Ethos Technologies Inc. (LIFE) September 2026 Conference Transcript

All right. I think we could probably get started as people trickle in. It's a pleasure to have Ethos Technologies for the first time at the Communicopia Conference this year. Peter Kola is CEO. Alex, thanks for having me. Yeah, thanks for being here. Appreciate it. I just want to start big picture, Peter, and just the level set for investors. You went public earlier this year, and there's plenty of folks that might be new to the story. So how would you describe what you're building at Ethos and what makes the platform structurally attractive to facilitate this industry within life insurance?

That's a great question. So Ethos transforms the buying, selling, and risk management of life insurance. We deliver a 10-minute purchase journey instead of 10 weeks of paper applications, medical exams, blood tests, and this allows consumers to have a much simpler and easier experience to solve this critical cornerstone of their family's financial plan. It also transforms the agent's life because they free up so much time to prospect and sell more policies than they otherwise would, having to case manage people through the legacy income and process. And then for carrier partners, we allow them to grow incrementally at their target IRRs in a very risk-conscious manner. And so it really is a platform that benefits all three sides and parties.

That's great. Maybe talk about the secular growth opportunity within the life insurance industry. Pretty steady growth industry overall, but very low digital penetration, which you guys are obviously helping to facilitate that. So how do you see the secular growth opportunity for the industry going forward?

It's a great question. So the industry is growing around 3% on average compared to Ethos, which is growing substantially higher than that. And I think the underlying value proposition in the product market fit has enabled sustainable unit economics in differentiated go-to-market strategies. So the instant transactional nature of the end-to-end technology platform has made it possible to make direct-to-consumer work as an acquisition channel where it previously could not have been done by an incumbent. But the underlying value proposition is allowing us to take share of the independent agent community, onboard agents at an unprecedented growth rate, have those agents reach peak productivity levels of selling more and more policies per agent than was ever previously possible, enabled by the end-to-end frictionless platform across a whole portfolio of products. So we're optimistic about growing both of these core distribution strategies. I think if I think about the direct business, it really is in the early innings and could be like a progressive or a Geico-like transformation of the industry where you had an agent-dominated strategy with a manual offline process. You make it simple and easy online, and half the market goes to direct-to-consumer as it did in auto insurance. And I think we could realize that future faster because we don't have to grow our surplus capital in relation to our client demand, right? Ethos is a non-risk-bearing company. We have no balance sheet. We have no commissions at risk. And we have ample balance sheet carrier partners who want to grow premiums being received from us faster than we are growing them. So, you know, I'm excited to see that transformation occur over the coming years and decades. On the third-party independent agent side, agents are 90% of life insurance sales today. We look very different from a typical carrier, and we allow agents to have a successful career, especially as a new agent. You can onboard, learn, sell a policy, get paid the next day a commission, reinvest those commissions in lead buying or prospecting, and so on and so forth.

Great. Right. You touched on it a little bit, but it seems like at the core of your value prop is the underlying technology, right? The ability to instantly price or quote. How have you built that out, and what's sort of the differentiation factor of the ethos technology platform versus either previously how it's been done for a number of years in the past or some of your maybe competitors that are in the space on the online space?

We realized early on that we needed to both vertically integrate and take over almost all operations that are typically housed within a carrier, things like underwriting, administrating policies, payments and commissions, infrastructure, you know, being the system of record. And at the same time, we couldn't rely on the same third-party antiquated on-prem mainframe and other legacy solutions that carriers are hobbled by today. So it led to us building a completely native technology platform. All core systems are ethos built, are admin systems, underwriting engines, payments and commission infrastructure, agent operating systems, et cetera. And they're all purpose built for ethos and how we do business. They all seamlessly work together. And so it allows us to be a virtuous learning cycle business in a much more frictionless manner than a typical carrier that's sitting between them and their client is a fractured data infrastructure, on-prem systems, a medical exam underwriting process, a PDF application, a mandatory sales agent. There's so much more sludge in that virtuous learning cycle business than in our business today. So having a native technology platform was of the utmost importance. The second was really advancing the state of underwriting, and what I would analogize it to is if we were credit underwriters, it's like the rest of the market can compile FICO in 10 weeks, and we can compile it instantly with a near-perfect supplement of data for a traditional medical underwriting process. What it's not is us going and underwriting off some really different kind of data like, you know, analogous to your social media profile or something like that. It's really we're absorbing medical data like your pharmaceutical records, your medical claims billing data that would get coded back to your health insurance company, showing us what doctors you've seen, what tests or procedures you've had. We're absorbing your prior blood labs information from your last medical exam. So information that's a near-perfect supplement for a manual life insurance underwriting process, but we're compiling it instantly. And then there are two core layers of IP in our underwriting engine. The first is translating this morass of structured and unstructured data into a proprietary information graph. And then a second layer is computing that complex information graph into an accurate pricing decision. In a highly levered business where one mispriced apple can spoil a bundle of 300, you know, accurately priced apples. So it's a very complicated data science, and we automated it slowly percentage point by percentage point over a five- to six-year period. But what we got to was really a transformative transactional experience where we can confidently issue life insurance in 10 minutes online at a price that's comparable to if you were to go through a full medical exam. And that has allowed us to open up all sorts of incredible growth opportunities.

A lot of questions we get along those lines are around, okay, why would the carrier partners not just build it themselves, right? I would imagine they have access to a lot of their own proprietary first-party data. Is it more about these are legacy carriers that don't necessarily have the sophistication or resources to? Is there something on the actual technology itself that you guys have unlocked? Talk about that value prop over time.

I think it's a combination of factors. One, our underwriting engine uniquely puts us in a position to be able to automate not only the simple, easy, younger, healthier person, but the more complicated older person with pre-existing health conditions and unclean data and just complicated conflicting variables. So the technology is a big part of it. The execution and the team and the rules and logic IP that we've developed is very complicated and hard to reproduce. And we really got there out of necessity. our direct-to-consumer unit economics could not have been sustainable in absence of this. And so a typical carrier that relies on agent-based sales has less of a need to make that journey and make that leap and do that incredibly hard work, and they may not have the technology or the resources internally to be able to achieve it either. And then what I would say is a manual underwriting data mode does not translate to an automated underwriting data mode. They are two really distinct things, and we have built up one of the largest automated underwriting, if not the largest automated underwriting data mode, which allows us to de-average observations, drill deeper and deeper into pricing for more specific kinds of risk, and become more intelligent. And that ultimately generates more profit and IRR for our carrier partners and then eventually more economics for ethos or the end client's prices or agent's commission.

You talked a little bit about earlier about how pricing has to be near perfect and how one bad apple could spoil the bunch. You know, you've been on this journey for a number of years, but still relatively early in your journey. Talk about how the cohort behavior of some of the policies that you've underwritten over the years have performed for your carrier partners and how that, you know, ROE or ROI has, you know, trended over time.

Yeah, it's a great question. So we're always on managing mortality and persistency risk on behalf of our carrier partners. We look at updating pricing on a quarterly basis for every single product. you know we in actuality change pricing very minimally you know i think in the past year we updated pricing on one product just to give you a sense of kind of how mature and seasoned the actuarial perspective and views on our business are we're always looking at updates to the underwriting algorithm and rules as we you know find abilities to improve and modify one of the benefits we have is we have a large human underwriting team that, after we issue coverage, are evaluating how the human would have priced that decision versus how the engine did, right? The human will pull medical records from the client's doctor, and that human has decades of known pricing outcomes. And we'll compare, hey, should pricing have been tweaked? Should the underwriting rules have operated a bit different in that instance? And that gets incorporated on on a go-forward basis, almost as a shortcut for auditing data to get a feedback loop faster than having to wait for claims to come. We're now also of a credible scale and tenure of claims that that is also a material input into our pricing model on a go-forward basis. So I would say, NatNet, just given our scale and our tenure in market, we're no longer operating with the unknown of a startup's data set. We are one of the largest underwriters in the industry now, and we have a, you know, a credible tenure of data.

And how do you generally approach that, you know, persistency estimates in terms of level of conservatism, the way you price policies, and, you know, are you going more for growth and scale at this point or profitability with your carrier partners? Talk about that balance.

That's a great question. So persistency is an important variable in our business, not only for carrier partners' profitability, but also for our LTVs, and it's an input to our revenue recognition model. Our chief actuary, who is the former chief actuary of Legal and General America, and his actuarial team set the initial assumption on a quarterly basis. And then every quarter, that assumption is scrutinized and reviewed by Milliman, which is the leading third-party actuarial consulting firm, and then by Ernst & Young and their specialist actuarial team, who are our auditors. So it's peer-reviewed. It's set as conservatively as possible within the bounds of gap accounting standards. And we aggressively manage to persistency targets on behalf of our carrier partners. So we are always evaluating what business we should lean into or lean away from based on you know perceived mortality and persistency in relation to pricing. We are not just trying to grow at all costs or in an unconstrained manner, our business is one of many countermetrics. And so we are always putting the ecosystem of our carrier partner's profitability and our profitability in focus. And we always prioritize our carrier partner's long-term profitability before our own short-term profitability.

You gave some great stats when you went public earlier this year around the fragmentation of the carrier landscape across U.S. life insurance. Maybe frame for us what the landscape looks like in terms of carrier market share and fragmentation and what percent penetration of who you're working with on the carrier side is right now.

So the largest carrier in the market commands about 10% of new premiums issued, which is It's surprising because life insurance, in our opinion, should behave more like a commodity where it's differentiated on a price per unit of coverage. But in reality, our observation is it's much more differentiated on the distribution and experience the client or the agent go through. And it lends itself to a more inelastic purchase and an inelastic sale. And we think that benefits us because Ethos is the most differentiated client and agent experience in the market by far. And so our hope is to one day consolidate more market share than any individual carrier has been able to do. We also benefit because we work with a portfolio of carriers, today six carriers, and we specifically choose carriers who are strong in the respective parts of the market where we partner with them. If you look at carriers, they tend to be strong in various parts of the market and weak in others based on their philosophies on underwriting, how their balance sheet is composed, what their actuarial opinions and their target IRRs are, where they feel their competitive advantage is. And so if you look at how ethos has pooled a collection of strong carriers in various respective parts of the market, it should give us a game theory dominant value proposition to the selling agent and the buying client versus any one individual carrier in the market. And therefore, we should have superior unit economics and the ability to grow and take market share faster than any individual carrier. And so think of it as almost the ethos brand works as a collective brand on behalf of the carrier partners and balance sheets standing behind it for their benefit.

And would you frame the larger opportunity to grow your wallet share within your existing carrier partners, to expand into new carrier partners, a combination of both? I mean, I imagine it's both given it's very early in the penetration curve, but how would you sort of balance those two?

That's a great question. The carrier partners that we operate with today have ample surplus capital and balance sheet availability for us to grow significantly without any constraint. And they like the risk that we're giving them. And so I think that we can continue to grow in a risk-conscious manner, but with our existing partners without issue. We are always on the lookout for new potential carrier partners who might be good in building redundancy for existing parts of the market where we're already growing large in or growing our portfolio of products to access new parts of the market that we're not already in today, either in new product categories or different parts of the risk spectrum where we're not a material part today. So both always looking to add redundancy and improve the strength of our offering.

It seems like what are some of maybe the gating factors to driving that growth, both a number of carrier partners but also that wallet share? You seem to be framing it, and correct me if I'm wrong, as more demand-constrained rather than supply-constrained, i.e. your carrier partners have ample capacity to be able to facilitate increasing the risk that you guys bring to them. but maybe it's more on the demand side of the equation. How do you sort of unlock that, and what are some of the investments you're making to sort of unlock those bottlenecks?

We are intentional about wanting sizable relationships with each carrier that we work with. The reason is it benefits us in being prioritized at the front of their IT and operational roadmaps. It gives us the standing to have a meaningful economic participation in the transaction. And it makes us the most important thing to them, and it makes them extremely important to us. So we like that nature of the relationship. We are, at the same time, focused on further growing our direct-to-consumer and our third-party agent business. And let me talk through the growth models on those two. So the direct-to-consumer growth model is really one where it's a unit economics-focused business where we improve the underlying unit economics via improvements to the underwriting algorithms, improvements to persistency in retaining paying clients, improvements to the user experience and conversion rates, improvements to the MarTech data infrastructure, figuring out where to best spend the next incremental dollar to acquire a client, improvements to the brand building and creative and trust in the market. And so all of these things yield unit economic gains which then allows to increase our advertising spend, you know, unlocking new swaths of spend until the next incremental dollar spent is back down to our target unit economic threshold. And that target unit economic threshold for us is on a fully burdened basis variable cash positive by month two of a policy's life cycle. So a 60-day working capital cycle. So very efficient. and that's really the growth model and we've been able to you know last quarter direct our direct channel grew over 130 percent year over year at commensurate unit economics with the year prior with the fairly same product portfolio makeup as a year prior just giving you a sense of the ability to scale and grow in that channel you know through this model on the third party agent side, the growth model is really one of quantity of agents times number of policies sold per agent. And so we are always focused on improving both of those things. We reported last year that over 15,000 agents had sold our products. And we're always recruiting and onboarding new agencies who roll us out to all their existing agents, but then also go and keep recruiting more agents to our platform at no incremental cost. And interestingly, because Ethos is so simple and easy for an agent, that agent can, with Ethos, more successfully retain as a successful career agent with that agency, allowing them to have the confidence to go and recruit more agents than they otherwise would be able to without Ethos. Furthermore, we're always focused on improving our operating system and broadening the product portfolio so that those agents can go and sell more policies than they otherwise would. And so that's really the growth model. Historically, we've seen great gains not only from increasing the volume of selling agents, but also the products sold per agent.

You touched on it a little bit there, but maybe just a double click on it, the relative unit economics of both of those channels. So direct-to-consumer, you have the sort of marketing spend against that, and you talked about improving the ROIs on that and seeing really nice strength there. On the agency side, you obviously have the revenue share with those agents. So maybe talk about the difference in unit economics between the two, and are you sort of more focused on expanding both, or is there sort of a relative difference in either channel that you're looking at?

That's a great question. The two channels have different unit economic profiles. In direct consumer, there's the absence of an agent commission in the mix. In third party, there's an added agent commission. And so when we improve our end-to-end conversion rates or underwriting in direct consumer, that accrues to ethos unit economically, and we can decide to increase marketing spend or just take more profit. In our third-party agent business, when we improve the end-to-end conversion rates or the underwriting or something there, it accrues to the agent unit economically, but it accrues to ethos volumetrically because that agent can then go sell net more policies than they otherwise would in absence of those unit economic improvements. So we're always focused on improving unit economics for both ethos and for our selling agents and benefiting in both ways. The mix of those two businesses has an impact on our blended contribution margin, but both businesses are great to be in. They both are held to that same standard of variable cash positive by month two of a policyholder's life cycle, regardless whether it's direct to consumer or the agent business, and so we want to grow as much as we can in both, and we are not constraining either.

Can you talk a little bit about growing the agent base, what the landscape looks like, whether it's large agencies or more independent, and what's your go-to-market there? I think a couple years ago you might have taken actually a step back and rethought about the number of agents you brought onto the platform and focusing more on quality rather than quantity at all costs. But obviously, the word of mouth, as you alluded to, sort of sells itself once you get within an agency. So maybe talk about that onboarding cycle and how you think about that going forward.

We are thoughtful about what agents will make a good fit with our platform, and we have always on machine learning, agent fraud, and client fraud management, which is just always looking at business quality and leading indicators for which agents might be trying to abuse the system and terminating them from the platform as quickly as we can within that agent's life with us. So it's a fairly resilient system that allows us to be less discriminating in onboarding our agents than we otherwise would have to be because the fraud prevention is there. And that's something we're always evolving and improving. But we're agnostic in recruiting large agencies and small agencies, and we have a blend of both. We have life-focused agencies. We have home and auto-focused agencies, health insurance-focused agencies. We have partnerships with more digital distributors like Liberty Mutual or Credit Karma or Goosehead. So it's really a variety of different archetypes of partners. The core of it are life insurance agents, and Ethos is really transformative for the agency owner because it gives them not only the increased productivity that we talked about, but a level of fidelity and control over their downline agent's productivity and business quality that is not, you know, accessible via selling other carriers' products. So it's not only beloved by the agents, but it's also beloved by the agency owners and managers. And it lends itself well to a diversity of archetypes.

Switching gears a little bit to your product suite and your product offering, that's been something that's surprised us to the upside in terms of the pull forward and execution on that product pipeline over the last 6 to 12 months. How would you view or frame your current product offering and your suite of policies that you offer and what the roadmap is going forward?

That's a great question. I think we're partially built through the life insurance roadmap. There are still many more life insurance products that we would like to build with both existing carrier partners and net new carrier partners. And then we are excited about a number of tangential markets, annuities being a core one where we've disclosed previously that we've started distributing annuities through our direct-to-consumer business. We like the early signs of what we see. We think direct-to-consumer is a distribution model that Ethos can potentially uniquely succeed at with this product. Still mandating that the client speak with a licensed annuity representative so that they know what they're buying and we ensure the suitability underwriting is done correctly. But it's really a novel go-to market for a very large industry. and then we're excited about a number of other tangential markets to life insurance which i don't want to comment on specifically but other things that our platform can be amortized by you know the same underlying technology and then our go-to-market uh existing distribution we can amortize and then our skills and execution internally that we can amortize you talked a little in the past publicly as well about the potential going forward to maybe white label your technology offering as well and offer it direct to the carriers.

Maybe talk about that opportunity over time.

So, you know, carriers badly need technology like ethos, right? Buying life insurance sucks without an ethos-like solution and selling it kind of sucks without an ethos-like solution. So we are always keeping our eyes open for what opportunities would be most incremental to how we're otherwise already going to get in front of the same client or agent, right? So carriers that have captive or proprietary distribution that we're otherwise not going to access, that's exciting to us. And then it has to be at economics that are interesting to us and contributory to our But those are the opportunities that we explore and spend the most time and effort on.

Switching gears a little bit to investment areas, obviously the biggest one being marketing to drive that direct traffic on the D-to-C side of things. Maybe talk about how you view sort of your return on some of those investments over time, and you touched on it a little bit earlier, but sort of the building blocks to improving that going forward, whether it's increased conversion and some of the investments there, whether it's honing your marketing and customer acquisition engine. What are some of the key points that can continue to improve that over time?

So we have many pods at Ethos that are focused on a whole slew of de-averaged opportunities that eventually feed into improving unit economics, right? It could be improving brand creative. It could be improving marketing targeting. It could be improving upper funnel conversion rates, lower funnel conversion rates, increasing the rate that we can improve people, decreasing prices for clients, improving the longevity and persistency of a client, et cetera. So there are many different pods of ethos who are all focused on these goals that all feed into the overall goal of improving unit economics. And if you look at over the past several years, we've had a very consistent and predictable rate of being able to increase unit economics. And where we've been positively surprised by is recently the nonlinear relationship between improving those unit economics and unlocking large swaths of marketing spend at our target economic efficiency. And that's especially occurred as we've transitioned from being more focused on bottom-of-funnel advertising where people are looking for life insurance via search or bottom-of-funnel affiliates to building a brand in more top-of-funnel advertising strategies like television, radio, social media, podcasts, direct mail, YouTube, et cetera. And so we're succeeding at building a brand and convincing people that aren't looking for life insurance to get off the couch and realize they are a candidate for it, they need to buy it, and take action. And so we're excited about just that continuing to play out. If I look at the largest property and casualty consumer-facing companies, they're spending billions each a year on advertising. And so we draw inspiration from them that hopefully we should be able to scale up advertising spend to many multiples of where it currently is today, doing it in a unit economically controlled manner.

I've definitely seen a lot of your TV and YouTube ads lately as well, so I can speak to that. Maybe some other investment areas. How do you think about, you know, targeted investments to drive that growth, given you're so early in the growth and penetration curve versus, you know, making sure you're maintaining that positive unit economics and margin expansion? How do you balance that?

We're not trying to pursue every flashy, you know, new opportunity and every new product category. we're really disciplined about doing our core thing really well because life insurance is such a large market that oftentimes we'll get the greatest gains from making some, you know, tweak to some part of the process or experience and that will yield the most gains, right? And so, you know, we really try to follow this mantra of don't confuse motion with progress and really focus on, you know, the end results and progress. So we see a tremendous amount of opportunity within our core existing strategies that we've been pursuing for years and just doing more of the same, in addition to green shoots in adjacent markets like annuities. But we think our growth formula really, the things that have worked in the past will continue to work into the future. That's our belief.

And then broadening out to sort of broader capital allocation, how do you think about balancing, reinvesting in the business to drive that growth, maybe some strategic M&A, if there's any pockets of, you know, whether it's technology or talent or what have you, that you might be able to sort of accelerate that roadmap. And then you announced a share repurchase program as well. So recognizing that you're not the CFO, but how do you sort of make those capital allocation decisions?

Yeah, first, the first and foremost priority is organically funding our growth, right, and just continuing to do more of the same. We are always on the lookout for acquisition opportunities. We look at, you know, could something make sense to accelerate us into a tangential market? And do we want to give the distraction from our core business to take on everything that comes with an acquisition because they are not distraction free? And then the share we purchase is really there to take advantage of, you know, large dislocations in the price if they come. When we look back at the volatility since we went public, there were opportunities where we said, man, we wish we could have bought back stock at those days, but we didn't have a share purchase program approved and announced. And so we wanted it there in the event that those opportunities present itself. It's not an always-on, you know, just constantly buying no matter the price program.

We've got about a minute left. I want to give you the opportunity to sort of bring it all home. Hopefully you'll be back next year. If we're sitting here 12 months from now, what will we be talking about? What are sort of the key developments over the next 12 months? and then what excites you most as you look out over the opportunities over the next few years?

This is going to sound boring, but it's really more of the same. It's a very simple thesis in our perspective. It's a complicated business to manage, but it's a simple thesis. Buying life insurance is incredibly important. I can guarantee you 100% of us are going to die. So the need for the product, if you have people who count on you, is really non-negotiable. And buying it without ethos is terribly painful. Buying it with Ethos is simple and easy and delightful. And you can solve that problem in 10 minutes online at ethos.com.

Very uplifting way to end it. Thanks so much for being part of the conference here. Thanks so much, Alex.

Appreciate it.