After the recent launch of Lemonade car insurance, AI-powered insurance company Lemonade has announced its first-ever acquisition, purchasing the online insurance platform and pay-per-mile vehicle insurer Metromile in an all-stock deal aimed at boosting its auto insurance business.
Related news: Lemonade Launches Car Insurance Platform in Illinois
The insurance technology company is pinning its hope on Metromile’s proprietary data and algorithms, which “can vault us over the most time- and cost-intensive parts of the journey,” Lemonade’s CEO and Co-founder Daniel Schreiber said in a statement. “In a vast and competitive market like auto insurance, today’s deal is a huge unlock of value for our customers and shareholders.”
In an earnings call with analysts on Tuesday (Nov. 9), Schreiber added that the company does not intend to distinctly run Metromile, which has 1.4 million customers, but rather intends to integrate it into Lemonade to “form a single company with a single product.” He further said that “it’s about strengthening Lemonade Car and leapfrogging us to the vanguard of car insurance.”
The Metromile announcement was made alongside the release of the company’s third-quarter earnings results. Apart from homeowners’ share of their overall business, which remained stable at 30%, renters’ share increased from 44% last quarter to 47% in Q3. The pet line of the business added 2% to its share to reach 15%, and the life insurance share increased to 2%.
Total third-quarter revenue for the InsurTech firm increased by 101% to $35.7 million as compared to Q3 2020, resulting in a 60% increase in gross profits to $11.7 million.
Outside of the U.S., the technology company has made Europe its launchpad for international expansion, debuting in Germany in 2019 followed by the Netherlands – where it has its European headquarters – and France last year.
“The EU is performing well, and while it’s a small part of our business, we do anticipate it growing perhaps at a faster rate than the rest of our business,” Schreiber said on the call, sharing the company’s optimism for a “Lemonade-style growth curve” in the region long-term.
Launched in 2016 in New York, the mobile insurance firm works to digitize the insurance process, replacing brokers and bureaucracy with bots and machine learning algorithms that can provide homeowners’ and renters’ insurance policies in a matter of minutes.
Booming Pet Business
In July of last year, the digital insurance company backed by Japan’s SoftBank had a highly successful initial public offering (IPO) on the New York Stock Exchange, raising close to $320 million at a valuation of over $3 billion. That same month, the company expanded into health insurance for cats and dogs, which Schreiber said experienced a boom during the COVID period and has outperformed expectations.
Read more: SoftBank-Backed Lemonade Soars Above $3B Valuation on First Day of IPO Trading
“It has formed in short order a sizable portion of our business on any given day … oftentimes 20-30% of our sales will come from pet insurance,” he said, adding that “it has provided both an additional on-ramp to Lemonade, [bringing in] customers that we otherwise might not have gotten at all.”
Related news: Lemonade Expands Into Pet Insurance
He added that the business has also provided Lemonade its “first proof of cross-sell,” given that about a third of its pet policies are to existing customers, and premiums jump by 300% or 400% when a renter has a pet policy.
More details: Lemonade Debuts Preventative Care Coverage for Puppies and Kittens
According to a PYMNTS report, Lemonade launched its preventative care offerings for puppies and kittens in September of this year, offering coverage for various procedures, including spaying and neutering, microchipping, flea medication, vaccines and boosters.
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