Hippo Reports Fourth Quarter 2024 Financial Results

Rhea-AI Summary

Hippo (NYSE: HIPO) reported strong Q4 2024 financial results, achieving $8.5 million in positive adjusted EBITDA and $102 million in Q4 revenue, up 58% year-over-year. Full-year 2024 revenue increased 77% to $372 million.

The company posted Q4 net income of $44 million, compared to a $42 million loss in Q4 2023, aided by a $46 million gain from First Connect's sale. The Hippo Home Insurance Program (HHIP) showed significant improvement with Q4 gross loss ratio dropping to 50%, while fixed expenses decreased by $8 million despite revenue growth.

However, Hippo faces an estimated $42 million in catastrophe losses from January Los Angeles wildfires, with $30 million attributed to HHIP and $12 million to non-Hippo programs. The company maintains strong financial position with $571 million in cash and investments, and Spinnaker surplus of $204 million.

Positive

• Revenue up 58% YoY to $102M in Q4
• Positive adjusted EBITDA of $8.5M in Q4
• Q4 Net income of $44M vs $42M loss prior year
• HHIP Q4 gross loss ratio improved to 50%
• Fixed expenses reduced by $8M while revenue grew
• Cash position increased to $571M
• Spinnaker surplus up to $204M

Negative

• $42M estimated catastrophe losses from LA wildfires
• Net profitability still not achieved (excluding one-time gain)
• Gain on sale of First Connect ($46M) drove Q4 profit

Insights

Financial Analyst

Hippo's Q4 2024 results mark a significant inflection point in the company's financial trajectory, highlighted by their first-ever positive adjusted EBITDA of $8.5 million. Revenue surged 58% year-over-year to $102 million, with full-year 2024 revenue up an impressive 77% to $372 million.

The insurance metrics show dramatic operational improvement. Hippo's gross loss ratio improved by nearly 30 percentage points for the full year, with the Q4 HHIP gross loss ratio at 50%, down 3 points year-over-year. This substantial improvement in loss ratios is important for an insurer's path to profitability and demonstrates better underwriting discipline.

Operational efficiency gains are equally impressive, with fixed expenses decreasing by $8 million while revenue increased by $38 million. Sales, marketing, technology, and administrative expenses collectively declined from 69% of revenue to 35% - cutting the expense ratio nearly in half.

While the $44 million net income was primarily driven by a $46 million gain from the First Connect sale (suggesting an underlying small loss), the fundamental improvements in core insurance metrics and cost structure provide confidence in management's guidance toward net income profitability by Q4 2025.

The $42 million preliminary loss estimate from January 2025 LA wildfires represents a near-term headwind, but notably excludes the company's fastest-growing New Homes Program channel, potentially limiting the impact on future growth.

Insurance Industry Specialist

The dramatic improvement in Hippo's loss ratios represents the most critical indicator of their business transformation. The 28-point full-year improvement to 73% and Q4's 50% gross loss ratio demonstrate a fundamental improvement in underwriting quality and risk selection. For context, established property insurers typically target loss ratios in the 50-60% range, suggesting Hippo has now achieved competitive underwriting performance.

The bifurcation of the loss ratio between non-catastrophe (43%) and catastrophe (7%) components indicates effective management of everyday claims while maintaining reasonable catastrophe exposure. This balanced approach is essential for long-term stability in home insurance.

Hippo's channel diversification strategy appears effective. The New Homes Program's growth and absence of exposure to the LA wildfires demonstrates how newer construction with modern materials and building codes can create a more resilient, lower-risk insurance portfolio. This builder-focused approach differs from traditional insurers who often face adverse selection in aging housing stock.

The Insurance-as-a-Service model growing at 22% represents a capital-light approach that can generate fee income without directly assuming underwriting risk. This hybrid model balances growth with risk management better than pure-play insurers or MGAs.

With $571 million in cash/investments and $204 million in Spinnaker surplus, Hippo maintains strong financial flexibility to weather catastrophe events like the LA wildfires ($42 million estimated impact) without impairing their growth trajectory or threatening solvency requirements.

PALO ALTO, Calif., March 6, 2025 /PRNewswire/ -- Hippo (NYSE: HIPO), the home insurance group focused on proactive home protection, today announced its consolidated financial results for the three months that ended December 31, 2024.

"Hippo delivered $8.5 million in positive adjusted EBITDA in Q4 2024, surpassing all expectations," said Hippo President and CEO Rick McCathron. "A nearly 30-point improvement in our gross loss ratio in 2024 and the further streamlining of our operations contributed to our most successful year to date. We accomplished all of this while nearly doubling our revenue, and our focus is now on turning net income profitable by Q4 2025."

Hippo's preliminary pre-tax estimate of catastrophe losses from the wildfires in Los Angeles in January, including assessments from the California FAIR Plan and net of subrogation, is approximately $42 million, with $30 million attributed to the Hippo Home Insurance Program and $12 million related to non-Hippo programs supported by Spinnaker.

None of the losses were associated with the company's fastest-growing channel, the Hippo New Homes Program, which offers homebuilders access to insurance products specifically designed for new homes from Hippo and a panel of carrier partners. The channel represents a substantial majority of the new business Hippo has written in California over the past few years.

"As a native of Southern California, these events are deeply personal to me," added McCathron. "I am proud of Hippo's quick and compassionate response—arranging temporary housing, offering accelerated payouts, and collaborating with our builder partners to find ways to shorten the rebuilding process."

Complete financial results and full year guidance for 2025 can be found in the company's shareholder letter in the Investor Relations section of Hippo's website at https://investors.hippo.com/.

Fourth Quarter Highlights

Strong Top-line Growth; Favorable Mix-Shift

• Q4 Revenue up 58% YoY to $102 million; FY2024 Revenue up 77% to $372 million
• Pro-forma for the First Connect transaction, Consolidated TGP up 16% YoY, driven by Insurance-as-a-Service ("Iaas") which grew 22%

Continued Improvement of HHIP Loss Ratio

• HHIP Q4 gross Loss Ratio improved 3pp YoY to 50%, with HHIP non-PCS loss ratio at 43%, and HHIP PCS loss ratio at 7%
• HHIP FY2024 Gross Loss Ratio improved 28pp to 73%
• HHIP Net Loss Ratio improved 46pp YoY to 60%

Improving Operating Leverage

• Investments in operational efficiencies continued to pay off as fixed expenses lowered by $8 million while revenue increased by $38 million YoY
• Sales & Marketing, Technology & Development, and General & Administrative expenses collectively declined by 34pp of revenue YoY, from 69% of revenue in Q4'23 to 35% in Q4'24

Significant Step Forward on our Path to Profitability

• Q4 Net Income attributable to Hippo of positive $44 million, vs. Net Loss of $42 million in Q4 of last year; Gain on Sale of First Connect contributed $46m
• Q4 adjusted EBITDA of positive $8.5 million vs. Adjusted EBITDA loss of $22 million in Q4 of last year

Financial Strength

• Cash and investments, excluding restricted cash, increased $25 million QoQ to $571 million
• Spinnaker surplus of $204 million, up from $191 million a year ago

Conference Call and Webcast Information 
Date: Thursday, March 6, 2025
Time: 8:00 a.m. Eastern Time / 5:00 a.m. Pacific Time
Dial In: +1 833 470 1428 (U.S.) / Global Dial-In Numbers
Conf ID: 827436
Webcast: https://events.q4inc.com/attendee/922114957

A replay of the webcast will be made available after the call in the investor relations section of the company's website at https://investors.hippo.com/ 

Information about Key Operating Metrics/Non-GAAP Financial Measures
We define gross loss ratio expressed as a percentage, as the ratio of the gross losses and loss adjustment expenses, to the gross earned premium. We define TGP as the aggregate written premium placed across all of our business platforms for the period presented. We measure TGP as it reflects the volume of our business irrespective of choices related to how we structure our reinsurance treaties, the amount of risk we retain on our own balance sheet, or the amount of business written in our capacity as an MGA, agency, or as an insurance carrier/reinsurer. We define adjusted EBITDA, a Non-GAAP financial measure, as net loss attributable to Hippo excluding interest expense, income tax expense, depreciation, amortization, stock-based compensation, net investment income, restructuring charges, impairment expense, gains and losses on sales of business, other non-cash fair market value adjustments, contingent consideration for one of our acquisitions, and other transactions, which may include certain legal fees and settlement costs, that we consider to be unique in nature. We exclude these items from Adjusted EBITDA because we do not consider them to be directly attributable to our underlying operating performance. This Non-GAAP financial measure is in addition to, and not a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP and should not be considered as an alternative to net income, operating income or any other performance measures derived in accordance with GAAP. Reconciliations of this Non-GAAP financial measure to its most directly comparable GAAP counterpart is included in the shareholder letter referenced above. We believe that these non-GAAP measures of financial results provide useful supplemental information to investors about Hippo.

Forward-looking statements safe harbor
Certain statements included in this press release that are not historical facts are forward-looking statements for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements generally are accompanied by words such as "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "expect," "should," "would," "plan," "predict," "potential," "seem," "seek," "future," "outlook," and similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding estimates and forecasts of financial results and other operating and performance metrics, our business strategy, our cost reduction efforts, the quality of our products and services, and the potential growth of our business. These statements are based on the current expectations of Hippo's management and are not predictions of actual performance. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions, and many actual events and circumstances are beyond the control of Hippo. These forward-looking statements are subject to a number of risks and uncertainties, including our ability to navigate extensive insurance industry regulations and the scrutiny of state insurance regulators, our ability to achieve or maintain profitability in the future; our ability to retain and expand our customer base and grow our business, including our builder network; our ability to manage growth effectively; risks relating to Hippo's brand and brand reputation; denial of claims or our failure to accurately and timely pay claims; the effects of intense competition in the segments of the insurance industry in which we operate; the availability and adequacy of reinsurance, including at current coverage, limits or pricing; our ability to underwrite risks accurately and charge competitive yet profitable rates to our customers, and the sufficiency of the analytical models we use to assess and predict exposure to catastrophe losses; risks related to our proprietary technology and our digital platform; outages or interruptions or delays in services provided by our third party providers, including our data vendors; risks related to our intellectual property; the seasonal and cyclical nature of our business; the effects of severe weather events and other natural or man-made catastrophes, including the effects of climate change, global pandemics, and terrorism; continued disruptions from the COVID-19 pandemic; any overall decline in economic activity; regulators' identification of errors in the policy forms we use, the rates we charge, and our customer communications including, but not limited to, cancellations, non-renewals and reinstatements through market conducts, complaints, or other inquiries; the effects of existing or new legal or regulatory requirements on our business, including with respect to maintenance of risk-based capital and financial strength ratings, data privacy and cybersecurity, and the insurance industry generally; and other risks set forth in the sections entitled "Risk Factors" in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. If any of these risks materialize or our assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. There may be additional risks that Hippo does not presently know, or that Hippo currently believes are immaterial, that could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect Hippo's expectations, plans, or forecasts of future events and views as of the date of this press release. Hippo anticipates that subsequent events and developments will cause Hippo's assessments to change. However, while Hippo may elect to update these forward-looking statements at some point in the future, Hippo specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing Hippo's assessments of any date subsequent to the date of this press release. Accordingly, undue reliance should not be placed upon the forward-looking statements.

About Hippo
Hippo is protecting the joy of homeownership, helping to safeguard customers' most important financial asset by harnessing the power of real-time data and a growing suite of home services to deliver proactive home protection. Hippo Holdings Inc. operating subsidiaries include Hippo Insurance Services, Hippo Builder Insurance Agency, Hippo Home Care, Spinnaker Insurance Company, Spinnaker Specialty Insurance Company, and Wingsail Insurance Company. Hippo Insurance Services and Hippo Builder Insurance Agency are licensed property casualty insurance agents with products underwritten by various affiliated and unaffiliated insurance companies. For more information, visit http://www.hippo.com.

Contacts
Investors:
Sammy Ng
Investors@hippo.com

Press:
Mark Olson
press@hippo.com

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SOURCE Hippo Analytics, Inc

FAQ

What was Hippo's (HIPO) revenue growth in Q4 2024?

Hippo's Q4 2024 revenue grew 58% year-over-year to $102 million, with full-year revenue up 77% to $372 million.

How much are the estimated wildfire losses for Hippo (HIPO) in January 2025?

Hippo estimates $42 million in catastrophe losses from LA wildfires, with $30 million for HHIP and $12 million for non-Hippo programs.

What was Hippo's (HIPO) Q4 2024 adjusted EBITDA?

Hippo achieved positive adjusted EBITDA of $8.5 million in Q4 2024, compared to a $22 million loss in Q4 2023.

How much did Hippo's (HIPO) HHIP loss ratio improve in 2024?

HHIP's full-year 2024 gross loss ratio improved by 28 percentage points to 73%, with Q4 ratio at 50%.

What is Hippo's (HIPO) current cash position as of Q4 2024?

Hippo reported $571 million in cash and investments, excluding restricted cash, up $25 million quarter-over-quarter.