Why did HIPO's Q1 2024 earnings exceed forecasts?

Hippo Holdings Inc. (HIPO) reported an earnings per share (EPS) of ($1.56) for Q1 2024, which was significantly better than the expected loss of ($2.01). Hippo's Q1 2024 earnings exceeded forecasts due to several key factors:

1. **Strategic Business Shifts**: Hippo has been transforming its business, focusing on less volatile segments such as Insurance-as-a-Service (IaaS) and Services. These segments contributed significantly to the growth in total generated premium (TGP), which increased by 40% year-over-year, reaching over $1.1 billion in 2023.
2. **Revenue Growth**: The company's revenue increased by 80% year-over-year to $64 million in Q4 2023. This substantial growth in revenue reflects the success of Hippo's strategic expansions and operational efficiencies.
3. **Loss Ratio Improvement**: The HHIP Accident Period Loss Ratio improved by 24 percentage points year-over-year to 64% in Q4. This reduction in losses, coupled with increased revenue, contributed to the improved financial results.
4. **Cost Management**: Hippo has been effective in managing its costs, reducing fixed expenses from 138% of revenue in the previous year to 75% in Q4. This improved cost management has enhanced the company's profitability.

In summary, Hippo's Q1 2024 earnings exceeded forecasts due to strategic business shifts, revenue growth, loss ratio improvement, and effective cost management. These factors combined to deliver a strong financial performance despite the challenging economic conditions.