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What changed in Lemonade, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Lemonade, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+593 added−657 removedSource: 10-K (2026-02-25) vs 10-K (2025-02-26)

Top changes in Lemonade, Inc.'s 2025 10-K

593 paragraphs added · 657 removed · 441 edited across 10 sections

Item 1. Business

Business — how the company describes what it does

112 edited+9 added−19 removed107 unchanged
Biggest changeMany states have enacted the Insurance Data Security Model Law or similar laws, and we expect more states to follow. 18 Table of Contents Additionally, a growing set of privacy regulations have created intense scrutiny regarding Interest-based advertising, or the use of data to draw inferences about a consumer’s interests and deliver relevant advertising to that consumer, by legislative, regulatory, and self-regulatory bodies, privacy advocates, academics, and commercial interests in the United States and abroad that focus on consumer data protection and privacy.
Biggest changeAdditionally, a growing set of privacy regulations have created intense scrutiny by legislative, regulatory, and self-regulatory bodies, privacy advocates, academics, and commercial interests in the United States and abroad that focus on consumer data protection and privacy regarding interest-based advertising, or the use of data to draw inferences about a consumer’s interests and deliver relevant advertising to that consumer.
Cooper makes our team dramatically more efficient and keeps evolving and learning with time. Forensic Graph, Blender, and Cooper, together with AI Maya, AI Jim, and CX.AI, run atop our Customer Cortex. The Customer Cortex, like a central nervous system, is the place where all data about our customers is transmitted, continuously analyzed, and then used by all six applications.
Cooper makes our team dramatically more efficient and keeps evolving and learning with time. Blender, Forensic Graph and Cooper, together with AI Maya, AI Jim, and CX.AI, run atop our Customer Cortex. The Customer Cortex, like a central nervous system, is the place where all data about our customers is transmitted, continuously analyzed, and then used by all six applications.
In 2020, we issued 500,000 shares of common stock as the initial endowment of the Lemonade Foundation, a 501(c)(4) social welfare organization established under Arizona law. By contributing approximately 1% of our common stock to the Lemonade Foundation, we hope to promote charitable giving and other community-centric activities with a nexus to our community.
We issued 500,000 shares of common stock in 2020 as the initial endowment of the Lemonade Foundation, a 501(c)(4) social welfare organization established under Arizona law. By contributing approximately 1% of our common stock to the Lemonade Foundation, we hope to promote charitable giving and other community-centric activities with a nexus to our community.
See “Risk Factors — Risks Relating to Our Business — We may face particular privacy, data security, and data protection risks as we continue to expand into Europe and the UK. in connection with the GDPR, UK GDPR and other data protection regulations.” Federal and State Legislative and Regulatory Changes A number of federal laws affect and apply to the insurance industry, including various privacy laws, the Fair Credit Reporting Act (“FCRA”), and the economic and trade sanctions implemented by the Office of Foreign Assets Control (“OFAC”) of the U.S.
See “Risk Factors — Risks Relating to Our Business — We may face particular privacy, data security, and data protection risks as we continue to expand into Europe and the UK. in connection with the GDPR and other data protection regulations.” Federal and State Legislative and Regulatory Changes A number of federal laws affect and apply to the insurance industry, including various privacy laws, the Fair Credit Reporting Act (“FCRA”), and the economic and trade sanctions implemented by the Office of Foreign Assets Control (“OFAC”) of the U.S.
Representative indicators in the assessment range from payment above a living wage, employee benefits, charitable giving/community service, and use of renewable energy. Recognition as a Certified B Corp currently requires that a company achieve a reviewed assessment score of at least 80. The review process includes a phone review and a random selection of indicators for purposes of verifying documentation.
Representative indicators in the assessment range from payment of living wage, employee benefits, charitable giving/community service, and use of renewable energy. Recognition as a Certified B Corp currently requires that a company achieve a reviewed assessment score of at least 80. The review process includes a phone review and a random selection of indicators for purposes of verifying documentation.
Our primary channel of advertisement is the internet, where we promote our ads and services through various media and social media platforms, including Facebook, TikTok, YouTube, and Instagram. We also use the data generated in customer support interactions to constantly refine and improve our marketing campaigns.
Our primary channel of advertisement is the internet, where we promote our ads and services through various media and social media platforms, including Facebook, TikTok, YouTube, X and Instagram. We also use the data generated in customer support interactions to constantly refine and improve our marketing campaigns.
As a result, we are subject to U.S. federal and state privacy and data security laws and regulations that, among other things, require that we institute and maintain certain policies and procedures to safeguard this information from improper use or disclosure.
As a result, we are subject to U.S. federal and state and international privacy and data security laws and regulations that, among other things, require that we institute and maintain certain policies and procedures to safeguard this information from improper use or disclosure.
The insurance we offer in the United States covers stolen or damaged property, and also covers personal liability, which protects our customers if they are responsible for an accident or damage to another person or their property.
The insurance we offer in the United States covers stolen or damaged property, and personal liability, which protects our customers if they are responsible for an accident or damage to another person or their property.
As a result, the values for assets, liabilities, and equity reflected in financial statements prepared in accordance with GAAP may be different from those reflected in financial statements prepared under SAP. 20 Table of Contents Rate Regulation Nearly all states have insurance laws requiring personal property and casualty insurers to file rating plans, policy or coverage forms, and other information with the state’s regulatory authority.
As a result, the values for assets, liabilities, and equity reflected in financial statements prepared in accordance with GAAP may be different from those reflected in financial statements prepared under SAP. 19 Table of Contents Rate Regulation Nearly all states have insurance laws requiring personal property and casualty insurers to file rating plans, policy or coverage forms, and other information with the state’s regulatory authority.
As of December 31, 2024, roughly 55% of our claims were automated, resulting in instant or near-instant processing from start to finish. AI Jim triages and assigns claims he is not authorized to settle, or ones where he identifies concerns, to human claims experts, analyzing each expert's specialty, qualifications, workload, and schedule to determine to whom to assign the claim.
As of December 31, 2025, roughly 55% of our claims were automated, resulting in instant or near-instant processing from start to finish. AI Jim triages and assigns claims he is not authorized to settle, or ones where he identifies concerns, to human claims experts, analyzing each expert's specialty, qualifications, workload, and schedule to determine to whom to assign the claim.
We believe we have achieved this through a combination of reinsurance structures known as "per risk reinsurance" and "facultative reinsurance" (the "Non-Proportional Reinsurance Contracts"). Together, these contracts reduce the maximum amount we would need to pay for any one claim. Our business is exposed to the risk of severe weather conditions and other catastrophes which are inherently unpredictable.
We believe we have achieved this through a combination of reinsurance structures known as "per risk reinsurance" (the "Non-Proportional Reinsurance Contracts"), which together reduce the maximum amount we would need to pay for any one claim. Our business is exposed to the risk of severe weather conditions and other catastrophes which are inherently unpredictable.
Health, Safety and Wellness As a B Corp, it is part of our legal mission to advance the health, well-being and equity of employees.
Health, Safety and Wellness As a B Corp, it is part of our legal mission to advance the health and well-being of employees.
We engage with employees for ideas of nonprofits to partner with, or resources to learn more about a social issue, and their candid (and anonymous, should they choose) feedback about our workplace culture and environment. Additionally, our employees organize several education groups across the Company addressing these importantt topics.
We engage with employees for ideas of nonprofits to partner with, or resources to learn more about a social issue, and their candid (and anonymous, should they choose) feedback about our workplace culture and environment. Additionally, our employees organize several education groups across the Company addressing these important topics.
In addition to digitizing insurance end-to-end, we also reimagined the underlying business model to minimize volatility while maximizing trust and social impact. To lessen the volatility inherent in an industry directly impacted by the weather, we utilize several forms of reinsurance, with the goal of dampening the impact on our gross margin.
In addition to digitizing insurance end-to-end, we also reimagined the underlying business model to minimize volatility while maximizing trust and social impact. To lessen the volatility inherent in an industry directly impacted by the weather, we utilize several forms of reinsurance, with the goal of reducing the impact on our gross margin.
AI Jim AI Jim is our claims bot, and, as of December 31, 2024, 96% of the time, it is AI Jim that will take the first notice of loss from a Lemonade customer without human intervention (and with zero claims overhead, known as loss adjustment expense, or “LAE”).
AI Jim AI Jim is our claims bot, and, as of December 31, 2025, 96% of the time, it is AI Jim that will take the first notice of loss from a Lemonade customer without human intervention (and with zero claims overhead, known as loss adjustment expense, or “LAE”).
Forensic Graph tracks untold signals and analyzes relationships between things which may appear trivial or invisible to humans, but in which our machine learning uncovers complex multivariate links that have helped us avoid millions of dollars' worth of potential losses. Blender Blender is a robust insurance management platform that we built with customer centricity and exponential efficiency in mind.
Forensic Graph tracks untold signals and analyzes relationships between things which may appear trivial or invisible to humans, but in which our machine learning uncovers complex multivariate links that have helped us avoid millions of dollars' worth of potential losses. 6 Table of Contents Blender Blender is a robust insurance management platform that we built with customer centricity and exponential efficiency in mind.
Human Capital Management We understand that strength lies in the unique backgrounds of our employees and drives the innovation behind our product. We encourage employees to bring their lived experiences, and personal strengths, to develop new ideas, improve customer experiences and shape our brand.
Human Capital Management We understand that strength lies in the unique backgrounds of our employees that drive the innovation behind our product. We encourage employees to bring their lived experiences, and personal strengths, to develop new ideas, improve customer experiences and shape our brand.
For example, in 2017, the New York Department of Financial Services (“NYDFS") adopted a broad cybersecurity regulation that requires financial services institutions to, among other things, implement and maintain a cybersecurity program and a cybersecurity policy that will be monitored and tested periodically, develop controls and technology standards for data protection, meet minimum standards in response to any cybersecurity breach and annually certify their compliance with the regulation.
For example, in 2017, the New York Department of Financial Services (“NY DFS") adopted a broad cybersecurity regulation that requires financial services institutions to, among other things, implement and maintain a cybersecurity program and a cybersecurity policy that will be monitored and tested periodically, develop controls and technology standards for data protection, meet minimum standards in response to any cybersecurity breach and annually certify their compliance with the regulation.
See “Risk Factors — Risks Relating to Our Business — New legislation or legal requirements may affect how we communicate with our customers, which could have a material adverse effect on our business model, financial condition, and results of operations.” GDPR The General Data Protection Regulation (E.U.) 2016/679 (the “E.U.
See “Risk Factors — Risks Relating to Our Business — New legislation or legal requirements may affect how we communicate with our customers, which could have a material adverse effect on our business model, financial condition, and results of operations.” 17 Table of Contents GDPR The General Data Protection Regulation (E.U.) 2016/679 (the “E.U.
State insurance laws and regulations generally are designed to protect the interests of customers, consumers, and claimants rather than stockholders or other investors. State regulation generally have broad administrative power with respect to all aspects of the insurance business.
State insurance laws and regulations generally are designed to protect the interests of customers, consumers, and claimants rather than stockholders or other investors. State regulators generally have broad administrative power with respect to all aspects of the insurance business.
We aim to provide an unmatched user experience in order to retain customers throughout their lifespan, expanding their lifetime value without incurring any incremental costs of acquisition. Expand to new products Our strategy of growing with our customers also lends itself to expanding into new lines of insurance, as lifecycle events trigger the need for additional insurance products.
We aim to provide an unmatched user experience in order to retain customers throughout their lifespan, expanding their lifetime value without incurring any incremental costs of acquisition. 7 Table of Contents Expand to new products Our strategy of growing with our customers also lends itself to expanding into new lines of insurance, as lifecycle events trigger the need for additional insurance products.
State insurance regulatory authorities that have jurisdiction over the payment of dividends by our regulated insurance subsidiaries may in the future adopt statutory provisions more restrictive than those currently in effect. 17 Table of Contents Investment Regulation LIC is subject to New York’s insurance laws and MIC is subject to Delaware and California’s laws regarding the composition of their investments.
State insurance regulatory authorities that have jurisdiction over the payment of dividends by our regulated insurance subsidiaries may in the future adopt statutory provisions more restrictive than those currently in effect. Investment Regulation LIC is subject to New York’s insurance laws and MIC is subject to Delaware and California’s laws regarding the composition of their investments.
In addition, DNB monitors operations and business through monthly updates, the submission of Quantitative Reporting Templates, by reviewing annual reports, approving prospective Management Board and Supervisory Board members prior to their appointment and through scheduled and unannounced audits. 22 Table of Contents DNB also regulates the acquisition and increase of control over certain authorized firms, including insurers.
In addition, DNB monitors operations and business through monthly updates, the submission of Quantitative Reporting Templates, by reviewing annual reports, approving prospective Management Board and Supervisory Board members prior to their appointment and through scheduled and unannounced audits. DNB also regulates the acquisition and increase of control over certain authorized firms, including insurers.
We believe we compete favorably across many of these factors, and have developed a digital platform and business model based on artificial intelligence and behavioral economics that we believe will be difficult for incumbent insurance providers to emulate. 13 Table of Contents Intellectual Property The protection of our technology and intellectual property is an important aspect of our business.
We believe we compete favorably across many of these factors, and have developed a digital platform and business model based on artificial intelligence and behavioral economics that we believe will be difficult for incumbent insurance providers to emulate. Intellectual Property The protection of our technology and intellectual property is an important aspect of our business.
Seasonality For information regarding the seasonality of our business, please refer to Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Annual Report. 16 Table of Contents Regulation of our Business Insurance Regulation Our U.S. insurance subsidiaries are regulated by insurance regulatory authorities in the states in which we operate.
Seasonality For information regarding the seasonality of our business, please refer to Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Annual Report. Regulation of our Business Insurance Regulation Our U.S. insurance subsidiaries are regulated by insurance regulatory authorities in the states in which we operate.
If a vendor is needed, for example, to assess the damage, all appropriate suppliers will pop up in Blender, and can be dispatched to the field, and paid, at the push of a button. Blender brings similar integrated, customer-centric, and focused workflows to the other Lemonade teams as well.
If a vendor is needed, for example, to assess the damage, all appropriate suppliers will appear in Blender, and can be dispatched to the field, and paid, at the push of a button. Blender brings similar integrated, customer-centric, and focused workflows to the other Lemonade teams as well.
Cooper continuously analyzes spectrometry imaging beamed from NASA's satellites, identifying wildfires in real time and blocking ads and sales in the affected areas; Cooper collates and formats materials for our regulatory filings; and he even handles most of our engineering task allocation, code deployment, Q&A, and more.
Cooper continuously analyzes spectrometry imaging beamed from NASA's satellites, identifying wildfires in real time and blocking ads and sales in the affected areas; Cooper collates and formats materials for our regulatory filings; and he even handles most of our engineering task allocation, code deployment, QA, and more.
We conduct drip campaigns via email to follow up with those who have inquired about us or started the on-boarding process. Additionally, we enter into agreements with parties who have access to potential customers, including insurance agencies, apartment building owners, and property management companies.
We conduct drip campaigns via email to follow up with those who have inquired about us or started the onboarding process. Additionally, we enter into agreements with parties who have access to potential customers, including insurance agencies, apartment building owners, and property management companies.
Investments Our portfolio of investable assets is primarily held in cash, money market funds, and fixed income securities which includes U.S. and non-US government and government agencies obligations, corporate debt securities and asset-backed securities with relatively short durations. We manage the portfolio in accordance with the investment policies and guidelines approved by the board of directors.
Investments Our portfolio of investable assets is primarily held in cash, money market funds, and fixed income securities which include U.S. and non-US government and government agency obligations, corporate debt securities and asset-backed securities of relatively short durations. We manage the portfolio in accordance with investment policies and guidelines approved by our board of directors.
Both expansions were supported by existing partnerships with Aviva in the UK and BNP Paribas Cardif in France, providing coverage options unique to each locale through our fully digital experience. The full Lemonade experience is available through our iOS and Android apps, as well as through our website.
Both expansions in the UK and France were supported by existing partnerships with Aviva in the UK and BNP Paribas Cardif in France, providing coverage options unique to each locale through our fully digital experience. 8 Table of Contents The full Lemonade experience is available through our iOS and Android apps, as well as through our website.
Regulated entities are generally required to comply with the new requirements imposed by the Amendment in phases throughout 2024 and 2025.
Regulated entities were generally required to comply with the new requirements imposed by the Amendment in phases throughout 2024 and 2025.
The calculation of "employees" includes insurance agents and brokers because they are a significant cost component for other insurance companies. In comparison to these competitors, our number of customers per employee was approximately 2,000 as of December 31, 2024.
The calculation of "employees" includes insurance agents and brokers because they are a significant cost component for other insurance companies. In comparison to these competitors, our number of customers per employee was approximately 2,300 as of December 31, 2025.
We also established a captive cell facility at a Bermuda transformer vehicle that is authorized to write and purchase insurance / reinsurance where we retain most of our windstorm exposure.
We also established a captive cell facility at a Bermuda transformer vehicle that is authorized to write and purchase insurance / reinsurance where we retain most of our tail catastrophe exposure.
Growing households often need car, pet, and life insurance, and additional coverage. These progressions regularly trigger orders of magnitude jumps in insurance premiums, and within states that offer all of Lemonade’s “suite of products” - Renters, Home, Car, Pet, and Life - we see a growing proportion of customers with multiple Lemonade policies and see ripe opportunities for the business.
These progressions regularly trigger orders of magnitude jumps in insurance premiums, and within states that offer all of Lemonade’s “suite of products” - Renters, Home, Car, Pet, and Life - we see a growing proportion of customers with multiple Lemonade policies and see ripe opportunities for the business.
DNB regularly pro-actively contacts insurers to discuss matters of strategy, day-to-day operations and the current (and expected future) financial standing of the undertaking, in order to assess what parts of a regulated undertaking, if any, which could pose systemic risks.
DNB regularly proactively contacts insurers to discuss matters of strategy, day-to-day operations and the current (and expected future) financial standing of the undertaking, in order to assess what parts of a regulated undertaking, if any, could pose systemic risks.
In an event that requires immediate assistance or temporary housing as a result of fire, ongoing water damage, or structural damage that leaves the customer's home exposed, we contact the customer to assess the situation and provide emergency services, such as water or fire damage cleanup, temporary housing, or a designated specialist. 11 Table of Contents Reinsurance Insurance often produces businesses with highly recurring revenue streams, and hence predictable top lines, but with significant bottom-line volatility, as profits can literally fluctuate with the weather.
In an event that requires immediate assistance or temporary housing as a result of fire, ongoing water damage, or structural damage that leaves the customer's home exposed, we contact the customer to assess the situation and provide emergency services, such as water or fire damage cleanup, temporary housing, or a designated specialist. 10 Table of Contents Reinsurance Insurance companies typically experience highly recurring revenue streams, and hence predictable top lines, but with significant bottom line volatility, as profits can literally fluctuate with the weather.
Our Product Offerings Renters and Homeowners Insurance We offer our products to renters and homeowners in the United States, France, and the UK (in addition to liability insurance for the latter two) and contents and liability insurance in Germany and the Netherlands.
Our Product Offerings Renters and Homeowners Insurance We offer our products to renters and homeowners in the United States, France, the Netherlands and the UK (in addition to liability insurance) and contents and liability insurance in Germany.
In a number of states, we also offer landlord insurance policies to condo and co-op owners who rent out their property less than five times a year. In 2024, we expanded our offerings to include Buildings insurance in the UK and France, giving homeowners throughout France and the UK the ability to purchase extensive coverage for their home and belongings.
In a number of states, we also offer landlord insurance policies to condo and co-op owners who rent out their property less than five times a year. In the past two years, we expanded our offerings to include Buildings insurance in the UK, the Netherlands and France, giving homeowners the ability to purchase extensive coverage for their home and belongings.
With our reinsurance agreements offloading residual claims, and our Giveback policy offloading residual premiums, we have two powerful ballasts that reduce volatility, while creating an aligned, trustful, and values-rich relationship with our customers. 5 Table of Contents This combination of a customer-focused onboarding experience, a customer-aligned business model, and a revenue stream that grows along with our customers' insurance needs, has created a sustainable financial model that we are proud of.
With our reinsurance agreements reducing the impact of excess claims, and our Giveback policy, we have two powerful ballasts that reduce volatility, while creating an aligned, trustful, and values-rich relationship with our customers. 5 Table of Contents This combination of a customer-focused onboarding experience, a customer-aligned business model, and a revenue stream that grows along with our customers' insurance needs, has created a sustainable financial model that we are proud of.
Proportional Reinsurance: Maximize Capital Efficiency The low cost of capital for reinsurance companies creates an opportunity to share premiums and maintain our gross margin while dramatically reducing our capital requirements. We maintain proportional reinsurance contracts which cover all of the Company’s products and geographies, and transfers, or “cedes”, a specified percentage of the premium to reinsurers (“Proportional Reinsurance Contracts”).
Proportional Reinsurance: Maximize Capital Efficiency The low cost of capital for reinsurance companies creates an opportunity to share premiums and maintain our gross margin while reducing our capital requirements. We maintain proportional reinsurance contracts which transfers, or “cedes”, a specified percentage of the premium to reinsurers (“Proportional Reinsurance Contracts”).
As of December 31, 2024, and based on public information from five competing insurance companies in the United States, we estimate that the number of customers per employee for those companies ranges from approximately 150 to approximately 450 customers per employee. We base this estimate on publicly available information, which we have adjusted for comparability.
As of December 31, 2025, and based on public information from five competing insurance companies in the United States, we estimate that the number of customers per employee for those companies ranges from approximately 300 to approximately 600 customers per employee. We base this estimate on publicly available information, which we have adjusted for comparability.
When the ORSA Model Act is adopted by a particular state, it imposes more extensive filing requirements on parents and affiliates of domestic insurers. Delaware has adopted its version of the ORSA Model Act and New York has implemented portions of the ORSA Model Act. In the course of our business, we collect and maintain confidential and personal information.
When the ORSA Model Act is adopted by a particular state, it imposes more extensive filing requirements on parents and affiliates of domestic insurers. Delaware and New York have adopted the ORSA Model Act. In the course of our business, we collect and maintain confidential and personal information.
By completing a set of over 200 questions that reflect impact indicators, best practices, and outcomes, a company receives a composite score on a 200-point scale representative of its overall impact on its employees, customers, communities, and the environment.
Based on responses to a set of over 200 questions that reflect impact indicators, best practices, and outcomes, a company receives a composite score on a 200-point scale representative of its overall impact on its employees, customers, communities, and the environment.
We also have a reinsurance contract between Lemonade Insurance Company (“LIC”) and a Bermuda-based segregated cell insurer to cover catastrophe risks over the initial $50,000,000 limit for each loss occurrence, and further subject to a limit of $80,000,000 for each loss occurrence and in aggregate .
We also have a reinsurance contract between LIC and MIC, and a Bermuda-based segregated cell insurer to cover catastrophe risks over the initial $50,000,000 limit for each loss occurrence, and further subject to a limit of $80,000,000 for each loss occurrence and in aggregate .
To that end, employees have access to health and wellness programs, and healthcare plans. 15 Table of Contents Geographic Scope of Business In the United States, as of December 31, 2024, LIC and MIC are licensed to sell our insurance products in the following states: We also currently hold a pan-European license, which enables us to sell in 30 countries across Europe.
To that end, employees have access to health and wellness programs, and healthcare plans. 14 Table of Contents Geographic Scope of Business In the United States, as of December 31, 2025, LIC and MIC are licensed to sell our insurance products in the following states: We also hold a pan-European license, which enables us to sell in 30 countries across Europe, and currently operate and sell our insurance products in Germany, the Netherlands, France and the UK.
In 2023, the Foundation launched a first of its kind blockchain-based insurance product for the world’s most vulnerable farmers. The product was built with a goal of protecting subsistence farmers against the effects of climate change.
In 2023, the Foundation, launched a first of its kind blockchain-based insurance product benefitting some of the world’s most vulnerable farmers. The product was built with a goal of protecting subsistence farmers against the effects of climate variability.
As we expand into Europe or UK, the compliance obligations under the GDPR (as set out above) will become more significant.
As we expand into Europe or UK, the compliance obligations under the GDPR will become more significant.
Competitors in the car insurance space include companies such as Progressive, GEICO and Allstate. We also compete with new market entrants.
Competitors in the car insurance space include companies such as Progressive, GEICO and Allstate. 12 Table of Contents We also compete with new market entrants.
About 83% of our pet insurance policies were sold to new customers, and about 6% of those have already added a renters or homeowners policy to their pet policy as of December 31, 2024. Customers that bundle our insurance offerings typically save money.
About 87% of our pet insurance policies were sold to new customers, and about 5% of those have already added a renters or homeowners policy to their pet policy as of December 31, 2025. Customers that bundle our insurance offerings typically save money.
Acceptance as a Certified B Corp and continued certification is at the sole discretion of the independent nonprofit organization. 14 Table of Contents Human Capital Resources Employees As of December 31, 2024, we had 1,235 employees, 796 of whom were based in the United States and the rest of whom were based outside of the United States, primarily in Israel and the Netherlands.
Acceptance as a Certified B Corp and continued certification is at the sole discretion of the independent nonprofit organization. 13 Table of Contents Human Capital Resources Employees As of December 31, 2025, we had 1,282 employees, 810 of whom were based in the United States and the rest of whom were based outside of the United States, primarily in Israel and the Netherlands.
Failure to maintain risk-based capital at the required levels could adversely affect the ability of LIC and MIC to maintain the regulatory approvals necessary to conduct their businesses. As of December 31, 2024, LIC maintained a risk-based capital level of 577% and MIC maintained a risk-based capital level of 525%.
Failure to maintain risk-based capital at the required levels could adversely affect the ability of LIC and MIC to maintain the regulatory approvals necessary to conduct their businesses. As of December 31, 2025, LIC maintained a risk-based capital level of 586% and MIC maintained a risk-based capital level of 625%.
Lemonade Insurance N.V. is licensed as an insurance company by De Nederlandsche Bank in the Netherlands (R162036). Authorized by the Prudential Regulation Authority. Subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority (FRN 846181).
This allows the company to operate in the UK market permanently. Lemonade Insurance N.V. is licensed as an insurance company by De Nederlandsche Bank in the Netherlands (R162036). Authorized by the Prudential Regulation Authority. Subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority (FRN 846181).
Furthermore, our investment policy prohibits investments in areas such as oil and gas, coal, tobacco, controversial weapons, and non-compliance with the United Nations Global Compact.
Furthermore, our investment policy prohibits investments in sectors such as oil and gas, coal, tobacco, controversial weapons, and entities that exhibit non-compliance with the United Nations Global Compact.
Claims are often paid or declined through our claims bot, AI Jim, within seconds. While a meaningful portion of simple theft and standard pet claims are paid almost instantly, in many cases the incident is also reviewed by a human before the claim is approved, and certain property damage claims or liability claims may take longer to settle.
While a meaningful portion of simple theft and standard pet claims are paid almost instantly, in many cases the incident is also reviewed by a human before the claim is approved, and certain property damage claims or liability claims may take longer to settle.
The relevant EU supervisory body for insurers, EIOPA, has limited supervisory powers in the Netherlands, however it plays an important role in drafting and issuing technical standards and preparing guidance relating to various European directives and regulations. EIOPA aims to accomplish efficient and harmonized financial supervision across the European Union.
The relevant EU supervisory body for insurers, EIOPA, has limited supervisory powers in the Netherlands, however it plays an important role in drafting and issuing technical standards and preparing guidance relating to various European directives and regulations.
In addition, we established a Cayman Islands-based captive reinsurer to which Metromile Insurance Company (“MIC”) cedes approximately 25% of its premiums and losses. Our Non-Proportional Reinsurance Contracts are issued by a collection of reinsurers, each holding an ‘A’ or better rating from A.M. Best, have a one-year term that expires on June 30, 2025.
In addition, Lemonade Insurance Company (LIC) and Metromile Insurance Company (“MIC”) cedes approximately 15% and 35% of their premiums and losses, respectively, to our Cayman Islands-based captive reinsurer. Our Non-Proportional Reinsurance Contracts are issued by a collection of reinsurers, each holding an ‘A’ or better rating from A.M. Best, and have a one-year term that expires on June 30, 2026.
On November 1, 2023, the NYDFS issued a significant amendment to the cybersecurity requirements, mandating covered entities to adopt specific standards and controls to secure sensitive data. The recent amendment significantly expands obligations on entities regulated by NYDFS to report cybersecurity incidents and enhance their consumer data protection and cybersecurity infrastructure.
The NY DFS in 2023 issued a significant amendment to the cybersecurity requirements, mandating that covered entities adopt specific standards and controls to secure sensitive data. The recent amendment significantly expands obligations of entities regulated by NY DFS to report cybersecurity incidents and enhance their consumer data protection and cybersecurity infrastructure.
To reduce this risk, we also purchase one year property catastrophe excess protection. In 2023, we formed a new risk-bearing entity, Lemonade Re SPC, in the Cayman Islands, where we hold some of our retained risk.
To reduce this risk, we also purchase a catastrophe excess of loss policy with a one year term. We formed a risk-bearing entity, Lemonade Re SPC, in the Cayman Islands, where we hold some of our retained risk.
The regulatory requirements and restrictions include, among others, the following: • approval of policy forms and premium rates; • approval for intercompany service agreements; • advertising, marketing, and trade practices; and • restrictions on the ability of our regulated insurance subsidiaries to pay dividends to us or enter into certain related party transactions Regulation of insurance companies constantly changes as governmental agencies and legislatures react to real or perceived issues.
The regulatory requirements and restrictions include, among others, the following: • approval of policy forms and premium rates; • approval for intercompany service agreements; • advertising, marketing, and trade practices; and • restrictions on the ability of our regulated insurance subsidiaries to pay dividends to us or enter into certain related party transactions Regulation of insurance companies constantly changes as governmental agencies and legislatures react to real or perceived issues. 15 Table of Contents Required Licensing Our regulated U.S. insurance subsidiaries are domiciled and admitted in the states of New York and Delaware.
For instance, we see an incredible opportunity for Lemonade Car in selling to our existing customers, allowing us to acquire customers at no cost. Of the more than 2.2 million customers we have today, about 1.2 million already have car insurance—that translates to a potential multi-billion dollar opportunity in car premiums at nearly zero acquisition costs.
For instance, we see a significant opportunity for Lemonade Car in selling to our existing customers, allowing us to acquire customers at little or no cost. Of the approximately 3,000,000 customers we have today, about 1.9 million already have car insurance—that translates to a potential multi-billion dollar opportunity in car premiums at nearly zero acquisition costs.
As of December 31, 2024, we have 5 issued patents in the United States. The issued patents generally relate to determining the route and parking location of a vehicle, recording trip data associated with a vehicle, and estimating the usage of a vehicle based on refueling events.
As of December 31, 2025, we have 5 issued patents in the United States. The issued patents generally relate to determining the route and parking location of a vehicle, recording trip data associated with a vehicle, and estimating the usage of a vehicle based on refueling events. The issued patents will expire between September 1, 2035 and January 11, 2036.
As of December 31, 2024, 422 employees were required to maintain and did maintain requisite licenses for these activities in most states in which we operate.
As of December 31, 2025, 382 employees were required to maintain and did maintain requisite licenses for these activities as required by the states in which we operate.
In 2017, the NAIC adopted the Insurance Data Security Model Law, which established standards for data security and for the investigation and notification of insurance commissioners of cybersecurity events involving unauthorized access to, or the misuse of, certain nonpublic information.
The NAIC in 2017 adopted the Insurance Data Security Model Law, which established standards for data security and for the investigation and notification of insurance commissioners of cybersecurity events involving unauthorized access to, or the misuse of, certain nonpublic information. Many states have enacted the Insurance Data Security Model Law or similar laws, and we expect more states to follow.
Additionally the SEC maintains an internet site that contains reports, proxy and information statements and other information. The address of the SEC’s website is www.sec.gov. 24 Table of Contents
Additionally, the SEC maintains an internet site that contains reports, proxy and information statements and other information at www.sec.gov. 23 Table of Contents
DNB and AFM employ a risk-based and proportionate approach to supervision, comprising a firm systemic framework, which focuses on the continuous assessment of how firms manage the risks they create and identifying the root causes of risk.
EIOPA aims to accomplish efficient and harmonized financial supervision across the European Union. 21 Table of Contents DNB and AFM employ a risk-based and proportionate approach to supervision, comprising a firm systemic framework, which focuses on the continuous assessment of how firms manage the risks they create and identifying the root causes of risk.
In general, in addition to continuing to meet the threshold conditions to authorization, Lemonade Insurance N.V. and Lemonade Agency B.V. are obliged to comply with European regulations, European directives (in as far as these directives have direct effect in the Netherlands or other European member states in which our subsidiaries do business), the DFSA and the lower regulations set out thereunder, and other national regulations, all of which contain detailed rules covering, among other things, systems and controls, conduct of business, and prudential ( i.e . capital and solvency) requirements.
In general, in addition to continuing to meet the threshold conditions to authorization, Lemonade Insurance N.V. and Lemonade Agency B.V. are obliged to comply with European regulations, European directives (in as far as these directives have direct effect in the Netherlands or other European member states in which our subsidiaries do business), the DFSA and the lower regulations set out thereunder, and other national regulations, all of which contain detailed rules covering, among other things, systems and controls, conduct of business, and prudential ( i.e . capital and solvency) requirements. 22 Table of Contents Lemonade Insurance N.V. launched its first product in the UK market in October 2022, and operates in the UK through its registered branch establishment, Lemonade Insurance N.V., UK Branch (BR025196) which received third-country branch authorization from the Prudential Regulation Authority in the UK in May 2023.
Our 'behind the scenes technology' is structured within three proprietary applications: Forensic Graph, Blender, and Cooper. 6 Table of Contents Forensic Graph Forensic Graph utilizes the combined power of behavioral economics, big data, and AI to predict, deter, detect, and block fraud throughout the customer engagement.
Our 'behind the scenes technology' is structured within three proprietary applications: Forensic Graph, Blender, and Cooper. Forensic Graph Forensic Graph utilizes the combined power of behavioral economics, big data, and AI to predict, deter, detect, and block fraud throughout the customer engagement. Insurance fraud is a complicated problem to solve for traditional insurers, mostly due to data paucity.
There are several different ways in which the credit for reinsurance laws may be satisfied by an assuming reinsurer, including being licensed in the state, being accredited in the state, or maintaining certain types of qualifying collateral.
There are several different ways in which the credit for reinsurance laws may be satisfied by an assuming reinsurer, including being licensed in the state, being accredited in the state, or maintaining certain types of qualifying collateral. We ensure that LIC and MIC are able to take full financial statement credit for their reinsurance.
The remaining 17% or so of pet insurance policies were sold to existing customers, whose median premium per customer grew roughly 3.7x with little to no incremental customer acquisition costs. Car We launched car insurance in December 2021 in Illinois, and now offer it in nine states.
The remaining 13% or so of pet insurance policies were sold to existing customers, whose median premium per customer grew roughly 3.8x with little to no incremental customer acquisition costs. Car Insurance We offer car insurance in a number of states.
As of December 2024, we have substantially completed the migration of Metromile customers to the Lemonade platform. Life Lemonade also provides life insurance through a partnership arrangement with a third-party carrier. With Lemonade’s term life insurance offering, individuals can apply online for up to $1.5 million or more in coverage, for a term of 10 to 40 years.
Life Insurance Lemonade also provides life insurance through a partnership arrangement with a third-party carrier, Legal & General Group. With Lemonade’s term life insurance offering individuals can apply online for up to $1.5 million or more in coverage, for a term of 10 to 40 years.
Competition The homeowners, pet, car and, to a lesser extent, the renters insurance industries in which we operate are highly competitive. While we believe we are well positioned to execute our business model and reinvent insurance, we face significant competition from traditional insurance companies such as Allstate, Farmers, Liberty Mutual, State Farm, GEICO, Progressive and Travelers.
While we believe we are well positioned to execute our business model and reinvent insurance, we face significant competition from traditional insurance companies such as Allstate, Farmers, Liberty Mutual, State Farm, GEICO, Progressive and Travelers.
Applicants use Lemonade’s interface to receive an initial quote estimate and then are transferred to our partner to complete their final application. Giveback Feature Giveback is a distinctive feature, whereby each year we aim to donate leftover money to causes our customers care about.
Applicants use Lemonade’s interface to receive an initial quote estimate and then are transferred to our partner to complete their final application. Giveback Feature Giveback is a distinctive Lemonade policy to which the Company continues to have a deep commitment. Each year, we aim to donate funds to cause our customers care about.
We continually review our development efforts to assess the existence and patentability of intellectual property. Intellectual property laws, procedures, and restrictions provide only limited protection and any of our intellectual property rights may be challenged, invalidated, circumvented, infringed, or misappropriated.
Intellectual property laws, procedures, and restrictions provide only limited protection and any of our intellectual property rights may be challenged, invalidated, circumvented, infringed, or misappropriated.
Even our basic pet insurance offering covers blood tests, urinalysis, X-rays, MRIs, lab work, and CT scans. We also offer two optional add-ons to the basic plan, a wellness package and an extended accident and illness package.
Even our basic pet insurance offering covers blood tests, urinalysis, X-rays, MRIs, lab work, and CT scans. We also offer two optional add-ons to the basic plan, a wellness package and an extended accident and illness package. These provide additional coverage for preventative care costs, including annual exams and vaccines, and recovery treatments, including physical therapy and hydrotherapy.
In 2012, the NAIC adopted the Risk Management and Own Risk and Solvency Assessment (“ORSA”) Model Act (the “ORSA Model Act”) to require domestic insurers to maintain a risk management framework and establishes a legal requirement for domestic insurers to conduct an ORSA in accordance with the NAIC’s ORSA Guidance Manual.
Recently, the NAIC has developed model laws requiring annual reports concerning the nature of corporate governance within an insurance holding company. 16 Table of Contents The NAIC in 2012 adopted the Risk Management and Own Risk and Solvency Assessment (“ORSA”) Model Act (the “ORSA Model Act”) to require domestic insurers to maintain a risk management framework and establishes a legal requirement for domestic insurers to conduct an ORSA in accordance with the NAIC’s ORSA Guidance Manual.
They trust us, and they also become part of a community; our policyholders are helping others while covering their own valuables, insuring their home, or making sure their pet can afford vital medical care.
The Giveback program, and its underlying ethos, has also helped build an honest relationship with our consumers. They trust us, and they also become part of a community; our policyholders are helping others while protecting their valuables, insuring their home, or making sure their pet can afford vital medical care.
We estimate that approximately half of our book is reinsured through June 30, 2025, and renewed and renegotiated on an annual basis. We believe that the terms of our reinsurance arrangements provide an appropriate balance between maximizing predictability, and enabling us to capture more margin over time.
We believe that the terms of our reinsurance arrangements provide an appropriate balance between maximizing predictability, and enabling us to capture more margin over time.
The policy, which may change from time to time, is approved by the board of directors and is reviewed on a regular basis to ensure that the policy evolves in response to changes in the financial markets. See "Note 4 — Summary of Significant Accounting Policies" in the Notes to Consolidated Financial Statements included in this Annual Report.
The policy, which may change from time to time, is approved by the board of directors and is reviewed on a regular basis to ensure that the policy evolves in response to changes in the financial markets and our risk profile.
By virtue of its authorisation and oversight by both the Prudential Regulation Authority (the “PRA”) and the Financial Conduct Authority (the “FCA”) in the UK, Lemonade is also subject to the regulatory requirements of the PRA Rulebook and the FCA Handbook respectively as they pertain to Insurers, distributing agents and financial service providers generally. 21 Table of Contents The Solvency II Regulations The Solvency II Directive, as implemented in the DFSA and other national regulations, such as the German Insurance Supervisory Act ( Versicherungsaufsichtsgesetz ), prescribes uniform rules for insurers and their activities and services.
By virtue of its authorisation and oversight by both the Prudential Regulation Authority (the “PRA”) and the Financial Conduct Authority (the “FCA”) in the UK, Lemonade is also subject to the regulatory requirements of the PRA Rulebook and the FCA Handbook respectively as they pertain to Insurers, distributing agents and financial service providers generally.
Our website and information included in or linked to our website are not part of this Annual Report.
In addition to the information about us and our subsidiaries contained in this Annual Report, information about us can be found on our website. Our website and information included in or linked to our website are not part of this Annual Report.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeBelow is Demotech, Inc.'s rating scale: • A" (A Double Prime), Unsurpassed: 100% of insurers with this rating are expected to have a positive surplus at least 18 months from the initial date of rating assignment; • A' (A Prime), Unsurpassed: 99% of insurers with this rating are expected to have a positive surplus at least 18 months from the initial date of rating assignment; • A, Exceptional: 97% of insurers with this rating are expected to have a positive surplus at least 18 months from the initial date of rating assignment; • S, Substantial: 95% of insurers with this rating are expected to have a positive surplus at least 18 months from the initial date of rating assignment; • M, Moderate: 90% of insurers with this rating are expected to have a positive surplus at least 18 months from the initial date of rating assignment; and • L, Licensed: These companies have been assessed but have not been given one of the financial strength ratings listed above. 58 Table of Contents While our Demotech, Inc. rating has proved satisfactory to date, we cannot assure that this rating will remain at its current level and it is possible that some prospective customers may be reluctant to do business with a company that is not rated by A.M.
Biggest changeWhile our Demotech, Inc. rating has proved satisfactory to date, we cannot assure that this rating will remain at its current level and it is possible that some prospective customers may be reluctant to do business with a company that is not rated by A.M. Best. We have not been reviewed by A.M.
The following factors, in addition to other factors described in this "Risk Factors" section and included elsewhere in this document may have a significant impact on the market price of our common stock and warrants: • the occurrence of severe weather conditions and other catastrophes; • our operating and financial performance, quarterly or annual earnings relative to similar companies; • publication of research reports or news stories about us, our competitors or our industry, or positive or negative recommendations or withdrawal of research coverage by securities analysts; • the public's reaction to our press releases, our other public announcements and our filings with the SEC; • announcements by us or our competitors of acquisitions, business plans or commercial relationships; • any major change in our board of directors or senior management, including the departure of either of our Co-Founders; • additional sales of our common stock and warrants by us, our directors, executive officers, principal shareholders, or our Co-Founders; • adverse market reaction to any indebtedness we may incur or securities we may issue in the future; • short sales, hedging and other derivative transactions in our common stock and warrants; • exposure to capital market risks related to changes in interest rates, realized investment losses, credit spreads, equity prices, foreign exchange rates and performance of insurance- linked investments; • our creditworthiness, financial condition, performance, and prospects; • our dividend policy and whether dividends on our common stock and warrants have been, and are likely to be, declared and paid from time to time; • perceptions of the investment opportunity associated with our common stock relative to other investment alternatives; • regulatory or legal developments; • changes in general market, economic, and political conditions; • conditions or trends in our industry, geographies or customers; • short selling activities • changes in accounting standards, policies, guidance, interpretations or principles; and • threatened or actual litigation or government investigations.
The following factors, in addition to other factors described in this "Risk Factors" section and included elsewhere in this document may have a significant impact on the market price of our common stock: • the occurrence of severe weather conditions and other catastrophes; • our operating and financial performance, quarterly or annual earnings relative to similar companies; • publication of research reports or news stories about us, our competitors or our industry, or positive or negative recommendations or withdrawal of research coverage by securities analysts; • the public's reaction to our press releases, our other public announcements and our filings with the SEC; • announcements by us or our competitors of acquisitions, business plans or commercial relationships; • any major change in our board of directors or senior management, including the departure of either of our Co-Founders; • additional sales of our common stock by us, our directors, executive officers, principal shareholders, or our Co-Founders; • adverse market reaction to any indebtedness we may incur or securities we may issue in the future; • short sales, hedging and other derivative transactions in our common stock; • exposure to capital market risks related to changes in interest rates, realized investment losses, credit spreads, equity prices, foreign exchange rates and performance of insurance- linked investments; • our creditworthiness, financial condition, performance, and prospects; • our dividend policy and whether dividends on our common stock have been, and are likely to be, declared and paid from time to time; • perceptions of the investment opportunity associated with our common stock relative to other investment alternatives; • regulatory or legal developments; • changes in general market, economic, and political conditions; • conditions or trends in our industry, geographies or customers; • short selling activities • changes in accounting standards, policies, guidance, interpretations or principles; and • threatened or actual litigation or government investigations.
These provisions include: • our board of directors is classified into three classes of directors with staggered three-year terms and directors are only able to be removed from office for cause; • nothing in our Amended Charter precludes future issuances without stockholder approval of the authorized but unissued shares of our common stock; • advance notice procedures apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders; • our stockholders will only be able to take action at a meeting of stockholders and not by written consent; 62 Table of Contents • only our chairman of the board of directors, our chief executive officer, our president (in the absence of the chief executive officer), or a majority of the board of directors are authorized to call a special meeting of stockholders; • no provision in our Amended Charter or Amended Bylaws provides for cumulative voting, which limits the ability of minority stockholders to elect director candidates; • directors will only be able to be removed for cause; • certain amendments to our Amended Charter will require the approval of two-thirds of the then outstanding voting power of our capital stock; • our Amended Bylaws will provide that the affirmative vote of two-thirds of the then-outstanding voting power of our capital stock, voting as a single class, is required for stockholders to amend or adopt any provision of our bylaws; • our Amended Charter authorizes undesignated preferred stock, the terms of which may be established and shares of which may be issued, without the approval of the holders of our capital stock; and • certain litigation against us can only be brought in Delaware.
These provisions include: • our board of directors is classified into three classes of directors with staggered three-year terms and directors are only able to be removed from office for cause; • nothing in our Amended Charter precludes future issuances without stockholder approval of the authorized but unissued shares of our common stock; • advance notice procedures apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders; • our stockholders will only be able to take action at a meeting of stockholders and not by written consent; 59 Table of Contents • only our chairman of the board of directors, our chief executive officer, our president (in the absence of the chief executive officer), or a majority of the board of directors are authorized to call a special meeting of stockholders; • no provision in our Amended Charter or Amended Bylaws provides for cumulative voting, which limits the ability of minority stockholders to elect director candidates; • directors will only be able to be removed for cause; • certain amendments to our Amended Charter will require the approval of two-thirds of the then outstanding voting power of our capital stock; • our Amended Bylaws will provide that the affirmative vote of two-thirds of the then-outstanding voting power of our capital stock, voting as a single class, is required for stockholders to amend or adopt any provision of our bylaws; • our Amended Charter authorizes undesignated preferred stock, the terms of which may be established and shares of which may be issued, without the approval of the holders of our capital stock; and • certain litigation against us can only be brought in Delaware.
There is not yet any clear precedent as to whether use of artificial intelligence to make insurance offers to individuals will be considered necessary even though it is integral to our business model. If our automated decision making processes cannot meet this necessity threshold, we cannot use these processes with E.U./U.K. data subjects unless we obtain their explicit consent.
There is not yet any clear precedent as to whether use of artificial intelligence to make insurance offers to individuals will be considered necessary even though it is integral to our business model. If our automated decision making processes cannot meet this necessity threshold, we cannot use these processes with E.U. data subjects unless we obtain their explicit consent.
We rely on artificial intelligence, telematics, mobile technology, and our digital platforms to collect data that we evaluate in pricing and underwriting our insurance policies, managing claims and customer support, and improving business processes, and any legal or regulatory requirements that prohibit or restrict our ability to collect or use this data could thus materially and adversely affect our business, financial condition, results of operations and prospects.
We rely on artificial intelligence, telematics, mobile technology, and our digital platforms to collect data that we evaluate in pricing and underwriting our insurance policies, managing claims and customer support, and improving business processes, and any legal or regulatory requirements that prohibit or restrict our ability to collect or use this data could materially and adversely affect our business, financial condition, results of operations and prospects.
Our monitoring efforts of the third party provider’s and other service providers may not be adequate, or our providers could exceed their authorities or otherwise breach obligations owed to us, which could result in operational disruption, reputational damage and regulatory intervention and otherwise have a material adverse effect on our results of operation and financial condition.
Our monitoring efforts of the third party providers and other service providers may not be adequate, or our providers could exceed their authorities or otherwise breach obligations owed to us, which could result in operational disruption, reputational damage and regulatory intervention and otherwise have a material adverse effect on our results of operation and financial condition.
In addition, our business and operations are subject to various U.S. federal, state, and local consumer protection laws, including laws which place restrictions on the use of automated and non-automated tools and technologies to communicate with wireless telephone subscribers or consumers generally.
In addition, our business and operations are subject to various U.S. federal, state, and local, and foreign, consumer protection laws, including laws which place restrictions on the use of automated and non-automated tools and technologies to communicate with wireless telephone subscribers or consumers generally.
Our insurance subsidiaries, LIC and MIC, obtain reinsurance to help manage their exposure to property and casualty insurance risks. Although our reinsurance counterparties are liable to us according to the terms of the reinsurance policies, we remain primarily liable to our policyholders as the direct insurers on all risks reinsured.
Our insurance subsidiaries, LIC, MIC and NV, obtain reinsurance to help manage their exposure to property and casualty insurance risks. Although our reinsurance counterparties are liable to us according to the terms of the reinsurance policies, we remain primarily liable to our policyholders as the direct insurers on all risks reinsured.
Increasing scrutiny, actions and changing expectations from investors, clients, regulators and our employees and other stakeholders with respect to environmental, social and governance (“ESG”) matters may impose additional costs on us, impact our access to capital, or expose us to new or additional risks.
Scrutiny, actions and changing expectations from investors, clients, regulators and our employees and other stakeholders with respect to environmental, social and governance (“ESG”) matters may impose additional costs on us, impact our access to capital, or expose us to new or additional risks.
We currently offer our products through our website and online app using Amazon Web Services ("AWS") data centers, a provider of cloud infrastructure services. We do not have control over the operations of the facilities of AWS that we use.
We offer our products through our website and online app using Amazon Web Services ("AWS") data centers, a provider of cloud infrastructure services. We do not have control over the operations of the facilities of AWS that we use.
In addition, all portions of our business established outside the European Union may be required to comply with the requirements of the GDPR with respect to the offering of products or services to individuals in the European Union or UK.
In addition, all portions of our business established outside the European Union and the UK may be required to comply with the requirements of the GDPR with respect to the offering of products or services to individuals in the European Union or UK.
In addition, broad market and industry factors may negatively affect the market price of our common stock and warrants, regardless of our actual operating performance, and factors beyond our control may cause our stock price to decline rapidly and unexpectedly.
In addition, broad market and industry factors may negatively affect the market price of our common stock, regardless of our actual operating performance, and factors beyond our control may cause our stock price to decline rapidly and unexpectedly.
We cannot predict the extent to which investor interest in us will sustain a trading market on the NYSE and NYSE American or how active and liquid that market may remain.
We cannot predict the extent to which investor interest in us will sustain a trading market on the NYSE or how active and liquid that market may remain.
The market price of our common stock or warrants may decline below the public offering price, and you may not be able to sell your shares of our common stock at or above the price you paid or at all.
The market price of our common stock may decline below the public offering price, and you may not be able to sell your shares of our common stock at or above the price you paid or at all.
We have experienced ownership changes in the past, and we may or may experience ownership changes in the future as a result of subsequent shifts in our stock ownership, some of which may be outside of our control.
We have experienced ownership changes in the past, and we may experience ownership changes in the future as a result of subsequent shifts in our stock ownership, some of which may be outside of our control.
If any analyst who may cover us were to cease coverage of the Company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to materially decline. 66 Table of Contents Item 1B. Unresolved Staff Comments None.
If any analyst who may cover us were to cease coverage of the Company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to materially decline. 62 Table of Contents Item 1B. Unresolved Staff Comments None.
Any failure or perceived failure by us to comply with our privacy policies, our privacy-related obligations to customers or other third parties, or our privacy-related legal obligations, or any compromise of security that results in the unauthorized release or transfer of sensitive information, which could include personally identifiable information or other user data, may result in governmental or regulatory investigations, enforcement actions, regulatory fines, compliance orders, litigation or public statements against us by consumer advocacy groups or others, and could cause customers to lose trust in us, all of which could be costly and have an adverse effect on our business.
Any failure or perceived failure by us to comply with our privacy policies, our privacy-related obligations to customers or other third parties, or our privacy-related legal obligations, or any compromise of security that results in the unauthorized release or transfer of sensitive information, which could include Personal Information or other user data, may result in governmental or regulatory investigations, enforcement actions, regulatory fines, compliance orders, litigation or public statements against us by consumer advocacy groups or others, and could cause customers to lose trust in us, all of which could be costly and have an adverse effect on our business.
We are periodically subject to examinations by our primary state insurance regulators, which could result in adverse examination findings and necessitate remedial actions. We provide insurance through our subsidiaries, LIC and MIC. Since LIC is a New York State-domiciled insurance company, LIC’s primary insurance regulator responsible for supervision and examination is the NYDFS.
We are periodically subject to examinations by our primary U.S. state insurance regulators, which could result in adverse examination findings and necessitate remedial actions. We provide insurance through our U.S. subsidiaries, LIC and MIC. Since LIC is a New York State-domiciled insurance company, LIC’s primary insurance regulator responsible for supervision and examination is the NYDFS.
In addition, new and changed rules and regulations regarding privacy, data protection (in particular those that impact the use of artificial intelligence) and cross-border transfers of customer information could cause us to delay planned uses and disclosures of data to comply with applicable privacy and data protection requirements.
In addition, new and changed rules and regulations regarding privacy, data protection (in particular those that impact the use of artificial intelligence) and cross-border transfers of Personal Information could cause us to delay planned uses and disclosures of data to comply with applicable privacy and data protection requirements.
The trading price of our common stock and warrants could be volatile, and you could lose all or part of your investment.
The trading price of our common stock could be volatile, and you could lose all or part of your investment.
Presidential administration, the passage of U.S. taxation reform legislation, and concerns over interest rates (particularly short-term rates) each have caused, and may continue to cause, significant volatility in currency exchange rates, especially among the U.S. dollar, the GBP pounds and the euro.
Presidential administration, the passage of U.S. taxation reform legislation, and concerns over interest rates (particularly short-term rates) each have caused, and may continue to cause, significant volatility in currency exchange rates, especially among the U.S. dollar, Euros and the GBP pounds.
Fluctuations in foreign currency exchange rates may adversely affect our financial results. Since we conduct limited operations in Israel and Europe, portions of our revenues, expenses, assets and liabilities are denominated in New Israeli Shekels, Euros and GBP pounds.
Fluctuations in foreign currency exchange rates may adversely affect our financial results. Since we conduct limited operations in Israel, Europe and the UK, portions of our revenues, expenses, assets and liabilities are denominated in New Israeli Shekels, Euros and GBP pounds.
Further, to the extent that any changes in law or regulation further restrict the ways in which we communicate with prospective or current customers before or during onboarding, customer care, or claims management, these restrictions could result in a material reduction in our customer acquisition and retention, reducing the growth prospects of our business, and adversely affecting our financial condition and future cash flows.
Further, to the extent that any changes in law or 40 Table of Contents regulation further restrict the ways in which we communicate with prospective or current customers before or during onboarding, customer care, or claims management, these restrictions could result in a material reduction in our customer acquisition and retention, reducing the growth prospects of our business, and adversely affecting our financial condition and future cash flows.
In response to such changes, many individuals, organizations and institutions, both within and outside of Israel, have in the past and may in the future voice concerns that the proposed changes may negatively impact the business environment in Israel, due to potential reluctance of foreign investors to invest or transact business in Israel, increased currency fluctuations, downgrades in credit rating, increased interest rates, increased volatility in securities markets, and other changes in macroeconomic conditions.
In response to such changes, many individuals, organizations and institutions, both within and outside of Israel, have in the past and may in the future voice concerns that the proposed changes may negatively impact the business environment in Israel, due to potential reluctance of foreign investors to invest or transact business in Israel, increased currency fluctuations, downgrades in credit rating, increased interest rates, increased 44 Table of Contents volatility in securities markets, and other changes in macroeconomic conditions.
We may not be able to easily switch our AWS operations to another cloud or other data center provider if there are disruptions or interference with our use of AWS, and, even if we do switch our operations, other cloud and data center providers are subject to the same risks.
We may not be able to easily switch our AWS operations to another cloud or other data center provider if there are disruptions or interference with our use of AWS, and other cloud and data center providers are subject to the same risks.
If so, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations, and financial condition. 63 Table of Contents We are subject to rules and regulations established from time to time by the SEC and the NYSE and the NYSE American regarding our internal control over financial reporting.
If so, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations, and financial condition. 60 Table of Contents We are subject to rules and regulations established from time to time by the SEC and the NYSE regarding our internal control over financial reporting.
We currently rely on the EU standard contractual clauses and the UK Addendum to the EU standard contractual clauses and the UK International Data Transfer Agreement as relevant to transfer personal data outside the EEA and the UK with respect to both intragroup and third party transfers. We expect international personal data transfers to continue.
We currently rely on the EU standard contractual clauses and the UK Addendum to the EU standard contractual clauses and the UK International Data Transfer Agreement as relevant to transfer personal data outside the EEA and the UK with respect to both intragroup and third party transfers.
Other limitations are evident in significant variations in estimates between models, material increases and decreases in results due to model changes and refinements of the underlying data elements and actual conditions that are not yet well understood or may not be properly incorporated into the models. We are subject to payment processing risk.
Other limitations are evident in significant variations in estimates between models, material increases and decreases in results due to model changes and refinements of the underlying data elements and actual conditions that are not yet well understood or may not be properly incorporated into the models. 53 Table of Contents We are subject to payment processing risk.
Failure to establish and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and stock price. We are subject to the rules and regulations established from time to time by the SEC, the New York Stock Exchange (“NYSE”) and the New York Stock Exchange American (“NYSE American”).
Failure to establish and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and stock price. We are subject to the rules and regulations established from time to time by the SEC and the New York Stock Exchange (“NYSE”).
With regards to the recent hostilities, there is still uncertainty regarding the extent to which it will impact our operations in Israel, which we continue to evaluate. 42 Table of Contents Our commercial insurance may not cover losses that could occur as a result of events associated with the security situation in the Middle East.
With regards to the recent hostilities, there is still uncertainty regarding the extent to which it will impact our operations in Israel, which we continue to evaluate. Our commercial insurance may not cover losses that could occur as a result of events associated with the security situation in the Middle East.
If global economic and market conditions, or economic conditions in the UK, European Union, the United States or other key markets remain uncertain or deteriorate further, the value of the GBP pounds and euro and the global credit markets may further weaken.
If global economic and market conditions, or economic conditions in the UK, European Union, the United States or other key markets remain uncertain or deteriorate further, the value of the GBP pounds and Euros, and the global credit markets may further weaken.
Automated decision making also attracts a higher regulatory burden under the GDPR, which requires the existence of such automated decision making be disclosed to the data subject including a meaningful explanation of the logic used in such decision making, and safeguards must be implemented to safeguard individual rights, including the right to obtain human intervention and to contest any decision.
Automated decision making 35 Table of Contents also attracts a higher regulatory burden under the GDPR, which requires the existence of such automated decision making be disclosed to the data subject including a meaningful explanation of the logic used in such decision making, and safeguards must be implemented to safeguard individual rights, including the right to obtain human intervention and to contest any decision.
To the extent we are not able to offset future taxable income with our NOLs, our net income and cash flows may be adversely affected. 47 Table of Contents The enactment of legislation implementing changes in tax legislation or policies in different geographic jurisdictions may impact our business, financial condition and results of operations.
To the extent we are not able to offset future taxable income with our NOLs, our net income and cash flows may be adversely affected. The enactment of legislation implementing changes in tax legislation or policies in different geographic jurisdictions may impact our business, financial condition and results of operations.
Any such events could adversely affect our business, results of operations or financial condition. See "Business - Regulation - European Regulation." 51 Table of Contents State insurance regulators impose additional reporting requirements regarding enterprise risk on insurance holding company systems, with which we must comply as an insurance holding company.
Any such events could adversely affect our business, results of operations or financial condition. See "Business - Regulation - European Regulation. State insurance regulators impose additional reporting requirements regarding enterprise risk on insurance holding company systems, with which we must comply as an insurance holding company.
Laws and regulations that limit cancellation and non-renewal of policies or that subject withdrawal plans to prior approval requirements may significantly restrict our ability to exit unprofitable markets. Such actions and related regulatory restrictions may limit our ability to reduce our potential exposure to hurricane-related losses.
Laws and regulations that limit cancellation and non-renewal of policies or that subject withdrawal plans to prior approval requirements 50 Table of Contents may significantly restrict our ability to exit unprofitable markets. Such actions and related regulatory restrictions may limit our ability to reduce our potential exposure to hurricane-related losses.
See "Regulation — Risk-Based Capital." If we are unable to maintain and implement relationships with third-party service providers, or renew contracts with them on favorable terms, or if those parties are adversely impacted by financial, reputational, regulatory and other risks, our prospects for future growth and our business may be adversely affected.
See "Regulation — Risk-Based Capital." 26 Table of Contents If we are unable to maintain and implement relationships with third-party service providers, or renew contracts with them on favorable terms, or if those parties are adversely impacted by financial, reputational, regulatory and other risks, our prospects for future growth and our business may be adversely affected.
See "Dividends." 64 Table of Contents Because we are a holding company and all of our business is conducted through our subsidiaries, dividends, distributions and other payments from, and cash generated by, our subsidiaries will be our principal sources of cash to fund operations and pay dividends.
See "Dividends." Because we are a holding company and all of our business is conducted through our subsidiaries, dividends, distributions and other payments from, and cash generated by, our subsidiaries will be our principal sources of cash to fund operations and pay dividends.
We are implementing external and internal policies and procedures, technical measures and internal training designed to adhere to those principles; • In relation to the transparency principle, the GDPR requires us to provide individuals in the European Union and the U.K. whose personal data we process ("data subjects") with certain information regarding the processing of their personal data by us, and we have an E.U. and U.K. privacy policy, which can be found at https://www.lemonade.com/de/en/privacy-policy (with respect to Germany), https://www.lemonade.com/nl/en/privacy-policy (with respect to the Netherlands) and http://www.lemonade.com/fr/en/privacy-policy (with respect to France); and https://www.lemonade.com/uk/privacy-policy (with respect to UK). • The GDPR requires us to maintain internal records of our processing activities and to make those records available to regulators on demand; • The GDPR requires us to include certain mandatory terms in our agreements with third parties that process personal data subject to the GDPR on our behalf ("Processors") and we are in the process of entering into compliant data processing terms with each of our Processors.
We are implementing external and internal policies and procedures, technical measures and internal training designed to adhere to those principles; • In relation to the transparency principle, the GDPR requires us to provide individuals in the European Union and the UK whose personal data we process ("data subjects") with certain information regarding the processing of their personal data by us, and we have an EU and UK privacy policy, which can be found at https://www.lemonade.com/de/en/privacy-policy (with respect to Germany), https://www.lemonade.com/nl/en/privacy-policy (with respect to the Netherlands) and http://www.lemonade.com/fr/en/privacy-policy (with respect to France); and https://www.lemonade.com/uk/privacy-policy (with respect to UK); • The GDPR requires us to maintain internal records of our processing activities and to make those records available to regulators on demand; • The GDPR requires us to include mandatory terms in our agreements with third parties that process personal data subject to the GDPR on our behalf ("Processors").
As we expand our product offerings and enter new markets, we need to establish our reputation with new customers, and to the extent we are not successful in creating positive impressions, our business in these newer markets could be adversely affected.
As we expand our product offerings and enter new markets, we need to establish our reputation with new customers, and to the extent we are not successful in creating positive impressions, our business in current and new markets could be adversely affected.
Further, outside parties may attempt to fraudulently induce employees or customers to disclose sensitive information in order to gain access to our information or customers' information.
Further, outside parties may attempt to fraudulently induce employees or customers to disclose sensitive information in order to gain access to our Confidential Information.
Therefore, increases or decreases in the value of the U.S. dollar against the other currencies may affect our revenues, income and the value of balance sheet items denominated in foreign currencies. External events such as Brexit, global pandemics, the ongoing uncertainty regarding actual and potential shifts in U.S. and foreign, trade, economic and other policies, including under the new U.S.
Therefore, increases or decreases in the value of the U.S. dollar against the other currencies may affect our revenues, income and the value of balance sheet items denominated in foreign currencies. 48 Table of Contents External events such as Brexit, global pandemics, the ongoing uncertainty regarding actual and potential shifts in U.S. and foreign, trade, economic and other policies, including under the current U.S.
We may incur significant operating expenses and may not be successful in our international expansion for a variety of reasons, including: • obtaining any required government approvals, licenses or other authorizations; • complying with varying laws and regulatory standards, including with respect to the insurance business and insurance distribution, capital and outsourcing requirements, data privacy, tax and local regulatory restrictions; • recruiting and retaining talented and capable employees in foreign countries; • competition from local incumbents that better understand the local market, may market and operate more effectively and may enjoy greater local affinity or awareness; • differing demand dynamics, which may make our product offerings less successful; • currency exchange restrictions or costs and exchange rate fluctuations; • operating in jurisdictions that do not protect intellectual property rights to the same extent as the United States; and • limitations on the repatriation and investment of funds as well as foreign currency exchange restrictions. 48 Table of Contents Our limited experience in operating our business internationally increases the risk that any potential future expansion efforts that we may undertake may not be successful.
We may incur significant operating expenses and may not be successful in our international expansion for a variety of reasons, including: • obtaining any required government approvals, licenses or other authorizations; • complying with varying laws and regulatory standards, including with respect to the insurance business and insurance distribution, capital and outsourcing requirements, data privacy, tax and local regulatory restrictions; • recruiting and retaining talented and capable employees in foreign countries; • competition from local incumbents that better understand the local market, may market and operate more effectively and may enjoy greater local affinity or awareness; • differing demand dynamics, which may make our product offerings less successful; • currency exchange restrictions or costs and exchange rate fluctuations; • operating in jurisdictions that do not protect intellectual property rights to the same extent as the United States; and • limitations on the repatriation and investment of funds as well as foreign currency exchange restrictions.
We maintain offices in Israel and some of our officers, employees and directors are located in Israel, including our Co-Founders and some of our product development staff, help desk and online sales support operations. As of December 31, 2024, we had approximately 297 full-time employees in Israel.
We maintain offices in Israel and some of our officers, employees and directors are located in Israel, including our Co-Founders and some of our product development staff, help desk and online sales support operations. As of December 31, 2025, we had approximately 310 full-time employees in Israel.
Any of these events could adversely affect our business, results of operations and financial condition. We may not be able to utilize a portion of our net operating loss carryforwards ("NOLs") to offset future taxable income for U.S. federal income tax purposes, which could adversely affect our net income and cash flows.
Any of these events could adversely affect our business, results of operations and financial condition. 47 Table of Contents We may not be able to utilize our net operating loss carryforwards ("NOLs") to offset future taxable income for U.S. federal income tax purposes, which could adversely affect our net income and cash flows.
The National Association of Insurance Commissioners (“NAIC”) adopted its Artificial Intelligence Principles in August 2020, a model bulletin titled “Use of Artificial Intelligence Systems by Insurers,” and a number of states have had legislative or regulatory initiatives relating to the use of external data and artificial intelligence in the insurance industry, including bulletins issued in 2022 by the California and Connecticut Departments of Insurance, and more recently in July 2024 by the New York State Department of Financial Services, advising insurers of their obligations related to unfair discrimination when using big data and artificial intelligence.
The NAIC adopted its Artificial Intelligence Principles in August 2020, a model bulletin titled “Use of Artificial Intelligence Systems by Insurers,” and a number of states have had legislative or regulatory initiatives relating to the use of external data 27 Table of Contents and artificial intelligence in the insurance industry, including bulletins issued in 2022 by the California and Connecticut Departments of Insurance, and more recently in July 2024 by the New York State Department of Financial Services, advising insurers of their obligations related to unfair discrimination when using big data and artificial intelligence.
The lower the percentage, the more severe the regulatory response, including, in the event of a mandatory control level event (total adjusted capital falls below 70% of the insurer's authorized control level risk-based capital), placing the insurance company into receivership. As of December 31, 2024, our risk-based capital ratio was 577% for LIC and 525% for MIC.
The lower the percentage, the more severe the regulatory response, including, in the event of a mandatory control level event (total adjusted capital falls below 70% of the insurer's authorized control level risk-based capital), placing the insurance company into receivership. As of December 31, 2025, our risk-based capital ratio was 586% for LIC and 625% for MIC.
If we cannot underwrite insurance at appropriate rates, our ability to transact business will be materially and adversely affected. Any of these factors could lead to an adverse effect on our business, results of operations and financial condition. We are subject to extensive insurance industry regulations.
If we cannot underwrite insurance at appropriate rates, our ability to transact business will be materially and adversely affected. Any of these factors could lead to an adverse effect on our business, results of operations and financial condition.
Risks Relating to Our Business We have a history of losses and we may not achieve or maintain profitability in the future. We have not been profitable since our inception in 2015 and had an accumulated deficit of $1,298.8 million and $1,096.6 million as of December 31, 2024 and December 31, 2023, respectively.
Risks Relating to Our Business We have a history of losses and we may not achieve or maintain profitability in the future. We have not been profitable since our inception in 2015 and had an accumulated deficit of $1,464.3 million and $1,298.8 million as of December 31, 2025 and December 31, 2024, respectively.
We face a number of challenges that may affect our ability to sustain our corporate culture, including: • failure to identify, attract, reward and retain people in leadership positions in our organization who share and further our culture, values and mission; • the increasing size and geographic diversity of our workforce, and our ability to promote a uniform and consistent culture across all our offices and employees; • the market perception about our charitable contributions and social and political stances; • competitive pressures to move in directions that may divert us from our mission, vision and values; • the continued challenges of a rapidly-evolving industry; and • the increasing need to develop expertise in new areas of business that affect us. 43 Table of Contents Our unique culture is one of our core characteristics that helps us to attract and retain key personnel.
We face a number of challenges that may affect our ability to sustain our corporate culture, including: • failure to identify, attract, reward and retain people in leadership positions in our organization who share and further our culture, values and mission; • the increasing size and geographic diversity of our workforce, and our ability to promote a uniform and consistent culture across all our offices and employees; • the market perception about our charitable contributions and social and political stances; • competitive pressures to move in directions that may divert us from our mission, vision and values; • the continued challenges of a rapidly-evolving industry; and • the increasing need to develop expertise in new areas of business that affect us.
Furthermore, any debt financing secured by us in the future could require that a substantial portion of our operating cash flow be devoted to the payment of interest and principal on such indebtedness, which may decrease available funds for other business activities, and could involve restrictive covenants relating to our capital-raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities.
Furthermore, any debt financing secured by us in the future could require a substantial portion of our operating cash flow to be allocated to payment of interest and principal, which may reduce available funds for other business activities, and could involve restrictive covenants relating to our capital-raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities.
Any disputes with reinsurers regarding coverage under reinsurance contracts could be time consuming, costly, and uncertain of success. Under the Proportional Reinsurance Contracts, which span all of our products and geographies, we transfer, or “cede,” a specified percentage of our premiums to our reinsurers.
Any disputes with reinsurers regarding coverage under reinsurance contracts could be time consuming, costly, and uncertain of success. Under the Proportional Reinsurance Contracts, we transfer, or “cede,” a specified percentage of our premiums to our reinsurers.
LIC's board of directors may determine the amount and distribution of the Giveback by taking into consideration various factors such as the current goodwill and reputation of the nonprofit selected by customers, the amount of funds available for distribution by each cohort, the reasonableness of such contribution, and general shareholders' interests, such as the proposed amount and distribution of the Giveback against factors like overall shareholder returns, our financial and operating performance, and our social responsibility and the benefits shareholders and their communities receive from proposed contributions.
The Company’s board of directors may determine the amount and distribution of the Giveback by taking into consideration various factors such as the current goodwill and reputation of the causes selected by customers, the amount of funds available for distribution, the reasonableness of such contribution, and general shareholders' interests, such as the proposed amount and distribution of the Giveback against factors like overall shareholder 57 Table of Contents returns, our financial and operating performance, and our social responsibility and the benefits shareholders and their communities receive from proposed contributions.
As of December 31, 2024, we were licensed to sell renters, homeowners, pet and/or car insurance policies in 50 states of the United States and Washington D.C. We operate in 39 of those states and Washington D.C. covering approximately 93% of the U.S. population.
As of December 31, 2025, we were licensed to sell renters, homeowners, pet and/or car insurance policies in 50 states of the United States and Washington D.C. We operate in 41 of those states and Washington D.C. covering approximately 95% of the U.S. population.
Approximately 49% of our gross written premium for the year ended December 31, 2024 originated from customers in California, New York, and Texas.
Approximately 45% of our gross written premium for the year ended December 31, 2025 originated from customers in California, New York, and Texas.
However, since actual catastrophic events vary considerably, there are limitations with respect to its usefulness in predicting losses in any reporting 55 Table of Contents period.
However, since actual catastrophic events vary considerably, there are limitations with respect to its usefulness in predicting losses in any reporting period.
Specifically, regulators have raised questions about the potential for unfair discrimination, disparate impact, and lack of transparency associated with the use of external consumer data. Regulators may also require us to disclose the external data we use, algorithms and/or predictive matters prior to approving our underwriting models and rates.
Specifically, regulators have raised questions about the potential for unfair discrimination, disparate impact, and lack of transparency associated with the use of external consumer data. Regulators may also require us to disclose the external data we use, algorithms and/or predictive matters prior to approving our underwriting models and rates. Such disclosures could put our intellectual property at risk.
With these developments, legislation relating to artificial intelligence including the EU AI Act has a material impact on the way artificial intelligence is regulated in the EU, and together with developing guidance and/ or decisions in this area, is likely to affect our use of artificial intelligence and our ability to provide and to improve our services, require additional compliance measures and changes to our operations and processes, result in increased compliance costs and potential increases in civil claims against us, and could adversely affect our business, operations and financial condition.
The EU AI Act and the EU Product Liability Directive will have a material impact on the way artificial intelligence is regulated in the EU, and together with developing guidance and/ or decisions in this area, is likely to affect our use of artificial intelligence and our ability to provide and to improve our services, require additional compliance measures and changes to our operations and processes, result in increased compliance costs and potential increases in civil claims against us, and could adversely affect our business, operations and financial condition.
We utilize the data gathered from the insurance application process to determine whether or not to write a particular policy and, if so, how to price that particular policy. Similarly, we use proprietary artificial intelligence algorithms to process many of our claims.
For example, we utilize the data gathered from the insurance application process to determine whether or not to write a particular policy and, if so, how to price that particular policy. Similarly, we use proprietary AI Technologies to process many of our claims.
We are continually monitoring for updates to guidance in this area, however, if subsequent guidance and/or decisions limit our ability to engage in profiling, that may decrease our operational efficiency and result in an increase to the costs of operating our business.
We are continually monitoring for updates to guidance in this area, however, if subsequent guidance and/or decisions limit our ability to engage in profiling, that may decrease our operational efficiency and result in an increase to the costs of operating our business. The DUAA brought about other key changes as well.
If we are unable to attract the requisite personnel, our business and prospects may be adversely affected. Each of our Co-Founders, executive officers, specialized insurance experts, key technical personnel and other employees could terminate his or her relationship with us at any time.
If we are unable to attract the requisite personnel, our business and prospects may be adversely affected. Each of our Co-Founders, executive officers, specialized insurance experts and key technical personnel could terminate his or her relationship with us at any time which may delay or prevent the achievement of our strategic business objectives and could harm our business.
In addition, we are required to document and test our internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act so that our management can certify as to the effectiveness of our control over financial reporting by the time our second annual report is filed with the SEC and thereafter, which will require us to document and make changes to our internal control over financial reporting.
In addition, we are required to document and test our internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act (“SOX”) so that our management can certify as to the effectiveness of our control over financial reporting by the time our annual report is filed with the SEC.
Although we have taken steps to mitigate our liability for violations of this and other laws restricting the use of electronic communication tools, no assurance can be given that we will not be exposed to civil litigation or regulatory enforcement.
While the Company has taken steps to mitigate our liability for violations of the laws restricting the use of electronic communication tools, no assurance can be given that we will not be exposed to civil litigation or regulatory enforcement.
Additionally, the steps that we have already taken to protect our intellectual property may not be sufficient or effective. Even if we do detect violations, we may need to engage in litigation to enforce our rights.
However, there are steps that we have not yet taken to protect our intellectual property on a global basis. Additionally, the steps that we have already taken to protect our intellectual property may not be sufficient or effective. Even if we do detect violations, we may need to engage in litigation to enforce our rights.
Our insurance subsidiaries are subject to minimum capital and surplus requirements, and our failure to meet these requirements could subject us to regulatory action. Our insurance subsidiaries are subject to risk-based capital standards and other minimum capital and surplus requirements imposed under the laws of the State of New York and Delaware, respectively.
Our insurance subsidiaries are subject to risk-based capital standards and other minimum capital and surplus requirements imposed under the laws of the State of New York and Delaware, respectively.
Many factors will affect our capital needs as well as their amount and timing, including our growth and profitability, the availability of reinsurance, as well as market disruptions and other developments. Historically, we have funded our operations, marketing expenditures and capital expenditures primarily through equity issuances.
Many factors will affect our capital needs as well as their amount and timing, including our growth and profitability, the availability of reinsurance, as well as market disruptions and other developments. Historically, we have funded our operations, marketing expenditures and capital expenditures primarily through equity issuances, cash from operations and our Customer Investment Agreement with GC Customer Value Arranger LLC.
We anticipate that we will continue to rely on such third-party software in the future. Although we believe that there are commercially reasonable alternatives to the third-party software we currently license, this may not always be the case, or it may be difficult or costly to replace.
Our business relies on certain third-party software obtained under licenses from other companies. We anticipate that we will continue to rely on such third-party software in the future. Although we believe that there are commercially reasonable alternatives to the third-party software we currently license, this may not always be the case, or it may be difficult or costly to replace.
Likewise, a change in guidance could be costly and have an adverse effect on our business. 40 Table of Contents We are also subject to evolving EU and UK privacy laws on cookies, tracking technologies and e-marketing.
Likewise, a change in guidance could be costly and have an adverse effect on our business. 36 Table of Contents We are also subject to evolving EU and UK privacy laws on cookies, tracking technologies and e-marketing. Recent European court and regulator decisions are driving increased attention to cookies and tracking technologies.
Our primary market risk exposures are to changes in interest rates and equity prices. See Part II Item 7A. “Quantitative and Qualitative Disclosures about Market Risk.” A protracted low interest rate environment could place pressure on our net investment income, particularly as it relates to fixed income securities and short-term investments, which, in turn, may adversely affect our operating results.
“Quantitative and Qualitative Disclosures about Market Risk.” A protracted low interest rate environment could place pressure on our net investment income, particularly as it relates to fixed income securities and short-term investments, which, in turn, may adversely affect our operating results.
If we identify material weaknesses in our internal control over financial reporting or if we are unable to comply with the demands placed upon us as a public company, including the requirements of Section 404 of the Sarbanes-Oxley Act, in a timely manner, we may be unable to accurately report our financial results, or report them within the timeframes required by the SEC.
If we identify material weaknesses in our internal control over financial reporting or if we are unable to comply in a timely manner with the requirements of Section 404 of the SOX, we may be unable to accurately report our financial results, or report them within the timeframes required by the SEC.
If our claims adjusters or third party claims administrators are unable to effectively process our volume of non-automated claims, our ability to grow our business while maintaining high levels of customer satisfaction could be compromised, which in turn, could adversely affect our operating margins. Our future revenue growth and prospects depend on attaining greater value from each customer.
If our claims adjusters or third party claims administrators are unable to effectively process our volume of non-automated claims, our ability to grow our business while maintaining high levels of customer satisfaction could be compromised, which in turn, could adversely affect our operating margins.
In recent years, including most recently in October 2023, Israel has been involved in sporadic armed conflicts with Hamas, an Islamist terrorist group that controls the Gaza Strip, with Hezbollah, an Islamist terrorist group that controls large portions of Southern Lebanon, and with Iranian-backed military forces in Syria.
In recent years, including most recently after the events in October 2023, Israel has been involved in sporadic armed conflicts with (i) the Islamic Republic of Iran, (ii) Hamas, an Islamist terrorist group that controls the Gaza Strip, (iii) Hezbollah, an Islamist terrorist group that controls large portions of Southern Lebanon, (iv) Iranian-backed military forces in Syria and (v) the Houthis, an Islamist terrorist group that controls significant portions of Yemen.
Some of these hostilities, including the most recent attacks by Hamas in October 2023, were accompanied by missile strikes from the Gaza Strip against civilian targets in various parts of Israel, including areas in which our officers, employees and directors are located, and negatively affected conditions in Israel.
Some of these hostilities were accompanied by missile strikes against civilian targets in various parts of Israel, including areas in which our officers, employees and directors are located, and negatively affected conditions in Israel.
A significant impact on the performance, reliability, security, and availability of our systems, software, or services may harm our reputation, impair our ability to operate, retain existing customers or attract new customers, and expose us to legal claims and government action, each of which could have a material adverse impact on our financial condition, results of operations, and growth prospects.
A significant impact on the performance, reliability, security, and availability of our systems, software, or services may harm our reputation, impair our ability to operate, retain existing customers or attract new customers, and expose us to legal claims and government action. Any or all of the foregoing could materially adversely affect our business, results of operations, and financial condition.
If we are unsuccessful in our ability to maintain successful relationships with these third-party service providers and implement our arrangements with them for any of these reasons, our business may be adversely affected. If we are unable to expand our product offerings, or expand into new markets, our prospects for future growth may be adversely affected.
If we are unsuccessful in our ability to maintain successful relationships with these third-party service providers and implement our arrangements with them for any of these reasons, our business may be adversely affected.
In addition, the NYDFS, Delaware Department of Insurance ("DE Dept."), California Department of Insurance ("CDI"), and other regulatory bodies may not permit additional equity issuances or other forms of financing that we may wish to pursue.
In addition, the NYDFS, Delaware Department of Insurance ("DE Dept."), California Department of Insurance ("CDI"), and other regulatory bodies may not permit additional equity issuances or other forms of financing that we may wish to pursue. We cannot be certain that additional financing will be available to us on favorable terms, or at all.
If an active and liquid trading market is not sustained, you may have difficulty selling any of our common stock or warrants that you purchase at a price above the price you purchase it or at all.
If an active and liquid trading market is not sustained, you may have difficulty selling any of our common stock that you purchase at a price above the price you purchase it or at all. The failure of an active and liquid trading market to continue would likely have a material adverse effect on the value of our common stock.
In addition, as our business expands and matures, other seasonality trends may develop and the existing seasonality and customer behavior that we experience may change.
As our business expands and matures, additional seasonality trends may develop, and the seasonality and customer behavior we experience may change.
Accordingly, if you purchase shares of our common stock, realization of a gain on your investment will depend on the appreciation of the price of shares of our common stock, which may never occur. Investors seeking cash dividends in the foreseeable future should not purchase our common stock.
Accordingly, if you purchase shares of our common stock, realization of a gain on your investment will depend on the appreciation of the price of shares of our common stock, which may never occur.
For example: • Our commitment to charitable giving through our Giveback program may not align our interests with those of our customers or prospective customers to the extent anticipated.
Further, our commitment to charitable giving through our Giveback program may not align our interests with those of our customers or prospective customers to the extent anticipated. Our commitment to charitable giving may not resonate with our existing customers or may fail to attract new customers.
Further, as compared to our competitors who operate on a wider geographic scale, any adverse changes in the regulatory environment affecting property and casualty insurance in California, New York and Texas may expose us to more significant risks.
Further, as compared to our competitors who operate on a wider geographic scale, any adverse changes in the regulatory environment affecting property and casualty insurance in California, New York and Texas may expose us to more significant risks. Failure to protect or enforce our intellectual property rights could harm our business, results of operations and financial condition.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeIn addition, management updates the Audit Committee, as necessary, regarding any material cybersecurity incidents or incidents with lesser impact potential. 67 Table of Contents The Audit Committee regularly reports its activities, including those related to cybersecurity, to the full Board. The full Board also receives briefings from management on our cyber risk management.
Biggest changeThe Audit Committee periodically receives reports on our cybersecurity risks from our Chief Information Security Officer (“CISO”) or his designee. In addition, management updates the Audit Committee, where it deems appropriate, regarding cybersecurity incidents it considers significant or potentially significant. 63 Table of Contents The Audit Committee regularly reports its activities, including those related to cybersecurity, to the full Board.
Our program is informed by best practice approaches relevant to the technologies we use, the environments in which our services are designed and deployed, our business needs, and relevant regulatory requirements.
Our cybersecurity risk management program is informed by best practice approaches relevant to the technologies we use, the environments in which our services are designed and deployed, our business needs, and relevant regulatory requirements.
See “Risk Factors – Risks Relating to Our Business.” Cybersecurity Governance Our Board considers cybersecurity risk as a critical part of its risk oversight function and has delegated to the Audit Committee oversight of cybersecurity and other information technology risks. The Audit Committee oversees management’s implementation of our cybersecurity risk management.
See “Risk Factors – Risks Relating to Our Business.” Cybersecurity Governance Our Board considers cybersecurity risk as a critical part of its risk oversight function and has delegated to the Audit Committee oversight of cybersecurity risks, including management’s implementation of our cybersecurity risk management.
As part of the Board’s continuing education on topics that impact public companies, Board members receive presentations on cybersecurity topics from our CISO or his designee. The management team delegates responsibility for assessing and managing our cybersecurity risks to the CISO.
The full Board also receives briefings from management on our cyber risk management. As part of the Board’s continuing education on topics that impact public companies, Board members receive presentations on cybersecurity topics from our CISO or his designee. The management team delegates responsibility for assessing and managing our cybersecurity risks to the CISO.
Our CISO supervises efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which includes managing a security team and security tools, and as appropriate may include briefings from internal security personnel threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in the IT environment.
Our management team takes steps to stay informed about and monitor efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which includes managing a security team and security tools, and as appropriate may include briefings from internal security personnel threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in our IT environment.
Our cybersecurity risk management program includes: • Risk assessments designed to help identify material cybersecurity risks to our critical systems, information, products, services, and our broader enterprise IT environment; • A security team principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents; • The use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security controls; • Security tools deployed in the IT environment for protection against and monitoring of suspicious events; • Security awareness training of our employees, incident response personnel, and senior management; • A cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and • A third-party risk management process for service providers, suppliers, and vendors who access our data and/or systems.
Our cybersecurity risk management program includes, but is not limited to the following: • Risk assessments designed to help identify risks from cybersecurity threats to our critical systems and information; • A security team principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents; • The use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security processes; • Security tools deployed in the IT environment for protection against and monitoring of suspicious events; • Security awareness training of our employees, including incident response personnel, and senior management; • A cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and • A third-party risk management process for key service providers based on our assessment of their criticality to our operations and respective risk profile.
Item 1C. Cybersecurity Cybersecurity Risk Management and Strategy We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our critical systems and information. Our cybersecurity risk management program includes a cybersecurity incident response plan, employee training, testing and assessments and a third party risk management process.
Item 1C. Cybersecurity Cybersecurity Risk Management and Strategy We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our critical systems and information.
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The Audit Committee periodically receives reports on our cybersecurity risks from our Chief Information Security Officer (“CISO”) or his designee at least twice annually.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties The Company does not own any real property. Our principal office is located at 5 Crosby Street, 3rd Floor, New York, New York 10013 where we lease approximately 43,985 square feet of office space under a lease agreement that terminates in November 2025, and extended through February 2029 for a portion of the leased office space.
Biggest changeItem 2. Properties The Company does not own any real property. Our principal office is located at 5 Crosby Street, 3rd Floor, New York, New York 10013 under a lease agreement that terminates in February 2029. This office space is used for corporate functions and business operations.
We believe that our facilities are sufficient to meet our current needs and that suitable additional space will be available as and when needed.
The Company leases additional office space in Tel Aviv and Amsterdam, to support our operations in Israel, and Europe. See “Note 21 - Leases”. We believe that our facilities are sufficient to meet our current needs and that suitable additional space will be available as and when needed.
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This office space is used for corporate functions and business operations. The Company leases additional office space in Arizona, California, Tel Aviv, Amsterdam, and London, to support our operations in the U.S., Europe and the UK. “See Note 22 - Leases”.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings The Company is occasionally a party to routine claims or litigation incidental to its business. See “Note 21 - Commitments and Contingencies” in our consolidated financial statements included elsewhere in this Annual Report.
Biggest changeItem 3. Legal Proceedings The Company is occasionally a party to routine claims or litigation incidental to its business. See “Note 20 - Commitments and Contingencies” in our consolidated financial statements included elsewhere in this Annual Report.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeShe previously served as CFO at Cameo, the celebrity video shoutout pioneer, and at Bustle Digital Group, the digital media provider. Ms. Schwartz spent more than a decade as an equity analyst with Goldman Sachs and Credit Suisse, and holds an MBA from Harvard University, and a BA/BS from the University of Pennsylvania.
Biggest changeSchwartz spent more than a decade as an equity analyst with Goldman Sachs and Credit Suisse, and holds an MBA from Harvard University, and a BA/BS from the University of Pennsylvania. 66 Table of Contents Geoff Seeley has served as a member of our board of directors since October 2025. Mr.
She holds a Bachelor of Arts in Economics in Hebrew University and a Master of Business Administration from Tel Aviv University. 69 Table of Contents Tim Bixby has served as our Chief Financial Officer since June 2017.
She holds a Bachelor of Arts in Economics in Hebrew University and a Master of Business Administration from Tel Aviv University. 65 Table of Contents Tim Bixby has served as our Chief Financial Officer since June 2017.
Item 4. Mine Safety Disclosures Not applicable. 68 Table of Contents INFORMATION ABOUT OUR EXECUTIVE OFFICERS AND DIRECTORS The following table sets forth information regarding our executive officers and directors as of the date of this Annual Report.
Item 4. Mine Safety Disclosures Not applicable. 64 Table of Contents INFORMATION ABOUT OUR EXECUTIVE OFFICERS AND DIRECTORS The following table sets forth information regarding our executive officers and directors as of the date of this Annual Report.
Since February 2021, he has also served as a director and as chair of the audit committee of the board of directors of Rent the Runway, a leading e-commerce fashion rental and resale business. Prior to joining Lemonade, Mr. Bixby served as Chief Financial Officer of Shutterstock, Inc., a digital content licensing marketplace, from 2011 to 2015.
From February 2021 through October 2025, he served as a director and as chair of the audit committee of the board of directors of Rent the Runway, a leading e-commerce fashion rental and resale business. Prior to joining Lemonade, Mr. Bixby served as Chief Financial Officer of Shutterstock, Inc., a digital content licensing marketplace, from 2011 to 2015.
Ross School of Business, where she was a Fulbright Scholar. 70 Table of Contents PART II
Ross School of Business, where she was a Fulbright Scholar. 67 Table of Contents PART II
Samer Haj-Yehia (1)(2) 55 Director Debra Schwartz (1)(3) 46 Director Maria Angelidis-Smith (1)(2) 46 Director (1) Member of the Audit Committee (2) Member of the Compensation Committee (3) Member of the Nominating and Corporate Governance Committee The following is a brief biography of each of our executive officers and directors: Daniel Schreiber has served as our Co-Founder, Chief Executive Officer, and Chairman of our board of directors since our founding in June 2015.
Samer Haj-Yehia (1) 56 Director Prashant Ratanchandani (1) 45 Director Debra Schwartz (1)(3) 47 Director Geoff Seeley (2) 54 Director Maria Angelidis-Smith (2)(3) 47 Director (1) Member of the Audit Committee (2) Member of the Compensation Committee (3) Member of the Nominating and Corporate Governance Committee The following is a brief biography of each of our executive officers and directors: Daniel Schreiber has served as our Co-Founder, Chief Executive Officer, and Chairman of our board of directors since our founding in June 2015.
Name Age Position Executive Officers Daniel Schreiber 53 Co-Founder, Chief Executive Officer, Chairman and Director Shai Wininger 51 Co-Founder, President and Director Adina Eckstein 40 Chief Operating Officer Tim Bixby 60 Chief Financial Officer John Peters 53 Chief Insurance Officer Maya Prosor 40 Chief Business Officer Directors Michael Eisenberg (2)(3) 53 Director Dr.
Name Age Position Executive Officers Daniel Schreiber 54 Co-Founder, Chief Executive Officer, Chairman and Director Shai Wininger 52 Co-Founder, President and Director Adina Eckstein 41 Chief Operating Officer Tim Bixby 61 Chief Financial Officer John Peters 54 Chief Insurance Officer Maya Prosor 41 Chief Business Officer Directors Michael Eisenberg (2)(3) 54 Director Dr.
Haj-Yehia holds a Ph.D. in economics from MIT, and an MBA (summa cum laude), LLB, MA (magna cum laude) in economics, and BA (magna cum laude) in accounting, all from Hebrew University. He is a CFA charterholder. Debra Schwartz has served as a member of our board of directors since November 2023. Ms.
Haj-Yehia holds a Ph.D. in economics from MIT, and an MBA (summa cum laude), LLB, MA (magna cum laude) in economics, and BA (magna cum laude) in accounting, all from Hebrew University. He is a CFA charterholder. Prashant Ratanchandani has served as a member of our board of directors since October 2025. Mr.
Prior to Personio, she served as a Vice President of Product and General Manager at Meta, leading and scaling the monetization of the Facebook App as well as billion+ user products such as Facebook Groups, Events and Profile.
Prior to Reddit, she served as Chief Product and Technology Officer of Personio, Europe’s leading HR software provider empowering small and mid-sized organizations and Vice President of Product and General Manager at Meta, leading and scaling the monetization of the Facebook App as well as billion+ user products such as Facebook Groups, Events and Profile.
Maria Angelidis-Smith has served as a member of our board of directors since October 2024. Ms. Angelidis-Smith is currently the Chief Product and Technology Officer of Personio, Europe’s leading HR software provider empowering small and mid-sized organizations.
Seeley holds a B.Sc. from University College London. Maria Angelidis-Smith has served as a member of our board of directors since October 2024. Ms. Angelidis-Smith is the Chief Product Officer of Reddit, Inc.
Schwartz is a seasoned financial leader skilled at enabling companies to innovate, grow and scale. She is currently the Chief Financial Officer of H1, a leading healthcare data technology company whose mission is to connect the world to the right doctors.
Debra Schwartz has served as a member of our board of directors since November 2023. Ms. Schwartz is a seasoned financial leader skilled at enabling companies to innovate, grow and scale. She is currently the Chief Financial Officer at Goldbelly, Inc., the leading curated marketplace for American food culture.
Added
Ratanchandani is the VP of Engineering for AI Products at Meta, supporting the engineering teams responsible for building Meta’s Generative AI products. He has held several leadership roles at Meta, building and scaling technical organizations responsible for core experiences across Meta products.
Added
Prior to Meta, he held leadership roles at Microsoft, with a focus on the fundamentals of the Windows operating system. He holds a Bachelor of Technology in Computer Science from the Indian Institute of Technology, Kharagpur where he received the B.C Roy Gold Medal, and also holds a Master of Science degree from the University of Illinois at Urbana Champaign.
Added
Prior to Goldbelly, She served as CFO at H1, a leading healthcare data technology company whose mission is to connect the world to the right doctors. She previously served as CFO at Cameo, the celebrity video shoutout pioneer, and at Bustle Digital Group, the digital media provider. Ms.
Added
Seeley is the Chief Marketing Officer of PayPal Holdings, Inc., a role he has held since February 2024, where he leads global marketing for PayPal and Venmo. Previously, Mr. Seeley served as Global Chief Marketing and Communications Officer at Afterpay, where he helped scale both consumer and merchant adoption —culminating in the $29 billion sale to Block, Inc. (formerly Square).
Added
Previously, he led global marketing at Airbnb, driving brand equity resulting in guest and host growth. Mr. Seeley previously held senior roles at Unilever and Pearson over a 30+ year career spanning brand strategy and performance marketing, large-scale rebrands, and modernization of marketing technology and analytics. He is a frequent speaker at industry forums. Mr.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information The Company’s common stock is listed and traded on the New York Stock Exchange under the trading symbol “LMND”. The Company’s warrants to purchase common stock are listed and traded on the New York Stock Exchange American under the trading symbol “LMND-WS”.
Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information The Company’s common stock is listed and traded on the New York Stock Exchange under the trading symbol “LMND”. Holders As of February 24, 2026, there were 134 holders of record of the Company’s common stock.
Performance Graph The following performance graph compares the cumulative total shareholder return of an investment in our common shares since July 2, 2020 (first day of trading) through December 31, 2024 to the cumulative total return of Nasdaq Composite Stock Index (“Nasdaq Index’) and the Nasdaq Insurance Index (“Nasdaq Insurance Index”).
Performance Graph The following performance graph compares the cumulative total shareholder return of an investment in our common shares since July 2, 2020 (first day of trading) through December 31, 2025 to the cumulative total return of Nasdaq Composite Stock Index (“Nasdaq Index”) and the Nasdaq Insurance Index (“Nasdaq Insurance Index”).
July 2, 2020 December 31, 2020 December 31, 2021 December 31, 2022 December 31, 2023 December 31, 2024 Lemonade, Inc. $ 100.00 $ 422.41 $ 145.21 $ 47.17 $ 55.62 $ 126.48 Nasdaq Composite Index $ 100.00 $ 123.78 $ 153.27 $ 102.54 $ 147.06 $ 189.18 Nasdaq Insurance Index $ 100.00 $ 123.27 $ 140.90 $ 143.68 $ 155.54 $ 193.05 71 Table of Contents The foregoing performance graph and data shall not be deemed “filed” as part of this Annual Report for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section and should not be deemed incorporated by reference into any other filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, except to the extent the Company specifically incorporates it by reference into such filing.
July 2, 2020 December 31, 2020 December 31, 2021 December 31, 2022 December 31, 2023 December 31, 2024 December 31, 2025 Lemonade, Inc. $ 100.00 $ 422.41 $ 145.21 $ 47.17 $ 55.62 $ 126.48 $ 245.45 Nasdaq Composite Index $ 100.00 $ 123.78 $ 153.27 $ 102.54 $ 147.06 $ 189.18 $ 227.69 Nasdaq Insurance Index $ 100.00 $ 123.27 $ 140.90 $ 143.68 $ 155.54 $ 193.05 $ 191.99 68 Table of Contents The foregoing performance graph and data shall not be deemed “filed” as part of this Annual Report for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section and should not be deemed incorporated by reference into any other filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, except to the extent the Company specifically incorporates it by reference into such filing.
Recent Sales of Unregistered Securities There have been no recent sales of unregistered securities. Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. Item 6. [Reserved] 72 Table of Contents
Recent Sales of Unregistered Securities There have been no recent sales of unregistered securities. Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. Item 6. [Reserved] 69 Table of Contents
We currently intend to retain any future earnings and do not expect to pay any dividends in the foreseeable future.
Dividends We have never declared or paid any cash dividends on our capital stock. We currently intend to retain any future earnings and do not expect to pay any dividends in the foreseeable future.
Removed
Holders As of February 25, 2025, there were approximately 149 holders of record of the Company’s common stock and 1 holder of record of the Company’s warrants to purchase common stock. Dividends We have never declared or paid any cash dividends on our capital stock.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeFinancial Statements and Supplementary Data 96 Consolidated Balance Sheets 101 Consolidated Statements of Operations and Comprehensive Loss 102 Consolidated Statements of Changes in Stockholders' Equity 103 Consolidated Statements of Cash Flows 104 Notes to Consolidated Financial Statements 105
Biggest changeFinancial Statements and Supplementary Data 92 Consolidated Balance Sheets 97 Consolidated Statements of Operations and Comprehensive Loss 98 Consolidated Statements of Changes in Stockholders' Equity 99 Consolidated Statements of Cash Flows 100 Notes to Consolidated Financial Statements 101
Item 6. [Reserved] 72 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 73 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 95 Item 8.
Item 6. [Reserved] 69 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 70 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 91 Item 8.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

95 edited+18 added−20 removed104 unchanged
Biggest changeNet Loss Ratio We define net loss ratio, expressed as a percentage, as the ratio of losses and loss adjustment expense, less amounts ceded to reinsurers, to net earned premium. 81 Table of Contents Results of Operations The following table presents our results of operations: Years Ended December 31, 2024 2023 Change % Change ($ in millions) Revenue Net earned premium $ 370.6 $ 315.2 $ 55.4 18 % Ceding commission income 91.1 69.8 21.3 31 % Net investment income 34.0 24.7 9.3 38 % Commission and other income 30.8 20.1 10.7 53 % Total revenue 526.5 429.8 96.7 22 % Expense Loss and loss adjustment expense, net 277.0 280.4 (3.4) (1) % Other insurance expense 76.8 59.2 17.6 30 % Sales and marketing 166.3 101.9 64.4 63 % Technology development 85.8 88.8 (3.0) (3) % General and administrative 124.5 129.3 (4.8) (4) % Total expense 730.4 659.6 70.8 11 % Loss before income taxes (203.9) (229.8) 25.9 (11) % Income tax (benefit) expense (1.7) 7.1 (8.8) (124) % Net loss $ (202.2) $ (236.9) $ 34.7 (15) % Comparison of the Years Ended December 31, 2024 and 2023 Net Earned Premium Net earned premium increased by $55.4 million, or 18%, to $370.6 million for the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily due to the earning of increased gross written premium and impact of our reinsurance program to ceded written premium under our Proportional Reinsurance Contracts as discussed above under “Reinsurance.” Years Ended December 31, 2024 2023 Change % Change ($ in millions) Gross written premium $ 929.0 $ 738.4 $ 190.6 26 % Ceded written premium (513.9) (389.1) (124.8) 32 % Net written premium $ 415.1 $ 349.3 $ 65.8 19 % Gross written premium increased $190.6 million, or 26%, to $929.0 million for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Biggest changeNet Loss Ratio We define net loss ratio, expressed as a percentage, as the ratio of losses and loss adjustment expense, less amounts ceded to reinsurers, to net earned premium. 78 Table of Contents Results of Operations The following table presents our results of operations: Years Ended December 31, 2025 2024 Change % Change ($ in millions) Revenue Net earned premium $ 536.3 $ 370.6 $ 165.7 45 % Ceding commission income 122.7 91.1 31.6 35 % Net investment income 37.8 34.0 3.8 11 % Commission and other income 41.1 30.8 10.3 33 % Total revenue 737.9 526.5 211.4 40 % Expense Loss and loss adjustment expense, net 347.0 277.0 70.0 25 % Other insurance expense 93.7 76.8 16.9 22 % Sales and marketing 224.4 166.3 58.1 35 % Technology development 93.9 85.8 8.1 9 % General and administrative 139.8 124.5 15.3 12 % Total expense 898.8 730.4 168.4 23 % Loss before income taxes (160.9) (203.9) 43.0 (21) % Income tax expense (benefit) 4.6 (1.7) 6.3 (371) % Net loss $ (165.5) $ (202.2) $ 36.7 (18) % Comparison of the Years Ended December 31, 2025 and 2024 Net Earned Premium Net earned premium increased by $165.7 million, or 45%, to $536.3 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily due to the earning of increased gross written premium and impact of our new reinsurance program as discussed in more detail in the “Reinsurance” section above.
Under the Agreement, subject to certain terms and conditions specified therein, at the start of each growth period, an Investment Amount of up to 80% of our growth spend (the "Investment Amount") will be advanced by GC. During each growth period, we will repay each Investment Amount including a 16% rate of return based upon an agreed schedule.
Under the Agreement, subject to certain terms and conditions specified therein, at the start of each growth period, an Investment Amount of up to 80% of our growth spend (the "Investment Amount") will be advanced by GC. During each growth period, we repay each Investment Amount including a 16% rate of return based upon an agreed schedule.
Investing Activities Cash provided by investing activities was $40.6 million for the year ended December 31, 2024 primarily due to proceeds from sales and maturities of U.S. and non-US government obligations, corporate debt securities, asset-backed securities, short term investments, offset by purchases of U.S. and non-US government obligations, corporate debt securities, asset-backed securities, short term investments.
Cash provided by investing activities was $40.6 million for the year ended December 31, 2024 primarily due to proceeds from sales and maturities of U.S. government obligations, corporate debt securities, asset-backed securities, short term investments, offset by purchases of U.S. and non-US government obligations, corporate debt securities, asset-backed securities, short term investments.
We have incurred and expect to continue to incur significant additional general and administrative expense as a result of operating as a public company, including expenses related to compliance with the rules and regulations of the SEC and the listing standards of the NYSE and NYSE American, additional corporate, director and officer insurance expenses, greater investor relations expenses and increased legal, audit and consulting fees.
We have incurred and expect to continue to incur significant additional general and administrative expense as a result of operating as a public company, including expenses related to compliance with the rules and regulations of the SEC and the listing standards of the NYSE, additional corporate, director and officer insurance expenses, greater investor relations expenses and increased legal, audit and consulting fees.
The result is that excess claims are generally offloaded to reinsurers, while excess premiums can be donated to nonprofits selected by our customers as part of our annual "Giveback". These two ballasts, reinsurance and Giveback, reduce volatility, while creating an aligned, trustful, and values-rich relationship with our customers.
The result is that excess claims are generally offloaded to reinsurers, while excess premiums can be donated to nonprofits selected by our customers as part of our "Giveback". These two ballasts, reinsurance and Giveback, reduce volatility, while creating an aligned, trustful, and values-rich relationship with our customers.
We expect to maintain this valuation allowance until it becomes more likely than not that the benefit of our federal and state deferred tax assets will be realized through expected future taxable income in the U.S.. 78 Table of Contents Key Operating and Financial Metrics We regularly review a number of metrics, including the following key operating and financial metrics, to evaluate our business, measure our performance, identify trends in our business, prepare financial projections and make strategic decisions.
We expect to maintain this valuation allowance until it becomes more likely than not that the benefit of our federal and state deferred tax assets will be realized through expected future taxable income in the U.S. 75 Table of Contents Key Operating and Financial Metrics We regularly review a number of metrics, including the following key operating and financial metrics, to evaluate our business, measure our performance, identify trends in our business, prepare financial projections and make strategic decisions.
Through our captives, we are exposed to the risk of natural catastrophe events and other covered risks under the reinsurance agreements from assumed risks from policies underwritten by both LIC and MIC. 75 Table of Contents Components of our Results of Operations Revenue Gross Written Premium Gross written premium is the amount received, or to be received, for insurance policies written by us during a specific period of time without reduction for premiums ceded to reinsurers.
Through our captives, we are exposed to the risk of natural catastrophe events and other covered risks under the reinsurance agreements from assumed risks from policies underwritten by both LIC and MIC. 72 Table of Contents Components of our Results of Operations Revenue Gross Written Premium Gross written premium is the amount received, or to be received, for insurance policies written by us during a specific period of time without reduction for premiums ceded to reinsurers.
We also have the ability to access additional capital through pursuing third-party borrowings, sales of our equity, issuance of debt securities or entrance into new reinsurance arrangements.
We also have the ability to access additional capital through third-party borrowings, sales of our equity, issuance of debt securities or entrance into new reinsurance arrangements.
We expect that, in the long-term, our sales and marketing costs will decrease as a percentage of revenue as we continue to drive customer acquisition efficiencies and as the proportion of renewals to our total business increases. 77 Table of Contents Technology Development Technology development consists of employee compensation, including stock-based compensation and benefits, and expenses related to vendors engaged in product management, design, development and testing of our websites and products.
We expect that, in the long-term, our sales and marketing costs will decrease as a percentage of revenue as we continue to drive customer acquisition efficiencies and as the proportion of renewals to our total business increases. 74 Table of Contents Technology Development Technology development consists of employee compensation, including stock-based compensation and benefits, and expenses related to vendors engaged in product management, design, development and testing of our websites and products.
The amounts in the above table represent our gross estimates of known liabilities as of December 31, 2024 and do not include any allowance for claims for future events within the time period specified. Accordingly, we expect that the total amounts of obligations paid by us in the time periods shown will be greater than those indicated in the table.
The amounts in the above table represent our gross estimates of known liabilities as of December 31, 2025 and do not include any allowance for claims for future events within the time period specified. Accordingly, we expect that the total amounts of obligations paid by us in the time periods shown will be greater than those indicated in the table.
Gross Profit Gross profit is calculated in accordance with GAAP as total revenue less loss and loss adjustment expense, net, other insurance expense, and depreciation and amortization (allocated to cost of revenue). 80 Table of Contents Adjusted Gross Profit We define adjusted gross profit, a non-GAAP financial measure, as: • Gross profit, excluding net investment income, interest income and other income, plus • Employee-related expense, plus • Professional fees and other, plus • Depreciation and amortization (allocated to cost of revenue).
Gross Profit Gross profit is calculated in accordance with GAAP as total revenue less loss and loss adjustment expense, net, other insurance expense, and depreciation and amortization (allocated to cost of revenue). 77 Table of Contents Adjusted Gross Profit We define adjusted gross profit, a non-GAAP financial measure, as: • Gross profit, excluding net investment income, interest income and other income, plus • Employee-related expense, plus • Professional fees and other, plus • Depreciation and amortization (allocated to cost of revenue).
The portion of ceding commission income which represents reimbursement of successful acquisition costs related to the underlying policies is recorded as an offset to other insurance expense. 76 Table of Contents Net Investment Income Net investment income represents interest earned from fixed maturity securities, short term and other investments, net of investment fees paid to the Company’s investment manager.
The portion of ceding commission income which represents reimbursement of successful acquisition costs related to the underlying policies is recorded as an offset to other insurance expense. 73 Table of Contents Net Investment Income Net investment income represents interest earned from fixed maturity securities, short term and other investments, net of investment fees paid to the Company’s investment manager.
There can be no assurance that we will be able to raise additional capital on favorable terms or at all. 90 Table of Contents Critical Accounting Policies and Estimates Our financial statements are prepared in accordance with GAAP in the United States.
There can be no assurance that we will be able to raise additional capital on favorable terms or at all. 87 Table of Contents Critical Accounting Policies and Estimates Our financial statements are prepared in accordance with GAAP in the United States.
The decrease in cash used in operating activities from the year ended December 31, 2023 compared to December 31, 2022 was primarily due to claims payments, settlements with our reinsurance partners, and decreased spend related to growth and expansion, offset by collection of premiums and recoveries from reinsurance partners.
The decrease in cash used in operating activities from the year ended December 31, 2024 compared to December 31, 2023 was primarily due to claims payments, settlements with our reinsurance partners, and decreased spend related to growth and expansion, offset by collection of premiums and recoveries from reinsurance partners.
We evaluate our significant estimates on an ongoing basis, including, but not limited to, estimates related to unpaid loss and loss adjustment expense, reinsurance assets, intangible assets, stock-based compensation, income tax assets and liabilities, including recoverability of our net deferred tax asset, income tax provisions and certain non-income tax accruals.
We evaluate our significant estimates on an ongoing basis, including, but not limited to, estimates related to unpaid loss and loss adjustment expense, stock-based compensation, income tax assets and liabilities, including recoverability of our net deferred tax asset, income tax provisions and certain non-income tax accruals.
The Automatic Facultative PPR Contract, in which claims in excess of $3,000,000 are 100% ceded with a potential recovery of at least $10,000,000, subject to certain limitations, expired on June 30, 2024, and was not renewed.
The Automatic Facultative PPR Contract, in which claims in excess of $3,000,000 were 100% ceded with a potential recovery of at least $10,000,000, subject to certain limitations, which expired on June 30, 2024, and was not renewed.
In addition, we saw a 5% increase in premiums per customer year over year due to an increasing prevalence of multiple policies per customer, growth in the overall average policy value, and continued shift in the mix of underlying products toward higher value policies.
In addition, we saw a 7% increase in premiums per customer year over year due to an increasing prevalence of multiple policies per customer, growth in the overall average policy value, and continued shift in the mix of underlying products toward higher value policies.
The increase was primarily due to a 20% increase in net added customers year over year, driven by the success of our digital advertising campaigns and partnerships. We also continued to expand our geographic footprint and product offerings.
The increase was primarily due to a 23% increase in net added customers year over year, driven by the success of our digital advertising campaigns and partnerships. We also continued to expand our geographic footprint and product offerings.
Recently Issued and Adopted Accounting Pronouncements See "Note 4 — Summary of Significant Accounting Policies" in the Notes to Consolidated Financial Statements included in this Annual Report for a discussion of accounting pronouncements recently issued and pending adoption. 94 Table of Contents
Recently Issued and Adopted Accounting Pronouncements See "Note 4 — Summary of Significant Accounting Policies" in the Notes to Consolidated Financial Statements included in this Annual Report for a discussion of accounting pronouncements recently issued and pending adoption. 90 Table of Contents
For additional information, see “Risk Factors - Risks Relating to our Business - We conduct certain of our operations in Israel and therefore our results may be adversely affected by political, economic and military instability in Israel and the surrounding region.” Reinsurance We obtain reinsurance to help manage our exposure to property and casualty insurance risks.
For additional information, see “Risk Factors - Risks Relating to our Business - We conduct certain of our operations in Israel and therefore our results may be adversely affected by political, economic and military instability in Israel and the surrounding region.” 71 Table of Contents Reinsurance We obtain reinsurance to help manage our exposure to property and casualty insurance risks.
We mainly invest in cash, money market funds, U.S. Treasury bills, corporate debt securities, asset-backed securities, notes and other obligations issued or guaranteed by the U.S. Government and non-US Government.
We mainly invest in cash, money market funds, U.S. Treasury bills, corporate debt securities, asset-backed securities, notes and other obligations issued or guaranteed by the U.S. governments and non-US governments.
The Agreement was amended and restated in January 2024, pursuant to which an additional financing of $140.0 million will be provided for our sales and marketing growth efforts through December 31, 2025, and was further amended and restated in April 2024 and June 2024 to clarify certain provisions and all material terms and conditions remain unchanged.
The Agreement was amended and restated in January 2024, pursuant to which an additional financing of $140 million would be provided for our sales and marketing growth efforts through December 31, 2025, and was further amended and restated in April 2024 and June 2024 to clarify certain provisions and all material terms and conditions remain unchanged.
These funds are primarily used to pay claims, operating expenses and taxes. In June 2023, we entered into an Agreement with GC, where up to $150.0 million of financing will be provided for our sales and marketing growth efforts through December 31, 2024.
These funds are primarily used to pay claims, operating expenses and taxes. We entered into an Agreement with GC in June 2023, where up to $150 million of financing would be provided for our sales and marketing growth efforts through December 31, 2024.
Adjusted EBITDA We define adjusted EBITDA, a non-GAAP financial measure, as net loss excluding the impact of income tax expense, depreciation and amortization, stock-based compensation, interest expense, interest income and others, net investment income, change in fair value of warrants liability, amortization of fair value adjustment on insurance contract intangible liability relating to the Metromile Acquisition, and other non-cash adjustments and other transactions that we consider to be unique in nature.
Adjusted EBITDA We define adjusted EBITDA, a non-GAAP financial measure, as net loss excluding the impact of income tax expense, depreciation and amortization, stock-based compensation, interest expense, interest income and others, net investment income, amortization of fair value adjustment on insurance contract intangible liability relating to the acquisition of Metromile, and other one time and non-cash adjustments and other transactions that we consider to be unique in nature.
There can be no assurance that we will be able to raise additional capital on favorable terms or at all. 89 Table of Contents The following table summarizes the Company’s contractual obligations and commitments as of December 31, 2024, and the effect of such obligations are expected to have on our liquidity and cash flows in the future periods.
There can be no assurance that we will be able to raise additional capital on favorable terms or at all. 86 Table of Contents The following table summarizes the Company’s contractual obligations and commitments as of December 31, 2025, and the effect of such obligations are expected to have on our liquidity and cash flows in the future periods.
In force placed premium currently reflects approximately 2% of IFP. 79 Table of Contents The annualized value of premiums is a legal and contractual determination made by assessing the contractual terms with our customers. The annualized value of contracts is not determined by reference to historical revenues, deferred revenues, or any other GAAP financial measure over any period.
In force placed premium currently reflects approximately 4% of IFP. 76 Table of Contents The annualized value of premiums is a legal and contractual determination made by assessing the contractual terms with our customers. The annualized value of contracts is not determined by reference to historical revenues, deferred revenues, or any other GAAP financial measure over any period.
As of December 31, 2024, the total adjusted capital of our U.S. insurance subsidiaries was in excess of its respective prescribed risk-based capital requirements.
As of December 31, 2025, the total adjusted capital of our U.S. insurance subsidiaries was in excess of its respective prescribed risk-based capital requirements.
We enter into reinsurance contracts to limit our exposure to potential losses as well as to provide additional capacity for growth. Ceded written premium is earned over the reinsurance contract period in proportion to the period of risk covered.
Ceded Written Premium Ceded written premium is the amount of gross written premium ceded to reinsurers. We enter into reinsurance contracts to limit our exposure to potential losses as well as to provide additional capacity for growth. Ceded written premium is earned over the reinsurance contract period in proportion to the period of risk covered.
On February 3, 2025, the Agreement was further amended under which GC will provide up to an additional $200 million of financing for our sales and marketing growth efforts from January 1, 2026 to December 31, 2026. As of December 31, 2024, we had $83.4 million of outstanding borrowings under the Amended and Restated Agreement with GC.
On February 3, 2025, the Agreement was further amended under which GC will provide up to an additional $200 million of financing for our sales and marketing growth efforts from January 1, 2026 to December 31, 2026. As of December 31, 2025, we had $158.1 million of outstanding borrowings under the Amended and Restated Agreement with GC.
This reflected the $34.7 million decrease in our net loss, primarily offset by changes in our operating assets and liabilities.
This reflected the $36.7 million decrease in our net loss, primarily offset by changes in our operating assets and liabilities.
The following tables summarize our Gross Ultimate Losses and LAE, and Net Ultimate Losses and LAE as of December 31, 2024 and 2023, respectively.
The following tables summarize our Gross Ultimate Losses and LAE, and Net Ultimate Losses and LAE as of December 31, 2025 and 2024, respectively.
The decrease in cash used in operating activities from year ended December 31, 2024 compared to year ended December 31, 2023 was primarily due to claims payments and settlements with our reinsurance partners, offset by collection of premiums and recoveries from reinsurance partners.
The increase in cash used in operating activities from year ended December 31, 2025 compared to year ended December 31, 2024 was primarily due to claims payments and settlements with our reinsurance partners, offset by collection of premiums and recoveries from reinsurance partners.
Cash provided by financing activities was $15.4 million for the year ended December 31, 2023 primarily due to borrowings under the financing agreement and proceeds from stock exercises. We do not have any current plans for material capital expenditures other than current operating requirements.
Cash provided by financing activities was $87.7 million for the year ended December 31, 2024 primarily due to borrowings under the financing agreement and proceeds from stock exercises. We do not have any current plans for material capital expenditures other than current operating requirements.
We also purchased property and equipment purchased during the year. Financing Activities Cash provided by financing activities was $87.7 million for the year ended December 31, 2024 primarily due to borrowings under the Amended and Restated Agreement with GC and proceeds from stock exercises.
We also purchased property and equipment purchased during the year. Financing Activities Cash provided by financing activities was $106.6 million for the year ended December 31, 2025 primarily due to borrowings under the Amended and Restated Agreement with GC and proceeds from stock exercises.
We currently have a financing agreement with GC, the Amended and Restated Agreement with GC (see “Note 14 - Borrowings under financing agreement”). To the extent our future operating cash flows are insufficient to cover our net losses from catastrophic events, we had $1,010.9 million in cash and cash equivalents, and investments available at December 31, 2024.
We currently have a financing agreement with GC, the Amended and Restated Agreement with GC (see “Note 13 - Borrowings under financing agreement”). To the extent our future operating cash flows are insufficient to cover our net losses from catastrophic events, we had $1,026.4 million in cash and cash equivalents, and investments available at December 31, 2025.
Furthermore, reinsurance may be unavailable at current levels and prices, which may limit our ability to write new business. 74 Table of Contents We maintain proportional reinsurance contracts which cover all of the Company's products and geographies, and transferred, or “ceded,” a specified percentage of the premium to reinsurers ("Proportional Reinsurance Contracts").
Furthermore, reinsurance may be unavailable at current levels and prices, which may limit our ability to write new business. We maintain proportional reinsurance contracts which cover all of the Company's products and geographies, and transfer, or “cede,” a specified percentage of the premium to reinsurers.
In exchange, these Reinsurers pay us a ceding commission on all premiums ceded to the Reinsurers, in addition to funding the corresponding claims, subject to certain limitations, including but not limited to, the exclusion of hurricane losses, and a limit of $5,000,000 per occurrence for non-hurricane catastrophe losses.
In exchange, these Reinsurers pay us a ceding commission on all premiums ceded to the Reinsurers, in addition to funding the corresponding claims, subject to certain limitations, including but not limited to, the exclusion of hurricane losses, and a limit of $10,000,000 per occurrence for non-hurricane catastrophe losses. The Per Risk Cap across the contracts is $750,000.
("LINV"), and each of Hannover Ruck SE, MAPFRE Re, and Swiss Reinsurance America Corporation (collectively referred to as “Reinsurers”) ("Reinsurance Program"). Under the Reinsurance Program, which covers all products and geographies, the Company transfers, or "cedes," a share of premium to the Reinsurers.
("LINV"), and each of Hannover Ruck SE ("Hannover"), MAPFRE Re Compania De Reaseguros S.A. ("MAPFRE"), and Swiss Reinsurance America Corporation (collectively referred to as “Reinsurers”) ("Reinsurance Program"). Under the Reinsurance Program, which covers all products and geographies, the Company transfers, or "cedes," approximately 55% of premium to the Reinsurers.
A discussion of the year ended December 31, 2023 compared to the year ended December 31, 2022 has been reported previously under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 28, 2024 (the “2023 Annual Report’”).
A discussion of the year ended December 31, 2024 compared to the year ended December 31, 2023 has been reported previously under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on February 26, 2025 (the “2024 Annual Report”).
The following table sets forth our calculation of the Ratio of Adjusted Gross Profit to Gross Earned Premium for the periods presented: Year Ended December 31, 2024 2023 ($ in millions) Numerator: Adjusted gross profit $ 174.9 $ 97.4 Denominator: Gross earned premium $ 827.3 $ 672.3 Ratio of Adjusted Gross Profit to Gross Earned Premium 21 % 14 % 86 Table of Contents Adjusted EBITDA We define Adjusted EBITDA, a non-GAAP financial measure, as net loss excluding income tax expense, depreciation and amortization, stock-based compensation, interest expense, interest income and others, net investment income, change in fair value of warrants liability, amortization of fair value adjustment on insurance contract intangible liability relating to the Metromile Acquisition, and other non-cash adjustments and other transactions that we would consider to be unique in nature.
The following table sets forth our calculation of the Ratio of Adjusted Gross Profit to Gross Earned Premium for the periods presented: Year Ended December 31, 2025 2024 ($ in millions) Numerator: Adjusted gross profit $ 304.5 $ 174.9 Denominator: Gross earned premium $ 1,050.8 $ 827.3 Ratio of Adjusted Gross Profit to Gross Earned Premium 29 % 21 % 83 Table of Contents Adjusted EBITDA We define Adjusted EBITDA, a non-GAAP financial measure, as net loss excluding income tax expense, depreciation and amortization, stock-based compensation, interest expense, interest income and others, net investment income, amortization of fair value adjustment on insurance contract intangible liability relating to the acquisition of Metromile, and other one time and non-cash adjustments and other transactions that we would consider to be unique in nature.
The volume of our gross written premium in any given period is generally influenced by new business submissions, binding of new business submissions into policies, renewals of existing policies, and average size and premium rate of bound policies. Ceded Written Premium Ceded written premium is the amount of gross written premium ceded to reinsurers.
Gross written premium includes direct and assumed premium. The volume of our gross written premium in any given period is generally influenced by new business submissions, binding of new business submissions into policies, renewals of existing policies, and average size and premium rate of bound policies.
Net loss Net loss decreased $34.7 million, or 15%, to $202.2 million for the year ended December 31, 2024 compared to the year ended December 31, 2023 due to the factors described above. 84 Table of Contents Non-GAAP Financial Measures The non-GAAP financial measures below have not been calculated in accordance with GAAP and should be considered in addition to results prepared in accordance with GAAP and should not be considered as a substitute for, or superior to, GAAP results.
Net loss Net loss decreased $36.7 million, or 18%, to $165.5 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 due to the factors described above. 81 Table of Contents Non-GAAP Financial Measures The non-GAAP financial measures below have not been calculated in accordance with GAAP and should be considered in addition to results prepared in accordance with GAAP and should not be considered as a substitute for, or superior to, GAAP results.
Commission and Other Income Commission and other income increased $10.7 million, or 53% to $30.8 million for the year ended December 31, 2024 compared to year ended December 31, 2023, primarily due to growth in premiums placed with third-party insurance companies, installment fees and sublease income from our New York and San Francisco office space.
Commission and Other Income Commission and other income increased $10.3 million, or 33% to $41.1 million for the year ended December 31, 2025 compared to year ended December 31, 2024, primarily due to growth in premiums placed with third-party insurance companies, installment fees, interest income and sublease income from our New York and San Francisco office space.
(3) Includes $3.9 million extra-contractual car claim liability related to pre-acquisition Metromile, and asset impairment charge of $0.3 million related to a portion of the New York office sublease (Note 22), net of gain on termination of lease for the year ended December 31, 2024. 87 Table of Contents Liquidity and Capital Resources As of December 31, 2024, we had $385.7 million in cash and cash equivalents, and $634.9 million in investments.
(6) Includes $3.9 million extra-contractual car claim liability related to pre-acquisition Metromile (see Note 12 of the consolidated financial statements), and impairment charge of $0.3 million related to a portion of the New York office sublease, net of gain on termination of lease for the year ended December 31, 2024 (See Note 21 of the consolidated financial statements). 84 Table of Contents Liquidity and Capital Resources As of December 31, 2025, we had $385.0 million in cash and cash equivalents, and $722.9 million in investments.
The following tables summarize our gross and net reserves for unpaid loss and LAE as of December 31, 2024 and 2023, respectively: December 31, 2024 Gross % of total Net % of Total ($ in millions) Loss and loss adjustment reserves Case reserve $ 101.7 34 % $ 48.4 33 % IBNR 196.4 66 % 100.2 67 % Total reserves $ 298.1 100 % $ 148.6 100 % 91 Table of Contents December 31, 2023 Gross % of total Net % of Total ($ in millions) Loss and loss adjustment reserves Case reserve $ 93.3 36 % $ 46.7 33 % IBNR 169.0 64 % 95.4 67 % Total reserves $ 262.3 100 % $ 142.1 100 % We have assessed the impact of potential reserve deviations from our carried reserve at December 31, 2024.
The following tables summarize our gross and net reserves for unpaid loss and LAE as of December 31, 2025 and 2024, respectively: December 31, 2025 Gross % of total Net % of Total ($ in millions) Loss and loss adjustment reserves Case reserve $ 101.7 34 % $ 57.8 34 % IBNR 201.4 66 % 111.6 66 % Total reserves $ 303.1 100 % $ 169.4 100 % 88 Table of Contents December 31, 2024 Gross % of total Net % of Total ($ in millions) Loss and loss adjustment reserves Case reserve $ 101.7 34 % $ 48.4 33 % IBNR 196.4 66 % 100.2 67 % Total reserves $ 298.1 100 % $ 148.6 100 % We have assessed the impact of potential reserve deviations from our carried reserve at December 31, 2025.
The following table sets forth these metrics as of and for the periods presented: Year Ended December 31, 2024 2023 ($ in millions, except Premium per customer) Customers (end of period) 2,430,056 2,026,918 In force premium (end of period) $ 943.7 $ 747.3 Premium per customer (end of period) $ 388 $ 369 Annual dollar retention (end of period) (1) 86 % 87 % Total revenue $ 526.5 $ 429.8 Gross earned premium $ 827.3 $ 672.3 Gross profit $ 166.9 $ 84.1 Adjusted gross profit $ 174.9 $ 97.4 Net loss $ (202.2) $ (236.9) Adjusted EBITDA $ (149.7) $ (172.6) Gross profit margin 32 % 20 % Adjusted gross profit margin 33 % 23 % Ratio of Adjusted Gross Profit to Gross Earned Premium 21 % 14 % Gross loss ratio 73 % 85 % Net loss ratio 75 % 89 % Customers We define customers as the number of current policyholders underwritten by us or placed by us with third party insurance partners (who pay us recurring commissions) as of the period end date.
The following table sets forth these metrics as of and for the periods presented: Year Ended December 31, 2025 2024 ($ in millions, except Premium per customer) Customers (end of period) 2,984,513 2,430,056 In force premium (end of period) $ 1,236.5 $ 943.7 Premium per customer (end of period) $ 414 $ 388 Annual dollar retention (end of period) 85 % 86 % Total revenue $ 737.9 $ 526.5 Gross earned premium $ 1,050.8 $ 827.3 Gross profit $ 293.4 $ 166.9 Adjusted gross profit $ 304.5 $ 174.9 Net loss $ (165.5) $ (202.2) Adjusted EBITDA $ (118.1) $ (149.7) Gross profit margin 40 % 32 % Adjusted gross profit margin 41 % 33 % Ratio of Adjusted Gross Profit to Gross Earned Premium 29 % 21 % Gross loss ratio 64 % 73 % Net loss ratio 65 % 75 % Customers We define customers as the number of current policyholders underwritten by us or placed by us with third party insurance partners (who pay us recurring commissions) as of the period end date.
Employee-related expense, including stock based compensation, net of capitalized costs for the development of internal-use software, decreased $1.6 million, or 2%, as compared to the year ended December 31, 2023, driven by decrease in payroll and stock compensation expense for product, engineering, design and quality assurance personnel.
Employee-related expense, including stock based compensation, net of capitalized costs for the development of internal-use software, increased $9.5 million, or 14%, as compared to the year ended December 31, 2024, driven by increase in headcount and related payroll and stock compensation expense for product, engineering, design and quality assurance personnel.
We also began assuming premium related to car insurance policies written in Texas in December 2022, in connection with our fronting arrangement with a third party carrier in Texas.
We have assumed premium related to car insurance policies written in Texas in connection with our fronting arrangement with a third party carrier in Texas.
Some of our payments and receipts, including loss settlements and subsequent reinsurance receipts, can be significant. Therefore, their timing can influence cash flows from operating activities in any given period.
The timing of our cash flows from operating activities can also vary among periods due to the timing of payments made or received. Some of our payments and receipts, including loss settlements and subsequent reinsurance receipts, can be significant. Therefore, their timing can influence cash flows from operating activities in any given period.
Cash used in operating activities was $119.1 million for the year ended December 31, 2023, a decrease of $43.9 million from $163.0 million for the year ended December 31, 2022. This reflected the $60.9 million decrease in our net loss, primarily offset by changes in our operating assets and liabilities.
Cash used in operating activities was $11.4 million for the year ended December 31, 2024, a decrease of $107.7 million from $119.1 million for the year ended December 31, 2023. This reflected the $34.7 million decrease in our net loss, primarily offset by changes in our operating assets and liabilities.
The Amended and Restated Agreement contains standard customary 73 Table of Contents representations, warranties and covenants by the parties, and will continue in effect unless terminated by any party pursuant to its terms. We had $83.4 million and $14.9 million of outstanding borrowings under the Amended and Restated Agreement as of December 31, 2024 and December 31, 2023, respectively.
The Agreement, as amended and restated (the “Amended and Restated Agreement”) contains standard customary representations, warranties and covenants by the parties, and will continue in effect unless terminated by any party pursuant to its terms. 70 Table of Contents As of December 31, 2025, we had $158.1 million of outstanding borrowings under the Amended and Restated Agreement.
Net Investment Income Net investment income increased $9.3 million, or 38%, to $34.0 million for the year ended December 31, 2024 compared to the year ended December 31, 2023. The increase was primarily driven by the diversification of the Company’s investment portfolio with higher returns in comparison to prior year, offset by investment expenses of $0.3 million.
Net Investment Income Net investment income increased $3.8 million, or 11%, to $37.8 million for the year ended December 31, 2025 compared to the year ended December 31, 2024. The increase was primarily driven by the diversification of the Company’s investment portfolio with higher returns, offset by investment expenses of $0.4 million.
We agreed to the terms of our reinsurance program effective July 1, 2023 through June 30, 2024 which included Whole Account Quota Share Reinsurance Contracts by and among the Company, Lemonade Insurance Company ("LIC"), Metromile Insurance Company ("MIC") and Lemonade Insurance N.V.
We also manage the remaining percentage of the business with alternative forms of reinsurance through non-proportional reinsurance contracts. We agreed to the terms of our reinsurance program effective July 1, 2024 through June 30, 2025 which included Whole Account Quota Share Reinsurance Contracts by and among the Company, LIC, MIC and Lemonade Insurance N.V.
The following table summarizes our cash flow data for the periods presented: December 31, 2024 2023 ($ in millions) Net cash used in operating activities $ (11.4) $ (119.1) Net cash provided by investing activities $ 40.6 $ 88.7 Net cash provided by financing activities $ 87.7 $ 15.4 88 Table of Contents Operating Activities Cash used in operating activities was $11.4 million for the year ended December 31, 2024, a decrease of $107.7 million from $119.1 million for the year ended December 31, 2023.
The following table summarizes our cash flow data for the periods presented: December 31, 2025 2024 ($ in millions) Net cash used in operating activities $ (16.5) $ (11.4) Net cash (used in) provided by investing activities $ (89.1) $ 40.6 Net cash provided by financing activities $ 106.6 $ 87.7 85 Table of Contents Operating Activities Cash used in operating activities was $16.5 million for the year ended December 31, 2025, an increase of $5.1 million from $11.4 million for the year ended December 31, 2024.
The following table provides a reconciliation of total revenue and gross profit margin to adjusted gross profit and the related adjusted gross profit margin, respectively, for the periods presented: Year Ended December 31, 2024 2023 ($ in millions) Total revenue $ 526.5 $ 429.8 Adjustments: Loss and loss adjustment expense, net $ (277.0) $ (280.4) Other insurance expense (76.8) (59.2) Depreciation and amortization (5.8) (6.1) Gross profit $ 166.9 $ 84.1 Gross profit margin (% of total revenue) 32 % 20 % Adjustments: Net investment income $ (34.0) $ (24.7) Interest income and other income (9.3) (4.1) Employee related expense 21.8 18.2 Professional fees and other 23.7 17.8 Depreciation and amortization 5.8 6.1 Adjusted gross profit $ 174.9 $ 97.4 Adjusted gross profit margin (% of total revenue) 33 % 23 % 85 Table of Contents Ratio of Adjusted Gross Profit to Gross Earned Premium We define the Ratio of Adjusted Gross Profit to Gross Earned Premium as the ratio of adjusted gross profit to gross earned premium.
The following table provides a reconciliation of total revenue and gross profit margin to adjusted gross profit and the related adjusted gross profit margin, respectively, for the periods presented: Years Ended December 31, 2025 2024 ($ in millions) Total revenue $ 737.9 $ 526.5 Adjustments: Loss and loss adjustment expense, net $ (347.0) $ (277.0) Other insurance expense (93.7) (76.8) Depreciation and amortization (3.8) (5.8) Gross profit $ 293.4 $ 166.9 Gross profit margin (% of total revenue) 40 % 32 % Adjustments: Net investment income $ (37.8) $ (34.0) Interest income and other income (7.9) (9.3) Employee related expense 22.8 21.8 Professional fees and other 30.2 23.7 Depreciation and amortization 3.8 5.8 Adjusted gross profit $ 304.5 $ 174.9 Adjusted gross profit margin (% of total revenue) 41 % 33 % 82 Table of Contents Ratio of Adjusted Gross Profit to Gross Earned Premium We define the Ratio of Adjusted Gross Profit to Gross Earned Premium as the ratio of adjusted gross profit to gross earned premium.
For additional information, see "Risk Factors — Risks Relating to our Industry — Severe weather events and other catastrophes, including the effects of climate change and global pandemics, are inherently unpredictable and may have a material adverse effect on our financial results and financial condition." Current Macroeconomic Environment General economic inflation has increased and there is a risk of inflation remaining elevated for an extended period.
For additional information, see "Risk Factors — Risks Relating to our Industry — Severe weather events and other catastrophes, including the effects of climate change and global pandemics, are inherently unpredictable and may have a material adverse effect on our financial results and financial condition." Current Macroeconomic Environment Changing U.S. and global conditions may impact our business.
Payments Due by Period Total Less than 1 Year 1 to 3 Years 4 to 5 Years More than 5 Years ($ in millions) Unpaid losses and loss adjustment expense (1) $ 298.1 $ 206.1 $ 81.1 $ 7.8 $ 3.1 Borrowings under financing agreement 83.4 40.1 43.3 — — Operating lease commitments 27.0 9.0 10.0 7.3 0.7 Total $ 408.5 $ 255.2 $ 134.4 $ 15.1 $ 3.8 ___________ (1) The reserve for losses and loss adjustment expenses represent management's estimate of the ultimate cost of settling losses.
Payments Due by Period Total Less than 1 Year 1 to 3 Years 4 to 5 Years More than 5 Years ($ in millions) Unpaid losses and loss adjustment expense (1) $ 303.1 $ 209.0 $ 81.0 $ 11.9 $ 1.2 Borrowings under financing agreement 158.1 70.3 84.4 3.4 — Operating lease commitments 25.6 7.2 10.0 7.4 1.0 Total $ 486.8 $ 286.5 $ 175.4 $ 22.7 $ 2.2 ___________ (1) The reserve for losses and loss adjustment expenses represent management's estimate of the ultimate cost of settling losses.
Goodwill is not amortized, but instead is reviewed for impairment at the reporting unit level on an annual basis, during the fourth quarter, or more frequently if indicators of impairment exist.
Goodwill Goodwill represents the excess of purchase price over the fair value of net assets acquired from our acquisition. Goodwill is not amortized, but instead is reviewed for impairment at the reporting unit level on an annual basis, during the fourth quarter, or more frequently if indicators of impairment exist.
We also purchased property and equipment during the year. Cash provided by investing activities was $88.7 million for the year ended December 31, 2023 primarily due to proceeds from sales and maturities of U.S. government obligations, corporate debt securities, asset-backed securities, short term investments, offset by purchases of U.S. government obligations, corporate debt securities, asset-backed securities, short term investments.
Investing Activities Cash used in investing activities was $89.1 million for the year ended December 31, 2025 primarily due to purchases of U.S. and non-US government obligations, corporate debt securities, asset-backed securities, short term investments offset by proceeds from sales and maturities of U.S. and non-US government obligations, corporate debt securities, asset-backed securities, short term investments.
Year Ended December 31, 2024 2023 ($ in millions) Net loss $ (202.2) $ (236.9) Adjustments: Income tax expense (1.7) 7.1 Depreciation and amortization 20.0 20.0 Stock-based compensation (1) 64.5 59.9 Interest expense 6.2 0.4 Interest income and others (6.2) (3.6) Net investment income (34.0) (24.7) Change in fair value of warrants liability — (0.3) Amortization of fair value adjustment on insurance contract intangible liability relating to the Metromile acquisition (0.4) (1.2) Other adjustments (2) (3) 4.1 6.7 Adjusted EBITDA $ (149.7) $ (172.6) (1) Includes compensation expense related to warrant shares of $6.5 million and $2.5 million for the years ended December 31, 2024 and 2023.
Year Ended December 31, 2025 2024 ($ in millions) Net loss $ (165.5) $ (202.2) Adjustments: Income tax expense (benefit) 4.6 (1.7) Depreciation and amortization 15.2 20.0 Stock-based compensation (1) 61.3 64.5 Interest expense 17.3 6.2 Interest income and others (4.9) (6.2) Net investment income (37.8) (34.0) Amortization of fair value adjustment on insurance contract intangible liability relating to the Metromile acquisition (0.2) (0.4) Other adjustments (2)(3)(4)(5)(6) (8.1) 4.1 Adjusted EBITDA $ (118.1) $ (149.7) (1) Includes the impact of canceled unvested warrant shares for contract year 2 related to the termination of the Warrant Agreement with Chewy of $5.2 million for the year ended December 31, 2025 and compensation expense related to the warrant shares of $6.5 million for the year ended December 31, 2024, respectively (See Note 16 of the consolidated financial statements).
We also entered into an Excess of Loss Reinsurance Contract (the "XOL reinsurance contract") through a captive in Bermuda in which we have a variable interest, primarily to cover catastrophe risk over the initial $50,000,000 limit for each loss occurrence, and further subject to a limit of $80,000,000 for each loss occurrence and in aggregate, primarily on property and car business underwritten by LIC.
This XOL reinsurance contract primarily covers catastrophe risk on property and car business underwritten by LIC and MIC over the initial $50,000,000 limit for each loss occurrence, and further subject to a limit of $80,000,000 for each loss occurrence and in aggregate.
Our U.S. and Dutch insurance company subsidiaries, and our Dutch insurance holding company, are restricted by statute as to the amount of dividends that they may pay without the prior approval of their respective competent regulatory authorities.
Our U.S. and Dutch insurance company subsidiaries, and our Dutch insurance holding company, are restricted by statute as to the amount of dividends that they may pay without the prior approval of their respective competent regulatory authorities. As of December 31, 2025, cash and investments held by these companies was $773.0 million and statutory surplus amounted to $329.8 million.
Net written premium increased $65.8 million, or 19%, to $415.1 million for the year ended December 31, 2024 compared to the year ended December 31, 2023 due to factors noted above. The table below shows the amount of premium we earned on a gross and net basis.
See "Reinsurance" above for further information. 79 Table of Contents Net written premium increased $348.4 million, or 84%, to $763.5 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 due to factors noted above. The table below shows the amount of premium we earned on a gross and net basis.
See “Business - Our Business Model” and “Business - Our Product Offerings - Giveback Feature.” Customer Investment Agreement On June 28, 2023, we entered into a Customer Investment Agreement (the “Agreement”), with GC Customer Value Arranger, LLC (a General Catalyst company) ("GC").
See “Business - Our Business Model” and “Business - Our Product Offerings - Giveback Feature.” Customer Investment Agreement On June 28, 2023, we entered into a Customer Investment Agreement (the “Agreement”), with GC Customer Value Arranger, LLC (a General Catalyst company) ("GC") under which GC agreed to provide up to $150 million of financing for our sales and marketing growth efforts through December 31, 2024.
Stock options are mainly awarded to employees and members of our board of directors and measured at fair value at each grant date. We calculate the fair value of share options on the date of grant using the Black-Scholes option-pricing model and the expense is recognized over the requisite service period for awards expected to vest using the straight-line method.
We calculate the fair value of share options on the date of grant using the Black-Scholes option-pricing model and the expense is recognized over the requisite service period for awards expected to vest using the straight-line method. The requisite service period for share options is generally four years. We recognize forfeitures as they occur.
Loss and Loss Adjustment Expense, Net Loss and LAE, net decreased $3.4 million, or 1%, to $277.0 million for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Loss and Loss Adjustment Expense, Net Loss and LAE, net increased $70.0 million, or 25%, to $347.0 million for the year ended December 31, 2025 compared to the year ended December 31, 2024.
The overall share of proportional reinsurance under the Reinsurance Program is approximately 55% of premium. The Per Risk Cap across the contracts is $750,000. Additionally, the contracts are subject to loss ratio caps and variable ceding commission levels, which align our interests with those of our Reinsurers, and is settled primarily on a funds withheld basis.
Additionally, these contracts are subject to loss ratio caps and variable ceding commission, which align our interests with those of our Reinsurers and is settled primarily on a funds withheld basis.
On February 3, 2025, the Agreement was further amended under which GC will provide up to an additional $200 million of financing from January 1, 2026 to December 31, 2026 for our sales and marketing growth efforts (collectively, with the Amended Agreement, the “Amended and Restated Agreement”).
On February 3, 2025, the Agreement was further amended to provide up to an additional $200 million of financing from January 1, 2026 through December 31, 2026 for our sales and marketing growth efforts. In addition, the Agreement was amended in April 2024, June 2024 and December 2025 to clarify certain provisions with no changes to material terms.
Technology Technology development expense decreased $3.0 million, or 3%, to $85.8 million for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Technology Technology development expense increased $8.1 million, or 9%, to $93.9 million for the year ended December 31, 2025 compared to the year ended December 31, 2024.
However, if the book value exceeds the fair value of a reporting unit, an impairment loss will be recognized in the amount of the excess book value over fair value limited by the total amount of goodwill for the reporting unit. 93 Table of Contents Stock-based compensation We account for stock-based compensation in accordance with ASC Topic 718, "Compensation — Stock Compensation”.
If the fair value exceeds the book value, goodwill is considered not impaired. However, if the book value exceeds the fair value of a reporting unit, an impairment loss will be recognized in the amount of the excess book value over fair value limited by the total amount of goodwill for the reporting unit.
Amortization of deferred acquisition costs, net of ceded commissions also increased by $3.8 million, or 38% as compared to the year ended December 31, 2023, consistent with growth in business.
Credit card fees increased $6.5 million, or 37%, as a result of the increase in customers and associated premium. Amortization of deferred acquisition costs, net of ceded commissions also increased by $2.8 million, or 20% as compared to the year ended December 31, 2024, consistent with growth in business.
The requisite service period for share options is generally four years. We recognize forfeitures as they occur. See “Note 17 - Stock-based compensation” in the Notes to Consolidated Financial Statements included in this Annual Report for a complete description of the accounting for stock-based awards.
See “Note 16 - Stock-based compensation” in the Notes to Consolidated Financial Statements included in this Annual Report for a complete description of the accounting for stock-based awards.
Under the PPR Contract, claims in excess of $750,000 are 100% ceded up to a maximum recovery of $2,250,000, subject to certain limitations. The PPR Contract was renewed at similar terms effective July 1, 2024 through June 30, 2025.
LIC and MIC entered into a Property Per Risk Excess of Loss Reinsurance Contract with a panel of reinsurance companies (the "PPR Contract") which was effective July 1, 2024 and expired on June 30, 2025. Under the PPR Contract, claims in excess of $750,000 were 100% ceded up to a maximum recovery of $2,250,000, subject to certain limitations.
We conduct certain of our operations in Israel and therefore our results may be adversely affected by political, economic and military instability and conflict in Israel and the surrounding region. This evolving conflict has increased global economic and political uncertainty.
The actual effects of these macroeconomic factors on our results remains to be unknown and cannot be estimated with precision. We conduct certain of our operations in Israel and therefore our results may be adversely affected by political, economic and military instability and conflict in Israel and the surrounding region.
Gross written premium includes direct and assumed premium. We began assuming premium related to car insurance policies written in Texas in December 2022, in connection with our fronting arrangement with a third party carrier in Texas.
Assumed premium related to car insurance policies written in Texas through our fronting arrangement with a third party carrier in Texas also contributed to the increase in gross written premium during the period.
Bad debt expense increased by $2.9 million, or 36%, as compared to the year ended December 31, 2024.
Underwriting data costs increased $2.1 million, or 18%, as compared to the year ended December 31, 2024.
This QS reinsurance contract became effective July 1, 2023 and shall remain in force for an indefinite period until terminated by either party.
The new MIC QS reinsurance contract will remain effective for an indefinite period until terminated by either party. The LIC QS reinsurance contract became effective on July 1, 2025 and will expire on June 30, 2026.
As of December 31, 2024, cash and investments held by these companies was $593.9 million, of which $271.4 million is held as regulatory surplus. Insurance companies in the United States are also required by state law to maintain a minimum level of policyholder's surplus.
Insurance companies in the United States are also required by state law to maintain a minimum level of policyholder's surplus.
This XOL reinsurance contract became effective July 1, 2023 and expired on June 30, 2024. We have renewed the XOL reinsurance contract effective July 1, 2024 and will expire on June 30, 2025, at similar terms and is expanded to include risks written by MIC.
This XOL reinsurance contract effective July 1, 2024 expired on June 30, 2025, and was renewed at similar terms effective July 1, 2025 and expiring on June 30, 2026.
Hosting and development costs also decreased $1.0 million, or 11%, as compared to the year ended December 31, 2023. General and Administrative General and administrative expense decreased $4.8 million, or 4%, to $124.5 million for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Software expense increase $2.0 million, or 53%, as compared to the year ended December 31, 2024. Hosting and development decreased $1.8 million, or 21%, as compared to the year ended December 31, 2024. Payments made to contractors decreased $1.8 million, or 44%. as compared to the year ended December 31, 2024.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThere were no invested assets denominated in foreign currencies. Overview The Company’s investment portfolio is primarily fixed income securities issued by the U.S. government and government agencies and corporate issuers with relatively short durations. The investment portfolio is managed in accordance with the investment policies and guidelines approved by the board of directors.
Biggest changeOverview The Company’s investment portfolio is primarily fixed income securities issued by the U.S. government and government agencies, non-U.S. government and corporate issuers with relatively short durations. The investment portfolio is managed in accordance with the investment policies and guidelines approved by the board of directors.
As of December 31, 2024 and 2023, none of our fixed maturity securities were unrated or rated below investment grade. To reduce credit exposure to reinsurance recoverable balances, the Company obtains letters of credit from certain reinsurers that are not authorized as reinsurers under U.S. state insurance regulations.
As of December 31, 2025 and 2024, none of our fixed maturity securities were unrated or rated below investment grade. To reduce credit exposure to reinsurance recoverable balances, the Company obtains letters of credit from certain reinsurers that are not authorized as reinsurers under U.S. state insurance regulations.
Inflation Risk Inflationary factors such as increases in overhead costs may adversely affect our operating results. In addition, inflation could lead to higher interest rates which may impact the market value of our investment portfolio. The current short duration of the Company's fixed maturity portfolio minimizes the negative effects of higher interest rates. 95 Table of Contents
Inflation Risk Inflationary factors such as increases in overhead costs may adversely affect our operating results. In addition, inflation could lead to higher interest rates which may impact the market value of our investment portfolio. The current short duration of the Company's fixed maturity portfolio minimizes the negative effects of higher interest rates. 91 Table of Contents
In addition, if a 10% change in interest rates were to have immediately occurred on December 31, 2024, this change would not have a material effect on the fair value of our investments as of that date. Credit Risk We are also exposed to credit risk on our investment portfolio and reinsurance recoverable.
In addition, if a 10% change in interest rates were to have immediately occurred on December 31, 2025, this change would not have a material effect on the fair value of our investments as of that date. Credit Risk We are also exposed to credit risk on our investment portfolio and reinsurance recoverable.

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