Lemonade ends Q1 with $47 million loss

Lemonade released its Q1 2024 results, ending the quarter with 2,095,275 customers, a 13% year-over-year increase. The company added ~68k customers to its overall count in the quarter.

In-force premium reached $794 million, an increase of 22% compared to the same period last year.

Premium per customer stood at $379, 8% higher compared to Q1 2023.

The company spent $30.4 million on sales and marketing during the quarter, an 8% increase compared to Q1 2023.

Gross loss ratio for the quarter was 79%, an 8 point year-over-year improvement.

Combined ratio for the quarter was 195%, compared to the 234% in Q1 2023.

Net loss for the quarter stood at $47 million, a 28% improvement compared to the same period last year.

The company expects positive cash flow breakeven by the end of the year.

In the shareholder letter, Lemonade decided to highlight its LAE ratio, defined as loss adjustment expenses divided by gross earned premium. “An LAE ratio of ~10% is typical of leading insurers with tens of billions in premium. Despite our relatively small size, Lemonade’s LAE ratio, at 7.6% in Q1, is notably better than that benchmark, showcasing how technology can dramatically drive efficiency even before the benefits of scale kicks in.” To illustrate their case, the company highlighted the declining cost per claim of its pet insurance book.

The company’s cash, cash equivalents, and investments totaled approximately $927 million at March 31, 2024. As of March 31, 2024, approximately $186 million is carried by Lemonade’s insurance subsidiaries as regulatory surplus.