John Campbell: But I guess just directionally, agencies may be rising a little bit in the mix?
Matt Ehrlichman: I mean, I would say both of those parts of the insurance business, I would say, are performing well. But clearly like we indicated, we are, in the carrier business, clearly managing gross written premium to a very specific target level. Like Matthew said, in the quarter, we tried to manage it to basically flat written premium year-over-year with obviously much, much fewer policies and therefore fewer risks, which clearly then drove the results we saw.
Operator: We’ll take our next question from Jason Helfstein with Oppenheimer.
Jason Helfstein: Just I want to clarify on slide 13 the $30 million to $10 million and $2 million of the impact from Vesttoo, that was just in the third quarter. Correct?
Shawn Tabak: That’s correct.
Jason Helfstein: And so you’ll have — I mean, effectively, you’re not — I mean, because you’re taking a 100% of the risk in the fourth quarter until the approval of reciprocal, correct? Is the idea that you’re not going to sign up another reinsurance company and just kind of manage it yourself until then?
Shawn Tabak: Maybe I’ll clarify. It’s a good question. Hey, Jason. Thanks for the question. So the $30 million I think I referenced, that was specifically from the net impact of terminating the Vesttoo contract. We did then obviously go out and procure reinsurance. Now, we bought it in August, when — which is obviously different than when we typically buy it. So, we thought about, obviously, the remaining risks that we have in the business, and the specific perils, the specific geographies, et cetera, to make sure that we have appropriate coverage there. But specific to Q3, the net impact of ceding less from terminating the Vesttoo contract, it’s $30 million to revenue, $10 million to revenue less cost of revenue. And then when you get to the bottom line, it really didn’t have much of an impact.
It was about $2 million of adjusted EBITDA. So that was the impact to Q3 specifically. You could pretty much double that for the same type of thing you would expect for Q4.
Matt Ehrlichman: Let me just double down, just to make sure we got it clear in the notes. And this was included in some previous press releases we made about this topic. But the team did an excellent job. Our reinsurance team did an excellent job post the Vesttoo termination going out to the third-party reinsurance market and refilling our excess of loss stack, and bringing other top tier, grade A reinsurers into that program. And so we have fully rebuilt that program and have had that in place for a while, now to make sure that we are protected. So I certainly don’t want you or others to feel like we are not using reinsurance. We terminated that particular partner and then been able to go get other high quality reinsurers in place.
Jason Helfstein: So, basically, — so this is the current status which led to the, let’s say, Q4 guide, this will be the framework until you get the approval of the reciprocal, if all the pieces are in place?
Matt Ehrlichman: Yes. We have the reinsurance partners in place for our program. The next renewal cycle for us would be April 1st, the core reinsurance cycle. So, obviously, we would then look to renew partners. And yes, this would continue to be the structured approach until the reciprocal launches. Even then, obviously, reciprocal will continue to use reinsurance and will help manage those placements for that entity, but this is how we’ll continue to present between now and then.
Jason Helfstein: And then just a follow-up, as we’re thinking about next year, you’ve given us kind of the target of flat or better positive EBITDA next year. I mean, given the implied ratios for the insurance business in the back half, is there a way to think about kind of how would we think about maybe gross written premium and kind of revenue to get to that EBITDA, given we know that, like, corporate expenses would be about $55 million for the company next year kind of run rate.
