Flood Insurer Neptune Insurance Buoyed Higher In First-Day Trading

Shares of Neptune Insurance Holdings were up 14% in early first-day trading Wednesday, as the market tides delivered a moderate rise for the flood insurance policy provider.

The St. Petersburg, Florida-based company priced shares at $20 a piece Tuesday afternoon,  the top of the projected range. The offering raised $368 million for Neptune and set a valuation around $2.76 billion. The company trades on the New York Stock Exchange under the ticker “NP.”

Founded in 2018, Neptune bills itself as an AI-enabled platform for insurers to offer flood coverage to residential and commercial customers. The company underwrites policies but does not handle claims or take balance sheet insurance risk, opting instead to work with other insurance providers.

So far, it’s working out profitably, with business growing as well. In the first half of this year, Neptune reported revenue of $71.4 million — up 34% year over year. The company posted net income of $21.6 million, more than doubling from the same period last year.

Neptune cites climate change as a driver of future growth in its platform, noting that “areas with low perceived flood risk today (e.g., non-coastal regions) could face increased frequency and intensity of flooding due to additional rainfalls and storms.” 

Additionally, it foresees the possibility of more areas with severe inland flooding being designated as mandatory flood insurance zones for policyholders with federally-backed mortgages.

Today, per Neptune, the largest U.S. provider of flood insurance and the holder of the majority market share is the National Flood Insurance Program, a government-run entity that it cites as its main competitor. Per Neptune, however, “its limited product offerings often fail to meet policyholder needs.”

Neptune’s growth to date has been funded in part through private investors.The company lists Bregal Sagemount and FTV Capital as its largest holders of Class A shares, with 28.9% and 25.4% stakes, respectively.

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Illustration: Dom Guzman