Q1 2022 Hippo Holdings Inc Earnings Call
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Hello, and welcome to today's first quarter 2022 earnings call. My name is daily and I'll be the moderator for today's call.
All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question. Please press star followed by one on your telephone keypad.
I would now like to pass the conference over to Cliff Gallant of Investor Relations. Please go ahead. Thank you operator.
Good morning, everybody and thank you for joining <unk> first quarter earnings conference call earlier. This morning, <unk> issued a shareholder letter announcing its first quarter results, which is also available at investor thought Halo Dot com, leading todays discussions will be hippos, Chief Executive officer of soft one president Rick <unk>, Chief Financial Officer Stuart.
Following managements prepared remarks, we will open up the call to questions.
Before we begin I'd like to remind you that our discussion will contain predictions expectations forward looking statements and other information about our business that is based on management's current expectations as of the date of this presentation forward. Looking statements include but are not limited to <unk> expectations or predictions of financial and business performance and conditions and competitive and industry outlook.
Forward looking statements are subject to risks uncertainties and other factors that will cause our actual results to differ materially from historical results <unk> from our forecast, including those set forth in <unk> form 8-K filed today.
More information please refer to the risks uncertainties and other factors discussed in <unk> SEC filings all cautionary statements that we make during this call are applicable to any forward looking statements. We make whenever they appear you should carefully consider the risks and uncertainties and other factors discussed in to both the SEC filings do not place undue reliance on forward looking statements as Hippo is under no obligation.
That expressly disclaims any responsibility for updating altering or otherwise revising any forward looking statements, whether as a result of new information future events or otherwise except as required by law.
During this conference call. We will also refer to non-GAAP financial measures such as total generated premium and adjusted EBITDA, Our GAAP results and description of our non-GAAP financial measures with a full reconciliation to GAAP can be found in the first quarter 2022 shareholder letter, which has been furnished to the SEC and available on our website.
I'll turn the call over to <unk> co founder and CEO of HIPAA.
Thank you Claire.
We are pleased to report that <unk> has had a successful start to 2022.
Continuous improvement is the hallmark of the April culture and over the past year to focus on my efforts has been on the gross loss ratio and for the first quarter. We are reporting our best loss ratio as a public company.
<unk> remains robust and on track with our full year target.
We also believe the quality of our products and services continues to get better.
Outlook is bright.
<unk> generated premium grew 25% over the prior year quarter.
Our state expansion efforts are gaining momentum as recently licensed states begin to produce volume.
We launched in New York in late April and we're expecting other states in coming months.
We believe our customer satisfaction and word of mouth reputation remains strong with equal one is premium retention at 87%.
We continue to expect full year PGP in the $800 million to $820 million range.
Our homebuilder business is our fastest growing and most profitable channel.
When we partner with a homebuilder like we did with Lasalle in 2019, we have proven our ability to materially increased insurance attachment rate driving volume and better customer outcome for our partners.
We did this by deeply integrating into the home buying process and offering an insurance policy tailored for the needs of new home buyer.
We believe that as the market recognize that <unk> delivers a better experience for both builders and their customers our builder network will further expand.
Our gross loss ratio of 76% is our best since we became a public company.
While Q1 is traditionally a milder weather quarter, we're very pleased with the progress, particularly compared to last deal where we encountered a winter storm.
We remain confident in our previous guidance of significant improvement over full year 2021 resorts.
We achieved our loss ratios. Despite the inclusion of 19 points of catastrophe loss event stemming from winter storms across the U S.
As we add greater geographic balance and scale to our book of business the impact of individual events should lessen.
The additions of New York and other states will add significantly to this balance.
We continue to refine our pricing and underwriting models to appropriately match price to risk and improve our ability to identify and track the type of Oman, as well, particularly well suited to our product.
Our best customers are homeowners, who embraced proactive protection and are willing to use technology to make the home safer and easier to manage.
Looking ahead, we expect that the actions, we've already taken including more advanced pricing and segmentation and better geographic balance we have favorable impacts on the loss ratio.
In addition, we are beginning to identify and execute upon other areas for further improvement.
For example, our new claims leadership is leveraging technology to improve customer experience, while reducing loss expenses and improving operational efficiency.
We are excited to be returning to the office, we've opened and expanded our office locations to include Oakland and a larger space in Austin, Despite a challenging hiring environment, our staff count rose to 645.
We were pleased with the progress we're reporting today, but even more excited by the progress to come we are planning an investor day on September six in New York City, and we'd love to have you come by to meet our leadership team in person and learn more about our plans to deliver growing the values to our customers and shareholders.
Now to passage of rig our president.
Thanks, Thats all 2022 has started off well for our business as we begin to show the underlying strengths of our insurance operations.
Growth continues to be balanced across geographies and distribution channels.
We grew our homeowners business across our 37 states with two thirds of growth outside of Texas and California.
In late April we launched the state of New York, and we expect additional states in upcoming quarters.
These new states will take time to add meaningful volume, but our results show. The states. We launched in 2021 are adding meaningfully today.
Our builder channel has been particularly strong.
And we expect to add additional builder partners this year.
We also expect to soon announce new alliances and our mortgage lender channels.
As a soft said, we create real value for our partners.
By improving attach rates and delivering a better insurance experience for the customer our partner see better economics, and a stronger relationship with the homeowner.
We're also excited that spinnaker launched important new programs in the quarter.
We now offer excess and surplus lines products like earthquake and flood.
These products will be reinsured, but will offer our customers the opportunity to buy additional protections when their homes carry such exposures.
We continue to focus on developing products and services to fit the needs of our Hippo customers.
Our loss ratio has improved but we still have much more to go.
We are pleased by the positive impact from our latest iteration of our underwriting engine introduced in late 2021.
Which we discussed during our Q4 2021 call.
For new business, our flexible technology platform enables us to implement 22 rate changes across 10 states in quarter one.
These changes went live in the quarter and were highly segmented providing a wide mix of decreases and increases as we have improved our ability to identify and accurately price our target market of homeowners, who are willing to use our technology to protect their homes.
For renewals these rate changes took effect in California during the quarter and the response has been encouraging with premium retention rates remaining high.
For the other states the changes will take effect over the course of 2022 as policies in these states come up for renewal.
We expect these changes will positively impact our loss ratio as the year progresses.
These filings strategies have been extremely deliberate and successful, reflecting hippos expertise and experience applied to our unique tech stack.
One advantage Hippo has in the current market relative to carriers, who use simple inflation accelerators is that we rerun, our underwriting and rebuilding cost models automatically at each renewal incorporating all the accumulated data since last renewal.
This ensures our customers are properly protected while providing protection to hippo from current inflationary trends and materials and labor.
We're encouraged by the first quarter results.
Our strategy and ability to execute is proving out, but we have much larger goals.
We're investing in our business to create a nationwide consistently profitable homeowners protection company that is the clear leader in customer service.
I'd like now to pass it over to Stewart, our CFO . Thanks.
Thanks, Rick.
<unk> had a strong first quarter of 2022, we delivered a substantial improvement in our gross loss ratio versus last year, while continuing to grow our book of business.
Let me take you through some of the financial highlights.
Total generated premium was $154 million in Q1 up 25% from $123 million in the first quarter of last year, we continued to execute against our plan for thoughtful growth with loss ratio goals in mind.
For the full year, we continue to expect $800 million to $820 million of PGP, implying an accelerating growth rate as the year progresses, reflecting geographic expansion as we rollout new states growing partnerships and a step up in marketing.
Revenues in Q1 were $24 million up 44% over the prior year quarter revenues include net premiums earned growing and steady streams of ceding commission paid to us by reinsurers.
NGA and agency commissions paid to us by other carriers and service and fee income from our customers.
Also through spinnaker, we're expanding our third party program administrator business.
We continue to expect 2022 revenue in the range of $140 million to $142 million.
Our gross loss ratio in Q1 was 76, 1%, marking another quarter of substantial improvement.
Given the seasonality of weather exposure continued sequential improvement isn't fully within our control, but we believe we are on track to achieve our full year guidance of the gross loss ratio of below 100%, which would be a major improvement versus 2021% to 138%.
During the quarter PCF catastrophic losses added 19 percentage points to the loss ratio driven largely by winter weather across the U S.
The quarter's results also include a benefit of <unk>, 19% of favorable loss reserve development from prior periods with approximately two thirds of that number from attritional loss activity and one third from prior period catastrophic events.
Sales and marketing expenses increased slightly to $24 9 million from $24 7 million in the prior year quarter. We believe we have a unique and compelling value proposition.
Our proactive approach to home protection is a persuasive message to homeowners and is particularly aligned with those customers, who we view as attractive risks in the coming months, we plan to invest in marketing programs to further grow awareness of the Hippo brand.
Technology and development expenses increased to $14 7 million from $6 9 million in the prior year quarter, primarily driven by an increase in stock based compensation of $4 8 million.
Further our spend it now includes our acquisition of the swing Dev team in Poland Engineers designers product managers, who are boosting the development of our mobile apps are homebuilders suite of products and our consumer facing web portals were glad to have a geographically and culturally diverse set of teams, allowing us to tap into innovation.
And talent pools around the world.
General and administrative expenses increased to $16 5 million from $8 3 million in the prior year quarter, reflecting our growth, including an increase in stock based compensation of $2 $9 million the cost of being a public company and new office locations.
Our cash and investments at the end of the quarter were $772 million the reduction in cash quarter over quarter with amplified by $12 2 million due to a temporary increase in recoverable from reinsurers.
During the quarter, we shifted $349 million from cash to U S. Treasury bills in order to capture the benefit of short term yields which is why on the balance sheet, you'll see the shift from cash to investments.
We remain well positioned for an extended period of growth and investment.
Net loss attributable to Hippo was $67 6 million or <unk> 12 per share in Q1 compared to a net loss of $195 2 million in the prior year quarter adjusted.
Adjusted EBITDA was a loss of $48 5 million versus a loss of $35 6 million in the prior year quarter.
Our guidance for 2022 remains unchanged from when we reported last quarter's results.
To summarize for the full year 2022, we continue to expect <unk> in the range of $800 million to $820 million revenue in the range of $140 million to $142 million and a gross loss ratio below 100% and on track for further material improvement in future years.
Thank you and I'll now turn it back over to <unk> for his closing remarks.
Thank you Stuart.
In a world of low volatility appears to have become normal.
We had April feel grateful that we are able to focus on a simple challenge to improve their homeownership experience of our customers.
This quarter, we made significant progress in the loss ratio and continue that growth we remain.
Confident that we are on the road and delivering on our mission.
Thank you everybody operator could we please take questions.
Okay.
Thank you.
If you would like to ask a question. Please press star followed by one on your telephone keypad.
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Our first question today comes from Matt <unk> from JMP Securities.
Please go ahead. Your line is now open.
Hey, Thanks, good morning.
First question I was hoping to ask you a little bit I saw the commentary in the shareholder letter about.
Building.
Earthquake and flood products on spinnaker paper, obviously heavily reinsured I just wanted to get your perspective on as you look at that kind of the build versus.
We could have partnered kind of gone the other way with that just kind of that thought process and why you elected to build the hippo product versus partner with somebody else.
Yes, Matt how are you doing this is Rick.
A couple of things to consider one remember our vision is to protect the joy of homeownership and to do that you need to make sure you are providing proper coverages for customers that need that but the specific type of coverage. Yes. There are some areas, where we don't have as much expertise. So we choose to partner instead of built now keep in mind also.
So when we acquired spin it hurts spinnaker was a fronting carrier that had other programs that we continue to add other programs as a fronting carrier taking minimal exposure, if any but to provide that platform for other <unk> that have products that we think are additive.
The total gross loss ratio.
We also utilize our distribution channels to sell some of those products, creating sort of a win win for our customer for the product manager and for us.
Alright, great very helpful. And then just a numbers question for Stuart.
Really good growth in the quarter.
Net earned premiums were flat sequentially and year over year can you just help us a little bit with kind of the cadence there and what's going on.
Hi, Matt This is Stuart I'm happy to take that I think <unk>.
First I'll say some of this is a bit of a quirk of how the accounting for cat allowances that we get from our reinsurers as part of our reinsurance treaty and the accounting for our actual purchases and then amortization of the <unk>.
So that would reduce our earned premium.
In 2022, a reinsurance treaty.
Some pieces of it moved from a gross quota share to a net quota share which means that.
The reinsurers themselves are giving us an allowance to purchase reinsurance rather than having it baked in.
To the to the treaty and those allowances are going to be tied to the policies that are written during the treaty and so it's more of a kind of a treaty dynamic which means it can spread out over a couple of years, whereas the capex ol purchases are amortized over the calendar year that we're <unk>.
Buying them and so there is a bit of a timing difference that is reducing our net earned premium.
Cause of that effect more than more than it did last year, which didn't have this effect on it but just in general more than I think that sort of substantive economics would indicate that also.
Filter down into other parts of our P&L, So if youre looking at.
EBITDA, where youre looking at the net loss ratio, which is going to be based on net earned premium.
That impact will tend to lower our earnings a bit on an accounting basis and it will tend to raise our net loss ratio as well.
Okay, great very helpful. Thank you for the answers.
Thank you.
The next question today comes from young from Jefferies. Please go ahead. Your line is now open.
Thank you and good morning.
So you've had nice momentum on the growth loss ratio.
Maybe you can help us think about the expected underlying gross loss ratio for 2002 do you see improvement there year over year or is it more on just an overall loss ratio that youre thinking of would be below 100%.
Yes, Hey, your audits rack.
We are seeing a meaningful improvement in the underlying loss ratio results keep in mind. When you are making pretty material changes in geographical diversification and underwriting model and rate changes rate filings. It takes time wanted to determine what you wanted to then you have.
To file the change and then you have to wait for regulatory approval and then the change for your existing book starts at the renewal of those existing policies. So that entire process ranges between 12 and 24 months. So in the first quarter, we actually had 10 right.
<unk> go lives for 'twenty, two different products, but we're just beginning to see the improvements of those particular rate filings going live. So the improvement that you see for this particular quarter or efforts that we took six to nine months ago and I would say you should continue to see meaningful improvement.
Subject to.
Quarter volatility due to weather as you know second quarter for our footprint.
Typically a pretty high weather quarter, but you should see that continued improvement we have strong conviction and clear line of sight that our loss ratio continues to trend down by the actions we've taken that havent worked themselves into the book of business.
Got it and just to be clear here, you expect continued improvement on the underlying loss ratio as well as the total loss ratio right correct, Yes, correct correct.
Perfect.
And then.
You gave you spelled out.
The impact of catastrophes and prior year development on the gross loss ratio do you have those numbers on a net basis.
Yes.
Ron This is Stuart on a net basis.
I think that the net reserve release was.
$2 8 million in.
In 2022.
And we didn't have a reserve release.
In 2021.
Okay.
A cat for the cat load on a net basis.
It is.
PCF basis it was.
Of that $2 8.600 million roughly.
Ex PCI so it is $2 one so.
Got it.
And then.
Stuart I think on the previous.
Question, you had addressed the.
Net loss ratio, which actually came in a bit higher year over year.
It sounds like a lot of it has to do with just the shift in treaties and the impact on net net premiums earned are.
Are there any other drivers there that would have led to deterioration year over year, Despite a very significant improvement into growth.
Yes.
That's a great question I think.
Before I dive into the details here I think it makes sense for us.
Remind everybody that we do think that gross loss ratio is the best measure of our underwriting actuarial performance our operational performance. It's the measure of the actual performance of the risk that is being assumed in that.
Regardless of who is assuming the risk.
As.
We reduced our risk retention. So if we were maintaining all of the risk our net our gross loss ratio would be the same as we as we reduce the risk retention and we look only at the pieces of the risks that we retained.
We are going to get the.
The number is representing a smaller and smaller piece of our overall economics.
To the point, where once the risk retention gets below a certain amount than.
The number of starts to become increasingly irrelevant to the to the overall economics of the business.
Because we are a program business and an MGA.
Our performing services on behalf of the people who are bearing the risk of the bulk of the policies that we write so for example.
Unallocated loss and loss adjustment expense, which we are.
We're incurring on behalf of the entire portfolio.
Is hitting all of that cost is hitting our net loss ratio.
Even though only.
We're only retaining a small percentage of the premium and so.
Just the U S. Just to give you. An example of how big some of these numbers can get when you get a small earned premium number just the UA represents 51 percentage points of our net loss ratio.
I think the problem with the net loss ratio for a business like Hippo is it.
Essentially the economics on a small piece of our business and it excludes all of the commissions that we get from the the reinsurance and so the change in <unk>.
<unk> well.
Sure.
Like the catechol purchased by itself was 113 percentage points of net loss ratio in this quarter. It was 71 percentage points in the prior year quarter those sorts of things have a big impact on net loss ratio when.
And so movements and then Ken can move that number around independent of the performance of the overall underlying portfolio that makes sense.
Yes, yes, very much so and I appreciate that color.
Alright. Thanks.
Thank you.
Thank you.
Our next question today comes from Michael Phillips from Morgan Stanley . Michael. Please go ahead. Your line is now open.
Okay. Thanks, good morning.
You've talked in the past.
Last quarter in quarters before that about com.
Certain areas of taking rate decreases and more refined pricing has allowed you to do that.
Couple that with another quarter of <unk> favorable on not the cat piece, but on the Attritional piece of kind of those two things combined kind of imply that some of your prior pricing may have been too high.
Hoping you can just add some color on.
Any more color on that or what's driving the ability to take rate cuts again, I think I've heard you say before that you've just got more refined pricing that allows you to do that but.
Couple that with the <unk> it looks like prior stuff, what's your kind of high to bring it back down. So just any more color you can provide there would be appreciated.
Yes, Michael Hey, it's Rick.
Really good question I think a better way of explaining this is that historically the prices we were charging.
Ward segmented enough to match rate with exposure. So we've gone through an entire re underwriting process at the company and making sure that we have appropriate segmentation. This is one of the reasons why we partnered with incline in ally to bring multiple underwriting companies.
To bear so we can have greater segmentation and granularity on the pricing. What we found is we were not charging enough premium.
For what we would consider average clients and we were charging too much premium for what we consider our best clients. So we were getting disproportionately poor clients versus the better clients that we want so our new leadership team on the insurance organization. We've spent the last value.
Months, continuing to focus and re underwrite the policy make sure pricing matches each individual exposure specifically towards those customers. We want we call them, our generation better customers customers that resonate strongly with our total home protection mindset and Thats.
Why youre seeing some go down and others go up the portfolio as a whole is experiencing pretty significant rate increases just as the industry as a whole is seeing significant rate increases, but it's really that segmentation that we're refining mud.
Much of the work is done it just needs to work its way into the book over future quarters.
Okay. Thank you that's helpful.
Okay.
Second question on.
On the <unk> piece as well too.
Two thirds over the Attritional.
Can you talk a little bit more about what you mean by that and specifically areas where that was coming from the intuitional side.
Yes, Michael we have a good phone dropped a little bit can you can you repeat that please.
Oh, sorry, yes, two thirds of your people I do 19 points with some nutritional.
Hoping you can add a little more color on what you mean by that.
<unk> seen that on the Attritional side, another quarter of stable development there.
Yes. This is also got I understand your question now. This is also complex when you have a shifting portfolio geographically because in states, where we have been heavily exposed to catastrophe like Texas, and California, those states have particularly high weather or.
Tcs type loss ratio as we start diversified into states that have almost all of their loss ratio is attritional will use Arizona. As an example, then you actually see while youre balancing the portfolio Attritional losses going up as you write more business in those areas that some times.
Masks the effects of Attritional going down overall in your portfolio because of mix shift. So those are things that are I think relevant and.
It's difficult to judge it when you're in a period of correction as we have been so sometimes the numbers look a little wonky Stewart do you want to add anything.
Alright, there you go.
Michael.
Okay no. Thank you one more from me.
Your thoughts on the inflation, we're seeing on the property side for homeowners.
I assume you're feeling that with everybody else's and youre seeing that and reacting to what with your rate increases that you thought you were taking.
The question is do you feel like because you are.
Portion of them that bigger smaller portion of your businesses from the homebuilder, Therefore pretty new new homes does that insulate you more than our competitors on the inflation pressures are going to actually make it worse.
Yes, and also great question Michael.
Going to tackle this two different ways. So lets just talk about inflation generally so I mean, one word is volatile the inflation increases.
Building cost labor and materials are going up dramatically, we actually have I think a competitive advantage over some of the incumbents because what many incumbents do is they put an inflation guard that arbitrarily increases coverage <unk> at each renewal, we don't have that we re underwrite every policy.
And all the data sources, we have all that policy at each and every renewal. So we are picking up significant increases and inflationary pressure each renewal.
If severity because of inflation goes up 20% when we re underwrite that policy at renewal the coverage is going up 20%. So we're able to stay ahead of it I think better than most so thats. The first aspect of it the builder aspect of it is.
Obviously, the builder business performs very very well they are new construction homes. There is you have fewer attritional losses in new construction homes and therefore since you have fewer attritional losses, those homes are not subject as much as homes that have higher <unk>.
<unk> losses, you just the frequency of new construction is less than existing home. So I think it helps not necessarily to a meaningful amount as it relates to inflation and severity I think the first aspect I mentioned has a far greater impact.
Okay.
Okay. Thanks, Thanks, Rick that makes it makes sense.
During the quarter.
Thanks, Michael.
Thank you.
The next question today comes from Alex Scott from Goldman Sachs. Please go ahead. Your line is now open.
<unk>.
Hey, good morning.
First one I had is.
On the MGA.
Interested if you can provide an update on.
How those are going in terms of coming online and could you also talk about what that may allow you to do as we think through the back half of the year.
Does it is it just more capacity or does it actually allow you to underwrite risk that you weren't underwriting before.
Different geographies et cetera.
Yes, Alex good question.
By MGA is I assume youre talking about the partnerships, we have with incline in alloy.
Yes.
Okay perfect.
There's really two benefits that we have with those partnerships. The first benefit is it helps us with our capital light structure, we utilize their balance sheet to grow the business instead of infusing additional.
Capital into our own balance sheet, which is spend occur. So that's one aspect.
That's important but not the most important aspect. The most important aspect is what I mentioned earlier, our ability to have multiple programs multiple rate filings and further granular segmentation in each and every state really allows us to better match price and risk now historically.
Essentially had one underwriting company that will spend occur yes, it's a fairly sophisticated rating algorithm. It's by apparel, we have lots of granularity, but you can never get the level of granularity that you would get if you have multiple carriers and underwriting companies finally, as we launch new companies in the state.
It's the time for those products to go live is usually compressed because the regulator is not as concerned about dislocation of current customers because those new underwriting companies have no current customers. So all of that accelerates the timeline in which we can take on rate. It gives.
US granular segmentation.
And it does support our capital light structure.
Got it thank you.
Second one I had I guess just.
In light of the droughts going on in California, and some concerns that the wildfire season is going to be pretty bad. This year could you talk about sort of where you are geographically in California, and any nuances to maybe your exposures relative to the areas that get hit by.
Wildfires.
Yes.
Also a great question.
We are not overly exposed to wildfire concentration. So we historically have used fire line as our risk meter for that fire line goes from zero, which is the least exposed all the way up to 30%, which is the most exposed in places like California, We only do fire lines zero and one so not overly.
<unk>, we've actually switched are in the process of switching to a better metric, but our appetite for brush-fire wildfire exposure has not changed we are very conservative related to that.
Got it maybe if I could sneak one last one in.
I mean, just looking at where your stocks trading obviously, there's been a lot going on with that.
What's happened with growth stocks and so forth but.
With where its trading I mean, do you think about anything differently.
Is there anything strategic that you can do.
Two.
Do something about where your stock is traded down to even just looking at it relative to book value per share at this point.
Hi, Alex its us up in.
In short, we basically believe that were building a valuable company, we keep on managing the company, we keep on improving on an ongoing rate. We basically we live our lives in a very simple way, which we say what we do and we do what we say and this is what we're doing in all of these quarterly calls, we said were going to keep on reducing the loss ratio and this is what we're focused on we basically everything.
The growth and where we're going to end.
And this is what we are doing to market. We can control the market, we don't like where it is we think it's.
The stock is not where it should be but we focused on growth and was actually a very optimistic and have more conviction than ever in the company and the <unk>.
Future. So this is what we're focused on.
And I think this quarter is a good system and point out.
Okay. Thank you.
Thank you.
As a reminder, if you would like to ask a question. Please press star followed by one on your telephone keypad.
The next question today is a follow up from your own Kyna from Jefferies. Please go ahead. Your line is now open.
Okay. Thank you.
I'm curious given the.
Re underwriting and the amount of actions you've taken year over year have you tried to kind of model, where <unk> 21 would've come in based on the current portfolio.
From a loss ratio, we have I don't know if we can share that I'm going to I'm going to pass over to Stuart but of course, we have but I am not sure Thats something that we would sure yes, I think what we what we.
I think what we can say, which is probably obvious is that given the increased diversity in our book today versus last year.
The impact of the winter storm, Yuri and other other Pcs cat events that we had last year. They are they would be smaller obviously then.
Then they were in 2021.
And it's part of I.
I don't think we've quantified that publicly but.
But it's part of the overall growth strategy and the diversification strategy that we have so those pieces of Texas represent a smaller piece of our overall book today than they did a year ago.
And mathematically the book is just more diverse in each of those would have a smaller smaller impact youre wrong suffice it to say if we hadn't been taking the actions that we've been working hard to take the loss ratio would look very very differently.
Yes, no doubt.
Okay, and then second follow up if I could.
Could you talk about the Homo homebuilder customers being the highest quality I guess what are the best performers in the books can you maybe give us a sense of what portion of those customers remaining with the company after year, one after a year or two or maybe how that compares to the rest of the book.
Hi, Ryan This is Jerry I don't think we broken out the retention by channel.
But.
But in general in the Homeowner's space and I think in particular with Hippo, given the high levels of customer satisfaction.
We do feel like the book that we are building has enduring value.
This is not and I think you can see in the in the numbers our marketing expense was pretty similar to last year, but our book is still continuing to grow.
It's not that we're having to replace a large number of people who churn out every year.
We feel really good about the.
Premium retention.
Across all of our channels.
And.
And so we're excited about our ability to continue to invest in that in that piece of the business you. Ron one thing I would add too because a question people would probably start thinking about is as those homes age what happens to the loss ratio of those particular business and suffice it to say we have a strategy both on a return.
<unk> and pricing that as the home ages to create more of a standard type rating methodology that we would have.
A similar home at similar age so I think thats something that others that have been in this space have not done a great job with and we have a very strong strategy to support those homes as they age to help both retention and underwriting.
Thanks, and thanks for Preempting next question.
Thanks, so much.
Thanks Rod.
Sure.
Thank you.
There are no additional questions waiting at this time, so I'd like to pass the conference over to surf one for closing remarks.
Thank you.
I just wanted to reiterate that this was a very strong quarter for April and we continued making progress on all fronts.
We're actually very optimistic for the future and wanted to thank everybody for joining our call. Thank you.
That concludes the Hippo first quarter 2022 earnings call. Thank you for your participation you may now disconnect your lines.
Goodbye.
Sure.
Yes.