Travelers CEO: Canadian business sale made as no opportunity to close market share gap

By Michael Loney

July 17 - (The Insurer) - Travelers chairman and CEO Alan Schnitzer has explained that the sale of its Canadian operations is “not part of a broader geographic repositioning” and was agreed in response to a lack of opportunities to increase market share in the country.

On an earnings call on Thursday, Schnitzer discussed May’s announcement that Travelers has agreed to sell most of its Canadian business to Definity for $2.4 billion or 1.8x book value, excluding excess local capital. The deal does not include the Canadian surety business.

Travelers expects to allocate about $700 million of the net cash proceeds for additional share repurchases in 2026, and for the transaction to be slightly accretive earnings per share in each of the next several years.

“It was a relatively small transaction for us, (but) it's noteworthy in reflecting an important point. We are relentless in our commitment to disciplined capital allocation and value creation,” Schnitzer said.

The executive explained that the Canadian marketplace has evolved over the last decade in a few significant ways.

“First, a small number of insurers have built significant scale and market influence, in part, through vertical integration with distribution,” he said. “There were no compelling inorganic opportunities for us to close the market share gap and we didn't see vertical integration as a realistic opportunity for us.

"Also, the regulatory environment has become more challenging.”

Schnitzer added that the deal “is not part of a broader geographic repositioning.”

“It's simply a smart transaction,” he said.

On the call, Schnitzer also said Travelers has not had any meaningful impact of tariffs across any of its businesses.

“We do have some expectation that there could be an impact. I think we said last quarter that we would expect it in the back half of this year to the extent we do expect it. We'll put it into our loss picks, and that will make its way through to our pricing indications.”

Schnitzer also highlighted that “tort inflation is alive and well.”

“It hasn't gone anywhere and continues to show up in the numbers. I would say we've got an expectation for it. We're pricing for it, it appears the whole market is pricing for it,” he said.