Definity on how its broker platform is performing, how McDougall brokerage deals are modelled

Definity Financial Corporation reported a strong financial performance by its brokers 2025 Q2, sharing details on how its broker acquisitions under the McDougall banner are funded. 

The insurer reported a 2025 Q2 profit of $98.9 million, carried in part by “a seasonally strong contribution from our insurance broker platform,” Rowan Saunders, president and CEO of Definity, said in the company’s quarterly earnings call on Aug. 1. “We continue to view our national broker platform as a vehicle to diversify and spread the earnings profile of the business.” 

Definity now has the 10th-largest property and casualty insurance brokerage in Canada, having completed six brokerage acquisitions so far in 2025. The moves, including the company’s first move into the Atlantic Canada brokerage space with a Nova Scotia deal, account for a total of $160 million in acquired gross written premium. 

“Our progress with M&A activity and solid organic growth has enabled us to close in on our [gross written premium] target” of $1.5 billion by first quarter 2026, said Saunders. “That $1.5 billion in GWP certainly is looking like a very conservative estimate to us.” 

As Definity expands its broker platform, it says scale advantages and cost efficiencies make each acquisition more valuable. 

“We’ve now deployed a little under a billion dollars into the channel,” said Saunders. “We’re a Top-10 player, growing quite quickly. We’ve done about 20 transactions, another six this year, and we’re now seeing benefits of scale. 

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“I think as the business grows and it standardizes its technologies in some of the back office functions, there absolutely is upside in terms of the margin,” he added. “I think you know that whole segment has gone through quite a lot of change in the last couple of years, but it is attractive.” 

Definity has increased its growth guidance to 20% due to strong acquisition activity and organic growth and expects this trend to continue. 

In the meantime, Definity says it will continue scaling in its two priority provinces — Ontario and Alberta. 

McDougall’s model  

Definity increased its ownership interest in large Ontario brokerage McDougall Insurance from 25% to 75% in October 2022, and later increased its ownership share to 78%). The carrier claims its unique model for brokerage consolidation through McDougall allows acquired brokerages to contribute greater organic growth post-deal.  

It’s a form of roll-over equity transaction. Instead of accepting money for the full cash price of a sale, the owners, executives or other shareholders of an acquired company take a portion of the sale proceeds in the form of an equity stake in McDougall post-transaction.

“The model we have under the McDougall group is a little unique…we keep the entrepreneurs engaged today, keep equity in the business,” Saunders said. “As they do roll-ups, there is a lot of value [McDougall] can bring to the acquired companies such as more market access, more specialization and capabilities.

“So we’ve seen revenue synergies as companies we acquire increase the organic growth rate.” 

For example, McDougall acquired McFarlan Rowlands in 2023. At the time, a McFarlan executive said the decision to sell came down to the importance of scale in today’s P&C marketplace. 

Saunders said many broker principals choose to roll over equity into McDougall as part of the transaction. “Quite often we’ll see 25% to 30% roll over their equity,” he said. “So we tend to see pretty good uptick on that.” 

The acquisition pipeline, he said, “is still pretty full for us. So that should play out well for the next several years.” 

Alyssa DiSabatino

Alyssa Di Sabatino has been a reporter for Canadian Underwriter since 2021, covering industry trends, market developments, and emerging risks.