Prepared remarks
Good afternoon, and thank you for participating in Porch Group's Second Quarter 2026 Conference Call. Earlier today, we issued our press release and filed our related Form 8-K with the SEC. The earnings release and today's presentation are available on our Investor Relations website at ir.porchgroup.com. Before we begin, I'd like to review the company's safe harbor statement within the meaning of the Private Securities Litigation Reform Act of 1995, which provides important cautions regarding forward-looking statements. Today's discussion, including responses to your questions, reflect management's views as of today, July 29, 2026. We undertake no obligation to update or revise these remarks. We will make forward-looking statements that involve risks and uncertainties, and actual results may differ materially. Please refer to the information on this slide and our SEC filings for additional detail. We will also reference certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP measures are included in today's earnings release available at ir.porchgroup.com. A replay of this webcast will be available shortly after the call, again, on our Investor Relations site. Joining me here today are Matt Ehrlichman, Porch's CEO, Chairman and Founder; Shawn Tabak, Porch's CFO; and Matthew Neagle, Porch's COO. With that, I'll turn the call over to Matt for his key updates.
Thank you, John. Good afternoon, everyone. This will be another fun call here today. We are pleased to report a fantastic second quarter where we again delivered results that exceeded expectations and are raising guidance substantially across the board. We generated positive net income attributable to Porch in the quarter and expect that to be true for the full year 2026, 2027 and the years ongoing. I was excited to share this. Overall, now with Q2 revenue growth, excluding the reciprocal, at 23% and adjusted EBITDA margin, excluding the reciprocal, at 30%, we are now a Rule of 50 company. Insurance Services, our core largest and fastest growing business stands out even more with 38% revenue growth and a 48% adjusted EBITDA margin this quarter. Policy growth at our insurance business grew by the same 38% year-over-year. This is a big deal. Our Insurance Service business generates its economics based, yes, on reciprocal written premium volume but also meaningfully based on total number of policies given the policy fees that are charged to each policyholder. We managed to our financial results based both on premium and policy count, which I'm not sure is fully appreciated. Incremental margins at Insurance Services are exceptional, which you can see based on the fact that incremental revenues flowed almost fully into higher adjusted EBITDA. For our entire company, adjusted EBITDA, excluding the reciprocal, grew 2.5x year-over-year. The progress we've made on profitability is strengthening our balance sheet profile. We're announcing today increased 2026 guidance of $122 million of adjusted EBITDA at the midpoint. This puts our leverage below 3x this year. The reciprocal is healthier than it's ever been with statutory surplus growing quarter-over-quarter and loss ratios that continue to be truly exceptional. So the key message is that the system is working. We built a differentiated insurance platform with strong capacity, expanding distribution and proprietary data, which creates a fundamental margin advantage relative to competitors. So Q2 results were strong. Shawn's going to dive in more deeply momentarily, but quickly just a few highlights. Reciprocal written premium, or RWP, was $140 million, up 16% year-over-year. First half RWP landed right in line with our internal targets at the start of the year. We're managing this well toward our $600 million annual target while sustaining strong margin across the system and doing so in a homeowners insurance market that is healthy but has softened. As I mentioned, written policies were up 38% year-over-year. These premium and policy volumes helped drive quarterly consolidated revenue of $141 million, up 12% year-over-year and our revenue, excluding the reciprocal, of $132 million, up 23% year-over-year, with continued strong gross margins of 85% for this quarter. RWP flowed through to Insurance Services adjusted EBITDA at a 32% conversion rate, demonstrating the strong incremental margins of this business. In a new view, RWP flowed through to company adjusted EBITDA, excluding the reciprocal, at a 28% conversion rate. That translated, again, to overall adjusted EBITDA, excluding the reciprocal, of $39 million, up 2.5x the prior year period. Q2 showed the earnings power of the model we built with premium volumes certainly translating into high-margin earnings. Scaling our insurance business is straightforward. Statutory surplus creates capacity. Top of funnel consists of insurance agencies driving quote volume and quotes convert to policies written in RWP. Over the next few slides, I'll walk through each piece of the growth engine and why we believe the foundation continues to strengthen. I'll start here with the result, which is the most important metric. In Q2, again, total reciprocal policies written across new and renewal grew 38% year-over-year to 59,000. We expect a rapid policy growth rate to continue throughout the year, ramping to more than 70,000 per quarter by year-end. We are well ahead of our start-of-year policy count expectations with pricing slightly below due to a softer insurance market with competitors lowering prices. While price can move up or down based on market cycles, policy growth is the key as it's the leading indicator of future growth and as premium for renewing customer naturally increases. There's substantial excess capital to support this level of growth. The reciprocal ended Q2 with statutory surplus of $170 million, up meaningfully versus the prior year period. That's a strong outcome, particularly given Q2 is typically a seasonal period in Texas when weather activity most impacts surplus, and we did see some of that this quarter. The $43 million gained over the last year translates to more than $200 million of additional RWP capacity. Overall, the reciprocal's Q2 statutory surplus supports over $800 million of premium including non-admitted assets, primarily the Porch shares owned by the reciprocal. It has the ability to support what's approaching $2 billion of premium. Looking ahead, the reciprocal surplus position gives us plenty of room to support our organic and inorganic growth goals. So with capacity in place, the next driver is top of funnel through independent insurance agencies. We continue to increase the top of funnel with a land-and-expand strategy. This is a key strategic proof point in the quarter. Producing agency branch locations grew 148% year-over-year, and quote volumes grew 87% year-over-year and increased sequentially for the seventh straight quarter. That means we are significantly expanding the number of opportunities for us to win attractive low-risk business. The distribution engine is expanding and quote volumes continue to build, which sets a strong foundation for sustained premium growth. Looking ahead, we have a fraction of the total agencies even in our largest markets, so we certainly are in the early innings here. Moving down the funnel. Conversion is the lever that turns quote volume into new customers and premium. As shown here, conversion remained meaningfully above prior year levels, but we thought it would be helpful to see the impact when we refer to a softer market and how we can respond given our margin advantages. As you can see here, conversions stepped down a tick in May without actions on our side simply due to competitors being more aggressive in their pricing, likely due to lower reinsurance costs. We responded with targeted pricing adjustments in specific areas, which resulted in improvements and reacceleration of conversion rates in June. In Texas, our largest state, conversion reached high watermarks in the final week of June, with broad-based improvement across the areas where we focus our actions. So the risk for us is less about managing to our medium and even short-term growth goals. In fact, we have a big advantage in our ability to perform across market cycles. The risk is simply, in a given month, the execution and filing time required. The fact that we delivered these results in this market, with premium per new customer only down 4% year-over-year in Q2 means that we are sustaining the well above-market margins that we've demonstrated. So put all that together, we continue to see strong growth in RWP from new customers, which more than tripled year-over-year. We're adding new customers at a rapid rate, building a larger renewal base and keeping premium for new customer relatively stable. With that, I'll turn it over to Shawn to cover the financials and guidance.
Thank you, Matt. Good afternoon, everyone. One quick housekeeping item before I dive into the results. Following feedback, we've updated our reporting format to provide more detail on our consolidated GAAP results, which include the reciprocal. We've also renamed Porch shareholder interest to Porch-owned segments for revenue, gross profit and adjusted EBITDA, excluding the reciprocal. We've done that to ensure clarity, and this is a naming change only. Now let's dive into the results. I'll start off with a high-level summary of our financials. In Q2, we saw strong results from the Insurance Services segment, which drove significant growth in adjusted EBITDA. Policies written of 59,000 were up 38% year-over-year, driven by new customer additions. RWP of $140 million drove adjusted EBITDA, excluding the reciprocal, of $39 million. That's growth of 150% year-over-year. Net income attributable to Porch shareholders was $6 million, an important milestone for the business. Overall, these results highlight the strong growth in our Insurance Services business and its operating leverage as RWP and policies scale. As our Insurance Services business has grown, it's become the clear engine of our earnings growth and as such, we'll highlight its performance in today's discussion. Now let's walk through revenue before we move into the segment results. Total consolidated GAAP revenue was $141 million, up 12% year-over-year. Revenue for the Porch-owned segments, excluding the reciprocal, was $132 million, up 23% year-over-year. And within that, Insurance Services delivered $93 million in revenue, up 38% year-over-year. And now let's dive into the segment results. Insurance Services is the segment driving the majority of our adjusted EBITDA and adjusted EBITDA growth. Revenue grew 38% year-over-year to $93 million, driven by higher fee-based revenue with higher policies written, RWP volume and new customer additions. In the quarter, we saw 38% growth in policies written year-over-year, which was a 500 basis point acceleration from the Q1 growth rate. Gross profit was $81 million, up 40% year-over-year. Gross margins in this segment are strong and predictable at 87% for Q2. Insurance Services adjusted EBITDA was $44 million, up 126% year-over-year. Adjusted EBITDA margin was 48% compared to 29% in the prior year period, driven by operating leverage as RWP and policies written scale. Two notes here first, as a reminder, the majority of the high-margin management fee we charge is recognized upfront, but a portion is deferred over 18 months. Thus, while last year was year 1 of operating the reciprocal, 2026 is the first year where we benefit from that deferred revenue and corresponding margin. Second, the margin improvement also reflects a roughly $3 million benefit from an expense true-up in the quarter, which we don't expect to recur. Overall, Insurance Services continues to demonstrate a very high margin profile with even higher incremental margins given the largely fixed cost base. Shifting now to Software & Data and Consumer Services segments, which overall were relatively flat year-over-year against the backdrop of a stagnant U.S. housing market. Starting with Software & Data. Revenue was $23 million. As a reminder, we sunset certain legacy home contractor SMB-focused products, which drove the year-over-year decline. Our inspection and title insurance software businesses remained solid despite the stagnant market. Gross profit was $17 million with gross margin of 75%. Adjusted EBITDA was $5 million. Moving to Consumer Services. Revenue was $18 million. Gross profit was $15 million with gross margin of 84%, and adjusted EBITDA was $3 million. Turning to the reciprocal now. Statutory surplus was better than our expectations, ending the period at $170 million, up 33% year-over-year and up 3% quarter-over-quarter. This is a strong result as the reciprocal typically incurs the most weather claims in Q2, including a $14 million storm in the quarter. Loss ratios remained strong. Gross loss ratio was 38% and attritional loss ratio was 18% in Q2, reflecting continued pricing and underwriting discipline and a meaningful margin advantage. And finally, after selling 2.1 million Porch shares to Porch Group in Q2, the reciprocal now owns 16.2 million Porch shares, of which the majority of the value is considered non-admitted assets and incremental to statutory surplus. Okay. Moving on to the balance sheet. Porch ended Q2 with $127 million in cash and investments, down slightly versus Q1. The decrease reflects the purchase of the 2.1 million Porch shares during the period, along with $17 million in interest expense and timing of working capital and all of that partially offset by adjusted EBITDA generated in the period. As a reminder here, over time, we expect cash generated for Porch to track with adjusted EBITDA, excluding the reciprocal, minus the cash interest on our notes. Q2 was consistent with that framework. Adjusted EBITDA generation largely offset the biannual interest payment and the 2.1 million share purchase from the reciprocal. On the reciprocal side, it held cash and investments of $331 million at the end of Q2. Okay. Shifting now to guidance. We're raising our guidance across the board given the strong 2Q performance and outlook for the remainder of the year, driven by Insurance Services. We're increasing guidance for revenue, excluding the reciprocal, to a range of $506 million to $517 million. The midpoint of $512 million represents a 22% year-over-year growth rate, up from the 22% growth rate that was implied in the prior guidance midpoint. We're increasing guidance for gross profit, excluding the reciprocal, to a range of $419 million to $429 million, now representing 23% growth at the midpoint, up from 18% growth at the prior midpoint. We're increasing our guidance for adjusted EBITDA, which excludes the reciprocal to a range of $119 million to $125 million. The midpoint of $122 million represents a 59% year-over-year growth rate, up from 38% growth at the prior midpoint. Taking a step back. We started the year with adjusted EBITDA guidance of roughly $100 million at the midpoint. Halfway through the year, we've delivered $59 million of adjusted EBITDA, excluding the reciprocal, and in 6 months, we've increased our guidance by more than $20 million at the midpoint. As Matt highlighted, we expect net income attributable to Porch shareholders to be positive for the full year and on a go-forward annual basis. The trend here is clear. Adjusted EBITDA is scaling. Insurance services is driving operating leverage, and the business is moving into a profitable position. Quarter-to-quarter, GAAP net income can still move with mark-to-market adjustments and other noncash items, but that doesn't change the underlying trajectory. This positive net income milestone and overall earnings growth trajectory also translates to a strengthening and more durable financial profile. With our updated guidance, we expect our leverage ratio to be better than 3x this year, consistent with the 2 to 3x target range we discussed in our 2024 Investor Day. Now I'll hand it over to Matthew to provide a strategic update.
Thank you, Shawn. I'll provide a brief operating update and walk you through the key KPIs across our segments. Last quarter, we discussed AI, how we're using it at Porch today, how we plan to use it over time and why we believe AI strengthens rather than threatens our position. Today, I want to give a few concrete examples of how that is starting to show up operationally. We believe our proprietary data assets become more valuable as AI capabilities mature. Our data platform gives us unique insights on approximately 90% of U.S. residential properties and early signals into 90% of U.S. homebuyers each month. Not only does AI allow us to accelerate the breadth and depth of our data platform, we are able to leverage it to better price and predict risk. In engineering, we are seeing broad adoption of AI tooling and productivity improvements, including a 2.4x increase in lines of code changed and a 73% increase in merge requests created. Nearly all of our engineers leverage available tools to meaningfully accelerate their work. AI is helping identify and reduce underutilized compute resources across targeted cloud compute infrastructure, with net savings approaching 10%. Across the org, AI is improving product and support capabilities. And just one example, in our moving group, we've shifted to AI-assisted call reviews, which is already having a major impact on conversion, and support is becoming faster, cheaper and higher quality. These are just a few of many examples. Our company already looked at velocity as a competitive advantage versus our competitors, and the tools available will help us accelerate. Shifting gears to the Q2 insurance KPIs. The key operating story is volume growth. We continue to expand the customer base at a strong growth rate with reciprocal policies written of approximately 59,000, growing 38% year-over-year. Reciprocal written premium was $140 million, and RWP per policy written was $2,383. Similar to recent quarters, RWP per policy written was down year-over-year given the mix shift toward a higher percentage of new customers versus higher-priced renewing customers. As Matt mentioned, the premium per new customer in Q2 declined only 4% year-over-year, which is the appropriate apples-to-apples comparison. The progress we've made in our Insurance Services business is clear to see in the financials and KPIs, but there's more to the story. The most important point is that Insurance Services is not just getting bigger. It's becoming more scalable and more efficient. We continue to make progress across the various operations that support the insurance business. On pricing and underwriting, we are continuing to improve the precision of how we select price and manage risk. This matters because it supports disciplined growth, helping us compete for the right policies and maintaining attractive unit economics by avoiding bad risks. Our agency experience continues to improve. Here, we've seen a 30-point improvement in NPS driven by our product investment, better support and responsiveness, and execution by our teams. We're continuing to invest in the technology behind our insurance workflows using automation and AI to improve velocity and increase efficiency across the organization. So when you look at the quarter, the takeaway is more than the strong financial execution, but the deep investments we're making at the same time to set the business up for years of strong performance ahead. Moving to Software & Data and Consumer Services. Both businesses remain tied to the U.S. housing market, which continues to present a challenging backdrop. Our focus is straightforward, manage these businesses with discipline today while continuing to strengthen the product and partnerships for our future market recovery. Starting with the Software & Data KPIs. The total number of companies served was approximately 19,000. The majority of the decline was driven by the previously discussed planned sunset of a legacy product that served roughly 4,000 small home service contractors. Annualized revenue per company increased 24% year-over-year to $4,926, reflecting the higher mix of larger, higher value customers. In Consumer Services, the team continued building partnership momentum in advancing properties such as movingplace.com. For the quarter, Consumer Services had 84,000 monetized services with annualized revenue per monetized service of $216, growing 7% year-over-year driven by upsell and cross-sell efforts. Beyond the KPIs, we continue to make progress on the product and customer experience side of the business. In Software & Data, the Home Factors pipeline is progressing nicely with carriers of all sizes testing the product with successful results. In the quarter, ISN launched a redesigned order form in auto provisioning for new inspectors. And last year, ISN rolled out AI defect detection and usage has doubled across our core inspection software products. Importantly, customer satisfaction for our software products remains strong and improving. The latest NPS was 51 for inspection software, up 14% year-over-year; 61 for our Floify mortgage software, up 23%; and 71 for Rynoh, up 14%. That is encouraging in any environment but especially against a housing market that remains near cyclical trough levels. We see additional opportunity to improve product value and customer experience, which we believe can further strengthen our already strong market positions, including inspection where we serve roughly half of the market, in title where we have roughly 40% share. I'll now pass it back to Matt to wrap this up.
Thank you, Matthew. Okay. I want to wrap up by briefly reinforcing the most important messages from today. First, we're executing well. We exceeded expectations across the board and raised our outlook. Adjusted EBITDA, excluding the reciprocal is now $122 million at the midpoint and $125 million at top end of guidance, driven by the very high incremental margins of our Insurance Services business. We are ahead of schedule and tracking to our medium-term target of $3 billion in premium, $2.3 billion in revenue and $660 million in adjusted EBITDA, excluding the reciprocal. Second, we are pleased with the progress on growth. As we mentioned, total policies written grew 38% year-over-year. Insurance Services similarly had 38% year-over-year revenue growth. The number of producing agency branches more than doubled, and statutory surplus at the reciprocal is in a very strong position. And third, our financial profile has strengthened. We're now a Rule of 50 company. Our leverage ratio is better than 3x this year, and we delivered positive net income attributable to Porch in Q2 while expecting to remain positive for the full year. With that, John, let's please open the call for questions.
Questions and answers
Your first question comes from the line of Dan Kurnos with StoneX.
Thanks for all the additional color tonight, especially Matt refocusing on policy count. Can you just broaden your thoughts a little bit? I really appreciate the slide in terms of the targeted actions you guys took. So help us think through what you saw, how you guys reacted and to what extent the market is dictating those choices and when you might choose to get more aggressive or not because you guys are in a rather enviable position from a margin perspective and you have a lot of leeway.
Yes. Thanks. Appreciate it. The first point that you make is the point we wanted to lay on, which is I'm not sure if folks have really understood and appreciated. We talked about how we generate revenue in a few different ways, management fees and policy fees as examples. But the policy fees and really the count of policies is really impactful to our financial model. And so we just wanted to make sure that was clear to folks. In terms of conversion rate, you saw it on the graph, but it is interesting to see across different market cycles conversion rates will naturally move up and down slightly. The advantage that we have is because we have such better loss ratios than the market, we are able to manage against that. I was proud of the team's ability to recognize changes in the elasticity curve of the conversion rates, put new actions in, and a fairly minor change is that 4% year-over-year change in the premium per new customer, but to be able to respond quickly and ensure that we're managing to the outcomes that we want to manage to for this year. I think you're right, Dan. There's a lot of runway ahead. As I've talked about, we want to stack year after year really strong, consistent growth while we're maximizing margin dollars within our growth goals, and that's the playbook that we're executing against.
And then if I could just follow up with two secondary pieces. First, any update on how Michigan is going, learnings there? Obviously, it's going to take a while to prove out the data case, but just love an update. And second, you mentioned adding a little bit more to the surplus, especially in the statutory side. You had a phenomenal Q2, especially given timing and seasonality. Book rolls, M&A, any reason to get more aggressive? Or are you trying to maximize margin dollars, but those all accrue to shareholder interest. Any thoughts there would be great.
Well, why don't I take the second one? Our corporate development team has never been busier. It's part of our playbook. What we're managing to and what we've talked about in terms of our goals this year are our pure organic goals. If we were to do anything else, that would sit on top of those goals. More to come in the right time if there's something to share. Matthew, do you want to hit on Michigan?
Yes, I think we're excited about Michigan. We're excited about any new state expansion. It does take time, but our team is focused on growing distribution there. There's lots of opportunity around agencies, and we're getting them appointed. We're starting to see quote flow. Another thing about the data that's interesting is we're now effective enough with our data that even if we don't have data on a specific home, we have enough data on related homes that we can start to infer things about homes. That matters because when you're heading into a new state, there's always a period where you're learning about how risk behaves, and you accumulate that over time by getting more claims data and working with more customers. We think we'll have an advanced start because of our data based on what we've been seeing in our modeling.
Our next question comes from the line of Jason Helfstein with Oppenheimer.
So this is now two solid quarters of very nice take rate. Can you just talk about is this the new normal and how mix kind of plays into the take rate? And then secondly, the rest of the industry is losing the pricing tailwind but yet it doesn't seem to impact your efficiency on marketing for a lot of the reasons you've talked about. Maybe talk about how that change in the industry impacts your ability to be efficient in adding policies.
Shawn, why don't you take the first and I can layer in the second?
Yes, sure. For the take rate context, sometimes folks think of the insurance services revenue as a percentage of RWP as effectively the take rate. That percentage was 66% in Q2 and 65% in Q1. We've seen it sustain at that higher mark for a couple of quarters. We're pleased with that conversion, both in the Insurance Services revenue and ultimately into adjusted EBITDA given the relatively fixed cost base. Mechanically, last year was our first year under the reciprocal structure and some fees were deferred; we are seeing deferred revenue flow through this year, and we expect that to continue in future years as well.
On the second point, fundamentally this game is about being able to assess, predict and price risk. We've demonstrated over time we can produce lower loss ratios than others. With lower loss ratios and low attritional loss ratios, there's more margin in the system. You can choose how to deploy that margin — allocate to Porch Group EBITDA, grow the capital base at the reciprocal, support reinsurance, or use it for growth. We've effectively put a little bit of margin back to customers via the 4% decline in premium per new customer to influence conversion rates and grow our policy count faster. That's a strong position to be in, allowing us to manage our margin advantage to produce outcomes that create shareholder value over time.
Our next question comes from the line of Matthew VanVliet with Cantor Fitzgerald.
This is Mason Marion on for Matt. So your proprietary data is one of your real competitive advantages. You kind of talked to it on the call, but how is AI helping you further expand this advantage? Are you leveraging your home inspection data in any new or interesting ways today compared to, say, the beginning of the year?
We have a large set of proprietary data and continue to look for different attributes or conditions of homes that we believe predict risk, which we call Home Factors. We're now up to 100 Home Factors. AI is accelerating our ability to model and identify those factors, letting us build out insights more quickly. Certain types of digital information that were previously hard to extract insights from are now reachable with AI, allowing us to go deeper into the data to build Home Factors that help our business and can help other insurance businesses.
Then maybe a modeling question to follow up. Your EBITDA guide was raised about $16 million while revenue was raised about $11 million. You have really strong incremental margins. Can you talk to where you're seeing strong leverage and how that factored into the guidance?
Yes. You can see it clearly in Insurance Services adjusted EBITDA. The costs are relatively fixed, which we've been saying for many quarters. This quarter exemplifies that: 38% growth in policies written against a largely fixed cost base. There is a roughly $3 million nonrecurring benefit in the period, so account for that. We're pleased to continue increasing guidance; in the last six months we've increased adjusted EBITDA guidance by over $20 million and are now guiding to $122 million at the midpoint.
Our next question comes from the line of Ryan Tomasello with KBW.
On the revised guidance, can you say what that is now baking in for reciprocal written premium for the full year and in the second half whether we're now talking about something north of $600 million, which I believe you initially set out to achieve to start the year?
The target on RWP is $600 million. We're halfway through the year with $255 million of RWP, which implies $345 million of RWP in the second half. Policy growth has been strong and we expect volume to continue to ramp sequentially, ending the year with more than 70,000 policies per quarter written. In Q2 we wrote just under 60,000 policies, and we'll continue to increase policies written via top-of-funnel distribution, adding agents with our land-and-expand approach, and conversion actions that have been working well.
Given the momentum in the first half, are there potential offsets reducing upside to that $600 million full-year target? Why isn't the second half baking in more upside given how strong the results have been and the guide up despite the RWP guide seemingly unchanged?
It's one of the messages we wanted to be clear about: we're managing to our financial results and to outcomes we want to deliver. People have focused on RWP, but our economic model is driven by both RWP and policies written. We charge policy fees to every new and renewing policyholder, so you have to look at both metrics. Policy growth is accelerating quickly, and we can balance how fast we grow total premium and how fast we grow policies to accomplish our organic growth goals. That's the approach we'll continue to take.
Our next question comes from the line of Timothy D'Agostino with B. Riley Securities.
Just quickly on my end. It'd be great to get some color on the products: the legacy product and the Porch insurance product. RWP from new customers obviously tripled year-over-year. Are you seeing a lot of interest in demand for the new product? Or is it still toward the legacy product? And for the branch growth, do new branches interact with that new product more? Any color around that would be great.
By definition, the vast majority of policies are with our legacy Homeowners of America product because it includes renewing customers. Porch insurance is early and only launched in one state so far; you need time to ramp agency appointments and distribution. When you launch a new product, it takes time to ramp within and across states and to build a renewal base. We're excited about offering a differentiated product — full home warranty, four hours of moving service — and being known as providing the best product for a homebuyer. It's early days given how insurance product rollouts work.
Our next question comes from the line of Jason Kreyer with Craig-Hallum.
So in the quarter, you had the first transaction to monetize some of the shares held inside the reciprocal. How should we think about the other 16 million shares and what your strategy is going to be there over the coming quarters or years?
We're excited about where the value of the shares can go over time. Our view of intrinsic value differs from where shares trade today, and as we continue to execute and stack quarters, that gap should shrink. There will be a time when it makes sense for the reciprocal to sell a small portion of shares to move capital from non-admitted assets into statutory surplus; that is part of our playbook. We're in no hurry — we have ample capital at the reciprocal to support more premium growth than we're planning for this year. We'll maintain a healthy margin of excess capital and manage the business accordingly.
At the end of the quarter, I think the reciprocal secured a $100 million cat bond. Can you talk about what that means for the health of the reciprocal and if there are anticipated cost savings on reinsurance from that cat bond?
I can cover that. A cat bond is a fully collateralized reinsurance instrument. We placed it at the very top of the reinsurance tower to cover very low likelihood events. Given the reciprocal's growth, we thought it prudent to add this capacity. It was our inaugural cat bond, and we partnered with a strong slate of investors. We think it's an attractive instrument and an attractive way to procure reinsurance.
Our next question comes from the line of Oscar Nieves with Stephens Inc.
Sorry about earlier. I was having some technical difficulties.
No problem.
My first question: you highlighted that new customer RWP grew 206% year-over-year, while total RWP grew 16%. Should investors expect that gap to persist, or will renewal growth become a larger contributor over time?
We expect new customer growth will continue. We have a healthy engine to add agencies that deliver more quotes and convert to policies. Insurance tends to be a sticky product with high renewal rates, and most customers pay with escrow. New customers generally become long-term customers and premium per customer tends to tick up year after year as they renew. We aren't commenting on exact future mix transitions, but new customers should continue to grow quickly and become a valuable renewal base over time.
That's helpful. My second question: statutory surplus increased to about $170 million. How should we think about the relationship between surplus growth and premium growth over the next 12 to 24 months?
We're pleased with statutory surplus at $170 million at the end of Q2, up $15 million year-to-date. Given Q2 typically has the most weather claims, this is a strong outcome. A helpful historical guardrail is roughly a 5:1 RWP to surplus ratio, and in prior quarters we've seen that metric perform even better. Those are some guardrails for folks to consider. Overall, we're very pleased with statutory surplus, loss ratios, underwriting discipline and how the reciprocal is performing.
And that concludes our Q&A session for today. I would now like to turn the call back over to Matt Ehrlichman for closing remarks.
I appreciate everybody being on the call. Thanks for the questions. You can get a feel for the energy. We remain very confident in where we're at and how we are executing. It is fun now to be a Rule of 50 company. I feel really good about our leverage being better than 3x this year. We're making strong progress and are now net income positive this year, all great markers for us. I feel confident we've constructed a durable model with significant opportunity where we can scale premium and convert that premium into high-margin earnings and continue to add products and capabilities that set us up to go after this $200 billion TAM with fundamental advantages. Our core focus is creating long-term shareholder value by building a truly great and enduring company. Rest assured that's what we're focused on and we are making great progress each day. With that, we'll close the call. Have a great rest of the day. Take care, everybody.
Ladies and gentlemen, that concludes today's call. You may now disconnect.