.9% YoY increase. The company attributed the growth in book value to private equity placements supporting its planned CAD 3.3 billion acquisition of Travelers Canada, expected to close in Q1 2026. Operating return on equity for the trailing twelve-month period was 9.6%, down from 10.8% a year earlier, impacted by elevated catastrophe losses and higher equity base.