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Two big reinsurers in Bermuda could be getting ready to tie the knot. Aspen Insurance Holdings (AHL) is said to be close to buying Ariel, which would be a multi-billion dollar merger.
According to Reinsurance magazine, the companies are "close to signing a merger agreement." None of the financial details have been disclosed yet, but the result would create the largest combined Bermuda and Lloyd's reinsurance operation on the island.
Aspen's stock has been on fire this year, picking up a gain of 80% over the past 52 weeks. This strong valuation obviously gives the company some options when it comes to making acquisitions. Meanwhile, this isn't Ariel's first dance. Aspen is the third company to take a look at it this year. All three have made it through due diligence, but none, so far, has completed a transaction.
The insurance and reinsurance industries are likely to see a pickup in consolidation in the coming 24 months, mostly because of competitive pressures. Look for an increase in deal flow in this corner of the financial services industry, with the stronger players looking to round out their portfolios, buy top line growth and generally thin the herd.
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