By Ateev Bhandari and Anuj T
(Reuters) -Neptune Insurance shares jumped 12.5% in their New York Stock Exchange debut on Wednesday, valuing the company at nearly $3.11 billion and making it the latest insurer to capitalize on a buoyant listings market.
Shares of the St. Petersburg, Florida-based flood insurer opened at $22.50 apiece, compared with the $20 issue price.
Neptune and some of its existing shareholders sold 18.4 million shares in an initial public offering on Tuesday, at the top of its target range of $18 to $20 apiece. Based on the IPO pricing, the company was initially valued at $2.76 billion.
Traditionally seen as resilient to broader economic downturns, insurers have featured as prominent players in the long-awaited rebound of the U.S. IPO market, buoyed by a rallying equity market and expectations of easing interest rates.
Demand for risk-mitigation products has been rising as climate-related events such as floods become more frequent and destructive.
The flood insurance market remains dominated by the National Flood Insurance Program, a federal initiative that has been disrupted by the latest federal government shutdown.
“There’s nothing like highlighting the availability of your business when your main competitor is closed,” Neptune CEO Trevor Burgess told Reuters in an interview.
While such shutdowns are typically of a brief duration, programs like NFIP will not be “issuing any new policies and there may be delays in even renewing policies,” Burgess said.
In its prospectus, Neptune says NFIP’s subsidized funding has created a cost disadvantage for private insurers.
As part of its push to gain market share, Neptune uses artificial intelligence and machine learning to underwrite flood insurance and employs no human underwriters, with 100% of underwriting done through its “Triton” engine.
“We have 60 employees and 260,000 customers. We do $2.5 million of revenue per employee,” Burgess added.
(Reporting by Ateev Bhandari and Anuj T in Bengaluru; Editing by Shilpi Majumdar and Tasim Zahid)
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