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A brief earnings update:

  • The Q4 results were very good, esp. profitability -- adjusted EBITDA was much better then guided for.
  • The loss ratio of 77% was a huge improvement (12 pt. YoY), however I was expecting even better, perhaps 75% or less.
  • The main issue is relatively weak 2024 guidance. They expect to grow in-force premium (annualized insurance fees) about 26% by the end of the year. I was expecting much faster acceleration of the growth, closer to 35 or even 40%.
  • Another mild negative is their cautious communication about loss ratios in Q1 and Q2 (seasonality).

LMND is a small cap and therefore it's a playground of traders and short seller. The stock is now down about -27% basically deleting the huge gains of the past two weeks. Classic "buy the rumor, sell the news" situation. 

Given the slower planned growth there is perhaps less urgency in building a position. However the current price seems attractive long term.

Check out ROOT stock yesterday. A car insurance company went up 53% after earnings. I'm not saying Lemonade will do the same next week after it reports earnings (on Tuesday), because their situation is quite different, and there is always uncertainty. However it's a hint about the likely direction of the move, because there is one commonality: inflation going down and rates getting approved.

If you look at some large insurance companies, and what their stock was doing last 6 months, you can see a big uptrend. For example Progressive (PGR), Allstate (ALL), The Travelers Companies (TRV).

The main reason is probably inflation coming down. In the U.S. insurance is very regulated, every increase in insurance rate has to be approved. When inflation was high the rates became inadequate and regulators took many months to approve the rates. Now inflation is much lower and the fillings mostly went through, that's why all insurance companies have much better profits recently. Another reason is there were very few catastrophic weather events in Q4 (evident from the reports of several insurance companies which already published Q4 results).

I think this is a big factor that I didn't sufficiently explain in my post.

TL;DR: GoodAI launched the Solving the AI Race round of the General AI Challenge. $15,000 in prizes are available for entering suggestions on how to mitigate the risks associated with a race to transformative AI.

They will be accepting submissions until 18 May 2018, and are asking participants to come up with detailed proposals of how to avoid AI research becoming a race where:

  • Key stakeholders, including developers, may ignore or underestimate safety procedures, or agreements, in favor of faster utilization
  • The fruits of the technology might not be shared by the majority of people to benefit humanity, but only by a selected few