Lemonade trims nearly 1/3 of quota share reinsurance cession since launch

Upstart insurtech  Lemonade has cut its quota share reinsurance cede to 55% from the initial level of 75% when reinsurance coverage was launched just two years ago.

“A 55% cession is stage-appropriate for us, as our current [in-force premium] is more than 4x where it was two years ago, and we’ve diversified in the intervening years,” management said in comment to its second quarter earnings release.

“We expect to continue to revisit our quota-share and other reinsurance agreements regularly in order to optimise our capital efficiency and concentration exposure.”

The inclusion of recently-acquired pay-per-mile auto insurer Metromile, which keeps a 30% quota share cover from Swiss Re and Mapfre, will lead to a rejigging of covers starting from the mid-year 2023 reinsurance renewals, management indicated.

“We expect to roll this part of our business under our Lemonade-wide structure,” management said of outlook for the Metromile reinsurance coverage. Both Swiss Re and Mapfre figure among Lemonade's reinsurers, they noted.

Lemonade began the process of paring its reinsurance cessions one year ago at the 2021 renewals, management reminded.

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