Lemonade Just Changed the Game

Most people missed this.

But buried inside Lemonade’s latest shareholder update was a quiet shift with major implications:

They just cut reinsurance from 55% to 20%.

That might sound like a technical detail, but it’s not.
It fundamentally shifts the economics of their business.

Let me walk you through it.

The Reinsurance Shift

Lemonade used to cede 55% of their premium revenue to reinsurers. That meant for every $1 in gross earned premium (GEP), they only kept $0.45.

Now? They're keeping $0.80.

That change alone is expected to unlock $300M+ in additional revenue over the next 12 months. Here’s how it breaks down:

Add in commission income, investment income, and other line items, and we’re looking at $900M–$1B in revenue over the next 12 months.

With that kind of revenue growth, the forward multiple drops:

For a company growing top line 50%+ YoY with improving margins? That’s rare.

Here’s a short list of US-listed companies trading under 3.5x sales with >50% revenue growth:

Those names come with baggage.
Lemonade doesn’t — it’s just being overlooked.

Let’s start with the bull case:

Now the bear case:

In my view, Lemonade’s earned the right to keep more risk on their books.

They've hit their internal loss targets for 6 straight quarters. They're sitting on capital. They're ready to scale.

This move is bold. But it’s not reckless.

This is Lemonade stepping into its next phase:

The risk? If a catastrophe hits, they eat more of the loss. But that's part of building a real insurance business.

And they’re doing it the right way:

Just quietly compounding.

This is what inflection looks like.

Conviction before consensus.

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