HIPO · Hippo Holdings
Conviction · Medium · more likely to lead the S&P 500 over the next three months, by a modest margin
Wrong if: a daily close below $32.50
Note written ·
Price against the kill line
14.5% clear of its kill line on the 13 November 2026 close.
How to read this
The red mark is the price level of the published kill line: a close through it (a weekly close, on a weekly line) would prove the research note wrong on price. The dot is where the stock closed on 13 November 2026; a dot left of the mark has closed through its line.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close below $32.50, on record since 10 November 2026. The shares are up 14.0% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close below $32.50, under the 50-day moving average and the 13 August 2026 close, which would show the raised guidance failing to hold the shares; or a fourth-quarter combined ratio above 100% with full-year adjusted net income below the $77 million guidance floor.
Research onlyNot in the portfolio.
Catalyst
Key figures from the filings · Financials
Quarter to 30 September 2026, filed 29 October 2026; valuation at the 13 November 2026 close
- Net income, latest quarter ($M)
- 8.8
- Net income, four quarters ($M)
- 32.0
- Shareholders' equity ($M)including non-controlling interests
- 469
- Price to earnings (×)
- 31.0
- Price to book value (×)
- 2.1
- Revenue, latest quarter ($M)total revenues, including investment gains and losses
- 156
- Revenue, change on a year (%)
- +29.4
- Market value ($M)
- 991
Hippo Holdings is an insurer: net cash, enterprise value and free cash flow are not shown, because a bank's or insurer's cash and investments back its deposits and policies.
All filed numbers
What Hippo Holdings reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Operating margin (%) |
|---|---|---|---|
| first filed | 156 | +29.4 | 5.7 |
| first filed | 145 | +23.4 | 7.6 |
| first filed | 122 | +10.2 | 5.9 |
| first filed | 120 | +18.2 | 5.6 |
| first filed | 121 | +26.3 | 81.3 |
| first filed | 117 | +30.9 | 3.4 |
| Pre-tax income ($M) | 8.9 |
| Net income ($M) four quarters: 32.0 | 8.8 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | +3.9 |
| Operating cash flow ($M) | 127 |
| Capital spending ($M) | 0.6 |
| Free cash flow ($M) | Not meaningful |
Not meaningful: a bank's or insurer's operating cash flow moves with its deposits, loans and policy reserves, so it is not cash free for its owners.
| Cash and short-term investments ($M) | 312 |
| Debt ($M) | None reported |
| Net cash, cash less debt ($M) | Not meaningful |
| Deferred revenue ($M) | Not reported |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | Not reported |
| Inventory ($M) | Not reported |
| Shareholders' equity ($M) including non-controlling interests | 469 |
Not meaningful: a bank's or insurer's cash and investments back its deposits and policies.
| Market value ($M) | 991 |
| Enterprise value, market value plus net debt ($M) | Not meaningful |
| Enterprise value to sales (×) | Not meaningful |
| Enterprise value to operating income (×) | Not meaningful |
| Price to earnings (×) | 31.0 |
| Price to book value (×) | 2.1 |
| Free-cash-flow yield (%) | Not meaningful |
Not meaningful: a bank's or insurer's cash and investments back its deposits and policies.
Not meaningful: a bank's or insurer's operating cash flow moves with its deposits, loans and policy reserves, so it is not cash free for its owners.
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 3.7% of shares outstanding sold short, 5.4 days of average trading to cover, +5.1% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $549K |
| 12 monthsfrom | $0 | $2.5M |
The thesis
Hippo Holdings has modestly better-than-even odds of beating the S&P 500 over the next three months. It raised full-year profit guidance on 29 October 2026 on the strength of a falling expense ratio. Fourth-quarter underwriting against the 97–98% combined ratio guidance settles the case. The Atlantic hurricane season ends on 30 November 2026, and the full-year report is expected around 26 February 2027.
The combined ratio is claims plus expenses as a share of premium earned, so a figure under 100% means underwriting made money. Hippo's was 98.4% in the third quarter of 2026, against 99.6% a year earlier (company 8-K, 29 October 2026). Management raised full-year adjusted net income guidance to $77–80 million from $62–70 million.
The shares have recovered since the report. After falling to $34.79 on 5 November 2026, they rose for four straight sessions to close at $36.61 on 11 November 2026. That close sits just under the $37 target Keefe, Bruyette & Woods set on 3 November 2026. The market already prices in most of the raised guidance. Further gains depend on fourth-quarter results landing at or above the top of the range, and on cheaper reinsurance at the 1 January 2027 renewals.
The rating is modestly above even because the guidance raise and the expense cuts are filed facts. Against them, loss ratios rose in the third quarter and reserve releases shrank. No company filing, guidance change or analyst action has appeared since 3 November 2026.
Bullish and bearish views on Hippo Holdings Inc.
The bull case on Hippo Holdings Inc. (HIPO), in brief: guidance raised on most measures. The bear case: reserve releases have shrunk.
Bull case
- Guidance raised on most measures. On 29 October 2026 Hippo raised full-year gross written premium guidance to $1.70–1.75 billion from $1.65–1.70 billion and revenue guidance to $585–590 million from $580–585 million. Combined ratio guidance improved to 97–98% from 99–101% (8-K, 29 October 2026).
- Underwriting stayed profitable through storms. Catastrophe losses added 6.5 points to the third-quarter loss ratio, against a 0.3-point benefit a year earlier, and the combined ratio still improved to 98.4% (8-K, 29 October 2026).
- Expense ratio is falling quickly. It fell to 41.7% in Q3 2026 from 52.0% in Q3 2025 (8-K, 29 October 2026). Management kept its 2028 targets of a mid-30% expense ratio and a normalized combined ratio in the mid-90s (MarketBeat call summary, 29 October 2026).
- Earnings beat by a wide margin. Q3 2026 adjusted earnings per share were $0.74 against a $0.51 consensus estimate. Revenue was $156.0 million against a $153.9 million estimate (Benzinga, 29 October 2026).
- Casualty growth is renewing. Casualty gross written premium rose 146% to $187.6 million in Q3 2026 (8-K, 29 October 2026). More than two-thirds of the increase came from renewal business after Hippo added large existing programs (MarketBeat call summary, 29 October 2026).
- Cheaper reinsurance helps a heavy ceder. JP Morgan, citing Guy Carpenter, reported property catastrophe reinsurance rates down 16% at the July 2026 renewal (Insurance Business). Hippo kept only 30% of its third-quarter gross premium, so lower ceding costs at the 1 January 2027 renewals would flow to its margin (8-K, 29 October 2026).
- New source of programs. On 28 October 2026 Hippo announced a partnership with Greenlight Re to evaluate co-investing in early-stage insurance programs, with its Spinnaker unit as preferred US carrier (Benzinga, 28 October 2026).
- Highest target sits well above the shares. B. Riley Securities reiterated its buy rating and raised its target to $50 from $41.50 on 30 October 2026 (Benzinga).
Bear case
- Reserve releases have shrunk. Favorable prior-year reserve development was $4.6 million in the first nine months of 2026, against $10.6 million a year earlier. Of the 2026 figure, $2.6 million was a reinsurance commutation gain (10-Q for the quarter ended 30 September 2026).
- Loss ratios are rising. The Q3 2026 gross loss ratio was 58.5% against 39.8% a year earlier, and the net loss ratio was 56.7% against 47.6% (8-K, 29 October 2026). The combined ratio improved because of expense cuts while losses got worse.
- Reinsurance exposure is growing. Reinsurance recoverables on paid and unpaid losses reached $547.5 million at 30 September 2026, against $346.6 million at 31 December 2025 (10-Q). Earnings depend heavily on reinsurers' terms and creditworthiness.
- Adjusted profit runs well above GAAP. Q3 2026 GAAP net income was $8.8 million, against $20.0 million of adjusted net income, which excludes stock-based compensation and amortization (8-K, 29 October 2026).
- One major broker sees fair value near the price. Keefe, Bruyette & Woods kept a Market Perform rating with a $37 target on 3 November 2026 (TradingView). The shares closed at $36.61 on 11 November 2026.
- Executives sell steadily. SEC Form 4 filings show chief executive Richard McCathron sold 5,000 shares at $32.23 on 9 September 2026 and 5,000 at $34.18 on 9 October 2026. Spinnaker chief executive Torben Ostergaard sold 1,169 shares at $35.03 on 15 October 2026. All three sales were made under Rule 10b5-1 plans.
Price setup
The shares closed at $36.61 on 11 November 2026, 7.1% below the 52-week intraday high of $39.39 set on 22 October 2026. They are up 11.2% over three months from a $32.93 close on 13 August 2026. The 52-week closing low was $24.09 on 3 June 2026.
By the 11 November 2026 close, adjusted daily closes put the 50-day moving average at $34.03 and the 200-day moving average at $29.64. The shares sit above both. The post-report dip went from $35.88 on 4 November 2026 to $34.79 on 5 November 2026. It stopped above the 50-day average, and closes have risen every session since: $34.89, $36.07, $36.29 and $36.61.
The levels that matter are the October high above and the 50-day average below. A close back over $39.39 would show the market paying for more than the raised guidance. A slide under the 50-day average would put the shares back where they traded before the third-quarter beat. Insider sales so far have been small, regular and made under pre-set Rule 10b5-1 plans.
Catalysts ahead
- 30 November 2026: End of the Atlantic hurricane season. Removes most of the remaining hurricane risk to the lowered 8% full-year catastrophe loss ratio assumption behind the $77–80 million adjusted net income guidance.
- ~1 January 2027 (est.): Annual reinsurance renewals. Sets 2027 ceding terms and retention, which decide how much of the gross premium growth Hippo keeps as earnings; lower rates would widen its margin.
- ~26 February 2027 (est.): Fourth-quarter and full-year 2026 report. Shows whether the combined ratio held inside the 97–98% guidance and adjusted net income landed in the $77–80 million range, and sets the first 2027 outlook.
What would change the view
A daily close below $32.50, under the 50-day moving average and the 13 August 2026 close, which would show the raised guidance failing to hold the shares; or a fourth-quarter combined ratio above 100% with full-year adjusted net income below the $77 million guidance floor.
The risks this note tracks, each with what would confirm it:
- Underlying losses keep rising while expense cuts and reinsurance mask them. Confirmed by: a Q4 2026 non-catastrophe net loss ratio above Q3's 50.2%, or a combined ratio above 100%.
- Reserve releases turn into reserve strengthening as the casualty book grows. Confirmed by: adverse prior-year reserve development in the 2026 annual filing, against $4.6 million of favorable development over the first nine months.
- A late-season storm or winter freeze breaks the lowered 8% catastrophe loss ratio assumption. Confirmed by: a Q4 2026 pre-announcement or a full-year catastrophe loss ratio above 8% in the February 2027 report.
- Reinsurers tighten terms, capping what gross premium growth earns. Confirmed by: higher ceding costs or retention below the low-30% range disclosed after the 1 January 2027 renewals.
- New-state homeowners expansion brings early adverse loss experience. Confirmed by: rising homeowners loss ratios in the Q4 2026 report, after quoting expanded into 14 additional states this year.
What it trades with
Hippo trades with US property catastrophe risk. Large storms, wildfires and freezes hit homeowners insurers together, and Hippo's 30% net retention softens that link without removing it. The reinsurance pricing cycle matters more to Hippo than to most carriers because it cedes most of its premium. The shares have little direct link to the technology and AI themes that drive much of the S&P 500. Interest rates reach the company mainly through investment income and through the price investors pay for small-cap financial growth companies.
The evidence, claim by claim (8)
- Q3 2026 gross written premium was $498.1 million, up 60%; revenue was $156.0 million, up 29%; net written premium was $149.1 million, up 26%. Hippo Q3 2026 earnings release, SEC 8-K · as of
- Q3 2026 combined ratio was 98.4% against 99.6% a year earlier, with a 6.5-point catastrophe loss ratio and an expense ratio of 41.7% against 52.0%. Hippo Q3 2026 earnings release, SEC 8-K · as of
- Q3 2026 gross loss ratio was 58.5% against 39.8%; net loss ratio was 56.7% against 47.6%. Hippo Q3 2026 earnings release, SEC 8-K · as of
- Q3 2026 adjusted net income was $20.0 million; adjusted EPS was $0.74 against a $0.51 consensus estimate; GAAP net income was $8.8 million. Hippo 8-K; Benzinga · as of
- Full-year 2026 guidance was raised to $1.70–1.75 billion gross written premium, $585–590 million revenue, 97–98% combined ratio and $77–80 million adjusted net income, with an 8% catastrophe loss ratio assumption. Hippo Q3 2026 earnings release, SEC 8-K · as of
- Favorable prior-year reserve development was $4.6 million in the first nine months of 2026, including a $2.6 million commutation gain, against $10.6 million a year earlier. Hippo 10-Q for the quarter ended 30 September 2026 · as of
- Reinsurance recoverables on paid and unpaid losses were $547.5 million at 30 September 2026, against $346.6 million at 31 December 2025. Hippo 10-Q for the quarter ended 30 September 2026 · as of
- Keefe, Bruyette & Woods kept its Market Perform rating and raised its target to $37 from $35; B. Riley Securities reiterated its buy rating with a $50 target on 30 October 2026. Benzinga, 3 November 2026 and 30 October 2026; TradingView · as of
Sources
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