By Mia MacGregor, David Bull

June 16 - (The Insurer) - The Baldwin Group’s $100 million acquisition of Hippo’s homebuilder distribution network and capacity commitments to its MGA from Hippo-owned Spinnaker will accelerate the strategies of both parties, said management last week.

As previously reported, Baldwin Group subsidiary Westwood Insurance Agency has agreed to buy Hippo’s homebuilder distribution network, which generated revenues of around $29.2 million in the most recent trailing 12-month period.

Separately, its MGA unit Millennial Specialty Insurance $(MSI)$ has entered into a program administrator agreement and claims administration agreement with a Hippo affiliate on a new homebuilder program aimed at providing additional proprietary capacity for Westwood’s builder partners.

Meanwhile, Hippo and its affiliates, including Spinnaker, have committed to provide capacity and reinsurance support for current and prospective MSI programs.

Speaking on an investor call on Thursday after the transactions were announced, Hippo’s president and CEO Rick McCathron said: “This accelerates our plan to create additional volume within Spinnaker.

“Baldwin now is committed to write more business across different product lines within the Spinnaker platform, giving us growth of what we believe is the best-operated programs in the industry as well as stability and diversification over time.”

McCathron stated that the partnership with Baldwin Group triples his company’s access to builders through the U.S. via the Westwood platform.

“That tripling is a more diversified offering across multiple states with multiple builders, giving us now access to 20 of the top 25 homebuilders in the U.S.,” he added.

"Having more diversified programs under Baldwin on Spinnaker paper fulfils that goal of maintaining an optimal portfolio as it relates to diversification," McCathron continued.

He said that Hippo partnering with a one-time competitor in Westwood means working with a company that does an “exceptional job” in working with their partners.

“They do what they do really well, and we can do what we do really well,” he said.

The Baldwin Group had previously said that the acquisition element of the transactions will be neutral to net leverage and accretive to 2026 pro forma adjusted diluted earnings per share.

STRATEGIC CAPACITY PARTNERSHIP

During a fireside chat with McCathron at Hippo’s investor day, Baldwin Group's president and CEO of underwriting, capacity and technology solutions Jim Roche highlighted the benefits of securing capacity as part of the strategic partnership.

“Baldwin and MSI are constantly searching for strategic additional capacity,” said Roche.

“This is an amazing opportunity when you think about us building an additional new construction project or program together and then our ability to now place additional business across a variety of property but more casualty basis and what that means to both companies,” he said.

“It's extremely accretive to what we're trying to do across Baldwin as a whole.”

He said adding capacity to Westwood’s expanded builder partners with the new homebuilder program is a “massive opportunity” to capture more of the economics.

“To have a program that is specifically aimed at this niche is a great opportunity to help both capture more of the opportunity, but more importantly, to create a more frictionless opportunity and experience for that ultimate consumer,” Roche added.

McCathron emphasised the advantages of new construction as a risk, noting that it tends to perform better in terms of attritional and weather loss ratios, citing past hurricanes in Florida as evidence.

"It's crucial for us as underwriters to make sure we have access to the best risks," he said.

He highlighted the importance of the Westwood partnership in providing insight into the quality of business. “Getting that access through the Westwood partnerships and being part of the Westwood panel very much gives us a great view of the quality of that business,” he remarked.

McCathron also pointed out that buyers of new homes typically want their properties to remain in pristine condition, aligning with Hippo's target customer base.

“Those are exactly the kinds of customers that we have historically targeted at Hippo that really want a partner within the insurance and home protection space to help them keep that new home new,” he said.