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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 25, 2024
PORCH GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware001-3914283-2587663
(State or other jurisdiction
of incorporation)
(Commission File Number)
(IRS Employer
Identification No.)
411 1st Avenue S., Suite 501
Seattle, Washington
98104
(Address of principal executive offices)(Zip Code)
(855) 767-2400
(Registrant’s telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading
Symbol(s)
Name of each exchange
on which registered
Common stock, par value $0.0001PRCHThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o


Item 8.01. Other Events
On October 25, 2024, the Texas Department of Insurance (“TDI”) approved the application of Porch Group, Inc. (“Porch”) to form and license Porch Insurance Reciprocal Exchange, a new homeowners insurance reciprocal entity to be owned by its policyholder members (“the Reciprocal”). The approval is subject to the completion of customary administrative closing procedures that are expected to conclude this year. To capitalize the Reciprocal, Porch will initially contribute $10 million of cash into the Reciprocal in 2024 in exchange for a surplus note from the Reciprocal.

Porch expects the Reciprocal to acquire its existing homeowners insurance carrier, Homeowners of America Insurance Company (“HOAIC”), on or around January 1, 2025, and commence operations immediately thereafter. As part of this transaction and as consideration for HOAIC, Porch expects to receive an additional surplus note from the Reciprocal equal to an amount to be determined representing the difference between one times HOAIC’s end-of-year surplus, less $49 million (which is the principal amount of a surplus note issued by HOAIC to Porch in 2023. As part of the aforementioned transactions, the Reciprocal will become the sole obligor on such $49 million surplus note.

Porch will operate the Reciprocal through its new wholly owned subsidiary, Porch Risk Management Services LLC (“PRMS”). The services to be provided by PRMS to the Reciprocal include, but are not limited to, all matters related to underwriting, policy renewal, risk management, insurance portfolio management, financial management, and setting investment guidelines. In addition, PRMS will maintain the Reciprocal’s books and records and be responsible for its accounting and financial reporting. In exchange for the services to be provided, PRMS will receive ongoing commissions and policy fees equal to a blended take rate of approximately 20% of the Reciprocal’s gross written premium. The Reciprocal will pay all claims and claims adjustment expenses, reinsurance costs, agency commissions, and taxes and license fees. The Reciprocal will be managed to appropriate risk based capital and surplus levels.

On October 28, 2024, the Company issued a press release announcing regulatory approval of the formation and licensure of the Reciprocal. A copy of the press release is filed as Exhibit 99.1 and is incorporated herein by reference.

Forward-Looking Statements

Certain statements in this Form 8-K may be considered “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. These statements are based on the beliefs and assumptions of management. Although we, Porch Group, Inc., believe that our plans, intentions, and expectations reflected in or suggested by these forward-looking statements are reasonable, we cannot assure you that we will achieve or realize these plans, intentions, or expectations. Forward-looking statements are inherently subject to risks, uncertainties, and assumptions. Generally, statements that are not historical facts, including statements concerning our possible or assumed future actions, business strategies, events, results of operations, or financial condition, are forward-looking statements. These statements may be, but are not always, preceded by, followed by, or include the words “believe,” “estimate,” “expect,” “project,” “forecast,” “may,” “will,” “should,” “seek,” “plan,” “scheduled,” “anticipate,” “intend,” or similar expressions.

Forward-looking statements are not guarantees of performance or occurrence. You should not put undue reliance on these statements which speak only as of the date hereof, and include statements relating to our strategic initiatives, timing of administrative procedures to complete and form the Reciprocal, when the Company will receive final approval to form and license the Reciprocal, if the Company will receive final approval to form and license the Reciprocal, the future sale of HOAIC and receipt of surplus note, ability for the Reciprocal to commence operations, the services Porch through PRMS will provide to the Reciprocal, and fees paid to PRMS for services provided to the Reciprocal. You should understand that the following important factors, among others, could affect our future results and condition and could cause those results, condition or other outcomes to differ materially from those expressed or implied in our forward-looking statements:

•the incidence, frequency, and severity of weather events, extensive wildfires, and other catastrophes, including those occurring during our second quarter;
•economic conditions, especially those affecting the housing, insurance, and financial markets;
•expectations regarding revenue, cost of revenue, operating expenses, and the ability to achieve and maintain future profitability;
•existing and developing federal and state laws and regulations, including with respect to insurance, warranty, privacy, information security, data protection, and taxation, and management’s interpretation of and compliance with such laws and regulations;
•our reinsurance program, which includes the use of a captive reinsurer, the success of which is dependent on a number of factors outside management’s control, along with reliance on reinsurance to protect against loss;
•the possibility that a decline in our share price would result in a negative impact to HOA’s surplus position and may require further financial support to enable HOA to meet applicable regulatory requirements and maintain financial stability rating;
•the uncertainty and significance of the known and unknown effects on our insurance carrier subsidiary, Homeowners of America Insurance Company (“HOA”), and us due to the termination of a reinsurance contract following the fraud committed by Vesttoo Ltd. (“Vesttoo”), including, but not limited to, the outcome of Vesttoo’s


Chapter 11 bankruptcy proceedings; our ability to successfully pursue claims arising out of the fraud, the costs associated with pursuing the claims, and the timeframe associated with any recoveries; HOA's ability to obtain and maintain adequate reinsurance coverage against excess losses; HOA’s ability to stay out of regulatory supervision and maintain its financial stability rating; and HOA’s ability to maintain a healthy surplus;
•uncertainties related to regulatory approval of insurance rates, policy forms, insurance products, license applications, acquisitions of businesses, or strategic initiatives, including the reciprocal exchange restructuring, and other matters within the purview of insurance regulators (including the discount associated with the contributed shares);
•changes in capital requirements, and the ability to access capital when needed to provide statutory surplus;
•our ability to timely repay our outstanding indebtedness;
• the ability of the Company and its affiliates to consummate the sale of HOA to the reciprocal exchange and to commence operations of the reciprocal exchange;
the ability of the Company to successfully operate its businesses alongside a reciprocal exchange;
•the ability of the Company to implement its plans, forecasts and other expectations with respect to the reciprocal exchange business after the completion of the formation and to realize expected synergies and/or convert policyholders from its existing insurance carrier business into policyholders of the reciprocal exchange;
•potential business disruption following the formation of the reciprocal exchange, as well as other risks and important factors detailed in our public filings with the Securities and Exchange Commission; and
•other risks and uncertainties discussed in Part I, Item 1A, “Risk Factors,” in our Annual Report on Form 10-K (“Annual Report”) for the year ended December 31, 2023, and in subsequent reports filed with the Securities and Exchange Commission (“SEC”), all of which are available on the SEC’s website at www.sec.gov.

We caution you that the foregoing list may not contain all of the risks to forward-looking statements made in this Form 8-K.

You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Form 8-K primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors, including those described in the reports filed with the SEC and elsewhere in this Form 8-K. We disclaim any obligation to update publicly any forward-looking statements, whether in response to new information, future events, or otherwise, except as required by applicable law.


Item 9.01. Financial Statements and Exhibits.
(d)Exhibits.
Exhibit
No.
Description
99.1
104Cover Page Interactive Data File (embedded within the Inline XBRL document)


SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
PORCH GROUP, INC.
By:/s/ Matthew Cullen
Name:Matthew Cullen
Title:General Counsel
Date: October 28, 2024

logo.jpg        Exhibit 99.1
Porch Group Announces Reciprocal Exchange Regulatory Approval, A Key Milestone
SEATTLE, October 28, 2024 (BUSINESS WIRE) – Porch Group, Inc. (“Porch” or “the Company”) (NASDAQ: PRCH), a homeowners insurance and vertical software platform, today announced the Texas Department of Insurance (“TDI”) has approved its application to form and license Porch Insurance Reciprocal Exchange, a new homeowners insurance reciprocal exchange (“the Reciprocal” or “PIRE”).

Forming PIRE is a key step in Porch's strategy to increase profitability and stabilize earnings in its go-forward Insurance reporting segment by reducing direct exposure to claims and weather risks. A reciprocal insurer is owned by its policyholders, much like how Farmers Insurance and Erie Insurance operate. Porch will be the operator (also known as the attorney-in-fact) managing PIRE’s operations.

The terms and structure of the transaction approved by the TDI provide for an exciting and sustainable opportunity ahead for Porch shareholders. After the TDI completes customary administrative closing procedures, Porch will contribute $10 million cash in exchange for a surplus note to capitalize PIRE. On or around January 1, 2025, Porch will sell Homeowners of America Insurance Company (“HOAIC”) to PIRE, including all its policies, premium, assets, and liabilities. In exchange, Porch will receive an incremental surplus note 1 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. Ongoing, as the operator, Porch will earn commissions and fees that blend to a take rate of approximately 20% of Gross Written Premium and PIRE will manage to appropriate risk based capital and surplus. HOAIC is expected to maintain its “A” financial stability rating from Demotech.

Porch does not expect PIRE’s approval to impact its 2024 financials. Further details will be shared at the Q3 2024 earnings announcement on November 7, 2024 and at an investor day in early December 2024.

“I would like to thank the TDI for their partnership throughout this process and to the Porch team for consistently living our values as we worked toward this moment. It has taken great effort, and we are pleased to have achieved this key milestone on our journey to become ‘A New Kind of Homeowners Insurance Company.’ This is an important step for us to protect the homes of more homeowners in Texas and around the country where we plan to continue to be a great partner for both policyholders and insurance agents alike. With this change, Porch will be a simpler and more predictable business over time that has higher margins and growth potential. We believe this transaction and go-forward operation will create significant value for shareholders. We are looking forward to sharing more about our 2024 results, forward-looking financials, and details into our plans soon.” Matt Ehrlichman, Chief Executive Officer.

Porch Group was advised by Eversheds Sutherland LLP and Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C

1.A surplus note is a subordinated financial instrument that pays an interest-bearing coupon with excess surplus generated by the Reciprocal.

About Porch Group 
Porch Group, Inc., ("Porch") is a homeowners insurance and vertical software platform. Porch's strategy to win in homeowners insurance is to leverage unique data for advantaged underwriting, provide the best services for homebuyers, and protect the whole home. The long-term competitive moats that create this differentiation come from Porch's leadership in home services software-as-a-service and its deep relationships with approximately 30 thousand companies that are key to the home-buying transaction, such as home inspectors, mortgage, and title companies.



To learn more about Porch, visit ir.porchgroup.com.

Forward-Looking Statements
Certain statements in this release may be considered forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These statements are based on the beliefs and assumptions of management. Although we believe that our plans, intentions, and expectations reflected in or suggested by these forward-looking statements are reasonable, we cannot assure you that we will achieve or realize these plans, intentions, or expectations. Forward-looking statements are inherently subject to risks, uncertainties, and assumptions. Generally, statements that are not historical facts, including statements concerning our possible or assumed future actions, business strategies, events, or results of operations, are forward-looking statements. These statements may be preceded by, followed by, or include the words “believe,” “estimate,” “expect,” “project,” “forecast,” “may,” “will,” “should,” “seek,” “plan,” “scheduled,” “anticipate,” “intend,” or similar expressions.

Forward-looking statements are not guarantees of performance. You should not put undue reliance on these statements which speak only as of the date hereof, and include statements relating to our strategic initiatives, ability to increase profitability and stabilize earnings in Porch’s Insurance segment, reducing direct exposure to claims and weather risks and PIRE’s role in such reduction, completion of the TDI’s customary administrative closing procedures, contribution of cash to PIRE, timing and whether Porch will sell HOAIC, any consideration to be received by Porch for such sale, Porch’s operation of PIRE and any fees to be received for such operation, and whether 2024 financials will be impacted by PIRE . Unless specifically indicated otherwise, the forward-looking statements in this press release do not reflect the potential impact of any divestitures, mergers, acquisitions, or other business combinations that have not been completed as of the date of this filing. You should understand that the following important factors, among others, could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in our forward-looking statements:

(1) expansion plans and opportunities, and managing growth, to build a consumer brand;
(2) the incidence, frequency, and severity of weather events, extensive wildfires, and other catastrophes;
(3) economic conditions, especially those affecting the housing, insurance, and financial markets;
(4) expectations regarding revenue, cost of revenue, operating expenses, and the ability to achieve and maintain future profitability;
(5) existing and developing federal and state laws and regulations, including with respect to insurance, warranty, privacy, information security, data protection, and taxation, and management’s interpretation of and compliance with such laws and regulations;
(6) our reinsurance program, which includes the use of a captive reinsurer, the success of which is dependent on a number of factors outside management’s control, along with reliance on reinsurance to protect against loss;
(7) the possibility that a decline in our share price would result in a negative impact to our insurance carrier subsidiary’s, Homeowners of America Insurance Company (“HOA”), surplus position and may require further financial support to enable HOA to meet applicable regulatory requirements and maintain financial stability rating;
(8) the uncertainty and significance of the known and unknown effects on our insurance carrier subsidiary, Homeowners of America Insurance Company (“HOA”), and us due to the termination of a reinsurance contract following of fraud committed by Vesttoo Ltd. (“Vesttoo”), including, but not limited to, the outcome of Vesttoo’s Chapter 11 bankruptcy proceedings; our ability to successfully pursue claims arising out of the fraud, the costs associated with pursuing the claims, and the timeframe associated with any recoveries; HOA's ability to obtain and maintain adequate reinsurance coverage against excess losses; HOA’s ability to stay out of regulatory supervision and maintain its financial stability rating; and HOA’s ability to maintain a healthy surplus
(9) uncertainties related to regulatory approval of insurance rates, policy forms, insurance products, license applications, acquisitions of businesses, or strategic initiatives, including the reciprocal restructuring, and other matters within the purview of insurance regulators (including the discount associated with the shares contributed to HOA);
(10) the ability of the Company and its affiliates to consummate the launch of the reciprocal exchange, including sale of HOA to the reciprocal exchange, and to commence operations;
(11) our ability to successfully operate its businesses alongside a reciprocal exchange;


(12) our ability to implement our plans, forecasts and other expectations with respect to the reciprocal exchange business after the completion of the formation and to realize expected synergies and/or convert policyholders from its existing insurance carrier business into policyholders of the reciprocal exchange;
(13) potential business disruption following the formation of the reciprocal exchange;
(14) reliance on strategic, proprietary relationships to provide us with access to personal data and product information, and the ability to use such data and information to increase transaction volume and attract and retain customers;
(15) the ability to develop new, or enhance existing, products, services, and features and bring them to market in a timely manner;
(16) changes in capital requirements, and the ability to access capital when needed to provide statutory surplus;
(17) our ability to timely repay our outstanding indebtedness;
(18) the increased costs and initiatives required to address new legal and regulatory requirements arising from developments related to cybersecurity, privacy, and data governance and the increased costs and initiatives to protect against data breaches, cyber-attacks, virus or malware attacks, or other infiltrations or incidents affecting system integrity, availability, and performance;
(19) retaining and attracting skilled and experienced employees;
(20) costs related to being a public company; and
(21) other risks and uncertainties discussed in Part II, Item 1A, “Risk Factors,” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, as well as those discussed in Part II, Item 1A, “Risk Factors,” in the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 and in subsequent reports filed with the Securities and Exchange Commission (“SEC”), all of which are available on the SEC’s website at www.sec.gov.

We caution you that the foregoing list may not contain all the risks to forward-looking statements made in this release.

You should not rely upon on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this release primarily on our current expectations and projections about future events and trends we believe may affect our business, financial condition, results of operations and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors, including those described above and elsewhere in this release. We disclaim any obligation to update publicly any forward-looking statements, whether in response to new information, future events, or otherwise, except as required by applicable law.

Investor Relations Contact: 
Lois Perkins, Head of Investor Relations
Porch Group, Inc.
Loisperkins@porch.com


v3.24.3
Document and Entity Information
Oct. 25, 2024
Cover [Abstract]  
Document Type 8-K
Document Period End Date Oct. 25, 2024
Entity Registrant Name PORCH GROUP, INC.
Entity Incorporation, State or Country Code DE
Entity File Number 001-39142
Entity Tax Identification Number 83-2587663
Entity Address, Address Line One 411 1st Avenue S.
Entity Address, Address Line Two Suite 501
Entity Address, City or Town Seattle
Entity Address, State or Province WA
Entity Address, Postal Zip Code 98104
City Area Code 855
Local Phone Number 767-2400
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common stock, par value $0.0001
Trading Symbol PRCH
Security Exchange Name NASDAQ
Entity Emerging Growth Company false
Amendment Flag false
Entity Central Index Key 0001784535
Porch (NASDAQ:PRCH)
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