NEWSMAKER: Dealmaker Hilbert starts private equity firm:

December 26, 2005

NEWSMAKER Dealmaker Hilbert starts private equity firm

Five years after his ouster as CEO of Conseco Inc., the acquisitive insurer he founded, Steve Hilbert is back in the deal-making game.

IBJ reported in November that Hilbert has launched MH Private Equity Fund LLC, a private-equity firm that plans to buy firms in specific industries and consolidate them. Consolidation will bring economies of scale and cost savings, the thinking goes, and also will create marketleading companies positioned to thrive in their sectors.

Sound familiar? It's a formula Hilbert used to great success in the insurance industry, one that fueled a rapid rise in Conseco stock in the company's early years. In the decade after Conseco went public in 1995, its shares appreciated 2,300 percent.

Hilbert, though, also knows the risks of a deal gone awry. In 1998, Conseco entered the mobile-home-lending business by buying Minnesota-based Green Tree Financial Corp. for $6 billion. Higher-than-expected loan defaults helped send Conseco into a tailspin, and it landed in bankruptcy court in 2002.

In 2005, Hilbert, 59, continued to battle Conseco over hundreds of millions of dollars in principal and interest it says he owes on loans from the mid-1990s. He used the money to buy stock that became worthless when the company reorganized in bankruptcy court.

In November, the Indiana Court of Appeals ruled he must pay nearly $80 million in loan interest to the company. Conseco is continuing to try to collect $162 million in principal through separate litigation. Meanwhile, Hilbert has asked the Indiana Supreme Court to review the interest ruling.

To keep Conseco at bay as the litigation plays out, Hilbert and his family moved out of their 23,000-square-foot Carmel mansion in January. The property is now on the market. If Conseco prevails in the litigation, it will keep proceeds of the sale. Otherwise, Hilbert will get the money.
* Hilbert In early 2005, Hilbert and his family moved out of their 23,000-square-foot Carmel mansion, which includes a barber shop.
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