Berkshire Hathaway announced it acquired insurer Alleghany Corp, for $11.6 billion on March 21, finally deploying some of its massive cash reserves.

                By                    Yaёl Bizouati-Kennedy

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The transaction is expected to close in the fourth quarter of 2022, subject to customary closing conditions, including approval by Alleghany stockholders and receipt of regulatory approvals, and Alleghany will continue to operate as an independent subsidiary of Berkshire Hathaway after closing, according to a press release.

“Berkshire will be the perfect permanent home for Alleghany, a company that I have closely observed for 60 years. Throughout 85 years the Kirby family has created a business that has many similarities to Berkshire Hathaway. I am particularly delighted that I will once again work together with my long-time friend, Joe Brandon.” Warren Buffett, Berkshire Hathaway’s Chairman and Chief Executive Officer, said in the press release. 

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“Alleghany is often referred to as a “mini-Berkshire” because of its similar underwriting and investment strategies,” Seifert said. “Alleghany’s newly appointed CEO, Joe Brandon, is also a known entity in Berkshire circles since he used to be an executive at General Re — a Berkshire owned reinsurer — and has had a long business relationship with Berkshire.”

Seifert added that CFRA views this transaction positively since it provides Alleghany with the capital support of a larger entity while increasing Berkshire’s presence in the insurance and reinsurance marketplace at a time when prospects for growth here are enhanced by a firm pricing environment and increased demand for risk transfer services.

She added that while there may be some overlap between Berkshire and Alleghany clients, CFRA doesn’t see this as material.

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“Alleghany shareholders will get cash and a nice premium to Friday’s closing price, but will not be getting Berkshire shares,” she added.