Definity Financial Corp. · TSX:DFY
Definity Financial — Q2 2024 Earnings Presentation
31 slides from Definity Financial's earnings presentation, August 2024
Slide 1: Investor Presentation August 2024
INVESTOR PRESENTATION August 2024
Slide 2: Advisory Regarding Forward-Looking Information
2 ADVISORY REGARDING FORWARD-LOOKING INFORMATION This presentation contains “forward-looking information” within the meaning of applicable securities laws in Canada. Forward-looking information may relate to our future business, financial outlook and anticipated events or results and may include inf
Slide 3: Company Overview
COMPANY OVERVIEW
Slide 4: Company Highlights
4 COMPANY HIGHLIGHTS Leading Canadian P&C Insurer in a Large and Growing Market Superior Customer and Broker Experience Highly Scalable Digital Platforms and Growing Broker Distribution Capabilities Market Leading Commercial Insurance Capabilities Sophisticated Pricing Methodologies and Disciplined
Slide 5: Definity is a Leading Canadian P&C Insurer
5 DEFINITY IS A LEADING CANADIAN P&C INSURER We are a personal and commercial P&C insurer offering auto, property, liability, pet, and specialty insurance solutions through multiple distribution channels Over 150 Years of Operations in Canada $4.3B IN GROSS WRITTEN PREMIUMS(3) FOR TTM Q2 2024(2) 6th
Slide 6: Our Strategy
6 OUR STRATEGY STRATEGIC OBJECTIVES OUR PURPOSE Building a better world Consistently Position Definity as Become one of the by helping our clients Maintain our digital deliver disciplined a purpose-driven five largest P&C and communities leadership financial sustainability insurers in Canada adapt a
Slide 7: Superior Customer and Broker Experience
7 SUPERIOR CUSTOMER AND BROKER EXPERIENCE Our Digital Platforms, Sonnet and Vyne, enable our customers and brokers to access competitively priced insurance in a fast, easy to use manner IMPACT EVERY ASPECT OF THE VALUE CHAIN We believe that our sophisticated Digital Platforms enable rapid scaling of
Slide 8: Using Analytics & AI to Create Business Value
8 USING ANALYTICS & AI TO CREATE BUSINESS VALUE 200+ data & analytics practitioners Over 25 years of high-quality, ALL LINES PERSONAL LINES COMMERCIAL LINES digitized data + access to extensive third-party datasets Predictive modelling evaluates Predictive models are Numerous models triage & custome
Slide 9: Profitable Growth Combined with a Strengthened and Diversified Earnings Profile
9 PROFITABLE GROWTH COMBINED WITH A STRENGTHENED AND DIVERSIFIED EARNINGS PROFILE Gross Written Premiums(1) Operating Income(1) ($ in millions) 13.6% YoY ($ in millions) $4,005 $246.5 $3,662 $323.7 $2,195 $309.1 $27.2 $3,258 $1,932 $290.9 $39.3 $14.1 $242.1 $2,829 $8.0 $2,534 $1.3 $133.1 $166.9 $98.
Slide 10: Driving Profitable Growth in Personal Auto
10 DRIVING PROFITABLE GROWTH IN PERSONAL AUTO BY LEVERAGING DIGITAL ASSETS AND BROKER RELATIONSHIPS PERSONAL AUTO GWP(1,2) GROWTH PERSONAL AUTO COMBINED RATIO(2,4) ($ in millions) 17.8% 13.4-point improvement in Combined Ratio(2) 310 bps 6.6% 4-Year CAGR(3) YoY $166M increase in Underwriting Income(
Slide 11: Robust Growth in Personal Property with Improved Underwriting
11 ROBUST GROWTH IN PERSONAL PROPERTY WITH IMPROVED UNDERWRITING PERSONAL PROPERTY GWP(1,2) GROWTH PERSONAL PROPERTY COMBINED RATIO(2,4) ($ in millions) 6.2% 4.0-point improvement in Combined Ratio(2) (ex. CAT) 210 bps improvement 15.2% 4-Year CAGR(3) $98M increase in Underwriting Income(2) (ex. CAT
Slide 12: Growing and Profitable Commercial Insurance Capabilities
12 GROWING AND PROFITABLE COMMERCIAL INSURANCE CAPABILITIES COMMERCIAL INSURANCE GWP(1,2) GROWTH COMMERCIAL INSURANCE COMBINED RATIO(2,4) ($ in millions) 18.9% 4-Year CAGR(3) 14.7% 180 bps 12.9-point improvement in Combined Ratio(2) YoY increase $121M increase in Underwriting Income(2) $1,235 101.7%
Slide 13: Positioned for Expansion Across Several Commercial Insurance Segments
13 POSITIONED FOR EXPANSION ACROSS SEVERAL COMMERCIAL INSURANCE SEGMENTS SMALL BUSINESS MID-MARKET SPECIALTY Target market size: ~$9.5B(1) Target market size: ~$8.5B(1) Target market size: ~$6.0B(1) Key growth opportunities: Key growth opportunities: Key growth opportunities: ⚫ Leverage digital capa
Slide 14: Our Leading Broker Platform
14 OUR LEADING BROKER PLATFORM Our national broker platform provides ongoing opportunities to scale and grow the earnings profile of the business Benefits to Definity 3-5 Year Ambition • Diversified product base allows for repeatable distribution income and complementary earnings contribution • • St
Slide 15: A Heightened Focus on Culture and Developing Executive Bench Strength
15 A HEIGHTENED FOCUS ON CULTURE AND DEVELOPING EXECUTIVE BENCH STRENGTH Philip Mather Paul MacDonald Fabian Richenberger Liam McFarlane Brigid Pelino Rowan Saunders EVP & CFO EVP, Personal Insurance EVP, Commercial SVP & Chief Risk and President & CEO SVP & Chief People & & Digital Channels Insuran
Slide 16: Definity, It's Better Here
16 DEFINITY, IT’S BETTER HERE 2023-2024 Our engagement journey Key Statistics Company Recognition 80% 80% 77% 77% 65% 72% 92% retention rate of Definity employee 59% Engagement (1) 54% high-performers 2015 2017 2019 2020 2021 2022 2023 2024 88% of employees feel accepted and included for who they ar
Slide 17: ESG Highlights
17 ESG HIGHLIGHTS Our purpose: Building a better world by helping our clients and communities adapt and thrive. ENVIRONMENT SOCIAL GOVERNANCE • Target: Achieve net zero • Target: At least 30% women, • 12 of 13 Board directors are emissions from operations and 15% equity-deserving (BIPOC, independent
Slide 18: Financial Performance and Risk Management
FINANCIAL PERFORMANCE AND RISK MANAGEMENT
Slide 19: Our Financial Targets
19 OUR FINANCIAL TARGETS Gross Written Premiums(1) Combined Ratio(1) Operating ROE(1) 13.6% 92.0% 10.8% YTD Q2-2024 YTD Q2-2024 TTM Q2-2024 Maintain a full year combined ratio Generate a full year operating ROE Grow GWP at an upper single digit in the range of 10% to below teens(2) in the mid-90s(2)
Slide 20: Significant Financial Flexibility
20 SIGNIFICANT FINANCIAL FLEXIBILITY CAPITAL MANAGEMENT FRAMEWORK DIVIDEND GROWTH ($ in millions, except as otherwise noted) Jun 30-24 ⚫ Establishment of flexible capital management tools to Dividend for stub period between the initial public offering and December 31, 2021 16%+ Excess capital for De
Slide 21: Prudent Approach to Reserving and Reinsurance
21 PRUDENT APPROACH TO RESERVING AND REINSURANCE PRUDENT RESERVING PRACTICES ROBUST REINSURANCE FRAMEWORK • Closely monitor adequacy of reserves Structured to provide protection against individual large • Favourable prior year development (PYD)(1) in 9 out of 10 losses and catastrophe events years b
Slide 22: Conservative and Diversified Investment Portfolio
22 CONSERVATIVE AND DIVERSIFIED INVESTMENT PORTFOLIO PORTFOLIO HIGHLIGHTS DIVERSE ASSET ALLOCATION FIXED INCOME PORTFOLIO(1) 79% of total portfolio in high quality ✓ fixed income securities, cash, and short- term investments BB 0.3% AAA 6.7% 38.1% 1.7% 85% of the preferred stocks in the ✓ portfolio
Slide 23: Appendix
é APPENDIX i ~ definity.
Slide 24: 12-Month Industry Outlook
24 12-MONTH INDUSTRY OUTLOOK Personal Auto Personal Property Commercial Insurance • We expect the inflationary pressures • The volatility of weather events is expected • We expect the commercial lines market affecting vehicle damage claims to remain to continue to be a risk for this line of conditio
Slide 25: Financial Results
25 FINANCIAL RESULTS (in millions of Canadian dollars, except as otherwise noted - unaudited) IFRS 17 / IFRS 9 IFRS 4 / IAS 39 Q2 2024 Q1 2024 2024 YTD 2023 YTD FY 2023 FY 2022 FY 2021 FY 2020 FY 2019 Insurance revenue 1,046.1 991.9 2,038.0 1,862.4 3,850.3 3,485.7 Insurance service expenses (839.9)
Slide 26: Selected Financial Ratios
26 SELECTED FINANCIAL RATIOS IFRS 17 / IFRS 9 IFRS 4 / IAS 39 Q2 2024 Q1 2024 2024 YTD 2023 YTD FY 2023 FY 2022 FY 2021 FY 2020 FY 2019 Gross written premiums1 YOY Growth 14.2% 12.8% 13.6% 10.0% 9.4% 12.4% 15.2% 11.7% 1.5% Claims ratio1 60.0% 62.6% 61.2% 63.2% 65.1% 61.7% 60.8% 62.3% 73.1% Expense r
Slide 27: Balance Sheet
27 BALANCE SHEET IFRS 17 / IFRS 9 IFRS 4 / IAS 39 Q2 2024 Q1 2024 FY 2023 FY 2022 FY 2021 FY 2020 FY 2019 Total cash and investments 5,076.5 5,014.1 5,128.5 5,097.7 5,753.1 4,876.6 4,285.7 Restricted cash 209.8 229.5 244.0 302.1 110.8 - - Premiums receivable 1,075.9 958.7 850.7 Income taxes receivab
Slide 28: Financial Strength and Issuer Ratings
28 FINANCIAL STRENGTH AND ISSUER RATINGS Strong issuer and financial strength ratings have been assigned to Definity, and its subsidiary Definity Insurance, by major credit rating agencies. The ratings are reflective of Definity’s strong capitalization and liquidity, extensive distribution network,
Slide 29: Supplementary Financial Measures and Non-GAAP Financial Measures and Ratios
29 SUPPLEMENTARY FINANCIAL MEASURES AND NON-GAAP FINANCIAL MEASURES AND RATIOS The Company’s unaudited condensed interim consolidated financial statements and accompanying notes as at and for the quarter ended June 30, 2024 have been prepared in accordance with International Financial Reporting Stan
Slide 30: Contact Us
30 CONTACT US Investor Relations Corporate Communications Definity Financial Corporation Sarah Attwells Investor Relations Department AVP, Corporate Communication 333 Bay St, Suite 2900 (C) 226-753-1130 Toronto, ON M5H 2R2 sarah.attwells@definity.com (TF) 1-866-902-4724 IR@definity.com General Inqui
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