Neptune Flood CEO talks IPO, home insurance during gov’t shutdown

00:00 Speaker A

Neptune Flood is said to begin trading on the New York Stock Exchange today after raising $368 million in its IPO, selling 18.4 million shares at $20 each. The pricing gives the flood insurance provider a market value of about $2.8 billion. We’ll see where it opens up. And joining me now is Trevor Burgess, Neptune Flood CEO, joining us from the floor of the New York Stock Exchange. Trevor, congrats on the IPO and thanks for being here.

00:17 Trevor Burgess

Thank you to be here and happy to be here on the day of the government shutdown.

00:22 Speaker A

Yeah, exactly. Uh, we’re going to talk about that in a moment, but I do want to talk about your business, um, and you know, flood insurance for a lot of folks is tough to get right now, right? Some places are considered uninsurable. So what do you come in with into this market that is different from what we have seen traditionally?

00:47 Trevor Burgess

Listen, for 50 years, the only way to buy flood insurance was through the federal government, through the NFIP, which happens to be closed today.

00:57 Trevor Burgess

What Neptune offers is a better product that’s easier to buy. So, we offer up to $7 million of coverage on your home instead of only $250,000. We’ll cover temporary living expenses when you’re flooded out of your house. And really, we’re focused on, how do we get more Americans covered for this most dangerous peril? It’s incredibly underinsured because people mistakenly think their homeowner’s policy covers the risk of flooding, when it doesn’t. You have to buy a separate policy. And today, the place to buy it is Neptune.

01:22 Speaker A

Well, and it’s also probably undercovered because again, some people just feel they can’t afford the premiums because in some cases, the flood risk is in many parts of the country, the flood risk is pretty high and so the premiums therefore are very high. So, how do you sort of address that or do you just have to charge those high premiums to some folks?

01:43 Trevor Burgess

Listen, what Neptune does is totally different than the federal government who uses low-risk policies to subsidize high-risk policies. We’ve always told the truth to the consumer around their risk as associated with the price. So if we tell you that it’s $300 a year, that’s pretty low risk, but you should still buy a policy. If we say it’s $10,000 a year, you should really think about whether or not that’s a house you want to buy, right? We’re telling the truth to the consumer that they can so they can make really valid risk decisions.

02:14 Speaker A

And I’m curious, you guys, um, you underwrite the policies but you don’t hold the policies, right? That’s so it’s um that’s something that you outsource to financial institutions. So talk to me a little bit about the thinking behind that model.

02:28 Trevor Burgess

Yeah, so Neptune is a software company. We’ve built an artificial intelligence engine powered by data science that does a really good job at underwriting that flood risk, at selecting the risk, pricing the risk, and then we allocate those policies to seven large global insurers who then actually take on the risk. It’s a really neat model where we can focus on what we’re great at, which is this artificial intelligence, data science uh driven company.

02:53 Speaker A

Um, and you guys are also profitable, um, which is not a given for for IPOs ever and especially, um, recently here. So, what can you tell us about, um, what the growth outlook looks like going forward on both the profitability and on the revenue front?

03:08 Trevor Burgess

Yeah, Neptune is a new breed of company. We were AI native from the very beginning. So everything we have built is with super efficiency. We have 60 employees and 260,000 customers. That means we have revenue per employee of $2.5 million, EBITDA per employee of a million and a half dollars. It’s a very, very efficient model and we’re able to use technology to efficiently grow.

03:31 Speaker A

Um, I want to circle back around to the government shutdown, right? Um, how at all does this affect your business, um, when you see something like this happening?

03:42 Trevor Burgess

Yeah, so there are 1,300 homes a day that require flood insurance in order for their, you know, purchase to close. If you live in a high-risk flood zone and you have a government-backed mortgage, you’re required to buy flood insurance. That’s from the NFIP or from Neptune. With the NFIP closed, Neptune’s one of the only games in town to be able to actually ensure your home and make sure that your home closing can still take place today or tomorrow. I hope the government shutdown doesn’t last a long time, but while it does, Neptune’s going to be able to prove to the national market that we are here and we’re able to help and we can make sure those home closings can still take place.

04:18 Speaker A

Interesting. I imagine part of your quest here, Trevor, is to let people know that you even exist because as you say, there hasn’t been that alternative in the past. Is that part of the reason why you guys decided to go public to sort of up the profile, get more funding to to get the word out?

04:33 Trevor Burgess

Yeah, the number one reason that we’re going public is to build that national brand, to let consumers and insurance agents know that they have a viable alternative to the NFIP. And it’s a great day to do it, to tell the story when we’re open for business and the NFIP is closed.

04:50 Speaker A

So do you expect that sort of uptick in in volumes?

04:54 Trevor Burgess

Well, we’ll see. We’re working on getting the word out. We’re communicating with our agents. We’re communicating uh with consumers and letting them know that if they have a home closing that’s in jeopardy today, they should check out Neptune. We hope that we’ll be able to help and make sure that their home closing can still go on as scheduled.

05:08 Speaker A

Trevor, thanks so much for joining us. We really appreciate it.

05:12 Trevor Burgess

Thank you.