Q4 2023 Hippo Holdings Inc Earnings Call

Hello, everyone and welcome to the Hippo Holdings fourth quarter 2023 earnings call. My name is Charlie and I will be coordinating the call today.

Operator: Hello, everyone, and welcome to the Hippo Holdings fourth quarter 2023 earnings call. My name is Charlie, and I'll be coordinating the call today.

Operator: You have the opportunity to ask questions at the end of the presentation. If you'd like to register a question, please press a star followed by one on your telephone keypad. I'll now hand over to our host, Mark Olson, Director of Corporate Communications, to begin. Mark, please go ahead.

You have the opportunity to ask questions at the end of the presentation. Maybe lots you Register your question. Please press star followed by one on your telephone keypad.

I'll hand over to our host Mark Olson director of corporate Communications to begin Marc. Please go ahead. Thank you operator, good morning, and thank you for joining hit those 2023 fourth quarter earnings call earlier today <unk> issued a shareholder letter announcing its Q4 and full year results, which is available at investors that Hippo dot com.

Mark Olson: Thank you, operator. Good morning, and thank you for joining Hippo's 2023 fourth quarter earnings call. Earlier today, Hippo issued a shareholder letter announcing its Q4 and full year results, which is available at investors.hippo.com. Leading today's discussion will be Hippo President and Chief Executive Officer Rick McCathron and Chief Financial Officer Stewart Ellis. Following management's prepared remarks, we will open the call to questions.

Leading today's discussion will be <unk>, President and Chief Executive Executive Officer, Ricky Catherine and Chief Financial Officer Stuart outs. Following management's prepared remarks, we will open the call to questions.

Mark Olson: Before we begin, we'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 HIPPO's expectations or predictions of financial and business performance and conditions and competitive and industry conditions. Such forward-looking statements are subject to risks, uncertainties, and other factors that could cause our actual results to differ materially from historical results and or from our forecast, including those set forth in HIPPO's Form 8K filed today. For more information, please refer to the risks, uncertainties, and other factors discussed in HIPPO's SEC filing, in particular, in the section entitled Risk. All cautionary statements 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 Hippo's SCP class.

Before we begin we'd like to remind you that our discussion will contain predictions expectations forward looking statements and other information about our business that are based on management's current expectation as of the date of this presentation.

Forward looking statements include but are not limited to expectations or predictions financial and business performance and conditions and competitive and industry outlook.

Looking statements are subject to risks uncertainties and other factors that could cause our actual results to differ materially from historical results or from our forecast, including those set forth in both form 8-K filed today.

For more information please refer to the risks uncertainties and other factors discussed in <unk> SEC filings in particular in the section entitled Risk factors. All cautionary statements 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 U S patents do not.

Mark Olson: Do not place undue reliance on forward-looking statements, as HIPPO is under no obligation and expressly disclaims any responsibility for updating, offering, or otherwise revising any forward-looking statements, whether as the result of new information, future events, or otherwise, except as required by law. During this conference call, we refer to non-GAAP financial measures, such as total generated premiums and adjusted EBITDA. Our GAAP results and description of our non-GAAP financial measures with full reconciliation to GAAP can be found in the fourth quarter 2023 shareholder letter, which has been furnished to the SEC and is available on our website. And with that, I will turn the call over to Rick McCathron, our president and CEO. Good morning, everyone.

Undue reliance on forward looking statements as HIPAA is under no obligation and expressly disclaims any responsibility.

Updating offering or otherwise revising any forward looking statements whether as the result of new information.

Future events or otherwise, except as required by law.

During this conference call, we refer to non-GAAP financial measures such as total generated premiums and adjusted EBITDA, Our GAAP results and a description of our non-GAAP financial measures full reconciliation to GAAP can be found in the fourth quarter 2023 shareholder letter, which has been furnished to the SEC and is available on our website and with that I will.

Turn the call Rick from Catherine our President and CEO.

Good morning, everyone to.

Richard Lyn McCathron: The beginning of a new year always presents an opportunity to reflect on the past and internalize its lessons before moving forward with renewed enthusiasm and focus. In two short years, we have nearly doubled our total generated premium from $606 million to $1.1 billion and more than doubled our revenue from $91 million to $210 million, all while lowering fixed expenses and improving the gross loss ratio on our Hippo Home Insurance Program by approximately 40 percent. Over the past year, we learned that our customers want the ability to buy not just Hippo home insurance policies from us but other kinds of policies from third-party carriers as well. We have taken this to heart and refocused our consumer agency on finding the best policy for each customer, regardless of the carrier.

At the beginning of a new year always presents an opportunity to reflect on past and internalize its lessons before moving forward with renewed enthusiasm and focus.

In two short years, we have nearly doubled our total generated premium from $606 million to $1 1 billion and more than doubled our revenue from $91 million to $210 million, all while lowering fixed expenses and improving the gross loss ratio on our Hippo home.

Insurance program by approximately 40 percentage points.

Over the past year, we learned that our customers want the ability to buy not just hippo home insurance policies from us, but other kinds of policies from third party carriers as well.

We have taken this to heart and refocused our consumer agency on finding the best policy for each customer regardless of the carrier.

Richard Lyn McCathron: We believe that for our target customers, Generation Better customers, especially those who are buying a newly built home, a Hippo homeowners policy will be the best option. But if a customer is a better fit with another carrier, we will work to find the best option from across our 50 plus carrier partners. We also learned that there is a real need in the market for carrier services focused on servicing MGAs, where much of the innovation in the insurance market is happening. Our Spinnaker Insurance is a service business, has an industry-leading platform, and robust underwriting processes that have allowed us to grow at an accelerating rate in 2023 while avoiding many of the pitfalls experienced by our competitors over the past year.

We believe that for our target customer generation better customers, especially those who are buying a newly built home a.

Hippo homeowners policy will be the best option.

But if a customer is a better fit with another carrier we will work to find the best option from across our 50 plus carrier partners.

We also learned that there is a real need in the market for carrier services focused on servicing mga's, where much of the innovation in the insurance market is happening.

Our spinnaker insurance as a service business.

Has an industry, leading platform and robust underwriting processes that have allowed us to grow at an accelerating rate in 2023, while avoiding many of the pitfalls experienced by our competitors over the past year.

Richard Lyn McCathron: We are especially excited to have achieved this growth while expanding our operating margin in this already profitable portion of our business. Truly a win-win for both Spinnaker and its MGA customers. And finally, we also learned that there are some risks and some geographies to which we prefer less exposure as we seek to improve the predictability and profitability of our HIPPO home insurance program. As discussed in the last quarter earnings call, in the second half of 2023, we launched an aggressive program to raise deductibles for wind and hail in certain geographies and began non-renewing policies in higher-cat areas where we had excess concentration. These actions are intended to reduce exposure to the kinds of losses we experienced in the second quarter of 2023.

We are especially excited to have achieved this growth while expanding our operating margin in this already profitable portion of our business truly a win win for both spinnaker and its MGA customers.

And finally, we also learned that there are some risks and some geographies to which we prefer less exposure as we seek to improve the predictability and profitability of our Hippo home insurance program.

As discussed in the last quarter earnings call in the second half of 2023, we launched an aggressive program to raise deductibles for wind and hail in certain geographies and began non renewing policies and higher cat areas, where we had excess concentration.

These actions are intended to reduce exposure to the kinds of losses, we experienced in the second quarter of 2023.

Richard Lyn McCathron: A quick thought experiment illustrates how those decisions are paying off. If we experience the exact same hailstorms this coming year with the same level of severity, the program of deductible changes and selective non-renewals in cat-concentrated areas that is currently in progress would reduce Hippo's direct losses by approximately 55%. Moreover, these changes that began last October take a full year to work their way through the policy renewal date.

A quick thought experiment illustrates how those decisions are paying off.

If we experience the exact same hailstorms this coming year with the same level of severity.

The program of deductible changes and selective non renewals in concentrated areas that is currently in progress would reduce hippos direct losses by approximately 55%.

Moreover, because these changes that began last October take a full year to work their way through the policy renewal dates the benefits in 2025 would be even greater.

Richard Lyn McCathron: The benefits in 2025 would be even greater, an almost 80% reduction in direct losses if the hailstorms from the second quarter of 2023 were to recur. These initiatives, when combined with the actions we took in the second half of 2023 to streamline our operations and reduce our fixed expenses, give us greater confidence that we are on track to achieve our profitability goals ahead of schedule, with a mix that is shifting towards businesses with lower volatility and higher predictability. As we enter 2024, we believe we are incredibly well positioned to compete for business in our core markets and our core customer segment. It's time for Hippo to go back on offense.

And almost 80% reduction indirect losses, if the hailstorms from the second quarter of 2023 were to reoccur.

These initiatives when combined with the actions we took in the second half of 2023 to streamline our operations and reduce our fixed expenses give us greater confidence that we are on track to achieve our profitability goals ahead of schedule.

With a mix that is shifting towards businesses with lower volatility and higher predictability.

As we enter 2024, we believe we are incredibly well positioned to compete for business in our core markets and in our core customer segments.

It's time for Hippo to go back on offense.

Now I'd like to turn the call over to our Chief Financial Officer, Stuart Ellis to walk through the highlights of our full year and Q4 2023 financial results as well as our expectations for the future.

Stewart Andrew Ellis: Now, I'd like to turn the call over to our Chief Financial Officer, Stewart Ellis, to walk through the highlights of our full year and Q4 2023 financial results, as well as our expectations for the future. Thanks, Rick, and good morning, everyone. 2023 was a remarkable year for Hippo. We doubled down on meeting the needs of our customers, streamlined our operations, focused on segments of the market where we have a significant competitive advantage, and simplified our reinsurance structure. We exit the year as a business transformed by these efforts, increasingly predictable, and with far clearer visibility into both how and when we will achieve profitability. During 2023, we grew TGP from $811 million to more than $1.1 billion, an increase of 40%. More important than the growth itself was how we achieved it.

Thanks, Rick and good morning, everyone.

23, with a remarkable year for head though.

We doubled down on meeting the needs of our customers streamlined our operations focused on segments of the market, where we have a significant competitive advantage and simplified our reinsurance structure.

We exited the year of the business transformed by these efforts increasingly predictable and with Barclays for visibility into both how and when we will achieve profitability.

During 2023, we grew GGP from $811 million to more than $1 1 billion, an increase of 40%.

More important than the growth itself was how we achieved at.

Stewart Andrew Ellis: The parts of our business that are less exposed to underlying weather and underwriting volatility grew at an accelerating rate while we significantly reduced our exposure to weather in our primary homeowners insurance program. During Q4, the most profitable and predictable components of our business, insurance as a service, and services, collectively represented 77% of our TGP, up from 59% in the fourth quarter of 2021 and 65% a year ago. We expect these trends to continue in the coming year, with TGP growing during 2024 to more than $1.3 billion, with the services and insurance as a service segments collectively representing 85% of total TGP by the final quarter of the year. During 2023, we grew revenue significantly faster than TGP from 120 million in 2022 to 210 million in 2023, an increase of 75%. This growth was the result of increases in the scale of our services and insurance as a service segments, combined with structural changes we made to our program-specific reinsurance structure at HHIP. In 2022, we retained only 12% of the premium associated with our homeowner's policies but approximately 30% of the rest.

The parts of our business that are less exposed to underlying weather and underwriting volatility grew at an accelerating rate, while we significantly reduced our exposure to weather in our primary homeowners insurance program.

During Q4, the most profitable and predictable components of our business insurance as a service and services collectively represented 77% of our PGP up from 59% in the fourth quarter of 2021, and 65% a year ago.

We expect these trends to continue in the coming year with GDP growing during 2024 to more than $1 3 billion with the services and insurance as a service segment collectively representing 85% of total PGP by the final quarter of the year.

During 2023, we grew revenue significantly faster than TTP from $120 million in 2000 $22 million to $210 million in 2023, an increase of 75%.

This growth was the result of increases in the scale of our services and insurance as a service segments combined with structural changes we made to our program specific reinsurance structure at HHS IP.

In 2022, we retained only 12% the premium associated with our homeowners policies, but approximately 30% of the risk.

Stewart Andrew Ellis: In 2023, we were able to retain about 40% of the premium but only 46% of the risk, significantly narrowing the gap between risk retention and premium retention, thereby getting paid more fully for the risk we've retained. By moving away from our past reinsurance structure and bringing the premium more in line with the risk that we are retaining, we are able to monetize the insurance risk more effectively, which is a key driver of both revenue growth and profitability. We expect 2024 revenue to continue to grow at an accelerated rate relative to TGP, rising more than 60% from $210 million this past year to more than $340 million in 2024. Importantly, we expect to be able to achieve this while lowering our underlying volatility and exposure to the weather that has driven our historical losses, as measured by an almost 60% reduction we expect to achieve in our underlying severe weather exposure.

In 2023, we were able to retain about 40% of the premium, but only 46% of the risk.

<unk> narrowing the gap between risk retention and premium retention, thereby getting paid more fully for the risk we retained.

By moving away from our path reinsurance structure and bringing premium more in line with the risk that we are retaining we're able to monetize the insurance risk more effectively which is a key driver of both revenue growth and profitability.

We expect 2020 for revenue to continue to grow at an accelerated rate relative to TTP rising more than 60% from $210 million this past year to more than $340 million in 2024.

Accordingly, we expect to be able to achieve that while lowering our underlying volatility and exposure to the weather that has driven our historical losses as measured by almost 60% reduction we expect to achieve in our underlying severe weather exposure.

Because of our consistent historical track record of Attritional loss ratio improvement combined with the expected reduction in underlying volatility and exposure to the weather that Rick discussed earlier.

Stewart Andrew Ellis: Because of our consistent historical track record of attritional loss ratio improvement combined with the expected reduction in underlying volatility and exposure to the weather that Rick discussed earlier, we felt comfortable transitioning to a more traditional excess of loss or XOL reinsurance structure, retaining nearly all the attritional risk and purchasing XOL reinsurance to protect against major catastrophic weather events. This transition to XOL reinsurance will better align our net earned premium with risk retention and will also allow us to further narrow the gap between gross and net loss ratio. Turning now to the loss ratio, our loss and loss adjustment expenses during 2023 were significantly higher than our expectations because of outsized weather losses in the second quarter. The wind and hail losses during that time masked the significant and continued improvement in our non-PCS loss ratio over the course of the year.

We felt comfortable transitioning to a more traditional excess of loss or <unk> reinsurance structure, retaining nearly all the attritional risk and purchasing ex ol reinsurance to protect against major catastrophic weather events.

This transition to <unk> reinsurance will better align our net earned premium with risk retention and will also allow us to further narrow the gap between gross and net loss ratio.

Turning now to the loss ratio.

Loss and loss adjustment expenses during 2023 were significantly higher than our expectations because of outsized weather losses in the second quarter.

The wind and hail losses during that time mapped the significant and continued improvement in our non PCF loss ratio over the course of the year with.

Stewart Andrew Ellis: With the 2023 non-PCS loss ratio improving 13 percentage points to 63% in 2023 versus 76% in 2022. As Rick mentioned earlier, we responded to the excess weather losses during the year with aggressive actions to raise deductibles in wind and hail-exposed geographies and selective policy non-renewals in cat-exposed geographies more generally. The combined effects of rate and underwriting actions taken over the past two years, which resulted in a 28% written rate increase in Q4, and the actions taken to structurally reduce our exposure to cap-related volatility mean that the expected loss ratio of the business we wrote in Q4 2023 was far better than in Q4 2022. In 2024, we expect to realize additional benefits to our gross loss ratio, as previous rates and underwriting actions burn into our finances, In 2024, we expect HHIP's gross non-PCS loss ratio to be between 52% and 58%, with an expected PCS cat load of 20%.

With 2023, non Pts loss ratio, improving 13 percentage points to 63% in 2023.

76% in 2022.

As Rick mentioned earlier, we responded to the excess weather losses during the year with aggressive actions to raise deductibles and wind and hail, both geographies and selective policy Nonrenewals and cat exposed geographies more generally.

The combined effect of rate and underwriting actions taken over the past two years, which resulted in a 28% written rate increase in Q4 and the actions taken to structurally reduce our exposure to cat related volatility means that the expected loss ratio of the business. We wrote in Q4 2023 was far better.

In Q4 2022.

In 2024, we expect to realize additional benefit to our gross loss ratio as previous rate and underwriting actions earn into our financials as well as significantly lower losses from cat events due to reduced exposure in higher deductibles.

In 2024, we expect Hh IP gross non PCI loss ratio to be between 52% and 58% with an expected PCF cat load of 20%.

In 2024, we expect <unk> net loss ratio to be between 85% 90%.

Stewart Andrew Ellis: In 2024, we expect HHIP's net loss ratio to be between 85 and 90%, down more than 160 percentage points from 2023 due to the improvements in gross loss ratio and more effective use of reinsurance. Similarly to the trend we experienced in 2023, we expect the net loss ratio improvement to happen gradually over the year, with Q4 2024 expected net loss ratio under 75%. We expect additional improvements in 2025, when we expect the net loss ratio to be less than 75% for the full year. During 2023, we complemented our robust top-line growth with a disciplined and sustained effort to drive efficiency into our operations. The result has been a year-over-year decline in our fixed expenses from $166 million in 2022 to $138 million in 2023. This efficiency improvement is even more impressive when viewed in conjunction with our top-line growth, with fixed expenses falling from 138% of 2022 revenue to only 66% of 2023 revenue. And more encouraging, only a small percentage of the benefits of our late 2023 cost reduction measures are reflected in these numbers.

Down more than 160 percentage points from 2023 due to the improvement in gross loss ratio and more effective use of reinsurance.

Similarly to the trend we experienced in 2023, we expect the net loss ratio improvement to happen gradually over the year with Q4 2024 expected net loss ratio under 75%.

We expect additional improvements in 2025, when we expect net loss ratio to be less than 75% for the full year.

During 2023, we complemented our robust topline growth with a disciplined and sustained effort to drive efficiency into our operations.

<unk> has been a year over year decline in our fixed expenses from $166 million in 2000 $22 million to $138 million in 2023.

This efficiency improvement is even more impressive when viewed in conjunction with our topline growth.

With fixed expenses falling from 138% of 2022 revenue to only 66% of 2023 revenue and more encouraging only a small percentage of the benefit of our late 2023 cost reduction measures are reflected in these numbers for.

Stewart Andrew Ellis: For 2024, we expect fixed expenses to continue to decline by more than 20% in absolute dollar terms and to less than 31% of expected 2024 revenue. During 2023, our top line growth, shifts toward more predictable and profitable businesses, more effective use of reinsurance, continued rate and underwriting improvements at HHIP, and efficiency gains across our organization leave us with a clear line of sight to delivering positive adjusted EBITDA earlier than we expected when we entered the year. We finished Q4 2023 with an adjusted EBITDA loss of $22 million, down more than 50% from our adjusted EBITDA loss of $47 million in the fourth quarter of 2022.

For 2024, we expect fixed expenses to continue to decline by more than 20% in absolute dollar terms and to less than 31% of expected 2020 for revenue.

During 2023, our topline growth mixed shift towards more predictable and profitable businesses.

More effective use of reinsurance continued rate and underwriting improvements Hh IP and efficiency gains across our organization leave us with a clear line of sight to delivering positive adjusted EBITDA earlier than we expected when we entered the year.

We finished Q4 2023 with an adjusted EBITDA loss of $22 million down more than 50% from our adjusted EBITDA loss of $47 million in fourth quarter of 2022.

Stewart Andrew Ellis: And as mentioned previously, many of the improvements we have made in 2023 are only partially reflected in our Q4 financials. Looking forward, we expect an adjusted EBITDA loss of only $41 to $51 million for the full year 2024, down more than 75% from 2023, with over 90% of this loss coming in the first half of the year. We expect to turn adjusted EBITDA positive during the second half of the year and for the fourth quarter to be fully adjusted EBITDA positive. We've made significant progress during 2023 along our path to profitability. Winter 2024 with increased confidence that we will achieve it sooner and to a greater extent than previously anticipated.

And as mentioned previously many of the improvements we have made in 2023 are only partially reflected in our Q4 financials.

Looking forward, we expect an adjusted EBITDA loss of only 41% to $51 million for the full year 2024 down more than 75% from 2023 with over 90% of this loss coming in the first half of the year.

We expect to turn adjusted EBITDA positive during the second half of the year and for the fourth quarter to be fully adjusted EBITDA positive.

We have made significant progress during 2023, along our path to profitability. We enter 2024 with increased confidence that we will achieve it sooner and to a greater extent than previously anticipated.

Stewart Andrew Ellis: I'd now like to summarize our updated guidance for 2024. We expect TGP to grow to more than $1.3 billion, driven by the components of our business that are less exposed to weather and underwriting volatility. We expect revenue to grow to more than $340 million. We expect the HHIP growth to loss ratio to be between 72 and 78% with 20% related to PCS cat losses and between 52% and 58% related to non-PCS losses. Because of the seasonality of weather in areas where our policies are distributed, we expect our 2024 cat load to be allocated 29% to the first quarter.

I'd now like to summarize our updated guidance for 2024.

We expect <unk> to grow to more than $1 3 billion driven by the components of our business that are less exposed to weather and underwriting volatility.

We expect revenue to grow to more than $340 million.

We expect the Hh IP growth loss ratio to be between 72% and 78% with 20% related to PCF cat losses.

And between 52, and 58% related to non PCI philosophy.

Because of the seasonality of weather in areas, where our policies are distributed we expect our 2020 for cat load to be allocated 29% to the first quarter.

41% for the second quarter, and 19% for the third quarter and.

And 11% to the fourth quarter.

Stewart Andrew Ellis: 41% to the second quarter, 19% to the third quarter, and 11% to the fourth quarter. We expect HHIP's net loss ratio to be between 85 and 90% with the Q4 2024 HHIP net loss ratio under 75%. We expect an adjusted EBITDA loss of between $41 and $51 million for the full year, with more than 90% of the losses coming in the first two quarters and to be adjusted EBITDA positive in Q4. As a reminder, the definition of adjusted EBITDA that we are using and have used historically excludes interest income from the float on the premium that we retain.

We expect <unk> net loss ratio to be between 85% to 90% with Q4 2024, <unk> net loss ratio under 75%.

We expect an adjusted EBITDA loss of between 41% and $51 million for the full year with more than 90% of the losses coming in the first two quarters to be adjusted EBITDA positive in Q4.

As a reminder, the definition of adjusted EBITDA that we are using and have used historically exclude interest income from the float on premium that we retain.

Finally, we expect minimum cash and investments at the time, we turn adjusted EBITDA positive to meet more than $400 million up significantly from our previous guidance.

Operator: Finally, we expect minimum cash and investments at the time we turn adjusted EBITDA positive to meet more than $400 million, up significantly from our previous guidance. And now, we'd be happy to take your questions. Operator.

And now we'd be happy to take your questions.

Operator.

Thank you of course I'd like to ask a question. Please press star followed by one on your telephone keypad, if you're about to your question. Please press star followed by two.

Operator: Of course, if you'd like to ask a question, please press star followed by one on your telephone keypad. If you'd like to withdraw your question, please press star followed by two. When preparing to ask your question, please ensure you're unmuted locally. As a reminder, that's star followed by one on your keypad now.

To ask a question. Please ensure you're on mute locally as a reminder, that star followed by one on your key pads now.

Our first question comes from Thomas <unk> of <unk> Tell me. Your line is open. Please go ahead.

Hey, good morning, guys. Thanks for taking our question.

Just from a competitive standpoint, we're still seeing a lot of the largest <unk>.

Thomas Patrick Mcjoynt: Our first question comes from Tommy Mcjoynt of KBW. Tommy, your line is open, please go ahead. Hey, good morning, guys. Thanks for taking our question. Just from a competitive standpoint, you know, we're still seeing a lot of the largest competing homeowners insurers out there pushing through acceleration of rate increases. Can you just remind us kind of where you guys stand on the rate increases and the adequacy that you have throughout your geographies, and then just how you feel competitively as the competition seems to be accelerating their rates? Yeah, great. Thanks. Thanks for the question, Tommy. There are a couple different things.

Impeding homeowners insurers out there pushing through accelerating rate increases.

Can you just remind us kind of where you guys stand on the rate increases in the adequacy that you have throughout the year and geographies and then just how you feel competitively.

Competition seems to be accelerating more rate increases.

Yeah, great. Thanks, Thanks for the question Tommy.

A couple of different things as you all know we've been taking additional rate and underwriting actions for the last couple of years.

We did that in a far more aggressive stance after Q2 of 2023.

Good news is all of our rate following are in most of them have gone live, but I will point out that going live takes effect for new business and renewal business on their effective date. So we're still relatively early and getting the actual portfolio to rate adequacy, which is one of the reasons why.

Richard Lyn McCathron: As you all know, we've been taking additional rate and underwriting actions for the last couple years. We did that in a far more aggressive stance after Q2 of 2023. The good news is that all of our rate filings are in, and most of them have gone live.

Richard Lyn McCathron: But I will point out that going live takes effect for new business and renewal business on their effective date. So we're still relatively early in getting the actual portfolio to rate adequacy, which is one of the reasons why these numbers are very exciting, because we still have lots of positive benefits to work ourselves into the P&L. So I do think others are taking rates.

These numbers I think are very exciting because we still have lots of.

Positive benefit to work ourselves into.

The P&L. So I do think others are taking rate I think there is a lot of rate that was needed in the industry, we feel very good.

Our current rate level with those things already filed and already in flight as I mentioned to get back on offense. So we feel like were in good in good shape competitively to write profitable business.

Richard Lyn McCathron: I think there's a lot of rate that was needed in the industry. We feel very good about our current rate level with those things already filed and already in flight. As I mentioned, to get back on offense.

Yeah.

Okay got it and how much.

Of the improvement would you say that you guys have seen in underwriting has come from.

Richard Lyn McCathron: So we feel like we're in good shape competitively to write profitable businesses. Okay, got it. And how much of the improvement would you say that you guys have seen in underwriting has come from, you know, the actual rate, which you can quantify versus the terms and conditions and the high reducers that you guys have pushed through? Is there a reasonable way to think about the mix of those contributions? Yeah, it's a it's an interesting question.

Right, which you can quantify.

The the terms and conditions in the high deductible that you guys got pushed.

A reasonable way to think about the mix of those contributions.

Yes.

It's an interesting question. So there are three primary factors that impacts our sort of forward looking statements first is in terms of condition changes predominantly deductibles and high cat exposed areas second of course is the rates and third is selective non renewals on business.

Stewart Andrew Ellis: So there are three primary factors that impact our sort of forward-looking statements. The first is terms and condition changes, predominantly deductibles, and high CAD exposed areas. Second, of course, is the rates. And third is selective non renewal of business that we are getting out of where we're overly concentrated. I think all of these things are very, very important for us to reduce that volatility in our portfolio, and that's been a singular focus of the company over the last six months. I don't think any one of them specifically is driving the positive results. I think they are all collectively driving positive results. And hey, Tommy, this is Stewart.

We are.

Getting out of where we are overly concentrated.

All of these things are very very important for us to reduce that volatility in our portfolio and thats been a singular focus of the company over the last six months.

I don't think any one of them specifically.

Is driving positive results I think they are all collectively driving the positive results.

Hey, Tommy this is Stuart I'll, just add one thing to to Rick's point, just just to clarify.

Stewart Andrew Ellis: I'll just add one thing to Rick's point just to clarify. When we think about our expectations for the future and the confidence we have in the numbers. We, you know, look at the expected results and then we look at the spread around the expected results. The changes in the terms of conditions and the selective non-renewals and high-cat areas are going to be things that are going to affect both of those, but predominantly the spread of the results and the change in rates are the things that's going to be driving the expectation sort of where actuarially where do we think we're going to come out. So it really is a combination of all three small factors. Okay, thanks. And then just the last one; I'll sneak in here.

When we think about.

Our expectations for the future and the confidence we have in the numbers.

When we look at the expected results and then we look at the spread around the expected results.

Changes in the terms and conditions and the selective non renewals in high cat areas are going to be things that are going to affect both of those but predominantly the spread of the results.

And the change in the rates are the thing is one of the things that is going to be driving the.

The expectation sort of Actuarially, where do we think we're going to come out. So it really is a combination of all three all three factors.

Okay.

Okay. Thanks, and then just last one I'll sneak in here.

I guess, we're kind of already into March now side would be great to get an update on the first quarter.

Richard Lyn McCathron: I guess we're kind of already into March now, so it would be great to get an update on the first quarter in terms of some of the potential storm activity and losses from that. You know, we've seen some headlines around losses and flooding around Texas, and maybe you guys have a decent exposure there. So, anything you can share with an update on the first quarter? All right, thanks, Tommy. I think it's a little premature for us to be sharing Q1 results. At this point, I think, you know, we'd be happy to talk about Q4 in 2023. But it's a little early for Q1.

In terms of some of the potential storm activity and losses from that we've seen.

Headlines around losses, and flooding around Texas, and maybe you guys have a decent exposure. There. So anything you can share with an update on that in the first quarter.

Yeah.

Okay.

Alright, Thanks, Tommy I think it's a little premature.

For us to be sharing Q Q1 results.

At this point I think.

We'd be happy to talk about Q4, and 2023, but it's a little early for Q1.

One thing I would I would add is that.

When we give guidance for the year, we take all current information that's available and we've baked in our expectations on what's been happening with Q.

Stewart Andrew Ellis: Yeah, the one thing I would add is that when we give guidance for the year, we take all the current information that's available, and we've baked in our expectations for what's been happening with Q1 weather at this point in our current guidance. Okay, thank you.

Q1 weather at this point in our current guidance.

Okay. Thank you.

Thank you as a reminder, if you wish to submit your question. Please to all star followed by one on your key pads our.

Operator: As a reminder, if you wish to submit a question, please dial star followed by one on your keypad. Our next question comes from Yaron Kinar or Geoffrey Yaron. Your line is open, please go ahead. Thank you. Good morning, everybody.

Our next question comes from but you have one cannot Jefferies Yao on your line is open. Please go ahead.

Thank you good morning, everybody.

Yaron Joseph Kinar: I want to start maybe with a couple of questions on the revenue guide, and if we could start maybe with HHIP. You're talking about switching to offense, but I guess I'm looking at two different numbers here. One, if I look at TGP, the guy there seems to be having a downward movement there, like 20-30% down, whereas the revenue number, I think, is up quite significantly significantly in the midpoint of the guidance range. So can you help us maybe sort things out there?

I want to start maybe with a couple of questions on the revenue guide.

If we could start maybe with <unk>.

Youre talking about switching to offense, but I guess I'm looking at two different numbers Youre, one if I look at CGP guide there seems to be.

The downward.

Movement, there for like 2030% down, whereas the revenue number I think is up quite significantly.

The midpoint of the guidance range. So can you help us maybe sort things out there how much of the revenue change is driven by change in reinsurance how much of the playing offense should we expect to see flow through PGP and revenues.

Stewart Andrew Ellis: How much of the revenue change is driven by the change in reinsurance? How much of the playing offense should we expect to see flow through TGP and revenues? Yaron, thank you for the question. This is Stewart.

Thank you for the question this is Stuart.

Stewart Andrew Ellis: I'm happy to start and then I'm happy to let Rick Rick add. I think, you're right, as we think about TGP, the fastest growing pieces of our business in Q4 anyway, which to the extent that that influences next year and the trends continue, it's important to understand that our insurance as a services segment and our services segment were the primary drivers of TGP growth in 2024. Let me start over. Those two pieces of our business were the primary drivers of growth in the fourth quarter of 2023. That trend is going to continue in 2024 on the TGP side. And that's important for us because those two pieces of the business are the most profitable and least volatile in the portfolio.

I think.

I'm happy to start and then I'm happy to let Rick Rick at I think.

Youre right as we think about T. G P.

The fastest growing pieces of our business in Q4 anyway, which to the extent that that influences next year and the trend to continue its important.

Two.

To understand that our insurance as a services segment and our services segment were the primary drivers of GDP growth in 2024 excuse me in 2000 in Q3.

Let me start over.

Those two pieces of our business were the primary drivers of growth in the fourth quarter of 2023 that trend is going to continue in 2024 on the <unk> side.

And that's important for us because those two pieces in the business or the <unk>.

The most profitable and least volatile in the portfolio.

Stewart Andrew Ellis: The HHIP business is improving from a revenue standpoint, both in Q4 and continuing again in 2024. Because of the factors we talked about earlier, the rate improvements and that sort of thing, but also because of the change in the reinsurance structure. And what we're doing there, as the loss ratio has come down, as the attritional loss ratio has come down, as the expected volatility around that number has come down, we are increasingly comfortable retaining more of the premium associated with the attritional risk within HHIP. And so we've transitioned almost entirely away from a quarter share reinsurance structure to a more traditional excess of loss reinsurance structure, which means that we' In 2022 and 2023, we ended up retaining more of the risk functionally than we retained on the premium, which was a key contributor to some of the losses from the HHIP program. And in 2024, we're correcting that. It won't happen on January 1st because some of the policies from the 2023 treaty year are still under a partial net quota share structure.

The <unk> business is.

Improving from a revenue standpoint, both in Q4 and continuing again in 2024 because of the factors we talked about earlier the rate improvements and that sort of thing, but also because of the change in the reinsurance structure.

And what we're doing there as the loss ratio has come down as the Attritional loss ratio has come down as the expected volatility around.

Around that number has come down we are increasingly comfortable retaining more of the premium associated with the attritional risk within Hh IP.

So we've transitioned almost entirely away from our quota share reinsurance structure to a more traditional excess of loss reinsurance structure, which means that we're getting paid for the risks that we are retaining and.

In 2022, and 2023, we ended up retaining more of the risk.

Functionally then we retained on the premium which was a key contributor to some of the losses from the HIV program.

And in 2024 were correcting that won't happen on January 1st because.

Some of the policies from the 2023 treaty year are still under a part.

Partial net quota share structure, but in 2024, we're moving as we as I said, we're moving almost entirely away from that and retaining.

Stewart Andrew Ellis: But in 2024, as I said, we're moving almost entirely away from that and retaining a premium that is far more in line with the risk that we're retaining. Yeah, Yaron, if I could add, this is Rick, if I could add a few things to that, I would look at it almost in two categories, the current portfolio or historical portfolio, and growth in the HHIP program, creating our new portfolio, or expanding the portfolio that we already have that's profitable. So we continue to take the actions necessary to reduce the volatility in the book; that's our effort for our existing portfolio. When I mentioned going back on the offense, that's our comfort, writing business in segments, in demographics, in geographies, and products where we believe we have a strong competitive advantage. In these areas, we have a technological competitive advantage, a distribution competitive advantage, and a product competitive advantage.

Premium that is far more in line with the risk that we're retaining.

Ron if I could add this is Rick if I could add a few things to that I would look at it almost in two categories. The current portfolio or our historical portfolio and growth in the <unk> program in creating our new portfolio <unk> expanding the portfolio that we already have that's <unk>.

<unk>. So we continue to take the actions necessary to reduce the volatility in the book that's efforts for our existing portfolio. When I mentioned going back on the offense, that's our comfort, writing business and segments and demographics and geographies and products.

Where we believe we have a strong competitive advantage in these areas, we have a competitive advantage of distribution competitive advantage and a product competitive advantage. So with all of these components that business, we're doubling down on and going to grow in an accelerated fashion.

Richard Lyn McCathron: So with all of these components, that business we're doubling down on and going to grow in an accelerated fashion. And over time, we'll overtake the reduction in that historical portfolio, TGP. So we're really excited that we can continue the efforts of HIPPO to really write business profitably in these areas that we think are ones that we have a distinct advantage. Got it. And Rick, maybe to your last comment there.

And over time will overtake the reduction in that historical portfolios PGP. So we're really excited that we can continue.

The efforts of Hippo to really write business profitably.

With these areas that we think are ones that we have a distinct advantage.

Got it and Rick maybe to your last comment there so.

Richard Lyn McCathron: So how should we think about the inflection point when the pivot to offense starts overtaking the retrenchment and other parts of the business or other segments in geographies in the HHIP? Namely, when should we start seeing maybe TGP moving back up again or gross premiums written moving back up again? Yeah, a couple of things.

How should we think about excuse me.

Kind of the inflection point when the.

The pivot to offense.

Over taking the the retrenchment in other parts of the business.

Other segments and geographies.

Mainly when should we start seeing maybe PGP moving back up again, our gross premiums written moving back up again.

Yes, a couple a couple of things and just as a point of clarification and I know your question was specific to <unk> I think as Stuart mentioned.

Richard Lyn McCathron: And just as a point of clarification, and I know your question was specific to HHIP, I think, as Stewart mentioned, we've never shut down for business in our agency segment. So they continue to sell homeowners policies from third parties, and they continue to sell and cross sell other products. In the HHIP section, we've already begun opening up in those areas that I mentioned where we have these advantages, and we will accelerate that opening as we continue to get comfortable around the success of the portfolio, the existing portfolio. So I think you're going to start seeing that the traditional business slows down in terms of its decrease, and then you'll start seeing increases in premium for these new segments. Hey, can you offer a timeline around that, or is it too early? Yeah, I would say late 24, early 25 is when you start really seeing this inflection point, but there's growth that's happening all along the way. I got it.

We've always we never shut down for business and our.

Agency segment. So they continue to sell a homeowners policies from third parties and they continue to sell and cross sell other products.

In the Hh IP section.

We've already begun opening up in those areas that I mentioned, where we have these advantages and we will accelerate that opening as we continue to get comfort around the success of the portfolio of the existing portfolio. So.

I think youre going to start seeing.

That's the traditional business slows down in terms of its decrease and then youll start seeing increases in premium for these new segments.

And can you offer a timeline around that or is it too early.

I would say.

Late 'twenty for early 'twenty five is when you start really seeing this inflection point, but there is growth that's happening in all along the way.

Got it.

And then.

Stewart Andrew Ellis: And then, if I could, my second question would be just around the continued gap between the net loss ratio and the gross loss ratio that I think we're going to see when I look at your guidance even into 2025. I would have thought that with the changes in the reinsurance program and really a diminishing quota share and much more XOL, we'd see that gap almost eliminated. Can you talk about that?

My second question was going to be just around the continued gap between.

The net loss ratio on gross loss ratio I think we're going to see.

When I look at your guidance, even into 2025, I would've thought that with the changes in our reinsurance program and really a diminishing quota share and much more <unk>, we'd see that gap almost eliminated.

Can you talk about that are there so last quarter. So we should be thinking on that.

Stewart Andrew Ellis: Are there still lost quarters that we should be thinking of, and how is that playing out? Yeah, thanks. Thanks, Ron. I think, you know, as the 2023 treaty runs out, there will be small effects there. But I don't believe those are meaningful and significant. I think that the major driver of the difference between the gross and the net loss ratio as we get into 2024 and certainly beyond will be the premium that we're ceding off for XOL reinsurance. And I think that's a pretty standard gap between gross and net. We do have a little bit of 23rd quarter share that's kind of running down at this point. But again, that shouldn't be a factor for 2025. Okay, thank you.

And how does that play out.

Yeah. Thanks, Thanks, Ron I think as the 2023 treaty runs off there will be small effects, there, but I don't believe those are meaningful and significant I think.

The major driver between the <unk>.

Difference between the gross and the net loss ratio as we get into 2024 and certainly beyond it's just going to be the premium that we're seeding off for <unk> reinsurance and.

And I think that's a pretty standard.

Pretty standard gap between gross and net.

We do have a little bit of 23 quota share that's kind of running down at this point.

But again that shouldnt be a factor for 2025.

Okay. Thank you.

Thank you as a final reminder, if you wish to submit a question by the type of things pleased all star followed by one on your telephone keypads now.

Stewart Andrew Ellis: Thank you. As a final reminder, if you wish to submit a question via the telephones, please dial star followed by one on your telephone keypad now. Our next question comes from Matt Carletti of JMP. Matt, your line is open, please go ahead. Hey, thanks. Good morning.

Our next question comes from Matt <unk> of JMP. Your line is open. Please go ahead.

Hey, Thanks, good morning.

It's something pretty loud and clear the kind of the increased confidence you guys have in the <unk>.

Matthew John Carletti: It's come through pretty loud and clear the increased confidence you guys have and the path to EBITDA positivity. Can you talk a bit about the exact drivers that got you to that increased confidence? We've talked a lot about, you know, pricing in terms of conditions, and maybe that's the answer, but are there other factors that play in? Stewart, you obviously highlighted some of the kind of more structural, you know, expense changes that have taken place. You're just trying to understand kind of what's changed over the past few quarters so that you kind of get a better line of sight now. Yeah, good morning, Matt.

Pat.

EBITDA positivity.

Can you talk a bit about.

The exact drivers that got you to that increase.

Competence and we've talked a lot about pricing and terms and conditions and maybe that's the answer but.

Are there other factors that play in the store do you obviously highlighted some of the kind of more structural expense changes that have taken place and just trying to understand kind of what's changed over the past few quarters that kind of you get better line of sight now.

Yes, good morning, Matt Thanks for the question.

Stewart Andrew Ellis: Thanks for the question. I think it breaks down into a few categories, all of which are moving in the right direction. I think, on a written basis, we achieved slightly more growth than we expected in the fourth quarter, and we expect that to continue. I think we also made more progress reducing losses in the fourth quarter than we had expected previously. Both of those things, along with the structural changes that you mentioned in your question, mean a better expected loss ratio in 2024 with lower volatility around that expectation than we had anticipated previously.

It breaks down into a few categories of things all of which are moving in the right direction I think on a.

On a on a written basis, we're achieving slightly more rate than we expected in the fourth quarter and we expect that to continue.

I think we also made more progress reducing losses in the fourth quarter than we had expected previously.

Both of those things along with the structural changes that you mentioned in your question.

I mean, a better expected loss ratio in 2024 with lower volatility around that expectation than we had anticipated previously.

Stewart Andrew Ellis: I think beyond that, we just came through our 2024 reinsurance placement, and I think maybe the market was a little bit better than we expected, and I think maybe our story was a little bit more well received by the reinsurance market than we had expected. So I think we have slightly improved reinsurance economics and structure compared to where we were a quarter or two ago. And then finally, we talked a lot about the cost saving initiatives, both people and vendor related, in Q3. I think we were able to achieve slightly more benefit from the cost reduction initiatives in the fourth quarter than we had previously expected.

Beyond that.

We just came through our 2020 for reinsurance placement and I think that.

Maybe the market was a little bit better than we expected and I think maybe our story was a little bit more well received by the reinsurance market than we had expected. So I think we have slightly improved reinsurance economics and structure compared to where we were a quarter or two ago.

And then finally, we talked a lot about the cost saving initiatives, both people and and vendor related in Q3.

I think we were able to achieve slightly more benefit from the cost reduction initiatives in.

In the fourth quarter than we had previously expected.

Stewart Andrew Ellis: And so you'll see those work their way into our 2024 P&L progressively over the course of the year. So I think really all of the drivers are moving in the right direction, and we're feeling increasingly confident as we move into 2024. Great. And then one follow-up, if I could, you know, Rick, you talked about the competitive environment a little bit and, you know, leaning in where you have an advantage, right? Whether it's geography, technology, demographics, you know, whatever it might be.

Youll see those work their way into our 2024 P&L progressively over the course of the year. So I think really all of the all the drivers are moving in the right direction and we're feeling increasingly confident as we move into 'twenty four.

Okay, Great and then one follow up if I could Rick you talked about the competitive environment a little bit.

Leaning in where you have an advantage right whether it's.

Geography technology demographic or whatever it might be.

Richard Lyn McCathron: As we, I think, as we think about the market broadly, we still think of a lot of your competitors as kind of being on their heels, pushing a lot of rates, not looking to grow new business. In those areas that you're looking to grow, is that a similar picture, or are these pockets of the market that, you know, maybe others view as less cat-exposed and other things as well? And there is more competition in those markets; just trying to get a feel for the competitive environment kind of in the spots where Hippo is going to look to grow. Yeah, no, it's a really good question.

As we I think as we think about the market broadly we still think of a lot of your competitors is kind of being on their heels pushing a lot of rate not looking to grow new business.

Those areas that Youre looking to grow is that a similar picture or are these pockets of the market that maybe.

Maybe others view is less cat exposed and other things as well and there is more competition in those markets just trying to get a feel for the competitive environment kind of in the spots, where if we're going to look to grow.

Yes, no. It's a really good question and so a couple of things one.

Richard Lyn McCathron: And so a couple of things. One, we were actually, I think, ahead of the curve from most of our competitors on changing given the hardening of the market. The main reason we were ahead of the curve is that our technology actually allows us to put changes in quicker and get them to market quicker. So I would say we had a six to 12 month advantage in terms of timing over our competitors. That's one aspect of it.

We were actually I think ahead of the curve from most of our competitors on changing given the hardening of the market. The main reason we were ahead of the curve as our technology actually allows us to put changes in quicker and get them to market quicker. So I would say.

We had a six to 12 months advantage in terms of timing to our competitors.

That's one aspect of it the second aspect of it which we've talked about before and this is one example, we do have comparative and competitive advantages in certain channels. So we've talked about our builder channel.

Richard Lyn McCathron: The second aspect of it, which we've talked about before, and this is one example, is that we do have comparative and competitive advantages in certain channels. So we've talked about our builder channel. As an example, we have a tech advantage because quoting a property that doesn't even have a street number or a street name requires significant ingestion of data from builder partners.

As an example.

We have a tech advantage because quoting a property that doesn't even have a street number or a street name requires significant ingestion of data from builder partners. We have a distribution advantage because we are getting those leads directly from the builder partners and we have a product.

Richard Lyn McCathron: We have a distribution advantage because we are getting those leads directly from the builder partners. And we have a product advantage; we have constructed a specific homeowners policy for new home builds. All of those are areas, and although what some may think is a niche, there are between a million and a million and a half new homes being built every year. So if that's a niche, it's a massive one where we have four years of moat building and competitive advantage that we're doubling down on. Thanks and for football.

Advantage, we have constructed a specific homeowners policy for new home builds all of those are areas and although what some may think is a niche there is between $1 million and $1 million and a half new homes being built every year. So if that's a niche it's a massive one where we.

Have four years of <unk>.

Building and competitive advantage that we're doubling down on.

Great. Thanks, that's helpful. I appreciate it.

Richard Lyn McCathron: I appreciate it. You're welcome. Thank you, we have a follow-up question from Yaron Kinar of Jefferies. Yaron, your line is open, please go ahead.

Youre welcome.

Thank you we have a follow up question from Yamana cannot of Jefferies. Your line is open. Please go ahead.

Thanks.

Yaron Joseph Kinar: Thanks. Actually, two follow-up questions if I could. One, when you say that the actions you've taken would reduce direct losses from hail events by 55%, and if the same hail events occurred in 24 as they did in 23, is that on a dollar basis? Yes, Yaron, that's on a dollar basis. So basically, if you just apply the exact same storms with the exact same severity and the exact same geographies and you roll our changes in wind and hail deductibles and selective non-renewals through the portfolio progressively over the course of the year with their renewal dates, we'll achieve a 55% reduction relative to 2023 and 2024, and then it rises to nearly 80% if you allow those changes to work their way all the way through The reason for this difference is that these storms happen every year.

Two follow up questions. If I could one when you say that the actions you've taken now would produce direct losses from hail events like 55% in the.

Same hail events occurred in 24 as they did in 2003 is that on a dollar basis.

Yes, youre right and Thats on a dollar basis. So basically if you just.

Apply the exact same storms with the exact same severity in the exact same geographies and you roll our.

Changes in wind and hail deductibles and selective non renewals through the portfolio progressively over the course of the year with their renewal dates.

We will achieve a 55% reduction.

Relative to 2023, and 2024 and then it rises to nearly 80%. If you allow those changes to work their way all the way through the book the reason for the difference is because these storms happened, we didnt really start.

Stewart Andrew Ellis: We didn't really start the process of rolling these changes out until the fall of 2024, so not all of our portfolio policies will have had a chance to come up for renewal by the time we get to hail season this year. So we'll still have some of that exposure, but it will be dramatically reduced in 24 and then even further reduced in 25. Yeah, Yaron, this is Rick, just to add to that, and really with one of the previous questions.

The process of Rolling these changes out until the fall of 2024, so not all of our portfolio of policies will have had a chance to come up for renewal by the time, we get to Hell season. This year. So we will still have some of that exposure, but it will be dramatically reduced in 'twenty four and then even further reduced in 25%.

You're on this is Rick just to add to that and really with one of the previous questions.

Richard Lyn McCathron: If you really think about when we started the work on reducing volatility in the portfolio, we actually started that work in 2022. And so we significantly reduced the volatility in 2020 from 2022 to 2023. Just 2023 was a horrible, horrible first half and a horrible pale season.

If you really think about when we started the work on reducing volatility in the portfolio. We actually started that work in 2022, and so we significantly reduced the volatility in 2020 from 2022 to 2023, just 2023 was a horrible horrible first.

Half on a horrible hell season, so we havent made all we havent benefited from all of the actions that we had already been taken so now as we look forward to 2024, we have all of the 2022 actions already in the portfolio. We have a portion of the 2012.

Richard Lyn McCathron: So we hadn't made all we hadn't benefited from all of the actions that we had already taken. So now, as we look forward to 2024, we have all of the 2022 actions already in the portfolio. We have a portion of the 2023 actions that Stewart mentioned that we started in October as a result of our Q2 partially, and then they'll be fully in the portfolio by the end of 2024. So we've got a stacking effect of two different years' worth of efforts to get us highly confident in our projection. And the loss ratio impact should be even more pronounced, right, because the premiums earned components continue to grow. I think I think yes, that's right, because we'll be retaining more of the attritional or the premium associated with the attritional loss. Okay.

Three actions that Stuart mentioned that we started in October as a result of our Q2, partially and then there'll be fully in to the portfolio by the end of 2024. So we've got a stacking effect of two different years worth of efforts to get us highly confident.

And our projections.

Yes.

And the loss ratio impact should be even more pronounced because the premiums earned component is continuing to grow.

I think I think yes, that's right because we will be retaining more of the attritional.

Or the premium associated with the Attritional losses.

Okay.

Yaron Joseph Kinar: And then I guess going back to revenues for a second. So in the services segment, the guide there is for a bit of a reduction in growth relative to where you were in 2023. And I understand it's a very young business that you're still ramping up. So I guess on the one hand, I could say maybe you have a larger base and growing off of that base is more challenging.

And then.

I guess going back to revenues for a second so in the services segment. The guide there is for a bit of a reduction in growth relative to where you were in 2023.

And I understand that.

Very young business that Youre still ramping up so I guess on the one hand I could say, maybe you have a larger base and growing off of that base is more challenging on the other had it so young and still in ramp up mode. So why shouldn't we see the same level of growth as we saw 23 or if not better when we look at 2004.

Stewart Andrew Ellis: On the other hand, it's still young and still in ramp-up mode. So why shouldn't we see the same level of growth as we saw in 23, if not better, when we look at 24? Yeah, Yaron, that's a great question. I think it gives us an opportunity to clarify maybe one of the drivers that's going on that. It should be clear to everybody, but because we have some eliminations in the numbers between segments, it may be a bit confusing. So one of the headwinds for our services segment is the pullback in the pause and underwriting that we've had at HHIP. So our service business sells policies that are third-party carrier policies. And it also sells HIPPO home insurance policies.

Yeah, Youre right Thats, a great question and I think it gives us an opportunity to clarify maybe one of the drivers that's going on that.

That should should be clear to everybody but.

As we have announced.

Some eliminations in the numbers between segments.

Maybe a bit confusing so one of the headwinds for our services segment is the pullback in the pause in underwriting that we've had at <unk>. So our service business sells policies that are third party carrier policies and it also sells hip our home insurance policy.

<unk>.

Stewart Andrew Ellis: And so the third-party business is the primary driver of growth in the fourth quarter of 2023. It will continue to be the primary driver of growth as we move into 2024 at the beginning of the year. When we start to reopen some of the segments of our HIPPO home insurance policies that Rick mentioned, then you'll start to get a tailwind effect from that. But the services business grew, you know, 20% TGP year over year in the fourth quarter despite the fact that we had paused most of the HIPPO premium. So I actually look at the services business and the growth that we're seeing there as a bright spot, when you understand that there was a headwind associated with the HIPPO home insurance program pause. Makes sense. Thanks for the clarification.

And so.

The third party business.

Is that the primary driver of growth in.

In the fourth quarter of 2023 and will continue to be the primary driver of growth.

As we move into 2024 and the beginning of the year when.

When we start to reopen some of the segments of our Hippo home insurance policies that Rick mentioned and you'll start to get a tailwind effect from that but the services business grew 20, 20% TTP.

Year over year in the fourth quarter. Despite the fact that we had.

Most of the Hippo premiums so I actually look at the services business and the growth that we're seeing there is a bright spot.

When you understand that there was the headwind associated with Hippo.

Home insurance program.

Yeah.

Makes sense thanks for the clarification.

Absolutely.

Richard Lyn McCathron: Absolutely. Thank you. At this stage, we currently have no further questions, so I'll hand back over to Rick, the CEO, for any closing remarks. Great. Well, thank you very much for your attention. We look forward to chatting with you next quarter. Have a good day. Ladies and gentlemen, this concludes today's call. Thank you for joining me, and may I disconnect your line? www.youtube.com.au

Thank you at this stage. We currently have no further questions. So I'll hand back over to Rick <unk> CEO for any closing remarks.

Great well. Thank you very much for your attention and we look forward to chatting with you next quarter have a good day.

Ladies and gentlemen, this concludes today's call. Thank you for joining amounts disconnect your lines.

Yeah.

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