Porch forms homeowners insurance reciprocal exchange and sells HOA for $105m

Porch Group, a homeowners insurance and vertical software platform, has completed the formation of Porch Insurance Reciprocal Exchange (PIRE), a new homeowners insurance reciprocal exchange, alongside the sale of Homeowners of America Insurance Company (HOA) to PIRE.

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This follows Porch receiving approval from the Texas Department of Insurance (TDI) in October 2024 to form and licence PIRE.

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As part of the transaction, Porch sold HOA to PIRE for a purchase price based on HOA’s projected surplus of approximately $105 million as of December 31, 2024. The amount was adjusted by subtracting a $49 million surplus note from 2023 and $9 million in outstanding interest expected to be paid in 2025. Porch now holds total surplus notes of approximately $106 million.

PIRE will assume ownership of all HOA policies, premiums, claims, assets, and liabilities.

Porch will earn commissions and fees for providing operational and other services to PIRE, which are expected to result in more stable and higher-margin financial outcomes for Porch shareholders.

The establishment of PIRE marks a significant step in Porch’s strategy to grow a highly profitable homeowners insurance business. With PIRE in place, Porch aims to scale its written insurance premiums.

Matt Ehrlichman, CEO of Porch, stated, “We are thrilled to announce the formation of the Porch Insurance Reciprocal Exchange, a transformative step in our journey to redefine the homeowner experience while enhancing profitability for Porch shareholders.”

He added, “This is just the beginning of an exciting new chapter. We look forward to delivering exceptional value to our stakeholders and continuing to innovate in the homeowners insurance industry.”