v3.26.1
Vantage Acquisition
 6 Months Ended
Jun. 30, 2026
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]  
Vantage Acquisition
2. Vantage Acquisition

On June 4, 2026, Howard Hughes Insurance Holdings, LLC, a wholly owned subsidiary of the Company, completed the acquisition of 100% of the outstanding shares of capital stock of Vantage Group Holdings, Ltd., a privately held specialty insurance and reinsurance company, for cash consideration of approximately $2.1 billion. References to "Vantage" herein refer to Howard Hughes Insurance Holdings, LLC and its consolidated insurance and reinsurance subsidiaries acquired in the Vantage Acquisition, unless the context otherwise requires. Also on June 4, 2026, to support the funding of the Vantage Acquisition, the Company issued $1.0 billion of its Series A Preferred Stock to Pershing Square Holdings, Ltd. See Note 1 - Presentation of Financial Statements and Significant Accounting Policies and Note 3 - Pershing Square for additional information. The transaction costs associated with the acquisition were $15.4 million for the three months ended June 30, 2026, and $19.0 million for the six months ended June 30, 2026, and are included in General and administrative expenses in the Condensed Consolidated Statements of Operations.
Preliminary Fair Value of Net Assets Acquired and Liabilities Assumed

The acquisition constitutes a business combination and was accounted for using the acquisition method of accounting. As such, the Company recorded the assets acquired and liabilities assumed at their estimated acquisition-date fair values, as summarized in the table below. Certain data necessary to complete the purchase price allocation is not yet available, and includes, but is not limited to, the final underlying tax bases of assets acquired and liabilities assumed. The Company will finalize the purchase price allocation during the 12-month period following the acquisition date, during which time the value of the assets and liabilities may be revised as appropriate.
thousandsJune 4, 2026
Fair value of assets acquired:
Buildings and equipment$118 
Investments in fixed maturity securities2,608,294 
Short-term investments32,845 
Cash and cash equivalents376,321 
Restricted cash84,450 
Accounts receivable, net788,692 
Reinsurance recoverable on paid and unpaid losses599,056 
Intangibles, net571,000 
Other assets, net626,363 
Total estimated fair value of assets acquired5,687,139 
Fair value of liabilities assumed:
Reserves for claims and claim expenses2,090,210 
Unearned premiums1,384,357 
Deferred tax liabilities, net18,437 
Other liabilities, net366,271 
Total estimated fair value of liabilities assumed3,859,275 
Noncontrolling interests7,753 
Fair value of net assets acquired1,820,111 
Goodwill (a)279,881 
Total consideration$2,099,992 
(a)The excess of the purchase price over the preliminary estimated fair value of the net tangible and identifiable intangible assets acquired, net of the fair value of the liabilities assumed totaled $279.9 million in Goodwill. Goodwill represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized, and is attributable primarily to the assembled workforce of Vantage’s underwriting, actuarial, claims and executive teams, the established specialty insurance and reinsurance platform, and financial strength ratings that could not be replicated on a comparable timeline through internal development. The Company estimated that approximately $68.5 million of the goodwill related to the acquisition of Vantage will be deductible for U.S. tax purposes. The Company has not yet completed the allocation of goodwill to its reporting units or segments, and such allocation will be finalized during the 12-month period following the acquisition date.
Identifiable indefinite-lived and finite-lived intangibles consisted of the following and are included in Intangibles, net on the Company’s Condensed Consolidated Balance Sheets:
thousandsJune 4, 2026Economic Useful Life
Broker relationships - insurance$183,000 17 years
Broker relationships - reinsurance44,000 15 years
Trade name16,000 10 years
Internally developed and used technology9,000 7 years
VOBA (a)304,000 1 year
Insurance licenses15,000 Indefinite
Total$571,000 
(a)The majority of VOBA amortization is expected to be recognized within the first 12 months following the acquisition, with 90% recognized in year one, 9% in year two, and 1% in year three.

The Company engaged independent valuation specialists to assist management in determining the fair values of certain acquired assets and assumed liabilities. The determination of fair value required significant judgment and estimates and was based on information available as of the acquisition date.

The fair value of investments in fixed maturity securities was based primarily on Level 2 observable market inputs obtained from independent pricing services which use proprietary valuation models and techniques, including matrix pricing, to estimate fair value using observable market inputs.

Broker relationships represent the fair value of Vantage's existing relationships with independent insurance and reinsurance brokers, which serve as the primary distribution network for the Company's specialty insurance and reinsurance operations. The fair values were estimated using the multi-period excess earnings method under the income approach and are classified as Level 3 fair value measurements. The valuation incorporates significant unobservable inputs, including projected net premiums written, retention rates based on historical experience, normalized growth assumptions, contributory asset charges, and a discount rate. The analysis also reflects management’s assumptions regarding long-term tax rates and investment yields used to estimate attributable investment income. The Company assigned estimated useful lives of 17 years for insurance broker relationships and 15 years for reinsurance broker relationships. These useful lives were determined based on an analysis of historical broker-level attrition data, which was fitted to exponential survivor curves. The selected useful lives represent the periods over which the substantial majority of the present value of economic benefits from the existing broker relationships is expected to be realized. The shorter useful life assigned to reinsurance broker relationships reflects the more concentrated nature of the reinsurance broker market. The Company considered all applicable factors, including legal, regulatory, contractual, competitive, and economic factors, and concluded that no such factors impose a useful life shorter than those selected. All broker relationship intangible assets are amortized on a straight-line basis, as the Company determined that no other method more reliably reflects the pattern in which the economic benefits of the assets are consumed.

The trade name represents the "Vantage" brand identity used in the specialty insurance and reinsurance markets. The fair value was estimated using the relief-from-royalty method under the income approach and is classified as a Level 3 fair value measurement. The valuation incorporated a royalty rate derived from market data and qualitative factors, projected net premiums written with near- and long-term growth assumptions, and a discount rate. The 10-year estimated useful life reflects the expected period over which the trade name will generate incremental economic benefit distinct from the Company's own brand identity, considering the Company's anticipated brand strategy.

Internally developed and used technology consists of custom underwriting workbenches used in Vantage's insurance and reinsurance operations. The fair value was estimated using the replacement cost method under the cost approach and is classified as a Level 3 fair value measurement. The valuation incorporated estimates of labor costs, development timing, developer’s profit, entrepreneurial incentive, and obsolescence. The 7-year estimated useful life reflects the expected period over which the existing technology platforms will continue to serve the business before requiring significant re-engineering or replacement, considering the pace of technological change.
VOBA was valued using a discounted cash flow model applied to the run-off of unearned premium reserves, net of reinsurance, and is classified as a Level 3 fair value measurement. The valuation incorporated assumptions for loss and expense ratios, payment patterns, capital requirements, risk margin, and a discount rate based on the U.S. Treasury yield curve as of the acquisition date. VOBA is amortized in proportion to the pattern in which the underlying unearned premiums are earned, which reflects the period over which the acquired in-force contracts will generate premium revenue. The short amortization period reflects the fact that the unearned premium revenue represents premiums on policies already written but not yet earned as of the acquisition date, substantially all of which are expected to be earned within the 12 months following the closing date based on Vantage's historical earning patterns. As such, the majority of VOBA amortization is expected to be recognized within the first 12 months following the acquisition, with 90% recognized in year one, 9% in year two, and 1% in year three.

Insurance licenses represent the certificates of authority and surplus lines eligibility held by various Vantage subsidiaries in the United States and abroad. The fair values were valued using the comparable transaction method under the market approach and are classified as Level 2 fair value measurements. The valuation incorporated observable arm’s-length transaction prices from publicly reported acquisitions of shell insurance companies with operating licenses, with values selected based on transaction price statistics by license type. The Company determined that the insurance licenses have indefinite useful lives as no legal, regulatory, contractual, competitive, economic, or other factors limit their useful lives. State-issued certificates of authority are not subject to competitive re-bidding and remain in force continuously so long as the licensed entity maintains compliance with applicable regulatory requirements. Renewal involves routine filing obligations and negligible incremental cost. The Company will reassess the indefinite useful life classification each reporting period and will test these assets for impairment at least annually.

Reserves for claims and claim expenses, net of reinsurance recoverable on unpaid losses, were measured using a discounted cash flow model applied to the actuarial run-off of recorded reserves and are classified as Level 3 fair value measurements. The valuation incorporated adjustments for the time value of money and risk margin based on the U.S. Treasury yield curve, actuarial payment patterns, capital requirements, cost of capital, and reserve payout assumptions. The fair value adjustment will be amortized over the estimated payout period of the underlying claims as a reduction to prior accident year net claims and claim expenses.

The following table summarizes acquired finite-lived intangible assets which are amortized over their estimated useful lives:
As of June 30, 2026
thousandsGross Asset Accumulated AmortizationNet Carrying Amount
Broker relationships - insurance$183,000 $(798)$182,202 
Broker relationships - reinsurance44,000 (218)43,782 
Trade name16,000 (119)15,881 
Internally developed and used technology9,000 (95)8,905 
VOBA304,000 (20,239)283,761 

Future net amortization expense for acquired finite-lived intangible assets is estimated as shown below:
thousandsStatements of Operations Location
Remaining in 2026
20272028202920302031
VOBAInsurance underwriting expenses$137,924 $131,210 $13,344 $1,283 $— $— 
Other finite-lived intangiblesDepreciation and amortization8,292 16,584 16,584 16,583 16,584 16,584 
Net amortization expense$146,216 $147,794 $29,928 $17,866 $16,584 $16,584 
Post-Acquisition Financial Results

The following table summarizes the revenue and net income (loss) attributable to Vantage from the acquisition date, June 4, 2026, through June 30, 2026, as included in the Company’s Condensed Consolidated Statements of Operations. This is provided for informational purposes only and may not be indicative of future results.
thousandsThree and Six Months Ended
June 30, 2026
Total revenues$113,141 
Net income (loss) attributable to common stockholders(15,730)

Supplemental Pro Forma Information

The following summarized pro forma consolidated income statement information assumes that the acquisition of Vantage occurred as of January 1, 2025. The pro forma amounts are for comparative purposes only, may not necessarily reflect the results of operations that would have resulted had the acquisition been completed at the beginning of the applicable period, and may not be indicative of future results.
Three Months Ended June 30,
Six Months Ended June 30,
thousands2026202520262025
Total revenues$1,369,326 $529,797 $1,940,580 $979,343 
Net income (loss) attributable to common stockholders174,441 (13,436)238,732 (34,469)

The pro forma results include amortization of the fair value adjustments related to VOBA, identifiable finite-lived intangible assets, and reserves for claims and claim expenses, net of the related tax impacts. The pro forma adjustments include estimates and assumptions based on currently available information, which management believes are reasonable.