The joint venture reciprocal exchange insurer being launched by US property cat-focused MGA Orchid and American Family subsidiary Homesite has secured an A- rating from AM Best after being licensed by the Florida Office of Insurance Regulation (FLOIR) last month.


As first revealed by The Insurer in June, TowerBrook-backed Orchid filed an application with the FLOIR to initially write Florida homeowners business on an admitted basis.

According to FLOIR rate filings, TRUE will provide coverage for homes valued in the $400,000 to $2mn range.

The top end of that range is thought to be the entry level for high net worth (HNW) carriers including Vault, which also deploys the reciprocal exchange model.

The attorney-in-fact for TRUE is called Trusted Resource Underwriters, with Steven Carlsen named as president in the filing. Carlsen is a current director on the Orchid board and is also chairman of US specialty insurer ProSight.

Orchid will be the main distribution partner for TRUE.

In a statement, AM Best said that Tampa-based Trusted Resource Underwriters Exchange had been assigned an A- financial strength and “a-” long-term issuer credit rating.

The agency confirmed that the company will initially operate with a concentration in Florida and noted it will require a period of time to establish its brand.

The assigned ratings factor in financial and operational support provided by American Family, which has committed capital to the start-up via surplus notes, and is expected to participate on TRUE’s reinsurance programme and provide select “day-to-day services”.

According to the FLOIR website, TRUE was licensed by the regulator on 14 October.

As previously reported, typically reciprocal exchanges are launched with start-up funding from sponsors in the form of surplus notes. The capital base is then built up over time from the premiums paid by members.

Hardening rates

The move comes at a time of meaningful hardening of Florida homeowners rates, as carriers file for significant increases in the face of sharply rising insurance costs and several years of underwriting losses.

In its filling TRUE based its initial request rates on a recent filing by United P&C’s Family Security. It added a factor to its own filing for higher reinsurance costs to reflect coastal risk in the peak North America hurricane zone as well as reinsurers views of TRUE as a start-up as opposed to an established cedant.

Orchid’s management team has experience working in the reciprocal exchange model.

The MGA hired Kathy Cody as executive vice president and COO from Farmers Insurance Group last year, where she had been COO for personal lines. Farmers deploys a reciprocal exchange structure.


Boston, Massachusetts-based Homesite – which describes itself as one of the fastest-growing insurance companies in the industry – has developed phone and online-based distribution models for its core home, condo, auto and renters products.

Last year it also launched Homesite Underwriting Managers as a new programs division, with former Allied World executive Grace Meek as its president and CEO, in a move first revealed by this publication.

Homesite is owned by Madison, Wisconsin-based US mutual American Family, which bought the homeowners-focused carrier from investors including Metalmark Capital and Alleghany for $616mn in a deal that closed in early 2014.