Howard Hughes Holdings Inc. (HHH) has completed its previously announced acquisition of specialty insurance and reinsurer Vantage Group Holdings Ltd. in an all-cash transaction valued at approximately $2.1 billion.
The acquisition, completed by Howard Hughes Insurance Holdings, LLC, a wholly-owned subsidiary of HHH, upon receipt of all necessary regulatory approvals, is expected to drive Howard Hughes’ transformation into a diversified holding company.
Founded in 2020, Vantage offers a diversified global property and casualty (P&C) portfolio, powered by modern infrastructure and advanced analytics, and backed by Carlyle and Hellman & Friedman.
Under the terms of the deal, Vantage will continue to operate under its existing leadership team and employ the same go-to-market strategy, distribution model and service standards.
HHH explained that its holding company’s ownership of Vantage has provided long-term capital support, which will significantly strengthen its credit profile and underwriting flexibility. At the same time, HHH will inject $200 million to improve Vantage’s balance sheet.
“An emphasis on underwriting profitability – driven by disciplined risk selection, pricing and portfolio optimization rather than growth – will enhance Vantage’s ability to effectively navigate the insurance cycle and optimize asset allocation over time,” HHH said.
Pershing Square Capital Management will manage Vantage’s investment portfolio for free, further enhancing coordination with policyholders and shareholders. It should be noted that as the investment manager of Vantage Assets, Pershing does not pay additional investment management or advisory fees.
Over time, Vantage’s portfolio will invest directly in cash, short-term Treasury securities and a portfolio of common stocks subject to consideration by rating agencies and regulators.
The acquisition is intended to deliver higher returns and a faster-growing insurance business, accelerating HHH’s overall growth while increasing and diversifying HHH’s sources of long-term value.
The transaction will be funded by HHH’s cash on hand and $1 billion of non-voting exchangeable perpetual preferred stock issued by HHH to Pershing Square Holdings, Ltd.
Vantage CEO Greg Hendrick commented: “Today’s closing marks the beginning of an exciting new chapter for Vantage. Howard Hughes brings the permanent capital and long-term vision it deserves to our business. While our ownership has changed, our team, underwriting discipline and commitment to our brokers and clients remain steadfast. I am extremely grateful for the past five years creating Vantage.” colleagues and thank our brokers and clients for their continued trust in us. “We are proud of what we have accomplished and moving forward, we are ready to deliver even greater value to our brokers and clients.” “
He added, “HHH’s permanent capital and long-term view have laid the foundation for us to invest in the business through the cycle, and our team, underwriting discipline and commitment to brokers and clients remain unchanged. We are proud of everything we have built and are prepared to deliver even greater value to brokers and clients, as well as HHH shareholders, over time.”
Howard Hughes Executive Chairman Bill Ackman added: “Vantage will now serve as the cornerstone of Howard Hughes’ transformation into a diversified holding company. Vantage’s superior specialty insurance and reinsurance platform, combined with Pershing Square’s investment capabilities, provides a strong foundation from which to build a large, highly profitable insurance company and a durable source of long-term value creation for Howard Hughes and its shareholders.”
He continued: “Vantage will now form the cornerstone of Howard Hughes’ transformation into a diversified holding company. Vantage’s superior specialty insurance and reinsurance platform, combined with Pershing Square’s investment capabilities, provides a strong foundation upon which we will build a large, highly profitable insurance company and provide a durable source of long-term value creation for Howard Hughes and its shareholders.”
Ryan Israel, chief investment officer of Howard Hughes Holdings, said: “We are excited to begin the next phase of Howard Hughes’ growth as we focus on operating a profitable insurance business and managing Vantage’s assets to generate attractive long-term returns. We believe Vantage will deliver high returns on equity for Howard Hughes shareholders for decades to come.”
HHH’s financial advisor is Jefferies LLC, with Latham & Watkins serving as legal advisor, Oliver Wyman serving as actuarial advisor, and Jones Day serving as legal advisor to the Equity Financing Committee of the Board of Directors.
Vantage was advised by JP Morgan Securities LLC as financial advisor and Debevoise & Plimpton LLP as legal advisor by Carlyle and Hellman & Friedman.
