Porch Group, a Seattle-based insurtech, has transitioned its homeowners insurance business into a reciprocal exchange. The company aims to use its data-driven approach to improve pricing accuracy and customize services for homebuyers.
The move involved selling its subsidiary, Homeowners of America Insurance Co., to the newly formed Porch Insurance Reciprocal Exchange.
The sale reflected an estimated year-end 2024 surplus of $105 mn, adjusted for a $49 mn surplus note from 2023 and an expected $9 mn interest payment in 2025.
Following the transaction, Porch holds around $106 mn in total surplus notes. The sale included all policies, premiums, assets, and liabilities of Homeowners of America Insurance Co.
As the exchange operator, Porch will manage day-to-day operations and offer additional services. It expects to earn commissions and fees equivalent to about 20% of gross written premium, with plans to increase that percentage over time.
CEO Matt Ehrlichman described the shift to a reciprocal exchange as a significant business transformation. He emphasized the potential for increased growth and improved margins, noting that this model simplifies operations and provides more predictable outcomes.
Porch also highlighted that the exchange structure will reduce its direct exposure to claims and weather-related risks. This change aligns with its broader strategy to integrate its homeowners insurance business with its vertical software platform.