Truist completes selling 20% stake in subsidiary Truist completes selling 20% stake in insurance subsidiary

Truist Financial Corp. said Monday it has completed selling a 20% stake in its insurance subsidiary to a private-equity group for $1.95 billion.

Funds managed by Stone Point Capital, which is focused on the global financial services industry, are the primary acquirer of the 20% stake, along with Mubadala Investment Co. and other investors.

The companies said when announcing the transaction that the investment was expected to close in the third quarter.

Truist Insurance Holdings Inc. is the sixth-largest U.S. insurance brokerage with more than 250 offices nationwide and more than 9,000 employees, or about 17% of Truist's overall workforce of 53,999 as of Dec. 31.

The transaction excludes an ownership stake in Truist Insurance Holdings' premium finance business.

"This investment is a testament to the quality and success of Truist Insurance Holdings and our teammates," Truist chairman and chief executive Bill Rogers said in a statement.

"We look forward to continuing our longstanding relationship with Stone Point to grow our insurance business and further deepen our partnerships with clients and the communities we serve, while also preserving significant strategic and financial flexibility in the business."

The bank said Feb. 16 that the sale price of the 20% stake values the whole insurance subsidiary at $14.75 billion.

Janney Montgomery Scott analyst Chris Marinac said there will be no earnings per share benefit from the proceeds. The bank said $1.54 billion will be reinvested into U.S. Treasury notes.

"Selling a great business at a possible peak multiple may not be effective to improving Truist's enterprise-wide valuation despite the positive sum-of-the-parts disclosure," Marinac said. "Investors care more about rising earnings, and less about the capital benefit."

Marinac said Truist may have wanted the additional capital "to cover loss absorption" under the Federal Reserve's Stress Test submission in April. Results are expected in June.

The bank said John Howard would remain as the insurance subsidiary's chief executive, but it "will shift some of his enterprise-wide responsibilities in order to support focus on maximizing the success of" the subsidiary.

Insurance, as has been the case with Truist and legacy BB&T Corp. for several years, was the bank's top fee-revenue producer for fiscal 2022 at $3.04 billion, up 15.8% over fiscal 2021.

By comparison, the next largest fee-income producer was wealth management income at $1.34 billion.

The bank and the insurance subsidiary have completed more than 100 acquisitions in the sector.

Stone Point chief executive Chuck Davis said the firm sought the 20% stake primarily because the Truist insurance subsidiary "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."

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