Aspen Insurance shareholders have voted to accept the $2.6bn takeover by alternative investment heavyweight Apollo Global Management clearing the way for the acquisition to complete next year subject to regulatory approval, according to sources.
Shareholders will receive $42.75 per share from Apollo’s wholly owned subsidiary Highland Holdings Ltd, which valued the firm at around 1.1x NTA.
It has already been announced that Aspen’s long-serving CEO Chris O’Kane will step down to be succeeded by Mark Cloutier, the executive chairman of Brit Insurance.
Apollo worked closely with Cloutier at Brit Insurance which the alternative investment firm, in partnership with CVC, took private in 2011 for £888mn before subsequently re-listing on the London Stock Exchange as a streamlined Lloyd’s insurer.
Ahead of the $2.6bn deal’s closure, Aspen is already evolving to be more in tune with Apollo’s guidelines.
One area is reinsurance buying following Aspen’s decision to purchase significantly more reinsurance in 2018 to prevent a repeat of its heavy 2017 losses.
According to sources, Aspen has instructed its reinsurance brokers that it wishes to buy less QS cover and more peak risk XoL in 2019.
The firm increased its ceded premiums to reinsurers by 53 percent from $976mn to $1.49bn over the past year to absorb volatility in its insurance and reinsurance books but it also came at the expense of the firm’s bottom line in H1 2018.
Aspen has a ceiling of $350mn for net cat losses resulting from cat events occurring before 31 Jan 2019 before giving Apollo the ability to walk away ahead of closing.
So far, Aspen has disclosed $96.4mn of cat losses from 3Q losses ($56.4mn – principally Hurricane Florence; Typhoon Jebi) and Hurricane Michael ($40mn).
Aspen did endure a heavy 2017 Californian wildfire bill of $135mn in 2017 but it is expected to be significantly smaller this year because of the additional reinsurance bought.
Aspen – since 2017 – has been undertaking a streamlining exercise which accelerated this year with the cutting back of unprofitable lines at Lloyd’s.
Aspen declined to comment.