Lemonade Customer Base Now Surpasses 1.2M; Q2 Losses Land Above $55M

Lemonade’s customer base continues to climb in the 2021 second quarter, with that number now surpassing 1.2 million.

In contrast, the New York-based digital insurer reported nearly 814,200 customers at the end of its 2020 second quarter.

Additionally, Lemonade notes in its quarterly shareholder letter that it is now generating $246 in premium per customer, nearly 30 percent higher p the $190 figure from a year ago. Lemonade cites that result as stemming from greater product diversification with a focus on premium offerings, and also more Lemonade customers carrying multiple policies.

Still, Lemonade ended Q2 losing $55.6 million, compared to a $21 million loss a year ago. Part of that stems from what Lemonade and many other startups do: scale up rapidly through venture funding and the public markets with the idea that revenues and income will follow. For the first six months of 2021, Lemonade reported a $104.6 million net loss, compared to $57.5 million through the first six months of 2020.

Nonetheless, the InsurTech had many other Q2 gains to report:

• Gross earned premium nearly hit $67 million during the second quarter, up from $35.3 million in Q2 2020.

• Lemonade’s in-force premium nearly reached $297 million during the quarter, compared to $155 million last year.

• Operating expenses, excluding net loss and loss adjustment expenses, jumped to $68.1 million – 126 percent higher than the $30.1 million reported in the 2020 second quarter. Driving this was an increased investment in sales and marketing efforts to support expansion into new products and markets, technology development, and general/administrative costs stemming from continued growth and more hiring.

• As of Q2, renters insurance represented 56 percent of Lemonade’s product mix, down from 75 percent in the 2020 second quarter. Homeowners was 30 percent, with pet insurance at 13 percent and life insurance reflecting about 1 percent of the customer base. Lemonade said the change in reners reflected a shift of first-time customers to higher premium products such as pet, home and life. As well, the company said, Lemonade renter customers are increasingly becoming homeowners. Additionally, the product mix this year is bigger; Lemonade only sold renters and homeowners products a year ago.

• Lemonade said a quota share reinsurance program it entered into in July 2020 has benefited the company. At the time, Lemonade secured 55 of the 75 points on a three-year term, with the remaining 20 points up for renewal annually. The company said it made a modest reduction in the scope of the program, stepping down from 75 percent to 70 percent, and renewed 15 of the 20 points up for renewal this quarter at similar financial terms.

• Lemonade donates all unclaimed premium to charity annually, and the company said the number surpassed $2.3 million this year. Money went to 65 nonprofits chosen by customers.

Lemonade’s shareholder letter also included guidance for the 2021 third quarter. In-force premium is expected to reach $336 million to $339 million, with gross earned premium of $76.5 million to $77.5 million. Revenue should hit between $32.5 million and $33.5 million, the company said. Lemonade also expects a $52 million to $55 million adjusted EBITDA loss for Q3, the company said.

Source: Lemonade