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(Sharecast News) - Financial services venture capital investor BP Marsh said in an update on Monday that it was selling its shareholding in Kentro, a London-based insurance group, for £51.5m, pending regulatory approvals.
The AIM-traded firm said it planned to distribute about 25% of the proceeds from the Kentro sale to shareholders through dividends and buy-backs.
Its cash and treasury funds stood at £4.3m on 31 July, a decrease from £12.1m in January and £14.1m in July last year.
However, that amount was anticipated to grow to £52.2m after the Kentro transaction.
The firm said it had invested in Verve Risk Services and Pantheon Specialty and had a strong pipeline of upcoming investment opportunities.
Its net asset value steadily grew, going from £166.6m to £189.5m in the year ended 31 January.
Looking at the details of the Kentro sale, BP Marsh said Brown & Brown, a central US-based insurance intermediary, would acquire all of Kentro's issued share capital.
After deducting transaction expenses, the transaction was expected to conclude at £51.5m in cash.
Regarding dividends, BP Marsh declared a final dividend of 1.39p per share for the year ending 31 January, mirroring the interim dividend paid in February.
Additionally, upon completion of the Kentro sale, the firm said it aimed to distribute a special dividend of £1m.
The company also announced its intention to roll out a three-year dividend policy for 2024 to 2026, funded by the Kentro deal, with a projected aggregate distribution of £2m per annum.
New investment ventures meanwhile included a 25% stake in Pantheon Specialty, with the company backing Robert Dowman's aim to establish a dominant independent specialist broker across diverse markets.
Additionally, the firm acquired a 35% share in Verve Risk Services, which specialises in professional and management liability business in the insurance sector spanning several countries.
Other significant business activities included an impressive performance from Lilley Plummer Risks and the continued success of CBC UK and Paladin Holdings.
The XPT Group also recorded promising gross written premium growth, while LEBC Holdings' subsidiary Aspira acquired assets from its sister company, LEBC Group.
In terms of liquidity, BP Marsh extended loans totalling £8.2m to its investment portfolio between January and July.
As of 31 July, its loan portfolio balance stood at £17.8m.
BP Marsh said it remained debt-free and optimistic about new business opportunities, having received 60 further business inquiries in the year ended 31 January, reflecting growth from the prior year.
Given the company's robust financial standing and pending the Kentro transaction, it said it was well-positioned to capitalise on emerging opportunities in the financial services sector, particularly in the insurance market.
Potential future ventures included a marine insurance underwriting agency, a Europe-based aviation broker, and a Lloyd's broker specialising in financial lines.
"The insurance industry continues to discuss rate increases across global commercial lines of business," the BP Marsh board said in its statement.
"The second quarter of 2023 resulted in an overall rate increase of 3% across all global commercial lines, down from a 4% increase in the first quarter of 2023.
"This increase represented the 23rd consecutive quarter of rate increases, although rate increases are well below the peak, being 22% in the fourth quarter of 2020."
BP Marsh said price increases across global property insurance were up 10% in the second quarter - the same increase as in the first quarter of 2023.
Casualty insurance pricing meanwhile increased by 3%, again the same as in the first quarter.
"Conversely, pricing for financial and professional lines fell for the fourth consecutive quarter, with average pricing falling by 8% during the second quarter of 2023, compared to a 5% decline in the first quarter of 2023.
"In the UK, rates generally have increased over the past four quarters, and the group does not anticipate the market returning to the pricing of the last soft market in the short to medium term."
BP Marsh said it expected to report half-year results for the period ended 31 July on 17 October.
At 1204 BST, BP Marsh & Partners shares were up 3.29% at 377p.
Reporting by Josh White for Sharecast.com.