by B.P. Marsh | Apr 23, 2020 | Portfolio News
B.P. Marsh & Partners Plc is pleased to announce that investee company XPT Group LLC (“XPT”), the U.S. based specialty lines insurance distribution company, has successfully completed an acquisition.
XPT has acquired 100% of LP Risk, Inc (“LP Risk”) , the Houston, Texas, headquartered Managing General Agency (“MGA”) and surplus lines Broker, (the “Transaction”). LP Risk also has offices in Dallas and San Antonio (Texas). Founded in 1991 as MD Jensvold & Company, LP Risk was acquired in 2013 by Mr Landon Parnell and rebranded to LP Risk in January 2018.
XPT will be utilising its previously announced debt
facility with Madison Capital Funding LLC to acquire LP Risk. As part of
the Transaction, Landon Parnell will become a shareholder of XPT, with an
approximate 6% shareholding, forming part of the purchase price.
Following the acquisition, B.P. Marsh will have a revised shareholding of
29.9% in XPT.
LP Risk specialises in transportation,
hospitality, contractors, marine, energy/oil & gas and manufacturing. With
51 employees, it handles over 4,000 accounts a year on behalf of 350
retail agents and brokers in 18 States. Following the Transaction, Landon
Parnell will remain with the business as the President of LP Risk and will
become a member of XPT’s Executive Committee.
It is expected that this acquisition will
bolster XPT’s foothold within its existing markets and add an
experienced professional to XPT’s Executive Committee. The Transaction
furthers XPT’s strategy to develop a high-class specialty distribution
platform across the US by acquiring niche, profitable businesses.
B. P. Marsh was a founding investor in XPT in 2017,
since when it has grown significantly through value accretive acquisitions
using its partnership approach. From a standing start, XPT is forecasting
Gross Written Premium in excess of $300m and EBITDA of approximately
$7m inclusive of this acquisition to December 2020. It has operations
across the United States, with a strong presence on the West and East coast and
a strengthened footprint in the Midwest now, following its
first acquisition of Western Security Surplus Insurance Brokers, LLC
in November 2017.
Commenting on the recent activity, the Group’s Chief
Investment Officer and Nominee Director on the Board of XPT, Daniel Topping,
said “LP Risk is a tremendous addition to XPT. Landon Parnell has developed a
first-rate speciality insurance business which will further bolster XPT’s
position. It is a testament to what Tom Ruggieri and his team have achieved so
far, that they have been able attract Landon Parnell and his business. We at B.
P. Marsh look forward to continuing to work with XPT to help them achieve all
their targets.”
On the latest acquisition XPT’s Chief Executive
Officer Thomas Ruggieri stated that “Landon brings with him an impressive track
record of success and knowledge that will strengthen our executive committee.
We are thrilled to have him and his team join the XPT
family”.
Landon Parnell, who will remain as President of
LP Risk and will take on a new role of leading XPT’s National Property and
Casualty Brokerage Division, said “LP Risk has spent many years developing
the technical knowledge of our underwriters and the market relationships of our
brokers, while making service our main priority. XPT’s commitment to launch
innovative products while using a modern platform to access new markets will
allow us to raise our service level and realize lasting growth”.
by B.P. Marsh | Mar 5, 2020 | Uncategorised
B.P.
Marsh, the specialist investor in early stage financial services businesses, is
pleased to provide an update on its Canadian Investment, Stewart Specialty Risk
Underwriting Limited (“SSRU”).
SSRU
is the provider of specialty insurance products to a wide array of clients with
severe exposures in the Construction, Manufacturing, Natural Resources, Public
Entity and Transportation sectors. SSRU commenced operations in February 2017.
For
the year ended 31 December 2019, SSRU wrote Gross Written Premium of CA$10.8m
and is primed to enter its next stage of growth.
Part
of this growth has seen SSRU establish a new Property Department, which went
live in December 2019. SSRU have capacity of CA$15m and now provide a variety
of primary and excess Property products tailored to individual clients in the
Natural Resources, Complex Commercial and Construction segments.
As
part of this new offering, SSRU has announced the appointment of Heather
Jamieson as Vice President of SSRU’s Property division. Having worked in the
Insurance industry for more than a decade, Heather joins SSRU to head their new
Property division. Her experience includes positions of increasing
responsibility at Allianz and Zurich in Canada where she specialised in Mining,
Power Generation and Oil & Gas business.
SSRU
have also made a number of other senior appointments for the next phase of its
growth. Peter Lee has been appointed as
Vice President of Casualty, joining SSRU with over 25 years’ experience, having
spent most of his career dealing with complex commercial casualty business as
both an underwriter and a broker, most notably with ACE INA Insurance and
Northbridge Insurance. SSRU have also promoted Victor Ip, to be Senior Vice
President of Casualty. Victor has been with SSRU since formation and has been a
central part of SSRU’s past and on-going success. Georgiana
Pasca has also been promoted to Chief Financial Officer, having been with SSRU
since formation. She has played a key role in ensuring stability as the company
grows through the development and implementation of financial and operational
processes and controls. Georgiana holds
a master’s degree in international finance and a CRM designation.
Commenting
on this development, SSRU’s President and CEO Stephen Stewart stated:
“The appointment of Heather Jamieson, alongside the establishment of a
new Property facility, strengthens and develops SSRU’s capabilities at an
important time in SSRU’s development.
The business has grown steadily since formation and it has always been
our intention to substantially develop SSRU, alongside our investment partners,
B.P. Marsh, over the next five years. The
appointment and promotions form a central part of our growth plans.”
Commenting
on the Canadian insurance market, Stephen Stewart added:
“The
Canadian insurance market differs in many respects from its American
counterpart. While its economy is closely integrated with that of the United
States, the Canadian legal climate is very different, providing for much lower
indemnity judgments with a virtual absence of punitive and general damage
awards. This produces a less volatile
and more consistently profitable result for Casualty lines.
“The Canadian Property
insurance environment is markedly less exposed to natural catastrophe than its
American neighbour and the market is currently experiencing severe rate
hardening. This hardening is
contributing to a much-needed correction to its premium base. Climate change will undoubtedly create a
greater frequency and severity of natural catastrophe exposure in both the USA
and Canada.
“With less relative
exposure, increasing rates and a favourable regulatory environment, the
Canadian market is well positioned to face these challenges and provide
stability for future renewal cycles.”
Daniel
Topping, Chief Investment Officer of the Group commented:
“Since
SSRU commenced writing business in February 2017, SSRU has grown to
Gross Written Premium of over CA$10m. This is an excellent achievement by the
SSRU team and we look forward to further supporting their growth over the
coming years.”
Brian
Marsh, Chairman of the Group commented:
“Our
backing of Stephen Stewart and his colleagues at SSRU demonstrates both our
long term investment approach and our ability to identify and support
outstanding management teams. Stephen
and his team members deserve congratulations and thanks from B.P. Marsh for
this very sturdy performance.”
by B.P. Marsh | Feb 5, 2020 | Portfolio News
B.P. Marsh & Partners Plc
(“B.P. Marsh”, the “Company” or the “Group”)
Trading
Update
B.P.
Marsh, the specialist investor in early stage financial services businesses, is
pleased to provide the following unaudited trading update for the Group’s year
ended 31 January 2020.
Highlights
- The
completion of two new investments; Agri Services Company PTY Limited in Sydney
and Lilley Plummer Risks Limited in London
- £2m
follow-on funding to Nexus Underwriting Management Limited, as part of its
wider £16m fundraising exercise
- Loan
Facility of US$2m to XPT Group LLC, based in New York City, which also
completed a successful US$40m refinancing exercise with Madison Capital Funding
LLC
- The
Group secured access to a £3m loan facility with attractive terms
- As
at 31 January 2020, cash of £0.8m and available cash of £3.8m
- The
Company continues to maintain a diverse portfolio of investments, by sector,
geography and currency, with 57% of the investment portfolio’s revenue originating
from overseas
Net
Asset Value
The latest published Net Asset Value (“NAV”) was £130m,
or 360.9p per share, as at 31 July 2019, which represented a 3% increase, or a
4.3% increase including the dividend paid in July 2019, for the six months
ended on that date. From its inception in 1990 until 31 July 2019 the Group has
maintained an average annual compound increase in NAV of 11.7%. The Group is
expected to report a positive performance for the financial year ended 31
January 2020.
The Company’s Annual Results for the full year to 31
January 2020 and an updated NAV will be announced on Tuesday 9 June 2020.
B.P. Marsh remains focussed on taking actions to
reduce the differential between NAV per share and the current share price.
In the year
ended 31 January 2020, as a sign of confidence in the Company, nine Directors
and Senior Management of the Group purchased a net c.145,000 shares in the
Company at market price. Chairman of the Group, Brian Marsh, gifted c.2% of his
direct shareholding to the Marsh Christian Trust, a charitable trust he founded
in 1981, as he does every year.
Cash Balance
At
31 January 2020 the Group had access to cash of £3.8m. This is inclusive of the
undrawn £3m loan facility with Brian Marsh Enterprises Limited (“BME”). As at
31 January 2020, the Group was debt free.
In
the financial year ending 31 January 2021, the Company is expected to receive over
£2.5m in loan repayments from its investee companies, which will assist the
Group to continue to pursue its core investment objectives.
As
previously announced, during the year, the Company explored short, medium, and
long-term funding options so that it could continue to take advantage of new
investment opportunities as they are identified.
Having
considered the available options, and taking account of market conditions and
the performance of its portfolio, the Group entered into the £3m loan facility
with BME, a company of which the Chairman of the Group, Brian Marsh, is a Director
and sole Shareholder.
The
loan facility provides the Group with access to further investment funds at an
interest rate of the higher of 4% or the UK 1-month LIBOR plus 3.25% and is
available until 29 July 2021.
The
Group considered these to be attractive terms when compared to other avenues of
funding.
New
Investments
Ag Guard PTY Limited (“Ag Guard”)
In July 2019, the Group
completed an investment into Ag Guard, based in Sydney Australia, a Managing
General Agency specialising in Australian Agriculture Insurance. The Group acquired
a 36% equity stake for up-front consideration of AU$1.47m (c.£0.8m), with
further consideration of AU$1.13m (c.£0.6m) paid in January 2020. This
transaction represented the Group’s fourth Australian investment.
Founders Alex Cohn (Managing
Director), Martin Birch (Technical Director) and Ben Ko (Finance &
Operations Director) have considerable experience in the provision of general
insurance services in the Australian rural sector.
Lilley
Plummer Risks Limited (“LPR”)
In October 2019, the Group
subscribed for a 30% equity stake in the London based, Lloyd’s Marine Broker
LPR, the Group’s third Lloyd’s Broker in its current portfolio. The Group
invested £1m by way of both redeemable and non-redeemable preference shares.
In the first three months of
being operational, the founders, Stuart Lilley and Dan Plummer, have been
extremely active in expanding the workforce and have more than doubled the
number of employees working within the organisation. LPR have both strengthened
their original marine operation and also hired new members of staff, which have
enabled them to diversify into new product lines.
Mike Lilley joined from
Chesterfield Insurance Brokers after 17 years of service, being appointed Chairman
of LPR, and to open a Treaty Reinsurance department.
Mike Gooding will be joining
LPR from Guy Carpenter after 12 years of service, to head up the Terrorism and
Political Violence department.
Follow-on
Investments and Funding
Nexus Underwriting Management Limited (“Nexus”)
Nexus is one of the largest independently
owned Managing General Agency in the UK insurance market, budgeting to write
over £345m of Gross Written Premium across various specialty lines in the 2020
financial year.
In March 2019, Nexus launched Xenia Broking
Group Limited, a new entity which consolidated Nexus’ trade credit broking
activities and will remain independent and segregated from Nexus’ underwriting
operations. Nexus is now one of the leading independent UK trade credit
brokers, having a c.10% market share of the c.£350m Gross Written Premium trade
credit market.
In April 2019, the Group provided Nexus with a
£2m revolving credit facility, as part of a wider £16m fundraising exercise, in
order to undertake M&A activity.
Nexus has acquired Credit & Business
Finance Limited, Capital Risks MGA Limited and Plus Risk Limited in the past
year. These acquisitions demonstrate Nexus’ M&A strategy and the company continues
to explore value accretive acquisition opportunities.
In September 2019 Nexus announced the
appointment of Andrew Moss as independent Non-Executive Chairman on Nexus’ main
board as part of its strategic growth plan. Andrew has had a long and
distinguished career within the insurance industry including five years as
Group CEO of Aviva Plc, and prior to this he spent four years as Director of
Finance, Risk Management and Operations at Lloyd’s of London. In 2014 he joined
Parker Fitzgerald, the London based Management Consultancy, as Chairman of the
Advisory Board where he helped steer their recent acquisition by Accenture to
its successful outcome.
In January 2020 Nexus Specialty Inc., part of their
US platform, established a wide-ranging new programme agreement with A-rated
Crum & Forster, that allows Nexus to underwrite their market leading trade
credit products on a fully admitted basis in the US.
XPT Group LLC (“XPT”)
Since investment in 2017,
XPT the specialty lines distribution company, has made numerous acquisitions,
providing it with a footprint across the US with offices in North Carolina,
Texas, California and New York. From a standing start in 2017, it is now forecasting
annualised Gross Written Premium of US$260m for the 2020 year.
In April 2019, the Group
provided XPT with a US$2m Loan Facility.
Later that year XPT
successfully secured US $40m of aggregate funding from Madison Capital Funding
LLC (“Madison”). As part of the transaction, Madison took an equity interest in
the business which values XPT at an enterprise value of c.US$54m. Madison is
backed by the financial strength and stability of New York Life Insurance
Company and has $10.6 billion of assets under management, exclusively investing
alongside private equity sponsors and other investors.
Portfolio Highlights
UK
CBC UK Limited
(“CBC”)
CBC continues to deliver strong growth, with the year ending 31 December 2019 expected to report revenue of £7m and EBITDA of £1.7m. This result represents an increase of c.20% in revenue and c.50% in EBITDA over the year.
CBC have successfully established an International
Division for professional lines, further expanding its product offering.
EC3 Brokers Limited (“EC3”)
Over the course of the year EC3 has made several new
team hires, establishing both a North American Property Division and a Sports
and Entertainment Division. This further diversified EC3’s product offering.
The management team at EC3 continue to explore further value accretive hires
and acquisitions.
In May 2019, James Murphy joined EC3 as Head of
Broking having had many decades’ experience in the London Insurance Market,
starting his career at Nelson Hurst & Marsh, then as part of the management
team of a Lloyd’s broker that was subsequently acquired by Willis. Following on
from this, EC3 expanded its UK Contingency & Entertainment division with three
senior hires, helping it towards its goal of becoming the pre-eminent
independent entertainment insurance broker in the London Market.
In August 2019, EC3 established a North American
Property division, headed up by Matt and David Jeffery, with further hires
thereafter. These two individuals have over three decades of combined experience
in the London Market with senior roles at Jardine Lloyd Thompson, Cooper Gay
and Besso.
Since investment in December 2017, EC3 has grown its
top line revenue from c.£9m to a 2020 budget approaching £14m.
The Fiducia MGA Company Limited (“Fiducia”)
Fiducia, the UK Marine Cargo Underwriting Agency established in November
2016, has grown from a start-up position to Gross Written Premiums of £12m for
the year ending 31 December 2019, across the Marine Specialty Insurance Sector.
In January 2020, Fiducia expanded their product offering with the
establishment of a Fine Art and Specie division, headed up by James Bavin.
James was previously head of Marine at Advent Capital. This new division is
supported by underwriting capital from Lloyd’s of London to complement
Fiducia’s existing product offering.
LEBC
Holdings Limited (“LEBC”)
On
2 September 2019 the Group announced that LEBC Group Ltd, a UK-based IFA and
100% owned subsidiary of LEBC, had agreed to voluntarily cease the provision of
Defined Benefit transfer advice. This was pursuant to the FCA’s market-wide
review of the Defined Benefit transfer market.
Advice in the Defined Benefit transfer market represented 15% of LEBC’s
audited consolidated total revenue in its previous financial year, ended 30
September 2019. This impacted the Group’s valuation of its 59.3% equity
interest in LEBC, which was reduced to £23.9m at its most recent valuation for
the period ending 31 July 2019.
LEBC has implemented a significant restructuring and is
working on a number of new initiatives. In line with its successful
long-term investment strategy, the Group continues to support LEBC.
LEBC continues to offer a full range of private client and
employee benefit advice and is focussed on growing the business in these areas
and investing in technology and recruitment, to continue to meet a growing
demand for advice from private individuals and companies.
Canada
Stewart Specialty Risk
Underwriting Limited (“SSRU”)
SSRU, the Toronto based provider of
specialty insurance products to the Construction, Manufacturing, Onshore
Energy, Public Entity and Transportation sectors, has secured a new Property
offering. SSRU has secured CA$15m of A-rated Canadian capacity to write primary
and excess Property products, tailored to individual clients in the Natural
Resources, Complex Commercial and Construction segments.
As part of this new product
offering, SSRU has appointed Heather Jamieson as Vice President of SSRU’s
Property division.
Australia: ATC Insurance Solutions PTY Limited (“ATC”),
Sterling Insurance PTY Limited (“Sterling”) and MB Prestige Holdings (PTY)
Limited (“MB”)
The Group’s established investments in Australia, ATC, Sterling and MB
continue to perform well, with all three investments increasing their premium
income and profitability in the year. This results in an aggregate combined
budget of approaching AU$150m in premium income and AU$23m in commission income.
This performance, in a challenging insurance market, underpins the
quality of these companies and their management teams.
In September 2019, ATC partnered with the Lloyd’s syndicate, Talbot
Underwriting (an AIG company), to provide a bespoke insurance solution to the
Australian SME sector. The Group welcomed ATC’s move into this fast-growing
sector of the insurance market.
In December 2019, Sterling announced further expansion of its aviation
division with the appointment of Greg Leeman, and partnership with Tokio Marine
Kiln in bolstering its product offering in Aviation insurance.
Singapore
Asia Reinsurance Brokers PTE
Limited (“ARB”)
In December 2019, ARB appointed William Pang as
Managing Director, to oversee ARB’s business portfolio and the teams across
ARB. William has 20 years of reinsurance experience, having worked for Munich Re,
ACR and JLT Re in various underwriting, broking and senior management roles.
Additionally, in September 2019, Chiam Heng Lock was
appointed a Director of Reinsurance. Chiam has a wealth of experience in this
market, having previously worked at Willis Re, JLT Re, and worked with
Copenhagen Re and Everest Re for many years.
New Business Opportunities
B.P. Marsh is well known in the sectors in which it
specialises and the quantity of opportunities presented to the Group remains
high.
B.P. Marsh has a wide array of industry specific
contacts with whom the Group remains in regular contact, to drive germane and
high quality deal flow.
The financial year closed with a total of 117 new opportunities having been presented to the Group during the year, in comparison with 64 in the previous year. Of the 117, the majority were in the insurance sector. The increase in opportunities over the past year underpins our unique investment approach, with the Group continuing to see significant deals in the Financial Services sector.
The Group is well positioned in its current
financial year, with a strong pipeline of new opportunities, a number of which
should develop over the course of the year.
The Group will remain disciplined in its approach to
the investment process, focusing on niche SME businesses in sectors which the
Group understands, with the aim of achieving considerable short and long term
growth.
In addition to this, the Group’s investee companies
continue to seek and undertake bolt-on acquisitions.
Recent Comments