Hippo, a startup focused on providing home insurance digitally, has secured a $350 million capital investment from Mitsui Sumitomo Insurance Company.
The new financing – which was provided in the form of a convertible note – comes just four months after Hippo raised $150 million in a Series E funding at a post-money valuation of $1.5 billion. The subsidiary of MS&AD Insurance Group Holdings initially invested in the company in that round.
Prior to this latest investment, Hippo had raised a total of $359 million since its 2015 inception. The company reached unicorn status ($1 billion valuation) in July 2019 with a $100 million Series D fundraise.
The latest capital infusion will help support Palo Alto-based Hippo’s product rollout in additional states with the goal of reaching “95 percent of the U.S. homeowners population in the next year.” The financing did not come with a valuation because it was in the form of a convertible note and does not include a re-evaulation of the company, meaning it will convert “at the next financial event,” said Assaf Wand, CEO and Co-founder of Hippo in an interview with FinLedger.
Hippo and Mitsui Sumitomo Insurance Company plan to sign a reinsurance treaty where Mitsui Sumitomo will take on a “portion of risk” to support Hippo. Wand explained that Hippo has a treaty with about 10 different reinsurers. As the company becomes larger, the company also needs to extend the treaty, and Mitsui Sumitomo wants to participate and “take a portion of the risk on their balance sheet,” he said.
Hippo has seen impressive growth as of late. In July 2020, Hippo’s total written premiums reached $270 million, growing 140 percent year-over-year. And in the second quarter of 2020, in the midst of the COVID-19 pandemic, Hippo’s sales increased by 60 percent year-over-year.
Wand said that overall, “the pandemic has been a very, very strong tailwind for digital distribution.”
Going forward, Hippo’s growth strategy is “more of everything,” said Wand.
“Running a startup to begin with is running with limited resources,” he told FinLedger. “And we always have more opportunities than resources. And this is a way to book it up and pursue these opportunities more aggressively. So launching [in] more states, launching more lines, hiring more top people that would help us build what we want to build, doubling down on marketing, enhancing some data and technology capabilities [and] enhancing our actuarial capabilities.”
How it works
Hippo allows homeowners to get a quote and purchase home insurance online in 60 seconds or less, save up to 25% compared to traditional insurers, and obtain “smarter coverage for modern households,” according to the company.
It also offers direct integrations into loan origination systems and point of sale systems to allow borrowers to obtain homeowners insurance as part of the mortgage process.
Hippo differentiates itself from other home insurers, it says, by providing “more accurate and affordable coverage by using technology and data integrations to develop a unique profile of a customer’s property during the onboarding process.” The company actively reviews changes to a customer’s property over time, using thermal and satellite imagery and layers in AI, machine learning and public records.
Hippo also has a smart home program, which offers eligible customers complimentary smart home devices at sign-up. The company says it has delivered more than 400,000 devices to date and helps alert homeowners to potential issues such as water leaks. When things do go wrong, Hippo says its claim process “leverages highly vetted contractors.”
In the past 12 months, Hippo has made two acquisitions: Spinnaker Insurance Company, a national insurance carrier licensed in all 50 U.S. states, and Sheltr, a preventive home maintenance platform that offers Home Pro services and maintenance solutions. Rebranded and launched as Hippo Home Care, the Sheltr service has become part of Hippo’s home insurance policies and provides services for non-Hippo customers..