One of the largest property and casualty insurers in Japan has agreed to buy Bermudian-based speciality insurer Aspen.

Sompo, headquartered in Tokyo, will pay $3.5 billion for the company headed by Mark Cloutier.

This will add $4.6 billion in gross written premium to Sompo’s balance sheets.

James Shea, chief executive officer of Sompo Property & Casualty said strategic acquisitions have been a key part of their plan to build a robust and diversified global P&C platform.

“Aspen represents an excellent opportunity at the right time in the market cycle,” he said.

Aspen shares have been on the rise since rumours began circulating about the acquisition, finishing at $37.21 yesterday.

In June, the firm’s net income for the three months ending March 31 fell sharply from $111.8 million for the same period last year to $36.8 million. Earnings per share slid to $0.22 from $1.08.

The decline came as the company’s combined ratio, a key measure of underwriting profitability, worsened to 96.1 per cent, up from 86.6 per cent a year earlier. In its reinsurance segment, the combined ratio rose above the break-even point to 101.4 per cent, reflecting deteriorating underwriting results amid natural disasters and inflation.

Private-equity firm Apollo Global bought Aspen in 2019, and have maintained a majority stake in the company.

Sompo’s purchase price is 36 per cent above its unaffected stock price, Wells Fargo analysts said in a note Wednesday.

“We think it does screen as a good deal at 1.3x current book and allows Apollo (who owns 82 per cent of shares) to monetise the business much quicker and provides Aspen with a strong long-term partner in the process,” the note said.

The deal will be completed in the first half of next year.

Aspen’s business is about 62 per cent insurance and 38 per cent reinsurance.

Sompo has not yet revealed information on Aspen’s future structure or management.

In fiscal 2025 the Japanese company reported $34.5 billion in insurance revenue and a profit of $1.66 billion.

It acquired another Bermudian-based company, Endurance Specialty for $6.3 billion eight years ago. They also recently purchased Diversified Crop Insurance Services in 2020, in an effort to diversify their business.