TARIK KIZILKAYA
Lemonade (New York Stock Exchange:LMND) stock got a much-needed boost last week when co-founder and CEO Daniel Schreiber appeared on CNBC extolling the benefits of AI in the insurance business.
“There is a lack of companies within our sector that are not based on AI “For us, it affects everything we do.” “The whole company was based on it.”
In the next trading session, the stock jumped 8.8%. During the holiday-shortened week, Lemonade (LMND) rose 13%.
AI helps the company make decisions on underwriting, marketing spend, and claims processing. AI affects everything from risk management to cost of service to user experience, Schreiber said. “Each consumer that comes in has about 50 different machine learning models that analyze and make predictions about ‘will they buy, will they abandon, will they cross-sell, will they complain’.”
Lemonade has grown its business 5-fold and its gross profit 15-fold since going public four years ago, he said. It’s been tough for stocks, though. The stock closed Friday at $16.10, or 44% below its IPO price of $29. Year to date, the stock has fallen 0.2%, lagging the S&P 500’s 15% gain and competitor Root’s (ROOT) fourfold gain and Hippo Holdings’ (HIPO) 76% gain in the same period of time.
“This is a business that is really driving all the metrics (gross profit, revenue, results, profitability, cash flow); everything has a green light everywhere. The stock market will notice sooner or later,” Schreiber said in the interview.
The SA Quant system is not as bullish on Lemonade (LMND), assigning the company a Hold rating, as do Root (ROOT) and Progressive (PGR). In comparison, Hippo (HIPO) earns a Buy rating and Allstate deserves a Strong Buy.
Looking at the property and casualty insurance sector overall, the SA Quant system rates HCI Group (HCI) highest, followed by Old Republic International (ORI), Universal Insurance Holdings (UVE) and Allstate (ALL). , all with strong purchases. .