Definity Financial Corporation Reports Fourth Quarter and Full Year 2022 Results

TORONTO , Feb. 9, 2023 /CNW/ - (TSX: DFY)
(in Canadian dollars except as otherwise noted)

Highlights

• Premium growth of 11.3% in the fourth quarter of 2022, and 11.8% for the full year, was driven by our strategic expansions in commercial lines, Sonnet and personal property, supported by ongoing firm market conditions in property and commercial lines
• Combined ratio¹ of 91.7% in the fourth quarter of 2022 was reflective of the strong performance in our commercial and property lines; full year combined ratio remained solid at 94.1%
• Operating net income¹ of $79.0 million in the fourth quarter of 2022, compared to $46.5 million in the fourth quarter of 2021, resulted in Operating EPS¹ of $0.67 per share. Operating ROE¹ of 10.0% over the last twelve months
• Full year net income attributable to common shareholders of $252.0 million, inclusive of a $67 million revaluation gain on our previous investment in McDougall, drove book value per share¹ to $20.74
• 10% quarterly dividend increase to $0.1375 per share supported by our strong financial position and operational outlook
• Our application to continue under the Canada Business Corporations Act has been submitted to the federal Minister of Finance

Executive Messages

"I am proud of our team's ability to manage volatility in the insurance and capital markets while consistently delivering solid quarterly results throughout 2022. Strong underwriting, robust net investment income and an increasing contribution from our recently strengthened distribution capabilities combined to generate fourth quarter operating net income of $79.0 million, or $0.67 per share. We continued to leverage our broker relationships and digital platforms to drive strong premium growth of 11.3% in the fourth quarter and 11.8% for the full year. The disciplined nature of our growth through our underwriting expertise, pricing strategy, and prudent reserving resulted in a fourth quarter combined ratio of 91.7%. I am excited by the opportunities ahead for Definity to continue building on our track record of success."
– Rowan Saunders, President & CEO

"We maintained our strong financial position, with book value per share up slightly at $20.74, despite elevated catastrophe losses and significant volatility in fixed income and equity markets over the last twelve months. The rising yield environment negatively impacted our fixed income investments and book value growth in 2022, but continues to benefit us in the form of higher net investment income. Our confidence in the outlook for the Company enabled us to increase our quarterly dividend by 10%, consistent with our objective to grow our dividend over time. With over $650 million in financial capacity, and the continuance application underway, we have significant flexibility as we continue to prioritize reinvestment and growth in our business."
– Philip Mather, EVP & CFO

Consolidated Results

(in millions of dollars, except as otherwise noted)					Q4 2022	Q4 2021	Change		2022	2021	Change
Gross written premiums					942.5	846.6	11.3 %		3,613.8	3,231.4	11.8 %
Net earned premiums					850.6	745.0	14.2 %		3,248.6	2,833.6	14.6 %
Claims ratio^1					58.8 %	63.1 %	(4.3) pts		61.2 %	60.8 %	0.4 pts
Expense ratio^1					32.9 %	31.5 %	1.4 pts		32.9 %	32.3 %	0.6 pts
Combined ratio^1					91.7 %	94.6 %	(2.9) pts		94.1 %	93.1 %	1.0 pts
Underwriting income					70.2	40.3	29.9		192.3	194.5	(2.2)
Net investment income					39.5	25.1	14.4		133.1	96.8	36.3
Distribution income^1					4.2	1.7	2.5		13.5	8.0	5.5
Net income attributable to common shareholders					141.6	33.7	107.9		252.0	213.2	38.8
Operating net income^1					79.0	46.5	32.5		238.9	220.4	18.5

					Q4 2022	Q4 2021	Change		2022	2021	Change
Per share measures (in dollars)
Diluted EPS					1.21	0.31	0.90		2.15	2.02	0.13
Operating EPS^1					0.67	0.42	0.25		2.04	2.09	(0.05)
Book value per share ("BVPS")^1									20.74	20.68	0.06
Rolling 12 months return measures
Return on equity ("ROE")^1									10.6 %	10.7 %	(0.1) pts
Operating ROE^1									10.0 %	11.5 %	(1.5) pts

• Gross written premiums ("GWP") for the fourth quarter of 2022 increased by $95.9 million or 11.3% compared to the fourth quarter of 2021, with growth across all our lines of business. Personal lines GWP was up 8.9% with increases in both our broker and direct businesses. Commercial lines GWP increased 17.0% as we continued to focus on profitable growth in this line of business. Customer relief related to the COVID-19 pandemic ended in May 2022 and did not impact GWP in the fourth quarter of 2022 (Q4 2021: decrease of approximately $13 million), but did reduce net earned premiums by approximately $7 million (Q4 2021: $14 million).
  
  Full year GWP increased by $382.4 million or 11.8% compared to 2021. Personal lines GWP increased 9.6% and commercial lines GWP increased 17.6%. The full year impact of the customer relief related to the COVID-19 pandemic on our underwriting results was a reduction in GWP of approximately $21 million (2021: $55 million) and a reduction in net earned premiums of approximately $43 million (2021: $58 million).
  
  
• Underwriting income for the fourth quarter of 2022 was $70.2 million and the combined ratio was 91.7%, compared to underwriting income of $40.3 million and a combined ratio of 94.6% in the same quarter a year ago. The combined ratio improved due to a decrease in catastrophe losses as we benefitted from recoveries under our multi-year aggregate catastrophe reinsurance treaty, and a reduction in the core accident year claims ratio which was impacted in the fourth quarter of 2021 by reserve strengthening for auto inflation. These were partially offset by lower favourable prior year claims development.
  
  Our full year underwriting income decreased slightly by $2.2 million and led to a combined ratio of 94.1% in 2022 compared to 93.1% in 2021. Full year results were impacted by a higher commissions ratio and elevated catastrophe losses, as well as an increase in the core accident year claims ratio as a result of normalizing auto claims frequencies.
  
  
• Net investment income increased $14.4 million in the fourth quarter of 2022 and $36.3 million for the year, driven primarily by higher fixed income yields, as well as the investment of funds generated from our underwriting results, business growth, and net proceeds retained by the Company from the initial public offering ("IPO") and related transactions.
  
  
• Distribution income On October 3, 2022, we increased our ownership interest in McDougall Insurance Brokers Limited ("McDougall") from approximately 25% to 75%. Distribution income was $4.2 million in the fourth quarter of 2022 compared to $1.7 million in the fourth quarter of 2021, due primarily to the increased ownership position. For the year, distribution income was $13.5 million compared to $8.0 million in 2021.

Net Income and Operating Net Income

• Net income attributable to common shareholders was $141.6 million in the fourth quarter of 2022 compared to $33.7 million in the fourth quarter of 2021. Net income attributable to common shareholders included a revaluation gain of $67.0 million on our previous ownership interest in McDougall and further increased as a result of higher underwriting income and net investment income. 
  
  Full year net income attributable to common shareholders was $252.0 million compared to $213.2 million in 2021. The increase was due in part to the revaluation gain on McDougall and higher net investment income. These were partially offset by higher market value losses on our bond portfolio due to the significant increase in fixed income yields, and investment impairment charges of $22.9 million in 2022 due to significant equity market volatility.
  
  
• Operating net income increased to $79.0 million in the fourth quarter of 2022 compared to $46.5 million in the fourth quarter of 2021 due to higher underwriting, net investment, and distribution income. Full year operating net income was $238.9 million compared to $220.4 million in 2021.
  
  
• Operating ROE was 10.0% in 2022 compared to 11.5% in 2021. Operating ROE was lower, despite higher operating net income, due to the impact of year over year increases in our average equity position.

Line of Business Results

(in millions of dollars, except as otherwise noted)					Q4 2022	Q4 2021	Change		2022	2021	Change
Personal insurance
Gross written premiums
Auto					377.2	355.5	6.1 %		1,530.6	1,426.5	7.3 %
Property					268.0	237.1	13.0 %		1,012.7	894.6	13.2 %
Total					645.2	592.6	8.9 %		2,543.3	2,321.1	9.6 %
Combined ratio^1
Auto					94.2 %	94.9 %	(0.7) pts		94.7 %	91.2 %	3.5 pts
Property					90.4 %	93.2 %	(2.8) pts		96.7 %	98.6 %	(1.9) pts
Total					92.7 %	94.3 %	(1.6) pts		95.5 %	93.9 %	1.6 pts
Commercial insurance
Gross written premiums					297.3	254.0	17.0 %		1,070.5	910.3	17.6 %
Combined ratio^1					89.2 %	95.5 %	(6.3) pts		90.3 %	91.0 %	(0.7) pts

Personal Insurance

• Overall, personal lines GWP increased 8.9% in the fourth quarter of 2022 (9.6% for the year). Sonnet GWP was $87.2 million in the fourth quarter of 2022, an increase of 12.2% compared to $77.7 million in the fourth quarter of 2021. Sonnet GWP was $332.4 million for the year, an increase of 13.3% compared to $293.3 million in 2021. Personal lines underwriting income was $45.4 million in the fourth quarter of 2022 compared to $31.5 million in the same quarter a year ago. Full year personal lines underwriting income was $107.7 million compared to $127.6 million in 2021.
• Personal auto GWP increased 6.1% in the quarter (7.3% for the year), driven by an increase in average written premiums and growth in Sonnet. Customer relief related to the COVID-19 pandemic ended in May 2022. The impact of customer relief was nil in the quarter versus a reduction in GWP of approximately $11 million in the fourth quarter of 2021. The combined ratio of 94.2% in the quarter (Q4 2021: 94.9%) improved due primarily to a reduction in the core accident year claims ratio, which was impacted in the fourth quarter of 2021 by reserve strengthening for auto inflation, partially offset by lower favourable prior year claims development. For the year, the personal auto combined ratio was impacted by lower favourable prior year claims development, and an increase in the core accident year claims ratio driven by higher claims frequency combined with inflationary cost pressures, largely within the auto physical damage coverage.
• Personal property GWP increased 13.0% in the quarter (13.2% for the year), benefitting from continued firm market conditions and growth in Sonnet. The combined ratio in the quarter was 90.4% (Q4 2021: 93.2%). Improvements in the combined ratio for the quarter and the year were due to a decrease in catastrophe losses and an increase in favourable prior year claims development. These were partially offset by an increase in the core accident year claims ratio.

Commercial Insurance

• Strong growth momentum in commercial lines continued in the fourth quarter of 2022. GWP increased 17.0% in the quarter (17.6% for the year), as we benefitted from continued broker support as a result of our strong value proposition, rate achievement in a firm market environment, and further scaling of specialty capabilities, with an ongoing focus on strong underwriting execution.
• Commercial lines combined ratio was 89.2% and underwriting income was $24.8 million in the quarter compared to the combined ratio of 95.5% and underwriting income of $8.8 million in the same quarter a year ago. The combined ratio improvement was driven by a decrease in catastrophe losses. Full year commercial lines combined ratio was 90.3% (2021: 91.0%) and underwriting income was $84.6 million (2021: $66.9 million). Improvements in underwriting profitability were due primarily to higher favourable prior year claims development, partially offset by an increase in catastrophe losses.

^1

This is a supplementary financial measure, non-GAAP financial measure, or a non-GAAP ratio. 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 the Q4-2022 Management's Discussion and Analysis dated February 9, 2023 for further details, which is available on the Company's website at www.definityfinancial.com and on SEDAR at www.sedar.com

Financial Position

(in millions of dollars, except as otherwise noted)									As at  December 31, 2022	As at  December 31, 2021	Change
Financial position
Investments									4,897.9	5,365.8	(467.9)
Equity attributable to common shareholders									2,371.9	2,396.3	(24.4)
Consolidated excess capital at 200% MCT									386.2	759.3	(373.1)

• Equity attributable to common shareholders decreased slightly by $24.4 million in the year or 1%. Equity decreases were due primarily to volatility in capital markets, including significant increases in fixed income yields which resulted in declines in the market value of our available for sale bond portfolio. These were largely offset by strong underwriting income and increasing net investment income, as well as a $67.0 million revaluation gain on our previous ownership interest in McDougall.
• The decrease in consolidated excess capital at 200% MCT relates primarily to the deployment of funds in connection with broker acquisitions in the year combined with the factors driving the equity decrease. Our capital position as of December 31, 2022 remains strong and well in excess of both internal and regulatory minimum capital requirements.

Dividend

• On February 9, 2023, the Board of Directors declared a $0.1375 per share dividend, payable on March 28, 2023 to shareholders of record at the close of business on March 15, 2023. This represents a 10% increase and is consistent with our objective to grow our dividend over time.

Conference Call

Definity will conduct a conference call to review information included in this news release and related matters at 11:00 a.m. ET on February 10, 2023. The conference call will be available simultaneously and in its entirety to all interested investors and the news media at www.definityfinancial.com. A transcript will be made available on Definity's website within two business days.

About Definity Financial Corporation

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 $3.6 billion in gross written premiums in 2022 and over $2.3 billion in equity attributable to common shareholders as at December 31, 2022.

Cautionary Note Regarding Forward-Looking Information

This news release contains "forward-looking information" within the meaning of applicable securities laws in Canada. Forward-looking information may relate to our future business, financial outlook and anticipated events or results and may include information regarding our financial position, business strategy, growth strategies, addressable markets, budgets, operations, financial results, taxes, dividend policy, plans and objectives. Particularly, information regarding our expectations of future results, performance, achievements, prospects or opportunities or the markets in which we operate is forward-looking information. In some cases, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "targets", "expects" or "does not expect", "is expected", "an opportunity exists", "budget", "scheduled", "estimates", "forecasts", "projection", "prospects", "strategy", "intends", "anticipates", "does not anticipate", "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might", "will", "will be taken", "occur" or "be achieved". In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management's expectations, estimates and projections regarding possible future events or circumstances.

Forward-looking information in this news release is based on our opinions, estimates and assumptions in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors that we currently believe are appropriate and reasonable in the circumstances. Despite a careful process to prepare and review the forward-looking information, there can be no assurance that the underlying opinions, estimates and assumptions will prove to be correct. Forward-looking information is necessarily based on a number of opinions, estimates and assumptions that we considered appropriate and reasonable as at the date such statements are made, and are subject to many factors that could cause our actual results, performance or achievements, or other future events or developments, to differ materially from those expressed or implied by the forward-looking statements, including, without limitation, the following factors:

• Definity's ability to appropriately price its insurance products to produce an acceptable return, particularly in provinces where the regulatory environment requires auto insurance rate increases to be approved or that otherwise impose regulatory constraints on auto insurance rate increases;
• Definity's ability to accurately assess the risks associated with the insurance policies that it writes;
• Definity's ability to assess and pay claims in accordance with its insurance policies;
• litigation and regulatory actions, including potential claims in relation to demutualization and our IPO, and COVID-19-related class-action lawsuits that have arisen and which may arise, together with associated legal costs;
• Definity's ability to obtain adequate reinsurance coverage to transfer risk;
• Definity's ability to accurately predict future claims frequency or severity, including the frequency and severity of weather-related events and the impact of climate change;
• Definity's ability to address inflationary cost pressures through pricing, supply chain, or cost management actions; 
• the occurrence of unpredictable catastrophe events;
• unfavourable capital market developments, interest rate movements, changes to dividend policies or other factors which may affect our investments or the market price of our common shares;
• changes associated with the transition to a low-carbon economy, including reputational and business implications from stakeholders' views of our climate change approach or that of our industry;
• Definity's ability to successfully manage credit risk from its counterparties;
• foreign currency fluctuations;
• Definity's ability to meet payment obligations as they become due;
• Definity's ability to maintain its financial strength rating or credit rating;
• Definity's dependence on key people;
• Definity's ability to attract, develop, motivate, and retain an appropriate number of employees with the necessary skills, capabilities, and knowledge;
• Definity's ability to appropriately manage and protect the collection and storage of information;
• Definity's reliance on information technology systems and internet, network, data centre, voice or data communications services and the potential disruption or failure of those systems or services, including as a result of cyber security risk;
• failure of key service providers or vendors to provide services or supplies as expected, or comply with contractual or business terms;
• Definity's ability to obtain, maintain and protect its intellectual property rights and proprietary information or prevent third parties from making unauthorized use of our technology;
• compliance with and changes in legislation or its interpretation or application, or supervisory expectations or requirements, including changes in effective income tax rates, risk-based capital guidelines, and accounting standards;
• failure to design, implement and maintain effective control over financial reporting which could have a material adverse effect on our business; 
• deceptive or illegal acts undertaken by an employee or a third party, including fraud in the course of underwriting insurance or settling insurance claims;
• Definity's ability to respond to events impacting its ability to conduct business as normal;
• Definity's ability to implement its strategy or operate its business as management currently expects;
• the impact of public-health crises, such as pandemics or other health risk events including the COVID-19 pandemic and their associated operational, economic, legislative and regulatory impacts, including impacts on Definity's ability to maintain operations and provide services to customers and on the expectations of governmental or regulatory authorities concerning the provision of customer relief;
• general economic, financial, political, and social conditions, particularly those in Canada;
• the competitive market environment and cyclical nature of the P&C insurance industry;
• the introduction of disruptive innovation;
• distribution channel risk, including Definity's reliance on brokers to sell its products;
• Definity's dividend payments being subject to the discretion of the Board and dependent on a variety of factors and conditions existing from time to time;
• there can be no assurance that Definity's normal course issuer bid will be maintained, unchanged and/or completed;
• Definity's dependence on the results of operations of its subsidiaries and the ability of the subsidiaries to pay dividends;
• Definity's ability to manage and access capital and liquidity effectively;
• Definity's ability to successfully identify, complete, integrate and realize the benefits of acquisitions or manage the associated risks;
• periodic negative publicity regarding the insurance industry or Definity;
• management's estimates and expectations in relation to interests in the broker distribution channel and the resulting impact on growth, income, and accretion in various financial metrics; and
• the completion and timing of Definity continuing under the Canada Business Corporations Act.

If any of these risks or uncertainties materialize, or if the opinions, estimates or assumptions underlying the forward-looking information prove incorrect, actual results or future events might vary materially from those anticipated in the forward-looking information. The opinions, estimates or assumptions referred to above and described in greater detail in the "11 – Risk Management and Corporate Governance" section of the Management's Discussion and Analysis should be considered carefully by readers.

Although we have attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, the factors above are not intended to represent a complete list and there may be other factors not currently known to us or that we currently believe are not material that could also cause actual results or future events to differ materially from those expressed in such forward-looking information. There can be no assurance that such forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information, which speaks only as at the date made. The forward-looking information contained in this news release represents our expectations as at the date of this news release (or as at the date they are otherwise stated to be made) and are subject to change after such date. However, we disclaim any intention or obligation or undertaking to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable securities laws in Canada.

All of the forward-looking information contained in this news release is expressly qualified by the foregoing cautionary statements.

Supplementary Financial Measures and Non-GAAP Financial Measures and Ratios

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 Q4-2022 Management's Discussion and Analysis dated February 9, 2023, which is available on our website at www.definityfinancial.com and on SEDAR at www.sedar.com.

Net income attributable to common shareholders is the most directly comparable GAAP financial measure disclosed in our consolidated financial statements to operating net income, operating income, and non-operating gains (losses), which are considered non-GAAP financial measures. Below is a quantitative reconciliation of operating net income, operating income, and non-operating gains (losses) to net income attributable to common shareholders for the three months and years ended December 31, 2022 and 2021:

(in millions of dollars)		Q4 2022	Q4 2021	2022	2021
Net income attributable to common shareholders		141.6	33.7	252.0	213.2
Remove: income tax expense		(24.0)	(11.4)	(52.3)	(68.0)
Income before income taxes		165.6	45.1	304.3	281.2
Remove: non-operating gains (losses)
Recognized (losses) gains on investments
Realized (losses) gains on sale of AFS investments		(5.3)	3.3	(44.0)	49.7
Net gains (losses) on FVTPL investments		2.8	(12.0)	(161.4)	(70.0)
Impairment losses on AFS investments		(2.4)	(0.5)	(22.9)	(0.5)
Impact of discounting		2.8	9.4	162.6	44.7
Demutualization and IPO-related expenses, and interest on funds held in trust^1		1.7	(16.7)	0.7	(30.1)
Amortization of intangible assets recognized in business combinations^1		(3.5)	(0.6)	(5.4)	(3.5)
Revaluation gain on acquisition of McDougall Insurance Brokers Limited^1		67.0	-	67.0	-
Other^1,2		(2.2)	(0.2)	(2.8)	-
Non-operating gains (losses)		60.9	(17.3)	(6.2)	(9.7)
Operating income		104.7	62.4	310.5	290.9
Operating income tax expense		(25.7)	(15.9)	(71.6)	(70.5)
Operating net income		79.0	46.5	238.9	220.4

^1	Included in Other income (expenses) in our consolidated financial statements.
^2	Other represents foreign currency translation of insurtech venture capital funds, acquisition-related expenses, and a number of other expenses or revenues that in the view of management are not part of our insurance operations and are individually and in the aggregate not material.

The following table shows the components of our calculation of ROE, a non-GAAP ratio, for the years ended December 31:

(in millions of dollars, except as otherwise noted)																					2022	2021
Net income attributable to common shareholders																				252.0		213.2
Equity attributable to common shareholders^1																				2,371.9		2,396.3
Adjustment for Over-Allotment option and Anti-Dilution Adjustment^2																				-		(227.6)
Adjusted equity attributable to common shareholders																				2,371.9		2,168.7
Average adjusted equity attributable to common shareholders^3																				2,384.1		1,993.3
ROE																				10.6 %		10.7 %

^1	Equity attributable to common shareholders is as at December 31, 2022 and 2021.
^2	In 2021, the Over-Allotment option and Anti-Dilution Adjustment were prorated for the 326 days prior to the IPO date of November 23, 2021.
^3	Average adjusted equity attributable to common shareholders is the average of adjusted equity attributable to common shareholders (equity attributable to common shareholders as shown on our consolidated balance sheets, adjusted for significant capital transactions, if applicable) at the end of the period and the end of the preceding 12-month period. Equity attributable to common shareholders and adjusted equity attributable to common shareholders as at December 31, 2020 was $1,818.0 million. The Over-Allotment option and Anti-Dilution Adjustment was used in the calculation of ROE for 2021.

The following table shows the components of our calculation of operating ROE, a non-GAAP ratio, for the years ended December 31:

(in millions of dollars, except as otherwise noted)												2022	2021
Operating net income^1												238.9	220.4
Equity attributable to common shareholders, excluding AOCI^2												2,473.7	2,298.3
Adjustment for Over-Allotment option and Anti-Dilution Adjustment^3												-	(227.6)
Adjusted equity attributable to common shareholders, excluding AOCI												2,473.7	2,070.7
Average adjusted equity attributable to common shareholders, excluding AOCI^4												2,386.0	1,913.3
Operating ROE												10.0 %	11.5 %

^1	Operating net income is a non-GAAP financial measure.
^2	Equity attributable to common shareholders, excluding accumulated other comprehensive (loss) income ("AOCI") is as at December 31, 2022 and 2021.
^3	In 2021, the Over-Allotment option and Anti-Dilution Adjustment were prorated for the 326 days prior to the IPO date of November 23, 2021.
^4	Average adjusted equity attributable to common shareholders, excluding AOCI is the average of adjusted equity attributable to common shareholders, excluding AOCI (equity attributable to common shareholders and AOCI each as shown on our consolidated balance sheets, adjusted for significant capital transactions, if applicable) at the end of the period and the end of the preceding 12-month period. Equity attributable to common shareholders, excluding AOCI, and adjusted equity attributable to common shareholders, excluding AOCI, as at December 31, 2020 was $1,755.9 million. The Over-Allotment option and Anti-Dilution Adjustment was used in the calculation of Operating ROE for 2021.

Below is a quantitative reconciliation of distribution income for the three months and years ended December 31, 2022 and 2021:

(in millions of dollars)		Q4 2022	Q4 2021	2022	2021
Distribution revenue^1		19.9	-	19.9	-
Distribution business expenses^2		(15.7)	-	(15.7)	-
Share of distribution profit from investments in associates^2		-	1.3	6.9	6.4
Remove: Income taxes included in share of distribution profit from investments in associates		-	0.4	2.4	1.6
Distribution income		4.2	1.7	13.5	8.0

^1	Distribution revenue includes commissions on policies underwritten by external insurance companies.
^2	Included in Other income (expenses) in our consolidated financial statements. These amounts exclude amortization of intangible assets recognized in business combinations.

SOURCE Definity Financial Corporation

Investor inquiries: Dennis Westfall, Head, Investor Relations, (C) 416-435-5568, [email protected]; Media inquiries: Sarah Attwells, AVP, Corporate Affairs, (C) 226-753-1130, [email protected]