ISO Parent Verisk Analytics Raises $1.88 Billion in IPO

By | October 7, 2009

Insurance risk specialist Verisk Analytics Inc. raised $1.88 billion Tuesday in the biggest IPO by a U.S. company since March 2008 after pricing its shares at a higher-than-expected $22 each.

The sale of the shares, which had been expected to price at between $19 and $21, marked the biggest IPO by a U.S. company since a $19.6 billion offering by credit card operator Visa Inc .

Verisk, which does most of its business through its subsidiary ISO and is owned by a group of insurance companies, collects actuarial and underwriting data related to U.S. property and casualty insurance risks.

All 85.25 million shares in the IPO were being sold by Verisk’s existing shareholders, which include American International Group Inc., Hartford Financial Services Group and ACE Group Holdings.

Warren Buffett’s Berkshire Hathaway Inc. is the only major shareholder not selling a stake through the IPO, which research firm Morningstar in a report posted on its website on Tuesday said was a “vote of confidence” in the company. A Morningstar analyst estimated Verisk shares to be worth between $25 and $30.

By not selling its shares, Berkshire Hathaway’s stake in the company has doubled to 10.7 percent, according to a regulatory filing.

Verisk will get no proceeds from the IPO.

“They have become the industry standard in insurance, risk management, and fraud prevention and detection,” said Scott Sweet, a senior managing partner with advisory firm IPO Boutique.

Verisk, which also provides fraud detection analytical tools, began in 1971 as a nonprofit association of property and casualty insurers to help them meet regulatory reporting requirements.

Revenue rose 15 percent to $503.7 million in the first six months of 2009 over the year-earlier period, while net income rose 12 percent to $90.9 million.

Recent IPOs by risk analytics firms have included the January 2008 offering by RiskMetrics Group Incand the November 2007 IPO by MSCI Inc, a spinoff of Morgan Stanley.

RiskMetrics closed 20 percent below its IPO price on Tuesday, while MSCI was 45.6 percent above its IPO price.

The Verisk IPO and the offering by Banco Santander (Brasil) SA together raised nearly $10 billion on Tuesday.

The IPO was led by Bank of America Merrill Lynch and Morgan Stanley . The underwriters have the option to buy an additional 12.7 million shares.

Shares are set to begin trading on Nasdaq on Wednesday under the symbol “VRSK.”

(Reporting by Phil Wahba; Editing by Ted Kerr, Gary Hill)

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