Sompo’s $3.5bn Aspen takeover driven by regulatory push
Sompo’s $3.5 billion move for Aspen, coming swiftly after the reinsurer’s IPO, reflects Japanese regulatory-driven demand rather than Aspen’s performance.
That’s according to S&P Global, which notes the sale highlights Japanese insurers’ appetite for overseas expansion due to changes in solvency regulations in that country.
Last month, the Japanese insurance giant clinched a $3.5 billion deal to acquire Bermuda-based specialty reinsurer Aspen, set to close in the first half of 2026.
As to why Sompo targeted Aspen, the Japanese insurance group has a relatively strong appetite for strategic investments and has been looking for M&A opportunities, according to a research note from Japan Credit Rating Agency.
“The Sompo Group has been operating the overseas insurance/reinsurance business by positioning Sompo International as its global platform,” Japan Credit Rating Agency wrote.
Sompo’s proposed acquisition of Aspen comes amid a trend of Japanese insurers expanding into the US market, said S&P.
The deal came less than six months after Aspen launched its IPO at the end of April, raising $397.5 million for the company.
Selling Aspen so soon after its IPO may appear unusual, but it is likely motivated more by Sompo's interest than Aspen's performance, Piper Sandler analyst Paul Newsome said.
“It doesn’t make a lot of sense to go through all the steps and the IPO process if the seller already has a private buyer in mind,” Newsome added. “Basically, the buyer was likely not around during the IPO process and recently showed up and decided they wanted to spend the money.”
Japanese non-life insurers are intent on expanding business overseas, given that they have been ordered to sell off local equity holdings by the Japanese regulator, leaving them awash with cash.
“This is because they feel there is little growth potential in the domestic insurance business amid Japan’s declining birthrate and ageing society,” S&P Global analysts wrote back in June.
And Sompo is not done yet. Sompo Holdings CEO Mikio Okumura told analysts on an August 28 investor call that when it comes to acquisitions, it has “a long list ... a very strong appetite”.
Newsome described current owner Apollo Global Management’s decision to sell to Sompo as a choice between immediate and potential gains, saying that Apollo may have been more interested in selling Aspen than investing time in the company and waiting for it to perform well.
“Apollo would have had to wait, and Aspen would have to deliver results over time, similar to how Palm or Skyward or some of these other companies that were private equity-owned and fixed up and then went public,” Newsome said. “It took time to get the value up, but the multiples were ultimately much higher.”
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