Private Equity Firm Apollo to Buy Aspen Insurance for $2.6 Billion

August 28, 2018 by

Apollo Global Management LLC, the investment firm led by Leon Black, agreed to acquire Aspen Insurance Holdings Ltd. for $2.6 billion, in the latest example of private equity investors expanding their insurance assets.

Apollo will pay $42.75 a share in cash for the Hamilton, Bermuda-based insurer, 6.6 percent higher than Monday’s closing price, according to a statement Tuesday. The acquisition is expected to be completed in the first half of next year.

The private-equity firm joins rivals such as Carlyle Group LP and Blackstone Group LP in building insurance assets to gain access to premium income, betting that they can generate higher returns. Apollo is pushing its annuity seller, Athene Holding Ltd., into Europe while increasing its stake in reinsurer Catalina Holdings Bermuda Ltd.

“Aspen benefits from strong underwriting talent, specialized expertise and longstanding client relationships which makes them well positioned in the market,” Alex Humphreys, a partner at Apollo, said in the statement.

Aspen has $12.9 billion of total assets. Apollo managed about $270 billion as of June 30 across private equity, credit and real assets funds. The private equity firm gained 0.5 percent to $34.88 at 9:50 a.m. in New York. Aspen advanced 2.2 percent to $41.

“We think this valuation reflects the limited appeal of Bermuda turnarounds, and could foster more M&A by reducing sellers’ expectations,” Meyer Shields, an analyst at Keefe, Bruyette & Woods Inc., said about the deal in a note to clients Tuesday.

In other recent insurance deals, Cinven Ltd. is in exclusive talks to acquire a retirement-products unit of AXA SA.

Earlier this month, Bain Capital Private Equity LP agreed to buy Esure Group Plc for about 1.17 billion pounds ($1.5 billion).

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