DEFINITY AND MCDOUGALL PARTNER TO ACQUIRE DRAYDEN AND EXPAND THEIR INSURANCE BROKER PLATFORM INTO ALBERTA

HIGHLIGHTS

• Drayden is a large scale independent insurance broker in Alberta with a proven track record
• Acquisition will complement Definity's existing portfolio of broker assets with the establishment of a strong presence in Western Canada
• Transaction is expected to increase Definity's earnings from distribution1 by over 25% and be immediately accretive to Definity's operating ROE and operating EPS2

WATERLOO, ON, June 13, 2023 /CNW/ - McDougall Insurance Brokers Limited ("McDougall"), a subsidiary of Definity Financial Corporation (TSX: DFY), has announced that it has entered into a definitive agreement to acquire 100% of Drayden Insurance Ltd. ("Drayden") for $208 million, subject to closing and post-closing adjustments. The transaction will be funded by Definity, through McDougall, using a combination of excess capital and debt. After accounting for all related transactions, Definity's ownership interest in McDougall will increase to approximately 78%.

Founded in 1965, Drayden is a leading Alberta insurance broker with approximately $125 million in annual premiums and strong operating margins. Through its insurance broker and government registry service operations, Drayden employs over 170 people across eight locations in the Edmonton area.

After closing of the Drayden transaction, McDougall will have over $860 million in annual premiums with 860 employees in 65 office locations. The transaction is expected to be immediately accretive to Definity's operating ROE and operating earnings per share. Definity continues to hold significant financial capacity for future opportunities.

"The addition of Drayden will provide immediate scale and market leading presence outside of Ontario," said Rowan Saunders, President and Chief Executive Officer, Definity. "This acquisition reinforces Definity's commitment to build our insurance broker platform into another billion dollar business for Definity."

"Drayden has an experienced management team, highly valued brands, a great culture and strong operational alignment with our existing broker operations," stated Ross McDougall, Chief Executive Officer, McDougall. "This transaction will give McDougall a unique opportunity to expand nationally and immediately establish a leadership position in Alberta's insurance broker market."

"We are excited about the opportunity to join the McDougall family given our common focus and shared values," said Brian Nielsen, President, Drayden. "For our employees and customers this combination underpins our commitment to provide unrivalled service and supports continued investment in growing our business in Edmonton and the broader Alberta region."

The acquisition is expected to close in the third quarter of 2023, subject to the fulfillment of customary closing conditions including provincial regulatory approval related to the change of control of Drayden's registries business.

Definity Financial Corporation ("Definity", which includes its subsidiaries where the context so requires) is one of the leading property and casualty insurers in Canada, with over $3.7 billion in gross written premiums for the 12 months ended March 31, 2023 and over $2.6 billion in equity attributable to common shareholders as at March 31, 2023.

This news release may contain forward-looking information within the meaning of applicable securities laws, which reflects Definity's current expectations regarding future events, including statements relating to the Acquisition, the accretive impact of the Acquisition on operating ROE and operating EPS, diversification benefits on income, the timing and receipt of all requisite approvals related to the Acquisition, Definity's level of ownership in McDougall, future expected operating income from broker investments, future transactions and acquisitions, impact on Definity's operating income and book value, timing and amount of post-closing adjustments, impact on McDougall's operating margins, and impact on Definity's and McDougall's growth plans and McDougall's annual premium base objective, among others. The words "may", "will", "would", "should", "could", "expects", "plans", "intends", "trends", "indications", "anticipates", "believes", "estimates", "predicts", "likely", "potential" or the negative or other variations of these words or other similar or comparable words or phrases, are intended to identify forward-looking statements. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond Definity's control. Such risks and uncertainties are included in the "Cautionary Note Regarding Forward-looking Information" section of the Company's Q1-2023 Management's Discussion and Analysis dated May 11, 2023 and the "Risk Management and Corporate Governance" section of Definity's Management's Discussion and Analysis for the year ended December 31, 2022. Actual results could differ materially from those projected herein. Unless otherwise indicated, all forward-looking statements in this press release are made as of June 13, 2023 and are subject to change after that date. Definity does not undertake any obligation to update such forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required under applicable securities laws.

We measure and evaluate performance of our business using a number of financial measures. Among these measures are the "supplementary financial measures", "non-GAAP financial measures", and "non-GAAP ratios" (as such terms are defined under Canadian Securities Administrators' National Instrument 52-112 – Non-GAAP and Other Financial Measures Disclosure), and in each case are not standardized financial measures under GAAP. The supplementary financial measures, non-GAAP financial measures, and non-GAAP ratios in this news release may not be comparable to similar measures presented by other companies. These measures should not be considered in isolation or as a substitute for analysis of our financial information reported under GAAP. These measures are used by financial analysts and others in the P&C insurance industry and facilitate management's comparisons to our historical operating results in assessing our results and strategic and operational decision-making. For more information about these supplementary financial measures, non-GAAP financial measures, and non-GAAP ratios, including (where applicable) definitions and explanations of how these measures provide useful information, refer to Section 12 – Supplementary financial measures and non-GAAP financial measures and ratios in the Q1-2023 Management's Discussion and Analysis dated May 11, 2023, which is available on our website at www.definityfinancial.com and on SEDAR at www.sedar.com. These measures have been updated to reflect the estimated impact arising from the adoption of IFRS 17 and IFRS 9.

1Operating income from broker investments before finance costs, taxes and minority interests.
2This is a supplementary financial measure, non-GAAP financial measure, or a non-GAAP ratio. Please refer to Supplementary financial measures and non-GAAP financial measures and ratios in this news release, and Section 12 – Supplementary financial measures and non-GAAP financial measures and ratios in Definity's Management's Discussion and Analysis for the quarter ended March 31, 2023 for further details, which is available on the Company's website at www.definity.com and on SEDAR at www.sedar.com.

SOURCE Definity Financial Corporation

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