Bill Ackman, founder and CEO of Pershing Square Capital Management, said Howard Hughes’ $2.1 billion purchase of specialty insurance and reinsurer Vantage Group echoes Warren Buffett’s early moves at Berkshire Hathaway, as the company he backs looks to build a diversified holding company.
As reported earlier today, Howard Hughes’ purchase of Vantage Group was priced at 1.5 times projected year-end 2025 book value, implying a price-to-book ratio of about 1.4 times at closing, and the acquisition will be financed using $1.2 billion of cash on Howard Hughes’ balance sheet and up to $1 billion of non-interest-bearing, non-voting preferred stock issued by Howard Hughes to Pershing Square.
Founded in 2020, Vantage has quickly established itself as a global insurer and reinsurer, offering a property and casualty product portfolio powered by modern infrastructure and advanced analytics.
Upon completion of the transaction, Vantage expects to inject additional capital and enhance its investment strategy, including allocations consistent with Pershing Square’s long-term investment approach.
On a recent conference call, Ackman, executive chairman of Howard Hughes Corp., in which Pershing Square owns about 46.9% of the company, likened the deal to Berkshire Hathaway’s early years under Warren Buffett.
He said Buffett prioritized underwriting profitability, took relatively low insurance risks, used far less leverage than typical insurance companies and invested a large portion of his portfolio in common stocks — creating an insurance business that generated a return on equity of more than 20 percent for about six decades.
Ackman continued: “Learning from Mr. Buffett, we took a similar approach and started looking for a management team to build the business or an existing company that we could acquire at a reasonable price and use as the core of the platform.
“We are pleased to report that we have completed the latter, which was our preferred option because building from the ground up takes time. The company we acquired, Vantage, was itself a 50:50 joint venture between two well-respected private equity firms, Hellman & Friedman and Carlyle.”
He added: “The acquisition of Vantage is a milestone in Howard Hughes’ transformation into a diversified holding company. In Vantage, Howard Hughes acquires a superior diversified specialty insurance and reinsurance platform managed by a talented and experienced team.
“The combination of Vantage’s insurance expertise and Pershing Square’s investment capabilities creates the opportunity to build a large, highly profitable insurance company and an important source of long-term value creation for Howard Hughes.”
Vantage will reportedly continue to operate under its existing name, brand and culture, with employees retaining the same roles, teams and go-to-market strategies.
“I am pleased to begin a new chapter for Vantage with this acquisition,” said Vantage CEO Greg Hendrick. “With Howard Hughes’ permanent capital and long-term vision, we look forward to strengthening our balance sheet and expanding opportunities in specialty insurance, reinsurance and partnership capital.”
“Once the transaction closes, we expect to have additional resources to drive profitable growth, drive innovation and deliver greater value to brokers and clients over time.”