Shares of Verisk Analytics Inc., an insurance data specialist that first signaled that it planned to offer shares to the public shortly before the collapse of Lehman Brothers, soared Wednesday in their trading debut.
The Jersey City, N.J., company, whose selling stockholders include insurance giants American International Group and Hartford Financial Services Group Inc. raised $1.9 billion from selling 85.3 million shares at $22 each, more than the $19 to $21 per share range that had been expected. The stock rose $5.25, or 23.9 percent, to $27.26 in midday trading on volume of 52.6 million shares.
The IPO market has been heating up recently after taking a big hit in 2008 amid trouble in the financial markets and the recession. Since then, a broad stock market rally and a sense that investors’ appetites are again whetted for IPOs is prompting a range of companies to go public after long delays. Verisk was joined Wednesday by the debut of shares of Banco Santander (Brasil) SA, the Brazilian unit of Spain’s largest bank, which raised $8.1 billion. Its shares were down 2.5 percent.
Verisk’s IPO is one of the largest U.S. initial public offerings this year, but none of the offering’s proceeds will go to Verisk. Instead, cash from the IPO will go the insurance companies who are selling shares, including AIG, Hartford and Travelers Cos.
Verisk says it is the largest aggregator and provider of actuarial and underwriting data pertaining to U.S. property and casualty insurance risks. In 2008, Verisk’s customers included the biggest 100 property and casualty insurance providers as well as leading health insurers, mortgage insurers, mortgage lenders and reinsurers.
“Technology is the in thing in the IPO market,” said John Fitzgibbon of IPOScoop.com. Another factor likely helping Verisk’s shares is that one of its major shareholders is famed investor Warren Buffett’s Berkshire Hathaway Inc., which owns 7.2 million shares, and isn’t selling any in the offering.
“People have a tendency to feel a bit more comfortable if Berkshire Hathaway buys a stock or owns it,” Fitzgibbon said.
Verisk said it earned $90.9 million on sales of $503.7 million in first half of the year, compared with income of $80.9 million on revenue of $437.7 million in the year-earlier period.
Its ticker on the Nasdaq exchange is “VRSK.”
Verisk first filed for an IPO in August 2008, just before the collapse of investment bank Lehman Brothers triggered a global financial crisis. Insurance companies struggled during the financial turmoil as many of their investments soured, causing them to post steep losses and looking for ways to build capital.
The IPO market went through its worst year in three decades in 2008. But in the third quarter this year, the number of IPOs more than tripled compared to the same period in 2008. The week of Sept. 20 was the busiest week for trading debuts in almost two years, according to business information provider Hoover’s.
“The market is starting to open up,” Fitzgibbon said. Verisk’s performance “is a normal expectation when the IPO market arises from its ashes. It’s the phoenix.”
Santander’s shares slipped, however. That’s because it isn’t technically an IPO ? the bank had priced shares in Brazil. That meant the U.S. IPO “behaved like a secondary offering,” Fitzgibbon said, rather than as a brand-new opportunity to invest.
Copyright 2009 The Associated Press.