Categories Earnings Call Transcripts, Health Care

Lemonade Inc. (LMND) Q2 2020 Earnings Call Transcript

LMND Earnings Call - Final Transcript

Lemonade Inc. (NYSE: LMND) Q2 2020 earnings call dated Aug. 12, 2020

Corporate Participants:

Yael Wissner-Levy — Vice President, Communications

Daniel Schreiber — Co-Founder, Chief Executive Officer, and Chairman

Shai Wininger — Co-Founder, President, Secretary, Treasurer, Chief Operating Officer, Chief Technology Officer

Tim Bixby — Chief Financial Officer

Analysts:

Michael Phillips — Morgan Stanley — Analyst

Ronald Josey — JMP Securities — Analyst

Ross Sandler — Barclays — Analyst

Ralph Schackart — William Blair & Company — Analyst

Jason Helfstein — Oppenheimer & Co. — Analyst

Heath Terry — Goldman Sachs — Analyst

Yaron Kinar — Goldman Sachs — Analyst

Presentation:

Operator

Ladies and gentlemen, thank you for standing by and welcome to the Lemonade’s Second Quarter 2020 Earnings Call. [Operator Instructions] Please be advised that today’s conference is being recorded. [Operator Instructions] Thank you.

I’d now like to hand the conference over to your presenters, Lemonade management team, please go ahead.

Yael Wissner-Levy — Vice President, Communications

Good morning and welcome to Lemonade’s second quarter 2020 earnings call. My name is Yael Wissner-Levy, and I am the VP, Communications at Lemonade. Joining me today to discuss our results are Daniel Schreiber, CEO and Co-Founder; Shai Wininger, COO and Co-Founder; and Tim Bixby, Lemonade’s CFO.

A letter to shareholders covering the Company’s second quarter 2020 financial results is available on our Investor Relations website at investor.lemonade.com.

Before we begin, I would like to remind you that management’s remarks on this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by those forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of our Form 10-Q for the three months ended June 30, 2020 and other filings with the SEC. Any forward-looking statements made on this call represent our views only as of today and we undertake no obligation to update them.

We will be referring to certain non-GAAP financial measures on today’s call, such as adjusted EBITDA and adjusted gross profit, which we believe may be important to investors to assess our operating performance. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in our letter to shareholders. Our letter to shareholders also includes information about our key operating metrics, including a definition of each metric, why each is useful to investors and how each used to monitor and manage our business.

We have also prepared a visual presentation that investors can consult to follow along with this discussion and it can be accessed at investor.lemonade.com.

With that, I’ll turn the call over to Daniel, who will begin with a few opening remarks. Daniel?

Daniel Schreiber — Co-Founder, Chief Executive Officer, and Chairman

Thank you, Yael. Good morning. I’d like to welcome our shareholders, long-standing, newly minted and perspective to this inaugural earnings call of Lemonade. Since this is my first time talking to many of you, I’m going to take a few minutes to provide some context for the strong second quarter results, which Tim will expand on shortly.

Lemonade was founded as a new kind of insurance company. One built from scratch on an unconflicted business model and an entirely digital substrate. We set out to replace brokers and bureaucracy with bots and machine learning aiming for zero paperwork and instant everything. Our hypothesis was that by placing the consumer at the center and building the policy, the technology and the business model around her would achieve a level of customer satisfaction unknown in this sector. Thankfully this is largely how things played, our Net Promoter Score stands at above 70, a level of customer delight usually reserved for brands like Apple or Tesla. And consumers have upgraded Lemonade to the number one position on many of the destinations where Americans review their insurance company.

Perhaps that’s less surprising when you consider that the median time to buy a policy from Lemonade is about 90 seconds. Roughly a third of our claims are paid instantaneously. And first time buyers of insurance can often save 50% by choosing Lemonade. This level of service and automation has generated very rapid growth and increasing efficiencies, trends captured well in our second quarter numbers. Our top line in-force premium increased 115% year-on-year, while our adjusted gross profit grew by over 200% year-on-year.

Rapid growth is always welcome, but in our case, it does double duty. In addition to boosting our top and bottom lines that generates troves of textured proprietary and highly predictive data. Insurance is the business of using data to quantify risk and a digital substrate allows us to capture something like a 100-fold more data than traditional broker-based incumbents. We believe that represents a structural and growing competitive advantage. These data service training sets for all of our systems fueling a cycle of continuous improvement, with a return of the flywheel, our marketing campaigns become more effective, our bots get better at understanding our customers needs, our fraud detection picks up ever-faint signals, and our claims bot Jim learns which claims to pay and which to escalate with growing precision. All this amounts to a powerful closed loop system, allowing us to target price and underwrite risk with growing accuracy, which is the very core of insurance.

The impact of this continuous learning is on display in our second quarter results too, and is best captured by our gross loss ratio, which was 67% for the quarter. This represents our 10th consecutive quarter of declining loss ratios, and our loss ratio has halved over the past two years. This rate of improvement in loss ratio is, to the best of my knowledge, without precedent in the history of the insurance industry, and is all the more unusual for coming at a time of very rapid growth.

While our strategy is to delight consumers in order to grow their number and to leverage that growth to extend our data advantage, we also aim to grow with our customers. This has been an evidence in the steady growing percentage of homeowners, who started life with us as renters, a trend that continued unabated in the second quarter. In July, we launched health insurance for pets, our first major offering outside of the world of homeowners insurance, and a milestone on our journey to offer a comprehensive solution to our customers with potentially far reaching implications for customer retention and lifetime value. Shai will share some early thoughts and numbers on our pet launch in a couple of minutes.

In many ways then our second quarter was a straight line continuation of the progressions we’ve seen in recent quarters and years, rapid top line growth, increasing efficiencies, declining loss ratios. But it would be a mistake to take the second quarter results as pedestrian or a foregone conclusion because early in the quarter, we anticipated things playing out very differently. With millions furloughed and much of humanity in lockdown, in the early days of the quarter, we resolved to CASA discretionary spending, pause our non-essential hiring and enable customers to postpone their payments to us in recognition of the widespread hardship COVID-19 had engendered. We brace for a spike in churn, a drop in demand, a slowdown in productivity and a hit to our cash flow. Thankfully, none of these materialized.

Despite our marketing pullback and notwithstanding a shut down at all of our offices, our key performance indicators for Q2 outperformed, not only our worse concerns, but even our pre-pandemic aspirations. No one knows what turn the pandemic or the economy will take in Q3 or beyond but we are heartened by the resilience our team, our Company and our business demonstrated in the second quarter. Indeed, the coronavirus seems to have been a fundamental accelerator of the trend towards digitization throughout society and Lemonade is thankfully on the right side of that dislocation.

Our IPO prospectus includes our Founders’ letter, a document where Shai and I outline our approach to managing Lemonade and hope that investors who share our thinking will be drawn to Lemonade but equally in the hope that those who do not will seek their fortunes elsewhere. There is a link to this letter on the homepage of our Investor Relations website, and I warmly recommend you read it. One of the point to make there is that, we view our plans as hypotheses to be updated as data accumulate. Our plan is to adapt. Q2 demonstrated this in spades.

As I mentioned, faced with unprecedented uncertainty, early in the quarter we decided to decelerate our marketing spend meaningfully, and we prepared for our growth to take a disproportionate hit. We then monitored signals from the market in real-time, click-through rates, funnel analysis, retention numbers, cost per click and many more and adapted to the encouraging signals as these came in. The quarter had a happy ending, but it’s important for me to share how that sausage was made because it’s illustrative of how we think and how we operate. We endeavor to be driven by data but data often incomplete, and while waiting for more data, decreases error rates, it also blunts potential upside.

As Q2 demonstrated, we prefer to make decisions under conditions of uncertainty and to abandon bad ones as soon as the data reveals them to be so. We believe that translates into greater volatility, but also into better aggregate returns. It’s a trade between the short-term and the long-term, between optimizing for predictability versus optimizing for value maximization. It’s a trade we’re comfortable making and, as our shareholders, we do hope you’re comfortable with the way we’re making it too.

And with that, let me hand over to Shai to give you some more updates. Shai?

Shai Wininger — Co-Founder, President, Secretary, Treasurer, Chief Operating Officer, Chief Technology Officer

Thanks, Daniel. Daniel spoke about the financial impact or lack of financial impact of the pandemic on our business. I’d like to add some color from the operations perspective where I’m pleased to report that things are in good shape. In early March, the entire Lemonade team started working from home. Since Lemonade is based on cloud infrastructure, our team switched to this new arrangement overnight, and with no interruption to our business activities. If anything we’re seeing productivity improvements across the organization, and for the first time we actually launched a new European country, as well as a new product line from home. We’ve also been able to recruit and onboard new team members throughout the Company. In fact, at this point, over a quarter of our team were recruited and onboarded remotely during the pandemic. We invest a lot of thought and effort into keeping the team engaged and happy at home. And our employee satisfaction rates, which we constantly measure, are the highest we’ve ever seen.

Switching gears to pet insurance. As Daniel mentioned, the release of the pet health insurance line earlier this quarter is a significant milestone for the Company. We’ve built the pet product entirely from scratch, rethinking coverages, user experience, the claims process, pricing, and even the policy document itself. Our pet product offers a hassle free digital experience with lightening fast claim payments, best-in-class customer service and a donation of leftover premium to animal-focused charities our customers choose. The new pet insurance is now available in more than 30 states with prices starting at $10 per month.

As part of this new release, we’ve also introduced our first Lemonade bundle, allowing an additional 10% savings when bundling pet insurance with one of our renters or homeowners’ policies. I’m pleased to share that the reception has been positive and the feedback we’re getting from customers translates into a Net Promoter Score of well over 80. But as encouraged as we are by the initial results, it’s important to remember that introducing a new insurance product to the market takes time, and that we are still in the early days of this process.

In other news, on August 6, we announced our annual Giveback, in which a portion of underwriting profits go to charities that our customers choose. As the Lemonade community grows, so does the potential of the Giveback. And this year’s donation amounted to more than 20x, the first one we gave back in 2017, and is higher than our previous three years combined. This year, we gave back more than $1 million to non-profit organizations, including the Direct Relief COVID Response, UNICEF, The Trevor Project, and the ACLU. With the help of our community, we funded treatments for more than 50,000 ICU COVID patients, fed 980 families, covered rent for more than 100 struggling households and more. Giveback day is one of the highlights of the year for our team, and we do hope that, as shareholders, you too will fill a certain pride of ownership in this day.

And now, let me hand over to Tim, for a bit more detail around our financial results and outlook. Tim?

Tim Bixby — Chief Financial Officer

Great. Thanks, Shai. I’ll give a bit more color on our Q2 results, as well as expectations for the rest of 2020 and then we’ll turn to questions.

We had another strong quarter of growth, driven by additions of new customers, as well as continued increase in premium per customer. In-force premium grew 115% as compared to the prior year to $155.1 million. This metric captures the full scope of our top line growth before the impact of reinsurance and regardless of the timing of customer acquisition during the quarter. Premium per customer increased 17% versus the prior year to $190. This increase was driven by a combination of increased value of policies over time, as well as mix shift toward higher value homeowner policies. Gross earned premium in Q2 increased 121% as compared to the prior year to $35.3 million, in line with the increase in in-force premium.

Our gross loss ratio continued to improve as it has for many quarters and came in at 67% for Q2, as compared to 72% in the first quarter of this year and down from 82% in the second quarter of 2019. With our Q2 gross loss ratio in the 60s, I’m pleased to note that we are now within our target range, an achievement we’ve been focused on since selling our first policy. We expect that our gross loss ratio will vary over time within this target range of between 60% and 70%. And while it is likely that our gross loss ratio may occasionally move above this average, in periods with notably severe weather, for example, we expect our average gross loss ratio to remain in the 60s. In any event, due to comprehensive reinsurance, our net loss ratio and hence our unit economics, is most unlikely to change much quarter-to-quarter or even year-to-year.

Operating expenses, excluding loss and loss adjustment expense, increased fairly modestly in Q2 as compared to the prior year, with sales and marketing expense actually lower in Q2 this year due to continued strong improvement in our marketing efficiency. Our marketing spend in Q2 generated more than twice the sales as compared to a year ago in terms of the amount of customer premium acquired. We also continued to hire new Lemonade team members in all areas of the Company in support of customer and premium growth, and thus saw increases in each of the other expense lines.

Also, to note, certain G&A expenses increased as we continue to prepare for life as a public company, and we expect those expenses to continue to increase in the coming quarters as we enter our first full-year as a public company. These expenses, include among others, D&O insurance premiums, which have increased significantly for most newly public companies in recent quarters. I note that the timing of certain expenses, particularly marketing spend and new hire payroll expense in the second quarter was influenced by the onset of the pandemic with significant belt tightening in April and early May. We began to reverse this approach in the second half of Q2 as we gained more visibility into the impacts on our business. We began to revert to prior growth spend and hiring patterns by early June and expect that theme to continue into the second half of the year, and likewise to influence our investment strategy, as well as our financial expectations.

Our net loss in the quarter was $21 million, as compared to $23.1 million in the second quarter of 2019.

And our adjusted EBITDA loss was $18.2 million in Q2, an improvement as compared to $23 million of loss in the second quarter of 2019.

Our cash, cash equivalents and total investments balance ended the quarter at $295.4 million, reflecting the use of cash for operations of approximately $35.5 million since year-end 2019. And the recent closing of our initial public offering in early July brought us additional net proceeds of approximately $335 million.

We had 381 employees as of June 30 and we’ll increase that number over the coming quarters. We resumed our normal hiring pace after a brief pause during the early weeks of the pandemic. We have since hired dozens of new employees and have become quite adept at remote onboarding. We continue to have the vast majority of our global workforce working remotely. And at April, we launched our second European territory early in the pandemic, with a 100% remote workforce with great vigor and efficiency.

Our progress in the first half of the year is influencing our investment approach for the second half. With continued steady growth and strong marketing efficiency, we have resumed a bullish stance on both growth and hiring. We plan to redeploy savings generated during early Q2 into the second half of the year and increase somewhat beyond. While our full-year expense plan and EBITDA loss expectations are relatively unchanged, the timing has shifted such that we plan to invest more in the second half, which will offset the savings in the second quarter and we expect will set us up nicely for continued growth into 2021 and beyond.

It’s worth taking a moment to review that our model differs from traditional broker-based insurance incumbent in a number of ways: one is that, we expense the vast majority of our customer acquisition expense upfront at inception, while we earn back the return on that investment over the life of the customer. And this is in contrast to many insurance companies that incur ongoing commission expense for customer acquisition at a much lower initial rate but typically for the life of the customer. And this is another key reason that we measure and report in-force premium, which give some additional insight into what we are acquiring when we invest in growth. A customer acquired in Q2, for example, drove significant acquisition investment in the quarter, but on a GAAP basis, very little incremental earnings. In-force premium captures more fully the top line impact of this growth investment.

And with these goals and metrics in mind, I’ll outline our specific financial expectations for the third quarter and for the full-year of 2020. For the third quarter, we expect in-force premium, as of September 30, of between $170 million and $175 million. We expect gross earned premium of $37 million to $39 million. GAAP revenue of between $14 million and $15 million. And an adjusted EBITDA loss of between $32 million and $33 million. We expect stock-based compensation expense of approximately $3 million and capital expenditures of approximately $1 million.

And as Daniel noted, we should reiterate that GAAP revenue will change from roughly $30 million in Q2 to between $14 million and $15 million as guided in Q3. And this is as expected and it’s related to the implementation of our new proportional reinsurance structure as of July 1, 2020. The GAAP accounting rules are such that ceded premiums are excluded from GAAP revenue and accordingly, we publish in-force premium and gross earned premium as helpful metrics that capture the overall growth trajectory of the business before the impact of reinsurance.

For the full-year of 2020, we expect the following: in-force premium at December 31 of between $190 million and $195 million. Gross earned premium of $147 million to $151 million. GAAP revenue of between $86 million and $88 million. And adjusted EBITDA loss of between $106 million and $109 million. Stock-based compensation expense for the full-year of approximately $11 million, and capital expenditures of approximately $4 million for the full-year.

Thanks so much for joining our first quarterly review as a public company. We are grateful for your interest and for your support.

And with that, we’ll now turn the call back over to the operator, who can hopefully rejoin the call with Q&A instructions and we’ll be happy to take questions.

Questions and Answers:

 

Operator

Certainly. [Operator Instructions] Michael Phillips with Morgan Stanley. Your line is open.

Michael Phillips — Morgan Stanley — Analyst

Thanks. Good morning, everybody. The first question, you talked about how — you didn’t see much impact from furlough, stay-at-home on top line metrics. And nothing that customers asked for in terms of payments and all that was good. I guess, did you see any impact on the loss side, was there a pause in claims activity for the first — maybe first month or so of the furlough or anything on that side that impacted that 67% gross loss ratio?

Tim Bixby — Chief Financial Officer

Yeah. Hey, Mike. Thanks. The short answer is, yes, but fairly modest. So, we did see some dynamics, particularly in the earlier part of the quarter as people really readjusted their behaviors and it was sort of a shock to everyone’s system, we did see things kind of quiet down pretty quickly and then it normalized a bit. So, I would say, there is a modest tailwind in the loss ratio for the quarter due to the pandemic, nothing dramatic. But I would say, more — slightly more favorable than unfavorable. Things are starting to normalize a bit more now, but I would expect the trends we’re seeing at the end of the quarter of Q2 to persist at a fairly stable rate for some time.

Michael Phillips — Morgan Stanley — Analyst

Okay, thanks. You both — yourself and Dan talked about on the premium per policy how it shifted up because of the mix shift and that’s kind of trend been happening for a while. And then Dan said the homeowner — from renter to homeowner kind of graduation is a trend that continued on a bit in the quarter. Is there anything you can give us in terms of metrics around that, that we can see or — from you guys it talks about specifically those numbers of the shift between renters and homeowners?

Tim Bixby — Chief Financial Officer

Yeah. So, we don’t give a deep breakdown of those metrics, but it’s obviously something we track pretty closely internally. The themes I think that we have shared over the past couple of quarters have continued. So, we’re continuing to see more new customers at a pretty stable ratio come in the form of homeowners. And if you look at the premium per customer over the past several quarters continuing into Q2 and into our guidance, we expect that trend to continue. We do have some control over the homeowners proportion of the business because we are somewhat more cautious as we build the book of business as we move into homeowners. But all systems are pretty much go. And so, we’re focused on increasing the proportion of homeowners over time. We expect that to start to look more like the market over the longer term. Today, it’s obviously skewed more to renters than to homeowners. But in the US, as you know, the business is the vast majority is homeowners. So over time, we’ll continue to move that direction.

It’s also probably worth reminding that we’re seeing some increase from our existing customers regardless of whether they graduate to condo are homeowners. So our average renter, for example, pays us more in year one and year two and year three than they did when they first start, and that’s a trend we’ve continued to see. So I think the premium per customer will continue to grow. We don’t guide to it specifically, but we see those trends continuing. And I think you should expect to see — let’s give you more color on that in the coming couple of quarters.

Michael Phillips — Morgan Stanley — Analyst

Okay. Thanks, Tim. Last one and then maybe if we can re-queue, I guess. And maybe it’s not a fair quarter to talk about this. I’m not sure all you guys to send in your answer, because of what you did with pullback in the marketing spend, but you did mention that you’re still getting more premium per dollar of marketing spend than you have before. But we’ve also talked a lot about kind of the LTV to CAC expense and how that ratio has trended up over time. Is it fair to comment on that given the pullback or the two distorted because of the pullback in marketing spend or anything you can talk about kind of that LTV to CAC ratio and how that looked this quarter versus prior quarters?

Tim Bixby — Chief Financial Officer

I would think of the LTV to CAC dynamics as strong and stable and a trend that we had seen for the last few quarters is continuing improvement. And so, those trends, I think will continue.

With regard to our spend, that is sort of a different dynamic. So, when we noted that we pulled back a little bit in the early part of the quarter, that’s literally just spending fewer dollars but did not really impact the unit economics. There were just fewer units. And then we kind of resumed the normal spending pace as we got towards the middle or the second half of the quarter. And are really back to where we originally expected to be, in most cases, somewhat ahead. So, stronger marketing economics, very strong feel in terms of how we think the second half of the year is shaping up in terms of our ability to spend gross investment wisely and get the return we expect. It’s a little early to say that there — I think it’s not fair to say, yeah, there is a dramatic shift in LTV to CAC, those dynamics tend to evolve more gradually over time. But what we’re seeing is stable and positive.

Michael Phillips — Morgan Stanley — Analyst

Okay. Thanks, Tim. I will pause and hop back in if I can. Thanks very much.

Operator

Ron Josey with JMP Securities. Your line is open.

Ronald Josey — JMP Securities — Analyst

Great. Thanks for taking the question. Appreciate it. I just wanted, maybe Daniel and Tim talk a little bit more about guidance, particularly with your commentary in the letter around 3Q being seasonally the strongest in the quarter. There remains unknowns around school closing and moves and whatever. However, it seems further commentary on the guidance, nothing really materialized in April. So, can you help us unpack a little bit more your guidance as it appears a little bit lower expectations in the quarter didn’t really materialize in 2Q? And so, maybe any insight on what you’re seeing in July and August and the assumptions and guidance would be helpful? Thank you.

Tim Bixby — Chief Financial Officer

Sure. So, two different dynamics. Q2 was really driven by us and our reaction to the high-level of uncertainty that everyone is feeling March, April, maybe early May. And so, we’ve proactively made those decisions in terms of what we would spend and when. And as things strengthened, we ramped that back up. And during that period we’re pretty cautiously watching the other KPIs. What’s happening with churn. What’s happening with payments. What’s happening with just general customer behavior. And as the days and weeks went by there was just not much changing, which is always a good news in terms of how we think about deploying more dollars. And so, when we laid out our thoughts and expectations for the second half of the year, the decisions that we control, that we manage, we decided to take that savings from Q2, if you want to term it as savings, money that was unspent in the early for the quarter and invest that in the second half, because we are seeing the return. We are finding ways to deploy those dollars, and it’s working.

The uncertain part is the part we don’t control, which is the historical seasonal trend, which if you look at the past two years, maybe even three years, it’s been a pretty discrete or visible step change with Q3 higher, Q4 lower and really driven by the moving dynamic of people in the US, and that’s just uncertain this year. We’re confident that we can deliver the numbers over the course of the year. It may be that there is some shift among months between August, September, October versus prior years. And I think we’ve built in enough conservatism into our guidance such that, if we see — we expect to see, which is a little different versus prior years, we’ll be in good shape. If it is dramatically different then that’s something we’ll have to react to, but so far, we’re not seeing anything that’s too dramatically different than prior years, but we want to be cautious.

Ronald Josey — JMP Securities — Analyst

That’s super helpful. Thank you, Tim.

Operator

Ross Sandler with Barclays. Your line is open.

Ross Sandler — Barclays — Analyst

Hey, Tim. Just wanted to follow up on the customer acquisition conversation from a couple of questions ago. So, we’re seeing across the digital advertising industry that CPMs have come down pretty markedly through the COVID impact, and you guys have seen fairly dramatic improvement in your unit cost of acquiring a customer even before COVID. So, with those two dynamics in place and the increased efficiency and the fact that you’re now leaning back in June, when do you expect the customer growth rate or the gross earned premium growth rates to ramp back up?

And then related to that, the retention rate that you guys disclosed in the S-1 of around 65% or so is pretty good but it leave some room for improvement. So what are the biggest drivers of churn and what are you doing to drive up that retention rate? Thank you.

Tim Bixby — Chief Financial Officer

Sure. Thanks, Ross. So, a couple of thoughts, in terms of the first question on customer ramp, our relationship between our spend and customer acquisition is pretty linear. So when we turn things up, you see it right away, it’s almost a real-time in the day or in the week that you change how we invest, what channels we use. How many dollars we’re putting forth. And so, what we’re seeing and what we’re spending today, we’re getting reaction to that. And so, that’s factored into how we see the second half playing out in terms of both customer acquisition and premium acquisition.

Worth noting that, while we certainly track and report the number of customers and the premium, if you had to pick one that we think is more important, it’s really the premium, a renter customer is a great customer, and we’ll keep them for as long as we can, hopefully for a lifetime and they’ll graduate and drive more value. But if we can acquire a customer as a homeowner efficiently and effectively, we’ll do that too. And so, the reason we guide to top line in terms of in-force premium and not to customer is for that very reason is we and our growth team are really optimizing for premium and sometimes the customer count can vary a little bit, but we expect to see obviously growth in both of those. We also expect the premium per customer to continue to grow just to the underlying dynamics of the trends we’ve seen and the continued mix shift toward homeowners.

In terms of churn and I don’t know maybe Daniel can chime in a little bit, this is something, obviously, there is kind of long-term and short term. Short-term, we’ve been very focused on what is new and what has changed. What’s COVID-driven, what’s behavior-driven. What’s unique across product lines between renters and homeowners. And from a short-term perspective, a pandemic perspective, again, we’re not seeing much dramatic at all. We’ve allowed customers to defer payments, not much really happened there. We’re tracking churn very carefully, not much has really changed.

In terms of the longer-term, what we’re doing is, what we plan to do, which is maintain an extraordinarily high NPS so that we can retain customers for as long as possible, hopefully a lifetime. We’ve launched a new product. So for the first time we have pet insurance, which is a new coverage type for the first time a Lemonade customer can have two different policy types and take advantage of bundling and bundling discounts, and that’s something obviously has been on our plan for a very long time, but now it’s actually in the market. And so, I think our team on churn is keep doing exactly what we’re doing, hit the plans and goals that we set out, and that includes new coverage types, great customer support, and then as we get better color on that, we’ll certainly share it.

I don’t know, if Daniel had any other thoughts on other churn or customers in general?

Daniel Schreiber — Co-Founder, Chief Executive Officer, and Chairman

Thanks, Tim. Hey, Ross. Yeah. Just a couple of added color points on churn. So, there is reason to believe that churn will continue to improve. So first is just the aging of our cohorts. Last year in terms of retention, across the industry frankly is, year one. And given the growth rates that we’re experiencing, a very large portion of our customers are first year customers. So, a big portion of our business is, from a retention perspective, in the worst category just in terms of the aging of the cohorts. And indeed even within the year, we see the worst couple of months of churn or the first couple of months of the policy. And as you add months and years to a cohort, the retention numbers start improving pretty significantly.

Beyond that, I would say that, the different products that we have, have very different churn dynamics as well or retention dynamic. So renters tend to be younger consumers and more transient. They go to college, they come back. They move in with their boyfriend, with their girlfriend. They move back home, all those kinds of changes. And they also move from state to state and oftentimes they move into a state where we are not yet launched. So all of those reasons are just a part of the nature of the stage of life of those customers. Tim alluded earlier to the growing portion of homeowners in our book, that too helps because our retention numbers among homeowners is significantly higher.

As we launch more territories, I mentioned that in passing, but also new products like pet, we are able to cater to our customers more fully. And that in addition to everything else that I spoke about, militates in favor of higher retention levels over time.

But having said all that, I’d love to add a different gloss on the whole story. So, when you think about customers leaving or a channel or retention, and I think it’s fair to categorize it in one of two broad strokes — one of two broad strokes. So, if you think about people who leave their cable company to go to Netflix. And when they cut that cable, they’re never going back. That is churn. They have left cable. They’ve now discovered a new way of consuming media and that is not a change that’s going to be revert anytime soon. And when somebody leaves Netflix because they are traveling in Europe or they have just moved in with their boyfriend or girlfriend and they’re sharing account or any of those dynamics, they remain kind of alumni, right? They’re still ambassadors of goodwill. They love the company and they will return. I know I myself have had chosen to leave Netflix on two or three different occasions and back to being a Netflix consumer.

And I think if you think about those two paradigms, Lemonade falls squarely into the latter. So when we do see customers leaving, more often they not leave with a love note. Quite literally when they leave we ask them for comment about why they’re leaving, we get quite a lot of data on that. And oftentimes it’s accompanied by, hey, I love you guys, but I’m moving into my girlfriend. I’m moving to this state, I’m moving to college or what have you.

And just to put some numbers behind that. If I look at our churn, we do sell them, but we do sometimes get customers that are unhappy with their service and they give that as a reason for churning. But they are outnumbered 11:1 by people saying, hey, I’m moving in with my family, and that’s why I’m canceling. We pride ourselves on giving really exceptional claims experience, but on occasion customers feel hard done by in terms of claims and they can say that that’s why they’re leaving. But those people are outnumbered 36:1, literally 36:1 by people who say, I’ll be back. So, I hope all of that gives you both sense about why we think that churn rates are going to improve for structural reasons but also why those people who are leaving us, I think will come back, as circumstances in their life change and they have a need for insurance once more.

Operator

Ralph Schackart with William Blair. Your line is open.

Ralph Schackart — William Blair & Company — Analyst

Good morning. Wanted to kind of talk about the customer conversation again. The adds were much stronger than our model but Tim I know you talked about some pullback in advertising. And while I know you optimize for policy, just kind of wanted to understand that dynamic. Maybe some perspective of the drivers of customer growth in the quarter. What are the cadence look like throughout the quarter? And maybe some trends post-quarter on the customer growth side?

Tim Bixby — Chief Financial Officer

Sure. So, there’s a couple of different levers we’re pulling and then there is a — there is different dynamics, it all kind of comes together and looks a little simplistic when you just look at the number of customers added in the quarter. And so, if I pull those apart a little bit, I would think about timing trends, product trends and spending trends.

So from a timing perspective, I think we’ve kind of covered that. We — end of March, early April sat down and said, we really don’t know what Q2 looks like in the world. Certainly, and to some extent Lemonade, and so we were just very cautious. We didn’t go to zero. You never want to kind of cut growth spend to zero because it just takes quite a while to ramp anything back up, but we paired back fairly significantly and gathered more data.

From a mix perspective, we tend to optimize, just period. We tend to optimize. And so, some days some campaigns, things are stronger with higher return on renters and some days it’s homeowners and some channels are particularly suited to one or the other. And so, there tends to be an ebb and flow overall, if you looked at, say, a week or a month, we see a relatively consistent proportion of the business that’s homeowners. But that kind of hides what’s going on under the covers, which is, we’ve got a lot of states to play with, we’ve got a lot of campaigns to play with and we’ve got a growth team that really spends 24 hours a day thinking about how to maximize the return on those dollars. And it is working. If you’re looking at a year ago versus today, more than twice as many dollars are coming in for every dollar that we spend.

In terms of how we see that playing forward, again, I think the seasonality is a little bit of a wildcard. But I got to tell you the sessions we have with the team thinking about how to deploy dollars, the challenge is not where can we spend, the challenge is how much can we spend because we’re seeing really strong returns. And so, we’re trying to balance the spend with the overall health of the business. We don’t want our NPS scores to suffer. We don’t want really terrific progress on our loss ratio to change radically. It can vary a little bit, but we don’t want to alter things that are performing really well by seeking growth at all costs. But the dynamic really is that, we are finding ways to spend dollars at a very strong return. And it doesn’t seem like it’s dramatically sort of pandemic-driven, like it’s a continuation of themes we saw over the past several months in the past few quarters as opposed to a step change that we saw in April or May. So, we’re really encouraged by the combination of all three of these and how that growth team is really performing.

Ralph Schackart — William Blair & Company — Analyst

That’s helpful, Tim. Maybe one more. You talked about how the business emerged stronger coming out the pandemic. Just maybe some perspective on how it emerged stronger a little bit more color there. And perhaps, so the long-term impacts for the business. Thank you.

Tim Bixby — Chief Financial Officer

Yeah, it’s interesting. So, we are seeing what a lot of tech or digital companies are seeing, which is themes and trends we saw are amplified or accelerated or in other way — in other words to put is, changes we expect to happen over a year or two, or happening over a month or two. We’re seeing the same and we’re feeling the same. Folks who want to — at the age of 20 or 30 go sit down in an insurance agent’s office, we’re dwindling before the pandemic. And certainly, during the pandemic, that’s gone to probably close to zero in many cases. These trends are probably not ever going to go back to where they were. And so, we are — while we’re not taking it as a given, we expect this acceleration to continue and to really be right in our wheelhouse. We were — we had the entire Company able to work from home before the pandemic. We didn’t do it too frequently, although probably each person had done it from time-to-time, departments had tested it. So, within a few days of work from home, it was just business as usual. We were able to launch an entire new European country in April with 100% remote folks with terrific results, zero customer awareness, but anything was different than it would otherwise have been.

We’re thinking carefully about how we deploy employees and where offices are and all those things that other companies are thinking about, but we really feel we have pretty dramatic degrees of freedom based on how the Company was built. One system from a digital substrate designed to do just this. We didn’t know obviously a pandemic was going to come and accelerate all this stuff, but the business is really designed for this.

Ralph Schackart — William Blair & Company — Analyst

Great. That’s helpful. Thanks, Tim.

Operator

Our next question comes from the line of Jason Frank with OpCo. Your line is open.

Jason Helfstein — Oppenheimer & Co. — Analyst

Yeah. Hey, it’s Jason Helfstein. Should not have spelled my last name for the operator. So two questions. Maybe talk a bit more about the outlook for the third quarter in the back half, just given the second quarter beat versus your expectations, did you see any pull forward into the second quarter that maybe — that — you’re then kind of compensating for in the outlook.

And then the main question that we get from clients is just the concept around bundling, given how important it generally is for the industry. And mostly people focus on the importance of automotive insurance bundling. Clearly, you have targeted a more millennial customer. I think automotive ownership generally is lower amongst that group when we can kind of think about what the secular trends are from automotive ownership. Just talk broadly, how you’re thinking about bundling? Obviously, you’re launching pet. If things like auto are important, how do you check that box? Are you thinking about maybe partnering with auto insurance companies? Or is that just something that you may have to launch on your own over time? Thank you.

Tim Bixby — Chief Financial Officer

Sure. So, I’ll take the first one and then maybe if Daniel have any thoughts on sort of the overall product strategy, maybe take that one second. So, from a pull forward question, the way you phrased it, it’s interesting one, we kind of thought that through. And what are we doing? Are we getting customers in advance that we would have gotten otherwise? The way we kind of thought about it is number one, obviously, just great results and good returns and ramping up spend was working. So that was, step one.

Step two is, we had always planned and expected that things would return to a more normalized growth pattern in 2021 and beyond regardless of kind of where we are now in the pandemic. And so, we have ambitious goals and expectations for 2021 and beyond. And so, I think our increase in spend and our increase in our expectations for our in-force premium for the second half is really just setting us up for a higher base of foundation going into 2021. So rather than I would think of it less as our Q3 approach, our Q4 approach, our Q1 approach and more of a long-term growth approach. And we can power through the — a little bit of uncertainty on seasonality. And we’re expecting and planning that Q4 can be strong.

Now, can it be as strong as Q3? I think it’s possible. Historically, it’s been a lighter quarter in Q3, but we’re ready and built into our expectations, our guidance, an ability to invest more. And we’ll obviously continue to manage and monitor that, but we’re thinking — I think more about 2021 at this point and launching with a great foundation than we are worried as much about what’s happening in August or September.

Daniel Schreiber — Co-Founder, Chief Executive Officer, and Chairman

And just a couple of thoughts about the bundling question. So, we do think about our customers has been rather unusual in the insurance landscape. So, we attract customers surprisingly young about 90% of our customers as best we can tell, are joining us at the time that they’ve never been to another insurance company. So rather than playing the I switch to an I saved game upon which the entire industry is really predicated, we find ourselves playing a different sport where we are acquiring customers before the traditional insurance companies have got to them. And typically at a time that they don’t particularly want them, because the total premiums are relatively modest earlier in life.

And then as we delight them and continue to get kind of number one ratings in terms of the comparison site or NPS in the 70 and 80s, we hope to retain them for life as they go through predictable lifecycle events and car insurance or buying a car would certainly be one of those in the fullness of time. But it is important for me to stress kind of underlying the core element of our philosophy of acquiring customers at a time that we’re competing with non-consumption, delighting them and then growing with them. Somebody, certainly, when they kind of analyze our business, they said to me, you’re signing LeBron James in eighth grade. So it’s that kind of a dynamic of — competing with non-consumption, acquiring fabulous customers and then growing with them.

And our step towards pet insurance, which we launched a few weeks ago is part of exactly that. The majority of our customers are parents. This is a woefully under addressed market. The premiums for pet insurance are very substantial, they’re equivalent to condo insurance pretty much. So, that is our first step. Our first foray outside of homeowners in order to flesh out the offering and the prioritization of our products is really borne of our customer-centricity. So, we think about our customer, place her at the center, say, okay, what are the needs? There’s renters, and she’ll graduate to a condo, then she’ll graduate to a homeowners and in addition she’ll get the dog, the cat, perhaps the diamond ring, and yes, in the fullness of time, she’ll need all these other insurance products, and we hope to be there for her.

So, without talking about car insurance specifically, I think that the fact that we don’t yet have all of our products out there is they’re handicap. Other insurance companies will offer more complete list of products than we have. And the fact that we’re managing to grow at over 100% year-on-year, notwithstanding the fact that we haven’t yet fully fleshed it out, I think is encouraging because it means that there is a lot of opportunity for us to grow farther and improve retention rates, improve LTV, improve everything else, as good as it is now, as we offer new products, presumably we’ll get better.

And one other early investors is Google and this information is a little bit out of date, but just to give you a sense of this. They told us a while ago that they’re seeing — and they’re seeing volume of search is for Lemonade car insurance, auto insurance, although we think Lemonade home insurance. So, we don’t feel like there’s any lack of demand out there for Lemonade and our entire systems, our brand, our technology, our licenses, all built with extensibility in mind to be able to launch more products with pretty rapid succession. And I think what you saw three weeks ago with pet insurance is a sign of things to come.

Jason Helfstein — Oppenheimer & Co. — Analyst

Thank you.

Operator

Heath Terry with Goldman Sachs. Your line is open.

Heath Terry — Goldman Sachs — Analyst

Great. Thank you. I just wanted to dig in a little bit more in a couple of areas. On the homeowners’ graduation that you’ve talked about. I’m curious if you can even just sort of qualify for us a little bit more, how much of the growth in homeowners you’re seeing are come — is coming from existing rental customers graduating as we’ve talked about versus completely new homeowners being attracted to the platform by the marketing work that you’re doing.

And then one of the big narratives around the last quarter and just the environment is this migration of younger, urban single people, professionals back to their suburban homes with their parents as part of this, that certainly didn’t seem to show up in your numbers. And I’m just curious what part of that narrative you think might be wrong. And then a couple other follow-up questions as well.

Tim Bixby — Chief Financial Officer

Sure. So, a couple of thoughts there and then jump in, Dan, if you like. In terms of the proportion of homeowner acquisition, the — we’re seeing a continued trend. So, historically, most recent quarters, the majority of homeowners that we’re adding are new customers that we’re going out and acquiring, direct new adds. But we’ve had a consistent theme of existing renters either buying a condo or buying a home and moving up, but the majority are still direct acquisition. And the one, direct, obviously, we manage and direct proactively and the other tends to be just driven by life events.

Interestingly enough, I think there could be as much in the current environment pandemic-driven that could cause there to be more relocation or more home ownership or more decisions made about where people live and their long-term commitment to those places. It’s a little early and the data is very light to be able to say that, for sure. But that is something where we could actually see more of those decisions that drive graduation being made as opposed to less. So, I think part of what you’re not seeing in Q2, is that, for everybody who moves home, somebody is moving elsewhere to a new location, because they are tried of the city and they’re renting a new apartment on their own and that may require insurance. So, I think it’s a mix. We’ll continue to proactively acquire homeowners directly. And then we’re, of course, doing what we — everything we can to ensure that when our customers face those life decisions, when they’re ready to move, when they’re ready to buy their first home, when they need more coverage, we’ll be there. We’re there with pet now, and we’ll look to add others over time. That’s how I would think about it.

Heath Terry — Goldman Sachs — Analyst

Great. That’s really helpful. When you look at the improvement — significant improvement that was made in the gross loss ratio this quarter. Could you help us by disaggregating sort of the components of that? How much of that was higher denial rates on claims, higher premiums being paid or just fewer claims coming in? I know you sort of addressed a little bit of that earlier. Or was there something else that contributed that maybe we’re not thinking about?

Tim Bixby — Chief Financial Officer

So, I would think of it as a continuation of prior trends with some benefit from the pandemic, and we’re not — we don’t — we’re not specifically quantifying it, but I would think of it as nominal. Certainly, helped a little bit, it didn’t hurt in terms of that progression from 73% in the prior quarter, 5 points of improvement, we have seen that in several prior quarters. The most recent prior quarter was actually the anomaly where the improvement was only 1%. So, I would say, the impact from change in claim behavior or denial of claims is probably zero. Our practice is unchanged and it’s — I would categorize it as extremely customer-friendly but within reason. We are very good at detecting fraud. We are very good at detecting claims that are not appropriate, and it’s really part of our business model, it’s part of our behavioral analytics approach to business, but that was unchanged essentially in the quarter and that’s something is very important to us.

So, I would think of it as very nominal tailwinds, and we’re in the range now. So, if we think about one thing as we noted, and I think it’s important to dwell on a bit is, we are in the target range 60% to 70% is better than industry average. Gross loss ratio, you don’t want to go to zero and you don’t want it decline forever. That means something is wrong with your business. If you’re giving up growth, there’s other opportunities you’re not taking advantage of. But in that 60% to 70% range, we think is very strong performance. It will vary as we build the book, as we launch new products, as we launch new geos, but we don’t expect it to vary dramatically outside of that range. So, I would think of it as we’re kind of at that target within a few percentage points.

Heath Terry — Goldman Sachs — Analyst

Great numbers. That’s really helpful.

Daniel Schreiber — Co-Founder, Chief Executive Officer, and Chairman

Sorry, Heath, I just add [Speech Overlap] brief comment.

Heath Terry — Goldman Sachs — Analyst

Please.

Daniel Schreiber — Co-Founder, Chief Executive Officer, and Chairman

Yeah. I just wanted to you build on what Tim said as well. So, this isn’t — as Tim said, this isn’t about the pandemic, this is our 10th consecutive quarter of declining loss ratio. So this is really something that has been very strong trend, we’ve halved our loss ratio over the course of the last two years. So, this is something systemic.

One thing to point out is, it’s not price. While we have implemented some price changes recently, it takes a while to earn into that. And I think it would be fair to round that down to zero in terms of how much of a loss ratios effect of price changes, which is pretty striking because most companies that improve their loss ratio will do it by raising prices and that’s really not what’s going on here. We do have a sense, I think this is one that is being appreciated in this industry in recent years, all the more, but that you’re really not in the business of underwriting or insuring property so much as people and you really want to get into a sense of understanding what kind of risks people represent. And then it comes back to the fundamentals of Lemonade acquiring about 100 times more data than broker-based businesses. And then having a closed loop system that can use those data in ways that are unavailable to more traditional incumbents. So, using that data in terms of who you target in a marketing campaign, how you onboard, how you handle claims, customer support inquiries and having that single vantage point, which is customer-centric so that data that you’ve collected in any one interaction came from every other interaction. And I think really if you want to look and ask what is the fundamental propellant of our precipitous and steady decline in loss ratio, it is exactly that, is that, digital infrastructure and the AI that was implemented and how that creates a closed loop system that reinforces itself with every turn of the flywheel, if you like.

And the other thing I’d just say is that, you know this, of course, but loss ratios are lagging indicators. And changes that you take today in terms of any of your practices, pricing like we discussed our underwriting or anything else will take time to flow through to earn in to the book. And in addition to that being generically true, I go back to the comment I made earlier about churn, which is that, loss ratios of first year cohorts are historically worse than second year cohorts and third year cohorts and that is true at an industry-wide level as well. So, maturing cohorts also give us some wind in our sales. So, these have been steady progressions and structural reasons that have driven the loss ratio.

And the final thing I’d say, at the risk of — I’m saying too much here, but that loss ratio decline, that steady decline over the course of years now, has been all the more extraordinary, not really, because it has been so sustained and so dramatic. But that it has come at a time of over 400% compounded annual growth rate. And that really does fly in the face of insurance orthodoxy, which preaches that you can’t grow fast and get better dramatically concurrently. The two are live intention one with each other. And I think that makes sense when you’re a broker-based business, human-intensive because rapid growth can overwhelm humans, too much data leads to people cutting corners and being overwhelmed. Of course, when you built on an AI infrastructure, it’s the other way round. There’s torrents of data don’t inhibit the improved performance and getting smarter, they are the pre-condition to it. So, hopefully, that all helps you understand the loss ratio.

Heath Terry — Goldman Sachs — Analyst

No, that does. And it’s really helpful. And then if I just may a quick one on pet. What allowed the Company to lower the entry level price for pet insurance? I seem to recall when you announced the product last month it was $12 and then you noted in yesterday’s release and on the call today that it had gone up to $10.

And then also just curious, what if any impact the bundling discount offer for pet could have on the loss ratio. And then, I’m done. I promise.

Daniel Schreiber — Co-Founder, Chief Executive Officer, and Chairman

So, maybe I’ll take it up and then, Tim come in with some more. I’ll say two or three things, Heath. The first one is that, while our expense ratio today looks high, because we’re spending a lot on customer acquisition, the fundamentals of our business actually lead to a very light marginal cost to serve. The biggest and best and most efficient insurance companies in America have about a ratio of 400 customers to one employee, so it’s about 400:1 ratio. And even among the top five that drops off pretty quickly and you get to like 150:1. And Lemonade is over 2000:1. So, the digital infrastructure that we just spoke about in terms of helping with loss ratio, certainly helps with expense ratio in terms of automation, streamlining, if you’re paying your claims a third of them without any human intervention at all and you’re onboarding customers pretty much 100% of them algorithmically, you can understand how that will translate into an ability to price more aggressively. And indeed the same is true with our renters insurance, right? Entry level buyers of renters insurance from Lemonade will typically see something in the order of 50%, 5-0 percent savings compared to incumbents. And in the early days, people said, we’re selling dollars for $0.90, we’re selling at a loss that’s unsustainable, but I think our loss ratio at 67% shows that that’s not the case, that we’re able to drive efficiencies and do things at a cost point — at a price point on a cost structure that is unfamiliar to industry at large. So, a lot of that I think spilled over just as it did in renters or spillover to pet insurance.

But the one other thing that I wanted to say is, we are experimentalists. And we do see new products that we launch and new geographies that we launch. We may have unattractive loss ratios in the early days. And that’s the tuition fee that we pay now. Thankfully, it’s not like September 2016 when we launched our initial product because then we had no denominator and all our tuition was — all our — all of our business was the tuition. Today, we’ve got a very sizable business and growing fast. And so, I don’t think you’ll see pet or other new products hit it, even if we got the pricing wrong. But my point is, we’re okay with launching new products using our best data, best guess, smart people doing best work, but also understanding that until we’ve generated the kind of datasets that we need, there will be some errors and we will improve pretty quickly after that. And we tend to think about the first year of new products of the year where we want to onboard as many customers as possible in order to generate those datasets. And then in the second year to start implementing all the learnings and really just hit our target loss ratio in the third year and you’ve seen that with renters. We’re seeing that in homeowners and it wouldn’t be a shock to me, if we saw something similar with pet as well.

Heath Terry — Goldman Sachs — Analyst

Great. Thank you so much, Daniel.

Operator

Yaron Kinar with Goldman Sachs. Your line is open.

Yaron Kinar — Goldman Sachs — Analyst

Thank you very much. Heath asked my question, but I will follow-up on pet and maybe try to understand what impact the bundling of pet and renters could have on the loss ratio considering the 10% discount you’re offering.

Tim Bixby — Chief Financial Officer

Yeah. So, I would say, it’s a little too early to say. I wouldn’t expect it to be dramatic. So our — the trends we’ve seen and the fact that we’re in the target range is something that we expect to continue. We’ll obviously get better data as we go. The response to pet has actually been quite positive, quite strong. And I would think of maybe the whole business in aggregate and the way we think about expenses and losses in the combined ratio aspect, which is more of a traditional insurance view is, we’ve got improvements coming everywhere. And so, to the extent, we are managing and growing the business, we’ve got more than just the loss ratio lever to pull. But I wouldn’t expect it to cause dramatic shifts.

Generally, people have more than one type of policy, or better risks. They have more coverage, they are thinking more thoughtfully about what they protect. And so, there is — again as with much of our business, there is as — for every potential negative impact, there is likely one or more likely positive impacts. And I think we see that in bundling, we see that with pet and it’s something we see pretty consistently across the whole business.

Yaron Kinar — Goldman Sachs — Analyst

Got it. Thank you. And then one last one on my end. When you talk about your loss ratios being better than industry average, is that for renters specifically or is that the industry average overall? Across all lines?

Tim Bixby — Chief Financial Officer

I think there is an overall sort of P&C average that’s in the low 70s range, that’s where we were last quarter. And so, I was just kind of generally referring to a pretty general market metric. So, it’s not something we — it’s something we notice, but it’s not something we manage ourselves by. But notable that in just three years in the market, we’re on par with a $1 billion large incumbents that have been around for decades.

Yaron Kinar — Goldman Sachs — Analyst

Got it. And do you have any sense for the renters industry averages on the loss ratio?

Tim Bixby — Chief Financial Officer

I’m not going to quote that. You can probably get as good a metric as I can give you. It is somewhat higher than the homeowners as it is for us, but we’re seeing continued improvement in both the renters and the homeowners loss ratio over time.

Yaron Kinar — Goldman Sachs — Analyst

Okay. Thank you.

Operator

There are no further questions at this time. I would now like to turn the call back over to the Lemonade team for final remarks.

Yael Wissner-Levy — Vice President, Communications

Thanks, everyone, for tuning in this morning. From the entire Lemonade team, wishing you a rest of a good morning. You can find the letter to shareholders on our website at investor.lemonade.com. And we look forward to staying in touch. Have a great morning.

Operator

[Operator Closing Remarks]

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