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Warren Buffett Got It Right Says UBS Following Berkshire’s $11.6 Billion Acquisition of Alleghany -Breaking

by Mike Robinson

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© Reuters. Warren Buffett Right: UBS Says Warren Buffett After Berkshire’s (11.6 Billion) Acquisition of Alleghany. (Y).

Warren Buffets Berkshire Hathaway announced yesterday the $11.6 billion acquisition of Alleghany Corporation.

Berkshire will spend $848.02/s for Alleghany, with the transaction expected to close by Q4 2022.

Brian Meredith, UBS analyst has expressed optimism about the Alleghany deal’s positive effects on Berkshire.

The transaction is a win-win for Berkshire. It’s a great use of excess cash and accretive earnings. Berkshire also has a quota with Transatlantic, Alleghany’s reinsurance firm. This gives Berkshire a better understanding of the business and boosts BRK’s broker market distribution. General Re is largely direct distribution. We continue to like the pricing, growth and margin improvement fundamentals in the E&S and Specialty lines space, Meredith (NYSE:) said in a client note.

Analysts add that this acquisition represents a good example of capital surplus, with BRK having $144 billion in cash as of quarter four 2021. This deal will not result in Berkshire’s share-repurchase activity slowing down, according to the analyst.

The purchase price is attractive to BRK, too. The analyst stated that while other reinsurers trade around 1.1x in book value, specialty insurers trade at over 2.0x.

Berkshire Hathaway Class A shares are trading at all-time highs, giving the company an estimated market value of $774 billion.

By Senad Karaahmetovic

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