HIPO - Hippo Holdings boosts 2022 loss ratio guidance cuts revenue TGP outlook

Hippo Holdings ( NYSE: HIPO ) stock initially rose ~12% in Thursday after-hours trading after the insurance app company issued an improved outlook for its gross loss ratio. But it also cut 2022 guidance for total generated premium and revenue. By about 4:25 PM ET, the gain had vanished.

Its guidance for gross loss ratio improved to below 90% vs. its previous outlook for 100%.

The company expects total generated premium of $790M-$810M in 2022, down from its previous range of $800M-$820M, and now representing an increase of 30% from 2021.

Revenue guidance for the year fell to $119M-$121M from its prior range of $140M-$142M, and is well below the consensus estimate of $136.2M.

In addition, Hippo ( HIPO ) said it ended the first half of the year with cash and investments of $732M and believes it can achieve profitability without raising additional capital.

Q2 total generated premium of $204M increased 29% from a year ago, and its Hippo Homeowners premium retention rate was 87%.

"As we have worked to accelerate our timeline to profitability, we have become more selective in our underwriting. This has shifted the mix of customers toward our most attractive segments but on the margin, has slowed our TGP growth slightly," the company said.

Q2 revenue of $28.7M, missing the average analyst estimate of $29.7M, increased 27% from a year ago. "The volume impact of our increased focus on nearer term profitability and the increased cost of certain kinds of reinsurance, which directly reduced our earned premium, have resulted in a short-term headwind on the earned premium portion of our revenue," the company said.

Q2 gross loss ratio of 78% improved 83 percentage point from Q2 2021.

Q2 adjusted EBITDA of -$55.8M widened from -$42.3M a year ago.

Q2 EPS of -$0.13, trailing the -$0.09 consensus, narrowed from $0.86 a year ago.

Q2 generated premium in-force increased to $680M in Q2 from $634M in Q1 and from $501M in Q2 2021.

Conference call at 5:00 PM ET.

Before the Q2 earnings results, SA contributor Matthew Queen discussed how the company's expansion into lower risk states suggests Hippo ( HIPO ) will become profitable in the foreseeable future.

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