TIDMBPM
RNS Number : 3774O
B.P. Marsh & Partners PLC
09 February 2021
9(th) February 2021
B.P. Marsh & Partners Plc
("B.P. Marsh", the "Company" or the "Group")
Trading Update
Chairman's Update
Introduction
B.P. Marsh, the niche venture capital provider to early-stage
financial services businesses, is pleased to provide the market
with an update on trading for the year ended 31 January 2021.
The portfolio of 18 investments has continued to show its
resilience despite the ongoing uncertainty caused by the global
pandemic.
Covid-19
As the effects of Covid-19 continue, the Group remains impressed
by the dedication and competence demonstrated by its own staff and
also the staff within its investment portfolio, in overcoming all
obstacles to operate throughout the crisis. All staff continue to
work from home but are looking forward to returning to the office
later in 2021.
The Group has worked with the Management Teams across the
portfolio to ensure stability throughout this time. Emphasis has
been placed on having adequate liquidity within each business and
on regular reforecasting, with various scenarios applied.
Net Asset Value
One of the Group's key financial objectives is the delivery of
long-term growth to its shareholders via the regular increase in
Net Asset Value. The Group's interim results to 31 July 2020 showed
an increase in Net Asset Value to GBP142.6m (31 July 2019:
GBP130.0m; 31 January 2020: GBP136.9m), producing a 4.8% return to
shareholders (including the payment of a dividend) in the six month
period. The Group remains positive regarding its ongoing
performance.
Cash Balance and Loan Facility
At 31 January 2021 the Group had GBP0.7m in cash, having drawn
down GBP1.0m from its GBP3.0m loan facility with Brian Marsh
Enterprises Ltd ("BME"), a company of which the Chairman, Mr. Brian
Marsh, is a director and sole shareholder. Currently, due to the
receipt of income post year-end, the Group has GBP1.3m in cash and
access to a further GBP2.0m from the loan facility with BME.
Underlying profit
Income for the year to 31 January 2021 was c.15% lower than the
preceding year, predominantly due to receiving lower dividend
income from the investment portfolio due to Covid-19, as the
portfolio companies maximised liquidity. However, due to cost
mitigation, the Group is expecting its underlying profit (excluding
portfolio revaluation) to be at, or above, the prior year's
GBP0.8m.
Share Buy-Backs
As has been stated previously, the Group has a strategy for
undertaking small market buy-backs of its shares at times when the
discount to Net Asset Value ("NAV"), based upon the most recently
announced NAV, is greater than 15%.
For the avoidance of doubt, notwithstanding that the discount to
NAV at which the Group's shares are currently trading is greater
than 15%, the Group repeats that it is currently restricted in its
ability to buy back shares since, given that Brian Marsh, together
with persons acting in concert with Brian Marsh for the purposes of
the City Code on Takeovers and Mergers (the "City Code"), has an
interest in approximately 41.85% of the Group's voting rights, any
such purchase of shares would result in an obligation for Brian
Marsh to make a general offer for the Group in accordance with Rule
9 of the City Code.
Publication of Full Year Results
The Group expects to report its full year results to 31 January
2021 on 8 June 2021.
Chief Investment Officer's Portfolio Update
As noted above, our portfolio has proved resilient to the
challenges of Covid-19 and the effect it has had on our sector,
being financial services generally, and insurance specifically.
Investing in a diverse portfolio across the insurance sector,
both in business lines and geographically, has been a key component
of this resilience.
Our underwriting agency ("MGA") investments, which account for
11 of our 18 current investments, provide insurance across nearly
30 specialist sectors, with not one product area accounting for
more than 20% of the GBP620m of Gross Written Premium produced by
these agencies over the course of the 2020 year. This was an
increase of circa GBP95m on the prior year. This demonstrates the
portfolio's ability to grow in a very challenging climate.
Generally speaking, our insurance investments continue to see
significant pricing increases within the sectors in which they
operate.
The impact of Covid-19 has not only intensified premium pricing
increases but also led to many insurers reducing their risk
appetite for new business and seeking to mitigate their existing
exposures, presenting opportunities for our portfolio companies to
fill the gaps this may create.
The Group expects this to continue into 2021 and beyond.
One area of insurance that has attracted recent attention and
legal dispute has been business interruption insurance. Our
portfolio overall has a very limited exposure to this area, and
therefore we have thus far been unaffected by the litigation and
the outcomes thereof.
In addition to the above, the Group as a rule does not have any
exposure to balance sheet risk via its investment portfolio, and is
therefore unaffected directly by insurance losses. That being said,
our MGA investments do in effect borrow the balance sheet of their
insurance partners to provide insurance coverage, as such they are
extremely conscious of the importance of protecting and growing
their partners' balance sheets.
The Insurance Market, with ongoing consolidation and corporate
activity, has continued to provide deal flow to the Group, both in
terms of new investments and potential realisations. Because of the
climate, we have taken a cautious approach but believe that we and
the portfolio are well positioned looking to 2021. Our appetite for
investment, from financing start-ups, to a maximum of GBP5m as an
initial investment amount, has served us well.
New Investments
In the financial year to 31 January 2021, we completed one new
investment in SAGE Program Underwriters, Inc , as set out
below.
SAGE Program Underwriters, Inc ("Sage")
Based in Bend, Oregon, Sage is an MGA which was established in
2019 by CEO Chuck Holdren, and which provides specialist insurance
products to niche industries, initially in the inland delivery and
field sport sectors .
Commenting on performance since our investment, Sage's CEO,
Chuck Holdren stated: -
"Sage has been fortunate to have good results in 2020 despite
the pandemic. The niche industries we specialise in continue to
have tremendous growth with no sign of easing. Our partnership with
B.P. Marsh has allowed us to start building our teams and focus on
our goals. We are excited for 2021 and the new programs, coverages
and team members that will help Sage have a positive impact on the
industries and partners we serve."
Portfolio Developments
Specific developments within the portfolio during the Period are
noted below:
UK Investments:
Nexus Underwriting Management Limited ("Nexus")
Nexus has continued to perform well in the year and in December
2020, it expanded its operations with the acquisition of the Hiscox
MGA Marine business ("Hiscox Marine") from Hiscox Ltd. Hiscox
Marine provides yacht and marine trades insurance and brings to
Nexus a market-leading team with considerable expertise in this
specialist class of business.
Since B.P. Marsh first invested in Nexus in August 2014, its
business has grown from a Gross Written Premium of GBP50m to a
projected figure of GBP310m in 2020. Consequently the equity
valuation of Nexus has increased from c.GBP30m to approximately
GBP233m, as at 31 July 2020, which represents a seven fold increase
in just over 6 years. We expect Nexus to continue to target this
level of growth going forward.
Commenting on market conditions and Nexus' Performance, its
Founder & Group Chief Executive Officer, Colin Thompson stated:
-
"Nexus is firmly in the midst of the hardening market, the likes
of which have not been felt for the last two decades. We expect the
market will continue to harden over the next couple of years at a
minimum, which when coupled with the returning economic activity
for product areas severely impacted in 2020, should spur strong
organic growth for Nexus in 2021.
With B.P. Marsh's investment, Nexus has built up a strong and
diversified capacity base, which is essential for an MGA in these
conditions. Furthermore, Nexus plans to continue adding to its
existing 18 acquisitions during 2021, whilst exploring a variety of
new strategic avenues in order to fully maximise the current market
opportunity."
The Fiducia MGA Company Limited ("Fiducia")
Fiducia, from its beginning in November 2016, will have written
Gross Written Premium approaching GBP18m in its financial year to
31 December 2020, a 32% year on year increase.
Fiducia has built a reputation as a specialist MGA and has, in a
short period of time, become a leader in its respective field, for
an ever-expanding distribution channel of brokers across the
UK.
To continue its expansion, over the year, Fiducia brought on a
number of new staff which has enhanced its underwriting
capabilities and it continues to seek out new opportunities for
growth. Moving into 2021, Fiducia is well positioned to build on
its 2020 success, taking advantage of decisions made by competitors
to reduce their participation in several classes of business, or
withdraw totally, from the classes written by Fiducia.
Commenting on market conditions and performance, Fiducia's CEO,
Gerry Sheehy stated: -
"With Fiducia's book of business weighted heavily towards
physical damage cover, we have been less affected than others by
Covid-19. 2020 was a year of growth for Fiducia, as we have built
on the foundations of the past four years. Fiducia is looking to
continue that growth into 2021 and has had a positive start to the
year."
Walsingham Motor Insurance Limited ("Walsingham")
In December 2013, B.P. Marsh invested in Walsingham, a London
based MGA specialising in insurance for public and private taxi
fleets and couriers in the UK.
Whilst Walsingham's business is impacted by Covid-19 and the
lockdown restrictions, it succeeded in hitting its pre-Covid-19
budget numbers for the year ended 30 September 2020.
Walsingham's portfolio is evenly divided between courier and
taxi business, with the taxi account similarly split between
private hire and public hire. Over 2020 the downturn in the taxi
market had been largely counteracted by the upturn in courier
business, showing the importance of a diverse portfolio.
Walsingham have employed a pragmatic approach to their clients,
permitting use of taxi fleets for other purposes (such as food
deliveries) and providing return premiums in certain cases where a
vehicle is not being utilised. This has allowed Walsingham to
retain existing clients and also attract new ones.
Walsingham's CEO, Garry Watson, commented : -
"Throughout this difficult time, Walsingham has continued to be
flexible with its client base, with the aim of supporting the taxi
market by keeping as many vehicles on the road as possible, but by
also ensuring that we renew policies even where the vehicle count
is massively reduced.
Post the current crisis we believe that there will be a
significant and rapid recovery of our taxi account with vehicles
attaching to existing policies that we have renewed. This,
alongside the strength in Walsingham's courier business, means we
enter 2021 with an optimistic outlook in the long term."
Lilley Plummer Risks Limited ("Lilley Plummer")
Lilley Plummer has performed well since the Group's investment
in October 2019, with the business exceeding its plan in its first
15-month financial period to 31 December 2020.
Since Lilley Plummer was established, the business has grown its
underlying marine portfolio, and has also expanded into new product
lines in new geographic locations. This has resulted in the
establishment of a new office in Nicosia, Cyprus, alongside the
development of several new product areas such as Terrorism, Energy
and Cargo.
In the light of the above, Lilley Plummer is expecting
substantial growth into 2021.
LEBC Holdings Limited ("LEBC")
As has previously been announced, LEBC has been through a period
of change following the voluntary decision to close its Retirement
Adviser division in September 2019.
Notwithstanding the above, the performance of LEBC's core
Independent Financial Advisory business has held up well in a
Covid-19 trading environment. Both LEBC's private and corporate
divisions continue to provide additional support to clients, with
the uptake in LEBC's centralised investment proposition growing
steadily.
The Group, therefore, anticipates that for LEBC's current
financial year to 30 September 2021, its business will return to
previous profitability levels, having focused its ongoing strategy
on developing and strengthening its core areas.
North American Investments:
USA - XPT Group LLC ("XPT")
Commenting on XPT's performance, Founding Partner, Thomas
Ruggieri stated: -
"XPT are now in their fourth full year of trading, having
acquired 8 businesses across the US, both MGAs and wholesalers, in
a number of different product areas.
XPT is well positioned to continue its growth trajectory and is
currently in discussions with a number of potential new
acquisitions, two of which would be transformational to the
business.
Taking into account all of these positive factors, 2021 looks
set to be a positive year for XPT".
Since B.P. Marsh's original investment in XPT, the enterprise
value we ascribe to it has grown from a start-up to a figure in
excess of US$86m. XPT are targeting to produce Gross Written
Premium approaching US$400m for the 2021 financial year. This level
of growth is expected to continue into 2021 and beyond.
XPT recently completed the acquisition of International Property
& Casualty Brokers of Nevada, Inc. ("IPC"), an MGA specialising
in excess and surplus lines insurance. Following this acquisition
XPT have recently launched Platinum Specialty Underwriters, an MGA
specialising in a number of niche product areas, including specific
programmes in trucking liability and a Bars and Taverns programme,
amongst others.
Canada - Stewart Specialty Risk Underwriting Ltd ("SSRU")
SSRU continues to outperform the Group's expectations since its
formation in 2017. From a standing start, SSRU has exceeded Gross
Written Premium of CA$34m in its financial year to 31 December
2020, exceeding its original 2020 budget.
With the Group's support, SSRU has developed into one of the
largest Specialty MGAs in Canada, which is testament to the
management team that established the business.
Commenting on market conditions and this performance, SSRU's
Founder and CEO, Stephen Stewart, stated: -
"SSRU since foundation has diversified its book away from the
Oil and Gas sector but we continue to see rate increases in the
sector. In the Construction sector, heavy government stimulus
around infrastructure build will drive growth in that portion of
the industry already targeted by both the Property and Casualty
departments at SSRU."
Australian investments:
Agri Services Company PTY Ltd ("Agri Services");
ATC Insurance Solutions PTY Ltd ("ATC");
MB Prestige Holdings PTY Ltd ("MB"); and
Sterling Insurance PTY Ltd ("Sterling")
The Group's four Australian investments continue to perform
well, being either in line with or above expectations.
Cumulatively, the Group's Australian investments produce
approximately AU$180m of Gross Written Premium across multiple
specialist lines of business. This has grown significantly over the
period of the Group's investments, and we expect to see this
continue into 2021.
When B.P. Marsh invested in ATC, the business reported Gross
Written Premium of AU$61m for the year ended 30 June 2018. Since
that time, GWP has grown by a compound annual rate of 34%. Over the
last 6 months, ATC has expanded its product offerings in the
Construction and Cyber sectors, with a number of strategic
hires.
MB continues to show strong growth with both Gross Written
Premium and underlying profitability being up 10% year on year.
Sterling, in which the Group has held an investment since 2013,
is performing in line with the Group's expectations. It is on track
to achieve its current budget to June 2021, which forecasts Gross
Written Premium growth of over 10%.
The Group's recent investment in start-up MGA, Agri Services,
has developed broadly in line with expectations and the Group see
2021 as presenting good opportunities for this business to further
establish itself as a pre-eminent agricultural MGA in
Australia.
New Business
No changes have been made to the Group's investment policy,
being to seek out investments in early to medium staged businesses
, operating in niche sectors, run by experienced and capable
Management Teams. The Group believes that such a strategy secures
scalable and high growth investments, with substantial shareholder
returns expected over time.
The Group has seen 49 potential new business opportunities in
the year, with one completing. Whilst this number is lower than
previous years, given Covid-19, our primary focus has been on
supporting our existing investment portfolio .
Moving into 2021, the Group has a strong pipeline of new
business opportunities to consider and is optimistic in being able
to add compelling new investments to the portfolio.
For further information:
B.P. Marsh & Partners Plc www.bpmarsh.co.uk
Brian Marsh OBE +44 (0)20 7233 3112
Nominated Adviser & Broker
Panmure Gordon
Atholl Tweedie / Charles Leigh-Pemberton
/ Ailsa MacMaster +44 (0)20 7886 2500
Financial PR & Investor Relations
Tavistock bpmarsh@tavistock.co.uk
Simon Hudson / Tim Pearson +44 (0)20 7920 3150
Notes to Editors:
B.P. Marsh's current portfolio contains eighteen companies. More
detailed descriptions of the portfolio can be found at
www.bpmarsh.co.uk .
Since formation over 25 years ago, the Company has assembled a
management team with considerable experience both in the financial
services sector and in managing private equity investments. Many of
the directors have worked with each other in previous roles, and
all have worked with each other for approaching ten years.
- Ends -
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
TSTDVLFBFLLLBBL
(END) Dow Jones Newswires
February 09, 2021 02:00 ET (07:00 GMT)
B.p. Marsh & Partners (LSE:BPM)
Historical Stock Chart
From Apr 2024 to May 2024
B.p. Marsh & Partners (LSE:BPM)
Historical Stock Chart
From May 2023 to May 2024