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LMND · Forward model · Ceding commission, investment and other income · Schreiber 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 $134.95 all other verticals held in this portfolio case
Final-quarter revenue $58M 4% of company revenue
Explicit segment contribution $713M EBITDA less segment capex, before corporate items

Daniel Schreiber's version: the first adjusted-EBITDA-positive quarter arrives in Q4 2026 as promised and is the hinge rather than the destination, with gross profit compounding at the ~100% three-year rate it has managed so far and every product line lifted by the same software. What makes this case checkable rather than rhetorical is that Lemonade has put an arithmetic promise on the record - third-quarter and full-year guidance imply approximately $8M of positive adjusted EBITDA in the fourth quarter, a specific number a reader can hold them to one quarter from now. What this case does NOT contain is any change in the reinsurance structure or the cost of float beyond 2026; the ceding commission line still shrinks here, and the improvement is all underwriting and scale.

Ceding commission, investment and other income

Basis quarter$42M
Final quarter$58M
Implied CAGR+6%
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: $58M (2031Q2E)

Period Value
2024Q3 $41M
2024Q4 $48M
2025Q1 $47M
2025Q2 $52M
2025Q3 $54M
2025Q4 $49M
2026Q1 $45M
2026Q2 $42M
2026Q3E $42M
2026Q4E $42M
2027Q1E $42M
2027Q2E $43M
2027Q3E $43M
2027Q4E $43M
2028Q1E $44M
2028Q2E $45M
2028Q3E $45M
2028Q4E $46M
2029Q1E $47M
2029Q2E $48M
2029Q3E $49M
2029Q4E $50M
2030Q1E $51M
2030Q2E $52M
2030Q3E $54M
2030Q4E $55M
2031Q1E $56M
2031Q2E $58M

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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