References to the "Company," "our," "us" or "we" refer to Hippo Holdings Inc.
The following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with the unaudited condensed
consolidated financial statements and the notes thereto contained elsewhere in
this report. Certain information contained in the discussion and analysis set
forth below includes forward-looking statements that involve risks and
uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This
Quarterly Report on Form 10-Q (this
"Quarterly Report") includes forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). We have based
these forward-looking statements on our current expectations and projections
about future events. These forward-looking statements are subject to known and
unknown risks, uncertainties and assumptions about us that may cause our actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by such forward-looking statements. In some
cases, you can identify forward-looking statements by terminology such as "may,"
"should," "could," "would," "expect," "plan," "anticipate," "believe,"
"estimate," "continue," or the negative of such terms or other similar
expressions. Such statements include, but are not limited to, possible business
combinations, including the proposed Hippo Business Combination (as defined
below) , and the financing thereof, and related matters, as well as all other
statements other than statements of historical fact included in this Quarterly
Report. Factors that might cause or contribute to such a discrepancy include,
but are not limited to, those described in the Risk Factors section of Amendment
No. 1 to our Annual Report on Form
10-K/A
filed with the SEC on May 11, 2021, in the Hippo Business Combination Proxy
Statement/Prospectus (as defined below) and in our other filings with the
Securities and Exchange Commission (the "SEC"). Our filings with the SEC can be
accessed on the EDGAR section of the SEC's website at www.sec.gov. Except as
expressly required by applicable securities law, we disclaim any intention or
obligation to update or revise any forward-looking statements whether as a
result of new information, future events or otherwise.
Overview
We were a blank check company incorporated on October 2, 2020 as a Cayman
Islands exempted company for the purpose of effecting a merger, share exchange,
asset acquisition, share purchase, reorganization or similar business
combination with one or more businesses (the "Business Combination"). Our
sponsor is Reinvent Sponsor Z LLC, a Cayman Islands exempted limited liability
company (our "Sponsor").
Our registration statement for our initial public offering (the "Initial Public
Offering") was declared effective on November 18, 2020. On November 23, 2020, we
consummated our Initial Public Offering of 23,000,000 units (the "Units" and,
with respect to the Class A ordinary shares included in the Units, the "Public
Shares"), including 3,000,000 additional Units to cover over-allotments (the
"Over-Allotment Units"), at $10.00 per Unit, generating gross proceeds of
$230.0 million, and incurring offering costs of approximately $13.1 million,
inclusive of approximately $8.1 million in deferred underwriting commissions.
Substantially concurrently with the closing of the Initial Public Offering, we
consummated the private placement (the "Private Placement") of 4,400,000
warrants (each, a "Private Placement Warrant" and collectively, the "Private
Placement Warrants"), at a price of $1.50 per Private Placement Warrant to our
Sponsor, generating gross proceeds of $6.6 million.
Upon the closing of the Initial Public Offering and the Private Placement, an
aggregate of $230.0 million ($10.00 per Unit) of the net proceeds of the Initial
Public Offering and certain of the proceeds of the Private Placement was placed
in a trust account ("Trust Account") with Continental Stock Transfer & Trust
Company acting as trustee and invested in United States government treasury
bills with a maturity of 185 days or less or in money market funds investing
solely in U.S. Treasuries and meeting certain conditions under Rule
2a-7 under
the Investment Company Act, as determined by us, until the earlier of: (i) the
completion of a Business Combination and (ii) the distribution of the Trust
Account.

                                       20

--------------------------------------------------------------------------------


  Table of Contents
Recent Developments-Hippo Business Combination
On March 3, 2021, we announced that we entered into an Agreement and Plan of
Merger (the "Merger Agreement"), with RTPZ Merger Sub LLC, RTPZ Merger Sub Inc.,
a Delaware corporation and our direct wholly-owned subsidiary ("Merger Sub"),
and Hippo Enterprises Inc. ("Hippo"), a Delaware corporation.
The Merger Agreement provided that:

     •    at the closing of the transactions contemplated by the Merger Agreement
          (the "Closing"), upon the terms and subject to the conditions of the
          Merger Agreement and in accordance with the General Corporation Law of
          the State of Delaware, as amended (the "DGCL"), (i) Merger Sub merged
          with and into Hippo, the separate corporate existence of Merger Sub
          ceased and Hippo became the surviving corporation and a wholly owned
          subsidiary of the Company (the "First Merger") and (ii) immediately
          following the First Merger, Hippo (as the surviving corporation of the
          First Merger) merged with and into the Company, the separate corporate
          existence of Hippo ceased and the Company became the surviving
          corporation (the "Second Merger" and, together with the First Merger, the
          "Mergers");



     •    as a result of the Merger, among other things, all outstanding shares of
          capital stock of Hippo were canceled in exchange for the right to
          receive, in the aggregate, a number of shares of RTPZ Common Stock (as
          defined below) equal to the quotient obtained by dividing (i)
          $5,522,000,000 (representing the enterprise value of $5,000,000,000 plus
          Hippo's cash as of December 31, 2020 ($522,000,000)) by (ii) $10.00; and



     •    upon the effective time of the Domestication (as defined below), the
          Company was immediately renamed "Hippo Holdings Inc."


Prior to the Closing, subject to the approval of our shareholders, and in
accordance with the DGCL, Cayman Islands Companies Act (as revised) (the "CICA")
and our amended and restated memorandum and articles of association, we effected
a deregistration under the CICA and a domestication under Section 388 of the
DGCL (by means of filing a certificate of domestication with the Secretary of
State of Delaware), pursuant to which our jurisdiction of incorporation was
changed from the Cayman Islands to the State of Delaware (the "Domestication").
In connection with the Domestication, (i) each of the then issued and
outstanding Class A ordinary shares, par value $0.0001 per share, of the
Company, were converted automatically, on
a one-for-one basis,
into a share of common stock, par value $0.0001, of the Company (after its
Domestication) (the "RTPZ Common Stock"), (ii) each of the then issued and
outstanding Class B ordinary shares, par value $0.0001 per share, of the
Company, were converted automatically, on
a one-for-one basis,
into a share of RTPZ Common Stock, (iii) each then issued and outstanding
warrant to acquire the Company's Class A ordinary shares were converted
automatically into a warrant to acquire an equal number of shares of RTPZ Common
Stock (a "Domesticated RTPZ Warrant"), and (iv) each then issued and outstanding
unit of the Company were converted automatically into a share of RTPZ Common
Stock, on
a one-for-one basis,
and one-fifth of
one Domesticated RTPZ Warrant.
On March 3, 2021, concurrently with the execution of the Merger Agreement, we
entered into subscription agreements with certain investors (collectively, the
"PIPE Investors"), pursuant to, and on the terms and subject to the conditions
of which, the PIPE Investors have collectively subscribed for 55 million shares
of RTPZ Common Stock for an aggregate purchase price equal to $550 million (the
"PIPE Investment"). The PIPE Investment was consummated substantially
concurrently with the Closing, subject to the terms and conditions contemplated
by the applicable subscription agreements.
On March 3, 2021, our Sponsor entered into the Sponsor Agreement (the "Sponsor
Agreement") with the Company and Hippo, pursuant to which the parties thereto
agreed to, among other things, (i) certain vesting terms with respect to the
RTPZ Common Stock beneficially owned by our Sponsor as of the Domestication,
(ii) a
lock-up
of securities held by our Sponsor, (iii) the mandatory exercise of the
Domesticated RTPZ Warrants held by our Sponsor if (a) RTPZ elects to redeem the
Domesticated RTPZ Warrants held by RTPZ's public shareholders and (b) the last
reported sales price of the RTPZ Common Stock for any 20 Trading Days (as
defined in the Sponsor Agreement) within a period of 30 consecutive Trading Days
exceeds $25.00 per share and (iv) certain rights of Sponsor with respect to
board representation of the combined company at the Closing, in each case, on
the terms and subject to the conditions set forth in the Sponsor Agreement.

                                       21

--------------------------------------------------------------------------------


  Table of Contents
On July 30, 2021, as contemplated by the Merger Agreement we filed a notice of
deregistration with the Cayman Islands Registrar of Companies, together with the
necessary accompanying documents, and filed a certificate of incorporation and a
certificate of corporate domestication with the Secretary of State of the State
of Delaware, under which we were domesticated and continue as a Delaware
corporation, changing our name to "Hippo Holdings Inc." (the "Domestication").
As a result of and upon the effective time of the Domestication, among other
things, (1) each of the then issued and outstanding RTPZ Class A ordinary shares
converted automatically, on
a one-for-one basis,
into a share of Hippo Holdings common stock, (2) each of the then issued and
outstanding RTPZ Class B ordinary shares converted automatically, on
a one-for-one basis,
into a share of Hippo Holdings common stock, (3) each then issued and
outstanding RTPZ warrant converted automatically into a Hippo Holdings warrant
and (4) each issued and outstanding RTPZ unit separated automatically into one
share of Hippo Holdings common stock
and one-fifth of
one Hippo Holdings warrant.
On August 2, 2021, as contemplated by the Merger Agreement, RTPZ and Hippo
consummated the merger transactions contemplated by the Merger Agreement.
For more information about the Merger Agreement and the proposed Hippo Business
Combination, see our   Current Report on Form 8-K filed with the SEC on March 4,
2021   and the   final prospectus and proxy statement (Registration Number 333-
254691) related to the proposed Hippo Business Combination filed with the SEC on
July 9, 2021   (the "Hippo Business Combination Proxy Statement/Prospectus").
Unless specifically stated, this Quarterly Report does not contain the risks
associated with the proposed Hippo Business Combination, which are included in
the Hippo Business Combination Proxy Statement/Prospectus. Additionally, unless
specifically stated, this Quarterly Report does not give effect to the proposed
Hippo Business Combination.
Results of Operations
Our entire activity since inception through June 30, 2021 related to our
formation, the preparation for the Initial Public Offering, and since the
closing of the Initial Public Offering, the search for a prospective initial
Business Combination and the negotiation and execution of the proposed Hippo
Business Combination. We have neither engaged in any operations nor generated
any operating revenues to date. We will not generate any operating revenues
until after completion of our initial Business Combination, at the earliest. We
will generate
non-operating
income in the form of interest income on cash and cash equivalents. We expect to
incur increased expenses as a result of being a public company (for legal,
financial reporting, accounting and auditing compliance), as well as for due
diligence expenses. Additionally, we recognize
non-cash
gains and losses within other income (expense) related to changes in recurring
fair value measurement of our warrant liabilities at each reporting period.
For the three months ended June 30, 2021, we had a net loss of approximately
$2.6 million, which consisted of approximately $561,600 in general and
administrative costs and $2.1 million change in the fair value of derivative
warrant liabilities, partially offset by approximately $6,400 gain on the
investments held in the Trust Account.
For the six months ended June 30, 2021, we had a net loss of approximately
$5.1 million, which consisted of approximately $2.0 million in general and
administrative costs and $3.1 million change in the fair value of derivative
warrant liabilities, partially offset by approximately $59,000 gain on the
investments held in the Trust Account
Liquidity and Capital Resources
As of June 30, 2021, we had approximately $101,000 in our operating bank
account, a working capital deficit of approximately $397,000 and no interest
income available in the Trust Account to fund our working capital requirements,
subject to an annual limit of $165,000, and/or to pay our taxes, if any.

                                       22

--------------------------------------------------------------------------------


  Table of Contents
Our liquidity needs have been satisfied prior to the completion of the Initial
Public Offering through receipt of a $25,000 capital contribution from our
Sponsor in exchange for the issuance of the Founder Shares (as defined in Part
II, Item 2, Unregistered Sales of Equity Securities and Use of Proceeds from
Registered Securities) to our Sponsor and the advancement of funds by our
Sponsor to cover our expenses in connection with the Initial Public Offering. In
addition, our Sponsor advanced approximately $60,000 to us under a promissory
note (the "Note"). We repaid the Note in full as of November 23, 2020.
Subsequent to the consummation of the Initial Public Offering and Private
Placement, our liquidity needs have been satisfied from the proceeds from the
consummation of the Private Placement not held in the Trust Account. In
addition, in order to finance transaction costs in connection with a Business
Combination, our Sponsor or an affiliate of our Sponsor, or our officers and
directors may, but are not obligated to, provide us working capital loans
("Working Capital Loans"). As of June 30, 2021, there were no amounts
outstanding under any Working Capital Loan.
We continue to evaluate the impact of the
COVID-19
pandemic and have concluded that the specific impact is not readily determinable
as of the date of the condensed consolidated balance sheet. The unaudited
condensed consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
Contractual Obligations
We do not have any long-term debt obligations, capital lease obligations,
operating lease obligations, purchase obligations or long-term liabilities,
other than an agreement to pay support services fees to Reinvent Capital LLC
("Reinvent Capital') that total $625,000 per year for support and administrative
services ("Support Services Agreement"), as well as reimburse Reinvent Capital
for any
out-of-pocket
expenses it incurs in connection with providing services or for office space
under this agreement. As of June 30, 2021, we paid $0 to Reinvent Capital as
part of the Support Services Agreement and recognized approximately $156,000 and
$312,500 in the condensed consolidated statements of operations for the three
and six months ended June 30, 2021. As of June 30, 2021 and December 31, 2020,
we had Support Services fees of $312,500 and $0, respectively, in Due to Related
Party on the condensed consolidated balance sheet. We ceased paying these
quarterly fees and periodic cost reimbursements following the consummation of
the Hippo Business Combination.
Critical Accounting Policies
This management's discussion and analysis of our financial condition and results
of operations is based on our unaudited condensed consolidated financial
statements, which have been prepared in accordance with accounting principles
generally accepted in the United States of America. The preparation of our
unaudited condensed consolidated financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses and the disclosure of contingent assets and liabilities in
our unaudited condensed consolidated financial statements. On an ongoing basis,
we evaluate our estimates and judgments, including those related to fair value
of financial instruments and accrued expenses. We base our estimates on
historical experience, known trends and events and various other factors that we
believe to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions. We have identified
the following as its critical accounting policies:
Derivative Warrant Liabilities
We do not use derivative instruments to hedge exposures to cash flow, market or
foreign currency risks. We evaluate all of our financial instruments, including
issued stock purchase warrants, to determine if such instruments are derivatives
or contain features that qualify as embedded derivatives, pursuant to FASB ASC
Topic 480 "Distinguishing Liabilities from Equity" and FASB ASC Topic 815,
"Derivatives and Hedging" ("ASC 815"). The classification of derivative
instruments, including whether such instruments should be recorded as
liabilities or as equity, is
re-assessed
at the end of each reporting period.

                                       23

--------------------------------------------------------------------------------


  Table of Contents
The warrants issued in the Initial Public Offering and the Private Placement
Warrants are recognized as derivative liabilities in accordance with ASC 815.
Accordingly, we recognize the warrant instruments as liabilities at fair value
and adjusts the carrying value of the instruments to fair value at each
reporting period. The liabilities are subject to
re-measurement
at each balance sheet date until exercised. The initial fair value of Public
Warrants issued in connection with the Public Offering and the fair value of the
Private Placement Warrants have been estimated using Monte-Carlo simulations at
each measurement date. The fair value of the Public Warrants as of June 30, 2021
is based on observable listed prices for such warrants. Derivative warrant
liabilities are classified as
non-current
liabilities as their liquidation is not reasonably expected to require the use
of current assets or require the creation of current liabilities.
Class A Ordinary Shares Subject to Possible Redemption
Class A ordinary shares subject to mandatory redemption (if any) are classified
as liability instruments and are measured at fair value. Conditionally
redeemable Class A ordinary shares (including Class A ordinary shares that
feature redemption rights that are either within the control of the holder or
subject to redemption upon the occurrence of uncertain events not solely within
the Company's control) are classified as temporary equity. At all other times,
Class A ordinary shares are classified as shareholders' equity. Our Class A
ordinary shares feature certain redemption rights that are considered to be
outside of our control and subject to the occurrence of uncertain future events.
Accordingly, at June 30, 2021, 19,975,356 and 20,484,749, respectively, Class A
ordinary shares subject to possible redemption were presented as temporary
equity, outside of the shareholders' equity section of the Company's condensed
consolidated balance sheet.
Net Income (Loss) Per Ordinary Share
Net income (loss) per share is computed by dividing net income (loss) by the
weighted-average number of ordinary shares outstanding during the periods. We
have not considered the effect of the warrants sold in the Initial Public
Offering and the Private Placement to purchase an aggregate of 9,000,000 of the
Company's Class A ordinary shares in the calculation of diluted income (loss)
per share, since their inclusion would be anti-dilutive under the treasury stock
method.
Our unaudited condensed consolidated statements of operations include a
presentation of income (loss) per share for ordinary shares subject to
redemption in a manner similar to the
two-class
method of income (loss) per share. Net income (loss) per ordinary share, basic
and diluted for Class A ordinary shares are calculated by dividing the
unrealized gain on investments held in the Trust Account, net of applicable
taxes and interest to fund working capital requirements, subject to an annual
limit of $165,000, available to be withdrawn from the Trust Account, resulting
in income of approximately $6,408 and $59,300 for the three and six months ended
June 30, 2021, by the weighted average number of Class A ordinary shares
outstanding for the period. Net loss per ordinary share, basic and diluted for
Class B ordinary shares is calculated by dividing the net income (loss), less
income (loss) attributable to Class A ordinary shares by the weighted average
number of Class B ordinary shares outstanding for the period.
Recent Accounting Pronouncements
In August 2020, the FASB issued Accounting Standards Update ("ASU")
No. 2020-06, "Debt-Debt
with Conversion and Other Options
(Subtopic 470-20) and
Derivatives and Hedging-Contracts in Entity's Own Equity
(Subtopic 815-40): Accounting
for Convertible Instruments and Contracts in an Entity's Own
Equity" ("ASU 2020-06"), which
simplifies accounting for convertible instruments by removing major separation
models required under current GAAP. The ASU also removes certain settlement
conditions that are required for equity-linked contracts to qualify for the
derivative scope exception, and it simplifies the diluted earnings per share
calculation in certain areas. The Company adopted
ASU 2020-06 on
January 1, 2021. Adoption of the ASU did not impact the Company's financial
position, results of operations or cash flows.
Our management does not believe that any other recently issued, but not yet
effective, accounting standards if currently adopted would have a material
effect on the Company's unaudited condensed consolidated financial statements.
Off-Balance Sheet Arrangements
As of June 30, 2021, we did not have any
off-balance
sheet arrangements as defined in Item
303(a)(4)(ii) of Regulation S-K.

                                       24

--------------------------------------------------------------------------------


  Table of Contents
JOBS Act
The Jumpstart Our Business Startups Act of 2012 (the "JOBS Act") contains
provisions that, among other things, relax certain reporting requirements for
qualifying public companies. We qualify as an "emerging growth company" and
under the JOBS Act are allowed to comply with new or revised accounting
pronouncements based on the effective date for private (not publicly traded)
companies. We are electing to delay the adoption of new or revised accounting
standards, and as a result, we may not comply with new or revised accounting
standards on the relevant dates on which adoption of such standards is required
for
non-emerging
growth companies. As a result, the condensed consolidated financial statements
may not be comparable to companies that comply with new or revised accounting
pronouncements as of public company effective dates.
Additionally, we are in the process of evaluating the benefits of relying on the
other reduced reporting requirements provided by the JOBS Act. Subject to
certain conditions set forth in the JOBS Act, if, as an "emerging growth
company," we choose to rely on such exemptions we may not be required to, among
other things, (i) provide an auditor's attestation report on our system of
internal controls over financial reporting pursuant to Section 404, (ii) provide
all of the compensation disclosure that may be required of
non-emerging
growth public companies under the Dodd-Frank Wall Street Reform and Consumer
Protection Act, (iii) comply with any requirement that may be adopted by the
PCAOB regarding mandatory audit firm rotation or a supplement to the auditor's
report providing additional information about the audit and the financial
statements (auditor discussion and analysis) and (iv) disclose certain executive
compensation related items such as the correlation between executive
compensation and performance and comparisons of the CEO's compensation to median
employee compensation. These exemptions will apply for a period of five years
following the completion of our Initial Public Offering or until we are no
longer an "emerging growth company," whichever is earlier.
This may make comparison of the Company's condensed consolidated financial
statements with another public company that is neither an emerging growth
company nor an emerging growth company that has opted out of using the extended
transition period difficult or impossible because of the potential differences
in accounting standards used.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined by
Rule 12b-2 of
the Exchange Act and are not required to provide the information otherwise
required under this item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including
our principal executive officer and principal financial officer, we conducted an
evaluation of the effectiveness of our disclosure controls and procedures as of
the end of the fiscal quarter ended June 30, 2021, as such term is defined in
Rules 13a-15(e) and 15d-15(e) under
the Exchange Act. Based upon that evaluation and in light of the SEC Staff
Statement, our Certifying Officers concluded that, solely due to the Company's
misapplication of the accounting for the Company's warrants as liabilities
described in in our Annual Report on Form 10K/A for the year ended December 31,
2021, as filed with the SEC on May 17, 2021, our disclosure controls and
procedures were not effective as of June 30, 2021. In light of this material
weakness, we performed additional analysis as deemed necessary to ensure that
our unaudited condensed consolidated financial statements were prepared in
accordance with U.S. generally accepted accounting principles. Accordingly,
management believes that the condensed consolidated financial statements
included in this Quarterly Report present fairly in all material respects our
financial position, results of operations and cash flows for the period
presented
Disclosure controls and procedures are designed to ensure that information
required to be disclosed by us in our Exchange Act reports is recorded,
processed, summarized, and reported within the time periods specified in the
SEC's rules and forms, and that such information is accumulated and communicated
to our management, including our principal executive officer and principal
financial officer or persons performing similar functions, as appropriate to
allow timely decisions regarding required disclosure.

                                       25

--------------------------------------------------------------------------------

Table of Contents Changes in Internal Control over Financial Reporting We have commenced our remediation efforts in connection with the identification of the material weakness discussed above and have taken the following steps during the quarter ended June 30, 2021:



     •    we have implemented procedures intended to ensure that we identify and
          apply the applicable accounting guidance to all complex transactions; and



     •    we are establishing additional monitoring and oversight controls designed
          to ensure the accuracy and completeness of our consolidated financial
          statements and related disclosures.

While we took certain actions to remediate the material weakness, such remediation has not been fully evidenced. Accordingly, we continue to test our controls implemented in the second quarter to assess whether our controls are operating effectively. While there can be no assurance, we believe our material weakness will be remediated during the course of fiscal 2021. Other than the changes discussed above, there have been no changes to our internal control over financial reporting during the quarter ended June 30, 2021 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

© Edgar Online, source Glimpses