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LMND · Forward model · Ceding commission, investment and other income · Bull case

What has to happen in Ceding commission, investment and other income

Model as of

This page changes Ceding commission, investment and other income inside the complete LMND model. Every other vertical, corporate programme and valuation assumption stays in the selected portfolio case.

LMND forward model
Horizon
Consolidated fair value $86.24 all other verticals held in this portfolio case
Final-quarter revenue $43M 4% of company revenue
Explicit segment contribution $606M EBITDA less segment capex, before corporate items

The AI claims argument turns into underwriting margin, and Car becomes the third large line. Lemonade's LAE ratio has gone from 13% to a record-low 5% against an industry average near 9%, with record lows in homeowners, car and pet in the same quarter - and Car, where claims are hardest, hit 7%. This case carries that cost advantage into the loss ratios rather than treating it as a one-quarter print, and lets Car compound faster as states open. What it does NOT assume is any improvement in pet's loss ratio beyond base, which is the line that got worse this quarter and is about to become the largest book.

Ceding commission, investment and other income

Basis quarter$42M
Final quarter$43M
Implied CAGR0%
Final revenue mix4%

Not a product - the rest of the income statement. Ceding commission Lemonade earns for handing premium to reinsurers, investment income on the $1.16B it holds, and commission and other income. $42.4M in the basis quarter, and the only line here that is SHRINKING: it was $54.5M three quarters ago, because the reinsurance transition retains more premium and therefore earns less ceding commission. That is the same transition that made revenue grow 79% while gross earned premium grew 32%, so this line falling is the price of the product lines rising.

Last four quarters
2025 Q3 $54M Reported
2025 Q4 $49M Reported
2026 Q1 $45M Reported
2026 Q2 $42M Reported
Ceding commission incomeNet investment incomeCommission and other income
Sequential growth −2.0%/qtr decaying toward +1.0% -2% a quarter. This line fell from $54.5M to $42.4M over three quarters as Lemonade ceded less premium.
Ceding commission, investment and other income

Latest: $43M (2031Q2E)

Period Value
2024Q3 $41M
2024Q4 $48M
2025Q1 $47M
2025Q2 $52M
2025Q3 $54M
2025Q4 $49M
2026Q1 $45M
2026Q2 $42M
2026Q3E $42M
2026Q4E $41M
2027Q1E $40M
2027Q2E $40M
2027Q3E $40M
2027Q4E $40M
2028Q1E $40M
2028Q2E $40M
2028Q3E $40M
2028Q4E $40M
2029Q1E $40M
2029Q2E $40M
2029Q3E $40M
2029Q4E $41M
2030Q1E $41M
2030Q2E $41M
2030Q3E $42M
2030Q4E $42M
2031Q1E $42M
2031Q2E $43M

Assumptions & reasoning

  • This line exists so the six verticals sum to Lemonade's reported total revenue. The five product lines carry net earned premium only; total revenue also carries ceding commission, investment income and commission income.
  • It has fallen from $54.5M to $42.4M over three quarters as Lemonade retained more premium and ceded less. A reader who models the product lines growing without this line falling has double-counted the reinsurance transition.
  • Net investment income has been almost flat at $9.2M to $9.8M for eight quarters on a $1.16B portfolio. It is the most predictable number on this page and the least interesting.
  • If the intention is to value Lemonade as an underwriter, this is the line to zero out. It is 14% of revenue and none of it is premium.
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