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With two profitable quarters under its belt, property insurance and home warranty provider Porch Group this week announced it has bolstered its executive team with an eye on momentum by growing the company’s market share and profit margins.
After losing $78.6 million in the first half of 2024 and $133.9 million in 2023, Porch has been profitable for two-consecutive quarters, according to Q4 earnings data released in February.
Shares in Porch, which in the past 12 months have traded for as little as $1.05 and as much as $7.30, gained 74 percent on Feb. 26 after the company reported fourth quarter net income of $30.5 million.
In November, Seattle-based Porch announced it had turned a $14.4 million Q3 2024 profit and was moving forward with a plan to restructure its insurance business to better insulate it from catastrophic weather events.
“After a chapter of strategic focus on profitability, Porch now enters a new chapter centered on growth and margin expansion,” the company said Tuesday in announcing four recent additions its executive team.
Eric Lemieur
Eric Lemieur, head of insurance sales and distribution: Before joining Portch Group, Lemieur was head of field sales operations at Farmers Insurance, and senior director for strategic planning and analyitics at Foremost Insurance. In addition to overseeing Porch’s sales team, Lemieur is charged with strengthening third-party agency relationships as Porch focuses on premium growth and distribution.
Chad Mirock
Chad Mirock, senior director, insurance product and strategy: Having held product management leadership positions at Country Financial, The Hartford and Travelers, Mirock has expertise in product management, underwriting, and pricing strategies. At Porch, he’s been tasked with growing the new Porch Insurance product.
Andrea Ferrari
Andrea Ferrari, director of underwriting: With over 20 years of experience in the insurance industry, specializing in wildfire risk underwriting, catastrophe risk modeling, and loss mitigation at Kin Insurance, FutureProof Technologies and Hippo Insurance, Ferrari will focus on optimizing profitability while maintaining Porch’s focus on risk management.
Matt Ehrlichman
Emmanuel Bellegarde, head of reinsurance: After heading up North America Casualty Facultative reinsurance at McGill and Partners and holding reinsurance leadership roles at Aon Benfield, Bellegarde will help Porch structure placements and secure optimal coverage with third-party reinsurance providers.
“The addition of these leaders comes at a pivotal time for Porch,” Porch Group CEO Matt Ehrlichman said, in a statement. “We had a strong finish to 2024 … (and) looking toward 2025, we have the Porch Insurance Reciprocal Exchange well-positioned to scale premium.”
Leveraging software clients to sell insurance
Porch’s business strategy is to leverage the software it provides to home inspectors, mortgage lenders, title companies, roofers and other contractors, to help it sell home warranty and insurance products to homeowners. Porch’s MovingPlace marketplace, launched in December to help consumers compare moving companies, will also serve as a channel for marketing insurance.
Porch’s vertical software segment accounted for only about one-fourth of its 2024 revenue (27 percent). But through its subsidiaries, Porch claims relationships with about 29,000 companies that are key to the home-buying transaction. Porch says its Rynoh title insurance software was used in 40 percent of real estate closings last year, and that its Inspection Support Network serves businesses that conducted more than 40 percent of home inspections.
Porch says its software business also gives it “unique insights into the majority of U.S. properties. This helps us better understand risk and create competitive differentiation in underwriting and pricing” insurance policies offered by Homeowners of America in 22 states.
While Porch’s property insurance business had been entangled in the fallout from the bankruptcy of its reinsurer, Vesttoo Ltd., the company looks to have put that chapter of its history behind it.
After raising $25 million through a strategic business collaboration with reinsurance broker Aon Re Inc. last year, Porch was granted regulatory approval in October to restructure its insurance business by selling its Homeowners of America subsidiary to a new homeowners insurance reciprocal exchange that’s owned by policyholders but operated by Porch.
The deal to sell Homeowners of America to Porch Insurance Reciprocal Exchange, or PIRE, closed on Jan. 7, leaving Porch holding $106 million in interest-bearing surplus notes.
The formation of PIRE, “is a key step in Porch’s strategy to increase profitability and stabilize earnings … by reducing direct exposure to claims and weather risks,” the company said in announcing approval of the deal by the Texas Department of Insurance last fall.
Path to profitability
Despite having put together two-consecutive profitable quarters, Porch has racked up $754.9 million in cumulative losses through Dec. 31, 2024.
After going public in a December 2020 SPAC merger, Porch went on a buying spree. Porch spent $346.3 million on acquisitions in 2021 on companies including Homeowners of America ($114.8 million), Floify ($95.4 million), home warranty provider American Home Protect ($46.3 million), title and real estate software and data analytics company Rynoh ($35.8 million), and Omnichannel marketing platform V12 Data ($21.8 million).
Porch’s acquisition streak wound down in 2022 with a $33 million deal to acquire Residential Warranty Services’ home warranty and inspection software and services businesses.
After posting a $133.9 million net loss in 2023, Porch trimmed its 2024 net loss to $32.8 million by growing revenue by 2 percent, to $437.8 million, and cutting operating expenses by 19 percent, to $502.4 million.
Last year Porch generated $452 million in gross written premiums, down 14 percent from the year before. Part of that drop was attributed to the January, 2024 sale of Porch’s insurance agency, Elite Insurance Group, for $12.2 million.
The company finished the year with 206,000 policies in force, with each policy generating an average of $2,470 in annual premiums.
In announcing Q4 2024 results, Porch executives said they expect the company to generate $390 million to $410 million in revenue this year, and achieve adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of between $55 million and $65 million.
With shares in Porch closing at $5.58 Thursday, Porch had a market capitalization of about $568 million.
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