Truist Financial Corporation has completed the sale of its remaining stake in Truist Insurance Holdings (TIH), the fifth largest insurance brokerage in the US, to an investor group led by private equity firms Stone Point Capital, Clayton, Dubilier & Rice, Mubadala Investment Company and other co-investors.
If you recall, in February of 2023, Truist agreed to sell a 20% stake in TIH to funds managed by Stone Point Capital for $1.95 billion. Then, in February of this year, Truist said it would sell its remaining stake in the brokerage, noting at the time that the decision would strengthen its balance sheet and enhance its strategic flexibility.
Now, after completing the transaction, Truist has revealed that it received after-tax cash proceeds of approximately $10.1 billion. According to the firm, the transaction resulted in an approximate after-tax gain of $4.7 billion and increased CET1 capital by $9.4 billion.
Following the completion of the sale, Truist reportedly executed a strategic balance sheet repositioning of a portion of its available-for-sale investment securities portfolio by selling $27.7 billion of lower-yielding investment securities, resulting in an after-tax loss of $5.1 billion in the second quarter of 2024.
Truist explained that the investment securities that were sold had a book value of $34.4 billion and a weighted average book yield of 2.80% for the remainder of 2024 including the impact of hedges and based on the Federal Funds futures curve.
Including the tax benefit, the repositioning generated $29.3 billion available for reinvestment.
Truist additionally noted that the proceeds from the sale of TIH and the balance sheet repositioning will add $160 million to net interest income in the second quarter of 2024 and $710 million (inclusive of the second quarter impact) to net interest income in 2024 based on the Federal Funds futures curve.
Truist Chairman and Chief Executive Officer Bill Rogers, commented, “We are pleased to have completed the sale of TIH, and we look forward to maintaining a strong partnership with TIH into the future.
“The sale of TIH significantly enhances Truist’s financial profile and positions Truist to invest in and grow its core banking businesses.”
