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  #271  
Old 07-13-2018, 09:34 AM
NAMAK NAMAK is offline
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my belief is that they need the positive impact on marketing that giving to charity routinely can provide. if they take a year off and it is noted, that aspect of the program seems harder to sell.
This may be but if you are paying out your profits on each individual charity on every year it makes money with no clawback or carryover provision in the years it losses money I think you are doomed to failure based on loss ratio insurance modeling 101.
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  #272  
Old 07-13-2018, 10:51 AM
sticks1839 sticks1839 is offline
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my belief is that they need the positive impact on marketing that giving to charity routinely can provide. if they take a year off and it is noted, that aspect of the program seems harder to sell.
the giveback perception is really popular these days and may be the practice that enables them to secure funding while they burn into markets.

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This may be but if you are paying out your profits on each individual charity on every year it makes money with no clawback or carryover provision in the years it losses money I think you are doomed to failure based on loss ratio insurance modeling 101.
If it's calendar period "profit", they could manage it through reserve levels to reduce the underwriting loss to a level that is supported by investment income. Don't forget that Lemonade only cares about it's loss ratio to the extent that it enables them to access the reinsurance market at a reasonable price. They keep very little if any insurance risk, and make money through their 20% "fee" arrangement by minimizing expenses like claim settlement. The charity angle provides inexpensive marketing and, in theory, a fraud reduction incentive.
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  #273  
Old 07-13-2018, 12:06 PM
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r. mutt r. mutt is offline
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the giveback perception is really popular these days and may be the practice that enables them to secure funding while they burn into markets.



If it's calendar period "profit", they could manage it through reserve levels to reduce the underwriting loss to a level that is supported by investment income. Don't forget that Lemonade only cares about it's loss ratio to the extent that it enables them to access the reinsurance market at a reasonable price. They keep very little if any insurance risk, and make money through their 20% "fee" arrangement by minimizing expenses like claim settlement. The charity angle provides inexpensive marketing and, in theory, a fraud reduction incentive.
I posted their 2017 financials earlier in the thread, and they aren't even remotely close enough to profit, calendar year or otherwise, to make this reasonable...and just eyeballing those loss ratios and overhead, I'll be surprised if they reach breakeven in the next 3 years on a net basis (or double that on a gross basis). So they'll continue burning through capital, while people think about whether this distribution platform can be monetized in some other way.
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  #274  
Old 07-13-2018, 12:14 PM
tommie frazier tommie frazier is offline
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the charity provision is key to marketing. it's a cost they have to keep. the plan must be to make it up on volume...
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  #275  
Old 07-13-2018, 01:03 PM
NAMAK NAMAK is offline
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I posted their 2017 financials earlier in the thread, and they aren't even remotely close enough to profit, calendar year or otherwise, to make this reasonable...and just eyeballing those loss ratios and overhead, I'll be surprised if they reach breakeven in the next 3 years on a net basis (or double that on a gross basis). So they'll continue burning through capital, while people think about whether this distribution platform can be monetized in some other way.
yeah, the Q1 18 loss ratio results were just as bad.
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  #276  
Old 07-13-2018, 01:39 PM
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yeah, the Q1 18 loss ratio results were just as bad.
I was going to make a "make it up on volume joke", but darned if tommie didn't beat me to it.
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