Interim Results For the six month period ending 31 July 2019 15 th October 2019 Dan Topping , Chief Investment Officer Jonathan Newman , Group Finance Director
Overview 25+ Years strong 16 Investments Specialist Invested in 51 companies Geographically diverse PE/VC investor in Financial Services intermediaries since 1990 within our specialist sector Long-term view Industry knowledge Up to £5m investment Partnership approach to investment and mutually Significant, specialist experience and deep sector For minority equity positions (20-40%) agreed exit route, maximising value knowledge acquired across several decades Average holding period of 6.4 years 2
Performance: Net Asset Value (NAV) 140 130.00 † 126.17 130 † 120.03 120 110 Full Year 98.90 100 Half Year 88.80 £ Millions 90 79.68 80 70.81 62.97 70 58.92 *NB: The valuation at 31 55.46 60 July 2007 includes £10.1m net proceeds 44.17 50 40.61 raised on AIM 40 **NB: The valuations 22.10 from and including 31 30 July 2018 include £16.6m net proceeds 20 raised in the July 2018 Share Placing and Open 10 Offer 0 31-Jan-05 31-Jan-07* 31-Jan-10 31-Jan-13 31-Jan-14 31-Jan-15 31-Jan-16 31-Jan-17 31-Jul-17 31-Jan-18 31-Jul-18** 31-Jan-19 31-Jul-19 † Restated for IFRS 16: Leases 3
2019 Summary – Period Ending 31 July 2019 • Dividend of 4.76p per share declared for the year ended 31 January • As at 31 July 2019 – 16 investments in portfolio with a NAV of 2019, paid on 26 July 2019, the final dividend from a three-year £130.0m (31 January 2019 £126.2m* ) distribution following the realisation of Besso • Increase in Equity Portfolio Value of 4.0% in period to 31 July • Total Shareholder return of 4.4% for the period to 31 July 2019, 2019, to £107.0m including the dividend paid in July 2019 • Loan Book value of £19.7m • £1.4m cash and £3.0m loan facility *Restated for IFRS 16: Leases 320 Price and NAV comparators 270 220 % Change 31 January 2010 to 31 July 2019 170 B.P. Marsh & Partners +210.63% PLC 120 FTSE AIM All Share +39.58% FTSE AIM Financials +116.4% 70 BPM share price BPM NAV/share, rebased AIM All Share, rebased AIM Financials, rebased 4
Specific Activity During the Period – LEBC Update • The FCA has undertaken a sector-wide review of the Defined Benefit (“DB”) Transfer market • Mattioli Woods and Intelligent Pensions have exited the DB Transfer business, with Sanlam recently announcing it is stopping network IFAs offering DB Transfer advice • In September 2019, LEBC announced that it had voluntarily agreed to cease providing DB advice • DB was approximately 20% of LEBC’s revenue • Consequently, the Group has reduced its valuation in LEBC from £35.4m as at 31 January 2019, to £23.9m • The business is undergoing a restructuring, focusing on their core offering which is expected to produce c.£19m in revenue alongside an underlying profit • A new Chairman was recently appointed and a leading consulting firm will be engaged to assist with the process • LEBC continues to make progress in its key areas, including developing its digital offering, Hummingbird • The sector continues to be resilient with consolidation continuing and the potential for value accretive deals 5
Specific Activity within the Portfolio During the Period • In October 2018, the Company purchased an additional 1.9% in Nexus for cash consideration of £2.6m • In April of this year, BP Marsh provided Nexus with a £2m revolving credit facility, as part of Nexus’ wider debt fundraising exercise in order to undertake M&A activity • In addition to the facility from the Company, Nexus secured an additional £14m loan facility from funds managed by HPS Investment Partners LLC Since the Group’s Nexus was ranked number 32 During the same period, investment in Nexus in 2014, Nexus continues its M&A in the Sunday Times Profit EBITDA is expected to increase Gross Written Premium has strategy and has completed Track 100 league table for from £2.6m to an estimated grown from £50m and acquisitions of Credit & Business Britain’s fastest growing £15.2m annualised in 2019 Nexus is expecting to Finance Ltd, Capital Risks MGA private companies in 2019 achieve Gross Written Ltd and Plus Risks Limited in Premium of £313m in 2019 2019 31.1.19 Valuation: £30.1m £1.6m Investment 31.7.Valuation: 5% Shareholding 18.1% Shareholding Gross Written Premium of Gross Written Premium of £50m 31.1.18 Valuation: £20.5m 31.1.17 Valuation: £13.9m £313m 31.1.15 Valuation: £1.6m 31.1.16 Valuation: £6m 17.6% Shareholding 18.6% Shareholding 5% Shareholding 13.5% Shareholding July 2019: Acquisition of Plus Nexus founded Risks Limited December 2015: July 2017: Acquisition of April 2019: Acquisition of Credit Acquisition of Equinox Global Limited & Business Finance Limited and Millstream Capital Risks MGA Limited 2008 2014 2015 2016 2017 2018 2019 Underwriting Limited 6
Specific Activity within the Portfolio During the Period • In June 2017, B.P . Marsh subscribed for a 35% holding in XPT Group LLC – the U.S. based specialty lines insurance distribution company • During the period, XPT completed the acquisition of Klein & Costa, an MGA and surplus lines broker located in Santa Ana, California • Post period end, XPT has completed a $40m fundraising with Madison Capital Funding LLC (part of New York Life) and acquired Sierra Specialty Insurance Services As part of the XPT has completed the XPT has secured in fundraising, Madison acquisition of five aggregate $40m in funding Since investment, XPT’s Capital invested $2m established and profitable from Madison Capital, Gross Written Premium has for a 6% shareholding businesses in the U.S., including $22m in new grown from $nil to $165m in XPT, which values including in California, Texas facilities to support future ($200m including Sierra XPT at an enterprise and North Carolina growth. Specialty) value of $54m. Dan Topping, Chief Investment Officer The fundraising with Madison is a tremendous & XPT Board Member commented: milestone in XPT's development. Since XPT's first investment in November 2017, XPT has grown to Gross Written Premium approaching $200m, inclusive of the Sierra acquisition. This is an outstanding achievement by the XPT team and we look forward to further supporting their growth. 7
Specific Activity - New Investment • This opportunity was initially introduced to B.P . Marsh by PSC Insurance Group Limited • Founding management team Alex Cohn, Martin Birch and Ben Ko wanted a strategic partner to assist in the development of a new MGA in the Australian agricultural sector • This investment added a further investment to B.P . Marsh’s portfolio based in Australia On 12 July 2019 the Group Ag Guard specialises in Ag Guard is a Sydney invested AUD$1.47m in Agri providing insurance products headquartered MGA Services Company PTY Limited, to the Australian agricultural founded in 2013 as an for a 36% stake. Agri Services in sector with insurance capacity Insurance Broker but is turn acquired 100% of Ag Guard provided by Munich Re developing into an MGA Dan Topping, Chief Investment Officer & Ag Guard Board Member commented: The investment in Agri Services sees B.P. Marsh backing a strong and experienced management team in a business that is capable of becoming a serious market player over the next 5 years. We look forward to helping them grow their business. 8
International Portfolio UK Based Investments: Summa Insurance Brokerage S.L. CBC UK Ltd EC3 Brokers Ltd Stewart Specialty Risk The Fiducia MGA Company Ltd Underwriting Ltd LEBC Holdings Ltd Nexus Underwriting Management Ltd Mark Edward Partners LLC Walsingham Motor Insurance Ltd XPT Group LLC B.P. Marsh’s international strategy is focused on areas where we see: Sufficient opportunity for • business development in partnership with a Asia Reinsurance Brokers Pte Ltd London-based investor A suitably developed • Criterion Underwriting Pte Ltd regulatory and compliance environment The Group believes that the Approximately 50% of our Ag Guard (PTY) Limited geographic spread of the investee companies’ ATC Insurance Solutions (PTY) Ltd portfolio provides revenue originates sufficient diversification to overseas MB Prestige Holdings (PTY) Ltd minimise any impact of 9 Sterling Insurance (PTY) Ltd specific country risk
Equity Investments – Underwriting Agencies Movement in Movement in Fair market value Equity Cost of equity Year of initial Investment Sector Jurisdiction Period to 31 July Period to 31 July investment (£’000) investment 31 July 2019 (£’000) As at 31 July 2019 2019 (£’000) 2019 (%) Nexus UK 40,295 17.77% 11,126 2014 10,170 33.8% MGA ATC Australia 7,157 20.0% 2,865 2018 1,737 32.0% MGA MB Australia 2,568 40.0% 480 2013 94 3.8% MGA Sterling Australia 2,493 19.7% 1,945 2013 79 3.3% MGA Walsingham MGA UK 1,795 40.5% 600 2013 423 30.8% SSRU Canada 1,103 30.0% - 2017 370 50.5% MGA Fiducia UK 926 35.18% 228 2016 413 80.5% MGA Ag Guard Australia 827 36.0% 822 2019 5 0.5% MGA Criterion Singapore - 29.4% 50 2018 (50) (100.0%) MGA Walsingham Holding Company UK 44 20.0% - 2018 25 131.6% Holdings Limited MGA – Managing General Agent 10
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