Hippo Holdings Raises Full-Year Guidance as Growth Accelerates
Hippo Holdings posted 61.5% growth in gross written premium to $482 million, its fastest pace in at least a year, and raised its full-year outlook across every major metric.
Hippo Holdings (HIPO) grew gross written premium 61.5% to $482 million in the second quarter, extending an acceleration that has now run four straight quarters — from 33% growth in the third quarter of 2023 to 40%, then 58%, then 61.5%.
The growth came as Hippo's underlying profitability continued to normalize after a stretch of results distorted by one-time items. Net income of $98 million in the third quarter of 2023 included a $91 million gain on the sale of Hippo's homebuilder distribution network; with no comparable gain since, reported net income has settled into a lower but steadier range, coming in at $10 million this quarter versus $1 million a year earlier. Adjusted net income, which strips out such items, rose 23.5% year-over-year to $21 million, a slower rate of improvement than the roughly 149% jump reported in the first quarter, when Hippo was still lapping California wildfire losses from early 2023.
Revenue rose 23.4% to $145 million, accelerating from 10% growth in the first quarter. The combined ratio improved 4 points year-over-year to 95.8%, a smaller gain than the 60-point improvement Hippo posted in the first quarter, when the comparison against wildfire-inflated 2023 losses was easier. Expense discipline did more of the work this quarter: the expense ratio improved 8 points to 45.4% from 53.1%, the largest such gain in recent quarters and evidence of operating leverage as premium volume scales. That offset a 3-point rise in the net loss ratio to 50.4%, which was attributed to a smaller benefit from favorable prior-year reserve development — 2% this quarter versus 7% a year earlier. The accident-year loss ratio excluding catastrophes, a cleaner read on underlying claims trends, improved a modest 1 point to 45.8%.
Casualty and Commercial Multi-Peril lines drove the volume growth, with Casualty GWP up 177% to $180 million and CMP up 65% to $138 million, even as both growth rates decelerated from the first quarter's 193% and 89% gains. Casualty's share of total GWP rose to 37% from 30% in the first quarter, while Homeowners fell to 22% from 26% of the mix even as its own growth ticked up to 7%.
Net retention jumped to 38% from 31% in the first quarter, reversing a decline that had run from 39% in the third quarter of 2023. The increase reflected a change in its reinsurance program structure that added roughly $21 million of net written CMP premium and $6 million of net written Casualty premium. That structural shift helped net written premium grow 71% to $183 million, outpacing GWP growth for the first time in several quarters after net written premium had grown just 1% in the first quarter versus 58% GWP growth. Total assets grew to $2.32 billion from $1.91 billion at year-end 2023, with loss and LAE reserves and unearned premiums both scaling alongside the premium base.
Book value per share rose 4.0% from $16.97 at year-end 2023 to $17.65, a faster sequential pace than the 2% gain reported at the end of the first quarter.
Hippo raised its full-year guidance across every major line. The company now expects GWP of $1.65 billion to $1.7 billion, up from a prior range of $1.45 billion to $1.525 billion, and adjusted net income of $62 million to $70 million, up from $48 million to $56 million. The combined ratio guide improved to 99%-101% from 103%-105%, and the catastrophe loss ratio guide was lowered to 10% from 13%. Measured against the long-term target Hippo laid out with its fourth-quarter 2023 results — surpassing $2 billion in GWP and $125 million in adjusted net income by the end of 2028 — the raised 2024 guidance points to a faster pace toward that goal than previously indicated.