Disruptive insurtech Lemonade strikes $0.5bn deal for Metromile to target ‘vast and competitive’ auto market

Artificial intelligence-driven company  Lemonade, one of the best-funded and most disruptive insurtech startups, is acquiring US-based digital insurance platform and pay-per-mile auto insurer  Metromile. The move follows the launch of its much anticipated car insurance product,  Lemonade Car, as it seeks to expand in a “vast and competitive” auto market.

Under the terms of the definitive agreement, 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. Metromile shareholders will receive Lemonade common shares at a ratio of 19:1.

The transaction is expected to close during the second quarter of 2022, following regulatory approvals including from Metromile stockholders.

Lemonade was launched in September 2016 by Daniel Schreiber and Shai Wininger as a licensed insurance carrier initially offering homeowners and renters insurance. It has since expanded into car, pet, and life insurance with a strong presence in the US, Germany, the Netherlands, and France.

San Francisco-based Metromile was formed in 2011, and offers telematics-powered car insurance. Metromile became a public company earlier this year by merging with special purpose acquisition company Insu Acquisition Corp.

Lemonade said while it has been at the forefront of using big data and AI in home and pet insurance, Metromile has been trailblazing a parallel path for car insurance.

Lemonade entered the car insurance market last week with the launch of telematics-powered Lemonade Car, which it says is “architected to learn from the data it generates, with precision pricing as its ultimate destination”.

Daniel Schreiber (pictured), Lemonade chief executive officer and co-founder, said: “In a vast and competitive market like auto insurance, today’s deal is a huge unlock of value for our customers and shareholders.”

Dan Preston, chief executive of Metromile, said: “We’ve long admired Lemonade for its beautiful products, world-class customer experience, unprecedented growth, and socially-impactful business model.

“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. 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.”

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