Summary of Hippo (HIPO) 2025 Investor Day Company Overview - **Company**: Hippo Holdings Group - **Event**: 2025 Investor Day held on June 12, 2025 - **Key Speakers**: Andrea Collins (CMO), Rick McAthron (CEO), Stuart Ellis (Chief Strategy Officer), Torben Ostergard (CEO of Spinnaker), Guy Zeltzer (CFO), Jesse Wilmot (CFO and COO of Spinnaker) Core Industry Insights - **Industry**: Insurance, specifically focusing on home insurance and hybrid fronting platforms - **Market Position**: Hippo is positioned as a tech-enabled insurance platform with a focus on underwriting and risk management Key Financial Highlights - **Previous Targets**: In 2022, Hippo set aggressive targets to achieve cash flow positivity and increase top-line revenue by over 3.5 times by the end of 2024 - **Current Performance**: Surpassed previous financial targets, with revenue guidance raised from $420-$450 million to $465-$475 million for the current fiscal year [12][13] - **Adjusted EBITDA Improvement**: Transitioned from a loss of $55 million in Q3 2022 to a positive adjusted EBITDA of $9 million, driven by improvements in underwriting profit and operational efficiency [11][14] Strategic Initiatives - **Business Transformation**: Shifted from a monoline homeowners company to an integrated platform with diversified lines of business, including casualty and new construction [30] - **Hybrid Fronting Platform**: Spinnaker is highlighted as a leading hybrid fronting platform, with a focus on geographic and product line diversification to reduce earnings volatility [33][34] - **Partnership with Baldwin Group**: The partnership is expected to triple access to builders and enhance the Hippo Home Insurance program, focusing on builder-sourced business [46][47] Risk Management and Underwriting - **Underwriting Improvements**: Achieved a cumulative rate increase of 82% through 173 new rate filings, significantly lowering the loss ratios from 34% to 19% for catastrophic risks and from 73% to 56% for non-catastrophic risks [18][22] - **Risk Management Strategy**: Emphasizes a disciplined approach to underwriting, focusing on positive expected loss ratios and utilizing data analytics for decision-making [39][90] Technology and Operational Efficiency - **Technology Investments**: Significant investments in technology to automate onboarding processes and improve operational efficiency, enhancing the ability to manage risk and underwriting [95][96] - **Operational Excellence**: A dedicated team focuses on streamlining workflows and processes to ensure scalability and favorable results [42][92] Future Outlook - **Financial Targets for 2028**: Aiming for $2 billion in gross written premium, over $125 million in adjusted net income, and more than 18% return on equity [45] - **Market Growth**: The MGA market is projected to grow, with Hippo well-positioned to capitalize on this growth through its hybrid fronting model [72] Additional Insights - **New Construction Focus**: Emphasizing the importance of new construction in underwriting, as it generally presents lower risk compared to older homes [63][64] - **Value Chain Benefits**: The partnership with Baldwin is expected to create a more frictionless experience for builders and customers, enhancing overall outcomes [68] This summary encapsulates the key points discussed during Hippo's 2025 Investor Day, highlighting the company's strategic direction, financial performance, and market positioning within the insurance industry.

Financial Data and Key Metrics Changes - In Q4 2024, Hippo achieved positive adjusted EBITDA of $8.5 million, exceeding previous guidance and representing a $31 million improvement year-over-year [29] - Q4 net income was positive $44 million, an $86 million improvement compared to Q4 of the previous year, with $46 million of this improvement attributed to a one-time gain from the sale of a majority stake in First Connect [28] - Total generated premium (TGP) grew by 10% year-over-year to $295 million, with revenue increasing 58% year-over-year to $102 million [22][23] Business Line Data and Key Metrics Changes - The core HHIP homeowners insurance program saw a gross loss ratio of 73% for the full year 2024, with a non-cat PCS loss ratio under 45% in Q4 [15] - The Insurance as a Service segment experienced over 40% annual revenue growth, maintaining a net loss ratio of 39% [15][22] - The HHIP gross loss ratio improved by three percentage points year-over-year to 50%, while the HHIP non-PCS loss ratio improved by 20 percentage points to 43% [25] Market Data and Key Metrics Changes - The company reported an 8% decline in the Hippo home insurance program segment due to efforts to manage exposure to high catastrophe geographies [22] - The net earned premium as a percentage of gross earned premium in the HHIP business rose to 83% in Q4, up from 29% a year ago [24] Company Strategy and Development Direction - Hippo is focused on expanding its network of partners and enhancing relationships with existing partners, particularly in the new homes channel [17] - The company aims to turn net income profitable by the end of 2025, with a revenue guidance increase to $465 million for 2025 [31][32] - The strategic focus includes maintaining high-quality underwriting standards while exploring new program opportunities [16][62] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of recent wildfires in California, estimating preliminary pretax cat losses of approximately $42 million, but emphasized that losses were primarily from legacy policies [11][12] - The company remains optimistic about its position in 2025, expecting substantial improvements in operating income despite the short-term impact of the wildfires [18] - Management expressed confidence in achieving continued improvements in gross and net loss ratios in 2025 [32] Other Important Information - The company announced a leadership change, with Guy Zeltser appointed as the new Chief Financial Officer effective March 10 [36] - Hippo plans to provide more detailed guidance on financial projections during its Investor Day event on June 12 [49] Q&A Session Summary Question: Strategy behind the sale of Eaton Fire subrogation rights - Management confirmed the sale was not due to liquidity needs but rather an attractive opportunity based on current market conditions [41][42] Question: Impact of early-year cat loss event on reinsurance protection - Management indicated that the existing reinsurance structure remains intact and the losses barely impacted the first layer of reinsurance [44][46] Question: Guidance for full year 2025 on bottom line basis - Management stated that detailed guidance would be provided during the Investor Day event, with some indications of operating expenses and revenue trends shared [48][50] Question: Update on California exposures and derisking efforts - Management clarified that losses from recent fires were not related to the new home business and emphasized ongoing efforts to reduce concentration exposures [56][58] Question: Competitive environment in Insurance as a Service - Management expressed confidence in the quality of their programs and partnerships, indicating a strong pipeline for growth [62][64] Question: Sales and marketing spend and seasonality into 2025 - Management noted improved efficiency in spending and indicated a disciplined approach to growth while aiming for net income positivity in 2025 [68][70]