Review of the Latest Lemonade Financial Results
Despite Lemonade's ($LMND) higher than anticipated first-year loss percentages on insurance, the AI-driven insuretech isn't having any problem attracting new clients and growing the quantity of insurance coverage it offers.
Customers grew by 37 percent year-over-year to 1.5 million in the first quarter of 2022, while in-force premium rose by 66% to $419 million. While a gross loss ratio of 90% for the third quarter isn't ideal, the company's long-term objective loss ratio of 75% is being steadily approached.
For the first time, all four of Lemonade's insurance products (renters', life, vehicle, and pet) were accessible in a single bundle this quarter in Tennessee and Illinois, demonstrating the strength of its expanding product line. Although the sample size is modest, Lemonade reported good results in Illinois, where yearly dollar retention (a measure of average customer spend) hit 90 percent—8 percentage points above Lemonade's company-wide score.
There has been a significant increase in Lemonade's lifetime value per client since the company recently introduced vehicle insurance, and the purchase of Metromile ($MILE) is expected to further reduce Lemonade's acquisition expenses, resulting in a lower customer acquisition cost.
With each passing quarter, investors are pleased by the company's AI-enhanced underwriting's improved ability to manage risk.