Alleghany Corporation

Alleghany Corporation was a specialty insurance and reinsurance holding company acquired by Berkshire Hathaway in October 2022 for $11.6 billion — Berkshire's largest acquisition since Precision Castparts in 2016.

📝 The Acquisition

The deal was announced in March 2022 at $848.02 per share — a number explained at the 2022 Meeting as a calculated quirk: Buffett had offered $850, with the remainder ("$1.98/share") earmarked to cover the investment banking fairness opinion fees that Delaware law effectively requires. The joke was a serious point: Buffett structured the price to make the cost of financial intermediation visible and accountable.

Berkshire had to obtain only two fairness opinions in its 57-year history as a public company, including in transactions involving Diversified Retailing in the 1970s. Both times, Munger's advice was to shop the opinion to a ranked list of investment banks at dramatically below-market rates (the first was $60,000 per side, in 1978). The system works as theater, not as genuine value assessment.

Why Alleghany?

The acquisition thesis had several layers:

1. Float: Alleghany brought approximately $26 billion of additional insurance float to Berkshire, pushing total float toward $164 billion. Float at zero cost is Berkshire's engine; adding quality float is always value-accretive.

2. TransRe: Alleghany's crown jewel was Transatlantic Holdings (TransRe), a respected specialty reinsurer with deep expertise in property-casualty reinsurance. This added a professional reinsurance platform that complements Ajit Jain's Berkshire Hathaway Reinsurance Group operation.

3. Joe Brandon: Alleghany's CEO at acquisition was Joe Brandon — the same executive who had architected the legendary General Re turnaround from 2001-2008. Buffett knew Brandon's character and capability intimately. The deal was effectively a vote of confidence in Brandon personally, as much as in Alleghany structurally.

4. Owned Businesses: In addition to its insurance operations, Alleghany had built a portfolio of owned industrial and specialty businesses, consistent with Buffett's preference for diversified holding companies with managerial autonomy.

📅 Timeline

🔗 Connections

• CEO at Acquisition: Joe Brandon
• Parent: Berkshire Hathaway Inc.
• Key Subsidiary: TransRe (Transatlantic Holdings)
• Related: General Re (Brandon's prior turnaround)
• Concepts: Insurance Float, Buyer of Choice, Insurance Principles
• Sources: 2022 Letter, 2022 Meeting