Truist Financial to sell 20% stake in Truist Insurance for $1.95B

Truist announced that it has agreed to sell a 20% stake in Truist Insurance, a subsidiary of Truist and the sixth-largest insurance brokerage in the United States, to funds managed by Stone Point Capital, a private equity firm for $1.95B. Mubadala Investment Company and other co-investors are participating in the investment with Stone Point. The transaction represents an aggregate value of $14.75B for Truist Insurance Holdings, including a common equity value of $9.75B and $5B of inter-company preferred equity issued by Truist Insurance Holdings to Truist. Upon closing of the investment, expected in Q2, Truist will own 80% of Truist Insurance Holdings, which will continue to be a contributor for Truist and its shareholders. Truist’s board has approved the agreement to sell a 20% stake in Truist Insurance to funds managed by Stone Point, in partnership with Mubadala and other co-investors, with the cash proceeds from the transaction received by Truist. Truist Insurance Holdings’ aggregate valuation of $14.75B represents 17.2x 2022 adjusted EBITDA and 27.4x 2022 adjusted earnings. The transaction, which excludes Truist Insurance Holdings’ premium finance business, is expected to increase Truist’s consolidated CET1 ratio by 32 basis points and be 6% accretive to tangible book value per share. Truist also expects the transaction to be approximately neutral to net income available to common shareholders and earnings per share, with the potential for enhanced growth as the generated capital is deployed over time. Upon closing of the transaction, which is subject to customary closing conditions and regulatory approvals, a five-person Board will be formed to oversee Truist Insurance Holdings, comprising four members appointed by Truist and one member appointed by Stone Point.