USI Holdings Raises $90 Million in IPO

Despite the dismal market for first-time stock offerings, USI Holdings Corp., a San Francisco-based insurance firm, raised $90 million through an initial public offering Tuesday.

USI Holdings sold 9 million shares at $10 a share in an IPO led by Merrill Lynch & Co. The company’s stock -- ticker symbol USIH -- closed unchanged at $10 in Nasdaq trading Tuesday. Proceeds will be used to pay down debt.

The IPO is notable in a year when so few companies have gone public. The third quarter saw nine IPOs, the fewest for any quarter since the 1970s. The market for first-time offerings has collapsed in the stock downturn. IPO performance has been poor this year, with the average IPO down 8.7% from its offer price.

Insurance is one area that has remained strong despite the market downturn. About a dozen insurance-related IPOs have gone to market since 2001 and are up an average 37% from their offer price, according to Thomson Financial, a New Jersey data firm.

“We took a look at this market and saw there was no question it was a challenge, but our sector has done pretty well,” USI Chief Executive Dave Eslick said.

Founded in 1994, USI distributes insurance and financial products to small and mid-sized businesses. With 58 offices in 20 states, the company has 2,100 employees.

A company that goes public now is either one of two extremes, “they really need the money or they are so good, they can rise above the current environment,” said Richard J. Peterson, a market strategist for Thomson.

So far this year, 14 California companies have gone public, and on average, their stock is down 22% from their offer price.