Buffett’s Berkshire Hathaway buys Alleghany Corp. for $11.6 billion, expanding its insurance portfolio | local business

Berkshire's $11.6 billion deal for Alleghany expands its insurance arm

FILE – Warren Buffett, chairman and CEO of Berkshire Hathaway, smiles as he plays bridge after Berkshire Hathaway’s annual stockholders meeting in Omaha, Neb, May 5, 2019. Buffett’s Berkshire Hathaway is buying insurance company Alleghany in a deal worth approximately $11.6 billion, a statement Monday, March 21, 2022. (AP Photo/Nati Harnik, file)

Nati Harnik

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

Alleghany adds to Berkshire’s already large insurance portfolio, which includes Geico auto insurance, General Re reinsurance, and a unit that insures against large and unusual risks.

Founded in 1929 by railroad entrepreneurs Oris and Mantis Van Sweringen, Alleghany is headquartered in New York and principally engaged in property-casualty reinsurance and insurance through subsidiaries and affiliates.

Often likened to a mini Berkshire, Alleghany was transformed from a railroad holding company into an insurance and investment company by Fred Morgan Kirby II. The company’s Board of Directors is currently chaired by Jefferson Kirby.

“Berkshire will be the perfect permanent home for Alleghany, a company I’ve watched closely for 60 years,” Warren Buffett, Berkshire Hathaway’s chairman and chief executive, said in a statement Monday.

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“Over the course of 85 years, the Kirby family has built a company that shares many similarities with Berkshire Hathaway,” Buffett said.

Buffett pledged in February to have more than $30 billion in cash on hand, leaving plenty available for the right acquisition.

Alleghany’s insurance holdings also include RSUI Group, a wholesale specialty insurance underwriter, and CapSpecialty, a specialty insurance company.

Berkshire Hathaway bid $848.02 for each Alleghany share, 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 entity of Berkshire upon closing.

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

Goldman Sachs advised Alleghany on the deal.

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