Sompo Holdings, Inc.has announced that it will acquire insurance and reinsurance group Aspen Insurance Holdings in a deal valued at $3.5 billion, while it cites access to alternative capital through the Aspen Capital Markets unit as a key benefit and a “highly differentiated product offering.”A wholly owned subsidiary of Sompo International Holdings Ltd.has entered into a definitive merger agreement to acquire 100% of the issued Class A ordinary shares of Aspen Insurance Holdings Limited for $37.50 per share in cash, representing the deal value of approximately $3.5 billion.Aspen brings to Sompo a leading specialty insurance and reinsurance franchise, adding to its own, with over $4.6 billion in annual gross written premiums.

Mikio Okumura, Sompo Group CEO, commented on the news, “In pursuit of realizing Sompo’s Purpose, we have been striving to enhance further resilience and to promote ‘Connect and Be Connected.’ To accelerate capital circulation management and collaboration across the Sompo Group, we established Sompo P&C and appointed James Shea as its CEO.This transaction is an excellent example of those initiatives in action.“I would like to express my sincere appreciation for the successful realization of this transaction, made possible through the full utilization of the diverse capabilities and market intelligence of the SIH executive team, Jim’s leadership, and the close collaboration with Sompo Holdings.” James Shea, CEO of Sompo P&C, added, “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 organizations together, recognizing 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, further said, “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 notes that the acquisition of Aspen will enhance its global scale and diversification.The large Japanese P&C groups have become increasingly global in their ambitions over the years, with Sompo having acquired Bermudian firm Endurance in the past and this now signalling a further extension of its global specialty insurance and reinsurance ambitions.Notably, for our audience, Sompo highlights the inclusion of the third-party, ILS and alternative reinsurance capital management unit Aspen Capital Markets within this acquisition as one of the key benefits for the company.

“This platform is expected to significantly enhance Sompo’s approach to capital optimization, providing greater flexibility to manage its risk exposure and reduce earnings volatility,” the company said.Sompo further explained that, “Aspen provides meaningful exposure to the alternative reinsurance market through its Aspen Capital Markets (“ACM”) platform.“ACM sources capital from third-party investors who Aspen earns underwriting, management and performance fees from primarily through the placement and management of collateralized quota share sidecar vehicles.

ACM brings a highly differentiated product offering, with more than $2 billion in assets under management and 80% of fee income in 2024 generated from non-catastrophe, long-tail lines of business.” As we reported recently, .It’s notable that Aspen Capital Markets has been an early proponent of casualty ILS, enabling investors to access returns from longer-tailed lines of insurance and reinsurance business.In fact, Aspen Capital Markets generated .

It’s worth noting that, when .The Blue Capital unit was wound down a few years ago now, so with this acquisition of Aspen, Sompo gets back into ILS management activities but with a much more differentiated and largely non-cat focus..All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance can be accessed online.

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