Lemonade forms Bermuda captive cell

Digital insurance company Lemonade has formed a captive cell at a Bermuda transformer which it will use to retain most of its windstorm exposure.

Lemonade, which says it is powered by artificial insurance and social impact, said the captive cell was designed to augment its reinsurance programme, which has been renewed for another year.

Lemonade said with trehard to its windstorm exposure: "While windstorm reinsurance capacity was available, this structure was determined to offer a materially better cost/benefit profile."

Lemonade also announced it had formed a Cayman Islands captive insurer, Lemonade Re, to hold some of its retained risk.

Lemonade said its reinsurance programme had been led by the same tier-one carriers as the expiring and was oversubscribed on all dimensions.

"The centrepiece of the program is 55% quota share protection, the same level as the expiring coverage," said Lemonade. "The variable ceding commissions are projected to be roughly equivalent to those enjoyed under the outgoing agreements. The program covers all Lemonade businesses globally, now also including Metromile, acquired by Lemonade in 2022."

Daniel Schreiber, the co-chief executive of Lemonade, said: “It says a great deal when some of the world’s largest and most respected reinsurers choose to stake their capital on the performance of our business.

“These partners allow us to operate in a very capital light mode, and focus our resources on expanding our customer base across all of our products and geographies, while harnessing our technologies to get ever more efficient, and ever better at matching rate to risk.”