Insurance Daily News

Hippo's Casualty Line Surpasses Homeowners, Driving 60% Premium Growth

Hippo has moved beyond its original direct homeowners insurance model to become a program platform, and the change is now evident in its third‑quarter results. Gross written premium (GWP) climbed 60% year‑over‑year to $498 million, with the casualty line expanding 146% to $188 million and commercial multi‑peril (CMP) rising 63% to $108 million.

On a GWP basis, casualty now represents 38% of Hippo’s portfolio, overtaking homeowners, which accounts for 23%, while CMP holds 22%. The company’s president and CEO, Rick McCathron, said the firm continues to grow despite a softening market by focusing on underwriting economics that are attractive, and by staying selective about new business.

Hippo retains a smaller share of the risk in its fast‑growing lines. Net written premium (NWP) increased 26% to $149 million, but the net retention ratio fell to 30% from 38% a year earlier, below the mid‑30s range previously guided. Homeowners now make up half of NWP, down from 64%, reflecting the shift toward fronting and program fees while reinsurers assume most casualty risk.

The insurer’s combined ratio improved to 98.4%, helped by a 10‑point drop in the expense ratio to 41.7% as expenses grew only 12% while net earned premium rose 29%. However, the loss ratio increased to 56.7% from 47.6%, driven by a 6.5‑point rise in catastrophe losses and a modest increase in non‑catastrophe accident‑year losses.

Net income fell sharply to $9 million from $98 million, a decline largely explained by a $91 million gain in the prior year from the sale of its homebuilder distribution network. Adjusted net income, however, rose 9% to $20 million. Hippo lifted its full‑year outlook, now targeting a combined ratio of 97%‑98% and GWP of $1.7‑$1.75 billion.

For managing general agents (MGAs) and program administrators, Hippo has become a major source of fronting capacity, especially in casualty and CMP. The rapid addition of programs and partners offers MGAs an alternative source of paper at a time when demand for fronting capacity remains high. The model does carry risk: low retention means Hippo relies heavily on reinsurers’ willingness to assume casualty risk, and any tightening of reinsurance terms could force capacity cuts or higher retentions, potentially disrupting dependent programs.

Homeowners agents see a reduced share of Hippo’s business, though homeowners remain the largest line that Hippo keeps on its balance sheet. The overall shift suggests future growth will be driven more by commercial lines programs than by direct homeowners distribution.

Why it matters

Hippo’s pivot to casualty and commercial programs reshapes risk distribution and fronting capacity for MGAs in a tightening reinsurance market.

FAQ

What was Hippo’s gross written premium in Q3?
Gross written premium rose 60% year on year to $498 million.

How much did casualty premium grow year over year?
Casualty premium increased 146% to $188 million.

What combined ratio does Hippo now target for the full year?
Hippo expects a combined ratio of 97% to 98% for the full year.

What risk does Hippo’s low net retention pose?
Low retention means Hippo depends on reinsurers’ continued appetite for the casualty it writes, exposing it to potential capacity cuts if terms tighten.

Source: Insurance Business America. See the original source for full details.