Lemonade’s Revenue by Segment (2019-2020)

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This statistic highlights Lemonade’s Revenue by Segment from 2019 onwards, split between ceding commission income, commission and other income, net earned premium, net investment income.
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This statistic highlights Lemonade’s Revenue by Segment from 2019 onwards, split between ceding commission income, commission and other income, net earned premium, net investment income.

Lemonade Inc. is a public limited company that provides renters, homeowners, pets, and life insurance to its policyholders. The company has incorporated technology, data, artificial intelligence, contemporary design, and behavioral economics in its product and services. Lemonade works with the help of artificial intelligence (AI) and chatbots (AIMaya, AIJim0, and CX.AI) to process claims. In addition, it has a world record for processing a claim in just 3 seconds.

Lemonade’s Revenue by Segment

Segment Revenue in Q3 2019 Revenue in Q3 2020 YOY Growth in Q3 2020 Revenue Share in Q3  2020
Ceding commission income  NA $7 NA 39.33%
Commission and other income $0.1 $0.1 0.00% 0.56%
Net earned premium $17.8 $10.5 -41.01% 58.99%
Net investment income $1.1 $0.2 -81.82% 1.12%
Total $19 $17.8 -6.32% 100%

(All figures in millions, except percentages)

Lemonade has a market capitalization of $6.3 billion. Lemonade’s 3-year revenue growth nil while the industry growth is averaging at 8%. Lemonade’s overall revenue dropped from $19 million in Q3 2019 to $17.8 million in Q3 2020, showing a 6.32% decrease on a year-over-year basis.

Ceding Commission Income: Ceding commission income is the commission that the company receives based on the premium ceded to third-party reinsurers which are reimbursed to the company for acquisition and underwriting expenses. The company earns a commission on reinsurance premium against the premium earned against an underlying insurance policy on a pro-rata basis according to the terms of policies reinsured. A portion of this income having a reimbursement of successful acquisition cost related to the underlying policies is recorded as an offset to other insurance expenses. Ceding commissions stood at $7 million in Q3 2020, which accounts for 39.33% of contribution towards Lemonade’s overall revenue.

Commission and Other Income: Commission income includes commission earned for policies placed with the third-party insurance company where Lemonade doesn’t have any insured risk. Other income includes fees collected from policyholders related to installments of premium. This segment contributed 0.56% revenue in Q3 2020. However, revenue in Q3 2020 stood at $0.1 million which was the same as in Q3 2019.

Net Earned Premium: The net premium earned by Lemonade is nothing but the gross written premium earned, less the earned portion ceded to third-party insurers under Lemonade’s reinsurance agreement. Premium is earned on a pro-rata basis according to the terms of the policy, which is generally one year. Lemonade charges a fixed fee of 25% of the premium while the remaining amount is kept aside to pay claims and purchase reinsurance. At Lemonade, excess premiums are donated to nonprofit organizations selected by their customers. Lemonade generated a revenue of $17.8 billion in Q3 2019 and $10.5 million in Q3 2020 from premiums, reflecting a 41.01% decrease on a year-over-year basis. The net earned premium has a revenue share of 58.99% in Q3 2020.

Net Invested Income: This segment represents interest earned from fixed maturity securities, short-term securities, and other investments, and the gains or losses from the sale of investments. Net investment income is influenced by the size of the investment portfolio and the yield earned on the same. Revenue from this sector stood at $1.1 billion in Q3 2019 and $0.2 million in Q3 2020, marking an 81.82% decrease on a year-over-year basis. Net investment income contributed 1.12% of revenue in Q3 2020. The winter storm URI in Texas in February 2020, caused a huge loss to Lemonade. The company expects the losses to increase due to the claims filed from the storm.

Company Overview

Lemonade Inc. was founded 6 years ago by Daniel Schreiber, Shai Wininger, and Ty Sagalow in 2015. Lemonade is listed on New York Stock Exchange under the symbol of LMND.  The company is headquartered in New York City. Lemonade started its business in the Netherlands and France in April and December 2020 respectively. Further, Lemonade was listed as a public company through Initial Public Offering (IPO) in July 2020.

Lemonade is currently operating in the United States, Germany,  France, and the Netherlands. Lemonade also holds a pan-European license which allows them to sell their product in 31 countries across Europe.

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