Thursday, September 10, 2020

Lemonade, still a 'Buy' (LMND)

 An insurance tech company.

- Over 10% pf US GDP is insurance.

- The basic idea is to use modern technologies to make the insurance business quicker, easier and more affordable.

- You can get a quote from Lemonade within a few minutes.

- They offer home owners, renters and pet insurance and planing to add more in the future.

- The business model: Lemonade takes a portion of the premium as an upfront fee - 25%. The other 75% are used to purchase reinsurance policies. So instead of making a variable payout, the reinsurance enables them to have a predictable cost of claims.

- The use of AI in this field gives Lemonade a durable competitive first mover advantage of having a favourable cost structure.

- It's cheaper to generate a policy through artificial intelligence than through a live agent.

- 70% of customers are under 35.

- 90% have not transferred from other policies.

- Down 37% since I bought it. Might consider adding to the position once I finish my entire portfolio allocation.


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