Homeowners insurtech Hippo acquires Spinnaker

Hippo has acquired Spinnaker Insurance Company, the program fronting specialist that the homeowners insurtech has partnered with since 2017.

Financial details of the deal, which is pending regulatory approval, were not given. 

Bedminster, New Jersey-based Spinnaker is a national property and casualty insurer licensed in 50 states and rated A- (Excellent) by AM Best. 

As this publication revealed back in November 2019, Spinnaker had been looking for an investment partner to fuel further growth. At that time, it was on course for gross written premium of around $150mn-$160mn for 2019.

Palo Alto, California-based Hippo has partnered with Spinnaker as its largest carrier platform since 2017, with Spinnaker-backed Hippo products currently available to consumers in more than 18 states. 

Hippo said the acquisition will allow it to expand the geographical reach of its modern home insurance policies, which also include smart home monitoring kits.

“Bringing Spinnaker into the Hippo family is a natural next step in growing our proactive home insurance offering,” said Rick McCathron, chief insurance officer at Hippo. “Spinnaker knows the complexities of our industry, mirrors our same standards for technology innovation and customer experience and has continued to meet, oftentimes exceeding, our expectations over the years.”

Hippo will continue to operate as a managing general agent with a portion of its premiums to be underwritten by its affiliate Spinnaker and the balance underwritten by other carrier partners. 

Hippo policies are also written by Topa in six states, and by Canopius US Insurance on a surplus lines basis in California and Texas. 

Spinnaker will operate independently under the Hippo umbrella and maintain its position as a program and fronting company. It will continue to service a portfolio of program administrators and drive the growth of its program platform.

Spinnaker was founded by Ken and Dave Ingrey with backing from management, former Arch chairman Paul Ingrey, Arch and other sources.

“Spinnaker is excited to join the Hippo family. Since launching in 2015, Spinnaker has pioneered the concept of value-added fronting: working to create products that benefit the policyholder, the producer, the insurer, and the reinsurer,” said Spinnaker CEO Dave Ingrey. 

Hippo in February this year revealed that it had replaced Munich Re as the reinsurer for the business fronted by Spinnaker. Its new panel of reinsurers includes Arch, Markel, RenaissanceRe and TransRe and others, with Hippo as part of the panel also forming its own captive to participate in the risk and underwriting profit.

Hippo was founded in 2015 by technology entrepreneurs Wand and Eyal Navon.

Last July it raised $100mn in series D funding in a round led by technology investment firm Bond. That brought its total funding to $209mn, and gave it a $1bn valuation and unicorn status. 

Willkie Farr & Gallagher and TigerRisk Capital Markets & Advisory advised Spinnaker on the transaction, which is expected to close in the third quarter of 2020. Hippo was advised by Latham & Watkins.