Lemonade $LMND 3Q21 Earnings 💪🏻
- Rev $36m +101% 🚀
- Gross Profit $12m +60% ↗️ margin 33% -800bps ↘️
- NG Gross Profit $15m +63% ↗️margin 43% -900bps ↘️
- Net Loss -$66m margin -186% -1240bps ↘️
- Customers 1.3m +45% ↗️
- In-Force Premiums $347m 📶 +84% 🚀
- Rev $36m +101% 🚀
- Gross Profit $12m +60% ↗️ margin 33% -800bps ↘️
- NG Gross Profit $15m +63% ↗️margin 43% -900bps ↘️
- Net Loss -$66m margin -186% -1240bps ↘️
- Customers 1.3m +45% ↗️
- In-Force Premiums $347m 📶 +84% 🚀
Business Metrics (loss ratios normalising after 1Q21…)
- Ann Dollar Retention 82% +600bps ✅
- Gross Loss Ratio 77% +500bps YoY ↗️
- Net Loss Ratio 81% +900bps YoY ↗️
- Gross Earned Premium $80m +86% 🚀
- Ann Dollar Retention 82% +600bps ✅
- Gross Loss Ratio 77% +500bps YoY ↗️
- Net Loss Ratio 81% +900bps YoY ↗️
- Gross Earned Premium $80m +86% 🚀
$LMND Business Mix
- Non-Renter’s Share ~47% +300bps 📈✅
- Pet Share ~15% +200bps 📈✅
- Life ~2% 📈✅
- Homeowners’s ~30% ➡️
- Renters ~53%
- Non-Renter’s Share ~47% +300bps 📈✅
- Pet Share ~15% +200bps 📈✅
- Life ~2% 📈✅
- Homeowners’s ~30% ➡️
- Renters ~53%
Higher Gross Loss Ratio +550bps
- Biz mix of new home and pet have higher loss ratios than mature, stable renters book.
- Improving loss ratios in home (+5200bps) and pet (+400bs) ✅
- “…long term, we expect the loss ratios of all Lemonade product lines will be < 75%.” ↘️
- Biz mix of new home and pet have higher loss ratios than mature, stable renters book.
- Improving loss ratios in home (+5200bps) and pet (+400bs) ✅
- “…long term, we expect the loss ratios of all Lemonade product lines will be < 75%.” ↘️
🚙 Expanded to New Market:
- Auto Insurance (Lemonade Car) and announced Metromile acquisition.
- Car specific data science & insurance expertise
- 3bn milles, closed loop
- 47% customer savings within 10% of GEICO & Progressive
- Bypass riskiest phase and leapfrog position.
- Auto Insurance (Lemonade Car) and announced Metromile acquisition.
- Car specific data science & insurance expertise
- 3bn milles, closed loop
- 47% customer savings within 10% of GEICO & Progressive
- Bypass riskiest phase and leapfrog position.
1| Acquiring Metromile - Accelerating the journey
“Firstly by collapsing time. We are acquiring billions of miles of highly textured driving data, advanced telematic technologies and deep pricing and underwriting knowledge.
“Firstly by collapsing time. We are acquiring billions of miles of highly textured driving data, advanced telematic technologies and deep pricing and underwriting knowledge.
1 | cont’d
“…would candidly take us years to gather this level of insight. …over $100m of seasoned IFP, 49 states licenses and a team steeped in every aspect of digital car insurance… can accelerate the growth trajectory of our own car insurance business.”
“…would candidly take us years to gather this level of insight. …over $100m of seasoned IFP, 49 states licenses and a team steeped in every aspect of digital car insurance… can accelerate the growth trajectory of our own car insurance business.”
2 | De-Risk Significantly
“…allows us to flatten risk curves…accelerate our growth trajectory and knowledge base, but importantly, it allows us to bolster the riskiest part of our car ambitions, namely growing Lemonade Car before our data models season.
“…allows us to flatten risk curves…accelerate our growth trajectory and knowledge base, but importantly, it allows us to bolster the riskiest part of our car ambitions, namely growing Lemonade Car before our data models season.
3 | Metromile’s Structural Advantage
“….customers report saving… 47% when searching to Metromile. …loss ratios were within 10pts of Progressive's direct business…even if they took a rate increase…sizable savings…see a structural advantage in the capabilities…”
“….customers report saving… 47% when searching to Metromile. …loss ratios were within 10pts of Progressive's direct business…even if they took a rate increase…sizable savings…see a structural advantage in the capabilities…”
3 | Metromile’s Structural Advantage (cont’d)
“If you look at the people getting quotes at Metromile…55% of the people quoting on Metromile will have savings of 20% or more. And for almost half for 45%, the savings of 30% or more with a medium saving of 60%.”
“If you look at the people getting quotes at Metromile…55% of the people quoting on Metromile will have savings of 20% or more. And for almost half for 45%, the savings of 30% or more with a medium saving of 60%.”
4 | Others missing telematics…
“…the owners of GEICO said the following. They said that “GEICO clearly missed the bus when it came to telematics.”
“…the owners of GEICO said the following. They said that “GEICO clearly missed the bus when it came to telematics.”
5 | Legacy Proxy-based Insurance Pricing to be disrupted by Precision-based Pricing
6 | Pricing Strategy TBC
“…can package that in different ways…as Metromile themselves have done on a pay-per-mile basis…as Lemonade Car… flat rate per month…change based on your driving patterns.
…we will experiment & bring to market different capabilities over time.”
“…can package that in different ways…as Metromile themselves have done on a pay-per-mile basis…as Lemonade Car… flat rate per month…change based on your driving patterns.
…we will experiment & bring to market different capabilities over time.”
7 | Flexibility in Reinsurance
“Once the companies come together, we will more than likely continue to enjoy the reinsurance structure we have in place, so we have lots of flexibility with that.”
“Once the companies come together, we will more than likely continue to enjoy the reinsurance structure we have in place, so we have lots of flexibility with that.”
8 | Gross Loss Ratios
“Overall loss ratio showed a slight increase due to the shift in mix.”
“…masks an important underlying trend. Our less mature lines of business are demonstrating meaningfully improved profitability.”
“Overall loss ratio showed a slight increase due to the shift in mix.”
“…masks an important underlying trend. Our less mature lines of business are demonstrating meaningfully improved profitability.”
9 | “Pricing Increase” due to customers buying more and bunding, did not increase price.
“There was no 20% increase in any pricing or any rate. About 20% of the premium per customer increase was driven by pricing or increased coverage.”
“There was no 20% increase in any pricing or any rate. About 20% of the premium per customer increase was driven by pricing or increased coverage.”
10 | Evolution 📶
“We have moved from being a monoline business, doing only homeowners insurance to one that also does pet insurance, life insurance, car insurance and as of our recent announcement has acquired Metromile.”
“We have moved from being a monoline business, doing only homeowners insurance to one that also does pet insurance, life insurance, car insurance and as of our recent announcement has acquired Metromile.”
11 | Why Hold on to Lemonade
“…if you believe in our thesis…there is unlimited opportunity almost and there is a limited window of opportunity, and if you believe that the moves we're making, the investments we are making have a good chance of the outsized return…”
“…if you believe in our thesis…there is unlimited opportunity almost and there is a limited window of opportunity, and if you believe that the moves we're making, the investments we are making have a good chance of the outsized return…”
Final Thoughts on Lemonade $LMND:
➡️ They have accelerated their growth pathway significantly from just renter’s insurance to multiple new verticals over the 1-2 years. The disruption of insurance with precision-based vs proxy-based could change the landscape.
➡️ They have accelerated their growth pathway significantly from just renter’s insurance to multiple new verticals over the 1-2 years. The disruption of insurance with precision-based vs proxy-based could change the landscape.
➡️ Acquisition of Metromile seems strategic and thoughtful. Will take time, but could prove very enduring, and durable from where it is right now, when we look back 5-10 years from now, if they can continue to execute and grow.
Thesis unchanged.
Thesis unchanged.
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