- Drayden is a large scale independent insurance broker in Alberta with a proven track record
- Acquisition will complement Definity’s existing portfolio of broker assets with the establishment of a strong presence in Western Canada
- Transaction is expected to increase Definity’s earnings from distribution[1] by over 25% and be immediately accretive to Definity’s operating ROE and operating EPS[2]
Waterloo, ON (May 24, 2023) – McDougall Insurance Brokers Limited, a subsidiary of Definity Financial Corporation, has announced that it has entered into a definitive agreement to acquire 100% of Drayden Insurance Ltd. for $208 million, subject to closing and post-closing adjustments. The transaction will be funded by Definity, through McDougall, using a combination of excess capital and debt. After accounting for all related transactions, Definity’s ownership interest in McDougall will increase to approximately 78%.
Founded in 1965, Drayden is a leading Alberta insurance broker with approximately $125 million in annual premiums and strong operating margins. Through its insurance broker and government registry service operations, Drayden employs over 170 people across eight locations in the Edmonton area.
After closing of the Drayden transaction, McDougall will have over $860 million in annual premiums with 860 employees in 65 office locations. The transaction is expected to be immediately accretive to Definity’s operating ROE and operating earnings per share. Definity continues to hold significant financial capacity for future opportunities.
“The addition of Drayden will provide immediate scale and market leading presence outside of Ontario,” said Rowan Saunders, President and Chief Executive Officer, Definity. “This acquisition reinforces Definity’s commitment to build our insurance broker platform into another billion-dollar business for Definity.”
“Drayden has an experienced management team, highly valued brands, a great culture and strong operational alignment with our existing broker operations,” stated Ross McDougall, Chief Executive Officer, McDougall. “This transaction will give McDougall a unique opportunity to expand nationally and immediately establish a leadership position in Alberta’s insurance broker market.”
“We are excited about the opportunity to join the McDougall family given our common focus and shared values,” said Brian Nielsen, President, Drayden. “For our employees and customers this combination underpins our commitment to provide unrivalled service and supports continued investment in growing our business in Edmonton and the broader Alberta region.”
The acquisition is expected to close in the third quarter of 2023, subject to the fulfillment of customary closing conditions including provincial regulatory approval related to the change of control of Drayden’s registries business.
About Definity
Definity Financial Corporation (“Definity”, which includes its subsidiaries where the context so requires) (TSX: DFY) is one of the leading property and casualty insurers in Canada, with over $3.7 billion in gross written premiums for the 12 months ended March 31, 2023, and over $2.6 billion in equity attributable to common shareholders as at March 31, 2023.[2]
Formed in 2021, Definity Financial Corporation is the parent company to some of Canada’s most long-standing and innovative property and casualty insurance brands and companies, including Economical Insurance, Sonnet Insurance, Family Insurance Solutions, and Petline Insurance. By investing in businesses and innovations, the companies in our group help our customers, broker partners, employees, and communities adapt and thrive in a world of constant change. For more information, visit www.definityfinancial.com.
About McDougall Insurance
McDougall Insurance has been successfully operating for 70 years. As the largest brokerage in Eastern Ontario, we represent over 50 insurance companies, giving us the ability to offer you optimal selection and competitive rates. Our online service provides reliable 24/7 connection with the same dedication and genuine care we consistently provide in-house. When you choose McDougall Insurance, you get quality service for life. We’re real people working for you, since 1946. For more information, visit www.mcdougallinsurance.com.
Forward-Looking Statements
This news release contains “forward-looking information” within the meaning of applicable securities laws in Canada, which reflects Definity’s current expectations regarding future events, including statements relating to features and benefits of the relationship. In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond Definity’s control. Such risks and uncertainties include Definity’s ability to successfully realize the benefits of the relationship and manage the associated risks. Actual results could differ materially from those projected herein. Definity does not undertake any obligation to update such forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required under applicable securities laws.
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 11 – Supplementary financial measures and non-GAAP financial measures and ratios in the Q2-2022 Management’s Discussion and Analysis dated August 2, 2022, which is available on our website at www.definityfinancial.com and on SEDAR at www.sedar.com.
Notes
1. Operating income from broker investments before finance costs, taxes and minority interests.
2. This is a supplementary financial measure, non-GAAP financial measure, or a non-GAAP ratio. Please 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 Definity’s Management’s Discussion and Analysis for the quarter ended March 31, 2023 for further details, which is available on the Company’s website at www.definity.com and on SEDAR at www.sedar.com.
SOURCE: Definity Financial Corporation
Tags: Acquisition, Alberta, Brokers, Definity, growth, McDougall, platform
