Porch Group, a homeowners insurance and vertical software platform, has reported total revenue of $110.8 million, which increased 12% compared to the same period the prior year, with an improved net loss of $64.3 million in the second quarter of 2024.
In Q2 2024 the firm’s net loss grew compared to the $22.6 million reported in Q2 2023. The firm also noted that the 12% increase in total revenues, from $98.8 million in Q2 2023, was driven by the insurance segment, including a 28% increase in premium per policy and lower reinsurance ceding.
For the insurance segment, Porch reported $117 million in gross written premiums (GWP) in Q2 2024, with approximately 232 thousand policies in force. In Q2 2023, the firm reported GWP of $143 million.
Porch noted that its 21% attritional loss ratio for this year’s second quarter, an improvement from 35% in the prior year, was driven by the insurance profitability actions.
Additionally, this quarter, which historically has been the highest claims quarter for the insurance business, realised substantial improvement in its gross combined ratio, from 180% in Q2 2023 to 124% in Q2 2024, despite increased catastrophic weather driven by the May Houston wind event.
“The team delivered a solid performance this quarter. Despite a May hurricane-like event in Houston with 100 miles per hour sustained winds that caused catastrophic weather claims worse than historic experiences and expectations, our results are still broadly in line with plan and showed solid year-over-year improvement. Our insurance profitability actions continued to result in attritional losses performing better than anticipated and substantial improvement in our gross combined ratio year-over-year,” said Matt Ehrlichman, Chief Executive Officer, Chairman and Founder.
He continued: “Our focus remains on deepening our long-term competitive moat by expanding our data platform, monetizing data products such as Home Factors in the market, and executing the reciprocal exchange to structure our insurance operation in a way we believe scales rapidly and profitability with lower volatility.
“We are excited about the announcement of having filed the updated reciprocal application, with a targeted 2024 approval. We remain focused on building long-term value for our shareholders and are very excited about how the years ahead are shaping up.”
The Porch Group has also announced it has filed a new and updated application to form and licence a Texas reciprocal insurance exchange (Reciprocal) with the Texas Department of Insurance (TDI). The firm had filed the first application in March 2023.
A reciprocal insurer is an insurance association owned by its policyholder-members who spread risk by pooling their risks together.
According to the firm, if approved, its homeowners insurance carrier, Homeowners of America Insurance Company (HOA), will be sold to the Reciprocal, resulting in all premiums, policies, and insurance underwriting being conducted through the Reciprocal.
The day-to-day operations of the Reciprocal would be managed by a subsidiary of Porch, the firm explained, which would receive ongoing fees for originating and managing all day-to-day aspects of the homeowners insurance business for the Reciprocal.
Growth at the Reciprocal would be supported by Porch. This would be done by Porch continuing to reach homebuyers early and throughout the homebuying journey and leveraging access to homebuyer information and property data.
Porch highlighted that the formation of the Reciprocal is an important step in the company’s long-term strategy to reduce its exposure to earnings volatility from its insurance segment by mitigating direct exposure to insurance claims and weather events.
Ehrlichman commented: “Launching a reciprocal exchange is a significant step to reduce volatility, enable our insurance business to grow more effectively, and improve margins at Porch Group. We look forward to working with the TDI toward approval of the reciprocal application, positioning Porch and HOA to better serve Texas homeowners.
“A contribution of Porch Group equity increases HOA’s surplus in the near-term and is an important part of our long-term growth strategy. As we deliver on strategic initiatives, such as leveraging our unique data to grow premium profitably, we believe this should create value at Porch Group and thus contribute to capital growth at the carrier. This ultimately supports further premium growth and profitability at Porch.”
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