Truist Financial plans to sell a stake in its insurance brokerage subsidiary to a private-equity firm, a move that executives are touting as a way to fund future growth and boost earnings over time.
The Charlotte, North Carolina, company announced Thursday that it will sell 20% of Truist Insurance Holdings to Stone Point Capital in Greenwich, Connecticut, for $1.95 billion. The deal, which excludes Truist’s recently acquired insurance premium finance business, is expected to close during the second quarter of this year, pending regulatory approval, the company said.
Truist will invest the cash proceeds in short-term securities and, over time, use the capital to expand the insurance business organically and through acquisitions, possibly doing deals that are smaller in size as well as those that are “transformational,” CEO Bill Rogers told analysts Thursday.
“[Insurance] is a rapidly consolidating industry and we want to make sure that we’re highly competitive and the consolidator of choice,” Rogers said during a conference call to discuss the sale. “Whether transformation happens one deal at a time or whether it happens with a larger deal, I don’t know. Those will be things that we’ll consider. We’ve got a great partner” in Stone Point.
When the deal closes, the insurance unit will be overseen by a board of five, including four members appointed by Truist and one member appointed by Stone Point, Truist said. Mubadala Investment, the sovereign wealth fund of Abu Dhabi, and other unnamed co-investors are participating in the deal with Stone Point.
The announcement comes more than two months after The Insurer, a trade publication, reported that Truist was exploring the sale of up