B.p Marsh Regulatory News (BPM)

5 August 2020

B.P. Marsh & Partners Plc

("B.P. Marsh", "the Company" or "the Group")

Further Progress at US Investee Company XPT Group

B.P. Marsh & Partners Plc (AIM: BPM), the specialist investor in early stage financial services businesses, is pleased to note the following updates from one of the Group's US investments, XPT Group LLC ("XPT"), in which it holds a 29.9% shareholding. XPT is a specialty lines insurance distribution business.

Acquisition of Houston Surplus Lines

In May 2020 Western Security Surplus ("WSS"), the boutique wholesale broker part of XPT, announced the acquisition of Houston Surplus Lines ("HSL").

HSL is an excess and surplus lines ("E&S") managing general agency. Founded in 1994, HSL has long-standing binding authority contracts with some of the very best A rated surplus lines carriers, along with a solid list of brokerage markets for the harder to place risks. 

This is the seventh acquisition undertaken by XPT and the second undertaken by WSS. It demonstrates WSS's commitment to the strategic growth of its specialty insurance distribution business and its expansion throughout California and Texas. 

WSS's President and CEO Kyle Stevens said that:

"We are excited to announce the addition of HSL to WSS. Since joining XPT Group, WSS has been successful in expanding on the West Coast and adding HSL outlines the commitment to continue this expansion throughout Texas. 

"The knowledge and responsiveness of the HSL team make them a perfect complement to WSS while we mutually maintain our high level of service. This is another step in strengthening our position in one of the largest E&S marketplaces in the country"

Platinum Trucking Program

XPT's subsidiary, W.E. Love & Associates ("W.E. Love "), has launched a new trucking program, named Platinum Trucking, alongside Watford Insurance Company ("Watford"), a New Jersey domiciled admitted carrier with A- rated paper. 

This new program has been created for primary truck liability insurance, where W.E. Love have identified that the needs of the market are underserved. 

The program complements other trucking-related programs written by W.E. Love and is currently available in 20 US states, with the strategy to expand coverage to all 50 US states.

XPT's Chief Executive Officer Thomas Ruggieri said of the launch:

"The creation of Platinum Trucking highlights XPT's commitment to the growth of our partners, and allows for our trucking experts at W.E. Love to not only offer better products to their retail agents, as well as those served by SVA and Sierra, but also promotes a collaborative work environment to provide the best service possible."

New Appointments 

XPT has appointed Chris Petrucci as its new Chief Financial Officer effective September 2020.

Chris comes to the organization with over 25 years of experience that includes private equity-backed insurance exposure (JenCap Holdings, Crump Group, Wilton Re, and Pemaso LLC), public accounting (Ernst & Young) and investment banking (UBS). He has held various positions with increasing responsibilities in Finance functions across these organizations, with his most recent role serving as Divisional CFO of JenCap Holdings. His experience covers financial reporting, treasury, auditing and consulting. Chris helped lead JenCap Holdings, Crump Group and Wilton Re through strategic sales for their respective private equity sponsors. He has facilitated lender, rating agency and investor communications. He has hands-on experience in public debt offerings and has participated in several M&A transactions throughout his career.

Additionally, XPT has appointed Rob Crowell as XPT's Executive Vice President and Director of Business Operations. He will work with XPT's senior management team to assist in executing XPT's agreed medium to long term business strategy. 

Rob Crowell has over 25 years of experience in the insurance industry, including executive level roles with managing general agencies insurance carriers, and brokers. Most recently Rob Crowell was an Executive Vice President with Innovative Coverage Concepts / RPA Insurance Services, a national wholesale MGA and retail agency. He has been involved with multiple start-up businesses and is the former Chief Operating Officer of the RVI Group, President of CNA Guaranty and Credit and Vice President of Capital Markets at Marsh McLennan Securities. 

On the latest appointments, XPT's Chief Executive Officer Thomas Ruggieri said:

"XPT are now in their third full year of trading, having acquired 6 business across the US, both MGAs and wholesalers, in a number of different product areas.

"Given the increasingly expanding business, I welcome both the appointment of both Chris Petrucci and Rob Crowell to the senior management team. Their appointments will enhance XPT's capabilities on consolidating and growing our underlying business, and sourcing new acquisition opportunities."

Background to the XPT Investment

B.P. Marsh first invested in XPT in June 2017, providing $6m via newly issued preferred shares to acquire niche MGAs and wholesalers, providing B.P. Marsh with an initial shareholding of 35%. 

Over the three-year period of its investment, B.P. Marsh has provided XPT with further financing to bring about growth via acquisition, of $5.2m (split $3.2m in equity and $2m in loans), taking the aggregate amount invested to $11.2m.

In September 2019, as part of the acquisition of Sierra Specialty Insurance Services Inc, ("Sierra"), being XPT's fourth acquisition, XPT secured $40m in aggregate financing from Madison Capital Funding LLC ("Madison"). 

As part of this fundraise, Madison provided $38m via loan funding and also took a 6% equity interest in the business which valued XPT at an enterprise valuation of circa $54m. 

Since the Madison fundraise, XPT has further drawn down on these facilities in order to acquire LP Risk, Inc. ("LP Risk") in April 2020, the Houston, Texas, headquartered Managing General Agency ("MGA") and surplus lines Broker. 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.

Over the three-year period in which the Company has been invested, XPT has acquired seven businesses throughout the U.S. and has grown from a standing start to forecasting over $300m of GWP and approximately $7m EBITDA to the year ending 31st December 2020.

XPT now has operations across the US, with a strong presence on the West and East coasts, as well as a growing footprint in the Midwest. 

Dan Topping, Chief Investment Officer of the Company, commented: 

"We've been delighted with what Tom and his team have created to date. Through the judicious use of B. P. Marsh's capital and support and then Madison's, XPT has executed the first stage of their strategy in line with our expectations. We look forward to working with them to continue their growth trajectory from what is now a solid platform bringing together both specialty underwriting and wholesale broking operations."

For further information:

Notes to Editors:

B.P. Marsh's current portfolio contains seventeen 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.

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