Baldwin said that BRP’s capital model is a reflection of its broader strategy and how it thinks about creating success over the longer term.
“We didn’t create a capital model and then build our strategy around it; rather we established our strategy and then sought out a capital model that would best support our strategy,” Balwin said.
He added: “Our strategy is a stakeholder-centric approach to building the very best insurance brokerage and consulting firm that the globe has ever seen. Our view is that we make decisions based on the lens of what is going to uphold the best interests of our four core stakeholders and the financial success of our shareholders will follow.”
Baldwin said that BRP views its core stakeholders as clients, colleagues, insurance company partners and communities.
The Tampa, Florida-based broker came to the conclusion that the best strategy was going to market as a public company where there is “meaningful insider and colleague ownership”, the executive said.
BRP went public in October 2019 at $14 a share, raising around $230mn. Although its stock dipped below the offering price in the early stages of the pandemic, it has risen since then and closed at $37.94 on Tuesday.
Baldwin noted that all of BRP’s employees are shareholders in the business.
“As we sit here today and we compare ourselves to some of the private equity-sponsored strategies that are out there, we have far more significant colleague ownership of our business than virtually all of those private equity-backed strategies,” said Baldwin.
He added: “We think about those public market shareholders as a stakeholder in the business but importantly we operate as a colleague-owned partnership where we are investing for the long term to deliver the very best outcomes for our stakeholders over time.”
Since going public, BRP has grown rapidly, both organically and through acquisitions.
In 2020 BRP reported 16 percent organic growth and has followed that up with 24 percent organic growth for the first nine months of this year.
On the acquisition front, the broker has announced seven acquisitions of top 100 US independent P&C agencies since the beginning of the fourth quarter of 2020.
The most recent large acquisition was that of Construction Risk Partners (CRP) last month. Branchburg, New Jersey-based CRP’s $32.6mn of annual revenues make it the 65th biggest US independent P&C agency, BRP said.
In total BRP’s acquisitions in 2021 have represented over $200mn in annual revenues.
Baldwin said there are two attributes that BRP looks for in a partnership.
“The first is: is there real value alignment – do we think about success in the same way, culturally are we similar? Second, does this organisation have all the attributes necessary, and make the requisite investments in talent and resources to drive outsized organic growth?” the executive explained.
He added: “If you are driving organic growth at a rate that exceeds your peer group you are being validated in the market every single day by your clients and colleagues and there is no better sign of long-term success than that.”
Baldwin said BRP has a “very robust pipeline” of prospective acquisitions, and suggested that oher buyers do not necessarily look for the right attributes in an acquisition partner.
“While pricing and multiples are certainly at relative highs for our industry, we think the market misunderstands and misprices growth and quality over just pure earnings,” Baldwin said.
“As a result we are focused on the businesses that have more durable longer-term growth trajectories on an underlying basis and we believe over a relatively finite time period will generate substantial outperformance from a shareholder return perspective.”