Lemonade Inc

Previous wording

As of June 30, 2024, we had $43.9 million of outstanding borrowings under the Agreement. We incurred interest expense of $1.0 million and $1.5 million for the three and six months ended June 30, 2024, respectively and such interest is included in “General and administrative expense” in the unaudited condensed consolidated statements of operations and comprehensive income.

Current wording

As of September 30, 2024, we had $67.4 million of outstanding borrowings under the Agreement. We incurred interest expense of $1.8 million and $3.4 million for the three and nine months ended September 30, 2024, respectively and such interest is included in “General and administrative expense” in the unaudited condensed consolidated statements of operations and comprehensive income.

Previous wording

We conduct certain of our operations in Israel and therefore our results may be adversely affected by political, economic and military instability in Israel and the region, including the evolving conflict in Israel and surrounding region. The conflict between Israel and Hamas, primarily within Gaza, has increased global economic and political uncertainty. There is still uncertainty regarding the extent to which the war and its broader macroeconomic implications will impact our operations in Israel. We will continue to evaluate the extent to which this may impact our business, financial condition, or results of operations. These and other uncertainties could result in changes to our current expectations.

Current wording

We conduct certain of our operations in Israel and therefore our results may be adversely affected by political, economic and military instability and conflict in Israel and the surrounding region. This evolving conflict has increased global economic and political uncertainty. There is still uncertainty regarding the extent to which the war and its broader macroeconomic implications will impact our operations in Israel. We will continue to evaluate the extent to which this may impact our business, financial condition, or results of operations. These and other uncertainties could result in changes to our current expectations.

Previous wording

We maintained proportional reinsurance contracts which cover all of the Company's products and geographies, and transferred, or “ceded,” a specified percentage of the premium to reinsurers ("Proportional Reinsurance Contracts"). In exchange, these reinsurers paid a ceding commission for every dollar ceded, in addition to funding all of the corresponding claims at the same specified percentage as applied to premium. We opted to manage the remaining percentage of the business with alternative forms of reinsurance through non-proportional reinsurance contracts ("Non-Proportional Reinsurance Contracts").

Current wording

We maintain proportional reinsurance contracts which cover all of the Company's products and geographies, and transferred, or “ceded,” a specified percentage of the premium to reinsurers ("Proportional Reinsurance Contracts"). We also opted to manage the remaining percentage of the business with alternative forms of reinsurance through non-proportional reinsurance contracts ("Non-Proportional Reinsurance Contracts").

Previous wording

We maintained proportional reinsurance contracts which provided 55% protection on covered risks. We agreed to the terms of our reinsurance program effective July 1, 2023 through June 30, 2024 which includes Whole Account Quota Share Reinsurance Contracts by and among the Company, Lemonade Insurance Company ("LIC"), Metromile Insurance Company ("MIC") and Lemonade Insurance N.V. ("LINV"), and each of Hannover Ruck SE, MAPFRE Re, and Swiss Reinsurance America Corporation (collectively referred to as “Reinsurers”) ("Reinsurance Program"). Under the Reinsurance Program, which covers all products and geographies, the Company transfers, or "cedes," a share of premium to the Reinsurers. In exchange, these Reinsurers pay us a ceding commission on all premiums ceded to the Reinsurers, in addition to funding the corresponding claims, subject to certain limitations, including but not limited to, the exclusion of hurricane losses, and a limit of $5,000,000 per occurrence for non-hurricane catastrophe losses. The overall share of proportional reinsurance under the Reinsurance Program is approximately 55% of premium. The Per Risk Cap across the contracts is $750,000. Additionally, the contracts are subject to loss ratio caps and variable ceding commission levels, which align our interests with those of its Reinsurers. We renewed the Reinsurance Program effective July 1, 2024 and will expire on June 30, 2025, with similar terms to the contracts that expired on June 30, 2024 except for the limit per occurrence for non-hurricane catastrophe losses which increased to $10,000,000.

Current wording

Our proportional reinsurance contracts provides 55% protection on covered risks. We agreed to the terms of our reinsurance program effective July 1, 2023 through June 30, 2024 which includes Whole Account Quota Share Reinsurance Contracts by and among the Company, Lemonade Insurance Company ("LIC"), Metromile Insurance Company ("MIC") and Lemonade Insurance N.V. ("LINV"), and each of Hannover Ruck SE, MAPFRE Re, and Swiss Reinsurance America Corporation (collectively referred to as “Reinsurers”) ("Reinsurance Program"). Under the Reinsurance Program, which covers all products and geographies, the Company transfers, or "cedes," a share of premium to the Reinsurers. In exchange, these Reinsurers pay us a ceding commission on all premiums ceded to the Reinsurers, in addition to funding the corresponding claims, subject to certain limitations, including but not limited to, the exclusion of hurricane losses, and a limit of $5,000,000 per occurrence for non-hurricane catastrophe losses. The overall share of proportional reinsurance under the Reinsurance Program is approximately 55% of premium. The Per Risk Cap across the contracts is $750,000. Additionally, the contracts are subject to loss ratio caps and variable ceding commission levels, which align our interests with those of its Reinsurers. We renewed the Reinsurance Program effective July 1, 2024 and will expire on June 30, 2025, with similar terms to the contracts that expired on June 30, 2024, except for the limit per occurrence for non-hurricane catastrophe losses which increased to $10,000,000.

Previous wording

We also entered into an Excess of Loss ("XOL") Reinsurance Contract through a captive in Bermuda in which we have a variable interest, primarily to cover catastrophe risk over the initial $50,000,000 limit for each loss occurrence, and further subject to a limit of $80,000,000 for each loss occurrence and in aggregate, primarily on property and car business underwritten by LIC. This XOL reinsurance contract became effective July 1, 2023 and expired on June 30, 2024. We have renewed the XOL reinsurance contract effective July 1, 2024 and will expire on June 30, 2025 at similar terms and is expanded to include risks written by MIC.

Current wording

We also entered into an Excess of Loss Reinsurance Contract (the "XOL reinsurance contract") through a captive in Bermuda in which we have a variable interest, primarily to cover catastrophe risk over the initial $50,000,000 limit for each loss occurrence, and further subject to a limit of $80,000,000 for each loss occurrence and in aggregate, primarily on property and car business underwritten by LIC. This XOL reinsurance contract became effective July 1, 2023 and expired on June 30, 2024. We have renewed the XOL reinsurance contract effective July 1, 2024 and will expire on June 30, 2025, at similar terms and is expanded to include risks written by MIC.

Previous wording

We are also exposed to some risks from MIC ceded through the Quota Share ("QS") Reinsurance Contract which is retained in a captive subsidiary, Lemonade Re SPC in the Cayman Islands. This QS reinsurance contract became effective July 1, 2023 and shall remain in force for an indefinite period until terminated by either party.

Current wording

We are also exposed to some risks from MIC ceded through the Quota Share Reinsurance Contract (the "QS reinsurance contract") which is retained in a captive subsidiary, Lemonade Re SPC in the Cayman Islands. This QS reinsurance contract became effective July 1, 2023, and shall remain in force for an indefinite period until terminated by either party.

Previous wording

Gross written premium is the amount received, or to be received, for insurance policies written by us during a specific period of time without reduction for premiums ceded to reinsurance. Gross written premium includes direct and assumed premium. In December 2022, we began assuming premium related to car insurance policies written in Texas, in connection with our fronting arrangement with a third party carrier in Texas. Following the Metromile Acquisition in July 2022, we also include gross written premium from the sale of pay-per-mile car insurance policies within the United States. The volume of our gross written premium in any given period is generally influenced by new business submissions, binding of new business submissions into policies, renewals of existing policies, and average size and premium rate of bound policies.

Current wording

Gross written premium is the amount received, or to be received, for insurance policies written by us during a specific period of time without reduction for premiums ceded to reinsurers. Gross written premium includes direct and assumed premium. We began assuming premium related to car insurance policies written in Texas in December 2022, in connection with our fronting arrangement with a third party carrier in Texas. We also include gross written premium from the sale of pay-per-mile car insurance policies within the United States following the Metromile Acquisition in July 2022. The volume of our gross written premium in any given period is generally influenced by new business submissions, binding of new business submissions into policies, renewals of existing policies, and average size and premium rate of bound policies.

Previous wording

Gross earned premium represents the earned portion of our gross written premium. Gross earned premium includes direct and assumed premium. Our insurance policies generally have a term of one year and premium is earned pro rata over the term of the policy. In addition, following the Metromile Acquisition, we also include earned premiums from the pay-per-mile car insurance policies which are written for six-month terms. Premium for the policy provides a base rate per month for the entire policy term upon binding of the policy plus a per-mile rate multiplied by the miles driven each day (based on data from the telematics device, subject to a daily maximum).

Current wording

Gross earned premium represents the earned portion of our gross written premium. Gross earned premium includes direct and assumed premium. Our insurance policies generally have a term of one year and premium is earned pro rata over the term of the policy. In addition, we also include earned premiums from the pay-per-mile car insurance policies which are written for six-month terms. Premium for the policy provides a base rate per month for the entire policy term upon binding of the policy plus a per-mile rate multiplied by the miles driven each day (based on data from the telematics device, subject to a daily maximum).

Previous wording

ii)In force placed premium — the annualized premium of in force policies placed with third party insurance companies for which we earn a recurring commission payment. In force placed premium currently reflects approximately 1% of IFP.

Current wording

ii)In force placed premium — the annualized premium of in force policies placed with third party insurance companies for which we earn a recurring commission payment. In force placed premium currently reflects approximately 2% of IFP.

Previous wording

Gross earned premium is the earned portion of our gross written premium. Gross earned premium includes direct and assumed premium. In December 2022, we began assuming premium related to car insurance policies written in Texas, in connection with our fronting arrangement with a third party carrier in Texas, and this did not impact the key performance indicators for periods prior to the fourth quarter of 2022.

Current wording

Gross earned premium is the earned portion of our gross written premium. Gross earned premium includes direct and assumed premium. We also began assuming premium related to car insurance policies written in Texas in December 2022, in connection with our fronting arrangement with a third party carrier in Texas.

Previous wording

Net earned premium increased $12.8 million, or 17%, to $89.3 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023, primarily due to the earning of increased gross written premium and the impact of our reinsurance program to ceded written premium under our Proportional Reinsurance Contracts as discussed above under "Reinsurance".

Current wording

Net earned premium increased $9.1 million, or 11%, to $95.7 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily due to the earning of increased gross written premium and the impact of our reinsurance program to ceded written premium under our Proportional Reinsurance Contracts as discussed above under "Reinsurance."

Previous wording

Gross written premium increased $44.3 million, or 24%, to $226.2 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The increase was primarily due to a 14% increase in net added customers year over year driven by the success of our digital advertising campaigns and partnerships. We also continued to expand our geographic footprint and product offerings. In addition, we also saw an 8% increase in premium per customer year over year due to an increasing prevalence of multiple policies per customer, growth in the overall average policy value, and continued shift in the mix of underlying products toward higher value policies. Assumed premium related to car insurance policies written in Texas through our fronting arrangement with a third party carrier in Texas also contributed to the increase in gross written premium during the period.

Current wording

Gross written premium increased $56.1 million, or 26%, to $268.9 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The increase was primarily due to a 17% increase in net added customers year over year driven by the success of our digital advertising campaigns and partnerships. We also continued to expand our geographic footprint and product offerings. In addition, we also saw a 6% increase in premium per customer year over year due to an increasing prevalence of multiple policies per customer, growth in the overall average policy value, and continued shift in the mix of underlying products toward higher value policies. Assumed premium related to car insurance policies written in Texas through our fronting arrangement with a third party carrier in Texas also contributed to the increase in gross written premium during the period.

Previous wording

Ceded written premium increased $30.2 million, or 32%, to $124.3 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023, primarily due to growth in business across all products and the impact of our reinsurance agreements. Under our proportional reinsurance program, our overall share is approximately 55% of premium and are subject to loss ratio caps and variable commission. Other non-proportional reinsurance contracts were renewed with terms similar to the expired contracts. See "Reinsurance" above for further information.

Current wording

Ceded written premium increased $35.4 million, or 30%, to $153.4 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily due to growth in business across all products and the impact of our reinsurance agreements. Under our proportional reinsurance program, our overall share is approximately 55% of premium and are subject to loss ratio caps and variable commission. Other non-proportional reinsurance contracts were renewed with terms similar to the expired contracts. See "Reinsurance" above for further information.

Previous wording

Net written premium increased $14.1 million, or 16%, to $101.9 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 due to factors noted above.

Current wording

Net written premium increased $20.7 million, or 22%, to $115.5 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 due to factors noted above.

Previous wording

The table below shows the amount of premium we earned on a gross and net basis. Ceded earned premium as a percentage of gross earned premium slightly increased to approximately 55% for the three months ended June 30, 2024, as compared to approximately 53% for the three months ended June 30, 2023 primarily due to the impact of reinsurance terms under the proportional reinsurance contracts as discussed above.

Current wording

The table below shows the amount of premium we earned on a gross and net basis. Ceded earned premium as a percentage of gross earned premium increased to 55% for the three months ended September 30, 2024, as compared to 50% for the three months ended September 30, 2023 primarily due to the impact of reinsurance terms under the proportional reinsurance contracts as discussed above.

Previous wording

Ceding commission income decreased $1.0 million, or 6%, to $16.5 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023, consistent with the increase in ceded earned premium offset by the change in terms of the proportional reinsurance contracts with third-party reinsurers during the period.

Current wording

Ceding commission income increased $7.3 million, or 44%, to $24.0 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, consistent with the increase in ceded earned premium during the period.

Previous wording

Net investment income increased $2.5 million, or 45% to $8.1 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The increase was primarily driven by the diversification of the Company's investment portfolio with higher returns, offset by investment expenses of $0.1 million. We mainly invest in cash, money market funds, U.S. Treasury bills, corporate debt securities, asset-backed securities, notes and other obligations issued or guaranteed by the U.S. Government.

Current wording

Net investment income increased $1.9 million, or 27% to $8.9 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The increase was primarily driven by the diversification of the Company's investment portfolio with higher returns, offset by investment expenses of $0.1 million. We mainly invest in cash, money market funds, U.S. Treasury bills, corporate debt securities, asset-backed securities, notes and other obligations issued or guaranteed by the U.S. Government.

Previous wording

Commission and other income increased $3.1 million, or 62%, to $8.1 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023, primarily due to growth in premiums placed with third-party insurance companies during the period, installment fees and sublease income from our New York and San Francisco office space.

Current wording

Commission and other income increased $3.8 million, or 90%, to $8.0 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily due to growth in premiums placed with third-party insurance companies during the period, installment fees and sublease income from our New York and San Francisco office space.

Previous wording

Other insurance expense increased $3.8 million, or 25%, to $18.8 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 consistent with growth in earned premium. Professional fees and other services increased $1.5 million, or 33%, as compared to the three months ended June 30, 2023 primarily in support of growth and expansion initiatives. Credit card processing fees increased $1.2 million, or 38%, as compared to the three months ended June 30, 2023 as a result of the increase in customers and associated premium. Amortization of deferred acquisition costs, net of ceding commissions increased $0.7 million, or 28% as compared to the three months ended June 30, 2023.

Current wording

Other insurance expense increased $4.7 million, or 31%, to $19.8 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 consistent with growth in earned premium. Amortization of deferred acquisition costs, net of ceding commissions increased $1.3 million, or 54% as compared to the three months ended September 30, 2023. Professional fees and other services increased $1.3 million, or 29%, as compared to the three months ended September 30, 2023 primarily in support of growth and expansion initiatives. Credit card processing fees increased $1.1 million, or 31%, as compared to the three months ended September 30, 2023 as a result of the increase in customers and associated premium.

Previous wording

Sales and marketing expense increased $12.0 million, or 48%, to $36.8 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 primarily due to brand and performance advertising, which is the largest component of our sales and marketing expenses. Expense related to advertising, other customer acquisition channels and partner payments increased $12.2 million, or 90%, as compared to the three months ended June 30, 2023. Compensation expense related to the warrant shares increased $1.0 million, or 167%, as compared to the three months ended June 30, 2023. Employee-related expense, including stock-based compensation, decreased by $1.4 million, or 17% as compared to the three months ended June 30, 2023.

Current wording

Sales and marketing expense increased $27.0 million, or 111%, to $51.4 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 primarily due to brand and performance advertising, which is the largest component of our sales and marketing expenses. Expense related to advertising, other customer acquisition channels and partner payments increased $25.9 million, or 185%, as compared to the three months ended September 30, 2023. Compensation expense related to the warrant shares increased $1.1 million, or 122%, as compared to the three months ended September 30, 2023.

Previous wording

Technology development expense decreased $2.9 million, or 12%, to $21.2 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. Employee-related expense, including stock-based compensation, and net of capitalized costs for the development of internal-use software, decreased $1.7 million, or 9%, as compared to the three months ended June 30, 2023. Hosting and software costs decreased $0.8 million, or 22%, as compared to the three months ended June 30, 2023. Allocated occupancy costs also decreased $0.4 million, or 36%, as compared to the three months ended June 30, 2023.

Current wording

Technology development expense increased $0.1 million, or less than 1%, to $21.9 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. Employee-related expense, including stock-based compensation, and net of capitalized costs for the development of internal-use software, increased $0.3 million, or 2%, as compared to the three months ended September 30, 2023. Hosting and development costs decreased $0.3 million or 13%, as compared to the three months ended September 30, 2023.

Previous wording

General and administrative expense decreased $0.9 million, or 3%, to $29.8 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. Employee-related expense, including stock-based compensation, decreased $1.5 million, or 10%, as compared to three months ended June 30, 2023. Corporate insurance expense decreased $1.0 million, or 56% as compared to three months ended June 30, 2023. Legal, accounting and other professional fees increased $1.2 million, or 80%, compared to three months ended June 30, 2023. Bad debt expense increased by $0.5 million or 31%, as compared to three months ended June 30, 2023.

Current wording

General and administrative expense decreased $5.5 million, or 15%, to $31.4 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. During the third quarter of 2023, we recognized an asset impairment on the right-of-use asset related to the San Francisco office in the amount of $3.7 million and an accrual for a potential liability claim of $3.0 million related to Metromile. Employee-related expense, including stock-based compensation, increased $0.4 million, or 3%, as compared to three months ended September 30, 2023. Legal, accounting and other professional fees decreased $0.5 million, or 20%, compared to three months ended September 30, 2023. Bad debt expense increased by $0.5 million or 24%, as compared to three months ended September 30, 2023.

Previous wording

Net loss decreased $10.0 million, or 15%, to $57.2 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 due to the factors described above.

Current wording

Net loss increased $6.2 million, or 10%, to $67.7 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 due to the factors described above.

Previous wording

Net earned premium increased $29 million, or 20%, to $173.7 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 primarily due to the earning of increased gross written premium and the impact of our reinsurance program to our ceded written premium as discussed above under "Reinsurance."

Current wording

Net earned premium increased $38.1 million, or 16%, to $269.4 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily due to the earning of increased gross written premium and the impact of our reinsurance program to our ceded written premium as discussed above under "Reinsurance."

Previous wording

Gross written premium increased $85.9 million, or 25%, to $431.8 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The increase was primarily due to a 14% increase in net added customers year over year driven by the success of our digital advertising campaigns and partnerships. We also continued to expand our geographic footprint and product offerings. We also saw a 8% increase in premium per customer year over year primarily due to an increasing prevalence of multiple policies per customer, growth in the overall average policy value, and continued shift in the mix of underlying products toward higher value policies. Assumed premium related to car insurance policies written in Texas from our fronting arrangement with a third party carrier in Texas also contributed to the increase in gross written premium during the period.

Current wording

Gross written premium increased $142.0 million, or 25%, to $700.7 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The increase was primarily due to a 17% increase in net added customers year over year driven by the success of our digital advertising campaigns and partnerships. We also continued to expand our geographic footprint and product offerings. We also saw a 6% increase in premium per customer year over year primarily due to an increasing prevalence of multiple policies per customer, growth in the overall average policy value, and continued shift in the mix of underlying products toward higher value policies. Assumed premium related to car insurance policies written in Texas from our fronting arrangement with a third party carrier in Texas also contributed to the increase in gross written premium during the period.

Previous wording

Ceded written premium increased $60.6 million, or 35%, to $236.0 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 primarily due to growth in business across all products and the impact of our reinsurance agreements. Under our proportional reinsurance program, our overall share is approximately 55% of premium and are subject to loss ratio caps and variable commission. Other non-proportional reinsurance contracts were renewed with terms similar to the expired contracts. See "Reinsurance" above for further information.

Current wording

Ceded written premium increased $96.0 million, or 33%, to $389.4 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily due to growth in business across all products and the impact of our reinsurance agreements. Under our proportional reinsurance program, our overall share is approximately 55% of premium and are subject to loss ratio caps and variable commission. Other non-proportional reinsurance contracts were renewed with terms similar to the expired contracts. See "Reinsurance" above for further information.

Previous wording

Net written premium increased $25.3 million, or 15%, to $195.8 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 due to factors noted above.

Current wording

Net written premium increased $46.0 million, or 17%, to $311.3 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 due to factors noted above.

Previous wording

The table below shows the amount of premium we earned on a gross and net basis. Ceded earned premium as a percentage of gross earned premium remained at 55% for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023 consistent with the total participation under the proportional reinsurance program.

Current wording

The table below shows the amount of premium we earned on a gross and net basis. Ceded earned premium as a percentage of gross earned premium slightly increased to 55% for the nine months ended September 30, 2024, as compared to 53% for the nine months ended September 30, 2023 consistent with the total participation under the proportional reinsurance program.

Previous wording

Ceding commission income increased $2.8 million, or 8%, to $37.5 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023, consistent with the increase in ceded earned premium offset by the change in terms of the proportional reinsurance contracts with third-party reinsurers during the period.

Current wording

Ceding commission income increased $10.1 million, or 20%, to $61.5 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, consistent with the increase in ceded earned premium..

Previous wording

Net investment income increased $5.1 million, or 48%, to $15.7 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The increase was primarily driven by the diversification of the Company's investment portfolio with higher returns offset by investment expenses of $0.2 million. We mainly invest in cash, money market funds, U.S. Treasury bills, corporate debt securities, asset-backed securities, notes and other obligations issued or guaranteed by the U.S. Government.

Current wording

Net investment income increased $7.0 million, or 40%, to $24.6 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The increase was primarily driven by the diversification of the Company's investment portfolio with higher returns offset by investment expenses of $0.2 million. We mainly invest in cash, money market funds, U.S. Treasury bills, corporate debt securities, asset-backed securities, notes and other obligations issued or guaranteed by the U.S. Government.

Previous wording

Commission and other income increased $4.4 million, or 45%, to $14.2 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023, due to growth on premium placed with third-party insurance companies during the period, installment fees and sublease income from our New York and San Francisco office space.

Current wording

Commission and other income increased $8.2 million, or 59%, to $22.2 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, due to growth on premium placed with third-party insurance companies during the period, installment fees and sublease income from our New York and San Francisco office space.

Previous wording

Loss and LAE, net decreased $5.4 million, or 7%, to $70.5 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The decrease was primarily due to improvement in overall loss ratio driven by reduced impact of catastrophe events, lower frequency and severity in certain lines, and reduction in loss adjustment expenses. Net incurred losses during the second quarter of 2023 included $10.0 million from winter storm Elliott and $3.5 million from the hail storm that impacted customers in Texas.

Current wording

Loss and LAE, net decreased $1.1 million, or 1%, to $214.3 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The decrease was primarily due to improvement in overall loss ratio driven by reduced impact of catastrophe events, reserve releases due to better than expected loss reserve emergence on homeowners multi-peril and pet lines of business, and reduction in loss adjustment expenses. Incurred loss and LAE also included an extra-contractual car claim liability related to pre-acquisition Metromile. Net incurred losses during the third quarter of 2024 also included $5.0 million from hurricane Helene and $4.0 million from hurricane Beryl.

Previous wording

Other insurance expense increased $7.5 million, or 26%, to $36.1 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. Professional fees and other services increased $2.1 million, or 23%, as compared to the six months ended June 30, 2023, primarily in support of growth and expansion initiatives. Credit card fees also increased $2.1 million, or 34%, as compared to the six months ended June 30, 2023, as a result of the increase in customers and associated premium. Employee-related expense, including stock-based compensation, increased $2.0 million, or 24%, as compared to the six months ended June 30, 2024. Amortization of deferred acquisition costs, net of ceding commissions increased $1.2 million, or 24%, as compared to the six months ended June 30, 2023.

Current wording

Other insurance expense increased $12.2 million, or 28%, to $55.9 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. Professional fees and other services increased $3.5 million, or 26%, as compared to the nine months ended September 30, 2023, primarily in support of growth and expansion initiatives. Credit card fees also increased $3.2 million, or 33%, as compared to the nine months ended September 30, 2023, as a result of the increase in customers and associated premium. Employee-related expense, including stock-based compensation, increased $2.9 million, or 22%, as compared to the nine months ended September 30, 2023. Amortization of deferred acquisition costs, net of ceding commissions increased $2.7 million, or 38%, as compared to the nine months ended September 30, 2023.

Previous wording

Sales and marketing expense increased $14.2 million, or 27%, to $67.2 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. Expense related to advertising, other customer acquisition channels and partner payments increased $14.6 million, or 47%, as compared to the six months ended June 30, 2023. Compensation expense related to the warrant shares increased $1.9 million, or 317%, as compared to the six months ended June 30, 2023. Employee-related expense, including stock-based compensation, decreased by $3.2 million, or 18% as compared to the six months ended June 30, 2023.

Current wording

Sales and marketing expense increased $41.2 million, or 53%, to $118.6 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. Expense related to advertising, other customer acquisition channels and partner payments increased $40.5 million, or 90%, as compared to the nine months ended September 30, 2023. Compensation expense related to the warrant shares increased $3.0 million, or 200%, as compared to the nine months ended September 30, 2023. Employee-related expense, including stock-based compensation, decreased by $3.8 million, or 15% as compared to the nine months ended September 30, 2023.

Previous wording

Technology development expense decreased $3.8 million, or 8%, to $42.1 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. Employee-related expense, including stock-based compensation, net of capitalized costs for the development of internal-use software, decreased $2.6 million, or 7%, as compared to the six months ended June 30, 2023. Occupancy costs decreased by $0.7 million, or 32%, as compared to the six months ended June 30, 2023. Hosting and development costs also decreased by $0.4 million, or 9%, as compared to the six months ended June 30, 2023.

Current wording

Technology development expense decreased $3.7 million, or 5%, to $64.0 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. Employee-related expense, including stock-based compensation, net of capitalized costs for the development of internal-use software, decreased $2.3 million, or 4%, as compared to the nine months ended September 30, 2023. Hosting and development costs also decreased by $0.7 million, or 10%, as compared to the nine months ended September 30, 2023.

Previous wording

General and administrative expense decreased $3.8 million, or 6%, to $59.6 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. Employee-related expense, including stock-based compensation, decreased by $2.8 million, or 10%, as compared to the six months ended June 30, 2023. Insurance expense decreased $2.0 million, or 56% compared to the six months ended June 30, 2023. Bad debt expense increased $1.4 million, or 36% compared to the six months ended June 30, 2023.

Current wording

General and administrative expense decreased $9.3 million, or 9%, to $91.0 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. During the third quarter of 2023, we recognized an asset impairment on the right-of-use asset related to the San Francisco office in the amount of $3.7 million and an accrual for a potential liability claim of $3.0 million related to Metromile. Employee-related expense, including stock-based compensation, decreased by $2.4 million, or 6%, as compared to the nine months ended September 30, 2023. Insurance expense decreased $2.1 million, or 48% compared to the nine months ended September 30, 2023. Bad debt expense increased $1.9 million, or 32% compared to the nine months ended September 30, 2023.

Previous wording

Income tax expense increased $1.8 million, or 75%, to $4.2 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 due to change in transfer pricing methodology and uncertain tax position.

Current wording

Income tax expense increased $1.8 million, or 42%, to $6.1 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 due to change in transfer pricing methodology and uncertain tax position.

Previous wording

Net loss decreased $28.5 million, or 21%, to $104.5 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 due to the factors described above.

Current wording

Net loss decreased $22.3 million, or 11%, to $172.2 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 due to the factors described above.

Previous wording

(1) Includes compensation expense related to warrant shares of $1.6 million and $2.5 million for the three and six months ended June 30, 2024, respectively, and $0.6 million for both the three and six months ended June 30, 2023.

Current wording

(1) Includes compensation expense related to warrant shares of $2.0 million and $4.5 million for the three and nine months ended September 30, 2024, respectively, and $0.9 million and $1.5 million for the three and nine months ended September 30, 2023.

Previous wording

(2) Consisted primarily of impairment charge of $0.3 million related to a portion of the New York office sublease (refer to Note 15 of the unaudited condensed consolidated financial statements), net of gain on termination of lease.

Current wording

(3) Includes $3.9 million extra-contractual car claim liability related to pre-acquisition Metromile, and impairment charge of $0.3 million related to a portion of the New York office sublease (refer to Note 15 of the unaudited condensed consolidated financial statements), net of gain on termination of lease for the three and nine months ended September 30, 2024.