The insurtech startup says it's better at appealing to younger
consumers than companies built on human brokers are.
Lemonade Inc. — a company that
has started out by selling renters and homeowners insurance through mobile
devices — says in its registration statement for an initial public
offering (IPO) that it’s thinking about offering life insurance.
The New York-based insurer says it
already owners a life insurance agency, Lemonade Life Insurance Agency LLC of
Delaware.
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“As our customers move up the
economic ladder and through lifecycle events, their insurance needs evolve to
higher value products: renters continuously acquire more property and
frequently upgrade to successively larger homes,” Lemonade says in the
registration statement. “Growing households often need life insurance or pet
insurance. These progressions regularly trigger orders of magnitude jumps in
insurance premiums. We aim to provide an unmatched user experience in order to
retain customers throughout their lifespan, expanding their lifetime value
without incurring any incremental costs of acquisition.”
Lemonade contends that it will be
better-suited to sell to younger consumers than traditional insurers are.
“Companies built on human brokers and
claims agents have many strengths, no doubt, but appealing to millennials and
Gen Zers is not chief among them,” the company says.
Lemonade notes, however, that
starting to sell life insurance and other products, such as pet insurance,
would subject the company to additional regulatory requirements and regulatory
scrutiny.
Organizers started the company in
2015, with the goal of using modern technology to create an insurance provider
that would be easier for consumers to use.
The organizers hope to raise up to
$100 million through the IPO, and list the company’s shares on the New York
State Exchange, with the stock symbol LMND.
The heart of Lemonade is an insurance
company domiciled in New York state. The company plans to use reinsurance to
cede 75% of the premiums it generates form insurance sales to other entities.
The company has offices in Israel and
in Scottsdale, Arizona, as well as in New York.
The top-level company is organized as
a for-profit public benefit corporation. The organizers say this status means
that the company must try to balance the need to earn profits against other
stakeholders’ interests.
The company is reporting a $108
million comprehensive loss for 2019 on $67 million in revenue, $414 million in
total assets, and $270 million in cash, cash equivalents and restricted cash.
About $64 million of the 2019 revenue
consisted of net earned premiums.
SoftBank has been financing Lemonade.
Lemonade indicates in the registration statement that SoftBank would continue to
own a large amount of Lemonade stock after the IPO, and that the company
co-founders participate in a joint investment committee with a SoftBank
executive. The arrangement would limit outside investors’ ability to influence
company transactions, such as efforts to sell the company, Lemonade says.
Goldman Sachs & Co. LLC, Morgan
Stanley & Co. LLC and Allen & Company LLC are acting as the managing
bookrunners for the proposed offering.
Allison Bell, ThinkAdvisor's insurance editor, previously
was LifeHealthPro's health insurance editor. She has a bachelor's degree in
economics from Washington University in St. Louis and a master's degree in
journalism from the Medill School of Journalism at Northwestern University. She
can be reached at abell@alm.com or on Twitter at @Think_Allison.
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