Porch ends Vesttoo claims with Aon

Porch Group Inc., a home services company that owns a homeowners insurer, said Friday it had reached a $30 million “strategic business collaboration” with Aon PLC in which the brokerage will provide reinsurance brokerage services to the company and be released from claims related to the alleged Vesttoo fraud.

In a statement, Seattle-based Porch said that under the terms of the agreement Aon will provide various services to Porch “resulting in payments to Porch of approximately $25 million upfront and an expected approximately $5 million over the following four years.”

The services will include placing reinsurance coverage at Porch’s renewal on April 1 and providing data-modeling services to Porch.

“As part of this agreement, the parties also signed a release of 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 said.

Porch disclosed in September that its insurance unit, Homeowners of America Insurance Co., was placed under temporary supervision by the Texas Department of Insurance. And in its second-quarter 2023 earnings release it said it had a reinsurance contract with White Rock Insurance SAC Ltd., a segregated account company owned by Aon, that was backed by Vesttoo. Porch recognized a $48.2 million charge in provision for doubtful accounts related to the reinsurance.

The Vesttoo program unwound in July when allegations of fraudulent letters of credit surfaced.

Aon in July disclosed that clients were taking legal action against the brokerage over transactions involving the allegedly fraudulent LOCs. In August, Aon sued Vesttoo, which soon after filed for bankruptcy protection.