It's Like Old Times for IPOs and Insurers Are Piling In

Remember the go-go ‘90’s, when fast money was made in virtually every initial public offering? Shares of a fresh face would double on the initial day of trading, investment banks like Morgan Stanley that were managing the offering would grab their seven percent and no one would mind except for the average investor, who couldn’t get in on the IPO until all the money had been made.

Those days seem to be back again, and insurers should get in while the getting’s good.

No less a sharpie than Warren Buffett, the Oracle of Omaha, is very aware of that. Buffett hasn’t been making a lot of money in investing lately, but he’s doing bang-up in the IPO market.

Yesterday Verisk, an risk assessment and actuarial data company partly owned by Buffett’s Berkshire-Hathaway, went public at $22 and is now at $27, a nearly 23 percent gain. Following on the heels of that, life insurance firm Symetra Financial, also partly owned by Berkshire-Hathaway, is also scheduled to launch shortly with a $575 million stock sale.

Business Insurance reports that Verisk’s IPO raised $1.9 billion with its sale of 85 million shares, making it the biggest IPO since credit card operator Visa Inc. raised $19.6 billion in 2008 - which seems like such a long time ago.

Of course it’s no secret that American International Group under new CEO Robert Benmosche is ready to unload Alico, its Asian life insurance unit, with more to follow. Benmosche would like nothing better than to use the stock market to pay off his TARP debt to the federal government.

The prospects for insurance IPOs are one more indication that credit ratings agencies are far off base with their doom and gloom scenario about insurers’ capital. It’s easy to raise more. And, as long as the current IPO frenzy continues, there’s no point in not following Buffett’s lead and taking full advantage of it.

Because - eventually - it will end.