HIGHLIGHTS
- Drayden is a large scale independent insurance broker in
Alberta with a proven track
record
- Acquisition will complement Definity's existing portfolio of
broker assets with the establishment of a strong presence in
Western Canada
- Transaction is expected to increase Definity's earnings from
distribution1 by over 25% and be immediately accretive
to Definity's operating ROE and operating EPS2
WATERLOO, ON, June 13,
2023 /CNW/ - McDougall Insurance Brokers Limited
("McDougall"), a subsidiary of Definity Financial Corporation (TSX:
DFY), has announced that it has entered into a definitive agreement
to acquire 100% of Drayden Insurance Ltd. ("Drayden") for
$208 million, subject to closing and
post-closing adjustments. The transaction will be funded by
Definity, through McDougall, using a combination of excess capital
and debt. After accounting for all related transactions, Definity's
ownership interest in McDougall will increase to approximately
78%.
Founded in 1965, Drayden is a leading Alberta insurance broker with approximately
$125 million in annual premiums and
strong operating margins. Through its insurance broker and
government registry service operations, Drayden employs over 170
people across eight locations in the Edmonton area.
After closing of the Drayden transaction, McDougall will have
over $860 million in annual premiums
with 860 employees in 65 office locations. The transaction is
expected to be immediately accretive to Definity's operating
ROE and operating earnings per share. Definity continues to
hold significant financial capacity for future
opportunities.
"The addition of Drayden will provide immediate scale and market
leading presence outside of Ontario," said Rowan
Saunders, President and Chief Executive Officer, Definity.
"This acquisition reinforces Definity's commitment to build our
insurance broker platform into another billion dollar business for
Definity."
"Drayden has an experienced management team, highly valued
brands, a great culture and strong operational alignment with our
existing broker operations," stated Ross
McDougall, Chief Executive Officer, McDougall. "This
transaction will give McDougall a unique opportunity to expand
nationally and immediately establish a leadership position in
Alberta's insurance broker
market."
"We are excited about the opportunity to join the McDougall
family given our common focus and shared values," said Brian Nielsen, President, Drayden. "For our
employees and customers this combination underpins our commitment
to provide unrivalled service and supports continued investment in
growing our business in Edmonton
and the broader Alberta
region."
The acquisition is expected to close in the third quarter of
2023, subject to the fulfillment of customary closing conditions
including provincial regulatory approval related to the change of
control of Drayden's registries business.
About Definity Financial
Corporation
Definity Financial Corporation ("Definity", which includes its
subsidiaries where the context so requires) is one of the leading
property and casualty insurers in Canada, with over $3.7
billion in gross written premiums for the 12 months ended
March 31, 2023 and over $2.6 billion in equity attributable to common
shareholders as at March 31,
2023.
Forward Looking
Statements
This news release may contain forward-looking information within
the meaning of applicable securities laws, which reflects
Definity's current expectations regarding future events, including
statements relating to the Acquisition, the accretive impact of the
Acquisition on operating ROE and operating EPS, diversification
benefits on income, the timing and receipt of all requisite
approvals related to the Acquisition, Definity's level of ownership
in McDougall, future expected operating income from broker
investments, future transactions and acquisitions, impact on
Definity's operating income and book value, timing and amount of
post-closing adjustments, impact on McDougall's operating margins,
and impact on Definity's and McDougall's growth plans and
McDougall's annual premium base objective, among others. The words
"may", "will", "would", "should", "could", "expects", "plans",
"intends", "trends", "indications", "anticipates", "believes",
"estimates", "predicts", "likely", "potential" or the negative or
other variations of these words or other similar or comparable
words or phrases, are intended to identify forward-looking
statements. Forward-looking information is based on a number of
assumptions and is subject to a number of risks and uncertainties,
many of which are beyond Definity's control. Such risks and
uncertainties are included in the "Cautionary Note Regarding
Forward-looking Information" section of the Company's Q1-2023
Management's Discussion and Analysis dated May 11, 2023 and the "Risk Management and
Corporate Governance" section of Definity's Management's Discussion
and Analysis for the year ended December 31,
2022. Actual results could differ materially from those
projected herein. Unless otherwise indicated, all forward-looking
statements in this press release are made as of June 13, 2023 and are subject to change after
that date. Definity does not undertake any obligation to update
such forward-looking information, whether as a result of new
information, future events or otherwise, except as expressly
required under applicable securities laws.
Supplementary Financial Measures
and Non-GAAP Financial Measures and Ratios
We measure and evaluate performance of our business using a
number of financial measures. Among these measures are the
"supplementary financial measures", "non-GAAP financial measures",
and "non-GAAP ratios" (as such terms are defined under Canadian
Securities Administrators' National Instrument 52-112 – Non-GAAP
and Other Financial Measures Disclosure), and in each case are not
standardized financial measures under GAAP. The supplementary
financial measures, non-GAAP financial measures, and non-GAAP
ratios in this news release may not be comparable to similar
measures presented by other companies. These measures should not be
considered in isolation or as a substitute for analysis of our
financial information reported under GAAP. These measures are used
by financial analysts and others in the P&C insurance industry
and facilitate management's comparisons to our historical operating
results in assessing our results and strategic and operational
decision-making. For more information about these supplementary
financial measures, non-GAAP financial measures, and non-GAAP
ratios, including (where applicable) definitions and explanations
of how these measures provide useful information, refer to Section
12 – Supplementary financial measures and non-GAAP financial
measures and ratios in the Q1-2023 Management's Discussion and
Analysis dated May 11, 2023, which is
available on our website at www.definityfinancial.com and on SEDAR
at www.sedar.com. These measures have been updated to reflect the
estimated impact arising from the adoption of IFRS 17 and IFRS
9.
1Operating income from broker investments before
finance costs, taxes and minority interests.
2This is a supplementary financial measure, non-GAAP
financial measure, or a non-GAAP ratio. Please refer to
Supplementary financial measures and non-GAAP financial measures
and ratios in this news release, and Section 12 – Supplementary
financial measures and non-GAAP financial measures and ratios in
Definity's Management's Discussion and Analysis for the quarter
ended March 31, 2023 for further
details, which is available on the Company's website at
www.definity.com and on SEDAR at www.sedar.com.
SOURCE Definity Financial Corporation