Japanese Big Three member Sompo has struck a deal to acquire Bermudian carrier Aspen for $3.5bn, equivalent to 1.2x trailing fully diluted book value ex-AOCI, confirming earlier reporting from this publication.
Insurance Insider revealed last week that Sompo was in talks to acquire Aspen, only months after the Bermudian was listed on the New York Stock Exchange, with sources saying at the time that detailed talks were being held with a clear path to a deal.
The all-cash deal has been concluded at $37.50 per share, a 36% premium to the undisturbed share price of $27.66, and at a multiple of around 1.3x tangible book.
Sompo’s move for Aspen may signal that the carrier M&A cycle predicted by this publication is kicking off.
In their joint announcement, Sompo and Aspen said the transaction is expected to close in H1 2026.
Following this publication’s exclusive reporting last week, Aspen’s share price jumped by nearly 17%.
Aspen launched its IPO at the end of April this year. Having initially offered 11 million Class A ordinary shares, the carrier upsized its offer to 13.25 million shares and ultimately raised around $400mn.
Its ordinary equity was valued at $2.73bn, or a trailing multiple of around 1.1x book, with a $30 per share offer price.
Sompo’s acquisition comes amid widespread expectations of major buying activity by Japanese insurers, which have tens of billions of additional – or incoming – capital on their balance sheets, due to a regulatory edict to sell down crossholdings in other domestic companies.
The carrier, understood to have been looking hard for a deal for several months, had plans to offload a third of its $11.5bn in crossholdings by the end of next year.
This publication also revealed last week that Sompo, prior to its talks with Aspen, had been in advanced negotiations with Axa to acquire Axa XL Re.
As argued in this analysis, Sompo’s choice of Aspen will provide it with a broader-based (re)insurance vehicle, given that almost 60% of the Bermudian's total premium comprises primary insurance.
The acquisition also stands to boost the scale of the Sompo Re platform, provide the carrier with a Lloyd’s platform and increase third-party capital infrastructure.
That being said, Sompo will also have to meet the challenge of fitting complex hybrid businesses together.
Earlier this month, Insurance Insider US argued that Sompo, having already acquired Endurance, had chosen a “take two” deal, betting again on Bermuda.
Advisory fees for the deal amounted to $15mn. Morgan Stanley was the exclusive financial adviser to Sompo, whilst Goldman Sachs and Insurance Advisory Partners advised Aspen.
CEO of Sompo P&C James Shea 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.”
Aspen CEO Mark Cloutier added: “Sompo is a highly regarded brand, and, through this process, it has become clear 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.”
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