Neptune Insurance is returning to the equity market with a secondary share offering just months after its public debut, as existing investors move to sell portions of their holdings.
The New York-listed parent company of Neptune Flood Incorporated announced that selling securityholders plan to offer 8,355,615 shares of Class A common stock in a public offering. In addition, underwriters will have a 30-day option to purchase up to 1,253,342 additional shares.
Neptune Insurance will not issue any new shares as part of the transaction. Instead, proceeds from the offering will go directly to the selling securityholders.
However, the company will participate in the transaction through a share repurchase agreement. Neptune Insurance said it intends to buy back 835,561 shares from the underwriters at the same price paid to the selling shareholders. The company plans to retire those shares following the closing of the offering.
The repurchase remains subject to the completion of the broader offering and customary closing conditions.
Morgan Stanley is serving as the lead left bookrunner for the transaction. J.P. Morgan and Goldman Sachs & Co. are acting as active bookrunners. Neptune Insurance said the offering will be conducted solely through a prospectus.
The offering announcement follows Neptune Insurance’s first full quarter of financial reporting as a public company.
During the first quarter, revenue increased 29% to $37.8 million compared with the same period last year. Written premium also rose 26% to $86.7 million between January and March.
The company reported 295,000 policies in force at the end of the quarter, continuing a trend of double-digit growth for the St. Petersburg, Florida-based insurer.
Net income declined during the quarter despite revenue and premium volume growth. Neptune Insurance reported net income of $7.3 million, down 26.1% from the prior-year period.
According to the company, the decline primarily reflected an increase in share-based compensation expenses associated with its public listing. That expense rose to $6.9 million during the quarter, compared with $84,000 a year earlier.
Neptune Flood has expanded as a private market alternative to the federally backed National Flood Insurance Program. The company uses a technology-driven underwriting platform to provide residential and commercial flood insurance coverage across the United States.
Private flood insurers have increased their presence in the market in recent years as catastrophe losses continue to rise and attention grows around federal flood insurance coverage limits.
Neptune Insurance has not disclosed the identities of the selling securityholders participating in the offering. The company also has not announced an expected pricing range or a target closing date.
Pricing details are expected to be included in the preliminary prospectus once it becomes available to investors.
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