Lemonade boosts auto insurance offering with $500 million acquisition of Metromile

Israeli-founded insurtech company Lemonade announced on Monday that it is acquiring Metromile, a data science company focused on auto insurance, in an all-stock transaction that implies a fully diluted equity value of approximately $500 million, or just over $200 million net of cash. Under the terms of the transaction, Metromile shareholders will receive Lemonade common shares at a ratio of 19:1.

While Lemonade has been focused since its founding on using big data and AI in home and pet insurance, Metromile has been going down a parallel path for car insurance. Metromile’s car-mounted precision sensors took over 400 million road trips in recent years, covering billions of kilometers and sending real-time streams to the Metromile cloud. These were cross-referenced with actual claims data, yielding precise predictions for losses per mile driven.

“We launched Lemonade Car last week, and we think you’ll love how it looks and handles. Pop the hood and you’ll see that it's powered by telematics and architected to learn from the data it generates, with precision pricing as its ultimate destination,” said Daniel Schreiber, Lemonade CEO and co-founder. “That’s where Metromile comes in. They have been down this road billions of times, and their proprietary data and machine learning algorithms can vault us over the most time and cost-intensive parts of the journey. In a vast and competitive market like auto insurance, today’s deal is a huge unlock of value for our customers and shareholders.”

Metromile enjoys 49 state licenses, over $100 million of seasoned in-force premium (IFP), and over $250 million of cash on the balance sheet.

“The data science-driven technology platform we built created fairer and more individualized car insurance for consumers in an industry marred by vast inequities," said Dan Preston, CEO of Metromile. "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.”

The transaction is expected to close during the second quarter of 2022, once all regulatory approvals have been secured. The transaction requires the approval of Metromile stockholders and is subject to other customary closing conditions.