By David French
NEW YORK (Reuters) – U.S. online bank Ally Financial has agreed to a partnership with home insurance provider Hippo Holdings Inc that will allow it to offer home insurance policies for the first time, the companies told Reuters.
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)