Flood Insurer Neptune Goes Public as Federal Program Stalls

When D.C. gridlock froze the federal flood insurance program, one Florida startup saw an opening.

Neptune Insurance Holdings made its Wall Street debut on Oct. 1 — the same day the government shutdown suspended the National Flood Insurance Program’s ability to sell or renew policies, the Wall Street Journal reported. Neptune’s stock dipped 3.5 percent on Friday but remains up more than 30 percent since its $20 debut.

The St. Petersburg-based insurer, founded in 2018, is carving out a niche in the high-risk, low-profit world of flood coverage. Neptune’s IPO, which raised its profile on the New York Stock Exchange under the ticker NP, came as millions of homeowners faced uncertainty over their coverage.

The National Flood Insurance Program, or NFIP, covers about 4.7 million policyholders nationwide. Neptune’s book is a fraction of that at 260,000, but chief executive officer Trevor Burgess says technology gives his firm an edge.

The former Morgan Stanley banker — who once bought a Florida bank in the depths of the financial crisis — believes advanced flood modeling and automated underwriting can turn flood coverage into what he calls an “investible asset.” Rather than paying claims itself, Neptune uses capital from global insurers like AXA XL, Fortegra and Palomar to back policies it originates.

Flood insurance has historically been a money-loser; NFIP posted nearly $40 billion in losses over the last two decades. But Burgess is betting that improved data and a lean private model can change that calculus.

The timing may prove prescient. The shutdown prevents the NFIP from writing new business, giving private players room to grow. Analysts at A.M. Best, however, caution that it’s unclear how far insurers’ appetite for flood risk will stretch.

Private carriers collect roughly a quarter of flood premiums nationwide, a share that has been growing steadily as federal pricing reforms phase in higher rates for coastal properties.

The question is whether enough homeowners — many already facing soaring insurance costs — will want to buy flood coverage where it’s not required.

For Burgess, the long-term bet is clear. As he put it, federal rates are finally catching up to the real cost of risk. “Eventually,” he said, “it will be a real price that Neptune will be able to compete with.”

— Holden Walter-Warner