Lemonade Announces Successful Renewal of Reinsurance Program

Business Wire

3 days ago

NEW YORK--(BUSINESS WIRE)--Lemonade, Inc. (NYSE: LMND), the digital insurance company powered by AI and social impact, announced that its reinsurance program is being renewed.
Given strong progress in the company's diversification, underwriting prowess and loss ratio trajectory, the Company has chosen to reduce the ceded proportion of its quota share reinsurance from approximately 55% to approximately 20%, effective July 1. The variable ceding commission rate related to the quota share agreements is expected to be roughly equivalent to that of the expiring agreements. The program covers all Lemonade businesses globally, and the primary quota share carriers will remain unchanged.
'This year, we continued to reduce our reinsurance overhead, which is a reflection of how much stronger and more precise our tech based underwriting and pricing machines have become,' said Shai Wininger, Lemonade's President and cofounder. 'Reinsurance comes at a cost, and thanks to years of steady improvements, we're now in a position to retain more of the risk ourselves, improve margins, and stay capital-light—all while continuing to work with some of the world's top reinsurers.'
The Company expects to renew its other ancillary reinsurance programs, including Property Per Risk (PPR) coverage, at terms roughly in line with expiring agreements.
The new program will be in effect for a standard 12-month term.
About Lemonade
Lemonade offers renters, homeowners, car, pet, and life insurance. Powered by artificial intelligence and social impact, Lemonade's full stack insurance carriers in the US and the EU replace brokers and bureaucracy with bots and machine learning, aiming for zero paperwork and instant everything. A Certified B-Corp, Lemonade gives unused premiums to nonprofits selected by its community, during its annual Giveback. Lemonade is currently available in the United States, Germany, the Netherlands, France, and the UK, and continues to expand globally.
Follow @lemonade_inc on X for updates.
FORWARD LOOKING STATEMENTS
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact contained in this press release are forward-looking statements, including the impact or effectiveness of the reinsurance program and financial expectations for Q2 and the full year 2025.
These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements expressed or implied to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to the following: our history of losses and that we may not achieve or maintain profitability in the future; our success and ability to retain and expand our customer base; the 'Lemonade' brand may not become as widely known as incumbents' brands or the brand may become tarnished; the denial of claims or our failure to accurately and timely pay claims; our ability to attain greater value from each user; availability of reinsurance at current levels and prices; our exposure to counterparty risks; our limited operating history; our ability to manage our growth effectively; our proprietary artificial intelligence algorithms may not operate properly or as expected; the intense competition in the segments of the insurance industry in which we operate; our ability to maintain our risk-based capital at the required levels; our ability to expand our product offerings; the novelty of our business model and its unpredictable efficacy and susceptibility to unintended consequences; the possibility that we could be forced to modify or eliminate our Giveback; regulatory risks, related to the operation, development, and implementation of our proprietary artificial intelligence algorithms and telematics based pricing model; legislation or legal requirements that may affect how we communicate with customers; the cyclical nature of the insurance industry; our reliance on artificial intelligence, telematics, mobile technology, and our digital platforms to collect data that we utilize in our business; our ability to obtain additional capital to the extent required to grow our business, which may not be available on terms acceptable to us or at all; our actual or perceived failure to protect customer information and other data as a result of security incidents or real or perceived errors, failures or bugs in our systems, website or app, respect customers' privacy, or comply with data privacy and security laws and regulations; periodic examinations by state insurance regulators; underwriting risks accurately and charging competitive yet profitable rates to customers; our ability to underwrite risks accurately and charge competitive yet profitable rates to our customers; potentially significant expenses incurred in connection with any new products before generating revenue from such products; risks associated with any costs incurred and other risks as we expand our business in the U.S. and internationally; our ability to comply with extensive insurance industry regulations; our ability to comply with insurance regulators and additional reporting requirements on insurance holding companies; our ability to predict the impacts of severe weather events and catastrophes, including the effects of climate change and global pandemics, on our business and the global economy generally; increasing scrutiny, actions, and changing expectations on environmental, social, and governance matters; our agreement with General Catalyst as a synthetic agent may not function as expected; fluctuations of our results of operations on a quarterly and annual basis; our utilization of customer and third party data in underwriting our policies; limitations in the analytical models used to assess and predict our exposure to catastrophe losses; potential losses could be greater than our loss and loss adjustment expense reserves; the minimum capital and surplus requirements our insurance subsidiaries are required to have; assessments and other surcharges from state guaranty funds; our status and obligations as a public benefit corporation; our operations in Israel and the current political, economic, and military instability, including the evolving conflict in Israel and surrounding region; enactment of legislation, or other government actions, implementing changes in tax legislation or trade policies in different geographic jurisdictions may impact our business, financial condition and results of operations.
These and other important factors described under the caption 'Risk Factors' in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed on February 26, 2025, and in our other subsequent filings with the SEC, could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release. Any such forward-looking statements represent management's beliefs as of the date of this press release. While we may elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause our views to change.
NEWS & INFORMATION DISCLOSURE
Investors should note that we may use our website (investor.lemonade.com), blog (lemonade.com/blog), X (@Lemonade_Inc), and LinkedIn as a means of disclosing information and for complying with our disclosure obligations under Regulation FD. The information we post through these channels may be deemed material. Investors should monitor these channels in addition to reviewing our press releases, SEC filings, and public conference calls.