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Lemonade, Inc. (LMND - Free Report) reported third-quarter 2022 operating loss of $1.37 per share, wider than the Zacks Consensus Estimate of a loss of $1.36. The loss was also wider than the year-ago loss of $1.08 per share.
Improved gross earned premiums, driven by an increase in in-force premium earned, were offset by higher expense.
Revenues increased more than double year over year to $74 million, driven by an increase in gross earned premium and a reduction in the proportion of earned premium ceded to reinsurers. The top line beat the Zacks Consensus Estimate by 13.5%.
Gross earned premiums soared 71% year over year to $136.4 million, driven by an increase in in-force premiums earned.
Lemonade’s in-force premium of $609.2 million jumped 76%, driven by a 30% increase in the number of customers as well as a 35% increase in premium per customer. The increase in premium per customer was largely driven by the acquisition of Metromile. The increasing prevalence of multiple policies per customer, overall growth in average policy value and the continued shift of its business mix toward products with higher average policy values also acted as tailwinds.
Total operating expenses, excluding net loss and loss adjustment expense, increased 33.3% year over year to $109.8 million, attributable to increased employee-related expenses and transaction costs related to the Metromile acquisition.
Adjusted EBITDA was negative $65.7 million, wider than negative $51.3 million in the year-ago quarter, attributable to increased operating expenses.
The net loss ratio of 105 deteriorated 2400 basis points year over year. Lemonade estimates the loss ratio to be less than 75 in the long term.
Financial Update
Cash, cash equivalents, and investments were $1.1 billion as of Sep 30, down 1.1% from 2021 end, reflecting net proceeds from cash used in operations.
As of Sep 30, LMND had assets worth $1.7 billion, up 13.4% from the level at 2021 end.
Shareholder equity at quarter-end was $906.8 billion, down 8.2% from the 2021-end level.
Cash used in operations was $134.4 million in the first nine months of 2022, higher than $94.7 million used in the year-ago quarter.
Q4 Guidance
In-force premium at quarter-end is projected between $612 million and $615 million. Gross earned premium is expected in the range of $147-$150 million. Lemonade expects revenues between $77 million and $80 million. Adjusted EBITDA loss is expected to be between $62 million and $65 million. Capital expenditure is estimated to be $3 million. Shares outstanding are estimated to be 70 million.
2022 View
Lemonade projects in-force premiums between $612 million and $615 million.
Gross earned premium is expected in the range of $486-$489 million, up from the earlier-guided range of $476 million to $480 million.
Revenues are anticipated to be between $245 million and $248 million, up from the earlier-guided range of $236 million and $239 million.
Adjusted EBITDA loss is expected to be in the range of $235-$238 million, improved from a loss of $240-$245 million.
Capital expenditure is estimated to be $11 million, up from $10 million guided earlier. Stock-based compensation expense is estimated to be about $60 million.
Shares outstanding are estimated to be 65 million.
Zacks Rank
Lemonade currently carries a Zacks Rank #4 (Sell).
Of the insurance industry players that have reported third-quarter results so far, The Travelers Companies (TRV - Free Report) and RLI Corporation (RLI - Free Report) beat the respective Zacks Consensus Estimate for earnings, while The Progressive Corporation (PGR - Free Report) missed the mark.
Travelers’ third-quarter 2022 core income of $2.20 per share beat the Zacks Consensus Estimate by 24.3% but decreased 15.4% year over year. Total revenues increased 6.8% from the year-ago quarter to $9.4 billion and beat the Zacks Consensus Estimate by 2.5%.
Net written premiums increased 110% year over year to $9.2 billion. Underwriting gain of $115 million increased 53.3% year over year in the reported quarter. Travelers’ combined ratio improved 40 bps year over year to 98.2.
RLI’s third-quarter 2022 operating earnings of 50 cents per share beat the Zacks Consensus Estimate by 51.5% but declined 23.1% from the prior-year quarter. Operating revenues of $312.7 million were up 15.3% year over year but missed the Zacks Consensus Estimate by 1.3%.
Gross written premiums increased 13.3% year over year to $403.8 million. RLI’s underwriting income of $8.8 million decreased 35.8% while the combined ratio deteriorated 240 bps year over year to 97.
Progressive’s earnings per share of 49 cents missed the Zacks Consensus Estimate of $1.24 as well as our estimate of $1.38. The bottom line, however, improved more than threefold from 14 cents earned in the year-ago quarter.
Progressive’s net written premiums were $13 billion in the quarter, up 5% from $11.7 billion a year ago but missed our estimate of $14.2 billion. The combined ratio — the percentage of premiums paid out as claims and expenses — improved 120 bps from the prior-year quarter’s level to 99.2.
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Lemonade (LMND) Q3 Earnings Lag, Revenues Top, View Revised
Lemonade, Inc. (LMND - Free Report) reported third-quarter 2022 operating loss of $1.37 per share, wider than the Zacks Consensus Estimate of a loss of $1.36. The loss was also wider than the year-ago loss of $1.08 per share.
Improved gross earned premiums, driven by an increase in in-force premium earned, were offset by higher expense.
Lemonade, Inc. Price, Consensus and EPS Surprise
Lemonade, Inc. price-consensus-eps-surprise-chart | Lemonade, Inc. Quote
Behind the Q3 Headlines
Revenues increased more than double year over year to $74 million, driven by an increase in gross earned premium and a reduction in the proportion of earned premium ceded to reinsurers. The top line beat the Zacks Consensus Estimate by 13.5%.
Gross earned premiums soared 71% year over year to $136.4 million, driven by an increase in in-force premiums earned.
Lemonade’s in-force premium of $609.2 million jumped 76%, driven by a 30% increase in the number of customers as well as a 35% increase in premium per customer. The increase in premium per customer was largely driven by the acquisition of Metromile. The increasing prevalence of multiple policies per customer, overall growth in average policy value and the continued shift of its business mix toward products with higher average policy values also acted as tailwinds.
Total operating expenses, excluding net loss and loss adjustment expense, increased 33.3% year over year to $109.8 million, attributable to increased employee-related expenses and transaction costs related to the Metromile acquisition.
Adjusted EBITDA was negative $65.7 million, wider than negative $51.3 million in the year-ago quarter, attributable to increased operating expenses.
The net loss ratio of 105 deteriorated 2400 basis points year over year. Lemonade estimates the loss ratio to be less than 75 in the long term.
Financial Update
Cash, cash equivalents, and investments were $1.1 billion as of Sep 30, down 1.1% from 2021 end, reflecting net proceeds from cash used in operations.
As of Sep 30, LMND had assets worth $1.7 billion, up 13.4% from the level at 2021 end.
Shareholder equity at quarter-end was $906.8 billion, down 8.2% from the 2021-end level.
Cash used in operations was $134.4 million in the first nine months of 2022, higher than $94.7 million used in the year-ago quarter.
Q4 Guidance
In-force premium at quarter-end is projected between $612 million and $615 million. Gross earned premium is expected in the range of $147-$150 million. Lemonade expects revenues between $77 million and $80 million. Adjusted EBITDA loss is expected to be between $62 million and $65 million. Capital expenditure is estimated to be $3 million. Shares outstanding are estimated to be 70 million.
2022 View
Lemonade projects in-force premiums between $612 million and $615 million.
Gross earned premium is expected in the range of $486-$489 million, up from the earlier-guided range of $476 million to $480 million.
Revenues are anticipated to be between $245 million and $248 million, up from the earlier-guided range of $236 million and $239 million.
Adjusted EBITDA loss is expected to be in the range of $235-$238 million, improved from a loss of $240-$245 million.
Capital expenditure is estimated to be $11 million, up from $10 million guided earlier. Stock-based compensation expense is estimated to be about $60 million.
Shares outstanding are estimated to be 65 million.
Zacks Rank
Lemonade currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
Of the insurance industry players that have reported third-quarter results so far, The Travelers Companies (TRV - Free Report) and RLI Corporation (RLI - Free Report) beat the respective Zacks Consensus Estimate for earnings, while The Progressive Corporation (PGR - Free Report) missed the mark.
Travelers’ third-quarter 2022 core income of $2.20 per share beat the Zacks Consensus Estimate by 24.3% but decreased 15.4% year over year. Total revenues increased 6.8% from the year-ago quarter to $9.4 billion and beat the Zacks Consensus Estimate by 2.5%.
Net written premiums increased 110% year over year to $9.2 billion. Underwriting gain of $115 million increased 53.3% year over year in the reported quarter. Travelers’ combined ratio improved 40 bps year over year to 98.2.
RLI’s third-quarter 2022 operating earnings of 50 cents per share beat the Zacks Consensus Estimate by 51.5% but declined 23.1% from the prior-year quarter. Operating revenues of $312.7 million were up 15.3% year over year but missed the Zacks Consensus Estimate by 1.3%.
Gross written premiums increased 13.3% year over year to $403.8 million. RLI’s underwriting income of $8.8 million decreased 35.8% while the combined ratio deteriorated 240 bps year over year to 97.
Progressive’s earnings per share of 49 cents missed the Zacks Consensus Estimate of $1.24 as well as our estimate of $1.38. The bottom line, however, improved more than threefold from 14 cents earned in the year-ago quarter.
Progressive’s net written premiums were $13 billion in the quarter, up 5% from $11.7 billion a year ago but missed our estimate of $14.2 billion. The combined ratio — the percentage of premiums paid out as claims and expenses — improved 120 bps from the prior-year quarter’s level to 99.2.