Hippo Holdings Inc. · NYSE:HIPO
Hippo — Reinvent Technology Partners Z — SPAC Merger (May 2021)
84 slides from Hippo's SPAC merger presentation, May 19, 2021
Slide 1: Reinvent Technology Partners Z and Hippo Analyst Day
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: May 19, 2021 Reinvent Technology Partners Z and Hi
Slide 2: Welcome
Andrea Collins VP Marketing Welcome Andrea Collins VP Marketing Welcome
Slide 3: We want to hear your questions
We want to hear your questions 1 In Zoom: Chat function / Raise your hand Email: investors@hippo.com 2 3 Unmute, share your questionWe want to hear your questions 1 In Zoom: Chat function / Raise your hand Email: investors@hippo.com 2 3 Unmute, share your question
Slide 4: Today's Presenters
Today’s Presenters Reid Hoffman Michael Thompson Assaf Wand Richard McCathron Stewart Ellis Co-Lead Director of RTPZ President and CEO of RTPZ Chief Executive Officer President Chief Financial OfficerToday’s Presenters Reid Hoffman Michael Thompson Assaf Wand Richard McCathron Stewart Ellis Co-Lead
Slide 5: Disclaimer (1/2)
Disclaimer (1/2) About this Presentation This presentation (“Presentation”) is for informational purposes only. This Presentation shall not constitute an offer to sell, or the solicitation of an offer to buy, any securities, nor shall there be any sale of securities in any states or jurisdictions in
Slide 6: Disclaimer (2/2)
Disclaimer (2/2) Use of Data … The data contained herein is derived from various internal and external sources. No representation is made as to the reasonableness of the assumptions made within or the accuracy or completeness of any projections or modeling or any other information contained herein.
Slide 7: Today's Objectives
Today’s Objectives 1 Share the Hippo story Introduce members of our broader leadership team 2 Help you build your model 3Today’s Objectives 1 Share the Hippo story Introduce members of our broader leadership team 2 Help you build your model 3
Slide 8: Agenda
Agenda Eastern Time 11:00 to 11:15 Introduction 11:15 to 11:45 Hippo vision and strategy 11:45 to 12:15 Differentiated product and distribution 12:15 to 12:30 Break 12:30 to 13:15 Balancing growth with underwriting profit 13:15 to 14:00 Financials and modeling 14:00 to 14:15 Break 14:15 to 14:30 Par
Slide 9: Transaction Structure
Transaction Hippo and Reinvent are partnering to transform the home Structure insurance industry Transaction Founder shares are structured to create long-term alignment Summary Valuation Transaction implies a fully diluted pro forma enterprise value of $5.0B 4.4x 2023E Total Written Premium 25.1x 20
Slide 10: Why Hippo
Reid Hoffman Co-Lead Director of RTPZ Why HippoReid Hoffman Co-Lead Director of RTPZ Why Hippo
Slide 11: What Attracted Us to Hippo?
Proud to Partner with Hippo What Attracted Us to Hippo? Asymmetric Risk Adaptive Strong Unit Reward Management Team Economics Relative and Housing Tech + Insurance Fundamental Fundamentals Expertise Valuation Homeowners Disciplined Customer Value Insurance Mkt Underwriters Proposition StructureProud
Slide 12: Aligned Incentives
Michael Thompson President and CEO of RTPZ Aligned IncentivesMichael Thompson President and CEO of RTPZ Aligned Incentives
Slide 13: De-SPAC Structure Aligns Interests for the Long Term
De-SPAC Structure Aligns Interests for the Long Term One Board Seat Lock-up Arrangements Designated by Reinvent Up to two-years Senior Hippo management and on founder shares material existing investors are Strong Alignment for subject to lock-up arrangements substantially similar to the founder Hipp
Slide 14: Why Reinvent and the Hippo founding story
Assaf Wand Why Reinvent and the Chief Executive Officer Hippo founding story Assaf Wand Why Reinvent and the Chief Executive Officer Hippo founding story
Slide 15: Agenda
Agenda Eastern Time 11:00 to 11:15 Introduction 11:15 to 11:45 Hippo vision and strategy 11:45 to 12:15 Differentiated product and distribution 12:15 to 12:30 Break 12:30 to 13:15 Balancing growth with underwriting profit 13:15 to 14:00 Financials and modeling 14:00 to 14:15 Break 14:15 to 14:30 Par
Slide 16: Vision and Mission
VISION Hippo exists to protect the joy of homeownership MISSION Delivering intuitive and proactive protection for homeowners, combining the power of technology with a human touch Proprietary and Confidential | 16VISION Hippo exists to protect the joy of homeownership MISSION Delivering intuitive and
Slide 17: Legacy insurers spent 100 years building a flawed experience
THOUGH HOME INSURANCE IS A $100B+ MARKET Legacy insurers spent 100 years building a flawed experience Difficult purchase process Top 4 Home 1 Insurers Mkt. Share Founded State Farm 17.9% 1922 Outdated coverage 35/100 2 Allstate Corp 8.4% 1931 Typical Carrier NPS Poor claims experience 3 -49 for Clai
Slide 18: Transactional, adversarial relationship between insurers and customers
The entire system creates a transactional, adversarial relationship between insurers and customers r When one wins, the other loses We believe there is a better way Proprietary and Confidential | 18The entire system creates a transactional, adversarial relationship between insurers and customers r W
Slide 19: Hippo makes insurance simple, modern, and proactive
Hippo makes insurance simple, modern, and proactive Easy to buy 1 minute to quote, 5 minutes to purchase Coverage designed for modern lives 75/100 Expanded home office, electronics coverage, etc. 1 Overall NPS 1 Proactive, human approach to claims 60 for Claims Event monitoring, claims concierge Tec
Slide 20: Hippo takes a proactive approach to drive better outcomes
Hippo takes a proactive approach to drive better outcomes for homeowners Ongoing Underwriting 1 2 Smart Home Devices 3 Maintenance SupportHippo takes a proactive approach to drive better outcomes for homeowners Ongoing Underwriting 1 2 Smart Home Devices 3 Maintenance Support
Slide 21: Ongoing underwriting: Day 0 onboarding
1 Ongoing underwriting Fraud identification Property/permit data Risk modeling Risk score modeling (Cat, non-Cat) Customer history Permit analysis Behavioral analytics Physical property inspections Day 0 Onboarding Run risk models with initial data Proprietary and Confidential | 211 Ongoing underwri
Slide 22: Ongoing underwriting: Year 1
1 Ongoing underwriting Fraud identification Property/permit data Risk modeling Risk score modeling (Cat, non-Cat) Customer history Permit analysis Behavioral analytics Physical property inspections Year 1 New pool identified! Outreach with recommendation to increase liability coverage Proprietary an
Slide 23: Ongoing underwriting: Year 4
1 Ongoing underwriting Fraud identification Property/permit data Risk modeling Risk score modeling (Cat, non-Cat) Customer history Permit analysis Behavioral analytics Physical property inspections Year 4 New roof identified! Update premium with new roof discount Proprietary and Confidential | 231 O
Slide 24: Smart Home Kits
2 We believe our Smart Kits include devices intended to Home program is the most mitigate damage from water, fire widely adopted in the US and theft 1 Home Insurance space Included in standard policies, ~70% with premium discounts 2 Opt-in rate Complimentary self or professionally-monitored kits Enh
Slide 25: We help customers maintain their homes
3 We help customers maintain their homes Thousands Of home checkups delivered 11K+ 1 Preventive actions performed 4.5 out of 5 1 Average customer satisfaction score3 We help customers maintain their homes Thousands Of home checkups delivered 11K+ 1 Preventive actions performed 4.5 out of 5 1 Average
Slide 26: Proactive approach turns adversarial relationship into a partnership
Hippo’s proactive approach turns an adversarial customer relationship into a partnership And average risk into better riskHippo’s proactive approach turns an adversarial customer relationship into a partnership And average risk into better risk
Slide 27: Vertical, integrated home protection platform
Vertical, integrated Home Warranty approach to building Flood Insurance an all-inclusive home protection platform HoA Insurance Renters Auto Condo Travel Pet Life Umbrella Homeowners Smart Home Tech Home Maintenance Professional MonitoringVertical, integrated Home Warranty approach to building Flood
Slide 28: The opportunity in homeowners insurance is potentially massive
The opportunity in homeowners insurance is potentially massive Massive Fragmented Attractive Dynamics $ +8 YRS 105B 10% 2 Customer Lifetime 1 In Annual Premiums Only one player 1. Source: Morgan Stanley research 2. Source: William Blair research Proprietary and Confidential | 28The opportunity in ho
Slide 29: Q&A
Q&AQ&A
Slide 30: Agenda
Agenda Eastern Time 11:00 to 11:15 Introduction 11:15 to 11:45 Hippo vision and strategy 11:45 to 12:15 Differentiated product and distribution 12:15 to 12:30 Break 12:30 to 13:15 Balancing growth with underwriting profit 13:15 to 14:00 Financials and modeling 14:00 to 14:15 Break 14:15 to 14:30 Par
Slide 31: Differentiated product and distribution
Differentiated product and distribution Richard McCathron Aviad Pinkovezky President Chief Product Officer Differentiated product and distribution Richard McCathron Aviad Pinkovezky President Chief Product Officer
Slide 32: Macro trends favor tech-forward challengers
Macro trends favor tech-forward challengers Aging Agent Agent-channel Population conflict 1 average age of 61 Incumbents hindered (and increasing) by legacy agent network v s v s Birth of the Omni-channel digital consumer distribution New generation of customers expect API integration into multiple
Slide 33: Hippo has a technological advantage over existing players
Hippo has a technological advantage over existing players Owning a proprietary, Legacy tech v s modern tech stack stacks enables better adaptation to customer prevent meeting customer expectations expectations and to partner platforms Third-party, verifiable Customer- v s data sources supplied data
Slide 34: Distribution: direct to customer, agents, partners
Our distribution allows customers to purchase however they want and provides Hippo differentiated access to the best risk Direct to Customer Agents Partners Fast and accurate Agents can focus on the Tech embedded into partner online purchase customers’ insurance needs sales flows enables access to a
Slide 35: Distribution: direct to customer, agents, partners
Our distribution allows customers to purchase however they want and provides Hippo differentiated access to the best risk Direct to Customer Agents Partners Fast and accurate Agents can focus on the Tech embedded into partner online purchase customers’ insurance needs sales flows enables access to a
Slide 36: Demo: Direct to Consumer Online Flow
Demo: Direct to Consumer Online Flow Demo: Direct to Consumer Online Flow
Slide 37: Distribution: direct to customer, agents, partners
Our distribution allows customers to purchase however they want and provides Hippo differentiated access to the best risk Direct to Customer Agents Partners Fast and accurate Agents can focus on the Tech embedded into partner online purchase customers’ insurance needs sales flows enables access to a
Slide 38: Distribution: direct to customer, agents, partners
Our distribution allows customers to purchase however they want and provides Hippo differentiated access to the best risk Direct to Customer Agents Partners Fast and accurate Agents can focus on the Tech embedded into partner online purchase customers’ insurance needs sales flows enables access to a
Slide 39: Partnership case study #1: Homepoint Financial
Willie Newman Partnership case study President and CEO #1: Homepoint FinancialWillie Newman Partnership case study President and CEO #1: Homepoint Financial
Slide 40: Mortgage Servicer Insurance Distribution
Mortgage Servicer Insurance Distribution Product Innovation Summary Execution • Identify potential insurance • Monthly bulk quoting • Homepoint is a mortgage savings and coverage of an entire servicer’s book originator and servicer with improvements for Homepoint’s performed at scale +6.6K third par
Slide 41: Demo: Homepoint Financial Online Flow
Demo: Homepoint Financial Online Flow Demo: Homepoint Financial Online Flow
Slide 42: Q&A
Q&AQ&A
Slide 43: Agenda
Agenda Eastern Time 11:00 to 11:15 Introduction 11:15 to 11:45 Hippo vision and strategy 11:45 to 12:15 Differentiated product and distribution 12:15 to 12:30 Break 12:30 to 13:15 Balancing growth with underwriting profit 13:15 to 14:00 Financials and modeling 14:00 to 14:15 Break 14:15 to 14:30 Par
Slide 44: Reinvent Technology Partners Z and Hippo Analyst Day
Reinvent Technology Partners Z and Hippo Analyst Day May 19, 2021Reinvent Technology Partners Z and Hippo Analyst Day May 19, 2021
Slide 45: Agenda
Agenda Eastern Time 11:00 to 11:15 Introduction 11:15 to 11:45 Hippo vision and strategy 11:45 to 12:15 Differentiated product and distribution 12:15 to 12:30 Break 12:30 to 13:15 Balancing growth with underwriting profit 13:15 to 14:00 Financials and modeling 14:00 to 14:15 Break 14:15 to 14:30 Par
Slide 46: Balancing growth with underwriting profit
Balancing growth with underwriting profit Michael Stienstra Chris Donahue Chief Actuary Chief Underwriting Officer Balancing growth with underwriting profit Michael Stienstra Chris Donahue Chief Actuary Chief Underwriting Officer
Slide 47: 2020 Normalized Loss Ratio
2020 Normalized Loss Ratio 1 Bridge from 2020 Loss Ratio to 2020 Normalized Loss Ratio of Hippo Programs • Excess CAT- Higher catastrophic losses due to extreme weather 121% conditions in 2020 -24% • COVID- Higher cost to repair losses -5% as materials costs increased due to -9% 83% COVID-related di
Slide 48: Loss Ratio Maturation
Loss Ratio Maturation 1 2 Bridge from 2020 Normalized Loss Ratio of Hippo Programs to Industry Benchmark • Operational Improvements- 83% Our underwriting, claims and -9% support functions benefit from 68% -6% economies of scale • Growth Penalty - Newer cohorts perform worse vs. older cohorts - Custo
Slide 49: The Compounding Impact of Retention
The Compounding Impact of Retention 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 2020The Compounding Impact o
Slide 50: Long Term Differentiation
Long Term Differentiation Bridge from Industry Benchmark Loss Ratio to Steady State Indicated Loss 1 Ratio of Hippo Programs • Proactive / Preventative Strategy- 68% proactive maintenance, IOT devices -4% placement and ongoing monitoring to -4% 60% prevent losses • Underwriting and Claims Innovation
Slide 51: Reinsurance: asset-light capital strategy
1 Reinsurance ~75% ~90% Asset-light capital strategy Net Risk Retained ~25% ~10% 2021E Long Term1 Reinsurance ~75% ~90% Asset-light capital strategy Net Risk Retained ~25% ~10% 2021E Long Term
Slide 52: Q&A
Q&AQ&A
Slide 53: Agenda
Agenda Eastern Time 11:00 to 11:15 Introduction 11:15 to 11:45 Hippo vision and strategy 11:45 to 12:15 Differentiated product and distribution 12:15 to 12:30 Break 12:30 to 13:15 Balancing growth with underwriting profit 13:15 to 14:00 Financials and modeling 14:00 to 14:15 Break 14:15 to 14:30 Par
Slide 54: Hippo's economic models
1 2 MGA Agency Commission, Policy, and Agency Commission Service Fees Hippo’s economic 3 4 models Carrier Risk Retention Insurance as a Service Earned Premium 1 2 MGA Agency Commission, Policy, and Agency Commission Service Fees Hippo’s economic 3 4 models Carrier Risk Retention Insurance as a Servi
Slide 55: Key metrics and performance indicators
Highly recurring and predictable Total Written Unaffected by short-term fluctuations 1 Premium in loss ratio Premium Important driver of future Total Written Premium and customer lifetime value Renewal Rate Key metrics Driver of long-term profitability Loss Ratio Improves with cohort tenure and beco
Slide 56: Summary Consolidated Non-GAAP P&L
Summary Consolidated Non-GAAP P&LSummary Consolidated Non-GAAP P&L
Slide 57: Drivers of Total Written Premium
Hippo- State expansion, product launches, new partnerships, independent agent network expansion and marketing spend New Written Agency– Grows along with Hippo new Premium business growth and independently Spinnaker Fronting– Grows with the programs it supports Drivers of Total Written Premium Volume
Slide 58: How Written Premium translates to Earned Premium
Total Written ILLUSTRATIVE Premium How Written Premium translates to Earned Premium Total Earned Premium Total Written ILLUSTRATIVE Premium How Written Premium translates to Earned Premium Total Earned Premium
Slide 59: Summary Consolidated Non-GAAP P&L
Summary Consolidated Non-GAAP P&LSummary Consolidated Non-GAAP P&L
Slide 60: Conceptual links between Total Earned Premium and Revenue
Conceptual links between Total Earned Premium and Revenue Premium written on 3rd party Balance Sheets Placed Earned Commission 2 Premium Income, Net Ceded Earned Service and Premium Fee Income Premium written on Hippo’s Balance Sheet Total Earned Gross Earned GAAP 1 Premium Premium Revenue Net Earne
Slide 61: Summary Consolidated Non-GAAP P&L
Summary Consolidated Non-GAAP P&LSummary Consolidated Non-GAAP P&L
Slide 62: Adjusted Gross Profit definition and rationale
DEFINITION GAAP Gross profit § Net investment income § Channel Distribution Costs § Overhead associated with our underwriting operations including employee-related expense and professional fees § Depreciation, Amortization, stock-based compensation and Other non-cash expenses Adjusted Gross Profit R
Slide 63: How AGP controls for carrier mix
How AGP controls for carrier mix ILLUSTRATIVE EXAMPLE rd 3 Party Carrier Hippo Carrier Assumptions Net Earned Premium 100 100 § Premium of $1,000 1 Commission Income, Net 250 150 § 10% Risk retention Revenue 350 250 § 60% Loss ratio § $250 Ceding commission (reflected Losses and LAE 60 60 as Commiss
Slide 64: Summary Consolidated Non-GAAP P&L
Summary Consolidated Non-GAAP P&LSummary Consolidated Non-GAAP P&L
Slide 65: Operating expense key drivers
1 Producer and partner commissions , deferred Insurance acquisition costs, UW employee costs Related Marketing and advertising costs, Sales & employee costs Marketing Key drivers of Operating Primarily employee costs, infrastructure Technology & expense rd support, actuarial and 3 party services Dev
Slide 66: Attractive customer dynamics and compelling unit economics
We have attractive …and compelling unit customer dynamics… economics ~$1,900 ~$1,200 Avg. Premium 5.4x 5.4x ~$350 8+ Years 1 Avg. Customer Life Customer Lifetime 2 Acquisition Cost Value (CAC) (LTV)We have attractive …and compelling unit customer dynamics… economics ~$1,900 ~$1,200 Avg. Premium 5.4x
Slide 67: Summary Consolidated Non-GAAP P&L
Summary Consolidated Non-GAAP P&LSummary Consolidated Non-GAAP P&L
Slide 68: Q&A
Q&AQ&A
Slide 69: Agenda
Agenda Eastern Time 11:00 to 11:15 Introduction 11:15 to 11:45 Hippo vision and strategy 11:45 to 12:15 Differentiated product and distribution 12:15 to 12:30 Break 12:30 to 13:15 Balancing growth with underwriting profit 13:15 to 14:00 Financials and modeling 14:00 to 14:15 Break 14:15 to 14:30 Par
Slide 70: Agenda
Agenda Eastern Time 11:00 to 11:15 Introduction 11:15 to 11:45 Hippo vision and strategy 11:45 to 12:15 Differentiated product and distribution 12:15 to 12:30 Break 12:30 to 13:15 Balancing growth with underwriting profit 13:15 to 14:00 Financials and modeling 14:00 to 14:15 Break 14:15 to 14:30 Par
Slide 71: Partnership case study #2: Lennar
Stuart Miller Partnership case study Executive Chairman #2: LennarStuart Miller Partnership case study Executive Chairman #2: Lennar
Slide 72: Homebuilder Insurance Distribution
Homebuilder Insurance Distribution Product Innovation Summary Execution • Lennar Corporation is one of the • Lennar and Hippo invested in • Dedicated builder tech stack nation’s leading homebuilders and operate an insurance receives all home specs and bids with more than $20B in revenue and agency t
Slide 73: Demo: Lennar Online Flow
Demo: Lennar Online Flow Demo: Lennar Online Flow
Slide 74: Agenda
Agenda Eastern Time 11:00 to 11:15 Introduction 11:15 to 11:45 Hippo vision and strategy 11:45 to 12:15 Differentiated product and distribution 12:15 to 12:30 Break 12:30 to 13:15 Balancing growth with underwriting profit 13:15 to 14:00 Financials and modeling 14:00 to 14:15 Break 14:15 to 14:30 Par
Slide 75: Hippo exists to protect the joy of homeownership
Hippo exists to protect the joy of homeownership Radically improved customer experience 1 Policies built for modern lives, powered by data 2 and technology Proactive services that reinforce our core product 3 and strengthen our relationship with customers Hippo exists to protect the joy of homeowner
Slide 76: Guiding Principles
Equally weigh Insurance and Technology Insurance + Tech Success requires integration of many dimensions No Silver Bullets Take smart risk, acknowledge failure, learn and grow Grow From Failure CEO Letter, Guiding Our incentives align around protecting consumers Embrace Regulation Principles Best cla
Slide 77: Q&A
Q&AQ&A
Slide 78: Appendix
AppendixAppendix
Slide 79: Reconciliation of FY2020 Actuals to Pro forma
Reconciliation of FY2020 Actuals to Pro formaReconciliation of FY2020 Actuals to Pro forma
Slide 80: Adjusted Gross Profit – Non-GAAP Reconciliation
Adjusted Gross Profit – Non-GAAP Reconciliation 1 FY2020A $ in Millions (Unaudited) Revenue 51.5 Loss and Loss Adjustment Expense (25.3) Insurance Related Expense (19.3) GAAP Gross Profit 7.0 Adjustments: Less: Net Investment Income (1.1) Add: Channel Distribution Costs 4.6 Add: Employee Related cos
Slide 81: Adjusted EBITDA – Non-GAAP Reconciliation
Adjusted EBITDA – Non-GAAP Reconciliation 1 FY2020A $ in Millions (Unaudited) Net Income (Loss) (141.5) Adjustments: Less: Benefit from Income Taxes (1.8) Less: Capitalization of Software Development costs (9.4) Add: Depreciation and Amortization 6.7 Add: Stock Based Compensation 17.7 2 Add: Fair Va
Slide 82: Summary of Risks (1/3)
Summary of Risks (1/3) Investing in our common stock involves a high degree of risk. You should carefully consider the following risks, together with all of the other information contained in this prospectus, before deciding to invest in our common stock. Our business, financial condition, results o
Slide 83: Summary of Risks (2/3)
Summary of Risks (2/3) Risks Relating to Our Business providers could impair the operability of our website and may cause our business to suffer. 1. We have a history of net losses and we may not achieve or maintain profitability in the future. 20. Security incidents or real or perceived errors, fai
Slide 84: Summary of Risks (3/3)
Summary of Risks (3/3) 38. Claims by others that we infringed their proprietary technology or other intellectual property rights could harm our business. 59. Our insurance company subsidiaries are subject to assessments and other surcharges from state guaranty funds, and 39. If we are unable to make
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