Hippo Holdings Inc
For the period ended Mar 31, 2025. Filed May 7, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 7, 2025
HIPO$34.89+0.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-08.
0001828105-24-000056
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-07.
0001828105-25-000036
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 207 previous paragraphs and 172 current paragraphs.
109 unchanged; 27 reworded; 35 added; 70 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 15 previous and 14 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (35)
Current report
We maintain a comprehensive reinsurance program to manage risk exposure, reduce earnings volatility, and safeguard capital. By ceding a portion of our underwriting risk to highly rated reinsurers and alternative capital providers, we limit the financial impact of catastrophe events. Nevertheless, we remain ultimately responsible for policyholder claims should a reinsurer fail to perform.
Current report
Our reinsurance strategy includes a mix of quota share and excess of loss (“XOL”) structures, alongside collateralized protection through catastrophe bonds. We work with reinsurers rated “A-” (Excellent) or better by A.M. Best, or require appropriate collateral. Contracts often include provisions allowing for replacement of reinsurers whose financial condition deteriorates.
Current report
Our catastrophe reinsurance program supports property risks underwritten through Spinnaker Insurance Company on behalf of HHIP and third-party MGAs. These risks are protected by program-specific XOL treaties, and in some cases, quota share reinsurance. In addition to the program specific covers, Spinnaker is also protected by a corporate catastrophe cover, and participation in the Florida Hurricane Catastrophe Fund (FHCF). This structure is designed to provide protection against severe loss events across the portfolio, covering up to at least a 1-in-250-year return period threshold.
Current report
For business written by HHIP through Spinnaker, we have strategically retained more risk in recent periods by scaling back proportional reinsurance, reflecting our confidence in the portfolio’s underwriting performance. HHIP remains covered by standalone catastrophe XOL protection.
Current report
Additionally, we utilize collateralized reinsurance through Mountain Re Ltd., a Bermuda-based special purpose insurer. The catastrophe bonds issued through Mountain Re provide multi-year per occurrence coverage for a range of perils for business written through HHIP.
Current report
Commission Income, net includes agency commission which the Company earns from the unaffiliated carriers whose policies the Company sells, ceding commission on the premium it cedes to third-party reinsurers, fronting fees through the Company’s Insurance-as-a-Service business from the Managing General Agent (“MGA”) programs it supports, and MGA Commission from the multiple insurers for which we operate as an MGA.
Current report
Loss and loss adjustment expenses represent costs associated with insured claims, net of amounts ceded under reinsurance agreements. We utilize reinsurance to manage our exposure to large or unexpected losses and to support underwriting capacity for growth. Loss and loss adjustment expense is driven by the scope and duration of coverage we provide, as well as actual and expected loss experience. Estimates for loss and loss adjustment expenses incorporate actuarial methodologies and management judgment, including loss emergence during the reporting period and any revisions to prior period estimates. Our loss and loss adjustment expenses are generally influenced by the following factors:
Current report
•The frequency, severity, and geographic impact of catastrophe events affecting our insured portfolio;
Current report
•The volume and characteristics of non-catastrophe, attritional claims across our lines of business;
Current report
•Changes in our underwriting mix, including variations in policy type, risk profile, and exposure concentration;
Current report
•The terms and structure of our reinsurance program in effect during the occurrence of loss events;
Current report
•The regional distribution and underlying risk attributes of our insured exposures;
Current report
•Legal and regulatory changes that may affect claims costs or adjudication processes;
Current report
•Trends in litigation activity and legal defense spending;
Current report
•Inflationary pressures, particularly in residential construction materials and labor costs; and
Current report
•Shifts in judicial outcomes or jury behavior that influence the magnitude of loss settlements.
Current report
In prior periods, we reported Total Generated Premium (TGP) as a key operating metric to provide a comprehensive view of the premium volume across all our business platforms. We defined TGP as the sum of Gross Written Premium (GWP) and Gross Placed Premium, reflecting the total premium volume placed, regardless of how we structured reinsurance treaties or the amount of risk retained.
Current report
Beginning in the first quarter of 2025 we have discontinued reporting Total Generated Premium. This change aligns with our evolving business model, the sale of our independent agent platform First Connect, and internal performance measurement practices. Specifically, we have shifted our focus toward metrics that more closely correlate with financial performance under our current operating strategy and capital allocation approach. Additionally, as our business has matured, we believe that other metrics such as gross written premium, net earned premium, and commission income more effectively reflect the core operating drivers and provide investors with a clearer view of our performance and growth.
Current report
We believe that this change enhances the clarity and comparability of our financial disclosures and aligns with industry standards. For consistency, historical figures for Total Generated Premium may continue to be referenced in select investor materials for comparative purposes, but will no longer be updated in our periodic filings.
Current report
Gross Written Premium
Current report
The following table provides Gross Written premium for the periods presented (in millions)
Current report
Our Gross Written Premium for the three months ended March 31, 2025 increased 8% year-over-year to $210.9 million from $194.7 million for the three months ended March 31, 2024. The increase was driven primarily by the year-over-year growth in our Insurance-as-a-Service book of business.
Current report
For the three months ended March 31, 2025, adjusted EBITDA loss was $41.1 million, an increase of $21.3 million compared to a $19.8 million EBITDA loss for the three months ended March 31, 2024. The increase was due primarily to an increase in PCS events, primarily driven by a series of destructive wildfires that affected Los Angeles, California (“LA Wildfires”) which negatively impacted adjusted EBITDA by $45.4 million, this impact was partially offset by a growth in net earned premium due to higher premium retention compared to prior periods.
Current report
For the three months ended March 31, 2025, our net loss ratio was 106% net of a prior year favorable development of 3 percentage points relating to non-PCS events compared with 87% for the three months ended
Current report
March 31, 2024. The increase in PCS losses for the three months ended March 31, 2025 includes 51 percentage points related to the LA Wildfires. These increases were partially offset by a decrease in losses from wildfires other than the LA Wildfires. due primarily to the benefits of the pricing and underwriting actions we have taken. There was no material PCS or non-PCS prior year developments in the prior year quarter.
Current report
For the three months ended March 31, 2025, HPGLR was 121% compared to 80% for the three months ended March 31, 2024. The increase reflected the effects of higher severity PCS events experienced in the three months ended March 31, 2025 primarily from the LA Wildfires, which was partially offset by a decrease in our non-PCS losses due primarily to the benefits of the pricing and underwriting actions we have taken. The increase in PCS losses for the three months ended March 31, 2025 includes 56 percentage points related to the LA Wildfires.
Current report
Net Revenue
Current report
The following table set forth net revenue by segment for the periods presented:
Current report
Commission Income, Net
Current report
For the three months ended March 31, 2025, commission income was $14.4 million, a decrease of $1.5 million, or 9%, compared to $15.9 million for the three months ended March 31, 2024. The decrease was due primarily to a decrease in fronting fees and ceding commissions totaling $1.3 million due to higher premium retention.
Current report
For the three months ended March 31, 2025, loss and loss adjustment expenses were $92.4 million, an increase of $39.8 million, compared to $52.6 million for the three months ended March 31, 2024. The increase was due primarily to the impact from the LA Wildfires of $44.1 million in the three months ended March 31, 2025, which was partially offset by a decrease in our non-PCS losses due primarily to the benefits of the pricing and underwriting actions we have taken.
Current report
For the three months ended March 31, 2025, insurance related expenses were $30.2 million, an increase of $9.4 million, or 45%, compared to $20.8 million for the three months ended March 31, 2024. The increase was due primarily to an increase in acquisition expenses, net of $7.6 million due to our increased premium retention in our Insurance-as-a-Service segment..
Current report
In April 2025, our subsidiary, Spinnaker Insurance Company, entered into an agreement to issue a $50 million surplus note to several initial purchasers. The transaction is subject to regulatory approval by the Illinois Department of Insurance. If approved, the closing of the surplus note issuance would provide additional statutory capital and further support Spinnaker’s operational and growth initiatives. As of the date of this report, regulatory approval has not been received, and no proceeds have been funded.
Current report
Our critical accounting policies are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” in our Annual Report on Form 10-K and the notes to the unaudited interim condensed consolidated financial statements appearing elsewhere in this Quarterly Report. During the three months ended March 31, 2025, there were no material changes to our critical accounting policies from those discussed in our Annual Report on Form 10-K.
Current report
The last business day of the fiscal year of 2025 is the last day of the fiscal year following the fifth anniversary of our initial public offering. As a result, on December 31, 2025 we will cease to be an emerging growth company.
Removed paragraphs (70)
Previous report
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 report
We utilize reinsurance primarily to support the growth of our new and renewal insurance business, to reduce the volatility of our earnings, and to optimize our capital management.
Previous report
As an MGA, we underwrite homeowners insurance policies on behalf of our insurance company subsidiaries (Spinnaker and Spinnaker Specialty Insurance Company (“SSIC”)) and other non-affiliated third-party insurance carriers. These carriers purchase reinsurance from a variety of sources and in a variety of structures. In the basic form of this arrangement, fronting insurance carriers will typically cede a significant portion of the total insurance premium they earn from customers, in return for a proportional amount of reinsurance protection. This is known as “ceding” premium and losses through a “quota share” or “proportional” reinsurance treaty.
Previous report
The insurance carrier and the MGA are paid a percentage of the ceded premium as compensation for sales and marketing, underwriting, insurance, support, claims administration, and other related services (in totality, known as a ceding commission). As additional protection against natural catastrophes or other large loss events, the fronting carrier frequently purchases additional, non-proportional reinsurance.
Previous report
Without reinsurance protection, the insurer would shoulder all of the insurance risk itself and would need incremental capital to satisfy regulators and rating agencies requirements. Reinsurance allows a carrier to write more business while reducing its balance sheet exposure and volatility of earnings.
Previous report
Proportional Reinsurance Treaties — Hippo Home Insurance Program
Previous report
For our Hippo primary homeowners’ reinsurance program for policies with effective dates in 2024, we elected not to purchase proportional reinsurance. Based on our growing confidence in the profitability and predictability of our underwriting results, we decided to retain more of the exposure and associated premium.
Previous report
For business produced through our builder channel for policies with effective dates in 2024, we purchased proportional reinsurance from one third-party reinsurer and expect to retain approximately 85% of the premium and associated risk, before purchasing catastrophe protection. All reinsurance obligations are appropriately collateralized. The reinsurance contracts are subject to contingent commission adjustments and a loss occurrence limit, which aligns our interests with that of the reinsurer.
Previous report
Effective January 1, 2024, we also elected to cut off 25% of the reinsurer’s participation on the 2023 proportional reinsurance treaty and retain the remaining exposure and related premiums.
Previous report
In 2024, we continue to further protect our balance sheet through the purchase of non-proportional reinsurance described below in the section titled “Non-Proportional Reinsurance.”
Previous report
For our primary homeowners’ reinsurance program for policies with effective dates in 2023, we secured proportional reinsurance from a diverse panel of third-party reinsurers. All reinsurers are either rated “A-” Excellent or better by AM Best, or the reinsurance is appropriately collateralized. In 2023, we retained approximately 40% of the premium through our insurance company subsidiaries or our captive reinsurance company, RHS, before purchasing catastrophe protection. Additionally, the reinsurance contracts are subject to contingent commission adjustments and loss participation features, which align our interests with those of our reinsurers. Loss participation features may increase the amount of losses retained by our insurance company subsidiaries in excess of our pro rata participation.
Previous report
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 report
For our primary homeowners reinsurance program for policies with effective dates in 2022, we secured quota share reinsurance from a diverse panel of third-party reinsurers. All reinsurers are either rated “A-” Excellent or better by AM Best, or the reinsurance is collateralized. In 2022, we retained approximately 10% of the premium through our insurance company subsidiaries, including our captive reinsurance company, RHS. Additionally, the reinsurance contracts are subject to variable commission adjustments and loss participation features, including loss ratio caps and loss corridors, which align our interests with those of our reinsurers. Similar to the prior year, we saw increased use of loss participation features in the 2022 reinsurance agreements, which increased the amount of losses retained by our insurance company subsidiaries in excess of our pro rata participation in both the 2022 and 2023 fiscal periods.
Previous report
Non-Proportional Reinsurance — Hippo Home Insurance Program
Previous report
We also purchased non-proportional excess of loss catastrophe coverage (“XOL”) reinsurance which includes traditional reinsurance protection, state subsidized reinsurance protection, catastrophe bonds, and industry loss warranty products. Through our insurance company subsidiaries, we are exposed to the risk of natural catastrophe events that could occur on the risks arising from policies underwritten by us or other MGAs. We are also exposed to this risk through our captive reinsurer, which takes on a share of the risk underwritten by our MGA business.
Previous report
In May 2023, we secured new catastrophe protection through a per occurrence XOL reinsurance agreement with Mountain Re Ltd. (“Mountain Re”), an independent Bermuda company, licensed as a Special Purpose Insurer. The reinsurance agreement meets the requirements to be accounted for as reinsurance in accordance with the guidance for reinsurance contracts. In connection with the reinsurance agreement, Mountain Re issued notes (generally referred to as “catastrophe bonds”) to investors, consistent with the amount of coverage provided under the reinsurance agreement. The reinsurance agreement provides us with coverage through June 2026, and pursuant to the agreement, Mountain Re provides XOL reinsurance coverage to us for losses from a variety of perils, including named storms, fire following an earthquake, severe thunderstorms, and winter storms on business produced through the Hippo MGA. Under the terms of the reinsurance agreement, we are obligated to pay annual reinsurance premiums to Mountain Re for the reinsurance coverage which inures to the benefit of our traditional
Previous report
XOL program described below. Amounts payable under the reinsurance agreement with respect to any covered event cannot exceed our actual losses from such event.
Previous report
Our XOL program provides us protection from catastrophes that could impact a large number of insurance policies. We buy XOL so that the probability of losses from a single occurrence exceeding the protection purchased is no more than 0.4%, or equivalent to a 1 in 250-year return period when considered with the Mountain Re per occurrence, described above, corporate catastrophe, and Florida Hurricane Catastrophe Fund (the “FHCF”) XOL described below under “Other Reinsurance.” This reinsurance protects us from all but the most severe catastrophic events.
Previous report
Other Reinsurance
Previous report
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 report
Spinnaker purchased a corporate catastrophe XOL program that attaches above the individual programmatic reinsurance programs protecting the property business written by Hippo as well as the other MGAs. This treaty has a floating retention and attaches at the exhaustion point of the underlying programs’ specific reinsurance. The catastrophe bond, and the FHCFs, described above, inures to the benefit of this contract. This program provides us protection from catastrophes that could impact a large number of correlated insurance policies underwritten by us and our other MGAs. We buy this XOL so that the probability of losses from a single occurrence across the property portfolio exceeding the protection purchased is no more than 0.4%, or equivalent to a 1 in 250 year-return period. This reinsurance protects us from all but the most severe catastrophic events.
Previous report
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 report
Commission Income, Net Includes:
Previous report
a. MGA Commission: We operate as an MGA for multiple insurers. We design and underwrite insurance products on behalf of the insurers culminating in the sale of insurance policies. We earn recurring commission and policy fees associated with the policies we sell. We have underwriting authority and responsibility for administering claims (see Claim Processing Fees below) and we work with affiliated and unaffiliated carrier platforms who pay us a commission in exchange for the opportunity to take that risk on their balance sheets. Our performance obligation associated with these contracts is the placement of the policy, which is met on the effective date. Upon issuance of a new policy, we charge policy fees and inspection fees (see Service and Fee Income below), retain our share of commission, and remit the balance to the respective insurers. Subsequent commission adjustments arising from policy changes such as endorsements are recognized in the period when the adjustments occur. Cash received in advance of policy effective dates is recorded on the condensed consolidated balance sheets, representing our portion of commission and premium due to insurers and reinsurers, and held in trust for the benefit of the insurers and reinsurers as fiduciary liabilities.
Previous report
The MGA commission is subject to adjustments, higher or lower (commonly referred to as “commission slide”), depending on the underwriting performance of the policies placed by us. We are required to return a portion of our MGA commission due to commission slide on the policies placed as an MGA if the underwriting performance varies due to higher Hippo programs’ loss ratio from provisional performance of the Hippo programs’ loss ratio. We also return a portion of our MGA commission if the policies are cancelled before the term of the policy. Accordingly, we reserve for commission slide using estimated Hippo programs’ loss ratio performance, or a cancellation reserve as a reduction of revenue for each period presented in our statement of operations and comprehensive loss.
Previous report
b. Agency Commission: We also operate licensed insurance agencies that are engaged solely in the sale of policies, including non-Hippo policies. For these policies, we earn a recurring agency commission from the carriers whose policies we sell, which is recorded in the commission income, net line on our statements of operations and comprehensive loss. Similar to the MGA businesses, the performance obligation from the agency contracts is placement of the insurance policies.
Previous report
For both MGA and insurance agency activities, we recognize commission received from insurers for the sale of insurance contracts as revenue at a point in time on the policy effective dates.
Previous report
c. Ceding Commission: We receive commission based on the premium we cede to third-party reinsurers for the reimbursement for our acquisition and underwriting services. Excess ceding commission over the cost of acquisition is included in the commission income, net line on our statements of operations and comprehensive loss. For the policies that we write on our own carrier as MGA, we recognize this commission as ceding commission on the statement of operations and comprehensive loss. We earn commission on reinsurance premium ceded in a manner consistent with the recognition of the earned premium on the underlying insurance policies, on a pro-rata basis over the terms of the policies reinsured. We record the portion of ceding commission income, which represents reimbursement of successful direct acquisition costs related to the underlying policies, as an offset to the applicable direct acquisition costs.
Previous report
d. Carrier Fronting Fees: Through our Insurance-as-a-Service business, we earn fronting fees from the MGA programs we support. We earn fronting fees in a manner consistent with the recognition of the earned premium on the underlying insurance policies, on a pro-rata basis over the terms of the policies. This revenue is included in the commission income, net line on our statements of operations and comprehensive loss.
Previous report
e. Claim Processing Fees: As an MGA, we receive a fee that is calculated as a percent of the premium from the insurers in exchange for providing claims adjudication services. The claims adjudication services are provided over the term of the policy and recognized ratably over the same period. This revenue is included in the commission income, net line on our statements of operations and comprehensive loss.
Previous report
Loss and loss adjustment expenses represent the costs incurred for losses net of amounts ceded to reinsurers. We enter into reinsurance contracts to limit our exposure to potential losses as well as to provide additional capacity for growth. The expenses are a function of the size and term of the insurance policies and the loss experience and loss participation features associated with the underlying risks. Loss and LAE are based on actuarial assumptions and management judgements, including losses incurred during the period and changes in estimates from prior periods. Loss and LAE also include employee compensation (including stock-based compensation and benefits) of our claims processing teams, as well as allocated occupancy costs and related overhead based on headcount.
Previous report
Total Generated Premium
Previous report
We define Total Generated Premium as the aggregate written premium placed across all of our business platforms for the period presented. We measure Total Generated Premium as it reflects the volume of our business irrespective of choices related to how we structure our reinsurance treaties, the amount of risk we retain on our own balance sheet, or the amount of business written in our capacity as an MGA, agency, or as an insurance carrier/reinsurer. We calculate Total Generated Premium as the sum of:
Previous report
i)Gross written premium (“GWP”)—a GAAP measure defined above; and
Previous report
ii)Gross placed premium—premium of policies placed with third-party insurance companies, for which we do not retain insurance risk and for which we earn a commission payment, and policy fees charged by us to the policyholders on the effective date of the policy.
Previous report
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 report
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 report
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 report
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 report
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.
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Reworded paragraphs (27)
Previous wording
Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “we,” “our,” “Hippo” and “the Company” refer to the business and operations of Hippo Holdings Inc. and its consolidated subsidiaries. You should read the following discussion of our financial condition and results of operations in conjunction with our condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q and with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the Securities and Exchange Commission.
Current wording
Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “we,” “our,” “Hippo” and “the Company” refer to the business and operations of Hippo Holdings Inc. and its consolidated subsidiaries. You should read the following discussion of our financial condition and results of operations in conjunction with our condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q and with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC.
Previous wording
Our long-term growth will depend, in large part, on our continued ability to attract new customers to our platform. For Hippo home insurance policies, we seek to minimize the volatility of our portfolio and are currently in the process of analyzing overall underwriting results for the segment, taking actions as needed. Our short-term focus is on attracting new customers to our licensed insurance agency to purchase non-Hippo policies and to our home care offerings, although over time we expect to strategically return to Hippo underwritten policies as our underwriting actions take hold. We intend to continue to drive new customer growth by highlighting our consumer-focused approach to home protection and insurance across multiple distribution channels, regardless of whether the customer is a Hippo policyholder. In particular, we seek to grow by:
Current wording
Our long-term growth will depend, in large part, on our continued ability to attract new customers to our platform. For Hippo home insurance policies, we seek to minimize the volatility of our portfolio and are currently in the process of analyzing overall underwriting results for the segment, taking actions as needed. We intend to continue to drive new customer growth by highlighting our consumer-focused approach to home protection and insurance across multiple distribution channels, regardless of whether the customer is a Hippo policyholder. In particular, we seek to grow by:
Previous wording
The non-GAAP financial measures below have not been calculated in accordance with GAAP, should be considered in addition to results prepared in accordance with GAAP, and should not be considered as a substitute for, or superior to, GAAP results. In addition, adjusted EBITDA should not be construed as an indicator of our operating performance, liquidity, or cash flows generated by operating, investing, and financing activities, as there may be significant factors or trends that it fails to address. We caution investors that non-GAAP financial information—by its nature—departs from traditional accounting conventions. Therefore, its use can make it difficult to compare our current results with our results from other reporting periods and with the results of other companies.
Current wording
The non-GAAP financial measures below have not been calculated in accordance with GAAP, and should be considered in addition to results prepared in accordance with GAAP, and should not be considered as a substitute for, or superior to, GAAP results. In addition, adjusted EBITDA should not be construed as an indicator of our operating performance, liquidity, or cash flows generated by operating, investing, and financing activities, as there may be significant factors or trends that it fails to address. We caution investors that non-GAAP financial information—by its nature—departs from traditional accounting conventions. Therefore, its use can make it difficult to compare our current results with our results from other reporting periods and with the results of other companies.
Previous 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.
Current wording
For the three months ended March 31, 2025, our Gross Loss Ratio was 95% net of a prior year favorable development of 1 percentage point relating to non-PCS events compared with 59% for the three months ended March 31, 2024. The increase in PCS losses for the three months ended March 31, 2025 includes 47 percentage points related to the LA Wildfires. These increases were partially offset by a decrease in our non-PCS losses due primarily to the benefits of the pricing and underwriting actions we have taken. There was no material PCS or non-PCS prior year developments in the prior year quarter.
Previous wording
(1)Intersegment eliminations include commissions paid from Hippo Home Insurance Program for policies sold by the Company’s Services segment (revenue, cost, and other adjustments in respective business units eliminated as part of consolidation). Intersegment eliminations also include premiums written between the segments.
Current wording
(1)Intersegment eliminations include commissions paid from Hippo Home Insurance Program for policies sold by the Company’s Agency segment (revenue, cost, and other adjustments in respective business units eliminated as part of consolidation). Intersegment eliminations also include premiums written between the segments.
Previous 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.
Current wording
For the three months ended March 31, 2025, our Services segment, which earns fees and/or commission income without assuming underwriting risk or need for reinsurance, had revenue of $11.7 million, an increase of 3% from $11.4 million over the prior year quarter. Our adjusted operating loss was $3.5 million, a decrease of 34% compared to a loss of $5.3 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
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.
Current wording
Our Insurance-as-a-Service segment, which through our carrier, Spinnaker, leverages our capital and insurance licenses to provide capacity to MGAs, creating diversified income through fees, underwriting profits, and investment income. For the three months ended March 31, 2025, revenue was $38.9 million, an increase of 91% from $20.4 million over the prior year quarter. The growth was driven primarily by a combination of increased premium retention on certain programs and the increase in performance of existing programs. Adjusted operating loss was $0.5 million, a decrease of 111% compared to income of $4.7 million in the prior year quarter, due primarily to an increase in loss and loss adjustment expenses due to losses from the LA Wildfires of $12.1 million and increased premium retention. There was also an increase in insurance related expenses due to the increase in premium retention. These were partially offset by an increase in revenue as noted above.
Previous 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.
Current wording
For the three months ended March 31, 2025, our Hippo Homeowners Insurance Program had revenue of $61.9 million, an increase of 12% from $55.1 million over the prior year quarter. The increase in revenue was due primarily to higher net earned premium due to higher premium retention on our 2024 and 2025 reinsurance treaties. Adjusted operating loss was $38.0 million in the quarter, an increase of 88% compared to a loss of $20.2 million in the prior year quarter. The increase in adjusted operating loss was due primarily to an increase in loss and loss adjustment expenses due to the LA Wildfires of $32.0 million and seasonality of the book of business. These were partially offset by an increase in revenue as noted above.
Previous wording
Hippo Home Insurance Program Gross Loss Ratio (“HPGLR”) is a key performance indicator that represents our underwriting operational performance for the entire Total Generated Premium underwritten by Hippo as part of the Hippo Home Insurance Program. This ratio includes losses and premiums written and placed on Spinnaker (our carrier) as well as other carriers for Hippo policies (policies underwritten by the Hippo MGA). For the periods presented, changes in this ratio also impact our ceding commission revenue and loss participation features in our reinsurance treaties, which is included in loss and loss adjustment expense on our condensed consolidated statements of operations and comprehensive loss. This ratio is also used by our reinsurers and other carriers to make business decisions relating to the capacity of reinsurance and amount of ceding commission that would be available to Hippo. The lower the ratio, the better the economics for Hippo.
Current wording
Hippo Home Insurance Program Gross Loss Ratio (“HPGLR”) is a key performance indicator that represents our underwriting operational performance. This ratio includes losses and premiums written and placed on Spinnaker (our carrier) as well as other carriers for Hippo policies (policies underwritten by the Hippo MGA). For the periods presented, changes in this ratio also impact our ceding commission revenue and loss participation features in our reinsurance treaties, which is included in loss and loss adjustment expense on our condensed consolidated statements of operations and comprehensive loss. This ratio is also used by our reinsurers and other carriers to make business decisions relating to the capacity of reinsurance and amount of ceding commission that would be available to Hippo. The lower the ratio, the better the economics for Hippo.
Previous wording
Comparison of the Three and Nine Months Ended September 30, 2024 and 2023
Current wording
Comparison of the Three Months Ended March 31, 2025 and 2024
Previous 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.
Current wording
For the three months ended March 31, 2025, net earned premium was $87.3 million, an increase of $26.8 million compared to $60.5 million for the three months ended March 31, 2024. This increase was due primarily to increases in gross earned premium due to higher retention of earned premium, 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 March 31, 2025 and 2024, $15.2 million and $13.5 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 nine months ended September 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 months ended March 31, 2025 and 2024 (in millions).
Previous 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.
Current wording
For the three months ended March 31, 2025, service and fee income was $2.8 million, compared to $2.8 million for the three months ended March 31, 2024.
Previous 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.
Current wording
For the three months ended March 31, 2025, net investment income was $5.8 million, a decrease of $0.1 million, compared to $5.9 million for the three months ended March 31, 2024. 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 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.
Current wording
For the three months ended March 31, 2025, technology and development expenses were $8.1 million, a decrease of $0.2 million, or 2%, compared to $8.3 million for the three months ended March 31, 2024. The decrease was due primarily to a decrease in employee-related costs of $0.2 million.
Previous 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.
Current wording
For the three months ended March 31, 2025, sales and marketing expenses were $8.9 million, a decrease of $5.5 million, or 38%, compared to $14.4 million for the three months ended March 31, 2024. The decrease was due primarily to a decrease in employee-related costs of $2.2 million due to a decrease in headcount and a decrease in the change in fair value of contingent consideration of $2.1 million. The decrease was also due to a decrease in advertising costs of $0.6 million, and a decrease in amortization of acquired intangible assets of $0.3 million.
Previous wording
For the three months ended September 30, 2024, general and administrative expenses were $15.3 million, a decrease of $5.4 million, or 26%, compared to $20.7 million for the three months ended September 30, 2023. The decrease was due primarily to a decrease in stock-based compensation of $2.2 million, legal costs of $1.2 million, and corporate insurance costs of $0.7 million.
Current wording
For the three months ended March 31, 2025, general and administrative expenses were $16.5 million, a decrease of $1.8 million, or 10%, compared to $18.3 million for the three months ended March 31, 2024. The decrease was due primarily to a decrease in legal costs.
Previous wording
For the nine months ended September 30, 2024, impairment and restructuring charges were $3.6 million which primarily related to the impairment of a lease right-of-use asset due to abandonment of leased office space. There were no impairment and restructuring charges for the nine months ended September 30, 2023.
Current wording
There were no impairment and restructuring charges for the three months ended March 31, 2025. For the three months ended March 31, 2024, impairment and restructuring charges were $3.6 million which is primarily related to the impairment of a lease right-of-use asset due to abandonment of leased office space.
Previous wording
For the three months ended September 30, 2024, income tax expense was $0.0 million, an increase of $0.3 million compared to a benefit of $0.3 million for the three months ended September 30, 2023.
Current wording
For the three months ended March 31, 2025, income tax benefit was $0.2 million, a change of $0.4 million compared to an expense of $0.2 million for the three months ended March 31, 2024.
Previous wording
For the three months ended September 30, 2024, net loss attributable to Hippo was $8.5 million, a decrease of $44.6 million compared to $53.1 million for the three months ended September 30, 2023 due to the factors described above.
Current wording
For the three months ended March 31, 2025, net loss attributable to Hippo was $47.7 million, an increase of $12.0 million compared to $35.7 million for the three months ended March 31, 2024 due to the factors described above.
Previous wording
Our existing sources of liquidity include cash and cash equivalents and marketable securities. As of September 30, 2024, we had $191.2 million of cash, $39.7 million of restricted cash, and $354.3 million of available-for-sale fixed income securities and short-term investments.
Current wording
Our existing sources of liquidity include cash and cash equivalents and marketable securities. As of March 31, 2025, we had $140.9 million of cash, $39.3 million of restricted cash, and $387.6 million of available-for-sale fixed income securities and short-term investments.
Previous wording
In addition, we are a member of the Federal Home Loan Bank (FHLB) of New York, which provides secured borrowing capacity. Our borrowing capacity as of September 30, 2024, is $11.5 million, and there were no outstanding amounts under this agreement.
Current wording
In addition, we are a member of the Federal Home Loan Bank (FHLB) of New York, which provides secured borrowing capacity. Our borrowing capacity as of March 31, 2025, is $17.4 million, and there were no outstanding amounts under this agreement.
Previous wording
Cash provided by operating activities was $53.9 million for the nine months ended September 30, 2024, an increase of $97.8 million, from cash used in operating activities of $43.9 million for the nine months ended September 30, 2023. The increase was due primarily to an increase in revenues as well as working capital changes that benefited cash due to higher premium retention and improved terms on our reinsurance treaties. Cash used in operating activities represents payments for our operations including, payroll, loss and loss adjusted expenses and marketing activities.
Current wording
Cash used in operating activities was $35.6 million for the three months ended March 31, 2025, a change of $53.3 million, from cash provided by operating activities of $17.7 million for the three months ended March 31, 2024. The change was due primarily to an increase in net loss and decrease in cash provided by working capital. Cash used in operating activities represents payments for our operations including, payroll, loss and loss adjusted expenses and marketing activities.
Previous wording
Cash provided by investing activities was $2.5 million for the nine months ended September 30, 2024, due primarily to the maturities of investment securities and proceeds from the sale of a business, partially offset by purchases of investment securities.
Current wording
Cash used in investing activities was $11.0 million for the three months ended March 31, 2025, due primarily to the purchases of investment securities, partially offset by the maturities of investment securities.
Previous wording
Cash provided by investing activities was $79.6 million for the nine months ended September 30, 2023, due primarily to the maturities and sales of investment securities, partially offset by purchases of investment securities and an office building.
Current wording
Cash provided by investing activities was $58.5 million for the three months ended March 31, 2024, due primarily to the maturities of investment securities, partially offset by purchases of investment securities.
Previous wording
Cash used in financing activities was $20.6 million for the nine months ended September 30, 2024, primarily driven by distributions to noncontrolling interests and change in fiduciary liabilities, and taxes paid related to net share settlement of RSUs, partially offset by proceeds from common stock issuances.
Current wording
Cash used in financing activities was $6.0 million for the three months ended March 31, 2025, primarily driven by distributions to noncontrolling interests and change in fiduciary liabilities, and taxes paid related to net share settlement of RSUs, partially offset by proceeds from common stock issuances.
Previous wording
Cash used in financing activities was $10.8 million for the nine months ended September 30, 2023, primarily driven by distributions to noncontrolling interests, repurchases of shares, and taxes paid related to net share settlement of RSUs, partially offset by proceeds from common stock issuances.
Current wording
Cash used in financing activities was $8.0 million for the three months ended March 31, 2024, primarily driven by distributions to noncontrolling interests, repurchases of shares, and taxes paid related to net share settlement of RSUs, partially offset by proceeds from common stock issuances.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
The following table provides a reconciliation of Net Loss Ratio by named event PCS and non-PCS events.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
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.