$2.1 billion acquisition of an insurance company, Ackman replicates "Berkshire Hathaway"

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Activist investor Bill Ackman is attempting to build a "new version of Berkshire Hathaway."

On Thursday, billionaire Bill Ackman announced that his company, Howard Hughes, will acquire insurance company Vantage Risk for $2.1 billion. In a statement, Ackman said:

The acquisition of Vantage is a milestone in Howard Hughes’ transformation into a diversified holding company.

According to the agreement, Howard Hughes will complete the acquisition through cash and an equity investment of up to $1 billion from Ackman's hedge fund, Pershing Square. Pershing Square is Howard Hughes’ largest shareholder; the latter has been quiet in the public market for a decade.

This deal marks a key step for Ackman in emulating Warren Buffett’s investment model. Berkshire Hathaway was among the pioneers that used insurance float—premiums collected, used to pay claims and invest—as a low-cost funding source for a diversified investment portfolio.

This acquisition also places Ackman into an increasingly crowded field. In recent years, other activist investors and private equity groups have flocked to the insurance sector, using cheap insurance capital to fund public takeovers and private loans.

Competition for Insurance Capital Heats Up

The strategy of using cheap insurance capital to fund investments is becoming increasingly popular.

Since 2020, private equity giants Apollo Global and KKR have fully acquired affiliated life insurance companies, using premium income from retirement products to fund hundreds of billions of dollars of investments.

Earlier this year, activist investor Daniel Loeb also overcame some shareholder opposition to successfully push his London-listed company to transform into a reinsurance business.

Malibu Life Reinsurance, headquartered in the Cayman Islands, will focus on capturing market share in the U.S. fixed annuity market to provide secure income for retirees.

In contrast, Vantage is a property and casualty insurance company focusing on underwriting in areas such as litigation, political violence, and cyber risk.

The difference in business models means that Ackman’s path differs from private equity giants like Apollo and KKR, but is likewise aimed at obtaining stable insurance float as a source of investment capital.

Howard Hughes has been publicly listed for ten years, but its performance has long been lackluster. Ackman plans to acquire controlling stakes in operating companies, transforming it from a single real estate business into a vast business empire similar to Berkshire Hathaway.

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