Orchid Insurance, Homesite Launch Homeowners Insurer TRUE in Florida

IJ - November 16, 2020 - Orchid Underwriters Agency, LLC (Orchid), a specialty underwriter of catastrophe-exposed property insurance, and Homesite Group, a national property insurer, have created TRUE, a reciprocal insurance company to protect homeowners in coastal states. TRUE (Trusted Resource Underwriters Exchange) is domiciled in Tampa, Fla. 

TRUE will offer owner-occupied homeowners insurance, as well as bundled, optional coverages and a private flood product, for medium-to-high-value homes. The products will be distributed through select agent partners, beginning in Florida and eventually expanding into the Gulf, Southeast and Mid-Atlantic states.

The company was licensed by the Florida Office of Insurance Regulation in October and was assigned an AM Best rating of A- and a long-term issuer credit rating of “a-” with a stable outlook this month.

According to Michael Lorion, TRUE’s chief executive officer and former chief financial officer of Homesite, the company has a strong financial backing and broad coverage offerings with a “commitment to best-in-class service.”

“TRUE offers insurance solutions through a collaborative relationship with homeowners to help prevent and mitigate risks,” he added.

Lorion has nearly 25 years of experience in the industry, including leadership positions with several large property casualty carriers, including Homesite, Hanover Insurance Group and Travelers Insurance.

As CEO, Lorion leads the strategy and operations of the company. He also serves on its board of managers along with executives of Orchid; TowerBrook Capital Partners, a private equity firm and majority owner of Orchid; Homesite; American Family Insurance, Homesite’s parent; and a manager independent of those companies.

In addition to Lorion, the company’s management team includes Stephen Russell, former chief actuary of Tower Hill Insurance Group and chief underwriting and actuarial officer of American Modern Insurance Group, as its chief underwriting officer; and insurtech and insurance operations veteran Scott Soderstrom as its chief operating officer.

Orchid will begin offering TRUE to select agent partners.

“Given what we are seeing in the market, we are proactively developing new admitted products that meet the needs of risk-conscious customers and agency partners,” said Brad Emmons, president and chief executive officer of Orchid Underwriters.

According to TRUE, its organizational structure as a reciprocal insurance company aligns with its customer focus. A reciprocal insurance company is an unincorporated association owned by its policyholder-members who exchange insurance policies to spread risk by pooling their money together. There are no shareholders. The exchange is managed by an attorney-in-fact (AIF), which, in TRUE’s case, will be Delaware-based Trusted Resource Underwriters, LLC.

TRUE’s service model will utilize technology in underwriting, claims, and catastrophe exposure management, designed to be successful higher-risk areas.

AM Best said TRUE’s balance sheet strength assessment is based on initial risk-adjusted capital capacity that meets AM Best’s guidelines for newly formed entities through a five-year start up period. Capital levels are measured against a risk adverse investment strategy and “TRUE’s intentions to maintain a robust reinsurance program backed by highly rated reinsurers,” Best said.

“AM Best assesses TRUE’s operating performance as adequate based on the exchange’s clearly defined five-year business plan that contemplates implementation and execution risk for the new exchange,” the ratings agency noted.

Best added that TRUE will initially operate with a concentration in Florida with a select market and will require a period of time to establish its brand. Its enterprise risk management program will utilize a “proven structure in the ‘three lines of defense approach.'” Best said the assigned ratings also consider financial and operational support provided by American Family Insurance Group, which has provided capital to TRUE through surplus notes, is anticipated to participate in the reinsurance program and support select day-to-day services.

TRUE said it will immediately leverage the scale and operational capabilities of both Homesite and Orchid to deliver “a premier level of service to members and agents.”

TRUE will target customers focused on preventing and limiting damages from hurricanes and other severe weather events in addition to preventing non-weather losses, and will offer explicit discounts for shuttered windows, wind-resistant glass, water detection devices and alarm systems. When a claim occurs, it will work with the member on additional loss-control measures to reduce the chances of similar claims happening in the future, the company said.

TigerRisk Capital Markets & Advisory acted as sole Transaction Advisor to Orchid Underwriters and Placement Agent to TRUE.

Founded in 1998 and based in Vero Beach, Fla., Orchid specializes in providing specialty insurance products for homeowners and small businesses throughout the United States and the Caribbean. The product offerings for homeowners and condominium property insurance including wind and wind only, general liability and excess flood, earthquake, builder’s risk, and others.

With more than $2 billion in annual written premium, Homesite offers homeowners, condo, renters, and flood products, Homesite also offers small commercial and life insurance products nationwide. Homesite’s products are offered directly online through its many partnerships, and through its call center locations. Homesite is a subsidiary of American Family Insurance.