TORONTO , Feb. 9, 2023
/CNW/ - (TSX: DFY)
(in Canadian dollars except as otherwise noted)
Highlights
- Premium growth of 11.3% in the fourth quarter of 2022, and
11.8% for the full year, was driven by our strategic expansions in
commercial lines, Sonnet and personal property, supported by
ongoing firm market conditions in property and commercial
lines
- Combined ratio1 of 91.7% in the fourth quarter of
2022 was reflective of the strong performance in our commercial and
property lines; full year combined ratio remained solid at
94.1%
- Operating net income1 of $79.0 million in the fourth quarter of 2022,
compared to $46.5 million in the
fourth quarter of 2021, resulted in Operating EPS1 of
$0.67 per share. Operating
ROE1 of 10.0% over the last twelve months
- Full year net income attributable to common shareholders of
$252.0 million, inclusive of a
$67 million revaluation gain on our
previous investment in McDougall, drove book value per
share1 to $20.74
- 10% quarterly dividend increase to $0.1375 per share supported by our strong
financial position and operational outlook
- Our application to continue under the Canada Business
Corporations Act has been submitted to the federal Minister of
Finance
Executive Messages
"I am proud of our team's ability to manage volatility in the
insurance and capital markets while consistently delivering solid
quarterly results throughout 2022. Strong underwriting, robust net
investment income and an increasing contribution from our recently
strengthened distribution capabilities combined to generate fourth
quarter operating net income of $79.0
million, or $0.67 per share.
We continued to leverage our broker relationships and digital
platforms to drive strong premium growth of 11.3% in the fourth
quarter and 11.8% for the full year. The disciplined nature of our
growth through our underwriting expertise, pricing strategy, and
prudent reserving resulted in a fourth quarter combined ratio of
91.7%. I am excited by the opportunities ahead for Definity to
continue building on our track record of success."
– Rowan Saunders, President &
CEO
"We maintained our strong financial position, with book value
per share up slightly at $20.74,
despite elevated catastrophe losses and significant volatility in
fixed income and equity markets over the last twelve months. The
rising yield environment negatively impacted our fixed income
investments and book value growth in 2022, but continues to benefit
us in the form of higher net investment income. Our confidence in
the outlook for the Company enabled us to increase our quarterly
dividend by 10%, consistent with our objective to grow our dividend
over time. With over $650 million in
financial capacity, and the continuance application underway, we
have significant flexibility as we continue to prioritize
reinvestment and growth in our business."
– Philip Mather, EVP &
CFO
Consolidated Results
(in millions of
dollars, except as otherwise noted)
|
|
Q4
2022
|
Q4
2021
|
Change
|
|
2022
|
2021
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross written
premiums
|
|
|
|
|
942.5
|
846.6
|
11.3 %
|
|
3,613.8
|
3,231.4
|
11.8 %
|
Net earned
premiums
|
|
|
|
|
850.6
|
745.0
|
14.2 %
|
|
3,248.6
|
2,833.6
|
14.6 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Claims
ratio1
|
|
|
|
|
58.8 %
|
63.1 %
|
(4.3)
pts
|
|
61.2 %
|
60.8 %
|
0.4
pts
|
Expense
ratio1
|
|
|
|
|
32.9 %
|
31.5 %
|
1.4
pts
|
|
32.9 %
|
32.3 %
|
0.6
pts
|
Combined
ratio1
|
|
|
|
|
91.7 %
|
94.6 %
|
(2.9)
pts
|
|
94.1 %
|
93.1 %
|
1.0
pts
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting
income
|
|
|
|
|
70.2
|
40.3
|
29.9
|
|
192.3
|
194.5
|
(2.2)
|
Net investment
income
|
|
|
|
|
39.5
|
25.1
|
14.4
|
|
133.1
|
96.8
|
36.3
|
Distribution
income1
|
|
|
|
|
4.2
|
1.7
|
2.5
|
|
13.5
|
8.0
|
5.5
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to common shareholders
|
|
141.6
|
33.7
|
107.9
|
|
252.0
|
213.2
|
38.8
|
Operating net
income1
|
|
|
|
|
79.0
|
46.5
|
32.5
|
|
238.9
|
220.4
|
18.5
|
|
Q4
2022
|
Q4
2021
|
Change
|
|
2022
|
2021
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share measures
(in dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS
|
|
|
|
|
1.21
|
0.31
|
0.90
|
|
2.15
|
2.02
|
0.13
|
Operating
EPS1
|
|
|
|
|
0.67
|
0.42
|
0.25
|
|
2.04
|
2.09
|
(0.05)
|
Book value per share
("BVPS")1
|
|
|
|
|
|
|
|
|
20.74
|
20.68
|
0.06
|
|
|
|
|
|
|
|
|
|
|
|
|
Rolling 12 months
return measures
|
|
|
|
|
|
|
|
|
|
|
|
Return on equity
("ROE")1
|
|
|
|
|
|
|
|
|
10.6 %
|
10.7 %
|
(0.1)
pts
|
Operating
ROE1
|
|
|
|
|
|
|
|
|
10.0 %
|
11.5 %
|
(1.5)
pts
|
- Gross written premiums ("GWP") for the fourth
quarter of 2022 increased by $95.9
million or 11.3% compared to the fourth quarter of 2021,
with growth across all our lines of business. Personal lines GWP
was up 8.9% with increases in both our broker and direct
businesses. Commercial lines GWP increased 17.0% as we continued to
focus on profitable growth in this line of business. Customer
relief related to the COVID-19 pandemic ended in May 2022 and did not impact GWP in the fourth
quarter of 2022 (Q4 2021: decrease of approximately $13 million), but did reduce net earned premiums
by approximately $7 million (Q4 2021:
$14 million).
Full year GWP increased by $382.4
million or 11.8% compared to 2021. Personal lines GWP
increased 9.6% and commercial lines GWP increased 17.6%. The full
year impact of the customer relief related to the COVID-19 pandemic
on our underwriting results was a reduction in GWP of approximately
$21 million (2021: $55 million) and a reduction in net earned
premiums of approximately $43 million
(2021: $58 million).
- Underwriting income for the fourth quarter of 2022
was $70.2 million and the combined
ratio was 91.7%, compared to underwriting income of $40.3 million and a combined ratio of 94.6% in
the same quarter a year ago. The combined ratio improved due to a
decrease in catastrophe losses as we benefitted from recoveries
under our multi-year aggregate catastrophe reinsurance treaty, and
a reduction in the core accident year claims ratio which was
impacted in the fourth quarter of 2021 by reserve strengthening for
auto inflation. These were partially offset by lower favourable
prior year claims development.
Our full year underwriting income decreased slightly by
$2.2 million and led to a combined
ratio of 94.1% in 2022 compared to 93.1% in 2021. Full year results
were impacted by a higher commissions ratio and elevated
catastrophe losses, as well as an increase in the core accident
year claims ratio as a result of normalizing auto claims
frequencies.
- Net investment income increased $14.4 million in the fourth quarter of 2022 and
$36.3 million for the year, driven
primarily by higher fixed income yields, as well as the investment
of funds generated from our underwriting results, business growth,
and net proceeds retained by the Company from the initial public
offering ("IPO") and related transactions.
- Distribution income On October 3,
2022, we increased our ownership interest in McDougall
Insurance Brokers Limited ("McDougall") from approximately 25% to
75%. Distribution income was $4.2
million in the fourth quarter of 2022 compared to
$1.7 million in the fourth quarter of
2021, due primarily to the increased ownership position. For the
year, distribution income was $13.5
million compared to $8.0
million in 2021.
Net Income and Operating Net Income
- Net income attributable to common
shareholders was $141.6 million
in the fourth quarter of 2022 compared to $33.7 million in the fourth quarter of 2021. Net
income attributable to common shareholders included a revaluation
gain of $67.0 million on our previous
ownership interest in McDougall and further increased as a result
of higher underwriting income and net investment income.
Full year net income attributable to common shareholders was
$252.0 million compared to
$213.2 million in 2021. The increase
was due in part to the revaluation gain on McDougall and higher net
investment income. These were partially offset by higher market
value losses on our bond portfolio due to the significant increase
in fixed income yields, and investment impairment charges of
$22.9 million in 2022 due to
significant equity market volatility.
- Operating net income increased to $79.0 million in the fourth quarter of 2022
compared to $46.5 million in the
fourth quarter of 2021 due to higher underwriting, net investment,
and distribution income. Full year operating net income was
$238.9 million compared to
$220.4 million in 2021.
- Operating ROE was 10.0% in 2022 compared to 11.5% in
2021. Operating ROE was lower, despite higher operating net income,
due to the impact of year over year increases in our average equity
position.
Line of Business Results
(in millions of
dollars, except as otherwise noted)
|
|
Q4
2022
|
Q4
2021
|
Change
|
|
2022
|
2021
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal
insurance
|
|
|
|
|
|
|
|
|
|
|
|
Gross written
premiums
|
|
|
|
|
|
|
|
|
|
|
|
Auto
|
|
|
|
|
377.2
|
355.5
|
6.1 %
|
|
1,530.6
|
1,426.5
|
7.3 %
|
Property
|
|
|
|
|
268.0
|
237.1
|
13.0 %
|
|
1,012.7
|
894.6
|
13.2 %
|
Total
|
|
|
|
|
645.2
|
592.6
|
8.9 %
|
|
2,543.3
|
2,321.1
|
9.6 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined
ratio1
|
|
|
|
|
|
|
|
|
|
|
|
Auto
|
|
|
|
|
94.2 %
|
94.9 %
|
(0.7)
pts
|
|
94.7 %
|
91.2 %
|
3.5
pts
|
Property
|
|
|
|
|
90.4 %
|
93.2 %
|
(2.8)
pts
|
|
96.7 %
|
98.6 %
|
(1.9)
pts
|
Total
|
|
|
|
|
92.7 %
|
94.3 %
|
(1.6)
pts
|
|
95.5 %
|
93.9 %
|
1.6
pts
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
insurance
|
|
|
|
|
|
|
|
|
|
|
|
Gross written
premiums
|
|
|
|
|
297.3
|
254.0
|
17.0 %
|
|
1,070.5
|
910.3
|
17.6 %
|
Combined
ratio1
|
|
|
|
|
89.2 %
|
95.5 %
|
(6.3)
pts
|
|
90.3 %
|
91.0 %
|
(0.7)
pts
|
Personal Insurance
- Overall, personal lines GWP increased 8.9% in the fourth
quarter of 2022 (9.6% for the year). Sonnet GWP was $87.2 million in the fourth quarter of 2022, an
increase of 12.2% compared to $77.7
million in the fourth quarter of 2021. Sonnet GWP was
$332.4 million for the year, an
increase of 13.3% compared to $293.3
million in 2021. Personal lines underwriting income was
$45.4 million in the fourth quarter
of 2022 compared to $31.5 million in
the same quarter a year ago. Full year personal lines
underwriting income was $107.7
million compared to $127.6
million in 2021.
- Personal auto GWP increased 6.1% in the quarter
(7.3% for the year), driven by an increase in average written
premiums and growth in Sonnet. Customer relief related to the
COVID-19 pandemic ended in May 2022.
The impact of customer relief was nil in the quarter versus a
reduction in GWP of approximately $11
million in the fourth quarter of 2021. The combined ratio of
94.2% in the quarter (Q4 2021: 94.9%) improved due primarily to a
reduction in the core accident year claims ratio, which was
impacted in the fourth quarter of 2021 by reserve strengthening for
auto inflation, partially offset by lower favourable prior year
claims development. For the year, the personal auto combined ratio
was impacted by lower favourable prior year claims development, and
an increase in the core accident year claims ratio driven by
higher claims frequency combined with inflationary cost pressures,
largely within the auto physical damage coverage.
- Personal property GWP increased 13.0% in the quarter
(13.2% for the year), benefitting from continued firm market
conditions and growth in Sonnet. The combined ratio in the quarter
was 90.4% (Q4 2021: 93.2%). Improvements in the combined ratio for
the quarter and the year were due to a decrease in catastrophe
losses and an increase in favourable prior year claims development.
These were partially offset by an increase in the core accident
year claims ratio.
Commercial Insurance
- Strong growth momentum in commercial lines continued in
the fourth quarter of 2022. GWP increased 17.0% in the quarter
(17.6% for the year), as we benefitted from continued broker
support as a result of our strong value proposition, rate
achievement in a firm market environment, and further scaling of
specialty capabilities, with an ongoing focus on strong
underwriting execution.
- Commercial lines combined ratio was 89.2% and
underwriting income was $24.8 million
in the quarter compared to the combined ratio of 95.5% and
underwriting income of $8.8 million
in the same quarter a year ago. The combined ratio improvement was
driven by a decrease in catastrophe losses. Full year
commercial lines combined ratio was 90.3% (2021: 91.0%) and
underwriting income was $84.6 million
(2021: $66.9 million). Improvements
in underwriting profitability were due primarily to higher
favourable prior year claims development, partially offset by an
increase in catastrophe losses.
1
|
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 Q4-2022 Management's Discussion and Analysis
dated February 9, 2023 for further details, which is available on
the Company's website at www.definityfinancial.com and on SEDAR at
www.sedar.com
|
Financial Position
(in millions of
dollars, except as otherwise noted)
|
|
|
|
|
As at
December
31,
2022
|
As at
December
31,
2021
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial
position
|
|
|
|
|
|
|
|
|
|
|
|
Investments
|
|
|
|
|
|
|
|
|
4,897.9
|
5,365.8
|
(467.9)
|
Equity attributable to
common shareholders
|
|
|
|
|
|
|
|
|
2,371.9
|
2,396.3
|
(24.4)
|
Consolidated excess
capital at 200% MCT
|
|
|
386.2
|
759.3
|
(373.1)
|
- Equity attributable to common shareholders decreased slightly
by $24.4 million in the year or 1%.
Equity decreases were due primarily to volatility in capital
markets, including significant increases in fixed income yields
which resulted in declines in the market value of our available for
sale bond portfolio. These were largely offset by strong
underwriting income and increasing net investment income, as well
as a $67.0 million revaluation gain
on our previous ownership interest in McDougall.
- The decrease in consolidated excess capital at 200% MCT relates
primarily to the deployment of funds in connection with broker
acquisitions in the year combined with the factors driving the
equity decrease. Our capital position as of December 31, 2022 remains strong and well in
excess of both internal and regulatory minimum capital
requirements.
Dividend
- On February 9, 2023, the Board of
Directors declared a $0.1375 per
share dividend, payable on March 28,
2023 to shareholders of record at the close of business on
March 15, 2023. This represents a 10%
increase and is consistent with our objective to grow our dividend
over time.
Conference Call
Definity will conduct a conference call to review information
included in this news release and related matters at 11:00 a.m. ET on February
10, 2023. 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 $3.6
billion in gross written premiums in 2022 and over
$2.3 billion in equity attributable
to common shareholders as at December 31,
2022.
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", "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 "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 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 rate increases;
- 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;
- litigation and regulatory actions, including potential claims
in relation to demutualization and our IPO, and COVID-19-related
class-action lawsuits that have arisen and which may arise,
together with associated legal costs;
- Definity's ability to obtain adequate reinsurance coverage to
transfer 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;
- 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 that of our industry;
- 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 manage and protect the
collection and storage of information;
- Definity's reliance on information technology systems and
internet, network, data centre, voice or data communications
services and the potential disruption or failure of those systems
or services, including as a result of cyber security risk;
- 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;
- compliance with and changes in legislation or its
interpretation or application, or supervisory expectations or
requirements, including changes in effective income tax rates,
risk-based capital guidelines, and accounting standards;
- failure to design, implement and maintain effective control
over financial reporting 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
settling 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;
- the impact of public-health crises, such as pandemics or other
health risk events including the COVID-19 pandemic and their
associated operational, economic, legislative and regulatory
impacts, including impacts on Definity's ability to maintain
operations and provide services to customers and on the
expectations of governmental or regulatory authorities concerning
the provision of customer relief;
- general economic, financial, political, and social conditions,
particularly those in Canada;
- the competitive market environment and cyclical nature of the
P&C insurance industry;
- the introduction of disruptive innovation;
- 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;
- there can be no assurance that Definity's normal course issuer
bid will be maintained, unchanged and/or completed;
- 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;
- periodic negative publicity regarding the insurance industry or
Definity;
- 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; and
- the completion and timing of Definity continuing under the
Canada Business Corporations Act.
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 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 Q4-2022 Management's Discussion and
Analysis dated February 9, 2023,
which is available on our website at www.definityfinancial.com and
on SEDAR at www.sedar.com.
Net income attributable to common shareholders is the most
directly comparable GAAP financial measure disclosed in our
consolidated financial statements to operating net income,
operating income, and non-operating gains (losses), which are
considered non-GAAP financial measures. Below is a quantitative
reconciliation of operating net income, operating income, and
non-operating gains (losses) to net income attributable to common
shareholders for the three months and years ended December 31, 2022 and 2021:
(in millions of
dollars)
|
|
Q4
2022
|
Q4
2021
|
2022
|
2021
|
Net income attributable
to common shareholders
|
|
141.6
|
33.7
|
252.0
|
213.2
|
Remove: income tax
expense
|
|
(24.0)
|
(11.4)
|
(52.3)
|
(68.0)
|
Income before income
taxes
|
|
165.6
|
45.1
|
304.3
|
281.2
|
|
|
|
|
|
|
Remove: non-operating
gains (losses)
|
|
|
|
|
|
Recognized (losses) gains on investments
|
|
|
|
|
|
Realized
(losses) gains on sale of AFS investments
|
|
(5.3)
|
3.3
|
(44.0)
|
49.7
|
Net gains
(losses) on FVTPL investments
|
|
2.8
|
(12.0)
|
(161.4)
|
(70.0)
|
Impairment losses on AFS investments
|
|
(2.4)
|
(0.5)
|
(22.9)
|
(0.5)
|
Impact of discounting
|
|
2.8
|
9.4
|
162.6
|
44.7
|
Demutualization and IPO-related expenses, and interest on funds
held in trust1
|
|
1.7
|
(16.7)
|
0.7
|
(30.1)
|
Amortization of intangible assets recognized in business
combinations1
|
|
(3.5)
|
(0.6)
|
(5.4)
|
(3.5)
|
Revaluation gain on
acquisition of McDougall Insurance Brokers
Limited1
|
|
67.0
|
-
|
67.0
|
-
|
Other1,2
|
|
(2.2)
|
(0.2)
|
(2.8)
|
-
|
Non-operating gains
(losses)
|
|
60.9
|
(17.3)
|
(6.2)
|
(9.7)
|
Operating
income
|
|
104.7
|
62.4
|
310.5
|
290.9
|
Operating income tax
expense
|
|
(25.7)
|
(15.9)
|
(71.6)
|
(70.5)
|
Operating net
income
|
|
79.0
|
46.5
|
238.9
|
220.4
|
|
1
|
Included in Other
income (expenses) in our consolidated financial
statements.
|
2
|
Other represents
foreign currency translation of insurtech venture capital funds,
acquisition-related expenses, and a number of other 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.
|
The following table shows the components of our calculation of
ROE, a non-GAAP ratio, for the years ended December 31:
(in millions of
dollars, except as otherwise noted)
|
|
|
|
|
|
|
|
|
|
|
|
2022
|
2021
|
Net income attributable
to common shareholders
|
|
|
|
|
|
|
|
|
252.0
|
213.2
|
|
Equity attributable to
common shareholders1
|
|
|
|
|
|
|
|
|
2,371.9
|
2,396.3
|
|
Adjustment for
Over-Allotment option and Anti-Dilution
Adjustment2
|
|
|
|
|
|
|
|
|
-
|
(227.6)
|
|
Adjusted equity
attributable to common shareholders
|
|
|
|
|
|
|
|
|
2,371.9
|
2,168.7
|
|
Average adjusted equity
attributable to common shareholders3
|
|
|
|
|
|
|
|
|
2,384.1
|
1,993.3
|
|
ROE
|
|
|
|
|
|
|
|
|
10.6 %
|
10.7 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Equity attributable to
common shareholders is as at December 31, 2022 and 2021.
|
2
|
In 2021, the
Over-Allotment option and Anti-Dilution Adjustment were prorated
for the 326 days prior to the IPO date of November 23,
2021.
|
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, 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, 2020 was
$1,818.0 million. The Over-Allotment option and Anti-Dilution
Adjustment was used in the calculation of ROE for 2021.
|
The following table shows the components of our calculation of
operating ROE, a non-GAAP ratio, for the years ended December 31:
(in millions of
dollars, except as otherwise noted)
|
|
|
|
|
|
|
|
|
|
|
|
2022
|
2021
|
Operating net
income1
|
|
|
|
|
|
238.9
|
220.4
|
Equity attributable to
common shareholders, excluding AOCI2
|
|
|
|
|
|
2,473.7
|
2,298.3
|
Adjustment for
Over-Allotment option and Anti-Dilution
Adjustment3
|
|
|
|
|
|
-
|
(227.6)
|
Adjusted equity
attributable to common shareholders, excluding AOCI
|
|
|
|
|
|
2,473.7
|
2,070.7
|
Average adjusted equity
attributable to common shareholders, excluding
AOCI4
|
|
|
|
|
|
2,386.0
|
1,913.3
|
Operating
ROE
|
|
|
|
|
|
10.0 %
|
11.5 %
|
|
1
|
Operating net income is
a non-GAAP financial measure.
|
2
|
Equity attributable to
common shareholders, excluding accumulated other comprehensive
(loss) income ("AOCI") is as at December 31, 2022 and
2021.
|
3
|
In 2021, the
Over-Allotment option and Anti-Dilution Adjustment were prorated
for the 326 days prior to the IPO date of November 23,
2021.
|
4
|
Average adjusted equity
attributable to common shareholders, excluding AOCI is the average
of adjusted equity attributable to common shareholders, excluding
AOCI (equity attributable to common shareholders and AOCI each as
shown on our consolidated balance sheets, adjusted for significant
capital transactions, if applicable) at the end of the period and
the end of the preceding 12-month period. Equity attributable to
common shareholders, excluding AOCI, and adjusted equity
attributable to common shareholders, excluding AOCI, as at December
31, 2020 was $1,755.9 million. The Over-Allotment option and
Anti-Dilution Adjustment was used in the calculation of Operating
ROE for 2021.
|
Below is a quantitative reconciliation of distribution income for
the three months and years ended December
31, 2022 and 2021:
(in millions of
dollars)
|
|
Q4
2022
|
Q4
2021
|
2022
|
2021
|
Distribution
revenue1
|
|
19.9
|
-
|
19.9
|
-
|
Distribution business
expenses2
|
|
(15.7)
|
-
|
(15.7)
|
-
|
Share of distribution
profit from investments in associates2
|
|
-
|
1.3
|
6.9
|
6.4
|
Remove: Income taxes
included in share of distribution profit from investments in
associates
|
|
-
|
0.4
|
2.4
|
1.6
|
Distribution
income
|
|
4.2
|
1.7
|
13.5
|
8.0
|
|
1
|
Distribution revenue
includes commissions on policies underwritten by external insurance
companies.
|
2
|
Included in Other
income (expenses) in our consolidated financial statements. These
amounts exclude amortization of intangible assets recognized in
business combinations.
|
SOURCE Definity Financial Corporation