AM Best places Vantage ratings under review following HHH acquisition

Core Viewpoint - AM Best has placed the credit ratings of Vantage Risk Ltd. and its affiliates under review due to the acquisition by Howard Hughes Holdings, indicating potential changes in the company's financial outlook [1][2]. Group 1: Acquisition Details - Howard Hughes Holdings signed a definitive agreement to acquire 100% of Vantage Group Holdings Ltd. for approximately $2.1 billion in an all-cash transaction [2]. - The transaction is expected to close in the second quarter of 2026, pending regulatory approval [3]. Group 2: Financing Structure - The acquisition will be financed through a combination of HHH's cash on hand and non-interest-bearing, non-voting preferred stock issued to Pershing Square Holdings Ltd. [3]. - The preferred shares will be divided into 14 equally sized tranches, which HHH can repurchase at the end of each fiscal year for the first seven years post-transaction [3]. Group 3: Credit Ratings and Financial Strength - Vantage Group's credit ratings, including a Financial Strength Rating of A- and Long-Term Issuer Credit Ratings of "a-", reflect its very strong balance sheet strength and adequate operating performance [2]. - AM Best expects Vantage Group's operations to remain broadly consistent post-transaction, with changes primarily related to investment management agreements [4]. Group 4: Investment Strategy Post-Acquisition - Post-acquisition, there will be higher allocations to public equities, although this increased equity risk will be partially offset by higher allocations to cash and short-term Treasuries [4]. - A reduction in underwriting leverage is anticipated through capital contributions following the acquisition [4].