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Truist to sell insurance brokerage business in $15.5 billion deal


(Reuters) — Truist Financial said Tuesday it has agreed to sell the remaining stake in its insurance brokerage business to an investor group led by private-equity firms Stone Point and CD&R in a deal valued at $15.5 billion as the bank focuses on its core lending business.

The all-cash transaction for Truist Insurance Holdings also includes investments from Mubadala Investment Co. and other co-investors.

“We are pleased to have reached an agreement to sell TIH, as it will further strengthen our balance sheet ... create significant ongoing flexibility to invest in our core banking franchise,” Truist CEO Bill Rogers said.

“The sale of Truist Insurance Holdings accelerates our ability to meet increasing standards for capital and liquidity in the industry,” CFO Mike Maguire said in a call with investors.

Citigroup analysts wrote in a note that the sale removes the argument for one of the bear cases for Truist, which was its “relatively weak capital position.”

Truist said it intends to evaluate a variety of capital deployment options, including a potential balance sheet repositioning, to replace the insurance brokerage business earnings after the deal closes.

It is also expected to raise its tangible book value per share by $7.12, or 33%.

The broader U.S. banking industry had until recently seen large gains from the U.S. Federal Reserve's interest-rate hikes, aimed at controlling inflation, as they earned more on loans.

However, Truist, the seventh largest bank in the U.S., with more than $535 billion in assets, reported a loss in the fourth quarter, hurt by a raft of one-time charges tied to regulatory and restructuring activities, and a fall in net interest income.

Late last year, Aon PLC agreed to buy privately held NFP, in a deal valued at about $13.4 billion, to tap the fast-growing middle-market segment of insurance brokerage, wealth management and retirement plan advisory.