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Aspen auditions bankers for ~$4bn H1 IPO in New York

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Apollo-owned specialty carrier Aspen held a beauty parade last week as it lines up banks to advise on an IPO in the first half of 2024, this publication can reveal.

Sources said Aspen met with a range of potential lead IPO banks, and is expected to appoint two or three this month.

It is understood that advisors were asked to pitch on a New York IPO, suggesting that a firm decision has now been taken to eschew London as a listing venue.

Sources said the roughly $2.7bn book value business is likely to target a valuation of 1.5x book or above – pointing to a valuation in excess of $4bn.

The timetable could flex depending on equity and insurance market conditions, but sources said the base case was for an IPO late in Q1, or early in Q2, based on audited full-year financials.

It is understood that Aspen held a non-deal roadshow to speak to investors during the summer.

The business is not running a full “dual track”, but with the firm gearing up for an IPO it has effectively given notice to any interested parties to make an approach.

However, given its size and breadth, and the need for an acquirer to offer substantial liquidity to Apollo, the universe of potential acquirers is relatively small and an IPO seems the likeliest outcome.

After a period of sustained underperformance, Bermudian (re)insurer Aspen was taken private by Apollo in 2019 in a $2.6bn deal, with former Brit CEO Mark Cloutier parachuted in as CEO.

The business has been subject to major turnaround work, with upwards of around $1bn of underperforming business dropped, the portfolio significantly repositioned, and a massive reserve cover bought from Enstar to close the book on 2019 and prior.

Aspen wrote about $4.3bn of business in 2022. The Bermuda-domiciled business has US admitted and E&S operations, a Bermuda reinsurer, a Lloyd’s business, a London company market platform and a third-party capital business.

The carrier’s results have shown significant improvement in recent quarters following the portfolio remediation, buoyed by a much-improved P&C market.

In the first six months of the year, Aspen reported a combined ratio of 83.8%, down from 88.2% in the prior-year period. This helped the carrier deliver a 22% annualised operating return on equity, as operating income jumped 47% to $191mn.

The business shrank its top line by 10% to $2.1bn in H1 into a rising rate environment, as it cuts its US property insurance and mortgage books in an effort to drive underwriting returns.

Aspen’s cat losses narrowed to $53mn from $93mn, despite around $50bn of industry losses in an active first half. (For background see: “Lower H1 cat losses reflect Aspen’s book reposition: CEO Cloutier”)

The sector’s recent track record on IPOs has been mixed, with Skyward Specialty landing its IPO and achieving significant subsequent multiple expansion, and Fidelis Insurance Group receiving a cooler reception.

By the time Aspen launches, total-return carrier Hamilton Insurance Group is also likely to have held its IPO, which is slated to happen in Q4 in New York.

Hamilton and Aspen are part of a long line of insurance-focused businesses weighing IPOs over the next 12-18 months if equity markets are supportive.

Aspen declined to comment.