Lemonade Inc. has reported its second-quarter 2026 financial results and announced a leadership succession plan under which longtime CFO Tim Bixby (pictured, left) will move to the company's board of directors, effective January 1, 2027.
For the second quarter, in-force premium grew 32% year over year to $1.43 billion, marking the company's 11th consecutive quarter of accelerating growth, driven by 23% growth in customers to 3.31 million and an 8% increase in premium per customer to $433.
Revenue rose 79% to $294.4 million, aided by lower quota-share reinsurance cessions that took effect on July 1, 2025, when Lemonade reduced the portion of premium ceded to reinsurers from 20% to 18%, reflecting growing confidence in its underwriting models.
The company's gross loss ratio improved to 60% for the quarter, down from 67% a year earlier, continuing a multi-year trend that has seen the metric fall from 88% in the third quarter of 2023. Adjusted gross profit grew 74% to $114.4 million, and the loss-adjustment expense ratio fell to a record 5%, which president Shai Wininger said on the earnings call reflects lower claims adjudication costs through automation, noting competitors spend almost twice as much on handling claims.
The adjusted EBITDA loss narrowed to $18.7 million, compared with $40.9 million a year earlier. Net loss for the quarter was $43.4 million, or $0.56 per share, compared with $43.9 million, or $0.60 per share, in Q2 2025.
For the third quarter, Lemonade guided to revenue of between $323 million and $326 million and an adjusted EBITDA loss of between $20 million and $23 million, with in-force premium projected at approximately $1.54 billion. The company reiterated full-year 2026 guidance of 33% in-force premium growth and 65% revenue growth, and continues to expect its first quarter of positive adjusted EBITDA in the fourth quarter of 2026, with GAAP profitability targeted for 2027.
Piper Sandler analysts noted that while adjusted EBITDA and adjusted gross profit came in better than expected, gross written premium growth of 33.6% fell short of their forecast of 42.7%, a gap that appeared to weigh on investor sentiment despite the quarter's underlying improvements.
Separately, Lemonade announced that Bixby, CFO since 2017, will move to the Board effective January 1, 2027. Nick Stead (pictured, right), currently SVP Finance, will succeed him. Bixby will remain in his current role until the transition date to ensure continuity.
In his current position, Stead has played a central role in several of Lemonade's financial milestones, including its IPO and a secondary offering, a strategic acquisition, and the establishment of two strategic growth financing partnerships.
Before joining Lemonade, he held strategic finance roles in technology and financial services. He graduated cum laude from Princeton University and was a Fulbright Scholar.
Lemonade's results underscore how central AI has become to its underwriting and claims model; the company has said roughly 40% of its claims are now handled instantly. It has also pushed into new product lines, including the recent launch of autonomous vehicle coverage in Colorado and Indiana, positioning it as an early mover in pricing risk based on human versus AI driving modes.
That AI-first approach is increasingly being met by established carriers. Allstate and Progressive have both rolled out AI-driven underwriting and faster digital claims handling, a trend that raises longer-term questions about whether incumbents' AI adoption could narrow the efficiency gap Lemonade has built its pitch around.
The shift toward algorithmic underwriting is also drawing closer regulatory attention across several states. Colorado's SB 21-169, expanded to auto and health insurance in October 2025, requires insurers to inventory their algorithms, test for bias and submit annual compliance reports, while California's SB 1120, in effect since January 2025, prohibits health coverage denials based solely on AI output and mandates physician review.
For insurers expanding AI-driven pricing and claims automation, as Lemonade has done, these state-level frameworks are likely to shape how such systems are documented, tested and disclosed going forward.
The succession plan gives Lemonade roughly five months to manage the CFO transition, a timeline the company has framed as designed to preserve continuity in financial leadership as it scales.
The change comes as Lemonade continues an aggressive growth trajectory, with in-force premium having doubled since 2023 alongside steadily improving loss ratios, even as the stock's sharp decline despite improved underwriting metrics signals that investors remain focused on the path to sustained profitability rather than growth alone.
