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Lemonade, Inc. (NYSE:LMND), the insurtech company with a market capitalization of $3.2 billion and showing strong revenue growth of 23% over the last twelve months, has entered into new reinsurance agreements that will lower the portion of its insurance business ceded to reinsurers. According to a statement filed with the Securities and Exchange Commission, the company and certain subsidiaries finalized terms for a reinsurance program effective July 1, 2025, through June 30, 2026.
The reinsurance program includes quota share contracts between Lemonade, its subsidiaries Lemonade Insurance Company, Metromile Insurance Company, and Lemonade Insurance N.V., and reinsurers Hannover Ruck SE and MAPFRE Re. Under the new agreements, Lemonade will reduce the percentage of premiums ceded under its quota share reinsurance from about 55% to roughly 20%.
The company stated that the variable ceding commission rate for the new quota share agreements is expected to remain similar to the rate in the expiring contracts. Lemonade also expects to renew other ancillary reinsurance programs on terms largely consistent with those of the previous period.
Lemonade indicated that the full text of the reinsurance contracts will be filed as exhibits to its upcoming quarterly report for the period ending June 30, 2025, with certain confidential provisions redacted.
This information is based on a press release statement included in Lemonade’s recent SEC filing.
In other recent news, Lemonade Inc . has reported significant developments that may interest investors. The company announced a reduction in its quota share reinsurance from approximately 55% to 20%, effective July 1. This decision is attributed to improvements in diversification and underwriting capabilities, along with a favorable loss ratio trajectory. Lemonade also reported an adjusted gross profit of $46 million for the first quarter of 2025, surpassing JMP’s estimate of $41 million and the consensus of $37 million. The gross loss ratio for the quarter was 78%, better than anticipated by JMP and the consensus forecast.
Analysts at BMO Capital have raised their price target for Lemonade to $23.00 from $15.00, noting a significant increase in the company’s premium retention. Meanwhile, Keefe, Bruyette & Woods increased their price target to $26.00 from $22.00, citing the positive impact of the reinsurance shift on earnings. JMP analysts maintained a Market Outperform rating with a $60.00 price target, highlighting Lemonade’s operational improvements and growth in its auto insurance offering. The company’s strategy of using telematics for its Lemonade Car product has shown promising results, with increased conversion rates and a doubling of cross-sales. These developments reflect Lemonade’s ongoing efforts to enhance its financial performance and market position.
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