Lemonade, Inc. (NYSE: LMND) has released its fourth quarter and full year 2022 financial results.
Lemonade recently shared its Q4 2022 financial results in the Letter to Shareholders on the company’s official investor relations website.
On Thursday, February 23, 2023, Lemonade reportedly hosted to discuss the results. As noted in the update, Lemonade’s fourth quarter “saw 64% top line growth, with IFP of $625 million.”
The firm reports steady and significant improvement “in loss ratios across the book.”
Lemonade further reveals that Gross Loss Ratio “was 89% for the quarter, down from 94% in the prior quarter, and 96% in Q4 ’21.” The firm also mentioned that “adjusted EBITDA Loss contracted to $52 million, down from $66 million in Q3; while Net Loss for the period was $64 million, down from $91 million in the prior quarter.”
As mentioned in the announcement:
“2022 was a year in which Lemonade grew and matured in material ways. It was our first full year with all five major products in market: Renters, Homeowners, Car, Pet, and Life. With the heavy lifting associated with building new products behind us, we were able to shift much of our firepower to lowering our loss ratio and expense ratio, all while growing with our customers.”
The firm added that even as ther loss ratio “continued its (uneven) decline and we saw what we expect are peak losses, our IFP increased by 64%.” It was the year in which they “added a new insurance entity licensed in 49 states, and precision data from billions of miles driven as part of the Metromile acquisition.”
As noted in the the update, it was “a year of soaring inflation, in response to which we filed eight times more rate changes with regulators across the country, as compared to 2021.”
Most of these rate changes “have yet to be approved, implemented, and earned in, so we expect continued loss ratio improvement as they do.”
As mentioned in the announcement:
“As for Q4, it was a quarter of good news across the board: strong growth, improving loss ratios, and greater efficiencies. With peak losses expected to be behind us, Q4 ‘22 saw a sizable improvement in Adjusted EBITDA, both in absolute dollar terms, and – to an even greater extent – in percentage terms, relative to our total book of business.”
Lemonade also said they expect their Adjusted EBITDA “to continue to improve on an annualized basis (seasonality means improvements won’t always be sequential), driven
by a better loss ratio and operational efficiencies over time.” Indeed, their Adjusted EBITDA loss this quarter “was almost identical to that of Q4 ’21, yet their business was two thirds larger this year than last – highlighting the rapid and demonstrable improvements to their underlying business during the course of 2022.” Looking forward to 2023, Lemonade says they will “double down on the fundamentals of their business,” focusing on the three levers they expect will take them to profitability:
- Cross sells and upsells (ADR)
- Loss Ratio
- Growth (IFP)
For more details check here.