Truist to sell minority stake in Truist Insurance Holdings
Truist announced that it has agreed to sell a 20% stake in Truist Insurance Holdings, Inc., a subsidiary of Truist and the sixth-largest insurance brokerage in the United States, to funds managed by Stone Point Capital, a private equity firm focused on the global financial services industry, for $1.95 billion. Mubadala Investment Company and other co-investors are participating in the investment with Stone Point. The transaction represents an aggregate value of $14.75 billion for Truist Insurance Holdings, including a common equity value of $9.75 billion and $5.0 billion of inter-company preferred equity issued by Truist Insurance Holdings to Truist. Upon closing of the investment, expected in Q2 2023, Truist will own 80% of Truist Insurance Holdings, which will continue to be an important contributor for Truist and its shareholders.
The transaction allows Truist to maintain strategic flexibility and future upside in Truist Insurance Holdings, which will continue to benefit from Truist’s operations, access to capital, and client relationships. Truist will also preserve and enhance its client service approach to offering leading insurance products to its banking clients. Moreover, Truist Insurance Holdings gains an experienced partner in Stone Point, which brings deep industry expertise to help accelerate Truist Insurance Holdings’ growth. Both Truist Insurance Holdings and Truist will benefit from Stone Point’s role as a strong capital partner enabling future growth opportunities.
“We are excited for this collaboration with Stone Point, as the investment demonstrates the significant value of Truist Insurance Holdings and strategically positions it, and Truist, for long-term success.” – Truist chairman and CEO Bill Rogers.
“Today’s announcement is a recognition of the success and quality of Truist Insurance Holdings’ brands, the trusted relationships we’ve developed with clients, and above all, the hard work and relentless commitment of our teammates. We operate in an attractive, growing, and dynamic industry in which scale is critical to remain competitive. With Stone Point’s industry expertise and role as a capital partner, we will be strategically positioned for long-term success and growth as we continue expanding our portfolio and investing in innovative digital solutions.” – Truist Insurance Holdings chairman and CEO John Howard
“Truist Insurance Holdings is a scaled, diversified U.S. retail and wholesale insurance distribution platform that has experienced strong growth both organically and through a disciplined acquisition strategy. We have had a longstanding and mutually beneficial relationship with Truist for many years and we and our co-investors could not be more excited to partner with them, John, and the entire Truist Insurance Holdings team in its next phase of profitable growth.” – Chuck Davis, CEO of Stone Point.
Transaction Details
Truist’s Board of Directors has approved the agreement to sell a 20% stake in Truist Insurance Holdings to funds managed by Stone Point, in partnership with Mubadala Investment Company and other co-investors, with the cash proceeds from the transaction received by Truist. Truist Insurance Holdings’ aggregate valuation of $14.75 billion represents 17.2x 2022 adjusted EBITDA and 27.4x 2022 adjusted earnings. The transaction, which excludes Truist Insurance Holdings’ premium finance business, is expected to increase Truist’s consolidated CET1 ratio by 32 basis points and be 6% accretive to tangible book value per share. Truist also expects the transaction to be approximately neutral to net income available to common shareholders and earnings per share, with the potential for enhanced growth as the generated capital is deployed over time.
Upon closing of the transaction, which is subject to customary closing conditions and regulatory approvals, a five-person Board will be formed to oversee Truist Insurance Holdings, comprising four members appointed by Truist and one member appointed by Stone Point.
