Hippo Holdings Inc

Previous wording

In the third quarter of 2023 we began taking several actions to lower the volatility of our Hippo Homeowners Insurance Program portfolio in light of the significant catastrophe losses we experienced in the second quarter, including raising rates on a portion of our renewal business, increasing deductibles for wind and hail perils, selectively non-renewing policies in certain regions, and instituting a nationwide pause on underwriting new premiums for our HO3 business as we examine our risk appetite. We also launched an expense reduction initiative across the Company, including a reduction in staff which we announced in October 2023.

Current wording

In the third quarter of 2023 we began taking several actions to lower the volatility of our Hippo Homeowners Insurance Program portfolio in light of the significant catastrophe losses we experienced in the second quarter of 2023, including raising rates on a portion of our renewal business, increasing deductibles for wind and hail perils, selectively non-renewing policies in certain regions, and instituting a nationwide pause on underwriting new premiums for our HO3 business as we examined our risk appetite. We also launched an expense reduction initiative across the Company, including a reduction in staff which we announced in October 2023.

Previous wording

For business produced through our builder channel for policies with effective dates in 2023, we purchased proportional reinsurance from three third-party reinsurers. All reinsurers are rated “A-” Excellent or better by AM Best, or the reinsurance is appropriately collateralized. In 2023, we retained approximately 58% of the premium produced through our insurance company subsidiaries or RHS, before purchasing catastrophe protection. The reinsurance contracts are subject to contingent commission adjustments and limited loss participation features, which align our interests with those of the reinsurers.

Current wording

For business produced through our builder channel for policies with effective dates in 2023, we purchased proportional reinsurance from three third-party reinsurers. All reinsurers are rated “A-” Excellent or better by AM Best, or the reinsurance is appropriately collateralized. In 2023, we retained approximately 58% of the premium produced through our insurance company subsidiaries or RHS, before purchasing catastrophe protection. The reinsurance contract is subject to contingent commission adjustments and limited loss participation features, which align our interests with those of the reinsurers.

Previous wording

Spinnaker also purchased reinsurance for programs written by MGAs other than Hippo through our Insurance-as-a-Service business. The reinsurance treaties are a mix of proportional and XOL in which generally 75% to 100% of the risk, up to the 1 in 250-year return period, is ceded. The reinsurance contracts are subject to variable commission adjustments and loss participation features, including loss caps, which may increase the amount of losses retained by us in excess of our pro-rata participation. Such provisions are recognized in the period based on the experience to date under the agreement.

Current wording

Spinnaker also purchased reinsurance for programs written by MGAs other than Hippo through our Insurance-as-a-Service business. The reinsurance treaties are a mix of proportional and XOL in which generally 75% to 100% of the risk, up to at least the 1 in 250-year return period, is ceded. The reinsurance contracts are subject to variable commission adjustments and loss participation features, including loss caps, which may increase the amount of losses retained by us in excess of our pro-rata participation. Such provisions are recognized in the period based on the experience to date under the agreement.

Previous wording

We purchased reinsurance from the State Board of Administration in Florida via the FHCF annually for admitted residential hurricane losses in the State of Florida. This coverage is provided and required by the State of Florida and protects business written by Hippo as well as other MGAs that produce admitted residential policies. We currently purchase reimbursement protection at the maximum level (90%) of mandatory coverage offered by the FHCF.

Current wording

We purchased reinsurance from the State Board of Administration in Florida via the FHCF annually for admitted residential hurricane losses in the State of Florida. This coverage is provided by the State of Florida and protects business written by Hippo as well as other MGAs that produce admitted residential policies. We currently purchase reimbursement protection at the maximum level (90%) of mandatory coverage offered by the FHCF.

Previous wording

Our Total Generated Premium for the three months ended June 30, 2024 grew 20% year-over-year to $380.1 million from $317.6 million for the three months ended June 30, 2023. The growth was driven primarily by the growth of non-Hippo written premium supported by our Insurance-as-a-Service business, the growth in the total book of business in our aggregator channel, as well as in our builder channel for new and renewal business, as we maintain higher retention rates and experienced premium rate increases. This was partially offset by a decrease in our Hippo Home Insurance Program (“HHIP”) as we have taken actions to reduce our exposure to wind and hail while achieving planned premium rate increases.

Current wording

Our Total Generated Premium for the three months ended September 30, 2024 grew 21% year-over-year to $368.0 million from $303.7 million for the three months ended September 30, 2023. The growth was driven primarily by the growth in the total book of business in our aggregator channel, as well as in our builder channel for new and renewal business, as we maintain higher retention rates and experienced premium rate increases. The growth was also due to the growth of non-Hippo written premium supported by our Insurance-as-a-Service business. This was partially offset by a decrease in our Hippo Home Insurance Program (“HHIP”) as we have taken actions to reduce our exposure to wind and hail while achieving planned premium rate increases.

Previous wording

Our Total Generated Premium for the six months ended June 30, 2024 grew 20% year-over-year to $673.6 million from $562.6 million for the six months ended June 30, 2023. The growth was driven primarily by the growth of non-Hippo written premium supported by our Insurance-as-a-Service business, the growth in the total book of business in our aggregator channel, as well as in our builder channel for new and renewal business, as we maintain higher retention rates and experienced premium rate increases. This was partially offset by a decrease in our Hippo Home Insurance Program (“HHIP”) as we have taken actions to reduce our exposure to wind and hail while achieving planned premium rate increases.

Current wording

Our Total Generated Premium for the nine months ended September 30, 2024 grew 20% year-over-year to $1,041.6 million from $866.3 million for the nine months ended September 30, 2023. The growth was driven primarily by the growth in the total book of business in our aggregator channel, as well as in our builder channel for new and renewal business, as we maintain higher retention rates and experienced premium rate increases. The growth was also due to the growth of non-Hippo written premium supported by our Insurance-as-a-Service business. This was partially offset by a decrease in our HHIP as we have taken actions to reduce our exposure to wind and hail while achieving planned premium rate increases.

Previous wording

We define adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (“adjusted EBITDA”), a Non-GAAP financial measure, as net loss attributable to Hippo excluding interest expense, income tax expense, depreciation, amortization, stock-based compensation, net investment income, restructuring charges, impairment expense, other non-cash fair market value adjustments including contingent consideration for one of our acquisitions, and other transactions, which may include certain legal fees and settlement costs, that we consider to be unique in nature.

Current wording

We define adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (“adjusted EBITDA”), a Non-GAAP financial measure, as net loss attributable to Hippo excluding interest expense, income tax expense, depreciation, amortization, stock-based compensation, net investment income, restructuring charges, impairment expense, gains and losses on sales of business, and other non-cash fair market value adjustments including contingent consideration for one of our acquisitions, and other transactions, which may include certain legal fees and settlement costs, that we consider to be unique in nature.

Previous wording

For the three months ended June 30, 2024, adjusted EBITDA loss was $24.9 million, a decrease of $62.8 million compared to a $87.7 million EBITDA loss for the three months ended June 30, 2023. The decrease was due primarily to a growth in revenue reflecting an increase in premiums earned mainly due to higher premium retention as a result of the 2023 and 2024 reinsurance treaty compared to prior periods, a lower HHIP gross loss ratio due primarily to the benefits of the pricing and underwriting actions we have taken, including a reduction of loss participation features in our reinsurance treaties, and a decrease in other operating expenses.

Current wording

For the three months ended September 30, 2024, adjusted EBITDA loss was $7.5 million, a decrease of $30.9 million compared to a $38.4 million EBITDA loss for the three months ended September 30, 2023. The decrease was due primarily to a growth in revenue reflecting an increase in premiums earned mainly due to higher premium retention as a result of the 2023 and 2024 reinsurance treaty compared to prior periods, and a lower HHIP gross loss ratio due primarily to the benefits of the pricing and underwriting actions we have taken, including a reduction of loss participation features in our reinsurance treaties, and a decrease in other operating expenses.

Previous wording

For the six months ended June 30, 2024, adjusted EBITDA loss was $44.7 million, a decrease of $95.2 million compared to a $139.9 million EBITDA loss for the six months ended June 30, 2023. The decrease was due primarily to a growth in revenue reflecting an increase in premiums earned mainly due to higher premium retention as a result of the 2023 and 2024 reinsurance treaty compared to prior periods, a lower HHIP gross loss ratio due primarily to the benefits of the pricing and underwriting actions we have taken, including a reduction of loss participation features in our reinsurance treaties, and a decrease in other operating expenses.

Current wording

For the nine months ended September 30, 2024, adjusted EBITDA loss was $52.2 million, a decrease of $126.1 million compared to a $178.3 million EBITDA loss for the nine months ended September 30, 2023. The decrease was due primarily to a growth in revenue reflecting an increase in premiums earned mainly due to higher premium retention as a result of the 2023 and 2024 reinsurance treaty compared to prior periods, a lower HHIP gross loss ratio due primarily to the benefits of the pricing and underwriting actions we have taken, including a reduction of loss participation features in our reinsurance treaties, and a decrease in other operating expenses.

Previous wording

For the three months ended June 30, 2024, our Gross Loss Ratio was 58% net of a prior year favorable development of 5 percentage points relating to PCS events compared with 107% net of a prior year favorable development of 6 percentage points relating to Non-PCS events and 4 percentage points relating to PCS events for the three months ended June 30, 2023. The decrease reflected the benefits of the pricing and underwriting actions we have taken and due to a lower impact from PCS events. We expect continued improvement as these actions have more time to impact our financial results.

Current wording

For the three months ended September 30, 2024, our Gross Loss Ratio was 50% net of a prior year favorable development of 6 percentage points relating to non-PCS events and 2 percentage points relating to PCS events compared with 59% for the three months ended September 30, 2023. The decrease reflected the benefits of the pricing and underwriting actions we have taken and due to a lower impact from non-PCS events which was partially offset by an increase in PCS losses primarily due to an increase in the severity of PCS events. We expect continued improvement as these actions have more time to impact our financial results.

Previous wording

For the six months ended June 30, 2024, our Gross Loss Ratio was 58% net of a prior year favorable development of 2 percentage points relating to PCS events compared with 93% net of a prior year favorable development of 3 percentage points relating to Non-PCS events and 2 percentage points relating to PCS events for the six months ended June 30, 2023. The decrease reflected the benefits of the pricing and underwriting actions we have taken and due to a lower impact from PCS events. We expect continued improvement as these actions have more time to impact our financial results.

Current wording

For the nine months ended September 30, 2024, our Gross Loss Ratio was 55% net of a prior year favorable development of 2 percentage points relating to non-PCS events and 2 percentage points relating to PCS events compared with 81% net of a prior year favorable development of 2 percentage points relating to non-PCS events and 1 percentage point relating to PCS events for the nine months ended September 30, 2023. The decrease reflected the benefits of the pricing and underwriting actions we have taken and due to a lower impact from PCS events. We expect continued improvement as these actions have more time to impact our financial results.

Previous wording

For the three months ended June 30, 2024, our net loss ratio was 94% net of a prior year favorable development of 3 percentage points relating to PCS events compared with 344% net of a prior year favorable development of 7 percentage points relating to Non-PCS events and 4 percentage points relating to PCS events for the three months ended June 30, 2023. The decrease reflected the benefits of the pricing and underwriting actions we have taken, including a reduction of loss participation features in our reinsurance treaties, higher retention of earned premium due to our 2023 and 2024 reinsurance treaties, and a lower impact from PCS events. We expect continued improvement as these actions have more time to impact our financial results.

Current wording

For the three months ended September 30, 2024, our net loss ratio was 73% net of a prior year favorable development of 2 percentage points relating to on-PCS events and 1 percentage point relating to PCS events compared with 111% for the three months ended September 30, 2023. The decrease reflected the benefits of the pricing and underwriting actions we have taken, including a reduction of loss participation features in our reinsurance treaties, higher retention of earned premium due to our 2023 and 2024 reinsurance treaties, and a lower impact from PCS and non-PCS events. We expect continued improvement as these actions have more time to impact our financial results.

Previous wording

For the six months ended June 30, 2024, our net loss ratio was 91% net of a prior year favorable development of 2 percentage points relating to PCS events compared with 317% net of a prior year favorable development of 3 percentage points relating to Non-PCS events and 3 percentage points relating to PCS events for the six months ended June 30, 2023. The decrease reflected the benefits of the pricing and underwriting actions we have taken, including a reduction of loss participation features in our reinsurance treaties, higher retention of earned premium due to our 2023 and 2024 reinsurance treaties, and a lower impact from PCS events. We expect continued improvement as these actions have more time to impact our financial results.

Current wording

For the nine months ended September 30, 2024, our net loss ratio was 84% net of a prior year favorable development of 1 percentage point relating to non-PCS events and 1 percentage point relating to PCS events compared with 219% net of a prior year favorable development of 2 percentage points relating to non-PCS events and 2 percentage points relating to PCS events for the nine months ended September 30, 2023. The decrease reflected the benefits of the pricing and underwriting actions we have taken, including a reduction of loss participation features in our reinsurance treaties, higher retention of earned premium due to our 2023 and 2024 reinsurance treaties, and a lower impact from PCS and non-PCS events. We expect continued improvement as these actions have more time to impact our financial results.

Previous wording

For the three months ended June 30, 2024, our Services segment, which earns fees and/or commission income without assuming underwriting risk or need for reinsurance, had Total Generated Premium of $163.3 million, an increase of 38% from $118.1 million over the prior year quarter, while revenue was $12.1 million, an increase of 5% from $11.5 million over the prior year quarter. The growth was driven primarily due to the growth in the total book of business in our aggregator channel, as well as in our builder channel for new and renewal business, as we maintain higher retention rates and experienced premium rate increases. Our adjusted operating loss was $4.5 million, a decrease of 53% compared to a loss of $9.6 million in the prior year quarter, due primarily to lower adjusted operating expenses including a decrease in advertising costs, and an increase in revenue as noted above.

Current wording

For the three months ended September 30, 2024, our Services segment, which earns fees and/or commission income without assuming underwriting risk or need for reinsurance, had Total Generated Premium of $177.9 million, an increase of 46% from $121.6 million over the prior year quarter, while revenue was $13.2 million, an increase of 14% from $11.6 million over the prior year quarter. The growth was driven primarily due to the growth in the total book of business in our aggregator channel, as well as in our builder channel for new and renewal business, as we maintain higher retention rates and experienced premium rate increases. Our adjusted operating loss was $3.4 million, a decrease of 65% compared to a loss of $9.7 million in the prior year quarter, due primarily to lower adjusted operating expenses including a decrease in advertising costs, and an increase in revenue as noted above.

Previous wording

For the six months ended June 30, 2024, our Services segment, which earns fees and/or commission income without assuming underwriting risk or need for reinsurance, had Total Generated Premium of $297.0 million, an increase of 38% from $216.0 million over the prior year period, while revenue was $23.5 million, an increase of 11% from $21.2 million over the prior year period. The growth was driven primarily due to the growth in the total book of business in our aggregator channel, as well as in our builder channel for new and renewal business, as we maintain higher retention rates and experienced premium rate increases. Our adjusted operating loss was $9.8 million, a decrease of 52% compared to a loss of $20.6 million in the prior year period, due primarily to lower adjusted operating expenses including a decrease in advertising costs, and an increase in revenue as noted above.

Current wording

For the nine months ended September 30, 2024, our Services segment, which earns fees and/or commission income without assuming underwriting risk or need for reinsurance, had Total Generated Premium of $474.9 million, an increase of 41% from $337.6 million over the prior year period, while revenue was $36.7 million, an increase of 12% from $32.8 million over the prior year period. The growth was driven primarily due to the growth in the total book of business in our aggregator channel, as well as in our builder channel for new and renewal business, as we maintain higher retention rates and experienced premium rate increases. Our adjusted operating loss was $13.2 million, a decrease of 56% compared to a loss of $30.3 million in the prior year period, due primarily to lower adjusted operating expenses including a decrease in advertising costs, and an increase in revenue as noted above.

Previous wording

Our Insurance-as-a-Service segment, which through our carrier, Spinnaker, leverages our capital and insurance licenses to provide capacity to third party MGAs, creating diversified income through fees, underwriting profits, and investment income. For the three months ended June 30, 2024, Total Generated Premium was $186.3 million, an increase of 23% from $151.7 million over the prior year quarter, while revenue was $24.4 million, an increase of 51% from $16.2 million over the prior year quarter. The growth was driven primarily by the increase in performance of existing programs. Adjusted operating income was $5.7 million, an increase of 21% compared to income of $4.7 million in the prior year quarter, due primarily to the increase in revenue mentioned above, partially offset by an increase in insurance related expenses and loss and loss adjustment expenses due to the growth of the book of business.

Current wording

Our Insurance-as-a-Service segment, which through our carrier, Spinnaker, leverages our capital and insurance licenses to provide capacity to third party MGAs, creating diversified income through fees, underwriting profits, and investment income. For the three months ended September 30, 2024, Total Generated Premium was $159.3 million, an increase of 12% from $141.8 million over the prior year quarter, while revenue was $25.4 million, an increase of 31% from $19.4 million over the prior year quarter. The growth was driven primarily by the increase in performance of existing programs. Adjusted operating income was $6.7 million, an increase of 86% compared to income of $3.6 million in the prior year quarter, due primarily to the increase in revenue mentioned above, partially offset by an increase in insurance related expenses and loss and loss adjustment expenses due to the growth of the book of business.

Previous wording

For the six months ended June 30, 2024, Total Generated Premium was $316.3 million, an increase of 24% from $255.7 million over the prior year period, while revenue was $44.8 million, an increase of 53% from $29.2 million over the prior year period. The growth was driven primarily by the increase in performance of existing programs. Adjusted operating income was $10.4 million, an increase of 32% compared to income of $7.9 million in the prior year quarter, due primarily to the increase in revenue mentioned above, partially offset by an increase in insurance related expenses and loss and loss adjustment expenses due to the growth of the book of business.

Current wording

For the nine months ended September 30, 2024, Total Generated Premium was $475.6 million, an increase of 20% from $397.5 million over the prior year period, while revenue was $70.2 million, an increase of 44% from $48.6 million over the prior year period. The growth was driven primarily by the increase in performance of existing programs. Adjusted operating income was $17.1 million, an increase of 49% compared to income of $11.5 million in the prior year quarter, due primarily to the increase in revenue mentioned above, partially offset by an increase in insurance related expenses and loss and loss adjustment expenses due to the growth of the book of business.

Previous wording

For the three months ended June 30, 2024, our Hippo Homeowners Insurance Program had Total Generated Premium of $74.1 million, a decrease of 27% from $102.2 million over the prior year quarter, while revenue was $56.2 million, an increase of 149% from $22.6 million over the prior year quarter. The increase in revenue was due primarily to higher net earned premium, partially offset by a decrease in commission income, net, reflecting changes in our 2023 and 2024 reinsurance treaties, resulting in higher premium retention, and achieving planned premium rate increases. We purchased XOL to cover events in excess of per occurrence limits based on the expected growth in exposure during the year which results in an increase in ceded earned premium and lower net earned premium.

Current wording

For the three months ended September 30, 2024, our Hippo Homeowners Insurance Program had Total Generated Premium of $77.6 million, a decrease of 18% from $95.0 million over the prior year quarter, while revenue was $61.1 million, an increase of 111% from $28.9 million over the prior year quarter. The increase in revenue was due primarily to higher net earned premium due to higher retention on our 2023 and 2024 reinsurance treaties. We purchased XOL to cover events in excess of per occurrence limits based on the expected growth in exposure during the year which results in an increase in ceded earned premium and lower net earned premium. For the three months ended September 30, 2024 and 2023, $5.8 million and $7.4 million, respectively, was offset against earned premium for XOL. Adjusted operating loss was $9.9 million in the quarter, a decrease of 69% compared to a loss of $31.7 million in the prior year quarter. The decrease in adjusted operating loss was due primarily to the increase in revenue noted above and an improvement in our net loss ratio due to improved terms on our reinsurance treaties and a lower impact of non-PCS events, and lower adjusted operating expenses. This was partially offset by an increase in insurance related expenses due to higher premium retention.

Previous wording

For the six months ended June 30, 2024, our Hippo Homeowners Insurance Program had Total Generated Premium of $139.6 million, a decrease of 28% from $194.4 million over the prior year period, while revenue was $111.3 million, an increase of 164% from $42.1 million over the prior year quarter. The increase in revenue was due primarily to higher net earned premium, partially offset by a decrease in commission income, net, reflecting changes in our 2023 and 2024 reinsurance treaties, resulting in higher premium retention, and achieving planned premium rate increases. We purchased XOL to cover events in excess of per occurrence limits based on the expected growth in exposure during the year which results in an increase in ceded earned premium and lower net earned premium. For the six months ended June 30, 2024 and 2023, $15.0 million and $15.9 million, respectively, was offset against earned premium for XOL. Adjusted operating loss was $46.2 million in the quarter, a decrease of 63% compared to a loss of $126.2 million in the prior year quarter. The decrease in adjusted operating loss was due primarily to the increase in revenue noted above, a decrease in sales and marketing expenses, including a reduction in headcount and decrease in sales commissions, as well as an improvement in our net loss ratio due to improved terms on our reinsurance treaties and a lower impact of PCS events. This was partially offset by an increase in insurance related expenses due to higher premium retention.

Current wording

For the nine months ended September 30, 2024, our Hippo Homeowners Insurance Program had Total Generated Premium of $217.2 million, a decrease of 25% from $289.4 million over the prior year period, while revenue was $172.4 million, an increase of 143% from $71.0 million over the prior year quarter. The increase in revenue was due primarily to higher net earned premium due to higher retention on our 2023 and 2024 reinsurance treaties, partially offset by a decrease in commission income, net, reflecting changes in our 2023 and 2024 reinsurance treaties, resulting in higher premium retention, and achieving planned premium rate increases. We purchased XOL to cover events in excess of per occurrence limits based on the expected growth in exposure during the year which results in an increase in ceded earned premium and lower net earned premium. For the nine months ended September 30, 2024 and 2023, $20.7 million and $23.3 million, respectively, was offset against earned premium for XOL. Adjusted operating loss was $56.1 million in the quarter, a decrease of 64% compared to a loss of $157.9 million in the prior year quarter. The decrease in adjusted operating loss was due primarily to the increase in revenue noted above, a decrease in adjusted operating expenses, partially due to a reduction in headcount and decrease in sales commissions, as well as an improvement in our net loss ratio due to improved terms on our reinsurance treaties and a lower impact of PCS events. This was partially offset by an increase in insurance related expenses due to higher premium retention.

Previous wording

For the three months ended June 30, 2024, HPGLR was 84% net of a prior year favorable development of 15 percentage points relating to PCS events and 178% net of a prior year favorable development of 5 percentage points relating to Non-PCS events and 2 percentage points relating to PCS events. The decrease reflected the benefits of the pricing and underwriting actions we have taken and a lower impact from PCS events. We expect continued improvement as these actions have more time to impact our financial results.

Current wording

For the nine months ended September 30, 2024, HPGLR was 79% net of a prior year favorable development of 1 percentage point relating to non-PCS events and 5 percentage points relating to PCS events compared to 118% net of a prior year favorable development of 2 percentage points relating to non-PCS events and 1 percentage point relating to PCS events for the nine months ended September 30, 2023. The decrease reflected the benefits of the pricing and underwriting actions we have taken and a lower impact from PCS events. We expect continued improvement as these actions have more time to impact our financial results.

Previous wording

Comparison of the Three and Six Months Ended June 30, 2024 and 2023

Current wording

Comparison of the Three and Nine Months Ended September 30, 2024 and 2023

Previous wording

For the three months ended June 30, 2024, net earned premium was $64.4 million, an increase of $42.1 million compared to $22.3 million for the three months ended June 30, 2023. This increase was due primarily to increases in gross earned premium due to year-over-year growth of our total book of business and higher retention of earned premium due to our 2023 and 2024 reinsurance treaties, partially offset by an increased cost of XOL premiums for our catastrophic coverage which results in an increase in ceded earned premium and lower net earned premium. We purchased XOL to cover events in excess of per occurrence limits based on the expected growth in exposure during the year. For the three months ended June 30, 2024 and 2023, $15.4 million and $13.9 million, respectively, was offset against earned premium for XOL.

Current wording

For the three months ended September 30, 2024, net earned premium was $70.6 million, an increase of $37.7 million compared to $32.9 million for the three months ended September 30, 2023. This increase was due primarily to increases in gross earned premium due to year-over-year growth of our total book of business and higher retention of earned premium due to our 2023 and 2024 reinsurance treaties, partially offset by an increased cost of XOL premiums for our catastrophic coverage which results in an increase in ceded earned premium and lower net earned premium. We purchased XOL to cover events in excess of per occurrence limits based on the expected growth in exposure during the year. For the three months ended September 30, 2024 and 2023, $15.4 million and $14.3 million, respectively, was offset against earned premium for XOL.

Previous wording

For the six months ended June 30, 2024, net earned premium was $124.9 million, an increase of $88.8 million compared to $36.1 million for the six months ended June 30, 2023. This increase was due primarily to increases in gross earned premium due to year-over-year growth of our total book of business and higher retention of earned premium due to our 2023 and 2024 reinsurance treaties, partially offset by an increased cost of XOL premiums for our catastrophic coverage which results in an increase in ceded earned premium and lower net earned premium. We purchased XOL to cover events in excess of per occurrence limits based on the expected growth in exposure during the year. For the six months ended June 30, 2024 and 2023, $28.9 million and $25.6 million, respectively, was offset against earned premium for XOL.

Current wording

For the nine months ended September 30, 2024, net earned premium was $195.5 million, an increase of $126.5 million compared to $69.0 million for the nine months ended September 30, 2023. This increase was due primarily to increases in gross earned premium due to year-over-year growth of our total book of business and higher retention of earned premium due to our 2023 and 2024 reinsurance treaties, partially offset by an increased cost of XOL premiums for our catastrophic coverage which results in an increase in ceded earned premium and lower net earned premium. We purchased XOL to cover events in excess of per occurrence limits based on the expected growth in exposure during the year. For the nine months ended September 30, 2024 and 2023, $44.3 million and $39.9 million, respectively, was offset against earned premium for XOL.

Previous wording

The following table presents gross written premium, ceded written premium, net written premium, change in unearned premium, and net earned premium for the three and six months ended June 30, 2024 and 2023 (in millions).

Current wording

The following table presents gross written premium, ceded written premium, net written premium, change in unearned premium, and net earned premium for the three and nine months ended September 30, 2024 and 2023 (in millions).

Previous wording

For the three months ended June 30, 2024, commission income was $16.1 million, a decrease of $0.1 million, or 1%, compared to $16.2 million for the three months ended June 30, 2023. The decrease was due primarily to a decrease in ceding commissions of $4.0 million due to higher premium retention, which decreases ceding commissions and increases net earned premium. This decrease was partially offset by an increase in agency commissions of $2.5 million and carrier fronting fees of $1.0 million, both of which grew due to the year-over-year growth of our total book of business.

Current wording

For the three months ended September 30, 2024, commission income was $15.7 million, an increase of $1.5 million, or 11%, compared to $14.2 million for the three months ended September 30, 2023. The increase was due primarily to an increase in agency commissions of $2.3 million and carrier fronting fees of $0.5 million, both of which grew due to the year-over-year growth of our total book of business. This increase was partially offset by a decrease in ceding commissions of $0.8 million due to higher premium retention, which decreases ceding commissions and increases net earned premium.

Previous wording

For the six months ended June 30, 2024, commission income was $32.0 million, a decrease of $1.6 million, or 5%, compared to $33.6 million for the six months ended June 30, 2023. The decrease was due primarily to a decrease in ceding commissions of $10.6 million due to higher premium retention, which decreases ceding commissions and increases net earned premium. This decrease was partially offset by an increase in agency commissions of $6.1 million and carrier fronting fees of $2.7 million, both of which grew due to the year-over-year growth of our total book of business.

Current wording

For the nine months ended September 30, 2024, commission income was $47.7 million, a decrease of $0.1 million, or 0%, compared to $47.8 million for the nine months ended September 30, 2023. The decrease was due primarily to a decrease in ceding commissions of $11.4 million due to higher premium retention, which decreases ceding commissions and increases net earned premium, and a decrease in MGA commissions of $0.3 million. This decrease was partially offset by an increase in agency commissions of $8.4 million and carrier fronting fees of $3.2 million, both of which grew due to the year-over-year growth of our total book of business.

Previous wording

For the three months ended June 30, 2024, service and fee income was $3.0 million, a decrease of $0.8 million, or 21%, compared to $3.8 million for the three months ended June 30, 2023. The decrease was due primarily to a decrease in policy fees and fee sharing arrangements.

Current wording

For the three months ended September 30, 2024, service and fee income was $3.0 million, a decrease of $1.9 million, or 39%, compared to $4.9 million for the three months ended September 30, 2023. The decrease was due primarily to a decrease in policy fees and fee sharing arrangements.

Previous wording

For the six months ended June 30, 2024, service and fee income was $5.8 million, a decrease of $1.2 million, or 16%, compared to $7.0 million for the six months ended June 30, 2023. The decrease was due primarily to a decrease in policy fees and fee sharing arrangements.

Current wording

For the nine months ended September 30, 2024, service and fee income was $8.8 million, a decrease of $3.1 million, or 16%, compared to $11.9 million for the nine months ended September 30, 2023. The decrease was due primarily to a decrease in policy fees and fee sharing arrangements.

Previous wording

For the three months ended June 30, 2024, net investment income was $6.1 million, an increase of $0.7 million, compared to $5.4 million for the three months ended June 30, 2023. The increase was due primarily to an increase in yields and diversification. We are mainly invested in money market accounts, securities issued by the U.S. government and agencies, high-grade corporate securities, residential and commercial mortgage-backed securities, and other governmental related securities.

Current wording

For the three months ended September 30, 2024, net investment income was $6.2 million, an increase of $0.5 million, compared to $5.7 million for the three months ended September 30, 2023. The increase was due primarily to an increase in yields and diversification. We are mainly invested in money market accounts, securities issued by the U.S. government and agencies, high-grade corporate securities, residential and commercial mortgage-backed securities, and other governmental related securities.

Previous wording

For the six months ended June 30, 2024, net investment income was $12.0 million, an increase of $1.2 million, compared to $10.8 million for the six months ended June 30, 2023. The increase was due primarily to an increase in yields and diversification. We are mainly invested in money market accounts, securities issued by the U.S. government and agencies, high-grade corporate securities, residential and commercial mortgage-backed securities, and other governmental related securities.

Current wording

For the nine months ended September 30, 2024, net investment income was $18.2 million, an increase of $1.7 million, compared to $16.5 million for the nine months ended September 30, 2023. The increase was due primarily to an increase in yields and diversification. We are mainly invested in money market accounts, securities issued by the U.S. government and agencies, high-grade corporate securities, residential and commercial mortgage-backed securities, and other governmental related securities.

Previous wording

For the three months ended June 30, 2024, loss and loss adjustment expenses were $60.4 million, a decrease of $16.3 million, compared to $76.7 million for the three months ended June 30, 2023. The decrease was due primarily to an improvement in our net loss ratio due to improved terms on our reinsurance treaties and a lower impact of PCS events, which is partially offset by an increase in losses due to higher premium retention rates and the growth of our book of business.

Current wording

For the three months ended September 30, 2024, loss and loss adjustment expenses were $51.6 million, an increase of $15.1 million, compared to $36.5 million for the three months ended September 30, 2023. The increase was due primarily to an increase in losses due to higher premium retention rates and the growth of our book of business, which is partially offset by an improvement in our net loss ratio due to improved terms on our reinsurance treaties, and pricing and underwriting actions we have taken.

Previous wording

For the six months ended June 30, 2024, loss and loss adjustment expenses were $113.0 million, a decrease of $1.4 million, compared to $114.4 million for the six months ended June 30, 2023. The decrease was due primarily to an improvement in our net loss ratio due to improved terms on our reinsurance treaties and a lower impact of PCS events, which is partially offset by an increase in losses due to higher premium retention rates and the growth of our book of business.

Current wording

For the nine months ended September 30, 2024, loss and loss adjustment expenses were $164.6 million, an increase of $13.7 million, compared to $150.9 million for the nine months ended September 30, 2023. The increase was due primarily to an increase in losses due to higher premium retention rates and the growth of our book of business which is partially offset by an improvement in our net loss ratio due to improved terms on our reinsurance treaties, and pricing and underwriting actions we have taken.

Previous wording

For the three months ended June 30, 2024, insurance related expenses were $24.5 million, an increase of $5.7 million, or 30%, compared to $18.8 million for the three months ended June 30, 2023. The increase was due primarily to an increase in amortization of deferred direct acquisition costs of $5.7 million due to higher premium retention rates and the growth of our book of business. This was partially offset by a decrease in underwriting costs.

Current wording

For the three months ended September 30, 2024, insurance related expenses were $22.6 million, an increase of $2.3 million, or 11%, compared to $20.3 million for the three months ended September 30, 2023. The increase was due primarily to an increase in amortization of deferred direct acquisition costs of $4.4 million due to higher premium retention rates and the growth of our book of business, and an increase in amortization expense attributable to capitalized internal use software of $0.9 million. This was partially offset by a decrease in underwriting and other insurance related expenses.

Previous wording

For the six months ended June 30, 2024, insurance related expenses were $45.3 million, an increase of $10.8 million, or 31%, compared to $34.5 million for the six months ended June 30, 2023. The increase was due primarily to an increase in amortization of deferred direct acquisition costs of $11.2 million due to higher premium retention rates and the growth of our book of business. This was partially offset by a decrease in underwriting costs.

Current wording

For the nine months ended September 30, 2024, insurance related expenses were $67.9 million, an increase of $13.1 million, or 24%, compared to $54.8 million for the nine months ended September 30, 2023. The increase was due primarily to an increase in amortization of deferred direct acquisition costs of $15.6 million due to higher premium retention rates and the growth of our book of business, and an increase in amortization expense attributable to capitalized internal use software of $2.9 million. This was partially offset by a decrease in underwriting and other insurance related expenses.

Previous wording

Direct acquisition costs were $20.7 million and $44.9 million for the three and six months ended June 30, 2024, of which $8.1 million and $20.8 million were offset by ceding commission income.

Current wording

Direct acquisition costs were $20.5 million and $65.4 million for the three and nine months ended September 30, 2024, of which $8.8 million and $29.6 million were offset by ceding commission income.

Previous wording

Direct acquisition costs were $19.7 million and $36.0 million for the three and six months ended June 30, 2023, of which $12.8 million and $23.1 million were offset by ceding commission income.

Current wording

Direct acquisition costs were $24.3 million and $60.3 million for the three and nine months ended September 30, 2023, of which $17.0 million and $40.1 million were offset by ceding commission income.

Previous wording

For the three months ended June 30, 2024, technology and development expenses were $7.8 million, a decrease of $5.3 million, or 40%, compared to $13.1 million for the three months ended June 30, 2023. The decrease was due primarily to a decrease in employee-related costs of $5.3 million, including a decrease in stock-based compensation of $2.0 million, driven by a decrease in headcount.

Current wording

For the three months ended September 30, 2024, technology and development expenses were $7.0 million, a decrease of $4.9 million, or 41%, compared to $11.9 million for the three months ended September 30, 2023. The decrease was due primarily to a decrease in employee-related costs of $5.5 million, including a decrease in stock-based compensation of $1.9 million, driven by a decrease in headcount. This decrease is partially offset by a decrease of $1.6 million in capitalized employee-related costs.

Previous wording

For the six months ended June 30, 2024, technology and development expenses were $16.1 million, a decrease of $8.6 million, or 35%, compared to $24.7 million for the six months ended June 30, 2023. The decrease was due primarily to a decrease in employee-related costs of $8.7 million, including a decrease in stock-based compensation of $3.7 million, driven by a decrease in headcount.

Current wording

For the nine months ended September 30, 2024, technology and development expenses were $23.1 million, a decrease of $13.5 million, or 37%, compared to $36.6 million for the nine months ended September 30, 2023. The decrease was due primarily to a decrease in employee-related costs of $14.2 million, including a decrease in stock-based compensation of $5.7 million, driven by a decrease in headcount. This decrease is partially offset by a decrease of $3.3 million in capitalized employee-related costs.

Previous wording

For the six months ended June 30, 2024, sales and marketing expenses were $27.8 million, a decrease of $17.2 million, or 38%, compared to $45.0 million for the six months ended June 30, 2023. The decrease was due primarily to a decrease in advertising costs of $5.4 million and a decrease in employee-related costs of $5.8 million, including a decrease stock-based compensation of $3.3 million due to a decrease in headcount. The decrease was also due to the change in fair value of contingent consideration of $1.7 million and decrease in commission expense of $1.3 million.

Current wording

For the three months ended September 30, 2024, sales and marketing expenses were $12.5 million, a decrease of $6.4 million, or 34%, compared to $18.9 million for the three months ended September 30, 2023. The decrease was due primarily to a decrease in employee-related costs of $3.3 million, including a decrease in stock-based compensation of $1.6 million due to a decrease in headcount, and a decrease in advertising costs of $1.3 million. The decrease was also due to a decrease in commission expense of $0.7 million.

Previous wording

For the three months ended June 30, 2024, sales and marketing expenses were $13.4 million, a decrease of $9.2 million, or 41%, compared to $22.6 million for the three months ended June 30, 2023. The decrease was due primarily to a decrease in advertising costs of $2.4 million and a decrease in employee-related costs of $2.0 million, including a decrease in stock-based compensation of $0.9 million due to a decrease in headcount. The decrease was also due to the change in fair value of contingent consideration of $2.5 million and decrease in commission expense of $0.8 million.

Current wording

For the nine months ended September 30, 2024, sales and marketing expenses were $40.3 million, a decrease of $23.6 million, or 37%, compared to $63.9 million for the nine months ended September 30, 2023. The decrease was due primarily to a decrease in employee-related costs of $9.1 million, including a decrease stock-based compensation of $4.9 million due to a decrease in headcount, and a decrease in advertising costs of $6.8 million. The decrease was also due to the change in fair value of contingent consideration of $2.0 million and decrease in commission expense of $2.0 million.