Truist Financial Corp.’s plan to sell its remaining stake in Truist Insurance Holdings at a valuation of $15.5 billion marks a better-than-expected price for the business, an analyst said Tuesday. Keith Horowitz of Citigroup reiterated a buy rating on Truist and said that while the sale of Truist Insurance Holdings is not a surprise, he had been expecting a dilution of 40 cents a share from the loss of earnings from the insurance-brokerage unit. Instead, Truist
TFC,
-1.50%
said the dilution from teh deal would be about 20 cents a share.
“This was widely expected, but the incremental news is the pricing on the sale was slightly greater than expected resulting in better capital accretion,” Horowitz said in a research note. The deal comes about a year after Truist said it would sell a 20% ownership stake in Truist Insurance Holdings to Stone Point Capital at a total valuation of $14.75 billion. Earlier on Tuesday, Truist Financial said the buyer for the remaining 80% of the Truist Insurance Holdings business is an investor group led by Stone Point Capital and Clayton, Dubilier & Rice, with capital from Mubadala Investment Co., as private-equity firms build up their presence in the insurance business. The deal comes at a time when banks are beefing up their balance sheets ahead of a potential economic downturn, and as federal regulators have proposed higher capital requirements for lenders. It’s also a further sign of interest in the insurance sector from private-equity firms. One example is Leonard Green & Partners, which joined Hub International as a minority investor last year at a valuation of $23 billion for the insurance brokerage. Hub International is the acquisitive portfolio company of Hellman & Friedman. Brad …
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TFC,
-1.50%
said the dilution from teh deal would be about 20 cents a share.
“This was widely expected, but the incremental news is the pricing on the sale was slightly greater than expected resulting in better capital accretion,” Horowitz said in a research note. The deal comes about a year after Truist said it would sell a 20% ownership stake in Truist Insurance Holdings to Stone Point Capital at a total valuation of $14.75 billion. Earlier on Tuesday, Truist Financial said the buyer for the remaining 80% of the Truist Insurance Holdings business is an investor group led by Stone Point Capital and Clayton, Dubilier & Rice, with capital from Mubadala Investment Co., as private-equity firms build up their presence in the insurance business. The deal comes at a time when banks are beefing up their balance sheets ahead of a potential economic downturn, and as federal regulators have proposed higher capital requirements for lenders. It’s also a further sign of interest in the insurance sector from private-equity firms. One example is Leonard Green & Partners, which joined Hub International as a minority investor last year at a valuation of $23 billion for the insurance brokerage. Hub International is the acquisitive portfolio company of Hellman & Friedman. Brad …nnDiscussion:nn” ai_name=”RocketNews AI: ” start_sentence=”Can I tell you more about this article?” text_input_placeholder=”Type ‘Yes'”]