Hippo Q1 Earnings Call Highlights

Key Points

• Strong Q1 results: Hippo posted net income of $7 million and Adjusted Net Income of $17 million, with gross written premium up 58% to $332 million and the net combined ratio improving to 99.5%, a ~60 percentage-point year-over-year improvement.
• Shift toward commercial lines and retention effects: Casualty and commercial multi-peril (CMP) drove diversification—$101M (30%) and $96M (29%) of GWP respectively—but net written premium lagged (NWP $101M) as implied retention fell to 31%, partly from a $26M unearned premium adjustment in renters that management expects to normalize toward ~40% retention.
• Raised 2026 guidance and tech initiatives: Hippo raised full-year GWP guidance to $1.45–$1.525 billion, increased NWP and Adjusted Net Income targets while keeping a 103–105% combined-ratio outlook, and highlighted expanding distribution with Progressive plus AI deployments that have improved adjuster efficiency by ~30%.

Hippo NYSE: HIPO reported first-quarter 2026 results that management said reflected accelerating premium growth, improving underwriting performance, and a fourth consecutive quarter of profitability on both a GAAP and adjusted basis.

Premium growth and profitability improve in Q1

President and CEO Rick McCathron said Hippo began 2026 with “strong momentum,” posting $7 million of net income and $17 million of Adjusted Net Income for the quarter. He said gross written premium (GWP) totaled more than $332 million, up 58% year over year, driven by growth in commercial lines and what he described as a return to growth in homeowners.

McCathron also highlighted underwriting performance, pointing to an underwriting profit and a 99.5% combined ratio, which he said improved by 60 percentage points from the prior-year quarter.

Chief Financial Officer Guy Zeltser said Q1 net income of $7 million, or $0.27 per diluted share, represented a $55 million improvement year over year, which he attributed primarily to lower catastrophe activity and continued improvement in underlying underwriting results. Adjusted Net Income rose to $17 million, or $0.65 per diluted share, up $52 million year over year, according to Zeltser.

Shift toward diversified commercial lines

Zeltser said Q1 GWP of $332 million rose from $211 million a year earlier, driven primarily by casualty and commercial multi-peril (CMP), steady expansion in renters, and modest growth in homeowners.

• Casualty: $101 million (30% of GWP), up from 16% of GWP in the prior-year quarter
• Commercial multi-peril: $96 million (29% of GWP), up from 24% of GWP a year earlier
• Homeowners: $87 million (26% of GWP), which Zeltser said grew slightly as the portfolio diversified

McCathron said CMP premium increased 89% year over year to $96 million, while casualty grew 193% to $101 million. He said CMP growth came largely from existing program partners focused on commercial property and business owners’ policies. In casualty, he said growth came from a “well-diversified group of programs” with “relatively modest limit profiles.” He also said the company began increasing retention rates in casualty, launching a new program with an operator the company knows well and retaining a larger portion of the risk.

Retention dynamics and renters adjustment

Zeltser said net written premium (NWP) grew 1% year over year to $101 million, which he noted lagged GWP growth. He said the implied retention rate was 31% in the quarter, down from 48% a year earlier, reflecting a mix shift as the company retained less in its fastest-growing line, casualty.

He also cited a retention-related accounting impact in renters. Zeltser said renters NWP was $11 million compared with $37 million in Q1 2025, and explained that the change was “almost entirely driven by a $26 million unearned premium adjustment” tied to changes in retention at treaty renewal on Jan. 1. He said the structure of the renters line means the new retention rate applies to current GWP and to all unearned premium outstanding from the prior period. For the rest of 2026, Zeltser said he expects renters retention rates to “normalize and get closer to 40%.”

Underwriting: lower cat losses and improving expense ratio

Zeltser said the net combined ratio improved to 99.5% from the prior-year quarter, driven by improvements in both the net loss ratio and the net expense ratio.

He said the Q1 net loss ratio improved 58 percentage points year over year to 48%, citing favorable catastrophe and non-cat loss experience. The catastrophe loss ratio improved to 4%, which he attributed to low catastrophe losses in the quarter and the prior-year impact of California wildfires. The non-catastrophe loss ratio improved to 44%, down 1 percentage point year over year, which he said reflected that underlying pricing is “largely” where it needs to be for rate adequacy.

The net expense ratio improved 2 percentage points year over year to 51.5%, Zeltser said. He added that the improvement came “despite the benefit in prior year quarter of roughly 4.5 percentage points from profits generated by the homebuilder distribution network” that was sold in the third quarter of 2025.

In response to an analyst question about why the company raised premium guidance but kept the combined ratio outlook unchanged, Zeltser emphasized that the second and third quarters are typically the highest catastrophe quarters and said the company did not want to “get ahead of that.” McCathron said the company expects continued progress and pointed to expense ratio reduction as a major area of focus, with an “ultimate goal in the mid-30s as opposed to close to 50% where it is today.”

Progressive partnership and AI initiatives

McCathron said the company is working to advance its “technology-native insurance platform,” including a strategic distribution partnership with Progressive that he said complements Hippo’s existing Westwood partnership. He described Progressive as providing scaled, high-volume distribution and Westwood as offering access to home builders and new home buyers at the point of purchase.

Asked for an update on the rollout, McCathron said the partnership went live at the beginning of the year and the company has four months of history with it. He said results are “exceeding our expectations,” and the companies are discussing adding additional states. He said the partnership launched with approximately “eight states” and he expects that footprint to grow in coming quarters, potentially doubling by this time next year, subject to pricing adequacy and concentration considerations.

McCathron also detailed how Hippo is applying “agentic AI” across claims, services, and underwriting. In claims, he said embedding agentic AI into workflows has adjusters operating at “roughly 30% higher efficiency,” and he expects that improvement to be sustainable. He said the company expects more than 70% of first notice of loss to be filed digitally over time. In services, he said Hippo plans to announce later this year a customer experience transformation with AI-powered first-line support; he added that an AI service voice agent is already live for 100% of inbound calls and after-hours support, and early indications after a Q1 launch show a 10% improvement in average handle time. In underwriting, he said Hippo has begun deploying AI in homeowners to help underwriters review new business and support growth without adding headcount.

On homeowners mix, Zeltser said about 70% of the homeowners line in Q1 was HHIP (the company’s own MGA), with the remainder from a partner program that is “predominantly E&S.” He said HHIP grew about 15%, driven by Progressive and Westwood, while the other side of the book declined about 20% to 25% amid competition. McCathron said the company is “toggling down” E&S where it sees less attractive conditions while maintaining underwriting discipline.

McCathron also addressed a question on collateral and counterparty risk in fronting, saying the company emphasizes “quality above quantity and above growth,” monitors collateral closely, and is selective in choosing reinsurance and program partners.

Looking ahead, Zeltser said Hippo updated several full-year 2026 guidance metrics, including raising its GWP outlook to $1.45 billion to $1.525 billion and increasing its NWP outlook to $520 million to $550 million. The company introduced a revenue guide of $560 million to $570 million, which Zeltser said implies 19% to 22% growth over fiscal 2025. Hippo maintained its net combined ratio outlook of 103% to 105%, inclusive of a 13% catastrophe loss ratio load, and raised expected Adjusted Net Income to $48 million to $56 million.

About Hippo NYSE: HIPO

Hippo Enterprises Inc is a technology-driven home insurance company that offers modernized homeowners insurance products through a digital-first platform. Leveraging data analytics, artificial intelligence and smart home devices, the company designs tailored coverage plans intended to streamline the underwriting process and deliver more comprehensive protection for homeowners. Hippo's policies typically include standard dwelling coverage, personal property protection and liability insurance, along with optional add-ons such as water backup, home computer systems and equipment breakdown coverage.

Through its online portal and partner network of licensed insurance agents, Hippo provides policyholders with a range of services aimed at minimizing risk and preventing losses before they occur.

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