Investing.com -- The Travelers Companies, Inc. (NYSE: TRV ) disclosed today that it has entered a definitive agreement to divest its personal insurance and most of its commercial insurance businesses in Canada to Definity Financial (TSX: DFY ) Corporation for an estimated $2.4 billion. The selling price is equivalent to 1.8 times the book value, after adjusting for around $0.8 billion of surplus local capital being repatriated in a tax-efficient manner as part of this transaction.
Travelers, the leading surety writer in North America, will retain its top-tier Canadian surety business. The transaction is anticipated to be finalized in the first quarter of 2026, pending regulatory approvals and standard closing conditions.
Alan Schnitzer, Chairman and CEO of Travelers, stated, "This transaction is a reflection of our steadfast commitment to disciplined capital allocation and long-term value creation." He added that Definity’s evolution over the past decade has positioned the company as a natural long-term owner for this business, a perspective reinforced by the attractive value of their proposal.
Travelers plans to allocate approximately $0.7 billion from the net cash proceeds of the transaction for additional share buybacks in 2026, while preserving the rest to support ongoing operations and for general corporate purposes. The company anticipates that the transaction and subsequent share repurchases will slightly boost the company’s earnings per share in the coming years.
In this transaction, Jefferies LLC served as the financial advisor and Skadden, Arps, Slate, Meagher & Flom LLP and Stikeman Elliott LLP provided legal advice to Travelers.
The price to book value multiple calculation omitted about $0.8 billion of excess local capital from both the purchase price and the book value. The book value is based on the equity of the entities being sold as of Dec. 31, 2024, after considering the separation of the surety business and is measured on an IFRS basis.
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