Lemonade Will Acquire Metromile

[marindependent]

Digital insurer Lemonade plans to acquire pay-per-mile auto insurance startup Metromile in an all-stock transaction as it aggressively continues expansion plans.

InsurTech Lemonade Will Acquire Metromile in Acceleration of Auto Insurance Growth Plans - Carrier Management

 

[Allen Trent]

seems odd that a newer carrier with the leading edge technology providing consumers with the best rates for safe drivers lost active policies during the 2nd qtr 2021. Either not writing enough new business or losing more in retention than writing. I am sure Lemonade will help them propel, but it always surprises me when these direct writers cannot find a way to grow past flat lining & having to spend a ton to attract new business

 

[Markthebroker]

"But as Lemonade noted, Metromile has 49 state licenses. On top of that, Lemonade gets to add to its roster Metromile's more than $100 million of in-force auto insurance premium, over $250 million of cash on its balance sheet, and the San Francisco-based InsurTech's experience using big data and AI for its own car insurance process."

The reasoning of buying Metromile for it's state licenses is ridiculous. Getting an out of state license is pretty easy. Most mid to large agencies have all or at least most licenses in the 50 states. Furthermore, buying a company for cash on the balance sheet doesn't really make sense to spend cash to get cash. Now, consolidating marketing, buying customers, and leveraging their experience, yeah, that makes sense.

 

[marindependent]

losing more in retention than writing.

That is my guess and that is probably the problem with the entire Metromile business model. If you are selling auto insurance to people that want to just pay by the mile and hence probably do not drive much, they are probably more likley to cancel their insurnace when they are not driving [maybe due to the pandemic] or for other reasons: Move, Cancel their Apartment and move back in with Mommy and Daddy, Go Autoless, etc.

I have pulled lots from them as they are an unrated firm and I got no umbrellas for that.

 

[Gulliver]

Yawn...