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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 classTrading Symbol(s)Name of each exchange on which registered
Common stock, $0.0001 par value per shareHIPONew York Stock Exchange
Warrants to purchase common stockHIPO.WSNew 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




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.
(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 investments330.0 445.9 
Cash and cash equivalents228.4 194.5 
Restricted cash41.0 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 LAE297.3 286.3 
Prepaid reinsurance premiums375.5 309.9 
Ceding commissions receivable79.9 45.8 
Capitalized internal use software46.9 38.8 
Intangible assets23.6 26.9 
Other assets79.0 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 premiums441.8 341.3 
Reinsurance premiums payable291.1 207.1 
Provision for commission 18.0 5.0 
   Accrued expenses and other liabilities124.9 128.2 
Total liabilities1,235.7 975.4 
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 capital1,606.1 1,558.0 
Accumulated other comprehensive loss(7.1)(7.0)
Accumulated deficit(1,192.0)(961.1)
Total Hippo stockholders’ equity407.0 589.9 
Noncontrolling interest4.3 3.6 
Total stockholders’ equity411.3 593.5 
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,
2023202220232022
Revenue:
Net earned premium$32.9 $10.7 $69.0 $30.9 
Commission income, net14.2 14.3 47.8 38.7 
Service and fee income4.9 3.2 11.9 10.3 
Net investment income5.7 2.5 16.5 4.0 
Total revenue57.7 30.7 145.2 83.9 
Expenses:
Losses and loss adjustment expenses36.5 23.9 150.9 75.6 
Insurance related expenses20.3 15.6 54.8 46.2 
Technology and development11.9 14.8 36.6 46.0 
Sales and marketing18.9 29.4 63.9 73.7 
General and administrative20.7 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 expenses108.3 157.9 368.7 349.1 
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 tax2.8 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 diluted23,729,570 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 StockAdditional Paid-in CapitalAccumulated Other Comprehensive Income (Loss)Accumulated Deficit Total Hippo Stockholders' EquityNon controlling InterestsTotal Stockholders’ Equity
SharesAmount
Balance at January 1, 202323,201,434 $ $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 shares134,824 — 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, 202323,320,786 $ $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 shares375,844 — 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, 202323,611,308 $ $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 shares280,622 — 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, 202323,891,930 $ $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 StockAdditional Paid-in CapitalAccumulated Other Comprehensive Income (Loss)Accumulated Deficit Total Hippo Stockholders' EquityNon controlling InterestsTotal Stockholders’ Equity
SharesAmount
Balance at January 1, 202222,601,245 $ $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 shares108,916 — 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, 202222,710,161 $ $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 shares187,934 — 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, 202222,894,496 $ $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 shares166,770 — 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, 202223,061,266 $ $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,
20232022
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 amortization14.4 11.2 
Stock–based compensation expense46.7 46.3 
Change in fair value of warrant liability(0.2)(2.8)
Change in fair value of contingent consideration liability4.5 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 assets0.1 15.3 
Provision for commission13.0 1.1 
Accrued expenses and other liabilities6.6 15.5 
Loss and loss adjustment expense reserves66.1 60.7 
Unearned premiums100.6 63.4 
Reinsurance premiums payable84.0 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 investments29.8 5.5 
Other(0.9)(2.0)
Net cash provided by (used in) investing activities79.6 (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 stock2.4 3.4 
Share repurchases under program(1.8) 
Payments of contingent consideration(1.0)(0.4)
Distributions to noncontrolling interests(6.5)(2.2)
Other0.1 (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 period244.5 818.7 
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 CostGross Unrealized GainsGross Unrealized LossesFair Value
Fixed maturities available-for-sale:
U.S. government and agencies$22.5 $ $(0.4)$22.1 
States and other territories10.1  (0.6)9.5 
Corporate securities71.9 0.1 (2.6)69.4 
Foreign securities0.9   0.9 
Residential mortgage-backed securities21.2  (2.3)18.9 
Commercial mortgage-backed securities7.7  (0.7)7.0 
Asset backed securities14.2  (0.5)13.7 
Total fixed maturities available-for-sale148.5 0.1 (7.1)141.5 
Short-term investments:
U.S. government and agencies123.4  (0.1)123.3 
Commercial paper47.6   47.6 
Corporate securities17.6   17.6 
Total short-term investments188.6  (0.1)188.5 
Total$337.1 $0.1 $(7.2)$330.0 
December 31, 2022
Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value
Fixed maturities available-for-sale:
U.S. government and agencies21.6 $ $(0.5)$21.1 
States and other territories8.9  (0.6)8.3 
Corporate securities54.8 0.1 (2.4)52.5 
Foreign securities0.9  (0.1)0.8 
Residential mortgage-backed securities20.4 0.1 (1.6)18.9 
Commercial mortgage-backed securities6.5  (0.7)5.8 
Asset backed securities14.2  (0.5)13.7 
Total fixed maturities available-for-sale127.3 0.2 (6.4)121.1 
Short-term investments:
U.S. government and agencies129.1  (0.2)128.9 
Commercial paper147.1  (0.6)146.5 
Corporate securities49.4   49.4 
Total short-term investments325.6  (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 months12 months or moreTotal
Fair ValueGross Unrealized LossesFair ValueGross Unrealized LossesFair ValueGross 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 territories1.4  8.0 (0.6)9.4 (0.6)
Corporate securities36.4 (0.5)37.8 (2.1)74.2 (2.6)
Foreign securities0.9  0.9  
Residential mortgage-backed securities7.6 (0.3)11.4 (2.0)19.0 (2.3)
Commercial mortgage-backed securities1.3  5.8 (0.7)7.1 (0.7)
Asset backed securities5.6 (0.1)8.2 (0.4)13.8 (0.5)
Short-term investments:
U.S. government and agencies123.4 (0.1)  123.4 (0.1)
Commercial paper47.5    47.5  
Corporate securities17.6    17.6  
Total $251.0 $(1.1)$84.0 $(6.1)$335.0 $(7.2)

December 31, 2022
Less than 12 months12 months or moreTotal
Fair ValueGross Unrealized LossesFair ValueGross Unrealized LossesFair ValueGross 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 territories3.6 (0.1)4.6 (0.5)8.2 (0.6)
Corporate securities30.5 (1.5)11.1 (0.9)41.6 (2.4)
Foreign securities  0.8 (0.1)0.8 (0.1)
Residential mortgage-backed securities6.3 (0.3)7.6 (1.3)13.9 (1.6)
Commercial mortgage-backed securities1.9  3.9 (0.7)5.8 (0.7)
Asset backed securities5.5 (0.2)3.7 (0.3)9.2 (0.5)
Short-term investments:
U.S. government and agencies129.1 (0.2)  129.1 (0.2)
Commercial paper147.1 (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 CostFair Value
Due to mature:
One year or less$25.2 $24.9 
After one year through five years76.5 73.5 
After five years3.6 3.5 
Residential mortgage-backed securities21.2 18.9 
Commercial mortgage-backed securities7.7 7.0 
Asset backed securities14.2 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,
2023202220232022
Interest on cash and cash equivalents$2.2 $1.2 $4.7 $1.4 
Fixed maturities income1.5 0.6 4.1 1.1 
Short-term investment income2.1 0.8 8.1 1.7 
Total gross investment income5.8 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 funds148.7 87.1 
Commercial paper 26.8 
U.S. government and agencies9.9 14.9 
Total cash and cash equivalents$228.4 $194.5 
Restricted cash:
Fiduciary assets32.4 30.6 
Letters of credit and cash on deposit8.6 19.4 
Total restricted cash41.0 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 1Level 2Level 3Total
Financial assets:
Cash, cash equivalents, and restricted cash$269.4 $ $ $269.4 
Fixed maturities available-for-sale:
U.S. government and agencies22.1   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-sale22.1 119.4  141.5 
Short-term investments
U.S. government and agencies123.3   123.3 
Commercial paper 47.6  47.6 
Corporate securities 17.6  17.6 
Total short-term investments123.3 65.2  188.5 
Total financial assets$414.8 $184.6 $ $599.4 
Financial liabilities:
Contingent consideration liability$ $ $13.5 $13.5 
Public warrants0.1   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 1Level 2Level 3Total
Financial assets:
Cash, cash equivalents, and restricted cash$244.5 $ $ $244.5 
Fixed maturities available-for-sale:
U.S. government and agencies21.1   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-sale21.1 100.0  121.1 
Short-term investments
U.S. government and agencies128.9   128.9 
Commercial paper 146.5  146.5 
Corporate securities 49.4  49.4