After the close today Definity (DFY) announced an accretive $3.3B acquisition of Travelers Canada. The company paid 1.4x book value for the portfolio, well below where it currently trades and its long-term average.

On the surface, it’s a scale deal - unlocking $100M of synergies and adding $1.6B in gross written premiums…

… but it also brings diversification benefits, as Travelers’ Canadian book has a heavier skew towards commercial lines versus Definity’s current mix.

Lastly, it’s an efficiency deal - as ~$3B of excess capital and leverage capacity at the combined company let DFY get this over the finish line without too much dilution ($350M in private placements). On paper it looks awesome, let’s see how reality matches up.