LMND Q4 Loss Narrower Than Expected on Solid Underwriting

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LMND’s Q4 Update

In force premium increased 31% year over year to $1,236.5 million. This marks the ninth consecutive quarter of growth acceleration. This metric beat the Zacks Consensus Estimates by 1.1%.

Net investment income declined 2.1% year over year to $9.2 million.

Customer count increased 23% year over year to nearly 3 million.

Premium per customer reached $414 at the end of the fourth quarter, increasing 7% year over year and exceeding the Zacks Consensus Estimate by 1.8%.

Gross earned premium increased 28% year over year to $290.2 million, primarily due to the increase in IFP earned during the quarter.

Gross profit climbed 73% year over year to $110.6 million, while adjusted gross profit rose 69% to $112 million. The increase was driven by a 53.3% surge in revenues and a nine-percentage-point improvement in the net loss ratio.

Total operating expense, excluding net loss and loss adjustment expense, increased 24% year over year to $154.2 million. This was primarily driven by higher growth spend for customer acquisition.

Adjusted EBITDA loss was $4.6 million compared with the year-ago adjusted EBITDA loss of $23.8 million. This year-over-year improvement was primarily due to revenue growth and improved underwriting results, partly offset by the increase in growth spend.

LMND’s Full-Year 2025 Update

Lemonade reported full-year operating revenues of $737.9 million, up 40.2% year over year. Net loss narrowed to $2.24 per share from $2.85 in the prior year.

Full-year adjusted EBITDA loss was $118.1 million compared with a loss of $149.7 million a year ago.

LMND’s Financial Update

Lemonade exited the fourth quarter with cash, cash equivalents, and investments of $1.1 billion, up 9.7% from 2024-end.

As of Dec. 31, 2025, approximately $250 million was carried by insurance subsidiaries as regulatory surplus.

As of Dec. 31, 2025, total assets increased 4.1% from the year-ago level of $1.9 billion. Stockholders' equity of $533.6 million decreased 10.1% from the 2024-end level.

Cash flow from operating activities surged 50% year over year to $20.7 million in the reported quarter.

Adjusted free cash flow surged 38.5% year over year to $36.7 million in the fourth quarter of 2025.

LMND’s Q1 2026 Guidance

Lemonade estimates in-force premium in the range of $1,321-$1,326 million.

The insurer expects gross earned premiums in the range of $299-$302 million.

LMND projects revenues in the range of $246-$251 million.

Lemonade estimates adjusted EBITDA loss in the band of $22-$25 million.

LMND projects stock-based compensation expense to be $19 million.

LMND’s 2026 Guidance

Lemonade estimates in force premium in the range of $1,625-$1,630 million.

The insurer expects gross earned premiums in the range of $1,362-$1,365 million.

LMND projects revenues in the range of $1,187-$1,192 million.

Lemonade estimates adjusted EBITDA loss in the range of $48-$52 million.

LMND projects stock-based compensation expense to be $75 million.

Zacks Rank

Lemonade currently has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Multi-Line Insurers

Everest Group, Ltd. EG reported a fourth-quarter 2025 operating income of $13.26 per share, which missed the Zacks Consensus Estimate by 0.8%. The figure marked an improvement from the year-ago loss of $18.39.  Total operating revenues of nearly $4.4 billion declined 4.6% year over year, reflecting lower premiums. The top line beat the Zacks Consensus Estimate by 2.7%.

Everest’s gross written premiums fell 8.6% year over year to $4.3 billion, as strong double-digit growth in specialty lines was offset by targeted reductions in certain casualty lines. Our estimate was $4.8 billion. Net investment income rose 18.8% year over year to $562 million. The figure exceeded both our estimate of $330.6 million and the Zacks Consensus Estimate of $456.4 million.

Assurant, Inc. AIZ reported fourth-quarter 2025 net operating income of $5.61 per share, which beat the Zacks Consensus Estimate by 1.08%. The bottom line increased 17% year over year. Total revenues increased 7.5% year over year to $3.3 billion. The top line beat the Zacks Consensus Estimate by 2.7%.

Assurant’s adjusted EBITDA, excluding reportable catastrophes, increased 3% to $445.9 million, due to growth within Global Housing and Global Lifestyle. Total benefits, loss and expenses increased 7.4% to $3.1 billion. The figure was higher than our estimate of $2.8 billion.

Principal Financial Group, Inc.’s PFG fourth-quarter 2025 operating net income of $2.19 per share missed the Zacks Consensus Estimate by 1.8%. The bottom line increased 13% year over year. Total revenues jumped 9.2% year over year to $4.4 billion due to increased premiums and other considerations, fees, and other revenues and net investment income.

Principal Financial’s total expenses increased 8.2% year over year to $3.9 billion As of Dec. 31, 2025, PFG’s assets under management amounted to $781 billion, which is included in the assets under administration of $1.8 trillion.