Lemonade releases IPO filing with $100m target

Online insurance company Lemonade postponed its initial public offering (IPO) last year after WeWork’s attempt imploded, but now it seems like the InsurTech has changed its mind.

Lemonade, which is backed by SoftBank, has issued a filling with the US Securities and Exchange Commission to go public. The InsurTech hopes to raise $100m for the IPO and will be listed on the New York Stock Exchange under LMND.

Lemonade is available in 26 US states and helps consumers access contents and liability insurance through their smartphones. Its platform charges a flat fee which covers everything, and if after paying claims there is money left over, it is donated to a charity of the policyholder’s choice.

The InsurTech entered the European market last year after launching in Germany. Earlier this year, it took its first steps to grow its presence in Europe, by entering the Netherlands market.

According to charts in the SEC filing, Lemonade’s gross written premium (GWP) has increased from just $9m in 2017 to $47m in 2018 and then $116m in 2019. The GWP is the total revenue from contracts that the insurer is expecting to receive, prior to deductions for reinsurance or commissions.

The InsurTech is hoping to continue this growth during 2020, with the GWP in the first quarter of 2020 being $38m.

Lemonade’s revenue was $2m, $23m and $67m in 2017, 2018 and 2019, respectably, while its net losses were $28m, 53m and $109m, respectively. In Q1 2020 its revenue was $26m and loss was $37m.

The company’s net losses per dollar of GWP dropping from $3.12 in 2017 to $0.9 in 2019; however, despite Lemonade seeing more than double the GWP between 2018 and 2019, the drop in net losses per dollar of GWP was not as good. The net losses per dollar of GWP in 2018 was $1.1.

Furthermore, the company’s gross loss ratio has steadily declined from 161% in 2017, to 113% in 2018 and  to 79% in 2019. During the first quarter of 2020, it stands at 72%.

While the company is not profitable, Lemonade’s growth shows it is going in the right direction. The company’s EBITDA (Earnings before interest, taxes, depreciation, and amortization) has gone from -204% in 2018 to -141% in 2019. After Q1 2020, it currently sits on -73%.

The InsurTech platform claims that 70% of its current customers are under the age of 35 and 90% of its clients claim they were not switching from another carrier. Lemonade also claims that customers to have bought renters insurance three years ago spend 56% more on their renters insurance.

Last year, it was reported the company was looking to hold an IPO which could have seen it valued at $2bn. Plans were quickly shelved after seeing WeWork’s failed attempt of an IPO earlier that year.

The office rental company had its finances pulled under for questioning, delaying the sale. After this, the CEO faced the heat in regard to his conduct. Eventually, SoftBank acquired a controlling stake in the business, in a deal which valued the business at $8bn – WeWork had been valued at around $50bn just months earlier.

SoftBank is also an investor into Lemonade, having led the InsurTech’s $300m Series D in 2019 and its $120m Series C in 2017. Since the company was founded it has raised $480m in funding.

The online insurer’s Series D was also backed by Allianz, General Catalyst, GV, OurCrowd and Thrive Capital to support its US and European expansion.

Earlier in the year, Lemonade revealed it is planning to launch pet insurance in the coming months. The policies will offer protections to cats and dogs, and will have easy claim payments, customer service support and donations of leftover premiums to charitable causes picked by the policyholder.

Copyright © 2020 FinTech Global


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