Hippo Reports Third Quarter 2023 Financial Results

Rhea-AI Summary

Hippo, the home insurance group, announced its financial results for Q3 2023. The company reported a GAAP net loss of $53 million and an adjusted EBITDA loss of $38 million. However, they expect to achieve EBITDA profitability before the end of 2024, earlier than previously projected. The core gross loss ratio improved to 53% from 59% in the previous quarter. Total TGP increased by 38% YoY, with Insurance-As-A-Service and Services accounting for 65% of the total. Operating expenses declined to $72 million from $79 million. The company has $558 million in cash and investments and a Spinnaker policyholder surplus of $182 million.

Positive

• Hippo expects to achieve EBITDA profitability before the end of 2024, earlier than previously projected.
• The core gross loss ratio improved to 53% from 59% in the previous quarter.
• Total TGP increased by 38% YoY, with Insurance-As-A-Service and Services representing 65% of the total.
• Operating expenses declined to $72 million from $79 million.
• The company has $558 million in cash and investments and a Spinnaker policyholder surplus of $182 million.

Negative

• None.

PALO ALTO, Calif., Nov. 2, 2023 /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, 2023.

Complete financial results and full year guidance for 2023 can be found in the company's shareholder letter in the Investor Relations section of Hippo's website at https://investors.hippo.com.

"The third quarter was our best as a public company yet, and we now expect to achieve EBITDA profitability before year-end 2024, earlier than previously projected," said Hippo President and CEO Rick McCathron. "It is a challenging time for the industry, but we have positioned ourselves for future growth in our Insurance-As-A-Service and fee-based segments and expected profitability in our risk-based segments. We are well positioned for when the market turns, as we continue protecting the joy of homeownership."

Third Quarter Highlights

Adjusted EBITDA, Our Best Quarter Yet

• GAAP net loss attributable to Hippo of $53 million/adjusted EBITDA loss of $38 million
• Expect to turn adjusted EBITDA positive before year-end 2024, earlier than previously projected

Improving Core Gross Loss Ratio¹

• Reported consolidated GLR for the quarter of 59% with a core consolidated GLR of 53%
• Hippo Homeowners Insurance Program (HHIP) core GLR for the quarter: 69%, improved from 82% a year ago

Outstanding TGP

• TGP up 38% YoY with Insurance-As-A-Service (IaaS) and Services now representing 65% of Total TGP in Force
• IaaS TGP growth of 72% YoY
• Services TGP growth of 32% YoY

Expense Improvement

• Operating expense, excluding loss and loss adjustment expense and an impairment and restructuring charge, declined to $72 million from $79 million a year ago

Financial Strength

• Cash and investments at $558 million at 9/30/23
• Spinnaker policyholder surplus of $182 million

Conference Call and Webcast Information
Date: Thursday November 02, 2023
Time: 5:00 p.m. Eastern Time / 2:00 p.m. Pacific Time
Dial-in: 404 975 4839 (U.S.) / +1 646 904 5544 (International)
Conf ID: 930760
Webcast: https://events.q4inc.com/attendee/468482918

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, other non-cash fair market value adjustments, contingent consideration for one of our acquisitions, and other transactions 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 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 vendor; 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; 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.

Contacts
Investors:
Cliff Gallant
Investors@hippo.com

Press:
Mark Olson
press@hippo.com

¹ Core Gross Loss Ratio defined as current accident year loss ratio excluding PCS-defined catastrophe losses

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SOURCE Hippo Analytics, Inc

FAQ

What are the financial results announced by Hippo for Q3 2023?

Hippo reported a GAAP net loss of $53 million and an adjusted EBITDA loss of $38 million for Q3 2023.

When does Hippo expect to achieve EBITDA profitability?

Hippo expects to achieve EBITDA profitability before the end of 2024, earlier than previously projected.

What was the core gross loss ratio for the quarter?

The core gross loss ratio improved to 53% in Q3 2023.

How much did total TGP increase by YoY?

Total TGP increased by 38% YoY.

What percentage of the total TGP is represented by Insurance-As-A-Service and Services?

Insurance-As-A-Service and Services represent 65% of the total TGP.

What was the decline in operating expenses compared to the previous year?

Operating expenses declined to $72 million from $79 million.

What is the amount of cash and investments held by the company?

The company has $558 million in cash and investments.

What is the Spinnaker policyholder surplus?

The company has a Spinnaker policyholder surplus of $182 million.