Definity Financial's 2024 Earnings: A Mixed Bag of Surprises

As the financial world continues to grapple with the aftermath of the 2020 pandemic and the subsequent economic downturn, companies are slowly regaining their footing. Definity Financial Corp (DFYFF) is one such company that has weathered the storm, reporting its full-year 2024 earnings on February 14, 2025. While the company's revenues beat expectations, its earnings per share (EPS) lagged, leaving investors with a mixed bag of surprises.

Definity Financial's revenues for the full year 2024 came in at $4.5 billion, a 11.1% increase from the previous year. This growth was driven by strong performances from commercial lines and personal auto, as well as firm market conditions in personal property and commercial lines. The company's gross written premiums (GWP) increased by 11.1% in 2024, supported by these factors. However, the exit of Sonnet's Alberta personal auto business negatively impacted reported growth by 4.1 points in the fourth quarter.

Despite the strong revenue growth, Definity Financial's EPS lagged behind expectations. The company reported record full-year operating earnings per share of $2.66, marking a nearly 25% increase over 2023. However, this increase was not enough to keep pace with the company's top-line growth. The company's combined ratio for the full year was 94.5%, demonstrating strong operational performance. However, the company faced significant catastrophe losses in 2024, which impacted profitability despite the strong operational performance.

Definity Financial's book value per share increased by 17.6% in 2024, driven by strong operating performance and the return of restricted cash. The company has grown its premiums by $1.2 billion since its IPO, improving its market position from number 8 to number 6 in the industry. Definity Financial has also distributed $200 million in shareholder dividends since its IPO, with a recent increase of more than 17%.



Definity Financial's 2024 earnings report highlights the company's ability to navigate challenging market conditions and maintain strong revenue growth. However, the company's EPS lagged behind expectations, indicating that there may be underlying issues that need to be addressed. The company's significant catastrophe losses in 2024, as well as increased competition in some commercial segments, may be contributing factors to this discrepancy.

As Definity Financial looks ahead to 2025, it will be crucial for the company to address these challenges and continue to grow its earnings in line with its revenue growth. The company's focus on building value and its cornerstone investors' support for long-term plans will be essential in achieving this goal. With the demutualization protection period ending soon, Definity Financial will also need to be prepared for any potential bids that may come its way.

In conclusion, Definity Financial's 2024 earnings report is a mixed bag of surprises, with strong revenue growth offset by lagging EPS. As the company looks ahead to 2025, it will be crucial for Definity Financial to address the underlying issues that contributed to this discrepancy and continue to grow its earnings in line with its revenue growth.