2025 Sohn Montreal: Gallatin Point’s Matt Botein – Unlocking 100%+ Upside via Structural Opportunity in Insurance

At the 2025 Sohn Montreal Conference, Matt Botein, co-founder and managing partner of Gallatin Point Capital (a special situations investor focused on financial services), explored an increasingly relevant structure in the insurance world: reciprocal insurance exchanges.

• Background: Matt Botein is a special situations investor who focuses on financial services. Before co-founding Gallatin Point Capital, he was Head of Alternatives at BlackRock, where he managed nearly $300 billion in AUM. He is known for his creative and hands-on investment style, including personal involvement in complex restructurings, which inspired the creation of Gallatin Point.
• Firm Focus: Gallatin Point Capital specializes in special situations within the financial services sector, particularly focusing on structures like reciprocal insurance exchanges.
• Time at Firm: As a co-founder, he has been with Gallatin Point Capital since its inception, though the exact duration is not specified.

2025 Sohn Montreal Conference – Gallatin Point’s Matt Botein

What Are Reciprocal Insurers

Non-traditional mutual insurance companies where policyholders own the risk-bearing balance sheet, while a separate entity (called the “Attorney-in-Fact” or AIF) manages the operations.

• The AIF, owned by shareholders (often investors like Gallatin), collects recurring fees, typically around 17% of gross premiums. It is a for-profit business, while the reciprocal itself operates more like a non-profit mutual.
• Policyholders don’t put up capital upfront; instead, investors front regulatory capital via surplus notes.
  Over time, this bridge capital is replaced by retained earnings and member surplus contributions, making the model self-sustaining.

Why It Matters

• While traditional mutuals (e.g., State Farm) are owned by policyholders and stock companies (e.g., AIG) are owned by shareholders, reciprocals split the functions: policyholders carry the insurance risk, while investors own the fee-generating management layer.
• This structure allows investors to earn consistent, high-margin, capital-light returns without bearing underwriting risk.
• It’s effectively a re-mutualization of insurance risk, turning low-return insurance businesses (5% ROE) into high-return asset-light service companies.