HCI Postpones Home and Flood Insurer TypTap’s IPO Until ‘Conditions Are Appropriate’

January 13, 2022

Holding company HCI Group announced it is postponing the previously announced initial public offering of its subsidiary, TypTap Insurance Group, Inc.

Paresh Patel, HCI chairman and CEO, said current market pricing “does not accurately reflect TypTap’s value” and this the board of directors has agreed to monitor market conditions and “move forward with a TypTap IPO when and if conditions are appropriate.”

He said the company has the resources to execute TypTap’s growth plan without the funds raised from an IPO.

The company filed a draft IPO statement with the Securities and Exchange Commission last August. Last November, the company said it was moving ahead with the IPO. It planned to list on the NYSE under the symbol TYTP.

TypTap has been expanding with the help of $100 million in financing from investment firm Centerbridge Partners it received in March. Centerbridge’s investment reflects about 11.75 percent of TypTap, based on post-money valuation for the company of about $850 million.

TypTap, which was founded in 2016, reported gross premiums earned of $78.8 million and $30.9 million in 2020 and 2019, respectively, and gross premiums earned of $119.4 million for the nine months ended September 30, 2021. It incurred net losses of $12.4 million in 2020 and $6.9 million in 2019, and a net loss of $14.7 million for the nine months ended September 30, 2021.

Other IPOs

TypTap is among a handful of technology-driven insurers, or insurtechs, looking to go public. Metromile, Lemonade, Root and Hippo have gone public.

Kin Insurance, a digital direct-to-consumer home insurer that targets catastrophe-prone areas, plans to go public by merging with Omnichannel Acquisition Corp., a reverse merger, or special purpose acquisition company (SPAC). The SPAC agreement is expected to close in the 2022 first quarter.

Insurtechs are not alone among insurance entities going public. Ryan Specialty Group completed an IPO in 2021 and classic car insurance specialist Hagerty recently went public in a SPAC merger with Aldel Financial Inc.

TypTap is also not the first insurer to cancel or postpone an IPO. FWD Group Ltd., the Hong Kong-based insurer backed by billionaire Richard Li, and Hallmark Financial Services, Inc. announced last month that they would not proceed with planned IPOs.

HCI Group, Inc. owns subsidiaries engaged in homeowners insurance, reinsurance, real estate and information technology services. HCI’s leading insurance operation, TypTap Insurance Co., is a technology-driven insurer that is expanding nationwide to provide homeowners and flood insurance.