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Jun 30, 2023
Lemonade Q2 2023 Earnings Report
Lemonade's Q2 2023 performance exceeded expectations with strong top and bottom lines, highlighted by strategic reinsurance and growth financing initiatives that significantly improved capital efficiency.
Key Takeaways
Lemonade reported better than expected top and bottom lines in Q2 2023. In-force premium grew by 50% year-over-year, and the company renewed its reinsurance program. The company also secured customer acquisition cost (CAC) financing. Adjusted EBITDA loss came in better than expected, despite heightened CAT losses. Net loss for the quarter was $67 million.
In-force premium (IFP) grew by 50% year-over-year, reaching $687 million.
The 55% quota share reinsurance program was renewed and oversubscribed.
Customer acquisition cost (CAC) financing was secured to enhance cash-friendly scaling.
California approved a 30% increase in homeowners rates and a 23% increase for Lemonade Pet.
Forward Guidance
Lemonade is modestly raising its guidance for the second half of 2023, focusing on continued improvements and automation to set up for more growth in 2024.
Positive Outlook
- Faster rate filings and more approvals bode well.
- Slowing inflation is expected to positively impact results.
- Synthetic Agents and reinsurance are in place, strengthening the capital structure.
- H2 should bring a growing top line and an improving bottom line.
- Continued improvements: more automation, more 'earning in', more filings.
Challenges Ahead
- The company won't accelerate growth until the loss ratio for new cohorts is in line with targets.
- More rates need to come online before accelerated growth can occur.
- Improvements will take several quarters to fully register on the book.
- The team is conducting a thorough review of the homeowners business book based on multiple factors.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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