Reuters is reporting that Truist is in talks to sell the remainder of its insurance unit
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Why do we give 2 flying you know whats about what a Wells Fargo analyst thinks. That bank makes this dumpster fire look like a well oiled machine.
“Everyone is missing the big coming storm”
It isn’t climate change, it is increased replacement costs and that is driven by building codes, labor costs, and inflation.
This is a nothing burger. No wonder we need to right size with all the id--tic comments.
You don't sell your most valuable asset unless your house is facing foreclosure. Tiiiiimber
Selling insurance unit for 10B with a market cap of 38B…. Classic Bill
Further Garage Sale tactics. Wasn’t it Ole Bill that kept saying how wonderful BB&Ts Insurance success was????? Now you know why folks.
They have been working on insurance separation for months there is even a project called Insurance Separation.
Everyone is missing the big coming storm. Yes, climate change and insurance is the other issue. All insurers are facing this gigantic issue and the unknown is huge. Insurance will never be the same. If you think it will be just look at Florida. Great job selling this asset while still so valuable!!
Now look:
Following the news of the sale, Wells Fargo analyst Mike Mayo reiterated his Buy rating on the stock with a price target of $37 (34.9% upside). The analyst is optimistic about the insurance business sale to Stone Point, which could unlock potential “unrecognized equity value.” Plus, the substantial restructuring plans, including the Board changes, mean that the management is ready to lift the company’s performance. Mayo had initially believed that Truist could become a target for a potential activist investor takeover.
The upside price is considerably less than price of either stock at merger. Analysts believe this will in time free up monies to resume stock buybacks and increase dividends for investors.
This:
Banks prize steady, fee-based businesses, and so do regulators and investors. Truist’s living will, its plan for an orderly wind-down in a crisis, involves selling its insurance arm for cash.
Nice job William and BOD. As a stand alone bank we likely will be forced into merger or sale in a couple of years. Two men’s egos will haves ki-led one good bank, one mediocre bank and the sixth largest insurance brokerage in the US as it will no doubt be sold in pieces to recoup the investment. If your PURPOSE was to do this mission accomplished. Care my a**!
Will this sale help boost capital? Sure.
Is it in the best interest of the bank? Absolutely not.
The insurance division has provided a steady stream of non-banking revenue and has helped maintain profitability during economic downturns.
EL is now being forced to sell off this cash cow due to short-sighted planning and knee jerk reactions.
You better believe there is some EL bonus compensation built into this deal that will be paid by the purchaser - terms we will likely never see.
If we can get $9 bill for that it’s a no brainer. Slim down and focus on core business. #purple
Wanted to advise this was just a bad joke. This is obviously a terrible indicator and a forced sale. I now see the writing on the wall for the org.
“ Still not a great deal as they should get the remainder at 11.8, but not as bad as you were thinking”
Quite right, misread the article. My bad.
KNOW MORE
Stone Point specializes in financial-services deals and managed $45 billion at the end of 2022. It owns Kroll, a business intelligence and advisory firm; real-estate data provider CoreLogic; and dozens of money managers, mortgage servicers, and insurers.
It has carved out a niche taking unwanted divisions off of financial firms’ hands. It bought TIAA’s bank last year and recently partnered with insurers AIG and Axis Capital in separate deals to free up capital.
LIZ’S VIEW
Regulators didn’t put this deal together over a weekend, but their fingerprints are all over it. In February, Truist sounded keen to hold onto its 80% stake. Then four regional banks failed and now new rules are coming for Truist and its peers.
Regulators are likely to raise banks’ required ratio of loss-absorbing capital to assets, and Truist was cutting it close in its latest Fed stress test. “We’re in a build-capital mode,” CEO Bill Rogers said at an industry conference in May. “We’re going to be in build mode until we have more information, more certainty” about regulators’ plans.
The insurance operation is an obvious place to get it. Rogers said last month that Truist’s stake was tying up 2 percentage points of capital and hinted at a sale. As of June 30, Truist’s all-important ratio was 9.6%, versus a minimum that rose to 7.4% this month and may rise further yet.
ROOM FOR DISAGREEMENT
Truist might regret parting with a business that churns out 25% margins and never gets anyone hauled in front of Congress. Banks prize steady, fee-based businesses, and so do regulators and investors. Truist’s living will, its plan for an orderly wind-down in a crisis, involves selling its insurance arm for cash.
Offloading it now will leave Truist with just two business lines — consumer banking and commercial banking — where scale has favored giants like JPMorgan and Bank of America.
THE SCOOP
Regional bank Truist is in talks to sell its giant insurance brokerage to private-equity firm Stone Point for about $10 billion, an early consequence of new, tighter regulations meant to avoid another run of bank failures.
Stone Point earlier this year bought 20% of the business and is now negotiating to acquire the rest, people familiar with the matter said.
Truist Insurance Holdings says it’s the seventh-largest insurance broker in the world. The stake sale in February, which included money from Emirati sovereign fund Mubadala, valued it at $14.5 billion. It’s not clear whether the current deal would include other investors.
Talks are ongoing, the people said, and a deal may hinge on Stone Point’s ability to scrounge up enough debt in a market that’s been skittish on buyout loans.
A spokesman for Truist declined to comment. Stone Point did not respond to requests for comment.
I’m certainly not one to give Bill any credit, but it was sold 20% valued at 14.75, which means they sold it for 2.95. Still not a great deal as they should get the remainder at 11.8, but not as bad as you were thinking
Bill sold 20% of Insurance for $14.75B and now is looking to sell the other 80% for only $10B? Man, these peach puckers know the Art of the Deal.
Article implies they need the capital for the bank to meet the new fed requirements
TDLC pipelines with 48 levels of email approvals aren’t cheap!
Not sure they have a choice but to sell. Regulators may be pushing this as our bond losses continues to grow. Between all the layoffs and this the next earnings call should be interesting
If we can get $9 bill for that it’s a no brainer. Slim down and focus on core business. #purple
Go to Reuters and pound Truist in at the search bar u r a technically saavy banker
Link, perhaps?
Article implies they need the capital for the bank to meet the new fed requirements
If you don’t think EL are id--ts, you should now.
Selling the insurance unit would be a very poor decision. The revenues generated from insurance operations far outperforms the bank. It would become even harder for Truist to have decent future earnings reports.
Nice, sell off any income producing assets. Looks like the strategy is a race to the bottom to get swallowed up by a real bank. Mr. Rogers is out of his element in this neighborhood.