United States securities and exchange commission logo
April 23, 2021
Michael Thompson
Chief Executive Officer and Chief Financial Officer
Reinvent Technology Partners Z
215 Park Avenue, Floor 11
New York, NY 10003
Re: Reinvent Technology
Partners Z
Registration
Statement on Form S-4
Filed March 25,
2021
File No. 333-254691
Dear Mr. Thompson:
We have reviewed your registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by amending your registration
statement and providing the
requested information. If you do not believe our comments apply to your
facts and
circumstances or do not believe an amendment is appropriate, please tell
us why in your
response.
After reviewing any amendment to your registration statement and
the information you
provide in response to these comments, we may have additional comments.
Registration Statement on Form S-4 filed March 25, 2021
Summary of the Proxy Statement/Prospectus
The Parties to the Business Combination
Hippo, page 2
1. Please ensure that the
information you include in your summary is balanced. For
example, we note your
disclosure elsewhere of Hippo's limited operating history, history
of net losses and
accumulated deficit of $256.6 million as of December 31, 2020. Please
provide a more detailed
and prominent discussion of the most material risks relating to
Hippo's business.
2. Please clarify what Net
Promoter Score (NPS) measures, how it is calculated and how it is
significant to your
business.
Michael Thompson
FirstName LastNameMichael
Reinvent Technology PartnersThompson
Z
Comapany
April NameReinvent Technology Partners Z
23, 2021
April 223, 2021 Page 2
Page
FirstName LastName
Risk Factors
We may be unable to prevent, monitor or detect fraudulent activity..., page 38
3. We note that your risk factor references "past incidents of fraudulent
activity," which you
believe have been "relatively isolated." Please revise to clarify
whether you have
experienced any material adverse impact to your business as a result
of such incidents. If
so, please also quantify the amount by which such incidents have
increased your costs and
expenses.
BCA Proposal
Unaudited Projected Financial Information, page 124
4. We note the language in the second paragraph of this section that
shareholders "are
cautioned not to rely on the projections in making a decision
regarding the
transaction...." This statement unduly limits a shareholder s
reliance on the proxy
statement/prospectus disclosure. Please remove or revise as
appropriate.
U.S. Federal Income Tax Considerations
U.S. Holders
Effects of the Domestication to U.S. Holders, page 170
5. We note the disclosure that "It is intended that the Domestication
will qualify as an F
Reorganization." Please revise to address the material federal income
tax consequences of
the transaction and state clearly whether the Domestication will
qualify as an F
Reorganization. Please make corresponding changes to your related Q&A.
Alternatively,
please advise why you cannot provide such a statement. Please also
file a tax opinion as
an exhibit and clarify whether the tax disclosure is intended to
constitute such opinion or
whether you will be providing a separate long form tax opinion.
Alternatively, please
advise if you do not believe a tax opinion is required to be filed.
Refer to Item 601(b)(8)
of Regulation S-K and Section III of Staff Legal Bulletin No. 19.
Unaudited Pro Forma Condensed Combined Financial Information
Unaudited Pro Forma Condensed Combined Statement of Operations, page 184
6. Please revise your presentation to add an adjustment for the $16.6
million statement of
operations impact of adjustment 6(f). We note that Rule
11-02(a)(6)(i)(B) of Regulation
S-X requires all adjustments required by GAAP to be recorded in the
pro forma statement
of comprehensive income and there is no longer a requirement that such
pro forma
adjustments must have a continuing impact.
Information About Hippo
We have built an omni-channel distribution approach which is designed to allow
customers to
purchase however they want..., page 214
7. We note your statement that "Hippo does not suffer from the same agent
channel conflict
Michael Thompson
FirstName LastNameMichael
Reinvent Technology PartnersThompson
Z
Comapany
April NameReinvent Technology Partners Z
23, 2021
April 323, 2021 Page 3
Page
FirstName LastName
as legacy carriers potentially do." Please revise to briefly explain
the meaning of "agent
channel conflict" in this context.
Our Technology + Insurance Approach, page 215
8. Please revise to describe in greater detail how you have "optimized
[your] use of machine
intelligence and the way [you] leverage the vast amounts of data at
[your] disposal" and
how "time and scale have allowed [you] to build and optimize data
integration, giving
[you] a significant advantage over others in the space." Please also
illustrate or
specifically connect to this disclosure the statement "not all data
are created equal and
each situation requires thoughtful application of the right data."
Our Vertically Integrated Insurance Capabilities, page 216
9. Please identify the third party survey cited for your 90-day Claims
NPS of 60.
Our Smart Home Program, page 216
10. Please revise to briefly describe the elements and workings of your
Smart Home program.
Also please describe any requirements customers must meet to become
eligible to opt into
the program.
Hippo Customer Experience, page 217
11. Please confirm that you have received consents to the inclusion of the
quotes included in
this section. In addition, please disclose whether any of these
individuals were
compensated for their testimonials.
Technology Approach, page 222
12. Please revise to clarify and substantiate your belief that Hippo's
technology is the "most
advanced technology stack in the home insurance industry."
Hippo Management's Discussion and Analysis of Financial Condition and Results
of Operations
Significant Milestones Achieved in 2020
Reinsurance Stability, page 235
13. Noting the three-year reinsurance commitment for 20% of your capacity
from an
"established provider," please identify any material reinsurers and
discuss the material
terms of your reinsurance agreements. If applicable, please also file
the same as exhibits
to the registration statement. Refer to Item 601(b)(10) of Regulation
S-K.
Key Operating and Financial Metrics and Non-GAAP Measures, page 240
14. Please remove your Ratio of Adjusted EBITDA to Total Earned Premium.
Otherwise, tell
us the relevance of this ratio or of any measure of EBITDA divided by
any measure of
revenues.
Michael Thompson
FirstName LastNameMichael
Reinvent Technology PartnersThompson
Z
Comapany
April NameReinvent Technology Partners Z
23, 2021
April 423, 2021 Page 4
Page
FirstName LastName
15. Please revise your table on page 241 to include the most comparable
GAAP measure for
each item in the table. In this regard, for example, also provide your
Gross Profit Margin
and Adjusted Gross Profit Margin and your GAAP Loss Ratio.
Total Earned Premium, page 241
16. Please tell us the relevance of Total Earned Premium ("TEP") and
address the following
in your response (referencing where appropriate the authoritative
literature to support your
position):
Provide us your analysis explaining why TEP is a non-GAAP measure
and not a
metric.
Tell us why it is appropriate to include Ceded Earned Premium
("CEP") and Placed
Earned Premium ("PEP"), amounts that will never become GAAP
revenue, in TEP.
Tell us why the Ratio of Adjusted Gross Profit ("AGP") to TEP is
meaningful when it
appears that AGP includes commission income earned at a point in
time which
appears to be more directly linked to Gross Placed Premium and not
PEP.
17. Please tell us, and revise your disclosure at the top of page 242
accordingly to explain,
why you exclude the impact of ceded premiums from TEP when it appears
that ceded
earned premium is included in TEP as presented in the first table on
page 242.
Gross Profit Margin, page 244
18. We note you disclose that certain categories of customer acquisition
costs were reflected
as Insurance Related expense in 2020 but were classified as Sales and
Marketing expense
in 2019. Please tell us the types of these costs and explain why you
classified them as you
did. In your response, tell us why you otherwise have Insurance
Related expenses in 2019
when you had no earned premiums and your consideration for
retroactively reclassifying
the 2020 reclassified expenses as Insurance Related in 2019.
Critical Accounting Policies and Estimates
Fair Value of Common Stock, page 262
19. We note that based on the 6.9413 Exchange Rate inherent in your
proposed transaction
and the $10.00 per share issuance price in the contemplated private
placement that the
effective fair value of Hippo Enterprises, Inc. common stock is
$69.413 per share. Given
the June 2020 issuance price of Series E preferred stock of $19.66420
per share and the
apparent deemed fair value of your common stock at December 31, 2020
of about $15.35
per share (derived from the intrinsic value stock option disclosures
on page F-55), it
appears that Hippo has experienced significant appreciation in the
fair value of its
common stock. Please provide us an analysis explaining the reasons for
the apparent
significant increase from Hippo's recent valuations of it common stock
leading up to this
proposed transaction and the inherent value in this transaction. In
your response tell us
the number of recent equity and equity-linked instruments
issued/granted and the value of
common stock used to value them.
Michael Thompson
Reinvent Technology Partners Z
April 23, 2021
Page 5
Executive Compensation Arrangements
Employment and Offer Letter Agreements, page 274
20. Please file as exhibits to the registration statement the employment
and offer letter
agreements with Hippo s Named Executive Officers pursuant to Item
601(b)(10)(iii) of
Regulation S-K.
Certain Relationships and Related Person Transactions
Warrants, page 286
21. Please disclose the price paid for the April 2019 option to purchase
2,465,454 shares of
Series C-1 Preferred Stock pursuant to the Rights Agreement dated
October 25, 2018 or
advise. See Item 404 of Regulation S-K.
Description of Hippo Holdings Securities, page 291
22. Please revise to provide a description of the warrants in this
offering. Please refer to Item
202 of Regulation S-K.
Hippo Enterprises Inc. and Subsidiaries Audited Financial Statements
Notes to Consolidated Financial Statements
1. Description of Business and Summary of Significant Accounting Policies
Revenue Recognition, page F-31
23. On page 209 you disclose a growing suite of home services. On page 210
you disclose
that you pioneered a Smart Home program and offer services to
proactively help your
customers maintain and protect their homes. Please tell us where the
revenue streams for
these services are classified in your disaggregated revenue disclosure
on page F-33 and
your consideration for disclosing your policy for recognition of
revenue on these specific
streams.
10. Loss and Loss Adjustment Expense Reserves, page F-44
24. Please revise your table that reconciles the beginning and ending
reserve balances for loss
and LAE, net of reinsurance, to either subtotal the $8 million total
incurred and paid
activity before adding the $5 million reserve added from your August
31, 2020 acquisition
of Spinnaker Insurance Company or by adding an underline below the $5
million amount.
Spinnaker Insurance Company Audited Financial Statements
Independent Auditors' Report, page F-70
FirstName LastNameMichael Thompson
25. We note Spinnaker's audit report for the two years ended December 31,
2019 on page F-
Comapany
70 byNameReinvent Technology
Mazars LLP. Please Partners
have your Z revise its report to
identify the city and state
auditor
of 2021
April 23, issuance
Pageas5required by AU-C Section 700.42 and Regulation S-X Rule
2-02(a).
FirstName LastName
Michael Thompson
FirstName LastNameMichael
Reinvent Technology PartnersThompson
Z
Comapany
April NameReinvent Technology Partners Z
23, 2021
April 623, 2021 Page 6
Page
FirstName LastName
General
26. Please revise the forepart of your document to add diagrams depicting
the pre-
combination organizational structure of both RTPZ and Hippo and the
post-combination
organizational structure of the combined company. Also, please ensure
that these
diagrams, as applicable, clearly identify ownership percentages of the
different security
holder groups, such as the sponsor, the public shareholders of RTPZ,
existing shareholders
of Hippo, and the PIPE investors under both no and maximum redemption
scenarios.
27. Please revise so that the text within the various charts and graphics
throughout your filing
are legible. As examples only, we note the graphics on pages 222 and
238.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
Refer to Rules 460 and 461 regarding requests for acceleration. Please
allow adequate
time for us to review any amendment prior to the requested effective date of
the registration
statement.
You may contact Bonnie Baynes at 202-551-4924 or Mark Brunhofer at
202-551-3638 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Jessica Livingston at 202-551-3448 or David Lin at 202-551-3552 with
any other
questions.
Sincerely,
Division of
Corporation Finance
Office of
Finance