Open Lending's Q2 2025: Key Contradictions Unveiled on Partnerships, Profit Shares, and Market Dynamics

AmTrust relationship and partnership, profit share and insurance carrier financial health, OEM business and demand dynamics, impact of tariffs on pricing strategy, and profit share and claim activity are the key contradictions discussed in Open Lending's latest 2025Q2 earnings call.



Certified Loan Trends and Strategic Focus:
- Open Lending facilitated 26,522 certified loans in Q2, a decrease from the prior year and quarter, due to intentional tightening of lending standards and targeted rate increases in less profitable segments.
- The decrease is part of a strategic focus to prioritize profitability and improve business mix in 2025, with a plan to pursue growth from 2026 onward.

Program Fee and Loss Ratio Improvements:
- The company's program fees remained above $500 per loan, and the mix of OEM and credit union business shifted more towards credit unions, typically with better performing loss ratios.
- These improvements are attributed to reduced OEM exposure and a strategic focus on higher profitability channels, supported by increased OEM 3 partnerships.

Profit Share and CIE Developments:
- Open Lending recorded a positive $300,000 profit share CIE in Q2, associated with cumulative profit share revenue since January 2019.
- This positive adjustment is due to lower than expected claim frequency and an increase in the Manheim Used Vehicle Value Index, indicating a shift towards more favorable vintages.

Operating Expenses and Cost Management:
- Operating expenses increased by 9% year-over-year to $18.6 million, including onetime severance expenses.
- The increase is due to restructuring efforts to identify substantial run rate savings and rightsize the organization, with planned actions expected to be fully implemented by year-end.

AmTrust Agreement Extension:
- Open Lending secured an early extension of its producer agreement with AmTrust, extending it through 2033.
- The extension, driven by the strength of the partnership and AmTrust's faith in Open Lending's future, ensures credit capability and capacity, mitigating risk for credit unions.