‘This is a unique moment’: $2.4 billion public launch positions Economical Insurance to become a top five Canadian insurer – TheRecord.com

Definity Financial Corporation president and chief executive officer Rowan Saunders is pictured at the Toronto Stock Exchange to mark the close of the company's IPO.

By Brent DavisRecord Reporter

Thu., Nov. 25, 20212 min. read

WATERLOO — It’s quite the birthday present.

Waterloo’s Economical Insurance celebrates its 150th anniversary this week by becoming a publicly-traded company; the launch of its new parent company, Definity Financial Corporation, on the Toronto Stock Exchange was one of the largest Canadian initial public offerings in recent years.

“For us, this has been a really big and exciting week. To have our IPO and also our 150th anniversary in the same week is a pretty amazing kind of experience,” president and chief executive officer Rowan Saunders said in an interview Wednesday.

“For Definity, this is a unique moment for us. We’re now a new public company, coming from a 150-year-old franchise that’s been transformed into a digital leader, so we see lots of opportunities ahead for us.”

Definity Financial Corporation is the new parent to Economical Insurance, Family Insurance Solutions Inc., Petline Insurance Company, and Sonnet Insurance Company.

Gross proceeds as Definity went public totalled approximately $2.4 billion, after the exercise of an over-allotment option by underwriters. Those proceeds include more than $700 million in shares purchased through private placements to the Healthcare of Ontario Pension Plan and Swiss Re Investments Holding Company Ltd.

The pension plan will own 19.9 per cent of Definity’s issued and outstanding common shares, while Swiss Re will own roughly 9.9 per cent.

Shares began trading last week prior to the official close of the IPO on Tuesday.

“The IPO caps the story of turnaround and transformation for us,” Saunders said. “We have been pleased by the level of interest from investors, both major Canadian institutional investors and foreign investors, who really like the Economical or the Definity story.”

Economical’s transition from a mutual company owned by policyholders to a public company owned by shareholders provides access to capital markets that should allow it to expand its share of the Canadian property and casualty insurance market.

Currently the seventh-largest provider in Canada with a market share of about 4.6 per cent, Saunders sees opportunities for organic and strategic growth. “Our goal is to be a top five insurer in Canada.”

Definity’s online insurance company Sonnet and broker platform Vyne are poised to take advantage of a growing interest in digital insurance offerings and services, Saunders said. Larger and specialty commercial markets are “two very attractive segments” for a company previously focused on small to medium-sized enterprises.

“In addition to that, we do see that the long-standing trend of consolidation in the insurance industry is likely to continue, and arguably will increase its pace of consolidation, and as a public company we can also now participate in that.”

Much of the proceeds raised in going public will be distributed to Economical’s regular and mutual policyholders as part of the demutualization process. Saunders said it will likely be a few weeks before amounts are finalized and payments are made.

$100 million in proceeds will also establish the Definity Insurance Foundation, a charitable foundation that will also receive one per cent of Economical’s net profit before tax each year, with a minimum annual donation of $250,000.