Adam Kornick: Sure. So from a lever standpoint, so as Shawn mentioned on an adjusted EBITDA standpoint, we would report for the entity that for shareholder own. And so that would not be moved with lever. So the claims paid by the exchange would be shown on the exchanges balance sheet NPL apart the loss statement and not on the Porch owned. So that’s the intent is we want to create a reliable source of capital, right? But we can tell our consumers be there, pay their claims, but they can own the entity that’s actually experiencing the lever volatility and make it more efficient. So then your second question was about the Porch Home Plan and I think in many ways this lets us do more there. So we want to find ways to make the value proposition for the reciprocal exchange, but Porch Insurance Reciprocal Exchange, such that people get these kinds of offers with us.
So we want to make it easy through the app or through the phone for them to get a moving concierge. We’re looking at value propositions we can offer around warranty through the Reciprocal Exchange or a recall check. So we think it actually makes it easier from a branding and ability to offer products what we do. So that’s something actually as we launch it, we want to make sure it happens. Matt or Matthew you want to add anything to that.
Cory Carpenter: Sorry, muted. I’ll try one more too. Just for the first half of the year, where this is not effective yet and you’re essentially only reinsuring 50%, I think 50% if I heard correctly, like, will you pull back at all in terms of your insurance? Sorry, somebody is in my window. Will you pull back at all in terms of like your growth and insurance policies or be less aggressive during that time period given, I think you said it’s the most variable weather part of the year and you’ll have a little more exposure. Just how are you kind of thinking about that?
Adam Kornick: Yes. So I can answer that. So first of all, if I talked about reinsurance, remember there are two kinds of reinsurance primarily that we use. One is quota share, where we see essentially a percent of premium and a percent of losses. And the other is excessive loss or CAT excessive loss that only pays for an event like a single event, a catastrophe, like a hurricane So the 50% refers to quota share. And so there are really a couple things about that structure is that we get under 50%. It’s an appropriate way for us to manage the economics around the current reinsurance market. It’s also a way for us to position HOA to be sold as a subsidiary of the Reciprocal Exchange as part of our application filing to do. So if the TDI approves that, it puts that structure in better footing to be more efficient, it doesn’t change our use of CAT XoL, which is if there is a large event, it would pay for the amount in excess of some retention at the deductible.
So those two factors are why we’ve intentionally changed the quota share this year. As we’ve looked through the markets, that’s something we’ve worked on for a long time, getting ready and then the transition upon filing in approval. The second question was around policies. Yes, so I think there are a range of things we do there. The team has great science around when we see an application, how we price it, how we underwrite it, how we understand if it’s a policy that’s profitable. But at a macro level, there are 37,000 policies that we plan to non-renew this year. About half of those are already done. And that’s fundamentally because in the current market. Those were good policies in the past, but there’s a lag. Reinsurers are not regulated.
They can charge us the price they feel is appropriate. We are regulated. And so those are just policies that it doesn’t make sense for us to hold right now. So we will not renew those. And it’s one of the €“ an example of a tactic that we’re taking in part because we see that reinsurance cost and that leverage both.
