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Hippo will underwrite the policies on behalf of Ally as a
"fronting carrier," while Ally will assume their risk and put up
the cash to back them - some $500 million to begin with. The
agreement will double Hippo's underwriting capacity and free up
its own capital to improve its technology and services, its
President Rick McCathron said in a recent interview.
"As we are a fast-growing company, it's very important for us to
have plenty of underwriting capacity to support our growth,"
McCathron said.
Ally will offer home insurance in ten states under the
partnership before rolling it out nationally, the companies
said.
"This relationship complements and diversifies the ongoing
expansion of Ally's insurance business," Mark Manzo, Ally's
president of insurance, said in a statement.
Ally's insurance offering had so far been limited to car
insurance. McCathron said there was potential for further
collaboration with Ally, without providing details.
The partnership comes a week after Hippo began trading on the
New York Stock Exchange following the completion of its merger
with a blank-check acquisition firm backed by Reid Hoffman and
Mark Pincus, the co-founders of LinkedIn and Zynga respectively.
Hippo will also announce on Wednesday a fronting carrier
agreement with Austin, Texas-based insurance services provider
Incline P&C Group, which will offer Incline's customers access
to Hippo's home protection and maintenance services.
(Reporting by David French in New York; Editing by Aurora Ellis)
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