Pershing Square's $2.1 Billion Insurance Acquisition: Ackman's Berkshire-Style Play

Activist investor Bill Ackman is building what some call a "next-generation Berkshire Hathaway."

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

"The Vantage acquisition marks a transformational milestone as Howard Hughes evolves into a diversified holding company."

The deal will be financed through cash and up to $1 billion in equity investment from Ackman's hedge fund Pershing Square, the largest shareholder of Howard Hughes - a publicly traded company that has remained relatively inactive for a decade.

This move represents a significant step in Ackman's strategy to emulate Warren Buffett's investment model. Berkshire Hathaway pioneered using insurance float - premiums collected before claims are paid - as low-cost capital for diversified investments.

Ackman now joins increasingly crowded competition. In recent years, activist investors and private equity firms have rushed into insurance, leveraging cheap insurance capital to fund public acquisitions and private lending.

The insurance capital race intensifies

The strategy of using insurance float as investment fuel is gaining momentum. Since 2020, private equity giants Apollo Global and KKR have fully acquired life insurance affiliates, deploying retirement product premiums to fund hundreds of billions in investments.

Activist Daniel Loeb similarly transformed his London-listed company into a reinsurance business earlier this year despite shareholder objections. His Cayman Islands-based Malibu Life Reinsurance will target U.S. fixed annuity markets serving retirees.

Vantage, however, operates in property/casualty insurance with specialties in litigation, political violence and cyber risks. This differentiates Ackman's approach from Apollo and KKR's life insurance focus, though all seek stable float for investment capital.

Howard Hughes, publicly traded for ten years with lackluster performance, will transition from a pure real estate play to a Berkshire-style conglomerate through controlling stakes in operating companies.