BP Marsh has just published results for the year ended 31 January 2015. Over that period the net asset value rose from 202p to 216p and the return to shareholders was 8.2%. The final dividend is 2.75p, unchanged from last year.
£1.7m was invested in new equity investments and £1.4m was injected into existing investments. the new investments are Bastion Reinsurance and Nexus Underwriting Management.
In December 2014, the Group acquired a 35% Cumulative Preferred Ordinary shareholding in Bastion, a start-up Reinsurance Broker based in South Africa, for a total cash consideration of £0.1m. In addition to the equity investment, the Group provided Bastion with a loan facility of £0.34m, all of which has, since the year-end, been drawn down to support working capital requirements. Bastion provides specialist reinsurance solutions to a number of insurance companies and managing general agents in Africa. The Group undertook this investment as it was an opportunity to gain a foothold in the South African Reinsurance Market, whilst also backing a management team with a strong track record. Ian Snowball, the Chairman of Bastion, has worked for various insurance and reinsurance businesses both in the South African and Lloyd’s of London markets and has a 30 year track record in the insurance industry with considerable experience in the mid-market insurance sector. Bastion’s CEO, Lance Brogden, also has wide-ranging experience in the South African reinsurance and financial services sectors, having worked for a number of insurance related and multinational organisations over the past 20 years.
On 14 August 2014 the Group subscribed for a 5% Preferred Ordinary shareholding in Nexus, one of the largest independent Specialty Managing General Agents in the London market and 12(th) largest Managing General Agency in the UK, for a total consideration of £1.55m. The funds have been used to assist the company in its growth ambitions. Founded in 2008 by Colin Thompson, its CEO, Nexus has grown rapidly in the six years since inception; from a standing start it now writes over US$350m Gross Written Premium annually. Nexus has two operating subsidiaries, Nexus Underwriting Limited, which underwrites Speciality Insurance Products (Directors & Officers, Professional Indemnity, Financial Institutions and Accident & Health), and Nexus CIFS Limited, which specifically covers Trade Credit Insurance. Nexus CIFS Limited has recently won the title of Credit Insurer of the Year 2015 at the Institute of Credit Management Awards.
Since the year end, in April 2015 the Group, alongside its existing South African Partners, established a new venture, Bulwark, of which the Company owns 35%. This South African based holding company, funded via a £0.5m loan facility from the Company, establishes Managing General Agents in South Africa. To date £0.15m of the loan facility has been drawn upon, and Bulwark has established two new Managing General Agents, Preferred Liability Underwriting Managers (PTY) Limited (“Preferred”) and Mid-Market Risk Acceptances (PTY) Limited (“MMRA”). Preferred is a Managing General Agent which writes corporate and commercial liability business. They say that since it commenced writing business, Preferred has exceeded budget and looks well placed to fulfil the Group’s expectations. MMRA is a Managing General Agent which writes mid-market commercial property risk. This investment, alongside our existing South African Partners, illustrates the Company’s view that the South African insurance market offers substantial growth opportunities, given its continued and increasing exposure to the London Insurance market.
Sales of businesses during the period were represented by the sale of stakes in Portfolio Design Group International Limited, Morex Commercial Limited, Preferred Asset Management Limited and New Horizons Nominees Limited (together the “PDGI Businesses”) on 1 May 2014 for a combined cash consideration of £1.3m, delivering an internal rate of return of 24.5% per annum, including all income received.
BPM : BP & Marsh reports on profitable 2014