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What changed in Hippo Holdings Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Hippo Holdings Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+405 added−445 removedSource: 10-K (2025-03-06) vs 10-K (2024-03-06)

Top changes in Hippo Holdings Inc.'s 2024 10-K

405 paragraphs added · 445 removed · 338 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

46 edited+9 added−17 removed39 unchanged
Biggest changeHippo’s name is also registered as a trademark in Algeria, Armenia, Australia, Bhutan, Bosnia & Herzegovina, Cambodia, Columbia, the European Union, Georgia, Iceland, India, Indonesia, Israel, Japan, Kazakhstan, Laos, Liechtenstein, Monaco, Mongolia, Montenegro, New Zealand, Norway, Philippines, Republic of Korea, Republic of Moldova, Russian Federation, San Marino, Serbia, Singapore, Switzerland, Turkmenistan, Ukraine, United Kingdom, United States of America and Vietnam. 13 The expansion of our business has required us to protect our trademarks, domain names, and patents and, to the extent that we expand our business into new geographic areas, we may be required to protect our trademarks, domain names, patents and other intellectual property in an increasing number of jurisdictions, a process that is expensive and sometimes requires litigation.
Biggest changeAs of December 31, 2024, Hippo’s name is also registered as a trademark in Algeria, Armenia, Australia, Bhutan, Bosnia & Herzegovina, Cambodia, Columbia, the European Union, Georgia, Iceland, India, Indonesia, Israel, Japan, Kazakhstan, Laos, Liechtenstein, Monaco, Mongolia, Montenegro, New Zealand, Norway, Philippines, Republic of Korea, Republic of Moldova, Russian Federation, San Marino, Serbia, Singapore, Switzerland, Turkmenistan, Ukraine, United Kingdom, United States of America and Vietnam.
For example, in California the California Consumer Privacy Act (“CCPA”), which came into force in 2020, gives California residents expanded rights to access and request deletion of their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is used and shared.
For example, in California the California Consumer Privacy Act (the “CCPA”), which came into force in 2020, gives California residents expanded rights to access and request deletion of their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is used and shared.
The CCPA allows for the California Attorney General to impose civil penalties for violations, and provides a private right of action for certain data breaches. In 2020, California voters also passed the California Privacy Rights Act (“CPRA”), which amended the CCPA and took effect on January 1, 2023.
The CCPA allows the California Attorney General to impose civil penalties for violations and provides a private right of action for certain data breaches. In 2020, California voters also passed the California Privacy Rights Act (“CPRA”), which amended the CCPA and took effect on January 1, 2023.
However, new entrants must overcome high barriers to entry: • Significant initial capital requirements to support insurance risk, challenges finding cost-effective reinsurance without an underwriting track record, expensive off-the-shelf policy and claims management systems, or resource-intensive investment in developing a proprietary tech stack • Complicated and fragmented regulatory landscape with a unique set of rules from each state • Significant resource investment in tech and infrastructure to access, collect and validate insurance-related data, in addition to the development of multiple customized APIs • Difficulty accessing distribution networks, built upon a legacy, agent-based distribution, or resource-intensive process of creating and scaling new, alternative customer acquisition channels We believe incumbents face multiple challenges in responding to the ongoing transformation and meeting customer needs, including channel conflict, data stability and veracity (stemming from unverified customer-supplied data), and too much reliance on aging and siloed technology.
However, new entrants must overcome high barriers to entry: • Significant initial capital requirements to support insurance risk, challenges finding cost-effective reinsurance without an underwriting track record, expensive off-the-shelf policy and claims management systems, or resource-intensive investment in developing a proprietary tech stack • Complicated and fragmented regulatory landscape with a unique set of rules from each state • Significant resource investment in tech and infrastructure to access, collect and validate insurance-related data, in addition to the development of multiple customized APIs 7 • Difficulty accessing distribution networks, built upon a legacy, agent-based distribution, or resource-intensive process of creating and scaling new, alternative customer acquisition channels We believe incumbents face multiple challenges in responding to the ongoing transformation and meeting customer needs, including channel conflict, data stability and veracity (stemming from unverified customer-supplied data), and too much reliance on aging and siloed technology.
For additional information, see “Risk Factors — Risks Related to Our Business — We are subject to laws and regulations concerning our collection, processing, storage, sharing, disclosure, and use of customer information and other sensitive data, and our actual or perceived failure to comply with data privacy and security laws and regulations could damage our reputation and brand and harm our business and operating results.” Data Security and Cybersecurity Laws In addition to data privacy laws, a growing number of states have enacted data security and cybersecurity laws requiring companies to take proactive data security measures to protect sensitive information from cybersecurity threats.
For additional information, see “Risk Factors — Risks Related to Our Business — We are subject to laws and regulations concerning our collection, processing, storage, sharing, disclosure, and use of customer information and other sensitive data, and our actual or perceived (or alleged) failure to comply with data privacy and security laws and regulations could damage our reputation and brand and harm our business and operating results.” Data Security and Cybersecurity Laws In addition to data privacy laws, a growing number of states have enacted data security and cybersecurity laws requiring companies to take proactive data security measures to protect sensitive information from cybersecurity threats.
For additional information, see “Risk Factors — Risks Related to Our Industry — We are subject to extensive insurance industry regulations” and “— Our insurance company subsidiaries are subject to minimum capital and surplus requirements, and failure to meet these requirements could subject us to regulatory action.” Intellectual Property We consider the Hippo brand and those brands of our subsidiaries to be among our most valuable assets.
For additional information, see “Risk Factors — Risks Related to Our Industry — We are subject to extensive insurance industry regulations” and “— Our insurance company subsidiaries are subject to 11 minimum capital and surplus requirements, and failure to meet these requirements could subject us to regulatory action.” Intellectual Property We consider the Hippo brand and those brands of our subsidiaries to be among our most valuable assets.
First Connect Our First Connect Insurance Services business is a digital platform designed to support independent agents by providing access to some of the nation’s top carriers. The agent-centric platform provides access to carriers and a variety of products that includes home, auto, cyber, small business, life, specialty lines and more.
First Connect First Connect Insurance Services business is a digital platform designed to support independent agents by providing access to some of the nation’s top carriers. The agent-centric platform provides access to carriers and a variety of products that includes home, auto, cyber, small business, life, specialty lines and more.
According to the Model Bulletin, the AIS program should: (1) address governance, risk management controls and internal audit functions, (2) be adopted by the board of directors or an appropriate board committee, (3) be tailored to and proportionate with the insurer’s use and reliance on AI and AI systems, (4) be independent or part of an insurer’s existing enterprise risk management framework; (5) address the use of all AI systems that make decisions impacting customers and include processes and procedures for notify impacted consumers that AI systems are in use; (6) address the AI systems used with respect to regulated insurance practices whether developed by an insurer or third party vendor; (7) address the use of AI systems across the insurance product life cycle.
According to the Model AI Bulletin, the AIS program should: (1) address governance, risk management controls and internal audit functions, (2) be adopted by the board of directors or an appropriate board committee, (3) be tailored to and proportionate with the insurer’s use and reliance on AI and AI systems, (4) be independent or part of an insurer’s existing enterprise risk management framework; (5) address the use of all AI systems that make decisions impacting customers and include processes and procedures for notifying impacted consumers that AI systems are in use; (6) address the AI systems used with respect to regulated insurance practices whether developed by an insurer or third party vendor; and (7) address the use of AI systems across the insurance product life cycle.
Dodd-Frank created the Federal Insurance Office (“FIO”) within the U.S. Department of the Treasury (“Treasury”). The FIO monitors the insurance industry, provides advice to the Financial Stability Oversight Council (“FSOC”), represents the U.S. on international insurance matters, and studies the current regulatory system.
The Dodd-Frank Act created the Federal Insurance Office (“FIO”) within the U.S. Department of the Treasury (“Treasury”). The FIO monitors the insurance industry, provides advice to the Financial Stability Oversight Council (“FSOC”), represents the U.S. on international insurance matters, and studies the current regulatory system.
Any reduction in the risk-based capital ratios of our insurance subsidiaries could require us to take remedial actions to increase our insurance subsidiaries’ capital and could also adversely affect their financial strength ratings as determined by statistical rating agencies.
Any reduction in the risk-based capital ratios of our insurance 10 subsidiaries could require us to take remedial actions to increase our insurance subsidiaries’ capital and could also adversely affect their financial strength ratings as determined by statistical rating agencies.
In the U.S., insurance companies are subject to the privacy provisions of the federal Gramm-Leach-Bliley Act and the National Association of Insurance Commissioners (“NAIC”) Insurance Information and Privacy Protection Model Act, to the extent adopted and implemented by various state legislatures and insurance regulators.
In the U.S., insurance companies are subject to the privacy provisions of the federal Gramm-Leach-Bliley Act and the National Association of Insurance Commissioners (“NAIC”) Insurance Information and Privacy Protection Model Act, to the extent adopted and implemented by 8 various state legislatures and insurance regulators.
The NYDFS Reg requires state-licensed financial institutions, including insurance companies, to protect their information systems and the nonpublic information that they store by requiring policies and procedures, risk assessment, and certain core cybersecurity program elements.
The NYDFS Reg requires state-licensed financial institutions, including insurance companies, to protect their information systems and 9 the nonpublic information that they store by requiring policies and procedures, risk assessment, and certain core cybersecurity program elements.
If we are unable to protect our trademarks, domain names, patents and other intellectual property rights, or prevent third parties from infringing upon them, our business may be adversely affected, perhaps materially.
If we are unable to protect or enforce our trademarks, domain names, patents and other intellectual property rights, or prevent third parties from infringing upon them, our business may be adversely affected, perhaps materially.
These laws, regulations and orders have a substantial impact on our business and relate to a wide variety of matters including insurer solvency and statutory surplus sufficiency, reserve adequacy, insurance company licensing, examination, investigation, agent and adjuster licensing, agent and broker compensation, policy forms, rates, and rules, the nature and amount of investments, claims practices, trade practices, participation in shared markets and guaranty funds, transaction with affiliates, the 11 payment of dividends, underwriting standards, withdrawal from business, statutory accounting methods, data privacy and data security regulation, corporate governance, internal and external risk management, moratoriums (including of lawful actions), and other matters.
These laws, regulations and orders have a substantial impact on our business and relate to a wide variety of matters including insurer solvency and statutory surplus sufficiency, reserve adequacy, insurance company licensing, examination, investigation, agent and adjuster licensing, agent and broker compensation, policy forms, rates, and rules, the nature and amount of investments, claims practices, trade practices, participation in shared markets and guaranty funds, transactions with affiliates, the payment of dividends, underwriting standards, withdrawal from business, statutory accounting methods, data privacy and data security regulation, corporate governance, internal and external risk management, moratoriums (including of lawful actions), and other matters.
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge through our website as soon as reasonably practicable after they are electronically filed with or furnished to the Securities and Exchange Commission, or SEC.
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are available free of charge through our website as soon as reasonably practicable after they are electronically filed with or furnished to the Securities and Exchange Commission, or SEC.
In addition, state legislatures and insurance regulators continue to examine the appropriate nature and scope of state insurance regulations, including adopting new laws and regulations, and reinterpreting existing ones. As part of an effort to strengthen the regulation of the financial services market, the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) was enacted in 2010.
In addition, state legislatures and insurance regulators continue to examine the appropriate nature and scope of state insurance regulations, including adopting new laws and regulations, and reinterpreting existing ones. As part of an effort to strengthen the regulation of the financial services market, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) was enacted in 2010.
For additional information, see “ Risk Factors — Risks Related to Our Business — Failure to protect or enforce our intellectual property rights could harm our business, results of operations, and financial condition ” and “— Claims by others that we infringed their proprietary technology or other intellectual property rights could result in litigation which is expensive to support, and if resolved adversely, could harm our business .” Available Information Our internet website address is www.hippo.com.
For additional information, see “ Risk Factors — Risks Related to Our Business — Failure to protect or enforce our intellectual property rights could harm our business, results of operations, and financial condition ” and “— Claims by third parties that we infringed their proprietary technology or other intellectual property rights could result in litigation which is expensive to support, and if resolved adversely, could harm our business .” Available Information Our internet website address is www.hippo.com.
Twenty states and the District of Columbia require that companies employ reasonable data security measures, and seven states have prescriptive laws that require companies to develop, implement, and maintain specific data security measures and, in some cases, a comprehensive information security program.
Twenty states and the District of Columbia require that companies employ reasonable data security measures, and eight states have prescriptive laws that require companies to develop, implement, and maintain specific data security measures and, in some cases, a comprehensive information security program.
We believe the market is poised for rapid transformation with trends emerging in big data, technology, and underwriting that will allow better assessment of home insurance risk resulting in more accurate pricing, proliferation of application programming interfaces (“APIs”), and meeting the rising customer expectations for personalized and real-time products.
We believe the market is poised for rapid transformation with trends in emerging technology that will allow better assessment of home insurance risk resulting in more accurate pricing, proliferation of application programming interfaces (“APIs”), and meeting the rising customer expectations for personalized and real-time products.
And with the agent population shrinking (according to McKinsey & Company research), incumbents may find it harder to access new customers who increasingly choose digital, direct-to-consumer channels. Competition We face competition from established national brand names that offer competing products.
And with the agent population shrinking (according to McKinsey & Company research), incumbents may find it harder to access new customers who increasingly choose digital and embedded channels. Competition We face competition from established national brand names that offer competing products.
On December 4, 2023, after opportunity for industry comment, the NAIC released a model bulletin entitled “Model Bulletin on the Use of Artificial Intelligence Systems by Insurers” (the “Model Bulletin”), which encourages insurers to develop, 12 implement and maintain a written program for the use of Artificial Intelligence (“AI”) systems (“AIS program”) that is designed to mitigate the risk that the use of AI systems in making or supporting decisions affecting insurers’ customers will result in decisions that are arbitrary or capricious, unfairly discriminatory or that otherwise violate unfair trade practice laws.
On December 4, 2023, the NAIC released a model bulletin entitled “Model Bulletin on the Use of Artificial Intelligence Systems by Insurers” (the “Model AI Bulletin”), which encourages insurers to develop, implement and maintain a written program for the use of Artificial Intelligence (“AI”) systems (the “AIS program”) that is designed to mitigate the risk that the use of AI systems in making or supporting decisions affecting insurers’ customers will result in decisions that are arbitrary or capricious, unfairly discriminatory or that otherwise violate unfair trade practice laws.
We rely on a combination of trademark, patent and other intellectual property laws and confidentiality procedures and contractual provisions such as non-disclosure terms to protect our intellectual property.
We rely on a combination of trademark, service mark, patent, copyright, trade secret and other intellectual property laws and confidentiality procedures and contractual provisions such as non-disclosure terms to protect our intellectual property.
States have also enacted industry-specific data security and cybersecurity laws, including the NAIC Insurance Data Security Model Law, which twenty two states and the District of Columbia have adopted, and the New York Department of Financial Services (NYDFS) Cybersecurity Requirements for Financial Services Companies (the “NYDFS Reg”).
States have also enacted industry-specific data security and cybersecurity laws, including the NAIC Insurance Data Security Model Law, which 25 states have adopted, and the New York Department of Financial Services (“NYDFS”) Cybersecurity Requirements for Financial Services Companies (the “NYDFS Reg”).
Our Values and People As of December 31, 2023, we had a total of 516 employees, of which 401 were located in the United States and 115 located internationally. We engage temporary workers and independent contractors when necessary in connection with a particular project, to meet increases in demand or to fill vacancies while recruiting a permanent employee.
Our Values and People As of December 31, 2024, our workforce consists of a total of 478 people, of which 349 were located in the United States and 129 located internationally. We engage temporary workers and independent contractors when necessary in connection with a particular project, to meet increases in demand or to fill vacancies while recruiting a permanent employee.
States with recently enacted and currently effective data privacy laws include Nevada, Virginia, Colorado, Connecticut, and Utah; new data privacy laws will become effective during 2024 in Montana and Oregon; and Delaware, Indiana, Iowa, Tennessee, and Texas have all passed data privacy laws that will become effective in 2025 or 2026.
States with recently enacted and currently effective data privacy laws include Colorado, Connecticut, Delaware, Iowa, Montana, Nebraska, Nevada, New Hampshire, New Jersey, Oregon, Texas, Utah, and Virginia; new data privacy laws will become effective during 2025 in Maryland, Minnesota, and Tennessee; and Indiana, Kentucky, and Rhode Island have all passed data privacy laws that will become effective in 2026.
We believe there is significant opportunity in this market, expected to reach nearly $142 billion by 2024 (according to industry data from S&P Global) for a digital-first, customer-centric company like Hippo.
We believe there is significant opportunity in this market, expected to reach nearly $170 billion by 2025 (according to industry data from Standard & Poor’s (“S&P”) Global) for a digital-first, customer-centric company like Hippo.
At the federal level, on October 30, 2023, President Biden issued an executive order (EO) on Safe, Secure, and Trustworthy AI which sets forth a wide range of federal regulatory principles and priorities, directs several federal agencies to promulgate standards and technical guidelines, and invokes statutory authority, the Defense Production Act, to advance a coordinated, federal government-wide approach toward the safe and responsible development of AI.
At the federal level, in October 2023, President Biden issued an executive order (“EO”) on Safe, Secure, and Trustworthy AI (the “Biden AI EO”) which set forth a wide range of federal regulatory principles and priorities, directed several federal agencies to promulgate standards and technical guidelines, and invoked statutory authority to advance a coordinated, federal government-wide approach toward the safe and responsible development of AI.
The EO signals that federal regulation of AI may be forthcoming, which would potentially impose additional regulatory burden on us. Spinnaker is, and any insurance companies that we would form in the future would be, part of an insurance holding company system and as such is subject to regulation in the jurisdictions in which these insurance subsidiaries are domiciled.
Spinnaker is, and any insurance companies that we would form in the future would be, part of an insurance holding company system and as such is subject to regulation in the jurisdictions in which these insurance subsidiaries are domiciled.
In addition, the revenues include commissions for premiums we cede to third parties, policy and service fees and investment income. Our strategy is to retain underwriting risk where we believe our loss prevention strategies are the most effective.
Our Economic Model Hippo Home Insurance Program’s main source of revenue is the premiums paid to us by our homeowner customers. In addition, the revenues include commissions for premiums we cede to third parties, policy and service fees and investment income. Our strategy is to retain underwriting risk where we believe our loss prevention strategies are the most effective.
The CCPA excludes information covered by Gramm-Leach-Bliley Act, the Driver’s Privacy Protection Act, the Fair Credit Reporting Act, and the California Financial Information Privacy Act from the CCPA’s scope, but the CCPA’s definition of “personal information” is broad and may encompass other information that we maintain. 10 The CCPA marked the beginning of a trend toward more stringent privacy legislation in the U.S., and multiple states have subsequently enacted or proposed similar laws.
The CCPA excludes information covered by the Gramm-Leach-Bliley Act, the Driver’s Privacy Protection Act, the Fair Credit Reporting Act, and the California Financial Information Privacy Act from the CCPA’s scope, but the CCPA’s definition of “personal information” is broad and may encompass other information that we maintain.
As of December 31, 2023, our patent portfolio consisted of five U.S. utility patents covering autonomous cancellation of insurance policies using a multi-tiered data structure, system and method for updating a policy object and real time rate monitoring, and two pending utility patent applications in the United States.
As of December 31, 2024, our patent portfolio consisted of five U.S. utility patents covering autonomous cancellation of insurance policies using a multi-tiered data structure, system and method for updating a policy object and real time rate monitoring. Our issued patents are expected to expire between May 23, 2038 and October 13, 2040.
We seek to facilitate an active partnership with our customers to help prevent losses, which in turn creates better results for Hippo. The result creates an opportunity for a win-win.
Hippo harnesses technology and data to refocus the home insurance experience around the customer’s needs at every stage of the relationship. We seek to facilitate an active partnership with our customers to help prevent losses, which in turn creates better results for Hippo. The result creates an opportunity for a win-win.
This system also enables us to deploy Hippo’s proprietary quoting and underwriting engine (via API) across Hippo’s diversified distribution channels and partners to gain market share. 9 We believe our strategy to deliver the first all-in home protection platform is unique and differentiated and that our competitive advantages across smart home, technology, and distribution will make it difficult for competitors — old or new — to emulate our approach.
We believe our strategy to deliver the first all-in home protection platform is unique and differentiated and that our competitive advantages across technology and distribution will make it difficult for competitors — old or new — to emulate our approach.
This specific type of transaction structuring in the insurance industry is commonly referred to as “fronting”. Spinnaker entered the market in 2015 and was acquired by Hippo in 2020. The strategy is built on Spinnaker’s underwriting first approach paired with its risk participation in programs alongside reinsurance markets.
Spinnaker entered the market in 2015 and was acquired by Hippo in 2020. Spinnaker’s strategy is built on its underwriting first approach paired with its risk participation in programs alongside reinsurance markets. This strategy aligns Spinnaker’s interests with those of the reinsurers and MGAs, prioritizing underwriting profitability 6 over volume.
Our mission is to deliver intuitive and proactive protection for homeowners by combining the power of technology with a human touch. Modern technology provides an opportunity to transform the $133 billion U.S. home insurance industry, enabling advancements and efficiencies across the customer lifecycle.
Hippo Home Insurance Program The Hippo Home Insurance Program is the Company’s Hippo-branded homeowners insurance business. Our mission is to protect the joy of homeownership. Modern technology provides an opportunity to transform the $133 billion U.S. home insurance industry, enabling advancements and efficiencies across the customer lifecycle.
Our Insurance-as-a-Service business is predominantly focused on providing insurance capacity to program administrators and managing general agencies (collectively referred to as “MGAs”). Spinnaker partners with MGAs across multiple lines of business, offering both Admitted and Excess and Surplus Lines (E&S) capacity. Spinnaker cedes most of the underwriting risk to a diversified panel of highly rated reinsurance companies.
Spinnaker partners with MGAs across multiple lines of business, offering both Admitted and Excess and Surplus Lines (“E&S”) capacity. Spinnaker cedes most of the underwriting risk to a diversified panel of highly rated reinsurance companies. This specific type of transaction structuring in the insurance industry is commonly referred to as “fronting”.
In the third quarter of 2023 we began taking several actions to lower the volatility of our Hippo Homeowners Insurance Program portfolio in light of the significant catastrophe losses we experienced in the second quarter, including raising rates on a portion of our renewal business, increasing deductibles for wind and hail perils, selectively non-renewing policies in certain regions, and instituting a nationwide pause on underwriting new premiums for our HO3 business as we examine our risk appetite.
In 2024, we took steps to lower the volatility of our Hippo Homeowners Insurance Program portfolio, including raising rates on a portion of our renewal business, increasing deductibles for wind and hail perils, and selectively non-renewing policies in certain regions.
Programs are generally reinsured utilizing program specific quota share reinsurance with XOL complementing the programmatic structure. Reinsurance structures are designed to provide Spinnaker protection from both low return period frequency events and large tail events up to the 1:250-year return period.
Reinsurance structures are designed to provide Spinnaker protection from both low return period frequency events and large tail events up to the 1:250-year return period. Spinnaker includes provisions in its program agreements that allow it to non-renew business if the programs it supports are unable to secure satisfactory reinsurance.
The fronting company index, as reported by Dowling Partners, has increased from $1.8 billion of Gross Written Premium in 2015 to $11.2 billion in 2022, growing 41% year-over-year. This growth has been fueled by the significant increase in MGAs throughout this period. Our Economic Model Spinnaker’s risk appetite is primarily focused on short-tail lines of business.
Since Spinnaker’s entry into the market, the number of fronting carriers participating in underwriting risk, now referred to as participatory fronts, has increased to over 20. The fronting company index, as reported by Dowling Partners, has increased from $1.8 billion of Gross Written Premium in 2015 to $11.2 billion in 2022, growing 41% year-over-year.
The Company offers its services primarily in the United States. Services Hippo’s Services Segment is comprised of our Consumer Agency, which serves consumers who are shopping for insurance and First Connect, which serves insurance agents seeking appointments with third party insurance carriers.
The Company offers its services primarily in the United States. Services Hippo’s Services Segment is comprised of our Consumer Agency and First Connect. This business is fee-driven and are not exposed to any volatility associated with losses related to the underlying insurance policies.
Spinnaker earns investment income on the premiums and commission it retains while waiting to pay claims or settle obligations, commonly referred to as float. Hippo Home Insurance Program The Hippo Home Insurance Program is the Company’s Hippo-branded homeowners insurance business.
Spinnaker’s economic model generates margin both on a fee basis and on a traditional underwriting (e.g., combined ratio) basis based on the risk it retains. Spinnaker earns investment income on the premiums and commission it retains while waiting to pay claims or settle obligations, commonly referred to as float.
The Agency sells home insurance policies from the Hippo Home Insurance Program and from third-party carriers, as well as other personal lines policies from third party carriers. Our Agency is licensed to provide agency services in all 50 states and is appointed with 50+ carriers to sell homeowners, auto, flood, earthquake, pet, and other insurance products.
Our Agency is licensed to provide agency services in all 50 states and is appointed with 50+ carriers to sell homeowners, auto, flood, earthquake, pet, and other insurance products. We have built next-generation technology platforms to increase agent efficiency and policies per customer while streamlining the customer flow and optimizing the right products for each customer.
Our issued patents are expected to expire between July 31, 2038 and January 29, 2041. As of December 31, 2023, Hippo’s trademark portfolio consisted of forty-two registered trademarks, and Spinnaker had one registered trademark.
As of December 31, 2024, Hippo’s trademark portfolio consisted of forty registered trademarks, and Spinnaker owned one registered trademark.
First Connect’s Carrier Store helps agents discover additional carriers and insurance providers and products that can be bundled to increase sales.
First Connect’s Carrier Store helps agents discover additional carriers and insurance providers and products that can be bundled to increase sales. First Connect also benefits participating carriers by helping to quickly build their network of independent agents based on geographic needs and desired risk profile. On October 29, 2024, we sold our First Connect business.
These businesses are fee-driven and are not exposed to any volatility associated with losses related to the underlying insurance policies. Consumer Agency Our Consumer Agency helps consumer customers who are shopping for insurance find the policies that best meet their needs.
Consumer Agency Our Consumer Agency helps consumer customers who are shopping for insurance find the policies that best meet their needs. The Agency sells home insurance policies from the Hippo Home Insurance Program and from third-party carriers, as well as other personal lines policies from third party carriers.
Generally these fees are structured as a percentage of the policy premiums (both new and renewal) that are placed or supported by each business. Insurance-as-a-Service Insurance-as-a-Service is managed through the Company’s subsidiary Spinnaker Insurance Company and its subsidiaries (“Spinnaker”).
Refer to Note 19 of the accompanying consolidated financial statements for additional information on the sale. Our Economic Model Our Services segment earns fees and/or commission income without assuming underwriting risk or need for reinsurance. Generally, these fees are structured as a percentage of the policy premiums (both new and renewal) that are placed or supported by each business.
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We have built next-generation technology platforms to increase agent efficiency and policies per customer while streamlining the customer flow and optimizing the right products for each customer. We offer a differentiated consumer experience built around proactive home care services, the most significant of which is the Hippo Home Care Program.
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Occasionally we also benefit from bonus commissions that are a function of the writing carriers’ loss ratio on the policies we sell. Insurance-as-a-Service Insurance-as-a-Service is managed through the Company’s subsidiary Spinnaker Insurance Company and its subsidiaries (“Spinnaker”). Our Insurance-as-a-Service business is predominantly focused on providing insurance capacity to MGAs.
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The Hippo Home Care Program’s mobile app serves as the command center for proactive home protection, empowering our customers with tools to take better care of their homes.
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This growth has been fueled by the significant increase in the number of MGAs throughout this period. Our Economic Model Spinnaker’s risk appetite is primarily focused on short-tail lines of business. Programs are generally reinsured utilizing program specific quota share reinsurance with excess of loss (“XOL”) complementing the programmatic structure.
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Over 100,000 users have installed the 4.8-star rated app, which not only allows them to manage their policy, claims, and payments if they are also Hippo customers, but also enables them to take control of their home care and maintenance needs.
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This system also enables us to deploy Hippo’s proprietary quoting and underwriting engine (via API) across Hippo’s diversified distribution channels and partners to gain market share.
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At its core is the Home Health assessment, providing personalized maintenance plans based on up to 200 data points sourced from third-party providers and user data. These actionable insights and checklists help our users understand their home’s condition and guide them on how to improve it.
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The CCPA marked the beginning of a trend toward more stringent privacy legislation in the U.S., and multiple states have subsequently enacted or proposed similar laws.
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Additionally, the Hippo Home platform connects users with the resources they need to get things done, allowing users to actively complete maintenance actions within the app, enhancing their knowledge, engagement with Hippo, and their home's protection. If a problem or question arises, users can connect with home experts on-demand 24/7 with a Home Assist membership.
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As of January 2025, 21 states have adopted bulletins similar to the Model AI Bulletin, and California, Colorado, New Mexico, New York, Texas, and Utah have also adopted regulations specific to the use of AI.
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Moreover, users can explore offers within the app, shopping for smart devices, leak sensors, insurance coverages, and more to enhance their home protection.
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In January 2025, President Trump rescinded the Biden AI EO and issued a new EO that, among other things, requires certain agencies to develop and submit to the president action plans to “sustain and enhance America’s global AI dominance,” and to specifically review and, if possible, rescind rulemaking taken pursuant to the rescinded Biden AI EO.
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We believe the Hippo Home mobile app will continue to drive customer engagement, particularly among the Generation Better demographic, and provide Hippo with unique insights into homeowner behavior, positioning Hippo for a more connected and protected future for both Hippo, our users and our customers.
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Thus, the Trump administration may continue to rescind other existing federal orders and/or administrative policies relating to AI, machine learning and automated decision-making technologies and systems (“AI Systems”), or may implement new EOs and/or other rule making relating to AI Systems in the future.
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First Connect also benefits participating carriers by helping to quickly build their network of independent agents based on geographic needs and desired risk profile. 7 Our Economic Model Our Services segment earns fees and/or commission income without assuming underwriting risk or need for reinsurance.
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Any such changes at the federal level could require us to expend significant resources to modify our products, services, or operations to ensure compliance or remain competitive.
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This strategy aligns Spinnaker’s interests with those of the reinsurers and MGAs, prioritizing underwriting profitability over volume. Since Spinnaker’s entry into the market, the number of fronting carriers participating in underwriting risk, now referred to as participatory fronts, has increased to over 20.
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The expansion of our business has required us to protect our trademarks, domain names, and patents and, to the extent that we expand our business into new geographic areas, we may be required to protect our trademarks, domain names, patents and other intellectual property rights in an increasing number of jurisdictions, a process that is expensive and sometimes requires litigation.
Removed
Spinnaker includes provisions in its program agreements that allow it to non-renew business if the programs it supports are unable to secure satisfactory reinsurance. Spinnaker’s economic model generates margin both on a fee basis and on a traditional underwriting (e.g., combined ratio) basis based on the risk it retains.
Removed
Our targeted customers, a demographic we call “Generation Better”, are homeowners who proactively maintain their homes, are open to using technology to do so, and welcome a modern insurance brand. We estimate that Generation Better represents 33% of all U.S. homeowners.
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We believe the COVID-19 pandemic only accelerated this change, increasing homeowner adoption of digital channels and growing demands on the use of their homes. 8 Hippo harnesses technology and data to refocus the home insurance experience around the customer’s needs at every stage of the relationship.
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We also launched an expense reduction initiative across the Company, including a reduction in staff which we announced in October 2023. Our Economic Model Hippo Home Insurance Program’s main source of revenue is the premiums paid to us by our homeowner customers.
Removed
In August 2020, the NAIC adopted a statement of “high-level guiding principles”, calling on industry participants to be “fair and ethical, accountable, compliant, transparent, and secure, safe, and robust” in connection with the use of artificial intelligence.
Removed
These principles do not have the force and effect of law, but could lead the NAIC or individual states to take action in the future that might restrict our use of artificial intelligence in our business.
Removed
State insurance departments may elect to adopt the Model Bulletin, and we may be required to comply with its provisions. Individual states are also proposing their own regulations.
Removed
On January 17, 2024, for example, New York issued a proposed circular letter for public comment concerning the use of external consumer data and AI Systems that seeks to achieve similar aims as the NAIC Model Bulletin but with a greater emphasis on compliance testing and third party vendor compliance oversight.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

157 edited+27 added−51 removed402 unchanged
Biggest changeAlthough we generally enter into agreements with our contractors and employees pursuant to which they (i) assign to us all rights in and to inventions developed by them during and as a result of their employment or engagement with us; and (ii) waive any right to receive royalties, compensation or additional consideration in connection therewith (including, with respect to employees, waiver under Section 134 of the Israeli Patents Law), we may face claims demanding remuneration in consideration for assigned inventions.
Biggest changeTherefore, it is considered best practice to include, in the contractor’s engagement agreement, a provision whereby the parties agree that the company engaging such contractor shall own all intellectual property rights conceived or developed by the contractor during and as a result of such contractor’s engagement with the company, including a clear and explicit assignment provision with respect thereto and a waiver to receive additional consideration. 30 Although we generally enter into agreements with our contractors and employees pursuant to which they (i) assign to us all rights in and to inventions developed by them during and as a result of their employment or engagement with us; and (ii) waive any right to receive royalties, compensation or additional consideration in connection therewith (including, with respect to employees, waiver under Section 134 of the Israeli Patents Law), we may face claims demanding remuneration in consideration for assigned inventions.
Many factors will affect our capital needs, as well as their amount and timing (including our growth and profitability, risk retained, and the availability of reinsurance, market disruptions, and other developments). Historically, we funded our operations, marketing expenditures, and capital expenditures primarily through equity issuances, including through convertible note financings.
Many factors will affect our capital needs, as well as their amount and timing (including our growth and profitability, risk retained, the availability of reinsurance, market disruptions, and other developments). Historically, we funded our operations, marketing expenditures, and capital expenditures primarily through equity issuances, including through convertible note financings.
In the ordinary course of business, we collect, store, and transmit information, including personal information, in relation to our current, past, or potential customers, business partners, agents, staff, and contractors.
In the ordinary course of business, we collect, store, and transmit information, including personal information, in relation to our current, past, or potential customers, business partners, agents, staff, and contractors.
Performance of our investment portfolio is subject to a variety of investment risks that may adversely affect our financial results. Our results of operations depend, in part, on the performance of our investment portfolio. We seek to hold a diversified portfolio of investments in accordance with our investment policy and routinely reviewed by our investment committee.
Performance of our investment portfolio is subject to a variety of investment risks that may adversely affect our financial results. Our results of operations depend, in part, on the performance of our investment portfolio. We seek to hold a diversified portfolio of investments in accordance with our investment policy, and our investment portfolio is routinely reviewed by our investment committee.
As we seek to expand, we may incur significant operating expenses, although our expansion may not be successful for a variety of reasons, including because of, among other things: • barriers to obtaining the required government approvals, licenses, or other authorizations, including seasoning or other limitations imposed by a state; • failures in identifying and entering into joint ventures with strategic partners or entering into joint ventures that do not produce the desired results; • challenges in, and the cost of, complying with various laws and regulatory standards, including with respect to the insurance business and insurance distribution, capital and outsourcing requirements, data privacy, tax and regulatory restrictions; 36 • competition from incumbents that already own market share, better understand the market, may market and operate more effectively, and may enjoy greater affinity or awareness; and • differing demand dynamics, which may make our product offerings less successful.
As we seek to expand, we may incur significant operating expenses, although our expansion may not be successful for a variety of reasons, including because of, among other things: • barriers to obtaining the required government approvals, licenses, or other authorizations, including seasoning or other limitations imposed by a state; • failures in identifying and entering into joint ventures with strategic partners or entering into joint ventures that do not produce the desired results; • challenges in, and the cost of, complying with various laws and regulatory standards, including with respect to the insurance business and insurance distribution, capital and outsourcing requirements, data privacy, tax and regulatory restrictions; • competition from incumbents that already own market share, better understand the market, may market and operate more effectively, and may enjoy greater affinity or awareness; and • differing demand dynamics, which may make our product offerings less successful.
Our Certificate of Incorporation states that we shall not engage in a “business combination” with an “interested stockholder” for a period of three years after the date of the transaction in which the person became an interested stockholder, unless: • the business combination or transaction which resulted in the stockholder becoming an interested stockholder was approved by the board of directors prior to the time that the stockholder became an interested stockholder; • upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding shares owned by directors who are also officers of the corporation and shares owned by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or • at or subsequent to the time the stockholder became an interested stockholder, the business combination was approved by the board of directors and authorized at an annual or special meeting of the stockholders, and not by written consent, by the affirmative vote of at least two-thirds of the outstanding voting stock which is not owned by the interested stockholder.
Our Certificate of Incorporation states that we shall not engage in a “business combination” with an “interested stockholder” for a period of three years after the date of the transaction in which the person became an interested stockholder, unless: 47 • the business combination or transaction which resulted in the stockholder becoming an interested stockholder was approved by the board of directors prior to the time that the stockholder became an interested stockholder; • upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding shares owned by directors who are also officers of the corporation and shares owned by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or • at or subsequent to the time the stockholder became an interested stockholder, the business combination was approved by the board of directors and authorized at an annual or special meeting of the stockholders, and not by written consent, by the affirmative vote of at least two-thirds of the outstanding voting stock which is not owned by the interested stockholder.
There are many factors that could negatively affect our ability to grow our customer base, including if: • we fail to effectively use search engines, social media platforms, content-based online advertising, and other online sources for generating traffic to our website; • potential customers in a particular marketplace or more generally do not meet our underwriting guidelines; • our products are not competitive in terms of customer experience, pricing, or insurance coverage options; • our competitors mimic our digital platform or develop other innovative services, causing current and potential customers to purchase their insurance products instead of our products; • we lose customers to new market entrants and/or existing competitors; • we do not obtain regulatory approvals necessary for expansion into new markets or in relation to our products (such as line, form, underwriting, and rating approvals) or such approvals contain conditions that impose restrictions on our operations (such as limitations on growth); • our digital platform experiences disruptions; • we suffer reputational harm to our brand resulting from negative publicity, whether accurate or inaccurate; • we fail to expand geographically; • we fail to offer new and competitive products, to provide effective updates to our existing products or to keep pace with technological improvements in our industry; • we are unable to maintain traditional retail agent relationships; • customers have difficulty installing, updating or otherwise accessing our website or software application on mobile devices or web browsers as a result of actions by us or third parties; • customers are unable or unwilling to adopt or embrace new technology; 15 • technical or other problems frustrate the customer experience, particularly if those problems prevent us from generating quotes or paying claims in a fast and reliable manner; or • we are unable to address customer concerns regarding content, data privacy, and security generally or for our digital platform specifically.
There are many factors that could negatively affect our ability to grow our customer base, including if: • we fail to effectively use search engines, social media platforms, content-based online advertising, and other online sources for generating traffic to our website; • potential customers in a particular marketplace or more generally do not meet our underwriting guidelines; • our products are not competitive in terms of customer experience, pricing, or insurance coverage options; • our competitors mimic our digital platform or develop other innovative services, causing current and potential customers to purchase their insurance products instead of our products; 13 • we lose customers to new market entrants and/or existing competitors; • we do not obtain regulatory approvals necessary for expansion into new markets or in relation to our products (such as line, form, underwriting, and rating approvals) or such approvals contain conditions that impose restrictions on our operations (such as limitations on growth); • our digital platform experiences disruptions; • we suffer reputational harm to our brand resulting from negative publicity, whether accurate or inaccurate; • we fail to expand geographically; • we fail to offer new and competitive products, to provide effective updates to our existing products or to keep pace with technological improvements in our industry; • we are unable to maintain traditional retail agent relationships; • customers have difficulty installing, updating or otherwise accessing our website or software application on mobile devices or web browsers as a result of actions by us or third parties; • customers are unable or unwilling to adopt or embrace new technology; • technical or other problems frustrate the customer experience, particularly if those problems prevent us from generating quotes or paying claims in a fast and reliable manner; or • we are unable to address customer concerns regarding content, data privacy, and security generally or for our digital platform specifically.
One of the major changes is a requirement that an insurance holding company system’s ultimate controlling person submit annually to its lead state insurance regulator an “enterprise risk report” that identifies activities, circumstances or events involving one or more affiliates of an insurer that, if not remedied properly, are likely to have a material adverse effect upon the financial condition or liquidity of the insurer or its insurance holding company system as a whole.
One of the major changes is a requirement that an insurance holding company system’s ultimate controlling person submit annually to its lead state insurance regulator an “enterprise 40 risk report” that identifies activities, circumstances or events involving one or more affiliates of an insurer that, if not remedied properly, are likely to have a material adverse effect upon the financial condition or liquidity of the insurer or its insurance holding company system as a whole.
In particular, while we expect our loss performance to improve over time as more customers renew their policies and remain customers for longer, our recent nationwide pause in writing new HO3 business and other actions to combat volatility resulted in a loss of customers, and any future loss of customers could lead to higher loss ratios, loss ratios that cease to decline, or declining revenue, any of which would adversely impact our profitability.
In particular, while we expect our loss performance to improve over time as more customers renew their policies and remain customers for longer, our nationwide pause in writing new HO3 business and other actions to combat volatility resulted in a loss of customers, and any future loss of customers could lead to higher loss ratios, loss ratios that cease to decline, or declining revenue, any of which would adversely impact our profitability.
In the U.S., the federal Gramm-Leach-Bliley Act and certain federal and state laws and regulations specifically aimed at insurance companies require providers of insurance products to consumers to implement certain measures, including requirements to disclose their privacy practices to consumers, allow consumers to opt-in or opt-out, depending on the state, of the sharing of certain personal information with unaffiliated third parties, and maintain certain security controls to protect their information.
In the U.S., the federal Gramm-Leach-Bliley Act and certain federal and state laws and regulations specifically aimed at insurance companies require providers of insurance products to consumers to implement certain measures, including requirements to disclose their privacy practices to consumers, allow consumers to opt-in 20 or opt-out, depending on the state, of the sharing of certain personal information with unaffiliated third parties, and maintain certain security controls to protect their information.
Under Section 382 of the Code, if a corporation undergoes an “ownership change” (generally defined as a greater than 50 percentage point change, by value, in the corporation’s equity ownership by certain shareholders or groups of shareholders over a rolling three-year period), the corporation’s ability to use its pre-ownership change NOLs to offset its post-ownership change income may be limited.
In addition, under Section 382 of the Code, if a corporation undergoes an “ownership change” (generally defined as a greater than 50 percentage point change, by value, in the corporation’s equity ownership by certain shareholders or groups of shareholders over a rolling three-year period), the corporation’s ability to use its pre-ownership change NOLs to offset its post-ownership change income may be limited.
While we maintain directors’ and officers’ liability insurance, such insurance may not be adequate to cover all liabilities that we may incur, which may reduce our available funds to satisfy third-party claims and may adversely impact our cash position. Taking advantage of the reduced disclosure requirements applicable to “emerging growth companies” may make our common stock less attractive to investors.
While we maintain directors’ and officers’ liability insurance, such insurance may not be adequate to cover all liabilities that we may incur, which may reduce our available funds to satisfy third-party claims and may adversely impact our cash position. 49 Taking advantage of the reduced disclosure requirements applicable to “emerging growth companies” may make our common stock less attractive to investors.
Although we believe that there are commercially reasonable alternatives to the third-party products we currently license, other than proprietary information provided by ISO, this may not always be the case, or it may be difficult or costly to replace. In addition, integration of new third-party products may require significant work and require substantial investment of our time and resources.
Although we believe that there are commercially reasonable alternatives to the Third-Party Technology we currently license, other than proprietary information provided by ISO, this may not always be the case, or it may be difficult or costly to replace. In addition, integration of new third-party products may require significant work and require substantial investment of our time and resources.
These models require significantly less infrastructure and capital expenditures than traditional insurance businesses and can be operated without the need to be licensed as an insurance company (as we did prior to our acquisition of Spinnaker). 17 Accordingly, the barriers of entry for new insurtech companies may be low and competitors may be able to begin operating and build scale quickly.
These models require significantly less infrastructure and capital expenditures than traditional insurance businesses and can be operated without the need to be licensed as an insurance company (as we did prior to our acquisition of Spinnaker). Accordingly, the barriers of entry for new insurtech companies may be low and competitors may be able to begin operating and build scale quickly.
If third parties copy our technology and use our proprietary brand, content, and information to create or enhance competing solutions and services, the value of our brand and other intangible assets may be diminished, competitors may be able to more effectively mimic our service and methods of operations, the perception of our business and service to customers and potential customers may become confused, and our ability to attract customers may be adversely affected.
If third parties copy our technology and use our proprietary brand, content, and information to create or enhance competing solutions and services, the value of our brand and other intangible assets may be diminished, competitors may be able to more effectively mimic our service and methods of operations, the perception of our business and service to customers and potential customers may become confused, and our ability to attract customers may be adversely 28 affected.
External factors are also considered, such as court decisions, changes in law, and litigation imposing unintended coverage. We also consider benefits, such as disallowing the use of benefit payment schedules, requiring coverage designed to cover losses that occur in a single policy period to losses that develop continuously over multiple policy periods, or requiring the availability of multiple limits.
External factors are also considered, such as court decisions, changes in law, and litigation imposing unintended coverage. We also consider benefits, such as disallowing the use of benefit payment schedules, requiring coverage designed to cover losses that occur in a single policy period to losses that develop continuously over multiple policy 37 periods, or requiring the availability of multiple limits.
If a third-party does not offer us a license to its intellectual property on reasonable terms, or at all, we may be required to develop alternative, non-infringing technology, which could require significant time (during which we would be unable to continue to offer our affected 34 offerings), effort, and expense and may ultimately not be successful.
If a third-party does not offer us a license to its intellectual property on reasonable terms, or at all, we may be required to develop alternative, non-infringing technology, which could require significant time (during which we would be unable to continue to offer our affected offerings), effort, and expense and may ultimately not be successful.
An insurance company with total adjusted capital that is less than 200% of its authorized control level risk-based capital is at a company action level, which would require the insurance company to file a risk-based capital 44 plan that, among other things, contains proposals of corrective actions the company intends to take that are reasonably expected to result in the elimination of the company action level event.
An insurance company with total adjusted capital that is less than 200% of its authorized control level risk-based capital is at a company action level, which would require the insurance company to file a risk-based capital plan that, among other things, contains proposals of corrective actions the company intends to take that are reasonably expected to result in the elimination of the company action level event.
Interruptions or delays in the services provided by third-party technology platforms and/or our internet service providers could impair the operability of our website and may cause our business to suffer. We currently rely on multiple providers of cloud infrastructure services, including Google Cloud Platform, Amazon Web Services, Salesforce, and others (collectively, “Cloud Platforms”).
Interruptions or delays in the services provided by third-party technology platforms and/or our internet service providers could impair the operability of our website and may cause our business to suffer. 22 We currently rely on multiple providers of cloud infrastructure services, including Google Cloud Platform, Amazon Web Services, Salesforce, and others (collectively, “Cloud Platforms”).
Laws and regulations that limit cancellation and non-renewal of policies or that subject withdrawal plans to prior approval requirements may significantly restrict our ability to terminate unprofitable risks or to exit unprofitable markets. Such actions and related regulatory restrictions may limit our ability to reduce our potential exposure including, but not limited to, catastrophe events such as hurricane-related losses.
Laws and regulations that limit cancellation and non-renewal of policies or that subject withdrawal plans to prior approval requirements may significantly restrict our ability to terminate unprofitable policies or to exit unprofitable markets. Such actions and related regulatory restrictions may limit our ability to reduce our potential exposure including, but not limited to, catastrophe events such as hurricane-related losses.
Risks Related to Ownership of Our Common Stock There may not be an active trading market for our common stock, and there can be no assurance that the Company will be able to comply with the continued listing standards of the NYSE or other another reputable stock exchange, which may make it more difficult for our stockholders to sell our securities.
Risks Related to Ownership of Our Common Stock There may not be an active trading market for our common stock, and there can be no assurance that the Company will be able to comply with the continued listing standards of the NYSE or another reputable stock exchange, which may make it more difficult for our stockholders to sell our securities.
We could also become subject to investigations by the SEC, the stock exchange on which our securities are listed or other regulatory authorities, which could require additional financial and management resources. In addition, if we fail to remedy any material weakness, our financial statements could be inaccurate, and we could face restricted access to capital markets.
We could also become subject to investigations by the SEC, the stock exchange on which our securities are listed or other regulatory authorities, which could require 50 additional financial and management resources. In addition, if we fail to remedy any material weakness, our financial statements could be inaccurate, and we could face restricted access to capital markets.
Accordingly, we may not achieve or maintain profitability and we may continue to incur significant losses in the future. 14 Our success and ability to grow our business depend on retaining and expanding our customer base. If we fail to add new customers or retain current customers, our business, revenue, operating results, and financial condition could be harmed.
Accordingly, we may not achieve or maintain profitability and we may continue to incur significant losses in the future. Our success and ability to grow our business depend on retaining and expanding our customer base. If we fail to add new customers or retain current customers, our business, revenue, operating results, and financial condition could be harmed.
The COVID-19 pandemic increased cybersecurity risk as a result of global remote working arrangements that are likely to continue and which present opportunities for threat actors to engage in social engineering (for example, phishing) and to exploit vulnerabilities in non-corporate networks. In addition, according to U.S.
The COVID-19 24 pandemic increased cybersecurity risk as a result of global remote working arrangements that are likely to continue and which present opportunities for threat actors to engage in social engineering (for example, phishing) and to exploit vulnerabilities in non-corporate networks. In addition, according to U.S.
See “Cautionary Note Regarding Forward-Looking Statements.” Risks Related to Our Business We have a history of net losses and we may not achieve or maintain profitability in the future. We have incurred significant net losses on an annual basis since our incorporation in 2015, and we may continue to experience net losses in the future.
See “Cautionary Note Regarding Forward-Looking Statements.” Risks Related to Our Business We have a history of net losses and we may not achieve or maintain profitability in the future. 12 We have incurred significant net losses on an annual basis since our incorporation in 2015, and we may continue to experience net losses in the future.
Any of these eventualities could result in a material adverse effect on our business, results of operations, and financial condition. While we believe our by-peril pricing model to be more fair to consumers than multi-peril pricing models, it may yield results that customers find unfair.
Any of these eventualities could result in a material adverse effect on our business, reputation, results of operations, and financial condition. While we believe our by-peril pricing model to be more fair to consumers than multi-peril pricing models, it may yield results that customers find unfair.
We may also face particular privacy, data security, and data protection risks in connection with requirements of the European Union’s (“E.U.”) General Data Protection Regulation 2016/679 (“GDPR”), the United Kingdom (“UK”) GDPR and UK Data Protection Act 2018 (which retains the GDPR in UK national law) and other data protection regulations in the E.U. and UK.
We may also face particular privacy, data security, and data protection risks in connection with requirements of the European Union’s (“E.U.”) General Data Protection Regulation 2016/679 (“GDPR”), the United Kingdom (“UK”) GDPR and UK Data Protection Act 2018 (which retains the GDPR in UK national law) and other 26 data protection regulations in the E.U. and UK.
Rather, reserves represent an estimate of what the expected ultimate 38 settlement and administration of claims will cost, and the ultimate liability may be greater or less than the current estimate. In our industry, there is always the risk that reserves may prove inadequate, as it is possible for us to underestimate the cost of claims and claims administration.
Rather, reserves represent an estimate of what the expected ultimate settlement and administration of claims will cost, and the ultimate liability may be greater or less than the current estimate. In our industry, there is always the risk that reserves may prove inadequate, as it is possible for us to underestimate the cost of claims and claims administration.
In addition, certain states have enacted laws that require an insurer conducting business in that state to participate in assigned risk plans, reinsurance facilities and joint underwriting associations. Certain states also require insurers to offer coverage to all consumers, often restricting an insurer’s ability to charge the price it might 41 otherwise charge.
In addition, certain states have enacted laws that require an insurer conducting business in that state to participate in assigned risk plans, reinsurance facilities and joint underwriting associations. Certain states also require insurers to offer coverage to all consumers, often restricting an insurer’s ability to charge the price it might otherwise charge.
Our success is dependent in part on protecting our intellectual property rights and technology, including any source code, proprietary information, data, processes and other forms of information, know how, and technology. We rely on a combination of patents, trademarks, service marks, and trade secret laws to establish and protect our intellectual property.
Our success is dependent in part on protecting our intellectual property rights and technology, including any source code, proprietary information, data, processes and other forms of information, know how, and 27 technology. We rely on a combination of patents, trademarks, service marks, and trade secret laws to establish and protect our intellectual property.
If we are unable to attract the requisite personnel, our business and prospects may be adversely affected. Each of our CEO, key executive officers, specialized insurance experts, key technical personnel, and other employees could terminate his or her relationship with us at any time.
If we are unable to attract the requisite personnel, our business and prospects may be adversely affected. Each of our CEO, key executive officers, specialized insurance experts, key technical personnel, and other employees could terminate his or her relationship 29 with us at any time.
Additionally, anticipated customer demand for a product we are developing could decrease after the development cycle has commenced. Such decreased customer demand may cause us to fall short of our sales targets, and we may nonetheless be unable to avoid substantial costs associated with the product’s development.
Additionally, anticipated customer demand for a product we are developing could decrease after the development cycle has commenced. Such decreased customer demand may cause us to fall short of our sales targets, and we may 31 nonetheless be unable to avoid substantial costs associated with the product’s development.
If we fail to address the foregoing risks or other problems encountered in connection with past or future acquisitions of businesses, new technologies, services, and other assets and strategic investments, or if we fail to 35 successfully integrate such acquisitions or investments, our business, results of operations, and financial condition could be adversely affected.
If we fail to address the foregoing risks or other problems encountered in connection with past or future acquisitions of businesses, new technologies, services, and other assets and strategic investments, or if we fail to successfully integrate such acquisitions or investments, our business, results of operations, and financial condition could be adversely affected.
In addition, our efforts to comply with new or existing cybersecurity regulations could impose significant costs on our business, which could materially and adversely affect our business, financial condition or results of operations. 42 Our businesses, results of operations and financial condition could be adversely affected by ongoing international conflicts and related disruptions in the global economy.
In addition, our efforts to comply with new or existing cybersecurity regulations could impose significant costs on our business, which could materially and adversely affect our business, financial condition or results of operations. Our businesses, results of operations and financial condition could be adversely affected by ongoing international conflicts and related disruptions in the global economy.
Any of these changes may result in a decline in new business and renewals and, as a result, have a material adverse effect on our business, results of operations, and financial condition. Our proprietary technology, which relies on third-party data, may not operate properly or as we expect it to.
Any of these changes may result in a decline in new business and renewals and, as a result, have a material adverse effect on our business, results of operations, and financial condition. Our proprietary technology platform, which relies on third-party data, may not operate properly or as we expect it to operate.
The reverse stock split and corresponding capital stock adjustment became effective as of 11:59 p.m. Eastern Daylight Time on September 29, 2022. The market price of our common stock and warrants may be highly volatile, which could cause the value of your investment to decline.
The reverse stock split and corresponding capital stock adjustment became effective as of 11:59 p.m. Eastern Daylight Time on September 29, 2022. The market price of our common stock may be highly volatile, which could cause the value of your investment to decline.
To address the potential errors or desired or required changes in our current premium rates, we may be compelled to increase the amount allocated to cover policy claims, increased expenses, or to address other economic factors resulting in an increase in future premium rates or to additionally or alternatively adopt different underwriting standards.
To address the potential errors or desired or required changes in our current premium rates, we may be compelled to increase the amount allocated to cover policy claims, increased expenses, or to address other economic factors resulting in an increase in future premium rates or to additionally or alternatively adopt different 18 underwriting standards.
Existing regulations and changes to existing regulations, their interpretation or implementation, or new regulations could impede our use of this technology or require that we disclose our proprietary technology to our competitors, which could impair our competitive position and result in a material adverse effect on our business, results of operations, and financial condition.
Existing regulations and changes to existing regulations, their interpretation or implementation, or new regulations could impede our use of our technology or require that we disclose our proprietary technology to our competitors, which could impair our competitive position and result in a material adverse effect on our business, results of operations, and financial condition.
In addition, broad market and industry factors, such as recessions, loss of investor confidence or continued interest rate increases may negatively affect the market price of our common stock, regardless of our actual operating performance, and factors beyond our control may cause our stock price to decline rapidly and unexpectedly.
In addition, broad market and industry factors, such as recessions, loss of investor confidence or interest rate increases may negatively affect the market price of our common stock, regardless of our actual operating performance, and factors beyond our control may cause our stock price to decline rapidly and unexpectedly.
As is typical in the insurance industry, we continually face risks associated with litigation of various types arising in the normal course of our business 33 operations, including disputes relating to insurance claims under our policies, as well as other general commercial and corporate litigation.
As is typical in the insurance industry, we continually face risks associated with litigation of various types arising in the normal course of our business operations, including disputes relating to insurance claims under our policies, as well as other general commercial and corporate litigation.
Further, as compared to our competitors who operate on a wider geographic scale, any adverse changes in the regulatory or legal environment affecting property and casualty insurance in California and Texas may expose us 32 to more significant risks.
Further, as compared to our competitors who operate on a wider geographic scale, any adverse changes in the regulatory or legal environment affecting property and casualty insurance in California and Texas may expose us to more significant risks.
If we were to be involved in litigation and it was determined adversely, it could require us to pay significant damages amounts or to change aspects of our operations, either of which could have a material adverse effect on our financial results.
If we were to be involved in litigation and it was determined adversely, it could require us to pay significant damages or to change aspects of our operations, either of which could have a material adverse effect on our financial results.
Some fixed income securities have call or prepayment options, which create possible 45 reinvestment risk in declining rate environments. Other fixed income securities, such as mortgage-backed and asset-backed securities, carry prepayment risk or, in a rising interest rate environment, may not prepay as quickly as expected.
Some fixed income securities have call or prepayment options, which create possible reinvestment risk in declining rate environments. Other fixed income securities, such as mortgage-backed and asset-backed securities, carry prepayment risk or, in a rising interest rate environment, may not prepay as quickly as expected.
As an emerging growth company, our independent registered public accounting firm will not be required to formally attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 until the date we are no longer 51 an emerging growth company.
As an emerging growth company, our independent registered public accounting firm will not be required to formally attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 until the date we are no longer an emerging growth company.
Also, should ISO refuse to license its proprietary information to us on the 28 same terms that it offers to our competitors and we are unable to find a comparable replacement, we could be placed at a significant competitive disadvantage.
Also, should ISO refuse to license its proprietary information to us on the same terms that it offers to our competitors and we are unable to find a comparable replacement, we could be placed at a significant competitive disadvantage.
Going forward, we intend to evaluate financing opportunities from time to time, and our ability to obtain financing will depend, among other things, on our 23 development efforts, business plans, operating performance, and the condition of the capital markets at the time we seek financing.
Going forward, we intend to evaluate financing opportunities from time to time, and our ability to obtain financing will depend, among other things, on our development efforts, business plans, operating performance, and the condition of the capital markets at the time we seek financing.
The payment methods that we offer also subject us to potential fraud and theft by criminals, who are becoming increasingly more sophisticated, seeking to obtain unauthorized access to or exploit weaknesses that may exist in the payment systems.
The payment methods that we offer also subject us to potential fraud and theft by criminals, who are becoming increasingly more sophisticated, seeking to obtain unauthorized access to or exploit weaknesses that may 35 exist in the payment systems.
Interest rates increased significantly in 2022 and 2023, and future increases in interest rates could cause the values of our fixed income securities portfolios to decline, with the magnitude of the decline depending on the duration of securities included in our portfolio and the amount by which interest rates increase.
Interest rates increased significantly in 2022 and 2023, and any future increases in interest rates could cause the values of our fixed income securities portfolios to decline, with the magnitude of the decline depending on the duration of securities included in our portfolio and the amount by which interest rates increase.
Market forces and external factors (such as significant losses from hurricanes, wildfires, severe weather, or terrorist attacks) or an increase in capital requirements, impact the availability of coverage, limits, and pricing of the reinsurance we purchase.
Market forces and external factors (such as significant losses from hurricanes, wildfires, severe weather, or terrorist attacks) or an increase in capital 16 requirements, impact the availability of coverage, limits, and pricing of the reinsurance we purchase.
Alternatively, we could set our premiums too high, which could reduce our 19 competitiveness and lead to lower revenues, which could have a material adverse effect on our business, results of operations, and financial condition.
Alternatively, we could set our premiums too high, which could reduce our competitiveness and lead to lower revenues, which could have a material adverse effect on our business, results of operations, and financial condition.
In addition to increasing costs, a significant volume of customer complaints or litigation could adversely affect our brand and reputation, regardless of whether such allegations are valid or whether we are liable.
In addition to increasing costs, a significant volume of 32 customer complaints or litigation could adversely affect our brand and reputation, regardless of whether such allegations are valid or whether we are liable.
Any failure or perceived failure by us to comply with our privacy policies, our data privacy-related obligations to customers or other third parties, or our other data privacy-related legal obligations, may result in governmental or regulatory investigations, enforcement actions, regulatory fines, compliance orders, litigation, or public statements against us by consumer advocacy groups or others and could cause customers to lose trust in us, all of which could be costly and have an adverse effect on our business.
Any failure or perceived failure by us to comply with our privacy policies, our data privacy-related obligations to customers or other third parties, or our other data privacy-related legal obligations, may result in governmental or regulatory investigations, enforcement actions, regulatory fines, compliance orders, litigation (including class actions), or public statements against us by consumer advocacy groups or others and could cause customers to lose trust in us, all of which could be costly and have an adverse effect on our business.
Although we elected to substantially reduce our participation in quota share reinsurance treaties in 2024 on the Hippo program, if we determine it would be beneficial to enter into similar treaties in the future, we expect that we would be able to secure treaties on terms that qualify for continued reinsurance accounting; however, there can be no assurance that the available market terms of these treaties (including pricing, coverage and exclusions) would also pass risk transfer for accounting purposes.
Although we elected to substantially reduce our participation in quota share reinsurance treaties in 2025 on the Hippo program, if we determine it would be beneficial to enter into similar treaties in the future, we expect that we would be able to secure treaties on terms that qualify for continued reinsurance accounting; however, there can be no assurance that the available market terms of these treaties (including pricing, coverage and exclusions) would also pass risk transfer for accounting purposes.
We cannot predict with precision the likelihood, nature, or extent of any necessary remedial actions or financial impact (if any) resulting from such an examination or the associated costs of such remedial actions or regulatory scrutiny.
We cannot predict with precision the 25 likelihood, nature, or extent of any necessary remedial actions or financial impact (if any) resulting from such an examination or the associated costs of such remedial actions or regulatory scrutiny.
Additionally, factors, such as general economic conditions, the volatility and strength of the capital markets and inflation can affect the business and economic environment. These same factors affect our ability to generate 43 revenue and profits.
Additionally, factors, such as general economic conditions, the volatility and strength of the capital markets and inflation can affect the business and economic environment. These same factors affect our ability to generate revenue and profits.
In the past, companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigation in the future.
In the past, companies that have experienced volatility in the market price of their stock have been subject to securities 46 class action litigation. We may be the target of this type of litigation in the future.
Acquisitions and investments involve numerous risks, any of which could harm our business and negatively affect our financial condition and results of operations, including: • intense competition for suitable acquisition targets, which could increase prices and adversely affect our ability to consummate deals on favorable or acceptable terms; • failure or material delay in closing a transaction, including as a result of regulatory review and approvals; • inadequacy of reserves for losses and loss expenses; • quality of their data and underwriting processes; • conditions imposed by regulatory agencies that make the realization of cost-savings through integration of operations more difficult; • difficulties in obtaining regulatory approvals on our ability to be an acquirer; • a need for additional capital that was not anticipated at the time of the acquisition; • transaction-related lawsuits or claims; • difficulties in integrating the technologies, operations, existing contracts, and personnel of an acquired company; • difficulties in retaining key employees or business partners of an acquired company; • diversion of financial and management resources from existing operations or alternative acquisition opportunities; • failure to realize the anticipated benefits or synergies of a transaction; • failure to identify the problems, liabilities, or other shortcomings or challenges of an acquired company or technology, including issues related to intellectual property, regulatory compliance practices, litigation, accounting practices, or employee or user issues; • risks that regulatory bodies may enact new laws or promulgate new regulations that are adverse to an acquired company or business; • theft of our trade secrets or confidential information that we share with potential acquisition candidates; • risk that an acquired company or investment in new offerings cannibalizes a portion of our existing business; • adverse market reaction to an acquisition; • significant attention from management and disruption to our business; and • potential dilution in value to our stockholders.
Acquisitions and investments involve numerous risks, any of which could harm our business and negatively affect our financial condition and results of operations, including: • intense competition for suitable acquisition targets, which could increase prices and adversely affect our ability to consummate deals on favorable or acceptable terms; 33 • failure or material delay in closing a transaction, including as a result of regulatory review and approvals; • inadequacy of reserves for losses and loss expenses; • quality of their data and underwriting processes; • conditions imposed by regulatory agencies that make the realization of cost-savings through integration of operations more difficult; • difficulties in obtaining regulatory approvals on our ability to be an acquirer; • a need for additional capital that was not anticipated at the time of the acquisition; • transaction-related lawsuits or claims; • difficulties in integrating the technologies, operations, existing contracts, and personnel of an acquired company; • difficulties in retaining key employees or business partners of an acquired company; • diversion of financial and management resources from existing operations or alternative acquisition opportunities; • failure to realize the anticipated benefits or synergies of a transaction; • failure to identify the problems, liabilities, or other shortcomings or challenges of an acquired company or technology, including issues related to intellectual property, regulatory compliance practices, litigation, accounting practices, or employee or user issues; • risks that regulatory bodies may enact new laws or promulgate new regulations that are adverse to an acquired company or business; • theft misappropriation, or unauthorized public dissemination or disclosure of our trade secrets or confidential information that we share with potential acquisition candidates; • risk that an acquired company or investment in new offerings cannibalizes a portion of our existing business; • adverse market reaction to an acquisition; • significant attention from management and disruption to our business; and • potential dilution in value to our stockholders.
In some cases, particularly in the case of websites operating outside of the United States, our available remedies may not be adequate to protect us 30 against the effect of the operation of such websites.
In some cases, particularly in the case of websites operating outside of the United States, our available remedies may not be adequate to protect us against the effect of the operation of such websites.
We have limited exposure to equities but may in the future increase our portfolio’s allocation to equities. See “ Management’s Discussion and Analysis of Financial Condition and Results of Operations — Quantitative and Qualitative Disclosure About Market Risk .” For several years prior to 2022, interest rates were at or near historic lows.
We have limited exposure to equities but may in the future increase our portfolio’s allocation to equities. See “ Management’s Discussion and Analysis of Financial Condition and Results of Operations — Quantitative and Qualitative Disclosures About Market Risk .” For several years prior to 2022, interest rates were at or near historic lows.
Moreover, if our revenue declines, we may not be able to reduce costs in a timely manner because many of our costs are fixed, at least in the short term. In addition, if we reduce variable costs to respond to losses as we did in 2023, this may limit our ability to sign up new customers and grow our revenues.
Moreover, if our revenue declines, we may not be able to reduce costs in a timely manner because many of our costs are fixed, at least in the short term. In addition, if we reduce variable costs to respond to losses as we did in 2023, this may limit our ability to sign up new customers and increase our revenues.
The extent of losses from a catastrophe is a function of both the total amount of insured exposure in the area affected by the 39 event and the severity of the event.
The extent of losses from a catastrophe is a function of both the total amount of insured exposure in the area affected by the event and the severity of the event.
The lower the percentage, the more severe the regulatory response, including, in the event of a mandatory control level event (total adjusted capital falls below 70% of the insurer’s authorized control level risk-based capital), placing the insurance company into receivership. As of December 31, 2023, Spinnaker Insurance Company’s risk-based capital ratio was well in excess of minimum statutory requirements.
The lower the percentage, the more severe the regulatory response, including, in the event of a mandatory control level event (total adjusted capital falls below 70% of the insurer’s authorized control level risk-based capital), placing the insurance company into receivership. As of December 31, 2024, Spinnaker Insurance Company’s risk-based capital ratio was well in excess of minimum statutory requirements.
Notwithstanding the foregoing, the Certificate of Incorporation provides that the exclusive forum provision will not apply to suits brought to enforce a duty or liability created by the Securities Act of 1933, as amended (the “Securities Act”) or the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or any other claim for which the federal courts have exclusive jurisdiction.
Notwithstanding the foregoing, the Certificate of Incorporation provides that the exclusive forum provision will not apply to suits brought to enforce a duty or liability created by the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.
For our Hippo primary homeowners’ reinsurance program commencing in 2024, we elected not to purchase proportional reinsurance, and instead decided to retain more of the exposure and associated premium. Also, effective January 1, 2024, we elected to cut off 25% participation on our 2023 proportional reinsurance treaty and retain the remaining exposure and related premiums.
For our Hippo primary homeowners’ reinsurance program commencing in 2025, we elected not to purchase proportional reinsurance, and instead decided to retain more of the exposure and associated premium. Also, effective January 1, 2024, we elected to cut off 25% of the reinsurer’s participation on our 2023 proportional reinsurance treaty and retain the remaining exposure and related premiums.
Moreover, if third parties that we work with violate applicable laws or our policies, such violations also may put personal information at risk, which may result in increased regulatory scrutiny and have a material adverse effect to our reputation, business, and operating results.
Moreover, if third parties that we work with violate applicable laws or our policies, such violations also may put personal information at risk, which may result in increased regulatory scrutiny and have a material adverse effect on our reputation, business, and operating results.
Any failure to pay claims accurately or timely could also lead to regulatory and administrative actions or material litigation; lead to loss or reduction in the reinsurance recoveries; or result in damage to our reputation, any one of which could materially and adversely affect our business, financial condition, results of operations, and prospects.
Any failure to pay claims accurately or timely could also lead to regulatory and administrative actions or material litigation, lead to loss or reduction in reinsurance recoveries, or result in damage to 14 our reputation, any one of which could materially and adversely affect our business, financial condition, results of operations, and prospects.
Therefore, the exact effect of the protection of this intellectual property cannot be predicted with certainty. In addition, given the costs, effort, risks, and downside of obtaining patent protection, including the requirement to ultimately disclose the invention to the public, we may choose not to seek patent protection for certain innovations.
Therefore, the exact effect of the protection of this intellectual property cannot be predicted with certainty. In addition, given the costs, effort, risks, and downside of obtaining patent protection, including the requirement to ultimately disclose the invention to the public, we may choose not to seek patent protection for certain inventions.
As our business expands and matures, other seasonality trends may develop and the existing seasonality and customer behavior that we experience may change.
As our business expands and matures, other seasonal trends may develop and the existing seasonality and customer behavior that we experience may change.
We are exposed to risk through our captive reinsurer, RHS, which takes a share of the risk underwritten of affiliated and non-affiliated insurance carriers for business written through our MGA and unaffiliated MGAs. The Company assumes insurance risk of policies underwritten by Hippo and unaffiliated MGAs through a wholly-owned Cayman domiciled insurance captive, RHS.
We are exposed to risk through our captive reinsurer, RHS, which takes a share of the risk underwritten of affiliated and non-affiliated insurance carriers for business written through our MGA. The Company assumes insurance risk of policies underwritten by Hippo through a wholly-owned Cayman domiciled insurance captive, RHS.
Changes in laws or regulations, or changes in the interpretation of laws or regulations by a regulatory authority, specific to the use of artificial intelligence, may decrease our revenues and earnings and may require us to change the manner in which we conduct some aspects of our business.
New laws or regulations, changes in existing laws or regulations, or changes in the interpretation of laws or regulations by a regulatory authority, specific to the use of artificial intelligence, may decrease our revenues and earnings and may require us to change the manner in which we conduct some aspects of our business.
Many of the risks associated with the use of third-party software, technology, and other intellectual property cannot be eliminated, and these risks could negatively affect our business. Failure to protect or enforce our intellectual property rights could harm our business, results of operations, and financial condition.
Many of the risks associated with the use of Third-Party Technology cannot be eliminated, and these risks could negatively affect our business. Failure to protect or enforce our intellectual property rights could harm our business, results of operations, and financial condition.
Cyber-incidents are expected to accelerate on a global basis in both frequency and magnitude, and threat actors are increasingly sophisticated in using techniques that circumvent controls, evade detection, and remove forensic evidence, which means that we and our third-party providers may be unable to anticipate, contain or recover from future attacks or incidents in a timely or effective manner.
Cyber-incidents are expected to accelerate on a global basis in both frequency and magnitude, and threat actors are increasingly sophisticated in using techniques, including artificial intelligence, that circumvent controls, evade detection, and remove forensic evidence, which means that we and our third-party providers may be unable to anticipate, contain or recover from future attacks or incidents in a timely or effective manner.
For example, the proposed Designing Accounting Safeguards to Help Broaden Oversight and Regulations on Data (DASHBOARD) Act would mandate annual disclosure to the SEC of the type and “aggregate value” of user data used by harvesting companies, such as, but not limited to, Facebook, Google and Amazon, including how revenue is generated by user data and what measures are taken to protect the data.
For example, 21 the proposed Designing Accounting Safeguards to Help Broaden Oversight and Regulations on Data (“DASHBOARD”) Act would mandate annual disclosure to the SEC of the type and “aggregate value” of user data used by harvesting companies, such as, but not limited to, Facebook, Google and Amazon, including how revenue is generated by user data and what measures are taken to protect the data.
The Jumpstart Our Business Startups Act of 2012 (“JOBS Act”) provides that, so long as a company qualifies as an “emerging growth company,” it will, among other things: • be required to have only two years of audited financial statements and only two years of related Management’s Discussion and Analysis of Financial Condition and Results of Operations disclosure; • be exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that its independent registered public accounting firm provide an attestation report on the effectiveness of its internal control over financial reporting; • be exempt from the “say on pay” and “say on golden parachute” advisory vote requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”); and • be exempt from certain disclosure requirements of the Dodd-Frank Act relating to compensation of its executive officers and be permitted to omit the detailed compensation discussion and analysis from proxy statements and reports filed under the Exchange Act.
The Jumpstart Our Business Startups Act of 2012 (“JOBS Act”) provides that, so long as a company qualifies as an “emerging growth company,” it will, among other things: • be required to have only two years of audited financial statements and only two years of related Management’s Discussion and Analysis of Financial Condition and Results of Operations disclosure; • be exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that its independent registered public accounting firm provide an attestation report on the effectiveness of its internal control over financial reporting; • be exempt from the “say on pay” and “say on golden parachute” advisory vote requirements of the Dodd-Frank Act; and • be exempt from certain disclosure requirements of the Dodd-Frank Act relating to compensation of its executive officers and be permitted to omit the detailed compensation discussion and analysis from proxy statements and reports filed under the Exchange Act.
On November 1, 2023, the NYDFS adopted amendments to the NYDFS Reg which require enhanced governance, updated cybersecurity incident reporting, enhanced access controls, expanded asset inventory requirements, updated training obligations, and updated risk and vulnerability assessments.
On November 1, 2023, the NYDFS adopted amendments to the NYDFS Cybersecurity Regulation which require enhanced governance, updated cybersecurity incident reporting, enhanced access controls, expanded asset inventory requirements, updated training obligations, and updated risk and vulnerability assessments.
While these agreements will give us contractual remedies upon any unauthorized use or disclosure of our proprietary business information or intellectual property, we cannot assure you that these agreements will be effective in controlling access to, and use and distribution of, our platform and proprietary information, and we may not always be able to effectively monitor or prevent such unauthorized use or disclosure.
While these agreements may provide us with contractual remedies upon any unauthorized use or disclosure of our proprietary business information or intellectual property, we cannot assure you that these agreements will be effective in controlling access to, and use and distribution of, our platform and proprietary information, and we may not always be able to effectively monitor or prevent such unauthorized use or disclosure.
In the event of a data breach, we are also subject to breach notification laws in the jurisdictions in which we operate, including U.S. state laws, and the risk of litigation and regulatory enforcement actions.
In the event of a data breach, we are also subject to breach notification laws in the jurisdictions in which we operate, including all 50 U.S. state laws, and the risk of litigation and regulatory enforcement actions.
A July 16, 2020 decision of the Court of Justice of the European Union invalidated a key mechanism for lawful data transfer to the U.S. and called into question the viability of its primary alternative. As such, the ability of companies to lawfully transfer personal data from the E.U. to the U.S. is presently uncertain.
In 2020, a decision of the Court of Justice of the European Union invalidated a key mechanism for lawful data transfer to the U.S. and called into question the viability of its primary alternative. As such, the ability of companies to lawfully transfer personal data from the E.U. to the U.S. is presently uncertain.
Refer to Note 14, Commitments and Contingencies, Legal Proceedings. Claims by others that we infringed their proprietary technology or other intellectual property rights could result in litigation which is expensive to support, and if resolved adversely, could harm our business.
Refer to Note 14, Commitments and Contingencies, Legal Proceedings. Claims by third parties that we infringed their proprietary technology or other intellectual property rights could result in litigation which is expensive to support, and if resolved adversely, could harm our business.
Additionally, climate change may cause an impact on the demand, price and availability of homeowners insurance and reinsurance coverages, as well as the value of our investment portfolio. Due to significant variability associated with future changing climate conditions, we are unable to predict the impact climate change will have on our business. We are subject to extensive insurance industry regulations.
Additionally, climate change may cause an impact on the demand, price and availability of homeowners insurance and reinsurance coverages, as well as the value of our investment portfolio. Due to significant variability associated with future changing climate conditions, we are unable to predict the impact climate change will have on our business.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeTal Hornstein, our Chief Information Security Officer (CISO), leads our cybersecurity program and oversees teams supporting security functions across the company. Mr. Hornstein holds a CISSP certification from ISC2 and has over 20 years of experience in multiple cybersecurity and technology-related roles. He joined Hippo in late 2021 and has been instrumental in designing and executing our entire cybersecurity stack.
Biggest changeTal Hornstein, our Chief Information Officer and Chief Information Security Officer (“CISO”), leads our cybersecurity program and oversees teams supporting security functions across the company. Mr. Hornstein holds a CISSP certification from ISC2 and has over 20 years of experience in multiple cybersecurity and technology-related roles.
Impact of cybersecurity risks on business strategy, results of operations or financial condition As of the date of this Annual Report, we have not identified any cybersecurity threats materially affecting, or reasonably likely to materially affect, our business strategy, results of operations, or financial situation.
Impact of cybersecurity risks on business strategy, results of operations or financial condition 53 As of the date of this Annual Report, we have not identified any cybersecurity threats materially affecting, or reasonably likely to materially affect, our business strategy, results of operations, or financial situation.
ITEM 1C. CYBERSECURITY Cybersecurity Risk Management and Strategy Cybersecurity risk management is a key component of our overarching risk management strategy. Given the susceptibility of our industry to cyber threats and attacks, we regularly encounter attempted attacks of varying types.
ITEM 1C. CYBERSECURITY Cybersecurity Risk Management and Strategy 52 Cybersecurity risk management is a key component of our overarching risk management strategy. Given the susceptibility of our industry to cyber threats and attacks, we regularly encounter attempted attacks of varying types.
The findings of these independent assessments facilitate our risk-based decision-making, prioritization of cybersecurity countermeasures, and risk mitigation strategies. Our risk mitigation strategies encompass an array of technical and operational measures, complemented by annual cybersecurity and privacy training for all employees. Additionally, we have specific policies and practices governing third-party security risks, including our third-party risk management (TPRM) program.
The findings of these independent assessments facilitate our risk-based decision-making, prioritization of cybersecurity countermeasures, and risk mitigation strategies. Our risk mitigation strategies encompass an array of technical and operational measures, complemented by annual cybersecurity and privacy training for all employees. Additionally, we have specific policies and practices governing third-party security risks, including our third-party risk management (“TPRM”) program.
We regularly conduct an internal risk assessment to evaluate the effectiveness of the security of our systems and of our processes, identify areas for remediation, and explore opportunities for enhancement, such as cloud and endpoint security enhancements, application programming interface (API) security, and contractor access management.
We regularly conduct an internal risk assessment to evaluate the effectiveness of the security of our systems and of our processes, identify areas for remediation, and explore opportunities for enhancement, such as cloud and endpoint security enhancements, application programming interface (“API”) security, and contractor access management.
Both the financial and personal data in our systems, coupled with the dynamic nature of our products and services, make us a potential target. We operate internationally with employees, contractors, vendors, developers, partners, and third parties, which complicates our risk exposures. Our information security program encompasses policies and controls aimed at mitigating cybersecurity risks.
Both the financial and personal data in our systems, coupled with the dynamic nature of our products and services, make us a potential target. We operate internationally with employees, contractors, vendors, developers, partners, and third parties, which complicates our risk exposures.
However, we acknowledge the presence of both known and unknown risks, alongside vulnerabilities within our security program. Continuous improvement efforts are integral to enhancing our information security program and overall risk management endeavors. 55 We employ a risk management framework aligned with relevant laws, regulations, and industry standards to manage cybersecurity risks across our products and services, infrastructure, and organization.
Continuous improvement efforts are integral to enhancing our information security program and overall risk management endeavors. We employ a risk management framework aligned with relevant laws, regulations, and industry standards to manage cybersecurity risks across our products and services, infrastructure, and organization.
Our cybersecurity team monitors prevention, detection, mitigation, and remediation of cybersecurity incidents through technical and operational measures, regularly reporting to the CISO. As a key member of the senior management team, the CISO provides updates to the Committee on the company’s cybersecurity program, including risks, incidents, and mitigation strategies.
As a key member of the senior management team, the CISO provides updates to the Committee on the company’s cybersecurity program, including risks, incidents, and mitigation strategies.
However, despite our efforts, we recognize the impossibility of eliminating all cybersecurity risks or guaranteeing the absence of undetected cybersecurity incidents. For additional information about these risks, refer to Part I, Item 1A, "Risk Factors," in this Annual Report on Form 10-K.
For additional information about these risks, refer to Part I, Item 1A, "Risk Factors," in this Annual Report on Form 10-K.
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Our information security program encompasses policies and controls aimed at mitigating cybersecurity risks, including an incident response plan that includes procedures for assessing and responding to cybersecurity incidents. However, we acknowledge the presence of both known and unknown risks, alongside vulnerabilities within our security program.
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He joined Hippo in late 2021 and has been instrumental in designing and executing our entire cybersecurity stack. Our cybersecurity team monitors prevention, detection, mitigation, and remediation of cybersecurity incidents through technical and operational measures, regularly reporting to the CISO.
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However, despite our efforts, we recognize the impossibility of eliminating all cybersecurity risks or guaranteeing the absence of undetected cybersecurity incidents that, if realized, are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES Our corporate headquarters are located in Palo Alto, California. We own and occupy an office building in Austin, Texas and also lease facilities under operating leases with various expiration dates in Austin, Texas, Palo 56 Alto, California, Oakland, California; Dallas, Texas; Bedminster, New Jersey; Tel Aviv, Israel; and Warsaw, Poland.
Biggest changeITEM 2. PROPERTIES Our corporate headquarters are located in Palo Alto, California. We own and occupy an office building in Austin, Texas and also lease facilities under operating leases with various expiration dates in Austin, Texas; Palo Alto, California; Dallas, Texas; Bedminster, New Jersey; and Warsaw, Poland. We believe that our facilities are adequate to meet our current needs.
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We believe that our facilities are adequate to meet our current needs.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeRegardless of outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors. On November 19, 2021, Hippo and Assaf Wand, the Company’s co-founder, were named in a civil action in San Francisco Superior Court brought by Eyal Navon. Mr. Navon alleged six causes of action against Mr.
Biggest changeRegardless of outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors. On November 19, 2021, the Company and Assaf Wand were named in a civil action in San Francisco Superior Court brought by Eyal Navon. On February 16, 2024, Innovius Capital Canopus I, L.P.
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Wand for breach of fiduciary duty, breach of contract, promissory estoppel, fraud, negligent misrepresentation, and constructive fraud surrounding a loan and call option entered into between Innovius Capital Canopus I, L.P. (“Innovius”) and Mr. Navon, as well as alleged promises made by Mr. Wand to Mr. Navon while Mr. Navon was an employee of Hippo.
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(“Innovius”) filed an amended cross-complaint naming Mr. Navon, Hippo, and Mr. Wand as cross-defendants. The suits against the Company have been settled with no amounts paid by the Company to Innovius or Mr. Navon.
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Innovius was an investor in the Company prior to its transaction with Mr. Navon. Mr. Navon alleges a fraud claim against Hippo and also alleges a claim for declaratory judgment, requesting that the Court declare that Mr. Navon properly revoked the call option he entered into with Innovius. On May 2, 2022, Mr.
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Navon amended his complaint, naming Hippo in his breach of contract, promissory estoppel, negligent misrepresentation, and constructive fraud causes of action (in addition to re-pleading the declaratory relief and fraud causes of action). On February 28, 2023, Mr. Navon filed a Third Amended Complaint alleging 18 claims for relief.
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In addition to the original allegations, the Third Amended Complaint alleges fraud, insider-trading, and aiding-and-abetting claims based on the theory that Hippo and Mr.
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Wand provided Innovius and its principal, Justin Moore, with material nonpublic information about Hippo’s business, as well as conversion claims against Hippo related to the transfer of his shares to Innovius after Innovius exercised the call option. All claims asserted are based on alleged conduct that occurred prior to Hippo becoming a publicly traded company.
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Hippo engaged counsel to defend both Hippo and Mr. Wand, and Hippo and Mr. Wand have denied all claims. As a result of the allegations in the Third Amended Complaint, Hippo moved to have the court designate the case as complex.
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The court granted this motion, took the previously scheduled trial date off the calendar, and trial is now expected to take place in September 2024. On February 2, 2024, Mr. Navon filed a Fourth Amended Complaint alleging 19 claims for relief.
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In addition to the previous allegations, the Fourth Amended Complaint alleges securities fraud by affirmative false statements and aiding-and-abetting claims against Hippo, Mr. Wand, Innovius, and Mr. Moore on the theory that Mr. Wand purposely misled Mr. Navon into selling his Hippo shares, and that all defendants were aware of Mr. Wand’s plan to mislead Mr.
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Navon in an effort to convince him to sell his Hippo shares. On February 16, 2024, Innovius filed eight cross claims against Hippo and Mr. Wand, claiming breach of contract, promissory fraud and aiding and abetting fraud, and Hippo filed three cross claims against Mr. Navon including fraud, fraudulent inducement, negligent misrepresentation, and breach of contract.
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The parties are engaged in fact discovery, and Hippo intends to move for summary judgment against the claims alleged in the Fourth Amended Complaint.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe share repurchase program, which does not have a specific expiration date, authorizes repurchases in the open market or in private transactions. There were no share repurchases in the three months ended December 31, 2023. As of December 31, 2023, the Company had $48.2 million remaining under the share repurchase authorization.
Biggest changeThe share repurchase program, which does not have a specific expiration date, authorizes repurchases in the open market or in private transactions.
Recent Sales of Unregistered Securities There were no unregistered sales of equity securities in fiscal year 2023. Issuer Purchases of Equity Securities In March 2023, the Company’s Board of Directors authorized the repurchase of up to $50.0 million of its common stock.
Recent Sales of Unregistered Securities There were no unregistered sales of equity securities in fiscal year 2024. Issuer Purchases of Equity Securities In March 2023, the Company’s board of directors authorized the repurchase of up to $50.0 million of its common stock.
Holders As of February 21, 2024, there were approximately 56 holders of record of the Company’s common stock. Dividends We have never declared or paid any cash dividends on our capital stock. We currently intend to retain any future earnings and do not expect to pay any dividends in the foreseeable future.
Dividends We have never declared or paid any cash dividends on our capital stock. We currently intend to retain any future earnings and do not expect to pay any dividends in the foreseeable future.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information The Company’s common stock and warrants to purchase common stock trade on the New York Stock Exchange under the symbols “HIPO” and “HIPO WS,” respectively.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information The Company’s common stock trades on the New York Stock Exchange under the symbols “HIPO”. Holders As of February 20, 2025, there were approximately 49 holders of record of the Company’s common stock.
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Performance Graph The performance graph has been omitted as permitted under rules applicable to smaller reporting companies.
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The following table sets forth certain information with respect to repurchases of our common stock during the quarter ended December 31, 2024 (in thousands, except per share values): Period Total Number of Shares Purchased (1) Average Price Paid per Share (2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions, except share and per share data) October 1 through October 31, 2024 957,242 $ 16.28 957,242 November 1 through November 30, 2024 — $ — — December 1 through December 31, 2024 — $ — — Total 957,242 $ 32.6 (1) On October 30, 2024, the Company entered into a Share Repurchase Agreement with an existing unaffiliated shareholder to purchase 957,242 shares of the Company’s common stock at a purchase price of $16.28 per share pursuant to the Company’s share repurchase program (the “Share Repurchase”).
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The Share Repurchase was substantially completed on October 30, 2024. The Company used available cash resources of approximately $15.6 million to complete this transaction. As of December 31, 2024, the Company had $32.6 million remaining under the share repurchase authorization.
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Performance Graph The following graph shows a comparison of cumulative total return for our common stock, the Russell 2000 Stock Index (the “Russell 2000 Index”) and the Hudson Structured Capital Management Ltd Public InsurTech Index (the “HSCM Public InsurTech Index”) for the four fiscal years ended December 31, 2024.
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The total return 55 graph and table assume that $100 was invested on August 2, 2021, the date of our merger with RTPZ, in each of Hippo Holdings Inc. common stock, the Russell 2000 Index and the HSCM Public InsurTech Index and assume that all dividends are reinvested. Indexes are calculated on a month-end basis.
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The comparisons in the graph below are based on historical data and are not indicative of, or intended to forecast, the possible future performance of our common stock.
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August 2, 2021 December 31, 2021 December 30, 2022 December 29, 2023 December 31, 2024 Hippo Holdings Inc. $ 100.0 $ 28.9 $ 5.6 $ 3.7 $ 10.9 Russell 2000 Index $ 100.0 $ 114.8 $ 91.4 $ 106.8 $ 119.2 HSCM Public InsurTech Index $ 100.0 $ 72.6 $ 24.9 $ 41.9 $ 71.9

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

117 edited+19 added−26 removed90 unchanged
Biggest changeWe expect continued improvement as these actions have more time to impact our financial results. 71 Results of Operations The following table sets forth our consolidated results of operations data for the periods indicated (dollars in millions): Year Ended December 31, 2023 2022 Change % Change Revenue: Net earned premium $ 107.5 $ 42.5 $ 65.0 153 % Commission income, net 63.4 54.3 9.1 17 % Service and fee income 15.7 13.9 1.8 13 % Net investment income 23.1 9.0 14.1 157 % Total revenue 209.7 119.7 90.0 75 % Expenses: Losses and loss adjustment expenses 181.7 101.4 80.3 79 % Insurance related expenses 79.1 59.9 19.2 32 % Technology and development 47.0 57.5 (10.5) (18) % Sales and marketing 80.1 101.8 (21.7) (21) % General and administrative 79.6 71.5 8.1 11 % Impairment and restructuring charges 5.5 55.3 (49.8) (90) % Other income, net (0.8) (2.5) 1.7 (68) % Total expenses 472.2 444.9 27.3 6 % Loss before income taxes (262.5) (325.2) 62.7 (19) % Income taxes expense 0.5 1.3 (0.8) (62) % Net loss (263.0) (326.5) 63.5 (19) % Net income attributable to noncontrolling interests, net of tax 10.1 6.9 3.2 46 % Net loss attributable to Hippo $ (273.1) $ (333.4) $ 60.3 (18) % Other comprehensive income (loss): Change in net unrealized gain on available-for-sale securities, net of tax 4.1 (6.3) 10.4 (165) % Comprehensive loss attributable to Hippo $ (269.0) $ (339.7) $ 70.7 (21) % Comparison of the Year Ended December 31, 2023 and 2022 Net Earned Premium For the year ended December 31, 2023, net earned premium was $107.5 million, an increase of $65.0 million compared to $42.5 million for the year ended December 31, 2022.
Biggest changeWe expect continued improvement as these actions have more time to impact our financial results. 69 Results of Operations The following table sets forth our consolidated results of operations data for the periods indicated (dollars in millions): Year Ended December 31, Change % Change 2024 2023 2024 vs. 2023 2024 vs. 2023 Revenue: Net earned premium $ 272.5 $ 107.5 $ 165.0 153 % Commission income, net 63.6 63.4 0.2 — % Service and fee income 11.6 15.7 (4.1) (26) % Net investment income 24.4 23.1 1.3 6 % Total revenue 372.1 209.7 162.4 77 % Expenses: Losses and loss adjustment expenses 209.0 181.7 27.3 15 % Insurance related expenses 88.8 79.1 9.7 12 % Technology and development 30.7 47.0 (16.3) (35) % Sales and marketing 51.2 80.1 (28.9) (36) % General and administrative 70.7 79.6 (8.9) (11) % Impairment and restructuring 3.6 5.5 (1.9) (35) % Gain on sale of business (54.4) — (54.4) — % Other income, net (0.1) (0.8) 0.7 (88) % Total expenses 399.5 472.2 (72.7) (15) % Loss before income taxes (27.4) (262.5) 235.1 (90) % Income taxes expense 1.2 0.5 0.7 140 % Net loss (28.6) (263.0) 234.4 (89) % Net income attributable to noncontrolling interests, net of tax 11.9 10.1 1.8 18 % Net loss attributable to Hippo $ (40.5) $ (273.1) $ 232.6 (85) % Other comprehensive income (loss): Change in net unrealized gain on available-for-sale securities, net of tax 0.2 4.1 (3.9) (95) % Comprehensive loss attributable to Hippo $ (40.3) $ (269.0) $ 228.7 (85) % 70 Comparison of the Year Ended December 31, 2024 and 2023 Net Revenue The following table set forth net revenue by segment for the periods presented: Year Ended December 31, $ Change % Change 2024 2023 2024 vs. 2023 Services $ 48.2 $ 44.3 $ 3.9 9 % Insurance-as-a-Service 99.5 70.7 28.8 41 % Hippo Home Insurance Program 236.4 102.1 134.3 132 % Intersegment elimination $ (12.0) $ (7.4) (4.6) 62 % Total net revenue $ 372.1 $ 209.7 $ 162.4 77 % Net Earned Premium For the year ended December 31, 2024, net earned premium was $272.5 million, an increase of $165.0 million compared to $107.5 million for the year ended December 31, 2023.
From time to time, regulatory authorities or legislative bodies seek to influence and restrict premium rates, require premium refunds to policyholders, require reinstatement of terminated policies, restrict the ability of insurers to cancel or non-renew policies, require insurers to continue to write new policies or limit their ability to write new policies, limit insurers’ ability to change coverage terms and deductibles or to impose underwriting standards, impose additional regulations regarding agency and broker compensation, impose fines and penalties for unintended errors or mistakes, impose additional regulations regarding cybersecurity and privacy, and otherwise expand overall regulation of insurance products and the insurance industry.
From time to time, regulatory authorities or legislative bodies seek to influence and restrict premium rates, require premium refunds to policyholders, require reinstatement of terminated policies, restrict the ability of insurers to cancel or non-renew policies, require insurers to continue to write new policies or limit their ability to write new policies, limit insurers’ ability to change coverage terms and deductibles or to impose underwriting standards, impose additional 60 regulations regarding agency and broker compensation, impose fines and penalties for unintended errors or mistakes, impose additional regulations regarding cybersecurity and privacy, and otherwise expand overall regulation of insurance products and the insurance industry.
In addition, Adjusted EBITDA should not be construed as an indicator of our operating performance, liquidity, or cash flows generated by operating, investing, and financing activities, as there may be significant factors or trends that it fails to address. We caution investors that non-GAAP financial 66 information—by its nature—departs from traditional accounting conventions.
In addition, Adjusted EBITDA should not be construed as an indicator of our operating performance, liquidity, or cash flows generated by operating, investing, and financing activities, as there may be significant factors or trends that it fails to address. We caution investors that non-GAAP financial information—by its nature—departs from traditional accounting conventions.
Insurance related expenses also include employee compensation (including stock-based compensation and benefits) of our underwriting teams, amortization of capitalized internal use software, as well as allocated occupancy costs and related overhead based on headcount. Insurance related expenses are offset by a portion of ceding commission income, which represents reimbursement of successful acquisition costs related to the underlying policies.
Insurance related expenses also include employee compensation (including stock- 63 based compensation and benefits) of our underwriting teams, amortization of capitalized internal use software, as well as allocated occupancy costs and related overhead based on headcount. Insurance related expenses are offset by a portion of ceding commission income, which represents reimbursement of successful acquisition costs related to the underlying policies.
Recoverability of Our Net Deferred Tax Asset The evaluation of the recoverability of our deferred tax asset and the need for a valuation allowance requires us to weigh all positive and negative evidence to reach a conclusion, that it is more likely than not, that all 78 or some portion of the deferred tax asset will be realized.
Recoverability of Our Net Deferred Tax Asset The evaluation of the recoverability of our deferred tax asset and the need for a valuation allowance requires us to weigh all positive and negative evidence to reach a conclusion, that it is more likely than not, that all or some portion of the deferred tax asset will be realized.
IBNR for loss and loss adjustment expense include an estimate for future loss payments on incurred claims not yet reported and for expected development on reported claims 76 Case reserves are established within the claims adjustment process based on all known circumstances of a claim at the time.
IBNR for loss and loss adjustment expense include an estimate for future loss payments on incurred claims not yet reported and for expected development on reported claims Case reserves are established within the claims adjustment process based on all known circumstances of a claim at the time.
In addition, IBNR reserves are established by the Company based on reported loss and loss adjustment expenses and estimates of ultimate loss and loss adjustment expenses based on generally accepted actuarial reserving techniques that consider quantitative loss experience data and qualitative factors as appropriate.
In addition, IBNR reserves are established by the Company based on reported loss and loss 74 adjustment expenses and estimates of ultimate loss and loss adjustment expenses based on generally accepted actuarial reserving techniques that consider quantitative loss experience data and qualitative factors as appropriate.
We intend to continue to drive new customer growth by highlighting our consumer- 61 focused approach to home protection and insurance across multiple distribution channels, regardless of whether the customer is a Hippo policyholder.
We intend to continue to drive new customer growth by highlighting our consumer-focused approach to home protection and insurance across multiple distribution channels, regardless of whether the customer is a Hippo policyholder.
In the third quarter of 2023 we began taking several actions to lower the volatility of our Hippo Homeowners Insurance Program portfolio in light of the significant catastrophe losses we experienced in the second quarter, including raising rates on a portion of our renewal business, increasing deductibles for wind and hail perils, selectively non-renewing policies in certain regions, and instituting a nationwide pause on underwriting new premiums for our HO3 business as we examine our risk appetite.
In the third quarter of 2023 we began taking several actions to lower the volatility of our Hippo Homeowners Insurance Program portfolio in light of the significant catastrophe losses we experienced in the second quarter, including raising rates on a portion of our renewal business, increasing deductibles for wind and hail perils, selectively non-renewing policies in certain regions, and instituting a nationwide pause on underwriting new premiums for our HO3 business as we examined our risk appetite.
Refer to Note 22 of the 69 accompanying consolidated financial statements for additional information on segments and a reconciliation of Segment adjusted operating income (loss) to net loss attributable to Hippo.
Refer to Note 22 of the accompanying consolidated financial statements for additional information on segments and a reconciliation of Segment adjusted operating income (loss) to net loss attributable to Hippo.
The reinsurance contracts are subject to variable commission adjustments and loss participation features, including loss caps, and may increase the amount of losses retained by 60 us in excess of our pro-rata participation. Such provisions are recognized in the period based on the experience to date under the agreement.
The reinsurance contracts are subject to variable commission adjustments and loss participation features, including loss caps, which may increase the amount of losses retained by us in excess of our pro-rata participation. Such provisions are recognized in the period based on the experience to date under the agreement.
Significant Assumptions Employed in the Recording of the Loss and Loss Adjustment Expense Reserve The most significant assumptions used in the determination of the recorded reserve for loss and loss adjustment expenses as of December 31, 2023 are historical aggregate claim reporting and payment patterns, which is assumed to be indicative of future loss development and trends.
Significant Assumptions Employed in the Recording of the Loss and Loss Adjustment Expense Reserve The most significant assumptions used in the determination of the recorded reserve for loss and loss adjustment expenses as of December 31, 2024 are historical aggregate claim reporting and payment patterns, which is assumed to be indicative of future loss development and trends.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Unless the context otherwise requires, references in this “Hippo Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “we,” “our,” “Hippo” and “the Company” refer to the business and operations of Hippo Holdings Inc. and its consolidated subsidiaries.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “we,” “our,” “Hippo” and “the Company” refer to the business and operations of Hippo Holdings Inc. and its consolidated subsidiaries.
Cash received in advance of policy effective dates is recorded on the consolidated balance sheets, representing our portion of commission and premium due to insurers and reinsurers, and hold this cash in trust for the benefit of the insurers and reinsurers as fiduciary liabilities.
Cash received in advance of policy effective dates is recorded on the consolidated balance sheets, representing the Company’s portion of commission and premium due to insurers and reinsurers, and hold this cash in trust for the benefit of the insurers and reinsurers as fiduciary liabilities.
The increase was due primarily to an increase in our total book of business and higher premium retention rates, as well as an increase in PCS catastrophic weather, other weather loss experience, and our loss participation features.
The increase was due primarily to an increase in our total book of business and higher premium retention rates, as well as an increase in PCS catastrophic weather and other weather loss experience.
Ba sis of Presentation The accompanying consolidated financial statements have been prepared in accordance with GAAP as determined by the Financial Accounting Standards Board (“FASB”), Accounting Standards Codification (“ASC”), and pursuant to the regulations of the SEC.
Ba sis of Presentation The accompanying consolidated financial statements have been prepared in accordance with U.S. GAAP (“GAAP”) as determined by the Financial Accounting Standards Board (“FASB”), Accounting Standards Codification (“ASC”), and pursuant to the regulations of the SEC.
Claim Processing Fees: As an MGA, we receive a fee that is calculated as a percent of the premium from the insurers in exchange for providing claims adjudication services. The claims adjudication services are provided over the term of the policy and recognized ratably over the same period.
Claim Processing Fees: As an MGA the Company receives a fee that is calculated as a percent of the premium, from the insurers in exchange for providing claims adjudication services. The claims adjudication services are provided over the term of the policy and recognized ratably over the same period.
Our short-term focus is on attracting new customers to our licensed insurance agency to purchase non-Hippo policies and to our home care offerings, although over time we expect to strategically return to Hippo underwritten policies as our underwriting actions take hold.
Our short-term focus is on attracting new customers to our licensed insurance agency to purchase non-Hippo policies, although over time we expect to strategically return to Hippo underwritten policies as our underwriting actions take hold.
This ratio is also used by our reinsurers and other carriers to make business decisions relating to the capacity of reinsurance and amount of ceding commission that would be available to Hippo.
This ratio is also used by our reinsurers and other carriers to make business decisions relating to the capacity of reinsurance and amount of ceding commission that would be available to Hippo. The lower the ratio, the better the economics for Hippo.
We earn commission on reinsurance premium ceded in a manner consistent with the recognition of the earned premium on the underlying insurance policies, on a pro-rata basis over the terms of the policies reinsured.
The Company earns commission on ceded reinsurance premium in a manner consistent with the recognition of the earned premium on the underlying insurance policies, on a pro-rata basis over the terms of the policies reinsured.
This program provides us protection from catastrophes that could impact a large number of insurance policies underwritten by us or other MGAs. We buy XOL so that the probability of losses from a single occurrence exceeding the protection purchased is no more than 0.4%, or equivalent to a 1 in 250 year return period.
Our XOL program provides protection to us from catastrophes that could impact a large number of insurance policies. We buy XOL so that the probability of losses from a single occurrence exceeding the protection purchased is no more than 0.4%, or equivalent to a 1:250 year return period.
Segment Information Year Ended December 31, 2023 ($ in millions) Services Insurance-as-a-Service Hippo Home Insurance Program Intersegment Eliminations (1) Total Total Generated Premium $ 459.7 $ 513.9 $ 360.5 $ (199.8) $ 1,134.3 Total Revenue 44.3 — 70.7 — 102.1 — (7.4) 209.7 Adjusted operating income (loss) (37.6) — 18.3 — (180.3) — (1.0) (200.6) Year Ended December 31, 2022 ($ in millions) Services Insurance-as-a-Service Hippo Home Insurance Program Intersegment Eliminations (1) Total Total Generated Premium $ 358.0 $ 278.6 $ 366.3 $ (191.8) $ 811.1 Total Revenue 36.9 37.0 63.9 (18.1) 119.7 Adjusted operating income (loss) (49.0) 5.4 (162.8) — (206.4) (1) Intersegment eliminations include commissions paid from Hippo Home Insurance Program for policies sold by the Company’s Services segment (revenue, cost, and other adjustments in respective business units eliminated as part of consolidation).
Segment Information Years Ended December 31, 2024 ($ in millions) Services Insurance-as-a-Service Hippo Home Insurance Program Intersegment Eliminations (1) Total Total Generated Premium $ 596.7 $ 617.6 $ 282.9 $ (161.1) $ 1,336.1 Total Revenue 48.2 99.5 236.4 (12.0) 372.1 Adjusted operating income (loss) (16.9) 24.4 (51.5) 0.5 (43.5) 67 Year Ended December 31, 2023 ($ in millions) Services Insurance-as-a-Service Hippo Home Insurance Program Intersegment Eliminations (1) Total Total Generated Premium $ 459.7 $ 513.9 $ 360.5 $ (199.8) $ 1,134.3 Total Revenue 44.3 70.7 102.1 (7.4) 209.7 Adjusted operating income (loss) (37.6) 18.3 (180.3) (1.0) (200.6) Year Ended December 31, 2022 ($ in millions) Services Insurance-as-a-Service Hippo Home Insurance Program Intersegment Eliminations (1) Total Total Generated Premium $ 358.0 $ 278.6 $ 366.3 $ (191.8) $ 811.1 Total Revenue 36.9 37.0 63.9 (18.1) 119.7 Adjusted operating income (loss) (49.0) 5.4 (162.8) — (206.4) (1) Intersegment eliminations include commissions paid from Hippo Home Insurance Program for policies sold by the Company’s Services segment (revenue, cost, and other adjustments in respective business units eliminated as part of consolidation).
We are required to return a portion of our MGA commission due to commission slide on the policies placed as an MGA if the underwriting performance varies due to higher Hippo programs’ loss ratio from provisional performance of the Hippo programs’ loss ratio.
The Company is required to return a portion of its MGA commission due to commission slide on the policies placed as an MGA if the underwriting performance varies due to higher Hippo programs’ loss ratio from provisional performance of the Hippo programs’ loss ratio.
The following table presents Total Generated Premium for the years ended December 31, 2023 and 2022 (in millions): 2023 2022 Change Gross Written Premium $ 847.3 $ 629.9 $ 217.4 Gross Placed Premium 287.0 181.2 105.8 Total Generated Premium $ 1,134.3 $ 811.1 $ 323.2 Adjusted EBITDA We define adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (“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 67 expense, 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.
The following table presents Total Generated Premium for the years ended December 31, 2024 and 2023 (in millions): 65 Change 2024 2023 2024 vs. 2023 Gross Written Premium $ 892.4 $ 847.3 $ 45.1 Gross Placed Premium 443.7 287.0 156.7 Total Generated Premium $ 1,336.1 $ 1,134.3 $ 201.8 Adjusted EBITDA We define adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (“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, 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 earn fronting fees in a manner consistent with the recognition of the earned premium on the underlying insurance policies, on a pro-rata basis over the terms of the policies. This revenue is included in the commission income, net line on our statements of operations and comprehensive loss. e.
The Company earns fronting fees in a manner consistent with the recognition of the earned premium on the underlying insurance policies, on a pro-rata basis over the terms of the policies. This revenue is included in the commission income, net line on its statements of operations and comprehensive loss. c.
We buy XOL so that the probability of losses from a single occurrence exceeding the protection purchased is no more than 0.4%, or equivalent to a 1 in 250 year return period when considered with the corporate catastrophe XOL described below under “Other Reinsurance”. This reinsurance protects us from all but the most severe catastrophic events.
We buy XOL so that the probability of losses from a single occurrence exceeding the protection purchased is no more than 0.4%, or equivalent to a 1 in 250-year return period when considered with the Mountain Re per occurrence, described above, corporate catastrophe, and Florida Hurricane Catastrophe Fund (the “FHCF”) XOL 58 described below under “Other Reinsurance.” This reinsurance protects us from all but the most severe catastrophic events.
See Part I, Item 1A. “Risk Factors” for more information. Our Ability to Retain Customers Our ability to derive significant lifetime value from our customer relationships depends, in part, on our ability to retain our customers over time. Strong retention allows us to build a recurring revenue base, generating additional premium term over term without material incremental marketing costs.
Our Ability to Retain Customers Our ability to derive significant lifetime value from our customer relationships depends, in part, on our ability to retain our customers over time. Strong retention allows us to build a recurring revenue base, generating additional premium term over term without material incremental marketing costs.
Spinnaker purchased a corporate catastrophe XOL program that attaches above the reinsurance programs protecting the business written by Hippo as well as the other MGAs. This treaty has a floating retention and attaches at the exhaustion point of the underlying programs’ specific reinsurance. The catastrophe bonds described above inures to the benefit of this contract.
Spinnaker purchased a corporate catastrophe XOL program that attaches above the individual programmatic reinsurance programs protecting the property business written by Hippo as well as the other MGAs. This treaty has a floating retention and attaches at the exhaustion point of the underlying programs’ specific reinsurance.
Under the terms of the reinsurance agreement, we are obligated to pay annual reinsurance premiums to Mountain Re for the reinsurance coverage. Amounts payable under the reinsurance agreement with respect to any covered event cannot exceed our actual losses from such event.
Under the terms of the reinsurance agreement, we are obligated to pay annual reinsurance premiums to Mountain Re for the reinsurance coverage which inures to the benefit of our traditional XOL program described below. Amounts payable under the reinsurance agreement with respect to any covered event cannot exceed our actual losses from such event.
The growth was driven primarily by the growth in our builder channel for new and renewal business, as we maintain higher premium retention rates and experienced premium rate increases. The growth was also due to the growth in the total book of business in our aggregator channel.
The growth was driven primarily due to the growth in the total book of business in our aggregator channel, as well as in our builder channel for new and renewal business, as we experienced premium rate increases.
We also return a portion of our MGA commission if the policies are cancelled before the term of the policy. Accordingly, we reserve for commission slide using estimated Hippo programs’ loss ratio performance, or a cancellation reserve as a reduction of revenue for each period presented in our statement of operations and comprehensive loss. b.
The Company also returns a portion of its MGA commission if the policies are cancelled before the term of the policy. Accordingly, the Company reserves for commission slide using estimated Hippo programs’ loss ratio performance, or a cancellation reserve as a reduction of revenue for each period presented in its statements of operations and comprehensive loss.
It also consists of severance and other personnel costs associated with exit and disposal activities as well as reductions in workforce. Other (Income) Expense Other (income) expense primarily consists of certain fair value adjustments and other non-operating income expenses. Income Taxes We record income taxes using the asset and liability method.
It also consists of severance and other personnel costs associated with exit and disposal activities as well as reductions in workforce. Other (Income) Expense Other (income) expense primarily consists of certain fair value adjustments and other non-operating income expenses.
Other Reinsurance Spinnaker also purchased reinsurance for programs written by MGAs other than Hippo through our Insurance-as-a-Service business. The reinsurance treaties are a mix of proportional and XOL in which approximately 75% to 100% of the risk is ceded.
Other Reinsurance Spinnaker also purchased reinsurance for programs written by MGAs other than Hippo through our Insurance-as-a-Service business. The reinsurance treaties are a mix of proportional and XOL in which generally 75% to 100% of the risk, up to at least the 1 in 250-year return period, is ceded.
We are mainly invested in money market accounts, securities issued by the U.S. government and agencies, high-grade corporate securities, residential and commercial mortgage-backed securities, and other governmental related securities.
The increase was due primarily to an increase in yields and diversification. We are mainly invested in money market accounts, securities issued by the U.S. government and agencies, high-grade corporate securities, residential and commercial mortgage-backed securities, and other governmental related securities.
Key Factors and Trends Affecting our Operating Results Our financial condition and results of operations have been, and will continue to be, affected by a number of factors, including the following: Our Ability to Attract New Customers Our long-term growth will depend, in large part, on our continued ability to attract new customers to our platform.
This reinsurance protects us from all but the most severe catastrophic events. 59 Key Factors and Trends Affecting our Operating Results Our financial condition and results of operations have been, and will continue to be, affected by a number of factors, including the following: Our Ability to Attract New Customers Our long-term growth will depend, in large part, on our continued ability to attract new customers to our platform.
Years Ended December 31, 2023 2022 PCS losses 20 % 18 % Non-PCS losses 51 % 58 % Gross loss ratio 71 % 76 % For the year ended December 31, 2023, our Gross Loss Ratio was 71% net of a prior year favorable development of 1 percentage point relating to non-PCS events and 2 percentage points relating to PCS events, 68 compared with 76% net of a prior year favorable development of 8 percentage points relating to non-PCS events and 9 percentage points relating to PCS events for the year ended December 31, 2022.
Years Ended December 31, Change 2024 2023 2024 vs. 2023 PCS losses 9 % 20 % (11) % Non-PCS losses 44 % 51 % (7) % Gross loss ratio 53 % 71 % (18) % For the year ended December 31, 2024, our Gross Loss Ratio was 53% net of a prior year favorable development of 2 percentage points relating to non-PCS events and 2 percentage points relating to PCS events, compared with 71% net of a prior year favorable development of 1 percentage point relating to non-PCS events and 2 percentage points relating to PCS events for the year ended December 31, 2023.
Similar to the commission revenue, we estimate a cancellation reserve for policy fees using historical information. The performance obligation associated with these fees is satisfied at a point in time upon completion of the underwriting process, which is the policy effective date. Accordingly, we recognize all fees as revenue on the policy effective date.
The performance obligation associated with these fees is satisfied at a point in time upon completion of the underwriting process, which is the policy effective date. Accordingly, we recognize all fees as revenue on the policy effective date.
Technology and development also include allocated facility costs and related overhead based on headcount. We expense development costs as incurred, except for costs related to internal use software development projects, which are capitalized and subsequently depreciated over the expected useful life of the developed software.
We expense development costs as incurred, except for costs related to internal use software development projects, which are capitalized and subsequently depreciated over the expected useful life of the developed software.
The following table provides a reconciliation of net loss attributable to Hippo to adjusted EBITDA for the periods presented (in millions): Years Ended December 31, 2023 2022 Net loss attributable to Hippo $ (273.1) $ (333.4) Adjustments: Net investment income (23.1) (9.0) Depreciation and amortization 19.8 15.2 Stock-based compensation 57.5 61.9 Fair value adjustments (1.5) (4.0) Contingent consideration charge 6.0 4.1 Other one-off transactions 7.8 2.2 Income taxes expense 0.5 1.3 Restructuring charges 2.6 1.8 Impairment charges 2.9 53.5 Adjusted EBITDA $ (200.6) $ (206.4) Gross Loss Ratio Gross Loss Ratio, expressed as a percentage, is the ratio of the Gross Losses and LAE to the Gross Earned Premium (in millions).
The following table provides a reconciliation of net loss attributable to Hippo to adjusted EBITDA for the periods presented (in millions): Years Ended December 31, Change 2024 2023 2024 vs. 2023 Net loss attributable to Hippo $ (40.5) $ (273.1) $ 232.6 Adjustments: Net investment income (24.4) (23.1) (1.3) Depreciation and amortization 23.2 19.8 3.4 Stock-based compensation 38.2 57.5 (19.3) Fair value adjustments 1.7 4.5 (2.8) Other one-off transactions 7.9 7.8 0.1 Income taxes expense 1.2 0.5 0.7 Gain on sale of business (54.4) — (54.4) Impairment and restructuring charges 3.6 5.5 (1.9) Adjusted EBITDA $ (43.5) $ (200.6) $ 157.1 Gross Loss Ratio Gross Loss Ratio, expressed as a percentage, is the ratio of the Gross Losses and LAE to the Gross Earned Premium (in millions).
The decrease in cash used in operations was due primarily to higher premium retention which benefits working capital. Investing Activities Cash provided by investing activities was $57.6 million for the year ended December 31, 2023, due primarily to proceeds from the maturities and sales of investments, partially offset by purchases of investments and the purchase of an office building.
Cash provided by investing activities was $57.6 million for the year ended December 31, 2023, due primarily to proceeds from the maturities and sales of investments, partially offset by purchases of investments and the purchase of an office building.
As of December 31, 2023, we have U.S. federal and state NOL carryforwards of $719.8 million and $326.7 million, respectively. We have $166.2 million of Dual Consolidated Losses in a 953(d) company, RH Solutions Insurance (Cayman) Ltd.
As of December 31, 2024, we have U.S. federal and state NOL carryforwards of $707.5 million and $428.7 million, respectively. We have $166.0 million of Dual Consolidated Losses in a 953(d) company, RH Solutions Insurance (Cayman) Ltd.
The increase was due primarily to increases in gross earned premium due to year-over-year growth of our total book of business and higher retention of earned premium due to our 2023 reinsurance treaties, partially offset by an increased cost of XOL premiums for our catastrophic coverage which results in an increase in ceded earned premium and lower net earned premium.
The increase was due primarily to increases in gross earned premium due to higher retention of earned premium, and year-over-year growth of our Insurance-as-a-Service and HHIP segments, partially offset by an increased cost of XOL premiums for our catastrophic coverage which results in an increase in ceded earned premium and lower net earned premium.
In connection with the reinsurance agreement, Mountain Re issued notes (generally referred to as “catastrophe bonds”) to investors, consistent with the amount of coverage provided under the reinsurance agreement.
The reinsurance agreement meets the requirements to be accounted for as reinsurance in accordance with the guidance for reinsurance contracts. In connection with the reinsurance agreement, Mountain Re issued notes (generally referred to as “catastrophe bonds”) to investors, consistent with the amount of coverage provided under the reinsurance agreement.
Our XOL program provides protection to us from catastrophes that could impact a large number of insurance policies. We buy XOL so that the probability of losses from a single occurrence exceeding the protection purchased is no more than 0.4%, or equivalent to a 1:250 year return period. This reinsurance protects us from all but the most severe catastrophic events.
We buy this XOL so that the probability of losses from a single occurrence across the property portfolio exceeding the protection purchased is no more than 0.4%, or equivalent to a 1 in 250 year-return period. This reinsurance protects us from all but the most severe catastrophic events.
Our performance obligation associated with these contracts is the placement of the policy, which is met on the effective date. Upon issuance of a new policy, we charge policy fees and inspection fees (see Service and Fee Income below), retain our share of commission, and remit the balance to the respective insurers.
The 62 Company’s performance obligation associated with these contracts is the placement of the policy, which is met on the effective date. Upon issuance of a new policy, the Company charges policy fees and inspection fees (see Service and Fee Income below), retains its share of commission, and remits the balance to the respective insurers.
The estimation of the unpaid losses and loss adjustment expenses is based on various complex and subjective judgments. Actual losses paid may differ, perhaps significantly, from the reserve estimates reflected in our consolidated financial statements. Similarly, the timing of payment of our estimated losses is not fixed and there may be significant changes in actual payment activity.
Actual losses paid may differ, perhaps significantly, from the reserve estimates reflected in our consolidated financial statements. Similarly, the timing of payment of our estimated losses is not fixed and there may be significant changes in actual payment activity.
Years Ended December 31, 2023 2022 Net Losses and LAE $ 181.7 $ 101.4 Net Earned Premium 107.5 42.5 Net Loss Ratio 169 % 239 % For the year ended December 31, 2023, our Net Loss Ratio was 169% net of a prior year favorable development of 2 percentage points relating to PCS events and no favorable development for non-PCS events, compared with 239% net of a prior year favorable development of 14 percentage points relating to non-PCS events and 14 percentage points relating to PCS events for the year ended December 31, 2022.
Years Ended December 31, 2024 2023 Net Losses and LAE $ 209.0 $ 181.7 Net Earned Premium 272.5 107.5 Net Loss Ratio 77 % 169 % For the year ended December 31, 2024, our Net Loss Ratio was 77% net of a prior year favorable development of 1 percentage point relating to PCS events and 1 percentage point relating to non-PCS events, compared with 169% net of a prior year favorable development of 2 percentage points relating to PCS events for the year ended December 31, 2023.
Services For the year ended December 31, 2023, our Services segment had Total Generated Premium of $459.7 million, an increase of 28% from $358.0 million over the prior year period, while revenue was $44.3 million, an increase of 20% from $36.9 million over the prior year period.
Services For the year ended December 31, 2024, our Services segment had Total Generated Premium of $596.7 million, an increase of 30% from $459.7 million over the prior year period, while revenue was $48.2 million, an increase of 9% from $44.3 million over the prior year period.
The increase in revenue was due primarily to higher earned premiums, partially offset by a decrease in commission income, net, reflecting changes in our 2023 reinsurance treaties, resulting in higher premium retention, and achieving planned premium rate increases. There was also an increase in investment income due to an increase in yields.
The increase in revenue was due primarily to higher net earned premium, partially offset by a decrease in commission income, net, due to higher retention on our 2023 and 2024 reinsurance treaties, and achieving planned premium rate increases.
Further information on our business and reportable segments is presented in Part I, Item 1, “Business” and in Note 22 of the Notes to the Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data.” Reinsurance We utilize reinsurance primarily to support the growth of our new and renewal insurance business, to reduce the volatility of our earnings, and to optimize our capital management.
Further information on our business and reportable segments is presented in Part I, Item 1, “Business” and in Note 22 of the Notes to the Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data.” Reinsurance We reinsure a portion of the risks we underwrite in order to reduce the volatility of our earnings, and to protect our capital management.
Our Ability to Expand Fee Income and Premium Through Cross-Sales to Existing Customers 62 One of our strategies to increase the value we are providing to our customers is to offer incremental services to assist our customers in better maintaining and protecting their homes.
These laws may limit or restrict our ability to reduce our exposures, including to weather-related losses. Our Ability to Expand Fee Income and Premium Through Cross-Sales to Existing Customers One of our strategies to increase the value we are providing to our customers is to offer incremental services to assist our customers in better maintaining and protecting their homes.
Our adjusted operating loss was $37.6 million, a decrease of 23% compared to a loss of $49.0 million in the prior year period due primarily to the increase in revenue as noted above, as well as a decrease in sales and marketing costs, partially offset by an increase in technology and development costs.
Our adjusted operating loss was $16.9 million, a decrease of 55% compared to a loss of $37.6 million in the prior year period due primarily to a decrease in sales and marketing costs, as well as the increase in revenue as noted above.
Years Ended December 31, 2023 2022 ($ in millions) Total Generated Premium $ 1,134.3 $ 811.1 Total Revenue 209.7 119.7 Net Loss attributable to Hippo (273.1) (333.4) Adjusted EBITDA (200.6) (206.4) Gross Loss Ratio 71 % 76 % Net Loss Ratio 169 % 239 % Total Generated Premium We define Total Generated Premium as the aggregate written premium placed across all of our business platforms for the period presented.
Years Ended December 31, 2024 2023 Total Generated Premium $ 1,336.1 $ 1,134.3 Total Revenue 372.1 209.7 Net Loss attributable to Hippo (40.5) (273.1) Adjusted EBITDA (43.5) (200.6) Gross Loss Ratio 53 % 71 % Net Loss Ratio 77 % 169 % Total Generated Premium We define Total Generated Premium as the aggregate written premium placed across all of our business platforms for the period presented.
For the year ended December 31, 2023, our Insurance-as-a-Service segment’s Total Generated Premium was $513.9 million, an increase of 84% from $278.6 million over the prior year period, while revenue was $70.7 million, an increase of 91% from $37.0 million over the prior year period. The growth was driven primarily by the performance of both new and existing programs.
For the year ended December 31, 2024, our Insurance-as-a-Service segment’s Total Generated Premium was $617.6 million, an increase of 20% from $513.9 million over the prior year period, while revenue was $99.5 million, an increase of 41% from $70.7 million over the prior year period. The growth was driven primarily by the performance of existing programs and higher retention.
For our primary homeowners reinsurance treaty commencing in 2022, we secured quota share reinsurance from a diverse panel of third-party reinsurers. All reinsurers are either rated “A-” Excellent or better by AM Best, or the reinsurance is collateralized. In 2022, we retained approximately 10% of the premium through our insurance company subsidiaries, including our captive reinsurance company, RHS.
All reinsurers are either rated “A-” Excellent or better by AM Best, or the reinsurance is collateralized. In 2022, we retained approximately 10% of the premium through our insurance company subsidiaries, including our captive reinsurance company, RHS.
We have underwriting authority and responsibility for administering claims (see Claim Processing Fees below) and we work with affiliated and unaffiliated carrier platforms who pay us a commission in exchange for the opportunity to take that risk on their balance sheets.
The Company earns recurring commission and policy fees associated with the policies they sell. The Company has underwriting authority and responsibility for administering claims, (see Claim Processing Fees below) and works with affiliated and unaffiliated carrier platforms who pay the Company a commission in exchange for the opportunity to take that risk on their balance sheets.
Losses and Loss Adjustment Expenses For the year ended December 31, 2023, loss and loss adjustment expenses were $181.7 million, an increase of $80.3 million, or 79%, compared to $101.4 million for the year ended December 31, 2022.
Losses and Loss Adjustment Expenses For the year ended December 31, 2024, loss and loss adjustment expenses were $209.0 million, an increase of $27.3 million, or 15%, compared to $181.7 million for the year ended December 31, 2023.
Hippo Home Insurance Program Gross Loss Ratio Hippo Home Insurance Program Gross Loss Ratio (“HPGLR”) is a key performance indicator that represents our underwriting operational performance for the entire Total Generated Premium underwritten by Hippo as part of the Hippo Home Insurance Program.
This was partially offset by an increase in insurance related expenses due to higher premium retention. Hippo Home Insurance Program Gross Loss Ratio Hippo Home Insurance Program Gross Loss Ratio (“HPGLR”) is a key performance indicator that represents our underwriting operational performance for the entire Total Generated Premium underwritten by Hippo as part of the Hippo Home Insurance Program.
We record the portion of ceding commission income, which represents reimbursement of successful direct acquisition costs related to the underlying policies, as an offset to the applicable direct acquisition costs. 64 d. Carrier Fronting Fees: Through our Insurance-as-a-Service business, we earn fronting fees from the MGA programs we support.
The Company records the portion of ceding commission income which represents reimbursement of successful direct acquisition costs related to the underlying policies as an offset to the applicable direct acquisition costs. Through the Company’s Insurance-as-a-Service business the Company earns fronting fees from the MGA programs it supports.
Impairment and Restructuring Charges For the year ended December 31, 2023, impairment and restructuring charges were $5.5 million, a decrease of $49.8 million, or 90%, compared to $55.3 million for the year ended December 31, 2022.
Impairment and Restructuring Charges For the year ended December 31, 2024, impairment and restructuring charges were $3.6 million, a decrease of $1.9 million, or 35%, compared to $5.5 million for the year ended December 31, 2023.
We enter into reinsurance contracts to limit our exposure to losses, as well as to provide additional capacity for growth. Ceded written premium is treated as a reduction from gross written premium. The volume of our ceded written premium is impacted by the level of our gross written premium and decisions we make to increase or decrease retention levels.
Ceded written premium is treated as a reduction from gross written premium. The volume of our ceded written premium is impacted by the level of our gross written premium and decisions we make to increase or decrease retention levels.
The increase was due primarily to an increase in carrier fronting fees of $8.5 million and agency commissions of $7.2 million, both of which grew due to the year-over-year growth of our total book of business.
The increase was due primarily to an increase in agency commissions of $8.6 million from our Services segment and carrier fronting fees of $4.3 million from our Insurance-as-a-Service segment, both of which grew due to the year-over-year growth of our total book of business.
Years Ended December 31, 2023 2022 Gross Losses and LAE $ 543.5 $ 409.7 Gross Earned Premium 769.3 541.5 Gross Loss Ratio 71 % 76 % The following table provides a reconciliation of Gross Loss Ratio by named event PCS and non-PCS events.
Years Ended December 31, Change 2024 2023 2024 vs. 2023 Gross Losses and LAE $ 450.3 $ 543.5 $ (93.2) Gross Earned Premium 853.7 769.3 84.4 Gross Loss Ratio 53 % 71 % (18) % 66 The following table provides a reconciliation of Gross Loss Ratio by named event PCS and non-PCS events.
The increase was due primarily to an increase in stock-based compensation of $4.8 million, partially driven by charges related to the repricing of options during the first quarter of 2023. There was also an increase in legal costs of $2.8 million.
The decrease was due primarily to a decrease in stock-based compensation of $8.0 million, partially driven by a charge due to the repricing of options during the first quarter of 2023, and facilities costs of $3.3 million, partially offset by an increase in legal costs of $2.8 million.
Cash Flow Summary The following table summarizes our cash flows for the periods presented (in millions): Year Ended December 31, 2023 2022 Change Net cash provided by (used in): Operating activities $ (92.4) $ (161.5) $ 69.1 Investing activities $ 57.6 $ (405.9) $ 463.5 Financing activities $ (14.6) $ (6.8) $ (7.8) Operating Activities Cash used in operating activities was $92.4 million for the year ended December 31, 2023, a decrease of $69.1 million from $161.5 million for the year ended December 31, 2022.
Cash Flow Summary The following table summarizes our cash flows for the periods presented (in millions): Year Ended December 31, Change 2024 2023 2024 vs. 2023 Net cash provided by (used in): Operating activities $ 47.5 $ (92.4) $ 139.9 Investing activities $ 30.3 $ 57.6 $ (27.3) Financing activities $ (40.1) $ (14.6) $ (25.5) Operating Activities Cash provided in operating activities was $47.5 million for the year ended December 31, 2024, an increase of $139.9 million from cash used in operating activities of $92.4 million for the year ended December 31, 2023.
There have been no material changes to our contractual obligations from those described in the Annual Report on Form 10-K for the year ended December 31, 2022, other than an increase in Unpaid Loss and Loss Adjustment Expense, and the purchase of office space as noted in Note 8.
There have been no material changes to our contractual obligations from those described in the Annual Report on Form 10-K for the year ended December 31, 2023, other than an increase in Unpaid Loss and Loss Adjustment Expense. The estimation of the unpaid losses and loss adjustment expenses is based on various complex and subjective judgments.
Sales and Marketing Expenses For the year ended December 31, 2023, sales and marketing expenses were $80.1 million, a decrease of $21.7 million, or 21%, compared to $101.8 million for the year ended December 31, 2022.
Sales and Marketing Expenses For the year ended December 31, 2024, sales and marketing expenses were $51.2 million, a decrease of $28.9 million, or 36%, compared to $80.1 million for the year ended December 31, 2023.
We consider a number of factors to reliably estimate future taxable income so we can determine the extent of our ability to realize net operating loss (“NOL”), foreign tax credits, realized capital loss and other carryforwards.
The more negative evidence that exists, the more positive evidence is necessary and the more difficult it is to support a conclusion that a valuation allowance is not needed. 76 We consider a number of factors to reliably estimate future taxable income so we can determine the extent of our ability to realize net operating loss (“NOL”), foreign tax credits, realized capital loss and other carryforwards.
The volume of our gross written premium in any given period is generally influenced by: • New business submissions; • Binding of new business submissions into policies; • Bound policies going effective; • Renewals of existing policies; and • Average size and premium rate of bound policies. 63 Ceded Written Premium Ceded written premium is the amount of gross written premium written or assumed by us and our affiliates as a carrier that we cede to reinsurers.
The volume of our gross written premium in any given period is generally influenced by: • New business submissions; • Binding of new business submissions into policies; 61 • Bound policies going effective; • Renewals of existing policies; and • Average size and premium rate of bound policies.
Cash used in investing activities was $405.9 million for the year ended December 31, 2022, due primarily to purchases of investments, partially offset by proceeds from the maturities of investments. 75 Financing Activities Cash used in financing activities was $14.6 million for the year ended December 31, 2023, due primarily to distributions to noncontrolling interests, taxes paid related to net share settlement of equity awards, and acquisitions of noncontrolling interests.
Financing Activities Cash used in financing activities was $40.1 million for the year ended December 31, 2024, primarily driven by cash paid for share repurchase, distributions to noncontrolling interests and change in fiduciary liabilities, and taxes paid related to net share settlement of RSUs, partially offset by proceeds from common stock issuances. 73 Cash used in financing activities was $14.6 million for the year ended December 31, 2023, due primarily to distributions to noncontrolling interests, taxes paid related to net share settlement of equity awards, and acquisitions of noncontrolling interests.
General and Administrative Expenses For the year ended December 31, 2023, general and administrative expenses were $79.6 million, an increase of $8.1 million, or 11%, compared to $71.5 million for the year ended December 31, 2022.
General and Administrative Expenses For the year ended December 31, 2024, general and administrative expenses were $70.7 million, a decrease of $8.9 million, or 11%, compared to $79.6 million for the year ended December 31, 2023.
This section of this Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022. Overview Hippo is an insurance holding company with subsidiaries that provide property and casualty insurance products to both individuals and business customers. We conduct our operations through three reportable segments: Services, Insurance-as-a-Service, and Hippo Home Insurance Program.
Overview Hippo is an insurance holding company with subsidiaries that provide property and casualty insurance products to both individuals and business customers. We conduct our operations through three reportable segments: Services, Insurance-as-a-Service, and Hippo Home Insurance Program. We offer our services primarily in the United States.
The following table summarizes gross and net reserves for unpaid loss and LAE as of December 31, (in millions): December 31, 2023 December 31, 2022 Gross Net Gross Net Loss and loss adjustment reserves IBNR $ 217.2 $ 72.5 $ 200.6 $ 47.4 Case reserves 105.3 28.6 93.2 17.6 Total reserves $ 322.5 $ 101.1 $ 293.8 $ 65.0 Sensitivity Analysis The table below shows the impact on the loss and loss adjustment expense reserve based on reasonably likely changes to our held unpaid amounts after consideration of our proportional and non-proportional reinsurance as of December 31, 2023 (in millions). 10% increase in ultimate loss and loss adjustment expenses 10% decrease in ultimate loss and loss adjustment expenses Impact on: Loss and loss adjustment expense reserves, net $ 14.0 $ (13.8) For additional information refer to Note 11, Reinsurance, of the audited consolidated financial statements.
While there can be no assurance that any of the above assumptions as utilized will prove to be correct, we believe that these assumptions represent a realistic and appropriate basis for estimating the reserve for loss and loss adjustment expense reserves. 75 The following table summarizes gross and net reserves for unpaid loss and LAE as of December 31, (in millions): 2024 2023 Gross Net Gross Net Loss and loss adjustment reserves IBNR $ 227.3 $ 75.2 $ 217.2 $ 72.5 Case reserves 122.7 44.9 105.3 28.6 Total reserves $ 350.0 $ 120.1 $ 322.5 $ 101.1 Sensitivity Analysis The table below shows the impact on the loss and loss adjustment expense reserve based on reasonably likely changes to our held unpaid amounts after consideration of our proportional and non-proportional reinsurance as of December 31, 2024 (in millions). 10% increase in ultimate loss and loss adjustment expenses 10% decrease in ultimate loss and loss adjustment expenses Impact on: Loss and loss adjustment expense reserves, net $ 13.2 $ (10.9) For additional information refer to Note 11, Reinsurance, of the audited consolidated financial statements.
Loss participation features may increase the amount of losses retained by our insurance company subsidiaries in excess of our pro rata participation. For business produced through our builder channel, we purchased proportional reinsurance from three third-party reinsurers. All reinsurers are rated “A-” Excellent or better by AM Best, or the reinsurance is appropriately collateralized.
For business produced through our builder channel for policies with effective dates in 2023, we purchased proportional reinsurance from three third-party reinsurers. All reinsurers are rated “A-” Excellent or better by AM Best, or the reinsurance is appropriately collateralized. In 2023, we retained approximately 58% of the premium produced through our insurance company subsidiaries or RHS, before purchasing catastrophe protection.
For the year ended December 31, 2023, adjusted EBITDA loss was $200.6 million, a decrease of $5.8 million compared to $206.4 million for the year ended December 31, 2022, The decrease was primarily due to a growth in revenue reflecting an increase in premiums earned mainly due to higher premium retention as a result of the 2023 reinsurance treaty compared to 2022, a lower net loss ratio, and a decrease in advertising costs.
For the year ended December 31, 2024, adjusted EBITDA loss was $43.5 million, a decrease of $157.1 million compared to a loss of $200.6 million for the year ended December 31, 2023, the decrease was due primarily to a growth in revenue reflecting an increase in premiums earned mainly due to higher premium retention as a result of the 2023 and 2024 reinsurance treaties compared to prior periods, partially offset by an increase in loss and loss adjustment expenses and insurance-related expenses.
The decrease in other income was due primarily to changes in the fair market value on the outstanding public and private placement warrants of $3.8 million, partially 74 offset by a step-up gain of $1.3 million related to our previously held equity method investments acquired during the year and a decrease in other expenses of $0.8 million.
The decrease in other income was due primarily to changes in the fair market value on the delisted public and private placement warrants of $1.3 million, partially offset by a decrease in our share of losses from equity method investees of $0.7 million.
To date, we have funded operations primarily with issuances of convertible preferred stock, convertible promissory notes, and from net proceeds from a private placement transaction in connection with the Business Combination, the Business Combination, and revenue.
Our borrowing capacity as of December 31, 2024, is $17.4 million, and there were no outstanding amounts under this agreement. To date, we have funded operations primarily with issuances of convertible preferred stock, convertible promissory notes, and from net proceeds from a private placement transaction in connection with the Business Combination, the Business Combination, and revenue.
The increase in revenue from earned premiums was partially offset by an increased cost of XOL premiums for our catastrophic coverage, which results in an increase in ceded earned premium and lower net earned premium. We purchased XOL to cover events in excess of per occurrence limits based on the expected growth in exposure during the year.
We purchased XOL to cover events in excess of per occurrence limits based on the expected growth in exposure during the year which results in an increase in ceded earned premium and lower net earned premium. For the years ended December 31, 2024 and 2023, $26.5 million and $31.1 million, respectively, was offset against earned premium for XOL.
Effective January 1, 2024, we also elected to cut off 25% participation on the 2023 proportional reinsurance treaty and retain the remaining exposure and related premiums. For business produced through our builder channel in 2024, we purchased proportional reinsurance from one third-party reinsurer and expect to retain approximately 85% of the premium and associated risk, before purchasing catastrophe protection.
For business produced through our builder channel for policies with effective dates in 2024, we purchased proportional reinsurance from one third-party reinsurer and expect to retain approximately 85% of the premium and associated risk, before purchasing catastrophe protection. All reinsurance obligations are appropriately collateralized.
For the year ended December 31, 2023, we recorded a net reserve release of $2.0 million related to prior accident years, compared with $11.8 million for the year ended December 31, 2022.
For the year ended December 31, 2024, we recorded a net reserve release of $6.1 million related to prior accident years, compared with $2.0 million for the year ended December 31, 2023. 71 Insurance-Related Expenses For the year ended December 31, 2024, insurance-related expenses were $88.8 million, an increase of $9.7 million, or 12%, compared to $79.1 million for the year ended December 31, 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Market risk is the potential loss arising from adverse changes in market rates and prices, such as interest rates. We are primarily exposed to market risk through our fixed maturities investments.
Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to market risks related to interest rate changes and the corresponding changes in the market values of our investments. Interest Rate Risk Market risk is the potential loss arising from adverse changes in market rates and prices, such as interest rates.
Management does not expect our results of operations or cash flows to be materially affected to any degree by a sudden change in market interest rates. 79
Our investments are exposed to market risk due to the fluctuation of prevailing interest rates that may reduce the yield on our investments or their fair value. Management does not expect our results of operations or cash flows to be materially affected by a sudden change in market interest rates.
We invest our excess cash primarily in money market accounts, corporate and foreign securities, residential and commercial mortgage-backed securities, and other governmental related securities. Our current investment strategy seeks first to preserve principal, second to provide liquidity for our operating and capital needs, and third to maximize yield without putting principal at risk.
Our current investment strategy seeks first to preserve principal, second to provide liquidity for our operating and capital needs, and third to maximize yield without putting principal at risk. We do not enter into investments for trading or speculative purposes.
Removed
We do not enter into investments for trading or speculative purposes. Our investments are exposed to market risk due to the fluctuation of prevailing interest rates that may reduce the yield on our investments or their fair value.
Added
We are primarily exposed to market risk through our fixed maturities, short-term investments, and cash and cash equivalents. We invest our excess cash primarily in money market accounts, corporate and foreign securities, residential and commercial mortgage-backed securities, and other governmental related securities.
Added
In addition, if a 10% change in interest rates were to have immediately occurred on December 31, 2024, this change would not have a material effect on the fair value of our investments as of that date. 77

Other HIPO 10-K year-over-year comparisons