Lemonade Shareholders Ask Why Experts Aren’t Buying

Another quarter, another earnings call. Since going public on the New York Stock Exchange, insurtech Lemonade has regularly curated the top-voted investor questions for its core team to answer during their quarterly financial calls. This time there were question marks from shareholders as to why the Lemonade insiders aren’t buying the brand, or at least putting their own money where their mouths are.

“How can we expect investors to support the current team if insiders aren’t buying shares at today’s low levels?” asked an individual named only Darren, whose question was read first by investor vote.

The question arose when shares of Lemonade, at $12.40 as of Wednesday’s close, were sitting at levels much lower than their July 2020 post-IPO price of nearly $70. At launch, the insurtech was priced at $29 per share.

While the price has risen slightly since the insurer’s financials (as of Friday, May 5, it opened at $14.51), it is still a long way from its February 2021 peak of near $164, a height it hit in the weeks after co-CEO of Lemonade. and co-founder Daniel Schreiber sold 300,000 shares for a windfall of just under $49 million. Schreiber has deposited a total of $87.13 million and co-CEO and co-founder Wininger $62.14 million from the share sale since the loss-making insurtech went public, according to Benzinga data.

“Lemonade has been and remains by far our largest holding, and we don’t plan for that to change anytime soon,” Wininger said in response to a question from shareholders, commenting only on his positions and those of co-CEO and co-founder Daniel Schreiber. . . “We both have a strong financial investment in Lemonade and believe wholeheartedly in the long-term vision we share with our shareholders.

“For that reason, we are both completely financially aligned with our investors.”

Wininger drew attention to himself and Schreiber receiving paid compensation upgrades on stocks “with a high exercise price” and said that, in his view, “this further aligns us with our investors.”

“However, in any case, I believe that other people’s personal financial decisions should not be the main factor for anyone in deciding to invest in a company,” Wininger said. “People have different considerations, including cash availability, portfolio balance, as well as family and other commitments.

“I would not advise investors to buy or sell stocks by mistreating expert liquidity decisions as signals.”

Other areas of focus in the earnings call included the generative use of AI — competitors dealing with legacy will have a hard time onboarding and may never experience the technology to live up to “its full potential,” Wininger said — and a $10.1 million decrease in marketing expenses. .

“We continue to streamline our operations, and once we are able to transition all Metromile customers to Lemonade systems, we will realize even more savings,” he said.

Lemonade First Quarter 2023 Results

The insurtech reported a net loss of $65.8 million for the first quarter of 2023, an improvement on the first quarter 2022 net loss of $74.8 million. On the earnings call, Schreiber highlighted a “welcome decline” in the insurer’s net loss ratio, which was 87% for the quarter (Q1 2022: 93%).

Gross written premium was $164 million (Q1 2022: $110.6 million), while net written premium was $82.7 million (Q1 2022: $35 million).

In its letter to shareholders, the insurtech said the deals would “be signed in the coming weeks” under the reinsurance agreements, with discussions with reinsurers and regulators “validating our planned mix of risk retention, cession to a captive, and reinsurance.” commercial”.

“We don’t want to get too far ahead and talk about terms that aren’t in effect yet,” Schreiber said during the earnings call. “That being said, a captive structure is something that we have thought about and designed as a potential option in the future.”