Truist to sell 20% stake in $14.75bn insurance unit to Stone Point

Truist Financial is selling a minority stake in its insurance brokerage unit to private equity firm Stone Point Capital in a deal that values the unit at $14.75bn, it said on Thursday.

The move follows a year in which the commercial and investment bank’s profit dropped as it set aside a bigger share for rainy-day funds to deal with the chances of its borrowers falling behind on loan payments due to rising inflation and borrowing costs.

The bank’s shares were down nearly 1% at $48.42 in a weak market, after falling as much as 2.4% earlier in the session.

“TFC seems poised to do more insurance deals post this transaction. Deals and organic growth remain a higher priority than share buybacks,” Deutsche Bank analysts wrote in a note.

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Investment firms like Stone Point have offered some respite in an environment which remains tough for dealmaking as companies backpedal on deals and prioritize cost cuts.

Stone Point along with Abu Dhabi’s Mubadala Investment Co and other co-investors will pay $1.95 billion for a 20% stake in the unit, Truist Financial said.

Last year, Stone Point also took fitness company Tivity Health private in a $2 billion deal.

Truist Financial said it expects to close the deal in the second quarter of this year, after which it will retain an 80% stake in the unit.

The deal “raises more questions than answers,” including queries on what the ultimate goal would be for the unit, Deutsche Bank analysts wrote.

The unit, called Truist Insurance Holdings Inc, offers both retail and wholesale insurance.

Net income at the segment fell nearly 5% to $121 million in the fourth quarter, Truist Financial reported last month.

Source: Reuters

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