Hippo Holdings Inc.

Welcome, everyone, and thank you for attending today's HIPPO Holdings Third Quarter 2023 Earnings Call. My name is Ciara, and I will be your moderator today. All lines will be muted during the presentation portion of the call. We have an opportunity for questions and answers at the end. If you'd like to ask a question, press star 1 on your telephone keypad. I would now like to pass the conference over to our host, Cliff Gallant, Vice President of Investor Relations.

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's Chief Executive Officer and President, Rick McCaffrey, 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 to the date of this presentation. Forward-looking statements include, but are not limited to, expectations or predictions of financial and business performance and conditions in competitive 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 HIPPO's Form 8-K filed today. For more information, please refer to the risk, uncertainties, and other factors discussed in HIPPO's SEC filings, in particular in the section entitled Risk Factors. All cautionary statements are applicable to any forward-looking statements we make whenever they appear. You should carefully consider risks and uncertainties and other factors discussed in HIPPO's SEC filings. Do not place undue reliance on forward-looking statements as HIPPO is under no obligation and expressly disclaims any responsibility for updating, altering, or otherwise revising any four of the key 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 GAAP can be found in the third 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 McCaffer, our president and CEO.

Good afternoon. Q3 2023 was HIPPO's best quarter yet. The most predictable and profitable parts of HIPPO, our services and insurance as a service segment, continue to drive our growth and now represent 65% of our premiums in force, up from 52% a year ago. The actions we are taking in our homeowners insurance business to lower its volatility and improve its profitability are working. Our Q323 adjusted EBITDA loss was HIPPO's smallest as a public company, and we are on pace to turn positive earlier than previously projected. After a challenging first half of 2023 for the U.S. homeowners insurance industry, HIPPO has taken bold steps to position itself for a period of extended growth and profitability. In August, we temporarily paused the underwriting of most new business. We're assessing our underwriting and risk appetite and only writing new business where we are very confident in its expected profitability and reduced volatility. For our renewal book, we're raising rates, increasing deductibles, and when necessary, non-renewing some policies. While we expect to see a decline in HIPPO's home insurance program's total generated premium in 2024, We expect that to be driven by a disproportionate decline in exposure and volatility and a significant improvement in underwriting profitability. We have already begun to see the benefits of actions taken in 2022 and early 2023 to improve our loss ratio. And we expect significant additional improvement to come. Our consolidated gross loss ratio in the quarter was 59%. a 51 percentage point improvement over a year ago. And our net loss ratio improved even more significantly year over year, declining 112 percentage points to 111. HHIP's core gross loss ratio in the quarter, which excludes prior year reserve movements and PCS CATs, improved 13 percentage points to 69%, down from 82% in the prior year quarter. We had another outstanding quarter in our insurance as a service segment with positive adjusted operating income of $4 million, an exceptional PGP growth of 72%. In a market with highlighted concerns about credit risk exposures, Spinnaker continues to demonstrate strong risk management capabilities and underwriting controls while driving profitable growth. In our fee-based services segment, The success of our builder agency business is providing a repeatable playbook for our entire agency business. As HHIP's risk appetite narrowed, our builder's agency successfully placed business with third-party carriers to keep the premium retention rate at 97% for the quarter. At First Connect, agency appointments are up 3x. and we saw growth of more than 180% in our non-HIPPO new business versus the prior year. As we have focused our underwriting footprint and intensified our emphasis on expense control, we are announcing a significant expense reduction initiative, which we expect to take 50 to 70 million out of our cost structure in 2024. We expect these savings, coupled with further loss ratio improvements and growth, and our insurance as a service and services segment to result in positive adjusted EBITDA before year-end 2024, turning positive earlier than we previously projected. Finally, I extend our condolences to many Israeli members of our HIPPO family and friends and partners impacted by the horrible events over the past several weeks. Thank you. I'll now turn the call over to Stuart.