Japanese insurer Sompo Holdings has agreed to sell its Lloyd’s business Sompo Canopius to a private equity consortium led by Centerbridge Partners, in a $952mn deal.
On completion of the transaction, Canopius will become a standalone business led by incumbent executive chairman Michael Watson and chief underwriting officer Mike Duffy.
The consortium of investors includes private investment firm Gallatin Point Capital LLC.
Centerbridge, which has around $29bn of assets under management, was founded in 2005 by Jeffrey Aronson and Mark Gallogly.
Explaining the rationale behind Sompo’s decision, the company’s president and group CEO Kengo Sakurada said: "Following the announcement of the acquisition of Endurance Speciality Holdings in October 2016, we carefully reviewed the potential for Sompo Canopius to be integrated into the new global, commercial business platform, Sompo International.
“However, it became increasingly clear that the culture and business mix of the two companies were very distinct and that the combination would not necessarily be advantageous to either party.”
Sakurada added that the funds from the sale will also enable Sompo to pursue its “strategic objectives through Sompo International, whilst also providing Canopius with a secure and clear strategic future”.
Sompo first acquired Canopius in 2014 for £594mn and has been one of the main drivers for the Japanese insurer’s Europe and US business and has made a steady financial contribution since.
Commenting on the news, Watson said the deal provided the management team with a "golden opportunity to create a world class specialty (re)insurance franchise".
“We are grateful to Sompo for their support for our business over the past three years and recognise their generosity in allowing us to chart this new course.”
“Our close business and personal connections with Sompo have existed for many years and we hope to maintain a strong business relationship with them in future.”
Meanwhile, Duffy added: “We will continue to focus on those classes where we add value to our clients and brokers and seek profitable diversification through the recruitment of new teams and entry into new classes.”
"I believe we represent a very attractive home for industry leading talent who will thrive in an environment where performance and accountability is rewarded and an independent mind-set is valued," he concluded.
The transaction is expected to close in the first quarter of 2018, subject to regulatory approvals.