B.P. Marsh & Partners PLC (BPM) Earnings Call Transcript & Summary

We'll start in a second. As a reminder to you to have your phones on silent and there's no planned fire alarm today. So if it goes off, please follow the signs.

Thank you very much indeed. [Operator Instructions] You are now live, we will hand over to the presenting team this morning. Thank you.

Good morning all. Welcome to our shareholders and visitors. I'd like to welcome you to the B.P. Marsh & Partners Plc Annual General Meeting. I'd like to welcome shareholders who are viewing the meeting electronically as well as those present in person here today. I'm Dan Topping, Chief Investment Officer of B.P. Marsh & Partners Plc and Chair of this meeting. I'd also like to introduce Francesca Chappell, our Chief Finance Officer; and Ruth Pearson, our General Counsel and Company Secretary. As we recently gave an Investor Meet company presentation following our year-end 31st January 2025 annual results, we are not going to present again on our annual results. The recording of the 10th June 2025 presentation remains available on the IMC portal. We will, however, deal with questions you may have after the formal business of the meeting. It's now just after 11:00 a.m., so I will commence. Quorum. As we have a quorum, I now declare the meeting open. Practicalities. I'm pleased to inform you that the meeting today is being recorded and live streamed so that shareholders and other stakeholders who cannot be present can view it on the company's profile on Investor Meet company both live and as a recording in their own time. By way of a reminder, shareholders who are viewing the AGM online will not be participating in the voting of resolutions and will hopefully have submitted their votes by proxy in advance of the meeting notice. Ladies and gentlemen, I would now like to start the formal proceedings of the Annual General Meeting. The notice of Annual General Meeting, together with explanatory notes was posted to shareholders on 24th of June 2025. Accordingly, the requisite notice of the meeting has been given. I propose, therefore, that with your consent, the notice of the meeting should be taken as read, is that agreed?

Agreed.

Thank you. To accurately reflect the views of shareholders of the company, voting today will be done by way of a poll on each of the resolutions put to the meeting. This is seen as best practice as it gives all shareholders the opportunity to participate in the decision-making of the company and have their votes recorded in proportion to the number of shares they hold. I'm appointing Equiniti Group, the company's registrar, to act as scrutineers. A summary of each resolution will be shown on the screen together with a breakdown of the proxy votes we have received thus far before I put each resolution to the vote. As it will take some time to complete the poll procedure, the final results of the voting, including the proxy votes on each of the resolutions will be announced through our regulatory information service and published on our website as soon as reasonably practical. You have 3 options for each resolution: You can vote for the proposed resolution, against the proposed resolution, or you may withhold the vote. A vote withheld is not a vote in law and will not be counted in the calculation of proportion of the votes for or against the resolution. Will you please complete your poll card by ticking the appropriate box next to the relevant resolution depending on how you wish to cast your vote. Once all votes have been taken on the resolutions, please would you sign the poll card and hand your completed card to Ruth Pearson. Should you require any further assistance, our registrars or Ruth Pearson will be happy to assist you. With your permission, ladies and gentlemen, I should like to proceed by dealing with the formal business of the meeting at the outset before moving on to any questions. Unless anyone has any questions relating to a specific resolution, in which case, please raise them now. Thank you. We will now proceed to vote on the resolutions, which are formally proposed at the meeting. The full text of each of the resolutions is set out in the notice of the meeting, a copy of which you will have received. Resolutions 1 through 12 are proposed as ordinary resolutions and require a simple majority to be passed. Resolutions 13 and 14 are proposed as special resolutions which, to be passed, require a majority of 75% in favor of the resolution. Resolution 1, to receive and adopt the audited financial statements of the company for the financial year ended 31st January 2025, together with the report of the directors and the report of the auditors. I now propose that the annual report and accounts for the year ended 31st January 2025 be received and adopted together with the annual report of the directors and the report of the auditors. As I explained, to vote, would you tick the appropriate box on your poll card to vote for the resolution or against the resolution or you may withhold your vote. These instructions apply to all resolutions and will not be repeated going forward. Thank you. [Voting]

I declare the poll closed. Poll now closed. Subject to confirmation by our registrar, the resolution is carried. Resolution 2. The second resolution is to approve the report of the Remuneration Committee. I now propose to receive and approve the report of the Remuneration Committee as set out on Pages 33 to 38 of the company's report and accounts for the financial year ended 31st January 2025. [Voting]

I declare the poll closed. Subject to confirmation by our registrars, the resolution is carried. Resolution 3, to declare a final dividend of 6.78p per share -- per ordinary share as recommended by the directors. If approved, the recommended final dividend will be payable on 25th July to all shareholders on the register of members at the close of business on the record date of 27th June 2025. I therefore propose to approve the final dividend of 6.78p per ordinary share. [Voting]

I declare the poll closed. Subject to confirmation by our registrars, the resolution is carried. Resolution 4. The fourth item on the agenda is the reappointment of Mr. Brian Marsh as a Director of the company. I therefore propose to reelect Mr. Brian Marsh as a Director of the company. Will you please vote now. [Voting]

I declare the poll closed. Subject to confirmation by our registrars, the resolution is carried. Resolution 5. The fifth item on the agenda is the reappointment of Ms. Alice Foulk Director of the company. I therefore propose to reelect Ms. Alice Foulk as a Director of the company. Will you please vote now. [Voting]

I declare the poll closed subject to confirmation by registrars, the resolution is carried. Resolution 6. The sixth item on the agenda is the reappointment of myself as a Director of the company. I therefore propose to reelect Mr. Daniel Topping as a Director of the company. Will you please vote now? [Voting]

I declare the poll closed. Subject to confirmation by our registrars, the resolution is carried. Resolution 7. The seventh item on the agenda is the reappointment of Mr. Pankaj Lakhani as Director of the company. I therefore propose to reelect Mr. Pankaj Lakhani as a Director of the company. Will you please vote now? [Voting]

I declare the poll closed. Subject to confirmation by our registrars, the resolution is carried. Resolution 8. The eighth item on the agenda is the reappointment of Mr. Nick Carter as a Director of the company. I therefore propose to reelect Mr. Nick Carter as a Director of the company. Will you please vote now? [Voting]

I declare the poll closed. Subject to confirmation by our registrars, the resolution is carried. Resolution 9. The ninth item on the agenda is the appointment of Mrs. Francesca Chappell as a Director of the company. I therefore propose to elect Mrs. Francesca Chappell as a Director of the company. Will you please vote now? [Voting]

I declare the poll closed. Subject to confirmation by our registrars, the resolution is carried. Resolution 10. To appoint RSM UK Audit LLP as auditors of the company until the conclusion of the next general meeting before which accounts are laid. I therefore propose to appoint RSM UK Audit LLP as auditor of the company until the conclusion of the next general meeting before which accounts are laid. [Voting]

I declare the poll closed. Subject to confirmation by our registrar, the resolution is carried. Resolution 11. The 11th item on the agenda is to authorize the directors of the company to determine the remuneration of the auditors. I therefore propose to authorize the directors to determine the remuneration of RSM UK Audit LLP. [Voting]

I declare the poll closed. Subject to confirmation by our registrars, the resolution is carried. Resolution 12. The 12th item on the agenda is to authorize the directors pursuant to and in accordance with Section 551 of the Companies Act 2006, the act generally and unconditionally to exercise all the powers of the company to allot ordinary shares or grant rights to subscribe for or to convert any securities into shares in the company up to a nominal amount of GBP 1,236,666.66. I therefore propose to authorize the directors pursuant to and in accordance with Section 551 of the Companies Act 2006 to allot ordinary shares or grant rights to subscribe for or to convert any securities into shares in the company up to the nominal amount previously mentioned.

A question regarding Resolution 12. Obviously, given the level of cash within B.P. Marsh & Partners, why is this is still required, say, for the next year?

In terms of that amount, I suppose to increasing it. I think it's prudent at this stage, but the amount is always under review, and we'll remain being opportunistic as a company should it require anything over and above this that would sit outside the ordinary course of business. I suppose we see this as a safe harbor for the shareholders that we won't go out and do anything perhaps outside of this without coming back to them as required by the Companies Act. Resolution 13. I think it's Resolution 13. The 13th item on the agenda is the granting of authority to allow the company to allot equity securities wholly for cash pursuant to the authority given in Resolution 12, which is proposed as a special resolution. I therefore propose to authorize and empower the directors subject to the passing of Resolution 12 above in accordance with the Companies Act to allot equity securities either in connection with a preemptive offer or if not up to an aggregate amount of GBP 185,500 disregarding preemption rights, such power to expire at the conclusion of the next Annual General Meeting of the company or on 31st July 2026, whichever will be earlier. Will you please vote now? [Voting]

I declare the poll closed. Subject to confirmation by our registrars, the resolution is carried.

Okay. Thank you very much. I've got about 6 questions. One is in the annual report, there's reference to the secondary placing, which removed half of the relevant shareholding. I would assume the 60-day lockup is about June, therefore, are there any further proposals from the smaller share accounts?

Dealing with the detail, I believe the lockup ended on the 8th of July. So that 60-day lockup is now over. At this stage, all I would say is that we're in constant dialogue with our advisers, Singer and Panmure as regards to the 9.8% shareholding owned by Ardonagh and we, at this position, don't have any update. But clearly, we're aware of it and acting in the best long-term interest of the company. If anything were to arise that we thought in the best long-term interest of the company, we would act upon it in accordance with the Companies Act and any other regulations that we do. But at this stage, the lockups just ended. We've just done our AGM. We'll have to wait and see ultimately it's the discretion of Ardonagh as regards to what they do for their own best interest.

Understood. One -- second question I have is, obviously, if -- does the company have any rules in terms of if an investment was ironically so successful, for example, reached half the value of the business or more than that. Are there any rules or restrictions that say you cannot do that.

Short answer, no. But that being said, if that were to happen, as was the case with Hyperion in the mid-2010s, where it did account for about, we will say, 60% of the overall NAV, it did come under significant Board and investment level oversight to make sure that our exposure was managed and monitored. But ultimately, we wouldn't want to be forced into selling a very successful investment. And given the size of the NAV, if a company within the portfolio went to 50% or 60% of NAV, we feel was doing pretty well. But we would ensure that there was a requisite oversight on that portfolio company to make sure that we're aware of the risk it posed from a systemic standpoint to B.P. Marsh given the size of it [indiscernible] to our NAV.

Okay. My third question is clearly, there are a number of investments. Are there any views on investments, say, on any individual investments, say, if they start competing against each other. I mean the market is so large, I don't necessarily expect that to happen. But are there any views if that did happen?

It actually has happened within the portfolio. It's not something that we encourage. But that being said, we're minority investors. So if they're competing over business, it's for the relevant investee company to put their best foot forward and present the case why they should win that business as opposed to other portfolio company, whether they win the business won't be down to B.P. Marsh being a shareholder. But broadly speaking, all our shareholdings sit in that minority spot between generally 20% to 40%. So it's not like if, for example, we did have a majority position versus a minority, you could see the creation of sort of moral hazard saying, why don't we favor the one that we own more of because we don't do that, it's something that we've observed, but it's never involved us.

Okay. Within the market commentary, talk about softening rates due to competition rate capacity. Have those soften rates had any effect on any of B.P. Marsh's investments and/or the valuations used on those investments?

Not materially. So we are seeing rates soften in various parts of the market. I'd say predomantly North American properties seeing significant softening. That being said, because of the way we invest or are focused investing on early stage and start-ups, even if rates are softening, generally speaking, it's new business for our portfolio companies and they can be opportunistic, especially in some areas, for example, one underwriting agency is seeing more business at rates that it's prepared to underwrite at compared to other markets that have been on it in prior years where they written x percent renewals coming in at 75% of x or 50% of x, and they can't justify that to their underwriting committee. So either have to come off risk or scale back their line on that risk. And therefore, that provides opportunities for our portfolio companies or does provide an opportunity for our portfolio companies to step in. So if we were investing in larger, more mature businesses that we've seen grow significantly over the last 3 years, that would probably be a concern for us in as much as was the growth organic or was it, in fact, as a benefit of the premium rates going up with the same level of work being done now. If that were to go the other way and see 7 years of softening premiums, then it could be a challenge because of our focus and we don't take balance sheet risk of investing in insurers, a byproduct of softening rates is there is greater capacity within the market. So we would feel that our portfolio companies on the broking or underwriting side should be beneficiaries of that excess capacity for them to underwrite on behalf of the carriers.

Okay, thank you. My final 2 questions on new investments. So the first one is by -- it's actually a pre-submitted, pretty recent, any progress on that because it is a noninsurance business.

It is. In terms of progress, it's completed 2 acquisitions. There's a few coming down the turnpike. We finished in quite well. It's very early stages. But whilst it's a departure from our investments in insurance distribution, it's still close to our fundamental approach of backing the right partners. And we see the management running IO as good partners who understand their business, the shareholder partners in Janus Henderson as good partners to invest alongside and also James Kaberry, who's CEO -- Co-CEO of Titan, bought LEBC from us. He's also a shareholder in IO, and we've had good deals with that as you've seen, not related IO, we renegotiated the terms of the deferred consideration with LEBC and Aspira with Titan and the performance criteria attached to that has been taken away such that we've got guaranteed payments on those deferred consideration payments in the first GBP 5.9 million received in June of this year, and there's further amounts north of GBP 10 million that we anticipate over the course of '26 and '27. So with the partnership with Titan and flexing the terms of deferred consideration and looking at IO, we thought it was actually somewhat of a typical approach to B.P. in order to putting these bespoke investment proposals together in financial services backing good people in partnership with them and other shareholders.

And my last question is Amiga Specialty, obviously, has just started [indiscernible] gentlemen Adam Kembrooke.

So Adam Kembrooke was Managing Director of Nexus North America. We had a very successful investment in Nexus, which became Kentro. We sold that to Brown & Brown. Obviously, with all acquisitions, everybody fits in and there are departures, new arrivals. Adam honoring his contractual obligations was a departure. He came to us and said, look, I enjoyed departing B.P. Marsh. I think I've got a plan, which I think you'll understand, focusing on specialty underwriting in a similar vein to what he previously experienced as prior employment. We saw it as credible. There are other shareholders that we invested alongside that we previously invested alongside in an area of business that we like to think we understand very well. And as such, whilst it's very early stages, we see significant upside potential in Amiga Specialty going forward.

Thank you very much.

I think the 1 or 2 questions by IMC. But given we've dealt with them in the room, what I propose on that is that we will provide written responses as soon as practical for those by IMC and on our website. So any question on the Board will be dealt with and not ignored. The meat of the matter, closing remarks. That concludes the business of this meeting. I thank you all for your interest and attendance and declare the meeting closed. Confirmation of the final results of the meeting will be announced to the market through our regulatory information service and posted on our website as soon as available.

Thank you very much indeed to the company and to investors for joining us online. That now concludes today's session. We'll redirect you for your feedback.