Hippo Holdings Inc. · NYSE:HIPO
Hippo — Reinvent Technology Partners Z — SPAC Merger (July 2021)
66 slides from Hippo's SPAC merger presentation, Jul 16, 2021
Slide 1: Filed by Reinvent Technology Partners Z Pursuant to Rule 425
Filed by Reinvent Technology Partners Z Pursuant to Rule 425 under the Securities Act of 1933 and deemed filed pursuant to Rule 14a-12 of the Securities Exchange Act of 1934 Subject Company: Hippo Enterprises Inc. Commission File No. 001-39711 Date: July 16, 2021Filed by Reinvent Technology Partners
Slide 2: Important Information and Disclaimers
This presentation (this “Presentation”) was prepared by Reinvent Technology Partners Z (“RTPZ”) and Hippo Enterprises Inc. (“Hippo”) in connection for convenience, trademarks and trade names referred to in this Presentation may appear with the ® or ™ symbols, but such references are not with their p
Slide 3: Reinvent Technology Partners Z Leadership
Reid Mark Michael David Daniel Matt Hoffman Pincus Thompson Cohen Urdaneta DeGraw • Co-lead Director of RTPZ • Co-lead Director of RTPZ • CEO, CFO & Director of RTPZ • Secretary of RTPZ • Investment Partner at Reinvent Capital • Principal at Reinvent Capital • Partner at Greylock • Founder and Chair
Slide 4: Reinventing Homeowner's Insurance: Hippo
Reinventing Homeowner’s Insurance: Hippo Reinvent goal: to partner with amazing Hippo offers opportunity for founders with game changing technologies who Venture Capital @Scale are inventing or reinventing industries Reinvent vision for Hippo: Homeowners Experience as entrepreneurs, operators, inves
Slide 5: Hippo is an Attractive Opportunity on Many Dimensions
Hippo is an Attractive ü Adaptive Management Team Opportunity on Many ü Technology & Insurance Expertise Dimensions ü Disciplined Underwriters ü Customer Value Proposition ü Homeowners Insurance Market Structure ü Housing Macro Fundamentals ü Strong Unit Economics ü Relative and Fundamental Valuatio
Slide 6: Table of Contents
Table of Contents Hippo: Disrupting Homeowners Insurance 7 Executive Investment Summary 22 Historical Context 38 Upside Drivers 48 Hippo versus Peers 55 Unit Economics and Key Financial Drivers 62 6Table of Contents Hippo: Disrupting Homeowners Insurance 7 Executive Investment Summary 22 Historical
Slide 7: Hippo: Disrupting Homeowners Insurance
Hippo: Disrupting Homeowners Insurance 7Hippo: Disrupting Homeowners Insurance 7
Slide 8: The Opportunity in Homeowners Insurance is a Massive, Growing Market
The Opportunity in Homeowners Insurance is a Massive, Growing Market Homeowners Small penetration assumptions drive large Insurance is Massive potential outcomes for Hippo • Large and Growing Market: US Homeowners Insurance is a $100B+ Market Growing $179B (1) at 5%+ annually • Fragmented: only one
Slide 9: Complexity Creates Opportunity for Disruption
Complexity Creates Increasing technical complexity Climate changeà extreme Opportunity for of homes and insured products weather departing from past inside models Disruption Aging agent populationà shift Unique Attributes and Drivers Lack of product innovation towards DTC, importance of of Homeowner
Slide 10: Complexity Creates Opportunity for Differentiation
Complexity of home insurance market drives increasing opportunities for Complexity Creates differentiation versus incumbents on product, distribution, customer Opportunity for experience, and underwriting as technology further embeds in industry Differentiation… = Hippo focus today New builds & uniq
Slide 11: Tech Native Players Can Capture Disproportionate Share of Premium Growth
…Creating Ability for Tech Native Players to Capture Disproportionate Share of Future Premium Growth Auto insurance customer journeys have migrated towards DTC • The auto insurance industry serves as an important example of or mixed channel acquisition journeys how quickly channel distribution can s
Slide 12: Structural Changes Underway in Distribution Channels
Structural Changes Underway in Distribution Channel Diversification is Channels From Agents to DTC Starting to Take Hold in Homeowners Insurance Following Auto, Homeowners Market Starting Macro trends favor tech-forward challengers to Adopt Direct Distribution 2009-17 US homeowner’s direct premiums
Slide 13: Technology Can Help Reduce Frequency and Severity of Claims
Technology Can Help Reduce the Frequency and Technology and Data Are Severity of Claims Events Going to Transform Homeowners Insurance Data & Technology Penetration Technology Loss Frequency Loss Severity Loss Ratio Margins Today Opportunity • Low predictability has led to low technology adoption to
Slide 14: Homeowners Insurance is Ready for a Better Solution
Homeowners Insurance is Ready for a Better Solution • Slow – often takes days to secure a policy • Antiquated coverage–fur • Adversarial – customers have • Customer-supplied data leads coats, gold bullion, stamp come to expect painful claims to questions customers don’t collections, pewter bowls, an
Slide 15: Technology Across the Customer Journey
Technology Can Help From Inception to Technology Can Help Across the Claims Management Customer Journey, From Inception to Claims Processing Illustrative Customer Lifecycle Year 1 Claim Severity & Customer Experience Underwriting Proactive Monitoring Claims Processing Frequency Reduction rd • Improv
Slide 16: IoT Devices Enable Next-Gen Prevention Capabilities
IoT Devices Enable Next-Gen Prevention Capabilities Ample Opportunity For Use of IoT Devices to Drive Down Hippo Smart Home program is the most widely adopted in the (1) Loss Frequency and Severity US Home Insurance space (2)(3) Homeowners Insurance Losses By Cause, 2014-2018 • Kits include devices
Slide 17: Experiments with IoT Devices Highlight Potential for Loss Mitigation
Experiments Conducted with IoT Devices Highlight Huge Potential for Loss Mitigation (1) IoT on Commercial Properties Home IoT Devices Shown to Have Large Impact (2) on Water Damage • Church Mutual started testing IoT in commercial properties in • Test program was conducted between Moen and LexisNexi
Slide 18: Data Provides Opportunity to Capture Underinsured and Uninsured
Data Provides Opportunity to Capture Underinsured “Whitespace” and Santa Rosa Mayor Chris Rogers, whose city was hit by Uninsured “Greenfield” the Tubbs fire last year, testified at a state legislative committee hearing earlier this year that two-thirds of the people affected by that Underinsured (1
Slide 19: Rare Team Combining Insurance and Technology Expertise
Rare Team That Combines Best-in-Class Insurance and Expertise Across Technology Expertise Allowing Hippo to Drive Quality & Technology and Differentiated Growth Insurance Technology Insurance • Founder & CEO of First Connect Insurance Services • Founded Hippo in 2015 • EVP & CRO at Home Value Assaf
Slide 20: Hippo is Uniquely Positioned to Win
Innovators Dilemma Prevents Industry Incumbents From Hippo is Uniquely Innovating Product, Focusing on True Customer Positioned to Win Incumbent Approach: Hippo Approach: • Customer Acquisition: channel conflict with DTC • Customer Acquisition: omni-channel based on and existing agent base customer
Slide 21: Hippo: The Technology-Native Homeowners Insurance Provider
Hippo: The Technology-Native Homeowners Insurance Provider Incumbents Hippo • Legacy Tech StacküIoT Partnerships rd • Reliance on Historical üFlexible Architecture for 3 Customer Data Party Data • Outdated Pricing ModelsüDeep Tech Expertise as Data Availability Evolves • Focus on Agent versus Custom
Slide 22: Executive Investment Summary
Executive Investment Summary 22Executive Investment Summary 22
Slide 23: Reinvent Thesis
Reinvent Thesis Team that Combines World Class Technology and Immense Potential TAM à Small Penetration = 1 5 World Class Insurance Specialists Large Outcomes (1) (1) Hippo combines world class talent from insurance industry with world class Homeowners insurance market is a $100B+ TAM market growing
Slide 24: Team Combining World Class Technology and Insurance Specialists
1 Team that Combines World Class Technology and World Class Insurance Specialists Hippo attracts world class talent across technology and insurance World Class Team Broad and Deep Talent Across Team • [Show depth and breadth of team] Diverse and Experienced Board of Directors Amy Erret Eric Feder Hu
Slide 25: Industry Attractive With Opportunities for Technology Differentiation
2 Homeowners Insurance Industry Attractive With Multiple Opportunities for Technology Differentiation Hippo Positioned to Take Advantage of Unique Opportunity Ripe for Technology Opportunities for Attractive Market ++ Disruption Technology Differentiation • Minimal technology disruption to date • In
Slide 26: A Focus on the Customer Wins Over the Long-Term
2 Homeowners Insurance Industry Attractive With Multiple Opportunities for Technology Differentiation • Hippo’s focus on the customer provides a meaningfully better experience for consumers than incumbent home insurance carriers A Focus on the Underlying • As technology becomes more important, home
Slide 27: Highly Attractive Business Model & Unit Economics
3 Highly Attractive Business Model & Unit Economics Hippo’s Business Model Allows it to Be Adaptable Business Model Strategic Benefits Earn commissions, policies, • Asset light, visible and recurring revenue stream MGA • No balance sheet exposure taken (Managing General Agent) and service fees • Abi
Slide 28: Backing of Best-in-Class Reinsurers Helps Mitigate Volatility
3 Highly Attractive Business Model & Unit Economics Backing of Best-in-Class Reinsurers Helps Mitigate Volatility Reinsurance Structure / Approach Key Reinsurance Partners • 2021 reinsurance treaty • Focus on partnering with best-in-class reinsurers oversubscribed to cede risk • Strong demand from •
Slide 29: Reinsurance Mitigated Impact of 2021 Texas Freeze
3 Highly Attractive Business Model & Unit Economics Reinsurance programs mitigated impact Backing of Best-in-Class of 2021 Texas Freeze to Hippo’s Earnings Reinsurers Helps Mitigate Volatility Reinsurance à net impact of events to Hippo much smaller than gross loss impact Impact of Texas Winter Free
Slide 30: Compelling Unit Economics
3 Highly Attractive Business Model & Unit Economics Compelling Unit Economics Hippo has attractive customer dynamics… …and compelling unit economics ~$1,900 ~$1,200 Average Premium 5.4x 8+ Years ~$350 (1) Average Customer Life Customer Acquisition Lifetime ( 2) Cost Value (CAC) (LTV) (1) William Bla
Slide 31: Non-Heroic Need to Believe on Underwriting
4 Non-Heroic Need to Believe on Underwriting Hippo “Need to Believe” Business model that improves with scale Don’t need to believe heroic assumptions for Hippo to be an attractive investment. Increased Scale Execution, disciplined underwriting, technology focus can generate attractive Improved Unit
Slide 32: Potential Path to Steady State Loss Ratio
4 Non-Heroic Need to Believe on Underwriting Achieving standard loss ratios as the business and insurance book scale creates a very Potential Path to Steady compelling outcome for Hippo State Loss Ratio Over Time Loss Ratio for Hippo Programs Only Industry (3) Benchmark 68% -5% -6% -9% -6% -4% -4% 2
Slide 33: Geographic Diversification Progress Underway
4 Non-Heroic Need to Believe on Underwriting Geographic Diversification Progress Underway (1) • Over calendar year 2020, Hippo launched services in Share of Hippo Programs New Premium by State 2019-2020 % 12 new states, bringing the total to 32 states • In the fourth quarter of 2019, 55% of Hippo ne
Slide 34: Immense Potential TAM, Small Penetration, Large Outcomes
5 Immense Potential TAM à Small Penetration = Large Outcomes Modest Penetration Still Leads to a Highly Attractive Business Hypothetical Returns on Various Levels of Market Penetration Hippo Today % Penetration <0.3% 2% 4% 6% 8% Gross Written (3) $405 $3B+ $6B+ $8B+ $10B+ (1) Premium (4) Loss Ratio
Slide 35: Differentiated Omnichannel Distribution
6 Differentiated Omnichannel Distribution Omnichannel approach provides strategic flexibility for Hippo in trading off Benefits of capital light growth versus higher LTV of DTC channels. Distribution flexibility also helps avoid adverse selection problems Omnichannel Distribution Direct to Customer
Slide 36: Ancillary Business Opportunities from Vertical Focus
7 Ancillary Business Opportunities from Vertical Focus Advantages of Vertical Integration Home Warranty Hippo’s vertical focus provides Vertical, integrated Flood Insurance several advantages: approach to building an • Complexity of Homeowner market makes all-inclusive home vertical approach particu
Slide 37: Many Ways to Win with Upside Tailwinds
8 Many “Ways to win” with Upside Tailwinds Key Return Drivers Base Case Outcome Drivers Key Upside Drivers • Increasing penetration, growth • Provide services for other insurance of GWP (Gross Written Premium) companies / insuretechs • Continued geographic diversification • Drive additional value fo
Slide 38: Historical Context
Historical Context 38Historical Context 38
Slide 39: Hippo Poised to Capture Technology and Channel Shifts
Hippo as technology leader poised to capture technology impacts Hippo Poised to Capture and channel shifts for Home Insurance (1) Market Growth expected : +$30B in premiums over next 5 years Value as Home Insurance Follows Auto Mid 2000s Modern Auto Legacy Auto Insurance Market (Data Driven Pricing,
Slide 40: Auto Insurance Demonstrates Industry Effects of DTC Distribution
Auto Insurance Demonstrates Industry Effects Insurance Industry’s Post DTC Distribution and Digitization Long Evolution Direct sales can enhance growth for The “Winner-Takes-All” Effect Market Leader Players 2-4 Rest of Industry (1) Direct Auto Insurance Underwriting Profit personal lines insurers (
Slide 41: Analogous Industry Reinvention Cycles
Analogous Industry Reinvention Cycles Insurance Reinventions Consumer Reinventions Capturing distribution channel changes Consumer-focused DTC reinvention of with simple product and customer legacy business experience Consumer-focused reinvention of legacy Digitally native competitive taking large b
Slide 42: GEICO: Capturing DTC Shift with Simple Product
GEICO – Capturing DTC Shift with Simple Gross Written Premium Over Time (annual, in $M) Product and Customer Experience $40,000.0 $35,000.0 GEICO’s Insurance Reinvention $30,000.0 • Disrupted the industry as a pure-play DTC (primarily auto) insurance carrier that is simple $25,000.0 and easy to unde
Slide 43: Progressive: A Digitally First Competitor Takes Share
Progressive – A Digitally First Market Capitalization Over Time (monthly, in $M) Competitor Takes Share Progressive’s Insurance Reinvention • Disrupted the auto industry by embedding $70,000.0 digitally native practices $58,313.4 • Similar to Hippo, they adopted a hybrid $60,000.0 distribution model
Slide 44: Netflix: Consumer Focused DTC Reinvention
Netflix – Consumer Focused DTC Market Capitalization Over Time (monthly, in $M) Reinvention of Legacy Business $300,000.0 Netflix’s Rental Reinvention • Disrupted the movie rental business with a $250,000.0 consumer-first D2C model $237,655.0 • Just like how Netflix approached movie renting by build
Slide 45: Tesla: First Principles Architecture
Tesla – First Principles Architecture Market Capitalization Over Time (monthly, in $M) Reinvention of Asset Intensive Industry $800,000.0 Tesla’s Automobile Reinvention $700,000.0 $632,859.9 • Tesla built something from scratch; making first principles choices when building out its $600,000.0 archit
Slide 46: PayPal: Slow Financial Services Reinvention
PayPal – Slow Financial Services Reinvention Market Capitalization Over Time (monthly, in $M) Through Customer Focus PayPal’s Payments Reinvention • Disrupted the payments and banking industry by offering low-cost / nearly effortless digital $400,000.0 payments that put consumers first and gave them
Slide 47: Rocket Mortgage: Tech-Focused Penetration of Legacy Market
Rocket Mortgage: Mortgage Origination Volume & Market Share Over Time Tech-Focused (annual, in $B) Penetration of Legacy Financial Market Rocket’s Mortgage Reinvention 6.7% • Rocket’s technology approach and integration 19% to automating the mortgage industry is very Volume CAGR similar to Hippo’s a
Slide 48: Upside Drivers
Upside Drivers 48Upside Drivers 48
Slide 49: Upside Driver: Internal Infrastructure as Future Business Opportunity
Upside Driver: Internal Infrastructure as Future Business Opportunity “AWS of Insuretech” Similar to how Amazon built businesses from renting out in-house infrastructure, we believe Hippo will have increasing opportunities to rent out its infrastructure to other insuretechs as the market grows Oppor
Slide 50: Upside Driver: US Insuretech Market Expected to Grow
Upside Driver: US Insuretech Market Expected to Growth Exponentially “AWS of Insuretech” U.S. Insurtech Market Size, by Type, 2016 – 2028 ($ MM) Hippo’s bottom-up custom-built 9,980 software infrastructure is a unique competitive advantage Several core functions such as claims management and custome
Slide 51: Upside Driver: Mission to Protect the Joy of Homeownership
Upside Driver: Hippo’s Mission is to protect the joy of homeownership Homeownership (1) Top Financial Homebuyer Regrets Centered Around Home Maintenance Costs Platform Opportunities 25% 20% 15% Millenial Hippo’s mission of “protecting the joy of 10% GenX homeownership” is more expansive than 5% Boom
Slide 52: Upside Driver: Future Uses of IoT Technology
Upside Driver: Future Uses of IoT Technology Continued Growth in IoT devices to Expand Hippo’s Relative Value Proposition • Number of internet connected devices across the home continues to expand exponentially • This growth will increase availability of information for underwriting and help prevent
Slide 53: Upside Driver: IoT Device Adoption and Data Monetization
Upside Driver: (1) IoT Device Adoption Continues to Explode Worldwide… Monetize IoT Data Asset +21% CAGR 30.9 bn Hippo’s use of IoT devices for insurance 11.7 bn will drive an increasingly large data 3.6 bn 0.8 bn asset 2010 2015 2020 2025 We believe there will be a meaningful opportunity for Hippo
Slide 54: Upside Driver: Network Effects and Lower Prices for Consumers
Upside Driver: Lower Prices for Consumers; Network Effects Data Growth Increased Share Develop from Growth of Data, Better Use Data Growth Than Incumbents Drives Network Effect Potential Speed & Superior Expertise to We believe there are few true network Economics Integrate effects in the home insur
Slide 55: Hippo versus Peers
Hippo versus Peers 55Hippo versus Peers 55
Slide 56: vs Homeowner Peers: Industry Remains Highly Fragmented
vs Homeowner Peers Homeowners Insurance Market Share Over Time (%) Homeowners Insurance Industry Remains Highly Fragmented • Only one player with more than 10% market share Rest of Rest of • Even just picking off single-digit % Rest of Industry; 50 Industry; 51 Industry; 53 of market share from the
Slide 57: vs Homeowner Peers: Hippo Poised to Take Share
vs Homeowner Peers Hippo is Poised to Take Share in the Homeowner Market Projected Long Policies Underwriting Customer Service Term Loss Ratio Fast, verifiable, Proactive insurance (1) Modern, relevant correct, updates with customer = 60% over time policyholder Inflexible, Transactional, (2) Legacy
Slide 58: vs Insuretech Peers: Peer Comparison
vs Insuretech Peers Peer Comparison ( ( 1) 2) Gross Written Premium ($MM) 1,145 771 524 2,118 2023 Scale Revenue Growth 80% 54% 73% 58% (’21E – ’23E CAGR) Growth Rate (%) (3) (4) (5) (6) 87% 62% 69% 33% Retention One-Year Retention (%) (7) (5) (8) Avg. Premium Per Policy ($) ~$1,200 $213 $1,111 $929
Slide 59: vs Insuretech Peers: Hippo is Differentiated
vs Insuretech Peers Hippo and Lemonade are alike only in that they both are pioneers in the insuretech space. They operate in two fundamentally different markets (homeowners vs. Hippo is renters) and have fundamentally different business models. This contrast is evident Differentiated in their finan
Slide 60: Homeowners Market Fundamentally More Attractive than Rental
vs Insuretech Peers Homeowners Market Fundamentally More Attractive than Rental The Homeowner market is larger, ..individual policies are larger, growing …and has better retention than the growing more quickly,… more quickly,… Rental market One Year Customer Retention Percent Percent Market (3) (4)
Slide 61: Complexity of Insuretech Leads to 1 or 2 Winners per Vertical
vs Insuretech Peers Despite the massive opportunity for technology disruption across the insurance landscape, we expect the complexity of building a comprehensive insuretech We Expect Complexity platform leads to one or two clear winners per vertical. Meaningful barriers to of Insuretech To Lead to
Slide 62: Unit Economics and Key Financial Drivers
Unit Economics and Key Financial Drivers 62Unit Economics and Key Financial Drivers 62
Slide 63: Unit Economics Continued Improvement
Unit Economics Continued Improvement Improving Retention Declining Loss Frequency (1) Annual Premium Retention by Cohort 12-month average Non-CAT Frequency by Cohort Yr 1 Yr 2 Yr 3 New Renewal 98% 5.2 87% 87% 86% 82% 4.0 3.9 78% 3.5 3.3 3.2 2.8 2017 2018 2019 2017 2018 2019 2020 (1) Frequency define
Slide 64: Projected Margin Expansion at Scale
Projected Margin Expansion at Scale Projected Total Generated Premium, $m Projected Revenue, $m $2,279 43% 74% $546 ‘21 – ’25 CAGR ‘21 – ’25 CAGR $1,628 % of TGP $488 $1,145 35% $796 $282 30% $544 $151 25% $40 19% 16% 2021F 2022F 2023F 2024F 2025F 2021F 2022F 2023F 2024F 2025F 64Projected Margin Exp
Slide 65: Summary Consolidated Non-GAAP P&L
Summary Consolidated Non-GAAP P&L ($ in M) 2019A 2020A 2021F 2022F 2023F 2024F 2025F Total Generated Premium 304 405 544 796 1,145 1,628 2,279 Revenue 49 63 87 151 282 488 789 Expenses 102 152 233 286 390 528 731 Operating Income (53) (89) (146) (135) (108) (40) 58 Note: Pro forma for Spinnaker and
Slide 66: Valuation Benchmarking
Valuation Benchmarking AV / Gross Written Premium (2023E) 6.6x 4.4x 1.7x 0.7x (2) (1) AV / Revenue (2023E) 19.1x 17.9x 3.0x 2.1x (1) Source: Company estimates, subject to change; street estimates; based on latest disclosed financials and available estimates; market data as of 7/9/2021 (1) Reflects T
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