Truist Financial Corporation has announced it has agreed to sell its remaining stake in Truist Insurance Holdings (TIH), to an investor group led by private equity firms Stone Point Capital and Clayton, Dubilier & Rice (CD&R).
This transaction is expected to strengthen Truist’s balance sheet and enhance the company’s strategic flexibility to invest in core banking franchise.
Truist Chairman and Chief Executive Officer Bill Rogers, said: “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.
“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.”
According to the announcement, the all-cash transaction values TIH, a subsidiary of Truist and the fifth largest insurance brokerage in the United States, at an implied enterprise value of $15.5 billion or approximately 18x TIH’s 2023 core EBITDA.
Truist stated: “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%.
“Following closing, 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.”
Stone Point and CD&R offer deep industry and operational expertise to TIH. With the backing of supportive financial partners, TIH will be well-positioned to grow in the rapidly evolving insurance brokerage market.
TIH will also have additional resources to invest in cutting-edge technology and develop new products and services, offering even greater value to clients.
“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 CEO John Howard.
Adding: “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.”
In April 2023 Truist had confirmed the sale of a 20% stake, $1.95 billion, in Truist Insurance Holdings to Stone Capital. The transaction represented an aggregate value of $14.75 billion for TIH.
Mubadala Investment Company and other co-investors are also participating in the investment.
