Finance History | 1411 Broadway, New York, 19 October 2022 — US$11.6 Billion Added Insurance Float

On 19 October 2022, Berkshire Hathaway completed its acquisition of Alleghany Corporation for US$848.02 per share in 2022 dollars, representing approximately US$11.6 billion of total equity value in 2022 dollars.

Berkshire funded the purchase with existing cash, and Alleghany became a wholly owned subsidiary. The acquired group was anchored by property-and-casualty insurance and reinsurance businesses, alongside a portfolio of nonfinancial operating companies.

The transaction added assets and obligations rather than a simple stream of premiums. At 30 September 2022, Alleghany reported US$31.2 billion of assets in 2022 dollars and US$23.4 billion of liabilities in 2022 dollars.

Insurance float arises because premiums are collected before all claims are paid. The funds can be invested in the interval, but their economic value depends on disciplined underwriting because future losses can exceed premiums and investment income.

Alleghany's mix included TransRe in reinsurance, RSUI in specialty insurance and CapSpecialty in casualty and surety coverage. These operations exposed Berkshire to different claim patterns and distribution channels while remaining subject to correlated catastrophes and reserve uncertainty.

Berkshire's financial strength can let insurance subsidiaries hold investments through volatility and accept risks requiring large, credible balance sheets. Size is useful only when pricing remains adequate, since rapid premium growth can magnify underwriting errors that surface years later.

Alleghany also brought noninsurance subsidiaries through Alleghany Capital. That structure resembled Berkshire on a smaller scale by placing autonomous operating businesses beside an insurance engine, reducing the integration burden of imposing one centralized operating model.

Aided by the acquisition, Berkshire's insurance float increased from US$147 billion at the start of 2022 to US$164 billion at the end of 2022. The US$17 billion increase in 2022 dollars expanded investable funds while also expanding the obligation to pay valid claims.

The 34th-floor office at 1411 Broadway was Alleghany's principal executive address when the deal closed. The public Golda Meir Square entrance anchors a transaction that enlarged Berkshire's oldest capital engine through a modern specialty-insurance group.

Photo: Billy Hathorn, CC BY-SA 3.0, via Wikimedia Commons.