Online insurer Lemonade files for New York initial public share offering

Lemonade’s tech allows users to insure their homes by replacing agents with artificial intelligence and bots

Shoshanna Solomon is The Times of Israel's Startups and Business reporter

Lemonade's Shai Wininger at the Tel Aviv offices of the insurance firm, December 20, 2017 (Shoshanna Solomon/Times of Israel)
Lemonade's Shai Wininger at the Tel Aviv offices of the insurance firm, December 20, 2017 (Shoshanna Solomon/Times of Israel)

New York-based online insurer Lemonade Inc., founded by Israeli entrepreneurs Shai Wininger and Daniel Schreiber, has filed a prospectus for an initial public offering of shares with the US Securities and Exchange Commission.

The company is looking to start trading its shares on the New York Stock Exchange under the symbol LMND, though the filing didn’t provide information about the number of shares offered or the price.

Last year, Calcalist reported that the firm was seeking to raise more than half a billion dollars, at a market valuation of $2 billion, but in November the plans were put on hold, the financial website reported.

The firm, founded in 2015, is a licensed insurer in 40 US states and operates in 28 of those states, including California, Illinois, New Jersey, New York, and Texas. Lemonade also holds a pan-European license, the prospectus said.

Lemonade employees working at the firm’s R&D center located in a refurbished, historical templar building in the Sarona area of Tel Aviv; Dec. 20, 2017 (Shoshanna Solomon/The Times of Israel)

The company seeks to revolutionize the way homes are insured. Its technology allows users to insure their homes by doing away with agents and replacing them with artificial intelligence and bots, applications that perform an automated task.

Customers answer a set of simple questions through a chat with the company’s bot, “Maya”; it takes 90 seconds to get insured, the company’s website says, and three minutes to get paid if and when a claim is made.

The firm’s mission, the prospectus said, is to “harness technology and social impact to be the world’s most loved insurance company” by using a mix of “technology, data, artificial intelligence, contemporary design, and behavioral economics.”

Unlike traditional insurers, Lemonade takes a flat fee — one that would normally go to the insurance brokers — and sets aside the remaining funds for claims. In a good year, when there’s money left unclaimed, the company does not pocket the money but donates it to causes their customers choose.

Since the launch of its product in 2016, the firm’s revenues have grown year on year, reaching $67 million in 2019. The company, has however, posted net losses throughout its years of activity. Net loss in 2019 totaled $109 million. For the three months ended March 31, 2020, revenue was $26 million and net losses were $37 million, the prospectus said.

“We have a history of losses and we may not achieve or maintain profitability in the future,” the company said, in the risk factors listed in the prospectus. “Our success and ability to grow our business depends on retaining and expanding our customer base.”

Insurance is one of the largest industries in the world. Property, casualty, and life insurance premiums amount to approximately $5 trillion globally, and account for 11% of gross domestic product in the United States, Lemonade said in the prospectus.

The firm, which has R&D activities in Israel, has raised $480 million to date from investors including Jerusalem-based OurCrowd; Japan’s Softbank Group; financial services provider Allianz; Google Ventures, the venture capital arm of Alphabet Inc., the parent company of Google; Tusk Ventures; and Israel’s Aleph VC, according to the database of Start-Up Nation Central, which tracks Israel’s tech industry.

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