20 February 2024news

Truist to sell insurance business for $15.5bn

Truist has agreed to sell its remaining stake in Truist Insurance Holdings (TIH) to an investor group led by Stone Point Capital and Clayton, Dubilier & Rice (CD&R) for $15.5 billion.

Truist describes itself as the fifth largest insurance broker in the US with $48 billion in premiums.   

Among its operating companies are McGriff, CRC Group and Crump.

Truist said the sale will strengthen its balance sheet and enhances its strategic flexibility to invest in its core banking franchise.

The all-cash transaction values TIH at an implied enterprise value of $15.5 billion. The sale of TIH is expected to increase Truist’s December 31, 2023, CET1 capital ratio by 230 basis points and increase its tangible book value per share by $7.12 or 33%. The sale of TIH and reinvestment of the $10.1 billion of expected cash proceeds are estimated to be $0.20 dilutive to 2024 earnings per share, assuming the sale closed at the beginning of 2024 and the proceeds from the sale were reinvested in cash yielding 4.5%. 

The parties expect to complete the transaction during the second quarter of 2024, subject to certain regulatory reviews and approvals and the satisfaction of other customary closing conditions. Truist’s board of directors has unanimously approved the agreement.

Following the closing of the deal, Truist intends to evaluate a variety of capital deployment options, including a potential balance sheet repositioning with a goal of replacing TIH’s earnings. Any future actions would be subject to market conditions and other factors.

“We are pleased to have reached an agreement to sell TIH as it will further strengthen our balance sheet, afford us the ability to maintain our earnings profile, and create significant ongoing flexibility to invest in our core banking franchise,” said Truist chairman and chief executive Bill Rogers (pictured). 

“We are incredibly proud of the success we’ve achieved together with TIH over the years and are excited to see how Stone Point and CD&R continue to build the business in its next chapter of growth.”

“Today’s announcement is a testament to our strategy, the value of our insurance business, and the strength and dedication of our teammates,” said TIH chairman and chief executive John Howard. “Scale is critical to remain competitive in our rapidly changing industry, and through this partnership, we will benefit from Stone Point’s and CD&R’s expertise in financial services, proven track records of transformative value creation, and the significant capital support from two leading financial sponsors. Together with our capital partners, we will remain focused on growth and look forward to the opportunity to strengthen our relationships with our clients and business partners – more than ever before.”