Q1 2024





Accelerating Top-line Growth; Favorable Mix-Shift

  • Consolidated TGP up 20% YoY, with Services and Insurance-as-a-Service ("IaaS") representing 80% of TGP
  • Services and IaaS driving TGP growth, up 37% and 25% YoY, respectively in Q1
  • Revenue up 114% YoY to $85 million; significantly better Revenue monetization in Hippo Home Insurance Program ("HHIP")

Continued HHIP Loss Ratio Improvement

  • HHIP Q1 gross loss ratio improved 21pp YoY to 80%
  • Q1 gross PCS loss ratio improved 20pp YoY; improved rate and reduced exposure to severe weather
  • Q1 gross Non-PCS loss ratio improved 1pp YoY, despite a mix shift away from high CAT areas

Generating Substantial Operating Leverage

  • GAAP S&M, T&D, and G&A, collectively declined from 135% of revenue a year ago to 48% in Q1
  • These expenses declined 24% YoY, a reduction of $13 million YoY

Net Loss and Adjusted EBITDA continuing to improve

  • Q1 GAAP net loss attributable to Hippo down 49% YoY to $36 million
  • Q1 Adjusted EBITDA loss down 62% YoY to $20 million

Financial Strength

Cash and investments, excluding restricted cash,

rose QoQ to $511 million; first cash flow positive


Spinnaker surplus of $197 million, up

from $169 million a year ago

Total Generated Premium ("TGP")






HHIP Gross

Loss Ratio1



Adjusted EBITDA (Loss)






Q1'22 Q1'23 Q1'24




Q1'22 Q1'23 Q1'24




Q1'22 Q1'23 Q1'24

Q1'22 Q1'23 Q1'24



Letter to Shareholders | Q1 2024

(1) Q1'22 HHIP Gross Loss Ratio excludes PAY reserve releases




Dear Shareholders,

We started off the new year on the right foot, building on the momentum gained during a transformative 2023, and are on track to achieve the 2024 operational and financial goals we discussed last quarter.

I am particularly excited to share that during Q1, we were able to continue reducing our CAT exposure and streamlining our operations without sacrificing overall growth. In fact, we accelerated top-line growth compared to last quarter.

I mentioned previously that we've been focused on meeting our customers' needs with third-party policies while we reduce our Hippo Home Insurance Program ("HHIP") exposure in areas where we have a lower risk appetite. Our team's efforts to find the right policy for each customer, regardless of the carrier, have allowed us to maintain high retention rates during this effort and our success helped drive accelerating Total Generated Premium ("TGP") growth in Q1 relative to last quarter. I expect this growth to accelerate further toward the end of the year as the benefits of reopening certain geographies and the expansion of our builder business overtake the short-term growth impact of reducing CAT exposure.

Without the efforts to rebalance our geographic exposure, our top-line growth could have been even higher, but these efforts are already improving underwriting results and our bottom line. No home insurance company will ever be immune from weather, and like others, we experienced losses in Q1 (March) of this year from a large hailstorm that affected Texas and Missouri.

Because of our ongoing efforts to reduce policy counts in these areas and to increase deductibles that further reduce our exposure, we estimate that direct losses from this event will be approximately 43% lower than what we would have experienced if the exact same event had occurred in March 2023. This is solid progress in a relatively short period of time and like we discussed last quarter, we feel confident that later this

year, after the changes work their way fully through our book, the reduction in expected losses will be even higher.

Letter to Shareholders | Q1 2024


Finally, toward the end of last year, we took aggressive actions to lower cost and drive efficiencies into our operations. We're now realizing the full benefits of these cost reductions in our Q1 financials, and those improvements contributed to our progress in reducing our adjusted EBITDA loss during the quarter, even though Q1 had seasonally higher weather-related losses than Q4 of last year.

The critical work that started in 2023 has continued into 2024, and our results from Q1 add to the growing evidence of our ability to efficiently grow our business while marching toward positive adjusted EBITDA. Our teams have worked hard during the quarter; I'm encouraged by the progress and excited to report that there is more to come.


Richard McCathron

President & CEO

Letter to Shareholders | Q1 2024




Q1'24 Highlights



In Q1 we took another step toward achieving positive adjusted EBITDA later this year, continuing the trends we have been discussing the past few quarters, and showing measurable progress compared to our results from last quarter and to those from a year ago.

Letter to Shareholders | Q1 2024


Total Generated Premium ("TGP")

In Q1, TGP grew to $294 million, a 20% increase year over year. This was an acceleration of growth compared to last quarter and was driven primarily by the success we've had offering third-party policies to our customers through our agency and First Connect platforms. Our Insurance-as-a-Service business continued to grow, up 25% year over year, while our efforts to reduce CAT exposure in our Hippo Home Insurance Program caused TGP from that segment to shrink by 29%. All of these results were in line with expectations and consistent with the guidance we shared last quarter for the full 2024 calendar year.

The parts of our business that are less exposed to underlying weather and underwriting volatility (IaaS and Services) rose as a percentage of our total TGP to 80%, up from 77% last quarter. As a reminder, we expect these trends to continue over the course of the year, with the Services and IaaS segments collectively representing ~85% of total TGP by Q4 of this year, at which point we should be starting to see TGP from HHIP beginning to grow again, especially in the builder channel, which will help bolster our total TGP growth heading into 2025.

Letter to Shareholders | Q1 2024



During Q1, we again grew Revenue significantly faster than TGP, with it rising 114% year over year to $85 million, up from $40 million in Q1 2023.

As we discussed last quarter, this growth comes from a combination of volume increases at the Services and IaaS segments, as well as significantly higher monetization of our TGP from HHIP.

Within HHIP, we were able to retain 58% of gross earned premium, up from 7% a year ago, and also benefited from a 33% year over year increase in rate on a written basis during the quarter.

Letter to Shareholders | Q1 2024


Loss and Loss Adjustment Expense

The biggest driver of our consolidated loss and loss adjustment expense, the HHIP segment, showed strong progress during the quarter. Our HHIP gross loss ratio improved by 21 percentage points to 80%, from 101% in Q1 of last year. This portfolio- level improvement, combined with the improvements to our reinsurance structure drove the even larger improvement in our HHIP net loss ratio, which came in at 100% during the quarter, an improvement of 455 percentage points versus Q1 of last year.

Our gross losses at HHIP were $19 million higher than last quarter because of seasonal weather patterns, but because of the increase in earned premium quarter over quarter, we now have the earned premium base to absorb these losses.

Driven primarily by the improvements in the Hippo program, our consolidated gross loss ratio improved 17 percentage points year over year to 59% and our consolidated net loss ratio improved 186 percentage points year over year to 87%.

Letter to Shareholders | Q1 2024


Fixed Expenses and Operating Leverage

Q1 represents the first quarter where we realized the full benefit of the cost-reduction actions and efficiency improvements we implemented late last year. These improvements show the substantial operating leverage we are achieving as we scale.

Relative to Q1 of last year, our GAAP sales and marketing, technology and development, and general and administrative expenses collectively declined by 87 percentage points of revenue, shrinking from 135% of Revenue last year to 48% of revenue this quarter.

Beyond the improvement relative to revenue, each of our sales and marketing, technology and development, and general and administrative line items declined in absolute dollar terms during the quarter relative to both Q1 2023 and Q4 2023. Collectively, these improvements drove a year over year reduction in expenses of more than $13 million on a GAAP basis, a decrease of 24% in absolute dollar terms, all while revenue grew 114%.

Letter to Shareholders | Q1 2024


Adjusted EBITDA

Our Q1 adjusted EBITDA loss of $19.8 million was a $32.3 million improvement year over year and a $2.5 million improvement quarter over quarter.

The year over year improvement in adjusted EBITDA was driven primarily by a 21 percentage point improvement in our HHIP gross loss ratio, improved reinsurance structure which brings our retained premium more in-line with the risk we are retaining, cost savings initiatives we initiated in Q4 of last year, and the growth in our Insurance-as-a-Service and Services segments.

The quarter over quarter improvement in adjusted EBITDA was driven mainly by realizing the full benefit of the cost saving initiatives in Q1 versus only a partial benefit last quarter, while the benefit of higher earned premium offset seasonally higher weather-related losses.

As a reminder, the definition of adjusted EBITDA that we are using and have used historically excludes net investment income, which amounted to $5.9 million in Q1.

Summary of 2024 Guidance (unchanged from prior quarter)

Looking forward to the full year 2024, we are reiterating the guidance we provided last quarter. As a reminder, 41% of our annual PCS-cat load is estimated to occur in Q2, historically our highest weather loss quarter. When we report Q2 results, we plan to provide updated guidance for the rest of 2024. Reiterating our guidance for 2024:

  • We expect TGP to grow to more than $1.3 billion
  • We expect revenue to grow to more than $340 million
  • We expect an adjusted EBITDA loss of between $41 and 51 million for the full year, with more than 90% of the losses coming in the first two quarters, and to be adjusted EBITDA positive in Q4

Letter to Shareholders | Q1 2024



  • Original Link
  • Original Document
  • Permalink


Hippo Holdings Inc. published this content on 02 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 02 May 2024 12:58:20 UTC.