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Lemonade Q4 Loss Narrower Than Expected, Revenues Rise Y/Y
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Lemonade, Inc. (LMND - Free Report) reported a fourth-quarter 2024 operating loss of 42 cents per share, narrower than the Zacks Consensus Estimate of a loss of 60 cents as well as the year-ago loss of 61 cents per share.
Quarterly results reflect improved net earned premiums, driven by an increase in in-force premium earned and an increase in investment income, offset by higher expenses.
Behind the Q4 Headlines
Revenues increased 28.8% year over year to $148.8 million, driven by an increase in gross earned premium and higher investment income. The top line beat the Zacks Consensus Estimate by 2.7%.
Gross earned premiums soared 25% year over year to $226.4 million, driven by an increase in in-force premiums earned.
Net investment income of $9.4 million increased 32.4% year over year.
Lemonade’s in-force premium of $943.7 million jumped 26%, driven by a 20% increase in the number of customers as well as a 5% increase in premium per customer.
Total operating expenses, excluding net loss and loss adjustment expense, increased 38% year over year to $123.9 million.
Adjusted EBITDA was negative $23.8 million, narrower than negative $28.9 million in the year-ago quarter, attributable to higher revenues, offset by growth spending.
The gross loss ratio of 63 improved 1400 basis points year over year, while the net loss ratio improved 1600 basis points. Lemonade estimates the net loss ratio to be less than 75 in the long term.
Financial Update
Cash and cash equivalents were $385.7 million as of Dec. 31, 2024, up 42.1% from 2023 end.
As of Dec. 31, 2024, LMND had assets worth $1.8 billion, up 12.8% from the level at 2023 end.
Shareholder equity at 2024-end was $593.4 billion, down 16.3% from the 2023-end level.
Cash used in operations was $11.4 million in 2024, lower than the $119.1 million used in 2023. Adjusted free cash flow in the fourth quarter was $26.5 million, as compared to an outflow of $11.3 million in the year-ago quarter.
Q1 2025 Guidance
In-force premium at quarter-end is projected in the range of $997 million to $1 billion. Gross earned premium is expected in the range of $229-$231 million. Lemonade expects revenues between $143 million and $145 million. Adjusted EBITDA loss is expected to be between $46 million and $49 million. Capital expenditure is estimated to be $2 million. Shares outstanding are estimated to be 73 million.
2025 View
Lemonade projects in-force premiums between $1203 million and $1208 million.
Gross earned premium is expected in the range of $1025-$1028 million.
Revenues are anticipated to be between $655 million and $657 million.
Adjusted EBITDA loss is expected to be in the range of $135-$140 million.
Capital expenditure is estimated to be $60 million. Stock-based compensation expense is estimated to be about $10 million.
Shares outstanding are estimated to be 74 million.
The Travelers Companies (TRV - Free Report) reported fourth-quarter 2024 core income of $9.15 per share, which beat the Zacks Consensus Estimate by 39.3% and improved 30.5% year over year. Travelers’ total revenues increased 10.4% from the year-ago quarter to $11.9 billion. The top line beat the Zacks Consensus Estimate by 1%.
Net written premiums increased 7% year over year to a record $10.7 billion, driven by strong growth across all three segments. Our estimate was $10.8 billion. The Zacks Consensus Estimate was pegged at $926 million. TRV witnessed an underwriting gain of $1.4 billion, up 30.5% year over year. The consolidated underlying combined ratio of 84% improved 190 bps year over year.
RLI Corp. (RLI - Free Report) reported fourth-quarter 2024 operating earnings of 41 cents per share, which missed the Zacks Consensus Estimate by 14.5%. The bottom line decreased 46.8% from the prior-year quarter. Operating revenues for the reported quarter were $436 million, up 15.3% year over year, driven by higher net premiums earned and net investment income. The top line matched the Zacks Consensus Estimate.
Gross premiums written increased 9% year over year to $473.2 million. This uptick can be attributed to the solid performance of the Casualty segment (up 18.3%). Our estimate was $550 million. Underwriting income of $22.2 million decreased 62.8% year over year. The combined ratio deteriorated 1,170 bps year over year to 94.4%. The Zacks Consensus Estimate for the metric was pegged at 96%, while our estimate was 102%.
W.R. Berkley Corporation’s (WRB - Free Report) fourth-quarter 2024 operating income of $1.13 per share beat the Zacks Consensus Estimate by 20.2%. The bottom line improved 17.7% year over year. Operating revenues were $3.5 billion, up 9.2% year over year. The top line beat the consensus estimate by 4.2%.
W.R. Berkley’s net premiums written were $2.9 billion, up 8% year over year. The figure was lower than our estimate of $3 billion. The consolidated combined ratio (a measure of underwriting profitability) deteriorated 180 bps year over year to 90.2%. The Zacks Consensus Estimate was 91%.
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Lemonade Q4 Loss Narrower Than Expected, Revenues Rise Y/Y
Lemonade, Inc. (LMND - Free Report) reported a fourth-quarter 2024 operating loss of 42 cents per share, narrower than the Zacks Consensus Estimate of a loss of 60 cents as well as the year-ago loss of 61 cents per share.
See the Zacks Earnings Calendar to stay ahead of market-making news.
Quarterly results reflect improved net earned premiums, driven by an increase in in-force premium earned and an increase in investment income, offset by higher expenses.
Behind the Q4 Headlines
Revenues increased 28.8% year over year to $148.8 million, driven by an increase in gross earned premium and higher investment income. The top line beat the Zacks Consensus Estimate by 2.7%.
Lemonade, Inc. Price, Consensus and EPS Surprise
Lemonade, Inc. price-consensus-eps-surprise-chart | Lemonade, Inc. Quote
Gross earned premiums soared 25% year over year to $226.4 million, driven by an increase in in-force premiums earned.
Net investment income of $9.4 million increased 32.4% year over year.
Lemonade’s in-force premium of $943.7 million jumped 26%, driven by a 20% increase in the number of customers as well as a 5% increase in premium per customer.
Total operating expenses, excluding net loss and loss adjustment expense, increased 38% year over year to $123.9 million.
Adjusted EBITDA was negative $23.8 million, narrower than negative $28.9 million in the year-ago quarter, attributable to higher revenues, offset by growth spending.
The gross loss ratio of 63 improved 1400 basis points year over year, while the net loss ratio improved 1600 basis points. Lemonade estimates the net loss ratio to be less than 75 in the long term.
Financial Update
Cash and cash equivalents were $385.7 million as of Dec. 31, 2024, up 42.1% from 2023 end.
As of Dec. 31, 2024, LMND had assets worth $1.8 billion, up 12.8% from the level at 2023 end.
Shareholder equity at 2024-end was $593.4 billion, down 16.3% from the 2023-end level.
Cash used in operations was $11.4 million in 2024, lower than the $119.1 million used in 2023. Adjusted free cash flow in the fourth quarter was $26.5 million, as compared to an outflow of $11.3 million in the year-ago quarter.
Q1 2025 Guidance
In-force premium at quarter-end is projected in the range of $997 million to $1 billion. Gross earned premium is expected in the range of $229-$231 million. Lemonade expects revenues between $143 million and $145 million. Adjusted EBITDA loss is expected to be between $46 million and $49 million. Capital expenditure is estimated to be $2 million. Shares outstanding are estimated to be 73 million.
2025 View
Lemonade projects in-force premiums between $1203 million and $1208 million.
Gross earned premium is expected in the range of $1025-$1028 million.
Revenues are anticipated to be between $655 million and $657 million.
Adjusted EBITDA loss is expected to be in the range of $135-$140 million.
Capital expenditure is estimated to be $60 million. Stock-based compensation expense is estimated to be about $10 million.
Shares outstanding are estimated to be 74 million.
LMND’s Zacks Rank
Lemonade currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
The Travelers Companies (TRV - Free Report) reported fourth-quarter 2024 core income of $9.15 per share, which beat the Zacks Consensus Estimate by 39.3% and improved 30.5% year over year. Travelers’ total revenues increased 10.4% from the year-ago quarter to $11.9 billion. The top line beat the Zacks Consensus Estimate by 1%.
Net written premiums increased 7% year over year to a record $10.7 billion, driven by strong growth across all three segments. Our estimate was $10.8 billion. The Zacks Consensus Estimate was pegged at $926 million. TRV witnessed an underwriting gain of $1.4 billion, up 30.5% year over year. The consolidated underlying combined ratio of 84% improved 190 bps year over year.
RLI Corp. (RLI - Free Report) reported fourth-quarter 2024 operating earnings of 41 cents per share, which missed the Zacks Consensus Estimate by 14.5%. The bottom line decreased 46.8% from the prior-year quarter. Operating revenues for the reported quarter were $436 million, up 15.3% year over year, driven by higher net premiums earned and net investment income. The top line matched the Zacks Consensus Estimate.
Gross premiums written increased 9% year over year to $473.2 million. This uptick can be attributed to the solid performance of the Casualty segment (up 18.3%). Our estimate was $550 million. Underwriting income of $22.2 million decreased 62.8% year over year. The combined ratio deteriorated 1,170 bps year over year to 94.4%. The Zacks Consensus Estimate for the metric was pegged at 96%, while our estimate was 102%.
W.R. Berkley Corporation’s (WRB - Free Report) fourth-quarter 2024 operating income of $1.13 per share beat the Zacks Consensus Estimate by 20.2%. The bottom line improved 17.7% year over year. Operating revenues were $3.5 billion, up 9.2% year over year. The top line beat the consensus estimate by 4.2%.
W.R. Berkley’s net premiums written were $2.9 billion, up 8% year over year. The figure was lower than our estimate of $3 billion. The consolidated combined ratio (a measure of underwriting profitability) deteriorated 180 bps year over year to 90.2%. The Zacks Consensus Estimate was 91%.