Definity combined ratio worsens 60 bps to 94.5% in Q1

By Chris Munro

May 9 - (The Insurer) - Definity Financial Corporation closed Q1 2025 with its combined ratio worsening by 60 basis points to 94.5% as a catastrophe loss-driven increase in its claims ratio more than offset reduced expenses.

The company’s claims ratio stood at 64.2% for 2025’s first quarter, compared with 62.6% in Q1 2024.

Its expense ratio improved by 1.0 point to 30.3%.

In its earnings print, Definity explained that the first quarter 2025 combined ratio was impacted by active winter weather, compared with what was a relatively benign period in Q1 2024.

The resulting first quarter 2025 elevated catastrophe losses were driven by heavy snowfall, ice, and rain mostly in Ontario, Québec, and Atlantic Canada.

Those increases were largely offset by a decrease in the expense ratio and increased favorable claims development, Definity said.

While Definity’s combined ratio ticked up on higher catastrophe losses, the carrier’s underwriting income increased marginally by C$0.2 million ($0.14 million) year-on-year to $55.0 million.

The company’s personal lines combined ratio deteriorated by 1.4 points year-on-year to 96.1%, with higher catastrophe losses impacting both its auto and property segments.

Those increased cat losses were partially offset by earned rate increases in its auto business, and higher favorable claims development in property.

Definity’s commercial lines combined ratio improved by 1.6 points to 90.5% in Q1 2025, with the change driven by lower catastrophe losses, higher favorable claims development, and a decrease in the expense ratio, partially offset by an increase in the core accident year claims ratio.

Operating net income fell by C$0.2 million year-on-year to C$75.96 million.

Definity’s gross premiums written (GPW) increased by 7.8% from Q1 2024 to C$1.03 billion, supported by growth across all of its business lines.

Personal lines GPW grew 6.7% to C$693.8 million, driven by auto rate and unit count increases along with continued rate increases in property.

Commercial lines GPW increased 10.0% to C$336.3 million, fuelled by continued favorable overall market conditions that were particularly evident in the company’s strong small commercial and specialty business offerings.

Net investment income grew by C$1.6 million year-on-year to C$49.8 million.

“The firm market conditions in personal insurance, continued favorable conditions overall in commercial insurance, and our strong broker proposition combined to generate significant growth as premiums increased 9.6% in the first quarter, adjusted for our exited line,” said Definity’s president and CEO Rowan Saunders.

“Operating results were bolstered by a solid performance from our broker distribution platform, including C$11 million of distribution income and a strong level of commission offset,” he added.

“We have repeatedly demonstrated the resilience of our organization and have great confidence in our ability to become a top five P&C insurer,” Saunders said.