(Aug 28): Apollo Global Management LLC, the investment firm led by Leon Black, agreed to acquire Aspen Insurance Holdings Ltd for US$2.6 billion, in the latest example of private equity investors expanding their insurance assets.
Apollo will pay US$42.75 a share in cash for the Hamilton, Bermuda-based insurer, 6.6% 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 US$12.9 billion of total assets. Apollo managed about US$270 billion as of June 30 across private equity, credit and real assets funds. The private equity firm gained 0.5% to US$34.88 at 9:50 a.m. in New York. Aspen advanced 2.2% to US$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 (US$1.5 billion).