Insurtech company Lemonade Inc. is reducing the portion of its insurance premiums that it cedes to reinsurance partners, shifting from 55% to 20% for new and renewing policies. The change began July 1, 2025, and will phase in as policies are written or renewed. For the second half of 2025, Lemonade expects about 45% of its gross earned premium to be ceded to quota share partners.
This move enables Lemonade to keep a larger share of premiums while reinsurers assume a smaller slice of risk. The company also updated its financial projections, forecasting in-force premium (IFP) of $1.213–$1.218 billion, gross earned premium (GEP) of $1.036–$1.039 billion, and revenue of $710–$715 million for full-year 2025. Adjusted EBITDA loss is projected between $135 million and $140 million, with expectations of positive adjusted free cash flow in 2025 and positive adjusted EBITDA before the end of 2026.
Second-Quarter Performance Highlights
Lemonade’s second-quarter 2025 results showed significant year-over-year growth. IFP rose 29% to $1.08 billion, while revenue increased 35% to $164.1 million, compared with $122 million a year earlier. GEP climbed to $252.3 million from $199.9 million. Gross profit more than doubled to $64.3 million, lifting gross margin to 39% from 25%. Adjusted gross profit reached $65.6 million with a 40% margin, up from $33.4 million and a 27% margin a year ago.
The company recorded a net loss of $43.9 million, an improvement from $57.2 million in the second quarter of 2024. Adjusted EBITDA loss narrowed to $40.9 million from $43 million. For the first half of 2025, net loss totaled $106.3 million, while adjusted EBITDA loss was $87.9 million.
Customer and Retention Metrics
Lemonade reported 2.69 million customers at the end of Q2, gaining more than 148,000 during the quarter, up from 72,000 net additions in the same period of 2024. Premium per customer increased to $402 from $387. Annual dollar retention declined to 84%, compared with 88% a year earlier.
Loss ratios improved as well. The gross loss ratio dropped to 67% from 79%, and the net loss ratio decreased to 69% from 79%. For the first half of 2025, the gross loss ratio averaged 73%, down from 79% a year ago, while the net loss ratio averaged 75%, also down from 79%.
Product and Regional Growth
Growth across product lines and geographies contributed to these results. Lemonade Car reached $150 million in IFP — nearly double the previous year — and now represents 14% of the company’s portfolio. Conversion rates improved by about 60%, and the gross loss ratio for the car business declined to 82%, a 13-point improvement.
In Europe, IFP surged more than 200% year over year to $43 million — about 4% of total IFP. The company reported gross loss ratios in the low 80s, 15 points better than a year earlier and 20 points stronger than when its U.S. operations reached $50 million in IFP.
Outlook
With reinsurance cession scaled back and strong second-quarter performance, Lemonade projects steady premium growth and improved profitability metrics through 2025, while maintaining its timeline for positive adjusted free cash flow this year and positive adjusted EBITDA by late 2026.
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