Neptune (NP) Q4 2025 Earnings Call Transcript
And because those partners have seen hundreds of millions of dollars in underwriting profit flow through Neptune Insurance Holdings Inc., our average commission rate increased 35 basis points year over year. That is not us negotiating harder. That is the market telling us our AI works. Where we sit. Before I explain why AI is a tailwind for us, it is worth clarifying how Neptune Insurance Holdings Inc. actually reaches the end customer. Because I think some of the confusion starts here. We are a managing general agent. We sit between the capacity providers who take the risk and the distribution channel that reaches the policyholders. We do not own large captive agency forces.
We reach customers two ways: through a network of independent agents and wholesale partners and through direct-to-consumer digital channels. Both flow through the same platform. That distinction matters. Because when AI reduces the cost of distribution, that savings flows directly to Neptune Insurance Holdings Inc.'s bottom line. We are not disrupting ourselves. The distribution upside. Here is the part that I think is most misunderstood. Agent commissions are our single largest expense line. If AI-driven workflows reduce friction in how consumers buy flood insurance, and they will, that is not a threat to Neptune Insurance Holdings Inc. That is margin expansion for Neptune Insurance Holdings Inc. We already support both agent-led and fully digital flows on the same platform.
If every customer in America decides tomorrow they want to buy flood insurance through an AI agent instead of a human one, we are ready and our adjusted EBITDA margin goes from an already exceptional 60% to something significantly higher. The team. I would like everyone to look at who actually works here. Because it tells you what kind of company this is. Over 40% of Neptune Insurance Holdings Inc.'s employees are engineers or data scientists. This is not an insurance company experimenting with AI. This is an AI company that happens to be in insurance. And that composition shows up in the numbers. In 2025, trailing twelve-month revenue per employee increased 15% to $2,700,000.
And adjusted EBITDA per employee increased 14% to $1,600,000. For context, our revenue per employee puts us between Apple and NVIDIA. These are not insurance company metrics. Those are elite technology platform metrics made possible because of AI. I want to be honest about something. Nobody knows exactly how AI will reshape this industry. We could be wrong about the pace, the path, or the specifics. But if the question is who is best positioned to adapt, we like our answer. We are already building with the latest tools. We are already operating at the cutting edge, and our entire infrastructure was designed to evolve.
If the future belongs to AI, and we believe it does, we would rather be the company that was built for it than the one trying to catch up. Technology, capacity, distribution. Those are the three moats around this company, and we expect every one of them to get deeper as AI adoption accelerates. Now let me talk you through the quarter. The fourth quarter was an outstanding finish to a record year for Neptune Insurance Holdings Inc. It showcased the stability of our platform, the strength of our execution, and the durability of our business model.
During the quarter, we successfully launched new capacity programs, delivered record new business sales, and scaled our technology seamlessly to meet elevated demand, all while maintaining strong margins and operational discipline. Our first full quarter as a public company built directly on the momentum that brought us here and capped an exceptional year.
A few highlights from the quarter include revenue of $43,800,000, a 39% increase year over year; net income of $4,300,000 at a 10% margin, down 63% from 2024; adjusted net income of $15,300,000, up 25% from 2024; adjusted EBITDA of $25,900,000, up 34% year over year, at a 59% margin; written premium of $100,300,000, driving 33% year over year premium in-force growth; and record new business sales posted during the quarter. The strength of the fourth quarter capped an exciting and record-setting year. For the full year 2025, Neptune Insurance Holdings Inc. delivered revenue of $159,600,000, up 34% from 2024.
Net income of $37,400,000 had a 23% margin, up 8% from 2024, and adjusted net income of $56,900,000, up 38%. Full-year adjusted EBITDA of $95,000,000, up 32% year over year at a 60% margin, giving us a Rule of 40 of 93. Year-end premium in force was approximately $370,000,000, reflecting over $90,000,000 of net growth during the year. And as a reminder, because this is central to understanding the business, Neptune Insurance Holdings Inc. takes no balance sheet insurance risk. Zero. We are an asset-light platform that earns commissions and fees on every policy written and renewed. That model is what allows us to scale at 60% EBITDA margins without taking catastrophe exposure onto our books.
Now, profitability and technology get a lot of the attention, and they should. I wanted to spend a moment on something that does not always show up in the model: how we performed when it mattered most. During the fourth quarter, the federal government shut down and the National Flood Insurance Program, or NFIP, went dark. That is the primary source of flood insurance for most Americans, and it was unavailable. While the NFIP was shut down, our platform kept quoting kept binding, and kept onboarding new agents who needed somewhere to send their customers. We made targeted, disciplined decisions to support our agent partners during the disruption, including incentives that contributed to record new business sales, with minimal impact to margins. That is the kind of moment that cements relationships. Agents remember who showed up. I also want to highlight a structural advantage to our market that I think is underappreciated.
Flood insurance pricing is not subject to the reinsurance cycle volatility that whipsaws other property and casualty lines. The NFIP sets its rates statutorily, and as the dominant market alternative, that creates a stable pricing environment around which we can underwrite with confidence. In 2025, we retained 98% of premium. That retention rate tells you two things. Our pricing is competitive, and our policyholders are staying. The results we delivered this year reflect a model that is working. Technology, data, capacity, distribution, execution, all compounding together. We enter 2026 with real momentum and confidence in our ability to continue building value long term.
I will now turn the call over to Matt Duffy, our President and Chief Risk Officer, to discuss business updates. Let me walk through how we scaled our three core pillars during the fourth quarter. Our technology platform handled elevated volume without strain during the federal government shutdown. Increased activity drove strong growth in sign-ups, quotes, and bound policies. Performance, reliability, and service levels remained constant throughout.
Highlighting the best-in-class, fully digital nature of our platform. We also launched a beta version of our indemnity earthquake product. Because our underwriting and distribution infrastructure is entirely digital and API-driven, adding adjacent perils requires minimal incremental cost. We can expand into new lines without adding complexity or sacrificing margin. The company was built this way by design. At the same time, ongoing enhancements to our machine learning models continue to improve performance across both new business and renewal, demonstrating the compounding nature of our data advantage. We are seeing real productivity gains across the engineering organization from AI-assisted development tools.
Engineers are shipping code faster, iterating models more quickly, and accelerating testing and documentation cycles while maintaining strict quality and security standards. Nearly half of our workforce is our engineering and data science team. When development velocity increases, innovation accelerates, and importantly, operating leverage improves. That advantage compounds over time. Our platform was built from inception for real-time digital insurance transactions. If conversational or AI-driven interfaces increasingly become the entry point for insurance purchases, we are ready and integrated. We do not need to retrofit legacy systems or rebuild workflows. If more volume ultimately shifts towards direct-to-consumer channels, our economics benefit. At the same time, we continue investing in tools that make agents more productive. We are channel-flexible by design.
Onto capacity. Our capacity relationships are a direct validation of eight years of underwriting performance. It is important to clarify something that is often misunderstood. Neptune Insurance Holdings Inc. does not file rates like admitted insurers. All pricing algorithms and risk selection models are proprietary. We also do not retain insurance risk on our balance sheet. That means we scale without catastrophe loss volatility or capital strain. Our revenue is driven by recurring premium retention and operating leverage, not by loss ratio swings. That structure allows us to grow capacity efficiently, as shown during the fourth quarter when we launched our seventh capacity program with Palomar, which contributed immediately to financial results.
We also executed our eighth program with Somers Re, which went live on January 1. That program was designed to deploy additional capacity quickly as opportunities arise. Q4 also saw us expand an existing capacity relationship to support the beta launch of our indemnity earthquake product. We now partner with 40 risk-taking providers, up 74% year over year. Capacity expansion is earned. It reflects underwriting performance, disciplined portfolio management, and transparent reporting. Our partners continue to expand alongside us because the results support it. Subsequent to quarter-end, we completed the renewal of another significant capacity agreement. The continued renewal and expansion of these capacity relationships reinforce our ability to scale efficiently across varying market conditions while maintaining underwriting discipline.
And distribution. The strength of our distribution platform was particularly evident in the fourth quarter. We delivered record-breaking new business sales despite the absence of storm-driven demand, underscoring the point that our growth is driven by execution and market expansion rather than event-driven activity. Production associated with the Palomar relationship contributed incremental volume on top of an already record-setting quarter. We launched a new user-based login process during the quarter, and more than 30,000 insurance agents registered within the first thirty days. This significantly improves how agents interact with our platform and is already deepening the behavioral dataset that delivers better tools, insights, and feedback through our data science and AI models.
For the full year, premium retention reached 98%, up 90 basis points year over year, supporting record written premium of $367,000,000. Those figures reflect the durability of our agent relationships and the consistency of our value proposition. Across technology, capacity, and distribution, the progress achieved in the fourth quarter strengthens our operating leverage, reinforces our competitive moat, and compounds our data advantage. We enter 2026 with significant momentum. With that, I will pass it on to Jim.
Jim Steiner: For 2025, Neptune Insurance Holdings Inc. delivered another strong financial performance. Capping off a very successful year. Quarterly revenue increased 39% year over year to $43,800,000, driven by record new business sales and strong retention across the portfolio. For the full year, revenue increased 34% to $159,600,000, reflecting continued growth in premium in force and consistent execution across the business. We have continued to focus on renewal acceptance as a key driver of revenue retention. For the full year ended 12/31/2025, we retained 98% of premium and 86% of eligible policies, up 0.9 and 1.8 percentage points, respectively, compared to 2024. Our asset-light, technology-first model continues to deliver strong operating margins, as we incur incremental costs associated with being a public company.
For the three months ended 12/31/2025, net income was $4,300,000, down 63% over the prior-year quarter, while adjusted EBITDA rose 34% to $25,900,000. Net income included $4,600,000 of IPO-related expenses incurred during the quarter. This resulted in a 9.9% net income margin and a 59% adjusted EBITDA margin for the quarter. For the full year of 2025, net income increased 8.2% year over year to $37,400,000, representing a 23% net income margin, while adjusted EBITDA increased 32% to $95,000,000, representing a 60% adjusted EBITDA margin. 2025 adjusted EBITDA primarily excludes IPO expenses and share-based compensation.
On a per-employee basis, we generated $2,700,000 of revenue per employee and $1,600,000 of adjusted EBITDA per employee for the full year, increases of 15% and 14%, respectively, compared to the prior year. The continued improvement in these metrics underscores the scalability of our model as we grow. Turning to the balance sheet. Our growth and strong operating cash flow allowed us to further strengthen our capital structure. During the quarter, we refinanced our existing term debt into a $260,000,000 revolving credit facility, which lowered our interest rate, eliminated required amortization, and provides greater flexibility to manage capital efficiently.
We ended the quarter with $240,000,000 of total debt outstanding, or approximately 2.5 times net leverage on a trailing twelve-month adjusted EBITDA. Subsequent to quarter end, we paid down an additional $9,000,000 of debt during January and February, bringing our current outstanding balance to $231,000,000. Our priority remains continued debt reduction while maintaining flexibility to invest in growth. IPO-related expenses totaled approximately $8,900,000 for the full year, including $500,000 incurred during the fourth quarter. These costs were reimbursed following the completion of the IPO on October 2, and that reimbursement was reflected as an equity contribution in our Q4 financials. The proceeds from reimbursement were used to further reduce outstanding debt.
Share-based compensation totaled $11,400,000 for the year, with $11,100,000 recognized during the fourth quarter. The increase was driven by two IPO-related items. First, upon completion of the IPO, outstanding unvested employee stock options became subject to accelerated vesting, resulting in a one-time non-cash compensation expense of $4,100,000. Second, as part of the IPO, Neptune Insurance Holdings Inc. issued restricted stock units to all employees. These RSUs vest annually in equal installments over three years. On a go-forward basis, we expect approximately $6,900,000 of RSU-related expense quarterly. Based on Neptune Insurance Holdings Inc.'s year-end stock price and calculated using the treasury stock method, we had 149,000,000 and 1,852 diluted shares outstanding.
The net share settlement to satisfy tax withholding obligations will reduce that total share count by approximately 500,000 shares, or 35 basis points. Upon vesting, the net sale of RSUs will have a 64 basis point dilutive effect on the count of basic shares outstanding. With that, I will turn things back to Trevor for closing remarks.
Trevor Burgess: Neptune Insurance Holdings Inc. remains focused on long-term shareholder value creation. The inherent variability of government policy and weather-related activity make short-term forecasting challenging, and as a result, we generally do not update guidance unless there has been a meaningful change in the underlying trajectory of the business. The strength of our performance in the fourth quarter and across full year 2025 has increased our confidence in the outlook for 2026. Based on that performance, we are increasing our full-year expectations. For full year 2026, we now expect revenue of approximately $193,000,000 and adjusted EBITDA margin between 60%–61%. These targets reflect our continued commitment to profitable growth, operational efficiency, and disciplined capital allocation.
Where appropriate, we intend to deploy capital to grow the business while returning excess capital to shareholders. To date, that has included a strong emphasis on debt reduction as a straightforward and efficient way to enhance equity value. Before we open the line for questions, I want to bring it back to what matters. This quarter capped a record year. Revenue grew 39%. Adjusted EBITDA grew 34%. And we did it at a 59% adjusted EBITDA margin while investing for growth. Those are the numbers of a company that is AI. I want to be direct about what we are building because I think the market narrative has drifted from the reality.
Neptune Insurance Holdings Inc. is not just a successful flood MGA. We are building the technology and data infrastructure for flood insurance in an AI-driven world. That is a much larger opportunity. And we have a meaningful head start. Our datasets get stronger every day; every policy quoted, every renewal decision, every claim resolved feeds back into our models. That flywheel has been compounding for years. You cannot shortcut it with a foundation model in a press release. Data at our scale in our domain is a structural barrier to entry, and we believe it widens with time. Our underwriting results have made that case to the people who matter most, the capacity providers putting real capital behind our models.
We went from 23 to 40 partners this year. Commission economics improved. That is not momentum you can hand wave away. That is sophisticated risk capital voting with its balance sheet that Neptune Insurance Holdings Inc. works. And our distribution infrastructure is built for wherever the market goes next—agents, embedded digital, AI-native workflows—we do not need to guess which channel wins. We capture all of them on the same platform. But I want to be clear about something. We are not rooting against human agents. There are roughly 25,000,000 buildings in the United States at meaningful risk of flooding, and only about 4,000,000 flood insurance policies in force. That is a massive protection gap.
AI does not close the gap alone. Agents do. Armed with better tools, better data, and a faster quoting experience. Our job is to make agents more productive, not to replace them. When we do that well, the addressable market gets dramatically larger for everyone. And if parts of the market do shift towards fully automated buying, our margins expand because our largest cost line compresses. Either way, Neptune Insurance Holdings Inc. wins. So here is how I frame it simply. We have the technology. We have the data. We have the capacity relationships. We have the distribution flexibility. And we just posted a record year proving all four work together. The question is not whether AI disrupts insurance.
The question is who is best positioned when it does. We believe our results demonstrate that answer is Neptune Insurance Holdings Inc. Thank you to our employees, our over 30,000 totally awesome human insurance agents, our capacity partners, and our shareholders. We will now open the line for questions.
Operator: Ladies and gentlemen, we will now begin the question and answer session. As we enter Q&A, we ask that you please limit your input to one question and one follow-up. As a reminder, to ask a question, please press the star button followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star one again. Your first question comes from the line of John Barnidge of Piper Sandler. Please go ahead.
John Barnidge: Good afternoon. Congrats on the results and appreciate the opportunity. I believe you had talked about earthquake launching. How large of a market do you think this is for the company in 2026?
John Carlin: Thank you for asking that question. We are in beta testing right now. And what that means for us is getting the technology right, making sure that we have the right product that meets the marketplace needs. And we know that in California, which will be our first state, 90% of homes are not protected by earthquake coverage. So we think, much like flood, it is a hugely underpenetrated market. Too early to say how big that will be for us in 2026.
John Barnidge: Thank you for that answer. My other question, if I may, looks like there was a letter Elizabeth Warren put out shortly before the close today, attempting to connect flood insured with private Twenty Point Five. Can you maybe talk about your response to that and maybe build, Trevor, on how you are the AI disruption as opposed to being disrupted. Thank you.
John Carlin: You know, if this were a Polymarket and you had given—I was giving out odds of the likelihood that the Trump administration would invite me to the White House, and I would get a letter from Elizabeth Warren—let us say it is something like 10,000 to one. But I think that it is a tremendous opportunity for us to continue to talk with important stakeholders about the role of private flood insurance. We are entering our tenth year here in business. We are the largest private flood insurer in the United States.
And we want to make sure that all stakeholders understand the role that private flood insurance can play to close the huge flood insurance gap that exists in the country. We have talked with everyone who is interested in talking with us, from senators' staffs to the White House to the FEMA advisory council to our local congressperson. This is a bipartisan concern to make sure that people are properly protected, and we look forward to talking to Senator Warren's staff to make sure she understands the role that private flood insurance can play. Listen. When it comes to—I am sorry?
Chris McGinnis: Sorry. I did not realize you were continuing. Yeah. No. I was just going to answer your second question about sort of where we fit in the, you know, AI ecosystem. Really, I think the most important thing to understand is that Neptune Insurance Holdings Inc.'s platform was built from the beginning using old-fashioned AI—so non–large language model–developed AI—really the automation of human tasks. So we have been built from the beginning able to work in digital workflows. We have been able to work in agent-led workflows. Direct to consumer If—if all Americans decide tomorrow they are going to use ChatGPT to, you know, buy flood insurance, we are ready for that, and that would be good for us, because it would expand our margins. But I do not think that is actually going to happen. Agents play an incredibly important role here at expanding the marketplace. So there are about 25,000,000 buildings in America that are at moderate to severe risk of flooding. And there are only about 4,000,000 flood insurance policies that exist today. We need agents to be beating the drums, educating their customers that they need to add flood insurance to their coverage universe.
John Barnidge: Thanks a lot for the answers.
Operator: Your next question comes from the line of Andrew Kligerman of TD.
Andrew Kligerman: I was curious a little bit about the comment that your priority or emphasis would be on debt reduction, especially in, you know, in—in and maybe I would get a better you could give me a better sense of why—why that would be the priority given in the last two weeks what I think was a just—and certainly what you explained, Trevor, was a real overreaction to AI on your stock. I mean, it—I think it went down way too much. So my question is, given where the stock is, is there any thinking about share repurchase? And I think it was something you were touching on or exploring during the IPO period. So maybe bottom line, long story short, priorities on capital management and why.
John Carlin: Yeah. Thank you for that question. We have been paying down debt because it is the easiest thing to do. Obviously, as a revolver, that just gives us availability under that revolver to, you know, utilize that in the future if need be. If we find great ways to grow the business or invest, or ultimately if the Board decides that stock repurchases are the right, you know, thing to do, we are going to have the dry powder to be able to do that. And, obviously, we produce significant free cash flow which will just grow that amount over time. As I mentioned on our last call, we now have three things available to us.
We can pay down debt, we can buy back shares, and we can potentially someday pay dividends. I think our Board is going to be interested in the first two for this year because they give us the most, you know, flexibility. And we will have to see what the ultimate reaction is to, you know, our earnings and helping educate the market about our stock. But we too were surprised that, you know, year to date, we are down more than the traditional brokers, which is, you know, confusing to us.
Chris McGinnis: Yeah. It seemed like—ok.
Dan Berlin: Real reaction. Kind of following up on John's question about Senator Warren's letter. Related to that, she seemed to favor NFIP over the private market. And I appreciate that you know you want to educate the senator's staff. But I was kind of hopeful just given that, you know, it just seems like the private markets are so much more efficient. I have been kind of hopeful that the NF could be dissolved in the form in which it currently exists. Do you, Trevor, think that there is a good probability of that at this point given the support that, you know, we are seeing in the Senate,
John Carlin: think there is a lot of education that still needs to happen in Congress. And in particular, you know, helping everyone understand that private flood insurance can save the majority of Americans money on their flood insurance. Right? That is a really important point if we are trying to get more people insured, if we are trying to close this massive flood insurance gap, which we have talked about a couple of times on this call. We have got some education work to do. Now the decision around what is going to happen with FEMA and the NFIP seems to lie with the administration. And I do not have any insight into, you know, what the decision-making process is there.
And, you know, we, like everyone, look forward to a hopeful report from the FEMA advisory council, which was extended and may still produce a report. We will see. But our job is just to do the blocking and tackling every day to try to sell more policies. The NFIP has been in long-term decline, and Neptune Insurance Holdings Inc.—Neptune Insurance Holdings Inc. is growing rapidly. And our job is to keep Neptune Insurance Holdings Inc. growing, and there is not much I can do to, you know, control what happens at the federal government level.
Operator: Your next question comes from the line of Bob Wong of Morgan Stanley. Please go ahead. Hi.
Chris McGinnis: Good evening. So my first question is really about
Dan Berlin: how to think about the future evolution of AI. Right? So I think you gave some tremendous comments on why AI is an advantage
Jonathan Tanwanteng: that is built for Neptune Insurance Holdings Inc., and Neptune Insurance Holdings Inc. is built for AI. But as we go forward, as technology evolves, as you gather more data, things of that nature, can you maybe help us think about is there a scenario where potentially other competitors that can perhaps replicate your capabilities or perhaps come in from a different angle that can, for lack of a better word, give you a run for your money? Just really curious as to how you think about the evolution of the technology going forward.
John Carlin: Yeah. I think there are a couple of things here. One is there is a massive TAM here. Right? There are 100,000,000 buildings in America. 80% of the sales that Neptune Insurance Holdings Inc. has ever done are nonmandatory. Right? So there is a very big market here. Number two, we have a big data moat.
Chris McGinnis: Right?
John Carlin: The data that we have collected and we continue to collect and analyze gives us, you know, tremendous advantage. I do not think without that data it is going to be easy
Operator: even
Chris McGinnis: with a future where
John Carlin: large language models know everything about humans. They know everything that they have, you know, read on the Internet, and data does not exist on the Internet. Right? So, you know, but I am open to the possibility that, you know, advancements could be made there. But there are two other important, you know, moats, and one is the capacity relationship. Someone needs to take that risk. And we have made hundreds of millions of dollars for our risk-taking partners over the eight or nine years. This is a relationship business. We worked very hard to cultivate those relationships, and we continue to grow those relationships quite profitably for them.
We work with 11 of the 12 largest reinsurers in the world. They would have to be making a decision to leave us and the money that, you know, we have made them over time to go for, you know, a new, you know, start-up. I am not saying that is impossible. I am just saying it seems unlikely. Then the last area is just distribution. We have worked for years to build a distribution network that we have with amazing agents across this country. And it took years and years to build all of the API connections and etcetera. So I just think there is not one. There is not two.
There are three meaningful, you know, moats here that are just going to be hard to replicate.
Jonathan Tanwanteng: Okay. Really helpful. Thank you for that. Maybe on the second point is the path of growth. You have addressed some of this in the prepared remarks. But if we think about the current quarter, right, the revenue was stellar. One thing I would like maybe a little bit more detail on is how you think about the path for that growth going forward. Is there any reason to think that you cannot repeat the same level of growth you just had in the last—call it—two quarters or three quarters going forward? It feels like the momentum is on your side, so to speak.
John Carlin: We are certainly excited about the momentum in the business, and we have, you know, that is why we have increased our, you know, revenue guidance for 2026. We have a couple of things going on at the same time here. One is increased momentum. Two is the Palomar rollover, which will run through October 1 of this year. So that we will not have that effect in the, you know, fourth quarter of 2026. And we are larger, which means that even if you have, you know, 86%–87% of people renewing their policies with you, you are still losing 13%, and you need to, you know, make those up, you know, to just stay the same.
So it gets harder and harder the larger and larger you get. So you put all of that together, and we are confident that things look better than they did three months ago, and that is why we increased our guidance.
Operator: Your next question comes from the line of Mike Zaremski of BMO. Please go ahead.
Dan Berlin: Hi, thanks. Good afternoon. Just a question around any updates on the task force that was created by the President and if you all have seen any plans, timeline, etcetera around that initiative?
John Carlin: Thanks, Mike. The only thing that we heard is the same thing that everyone in America heard, which was that it was extended by 60 days, and that puts it to sometime, you know, March, and we will stand by and see what happens. But we have no other information than that the extension took place.
Jonathan Tanwanteng: Got it. So there is nothing you are—
Dan Berlin: you have seen that you are kind of changing the way you will operate to be able to react to the extent something
Jim Steiner: meaningful
Operator: comes to be when that date arrives.
John Carlin: Well, we are ready in case something does happen.
Chris McGinnis: But I just do not know
John Carlin: what, if anything, will happen. So you saw that we added our eighth program on January 1 with Somers Re. Somers, you know, is backed by, you know, a very, very large, you know, global reinsurer, and we put that kind of program in place in order to be able to react incredibly quickly if we need to. There could also be another government shutdown. Right? The NFIP has now been extended through September. There were multiple shutdowns in the first Trump administration. We have already had two so far in this one that affected the NFIP, and we need to be ready to serve America if that comes to pass again this fall.
Jonathan Tanwanteng: Great.
Chris McGinnis: That is helpful. My final follow-up is on the strong—
Dan Berlin: stronger than expected revenues. You know, you gave us some good color on the puts and takes.
Chris McGinnis: Did you all tease out kind of how much of a
Operator: bump you got from the
Paul DeSantis: shutdown and, separately, are the promotions you called out—are those kind of normal course of business, or those were more one-time due to the
Matt Duffy: shutdown?
Paul DeSantis: Thanks.
John Carlin: I think the promotions were more one time or December expense for, you know, agents. They have returned to normal levels as they have in January and so far in February, but we do promotions from time to time. And we thought the shutdown was a good opportunity to lean in and take very minor impact on margin to introduce a lot of new agents to Neptune Insurance Holdings Inc. who had heretofore largely only used the NFIP. So we were excited about, you know, onboarding them. When we last spoke in December—in November, which I think was on the day that the major shutdown ended, I likened the impact to a medium-sized, you know, storm.
Maybe with the after-effects of agents discovering Neptune Insurance Holdings Inc. for the first time and sticking with us because they liked it, maybe it was a medium- to large-sized storm, but still not as large as we would see from, you know, a major category four, five hurricane, you know, impacting a major metropolitan area. But the shutdown did
Chris McGinnis: have the very positive effect of
John Carlin: introducing a large number of agents to us for the first time. And that is part of why we added enthusiasm and trend led us to increase our guide.
Operator: Next question comes from the line of Tommy McJoint of KBW. Go ahead.
Jim Steiner: Hey. Good evening. If we looked at the last few years and also just thinking about the next few years ahead, is most of Neptune Insurance Holdings Inc.'s growth taking share from the NFIP? Or is it writing new policies that previously had no flood insurance?
Jonathan Tanwanteng: It is
John Carlin: something like 75% or 80% net new. Very few people are actually switching from the NFIP to Neptune Insurance Holdings Inc. And that is because there is still—about half of all policies are receiving subsidies. And their Risk Rating 2.0 price has not yet been achieved. As you remember, the NFIP is increasing prices on consumers' homes by 18% a year until they reach their
Operator: actuarially accurate rate at the NFIP.
John Carlin: So with the ongoing subsidization, there really has not even been the opportunity for people to,
Chris McGinnis: you know, think about a private alternative.
John Carlin: So that I think will change over time as the subsidizations burn off in the coming three, four, five years. But for now, the vast majority has been net new. New home purchases, people discovering from their agents that their homeowners policy does not cover the risk of flooding, and the need to protect themselves from this most dangerous peril. The housing market has not done us any favors. Right? The housing market continues to be quite slow. When people buy houses is when they normally shop for insurance. A return to a healthy housing market
Chris McGinnis: would definitely
John Carlin: you know, help our business as well because a lot of those people may have NFIP policies. They sell their home. Now that is a new opportunity for someone to shop.
Jim Steiner: Thanks. And actually along the same line there, sort of mechanically, when a home does sell that is, you know, currently under—we will call it Risk Rating 1.0 pricing with the NFIP, does the new buyer of that home get the full risk-adjusted, you know, Risk Rating 2.0 price, even if it is, you know, significantly higher, or are they also grandfathered into the 18% increase cap?
John Carlin: They are able to be grandfathered into the glide path through
Julie Schertell: a manual process of, you know, taking over the old policy. Not everyone does that because it is a, you know, bureaucratic process, but it is possible to do.
Operator: Otherwise, they do have to pay. Yep. But if not, you—
Julie Schertell: yeah. Otherwise, they do have to pay the new Risk Rating 2.0 price. But a lot of home sales also are taking place with people who have paid off their mortgage and so are no longer required to have flood insurance. And then when they sell, they sell to someone who does have a mortgage. And then that is going to trigger the requirement for a new policy to be bought. And that is a great opportunity for Neptune Insurance Holdings Inc. So that is part of, you know, the reason why. We are at near-record levels in the United States of, you know, cash ownership of homes.
And so that churn creates new mortgages, creates, you know, new mandatory buying.
Operator: Your next question comes from the line of Gregory Peters of Raymond James. Please go ahead. Good afternoon, everyone. I was going to ask you—I was looking at page 13 of your investor deck. And one of the comments you made—this will actually be the last bullet point. We—I think, Matt, you talked a little bit about it during your comments—where you said you launched a new
Chris McGinnis: user-based agent login system.
Operator: And you said within thirty days of the launch, more than 30,000 agents created individual accounts, and my human brain is having some problems processing how you had such a broad
Paul DeSantis: acceptance of this. Was that bots registering individual accounts? Talk to me about what
Operator: what actually happened that triggered such a
Chris McGinnis: strong response rate.
Matt Duffy: There is no—it was not bots. This is—sorry, Greg. Thank you for that question. The answer is no. It was not bots. This is all human-based. This is, you know, multifactor authentication. So, you know, the requirement to properly authenticate into the system. And it is just a reflection of how many users we have actually using Triton, the platform, and Poseidon, the policy management platform, on a monthly basis. And so this is agents who are coming in to quote policies, to bind policies, and then also agents who are coming in to service existing policies as well.
So we had a great uptake, but this is, you know, a big benefit and a big new dataset that we have going into 2026 that provides us much more granular behavioral data at the agent level. That allows us to really help the agents as they go through this process, help them with,
Operator: you know,
Matt Duffy: ways that they can sell policies. You know? How can they improve the sort of penetration within their book of flood insurance purchases? And also be able to reward agents for the behavior and for the quote and binding that they are doing through the Neptune Insurance Holdings Inc. system.
Operator: Okay.
Chris McGinnis: Well, thanks for that answer. I guess a follow-up question just relates back to comments you were talking about where you said you now have eight programs and 40 capacity providers. And can you just remind me, you know, what the difference is
Paul DeSantis: program number one versus program number eight? Or program number four versus program number seven. Just give me a
Chris McGinnis: just—trying to visualize what the difference is in the programs.
Julie Schertell: The programs are all actually the same. They have all signed up to Neptune Insurance Holdings Inc. and to Triton to allocate individual policies to them. And we were actually awarded a patent last year on our disaggregation system that does that allocation, and it is assigning individual policies to the carrier where it is going to have the least impact on their probable maximum loss. It is a very sophisticated program. You can think about it pretty simply as saying, we do not want one carrier to have all the policies in Miami. Right?
We want to spread that out amongst the eight different programs and want to make sure that if a big storm happens, no one carrier is disproportionately, you know, damaged because of that storm. And doing that in a, you know, highly sophisticated way to manage their risk capital is a big part of the value add of Neptune Insurance Holdings Inc. to these carrier partners. But they are all exactly the same rule set. They are not setting any pricing. There are no different guidelines. They are signing up to Neptune Insurance Holdings Inc. And they are basically giving us a premium that they are looking for during the year.
Maybe said a different way, they put in a premium request and then we are letting them know what we think we are going to be able to allocate them in terms of premium during the year.
Operator: But
Julie Schertell: to be super clear, we call a capacity provider either an insurer or a reinsurer. The eight programs are eight insurers on whose paper we place the individual policies, and then we have 32 reinsurers who sit behind those eight insurance companies, for a total of 40 total capacity providers.
Operator: Your next question comes from the line of David Muthmaiden of Evercore. Please go ahead.
Chris McGinnis: Hey, thanks. Good evening. I had just a question on the agent sales promotions that you guys were running, and, you know, it feels like they had a pretty big impact and minimal margin impact on the growth. But minimal margin impact. It did not sound like you guys were going to continue those in a bigger way. I guess, you know, margins are really good, but, you know, when you are producing the volume growth that you did this quarter, that is at least, I think, a pretty good trade-off. So I guess why not
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Neptune (NP) Q4 2025 Earnings Call Transcript was originally published by The Motley Fool
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