Lemonade presentation

1. Investor Day
November 15 2022

2. This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this presentation
that do not relate to matters of historical fact should be considered forward-looking statements, including statements regarding our anticipated financial performance, including our
financial outlook for the full year 2022, our expectations regarding our long term assets, our average multi-year loss ratio and expense ratio, our industry, business strategy, plans,
goals and expectations concerning our market position, future operations and other financial and operating information. These statements are neither promises nor guarantees, but
involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any
future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, the following: our history of losses and the fact
that we may not achieve or maintain profitability in the future; risks related to our ability to retain and expand our customer base and product offerings; the risk that the “Lemonade”
brand may not become as widely known as incumbents’ brands or the brand may become tarnished; the denial of claims or our failure to accurately and timely pay claims; our ability
to attain greater value from each user; the novelty of our business model and its unpredictable efficacy and susceptibility to unintended consequences; risks related to the
possibility that we could be forced to modify or eliminate our Giveback; risks related to the examinations and other targeted investigations by our primary and other state insurance
regulators; our limited operating history; our ability to manage our growth effectively; risks related to the intense competition in the segments of the insurance industry in which we
operate; risks related to the availability of reinsurance at current levels and prices; our exposure to counterparty risks; our ability to maintain our risk-based capital at the required
levels; risks related to the operation, development, and implementation of our proprietary artificial intelligence algorithms and telematics based pricing model; risks related to our
dependence on search engines, social media platforms, digital app stores, content-based online advertising and other online sources to attract consumers to our website and our
online app; risks related to the loss of personal customer information as a result of security incidents or real or perceived errors, failures or bugs in our systems, website or app; risks
related to our actual or perceived failure to protect customer information and other data, respect customers’ privacy, or comply with data privacy and security laws and regulations;
risks related to our ability to comply with extensive insurance industry regulations and additional regulatory requirements specific to other vertical markets that we enter or have
entered; risks related to our ability to successfully combine the businesses of Lemonade and Metromile and realize the anticipated benefits of the merger; within the anticipated
timeframes or cost expectations or at all; the ability to maintain relationships with Lemonade’s and Metromile’s respective employees, customers, other business partners and
governmental authorities; and risks related to the our inability to predict the impacts of severe weather events and other catastrophes, including the effects of climate change and
COVID-19 on our business, and the global economy generally. These and other important factors discussed under the caption “Risk Factors” in our Annual Report on Form 10-K for
the year ended December 31, 2021 filed with the SEC on March 1, 2022, in our Quarterly Report on Form 10-Q for the period ended September 30, 2022 and in our other filings
with the SEC could cause actual results to differ materially from those indicated by the forward-looking statements made in this presentation. Any such forward-looking statements
represent management’s beliefs as of the date of this presentation. While we may elect to update such forward-looking statements at some point in the future, we disclaim any
obligation to do so, even if subsequent events cause our views to change.
Safe Harbor

3. A structural technological advantage that will manifest
as a superior loss-cost and expense-load
An inbuilt edge in acquiring & delighting new entrants,
whose full value we’ll unlock as we grow with them
An advantaged long-term business model, and a clear
path to profitability
Today, we hope to demonstrate that LMND has:

4. Daniel Schreiber
Co-CEO & Cofounder
Strategy
Maya Prosor
Chief Business Officer
Products
Tim Bixby
Chief Financial Officer
Financial
Q&A
Today’s agenda:

5. Daniel Schreiber
November 15 2022

6. Alan Turing,
1951
“It is customary to o!er a grain of comfort, in
the form of a statement that some peculiarly
human characteristic could never be imitated
by a machine. I cannot o!er such comfort!”

7. 1951
1952
1953
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2015
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2019
2020
2021
2022
Birth of AI
First AI Winter
(Moravec's paradox)
Expert Systems
(Rules derived from experts)
Second AI
Winter
Big Computers +
GOFAI
(Deep Blue > Kasparov in ’97)
GenerativeiAI
Self-Supervised Learning
(Foundation Models: GPT3, DALL-E, Stable Diffusion…)
Symbolic AI
(DARPA, Checkers)
Big Data +
Machine & Deep Learning
(image & speech recognition, AlphaGo, autonomous driving)

8. GPT3
>> Write a Shakespearean sonnet about AI and insurance

9. When I do think ofiinsurance, ’tis but
To ponder howiAI doth make it better.
With nimble speediand keenest eye,
The claimsiand coverages do it spy;
And inia trice, with little fuss
The benefitsiand the best rates thus
Are foundiand given with but aiclick;
So, fairestcinsurance, I do thee praise
For being made more excellent withiAI!
GPT3
Shakespearean sonnet about AI and insurance

10. DALL·E
>> Draw an impressionist painting an insurance
adjuster denying coverage after a fire

11. DALL·E
An impressionist painting of an insurance adjuster denying coverage after a fire

12. DALL·E
>> Render a photo of an insurance agent
made out of a salad on a table

13. DALL·E
An insurance agent made out of a salad on a table

14. DALL·E
>> Create a 1960s photo of a despondent
insurance broker in a red dress sitting at
a desk full of paperwork, with florescent
lighting, taken using a 50mm lens, expired
CineStill 800t film, and an oversaturated
filter

15. DALL·E
Photo of a despondent insurance broker in a red dress in the 1960s

16. The stunning progress in AI
brings us to the first of two
pictures drawn by Lemonade
for our IPO prospectus

17. >> Draw a schematic of insurance as
a neural network

18. Customer Cortex
insurance as a neural network

19. We’ve used hundreds of millions of customer
interactions, and 160TB of textured data, to
train about 50 machine learning models.
Customer Cortex

20. But the power of our neural network derives
less from the sheer tonnage of our data, than
from their interconnectedness.
Customer Cortex

23. 2022
2020
2020
250m
2022
3B
Features
Called
2022
2020
2020
8.5m
2022
110m
Predictions
Made
Exponential Progress
Flywheel spinning fast, and getting faster

24. Theiupshot: More for Less

25. More

26. More Delight
“The cheerless customer service representative at Liberty
Mutual had about half the personality of Lemonade’s
chatbot”

27. More Delight
Net Promotor Score familiar from Apple & Tesla

28. More Delight
Award winning insurance
“Lemonade is No. 1 in our
Best Homeowners Insurance
Companies of 2022”
“Using AI to approve
coverage in 90 seconds
and pay claims in as little
as three minutes”
2023
America’s Best
Insurance

29. For Less

30. Expense Ratio
Loss Ratio

31. Expense Ratio
Cooper monitors servers, handles tasks,
instantiates virtual environments, pushes
>12,000 software builds into production
yearly, saving ~10,000 (human) dev hours.

32. Expense Ratio
AI Maya and our APIs sell 98% of
Lemonade’s policies, morphing between
millions of onboarding flows.
As a point of reference: ~95% of incumbents’ homeowners policies are
sold by humans, taking ~15% of premiums, in perpetuity, for their efforts.

33. Expense Ratio
Machine-learning models generate LTV
predictions for every customer, every
campaign, every product and every geo.
These models govern 86% of our
marketing spend.

34. Expense Ratio
CX.ai handles about ⅓ of all customer requests,
including scheduling items, adding spouses, moving
home and much more, with a CSAT score of 4.5

35. AI Jim takes first notice of loss (FNOL)
for 98% of claims, and handles 45% end-
to-end, with a level of accuracy that
surpasses humans.
Loss Ratio
Excluding Metromile

36. Fraud algorithms flagged over >$100m in
fraudulent claims, and detected doctored
documents in $12m worth of claims.
250,000,000%
500,000,000%
750,000,000%
1,000,000,000%
9,189,851
7,823,060
7,157,463
6,822,014
6,477,804
6,181,291
5,938,847
5,660,259
5,410,634
5,197,013
5,022,546
4,873,521
4,554,145
3,781,853
3,465,595
3,124,901
2,895,885
2,716,166
2,581,652
2,435,775
2,328,033
2,271,364
2,203,294
2,126,375
2,047,994
1,976,446
1,879,592
1,790,396
1,721,206
1,665,060
1,611,181
1,544,092
1,443,397
1,335,115
1,232,450
1,172,862
1,125,308
700,493
633,829
568,440
474,452
419,429
385,604
363,681
336,036
304,222
277,185
248,971
222,127
168,171
132,510
106,364
84,973
71,058
60,978
51,327
44,256
36,590
30,965
26,499
22,462
18,662
15,307
12,226
9,587
7,644
6,757
5,254
3,757
2,391
1,702
1,160
441
9.2m
9/16 Connections in Risk Network 9/22
Loss Ratio

37. Watchtower tracks wildfires and weather,
automatically halting marketing, and instituting a
delayed-start-date for affected areas.
Loss Ratio

38. Telematics, continuously used by >90% of
customers, lowers LAE, lowers adverse selection,
and enables pricing at a level of precision
unavailable to legacy systems.
Loss Ratio

39. Computer vision and Natural Language Processing
(NLP) detect risky homes for underwriting review,
with a hit rate of ~80%.
Loss Ratio

40. Machine Learning and Deep Learning match
rate and risk with unrivaled precision,
forming the basis of our newest rate filings.
Loss Ratio

41. “But everyone’s doing AI. Right?”

42. John Peters, formerly
EVP & Chief Underwriting O!cer
Liberty Mutual

43. “So why aren’t we seeing it
in the numbers?”

44. 59.25%
68.5%
77.75%
87%
Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22
60.6%
68.4%
76.3%
76.7%
79.1%
84.3%
85.8%
Predicted Cohort Lifetime Loss Ratio
We Are Seeing It In The Numbers

45. Front Loaded
Near-term Burdens Become Long-term Assets
Building Products
Data Disadvantage
New Business Penalty
Customer Acquisition Cost
Selling Products
Data Advantage
Seasoned Business
No-Commission-Sales

46. Front Loaded
Near-term Burdens Become Long-term Assets
Building Products
Data Disadvantage
New Business Penalty
Customer Acquisition Cost
Selling Products
Data Advantage
Seasoned Business
No-Commission-Sales

47. Built for Scale
A Growing Denominator Shrinks the Expense Ratio

48. 80%
90%
100%
110%
Q3 21 Q4 21 Q1 22 Q2 22 Q3 22
80%
81%
96%
95%
103%
Adjusted Expense Ratio is calculated as Gross Earned Premium divided by all operational expenses excluding Loss and loss adjustment expense
37,750%
45,500%
53,250%
61,000%
Q3 21 Q4 21 Q1 22 Q2 22 Q3 22
$609m
$458m
$419m
$380m
$347m
Built for Scale
Since Q3 21, Adjusted Expense Ratio Dropped 24% As IFP Grew 76%

49. Which brings us to the second
picture in Lemonade’s IPO prospectus

50. >> Draw Grow with Customers

51. Homeowners
Renters Condo

52. State Farm
The Gateway Policy
Lemonade GEICO Progressive Liberty All Others
24.1% 14.8% 14.1% 10.7% 9.5% 26.9%
n=1,500, 9/22
(+2.1%/-1.9%)
First time buyers of Renters Insurance
across USA in past 12 months

53. The Gateway Policy
First time buyers of Renters Insurance
in past 12 months under 35yr olds
Lemonade State Farm GEICO Progressive Liberty All Others
22.1% 21.8% 16.5% 11.5% 11.5% 16.8%
n=340, 9/22
(+4.1%/-3.5%)

54. Renters
Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 Q3-22
21%
20%
19%
18%
18%
17%
15%
14%
12%
11%
10%
9%
9%
8%
7%
6%
6%
4%
3%
3%
2%
2%
2%
Percent of Condo customers that
graduated from Renters (at IPO)
Homeowners
At IPO

55. ~⅓
Cross sold:j
6x
Premium jump:j
Homeowners
~⅓
4x
Pet Term
~⅓
5x
Life
~⅓
8x
Car
Renters
At IPO Since IPO

56. It’s Early Days…

57. ~60% of incumbents’ customers
are multi-line customers

58. <4% of Lemonade’s customers
are multi-line customers

59. Multi-Line Customers
We’re on our way
USA:
3.7%
Illinois:
5.9%
0%
1.5%
3%
4.5%
6%
May 20 July 20 Sep 20 Nov 20 Jan 21 Mar 21 May 21 Jul 21 Sep 21 Nov 21 Jan 22 Mar 22 May 22 Jul 22 Sep 22

60. In Conclusion…

61. Capture tomorrow’s most profitable
customers today, and grow with them
Build insurance as a neural network
= more love + less costs

62. >50x
>100x
>150x
Play The Movie Forward

63. Maya Prosor
November 15 2022

64. Portfolio of products that supports
Risk Management and Healthy Growth

65. The Perfect Onramp
Lemonade Renters

66. IFP Customers
51%
Predicted LR
Q3 cohort
$223M 1.4M
LTV/CAC
X3.15
Q3 Loss Ratio
65%
Conversion
rate
50%
Q3 Results

67. IFP ($,M)
Cross Sales coming from just Renters

68. 5X Renters with 10X Heart
Lemonade Pet

69. with Pet insurance*
Households with Pets
$2.6B at ~25% CAGR
70
>80M
*2021 data
2.5%
The US Market

70. And we are growing way faster
From standstill to $110M in 2 years
Coming Spring 2023

71. IFP LTV/CAC
47%
Claims
handled by AI
$110M X3.8
Quote Rate from
other products
15%
Predicted LR
Q3 cohort
~60%
Number of
claims
As of Q3-22
450K
Q3 Results

72. >450K pet
claims handled
to date
Total number of claims handled at Lemonade
All other
product claims
High Frequency, Low Severity

73. Our focus on efficiency is paying off
Loss Adjustment Expenses (LAE) as percentage of premiums

74. Rounds out the Family
Lemonade Life

75. Bundled with other
products
35%
The churn rate vs.
single line Renters
1/2

76. Made For Bundling
Lemonade Home

77. Q3 Results
LTV/CAC
81%
Predicted LR
October
IFP
$149M X1.6
TAM
>$120B
Q3 Loss Ratio
119%
Auto Handled
UW Reviews
40%

78. Predicted loss ratio by month
81% Predicted Loss Ratio
for new customer cohorts
On the Right Path

79. 118%
85%
Filed
rate as % of
total book
Approved
rate as % of
total book
4.5%
Earned
rate as % of
total book
LTV
Time Lag
Rate changes we’ve taken this year

80. Geo Profitability Management
Reducing California New Business Share

81. Getting the Right Risk

83. TRIGGERS
Real-Estate Property Description
Great starter pool home with loads of potential. On a corner lot featuring
3 bedrooms 2 bathrooms with copper plumbing, solar panels, new water
heater and updated electrical. The home needs TLC inside but perfect for
someone that doesn’t mind getting their hands dirty. Centrally located to
shopping, restaurants and 405/5/118 freeways.
Property Overview

84. TRIGGERS
Inspection Reports Auto-Review

85. Aerial Imagery Capabilities
Roofs segmentation, mobile homes and more…

86. Pay critical mass of claims (to
derive risk predictions, pricing)
File best assessment of Rates
Forms & Underwriting
Map learnings onto Rates,
Forms & Underwriting
Sell critical mass of such policies
(to derive conversion, churn…)
Pricing
Wash, Rinse, Repeat

87. Sophistication in Pricing and UW
Territory Factors

88. Sophistication in Pricing and UW
Address Level CAT

89. Sophistication in Pricing and UW
ML Loss Model

90. ML Model for Pricing in TX !
Conversion Rates Slightly Increased
Predicted loss ratios for new customer cohorts

91. 81% Predicted Loss Ratio
for new customer cohorts
On the Right Path

92. The Highway
Lemonade Car

93. Pent Up Demand and a Huge Market
25%
Conversion Rate-
Existing Customers
Car waitlist
>300K
TAM
$320B
“Smooth experience just like the
renter insurance, you are guys are just
amazing, can’t wait to hop on your
auto insurance once available”
“Cheaper insurance. I am loyal
customer and eagerly waiting for
lemonade car insurance but
service should be the best.”
“Car insurance in Texas so
I can ditch Root”
“Coverage in Michigan”
“My primary hope is that New York
state will be one of the states that
Lemonade car will be offered to and
can compete with Geico.”
“Lemonade stole the show in home
insurance, compared to any other
companies… you better in this one too.
Waiting eagerly - love Lemonade”

94. >90% Telematics
Crunching Time
aka bridging the data gap

95. Without Telematics
Top 10% highest risk
Power of Telematics
20 Year Old Male Medium Credit Score No Prior Accidents

96. Without With Telematics
In reality a low risk driver,
And we can price him as such
95% Within Speed Limit 0.3% Hard Brakes
90% Day Driving
5% High Traffic Driving 90% Main Roads 500 miles / month 0.2% Sharp Turns
Power of Telematics
20 Year Old Male Medium Credit Score No Prior Accidents

97. Touchless First Notice Of Loss
Digitally capturing initial claim info, allowing advocates to handle claims faster

99. Telematics Powered AI
Hidden drivers detection

100. Telematics Powered AI
Rideshare detection

101. Pay critical mass of claims (to
derive risk predictions, pricing)
File best assessment of Rates
Forms & Underwriting
Map learnings onto Rates,
Forms & Underwriting
Sell critical mass of such policies
(to derive conversion, churn…)
Pricing
Wash, Rinse, Repeat

102. Ratemaking Machine
2 Months of Coding
Zero Coding

103. Our Strategy

104. Tim Bixby
November 15 2022

105. Let’s do the numbers…….

106. 5 year IFP
CAGR
Gross Loss
Ratio (2027)
20% 70%
Multi-line
customer rate
by 2027
~25%

107. *Net working capital assumed to be zero
Unrestricted
Restricted
EBITDA
2022E 2023 2024 2025 2026 2027 Capex &
Invest.
Income, net
Cash
Cash/Investments
~$1B

108. 5 year IFP
CAGR
Gross Loss
Ratio (2027)
20% 70%
Multi-line
customer rate
by 2027
~25%

109. IFP
CAGR
Gross
Loss Ratio
Multi-line
customer
5%
60%
10%
25%
80%
40%
20%
70%
25%
Base - Profitable within 5 years
Minimum
Unrestricted Cash
~$100M
Mid '26
Turning profitable

110. IFP
CAGR
Gross
Loss Ratio
Multi-line
customer
5%
60%
10%
25%
80%
40%
65%
35%
20%
Better - Earlier Profitability
~$175M
2025
Turning profitable
Minimum
Unrestricted Cash

111. IFP
CAGR
Gross
Loss Ratio
Multi-line
customer
5%
60%
10%
25%
80%
40%
78%
20%
20%
Unrestricted
Cash Deficit
In 2027
~$125M
Worse - Later Profitability

112. IFP
CAGR
Gross
Loss Ratio
Multi-line
customer
5%
60%
10%
25%
80%
40%
78%
20%
12%
Adjusted Growth - Profitability in 5 years
2026
Turning profitable
Minimum
Unrestricted Cash
~$100M

113. Metrics

114. Ukraine
Invasion
Bear
Market
Inflation!
COVID
Q1-18 Q3-22
IPO
Consistent, Steady Topline Growth
IFP development

115. For 10 consecutive quarters, we have
met or beat our financial guidance
10/10

116. Pet
Renters
Q1-22 Q4E-22
Home
Loss Ratio by Product

117. Q1-18 Q4E-22
Larger Investments Behind Us
EBITDA/Gross Earned Premium, 5 years

118. Pet Car
IPO
MILE
Q4E-22
Q1-20 Q4E-22
Continued Improvement
EBITDA/Gross Earned Premium, 3 years

119. Improving Efficiency & Automation
IFP/headcount ($ 000’s)
+25%
Q4 -’21 Q4E -’22

120. Consistent Premium Growth
Annual premium per customer
Q3-18 Q3-19 Q3-20 Q3-21 Q3-22

121. LMND
2022
LMND
2018
Top LMND
customer
US
Average
High Net
Worth
Vast Potential to Grow With Customers
Annual premium per customer

122. Surplus Strategy

123. If 100% retained
~3:1
If 75% ceded to
captive
~5:1
If 75% ceded to
reinsurance
~8:1
Overall
~6:1
Evolving Surplus Strategy

124. Today Future #1 Future #2
What if…..?
Today
1.8m
customers
$343 PPC
IFP: ~$0.6B
Future #1
3.6m users
50% of avg PPC
IFP: ~$6B
Future #2
7.2m users
100% of avg
PPC
IFP: ~$23B

125. Investor Day
November 15 2022