By Chris Wack
Porch Group shares rose after the company said the Texas Department of Insurance approved its application to form and license Porch Insurance Reciprocal Exchange, a new homeowners insurance reciprocal exchange.
Shares were up 33% to $1.71 in recent trading. The stock is down almost 45% this year.
The insurance technology company said that forming Porch Insurance Reciprocal Exchange, or PIRE, is a key step in strategy to increase profitability and stabilize earnings in its go-forward insurance reporting segment by reducing direct exposure to claims and weather risks.
Porch will be the operator, also known as the attorney-in-fact, managing PIRE's operations.
The Seattle company will contribute $10 million cash in exchange for a surplus note to capitalize PIRE. On or around Jan. 1, 2025, Porch will sell Homeowners of America Insurance Co. to PIRE, including all its policies, premium, assets, and liabilities. In exchange, Porch will receive an incremental surplus note equal to HOAIC's end-of-year surplus less Porch's existing $49 million surplus note which will be assigned to PIRE and continue forward.
Porch doesn't expect PIRE's approval to impact its 2024 financials.
Write to Chris Wack at chris.wack@wsj.com
(END) Dow Jones Newswires
October 28, 2024 10:39 ET (14:39 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
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