Financial institution Truist potentially negotiating sale of its remaining insurance division for a sum of $10 billion, according to a recent news report.
Truist Considering Selling Insurance Business to Stone Point Capital
Truist, one of the largest banking institutions in the United States, is reportedly in talks to sell its insurance business to Stone Point Capital. If the deal goes through, it would leave Truist with two major business lines: commercial and consumer banking.
The discussions about the potential deal are being led by people familiar with the matter. Stone Point Capital, headquartered in New York City, has already acquired a non-controlling stake in TIAA's banking unit and bought 20% of Truist Insurance Holdings for $1.95 billion in a deal announced in February.
The insurance arm of Truist is one of the nation's seven largest insurance brokerages, facilitating approximately $45 billion in premiums and generating over $3 billion in annual revenue. It accounts for 13% of the bank's total revenue, 35% of its fee income, and 8% of its net income. If Truist offloads the rest of its insurance business, it could free up an additional 2 percentage points of capital.
The outcome of the deal may depend on Stone Point's ability to secure a buyout loan. No specific details about the purchase licensing rights have been disclosed. Stone Point Capital made this investment alongside Warburg Pincus, Sixth Street, Bayview Asset Management, and Reverence Capital Partners.
It is worth noting that this potential deal would not be Stone Point Capital's first investment in the financial services sector. The company previously acquired a stake in TIAA's banking unit.
Truist has been making efforts to shore up cost savings. In a recent announcement, the bank stated that it aims to achieve $750 million in cost savings over the next 18 months. However, as of February, Truist appeared bullish to hold onto the majority of its insurance business.
Regulators, led by the Federal Reserve, have proposed new standards for capital requirements that could force banks with between $250 billion and $1 trillion in assets to hold roughly 10% more capital. Truist's ratio of loss-absorbing capital to assets stood at 9.6% as of June 30.
No comment has been made by Truist or Stone Point regarding the potential deal. If the deal goes through, it would be a significant move in the financial services industry, potentially reshaping the landscape of the insurance sector. The acquisition would also be one of the largest deals in the industry this year, with Stone Point Capital offering for the secondary issuance of Truist Insurance Holdings on the market from July to December 2023.
