Lemonade will acquire auto insurer Metromile in an all-stock transaction for just over $200 million net of cash.
Lemonade and Metromile have entered into a definitive agreement pursuant to which Lemonade will acquire Metromile in an all-stock transaction that implies a fully diluted equity value of approximately $500 million, or just over $200 million net of cash.
Direct insurer Lemonade has pioneered big data and artificial intelligence (AI) in its home, renters and pet insurance products and last week unveiled Lemonade Car. Via its acquisition of Metromile, it is not only acquiring a team that has experience in the pay-per-mile auto insurance space, but a trove of claims data as well.
“Our own auto insurance—Lemonade Car—was unveiled last week, and we think you'll love how it looks and handles," said Daniel Schreiber, Lemonade CEO and cofounder, in a blog post. “Pop the hood and you'll see that it's powered by telematics and architected to learn from the data it generates, so that it gets better at quantifying and underwriting risks over time. Precision pricing is its ultimate destination, and it's been engineered to go the distance."
“The only downer is that going the distance (at the risk of overworking the metaphor) takes billions of miles, forgiving shock absorbers, and plenty of gas," Schreiber continued. “That's where Metromile comes in. They have been down this road already, and their proprietary data and machine learning algorithms can transform Lemonade Car by collapsing time, flattening risk, and increasing efficiency."
In October, Metromile announced that it can now offer independent agents access to its customizable pay-per-mile auto insurance through an integration with the EZLynx Rating Engine. Metromile has 49 state licenses, over $100 million of in-force premium and went public via a special purpose acquisition company (SPAC) at a valuation of $1.3 billion in February.
“We've long admired Lemonade for its beautiful products, world-class customer experience, unprecedented growth, and socially-impactful business model," said Dan Preston, CEO of Metromile. “The data science-driven technology platform we built created fairer and more individualized car insurance for consumers in an industry marred by vast inequities."
“Joining forces with Lemonade Car will create the most customer-centric, fair, and affordable car insurance, and is a great outcome for Metromile shareholders, who will benefit as shareholders of the combined company," Preston said. “It also means that now, homeowners, renters, and drivers alike can have all of their insurance needs with a single company that truly has their best interests at heart."
The transaction is expected to close by mid-2022 once all regulatory approvals have been secured. The transaction requires the approval of Metromile stockholders and is subject to other customary closing conditions.
Will Jones is editor-in-chief.