Hippo investors call for strategic review over ‘abysmal’ results
The shareholders of homeowners insurtech Hippo Holdings have called on the company’s board of directors to initiate a “strategic review” following a period of “significant value destruction”, urging board actions to preserve shareholder value without exposing them to “more risk and uncertainty”.
In an open letter to Hippo’s board of directors, the “concerned shareholder group,” including Bradley L Radoff and Etude Capital, together with their affiliates, asserted that “since becoming a publicly traded entity in early 2021, Hippo has generated abysmal financial results and operated in an unsustainable manner.”
The group claims to be among Hippo's ten largest shareholders, holding nearly 2.5% of the outstanding common shares of the company.
“Hippo is now a micro-cap stock that trades at a roughly 50% discount to book value,” the letter stated. “We believe the Board must immediately embrace its fiduciary duty to preserve shareholder value while navigating a highly regulated industry.”
It added: “We contend the only viable path forward is for the Board to immediately announce and run a strategic review process with the goal of preserving and maximizing value from the Company’s capital, Spinnaker Insurance Company and NOLs.
The shareholders also urged the company to take immediate steps to enhance its financial disclosures so that shareholders can hold the Board and management accountable. “The Company should cease giving meaningless non-GAAP guidance, like adjusted EBITDA, and focus on metrics that are critical to success as an insurer, such as book value and net income,” it noted.
“We expect the Board to address our concerns and move quickly to take the right steps. There is no excuse for exposing Hippo stakeholders to more risk and uncertainty. The Concerned Shareholder Group will seek to hold you accountable if no value-enhancing actions are taken,” read the letter.
The concerned shareholders have also asked the company to elect Jay Nichols Jr. as independent chair of the board, who they believe is experienced in leading “strategic actions and exits”.
Nichols is an industry veteran who was previously chief executive officer (CEO) of AXIS Re. Prior to that, he served as the president of RenaissanceRe Ventures. Nichols has held various positions at Hartford Steam Boiler, Monarch Capital and accounting firm Matson, Driscoll and D’Amico.
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