Hippo Holdings Inc. (HIPO) Q4 2025 Earnings Call Transcript
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Overview
The earnings call reveals strong financial performance with significant growth in NWP, net income, and GWP across various segments, despite a decline in homeowners GWP. The company has improved its net loss and expense ratios, indicating better operational efficiency. The Q&A section provides additional positive insights, such as strategic relaunches and thoughtful risk management. With raised guidance for 2025 and optimistic future strategies, the overall sentiment is positive, likely leading to a stock price increase of 2% to 8% over the next two weeks.
Key Financial Performance
Gross Written Premium (GWP) For the year, GWP was over $1.1 billion, an increase of 24% year-over-year. This growth was driven primarily by strong performance in casualty and commercial multi-peril lines, offset slightly by a modest contraction in homeowners.
Net Written Premium (NWP) NWP for the year was $422 million, up 13% year-over-year. This growth was achieved while improving the combined ratio by 25 percentage points.
Net Income Net income for the year was $58 million, representing a $98 million improvement year-over-year. This was driven by top-line growth, stronger underwriting performance, and a $45 million net gain from asset sales.
Homeowners Gross Written Premium Homeowners GWP was $379 million for the year, down approximately 10% year-over-year. The decline was due to prioritizing profitability over growth amidst heightened competition in E&S.
Renters Gross Written Premium Renters GWP was $175 million for the year, a 19% increase year-over-year. This growth was attributed to the program's maturity and continued innovation.
Commercial Multi-Peril Gross Written Premium Commercial multi-peril GWP grew 75% year-over-year to $265 million. Growth originated from programs with long track records and attractive underwriting results.
Casualty Gross Written Premium Casualty GWP grew 92% year-over-year to $264 million. Growth came from a diversified group of programs with modest limits profiles.
Net Loss Ratio The net loss ratio improved by 17 percentage points year-over-year to 60%, driven by better CAT and non-CAT loss experience.
Net Expense Ratio The net expense ratio improved by 8 percentage points year-over-year to 53%, driven by the scalability of the platform.
Net Combined Ratio The net combined ratio improved by 25 percentage points year-over-year to 113%, reflecting improvements in both loss and expense ratios.
Q4 Gross Written Premium GWP in Q4 grew 40% year-over-year to $288 million, driven by strong performance in casualty and commercial multi-peril lines.
Q4 Net Income Q4 net income was $6 million, down from $44 million in the prior year quarter. The decline was due to a $46 million gain from the sale of a majority stake of First Connect in the prior year.
Q4 Adjusted Net Income Q4 adjusted net income grew 20% year-over-year to $18 million, driven by improved underwriting performance.
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Operating Highlights
Homeowners Line: Gross written premium of $379 million in 2025, down 10% from the prior year. Focused on profitability over growth due to heightened competition. Achieved a 15% average renewal premium increase. Relaunched traditional new policies with selected partners after product improvements.
Renters Line: Gross written premium of $175 million in 2025, a 19% increase year-over-year. Continues to grow with attractive profitability.
Commercial Multi-Peril Line: Gross written premium of $265 million in 2025, a 75% increase year-over-year. Growth driven by programs with long track records and attractive underwriting results.
Casualty Line: Gross written premium of $264 million in 2025, a 92% increase year-over-year. Growth from diversified programs with modest limits profiles. Risk retention levels at 3% for 2025.
Market Growth: Expanded reach into attractive markets through technology-driven customer experience. Actively quoting business with over 50 homebuilders nationwide, up from 6 previously.
Operational Efficiency: Improved combined ratio by 25 percentage points in 2025. Net loss ratio improved by 17 percentage points to 60%. Net expense ratio improved by 8 percentage points to 53%.
Strategic Diversification: Broadened premium base across personal and commercial lines, reducing reliance on homeowners line. Homeowners accounted for 34% of gross written premium in 2025, down from 47% in 2024.
Risk Management Optimization: Leveraged diversified portfolio and risk management capabilities to optimize performance. Maintained a disciplined approach to underwriting and claims management.
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Risk or Challenges
Homeowners Line of Business: Gross written premium declined by 10% in 2025 due to prioritizing profitability over growth amidst heightened competition in the E&S market. This indicates challenges in maintaining growth while ensuring profitability.
California Wildfires: The severe wildfires in California in early 2025 impacted the company's gross loss ratio, highlighting exposure to catastrophic events and the associated financial risks.
Program Performance Variability: Not all programs performed as expected, leading to some being placed into runoff. This reflects challenges in maintaining consistent performance across all programs.
Reinsurance Dependency: The casualty business had a low risk retention level of 3% in 2025, relying heavily on reinsurance support. This dependency could pose risks if reinsurance terms become less favorable.
Expense Ratio Increase: The net expense ratio increased by 4 percentage points in Q4 2025 due to the sale of the Homebuilders Distribution Network, which previously contributed to profitability. This indicates challenges in managing operational costs.
Catastrophic Loss Exposure: The company assumes a 13% CAT loss ratio for 2026, slightly reduced from 15% in 2025, but remains exposed to catastrophic events, which could impact financial performance.
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Guidance & Outlook
Gross Written Premium Growth: Expected to grow between 27% and 36% in 2026, reaching a range of $1.4 billion to $1.5 billion. Growth will be driven by newer lines of business and a return to growth in the homeowners segment.
Net Written Premium Growth: Projected to grow between 19% and 28% in 2026, reaching a range of $500 million to $540 million.
Net Combined Ratio: Expected to improve by 8 to 10 percentage points, reaching a range of 103% to 105% in 2026. This improvement will be driven by operating leverage and platform scalability.
Adjusted Net Income: Forecasted to increase to a range of $45 million to $55 million in 2026, compared to $18 million in 2025.
Catastrophe (CAT) Loss Ratio: Anticipated to reduce to 13% in 2026, down from 15% in 2025, supported by diversification into less CAT-exposed lines of business.
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Shareholder Return Plan
Share Repurchase: The company executed a share repurchase in the third quarter of 2025, which contributed to the increase in total Hippo shareholders' equity at the end of the quarter.
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Key Q&A
Q:Can you talk about the relaunch of the homeowners book outside of builders, including your go-to-market strategy and the competitive environment?
A:The company has retooled its traditional homeowners product line over the past two years, focusing on reducing volatility and diversifying geographically. They have taken considerable rate increases, improved terms and conditions, and adjusted coverage language. The product is now considered rate adequate and profitable. The relaunch is being done thoughtfully, starting in a few states with strategic partners, and will expand to other states and direct-to-consumer channels. Results will be shared in the next quarter.
Q:What sort of business underlies the casualty business, and what is the tail risk? Can you discuss the timeline for increasing retention?
A:The casualty business includes cyber insurance, commercial general liability (GL) for small businesses, construction projects, and commercial auto. The portfolio is diverse, with a small aggregate exposure (3% in 2025) and an average exposure per account of $300,000. Claims are expected to settle within two years, making it short-tail in nature. The company is increasing risk participation selectively and thoughtfully, with plans to grow retention in 2026 and beyond. They also use third-party reinsurance to manage tail or larger limit exposures.
Q:What drove the reserve development in the quarter?
A:The reserve development was mostly driven by one large liability claim in the homeowners business. For the full year, the company released about $10 million, showing a positive trend. In Q4, there was 1 point of adverse development from the prior accident year but 3 points of positive development from earlier quarters in 2025. Overall, the reserve position entering 2026 is strong.
Q:How are renewal premium increases in homeowners expected to trend moving forward relative to the 15% in 2025?
A:The company achieved a 15% premium increase in 2025, which was above loss cost trends. For 2026, they do not expect another 15% increase but anticipate premiums to continue rising, driven by rate adjustments and inflation. The increases are expected to outpace loss cost trends, and the company is confident in maintaining profitability by only writing business with expected profitable loss ratios.
Q:Review of Unclear Management Responses
A:Management avoided directly answering a part of the question about the competitive environment for the homeowners book relaunch. While they mentioned being competitive on business they want to write and not displaying quotes for unprofitable business, they did not provide specific details or clarity on the broader competitive landscape.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Baldwin homebuilder
CEO technology
California position
Claims underwriting
Commercial Lines
ES line
Form information
Instructions floor
Lines multi
Net premium
Renters premium
Today claim
Today quote
administrator claim
approach loss
approach term
authority limit
builder channel
case program
casualty end
casualty program
channel rate
exception
income result
liability
line homeowner
market
peril
portfolio risk
premium increase
process
program partner
release
retention level
underwriting guideline
HIPO Transcript
Hippo Holdings Inc. (HIPO) Q4 2025 Earnings Call Transcript
Positive2-25
The earnings call reveals strong financial performance with significant growth in NWP, net income, and GWP across various segments, despite a decline in homeowners GWP. The company has improved its net loss and expense ratios, indicating better operational efficiency. The Q&A section provides additional positive insights, such as strategic relaunches and thoughtful risk management. With raised guidance for 2025 and optimistic future strategies, the overall sentiment is positive, likely leading to a stock price increase of 2% to 8% over the next two weeks.
Hippo Holdings Inc. (HIPO) Q3 2025 Earnings Call Transcript
Positive11-5
The company shows strong financial improvements, with significant growth in adjusted net income and gross written premiums. The raised guidance for net income and improved loss ratios indicate positive trends. The Q&A section supports these findings, with management addressing growth plans and diversification efforts confidently. Share repurchases further signal positive shareholder returns. Despite some risks, the optimistic guidance and financial performance suggest a positive stock price movement.
Hippo Holdings Inc. (HIPO) Q2 2025 Earnings Call Transcript
Positive8-6
The earnings call reflects strong financial performance with a 31% revenue increase and a significant improvement in net income. The Q&A session did not reveal major risks, and management's guidance remains stable with some upside potential. The positive factors, including a 16% gross written premium increase and improved loss ratios, outweigh any concerns about the opaque reinsurance details. Overall, the sentiment is positive, likely leading to a moderate stock price increase in the short term.
Hippo Holdings Inc. (HIPO) Q1 2025 Earnings Call Transcript
Unknown5-7
The earnings call reflects strong revenue growth and optimistic guidance, but significant concerns remain. The impact of the LA wildfires on loss ratios, a substantial adjusted EBITDA loss, and pending regulatory approval for a critical capital raise weigh heavily. Competitive pressures and economic factors also pose risks. Despite raised revenue guidance and reduced expenses, the lack of immediate profitability and uncertainty around the surplus note issuance negatively impact sentiment. Without a clear market cap, the reaction could vary, but the overall sentiment leans negative due to these uncertainties.
HIPO Slides
HIPO Report
Frequently Asked Questions
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