Hippo Holdings Inc.

Hello and welcome to the Hippo Holdings Q2 earnings call. My name is Alex, I'll be coordinating the call today. If you'd like to ask a question at the end of the presentation, you can press star followed by one on your telephone keypad. If you'd like to remove your question, you may press star followed by two. I'll now hand it over to your host, Cliff Gallant, VP of Investor Relations. Please go ahead.

Thank you, operator. Good morning. And thank you for joining Hippo's second 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 McCaffrey, and Chief Financial Officer, Stuart Ellis. Following management's prepared remarks, we will open up the call to questions. Before we begin, we'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, HIPAA's expectations or predictions of financial and business performance and conditions in competitive and industry outlooks. 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 HIPAA's Form 8 file today. For more information, please refer to the risks, uncertainties, and other factors discussed in HIPAA's SEC filing, 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 is under no obligation to expressly disclaim 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 to GAAP can be found in the second quarter 2023 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 morning, everyone. At the beginning of this year, we talked about our three major segments for the first time, presenting our 2023 outlook for each. I'm encouraged by our progress against key metrics in all three segments during the quarter. Growth in our total generated premium, or TGP, and revenue is exceeding expectations and we're holding the line on our fixed costs. Unfortunately, catastrophic losses during Q2 overshadowed continued improvement in our core gross loss ratio. However, I want to be clear, we remain confident in our long-term vision and that we are on track to be adjusted EBITDA positive by the end of 2024. In our services segment, we are ahead of plan on TGP and revenue while remaining within our fixed cost budget. At a time when insurer appointments are tough to come by, our First Connect platform is using its technology to facilitate business between agents and carriers. Its carrier store, which launched in October, already supports over 80 carriers, connecting them to thousands of independent agents. In Q2 23, we facilitated 14,800 agency appointments, up over 30% from Q1 2023, and up over 400% from the prior year quarter. We also continue to see strength in our HIPPO agency, Where we sell insurance to consumers, on behalf of third party carriers our builder business has continued to grow quickly and our year over year premium retention for third party products rose to 110% up from 98% in the prior year quarter. And finally, with our hippo home care services we're helping a growing number of homeowners improve their homes health. Our recently launched home health app crossed 10,000 monthly active users, and the team continues to make great progress on an exciting roadmap of products and services designed to help homeowners better protect and maintain their homes. When we first introduced our insurance as a service segment, we characterized its earning stream as steady, growing, and diversifying. In a quarter of significant earnings volatility for many insurers, We believe our results validate this characterization. Adjusted operating income for the second quarter was $5 million, as Spinnaker's diverse portfolio of short-tail risks and expense discipline continued to deliver adjusted operating income growth. We're also well ahead of plan for top-line growth. PGP is up 112% versus the prior year quarter as we expanded capacity with existing partners. Spinnaker's experienced team, strong financial rating, and the ability to leverage HIPPO's tech platform continues to attract potential new partners as well. Our HIPPO home insurance program segment continued to exceed our targets for growth and diversification during the quarter. And our core gross loss ratio of 62% year to date is comfortably within the 60 to 67% target we communicated at the beginning of the year. Unfortunately, the broader U.S. homeowners insurance industry experienced significant catastrophe losses in the quarter. Leading insurers have already reported billions of dollars of losses stemming from hail and severe conductive storm events in the central U.S. These events in Texas and Colorado also impacted HIPPO, leading to significantly higher PCS CAT losses than in normal years and a HIPPO home insurance program gross loss ratio of 178%. HIPPO is responding with rate hikes, increased deductibles for wind and hail perils, slowing policy growth, and non-renewing policies in certain regions. We remain committed to achieving underwriting profitability. For a nimble tech company like Hippo, these challenges and the resulting market dislocation are an opportunity. Our technology allows us to make the necessary changes faster than traditional insurers while also continuing to grow in less cat-exposed geographies, further adding to our diversity. For example, in Texas where our hail losses were severe this quarter, we've already responded with filings to raise rates and deductibles where needed. These filings are subject to regulatory approval. Excluding the effects of severe weather events during the quarter, our Q2 23 KPIs for each of our segments were ahead of the expectations we shared at the beginning of the year. And the actions we are taking in response to this weather should help reduce the volatility of our future financial results and give us even greater confidence in our path and timeline to profitability. The long history of insurance is one of innovation and change. Some opportunities arrive suddenly after major loss events like Hurricane Andrew. Some came after legislative actions like the passage of Prop 103 in California. Some came when the innovative spirits of great companies led change in the distribution and pricing of products like auto insurance. We believe the U.S. homeowners market is in the early days of a challenging period. but we see the opportunity for a tech-enabled company like HIPPO to be the solution for many U.S. homeowners. Thank you, and now I'd like to turn the call over to Stuart to review our Q2 financial results in more detail.