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Loss and Loss Adjustment Expense Reserves

12 Months Ended

Dec. 31, 2023

Insurance [Abstract]

Loss and Loss Adjustment Expense Reserves

10. Loss and Loss Adjustment Expense Reserves

The reconciliation of the beginning and ending reserve balances for losses and loss adjustment expenses, net of reinsurance is summarized as follows for the years ended December 31, (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
Reinsurance recoverables on unpaid losses and LAE			(228.8)						(216.8)
Reserve for losses and LAE, net of reinsurance recoverables as of beginning of the period			65.0						44.0
Add: Incurred losses and LAE, net of reinsurance, related to:
Current year			183.7						113.2
Prior years			(2.0)						(11.8)
Total incurred			181.7						101.4
Deduct: Loss and LAE payments, net of reinsurance, related to:
Current year			127.5						56.7
Prior year			18.1						23.7
Total paid			145.6						80.4
Reserve for losses and LAE, net of reinsurance recoverables at end of period			101.1						65.0
Add: Reinsurance recoverables on unpaid losses and LAE at end of period			221.4						228.8
Reserve for losses and LAE gross of reinsurance recoverables on unpaid losses and LAE as of end of the period			$	322.5					$	293.8

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 $2.0 million and $11.8 million for the years ended December 31, 2023 and 2022, respectively. The prior period development in 2023 of $2.0 million was driven primarily by favorable net loss development relating to the 2022 accident year, resulting in a net release of $2.1 million from catastrophe reserves. These changes are primarily a result of ongoing analysis of claims emergence patterns and loss trends. The prior period development in 2022 of $11.8 million was driven primarily by favorable net loss development relating to the 2021 accident year, resulting in a net release of $5.8 million from attritional reserves and $6.0 million from catastrophe reserves. These changes are primarily a result of ongoing analysis of claims emergence patterns and loss trends.

The following tables present information about incurred and paid loss development as of December 31, 2023, net of reinsurance, as well as cumulative claim frequency and the total of IBNR reserves. For the purpose of defining claims frequency, the number of reported claims is by loss occurrence and does not include claims that do not result in indemnification of loss. The Company presents incurred and paid claims development consistent with its GAAP reportable segments (Refer to Note 22, Segments). The information about incurred and paid claims development for the years ended prior to December 31, 2023 is presented as unaudited supplementary information.

In addition, the following tables show incurred loss and LAE by accident year in aggregate (in millions, except for number of claims):

Insurance-as-a-Service Incurred Loss and LAE, Net of Reinsurance

																																				December 31, 2023
						2019*						2020*						2021*						2022*						2023						IBNR						Cumulative Number of Reported Claims
Accident Year
2019						4.8						4.8						4.7						4.8						4.9						—						7,963
2020												7.6						7.4						9.3						8.9						0.1						16,667
2021																		6.9						3.8						3.5						0.2						16,481
2022																								13.7						12.4						0.8						21,422
2023																														15.4						5.3						22,380
Total incurred Loss and Loss Adjustment Expenses, net																														$	45.1					$	6.4					84,913
* Presented as unaudited required supplementary information

Insurance-as-a-Service Cumulative Paid Loss and LAE, Net of Reinsurance

						2019*						2020*						2021*						2022*						2023
Accident Year
2019						3.2						4.4						4.6						4.7						4.7
2020												4.6						8.0						8.4						8.6
2021																		0.4						2.8						3.1
2022																								5.0						10.7
2023																														7.9
Total paid losses and LAE, net																														$	35.0
Total unpaid loss and LAE reserves, net																														10.1
Unpaid loss and LAE reserves for years prior to 2019, net																														$	0.3
Ceded unpaid loss and LAE																														$	135.4
Gross unpaid loss and LAE																														$	145.8
* Presented as unaudited required supplementary information

Insurance-as-a-Service Average Annual Percentage Payout of Incurred Loss By Age, Net of Reinsurance (Unaudited Supplementary Information)

The following table presents the average annual percentage payout of incurred losses by age, net of reinsurance as of December 31, 2023:

Years						1						2						3						4						5
Property and Casualty						50%						40%						3%						3%						4%

Hippo Home Insurance Program Incurred Loss and LAE, Net of Reinsurance

			December 31,																																	December 31, 2023
						2019*						2020*						2021*						2022*						2023						IBNR						Cumulative Number of Reported Claims
Accident Year
2019						—						—						—						—						—						—						6,973
2020												20.9						20.7						20.6						20.7						0.2						13,555
2021																		69.9						59.7						58.0						2.6						24,459
2022																								80.6						81.5						30.3						24,109
2023																														153.2						32.9						21,079
Total incurred Loss and Loss Adjustment Expenses, net																														$	313.4					$	66.0					90,175
* Presented as unaudited required supplementary information

Hippo Home Insurance Program Cumulative Paid Loss and LAE, Net of Reinsurance

						2019*						2020*						2021*						2022*						2023
Accident Year
2019						—						—						—						—						—
2020												12.5						18.8						20.1						20.2
2021																		34.9						53.0						54.3
2022																								33.3						43.5
2023																														104.7
Total paid losses and LAE, net																														$	222.7
Total unpaid loss and LAE reserves, net																														90.7
Ceded unpaid loss and LAE																														$	83.7
Gross unpaid loss and LAE																														$	174.4
* Presented as unaudited required supplementary information

Hippo Home Insurance Program Average Annual Percentage Payout of Incurred Loss By Age, Net of Reinsurance (Unaudited Supplementary Information)

The following table presents the average annual percentage payout of incurred losses by age, net of reinsurance as of December 31, 2023:

Years						1						2						3						4						5
Property and Casualty						55%						23%						18%						2%						2%

The reconciliation of the net incurred and paid loss information in the loss reserve rollforward table and development tables with respect to the current accident year is as follows (in millions):

			2023 Current Accident Year												2022 Current Accident Year
			Incurred						Paid						Incurred						Paid
Development table
Insurance-as-a-Service			15.4						7.9						13.7						5.0
Hippo Home Insurance Program			153.2						104.7						80.6						33.3
Unallocated loss adjustment expense
Insurance-as-a-Service			0.9						0.9						—						—
Hippo Home Insurance Program			14.1						14.1						18.9						18.9
Other			0.1						(0.1)						—						(0.5)
Rollforward table			$	183.7					$	127.5					$	113.2					$	56.7

Reconciliation of Reinsurance Recoverables

			As of December 31, 2023
Net outstanding liabilities from development tables
Insurance-as-a-Service			$	10.4
Hippo Home Insurance Program			90.7
Reserve for losses and LAE, net of reinsurance recoverables at end of period			101.1
Recoverables
Insurance-as-a-Service			135.4
Hippo Home Insurance Program			83.7
Unallocated loss adjustment expense			2.3
Reinsurance recoverables on unpaid losses and LAE at end of period			221.4
Reserve for losses and LAE gross of reinsurance recoverables on unpaid losses and LAE as of end of the period			$	322.5

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- Definition

The entire disclosure for the types of coverages and products sold, and the assets, obligations, recorded liabilities, revenues and expenses arising therefrom, and the amounts of and methodologies and assumptions used in determining the amounts of such items.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 944
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 7
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479838/944-20-50-7

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 944
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//944/tableOfContent

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 944
-SubTopic 310
-Name Accounting Standards Codification
-Section 50
-Paragraph 3
-Subparagraph (c)(4)(ii)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479584/944-310-50-3

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 944
-SubTopic 310
-Name Accounting Standards Codification
-Section 50
-Paragraph 3
-Subparagraph (c)(4)(iv)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479584/944-310-50-3

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