Hippo Holdings Inc. · NYSE:HIPO
Hippo — Investor Day (September 2022)
61 slides from Hippo's investor day presentation, Sep 6, 2022
Slide 1: Investor Day September 2022
hippo INVESTOR DAY September 2022
Slide 2: Disclaimer
Disclaimer Certain statements included in this Presentation that are not historical facts are forward-looking statements for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements generally are accompanied by words
Slide 3: Today's Speakers
Today’s Speakers RICHARD MCCATHRON STEWART ELLIS ASSAF WAND President & CEO Chief Financial Officer Executive Chairman LUKASZ STROZEK CHRIS DONAHUE YUVAL HARRY DANIEL BLANARU Chief Technology Officer Chief Underwriting Officer Chief Revenue Officer Chief Growth Officer 3
Slide 4: Hippo's Value Proposition
Hippo’s Value Proposition Hippo is redefining an old, Our next-generation technology fragmented industry to address a platform gives us competitive 1 2 substantial pain point for and operational advantages homeowners whose needs are while providing our customers not currently met by insurers with a
Slide 5: Hippo is redefining an old, fragmented industry
1 Hippo is redefining an old, fragmented industry to address a substantial pain point for homeowners whose needs are not currently met by insurers 5
Slide 6: Homeowner anxiety and regret survey data
87% of homeowners experience anxiety and dread about what could go 1 wrong next 75% of homeowners have regrets about their 2 purchase 6 1. Source: Hippo quantitative survey conducted 4/6-4/28/2021 among 3,788 current and prospective customers 2. Source: Zillow, 75% of recent home buyers have regrets
Slide 7: The Hippo Difference
The Hippo Difference VS Proactive Reactive Ongoing Underwriting One-time Underwriting Proactive partnership with homeowners Financial compensation after to reduce the likelihood of losses losses incurred 7
Slide 8: Customers understand a proactive approach
Customers understand a proactive approach 8
Slide 9: Customer testimonial quote
“AN INSURANCE COMPANY THAT WOULD HELP ME ACTUALLY STAY ON TOP OF MAINTENANCE AND HOME PROTECTION WOULD BE SO MUCH OF A RELIEF. - Megan R 9
Slide 10: 100+ million households spend $750 billion per year
100+ MILLION HOUSEHOLDS SPEND $750 BILLION PER YEAR ON HOME SERVICES AND INSURANCE THERE’S NO DOMINANT PLAYER 10
Slide 11: Our Target Generation B(ETTER)
Our Target Generation B(ETTER) These homeowners are and . They proactively maintain their homes, and they welcome a more modern insurance brand. They are to protect their homes and to relieve some of the anxiety related to the uncertainty of homeownership. Especially for them, and aspiring to become
Slide 12: Help stomp out problems before they begin
ay HELP STOMP OUT PROBLEMS BEFORE THEY BEGIN Wy!!!) HOME INSURANCE q_. REINVENTED.
Slide 13: 13
13
Slide 14: Our next-generation technology platform
2 Our next-generation technology platform gives us competitive and operational advantages while providing our customers with a superior experience 14
Slide 15: Benefits of a Tech-Forward Approach
Benefits of a Tech-Forward Approach Benefits for our Customers Benefits for Hippo Superior Omnichannel Higher Customer Experience Distribution Operational Velocity • Differentiated consumer • Meeting the customers • Ability to adapt to rapid positioning where they want to purchase market conditions
Slide 16: Benefits – A Deeper Dive
Benefits – A Deeper Dive Superior Omnichannel Higher Customer Experience Distribution Operational Velocity • Quote in 60 seconds• Multi-channel including native • ML-driven lead prioritization & mobile segmentation • Dynamic Home Health Score • Rapid partner integration• Continuous Rate Calibration
Slide 17: How We Achieve These Benefits
How We Achieve These Benefits Superior Omnichannel Higher Customer Experience Distribution Operational Velocity Home Intelligence Platform Internet-scale Cloud platform Dynamic & Adaptive UX Modular structure allowing for rapid extensions 17
Slide 18: How We Achieve These Benefits
How We Achieve These Benefits Superior Omnichannel Higher Customer Experience Distribution Operational Velocity Home Intelligence Platform Proprietary Modern Tech Stack Agile DNA Data Ecosystem • 1st Party data sources• API-first mindset • Augmented 3rd Party data• Rapid experimentation • ML models•
Slide 19: Our Capabilities are Unique in the Industry
Our Capabilities are Unique in the Industry Hippo Legacy Players VS Verifiable, proprietary data ecosystem Customer-supplied, generic data Modern, cloud native, tech stack Legacy tech stacks Agility in our DNA Outdated development process 19
Slide 20: A modern home protection experience
WE BELIEVE IN SOMETHING BETTER A modern home protection experience, built with our platform Instant Purchase Real-Time, Seamless Updates Proactive Management via IoT device integrations and 3rd Pre-Filled Applications Party Data Sources: Virtual Home Concierge Real-Time Quotes in Any Channel New Sec
Slide 21: Behind a simple experience is advanced, modular technology
Behind a simple experience is advanced, modular technology… Smart Home Pre-fill Insurance Online Document Technology Catalog Bind Storage Rating Home Engine Care Rebuild Cost Estimator Data Sources Compliant ML Models Payments Proprietary Data 21
Slide 22: Accelerates new verticals and partners
…which accelerates new verticals and partners Smart Home Pre-fill Insurance Online Document Technology Catalog Bind Storage Rating Home Engine Care Rebuild Cost Estimator Data Sources Compliant ML Models Payments Proprietary Data 22
Slide 23: We explore novel data sources
We explore novel data sources… EXAMPLE Proof-of-concept Geo- Mapping to explore future possibilities 23
Slide 24: Analyze massive data sets for unique insights
…and can analyze massive data sets for unique insights EXAMPLE Proof-of-concept Claims Text Classification made possible with our NLP capabilities 24
Slide 25: Our platform drives process efficiency
Our platform drives process efficiency EXAMPLE 85 process automations in Q4 2021. • Automated quote generation for carriers with no integration capabilities • Elimination of manual policy rewrites $12M saved 150,000 • Customer data segmentation automation for email campaigns Hours Saved* • Automated
Slide 26: Delivering high scale, high throughput tech
Delivering high scale, high throughput tech for our customers Pushing 1,400 Code Continuous development / 2,000,000 external API Commits per week – integration – building our software calls per week over 20 per engineer 50+ times per day >20,000,000 internal calls Uptime at >99.99% Scaled our cloud
Slide 27: Benefits of a Tech-Forward Approach
Benefits of a Tech-Forward Approach Superior Omnichannel Higher Customer Experience Distribution Operational Velocity • Differentiated consumer• Meeting the customers • Ability to adapt to rapid positioning where they want to purchase market conditions • Easier purchase experience• Embedded distribu
Slide 28: Elite Insurance Team
El Elite I ite Insur nsurance ance Team Team TORBEN OSTERGAARD MICHEL STIENSTRA GRACE HANSON RICH PRIMERANO CEO Spinnaker Chief Risk Officer Chief Actuary Chief Claims Officer TRACY BOWDEN LORI DICKERSON FOUCHÉ JAY NICHOLS SANDRA WIJNBERG General Counsel Board Member Board Member Board Member 28
Slide 29: Underwriting: Significant Gross Loss Ratio Improvement
Underwriting Significant Gross Loss Ratio Improvement 1 Gross Loss Ratio Flexible Tech Stack 161% -83PP Data Analytics Smart Risk Retention 78% New Products & Services Q2’21 Q2’22 29 1. Gross loss ratio is expressed as a percentage, as the ratio of the gross losses and loss adjustment expenses (incl
Slide 30: Underwriting Portfolio Management Strategy
Underwriting Portfolio Management Strategy Target Customer Geographical Diversification Smart Risk Taking • Generation B(etter)• Protect against volatility • Compelling Value Prop• Selective Risk-Retention • Mitigation > Indemnification 30 Applies to the Hippo underwritten portfolio
Slide 31: Underwriting Technology-driven Achievements
Underwriting Technology-driven Achievements Launched in new states High volume of changes in 2022 • Significant changes to rate plans• Incline: Launched in MA & NC + builder partnerships in 5 states • More competitive rates for targeted customers• Spinnaker: Launched in NY • Material increase to ove
Slide 32: Underwriting Data Integration
Underwriting Data Integration Benefits For Our Customers Benefits For Hippo Gross Loss Ratio Premium Retention Name & Bind Quote Address Policy ~78% ~90% Q2’22 2022 1 60 seconds 5 minutes Data Integration • Better Loss Ratio • Quote in 60 seconds • Better Renewal Retention • Bind policy in 5 minutes
Slide 33: Benefits of a Tech-Forward Approach
Benefits of a Tech-Forward Approach Superior Omnichannel Higher Customer Experience Distribution Operational Velocity • Differentiated consumer• Meeting the customers • Ability to adapt to rapid positioning where they want to purchase market conditions • Easier purchase experience• Embedded distribu
Slide 34: Meeting Customers Where They Are
Meeting Customers Where They Are Direct to Customer Agents Embedded Partners Value Proposition Fast and accurate quote and Dedicated tools allowing agents Tech embedded into partner purchase online or over the to focus on customer needs sale flows enables access to phone with a Hippo agent and not o
Slide 35: Hippo's Builder Channel Partner Example
Hippo’s Builder Channel Partner Example - Builders Dedicated tech stack receives Coverage is tailored to each all home specs via API home’s unique attributes Home is bid out with a variety Digital customer experience of carriers, including Hippo completes transactions faster Integration with Builder
Slide 36: Benefits of a Tech-Forward Approach
Benefits of a Tech-Forward Approach Superior Omnichannel Higher Customer Experience Distribution Operational Velocity • Differentiated consumer• Meeting the customers • Ability to adapt to rapid positioning where they want to purchase market conditions • Easier purchase experience• Embedded distribu
Slide 37: Home Services
Home Services Our proactive offerings to-date Hippo’s Smart Smart Home Home and virtual services offerings have benefitted customers for years 37
Slide 38: Realizing our vision
Realizing our vision AN INTEGRATED HOME PROTECTION PLATFORM TO HELP PREVENT SMALL ISSUES FROM BECOMING BIG PROBLEMS Protection Intelligence Services 38
Slide 39: Protection: Expanded Smart Home Program
Protection EXPANDED SMART HOME PROGRAM Top brands + insurance discount Self or professionally monitored Expanding a strategic collaboration 39
Slide 40: Intelligence: Home Health + Maintenance Checklist
Intelligence HOME HEALTH + MAINTENANCE CHECKLIST Know your home and how to care for it. 40
Slide 41: Services: Hippo Home Care
Services HIPPO HOME CARE Expert advice Comprehensive check-up Personalized checklist 41
Slide 42: Services: Book a Pro
Services NEW BOOK A PRO Get more done Improve your Home Health 42
Slide 43: Big ambitions going forward
Big ambitions going forward 43
Slide 44: Combining proactive home protection with insurance results in a superior business model
3 Combining proactive home protection with insurance results in a superior business model 44
Slide 45: How we earn: fees, commissions and premium income
We leverage technology to help customers protect their homes. Financially, we earn our reward through: Recurring Earned Fee Commissions Premium Income • MGA and ceding commission in • Underwriting income• Policy Fees exchange for sourcing homeowners risk for reinsurers • Future monetization of and 3
Slide 46: Healthy unit economics and long customer lifetimes
Healthy unit economics supported by long customer lifetimes, increasing contribution over time, and cost-effective distribution strategy Lifetime Customer 1 2 Value Acquisition Cost ~4x • +8 yr customer lifetime• Multi-channel distribution LTV/CAC • Increasing premium over time• Embedded insurance p
Slide 47: Home Protection Customers
Home Protection Customers Insurance Services Proactive Tech (Agency & Carrier) & Services Insurance Customers 47
Slide 48: Business Model Evolution
Business Model Evolution Primary Business Model MGA / Carrier Home Protection Platform Keys to Success / Drivers of Value Differentiated Customer Risk Selection and Participation Experience Premium Growth and Growth in Non-Risk Recurring Improving Loss Ratio Commission and Fee Revenue 48
Slide 49: We are executing on our strategy
4 We are executing on our strategy and have a clear line of sight to future success 49
Slide 50: Primary focus has been improving our loss ratio
Our primary focus over the past year has been on improving our loss ratio 1 GEO Diversification shifted our exposure away from CAT prone states 2 Example – TX premium by zip code heatmap 3 4 50
Slide 51: Continued investing in growth
But we have also continued investing in growth Expanded breadth of home Expanded our Launched new embedded protection services GEO coverage insurance partnerships • Mobile App• Reached 40 states, with • PennyMac addition of key states • Home Care Mobile Experience (FL, MI, NY, NC, MA)• Amerisave • E
Slide 52: Significant loss ratio improvement with healthy top-line growth
The result: Significant loss ratio improvement while also delivering healthy top-line growth 1 2 Gross Consolidated Loss Ratio , % Total Generated Premium In-Force , $m -83 PP +36% 680 161% 634 128% 602 553 89% 4 3 78% 76% 501 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 1. We use Gro
Slide 53: As we look ahead…
As we look ahead… Enhance Customer Targeting Customer Growth Expand Distribution Partnerships Growth in Revenue Expand Home Protection Services and Profit per Customer Continued Improvement in Loss Ratio Fixed Cost Leverage Expense Discipline 53
Slide 54: We expect to double our consumer customer base by 2025
We expect to double our consumer customer base by 2025 Insurance Customer Base (Agency + MGA) (K) Targeted marketing to Generation Better 2.2x 720-760 Adding new builders to platform Additional embedded insurance partnerships Penetration of recently entered states 330-340 2022 2025 54
Slide 55: We expect increasing Revenue per Customer
We expect increasing Revenue per Customer Revenue, $m 3.6x Cross-sell non-home products via agency $420-450 Increase share of builder business (higher revenue monetization) Attach home protection services to our customer base Growth of retained risk premiums in preferred markets $119-121 Increase in
Slide 56: Business will be less exposed to risk
Over time, our business will be less exposed to risk Gross Placed Premium vs Gross Written Premium More stable bottom-line profitability Higher flexibility to attach the Gross Placed 24% 1 best product to our customers Premium 52% Ease on regulatory capital requirements Gross Written 76% 2 Premium 4
Slide 57: Business will be driven more by Builders
Over time, our business will also be driven more by Builders Builder Premium vs. Non-Builder Premium, out of total 1 Consumer Premium Broadening access to preferred customer profile Builder 24% 32-34% More predictable underlying UW performance and financial results Non-Builder 76% 66-68% 2022 2025 5
Slide 58: Premium retention expected to improve
We expect premium retention to improve as our book matures and as we expand our home protection service offering within our customer base 1 Premium Retention , % 92-94% Retention rates increase with age of 89% customer cohort Builder channel increase should drive higher retention (retention higher i
Slide 59: EBITDA Profitability by Q4 2024
We expect to achieve EBITDA Profitability by Q4 2024… 2022-2025 Drivers of Adj EBITDA change 20-30 (197)-(203) 2022 Improved Reinsurance Growth in Growth in Fixed Cost Home Protection 2025 Adjusted Loss Ratio Structure Agency Builder Channel Absorption Services Adjusted EBITDA EBITDA 59
Slide 60: Cash flow positive with a significant cash cushion
… and to turn cash flow positive with a significant cash cushion 1 Cash balance at end of period, $m 840 400 Substantial cash cushion at projected break even to protect against unforeseen events 2021 2022 2023 2024 2025 1. Includes Cash, cash equivalents, short-term investments, and fixed maturities
Slide 61: Hippo's Value Proposition
Hippo’s Value Proposition Hippo is redefining an old, Our next-generation technology fragmented industry to address a platform gives us competitive 1 2 substantial pain point for and operational advantages homeowners whose needs are while providing our customers not currently met by insurers with a