B.P. Marsh & Partners Plc
Investee Company Update: ATC Insurance Solutions
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, ATC Insurance Solutions PTY Limited (“ATC”), an independent underwriting agency and coverholder at Lloyd's, headquartered in Melbourne, Australia.
From the time of our investment, through to 31 July 2020, our valuation of our holding in ATC has risen significantly, increasing from AU$5.1m to AU$13.6m, an uplift of AU$8.5m (c. 4.7m).
Background on ATC
B.P. Marsh invested in ATC in July 2018 with the Company taking a 20% equity stake in ATC for a total cash consideration of AU$5.1m (c. £2.8m).
ATC is run by a longstanding and experienced management team led by CEO and Founder, Chris Anderson, alongside Head of Construction, Plant & Machinery, Shane Sheppard.
Since its establishment in 2006, ATC has grown to become one of the largest Lloyd's underwriting agencies in Australia. ATC has extensive experience providing insurance for construction & engineering, plant & equipment, accident & health, and sports injury & liability. ATC also provides trade pack insurance, which contains specialist insurance for electrical and renewable energy contractors such as public liability insurance, general property cover, and income protection policies.
ATC currently has capacity arrangements with several Lloyd's syndicates operating over 12 niche product areas.
B. P. Marsh's Introduction
ATC was a business that B.P. Marsh had been aware of for some time, and was introduced to the business through the Company's network of contacts in the insurance market.
Once discussions moved past the exploratory stage, the transaction completed seamlessly over the course of 8 weeks, demonstrating not only B. P. Marsh's ability to move quickly, in view of its insurance specialism, but also the natural investment fit between B.P. Marsh and ATC.
ATC were looking for a partner who could assist them in bringing about the next stage of growth and were particularly keen on B.P. Marsh's insurance expertise and existing investments in the Lloyd's of London Insurance market, noting that ATC was a Lloyd's coverholder looking to expand both its capacity and product offerings.
ATC believed that B.P. Marsh was the right strategic partner to assist and accelerate the long-term growth of ATC, welcoming our investment approach, which does not seek to impose exit pressures, but backs a management team towards an eventual, mutually beneficial exit route.
Additionally, the Group's appetite for a minority investment allows ATC's shareholders to retain a significant shareholding, whilst also allowing a new strategic partner to invest alongside them.
Growth of ATC
At the time of B.P. Marsh's investment in ATC, the business reported Gross Written Premium of AU$61m for the year ended 30 June 2018.
Since our investment, ATC has continued to show strong growth, with Gross Written Premium increasing at a compound annual rate of 34% to the year ended 30 June 2020.
Additionally, notwithstanding the challenges faced in the first half of 2020, ATC finished its year ended 30 June 2020 reporting an EBITDA 28% above the 2019 financial year, and substantially ahead of where it was at the time of our investment.
Over the past 6 months, ATC has also expanded its product offerings in the Construction and Cyber sectors, and has hired two new senior underwriters in the cyber field, one based in ATC's Melbourne office, the other in ATC's Sydney office. Both underwriters have held senior positions as international cyber underwriters and will oversee the expansion and development of ATC's cyber portfolio in their respective regions.
In September 2020, ATC appointed a further plant and machinery underwriter, based in its Melbourne office. This new role will oversee the expansion and development of ATC's plant and machinery portfolio for the eastern Australian states.
Chris Anderson, ATC's CEO, stated:-
“At the time of B.P. Marsh's investment in ATC, I believed that they were the right strategic partner for us to take ATC forward through its next phase of growth, a view which has held true during the time of their investment.
“Since the partnership between ATC and B.P. Marsh, ATC has shown considerable growth, both in top line Gross Written Premium and underlying profitability. I believe that ATC will continue its current growth trajectory, producing excellent returns for all its stakeholders.
“ATC continues to develop its product offerings to ensure that it can meet the diverse insurance needs of our expanding client base. ATC has an experienced underwriting team that ensures its policies meet clients' needs and has an in-house claims team to ensure that all claims are dealt with in an expedient manner.
“ATC has always been committed to building long-term relationships with both its underwriting partners and its broking clients, seeking to offer flexibility and innovation in developing policy solutions for a wide range of client risks.
“This business culture has been central to ATC's success since formation and was something that B.P. Marsh recognised and supported when they first invested in ATC. “
Commenting, the Group's Chief Investment Officer and Nominee Director on the Board of ATC, Dan Topping, stated:-
“We are delighted with the success of ATC since our investment in 2018. This investment is a demonstration of the success of our modus operandi; when ATC decided the time was right to bring in a new strategic investment partner, B.P. Marsh was seen as the ideal strategic fit.
“Whilst ATC has had to operate in challenging environments, the business has shown strong year-on- year growth since investment, which is a solid achievement, and B.P. Marsh looks forward to supporting ATC to achieve further growth in the years to come.
“The increase in valuation of our investment in ATC is testament to Chris and his team's hard work over the past two and a half years, and highlights B.P. Marsh's ability to spot opportunities in early stage insurance businesses and move quickly to secure the investment.”