Goldman Sachs (NYSE:GS) is apparently looking for buyers for USI Holdings – the insurance broker bought by its private equity arm in 2007.  The deal could rope in as much as $1.8 billion for the investment bank. Competing insurance brokers Hub International – controlled by Morgan Stanley (NYSE:MS) – and Alliant Insurance Services are rumored to have an interest in USI, besides several large private equity firms.
We maintain a $128 price estimate for Goldman’s stock – a good 40% premium to the bank’s current market price. We believe the difference can be attributed to the significant pessimism among investors towards investment bank stocks given the deteriorating economic condition in several European nations – as the investment banks have a sizable exposure to these economies.
A prominent insurance broker, USI largely deals in health, welfare and financial services solutions. It ranks among the top-10 players in the industry, with annual revenues of around $700 million. 
Goldman Sachs Capital Partners acquired USI in January 2007 – taking the listed company private by paying shareholders a total of $1.4 billion.  Estimates peg the value of the business at around $1.8 billion – something Goldman would be looking to pocket over coming months.
Once the deal is finalized, the revenue generated will reflect in Goldman’s income statement as income from its ‘other investments’. We capture this in our analysis as shown in the chart above. You can understand the impact of the USI sale on Goldman’s value by making changes to this chart.Notes: