Lemonade to reduce reinsurance quota share from 55% to 20%

NEW YORK - Lemonade, Inc. (NYSE:LMND), the $3.17 billion market cap insurtech company that has seen its stock surge over 150% in the past year, announced Monday it will reduce its quota share reinsurance from approximately 55% to 20%, effective July 1, as part of its annual reinsurance program renewal.

The digital insurance company cited improvements in diversification, underwriting capabilities and loss ratio trajectory as key factors enabling the reduction. The variable ceding commission rate is expected to remain roughly equivalent to previous agreements, and the program will cover all Lemonade businesses globally with primary quota share carriers remaining unchanged. According to InvestingPro data, the company has demonstrated strong growth with revenue increasing 23.12% over the last twelve months to $558.6 million.

"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. While the company’s technological advances are promising, InvestingPro analysis shows the company faces profitability challenges, with analysts not expecting positive earnings this year. For deeper insights into Lemonade’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.

The company also expects to renew its other ancillary reinsurance programs, including Property Per Risk coverage, at terms similar to expiring agreements. The new program will be in effect for a standard 12-month term.

Reinsurance allows insurers to transfer portions of risk portfolios to other parties to reduce the likelihood of paying large obligation resulting from insurance claims. By retaining more risk, Lemonade aims to improve margins while maintaining a capital-light structure.

Lemonade currently offers renters, homeowners, car, pet, and life insurance in the United States, Germany, the Netherlands, France, and the United Kingdom. The company made this announcement in a press release statement.

In other recent news, Lemonade Inc. reported impressive financial results for the first quarter of 2025, exceeding expectations in both earnings and revenue. The company posted an earnings per share (EPS) of -$0.86, surpassing the forecast of -$0.92, and generated revenue of $151.2 million against a forecast of $145.92 million. JMP analysts maintained their Market Outperform rating on Lemonade, with a price target of $60, following these results. They noted the company’s adjusted gross profit of $46 million, which exceeded both their estimate and the consensus. Lemonade’s in-force premium (IFP) grew by 27% year-over-year, with projections indicating continued growth in the coming years.

Additionally, Lemonade’s auto insurance segment, Lemonade Car, demonstrated significant growth, expanding into new markets and achieving higher conversion rates through the use of telematics. The company reported a strong cash position with $996 million in reserves, providing a solid foundation for its growth strategy. Analysts from JMP highlighted improvements in Lemonade’s operating leverage and expect this trend to continue as the company scales. Lemonade projects full-year revenue between $661 million and $663 million for 2025, with an expectation to achieve EBITDA breakeven by the end of 2026. These developments reflect confidence in Lemonade’s growth trajectory and operational strategy.

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