Gallatin Point targets cat risk with $1.25bn investment in AmFAM reciprocal TRUE

Investor Gallatin Point Capital is making a US $1.25 billion investment into the American Family Insurance Group owned reciprocal insurer Trusted Resource Underwriters Exchange (TRUE), with a target to write catastrophe exposed property insurance in Florida and beyond.

The deal sees funds managed by Gallatin Point acquiring a majority stake in the attorney-in-fact for Trusted Resource Underwriters Exchange (TRUE) and injecting over $1.25 billion into the company.

TRUE is a reciprocal insurer established by American Family in 2020 to serve homeowners in storm-prone regions of Florida and US states.

The capital injection from Gallatin Point is seen as providing “underwriting capacity in Florida at a crucial time,” while also providing TRUE the firepower “to strategically expand its footprint nationally.”

American Family will remain a minority owner, continuing to provide distribution and client services such as claims handling and call center support to TRUE, while the reciprocal will adopt a partnership distribution model both through new and existing partnerships.

“We are excited to be part of TRUE’s journey as it enters a new phase of growth, and we believe that our investment aligns perfectly with TRUE’s long-term vision and Gallatin Point’s commitment to the insurance sector,” explained Matthew Botein, Co-Founder and Managing Partner of Gallatin Point. “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. With TRUE’s leadership team, combined with the strength of American Family’s industry expertise and our capital investment, we are confident in the prospect of TRUE supporting homeowners as a fully national insurance company over time.”

Gallatin Point has sourced executives to run the operation, with Fabian Fondriest, former American Family Direct President, and former Chairman and CEO of Homesite Insurance, becoming TRUE’s Executive Chairman, and Tony Scavongelli, former Head of Partnerships at American Family, becoming TRUE’s incoming CEO.

“I am honored to lead TRUE in this exciting phase of growth,” Tony Scavongelli said. “The support from Gallatin Point and their investors is a testament to the confidence in our collective vision and capabilities. We are focused on delivering reliable protection to homeowners and expanding our footprint nationally.”

“This partnership reflects American Family’s commitment to providing high quality insurance options for homeowners nationwide,” added Michael Lorion, President of American Family Direct and Homesite. “The ongoing relationship between American Family and TRUE will enable us to serve more customers in catastrophe exposed regions.”

As a reminder, Gallatin Point previously backed an arrangement to funnel capital through a reciprocal insurance exchange established to provide additional US property catastrophe capacity for policyholders of Victor subsidiary, International Catastrophe Insurance Managers LLC (ICAT).

It’s a further signal for both the attractiveness of catastrophe exposed property insurance rates and returns, plus the fact investors believe them to be more risk adequate now, as well as of the improvements in Florida that are expected to be seen since the enactment of the property insurance reforms in that state.

The deal closed at the end of 2023 and Howden Tiger Capital Markets & Advisory was the financial advisor and Kirkland & Ellis LLP the legal counsel to Gallatin Point, while Willkie Farr and Gallagher LLP served as legal counsel to American Family.