Lemonade, the digital insurance company, has established a captive cell at a Bermuda transformer.

The news comes as the insurtech announced that its reinsurance programme had been renewed in good time and on good terms.

The Lemonade programme is led by the same tier-one carriers as the expiring programme and was oversubscribed on all dimensions.

Lemonade said it planned to use the Bermuda captive cell to retain most of its wind storm exposure. While wind storm reinsurance capacity was available, this structure was determined to offer a materially better cost/benefit profile, it said.

The company has also formed a new risk-bearing entity, Lemonade Re, in the Cayman Islands. Lemonade plans to hold some of its retained risk in Lemonade Re.

The centrepiece of the renewal programme is 55 per cent quota share protection, the same level as the expiring coverage. The variable ceding commissions are projected to be roughly equivalent to those enjoyed under the outgoing agreements.

The programme covers all Lemonade businesses globally, now also including Metromile, acquired by Lemonade in 2022.

“It says a great deal when some of the world’s largest and most respected reinsurers choose to stake their capital on the performance of our business,” said Daniel Schreiber, Lemonade co-CEO and cofounder.

“These partners allow us to operate in a very capital light mode and focus our resources on expanding our customer base across all of our products and geographies, while harnessing our technologies to get ever more efficient and ever better at matching rate to risk.”

The extant programme expires at midnight on June 30, at which time the new programme will go into effect for a standard 12-month term.

Lemonade offers renter, homeowner, car, pet, and life insurance.

Powered by artificial intelligence and social impact, Lemonade’s full stack insurance carriers in the US and the EU replace brokers and bureaucracy with bots and machine learning, aiming for zero paperwork and instant everything, it said.