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Apollo’s all-cash bid for Aspen likely to see no competition

Apollo’s all-cash bid for Aspen likely to see no competition

Odds are that no competing bids will emerge in response to the proposed $2.6 billion acquisition of Aspen Insurance Holdings Ltd. by certain funds of Apollo Global Management L.L.C., according to an equity analyst who follows Hamilton, Bermuda-based Aspen.

The all-cash transaction was announced Tuesday morning by New York-based Apollo and Aspen, and has already been approved by Aspen’s board.

According to a statement announcing the acquisition, the deal is expected to close during the first half of next year, subject to regulatory and shareholder approval as well as what the statement called “the satisfaction of other closing conditions.” In the statement, Apollo described itself as a “leading global alternative investment manager” having assets under management of approximately $270 billion as of June 30 in private equity, credit and real assets funds.

“We are tremendously excited for the Apollo Funds to acquire Aspen,” said Alex Humphreys, partner at Apollo, in the statement. “We believe that Aspen benefits from strong underwriting talent, specialized expertise and longstanding client relationships which makes them well positioned in the market. We look forward to working with Aspen to build on the existing high-quality specialty insurance and reinsurance business, and we aim to leverage Apollo’s resources and deep expertise in financial services to support the Company as it embarks on its next chapter.”

“This transaction is a testament to the strength of Aspen’s franchise, the quality of our business and the talent and expertise of our people,” said Aspen CEO Chris O’Kane, in the statement. “Under the ownership of the Apollo Funds, Aspen will have additional scale and access to Apollo’s investment and strategic guidance, which will help us to accelerate our strategy and take Aspen to the next level.”

Aspen announced earlier this month that it posted a $14.7 million after-tax loss in the second quarter of this year, compared with net income of $75.8 million during the same quarter a year earlier. A few days later, Starr Insurance Holdings Inc. announced that had agreed to acquire the renewal rights of Aspen’s aviation business for an undisclosed amount. 

In February, Aspen Insurance Holdings Ltd. said it closed its Bermuda-based U.S. property insurance unit as a result of catastrophe loss activity during 2017. At the time, a company spokeswoman said Aspen has been looking to reduce volatility in its global insurance business, which she said Mr. O’Kane discussed during the company’s 2017 fourth-quarter earnings call on Feb. 7. Aspen reported a net loss of $184.9 million for the quarter. 

“Ultimately, Aspen blinked first and the fast-approaching peak hurricane season coupled with investor skepticism on its stand-alone future likely forced AHL’s hand,” said Amit Kumar, director-equity research at New York-based Buckingham Research Group, in an investment update issued Tuesday. “Because of the long-drawn-out process, we anticipate a lower likelihood of a competing bidder emerging at this late stage.”

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