Art Wager
Truist Financial (NYSE:TFC) has started talks to sell its insurance brokerage unit to private equity firm Stone Point for ~$10B, according to a media report, the upshot of recent proposals to tighten bank regulations.
Stone Point had acquired 20% of the insurance unit earlier this year and is now seeking to buy the rest, Semafor reported Monday, citing people familiar with the matter. Truist (TFC) stock gained 1.7% in Monday after-hours trading.
Truist Insurance Holdings is the fifth-largest U.S. insurance broker by 2022 brokerage revenue, according to businessinsurance.com.
In February, the deal for the 20% stake also included investments from Mubadala Investment, the Abu Dhabi sovereign fund, and other investors and valued the entire business at $14.75B.
It wasn’t clear if other investors would be included in this transaction. The ability to reach a deal may depend on Stone Point’s ability to get enough debt financing in a market that’s leery about buyout loans, Semafor said.
The negotiations are occurring against a backdrop of a regulatory proposal that seeks to increase capital requirements for large U.S. banks after the failure of three large regional banks in March. In July, the major U.S. banking regulators proposed rule changes that would boost the common equity tier 1 capital at banks that have more than $100B of assets by an aggregate of 16%.
Truist was one of the banks that screened poorly in the Federal Reserve’s annual stress test.