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Bill Ackman’s Howard Hughes has announced a deal to acquire a Bermuda-based insurance company for $2.1bn, as the activist investor seeks to build what he has called a “modern-day Berkshire Hathaway”.
Howard Hughes will finance the $2.1bn purchase of Vantage Risk using a combination of cash and an investment in its own stock worth up to $1bn by Ackman’s hedge fund Pershing Square.
The billionaire has set out plans to transform Texas-based Howard Hughes from a real estate company into a sprawling business in the mould of Warren Buffett’s Berkshire Hathaway, using it to acquire controlling interests in operating companies.
Pershing Square is the largest shareholder in Howard Hughes, which has languished on public markets for a decade.
“The acquisition of Vantage is a milestone event in the transformation of Howard Hughes into a diversified holding company,” Ackman said in a statement on Thursday. Pershing will manage Vantage’s assets, Howard Hughes said.
Berkshire was one of the earliest groups to pioneer the use of insurance float — the money it takes in as premiums, holds to pay claims and invests — as a source of low-cost funding for a diversified book of investment holdings.
Using cheap insurance capital to finance public acquisitions and private loans has become a more crowded play, as rival activist investors and private equity groups have piled into the sector.
Since 2020, private capital juggernauts Apollo Global and KKR have acquired full ownership of life insurance affiliates, using premiums paid into retirement products to finance hundreds of billions of dollars of investments.
Activist investor Daniel Loeb earlier this year overcame some shareholder opposition and won a vote to turn his London-listed company into a reinsurance business. Malibu Life Reinsurance, which is based in the Cayman Islands, will focus on winning market share in US fixed annuities, which provide guaranteed income for retirement.
Some private groups have favoured the life insurance sector due to its long-dated liabilities, which are compatible with more illiquid private investments.
Vantage, by contrast, is a property and casualty insurer, specialising in coverage for perils such as lawsuits, political violence and cyber risk.
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