Hippo NYSE: HIPO reported third-quarter 2026 net income of $9 million and adjusted net income of $20 million, as the insurance company said premium growth, portfolio diversification and lower expenses supported a fifth consecutive quarter of underwriting profitability.
Chief Executive Officer Rick McCathron said the company generated nearly $500 million in gross written premium during the quarter, up 60% from a year earlier, while its combined ratio improved by 1 percentage point to 98.4%. A combined ratio below 100% generally indicates underwriting profitability.
“This growth did not come at the expense of underwriting discipline,” McCathron said, adding that Hippo's year-to-date combined ratio improved 20 points to 97.9%.
Premium growth led by casualty and commercial lines
Gross written premium rose to $498 million from $311 million in the prior-year quarter. Growth occurred across all major business lines, with casualty and commercial multi-peril, or CMP, delivering the largest increases.
- Casualty gross written premium increased 146% to $188 million.
- Commercial multi-peril premium increased 63% to $108 million.
- Homeowners premium increased 11% to $112 million.
- Renters premium increased 25% to $74 million.
Chief Financial Officer Guy Zeltser said more than two-thirds of the growth in casualty premium came from renewal business after Hippo added several large existing programs with in-force books. The company has been retaining less risk in its fastest-growing commercial lines, resulting in net written premium growth of 26% to $149 million and a blended retention rate of 30%, compared with 38% a year earlier.
Management expects the blended retention rate to decline further in 2027 to the low-30% range, from an estimated 33% to 34% for 2026. McCathron said Hippo is willing to retain less business during softer market conditions rather than compromise underwriting standards.
The company said the property insurance market remains soft, with ample reinsurance capacity contributing to lower rates and softer terms. In casualty, Hippo continues to see higher renewal pricing, though loss-cost trends vary by product line and attachment point.
Underwriting results and expenses
Hippo's third-quarter net loss ratio increased 9 percentage points year over year to 66.7%. The accident-year loss ratio excluding catastrophe losses was 49.9%, compared with 48.4% a year earlier. Zeltser attributed the increase to more normalized loss experience in a business-owner property line and the company's growing mix of casualty and CMP exposure.
Catastrophe losses accounted for 6.5 percentage points of the loss ratio, compared with no catastrophe losses in the year-earlier quarter. Zeltser said the third quarter typically has Hippo's highest modeled catastrophe exposure, but the quarter's catastrophe results were below the company's expectations.
The net expense ratio declined by 10 percentage points from a year earlier to 41.7%. Management attributed the reduction to operating leverage from higher scale and to the business mix, as casualty and CMP generally carry lower expense ratios than property insurance.
Hippo said it expects its longer-term business mix to raise the underlying non-catastrophe loss ratio while lowering catastrophe and expense ratios. The company maintained its target of a normalized combined ratio in the mid-90s by 2028 and said it expects an expense ratio in the mid-30% range at that time.
Technology, partnerships and capital
In its homeowners business, Hippo said its admitted-book growth more than offset headwinds in excess-and-surplus lines. The company reported a mid-single-digit renewal rate increase and nearly 10% higher exposure, producing nearly 14% growth in renewal premium.
McCathron said Hippo expanded quoting for existing homes into 14 additional states this year through national distribution partners. The company said its newer state launches required 70% less engineering effort per state than the initial eight-state rollout. It also cited claims technology called Clara, which it said has achieved a successful outcome in nine out of 10 first notices of loss.
Hippo also announced a partnership with Greenlight Re intended to position it as a preferred program carrier for emerging managing general agents, or MGAs. The company may invest alongside Greenlight Re in those businesses and plans to offer certain partners services including claims administration, customer support and technology. McCathron said those services are intended primarily to improve oversight and alignment with programs where Hippo retains risk, rather than serve as a standalone revenue center.
Addressing capital needs, Zeltser said the company has sufficient capital to support its organic growth plans through 2028. He cited more than $500 million of capital, including a surplus note, and said the company also has a whole-account quota share arrangement that could provide additional flexibility if growth opportunities exceed current plans.
Guidance raised
Revenue increased 29% year over year to $156 million, including $19.7 million of commission, service and fee income, up 45%. Adjusted net income increased 9% to $20 million, or $0.74 per diluted share.
Net income of $9 million, or $0.33 per diluted share, was down from the prior-year period, which included a $91 million net gain from the sale of the homebuilder distribution network. Excluding that one-time gain, Zeltser said net income improved by roughly 28% year over year.
Hippo raised its full-year outlook, now expecting:
- Gross written premium of $1.7 billion to $1.75 billion, up from prior guidance of $1.65 billion to $1.7 billion.
- Revenue of $585 million to $590 million, compared with prior guidance of $580 million to $585 million.
- A combined ratio of 97% to 98%, including an 8% catastrophe loss ratio, compared with prior guidance of 99% to 101% including a 10% catastrophe loss ratio.
- Adjusted net income of $77 million to $80 million, up from $62 million to $70 million previously.
Total shareholders' equity was $469 million at quarter-end, up 8% from year-end 2025. Book value per share was $17.62, largely unchanged from $17.65 in the second quarter as unrealized investment losses offset quarterly net income.
About Hippo (NYSE:HIPO)
Hippo Holdings Inc is a technology-focused insurance company that provides home insurance and related services to homeowners in the United States. Operating under the Hippo brand, the company uses digital tools, data analytics and a streamlined online experience to help customers obtain coverage, manage policies and receive support.
Hippo's offerings are designed to protect residential properties and personal belongings against covered risks, while also emphasizing proactive home protection.
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