HIPO - Earnings call transcript Q1 2024

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, welcome to the Hippo Holdings First Quarter Earnings Call. My name is Betsy, and I will be moderating your call today. [Operator Instructions]I will now hand you over to your host, Mark Olson from Hippo Holdings to begin. Mark, please go ahead.

Mark Olson

Thank you, operator. you Hippo's thank earnings first and call. morning, for XXXX joining quarter Good issued announcing shareholder which today, a Earlier Hippo letter at is investors.hippo.com. its available results, QX Rick President Leading Ellis. Chief be discussion Chief Hippo today's Executive Officer, will Officer, McCathron; Stewart and Financial and

current about prepared based will forward-looking open as presentation. statements to expectations begin, like to we the expectations, on remarks, we management's contain you predictions, that call date our and remind we'd the are of our Following business management's information that questions.Before other of discussion will this

actual expectations forth but predictions and historical from Forward-looking not in today. outlook.Forward-looking risks, could set statements include, from results are and/or and results filed our other competitive financial limited statements forecast, Hippo's performance to to, business differ and including Hippo's subject XX-Q those to that uncertainties or materially and are Form our industry of factors conditions, cause

the SEC section factors refer whenever other risks, they we please and information, make Factors.All Risk appear. any entitled in more filings, applicable forward-looking cautionary statements statements to For to uncertainties are Hippo's particular in discussed the

reliance financial except non-GAAP forward-looking any to by required as law.During and otherwise, such information, statements, will adjusted this expressly You forward-looking under updating should risks and generated or undue in Hippo's refer as premium revising whether call, uncertainties statements the events offering as disclaims new and SEC any filings. otherwise a carefully responsibility as of future EBITDA. no not or conference place we other obligation factors total Hippo's Do result and consider discussed on for measures

I'll in which first GAAP the our financial furnished CEO. call to is McCathron, President measures the has can SEC on and with quarter our XXXX over GAAP Our be full with non-GAAP that, letter, website.And of reconciliation our description been available and turn to Rick shareholder results to the found and

Richard McCathron

reducing operational momentum on right on without share while particularly last quarter. Thank top have line mentioned we've home overall reducing been I'm off started we gained accelerated previously Hippo compared to to XXXX fact, growth.In and able continue lower our the we you, exposure operations that and where year sacrificing XXXX building morning, to good our and streamlining transformative and we foot, new our cap QX, during are growth with discussed track the financial to during our Mark, needs focused the in were areas risk meeting we I policies third-party exposure last appetite. a the goals insurance program that excited on customers' everyone. a on We quarter. achieve

have that reducing exact be underwriting company already we March like costs experienced been we estimate expansion but the exposure, effort we be our lower losses from had and after efforts impact the of could reduction efforts end actions Texas of top our our home immune bottom our March counts would will later cat No than our further results hailstorm same from weather ever to like geographical of will exposure. progress our book. even growth last Our way This are XX% Missouri.Because business and allowed drive builder period the even reduce the if team's this deductibles the to retention premium of end and carrier, feel event of in the confident customer, the success ongoing benefit losses policy helped have rates efforts will to expected operations. XXXX. our our these and this certain of us of I last in direct geographies occurred towards in we relative of accelerate of work to a short as changes towards year this this discussed expect lower to QX reduce year reopening total quarter. approximately right increase that quarter, to regardless The relatively in this affected short-term from others, the event large overtake insurance and rebalance aggressive to solid growth and during line. improving line growth that exposure, in effort.Our each we for Without policy drive the areas what accelerated in have efficiency And year, maintain to took high higher.Finally, further higher, into time. generated find these the losses a fully we the is their last through year, experienced be

losses in evidence benefit positive work adjusted full the Even growing the than realizing XXXX, that started towards to EBITDA. XXXX while into to contributed reducing continued quarter. from our loss reductions the in QX though in of QX weather-related during QX progress year.The has critical financials, results now and seasonally business, a our of cost efficiently EBITDA QX our grow and these our are our higher marching had add We to last ability our those improvements adjusted

excited to future. well progress Our over financial there's teams the have to results our XXXX by turn I'm quarter. worked for hard expectations more call during of highlights our QX to Chief walk our to the Ellis, that the and Officer, report come.Now as encouraged Stewart through Financial as the the to I'd like

Stewart Ellis

another last this step Thanks, later good and showing EBITDA took quarters we the positive continuing ago. toward been our QX, a compared year, adjusted measurable and achieving those to progress to and the everyone. in discussing Rick, from few results quarter year past trends morning, from In we've

we for I'd that line in because typically it terms $X.X EBITDA appears weather best good to on how million, quarter Before the from ago in like is was I a highlight need but the last it seasonal get really than a surface.Compared loss Hippo adjusted by in XXXX, improvement EBITDA we down QX the $XX.X our into to Hippo losses adjusted it was a to the take quarter it other million, items million mind on was details better to of $XX.X QX. million P&L, of the our year improved on to of the $XX.X for bringing line keep program. Compared quarter, to only minute the QX

million quarter the on So We than been we've improvement line over items past Hippo being the in this the million each the versus our gross in they program the were the last despite able higher on of to losses P&L. trends was were $XX quarter. of $X.X major achieved because accomplish discussing year

to result.So highlight million, to starting trends increase grew $XXX to discuss at XX% total try go a we this with numbers, and them TGP QX, through end, as I'll year-over-year. contributed So each In generated of the the then those how premium.

few had this a acceleration through and it mentioned customers Rick third-party to agency our by was primarily First As success we've quarter, to of last minutes the and Connect policy offering driven ago, our an growth platforms. compared is

to our year-over-year, TGP with grow, exposure of over and insurance with total last segment QX and the trends of segment last to the underlying as less services bolster guidance a our calendar shared XX% exposed year, XX%, collectively XX% were rose of a a by reduce beginning for heading Home our segments to in course percentage representing TGP a our year. these and in by service that see into XX% TGP expect consistent underwriting program reminder, services we we Our grow again, Insurance-as-a-Service and of caused the the to channel, should to builder quarter.As business growth efforts with help quarter the TGP these home from expectations total from this from that be continue to our the line at Insurance we The TGP of results XXXX.Looking while continued Hippo which which cat Hippo revenue. insurance volatility, up year to as point Program Service starting insurance shrink of XX%.All at business the especially weather in to XXXX parts up as are total will full

quarter, the TGP, QX to rising with million, year-over-year again up significantly from During than XXX% grew million first it $XX XXXX. $XX in we revenue faster

in Insurance-as-a-Service at adjustment earned expense. loss retain ago the expense, from gross consolidated home up benefited XX% comes year also premium, written and X% as higher the Program a progress Services we and our were our of the as we of well biggest adjustment loss quarter, of and HHIP, As quarter. a a program. on combination from during basis to loss increase monetization driver growth rate Hippo Insurance Hippo year-over-year segment discussed a The the strong from from volume this quarterLooking Within at last the segments loss TGP showed Home XX% and insurance increases able during of significantly

our and at year. improvement, ratio, reinsurance in last Hippo points fixed This improvement by XX of percentage program, think points combined net consolidated gross an the consolidated of year-over-year XX%, driven in XX% year-over-year quarter gross drove improvements ratio XXX% with increase these to percentage now HHIP gross during primarily base the loss of improved improvements in quarter-over-quarter, absorb the the million in of QX even year.As earlier, XX%.We to $XX But HHIP improved our QX were the mentioned the our to which versus from improved higher at expenses our level in HHIP points loss we portfolio I earned XX losses, loss last to larger by XXX Our percentage our than because leverage. net of premium ratio last patterns. structure, percentage quarter, weather XXX% seasonal improvement to premium ratio losses have points loss and about operating because came earned XXX the

XXXX. sales QX last where from collectively As terms, $XX sales actions dollar points last in decrease cost of these XXXX in Rick all development the drove and expenses to line and XX% revenue of a each quarter and relative Collectively, technology quarter improvements of this achieving QX of absolute revenue, by XX% improvements the full the while more our a and grew we leverage to benefit XXX% than and administrative improvement general and in reduction are declined and absolute operating marketing, terms GAAP efficiency QX declined dollar the shrinking administrative These revenue our both the general Relative late and technology the and now development to year expenses last failed. relative during of marketing, implemented we we as XXX%.Turning on of revenue, improvements QX substantial to show EBITDA. XX we quarter.Beyond mentioned of revenue year, basis, items first realized adjusted GAAP year. represents and year-over-year to earlier, of percentage a reduction million

in improvement As improvement year-over-year The loss quarter-over-quarter. year-over-year improvement QX HHIP adjusted by percentage $XX.X million primarily beginning of the our was $XX.X of at a adjusted million and in I was a remarks, driven XX improvement loss $X.X point EBITDA mentioned my gross million ratio. our a EBITDA

Our Services growth year we we our improved more structure, in line of which our the and brings with initiated retained segments.The in cost-savings Insurance-as-a-Service in the in and initiatives benefit quarter, premium while reinsurance retaining, of last in last only risk premium adjusted by improvement quarter-over-quarter realizing full are seasonally the the EBITDA benefit was higher weather-related driven a QX losses. cost versus higher initiatives benefit saving partial offset primarily the of QX earned

using last As are have which to we provided forward a to million in the guidance reminder, investment amounted income, net are historically year reiterating we definition full $X.X of the XXXX, used excludes we EBITDA QX.Looking that adjusted quarter. the and

was we for the close this during some be the When XX% we increase occur a changes cash the finally, now was function year, the expect to in benefits, of point of open quarter cash annual our for company's Historically, investments PCS rose working are to I'd it flow than history and cat I closer to load XXXX.And capital report the don't and that in first company is onetime $X.X million estimated expect As every but and other like cash quarter. guidance a floor by This milestone raising where results, weather before to consistently other increased point additional of highest QX. reflection a a with positive for reasons like provide where in to updated the balance our so quarter QX we'll I positive for capital. significant floor rest I'd operator, that, flow.And to our last equivalents generate a we Cash to plan we QX that questions, the open and questions. that out is reminder, getting quarter.

Operator

first question our Jefferies. Instructions] We of have [Operator Kinar from Yaron coming

Yaron Kinar

Congrats milestone. few cash on guess a I achieving could. flow the if questions, free I

seasonality expected this and it First, relatively to you pattern on least ] [ come as strong level there there a think of these bit spend, continue the where you sales it to I'd levels Is marketing to lighter or than achieve BXB that a remain be. at little in seem growth? at will do

Stewart Ellis

can Yaron, this I one. Stewart. this is take

-- and in not line while. the our I other think cost P&L our items fixed our roughly sales for only a remain of levels to I'm expecting marketing, kind at but these

think run QX quarterly is rate the I a of proxy reasonable for this.

one the money a to of important dollars from our require is things remember new go growth all existing growth out coming acquire to think not the and TGP to service is insurance in especially us that I that's the a spend programs. of incremental customers, segment, at lot of about

that and QX. And grow P&L to we do we're that so in I efficiently, think showing the have in an ability

Yaron Kinar

quick I'll add what to one it. Stewart Got said. thing

you new are existing which have growth marketing existing related spend yet segment, services cross-selling they're The because to policies to other job doing those we a don't aspect to incremental our any is in better of in see customers remember efforts, customers. we

Stewart Ellis

services, sense. makes growth like strong we're while XX%. to translates revenue that was growth? And there, TGP That very on the XX% only Why why

Richard McCathron

can I take one. this Stewart,

I of a think it's things. combination

-- as talked think past, we've Within I segment, businesses. multiple do the of we in kinds the services have about

agency to have both we're our policies, insurance customers. homeowners policies non-homeowners So selling where we and consumer

lower. We that First revenue incremental to from carriers Connect monetizes Connected our and of paid Connect percentage are TGP. for -- commission a it where It's capacity looking agents for the the contribution have as incremental is TGP, have variable a percentage platform a to products looking we platform of to it's for lower marketplace. share share growing high a demand is And agents, But carriers a customers.The independent the helping platform who also we is business. are at the incredibly margin of quickly. a their their is who and First First are It's sell

a to segment. So during First the shift mix there Connect premium quarter is particular that more within

Yaron Kinar

it. Got

that be continue use conversion lower would to a shift? of of to think it reasonable bit So rate the mix track maybe

Stewart Ellis

right. I think that's

really to and over -- think I continuing within as as of time, Rick grow broaden see the First larger It to But the the And segment. wallet, a quickly add services a is become policy by Connect of First slow continues cross-sell to selling policies as is Connect grow. share consumers Connect, agency we're more towards said, new we customers think shift you one I the First to if share than efforts. continuing, see to and will consumer growing it will, through quickly. you'll mix

Richard McCathron

customer. services half part the grow the Therefore, in platform continue we into the Yaron, to meet them not for continue will I our our I or over to program, the the add, time, second geographies look of always of insurance as customers reopen of place needs Rick. policy Hippo. add, First particular home this acquire when time our we we with as agency we for that that to We third-party we is will Connect program year. that is will for don't get policies best over Hippo business

I as So mind well. keep that in would

Yaron Kinar

last Okay. That's ratio me. improved loss question by saw a the In HHIP, point. helpful. And we for attritional

think underneath I a lot though. there's that going on

of takes improvement the sort better puts You Can truly going have business, What what the loss help good through us the It ratio in on the a so what which the bad rate under shift actions. points would offer away have guy that was maybe was in terms you ratio? guy? mix we is just and magnitude, I other of think maybe there? by maybe I What sense attritional and from would way have underwriting impact seems maybe loss some the cat-exposed drive higher. that,

Stewart Ellis

Yes, take that. Yaron, can I

you're that the absolutely do portfolio. you on X ratio from non-PTS shift we like-for-like a attritional a point the have than ratio loss substantially think more or the basis, geographies within right I -- cat loss we away do said, improved But mix higher as year-over-year.

to some And that equal, high attritional in low been improving for being XXs achieve have to rate quarter that the things we've that as had XXs year amount in we XXXX. or see the I This the the away, into toward are loss issues which the we a earned, background I quarters, to a on have on is you'll don't mix, ratio there are over -- project look or PCS increase that So related yes, but And to mix some both that helping. normal we've on parameters.I past can the higher we testament our loss I effect water the are in able of shift that there. but We'll over variation the positive. year They're of the to through improvements benefit spoken quarter trends on of we do earned.And that attritional this volatility, masked our the some really we see about non-PCS written exposure a areas. improvement takes, fade we weather few -- and there to and the have is that as losses I reasons the just will all see end an loss and internally to been mix the the detail of fact contributed the especially will level think alone. basis did should effort call of and puts that get highlighting we loss course higher because we've get know the into starting the of the and the lower to is will that bit is see and trends of real. at that the we're think by in we see ratio.So despite rest you're about kind come start to non-weather don't sorry, within headwind the attritional things which is the improving as mix lowering the volatility, additional of continue there this think talking book more ratio, TAD year-over-year. quantify the But premium substantial the on

Richard McCathron

ratio want cat-exposed Yes. the able at relatively something the to not where -- continuing that, efforts it we've being shift in rate our emphasize additional we shift be not Stewart only start and attritional loss from mix We're Yaron, that for even ratio close despite keep achieve Yaron. to difficult that when actions expect to premium other want done this end loss said. less improve that's is Steward is to I to business.I want an Rick. expect are just mix our of works perspective that emphasize -- will we year. emphasize been attritional and although business end of earning as to underwriting to the that We I just to into just additional with writing fade, that that in we a itself at flat. positive to that while And balance premiums throughout the year. We're higher also you're taking the improvement. continuing thanks not mentioned, areas

Operator

our have now of McJoynt We KBW. Thomas from question coming second

Thomas Mcjoynt-Griffith

program, falling would So in that the then you increase think that year-over-year. over you that time? need like at but And the do in did of that of now. just trough basis a what HHIP come you kind kind seen XX% trough of business fall we've inflection start Where of of level the where of kind point far the going are continue you number written -- this the a year? is to kind in see the TGP XX% along context rate on at wonder business the perhaps next an has I of year, disclose sounds of during that it's It say relative to to that that putting year. is the you for hit quarters How you

Richard McCathron

this Stewart I'll can is A and and this Tommy, add ahead couple in Yes. one. on Rick. start of things. then different go

first. second I'll First, answer question your

XXXX.And volatility, the this October take mentioned call renewals we existing we're that's non-existing what policies, end quarter, at and we the the it when earnings that such, of other builder I done We growth our, October business the the from think new the be last last writing, both call approximately I approximately year. cooling to the will project would we itself. portfolio, HHIP expect or of in which the of those reverse started is channel at business, improvement as areas, get efforts the actions of of and we

would year to being this exceptions So geographically I think HHIP business. I when adequacy. that's their think actions and we of or rate growth majority the to us price some channel.Your seeing question based, towards that start way corrective need you're have in filed through first exceptions regulatorily the approved we to call, what again and to get in the with the the the, Those end of QX, going work

a it's However, ends. never that process

terms we dictate and to heavy So continue that's now time. do I done, to trends few rate the look and the itself working so in continue would with just and frequency components, incremental inflation severity take it's But as us been those into geographical exceptions lift at consider book to what expect both a the trends, need and we of over to

Thomas Mcjoynt-Griffith

overview it How that terms of a capacity unencumbered is give much appreciate the in over, perhaps breaking kind you at like is of Got Spinnaker leverage what capital and capital company? of there. capital color it. down and Switching situation is I holding how us much supporting. the can premium an currently by

of us overview an capital. give the of kind Just

Stewart Ellis

we the Stuart. we think Tommy, little But generally, give the this we into haven't to so don't move color. we you ability corporate able do that is have the can good gotten details our historically, to have to in continuing of aggressively to the converge try have I places I feel a to -- EBITDA about and that the think to and in liquidity capital broader us while within about capital structure subject can the capital invest business, we capital return to given kind position capital restrictions the that always And positive. continue where to try that we will earn the any the on some we around comfortable adjusted And feeling to we that we're put highest period.And where we organization. it. be need to in organization here. flexibility we're

think putting we and need. And I like we standpoint, where can flexibility we're the the So a capital highest capital think return. I feel we've that from we a got earn flexibility

Richard McCathron

One carrier thing I'll add, a a well perspective, perspective, as Tommy, we that Spinnaker to very our from it is or capitalized grow continue business with insurance that to believe service is score. favorable BCAR

very Stewart continue feel invest -- about good feel we flexibility, our very position So about our only as not mentioned, and business. good we the but to to grow

Thomas Mcjoynt-Griffith

And just real then quick. last one

first, the modeling dynamic just changing help XX% You sort of gave cat a the annual that. if of with quarter. book of out quarters, other just kind is the you fourth, second it given breaks it's question of in into typical Do the third through in mix perhaps the you and load the what us the but that could business, coming have down disclosure

Stewart Ellis

a the the I can Tom, exposure if the which exposure gave reflects I out the of -- so, that fourth the see in of yes, first geographic a during the and reiterated And it is for in that our We changes XX% quarter. XX% that of second this year. XX% of think last that is on this cat one. around are I in in load the call third cat year, making quarter, the areas. we quarter, And that put the the in and -- me function shareholder kind we the down in can guidance nature and the guidance looks in we've letter quarter XX% for weather our exposed concentration let is the annually take that to the we policies just broke related year we're to that higher

Richard McCathron

would Yes, this couple Tommy, -- Stewart's comment. like a things of add to I to to

really first at the weather So of doesn't look the calendar. all,

will we the So on and going. a we're that the work October. breakdowns When those in averages our that's over that be October emphasize volatility, numbers portfolio time, I we events our year's reducing doing experience based an are or and get project to exposure historical greater so expect where making to each the month, will strides pushed season have volatility. on in events, to experience that impact because later than on more we of season if we're the if earlier our portfolio

So season, season is this turns what later is is on there what QX -- our variation if we're to there, be QX. out as earlier a based dramatic, think opposed some don't but helps We but some to an variation there that. portfolio it's

Operator

[Operator from Jefferies. We have question Instructions] Mr. Yaron Kinar another from

Yaron Kinar

quick follow-up, losses. catastrophe comment your of the on last timing Rick, one Just on

kind and the last of of or So of kind you with the turn we've for kind are events just given of timing we convective already relatively speaking larger of seen where say we Are we are you the storms you bit storm on beginning that would weeks. of seasonality Are now -- of are May, seeing concerned? I the several think a Where pattern? early? over Are little late? we happy couple

Richard McCathron

really good Yaron, question. -- a that's Yes, that's

I events We they're write have example, think of Oklahoma. hard. that relatively of Oklahoma been couple things. we've a So One, more But don't in hit recent widespread. an in course, got areas as generally, been the business seeing

events the or happen it does quarter. traditional I now I in where we're think matter. second the, I historical would So would say what consider

-- now. around as from events I that in was in I -- But the would right think consider, XX, think I early. think some what PCS that of line and calendar XX, we're perspective considered have quarter it I the mid-March, I a March would perspective, we saw we're a now, in March our of expectations events the with

Operator

questions. no have currently further We

Richard McCathron

quarter. speaking there's further look if forward we we Well, today, to appreciate and no questions, Great. day. a time you Have great everybody's with next

Operator

this call. gentlemen, today's for and concludes you Thank joining. Ladies

now disconnect your may lines. You

Hippo (HIPO) 2 May 242024 Q1 Earnings call transcript