Lemonade Inc. narrowed its fourth-quarter net income loss to $42.4 million from a net loss of $63.7 million a year earlier, the company said in a letter to shareholders.
The company cited continued growth in in-force premium, which reached $747.3 million, up 20% year-over-year, and a 12-point decline in the gross loss ratio to 77, for the improved bottom line.
Lemonade Chief Financial Officer Tim Bixby said last year Lemonade’s long-term goal as a loss ratio was well under 75.
During a conference call, Chief Executive Officer Daniel Schreiber said the fourth quarter and 2023 as a whole showed Lemonade has the parts in place to steam toward profitability.
The past year, he said, “was the year when the plan came together,” adding no one should consider it a “mission accomplished” statement.
The company rode through a turbulent 2023 leaner and more focused, and is looking positively at stabilizing inflation, improved cost of capital and rates that are “finally catching up to risks.”
Schreiber also said while Lemonade had pulled back in recent years from some states where automobile and homeowners rates had been inadequate, the company is seeing auto rates move forward now and hopes to make auto 10%-15% of Lemonade’s book of newly written premium in 2024.
For the quarter, Lemonade reported total customers of more than 2 million, up 12%.
Fourth-quarter gross earned premium rose 20% to $181 million, primarily due to the increase of in-force premiums earned during the quarter. Total revenues rose to $115.5 million, from $88.4 million a year earlier, it said.