Lemonade...always In The News..."bypasses Auto In Favor Of Life"

[marindependent]

Home, Pet Insurer Lemonade Bypasses Auto in Favor of Life… for Now
By Susanne Sclafane | November 13, 2020

Lemonade plans to start selling term life insurance in the next 90 days, adding to its current rental, homeowners and pet insurance offerings, the company said in an earnings report this week.

During an investor conference call, Lemonade executives confirmed that while the insurtech carrier isn’t going to underwrite the life insurance product, the distribution launch moves Lemonade outside the bounds of property/casualty insurance for the first time. The term life insurance product it will sell will be written on an undisclosed carrier’s paper as a “form of market research.”...
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[InsCommentary]

Life insurance losses in the aggregate take decades to mature. You can make the bottom line look really good if you combine your P&C and Life underwriting experience. I suspect that could be a motivation for them. You want the numbers to look good when you're looking for a buyer in order to maximize the chances of becoming a billionaire.

 

[Allen Trent]

Life insurance losses in the aggregate take decades to mature. You can make the bottom line look really good if you combine your P&C and Life underwriting experience. I suspect that could be a motivation for them. You want the numbers to look good when you're looking for a buyer in order to maximize the chances of becoming a billionaire.

Generally true, but that would be the case if they were the carrier on both. Looks like they don't even have a life company, so the life will merely be a selling agreement to add revenue from collecting the 2 time commission from the sale

Amazing part is the assurances in the latter part of the article to help investors feel good "it is more of a bet & we are not sure it will work". Pretty amazing with these Tech companies that get to play with others money.

All at a time when major players have left selling life insurance because the core products they were experts in selling for so long can deliver the needed revenues with the extreme low interest rate environment.

Much safer play to tip toe in by selling for a commission & not having the real risks the carriers do

 

[marindependent]

Get this update from Lemonade: "Lemonade is still burning cash and reported a net loss on the bottom line of its third-quarter income statement, the insurtech expects both situations to reverse by year-end 2026.....The cash situation, in fact, will turn around by year-end 2025, Daniel Schreiber, co-CEO of Lemonade reported on an earnings conference call...We expect to become cashflow positive by end of year 2025"

Also
"Through nine months, adjusted EBITDA was $143.7 million in the red, "
"“There are certain aspects of loss ratio that you can’t know,” the CFO said, "
"Wininger also shared breaking news on a rate approval in California, reporting that California approved a 51% rate increase for Lemonade’s auto insurance yesterday."
"approximately 50% of our car premium comes from California,” "

Source.