Digital Insurer Now Boasts Over 2.4 Million Customers
In just under a decade, digital-first insurance company, Lemonade, has logged a major milestone announcing it has reached $1 billion in in-force premium (IFP) in 2025. The company attributes its success since its founding to rapid growth across multiple product lines and geographic markets.
“Surpassing $1B in IFP with positive free cash flow and a healthy loss ratio is an important milestone for us,” said Shai Wininger, Lemonade President and cofounder. “We’ll take a minute to celebrate today’s achievement and get back to work on our journey to our next 10x!”
Outlining its achievements in its latest quarterly earnings report, Lemonade noted that IFP grew 26% year-over-year to $944 million as of December 31, 2024, capping off what it called its “best quarter ever” with $27 million in adjusted free cash flow. Net loss narrowed to $30 million in the fourth quarter, compared to a $42 million loss a year earlier. Adjusted EBITDA loss improved to $23.8 million from $28.9 million in Q4-2023.
As for Lemonade’s gross loss ratio for Q4-2024, it was 63%, its lowest on record, having improved by 4 points sequentially. For the full year, the gross loss ratio was 73%, within the company’s long-term target range. Gross profit rose 90% year-over-year in the quarter to $64 million.
The company also emphasized that it achieved full-year positive adjusted free cash flow of $48 million for the first time in its history, aided in part by the financing structure of its Synthetic Agents program. According to the shareholder letter, 80% of growth spending was funded by partner General Catalyst.
Launches Auto Product in Colorado
As part of its continued expansion, Lemonade announced it will launch its Lemonade Car product in Colorado on March 26, 2025. With this move, Lemonade Car will be available in states representing approximately 40% of the U.S. auto insurance market.
Lemonade described Colorado as a promising auto market, noting its current customer base in the state already spends “hundreds of millions” annually on auto insurance. Total auto insurance premiums in Colorado are estimated at $7 billion annually, the company said.
The company views Lemonade Car as a key driver in its long-term growth strategy, as outlined during its November 2024 Investor Day. Executives shared plans to scale the business tenfold through further automation, data science, and geographic expansion.
Pet Insurance Growth, Wildfire Impact Noted
Lemonade’s pet insurance segment reached $283 million in IFP at year-end, growing 57% from the prior year. The company highlighted operational efficiency and underwriting precision in the pet segment, citing a loss ratio of 69% and a reduction in cost per claim to $19.
The company also disclosed a preliminary estimate of $45 million in gross losses and $20 million in adjusted EBITDA impact due to the January 2025 California wildfires. Lemonade credited diversification across product lines and underwriting revisions for mitigating what it said could have been losses five times higher.
2025 Outlook
Looking ahead, Lemonade says it is guiding toward IFP growth of 28% in 2025, projecting $1.2 billion in IFP by year-end. Revenue is expected to reach approximately $656 million. Despite planning a 40% increase in growth spend, the company expects continued improvement in adjusted EBITDA and its second consecutive year of positive adjusted free cash flow.
The company’s outstanding cash and investments totaled approximately $1 billion at year-end, including $271 million held as regulatory surplus in its insurance subsidiaries.
