Stewart Ellis: Yes, happy to start. And then if you have follow-up questions, I’m happy to try to clarify. I don’t think it’s true that you’ll see less revenue per dollar of premium in the Hippo Home Insurance Program segment. I think, in fact, the opposite is true and you’re seeing that show up in the numbers. I think we’ve talked in past quarters about we’ve retained some premium and we’ve ceded off some premium. There is — and we recognized commission income for the premium that we ceded off when we use quota share reinsurance. In 2023, we’re using less quota share reinsurance. And while we are retaining more premium, we’re not necessarily retaining dramatically more risk. I think earlier in the year, we showed a slide where we talked about the closing of the gap between risk retention and premium retention.
In our 2022 reinsurance treaty, we were retaining a disproportionate percentage of the risk because of the way our reinsurance treaty was structured. And that we’re moving away from that kind of reinsurance. And so what you’ll see is per dollar of premium, per dollar gross premium, you should actually see higher revenue per dollar premium rather than lower revenue because we’ll have higher earned premium. And you can see that in this quarter in the Hippo Home Insurance Program with revenue up 77% and total generated premium up only 1%. So I think we will see continued growth in Services segment. We’ll see continued growth in Insurance-as-a-Service. And we’ll not — I don’t think we’re going to see an erosion of economics in the Hippo Home Insurance Program.
I think we’re going to see, in fact, the opposite. And we’re going to see — it’s going to start to — all of the work we’ve been doing over the past few years is going to start to show itself in the reported financials, which is something that we’re quite excited about.
Alex Scott: But I guess the one piece of my question was also just when you’re writing — when you’re sending business to the Services segment as just an agency relationship rather than writing it through Hippo Home Insurance, I assume it would be the case that you can have a lot less revenue for those premium dollars than you would of running that through Hippo Home Insurance. Because you’re just the broker, right? You’re not taking risk. So is that — do we need to think about that as a revenue headwind just that mix shift and is that going to get more significant, I guess, is what I was trying to get at.
Stewart Ellis: Yes. I don’t — I don’t actually think so. I mean, I think the benefit of revenue in the Services segment is that there’s no loss and loss adjustment expense associated with it. It is much more profitable on a variable basis business than the risk-taking piece of our business. And so I believe the services revenue is growing faster than the Home Insurance — that the Hippo Home Insurance Premium. So I don’t see it as a headwind. I mean, we think about those as distinct aspects of our business. We think about the Hippo Home Insurance Program as the sort of risk-taking piece of what we do. And we think about the Services and the Insurance-as-a-Service as the lower risk exposed pieces, and in fact, services not having any risk exposure.
So I think on balance, it will make the business higher variable contribution margin and also more predictable over time as we see a mix shift towards Services and Insurance-as-a-Service, both of which are continuing to grow rapidly while we work to understand and kind of re-factor our risk appetite within the homeowners business.
