Lemonade, an online insurer utilizing artificial intelligence and algorithms to simplify the insurance purchasing process, has demonstrated impressive growth, nearly tripling its customer base from 1 million at the end of 2020 to 2.87 million by the third quarter of 2025. Starting with homeowners' and renters' insurance, Lemonade broadened its offerings post-2020 IPO to include term life, pet, and auto insurance, with aspirations to expand its in-force premium significantly from $1.16 billion to $10 billion in the coming years by entering more states, launching additional insurance products, and enhancing its AI capabilities.
Despite projected revenue growth at a 42% compound annual growth rate (CAGR) from 2025 to 2027 and an anticipated positive adjusted EBITDA in the final year, Lemonade remains deeply unprofitable and faces substantial competition from larger insurers adopting similar AI technologies. In contrast, Chubb, a global leader in property, casualty, supplemental, and health insurance, offers a more secure investment proposition. Chubb's combined property and casualty (P&C) ratio of 85.7% at the close of 2025 significantly outperforms the U.S. industry average of 96.6%, indicating superior underwriting profitability. Additionally, Chubb is actively integrating AI into its operations to maintain its competitive edge.
While Lemonade offers the allure of high growth, its current unprofitability and the competitive landscape suggest a speculative investment. For investors seeking stability in a volatile market, a seasoned blue-chip insurer like Chubb presents a more compelling option. Chubb is expected to generate approximately 43 times Lemonade's revenue in 2026, with a projected EPS growth of 6% CAGR from 2025 to 2027. Trading at a reasonable 12 times this year's earnings, coupled with a 1.2% forward dividend yield and a history of share repurchases, Chubb stands as a robust, profitable entity. This demonstrates that prudent investment often favors established companies with proven profitability and market resilience over high-growth ventures with uncertain paths to sustained profitability, encouraging a balanced and informed approach to financial decisions.