Orchid and Homesite Partner to Launch TRUE Reciprocal Exchange

Transaction Overview

Orchid Underwriters (“Orchid”) & Homesite Insurance (“Homesite”) launch TRUE property insurance

  • TRUE is a reciprocal exchange catering to unmet market needs for coastal property owners and agents
  • TRUE will underwrite admitted personal and small commercial P&C insurance products
  • TRUE will initially be focused on Florida with near-term plans to diversify to other states

TRUE has been capitalized with surplus note commitments from the two sponsors

  • Proceeds will be used to capitalize TRUE’s balance sheet and support TRUE’s growth prospects
  • TRUE has obtained a financial strength rating of “A-” (Excellent) from A.M. Best

TRUE entered into an attorney-in-fact agreement with Trusted Resource Underwriters, LLC (“TRU”)

  • TRU will provide all operational functions including pricing, U/W, claims, distribution and marketing

TRU’s management team has a proven track record of building and operating insurance companies

  • Led by CEO Michael Lorion who was most recently CFO and SVP of Homesite Insurance

Orchid is a leading specialty residential and commercial property MGU founded in 1998

  • Orchid manages over $300mm of premium and $60bn in capacity with over 31 carrier partners

Homesite is a subsidiary of American Family Insurance and the 12th largest U.S. homeowners insurer

  • Homesite writes over $2bn of annual premium including HO, condo, renters, flood and small commercial

TigerRisk Capital Markets & Advisory Role

TCMA acted as exclusive Transaction Advisor and Placement Agent for Orchid

  • TCMA introduced the reciprocal concept to Orchid
  • Provided objective advice and acted as a confidant to Orchid and TRUE throughout the process
  • Placement Agent in connection with TRUE surplus note security issuance
  • Key roles and responsibilities included:
    • Assistance in preparing TRUE business plan and financial projections
    • Assistance in preparing A.M. Best materials to achieve desired “A-” (Excellent) financial strength rating
    • Assistance in CAT modeling and designing reinsurance program for TRUE

This transaction further solidifies TCMA as the market leader in reciprocal exchange formations

  • Including the formation of the Vault Exchange in 2017, and the Noblr and Kin Exchanges in 2019