Seattle-based home services software company Porch Group Inc. (Nasdaq: PRCH) has signed a deal with reinsurance firm Aon potentially worth around $30 million.
Porch is receiving $25 million upfront, plus an expected roughly $5 million over the next four years for Aon to work with Porch's companies.
Porch said in a news release Aon will provide a variety of services in addition to reinsurance, which is essentially insurance for insurance companies.
“We think Aon is the right partner for us," Porch founder and CEO Matt Ehrlichman said in a release. "Porch and our insurance carrier have worked with Aon for many years, and we are excited to expand this relationship with Aon as our sole partner for certain services through 2028.”
A spokesperson added that Aon will arrange reinsurance coverage for Porch's insurance subsidiary Homeowners of America as its sole partner through 2028.
In addition to reinsurance, Aon offers services like consulting, risk management and analytics. The London-based company has clients in more than 120 countries.
The deal with Aon comes after Homeowners of America was placed under temporary supervision from the Texas Department of Insurance in September. The move stemmed from Homeowners of America's reinsurance contract with White Rock Insurance, as the capital was arranged by fintech company Vesttoo, which filed for Chapter 11 bankruptcy in August after fraudulent letters of credit were found on its platform.
The Vesttoo contract caused Porch to take a $48.2 million charge in the second quarter.
Porch announced in November Homeowners of America was no longer under temporary supervision. Along with the deal, the Porch spokesperson said the company has released Aon from any potential claims arising from the Vesttoo fraud. Porch added in the release it "has not released any claims against non-Aon parties related to these matters and intends to vigorously pursue recovery."
Porch launched in 2013 as a marketplace but several years later moved more into the software space, offering software for moving companies and home services companies, such as contractors, inspectors and utilities. Porch went public in 2020 through a merger with a special purpose acquisition company, and it acquired Irving, Texas-based Homeowners of America in 2021 for $100 million.
Porch generated $129.6 million in revenue during the third quarter, up from $77.4 million during the third quarter of 2022. In a release at the time, the company said its revenue was driven by its insurance business.
