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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)

☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023
OR

o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______.
Commission file number 001-39711
HIPPO HOLDINGS INC.
(Exact name of registrant as specified in its charter)

Delaware |  | 32-0662604 |
(State of incorporation) |  | (I.R.S. Employer Identification No.) |
150 Forest Avenue Palo Alto, California |  |  | 94301 |
(Address of Principal Executive Offices) |  |  | (Zip Code) |

(650) 294-8463
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:

Title of each class | Trading Symbol(s) | Name of each exchange on which registered
Common stock, $0.0001 par value per share | HIPO | New York Stock Exchange
Warrants to purchase common stock | HIPO.WS | New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer | ☐ | Accelerated filer | ☐
Non-accelerated filer | ☒ | Smaller reporting company | ☒
|  | Emerging growth company | ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The registrant had outstanding 23,887,240 shares of common stock as of October 24, 2023.

Table of Contents

|  | Page
| Cautionary Note regarding Forward-Looking Statements |
| Part I. Financial Information |
Item 1 | Consolidated Financial Statements |
| Consolidated Balance Sheets | 1
| Consolidated Statements of Operations and Comprehensive Loss | 2
| Consolidated Statements of Stockholders’ Equity | 3
| Consolidated Statements of Cash Flows | 5
| Notes to Consolidated Financial Statements | 6
Item 2 | Management's Discussion and Analysis of Financial Condition and Results of Operations | 32
Item 3 | Quantitative and Qualitative Disclosures About Market Risk | 54
Item 4 | Controls and Procedures | 55
| Part II. Other Information |
Item 1 | Legal Proceedings | 56
Item 1A | Risk Factors | 56
Item 2 | Unregistered Sales of Equity Securities and Use of Proceeds | 56
Item 3 | Defaults Upon Senior Securities | 56
Item 4 | Mine Safety Disclosures | 56
Item 5 | Other Information | 57
Item 6 | Exhibits | 58
| Signatures |

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q of Hippo Holdings Inc. (“Hippo,” the “Company,” “we,” “us” and “our”) contains statements that are forward-looking and as such are not historical facts. This includes, without limitation, statements regarding the financial position, business strategy and the plans and objectives of management for our future operations. These statements constitute projections, forecasts and forward-looking statements, and are not guarantees of performance. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. When used in this Quarterly Report on Form 10-Q, words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “strive,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this Quarterly Report on Form 10-Q may include, for example, statements about:
•our future results of operations and financial condition and our ability to attain profitability;
•our ability to grow our business and, if such growth occurs, to effectively manage such growth;
•customer satisfaction and our ability to attract, retain, and expand our customer base;
•our ability to maintain and enhance our brand and reputation;
•our business strategy, including our diversified distribution strategy and our plans to expand into new markets and new products;
•the effects of seasonal trends on our results of operations;
•our expectations about our book of business, including our ability to cross-sell and to attain greater value from each customer;
•our ability to compete effectively in our industry;
•our ability to maintain reinsurance contracts and our near- and long-term strategies and expectations with respect to cession of insurance risk;
•our ability to utilize our proprietary technology;
•our ability to underwrite risks accurately and charge profitable rates;
•our ability to leverage our data, technology and geographic diversity to help manage risk;
•our ability to protect our intellectual property;
•our ability to expand our product offerings or improve existing ones;
•our ability to attract and retain personnel, including our officers and key employees;
•potential harm caused by misappropriation of our data and compromises in cybersecurity;
•potential harm caused by changes in internet search engines’ methodologies;
•our expected use of cash on our balance sheet, our future capital needs and our ability to raise additional capital;
•fluctuations in our results of operations and operating metrics;
•our ability to receive, process, store, use and share data, and compliance with laws and regulations related to data privacy and data security;
•our ability to stay in compliance with laws and regulation that currently apply, or become applicable, to our business both in the United States and internationally;
•our inability to predict the lasting impacts of COVID-19 to our business in particular, and the global economy generally;
•our public securities’ liquidity and trading; and
•other factors detailed in the section titled “Risk Factors” in Part II, Item 1A, in this Quarterly Report on Form 10-Q.

These forward-looking statements are based on information available as of the date of this Quarterly Report on Form 10-Q, and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. You should not place undue reliance on these forward-looking statements.

PART I - Financial Information
Item 1: Financial Statements
HIPPO HOLDINGS INC.
Consolidated Balance Sheets
(In millions, except share and per share data)
(Unaudited)

| September 30, 2023 |  | December 31, 2022
| (Unaudited) |  |
Assets |  |  |
Investments: |  |  |
Fixed maturities available-for-sale, at fair value (amortized cost: $148.5 million and $127.3 million, respectively) | $ | 141.5 |  |  | $ | 121.1 |
Short-term investments, at fair value (amortized cost: $188.6 million and $325.6 million, respectively) | 188.5 |  |  | 324.8 |
Total investments | 330.0 |  |  | 445.9 |
Cash and cash equivalents | 228.4 |  |  | 194.5 |
Restricted cash | 41.0 |  |  | 50.0 |
Accounts receivable, net of allowance of $0.4 million and $0.3 million, respectively | 145.4 |  |  | 107.2 |
Reinsurance recoverable on paid and unpaid losses and LAE | 297.3 |  |  | 286.3 |
Prepaid reinsurance premiums | 375.5 |  |  | 309.9 |
Ceding commissions receivable | 79.9 |  |  | 45.8 |
Capitalized internal use software | 46.9 |  |  | 38.8 |
Intangible assets | 23.6 |  |  | 26.9 |
Other assets | 79.0 |  |  | 63.6 |
Total assets | $ | 1,647.0 |  |  | $ | 1,568.9 |
Liabilities and stockholders’ equity |  |  |
Liabilities: |  |  |
Loss and loss adjustment expense reserve | $ | 359.9 |  |  | $ | 293.8 |
Unearned premiums | 441.8 |  |  | 341.3 |
Reinsurance premiums payable | 291.1 |  |  | 207.1 |
Provision for commission | 18.0 |  |  | 5.0 |
Accrued expenses and other liabilities | 124.9 |  |  | 128.2 |
Total liabilities | 1,235.7 |  |  | 975.4 |
Commitments and contingencies (Note 12) |  |  |
Stockholders’ equity: |  |  |
Common stock, $0.0001 par value per share; 80,000,000 and 80,000,000 shares authorized as of September 30, 2023 and December 31, 2022, respectively; 23,891,930 and 23,201,434 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively | — |  |  | — |
Additional paid-in capital | 1,606.1 |  |  | 1,558.0 |
Accumulated other comprehensive loss | (7.1) |  |  | (7.0) |
Accumulated deficit | (1,192.0) |  |  | (961.1) |
Total Hippo stockholders’ equity | 407.0 |  |  | 589.9 |
Noncontrolling interest | 4.3 |  |  | 3.6 |
Total stockholders’ equity | 411.3 |  |  | 593.5 |
Total liabilities and stockholders’ equity | $ | 1,647.0 |  |  | $ | 1,568.9 |

See Notes to the Consolidated Financial Statements
1

HIPPO HOLDINGS INC.
Consolidated Statements of Operations and Comprehensive Loss
(In millions, except share and per share data)
(Unaudited)

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
Revenue: |  |  |  |  |  |  |
Net earned premium | $ | 32.9 |  |  | $ | 10.7 |  |  | $ | 69.0 |  |  | $ | 30.9 |
Commission income, net | 14.2 |  |  | 14.3 |  |  | 47.8 |  |  | 38.7 |
Service and fee income | 4.9 |  |  | 3.2 |  |  | 11.9 |  |  | 10.3 |
Net investment income | 5.7 |  |  | 2.5 |  |  | 16.5 |  |  | 4.0 |
Total revenue | 57.7 |  |  | 30.7 |  |  | 145.2 |  |  | 83.9 |
Expenses: |  |  |  |  |  |  |
Losses and loss adjustment expenses | 36.5 |  |  | 23.9 |  |  | 150.9 |  |  | 75.6 |
Insurance related expenses | 20.3 |  |  | 15.6 |  |  | 54.8 |  |  | 46.2 |
Technology and development | 11.9 |  |  | 14.8 |  |  | 36.6 |  |  | 46.0 |
Sales and marketing | 18.9 |  |  | 29.4 |  |  | 63.9 |  |  | 73.7 |
General and administrative | 20.7 |  |  | 19.0 |  |  | 62.0 |  |  | 53.7 |
Impairment and restructuring charges | — |  |  | 55.3 |  |  | — |  |  | 55.3 |
Interest and other (income) expense | — |  |  | (0.1) |  |  | 0.5 |  |  | (1.4) |
Total expenses | 108.3 |  |  | 157.9 |  |  | 368.7 |  |  | 349.1 |
Loss before income taxes | (50.6) |  |  | (127.2) |  |  | (223.5) |  |  | (265.2) |
Income tax expense (benefit) | (0.3) |  |  | 0.3 |  |  | 0.2 |  |  | 0.8 |
Net loss | (50.3) |  |  | (127.5) |  |  | (223.7) |  |  | (266.0) |
Net income attributable to noncontrolling interests, net of tax | 2.8 |  |  | 1.7 |  |  | 7.1 |  |  | 4.3 |
Net loss attributable to Hippo | $ | (53.1) |  |  | $ | (129.2) |  |  | $ | (230.8) |  |  | $ | (270.3) |
Other comprehensive income (loss): |  |  |  |  |  |  |
Change in net unrealized gain or loss on investments, net of tax | (0.7) |  |  | (2.9) |  |  | (0.1) |  |  | (7.1) |
Comprehensive loss attributable to Hippo | $ | (53.8) |  |  | $ | (132.1) |  |  | $ | (230.9) |  |  | $ | (277.4) |
Per share data: |  |  |  |  |  |  |
Net loss attributable to Hippo - basic and diluted | $ | (53.1) |  |  | $ | (129.2) |  |  | $ | (230.8) |  |  | $ | (270.3) |
Weighted-average shares used in computing net loss per share attributable to Hippo - basic and diluted | 23,729,570 |  |  | 22,839,916 |  |  | 23,440,555 |  |  | 22,651,026 |
Net loss per share attributable to Hippo - basic and diluted | $ | (2.24) |  |  | $ | (5.66) |  |  | $ | (9.85) |  |  | $ | (11.93) |

See Notes to the Consolidated Financial Statements
2

HIPPO HOLDINGS INC.
Consolidated Statements of Stockholders’ Equity
(In millions, except share data)
(Unaudited)

| Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total Hippo Stockholders' Equity | Non controlling Interests | Total Stockholders’ Equity
| Shares | Amount
Balance at January 1, 2023 | 23,201,434 |  | $ | — |  | $ | 1,558.0 |  | $ | (7.0) |  | $ | (961.1) |  | $ | 589.9 |  | $ | 3.6 |  | $ | 593.5 |
Net loss | — |  | — |  | — |  | — |  | (69.8) |  | (69.8) |  | 1.7 |  | (68.1) |
Other comprehensive income | — |  | — |  | — |  | 1.7 |  | — |  | 1.7 |  | — |  | 1.7 |
Issuance of common stock from stock plans and contingently issuable shares | 134,824 |  | — |  | 0.4 |  | — |  | — |  | 0.4 |  | — |  | 0.4 |
Repurchase of common stock | (15,472) |  | — |  | (0.2) |  | — |  | — |  | (0.2) |  | — |  | (0.2) |
Shares withheld related to net share settlement | — |  | — |  | (0.9) |  | — |  | — |  | (0.9) |  | — |  | (0.9) |
Stock-based compensation expense | — |  | — |  | 17.4 |  | — |  | — |  | 17.4 |  | — |  | 17.4 |
Other | — |  | — |  | — |  | — |  | (0.2) |  | (0.2) |  | (0.6) |  | (0.8) |
Balance at March 31, 2023 | 23,320,786 |  | $ | — |  | $ | 1,574.7 |  | $ | (5.3) |  | $ | (1,031.1) |  | $ | 538.3 |  | $ | 4.7 |  | $ | 543.0 |
Net loss | — |  | $ | — |  | $ | — |  | $ | — |  | $ | (107.8) |  | $ | (107.8) |  | $ | 2.6 |  | $ | (105.2) |
Other comprehensive loss | — |  | — |  | — |  | (1.1) |  | — |  | (1.1) |  | — |  | (1.1) |
Issuance of common stock from stock plans and contingently issuable shares | 375,844 |  | — |  | 1.8 |  | — |  | — |  | 1.8 |  | — |  | 1.8 |
Repurchase of common stock | (85,322) |  | — |  | (1.6) |  | — |  | — |  | (1.6) |  | — |  | (1.6) |
Shares withheld related to net share settlement | — |  | — |  | (2.0) |  | — |  | — |  | (2.0) |  | — |  | (2.0) |
Stock-based compensation expense | — |  | — |  | 18.0 |  | — |  | — |  | 18.0 |  | — |  | 18.0 |
Other | — |  | — |  | — |  | — |  | — |  | — |  | (5.9) |  | (5.9) |
Balance at June 30, 2023 | 23,611,308 |  | $ | — |  | $ | 1,590.9 |  | $ | (6.4) |  | $ | (1,138.9) |  | $ | 445.6 |  | $ | 1.4 |  | $ | 447.0 |
Net loss | — |  | $ | — |  | $ | — |  | $ | — |  | $ | (53.1) |  | $ | (53.1) |  | $ | 2.8 |  | $ | (50.3) |
Other comprehensive loss | — |  | — |  | — |  | (0.7) |  | — |  | (0.7) |  | — |  | (0.7) |
Issuance of common stock from stock plans and contingently issuable shares | 280,622 |  | — |  | 0.6 |  | — |  | — |  | 0.6 |  | — |  | 0.6 |
Shares withheld related to net share settlement | — |  | — |  | (1.1) |  | — |  | — |  | (1.1) |  | — |  | (1.1) |
Stock-based compensation expense | — |  | — |  | 15.7 |  | — |  | — |  | 15.7 |  | — |  | 15.7 |
Other | — |  | — |  | — |  | — |  | — |  | — |  | 0.1 |  | 0.1 |
Balance at September 30, 2023 | 23,891,930 |  | $ | — |  | $ | 1,606.1 |  | $ | (7.1) |  | $ | (1,192.0) |  | $ | 407.0 |  | $ | 4.3 |  | $ | 411.3 |

See Notes to the Consolidated Financial Statements
3

HIPPO HOLDINGS INC.
Consolidated Statements of Stockholders’ Equity
(In millions, except share data)
(Unaudited)

| Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total Hippo Stockholders' Equity | Non controlling Interests | Total Stockholders’ Equity
| Shares | Amount
Balance at January 1, 2022 | 22,601,245 |  | $ | — |  | $ | 1,488.3 |  | $ | (0.7) |  | $ | (628.0) |  | $ | 859.6 |  | $ | 2.1 |  | $ | 861.7 |
Net loss | — |  | — |  | — |  | — |  | (67.6) |  | (67.6) |  | 1.1 |  | (66.5) |
Other comprehensive loss | — |  | — |  | — |  | (2.6) |  | — |  | (2.6) |  | — |  | (2.6) |
Issuance of common stock from stock plans and contingently issuable shares | 108,916 |  | — |  | 1.4 |  | — |  | — |  | 1.4 |  | — |  | 1.4 |
Shares withheld related to net share settlement | — |  | — |  | (1.0) |  | — |  | — |  | (1.0) |  | — |  | (1.0) |
Stock-based compensation expense | — |  | — |  | 15.7 |  | — |  | — |  | 15.7 |  | — |  | 15.7 |
Balance at March 31, 2022 | 22,710,161 |  | $ | — |  | $ | 1,504.4 |  | $ | (3.3) |  | $ | (695.6) |  | $ | 805.5 |  | $ | 3.2 |  | $ | 808.7 |
Net loss | — |  | $ | — |  | $ | — |  | $ | — |  | $ | (73.5) |  | $ | (73.5) |  | $ | 1.5 |  | $ | (72.0) |
Other comprehensive loss | — |  | — |  | — |  | (1.6) |  | — |  | (1.6) |  | — |  | (1.6) |
Issuance of common stock from stock plans and contingently issuable shares | 187,934 |  | — |  | 2.3 |  | — |  | — |  | 2.3 |  | — |  | 2.3 |
Repurchase of common stock | (3,599) |  | — |  | — |  | — |  | — |  | — |  | — |  | — |
Shares withheld related to net share settlement | — |  | — |  | (1.7) |  | — |  | — |  | (1.7) |  | — |  | (1.7) |
Stock-based compensation expense | — |  | — |  | 17.8 |  | — |  | — |  | 17.8 |  | — |  | 17.8 |
Other | — |  | — |  | — |  | — |  | 0.3 |  | 0.3 |  | (2.4) |  | (2.1) |
Balance at June 30, 2022 | 22,894,496 |  | $ | — |  | $ | 1,522.8 |  | $ | (4.9) |  | $ | (768.8) |  | $ | 749.1 |  | $ | 2.3 |  | $ | 751.4 |
Net loss | — |  | $ | — |  | $ | — |  | $ | — |  | $ | (129.2) |  | $ | (129.2) |  | $ | 1.7 |  | $ | (127.5) |
Other comprehensive loss | — |  | — |  | — |  | (2.9) |  | — |  | (2.9) |  | — |  | (2.9) |
Issuance of common stock from stock plans and contingently issuable shares | 166,770 |  | — |  | 0.4 |  | — |  | — |  | 0.4 |  | — |  | 0.4 |
Shares withheld related to net share settlement | — |  | — |  | (0.8) |  | — |  | — |  | (0.8) |  | — |  | (0.8) |
Stock-based compensation expense | — |  | — |  | 18.4 |  | — |  | — |  | 18.4 |  | — |  | 18.4 |
Other | — |  | — |  | — |  | — |  | — |  | — |  | — |  | — |
Balance at September 30, 2022 | 23,061,266 |  | $ | — |  | $ | 1,540.8 |  | $ | (7.8) |  | $ | (898.0) |  | $ | 635.0 |  | $ | 4.0 |  | $ | 639.0 |

See Notes to the Consolidated Financial Statements
4

HIPPO HOLDINGS INC.
Consolidated Statements of Cash Flows
(In millions)
(Unaudited)

| Nine Months Ended September 30,
| 2023 |  | 2022
Cash flows from operating activities: |  |  |
Net loss | $ | (223.7) |  |  | $ | (266.0) |
Adjustments to reconcile net loss to net cash used in operating activities: |  |  |
Depreciation and amortization | 14.4 |  |  | 11.2 |
Stock–based compensation expense | 46.7 |  |  | 46.3 |
Change in fair value of warrant liability | (0.2) |  |  | (2.8) |
Change in fair value of contingent consideration liability | 4.5 |  |  | 2.6 |
Impairment charges | — |  |  | 53.5 |
Other non-cash items | (6.9) |  |  | (0.3) |
Changes in assets and liabilities: |  |  |
Accounts receivable, net | (38.2) |  |  | (33.3) |
Reinsurance recoverable on paid and unpaid losses and LAE | (11.0) |  |  | (70.4) |
Ceding commissions receivable | (34.2) |  |  | (14.7) |
Prepaid reinsurance premiums | (65.7) |  |  | (70.0) |
Other assets | 0.1 |  |  | 15.3 |
Provision for commission | 13.0 |  |  | 1.1 |
Accrued expenses and other liabilities | 6.6 |  |  | 15.5 |
Loss and loss adjustment expense reserves | 66.1 |  |  | 60.7 |
Unearned premiums | 100.6 |  |  | 63.4 |
Reinsurance premiums payable | 84.0 |  |  | 56.5 |
Net cash used in operating activities | (43.9) |  |  | (131.4) |
Cash flows from investing activities: |  |  |
Capitalized internal use software costs | (13.0) |  |  | (11.4) |
Purchases of property and equipment | (29.2) |  |  | (4.8) |
Purchases of investments | (290.7) |  |  | (645.4) |
Maturities of investments | 383.6 |  |  | 367.4 |
Sales of investments | 29.8 |  |  | 5.5 |
Other | (0.9) |  |  | (2.0) |
Net cash provided by (used in) investing activities | 79.6 |  |  | (290.7) |
Cash flows from financing activities: |  |  |
Taxes paid related to net share settlement of equity awards | (4.0) |  |  | (3.5) |
Proceeds from issuances of common stock | 2.4 |  |  | 3.4 |
Share repurchases under program | (1.8) |  |  | — |
Payments of contingent consideration | (1.0) |  |  | (0.4) |
Distributions to noncontrolling interests | (6.5) |  |  | (2.2) |
Other | 0.1 |  |  | (1.0) |
Net cash used in financing activities | (10.8) |  |  | (3.7) |
Net increase (decrease) in cash, cash equivalents, and restricted cash | 24.9 |  |  | (425.8) |
Cash, cash equivalents, and restricted cash at the beginning of the period | 244.5 |  |  | 818.7 |
Cash, cash equivalents, and restricted cash at the end of the period | $ | 269.4 |  |  | $ | 392.9 |

See Notes to the Consolidated Financial Statements
5

HIPPO HOLDINGS INC.
Notes to Consolidated Financial Statements
(Unaudited)
1. Description of Business and Summary of Significant Accounting Policies
Description of Business
Hippo Holdings Inc., referred to in these Notes to the Consolidated Financial Statements as “Hippo” or the “Company,” specializes in the underwriting, administration, and marketing of personal property and commercial insurance policies. The Company’s subsidiary, Hippo Analytics Inc., is a licensed insurance agency that provides various insurance services, including some or all of the following services for affiliated and non-affiliated insurance carriers: soliciting, marketing, servicing, underwriting, or providing claims processing services for a variety of commercial and personal insurance products. Hippo Analytics Inc. offers its insurance products through licensed insurance agents and direct-to-consumer channels. The Company’s insurance company subsidiaries, Spinnaker Insurance Company (“Spinnaker”), an Illinois domiciled insurance company, Spinnaker Specialty Insurance Company (“SSIC”), a Texas domiciled authorized surplus lines insurance company, and Mainsail Insurance Company (“MIC”), a Texas domiciled insurance company, underwrite personal and commercial insurance products on a direct basis through licensed insurance agents and surplus lines brokers. The Company has a wholly owned Cayman domiciled captive insurance company, RH Solutions Insurance (Cayman) Ltd. (“RHS”), which assumes insurance risk of policies from affiliated and non-affiliated insurance carriers.
The Company was incorporated in October 2020 under the name Reinvent Technology Partners Z (“RTPZ”) as a Cayman Islands exempted company for the purpose of effecting a business combination. On August 2, 2021, RTPZ domesticated as a Delaware corporation, changed its name to “Hippo Holdings Inc.” and consummated a series of mergers to acquire Hippo Enterprises Inc., a Delaware corporation (“Old Hippo”), with the Company ultimately surviving (such mergers, the “Business Combination”). The Business Combination was completed pursuant to the Agreement and Plan of Merger, dated as of March 3, 2021, by and among RTPZ, RTPZ Merger Sub Inc. and Old Hippo.
Basis of Presentation and Consolidation
The interim consolidated financial statements and accompanying notes of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and include the Company’s consolidated subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Certain information and disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been omitted accordingly.
The interim financial information is unaudited, but reflects all normal recurring adjustments that are, in the opinion of management, necessary to fairly present the information set forth herein. The interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. Interim results are not necessarily indicative of the results for a full year.
In accordance with Accounting Standards Codification 280 “Segment Reporting”, the Company reports three operating segments based on how the Company’s chief operating decision maker assesses the Company’s performance and allocates resources. See Note 17 “Segments”. The Company has three reportable segments: Services, Insurance-as-a-Service, and Hippo Home Insurance Program.
Reverse Stock Split
On September 29, 2022, the Company filed a Certificate of Amendment to its Certificate of Incorporation to effect a one-for-25 reverse stock split of the Company’s common stock and a corresponding adjustment to its authorized capital stock (the “Reverse Stock Split”), effective as of 11:59 p.m. Eastern Daylight Time on September
6

HIPPO HOLDINGS INC.
Notes to Consolidated Financial Statements
(Unaudited)
29, 2022 (the “Effective Time”). All share and per share information has been retroactively adjusted to give effect to the Reverse Stock Split for all periods presented, unless otherwise indicated.
As a result of the Reverse Stock Split, every 25 shares of the Company’s issued and outstanding common stock were automatically converted into one share of issued and outstanding common stock. No fractional shares were issued as a result of the Reverse Stock Split. Stockholders who otherwise would have been entitled to receive fractional shares of common stock were entitled to receive cash in an amount equal to the product obtained by multiplying (a) the closing price per share of the common stock as reported on the New York Stock Exchange as of the first trading day following the Effective Time, by (b) the fraction of one share owned by the stockholder.
Proportionate adjustments were made to the number of shares issuable upon the exercise or vesting of all stock options, restricted stock, restricted stock units or other stock-based awards or rights (the “Stock-Based Awards”) and warrants outstanding at the Effective Time, as well as certain performance goals applicable to certain Stock-Based Awards, which resulted in a proportional decrease in the number of shares of the Company’s common stock reserved for issuance upon exercise or vesting of such Stock-Based Awards and warrants, and, in the case of stock options, purchase rights outstanding under the Company’s 2021 Employee Stock Purchase Plan and warrants, a proportional increase in the exercise price of such stock options, purchase rights and warrants. In addition, the number of shares reserved for issuance under the Company’s 2021 Incentive Award Plan and 2021 Employee Stock Purchase Plan were proportionately reduced.
Use of Estimates
The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods. Significant items subject to such estimates and assumptions include, but are not limited to, loss and loss adjustment expense (“LAE”) reserves, provision for commission slide and cancellations, reinsurance recoverable on paid and unpaid losses and LAE, the fair values of investments, stock-based awards, warrant liabilities, contingent consideration liabilities, acquired intangible assets, deferred tax assets and uncertain tax positions, and revenue recognition. The Company evaluates these estimates on an ongoing basis. These estimates are informed by experience and other assumptions that the Company believes are reasonable under the circumstances. Actual results may differ significantly from these estimates.
Recent Accounting Pronouncements
The Company has evaluated recent accounting pronouncements through the date the financial statements were issued and filed with the SEC and believes that there are none that will have a material impact on the Company’s consolidated financial statements.
7

HIPPO HOLDINGS INC.
Notes to Consolidated Financial Statements
(Unaudited)
2. Investments
The amortized cost and fair value of fixed maturities securities and short-term investments are as follows (in millions):

| September 30, 2023
| Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Fair Value
Fixed maturities available-for-sale: |  |  |  |  |  |  |
U.S. government and agencies | $ | 22.5 |  |  | $ | — |  |  | $ | (0.4) |  |  | $ | 22.1 |
States and other territories | 10.1 |  |  | — |  |  | (0.6) |  |  | 9.5 |
Corporate securities | 71.9 |  |  | 0.1 |  |  | (2.6) |  |  | 69.4 |
Foreign securities | 0.9 |  |  | — |  |  | — |  |  | 0.9 |
Residential mortgage-backed securities | 21.2 |  |  | — |  |  | (2.3) |  |  | 18.9 |
Commercial mortgage-backed securities | 7.7 |  |  | — |  |  | (0.7) |  |  | 7.0 |
Asset backed securities | 14.2 |  |  | — |  |  | (0.5) |  |  | 13.7 |
Total fixed maturities available-for-sale | 148.5 |  |  | 0.1 |  |  | (7.1) |  |  | 141.5 |
Short-term investments: |  |  |  |  |  |  |
U.S. government and agencies | 123.4 |  |  | — |  |  | (0.1) |  |  | 123.3 |
Commercial paper | 47.6 |  |  | — |  |  | — |  |  | 47.6 |
Corporate securities | 17.6 |  |  | — |  |  | — |  |  | 17.6 |
Total short-term investments | 188.6 |  |  | — |  |  | (0.1) |  |  | 188.5 |
Total | $ | 337.1 |  |  | $ | 0.1 |  |  | $ | (7.2) |  |  | $ | 330.0 |

| December 31, 2022
| Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Fair Value
Fixed maturities available-for-sale: |  |  |  |  |  |  |
U.S. government and agencies | 21.6 |  |  | $ | — |  |  | $ | (0.5) |  |  | $ | 21.1 |
States and other territories | 8.9 |  |  | — |  |  | (0.6) |  |  | 8.3 |
Corporate securities | 54.8 |  |  | 0.1 |  |  | (2.4) |  |  | 52.5 |
Foreign securities | 0.9 |  |  | — |  |  | (0.1) |  |  | 0.8 |
Residential mortgage-backed securities | 20.4 |  |  | 0.1 |  |  | (1.6) |  |  | 18.9 |
Commercial mortgage-backed securities | 6.5 |  |  | — |  |  | (0.7) |  |  | 5.8 |
Asset backed securities | 14.2 |  |  | — |  |  | (0.5) |  |  | 13.7 |
Total fixed maturities available-for-sale | 127.3 |  |  | 0.2 |  |  | (6.4) |  |  | 121.1 |
Short-term investments: |  |  |  |  |  |  |
U.S. government and agencies | 129.1 |  |  | — |  |  | (0.2) |  |  | 128.9 |
Commercial paper | 147.1 |  |  | — |  |  | (0.6) |  |  | 146.5 |
Corporate securities | 49.4 |  |  | — |  |  | — |  |  | 49.4 |
Total short-term investments | 325.6 |  |  | — |  |  | (0.8) |  |  | 324.8 |
Total | $ | 452.9 |  |  | $ | 0.2 |  |  | $ | (7.2) |  |  | $ | 445.9 |

8

HIPPO HOLDINGS INC.
Notes to Consolidated Financial Statements
(Unaudited)
The following tables present the gross unrealized losses and related fair values for the Company’s investments in available-for-sale debt securities and short-term investments, grouped by duration of time in a continuous unrealized loss position as of September 30, 2023, and December 31, 2022 (in millions):

| September 30, 2023
| Less than 12 months |  | 12 months or more |  | Total
| Fair Value |  | Gross Unrealized Losses |  | Fair Value |  | Gross Unrealized Losses |  | Fair Value |  | Gross Unrealized Losses
Fixed maturities available-for-sale: |  |  |  |  |  |  |  |  |  |  |
U.S. government and agencies | $ | 10.2 |  |  | $ | (0.1) |  |  | $ | 11.9 |  |  | $ | (0.3) |  |  | $ | 22.1 |  |  | $ | (0.4) |
States and other territories | 1.4 |  |  | — |  |  | 8.0 |  |  | (0.6) |  |  | 9.4 |  |  | (0.6) |
Corporate securities | 36.4 |  |  | (0.5) |  |  | 37.8 |  |  | (2.1) |  |  | 74.2 |  |  | (2.6) |
Foreign securities |  |  |  |  | 0.9 |  |  | — |  |  | 0.9 |  |  | — |
Residential mortgage-backed securities | 7.6 |  |  | (0.3) |  |  | 11.4 |  |  | (2.0) |  |  | 19.0 |  |  | (2.3) |
Commercial mortgage-backed securities | 1.3 |  |  | — |  |  | 5.8 |  |  | (0.7) |  |  | 7.1 |  |  | (0.7) |
Asset backed securities | 5.6 |  |  | (0.1) |  |  | 8.2 |  |  | (0.4) |  |  | 13.8 |  |  | (0.5) |
Short-term investments: |  |  |  |  |  |  |  |  |  |  |
U.S. government and agencies | 123.4 |  |  | (0.1) |  |  | — |  |  | — |  |  | 123.4 |  |  | (0.1) |
Commercial paper | 47.5 |  |  | — |  |  | — |  |  | — |  |  | 47.5 |  |  | — |
Corporate securities | 17.6 |  |  | — |  |  | — |  |  | — |  |  | 17.6 |  |  | — |
Total | $ | 251.0 |  |  | $ | (1.1) |  |  | $ | 84.0 |  |  | $ | (6.1) |  |  | $ | 335.0 |  |  | $ | (7.2) |

| December 31, 2022
| Less than 12 months |  | 12 months or more |  | Total
| Fair Value |  | Gross Unrealized Losses |  | Fair Value |  | Gross Unrealized Losses |  | Fair Value |  | Gross Unrealized Losses
Fixed maturities available-for-sale: |  |  |  |  |  |  |  |  |  |  |
U.S. government and agencies | $ | 17.9 |  |  | $ | (0.4) |  |  | $ | 1.1 |  |  | $ | (0.1) |  |  | $ | 19.0 |  |  | $ | (0.5) |
States and other territories | 3.6 |  |  | (0.1) |  |  | 4.6 |  |  | (0.5) |  |  | 8.2 |  |  | (0.6) |
Corporate securities | 30.5 |  |  | (1.5) |  |  | 11.1 |  |  | (0.9) |  |  | 41.6 |  |  | (2.4) |
Foreign securities | — |  |  | — |  |  | 0.8 |  |  | (0.1) |  |  | 0.8 |  |  | (0.1) |
Residential mortgage-backed securities | 6.3 |  |  | (0.3) |  |  | 7.6 |  |  | (1.3) |  |  | 13.9 |  |  | (1.6) |
Commercial mortgage-backed securities | 1.9 |  |  | — |  |  | 3.9 |  |  | (0.7) |  |  | 5.8 |  |  | (0.7) |
Asset backed securities | 5.5 |  |  | (0.2) |  |  | 3.7 |  |  | (0.3) |  |  | 9.2 |  |  | (0.5) |
Short-term investments: |  |  |  |  |  |  |  |  |  |  |
U.S. government and agencies | 129.1 |  |  | (0.2) |  |  | — |  |  | — |  |  | 129.1 |  |  | (0.2) |
Commercial paper | 147.1 |  |  | (0.6) |  |  | — |  |  | — |  |  | 147.1 |  |  | (0.6) |
Total | $ | 341.9 |  |  | $ | (3.3) |  |  | $ | 32.8 |  |  | $ | (3.9) |  |  | $ | 374.7 |  |  | $ | (7.2) |

9

HIPPO HOLDINGS INC.
Notes to Consolidated Financial Statements
(Unaudited)
The Company has determined that unrealized losses as of September 30, 2023 and December 31, 2022 resulted from the interest rate environment, rather than a deterioration of the creditworthiness of the issuers. Therefore, an allowance for credit losses was not necessary as it is more likely than not that the Company will not be required to sell the investments before the recovery of the amortized cost basis or until maturity. As of September 30, 2023, none of the Company’s fixed maturity portfolio was unrated or rated below investment grade.
The amortized cost and fair value of fixed maturities securities by contractual maturity are as follows (in millions):

| September 30, 2023
| Amortized Cost |  | Fair Value
Due to mature: |  |  |
One year or less | $ | 25.2 |  |  | $ | 24.9 |
After one year through five years | 76.5 |  |  | 73.5 |
After five years | 3.6 |  |  | 3.5 |
Residential mortgage-backed securities | 21.2 |  |  | 18.9 |
Commercial mortgage-backed securities | 7.7 |  |  | 7.0 |
Asset backed securities | 14.2 |  |  | 13.7 |
Total fixed maturities available-for-sale | $ | 148.5 |  |  | $ | 141.5 |

Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.
Net realized gains and losses on fixed maturity securities were insignificant for the three and nine months ended September 30, 2023 and 2022, respectively.
The Company’s net investment income is comprised of the following (in millions):

| Three Months Ended September 30, |  | Nine Months Ended September 30, |
| 2023 |  | 2022 |  | 2023 |  | 2022 |  |
Interest on cash and cash equivalents | $ | 2.2 |  |  | $ | 1.2 |  |  | $ | 4.7 |  |  | $ | 1.4 |  |  |
Fixed maturities income | 1.5 |  |  | 0.6 |  |  | 4.1 |  |  | 1.1 |  |  |
Short-term investment income | 2.1 |  |  | 0.8 |  |  | 8.1 |  |  | 1.7 |  |  |
Total gross investment income | 5.8 |  |  | 2.6 |  |  | 16.9 |  |  | 4.2 |  |  |
Investment expenses | (0.1) |  |  | (0.1) |  |  | (0.4) |  |  | (0.2) |  |  |
Net investment income | $ | 5.7 |  |  | $ | 2.5 |  |  | $ | 16.5 |  |  | $ | 4.0 |  |  |

Pursuant to certain regulatory requirements, the Company is required to hold assets on deposit with various state insurance departments for the benefit of policyholders. These special deposits are included in cash and cash equivalents, fixed maturities, or short-term investments on the consolidated balance sheets. The carrying value of securities on deposit with state regulatory authorities total $12.7 million and $12.6 million as of September 30, 2023 and December 31, 2022, respectively.
10

HIPPO HOLDINGS INC.
Notes to Consolidated Financial Statements
(Unaudited)
3. Cash, Cash Equivalents, and Restricted Cash
The following table sets forth the cash, cash equivalents, and restricted cash (in millions):

| September 30, 2023 |  | December 31, 2022
Cash and cash equivalents: |  |  |
Cash | $ | 69.8 |  |  | $ | 65.7 |
Money market funds | 148.7 |  |  | 87.1 |
Commercial paper | — |  |  | 26.8 |
U.S. government and agencies | 9.9 |  |  | 14.9 |
Total cash and cash equivalents | $ | 228.4 |  |  | $ | 194.5 |
Restricted cash: |  |  |
Fiduciary assets | 32.4 |  |  | 30.6 |
Letters of credit and cash on deposit | 8.6 |  |  | 19.4 |
Total restricted cash | 41.0 |  |  | 50.0 |
Total cash, cash equivalents, and restricted cash | $ | 269.4 |  |  | $ | 244.5 |

4. Fair Value Measurement
When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions, and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:
•Level 1 — Quoted prices in active markets for identical assets or liabilities that are publicly accessible at the measurement date.
•Level 2 — Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
•Level 3 — Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.
11

HIPPO HOLDINGS INC.
Notes to Consolidated Financial Statements
(Unaudited)
The following table summarizes the Company’s fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis (in millions):

| September 30, 2023
| Level 1 |  | Level 2 |  | Level 3 |  | Total
Financial assets: |  |  |  |  |  |  |
Cash, cash equivalents, and restricted cash | $ | 269.4 |  |  | $ | — |  |  | $ | — |  |  | $ | 269.4 |
Fixed maturities available-for-sale: |  |  |  |  |  |  |
U.S. government and agencies | 22.1 |  |  | — |  |  | — |  |  | 22.1 |
States and other territories | — |  |  | 9.5 |  |  | — |  |  | 9.5 |
Corporate securities | — |  |  | 69.4 |  |  | — |  |  | 69.4 |
Foreign securities | — |  |  | 0.9 |  |  | — |  |  | 0.9 |
Residential mortgage-backed securities | — |  |  | 18.9 |  |  | — |  |  | 18.9 |
Commercial mortgage-backed securities | — |  |  | 7.0 |  |  | — |  |  | 7.0 |
Asset backed securities | — |  |  | 13.7 |  |  | — |  |  | 13.7 |
Total fixed maturities available-for-sale | 22.1 |  |  | 119.4 |  |  | — |  |  | 141.5 |
Short-term investments |  |  |  |  |  |  |
U.S. government and agencies | 123.3 |  |  | — |  |  | — |  |  | 123.3 |
Commercial paper | — |  |  | 47.6 |  |  | — |  |  | 47.6 |
Corporate securities | — |  |  | 17.6 |  |  | — |  |  | 17.6 |
Total short-term investments | 123.3 |  |  | 65.2 |  |  | — |  |  | 188.5 |
Total financial assets | $ | 414.8 |  |  | $ | 184.6 |  |  | $ | — |  |  | $ | 599.4 |
Financial liabilities: |  |  |  |  |  |  |
Contingent consideration liability | $ | — |  |  | $ | — |  |  | $ | 13.5 |  |  | $ | 13.5 |
Public warrants | 0.1 |  |  | — |  |  | — |  |  | 0.1 |
Private placement warrants | — |  |  | 0.1 |  |  | — |  |  | 0.1 |
Total financial liabilities | $ | 0.1 |  |  | $ | 0.1 |  |  | $ | 13.5 |  |  | $ | 13.7 |

12

HIPPO HOLDINGS INC.
Notes to Consolidated Financial Statements
(Unaudited)

| December 31, 2022
| Level 1 |  | Level 2 |  | Level 3 |  | Total
Financial assets: |  |  |  |  |  |  |
Cash, cash equivalents, and restricted cash | $ | 244.5 |  |  | $ | — |  |  | $ | — |  |  | $ | 244.5 |
Fixed maturities available-for-sale: |  |  |  |  |  |  |
U.S. government and agencies | 21.1 |  |  | — |  |  | — |  |  | 21.1 |
States and other territories | — |  |  | 8.3 |  |  | — |  |  | 8.3 |
Corporate securities | — |  |  | 52.5 |  |  | — |  |  | 52.5 |
Foreign securities | — |  |  | 0.8 |  |  | — |  |  | 0.8 |
Residential mortgage-backed securities | — |  |  | 18.9 |  |  | — |  |  | 18.9 |
Commercial mortgage-backed securities | — |  |  | 5.8 |  |  | — |  |  | 5.8 |
Asset backed securities | — |  |  | 13.7 |  |  | — |  |  | 13.7 |
Total fixed maturities available-for-sale | 21.1 |  |  | 100.0 |  |  | — |  |  | 121.1 |
Short-term investments |  |  |  |  |  |  |
U.S. government and agencies | 128.9 |  |  | — |  |  | — |  |  | 128.9 |
Commercial paper | — |  |  | 146.5 |  |  | — |  |  | 146.5 |
Corporate securities | — |  |  | 49.4 |  |  | — |  |  | 49.4 |
Total short-term investments | 128.9 |  |  | 195.9 |  |  | — |  |  | 324.8 |
Total financial assets | $ | 394.5 |  |  | $ | 295.9 |  |  | $ | — |  |  | $ | 690.4 |
Financial liabilities: |  |  |  |  |  |  |
Contingent consideration liability | $ | — |  |  | $ | — |  |  | $ | 11.9 |  |  | $ | 11.9 |
Public warrants | 0.2 |  |  | — |  |  | — |  |  | 0.2 |
Private placement warrants | — |  |  | 0.1 |  |  | — |  |  | 0.1 |
Total financial liabilities | $ | 0.2 |  |  | $ | 0.1 |  |  | $ | 11.9 |  |  | $ | 12.2 |

The Company’s policy is to recognize transfers into and transfers out of fair value hierarchy levels at the end of each reporting period. There were no transfers between levels in the fair value hierarchy during the nine months ended September 30, 2023.
Contingent Consideration
The contingent consideration, relating to the Company’s 2019 acquisition of North American Advantage Insurance Services, LLC, is re-valued to fair value at the end of each reporting period using the present value of future payments based on an estimate of revenue and customer renewals. North American Advantage Insurance Services, LLC’s ultimate parent company was Lennar Corporation, a related party of the Company. There is no limit to the maximum potential contingent consideration as the consideration is based on acquired customer retention. The table below presents the changes in the contingent consideration liability valued using Level 3 inputs (in millions):

| 2023 |  | 2022
Balance as of January 1, | $ | 11.9 |  |  | $ | 11.6 |
Payments of contingent consideration | (2.9) |  |  | (2.4) |
Changes in fair value | 4.5 |  |  | 2.6 |
Balance as of September 30, | $ | 13.5 |  |  | $ | 11.8 |

13

HIPPO HOLDINGS INC.
Notes to Consolidated Financial Statements
(Unaudited)
5. Intangible Assets and Goodwill

|  | September 30, 2023 |  | December 31, 2022
| Weighted- Average Useful Life Remaining (in years) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount |  | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount
|  | (in millions) |  | (in millions)
Agency and carrier relationships | 5.2 | $ | 13.5 |  | $ | (4.7) |  | $ | 8.8 |  |  | $ | 13.5 |  | $ | (3.4) |  | $ | 10.1 |
State licenses and domain name | Indefinite | 10.5 |  | — |  | 10.5 |  |  | 10.5 |  | — |  | 10.5 |
Customer relationships | 1.6 | 13.7 |  | (10.3) |  | 3.4 |  |  | 13.7 |  | (8.5) |  | 5.2 |
Other | 5.8 | 1.7 |  | (0.8) |  | 0.9 |  |  | 1.7 |  | (0.6) |  | 1.1 |
Total intangible assets, net |  | $ | 39.4 |  | $ | (15.8) |  | $ | 23.6 |  |  | $ | 39.4 |  | $ | (12.5) |  | $ | 26.9 |

Amortization expense related to intangible assets for the three months ended September 30, 2023 and 2022 was $1.1 million and $1.1 million, respectively, and for the nine months ended September 30, 2023 and 2022 was $3.3 million and $4.2 million, respectively. The amortization expense is included in sales and marketing expenses for customer relationships, agency and carrier relationships, and other on the consolidated statements of operations and comprehensive loss.
For the three months ended September 30, 2022, management identified quantitative and qualitative factors that indicated a triggering event to test goodwill for impairment, mainly due to the sustained decrease in stock price and continued deterioration of general macroeconomic conditions. The Company performed a valuation at the reporting unit level using the income-based approach. These forecasts and assumptions were highly subjective. Given the results of the Company’s quantitative assessment, the Company determined that all the reporting units’ goodwill were impaired and the Company recorded impairment charges of $53.5 million, which are included in impairment and restructuring charges in the accompanying consolidated statements of operations and comprehensive loss.
6. Capitalized Internal Use Software

| September 30, 2023 |  | December 31, 2022
| (in millions)
Capitalized internal use software | $ | 73.9 |  |  | $ | 56.4 |
Less: accumulated amortization | (27.0) |  |  | (17.6) |
Total capitalized internal use software | $ | 46.9 |  |  | $ | 38.8 |

Amortization expense related to capitalized internal use software for the three months ended September 30, 2023 and 2022 was $3.4 million and $2.4 million, respectively, and for the nine months ended September 30, 2023 and 2022 was $9.4 million and $6.3 million, respectively. The amortization expense is included in insurance related expenses on the consolidated statements of operations and comprehensive loss.
14

HIPPO HOLDINGS INC.
Notes to Consolidated Financial Statements
(Unaudited)
7. Other Assets

| September 30, 2023 |  | December 31, 2022
| (in millions)
Prepaid expenses | $ | 11.5 |  |  | $ | 17.4 |
Claims receivable | 11.2 |  |  | 9.0 |
Lease right-of-use assets | 14.6 |  |  | 27.6 |
Property and equipment | 35.1 |  |  | 5.4 |
Other | 6.6 |  |  | 4.2 |
Total other assets | $ | 79.0 |  |  | $ | 63.6 |

On April 18, 2023, the Company closed on the purchase of an office building, which included certain real property, improvements, and personal property, located at 701 E. 5th Street, Austin, Texas 78701. The Company capitalized $30.5 million to building and land related to the purchase. The building is used as office space for employees of the Company and affiliated companies. Prior to the purchase, the Company was leasing a portion of the building and had recorded a lease right-of use asset and lease liability. After the purchase, the Company reclassified the right-of-use asset and adjusted the carrying value by the difference between the purchase price and the lease liability immediately before the purchase. The Company will depreciate the building over its estimated useful life of 39 years, except that land is not depreciated.
8. Accrued Expenses and Other Liabilities

| September 30, 2023 |  | December 31, 2022
| (in millions)
Claim payments outstanding | $ | 30.6 |  |  | $ | 27.7 |
Lease liability | 15.9 |  |  | 28.9 |
Advances from customers | 13.4 |  |  | 10.2 |
Deferred revenue | 2.2 |  |  | 11.0 |
Employee related accruals | 8.5 |  |  | 6.2 |
Premium refund liability | 11.4 |  |  | 8.2 |
Fiduciary liability | 4.7 |  |  | 6.6 |
Contingent consideration liability | 13.5 |  |  | 11.9 |
Other | 24.7 |  |  | 17.5 |
Total accrued expenses and other liabilities | $ | 124.9 |  |  | $ | 128.2 |

15

HIPPO HOLDINGS INC.
Notes to Consolidated Financial Statements
(Unaudited)
9. Loss and Loss Adjustment Expense Reserves
The reconciliation of the beginning and ending reserve balances for losses and loss adjustment expenses (“LAE”), net of reinsurance is summarized as follows for the nine months ended September 30, (in millions):

| 2023 |  | 2022
Reserve for losses and LAE gross of reinsurance recoverables on unpaid losses and LAE as of beginning of the period | $ | 293.8 |  |  | $ | 260.8 |
Less: Reinsurance recoverables on unpaid losses and LAE | (228.8) |  |  | (217.0) |
Reserve for losses and LAE, net of reinsurance recoverables as of beginning of the period | 65.0 |  |  | 43.8 |
Add: Incurred losses and LAE, net of reinsurance, related to: |  |  |
Current year | 153.0 |  |  | 84.9 |
Prior years | (2.1) |  |  | (9.3) |
Total incurred | 150.9 |  |  | 75.6 |
Deduct: Loss and LAE payments, net of reinsurance, related to: |  |  |
Current year | 89.8 |  |  | 45.9 |
Prior years | 15.7 |  |  | 15.7 |
Total paid | 105.5 |  |  | 61.6 |
Reserve for losses and LAE, net of reinsurance recoverables at end of period | 110.4 |  |  | 57.8 |
Add: Reinsurance recoverables on unpaid losses and LAE at end of period | 249.5 |  |  | 263.7 |
Reserve for losses and LAE gross of reinsurance recoverables on unpaid losses and LAE as of end of the period | $ | 359.9 |  |  | $ | 321.5 |

Loss development occurs when actual losses incurred vary from the Company’s previously developed estimates, which are established through the Company’s loss and LAE reserve estimate processes.
Net incurred losses and LAE experienced favorable development of $2.1 million and $9.3 million for the nine months ended September 30, 2023 and 2022, respectively. The favorable development of $2.1 million was driven primarily by the 2022 accident year, resulting in a net release of $1.0 million from catastrophe reserves, and $1.1 million from attritional reserves, which were recorded in the first six months of 2023. These changes are a result of ongoing analysis of claims emergence patterns and loss trends.
The prior period’s favorable development of $9.3 million was driven primarily by the 2021 accident year, resulting in a net release of $5.0 million from attritional reserves and $4.3 million from catastrophe reserves. These changes are a result of ongoing analysis of claims emergence patterns and loss trends.
10. Reinsurance
The Company purchases reinsurance to help manage exposure to property and casualty insurance risks, including attritional and catastrophic risks. The Company’s insurance company subsidiaries have entered into proportional and non-proportional reinsurance treaties, under which a significant portion of the liabilities have been ceded to third-party reinsurers. The Company also assumes risk from non-affiliated insurance carriers.
Proportional Reinsurance Treaties — Hippo
For the Company’s primary homeowners reinsurance treaty commencing in 2023, the Company secured proportional reinsurance from a diverse panel of third-party reinsurers. All reinsurers are either rated “A-” Excellent or better by AM Best, or the reinsurance is appropriately collateralized. In 2023, the Company retains approximately 40% of the premium through its insurance company subsidiaries or its captive reinsurance company, RHS, before purchasing catastrophe protection. Additionally, the reinsurance contracts are subject to contingent commission adjustments and loss participation features, which align the Company’s interests with those of its reinsurers. Loss
16

HIPPO HOLDINGS INC.
Notes to Consolidated Financial Statements
(Unaudited)
participation features may increase the amount of losses retained by the Company’s insurance company subsidiaries in excess of its pro rata participation.
For business produced through the Company’s builder channel, the Company purchased proportional reinsurance from three third-party reinsurers. All reinsurers are rated “A-” Excellent or better by AM Best, or the reinsurance is appropriately collateralized. In 2023, the Company is retaining approximately 58% of the premium produced through the Company’s insurance company subsidiaries or RHS, before purchasing catastrophe protection. The reinsurance contracts are subject to contingent commission adjustments and limited loss participation features, which align the Company’s interests with those of the reinsurers.
For the Company’s primary homeowners reinsurance treaty commencing in 2022, the Company secured quota share reinsurance from a diverse panel of third-party reinsurers. All reinsurers are either rated “A-” Excellent or better by AM Best, or the reinsurance is collateralized. In 2022, the Company retained approximately 10% of the premium through the Company’s insurance company subsidiaries, including the Company’s captive reinsurance company, RHS. Additionally, the reinsurance contracts are subject to variable commission adjustments and loss participation features, including loss ratio caps and loss corridors, which align the Company’s interests with those of its reinsurers. Similar to the prior year, the Company saw increased use of loss participation features in the 2022 reinsurance agreements, which increased the amount of losses retained by its insurance company subsidiaries in excess of the Company’s pro rata participation in both the 2022 and 2023 fiscal years.
For the Company’s primary homeowners reinsurance treaty that commenced in 2021, the Company secured proportional reinsurance from a diverse panel of third-party reinsurers with AM Best ratings of “A-” Excellent or better. A total of approximately 12% of the premium was retained either by Spinnaker or RHS, which aligns the Company’s interests with third-party reinsurers. Two of the reinsurers, representing approximately one-third of the programs, provided three-year agreements.
The Company also seeks to further reduce its risk retention through purchases of non-proportional reinsurance described below.
Non-Proportional Reinsurance — Hippo
The Company also purchases non-proportional excess of loss catastrophe coverage (“XOL”) reinsurance which includes traditional reinsurance protection, catastrophe bonds, and industry loss warranty products. Through the Company’s insurance company subsidiaries, the Company is exposed to the risk of natural catastrophe events that could occur on the risks arising from policies underwritten by the Company or other managing general agents (“MGAs”). The Company is also exposed to this risk through its captive reinsurer, which takes on a share of the risk underwritten by the Company’s MGA business.
In May 2023, Spinnaker secured new catastrophe protection through a per occurrence excess of loss reinsurance agreement with Mountain Re Ltd. (“Mountain Re”), an independent Bermuda company, licensed as a Special Purpose Insurer. The reinsurance agreement meets the requirements to be accounted for as reinsurance in accordance with the guidance for reinsurance contracts. In connection with the reinsurance agreement, Mountain Re issued notes (generally referred to as “catastrophe bonds”) to investors, consistent with the amount of coverage provided under the reinsurance agreement.
The reinsurance agreement provides the Company with coverage through June 2026, and pursuant to the agreement, Mountain Re provides XOL reinsurance coverage to Spinnaker for losses from a variety of perils, including named storms, fire following an earthquake, severe thunderstorms, and winter storms on business produced through the Hippo MGA.
Under the terms of the reinsurance agreement, the Company is obligated to pay annual reinsurance premiums to Mountain Re for the reinsurance coverage. Amounts payable under the reinsurance agreement with respect to any covered event cannot exceed the Company’s actual losses from such event.
17

HIPPO HOLDINGS INC.
Notes to Consolidated Financial Statements
(Unaudited)
In June 2023, the Company’s captive reinsurance company, RHS, entered into an Industry Loss Warranty (ILW) with a third party under which loss payments are triggered by reference to the level of losses incurred by the insurance industry as whole for pre-defined events, rather than by losses incurred by the Company. RHS entered into the ILW in order to hedge the risk of the Company experiencing a catastrophic hurricane loss on business assumed.
The Company’s XOL program provides protection to the Company from catastrophes that could impact a large number of insurance policies. The Company buys XOL so that the probability of losses from a single occurrence exceeding the protection purchased is no more than 0.4%, or equivalent to a 1 in 250 year return period when considered with the corporate catastrophe XOL described below under “Other Reinsurance”. This reinsurance protects the Company from all but the most severe catastrophic events.
Other Reinsurance
Spinnaker also purchases reinsurance for programs written by MGAs other than Hippo. The reinsurance treaties are a mix of proportional and XOL in which approximately 75% to 100% of the risk is ceded. The reinsurance contracts are subject to variable commission adjustments and loss participation features, including loss caps, and may increase the amount of losses retained by the Company in excess of the Company’s pro-rata participation. Such provisions are recognized in the period based on the experience to date under the agreement.
Spinnaker purchases a corporate catastrophe XOL program that attaches above the reinsurance programs protecting the business written by Hippo as well as the other MGAs. This treaty has a floating retention and attaches at the exhaustion point of the underlying programs’ specific reinsurance. The catastrophe bonds described above inures to the benefit of this contract. This program provides protection to the Company from catastrophes that could impact a large number of insurance policies underwritten by the Company or other MGAs. The Company buys XOL so that the probability of losses from a single occurrence exceeding the protection purchased is no more than 0.4%, or equivalent to a 1 in 250 year return period. This reinsurance protects the Company from all but the most severe catastrophic events.
The Company also purchases reinsurance from the State Board of Administration in Florida via the Florida Hurricane Catastrophe Fund (the “FHCF”) and the Reinsurance to Assist Policyholders (the “RAP”) program for residential hurricane losses in the State of Florida. This coverage is provided and required by the State of Florida. The Company currently purchases reimbursement protection at the maximum level (90%) of mandatory coverage offered by the FHCF.
With all reinsurance programs, the Company’s wholly owned insurance carriers are not relieved of their primary obligations to policyholders in the event of a default or the insolvency of its reinsurers. As a result, a credit exposure exists to the extent that any reinsurer fails to meet its obligations assumed in the reinsurance agreements. To mitigate this exposure to reinsurance insolvencies, the Company evaluates the financial condition of its reinsurers and, in certain circumstances, holds substantial collateral (in the form of funds withheld, qualified trusts, and letters of credit) as security under the reinsurance agreements. No allowance has been recorded in the three and nine
18

HIPPO HOLDINGS INC.
Notes to Consolidated Financial Statements
(Unaudited)
months ended September 30, 2023, and 2022 for amounts anticipated to be uncollectible or for the anticipated failure of a reinsurer to meet its obligations under the contracts.
The following tables reflect amounts affecting the consolidated statements of operations and comprehensive loss for reinsurance as of and for the three and nine months ended September 30, 2023, and 2022 (in millions).

| For the Three Months Ended September 30,
| 2023 |  | 2022
| Written premiums |  | Earned premiums |  | Loss and LAE incurred |  | Written premiums |  | Earned premiums |  | Loss and LAE incurred
Direct | $ | 225.9 |  |  | $ | 207.7 |  |  | $ | 120.7 |  |  | $ | 173.0 |  |  | $ | 139.7 |  |  | $ | 155.3 |
Assumed | 3.6 |  |  | 3.0 |  |  | 3.8 |  |  | 0.3 |  |  | 0.1 |  |  | (1.6) |
Gross | 229.5 |  |  | 210.7 |  |  | 124.5 |  |  | 173.3 |  |  | 139.8 |  |  | 153.7 |
Ceded | (178.0) |  |  | (177.8) |  |  | (88.0) |  |  | (167.3) |  |  | (129.1) |  |  | (129.8) |
Net | $ | 51.5 |  |  | $ | 32.9 |  |  | $ | 36.5 |  |  | $ | 6.0 |  |  | $ | 10.7 |  |  | $ | 23.9 |

| For the Nine Months Ended September 30,
| 2023 |  | 2022
| Written premiums |  | Earned premiums |  | Loss and LAE incurred |  | Written premiums |  | Earned premiums |  | Loss and LAE incurred
Direct | $ | 651.8 |  |  | $ | 557.3 |  |  | $ | 441.4 |  |  | $ | 451.8 |  |  | $ | 388.5 |  |  | $ | 345.2 |
Assumed | 11.8 |  |  | 5.7 |  |  | 9.5 |  |  | 0.4 |  |  | 0.2 |  |  | 0.7 |
Gross | 663.6 |  |  | 563.0 |  |  | 450.9 |  |  | 452.2 |  |  | 388.7 |  |  | 345.9 |
Ceded | (559.8) |  |  | (494.0) |  |  | (300.0) |  |  | (430.9) |  |  | (357.8) |  |  | (270.3) |
Net | $ | 103.8 |  |  | $ | 69.0 |  |  | $ | 150.9 |  |  | $ | 21.3 |  |  | $ | 30.9 |  |  | $ | 75.6 |

As of September 30, 2023 and December 31, 2022, a provision for sliding scale commissions of $15.6 million and $3.5 million, respectively, is included in provision for commission on the consolidated balance sheets. As of September 30, 2023 and December 31, 2022, a receivable for sliding scale commissions of $5.4 million and $4.5 million, respectively, is included in ceding commissions receivable on the consolidated balance sheets.
As of September 30, 2023 and December 31, 2022, a provision for loss participation features of $106.0 million and $51.3 million, respectively, was recorded as a contra-asset in reinsurance recoverable on the consolidated balance sheets.
19

HIPPO HOLDINGS INC.
Notes to Consolidated Financial Statements
(Unaudited)
11. Geographical Breakdown of Gross Written Premium
Gross written premium by state is as follows (in millions):

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2023 |  | 2022 | 2023 |  | 2022
| Amount |  | % of GWP |  | Amount |  | % of GWP |  | Amount |  | % of GWP |  | Amount |  | % of GWP
State |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Texas | $ | 42.5 |  |  | 18.5 | % |  | $ | 38.2 |  |  | 22.0 | % |  | $ | 126.3 |  |  | 19.0 | % |  | $ | 115.2 |  |  | 25.5 | %
California | 40.6 |  |  | 17.7 | % |  | 32.8 |  |  | 18.9 | % |  | 116.6 |  |  | 17.7 | % |  | 86.1 |  |  | 19.0 | %
Florida | 29.9 |  |  | 13.0 | % |  | 15.1 |  |  | 8.7 | % |  | 89.4 |  |  | 13.5 | % |  | 37.8 |  |  | 8.4 | %
Georgia | 8.5 |  |  | 3.7 | % |  | 7.3 |  |  | 4.2 | % |  | 30.7 |  |  | 4.6 | % |  | 20.9 |  |  | 4.6 | %
Colorado | 5.6 |  |  | 2.4 | % |  | 5.5 |  |  | 3.2 | % |  | 18.1 |  |  | 2.7 | % |  | 12.7 |  |  | 2.8 | %
Arizona | 5.0 |  |  | 2.2 | % |  | 3.9 |  |  | 2.4 | % |  | 14.1 |  |  | 2.1 | % |  | 10.3 |  |  | 2.3 | %
Illinois | 7.5 |  |  | 3.3 | % |  | 6.6 |  |  | 3.8 | % |  | 19.9 |  |  | 3.0 | % |  | 16.0 |  |  | 3.5 | %
New Jersey | 4.5 |  |  | 2.0 | % |  | 4.7 |  |  | 2.7 | % |  | 12.8 |  |  | 1.9 | % |  | 9.2 |  |  | 2.0 | %
Ohio | 3.3 |  |  | 1.4 | % |  | 3.9 |  |  | 2.4 | % |  | 11.2 |  |  | 1.7 | % |  | 10.3 |  |  | 2.3 | %
Missouri | 5.1 |  |  | 2.2 | % |  | 4.7 |  |  | 2.7 | % |  | 12.6 |  |  | 1.9 | % |  | 11.3 |  |  | 2.5 | %
Other | 77.0 |  |  | 33.6 | % |  | 50.6 |  |  | 29.2 | % |  | 211.9 |  |  | 31.9 | % |  | 122.4 |  |  | 27.1 | %
Total | $ | 229.5 |  |  | 100 | % |  | $ | 173.3 |  |  | 100 | % |  | $ | 663.6 |  |  | 100 | % |  | $ | 452.2 |  |  | 100 | %

12. Commitments and Contingencies
Legal Proceedings
From time to time, the Company may become involved in litigation or other legal proceedings. The Company is routinely named in litigation involving claims from policyholders. Legal proceedings relating to claims are reserved in the normal course of business. The Company does not believe it is a party to any pending litigation or other legal proceedings that is likely to have a material adverse effect on the Company’s business, financial condition or results of operations. Regardless of outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors.
On November 19, 2021, Hippo and Assaf Wand, the Company’s co-founder, were named in a civil action in San Francisco Superior Court brought by Eyal Navon. Mr. Navon alleged six causes of action against Mr. Wand for breach of fiduciary duty, breach of contract, promissory estoppel, fraud, negligent misrepresentation, and constructive fraud surrounding a loan and call option entered into between Innovius Capital Canopus I, L.P. (“Innovius”) and Mr. Navon, as well as alleged promises made by Mr. Wand to Mr. Navon while Mr. Navon was an employee of Hippo. Innovius was an investor in the Company prior to its transaction with Mr. Navon. Mr. Navon alleges a fraud claim against Hippo and also alleges a claim for declaratory judgment, requesting that the Court declare that Mr. Navon properly revoked the call option he entered into with Innovius.
On May 2, 2022, Mr. Navon amended his complaint, naming Hippo in his breach of contract, promissory estoppel, negligent misrepresentation, and constructive fraud causes of action (in addition to re-pleading the declaratory relief and fraud causes of action). On February 28, 2023, Mr. Navon filed a Third Amended Complaint alleging 18 claims for relief. In addition to the original allegations, the Third Amended Complaint alleges fraud, insider-trading, and aiding-and-abetting claims based on the theory that Hippo and Mr. Wand provided Innovius and its principal, Justin Moore, with material nonpublic information about Hippo’s business. Finally, Mr. Navon alleges conversion claims against Hippo related to the transfer of his shares to Innovius after Innovius exercised the call option.
20

HIPPO HOLDINGS INC.
Notes to Consolidated Financial Statements
(Unaudited)
All claims asserted are based on alleged conduct that occurred prior to Hippo becoming a publicly traded company. Hippo engaged counsel to defend both Hippo and Mr. Wand, and Hippo and Mr. Wand have denied all claims. As a result of the new allegations in the Third Amended Complaint, Hippo moved to have the court designate the case as complex. The court granted this motion, took the previously scheduled trial date off the calendar, and trial is now expected to take place in late 2024.
The parties are engaged in fact discovery, and Hippo intends to move for summary judgment against the claims alleged in the amended complaint.
13. Stockholders’ Equity
Common Stock
On August 2, 2021, the Company’s common stock and warrants began trading on the New York Stock Exchange (“NYSE”) under the ticker symbols “HIPO” and “HIPO.WS,” respectively. Pursuant to Certificate of Incorporation, the Company is authorized to issue 80 million shares of common stock, with a par value of $0.0001 per share. Each share of common stock is entitled to one vote. The holders of the common stock are also entitled to receive dividends whenever funds are legally available and when declared by the board of directors. No dividends have been declared or paid since inception.
Stock-Based Compensation Plans
2019 Stock Option and Grant Plan
The Company’s 2019 Stock Option and Grant Plan (“the 2019 Stock Plan”) provides for the direct award or sale of shares, the grant of options to purchase shares, and the grant of restricted stock units (“RSUs”) to employees, consultants, and outside directors of the Company. Stock options under the plan may be either incentive stock options (“ISOs”) or non-qualified stock options (“NSOs”), with an exercise price of not less than 100% of fair market value on the grant date, with a term less than or equal to ten years. The vesting period of each option and RSU shall be as determined by a committee of the Company’s board of directors but is generally over four years. Upon the closing of the Business Combination, the remaining unallocated share reserve under the 2019 Plan was cancelled and no new awards will be granted under such plan. Awards outstanding under the 2019 Plan were assumed by the Company upon the Closing and continue to be governed by the terms of the 2019 Plan.
2021 Incentive Award Plan
The Company’s 2021 Incentive Award Plan (the “2021 Plan”), which authorized for issuance 3.1 million shares of common stock. The 2021 Plan provides for the issuance of a variety of stock-based compensation awards, including stock options, stock appreciation rights (“SARs”), restricted stock awards, restricted stock unit awards, performance bonus awards, performance stock unit awards, dividend equivalents, or other stock or cash-based awards. The vesting period of each option and award shall be as determined by a committee of the Company’s board of directors but is generally over two to four years. This reserve increases on January 1 of each year through 2031, by an amount equal to the smaller of: (i) 5% of the number of shares of common stock issued and outstanding on the last day of the immediately preceding fiscal year, or (ii) an amount determined by the board of directors.
21

HIPPO HOLDINGS INC.
Notes to Consolidated Financial Statements
(Unaudited)
Stock Options
The following table summarizes option activity under the plans:

| Options Outstanding |  | Weighted-Average Remaining |  | Aggregate Intrinsic Value (In Millions)
| Number of Shares |  | Weighted Average Exercise Price |  | Contract Term (In Years) |
Outstanding as of December 31, 2022 | 1,986,978 |  | $ | 36.54 |  |  | 7.8 |  | $ | 1.3 |
Granted | — |  | — |  |  |  |  |
Exercised | (103,002) |  | 11.89 |  |  |  |  |
Cancelled/Expired | (257,719) |  | 25.30 |  |  |  |  |
Outstanding as of September 30, 2023 | 1,626,257 |  | 16.12 |  |  | 7.1 |  | $ | 0.1 |
Vested and exercisable as of September 30, 2023 | 1,273,336 |  | $ | 16.09 |  |  | 6.9 |  | $ | 0.1 |

The aggregate intrinsic value of options exercised during the nine months ended September 30, 2023 and 2022 was $0.5 million and $3.5 million, respectively, and is calculated based on the difference between the exercise price and the fair value of the Company’s common stock as of the exercise date. There were no options granted during the three months ended September 30, 2023 and 2022.
Total unrecognized compensation cost of $6.8 million as of September 30, 2023 is expected to be recognized over a weighted-average period of 1.1 years.
Valuation Assumptions of Stock Options
The fair value of granted stock options are estimated as of the date of grant using the Black-Scholes-Merton option-pricing model, based on the following inputs:
Expected Term – The expected term represents the period that the Company’s Stock-Based Awards are expected to be outstanding. The Company has opted to use the simplified method for estimating the expected term of options. Accordingly, the expected term equals the arithmetic average of the vesting term and the original contractual term of the option (generally 10 years).
Expected Volatility – Due to the Company’s limited operating history and a lack of company specific historical and implied volatility data, the Company has based its estimate of expected volatility on the historical volatility of a group of peer companies that are publicly traded. The historical volatility data was computed using the daily closing prices for the selected companies’ shares during the equivalent period of the calculated expected term of the Stock-Based Awards.
Risk-Free Interest Rate – The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for zero coupon U.S. Treasury notes with maturities approximately equal to the grant’s expected term.
Expected Dividend Yield – The Company has never paid dividends and does not currently expect to pay dividends.
Fair value of common stock – The Company determined the value of its common stock based on the observable daily closing price of its common stock (ticker symbol “HIPO”).
22

HIPPO HOLDINGS INC.
Notes to Consolidated Financial Statements
(Unaudited)
Early Exercises of Stock Options
In 2020 and 2021, certain employees early exercised stock options with cash. On September 30, 2023 and December 31, 2022, the Company had $0.9 million and $1.4 million, respectively, recorded in accrued expenses and other liabilities related to early exercises of the stock options, and the related number of unvested shares subject to repurchase was 0.0 million and 0.1 million, respectively.
Stock Option Repricing
On March 1, 2023, the Board approved a one-time repricing of certain stock option awards. The repricing will impact out-of-the-money stock options held by all employees who remain employed through March 6, 2023 (the “Repricing Date”), including the Company’s executive officers. Each stock option was repriced to have a per share exercise price equal to the closing price of the Company’s common stock on the Repricing Date, except that the per share exercise price of each stock option held by any of the Company’s executive officers that was repriced is subject to a premium. The premium will be in effect from the Repricing Date through the first anniversary of the Repricing Date (the “Premium End Date”). In the event the applicable executive officer (i) exercises his/her stock options prior to the Premium End Date or (ii) does not provide services to the Company as an employee or a consultant through the Premium End Date, the per share exercise price applicable to his/her stock options will be two times the closing price of the Company’s common stock on the Repricing Date. There were no changes to the number of shares, the vesting schedule or the expiration date of the repriced stock options. As a result of the repricing, the Company recorded an incremental share-based compensation charge of $3.6 million, of which $1.4 million was recognized on the Repricing Date, and $2.2 million will be recognized over the remaining term of the repriced options.
Restricted Stock Units and Performance Restricted Stock Units
The Company grants service based RSUs and performance based RSUs (“PRSUs”) as part of the Company’s equity compensation plans. The Company measures RSU and PRSU expense for awards granted based on the estimated fair value of those awards at grant date. To estimate the fair value of PRSUs containing a market condition, the Company uses the Monte Carlo valuation model. The fair value of all other awards is based on the closing price of the Company’s common stock as reported on the NYSE on the date of grant. The RSUs generally vest over a period of two to four years. The PRSUs vest based on the level of achievement of the performance goals and continued employment with the Company over a one to four year performance period.
Stock-based compensation expense for RSUs is recognized based on the straight-line basis over the employee requisite service period. Stock-based compensation expense for PRSUs is recognized on a graded accelerated basis over the employee requisite service period. The Company accounts for forfeitures as they occur.
In June 2022, the Company began granting PRSUs. Half of the PRSUs granted are subject to the achievement of market-based performance goals, and the remaining PRSUs are subject to vesting pursuant to internal financial measures. The actual number of units that ultimately vest will range from 0% to 100% of the granted amount, based on the level of achievement of the performance goals and continued employment with the Company. During the nine months ended September 30, 2023 and 2022, 1.4 million and 2.3 million PRSUs were granted.
The following table summarizes the RSU and PRSU activity for the nine months ended September 30, 2023:
23

HIPPO HOLDINGS INC.
Notes to Consolidated Financial Statements
(Unaudited)

| Number of Shares |  | Weighted Average Grant-Date Fair Value per Share
Unvested and outstanding as of December 31, 2022 | 2,881,984 |  | $ | 41.15 |
Granted | 1,372,585 |  | 17.97 |
Released | (861,292) |  | 40.81 |
Canceled and forfeited | (414,068) |  | 39.29 |
Unvested and outstanding as of September 30, 2023 | 2,979,209 |  |  | $ | 30.79 |

Total unrecognized compensation cost related to unvested RSUs and PRSUs is $65.8 million as of September 30, 2023, and it is expected to be recognized over a weighted-average period of 1.8 years.
2021 Employee Stock Purchase Plan
The Company’s 2021 Employee Stock Purchase Plan (the “2021 ESPP”), which authorized 0.5 million shares of common stock for issuance. The 2021 ESPP became effective on October 25, 2021. The 2021 ESPP is designed to allow eligible employees of the Company to purchase shares of the Company’s common stock with their accumulated payroll deductions at a price equal to 85% of the lesser of the fair market value on the first business day of the offering period or on the designated purchase date of the offering period up to $25,000 during the calendar year. The ESPP offers a six-month look-back feature as well as an automatic reset feature that provides for an offering period to be reset to a new lower-priced offering if the offering price of the new offering period is less than that of the current offering period. During the nine months ended September 30, 2023, 80,990 shares have been issued under the 2021 ESPP for $1.0 million. During the nine months ended September 30, 2022, 46,000 shares have been issued under the 2021 ESPP for $1.6 million. In addition, the number of shares available for issuance under the 2021 ESPP will be annually increased on January 1 of each calendar year beginning in 2022 and ending in 2031, by an amount equal to the lesser of (i) one percent of the shares outstanding (on a converted basis) on the last day of the immediately preceding fiscal year and (ii) such number of shares as may be determined by the board of directors.
Stock-Based Compensation
Total stock-based compensation expense, classified in the accompanying consolidated statements of operations and comprehensive loss was as follows (in millions):

| Three Months Ended |  | Nine Months Ended
| September 30, |  | September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022 |  |
Losses and loss adjustment expenses | $ | 0.4 |  |  | $ | 0.7 |  |  | $ | 1.0 |  |  | $ | 1.9 |  |  |
Insurance related expenses | 1.1 |  |  | 1.4 |  |  | 3.7 |  |  | 3.9 |  |  |
Technology and development | 2.8 |  |  | 5.1 |  |  | 10.1 |  |  | 15.9 |  |  |
Sales and marketing | 3.3 |  |  | 4.0 |  |  | 11.2 |  |  | 9.3 |  |  |
General and administrative | 6.4 |  |  | 5.8 |  |  | 20.8 |  |  | 15.3 |  |  |
Total stock-based compensation expense | $ | 14.0 |  |  | $ | 17.0 |  |  | $ | 46.8 |  |  | $ | 46.3 |  |  |

Stock Repurchases
In March 2023, the Company’s Board of Directors authorized the repurchase of up to $50.0 million of its common stock, with no expiration date. Repurchases under the program may be made in the open market, in privately negotiated transactions or otherwise, with the amount and timing of repurchases to be determined at the Company’s discretion depending on market conditions and corporate needs. Open market repurchases will be structured to occur in accordance with applicable federal securities laws, including within the pricing and volume requirements of Rule 10b-18 under the Securities Exchange Act of 1934, as amended. The Company may also, from
24

HIPPO HOLDINGS INC.
Notes to Consolidated Financial Statements
(Unaudited)
time to time, enter into Rule 10b5-1 plans to facilitate repurchases of its common stock under this authorization. This program does not obligate the Company to acquire any particular amount of its common stock, and may be modified, suspended or terminated at any time at the Company’s discretion. During the nine months ended September 30, 2023, the Company repurchased 0.1 million shares of its common stock for $1.8 million under this program. As of September 30, 2023, $48.2 million of common stock remains available for repurchases. Shares repurchased by the Company are accounted for when the transaction is settled. As of September 30, 2023, there were no unsettled share repurchases. Direct costs incurred to acquire the shares are included in the total cost of the shares.
14. Restructuring
On August 31, 2022, the Company instituted an organizational realignment, including a workforce reduction impacting approximately 10% of the Company’s headcount. This strategic reduction of existing workforce was intended to drive efficiency and increase focus on strategic priorities. As a result, approximately 70 employees in various departments and locations were terminated. Each employee terminated as part of the reduction was offered severance, benefits and related costs. The Company recognized charges of $1.8 million for severance, benefits and related costs as a result of these actions for the three and nine months ended September 30, 2022, respectively. The charges are included in impairment and restructuring charges in the accompanying consolidated statements of operations and comprehensive income (loss). The Company did not incur any additional charges associated with the restructuring, and the cash payments associated with this restructuring were substantially complete as of September 30, 2022. There were no restructuring charges for the nine months ended September 30, 2023. Refer to Note 18 of the accompanying consolidated financial statements for additional information on restructuring.
15. Income Taxes
The consolidated effective tax rate was (0.1)% and (0.3)% for the nine months ended September 30, 2023 and 2022, respectively. The difference between the rate for the three months ended September 30, 2023 and 2022 and the U.S. federal income tax rate of 21% was due primarily to a full valuation allowance against the Company’s net deferred tax assets.
As of September 30, 2023 and 2022, the Company has $4.1 million and $2.2 million of unrecognized tax benefits, respectively, fully offset by a valuation allowance. No material interest or penalties were incurred during the nine months ended September 30, 2023 and 2022.
16. Net Loss Per Share Attributable to Common Stockholders
Net loss per share attributable to common stockholders was computed as follows:

| Three Months Ended |  | Nine Months Ended
| September 30, |  | September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
Numerator: |  |  |  |  |  |  |
Net loss attributable to Hippo – basic and diluted (in millions) | $ | (53.1) |  |  | $ | (129.2) |  |  | $ | (230.8) |  |  | $ | (270.3) |
Denominator: |  |  |  |  |  |  |
Weighted-average shares used in computing net loss per share attributable to Hippo — basic and diluted | 23,729,570 |  | 22,839,916 |  | 23,440,555 |  | 22,651,026
Net loss per share attributable to Hippo — basic and diluted | $ | (2.24) |  |  | $ | (5.66) |  |  | $ | (9.85) |  |  | $ | (11.93) |

25

HIPPO HOLDINGS INC.
Notes to Consolidated Financial Statements
(Unaudited)
The potential shares of common stock that were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been antidilutive are as follows:

| September 30,
| 2023 |  | 2022
Outstanding options | 1,626,257 |  | 2,215,726
Common stock from outstanding warrants | 360,000 |  | 360,000
Common stock subject to repurchase | 32,577 |  | 106,308
RSU and PRSUs | 2,979,526 |  | 2,642,416
Total | 4,998,360 |  | 5,324,450

17. Segments
Starting with the first quarter of 2023, the Company realigned its internal reporting to reflect how the Company now manages and monitors its operating results. As a result of these changes, the Company now has three reportable segments: Services, Insurance-as-a-Service, and Hippo Home Insurance Program.
The Company’s Services segment earns fees and/or commission income without assuming underwriting risk or need for reinsurance. The Company also partners with home builders, as well as independent agencies, to source insureds seeking a product for which the Company provides the best carrier for the insured whether it be of Hippo or a third-party carrier, including other insurance products like auto, rental, etc.
Insurance-as-a-Service is managed through the Company’s subsidiary Spinnaker and is a platform to support third party MGAs. The Company rents its capital, 50 state licenses and the strong financial rating of Spinnaker (rated “A-” Excellent by A.M. Best) to earn fee-based revenues with the assumption of limited underwriting risk using quota-share reinsurance. The Company also earns a portion of the premiums paid to it for the risk the Company retains as well as generates investment income. The diversification of the Company’s balance sheet allows it to carry less capital than the Company’s MGA clients would be required to on their own.
The Hippo Home Insurance Program is the Company’s Hippo-branded homeowners insurance business. The Company’s main source of revenue is the premiums paid to it by the Company’s homeowner customers. In addition, the Company’s revenues include commissions for premiums the Company cedes to third parties, policy and services fees and investment income. The Company’s strategy is to retain the portion of the underwriting risk where the Company believes its loss prevention strategies are the most effective.
The Company’s Chief Executive Officer, who serves as the chief operating decision maker (“CODM”), evaluates the financial performance of the Company’s segments based upon segment revenues and segment adjusted operating income or (loss) as the profitability measure. Items outside of adjusted operating income or (loss) are not reported by segment, since they are excluded from the single measure of segment profitability reviewed by the CODM. The Company’s CODM does not use segment assets to allocate resources or to assess performance of the segments and, therefore, segment assets have not been reported separately.
The tables below present segment information reconciled to total Net Loss attributable to Hippo, for the periods indicated (in millions). Financial information for the period ended September 30, 2022 has been revised to conform with the current year presentation.
26

HIPPO HOLDINGS INC.
Notes to Consolidated Financial Statements
(Unaudited)

| Three Months Ended September 30, 2023
| Services |  | Insurance-as-a-Service |  | Hippo Home Insurance Program |  | Intersegment Eliminations(1) |  | Total
Revenue: |  |  |  |  |  |  |  |  |
Net earned premium | $ | — |  |  | $ | 12.2 |  |  | $ | 20.7 |  |  | $ | — |  |  | $ | 32.9 |
Commission income, net | 11.5 |  | 5.4 |  | (0.5) |  | (2.2) |  | 14.2
Service and fee income | 0.1 |  | — |  | 4.8 |  | — |  | 4.9
Net investment income | — |  | 1.8 |  | 3.9 |  | — |  | 5.7
Total Revenue | 11.6 |  | 19.4 |  | 28.9 |  | (2.2) |  | 57.7
Adjusted Operating Expenses: |  |  |  |  |  |  |  |  |
Loss and loss adjustment expense | — |  |  | 5.2 |  |  | 31.0 |  |  | — |  |  | 36.2 |
Insurance related expense | — |  |  | 7.1 |  |  | 9.4 |  |  | (0.7) |  |  | 15.8 |
Sales and marketing | 10.6 |  |  | — |  |  | 4.3 |  |  | (0.9) |  |  | 14.0 |
Technology and development | 4.5 |  |  | 0.2 |  |  | 4.3 |  |  | — |  |  | 9.0 |
General and administrative | 3.3 |  |  | 1.5 |  |  | 7.7 |  |  | — |  |  | 12.5 |
Other expenses | 0.1 |  |  | — |  |  | — |  |  | — |  |  | 0.1 |
Total adjusted operating expenses | 18.5 |  |  | 14.0 |  |  | 56.7 |  |  | (1.6) |  |  | 87.6 |
Less: Net investment income | — |  |  | (1.8) |  |  | (3.9) |  |  | — |  |  | (5.7) |
Less: Noncontrolling interest | (2.8) |  |  | — |  |  | — |  |  | — |  |  | (2.8) |
Adjusted operating income (loss) | (9.7) |  |  | 3.6 |  |  | (31.7) |  |  | (0.6) |  |  | (38.4) |
Net investment income |  |  |  |  |  |  |  |  | 5.7
Depreciation and amortization |  |  |  |  |  |  |  |  | (4.9)
Stock-based compensation |  |  |  |  |  |  |  |  | (14.0)
Fair value adjustments |  |  |  |  |  |  |  |  | 0.2
Contingent consideration charge |  |  |  |  |  |  |  |  | (0.8)
Other one-off transactions |  |  |  |  |  |  |  |  | (1.2)
Income tax benefit |  |  |  |  |  |  |  |  | 0.3
Net loss attributable to Hippo |  |  |  |  |  |  |  |  | $ | (53.1) |

(1)Intersegment eliminations include commissions paid from Hippo Home Insurance Program for policies sold by the Company’s Services segment (revenue, cost, and other adjustments in respective business units eliminated as part of consolidation).
27

HIPPO HOLDINGS INC.
Notes to Consolidated Financial Statements
(Unaudited)

| Three Months Ended September 30, 2022
| Services |  | Insurance-as-a-Service |  | Hippo Home Insurance Program |  | Intersegment Eliminations(1) |  | Total
Revenue: |  |  |  |  |  |  |  |  |
Net earned premium | $ | — |  |  | $ | 6.2 |  |  | $ | 4.5 |  |  | $ | — |  |  | $ | 10.7 |
Commission income, net | 9.4 |  | 3.1 |  | 6.9 |  | (5.1) |  | 14.3
Service and fee income | 0.1 |  | — |  | 3.1 |  | — |  | 3.2
Net investment income | — |  | 0.7 |  | 1.8 |  | — |  | 2.5
Total Revenue | 9.5 |  | 10.0 |  | 16.3 |  | (5.1) |  | 30.7
Adjusted Operating Expenses: |  |  |  |  |  |  |  |  |
Loss and loss adjustment expense | — |  |  | 6.0 |  |  | 17.4 |  |  | — |  |  | 23.4 |
Insurance related expense | — |  |  | 0.2 |  |  | 16.7 |  |  | (5.1) |  |  | 11.8 |
Sales and marketing | 19.8 |  |  | — |  |  | 4.1 |  |  | — |  |  | 23.9 |
Technology and development | 1.8 |  |  | — |  |  | 7.6 |  |  | — |  |  | 9.4 |
General and administrative | 2.2 |  |  | 1.1 |  |  | 9.5 |  |  | — |  |  | 12.8 |
Other expenses | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total adjusted operating expenses | 23.8 |  |  | 7.3 |  |  | 55.3 |  |  | (5.1) |  |  | 81.3 |
Less: Net investment income | — |  |  | (0.7) |  |  | (1.8) |  |  | — |  |  | (2.5) |
Less: Noncontrolling interest | (1.7) |  |  | — |  |  | — |  |  | — |  |  | (1.7) |
Adjusted operating loss | (16.0) |  |  | 2.0 |  |  | (40.8) |  |  | — |  |  | (54.8) |
Net investment income |  |  |  |  |  |  |  |  | 2.5
Depreciation and amortization |  |  |  |  |  |  |  |  | (3.8)
Stock-based compensation |  |  |  |  |  |  |  |  | (17.0)
Fair value adjustments |  |  |  |  |  |  |  |  | 0.2
Contingent consideration charge |  |  |  |  |  |  |  |  | (0.2)
Other one-off transactions |  |  |  |  |  |  |  |  | (0.5)
Income tax expense |  |  |  |  |  |  |  |  | (0.3)
Restructuring charges |  |  |  |  |  |  |  |  | (1.8)
Goodwill impairment charge |  |  |  |  |  |  |  |  | (53.5)
Net loss attributable to Hippo |  |  |  |  |  |  |  |  | $ | (129.2) |

(1)Intersegment eliminations include commissions paid from Hippo Home Insurance Program for policies sold by the Company’s Services segment (revenue, cost, and other adjustments in respective business units eliminated as part of consolidation).
28

HIPPO HOLDINGS INC.
Notes to Consolidated Financial Statements
(Unaudited)

| Nine Months Ended September 30, 2023
| Services |  | Insurance-as-a-Service |  | Hippo Home Insurance Program |  | Intersegment Eliminations(1) |  | Total
Revenue: |  |  |  |  |  |  |  |  |
Net earned premium | $ | — |  |  | $ | 29.7 |  |  | $ | 39.3 |  |  | $ | — |  |  | $ | 69.0 |
Commission income, net | 32.4 |  | 14.1 |  | 8.5 |  | (7.2) |  | 47.8
Service and fee income | 0.4 |  | — |  | 11.5 |  | — |  | 11.9
Net investment income | — |  | 4.8 |  | 11.7 |  | — |  | 16.5
Total Revenue | 32.8 |  | 48.6 |  | 71.0 |  | (7.2) |  | 145.2
Adjusted Operating Expenses: |  |  |  |  |  |  |  |  |
Loss and loss adjustment expense | — |  |  | 11.7 |  |  | 138.2 |  |  | — |  |  | 149.9 |
Insurance related expense | — |  |  | 16.0 |  |  | 27.9 |  |  | (2.3) |  |  | 41.6 |
Sales and marketing | 33.9 |  |  | — |  |  | 14.4 |  |  | (3.3) |  |  | 45.0 |
Technology and development | 12.3 |  |  | 0.5 |  |  | 13.6 |  |  | — |  |  | 26.4 |
General and administrative | 9.3 |  |  | 4.1 |  |  | 23.1 |  |  | — |  |  | 36.5 |
Other expenses | 0.5 |  |  | — |  |  | — |  |  | — |  |  | 0.5 |
Total adjusted operating expenses | 56.0 |  |  | 32.3 |  |  | 217.2 |  |  | (5.6) |  |  | 299.9 |
Less: Net investment income | — |  |  | (4.8) |  |  | (11.7) |  |  | — |  |  | (16.5) |
Less: Noncontrolling interest | (7.1) |  |  | — |  |  | — |  |  | — |  |  | (7.1) |
Adjusted operating income (loss) | (30.3) |  |  | 11.5 |  |  | (157.9) |  |  | (1.6) |  |  | (178.3) |
Net investment income |  |  |  |  |  |  |  |  | 16.5
Depreciation and amortization |  |  |  |  |  |  |  |  | (14.4)
Stock-based compensation |  |  |  |  |  |  |  |  | (46.8)
Fair value adjustments |  |  |  |  |  |  |  |  | 0.2
Contingent consideration charge |  |  |  |  |  |  |  |  | (4.5)
Other one-off transactions |  |  |  |  |  |  |  |  | (3.3)
Income tax expense |  |  |  |  |  |  |  |  | (0.2)
Net loss attributable to Hippo |  |  |  |  |  |  |  |  | $ | (230.8) |

(1)Intersegment eliminations include commissions paid from Hippo Home Insurance Program for policies sold by the Company’s Services segment (revenue, cost, and other adjustments in respective business units eliminated as part of consolidation).
29

HIPPO HOLDINGS INC.
Notes to Consolidated Financial Statements
(Unaudited)

| Nine Months Ended September 30, 2022
| Services |  | Insurance-as-a-Service |  | Hippo Home Insurance Program |  | Intersegment Eliminations(1) |  | Total
Revenue: |  |  |  |  |  |  |  |  |
Net earned premium | $ | — |  |  | $ | 15.6 |  |  | $ | 15.3 |  |  | $ | — |  |  | $ | 30.9 |
Commission income, net | 25.0 |  | 8.1 |  | 18.1 |  | (12.5) |  | 38.7
Service and fee income | 0.8 |  | — |  | 9.5 |  | — |  | 10.3
Net investment income | — |  | 1.3 |  | 2.7 |  | — |  | 4.0
Total Revenue | 25.8 |  | 25.0 |  | 45.6 |  | (12.5) |  | 83.9
Adjusted Operating Expenses: |  |  |  |  |  |  |  |  |
Loss and loss adjustment expense | — |  |  | 9.9 |  |  | 63.9 |  |  | — |  |  | 73.8 |
Insurance related expense | — |  |  | 6.5 |  |  | 41.9 |  |  | (12.5) |  |  | 35.9 |
Sales and marketing | 44.5 |  |  | 0.2 |  |  | 13.8 |  |  | — |  |  | 58.5 |
Technology and development | 5.3 |  |  | — |  |  | 23.1 |  |  | — |  |  | 28.4 |
General and administrative | 6.8 |  |  | 3.3 |  |  | 27.5 |  |  | — |  |  | 37.6 |
Other expenses | 0.5 |  |  | — |  |  | — |  |  | — |  |  | 0.5 |
Total adjusted operating expenses | 57.1 |  |  | 19.9 |  |  | 170.2 |  |  | (12.5) |  |  | 234.7 |
Less: Net investment income | — |  |  | (1.3) |  |  | (2.7) |  |  | — |  |  | (4.0) |
Less: Noncontrolling interest | (4.3) |  |  | — |  |  | — |  |  | — |  |  | (4.3) |
Adjusted operating income (loss) | (35.6) |  |  | 3.8 |  |  | (127.3) |  |  | — |  |  | (159.1) |
Net investment income |  |  |  |  |  |  |  |  | 4.0
Depreciation and amortization |  |  |  |  |  |  |  |  | (11.2)
Stock-based compensation |  |  |  |  |  |  |  |  | (46.3)
Fair value adjustments |  |  |  |  |  |  |  |  | 2.8
Contingent consideration charge |  |  |  |  |  |  |  |  | (2.6)
Other one-off transactions |  |  |  |  |  |  |  |  | (1.8)
Income tax expense |  |  |  |  |  |  |  |  | (0.8)
Restructuring charges |  |  |  |  |  |  |  |  | (1.8)
Goodwill impairment charge |  |  |  |  |  |  |  |  | (53.5)
Net loss attributable to Hippo |  |  |  |  |  |  |  |  | $ | (270.3) |

(1)Intersegment eliminations include commissions paid from Hippo Home Insurance Program for policies sold by the Company’s Services segment (revenue, cost, and other adjustments in respective business units eliminated as part of consolidation).
18. Subsequent Events
On October 26, 2023, the Company initiated an organizational realignment, including an involuntary workforce reduction affecting up to approximately 120 employees, which represents approximately 20% of the Company’s worldwide workforce. This strategic reduction of existing workforce is intended to drive efficiency and increase focus on strategic priorities. The Company notified the majority of the affected employees on October 26, 2023, with most job eliminations effective on November 1, 2023. In the fourth quarter of 2023, the Company
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HIPPO HOLDINGS INC.
Notes to Consolidated Financial Statements
(Unaudited)
expects to record charges of approximately $2.2 million to $2.7 million for severance, benefits, and related costs as a result of these actions, materially all of which are expected to result in cash expenditures in the same period.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “we,” “our,” “Hippo” and “the Company” refer to the business and operations of Hippo Holdings Inc. and its consolidated subsidiaries. You should read the following discussion of our financial condition and results of operations in conjunction with our consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q and with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the Securities and Exchange Commission.
Overview
Hippo is a different kind of home protection company, built from the ground up to provide a higher standard of care and protection for homeowners. Our goal is to make homes safer and better protected so that customers spend less time worrying about the burdens of homeownership and more time enjoying their homes and their lives within. Harnessing real-time data, smart home technology, and a suite of home services, we have created an integrated home protection platform.
The home insurance industry has long been defined by incumbents that we believe deliver a passive, high- friction experience to policyholders. We view these incumbents as constrained by outdated captive-agent distribution models, legacy technology, and strong incentives not to disrupt their businesses. Accordingly, the industry has not seen meaningful innovation in decades. We believe this results in a flawed customer experience that creates a transactional, adversarial relationship—one that pits insurance companies and their “policyholders” against each other in a zero-sum game. The outcome of this misalignment is an experience that is out of touch with the needs of modern homeowners.
As a digital-first, customer-centric company, we offer an improved customer value proposition and are well-positioned to succeed in this growing market. By making our policies fast and easy to buy, designing coverages around the needs of modern homeowners, and making tools available to homeowners to help them proactively maintain their homes and potentially prevent claims, we have created an active partnership with our customers to better protect their homes, which saves our customers money and is expected to deliver a better economic outcome for Hippo.
Beyond a core insurance experience that is simple, intuitive, and human, we focus our resources on Hippo’s true promise: better outcomes for homeowners. With the support of Hippo Home Care, customers may be better prepared to detect and address home maintenance issues before they become major losses. And we help our customers maintain their homes with maintenance advice and access to experts and services designed to reduce the probability of future losses. In short, we have created an integrated home protection platform, which offers a suite of proactive features designed to prevent loss and provide greater peace of mind.
Our partnership with our customers is designed to create a virtuous cycle. By making homes safer, we help deliver better risk outcomes and increase customer loyalty, which improves our unit economics and customer lifetime value (“LTV”). This enables us to invest in expanding our product offering, customer value proposition, and marketing programs, which help attract more customers to the Hippo family. This growth generates more data and insights to fuel further innovation in our product experience and improved underwriting precision. The result is even safer homes and more loyal customers. We believe this virtuous cycle, combined with our significant existing scale, deep partnerships, and compelling unit economics, will propel Hippo to become a trusted household name synonymous with home protection.
In the third quarter of 2023 we began taking several actions to lower the volatility of our Hippo Homeowners Insurance Program portfolio in light of the significant catastrophe losses we experienced in the second quarter, including raising rates on a portion of our renewal business, increasing deductibles for wind and hail perils, selectively non-renewing policies in certain regions, and instituting a nationwide pause on underwriting new
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premiums for our HO3 business as we examine our risk appetite. We also launched an expense reduction initiative across the Company, including a reduction in staff we announced in October 2023.
Reinsurance
We utilize reinsurance primarily to support the growth of our new and renewal insurance business, to reduce the volatility of our earnings, and to optimize our capital management.
As an MGA, we underwrite homeowners insurance policies on behalf of our insurance company subsidiaries (Spinnaker and SSIC) and other non-affiliated third-party insurance carriers. These carriers purchase reinsurance from a variety of sources and in a variety of structures. In the basic form of this arrangement, fronting insurance carriers will typically cede a significant portion of the total insurance premium they earn from customers, in return for a proportional amount of reinsurance protection. This is known as “ceding” premium and losses through a “quota share” reinsurance treaty.
The fronting carrier and the MGA are paid a percentage of the ceded premium as compensation for sales and marketing, underwriting, insurance, support, claims administration, and other related services (in totality, known as a ceding commission). As additional protection against natural catastrophes or other large loss events, the fronting carrier frequently purchases additional, non-proportional reinsurance.
Without reinsurance protection, the insurer would shoulder all of the insurance risk itself and would need incremental capital to satisfy regulators and rating agencies. Reinsurance allows a carrier to write more business while reducing its balance sheet exposure and volatility of earnings.
Proportional Reinsurance Treaties — Hippo
For our primary homeowners reinsurance treaty commencing in 2023, we secured proportional reinsurance from a diverse panel of third-party reinsurers. All reinsurers are either rated “A-” Excellent or better by AM Best, or the reinsurance is appropriately collateralized. In 2023, we retain approximately 40% of the premium through our insurance company subsidiaries or our captive reinsurance company, RHS, before purchasing catastrophe protection. Additionally, the reinsurance contracts are subject to contingent commission adjustments and loss participation features, which align our interests with those of our reinsurers. Loss participation features may increase the amount of losses retained by our insurance company subsidiaries in excess of our pro rata participation.
For business produced through our builder channel, we purchased proportional reinsurance from three third-party reinsurers. All reinsurers are rated “A-” Excellent or better by AM Best, or the reinsurance is appropriately collateralized. In 2023, we are retaining approximately 58% of the premium produced through our insurance company subsidiaries or RHS, before purchasing catastrophe protection. The reinsurance contracts are subject to contingent commission adjustments and limited loss participation features, which align our interests with those of the reinsurers.
For our primary homeowners reinsurance treaty commencing in 2022, we secured quota share reinsurance from a diverse panel of third-party reinsurers. All reinsurers are either rated “A-” Excellent or better by AM Best, or the reinsurance is collateralized. In 2022, we retained approximately 10% of the premium through our insurance company subsidiaries, including our captive reinsurance company, RHS. Additionally, the reinsurance contracts are subject to variable commission adjustments and loss participation features, including loss ratio caps and loss corridors, which align our interests with those of our reinsurers. Similar to the prior year, we saw increased use of loss participation features in the 2022 reinsurance agreements, which increased the amount of losses retained by our insurance company subsidiaries in excess of our pro rata participation in both the 2022 and 2023 fiscal periods.
For our primary homeowners reinsurance treaty that commenced in 2021, we secured proportional reinsurance from a diverse panel of third-party reinsurers with AM Best ratings of “A-” Excellent or better. A total of approximately 12% of the premium was retained either by Spinnaker or RHS, which aligns the Company’s
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interests with third-party reinsurers. Two of the reinsurers, representing approximately one-third of the programs, provided three-year agreements.
We also seek to further reduce our risk retention through purchases of non-proportional reinsurance described below.
Non-Proportional Reinsurance — Hippo
We also purchase non-proportional XOL reinsurance which includes traditional reinsurance protection, catastrophe bonds, and industry loss warranty products. Through our insurance company subsidiaries, we are exposed to the risk of natural catastrophe events that could occur on the risks arising from policies underwritten by us or other MGAs. We are also exposed to this risk through our captive reinsurer, which takes on a share of the risk underwritten by our MGA business.
In May 2023, Spinnaker secured new catastrophe protection through a per occurrence excess of loss reinsurance agreement with Mountain Re Ltd. (“Mountain Re”), an independent Bermuda company, licensed as a Special Purpose Insurer. The reinsurance agreement meets the requirements to be accounted for as reinsurance in accordance with the guidance for reinsurance contracts. In connection with the reinsurance agreement, Mountain Re issued notes (generally referred to as “catastrophe bonds”) to investors, consistent with the amount of coverage provided under the reinsurance agreement.
The reinsurance agreement provides us with coverage through June 2026, and pursuant to the agreement, Mountain Re provides XOL reinsurance coverage to Spinnaker for losses from a variety of perils, including named storms, fire following an earthquake, severe thunderstorms, and winter storms on business produced through the Hippo MGA.
Under the terms of the reinsurance agreement, we are obligated to pay annual reinsurance premiums to Mountain Re for the reinsurance coverage. Amounts payable under the reinsurance agreement with respect to any covered event cannot exceed our actual losses from such event. The principal amount of the catastrophe bonds will be reduced by any amounts paid to us under the reinsurance agreement.
In June 2023, our captive reinsurance company, RHS, entered into an Industry Loss Warranty (ILW) with a third party under which loss payments are triggered by reference to the level of losses incurred by the insurance industry as whole for pre-defined events, rather than by losses incurred by us. RHS entered into the ILW in order to hedge the risk of us experiencing a catastrophic hurricane loss on business assumed.
Our XOL program provides us protection from catastrophes that could impact a large number of insurance policies. We buy XOL so that the probability of losses from a single occurrence exceeding the protection purchased is no more than 0.4%, or equivalent to a 1 in 250 year return period when considered with the corporate catastrophe XOL described below under “Other Reinsurance”. This reinsurance protects us from all but the most severe catastrophic events.
Other Reinsurance
Spinnaker also purchases reinsurance for programs written by MGAs other than Hippo. The reinsurance treaties are a mix of proportional and XOL in which approximately 75% to 100% of the risk is ceded. The reinsurance contracts are subject to variable commission adjustments and loss participation features, including loss caps, and may increase the amount of losses retained by us in excess of our pro-rata participation. Such provisions are recognized in the period based on the experience to date under the agreement.
Spinnaker purchases a corporate catastrophe XOL program that attaches above the reinsurance programs protecting the business written by Hippo as well as the other MGAs. This treaty has a floating retention and attaches at the exhaustion point of the underlying programs’ specific reinsurance. The catastrophe bonds described above inures to the benefit of this contract. This program provides us protection from catastrophes that could impact a large number of insurance policies underwritten by us or other MGAs. We buy XOL so that the probability of losses from
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a single occurrence exceeding the protection purchased is no more than 0.4%, or equivalent to a 1 in 250 year return period. This reinsurance protects us from all but the most severe catastrophic events.
We also purchase reinsurance from the State Board of Administration in Florida via the Florida Hurricane Catastrophe Fund (the “FHCF”) and the Reinsurance to Assist Policyholders (the “RAP”) program for residential hurricane losses in the State of Florida. This coverage is provided and required by the State of Florida. We currently purchase reimbursement protection at the maximum level (90%) of mandatory coverage offered by the FHCF.
Key Factors and Trends Affecting our Operating Results
Our financial condition and results of operations have been, and will continue to be, affected by a number of factors, including the following:
Our Ability to Attract New Customers
Our long-term growth will depend, in large part, on our continued ability to attract new customers to our platform. For Hippo home insurance policies, we seek to minimize the volatility of our portfolio and are currently in process of analyzing overall underwriting results for the segment, taking actions as needed. Our short-term focus is on attracting new customers to our licensed insurance agency to purchase non-Hippo policies and to our home care offerings, although over time we expect to strategically return to Hippo underwritten policies as our underwriting actions take hold. We intend to continue to drive new customer growth by highlighting our consumer-focused approach to home protection and insurance across multiple distribution channels, regardless of whether the customer is a Hippo policyholder. In particular, we seek to grow by:
•Promoting our agency for sales of non-Hippo policies, growing our network of partners within existing partner channels, and geographically optimizing our Hippo policyholder base;
•Developing new strategic partnerships with key players involved in the real estate transaction ecosystem; and
•Deepening our relationships with our customers by connecting them to partners offering value-added services that are not specifically insurance products, such as home maintenance, home monitoring, and energy consumption optimization.
Our ability to attract new customers depends on the pricing of our products, the offerings of our competitors, our geographic reach, and the extent and effectiveness of our marketing efforts. Our ability to attract customers also depends on maintaining and strengthening our brand by providing superior customer experiences across all of our offerings through our proactive, tech-enabled strategy.
We face competition from traditional insurers who have more diverse product offerings and longer established operating histories, as well as from new, technology-driven entrants who may pursue more horizontal growth strategies. These competitors may mimic certain aspects of our digital platform and offerings and have more types of insurance products, allowing them to offer customers the ability to “bundle” multiple coverage types together, which may be attractive to many customers.
Although the COVID-19 pandemic and the various responses to it created significant worldwide volatility, uncertainty and economic disruption over the past few years, recently there has been a return to more normal societal interactions, including in the way we operate our business. We cannot predict the future impacts of the COVID-19 pandemic or any new public health events. See Part II, Item 1A. “Risk Factors” for more information.
Our Ability to Retain Customers
Our ability to derive significant lifetime value from our customer relationships depends, in part, on our ability to retain our customers over time. Strong retention allows us to build a recurring revenue base, generating additional premium term over term without material incremental marketing costs. Our customers typically become
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more valuable to us over time because retention rates have historically increased with the age of customer cohorts and because non-catastrophic loss frequency declines as cohorts mature.
As we expect to broadly retain our customers who are not located in high severe weather exposed regions, over the long-term, we expect our book of business to evolve to be weighted more towards renewals versus new business, as is the case with our more mature competitors. We expect that this would enable us to benefit from the higher premium retention rates and inherently lower frequency of losses that characterize renewed premiums.
Our ability to retain customers will depend on a number of factors, including our customers’ satisfaction with our products, offerings of our competitors, and our ability to continue delivering exceptional customer service and support.
Our Ability to Manage Regulatory Impact, Including on Our Efforts to Manage Our Exposure to Volatility
We are subject to extensive laws, regulations, administrative directives, and regulatory actions. From time to time, regulatory authorities or legislative bodies seek to influence and restrict premium rates, require premium refunds to policyholders, require reinstatement of terminated policies, restrict the ability of insurers to cancel or non-renew policies, require insurers to continue to write new policies or limit their ability to write new policies, limit insurers’ ability to change coverage terms and deductibles or to impose underwriting standards, impose additional regulations regarding agency and broker compensation, impose fines and penalties for unintended errors or mistakes, impose additional regulations regarding cybersecurity and privacy, and otherwise expand overall regulation of insurance products and the insurance industry. These laws may limit or restrict our ability to reduce our exposures, including to weather related losses.
Our Ability to Expand Fee Income and Premium Through Cross-Sales to Existing Customers
Our strategy to increase the value we are providing to our customers is to offer incremental services to assist our customers in better maintaining and protecting their homes. As we roll out these services, we expect to be able to generate incremental, non-risk-based service and fee income from our existing customers. We expect these home protection services not only to generate incremental revenue, but also to reduce losses for our customers, and—by implication—our loss ratios. Our success in expanding revenue and reducing losses by offering these services depends on our ability to market these services, our operational ability to deliver value to our customers, and the ability of these services to reduce the probability of loss for an average homeowner.
We are also in the early stages of cross-selling non-homeowner insurance products across our customer base. Cross-sales allow us to generate additional premium per customer, and ultimately higher revenue and fee income, without material incremental marketing spend. Our success in expanding revenue through cross-sales depends on our marketing efforts with new products, offerings of our competitors, additional expansion into new states, and the pricing of our bundled products.
Our Ability to Manage Risk
We leverage data, technology, and geographic diversity to help manage risk. For instance, we obtain dynamic data from various sources and use advanced statistical methods to model that data into our pricing algorithm. Incorporating these external data sources and utilizing the experience gained with our own customer base should lead to better underwriting, reduced loss frequency, and—adjusting for weather related events—lower loss ratios over time. While our current reinsurance framework helps us manage the volatility of earnings, reducing our overall gross loss ratio is critical to our success. Our ability to incorporate new data sources as they become available and to use them to improve our ability to accurately and competitively price risk is central to our growth strategy.
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Seasonality of Claims Losses
Seasonal patterns can impact our incurrence of claims losses, as seasonal weather patterns impact the level and amount of claims we receive. These patterns include hurricanes, wildfires, and coastal storms in the fall, cold weather patterns and changing home heating needs in the winter, and tornados and hailstorms in the spring and summer. The mix of geographic exposure and products within our customer base impacts our exposure to these weather patterns, and as we diversify our base of premium such that our exposure more closely resembles the industry exposure, we should see the impact of these events on our business more closely resemble the impact on the broader industry.
Components of Results of Operations
Revenue
Gross Written Premium
Gross written premium is the amount received or to be received for insurance policies written or assumed by us and our affiliates as a carrier, without reduction for policy acquisition costs, reinsurance costs, or other deductions. In addition, gross written premium includes amounts received from our participation in our own reinsurance treaties. The volume of our gross written premium in any given period is generally influenced by:
•New business submissions;
•Binding of new business submissions into policies;
•Bound policies going effective;
•Renewals of existing policies; and
•Average size and premium rate of bound policies.
Ceded Written Premium
Ceded written premium is the amount of gross written premium written or assumed by us and our affiliates as a carrier that we cede to reinsurers. We enter into reinsurance contracts to limit our exposure to losses, as well as to provide additional capacity for growth. Ceded written premium is treated as a reduction from gross written premium written during a specific period of time over the reinsurance contract period in proportion to the period of risk covered. The volume of our ceded written premium is impacted by the level of our gross written premium and decisions we make to increase or decrease retention levels.
Net Earned Premium
Net earned premium represents the earned portion of our gross written premium for insurance policies written or assumed by us and less the earned portion of ceded written premium (any portion of our gross written premium that is ceded to third-party reinsurers under our reinsurance agreements). We earn written premiums on a pro-rata basis over the term of the policies.
Commission Income, Net Includes:
a.MGA Commission: We operate as an MGA for multiple insurers. We design and underwrite insurance products on behalf of the insurers culminating in the sale of insurance policies. We earn recurring commission and policy fees associated with the policies we sell. We have underwriting authority and responsibility for administering claims (see Claim Processing Fees below) and, we work with affiliated and unaffiliated carrier platforms and a diversified panel of highly rated reinsurance companies who pay us commission in exchange for the opportunity to take that risk on their balance sheets. Our performance obligation associated with these contracts is the placement of the policy, which is met on the effective date. Upon issuance of a new policy, we charge policy fees and inspection fees (see Service and Fee Income below), retain our share of commission, and remit the balance to the respective insurers. Subsequent
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commission adjustments arising from policy changes such as endorsements are recognized in the period when the adjustments occur.
The MGA commission is subject to adjustments, higher or lower (commonly referred to as “commission slide”), depending on the underwriting performance of the policies placed by us. We are required to return a portion of our MGA commission due to commission slide on the policies placed as an MGA if the underwriting performance varies due to higher Hippo programs’ loss ratio from provisional performance of the Hippo programs’ loss ratio. We also return a portion of our MGA commission if the policies are cancelled before the term of the policy. Accordingly, we reserve for commission slide using estimated Hippo programs’ loss ratio performance, or a cancellation reserve as a reduction of revenue for each period presented in our statement of operations and comprehensive loss.
b.Agency Commission: We also operate licensed insurance agencies that are engaged solely in the sale of policies, including non-Hippo policies. For these policies, we earn a recurring agency commission from the carriers whose policies we sell, which is recorded in the commission income, net line on our statements of operations and comprehensive loss. Similar to the MGA businesses, the performance obligation from the agency contracts is placement of the insurance policies.
For both MGA and insurance agency activities, we recognize commission received from insurers for the sale of insurance contracts as revenue at a point in time on the policy effective dates. Cash received in advance of policy effective dates is recorded on the consolidated balance sheets, representing our portion of commission and premium due to insurers and reinsurers, and we hold this cash in trust for the benefit of the insurers and reinsurers as fiduciary liabilities.
c.Ceding Commission: We receive commission based on the premium we cede to third-party reinsurers for the reimbursement for our acquisition and underwriting services. Excess ceding commission over the cost of acquisition is included in the commission income, net line on our statements of operations and comprehensive loss. For the policies that we write on our own carrier as MGA, we recognize this commission as ceding commission on the statement of operations and comprehensive loss. We earn commission on reinsurance premium ceded in a manner consistent with the recognition of the earned premium on the underlying insurance policies, on a pro rata basis over the terms of the policies reinsured. We record the portion of ceding commission income, which represents reimbursement of successful direct acquisition costs related to the underlying policies as an offset to the applicable direct acquisition costs.
d.Carrier Fronting Fees: Through our insurance-as-a-service business, we earn fronting fees from the MGA programs we support. We earn fronting fees in a manner consistent with the recognition of the earned premium on the underlying insurance policies, on a pro-rata basis over the terms of the policies. This revenue is included in the commission income, net line on our statements of operations and comprehensive loss.
e.Claim Processing Fees: As an MGA, we receive a fee that is calculated as a percent of the premium from the insurers in exchange for providing claims adjudication services. The claims adjudication services are provided over the term of the policy and recognized ratably over the same period. This revenue is included in the commission income, net line on our statements of operations and comprehensive loss.
Service and Fee Income
Service and fee income mainly represents policy fees and other revenue. We directly bill policyholders for policy fees and collect and retain fees per the terms of the contracts between us and our insurers. Similar to the commission revenue, we estimate a cancellation reserve for policy fees using historical information. The performance obligation associated with these fees is satisfied at a point in time upon completion of the underwriting process, which is the policy effective date. Accordingly, we recognize all fees as revenue on the policy effective date.
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Net Investment Income
Net investment income represents interest earned from fixed maturity securities, short-term investments and other investments, and the gains or losses from the sale of investments. Our cash and invested assets primarily consist of investment grade fixed-maturity securities, and may also include cash and cash equivalents, equity securities, and short-term investments. The principal factors that influence net investment income are the size of our investment portfolio and the yield on that portfolio. As measured by amortized cost (which excludes changes in fair value, such as changes in interest rates), the size of our investment portfolio is mainly a function of our invested equity capital along with premium we receive from our customers less payments on customer claims.
Net investment income also includes an insignificant amount of net realized gains (losses) on investments, which are a function of the difference between the amount received by us on the sale of a security and the security’s amortized cost, as well as any allowances for credit losses recognized in earnings, if any.
Expenses
Loss and Loss Adjustment Expenses
Loss and loss adjustment expenses represent the costs incurred for losses net of amounts ceded to reinsurers. We enter into reinsurance contracts to limit our exposure to potential losses as well as to provide additional capacity for growth. The expenses are a function of the size and term of the insurance policies and the loss experience and loss participation features associated with the underlying risks. Loss and LAE are based on actuarial assumptions and management judgements, including losses incurred during the period and changes in estimates from prior periods. Loss and LAE also include employee compensation (including stock-based compensation and benefits) of our claims processing teams, as well as allocated occupancy costs and related overhead based on headcount.
Insurance Related Expenses
Insurance related expenses primarily consist of amortization of direct acquisition commission costs and premium taxes incurred on the successful acquisition of business written on a direct basis and credit card processing fees not charged to our customers. Insurance related expenses also include employee compensation (including stock-based compensation and benefits) of our underwriting teams, as well as allocated occupancy costs and related overhead based on headcount. Insurance related expenses are offset by a portion of ceding commission income, which represents reimbursement of successful acquisition costs related to the underlying policies. Additionally, insurance related expenses include the costs of providing bound policies and delivering claims services to our customers. These costs include underwriting technology service costs including software, data services used for performing underwriting, and third-party call center costs in addition to personnel-related costs.
Technology and Development
Technology and development expenses primarily consist of employee compensation (including stock-based compensation and benefits) for our technology staff, which includes technology development, infrastructure support, actuarial, and third-party services. Technology and development also include allocated facility costs and related overhead based on headcount.
We expense development costs as incurred, except for costs related to internal-use software development projects, which are capitalized and subsequently depreciated over the expected useful life of the developed software. We expect our technology and development costs to decrease in the near-term as we seek to reduce internal expenses and focus on achieving profitability. Over the long term, our technology and development costs may increase as we invest in research and development activities to achieve our technology development roadmap.
Sales and Marketing
Sales and marketing expenses primarily consist of sales commission, advertising costs, and marketing expenditures, as well as employee compensation (including stock-based compensation and benefits) for employees engaged in sales, marketing, data analytics, and customer acquisition. Sales and marketing also include allocated facility costs and related overhead based on headcount.
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We plan to continue to invest in sales and marketing to attract and acquire new customers and to increase our brand awareness. However, we expect that our sales and marketing expenses will decrease in the near term as we seek to reduce internal expenses. Over the long term, sales and marketing costs may increase in absolute dollars and vary from period to period as a percentage of revenue, and over time may decrease as a percentage of revenue as we continue to drive customer acquisition efficiencies and as the proportion of renewals to our total business increases.
General and Administrative
General and administrative expenses primarily consist of employee compensation (including stock-based compensation and benefits) for our finance, human resources, legal, and general management functions, as well as facilities, insurance, and professional services. We expect our general and administrative expenses to remain relatively flat in the near term. However, these expenses may increase over the long term as we scale headcount with the growth of our business.
Impairment and Restructuring Charges
Impairment and restructuring charges consist of non-cash impairment charges relating to goodwill. We review goodwill for impairment annually on October 1 and more frequently if events or changes in circumstances indicate that an impairment may exist. If the carrying value of the reporting unit exceeds its fair value, the fair value of the reporting unit’s goodwill is calculated and an impairment loss equal to the excess is recorded. It also consists of severance and other personnel costs associated with exit and disposal activities as well as reductions in workforce.
Interest and Other (Income) Expense
Interest and other (income) expense primarily consists of fair value adjustments on outstanding warrants.
Income Taxes
We record income taxes using the asset and liability method. Under this method, we record deferred income tax assets and liabilities based on the estimated future tax effects of differences between the financial statement and income tax basis of existing assets and liabilities. We measure these differences using the enacted statutory tax rates that are expected to apply to taxable income for the years in which differences are expected to reverse. We recognize the effect on deferred income taxes of a change in tax rates in income in the period that includes the enactment date.
We record a valuation allowance to reduce deferred tax assets and liabilities to the net amount that we believe is more likely than not to be realized. We consider all available evidence, both positive and negative, including historical levels of income, expectations, and risks associated with estimates of future taxable income and ongoing tax planning strategies in assessing the need for a valuation allowance.
Key Operating and Financial Metrics and Non-GAAP Measures
We regularly review the following key operating and financial metrics in order to evaluate our business, measure our performance, identify trends in our business, prepare financial projections, and make strategic decisions.
The non-GAAP financial measures below have not been calculated in accordance with GAAP and should be considered in addition to results prepared in accordance with GAAP and should not be considered as a substitute for, or superior to, GAAP results. In addition, adjusted EBITDA should not be construed as an indicator of our operating performance, liquidity, or cash flows generated by operating, investing, and financing activities, as there may be significant factors or trends that it fails to address. We caution investors that non-GAAP financial information—by its nature—departs from traditional accounting conventions. Therefore, its use can make it difficult to compare our current results with our results from other reporting periods and with the results of other companies.
Our management uses non-GAAP financial measures, in conjunction with GAAP financial measures, as an integral part of managing our business and to, among other things: (i) monitor and evaluate the performance of our business operations and financial performance; (ii) facilitate internal comparisons of the historical operating
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performance of our business operations; (iii) review and assess the operating performance of our management team; (iv) analyze and evaluate financial and strategic planning decisions regarding future operating investments; and (v) plan for and prepare future annual operating budgets and determine appropriate levels of operating investments.

| Three Months Ended September 30, |  | Nine Months Ended September 30, |  |
| 2023 |  | 2022 |  | 2023 |  | 2022 |  |
| ($ in millions)
Total Generated Premium | $ | 303.7 |  |  | $ | 219.9 |  |  | $ | 866.3 |  |  | $ | 577.6 |  |  |
Total Revenue | 57.7 |  |  | 30.7 |  |  | 145.2 |  |  | 83.9 |  |  |
Net Loss attributable to Hippo | (53.1) |  |  | (129.2) |  |  | (230.8) |  |  | (270.3) |  |  |
Adjusted EBITDA | (38.4) |  |  | (54.8) |  |  | (178.3) |  |  | (159.1) |  |  |
Gross Loss Ratio | 59 | % |  | 110 | % |  | 81 | % |  | 89 | % |  |
Net Loss Ratio | 111 | % |  | 223 | % |  | 219 | % |  | 245 | % |  |

Total Generated Premium
We define Total Generated Premium as the aggregate written premium placed across all of our business platforms for the period presented. We measure Total Generated Premium as it reflects the volume of our business irrespective of choices related to how we structure our reinsurance treaties, the amount of risk we retain on our own balance sheet, or the amount of business written in our capacity as an MGA, agency, or as an insurance carrier/reinsurer. We calculate Total Generated Premium as the sum of:
i)Gross written premium (“GWP”)—a GAAP measure defined above; and
ii)Gross placed premium—premium of policies placed with third-party insurance companies, for which we do not retain insurance risk and for which we earn a commission payment, and policy fees charged by us to the policyholders on the effective date of the policy.

| Three Months Ended September 30, |  | Nine Months Ended September 30, |
| 2023 |  | 2022 |  | Change |  | 2023 |  | 2022 |  | Change |  |  |  |  |
| ($ in millions) |  |  |  |  |
Gross Written Premium | $ | 229.5 |  |  | $ | 173.3 |  |  | $ | 56.2 |  |  | $ | 663.6 |  |  | $ | 452.2 |  |  | $ | 211.4 |  |  |  |  |  |
Gross Placed Premium | 74.2 |  |  | 46.6 |  |  | $ | 27.6 |  |  | $ | 202.7 |  |  | $ | 125.4 |  |  | $ | 77.3 |  |  |  |  |  |
Total Generated Premium | $ | 303.7 |  |  | $ | 219.9 |  |  | $ | 83.8 |  |  | $ | 866.3 |  |  | $ | 577.6 |  |  | $ | 288.7 |  |  |  |  |  |

Our Total Generated Premium for the three months ended September 30, 2023 grew 38% year-over-year to $303.7 million from $219.9 million for the three months ended September 30, 2022. The growth was driven primarily by the growth of non-Hippo written premium supported by our Insurance-as-a-Service business as well as the continued growth across channels in existing states, expansion of our independent agent network, maintaining solid premium retention levels, and achieving planned premium rate increases.
Our Total Generated Premium for the nine months ended September 30, 2023 grew 50% year-over-year to $866.3 million from $577.6 million for the nine months ended September 30, 2022. The growth was driven primarily by the growth of non-Hippo written premium supported by our Insurance-as-a-Service business as well as the continued growth across channels in existing states, expansion of our independent agent network, maintaining solid premium retention levels, and achieving planned premium rate increases.
Adjusted EBITDA
We define adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (“adjusted EBITDA”), a Non-GAAP financial measure, as net loss attributable to Hippo excluding interest expense, income tax expense, depreciation, amortization, stock-based compensation, net investment income, restructuring charges, impairment
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expense, other non-cash fair market value adjustments, contingent consideration for one of our acquisitions, and other transactions that we consider to be unique in nature.
For the three months ended September 30, 2023, adjusted EBITDA loss was $38.4 million, a decrease of $16.4 million compared to $54.8 million for the three months ended September 30, 2022. The decrease was primarily due to a growth in revenue reflecting an increase in premiums earned mainly due to higher premium retention as a result of the 2023 reinsurance treaty compared to 2022, a lower net loss ratio, and a decrease in advertising costs. These improvements in EBITDA were partially offset by an increase in losses due to the overall growth of our total book of business. For the three months ended September 30, 2023, our net loss ratio was 111% compared to 223% for the three months ended September 30, 2022.
For the nine months ended September 30, 2023, adjusted EBITDA loss was $178.3 million, an increase of $19.2 million compared to $159.1 million for the nine months ended September 30, 2022, due primarily to an increase in losses due primarily to PCS catastrophic weather and other weather loss experience. These amounts were partially offset by a decrease in advertising costs and an increase in revenues.
The following table provides a reconciliation from net loss attributable to Hippo to adjusted EBITDA for the periods presented (in millions):

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
Net loss attributable to Hippo | $ | (53.1) |  |  | $ | (129.2) |  |  | $ | (230.8) |  |  | $ | (270.3) |
Adjustments: |  |  |  |  |  |  |
Net investment income | (5.7) |  |  | (2.5) |  |  | (16.5) |  |  | (4.0) |
Depreciation and amortization | 4.9 |  |  | 3.8 |  |  | 14.4 |  |  | 11.2 |
Stock-based compensation | 14.0 |  |  | 17.0 |  |  | 46.8 |  |  | 46.3 |
Fair value adjustments | (0.2) |  |  | (0.2) |  |  | (0.2) |  |  | (2.8) |
Contingent consideration charge | 0.8 |  |  | 0.2 |  |  | 4.5 |  |  | 2.6 |
Other one-off transactions | 1.2 |  |  | 0.5 |  |  | 3.3 |  |  | 1.8 |
Income tax expense | (0.3) |  |  | 0.3 |  |  | 0.2 |  |  | 0.8 |
Restructuring charges | — |  |  | 1.8 |  |  | — |  |  | 1.8 |
Goodwill impairment charge | — |  |  | 53.5 |  |  | — |  |  | 53.5 |
Adjusted EBITDA | $ | (38.4) |  |  | $ | (54.8) |  |  | $ | (178.3) |  |  | $ | (159.1) |

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Gross Loss Ratio
Gross Loss Ratio, expressed as a percentage, is the ratio of the Gross Losses and LAE to the Gross Earned Premium (in millions).

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022 |  |
Gross Losses and LAE | $ | 124.5 |  |  | $ | 153.7 |  |  | $ | 450.9 |  |  | $ | 345.9 |  |  |
Gross Earned Premium | 210.7 |  |  | 139.8 |  |  | 563.0 |  |  | 388.7 |  |  |
Gross Loss Ratio | 59 | % |  | 110 | % |  | 81 | % |  | 89 | % |  |

The following table provides a reconciliation of Gross Loss Ratio by PCS and non-PCS events.

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022 |  |
PCS losses | 6 | % |  | 45 | % |  | 28 | % |  | 29 | % |  |
Non-PCS losses | 53 | % |  | 65 | % |  | 53 | % |  | 60 | % |  |
Gross loss ratio | 59 | % |  | 110 | % |  | 81 | % |  | 89 | % |  |

For the three months ended September 30, 2023, our Gross Loss Ratio was 59% compared with 110% for the three months ended September 30, 2022. The three months ended September 30, 2023 includes 11 percentage points of favorable PCS developments in the current quarter relating to events incurred in the first six months of the year due to reduced uncertainty in loss and loss adjustment expense. There was no PCS or Non-PCS prior year developments in the current quarter. The three months ended September 30, 2022 includes 52 percentage points related to Hurricane Ian, which was partially offset by prior year favorable developments of 8 percentage points for Non-PCS events and 10 percentage points for PCS events. The prior year quarter also includes 6 percentage points of favorable PCS developments in the prior years’ quarter relating to events incurred in the first six months of the prior year.
For the nine months ended September 30, 2023, our Gross Loss Ratio was 81% net of a prior year favorable development of 2 percentage points relating to Non-PCS events and 1 percentage point relating to PCS events, compared with 89% net of a prior year favorable development of 10 percentage points for Non-PCS events and 9 percentage points relating to PCS events for the nine months ended September 30, 2022.
Net Loss Ratio
Net loss ratio expressed as a percentage, is the ratio of the net losses and LAE to the net earned premium (in millions).

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022 |  |
Net Losses and LAE | $ | 36.5 |  |  | $ | 23.9 |  |  | $ | 150.9 |  |  | $ | 75.6 |  |  |
Net Earned Premium | 32.9 |  |  | 10.7 |  |  | 69.0 |  |  | 30.9 |  |  |
Net Loss Ratio | 111 | % |  | 223 | % |  | 219 | % |  | 245 | % |  |

For the three months ended September 30, 2023, our net loss ratio was 111% compared with 223% for the three months ended September 30, 2022. The three months ended September 30, 2023 includes 36 percentage points of favorable PCS developments in the current quarter relating to events incurred in the first six months of the year due to reduced uncertainty in loss and loss adjustment expense. There was no PCS or Non-PCS prior year
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developments in the current quarter. The three months ended September 30, 2022 includes 44 percentage points related to Hurricane Ian, which was partially offset by prior year favorable developments of 16 percentage points for Non-PCS events and 15 percentage points for PCS events. The prior year quarter also includes 24 percentage points of favorable PCS developments in the prior years’ quarter relating to events incurred in the first six months of the prior year. The decrease from the prior year quarter was also due to the positive impact of our underwriting and pricing actions on our Non-PCS losses, the increase in our net earned premium as a result of higher premium retention on our 2023 reinsurance treaty, and the growth of our total book of business.
For the nine months ended September 30, 2023, our net loss ratio was 219% compared with 245% for the nine months ended September 30, 2022. The decrease was due primarily to the positive impact of our underwriting and pricing actions on our Non-PCS losses, the increase in net earned premium as a result of higher premium retention on our 2023 reinsurance treaty, and the growth of our total book of business. This was partially offset by an increase in PCS catastrophic weather losses and other weather loss experience and loss participation features in our reinsurance treaties.
Segment Information

| Three Months Ended September 30, 2023
| ($ in millions)
| Services |  | Insurance-as-a-Service |  | Hippo Home Insurance Program |  | Intersegment Eliminations(1) |  | Total
Total Generated Premium | $ | 121.6 |  |  | $ | 141.8 |  |  | $ | 95.0 |  |  | $ | (54.7) |  |  | $ | 303.7 |
Total Revenue | 11.6 |  |  | 19.4 |  |  | 28.9 |  |  | (2.2) |  |  | 57.7 |
Adjusted operating income (loss) | (9.7) |  |  | 3.6 |  |  | (31.7) |  |  | (0.6) |  |  | (38.4) |

| Three Months Ended September 30, 2022
| ($ in millions)
| Services |  | Insurance-as-a-Service |  | Hippo Home Insurance Program |  | Intersegment Eliminations(1) |  | Total
Total Generated Premium | $ | 92.4 |  |  | $ | 82.6 |  |  | $ | 94.1 |  |  | $ | (49.2) |  |  | $ | 219.9 |
Total Revenue | 9.5 |  |  | 10.0 |  |  | 16.3 |  |  | (5.1) |  |  | 30.7 |
Adjusted operating income (loss) | (16.0) |  |  | 2.0 |  |  | (40.8) |  |  | — |  |  | (54.8) |

| Nine Months Ended September 30, 2023
| ($ in millions)
| Services |  | Insurance-as-a-Service |  | Hippo Home Insurance Program |  | Intersegment Eliminations(1) |  | Total
Total Generated Premium | $ | 337.6 |  |  | $ | 397.5 |  |  | $ | 289.4 |  |  | $ | (158.2) |  |  | $ | 866.3 |
Total Revenue | 32.8 |  |  | 48.6 |  |  | 71.0 |  |  | (7.2) |  |  | 145.2 |
Adjusted operating income (loss) | (30.3) |  |  | 11.5 |  |  | (157.9) |  |  | (1.6) |  |  | (178.3) |

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| Nine Months Ended September 30, 2022
| ($ in millions)
| Services |  | Insurance-as-a-Service |  | Hippo Home Insurance Program |  | Intersegment Eliminations(1) |  | Total
Total Generated Premium | $ | 255.9 |  |  | $ | 194.9 |  |  | $ | 266.2 |  |  | $ | (139.4) |  |  | $ | 577.6 |
Total Revenue | 25.8 |  |  | 25.0 |  |  | 45.6 |  |  | (12.5) |  |  | 83.9 |
Adjusted operating income (loss) | (35.6) |  |  | 3.8 |  |  | (127.3) |  |  | — |  |  | (159.1) |

(1)Intersegment eliminations include commissions paid from Hippo Home Insurance Program for policies sold by the Company’s Services segment (revenue, cost, and other adjustments in respective business units eliminated as part of consolidation). Intersegment eliminations also include premiums written between the segments.
Segment adjusted operating income (loss) is our primary segment profitability measure, and is calculated as segment revenue less operating expenses that are directly attributable to the segments. Refer to Note 17 of the accompanying consolidated financial statements for additional information on segments and a reconciliation of Segment adjusted operating income (loss) to net loss attributable to Hippo.
Services
For the three months ended September 30, 2023, our Services segment, which earns fees and/or commission income without assuming underwriting risk or need for reinsurance, had Total Generated Premium of $121.6 million, an increase of 32% from $92.4 million over the prior year quarter, while revenue was $11.6 million, an increase of 22% from $9.5 million over the prior year quarter. The growth was driven primarily by the growth in our builder channel for new and renewal business, as we maintain higher retention rates and experienced premium rate increases. The growth was also due to the growth in the total book of business in our aggregator channel. Our adjusted operating loss was $9.7 million, a decrease of 39% compared to a loss of $16.0 million in the prior year quarter, due primarily to a decrease in advertising costs and the increase in revenue noted above. These amounts were partially offset by increases in other operating expenses.
For the nine months ended September 30, 2023, our Services segment had Total Generated Premium of $337.6 million, an increase of 32% from $255.9 million over the prior year period, while revenue was $32.8 million, an increase of 27% from $25.8 million over the prior year period. The growth was driven primarily by the growth in our builder channel for new and renewal business, as we maintain higher retention rates and experienced premium rate increases. The growth was also due to the growth in the total book of business in our aggregator channel. Our adjusted operating loss was $30.3 million, a decrease of 15% compared to a loss of $35.6 million in the prior year period due primarily to the increase in revenue as noted above.
Insurance-as-a-Service
Our Insurance-as-a-Service segment, which through our carrier, Spinnaker, leverages our capital and insurance licenses to provide capacity to third party MGAs, creating diversified income through fees, underwriting profits, and investment income. For the three months ended September 30, 2023, Total Generated Premium was $141.8 million, an increase of 72% from $82.6 million over the prior year quarter, while revenue was $19.4 million, an increase of 94% from $10.0 million over the prior year quarter. The growth was driven primarily by the performance of existing programs. Adjusted operating income was $3.6 million, an increase of 80% compared to income of $2.0 million in the prior year quarter, due primarily to the increase in revenue mentioned above, partially offset by an increase in insurance related expenses due to the growth of the book of business.
For the nine months ended September 30, 2023, our Insurance-as-a-Service segment’s Total Generated Premium was $397.5 million, an increase of 104% from $194.9 million over the prior year period, while revenue was $48.6 million, an increase of 94% from $25.0 million over the prior year period. The growth was driven primarily by the performance of both new and existing programs. Adjusted operating income was $11.5 million, an increase of 203% compared to $3.8 million in the prior year period, due primarily to the increase in revenue
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mentioned above, partially offset by an increase in insurance related expenses due to the growth of the book of business.
Hippo Home Insurance Program
For the three months ended September 30, 2023, our Hippo Homeowners Insurance Program had Total Generated Premium of $95.0 million, an increase of 1% from $94.1 million over the prior year quarter, while revenue was $28.9 million, an increase of 77% from $16.3 million over the prior year quarter. The increase in revenue was due primarily to higher earned premiums, partially offset by a decrease in commission income, net, reflecting changes in our 2023 reinsurance treaties, resulting in higher premium retention, and achieving planned premium rate increases. The increase in revenue from net earned premiums was partially offset by an increased cost of XOL premiums for our catastrophic coverage which results in an increase in ceded earned premium and lower net earned premium. We purchased XOL to cover events in excess of per occurrence limits based on the expected growth in exposure during the year. For the three months ended September 30, 2023 and 2022, $7.4 million and $9.7 million, respectively, was offset against earned premium for XOL. Adjusted operating loss was $31.7 million in the quarter, a decrease of 22% compared to a loss of $40.8 million in the prior year quarter. The decrease in adjusted operating loss was due primarily to the increase in revenue noted above.
Based in part on the second quarter impact of PCS cat losses of $109.9 million on a gross basis and $50.9 million on a net basis, we began taking decisive actions to reduce our future exposure to wind and hail, with the explicit goal of reducing the volatility of our financial results. Our aim is to materially reduce our exposure to the hail and storm risks which have caused a disproportionate portion of our losses to date. We have temporarily put on hold the underwriting of new premiums nationwide for our HO3 product as we re-examine our risk appetite in light of observed changes in weather and climate activity. For renewals, we are implementing actions that include increasing deductibles for wind and hail perils, selectively non-renewing policies in high-risk regions, and increasing the rates we charge for cat-exposed properties across our portfolio. We expect these actions will result in Total Generated Premium declines in 2024.
In addition, we have taken steps during the quarter to reduce our Hippo Home Insurance Program’s dependence on the reinsurance market and the costs associated with not retaining the risk we underwrite on our own balance sheet, including the catastrophe bonds noted in our reinsurance disclosures above.
For the nine months ended September 30, 2023, our Hippo Homeowners Insurance Program had Total Generated Premium of $289.4 million, an increase of 9% from $266.2 million over the prior year period, while revenue was $71.0 million, an increase of 56% from $45.6 million over the prior year period. The increase in revenue was due primarily to higher earned premiums, partially offset by a decrease in commission income, net, reflecting changes in our 2023 reinsurance treaties, resulting in higher premium retention, and achieving planned premium rate increases. There was also an increase in investment income due to an increase in yields. The increase in revenue from net earned premiums was partially offset by an increased cost of XOL premiums for our catastrophic coverage, which results in an increase in ceded earned premium and lower net earned premium. We purchased XOL to cover events in excess of per occurrence limits based on the expected growth in exposure during the year. For the nine months ended September 30, 2023 and 2022, $23.3 million and $21.3 million, respectively, was offset against earned premium for XOL. Adjusted operating loss was $157.9 million, an increase of 24% compared to a loss of $127.3 million in the prior year period. The increase in adjusted operating loss was due primarily to an increase in PCS catastrophic weather and other weather loss experience and our loss participation features primarily due to five major wind and hail events in Colorado and Texas during the second quarter of 2023, partially offset by an increase in earned premium as noted above.
Hippo Home Insurance Program Gross Loss Ratio
Hippo Home Insurance Program Gross Loss Ratio (“HPGLR”) is a key performance indicator that represents our underwriting operational performance for the entire Total Generated Premium underwritten by Hippo as part of the Hippo Home Insurance Program. This ratio includes losses and premiums written and placed on Spinnaker (our carrier) as well as other carriers for Hippo policies (policies underwritten by the Hippo MGA). For
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the periods presented, changes in this ratio also impact our ceding commission revenue and loss participation features in our reinsurance treaties, which is included in loss and loss adjustment expense on our consolidated statements of operations and comprehensive loss. This ratio is also used by our reinsurers and other carriers to make business decisions relating to the capacity of reinsurance and amount of ceding commission that would be available to Hippo. The lower the ratio, the better the economics for Hippo.

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
| Hippo Home Insurance Program
Non-PCS | 69 | % |  | 73 | % |  | 63 | % |  | 69 | %
PCS | 6 | % |  | 7 | % |  | 55 | % |  | 22 | %
HPGLR | 75 | % |  | 80 | % |  | 118 | % |  | 91 | %

For the three and nine months ended September 30, 2023 HPGLR was 75% and 118%, respectively, compared to 80% and 91% in the prior year. Excluding the impact of prior year reserve releases, HPGLR was 75% and 121%, respectively, compared to 101% and 116% in the prior year.
Excluding the impact of prior year reserve releases, the PCS component of HPGLR for the three and nine months ended September 30, 2023 was 6% and 56%, respectively, compared to 19% and 34% in the prior year. The decrease for the three-month period was primarily due to losses related to Hurricane Ian in the prior year period. The increase for the nine-months period reflected catastrophes in the first half of the year primarily due to hail and wind, unusually heavy rains, and snow in parts of California, our second largest market.
Excluding the impact of prior year reserve releases, the Non-PCS component of HPGLR for the three and nine months ended September 30, 2023 was 69% and 65%, respectively, compared to 82% and 82% in the prior year. This represents a decrease of 13 percentage points and 17 percentage points, respectively. The decrease reflected the benefits of the pricing and underwriting actions we took in calendar years 2022 and 2023. We expect continued improvement as these actions have more time to impact our financial results.
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Results of Operations
The following table sets forth our consolidated results of operations data for the periods presented (in millions, except percent data):

| Three Months Ended |  |  |  |  |  | Nine Months Ended |  |  |  |
| September 30, |  |  |  |  |  | September 30, |  |  |  |
| 2023 |  | 2022 |  | Change |  | % Change |  | 2023 |  | 2022 |  | Change |  | % Change
Revenue: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net earned premium | $ | 32.9 |  |  | $ | 10.7 |  |  | $ | 22.2 |  |  | 207 | % |  | 69.0 |  | 30.9 |  |  | $ | 38.1 |  |  | 123 | %
Commission income, net | 14.2 |  |  | 14.3 |  |  | (0.1) |  |  | (1) | % |  | 47.8 |  | 38.7 |  |  | 9.1 |  |  | 24 | %
Service and fee income | 4.9 |  |  | 3.2 |  |  | 1.7 |  |  | 53 | % |  | 11.9 |  | 10.3 |  |  | 1.6 |  |  | 16 | %
Net investment income | 5.7 |  |  | 2.5 |  |  | 3.2 |  |  | 128 | % |  | 16.5 |  | 4.0 |  |  | 12.5 |  |  | 313 | %
Total revenue | 57.7 |  |  | 30.7 |  |  | 27.0 |  |  | 88 | % |  | 145.2 |  | 83.9 |  |  | 61.3 |  |  | 73 | %
Expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Losses and loss adjustment expenses | 36.5 |  |  | 23.9 |  |  | 12.6 |  |  | 53 | % |  | 150.9 |  | 75.6 |  |  | 75.3 |  |  | 100 | %
Insurance related expenses | 20.3 |  |  | 15.6 |  |  | 4.7 |  |  | 30 | % |  | 54.8 |  | 46.2 |  |  | 8.6 |  |  | 19 | %
Technology and development | 11.9 |  |  | 14.8 |  |  | (2.9) |  |  | (20) | % |  | 36.6 |  | 46.0 |  |  | (9.4) |  |  | (20) | %
Sales and marketing | 18.9 |  |  | 29.4 |  |  | (10.5) |  |  | (36) | % |  | 63.9 |  | 73.7 |  |  | (9.8) |  |  | (13) | %
General and administrative | 20.7 |  |  | 19.0 |  |  | 1.7 |  |  | 9 | % |  | 62.0 |  | 53.7 |  |  | 8.3 |  |  | 15 | %
Impairment and restructuring charges | — |  |  | 55.3 |  |  | (55.3) |  |  | N/A |  | — |  |  | 55.3 |  |  | (55.3) |  |  | N/A
Interest and other (income) expense | — |  |  | (0.1) |  |  | 0.1 |  |  | (100) | % |  | 0.5 |  | (1.4) |  |  | 1.9 |  |  | (136) | %
Total expenses | 108.3 |  |  | 157.9 |  |  | (49.6) |  |  | (31) | % |  | 368.7 |  | 349.1 |  |  | 19.6 |  |  | 6 | %
Loss before income taxes | (50.6) |  |  | (127.2) |  |  | 76.6 |  |  | (60) | % |  | (223.5) |  |  | (265.2) |  |  | 41.7 |  |  | (16) | %
Income tax expense | (0.3) |  |  | 0.3 |  |  | (0.6) |  |  | (200) | % |  | 0.2 |  |  | 0.8 |  |  | (0.6) |  |  | (75) | %
Net loss | (50.3) |  |  | (127.5) |  |  | 77.2 |  |  | (61) | % |  | (223.7) |  |  | (266.0) |  |  | 42.3 |  |  | (16) | %
Net income attributable to noncontrolling interests, net of tax | 2.8 |  |  | 1.7 |  |  | 1.1 |  |  | 65 | % |  | 7.1 |  |  | 4.3 |  |  | 2.8 |  |  | 65 | %
Net loss attributable to Hippo | $ | (53.1) |  |  | $ | (129.2) |  |  | $ | 76.1 |  |  | (59) | % |  | (230.8) |  |  | (270.3) |  |  | $ | 39.5 |  |  | (15) | %
Other comprehensive income (loss): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Change in net unrealized gain on available-for-sale securities, net of tax | (0.7) |  |  | (2.9) |  |  | 2.2 |  |  | (76) | % |  | (0.1) |  |  | (7.1) |  |  | 7.0 |  |  | (99) | %
Comprehensive loss attributable to Hippo | $ | (53.8) |  |  | $ | (132.1) |  |  | $ | 78.3 |  |  | (59) | % |  | (230.9) |  |  | (277.4) |  |  | $ | 46.5 |  |  | (17) | %

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Comparison of the Three and Nine Months Ended September 30, 2023 and 2022
Net Earned Premium
For the three months ended September 30, 2023, net earned premium was $32.9 million, an increase of $22.2 million compared to $10.7 million for the three months ended September 30, 2022. This increase was due primarily to increases in gross earned premium due to year-over-year growth of our total book of business and higher retention of earned premium due to our 2023 reinsurance treaty, partially offset by an increased cost of XOL premiums for our catastrophic coverage which results in an increase in ceded earned premium and lower net earned premium. We purchased XOL to cover events in excess of per occurrence limits based on the expected growth in exposure during the year. For the three months ended September 30, 2023 and 2022, $14.3 million and $1.8 million, respectively, was offset against earned premium for XOL.
For the nine months ended September 30, 2023, net earned premium was $69.0 million, an increase of $38.1 million compared to $30.9 million for the nine months ended September 30, 2022. This increase was due primarily to increases in gross earned premium due to year-over-year growth of our total book of business and higher retention of earned premium due to our 2023 reinsurance treaty, partially offset by an increased cost of XOL premiums for our catastrophic coverage which results in an increase in ceded earned premium and lower net earned premium. We purchased XOL to cover events in excess of per occurrence limits based on the expected growth in exposure during the year. For the three months ended September 30, 2023 and 2022, $39.9 million and $16.3 million, respectively, was offset against earned premium for XOL.
The following table presents gross written premium, ceded written premium, net written premium, change in unearned premium, and net earned premium for the three and nine months ended September 30, 2023 and 2022 (in millions).

| Three Months Ended |  |  |  | Nine Months Ended |  |
| September 30, |  |  |  | September 30, |  |
| 2023 |  | 2022 |  | Change |  | 2023 |  | 2022 |  | Change
Gross written premium | $ | 229.5 |  |  | $ | 173.3 |  |  | $ | 56.2 |  |  | $ | 663.6 |  |  | $ | 452.2 |  |  | $ | 211.4 |
Ceded written premium | (178.0) |  |  | (167.3) |  |  | (10.7) |  |  | (559.8) |  |  | (430.9) |  |  | (128.9) |
Net written premium | 51.5 |  |  | 6.0 |  |  | 45.5 |  |  | 103.8 |  |  | 21.3 |  |  | 82.5 |
Change in unearned premium | (18.6) |  |  | 4.7 |  |  | (23.3) |  |  | (34.8) |  |  | 9.6 |  |  | (44.4) |
Net earned premium | $ | 32.9 |  |  | $ | 10.7 |  |  | $ | 22.2 |  |  | $ | 69.0 |  |  | $ | 30.9 |  |  | $ | 38.1 |

Commission Income, Net
For the three months ended September 30, 2023, commission income was $14.2 million, a decrease of $0.1 million, or 1%, compared to $14.3 million for the three months ended September 30, 2022. The decrease was due primarily to a decrease in ceding commissions, including fronting fees, of $2.2 million, which was partially offset by an increase in agency commissions of $1.6 million.
For the nine months ended September 30, 2023, commission income was $47.8 million, an increase of $9.1 million, or 24%, compared to $38.7 million for the nine months ended September 30, 2022. The increase was due primarily to an increase in agency commissions of $5.0 million, as well as an increase in ceding commissions, including fronting fees, of $3.3 million, both of which grew due to the year-over-year growth of our total book of business.
Service and Fee Income
For the three months ended September 30, 2023, service and fee income was $4.9 million, an increase of $1.7 million, or 53%, compared to $3.2 million for the three months ended September 30, 2022. The increase was due primarily to an increase in non-inspection policy fees and fee sharing arrangements.
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For the nine months ended September 30, 2023, service and fee income was $11.9 million, an increase of $1.6 million, or 16%, compared to $10.3 million for the nine months ended September 30, 2022. The increase was due primarily to an increase in non-inspection policy fees and fee sharing arrangements.
Net Investment Income
For the three months ended September 30, 2023, net investment income was $5.7 million, an increase of $3.2 million, compared to $2.5 million for the three months ended September 30, 2022. The increase was due primarily to an increase in yields and diversification. We are mainly invested in money market accounts, securities issued by the U.S. government and agencies, high-grade corporate securities, residential and commercial mortgage-backed securities, and other governmental related securities.
For the nine months ended September 30, 2023, net investment income was $16.5 million, an increase of $12.5 million, compared to $4.0 million for the nine months ended September 30, 2022. The increase was due primarily to an increase in yields and diversification. We are mainly invested in money market accounts, securities issued by the U.S. government and agencies, high-grade corporate securities, residential and commercial mortgage-backed securities, and other governmental related securities.
Loss and Loss Adjustment Expenses
For the three months ended September 30, 2023, loss and loss adjustment expenses were $36.5 million, an increase of $12.6 million, compared to $23.9 million for the three months ended September 30, 2022. The increase was due primarily to an increase in losses due to the growth of our total book of business and higher premium retention rates.
For the nine months ended September 30, 2023, loss and loss adjustment expenses were $150.9 million, an increase of $75.3 million, compared to $75.6 million for the nine months ended September 30, 2022. The increase was due primarily to an increase in PCS catastrophic weather and other weather loss experience and our loss participation features as well as an increase in our total book of business and higher premium retention rates.
Insurance Related Expenses
For the three months ended September 30, 2023, insurance related expenses were $20.3 million, an increase of $4.7 million, or 30%, compared to $15.6 million for the three months ended September 30, 2022. The increase was due primarily to an increase in amortization of deferred direct acquisition costs of $5.4 million due to the growth of our business.
For the nine months ended September 30, 2023, insurance related expenses were $54.8 million, an increase of $8.6 million, or 19%, compared to $46.2 million for the nine months ended September 30, 2022. The increase was due primarily to an increase in amortization of deferred direct acquisition costs of $6.6 million due to the
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growth of our business and an increase in amortization expense attributable to capitalized internal use software of $3.1 million.
The primary components of insurance related expenses are listed below (in millions):

| Three Months Ended |  | Nine Months Ended |
| September 30, |  | September 30, |
| 2023 |  | 2022 |  | 2023 |  | 2022 |
Amortization of deferred direct acquisition costs, net | $ | 7.3 |  |  | $ | 1.9 |  |  | $ | 20.2 |  |  | 13.6 |
Employee-related costs | 3.0 |  |  | 3.4 |  |  | 9.4 |  |  | 9.3 |
Underwriting costs | 2.5 |  |  | 1.9 |  |  | 6.5 |  |  | 6.0 |
Amortization of capitalized internal use software | 3.4 |  |  | 2.4 |  |  | 9.4 |  |  | 6.3 |
Other | 4.1 |  |  | 6.0 |  | 9.3 |  |  | 11.0 |
Total | $ | 20.3 |  |  | $ | 15.6 |  |  | $ | 54.8 |  |  | $ | 46.2 |  |

Direct acquisition costs were $24.3 million and $60.3 million for the three and nine months ended September 30, 2023, of which $17.0 million and $40.1 million were offset by ceding commission income.
Direct acquisition costs were $11.0 million and $41.5 million for the three and nine months ended September 30, 2022, of which $9.1 million and $27.9 million were offset by ceding commission income.
Technology and Development Expenses
For the three months ended September 30, 2023, technology and development expenses were $11.9 million, a decrease of $2.9 million, or 20%, compared to $14.8 million for the three months ended September 30, 2022. The decrease was due primarily to a decrease in stock-based compensation of $2.3 million, driven by performance RSUs related to an acquisition fully vesting in the prior year. The decrease was also due to an increase in capitalized internal use software costs of $1.1 million.
For the nine months ended September 30, 2023, technology and development expenses were $36.6 million, a decrease of $9.4 million, or 20%, compared to $46.0 million for the nine months ended September 30, 2022. The decrease was due primarily to a decrease in stock-based compensation of $5.8 million, driven by performance RSUs related to an acquisition fully vesting in the prior year. The decrease was also due to a decrease in consultants costs of $2.1 million.
Sales and Marketing Expenses
For the three months ended September 30, 2023, sales and marketing expenses were $18.9 million, a decrease of $10.5 million, or 36%, compared to $29.4 million for the three months ended September 30, 2022. The decrease was due primarily to a decrease in advertising costs of $8.2 million and a decrease in employee-related costs of $1.6 million, including a decrease stock-based compensation of $0.7 million.
For the nine months ended September 30, 2023, sales and marketing expenses were $63.9 million, a decrease of $9.8 million, or 13%, compared to $73.7 million for the nine months ended September 30, 2022. The decrease was due primarily to a decrease in advertising costs of $9.3 million and a decrease in employee-related costs of $1.7 million. These decreases were partially offset by an increase in stock-based compensation of $1.9 million.
General and Administrative Expenses
For the three months ended September 30, 2023, general and administrative expenses were $20.7 million, an increase of $1.7 million, or 9%, compared to $19.0 million for the three months ended September 30, 2022. The increase was due primarily to an increase in legal and consulting fees of $1.3 million.
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For the nine months ended September 30, 2023, general and administrative expenses were $62.0 million, an increase of $8.3 million, or 15%, compared to $53.7 million for the nine months ended September 30, 2022. The increase was due primarily to an increase in stock-based compensation of $5.5 million, partially driven by a charge due to the repricing of options during the first quarter of 2023. There was also an increase in legal costs of $2.5 million.
Impairment and Restructuring Charges
Impairment and restructuring charges were $55.3 million in the three and nine months ended September 30, 2022, respectively. The charges consisted of $53.5 million related to the impairment of goodwill and $1.8 million related to severance and other personnel costs associated with a reduction in workforce. We review goodwill for impairment annually on October 1 and more frequently if events or changes in circumstances indicate that an impairment may exist (“a triggering event”). During the three months ended September 30, 2022, management identified quantitative and qualitative factors that collectively indicated we had a triggering event, mainly due to the sustained decrease in stock price and continued deterioration of general macroeconomic conditions. Based on these events, we concluded that a triggering event occurred and performed an interim quantitative impairment test as of September 30, 2022. Based upon the results of the impairment test, we recognized the goodwill impairment charge. There were no impairment and restructuring expenses for the three and nine months ended September 30, 2023 .
Interest and Other (Income) Expense
For the three months ended September 30, 2023, other expense was $0.0 million compared to income of $0.1 million for the three months ended September 30, 2022.
For the nine months ended September 30, 2023, other expense was $0.5 million compared to income of $1.4 million for the nine months ended September 30, 2022. The decrease in other income was due primarily to changes in the fair market value on the outstanding public and private placement warrants of $2.6 million, partially offset by a decrease in other expenses of $0.8 million.
Income Taxes
For the three months ended September 30, 2023, income tax expense was $0.3 million, an increase of $0.6 million compared to an expense of $0.3 million for the three months ended September 30, 2022.
For the nine months ended September 30, 2023, income tax expense was $0.2 million, a decrease of $0.6 million compared to an expense of $0.8 million for the nine months ended September 30, 2022.
Net Loss Attributable to Hippo
Net loss attributable to Hippo is calculated in accordance with GAAP as total revenue less total expenses and taxes and net of net income attributable to noncontrolling interest, net of tax.
For the three months ended September 30, 2023, net loss attributable to Hippo was $53.1 million, an increase of $76.1 million compared to $129.2 million for the three months ended September 30, 2022 due to the factors described above.
For the nine months ended September 30, 2023, net loss attributable to Hippo was $230.8 million, an increase of $39.5 million compared to $270.3 million for the nine months ended September 30, 2022 due to the factors described above.
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Liquidity and Capital Resources
Sources of Liquidity
Our existing sources of liquidity include cash and cash equivalents and marketable securities. As of September 30, 2023, we had $269.4 million of cash and restricted cash and $330.0 million of available-for-sale fixed income securities and short-term investments.
In addition, we are a member of the Federal Home Loan Bank (FHLB) of New York, which provides secured borrowing capacity. Our borrowing capacity as of September 30, 2023, is $13.9 million, and there were no outstanding amounts under this agreement.
To date, we have funded operations primarily with issuances of convertible preferred stock, convertible promissory notes, and from net proceeds from a private placement transaction in connection with the Business Combination, the Business Combination, and revenue. Until we can generate sufficient revenue and other income to cover operating expenses, working capital and capital expenditures, we expect the funds raised as discussed above to fund our cash needs. Our capital requirements depend on many factors, including the volume of issuances of insurance policies, the timing and extent of spending to support research and development efforts, investments in information technology systems, and the expansion of sales and marketing activities. In the future, we may raise additional funds through the issuance of debt or equity securities or through borrowing. We cannot assure that such funds will be on favorable terms, or available at all.
Cash Flow Summary
The following table summarizes our cash flows for the periods presented (in millions):

| Nine Months Ended |  |
| September 30, |  |
| 2023 |  | 2022 |  | Change
Net cash provided by (used in): |  |  |  |  |
Operating activities | $ | (43.9) |  |  | $ | (131.4) |  |  | $ | 87.5 |
Investing activities | $ | 79.6 |  |  | $ | (290.7) |  |  | $ | 370.3 |
Financing activities | $ | (10.8) |  |  | $ | (3.7) |  |  | $ | (7.1) |

Operating Activities
Cash used in operating activities represents payments for our operations including, payroll, loss and loss adjusted expenses and marketing activities. Cash used in operating activities was $43.9 million for the nine months ended September 30, 2023, a decrease of $87.5 million, from $131.4 million for the nine months ended September 30, 2022. Our cash used in operations was lower than last year mainly due to an increase in revenues as well as working capital changes that benefited cash, partially offset by an increase in our loss and loss adjustment expenses.
Investing Activities
Cash provided by investing activities was $79.6 million for the nine months ended September 30, 2023, due primarily to the maturities and sales of investment securities, partially offset by purchases of investment securities and an office building.
Cash used in investing activities was $290.7 million for the nine months ended September 30, 2022, due primarily to purchases of investment securities partially offset by maturities and sales of investment securities.
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Financing Activities
Cash used in financing activities was $10.8 million for the nine months ended September 30, 2023, primarily driven by distributions to noncontrolling interests, repurchases of shares, taxes paid related to net share settlement of RSUs, and payments of contingent consideration, partially offset by proceeds from common stock issuances.
Cash used in financing activities was $3.7 million for the nine months ended September 30, 2022, primarily driven by taxes paid related to net share settlement of RSUs and payments of contingent consideration, partially offset by proceeds from common stock issuances.
Material Cash Requirements
Our material cash requirements from known contractual and other obligations primarily relate to purchase commitments, lease payments, and unpaid loss and loss adjustment expense. There have been no material changes to our contractual obligations from those described in the Annual Report on Form 10-K for the year ended December 31, 2022, other than an increase in Unpaid Loss and Loss Adjustment Expense. The estimation of the unpaid losses and loss adjustment expenses is based on various complex and subjective judgments. Actual losses paid may differ, perhaps significantly, from the reserve estimates reflected in our consolidated financial statements. Similarly, the timing of payment of our estimated losses is not fixed and there may be significant changes in actual payment activity. The assumptions used in estimating the likely payments due by period are based on our historical claims payment experience and industry payment patterns, but due to the inherent uncertainty in the process of estimating the timing of such payments, there is a risk that the amounts paid can be significantly different from the amounts disclosed.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts in our consolidated financial statements. We evaluate our estimates on an on-going basis, including those related to our revenue, loss and loss adjustment expense reserve, recoverability of our net deferred tax asset, and intangible assets. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Although actual results have historically been reasonably consistent with management’s expectations, the actual results may differ from these estimates, or our estimates may be affected by different assumptions or conditions.
Recent Accounting Pronouncements
The information set forth under Note 1 to the consolidated financial statements under the caption “Description of Business and Summary of Significant Accounting Policies” is incorporated herein by reference.
Emerging Growth Company Status
We currently qualify as an “emerging growth company” under the JOBS Act. Accordingly, we are provided the option to adopt new or revised accounting guidance either (1) within the same periods as those otherwise applicable to non-emerging growth companies or (2) within the same time periods as private companies.
We have elected to adopt new or revised accounting guidance within the same time period as private companies, unless management determines that it is preferable to take advantage of early adoption provisions offered within the applicable guidance. Our utilization of these transition periods may make it difficult to compare our financial statements to those of non-emerging growth companies and other emerging growth companies that have opted out of the transition periods afforded under the JOBS Act.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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For financial market risks related to changes in interest rates, refer to Item 7A “Quantitative and Qualitative Disclosures About Market Risk” contained in Part II of our Annual Report on Form 10-K for the year ended December 31, 2022. Our exposure to market risk has not changed significantly since December 31, 2022.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our chief executive officer and our chief financial officer, has concluded, based upon its evaluation as of the end of the period covered by this report, that the Company’s “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), are effective in providing reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosures.
In designing and evaluating the disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures and internal control over financial reporting must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Changes in Internal Control Over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the most recently completed fiscal quarter covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The information set forth under Note 12 Commitments and Contingencies in the notes to the consolidated financial statements under the caption “Legal Proceedings” is incorporated herein by reference.
ITEM 1A. RISK FACTORS
There have been no material changes from the risk factors previously disclosed under the heading “Risk Factors” in the Company's Annual Report on Form 10-K for the year ended December 31, 2022.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Company Purchases of Equity Securities
The following table provides information with respect to purchases of our common stock by the Company or any “affiliated purchaser” as defined in Rule 10b-18(a)(3) under the Exchange Act, during the three months ended September 30, 2023.

Period |  | Total Number of Shares Purchased(1) |  | Average Price Paid per Share(2) |  | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |  | Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
|  | (in millions, except share and per share data)
July 1 through July 31, 2023 |  | — |  |  | $ | — |  |  | — |  |  |
August 1 through August 31, 2023 |  | — |  |  | $ | — |  |  | — |  |  |
September 1 through September 30, 2023 |  | — |  |  | $ | — |  |  | — |  |  |
Total |  | — |  |  |  |  |  |  | $ | 48.2 |

(1) In March 2023, the Company’s Board of Directors authorized a share repurchase program to purchase up to $50.0 million of the Company’s common stock, with no expiration date. Repurchases under the program may be made in the open market, in privately negotiated transactions or otherwise, with the amount and timing of repurchases to be determined at the Company’s discretion depending on market conditions and corporate needs. This program does not obligate the Company to acquire any particular amount of its common stock, and may be modified, suspended or terminated at any time at the Company’s discretion.
(2) Includes direct costs incurred to acquire the shares.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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ITEM 5. OTHER INFORMATION
Not applicable.
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ITEM 6. EXHIBITS

Exhibit Number |  | Description
31.1 |  | Certification of Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2 |  | Certification of Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1 |  | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.#
32.2 |  | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.#
101.INS |  | XBRL Instance Document*
101.SCH |  | XBRL Taxonomy Extension Schema Document*
101.CAL |  | XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF |  | XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB |  | XBRL Taxonomy Extension Label Linkbase Document*
101.PRE |  | XBRL Taxonomy Extension Presentation Linkbase Document*
Exhibit 104 |  | Cover Page Interactive Data File (embedded within the Inline XBRL document).
* |  | Filed herewith.
# |  | Exhibits 32.1 and 32.2 are being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall such exhibits be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act or the Exchange Act, except as otherwise specifically stated in such filing.

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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on November 2, 2023.

| HIPPO HOLDINGS INC.
| By: | /s/ Richard McCathron
| Name: | Richard McCathron
| Title: | Chief Executive Officer
| By: | /s/ Stewart Ellis
| Name: | Stewart Ellis
| Title: | Chief Financial Officer

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