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Definity Financial Corp (DFY TSX)
This stock is another demutualization story that is still under-appreciated by the markets and presents a long-term investment opportunity to investors. In 2021 Definity became the parent company of Economical Insurance, Family Insurance Solutions Inc., Petline Insurance Company, and Sonnet Insurance Company. Recent earnings showed good top-line growth +11 per cent surpassing street expectations and management’s stated target. Besides the subdued story around the company, the earnings also had some mushiness that, together, is why there is a buying opportunity today. Definity’s combined ratio – or the cash that flows out for dividends, expenses, and losses – was 101 per cent suggesting it needs to work on its underwriting. Management expects price increases in its channels and unreported investment income (not part of the combined ratio) to set the company up well for a big increase in the bottom line for 2024 and beyond.
TOP PICK
Definity Financial(DFY)
05/06/2023
This is a buy for the long term, not a trade. It is doing a lot over the next year to improve the bottom line and is a new story in the insurance business.
Buy 7 Hold 4 Sell 0
(Analysts’ price target is $42.95)
Hap Sneddon
$36.96
Owned