Hippo Holdings Inc.

Good evening. Thank you for attending today's HIPAA third quarter 2022 earnings call. My name is Megan and I'll be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star one on your telephone keypad. I would now like to pass the conference over to our host, Cliff Gallant. Cliff, please go ahead.

Thank you, operator. Good afternoon, everybody, and thank you for joining HIPPO's third quarter earnings conference call. Earlier, HIPPO issued a shareholder letter announcing its results, which is available at investors.hippo.com. Leading today's discussions will be HIPPO Chief Executive Officer and President, Rick McCatherin, and Chief Financial Officer, Stuart Ellis. Following management's prepared remarks, we'll open up the call to questions. Before we begin, I'd like to remind you that our discussion will contain predictions, expectations, forward-looking statements, and other information about our business that are based on management's current expectations as of the date of this presentation. Forward-looking statements include, but are not limited to, TIPO's expectations or predictions of financial and business performance and conditions in competitive and industry outlook. Forward-looking statements are subject to risks, uncertainties, and other factors that could cause our actual results to differ materially from historical results and or from our forecast, including those set forth in TIPO's Form 8K file today. For more information, please refer to the risks, uncertainties, and other factors discussed in HIPAA's SEC filings, in particular in the sections entitled Risk Factors. All cautionary statements are applicable to any forward-looking statements we make whenever they appear. You should carefully consider the risks and uncertainties and other factors discussed in HIPAA's SEC filings. Do not place undue reliance on forward-looking statements as HIPAA was under no obligation and expressly disclaimed any responsibility for updating, altering, or otherwise revising any forward-looking statements. whether as a result of new information, future events, or otherwise, except as required by law. During this conference call, we will also refer to non-GAAP financial measures, such as total generated premium and adjusted EBITDA. Our GAAP results and description of our non-GAAP financial measures with a full reconciliation of 2GAAP can be found in the third quarter 2022 shareholder letter, which has been furnished to the SEC and available on our website. And with that, I'll turn the call over to Rick McCatherin, our President and CEO.

Good afternoon and thank you for joining us. Hippo's business model is proving itself and our investments in technology are paying off. We've executed on our dual goals of growth and improved loss ratio despite this year's challenges from inflation, supply chain dislocation, and one of the worst hurricane losses in history. We remain confident that we are building a superior underwriting model and an industry-leading technology stack. At HIPPO, we strive to help our customers enjoy the homes through enhanced home protection and services. But some events, like major hurricanes, are unavoidable. At such times, we do our best to help customers get through those difficulties and back to enjoying their homes. This quarter, I'm proud of HIPPO's response to the tragedy of Hurricane Ian. As we speak, well over half of Hurricane Ian reported claims have been paid. We are delivering on our service promise to our customers in a crisis while also executing on improving our financial performance. Our customer base reached 332,000 by quarter's end. Customer acquisition and retention is driving accelerating net commission revenue and steady total generated premium growth. Included in our customer count are HIPPO homeowners insurance policyholders as well as HIPPO agency customers who still receive the HIPPO experience while placed with third-party carriers. Our HIPPO blended premium retention across both HIPPO policies and agency customers was 90% in the quarter, up from 89% in Q2. Our customers are happy and are staying with us. TGP growth accelerated significantly. and was up 36% versus the prior year quarter. We continue to see strength in our builder channel, which is our best loss ratio segment. Despite some slowdowns in housing markets, we expect the attractiveness of our model for distribution partnerships will lead to new relationships and continued strong growth. We also increase the geographical diversification of our portfolio, with growth in the states where we have entered over the past year, including New York, North Carolina, and Massachusetts. We're having great success in attracting our target customers, a group we call Generation Better, which we estimate to account for a third of all U.S. homeowners. A key characteristic of Generation B is a desire to proactively protect and maintain their homes and a willingness to use technology to be better homeowners. Through a targeted marketing efforts in Q3 2022, we estimate that over 75% of our new business was Generation Better customers. With this cohort, we expect higher consumer retention, better loss ratios, and an opportunity to cross-sell as we expand our offering of home care services. Excluding the impact of Hurricane Ian, Our gross loss ratio in Q3 was 58%, an improvement of 70 percentage points from Q3 last year. Despite challenging market conditions where inflationary pressures have dampened results across the industry, our industry-leading technology platform leverages rapid data integration and quickly re-underwrite and reprice our book to incorporate inflationary trends into our pricing. In addition, we've gotten better at attracting our target market and have improved our geographical balance. We expect these improvement trends to continue and the superiority of our underwriting platforms to become increasingly apparent over time. While Stuart will say more about Hurricane Ian in a moment, I wanted to note that the net losses to HIPPO at a consolidated level from this event were only 4.7 million, and of that, only 900,000 related to HIPPO's homeowners programs. Our small net losses in Florida from Hurricane Ian was not a simple stroke of luck. We've made strategic decisions that limit our exposure in that state. First, we have been cautious about adding Florida exposure to our portfolio due to both the unique weather and legal environments. Second, our HIPPO homeowners business in Florida is exclusively through our builders programs. New home construction with the latest in design and technology and craftsmanship, better able to withstand nature's fury. HIPPO's third quarter adjusted EBITDA loss was $54.8 million, including $4.7 million of losses related to Hurricane Ian. When we reported our 2Q 2022 adjusted EBITDA loss of $55.8 million, we said we expected Q3 2022 to be our peak loss quarter we beat that expectation despite one of the worst industry events in history because revenue growth and underlining gross loss ratio improvement are accelerating and that the expense reduction actions we've taken are beginning to have their intended effect. Barring unusual weather, we expect our Q4 2022 adjusted EBITDA loss will be below 50 million with continued improvement thereafter. We have also continued to invest in our technology and service capabilities to drive long-term growth and superior customer experience. In the fourth quarter, we expect to launch our Book a Pro feature for Texas customers via our mobile app. This new feature will connect homeowners who need help from home improvement professionals like plumbers and electricians with a highly rated provider in our network. Additionally, our customers will be able to message our home care experts to get advice via our mobile app. We aim to aggressively scale these capabilities across more locations, services, and providers as part of our goal of becoming our customers' go-to destination for home care. We're very proud of what we have achieved this quarter and of the business we're building. Thank you. Now I'd like to turn the call over to Stuart, our CFO.