What is Lemonade Probability of Financial Distress (%)?
Probability of Financial Distress (%) measures the probability that a company will go bankrupt in the upcoming year given its current financial position. A higher ratio indicates a larger probability of bankruptcy for the company, while a lower ratio indicates a healthier fundamental. As of today, Lemonade's Probability of Financial Distress (%) is 0.06%.
Like the Altman Z-Score, the PFD measures a company's bankruptcy risk. However, the main drawback of the Z-score is it does not apply to banks and insurance companies. According to Investopedia, the concept of "working capital" does not apply to banks and insurance companies, as financial institutions do not have typical current assets or current liabilities like inventories or accounts payable.
Competitive Comparison of Lemonade's Probability of Financial Distress (%)
For the Insurance - Property & Casualty subindustry, Lemonade's Probability of Financial Distress (%), along with its competitors' market caps and Probability of Financial Distress (%) data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Lemonade's Probability of Financial Distress (%) Distribution in the Insurance Industry
For the Insurance industry and Financial Services sector, Lemonade's Probability of Financial Distress (%) distribution charts can be found below:
* The bar in red indicates where Lemonade's Probability of Financial Distress (%) falls into.
Lemonade Probability of Financial Distress (%) Calculation
Probability of Financial Distress (%) (PFD) was developed by John Campbell, Jens Hilscher and Jan Szilagyi in their Search of Distress Risk. It measures the probability that a company will go bankrupt within the next 12 months given its current financial position.
The Probability of Financial Distress (%) was obtained by a logit probability model based on eight explanatory variables. The logit formula to compute the probability of financial distress (LPFD) is given below:
| LPFD | = | -20.12 * NIMTAAVG | + | 1.60 * TLMTA | - | 7.88 * EXRETAVG | + | 1.55 * SIGMA | - | 0.005 * RSIZE | - | 2.27 * CASHMTA | + | 0.070 * MB | - | 0.09 * PRICE | - | 8.87 |
| = | -7.36 |
The Probability of Financial Distress (%) (PFD) was then obtianed by:
| PFD | = | 1 | / | (1 + e^(-LPFD)) | * | 100% |
| = | 0.06% |
The eight explanatory variables are:
1. NIMTAAVG = Net Income to Market Total Assets
*Note that for companies reported quarterly, geometrically declining weighted quarterly Net Income data in latest four quarters are used.
2. TLMTA = Total liabilities to Market Total Assets
3. CASHMTA = Cash to Market Total Assets
For insurance companies, CASHMTA is measured as:
4. EXRETAVG = Excess Return compared to the S&P 500
EXRETAVG is the weighted excess return compared to the S&P 500 in past 12 month. Geometrically declining weights are imposed on the monthly excess return to reflect lagged information. The weight is halved each quarter.
5. SIGMA = Standard Deviation of Daily Returns
For sigma, we use the annualized standard deviation of a company's returns over the past 92 days (or 63 trading days).
6. RSIZE = Relative Size
| RSIZE | = | log (Market Cap | / | Total Market Cap of S&P 500 companies) |
7. MB = Market to Adjusted Book Equity Ratio
8. PRICE
PRICE is measured as the log of the stock price, capped at log(15).
Lemonade (Lemonade) Business Description
Traded in Other Exchanges
Address
5 Crosby Street, 3rd Floor, New York, NY, USA, 10013
Lemonade Inc operates in the insurance industry. The company offers digital and artificial intelligence based platform for various insurances and for settling claims and paying premiums. The platform ensures transparency in issuing policies and settling disputes. Geographically, it operates in California, Texas, New York, New Jersey, Illinois, Georgia, Washington, Colorado, Pennsylvania, Virginia and others.
Executives
| John Sheldon Peters |
officer: Chief Insurance Officer |
C/O LEMONADE, INC., 5 CROSBY STREET, 3RD FLOOR, NEW YORK NY 10013 |
| Timothy E Bixby |
officer: Chief Financial Officer |
C/O SHUTTERSTOCK, 350 FIFTH AVENUE, 21ST FLOOR, NEW YORK NY 10118 |
| Alex Clavel |
10 percent owner |
PO BOX 1093, BOUNDARY HALL, CRICKET SQUARE, GRAND CAYMAN E9 KY1-1102 |
| Michael A Eisenberg |
director, 10 percent owner |
C/O SHOPPING.COM, 8000 MARINA BLVD. 5TH FLOOR, BRISBANE CA 94005 |
| Adina Eckstein |
officer: Chief Operating Officer |
C/O LEMONADE, INC., 5 CROSBY STREET, 3RD FLOOR, NEW YORK NY 10013 |
| Irina Novoselsky |
director |
C/O LEMONADE, INC., 5 CROSBY STREET, 3RD FLOOR, NEW YORK NY 10013 |
| Silvija Martincevic |
director |
C/O AFFIRM HOLDINGS, INC., 650 CALIFORNIA STREET, SAN FRANCISCO CA 94108 |
| Becker Caryn Seidman |
director |
65 EAST 55TH STREET, 17TH FLOOR, NEW YORK NY 10022 |
| Jorge Espinel |
officer: CBDO |
C/O LEMONADE, INC., 5 CROSBY STREET, 3RD FLOOR, NEW YORK NY 10013 |
| George Thompson Hutton |
director |
C/O WHITE MOUNTAINS INSURANCE GROUP, LTD, 80 SOUTH MAIN STREET, HANOVER NH 03755 |
| Joel E Cutler |
director |
C/O GENERAL CATALYST PARTNERS, 20 UNIVERSITY ROAD, SUITE 450, CAMBRIDGE MA 02138 |
| Daniel A. Schreiber |
director, 10 percent owner, officer: Co-Founder & CEO |
C/O LEMONADE, INC., 5 CROSBY STREET, 3RD FLOOR, NEW YORK NY 10013 |
| Shai Wininger |
director, 10 percent owner, officer: See Remarks |
C/O LEMONADE, INC., 5 CROSBY STREET, 3RD FLOOR, NEW YORK NY 10013 |
| Haim Sadger |
director |
C/O SEQUOIA CAPITAL, 2800 SAND HILL RD, SUITE 101, MENLO PARK CA 94025 |
| Sequoia Capital Israel Venture V Principals Fund, L.p. |
10 percent owner |
2800 SAND HILL RD, SUITE 101, MENLO PARK CA 94025 |
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