Financial Results
Has insurtech Lemonade finally turned the corner?
Lemonade, the 10-year-old upstart insurtech, that has never earned a dime, has consistently hinted that profitability for the digital-first insurance company is just around the corner. Yet, much to the consternation of an impatient Wall Street, net income positivity has proven most elusive.
Lemonade’s $183 per share stock price achieved during the era of heightened enthusiasm for tech stocks in 2021 is but a distant memory as investors have settled for shares valued in the mid-teens for most of the next three years.
But things may have changed. Lemonade shares have increased 94% in the last three months, to around $35 per share, mostly on the strength of the company’s third, and fourth quarter and full year 2024 financial results. They showed an insurer with accelerating revenue growth, positive cash flow, and a declining loss ratio – its best showing by far. Can profitability, finally, be close behind?
“We are still on track, as we have been for two-plus years, to be EBITDA positive exiting 2025. I'm sorry, I said, 2025, I mean 2026,” Tim Bixby, Lemonade’s chief financial officer told investors last month. “And then GAAP profitability, while we haven't given an exact date…we expect it to follow within roughly a year thereafter.”
If it seems as though we have heard this before, we have. Though Bixby contends Lemonade’s financial projections haven’t changed at all for almost three years.
The latest results have turned around some analysts.
“In my view, Lemonade is a stock that’s ripe for a buying moment,” said technology investor Gary Alexander, writing on financial website Seeking Alpha “The tech-first insurance company has continued to grow its premium base while also improving its underwriting profitability. In my view, this is another moment to buy the dip in Lemonade.”
News
Positive U.S. P&C result momentum set to continue in 2025: AM Best
The U.S. property and casualty (P&C) insurance industry saw significant improvement in 2024 compared to 2023, with momentum expected to continue in 2025 as higher interest rates drive stronger investment yields for insurers, providing a financial buffer against the volatility of weather-related losses, according to a new report from AM Best.
In 2023, the U.S. P&C industry recorded an underwriting loss of $24.6 billion, which was reportedly offset by net investment income of $72.4 billion.
While underwriting losses moderated in 2024, AM Best has estimated that net investment income increased to $85.4 billion and is projected to reach $100.8 billion in 2025.
Meanwhile, commercial lines underwriting results in 2024 benefited from positive rate momentum across most business lines, while personal lines saw improvements driven by pricing adjustments, claims-handling initiatives, and enhanced risk selection.
The rating agency has projected a 7.3% increase in net premiums written for the P&C industry in 2025, following an estimated 10.0% rise in 2024. Personal lines premiums are estimated to have grown by 12.9% in 2024, with a projected 9% increase in 2025.
“Insurers are more determined than ever to achieve the rate increases necessary to address their calculated rate needs, particularly for lines such as private passenger auto and homeowners multiperil,” said Greg Williams, managing director at AM Best.
Global insurance brands strengthen in value amid challenges
The global insurance sector has seen a 9% year-on-year increase in brand value among the top 100 insurance brands, according to the latest report from Brand Finance, a brand valuation consultancy.
Nine of the ten most valuable insurance brands saw growth in 2025, showing the industry's resilience amid changing challenges.
"The solid growth of the world’s top insurance brands is even more impressive given the rising challenges they face, particularly from climate change," said Jonathan Ong, Brand Finance's associate director.
Ong said that increasing natural disasters have led to higher claims and losses, prompting insurers to adapt through pricing strategies and risk diversification.
"While some have withdrawn from high-risk regions, the industry has navigated these challenges through strategic pricing and risk diversification to maintain stability and growth," he said.
Ong added that the US market has shown particular strength, with US insurance brands now comprising 25% of the total brand value of the top 100 global insurance brands.
According to Brand Finance, Ping An Insurance remains the most valuable insurance brand for the ninth consecutive year, maintaining a brand value of $33.6 billion. The company’s standing is attributed to strong consumer familiarity in China and consistent growth in life, health, and property and casualty (P&C) insurance. However, it has faced profitability challenges following market conditions in 2023.
$102 billion and climbing: Why MGAs are taking over the insurance game
And growth is just going to continue, says expert
In the current competitive market, MGAs (Managing General Agents) are playing an increasingly crucial role – especially with regards to capacity and retention. Research from Conning found that the US MGA market exceeded $102 billion in premium in 2023 – and it’s only continuing to grow. In fact, the MGA market grew 13% over a one-year period while property-casualty premium grew by just 10%.
“What we're seeing across the market is two-fold," says Brian Refici, vice president at MarshBerry. "The first main dynamic is [carriers] exiting the admitted market space and the expansion in excess and surplus lines, as well as where the wholesalers play. We don’t expect that trend to decrease. In fact, we're seeing that acceleration throughout.
“We're [also] seeing a lot of consolidation now, with the top 50, and even the top 100, brokers starting excess and surplus lines divisions. Where the surplus market is today is more consolidation and control on the brokerage and distribution side, with a binder that meets all risks in both admitted and non-admitted lines - putting more pressure on the carriers to understand what those dynamics are looking like."
AI in Insurance
WTW unveils AI tool for risk management
Insurers facing rising inflation, shifting customer behaviour, and intensifying competition may now have a new tool to manage these challenges. WTW has introduced Radar Vision, an artificial intelligence-powered solution designed to improve decision-making across underwriting, claims, and pricing functions.
The tool provides insurers with real-time insights that could help them identify emerging risks and opportunities more quickly.
WTW said Radar Vision enhances operational efficiency by automating manual processes and enabling faster responses to deviations between actual and expected performance.
According to the company, these capabilities could lead to increased underwriting profitability, cost reductions, and better resource allocation.
AI Copilots Give Commercial Insurance a Long-Overdue Makeover
The commercial insurance industry, an economic linchpin valued in the hundreds of billions, has long been bogged down by antiquated, paper-based processes.
While that should come as no surprise to anyone who has interacted with it recently, it’s not necessarily a conscious choice. The insurance sector is innately and uniquely hindered by legacy systems, regulatory complexities, as well as the sheer scale of underwriting and claims processes.
For commercial insurance to most effectively take its digital transformation medicine, it will need “a painkiller, not just a vitamin. Something that solves acute pain points from day one,” Vishal Sankhla, co-founder and CEO of Outmarket AI, told PYMNTS Karen Webster.
But the inefficiencies plaguing commercial insurance are not new. So why is the industry suddenly waking up to the need for change?
According to Sankhla, whose company just raised $4.7 million to enhance connectivity between brokers, wholesalers and carriers, the answer is twofold: an ongoing drive for efficiency, and the availability of advanced artificial intelligence (AI).
“We’re not just digitizing insurance,” Sankhla said. “We’re redefining it.”
The AI Advantage in Insurance
Sankhla’s company isn’t just leveraging existing AI models — it’s building an insurance-specific one from the ground up.
“We’ve spent the last year working closely with brokers, MGAs [managing general agents] and wholesalers to develop a solution tailored for insurance,” he said. “Generic AI models won’t go deep into the workflows or integrate with legacy systems.”
One of the most significant impacts of AI in commercial insurance is its potential for greater standardization and orchestration across system-level silos.
“If you ask a data analyst to pull a metric like last month’s premium, you’ll get different answers because they’re looking at different systems,” Sankhla explained. “We provide a unified data layer where definitions are standardized, ensuring consistency across the company.”
The Insurance Industry’s Data Posture Is An Existential Risk
Insurers collect a wealth of data, but only a few have found ways to harness its true potential. Most insurance business and technology leaders have very low confidence in their data assets’ ability to meet customer and competitive demands.
Almost all incumbent insurance companies support disparate lines of business and individual parts of the value chain through a plethora of legacy systems and disjointed data silos. For example, policy administration systems have different data stores and differing data formats from claims management systems, making it impossible to match risk with loss data. Add the complexity of siloed data representing each line of business, and you have entangled chaos for data environments.
AI technologies are advancing at breakneck speed and the use cases for AI in insurance are immense, but only high-quality data can adequately serve as training data for these AI use cases. Feeding bad data to AI engines dramatically increases the chances of bad outcomes. Carriers need improved data postures if they want to scale AI and see some real gains from the transformative technology.
The consequences of poor data posture in today’s operating environment are far-reaching. Poor data adds risk to almost all parts of the insurance value chain and can significantly challenge several business and technology areas:
- Underwriting performance
- Attracting the right distribution partners
- Product innovation
- Claims experience
- Seizing the power of AI
Rohit Makhijani, Principal Analyst, Forrester
Research
ACORD's 2025 Insurance Digital Maturity Study Finds That Only a Quarter of Top Insurers Have Truly Digitalized
ACORD, the standards-setting body for the global insurance industry, today released the 2025 edition of its annual ACORD Insurance Digital Maturity Study. The report analyzed 210 of the world's largest insurance carriers across all major lines of business, including property and casualty, life, and reinsurance. Of the organizations examined, the study found that only one quarter have truly digitalized the value chain, while more than 10% are not appreciably leveraging digital technologies within their current business process. Moreover, more than half are still exploring how digitalization can be applied against their business model.
A key addition to the 2025 edition of the study is the "AI & Digital Maturity" addendum, which examined the potential impact of AI across an insurance enterprise and how AI leverage can help less digitally mature organizations to overcome common hurdles and accelerate their digital development. ACORD's analysis indicates that robust integration of AI capabilities can reduce expenses by as much as 14.6% for P&C insurers — an estimated total of more than $480 billion in savings across the industry annually. Similarly, the annual value potential for life insurers is estimated at over $300 billion.
"The reality of AI and its impact on the industry are widely recognized, and implementation is well underway," said ACORD CEO Bill Pieroni. "We have seen the performance gap between Digital Competitors vs. Laggards steadily grow year after year – AI leverage is further accelerating that differentiation. A clear strategy and resource allocation around AI, as well as a full spectrum of digital capabilities, is necessary for any insurer to remain competitive in coming years." FULL ARTICLE
Commentary/Opinion
The web of factors behind rising P/C premiums
Rising insurance costs are often blamed on climate-related disasters, but the reality is far more complex. Despite what the recent U.S. Treasury Insurance Office report suggests, extreme weather events are just one piece of a much larger puzzle.
The surge in premiums consumers feel is driven by a web of interconnected factors, from technological advancements in vehicles (backup cameras, rearview detection and more) and costly legal battles to global economic pressures like tariffs and supply chain disruptions. Like ingredients in a recipe, each factor contributes to the final product - making insurance more expensive across the board. As these challenges evolve, so will the complexity of pricing. This is challenging both insurers and policyholders to navigate an increasingly unpredictable market.
Why smarter cars are fueling higher premiums
Today’s vehicles are computers on wheels. No longer just simple means of transportation, cars now feature advanced technologies such as sensors, cameras and driver assistance systems. While these innovations improve safety and performance, they also come at a cost.
The price of car repairs and maintenance is rising. CNBC reported that motor vehicle costs increased 4.1% per year from November 2013 to November 2023, compared with only 2.8% for the overall consumer price index. Fixing a modern vehicle no longer requires a standard mechanic — it often takes an engineer to recalibrate sensors, repair touchscreens and update software.
InsurTech/M&A/Finance💰/Collaboration
Gallagher pushes out WTW, Brown & Brown with $1.2 billion broker acquisition
Arthur J. Gallagher & Co. has announced a definitive agreement to acquire San Francisco-based insurance brokerage firm Woodruff Sawyer for $1.2 billion, prevailing over competing interest from WTW and Brown & Brown. The acquisition expands Gallagher’s presence in the property and casualty sector while strengthening its capabilities in management liability, construction, and real estate. The deal is expected to close in the second quarter of 2025, pending regulatory approval.
Woodruff Sawyer, operating from 14 US offices and one in the UK, serves middle and large-market clients with a range of risk management and insurance solutions. The firm reported estimated pro forma revenues of $268 million for the 12 months ending December 31, 2024, with an EBITDAC margin of 33%.
Gallagher’s acquisition values Woodruff Sawyer at approximately 4.5 times revenue and 13.6 times EBITDAC, aligning with comparable transactions in the brokerage sector.
Integration and retention costs are projected at $150 million over the next three years, with Gallagher aiming to maintain Woodruff Sawyer’s workforce of over 600 employees. The firm has built a strong reputation in Directors & Officers (D&O) liability and risk management, areas that will complement Gallagher’s existing services.
Awards
Roadzen’s MixtapeAI Wins ‘Best AI in Deep Tech’ at the Entrepreneur AI Awards 2025
Roadzen Inc. (Nasdaq: RDZN) (“Roadzen” or the “Company”), a global leader in AI at the convergence of insurance and mobility, today announced that it has been selected as Best AI in Deep Tech at the Entrepreneur AI Awards Summit 2025 held in Bangalore India.
Roadzen’s MixtapeAI was recognized for transforming customer experience in auto insurance and mobility by automating complex workflows, from claims processing and roadside assistance to policy administration. Integrating cutting-edge foundation models like those from OpenAI, Google, Anthropic, and Meta, and powered by DeepSeek R1, MixtapeAI offers advanced reasoning and ensures data sovereignty for enterprise clients across US, Europe and India.
Rohan Malhotra, Founder and CEO of Roadzen, stated, “Roadzen was among the first companies globally that integrated DeepSeek’s open-source models in an enterprise, private and data-sovereign product for global customers via MixtapeAI. We’re pushing the boundaries of AI in real-world applications and are now one of the rare AI companies that’s crossing the chasm of $50 million in recurring revenue. Big thanks to Entrepreneur for recognizing our work.”
Tariffs/Insurance
Tariffs Will Negatively Affect Insurance Industry, Says AM Best
Analysts at AM Best warned that the planned imposition of U.S. tariffs on imports from Canada and Mexico, along with increased tariffs on China, will have a negative effect on the insurance industry—particularly impacting the U.S. homeowners’ and auto lines of business.
“Given the supply chains that the U.S. auto industry has established with Canada and Mexico, any disruptions and inflationary impacts due to the tariffs will be a credit negative for carriers,” Sridhar Manyem, senior director at AM Best, said in a statement Thursday. “The more recent fleets of cars come equipped with advanced engineering and electronics and cost more to repair and replace.”