Gallatin Point Buys Majority Stake in American Family’s Florida Unit, Has National Plans

If you can make it in Florida, you can make it anywhere—especially if you have a billion dollars in capital.

That may be the thinking behind a plan by Gallatin Point Capital to purchase a majority stake in Trusted Resource Underwriters Exchange, part of American Family Insurance, and to expand its footprint nationwide after three years in the distressed Florida market. The purchase price was not disclosed but the investors announced this week that Gallatin had provided more than $1.25 billion. Part of that is a capital investment to help build underwriting capacity in Florida and beyond.

“The regulatory changes in Florida present a unique opportunity for us to contribute to the stability of the market and provide crucial support to homeowners in the region,” Gallatin Point Managing Partner Matthew Botein said in a statement. “We are confident in the prospect of TRUE supporting homeowners as a fully national insurance company over time.”

The transaction was completed Dec. 31.

Under Gallatin leadership, TRUE will continue to utilize a partnership distribution model through new and existing partnerships, the press release said. American Family, based in Wisconsin, will remain a minority owner and will continue providing distribution and client services, including claims handling and call center support.

Trusted Resource Underwriters, known as TRUE, is based in Tampa and West Palm Beach. It was formed in 2020 by executives with American Family’s Homesite Group and officials with Orchid Underwriters Agency. It has focused on homeowners policies in coastal areas but had just 2,247 policies in force as of the third quarter of 2023, Florida Office of Insurance Regulation reports show.

In a filing with OIR in July, the exchange dropped its rate stabilization plan, which had limited rate increases and decreases to no more than 25%. Large rate swings were seen after TRUE introduced a new hurricane peril model in 2021, the filing noted.

The firm’s reciprocal/exchange model has apparently done well enough to spur the growth plans and the massive investment, although new leadership at TRUE has been brought in. Michael Lorion, formerly chief financial officer at Homesite, was named CEO of TRUE in 2020. In a news release this week, Gallatin Point said it had assembled an executive suite that includes former American Family Direct President Fabian Fondriest as TRUE’s executive chairman. Tony Scavongelli, former head of partnerships at American Family, is now the CEO of TRUE.

Gallatin Point Capital has made a number of investments in insurance companies in recent years, but few, if any, have been as large as the December TRUE infusion, according to news reports. Gallatin, Vantage Point and other investors in 2021 provided $200 million in capital to Tower Hill Insurance. And Gallatin in September participated in a $7.3 million funding for Delos Insurance Solutions in California.

The reciprocal approach has gained momentum in Florida and other states in recent years. Besides a Tower Hill unit, other Florida startups have adopted the exchange model. In November 2023, Tampa-based HCI Group announced it had launched a new condominium insurer, known as Condo Owners Reciprocal Exchange, to help fill a growing need for beleaguered condo owners and associations in the Sunshine State.

The TRUE plans also could be seen as good news for the Florida market as it responds to recent legislative changes that attempted to limit litigation costs for property insurers. Florida regulators have approved at least 16 new P&C entrants into the Florida market this year, including Orange Insurance Exchange, Crossroads Insurance Co., Georgia Builders Insurance, Mainsail Insurance, Orion180 Insurance, Republic, Geovera, United Builders Insurance and Westguard Insurance Co.

Topics Florida Mergers & Acquisitions