Blackstone completes insurance buy

The Blackstone Group has completed its $1.6 billion purchase of niche insurance company UICI.

The Blackstone Group, along with co-investors Goldman Sachs Capital Partners and DLJ Merchant Banking Partners, has completed its roughly $1.6 billion buyout of Texas-based insurance outfit UICI.

UICI is a niche player in the insurance space. The company operates through four subsidiaries, comprised of a self-employed insurance agency, a student-insurance division, a life insurance unit and the Star HRG Group, which provides benefit insurance for high turnover employees.

The taking-private deal valued UICI at $37 per share. The transaction included a roughly $985 million slug of equity from the buyers on top of around $500 million of debt, led by JP Morgan Chase. The balance of the purchase price was covered by a private placement led by Merrill Lynch & Co.

The transaction was initiated by UICI’s former founder and chairman Ron Jensen, who had begun seeking potential buyers in the second half of 2004. However, Jensen died in automobile accident a few weeks prior to the company’s announcement of the sale in September.

Morgan Stanley and New Vernon Capital advised UICI on the transaction, while JP Morgan advised the buyers. UICI tapped Jones Day to provide legal counsel, and both Wachtell, Lipton, Rosen & Katz and Simpson Thacher & Bartlett served in the same capacity for the buyers.