Lemonade stock skyrocketed nearly 24% this week after the company renegotiated its reinsurance program to retain more premium income. The insurer lowered its quota share cession to around 18% from roughly 20%, effectively paying a lower rate to maintain coverage while also gaining expanded protection against catastrophic and major weather events. The new program is expected to be in force for a standard 12-month term. The adjustment allows Lemonade to retain more of the economics from its growing business, and the reinsurer's willingness to accept a lower cession while broadening protections signals increasing confidence in Lemonade as an underwriter.
Lemonade IncRenegotiated reinsurance program to retain more premium income and lower costs, improving financials.