Omnichannel Acquires Kin Insurance

Agents also contribute to churn because it's part of their value proposition to the user to reshape every year and because insurance companies often incentivize them to churn the book by paying higher first year commissions or growth bonuses.

Third by pre underwriting and marketing to the customers who are good match for our portfolio and underwriting criteria. We can use our direct to consumer marketing as a tool to reduce our loss ratio.

In comparison <unk>.

<unk> typically will compare each policy across many carriers and only send the customer to the cheapest or whoever pays the highest commission, which inherently results in adverse selection.

By controlling which coverages are applied to each policy and maintaining a direct and collaborative relationship with the customer during claims the direct to consumer model can further reduce loss ratio and increase customer satisfaction.

Our direct to consumer approach would not be possible without the technology that we've built.

Our DNA as a technology company and an industry star for technology Equips us with several additional advantages.

First.

Our technology advantage allows us to respond more quickly to changes in our legacy competitors.

Adding new data sources underwriting rules pricing algorithms running marketing experiments, even adding a new product or a new state are all orders of magnitude faster for us than for legacy insurance company.

Especially combined with our direct to consumer marketing, our tech and enables us to capitalize on opportunities that our competitors cannot.

Second analyzing the risk of each home, it's difficult because homes are so idiosyncratic even homes right next to each other.

Clearly different risk profiles, because they are built differently.

Which makes homeowners insurance fundamentally more difficult than auto or renters.

Our technology enables us to plug into external data sources create our own data sources extract structured data from unstructured data sources, such as images and forms.

And way the many data sources against each other in order to price each risk accurately.

That has enabled us to price slightly lower than average overall, well applying the most attractive pricing to homes with the best performing characteristics.

Our data advantage enables our team of top actuaries to apply the right price and right products to each individual risk applying deep analysis to every characteristic of the home.

Third.

Our technology provides our customers with a faster more personal claims experience.

We begin by proactively tracking weather events and automatically texting customers that are at risk.

The resources and information necessary to mitigate the risk.

Immediately after the passage of the weather they've received another taxes with the wellness Jack Hey, It's Jane.

<unk> how are you doing.

The customers love those texts and they respond at a high rate 58%.

Most customers don't have damage, requiring a claim and theyre happy we checked off.

But those who do can file a claim directly from the text message and include photos of the damage.

Throughout the process of the claim the user has kept up to date in the similar way it always knows the status of the claim and what needs to be done next to move things forward and get the home fixed.

Timken subtle complicated homeowners insurance claims without physically visiting the customer, which is a huge advantage and speed and cost, especially during an extreme weather event.

Our reaction speed accurate.

Accurate risk assessment and differentiate a claims experience ads at a loss ratio advantage from our direct to consumer targeting.

As a result, even as a younger company, we already have a lower loss ratio and are outperforming both our legacy geographic and our insured tech peers.

Such outperformance is meaningful because typically insurance portfolios underperformed in early years with improvement coming over time.

Our direct to consumer business model and tech advantage equip us with multiple opportunities to continue our rapid growth at scale, while ensuring that we maintain attractive unit economics.

Through tactical geographic expansion.

Currently we operate in 3 States, California, Florida, and Louisiana, which is intentional.

We wanted to start with Big States with larger average policy sizes and in states, where our data advantage is most meaningful we've.

We've been very deliberate in the selection of our geographies and those 3 geographies combined are a $20 billion plus market opportunity for Kent.

We expand we expect to expand into a handful of other states by mid 2022, which will give us access to almost 50% of the $100 billion plus homeowners insurance market.

By 2023, we expect that figure to reach 87% or essentially a tam of over $90 billion in the states, where we will have a presence.

We recently entered into an agreement to acquire a set of licenses or insurance shell that comes with 43 state licenses and will speed our entry into additional states.

We expect that acquisition to close before the business combination is completed.

Second.

Ken's partnership with Omnichannel will allow us to elevate our brand awareness across new marketing channels and drive stronger conversion.

Our priority is to build top of the funnel awareness, which will improve the results of our already strong performance marketing.

Matt literally teaches the course at Harvard on this kind of marketing and the business model and the rest of the Omnichannel team, including Gary the inner check am at Cheyenne and Denise Lamberson have already been specifically helpful. In helping can activate new marketing channels.

Third our cross sell opportunity is massive.

Because homeowners are the best customers for both insurance and non insurance products.

Median age of our customers is 59, they have assets they live in expensive homes embraced technology.

And they have a direct and positive relationship with Kent and.

And we intend to sell them many additional products.

We envision adding other insurance products in time, including auto and life insurance.

As well as non insurance products, such as home services solar and home finance.

Historically insurance companies have had a difficult time with such cross selling because the customer relationship and right to market other products contractually for walks to the agent not the insurer.

With that I would now like to turn the call over to our CFO Josh Cohen.

Josh.

Thank you Sean as you highlighted we have numerous channels to further accelerate our growth beyond our current rapid pace we.

We generated over $16 million in total written premium in the first quarter of 2021 and $24 million in the second quarter of 2021 growth of over 40% quarter over quarter and 200% year over year.

Our recent upward trajectory trajectory puts us well on pace to generate nearly $100 million in total written premium for the full year of 2021.

By successfully executing on our multiple growth strategies strategies by 2023, we believe we can exceed $400 million in total written premiums more than quadrupling our current pace.

<unk> business model is different from our insurer tech peers, and how we operate a reciprocal exchange.

Exchange as an insurance company that is owned by policyholders and managed by an outside company for a fee. It's an established model some of the oldest and best known insurance companies, including farmers USAA and Erie operate reciprocal exchanges.

The benefit of that model to gain shareholders as I can as a simple high margin and predictable revenue stream without direct exposure to volatile weather.

In exchange for managing the exchange, which is called the kin Inter insurance network kin receives a fee of 32% of written premium regardless of periodic results.

The benefit to customers is alignment of interests a reciprocal unlike a stock insurance company as a peer to peer model since Ken is not reliant on generating underwriting profits and the reciprocal our goal is for it to breakeven and use efficiencies generated by our technology platform and direct distribution model to achieve high operating margins in the management company.

This unique structure truly aligns the interest of Kim and our customers.

Does the reciprocal is owned by the policyholders Theres, no real or perceived bias to pay less for claims.

If the reciprocal outperforms that leads to lower rates for its members.

Like most reciprocal exchanges the kin enter insurance network charges customers a mandatory surplus contribution in addition to premium.

The surplus contributions set at 10% of premium.

There are cyclical does not pay a fee nor does it incur premium or income tax on the surplus contribution which flows directly to the balance sheet of the reciprocal exchange and helps the reciprocal accumulate capital.

Ken's unit economics are robust.

Even though as we grow rapidly and we expect them to remain strong as we layer in.

In top of the funnel inputs, we have a robust average annual premium per customer of over $600 and a retention rate of over 90%.

Which is best in class among our insured tech peers.

Our direct to consumer model.

We were able to maintain a reasonable customer acquisition cost of approximately $500 on a forward basis.

<unk> marketing and operational costs.

All of that translates into an LTV to CAC ratio of nearly 8 X, which is outstanding for any direct to consumer business and we will continue to work to grow this metric in the years ahead as we add other products.

Importantly, as we are achieving all of these strong metrics without cutting corners.

Our adjusted loss ratio of 77% for 2020 outperformed the geographic peers, who saw an average of 79% loss ratio last year.

When we report our adjusted loss ratio the only adjustment being made is to include the surplus contribution on an earned basis in the denominator, which provides an apples to apples comparison with other insurance companies that are not organized as reciprocal exchanges.

We have also taken the rate and underwriting actions to bring our loss ratio down even further and to best position us to achieve our targets going forward. Despite our outperformance with multiple catastrophic events last year the market had a significantly above average last year.

Based on the model projections for our portfolio about 15 points of our 77% adjusted loss ratio was attributable to abnormal volatility from an unusually bad weather year with 4 major hurricanes, making landfall and some big hail events.

Beyond that we've taken a few other actions, including the aforementioned rate increases and multiple significant underwriting process changes and we expect to see considerable improvement in our adjusted loss ratio in 2021.

Overall, we are laser focused on ensuring we continue to optimize our underwriting overtime and grow our unit economic advantage with that said I would like to now turn the call back to Sean.

Thank you Josh.

I hope that today, we have conveyed to you can differentiate the value proposition and the clear opportunity to take substantial market share and generate sustainable and profitable rapid growth in an extremely inefficient industry.

We're thrilled to partner with Omnichannel, which clearly shares our commitment to providing customers with a compelling offering and experience and recognizes the opportunities. We have ahead of ourselves thanks to our advanced platform.

We hope you will join us to become a long term supporter of Ken as we continue to make home mature, it's easy and affordable.

With that we thank you for our time and your interest in kin. If you have additional questions. Please contact us at our email investors at Kim Dotcom.

Thank you again for joining today's call.

This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.