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Brp Announces 4Q20 + Full Year 2020 Earnings

Highlights from the BRP earnings release and analyst call

Baldwin Risk Partners (NASDAQ: BRP) reported earnings on March 11, 2020, after the market closed and held a conference call with investors to discuss the results. The company reported adjusted earnings of $0.06 per share, largely in line with analyst expectations of $0.05 per share. Below are highlights from the conference call:

  • Total revenue growth (including acquired revenue) was 91% for BRP in 4Q20, meaning the company nearly doubled in size as a result of organic and acquired growth during the quarter.
    • Organic growth during 4Q20 was 17% which includes BRP’s rapidly growing “MGA of the Future” business. The company’s Middle Market and Mainstreet segments reported 5% organic growth for the full year 2020. So far in 2021, the company has seen an acceleration in results from its three non-specialty segments when compared to 4Q20.
    • The company acquired three of Business Insurance’s Top 100 largest U.S. Brokers during 4Q (Insgroup, LLC, Burnham Benefits Insurance Services, Inc., and Armfeld, Harrison and Thomas, LLC or AHT), driving the 74% inorganic growth rate in the quarter. In aggregate, BRP reported spending more than $630M in cash and stock consideration on acquisitions in 4Q alone, and nearly $920M during the entire year (excluding future “earn out” consideration).
    • Regarding COVID-19, the company noted that its Middle Market employee benefits business was impacted in 4Q when employers took action following the realization that another government stimulus package would not be passed before year end. January did not show a continuation of this trend, according to management.
  • The company’s MGA of the Future business was highlighted, particularly the success within the rental segment driven by new products. BRP noted it has almost 550,000 policies in force and that this segment grew 73% organically in 4Q20 and 49% for the full year 2020.
  • The company raised nearly $250M of proceeds from an equity offering in 4Q to support its partnership investments, with nearly $500M cash and credit available for acquisition funding in 2021. The company expects to acquire between $120-150M of revenue in 2021.
  • Looking forward, the company feels the start to 2021 should support organic growth at the high end of the 10-15% long-term range it has previously stated. Margins are likewise expected to be strong in 1Q21 (flat with 1Q20), the company’s seasonally strongest margin quarter. However, margins for the full year 2021 are forecast down from 2020 as the company integrates its large acquisitions from 4Q20 and it takes a full 12-18 months to realize the synergies from those combinations.

Overall, the company and analysts focused on two things related to 4Q performance: acquisitions and the MGA segment growth. The company was optimistic it can achieve its long term 10-15% organic growth rate in all its segments and noted it is seeing positive underlying signs in 1Q21 after some headwinds particularly in the benefits segment in 4Q20.

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MGA: Managing General Agent
This earnings summary has been prepared by Marsh, Berry & Co., Inc. and is not intended to provide investment recommendations on any company. It is not a research report, as such term is defined by applicable laws and regulations, and it does not contain sufficient information upon which to make an investment decision. It is not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any securities, financial instruments or to participate in any particular trading strategy. These materials are based solely on information contained in publicly available documents and Marsh, Berry & Co., Inc. has not independently attempted to investigate or to verify such information.

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