PALO ALTO, Calif., Nov. 8, 2024 /PRNewswire/ -- Hippo (NYSE: HIPO), the home insurance group focused on proactive home protection, today announced its consolidated financial results for the three months that ended September 30, 2024.
Hippo Logo (PRNewsfoto/Hippo Holdings Inc.)
"The positive momentum we've built over the past year continued in the third quarter as we took a significant step forward on our path to profitability," said Hippo President and CEO Rick McCathron. "We strengthened our foundation for future growth by continuing to develop our Hippo New Homes Program and delivered our best-ever year-over-year improvement to our HHIP non-weather loss ratio--positioning us for a successful fourth quarter and sustained growth in 2025 and beyond."
Hippo also announced that it sold a majority stake in First Connect Insurance Services to Centana Growth Partners, who will invest new capital into First Connect to fund its future growth.
"Since we acquired First Connect in 2020, it has become the premier platform for connecting independent agents with third-party carriers. As Hippo focuses more and more on its core business, we felt this was the ideal time for First Connect to chart its own path. We are excited to remain a customer, partner, and minority shareholder as First Connect continues leveling the playing field for independent agents."
Complete financial results and full year guidance for 2024 can be found in the company's shareholder letter in the Investor Relations section of Hippo's website at https://investors.hippo.com/.
Third Quarter Highlights
Maintained Top-line Growth; Favorable Mix-Shift
Revenue up 65% YoY to $95 million; premium retention more in-line with risk-retention
Consolidated TGP up 21% YoY, with Services and Insurance-as-a-Service ("IaaS") representing 81% of TGP
Services and IaaS driving TGP growth, up 46% and 12% YoY, respectively in Q3
Continued HHIP Loss Ratio Improvement
HHIP Q3 accident period loss ratio improved 22pp YoY to 70%; non-PCS loss ratio improved 15pp YoY to 52%, PCS loss ratio improved 7pp YoY to 18%
HHIP Q3 gross loss ratio improved 3pp YoY to 72%
HHIP net loss ratio improved 67pp YoY to 84%
Improving Operating Leverage
Investments in operational efficiencies continued to pay off as fixed expenses lowered by $17 million while revenue increased by $37 million YoY
Sales & Marketing, Technology & Development, and General & Administrative expense collectively declined from 89% of revenue to 36% YoY
Significant Step Forward on our Path to Profitability
Q3 net loss attributable to Hippo down 84% YoY to $8.5 million
Q3 adjusted EBITDA loss down 81% YoY to $7.5 million
Financial Strength
Cash and investments, excluding restricted cash, of $545 million
Spinnaker surplus of $216 million, up from $182 million a year ago; $8 million gain on sale of shell insurance carrier
A replay of the webcast will be made available after the call in the investor relations section of the company's website at https://investors.hippo.com/
Information about Key Operating Metrics/Non-GAAP Financial Measures
We define gross loss ratio expressed as a percentage, as the ratio of the gross losses and loss adjustment expenses, to the gross earned premium. We define TGP as the aggregate written premium placed across all of our business platforms for the period presented. We measure TGP as it reflects the volume of our business irrespective of choices related to how we structure our reinsurance treaties, the amount of risk we retain on our own balance sheet, or the amount of business written in our capacity as an MGA, agency, or as an insurance carrier/reinsurer. We define adjusted EBITDA, a Non-GAAP financial measure, as net loss attributable to Hippo excluding interest expense, income tax expense, depreciation, amortization, stock-based compensation, net investment income, restructuring charges, impairment expense, gains and losses on sales of business, other non-cash fair market value adjustments, contingent consideration for one of our acquisitions, and other transactions, which may include certain legal fees and settlement costs, that we consider to be unique in nature. We exclude these items from Adjusted EBITDA because we do not consider them to be directly attributable to our underlying operating performance. This Non-GAAP financial measure is in addition to, and not a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP and should not be considered as an alternative to net income, operating income or any other performance measures derived in accordance with GAAP. Reconciliations of this Non-GAAP financial measure to its most directly comparable GAAP counterpart is included in the shareholder letter referenced above. We believe that these non-GAAP measures of financial results provide useful supplemental information to investors about Hippo.
Forward-looking statements safe harbor
Certain statements included in this press release that are not historical facts are forward-looking statements for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements generally are accompanied by words such as "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "expect," "should," "would," "plan," "predict," "potential," "seem," "seek," "future," "outlook," and similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding estimates and forecasts of financial results and other operating and performance metrics, our business strategy, our cost reduction efforts, the quality of our products and services, and the potential growth of our business. These statements are based on the current expectations of Hippo's management and are not predictions of actual performance. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions, and many actual events and circumstances are beyond the control of Hippo. These forward-looking statements are subject to a number of risks and uncertainties, including our ability to navigate extensive insurance industry regulations and the scrutiny of state insurance regulators, our ability to achieve or maintain profitability in the future; our ability to retain and expand our customer base and grow our business, including our builder network; our ability to manage growth effectively; risks relating to Hippo's brand and brand reputation; denial of claims or our failure to accurately and timely pay claims; the effects of intense competition in the segments of the insurance industry in which we operate; the availability and adequacy of reinsurance, including at current coverage, limits or pricing; our ability to underwrite risks accurately and charge competitive yet profitable rates to our customers, and the sufficiency of the analytical models we use to assess and predict exposure to catastrophe losses; risks related to our proprietary technology and our digital platform; outages or interruptions or delays in services provided by our third party providers, including our data vendors; risks related to our intellectual property; the seasonal and cyclical nature of our business; the effects of severe weather events and other natural or man-made catastrophes, including the effects of climate change, global pandemics, and terrorism; continued disruptions from the COVID-19 pandemic; any overall decline in economic activity; regulators' identification of errors in the policy forms we use, the rates we charge, and our customer communications including, but not limited to, cancellations, non-renewals and reinstatements through market conducts, complaints, or other inquiries; the effects of existing or new legal or regulatory requirements on our business, including with respect to maintenance of risk-based capital and financial strength ratings, data privacy and cybersecurity, and the insurance industry generally; and other risks set forth in the sections entitled "Risk Factors" in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. If any of these risks materialize or our assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. There may be additional risks that Hippo does not presently know, or that Hippo currently believes are immaterial, that could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect Hippo's expectations, plans, or forecasts of future events and views as of the date of this press release. Hippo anticipates that subsequent events and developments will cause Hippo's assessments to change. However, while Hippo may elect to update these forward-looking statements at some point in the future, Hippo specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing Hippo's assessments of any date subsequent to the date of this press release. Accordingly, undue reliance should not be placed upon the forward-looking statements.
About Hippo Hippo is protecting the joy of homeownership, helping to safeguard customers' most important financial asset by harnessing the power of real-time data, smart home technology, and a growing suite of home services to deliver proactive home protection.
Hippo Holdings Inc. operating subsidiaries include Hippo Insurance Services, Hippo Home Care, First Connect Insurance Services, Spinnaker Insurance Company, Spinnaker Specialty Insurance Company, and Mainsail Insurance Company. Hippo Insurance Services is a licensed property casualty insurance agent with products underwritten by various affiliated and unaffiliated insurance companies. For more information, including licensing details, visit http://www.hippo.com.
