Warren Buffett deepens insurance exposure with $11.6 billion Alleghany deal

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Warren Buffett’s Berkshire Hathaway has struck an $11.6 billion deal to buy Alleghany Corp, the owner of reinsurer TransRe, just weeks after the 91-year-old billionaire bemoaned the lack of good investment opportunities.

Yesterday, the 91-year-old company Berkshire Hathaway struck an agreement to buy the insurance company, Alleghany Corp, for $11.6 billion.

Alleghany, the owner of reinsurer Transatlantic Holdings Inc, would expand Berkshire’s large portfolio of insurers, which already includes auto insurer Geico, reinsurer General Re and a unit that insures against major catastrophes and unusual risks, as per a report by Reuters.

Warren Buffett

“Berkshire will be the perfect permanent home for Alleghany, a company that I have closely observed for 60 years,” Buffett, who has run Berkshire since 1965, said in a statement.

The acquisition, one of the five largest in Berkshire’s history, would reunite Buffett with Joseph Brandon, who led General Re from 2001 to 2008 and became Alleghany’s chief executive in December.

Founded in 1929 by railroad entrepreneurs Oris and Mantis Van Sweringen, New York-based Alleghany operates mainly in property and casualty reinsurance and insurance through subsidiaries and investments.

Alleghany was transformed from a large railroad holding company into an insurance and investment firm by Fred Morgan Kirby II. The company’s board is currently led by Jefferson Kirby.

Berkshire Hathaway offered $848.02 for each share of Alleghany, a premium of more than 25% to the company’s closing price on Friday.

The deal, which includes a 25-day “go-shop” period, is expected to close in the fourth quarter of 2022 and Alleghany will operate as an independent unit of Berkshire after closing.

The purchase reunites Buffett with Alleghany chief executive Joseph Brandon, who had led Berkshire’s General Re unit from 2001 to 2008. Brandon took up the reins at Alleghany in December.

Goldman Sachs advised Alleghany on the deal. 

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