Truist Agrees to Sell Rest of Insurance Arm to Stone Point, CD&R

Truist Financial Corp. agreed to sell a majority stake in its insurance brokerage business to a group led by Stone Point Capital and Clayton Dubilier & Rice.

The all-cash transaction values Truist Insurance Holdings at $15.5 billion, the companies said in a statement Tuesday. The sale, scheduled to be completed in the second quarter, is expected to increase Truist’s Common Equity Tier 1 capital ratio by 230 basis points and its tangible book value by $7.12 a share, or 33%.

“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,” Truist Chief Executive Officer Bill Rogers said in the statement.

Last year, Truist agreed to sell 20% of the insurance business to a group led by Stone Point. Stone Point and CD&R will bring “deep industry and operational expertise” to Truist Insurance Holdings, the firms said, and the company will be positioned for growth in the rapidly evolving insurance brokerage market and offer new products and services.

“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,” Truist Insurance Holdings CEO John Howard said in the statement.

The sale and reinvestment of $10.1 billion of expected cash proceeds are estimated to be dilutive to Truist Financial’s earnings by 20 cents a share this year, assuming the transaction is completed when expected and the proceeds are reinvested in cash yielding 4.5%. The deal has been approved by Truist’s board is subject to regulatory reviews.

Abu Dhabi-based sovereign wealth fund Mubadala Investment Co. and other co-investors are also participating in the purchase.