B.p Marsh Regulatory News (BPM)

Date: 23rd 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 £17 (CA$30). Additionally, B.P. Marsh provided SSRU with a loan of £275,000 (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 £3.5m (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 £19m (CA$33m), in its latest financial year to 31 December 2020. SSRU is budgeting to write c. £31m (CA$55m) of Gross Written Premium in the year to 31 December 2021. EBITDA increased to £2.2m (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 £17. 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:

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.

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