Truist agreed to sell a 20% stake in Truist Insurance Holdings to funds managed by private equity firm Stone Point Capital for $1.95 billion. Mubadala Investment Company and other co-investors are participating in the investment with Stone Point. The transaction represents an aggregate value of $14.75 billion for Truist Insurance, including a common equity value of $9.75 billion and $5 billion of inter-company preferred equity issued by Truist Insurance to Truist. Upon closing of the investment, which is expected to occur in Q2/23, Truist will own 80% of Truist Insurance.

“We are excited for this collaboration with Stone Point, as the investment demonstrates the significant value of Truist Insurance Holdings and strategically positions it — and Truist — for long-term success,” Bill Rogers, chairman and CEO of Truist, said.

“Today’s announcement is a recognition of the success and quality of Truist Insurance Holdings’ brands, the trusted relationships we’ve developed with clients and above all, the hard work and relentless commitment of our teammates,” John Howard, chairman and CEO of Truist Insurance, said. “We operate in an attractive, growing and dynamic industry in which scale is critical to remain competitive. With Stone Point’s industry expertise and role as a capital partner, we will be strategically positioned for long-term success and growth as we continue expanding our portfolio and investing in innovative digital solutions.”

“Truist Insurance Holdings is a scaled, diversified U.S. retail and wholesale insurance distribution platform that has experienced strong growth both organically and through a disciplined acquisition strategy,” Chuck Davis, CEO of Stone Point Capital, said. “We have had a longstanding and mutually beneficial relationship with Truist for many years and we and our co-investors could not be more excited to partner with them, John and the entire Truist Insurance Holdings team in its next phase of profitable growth.”

Truist’s board of directors approved the agreement. Truist Insurance’s aggregate valuation of $14.75 billion is 17.2 times 2022 adjusted EBITDA and 27.4 times 2022 adjusted earnings. The transaction, which excludes Truist Insurance’s 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 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. The board will consist of four members appointed by Truist and one member appointed by Stone Point.

Morgan Stanley and Truist Securities are serving as financial advisors and Davis Polk & Wardwell is serving as legal counsel to Truist and Truist Insurance for this transaction. Simpson Thacher & Bartlett is serving as legal counsel to Stone Point.