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Goldman Kicks Off Sale of USI Holdings, Insurer Could Fetch $1.9 Billion

Hurricane Sandy is expected to cause about $20 billion in property damage, so an insurance deal seems appropriate.

Goldman Sachs Capital Partners is selling USI Holdings, an insurance broker, sources say. The auction started after Labor Day and Goldman Sachs is advising on the process, the persons say.

GS Capital Partners, the PE arm of Goldman, is seeking bids north of 10x EBITDA, one banker says. The Deal, which reported the USI auction earlier this year, said the insurer generates annual EBITDA of about $190 million.

Large private equity firms that lost out on the amWINS auction will likely be interested in USI, the banker says. In April, New Mountain Capital agreed to buy amWINS in a $1.3 billion deal. Potential bidders include KKR, TPG and Hellman & Friedman. The Blackstone Group, I’m told, didn’t look at amWINS although the buyout shop owns Alliant Insurance Services.

Officials for Goldman and USI declined comment.

Briarcliff Manor, N.Y.-based USI, which says it’s the nation’s ninth largest insurance broker, distributes P&C insurance and employee benefits products to small and mid-sized businesses. USI Holdings produced $660 million in 2007 revenue, according to AM Best.

GS Capital acquired USI in 2007 in a $1.4 billion deal. GS Capital invested up to $453 million cash in the deal, according to SEC filings from that time.

USI has been on an acquisition spree this year. In August, the company agreed to acquire TD Insurance, a unit of TD Bank and closed its buy of Suncoast Insurance Associates. USI completed three other deals in 2012 including buys of Lynch, Beretta and Bucci Insurance, certain assets of National Insurance Specialists and most of the Pinnacle Group.

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