Porch Group Announces Reciprocal Exchange Regulatory Approval, A Key Milestone
Porch Group (NASDAQ: PRCH) has received approval from the Texas Department of Insurance to form Porch Insurance Reciprocal Exchange (PIRE), a new homeowners insurance reciprocal exchange. This strategic move aims to increase profitability and stabilize earnings by reducing exposure to claims and weather risks. Porch will contribute $10 million to capitalize PIRE and plans to sell Homeowners of America Insurance Company (HOAIC) to PIRE around January 2025. As the operator, Porch will earn approximately 20% of Gross Written Premium in commissions and fees. HOAIC is expected to maintain its 'A' financial stability rating, with no impact on Porch's 2024 financials.
Porch Group (NASDAQ: PRCH) ha ricevuto l'approvazione dal Dipartimento delle Assicurazioni del Texas per formare Porch Insurance Reciprocal Exchange (PIRE), un nuovo scambio di assicurazioni per proprietari di case. Questa mossa strategica ha l'obiettivo di aumentare la redditività e stabilizzare i guadagni riducendo l'esposizione a richieste di risarcimento e rischi legati alle condizioni meteorologiche. Porch contribuirà con 10 milioni di dollari per capitalizzare PIRE e prevede di vendere Homeowners of America Insurance Company (HOAIC) a PIRE intorno a gennaio 2025. In qualità di operatore, Porch guadagnerà circa 20% del Premio Lordo Scritto in commissioni e spese. Si prevede che HOAIC manterrà il suo rating di stabilità finanziaria 'A', senza impatti sulle finanze di Porch nel 2024.
Porch Group (NASDAQ: PRCH) ha recibido la aprobación del Departamento de Seguros de Texas para formar Porch Insurance Reciprocal Exchange (PIRE), un nuevo intercambio recíproco de seguros para propietarios de viviendas. Este movimiento estratégico tiene como objetivo aumentar la rentabilidad y estabilizar las ganancias reduciendo la exposición a reclamaciones y riesgos climáticos. Porch contribuirá con 10 millones de dólares para capitalizar PIRE y planea vender Homeowners of America Insurance Company (HOAIC) a PIRE alrededor de enero de 2025. Como operador, Porch ganará aproximadamente 20% de la Prima Bruta Escrita en comisiones y tarifas. Se espera que HOAIC mantenga su calificación de estabilidad financiera 'A', sin impacto en las finanzas de Porch en 2024.
Porch Group (NASDAQ: PRCH)는 텍사스 보험부로부터 Porch Insurance Reciprocal Exchange (PIRE)를 설립할 수 있는 승인을 받았습니다. 이는 새로운 주택 소유자 보험 상호 교환입니다. 이 전략적 움직임은 수익성을 증가시키고 수익을 안정화하기 위해 청구 및 날씨 위험에 대한 노출을 줄이는 것을 목표로 하고 있습니다. Porch는 PIRE에 자본을 공급하기 위해 1천만 달러를 기여할 예정이며, 2025년 1월경 PIRE에 Homeowners of America Insurance Company (HOAIC)를 판매할 계획입니다. 운영자로서 Porch는 수수료 및 수수료로 총 발행 보험료의 약 20%를 벌어들일 것입니다. HOAIC는 재정적 안정성 'A' 등급을 유지할 것으로 예상되며, Porch의 2024년 재무에 미치는 영향은 없습니다.
Porch Group (NASDAQ: PRCH) a reçu l'approbation du Département des Assurances du Texas pour former Porch Insurance Reciprocal Exchange (PIRE), un nouvel échange réciproque d'assurance pour propriétaires. Ce mouvement stratégique vise à augmenter la rentabilité et stabiliser les bénéfices en réduisant l'exposition aux réclamations et aux risques météorologiques. Porch contribuera avec 10 millions de dollars pour capitaliser PIRE et prévoit de vendre la Homeowners of America Insurance Company (HOAIC) à PIRE vers janvier 2025. En tant qu'opérateur, Porch gagnera environ 20 % de la prime brute écrite en commissions et en frais. On s'attend à ce que HOAIC maintienne sa cote de stabilité financière 'A', sans impact sur les finances de Porch en 2024.
Porch Group (NASDAQ: PRCH) hat die Genehmigung des Texanischen Versicherungsministeriums erhalten, um Porch Insurance Reciprocal Exchange (PIRE) zu gründen, einen neuen gegenseitigen Versicherungswechsel für Hausbesitzer. Dieser strategische Schritt zielt darauf ab, die Rentabilität zu steigern und die Gewinne zu stabilisieren, indem die Exposition gegenüber Ansprüchen und Wetterrisiken verringert wird. Porch wird 10 Millionen Dollar zur Kapitalisierung von PIRE beisteuern und plant, die Homeowners of America Insurance Company (HOAIC) Anfang Januar 2025 an PIRE zu verkaufen. Als Betreiber wird Porch etwa 20% der brutto geschriebenen Prämie an Provisionen und Gebühren verdienen. Es wird erwartet, dass HOAIC ihre 'A'-Finanzstabilitätsbewertung beibehält, ohne Auswirkungen auf die Finanzen von Porch im Jahr 2024.
- Approval received for new insurance reciprocal exchange formation
- Expected 20% take rate on Gross Written Premium through commissions and fees
- HOAIC maintaining 'A' financial stability rating from Demotech
- Reduced exposure to claims and weather risks
- $10 million cash contribution required for PIRE capitalization
- Divestment of HOAIC insurance business to PIRE
Insights
This regulatory approval marks a significant strategic shift for Porch Group, transforming its insurance business model to mirror successful reciprocal insurers like Farmers and Erie. The formation of PIRE represents a fundamental restructuring that will reduce Porch's direct exposure to insurance claims and weather risks while maintaining a profitable revenue stream through a
The
The transaction's design, allowing Porch to receive surplus notes in exchange for HOAIC, provides financial flexibility while preserving capital adequacy. This restructuring should lead to more predictable earnings and improved margins, making the company's financial performance less susceptible to catastrophic weather events.
Forming PIRE is a key step in Porch's strategy to increase profitability and stabilize earnings in its go-forward Insurance reporting segment by reducing direct exposure to claims and weather risks. A reciprocal insurer is owned by its policyholders, much like how Farmers Insurance and Erie Insurance operate. Porch will be the operator (also known as the attorney-in-fact) managing PIRE’s operations.
The terms and structure of the transaction approved by the TDI provide for an exciting and sustainable opportunity ahead for Porch shareholders. After the TDI completes customary administrative closing procedures, Porch will contribute
Porch does not expect PIRE’s approval to impact its 2024 financials. Further details will be shared at the Q3 2024 earnings announcement on November 7, 2024 and at an investor day in early December 2024.
“I would like to thank the TDI for their partnership throughout this process and to the Porch team for consistently living our values as we worked toward this moment. It has taken great effort, and we are pleased to have achieved this key milestone on our journey to become ‘A New Kind of Homeowners Insurance Company.’ This is an important step for us to protect the homes of more homeowners in
Porch Group was advised by Eversheds Sutherland LLP and Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C
- A surplus note is a subordinated financial instrument that pays an interest-bearing coupon with excess surplus generated by the Reciprocal.
About Porch Group
Porch Group, Inc., ("Porch") is a homeowners insurance and vertical software platform. Porch's strategy to win in homeowners insurance is to leverage unique data for advantaged underwriting, provide the best services for homebuyers, and protect the whole home. The long-term competitive moats that create this differentiation come from Porch's leadership in home services software-as-a-service and its deep relationships with approximately 30 thousand companies that are key to the home-buying transaction, such as home inspectors, mortgage, and title companies.
To learn more about Porch, visit ir.porchgroup.com.
Forward-Looking Statements
Certain statements in this release may be considered forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These statements are based on the beliefs and assumptions of management. Although we believe that our plans, intentions, and expectations reflected in or suggested by these forward-looking statements are reasonable, we cannot assure you that we will achieve or realize these plans, intentions, or expectations. Forward-looking statements are inherently subject to risks, uncertainties, and assumptions. Generally, statements that are not historical facts, including statements concerning our possible or assumed future actions, business strategies, events, or results of operations, are forward-looking statements. These statements may be preceded by, followed by, or include the words “believe,” “estimate,” “expect,” “project,” “forecast,” “may,” “will,” “should,” “seek,” “plan,” “scheduled,” “anticipate,” “intend,” or similar expressions.
Forward-looking statements are not guarantees of performance. You should not put undue reliance on these statements which speak only as of the date hereof, and include statements relating to our strategic initiatives, ability to increase profitability and stabilize earnings in Porch’s Insurance segment, reducing direct exposure to claims and weather risks and PIRE’s role in such reduction, completion of the TDI’s customary administrative closing procedures, contribution of cash to PIRE, timing and whether Porch will sell HOAIC, any consideration to be received by Porch for such sale, Porch’s operation of PIRE and any fees to be received for such operation, and whether 2024 financials will be impacted by PIRE . Unless specifically indicated otherwise, the forward-looking statements in this press release do not reflect the potential impact of any divestitures, mergers, acquisitions, or other business combinations that have not been completed as of the date of this filing. You should understand that the following important factors, among others, could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in our forward-looking statements:
(1) expansion plans and opportunities, and managing growth, to build a consumer brand;
(2) the incidence, frequency, and severity of weather events, extensive wildfires, and other catastrophes;
(3) economic conditions, especially those affecting the housing, insurance, and financial markets;
(4) expectations regarding revenue, cost of revenue, operating expenses, and the ability to achieve and maintain future profitability;
(5) existing and developing federal and state laws and regulations, including with respect to insurance, warranty, privacy, information security, data protection, and taxation, and management’s interpretation of and compliance with such laws and regulations;
(6) our reinsurance program, which includes the use of a captive reinsurer, the success of which is dependent on a number of factors outside management’s control, along with reliance on reinsurance to protect against loss;
(7) the possibility that a decline in our share price would result in a negative impact to our insurance carrier subsidiary’s, Homeowners of America Insurance Company (“HOA”), surplus position and may require further financial support to enable HOA to meet applicable regulatory requirements and maintain financial stability rating;
(8) the uncertainty and significance of the known and unknown effects on our insurance carrier subsidiary, Homeowners of America Insurance Company (“HOA”), and us due to the termination of a reinsurance contract following of fraud committed by Vesttoo Ltd. (“Vesttoo”), including, but not limited to, the outcome of Vesttoo’s Chapter 11 bankruptcy proceedings; our ability to successfully pursue claims arising out of the fraud, the costs associated with pursuing the claims, and the timeframe associated with any recoveries; HOA's ability to obtain and maintain adequate reinsurance coverage against excess losses; HOA’s ability to stay out of regulatory supervision and maintain its financial stability rating; and HOA’s ability to maintain a healthy surplus
(9) uncertainties related to regulatory approval of insurance rates, policy forms, insurance products, license applications, acquisitions of businesses, or strategic initiatives, including the reciprocal restructuring, and other matters within the purview of insurance regulators (including the discount associated with the shares contributed to HOA);
(10) the ability of the Company and its affiliates to consummate the launch of the reciprocal exchange, including sale of HOA to the reciprocal exchange, and to commence operations;
(11) our ability to successfully operate its businesses alongside a reciprocal exchange;
(12) our ability to implement our plans, forecasts and other expectations with respect to the reciprocal exchange business after the completion of the formation and to realize expected synergies and/or convert policyholders from its existing insurance carrier business into policyholders of the reciprocal exchange;
(13) potential business disruption following the formation of the reciprocal exchange;
(14) reliance on strategic, proprietary relationships to provide us with access to personal data and product information, and the ability to use such data and information to increase transaction volume and attract and retain customers;
(15) the ability to develop new, or enhance existing, products, services, and features and bring them to market in a timely manner;
(16) changes in capital requirements, and the ability to access capital when needed to provide statutory surplus;
(17) our ability to timely repay our outstanding indebtedness;
(18) the increased costs and initiatives required to address new legal and regulatory requirements arising from developments related to cybersecurity, privacy, and data governance and the increased costs and initiatives to protect against data breaches, cyber-attacks, virus or malware attacks, or other infiltrations or incidents affecting system integrity, availability, and performance;
(19) retaining and attracting skilled and experienced employees;
(20) costs related to being a public company; and
(21) other risks and uncertainties discussed in Part II, Item 1A, “Risk Factors,” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, as well as those discussed in Part II, Item 1A, “Risk Factors,” in the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 and in subsequent reports filed with the Securities and Exchange Commission (“SEC”), all of which are available on the SEC’s website at www.sec.gov.
We caution you that the foregoing list may not contain all the risks to forward-looking statements made in this release.
You should not rely upon on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this release primarily on our current expectations and projections about future events and trends we believe may affect our business, financial condition, results of operations and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors, including those described above and elsewhere in this release. We disclaim any obligation to update publicly any forward-looking statements, whether in response to new information, future events, or otherwise, except as required by applicable law.
View source version on businesswire.com: https://www.businesswire.com/news/home/20241028729515/en/
Investor Relations Contact:
Lois Perkins, Head of Investor Relations
Porch Group, Inc.
Loisperkins@porch.com
Source: Porch Group, Inc.
FAQ
What regulatory approval did Porch Group (PRCH) receive from Texas Department of Insurance?
When will Porch Group (PRCH) sell HOAIC to PIRE?
What is the expected commission rate for Porch Group (PRCH) as PIRE's operator?
