Insurtech start-up Lemonade has reported a gross profit of $11.7 million for the third quarter of 2021, which increased by $4.4 million compared to the third quarter of 2020.
This increase was due to the increase in gross earned premium, partially offset by a higher net loss ratio.
Lemonade reported a gross earned premium of $79.6 million compared to $42.9 million in the third quarter of 2020, due to the increase of in force premium earned during the quarter.
Third quarter total revenue of $35.7 million increased by $17.9 million or 101% compared to the same prior year period.
This was primarily due to the increase of gross earned premium during the quarter, increases in net investment income & commission income, and a modest reduction in the scope of its quota share program.
The insurer also reported a loss of $66.4 million as compared to $30.9 million in the third quarter of 2020.
For the next quarter, Lemonade expects a gross earned premium of $88 to $89 million, with a revenue of $39 to $40 million.
Lemonade also stated: “Our Q3 21 gross loss ratio was 77%, up from 72% a year ago, notwithstanding the fact that our newer products are demonstrating improving loss ratios. 5 Our business mix has evolved considerably since a year ago, with renters comprising 53% of the book, relative to 70% a year ago.
“The lines of business that have captured that share (home & pet) do demonstrate higher loss ratios than our more mature, stable renters book.
“However, we are seeing improving loss ratios specifically in home & pet. On an accident period basis, our pet loss ratio improved by 4 percentage points sequentially while our homeowners loss ratio improved by 52 percentage points year over year.”