Truist Financial Corp.’s stock led gains among components of the S&P 500 on Tuesday following a report that it may sell its insurance-brokerage business.
Truist Financial
TFC,
was up 7% to reach the level of above $39 a share for the first time since September, on the heels of a report by Semafor that it’s in negotiations to sell the remaining 80% of its insurance-brokerage business to private-equity firm Stone Point for $10 billion.
Stone Point already acquired 20% of the business earlier this year and is in talks to buy the remaining stake, according to the report, which cited unnamed people familiar with the deal.
A Truist spokesperson decline to comment.
Citi analyst Keith Horwitz reiterated a buy rating on Truist and said the $10 billion price implies a valuation of about $2 billion more than the valuation the minority stake in the business got in February.
Jefferies analyst Ken Usdin said initial reaction to the deal would likely be positive.
“We would expect a full sale to bring benefits to capital and potentially add to earnings per share if [Truist] decided to restructure its bond book with proceeds,” Usdin said. “The one offset would be a less fee-diverse bank.”
Truist was formed by the merger of BB&T and SunTrust, which closed nearly three years ago.
Including Tuesday’s trades, Truist’s stock is down 32.5% in 2023, compared with a 2.3% drop by the Financial Select Sector SPDR exchange-traded fund
XLF
and a gain of 14% by the S&P 500
SPX.
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