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Lemonade Files for IPO, Says It May Sell Life Insurance

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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.


“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.

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