Seattle-based home services software company Porch Group Inc. (Nasdaq: PRCH) is predicting major losses from its insurance business ahead of its second-quarter earnings release on Aug. 8.
Earlier this month, Porch said it expects losses of $18 million in the second quarter due to catastrophic weather, including thunderstorms and hail in Texas during June. The losses come after Porch made a push into the insurance business, partly through its 2021 acquisition of Homeowners of America for $100 million.
“I’m proud of our team for serving our customers quickly and effectively after these difficult weather events," Porch founder and CEO Matt Ehrlichman said in a July 20 release. "Like everyone in the industry, we cannot predict these unfortunate and uncommon weather events, but we will continue to seek to increase prices to ensure we are set up well as we look ahead."
A Porch spokesperson said the company wasn't commenting beyond the release.
Porch launched in 2013 as a marketplace before moving into the software space about eight years ago, offering software for home services and moving companies. The Homeowners of America acquisition was part of a year in which Porch acquired more than a half-dozen companies. Porch went public in 2020 through a merger with a special purpose acquisition company.
Porch generated $87.4 million in revenue during the first quarter, a 37% year-over-year increase.
Catastrophic weather is becoming a serious problem for the insurance industry. Insurance giant Allstate, for example, estimates losses for June amounting to more than $1 billion. Reinsurance firm Guy Carpenter, meanwhile, projected global insurance losses for natural catastrophes to hit $112 billion last year, according to a Reuters report.
According to the Environmental Protection Agency, extreme weather is likely to become more frequent or intense, and climate change is forcing some insurance companies to rethink their business. State Farm in May announced it will no longer sell coverage to homeowners in California. Hurricane risk, meanwhile, caused Farmers Insurance to pull out of Florida this month.
A recent study from World Weather Attribution found July heat waves in the U.S., Mexico, Europe and China would have been almost impossible without human-caused climate change.
