Home insurance group, Hippo, has announced the successful placement of its reinsurance program for the year ahead, which, in spite of challenging market conditions, includes a 32% rise in per-occurrence excess of loss (XoL) limit within the carrier’s non-proportional treaty.
“In one of the most difficult reinsurance markets in the last 20 years, we successfully placed reinsurance on our flagship homeowners program on terms that are better than our treaty from last year,” said Rick McCathron, Chief Executive Officer and President of Hippo.
As highlighted by McCathron, for buyers of protection, it’s been a particularly challenging January reinsurance renewals in 2023, as sellers hiked prices on the back of consecutive heavy loss years from catastrophes, and the more recent impacts of the ongoing war in Ukraine, and inflation.
Against this backdrop, it’s promising that Hippo managed to successfully complete its reinsurance purchase for 2023 at improved terms than seen in 2022.
“Our expected loss ratios are rapidly converging to our long-term targets which drove our strategic decision to re-position our program. We are pleased that reinsurers continue to see the value in our technology-driven, proactive approach,” added McCathron.
Hippo purchases both proportional and non-proportional reinsurance at the recent renewals.
Starting with the former, commencing in 2023, the proactive home protection insurer secured proportional, quota share reinsurance coverage from a panel of six third-party reinsurers, all rated “A-” or better by AM Best, and appropriately collateralised.
The company says that it expects to retain 40% of the premium and losses through its insurance company subsidiaries or its captive reinsurer.
When compared to last year, for the 2023 placement, Hippo has elected to reduce the use of loss protection features, which has led to an overall loss exposure for catastrophic events similar to 2022. Further, Hippo’s required capital position will be substantially similar to the prior year.
For its non-proportional reinsurance program, Hippo actually increased its purchase of XoL reinsurance, lifting the per-occurrence limit by 32%. The firm is now protected on the upper layers of risk beyond a 1-in-250 year event.
Stewart Ellis, Chief Financial Officer (CFO), said: “We’re very pleased with the outcome of our renewals. Our 2023 program retains more of the premium associated with the day-to-day risks our customers face and where we believe our proactive approach to preventing losses can really make a difference. At the same time, we’ve added reinsurance protection against large losses from major catastrophes to ensure our financial stability.”
