Hippo (US:HIPO)2022-03-11 04:49Financial Data and Key Metrics Changes - Total Generated Premium grew 53% year-over-year to reach $153 million in Q4 and grew 50% year-over-year to $606 million for the full year [28] - Revenue of $32 million in Q4 was up 96% year-over-year [29] - Net loss attributable to Hippo was $60.7 million or $0.11 per share compared to a net loss of $54.1 million or $0.16 per share in the prior year quarter [41] Business Line Data and Key Metrics Changes - The gross loss ratio for Q4 was 89%, the best quarter of the year, benefiting from seasonality and reserve releases [11][32] - Catastrophic losses accounted for 25% of the gross loss ratio, with the largest event being the Marshall fire in Colorado [33] - The company expects to retain approximately 10% of the homeowners' premium that its MGA underwrites on the balance sheets of its insurance company subsidiaries [37] Market Data and Key Metrics Changes - The company is expanding its geographic presence from 37 states and plans to add major states in the northeast [9] - The partnership with home builders is the fastest-growing and most profitable channel, with significant improvements in attach rates [22][58] Company Strategy and Development Direction - The company aims to modernize home insurance and protect homeownership through technology and partnerships [8][45] - A multi-carrier strategy has been introduced to increase pricing flexibility and improve profitability [21] - The company is focused on delivering profitable growth while optimizing loss ratios [88][92] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term prospects despite challenges in the market, including inflation and catastrophic events [17][41] - The company anticipates a gross loss ratio under 100% for the full year 2022, down from 138% in 2021 [42] - Management highlighted the importance of technology in improving underwriting and customer experience [14][19] Other Important Information - The company successfully renewed its reinsurance program, expanding its panel of reinsurers from 9 to 11 [12][35] - The company is investing heavily in technology and development, with expenses increasing to $13.5 million in Q4 [39] - The company has appointed a new Chief Claims Officer to enhance claims service capabilities [16] Q&A Session Summary Question: Can you break down the gross loss ratio of 89%? - Management clarified that the large losses and PCS cat events are mutually exclusive, and the attritional loss ratio includes various factors [47][50] Question: How do you compare the profitability of builder partnerships versus financial services partnerships? - Management explained that builder partnerships are currently more profitable and have higher growth potential due to unique data integration and lower risk profiles [51][58] Question: What is the expected impact of reinsurance renewals on loss ratios? - Management indicated that the ceding commission remains similar to 2021, and they feel confident about the successful renewal despite a hardening market [94] Question: How do you expect retention to be affected by repricing actions? - Management noted that strong retention numbers indicate that customers are satisfied with the service, and they expect this to continue despite rate increases [96][99] Question: What is the expected loss ratio guidance for 2022? - Management expects significant year-over-year improvement in loss ratios, with a target of sub-100 for 2022 [92][88]