Lemonade Announces Successful Renewal of Reinsurance Program
June 22 2023 - 8:00AM
Business Wire
The program, led by Lemonade’s existing
partners, will commence July 1, 2023. Lemonade’s financial
expectations for Q2 and full year 2023 remain unchanged.
Lemonade (NYSE: LMND), the digital insurance company powered by
AI and social impact, announced that its reinsurance program has
been renewed in good time and on good terms. The Lemonade program
is led by the same tier-one carriers as the expiring and was
oversubscribed on all dimensions.
The centerpiece of the program is 55% quota share protection,
the same level as the expiring coverage. The variable ceding
commissions are projected to be roughly equivalent to those enjoyed
under the outgoing agreements. The program covers all Lemonade
businesses globally, now also including Metromile, acquired by
Lemonade in 2022.
“It says a great deal when some of the world’s largest and most
respected reinsurers choose to stake their capital on the
performance of our business,” said Daniel Schreiber, Lemonade
co-CEO and cofounder. “These partners allow us to operate in a very
capital light mode, and focus our resources on expanding our
customer base across all of our products and geographies, while
harnessing our technologies to get ever more efficient, and ever
better at matching rate to risk.”
The renewed program is augmented by some new structures as well.
For one, Lemonade has formed a new risk-bearing entity, Lemonade
Re, in the Cayman Islands. Lemonade plans to hold some of its
retained risk in Lemonade Re. Similarly, Lemonade has established a
captive cell at a Bermuda transformer, and plans to utilize it to
retain most of its windstorm exposure. While windstorm reinsurance
capacity was available, this structure was determined to offer a
materially better cost/benefit profile.
The extant program expires at midnight on June 30, 2023, at
which time the new program will go into effect for a standard
12-month term. The Company’s financial expectations for Q2 and for
the full year 2023, as communicated in the Q1 ‘23 Lemonade Letter
to Shareholders, remain unchanged.
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 Twitter for updates.
FORWARD LOOKING STATEMENTS
This press release may contain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. All statements contained in this press release that do not
relate to matters of historical fact should be considered
forward-looking statements, including statements regarding our
financial outlook for the second quarter of 2023 and full year 2023
and the projected variable ceding commissions under the renewed
reinsurance program. 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 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 the fact that we may not
achieve or maintain profitability in the future; our ability to
retain and expand our customer base; the fact that 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; 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, which could undermine our business model;
the examinations and other targeted investigations by our primary
and other state insurance regulators that could result in adverse
examination findings and necessitate remedial actions; our limited
operating history; our ability to manage our growth effectively;
the impact of intense competition in the segments of the insurance
industry in which we operate on our ability to attain or increase
profitability; the unavailability of reinsurance at current levels
and prices, which could limit our ability to write new business;
our ability to renew reinsurance contracts on comparable duration
and terms to those currently in effect; our exposure to
counterparty risks as a result of reinsurance; the loss of personal
customer information, damage to our reputation and brand, or harm
to our business and operating results as a result of security
incidents or real or perceived errors, failures or bugs in our
systems, website or app; our actual or perceived failure to protect
customer information and other data, respect customers’ privacy, or
comply with data privacy and security laws and regulations; our
ability to comply with extensive insurance industry regulations and
the need to incur additional costs or devote additional resources
to comply with changes to existing regulations; our exposure to
additional regulatory requirements specific to other vertical
markets that we enter or have entered, including auto, pet and life
insurance, and the need to devote additional resources to comply
with these regulations; the ability of Lemonade to successfully
complete the integration of Metromile’s operations, product lines
and technology; the ability of Lemonade to continue to implement
its plans, forecasts and other expectations with respect to
Metromile’s business and realize additional opportunities for
growth and innovation; the ability of Lemonade to realize the
anticipated synergies from the transaction in the anticipated
amounts or within the anticipated timeframes or costs expectations
or at all; the ability to maintain relationships with Lemonade’s
and Metromile’s respective employees, customers, other business
partners and governmental authorities; and the other risks,
uncertainties and important factors contained and identified; and
our inability to predict the lasting impacts of COVID-19 to our
business in particular, and the global economy generally. These and
other important factors are discussed under the caption “Risk
Factors” in our Form 10-K filed with the SEC on March 3, 2023 and
in our other and subsequent filings with the SEC, which 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20230622310549/en/
Yael Wissner-Levy, press@lemonade.com
Lemonade (NYSE:LMND)
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