Sompo takes next big step with $3.5bn Aspen deal

Japanese insurance group Sompo has announced the latest big move in its effort to globalise and diversify, with the $3.5bn (€3bn) acquisition of Bermuda-based specialty insurance and reinsurance group Aspen. Sompo International Holdings has entered into a definitive merger agreement through which it will acquire 100% of the issued Class A ordinary shares of Aspen Insurance Holdings Limited for $37.50 per share in cash. This represents an aggregate consideration of approximately $3.5bn. Aspen, originally a Lloyd’s managing agent that managed Syndicate 4711, brings a leading specialty insurance and reinsurance franchise with more than $4.6bn in annual gross written premiums centred around specialty product lines and bespoke solutions. The Aspen business also includes wholly owned operating subsidiaries in Bermuda and the US, as well as its branch operations in Canada, Singapore and Switzerland. James Shea, CEO of Sompo P&C, said: “Strategic acquisitions have been a key part of our growth plan to build a robust and diversified global P&C platform, and Aspen represents an excellent opportunity at the right time in the market cycle. We look forward to welcoming the team from Aspen as we bring our organisations together, recognising that the property/casualty market continues to value platforms that can underwrite and manage capital and risk at scale – and with exceptional skill.” Mark Cloutier, Aspen Group executive chairman and group CEO, added: “Sompo is a highly regarded brand and through this process it has become clear that they represent a long-term owner for Aspen that respects our business and shares our values and ethos. This transaction represents an excellent outcome for Aspen and our shareholders, while Sompo’s scale and capital strength will create significant opportunities for our customers, trading partners and colleagues. The significant 35.6% premium to our unaffected share price reflects the quality Sompo sees in our team, the depth of the group’s distribution relationships and the strength of the franchise that we have built across insurance, reinsurance and Aspen Capital Markets. We look forward to sharing more details as we work towards completion, while maintaining our focus on continuing to deliver great service and products for our customers.” Sompo has spent the past several years expanding its P&C business geographically outside the domestic Japanese market to better navigate a dynamic market landscape. The big move was the $6.3bn acquisition of Bermuda-based Endurance Specialty Holdings in early 2017. The addition of Aspen brings underwriting expertise across further specialty lines – such as cyber, credit and political risk, inland marine, UK property and construction and US management liability. Aspen also operates in a variety of global reinsurance lines, while its Lloyd’s syndicate provides access to complex risks and reinsurance licensing across markets in the Americas, the UK, Europe and Asia Pacific. Sompo intends to integrate Aspen with its overseas insurance business to pursue further expansion opportunities together across developed markets. Aspen Capital Markets (ACM) sources capital from third-party investors that earns Aspen underwriting, management and performance fees primarily through the placement and management of collateralised quota share sidecar vehicles. Sompo said that ACM brings a "highly differentiated" product offering, with more than $2bn in assets under management and 80% of fee income in 2024, generated from non-catastrophe, long-tail lines of business. “This platform is expected to significantly enhance Sompo’s approach to capital optimisation, providing greater flexibility to manage its risk exposure and reduce earnings volatility,” said Sompo. Sompo said that it is executing a strategic plan focused on achieving adjusted consolidated ROE of 13-15% and adjusted EPS growth of above 12% in 2026. “Aspen has taken significant action over the past few years to streamline its portfolio, reduce volatility and drive financial performance. Further Aspen has enhanced the resilience of its balance sheet through a loss portfolio transfer and adverse development cover for the 2019 and prior accident years,” said Sompo. “As a result of these steps, Aspen is expected to be immediately accretive to ROE and make a significant contribution to the Sompo Group. For the twelve months ended 31 December 2024, Aspen delivered a combined ratio of 87.9% and operating return on average equity of 19.4%. Sompo has identified significant cost and capital synergies as a result of this transaction,” added the group.

Sompo takes next big step with $3.5bn Aspen deal

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