Definity seeks place among top five Canadian property & casualty insurers following IPO

·2 min read

By Nichola Saminather

TORONTO (Reuters) - Definity Financial Corp will rely on both organic growth and acquisitions to become one of the top five property and casualty (P&C) insurers in Canada, with last week's initial public offering (IPO) paving the way for it to advance its growth plans, its chief executive said on Wednesday.

Definity raised C$2.1 billion ($1.7 billion) last week in one of Canada's biggest IPOs ahead of its trading debut on the Toronto stock exchange.

"As a mutual company, we were limited in our access to capital," CEO Rowan Saunders said on a media call. "Now, following the IPO, we've finally placed ourselves in a position to compete and continue to grow."

Definity, the seventh-largest P&C insurer in Canada, expects premiums from Sonnet, its digital direct-to-consumer offering, to double in the next couple of years from C$250 million at the end of last year, Saunders said.

Canada's P&C insurance market, with C$210 billion in total assets, is dominated by Intact Financial, Desjardins Group and Aviva Group. Rising premiums and industry consolidation have kept the industry profitable despite increasing claims from the pandemic and natural disasters.

Definity was previously known as Economical Mutual Insurance Co.

Definity's personal lines systems are built for a "much bigger business than they are today," so the company is also looking for an acquisition that will allow it to scale up, he said.

Definity also plans to expand its commercial insurance offering, which serves primarily small to medium-sized enterprises, into bigger middle-market companies and specialty insurance, Saunders said.

Saunders said that while the recent surge in inflation will affect costs of claims, the repricing of policies every year will help offset some of the higher costs. The company also reinvests bonds at higher yields when they roll over, he said.

"The changing interest rate environment is manageable," he said.

($1 = 1.2666 Canadian dollars)

(Reporting By Nichola Saminather; Editing by Mark Porter)

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