Definity Financial Corp. CEO is Rowan Saunders outside TSX in Toronto, Nov. 23, 2021.Supplied
Definity Financial Corp. DFY-T CEO Rowan Saunders is refreshingly candid about what kind of investment he thinks the 153-year-old property and casualty insurer is: “We clearly are a growth stock.”
Yup. Definity doesn’t provide leading-edge tech doodads and services, but if you measure the share-price gain since it went public on Nov. 23, 2021—even if you bought at the closing price after Definity surged on its first day—it beats six of the so-called Magnificent Seven tech stocks that have propelled U.S. markets (only trailing Nvidia).
At age 59, Saunders (the older brother of Globe and Mail CEO Andrew Saunders) was appointed chief executive of Economical Mutual Insurance (as the company was then called) in 2016 after more than 20 years in the industry, including 12 years as CEO of British-owned Royal & Sun Alliance Canada. He isn’t a jet-set visionary type. Instead, he patiently lays out a case for why Definity still has plenty of room to grow.
One is his track record. Definity’s gross written premiums are up by nearly half since 2020, when the total was $2.8 billion. “We were the eighth-largest P&C company in Canada. We’ve now organically moved that up to the sixth-largest,” Saunders says.
Going public provided fresh capital to help diversify the business. The IPO required some deft negotiating, though. Saunders had to get the company’s remaining 878 mutual policyholders and more than 630,000 non-mutual policyholders to agree to the offering.
Policyholders were initially allotted 20% control of Definity through the IPO (although they were later mostly paid out in cash). But both classes overwhelmingly approved the deal, Saunders says, and “we’re very proud of that IPO and of our subsequent performance as a public company.”
One early priority was reducing reliance on auto insurance, which is regulated by the provinces, and pushing harder into less regulated personal and commercial lines. Five years ago, he says, “over 55% of our revenue was auto.” Now that’s down to 42%. One key innovation: the launch of online home and auto insurance provider Sonnet in 2016. “You can go online, answer a few questions and be done in about five minutes,” he says.
Saunders has also bolted on a distribution channel of independent insurance brokerages, primarily through McDougall Insurance, which Definity acquired for $217 million in 2022. Over the past two years, Saunders says Definity has made “three significant high-quality broker acquisitions—two in Ontario, one in the West.”
More growth will likely follow—fast. “We’re not talking multiple years out,” he says.
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