Aspen registers for IPO

Bermuda-based Aspen confirmed today that it will hold an initial public offering as 100% owner Apollo looks to capitalise on its 2019 purchase of the specialty re/insurer. 

Aspen indicated in its pre-IPO filing with the Securities and Exchange Commission that Apollo will continue to have a controlling interest in the company after the IPO.  

The registration statement suggests its current shareholder will be selling shares in conjunction with the IPO.  

Aspen, headed by chairman and CEO Mark Cloutier, did not detail the size of the offering in its registration statement, but indicated it planned to use funds raised for future financial flexibility to create a public market for our ordinary shares, enhance its capitalisation and facilitate its future access to the capital markets.

Moneys eventually garnered will be put to “general corporate purposes” which may include working capital, operating and capital expenditures, "as well as” helping re/insurance units “continue to take advantage of ongoing favourable market conditions".

Aspen is selling itself to investors on a story of a “comprehensive transformation of the business since our acquisition by Apollo in February 2019". 

It describes itself as a nimble machine capable of pivoting quick to capture market opportunity in primary specialty insurance and “opportunistic” reinsurance, all supported by fee generating capital markets capabilities. 

Aspen has exited 12 insurance and five reinsurance lines of business since the acquisition by Apollo in 2019, representing approximately $911 million of 2018 gross written premium. 

Likewise in insurance, Aspen claims to have “actively managed down” from 2023 growth plans in selected US management and professional liability lines of business as rates soured. 

Along the way, Aspen said it had taken “extensive action to reduce volatility” in its books. Aspen cut its property catastrophe 1-in-250 probable maximum loss by about 69% versus the start of 2018. Prior year developments were protected by an LPT deal with Enstar. 

By mid-year 2023, that showed the group still cutting revenue but improving underwriting profits.  

For the first six months of 2023, Aspen reduced gross written premiums by 9.6% to $2.13 billion “primarily due to management’s decision to optimise the portfolio and reduce exposure, offset by rate increases". 

But H1 underwriting income was up 33% to take  4.4 points off the combined ratio to 83.8%, including 4.1 points from cat losses versus 7 points in H1 2022. 

Annualised operating return on average equity was 22.2% for the six months ended June 30, 2023 compared with 14.0% in the six months ended June 30, 2022.

Net investment income rose to $129.4 million from $88.7 million in the first half of the year, while realised investment gains were $18 million compared to a loss of $126.4 milion in the first half of 2022.