UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended March 31, 2025
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from ______ to ______.
Commission file number 001-39711
(Exact name of registrant as specified in its charter)
(State of incorporation) | (I.R.S. Employer Identification No.) | |||||||||||||
(Address of Principal Executive Offices) | (Zip Code) | |||||||||||||
(650 ) 294-8463
(Registrant's telephone number, including area code)
150 Forest Ave, Palo Alto, California 94301
(Former Address)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer.” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:
Large accelerated filer | ☐ | ☒ | |||||||||
Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
Emerging growth company | |||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The registrant had 25,157,024 shares of common stock outstanding as of April 30, 2025.
Table of Contents
Page | ||||||||
Item 1 | ||||||||
Item 2 | ||||||||
Item 3 | ||||||||
Item 4 | ||||||||
Part II. Other Information | ||||||||
Item 1 | ||||||||
Item 1A | Risk Factors | |||||||
Item 2 | ||||||||
Item 3 | ||||||||
Item 4 | ||||||||
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q of Hippo Holdings Inc. (“Hippo,” the “Company,” “we,” “us” and “our”) contains statements that are forward-looking and as such are not historical facts. This includes, without limitation, statements regarding the financial position, business strategy and the plans and objectives of management for our future operations. These statements constitute projections, forecasts and forward-looking statements, and are not guarantees of performance. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. When used in this Quarterly Report on Form 10-Q, words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “strive,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this Quarterly Report on Form 10-Q may include, for example, statements about:
•our future results of operations and financial condition and our ability to attain profitability;
•our ability to grow our business and, if such growth occurs, to effectively manage such growth;
•customer satisfaction and our ability to attract, retain, and expand our customer base;
•our ability to maintain and enhance our brand and reputation;
•our business strategy, including our diversified distribution strategy and our plans to expand into new markets and new products;
•the effects of seasonal trends on our results of operations;
•our expectations about our book of business, including our ability to cross-sell and to attain greater value from each customer;
•our ability to compete effectively in our industry;
•our ability to maintain reinsurance contracts and our near- and long-term strategies and expectations with respect to cession of insurance risk;
•our ability to utilize our proprietary technology;
•our ability to underwrite risks accurately and charge profitable rates;
•our ability to leverage our data, technology and geographic diversity to help manage risk;
•our ability to protect our intellectual property;
•our ability to expand our product offerings or improve existing ones;
•our ability to attract and retain personnel, including our officers and key employees;
•potential harm caused by misappropriation of our data and compromises in cybersecurity;
•potential harm caused by changes in internet search engines’ methodologies;
•our expected use of cash on our balance sheet, our future capital needs and our ability to raise additional capital;
•fluctuations in our results of operations and operating metrics;
•our ability to receive, process, store, use and share data, and compliance with laws and regulations related to data privacy and data security;
•our ability to stay in compliance with laws and regulations that currently apply, or become applicable, to our business both in the United States and internationally;
•our public securities’ liquidity and trading; and
•other factors detailed in the section titled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024.
You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations, estimates, forecasts, and projections about future events and trends that we believe may affect our business, financial condition, results of operations, and our reputation. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report on Form 10-Q, we cannot guarantee that the future
results, levels of activity, performance, events, and circumstances reflected in the forward-looking statements will be achieved or occur at all. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors discussed in Part I, Item 2, “Management's Discussion and Analysis of Financial Condition and Results of Operations” and Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q as well as other documents that may be filed by us from time to time with the Securities and Exchange Commission (“SEC”). Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events, and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.
These forward-looking statements are based on information available as of the date of this Quarterly Report on Form 10-Q, and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. You should not place undue reliance on these forward-looking statements.
You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed as exhibits to our most recent Annual Report on Form 10-K and this Quarterly Report on Form 10-Q, completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of the forward-looking statements in this Quarterly Report on Form 10-Q by these cautionary statements.
HIPPO HOLDINGS INC.
Condensed Consolidated Balance Sheets
(In millions, except share and per share data)
| March 31, 2025 | December 31, 2024 | ||||||||||
(unaudited) | |||||||||||
| Assets | |||||||||||
| Investments: | |||||||||||
Fixed maturities available-for-sale, at fair value (amortized cost: $ | $ | $ | |||||||||
Short-term investments, at fair value (amortized cost: $ | |||||||||||
| Total investments | |||||||||||
| Cash and cash equivalents | |||||||||||
| Restricted cash | |||||||||||
Accounts receivable, net of allowance of $ | |||||||||||
| Reinsurance recoverable on paid and unpaid losses and LAE | |||||||||||
| Prepaid reinsurance premiums | |||||||||||
| Ceding commissions receivable | |||||||||||
| Capitalized internal use software | |||||||||||
| Intangible assets | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and stockholders’ equity | |||||||||||
| Liabilities: | |||||||||||
| Loss and loss adjustment expense reserve | $ | $ | |||||||||
| Unearned premiums | |||||||||||
| Reinsurance premiums payable | |||||||||||
| Provision for commission | |||||||||||
| Accrued expenses and other liabilities | |||||||||||
| Total liabilities | |||||||||||
Commitments and contingencies (Note 12) | |||||||||||
| Stockholders’ equity: | |||||||||||
Common stock, $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Accumulated deficit | ( | ( | |||||||||
| Total Hippo stockholders’ equity | |||||||||||
| Noncontrolling interest | |||||||||||
| Total stockholders’ equity | |||||||||||
| Total liabilities and stockholders’ equity | $ | $ | |||||||||
See Notes to the Condensed Consolidated Financial Statements
1
HIPPO HOLDINGS INC.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(In millions, except share and per share data)
(Unaudited)
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Revenue: | |||||||||||
| Net earned premium | $ | $ | |||||||||
| Commission income, net | |||||||||||
| Service and fee income | |||||||||||
| Net investment income | |||||||||||
| Total revenue | |||||||||||
| Expenses: | |||||||||||
| Losses and loss adjustment expenses | |||||||||||
| Insurance related expenses | |||||||||||
| Technology and development | |||||||||||
| Sales and marketing | |||||||||||
| General and administrative | |||||||||||
| Impairment and restructuring charges | |||||||||||
| Other (income) expense, net | ( | ||||||||||
| Total expenses | |||||||||||
| Loss before income taxes | ( | ( | |||||||||
Income tax (benefit) expense | ( | ||||||||||
| Net loss | ( | ( | |||||||||
| Net income attributable to noncontrolling interests, net of tax | |||||||||||
| Net loss attributable to Hippo | $ | ( | $ | ( | |||||||
| Other comprehensive income (loss): | |||||||||||
Change in net unrealized gain (loss) on investments, net of tax | ( | ||||||||||
| Comprehensive loss attributable to Hippo | $ | ( | $ | ( | |||||||
| Per share data: | |||||||||||
| Net loss attributable to Hippo - basic and diluted | $ | ( | $ | ( | |||||||
| Weighted-average shares used in computing net loss per share attributable to Hippo - basic and diluted | |||||||||||
| Net loss per share attributable to Hippo - basic and diluted | $ | ( | $ | ( | |||||||
See Notes to the Condensed Consolidated Financial Statements
2
HIPPO HOLDINGS INC.
Condensed Consolidated Statements of Stockholders’ Equity
(In millions, except share data)
(Unaudited)
| Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total Hippo Stockholders' Equity | Non controlling Interests | Total Stockholders’ Equity | ||||||||||||||||||||
| Shares | Amount | |||||||||||||||||||||||||
| Balance at January 1, 2025 | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||
| Net loss | — | — | — | — | ( | ( | ( | |||||||||||||||||||
| Other comprehensive income (loss) | — | — | — | — | — | |||||||||||||||||||||
| Issuance of common stock from stock plans and contingently issuable shares | — | — | — | — | ||||||||||||||||||||||
| Shares withheld related to net share settlement | — | — | ( | — | — | ( | — | ( | ||||||||||||||||||
| Stock-based compensation expense | — | — | — | — | — | |||||||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | — | — | ( | ( | ||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||
| Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total Hippo Stockholders' Equity | Non controlling Interests | Total Stockholders’ Equity | ||||||||||||||||||||
| Shares | Amount | |||||||||||||||||||||||||
| Balance at January 1, 2024 | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||
| Net loss | — | — | — | — | ( | ( | ( | |||||||||||||||||||
| Other comprehensive income (loss) | — | — | — | ( | — | ( | — | ( | ||||||||||||||||||
| Issuance of common stock from stock plans and contingently issuable shares | — | — | — | — | ||||||||||||||||||||||
| Shares withheld related to net share settlement | — | — | ( | — | — | ( | — | ( | ||||||||||||||||||
| Stock-based compensation expense | — | — | — | — | — | |||||||||||||||||||||
Other | — | — | — | — | — | — | ( | ( | ||||||||||||||||||
| Balance at March 31, 2024 | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||
See Notes to the Condensed Consolidated Financial Statements
3
HIPPO HOLDINGS INC.
Condensed Consolidated Statements of Cash Flows
(In millions)
(Unaudited)
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net cash (used in) provided by operating activities | $ | ( | $ | ||||||||
| Cash flows from investing activities: | |||||||||||
| Capitalized internal use software costs | ( | ( | |||||||||
| Purchases of property and equipment | ( | ( | |||||||||
Purchases of fixed maturities | ( | ( | |||||||||
Maturities of fixed maturities | |||||||||||
Sales of fixed maturities | |||||||||||
Purchases of short-term investments | ( | ( | |||||||||
Maturities of short-term investments | |||||||||||
| Net cash (used in) provided by investing activities | ( | ||||||||||
| Cash flows from financing activities: | |||||||||||
| Taxes paid related to net share settlement of equity awards | ( | ( | |||||||||
Proceeds from issuance of common stock | |||||||||||
| Payments of contingent consideration | ( | ( | |||||||||
Distributions to noncontrolling interests and other | ( | ( | |||||||||
| Net cash used in financing activities | ( | ( | |||||||||
| Net (decrease) increase in cash, cash equivalents, and restricted cash | ( | ||||||||||
| Cash, cash equivalents, and restricted cash at the beginning of the period | |||||||||||
| Cash, cash equivalents, and restricted cash at the end of the period | $ | $ | |||||||||
See Notes to the Condensed Consolidated Financial Statements
4
HIPPO HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Description of Business and Summary of Significant Accounting Policies
Description of Business
Hippo Holdings Inc., referred to herein as “Hippo” or the “Company” is an insurance holding company incorporated in Delaware. Hippo has subsidiaries that provide property and casualty insurance products to both individuals and business customers. The Company’s headquarters are located in San Jose, California.
Basis of Presentation and Consolidation
The interim condensed consolidated financial statements and accompanying notes of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and include the Company’s consolidated subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Certain information and disclosures normally included in condensed consolidated financial statements prepared in accordance with GAAP have been omitted accordingly.
The interim financial information is unaudited, but reflects all normal recurring adjustments that are, in the opinion of management, necessary to fairly present the information set forth herein. The interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. Interim results are not necessarily indicative of the results for a full year.
Use of Estimates
The preparation of the Company’s condensed consolidated financial statements in conformity with GAAP requires management to make estimates that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods. Significant items subject to such estimates and assumptions include, but are not limited to, loss and loss adjustment expense (“LAE”) reserves, provision for commission slide and cancellations, reinsurance recoverable on paid and unpaid losses and LAE, the fair values of investments, stock-based awards, contingent consideration liabilities, acquired intangible assets, deferred tax assets and uncertain tax positions, and revenue recognition. The Company evaluates these estimates on an ongoing basis. These estimates are informed by experience and other assumptions that the Company believes are reasonable under the circumstances. Actual results may differ significantly from these estimates.
Recent Accounting Pronouncements
Recently Adopted Accounting Pronouncements
In November 2023, the FASB issued ASU No. 2023-07, Improvements to Reportable Segment Disclosures. The ASU includes requirements that an entity disclose the title of the chief operating decision maker (CODM) and on an interim and annual basis, significant segment expenses and the composition of other segment items for each segment's reported profit. The standard also permits disclosure of additional measures of segment profit. This ASU is effective for public companies with annual periods beginning after December 15, 2023, and interim periods within annual period beginning after December 15, 2024, with early adoption permitted. The adoption of this accounting standard in the fourth quarter of fiscal 2024 did not have a significant impact on the Company’s condensed consolidated financial statements.
Accounting Pronouncements Not Yet Adopted
In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures, which requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions. This ASU is effective for public companies with annual periods beginning after December 15, 2024, with early adoption permitted. The Company is required to adopt the guidance for its Annual Report on Form 10-K for the year ended December 31, 2025. The Company is
5
HIPPO HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
currently evaluating the impact of these amendments on its disclosures. The Company will update its income tax disclosures upon adoption.
In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses, which requires additional disclosure of the nature of expenses included in the income statement in response to longstanding requests from investors for more information about an entity’s expenses. The new standard requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses. This ASU is effective for public companies with annual periods beginning after December 15, 2026, and interim periods within annual periods beginning after December 15, 2027. The requirements will be applied prospectively with the option for retrospective application. Early adoption is permitted.
6
HIPPO HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
2. Investments
The amortized cost and fair value of fixed maturities securities and short-term investments are as follows (in millions):
| March 31, 2025 | |||||||||||||||||||||||
| Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||||||
| Fixed maturities available-for-sale: | |||||||||||||||||||||||
| U.S. government and agencies | $ | $ | $ | ( | $ | ||||||||||||||||||
| States and other territories | ( | ||||||||||||||||||||||
| Corporate securities | ( | ||||||||||||||||||||||
| Residential mortgage-backed securities | ( | ||||||||||||||||||||||
| Commercial mortgage-backed securities | ( | ||||||||||||||||||||||
| Asset backed securities | |||||||||||||||||||||||
| Total fixed maturities available-for-sale | ( | ||||||||||||||||||||||
| Short-term investments: | |||||||||||||||||||||||
| U.S. government and agencies | |||||||||||||||||||||||
| Commercial paper | |||||||||||||||||||||||
| Corporate securities | |||||||||||||||||||||||
| Total short-term investments | |||||||||||||||||||||||
| Total | $ | $ | $ | ( | $ | ||||||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||
| Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||||||
| Fixed maturities available-for-sale: | |||||||||||||||||||||||
| U.S. government and agencies | $ | $ | $ | ( | $ | ||||||||||||||||||
| States and other territories | ( | ||||||||||||||||||||||
| Corporate securities | ( | ||||||||||||||||||||||
| Residential mortgage-backed securities | ( | ||||||||||||||||||||||
| Commercial mortgage-backed securities | ( | ||||||||||||||||||||||
| Asset backed securities | |||||||||||||||||||||||
| Total fixed maturities available-for-sale | ( | ||||||||||||||||||||||
| Short-term investments: | |||||||||||||||||||||||
| U.S. government and agencies | |||||||||||||||||||||||
| Commercial paper | |||||||||||||||||||||||
| Corporate securities | |||||||||||||||||||||||
| Total short-term investments | |||||||||||||||||||||||
| Total | $ | $ | $ | ( | $ | ||||||||||||||||||
7
HIPPO HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The following tables present the gross unrealized losses and related fair values for the Company’s investments in available-for-sale debt securities and short-term investments, grouped by duration of time in a continuous unrealized loss position as of March 31, 2025, and December 31, 2024 (in millions):
| March 31, 2025 | |||||||||||||||||||||||||||||||||||
| Less than 12 months | 12 months or more | Total | |||||||||||||||||||||||||||||||||
| Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | ||||||||||||||||||||||||||||||
| Fixed maturities available-for-sale: | |||||||||||||||||||||||||||||||||||
| U.S. government and agencies | $ | $ | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||
| States and other territories | ( | ( | |||||||||||||||||||||||||||||||||
| Corporate securities | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Residential mortgage-backed securities | ( | ( | |||||||||||||||||||||||||||||||||
| Commercial mortgage-backed securities | ( | ( | |||||||||||||||||||||||||||||||||
| Asset backed securities | |||||||||||||||||||||||||||||||||||
| Short-term investments: | |||||||||||||||||||||||||||||||||||
| U.S. government and agencies | |||||||||||||||||||||||||||||||||||
| Commercial paper | |||||||||||||||||||||||||||||||||||
| Corporate securities | |||||||||||||||||||||||||||||||||||
| Total | $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||||||||||||||
| Less than 12 months | 12 months or more | Total | |||||||||||||||||||||||||||||||||
| Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | ||||||||||||||||||||||||||||||
| Fixed maturities available-for-sale: | |||||||||||||||||||||||||||||||||||
| U.S. government and agencies | $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||
| States and other territories | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Corporate securities | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Residential mortgage-backed securities | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Commercial mortgage-backed securities | ( | ( | |||||||||||||||||||||||||||||||||
| Asset backed securities | |||||||||||||||||||||||||||||||||||
| Short-term investments: | |||||||||||||||||||||||||||||||||||
| U.S. government and agencies | |||||||||||||||||||||||||||||||||||
| Commercial paper | |||||||||||||||||||||||||||||||||||
Corporate securities | |||||||||||||||||||||||||||||||||||
| Total | $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||
The Company has determined that unrealized losses as of March 31, 2025 and December 31, 2024 resulted from the interest rate environment, rather than a deterioration of the creditworthiness of the issuers. Therefore, an
8
HIPPO HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
allowance for credit losses was not necessary as it is more likely than not that the Company will not be required to sell the investments before the recovery of the amortized cost basis or until maturity. As of March 31, 2025, none of the Company’s fixed maturity portfolio was unrated or rated below investment grade.
The amortized cost and fair value of fixed maturities securities by contractual maturity are as follows (in millions):
| March 31, 2025 | |||||||||||
| Amortized Cost | Fair Value | ||||||||||
| Due to mature: | |||||||||||
| One year or less | $ | $ | |||||||||
| After one year through five years | |||||||||||
| After five years through ten years | |||||||||||
| After ten years | |||||||||||
| Residential mortgage-backed securities | |||||||||||
| Commercial mortgage-backed securities | |||||||||||
| Asset backed securities | |||||||||||
| Total fixed maturities available-for-sale | $ | $ | |||||||||
Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.
Net realized gains and losses on fixed maturity securities were insignificant for the three months ended March 31, 2025 and 2024, respectively.
The Company’s net investment income is comprised of the following (in millions):
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Interest on cash and cash equivalents | $ | $ | |||||||||
| Fixed maturities income | |||||||||||
| Short-term investment income | |||||||||||
| Total gross investment income | |||||||||||
| Investment expenses | ( | ( | |||||||||
| Net investment income | $ | $ | |||||||||
Pursuant to certain regulatory requirements, the Company is required to hold assets on deposit with various state insurance departments for the benefit of policyholders. These special deposits are included in cash and cash equivalents, fixed maturities, or short-term investments on the condensed consolidated balance sheets. The carrying value of securities on deposit with state regulatory authorities total $12.7 million and $12.2 million as of March 31, 2025 and December 31, 2024, respectively.
9
HIPPO HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
3. Cash, Cash Equivalents, and Restricted Cash
The following table sets forth the cash, cash equivalents, and restricted cash (in millions):
| March 31, 2025 | December 31, 2024 | ||||||||||
| Cash and cash equivalents: | |||||||||||
| Cash | $ | $ | |||||||||
| Money market funds | |||||||||||
| Commercial paper | |||||||||||
| U.S. government and agencies | |||||||||||
| Total cash and cash equivalents | $ | $ | |||||||||
| Restricted cash: | |||||||||||
| Fiduciary assets | |||||||||||
| Letters of credit and cash on deposit | |||||||||||
| Total restricted cash | |||||||||||
| Total cash, cash equivalents, and restricted cash | $ | $ | |||||||||
4. Fair Value Measurement
When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions, and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:
•Level 1 — Quoted prices in active markets for identical assets or liabilities that are publicly accessible at the measurement date.
•Level 2 — Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
•Level 3 — Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.
10
HIPPO HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The following table summarizes the Company’s fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis (in millions):
| March 31, 2025 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Financial assets: | |||||||||||||||||||||||
| Cash, cash equivalents, and restricted cash | $ | $ | $ | $ | |||||||||||||||||||
| Fixed maturities available-for-sale: | |||||||||||||||||||||||
| U.S. government and agencies | |||||||||||||||||||||||
| States and other territories | |||||||||||||||||||||||
| Corporate securities | |||||||||||||||||||||||
| Residential mortgage-backed securities | |||||||||||||||||||||||
| Commercial mortgage-backed securities | |||||||||||||||||||||||
| Asset backed securities | |||||||||||||||||||||||
| Total fixed maturities available-for-sale | |||||||||||||||||||||||
| Short-term investments | |||||||||||||||||||||||
| U.S. government and agencies | |||||||||||||||||||||||
| Commercial paper | |||||||||||||||||||||||
| Corporate securities | |||||||||||||||||||||||
| Total short-term investments | |||||||||||||||||||||||
| Total financial assets | $ | $ | $ | $ | |||||||||||||||||||
| Financial liabilities: | |||||||||||||||||||||||
| Contingent consideration liability | $ | $ | $ | $ | |||||||||||||||||||
| Total financial liabilities | $ | $ | $ | $ | |||||||||||||||||||
11
HIPPO HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
| December 31, 2024 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Financial assets: | |||||||||||||||||||||||
| Cash, cash equivalents, and restricted cash | $ | $ | $ | $ | |||||||||||||||||||
| Fixed maturities available-for-sale: | |||||||||||||||||||||||
| U.S. government and agencies | |||||||||||||||||||||||
| States and other territories | |||||||||||||||||||||||
| Corporate securities | |||||||||||||||||||||||
| Foreign securities | |||||||||||||||||||||||
| Residential mortgage-backed securities | |||||||||||||||||||||||
| Commercial mortgage-backed securities | |||||||||||||||||||||||
| Asset backed securities | |||||||||||||||||||||||
| Total fixed maturities available-for-sale | |||||||||||||||||||||||
| Short-term investments | |||||||||||||||||||||||
| U.S. government and agencies | |||||||||||||||||||||||
| Commercial paper | |||||||||||||||||||||||
| Corporate securities | |||||||||||||||||||||||
| Total short-term investments | |||||||||||||||||||||||
| Total financial assets | $ | $ | $ | $ | |||||||||||||||||||
| Financial liabilities: | |||||||||||||||||||||||
| Contingent consideration liability | $ | $ | $ | $ | |||||||||||||||||||
| Total financial liabilities | $ | $ | $ | $ | |||||||||||||||||||
The Company’s policy is to recognize transfers into and transfers out of fair value hierarchy levels at the end of each reporting period. There were no other transfers between levels in the fair value hierarchy during the three months ended March 31, 2025.
Contingent Consideration
The contingent consideration, relating to the Company’s 2019 acquisition of North American Advantage Insurance Services, LLC, is re-valued to fair value at the end of each reporting period using the present value of future payments based on an estimate of revenue and customer renewals. North American Advantage Insurance Services, LLC’s ultimate parent company was Lennar Corporation, a related party of the Company. There is no limit to the maximum potential contingent consideration as the consideration is based on acquired customer retention. The table below presents the changes in the contingent consideration liability valued using Level 3 inputs (in millions):
| 2025 | 2024 | ||||||||||
| Balance as of January 1, | $ | $ | |||||||||
| Payments of contingent consideration | ( | ( | |||||||||
| Changes in fair value | ( | ||||||||||
| Balance as of March 31, | $ | $ | |||||||||
12
HIPPO HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
5. Intangible Assets
| March 31, 2025 | December 31, 2024 | |||||||||||||||||||||||||
| Weighted- Average Useful Life Remaining (in years) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||||
| (in millions) | (in millions) | |||||||||||||||||||||||||
| Agency and carrier relationships | $ | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||||
| State licenses and domain name | Indefinite | — | — | |||||||||||||||||||||||
| Customer relationships | ( | ( | ||||||||||||||||||||||||
| Other | ( | ( | ||||||||||||||||||||||||
| Total intangible assets, net | $ | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||||
Amortization expense related to intangible assets for the three months ended March 31, 2025 and 2024 was $0.9 million and $1.2 million, respectively. The amortization expense is included in sales and marketing expenses for customer relationships, agency and carrier relationships, and other on the condensed consolidated statements of operations and comprehensive loss.
6. Capitalized Internal Use Software
| March 31, 2025 | December 31, 2024 | ||||||||||
| (in millions) | |||||||||||
| Capitalized internal use software | $ | $ | |||||||||
| Less: accumulated amortization | ( | ( | |||||||||
| Total capitalized internal use software | $ | $ | |||||||||
Amortization expense related to capitalized internal use software for the three months ended March 31, 2025 and 2024 was $4.3 million and $3.9 million, respectively. The amortization expense is included in insurance related expenses on the condensed consolidated statements of operations and comprehensive loss.
13
HIPPO HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
7. Other Assets
| March 31, 2025 | December 31, 2024 | ||||||||||
| (in millions) | |||||||||||
| Property and equipment | $ | $ | |||||||||
| Prepaid expenses | |||||||||||
| Claims receivable | |||||||||||
| Lease right-of-use assets | |||||||||||
Deferred policy acquisition costs | |||||||||||
| Other | |||||||||||
| Total other assets | $ | $ | |||||||||
The Company amortized deferred policy acquisition costs of $19.1 million and $11.5 million for the three months ended March 31, 2025 and 2024, respectively.
8. Accrued Expenses and Other Liabilities
| March 31, 2025 | December 31, 2024 | ||||||||||
| (in millions) | |||||||||||
| Claim payments outstanding | $ | $ | |||||||||
| Lease liability | |||||||||||
| Advances from customers | |||||||||||
| Employee related accruals | |||||||||||
| Premium refund liability | |||||||||||
| Fiduciary liability | |||||||||||
| Contingent consideration liability | |||||||||||
| Other | |||||||||||
| Total accrued expenses and other liabilities | $ | $ | |||||||||
14
HIPPO HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
9. Loss and Loss Adjustment Expense Reserves
The reconciliation of the beginning and ending reserve balances for losses and loss adjustment expenses (“LAE”), net of reinsurance is summarized as follows for the three months ended March 31, (in millions):
| 2025 | 2024 | ||||||||||
| Reserve for losses and LAE gross of reinsurance recoverables on unpaid losses and LAE as of beginning of the period | $ | $ | |||||||||
| Less: Reinsurance recoverables on unpaid losses and LAE | ( | ( | |||||||||
| Reserve for losses and LAE, net of reinsurance recoverables as of beginning of the period | |||||||||||
| Add: Incurred losses and LAE, net of reinsurance, related to: | |||||||||||
| Current year | |||||||||||
| Prior years | ( | ||||||||||
| Total incurred | |||||||||||
| Deduct: Loss and LAE payments, net of reinsurance, related to: | |||||||||||
| Current year | |||||||||||
| Prior years | |||||||||||
| Total paid | |||||||||||
| Reserve for losses and LAE, net of reinsurance recoverables at end of period | |||||||||||
| Add: Reinsurance recoverables on unpaid losses and LAE at end of period | |||||||||||
| Reserve for losses and LAE gross of reinsurance recoverables on unpaid losses and LAE as of end of the period | $ | $ | |||||||||
Loss development occurs when actual losses incurred vary from the Company’s previously developed estimates, which are established through the Company’s loss and LAE reserve estimate processes.
Net incurred losses and LAE experienced favorable development of $3.0 million for the three months ended March 31, 2025. The prior period development for the three months ended March 31, 2025 of $3.0 million was driven primarily by favorable net loss development relating to the 2024 and prior accident years, resulting in a net release of $2.9 million from attritional reserves and $0.1 million from catastrophe reserves. These changes are primarily a result of ongoing analysis of claims emergence patterns and loss trends.
The prior period development for the three months ended March 31, 2024 experienced an insignificant amount of development for the three months ended March 31, 2024.
10. Reinsurance
The Company maintains a comprehensive reinsurance program to manage risk exposure, reduce earnings volatility, and safeguard capital. By ceding a portion of its underwriting risk to highly rated reinsurers and alternative capital providers, the Company limits the financial impact of catastrophe events. Nevertheless, the Company remains ultimately responsible for policyholder claims should a reinsurer fail to perform.
The Company’s reinsurance strategy includes a mix of quota share and excess of loss (“XOL”) structures, alongside collateralized protection through catastrophe bonds. The Company works with reinsurers rated “A-” (Excellent) or better by A.M. Best, or require appropriate collateral. Contracts often include provisions allowing for replacement of reinsurers whose financial condition deteriorates.
The Company’s catastrophe reinsurance program supports property risks underwritten through Spinnaker Insurance Company on behalf of Hippo Home Insurance Program (“HHIP”) and third-party MGAs. These risks are protected by program-specific XOL treaties, and in some cases, quota share reinsurance. In addition to the program specific covers, Spinnaker is also protected by a corporate catastrophe cover, and participation in the Florida
15
HIPPO HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Hurricane Catastrophe Fund (FHCF). This structure is designed to provide protection against severe loss events across the portfolio, covering up to at least a 1-in-250-year return period threshold.
For business written by HHIP through Spinnaker, the Company has strategically retained more risk in recent periods by scaling back proportional reinsurance, reflecting the Company’s confidence in the portfolio’s underwriting performance. HHIP remains covered by standalone catastrophe XOL protection.
Additionally, we utilize collateralized reinsurance through Mountain Re Ltd., a Bermuda-based special purpose insurer. The catastrophe bonds issued through Mountain Re provide multi-year per occurrence coverage for a range of perils for business written through HHIP.
The following tables reflect amounts affecting the condensed consolidated statements of operations and comprehensive loss for reinsurance as of and for the three months ended March 31, 2025, and 2024 (in millions).
| For the Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||||||||||||||
| Written premiums | Earned premiums | Loss and LAE incurred | Written premiums | Earned premiums | Loss and LAE incurred | ||||||||||||||||||||||||||||||
| Direct | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Assumed | |||||||||||||||||||||||||||||||||||
| Gross | |||||||||||||||||||||||||||||||||||
| Ceded | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||
| Net | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
As of March 31, 2025 and December 31, 2024, a provision for sliding scale commissions of $27.8 million and $34.2 million, respectively, is included in provision for commission on the condensed consolidated balance sheets. As of March 31, 2025 and December 31, 2024, a receivable for sliding scale commissions of $14.7 million and $3.6 million, respectively, is included in ceding commissions receivable on the condensed consolidated balance sheets.
As of March 31, 2025 and December 31, 2024, a provision for loss participation features of $33.7 million and $41.6 million, respectively, was recorded as a contra-asset in reinsurance recoverable on the condensed consolidated balance sheets. The decrease is due primarily to settlements of the Company’s 2024 and prior year’s loss participation features with the Company’s participating reinsurers.
16
HIPPO HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
11. Geographical Breakdown of Gross Written Premium
Gross written premium by state is as follows (in millions):
| Three Months Ended March 31, | ||||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||
| Amount | % of GWP | Amount | % of GWP | |||||||||||||||||||||||
| State | ||||||||||||||||||||||||||
| California | $ | % | $ | % | ||||||||||||||||||||||
| Texas | % | % | ||||||||||||||||||||||||
| Florida | % | % | ||||||||||||||||||||||||
| Illinois | % | % | ||||||||||||||||||||||||
| Georgia | % | % | ||||||||||||||||||||||||
| South Carolina | % | % | ||||||||||||||||||||||||
| New York | % | % | ||||||||||||||||||||||||
| Colorado | % | % | ||||||||||||||||||||||||
| New Jersey | % | % | ||||||||||||||||||||||||
| Ohio | % | % | ||||||||||||||||||||||||
| Other | % | % | ||||||||||||||||||||||||
| Total | $ | % | $ | % | ||||||||||||||||||||||
12. Commitments and Contingencies
Purchase Commitments
As of March 31, 2025, the Company has total minimum purchase commitments, which must be made during the next three years , of $7.3 million.
Legal Proceedings
From time to time, the Company may become involved in litigation or other legal proceedings. The Company is routinely named in litigation involving claims from policyholders. Legal proceedings relating to claims are reserved in the normal course of business. The Company does not believe it is a party to any pending litigation or other legal proceedings that are likely to have a material adverse effect on the Company’s business, financial condition or results of operations. Regardless of outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors.
17
HIPPO HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
13. Stockholders’ Equity
Common Stock
The Company’s common stock trades on the New York Stock Exchange (“NYSE”) under the ticker symbol “HIPO”. Pursuant to its Certificate of Incorporation, the Company is authorized to issue 80 million shares of common stock, with a par value of $0.0001 per share. Each share of common stock is entitled to one vote. The holders of the common stock are also entitled to receive dividends whenever funds are legally available and when declared by the board of directors. No dividends have been declared or paid since inception.
Stock Options
The following table summarizes option activity under the plans:
| Options Outstanding | Weighted-Average Remaining | Aggregate Intrinsic Value (In Millions) | |||||||||||||||||||||
| Number of Shares | Weighted Average Exercise Price | Contract Term (In Years) | |||||||||||||||||||||
Outstanding as of December 31, 2024 | $ | $ | |||||||||||||||||||||
| Granted | |||||||||||||||||||||||
| Exercised | ( | ||||||||||||||||||||||
| Cancelled/Expired | ( | — | |||||||||||||||||||||
| Outstanding as of March 31, 2025 | $ | ||||||||||||||||||||||
| Vested and exercisable as of March 31, 2025 | $ | $ | |||||||||||||||||||||
The aggregate intrinsic value of options exercised during the three months ended March 31, 2025 and 2024 was $1.1 million and $0.4 million, respectively, and is calculated based on the difference between the exercise price and the fair value of the Company’s common stock as of the exercise date. There were no
Total unrecognized compensation cost of $0.4 million as of March 31, 2025 is expected to be recognized over a weighted-average period of 1.1 years.
Restricted Stock Units and Performance Restricted Stock Units
The Company grants service based RSUs and performance based RSUs (“PRSUs”) as part of the Company’s equity compensation plans. The Company measures RSU and PRSU expense for awards granted based on the estimated fair value of those awards at the grant date. To estimate the fair value of PRSUs containing a market condition, the Company used the Monte Carlo valuation model. The fair value of all other awards is based on the closing price of the Company’s common stock as reported on the NYSE on the date of grant. The RSUs generally vest over a period of to four years . The PRSUs vest based on the level of achievement of the performance goals and continued employment with the Company over a to four year performance period.
During the three months ended March 31, 2025, the Company granted PRSUs to its CEO. Vesting is based on the Company’s total shareholder return (“TSR”) relative to a peer group over a three-year period. Between 0 % and 100 % of the target shares may vest based on performance. The awards are classified as equity and were valued at grant using a Monte Carlo simulation. Expense is recognized over the service period regardless of TSR outcome, provided continued employment. The weighted-average grant-date fair value was $24.08 per unit. Total compensation expense expected to be recognized over the three-year period is $1 million.
Stock-based compensation expense for RSUs is recognized based on the straight-line basis over the employee requisite service period. Stock-based compensation expense for PRSUs is recognized on a graded accelerated basis over the employee requisite service period. The Company accounts for forfeitures as they occur.
The following table summarizes the RSU and PRSU activity for the three months ended March 31, 2025:
18
HIPPO HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
| Number of Shares | Weighted Average Grant-Date Fair Value per Share | ||||||||||
Unvested and outstanding as of December 31, 2024 | $ | ||||||||||
| Granted | |||||||||||
| Released | ( | ||||||||||
| Canceled and forfeited | ( | ||||||||||
Unvested and outstanding as of March 31, 2025 | $ | ||||||||||
Total unrecognized compensation cost related to unvested RSUs and PRSUs is $43.4 million as of March 31, 2025, and it is expected to be recognized over a weighted-average period of 1.7 years.
2021 Employee Stock Purchase Plan
The Company adopted the 2021 Employee Stock Purchase Plan (the “2021 ESPP”), which is designed to allow eligible employees of the Company to purchase shares of the Company’s common stock with their accumulated payroll deductions at a price equal to 85 % of the lesser of the fair market value on the first business day of the offering period or on the designated purchase date of the offering period, up to a maximum purchase amount of $25,000 during the calendar year. The 2021 ESPP offers a six-month look-back feature as well as an automatic reset feature that provides for an offering period to be reset to a new lower-priced offering if the offering price of the new offering period is less than that of the current offering period. No shares were issued under the 2021 ESPP during the three months ended March 31, 2025 and 2024. In addition, the number of shares available for issuance under the 2021 ESPP is increased annually on January 1 of each calendar year ending in 2031, by an amount equal to the lesser of (i) one percent of the shares outstanding (on a converted basis) on the last day of the immediately preceding fiscal year and (ii) such number of shares as may be determined by the board of directors.
Stock-Based Compensation
Total stock-based compensation expense, classified in the accompanying condensed consolidated statements of operations and comprehensive loss was as follows (in millions):
| Three Months Ended | |||||||||||
| March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Losses and loss adjustment expenses | $ | $ | |||||||||
| Insurance related expenses | |||||||||||
| Technology and development | |||||||||||
| Sales and marketing | |||||||||||
| General and administrative | |||||||||||
| Total stock-based compensation expense | $ | $ | |||||||||
Share Repurchases
In March 2023, the Board authorized the repurchase of up to $50.0 million of its common stock, with no expiration date. Repurchases under the program may be made in the open market, in privately negotiated transactions or otherwise, with the amount and timing of repurchases to be determined at the Company’s discretion depending on market conditions and corporate needs. Open market repurchases will be structured to occur in accordance with applicable federal securities laws, including within the pricing and volume requirements of Rule 10b-18 under the Securities Exchange Act of 1934, as amended. The Company may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases of its common stock under this authorization. This program does not obligate the Company to acquire any particular amount of its common stock, and may be modified, suspended or terminated at any time at the Company’s discretion. No share repurchases were made under this program during the three months ended March 31, 2025. As of March 31, 2025, $32.6 million of common stock remains available for
19
HIPPO HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
repurchase. Shares repurchased by the Company are accounted for when the transaction is settled. As of March 31, 2025, there were no unsettled share repurchases. Direct costs incurred to acquire the shares are included in the total cost of the shares.
14. Income Taxes
The consolidated effective tax rate was 0.4 % and (0.7 )% for the three months ended March 31, 2025 and 2024, respectively. The difference between the rate for the three months ended March 31, 2025 and 2024 and the U.S. federal income tax rate of 21% was due primarily to a full valuation allowance against the Company’s net deferred tax assets.
As of March 31, 2025 and 2024, the Company has $5.1 million and $5.4 million of unrecognized tax benefits, respectively, fully offset by a valuation allowance. No
15. Net Loss Per Share Attributable to Common Stockholders
Net loss per share attributable to common stockholders was computed as follows:
| Three Months Ended | |||||||||||
| March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Numerator: | |||||||||||
Net loss attributable to Hippo – basic and diluted (in millions) | $ | ( | $ | ( | |||||||
| Denominator: | |||||||||||
| Weighted-average shares used in computing net loss per share attributable to Hippo — basic and diluted | |||||||||||
| Net loss per share attributable to Hippo — basic and diluted | $ | ( | $ | ( | |||||||
The potential shares of common stock that were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been antidilutive are as follows:
| March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Outstanding options | |||||||||||
| Common stock from outstanding warrants | |||||||||||
| Common stock subject to repurchase | |||||||||||
| RSU and PRSUs | |||||||||||
| Total | |||||||||||
16. Segments
The Company has three reportable segments: Services, Insurance-as-a-Service, and Hippo Home Insurance Program. The reportable segments are determined based on several factors including, but not limited to, nature of the business, customers, and sales channel.
The Company’s Services segment earns fees and/or commission income without assuming underwriting risk or need for reinsurance. The Company also partners with home builders, as well as independent agencies, to
20
HIPPO HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
source insureds seeking a product for which the Company provides the best carrier for the insured, whether it be of Hippo or a third-party carrier, including other insurance products like auto, rental, etc.
Insurance-as-a-Service is managed through the Company’s subsidiary Spinnaker and is a platform to support MGAs, including Hippo. The Company rents its capital, 50 state licenses and the strong financial rating of Spinnaker (rated “A-” Excellent by A.M. Best) to earn fee-based revenues with the assumption of limited underwriting risk using quota-share reinsurance. The Company also earns a portion of the premiums paid to it for the risk the Company retains as well as generates investment income. The diversification of the Company’s balance sheet allows it to carry less capital than the Company’s MGA clients would be required to on their own.
The Hippo Home Insurance Program is the Company’s Hippo-branded homeowners insurance business. The Company’s main source of revenue is the premiums paid to it by the Company’s homeowner customers. In addition, the Company’s revenues include policy and services fees and investment income. The Company’s strategy is to retain the portion of the underwriting risk where the Company believes its loss prevention strategies are the most effective.
The Company’s Chief Executive Officer, who serves as the chief operating decision maker (“CODM”), evaluates the financial performance of the Company’s segments based upon segment adjusted operating income (or loss) as the profitability measure. Items outside of adjusted operating income (or loss) are not reported by segment, since they are excluded from the single measure of segment profitability reviewed by the CODM. The Company’s CODM does not use segment assets to allocate resources or to assess performance of the segments and, therefore, segment assets have not been reported separately.
The CODM uses adjusted operating income (or loss) in deciding which segment to invest the Company's capital and/or resources. Adjusted operating income (or loss) is used to monitor budget versus actual results. The CODM also uses adjusted operating income (or loss) in competitive analysis by benchmarking to the Company’s competitors. The competitive analysis along with the monitoring of budgeted versus actual results are used in assessing performance of the segment and in establishing resource allocation.
The tables below present segment information reconciled to total Net Loss attributable to Hippo, for the periods indicated (in millions).
21
HIPPO HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
| Three Months Ended March 31, 2025 | |||||||||||||||||||||||
| Services | Insurance-as-a-Service | Hippo Home Insurance Program | Total | ||||||||||||||||||||
| Revenue from external customers | |||||||||||||||||||||||
| Net earned premium | $ | $ | |||||||||||||||||||||
| Commission income, net | |||||||||||||||||||||||
| Service and fee income | |||||||||||||||||||||||
Net investment income | |||||||||||||||||||||||
| Intersegment revenue | — | — | |||||||||||||||||||||
Segment revenue | |||||||||||||||||||||||
| Reconciliation of Revenue | |||||||||||||||||||||||
Eliminations(1) | ( | ||||||||||||||||||||||
| Total consolidated revenue | |||||||||||||||||||||||
| Less segment expenses: | |||||||||||||||||||||||
| Loss and loss adjustment expense | |||||||||||||||||||||||
| Insurance related expense | |||||||||||||||||||||||
| Sales and marketing | |||||||||||||||||||||||
| Technology and development | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Other expenses | |||||||||||||||||||||||
Less: Net investment income | ( | ( | |||||||||||||||||||||
| Less: Noncontrolling interest | ( | ||||||||||||||||||||||
| Segment adjusted operating income (loss) | ( | ( | ( | ( | |||||||||||||||||||
Eliminations(1) | |||||||||||||||||||||||
| Consolidated adjusted operating income (loss) | ( | ||||||||||||||||||||||
| Reconciliation of segment adjusted operating income (loss) | |||||||||||||||||||||||
| Net investment income | |||||||||||||||||||||||
| Depreciation and amortization | ( | ||||||||||||||||||||||
| Stock-based compensation | ( | ||||||||||||||||||||||
| Fair value adjustments | |||||||||||||||||||||||
| Other one-off transactions | |||||||||||||||||||||||
| Noncontrolling interest | |||||||||||||||||||||||
| Loss before income taxes | $ | ( | |||||||||||||||||||||
(1)Intersegment eliminations include commissions paid from Hippo Home Insurance Program for policies sold by the Company’s Agency segment (revenue, cost, and other adjustments in respective business units eliminated as part of consolidation).
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HIPPO HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
| Three months ended March 31, 2024 | |||||||||||||||||||||||
| Services | Insurance-as-a-Service | Hippo Home Insurance Program | Total | ||||||||||||||||||||
| Revenue from external customers | |||||||||||||||||||||||
| Net earned premium | $ | $ | |||||||||||||||||||||
| Commission income, net | |||||||||||||||||||||||
| Service and fee income | |||||||||||||||||||||||
Net investment income | |||||||||||||||||||||||
| Intersegment revenue | — | — | |||||||||||||||||||||
Segment revenue | |||||||||||||||||||||||
| Reconciliation of Revenue | |||||||||||||||||||||||
Eliminations(1) | ( | ||||||||||||||||||||||
| Total consolidated revenue | |||||||||||||||||||||||
| Less segment expenses: | |||||||||||||||||||||||
| Loss and loss adjustment expense | |||||||||||||||||||||||
| Insurance related expense | |||||||||||||||||||||||
| Sales and marketing | |||||||||||||||||||||||
| Technology and development | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Other expenses | |||||||||||||||||||||||
Less: Net investment income | ( | ( | |||||||||||||||||||||
| Less: Noncontrolling interest | ( | ||||||||||||||||||||||
| Segment adjusted operating income (loss) | ( | ( | ( | ||||||||||||||||||||
Eliminations(1) | |||||||||||||||||||||||
| Consolidated adjusted operating income (loss) | ( | ||||||||||||||||||||||
| Reconciliation of segment adjusted operating income (loss) | |||||||||||||||||||||||
| Net investment income | |||||||||||||||||||||||
| Depreciation and amortization | ( | ||||||||||||||||||||||
| Stock-based compensation | ( | ||||||||||||||||||||||
| Fair value adjustments | ( | ||||||||||||||||||||||
| Other one-off transactions | ( | ||||||||||||||||||||||
| Impairment and restructuring charges | ( | ||||||||||||||||||||||
| Noncontrolling interest | |||||||||||||||||||||||
| Loss before income taxes | $ | ( | |||||||||||||||||||||
(1)Intersegment eliminations include commissions paid from Hippo Home Insurance Program for policies sold by the Company’s Agency segment (revenue, cost, and other adjustments in respective business units eliminated as part of consolidation).
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HIPPO HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
17. Subsequent Events
On April 30, 2025, Spinnaker Insurance Company (“Spinnaker”), a wholly owned subsidiary of Hippo, entered into an agreement to issue a surplus note in the aggregate principal amount of $50 million to several initial purchasers. The closing of the transaction is subject to the approval of the Illinois Department of Insurance. As of the date of this filing, regulatory approval has not been obtained, and no proceeds have been received under the agreement.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “we,” “our,” “Hippo” and “the Company” refer to the business and operations of Hippo Holdings Inc. and its consolidated subsidiaries. You should read the following discussion of our financial condition and results of operations in conjunction with our condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q and with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC.
Overview
Hippo is an insurance holding company with subsidiaries that provide property and casualty insurance products to both individuals and business customers. We conduct our operations through three reportable segments: Services, Insurance-as-a-Service, and Hippo Home Insurance Program. We offer our services primarily in the United States.
Further information on our business and reportable segments is presented in Part I, Item 1, “Business” and in Note 22 of the Notes to the Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of our Annual Report on Form 10-K for the year ended December 31, 2024.
Reinsurance
We maintain a comprehensive reinsurance program to manage risk exposure, reduce earnings volatility, and safeguard capital. By ceding a portion of our underwriting risk to highly rated reinsurers and alternative capital providers, we limit the financial impact of catastrophe events. Nevertheless, we remain ultimately responsible for policyholder claims should a reinsurer fail to perform.
Our reinsurance strategy includes a mix of quota share and excess of loss (“XOL”) structures, alongside collateralized protection through catastrophe bonds. We work with reinsurers rated “A-” (Excellent) or better by A.M. Best, or require appropriate collateral. Contracts often include provisions allowing for replacement of reinsurers whose financial condition deteriorates.
Our catastrophe reinsurance program supports property risks underwritten through Spinnaker Insurance Company on behalf of HHIP and third-party MGAs. These risks are protected by program-specific XOL treaties, and in some cases, quota share reinsurance. In addition to the program specific covers, Spinnaker is also protected by a corporate catastrophe cover, and participation in the Florida Hurricane Catastrophe Fund (FHCF). This structure is designed to provide protection against severe loss events across the portfolio, covering up to at least a 1-in-250-year return period threshold.
For business written by HHIP through Spinnaker, we have strategically retained more risk in recent periods by scaling back proportional reinsurance, reflecting our confidence in the portfolio’s underwriting performance. HHIP remains covered by standalone catastrophe XOL protection.
Additionally, we utilize collateralized reinsurance through Mountain Re Ltd., a Bermuda-based special purpose insurer. The catastrophe bonds issued through Mountain Re provide multi-year per occurrence coverage for a range of perils for business written through HHIP.
Key Factors and Trends Affecting our Operating Results
Our financial condition and results of operations have been, and will continue to be, affected by a number of factors, including the following:
Our Ability to Attract New Customers
Our long-term growth will depend, in large part, on our continued ability to attract new customers to our platform. For Hippo home insurance policies, we seek to minimize the volatility of our portfolio and are currently in the process of analyzing overall underwriting results for the segment, taking actions as needed. We intend to continue to drive new customer growth by highlighting our consumer-focused approach to home protection and
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insurance across multiple distribution channels, regardless of whether the customer is a Hippo policyholder. In particular, we seek to grow by:
•Promoting our agency for sales of non-Hippo policies, growing our network of partners within existing partner channels, and geographically optimizing our Hippo policyholder base;
•Developing new strategic partnerships with key players involved in the real estate transaction ecosystem; and
•Deepening our relationships with our customers by connecting them to partners offering value-added services that are not specifically insurance products, such as home maintenance, home monitoring, and energy consumption optimization.
Our ability to attract new customers depends on the pricing of our products, the offerings of our competitors, our geographic reach, and the extent and effectiveness of our marketing efforts. Our ability to attract customers also depends on maintaining and strengthening our brand by providing superior customer experiences across all of our offerings through our proactive, tech-enabled strategy.
We face competition from traditional insurers who have more diverse product offerings and longer established operating histories, as well as from new, technology-driven entrants who may pursue more horizontal growth strategies. These competitors may mimic certain aspects of our digital platform and offerings and have more types of insurance products, allowing them to offer customers the ability to “bundle” multiple coverage types together, which may be attractive to many customers.
Our Ability to Retain Customers
Our ability to derive significant lifetime value from our customer relationships depends, in part, on our ability to retain our customers over time. Strong retention allows us to build a recurring revenue base, generating additional premium term over term without material incremental marketing costs. Our customers typically become more valuable to us over time because retention rates have historically increased with the age of customer cohorts and because non-catastrophic loss frequency declines as cohorts mature.
As we expect to broadly retain our customers who are not located in high severe weather exposed regions, over the long-term, we expect our book of business to evolve to be weighted more towards renewals versus new business, as is the case with our more mature competitors. We expect that this would enable us to benefit from the higher premium retention rates and inherently lower frequency of losses that characterize renewed premiums.
Our ability to retain customers will depend on a number of factors, including our customers’ satisfaction with our products, the offerings of our competitors, and our ability to continue delivering exceptional customer service and support.
Our Ability to Manage Regulatory Impact, Including on Our Efforts to Manage Our Exposure to Volatility
We are subject to extensive laws, regulations, administrative directives, and regulatory actions. From time to time, regulatory authorities or legislative bodies seek to influence and restrict premium rates, require premium refunds to policyholders, require reinstatement of terminated policies, restrict the ability of insurers to cancel or non-renew policies, require insurers to continue to write new policies or limit their ability to write new policies, limit insurers’ ability to change coverage terms and deductibles or to impose underwriting standards, impose additional regulations regarding agency and broker compensation, impose fines and penalties for unintended errors or mistakes, impose additional regulations regarding cybersecurity and privacy, and otherwise expand overall regulation of insurance products and the insurance industry. These laws may limit or restrict our ability to reduce our exposures, including to weather related losses.
Our Ability to Expand Fee Income and Premium Through Cross-Sales to Existing Customers
One of our strategies to increase the value we are providing to our customers is to offer incremental services to assist our customers in better maintaining and protecting their homes. As we roll out these services, we expect to be able to generate incremental, non-risk-based service and fee income from our existing customers. We expect these home protection services not only to generate incremental revenue, but also to reduce losses for our customers, and—by implication—our loss ratios. Our success in expanding revenue and reducing losses by offering
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these services depends on our ability to market these services, our operational ability to deliver value to our customers, and the ability of these services to reduce the probability of loss for an average homeowner.
We are also in the early stages of cross-selling non-homeowner insurance products across our customer base. Cross-sales allow us to generate additional premium per customer, and ultimately higher revenue and fee income, without material incremental marketing spend. Our success in expanding revenue through cross-sales depends on our marketing efforts with new products, offerings of our competitors, additional expansion into new states, and the pricing of our bundled products.
Our Ability to Manage Risk
We leverage data, technology, and geographic diversity to help manage risk. For instance, we obtain dynamic data from various sources and use advanced statistical methods to model that data into our pricing algorithm. Incorporating these external data sources and utilizing the experience gained with our own customer base should lead to better underwriting, reduced loss frequency, and—adjusting for weather related events—lower loss ratios over time. While our current reinsurance framework helps us manage the volatility of earnings, reducing our overall gross loss ratio is critical to our success. Our ability to incorporate new data sources as they become available and to use them to improve our ability to accurately and competitively price risk is central to our growth strategy.
Seasonality of Claims Losses
Seasonal patterns can impact our incurrence of claims losses, as seasonal weather patterns impact the level and amount of claims we receive. These patterns include hurricanes, wildfires, and coastal storms in the fall, cold weather patterns and changing home heating needs in the winter, and tornados and hailstorms in the spring and summer. The mix of geographic exposure and products within our customer base impacts our exposure to these weather patterns, and as we diversify our base of premium such that our exposure more closely resembles the industry exposure, we should see the impact of these events on our business more closely resemble the impact on the broader industry.
Components of Results of Operations
Revenue
Gross Written Premium
Gross written premium is the amount received or to be received for insurance policies written or assumed by us and our affiliates as a carrier or captive reinsurer, without reduction for policy acquisition costs, reinsurance costs, or other deductions. The volume of our gross written premium in any given period is generally influenced by:
•New business submissions;
•Binding of new business submissions into policies;
•Bound policies going effective;
•Renewals of existing policies; and
•Average size and premium rate of bound policies.
Ceded Written Premium
Ceded written premium is the amount of gross written premium written or assumed by us and our affiliates as a carrier that we cede to reinsurers. We enter into reinsurance contracts to limit our exposure to losses, as well as to provide additional capacity for growth. Ceded written premium is treated as a reduction from gross written premium. The volume of our ceded written premium is impacted by the level of our gross written premium and decisions we make to increase or decrease retention levels.
Net Earned Premium
Net earned premium represents the earned portion of our gross written premium for insurance policies written or assumed by us and less the earned portion of ceded written premium (any portion of our gross written
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premium that is ceded to third-party reinsurers under our reinsurance agreements). We earn written premiums on a pro-rata basis over the term of the policies.
Commission Income, Net
Commission Income, net includes agency commission which the Company earns from the unaffiliated carriers whose policies the Company sells, ceding commission on the premium it cedes to third-party reinsurers, fronting fees through the Company’s Insurance-as-a-Service business from the Managing General Agent (“MGA”) programs it supports, and MGA Commission from the multiple insurers for which we operate as an MGA.
Service and Fee Income
Service and fee income mainly represents policy fees and other revenue. We directly bill policyholders for policy fees and collect and retain fees per the terms of the contracts between us and our insurers. Similar to the commission revenue, we estimate a cancellation reserve for policy fees using historical information. The performance obligation associated with these fees is satisfied at a point in time upon completion of the underwriting process, which is the policy effective date. Accordingly, we recognize all fees as revenue on the policy effective date.
Net Investment Income
Net investment income represents interest earned from fixed maturity securities, short-term investments and other investments, and the gains or losses from the sale of investments. Our cash and invested assets primarily consist of fixed-maturity securities, and may also include cash and cash equivalents, equity securities, and short-term investments. The principal factors that influence net investment income are the size of our investment portfolio and the yield on that portfolio. As measured by amortized cost (which excludes changes in fair value, such as changes in interest rates), the size of our investment portfolio is mainly a function of our invested equity capital along with premium we receive from our customers less payments on customer claims.
Net investment income also includes an insignificant amount of net realized gains (losses) on investments, which are a function of the difference between the amount received by us on the sale of a security and the security’s amortized cost, as well as any allowances for credit losses recognized in earnings, if any.
Expenses
Loss and Loss Adjustment Expenses
Loss and loss adjustment expenses represent costs associated with insured claims, net of amounts ceded under reinsurance agreements. We utilize reinsurance to manage our exposure to large or unexpected losses and to support underwriting capacity for growth. Loss and loss adjustment expense is driven by the scope and duration of coverage we provide, as well as actual and expected loss experience. Estimates for loss and loss adjustment expenses incorporate actuarial methodologies and management judgment, including loss emergence during the reporting period and any revisions to prior period estimates. Our loss and loss adjustment expenses are generally influenced by the following factors:
•The frequency, severity, and geographic impact of catastrophe events affecting our insured portfolio;
•The volume and characteristics of non-catastrophe, attritional claims across our lines of business;
•Changes in our underwriting mix, including variations in policy type, risk profile, and exposure concentration;
•The terms and structure of our reinsurance program in effect during the occurrence of loss events;
•The regional distribution and underlying risk attributes of our insured exposures;
•Legal and regulatory changes that may affect claims costs or adjudication processes;
•Trends in litigation activity and legal defense spending;
•Inflationary pressures, particularly in residential construction materials and labor costs; and
•Shifts in judicial outcomes or jury behavior that influence the magnitude of loss settlements.
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Insurance-Related Expenses
Insurance related expenses primarily consist of amortization of direct acquisition commission costs and premium taxes incurred on the successful acquisition of business written on a direct basis and credit card processing fees not charged to our customers. Insurance related expenses also include employee compensation (including stock-based compensation and benefits) of our underwriting teams, amortization of capitalized internal use software, as well as allocated occupancy costs and related overhead based on headcount. Insurance related expenses are offset by a portion of ceding commission income, which represents reimbursement of successful acquisition costs related to the underlying policies. Additionally, insurance related expenses include the costs of providing bound policies and delivering claims services to our customers. These costs include underwriting technology service costs including software, data services used for performing underwriting, and third-party call center costs in addition to personnel-related costs.
Technology and Development
Technology and development expenses primarily consist of employee compensation (including stock-based compensation and benefits) for our technology staff, which includes technology development, infrastructure support, actuarial, and third-party services. Technology and development also include allocated facility costs and related overhead based on headcount. We expense development costs as incurred, except for costs related to internal use software development projects, which are capitalized and subsequently depreciated over the expected useful life of the developed software.
Sales and Marketing
Sales and marketing expenses primarily consist of sales commission, advertising costs, and marketing expenditures, as well as employee compensation (including stock-based compensation and benefits) for employees engaged in sales, marketing, data analytics, and customer acquisition. Sales and marketing expenses also include allocated facility costs and related overhead based on headcount.
General and Administrative
General and administrative expenses primarily consist of employee compensation (including stock-based compensation and benefits) for our finance, human resources, legal, and general management functions, as well as facilities, insurance, and professional services.
Impairment and Restructuring Charges
Impairment and restructuring charges consist of non-cash impairment charges relating to goodwill. We review goodwill for impairment annually on October 1 and more frequently if events or changes in circumstances indicate that an impairment may exist. If the carrying value of the reporting unit exceeds its fair value, the fair value of the reporting unit’s goodwill is calculated and an impairment loss equal to the excess is recorded. It also consists of severance and other personnel costs associated with exit and disposal activities as well as reductions in workforce.
Other (Income) Expense, net
Other (income) expense, net primarily consists of certain fair value adjustments and other non-operating income expenses.
Income Taxes
We record income taxes using the asset and liability method. Under this method, we record deferred income tax assets and liabilities based on the estimated future tax effects of differences between the financial statement and income tax basis of existing assets and liabilities. We measure these differences using the enacted statutory tax rates that are expected to apply to taxable income for the years in which differences are expected to reverse. We recognize the effect on deferred income taxes of a change in tax rates in income in the period that includes the enactment date.
We record a valuation allowance to reduce deferred tax assets and liabilities to the net amount that we believe is more likely than not to be realized. We consider all available evidence, both positive and negative, including historical levels of income, expectations, and risks associated with estimates of future taxable income and ongoing tax planning strategies in assessing the need for a valuation allowance.
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Key Operating and Financial Metrics and Non-GAAP Measures
We regularly review the following key operating and financial metrics in order to evaluate our business, measure our performance, identify trends in our business, prepare financial projections, and make strategic decisions.
The non-GAAP financial measures below have not been calculated in accordance with GAAP, and should be considered in addition to results prepared in accordance with GAAP, and should not be considered as a substitute for, or superior to, GAAP results. In addition, adjusted EBITDA should not be construed as an indicator of our operating performance, liquidity, or cash flows generated by operating, investing, and financing activities, as there may be significant factors or trends that it fails to address. We caution investors that non-GAAP financial information—by its nature—departs from traditional accounting conventions. Therefore, its use can make it difficult to compare our current results with our results from other reporting periods and with the results of other companies.
Our management uses non-GAAP financial measures, in conjunction with GAAP financial measures, as an integral part of managing our business and to, among other things: (i) monitor and evaluate the performance of our business operations and financial performance; (ii) facilitate internal comparisons of the historical operating performance of our business operations; (iii) review and assess the operating performance of our management team; (iv) analyze and evaluate financial and strategic planning decisions regarding future operating investments; and (v) plan for and prepare future annual operating budgets and determine appropriate levels of operating investments.
In prior periods, we reported Total Generated Premium (TGP) as a key operating metric to provide a comprehensive view of the premium volume across all our business platforms. We defined TGP as the sum of Gross Written Premium (GWP) and Gross Placed Premium, reflecting the total premium volume placed, regardless of how we structured reinsurance treaties or the amount of risk retained.
Beginning in the first quarter of 2025 we have discontinued reporting Total Generated Premium. This change aligns with our evolving business model, the sale of our independent agent platform First Connect, and internal performance measurement practices. Specifically, we have shifted our focus toward metrics that more closely correlate with financial performance under our current operating strategy and capital allocation approach. Additionally, as our business has matured, we believe that other metrics such as gross written premium, net earned premium, and commission income more effectively reflect the core operating drivers and provide investors with a clearer view of our performance and growth.
We believe that this change enhances the clarity and comparability of our financial disclosures and aligns with industry standards. For consistency, historical figures for Total Generated Premium may continue to be referenced in select investor materials for comparative purposes, but will no longer be updated in our periodic filings.
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| ($ in millions) | |||||||||||
| Gross Written Premium | $ | 210.9 | $ | 194.7 | |||||||
| Total Revenue | 110.3 | 85.1 | |||||||||
| Net Loss attributable to Hippo | (47.7) | (35.7) | |||||||||
| Adjusted EBITDA | (41.1) | (19.8) | |||||||||
| Gross Loss Ratio | 95 | % | 59 | % | |||||||
| Net Loss Ratio | 106 | % | 87 | % | |||||||
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Gross Written Premium
The following table provides Gross Written premium for the periods presented (in millions)
| Three Months Ended March 31, | |||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||
| ($ in millions) | |||||||||||||||||
| Gross Written Premium | $ | 210.9 | $ | 194.7 | $ | 16.2 | |||||||||||
Our Gross Written Premium for the three months ended March 31, 2025 increased 8% year-over-year to $210.9 million from $194.7 million for the three months ended March 31, 2024. The increase was driven primarily by the year-over-year growth in our Insurance-as-a-Service book of business.
Adjusted EBITDA
We define adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (“adjusted EBITDA”), a Non-GAAP financial measure, as net loss attributable to Hippo excluding interest expense, income tax expense, depreciation, amortization, stock-based compensation, net investment income, restructuring charges, impairment expense, gains and losses on sales of business, and other non-cash fair market value adjustments including contingent consideration for one of our acquisitions, and other transactions, which may include certain legal fees and settlement costs, that we consider to be unique in nature.
For the three months ended March 31, 2025, adjusted EBITDA loss was $41.1 million, an increase of $21.3 million compared to a $19.8 million EBITDA loss for the three months ended March 31, 2024. The increase was due primarily to an increase in PCS events, primarily driven by a series of destructive wildfires that affected Los Angeles, California (“LA Wildfires”) which negatively impacted adjusted EBITDA by $45.4 million, this impact was partially offset by a growth in net earned premium due to higher premium retention compared to prior periods.
The following table provides a reconciliation from net loss attributable to Hippo to adjusted EBITDA for the periods presented (in millions):
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Net loss attributable to Hippo | $ | (47.7) | $ | (35.7) | |||||||
| Adjustments: | |||||||||||
| Net investment income | (5.8) | (5.9) | |||||||||
| Depreciation and amortization | 5.6 | 5.6 | |||||||||
| Stock-based compensation | 7.7 | 8.4 | |||||||||
| Fair value adjustments | (0.5) | 1.5 | |||||||||
| Other one-off transactions | (0.2) | 2.5 | |||||||||
Income tax (benefit) expense | (0.2) | 0.2 | |||||||||
Impairment and restructuring charges | — | 3.6 | |||||||||
| Adjusted EBITDA | $ | (41.1) | $ | (19.8) | |||||||
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Gross Loss Ratio
Gross Loss Ratio, expressed as a percentage, is the ratio of the Gross Losses and LAE to the Gross Earned Premium (in millions).
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Gross Losses and LAE | $ | 211.8 | $ | 121.1 | |||||||
| Gross Earned Premium | 222.8 | 206.7 | |||||||||
| Gross Loss Ratio | 95 | % | 59 | % | |||||||
The following table provides a reconciliation of Gross Loss Ratio by named event Property Claims Services (“PCS”) and non-PCS events.
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| PCS losses | 53 | % | 10 | % | |||||||
| Non-PCS losses | 42 | % | 49 | % | |||||||
Gross Loss Ratio | 95 | % | 59 | % | |||||||
For the three months ended March 31, 2025, our Gross Loss Ratio was 95% net of a prior year favorable development of 1 percentage point relating to non-PCS events compared with 59% for the three months ended March 31, 2024. The increase in PCS losses for the three months ended March 31, 2025 includes 47 percentage points related to the LA Wildfires. These increases were partially offset by a decrease in our non-PCS losses due primarily to the benefits of the pricing and underwriting actions we have taken. There was no material PCS or non-PCS prior year developments in the prior year quarter.
Net Loss Ratio
Net loss ratio expressed as a percentage, is the ratio of the net losses and LAE to the net earned premium (in millions).
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Net Losses and LAE | $ | 92.4 | $ | 52.6 | |||||||
| Net Earned Premium | 87.3 | 60.5 | |||||||||
| Net Loss Ratio | 106 | % | 87 | % | |||||||
The following table provides a reconciliation of Net Loss Ratio by named event PCS and non-PCS events.
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| PCS losses | 61 | % | 25 | % | |||||||
| Non-PCS losses | 45 | % | 62 | % | |||||||
Net Loss Ratio | 106 | % | 87 | % | |||||||
For the three months ended March 31, 2025, our net loss ratio was 106% net of a prior year favorable development of 3 percentage points relating to non-PCS events compared with 87% for the three months ended
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March 31, 2024. The increase in PCS losses for the three months ended March 31, 2025 includes 51 percentage points related to the LA Wildfires. These increases were partially offset by a decrease in losses from wildfires other than the LA Wildfires. due primarily to the benefits of the pricing and underwriting actions we have taken. There was no material PCS or non-PCS prior year developments in the prior year quarter.
Segment Information
| Three Months Ended March 31, 2025 | |||||||||||||||||||||||||||||
| ($ in millions) | |||||||||||||||||||||||||||||
| Services | Insurance-as-a-Service | Hippo Home Insurance Program | Intersegment Eliminations(1) | Total | |||||||||||||||||||||||||
| Total Revenue | $ | 11.7 | $ | 38.9 | $ | 61.9 | $ | (2.2) | $ | 110.3 | |||||||||||||||||||
| Adjusted operating income (loss) | (3.5) | (0.5) | (38.0) | 0.9 | (41.1) | ||||||||||||||||||||||||
| Three Months Ended March 31, 2024 | |||||||||||||||||||||||||||||
| ($ in millions) | |||||||||||||||||||||||||||||
| Services | Insurance-as-a-Service | Hippo Home Insurance Program | Intersegment Eliminations(1) | Total | |||||||||||||||||||||||||
| Total Revenue | $ | 11.4 | $ | 20.4 | $ | 55.1 | $ | (1.8) | $ | 85.1 | |||||||||||||||||||
| Adjusted operating income (loss) | (5.3) | 4.7 | (20.2) | 1.0 | (19.8) | ||||||||||||||||||||||||
(1)Intersegment eliminations include commissions paid from Hippo Home Insurance Program for policies sold by the Company’s Agency segment (revenue, cost, and other adjustments in respective business units eliminated as part of consolidation). Intersegment eliminations also include premiums written between the segments.
Segment adjusted operating income (loss) is our primary segment profitability measure, and is calculated as segment revenue less operating expenses that are directly attributable to the segments. Refer to Note 16 of the accompanying condensed consolidated financial statements for additional information on segments and a reconciliation of Segment adjusted operating income (loss) to net loss attributable to Hippo.
Services
For the three months ended March 31, 2025, our Services segment, which earns fees and/or commission income without assuming underwriting risk or need for reinsurance, had revenue of $11.7 million, an increase of 3% from $11.4 million over the prior year quarter. Our adjusted operating loss was $3.5 million, a decrease of 34% compared to a loss of $5.3 million in the prior year quarter, due primarily to lower adjusted operating expenses including a decrease in advertising costs, and an increase in revenue as noted above.
Insurance-as-a-Service
Our Insurance-as-a-Service segment, which through our carrier, Spinnaker, leverages our capital and insurance licenses to provide capacity to MGAs, creating diversified income through fees, underwriting profits, and investment income. For the three months ended March 31, 2025, revenue was $38.9 million, an increase of 91% from $20.4 million over the prior year quarter. The growth was driven primarily by a combination of increased premium retention on certain programs and the increase in performance of existing programs. Adjusted operating loss was $0.5 million, a decrease of 111% compared to income of $4.7 million in the prior year quarter, due primarily to an increase in loss and loss adjustment expenses due to losses from the LA Wildfires of $12.1 million and increased premium retention. There was also an increase in insurance related expenses due to the increase in premium retention. These were partially offset by an increase in revenue as noted above.
Hippo Home Insurance Program
For the three months ended March 31, 2025, our Hippo Homeowners Insurance Program had revenue of $61.9 million, an increase of 12% from $55.1 million over the prior year quarter. The increase in revenue was due
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primarily to higher net earned premium due to higher premium retention on our 2024 and 2025 reinsurance treaties. Adjusted operating loss was $38.0 million in the quarter, an increase of 88% compared to a loss of $20.2 million in the prior year quarter. The increase in adjusted operating loss was due primarily to an increase in loss and loss adjustment expenses due to the LA Wildfires of $32.0 million and seasonality of the book of business. These were partially offset by an increase in revenue as noted above.
Hippo Home Insurance Program Gross Loss Ratio
Hippo Home Insurance Program Gross Loss Ratio (“HPGLR”) is a key performance indicator that represents our underwriting operational performance. This ratio includes losses and premiums written and placed on Spinnaker (our carrier) as well as other carriers for Hippo policies (policies underwritten by the Hippo MGA). For the periods presented, changes in this ratio also impact our ceding commission revenue and loss participation features in our reinsurance treaties, which is included in loss and loss adjustment expense on our condensed consolidated statements of operations and comprehensive loss. This ratio is also used by our reinsurers and other carriers to make business decisions relating to the capacity of reinsurance and amount of ceding commission that would be available to Hippo. The lower the ratio, the better the economics for Hippo.
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Hippo Home Insurance Program | |||||||||||
| Non-PCS | 53 | % | 59 | % | |||||||
| PCS | 68 | % | 21 | % | |||||||
| HPGLR | 121 | % | 80 | % | |||||||
For the three months ended March 31, 2025, HPGLR was 121% compared to 80% for the three months ended March 31, 2024. The increase reflected the effects of higher severity PCS events experienced in the three months ended March 31, 2025 primarily from the LA Wildfires, which was partially offset by a decrease in our non-PCS losses due primarily to the benefits of the pricing and underwriting actions we have taken. The increase in PCS losses for the three months ended March 31, 2025 includes 56 percentage points related to the LA Wildfires.
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Results of Operations
The following table sets forth our condensed consolidated results of operations data for the periods presented (in millions, except percent data):
| Three Months Ended | |||||||||||||||||||||||
| March 31, | |||||||||||||||||||||||
| 2025 | 2024 | Change | % Change | ||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||
| Net earned premium | $ | 87.3 | $ | 60.5 | $ | 26.8 | 44 | % | |||||||||||||||
| Commission income, net | 14.4 | 15.9 | (1.5) | (9) | % | ||||||||||||||||||
| Service and fee income | 2.8 | 2.8 | — | — | % | ||||||||||||||||||
| Net investment income | 5.8 | 5.9 | (0.1) | (2) | % | ||||||||||||||||||
| Total revenue | 110.3 | 85.1 | 25.2 | 30 | % | ||||||||||||||||||
| Expenses: | |||||||||||||||||||||||
| Losses and loss adjustment expenses | 92.4 | 52.6 | 39.8 | 76 | % | ||||||||||||||||||
| Insurance related expenses | 30.2 | 20.8 | 9.4 | 45 | % | ||||||||||||||||||
| Technology and development | 8.1 | 8.3 | (0.2) | (2) | % | ||||||||||||||||||
| Sales and marketing | 8.9 | 14.4 | (5.5) | (38) | % | ||||||||||||||||||
| General and administrative | 16.5 | 18.3 | (1.8) | (10) | % | ||||||||||||||||||
| Impairment and restructuring charges | — | 3.6 | (3.6) | N/A | |||||||||||||||||||
| Other (income) expense, net | (0.2) | — | (0.2) | N/A | |||||||||||||||||||
| Total expenses | 155.9 | 118.0 | 37.9 | 32 | % | ||||||||||||||||||
| Loss before income taxes | (45.6) | (32.9) | (12.7) | 39 | % | ||||||||||||||||||
Income tax (benefit) expense | (0.2) | 0.2 | (0.4) | (200) | % | ||||||||||||||||||
| Net loss | (45.4) | (33.1) | (12.3) | 37 | % | ||||||||||||||||||
| Net income attributable to noncontrolling interests, net of tax | 2.3 | 2.6 | (0.3) | (12) | % | ||||||||||||||||||
| Net loss attributable to Hippo | $ | (47.7) | $ | (35.7) | $ | (12.0) | 34 | % | |||||||||||||||
| Other comprehensive income (loss): | |||||||||||||||||||||||
| Change in net unrealized gain on available-for-sale securities, net of tax | 2.1 | (0.5) | 2.6 | (520) | % | ||||||||||||||||||
| Comprehensive loss attributable to Hippo | $ | (45.6) | $ | (36.2) | $ | (9.4) | 26 | % | |||||||||||||||
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Comparison of the Three Months Ended March 31, 2025 and 2024
Net Revenue
The following table set forth net revenue by segment for the periods presented:
| Three months ended March 31, | $ Change | % Change | |||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Services | $ | 11.7 | $ | 11.4 | $ | 0.3 | 3 | % | |||||||||||||||
| Insurance-as-a-Service | 38.9 | 20.4 | 18.5 | 91 | % | ||||||||||||||||||
| Hippo Home Insurance Program | 61.9 | 55.1 | 6.8 | 12 | % | ||||||||||||||||||
| Intersegment elimination | (2.2) | $ | (1.8) | (0.4) | 22 | % | |||||||||||||||||
| Total net revenue | $ | 110.3 | $ | 85.1 | $ | 25.2 | 30 | % | |||||||||||||||
Net Earned Premium
For the three months ended March 31, 2025, net earned premium was $87.3 million, an increase of $26.8 million compared to $60.5 million for the three months ended March 31, 2024. This increase was due primarily to increases in gross earned premium due to higher retention of earned premium, partially offset by an increased cost of XOL premiums for our catastrophic coverage which results in an increase in ceded earned premium and lower net earned premium. We purchased XOL to cover events in excess of per occurrence limits based on the expected growth in exposure during the year. For the three months ended March 31, 2025 and 2024, $15.2 million and $13.5 million, respectively, was offset against earned premium for XOL.
The following table presents gross written premium, ceded written premium, net written premium, change in unearned premium, and net earned premium for the three months ended March 31, 2025 and 2024 (in millions).
| Three Months Ended | |||||||||||||||||
| March 31, | |||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||
| Gross written premium | $ | 210.9 | $ | 194.7 | $ | 16.2 | |||||||||||
| Ceded written premium | (110.6) | (85.9) | (24.7) | ||||||||||||||
| Net written premium | 100.3 | 108.8 | (8.5) | ||||||||||||||
| Change in unearned premium | (13.0) | (48.3) | 35.3 | ||||||||||||||
| Net earned premium | $ | 87.3 | $ | 60.5 | $ | 26.8 | |||||||||||
Commission Income, Net
For the three months ended March 31, 2025, commission income was $14.4 million, a decrease of $1.5 million, or 9%, compared to $15.9 million for the three months ended March 31, 2024. The decrease was due primarily to a decrease in fronting fees and ceding commissions totaling $1.3 million due to higher premium retention.
Service and Fee Income
For the three months ended March 31, 2025, service and fee income was $2.8 million, compared to $2.8 million for the three months ended March 31, 2024.
Net Investment Income
For the three months ended March 31, 2025, net investment income was $5.8 million, a decrease of $0.1 million, compared to $5.9 million for the three months ended March 31, 2024. We are mainly invested in money market accounts, securities issued by the U.S. government and agencies, high-grade corporate securities, residential and commercial mortgage-backed securities, and other governmental related securities.
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Loss and Loss Adjustment Expenses
For the three months ended March 31, 2025, loss and loss adjustment expenses were $92.4 million, an increase of $39.8 million, compared to $52.6 million for the three months ended March 31, 2024. The increase was due primarily to the impact from the LA Wildfires of $44.1 million in the three months ended March 31, 2025, which was partially offset by a decrease in our non-PCS losses due primarily to the benefits of the pricing and underwriting actions we have taken.
Insurance Related Expenses
For the three months ended March 31, 2025, insurance related expenses were $30.2 million, an increase of $9.4 million, or 45%, compared to $20.8 million for the three months ended March 31, 2024. The increase was due primarily to an increase in acquisition expenses, net of $7.6 million due to our increased premium retention in our Insurance-as-a-Service segment..
Technology and Development Expenses
For the three months ended March 31, 2025, technology and development expenses were $8.1 million, a decrease of $0.2 million, or 2%, compared to $8.3 million for the three months ended March 31, 2024. The decrease was due primarily to a decrease in employee-related costs of $0.2 million.
Sales and Marketing Expenses
For the three months ended March 31, 2025, sales and marketing expenses were $8.9 million, a decrease of $5.5 million, or 38%, compared to $14.4 million for the three months ended March 31, 2024. The decrease was due primarily to a decrease in employee-related costs of $2.2 million due to a decrease in headcount and a decrease in the change in fair value of contingent consideration of $2.1 million. The decrease was also due to a decrease in advertising costs of $0.6 million, and a decrease in amortization of acquired intangible assets of $0.3 million.
General and Administrative Expenses
For the three months ended March 31, 2025, general and administrative expenses were $16.5 million, a decrease of $1.8 million, or 10%, compared to $18.3 million for the three months ended March 31, 2024. The decrease was due primarily to a decrease in legal costs.
Impairment and Restructuring Charges
There were no impairment and restructuring charges for the three months ended March 31, 2025. For the three months ended March 31, 2024, impairment and restructuring charges were $3.6 million which is primarily related to the impairment of a lease right-of-use asset due to abandonment of leased office space.
Income Taxes
For the three months ended March 31, 2025, income tax benefit was $0.2 million, a change of $0.4 million compared to an expense of $0.2 million for the three months ended March 31, 2024.
Net Loss Attributable to Hippo
Net loss attributable to Hippo is calculated in accordance with GAAP as total revenue less total expenses and taxes and net of net income attributable to noncontrolling interest, net of tax.
For the three months ended March 31, 2025, net loss attributable to Hippo was $47.7 million, an increase of $12.0 million compared to $35.7 million for the three months ended March 31, 2024 due to the factors described above.
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Liquidity and Capital Resources
Sources of Liquidity
Our existing sources of liquidity include cash and cash equivalents and marketable securities. As of March 31, 2025, we had $140.9 million of cash, $39.3 million of restricted cash, and $387.6 million of available-for-sale fixed income securities and short-term investments.
In addition, we are a member of the Federal Home Loan Bank (FHLB) of New York, which provides secured borrowing capacity. Our borrowing capacity as of March 31, 2025, is $17.4 million, and there were no outstanding amounts under this agreement.
In April 2025, our subsidiary, Spinnaker Insurance Company, entered into an agreement to issue a $50 million surplus note to several initial purchasers. The transaction is subject to regulatory approval by the Illinois Department of Insurance. If approved, the closing of the surplus note issuance would provide additional statutory capital and further support Spinnaker’s operational and growth initiatives. As of the date of this report, regulatory approval has not been received, and no proceeds have been funded.
To date, we have funded operations primarily with issuances of convertible preferred stock, convertible promissory notes, and from net proceeds from a private placement transaction in connection with the Business Combination, the Business Combination, and revenue. Until we can generate sufficient revenue and other income to cover operating expenses, working capital and capital expenditures, we expect the funds raised as discussed above to fund our cash needs. Our capital requirements depend on many factors, including the volume of issuances of insurance policies, the timing and extent of spending to support research and development efforts, investments in information technology systems, and the expansion of sales and marketing activities. In the future, we may raise additional funds through the issuance of debt or equity securities or through borrowing. We cannot assure that such funds will be on favorable terms, or available at all.
Cash Flow Summary
The following table summarizes our cash flows for the periods presented (in millions):
| Three Months Ended | |||||||||||||||||
| March 31, | |||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||
| Net cash provided by (used in): | |||||||||||||||||
| Operating activities | $ | (35.6) | $ | 17.7 | $ | (53.3) | |||||||||||
| Investing activities | $ | (11.0) | $ | 58.5 | $ | (69.5) | |||||||||||
| Financing activities | $ | (6.0) | $ | (8.0) | $ | 2.0 | |||||||||||
Operating Activities
Cash used in operating activities was $35.6 million for the three months ended March 31, 2025, a change of $53.3 million, from cash provided by operating activities of $17.7 million for the three months ended March 31, 2024. The change was due primarily to an increase in net loss and decrease in cash provided by working capital. Cash used in operating activities represents payments for our operations including, payroll, loss and loss adjusted expenses and marketing activities.
Investing Activities
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Cash used in investing activities was $11.0 million for the three months ended March 31, 2025, due primarily to the purchases of investment securities, partially offset by the maturities of investment securities.
Cash provided by investing activities was $58.5 million for the three months ended March 31, 2024, due primarily to the maturities of investment securities, partially offset by purchases of investment securities.
Financing Activities
Cash used in financing activities was $6.0 million for the three months ended March 31, 2025, primarily driven by distributions to noncontrolling interests and change in fiduciary liabilities, and taxes paid related to net share settlement of RSUs, partially offset by proceeds from common stock issuances.
Cash used in financing activities was $8.0 million for the three months ended March 31, 2024, primarily driven by distributions to noncontrolling interests, repurchases of shares, and taxes paid related to net share settlement of RSUs, partially offset by proceeds from common stock issuances.
Material Cash Requirements
Our material cash requirements from known contractual and other obligations primarily relate to purchase commitments, lease payments, and unpaid loss and loss adjustment expense. There have been no material changes to our contractual obligations from those described in the Annual Report on Form 10-K for the year ended December 31, 2024, other than an increase in Unpaid Loss and Loss Adjustment Expense. The estimation of the unpaid losses and loss adjustment expenses is based on various complex and subjective judgments. Actual losses paid may differ, perhaps significantly, from the reserve estimates reflected in our condensed consolidated financial statements. Similarly, the timing of payment of our estimated losses is not fixed and there may be significant changes in actual payment activity. The assumptions used in estimating the likely payments due by period are based on our historical claims payment experience and industry payment patterns, but due to the inherent uncertainty in the process of estimating the timing of such payments, there is a risk that the amounts paid can be significantly different from the amounts disclosed.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts in our condensed consolidated financial statements. We evaluate our estimates on an on-going basis, including those related to our revenue, loss and loss adjustment expense reserve, recoverability of our net deferred tax asset, and intangible assets. We base our estimates on historical experience and on various other assumptions 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. Although actual results have historically been reasonably consistent with management’s expectations, the actual results may differ from these estimates, or our estimates may be affected by different assumptions or conditions.
Our critical accounting policies are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” in our Annual Report on Form 10-K and the notes to the unaudited interim condensed consolidated financial statements appearing elsewhere in this Quarterly Report. During the three months ended March 31, 2025, there were no material changes to our critical accounting policies from those discussed in our Annual Report on Form 10-K.
Recent Accounting Pronouncements
The information set forth under Note 1 to the condensed consolidated financial statements under the caption “Description of Business and Summary of Significant Accounting Policies” is incorporated herein by reference.
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Emerging Growth Company Status
We currently qualify as an “emerging growth company” under the JOBS Act. Accordingly, we are provided the option to adopt new or revised accounting guidance either (1) within the same periods as those otherwise applicable to non-emerging growth companies or (2) within the same time periods as private companies.
We have elected to adopt new or revised accounting guidance within the same time period as private companies, unless management determines that it is preferable to take advantage of early adoption provisions offered within the applicable guidance. Our utilization of these transition periods may make it difficult to compare our financial statements to those of non-emerging growth companies and other emerging growth companies that have opted out of the transition periods afforded under the JOBS Act.
The last business day of the fiscal year of 2025 is the last day of the fiscal year following the fifth anniversary of our initial public offering. As a result, on December 31, 2025 we will cease to be an emerging growth company.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risks related to interest rate changes and the corresponding changes in the market values of our investments.
Interest Rate Risk
Market risk is the potential loss arising from adverse changes in market rates and prices, such as interest rates. We are primarily exposed to market risk through our fixed maturities, short-term investments, and cash and cash equivalents. We invest our excess cash primarily in money market accounts, corporate and foreign securities, residential and commercial mortgage-backed securities, and other governmental related securities. Our current investment strategy seeks first to preserve principal, second to provide liquidity for our operating and capital needs, and third to maximize yield without putting principal at risk. We do not enter into investments for trading or speculative purposes. Our investments are exposed to market risk due to the fluctuation of prevailing interest rates that may reduce the yield on our investments or their fair value. Management does not expect our results of operations or cash flows to be materially affected by a sudden change in market interest rates. In addition, if a 10% change in interest rates were to have immediately occurred on March 31, 2025, this change would not have a material effect on the fair value of our investments as of that date.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our chief executive officer and our chief financial officer have concluded, based upon their evaluation as of the end of the period covered by this report, that the Company’s “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are effective in providing reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act 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 chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosures.
In designing and evaluating the disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures and internal control over financial reporting must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Changes in Internal Control Over Financial Reporting
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There was no change in our internal control over financial reporting that occurred during the most recently completed fiscal quarter covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The information set forth under Note 12, Commitments and Contingencies in the notes to the condensed consolidated financial statements under the caption “Legal Proceedings” is incorporated herein by reference.
ITEM 1A. RISK FACTORS
There have been no material changes to the risk factors previously disclosed under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Company Purchases of Equity Securities
The following table provides information with respect to purchases of our common stock by the Company or any “affiliated purchaser” as defined in Rule 10b-18(a)(3) under the Exchange Act, during the three months ended March 31, 2025.
| Period | Total Number of Shares Purchased(1) | Average Price Paid per Share(2) | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | ||||||||||||||||||||||
| (in millions, except share and per share data) | ||||||||||||||||||||||||||
| January 1 through January 31, 2025 | — | $ | — | — | ||||||||||||||||||||||
| February 1 through February 28, 2025 | — | $ | — | — | ||||||||||||||||||||||
| March 1 through March 31, 2025 | — | $ | — | — | ||||||||||||||||||||||
| Total | — | $ | 32.6 | |||||||||||||||||||||||
(1) In March 2023, the Company’s Board of Directors authorized a share repurchase program to purchase up to $50.0 million of the Company’s common stock, with no expiration date. Repurchases under the program may be made in the open market, in privately negotiated transactions or otherwise, with the amount and timing of repurchases to be determined at the Company’s discretion depending on market conditions and corporate needs. This program does not obligate the Company to acquire any particular amount of its common stock, and may be modified, suspended or terminated at any time at the Company’s discretion.
(2) Includes direct costs incurred to acquire the shares.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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ITEM 5. OTHER INFORMATION
Trading Arrangements of Section 16 Reporting Persons
During the three months ended March 31, 2025, no director or officer of the Company adopted terminated
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ITEM 6. EXHIBITS
| Exhibit Number | Description | |||||||
10.1* | ||||||||
10.2* | ||||||||
31.1* | ||||||||
31.2* | ||||||||
32.1# | ||||||||
32.2# | ||||||||
101.INS* | XBRL Instance Document* | |||||||
101.SCH* | XBRL Taxonomy Extension Schema Document* | |||||||
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document* | |||||||
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document* | |||||||
101.LAB* | XBRL Taxonomy Extension Label Linkbase Document* | |||||||
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document* | |||||||
104* | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |||||||
| * | Filed herewith. | |||||||
| # | Exhibits 32.1 and 32.2 are being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall such exhibits be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act or the Exchange Act, except as otherwise specifically stated in such filing. | |||||||
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized:
| HIPPO HOLDINGS INC. | ||||||||
Date: May 7, 2025 | By: | /s/ Richard McCathron | ||||||
| Name: | Richard McCathron | |||||||
| Title: | Chief Executive Officer | |||||||
(Principal Executive Officer) | ||||||||
Date: May 7, 2025 | By: | /s/ Guy Zeltser | ||||||
| Name: | Guy Zeltser | |||||||
| Title: | Chief Financial Officer | |||||||
(Principal Financial Officer) | ||||||||
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