Lemonade shares rose 12% in June after the digital insurer announced a renegotiated reinsurance agreement that reduces the percentage of premiums ceded to third-party reinsurers from 20% to 18%, while also providing better coverage and adding a new partner. The company is onboarding new customers rapidly, with in-force premium growth accelerating for ten consecutive quarters, and management expects adjusted EBITDA to turn positive by the end of the year. The improved reinsurance terms allow Lemonade to retain more gross profit, supporting its path toward profitability.
Lemonade IncRenegotiated reinsurance reduces ceded premiums, improving retained profit and path to profitability.