TSX:DFY - Post Discussion
Post by
retiredcf on Dec 13, 2023 9:45am
RBC
December 12, 2023
Definity Financial Corporation
Announces conversion to CBCA corporate structure on January 1, 2024
TSX: DFY | CAD 36.82 | Outperform | Price Target CAD 48.00
Sentiment: Neutral
Summary: Definity announced it received all required regulatory approvals to transition to a Canada Business Corporations Act ("CBCA") corporate structure and expects to complete the transition on January 1, 2024. Immediately following the transition to a CBCA structure, DFY's unsecured credit facility will increase to $700MM from $150MM.
DFY notes its operating insurance subsidiaries, including Definity Insurance Company, Sonnet Insurance Company and Petline Insurance Company, will remain incorporated under the Insurance Companies Act ("ICA").
We note DFY applied to transition to the CBCA corporate structure at the start of 2023 following government regulatory changes.
Our take: While we believe investors expected this approval, it is incrementally positive getting final approval as this officially allows DFY to increase its financial leverage materially to optimize its capital structure and should positively impact its ROE as it deploys its substantial excess capital, most likely in our view via acquisitions.
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