Hello, everyone. Thank you for joining us and welcome to the Hipple Holdings Inc. Third Quarter 2026 Earnings Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Charles Sebaski, Head of Investor Relations. Charles, please go ahead.

Thank you, Operator. Good morning, and thank you for joining HIPPO's third quarter 2026 earnings call. Earlier today, HIPPO issued an earnings release announcing the Q3 results and a financial results presentation, which will be webcast during today's call, both of which are available at investors.hippo.com. Leading today's discussion will be HIPPO President and Chief Executive Officer Rick McCathron and Chief Financial Officer Guy Zeltser. Following management's prepared remarks, we will open up the call for questions. Before we begin, we'd like to remind you that our discussion will contain predictions, expectations, forward-looking statements, and other information about our business that are based on management's current expectations as of the date of this presentation. Forward-looking statements are subject to risks, uncertainties, and other factors that could cause our actual results to differ materially from historical results and or from our forecast, including those set forth in HIPAA's Form 10-Q. For more information, please refer to the risks, uncertainties, and other factors discussed in HIPAA's SEC filings. In particular, the section entitled Risk Factors in our Form 10-Q and 10-K. All cautionary statements are applicable to any forward-looking statements we make whenever they appear. You should carefully consider the risks and uncertainties and other factors discussed in HIPAA's SEC filings. Do not place undue reliance on forward-looking statements as HIPAA is under no obligation and expressly disclaims any responsibility for updating, offering, or otherwise revising any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. During this conference call, we will also refer to non-GAAP financial measures, such as adjusted net income. Our GAAP results and description of our non-GAAP financial measures with full reconciliation to GAAP can be found in the third quarter 2026 earnings release, which has been furnished to the SEC and is available on our website. And with that, I'll turn the call over to Rick McCathron, our president and CEO.

Thank you, Chuck, and good morning, everyone. Thanks for joining us. HIPAA continues to execute on our strategy of growth, diversification, and improving profitability at reduced volatility. This quarter, we delivered on all three, including marking our fifth straight quarter of underwriting profitability. For the quarter, we generated $9 million of net income and $20 million of adjusted net income, which represents 17% annualized adjusted return on equity for the quarter. We had strong growth across the business with growth written premiums of nearly $500 million up 60% over last year, led by the continued expansion of existing program partners in our casualty and CMP lines of business and an acceleration of growth in our homeowners business. This growth did not come at the expense of underwriting discipline. Our combined ratio for the quarter improved one percentage point year over year to 98.4. However, on a year-to-date basis, our combined ratio improved 20 points to 97.9 compared to the same period last year. I would like to provide a few thoughts on what we are seeing in the overall competitive environment. In general, the property market remains soft with increased competition as plentiful reinsurance capacity is allowing for reduced rates and softening terms and conditions. In casualty, while we have seen some increased competition, we are still seeing higher renewal pricing and the impact of lost cost trends really depends on the line of business and where you are attaching. Combined, we still see an overall operating environment in which we can grow our business profitably. Now let's discuss where this performance is coming from. The program and MGA market remains one of the fastest growing and most innovative sectors of insurance. This market now generates gross premium of over 125 billion in the US, growing at 15% annually since 2019. And I am proud that HIPPO is one of the leading program carriers supporting this growth and innovation. Last night, we announced our latest endeavor into the program market, a partnership with GreenLight Re, whereby we will have the opportunity to be a preferred program carrier for emerging MGAs, as well as invest alongside GreenLight Re into these businesses. One of the ways we intend to support emerging programs and current program partners is by offering a broad suite of services beyond capacity, including claims administration, customer support, and technology. which we have built to operate our own MGA HHIP. We see the cultivating of emerging programs as a pathway to build strategic partnerships with some of the leading programs of the future. Now turning to our current portfolio. In homeowners, we wrote 112 million of premium up 11% over last year. Growth continues to come from our admitted book more than offsetting the headwinds in the ENS channel. We view our homeowners book as rate adequate, achieving a mid-single-digit renewal rate this quarter, and we combined with nearly 10% of increased exposure, we had nearly 14% of renewal premium increase in the quarter. Overall, we are seeing favorable loss trends across the book with low single-digit loss cost, which we expect rate to keep pace with. As we announced last quarter, we continue to ramp up our footprint with our national distribution partners, including an additional 14 states this year for quoting existing homes. We also are actively working to expand the options for how we reach potential customers. Supporting the expansion has been the rollout of our AI initiatives, one of which is now showing a success rate in 9 of 10 first notice of losses with Clara. This technology provides our claims operation the bandwidth to keep growing profitably. Additionally, the launching of these new states has also been significantly more efficient, requiring 70% less engineering effort per state than our initial eight states. We continue to refine our underwriting and technology integrations and see a lot of runway ahead for our homeowners business. Commercial Multi-Peril had another strong quarter, up 63% over last year to $108 million of gross written premium, which, on a year-to-date basis, makes CMP our second largest line behind casualty. Our retention of 19% came back in line with our previously communicated expectation of a low 20s retention for the year. Casualty was our fastest growing line again this quarter, with gross written premiums up sharply to $188 million, now our largest line on a gross basis, though only third on a net basis year to date. As we said last quarter, this year we have begun to retain more casualty risk primarily from a program with a 20-year track record, and we are doing so as both a means of managing the insurance cycle and managing the overall exposure concentrations given the growth we expect in our property book. As indicated last quarter, we expect the retention level to normalize with mid-teens for the full year. Our net expense ratio came in at 41.7%, down over 10 points from last year and nearly 30 points from the beginning of 2024. This improvement was driven by both increased operating leverage which improves with scale and our changing of mix of business, including more casualty business. We believe our investments in technology have us in the position to keep driving expense ratio down in the near future. The result of these efforts is the steadily improved and stabilized underwriting performance, which has now produced a combined ratio underwriting profit for the last five quarters in a row. with a 98% for the quarter, despite experiencing a more normalized CAT loss quarter. As we continue to see the market in various lines of business, especially CAT exposed E&S property, the need to remain ever more disciplined is increasingly important. We believe this type of discipline is embedded at HIPPO. This quarter, we continue to make excellent progress towards our long-term goals, which we have raised last quarter to over $2.5 billion of gross premium and over $140 million of adjusted net income. Our business continues to evolve into a more diversified, stable, and profitable enterprise. We are making the investments in technology and talent today, which will drive HIPPO into 2028 and beyond. Now, I'll turn it over to our CFO, Guy Zeltser, to walk through the numbers in detail, and then we'll take your questions. Guy?

Thanks, Rick, and good morning, everyone. In the third quarter, we continue to deliver strong top-line premium growth, improved underwriting, and increased profitability. Q3 gross return premium grew 60% year over year to $498 million, up from $311 million in Q3 of last year. Growth in the third quarter was achieved across all our lines of business with especially strong performance in casualty and commercial multi-parallel lines and more modest extension in both renters and homeowners. The intentional diversification of our gross return premium continued in the third quarter when three of our four major lines generated over $100 million of growth return premium. Homeowners grew 11% to $112 million and accounted for 23% of the total growth return premium down from 32% in Q3 of last year. Renters grew 25% to $74 million and accounted for 15% of the total gross return premium down from 19% in Q3 of last year. Commercial multi-parallel grew 63% to $108 million, accounted for 22% of total gross return premium, up from 21% last year. And casualty grew 146% to $188 million, representing 38% of total growth rates and premium up from 25% last year. I would like to provide a little additional color on our casualty growth in the last few quarters. While the rate of growth has been elevated, where the growth is originating from is equally important. During the year, we added several large existing programs with enforced books resulting in over two thirds of the casualty GWP growth coming from renewal business rather than chasing business in a softening market. Net return premium in Q3 grew 26% year over year to $149 million, trading the extension of gross return premium as we are intentionally retaining less risk in the fastest growing commercial lines. Consequently, our blended retention rate in the quarter was 30% compared to 38% last year. In general, we view retention levels on a full year basis as timing of program renewals can lead to quarterly variances in that metric. The changing mix was also reflected on a net basis. Homeowners generated $74 million of net written premium, representing 50% of the total net written premium, down from 64% last year. Renters generated $29 million and accounted for 19% of total net return premium down from 22% last year. Commercial multi-parallel generated $20 million and accounted for 14% of total net return premium up from 12% last year. Casualty also generated $20 million in the quarter compared to roughly $4 million in Q3 of last year. It is worth noting how this mix shift has already started impacting our underwriting results in Q3 and is expected to continue doing so in the future. Casualty and CMP lines generally have a higher non-cash loss ratio than our property lines, but also lower cash loss ratio and expense ratio. So as we continue to diversify into CMP and casualty lines on a net basis, we expect to see the components of consolidated combined ratio moving in the direction I just mentioned while we still aim to achieve normalized combined ratio in the mid-90s by 2028. In Q3, our net combined ratio improved one percentage point to 98.4% compared to Q3 of last year. This was achieved by improvement in expense ratio which more than offset a slightly more normalized loss ratio. Our Q3 net loss ratio increased nine percentage points year over year to 56.7%. Excellent year XCAT loss ratio came in at 49.9% compared to 48.4% last year. The increase was driven both by a more normalized loss experience in a business owner property line, as well as by the continued shift to a higher percentage of casualty and CMP exposure in the book. However, we still use sub 50% underlying loss ratio as excellent results. Cat loss ratio came in at 6.5% and was higher by 7 percentage points over last year, a period which had no cat losses. Seasonally, Q3 contains our most elevated model cat exposure, and this quarter's results still came in below expectation. There was no material prior extended year reserve development for the quarter, similar to Q3 of last year. In Q3, expense ratio improved by 10 percentage points year over year to 41.7%. This improvement was driven mostly by operating leverage, which improves with scale and was also supported by the lower expense ratio of CMP and casualty lines. As Rick mentioned previously, we believe that our continued focus on operating leverage through AI enables us to grow our business while keeping fixed expense largely flat. which in turn has helped driving the expense ratio improvement. Revenue in the quarter was $156 million, up 29% over Q3 of last year. During the quarter, revenue included $19.7 million of commission, service, and fee income, which was up 45% over Q3 of last year. Q3 net income came in at $9 million, or 33 cents per diluted share. Net income was down $89 million year over year as the prior year period included a $91 million net gain on sale of the home builder distribution network. Excluding the one-time gain on sale last year, our net income has improved roughly 28% year over year. Year three adjusted net income grew 9% year over year to $20 million or 74 cents per diluted share. The year-over-year improvement was primarily due to the continued improvement of underwriting results and strong premium growth. Total default stockholder equity at the end of the quarter was up 8% to $469 million, up from $436 million at year-end 2025. Total book value fair share at the end of the quarter was $17.62 fair share, largely in line with the $17.65 per share at last quarter as unrealized investment losses offset the net income in the quarter. Following this quarter's results, we are raising our full year guidance. We're increasing growth rate and premium from a range of $1.65 and $1.7 billion to a range of $1.7 and $1.75 billion. We're increasing revenue from a range of 580 and $585 million to a range of 585 and $590 million. We are lowering our combined ratio from a range of 99 and 101% inclusive of a 10% cash loss ratio to a range of 97 and 98% inclusive of an 8% cash loss ratio. And finally, we're increasing adjusted net income from a range of $62 and $70 million to a range of $77 and $80 million while maintaining the expected impact from both stockless compensation and depreciation and amortization to roughly $42 million. And without operator, I would now like to open the floor to questions.

We will now begin the question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Randy Binner with Texas Capital Bank. Your line is open. Please go ahead.

Hey, good morning. Thanks for all the detail. I guess my question, and it's somewhat in the context of looking ahead to revenue growth in 2027, but the retentions were a little bit lower, as you mentioned, this quarter. You know, is this the right level or do you think you kind of continue to retain less in light of soft market dynamics? And the question applies, I think, more to the commercial and casualty side, but also to the property side.

Hi, Randy. This is Guy. Thanks for the question. So generally speaking, because of the mix-ups we're seeing between the lines of business, and as you mentioned, the fact that we are retaining less in CMP and casualty, We do expect the blended retention of net return over gross return in 2027 to continue to go down a bit, I would say a few percentage points. So if the average in 2026 is about 33, 34, we do expect it to come down to probably to the low 30s area, low 30s to 30. So that's what will be the retention. But we do expect, I would say from a revenue growth perspective, probably a similar number to what we have been seeing and continue that trend into 2028.

Randy, this is Rick. One, good morning, and I appreciate the question as well. I just want to add a couple things more on a strategic view. We've mentioned on many occasions that we will not sacrifice underwriting quality for growth. When we're in a soft market, we are very comfortable retaining less business, yet we still believe we will hit the growth numbers that we have put forth. In fact, we've increased the guidance, as you know, on this call because we are operating with more partners and more channels. The opportunity for us to be more selective while we're growing in other channels with other partners more than offsets and the retention numbers from my perspective.

Okay. And just to double check, I heard that right. Well, the overall number goes down to 30% or is it you're more talking about in casualty and CMP?

The overall number.

Okay. And so that tracks closer to 30. Yeah, I guess just relatedly. The housing market is slower because of higher mortgage rates. Can you just touch a little bit on how submission and binding activity is with the Westwood partnership in light of the slower housing market?

Absolutely, Randy. Again, this is Rick. Happy to talk about that. So one, we don't specifically share the numbers of what they look like, but I can tell you one of the One of the thesis that we had by doing the Westwood partnership and the greater Baldwin partnership is that it gives us access to far more builders than we had access to previously. So even if individual builders are producing fewer homes, our access now is to a significantly larger number of builder partners. So we still believe that there's significant upside in the builder distribution channel, even with decreases that any individual builders might face due to the rising interest rate environment.

Okay, great. I'll leave it there. Appreciate it.

Thanks, Randy.

Your next question comes from the line of Tommy McJoynt with KBW. Your line is open. Please go ahead.

Hey, good morning, guys. Thanks for taking our questions. One of the slides, I think it was slide four, you had a bullet there about beginning to offer a broader suite of services. And you mentioned claims, customer support, and technology. Is this a sort of a new endeavor or offering that you guys are rolling out and thinking about monetizing better? Or what sort of the strategy around your as offerings in the go to market? Thanks.

Yeah, thanks, Tommy. This is Rick. And I really appreciate this question. You know, one of the things as we continue to take more and more risk with our various underlining program partners, I think it's incumbent upon us to make sure that the quality of the business from an underwriting perspective, a claims perspective, oftentimes driven by some of the technological improvements we have in our own MGA gives us better view, vision, and insight on what those individual programs are doing. So as an example, if I'm taking 20, 30, 40% on a particular program, I would much prefer actually being the claims TPA with that partner program because we believe that our claims handling at HIPPO would surpass the quality of any individual claims TPA that does not have the same interests aligned as we do, which is underwriting profitability. So most of the services that we are providing, those are generally to enhance our participation and partnership with individual programs and giving them sort of services that are aligned with our expectation of being an underwriting partner with them and also helping those programs leverage the years of technology, data and AI build that we've done with So we're not looking at it as a revenue center. We're looking at it as an opportunity for us to continue to have appropriate oversight on programs in which we retain risk. Does that help?

Yeah, that does. That's a sort of useful explanation for us to think about it. Yeah, so appreciate that.

Great.

Any other questions? Yeah. Anytime we see a high growth insurance company, that naturally raises questions around the capital and capacity to fund that growth. So can you talk about, as you think about growth into next year, certainly reaching into the double digits on a net written premium growth basis, how much capital is available at Spinnaker to support that growth? Or is there any need potentially for a capital injection to support that. Thanks.

Hey, Tommy, this is Guy. Happy to take this question. So just to reiterate something that we have said in the past, we have enough capital to support all the organic growth that we put out or to achieve the targets we put out for 2027 and 2028. And just to reiterate, these are more than $2.5 billion of growth return premium and more than $140 million of adjusted net income. So we'll have plenty of capital to accomplish that. I think the easiest way to think about that and one ratio that we are looking at very closely, not just at the Spinnaker level, but at the consolidated entity level, is the NWP leverage ratio over the surplus. So if you look at our gap surplus, alongside with the surplus note that we raised, we have more than 500 million of capital. And if you stretch that one and a half times, That gives you $750 to $800 million. And our net written premium this year is going to be under $600. And even if you assume the growth into next year, it's going to be probably in the $750 area. So we are now into the position where we start accumulating net income and accumulate the capital such that this additional capital can also support the growth into 2028 and beyond.

Yeah, Tommy, one thing that I would add is that I think we disclosed a few quarters ago that we have also put a whole account gross quota share in place. It's a very small percentage, you know, like 5% of our total portfolio is very small. But that is a lever we can use if we have an opportunity to grow more than what Guy had just indicated. We always have that lever that we could seed off more in the whole account HIPPO and Spinnaker quota share to allow us to take advantage of an opportunity where we think there would be a quality operator or new partnership we might have on the HHIP side. So we feel very good with the capital that we have to achieve the 2020-A goals, and we have a lever if we think there's an opportunity for us to increase those further.

Make sense. Thank you. Thanks, Tommy.

As a reminder, if you would like to ask a question or rejoin the queue, press star one to raise your hand. Your next question comes from the line of Andrew Anderson with Jefferies. Your line is open. Please go ahead.

Yeah. Hey, thanks. Good morning. This is Sid on for Andrew. First, just hoping you can expand a bit more on the announced partnership with Greenlight Re and I think the announcement mentioned emerging MGA business. So maybe you could clarify if that means it's programs with limited underwriting history and if we should think about HIPPO keeping retention lower on premiums from that business.

Yeah, Sid, this is Rick. I'll go ahead and take the beginning of this question. So a couple of things. One, we're always looking for growth, not just in the near term, but also in the long term. And our experience has shown that if you pick partners early in the process and you're able to help and support them throughout their startup phase into their high growth phase. You have an opportunity really to be an integrated partner in what they're accomplishing over time. So as an example, if you go back several years ago when Spinnaker first started as a fronting carrier, It essentially had two startups that were the vast majority of the business. It was Hippo and it was MSI. If we fast forward today, those two programs on Spinnaker paper account for close to a billion dollars of total premium, maybe a shade below that. But those were two startups. And so we believe that partnering with Greenlight and the capabilities that they've demonstrated on finding good partners and the services that we had sort of just talked about with Tommy, so adding more value to those partners because of our expertise in particular lines is seeding the future growth with these partners. So It's starting small, of course. We will continue to grow and expand it as we have success in this. But frankly, it's really planting seeds for long-term growth within HIPAA Holdings.

Okay, thanks. And then maybe just pivoting to the loss ratio, I think you called out some mixed shift headwinds and maybe those continue. But curious if you kind of expect accelerating homeowners growth to provide any offset There, if we should consider the third quarter underlying loss ratios a reasonable baseline moving forward.

Yes, thank you for the question. This is Guy. So just to give you an idea on the mix shift, when we look at it on a year-over-year basis, our X-CAT loss ratio, X reserve development, was higher by about 150 basis points. But if you just look at the mix shift, so if you keep everything else constant, just changing the mix in lines of business, It actually went up by about three points. So everything else being equal, we actually had a better quarter because we kept seeing homeowners performing better because we saw premium coming ahead of loss trend. In terms of what we expect into the future, just to do the full map, we still expect to have a combined ratio in the mid 90s in 2028. And Rick also said before that we expect on the same period to have an expense ratio in the mid So what we're going to see is just a mix shift between the components of combined ratio, whereas we do expect to see the X going up. But against that, the cap loss ratio to go down, as well as the extent ratio, which is an operating leverage play, as well as mix shift that will push the extent ratio down.

Yes, this is Rick. Just to elaborate a little bit on what Guy said, this is part of the strategy. This is intentional. So when we put the strategy forth a little under two years ago, what we said was we wanted to produce a highly curated, positively selected portfolio of risk that comes from our own program and partner programs. and we would want that positively selected portfolio to be diversified across geographies, across product lines and offerings. And so by doing that, we intentionally are adding program lines that look different than HHIP from both a loss ratio component and an expense ratio component leading to the combined ratio component. So currently we are performing better than our long-term projections on loss ratio. We're performing worse than our long-term, excuse me, we're performing online with our long-term projections of expense ratio. And the mixed shift will ultimately equate to the loss ratio, or excuse me, combined ratio targets that we put forth. And so, you know, we would expect there to see gradual increasing Thank you. Thanks, Ed.

There are no further questions at this time. I will now turn the call back to management for closing remarks.

Well, I appreciate you joining us. Thank you for that. And we look forward to speaking with you again next quarter. Have a great day, everyone.

And this concludes today's call. Thank you for attending. You may now disconnect. Goodbye.