Latest news with #DefinityFinancial
Yahoo
5 hours ago
- Business
- Yahoo
Are Robust Financials Driving The Recent Rally In Definity Financial Corporation's (TSE:DFY) Stock?
Definity Financial (TSE:DFY) has had a great run on the share market with its stock up by a significant 28% over the last three months. Since the market usually pay for a company's long-term fundamentals, we decided to study the company's key performance indicators to see if they could be influencing the market. Particularly, we will be paying attention to Definity Financial's ROE today. Return on equity or ROE is an important factor to be considered by a shareholder because it tells them how effectively their capital is being reinvested. In other words, it is a profitability ratio which measures the rate of return on the capital provided by the company's shareholders. Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit. The formula for ROE is: Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity So, based on the above formula, the ROE for Definity Financial is: 12% = CA$422m ÷ CA$3.6b (Based on the trailing twelve months to March 2025). The 'return' is the income the business earned over the last year. So, this means that for every CA$1 of its shareholder's investments, the company generates a profit of CA$0.12. See our latest analysis for Definity Financial So far, we've learned that ROE is a measure of a company's profitability. We now need to evaluate how much profit the company reinvests or "retains" for future growth which then gives us an idea about the growth potential of the company. Assuming all else is equal, companies that have both a higher return on equity and higher profit retention are usually the ones that have a higher growth rate when compared to companies that don't have the same features. To begin with, Definity Financial seems to have a respectable ROE. And on comparing with the industry, we found that the the average industry ROE is similar at 12%. This certainly adds some context to Definity Financial's exceptional 30% net income growth seen over the past five years. We believe that there might also be other aspects that are positively influencing the company's earnings growth. For instance, the company has a low payout ratio or is being managed efficiently. As a next step, we compared Definity Financial's net income growth with the industry, and pleasingly, we found that the growth seen by the company is higher than the average industry growth of 9.4%. Earnings growth is an important metric to consider when valuing a stock. The investor should try to establish if the expected growth or decline in earnings, whichever the case may be, is priced in. By doing so, they will have an idea if the stock is headed into clear blue waters or if swampy waters await. Has the market priced in the future outlook for DFY? You can find out in our latest intrinsic value infographic research report. Definity Financial has a really low three-year median payout ratio of 18%, meaning that it has the remaining 82% left over to reinvest into its business. So it looks like Definity Financial is reinvesting profits heavily to grow its business, which shows in its earnings growth. Additionally, Definity Financial has paid dividends over a period of three years which means that the company is pretty serious about sharing its profits with shareholders. Upon studying the latest analysts' consensus data, we found that the company is expected to keep paying out approximately 20% of its profits over the next three years. Therefore, the company's future ROE is also not expected to change by much with analysts predicting an ROE of 11%. Overall, we are quite pleased with Definity Financial's performance. Specifically, we like that the company is reinvesting a huge chunk of its profits at a high rate of return. This of course has caused the company to see substantial growth in its earnings. That being so, a study of the latest analyst forecasts show that the company is expected to see a slowdown in its future earnings growth. To know more about the latest analysts predictions for the company, check out this visualization of analyst forecasts for the company. — Investing narratives with Fair Values Vita Life Sciences Set for a 12.72% Revenue Growth While Tackling Operational Challenges By Robbo – Community Contributor Fair Value Estimated: A$2.42 · 0.1% Overvalued Vossloh rides a €500 billion wave to boost growth and earnings in the next decade By Chris1 – Community Contributor Fair Value Estimated: €78.41 · 0.1% Overvalued Intuitive Surgical Will Transform Healthcare with 12% Revenue Growth By Unike – Community Contributor Fair Value Estimated: $325.55 · 0.6% Undervalued View more featured narratives — Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
4 days ago
- Business
- Yahoo
Brookfield leads as RBC initiates bullish call on diversified financials
-- RBC (TSX:RY) Capital Markets has initiated coverage on the North American diversified financials sector with a bullish stance on select names showing attractive value and structural growth dynamics. The coverage spans 10 companies, with Brookfield Corporation, Element Fleet Management, and Fairfax Financial identified as the top "diversi-finds" in the sector due to secular positioning, earnings momentum, and valuation opportunity. Brookfield Corp (TSX:BN) is RBC's top pick, rated Outperform, which reflects confidence in its business model and upside tied to a valuation disconnect. RBC analyst Bart Dziarski noted: 'The current valuation disconnect is too extreme for what we view to be an industry-leading franchise in a sector benefiting from positive secular trends.' RBC also sees material upside in Brookfield Asset Management (TSX:BAM) and Brookfield Business Partners (NYSE:BBU) LP (TSX:BBU_u), both rated Outperform. The former offers capital-light exposure to alternative asset management, while the latter is moving into a favorable monetization cycle, which could act as a near-term catalyst. The firm is constructive on the P&C insurance space, citing its defensive profile and M&A optionality in a volatile macro environment. RBC is particularly optimistic about Definity Financial Corp (TSX:DFY) and Trisura Group Ltd (TSX:TSU), each rated Outperform, highlighting the former's 'transformational' Travelers (NYSE:TRV) acquisition and the latter's rebound potential now that regulatory penalties have run their course. Fairfax Financial Holdings Ltd (TSX:FFH) is another key Outperform-rated pick, where the market has yet to fully price in underlying franchise value. According to Dziarski, 'Investors are still not recognizing solid franchise value,' signaling continued re-rating potential. Among other diversified financials, RBC favors Element Fleet Management Corp (TSX:EFN) and Power Corporation Of Canada (TSX:POW), rating both Outperform on improving profitability and valuation upside. By contrast, the analyst initiated coverage on IGM Financial Inc . (TSX:IGM) with a Sector Perform due to concerns around the growth prospects for its core assets, IG Wealth Management and Mackenzie Investments. Intact Financial Corporation (TSX:IFC) received a Sector Perform rating from RBC Capital Markets, reflecting a more measured view despite the firm's strong franchise characteristics. While RBC acknowledges Intact's solid positioning within the property and casualty insurance market, valuation concerns prevent a more bullish stance at current levels. RBC applied a variety of valuation frameworks, including proprietary data analytics and return-based modeling, to challenge conventional consensus estimates. These findings support Street-high price targets for Brookfield Corporation, Element Fleet, and Fairfax Financial. The broader thesis is built on differentiated research including deep dives into subsidiary holdings and M&A scenarios, with data science insights from RBC Elements enhancing the views. The bank concludes that a diversified approach across capital-light asset models, alternative managers, and insurance offers both resilience and growth in today's market. RBC Capital Markets' initiation of coverage underscores a strategic preference for diversified financial firms that blend value, growth, and structural resilience. With high-conviction picks, the firm sees a compelling opportunity for investors to capitalize on dislocated valuations and favorable long-term trends. Related articles Brookfield leads as RBC initiates bullish call on diversified financials Roblox momentum is building for long-term growth, says analyst Sunrun hit by RBC downgrade, target halved on policy, cost risks
Globe and Mail
12-06-2025
- Business
- Globe and Mail
Definity Financial Corp: TD Cowen Raises Valuation on Acquisition
DeFinity Financial Corporation(DFY:CA) Definity Financial Corp. received a research report from TD Cowen, and analysts raised its 12-month target price to C$78, up from C$72 per share. This revision comes in response to Definity's recent strategic move to acquire the Canadian operations of Travelers Insurance (referred to as Travelers Canada). The acquisition is expected to significantly bolster Definity's market presence and competitive position within Canada's property and casualty (P&C) insurance industry. Travelers Canada brings a complementary book of business, national distribution capabilities, and strong underwriting expertise. This integration is anticipated to enhance Definity's scale, diversify its portfolio, and improve operational efficiencies through synergies and shared services. TD Cowen's analysts highlighted the potential for earnings accretion and margin expansion, noting that the deal aligns well with Definity's growth strategy and long-term objectives. The upgraded price target reflects stronger expected future cash flows and improved valuation metrics post-acquisition. According to forecasts from 8 analysts, the average 12-month target price for Definity Financial Corp is CAD 70.10, with an overall 'Hold' rating. Stock Target Advisor rates the stock as Neutral, based on 5 positive and 6 negative signals. As of the last close, the stock was trading at CAD 73.58. Performance-wise, the stock is down 0.54% over the past week, up 10.20% over the past month, and has gained 71.52% over the past year.
National Post
04-06-2025
- Business
- National Post
AM Best Downgrades Credit Ratings of The Dominion of Canada General Insurance Company and Travelers Insurance Company of Canada Following Announced Sale to Definity Financial Corporation; Places Credit Ratings Under Review With Various Implications
Article content OLDWICK, N.J. — has downgraded the Financial Strength Rating (FSR) to A- (Excellent) from A (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) to 'a-' (Excellent) from 'a' (Excellent) of The Dominion of Canada General Insurance Company (Dominion). At the same time, AM Best has downgraded the FSR to A+ (Superior) from A++ (Superior) and the Long-Term ICR to 'aa-' (Superior) from 'aa+' (Superior) of Travelers Insurance Company of Canada (TICC). In addition. AM Best has placed Dominion's Credit Ratings (ratings) under review with developing implications, while AM Best has placed TICC under review with negative implications. Dominion and TICC are domiciled in Toronto, Ontario, Canada. Article content The ratings of Dominion reflect its balance sheet strength, which AM Best assesses as strongest, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management (ERM). Article content The ratings of TICC reflect its balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, neutral business profile and appropriate ERM. Article content The Travelers Companies, Inc. (TRV) (NYSE: TRV) announced that it signed an agreement to sell the personal insurance business and most of the commercial insurance business of Travelers Canada, which include Dominion and TICC, to Definity Financial Corporation. The transaction is expected to close in the first quarter of 2026, subject to regulatory approvals and other customary closing conditions. Article content The announcement has triggered the removal of the TRV lift from Dominion and TICC, which have been placed under review, and while Dominion will have developing implications, TICC will have negative implications as a result of the higher rating compared with the rating of the new parent company at close. AM Best will continue to monitor events related to this transaction and provide updates as conditions warrant. Article content This press release relates to Credit Ratings that have been published on AM Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best's Article content Article content Article content Article content Article content Contacts Article content David Marek Article content Article content Associate Director Article content Article content +1 908 882 1924 Article content Article content Article content Carlos Wong-Fupuy Article content Article content Senior Director Article content Article content +1 908 882 2438 Article content Article content Article content Christopher Sharkey Article content Article content Associate Director, Public Relations Article content Article content +1 908 882 2310 Article content Article content Article content Al Slavin Article content Article content Article content Article content
Globe and Mail
29-05-2025
- Business
- Globe and Mail
Why investors love Definity's big acquisition, helping the home and auto insurer extend its hot run
Expected industry consolidation is forcing Canada's auto and property insurers to choose between eating or being eaten, and Definity Financial Corp. DFY-T is leaving no one guessing where it stands. On Tuesday the company, which predominately operates in Ontario, shelled out $3.3-billion for the Canadian operations of U.S. insurance giant Travelers Companies Inc., a deal that amounted to 40 per cent of Definity's stock market value. In most circumstances, taking such a big bite would be considered a risky bet. Yet Canada's auto and property insurance market has become very lucrative for the industry's best operators, and investors are so intrigued by the growth opportunity that they scrambled to buy more Definity stock on Wednesday, both through an upsized share sale that helps finance the takeover and in the open market. By day's end, Definity's stock jumped 11.3 per cent. Its total return, including dividends, since going public in November, 2021, is now 198.1 per cent, trouncing the 46.9-per-cent total return for the S&P/TSX Financials Index over the same period. Travelers, meanwhile, made the opposite call. The American insurer expanded to Canada in 2013 and 12 years in, its 1.85-per-cent market share remains muted. The company's Canadian business also accounted for just 2.3 per cent of its total property and casualty – that is, home, auto and commercial – premiums in 2024. While Travelers' shares have been on a run of their own and the company is in good financial standing, fighting Canadian rivals would take more capital, because the company would likely need to grow by acquisition. Instead, management decided to sell while home and auto insurers are trading at premium valuations. Travelers declined to comment. The sector is scorching hot for multiple reasons. To start, home and auto insurers are seen as defensive stocks amid the stock market volatility. Banks often struggle with surging loan losses during economic downturns, but property and casualty insurers do not face the same threats. Pricing conditions have also been favourable to insurers. Across the industry, executives often talk about 'soft' and 'hard' markets – the former is when insurers drop their prices and increase their risk tolerance in hopes of gaining market share, and the latter is when companies drop clients and hike premiums. Canada's P&C insurers have been operating in a hard market for a few years now, and there aren't many signs of it changing. When Definity reported first-quarter earnings in early May, chief executive officer Rowan Saunders said the hard market helped premiums grow 9.6 per cent over the same quarter in the prior year. The industry's best operators have also invested in technology that improves their risk models which, in turn, help them determine which clients are worthy of underwriting. This means rising prices and better profits. It also means a lower combined ratio for an insurer, which is a measure of claims to premiums earned. In 2018, Definity's combined ratio was 111.8 per cent, meaning it was paying out more in claims than it was bringing in through premiums. In the first quarter, the ratio had fallen to 94.1 per cent. Having proven its operating prowess, Definity became quite vocal over the past year about wanting to make an acquisition. The company was sitting on excess capital, and its balance sheet was in such good shape that it was comfortable adding debt to fund a large deal. By combining with Travelers' property and casualty business – Travelers' surety business in Canada will remain with the American company – Definity vaults into fourth place, ranked by market share, and its new heft will offer the scale Mr. Rowan believes is necessary to compete in a rapidly changing technology environment. Because Definity will have more revenue, it can spread its technology expenses – to upgrade its risk systems and to transform its claims operations – over a larger pot. And by growing, Definity can mimic the expansion strategy that has been so successful for Canadian rival Intact Financial Corp. Once known as ING Groep NV's Canadian arm, Intact rebranded in 2009 after ING sold the business to public investors. Intact then went on an acquisition spree in Canada, the United States and, most recently, in Britain with its deal to buy RSA Insurance Group. The growth abroad has impressed investors, because Intact has successfully integrated its takeover targets and increased profits in the process. In an interview Tuesday, Mr. Saunders said his immediate focus is to integrate the Travelers' business, but he added, 'We still have capital to keep deploying.' It's not yet clear who else would consider selling, but the more the industry consolidates, the better it is for top operators, because pricing power will only increase.
