An initial public offering by Slide Insurance Holdings Inc. would allow the Florida insurtech to capitalize on a hardening homeowners market and its own rapid growth in the Sunshine State.
Slide is looking at an IPO of between $200 million and $400 million, the Insurance Insider reported. A late June or early July listing is on the table, although it could also take place in the fourth quarter of 2024 or early 2025, per the same report.
The improvement in the Florida market benefited Slide's direct incurred loss ratios, which have improved significantly in recent years, falling from 165.6% in 2022 to 43.5% in 2023 and 26.7% during the first quarter of 2023.
Going public now could be an effort to get funding and grow while the timing is right, according to Kaenan Hertz, managing partner for Insurtech Advisors.
"Florida's hardening insurance market presents an opportunity for Slide to capitalize on favorable pricing and growth prospects," Hertz said. "They may want to go public sooner rather than later to take advantage of this window."
Capital raises
An IPO would provide a substantial capital infusion to support Slide's continued expansion, Hertz said. The company likely has ambitious plans to scale further and may have burned through much of its 2021 $100 million series A raise. It had incurred $35 million in debt by June 22, 2023, according to an S&P Global Market Intelligence analysis.
Slide declined to comment on IPO speculation.
Rapid growth
Founded by a veteran of Florida's tumultuous insurance market, Bruce Lucas, and incorporated in 2021, Slide made a name for itself in a challenging region for both property and casualty (P&C) insurers and reinsurers alike.
Slide grew quickly thanks to a process in Florida involving so-called take-out companies, through which an insurer can take on thousands of policies without fees or acquisition costs from Citizens, the state's insurer of last resort.
As a result of this aggressive growth Slide's became one of the largest residential insurers in the the Sunshine State.
In its first full year of underwriting business in 2022, the insurer recorded $481.9 million in direct premiums written, which grew to roughly $680 million the following year. The insurer reported $142.4 million in direct premiums during the first quarter of 2024.
Lucas is vocal about the need for legislative changes in the Sunshine State. In a 2023 interview with S&P Global Market Intelligence, he lauded related efforts, including getting rid of one-way attorney fees, shortening the statute of limitations and getting rid of assignment of benefits.
"I am incredibly bullish on the Florida homeowners market going forward," Lucas said. "That being said, the truth of the matter is that the legacy Florida homeowners carriers are going to struggle for the next three to five years because they have such a large number of open lawsuits and open claims from prior periods that they have not addressed yet."
Caveat Emptor
If Slide goes public, it would be among the few insurtechs to do following a rash of IPOs in 2020 and 2021, according to Tommy McJoynt-Griffith, an insurtech analyst with Keefe Bruyette & Woods.
Many were initially perceived more as technology companies than insurance companies, McJoynt-Griffith said, a perspective that shifted and contributed to post-IPO drops in value.
"Investors took a lot harder look at the actual insurance fundamentals of these companies and saw combined ratios that were well into the triple digits and saw that these were, effectively, very unprofitable companies holistically," McJoynt-Griffith said.
The stock values of P&C insurtechs Lemonade Inc. and Hippo Holdings Inc. plummeted after going public, eventually reaching an apparent value plateau.
While various insurtechs experienced severe drops in stock value soon after going public, some have since made adjustments and seen improvements, McJoynt-Griffith said.
"Over the past two or three years, the notion of trying to focus solely on growing the top line and acquiring customers, frankly, by underpricing and spending excessively on customer acquisition inefficiently is over," McJoynt-Griffith said. "Now, the customer acquisition dollars that insurtechs are deploying are being done so more responsibly, and any customers that they're looking to bring on are expected to be profitable sooner."
Hurricane season
The reported range of $200 million to $400 million would rank Slide among the largest recent IPOs by P&C insurers, according to a Market Intelligence analysis.
The targeted valuation range seems plausible given Slide's rapid growth trajectory, its leading market position and the capital-intensive nature of the insurance business, according to Hertz.
Rumors of Slide's IPO plans came just days after forecasters for the National Oceanic and Atmospheric Administration released a prediction of an above-average 2024 hurricane season. Stock values of various P&C insurers with exposure in Florida and Georgia subsequently dropped.
The ultimate price of Slide's IPO will depend on market conditions at the time and investor appetite, which could be complicated by hurricane exposure during the summer, Hertz said.
"Fall might be more ideal to get past peak hurricane season — but it's a delicate dance," Hertz said. "Too late in the year and you risk running into the holidays when many investors are checked out."