Marking a return to the kind of deal-making that Warren Buffett has recently shied away from, Berkshire Hathaway announced this week that they will purchase all outstanding shares of insurance company Alleghany for $848.02 each, a total of $11.6 billion, reports an article in Bloomberg. The deal represents a 29% premium to Alleghany’s average stock price over the last 30 days and a 16% premium to a 52-week high.

The insurance sector has always been key to Berkshire Hathaway’s growth, and the Alleghany deal shows that Buffett believes going deeper into the industry will benefit his company. It’s the largest acquisition by Berkshire since 2016, when they purchased Precision Castparts Corp. in a $37.2 billion deal. Over the last 2 years, Berkshire has amassed an enormous stockpile of cash, and the Alleghany purchase cuts into only 7.9% of that cash, leaving Buffett plenty of leftover funds to make deals with. As he looks for ways to spend Berkshire’s nearly $150 billion in cash, Buffett has executed more and more buybacks, a strategy he dismissed for decades, the article contends.

The terms of the Alleghany deal include a period of 25 days where the insurer can “go-shop” around, soliciting other proposals for acquisition, though the transaction was unanimously approved by both Alleghany’s and Berkshire’s boards. After the announcement of the deal, Alleghany’s shares soared 26%, and Berkshire’s Class A shares gained 1%.

The two companies have a shared history of railroads and insurance, with Berkshire’s holdings in Geico, Gen Re and BNSF railroad, and Alleghany’s origins as a holding company for railroads in 1929, the article details. The company will still operate independently after the deal is finalized. Additionally, Alleghany’s CEO is Joseph Brandon, who previously was CEO of Gen Re, with Buffett saying in the announcement that he was “particularly delighted that I will once again work together with my longtime friend, Joe Brandon.”