Porch Group, a software-driven financial services firm and Aon have entered into a $30 million strategic agreement whereby the re/insurance broker will provide services to the company. Interestingly, the agreement includes the release of all claims Porch had against the broker related to the Vesttoo fraud.
This collaboration is with Aon and its reinsurance broking arm, and sees Aon pay $25 million in payments to Porch upfront, with a further $5 million in payments over the following four years.
Porch says that it sought a strong partner that was able to deliver strong outcomes with reinsurance placements and provide other services across the Group, such as data modelling and more. The parties will now work together to place 2024 reinsurance coverage at the April 1st renewals.
But what is perhaps most notable is that as part of this agreement, Porch has confirmed that the pair have signed a release of all claims arising from the Vesttoo fraud.
“Porch has not released any claims against non-Aon parties related to these matters and intends to vigorously pursue recovery,” Porch explained.
“We think Aon is the right partner for us. They are a well-known name in the insurance industry who can provide a variety of important services to help across our business. 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,” said Matt Ehrlichman, Porch’s Chief Executive Officer.
In August 2023, Porch reported that its homeowners insurance subsidiary, Homeowners of America (HOA), discovered that Vesttoo, which arranged capital for one of the firm’s reinsurance contracts, faced allegations of fraudulent activity related to collateral it provided to HOA and other third parties.
Porch realised a charge of $48.2 million in its Q2 results as a result of the fraud and said it was pursuing $300 million of collateral from a letter of credit.
The firm later announced that HOA had replaced the majority of the reinsurance limit impacted by the Vesttoo fraud, and Porch later joined Vesttoo’s bankruptcy proceedings as a member of the official creditor committee.
It came to light that HOA had obtained reinsurance from White Rock Insurance (SAC) Ltd., an affiliate of Aon, which was acting in respect of a segregated account.
So, while it is unclear if litigation was ever filed, it does seem that Porch was previously pursuing claims against Aon in relation to the Vesttoo fraud, with this new agreement releasing all claims it had against the broker.
