Lemonade Investor Day Presentation Deck

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#1Lemonade Investor Day November 15 2022#2Safe Harbor This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this presentation that do not relate to matters of historical fact should be considered forward-looking statements, including statements regarding our anticipated financial performance, including our financial outlook for the full year 2022, our expectations regarding our long term assets, our average multi-year loss ratio and expense ratio, our industry, business strategy, plans, goals and expectations concerning our market position, future operations and other financial and operating information. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, the following: our history of losses and the fact that we may not achieve or maintain profitability in the future; risks related to our ability to retain and expand our customer base and product offerings; the risk that the "Lemonade" brand may not become as widely known as incumbents' brands or the brand may become tarnished; the denial of claims or our failure to accurately and timely pay claims; our ability to attain greater value from each user; the novelty of our business model and its unpredictable efficacy and susceptibility to unintended consequences; risks related to the possibility that we could be forced to modify or eliminate our Giveback; risks related to the examinations and other targeted investigations by our primary and other state insurance regulators; our limited operating history; our ability to manage our growth effectively; risks related to the intense competition in the segments of the insurance industry in which we operate; risks related to the availability of reinsurance at current levels and prices; our exposure to counterparty risks; our ability to maintain our risk-based capital at the required levels; risks related to the operation, development, and implementation of our proprietary artificial intelligence algorithms and telematics based pricing model; risks related to our dependence on search engines, social media platforms, digital app stores, content-based online advertising and other online sources to attract consumers to our website and our online app; risks related to the loss of personal customer information as a result of security incidents or real or perceived errors, failures or bugs in our systems, website or app; risks related to our actual or perceived failure to protect customer information and other data, respect customers' privacy, or comply with data privacy and security laws and regulations; risks related to our ability to comply with extensive insurance industry regulations and additional regulatory requirements specific to other vertical markets that we enter or have entered; risks related to our ability to successfully combine the businesses of Lemonade and Metromile and realize the anticipated benefits of the merger; within the anticipated timeframes or cost expectations or at all; the ability to maintain relationships with Lemonade's and Metromile's respective employees, customers, other business partners and governmental authorities; and risks related to the our inability to predict the impacts of severe weather events and other catastrophes, including the effects of climate change and COVID-19 on our business, and the global economy generally. These and other important factors discussed under the caption "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 1, 2022, in our Quarterly Report on Form 10-Q for the period ended September 30, 2022 and in our other filings with the SEC could cause actual results to differ materially from those indicated by the forward-looking statements made in this presentation. Any such forward-looking statements represent management's beliefs as of the date of this presentation. While we may elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause our views to change.#3Today, we hope to demonstrate that LMND has: A structural technological advantage that will manifest as a superior loss-cost and expense-load An inbuilt edge in acquiring & delighting new entrants, whose full value we'll unlock as we grow with them An advantaged long-term business model, and a clear path to profitability#4Today's agenda: Daniel Schreiber Co-CEO & Cofounder Strategy Maya Prosor Chief Business Officer Products Tim Bixby Chief Financial Officer Financial Q&A#5Lemonade Daniel Schreiber November 15 2022#6Alan Turing, 1951 "It is customary to offer a grain of comfort, in the form of a statement that some peculiarly human characteristic could never be imitated by a machine. I cannot offer such comfort!"#7Generative Al Self-Supervised Learning (Foundation Models: GPT3, DALL-E, Stable Diffusion...) Birth of Al Big Data + Machine & Deep Learning (image & speech recognition, AlphaGo, autonomous driving) Big Computers + GOFAI (Deep Blue > Kasparov in '97) Second Al Winter 2022 Symbolic Al (DARPA, Checkers) First Al Winter (Moravec's paradox) Expert Systems (Rules derived from experts)#8>> Write a Shakespearean sonnet about AI and insurance GPT3#9When I do think of insurance, 'tis but To ponder how AI doth make it better. with nimble speed and keenest eye, The claims and coverages do it spy; And in a trice, with little fuss The benefits and the best rates thus Are found and given with but a click; So, fairest insurance, I do thee praise For being made more excellent with AI! Shakespearean sonnet about Al and insurance GPT3#10>> Draw an impressionist painting an insurance adjuster denying coverage after a fire DALL-E#11An impressionist painting of an insurance adjuster denying coverage after a fire DALL-E#12>> Render a photo of an insurance agent made out of a salad on a table DALL-E#13An insurance agent made out of a salad on a table DALL-E#14>> Create a 1960s photo of a despondent insurance broker in a red dress sitting at a desk full of paperwork, with florescent lighting, taken using a 50mm lens, expired CineStill 800t film, and an oversaturated filter DALL-E#15Photo of a despondent insurance broker in a red dress in the 1960s DALL-E#16The stunning progress in Al brings us to the first of two pictures drawn by Lemonade for our IPO prospectus#17>> Draw a schematic of insurance as a neural network#18AI MAYA Customer experience bot AI JIM Claims experience bot CX.AI Customer Cortex Al-based customer experience platform 'В BLENDER Insurance management platform insurance as a neural network 8 COOPER Internal process manager FORENSIC GRAPH Predicts and detects fraud#19We've used hundreds of millions of customer interactions, and 160TB of textured data, to train about 50 machine learning models. AI MAYA Customer experience bot AI JIM Claims experience bot Customer Cortex CX.AI Al-based customer experience platform BLENDER Insurance management platform COOPER Internal process manager FORENSIC GRAPH Predicts and detects fraud#20But the power of our neural network derives less from the sheer tonnage of our data, than from their interconnectedness. AI MAYA Customer experience bot AI JIM Claims experience bot Customer Cortex CX.AI Al-based customer experience platform BLENDER Insurance management platform COOPER Internal process manager FORENSIC GRAPH Predicts and detects fraud#21#22VANCOUVER Victoria Seattle Portiar Sacra n SAN FRANCISCO San Jose ▶ LOS ANGEL Boise Las V San Diego LTV 1 - Q4-19 3 version LTV 1- Q4-19 Helena Salt Lake, City Phoe Culf of California Chevenne Regina OFNVE Santa Fe Chihuahua Mazatlan LTV 2 - Q2-20 Bismarck Pierre UNITED STATES Winnipeg MONTERREY San Antoni MEXICO Oklahoma Tampico Minneapolis Des Moine HOUSTO LTV 3 - Q4-20 Thunder Bay Saint Lou Memphis Jackson New Orleans Nashe hinnal ATLAN Tampas TORONTO LTV 4 - Q2-21 Buffalo ittsburgh WASHING Raleigh- MIAMI Havana CUBA Morfol Nassaux Montreal NZWE Quebec I LTV 5-04-21 Charlottetowns Halifax Hamilton LTV 6- Q2-22 Itv 2000 1000 0 -1000 -2000#23Features Called 250m 2020 Exponential Progress Flywheel spinning fast, and getting faster 3B 2022 Predictions Made 8.5m 2020 110m 2022#24The upshot: More for Less#25More#26BUSINESS INSIDER More Delight "The cheerless customer service representative at Liberty Mutual had about half the personality of Lemonade's chatbot"#27More Delight Net Promotor Score familiar from Apple & Tesla Lemonade T#28Lemonade State Farm Segment Average American Family Nationwide Allstate Farmers Liberty Mutual Travelers CUSTOMER SATISFA ISFACTION AND ASSOCIATES SINCE 1968 834 833 831 823 815 545 816 866 More Delight Award winning insurance Forbes America's Best Insurance 2023 "Using Al to approve coverage in 90 seconds and pay claims in as little as three minutes" BEST WORLD REPORT RANKINGS "Lemonade is No. 1 in our Best Homeowners Insurance Companies of 2022"#29For Less#30G&A Marketing Support Fraud LAE Claims Expense Ratio Loss Ratio#31G&A Marketing Support Fraud LAE Claims Cooper 3 3 + active | @cooper Cooper APP 12:06 Ready for QA! 16459 marketing website_work_on_punctuation_edits_with_silvi lemonade_staging 10 Cooper APP 12:30 Ready for QA! 16469 tx_launch lemonade_staging 11 Q Cooper APP 12:41 ✓ Ready for Deploy! 16419 privacy_policy_add_the_following_text Cooper APP 17:29 Ready for QA! 16475 tx_launch_web lemonade_staging_6 Cooper APP 17:06 ✔Ready for Deploy! 16457 texas_rating_engine ✔Ready for Deploy! 16469 tx_launch Message Cooper Sunday, September 17th (8) ⠀ Expense Ratio Cooper monitors servers, handles tasks, instantiates virtual environments, pushes >12,000 software builds into production yearly, saving ~10,000 (human) dev hours.#32G&A Marketing Support Fraud LAE Claims Expense Ratio Al Maya and our APIs sell 98% of Lemonade's policies, morphing between millions of onboarding flows. As a point of reference: ~95% of incumbents' homeowners policies are sold by humans, taking ~15% of premiums, in perpetuity, for their efforts.#33Projected LTV to spend G&A Marketing Support Projected LTV to spend Fraud LAE Claims Channel type 1 Channel type 2 Distribution Prediction Credibility Distribution Prediction Credibility Expense Ratio Machine-learning models generate LTV predictions for every customer, every campaign, every product and every geo. These models govern 86% of our marketing spend.#34G&A Marketing Support Fraud LAE Claims Expense Ratio CX.ai handles about 1/3 of all customer requests, including scheduling items, adding spouses, moving home and much more, with a CSAT score of 4.5#35G&A Marketing Support Fraud LAE Claims Excluding Metromile Loss Ratio Al Jim takes first notice of loss (FNOL) for 98% of claims, and handles 45% end- to-end, with a level of accuracy that surpasses humans.#36G&A Marketing Support Fraud LAE Claims 9/16 Connections in Risk Network 9/22 9.2m Loss Ratio Fraud algorithms flagged over >$100m in fraudulent claims, and detected doctored documents in $12m worth of claims.#37G&A Marketing Support Fraud LAE Claims Thousand Oaks Santa Clarita Santa Burbank Glendale Los Angeles Torrance Long Beach, i Anaheim Huntington Beach Santa Ana Pomona O Irvine Newport Beach Loss Ratio Watchtower tracks wildfires and weather, automatically halting marketing, and instituting a delayed-start-date for affected areas.#38G&A Marketing Support Fraud LAE Claims Griffith Ave E Adams Blvd E 27th St East Twentyeighth E25th St E Adams Blvd E 27th St Central Ave > Central Ave E Adams Blvd E 27th St 5 Central Ave E 25th St E Adams B Loss Ratio Telematics, continuously used by >90% of customers, lowers LAE, lowers adverse selection, and enables pricing at a level of precision unavailable to legacy systems.#39G&A Marketing Support Fraud LAE Claims Griffith Ave E Adams Blvd E 27th St Independent East Twentyeighth 0 E Adams Blvd E 27th St { Central Ave E Adams Blvd E 27th St 5 Central Ave E 25th St E Adams B Loss Ratio Computer vision and Natural Language Processing (NLP) detect risky homes for underwriting review, with a hit rate of ~80%.#40G&A Marketing Support Fraud LAE Claims Loss Ratio Machine Learning and Deep Learning match rate and risk with unrivaled precision, forming the basis of our newest rate filings.#41"But everyone's doing Al. Right?"#42#43"So why aren't we seeing it in the numbers?"#4485.8% Q121 We Are Seeing It In The Numbers Predicted Cohort Lifetime Loss Ratio 84.3% Q2 21 79.1% Q3 21 76.7% Q4 21 76.3% Q1 22 68.4% Q2 22 60.6% Q3 22#45Front Loaded Near-term Burdens Become Long-term Assets Building Products Data Disadvantage New Business Penalty Customer Acquisition Cost Selling Products Data Advantage Seasoned Business No-Commission-Sales#46Front Loaded Near-term Burdens Become Long-term Assets Building Products Data Disadvantage New Business Penalty Customer Acquisition Cost Selling Products Data Advantage Seasoned Business No-Commission-Sales#47Built for Scale A Growing Denominator Shrinks the Expense Ratio C#48$347m 103% Q3 21 Built for Scale Since Q3 21, Adjusted Expense Ratio Dropped 24% As IFP Grew 76% $380m 95% Q4 21 $419m 96% Q1 22 Adjusted Expense Ratio is calculated as Gross Earned Premium divided by all operational expenses excluding Loss and loss adjustment expense $458m 81% Q2 22 $609m 80% Q3 22#49Which brings us to the second picture in Lemonade's IPO prospectus#50>> Draw Grow with Customers#51@25 Renters Condo @50 Homeowners A Umbrella Life Car Pet Travel#5224.1% State Farm 14.8% Lemonade The Gateway Policy First time buyers of Renters Insurance across USA in past 12 months 14.1% GEICO 10.7% Progressive 9.5% Liberty 26.9% All Others Google Surveys n=1,500, 9/22 (+2.1% / -1.9%)#5322.1% Lemonade 21.8% State Farm The Gateway Policy First time buyers of Renters Insurance in past 12 months under 35yr olds 16.5% GEICO 11.5% Progressive 11.5% Liberty 16.8% All Others Google Surveys n=340, 9/22 (+4.1% /-3.5%)#542% 2% 2% 3% 3% 4% Renters Coverage for your stuff, in and out of your home At IPO 6% 6% 7% CHECK OUR PRICES FROM $5/MO 11 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 2020 Homeowners Protection for your home and stuff CHECK OUR PRICES FROM $25/MO 8% 9% 9% 10% 11% Percent of Condo customers that graduated from Renters (at IPO)#55K Renters Coverage for your stuff, in and out of your home CHECK OUR PRICES At IPO FROM $5/MO Cross sold: Premium jump: 2018 Homeowners Protection for your home and stuff CHECK OUR PRICES FROM $25/MO ~13 6x Pet Health insurance for furry family members CHECK OUR PRICES FROM $10/MO ~1/3 4x Since IPO Life Protecting the people you love CHECK OUR PRICES FROM $9/MO ~1/3 5x Car Protect your car, passengers, and the planet CHECK OUR PRICES AS LOW AS $30/MO ~1/3 8x#56It's Early Days...#57~60% of incumbents' customers are multi-line customers#58<4% of Lemonade's customers are multi-line customers#59May 20 July 20 Sep 20 Nov 20 65 Jan 21 We're on our way Multi-Line Customers Mar 21 May 21 Jul 21 D Sep 21 Nov 21 Jan 22 Mar 22 May 22 Jul 22 Illinois: 5.9% USA: 3.7% Sep 22#60In Conclusion...#61AI MAYA e bot Customer experie AI JIM Claims experience bot CX.AI Customer Cortex Al-based customer experience platform B BLENDER Insurance management platform COOPER Internal process manager FORENSIC GRAPH Predicts and detects fraud Build insurance as a neural network = more love + less costs @25 Renters Condo @50 Umbrella Life Capture tomorrow's most profitable customers today, and grow with them Car Pet Travel Homeowners#62Lemonade Play The Movie Forward >50x GEICO >100x State Farm >150x AXA#63Lemonade Maya Prosor November 15 2022#64Portfolio of products that supports Risk Management and Healthy Growth aalo ad Ca JIK Co 3.5#65The Perfect Onramp Lemonade Renters#66$223M IFP 65% Q3 Loss Ratio Q3 Results 1.4M Customers 51% Predicted LR Q3 cohort X3.15 LTV/CAC 50% Conversion rate#67al IFP ($,M) $5 $2 $3 2020-Q3 $8 $3 $5 Cross Sales coming from just Renters 2020-Q4 $13 $4 $8 2021-Q1 $17 $6 $11 2021-Q2 Life $22 Car $8 $13 2021-Q3 Home $26 $9 $16 2021-Q4 Pet $31 $10 $19 2022-Q1 $36 $12 $21 2022-Q2 $42 $2 $3 $13 $25 2022-Q3#685X Renters with 10X Heart Lemonade Pet#69The US Market *2021 data Households with Pets >80M 70 $2.6B at -25% CAGR with Pet insurance* 2.5%#70chewy Coming Spring 2023 $5 $8 $10 $12 $17 And we are growing way faster From standstill to $110M in 2 years $20 $25 $30 $34 $38 $43 $47 $51 $55 $59 $63 $68 $74 $79 $84 $89 $93 $99 $105 $110 09-20 10-20 11-20 12-20 01-21 02-21 03-21 04-21 05-21 06-21 07-21 08-21 09-21 10-21 11-21 12-21 01-22 02-22 03-22 04-22 05-22 06-22 07-22 08-22 09-22#71$110M IFP ~60% Predicted LR Q3 cohort Q3 Results X3.8 LTV/CAC 47% Claims handled by AI 15% Quote Rate from other products 450K Number of claims As of Q3-22#7201-19 02-19 03-19 04-19 05-19 06-19 07-19 08-19 09-19 10-19 11-19 12-19 01-20 02-20 03-20 04-20 05-20 06-20 07-20 08-20 09-20 10-20 11-20 12-20 01-21 02-21 03-21 04-21 05-21 06-21 07-21 08-21 09-21 10-21 11-21 12-21 01-22 02-22 03-22 04-22 05-22 06-22 07-22 08-22 09-22 product claims All other to date claims handled >450K pet Total number of claims handled at Lemonade High Frequency, Low Severity#73Our focus on efficiency is paying off Loss Adjustment Expenses (LAE) as percentage of premiums 36% Q4-20 27% Q1-21 22% Q2-21 21% Q3-21 23% Q4-21 18% Q1-22 16% Q2-22 14% Q3-22#74Rounds out the Family Lemonade Life#7535% Bundled with other products 1/2 The churn rate vs. single line Renters#76Made For Bundling Lemonade Home#77>$120B TAM 119% Q3 Loss Ratio Q3 Results $149M IFP 81% Predicted LR October X1.6 LTV/CAC 40% Auto Handled UW Reviews#7893% 4/2022 91% 5/2022 On the Right Path 81% Predicted Loss Ratio for new customer cohorts 87% 6/2022 89% 7/2022 Predicted loss ratio by month 87% 8/2022 83% 9/2022 81% 10/2022#79Time Lag Rate changes we've taken this year 118% Filed rate as % of total book 85% Approved rate as % of total book LTV 4.5% Earned rate as % of total book#8030% 01-22 Geo Profitability Management Reducing California New Business Share 24% 18% 03-22 14% 9% 05-22 7% 10% 07-22 10% 6% 09-22#81Getting the Right Risk#82#83TRIGGERS Real-Estate Property Description Property Overview Great starter pool home with loads of potential. On a corner lot featuring 3 bedrooms 2 bathrooms with copper plumbing, solar panels, new water heater and updated electrical. The home needs TLC inside but perfect for someone that doesn't mind getting their hands dirty. Centrally located to shopping, restaurants and 405/5/118 freeways.#84TRIGGERS Inspection Reports Auto-Review#85Aerial Imagery Capabilities Roofs segmentation, mobile homes and more...#86Map learnings onto Rates, Forms & Underwriting Pricing Wash, Rinse, Repeat File best assessment of Rates Forms & Underwriting Sell critical mass of such policies (to derive conversion, churn...) Pay critical mass of claims (to derive risk predictions, pricing)#87Sophistication in Pricing and UW Territory Factors HUMBOLDT LAKE SONOMA SAN FRANCISCO SAN MATED SANTA CRUZ L ALAMEDA MODOC YUBA NEVADO BENITO LASSEN PLACER STANISLAUS CALAVERAS TUOLUMNE MARIPOSA MADERA SANTA BARBARA TULARE VENTURA LOS ANGELES SAN BERNARDING SAN DIEGO RIVERSIDE#88Sophistication in Pricing and UW Address Level CAT ↑#89Sophistication in Pricing and UW ML Loss Model#9081.73% 77.76% May 16 79.07% 79.20% 79.77% May 30 ML Model for Pricing in TX Predicted loss ratios for new customer cohorts 82.04% Jun 13 75.89% 80.93% Jun 27 84.25% 76.54% Jul 11 81.89% 79.41% Jul 25 81.16% 76.66% Aug 8 79.32% 73.96% Aug 22 Conversion Rates Slightly Increased 77.37% 74.20% Sep 5 80.89% 63.68% Sep 19#9193% 4/2022 91% 5/2022 On the Right Path 81% Predicted Loss Ratio for new customer cohorts 87% 6/2022 89% 7/2022 87% 8/2022 83% 9/2022 81% 10/2022#92The Highway Lemonade Car#93Pent Up Demand and a Huge Market "Cheaper insurance. I am loyal custc ler se "My primary hope is that New York state will be one of the states that Lemonade car will be offered to and can compete with Geico." >300K Car waitlist "Lemonade stole the show in home insurance, compared to any other companies... you better in this one too. Waiting eagerly - love Lemonade" 25% Conversion Rate- Existing Customers $320B TAM Texas so oot"#94Crunching Time aka bridging the data gap To metromile JA >90% Telematics#9520 Year Old Male Power of Telematics Without Telematics Medium Credit Score Top 10% highest risk No Prior Accidents#9620 Year Old Male Power of Telematics 90% Day Driving 5% High Traffic Driving Without With Telematics Medium Credit Score 95% Within Speed Limit 90% Main Roads No Prior Accidents In reality a low risk driver, And we can price him as such 0.3% Hard Brakes 500 miles / month 0.2% Sharp Turns#97Touchless First Notice Of Loss Digitally capturing initial claim info, allowing advocates to handle claims faster CANCEL 2 damaged areas DONE 2022 Hyundai Santa Fe VEHICLE OVERVIEW Photos of Damage Condition Car Mileage Car Color Description Child car seat was damaged + Your vehicle is drivable with 2 damage points 14,980 White Damage to the left front bumper NO YES 1ST PARTY :#98★★★★ Affordable and Amazing I just wanted to pop here and give a 5 star review because this morning I was taking my nephew to school and a car in front of me brake checked because a car pulled out in front of it so I also had to slam my breaks, and no more than 5 minutes later I got a call asking if I was okay from my local emergency services. This is the first time this has happened and I had no idea that this app could do that, but I was highly impressed. United states L#996:48 pm-7:02 pm Trip Detais Date Location 10.0 Telematics Powered Al Hidden drivers detection Summary bed on end of the The driver completed a trip at 10:09 PM. The driver was going west on W Randolph St at 2 mph. At the time of the trip the weather was overcast W Randolph St is a intersection 9:58 pm-10:09 pm Export Claim Report N/A 9:58 PM-1009 PM (11m) May 21, 2022 Chicago, Chicago, I Whe Map Satelite Museum ● Street View Berthe Marylan OBREEKTOWN Show Point of Interests CANNING GREER East Ban Clu Mooty BA What RIVER NOW 360 CHICAGO NEAR NORT man Menn Contemporary A Al The highey bulding C Pruderal Prac Maggie Dv LAMM CHICAGD Ma FOOT#100. d Douglas Tennis Center Sharon Art Studio Grove ✪ c Baseball imonds nd A Underdogs Tres 11th Ave 'h Ave Ave O 10th Ave onico's nity Market 8th Ave Kemujor 11 San Tung ch 5th Ave 6th Ave O Loving 1 Crep ne ( Lale 4th Ave Kezar Stadium ( Lincoln Way 9th Ave Telematics Powered Al Rideshare detection Circus Center 2nd Ave 7 8 Judah Street & 9th Avenue A UCSF Parnassus You See shi Langley Porter Psychiatric Institute University of California 11th Ave Enjoy Vegetarian Restaurant UCSF Dentistry O Roxie's Market & Deli 10th Ave Edgewood Ave Kirkham Child Development Center 8th Ave 7th Ave Garden for the Environment Auto Dr Star Da Map Main St Ascend Church Satellite Street View MSA Masjid Harper Hall Heitz Hall University St Continuing W Russell St Avanti's Italian Restaurant Main Street Italian- N University St One World American $$ Hide Point of Interests W Main St Thanh Linh Vietnamese S Primitiques Market on Main Antique store Soo Kim Martial Arts Starbucks N Underhill St Campustown Shopping Center Shopping mall W Main St Subway Sandwich S CVS Dac's Smokehouse Drug store BBQ Campustown Barbecue S W Russell St Jimmy John's Sandwich S Main Street Commons CEFCU (ATM) Worain St Shell PIZZA N Bourland Ave N Bourland Ave Campust apa John's Pizz O Jr's Kitch PAPA JOHNS PIZZA#101Map learnings onto Rates, Forms & Underwriting Pricing Wash, Rinse, Repeat File best assessment of Rates Forms & Underwriting Sell critical mass of such policies (to derive conversion, churn...) Pay critical mass of claims (to derive risk predictions, pricing)#102Ratemaking Machine 2 Months of Coding Zero Coding#103Machine Learns Our Strategy Delight Consumers Predictive Data Grow Fast#104Lemonade Tim Bixby November 15 2022#105q 2 Let's do the numbers.......#10620% 5 year IFP CAGR 70% Gross Loss Ratio (2027) ~25% Multi-line customer rate by 2027#107~$1B 2022E 2023 2024 *Net working capital assumed to be zero Cash/Investments 2025 EBITDA 2026 2027 Capex & Invest. Income, net $582M $182M Unrestricted $400M Cash Restricted#10820% 5 year IFP CAGR 70% Gross Loss Ratio (2027) ~25% Multi-line customer rate by 2027#109IFP CAGR Gross Loss Ratio Multi-line customer H 5% 60% 10% Base - Profitable within 5 years 70% 25% 20% 25% 80% 40% ~$100M Minimum Unrestricted Cash Mid '26 Turning profitable#110IFP CAGR Gross Loss Ratio Multi-line customer H 5% 60% 10% Better - Earlier Profitability 65% 20% 35% 25% 80% 40% ~$175M Minimum Unrestricted Cash 2025 Turning profitable#111IFP CAGR Gross Loss Ratio Multi-line customer H 5% 60% 10% Worse - Later Profitability 20% 20% 78% 25% 80% 40% ~$125M Unrestricted Cash Deficit In 2027#112IFP CAGR Gross Loss Ratio Multi-line customer Adjusted Growth - Profitability in 5 years H 5% 60% 10% 12% 20% 78% 25% 80% 40% ~$100M Minimum Unrestricted Cash 2026 Turning profitable#113Metrics#114$400 $16M Q1-18 Consistent, Steady Topline Growth IFP development COVID IPO Inflation! Bear Market Ukraine Invasion $609M Q3-22#11510/10 For 10 consecutive quarters, we have met or beat our financial guidance ✓#116132% 93% 61% Q1-22 Loss Ratio by Product 123% 89% 57% 119% 90% 65% 117% Home 86% Pet 55% Renters Q4E-22#1170% -100% -200% -300% -400% Larger Investments Behind Us EBITDA/Gross Earned Premium, 5 years Q1-18 Q4E-22#118-20% -40% -60% -80% Q1-20 Continued Improvement EBITDA/Gross Earned Premium, 3 years IPO Pet Car MILE Q4E-22#119Improving Efficiency & Automation IFP/headcount ($ 000's) $340 Q4-21 +25% $425 Q4E -'22#120$138 Q3-18 Consistent Premium Growth Annual premium per customer $169 Q3-19 $201 Q3-20 $254 Q3-21 $343 Q3-22#121Vast Potential to Grow With Customers Annual premium per customer $138 LMND 2018 LMND 2022 $343 Top LMND customer US Average High Net Worth $3K $10K >$15K#122Surplus Strategy#123Evolving Surplus Strategy ~3:1 If 100% retained ~5:1 If 75% ceded to captive ~8:1 If 75% ceded to reinsurance ~6:1 Overall#124Today 1.8m customers $343 PPC IFP: ~$0.6B What if.....? Future #1 3.6m users 50% of avg PPC IFP: ~$6B Future #2 7.2m users 100% of avg PPC IFP: ~$23B $0.6B Today ~$6B Future #1 ~$23B Future #2#125Lemonade Investor Day November 15 2022

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