Definity facing C$50 million Q1 cat hit

By Chris Munro

April 10 - (The Insurer) - Definity Financial Corporation expects its first quarter 2025 operating income will be affected by approximately C$50 million ($35.6 million) of catastrophe losses, net of reinsurance and taxes.

The C$50 million estimate, which equates to some C$0.32 per common share, is approximately double Definity’s expectation for first quarter catastrophe losses, based on historical averages.

As Definity noted, Q1 2025 saw heavy snowfall and rain while the ground was frozen, which resulted in elevated property damage from roof collapses and water infiltration, mostly in Ontario, Quebec and Atlantic Canada.

Definity’s estimated first quarter 2025 catastrophe losses also include those arising from the severe ice storm that affected Ontario in late March, which resulted in downed trees and loss of power for hundreds of thousands of homes and businesses.

The Waterloo, Ontario-based insurer said its catastrophe loss assessment is based on information received from customers to date, along with an analysis of its exposures.

The bulk of Definity’s C$50 million Q1 2025 catastrophe loss estimate comes from personal property, which the carrier expects will result in C$33 million of losses.

Commercial insurance accounts for another C$14 million, while personal auto represents the final C$3 million.

“With our enhanced catastrophe response capabilities, the resilience of our business model, and the commitment of our people, we have supported our impacted customers during these challenging winter months in a way that lives up to our promise of making insurance better,” said Rowan Saunders, Definity's president and CEO.

In its fourth quarter and full year 2024 earnings report, Definity noted that, effective January 1, 2025, the company’s maximum limit for catastrophe events is $2.075 billion, while the business has a net retention of C$75 million, before reinstatement premiums.

As it detailed, the company retains an average participation of 2.44% on the treaty for reinsurance losses above C$180 million. It has no participation on individual loss events between C$75 million and C$180 million, subject to reinstatement premiums.