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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
OR
 o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______.
Commission file number 001-39711

HIPPO HOLDINGS INC.
(Exact name of registrant as specified in its charter)
Delaware
32-0662604
(State of incorporation)
(I.R.S. Employer Identification No.)
150 Forest Avenue
Palo Alto, California
94301
(Address of Principal Executive Offices)
(Zip Code)
(650) 294-8463
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, $0.0001 par value per shareHIPONew York Stock Exchange
Warrants to purchase common stockHIPO.WSNew York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  o 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes  x    No  o 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
Accelerated filer
Non-accelerated filer  
Smaller reporting company
Emerging growth company
                
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).     Yes      No  

The registrant had outstanding 24,429,711 shares of common stock as of April 22, 2024.




Table of Contents

Page
Item 1
Item 2
Item 3
Item 4
Part II. Other Information
Item 1
Item 1A
Risk Factors
Item 2
Item 3
Item 4



CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q of Hippo Holdings Inc. (“Hippo,” the “Company,” “we,” “us” and “our”) contains statements that are forward-looking and as such are not historical facts. This includes, without limitation, statements regarding the financial position, business strategy and the plans and objectives of management for our future operations. These statements constitute projections, forecasts and forward-looking statements, and are not guarantees of performance. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. When used in this Quarterly Report on Form 10-Q, words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “strive,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this Quarterly Report on Form 10-Q may include, for example, statements about:

our future results of operations and financial condition and our ability to attain profitability;
our ability to grow our business and, if such growth occurs, to effectively manage such growth;
customer satisfaction and our ability to attract, retain, and expand our customer base;
our ability to maintain and enhance our brand and reputation;
our business strategy, including our diversified distribution strategy and our plans to expand into new markets and new products;
the effects of seasonal trends on our results of operations;
our expectations about our book of business, including our ability to cross-sell and to attain greater value from each customer;
our ability to compete effectively in our industry;
our ability to maintain reinsurance contracts and our near- and long-term strategies and expectations with respect to cession of insurance risk;
our ability to utilize our proprietary technology;
our ability to underwrite risks accurately and charge profitable rates;
our ability to leverage our data, technology and geographic diversity to help manage risk;
our ability to protect our intellectual property;
our ability to expand our product offerings or improve existing ones;
our ability to attract and retain personnel, including our officers and key employees;
potential harm caused by misappropriation of our data and compromises in cybersecurity;
potential harm caused by changes in internet search engines’ methodologies;
our expected use of cash on our balance sheet, our future capital needs and our ability to raise additional capital;
fluctuations in our results of operations and operating metrics;
our ability to receive, process, store, use and share data, and compliance with laws and regulations related to data privacy and data security;
our ability to stay in compliance with laws and regulations that currently apply, or become applicable, to our business both in the United States and internationally;
our inability to predict the lasting impacts of COVID-19 to our business in particular, and the global economy generally;
our public securities’ liquidity and trading; and
other factors detailed in the section titled “Risk Factors” in this Quarterly Report on Form 10-Q.
These forward-looking statements are based on information available as of the date of this Quarterly Report on Form 10-Q, and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of



any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. You should not place undue reliance on these forward-looking statements.


PART I - Financial Information
Item 1: Financial Statements
HIPPO HOLDINGS INC.
(In millions, except share and per share data)
(Unaudited)


March 31,
2024
December 31,
2023
(Unaudited)
Assets
Investments:
Fixed maturities available-for-sale, at fair value (amortized cost: $166.0 million and $164.6 million, respectively)
$162.7 $161.7 
Short-term investments, at fair value (amortized cost: $124.7 million and $187.1 million, respectively)
124.7 187.1 
Total investments287.4 348.8 
Cash and cash equivalents223.4 142.1 
Restricted cash39.9 53.0 
Accounts receivable, net of allowance of $0.5 million and $0.5 million, respectively
153.8 145.2 
Reinsurance recoverable on paid and unpaid losses and LAE290.1 281.3 
Prepaid reinsurance premiums275.3 335.6 
Ceding commissions receivable82.2 73.8 
Capitalized internal use software48.9 48.4 
Intangible assets26.2 27.3 
Other assets69.1 69.2 
Total assets$1,496.3 $1,524.7 
Liabilities and stockholders’ equity
Liabilities:
Loss and loss adjustment expense reserve$336.6 $322.5 
Unearned premiums407.3 419.2 
Reinsurance premiums payable263.2 260.1 
Provision for commission 29.0 24.7 
   Accrued expenses and other liabilities105.4 113.5 
Total liabilities1,141.5 1,140.0 
Commitments and contingencies (Note 12)
Stockholders’ equity:
Common stock, $0.0001 par value per share; 80,000,000 and 80,000,000 shares authorized as of March 31, 2024 and December 31, 2023, respectively; 24,409,724 and 24,148,308 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively
  
Additional paid-in capital1,624.7 1,615.2 
Accumulated other comprehensive loss(3.4)(2.9)
Accumulated deficit(1,270.1)(1,234.4)
Total Hippo stockholders’ equity351.2 377.9 
Noncontrolling interest3.6 6.8 
Total stockholders’ equity354.8 384.7 
Total liabilities and stockholders’ equity$1,496.3 $1,524.7 
See Notes to the Condensed Consolidated Financial Statements

1

HIPPO HOLDINGS INC.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(In millions, except share and per share data)
(Unaudited)

Three Months Ended March 31,
20242023
Revenue:
Net earned premium$60.5 $13.8 
Commission income, net15.9 17.4 
Service and fee income2.8 3.2 
Net investment income5.9 5.4 
Total revenue85.1 39.8 
Expenses:
Losses and loss adjustment expenses52.6 37.7 
Insurance related expenses20.8 15.8 
Technology and development8.3 11.6 
Sales and marketing14.4 22.4 
General and administrative18.3 19.8 
Impairment and restructuring charges3.6  
Other expense, net
 0.3 
Total expenses118.0 107.6 
Loss before income taxes(32.9)(67.8)
Income tax expense
0.2 0.3 
Net loss(33.1)(68.1)
Net income attributable to noncontrolling interests, net of tax2.6 1.7 
Net loss attributable to Hippo $(35.7)$(69.8)
Other comprehensive income (loss):
Change in net unrealized gain (loss) on investments, net of tax
(0.5)1.7 
Comprehensive loss attributable to Hippo$(36.2)$(68.1)
Per share data:
Net loss attributable to Hippo - basic and diluted$(35.7)$(69.8)
Weighted-average shares used in computing net loss per share attributable to Hippo - basic and diluted24,225,650 23,198,491 
Net loss per share attributable to Hippo - basic and diluted$(1.47)$(3.01)
            
See Notes to the Condensed Consolidated Financial Statements

2

HIPPO HOLDINGS INC.
Condensed Consolidated Statements of Stockholders’ Equity
(In millions, except share data)
(Unaudited)

Common StockAdditional Paid-in CapitalAccumulated Other Comprehensive Income (Loss)Accumulated Deficit Total Hippo Stockholders' EquityNon controlling InterestsTotal Stockholders’ Equity
SharesAmount
Balance at January 1, 202424,148,308 $ $1,615.2 $(2.9)$(1,234.4)$377.9 $6.8 $384.7 
Net loss— — — — (35.7)(35.7)2.6 (33.1)
Other comprehensive loss— — — (0.5)— (0.5)— (0.5)
Issuance of common stock from stock plans and contingently issuable shares261,416 — 1.2 — — 1.2 — 1.2 
Shares withheld related to net share settlement— — (1.2)— — (1.2)— (1.2)
Stock-based compensation expense— — 9.5 — — 9.5 — 9.5 
Other
— — — — — — (5.8)(5.8)
Balance at March 31, 202424,409,724 $ $1,624.7 $(3.4)$(1,270.1)$351.2 $3.6 $354.8 

Common StockAdditional Paid-in CapitalAccumulated Other Comprehensive Income (Loss)Accumulated Deficit Total Hippo Stockholders' EquityNon controlling InterestsTotal Stockholders’ Equity
SharesAmount
Balance at January 1, 202323,201,434 $ $1,558.0 $(7.0)$(961.1)$589.9 $3.6 $593.5 
Net loss— — — — (69.8)(69.8)1.7 (68.1)
Other comprehensive income— — — 1.7 — 1.7 — 1.7 
Issuance of common stock from stock plans and contingently issuable shares134,824 — 0.4 — — 0.4 — 0.4 
Repurchase of common stock(15,472)— (0.2)— — (0.2)— (0.2)
Shares withheld related to net share settlement— — (0.9)— — (0.9)— (0.9)
Stock-based compensation expense— — 17.4 — — 17.4 — 17.4 
Other— — — — (0.2)(0.2)(0.6)(0.8)
Balance at March 31, 202323,320,786 $ $1,574.7 $(5.3)$(1,031.1)$538.3 $4.7 $543.0 

See Notes to the Condensed Consolidated Financial Statements

3

HIPPO HOLDINGS INC.
Condensed Consolidated Statements of Cash Flows
(In millions)
(Unaudited)
Three Months Ended March 31,
20242023
Cash flows from operating activities:
Net loss$(33.1)$(68.1)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization5.6 4.3 
Stock–based compensation expense8.4 16.1 
Fair value adjustments
1.5 1.0 
Impairment charges3.3  
Other non-cash items(2.4)(1.8)
Changes in assets and liabilities:
Accounts receivable, net(8.7)(26.4)
Reinsurance recoverable on paid and unpaid losses and LAE(8.8)(14.6)
Ceding commissions receivable(8.4)(14.1)
Prepaid reinsurance premiums60.3 (16.9)
Other assets(3.3)(2.1)
Provision for commission4.3 3.7 
Accrued expenses and other liabilities(6.1)5.0 
Loss and loss adjustment expense reserves14.1 11.4 
Unearned premiums(12.0)24.4 
Reinsurance premiums payable3.0 42.4 
Net cash provided by (used in) operating activities
17.7 (35.7)
Cash flows from investing activities:
Capitalized internal use software costs(3.3)(3.9)
Purchases of property and equipment(0.1) 
Purchases of fixed maturities
(17.3)(21.9)
Maturities of fixed maturities
14.4 2.3 
Sales of fixed maturities
0.6 0.8 
Purchases of short-term investments
(37.6)(89.3)
Maturities of short-term investments
101.8 119.8 
Sales of short-term investments
 7.0 
Other (1.0)
Net cash provided by investing activities
58.5 13.8 
Cash flows from financing activities:
Taxes paid related to net share settlement of equity awards(1.1)(0.9)
Proceeds from issuance of common stock
1.0 0.2 
Share repurchases under program (0.2)
Payments of contingent consideration(0.3)(0.4)
Distributions to noncontrolling interests and other
(7.6)(0.6)
Net cash used in financing activities(8.0)(1.9)
Net increase (decrease) in cash, cash equivalents, and restricted cash
68.2 (23.8)
Cash, cash equivalents, and restricted cash at the beginning of the period195.1 244.5 
Cash, cash equivalents, and restricted cash at the end of the period$263.3 $220.7 
    
See Notes to the Condensed Consolidated Financial Statements

4

HIPPO HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

1. Description of Business and Summary of Significant Accounting Policies
Description of Business
Hippo Holdings Inc., referred to herein as “Hippo” or the “Company” is an insurance holding company incorporated in Delaware. Hippo has subsidiaries that provide property and casualty insurance products to both individuals and business customers. The Company’s headquarters are located in Palo Alto, California.
Basis of Presentation and Consolidation
The interim condensed consolidated financial statements and accompanying notes of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and include the Company’s consolidated subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Certain information and disclosures normally included in condensed consolidated financial statements prepared in accordance with GAAP have been omitted accordingly.
The interim financial information is unaudited, but reflects all normal recurring adjustments that are, in the opinion of management, necessary to fairly present the information set forth herein. The interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. Interim results are not necessarily indicative of the results for a full year.

Use of Estimates
The preparation of the Company’s condensed consolidated financial statements in conformity with GAAP requires management to make estimates that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods. Significant items subject to such estimates and assumptions include, but are not limited to, loss and loss adjustment expense (“LAE”) reserves, provision for commission slide and cancellations, reinsurance recoverable on paid and unpaid losses and LAE, the fair values of investments, stock-based awards, warrant liabilities, contingent consideration liabilities, acquired intangible assets, deferred tax assets and uncertain tax positions, and revenue recognition. The Company evaluates these estimates on an ongoing basis. These estimates are informed by experience and other assumptions that the Company believes are reasonable under the circumstances. Actual results may differ significantly from these estimates.
Recent Accounting Pronouncements
Accounting Pronouncements Not Yet Adopted
In November 2023, the FASB issued ASU No. 2023-07, Improvements to Reportable Segment Disclosures. The ASU includes requirements that an entity disclose the title of the chief operating decision maker (CODM) and on an interim and annual basis, significant segment expenses and the composition of other segment items for each segment's reported profit. The standard also permits disclosure of additional measures of segment profit. This ASU is effective for public companies with annual periods beginning after December 15, 2023, and interim periods within annual period beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of the ASU on its disclosures.
In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures, which requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions. This ASU is effective for public companies with annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of the ASU on its disclosures.
5

HIPPO HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
2. Investments
The amortized cost and fair value of fixed maturities securities and short-term investments are as follows (in millions):
March 31, 2024
Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value
Fixed maturities available-for-sale:
U.S. government and agencies$15.1 $ $(0.1)$15.0 
States and other territories8.6  (0.4)8.2 
Corporate securities97.6 0.7 (1.4)96.9 
Foreign securities0.9   0.9 
Residential mortgage-backed securities20.2 0.1 (1.5)18.8 
Commercial mortgage-backed securities7.7  (0.5)7.2 
Asset backed securities15.9  (0.2)15.7 
Total fixed maturities available-for-sale166.0 0.8 (4.1)162.7 
Short-term investments:
U.S. government and agencies85.7   85.7 
Commercial paper19.9   19.9 
Corporate securities19.1   19.1 
Total short-term investments124.7   124.7 
Total$290.7 $0.8 $(4.1)$287.4 
December 31, 2023
Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value
Fixed maturities available-for-sale:
U.S. government and agencies$18.6 $ $(0.2)$18.4 
States and other territories9.3  (0.4)8.9 
Corporate securities91.3 1.1 (1.3)91.1 
Foreign securities0.9   0.9 
Residential mortgage-backed securities20.7 0.1 (1.3)19.5 
Commercial mortgage-backed securities7.7  (0.6)7.1 
Asset backed securities16.1  (0.3)15.8 
Total fixed maturities available-for-sale164.6 1.2 (4.1)161.7 
Short-term investments:
U.S. government and agencies137.7   137.7 
Commercial paper34.5   34.5 
Corporate securities14.9   14.9 
Total short-term investments187.1   187.1 
Total$351.7 $1.2 $(4.1)$348.8 
6

HIPPO HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The following tables present the gross unrealized losses and related fair values for the Company’s investments in available-for-sale debt securities and short-term investments, grouped by duration of time in a continuous unrealized loss position as of March 31, 2024, and December 31, 2023 (in millions):

March 31, 2024
Less than 12 months12 months or moreTotal
Fair ValueGross Unrealized LossesFair ValueGross Unrealized LossesFair ValueGross Unrealized Losses
Fixed maturities available-for-sale:
U.S. government and agencies$4.7 $ $3.9 $(0.1)$8.6 $(0.1)
States and other territories  8.0 (0.4)8.0 (0.4)
Corporate securities26.1 (0.2)40.2 (1.2)66.3 (1.4)
Foreign securities  0.9  0.9  
Residential mortgage-backed securities4.9 (0.1)11.1 (1.4)16.0 (1.5)
Commercial mortgage-backed securities0.4 (0.1)5.9 (0.4)6.3 (0.5)
Asset backed securities4.2  7.0 (0.2)11.2 (0.2)
Short-term investments:
U.S. government and agencies85.7    85.7  
Commercial paper19.9    19.9  
Corporate securities19.1    19.1  
Total $165.0 $(0.4)$77.0 $(3.7)$242.0 $(4.1)
December 31, 2023
Less than 12 months12 months or moreTotal
Fair ValueGross Unrealized LossesFair ValueGross Unrealized LossesFair ValueGross Unrealized Losses
Fixed maturities available-for-sale:
U.S. government and agencies$4.3 $ $10.5 $(0.2)$14.8 $(0.2)
States and other territories1.5  7.4 (0.4)8.9 (0.4)
Corporate securities5.7  37.4 (1.3)43.1 (1.3)
Foreign securities  0.9  0.9  
Residential mortgage-backed securities  11.6 (1.3)11.6 (1.3)
Commercial mortgage-backed securities0.4  5.8 (0.6)6.2 (0.6)
Asset backed securities1.6  8.2 (0.3)9.8 (0.3)
Short-term investments:
U.S. government and agencies137.7    137.7  
Commercial paper34.5    34.5  
Corporate securities
14.9    14.9  
Total$200.6 $ $81.8 $(4.1)$282.4 $(4.1)
7

HIPPO HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The Company has determined that unrealized losses as of March 31, 2024 and December 31, 2023 resulted from the interest rate environment, rather than a deterioration of the creditworthiness of the issuers. Therefore, an allowance for credit losses was not necessary as it is more likely than not that the Company will not be required to sell the investments before the recovery of the amortized cost basis or until maturity. As of March 31, 2024, none of the Company’s fixed maturity portfolio was unrated or rated below investment grade.
The amortized cost and fair value of fixed maturities securities by contractual maturity are as follows (in millions):
March 31, 2024
Amortized CostFair Value
Due to mature:
One year or less$19.4 $19.1 
After one year through five years82.5 81.1 
After five years13.3 13.3 
After ten years7.0 7.5 
Residential mortgage-backed securities20.2 18.8 
Commercial mortgage-backed securities7.7 7.2 
Asset backed securities15.9 15.7 
Total fixed maturities available-for-sale$166.0 $162.7 
Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.
Net realized gains and losses on fixed maturity securities were insignificant for the three months ended March 31, 2024 and 2023, respectively.
The Company’s net investment income is comprised of the following (in millions):
Three Months Ended March 31,
20242023
Interest on cash and cash equivalents$2.2 $1.2 
Fixed maturities income1.8 1.4 
Short-term investment income2.0 3.0 
Total gross investment income6.0 5.6 
Investment expenses(0.1)(0.2)
Net investment income$5.9 $5.4 
Pursuant to certain regulatory requirements, the Company is required to hold assets on deposit with various state insurance departments for the benefit of policyholders. These special deposits are included in cash and cash equivalents, fixed maturities, or short-term investments on the condensed consolidated balance sheets. The carrying value of securities on deposit with state regulatory authorities total $13.7 million and $12.9 million as of March 31, 2024 and December 31, 2023, respectively.
8

HIPPO HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
3. Cash, Cash Equivalents, and Restricted Cash
The following table sets forth the cash, cash equivalents, and restricted cash (in millions):
March 31,
2024
December 31,
2023
Cash and cash equivalents:
Cash$120.2 $54.3 
Money market funds103.2 77.8 
Commercial paper 10.0 
U.S. government and agencies  
Total cash and cash equivalents$223.4 $142.1 
Restricted cash:
Fiduciary assets29.8 32.5 
Letters of credit and cash on deposit10.1 20.5 
Total restricted cash39.9 53.0 
Total cash, cash equivalents, and restricted cash$263.3 $195.1 
4. Fair Value Measurement
When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions, and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:
Level 1 — Quoted prices in active markets for identical assets or liabilities that are publicly accessible at the measurement date.
Level 2 — Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 — Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.
9

HIPPO HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The following table summarizes the Company’s fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis (in millions):
March 31, 2024
Level 1Level 2Level 3Total
Financial assets:
Cash, cash equivalents, and restricted cash$263.3 $ $ $263.3 
Fixed maturities available-for-sale:
U.S. government and agencies15.0   15.0 
States and other territories 8.2  8.2 
Corporate securities 96.9  96.9 
Foreign securities 0.9  0.9 
Residential mortgage-backed securities 18.8  18.8 
Commercial mortgage-backed securities 7.2  7.2 
Asset backed securities 15.7  15.7 
Total fixed maturities available-for-sale15.0 147.7  162.7 
Short-term investments
U.S. government and agencies85.7   85.7 
Commercial paper 19.9  19.9 
Corporate securities 19.1  19.1 
Total short-term investments85.7 39.0  124.7 
Total financial assets$364.0 $186.7 $ $550.7 
Financial liabilities:
Contingent consideration liability$ $ $14.2 $14.2 
Public warrants0.1   0.1 
Private placement warrants 0.1  0.1 
Total financial liabilities$0.1 $0.1 $14.2 $14.4 
10

HIPPO HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
December 31, 2023
Level 1Level 2Level 3Total
Financial assets:
Cash, cash equivalents, and restricted cash$195.1 $ $ $195.1 
Fixed maturities available-for-sale:
U.S. government and agencies18.4   18.4 
States and other territories 8.9  8.9 
Corporate securities 91.1  91.1 
Foreign securities 0.9  0.9 
Residential mortgage-backed securities 19.5  19.5 
Commercial mortgage-backed securities 7.1  7.1 
Asset backed securities 15.8  15.8 
Total fixed maturities available-for-sale18.4 143.3  161.7 
Short-term investments
U.S. government and agencies137.7   137.7 
Commercial paper 34.5  34.5 
Corporate securities 14.9  14.9 
Total short-term investments137.7 49.4  187.1 
Total financial assets$351.2 $192.7 $ $543.9 
Financial liabilities:
Contingent consideration liability$ $ $13.6 $13.6 
Public warrants0.1   0.1 
Private placement warrants 0.1  0.1 
Total financial liabilities$0.1 $0.1 $13.6 $13.8 
The Company’s policy is to recognize transfers into and transfers out of fair value hierarchy levels at the end of each reporting period. There were no transfers between levels in the fair value hierarchy during the three months ended March 31, 2024.
Contingent Consideration
The contingent consideration, relating to the Company’s 2019 acquisition of North American Advantage Insurance Services, LLC, is re-valued to fair value at the end of each reporting period using the present value of future payments based on an estimate of revenue and customer renewals. North American Advantage Insurance Services, LLC’s ultimate parent company was Lennar Corporation, a related party of the Company. There is no limit to the maximum potential contingent consideration as the consideration is based on acquired customer retention. The table below presents the changes in the contingent consideration liability valued using Level 3 inputs (in millions):

20242023
Balance as of January 1,$13.6 $11.9 
Payments of contingent consideration(1.0)(0.7)
Changes in fair value1.6 0.8 
Balance as of March 31,$14.2 $12.0 
11

HIPPO HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)


5. Intangible Assets

March 31, 2024December 31, 2023
Weighted- Average Useful Life Remaining (in years)Gross Carrying AmountAccumulated AmortizationNet Carrying AmountGross Carrying AmountAccumulated AmortizationNet Carrying Amount
(in millions)(in millions)
Agency and carrier relationships4.7$13.5 $(5.5)$8.0 $13.5 $(5.1)$8.4 
State licenses and domain nameIndefinite10.5 — 10.5 10.5 — 10.5 
Customer relationships4.818.5 (11.6)6.9 18.5 (10.9)7.6 
Other5.51.7 (0.9)0.8 1.7 (0.9)0.8 
Total intangible assets, net$44.2 $(18.0)$26.2 $44.2 $(16.9)$27.3 
Amortization expense related to intangible assets for the three months ended March 31, 2024 and 2023 was $1.2 million and $1.1 million, respectively. The amortization expense is included in sales and marketing expenses for customer relationships, agency and carrier relationships, and other on the condensed consolidated statements of operations and comprehensive loss.
6. Capitalized Internal Use Software
March 31,
2024
December 31,
2023
(in millions)
Capitalized internal use software$83.5 $79.1 
Less: accumulated amortization(34.6)(30.7)
Total capitalized internal use software$48.9 $48.4 
Amortization expense related to capitalized internal use software for the three months ended March 31, 2024 and 2023 was $3.9 million and $2.9 million, respectively. The amortization expense is included in insurance related expenses on the condensed consolidated statements of operations and comprehensive loss.
12

HIPPO HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
7. Other Assets
March 31,
2024
December 31,
2023
(in millions)
Property and equipment$34.5 $34.9 
Prepaid expenses13.5 11.3 
Claims receivable1.3 5.6 
Lease right-of-use assets6.5 10.6 
Deferred policy acquisition costs
5.0  
Other8.3 6.8 
Total other assets$69.1 $69.2 
8. Accrued Expenses and Other Liabilities
March 31,
2024
December 31,
2023
(in millions)
Claim payments outstanding$25.3 $26.3 
Lease liability13.4 14.8 
Advances from customers10.5 9.8 
Deferred revenue0.2 3.8 
Employee related accruals8.9 7.3 
Premium refund liability11.8 12.2 
Fiduciary liability4.1 6.0 
Contingent consideration liability14.2 13.6 
Other17.0 19.7 
Total accrued expenses and other liabilities$105.4 $113.5 
13

HIPPO HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
9. Loss and Loss Adjustment Expense Reserves
The reconciliation of the beginning and ending reserve balances for losses and loss adjustment expenses (“LAE”), net of reinsurance is summarized as follows for the three months ended March 31, (in millions):
20242023
Reserve for losses and LAE gross of reinsurance recoverables on unpaid losses and LAE as of beginning of the period$322.5 $293.8 
Less: Reinsurance recoverables on unpaid losses and LAE(221.4)(228.8)
Reserve for losses and LAE, net of reinsurance recoverables as of beginning of the period101.1 65.0 
Add: Incurred losses and LAE, net of reinsurance, related to:
Current year52.6 37.8 
Prior years (0.1)
Total incurred52.6 37.7 
Deduct: Loss and LAE payments, net of reinsurance, related to:
Current year20.3 6.5 
Prior years22.2 14.8 
Total paid42.5 21.3 
Reserve for losses and LAE, net of reinsurance recoverables at end of period111.2 81.4 
Add: Reinsurance recoverables on unpaid losses and LAE at end of period225.4 223.8 
Reserve for losses and LAE gross of reinsurance recoverables on unpaid losses and LAE as of end of the period$336.6 $305.2 
Loss development occurs when actual losses incurred vary from the Company’s previously developed estimates, which are established through the Company’s loss and LAE reserve estimate processes.
Net incurred losses and LAE experienced an insignificant amount of development for the three months ended March 31, 2024 and a net favorable development of $0.1 million for the three months ended March 31, 2023.
The three months ended March 31, 2023 prior period’s favorable development of $0.1 million was driven primarily by the 2022 accident year, resulting in a net release of $0.2 million from catastrophe reserves, offset by adverse development of $0.1 million from attritional reserves. These changes were primarily a result of ongoing analysis of claims emergence patterns and loss trends.
10. Reinsurance
The Company purchases reinsurance to help manage exposure to property and casualty insurance risks, including attritional and catastrophic risks. The Company’s insurance company subsidiaries have entered into both proportional and non-proportional reinsurance treaties. The Company also assumes risk from non-affiliated insurance carriers.
Proportional Reinsurance Treaties — Hippo Home Insurance Program
In 2024, the Company started transitioning from proportional reinsurance to a more traditional excess of loss (XOL) reinsurance structure, retaining nearly all the attritional risk and related premium, and purchasing XOL reinsurance to protect against major catastrophic weather events.
For the Company’s primary homeowners reinsurance program for policies with effective dates in 2024, the Company elected not to purchase proportional reinsurance, and retain more of the exposure and associated premium.
For business produced through the Company’s builder channel for policies with effective dates in 2024, the Company purchased proportional reinsurance from one third-party reinsurer and expects to retain approximately
14

HIPPO HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
85% of the premium and associated risk, before purchasing catastrophic protection. All reinsurance obligations are appropriately collateralized. The reinsurance contracts are subject to contingent commission adjustments and limited loss participation features, which align the Company’s interests with those of the reinsurers.
For the Company’s primary homeowners reinsurance treaty for policies with effective dates in 2023 the Company secured proportional reinsurance from a diverse panel of six third-party reinsurers. All reinsurers are either rated “A-” Excellent or better by AM Best, or the reinsurance is appropriately collateralized. In 2023, the Company retained approximately 40% of the premium through its insurance company subsidiaries or its captive reinsurance company, RH Solutions Insurance (Cayman) Ltd. (“RHS”), before purchasing catastrophe protection.
Effective January 1, 2024, the Company elected to cut off 25% of the reinsurer’s participation on the 2023 proportional reinsurance treaty and retain the remaining exposure and related premiums.
For business produced through the Company’s builder channel for policies with effective dates in 2023, the Company purchased proportional reinsurance from three third-party reinsurers. All reinsurers are rated “A-” Excellent or better by AM Best, or the reinsurance is appropriately collateralized. In 2023, the Company retained approximately 58% of the premium produced through the Company’s insurance company subsidiaries or RHS, before purchasing catastrophe protection.
For the Company’s primary homeowners reinsurance treaty for policies with effective dates in 2022, the Company secured proportional reinsurance from a diverse panel of eleven third-party reinsurers with AM Best ratings of “A-” Excellent or better. A total of approximately 10% of the premium was retained through the Company’s insurance company subsidiaries, including the Company’s captive reinsurance company, RHS.
The Company also seeks to further reduce its risk retention through purchases of non-proportional reinsurance described below.
Non-Proportional Reinsurance — Hippo Home Insurance Program
The Company purchases non-proportional excess of loss catastrophe coverage (“XOL”) reinsurance which includes traditional reinsurance protection, state subsidized reinsurance protection, catastrophe bonds, and industry loss warranty products. Through the Company’s insurance company subsidiaries, the Company is exposed to the risk of natural catastrophe events that could occur on the risks arising from policies underwritten by the Company or other managing general agents (“MGAs”). The Company is also exposed to this risk through its captive reinsurer, which takes on a share of the risk underwritten by the Company’s MGA business.
In May 2023, the Company secured new catastrophe protection through a per occurrence XOL reinsurance agreement with Mountain Re Ltd. (“Mountain Re”), an independent Bermuda company, licensed as a Special Purpose Insurer. The reinsurance agreement meets the requirements to be accounted for as reinsurance in accordance with the guidance for reinsurance contracts. In connection with the reinsurance agreement, Mountain Re issued notes (generally referred to as “catastrophe bonds”) to investors, consistent with the amount of coverage provided under the reinsurance agreement. The reinsurance agreement provides the Company with coverage through June 2026, and pursuant to the agreement, Mountain Re provides XOL reinsurance coverage to the Company for losses from a variety of perils, including named storms, fire following an earthquake, severe thunderstorms, and winter storms on business produced through the Hippo MGA. Under the terms of the reinsurance agreement, the Company is obligated to pay annual reinsurance premiums to Mountain Re for the reinsurance coverage. Amounts payable under the reinsurance agreement with respect to any covered event cannot exceed the Company’s actual losses from such event.
15

HIPPO HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The Company’s XOL program provides protection to the Company from catastrophes that could impact a large number of insurance policies. In 2023, the Company purchased XOL reinsurance so that the probability of losses from a single occurrence exceeding the protection purchase was no more than 0.4%. In 2024, the Company increased its purchase of non-proportional XOL reinsurance, raising the per occurrence XOL limit by 11% and increasing the number of participating reinsurers from 14 to 19. Under this placement, along with other existing catastrophe protections, the Company is protected on the upper layers of risk up to a 1 in 250-year event when considering the corporate catastrophe and the Florida Hurricane Catastrophe Fund (the “FHCF”) XOL described below under “Other Reinsurance”. The reinsurance protects the Company from all but the most severe catastrophic events.
Other Reinsurance
Spinnaker Insurance Company (“Spinnaker”) purchases reinsurance for programs written by MGAs other than Hippo through its Insurance-as-a-Service business. The reinsurance treaties are a mix of proportional and XOL in which generally 80% to 100% of the risk, up to the 1 in 250 year return period, is ceded. The reinsurance contracts are subject to variable commission adjustments and loss participation features, including loss caps, which may increase the amount of losses retained by the Company in excess of the Company’s pro-rata participation. Such provisions are recognized in the period based on the experience to date under the agreement.
Spinnaker purchases a corporate catastrophe XOL program that attaches above the individual programmatic reinsurance programs protecting the property business written by Hippo as well as the other MGAs. This treaty has a floating retention and attaches at the exhaustion point of the underlying programs’ specific reinsurance. The catastrophe bond, and the FHCFs, described below, inures to the benefit of this contract. This program provides the Company protection from catastrophes that could impact a large number of correlated insurance policies underwritten by the Company and its other MGAs. The Company buys this XOL so that the probability of losses from a single occurrence across the property portfolio exceeding the protection purchased is no more than 0.4%, or equivalent to a 1 in 250-year return period. This reinsurance protects the Company from all but the most severe catastrophic events.
Spinnaker also purchases reinsurance from the State Board of Administration in Florida via the FHCF annually for admitted residential hurricane losses in Florida. This coverage is provided and required by the State of Florida and protects business written by Hippo as well as other MGAs that produce admitted residential policies. The Company currently purchases reimbursement protection at the maximum level (90%) of mandatory coverage offered by the FHCF.
With all reinsurance programs, the Company’s wholly owned insurance carriers are not relieved of their primary obligations to policyholders in the event of a default or the insolvency of their reinsurers. As a result, a credit exposure exists to the extent that any reinsurer fails to meet its obligations assumed in the reinsurance agreements. To mitigate this exposure to reinsurance insolvencies, the Company evaluates the financial condition of its reinsurers and, in certain circumstances, holds substantial collateral (in the form of funds withheld, qualified trusts, and letters of credit) as security under the reinsurance agreements. No allowance has been recorded in the
16

HIPPO HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
three months ended March 31, 2024, and 2023 for amounts anticipated to be uncollectible or for the anticipated failure of a reinsurer to meet its obligations under the contracts.
The following tables reflect amounts affecting the condensed consolidated statements of operations and comprehensive loss for reinsurance as of and for the three months ended March 31, 2024, and 2023 (in millions).
For the Three Months Ended March 31,
20242023
Written premiumsEarned premiumsLoss and LAE incurredWritten premiumsEarned premiumsLoss and LAE incurred
Direct$188.6 $202.5 $117.3 $185.7 $164.1 $124.6 
Assumed6.1 4.2 3.8 3.8 1.0 1.7 
Gross194.7 206.7 121.1 189.5 165.1 126.3 
Ceded(85.9)(146.2)(68.5)(168.2)(151.3)(88.6)
Net$108.8 $60.5 $52.6 $21.3 $13.8 $37.7 
As of March 31, 2024 and December 31, 2023, a provision for sliding scale commissions of $27.6 million and $23.8 million, respectively, is included in provision for commission on the condensed consolidated balance sheets. As of March 31, 2024 and December 31, 2023, a receivable for sliding scale commissions of $6.7 million and $5.8 million, respectively, is included in ceding commissions receivable on the condensed consolidated balance sheets.
As of March 31, 2024 and December 31, 2023, a provision for loss participation features of $51.9 million and $112.8 million, respectively, was recorded as a contra-asset in reinsurance recoverable on the condensed consolidated balance sheets.
11. Geographical Breakdown of Gross Written Premium
Gross written premium by state is as follows (in millions):

Three Months Ended March 31,
20242023
Amount% of GWPAmount% of GWP
State
California$40.5 20.8 %$32.8 17.3 %
Texas27.7 14.2 %39.6 20.9 %
Florida25.6 13.1 %21.5 11.3 %
Georgia7.3 3.7 %9.2 4.9 %
Illinois6.0 3.1 %5.1 2.7 %
New Jersey4.6 2.4 %4.3 2.3 %
Ohio4.6 2.4 %3.7 2.0 %
Colorado4.1 2.1 %5.8 3.1 %
Arizona4.0 2.1 %4.5 2.4 %
Missouri3.0 1.5 %3.6 1.9 %
Other67.3 34.6 %59.4 31.3 %
Total$194.7 100 %$189.5 100 %
17

HIPPO HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
12. Commitments and Contingencies
Legal Proceedings
From time to time, the Company may become involved in litigation or other legal proceedings. The Company is routinely named in litigation involving claims from policyholders. Legal proceedings relating to claims are reserved in the normal course of business. The Company does not believe it is a party to any pending litigation or other legal proceedings that is likely to have a material adverse effect on the Company’s business, financial condition or results of operations. Regardless of outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors.
The Company records a liability for litigation if an unfavorable outcome is probable and the amount of loss or range of loss can be reasonably estimated. If an unfavorable outcome is probable and a reasonable estimate of the loss is a range, the Company accrues the best estimate within the range. If no amount within the range is a better estimate than any other amount, the Company accrues the minimum amount within the range. If an unfavorable outcome is probable but the amount of the loss cannot be reasonably estimated, the Company discloses the nature of the litigation and indicates that an estimate of the loss or range of loss cannot be made. If an unfavorable outcome is reasonably possible and the estimated loss is material, the Company discloses the nature and estimate of the possible loss of the litigation. The Company does not disclose information with respect to litigation where an unfavorable outcome is considered to be remote or where the estimated loss would not be material. Based on current expectations, such matters, both individually and in the aggregate, are not expected to have a material adverse effect on the Company’s liquidity, results of operations, business, or financial condition
On November 19, 2021, Hippo and Assaf Wand were named in a civil action in San Francisco Superior Court brought by Eyal Navon. Mr. Navon alleged six claims against Mr. Wand for breach of fiduciary duty, breach of contract, promissory estoppel, fraud, negligent misrepresentation, and constructive fraud surrounding a loan and call option entered into between Innovius Capital Canopus I, L.P. (“Innovius”) and Mr. Navon, as well as alleged promises made by Mr. Wand to Mr. Navon while Mr. Navon was an employee of Hippo. Innovius was an investor in the Company prior to its transaction with Mr. Navon. Mr. Navon filed a Fourth Amended Complaint on February 2, 2024, in which he alleged 19 claims for relief and sought treble damages in connection with certain of the claims. Hippo has engaged counsel to defend both Hippo and Mr. Wand.
On February 16, 2024, Hippo and Mr. Wand filed an answer to the Fourth Amended Complaint, and filed a cross-complaint against Mr. Navon for fraud, negligent misrepresentation, fraudulent inducement, and breach of contract.
Additionally, on February 16, 2024, Innovius also filed an amended cross-complaint naming Mr. Navon, Hippo, and Mr. Wand as cross-defendants.  Innovius alleged that Hippo and Mr. Wand aided and abetted Mr. Navon’s fraud against Innovius. The cross-complaint also included a breach of contract claim.
Hippo and Mr. Wand have filed a Motion for Summary Judgment against each of the claims filed by Mr. Navon and Innovius. Mr. Navon has filed a Motion for Summary Judgment against the claims filed by Hippo and Mr. Wand. A hearing on the Motions for Summary Judgment is expected to take place in June 2024. The court has set a trial date of September 9, 2024.
Any potential losses associated with Mr. Navon’s claims cannot be estimated at this time.
13. Stockholders’ Equity
Common Stock
The Company’s common stock and warrants trade on the New York Stock Exchange (“NYSE”) under the ticker symbols “HIPO” and “HIPO.WS,” respectively. Pursuant to its Certificate of Incorporation, the Company is authorized to issue 80 million shares of common stock, with a par value of $0.0001 per share. Each share of common stock is entitled to one vote. The holders of the common stock are also entitled to receive dividends
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HIPPO HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
whenever funds are legally available and when declared by the board of directors. No dividends have been declared or paid since inception.

Stock Options
The following table summarizes option activity under the plans:
Options OutstandingWeighted-Average RemainingAggregate Intrinsic Value
(In Millions)
Number of SharesWeighted Average Exercise PriceContract Term
(In Years)
Outstanding as of December 31, 2023
1,589,529$16.13 6.8$0.2 
Granted 
Exercised(83,654)12.95 
Cancelled/Expired(64,348)15.45 
Outstanding as of March 31, 20241,441,52716.35 6.6$3.6 
Vested and exercisable as of March 31, 20241,335,781$16.38 6.5$3.4 
The aggregate intrinsic value of options exercised during the three months ended March 31, 2024 and 2023 was $0.4 million and $0.3 million, respectively, and is calculated based on the difference between the exercise price and the fair value of the Company’s common stock as of the exercise date. There were no options granted during the three months ended March 31, 2024 and 2023.
Total unrecognized compensation cost of $2.5 million as of March 31, 2024 is expected to be recognized over a weighted-average period of 1.1 years.
Stock Option Repricing
On March 1, 2023, the Company’s Board of Directors (“Board”) approved a one-time repricing of certain stock option awards. The repricing impacted out-of-the-money stock options held by all employees who were employed through March 6, 2023 (the “Repricing Date”), including the Company’s executive officers. Each stock option was repriced to have a per share exercise price equal to the closing price of the Company’s common stock on the Repricing Date, except that the per share exercise price of each stock option held by any of the Company’s executive officers that was repriced was subject to a premium. The premium was in effect from the Repricing Date through the first anniversary of the Repricing Date (the “Premium End Date”). In the event the applicable executive officer (i) exercised his/her stock options prior to the Premium End Date or (ii) did not provide services to the Company as an employee or a consultant through the Premium End Date, the per share exercise price applicable to his/her stock options was two times the closing price of the Company’s common stock on the Repricing Date. There were no changes to the number of shares, the vesting schedule or the expiration date of the repriced stock options. As a result of the repricing, the Company will record an incremental share-based compensation charge of $3.6 million, of which $1.4 million was recognized on the Repricing Date, and $2.2 million is being recognized over the remaining term of the repriced options.

Restricted Stock Units and Performance Restricted Stock Units
The Company grants service based RSUs and performance based RSUs (“PRSUs”) as part of the Company’s equity compensation plans. The Company measures RSU and PRSU expense for awards granted based on the estimated fair value of those awards at the grant date. To estimate the fair value of PRSUs containing a market condition, the Company used the Monte Carlo valuation model. The fair value of all other awards is based on the closing price of the Company’s common stock as reported on the NYSE on the date of grant. The RSUs
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HIPPO HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
generally vest over a period of two to four years. The PRSUs vest based on the level of achievement of the performance goals and continued employment with the Company over a one to four year performance period.
Stock-based compensation expense for RSUs is recognized based on the straight-line basis over the employee requisite service period. Stock-based compensation expense for PRSUs is recognized on a graded accelerated basis over the employee requisite service period. The Company accounts for forfeitures as they occur.
During 2022, the Company granted PRSUs. Half of the PRSUs granted are subject to the achievement of market-based performance goals, and the remaining PRSUs are subject to vesting pursuant to internal financial measures. The actual number of units that ultimately vest will range from 0% to 100% of the granted amount, based on the level of achievement of the performance goals and continued employment with the Company.
The following table summarizes the RSU and PRSU activity for the three months ended March 31, 2024:
Number of SharesWeighted Average Grant-Date Fair Value per Share
Unvested and outstanding as of December 31, 2023
2,534,683$28.28 
Granted418,666