It is one of the biggest buys ever made by the Japanese insurance firm.

Michael Watson, chairman and CEO of Canopius, said: “We have a long-standing business relationship with the NKSJ Group and are very proud to become the specialist insurance platform of one of the largest insurance groups in Japan.

“Canopius will continue to pursue its existing strategy of profitable growth.

“We will benefit from access to the group’s financial strength and will seek to expand our presence in mature speciality markets, including the US and extending our reach in emerging markets, especially Asia and South America.

“Our businesses are highly complementary and we look forward to working with our new colleagues.”

Canopius Bermuda CEO Stephen Hartwig was unavailable for comment yesterday.

The deal was struck after Tower Group, based in Bermuda, sold its 10.7 percent stake in Canopius to Bregal last week for $69.7 million.

The proceeds were used to repay $70 million that was outstanding on a credit facility led by Bank of America Corporation.

Sompo will pay $594 million for Canopius, based on the firm’s unaudited tangible net value at the end of June, which will be adjusted to reflect its value at the end of the year.

The deal — which Sompo will pay for from existing funds — is subject to regulatory approval, but is anticipated it will be closed by the second quarter of next year.

Kengo Sakurada, president and representative director of NKSJ, said: “We are delighted to be welcoming Canopius into the NKSJ family of companies.

“As one of the top ten insurers in the Lloyd’s insurance market, Canopius’ significant underwriting capabilities and track record in executing strategic mergers has helped achieve rapid growth in the last five years.

“This acquisition, one of the largest we have undertaken, forms part of our long-term strategy to grow our overseas insurance business.”

And he added that — under the leadership of Mr Watson — Canopius brought “a highly experienced and talented management team to the NKSJ Group and we look forward to working with them”.

Bermuda-based Tower sold its Canopius holdings just before it announced it was to cut ten percent of its workforce to recover from losses and fell in New York trading after it said might need to add more than $100 million to its reserves.

The firm dropped 13 percent to $3.41 yesterday morning, which followed a 75 percent fall this year, as Tower announced it would delay reporting financial results so it could assess reserve shortfalls.

Tower has already said that it will need to add between $75 million and $105 million to reserves in the third quarter for losses tied to workers’ compensation, commercial liability and commercial auto policies.

The firm in October said it had to increase reserves by about $365 million, after a review of how much it set aside to cover losses from 2009 to 2011.

Tower said in October that it had hired JPMorgan Chase & Co to evaluate a “range of strategic options” — Wall Street shorthand for deals that could include a capital injection, the divestiture of assets, or the sale of an entire company.

Last month, the insurer said it was cutting about 140 jobs to save $21 million a year.

Tower president and CEO Michael Lee said: “While we are disappointed in the additional reserve strengthening, we believe our statutory capital remains sufficient to meet all of our financial obligations.

“Furthermore, we continue to work diligently and believe we are making progress in addressing the issues that have recently affected the company.”