Hippo Holdings Inc. Q3 FY2025 earnings call

• Strong quarter with adjusted net income of $18 million and gross written premium growth of 33% y-o-y. - Introduced new reporting aligning with unified business management, managing as a single carrier platform across multiple lines. - Focus on strategic diversification, unlocking market growth with technology-driven customer experience, and optimizing risk management. - 6 new programs joined, total 36, diversifying premium base. - Integrated new homes product with Westwood Insurance agency, bound first policies. - Underwriting results improved, net loss ratio 48% and combined ratio 100% y-o-y. - Added Chief Data Officer Robin Gordon and board members Laura Hay and Susan Holliday.

In the third quarter, gross written premium grew 33% year-over-year to $311 million. Net written premium was up 30% year-over-year to $118 million. Casualty increased to 25% of gross written premium, up from 14% last year. Commercial multi-peril increased to 21% of gross written premium, up from 13% last year. Homeowners, which was 47% of gross written premium in Q3 2024, decreased to 32% this quarter. On a net basis, renters increased to 22% of net written premium, up from 10% last year. Commercial multi-peril increased to 12% of net written premium, up from 3% last year, and homeowners decreased to 64% from 86% in Q3 2024.

• Raised full year 2025 gross written premium midpoint to $1.09 billion to $1.11 billion. - Raised revenue guidance to $465 million to $468 million. - Improved consolidated net loss ratio guidance to 63% to 64%. - Raised net income guidance to $53 million to $57 million. - Raised adjusted net income guidance to $10 million to $14 million.

Forward-looking statements are subject to risks, uncertainties, and other factors from Hippo's SEC filings that could cause actual results to differ materially from forecasts, including those in the Risk Factors section of the Form 10-Q.

Q: Just looking at some of the new premium disclosures by line of business and recognizing it's off of a small base, but the casualty growth was pretty sizable. Can you just give us some color on kind of the growth there and what type of business you're writing within casualty?

A: Andrew, thanks for the question. I'll have Guy talk a little bit about the numbers. But one thing to keep in mind, and we've emphasized this before, but I think it's a very important piece of the equation. When we grow premium in any of our fronted lines, we have the option to take risk or to not take risk. Generally speaking, until we have strong comfort and a historical reference point on the profitability of any particular program, we generally opt not to take risk. So even though we've grown that number fairly significantly as a premium line, we take very little risk initially until we gain that trust and confidence in the individual program. Guy, do you want to go over some of the make up?

Q: This is Jean on for Tommy. My first question is on business mix. So as Hippo diversified away from homeowners, just curious on by 2028, what is the reasonable business mix that you expect?

A: Yes. Thank you for the question. I think it's probably worth sharing a little bit of history on our homeowners line and where we're looking at it on a go-forward basis. So when we went through the portfolio correction over the last couple of years, we intentionally exited portions of the homeowners market that was non-new build, non-new construction. And as we've mentioned in the -- in our presentation that we've actually tripled the size of the funnel for new homes through our Westwood partnership. So the shrinking that you have seen in the homeowners line was an intentional effort to diversify into less cap-prone states and to make sure that we had correct underwriting pricing going forward. On the go-forward basis, we expect to increase the number of writings for new construction. We expect to continue to open our manufactured HHIP homeowners program. And we expect growth within our fronted partners that are also on our carrier platform because when you look at the homeowners numbers, it's a combination of what we do at HHIP and the partnerships that we have with our fronted programs. So we anticipate growth in the homeowners market over the next 3 years. Likewise, we anticipate growth in the entire portfolio over the next 3 years. So I refer back to our Investor Day 3-year pro forma and we anticipate over $2 billion in premium, which is nearly doubling our current premium basis. And I do think that $2 billion will be further diversified, but homeowners will grow in the absolute.

Q: My second question is on share repurchases. Just curious about kind of forward-looking buybacks intended to be like going forward as a use of capital.

A: Yes. I think the use of capital -- and I'll reiterate what we said during Investor Day. From our perspective, the use of capital will be a combination of continuing to grow our portfolio and the necessary surplus to facilitate that more than $2 billion of premium in 3 years. We've also indicated that we will be opportunistic if there are opportunities for us to acquire entities that will further diversify the portfolio and accelerate that diversification, that is a potential use of additional funds. But we feel very good with our cash position. We feel very good with our with our ratios in terms of the car. And we think we're well positioned not only to grow to the $2-plus billion premium in 3 years, but also to take advantage of things that might help us accelerate that further.