Hippo (US:HIPO)2023-08-08 15:10Financial Data and Key Metrics Changes - The company reported a net loss attributable to Hippo of $108 million or $4.61 per share for the quarter, compared to a loss of $74 million or $3.25 per share in the prior year quarter [14] - Total generated premium (TGP) grew 56% year-over-year to $318 million, while revenue increased 66% year-over-year to $48 million [34] - Adjusted EBITDA loss was $88 million, an increase from $56 million a year ago, reflecting higher than expected weather losses [35][41] Business Line Data and Key Metrics Changes - In the Services segment, TGP was up 35% year-over-year, exceeding the full-year guidance of 30% for 2023 [15] - The Hippo Home Insurance Program segment saw TGP increase by 10% year-over-year, with a core gross loss ratio of 63% in the quarter, improving by 12 percentage points compared to the prior year [17][32] - The Insurance-as-a-Service segment experienced TGP growth of 112% year-over-year, driven by new and existing programs [31][36] Market Data and Key Metrics Changes - The company noted that 71% of new TGP came from outside its two largest states, Texas and California, indicating progress in geographic diversification [37] - The Texas exposure is now about a quarter of the book, down from over half two years ago, with deductibles having doubled over the last year [98][99] Company Strategy and Development Direction - The company aims to turn adjusted EBITDA positive by late 2024, with a focus on improving pricing, underwriting, and reducing exposure to catastrophic events [13][41] - The management emphasized the importance of innovation in the homeowners' insurance market, particularly in response to climate change and increasing weather-related risks [33][89] - The company is taking aggressive actions to mitigate future catastrophic exposure, including rate hikes and increased deductibles [39][90] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by frequent catastrophic events, indicating that some events are becoming nearly uninsurable [47] - The company remains confident in its long-term vision and believes it is well-positioned to adapt to the changing insurance landscape [30][90] - Management highlighted the need for collaboration among consumers, the industry, and regulators to address the impacts of climate change on insurance [89] Other Important Information - The company successfully sponsored its first catastrophe bond, raising $110 million, which reflects strong investor confidence in its approach [19] - The company expects revenue to increase by 49% for 2023, with TGP guidance raised to $1.1 billion [20][40] Q&A Session Summary Question: Can you quantify the level of tail events experienced this quarter? - Management indicated that they experienced 22 cat events, with over 80% of losses coming from five major events in Texas and Colorado [23] Question: What actions are being taken in response to the catastrophic events? - Management stated they are becoming more aggressive in pricing, location diversification, and underwriting actions to isolate the book from weather-related events [24] Question: How is the company managing its exposure in Texas? - Management confirmed that Texas exposure is now about a quarter of the book, down from over half, and that deductibles have doubled [98][99] Question: What is the impact of the recent catastrophic losses on future financials? - Management explained that the losses will impact the 2022 reinsurance treaty, but they are taking steps to mitigate future risks [62] Question: How is the company positioned in the current market? - Management noted that while traditional underwriters are backing off, new players are entering the market, and Hippo is well-positioned to take advantage of this shift [75]