Hippo Holdings Inc.

Hello and welcome everyone to the HIPPO fourth quarter 24 earnings call. My name is Maxine and I'll be coordinating the call today. If you would like to ask a question, you may do so by pressing star below by one on your telephone keypad. I will now hand you over to Mark Olson, Director of Corporate Communications to begin. Mark, please go ahead when you are ready.

Thank you, Operator. Good morning and thank you for joining HIPPO's 2024 fourth quarter earnings call. Earlier today, HIPPO issued a shareholder letter announcing its Q4 and full year 2024 results, which is available at investors.hippo.com. Reading 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 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 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 forecasts, including those set forth in HIPAA's Form 10-K filed today. For more information, please refer to the risks, uncertainties, and other factors discussed in HIPAA's SEC filings, in particular, in the section entitled Risk Factors in our Form 10-K. 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 and expressly disclaims any responsibility for updating, offering, 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 full reconciliation to GAAP can be found in the fourth quarter 2024 shareholder letter which has been furnished to the SEC and is available on our website. And with that, I'll turn the call over to Rick McCatherin, our president and CEO.

Thank you, Mark, and good morning, everyone. Thank you for joining us. Before we get into our Q4 and full year 2024 results, I wanted to take a moment to acknowledge the pain the community of Los Angeles has felt in January because of the wildfires and our role as an insurance company to help alleviate that pain. A handful of our HIPPO homeowners customers and their families completely lost their homes to the fires. We responded immediately with assistance arranging temporary housing, accelerated payouts of policy limits, and have been working with our builder partners to explore ways to help reduce the time to rebuild. Other customers suffered partial losses and or damage from smoke and ash, and we are supporting them with both financial and operational assistance with remediation. Because I know you are curious about the financial impact of these events, I can say that our preliminary pre-tax estimates of cap losses from these fires is approximately $42 million. A few days ago, we signed a definitive agreement to sell our subrogation rights for the Eaton portion of the wildfires, so this figure is net of expected recoveries from both reinsurance as well as subrogation and includes the impact of the assessment from the California Fair Plan. Approximately $30 million of this amount relates to the HIPPO home insurance program, with the remaining $12 million related to non-HIPPO programs supported by our Spinnaker Funding business. The impact from these losses will be reflected in our Q1 2025 financial results. One more thing I should add is that the HIPPO portion of these losses was related to legacy HHIP policies which we have been working to reduce our exposure to over the past few years. None of these losses related to homes we cover that came from our new homes channel, which represents a substantial majority of the new business we've been writing in California for some time. Now turning to our performance for both the full year and fourth quarter of 2024. I think it's safe to say that this was the most successful year and quarter in the company's history. Over the course of the year, we improved our HHIP gross loss ratio by nearly 30 percentage points, streamlined our operations to reduce fixed costs, and in Q4 achieved our long-stated goal of generating positive adjusted EBITDA, both on time and to a greater extent than we expected. We did all of this while nearly doubling our annual revenue and laying the foundation across each of our business units to deliver margin-enhancing growth for years to come. In our core HHIP homeowners insurance program, we completed the broad transformation of our policy portfolio that was designed to reduce cat-related volatility and bring our loss ratios down to target levels. We accomplished this through rate increases structural changes to our coverage, and reductions in exposure to wind and hail by approximately 80% compared to mid-2023 levels. We achieved a gross loss ratio of 73% for calendar year 2024 and a non-CAT PCS loss ratio of under 45% in the fourth quarter, approaching our long-term target level with further improvements expected in 2025. In our insurance as a service business, we have demonstrated the ability to achieve consistent long-term growth and profitability over the years while maintaining our quality bar for program vetting and underwriting. In 2024, we grew our annual revenue by more than 40% while maintaining discipline in both program selection and risk participation, which resulted in an annual net loss ratio of 39%. There is no shortage of potential programs for Spinnaker to work with. In fact, we reviewed more than 100 opportunities in 2024, but we do not think we need to compromise on quality to achieve compelling financial results. During the year, we focused on building a solid foundation for future growth for our HIPPO homeowners insurance program with a particular focus on the new homes channel. We added new builders and carrier partners. enhanced our already differentiated risk allocation technology, and made additional investments in operational excellence. As we move into 2025, we are working to further expand our network of partners and to deepen relationships with our current partners, all while working with this group to redefine what is possible in helping buyers of newly built homes secure insurance quickly and easily as part of the home buying process. As we turn our attention to our outlook for 2025, I want to note that even with factoring in the short-term impact of the LA fires, we feel very well positioned in 2025 to deliver substantial improvements to operating income versus our 2024 results. Stuart will talk more about this in a few minutes, but because I know you're all curious, I will say with conviction that we remain on track to turn net income profitable by the end of 2025. I'm proud of the progress we've made as a business over the past 12 months and all of our HIPPO team members who have made this progress possible. I'm even more excited about what's next on the HIPPO journey, and we look forward to sharing more about our future plans and a special day for investors on June 12th in New York City. We'll share more details about that event soon. 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 2024 and Q4 financial results, as well as our expectations for 2025.