HIPO - Earnings call transcript Q3 2024

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Operator

Hello, and welcome to the Hippo Holdings' Third Quarter 2024 Earnings Call. My name is Maxine, and I'll be coordinating the call today. [Operator Instructions] I will now hand over to Mark Olson, Director of Communications, to begin. Mark, please go ahead when you are ready.

Mark Olson

Thank you, operator. you Hippo's thank Earnings Third 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

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

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

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

Forward-looking statements earlier including this forth our in to and results differ filed factors are materially filed Form Hippo's from XX-K Form those that set XX-Q and/or uncertainties today forecast, other could historical and year. cause our actual to subject our results risks, from

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

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

refer financial EBITDA. generated to and measures non-GAAP such this total During premium call, we as adjusted will conference

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

Richard McCathron

and morning, everyone. Thank you, good Mark,

over profitability. building continued the and the the forward to XXXX, made year been positive step the a momentum we've quarter we of path significant course third For of our on

foundation in We New strengthened growth Homes the our also for channel.

revenue while Hippo During and loss our premium in bestever the ratio. HHIP quarter, to posted top-line we non-weather grow year-over-year a continued improvement quickly,

despite in loss homes delivered help easily. of PCS the we results investments we've expected came previously, operations secure operating season. pay of made levels have our platform we off As at leverage cost-effective to discussed active improved another and And hurricane the best an newly we've continued quarter to streamline quickly built believe we to Our buyers insurance as

panel Homes investment by strengthen up core expanded on First we while to of welcoming if for Texas, benefits the lenders the level increase shares. Connect. The insurance Daele further Perry program New carriers the homebuilder Growth quarter, of roster to our access independent year's proceeds opportunity through in new program our some a our almost and of of come After repurchase for our carrier stake to carrier to its these to premier of states access for position million its First position, a Hippo annually the Van increase Partners teams, and opportunity and consumers, in an additions in $XX our own insurance Connect to to the homes in access embedded transaction First provide achieves proceeds both California, QX. By performance provides will Connect automating partner a in certain transaction earn XX,XXX builder to streamlines Florida and allows Insurance additional approximately majority to expect end, program homebuilders to million, shareholder and freeing Hippo's to builders process. In independent up its Homes retire an business sold insurance evidence enthusiastic process Beyond agent more potential scalable, First that close platform, be simultaneously this partners, have focus and $XX homebuyers as new and further to Centana Hippo distribution solution of us sales to closing with QX, the Hippo the for minority partners. taken fulfill customer, be in we cash agent Services, channel MGAs. continue and targets. This our from Connect of to with to the the as to we

our doing striking growth. a is to Over future and the to couple about team results, of our our has work visible in and years, past been optimistic increasingly improving in I'm financial investing efficiency balance been is support come. we've between The business our what

to I'd QX for the Financial our Chief walk well to through financial the of as Officer, expectations over turn like Ellis, Stewart highlights the XXXX our our results call Now, as to future.

Stewart Ellis

everyone. Rick, good Thanks, and morning,

in over Our making been QX benefits our leverage. and results ratio and illustrate past growth top line investments the the improvement We've we've delivered of loss substantial years. operating strong several

in through explain of in lines in growth by growth our walk our this XX% P&L, as to the the declined I in Insurance been $XXX segment. TGP million. are grew the benefits XX% Hippo Services of drivers key Insurance-as-a-Service Home our making more visible how now managing P&L. In and year-over-year investments XX% our the TGP I'll and TGP but results to our XX% offset was segment exposure TGP we've Program high-CAT our As behind result of a segment of geographies, the than QX,

was and quarter, that to the risk the shift million our Insurance-as-a-Service the towards outpaced Insurance-as-a-Service year ago. Revenue of from growth. to in up the XX% the year-over-year $XX QX in premium growth, and QX increases XX% at HHIP premium volume up segments million, mix in again primary are $XX collective weather TGP Services quarter, drivers and exposed from Our business TGP Much areas a the XXXX. and last like less segments TGP growth the volatility. were retention The underwriting to increasing of higher this the XX% of continued total from Services

write the sheet. our our both of own in premium of on our previously, to we magnitude confidence retain As share predictability the greater ratio and balance discussed we a loss enabled us has the have increasing

a due As earned commissions rose the by customers gross the of XX% in Services business net paid higher percentage commissions our risk-retention our by earned on ago Like quarters, recognize growth augmented XX% as a take to platform, on First slowly grew with revenue HHIP our than from programs. In up where continued growth premium and premium this a basis, premium we result gross net year to of Insurance-as-a-Service the we in a mostly basis. agency, from the Connect from by agency previous premium earn to revenue in QX, programs, where slightly higher retention, to existing our driven some was carriers TGP our shift mix segment, more gross revenue percentage of a a of

XX% the Connect an will QX driver We quarter-over-quarter the on HHIP agency our accident points October of percentage results active away hurricane the following older PCS improved despite XX%, effect came of only improvements losses First at points percentage an which ratio substantially period new from toward not would because our XX of a XX to XXth, will experience portfolio-level homes, PCS Services QX an shift shift weather which see than quarters to year. loss improved loss non-weather improvement net our higher-CAT of from improved XX%. in all of sale the an in in year-over-year in and season. future the despite tend this improvement be reinsurance non-weather accident by year-over-year in ratio, portfolio an QX combined which, results, last non-PCS generally ratio, improvement and point loss total and both improvement year. in mix driven level financials. Loss things homes. drove XX% segment's in quarter portfolio at HHIP the raise a in in a HHIP improvement accident of last XX improvement year. Despite year-over-year the improvement XX of an non-PCS our even percentage aggressive ratios lower of X improvement, loss actions period our which in substantial drove the geographies, during the combination This quarter, improvement as larger versus unprecedented achieved percentage by was this this percentage to of which well our This favorable show versus of HHIP improvement the We the QX the came ratio, period across ratio. The was points equal, real rate improvements star significant at loss as underwriting last loss to XX% with structure, points

quarter. QX and of our collectively our came The QX a the in and last XX% QX again XX% we continued year, QX, Compared significant ratio, are been XX year-over-year and improvement HHIP businesses a million, to simultaneously of XX% percentage on in net percentage susceptible better in million technology general improvement same a administrative absolute or $XX less improvement of million. top the costs growth of weather over last to drivers carrier, QX year $X and fell while last versus million $X XXXX. on sale both declined a by XXX QX our growth point loss insurance underwriting at volatility, revenue our $XX percentage releases period, operating have an line increases would net reserve basis. Relative were of a dollar When expenses and the of sales or shell 'XX, stock-based an Excluding compensation. development quarter, benefits in improvement of points. In revenue improved the XX%. in a net delivered to loss as loss of decrease our GAAP XX% our gain this million reducing the of in of leverage, this of in primary these year-over-year and million, $X.X by revenue combined marketing, to that operating revenue from reduction $XX and with expenses

agreement million. QX improved compared amounts an end a XXth, Our last million of XX% investments reinsurers, sell $X.X This QX Hippo to on with now, a into of QX $XX adjusted our quarter-over-quarter our X and to independent entered Centana higher loss the the cash million. came additional insurance XXXX. was beyond outstanding third operations. And million, QX Connect quarter, are the or the million Insurance the October partially $XX by to in losses adjusted After that platform, from versus financials. of at proceeds And of primarily First improvement in million by by majority sale collections loss $X $XX XX% quarter, and EBITDA by Partners our agent owed from Growth driven from to offset increased shares a EBITDA increase $XXX carrier, the we our Services. of updates ending reducing or shell

million opportunity investment to future we in Centana As level First Connect of repurchase support used of the future to shares while million, cash Centana focus transaction capital Connect additional realized to also reported in million over our This targets. have up retire of increase few to part cover $XX an outstanding. outstanding achieves strengthened and First an XX-Q. earn stake Hippo our proceeds from of incremental Hippo the proceeds shares total or agreement, the proceeds performance outstanding XXX,XXX years to Connect approximately invested Connect from Form further use cash the and its its to in in on First next this After Connect. This in growth. The with is position. simultaneously reduction of on $XX allows additional to core if X.X% business increase investment reflected shares certain today Hippo XX.X% our the a retains the closed, its up freeing First $XX.X us our the of transaction First transaction further growth,

but only removal $X from million will Hurricane QX November of net by open to revenue revenue loss million our expected floor questions. the million and on operator, QX a impact to of by guidance. million negligible The our to impact $XX expected beginning now TGP lower have $XX to approximately $X.X positive adjusted financials with the Milton, our for of EBITDA. million to to million, of $XX from EBITDA approximately $X.X previous the First like and Hippo's Turning guidance million now our like expected effects and adjusted Connect $X and Even I'd we'd reiterate million. And these expected with that, $XX QX of to will to

Operator

today Yaron Our first Jefferies. Kinar question comes from from

Yaron Kinar

nationwide new into homebuilders equivalent XX,XXX and you maybe with want will to of access offer number? the that start Florida Can us to entry California, I offer Texas, homes annually. an kind So

Richard McCathron

This not entry reclassify is California, and Texas. it into would Rick. Florida I an as

are We in additional our California, in states. and These with already partners. existing Florida are Texas homebuilder particular homebuilder those partners the

they that loss have announced and already publicly we've that the those builders and are heavier more are in, our very those homebuilders builders expected good quarter, both diversification joining we the be quality that in in with of now, platform ratio on from of this the but in As states from other these concentrated QX. our platform and feel we will

So feel down in. positive good we feel we homebuilder doubling our channels on that that we're markets in

Yaron Kinar

So service million currently X if today? there homes are you what, built over many United about, States, in just the can of those how annually

Richard McCathron

Yes.

We with our of new that the homes stages existing with have partners development cycle have Again, access to in an XXX,XXX active reiterate approximately at I'll business that cycle. partners. we various various

a bit million. X little is than number the more think I

X.X XXXX. on X million average, closer it's think I addressable And anticipate as and between million. we to in somewhere market X million the

Yaron Kinar

have color data of similarly, the looks you off to maybe too any homebuilders' roll channel a And warranties? given as builders' on the the the loss early in ratio insured rates would do homes And the roll as also somewhat Great. occurs? history but that points off maybe offer limited retention the say how any here,

Richard McCathron

Yes. come favorable Certainly, we Hippo very it very customers more as it's an look these us particular as of retention product. to The couple rate. of ways different agency there's than at a looking a way it. at And is insurance home a high,

policy. we a and And policies place with we typically transition HHIP, into older that carrier homeowner's at place as at traditional policies shift times, become So policies offer more of or other those our on partners. both homes our carrier and those HHIP partners times, those

a a So have from retention, as we more very a those age. only transition but traditional the to those new opportunity construction high we policy homes to have homes not policy

Stewart Ellis

this Yaron, is Stewart.

data at new for it's our a both On longer-term for loss agree that own the the early a of we suggests perform bit And level this than us little in is view one that But loss better also homes a on early the the our improvement specifically. ratio I and to ours older do to events is us, have of side, on it portfolio homes, a and -- PCS really within have losses. that non-weather the portfolio drivers highlight ratio.

shift age. more traditional as homes the policies think, Rick to said, I policies homeowners' as the

homeowner's excited ratio the on seeing And XX, that these years, ratio. so look after earlier the like But loss results would lives. more things cetera, the a start that you'd expect we're to homes' XX et of about of traditional loss for we're sort period the

Yaron Kinar

on Got stake assume understand And running, could. up? right, it loss it positive quick one, and then it. because have was one I negligible if negligible it's would sale I that But I the was impact as building Connect a a EBITDA. impact First

Stewart Ellis

a impact yet to It's positive is of That's to is makes it over one not correct. because operating time. still their for basis do business it Yes. adjusted that, income them increase small the EBITDA And an profitable. that things on investment sense on

that but own is path. a to time this business great it's like carriers it's a core chart its it felt and to and to a the allowing connect business, Creating agents to it in marketplace world. future allow third-party the business, nice we So makes not all was at and right choices make value that where scale our for sense growth are the and its a

Operator

KBW. comes McJoynt from question from next Our Tommy

Thomas Mcjoynt-Griffith

part that of was Did the Or just there? for other Spinnaker noncore you any rationale it unutilized piece? a why the Was shell sort sold talk rationale that about of business? there

Richard McCathron

is on Rick. was shelf. sort our is this that It Tommy, dormant something of

X its carrier, a Spinnaker So if banner. different actually think about within you companies fronting has Spinnaker as

the Specialty, which has the carrier. is rated Wingsail, We licensed. we and a which to unused asset widely which admitted sold that that to has carrier. carrier, was monetize given we is And asset, partner one also it access an on way had surplus also that an was fact Wingsail. is Mainsail, wanted unused So is the it Spinnaker, thought had redundant rated have that a Spinnaker we lines was A- asset. It that own which an have transaction great We that also we their

was other just sense behind out, no it to it. it rationale there made but really move So

Thomas Mcjoynt-Griffith

Okay. that Got a Obviously, in program. the of that lot been sense. it. to that switching It turnaround HHIP actions then With underwriting into the over are looking it's in of of a great rate And makes you've about kind What you -- program. segment? taken, some are early to growing segment, sort when re-grow growth XXXX? you think that potential business thoughts that in the

Richard McCathron

Yes.

our think that. in really progress of made we that a portfolio that priority since Tommy, I said XXXX, showing And actually is think, remediate the of on I made have is the to QX We've in not was as the we've or progress HHIP. that ton financials. even historical first all legacy

at these year to then into work As know, effect entire the financials. it an takes take renewal, renewal you things after and it

So areas on work around a are a strongly writing positive ratio. team quarter be do the around. still A or channel. writing our turn to have that we There impact to getting we're new X for high the still will of builder clarify don't But expected likelihood that are portfolio, we areas is a believe growth our work new a on that. rid but be to of, but we bit another little in positive there'll that in stuff also that have new the loss of that headwind business still done are a in we business lot accelerating it a in we of contradict that. We still bit has hard of

Thomas Mcjoynt-Griffith

Okay. Got it.

growth of should still So rates services and larger into as than HHIP? the 'XX the IaaS think we

Richard McCathron

will as Spinnaker growth the and We're and the in Spinnaker platform, with. quarter, HHIP that our XXXX -- our to the momentum going but efficiency it give doing to of IaaS, the in in operational is right. realm for that well. both line run, well, -- continue line And exceptionally agency, quality That's next we're is be as but top primary our partners driver in forward rebuilding programs and looking will be top short to that guidance

Thomas Mcjoynt-Griffith

you shares, The proceeds recurring Connect? Or the First And just of of last buybacks should the one. being it. some a think sort Got did about going part feel then forward? from onetime to sale we Okay. with bullet a repurchase story was decision the of that

Stewart Ellis

Stewart. is this Tommy,

with purchases second As better the you to approved share business buyback know, events, after of little just things the that program the under we the were And the hail get XXXX Board a of paused and previously programmatic has wind be a of and developing. quarter program. kind going to sense the how trajectory bit of

I acquire market to shares best our we the increasing continue with to at our with closer a think continue interest discount from for to when to opportunity optimistic. In the get to opportunities incremental profitability, the First our we shareholders. had proximity Connect And case, to think repurchasing opportunistic profitability, an be we be cash look feel transaction. -- would increasingly close will like be to to this we'll in explore As I ways shares we of

Operator

questions. [Operator have no Instructions] We further

hand back Rick to over So I'll remarks. McCathron for closing

Richard McCathron

you, Well, forward We're sharing QX, great I continued our for in excited in thank Thank everyone. and would improvements day. to look call. about the the like very just everybody to Have a QX. joining progress

Operator

This you. you today's does call. for Thank joining. conclude Thank

may now lines. You your disconnect

Hippo (HIPO) 8 Nov 242024 Q3 Earnings call transcript