Lemonade (NYSE:LMND), the AI-powered insurer, said on Thursday it has renewed its reinsurance program for the next year. The program was led by the same tier-one carriers as the expiring program and was oversubscribed on all dimensions.
The reinsurance program, which covers all Lemonade (LMND) businesses globally, featured 55% quota share protection, the same level as the expiring coverage. Also, variable ceding commissions are projected to be roughly equivalent to those under the outgoing agreements.
The reinsurance partners “allow us to operate in a very capital-light mode and focus our resources on expanding our customer base across all of our products and geographies, while harnessing our technologies to get ever more efficient and ever better at matching rate to risk,” said Lemonade (LMND) Co-CEO and Co-Founder Daniel Schreiber.
The company implemented some new structures to augment the renewed program. Lemonade (LMND) has formed a new risk-bearing entity, Lemonade Re, in the Cayman Islands to hold some of its retained risk.
It has also established a captive cell at a Bermuda transformer and plans to use it to retain most of its windstorm exposure. “While windstorm reinsurance capacity was available, this structure was determined to offer a materially better cost/benefit profile,” the company said.
Lemonade (LMND) said its financial expectations for Q2 and for full-year 2023 remain unchanged.
Lemonade (LMND) stock dropped 1.0% in late Thursday morning trading.
The existing reinsurance program expires at midnight on June 30, 2023, at which point the new program will take effect for a standard 12-month term.
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