Hippo (HIPO)

Cliff Gallant VP-IR
Assaf Wand CEO
Stewart Ellis CFO
Rick McCathron President
Matt Carletti JMP Securities
Alex Scott Goldman Sachs
Christopher Martin KBW
Call transcript
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Welcome and thank you for attending the Hippo Third Quarter 2021 Earnings Conference Call. [Operator Instructions] I would now like to pass the conference over to your host, the Hippo Management Team. Thank you.

You may proceed.

Cliff Gallant

Thank you, Operator. thank call. joining and XXXX third everybody conference earnings afternoon, you Hippo's for quarter Good Hippo a investors.hippo.com. today, which Earlier issued is quarter its also result, third available at shareholder letter announcing Chief Leading discussion Rick and Financial to Chief Assaf Stewart will Hippo's McCathron; Ellis. today's Officer, Wand; Executive be President, Officer,

call management’s Following the remarks, will we questions. prepared up open to

that management's we I would other our expectations predictions, contain will statements the begin, the like and that date on Before presentation. expectations, about information is as of business our discussion current to remind based forward-looking of you

to, Forward-looking business statements include, Hippo’s competitive but expectations conditions and predictions are and and not financial outlook. limited of and industry or performance

materially including filed today. Forward-looking in risks, that and statements X-K cause factors those Hippo’s subject and/or Form other uncertainties to from our historical set from results to forth forecasts, our are differ could actual results

make SEC applicable make in For appear. cautionary statements refer factors more information, wherever please we discussed this the risks, other statements filings. we All any and forward-looking during uncertainties call Hippo’s they to that to are

law. expressly is uncertainties no statements, should Hippo’s events revising whether on other the of information, Hippo otherwise, consider result statements risks new and carefully forward-looking any disclaims reliance future updating, or filings. for altering and undue or as as Do factors SEC discussed and not You obligation by responsibility any place forward-looking in under required otherwise as a except

we will Generated conference refer Additionally, Total Premium measures call, during EBITDA. as non-GAAP adjusted the also to financial and such

which And the and that, can our CEO our Co-Founder quarter the be and to full results with to to Wand, description XXXX has GAAP call with a website. the furnished third of Assaf on GAAP SEC measures in Hippo. turn financial been of available and I'll over Our Shareholder Letter, non-GAAP found reconciliation

Assaf Wand

Cliff. you, incredibly Hippo. strong for was quarter QX an Thank

made a XX% Premium in our XX%, the most. growth, will which our number matter retention and strengthen exciting We Total remained premium the increased our of of industry. foundation satisfaction demonstrate grew in the the improved Generated results loss year-over-year, delivered robust amongst to progress investments best ratio Our customer areas for business that and future.

more are a that proactively partnering industry standard homes and for and to is their protect our than losses with customers now prevent We new for success. Hippo is ever convinced setting the long-term positioning

Our strategy to deliver. omni-channel distribution continues

QX a the results agent, strong to lender national and to our excited home Total with offer are quotes partnership our the addition to million independent millions to we and Premium continued $XXX now. momentum strong year giving performance homeowners. in shared in I’m to our Generated PennyMac, In guidance full of our launched $XXX for additional million $XXX Reflecting builder opportunity direct, to we major in report to the that million expectations quarter, channels, from of new we million $XXX last raising QX, us

an We ago. in delivered the improved versus loss quarter, also ratio a year at coming XXX% XXX% during

talk lot in learn continue technology about we are progress, to changes area. our have do While will moment, pleased long-term pace this at our of accelerated and momentum reach targets. a work a how still proprietary by are we the to our implement an to Rick In to we using

new and quickly an position decisively to our operational results technology us we we insurance work under tech-driven in their and that leader for that a of sees making we actuarial, impacted I discuss us over more but puts and take our inflation, the will we progress leadership more by operating competitors, leading than QX recent have that have more of deliver. will CFO, built addition making in these our our experience And agility Hippo. for deliver are the personally act platform and new the of signs ever win Another better change, long-term. a changes claims underwriting early our team have organization. to believe excited many In a This pandemic, in results and to we reported companies way pass that environment you. to Stewart, It and rapid confident to will and at time insurance results, power allows I’m insurance our leaders. we than Thank decades is this in advantage it positive into I’m we the unpredictable announced our welcomed leaders are world-class better for detail. now functions, by new team. to months, are future brings In risk climate

Stewart Ellis

Thank Assaf. you,

customers As our from Assaf said, demand and highlight products for strong the services. results ongoing our third quarter

ratio Premium XX% year-over-year, $XXX to Generated acquisition Total million year-over-year indications or up from up our $XX benefits acceleration for forma we or of improving quarter. the last which was that an we the new and loss book Premium Spinnaker, Pro up to business are Our leverage early as Generated grow. operating of Additions of XX% is TGP seeing were Total XX% million, QX. was XX% year-over-year. TGP in

states to diversify Colorado California, up by last homeowners’ outside XX% of quarter. led We growth Hippo geographically new and premium in quarter in of the XX% came from Texas continue New also Jersey, from and

of quarter. and over are the we reduce strong to As XX% help balanced more reaching develop remains our the in which Premium of much continues time. portfolio volatility to edge our should exposure, retention upward loss business geographic continuing grows a nationally, ratio

Our benefit loss a high retention time. age, over driver top line of and declines improving because frequency are growth ratio a loss customer rates to with

revenue growth driven the in to Our by million Premium. year-over-year Generated $XX up Total was XX%

last quarter, higher in ratio homeowners geographic in can result loss highlighted volatility. concentration we insurance As

XXX% loss Texas gross the our worked us of due gross Hurricane was weather down weather, against components hit QX. points but the XXXX hard in year catastrophic concentration The deeper Prior ratio, points first a of contributed the this stable historically development. percentage in in QX, quarter, of us XX to from percentage by versus our loss North XXX%, ratio to of remained XX benefited ago. it While Digging half in managed last minor losses devastation reserves into bad period Ida loss favorable year. ratio to with we improve industry

Our a improvement of concentration loss year ago. XX%, ratio attritional can point underlying volatility. ratio percentage homeowners from in Geographic X loss was insurance in a result higher

half us concentration by hurricane hit north but us devastation weather, benefited Ida was we Texas will in QX. to our the continue While bad industry quarter, the to Rick our term bring long loss was first in XXX%. XXX% ratio to the to taken hard against from of to it improve XXXX down The talk a historically targets. this due specific more in managed we have the ratio and take actions gross will in down our moment loss of to about

invest platform $X.X home to message result, customers more in and as with Technology of we states, protection. we integrating spend. new model, of brand dollars growing earlier, of mentioned each expect partnerships, our million operating XX% the invest are improving aggressively more a expenses, compensation. with our our generate with stock-based differentiated million $XX.X continue operating to sources, XX% to to us new with to into General our major Premium. we increased build and to offset in new and onboarding scale and year-over-year development is products. costs slowly year-over-year I As as in expenses increased Total new see confidence starting data the resonating expanding the XXXX new administrative year-over-year our dollar to we we nationally marketing in being for TGP underwriting This that Generated by as Sales increased potential sales increased components and giving than is company a we and of continue trend than a million, launching to as benefits leverage more XX% reductions decreased more $XX.X operating and and by recognized public marketing

net Hippo well cash $XX.X per the prior share the ended $XX.X loss or for $X.XX quarter to year share million compared quarter. and Our equivalent per the $XXX attributable million in capitalized of net to with and or cash of $X.XX quarter investments We've a million. loss was

we you Looking shared forward, ability in remain and our to we confident exceed forecast with growth believe will strategy we previously. our execute the

our we year rapid range of Total million business. like million million turn to Premium $XXX to to over a to I insurance our we $XXX operational on from mentioned it guidance side from As $XXX are earlier, McCathron, Generated about Rick full Assaf our the President increasing of now more to making are the $XXX million. talk progress

Rick McCathron

Thank you, Stewart.

claims. to we've from to new generating We to improve and our made of results. leverage underwriting, customers loss promote servicing in enhancements technology Specific operations better to our continue aspects to and all iterate to business, ratio, several handling rapidly

have states will us we implement as made new We Ally been are more flexibility Massachusetts to have XX North and right in we the multi-carrier leverage our sources to allow expect introduce and price new beginning Incline filings made in These added during variables Carolina. right quarter been carrier XX sets, QX. to relationships, in our our data strategy. in customer risk. new data We matching which incorporated the the to five and

We have adjusted rates recently approved including increase in XX% a up California. and down,

home process. our enhanced inspection also have We

our were growth other based portfolio states These two continues to Hippo business the geographically. to states in new the of in over business Texas, price past in chosen address the have and results select restrict and health volatility been strategic the diversify combined adequately marketplace on and some portions seen addition, its of growth This Actions state. our to In will this largest diversifying with of generating years. our ability of the California perception two states. in

will a actions expect loss to our clear. There footprint taken and be change here, being improve to We this want are attrition of results. I in geographic help lot also

kind and this for continuous designed execution. improvement was model operating Our of quick

turn over an Assaf final in some we and And now built back As said, we for have an are to let words. model living it operating world me unpredictable adapt. Assaf to

Assaf Wand

joining to Thanks, call everyone Rick, thanks Hippo's today. earning for and

prove growth results that right QX to team just strategy, strategy. our we execute to Our the resources beginning have the and are right

insurance. on this be transform take your happy of We massive questions. believe market. Hippo to We that, the we’ll to are future path the is home With


first comes The the Instructions] with line JMP [Operator Carletti Securities. from Matt question of

You may proceed.

Matt Carletti

afternoon. Good Thanks. Okay.

So question. I start afternoon. premium with with I'd good I -- a start thought a

was commented on quarters. you the saw business drivers peel you commentary the I of the well I what as hoping onion bit and has from that could in color growth back accelerated give really premium little prior us maybe there And that as the view new as new opening some in real You a letter growth?

Stewart Ellis

Yes. for channels. then it. each can by I'll This question. saying the of I'll seeing And excited we're start about we're Thanks, join others distribution in take what is Matt Stewart, in. our

of forward. and builder of ways over new partner channels, exposure we balanced came QX, quarter XX% we and of see in range area was diversifying this homeowners market. And particular for from Hippo our to in the business net across Hippo's in In we given the our the outside new also the of PennyMac, continued growth Our did premium our of premium launch the Geographically, represented saw of which the time. we XX% to strength go partnership expect our geographic make strength going progress quarter homeowners’ with Texas. in California first

we've XX%, up live our from overcome departing that in to while the headwind we relate last premium states in remained new highest XX% that growth, ever to directly benefit went us premium of and the overall course that retention, was because which increased for from doesn't is the have us from customers. been we the to higher it accelerate retention benefit but we XX% think the a I are also smaller that to starting level quarter that quarter. for growth. have a for the strong premium, in up And So

Assaf Wand

is being have us. conversion with improves perform that are also value we been add the better. or the put see in And to want for Longer the also I it's market market in to usually materialization, This that things. effective starting while of a Assaf. amount I a it longer. the more and under the a aspect market some matures, title couple is would the improves partnerships very There's of longer for

have mature that to we started well. products New as

last and community think we homeowner now I association live announced in were quarter eight our association states.

of benefit that. So to the we're see starting

in funnel other Additionally, of longer data tuning and signed are and company of we kind what all iterations are seeing of we of a is what to we're the more is iterating. And constant because market, to that, are basically fine components. technology of the we components do we the

Our and growth. convergence is also our improving, that improves

and better our So product. strategy combination things I of of into think it's all these and a customers leaning

Matt Carletti

seen? The comment elevated could. in theme, more, marketing you. particularly you've then kind think Thank if last I quarter been Great. definitely you across channels Can business on more quarter and insure what And little good traditional just amount certain talked about that some and has through a marketing costs agent one are if of the well just performance of I'm but this you if And some from produce mechanisms. wondering tech, relying lower direct and as others I shielding not seeing means, efficiency. specifically what a that of that of broadly given is more be as some you more partnerships on might you your

Stewart Ellis

is this again. Matt, Yes. Stewart

talked seeing effect about I'm and phenomenon think bit I that our are a happy still business. not quarter we we report last to this in

marketing. for and efficiency every time, seeing we improved are marketing of on we're over spend more as we sales In dollar TGP generating fact, dollars

that affected often insurance purchase some an than home. the others of to do reasons around our a less maybe been is that has event-driven actual think purchase business. of with the Home I centers we've

go it one and is the So also, channel, social who is it as I reliant I out significant direct a part do why, online on reason think quite very difficult actually as been a not there people think market really media policy way that's then as also There to have that. homeowner's hasn't gone to not find of market potential many our way. to been historically we strategy. in are a a

being of I channel. spent influence that so money may think the And this in also that's amount

have there. we And an so advantage

least at persistent. been that has think now that for I

as I I'll planning reinforce our further from campaign that with things strategy think mentioned, think want our year approach which reaching are also scale, now for And that homes, differentiated along finally, like customers choice to with this experience. to true in to for we customers, the us we in consumer the we and next you their been our should launch we're better who national the right think partnering protect which say help brand us has nationwide future. that beginning, omni-channel our will our insulate

Matt Carletti

Great. That taking very of and makes you luck. best a lot Thank for questions of much sense. my

Stewart Ellis

Matt. Thanks, Absolutely.


Scott Thank Alex next to the line you, [Operator of Carletti with come question Sachs. Our will Mr. Goldman Instructions]

You may proceed.

Alex Scott

and on taking? I taking actions the provide were wanted of maybe those Hey, kind mean good the that'll and that maybe think how afternoon. in changes of some of for about of how Could you for some the levels? some your Ally question. towards and anyway, into letter. more intertwined us to just I Thanks push with dig Incline actions those referenced targeted partnerships operational quickly your loss detail to some the you're ratio

Rick McCathron

Rick. quite we're question. that data as perspective, Stewart California taken diversification managing leveraging outside underwriting action, and bit is answer hold have taken our of certainly we've From I'll and better our an Texas of of earlier, happily a doing job via technology. This a non-cat operational and mentioned

quarter. we've mentioned, I new got this data As that sources we've five integrated

we're multiple that mentioned companies, allow that us allowing you guidelines underwriting Also having to certainly multiple our is accelerate price accelerate improvement variables new to the underwriting and XX points, will that data have by using. us strategy as multiple We our Certainly, well. rate loss doing will helps accelerate tech architecture improvement. have stack of that in ratio tech multiple the we're fact quick that carriers with that a enables us way, also which we us in that, rate to help stack integrate multi-carrier open

and Ally us allows you efficient, those As we actions. have accelerate to structure not also capital only using know, light capital but more makes us Incline and

first as Incline business So and in we're combination Incline Ally states on policies XX write in mentioned on QX. a our filed to and our Ally already and QX. first I launch we anticipate those excited writing We've and of in

Alex Scott

ahead. go Yes, Thanks.

Stewart Ellis

is Sorry. Alex, with other talked little say in Stewart. and issues generally, of but more last we're aspects seeing also this the quarter, about -- just we this I'd COVID industry. chain of costs inflationary kind a bit remediation the and supply

us more an own react we changing control conditions. proprietary quickly, and to market generally I that platform think gives to our ability

that are the underwriting whatever of rate to really think I it's in like, future. we differentiators strong as we to conditions whether react do the market platform. technology one whether a filings, And position it's the we feel that So the guidelines, in are of confident

Alex Scott

sort the expect to early the on Thank to that that? a think actions will any you you think mean, through when it. about mentioned the Do some any Maybe any in way trend? way and increase the have that Or follow-up retention? impact you. you on the California Got I maybe quick of comments. you're me that, Is for you insights there of to just taking, rate that initial have

Stewart Ellis

question. good Alex's no, Yes,

think, think inflationary cycle. we're I I in an

entire the increased think of combination think I I and taking severity It's weather a frequency rate. is industry changes.

So rate something different. isolated data, look to I carriers you're no is this you find going and that to I don't Hippo. most that's SNL if think incumbent at think What taking we're are

Alex Scott

it. Got

how normal way more us of and kind normalized in that anyway sort we with impacted. other a Just of different through losses, companies a where areas in that I of quarter near maybe concentrated terms elevated in for it'll a term? are be that now this eventually you'd about at, here's And the the things been every should forward? a distribution, very think budget see that'll nationwide that's giving just been in you over going cap progress there's to level cat some to more How more appreciate think that have thinking and through level right exposed active, catastrophe

Rick McCathron


the year caps generally PCF this because the had the and clearly has think I mentioned of not event. great a that industry you been for

very continue and a Texas, a cat specific in is normalized an of of places state versus load see from we think attrition I shift time. different you'll diversify outside load a as over load California very to our sort perspective like a cat situation

I state us important think really we is each each what's have will underwriting an based where on we price that profit. for we believe customer

of it's with And we those us, ahead Obviously, work XX% that, I concentrated But the do and catch to staying that from that. high improving do, are we're rate filings. last Stewart diversification earlier up doing out to you're that. XX% out So all it have areas of that's mentioned and quarter. we've some been noticing the certainly think

you're in in we over and ratios to the to So time, that get seeing XX%s. certainly want loss

Stewart Ellis

say within, past is Texas, for this to been Stewart within would we've of over diversification state quarters be the couple also what example, doing the the even And consider state. we

concentration our historically North very, been the Texas area, Worth which near hail has So within is more Dallas-Fort in large very Texas the area is exposed. Texas in state. a

continuing our write though And away cat hail. bringing things diversifying new the in from to we're that portfolio Texas, so business like is that we're even business into exposure

Alex Scott

Thanks the it. for Got responses.

Rick McCathron

Alex. Thanks,


Mr. The Martin Thank [Operator the of Scott. with next question KBW. you, Instructions] from comes Christopher line

You proceed. may

Christopher Martin

quarter and recent on of bit the you Have those partnerships Hey homebuilder question with quarters on very guys that how the space it kind little of in piece slowdown positive six as could you the distribution, about constraints in and constrained diversification up versus Total thought be in seen on chain have a some what you kind of months you're the channels you those ago? look Le your splitting may think supply about Premium the in congrats on Generated. have. any quick the A see the you of of

Assaf Wand

growing Stewart our seen we've growth before for is one Chris, Hi that industry, what partners. is is and overall bill mentioned but they've category. growing. tax fastest yes, our the But of several rate that our constraints What Assaf. is this seen for this is

We more them is launched partnership with in Our deepening. states.

builders. actually our and we're don't XX see HOX now our that that And insurance product, which have it's kind think product Many selling caters partners, with needs. nuances was and that closely product more dedicated live there's to unique for with and of builders a to in I we all three know and excited more states features very product. developed and the out people more which were partnerships is we're keep starting of on their more adoption. very And add we tailwind XX just very no We're open top and were builder there's we with We no the working deepening currently -- it, this to about stopping seen have. these them.

Christopher Martin

Great. That of makes a lot senses.

be. the the all That's Now the what may I now. versus of deepening relationships for have constraints

everything previously. answered guys You else you. Thank

Assaf Wand

Chris. Thanks,


additional back Thank the it Management waiting provide so closing Team questions you, Hippo Mr. at Martin. remarks. this I'll pass time, There are to to no

Assaf Wand

Thanks, everybody.

talking wanted to Just to coming today, next in you and for we're thank the in you to say looking quarter. forward


third for the concludes Hippo and rest day. your call. the you enjoy That of Thank your earnings XXXX quarter participation