Hippo Holdings Inc.

Hello, everyone, and welcome to the Hippo Holdings fourth quarter 2023 earnings call. My name is Charlie, and I'll be coordinating the call today. You'll have the opportunity to ask a question at the end of the presentation. If you'd like to register a question, please press star followed by one on your telephone keypads. I'll now hand over to our host, Mark Olson, Director of Corporate Communications, to begin. Mark, please go ahead.

Thank you, Operator. Good morning, and thank you for joining Hippo's 2023 fourth quarter earnings call. Earlier today, HIPPO issued a shareholder letter announcing its Q4 and full year results, which is available at investors.hippo.com. Leading today's discussion will be HIPPO President and Chief Executive Officer, Rick McCatherin, and Chief Financial Officer, Stuart Ellis. Following management's prepared remarks, we will open 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 and 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 HIPAA's Form 8 file today. For more information, please refer to the risks, uncertainties, and other factors discussed in HIPPO's SEC filing, 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 the 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, offering, or otherwise revising any forward-looking statements, whether as the result of new information of future events or otherwise except as required by law. During this conference call, we referred to non-GAAP financial measures, such as total generated premiums and adjusted EBITDA. Our GAAP results and description of our non-GAAP financial measures with full reconciliation to GAAP can be found in the fourth quarter 2023 shareholder letter, which has been furnished to the SEC and is available on our website. And with that, I will turn the call over to Rick McCatherin, our president and CEO.

Good morning, everyone. The beginning of a new year always presents an opportunity to reflect on past and internalize its lessons before moving forward with renewed enthusiasm and focus. In two short years, we have nearly doubled our total generated premium from $606 million to $1.1 billion, and more than doubled our revenue from $91 million to $210 million, all while lowering fixed expenses and improving the gross loss ratio on our HIPPO home insurance program by approximately 40 percentage points. Over the past year, we learned that our customers want the ability to buy not just HIPPO home insurance policies from us, but other kinds of policies from third party carriers as well. We have taken this to heart and refocus our consumer agency on finding the best policy for each customer, regardless of the carrier. We believe that for our target customer generation, better customers, especially those who are buying a newly built home, a HIPPO homeowners policy will be the best option. But if a customer is a better fit with another carrier, we will work to find the best option from across our 50-plus carrier partners. We also learned that there is a real need in the market for carrier services focused on servicing MGAs, where much of the innovation in the insurance market is happening. Our Spinnaker Insurance as a Service business has an industry-leading platform and robust underwriting processes that have allowed us to grow at an accelerating rate in 2023, while avoiding many of the pitfalls experienced by our competitors over the past year. We are especially excited to have achieved this growth while expanding our operating margin in this already profitable portion of our business. Truly a win-win for both Spinnaker and its MGA customers. And finally, We also learned that there are some risks and some geographies to which we prefer less exposure as we seek to improve the predictability and profitability of our HIPPO home insurance program. As discussed in the last quarter earnings call, in the second half of 2023, we launched an aggressive program to raise deductibles for wind and hail in certain geographies and began non-renewing policies in higher CAT areas where we had excess concentration. These actions are intended to reduce exposure to the kinds of losses we experienced in the second quarter of 2023. A quick thought experiment illustrates how those decisions are paying off. If we experience the exact same hailstorms this coming year with the same level of severity, the program of deductible changes and selective non-renewals in CAT concentrated areas that is currently in progress would reduce HIPAA's direct losses by approximately 55%. Moreover, because these changes that began last October take a full year to work their way through the policy renewal dates, the benefits in 2025 would be even greater. An almost 80% reduction in direct losses if the hailstorms from the second quarter of 2023 were to reoccur. These initiatives, when combined with the actions we took in the second half of 2023 to streamline our operations and reduce our fixed expenses, give us greater confidence that we are on track to achieve our profitability goals ahead of schedule. with a mix that is shifting towards businesses with lower volatility and higher predictability. As we enter 2024, we believe we are incredibly well positioned to compete for business in our core markets and our core customer segments. It's time for Hippo to go back on offense. Now, I'd like to turn the call over to our Chief Financial Officer, Stuart Ellis, to walk through the highlights of our full year and Q4 2023 financial results, as well as our expectations for the future.