Highlights from Goosehead’s earnings call

Goosehead Insurance held its Q2’24 earnings call on July 24, 2024, led by CEO Mark Miller. Key highlights include:

• Leadership: Mark Miller joined for the first time as Goosehead’s President and CEO.
• Growth Opportunity: Miller emphasized the enormous growth potential in personalized insurance, noting that the total personalized industry is over $450 billion. Goosehead currently has over $3.3 billion in total written premiums, accounting for less than 1% of the total market and just 4.5% of mortgage transactions in the US. The majority of Goosehead’s referral partner leads are tied to mortgage transactions.
• Company Scale: Goosehead has over 950,000 clients, nearly 1.6 million policies in force, over 200 carrier partners, a national footprint, and more than 2,300 motivated agents.
• Challenging Environment: From 1980 to 2023, the average annual number of billion-dollar insurance claim disasters in the US was 8.5. 2023 marked the fourth consecutive year of 18 or more such events, CPI-adjusted, and this trend has continued in the first half of 2024. Many carriers have taken 20%+ price increases on home insurance over the past 12 months, but these increases have not been sufficient to reach their target profitability levels due to inflation and the frequency and severity of bad weather. Until carriers feel confident they can write property insurance profitably, they will continue putting significant limitations on appointing new agents and selling new policies.
• Auto Insurance: There are early signs of relief in auto insurance, but it is too early to confirm if carrier profitability has fully turned the corner.
• Financial Performance: Total written premium increased 30% year-over-year in the quarter compared to 28% in Q1. Core revenue increased 20% year-over-year compared to 13% growth in Q1, and Goosehead reached the highest level of franchise agent productivity in company history, with same-store sales up 29% year-over-year.
• Technology Investments: Most of Goosehead’s technology investments have been directed towards enabling sales productivity. The company believes there is tremendous opportunity to use the same technology to drive scale and quality in its service department. Services are the largest cost center, and many of the tasks performed can be automated, freeing agents to deliver an even better client experience.
• Wholesale Capabilities: Goosehead confirmed it has no interest in developing wholesale capabilities. “We’d probably not start our own wholesaler. We distribute through other wholesalers.”
• Producer Compensation: Compensation for producers is 40% on gross new business and 15% to 20% on gross renewals.

Bottom Line: Goosehead is the Primerica of property insurance.