Shares of home insurance group Hippo Holdings Inc. (HIPO) skyrocketed over 22% on Wednesday, fueled by the company's better-than-expected third-quarter results and the announced sale of a majority stake in its subsidiary First Connect Insurance Services.

For the quarter ended September 30, 2024, Hippo reported revenue of $95.5 million, a robust 65% increase year-over-year and exceeding analysts' consensus estimate of $94.1 million. The strong revenue growth was driven by continued improvement in Hippo's core home insurance business, with the company's HHIP non-weather loss ratio improving by 15 percentage points year-over-year to 52%.

Hippo's net loss attributable to shareholders narrowed significantly to $8.5 million, an 84% improvement compared to the same period last year. The company also achieved better operating leverage, with fixed expenses declining while revenue increased due to investments in operational efficiencies.

In a separate announcement, Hippo revealed that it has sold a majority stake in its subsidiary First Connect Insurance Services to growth equity firm Centana Growth Partners. The deal will see Centana invest over $60 million into First Connect to fund its future growth plans and enhance its digital platform that connects independent agents with carriers.

By divesting the First Connect subsidiary, Hippo can now focus more intently on enhancing its core home insurance operations and advancing towards profitability. Analysts lauded the strategic move, noting that it allows First Connect to chart its own growth path while Hippo concentrates on its strengths.

"The positive momentum we've built over the past year continued in the third quarter as we took a significant step forward on our path to profitability," said Hippo President and CEO Rick McCathron. "We strengthened our foundation for future growth and delivered our best-ever year-over-year improvement to our HHIP non-weather loss ratio -- positioning us for a successful fourth quarter and sustained growth in 2025 and beyond."