B.p Marsh Regulatory News (BPM)

13th September 2022

B.P. Marsh & Partners Plc

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

Trading Update

B.P. Marsh, the niche venture capital provider to early stage financial services businesses, is pleased to provide the market with an update on trading for the Group's six month period which ended 31 July 2022 (the "Period").

One of the Group's key financial objectives, is the delivery of long-term growth in Net Asset Value. The Group's full year results to 31 January 2022 showed an increase in Net Asset Value to £166.6m (31 January 2021: £149.9m; 31 July 2021: £155.0m). This represented an 11.7% shareholder return (including the payment of a dividend) in the financial year.

The Group remains positive regarding meeting its ongoing aims and objectives, and will be reporting its results for the six months to 31 July 2022, on Tuesday 18 October 2022.

1. Dividend

On 29 July 2022, the Group paid a dividend of £1m (2.78p per share), for the year ending 31 January 2022. This represented a 13.9% increase over the dividend paid in respect of the previous year.

The aim is at least to maintain this level of dividend for the next two years.

2. General portfolio update

The majority of B.P. Marsh's portfolio companies have performed well in the Period, notwithstanding the wider economic challenges.

The Group continues to work closely with its investee companies' respective Management Teams, providing advice and support, to assist in long term growth.

Kentro Capital Limited ("Kentro") in London and XPT Group LLC ("XPT") in New York, both continue on their strong growth trajectories.

Kentro (formerly called Nexus Underwriting Management Limited) achieved Gross Written Premium of c. £368m in its financial year to 31 December 2021 (2020: £309m) and is on track to increase Gross Written Premium to beyond £450m in its financial year ending on 31 December 2022.

XPT achieved Gross Written Premium of c. US$400m in its financial year to 31 December 2021 (2020: US$280m) and is on track to increase Gross Written Premium to beyond US$500m in its financial year which ends on 31 December 2022. This projection does not take into account any new acquisitions that it may complete during this period as it continues to explore M&A opportunities, consistent with its strategy.

Within the Period XPT acquired Insurance Brokers, Inc. ("IBI"), a wholesale Insurance Broker based in Indianapolis, Indiana. IBI offers its agents a broad range of personal and commercial insurance products and has licences in nine states across the USA.

In addition, as previously announced, in June 2022 the Group invested a further US$3.5m (£2.8m) in XPT, of which US$2.8m was in redeemable shares and US$0.7m in equity, increasing B.P. Marsh's shareholding in XPT from 28.18% to 29.15%. This additional investment was raised to repay US$1.5m of loan funding from Madison Capital, and for future deferred consideration payments.

During the Period, the Group completed its transaction regarding the disposal of its Spanish business, Summa Insurance Brokerage S.L. to Acrisure España S.L., part of Acrisure LLC, the global financial services business, realising total cash proceeds of £9.6m.

Additionally, the Group completed an investment in Denison and Partners Limited ("Denison"). The Group acquired a 40% Cumulative Preferred Ordinary shareholding in Denison, a start-up London-based Lloyd's Insurance Broker, established by Alasdair Ritchie, a market veteran with over 40 years of experience in the Insurance Market.

Post-Period end, the Group agreed a AU$1.2m (£0.7m) loan facility available to one of our Australian investments, Agri Services Company PTY Limited ("Agri Services") to enable it to develop and roll out a new crop insurance product. This was drawn down in full in September 2022.

B.P. Marsh remains confident that, by continuing with its investment strategy, and working closely with the management teams in which it invests, it will continue with its historic growth trajectory and will deliver attractive returns for investors.

3. Market commentary

The insurance intermediary sector, in which the Group invests, continues to see rate increases across most of the lines in which its investee companies operate.

The pace of these rate increases continues to slow across the industry, although the Group does not anticipate the market returning to the pricing of the last soft market in the short to medium term.

With the ongoing conflict in Ukraine, the Group has considered its direct exposure and remains of the view that the business and its underlying investee companies should not be materially adversely affected by the global sanctions in respect of Russia.

The Group acknowledges, however, the various macro challenges facing the world economy. These include higher inflation, increased interest rates, political uncertainty and heightened risks of recession across each of the territories in which the Group's portfolio companies operate.

It is not yet fully known how these challenges will affect the insurance market. The Group continues to maintain its disciplined approach against this uncertain backdrop. However, it is believed that increased costs will at least be matched by an increase in premium rates in the short to medium term.

4. New Business Opportunities

As has been reported to the market over the last 18 months, the Group has made a number of realisations which has resulted in an increase in liquidity, with current cash funds of £13.2m, pursuant to the £2.8m follow-on investment in XPT in June 2022, the payment of £1.0m in dividend in July 2022 and a loan of £0.7m to Agri Services in September 2022.

Given the Group's increased liquidity and prominence in the sectors in which it specialises, there remains a focus on new business, and the Group has an active pipeline of new business opportunities which are currently being considered, across financial services, with a focus on Insurance Brokers and Managing General Agencies.

5. Outlook

The Group's strong cash position means that it is well placed to take advantage of any attractive new business opportunities, alongside a strong progression of investment opportunities, presenting themselves within the current portfolio.

For further information:

Notes to Editors:

B.P. Marsh's current portfolio contains fifteen 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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