Tokyo-based Sompo will acquire specialty insurer and reinsurer Aspen for $US3.5 billion ($5.4 billion), adding diversification and global scale.

The two boards have approved the deal, which is expected to close in the first half of next year, subject to regulatory approvals.

Sompo has been expanding in property and casualty outside Japan and says Aspen has expertise in lines such as cyber, credit and political risk, inland marine, UK property and construction, and US management liability, with long-standing broker relationships.

“Strategic acquisitions have been a key part of our growth plan to build a robust and diversified global P&C platform, and Aspen represents an excellent opportunity at the right time in the market cycle,” Sompo P&C CEO James Shea said.

Aspen reported gross written premium of $US4.6 billion ($7.1 billion) last calendar year, a combined operating ratio of 87.9% and an operating return on average equity of 19.4%.

It has operating subsidiaries in Bermuda, the US and the UK, plus branches in Canada, Singapore and Switzerland.

Sompo’s $US37.50 ($57.77) per share offer represents a 35.6% premium to Aspen’s price of $US27.66 ($42.61) on August 19, before speculation about the transaction.

“This transaction represents an excellent outcome for Aspen and our shareholders, while Sompo’s scale and capital strength will create significant opportunities for our customers, trading partners and colleagues,” Aspen executive chairman and group CEO Mark Cloutier said.

Aspen closed its Sydney office in April 2023 but said it would continue to participate in Australian business, writing property via its Bermuda platform and casualty through London. The Sydney office was mainly writing reinsurance cover.

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