QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State of incorporation) | (I.R.S. Employer Identification No.) | |||||||||||||
(Address of Principal Executive Offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Large accelerated filer | ☐ | Accelerated filer | ☐ | ||||||||
☒ | Smaller reporting company | ||||||||||
Emerging growth company |
Page | ||||||||
Item 2 | ||||||||
Item 3 | ||||||||
Item 4 | ||||||||
Part II. Other Information | ||||||||
Item 1 | ||||||||
Item 1A | ||||||||
Item 2 | ||||||||
Item 3 | ||||||||
Item 4 | ||||||||
March 31, 2023 | December 31, 2022 | ||||||||||
(Unaudited) | |||||||||||
Assets | |||||||||||
Investments: | |||||||||||
Fixed maturities available-for-sale, at fair value (amortized cost: $ | $ | $ | |||||||||
Short-term investments, at fair value (amortized cost: $ | |||||||||||
Total investments | |||||||||||
Cash and cash equivalents | |||||||||||
Restricted cash | |||||||||||
Accounts receivable, net of allowance of $ | |||||||||||
Reinsurance recoverable on paid and unpaid losses and LAE | |||||||||||
Prepaid reinsurance premiums | |||||||||||
Ceding commissions receivable | |||||||||||
Capitalized internal use software | |||||||||||
Intangible assets | |||||||||||
Other assets | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities and stockholders’ equity | |||||||||||
Liabilities: | |||||||||||
Loss and loss adjustment expense reserve | $ | $ | |||||||||
Unearned premiums | |||||||||||
Reinsurance premiums payable | |||||||||||
Provision for commission | |||||||||||
Accrued expenses and other liabilities | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies (Note 12) | |||||||||||
Stockholders’ equity: | |||||||||||
Common stock, $ | |||||||||||
Additional paid-in capital | |||||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Accumulated deficit | ( | ( | |||||||||
Total Hippo stockholders’ equity | |||||||||||
Noncontrolling interest | |||||||||||
Total stockholders’ equity | |||||||||||
Total liabilities and stockholders’ equity | $ | $ |
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
Revenue: | |||||||||||
Net earned premium | $ | $ | |||||||||
Commission income, net | |||||||||||
Service and fee income | |||||||||||
Net investment income | |||||||||||
Total revenue | |||||||||||
Expenses: | |||||||||||
Losses and loss adjustment expenses | |||||||||||
Insurance related expenses | |||||||||||
Technology and development | |||||||||||
Sales and marketing | |||||||||||
General and administrative | |||||||||||
Interest and other (income) expense | ( | ||||||||||
Total expenses | |||||||||||
Loss before income taxes | ( | ( | |||||||||
Income tax expense | |||||||||||
Net loss | ( | ( | |||||||||
Net income attributable to noncontrolling interests, net of tax | |||||||||||
Net loss attributable to Hippo | $ | ( | $ | ( | |||||||
Other comprehensive income: | |||||||||||
Change in net unrealized gain or loss on investments, net of tax | ( | ||||||||||
Comprehensive loss attributable to Hippo | $ | ( | $ | ( | |||||||
Per share data: | |||||||||||
Net loss attributable to Hippo - basic and diluted | $ | ( | $ | ( | |||||||
Weighted-average shares used in computing net loss per share attributable to Hippo - basic and diluted | |||||||||||
Net loss per share attributable to Hippo - basic and diluted | $ | ( | $ | ( |
Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total Hippo Stockholders' Equity | Non controlling Interests | Total Stockholders’ Equity | ||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||
Balance at January 1, 2023 | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||
Net loss | — | — | — | — | ( | ( | ( | |||||||||||||||||||
Other comprehensive income | — | — | — | — | — | |||||||||||||||||||||
Issuance of common stock from stock plans and contingently issuable shares | — | — | — | — | ||||||||||||||||||||||
Repurchase of common stock | ( | — | ( | — | — | ( | — | ( | ||||||||||||||||||
Shares withheld related to net share settlement | — | — | ( | — | — | ( | — | ( | ||||||||||||||||||
Stock-based compensation expense | — | — | — | — | — | |||||||||||||||||||||
Other | — | — | — | — | ( | ( | ( | ( | ||||||||||||||||||
Balance at March 31, 2023 | $ | $ | $ | ( | $ | ( | $ | $ | $ |
Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total Hippo Stockholders' Equity | Non controlling Interests | Total Stockholders’ Equity | ||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||
Balance at January 1, 2022 | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||
Net loss | — | — | — | — | ( | ( | ( | |||||||||||||||||||
Other comprehensive income | — | — | — | ( | — | ( | — | ( | ||||||||||||||||||
Issuance of common stock from stock plans and contingently issuable shares | — | — | — | — | ||||||||||||||||||||||
Shares withheld related to net share settlement | — | — | ( | — | — | ( | — | ( | ||||||||||||||||||
Stock-based compensation expense | — | — | — | — | — | |||||||||||||||||||||
Balance at March 31, 2022 | $ | $ | $ | ( | $ | ( | $ | $ | $ |
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net loss | $ | ( | $ | ( | |||||||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Stock–based compensation expense | |||||||||||
Change in fair value of warrant liability | ( | ||||||||||
Change in fair value of contingent consideration liability | |||||||||||
Other non-cash items | ( | ||||||||||
Changes in assets and liabilities: | |||||||||||
Accounts receivable, net | ( | ( | |||||||||
Reinsurance recoverable on paid and unpaid losses and LAE | ( | ( | |||||||||
Ceding commissions receivable | ( | ( | |||||||||
Prepaid reinsurance premiums | ( | ( | |||||||||
Other assets | ( | ( | |||||||||
Provision for commission | |||||||||||
Accrued expenses and other liabilities | ( | ||||||||||
Loss and loss adjustment expense reserves | |||||||||||
Unearned premiums | ( | ||||||||||
Reinsurance premiums payable | |||||||||||
Net cash used in operating activities | ( | ( | |||||||||
Cash flows from investing activities: | |||||||||||
Capitalized internal use software costs | ( | ( | |||||||||
Purchases of property and equipment | ( | ||||||||||
Purchases of investments | ( | ( | |||||||||
Maturities of investments | |||||||||||
Sales of investments | |||||||||||
Other | ( | ( | |||||||||
Net cash provided by (used in) investing activities | ( | ||||||||||
Cash flows from financing activities: | |||||||||||
Taxes paid related to net share settlement of equity awards | ( | ( | |||||||||
Proceeds from exercise of options | |||||||||||
Share repurchases under program | ( | ||||||||||
Payments of contingent consideration | ( | ( | |||||||||
Other | ( | ||||||||||
Net cash used in financing activities | ( | ( | |||||||||
Net (decrease) increase in cash, cash equivalents, and restricted cash | ( | ( | |||||||||
Cash, cash equivalents, and restricted cash at the beginning of the period | |||||||||||
Cash, cash equivalents, and restricted cash at the end of the period | $ | $ | |||||||||
March 31, 2023 | |||||||||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||||||
Fixed maturities available-for-sale: | |||||||||||||||||||||||
U.S. government and agencies | $ | $ | $ | ( | $ | ||||||||||||||||||
States and other territories | ( | ||||||||||||||||||||||
Corporate securities | ( | ||||||||||||||||||||||
Foreign securities | |||||||||||||||||||||||
Residential mortgage-backed securities | ( | ||||||||||||||||||||||
Commercial mortgage-backed securities | ( | ||||||||||||||||||||||
Asset backed securities | ( | ||||||||||||||||||||||
Total fixed maturities available-for-sale | ( | ||||||||||||||||||||||
Short-term investments: | |||||||||||||||||||||||
U.S. government and agencies | |||||||||||||||||||||||
Commercial paper | ( | ||||||||||||||||||||||
Corporate securities | ( | ||||||||||||||||||||||
Total short-term investments | ( | ||||||||||||||||||||||
Total | $ | $ | $ | ( | $ |
December 31, 2022 | |||||||||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||||||
Fixed maturities available-for-sale: | |||||||||||||||||||||||
U.S. government and agencies | $ | $ | ( | $ | |||||||||||||||||||
States and other territories | ( | ||||||||||||||||||||||
Corporate securities | ( | ||||||||||||||||||||||
Foreign securities | ( | ||||||||||||||||||||||
Residential mortgage-backed securities | ( | ||||||||||||||||||||||
Commercial mortgage-backed securities | ( | ||||||||||||||||||||||
Asset backed securities | ( | ||||||||||||||||||||||
Total fixed maturities available-for-sale | ( | ||||||||||||||||||||||
Short-term investments: | |||||||||||||||||||||||
U.S. government and agencies | ( | ||||||||||||||||||||||
Commercial paper | ( | ||||||||||||||||||||||
Corporate securities | |||||||||||||||||||||||
Total short-term investments | ( | ||||||||||||||||||||||
Total | $ | $ | $ | ( | $ |
March 31, 2023 | |||||||||||||||||||||||||||||||||||
Less than 12 months | 12 months or more | Total | |||||||||||||||||||||||||||||||||
Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | ||||||||||||||||||||||||||||||
Fixed maturities available-for-sale: | |||||||||||||||||||||||||||||||||||
U.S. government and agencies | $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||
States and other territories | ( | ( | |||||||||||||||||||||||||||||||||
Corporate securities | ( | ( | ( | ||||||||||||||||||||||||||||||||
Residential mortgage-backed securities | ( | ( | |||||||||||||||||||||||||||||||||
Commercial mortgage-backed securities | ( | ( | |||||||||||||||||||||||||||||||||
Asset backed securities | ( | ( | |||||||||||||||||||||||||||||||||
Short-term investments: | |||||||||||||||||||||||||||||||||||
Commercial paper | ( | ( | |||||||||||||||||||||||||||||||||
Corporate securities | ( | ( | |||||||||||||||||||||||||||||||||
Total | $ | $ | ( | $ | $ | ( | $ | $ | ( |
December 31, 2022 | |||||||||||||||||||||||||||||||||||
Less than 12 months | 12 months or more | Total | |||||||||||||||||||||||||||||||||
Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | ||||||||||||||||||||||||||||||
Fixed maturities available-for-sale: | |||||||||||||||||||||||||||||||||||
U.S. government and agencies | $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||
States and other territories | ( | ( | ( | ||||||||||||||||||||||||||||||||
Corporate securities | ( | ( | ( | ||||||||||||||||||||||||||||||||
Foreign securities | ( | ( | |||||||||||||||||||||||||||||||||
Residential mortgage-backed securities | ( | ( | ( | ||||||||||||||||||||||||||||||||
Commercial mortgage-backed securities | ( | ( | |||||||||||||||||||||||||||||||||
Asset backed securities | ( | ( | ( | ||||||||||||||||||||||||||||||||
Short-term investments: | |||||||||||||||||||||||||||||||||||
U.S. government and agencies | ( | ( | |||||||||||||||||||||||||||||||||
Commercial paper | ( | ( | |||||||||||||||||||||||||||||||||
Total | $ | $ | ( | $ | $ | ( | $ | $ | ( |
March 31, 2023 | |||||||||||
Amortized Cost | Fair Value | ||||||||||
Due to mature: | |||||||||||
One year or less | $ | $ | |||||||||
After one year through five years | |||||||||||
After five years | |||||||||||
Residential mortgage-backed securities | |||||||||||
Commercial mortgage-backed securities | |||||||||||
Asset backed securities | |||||||||||
Total fixed maturities available-for-sale | $ | $ |
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
Interest on cash and cash equivalents | $ | $ | |||||||||
Fixed maturities income | |||||||||||
Short-term investment income | |||||||||||
Total gross investment income | |||||||||||
Investment expenses | ( | ||||||||||
Net investment income | $ | $ |
March 31, 2023 | December 31, 2022 | ||||||||||
Cash and cash equivalents: | |||||||||||
Cash | $ | $ | |||||||||
Money market funds | |||||||||||
Commercial paper | |||||||||||
U.S. government and agencies | |||||||||||
Total cash and cash equivalents | $ | $ | |||||||||
Restricted cash: | |||||||||||
Fiduciary assets | |||||||||||
Letters of credit and cash on deposit | |||||||||||
Total restricted cash | |||||||||||
Total cash, cash equivalents, and restricted cash | $ | $ |
March 31, 2023 | |||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
Financial assets: | |||||||||||||||||||||||
Cash, cash equivalents, and restricted cash | $ | $ | $ | $ | |||||||||||||||||||
Fixed maturities available-for-sale: | |||||||||||||||||||||||
U.S. government and agencies | |||||||||||||||||||||||
States and other territories | |||||||||||||||||||||||
Corporate securities | |||||||||||||||||||||||
Foreign securities | |||||||||||||||||||||||
Residential mortgage-backed securities | |||||||||||||||||||||||
Commercial mortgage-backed securities | |||||||||||||||||||||||
Asset backed securities | |||||||||||||||||||||||
Total fixed maturities available-for-sale | |||||||||||||||||||||||
Short-term investments | |||||||||||||||||||||||
U.S. government and agencies | |||||||||||||||||||||||
Commercial paper | |||||||||||||||||||||||
Corporate securities | |||||||||||||||||||||||
Total short-term investments | |||||||||||||||||||||||
Total financial assets | $ | $ | $ | $ | |||||||||||||||||||
Financial liabilities: | |||||||||||||||||||||||
Contingent consideration liability | $ | $ | $ | $ | |||||||||||||||||||
Public warrants | |||||||||||||||||||||||
Private placement warrants | |||||||||||||||||||||||
Total financial liabilities | $ | $ | $ | $ |
December 31, 2022 | |||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
Financial assets: | |||||||||||||||||||||||
Cash, cash equivalents, and restricted cash | $ | $ | $ | $ | |||||||||||||||||||
Fixed maturities available-for-sale: | |||||||||||||||||||||||
U.S. government and agencies | |||||||||||||||||||||||
States and other territories | |||||||||||||||||||||||
Corporate securities | |||||||||||||||||||||||
Foreign securities | |||||||||||||||||||||||
Residential mortgage-backed securities | |||||||||||||||||||||||
Commercial mortgage-backed securities | |||||||||||||||||||||||
Asset backed securities | |||||||||||||||||||||||
Total fixed maturities available-for-sale | |||||||||||||||||||||||
Short-term investments | |||||||||||||||||||||||
U.S. government and agencies | |||||||||||||||||||||||
Commercial paper | |||||||||||||||||||||||
Corporate securities | |||||||||||||||||||||||
Total short-term investments | |||||||||||||||||||||||
Total financial assets | $ | $ | $ | $ | |||||||||||||||||||
Financial liabilities: | |||||||||||||||||||||||
Contingent consideration liability | $ | $ | $ | $ | |||||||||||||||||||
Public warrants | |||||||||||||||||||||||
Private placement warrants | |||||||||||||||||||||||
Total financial liabilities | $ | $ | $ | $ |
2023 | 2022 | ||||||||||
Balance as of January 1, | $ | $ | |||||||||
Payments of contingent consideration | ( | ( | |||||||||
Changes in fair value | |||||||||||
Balance as of March 31, | $ | $ |
March 31, 2023 | December 31, 2022 | |||||||||||||||||||||||||
Weighted- Average Useful Life Remaining (in years) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||||
(in millions) | (in millions) | |||||||||||||||||||||||||
Agency and carrier relationships | $ | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||||
State licenses and domain name | Indefinite | — | — | |||||||||||||||||||||||
Customer relationships | ( | ( | ||||||||||||||||||||||||
Other | ( | ( | ||||||||||||||||||||||||
Total intangible assets, net | $ | $ | ( | $ | $ | $ | ( | $ |
March 31, 2023 | December 31, 2022 | ||||||||||
(in millions) | |||||||||||
Capitalized internal use software | $ | $ | |||||||||
Less: accumulated amortization | ( | ( | |||||||||
Total capitalized internal use software | $ | $ |
March 31, 2023 | December 31, 2022 | ||||||||||
(in millions) | |||||||||||
Prepaid expenses | $ | $ | |||||||||
Claims receivable | |||||||||||
Lease right-of-use assets | |||||||||||
Property and equipment | |||||||||||
Other | |||||||||||
Total other assets | $ | $ |
March 31, 2023 | December 31, 2022 | ||||||||||
(in millions) | |||||||||||
Claim payments outstanding | $ | $ | |||||||||
Lease liability | |||||||||||
Advances from customers | |||||||||||
Deferred revenue | |||||||||||
Employee related accruals | |||||||||||
Premium refund liability | |||||||||||
Fiduciary liability | |||||||||||
Contingent consideration liability | |||||||||||
Other | |||||||||||
Total accrued expenses and other liabilities | $ | $ |
2023 | 2022 | ||||||||||
Reserve for losses and LAE gross of reinsurance recoverables on unpaid losses and LAE as of beginning of the period | $ | $ | |||||||||
Less: Reinsurance recoverables on unpaid losses and LAE | ( | ( | |||||||||
Reserve for losses and LAE, net of reinsurance recoverables as of beginning of the period | |||||||||||
Add: Incurred losses and LAE, net of reinsurance, related to: | |||||||||||
Current year | |||||||||||
Prior years | ( | ( | |||||||||
Total incurred | |||||||||||
Deduct: Loss and LAE payments, net of reinsurance, related to: | |||||||||||
Current year | |||||||||||
Prior years | |||||||||||
Total paid | |||||||||||
Reserve for losses and LAE, net of reinsurance recoverables at end of period | |||||||||||
Add: Reinsurance recoverables on unpaid losses and LAE at end of period | |||||||||||
Reserve for losses and LAE gross of reinsurance recoverables on unpaid losses and LAE as of end of the period | $ | $ |
For the Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||
2023 | 2022 | ||||||||||||||||||||||||||||||||||
Written premiums | Earned premiums | Loss and LAE incurred | Written premiums | Earned premiums | Loss and LAE incurred | ||||||||||||||||||||||||||||||
Direct | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Assumed | |||||||||||||||||||||||||||||||||||
Gross | |||||||||||||||||||||||||||||||||||
Ceded | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||
Net | $ | $ | $ | $ | $ | $ |
Three Months Ended March 31, | |||||||||||||||||||||||
2023 | 2022 | ||||||||||||||||||||||
Amount | % of GWP | Amount | % of GWP | ||||||||||||||||||||
State | |||||||||||||||||||||||
Texas | $ | % | $ | % | |||||||||||||||||||
California | % | % | |||||||||||||||||||||
Florida | % | % | |||||||||||||||||||||
Georgia | % | % | |||||||||||||||||||||
Colorado | % | % | |||||||||||||||||||||
Arizona | % | % | |||||||||||||||||||||
Illinois | % | % | |||||||||||||||||||||
New Jersey | % | % | |||||||||||||||||||||
Ohio | % | % | |||||||||||||||||||||
Missouri | % | % | |||||||||||||||||||||
Other | % | % | |||||||||||||||||||||
Total | $ | % | $ | % |
Options Outstanding | Weighted-Average Remaining | Aggregate Intrinsic Value (In Millions) | |||||||||||||||||||||
Number of Shares | Weighted Average Exercise Price | Contract Term (In Years) | |||||||||||||||||||||
Outstanding as of December 31, 2022 | $ | $ | |||||||||||||||||||||
Granted | |||||||||||||||||||||||
Exercised | ( | ||||||||||||||||||||||
Cancelled/Expired | ( | ||||||||||||||||||||||
Outstanding as of March 31, 2023 | $ | ||||||||||||||||||||||
Vested and exercisable as of March 31, 2023 | $ | $ |
Number of Shares | Weighted Average Grant-Date Fair Value per Share | ||||||||||
Unvested and outstanding as of December 31, 2022 | $ | ||||||||||
Granted | |||||||||||
Released | ( | ||||||||||
Canceled and forfeited | ( | ||||||||||
Unvested and outstanding as of March 31, 2023 | $ |
Three Months Ended | ||||||||||||||
March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
Losses and loss adjustment expenses | $ | $ | ||||||||||||
Insurance related expenses | ||||||||||||||
Technology and development | ||||||||||||||
Sales and marketing | ||||||||||||||
General and administrative | ||||||||||||||
Total stock-based compensation expense | $ | $ |
Three Months Ended | |||||||||||
March 31, | |||||||||||
2023 | 2022 | ||||||||||
Numerator: | |||||||||||
Net loss attributable to Hippo – basic and diluted (in millions) | $ | ( | $ | ( | |||||||
Denominator: | |||||||||||
Weighted-average shares used in computing net loss per share attributable to Hippo — basic and diluted | |||||||||||
Net loss per share attributable to Hippo — basic and diluted | $ | ( | $ | ( |
March 31, | |||||||||||
2023 | 2022 | ||||||||||
Outstanding options | |||||||||||
Common stock from outstanding warrants | |||||||||||
Common stock subject to repurchase | |||||||||||
RSU and PRSUs | |||||||||||
Total |
Three Months Ended March 31, 2023 | |||||||||||||||||||||||||||||
Services | Insurance-as-a-Service | Hippo Home Insurance Program | Intersegment Eliminations(1) | Total | |||||||||||||||||||||||||
Revenue: | |||||||||||||||||||||||||||||
Net earned premium | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Commission income, net | ( | ||||||||||||||||||||||||||||
Service and fee income | |||||||||||||||||||||||||||||
Net investment income | |||||||||||||||||||||||||||||
Total Revenue | ( | ||||||||||||||||||||||||||||
Operating Expenses: | |||||||||||||||||||||||||||||
Loss and loss adjustment expense | |||||||||||||||||||||||||||||
Insurance related expense | ( | ||||||||||||||||||||||||||||
Sales and marketing | ( | ||||||||||||||||||||||||||||
Technology and development | |||||||||||||||||||||||||||||
General and administrative | |||||||||||||||||||||||||||||
Other expenses | |||||||||||||||||||||||||||||
Total operating expenses | ( | ||||||||||||||||||||||||||||
Less: Net investment income | ( | ( | ( | ||||||||||||||||||||||||||
Less: Noncontrolling interest | ( | ( | |||||||||||||||||||||||||||
Adjusted EBITDA | ( | ( | ( | ( | |||||||||||||||||||||||||
Net investment income | |||||||||||||||||||||||||||||
Depreciation and amortization | ( | ||||||||||||||||||||||||||||
Stock-based compensation | ( | ||||||||||||||||||||||||||||
Fair value adjustments | ( | ||||||||||||||||||||||||||||
Contingent consideration charge | ( | ||||||||||||||||||||||||||||
Other one-off transactions | ( | ||||||||||||||||||||||||||||
Income tax expense | ( | ||||||||||||||||||||||||||||
Net loss attributable to Hippo | $ | ( |
Three Months Ended March 31, 2022 | |||||||||||||||||||||||||||||
Services | Insurance-as-a-Service | Hippo Home Insurance Program | Intersegment Eliminations(1) | Total | |||||||||||||||||||||||||
Revenue: | |||||||||||||||||||||||||||||
Net earned premium | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Commission income, net | ( | ||||||||||||||||||||||||||||
Service and fee income | |||||||||||||||||||||||||||||
Net investment income | |||||||||||||||||||||||||||||
Total Revenue | ( | ||||||||||||||||||||||||||||
Operating Expenses: | |||||||||||||||||||||||||||||
Loss and loss adjustment expense | |||||||||||||||||||||||||||||
Insurance related expense | ( | ||||||||||||||||||||||||||||
Sales and marketing | |||||||||||||||||||||||||||||
Technology and development | |||||||||||||||||||||||||||||
General and administrative | |||||||||||||||||||||||||||||
Other expenses | |||||||||||||||||||||||||||||
Total operating expenses | ( | ||||||||||||||||||||||||||||
Less: Net investment income | ( | ( | ( | ||||||||||||||||||||||||||
Less: Noncontrolling interest | ( | ( | |||||||||||||||||||||||||||
Adjusted EBITDA | ( | ( | ( | ||||||||||||||||||||||||||
Net investment income | |||||||||||||||||||||||||||||
Depreciation and amortization | ( | ||||||||||||||||||||||||||||
Stock-based compensation | ( | ||||||||||||||||||||||||||||
Fair value adjustments | |||||||||||||||||||||||||||||
Contingent consideration charge | ( | ||||||||||||||||||||||||||||
Other one-off transactions | |||||||||||||||||||||||||||||
Income tax expense | ( | ||||||||||||||||||||||||||||
Net loss attributable to Hippo | $ | ( |
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
($ in millions) | |||||||||||
Total Generated Premium | $ | 244.9 | $ | 153.7 | |||||||
Total Revenue | 39.8 | 24.5 | |||||||||
Net Loss attributable to Hippo | (69.8) | (67.6) | |||||||||
Adjusted EBITDA | (52.1) | (48.5) | |||||||||
Gross Loss Ratio | 76 | % | 76 | % | |||||||
Net Loss Ratio | 273 | % | 250 | % | |||||||
Three Months Ended March 31, | |||||||||||||||||
2023 | 2022 | Change | |||||||||||||||
Gross Written Premium | $ | 189.5 | $ | 117.1 | $ | 72.4 | |||||||||||
Gross Placed Premium | 55.4 | 36.6 | $ | 18.8 | |||||||||||||
Total Generated Premium | $ | 244.9 | $ | 153.7 | $ | 91.2 |
Three Months Ended | |||||||||||
March 31, | |||||||||||
2023 | 2022 | ||||||||||
Net loss attributable to Hippo | $ | (69.8) | $ | (67.6) | |||||||
Adjustments: | |||||||||||
Net investment income | (5.4) | (0.4) | |||||||||
Depreciation and amortization | 4.3 | 3.9 | |||||||||
Stock-based compensation | 16.1 | 13.4 | |||||||||
Fair value adjustments | 0.2 | (1.2) | |||||||||
Contingent consideration charge | 0.8 | 3.2 | |||||||||
Other one-off transactions | 1.4 | — | |||||||||
Income tax expense | 0.3 | 0.2 | |||||||||
Adjusted EBITDA | $ | (52.1) | $ | (48.5) |
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
Gross Losses and LAE | $ | 126.3 | $ | 91.2 | |||||||
Gross Earned Premium | 165.1 | 120.1 | |||||||||
Gross Loss Ratio | 76 | % | 76 | % |
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
PCS losses | 25 | % | 19 | % | |||||||
Non-PCS losses | 51 | % | 57 | % | |||||||
Gross loss ratio | 76 | % | 76 | % |
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
Net Losses and LAE | $ | 37.7 | $ | 22.5 | |||||||
Net Earned Premium | 13.8 | 9.0 | |||||||||
Net Loss Ratio | 273 | % | 250 | % |
Three Months Ended March 31, 2023 | |||||||||||||||||||||||||||||
($ in millions) | |||||||||||||||||||||||||||||
Services | Insurance-as-a-Service | Hippo Home Insurance Program | Intersegment Eliminations(1) | Total | |||||||||||||||||||||||||
Total Generated Premium | $ | 97.9 | $ | 104.0 | $ | 92.2 | $ | (49.2) | $ | 244.9 | |||||||||||||||||||
Total Revenue | 9.8 | 12.9 | 19.3 | (2.2) | 39.8 | ||||||||||||||||||||||||
Adjusted EBITDA | (10.8) | 3.2 | (44.3) | (0.2) | (52.1) |
Three Months Ended March 31, 2022 | |||||||||||||||||||||||||||||
($ in millions) | |||||||||||||||||||||||||||||
Services | Insurance-as-a-Service | Hippo Home Insurance Program | Intersegment Eliminations(1) | Total | |||||||||||||||||||||||||
Total Generated Premium | $ | 75.9 | $ | 40.7 | $ | 79.0 | $ | (41.9) | $ | 153.7 | |||||||||||||||||||
Total Revenue | 7.4 | 7.0 | 13.0 | (2.9) | 24.5 | ||||||||||||||||||||||||
Adjusted EBITDA | (11.4) | 2.6 | (39.7) | — | (48.5) |
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
Hippo Home Insurance Program | |||||||||||
Non-PCS | 60 | % | 65 | % | |||||||
PCS | 41 | % | 34 | % | |||||||
HPGLR | 101 | % | 99 | % |
Three Months Ended | |||||||||||||||||||||||
March 31, | |||||||||||||||||||||||
2023 | 2022 | Change | % Change | ||||||||||||||||||||
Revenue: | |||||||||||||||||||||||
Net earned premium | $ | 13.8 | $ | 9.0 | $ | 4.8 | 53 | % | |||||||||||||||
Commission income, net | 17.4 | 11.5 | 5.9 | 51 | % | ||||||||||||||||||
Service and fee income | 3.2 | 3.6 | (0.4) | (11) | % | ||||||||||||||||||
Net investment income | 5.4 | 0.4 | 5.0 | 1250 | % | ||||||||||||||||||
Total revenue | 39.8 | 24.5 | 15.3 | 62 | % | ||||||||||||||||||
Expenses: | |||||||||||||||||||||||
Losses and loss adjustment expenses | 37.7 | 22.5 | 15.2 | 68 | % | ||||||||||||||||||
Insurance related expenses | 15.8 | 13.2 | 2.6 | 20 | % | ||||||||||||||||||
Technology and development | 11.6 | 14.7 | (3.1) | (21) | % | ||||||||||||||||||
Sales and marketing | 22.4 | 24.9 | (2.5) | (10) | % | ||||||||||||||||||
General and administrative | 19.8 | 16.5 | 3.3 | 20 | % | ||||||||||||||||||
Interest and other (income) expense | 0.3 | (1.0) | 1.3 | (130) | % | ||||||||||||||||||
Total expenses | 107.6 | 90.8 | 16.8 | 19 | % | ||||||||||||||||||
Loss before income taxes | (67.8) | (66.3) | (1.5) | 2 | % | ||||||||||||||||||
Income tax expense | 0.3 | 0.2 | 0.1 | 50 | % | ||||||||||||||||||
Net loss | (68.1) | (66.5) | (1.6) | 2 | % | ||||||||||||||||||
Net income attributable to noncontrolling interests, net of tax | 1.7 | 1.1 | 0.6 | 55 | % | ||||||||||||||||||
Net loss attributable to Hippo | $ | (69.8) | $ | (67.6) | $ | (2.2) | 3 | % | |||||||||||||||
Other comprehensive income: | |||||||||||||||||||||||
Change in net unrealized gain on available-for-sale securities, net of tax | 1.7 | (2.6) | 4.3 | (165) | % | ||||||||||||||||||
Comprehensive loss attributable to Hippo | $ | (68.1) | $ | (70.2) | $ | 2.1 | (3) | % |
Three Months Ended | |||||||||||||||||
March 31, | |||||||||||||||||
2023 | 2022 | Change | |||||||||||||||
Gross written premium | $ | 189.5 | $ | 117.1 | $ | 72.4 | |||||||||||
Ceded written premium | 168.2 | 116.5 | 51.7 | ||||||||||||||
Net written premium | 21.3 | 0.6 | 20.7 | ||||||||||||||
Change in unearned premium | (7.5) | 8.4 | (15.9) | ||||||||||||||
Net earned premium | $ | 13.8 | $ | 9.0 | $ | 4.8 |
Three Months Ended | |||||||||||
March 31, | |||||||||||
2023 | 2022 | ||||||||||
Amortization of deferred direct acquisition costs, net | $ | 6.0 | $ | 4.6 | |||||||
Employee-related costs | 3.0 | 2.8 | |||||||||
Underwriting costs | 1.8 | 2.0 | |||||||||
Amortization of capitalized internal use software | 2.9 | 1.8 | |||||||||
Other | 2.1 | 2.0 | |||||||||
Total | $ | 15.8 | $ | 13.2 |
Three Months Ended | |||||||||||||||||
March 31, | |||||||||||||||||
2023 | 2022 | Change | |||||||||||||||
Net cash provided by (used in): | |||||||||||||||||
Operating activities | $ | (35.7) | $ | (58.6) | $ | 22.9 | |||||||||||
Investing activities | $ | 13.8 | $ | (378.2) | $ | 392.0 | |||||||||||
Financing activities | $ | (1.9) | $ | (0.3) | $ | (1.6) |
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) | ||||||||||||||||||||||||||
January 1 through January 31, 2023 | — | $ | — | — | $ | 50.0 | ||||||||||||||||||||
February 1 through February 28, 2023 | — | $ | — | — | $ | — | ||||||||||||||||||||
March 1 through March 31, 2023 | 15,472 | $ | 15.46 | 15,472 | $ | 48.8 | ||||||||||||||||||||
Total | 15,472 | 15,472 |
Exhibit Number | Description | |||||||
31.1 | ||||||||
31.2 | ||||||||
32.1 | ||||||||
32.2 | ||||||||
101.INS | XBRL Instance Document* | |||||||
101.SCH | XBRL Taxonomy Extension Schema Document* | |||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document* | |||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document* | |||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document* | |||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document* | |||||||
Exhibit 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |||||||
* | Filed herewith. | |||||||
# | Exhibits 32.1 and 32.2 are being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall such exhibits be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act or the Exchange Act, except as otherwise specifically stated in such filing. |
HIPPO HOLDINGS INC. | ||||||||
By: | /s/ Richard McCathron | |||||||
Name: | Richard McCathron | |||||||
Title: | Chief Executive Officer | |||||||
By: | /s/ Stewart Ellis | |||||||
Name: | Stewart Ellis | |||||||
Title: | Chief Financial Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of Hippo Holdings Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: May 9, 2023 | By: | /s/ Richard McCathron | |||||||||||||||
Richard McCathron | |||||||||||||||||
Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of Hippo Holdings Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: May 9, 2023 | By: | /s/ Stewart Ellis | |||||||||||||||
Stewart Ellis | |||||||||||||||||
Chief Financial Officer |
/s/ Richard McCathron | ||||||||
Name: | Richard McCathron | |||||||
Title: | Chief Executive Officer |
/s/ Stewart Ellis | ||||||||
Name: | Stewart Ellis | |||||||
Title: | Chief Financial Officer |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Fixed maturities, available-for-sale, amortized cost | $ 146.0 | $ 127.3 |
Short-term investments, amortized cost | 290.7 | 325.6 |
Accounts receivable, allowance | $ 0.3 | $ 0.3 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 80,000,000 | 80,000,000 |
Common stock, shares issued (in shares) | 23,320,786 | 23,201,434 |
Common stock, shares outstanding (in shares) | 23,320,786 | 23,201,434 |
Description of Business and Summary of Significant Accounting Policies |
3 Months Ended |
---|---|
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business and Summary of Significant Accounting Policies | 1. Description of Business and Summary of Significant Accounting Policies Description of Business Hippo Holdings Inc., referred to in these Notes to the Consolidated Financial Statements as “Hippo” or the “Company,” specializes in the underwriting, administration, and marketing of personal property and commercial insurance policies. The Company’s subsidiary, Hippo Analytics Inc., is a licensed insurance agency that provides various insurance services, including some or all of the following services for affiliated and non-affiliated insurance carriers: soliciting, marketing, servicing, underwriting, or providing claims processing services for a variety of commercial and personal insurance products. Hippo Analytics Inc. offers its insurance products through licensed insurance agents and direct-to-consumer channels. The Company’s insurance company subsidiaries, Spinnaker Insurance Company (“Spinnaker”), an Illinois domiciled insurance company, Spinnaker Specialty Insurance Company (“SSIC”), a Texas domiciled authorized surplus lines insurance company, and Mainsail Insurance Company (“MIC”), a Texas domiciled insurance company, underwrite personal and commercial insurance products on a direct basis through licensed insurance agents and surplus lines brokers. The Company has a wholly-owned Cayman domiciled captive insurance company, RH Solutions Insurance (Cayman) Ltd. (“RHS”), which assumes insurance risk of policies from affiliated and non-affiliated insurance carriers. Basis of Presentation and Consolidation The interim consolidated financial statements and accompanying notes of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and include the Company’s consolidated subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Certain information and disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been omitted accordingly. The interim financial information is unaudited, but reflects all normal recurring adjustments that are, in the opinion of management, necessary to fairly present the information set forth herein. The interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. Interim results are not necessarily indicative of the results for a full year. In accordance with Accounting Standards Codification 280 "Segment Reporting", the Company began reporting three operating segments due to changes in how the Company's chief operating decision maker assesses the Company's performance and allocates resources. See Note 16 "Segment Reporting". The Company has three reportable segments: Services, Insurance-as-a-Service, and Hippo Home Insurance Program. Reverse Stock Split On September 29, 2022, the Company filed a Certificate of Amendment to its Certificate of Incorporation to effect a one-for-25 reverse stock split of the Company’s common stock and a corresponding adjustment to its authorized capital stock (the “Reverse Stock Split”), effective as of 11:59 p.m. Eastern Daylight Time on September 29, 2022 (the “Effective Time”). All share and per share information has been retroactively adjusted to give effect to the Reverse Stock Split for all periods presented, unless otherwise indicated. As a result of the Reverse Stock Split, every 25 shares of the Company’s issued and outstanding common stock were automatically converted into one share of issued and outstanding common stock. No fractional shares were issued as a result of the Reverse Stock Split. Stockholders who otherwise would have been entitled to receive fractional shares of common stock were entitled to receive cash in an amount equal to the product obtained by multiplying (a) the closing price per share of the common stock as reported on the New York Stock Exchange as of the first trading day following the Effective Time, by (b) the fraction of one share owned by the stockholder. Proportionate adjustments were made to the number of shares issuable upon the exercise or vesting of all stock options, restricted stock, restricted stock units or other stock-based awards or rights (the “Stock-Based Awards”) and warrants outstanding at the Effective Time, as well as certain performance goals applicable to certain Stock-Based Awards, which resulted in a proportional decrease in the number of shares of the Company’s common stock reserved for issuance upon exercise or vesting of such Stock-Based Awards and warrants, and, in the case of stock options, purchase rights outstanding under the Company’s 2021 Employee Stock Purchase Plan and warrants, a proportional increase in the exercise price of such stock options, purchase rights and warrants. In addition, the number of shares reserved for issuance under the Company’s 2021 Incentive Award Plan and 2021 Employee Stock Purchase Plan were proportionately reduced. Use of Estimates The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods. Significant items subject to such estimates and assumptions include, but are not limited to, loss and loss adjustment expense (“LAE”) reserves, provision for commission slide and cancellations, reinsurance recoverable on paid and unpaid losses and LAE, the fair values of investments, stock-based awards, warrant liabilities, contingent consideration liabilities, acquired intangible assets, deferred tax assets and uncertain tax positions, and revenue recognition. The Company evaluates these estimates on an ongoing basis. These estimates are informed by experience and other assumptions that the Company believes are reasonable under the circumstances. Actual results may differ significantly from these estimates. Recent Accounting Pronouncements The Company has evaluated recent accounting pronouncements through the date the financial statements were issued and filed with the SEC and believes that there are none that will have a material impact on the Company’s consolidated financial statements.
|
Investments |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | 2. Investments The amortized cost and fair value of fixed maturities securities and short-term investments are as follows (in millions):
The following tables present the gross unrealized losses and related fair values for the Company’s investments in available-for-sale debt securities and short-term investments, grouped by duration of time in a continuous unrealized loss position as of March 31, 2023, and December 31, 2022 (in millions):
The Company has determined that unrealized losses as of March 31, 2023 and December 31, 2022 resulted from the interest rate environment, rather than a deterioration of the creditworthiness of the issuers. Therefore, an allowance for credit losses was not necessary as it is more likely than not that the Company will not be required to sell the investments before the recovery of the amortized cost basis or until maturity. As of March 31, 2023, none of our fixed maturity portfolio was unrated or rated below investment grade. The amortized cost and fair value of fixed maturities securities by contractual maturity are as follows (in millions):
Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Net realized gains and losses on fixed maturity securities were insignificant for the three months ended March 31, 2023 and 2022, respectively. The Company’s net investment income is comprised of the following (in millions):
Pursuant to certain regulatory requirements, the Company is required to hold assets on deposit with various state insurance departments for the benefit of policyholders. These special deposits are included in cash and cash equivalents, fixed maturities, or available-for-sale on the consolidated balance sheets. The carrying value of securities on deposit with state regulatory authorities total $13.0 million and $12.6 million as of March 31, 2023 and December 31, 2022, respectively.
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Cash, Cash Equivalents, and Restricted Cash |
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Cash and Cash Equivalents [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash, Cash Equivalents, and Restricted Cash | 3. Cash, Cash Equivalents, and Restricted Cash The following table sets forth the cash, cash equivalents, and restricted cash (in millions):
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Fair Value Measurement |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurement | 4. Fair Value Measurement When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions, and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: •Level 1 — Quoted prices in active markets for identical assets or liabilities that are publicly accessible at the measurement date. •Level 2 — Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. •Level 3 — Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability. The following table summarizes the Company’s fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis (in millions):
The Company’s policy is to recognize transfers into and transfers out of fair value hierarchy levels at the end of each reporting period. There were no transfers between levels in the fair value hierarchy during the three months ended March 31, 2023. Contingent Consideration The contingent consideration, relating to the Company’s 2019 acquisition of North American Advantage Insurance Services, LLC, is re-valued to fair value at the end of each reporting period using the present value of future payments based on an estimate of revenue and customer renewals. North American Advantage Insurance Services, LLC’s ultimate parent company was Lennar Corporation, a related party of the Company. There is no limit to the maximum potential contingent consideration as the consideration is based on acquired customer retention. The table below presents the changes in the contingent consideration liability valued using Level 3 inputs (in millions):
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Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets | 5. Intangible Assets
Amortization expense related to intangible assets for the three months ended March 31, 2023 and 2022 was $1.1 million and $1.9 million. The amortization expense is included in sales and marketing expenses for customer relationships, agency and carrier relationships, and other on the consolidated statements of operations and comprehensive loss.
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Capitalized Internal Use Software |
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Research and Development [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capitalized Internal Use Software | 6. Capitalized Internal Use Software
Amortization expense related to capitalized internal use software for the three months ended March 31, 2023 and 2022 was $2.9 million and $1.8 million, respectively. The amortization expense is included in insurance related expenses on the consolidated statements of operations and comprehensive loss.
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Other Assets |
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Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Assets | 7. Other Assets
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Accrued Expenses and Other Liabilities |
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Accrued Expenses and Other Liabilities | 8. Accrued Expenses and Other Liabilities
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Loss and Loss Adjustment Expense Reserves |
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Loss and Loss Adjustment Expense Reserves | 9. Loss and Loss Adjustment Expense Reserves The reconciliation of the beginning and ending reserve balances for losses and loss adjustment expenses, net of reinsurance is summarized as follows for the three months ended March 31, (in millions):
Loss development occurs when actual losses incurred vary from the Company’s previously developed estimates, which are established through the Company’s loss and LAE reserve estimate processes. Net incurred losses and LAE experienced favorable development of $0.1 million and $2.8 million for the three months ended March 31, 2023 and 2022, respectively. The prior years’ development of $0.1 million was driven primarily by favorable net loss development relating to the 2022 accident year, resulting in a net release of $0.2 million from catastrophe reserves, offset by adverse development of $0.1 million from attritional reserves. These changes are primarily a result of ongoing analysis of claims emergence patterns and loss trends.
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Reinsurance |
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Reinsurance | 10. Reinsurance The Company purchases reinsurance to help manage exposure to property and casualty insurance risks, including attritional and catastrophic risks. The Company’s insurance company subsidiaries have entered into proportional and non-proportional reinsurance treaties, under which a significant portion of the liabilities have been ceded to third-party reinsurers. The Company also assumes risk from non-affiliated insurance carriers. Proportional Reinsurance Treaties — Hippo For the Company’s primary homeowners reinsurance treaty commencing in 2023, the Company secured proportional reinsurance from a diverse panel of six third-party reinsurers. All reinsurers are either rated “A-” Excellent or better by AM Best, or the reinsurance is appropriately collateralized. In 2023 the Company expects to retain approximately 40% of the premium through its insurance company subsidiaries or its captive reinsurance company, RHS, before purchasing catastrophe protection. Additionally, the reinsurance contracts are subject to contingent commission adjustments and loss participation features, which align the Company’s interests with those of its reinsurers. Loss participation features may increase the amount of losses retained by the Company’s insurance company subsidiaries in excess of its pro rata participation. For business produced through the Company’s 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. In 2023, the Company expects to retain approximately 58% of the premium produced through the Company’s insurance company subsidiaries or RHS, before purchasing catastrophe protection. The reinsurance contracts are subject to contingent commission adjustments and limited loss participation features, which align the Company’s interests with those of the reinsurers. For the Company’s primary homeowners reinsurance treaty commencing in 2022, the Company secured quota share reinsurance from a diverse panel of eleven third-party reinsurers. All reinsurers are either rated “A-” Excellent or better by AM Best, or the reinsurance is collateralized. In 2022 the Company retained approximately 10% of the premium through the Company’s insurance company subsidiaries, including the Company’s captive reinsurance company, RHS. Additionally, the reinsurance contracts are subject to variable commission adjustments and loss participation features, including loss ratio caps and loss corridors, which align the Company’s interests with those of its reinsurers. Similar to the prior year, the Company saw increased use of loss participation features in the 2022 reinsurance agreements, which may increase the amount of losses retained by its insurance company subsidiaries in excess of the Company’s pro rata participation. The Company also seeks to further reduce its risk retention through purchases of non-proportional reinsurance described below in the section titled “Non-Proportional Reinsurance.” For the Company’s primary homeowners reinsurance treaty that commenced in 2021, the Company secured proportional reinsurance from a diverse panel of nine third-party reinsurers with AM Best ratings of “A-” or better. A total of approximately 12% of the premium was retained either by Spinnaker or RHS, which aligns interests with third-party reinsurers. Two of the reinsurers, representing approximately one-third of the programs, provided three-year agreements. Non-Proportional Reinsurance — Hippo The Company also purchases non-proportional excess of loss catastrophe coverage (“XOL”) reinsurance. Through the Company’s insurance company subsidiaries, the Company is exposed to the risk of natural catastrophe events that could occur on the risks arising from policies underwritten by the Company or other managing general agents (“MGAs”). The Company is also exposed to this risk through its captive reinsurer, which takes on a share of the risk underwritten by the Company’s MGA business. The Company’s XOL program provides protection to the Company from catastrophes that could impact a large number of insurance policies. The Company buys 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. This reinsurance protects the Company from all but the most severe catastrophic events. Other Reinsurance Spinnaker purchases reinsurance for programs written by MGAs other than Hippo. The reinsurance treaties are a mix of proportional and XOL in which approximately 75% to 100% of the risk is ceded. 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 the Company in excess of the Company’s pro-rata participation. Such provisions are recognized in the period based on the experience to date under the agreement. Spinnaker also purchases 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. This program provides protection to the Company from catastrophes that could impact a large number of insurance policies underwritten by the Company or other MGAs. The Company buys 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. This reinsurance protects the Company from all but the most severe catastrophic events. With all reinsurance programs, the Company’s wholly owned insurance carriers are not relieved of their primary obligations to policyholders in the event of a default or the insolvency of its reinsurers. As a result, a credit exposure exists to the extent that any reinsurer fails to meet its obligations assumed in the reinsurance agreements. To mitigate this exposure to reinsurance insolvencies, the Company evaluates the financial condition of its reinsurers and, in certain circumstances, holds substantial collateral (in the form of funds withheld, qualified trusts, and letters of credit) as security under the reinsurance agreements. No allowance has been recorded in the three months ended March 31, 2023, and 2022 for amounts anticipated to be uncollectible or for the anticipated failure of a reinsurer to meet its obligations under the contracts. The following tables reflect amounts affecting the consolidated statements of operations and comprehensive loss for reinsurance as of and for the three months ended March 31, 2023, and 2022 (in millions).
As of March 31, 2023 and December 31, 2022, a provision for sliding scale commissions of $6.2 million and $3.5 million, respectively, is included in provision for commission on the consolidated balance sheets. As of March 31, 2023 and December 31, 2022, a receivable for sliding scale commissions of $4.0 million and $4.5 million, respectively, is included in ceding commissions receivable on the consolidated balance sheets. As of March 31, 2023 and December 31, 2022, a provision for loss participation features of $70.5 million and $51.3 million, respectively, was recorded as a contra-asset in reinsurance recoverable on the consolidated balance sheets.
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Geographical Breakdown of Gross Written Premium |
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Geographical Breakdown of Gross Written Premium | 11. Geographical Breakdown of Gross Written Premium Gross written premium by state is as follows (in millions):
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Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 12. Commitments and Contingencies Legal Proceedings From time to time, the Company may become involved in litigation or other legal proceedings. The Company is routinely named in litigation involving claims from policyholders. Legal proceedings relating to claims are reserved in the normal course of business. The Company does not believe it is a party to any pending litigation or other legal proceedings that is likely to have a material adverse effect on the Company’s business, financial condition or results of operations. Regardless 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. 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. 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. 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. 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. Wand provided Innovius and its principal, Justin Moore, with material nonpublic information about Hippo’s business. Finally, Mr. Navon alleges 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. Hippo engaged counsel to defend both Hippo and Mr. Wand, and Hippo and Mr. Wand have denied all claims. The parties are engaged in fact discovery, and a trial date is set for November 6, 2023. Hippo intends to move for summary judgment against the claims alleged in the amended complaint.
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Stockholders’ Equity |
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Stockholders’ Equity | 13. Stockholders’ Equity Common Stock On August 2, 2021, the Company’s common stock and warrants began trading on the New York Stock Exchange (“NYSE”) under the ticker symbols “HIPO” and “HIPO.WS,” respectively. Pursuant to Certificate of Incorporation, the Company is authorized to issue 80 million shares of common stock, with a par value of $0.0001 per share. Each share of common stock is entitled to one vote. The holders of the common stock are also entitled to receive dividends whenever funds are legally available and when declared by the board of directors. No dividends have been declared or paid since inception. Stock-Based Compensation Plans 2019 Stock Option and Grant Plan Adopted in 2019, the 2019 Stock Option and Grant Plan (“the 2019 Stock Plan”) provides for the direct award or sale of shares, the grant of options to purchase shares, and the grant of restricted stock units (“RSUs”) to employees, consultants, and outside directors of the Company. Stock options under the plan may be either incentive stock options (“ISOs”) or non-qualified stock options (“NSOs”), with an exercise price of not less than 100% of fair market value on the grant date, with a term less than or equal to ten years. The vesting period of each option and RSU shall be as determined by a committee of the Company’s board of directors but is generally over four years. Upon the closing of the Business Combination, the remaining unallocated share reserve under the 2019 Plan was cancelled and no new awards will be granted under such plan. Awards outstanding under the 2019 Plan were assumed by the Company upon the Closing and continue to be governed by the terms of the 2019 Plan. 2021 Incentive Award Plan In connection with the Closing of the Business Combination, on August 2, 2021, the Company adopted the 2021 Incentive Award Plan (the “2021 Plan”), which authorized for issuance 3.1 million shares of common stock. The 2021 Plan provides for the issuance of a variety of stock-based compensation awards, including stock options, stock appreciation rights (“SARs”), restricted stock awards, restricted stock unit awards, performance bonus awards, performance stock unit awards, dividend equivalents, or other stock or cash-based awards. The vesting period of each option and award shall be as determined by a committee of the Company’s board of directors but is generally over to four years. This reserve increases on January 1 of each year through 2031, by an amount equal to the smaller of: (i) 5% of the number of shares of common stock issued and outstanding on the last day of the immediately preceding fiscal year, or (ii) an amount determined by the board of directors. Stock Options The following table summarizes option activity under the plans:
The aggregate intrinsic value of options exercised during the three months ended March 31, 2023 and 2022 was $0.3 million and $2.5 million, respectively, and is calculated based on the difference between the exercise price and the fair value of the Company’s common stock as of the exercise date. There were no options granted during the three months ended March 31, 2023 and 2022. Total unrecognized compensation cost of $17.1 million as of March 31, 2023 is expected to be recognized over a weighted-average period of 1.2 years. Valuation Assumptions of Stock Options The fair value of granted stock options are estimated as of the date of grant using the Black-Scholes-Merton option-pricing model, based on the following inputs: Expected Term – The expected term represents the period that the Company’s Stock-Based Awards are expected to be outstanding. The Company has opted to use the simplified method for estimating the expected term of options. Accordingly, the expected term equals the arithmetic average of the vesting term and the original contractual term of the option (generally 10 years). Expected Volatility – Due to the Company’s limited operating history and a lack of company specific historical and implied volatility data, the Company has based its estimate of expected volatility on the historical volatility of a group of peer companies that are publicly traded. The historical volatility data was computed using the daily closing prices for the selected companies’ shares during the equivalent period of the calculated expected term of the Stock-Based Awards. Risk-Free Interest Rate – The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for zero coupon U.S. Treasury notes with maturities approximately equal to the grant’s expected term. Expected Dividend Yield – The Company has never paid dividends and does not currently expect to pay dividends. Fair value of common stock – The Company determined the value of its common stock based on the observable daily closing price of its common stock (ticker symbol “HIPO”). Early Exercises of Stock Options In 2019, certain employees early exercised stock options in exchange for promissory notes. The Company accounted for the promissory notes as nonrecourse in their entirety because the promissory notes are not aligned with a corresponding percentage of the underlying shares. The early exercises of options were not deemed to be substantive exercises for accounting purposes. Each of these loans and all interest accrued thereon was forgiven upon the consummation of the Business Combination. The forgiveness of the promissory notes was deemed to be exercises of the 0.4 million stock options with an intrinsic value of $94.0 million on the date of forgiveness. The unvested shares subject to repurchase fully vest in 2023. In 2020 and 2021, certain employees early exercised stock options with cash. On March 31, 2023 and December 31, 2022, the Company had $1.2 million and $1.4 million, respectively, recorded in accrued expenses and other liabilities related to early exercises of the stock options, and the related number of unvested shares subject to repurchase was 0.1 million and 0.1 million, respectively. Stock Option Repricing On March 1, 2023, the Board approved a one-time repricing of certain stock option awards. The repricing will impact out-of-the-money stock options held by all employees who remain employed through March 6, 2023 (the “Repricing Date”), including our executive officers. Each stock option was repriced to have a per share exercise price equal to the closing price of the Company’s common stock on the Repricing Date, except that the per share exercise price of each stock option held by any of our executive officers that was repriced is subject to a premium. The premium will be in effect from the Repricing Date through the first anniversary of the Repricing Date (the “Premium End Date”). In the event the applicable executive officer (i) exercises his/her stock options prior to the Premium End Date or (ii) does not provide services to the Company as an employee or a consultant through the Premium End Date, the per share exercise price applicable to his/her stock options will be two times the closing price of the Company’s common stock on the Repricing Date. There were no changes to the number of shares, the vesting schedule or the expiration date of the repriced stock options. As a result of the repricing, the Company recorded an incremental share-based compensation charge of $3.6 million, of which $1.4 million was recognized on the Repricing Date, and $2.2 million will be recognized over the remaining term of the repriced options. Restricted Stock Units and Performance Restricted Stock Units The Company grants service based RSUs and performance based RSUs (“PRSUs”) as part of our equity compensation plans. The Company measures RSU and PRSU expense for awards granted based on the estimated fair value of those awards at grant date. To estimate the fair value of PRSUs containing a market condition, the Company uses the Monte Carlo valuation model. The fair value of all other awards is based on the closing price of the Company’s common stock as reported on the NYSE on the date of grant. The RSUs generally vest over a period of to four years. The PRSUs vest based on the level of achievement of the performance goals and continued employment with the Company over a to four year performance period. Stock-based compensation expense for RSUs is recognized based on the straight-line basis over the employee requisite service period. Stock-based compensation expense for PRSUs is recognized on a graded accelerated basis over the employee requisite service period. The Company accounts for forfeitures as they occur. In June 2022, the Company began granting PRSUs. Half of the PRSUs granted are subject to the achievement of market-based performance goals, the remaining PRSUs are subject to vesting pursuant to internal financial measures. The actual number of units that ultimately vest will range from 0% to 100% of the granted amount, based on the level of achievement of the performance goals and continued employment with the Company. During the three months ended March 31, 2023 and 2022, no PRSUs were granted. The following table summarizes the RSU and PRSU activity for the three months ended March 31, 2023:
Total unrecognized compensation cost related to unvested RSUs and PRSUs is $81.4 million as of March 31, 2023, and it is expected to be recognized over a weighted-average period of 2.1 years. 2021 Employee Stock Purchase Plan In connection with the closing of the Business Combination, the Company adopted the 2021 Employee Stock Purchase Plan (the “2021 ESPP”), which authorized 0.5 million shares of common stock for issuance. The 2021 ESPP became effective on October 25, 2021. The 2021 ESPP is designed to allow eligible employees of the Company to purchase shares of our common stock with their accumulated payroll deductions at a price equal to 85% of the lesser of the fair market value on the first business day of the offering period or on the designated purchase date of the offering period up to $25,000 during the calendar year. The ESPP offers a six-month look-back feature as well as an automatic reset feature that provides for an offering period to be reset to a new lower-priced offering if the offering price of the new offering period is less than that of the current offering period. During the three months ended March 31, 2023 and 2022, no shares have been issued under the 2021 ESPP. In addition, the number of shares available for issuance under the 2021 ESPP will be annually increased on January 1 of each calendar year beginning in 2022 and ending in 2031, by an amount equal to the lesser of (i) one percent of the shares outstanding (on a converted basis) on the last day of the immediately preceding fiscal year and (ii) such number of shares as may be determined by the board of directors. Stock-Based Compensation Total stock-based compensation expense, classified in the accompanying consolidated statements of operations and comprehensive loss was as follows (in millions):
Stock Repurchases In March 2023, the Company’s Board of Directors authorized the repurchase of up to $50.0 million of its common stock, with no expiration date. Repurchases under the program may be made in the open market, in privately negotiated transactions or otherwise, with the amount and timing of repurchases to be determined at the Company’s discretion depending on market conditions and corporate needs. Open market repurchases will be structured to occur in accordance with applicable federal securities laws, including within the pricing and volume requirements of Rule 10b-18 under the Securities Exchange Act of 1934, as amended. The Company may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases of its common stock under this authorization. This program does not obligate the Company to acquire any particular amount of its common stock, and may be modified, suspended or terminated at any time at the Company’s discretion. During the three months ended March 31, 2023 the Company repurchased 15.5 thousand shares of its common stock for $0.2 million under this program. As of March 31, 2023, $49.8 million of common stock remain available for repurchases. Shares repurchased by the Company are accounted for when the transaction is settled. As of March 31, 2023, there was an immaterial amount of unsettled share repurchases. Direct costs incurred to acquire the shares are included in the total cost of the shares.
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Income Taxes |
3 Months Ended |
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Mar. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 14. Income Taxes The consolidated effective tax rate was (0.4)% and (0.3)% for the three months ended March 31, 2023 and 2022, respectively. The difference between the rate for the three months ended March 31, 2023 and 2022 and the U.S. federal income tax rate of 21% was due primarily to a full valuation allowance against the Company’s net deferred tax assets. As of March 31, 2023 and 2022, the Company has $3.5 million and $1.1 million of unrecognized tax benefits, respectively, fully offset by a valuation allowance. No material interest or penalties were incurred during the three months ended March 31, 2023 and 2022.
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Net Loss Per Share Attributable to Common Stockholders |
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Net Loss Per Share Attributable to Common Stockholders | 15. Net Loss Per Share Attributable to Common Stockholders Net loss per share attributable to common stockholders was computed as follows:
The potential shares of common stock that were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been antidilutive are as follows:
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Segments |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segments | 16. Segments Starting with the first quarter of 2023, the Company realigned its internal reporting to reflect how the Company now manages and monitors its operating results. As a result of these changes, the Company now has three reportable segments: Services, Insurance-as-a-Service, and Hippo Home Insurance Program. The Company’s Services segment earns fees and/or commission income without assuming underwriting risk or need for reinsurance. The Company also partners with home builders, as well as independent agencies, to source insureds seeking a product for which the Company provides the best carrier for the insured whether it be of Hippo or a third-party carrier, including other insurance products like auto, rental etc. Insurance-as-a-Service is managed through its Spinnaker subsidiary and is a platform to support third party MGAs. The Company rents its capital, 50 state licenses and the strong financial rating of the Company’s Spinnaker subsidiary (A- rated by A.M. Best) to earn fee-based revenues with the assumption of limited underwriting risk using quota-share reinsurance. The Company also earns a portion of the premiums paid to it for the risk the Company retains as well as generates investment income. The diversification of the Company’s balance sheet allows it to carry less capital than the Company’s MGA clients would be required to on their own. The Hippo Home Insurance Program is the Company’s Hippo-branded homeowners insurance business. The Company’s main source of revenue is the premiums paid to it by the Company’s homeowner customers. In addition, the Company’s revenues include commissions for premiums the Company cedes to third parties, policy and services fees and investment income. The Company’s strategy is to retain the portion of the underwriting risk where the Company believes its loss prevention strategies are the most effective. The Company’s Chief Executive Officer, who serves as the chief operating decision maker (“CODM”), evaluates the financial performance of the Company’s segments based upon segment revenues and segment Adjusted EBITDA, a non-GAAP profitability measure. Items outside of Adjusted EBITDA are not reported by segment, since they are excluded from the single measure of segment profitability reviewed by the CODM. The Company’s CODM does not use segment assets to allocate resources or to assess performance of the segments and, therefore, segment assets have not been reported separately. The tables below present segment information reconciled to total Net Loss attributable to Hippo, for the periods indicated (in millions). Financial information for the period ended March 31, 2022 has been revised to conform with the current year presentation.
(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).
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Subsequent Events |
3 Months Ended |
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Mar. 31, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | 17. Subsequent Events On April 18, 2023, Spinnaker Insurance Company, a wholly owned subsidiary of Hippo Holdings Inc., closed on the purchase from Elevate Sabine Investors LP (“Seller”) certain real property, improvements and personal property located at 701 E. 5th Street, Austin, Texas 78701, as well as Seller’s interest in and to certain leases and other agreements, licenses, permits and approvals as set forth in the original Purchase and Sale Agreement entered into on February 24, 2022 (as amended from time to time) (together, the “Property”). The Property will be used as office space for employees of the Company and affiliated companies. After application of earnest money, escrowed amounts, prorations and adjustments as provided for in the Agreement, the net amount paid at closing was approximately $26.0 million in cash.
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Description of Business and Summary of Significant Accounting Policies (Policies) |
3 Months Ended |
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Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Consolidation | The interim consolidated financial statements and accompanying notes of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and include the Company’s consolidated subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Certain information and disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been omitted accordingly. The interim financial information is unaudited, but reflects all normal recurring adjustments that are, in the opinion of management, necessary to fairly present the information set forth herein. The interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. Interim results are not necessarily indicative of the results for a full year. In accordance with Accounting Standards Codification 280 "Segment Reporting", the Company began reporting three operating segments due to changes in how the Company's chief operating decision maker assesses the Company's performance and allocates resources. See Note 16 "Segment Reporting". The Company has three reportable segments: Services, Insurance-as-a-Service, and Hippo Home Insurance Program.
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Use of Estimates | The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods. Significant items subject to such estimates and assumptions include, but are not limited to, loss and loss adjustment expense (“LAE”) reserves, provision for commission slide and cancellations, reinsurance recoverable on paid and unpaid losses and LAE, the fair values of investments, stock-based awards, warrant liabilities, contingent consideration liabilities, acquired intangible assets, deferred tax assets and uncertain tax positions, and revenue recognition. The Company evaluates these estimates on an ongoing basis. These estimates are informed by experience and other assumptions that the Company believes are reasonable under the circumstances. Actual results may differ significantly from these estimates. |
Recent Accounting Pronouncements | The Company has evaluated recent accounting pronouncements through the date the financial statements were issued and filed with the SEC and believes that there are none that will have a material impact on the Company’s consolidated financial statements. |
Investments (Tables) |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Fixed Maturities Securities and Short-Term Investments | The amortized cost and fair value of fixed maturities securities and short-term investments are as follows (in millions):
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Summary of Debt Securities, Available-for-Sale, Unrealized Loss Position, Fair Value | The following tables present the gross unrealized losses and related fair values for the Company’s investments in available-for-sale debt securities and short-term investments, grouped by duration of time in a continuous unrealized loss position as of March 31, 2023, and December 31, 2022 (in millions):
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Summary of Investments Classified by Contractual Maturity Date | The amortized cost and fair value of fixed maturities securities by contractual maturity are as follows (in millions):
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Summary of Investment Income | The Company’s net investment income is comprised of the following (in millions):
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Cash, Cash Equivalents, and Restricted Cash (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and Cash Equivalents [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Cash and Cash Equivalents | The following table sets forth the cash, cash equivalents, and restricted cash (in millions):
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Summary of Restrictions on Cash and Cash Equivalents | The following table sets forth the cash, cash equivalents, and restricted cash (in millions):
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Fair Value Measurement (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Fair Value, Assets Measured on Recurring Basis | The following table summarizes the Company’s fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis (in millions):
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Summary of Liabilities Measured on at Fair Value, Unobservable Input Reconciliation | The table below presents the changes in the contingent consideration liability valued using Level 3 inputs (in millions):
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Intangible Assets (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Indefinite-Lived Intangible Assets |
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|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Finite-Lived Intangible Assets |
|
Capitalized Internal Use Software (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Research and Development [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Capitalized Computer Software |
|
Other Assets (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Assets |
|
Accrued Expenses and Other Liabilities (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accrued Expenses and Other Liabilities |
|
Loss and Loss Adjustment Expense Reserves (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Liability for Unpaid Claims and Claims Adjustment Expense | The reconciliation of the beginning and ending reserve balances for losses and loss adjustment expenses, net of reinsurance is summarized as follows for the three months ended March 31, (in millions):
|
Reinsurance (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Effects of Reinsurance | The following tables reflect amounts affecting the consolidated statements of operations and comprehensive loss for reinsurance as of and for the three months ended March 31, 2023, and 2022 (in millions).
|
Geographical Breakdown of Gross Written Premium (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Gross Written Premium by Geographical Areas | Gross written premium by state is as follows (in millions):
|
Stockholders’ Equity (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Share-based Payment Arrangement, Option, Activity | The following table summarizes option activity under the plans:
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Schedule of Unvested Restricted Stock Units Roll Forward | The following table summarizes the RSU and PRSU activity for the three months ended March 31, 2023:
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Summary of Share-based Payment Arrangement, Expensed and Capitalized, Amount | Total stock-based compensation expense, classified in the accompanying consolidated statements of operations and comprehensive loss was as follows (in millions):
|
Net Loss Per Share Attributable to Common Stockholders (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | Net loss per share attributable to common stockholders was computed as follows:
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Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The potential shares of common stock that were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been antidilutive are as follows:
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Segments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | Financial information for the period ended March 31, 2022 has been revised to conform with the current year presentation.
(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).
|
Description of Business and Summary of Significant Accounting Policies (Details) |
3 Months Ended | |
---|---|---|
Sep. 29, 2022 |
Mar. 31, 2023
segment
|
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Reportable segments | 3 | |
Reverse stock split ratio | 0.04 |
Investments - Contractual Maturity (Details) - USD ($) $ in Millions |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Amortized Cost | ||
One year or less | $ 18.0 | |
After one year through five years | 75.2 | |
After five years | 7.7 | |
Amortized Cost | 146.0 | $ 127.3 |
Fair Value | ||
One year or less | 17.6 | |
After one year through five years | 72.9 | |
After five years | 7.6 | |
Fair Value | 141.0 | 121.1 |
Residential mortgage-backed securities | ||
Amortized Cost | ||
Securities | 22.3 | |
Amortized Cost | 22.3 | 20.4 |
Fair Value | ||
Securities | 21.0 | |
Fair Value | 21.0 | 18.9 |
Commercial mortgage-backed securities | ||
Amortized Cost | ||
Securities | 7.8 | |
Amortized Cost | 7.8 | 6.5 |
Fair Value | ||
Securities | 7.2 | |
Fair Value | 7.2 | 5.8 |
Asset backed securities | ||
Amortized Cost | ||
Securities | 15.0 | |
Amortized Cost | 15.0 | 14.2 |
Fair Value | ||
Securities | 14.7 | |
Fair Value | $ 14.7 | $ 13.7 |
Investments - Net Investment Income (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Investments, Debt and Equity Securities [Abstract] | ||
Interest on cash and cash equivalents | $ 1.2 | $ 0.2 |
Fixed maturities income | 1.4 | 0.2 |
Short-term investment income | 3.0 | 0.0 |
Total gross investment income | 5.6 | 0.4 |
Investment expenses | (0.2) | 0.0 |
Net investment income | $ 5.4 | $ 0.4 |
Investments - Narrative (Details) - USD ($) $ in Millions |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Investments, Debt and Equity Securities [Abstract] | ||
Securities on deposit with state regulatory authorities | $ 13.0 | $ 12.6 |
Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($) $ in Millions |
Mar. 31, 2023 |
Dec. 31, 2022 |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|---|---|
Cash and Cash Equivalents [Line Items] | ||||
Cash and cash equivalents | $ 188.9 | $ 194.5 | ||
Restricted cash | 31.8 | 50.0 | ||
Total cash, cash equivalents, and restricted cash | 220.7 | 244.5 | $ 381.6 | $ 818.7 |
Cash | ||||
Cash and Cash Equivalents [Line Items] | ||||
Cash and cash equivalents | 79.9 | 65.7 | ||
Money market funds | ||||
Cash and Cash Equivalents [Line Items] | ||||
Cash and cash equivalents | 58.6 | 87.1 | ||
Commercial paper | ||||
Cash and Cash Equivalents [Line Items] | ||||
Cash and cash equivalents | 20.4 | 26.8 | ||
U.S. government and agencies | ||||
Cash and Cash Equivalents [Line Items] | ||||
Cash and cash equivalents | 30.0 | 14.9 | ||
Fiduciary assets | ||||
Cash and Cash Equivalents [Line Items] | ||||
Restricted cash | 23.9 | 30.6 | ||
Letters of credit and cash on deposit | ||||
Cash and Cash Equivalents [Line Items] | ||||
Restricted cash | $ 7.9 | $ 19.4 |
Fair Value Measurement - Changes in Fair Value (Details) - Contingent Consideration - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Liability, beginning balance | $ 11.9 | $ 11.6 |
Payments of contingent consideration | (0.7) | (0.7) |
Changes in fair value | 0.8 | 3.2 |
Liability, ending balance | $ 12.0 | $ 14.1 |
Capitalized Internal Use Software (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
Dec. 31, 2022 |
|
Research and Development [Abstract] | |||
Capitalized internal use software | $ 61.7 | $ 56.4 | |
Less: accumulated amortization | (20.5) | (17.6) | |
Total capitalized internal use software | 41.2 | $ 38.8 | |
Amortization expense | $ 2.9 | $ 1.8 |
Other Assets (Details) - USD ($) $ in Millions |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid expenses | $ 17.5 | $ 17.4 |
Claims receivable | 10.6 | 9.0 |
Lease right-of-use assets | 26.1 | 27.6 |
Property and equipment | 5.1 | 5.4 |
Other | 5.4 | 4.2 |
Other assets | $ 64.7 | $ 63.6 |
Accrued Expenses and Other Liabilities (Details) - USD ($) $ in Millions |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Payables and Accruals [Abstract] | ||
Claim payments outstanding | $ 28.6 | $ 27.7 |
Lease liability | 27.8 | 28.9 |
Advances from customers | 16.8 | 10.2 |
Deferred revenue | 8.1 | 11.0 |
Employee related accruals | 7.2 | 6.2 |
Premium refund liability | 9.7 | 8.2 |
Fiduciary liability | 3.7 | 6.6 |
Contingent consideration liability | 12.0 | 11.9 |
Other | 18.7 | 17.5 |
Total accrued expenses and other liabilities | $ 132.6 | $ 128.2 |
Reinsurance - Ceded Reinsurance (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Written premiums | ||
Direct | $ 185.7 | $ 117.0 |
Assumed | 3.8 | 0.1 |
Gross | 189.5 | 117.1 |
Ceded | (168.2) | (116.5) |
Net | 21.3 | 0.6 |
Earned premiums | ||
Direct | 164.1 | 120.1 |
Assumed | 0.9 | 0.0 |
Gross | 165.0 | 120.1 |
Ceded | (151.2) | (111.1) |
Net | 13.8 | 9.0 |
Loss and LAE incurred | ||
Direct | 124.6 | 90.9 |
Assumed | 1.6 | 0.3 |
Gross | 126.2 | 91.2 |
Ceded | (88.5) | (68.7) |
Net | $ 37.7 | $ 22.5 |
Commitments and Contingencies (Details) - Pending Litigation |
Feb. 28, 2023
claim
|
Nov. 19, 2021
cause
|
---|---|---|
Litigation, Hippo and Chief Executive Officer Named Defendants | ||
Loss Contingencies [Line Items] | ||
Loss contingency, pending causes/claims of action, number | cause | 6 | |
Litigation, Hippo Named Defendant Only | ||
Loss Contingencies [Line Items] | ||
Loss contingency, pending causes/claims of action, number | claim | 18 |
Stockholders’ Equity - Restricted Stock Units and Performance Restricted Stock Units Activity (Details) - RSU and PRSU |
3 Months Ended |
---|---|
Mar. 31, 2023
$ / shares
shares
| |
Number of Shares | |
Unvested and outstanding, beginning balance (in shares) | shares | 2,881,984 |
Granted (in shares) | shares | 34,782 |
Released (in shares) | shares | (158,346) |
Canceled and forfeited (in shares) | shares | (155,827) |
Unvested and outstanding, ending balance (in shares) | shares | 2,602,593 |
Weighted Average Grant-Date Fair Value per Share | |
Unvested and outstanding, beginning balance (in dollars per share) | $ / shares | $ 41.15 |
Granted (in dollars per share) | $ / shares | 14.28 |
Vested (in dollars per share) | $ / shares | 60.86 |
Canceled and forfeited (in dollars per share) | $ / shares | 42.71 |
Unvested and outstanding, ending balance (in dollars per share) | $ / shares | $ 39.45 |
Stockholders’ Equity - Share-based Compensation Expense (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | $ 16.1 | $ 13.4 |
Losses and loss adjustment expenses | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | 0.5 | 0.7 |
Insurance related expenses | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | 1.2 | 1.3 |
Technology and development | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | 3.4 | 5.2 |
Sales and marketing | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | 4.3 | 2.4 |
General and administrative | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | $ 6.7 | $ 3.8 |
Income Taxes (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Income Tax Disclosure [Abstract] | ||
Effective income tax rate reconciliation, percent | (0.40%) | (0.30%) |
Unrecognized tax benefits | $ 3,500,000 | $ 1,100,000 |
Income tax interest or penalties incurred | $ 0 | $ 0 |
Net Loss Per Share Attributable to Common Stockholders - Computation (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Earnings Per Share [Abstract] | ||
Net loss attributable to Hippo - basic | $ (69.8) | $ (67.6) |
Net loss attributable to Hippo - diluted | $ (69.8) | $ (67.6) |
Weighted-average shares used in computing net loss per share attributable to Hippo - basic (in shares) | 23,198,491 | 22,464,802 |
Weighted-average shares used in computing net loss per share attributable to Hippo - diluted (in shares) | 23,198,491 | 22,464,802 |
Net loss per share attributable to Hippo - basic (in dollars per share) | $ (3.01) | $ (3.01) |
Net loss per share attributable to Hippo - diluted (in dollars per share) | $ (3.01) | $ (3.01) |
Segments - Narrative (Details) |
3 Months Ended |
---|---|
Mar. 31, 2023
segment
stateLicense
| |
Segment Reporting [Abstract] | |
Reportable segments | segment | 3 |
Number of state licenses | stateLicense | 50 |
Subsequent Events (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Apr. 18, 2023 |
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Subsequent Event [Line Items] | |||
Purchases of property and equipment | $ 0.0 | $ 2.4 | |
Subsequent Event | Spinnaker Insurance Company | Elevate Sabine Investors LP | |||
Subsequent Event [Line Items] | |||
Purchases of property and equipment | $ 26.0 |
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