Definity Financial Corporation Reports Fourth Quarter and Full Year 2024 Results

Feb 13 2025 22:01 GMT

TORONTO , Feb. 13, 2025 /CNW/ - (TSX: DFY)

(in Canadian dollars except as otherwise noted)

Highlights

Gross written premium¹ growth of 7.4% in Q4 2024; 9.0% excluding the premiums of our exited line, Sonnet Alberta personal auto, from both periods. Full year growth of 11.1% was supported by strong performances from commercial lines and personal auto
Combined ratio¹ of 90.3% in Q4 2024 reflected the broad-based strength of the business, with particularly strong results in personal property; full year combined ratio was robust at 94.5% despite record levels of industry catastrophe losses¹
Our Sonnet business contributed positively to profitability in the fourth quarter, positioning that portfolio well to break even or better in 2025
Operating net income¹ of $110.4 million in Q4 2024 was up from $101.0 million in Q4 2023 and resulted in operating EPS¹ of $0.95. Operating ROE¹ improved to 10.6% in 2024
Book value per share¹ increased by 17.6% to $29.13, driven by the full year net income attributable to common shareholders of $430.4 million and the return of restricted cash of $150 million
Quarterly dividend increased by over 17% to $0.1875 per share, demonstrating our robust financial position and confidence in our operational outlook

Executive Messages

"In a year where the industry faced historic levels of losses from catastrophes, the resilience of our people and business model enabled Definity to deliver on its commitment to be there for customers, while generating robust results for shareholders. Our catastrophe response teams, product design, and focus on accumulation management enabled us to mitigate losses to significantly below what our market share would indicate. We reported full year operating earnings per share of $2.66, an increase of approximately 25% over the prior year. We again met or exceeded all financial targets for 2024, with top line growth of 11.1%, a full year combined ratio of 94.5%, and an operating ROE of 10.6%. In the three years since completing our landmark IPO, we have grown premiums by $1.2 billion, successfully delivered consistent underwriting profits despite challenging conditions, built the 10th largest property and casualty insurance broker in Canada, grown book value per share by over 40%, and increased our quarterly dividends per share by 50%. I am proud of our exceptional track record and look forward with confidence to what we will accomplish together with our employees and broker partners in the coming years."
– Rowan Saunders, President & CEO

"In the fourth quarter, strong underwriting income together with growing contributions from our insurance broker platform and net investment income combined to generate record operating net income of $110.4 million. This strong operating performance coupled with the return of restricted cash of $150 million drove a 17.6% increase in book value per share in 2024 to $29.13. We enter 2025 with substantial financial capacity of almost $1.7 billion, in addition to having deployed over $800 million into the rapid growth of our broker platform in recent years and distributed $200 million in shareholder dividends since our IPO. The 17.2% increase in our quarterly dividend, which extends our track record of consistent dividend growth, demonstrates our strong capital position and resilient business model."
– Philip Mather, EVP & CFO

Consolidated Results

(in millions of dollars, except as otherwise noted)

Q4 2024

Q4 2023

Change

2024

2023

Change

Insurance revenue

1,124.9

1,003.8

12.1 %

4,258.4

3,850.3

10.6 %

Gross written premiums¹

1,109.5

1,033.2

7.4 %

4,448.1

4,005.2

11.1 %

Net underwriting revenue¹

1,006.0

922.4

9.1 %

3,842.5

3,542.6

8.5 %

Claims ratio¹

60.7 %

61.1 %

(0.4) pts

64.5 %

65.1 %

(0.6) pts

Expense ratio¹

29.6 %

29.5 %

0.1 pts

30.0 %

30.8 %

(0.8) pts

Combined ratio ¹

90.3 %

90.6 %

(0.3) pts

94.5 %

95.9 %

(1.4) pts

Insurance service result

164.9

147.9

17.0

480.3

424.4

55.9

Underwriting income¹

97.0

87.0

10.0

212.4

144.9

67.5

Net investment income

51.1

49.4

1.7

198.2

179.5

18.7

Distribution income¹

11.4

8.8

2.6

54.4

39.3

15.1

(in millions of dollars, except as otherwise noted)

Q4 2024

Q4 2023

Change

2024

2023

Change

Net income attributable to common shareholders

116.6

225.9

(109.3)

430.4

350.1

80.3

Operating net income ¹

110.4

101.0

9.4

310.2

248.2

62.0

Per share measures (in dollars)

Diluted earnings per share

1.00

1.94

(0.94)

3.69

3.00

23.0 %

Operating earnings per share¹

0.95

0.87

0.08

2.66

2.13

24.9 %

Book value per share¹

29.13

24.78

17.6 %

Return on equity

Return on equity ("ROE")¹

14.2 %

13.0 %

1.2 pts

Operating ROE¹

10.6 %

9.2 %

1.4 pts

Gross written premiums ("GWP") for Q4 2024 increased by $76.3 million or 7.4% compared to Q4 2023, with growth across all our lines of business. GWP growth was 9.0% excluding the premiums of our exited line, Sonnet Alberta personal auto, from both periods. Personal lines GWP were up 5.7% (8.2% when excluding the premiums of our exited line from both periods), driven by auto rate and unit count increases, along with continued rate increases in property. Commercial lines GWP increased 10.7%, driven by strong retention and rate achievement in a firm market environment overall in our core segments. For the full year, GWP increased by $442.9 million or 11.1% compared to 2023. Personal lines GWP increased 10.1% and commercial lines GWP increased 13.1%.
Underwriting income for Q4 2024 was $97.0 million and the combined ratio was 90.3%, compared to underwriting income of $87.0 million and a combined ratio of 90.6% in Q4 2023, reflecting strong performance across all lines of business. Our full year underwriting income increased by $67.5 million and led to a combined ratio of 94.5%, compared to 95.9% in 2023, despite the heightened level of catastrophe losses. Catastrophe losses amounted to 6.4 percentage points in 2024 and 6.2 percentage points in 2023.
Net investment income increased $1.7 million in Q4 2024 and $18.7 million for the year, due to increases in both interest and dividend income. The increase in interest income was driven by higher holdings of bonds. For the year, interest income also increased due to higher fixed income yields proactively captured within the portfolio.
Distribution income was $11.4 million in Q4 2024 and $54.4 million for the year, compared to $8.8 million in Q4 2023 and $39.3 million in 2023. The increase was driven primarily by the contributions from acquisitions combined with solid underlying organic growth.

Net Income and Operating Net Income

Net income attributable to common shareholders was $116.6 million in Q4 2024 compared to net income of $225.9 million in Q4 2023. The decrease was due primarily to mark-to-market losses on bonds and lower gains on common stocks consistent with changes in overall market valuations. Full year net income attributable to common shareholders was $430.4 million compared to $350.1 million in 2023, with the increase being due primarily to an increase in operating net income and higher mark-to-market gains on common and preferred stocks.
Operating net income was $110.4 million in Q4 2024 compared to $101.0 million in Q4 2023. The increase was due to higher underwriting, distribution, and net investment income. Full year operating net income was $310.2 million compared to $248.2 million in 2023.
Operating ROE was 10.6% in 2024 compared to 9.2% in 2023. The increase in operating ROE was driven by strong growth in operating net income, which more than offset the significant growth in average adjusted equity attributable to common shareholders, excluding accumulated other comprehensive loss ("AOCI").

Line of Business Results

(in millions of dollars, except as otherwise noted)	Q4 2024	Q4 2023	*Change*	2024	2023	*Change*

Personal insurance
Gross written premiums ¹
Auto	438.7	416.0	5.5 %	1,867.4	1,657.1	12.7 %
Property	295.2	278.0	6.2 %	1,183.9	1,113.1	6.4 %
Total	733.9	694.0	5.7 %	3,051.3	2,770.2	10.1 %

Combined ratio ¹
Auto	96.1 %	95.9 %	0.2 pts	96.7 %	98.3 %	(1.6) pts
Property	82.8 %	80.1 %	2.7 pts	96.3 %	99.3 %	(3.0) pts
Total	90.9 %	89.5 %	*1.4 pts*	96.5 %	98.7 %	*(2.2) pts*

Commercial insurance
Gross written premiums ¹	375.6	339.2	10.7 %	1,396.8	1,235.0	13.1 %
Combined ratio ¹	89.0 %	93.3 %	*(4.3) pts*	89.4 %	88.8 %	*0.6 pts*

Personal Insurance

Personal lines GWP increased 5.7% in Q4 2024 (10.1% for the year), with strong growth in our broker channel. Direct channel GWP were $94.1 million in Q4 2024, a decrease of 15.5% compared to $111.4 million in Q4 2023. Direct channel GWP were $390.9 million for the year, a decrease of 8.6% compared to $427.5 million in 2023, due primarily to profitability actions including the decision to exit Alberta auto. Excluding the premiums of Sonnet Alberta personal auto in both periods, direct channel GWP decreased marginally by 1.6% in Q4 2024 and increased 1.2% for the year, due to the impact of our profitability actions in Sonnet.
Personal auto GWP increased 5.5% in Q4 2024 (12.7% for the year). GWP increased 9.6% in Q4 2024 when excluding the premiums of our exited line from both periods. This growth reflects an increase in average written premiums as approved rate increases take hold in a firm market environment, unit growth, and the benefit of portfolio transfers. The combined ratio was 96.1% in Q4 2024 compared to 95.9% in Q4 2023. For the year, the personal auto combined ratio improved, driven by a lower core accident year claims ratio which benefitted from higher earned rates, stabilized loss cost trends, and improved Sonnet performance.
Personal property GWP increased 6.2% in Q4 2024 (6.4% for the year), benefitting from continued firm market conditions driving increases in average written premiums. This was partially offset by ongoing actions to address risk concentration in regions with a higher propensity for peril events. The combined ratio in Q4 2024 was strong at 82.8% compared to 80.1% in Q4 2023, despite the impact of catastrophe losses, which amounted to 7.2 percentage points in Q4 2024 compared to 1.2 percentage points in Q4 2023. The increase in catastrophe losses in Q4 2024 was partially offset by higher favourable claims development, an improvement in the core accident year claims ratio, and a decrease in the expense ratio. For the year, the personal property combined ratio improved due to higher favourable claims development and a decrease in the expense ratio. Both periods were impacted by elevated catastrophe losses, which amounted to 15.7 percentage points in 2024 and 15.6 percentage points in 2023.

Commercial Insurance

Commercial lines GWP increased 10.7% in Q4 2024 (13.1% for the year), driven by strong retention and rate achievement in a firm market environment overall in our core segments, and further expansion of our small business and specialty capabilities.
Commercial lines continued to benefit from our focus on underwriting execution and rate adequacy with a strong combined ratio of 89.0% in Q4 2024 compared to 93.3% in Q4 2023. The improvement in the combined ratio was driven by lower catastrophe losses. For the year, the commercial lines combined ratio was also strong at 89.4% compared to 88.8% in 2023. The modest increase was driven by higher catastrophe losses and lower favourable claims development, largely offset by improvements in both the core accident year claims ratio and the expense ratio.

Financial Position

(in millions of dollars)

As at

December 31,

2024

As at

December 31,
2023

Change

Financial position

Equity attributable to common shareholders

3,319.8

2,847.7

472.1

Financial capacity¹

1,651.7

1,269.6

382.1

Note: Financial capacity as at December 31, 2023 is shown pro forma for the CBCA continuance effective January 1, 2024.

Our capital position as of December 31, 2024 remains strong and well in excess of our capital targets.
Equity attributable to common shareholders increased by $472.1 million, or 16.6%, as at December 31, 2024, due primarily to the net income generated in 2024 and the return of restricted cash of $150 million.
The increase in financial capacity as at December 31, 2024 relates primarily to capital generated from operating net income, recognized gains on investments, and the return of restricted cash. These were partially offset by capital deployed in continuing acquisitions in our national broker platform, and disciplined deployment of capital to support our organic growth and dividend priorities.

Dividend

On February 13, 2025, our Board of Directors declared a $0.1875 per share dividend, payable on March 26, 2025 to shareholders of record at the close of business on March 12, 2025.

Conference Call

Definity will host a conference call to review information included in this news release and related matters at 11:00 a.m. ET on February 14, 2025. The conference call will be available simultaneously and in its entirety to all interested investors and the news media at www.definityfinancial.com. A transcript will be made available on Definity's website within two business days.

About Definity Financial Corporation

Definity Financial Corporation ("Definity", which includes its subsidiaries where the context so requires) is one of the leading property and casualty insurers in Canada, with over $4.4 billion in gross written premiums in 2024 and over $3.3 billion in equity attributable to common shareholders as at December 31, 2024.

This is a supplementary financial measure, non-GAAP financial measure, or a non-GAAP ratio. Refer to Supplementary financial measures and non-GAAP financial measures and ratios in this news release, and Section 12 – Supplementary financial measures and non-GAAP financial measures and ratios in the Q4 2024 Management's Discussion and Analysis dated February 13, 2025 for further details, which is hereby incorporated by reference and is available on the Company's website at www.definityfinancial.com and on SEDAR+ at www.sedarplus.ca.

Cautionary Note Regarding Forward-Looking Information

This news release 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 information regarding our financial position, business strategy, growth strategies, addressable markets, budgets, operations, financial results, taxes, dividend policy, plans and objectives. Particularly, information regarding our expectations of future results, performance, achievements, prospects or opportunities or the markets in which we operate is forward-looking information. In some cases, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "aims", "targets", "expects" or "does not expect", "is expected", "an opportunity exists", "budget", "scheduled", "estimates", "forecasts", "projection", "prospects", "strategy", "intends", "anticipates", "does not anticipate", "believes", or variations of such words and phrases or statements that certain actions, events or results "can", "may", "could", "would", "might", "will", "will be taken", "occur" or "be achieved". In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts, but instead represent management's expectations, estimates and projections regarding possible future events or circumstances.

Forward-looking information in this news release is based on our opinions, estimates and assumptions in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors that we currently believe are appropriate and reasonable in the circumstances. Despite a careful process to prepare and review the forward-looking information, there can be no assurance that the underlying opinions, estimates and assumptions will prove to be correct. Forward-looking information is necessarily based on a number of opinions, estimates and assumptions that we considered appropriate and reasonable as at the date such statements are made, and are subject to many factors that could cause our actual results, performance or achievements, or other future events or developments, to differ materially from those expressed or implied by the forward-looking statements, including, without limitation, the following factors:

Definity's ability to continue to offer competitive pricing or product features or services that are attractive to customers;
Definity's ability to appropriately price its insurance products to produce an acceptable return, particularly in provinces where the regulatory environment requires auto insurance rate increases to be approved or that otherwise impose regulatory constraints on auto insurance rates;
Definity's ability to accurately assess the risks associated with the insurance policies that it writes;
Definity's ability to assess and pay claims in accordance with its insurance policies;
Definity's ability to obtain adequate reinsurance coverage to manage risk;
Definity's ability to accurately predict future claims frequency or severity, including the frequency and severity of weather-related events and the impact of climate change;
Definity's ability to address inflationary cost pressures through pricing, supply chain, or cost management actions;
the occurrence of unpredictable catastrophe events;
litigation and regulatory actions, including potential claims in relation to demutualization and our IPO and unclaimed demutualization benefits, and COVID-19-related class-action lawsuits that have arisen and which may arise, together with associated legal costs;
Definity's ability to determine and process demutualization benefits in relation to the benefit claim deadline and the post-benefit claim deadline administrative processing period, whether in the form of cash or common shares, and the tax treatment of amounts transferred to the Company;
unfavourable capital market developments, interest rate movements, changes to dividend policies or other factors which may affect our investments or the market price of our common shares;
changes associated with the transition to a low-carbon economy, including reputational and business implications from stakeholders' views of our climate change approach or of our environmental or climate change–related representations (i.e. "greenwashing"), that of our industry, or that of our customers;
Definity's ability to successfully manage credit risk from its counterparties;
foreign currency fluctuations;
Definity's ability to meet payment obligations as they become due;
Definity's ability to maintain its financial strength rating or credit rating;
Definity's dependence on key people;
Definity's ability to attract, develop, motivate, and retain an appropriate number of employees with the necessary skills, capabilities, and knowledge;
Definity's ability to appropriately collect, store, transfer, and dispose of information;
Definity's reliance on information technology systems, software, internet, network, data centre, voice or data communications services and the potential disruption or failure of those systems or services, including disruption as a result of cyber security risk or of a third-party service provider;
failure of key service providers or vendors to provide services or supplies as expected, or comply with contractual or business terms;
Definity's ability to obtain, maintain and protect its intellectual property rights and proprietary information or prevent third parties from making unauthorized use of our technology;
Definity's ability to effectively govern the use of models, artificial intelligence, and generative AI technology;
compliance with and changes in legislation or its interpretation or application, or supervisory expectations or requirements, including changes in the scope of regulatory oversight, effective income tax rates, risk-based capital guidelines, accounting standards, and generally accepted actuarial techniques;
changes in domestic or foreign government policies, such as the imposition of new cross-border tariffs or restrictive trade policies, may negatively impact the Canadian economy and the P&C insurance industry and/or exacerbate other risks to Definity;
failure to design, implement and maintain effective controls over financial reporting and disclosure which could have a material adverse effect on our business;
deceptive or illegal acts undertaken by an employee or a third party, including fraud in the course of underwriting insurance or administering insurance claims;
Definity's ability to respond to events impacting its ability to conduct business as normal;
Definity's ability to implement its strategy or operate its business as management currently expects;
general business, economic, financial, political, and social conditions, particularly those in Canada;
the emergence or continuation of widespread health emergencies or pandemics, and their impact on local, national, or international economies, as well as their heightening of certain risks that may affect our business or future results;
the competitive market environment and cyclical nature of the P&C insurance industry;
the introduction of advanced technologies, disruptive innovation or alternative business models by current market participants or new market entrants;
distribution channel risk, including Definity's reliance on brokers to sell its products;
Definity's dividend payments being subject to the discretion of the Board and dependent on a variety of factors and conditions existing from time to time;
the discontinuance, modification, or failure to renew or complete Definity's normal course issuer bid;
Definity's dependence on the results of operations of its subsidiaries and the ability of the subsidiaries to pay dividends;
Definity's ability to manage and access capital and liquidity effectively;
Definity's ability to successfully identify, complete, integrate and realize the benefits of acquisitions or manage the associated risks;
management's estimates and judgments in respect of IFRS 17 and its impact on various financial metrics;
periodic negative publicity regarding the insurance industry, Definity, or Definity Insurance Foundation; and
management's estimates and expectations in relation to interests in the broker distribution channel and the resulting impact on growth, income, and accretion in various financial metrics.

If any of these risks or uncertainties materialize, or if the opinions, estimates or assumptions underlying the forward-looking information prove incorrect, actual results or future events might vary materially from those anticipated in the forward-looking information. The opinions, estimates or assumptions referred to above and described in greater detail in the "11 – Risk Management and Corporate Governance" section of the Management's Discussion and Analysis for the year ended December 31, 2024 should be considered carefully by readers.

Although we have attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, the factors above are not intended to represent a complete list and there may be other factors not currently known to us or that we currently believe are not material that could also cause actual results or future events to differ materially from those expressed in such forward-looking information. There can be no assurance that such forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information, which speaks only as at the date made. The forward-looking information contained in this news release represents our expectations as at the date of this news release (or as at the date they are otherwise stated to be made) and are subject to change after such date. However, we disclaim any intention or obligation or undertaking to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable securities laws in Canada.

All of the forward-looking information contained in this news release is expressly qualified by the foregoing cautionary statements.

Supplementary Financial Measures and Non-GAAP Financial Measures and Ratios

We measure and evaluate performance of our business using a number of financial measures. Among these measures are the "supplementary financial measures", "non-GAAP financial measures", and "non-GAAP ratios" (as such terms are defined under Canadian Securities Administrators' National Instrument 52-112 – Non-GAAP and Other Financial Measures Disclosure), and in each case are not standardized financial measures under GAAP. The supplementary financial measures, non-GAAP financial measures, and non-GAAP ratios in this news release may not be comparable to similar measures presented by other companies. These measures should not be considered in isolation or as a substitute for analysis of our financial information reported under GAAP. These measures are used by financial analysts and others in the P&C insurance industry and facilitate management's comparisons to our historical operating results in assessing our results and strategic and operational decision-making. For more information about these supplementary financial measures, non-GAAP financial measures, and non-GAAP ratios, including (where applicable) definitions and explanations of how these measures provide useful information, refer to Section 12 – Supplementary financial measures and non-GAAP financial measures and ratios in the Q4 2024 Management's Discussion and Analysis dated February 13, 2025, which is available on our website at www.definityfinancial.com and on SEDAR+ at www.sedarplus.ca.

Below are quantitative reconciliations of non-GAAP measures for the three months and years ended December 31, 2024 and 2023:

Net underwriting revenue

(in millions of dollars)	Q4 2024	Q4 2023	2024	2023
Insurance revenue	1,124.9	1,003.8	4,258.4	3,850.3
Earned reinsurance premiums ceded¹	(107.6)	(81.4)	(391.0)	(307.7)
Remove: impact of exited lines	(11.3)	-	(24.9)	-
Net underwriting revenue	1,006.0	922.4	3,842.5	3,542.6

¹Included in Net (expenses) income from reinsurance contracts held in our audited consolidated financial statements.

Net claims and adjustment expenses

(in millions of dollars)	Q4 2024	Q4 2023	2024	2023
Claims and adjustment expenses^1,2	688.0	637.8	2,763.7	2,536.2
Impact of onerous insurance contracts³	(4.7)	(2.5)	(9.3)	(4.6)
Claims recoverable from reinsurers for incurred claims^2,4	(57.5)	(72.2)	(241.1)	(225.9)
Remove: impact of exited lines	(15.4)	-	(35.4)	-
Net claims and adjustment expenses	610.4	563.1	2,477.9	2,305.7

¹	Included in Insurance service expenses and Other expenses in our audited consolidated financial statements.
²	Excludes the impact of discounting and risk adjustment.
³	Included in Insurance service expenses.
⁴	Included in Net (expenses) income from reinsurance contracts held in our audited consolidated financial statements.

Prior year claims development

(in millions of dollars)	Q4 2024	Q4 2023	2024	2023
Changes in fulfilment cash flows relating to the liabilities for incurred claims¹	(21.7)	(8.4)	(70.2)	(84.3)
Changes to amounts recoverable for incurred claims²	(0.2)	(13.8)	(16.8)	(16.6)
Remove: discounting included above	(6.3)	0.8	(24.6)	(12.8)
Remove: risk adjustment included above	11.4	8.6	47.8	50.7
Remove: impact of exited lines	(1.9)	-	(3.7)	-
Prior year claims development	(18.7)	(12.8)	(67.5)	(63.0)

¹	Included in Insurance service expenses in our audited consolidated financial statements.
²	Included in Net (expenses) income from reinsurance contracts held in our audited consolidated financial statements.

Net underwriting expenses

(in millions of dollars)	Q4 2024	Q4 2023	2024	2023
Net commissions	142.3	128.1	551.5	505.7
Net operating expenses	118.6	109.7	455.1	452.7
Net premium taxes	37.7	34.5	145.6	133.6
Net underwriting expenses	298.6	272.3	1,152.2	1,092.0

Net commissions

(in millions of dollars)	Q4 2024	Q4 2023	2024	2023
Commissions¹	158.5	141.0	612.3	556.0
Commissions earned on ceded reinsurance²	(16.9)	(12.9)	(61.8)	(50.3)
Remove: impact of exited lines	0.7	-	1.0	-
Net commissions	142.3	128.1	551.5	505.7

¹	Included in Insurance service expenses in our audited consolidated financial statements.
²	Included in Net (expenses) income from reinsurance contracts held in our audited consolidated financial statements.

Net operating expenses

(in millions of dollars)	Q4 2024	Q4 2023	2024	2023
Operating expenses¹	120.8	109.7	459.5	452.7
Remove: impact of exited lines	(2.2)	-	(4.4)	-
Net operating expenses	118.6	109.7	455.1	452.7

¹Included in Insurance service expenses in our audited consolidated financial statements.

Net premium taxes

(in millions of dollars)	Q4 2024	Q4 2023	2024	2023
Premium taxes¹	38.1	34.5	146.6	133.6
Remove: impact of exited lines	(0.4)	-	(1.0)	-
Net premium taxes	37.7	34.5	145.6	133.6

¹Included in Insurance service expenses in our audited consolidated financial statements.

Underwriting income

(in millions of dollars)	Q4 2024	Q4 2023	2024	2023
Net underwriting revenue	1,006.0	922.4	3,842.5	3,542.6
Less:
Net claims and adjustment expenses	610.4	563.1	2,477.9	2,305.7
Net commissions	142.3	128.1	551.5	505.7
Net operating expenses	118.6	109.7	455.1	452.7
Net premium taxes	37.7	34.5	145.6	133.6
Underwriting income	97.0	87.0	212.4	144.9

Operating net income, Operating income, Non-operating gains (losses)

Net income attributable to common shareholders is the most directly comparable GAAP financial measure disclosed in our audited consolidated financial statements to operating net income, operating income, and non-operating gains (losses), which are considered non-GAAP financial measures.

(in millions of dollars)	Q4 2024	Q4 2023	2024	2023
Net income attributable to common shareholders	116.6	225.9	430.4	350.1
Remove: income tax expense	38.9	77.9	142.3	112.0
Income before income taxes	155.5	303.8	572.7	462.1
Remove: non-operating gains (losses)
Recognized gains on FVTPL investments	7.7	222.6	214.4	151.8
Discounting¹	32.9	31.7	140.5	140.4
Risk adjustment¹	0.3	(0.7)	(2.4)	5.8
Finance expenses from insurance contracts issued	(20.4)	(79.0)	(166.0)	(152.4)
Finance income from reinsurance contracts held	1.4	7.5	14.5	13.3
Underwriting loss from exited lines	(6.0)	-	(14.9)	-
Interest on restricted cash, less demutualization and IPO-related expenses²	(1.1)	2.4	2.4	8.7
Amortization of intangible assets recognized in business combinations²	(6.6)	(5.2)	(25.6)	(16.7)
Restructuring expenses²	-	(11.1)	-	(11.1)
Other^2,3	0.3	0.3	0.2	(1.4)
Non-operating gains	8.5	168.5	163.1	138.4
Operating income	147.0	135.3	409.6	323.7
Operating income tax expense	(36.6)	(34.3)	(99.4)	(75.5)
Operating net income	110.4	101.0	310.2	248.2

¹	Included in Insurance service expenses and Net (expenses) income from reinsurance contracts held in our audited consolidated financial statements.
²	Included in Other expenses in our audited consolidated financial statements.
³	Other represents miscellaneous expenses or revenues that in the view of management are not part of our insurance operations and are individually and in the aggregate not material, such as gains or losses pertaining to fintech venture capital funds, acquisition-related expenses, gains on dispositions of non-portfolio investments, and gains on sale of customer lists.

Distribution income

(in millions of dollars)	Q4 2024	Q4 2023	2024	2023
Distribution revenues¹	46.6	35.8	186.0	127.4
Distribution business expenses²	(35.2)	(27.0)	(131.6)	(88.1)
Distribution income	11.4	8.8	54.4	39.3

¹	Distribution revenues includes commissions on policies underwritten by external insurance companies.
²	Included in Other expenses in our audited consolidated financial statements. These amounts exclude amortization of intangible assets recognized in business combinations and acquisition-related expenses.

Below are quantitative reconciliations of non-GAAP ratios for the years ended December 31:

ROE

(in millions of dollars, except as otherwise noted)	2024	2023
Net income attributable to common shareholders	430.4	350.1
Equity attributable to common shareholders¹	3,319.8	2,847.7
Adjustment for the return of restricted cash²	(121.3)	-
Adjusted equity attributable to common shareholders	3,198.5	2,847.7
Average adjusted equity attributable to common shareholders³	3,023.1	2,698.7
ROE	14.2 %	13.0 %

¹	Equity attributable to common shareholders is as at December 31, 2024 and 2023.
²	The return of restricted cash was prorated for the 296 days prior to the release date of October 23, 2024.
³	Average adjusted equity attributable to common shareholders is the average of adjusted equity attributable to common shareholders (equity attributable to common shareholders as shown on our consolidated balance sheets, adjusted for significant capital transactions or other unusual adjustments to equity, if applicable) at the end of the period and the end of the preceding 12-month period. Equity attributable to common shareholders and adjusted equity attributable to common shareholders as at December 31, 2022 was $2,549.8 million (restated for the impacts of IFRS 17 – Insurance Contracts ("IFRS 17") and IFRS 9 – Financial Instruments ("IFRS 9")).

Operating ROE

(in millions of dollars, except as otherwise noted)	2024	2023
Operating net income	310.2	248.2
Equity attributable to common shareholders, excluding AOCI¹	3,320.9	2,874.7
Adjustment for unrealized gains on FVTPL equity instruments	(141.9)	(60.8)
Adjustment for the return of restricted cash²	(121.3)	-
Adjusted equity attributable to common shareholders, excluding AOCI³	3,057.7	2,813.9
Average adjusted equity attributable to common shareholders, excluding AOCI⁴	2,935.8	2,690.2
Operating ROE	10.6 %	9.2 %

¹	Equity attributable to common shareholders, excluding AOCI is as at December 31, 2024 and 2023.
²	The return of restricted cash was prorated for the 296 days prior to the release date of October 23, 2024.
³	Adjusted equity attributable to common shareholders, excluding AOCI, is equity attributable to common shareholders and AOCI each as shown on our consolidated balance sheets, adjusted for significant capital transactions or other unusual adjustments to equity, if applicable, and excluding unrealized gains or losses on FVTPL equity instruments.
⁴	Average adjusted equity attributable to common shareholders, excluding AOCI, is the average of adjusted equity attributable to common shareholders, excluding AOCI at the end of the period and the end of the preceding 12-month period. Adjusted equity attributable to common shareholders, excluding AOCI, as at December 31, 2022 was $2,566.6 million (restated for the impacts of IFRS 17 and IFRS 9).

SOURCE Definity Financial Corporation

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Definity Financial Corporation Reports Fourth Quarter and Full Year 2024 Results