Conference Transcript - LIFE 2026-06-04

Aaron Turner, Head of Investor Relations

Good morning everyone. Adam Klobber. I know most of you guys. Thanks for joining. As you can see the disclosures. More importantly, this is the Ethos presentation. Peter Kolas is CEO and founder. I'll say two seconds before giving the stage. As we've been saying, it's a little newer public, but we think this is a company that you really should be watching and paying attention to. I think they're doing something that is very very challenging but much needed and you know in terms we think about it taking a really really complex consumer business life insurance make it easier to buy and sell very importantly we view things first and foremost from a technology lens in this company there's companies with good technology and ethos that's great technology but it's what they're actually doing on the technology side I I won't steal Peter's thunder, but is really, really tough to do and really unique. That sets them up to be a very innovative and rapidly expanding company. And setting the stage, Peter, tell us a bit about Ethos.

Peter Colis, CEO

Thanks, Adam, appreciate it. Okay, so I'm gonna provide a high-level overview of the company today. We exist to protect families. We send kids to college, we pay people's mortgages, we put food on people's you know in people's fridge we're there when the family is going through their most difficult time and we want to be their

Aaron Turner, Head of Investor Relations

partner high level on our financial results just to give you a snapshot of

Peter Colis, CEO

last quarter we were a hundred and four percent year over year adjusted EBITDA margin of 17% 34 million of adjusted EBITDA 31 million of cash flow rule of of 121 percent. We launched the company in 2016, we sold our first policy in 2018, so it's been a remarkable growth story and being able to grow both responsibly for our risk-bearing carrier partners but also profitably as a company. A high-level, if you look at the past three years, we've grown over 50 percent each of those years and our guidance at the midpoint from Q1 puts us within spitting distance of another 50% year. We have very efficient unit economics, we have 98% gross margins, and on a fully burdened basis we are variable cash positive by month two after we sell a policy, whether or not that's through a direct business or our third-party agent business. So this allows us to recycle cash very quickly and efficiently, be profitable and grow. If you look at our business model, in insurance speak, we're most analogous to an MGA, but really what that means is we're responsible for distributing and selling life insurance, underwriting it, making the risk-binding decision about whether or not you should be approved and at what price, and administrating the policy over its lifetime. So all functions and operations of the carrier, except for the balance sheet and portfolio management component, and our carrier partners are responsible for paying the claims. We have no economics at risk of mortality, and we design and price proprietary life insurance products that are only accessible through Ethos, and we go out to the carrier market and figure out which carriers are going to be best suited to partner with us offering the client pricing, the economics, and the underwriting frameworks that we want to bring to market. So we have a portfolio of six incredible carrier partners we have 12 products across these six partners so there's a fair amount of redundancy built into the platform and we add more carrier partners as we broaden the portfolio or just add more redundancy to scaled products we like this model because it allows us to focus on what we're great at technology risk management distribution while not being constrained by capital supply on the carrier side and our carrier partners today have multiples more availability of balance sheet for us than we have premiums today. So that is not a constraint in the growth model. If you look at and take a step back, the life insurance industry suffers from legacy technology infrastructure, bad process, and a slow ability to move off of you know that legacy technology infrastructure. Ethos has built a completely native technology platform. We have our own underwriting engines, admin systems, application engine, payments and commissions infrastructure, agent operating system, MarTech infrastructure. All components of Ethos have been natively built and seamlessly integrate together. And that was a multi-year build-out that was very complicated, but it's translated to be able to run so much faster and really build a virtuous data cycle learning organization in a way that many life insurance carriers struggle with due to the lengthy medical exams and blood tests manual processes and legacy technology stack. On top of that we've morphed from being just a term life insurance provider which is think of it as kind of the simplest and easiest flavor of life insurance to having multiple term life policies, multiple whole life insurance policies, multiple index universal life insurance policies, estate planning and supplementary health policies like accidental death and cancer insurance. We serve three constituents on our platform, consumers, agents, and carriers. We've activated over 600,000 policies with policy holders. Last year we had over 15,000 unique selling agents on our platform, and we have six carrier partners today. And we have a strong value proposition for each of them. We go to market in two ways, both through our direct-to-consumer business, which is historically around two-thirds of the business, and through for a third party independent agent focused channel. The direct consumer business launched in 2018, the agent business launched in late 20, early 2021. Whether or not you come through the direct or the agent business, you still flow through a similar version of the product portfolio and we really amortize the same technology across the board. On the direct consumer side, it's worth noting that ethos is a very diversified marketing engine we're not overly reliant on one strategy or channel for acquiring our clients we majority spend in top of funnel channels like television radio social media youtube maybe you've seen some of our ads we just launched a campaign last week with david ortiz you know red socks mlb hall of famer and so we're really successful for the first time ever at getting people that are not looking for life insurance to show up and buy life insurance without having an agent have to coax them through the process. We've made it so simple and easy that people would just show up and say, I have a need. I want to check off my list. I'm going to just buy this today. If you look at our market, we have a large reoccurring TAM of 10 million Americans who every year buy an individual life insurance policy. So this is not inclusive of people that buy policies through their employer. Every year these 10 million Americans show up very predictably pushed into the purchase journey by virtue of having kids, taking out mortgages, watching their parents age, having a health scare or seeing someone have a health scare and so ethos is the most efficient way for them to get protected and we are the most efficient way for an agent to sell a policy. We are a small single-digit percentage of this market today. There's a lot of room for us to keep compounding and growing into this reoccurring TAM as we keep refining our automated engine. If you look at the market today, over 90% of the market is still sold by agents and I think there's an analogy to Geico and Progressive 30-40 years ago where you had these high friction processes and mandatory agent models and they made it simple and easy put it online and today over half of the auto market is direct and I think ethos will similarly pull a large part of the life insurance market indirect to direct by really putting consumers in the seat of control and making things approachable intuitive and simple especially in if you are long AI and LLM as a research tool for consulting consumers in that world the The person that potentially gets disintermediated is the agent and the company that stands to most benefit from consumers taking control with their own research is Ethos by being there with the fastest, easiest way to buy and by being digitally native and being able to plug parts of the purchase journey into these LLMs like we did with our chat GBT integration recently. On the carrier side, it's worth noting, if you look at just to put a pin in kind of how antiquated this market is, the top 20 life insurance carriers every single one of them is over a hundred years old and for such a scaled industry I'm not familiar with any other markets like that also half of these companies are mutual companies so they don't answer to shareholders they you know operate for the good of policyholders but they move at really different paces of execution from ethos so what is the problem that we solve for consumers if anyone here has ever tried to buy life insurance through the traditional means, it's usually a five to ten week purchase journey. You find an agent or an agent finds you. You fill out a PDF or a paper or a dumb electronic application. You then go through a medical exam or a blood test. Medical records get requested from your doctor's office. They go and sit in an underwriter's queue. The underwriter then deliberates, may reach out to you with additional questions, and then there's a process back and forth of you get approved and you have to decide, do I want to take that offer with the carrier or do I want to apply somewhere else? The agent is guiding you through this process and then there's more work to eventually get the policy issued and then you pay and you forget about it. Ethos is very different. You show up to ethos.com or through one of our partner agents and you buy a policy in 10 minutes. End-to-end you're insured. We decision over 95% of underwriting decisions in an instant automated fashion and over 90% of of people who apply or approve for some kind of coverage. So we've got a policy for almost everybody. We've got products for prime market, mid-market, mass market, pre-existing health conditions, seniors. We really try to have the most expansive buy box so that we can ensure almost everyone for some kind of product at the right risk-adjusted price. People love this experience. We have a client NPS, which is net promoter score client satisfaction survey rating of over 70 which puts us up there with Apple and Tesla and far away from anything else in life insurance the process for agents is even more transformative than that of clients and the reason is a client has to go through this buying decision buying journey you know one or two times in their life an agent has to go through this selling journey all day every day right every day they wake up and they go through this process of handholding people through these 10 weeks, and then they have to wait another three weeks to get paid after the policy is placed. With Ethos, you sell a policy in 10 minutes, and you get paid the next day. And it's at a great price with an expansive product portfolio and a completely digital operating system surrounding it, where you can log in, buy leads from Ethos, have the Ethos CRM market to your clients on your behalf. You can just send a link to the client, and they can self-checkout, or you can control the application in the traditional means. As an agency owner or manager, you can manage all your downlines effectively in the platform, understanding their business quality, their production, manage fraud, agent debt, etc. So it's transformative for agencies, and in the P times Q equation, it allows them to sell so many more policies than than they otherwise would and reinvest those commissions the next day into more lead buying and prospecting activities so that they can go find their next policy that much faster. It really allows them to focus on what they're good at which is prospecting and finding that client rather than hand-holding people through administrative burden. So agents love this. As I mentioned, we launched this around five years ago and it's grown very quickly. Lastly, last constituent on our platform are carrier partners. For carrier partners, we're really delivering scaled incremental growth to them at their target ROEs, at their target underwriting profitability margins. We work with them to develop proprietary products where we have a go-to-market thesis and then And we deliver basically scaled incremental growth in a otherwise very stagnant market share, low growth environment for them. And so we're the largest source of premiums for half of our partners today, and carriers with Ethos grow significantly faster than carriers without Ethos. Carriers love us, and what I would say is that when we launched the company, it was much harder for us to find carrier partners before we had proven distribution and risk management and today at our scale and momentum it is much easier to find carrier partners who want to partner with us. Ethos is a business that gets better as it gets bigger. The more clients that we bring onto our platform the more data we have not only to optimize underwriting and make better risk management decisions but also the more data that we have flowing in where we can then optimize our user experience purchase journey and our marketing to more unit economically effectively acquire clients. As we keep getting better at risk management, it also allows us to negotiate either better prices for clients or higher takeaways for ethos as a share of the premiums. In addition, as we bring in more clients and bring in more scale, it allows us to attract more carrier partners and to build a broader and broader portfolio of products that serve a wider part of the TAM. That then allows us to go recruit more agencies than we otherwise would because while they may not have wanted to partner with us when we only offer products X and Y, when we offer product Z that is in their strike zone of what they like to sell, then they're fit to join our platform. And on the flip side of that, when we have an agency partner, as we keep broadening the product portfolio, it keeps eating into more of their wallet share because we serve more of the use cases they like to sell. So at the center of our advantage is underwriting. What I would analogize our underwriting to is, if you think about a credit FICO score, what we're not doing is throwing out FICO and underwriting people based on their social media profile and cash flow underwriting or some really novel set of data. Instead what it's analogous to is if it takes everyone else you know five to ten weeks to compile FICO, but we can compile it instantly. So the data that we absorb in the underwriting process is a near-perfect supplement for what gets absorbed through the traditional medical underwriting process. When a client applies, they authorize a HIPAA consent form that allows us to start pulling data like pharmaceutical records, medical claims billing data that gets coded back to the health insurance company, showing us what doctors they've seen, what tests and procedures they've had, their prior blood labs histories from, you know, a Quest Diagnostics or a LabCorp as part of their annual physical, as well as predictive information like motor vehicle records, financial related information. And so the trick and really the beauty of Ethos is being able to absorb on average per client 200,000 data points, transform this data into a structured information graph that is computable, and then apply per client 40,000 algorithmic rules of logic from a bank of over a million rules of logic and no two clients are the same, no two data sets are the same, no two sets of rules that get applied are the same and we compute that information graph into a pricing decision and allow them to bind on the spot and importantly as a risk management tool as part of our auditing process we have a human underwriting team that is constantly pulling people's medical records after we issue policies and looking and reviewing how did the human underwriting team price the decision versus the engine and we use that to inform pricing adjustments and underwriting rule adjustments on a go-forward basis and if the client was really dishonest about something material we will take the policy back and refund their premiums and then our carrier partners human underwriting teams are auditing both our human underwriting team's audits and the engine's decisions themselves. So the risk is heavily studied by both ourselves and our carrier partners. So how do we grow from here? There are really a few dimensions. One, keep recruiting more clients to the platform and more agents to the agent operating system. Two, really enhance our platform and expand our share of the agent's wallet of sales by making the system and features better and by broadening our product portfolio, allowing those agents to both take more of their wallet share but also allowing them to sell more policies than they otherwise would. And three, keep adding more products really across a couple dimensions. Expanding the share of TAM that we address and then cross-selling and upselling on our existing clients and then having what I would call like gateway products that then lead to sales. So an example of that is we lead with estate planning, wills and trust sometimes, and we will convert those people into actually buying life insurance and then give them the estate plan for free. And we have a track record of launching three to four products per year. This is not a, you know, this is not a full list of the products that we've launched, but we've consistently and methodically been able to identify key needs in the market and really develop competitive products with competitive pricing, competitive client value propositions and the amazing ethos 10 minute experience we recently launched into selling annuities this past quarter we recently launched into selling cancer insurance with Aflac this past quarter and as well as accumulation indexed universal life insurance in the agent market so and with that I think

Aaron Turner, Head of Investor Relations

we're done I have some questions but any questions from the from the audience so So starting at a basic level, why can't big insurance company met or pre-approved, they've got hundreds, thousands of programmers, right? Why can't they program a quick to underwrite product? And then I'll leave the answer, but then what's the hiccup when they're trying to go to the agents, the IPI points, EBICs of the world? Why can't those two sides connect super well? Yeah, it's a great question.

Peter Colis, CEO

Excuse me. On the underwriting side specifically, it is a massive data science problem of being able to ingest all that data, transform it into a structured information graph, and then apply rules of logic to compute it into a pricing decision that is accurate enough that in a levered business like life insurance where one mispriced apple can spoil a barrel of 300 apples, you know, to execute on it effectively. and so the the historical data modes of manual underwriting data are not translatable to algorithmic data modes like we have built up ourselves and so the best-in-class carriers today can automate around 15% to 20% of decisions at equivalent fully underwritten prices that we offer and they're typically for only the youngest, healthiest applicants. So we've seen a large and consistent lead in that respect. The other thing I would say is carriers have also tried to replicate our direct business. MassMutual, Prudential, Northwestern Mutual, John Hancock, many others, they've all launched their own direct businesses in the past or acquired ethos competitor startups and have all shuttered them because it's a very difficult business to execute. Not only the underwriting component, which is a necessary condition of being able to offer a fast, easy checkout process to a direct consumer client who doesn't have the intent to sit through a 10 week burdensome process, but also just the execution around the technology and the marketing. The other component I would say that's difficult to replicate is our underwriting engine itself is a crown jewel piece of technology that makes our underwriting possible and nothing else exists like it in the market from third-party vendor-provided underwriting systems.

Aaron Turner, Head of Investor Relations

Okay, from the agent perspective, you're working with 15,000 agents. Again, they've been selling the same product with the same systems for years, and they like that. You know, it's comfortable. You know, they don't generally like using new systems. What are the maybe top three reasons that agents say, okay, I have to use a different system because they can't use their existing platform, right? They have to use a different system. why are they going through all that trouble to say yeah i want to sell ethos it's a great question

Peter Colis, CEO

our agent acquisition process is fairly organic it's typically an agent to agent or agency to agency referral where a friend or a trusted source says hey i launched ethos a year ago and now 30 or 70 of my business is on ethos i use them for these products or these solutions or these client needs and I love it because it literally simplifies my life so much and I have so much more time to sell and I get paid great fair commissions and you know the way I kind of think about it is it's like uber for uber drivers where they can just live within this one system they don't have to train across five or ten carriers and understand all their product nuances it's the same ten minute process for each of our products and we cover a wide variety of client needs now and growing and so I think it really simplifies and accelerates their ability to be successful as an agency and yeah I know you don't provide broad

Aaron Turner, Head of Investor Relations

agent statistics but maybe some anecdotes that once agents starts using you have they tended to you know sell more of your products different products

Peter Colis, CEO

that any anecdotes on those lines would be we have many agents that just sell 100% ethos even though they have the ability to sell for any carrier right as an independent agent but especially a new agent where the agency owner says it's so much simpler and easier to just train you on ethos and it's the fastest way to sell and it's the fastest way to get paid so it's most likely that I'm going to retain that new agent as a career agent with me because if they don't get quick hits of success they may feel you know like it's not going to be great career opportunity for them and so they just train and learn on us and then they grow with us and they start with a very simple senior whole final expense policy and then as their abilities evolve our product portfolio has evolved to continue growing with their needs and so they don't feel a need or a reason to go beyond us so we have some agents who use us for 20 percent of our sales but we have a lot who also use us for a hundred percent of sales I'll

Speaker 3

keep going but any questions no okay oh yeah Bruce yes you have to file your

Peter Colis, CEO

rates ahead of time there's not the same litigation of approval of pricing it's more just you have to file the pricing so that it's known and and that you

Speaker 3

cannot underwrite in a discriminatory manner yes so ethos has many different

Peter Colis, CEO

pricing strategies for different distribution sources that have different risk profiles to you know their clients we have many many different pricing strategies for different risk segments and different levels of elasticity baked into the different clients you know depending on how they're coming in and I think one of the cool things about a direct business is there's never been a carrier has been able to run like elasticity studies because they've always had this agent and PDF application and lengthy medical exam between them and their client. They're not vertically integrated like we are, and so it allows us to be so much more intelligent about where to be on that elasticity scale. Kyle, I think you had a question.

Aaron Turner, Head of Investor Relations

The slide ratio is 70%.

Peter Colis, CEO

63%, I think.

Aaron Turner, Head of Investor Relations

7% of 12 shares.

Peter Colis, CEO

Oh, got it. There hasn't been an industry study since 2022, but my guess is Ethos is pushing that number higher. I think we're the most successful D2C brand in life insurance. And if you take a step back, there's never been a great D2C brand And for mass affluent, middle, and mass market US life insurance, the brands that you know, Prudential, MassMutual, New York Life, they really focus on a much higher up part of the market that is really concentrated to just a couple percent of the population. And so for us, we really want to be broadly available and broadly known. and I you know and I think we will be here's a fun fact the most recognized life insurance carrier brand in the US can anyone guess Prudential MetLife MetLife hasn't sold insurance to individuals outside of employers in over 10 years they're really known from Snoopy ads like from their Snoopy logo you know 30 years ago and so that just gives you a sense of kind of how stale these brands are and our ability to really define the category and become

Speaker 4

widely known yeah what do you mean by that second question oh yeah yeah yeah

Peter Colis, CEO

what's our philosophy around that so um we our largest category is term life which I think we last disclosed potentially in our s1 that it was over you know it's around 70% of our revenue I might be misquoting that but somewhere around there. But we are growing quickly also in whole life and index universal life. We launched term life first and our direct business more skews towards term life, our agent business more skews towards whole life and index universal life as well as term life. But now we're also offering index universal life through our direct business. So we are growing in sophistication in both channels. As far as how do we choose a carrier partner, we really look for what carriers are gonna be very strong in that respective part of the market. So like in term life we work with Banner Life and Protective Life who are the two largest term life carriers in the US on an annual premium basis. For whole life insurance we work with TruStage which is a top three non-participating whole life insurance carrier in the US. For indexed universal life we work with North American which is a top 10 indexed universal life carrier. For supplementary health Aflac is the leader in cancer insurance so we try to find people that are really heavy hitters and strong in their respective parts of the market and and work with them to build the most competitive products at that point we'll

Aaron Turner, Head of Investor Relations

cut it off so you can eat those again we've been saying this a company and a stock you really should be watching and we'll do breakout upstairs thank you