Hippo Q3 2026 Earnings: Expense Leverage Offset Higher CAT Losses

Hippo Holdings (NYSE: HIPO) reported Q3 2026 revenue of $156.0 million, up 29.4% from $120.6 million a year earlier, while diluted EPS was $0.33 versus $3.77. Adjusted diluted EPS increased to $0.74 from $0.70, and the combined ratio improved to 98.4% as expense leverage more than offset normalized catastrophe losses. The sharp decline in GAAP earnings mainly reflected a $95 million business-sale gain recorded in the prior-year quarter.

Core Financial Results

Revenue growth was led by net earned premium, which increased 29% to $128.3 million. Commission income, service and fee income, and net investment income also increased year over year.

Adjusted profitability improved despite the difficult GAAP comparison. Adjusted net income rose 9.3% to $20.0 million, representing a 17.1% annualized adjusted return on equity.

Adjusted net income and adjusted diluted EPS are non-GAAP measures. The prior-year GAAP result included a gain from the sale of Hippo’s home-builder distribution network, making the headline net income comparison less representative of operating performance.

Casualty and Commercial Lines Led Premium Growth

Hippo has one reportable segment, but its underwriting data show substantial differences among product lines. Casualty was the largest source of gross written premium and the fastest-growing major line, followed by Commercial Multi-Peril, or CMP.

The portfolio became more diversified by peril, with Casualty representing 38% of gross written premium, CMP 22%, and Homeowners 23%. However, the fastest-growing lines also have lower retention levels, so the 60% increase in gross written premium translated into a smaller 26% increase in net written premium.

Hippo’s net retention rate declined to 30% from 38% and was below its full-year expectation of approximately the mid-30% range. Homeowners accounted for 50% of net written premium, down from 64% a year earlier. On a net earned basis, CMP increased 88% to $25.9 million and Casualty rose 397% to $15.9 million, while Homeowners increased only 3% to $66.1 million.

Expense Leverage Offset Normalized Catastrophe Losses

The net loss ratio rose to 56.7% from 47.6%, largely because the catastrophe loss ratio reached 6.5% compared with negative 0.3% in Q3 2025. The prior-year period also benefited from 0.5 percentage points of favorable prior-year development. Excluding catastrophes, the net accident-year loss ratio was 49.9%, up from 48.4%.

That deterioration was more than offset by operating leverage. The expense ratio improved to 41.7% from 52.0% as net earned premium grew 29% while the expense base increased 12%. Hippo said this relationship accounted for nine percentage points of the expense-ratio improvement, allowing the combined ratio to decline to 98.4% despite higher catastrophe losses.

Cash Flow and Balance Sheet

Hippo’s cash flow disclosure covers the first nine months of 2026 rather than Q3 alone. Net cash provided by operating activities reached $124.2 million for the nine-month period, compared with $6.0 million in the same period of 2025.

Cash and cash equivalents increased to $311.8 million at September 30 from $218.3 million at the end of 2025, while investments rose to $499.1 million from $445.9 million. Stockholders’ equity increased 8% to $469.0 million. Book value per share rose to $17.62 from $16.97, and non-GAAP tangible book value per share increased to $15.59 from $14.76.

Quarterly comprehensive loss was $3.7 million despite positive net income, reflecting a $12.5 million unrealized loss on investments.

2026 Guidance

Hippo raised its full-year outlook for gross written premium, revenue, and adjusted net income while lowering its expected combined and catastrophe loss ratios. Net written premium guidance was unchanged, consistent with the lower retention associated with the company’s fastest-growing lines.

The revised outlook implies that Hippo expects the combination of premium growth, operating leverage, and lower full-year catastrophe losses to support higher adjusted profitability.

Management’s View

CEO Rick McCathron attributed the quarter’s results to underwriting discipline, portfolio diversification, and the company’s program platform. Management said Hippo intends to remain selective as the insurance market softens, expanding only where it considers the underwriting economics attractive.

Recent Insider Transactions

The supplied insider data show 13 purchases involving 99,221 shares and nine sales involving 36,505 shares over the past six months, resulting in net purchases of 62,716 shares. Total insider holdings were reported at approximately 2.72 million shares. The transaction table below presents the reported values from the source data and does not infer management’s view of the company’s prospects.

Risks Investors Should Monitor

• Catastrophe volatility: The Q3 catastrophe loss ratio increased to 6.5% from negative 0.3%. Losses above the updated 8% full-year assumption could pressure the combined ratio and adjusted earnings.
• Lower premium retention: Net retention fell to 30% from 38% and was below the company’s full-year mid-30% expectation. Continued growth in lower-retention Casualty and CMP programs could limit how much gross premium growth reaches net premium and revenue.
• Underlying loss-ratio movement: The net accident-year loss ratio excluding catastrophes increased to 49.9% from 48.4%. Q3’s combined-ratio improvement depended primarily on expense leverage rather than a lower underlying loss ratio.
• Maintaining discipline during rapid expansion: Casualty and CMP gross written premium increased 146% and 63%, respectively. Management’s ability to preserve attractive underwriting economics while the market softens will affect whether that growth translates into durable profitability.

Summary

Hippo’s Q3 2026 results showed faster premium and revenue growth alongside better adjusted earnings, with expense leverage offsetting normalized catastrophe losses. The main points to monitor are whether rapid Casualty and CMP growth can maintain underwriting quality, whether net retention returns toward the mid-30% range, and whether Hippo can deliver its raised adjusted-income and improved combined-ratio guidance.