TIDMBPM
B.P. Marsh & Partners PLC
23 March 2021
Date: 23(rd) March 2021
On behalf of: B.P. Marsh & Partners Plc ("B.P. Marsh", "the
Company" or "the Group")
B.P. Marsh & Partners Plc
Investee Company Update - Stewart Specialty Risk Underwriting
Ltd
B.P. Marsh & Partners Plc (AIM: BPM), the specialist
investor in early-stage financial services businesses, is pleased
to present an update on its investment, Stewart Specialty Risk
Underwriting Ltd ("SSRU"), an independent underwriting agency and
coverholder at Lloyd's, headquartered in Toronto, Canada.
SIGNIFICANT GROWTH OF SSRU SINCE LAUNCH
Established in 2016, by its President and CEO Stephen Stewart,
SSRU set out to provide services to the Canadian commercial
casualty market in the Natural Resources, Manufacturing and
Construction sectors. It has since expanded into providing a
variety of niche property products tailored to businesses operating
in the same space as its Casualty offering.
B.P. Marsh invested in SSRU in January 2017, taking a 30% equity
stake for a nominal value of GBP17 (CA$30). Additionally, B.P.
Marsh provided SSRU with a loan of GBP275,000 (c. CA$450,000), used
for working capital requirements.
At its most recent valuation on 31 July 2020, B.P. Marsh valued
its 30% shareholding in SSRU at GBP3.5m (CA$6.2m), a significant
increase over the three and a half year period since
investment.
Since B.P. Marsh invested in SSRU, from a standing start Gross
Written Premium has grown to GBP19m (CA$33m), in its latest
financial year to 31 December 2020. SSRU is budgeting to write c.
GBP31m (CA$55m) of Gross Written Premium in the year to 31 December
2021. EBITDA increased to GBP2.2m (CA$3.7m), in the financial year
to 31 December 2020, with this growth expected to continue into its
current financial year.
BACKGROUND ON SSRU AND B.P. MARSH'S INVESTMENT
Stephen Stewart was introduced to B. P. Marsh via an industry
contact, as he was looking for a long-term investment partner with
a proven track record in the insurance market, in particular with
the ability to support start-up situations.
B.P. Marsh's experience in the insurance sector and its prior
successful investments in start-ups appealed to Stephen Stewart, in
particular the Company's appetite for a minority investment,
allowing management to retain majority control of the business.
SSRU's EXPANSION
SSRU's business plan was to be the 'one stop shop' for insurance
services to the Canadian commercial casualty market, focusing on
severity driven business within the Natural Resources,
Manufacturing and Construction sectors. SSRU has achieved this and
has established itself as a key player in this sector in the four
and a half years since its launch.
Capacity was secured via a bespoke reinsurance treaty with a
panel consisting of A+ rated, Canadian domiciled reinsurers,
fronted by Fairfax's Northbridge Financial Corporation (A.M. Best
rated A - Excellent). SSRU also had support from Markel Canada
Limited, part of Markel International Insurance Company (A.M. Best
rated A- Excellent).
SSRU offered an innovative source of stable, domestic, A-rated
lead capacity. This facilitated significant organic growth of
SSRU's commercial casualty book in a short period of time.
In 2019, SSRU secured a new MGA authority agreement with
Northbridge (again supported by a reinsurance treaty panel),
expanding their offering to provide a variety of complex property
products tailored to businesses operating in the same space as its
casualty offering.
In order to support this newly established property division
with the required expertise, SSRU hired a specialist property
underwriter, with a strong background in Mining, Power Generation
and the Oil & Gas sectors. SSRU is expanding into the Complex
Property and Construction sectors with the pending hire of two more
specialists.
Not only has SSRU achieved the initial goals set out in its
business plan, but it has emerged as an innovative and robust
business, with efficient IT systems and a competent operating
structure.
This competitive advantage has been combined with SSRU's
excellent trading relationships and a continuing hardening market,
which has resulted in substantial growth since formation.
COMMENTARY
Stephen Stewart said:-
"Since B.P. Marsh provided start-up capital to SSRU, the
business has seen considerable growth, both in Gross Written
Premium and underlying profitability, outperforming its business
plan.
From the outset, B.P. Marsh understood and encouraged SSRU's
business model and culture, which has been central to our success
since formation.
When establishing SSRU, I wished to build a 'one stop shop' for
clients operating in a number of niche sectors across Canada. The
continued expansion of SSRU's product offering, alongside its
"anywhere/any time" working structure and robust IT systems have
seen SSRU being able to fulfil this wish in providing impeccable
service to its clients.
I look forward to B.P. Marsh's continued support over the years
to come, as SSRU continues on its growth trajectory, continuing to
produce substantial returns for all its stakeholders."
B.P. Marsh's Chief Investment Officer, Dan Topping, stated:-
"SSRU has performed brilliantly since our investment in January
2017. This investment demonstrates our ability to provide
structured funding on a "no-size too small" basis to insurance
businesses from the start-up phase into becoming successful medium
sized businesses with substantial future growth prospects.
"This approach allows us access to investments that would not
normally be available to a typical mid-market private equity fund,
in particular where the equity investment was just GBP17. In taking
this flexible approach, B.P. Marsh is able to share the benefits
with its partners as the business outperforms its plan, as has been
the case with SSRU.
"2021 looks to be an exciting year for SSRU, with continued
strong growth which we are pleased to support."
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 30 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 -
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