3 Things – Root / Lemonade Earnings, Orion180 Goes Full Stack & $2.5 Trillion Embedded Market Opportunity

Hello Friends!  This week we are following earnings reports from Root & Lemonade, the emerging new Florida property market and a report that claims the embedded market could grow to $2.5 trillion of new insurance premium.  Here are the three things we learned:


Root and Lemonade Earnings

Root and Lemonade both released their Q4 and 2022 full year results.  Root’s premium is declining and they have put all of their chips on the table to become profitable with embedded offerings.  Since Carvana is not going to be the best channel for them, it was good to see they ‘executed a commercial agreement with a national digital financial services company’.  It was the first time they have reported their total combined ratio which was net 195% in 2022.  Chief revenue and operating officer Danial Rosenthal is leaving the company and taking a bonus on his way out.  Hard to believe the assurances that they will be able to rely on their own capital soon.  The total accumulated losses on their balance sheet has now exceeded $1.5B.  Lemonade closed out the first full year with their entire complement of products Renters, Homeowners, Car, Pet and Life but their loss widened from $241.3M in 2021 to $297.8M in 2022.  They are putting all of their ‘firepower’ into lowering their loss ratio and expenses while trying to grow their customers.  The Q4 loss ratio of 89% is far from their target of below 70%.


Orion180 Goes Full Stack

Technology-focused coastal property MGA Orion180 announced they launched a standalone carrier transitioning to a full-stack model.  They have plans to set up another admitted carrier that will be able to write admitted inland homeowners.  The will use proprietary underwriting technology to take advantage of the newly forming Florida market post-Ian.  It was also notable to hear Universal P&C’s CEO comments about the changing market in their earnings call.  He said they were ‘grateful to state officials for passing meaningful reform’ and though it will ‘take time’ for the measures to have affect, the moves will restore long-term market health.


Embedded Insurance $2.5 Trillion Opportunity

The embedded insurance market could grow to over $2.5 trillion by 2032 according to a report ‘How and Why Insurers Should Increase Investment in Embedded Insurance 2.0’.  The report explains that Embedded 2.0 is still an early stage market and most of the innovation is coming from outside of the insurance industry and much of this new premium will increase the size of the market.  The key to unlocking this value will be to find the right partnerships and opportunities to offer.  The winners will be able to create the right operating models that are less capital-intensive than traditional carriers, not an easy challenge to solve for.

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