The acquisition of Bermuda headquartered insurance and reinsurance group Aspen Insurance Holdings by funds under the management of private equity and alternative investment specialist Apollo Global Management, LLC, has now been completed.
The $2.6 billion acquisition has been in the works since last August, and provides yet another sign of the attraction large asset managers have to insurance and reinsurance-linked returns and the resulting long-term capital that the business can generate for them.
It also signals a major investor who spotted a franchise in the re/insurance space that it felt it could develop and generate a profit from, given Apollo’s expertise at turning investments into profitable exits further down the line.
In acquiring Aspen, Apollo also now has ownership of an established and growing insurance-linked securities (ILS) and collateralized reinsurance platform, in Aspen Capital Markets, Aspen Capital Advisors and the teams managing its Peregrine Re collateralized reinsurance and segregated accounts vehicle.
In closing the deal, certain Apollo funds have acquired all of Aspen’s outstanding ordinary shares for $42.75 per share in cash, a total cost of approximately $2.6 billion.
With the conclusion of the acquisition there are also changes at the top for Aspen, with current CEO Chris O’Kane stepping down and ex-Brit Executive Chairman Mark Cloutier taking on the role of Chairman and Chief Executive Officer (CEO) of Aspen Insurance Holdings.
In addition, Glyn Jones has stepped down from his position as Chairman of Aspen’s Board, while Albert Beer, Matthew Botein, Gary Gregg, Heidi Hutter, Karl Mayr, Bret Pearlman and Ron Pressman have also ceased their roles as directors on the Aspen Board as well.
John Cavoores and Gordon Ireland stay on as Directors and will be joined by Josh Black, Alex Humphreys, Gernot Lohr, Gary Parr and Michael Saffer, who have all been appointed to the Aspen Board.
Alex Humphreys, Partner at Apollo, commented on the completion of the deal, “We are excited for our funds to be acquiring Aspen as it embarks on the next chapter of its development. We are delighted to be working with Mark again following our successful investment together in Brit Insurance. Mark has a long and successful track-record in the insurance sector and we believe he is ideally placed to lead Aspen through a period of transition to substantially improved profitability. We look forward to working with him and Aspen’s talented management team to drive value creation over the coming years.”
Chris O’Kane added, “Seventeen years ago, with 38 colleagues, $600 million of assets and a vision, we formed Aspen. As a result of hard work, determination and an unwavering dedication to our clients, Aspen is now a force in the reinsurance and insurance markets with over $12 billion of assets and around 1,150 employees. I am extremely proud of our accomplishments and I cherish the relationships and friendships, both within Aspen and in the broader market, which we formed along the way. I would like to thank all my colleagues at Aspen as well as our clients and brokers for all their considerable support over the years and it delights me to see Aspen poised to go from strength to strength under the new leadership of Mark Cloutier. I wish Mark and Aspen every success for the future.”
Mark Cloutier, the new Aspen CEO, also said, “I am honored to be appointed as the next CEO of Aspen. I truly believe that the company benefits from strong underwriting talent and specialized expertise, which makes it ideally positioned to deliver innovative solutions to the increasingly complex risks faced by its customers. I am very excited about what Aspen can achieve in the coming years. I would like to thank Chris for his key role and support over the last few months and for making the transition from public to private so seamless. He has built an impressive franchise over the past 17 years and we wish him well in his future endeavors.”
Aspen has been growing its third-party capital activities in recent quarters, not least its direct transactions with major ILS fund manager Stone Ridge Asset Management.
It will be interesting to see how third-party reinsurance capital fits into the strategy under Apollo fund ownership and whether the cessions of risk to other capital market investors continue or even grow, or whether Apollo prefers to find other ways to extract and retain as much of the risk premium as possible out of the risks underwritten by Aspen.