2022 brokerage revenue: $3.34B
Percent increase: 16.8%

A modified ownership structure at Truist Insurance Holdings Inc. should stimulate more growth at the bank-owned brokerage, with a new private-equity stake funding more acquisitions and bolstering existing operations, its top executive says.

The brokerage, which benefits from a broad client base and its large wholesale operations, is also positioned to grow organically, analysts say.

A combination of organic growth and acquisitions helped Truist Insurance increase brokerage revenue nearly 17% in 2022 to $3.34 billion. The brokerage is ranked No. 8 in Business Insurance’s ranking of the world’s largest brokers.

The February 2023 sale of a 20% stake in Truist Insurance to Stone Point Capital LLC for $1.95 billion values the brokerage at $14.75 billion.

The private-equity investment creates an equity vehicle tied to the broker’s performance as opposed to that of the parent bank, which should help with staff recruitment and retention, said John Howard, chairman and CEO of the Charlotte, North Carolina-based brokerage, a unit of Truist Financial Corp. 

“Now, with our own equity vehicle, we have a really effective incentive for recruiting, retention and performance, so that our teammates participate in the value they are creating,” he said. 

Mr. Howard said the deal also readies Truist Insurance for the future. “I think you will see some larger acquisition opportunities over the next few years, and I wanted to ensure we were well-positioned for that,” he said. 

John Wepler, chairman and CEO of Woodmere, Ohio-based mergers and acquisitions consultancy Marsh, Berry & Co. Inc., said the move helps “unlock” the value of the insurance business. “The valuation of Truist Insurance Holdings was not properly reflected within the market capitalization of the bank,” he said. 

Truist Insurance reported 2022 organic revenue growth of 6.7%, as commercial retail brokerage revenue rose 22.4% to $885.4 million and wholesale revenue increased 14.8% to $1.82 billion. 

The brokerage’s growth last year was bolstered by two significant acquisitions. 

In March 2022, Truist bought New York-based Kensington Vanguard National Land Services LLC, a title insurance agency, which added about $100 million in annual revenue to Truist’s title business. 

In September 2022, Truist acquired Dallas-based BenefitMall, a wholesale employee benefits broker, which added approximately $150 million in annual revenue to the brokerage’s wholesale division. Financial terms were not disclosed in either deal. 

Elyse Greenspan, managing director, equity research, insurance, at Wells Fargo Securities LLC in New York, said the organic growth rate shows that Truist is “doing a good job of navigating a hard-market environment.” She added that Truist has a larger concentration in the wholesale brokerage sector than its peer brokers, which is a potential advantage as commercial rates continue to rise in aggregate this year. 

“Wholesale brokers tend to benefit when business is flowing to nonadmitted markets during a difficult underwriting environment,” Mr. Howard said. 

Mr. Howard noted steep rate increases and capacity cutbacks in catastrophe-exposed property markets as the greatest challenge for brokers and policyholders but added that concerns persist in casualty markets as a result of both economic and so-called social inflation, or higher court awards and settlements. He said the rate environment for this year’s second half will likely largely mimic that of the first half. 

Mr. Wepler said that in addition to its spread of retail and wholesale business, Truist benefits from both geographical and client diversity. 

“The portfolio of their business across channels is broad,” Mr. Wepler said. “They have commercial lines and personal lines; they have mid-market and complex accounts in commercial and employees benefits; they have a very large and deep list of specialty programs; they can run from the smallest main street account all the way up to very sophisticated, high-hazard business. That diversity is beneficial from a stability perspective.” 

Technology and recruiting also contribute to Truist’s growth, Mr. Howard said.

“Technology is becoming a bigger part of the insurance brokerage business. We invest more in technology every year and expect that to continue,” he said. 

The broker is expanding its recruiting efforts, with this summer’s class of 95 interns 25% larger than last year’s. “We’ve really built out our internship program, and that translates into hiring and career development,” Mr. Howard said.