MetroMile shares soar after sale to Lemonade

0

Text size

The time of dreams



Lemonade

said on Monday he had agreed to buy another MetroMile insurtech for around $ 500 million in stock.

The terms of the agreement call for


MetroMile

(ticker: MILE) Shareholders will receive common shares of Lemonade at a 19-to-1 ratio, or one Lemonade share for 19 MetroMile shares, according to a statement. The transaction, which still requires approval from MetroMile shareholders, is expected to close in the second quarter of 2022. News of the transaction pushed MetroMile shares up more than 6% on Monday after-hours, while Lemonade ( LMND) fell 5%.

Founded in 2011, MetroMile is an insurtech that aims to make car ownership cheaper by offering auto insurance paid by the kilometer. Customers plug in the MetroMile “pulse”, an electronic gadget that connects to a car’s diagnostic port and collects data about the user’s driving. MetroMile is licensed in 49 states.

“Joining forces with Lemonade Car will create the most customer-centric, fairest and most affordable auto insurance, and is a great result for


Metromile

shareholders, who will benefit as shareholders of the combined company. It also means that now homeowners, renters and drivers can have all of their insurance needs with one company that truly has their best interests at heart, ”Dan Preston, CEO of MetroMile, said in a statement.

The acquisition comes more than a year since Lemonade went public in one of the most notable IPOs of 2020, rising 139% from its offering price of $ 29. The shares closed Monday at $ 66.98. Launched in 2016, Lemonade offers insurance to renters and homeowners in the United States for stolen or damaged goods as well as civil liability. The start-up uses machine learning to better assess risk and AI for complaints handling. Lemonade has since expanded into life insurance and pet insurance.

While Lemonade was at the forefront of the use of big data and AI in home and pet insurance, MetroMile was “actively working to chart a parallel path for auto insurance,” Daniel Schreiber, CEO and Co-Founder of Lemonade, said in a blog post, “Why Lemonade Acquires MetroMile. ”

Last week, Lemonade launched insurance for cars, claiming to offer faster and cheaper rates for low-mileage customers and those who drive electric and hybrid cars. Schreiber, in the blog, said auto insurance is an “extremely competitive market” and its steep learning curve could prove to be dangerous and costly. “Injecting all the MetroMile mojo into Lemonade Car could make the most transparent and customer-centric auto insurance product the most affordable, differentiated, accurate and fair. That’s the plan, ”he said.

MetroMile also went public earlier this year, merging with


Insu Acquisition Corp

II, a blank check company of the financial services company Cohen & Co. (COHN). MetroMile shares have plunged nearly 84% since hitting an annual high of $ 19.30 in February, closing at $ 3.16 on Monday.

Write to Luisa Beltran at [email protected]


Source link

Leave A Reply

Your email address will not be published.