Sign in
HH

Hippo Holdings Inc. (HIPO)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered 31% revenue growth to $117.3M, a consolidated net loss ratio of 47% (improved 46pp YoY), and first-ever positive net income from operating activities; diluted EPS was $0.05 versus $(1.64) in Q2’24 .
  • Results beat Wall Street: revenue modestly exceeded consensus ($117.3M vs $114.9M*) and EPS massively beat (-$0.68* est vs $0.65* actual); 5 EPS and 4 revenue estimates underpin consensus*.
  • FY25 guidance raised across key metrics (GWP, revenue, net income, net loss ratio, adjusted net income); Baldwin partnership expected to add ~$90M gain in Q3, but lower revenue in Q3/Q4 by ~$5.5M/$6.5M due to distribution sale .
  • Strategic catalysts: hybrid fronting program expansion (two new commercial/casualty MGAs), premium retention to 39%, and $50M surplus note; cash and investments rose QoQ to $604M .

Values retrieved from S&P Global.*

What Went Well and What Went Wrong

What Went Well

  • “We stacked another strong quarter…more than 30% revenue growth…major improvement in our net loss ratio…positive net income from operating activities for the first time,” – CEO Rick McCathron .
  • Consolidated net loss ratio improved to 47% (from 94% YoY), driven by underwriting/rate actions, better claims, and favorable reserve releases; HHIP net loss ratio fell to 55% (-58pp YoY) .
  • Operating leverage: fixed expenses down $6M YoY as revenue rose $28M; fixed costs fell to 30% of revenue (from 46% in Q2’24) .

What Went Wrong

  • HHIP gross written premium declined 9% YoY (growth in New Homes offset by reduced CAT exposure in existing homes), highlighting lingering portfolio normalization effects .
  • Favorable reserve releases contributed ~7.5pp to net loss ratio; excluding releases, consolidated NLR would be 55%—still improved, but underlying normalization remains in progress .
  • Seasonality: management guided to slightly higher consolidated NLR in Q3 (seasonally higher non-PCS losses) before improvement in Q4, tempering near-term loss ratio momentum .

Financial Results

Quarterly Trend (oldest → newest)

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$102.0 $110.0 $117.3
Net Income attributable to Hippo ($USD Millions)$44.0 (incl. $46M gain on First Connect sale) $(48.0) (wildfires $45M) $1.3
Diluted EPS ($USD)N/AN/A$0.05
Gross Loss Ratio (%)50 (HHIP) 121 (HHIP; wildfires) 37 (Consolidated); 44 (HHIP gross)
Net Loss Ratio (%)60 (HHIP) 106 (Consolidated) 47 (Consolidated); 55 (HHIP net)

Year-over-Year Comparison

MetricQ2 2024Q2 2025
Revenue ($USD Millions)$89.6 $117.3
Net Income attributable to Hippo ($USD Millions)$(40.5) $1.3
Diluted EPS ($USD)$(1.64) $0.05
Gross Loss Ratio (%)58 (Consolidated)37 (Consolidated)
Net Loss Ratio (%)94 (Consolidated)47 (Consolidated)

Q2 2025 vs Wall Street Consensus (S&P Global)

MetricConsensusActualSurprise
Revenue ($USD Millions)114.9*117.3 +2.4*
Primary EPS ($USD)-0.676*0.6532*+1.3292*

Values retrieved from S&P Global.*

Segment Breakdown

SegmentQ2 2024 Revenue ($M)Q2 2025 Revenue ($M)Q2 2024 Adj. Operating Income ($M)Q2 2025 Adj. Operating Income ($M)
Services12.111.7$(4.5)$(3.2)
Insurance-as-a-Service24.448.05.710.0
Hippo Home Insurance Program (HHIP)56.260.6$(26.0)4.8
Eliminations(3.1)(3.0)(0.1)0.2
Total89.6117.3$(24.9)11.8

KPIs and Operating Metrics

KPIQ2 2024Q2 2025
Gross Written Premium ($USD Millions)$257.6 $298.6
Gross Earned Premium ($USD Millions)$212.2$238.5
Net Earned Premium ($USD Millions)$64.4 $94.0
Premium Retention (%)30 39
Cash & Investments (excl. restricted) ($USD Millions)N/A$604.0
Fixed Expenses as % of Revenue (%)46 30

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Gross Written PremiumFY 2025$1.05–$1.10B $1.07–$1.10B Raised lower end
RevenueFY 2025Prior guide (pre-Baldwin) $460–$465M Set; Q3/Q4 lowered by ~$5.5M/$6.5M due to Baldwin
Consolidated Net Loss RatioFY 202572%–74% 67%–69% Improved
Net IncomeFY 2025$(65)–$(69)M +$35–$39M Raised to positive
Adjusted Net IncomeFY 2025$(10)–$(14)M $(4)M to breakeven Raised

Additional notes: ~+$90M one-time gain on Baldwin homebuilder asset sale expected in Q3; revenue reductions in Q3/Q4 from lower commission income; adjusted net income expected lower by ~$2M (Q3) and ~$3.5M (Q4) due to Baldwin .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Portfolio remediation & HHIP CAT exposureHHIP non-PCS LR improved; significant California wildfire impact in Q1; derisking largely complete HHIP net LR down to 55%; New Homes resilient; plan to expand beyond New Homes Improving underwriting, selective growth
Reinsurance & CAT load guidanceReinsurance intact post-January wildfires; PCS ~15% in Q4’25 guide HHIP CAT load ~15% in Q3, ~11% in Q4; corporate CAT covers property-exposed programs Seasonally higher Q3 CAT; adequate protection
Operating leverage & automationFixed costs down; adjusted EBITDA positive in Q4 Fixed costs down 16% YoY; leveraging scalable platform; deploying operational efficiency (incl. AI) Sustained leverage
Tariffs/material inflationPricing via coverage A resets at renewal; limited regulatory friction No new issues; approach reiterated Stable mitigation
Strategic partnershipsPreparing Investor Day; pipeline strong Baldwin partnership: tripling New Homes access; $100M asset sale; expanded MGA capacity Growth/diversification accelerant

Management Commentary

  • CEO: “We…achieve positive net income from operating activities for the first time…launched…commercial and casualty programs…a strategic partnership that will accelerate our growth and diversification” .
  • CEO letter: Baldwin deal “tripling access to new home closings” and strengthening finances via $100M asset sale; Q2 “posted positive net income from operating activities” .
  • CFO: Long-term targets—GWP > $2B, adjusted net income > $125M, adjusted ROE >18%; premium growth outpacing fixed expense growth .

Q&A Highlights

  • Rate actions and HHIP: Major rate remediation largely done; ongoing smaller increases as needed to maintain profitability .
  • CAT exposure and reinsurance: HHIP Florida limited to new builds; corporate CAT protection overlays program towers; HHIP CAT load ~15% (Q3) and ~11% (Q4) .
  • Operating leverage: Fixed costs expected to rise slower than premium growth (~8% vs >20% premium growth in plan), continuing scalability .
  • MGA program selection: Start fronted (low risk), increase participation only after data-supported conviction; runoff programs failing thresholds .
  • FAIR Plan & wildfires (prior quarter context): Q1 included FAIR Plan assessment within the $45M wildfire impact; recoupment to policyholders expected later (not in guidance) .

Estimates Context

  • Q2 2025 revenue beat: $117.3M actual vs $114.9M consensus (4 estimates)*.
  • Q2 2025 EPS beat: $0.6532 actual vs -$0.676 consensus (5 estimates)*.
  • Implications: Consensus likely to revise FY25 loss ratio and profitability assumptions lower (improved), and raise revenue and earnings paths given guidance increase and partnership effects.

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Achieved first positive net income from operating activities; consolidated NLR at 47% marks a structural step-change in underwriting performance .
  • Strong beat vs consensus and broad FY25 guidance raise are likely catalysts; monitor Q3 one-time gain (~$90M) and seasonal CAT headwinds .
  • Baldwin partnership accelerates New Homes distribution (3x access) and diversifies premium; near-term revenue mix shifts with distribution sale .
  • Premium retention up to 39% toward 40–45% target, supporting revenue growth and margin leverage while maintaining underwriting discipline .
  • Insurance-as-a-Service segment scaling (revenue +97% YoY) with disciplined risk participation adds ballast against property volatility .
  • Liquidity and capital position improved: cash/investments $604M; $50M surplus note enhances capacity for select risk participation .
  • Near-term watch items: Q3 non-PCS seasonality (NLR guide up slightly), CAT activity, and integration cadence of new MGAs and Baldwin programs .