Hippo Holdings Inc. Reports Record 2024 Earnings

Hippo Holdings Inc ((HIPO)) has held its Q4 earnings call. Read on for the main highlights of the call.

The latest earnings call from Hippo Holdings Inc. was marked by a strong positive sentiment, highlighting significant achievements in revenue growth, profitability, and operational efficiency. The company demonstrated resilience in overcoming challenges such as wildfires and legacy portfolio issues, while maintaining an optimistic outlook for future growth and profitability.

Record-Breaking Year and Quarter

2024 was declared the most successful year and quarter in Hippo’s history. The company achieved positive adjusted EBITDA in Q4, doubled its annual revenue, and improved its gross loss ratio by nearly 30 percentage points, setting a new benchmark for its financial performance.

Positive Adjusted EBITDA

Hippo achieved a positive adjusted EBITDA of $8.5 million in Q4 2024, surpassing its guidance. This milestone marks a significant achievement for the company, showcasing its ability to generate profitability amidst challenging conditions.

Revenue Growth

The company reported a 58% year-over-year increase in revenue, reaching $102 million in Q4 2024. This growth was driven by higher premium retention and increased volume across various segments, reflecting Hippo’s successful expansion strategies.

Improved Loss Ratios

Hippo’s gross loss ratio improved by three percentage points year-over-year to 50%, with the non-PCS loss ratio improving by 20 percentage points to 43%. These improvements underscore the company’s enhanced risk management and operational efficiency.

Spinnaker Fronting Business Growth

The Insurance as a Service segment, represented by the Spinnaker fronting business, grew by 22% year-over-year. This consistent growth highlights the segment’s long-term profitability and strategic importance to Hippo’s overall business model.

Impact of Wildfires

The preliminary pretax estimates of catastrophic losses from wildfires in Los Angeles were approximately $42 million, impacting financial results in Q1 2025. These losses were tied to legacy HHIP policies, emphasizing the ongoing exposure to older, less profitable policies.

Legacy Portfolio Exposure

The wildfires’ financial impact highlighted Hippo’s continued exposure to its legacy portfolio, which consists of older, less profitable policies. This exposure remains a challenge as the company works to optimize its policy offerings.

Decline in Hippo Home Insurance Program

There was an 8% decline in the Hippo home insurance program segment, attributed to efforts to manage exposure to high-catastrophe geographies. This strategic move aims to mitigate risks associated with natural disasters.

Future Guidance

For 2025, Hippo has raised its revenue guidance to $465 million, projecting an annual growth rate of 25% and 27% when excluding the First Connect platform. The company aims to achieve net income profitability by Q4 2025, despite the $42 million pretax loss from the Los Angeles wildfires. Hippo also expects further improvements in its loss ratios and operating efficiency.

In conclusion, Hippo Holdings Inc.’s earnings call reflected a robust performance with a positive outlook for the future. The company achieved record-breaking results in 2024, with significant improvements in profitability and operational efficiency. Despite challenges like wildfires and legacy portfolio exposure, Hippo remains focused on achieving its growth and profitability targets for 2025.