Lemonade Records Another Q2 Loss, Changes Pace For Profitability

By | August 9, 2022

Insurtech Lemonade said it booked a second quarter net loss of $67.9 million compared with a net loss of $55.6 million during the same quarter last year, but in a letter to shareholders the company said returns will soon eclipse the costs of investments.

In keeping with comments earlier this year, the letter reiterated that Lemonade expects losses to peak in 2022 – more specifically in the next quarter – before shrinking thereafter. The AI-powered insurance company said the change from “growing losses to shrinking losses is occurring naturally. It is an outgrowth of sticking to our strategy,” which will be outlined in more detail at an Investor Day in November, the company said.

Lemonade said it made changes to its plan “with the goal of ensuring we are never forced to raise capital” without committing to never fundraising if the cost of capital becomes more favorable. As part of the new approach, it has moderated growth spend and its hiring pace.

“We’re not changing course – we’re changing pace,” the letter told shareholders. “We will continue to execute on our strategy, just at a moderated clip.”

During the third quarter Lemonade will integrate the data and tech stack, as well as about 80% of the staff, at pay-per-mile car insurance provider Metromile – an all-stock acquisition Lemonade closed in late July. Metromile shareholders received 7.3 million Lemonade shares valued at about $145 million, while Lemonade received a business with over $155 million in cash, over $110 million in premiums, and an insurance entity licensed in 49 states that Lemonade said “changes our product mix significantly.” Renters now accounts for about a third of its book, down from about half, while auto jumped from 1% to 20%.

Lemonade said cross-selling was up in Q2. Cross- and up-sells accounted for 23% of sales in Q2 and Metromile gives Lemonade the opportunity to open seven more markets to bundle car and home insurance – and “further launches are in the works.” The continued roll out of Lemonade Car, launched in Illinois in November, “promises to spike” cross-sells. In Illinois, 36% of Lemonade sales in Q2 were cross- or up-sells, Lemonade said.

Acknowledging the impact of inflationary pressures, Lemonade said it has mitigated the threat with about 100 rate filings over the last year and is seeing the loss ratio moderate.

“Nevertheless, inflation-induced mismatches or rate and risk are liable to recur, and we will continue to be vigilant and responsive,” Lemonade said in the letter.

Topics Profit Loss

Was this article valuable?

Here are more articles you may enjoy.

Latest Comments

  • August 15, 2022 at 10:33 am
    Agency says:
    I thought they had an okay role to play and that is to sell renters policies to those without cars. While independent agents may write this business, with such low premium, it... read more
  • August 10, 2022 at 9:27 pm
    Buckle Up says:
    Did management come from the government sector because they are spinning this $ h it like a politician. One word to describe this company: FUBAR
  • August 10, 2022 at 6:42 pm
    PolarBeaRepeal says:
    It is a lesson in blindly following old parables. So, when Life gives you lemons, DON'T invest in Lemonade.

Add a CommentSee All Comments (10)Add a Comment

Your email address will not be published. Required fields are marked *


More News
More News Features