Insurance Sector Emerges as a Bright Spot in the IPO Market

Entering 2025, the market environment was characterized by elevated optimism and heightened expectations. Equity indices were nearing all-time highs, investor sentiment was fully risk-on and allocations to U.S. equities reached record levels. The backdrop included expectations for robust earnings growth, a resurgence in capital markets activity and rising valuations under a pro-growth policy agenda from the incoming administration. Insurance, in particular, had become the most overweight sector in investor portfolios over the past decade.  

In late Q1, however, the tone shifted meaningfully with the reintroduction of tariffs and renewed policy uncertainty, which reignited inflation concerns and cast doubt on the economic outlook. Following the April 2^nd tariff announcement and subsequent geopolitical developments, markets entered a new phase of volatility.  

S&P earnings growth forecasts have been revised down from +13% to +7%. Even so, the market entered this new period from a fundamentally strong position, with productivity gains driven by technological innovation and artificial intelligence integration. GDP growth estimates have moderated to +1.4% but remain in positive territory. 

Recent announcements regarding trade negotiations and tariff delays have helped reduce volatility—evidenced by the VIX falling below 20 and the S&P now trading higher year-to-date. This stabilization has supported a notable pickup in transaction activity. In May alone, corporate issuers and sponsors raised nearly $20 billion in the equity capital markets, just shy of February’s levels when equity indices were trading at all-time highs. 

To date, 23 IPOs have priced in 2025, raising $12 billion in aggregate. While slightly below last year’s pace, recent activity has proven resilient. Since April 2, six high-quality IPOs launched amid market turbulence. Benefitting from a less-crowded issuance calendar, each has traded higher in the aftermarket, averaging a +25% return—well above the broader 2025 IPO cohort’s +14%. Notably, three of these six deals originated from the financials sector, with a fourth financials transaction currently in market. 

The BMO Equity Capital Markets (ECM) team telegraphed this pickup in activity in mid-April. Based on our pipeline, we were confident that a combination of pent-up demand from investors seeking alpha, sponsors’ desire to monetize and high-quality corporates on file for extended periods would catalyze a swift rebound—similar to the post-COVID recovery. We also expected the resurgence to be led by the insurance sector. (*Ask your BMO representative for the April thought piece.) 

Financials have historically led IPO market reopenings, supported by the defensive characteristics of insurance and the tailwinds that volatility brings to the trading platform ecosystem. This year, financials represent 27% of all IPOs—surpassing previous highs of 26% in 2003 and 21% in 1992. Investor demand has followed suit: financials has been the best-performing IPO sector since 2023, with an average return of +64%.¹  

Within financials, insurance has emerged as the standout subsector of IPO debutants, delivering an impressive +87% return over the same period.² In recent weeks, two insurance IPOs have come to market: American Integrity Insurance and Aspen Insurance, the latter of which BMO supported as a bookrunner. Aspen, an insurance and reinsurance carrier taken private by Apollo in 2019, returned to the public markets with a compelling turnaround story, showcasing a stable mid-double-digit return on equity profile. After many months in the IPO pipeline and multiple rounds of investor meetings, Aspen was rewarded for its disciplined approach—pricing at 1.0x book value and leaving room to re-rate higher in the public markets.  

It’s also worth noting the disparity in size between the two IPOs. Aspen commanded a $2.8 billion market cap at IPO, while American Integrity came in at $300 million. Over the past two years, investors have generally favored larger, more established companies with meaningful floats. The success of American Integrity—competing on the road alongside a company nearly 10 times its size—indicates that investors are increasingly open to supporting smaller-cap issuers. This is an encouraging sign for the broader IPO pipeline heading into the second half of the year. 

Based on recent conversations with leading public investors, a clear picture is emerging around sentiment and expectations in the insurance space. Investor appetite remains strong, underpinned by favorable underwriting conditions and elevated interest rates. However, investors are increasingly mindful that the scarcity premium associated with public insurance names may diminish as IPO volumes rise, suggesting that earlier entrants are more likely to garner heightened investor interest.  

Investors continue to favor companies with diversified profiles and demonstrated resilience across market cycles. While small- and mid-cap names are generally viewed as undervalued, management teams must articulate a compelling valuation narrative to support a premium at IPO. Early and in-person engagement with the investment community is proving critical to effectively communicate these themes. 

Looking ahead, the public IPO backlog remains heavily weighted toward financials, with six of 11 names publicly on file coming from the sector, including two from insurance. In the confidential pipeline, we see a diverse mix of insurance businesses, including long-term growth compounders, high-margin managing general agents and firms positioned for valuation expansion based on favorable comps or strong management credibility. While many are well-positioned, some may require further clarity on their business models to fully resonate with investors. Ultimately, the strength and depth of the pipeline suggest that insurance is poised to maintain its outsized role in the IPO market through the remainder of 2025 and into 2026.  

The insurance IPO market has emerged as a defining bright spot in 2025—underscoring the sector’s resilience, investor appeal and capacity to lead in periods of recalibration. But as recent volatility has reminded us, market windows are fluid and often fleeting. In this environment, the most successful issuers will be those who remain engaged and are positioned to act with conviction when conditions align. 

Waiting for ideal circumstances may prove more costly than constructive. Instead, readiness will be the differentiator—ensuring that teams, messaging and valuation frameworks are in place. With a deep and diverse pipeline, and investor interest still intact, the remainder of 2025 presents a compelling window for those prepared to lead decisively. 

¹ Dealogic, FactSet, May 23rd, 2025 (Sector market shares by deal count. Excludes IPOs less than $50 million and Healthcare issuers).  

² Dealogic, FactSet, May 23, 2025. (Excludes IPOs less than $50 million and Healthcare issuers).