Updated: Orion180 Insurance valuation reaches $1.14 billion, but stock price drops on first day of listing

Analyst comments were added in paragraphs 8 and 11.

Atharva Singh/Pragyan Kalita

Reuters, September 18 - Orion180 Insurance (OIG.O) saw its shares fall on its first day of trading on Nasdaq last Friday, reaching a market capitalization of $1.14 billion, which has served as a warning to other insurance companies planning to list later this year.

The Melbourne, Florida-based company priced its IPO at $12 per share, below the offering range of $15 to $17, raising $240 million with an opening price of $11.50.

The listing comes as the autumn IPO season gets off to a rough start, with concerns over artificial intelligence spending, the Federal Reserve’s recent rate hikes, and rising bond yields all dampening investor enthusiasm for new listings.

However, Orion180 founder and CEO Kenneth Gregg said, "Regardless of the macro environment, this is the right decision for our business and our team."

Founded by Gregg in 2018, Orion180 provides excess and surplus (E&S) homeowners insurance in 14 U.S. states. Its major markets include Texas, California, and Florida.

"Our goal is the entire homeowners insurance market because we offer admitted insurance products through the E&S model. We see significant opportunities in our core business areas, and will expand our reach in due course over time," Gregg added.

As climate-related disasters such as floods and wildfires become more frequent and cause greater losses, demand for insurance products has risen; at the same time, property insurers have raised premiums in many markets to reflect higher payout levels.

"The E&S market is designed to underwrite risks that many insurers cannot or do not want to cover on standard terms. E&S insurers often have greater flexibility in pricing, coverage limits, and policy design," said Kat Liu, VP at IPOX.

Orion180's debut is expected to test investor interest in the sector and could set the tone for other insurers considering going public later this year, as investors look to increase their allocation to insurance stocks.

Bamboo Insurance Services, backed by CVC, also plans to go public next week, targeting a valuation of $3.24 billion (link). Both companies have expanded in markets where traditional insurers have reduced their exposure.

"In the case of Orion180, I think this opportunity has been accelerated by cyclical market dislocations, rather than being caused solely by the exit of larger insurers from the market," Liu added.

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