Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Mar. 01, 2022 | Jun. 30, 2021 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2021 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Transition Report | false | ||
Entity File Number | 001-39367 | ||
Entity Registrant Name | Lemonade, Inc. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 32-0469673 | ||
Entity Address, Address Line One | 5 Crosby Street, 3rd Floor | ||
Entity Address, City or Town | New York | ||
Entity Address, State or Province | NY | ||
Entity Address, Postal Zip Code | 10013 | ||
City Area Code | 844 | ||
Local Phone Number | 733-8666 | ||
Title of 12(b) Security | Common Stock, $0.00001 par value per share | ||
Trading Symbol | LMND | ||
Security Exchange Name | NYSE | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 4,336,991,174 | ||
Entity Common Stock, Shares Outstanding | 61,686,688 | ||
Documents Incorporated by Reference | Portions of the Registrant’s definitive Proxy Statement relating to its 2022 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year to which this report relates, are incorporated by reference into Part III of this Annual Report on Form 10-K where indicated. | ||
Amendment Flag | false | ||
Entity Central Index Key | 0001691421 | ||
Document Fiscal Year Focus | 2021 | ||
Document Fiscal Period Focus | FY |
Audit Information
Audit Information | 12 Months Ended |
Dec. 31, 2021 | |
Audit Information [Abstract] | |
Auditor Name | Ernst & Young LLP |
Auditor Location | New York, New York |
Auditor Firm ID | 42 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Investments | ||
Fixed maturities available-for-sale, at fair value (amortized cost: $696.8 million and $6.4 million as of December 31, 2021 and 2020) | $ 691.4 | $ 6.6 |
Short-term investments (cost: $110.4 million) | 110.4 | 0 |
Total investments | 801.8 | 6.6 |
Cash, cash equivalents and restricted cash | 270.6 | 571.4 |
Premium receivable, net of allowance for credit losses of $1.6 million and $0.5 million as of December 31, 2021 and 2020 | 127 | 86.1 |
Reinsurance recoverable | 89.8 | 49 |
Prepaid reinsurance premium | 149.6 | 91.3 |
Deferred acquisition costs | 6.2 | 3.5 |
Property and equipment, net | 11.7 | 5.7 |
Intangible assets | 0.6 | 0.6 |
Other assets | 53.2 | 14.5 |
Total assets | 1,510.5 | 828.7 |
Liabilities and Stockholders' Equity | ||
Unpaid losses and loss adjustment expenses | 97.9 | 46.3 |
Unearned premium | 207.7 | 123.8 |
Trade payables | 1 | 1.4 |
Funds held for reinsurance treaties | 103.1 | 62.1 |
Deferred ceding commission | 36.5 | 22.4 |
Ceded premium payable | 18.7 | 13 |
Other liabilities and accrued expenses | 57.4 | 18.7 |
Total liabilities | 522.3 | 287.7 |
Commitments and contingencies (Note 21) | ||
Stockholders' equity | ||
Common stock, $0.00001 par value, 200,000,000 shares authorized as of December 31, 2021 and 2020; 61,660,996 shares and 56,774,294 shares issued and outstanding as of December 31, 2021 and 2020, respectively | 0 | 0 |
Additional paid-in capital | 1,553.5 | 859.8 |
Accumulated deficit | (561.9) | (320.6) |
Accumulated other comprehensive income | (3.4) | 1.8 |
Total stockholders' equity | 988.2 | 541 |
Total liabilities and stockholders' equity | $ 1,510.5 | $ 828.7 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Amortized cost, available-for-sale securities | $ 696.8 | $ 6.4 |
Short term investments cost | 110.4 | |
Premium receivable, allowance for doubtful accounts | $ 1.6 | $ 0.5 |
Common stock, par value (usd per share) | $ 0.00001 | $ 0.00001 |
Common stock, authorized (shares) | 200,000,000 | 200,000,000 |
Common stock, issued (shares) | 61,660,996 | 56,774,294 |
Common stock, outstanding (in shares) | 61,660,996 | 56,774,294 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Revenue | |||
Net earned premium | $ 77 | $ 77.3 | $ 63.8 |
Ceding commission income | 44.9 | 15.3 | 0 |
Net investment income | 1.9 | 1.5 | 3.4 |
Commission and other income | 4.6 | 0.3 | 0.1 |
Total revenue | 128.4 | 94.4 | 67.3 |
Expense | |||
Loss and loss adjustment expense, net | 71.9 | 54.7 | 45.8 |
Other insurance expense | 24.1 | 14.4 | 9.6 |
Sales and marketing | 141.6 | 80.4 | 88.5 |
Technology development | 51.8 | 19.4 | 9.8 |
General and administrative | 72.6 | 46.3 | 21.5 |
Total expense | 362 | 215.2 | 175.2 |
Loss before income taxes | (233.6) | (120.8) | (107.9) |
Income tax expense | 7.7 | 1.5 | 0.6 |
Net loss | (241.3) | (122.3) | (108.5) |
Other comprehensive income, net of tax | |||
Unrealized (loss) gain on investments | (5.7) | 0.1 | 0.1 |
Foreign currency translation adjustment | 0.5 | 1.6 | 0 |
Comprehensive loss | $ (246.5) | $ (120.6) | $ (108.4) |
Per share data: | |||
Net loss per share attributable to common stockholders - basic (usd per share) | $ (3.94) | $ (3.63) | $ (9.75) |
Net loss per share attributable to common stockholders - diluted (usd per share) | $ (3.94) | $ (3.63) | $ (9.75) |
Weighted average common shares outstanding - basic (shares) | 61,224,433 | 33,654,828 | 11,124,397 |
Weighted average common shares outstanding - diluted (shares) | 61,224,433 | 33,654,828 | 11,124,397 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) - USD ($) $ in Millions | Total | Series C Preferred Stock | Series D Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Income |
Beginning balance (shares) at Dec. 31, 2018 | 24,445,555 | ||||||
Beginning balance at Dec. 31, 2018 | $ 180.8 | ||||||
Convertible Preferred Stock | |||||||
Issuance of preferred stock, net of issuance costs (in shares) | 3,622 | 7,107,930 | |||||
Issuance of preferred stock, net of issuance costs | $ 299.4 | ||||||
Ending balance (shares) at Dec. 31, 2019 | 31,557,107 | 8,703,846 | 7,107,930 | ||||
Ending balance at Dec. 31, 2019 | $ 480.2 | $ 119.8 | $ 299.4 | ||||
Beginning balance (in shares) at Dec. 31, 2018 | 10,983,684 | ||||||
Beginning balance at Dec. 31, 2018 | (79.1) | $ 0 | $ 10.7 | $ (89.8) | $ 0 | ||
Increase (Decrease) in Stockholders' Deficit [Roll Forward] | |||||||
Repayment of partial recourse loan and release of shares upon repayment (shares) | 105,487 | ||||||
Repayment of partial recourse loan and release of shares upon repayment | 0.2 | 0.2 | |||||
Exercise of stock options (in shares) | 182,057 | ||||||
Exercise of stock options | 0.5 | 0.5 | |||||
Stock-based compensation | 4.3 | 4.3 | |||||
Net loss | (108.5) | (108.5) | |||||
Other comprehensive income | 0.1 | 0.1 | |||||
Ending balance (in shares) at Dec. 31, 2019 | 11,271,228 | ||||||
Ending balance at Dec. 31, 2019 | $ (182.5) | $ 0 | 15.7 | (198.3) | 0.1 | ||
Convertible Preferred Stock | |||||||
Conversion of Convertible Preferred Stock to common stock upon closing of initial public offering (in shares) | (31,557,107) | ||||||
Conversion of Convertible Preferred Stock to common stock upon closing of initial public offering | $ (480.2) | ||||||
Ending balance (shares) at Dec. 31, 2020 | 0 | ||||||
Ending balance at Dec. 31, 2020 | $ 0 | ||||||
Increase (Decrease) in Stockholders' Deficit [Roll Forward] | |||||||
Conversion of convertible preferred stock to common stock upon closing of initial public offering (shares) | 31,557,107 | ||||||
Conversion of convertible preferred stock to common stock upon closing of initial public offering | 480.2 | 480.2 | |||||
Issuance of common stock upon closing of initial public offering (in shares) | 12,650,000 | ||||||
Issuance of common stock upon closing of Follow-on Offering, net of underwriting discounts and commissions and offering costs of $22.8 million | 338 | 338 | |||||
Contribution to the Lemonade Foundation (in shares) | 500,000 | ||||||
Contribution to the Lemonade Foundation | 12.2 | 12.2 | |||||
Repayment of partial recourse loan and release of shares upon repayment (shares) | 513,537 | ||||||
Repayment of partial recourse loan and release of shares upon repayment | 1.3 | 1.3 | |||||
Exercise of stock options (in shares) | 282,422 | ||||||
Exercise of stock options | 1.8 | 1.8 | |||||
Stock-based compensation | 10.6 | 10.6 | |||||
Net loss | (122.3) | (122.3) | |||||
Other comprehensive income | $ 1.7 | 1.7 | |||||
Ending balance (in shares) at Dec. 31, 2020 | 56,774,294 | 56,774,294 | |||||
Ending balance at Dec. 31, 2020 | $ 541 | $ 0 | 859.8 | (320.6) | 1.8 | ||
Ending balance (shares) at Dec. 31, 2021 | 0 | ||||||
Ending balance at Dec. 31, 2021 | $ 0 | ||||||
Increase (Decrease) in Stockholders' Deficit [Roll Forward] | |||||||
Issuance of common stock upon closing of initial public offering (in shares) | 4,018,647 | ||||||
Issuance of common stock upon closing of Follow-on Offering, net of underwriting discounts and commissions and offering costs of $22.8 million | $ 640.3 | 640.3 | |||||
Exercise of stock options (in shares) | 848,992 | 868,055 | |||||
Exercise of stock options | $ 9.3 | 9.3 | |||||
Stock-based compensation | 44.1 | 44.1 | |||||
Net loss | (241.3) | (241.3) | |||||
Other comprehensive income | $ (5.2) | (5.2) | |||||
Ending balance (in shares) at Dec. 31, 2021 | 61,660,996 | 61,660,996 | |||||
Ending balance at Dec. 31, 2021 | $ 988.2 | $ 0 | $ 1,553.5 | $ (561.9) | $ (3.4) |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) (Parenthetical) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Statement of Stockholders' Equity [Abstract] | |||
Issuance costs | $ 22.8 | $ 31.3 | |
Issuance costs | $ 22.8 | 31.3 | |
Exercise of stock options (in shares) | 848,992 | ||
Issuance of common stock upon closing of Follow-on Offering, net of underwriting discounts and commissions and offering costs of $22.8 million | $ 640.3 | 338 | |
Exercise of stock options | 9.3 | 1.8 | $ 0.5 |
Stock-based compensation | 44.1 | 10.6 | 4.3 |
Net loss | (241.3) | (122.3) | (108.5) |
Other comprehensive income | $ (5.2) | $ 1.7 | $ 0.1 |
Common Stock | |||
Issuance of common stock upon closing of initial public offering (in shares) | 4,018,647 | 12,650,000 | |
Exercise of stock options (in shares) | 868,055 | 282,422 | 182,057 |
Additional Paid-In Capital | |||
Issuance of common stock upon closing of Follow-on Offering, net of underwriting discounts and commissions and offering costs of $22.8 million | $ 640.3 | $ 338 | |
Exercise of stock options | 9.3 | 1.8 | $ 0.5 |
Stock-based compensation | 44.1 | 10.6 | 4.3 |
Accumulated Deficit | |||
Net loss | (241.3) | (122.3) | (108.5) |
Accumulated Other Comprehensive Income | |||
Other comprehensive income | $ (5.2) | $ 1.7 | 0.1 |
Series C Preferred Stock | |||
Statement of Stockholders' Equity [Abstract] | |||
Issuance costs | 0 | ||
Issuance costs | 0 | ||
Series D Preferred Stock | |||
Statement of Stockholders' Equity [Abstract] | |||
Issuance costs | 0.6 | ||
Issuance costs | $ 0.6 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Cash flows from operating activities: | |||
Net loss | $ (241.3) | $ (122.3) | $ (108.5) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depreciation | 3.7 | 1.7 | 0.6 |
Stock-based compensation | 44.1 | 10.6 | 4.3 |
Amortization of discount on bonds | (4.2) | (0.4) | (0.5) |
Provision for bad debt | 6.2 | 2.2 | 0.9 |
Common shares contribution to Lemonade Foundation | 0 | 12.2 | 0 |
Unrealized loss on money market funds | 0 | 0.1 | 0 |
Changes in operating assets and liabilities: | |||
Premium receivable | (47.2) | (34.2) | (29.1) |
Reinsurance recoverable | (40.8) | (28.7) | (8.5) |
Prepaid reinsurance premium | (58.3) | (90.3) | 0.5 |
Deferred acquisition costs | (2.7) | (1.7) | (1.2) |
Other assets | (38.6) | (12) | (1.1) |
Unpaid losses and loss adjustment expenses | 51.6 | 18.1 | 15.1 |
Unearned premium | 83.9 | 55.8 | 40.3 |
Trade payables | (0.4) | 0.7 | (0.8) |
Funds held for reinsurance treaties | 41 | 62.1 | 0 |
Deferred ceding commission | 14.1 | 22.4 | 0 |
Ceded premium payable | 5.7 | 9.1 | 0 |
Other liabilities and accrued expenses | 38.6 | 2.9 | 9.9 |
Net cash used in operating activities | (144.6) | (91.7) | (78.1) |
Cash flows from investing activities: | |||
Proceeds from short-term investments sold or matured | 20.2 | 70 | 21 |
Proceeds from bonds sold or matured | 27.2 | 2.3 | 1 |
Cost of short-term investments acquired | (130.8) | (14.9) | (69.2) |
Cost of bonds acquired | (712) | (2.9) | (3.5) |
Purchases of property and equipment | (9.4) | (4.4) | (2.7) |
Purchases of intangible assets | 0 | 0 | (0.6) |
Net cash (used in) provided by investing activities | (804.8) | 50.1 | (54) |
Cash flows from financing activities: | |||
Proceeds from Initial Public Offering and Follow-on Offering, net of underwriting discounts and commissions and offering costs | 640.3 | 338 | 0 |
Proceeds from release of shares upon repayment | 0 | 1.3 | 0 |
Issuance of Preferred stock, net | 0 | 0 | 299.4 |
Proceeds from stock exercises | 9.3 | 1.8 | 0.7 |
Net cash provided by financing activities | 649.6 | 341.1 | 300.1 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (1) | 1.6 | (0.1) |
Net (decrease) increase in cash, cash equivalents and restricted cash | (300.8) | 301.1 | 167.9 |
Cash, cash equivalents and restricted cash at beginning of year | 571.4 | 270.3 | 102.4 |
Cash, cash equivalents and restricted cash at end of year | 270.6 | 571.4 | 270.3 |
Supplemental disclosure of cash flow information: | |||
Cash paid for income taxes | $ 3.2 | $ 1.6 | $ 0.5 |
Nature of the Business
Nature of the Business | 12 Months Ended |
Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of the Business | Nature of the Business Lemonade, Inc. is a public benefit corporation organized under Delaware law on June 17, 2015. It provides certain personnel, facilities and services to each of its subsidiaries (together with Lemonade, Inc., the "Company"), all of which are wholly-owned, directly or indirectly, by Lemonade, Inc. The Company consists of the following entities, which support Lemonade, Inc.'s U.S. and E.U. operations: (1) Lemonade Insurance Company, an insurance corporation organized under New York law; this company issues insurance policies and pays claims; it is licensed and regulated as a stock property and casualty insurance company in New York and in all other states where the Company's insurance products are available; (2) Lemonade Insurance Agency, LLC, a limited liability company organized under New York law; this company is licensed as an insurance agent in New York and in all other states where the Company's insurance products are available and it acts as the distribution and marketing agent for Lemonade Insurance Company and provides certain underwriting and claims services, and receives a fixed percentage of premium for doing so; it also acts as agent for other insurance companies in distributing their insurance, for which it receives various percentages of premium in the form of commissions for placement of insurance policies; (3) Lemonade Ltd., a company organized under the laws of Israel; this company provides technology, research and development, management, marketing and other services to the companies in the group, charged on a "cost plus" basis; (4) Lemonade Insurance N.V., a public limited company organized under the laws of the Netherlands; (5) Lemonade Agency B.V., a Netherlands private limited liability company, (6) Lemonade B.V., a Netherlands private limited liability company; and (7) Lemonade Life Insurance Agency, LLC, a limited liability company organized under the laws of Delaware; this company acts as the distribution and marketing agent for the sale and servicing of life insurance products. |
Basis of Presentation
Basis of Presentation | 12 Months Ended |
Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The Company presents its financial statements on a consolidated basis including all of its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated. All foreign currency amounts in the consolidated statements of operations and comprehensive loss have been translated using an average rate for the reporting period. All foreign currency balances in the balance sheets have been translated using the spot rate at the end of the year. All figures expressed, except share amounts, are represented in U.S. dollars in millions. Risks and Uncertainties The global pandemic resulting from the disease known as COVID-19, caused by a novel strain of coronavirus, SARS-CoV-2, has caused national and global economic and financial market disruptions and may adversely impact our business. Although the Company did not see a material impact on its results of operations for the years ended December 31, 2021 and 2020 due to the COVID-19 pandemic, the Company cannot predict the duration or magnitude of the pandemic or the full impact that it may have on the Company’s financial condition and results of operations, business operations, and workforce. |
Use of Estimates
Use of Estimates | 12 Months Ended |
Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles ("GAAP") requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. On an ongoing basis, the Company’s management evaluates estimates, including those related to contingent assets and liabilities as of the date of the consolidated financial statements as well as the reported amounts of revenue and expense during the reporting period. Such estimates are based on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities at the dates of the condensed consolidated financial statements, and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. All revisions to accounting estimates are recognized in the period in which the estimates are revised. Significant estimates reflected in the Company's consolidated financial statements include, but are not limited to, reserves for loss and loss adjustment expense, reinsurance recoverable on unpaid losses, valuation allowance on deferred tax assets and the valuation of stock-based compensation prior to the Company’s Initial Public Offering (the “IPO”). |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Segment information The Company's chief operating decision makers are the Co-Chief Executive Officer. The chief operating decision maker manages operations, allocates resources, and evaluates financial performance on a company-wide basis. The Company operates in one reporting segment within the United States and Europe, providing insurance products to customers through various sales channels. Cash, cash equivalents and restricted cash The following represents the Company's cash, cash equivalents and restricted cash as of December 31, 2021 and 2020, ($ in millions). December 31, 2021 2020 Cash and cash equivalents $ 270.6 $ 570.8 Restricted cash — 0.6 Total cash, cash equivalents and restricted cash $ 270.6 $ 571.4 Cash and cash equivalents consist primarily of bank deposits and money market accounts with maturities of three months or less at the date of acquisition and are stated at cost, which approximates fair value. The Company's restricted cash relates to security deposits for office leases in Israel. The carrying value of restricted cash approximates fair value. Investments Investments consist of fixed maturity securities and short-term investments. The Company considers all of its fixed maturity securities as available-for-sale and are carried at fair value. Fixed maturity securities consist of securities with an initial fixed maturity of more than one year. Unrealized gains and losses related to bonds are included in accumulated other comprehensive income as a separate component of stockholders' equity (deficit). The discount or premium on bonds is amortized using the effective yield method. Short-term investments, which may include commercial paper, certificates of deposit, and fixed maturity securities with an initial maturity of one year or less, are carried at amortized cost, which approximates fair value. The fair value of bonds is principally derived from market price data for identical assets from exchange or dealer markets and from market observable inputs such as interest rates and yield curves that are observable at commonly quoted intervals. For certain bonds for which market prices are not readily available, market values are principally estimated using values obtained from independent pricing services, broker quotes and internal estimates. Interest income, as well as prepayment fees and the amortization of the related premium or discount, is reported in net investment income. Realized gains or losses on the sale of investments are determined on the basis of specific identification. The Company continuously monitors the difference between cost and the estimated fair value of its investments. Each reporting period, securities with unrealized losses are reviewed to determine whether the decline in fair value requires the recognition of an allowance for credit losses. Factors considered in the review include (i) current market interest rates, (ii) general financial condition of the issuer, (iii) issuers industry and future business prospects, (iv) issuers past defaults in principal and interest payments, and (v) the payment structure of the investment and the issuers ability to make contractual payments on the investment. The Company also considers whether it intends to sell the security, or if it is more likely than not that it will be required to sell the security before recovery of its amortized cost. When assessing whether it intends to sell a fixed-maturity security or if it is likely to be required to sell a fixed-maturity security before recovery of its amortized cost, the Company evaluates certain relevant facts and circumstances which may include, but not limited to, business prospects, credit ratings and available information from asset managers and rating agencies for individual securities. For fixed-maturity securities where a decline in fair value is below the amortized cost basis and the Company intends to sell the security, or it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost, a credit-loss charge is recognized in net income based on the fair value of the security at the time of assessment. For fixed-maturity securities that the Company has the intent and ability to hold, the Company compares the estimated present value of the cash flows expected to be collected to the amortized cost of the security. The extent to which the estimated present value of the cash flows expected to be collected is less than the amortized cost of the security and represents the credit-related portion of the impairment, such is recognized in net income through an allowance for credit losses. Any remaining decline in fair value represents the noncredit portion of the impairment, which is recognized in other comprehensive income. Accrued interest receivable is recorded as a component of accrued investment income on its consolidated balance sheet which is presented separately from available-for-sale securities. The Company does not measure an allowance for credit losses on accrued interest receivable and would instead write off accrued interest receivable at the time an issuer defaults or is expected to default on payments. Fair value of financial instruments Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between willing, able and knowledgeable market participants at the measurement date. Fair value measurements are not adjusted for transaction costs. In addition, a three-tiered hierarchy for inputs is used in management's determination of fair value of financial instruments that emphasizes the use of observable inputs over the use of unobservable inputs by requiring that the observable inputs be used when available. Observable inputs are market participant assumptions based on market data obtained from sources independent of the Company. Unobservable inputs are the reporting entity's own assumptions about market participant assumptions based on the best information available under the circumstances. In assessing the appropriateness of using observable inputs in making its fair value determinations, the Company considers whether the market for a particular security is "active" or not based on all the relevant facts and circumstances. To determine the fair value of its investments, the Company utilizes third-party valuation service providers to gather, analyze and interpret market information and derive fair values based upon relevant methodologies and assumptions for individual instruments. Valuation service providers typically obtain data about market transactions and other key valuation model inputs from multiple sources and, through the use of widely accepted valuation models, provide a single fair value measurement for individual securities for which a fair value has been requested under the terms of service agreements. The inputs used by the valuation service providers include, but are not limited to, market prices from recently completed transactions and transactions of comparable securities, interest rate yield curves, credit spreads, currency rates and other market observable information, as applicable. The valuation models consider, among other things, market observable information as of the measurement date as well as the specific attributes of the security being valued including its term, interest rate, credit rating, industry sector and, when applicable, collateral quality and other issue or issuer specific information. When market transactions or other market observable data is limited, the extent to which judgment is applied in determining fair value is greatly increased. As a basis for considering such assumptions, a three-tier value hierarchy is used in management's determination of fair value based on the reliability and observability of inputs as follows: Level 1 — Valuations are based on unadjusted quoted prices in active markets that the Company has the ability to access for identical, unrestricted assets and do not involve any meaningful degree of judgment. An active market is defined as a market where transactions for the financial instrument occur with sufficient frequency and volume to provide pricing information on an ongoing basis; Level 2 — Valuations are based on direct and indirect observable inputs other than quoted market prices included in Level 1. Level 2 inputs include quoted prices for similar assets in active markets and inputs other than quoted prices that are observable for the asset, such as the terms of the security and market-based inputs; Level 3 — Valuations are based on techniques that use significant inputs that are unobservable. The valuation of Level 3 assets and liabilities requires the greatest degree of judgment. These measurements may be made under circumstances in which there is little, if any, market activity for the asset or liability. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment. In making the assessment, the Company considers factors specific to the asset. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement is classified is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company's fair value measurements include investments, preferred stock warrants and stock options. Concentrations of credit risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, fixed maturity securities and reinsurance recoverables. Cash and cash equivalents are held with financial institutions of high credit quality, and fixed maturity securities primarily on U.S. government, U.S. government agencies, and high credit quality issuers of debt securities. Cash and cash equivalent balances may exceed the amount of insurance provided on such balances. The Company evaluates the financial condition of its reinsurers, and reinsures its business primarily with highly rated reinsurers, and may retain funds due to reinsurers or require letters of credit as security for those recoverable balances (Note 8). Premium receivable Premium receivable is reported net of an allowance for estimated uncollectible premium amounts. Premiums receivable are short-term in nature and due within a year. Allowance is based upon the ongoing review of amounts outstanding, length of collection periods, the creditworthiness of the insured and other relevant factors. Amounts deemed to be uncollectible are written off against the allowance. Prior to the adoption of CECL, the Company recorded an allowance for doubtful accounts of $0.5 million as of December 31, 2020. and no adjustment was recorded as a result of the implementation of the standard. Allowance for credit losses amounted to $1.6 million as of December 31, 2021. Reinsurance Reinsurance is used to mitigate the exposure to losses, manage capacity and protect capital resources. Reinsuring loss exposures does not relieve the Company from its obligations to policyholders. Reinsurance recoverable, including amounts related to incurred but not reported claims (“IBNR”) and prepaid reinsurance premium, is reported as an asset. To minimize exposure to losses related to a reinsurer's inability to pay, the financial condition of such reinsurer is evaluated initially upon placement of the reinsurance and periodically thereafter. In addition to considering the financial condition of a reinsurer, the collectability of the reinsurance recoverable is evaluated based upon a number of other factors. Such factors include the amounts outstanding, length of collection periods, disputes, any collateral or letters of credit held and other relevant factors. To the extent that an allowance for uncollectible reinsurance recoverable is established, amounts deemed to be uncollectible would be written off against the allowance for estimated uncollectible reinsurance recoverable. The Company has no historical experience on credit losses from reinsurance recoverables and has not recorded any allowance for uncollectible reinsurance recoverable as of December 31, 2021 and December 31, 2020. Amounts recoverable from reinsurers are estimated in a manner consistent with the liability associated with the reinsured business and consistent with the terms of the underlying contract. Ceded premium written is recorded in accordance with the applicable terms of the reinsurance contracts and ceded premium earned is charged against revenue over the period of the reinsurance contracts. Ceded losses incurred reduce net loss and loss adjustment expense incurred over the applicable periods of the reinsurance contracts with third-party reinsurers. The ceding of insurance does not legally discharge the Company from its primary liability for the full amount of the policy coverage, and therefore the Company will be required to pay the loss and bear collection risk if the reinsurer fails to meet its obligations under the reinsurance agreement. To minimize exposure to significant losses from reinsurance insolvencies, the Company evaluates the financial condition of its reinsurers and monitors concentrations of credit risk. Prepaid reinsurance premiums represents the unearned portion of premiums ceded to reinsurers. Funds held under reinsurance treaties represent amounts retained by the Company on behalf of the reinsurer based on terms of the reinsurance agreements. Deferred acquisition costs Direct acquisition expenses, which primarily consist of premium taxes, related to each policy the Company writes are deferred and amortized to expense in proportion to the premium earned, generally over a period of one year. Deferred acquisition costs are reviewed at least annually to determine their recoverability from future income. If any such costs are determined not to be recoverable they are charged to expense. Anticipated net loss and loss adjustment expense and estimated remaining costs of servicing contracts are considered when evaluating recoverability of deferred acquisition costs. The amount of deferred acquisition costs amortized to income was $9.5 million, $4.9 million , and $2.1 million for the years ended December 31, 2021, 2020, and 2019 respectively, and are included in other insurance expense on the consolidated statements of operations and comprehensive loss. Property and equipment, net Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful life of the assets at the following rates: Years Computers and electronic equipment 3 Furniture and equipment 6 Leasehold improvements Shorter of lease term or useful life Capitalized internal use software The Company defers certain costs related to the development of internal use software, which are incurred during the application development stage, and amortizes them over the software's estimated useful life. The amounts capitalized include employee payroll and payroll-related costs directly associated with the development activities. The Company's policy is to amortize capitalized costs using the straight-line method over the estimated useful life, which is currently two years, b eginning when the software is substantially complete and ready for its intended use. Costs incurred in the preliminary and post-implementation stages of the Company's products are expensed as incurred. Intangible assets Indefinite-lived intangible assets are tested for impairment at least annually, or more frequently if events or changes in circumstances indicate that the assets may be impaired. The annual impairment test for indefinite-lived intangible assets may be completed through a qualitative assessment to determine if the fair value of the indefinite-lived intangible assets is more likely than not greater than the carrying amount. The Company may elect to bypass the qualitative assessment, or if a qualitative assessment indicates it is more likely than not that the estimated carrying value exceeds the fair value, the Company will test for impairment using a quantitative process. If the Company determines that impairment of its intangible assets may exist, the amount of impairment loss is measured as the excess of carrying value over fair value. The estimates in the determination of the fair value of indefinite-lived intangible assets include the anticipated future revenues of the Company and the resulting cash flows. As of December 31, 2021 and 2020, there were no circumstances that indicate that the carrying amount of intangible assets deemed to have an indefinite useful life may not be recoverable. Unpaid loss and loss adjustment expense The reserves for loss and loss adjustment expense represent management's best estimate of the ultimate cost of all reported and unreported loss incurred through the balance sheet date. Unpaid loss and loss adjustment are based upon the assumption that past developments are an appropriate indicator of future events. The IBNR portion of unpaid loss and loss adjustment expense is based on past experience and other factors. The methods of making such estimates and for establishing the resulting reserves are periodically reviewed and updated. Any resulting adjustments are reflected in income. Unpaid loss and loss adjustment expense consists of the estimated ultimate cost of settling claims incurred within the reporting period (net of related reinsurance recoverable), including IBNR claims, plus changes in estimates of prior period losses. The Company reports its unpaid loss and loss adjustment expense on an undiscounted basis. The estimation of the liability for unpaid loss and loss adjustment expense is inherently complex and subjective, especially in view of changes in the legal and economic environment, which impact the development of unpaid loss and loss adjustment expense, and therefore quantitative techniques frequently have to be supplemented by subjective considerations and managerial judgment. In addition, trends that have affected development of liabilities in the past may not necessarily occur or affect liability development to the same degree in the future. Therefore, there can be no assurance that the ultimate liability will not materially differ from amounts reserved with a resulting material effect on the operating results of the Company. The unpaid loss and loss adjustment expense estimate is generally calculated by first projecting the ultimate cost of all claims that have been incurred and then subtracting reported losses and loss adjustment expenses. Reported losses include cumulative paid losses and loss adjustment expenses plus case reserves. Therefore, the IBNR also includes provision for expected development on reported claims. The Company's actuarial analysis of the historical data provides the factors the Company uses in its actuarial analysis in estimating its loss and loss adjustment reserves. These factors are measures over time of claims reported, average case incurred amounts, case development, severity and payment patterns. However, these factors cannot be directly used as they do not take into consideration changes in business mix, claims management, regulatory issues, and other subjective factors. The Company uses multiple actuarial methods in determining its estimates of the ultimate unpaid claim liabilities. Each of these methods require judgment and assumptions. The methods can include, but are not limited to: • Paid Development Method — uses historical, cumulative paid losses by accident year and develops those actual losses to estimated ultimate losses based upon the assumption that each accident year will develop to estimated ultimate cost in a manner that is analogous to prior years. • Paid Bornhuetter-Ferguson Method — a combination of the Paid Development Method and the Expected Loss Method, the Paid Bornhuetter-Ferguson Method estimates ultimate losses by adding actual paid losses and projected future unpaid losses. The amounts produced are then added to cumulative paid losses to produce the final estimates of ultimate incurred losses. • Incurred Development Method — uses historical, cumulative incurred losses by accident year and develops those actual losses to estimated ultimate losses based upon the assumption that each accident year will develop to estimated ultimate cost in a manner that is analogous to prior years. • Incurred Bornhuetter — Ferguson Method — a combination of the Incurred Development Method and the Expected Loss Method, the Incurred Bornhuetter-Ferguson Method estimates ultimate losses by adding actual incurred losses and projected future unreported losses. The amounts produced are then added to cumulative incurred losses to produce an estimate of ultimate incurred losses. • Expected Loss Method — utilizes an expected ultimate loss ratio based on historical experience adjusted for trends multiplied by earned premium to project ultimate losses. For each method, losses are projected to the ultimate amount to be paid. The Company then analyzes the results and may emphasize or de-emphasize some or all of the outcomes to reflect actuarial judgment regarding their reasonableness in relation to supplementary information and operational and industry changes. These outcomes are then aggregated to produce a single selected point estimate that is the basis for the actuary's point estimate for loss reserves. Contingent liabilities The Company accounts for its contingent liabilities in accordance with Accounting Standards Codification (ASC) Topic 450, "Contingencies". A provision is recorded when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. With respect to legal matters, provisions are reviewed and adjusted to reflect the impact of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. Preferred stock warrant liability The Company classified warrants for the purchase of shares of its convertible preferred stock (see Notes 6 and 14) as a liability on its consolidated balance sheets as these warrants were freestanding financial instruments which underlying shares were contingently redeemable (upon a certain liquidation events) and, therefore obligated the Company to transfer assets. The warrant liability, which consisted of warrants for the purchase of Series A convertible preferred stock, was initially recorded at fair value upon the date of issuance and was subsequently remeasured to fair value at each reporting date. Changes in the fair value of the warrant liability were recognized as a component of general and administrative expenses in the consolidated statements of operations and comprehensive loss. Changes in the fair value of the warrants comprising the preferred stock warrant liability were recognized until each respective warrant was exercised (see Notes 6 and 14). Comprehensive loss Comprehensive loss includes net loss as well as other changes in stockholders' equity that result from transactions and economic events other than those with stockholders. Employee related obligations During 2020, the Company established a defined contribution savings plan under Section 401(k) of the Internal Revenue Code for employees based in the United States. This plan covers substantially all employees who meet minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis. Company contributions to the plan may be made at the discretion of the Company's board of directors. The matching contributions made by the Company amounted to $0.9 million , $0.5 million and $0.3 million for the years ended December 31, 2021, 2020 and 2019, respectively. Revenue Premium is earned on a pro-rata basis over the term of the related insurance coverage. Unearned premium and prepaid reinsurance premium represent the portion of gross premium written and ceded premium written, respectively, related to the unexpired terms of related policies. Premium ceded to third party reinsurers is reported as a reduction of earned premium. A premium deficiency is recognized if the sum of expected loss and loss adjustment expense, unamortized acquisition costs, and policy maintenance costs exceeds the remaining unearned premium. A premium deficiency would first be recognized by charging any unamortized acquisition costs to expense to the extent required to eliminate the deficiency. If the premium deficiency were greater than unamortized acquisition costs, a liability would be accrued for the excess deficiency. The Company does not consider anticipated investment income when determining if a premium deficiency exists. There was no premium deficiency as of December 31, 2021 and 2020. Ceding commission income represents commission received based on premium ceded to third-party reinsurers to reimburse us for acquisition and underwriting expenses. Commissions on reinsurance premium ceded is recorded as earned consistent with the recognition of earned premium on the underlying insurance policies, on a pro-rata basis over the terms of the policies reinsured. The portion of ceding commission income which represents reimbursement of successful acquisition costs related to the underlying policies is recorded as an offset to other insurance expense. Net investment income represents interest earned from fixed maturity securities, short term securities and other investments, and gains or losses from sale of investments. Investment income is recorded as earned. Investment income consists primarily of interest income which is recognized on an accrual basis. Net investment income represents investment income, net of investment fees paid to the Company’s investment manager and other investment expenses. Commission income consists of commissions earned on policies written on behalf of third-party insurance companies where the Company has no exposure to the insured risk. Such commission is recognized on the effective date of the associated policy. Other income consists of fees collected from policyholders relating to installment premiums, and are recognized at the time each policy installment is billed. Other insurance expense Other insurance expense consists of the amortization of deferred acquisition costs and merchant processing fees. Other insurance expense also includes employee compensation, including stock-based compensation and benefits, of the Company's underwriting teams, as well as allocated occupancy costs and related overhead costs based on headcount. Sales and marketing Sales and marketing includes third-party marketing, advertising, branding, public relations and sales expenses. Sales and marketing also includes associated employee compensation, including stock-based compensation and benefits, as well as allocated occupancy costs and related overhead based on headcount. Sales and marketing costs are expensed as incurred. Advertising expenses totaled $104.6 million, $58.3 million and $76.0 million for the years ended December 31, 2021, 2020 and 2019, respectively. Technology development Technology development consists of employee compensation, including stock-based compensation and benefits, and expenses related to vendors engaged in product management, design, development and testing of the Company's websites and products. Technology development also includes allocated occupancy costs and related overhead costs based on headcount. Technology development costs are expensed as incurred, except for costs that are capitalized related to internal-use software development projects which are subsequently depreciated over the expected useful life of the developed software. General and administrative General and administrative includes employee compensation, including stock-based compensation and benefits for executive, finance, accounting, legal, business operations and other administrative personnel. In addition, general and administrative includes outside legal, tax and accounting services, insurance, and allocated occupancy costs and related overhead costs based on headcount. Leases The Company determines whether an arrangement is a lease at its inception. Operating lease Right-of-Use assets (ROU) and operating lease liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. Operating lease ROU assets are presented under Other assets (Note 12) and Operating lease liabilities are presented under Other Liabilities and Accrued Expenses (Note 14). To determine the present value of lease payments, the Company uses an estimated incremental borrowing rate for leases of office spaces which is derived from information available at the lease commencement date. For certain leases that contain options to extend, the options are included in lease liabilities only if the company is reasonably certain that the option will be exercised. The Company accounts for the lease and non-lease components as a single lease component for leases for real estate, Operating lease expense is recognized on a straight-line basis over the lease term. Accounting for stock-based compensation The Company accounts for stock-based compensation in accordance with ASC Topic 718, "Compensation — Stock Compensation." Stock options are mainly awarded to employees and members of the Company's board of directors and measured at fair value at each grant date. The Company calculates the fair value of share options on the date of grant using the Black-Scholes option-pricing model and the expense is recognized over the requisite service period for awards expected to vest using the straight-line method. The requisite service period for share options is generally four years. The Company recognizes forfeitures as they occur. The Black-Scholes option-pricing model requires the Company to make a number of assumptions, including the value of the Company's common stock, expected volatility, expected term, risk-free interest rate and expected dividends. The Company evaluates the assumptions used to value option awards upon each grant of stock options. Prior to the Company’s IPO, expected volatility was calculated based on the implied volatility from market comparisons of certain publicly traded companies and other factors. The expected option term was calculated based on the simplified method, which uses the midpoint between the vesting date and the contractual term, as the Company does not have sufficient historical data to develop an estimate based on participant behavior. The risk-free interest rate was based on the U.S. treasury bond yield with an equivalent term. The Company has not paid dividends and has no foreseeable plans to pay dividends. Prior to the Company’s IPO, the fair value of common stock underlying the options was historically determined by the Company's board of directors, with input from management, and considered third-party valuations of the Company's common stock. Because there was no public market for the Company's common stock, the board of directors determined its fair value at the time of grant of the option by considering a number of objective and subjective factors, including financing investment rounds, operating and financial performance, the lack of liquidity of share capital and general and industry specific economic outlook, among other factors. The Company's board of directors determined the fair value of common stock based on valuations performed using the Option Pricing Method ("OPM") and the Probability Weighted Expected Return Method ("PWERM") subject to relevant facts and circumstances. Foreign currency Financial statement accounts expressed in foreign currencies are translated into U.S. dollars. Functional currency assets and liabilities are translated into U.S. dollars generally using rates of exchange prevailing at the balance sheet date of each respective subsidiary and the related translation adjustments are recorded as a separate component of accumulated other comprehensive income, net of any related taxes. Income taxes The Company accounts for income taxes in accordance with the liability method whereby deferred tax assets and liability account balances are determined based on the differences between financial reporting and the tax basis for assets and liabilities and are measured using the enac |
Acquisition of a Business
Acquisition of a Business | 12 Months Ended |
Dec. 31, 2021 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisition of a Business | Acquisition of a Business On November 8, 2021, Lemonade entered into a definitive agreement (“Agreement”) to acquire Metromile, Inc. (“Metromile’). Pursuant to the terms of the Agreement, the Company will acquire 100% of the equity of Metromile, through an all stock transaction that implies a fully diluted equity value of $500.0 million, or over $200.0 million net of cash (based upon the conversion ratio of 19 shares of Metromile for 1 share of Lemonade). The transaction is expected to close in the second quarter of 2022 subject to customary closing conditions and approvals. Metromile is a leading digital insurance platform in the United States. With data science at its foundation, Metromile offers real-time, personalized auto insurance policies by the mile instead of the industry’s reliance on approximations that have historically made prices unfair. Metromile’s digitally native offering is built around the modern driver’s needs, featuring automated claims and complementary smart driving features. In addition, through Metromile Enterprise, Metromile licenses its technology platform to insurance companies around the world. Metromile’s cloud-based software as a service enables carriers to operate with greater efficiency, automate claims to expedite resolution, reduce losses associated with fraud, and unlock the productivity of employees. |
Investments
Investments | 12 Months Ended |
Dec. 31, 2021 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | Investments Unrealized gains and losses The following tables present cost or amortized cost and fair values of investments at December 31, 2021 and 2020, respectively ($ in millions): Cost or Gross Fair Gains Losses December 31, 2021 Corporate debt securities $ 593.4 $ — $ (4.7) $ 588.7 U.S. Government obligations 102.2 0.1 (0.8) 101.5 Municipal securities 1.2 — — 1.2 Total $ 696.8 $ 0.1 $ (5.5) $ 691.4 December 31, 2020 Corporate debt securities $ — $ — $ — $ — U.S. Government obligations 6.4 0.2 — 6.6 Municipal securities — — — — Total $ 6.4 $ 0.2 $ — $ 6.6 Gross unrealized losses for fixed maturities was $5.5 million and less than $0.1 million as of December 31, 2021 and 2020. Gross unrealized gains and losses are recorded as a component of accumulated other comprehensive income. Contractual maturities of bonds The following table presents the cost or amortized cost and estimated fair value of bonds as of December 31, 2021 by contractual maturity ($ in millions). Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. December 31, 2021 Cost or Fair Value Due in one year or less $ 69.2 $ 69.2 Due after one year through five years 627.6 622.2 Due after five years through ten years — — Due after ten years — — Total $ 696.8 $ 691.4 Aging of gross unrealized losses The following tables present the gross unrealized losses and related fair values for the Company's available-for-sale bond securities, grouped by duration of time in a continuous unrealized loss position, as of December 31, 2021 and 2020 ($ in millions): Less than 12 Months 12 Months or More Total Fair Value Gross Fair Value Gross Fair Value Gross December 31, 2021 Corporate debt securities $ 581.9 $ (4.7) $ — $ — $ 581.9 $ (4.7) U.S. Government obligations 95.0 (0.8) 0.5 — 95.5 (0.8) Municipal securities 1.2 — — — 1.2 — Total $ 678.1 $ (5.5) $ 0.5 $ — $ 678.6 $ (5.5) December 31, 2020 Corporate debt securities $ — $ — $ — $ — $ — $ — U.S. Government obligations — — — — — — Municipal securities — — — — — — Total $ — $ — $ — $ — $ — $ — Gross unrealized losses for fixed maturities was less than $0.1 million for twelve months or more as of December 31, 2021 and 2020, respectively. As of December 31, 2021, 259 of the fixed securities held were in an unrealized loss position . The Company determined that unrealized losses on fixed maturities were primarily due to the interest rate environment, and not credit risk related to the issuers of these securities. The Company does not intend to sell the investments and it is not more likely than not that that the Company will be required to sell the investments before the recovery of the amortized cost basis. No allowance for credit losses related to any of these securities was recorded for the year ended December 31, 2021. Special deposits Bonds with a total carrying value of $6.8 million and $6.5 million at December 31, 2021 and 2020, respectively, which are included in fixed maturities available-for-sale on the balance sheets were deposited with various state insurance departments, as required, to comply with state insurance laws. The carrying value of bonds deposited with each respective state is as follows ($ in millions): December 31, U.S. State 2021 2020 New York $ 2.8 $ 2.8 Washington 1.2 1.2 Colorado 1.1 1.1 Nevada 0.4 0.2 North Carolina 0.3 0.3 New Mexico 0.3 0.3 Virginia 0.3 0.3 Florida 0.2 0.2 Arkansas 0.1 — Massachusetts 0.1 0.1 Total $ 6.8 $ 6.5 Net investment income An analysis of net investment income follows ($ in millions): December 31, 2021 2020 2019 Interest on cash and cash equivalents $ 0.4 $ 1.0 $ 2.8 Fixed maturities 1.5 0.1 0.1 Short-term investments 0.1 0.4 0.5 Total 2.0 1.5 3.4 Investment expense 0.1 0.0 0.0 Net investment income $ 1.9 $ 1.5 $ 3.4 Investment gains and losses There were no pre-tax realized capital gains for the years ended December 31, 2021, 2020 and 2019. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The following tables present the Company's fair value hierarchy for financial assets and liabilities measured as of December 31, 2021 and 2020 ($ in millions): December 31, 2021 Level 1 Level 2 Level 3 Total Assets: Corporate debt securities $ — $ 588.7 $ — $ 588.7 U.S. Government obligations — 101.5 — 101.5 Municipal securities — 1.2 — 1.2 Fixed maturities — 691.4 — 691.4 Short term investments — 110.4 — 110.4 Total $ — $ 801.8 $ — $ 801.8 December 31, 2020 Level 1 Level 2 Level 3 Total Assets: Corporate debt securities $ — $ — $ — — U.S. Government obligations — 6.6 — 6.6 Municipal securities — — — — Fixed maturities — 6.6 — 6.6 Short term investments — — — — Total $ — $ 6.6 $ — $ 6.6 The fair value of all our different classes of Level 2 fixed maturities and short-term investments are estimated by using quoted prices from a third-party valuation service provider to gather, analyze and interpret market information and derive fair values based upon relevant methodologies and assumptions for individual instruments. There were no transfers between Level 1, Level 2, or Level 3 during the years ended December 31, 2021 and 2020. |
Reinsurance
Reinsurance | 12 Months Ended |
Dec. 31, 2021 | |
Insurance [Abstract] | |
Reinsurance | Reinsurance In the ordinary course of business, the Company cedes losses and LAE to other reinsurance companies. These arrangements reduce the net loss potential arising from large or catastrophic risks. Certain of these arrangements consist of excess of loss and catastrophe contracts, which protect against losses exceeding stipulated amounts. The ceding of risk through reinsurance does not relieve the Company from its obligations to policyholders. The Company remains liable with respect to losses and LAE ceded in the event that any reinsurer does not meet obligations assumed under the reinsurance agreements. The Company does not have any significant unsecured aggregate recoverable for losses, paid and unpaid including IBNR, loss adjustment expenses, and unearned premium with any individual reinsurer. Through June 30, 2021, the Company had proportional reinsurance contracts which cover all of the Company's products and geographies, and transferred, or “ceded,” 75% of the premium to reinsurers ("Proportional Reinsurance Contracts"). In exchange, these reinsurers pay a ceding commission of 25% for every dollar ceded, in addition to funding all of the corresponding claims, or 75% of all claims. The Company opted to manage the remaining 25% of the business with alternative forms of reinsurance through non-proportional reinsurance contracts ("Non-Proportional Reinsurance Contracts"). A portion of the Company’s proportional reinsurance program expired on June 30, 2021. The Company renewed the majority of the expiring reinsurance contracts at terms that are very similar to the prior agreements. As the business continues to grow and diversify, and with stability in our insurance results, the Company decreased the overall share of proportional reinsurance from 75% of premium to 70%. In addition, the Company purchased a new reinsurance program to protect against catastrophe risk in the U.S that exceed $60 million in losses. Other non-proportional reinsurance contracts were renewed with terms similar to the expiring contracts. The Company also had a multi-year Aggregate Excess of Loss Reinsurance Contract which expired on June 30, 2020, which covered against both catastrophe and non-catastrophe events, and provided excess of loss reinsurance on a per cohort basis excess of a cohort’s 50% Loss Ratio subject to an aggregate (i.e., a portfolio level) deductible of 10% of earned premium. A cohort as it relates to this reinsurance contract is a notional grouping of policyholders on the books of the Company. After a policy is bound, the new policyholder is asked to designate to which non-profit group he/she would prefer any charitable donation that the Company may make be contributed. All policyholders identifying the same non-profit group constitute one cohort. Reinsurance recoverable Amounts recoverable from reinsurers are recognized in a manner consistent with the claims liabilities associated with the reinsurance placement and presented on the balance sheet as reinsurance recoverable. Such balance as of December 31, 2021 and 2020 are presented in the table below ($ in millions). December 31, 2021 2020 Reinsurance recoverable on paid losses $ 17.1 $ 12.7 Ceded unpaid loss and LAE 72.7 36.3 Total reinsurance recoverable $ 89.8 $ 49.0 To reduce credit exposure to reinsurance recoverable balances, the Company obtains letters of credit from certain reinsurers that are not authorized as reinsurers under U.S. state insurance regulations. In addition, under the terms of its reinsurance contracts, the Company may retain funds due to reinsurers as security for those recoverable balances. The Company has the following unsecured reinsurance recoverable balances from reinsurers at December 31, 2021 and 2020 with all but one having an A.M. Best rating of A (Excellent) or better ($ in millions): AM Best December 31, Reinsurer 2021 2020 A+ Hannover Rueck SE $ 60.2 $ 22.2 A MAPFRE Re, Compania De Reaseguros S.A. 14.4 6.8 A+ Swiss Reinsurance America Corporation 12.4 5.8 NR Lloyd’s Underwriter Syndicate no. 1084 CSL 4.4 3.0 A+ Arch Reinsurance Limited 2.4 2.7 A Lloyd's Underwriter Syndicate no. 0033 HIS 0.8 1.6 NR Lloyd's Underwriter Syndicate no. 2001 AML 0.7 1.2 A+ Munich Reinsurance America Inc 0.6 1.6 A Lloyd's Underwriter Syndicate no. 2357 NCL 0.6 1.6 A Hiscox Insurance Company (Bermuda) Ltd 0.5 1.2 A++ Tokio Marine & Nichido Fire Insurance Company Limited — 3.9 $ 97.0 $ 51.6 Other reinsurers 3.3 5.1 $ 100.3 $ 56.7 Premium written, earned and losses and LAE incurred The impact of reinsurance treaties on the Company's consolidated financial statements is as follows ($ in millions): December 31, 2021 2020 2019 Premium written: Direct $ 375.7 $ 214.4 $ 115.8 Ceded (273.4) (171.7) (11.2) Net premium written $ 102.3 $ 42.7 $ 104.6 Premium earned: Direct $ 292.0 $ 158.7 $ 75.5 Ceded (215.0) (81.4) (11.7) Net premium earned $ 77.0 $ 77.3 $ 63.8 Loss and LAE incurred: Direct $ 264.1 $ 113.4 $ 59.7 Ceded (192.2) (58.7) (13.9) Net loss and LAE incurred $ 71.9 $ 54.7 $ 45.8 |
Deferred Acquisition Costs
Deferred Acquisition Costs | 12 Months Ended |
Dec. 31, 2021 | |
Insurance [Abstract] | |
Deferred Acquisition Costs | Deferred Acquisition Costs Deferred acquisition costs consist primarily of commissions, premium taxes and other acquisition costs incurred that are directly related to the successful acquisition of business written on a direct basis. The amortization of deferred acquisition costs is included in other insurance expense in the consolidated statements of operations and comprehensive loss. The following table presents the policy acquisition costs deferred and amortized ($ in millions): December 31, 2021 2020 Deferred Acquisition Costs: Balance, January 1 $ 3.5 $ 1.8 Add: Premium taxes and other acquisition costs 9.8 5.8 Direct commissions 2.4 0.8 Less: Amortization of net deferred acquisition costs (9.5) (4.9) Balance, December 31 $ 6.2 $ 3.5 Other Insurance Expense: Amortization of net deferred acquisition costs $ 9.5 $ 4.9 Period costs 14.6 9.5 Total other insurance expense $ 24.1 $ 14.4 |
Property and Equipment, net
Property and Equipment, net | 12 Months Ended |
Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, net | Property and Equipment, net Property and equipment, net consists of the following ($ in millions): December 31, 2021 2020 Computer equipment and software $ 11.7 $ 4.8 Leasehold improvements 4.6 2.2 Furniture and equipment 1.3 1.1 17.6 8.1 Accumulated depreciation (5.9) (2.4) Property and equipment, net $ 11.7 $ 5.7 Depreciation expense for the years ended December 31, 2021, 2020 and 2019 was $3.7 million, $1.7 million and $0.6 million, respectively and included in general and administrative expenses on the consolidated statements of operations and comprehensive loss. The Company capitalized costs related to the development of internal-use software of $8.1 million and $3.2 million for the years ended December 31, 2021 and 2020, respectively. Capitalized amounts are include d as a component of property and equipment under computer equipment and software. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Intangible Assets The Company acquired a trademark associated with the Company's name in 2019. The indefinite-lived intangible asset has a carrying value of $0.6 million and $0.6 million as of December 31, 2021 and 2020. The Company intends to maintain the trademark and renewal will take place as needed. |
Other Assets
Other Assets | 12 Months Ended |
Dec. 31, 2021 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other Assets | Other Assets Other assets consists of the following ($ in millions): December 31, 2021 2020 Right-of-use assets (Note 22) $ 21.9 $ — Ceding commission receivable 14.5 5.4 Prepaid expenses 10.6 7.5 Investment income due and accrued 3.4 0.9 Other 2.8 0.7 Total other assets $ 53.2 14.5 |
Unpaid Loss and Loss Adjustment
Unpaid Loss and Loss Adjustment Expense | 12 Months Ended |
Dec. 31, 2021 | |
Insurance [Abstract] | |
Unpaid Loss and Loss Adjustment Expense | Unpaid Loss and Loss Adjustment Expense The following table presents the activities in the liability for unpaid loss and loss adjustment expense (“LAE”) as of December 31, 2021 and 2020 ($ in millions): December 31, 2021 2020 Unpaid loss and LAE as of January 1 $ 46.3 $ 28.2 Less: Reinsurance recoverable (1) 36.3 18.5 Net unpaid loss and LAE as of January 1 10.0 9.7 Add: Incurred losses and LAE, net of reinsurance, related to: Current year 73.2 54.8 Prior years (1.3) (0.1) Total incurred 71.9 54.7 Deduct: Paid losses and LAE, net of reinsurance, related to: Current year 49.2 44.6 Prior years 7.5 9.8 Total paid 56.7 54.4 Foreign currency translation gain (loss) — — Unpaid loss and LAE, net of reinsurance recoverable, as of December 31 25.2 10.0 Reinsurance recoverable as of December 31 (1) 72.7 36.3 Unpaid loss and LAE, gross of reinsurance recoverable, as of December 31 $ 97.9 $ 46.3 ____________ (1) Reinsurance recoverable in this table includes only ceded unpaid loss and LAE Unpaid loss and LAE includes anticipated salvage and subrogation recoverable. Considerable variability is inherent in the estimate of the reserve for losses and LAE. Although management believes the liability recorded for losses and LAE is adequate, the variability inherent in this estimate could result in changes to the ultimate liability, which may be material to stockholders' equity. Additional variability exists due to accident year allocations of ceded amounts in accordance with reinsurance agreements, which is not expected to result in any changes to the ultimate liability. The Company had favorable development on net loss and LAE reserves of $1.3 million and $0.1 million as of December 31, 2021 and December 31, 2020. No additional premium or returned premium have been accrued as a result of prior year effects. For the year ended December 31, 2021, current accident year incurred loss and LAE included $6.9 million of net incurred loss and LAE from the severe winter storm (“Uri”) that affected our customers in Texas and Oklahoma, and $0.8 million relating to wildfires in Colorado. The net incurred loss and LAE from Uri and from the wildfires as of December 31, 2021 represents the Company's best estimates based upon information currently available. The Company compiles and aggregates its claims data by grouping the claims according to the year in which the claim occurred (Accident Year) when analyzing claim payment and emergence patterns and trends over time. For the purpose of defining claims frequency, the number of reported claims is by loss occurrence and includes claims that do not result in a liability or payment associated with them. The following is information about incurred and paid loss development as of December 31, 2021, net of reinsurance, as well as cumulative claim frequency and the total of IBNR liabilities included within the net incurred loss amounts. The Company separates home and renters claim experience from its pet claim experience when analyzing incurred and paid loss and allocated loss adjustment expenses, as there are distinct differences in the development and claim count emergence patterns. The information about incurred and paid claims development for the years ended prior to December 31, 2021, is presented as unaudited supplementary information. Home and Renters Incurred loss and allocated loss adjustment expense ("ALAE"), net of re insurance The following table presents incurred loss and ALAE, net of reinsurance, as well as IBNR loss reserves and the number of reported claims ($ in millions, except for number of claims): December 31, 2021 Cumulative December 31, 2016 2017 2018 2019 2020 2021 IBNR (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Accident Year 2016 $ — $ — $ — $ — $ — $ — $ — 8 2017 — 1.7 1.7 1.7 1.7 1.7 — 1,758 2018 — — 15.0 13.5 13.4 13.4 — 10,528 2019 — — — 46.0 46.0 46.2 — 19,483 2020 — — — — 53.2 51.8 1.1 30,212 2021 — — — — — 59.4 11.1 50,821 Total incurred losses and ALAE, net $ 172.5 $ 12.2 112,810 Amounts in accident year 2016 for the years ended December 31, 2016, 2017, 2018, 2019, 2020 and 2021 were less than $0.1 million, respectively. IBNR as of December 31, 2021 for accident years 2018 and 2019 was less than $0.1 million. Home and Renters Cumulative paid loss and ALAE, net of reinsurance The following table presents cumulative paid loss and ALAE, net of reinsurance ($ in millions): December 31, 2016 2017 2018 2019 2020 2021 (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Accident Year 2016 $ — $ — $ — $ — $ — $ — 2017 — 1.6 1.7 1.7 1.7 1.7 2018 — — 13.2 13.4 13.4 13.4 2019 — — — 36.4 46.1 46.2 2020 — — — — 42.9 50.0 2021 — — — — — 37.9 Total paid losses and ALAE, net $ 149.2 Total unpaid loss and ALAE reserves, net $ 22.9 Ceded unpaid loss and LAE 66.7 Gross unpaid loss and LAE $ 89.6 Cumulative paid loss and ALAE, net of reinsurance related to accident year 2016 was less than $0.1 million during the years ended December 31, 2016, 2017 , 2018, 2019, 2020, and 2021, respectively. Average annual percentage payout of accident year incurred claims by age, net of reinsurance (unaudited supplementary information) Year 1 Year 2 Year 3 Home and renters 79 % 15 % 4 % Pet Incurred loss and allocated loss adjustment expense ("ALAE"), net of re insurance The following table presents incurred loss and ALAE, net of reinsurance, as well as IBNR loss reserves and the number of reported claims ($ in millions, except for number of claims): December 31, 2021 Cumulative 2020 2021 IBNR (unaudited) Accident Year 2020 $ 0.3 $ 0.2 $ — 20,415 2021 — 10.0 2.1 173,379 Total incurred losses and ALAE, net $ 10.2 $ 2.1 193,794 Pet Cumulative paid loss and ALAE, net of reinsurance The following table presents cumulative paid loss and ALAE, net of reinsurance ($ in millions): December 31, 2020 2021 (unaudited) Accident Year 2020 $ 0.4 $ 0.7 2021 — 7.5 Total paid losses and ALAE, net $ 8.2 Total unpaid loss and ALAE reserves, net $ 2.3 Ceded unpaid loss and LAE 6.0 Gross unpaid loss and LAE $ 8.3 Average annual percentage payout of accident year incurred claims by age, net of reinsurance (unaudited supplementary information) Year 1 Year 2 Year 3 Pet 94 % 5 % 1 % The reconciliation of the net incurred and paid loss information in the loss reserve rollforward table and development tables with respect to the current accident year is as follows ($ in millions): 2021 Current Accident Year 2021 Prior Accident Year Incurred Paid Incurred Paid Rollforward table Home $ 62.2 $ 40.6 $ (1.2) $ 7.2 Pet 10.9 8.5 (0.1) 0.3 Car 0.1 0.1 — — 73.2 49.2 (1.3) 7.5 Development table Home 59.4 37.9 (1.2) 7.2 Pet 10.0 7.5 (0.1) 0.3 69.4 45.4 (1.3) 7.5 Others — — — — Variance $ 3.8 $ 3.8 $ — $ — Unallocated loss adjustment expense $ 3.8 $ 3.8 U.S. state insurance laws and regulations prescribe accounting practices for determining statutory net income and capital and surplus for insurance companies. In addition, state regulators may permit statutory accounting practices that differ from prescribed practices. Statutory accounting practices ("SAP") prescribed or permitted by regulatory authorities for statements of the Company's insurance subsidiary are (a) policy acquisition costs are expensed as incurred under SAP, whereas they are deferred and amortized under GAAP, (b) certain assets are not admitted for purposes of determining surplus under SAP, (c) investments in fixed income securities are carried at amortized cost under SAP, whereas such securities are carried at fair value under GAAP, and (d) the criteria for recognizing net deferred tax assets ("DTAs") and the methodologies used to determine such amounts are different under SAP and GAAP. Risk-based capital (“RBC”) requirements promulgated by the National Association of Insurance Commissioners require property/casualty insurers to maintain minimum capitalization levels determined based on formulas incorporating various business risks of the insurance subsidiaries. LIC’s statutory capital and surplus amounted to $99.4 million and $61.4 million as of December 31, 2021 and 2020, respectively. The Company’s capital and surplus exceeded its authorized control level RBC of $18.2 million and $10.9 million as of December 31, 2021 and 2020, respectively. |
Other Liabilities and Accrued E
Other Liabilities and Accrued Expenses | 12 Months Ended |
Dec. 31, 2021 | |
Other Liabilities Disclosure [Abstract] | |
Other Liabilities and Accrued Expenses | Other Liabilities and Accrued Expenses Other liabilities and accrued expenses consists of the following ($ in millions): December 31, 2021 2020 Lease liabilities (Note 22) $ 22.3 $ — Accrued advertising costs 11.2 6.8 Employee compensation payable 5.4 3.7 Premium taxes payable 5.4 3.2 Income tax payable 4.7 0.3 Accrued professional fees 4.6 2.6 Advance premium 2.0 — Other payables 1.8 2.1 Total other liabilities and accrued expenses $ 57.4 $ 18.7 |
Convertible Preferred Stock and
Convertible Preferred Stock and Preferred Stock Warrants | 12 Months Ended |
Dec. 31, 2021 | |
Temporary Equity Disclosure [Abstract] | |
Convertible Preferred Stock and Preferred Stock Warrants | Convertible Preferred Stock and Preferred Stock Warrants Concurrently with the closing of the IPO, all shares of convertible preferred stock were converted into 31,557,107 shares of common stock (See Notes 1 and 16). As of December 31, 2020, there was no preferred stock outstanding. As of December 31, 2019, the Company's certificate of incorporation, as then in effect, authorized the Company to issue 31,557,107 shares of par value $0.00001 per share convertible preferred stock. The holders of convertible preferred stock had liquidation rights in the event of a deemed liquidation that, in certain situations, were not solely within the control of the Company. Therefore the convertible preferred stock was classified outside of stockholders' equity (deficit) on the consolidated balance sheet. As of December 31, 2019, preferred stock consisted of the following ($ in millions, except for share amounts): December 31, 2019 Preferred Preferred Carrying Liquidation Common Stock Series Seed Preferred stock 7,905,140 7,905,140 $ 12.9 $ 13.0 7,905,140 Series A Preferred stock 3,328,774 3,328,774 14.0 13.6 3,328,774 Series B Preferred stock 4,511,417 4,511,417 34.1 34.1 4,511,417 Series C Preferred Stock 8,703,846 8,703,846 119.8 120.1 8,703,846 Series D Preferred Stock 7,107,930 7,107,930 299.4 300.0 7,107,930 31,557,107 31,557,107 $ 480.2 $ 480.8 31,557,107 The holders of the preferred stock had the following rights and preferences: Liquidation preference In the event of a liquidation event, as defined in the Company's Amended and Restated Certificate of Incorporation (the "COI"), the holders of Series D preferred Stock shall be entitled to receive, before any payment shall be made or declared to the holders of the Series Seed, A, B, and C preferred stock (collectively, the "Prior Preferred Stock") or to the holders of common stock, an amount equal to the Series D preferred stock original issue price, plus declared but unpaid dividends on such stock (the "Series D Preference"). After the full Series D Preference has been paid, and the liquidation preference of the Prior Preferred Stock has been paid, any remaining funds and assets of the Company legally available for distribution to stockholders shall be distributed pro rata among the holders of the common stock (the "Remaining Distribution"). For the purpose of determining the amount each holder of the preferred stock is entitled to receive, with respect to the Remaining Distribution, each such holder of the Series Seed, A, B, C, and D preferred stock shall be deemed to have converted such holder's stock of Series Seed, A, B, C, and D preferred stock into common stock. Voting rights Holders of Series Seed, A, B, C and D preferred stock (collectively, "Preferred Stockholders") are entitled to vote on all matters and are entitled to the number of votes equal to the number of shares of common stock into which each share of preferred stock is then convertible, except as otherwise required by law or as set forth in the Company's COI. Dividends Preferred Stockholders are entitled to receive, out of funds legally available, dividends prior and in preference to payment of any dividends (other than payable in common stock) on common stock, dividends at a rate of 8%, per share per annum, payable as and if declared by the board of directors. Such dividends shall not be cumulative. No dividends were declared or paid. Conversion Preferred stock shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into such amount of fully paid and non-assessable common stock as is determined by dividing the Series Seed, A, B, C and D original issuance prices by the applicable conversion price in effect at the time of conversion. Preferred stock shall automatically be converted into common stock at the applicable conversion price in effect at the time for such conversion immediately upon the earlier of: (1) the closing of a qualified public offering with aggregate gross proceeds to the Company of at least $50.0 million, or (2) the date or the occurrence of an event, specified by vote or written consent or agreement of the Preferred Majority (as defined in the COI), provided that (i) if such election is made in connection with a Liquidation Event in which the holders of Series B Preferred would receive less than one times (1x) the Original Issue Price in respect of each share Series B preferred stock as a result of such election, then the vote of the Series B Majority (as defined in the COI) shall also be required, and (ii) if such election is made in connection with a Liquidation Event in which the holders of Series C Preferred would receive less than one times (1x) the Original Issue Price in respect of each share Series C preferred stock as a result of such election, then the vote of the Series C Majority (as defined in the COI) shall also be required. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2021 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders' Equity Common stock The Company completed its IPO on July 2, 2020, in which the Company issued and sold 12,650,000 shares of its common stock at a public offering price of $29 per share, including 1,650,000 shares sold upon the exercise of the underwriter's option to purchase additional shares. After underwriter discounts and commissions and other offering costs, net proceeds from the IPO were approximately $335.6 million. Offering cost of approximately $3.5 million were recognized as a component of general and administrative expense for the year ended December 31, 2019. In connection with the IPO, the Company's outstanding convertible preferred stock were converted into 31,557,107 shares of common stock (See Note 15). Upon conversion of the convertible preferred stock, the Company reclassified the carrying value of the preferred stock to common stock and additional paid in capital. Upon closing of the IPO, the Company filed an amended and restated certificate of incorporation on July 7, 2020 with the Secretary of State of the State of Delaware to authorize the issuance of up to 200,000,000 shares of common stock, par value $0.00001 per share, and 10,000,000 shares of undesignated preferred stock, par value $0.00001 per share. On January 14, 2021, the Company completed a Follow-on Offering of common stock (the "Follow-on Offering"), which resulted in the issuance and sale of 3,300,000 shares of common stock of the Company, and 1,524,314 shares of common stock by certain selling shareholders, and generated net proceeds to us of $525.7 million after deducting underwriting discounts and commissions and other offering costs. On February 1, 2021, the underwriters exercised their option to purchase additional shares, which resulted in the issuance and sale of an additional 718,647 shares of common stock of the Company, and generated additional net proceeds of $114.6 million to us after deducting underwriting discounts . As of December 31, 2021 and 2020, the Company was authorized to issue 200,000,000 shares with par value of $0.00001 per share common stock. The voting, dividend and liquidation rights of the holders of the Company's common stock is subject to and qualified by the rights, powers and preferences of the holders of the preferred stock as set forth above. Common stock confers upon its holders the following rights: (i.) The right to participate and vote in the Company's general meetings, whether regular or extraordinary. Each share will entitle its holder, when attending and participating in the voting in person or via agent or letter, to one vote; (ii.) The right to a share in the distribution of dividends, whether in cash or in the form of bonus stock, the distribution of assets or any other distribution pro rata to the par value of the stock held by them; (iii.) The right to a share in the distribution of the Company's excess assets upon liquidation pro rata to the par value of the stock held by them. On February 18, 2020, the Company made a contribution of 500,000 newly issued shares of common stock to a related party, the Lemonade Foundation (see Note 20). In connection with the Follow-on Offering noted above, Lemonade Foundation sold 100,000 of the contributed shares of the Company. Undesignated Preferred Stock As of December 31, 2021, the Company's certificate of incorporation, as amended and restated, authorized the Company to issue up to 10,000,000 shares of undesignated preferred stock, par value $0.00001 per share. As of December 31, 2021, there were no shares of undesignated preferred stock issued or outstanding. Statutory dividend restrictions The payment of dividends by Lemonade Insurance Company (‘LIC”) is restricted by state insurance regulations. Under New York insurance law, LIC may pay cash dividends only out of its statutory earned surplus. Generally, the maximum amount of dividends that LIC may pay without regulatory approval in any twelve-month period is the lesser of adjusted net investment income or 10% of statutory policyholders' surplus as of the end of the most recently reported quarter unless the NYS Department of Financial Services, upon prior application, approves a greater dividend distribution. Adjusted net investment income is defined for this purpose to include net investment income for the thirty-six months immediately preceding the declaration or distribution of the current dividend less any dividends declared or distributed during the period commencing thirty-six months prior to the declaration or distribution of the current dividend and ending twelve months prior thereto. As of December 31, 2021 and 2020, LIC was not eligible to make dividend payments. |
Stock-based Compensation
Stock-based Compensation | 12 Months Ended |
Dec. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Stock-based Compensation | Stock-based Compensation Share option plan 2020 Incentive Compensation Plan On July 2, 2020, the Company’s board of directors adopted and the Company’s stockholders approved the 2020 Incentive Compensation Plan (the “2020 Plan”), which became effective immediately prior to the effectiveness of the registration statement for the Company’s IPO on July 2, 2020. The 2020 Plan provides for the issuance of incentive stock options, non-qualified stock options, stock awards, stock units, stock appreciation rights and other stock-based awards. The number of shares initially reserved for issuance under the 2020 Plan is 5,503,678 shares, inclusive of available shares previously reserved for issuance under the 2015 Incentive Share Option Plan, as amended and restated on September 4, 2019 (the “2015 Plan”). In addition, the number of shares reserved for issuance under the 2020 Plan is subject to increase for awards previously issued under the 2015 Plan which are forfeited or lapse unexercised. Annually, on the first day of each calendar year beginning on January 1, 2021 and ending on and including January 1, 2030, the reserve will be increased by an amount equal to the lesser of (A) 5% of the shares outstanding (on an as-converted basis) on the last day of the immediately preceding fiscal year and (B) such smaller number of shares as determined by the Company’s board of directors, provided that no more than 3,650,000 shares may be issued upon the exercise of incentive stock options. As of December 31, 2021, there we re 4,942,011 shares of common stock available for future grants. 2020 Employee Stock Purchase Plan On July 2, 2020, the Company's board of directors adopted and the Company's stockholders approved the 2020 Employee Stock Purchase Plan (the "2020 ESPP"), which became effective immediately prior to the effectiveness of the registration statement for the Company's IPO on July 2, 2020. The total shares of common stock initially reserved for issuance under the 2020 ESPP is limited to 1,000,000 shares. In addition, the number of shares available for issuance under the 2020 ESPP will be annually increased on January 1 of each calendar year beginning in 2021 and ending in and including 2030, by an amount equal to the lesser of (A) 1,000,000 Shares, (B) 1% of the shares outstanding on the final day of the immediately preceding calendar year and (C) such smaller number of shares as is determined by the board of directors. The board of directors or a committee of the board of directors will administer and will have authority to interpret the terms of the 2020 ESPP and determine eligibility of participants. There were no shares issued under the 2020 ESPP as of December 31, 2021. 2015 Incentive Share Option Plan In July 2015, the Company adopted the 2015 Incentive Share Option Plan (“2015 Plan”). The 2015 Plan has been amended and restated from time to time to increase the number of shares reserved for grant and to enable the grant of options to employees of the Company's subsidiaries. Under the 2015 Plan, options to purchase common stock of the Company may be granted to employees, officers, directors and consultants of the Company. Each option granted can be exercised for one share of common stock of the Company. Options granted to employees generally vest over a period of no more than four years. The options expire ten years from the date of grant. Pursuant to the 2015 Plan, the Company had reserved 7,312,590 shares of common stock for issuance. Effective immediately upon the approval of the 2020 Plan, the remaining shares of common stock available for future grant under the 2015 Plan were transferred to the 2020 Plan. As of December 31, 2021, there were no shares of common stock available for future grant under the 2015 Plan. Subsequent to the approval of the 2020 Plan, no additional grants were made under the 2015 Plan and any outstanding awards under the 2015 Plan will continue with their original terms. Options granted to employees and non-employees The fair value of each option granted during the year ended December 31, 2021 and 2020 is estimated on the date of grant using the Black-Scholes model with the following assumptions (annualized percentage): December 31, 2021 2020 Weighted average expected term (years) 6.13 6.09 Risk-free interest rate 1.3% 0.7% Volatility 48% 40% Expected dividend yield 0% 0% Expected volatility is based on companies at a comparable stage, as well as companies in the same or a similar industry. The expected term of options granted is based on the simplified method, which uses the midpoint between the vesting date and the contractual term in accordance with ASC 718, "Compensation — Stock Compensation". The risk-free interest rate is based on observed interest rates appropriate for the term of the Company's stock options. The dividend yield assumption is based on the Company's historical and expected future dividend payouts and may be subject to substantial change in the future. The following table summarizes activity ($ in millions, except for option and average amounts): Stock options Number of Weighted- Weighted- Aggregate Outstanding as of December 31, 2020 4,944,711 $ 20.50 8.30 $ 506.58 Granted 3,054,135 79.97 Exercised (848,992) 10.87 Cancelled (576,110) 54.78 Outstanding as of December 31, 2021 6,573,744 $ 46.03 8.29 $ 85.86 Options exercisable as of December 31, 2021 2,269,352 $ 19.31 7.09 $ 58.35 Options unvested as of December 31, 2021 4,304,392 $ 60.12 8.93 $ 27.51 On July 28, 2021, the Board of Directors of the Company approved the reduction in exercise price of certain options granted to employees in the beginning of 2021, with original exercise price ranging from $142.64 to $159.02 and were each repriced at an exercise price of $90.70 per share. Incremental compensation expense resulting from the repricing was $3.0 million and compensation expense amounted to $0.8 million. There were no changes in the vesting schedule or maturity term of the options. Restricted Stock Units Number of shares Grant Date Fair Value Outstanding as of December 31, 2020 — $ — Granted 362,624 71.41 Vested (19,063) 143.49 Cancelled (7,747) 87.54 Outstanding as of December 31, 2021 335,814 66.94 Stock-based compensation expense Stock-based compensation expense from stock options and RSUs granted included and classified in the consolidated statements of operations and comprehensive loss is as follows ($ in millions): December 31, 2021 2020 2019 Loss and loss adjustment expense, net $ 1.5 $ 0.4 $ — Other insurance expense 1.0 0.7 0.6 Sales and marketing 5.1 2.7 1.1 Technology development 18.2 3.1 1.4 General and administrative 18.3 3.7 1.2 Total stock-based compensation expense $ 44.1 $ 10.6 $ 4.3 Stock-based compensation expense classified by award type as included in the consolidated statements of operations and comprehensive loss is as follows ($ in millions): December 31, 2021 2020 2019 Stock options $ 40.1 $ 10.6 $ 4.3 RSUs 4.0 — — Total stock-based compensation expense $ 44.1 $ 10.6 $ 4.3 The total unrecognized expense granted to employees and non-employees outstanding as of December 31, 2021 was $101.8 million for stock options and $21.2 million for RSUs, with a remaining weighted average vesting period of 1.4 years for stock options and 1.8 years for RSUs . In 2016 and 2017, the Company entered into stock purchase agreements with two executive employees where in lieu of cash payment for the stock, promissory notes secured by the underlying stock purchased, were issued totaling $1.5 million and bearing a weighted average interest of 1.9% per annum, payable to the Company. One executive settled a portion of the existing promissory note in an amount equal to $0.1 million inclusive of accumulated interest, for which 105,487 shares were released in 2020. There were 513,537 shares restricted under the stock purchase agreements as of December 31, 2020. On June 8, 2020, the Company received $1.3 million in cash from the two executives in full settlement of the outstanding promissory notes, including principal and accrued and unpaid interest. Total stock-based compensation expense resulting from stock options granted to the executives for the years ended December 31, 2021 and 2020 was $0.1 million and $0.2 million, respectively. There was no unrecognized expense for options granted to these executives outstanding at December 31, 2021. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Corporate tax rates Lemonade, Inc., together with its U.S. subsidiaries, is taxed under the tax laws of the United States and the statutory enacted corporate income tax rate for the years ended December 31, 2021 and 2020 is approximately 21%. The Israeli Parliament approved the Economic Efficiency Law (Legislative Amendments for Applying the Economic Policy for the 2017 and 2018 Budget Years), which reduced the corporate income tax rate to 23%. The statutory enacted corporate tax rate in the Netherlands is approximately 25%. Deferred taxes Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company's deferred tax assets are comprised of operating loss carryforwards and other temporary differences. The components of the net deferred tax assets are as follows ($ in millions): December 31, 2021 2020 Deferred tax assets: Net operating loss carryforwards $ 127.4 $ 92.7 Deferred ceding commission 7.8 4.8 Lease liabilities 3.4 — Net unearned premium 2.6 1.4 Stock-based compensation 2.4 3.8 Charitable contribution 0.9 4.7 Startup costs 0.7 0.9 Other 0.6 0.3 Total gross deferred tax assets 145.8 108.6 Deferred tax liabilities: Right-of-use assets (3.3) — Depreciation and amortization (2.2) (0.9) Deferred acquisition costs (1.3) (0.8) Total gross deferred tax liabilities (6.8) (1.7) Valuation allowance (139.0) (106.9) Total deferred tax assets, net $ — $ — Income tax expense (Loss) income before tax consists of the following ($ in millions): December 31, 2021 2020 2019 United States $ (240.3) $ (123.6) $ (109.5) Foreign 6.7 2.8 1.6 Total $ (233.6) $ (120.8) $ (107.9) Income tax expense consists of the following ($ in millions): December 31, 2021 2020 2019 Current: Federal $ — $ — $ — State — — — Foreign 7.7 1.5 0.6 Total current 7.7 1.5 0.6 Deferred: Federal $ — $ — $ — State — — — Foreign — — — Total deferred — — — Total income tax expense $ 7.7 $ 1.5 $ 0.6 The Company classifies all interest and penalties related to tax contingencies as income tax expense. As of December 31, 2021, there were no material positions for which management believes it is reasonably possible that the total amounts will significantly increase or decrease within 12 months of the reporting date. The provision for federal and foreign income taxes incurred is different from that which would be obtained by applying the statutory federal income tax rate to income before income taxes. A reconciliation of the Company's statutory income tax rate to the Company's effective income tax rate is as follows: December 31, 2021 2020 2019 Income at US statutory rate 21.0 % 21.0 % 21.0 % State taxes, net of federal benefit (8.4) % 12.8 % 13.9 % Permanent differences (1.7) % (1.2) % (1.7) % Return to provision (0.9) % — % — % Foreign rate differential 0.6 % 0.2 % 0.1 % Valuation allowance (13.7) % (33.9) % (33.9) % Other (0.2) % (0.1) % — % Total income taxes (3.3) % (1.2) % (0.6) % Tax reform in the U.S. The Company selected to apply the "period cost method" to account for the Global Intangible Low-Taxed Income, and treated it as a current-period expense for December 31, 2021, 2020 and 2019 and had a gross inclusion o f $14.0 million , $5.0 million and $5.5 million respective ly, in its taxable income. Tax benefits under Israel's law for the Encouragement of Capital Investments, 1959 ("the Investment Law") As of January 1, 2011, new legislation amending the Investment Law came into effect (the "2011 Amendment"). The 2011 Amendment introduced new statuses of "Preferred Company" and "Preferred Enterprise", replacing the then existing status of "Beneficiary Company" and "Beneficiary Enterprise". Similar to the previous status of Beneficiary Company, a Preferred Company is an industrial company owning a Preferred Enterprise which meets certain conditions, including a minimum threshold of 25% export, though the requirement for a minimum investment in productive assets was cancelled as part of the 2011 Amendment. Under the 2011 Amendment, a uniform corporate tax rate will apply to all qualifying income of the Preferred Company, as opposed to the former law which was limited to income from the Approved Enterprises and Beneficiary Enterprise during the benefits period. During 2015 and 2016, the uniform corporate tax rate was 9% in areas in Israel designated as Development Zone A and 16% elsewhere in Israel. In December 2016, the Economic Efficiency Law 2016 (Legislative Amendments for Applying the Economic Policy for the 2017 and 2018 Budget Years), which includes Amendment 73 to the Investment Law ("the Amendment"), was published. According to the Amendment, a Preferred Enterprise located in Development Zone A will be subject to a tax rate of 7.5%, effective from January 1, 2017 and thereafter. The tax rate applicable to Preferred Enterprises located in other areas remains at 16%. During 2019, Lemonade Ltd., which is located outside Development Zone A, adopted the Amendment and filed a request to receive Preferred Enterprises status. Net operating loss carryforward As of December 31, 2021, the Company has gross accumulated federal losses for tax purposes of $518.3 million, which can be offset against future taxable income. Of this federal loss carryforward, $46.0 million in losses will begin to expire in 2035 and $472.3 million in losses can be carried forward indefinitely. As of December 31, 2021, the Company has gross accumulated state and local losses for tax purposes of $292.7 million which will begin to expire in 2029. The Company's income tax returns for 2018 through 2021 remain subject to examination by the tax authorities. Coronavirus Aid, Relief, and Economic Security Act On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was signed into law in the U.S. to provide certain relief as a result of the COVID-19 pandemic. In addition, governments around the world have enacted or implemented various forms of tax relief measures in response to the economic conditions in the wake of COVID-19. On December 27, 2020, the “Consolidated Appropriations Act, 2021” was signed into law in the U.S. to reprise several significant COVID relief provisions. As of December 31, 2020, the Company has determined that neither the CARES Act , the Consolidated Appropriations Act nor any changes to income tax laws or regulations in other jurisdictions had a significant impact on our effective tax rate. |
Net Loss Per Share
Net Loss Per Share | 12 Months Ended |
Dec. 31, 2021 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | Net Loss per Share Basic and diluted net loss per share attributable to common stockholders was calculated as follows: Year Ended December 31, 2021 2020 2019 Numerator: Net loss attributable to common stockholders (in millions) $ (241.3) $ (122.3) $ (108.5) Denominator: Weighted average common shares outstanding — basic and diluted 61,224,433 33,654,828 11,124,397 Net loss per share attributable to common stockholders — basic and diluted $ (3.94) $ (3.63) $ (9.75) The Company's potentially dilutive securities, which include stock options, preferred stock and warrants to purchase shares of preferred stock, have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same. The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect: December 31, 2021 2020 2019 Options to purchase common stock 6,573,744 4,944,711 4,048,802 Unvested restricted stock 335,814 — — Convertible preferred stock (as converted to common stock) — — 31,557,107 6,909,558 4,944,711 35,605,909 In addition to the potentially dilutive securities noted above, in 2017 and 2018 the Company entered into stock purchase agreements with executive employees where in lieu of cash payment for the stock, promissory notes were issued (see Note 17). The Company determined the purchase of the stock to be non-substantive, and as such, the shares subject to the promissory notes will not be deemed issued until such time as the promissory notes have been repaid. Accordingly, the Company has excluded these shares in the calculation of basic and diluted net loss per share for the year ended December 31, 2019. On June 8, 2020, all outstanding balances under the promissory notes were paid back to the Company and therefore, these shares were included in the calculation of basic and diluted net loss per share for the year ended December 31, 2020. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2021 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions The Company uses the services of a travel agency owned by a relative of one of the Company's key stockholders. During the years ended December 31, 2021, 2020 and 2019, the Company incurred travel related expenses in the amount of approximately $0.1 million, $0.1 million and $0.3 million r espectively, in connection with these services. The Company has historically leased office space in the United States and the Netherlands from an affiliate. Rental expense recorded for the years ended December 31, 2021, 2020 and 2019 in connection with this leased space was approximately $0.1 million, $0.1 million and $0.1 million, respectively. T here were no outstanding amounts due to or from related parties as of December 31, 2021 and 2020. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Litigation The Company is occasionally a party to routine claims or litigation incidental to its business and has been made a party to class action litigation alleging that certain of our business practices are or were improper. The Company does not believe that it is a party to any pending legal proceeding that is likely to have a material adverse effect on its business, financial condition or results of operations. Charges and guarantees There were no guarantees as of December 31, 2021. The Company provided guarantees in an aggregate amount of $0.6 million and $0.6 million as of December 31, 2020 and 2019 , respectively, with respect to certain office leases. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2021 | |
Leases [Abstract] | |
Lessee, Operating Leases | Leases The Company and its subsidiaries lease their facilities under various operating lease agreements. The Company's headquarters in New York operates under a lease agreement that expires in November 2025. The Company's Israel based operations occupy offices with lease expiration dates that extend through July 2026. On March 18, 2019, the Company entered into a lease agreement to lease office space in Scottsdale, Arizona that expires in November 2024. Operating lease expense under ASC 842 for leased facilities was $4.2 million for the year ended December 31, 2021. For certain leases that contain options to extend, the options are included in operating lease liabilities only if the company is reasonably certain the option will be exercised. Variable lease costs of $0.5 million and short term lease expense of $0.6 million are recorded as expense in the period the obligation is incurred and are not included in the Company’s operating lease liabilities. Operating lease expense is included within continuing operations in the consolidated statements of operations and comprehensive loss. Supplemental cash flow information related to operating leases as of December 31, 2021 is as follows ($ in millions): Operating cash outflow from operating leases $ 4.1 ROU assets obtained in exchange for lease liabilities for operating leases $ 19.5 Weighted-average remaining lease term and discount rate are as follows: Weighted-average remaining lease term (in years) 4.1 Weighted-average discount rate 4.62 % Maturities of operating lease liabilities as of December 31, 2021 is as follows ($ in millions): 2022 $ 4.9 2023 5.2 2024 6.7 2025 6.2 2026 1.6 Thereafter — Total $ 24.6 As of December 31, 2021, the Company had an additional lease commitment in Amsterdam and is excluded from the table above, of approximately $3.6 million which is expected to commence in the first quarter of 2022. Disclosures prior to adoption of ASC Topic 842: Operating lease expense under ASC 840 for leased facilities were $3.8 million, and $3.0 million, for the years ended December 31, 2020 and 2019, respectively. The following table presents future minimum lease commitments for operating leases as of December 31, 2020 ($ in millions): 2021 $ 4.8 2022 5.0 2023 2.8 2024 2.8 2025 and thereafter 4.4 Total $ 19.8 |
Statutory Financial Information
Statutory Financial Information | 12 Months Ended |
Dec. 31, 2021 | |
Insurance [Abstract] | |
Statutory Financial Information | Unpaid Loss and Loss Adjustment Expense The following table presents the activities in the liability for unpaid loss and loss adjustment expense (“LAE”) as of December 31, 2021 and 2020 ($ in millions): December 31, 2021 2020 Unpaid loss and LAE as of January 1 $ 46.3 $ 28.2 Less: Reinsurance recoverable (1) 36.3 18.5 Net unpaid loss and LAE as of January 1 10.0 9.7 Add: Incurred losses and LAE, net of reinsurance, related to: Current year 73.2 54.8 Prior years (1.3) (0.1) Total incurred 71.9 54.7 Deduct: Paid losses and LAE, net of reinsurance, related to: Current year 49.2 44.6 Prior years 7.5 9.8 Total paid 56.7 54.4 Foreign currency translation gain (loss) — — Unpaid loss and LAE, net of reinsurance recoverable, as of December 31 25.2 10.0 Reinsurance recoverable as of December 31 (1) 72.7 36.3 Unpaid loss and LAE, gross of reinsurance recoverable, as of December 31 $ 97.9 $ 46.3 ____________ (1) Reinsurance recoverable in this table includes only ceded unpaid loss and LAE Unpaid loss and LAE includes anticipated salvage and subrogation recoverable. Considerable variability is inherent in the estimate of the reserve for losses and LAE. Although management believes the liability recorded for losses and LAE is adequate, the variability inherent in this estimate could result in changes to the ultimate liability, which may be material to stockholders' equity. Additional variability exists due to accident year allocations of ceded amounts in accordance with reinsurance agreements, which is not expected to result in any changes to the ultimate liability. The Company had favorable development on net loss and LAE reserves of $1.3 million and $0.1 million as of December 31, 2021 and December 31, 2020. No additional premium or returned premium have been accrued as a result of prior year effects. For the year ended December 31, 2021, current accident year incurred loss and LAE included $6.9 million of net incurred loss and LAE from the severe winter storm (“Uri”) that affected our customers in Texas and Oklahoma, and $0.8 million relating to wildfires in Colorado. The net incurred loss and LAE from Uri and from the wildfires as of December 31, 2021 represents the Company's best estimates based upon information currently available. The Company compiles and aggregates its claims data by grouping the claims according to the year in which the claim occurred (Accident Year) when analyzing claim payment and emergence patterns and trends over time. For the purpose of defining claims frequency, the number of reported claims is by loss occurrence and includes claims that do not result in a liability or payment associated with them. The following is information about incurred and paid loss development as of December 31, 2021, net of reinsurance, as well as cumulative claim frequency and the total of IBNR liabilities included within the net incurred loss amounts. The Company separates home and renters claim experience from its pet claim experience when analyzing incurred and paid loss and allocated loss adjustment expenses, as there are distinct differences in the development and claim count emergence patterns. The information about incurred and paid claims development for the years ended prior to December 31, 2021, is presented as unaudited supplementary information. Home and Renters Incurred loss and allocated loss adjustment expense ("ALAE"), net of re insurance The following table presents incurred loss and ALAE, net of reinsurance, as well as IBNR loss reserves and the number of reported claims ($ in millions, except for number of claims): December 31, 2021 Cumulative December 31, 2016 2017 2018 2019 2020 2021 IBNR (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Accident Year 2016 $ — $ — $ — $ — $ — $ — $ — 8 2017 — 1.7 1.7 1.7 1.7 1.7 — 1,758 2018 — — 15.0 13.5 13.4 13.4 — 10,528 2019 — — — 46.0 46.0 46.2 — 19,483 2020 — — — — 53.2 51.8 1.1 30,212 2021 — — — — — 59.4 11.1 50,821 Total incurred losses and ALAE, net $ 172.5 $ 12.2 112,810 Amounts in accident year 2016 for the years ended December 31, 2016, 2017, 2018, 2019, 2020 and 2021 were less than $0.1 million, respectively. IBNR as of December 31, 2021 for accident years 2018 and 2019 was less than $0.1 million. Home and Renters Cumulative paid loss and ALAE, net of reinsurance The following table presents cumulative paid loss and ALAE, net of reinsurance ($ in millions): December 31, 2016 2017 2018 2019 2020 2021 (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Accident Year 2016 $ — $ — $ — $ — $ — $ — 2017 — 1.6 1.7 1.7 1.7 1.7 2018 — — 13.2 13.4 13.4 13.4 2019 — — — 36.4 46.1 46.2 2020 — — — — 42.9 50.0 2021 — — — — — 37.9 Total paid losses and ALAE, net $ 149.2 Total unpaid loss and ALAE reserves, net $ 22.9 Ceded unpaid loss and LAE 66.7 Gross unpaid loss and LAE $ 89.6 Cumulative paid loss and ALAE, net of reinsurance related to accident year 2016 was less than $0.1 million during the years ended December 31, 2016, 2017 , 2018, 2019, 2020, and 2021, respectively. Average annual percentage payout of accident year incurred claims by age, net of reinsurance (unaudited supplementary information) Year 1 Year 2 Year 3 Home and renters 79 % 15 % 4 % Pet Incurred loss and allocated loss adjustment expense ("ALAE"), net of re insurance The following table presents incurred loss and ALAE, net of reinsurance, as well as IBNR loss reserves and the number of reported claims ($ in millions, except for number of claims): December 31, 2021 Cumulative 2020 2021 IBNR (unaudited) Accident Year 2020 $ 0.3 $ 0.2 $ — 20,415 2021 — 10.0 2.1 173,379 Total incurred losses and ALAE, net $ 10.2 $ 2.1 193,794 Pet Cumulative paid loss and ALAE, net of reinsurance The following table presents cumulative paid loss and ALAE, net of reinsurance ($ in millions): December 31, 2020 2021 (unaudited) Accident Year 2020 $ 0.4 $ 0.7 2021 — 7.5 Total paid losses and ALAE, net $ 8.2 Total unpaid loss and ALAE reserves, net $ 2.3 Ceded unpaid loss and LAE 6.0 Gross unpaid loss and LAE $ 8.3 Average annual percentage payout of accident year incurred claims by age, net of reinsurance (unaudited supplementary information) Year 1 Year 2 Year 3 Pet 94 % 5 % 1 % The reconciliation of the net incurred and paid loss information in the loss reserve rollforward table and development tables with respect to the current accident year is as follows ($ in millions): 2021 Current Accident Year 2021 Prior Accident Year Incurred Paid Incurred Paid Rollforward table Home $ 62.2 $ 40.6 $ (1.2) $ 7.2 Pet 10.9 8.5 (0.1) 0.3 Car 0.1 0.1 — — 73.2 49.2 (1.3) 7.5 Development table Home 59.4 37.9 (1.2) 7.2 Pet 10.0 7.5 (0.1) 0.3 69.4 45.4 (1.3) 7.5 Others — — — — Variance $ 3.8 $ 3.8 $ — $ — Unallocated loss adjustment expense $ 3.8 $ 3.8 U.S. state insurance laws and regulations prescribe accounting practices for determining statutory net income and capital and surplus for insurance companies. In addition, state regulators may permit statutory accounting practices that differ from prescribed practices. Statutory accounting practices ("SAP") prescribed or permitted by regulatory authorities for statements of the Company's insurance subsidiary are (a) policy acquisition costs are expensed as incurred under SAP, whereas they are deferred and amortized under GAAP, (b) certain assets are not admitted for purposes of determining surplus under SAP, (c) investments in fixed income securities are carried at amortized cost under SAP, whereas such securities are carried at fair value under GAAP, and (d) the criteria for recognizing net deferred tax assets ("DTAs") and the methodologies used to determine such amounts are different under SAP and GAAP. Risk-based capital (“RBC”) requirements promulgated by the National Association of Insurance Commissioners require property/casualty insurers to maintain minimum capitalization levels determined based on formulas incorporating various business risks of the insurance subsidiaries. LIC’s statutory capital and surplus amounted to $99.4 million and $61.4 million as of December 31, 2021 and 2020, respectively. The Company’s capital and surplus exceeded its authorized control level RBC of $18.2 million and $10.9 million as of December 31, 2021 and 2020, respectively. |
Geographical Breakdown of Gross
Geographical Breakdown of Gross Written Premium | 12 Months Ended |
Dec. 31, 2021 | |
Segment Reporting [Abstract] | |
Geographical Breakdown of Gross Written Premium | Geographical Breakdown of Gross Written Premium The Company has a single reportable segment and offers insurance coverage under the homeowners multi-peril, inland marine and general liability lines of business . Gross written premium by jurisdiction is as follows ($ in millions): Years ended December 31, 2021 2020 2019 Jurisdiction Amount % of GWP Amount % of GWP Amount % of GWP California $ 93.9 25.0 % $ 49.8 23.2 % $ 29.0 25.0 % Texas 72.5 19.3 % 47.8 22.3 % 28.6 24.7 % New York 47.3 12.6 % 26.7 12.5 % 15.8 13.6 % New Jersey 16.7 4.4 % 8.6 4.0 % 4.7 4.1 % Georgia 16.5 4.4 % 11.6 5.4 % 6.2 5.4 % Illinois 15.7 4.2 % 9.8 4.6 % 5.2 4.5 % Pennsylvania 9.7 2.6 % 5.1 2.4 % 2.7 2.3 % Colorado 9.2 2.4 % 4.2 2.0 % 1.2 1.0 % Virginia 8.1 2.2 % 3.9 1.8 % 1.3 1.1 % Maryland 7.7 2.0 % 4.6 2.1 % 2.1 1.8 % All other 78.4 20.9 % 42.3 19.7 % 19.0 16.5 % $ 375.7 100.0 % $ 214.4 100.0 % $ 115.8 100.0 % |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Share-pool increase in 2020 Incentive Compensation Plan and 2020 Employee Stock Purchase Plan (“ESPP”) On January 1, 2022, the 2020 Incentive Compensation Plan share pool was increased by 3,083,050 shares, equal to 5% of the aggregate number of outstanding common stock as of December 31, 2021. There was no increase in the 2020 ESPP share pool as of January 1, 2022 (Refer to Note 17). |
Schedule V - Valuation and Qual
Schedule V - Valuation and Qualifying Accounts | 12 Months Ended |
Dec. 31, 2021 | |
SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | |
Schedule V - Valuation and Qualifying Accounts | LEMONADE, INC. AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS Additions ($ in millions) Balance at Charged to Charge (Deductions) Balance at Year Ended December 31, 2021 Valuation allowance for deferred tax assets $ 106.9 $ 32.1 $ — $ — $ 139.0 Allowance for premium receivables $ 0.5 $ 6.2 $ — $ (5.1) $ 1.6 Year Ended December 31, 2020 Valuation allowance for deferred tax assets $ 66.0 $ 40.9 $ — $ — $ 106.9 Allowance for premium receivables $ 0.2 $ 2.2 $ — $ (1.9) $ 0.5 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Basis of presentation | The Company presents its financial statements on a consolidated basis including all of its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated. All foreign currency amounts in the consolidated statements of operations and comprehensive loss have been translated using an average rate for the reporting period. All foreign currency balances in the balance sheets have been translated using the spot rate at the end of the year. All figures expressed, except share amounts, are represented in U.S. dollars in millions. |
Use of estimates | The preparation of the consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles ("GAAP") requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. On an ongoing basis, the Company’s management evaluates estimates, including those related to contingent assets and liabilities as of the date of the consolidated financial statements as well as the reported amounts of revenue and expense during the reporting period. Such estimates are based on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities at the dates of the condensed consolidated financial statements, and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. All revisions to accounting estimates are recognized in the period in which the estimates are revised. Significant estimates reflected in the Company's consolidated financial statements include, but are not limited to, reserves for loss and loss adjustment expense, reinsurance recoverable on unpaid losses, valuation allowance on deferred tax assets and the valuation of stock-based compensation prior to the Company’s Initial Public Offering (the “IPO”). |
Segment information | The Company's chief operating decision makers are the Co-Chief Executive Officer. The chief operating decision maker manages operations, allocates resources, and evaluates financial performance on a company-wide basis. The Company operates in one reporting segment within the United States and Europe, providing insurance products to customers through various sales channels. |
Cash, cash equivalents and restricted cash | Cash and cash equivalents consist primarily of bank deposits and money market accounts with maturities of three months or less at the date of acquisition and are stated at cost, which approximates fair value. The Company's restricted cash relates to security deposits for office leases in Israel. The carrying value of restricted cash approximates fair value. |
Investments | Investments consist of fixed maturity securities and short-term investments. The Company considers all of its fixed maturity securities as available-for-sale and are carried at fair value. Fixed maturity securities consist of securities with an initial fixed maturity of more than one year. Unrealized gains and losses related to bonds are included in accumulated other comprehensive income as a separate component of stockholders' equity (deficit). The discount or premium on bonds is amortized using the effective yield method. Short-term investments, which may include commercial paper, certificates of deposit, and fixed maturity securities with an initial maturity of one year or less, are carried at amortized cost, which approximates fair value. The fair value of bonds is principally derived from market price data for identical assets from exchange or dealer markets and from market observable inputs such as interest rates and yield curves that are observable at commonly quoted intervals. For certain bonds for which market prices are not readily available, market values are principally estimated using values obtained from independent pricing services, broker quotes and internal estimates. Interest income, as well as prepayment fees and the amortization of the related premium or discount, is reported in net investment income. Realized gains or losses on the sale of investments are determined on the basis of specific identification. The Company continuously monitors the difference between cost and the estimated fair value of its investments. Each reporting period, securities with unrealized losses are reviewed to determine whether the decline in fair value requires the recognition of an allowance for credit losses. Factors considered in the review include (i) current market interest rates, (ii) general financial condition of the issuer, (iii) issuers industry and future business prospects, (iv) issuers past defaults in principal and interest payments, and (v) the payment structure of the investment and the issuers ability to make contractual payments on the investment. The Company also considers whether it intends to sell the security, or if it is more likely than not that it will be required to sell the security before recovery of its amortized cost. When assessing whether it intends to sell a fixed-maturity security or if it is likely to be required to sell a fixed-maturity security before recovery of its amortized cost, the Company evaluates certain relevant facts and circumstances which may include, but not limited to, business prospects, credit ratings and available information from asset managers and rating agencies for individual securities. For fixed-maturity securities where a decline in fair value is below the amortized cost basis and the Company intends to sell the security, or it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost, a credit-loss charge is recognized in net income based on the fair value of the security at the time of assessment. For fixed-maturity securities that the Company has the intent and ability to hold, the Company compares the estimated present value of the cash flows expected to be collected to the amortized cost of the security. The extent to which the estimated present value of the cash flows expected to be collected is less than the amortized cost of the security and represents the credit-related portion of the impairment, such is recognized in net income through an allowance for credit losses. Any remaining decline in fair value represents the noncredit portion of the impairment, which is recognized in other comprehensive income. Accrued interest receivable is recorded as a component of accrued investment income on its consolidated balance sheet which is presented separately from available-for-sale securities. The Company does not measure an allowance for credit losses on accrued interest receivable and would instead write off accrued interest receivable at the time an issuer defaults or is expected to default on payments. |
Fair value of financial instruments | Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between willing, able and knowledgeable market participants at the measurement date. Fair value measurements are not adjusted for transaction costs. In addition, a three-tiered hierarchy for inputs is used in management's determination of fair value of financial instruments that emphasizes the use of observable inputs over the use of unobservable inputs by requiring that the observable inputs be used when available. Observable inputs are market participant assumptions based on market data obtained from sources independent of the Company. Unobservable inputs are the reporting entity's own assumptions about market participant assumptions based on the best information available under the circumstances. In assessing the appropriateness of using observable inputs in making its fair value determinations, the Company considers whether the market for a particular security is "active" or not based on all the relevant facts and circumstances. To determine the fair value of its investments, the Company utilizes third-party valuation service providers to gather, analyze and interpret market information and derive fair values based upon relevant methodologies and assumptions for individual instruments. Valuation service providers typically obtain data about market transactions and other key valuation model inputs from multiple sources and, through the use of widely accepted valuation models, provide a single fair value measurement for individual securities for which a fair value has been requested under the terms of service agreements. The inputs used by the valuation service providers include, but are not limited to, market prices from recently completed transactions and transactions of comparable securities, interest rate yield curves, credit spreads, currency rates and other market observable information, as applicable. The valuation models consider, among other things, market observable information as of the measurement date as well as the specific attributes of the security being valued including its term, interest rate, credit rating, industry sector and, when applicable, collateral quality and other issue or issuer specific information. When market transactions or other market observable data is limited, the extent to which judgment is applied in determining fair value is greatly increased. As a basis for considering such assumptions, a three-tier value hierarchy is used in management's determination of fair value based on the reliability and observability of inputs as follows: Level 1 — Valuations are based on unadjusted quoted prices in active markets that the Company has the ability to access for identical, unrestricted assets and do not involve any meaningful degree of judgment. An active market is defined as a market where transactions for the financial instrument occur with sufficient frequency and volume to provide pricing information on an ongoing basis; Level 2 — Valuations are based on direct and indirect observable inputs other than quoted market prices included in Level 1. Level 2 inputs include quoted prices for similar assets in active markets and inputs other than quoted prices that are observable for the asset, such as the terms of the security and market-based inputs; Level 3 — Valuations are based on techniques that use significant inputs that are unobservable. The valuation of Level 3 assets and liabilities requires the greatest degree of judgment. These measurements may be made under circumstances in which there is little, if any, market activity for the asset or liability. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment. In making the assessment, the Company considers factors specific to the asset. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement is classified is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company's fair value measurements include investments, preferred stock warrants and stock options. |
Concentrations of credit risk | Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, fixed maturity securities and reinsurance recoverables. Cash and cash equivalents are held with financial institutions of high credit quality, and fixed maturity securities primarily on U.S. government, U.S. government agencies, and high credit quality issuers of debt securities. Cash and cash equivalent balances may exceed the amount of insurance provided on such balances. The Company evaluates the financial condition of its reinsurers, and reinsures its business primarily with highly rated reinsurers, and may retain funds due to reinsurers or require letters of credit as security for those recoverable balances (Note 8). |
Premium receivable | Premium receivable is reported net of an allowance for estimated uncollectible premium amounts. Premiums receivable are short-term in nature and due within a year. Allowance is based upon the ongoing review of amounts outstanding, length of collection periods, the creditworthiness of the insured and other relevant factors. Amounts deemed to be uncollectible are written off against the allowance. Prior to the adoption of CECL, the Company recorded an allowance for doubtful accounts of $0.5 million as of December 31, 2020. and no adjustment was recorded as a result of the implementation of the standard. Allowance for credit losses amounted to $1.6 million as of December 31, 2021. |
Reinsurance | Reinsurance is used to mitigate the exposure to losses, manage capacity and protect capital resources. Reinsuring loss exposures does not relieve the Company from its obligations to policyholders. Reinsurance recoverable, including amounts related to incurred but not reported claims (“IBNR”) and prepaid reinsurance premium, is reported as an asset. To minimize exposure to losses related to a reinsurer's inability to pay, the financial condition of such reinsurer is evaluated initially upon placement of the reinsurance and periodically thereafter. In addition to considering the financial condition of a reinsurer, the collectability of the reinsurance recoverable is evaluated based upon a number of other factors. Such factors include the amounts outstanding, length of collection periods, disputes, any collateral or letters of credit held and other relevant factors. To the extent that an allowance for uncollectible reinsurance recoverable is established, amounts deemed to be uncollectible would be written off against the allowance for estimated uncollectible reinsurance recoverable. The Company has no historical experience on credit losses from reinsurance recoverables and has not recorded any allowance for uncollectible reinsurance recoverable as of December 31, 2021 and December 31, 2020. Amounts recoverable from reinsurers are estimated in a manner consistent with the liability associated with the reinsured business and consistent with the terms of the underlying contract. Ceded premium written is recorded in accordance with the applicable terms of the reinsurance contracts and ceded premium earned is charged against revenue over the period of the reinsurance contracts. Ceded losses incurred reduce net loss and loss adjustment expense incurred over the applicable periods of the reinsurance contracts with third-party reinsurers. The ceding of insurance does not legally discharge the Company from its primary liability for the full amount of the policy coverage, and therefore the Company will be required to pay the loss and bear collection risk if the reinsurer fails to meet its obligations under the reinsurance agreement. To minimize exposure to significant losses from reinsurance insolvencies, the Company evaluates the financial condition of its reinsurers and monitors concentrations of credit risk. Prepaid reinsurance premiums represents the unearned portion of premiums ceded to reinsurers. Funds held under reinsurance treaties represent amounts retained by the Company on behalf of the reinsurer based on terms of the reinsurance agreements. |
Deferred acquisition costs | Direct acquisition expenses, which primarily consist of premium taxes, related to each policy the Company writes are deferred and amortized to expense in proportion to the premium earned, generally over a period of one year. Deferred acquisition costs are reviewed at least annually to determine their recoverability from future income. If any such costs are determined not to be recoverable they are charged to expense. Anticipated net loss and loss adjustment expense and estimated remaining costs of servicing contracts are considered when evaluating recoverability of deferred acquisition costs. The amount of deferred acquisition costs amortized to income was $9.5 million, $4.9 million , and $2.1 million for the years ended December 31, 2021, 2020, and 2019 respectively, and are included in other insurance expense on the consolidated statements of operations and comprehensive loss. |
Property and equipment, net | Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful life of the assets at the following rates: Years Computers and electronic equipment 3 Furniture and equipment 6 Leasehold improvements Shorter of lease term or useful life |
Capitalized internal use software | The Company defers certain costs related to the development of internal use software, which are incurred during the application development stage, and amortizes them over the software's estimated useful life. The amounts capitalized include employee payroll and payroll-related costs directly associated with the development activities. The Company's policy is to amortize capitalized costs using the straight-line method over the estimated useful life, which is currently two years, b eginning when the software is substantially complete and ready for its intended use. Costs incurred in the preliminary and post-implementation stages of the Company's products are expensed as incurred. |
Intangible assets | Indefinite-lived intangible assets are tested for impairment at least annually, or more frequently if events or changes in circumstances indicate that the assets may be impaired. The annual impairment test for indefinite-lived intangible assets may be completed through a qualitative assessment to determine if the fair value of the indefinite-lived intangible assets is more likely than not greater than the carrying amount. The Company may elect to bypass the qualitative assessment, or if a qualitative assessment indicates it is more likely than not that the estimated carrying value exceeds the fair value, the Company will test for impairment using a quantitative process. If the Company determines that impairment of its intangible assets may exist, the amount of impairment loss is measured as the excess of carrying value over fair value. The estimates in the determination of the fair value of indefinite-lived intangible assets include the anticipated future revenues of the Company and the resulting cash flows. As of December 31, 2021 and 2020, there were no circumstances that indicate that the carrying amount of intangible assets deemed to have an indefinite useful life may not be recoverable. |
Unpaid loss and loss adjustment expense | The reserves for loss and loss adjustment expense represent management's best estimate of the ultimate cost of all reported and unreported loss incurred through the balance sheet date. Unpaid loss and loss adjustment are based upon the assumption that past developments are an appropriate indicator of future events. The IBNR portion of unpaid loss and loss adjustment expense is based on past experience and other factors. The methods of making such estimates and for establishing the resulting reserves are periodically reviewed and updated. Any resulting adjustments are reflected in income. Unpaid loss and loss adjustment expense consists of the estimated ultimate cost of settling claims incurred within the reporting period (net of related reinsurance recoverable), including IBNR claims, plus changes in estimates of prior period losses. The Company reports its unpaid loss and loss adjustment expense on an undiscounted basis. The estimation of the liability for unpaid loss and loss adjustment expense is inherently complex and subjective, especially in view of changes in the legal and economic environment, which impact the development of unpaid loss and loss adjustment expense, and therefore quantitative techniques frequently have to be supplemented by subjective considerations and managerial judgment. In addition, trends that have affected development of liabilities in the past may not necessarily occur or affect liability development to the same degree in the future. Therefore, there can be no assurance that the ultimate liability will not materially differ from amounts reserved with a resulting material effect on the operating results of the Company. The unpaid loss and loss adjustment expense estimate is generally calculated by first projecting the ultimate cost of all claims that have been incurred and then subtracting reported losses and loss adjustment expenses. Reported losses include cumulative paid losses and loss adjustment expenses plus case reserves. Therefore, the IBNR also includes provision for expected development on reported claims. The Company's actuarial analysis of the historical data provides the factors the Company uses in its actuarial analysis in estimating its loss and loss adjustment reserves. These factors are measures over time of claims reported, average case incurred amounts, case development, severity and payment patterns. However, these factors cannot be directly used as they do not take into consideration changes in business mix, claims management, regulatory issues, and other subjective factors. The Company uses multiple actuarial methods in determining its estimates of the ultimate unpaid claim liabilities. Each of these methods require judgment and assumptions. The methods can include, but are not limited to: • Paid Development Method — uses historical, cumulative paid losses by accident year and develops those actual losses to estimated ultimate losses based upon the assumption that each accident year will develop to estimated ultimate cost in a manner that is analogous to prior years. • Paid Bornhuetter-Ferguson Method — a combination of the Paid Development Method and the Expected Loss Method, the Paid Bornhuetter-Ferguson Method estimates ultimate losses by adding actual paid losses and projected future unpaid losses. The amounts produced are then added to cumulative paid losses to produce the final estimates of ultimate incurred losses. • Incurred Development Method — uses historical, cumulative incurred losses by accident year and develops those actual losses to estimated ultimate losses based upon the assumption that each accident year will develop to estimated ultimate cost in a manner that is analogous to prior years. • Incurred Bornhuetter — Ferguson Method — a combination of the Incurred Development Method and the Expected Loss Method, the Incurred Bornhuetter-Ferguson Method estimates ultimate losses by adding actual incurred losses and projected future unreported losses. The amounts produced are then added to cumulative incurred losses to produce an estimate of ultimate incurred losses. • Expected Loss Method — utilizes an expected ultimate loss ratio based on historical experience adjusted for trends multiplied by earned premium to project ultimate losses. For each method, losses are projected to the ultimate amount to be paid. The Company then analyzes the results and may emphasize or de-emphasize some or all of the outcomes to reflect actuarial judgment regarding their reasonableness in relation to supplementary information and operational and industry changes. These outcomes are then aggregated to produce a single selected point estimate that is the basis for the actuary's point estimate for loss reserves. |
Contingent liabilities | The Company accounts for its contingent liabilities in accordance with Accounting Standards Codification (ASC) Topic 450, "Contingencies". A provision is recorded when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. With respect to legal matters, provisions are reviewed and adjusted to reflect the impact of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. |
Preferred stock warrant liability | The Company classified warrants for the purchase of shares of its convertible preferred stock (see Notes 6 and 14) as a liability on its consolidated balance sheets as these warrants were freestanding financial instruments which underlying shares were contingently redeemable (upon a certain liquidation events) and, therefore obligated the Company to transfer assets. The warrant liability, which consisted of warrants for the purchase of Series A convertible preferred stock, was initially recorded at fair value upon the date of issuance and was subsequently remeasured to fair value at each reporting date. Changes in the fair value of the warrant liability were recognized as a component of general and administrative expenses in the consolidated statements of operations and comprehensive loss. Changes in the fair value of the warrants comprising the preferred stock warrant liability were recognized until each respective warrant was exercised (see Notes 6 and 14). |
Comprehensive loss | Comprehensive loss includes net loss as well as other changes in stockholders' equity that result from transactions and economic events other than those with stockholders. |
Employee related obligations | During 2020, the Company established a defined contribution savings plan under Section 401(k) of the Internal Revenue Code for employees based in the United States. This plan covers substantially all employees who meet minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis. Company contributions to the plan may be made at the discretion of the Company's board of directors. The matching contributions made by the Company amounted to $0.9 million , $0.5 million and $0.3 million for the years ended December 31, 2021, 2020 and 2019, respectively. |
Revenue | Premium is earned on a pro-rata basis over the term of the related insurance coverage. Unearned premium and prepaid reinsurance premium represent the portion of gross premium written and ceded premium written, respectively, related to the unexpired terms of related policies. Premium ceded to third party reinsurers is reported as a reduction of earned premium. A premium deficiency is recognized if the sum of expected loss and loss adjustment expense, unamortized acquisition costs, and policy maintenance costs exceeds the remaining unearned premium. A premium deficiency would first be recognized by charging any unamortized acquisition costs to expense to the extent required to eliminate the deficiency. If the premium deficiency were greater than unamortized acquisition costs, a liability would be accrued for the excess deficiency. The Company does not consider anticipated investment income when determining if a premium deficiency exists. There was no premium deficiency as of December 31, 2021 and 2020. Ceding commission income represents commission received based on premium ceded to third-party reinsurers to reimburse us for acquisition and underwriting expenses. Commissions on reinsurance premium ceded is recorded as earned consistent with the recognition of earned premium on the underlying insurance policies, on a pro-rata basis over the terms of the policies reinsured. The portion of ceding commission income which represents reimbursement of successful acquisition costs related to the underlying policies is recorded as an offset to other insurance expense. Net investment income represents interest earned from fixed maturity securities, short term securities and other investments, and gains or losses from sale of investments. Investment income is recorded as earned. Investment income consists primarily of interest income which is recognized on an accrual basis. Net investment income represents investment income, net of investment fees paid to the Company’s investment manager and other investment expenses. Commission income consists of commissions earned on policies written on behalf of third-party insurance companies where the Company has no exposure to the insured risk. Such commission is recognized on the effective date of the associated policy. Other income consists of fees collected from policyholders relating to installment premiums, and are recognized at the time each policy installment is billed. |
Other insurance expense | Other insurance expense consists of the amortization of deferred acquisition costs and merchant processing fees. Other insurance expense also includes employee compensation, including stock-based compensation and benefits, of the Company's underwriting teams, as well as allocated occupancy costs and related overhead costs based on headcount. |
Sales and marketing | Sales and marketing includes third-party marketing, advertising, branding, public relations and sales expenses. Sales and marketing also includes associated employee compensation, including stock-based compensation and benefits, as well as allocated occupancy costs and related overhead based on headcount. Sales and marketing costs are expensed as incurred. Advertising expenses totaled $104.6 million, $58.3 million and $76.0 million for the years ended December 31, 2021, 2020 and 2019, respectively. |
Technology development | Technology development consists of employee compensation, including stock-based compensation and benefits, and expenses related to vendors engaged in product management, design, development and testing of the Company's websites and products. Technology development also includes allocated occupancy costs and related overhead costs based on headcount. Technology development costs are expensed as incurred, except for costs that are capitalized related to internal-use software development projects which are subsequently depreciated over the expected useful life of the developed software. |
General and administrative | General and administrative includes employee compensation, including stock-based compensation and benefits for executive, finance, accounting, legal, business operations and other administrative personnel. In addition, general and administrative includes outside legal, tax and accounting services, insurance, and allocated occupancy costs and related overhead costs based on headcount. |
Lessee, Leases | The Company determines whether an arrangement is a lease at its inception. Operating lease Right-of-Use assets (ROU) and operating lease liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. Operating lease ROU assets are presented under Other assets (Note 12) and Operating lease liabilities are presented under Other Liabilities and Accrued Expenses (Note 14). To determine the present value of lease payments, the Company uses an estimated incremental borrowing rate for leases of office spaces which is derived from information available at the lease commencement date. For certain leases that contain options to extend, the options are included in lease liabilities only if the company is reasonably certain that the option will be exercised. The Company accounts for the lease and non-lease components as a single lease component for leases for real estate, Operating lease expense is recognized on a straight-line basis over the lease term. |
Accounting for stock-based compensation | The Company accounts for stock-based compensation in accordance with ASC Topic 718, "Compensation — Stock Compensation." Stock options are mainly awarded to employees and members of the Company's board of directors and measured at fair value at each grant date. The Company calculates the fair value of share options on the date of grant using the Black-Scholes option-pricing model and the expense is recognized over the requisite service period for awards expected to vest using the straight-line method. The requisite service period for share options is generally four years. The Company recognizes forfeitures as they occur. The Black-Scholes option-pricing model requires the Company to make a number of assumptions, including the value of the Company's common stock, expected volatility, expected term, risk-free interest rate and expected dividends. The Company evaluates the assumptions used to value option awards upon each grant of stock options. Prior to the Company’s IPO, expected volatility was calculated based on the implied volatility from market comparisons of certain publicly traded companies and other factors. The expected option term was calculated based on the simplified method, which uses the midpoint between the vesting date and the contractual term, as the Company does not have sufficient historical data to develop an estimate based on participant behavior. The risk-free interest rate was based on the U.S. treasury bond yield with an equivalent term. The Company has not paid dividends and has no foreseeable plans to pay dividends. Prior to the Company’s IPO, the fair value of common stock underlying the options was historically determined by the Company's board of directors, with input from management, and considered third-party valuations of the Company's common stock. Because there was no public market for the Company's common stock, the board of directors determined its fair value at the time of grant of the option by considering a number of objective and subjective factors, including financing investment rounds, operating and financial performance, the lack of liquidity of share capital and general and industry specific economic outlook, among other factors. The Company's board of directors determined the fair value of common stock based on valuations performed using the Option Pricing Method ("OPM") and the Probability Weighted Expected Return Method ("PWERM") subject to relevant facts and circumstances. |
Foreign currency | Financial statement accounts expressed in foreign currencies are translated into U.S. dollars. Functional currency assets and liabilities are translated into U.S. dollars generally using rates of exchange prevailing at the balance sheet date of each respective subsidiary and the related translation adjustments are recorded as a separate component of accumulated other comprehensive income, net of any related taxes. |
Income taxes | The Company accounts for income taxes in accordance with the liability method whereby deferred tax assets and liability account balances are determined based on the differences between financial reporting and the tax basis for assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to the amounts that are more-likely-than-not to be realized. As of December 31, 2021 and 2020, sufficient doubt existed over the Company's ability to generate sufficient taxable income to realize its deferred income tax assets, and accordingly, the Company has provided a full valuation allowance against its deferred tax assets. ASC 740, "Income Taxes" ("ASC 740") clarifies the accounting for uncertainties in income taxes by establishing minimum standards for the recognition and measurement of tax positions taken or expected to be taken in a tax return. Under the requirements of ASC 740, the Company reviews all of its tax positions and makes a determination as to whether its position is more-likely-than-not to be sustained upon examination by regulatory authorities. If a tax position meets the more-likely-than-not standard, then the related tax benefit is measured based on a cumulative probability analysis of the amount that is more-likely-than-not to be realized upon ultimate settlement or disposition of the underlying issue. The Company did not have any uncertain tax positions for the years ended December 31, 2021 and 2020. The Company classifies all interest and penalties related to uncertain tax positions as income tax expense. The Company did not incur any interest and penalties related to uncertain tax positions during the years ended December 31, 2021 and 2020. The Company did not record any liabilities for tax-related interest and penalties on its consolidated balance sheets as of December 31, 2021 and 2020. |
Net loss per share | The Company follows the two-class method when computing net loss per share as the Company has issued shares that meet the definition of participating securities. The two-class method determines net loss per share for each class of common and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income available to common stockholders for the period to be allocated between common and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. Basic net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted net loss attributable to common stockholders is computed by adjusting net loss attributable to common stockholders to reallocate undistributed earnings based on the potential impact of dilutive securities. Diluted net loss per share attributable to common stockholders is computed by dividing the diluted net loss attributable to common stockholders by the weighted average number of common shares outstanding for the period, including potential dilutive common shares. For purpose of this calculation, outstanding stock options, convertible preferred stock and warrants to purchase shares of convertible preferred stock are considered potential dilutive common shares. The Company's convertible preferred stock contractually entitled the holders of such shares to participate in dividends but did not contractually require the holders of such shares to participate in losses of the Company. Accordingly, in periods in which the Company reports a net loss attributable to common stockholders, such losses are not allocated to such participating securities. In periods in which the Company reports a net loss attributable to common stockholders, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. The Company reported a net loss attributable to common stockholders for the years ended December 31, 2021, 2020 and 2019. |
Recent accounting pronouncements | Prior to December 31, 2021, the Company qualified as an emerging growth company (“EGC”) under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. The Company was previously electing to adopt new or revised accounting guidance within the same time periods as private companies as permitted by its status as an EGC. The Company became a large accelerated filed on December 31, 2021, and must now adopt new accounting guidance within the same time periods as public companies, beginning with this 2021 Annual Report on Form 10-K. Prior to this annual report, the Company’s 2021 quarterly filings did not reflect adoption of the below guidance on Leases (Topic 842) ("ASU 2016-02") and ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, as the Company was not required to have adopted it. Recently adopted accounting pronouncements Revenue Recognition In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09 ("ASU 2014-09") "Revenue from Contracts with Customers." ASU 2014-09 supersedes the revenue recognition requirements in "Revenue Recognition (Topic 605)" and requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. This standard established the core principle of recognizing revenue to depict the transfer of promised goods and services and defines a five-step process, culminating with the recognition of revenue upon satisfaction of an entity's performance obligations. Although the standard and all related amendments supersede nearly all existing revenue recognition guidance under GAAP, the guidance does not amend the accounting for insurance contracts recognized in accordance with ASC Topic 944, Financial Services — Insurance ("ASC 944"). The Company adopted the standard and all related amendments using the modified retrospective method, effective January 1, 2019. The Company's primary sources of revenue are recognized in accordance with ASC 944 as such, revenue within the scope of the new standard primarily includes commission revenue. There was no material changes in the timing or measurement of revenues based upon the guidance. As a result, there was no cumulative effect on retained earnings. Financial Assets and Liabilities In January 2016, the FASB issued Financial Instruments — Overall, Recognition and Measurement of Financial Assets and Financial Liabilities ("ASU 2016-01"). ASU 2016-01 affected the recognition, measurement, presentation, and disclosure of financial instruments. The guidance required equity investments to be measured at fair value with changes in fair value recognized through net income (other than those accounted for under the equity method of accounting or those that result in consolidation of the investee) and an assessment of a valuation allowance on deferred tax assets related to unrealized losses of available-for-sale debt securities in combination with other deferred tax assets. The Company adopted the standard and all related amendments prospectively, effective January 1, 2019. The adoption of ASU 2016-01 did not have a material impact on the financial condition and results of operations of the Company. Statement of Cash Flows In November 2016, the FASB issued ASU No. 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash" ("ASU 2016-18"), which requires restricted cash to be presented with cash and cash equivalents on the consolidated statements of cash flows and disclosure of how the consolidated statements of cash flows reconciles to the balance sheet if restricted cash is shown separately from cash and cash equivalents on the balance sheet. The Company adopted ASU 2016-18 as of January 1, 2019. Restricted cash is now included as a component of cash, cash equivalents and restricted cash on the Company's consolidated statements of cash flows. Upon the adoption of ASU 2016-18, the amount of cash and cash equivalents previously presented on the consolidated statements of cash flows reflects the inclusion of restricted cash in the amount reported for changes in cash, cash equivalents and restricted cash. Additionally, as a result of the adoption, transfers between restricted and unrestricted cash are no longer presented as a component of the Company's investing activities. Stock-based compensation In June 2018, the FASB issued ASU 2018-07 "Compensation — Stock Compensation (Topic 718); Improvements to Nonemployee Share-Based Payment Accounting". ASU 2018-07 simplifies the accounting for share-based payments made to nonemployees so the accounting for such payments is substantially the same as those made to employees. Under this ASU, share-based awards to nonemployees will be measured at fair value on the grant date of the awards, entities will need to assess the probability of satisfying performance conditions if any are present, and awards will continue to be classified according to ASC 718 upon vesting, which eliminates the need to reassess classification upon vesting, consistent with awards granted to employees. The Company adopted ASU 2018-07 on January 1, 2019, which had no impact on the consolidated financial statements as all share-based awards granted to nonemployees prior to adoption were fully vested. Income Taxes ASU 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes, simplifies the various aspects related to accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and clarifies and amends the existing guidance to improve consistent application. The adoption of ASU 2019-12 beginning January 1, 2021 did not have a material impact on our condensed consolidated financial statement and related disclosures. Leases In February 2016, the FASB issued Leases (Topic 842) ("ASU 2016-02"), as subsequently amended, which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e. lessees and lessors), and replaces the existing guidance in ASC 840, Leases. The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine the recognition pattern of lease expense over the term of the lease. In addition, a lessee is required to record (i) a right-of-use asset and a lease liability the balance sheet for all leases with accounting lease terms of more than 12 months regardless of whether it is an operating or financing lease, and (ii) lease expense for operating leases and amortization and interest expense for financing leases, in statement of operations. Leases with a term of 12 months or less may be accounted for similar to existing guidance for operating leases under ASC 840. In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842), which added an optional transition method that allows companies to adopt the standard as of the beginning of the year of adoption as opposed to the earliest comparative period presented. This guidance is effective for the Company for annual periods beginning after December 15, 2021, including interim periods within that fiscal year. Early adoption is permitted. The Company adopted the new standard effective January 1, 2021, using the modified retrospective transition approach which uses the effective date as the date of initial application with no adjustment to prior periods presented. There was no adjustment to the opening balance of retained earnings. At adoption date, the new standard resulted in the recognition of an operating lease Right-of-Use (ROU) asset of $16.9 million included under Other Assets and a corresponding operating lease liabilities of $17.2 million included in Other Liabilities on the consolidated balance sheet. The difference of $0.3 million between the operating lease ROU assets and operating lease liabilities represents reclassification of deferred rent liability (the difference between the straight-line rent expenses and paid rent amounts under the leases) to operating lease ROU assets from other liabilities at the adoption date. The adoption of the standard did not have a material impact on the Company’s consolidated statements of operations and comprehensive loss, or consolidated statements of cash flows. The adoption impact relates to the Company’s existing operating leases for office spaces in the US, Netherlands and Israel. The Company has elected to apply the package of practical expedients requiring no reassessment of whether any expired or existing contracts are or contain leases, the lease classification of any expired or existing leases, or the capitalization of initial direct costs for any existing leases. Additionally, the Company elected the practical expedients that permit the exclusions of leases considered to be short-term. Current Expected Credit Losses In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, or ASU 2016-13. ASU 2016-13 introduced a current expected credit loss (CECL) model for measuring expected credit losses for certain types of financial instruments held at the reporting date requiring significant judgment in application based on historical experience, current conditions and reasonable supportable forecasts, but is not prescriptive about certain aspects of estimating expected losses. The guidance replaced the current incurred loss model for measuring expected credit losses and provided for additional disclosure requirements. Subsequently, the FASB issued additional ASUs on Topic 326 that did not change the core principle of the guidance in ASU 2016-13, but provided clarification and implementation guidance on certain aspects of ASU 2016-13, and have the same effective date and transition requirements as ASU 2016-13. The Company adopted the guidance using a modified retrospective approach as of January 1, 2021 which resulted in no cumulative-effect adjustment to retained earnings. The updated guidance in ASU 2016-13 also amended the previous other-than-temporary impairment (“OTTI”) model for available-for-sale fixed income securities by requiring the recognition of impairments relating to credit losses through an allowance account and limits the amount of credit loss to the difference between a security’s amortized cost basis and its fair value. In addition, the length of time a security has been in an unrealized loss position will no longer impact the determination of whether a credit loss exists. The Company adopted the guidance related to available-for-sale fixed income securities on January 1, 2021 using a prospective transition approach for available-for-sale fixed income securities that were purchased with credit deterioration or had recognized an OTTI write-down prior to the effective date. The effect of the prospective transition approach was to maintain the same amortized cost basis before and after the effective date. |
Reclassification | Certain accounts in the prior year consolidated financial statements were reclassified to conform with the current year presentation. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Cash and cash equivalents | The following represents the Company's cash, cash equivalents and restricted cash as of December 31, 2021 and 2020, ($ in millions). December 31, 2021 2020 Cash and cash equivalents $ 270.6 $ 570.8 Restricted cash — 0.6 Total cash, cash equivalents and restricted cash $ 270.6 $ 571.4 |
Restricted cash | The following represents the Company's cash, cash equivalents and restricted cash as of December 31, 2021 and 2020, ($ in millions). December 31, 2021 2020 Cash and cash equivalents $ 270.6 $ 570.8 Restricted cash — 0.6 Total cash, cash equivalents and restricted cash $ 270.6 $ 571.4 |
Property and equipment, net | Depreciation is calculated using the straight-line method over the estimated useful life of the assets at the following rates: Years Computers and electronic equipment 3 Furniture and equipment 6 Leasehold improvements Shorter of lease term or useful life Property and equipment, net consists of the following ($ in millions): December 31, 2021 2020 Computer equipment and software $ 11.7 $ 4.8 Leasehold improvements 4.6 2.2 Furniture and equipment 1.3 1.1 17.6 8.1 Accumulated depreciation (5.9) (2.4) Property and equipment, net $ 11.7 $ 5.7 |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Investments, Debt and Equity Securities [Abstract] | |
Amortized cost and fair values | The following tables present cost or amortized cost and fair values of investments at December 31, 2021 and 2020, respectively ($ in millions): Cost or Gross Fair Gains Losses December 31, 2021 Corporate debt securities $ 593.4 $ — $ (4.7) $ 588.7 U.S. Government obligations 102.2 0.1 (0.8) 101.5 Municipal securities 1.2 — — 1.2 Total $ 696.8 $ 0.1 $ (5.5) $ 691.4 December 31, 2020 Corporate debt securities $ — $ — $ — $ — U.S. Government obligations 6.4 0.2 — 6.6 Municipal securities — — — — Total $ 6.4 $ 0.2 $ — $ 6.6 |
Contractual maturities of bonds | The following table presents the cost or amortized cost and estimated fair value of bonds as of December 31, 2021 by contractual maturity ($ in millions). Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. December 31, 2021 Cost or Fair Value Due in one year or less $ 69.2 $ 69.2 Due after one year through five years 627.6 622.2 Due after five years through ten years — — Due after ten years — — Total $ 696.8 $ 691.4 |
Aging of gross unrealized losses | The following tables present the gross unrealized losses and related fair values for the Company's available-for-sale bond securities, grouped by duration of time in a continuous unrealized loss position, as of December 31, 2021 and 2020 ($ in millions): Less than 12 Months 12 Months or More Total Fair Value Gross Fair Value Gross Fair Value Gross December 31, 2021 Corporate debt securities $ 581.9 $ (4.7) $ — $ — $ 581.9 $ (4.7) U.S. Government obligations 95.0 (0.8) 0.5 — 95.5 (0.8) Municipal securities 1.2 — — — 1.2 — Total $ 678.1 $ (5.5) $ 0.5 $ — $ 678.6 $ (5.5) December 31, 2020 Corporate debt securities $ — $ — $ — $ — $ — $ — U.S. Government obligations — — — — — — Municipal securities — — — — — — Total $ — $ — $ — $ — $ — $ — |
Special deposits | The carrying value of bonds deposited with each respective state is as follows ($ in millions): December 31, U.S. State 2021 2020 New York $ 2.8 $ 2.8 Washington 1.2 1.2 Colorado 1.1 1.1 Nevada 0.4 0.2 North Carolina 0.3 0.3 New Mexico 0.3 0.3 Virginia 0.3 0.3 Florida 0.2 0.2 Arkansas 0.1 — Massachusetts 0.1 0.1 Total $ 6.8 $ 6.5 |
Net investment income | An analysis of net investment income follows ($ in millions): December 31, 2021 2020 2019 Interest on cash and cash equivalents $ 0.4 $ 1.0 $ 2.8 Fixed maturities 1.5 0.1 0.1 Short-term investments 0.1 0.4 0.5 Total 2.0 1.5 3.4 Investment expense 0.1 0.0 0.0 Net investment income $ 1.9 $ 1.5 $ 3.4 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair value hierarchy for financial assets and liabilities | The following tables present the Company's fair value hierarchy for financial assets and liabilities measured as of December 31, 2021 and 2020 ($ in millions): December 31, 2021 Level 1 Level 2 Level 3 Total Assets: Corporate debt securities $ — $ 588.7 $ — $ 588.7 U.S. Government obligations — 101.5 — 101.5 Municipal securities — 1.2 — 1.2 Fixed maturities — 691.4 — 691.4 Short term investments — 110.4 — 110.4 Total $ — $ 801.8 $ — $ 801.8 December 31, 2020 Level 1 Level 2 Level 3 Total Assets: Corporate debt securities $ — $ — $ — — U.S. Government obligations — 6.6 — 6.6 Municipal securities — — — — Fixed maturities — 6.6 — 6.6 Short term investments — — — — Total $ — $ 6.6 $ — $ 6.6 |
Reinsurance (Tables)
Reinsurance (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Insurance [Abstract] | |
Reinsurance recoverable | Amounts recoverable from reinsurers are recognized in a manner consistent with the claims liabilities associated with the reinsurance placement and presented on the balance sheet as reinsurance recoverable. Such balance as of December 31, 2021 and 2020 are presented in the table below ($ in millions). December 31, 2021 2020 Reinsurance recoverable on paid losses $ 17.1 $ 12.7 Ceded unpaid loss and LAE 72.7 36.3 Total reinsurance recoverable $ 89.8 $ 49.0 AM Best December 31, Reinsurer 2021 2020 A+ Hannover Rueck SE $ 60.2 $ 22.2 A MAPFRE Re, Compania De Reaseguros S.A. 14.4 6.8 A+ Swiss Reinsurance America Corporation 12.4 5.8 NR Lloyd’s Underwriter Syndicate no. 1084 CSL 4.4 3.0 A+ Arch Reinsurance Limited 2.4 2.7 A Lloyd's Underwriter Syndicate no. 0033 HIS 0.8 1.6 NR Lloyd's Underwriter Syndicate no. 2001 AML 0.7 1.2 A+ Munich Reinsurance America Inc 0.6 1.6 A Lloyd's Underwriter Syndicate no. 2357 NCL 0.6 1.6 A Hiscox Insurance Company (Bermuda) Ltd 0.5 1.2 A++ Tokio Marine & Nichido Fire Insurance Company Limited — 3.9 $ 97.0 $ 51.6 Other reinsurers 3.3 5.1 $ 100.3 $ 56.7 |
Impact of reinsurance | The impact of reinsurance treaties on the Company's consolidated financial statements is as follows ($ in millions): December 31, 2021 2020 2019 Premium written: Direct $ 375.7 $ 214.4 $ 115.8 Ceded (273.4) (171.7) (11.2) Net premium written $ 102.3 $ 42.7 $ 104.6 Premium earned: Direct $ 292.0 $ 158.7 $ 75.5 Ceded (215.0) (81.4) (11.7) Net premium earned $ 77.0 $ 77.3 $ 63.8 Loss and LAE incurred: Direct $ 264.1 $ 113.4 $ 59.7 Ceded (192.2) (58.7) (13.9) Net loss and LAE incurred $ 71.9 $ 54.7 $ 45.8 |
Deferred Acquisition Costs (Tab
Deferred Acquisition Costs (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Insurance [Abstract] | |
Policy acquisition costs deferred and amortized | The following table presents the policy acquisition costs deferred and amortized ($ in millions): December 31, 2021 2020 Deferred Acquisition Costs: Balance, January 1 $ 3.5 $ 1.8 Add: Premium taxes and other acquisition costs 9.8 5.8 Direct commissions 2.4 0.8 Less: Amortization of net deferred acquisition costs (9.5) (4.9) Balance, December 31 $ 6.2 $ 3.5 Other Insurance Expense: Amortization of net deferred acquisition costs $ 9.5 $ 4.9 Period costs 14.6 9.5 Total other insurance expense $ 24.1 $ 14.4 |
Property, Plant, and Equipment
Property, Plant, and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment, net | Depreciation is calculated using the straight-line method over the estimated useful life of the assets at the following rates: Years Computers and electronic equipment 3 Furniture and equipment 6 Leasehold improvements Shorter of lease term or useful life Property and equipment, net consists of the following ($ in millions): December 31, 2021 2020 Computer equipment and software $ 11.7 $ 4.8 Leasehold improvements 4.6 2.2 Furniture and equipment 1.3 1.1 17.6 8.1 Accumulated depreciation (5.9) (2.4) Property and equipment, net $ 11.7 $ 5.7 |
Other Assets (Tables)
Other Assets (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other assets | Other assets consists of the following ($ in millions): December 31, 2021 2020 Right-of-use assets (Note 22) $ 21.9 $ — Ceding commission receivable 14.5 5.4 Prepaid expenses 10.6 7.5 Investment income due and accrued 3.4 0.9 Other 2.8 0.7 Total other assets $ 53.2 14.5 |
Unpaid Loss and Loss Adjustme_2
Unpaid Loss and Loss Adjustment Expense (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Insurance [Abstract] | |
Activity in the liability for unpaid loss and LAE | The following table presents the activities in the liability for unpaid loss and loss adjustment expense (“LAE”) as of December 31, 2021 and 2020 ($ in millions): December 31, 2021 2020 Unpaid loss and LAE as of January 1 $ 46.3 $ 28.2 Less: Reinsurance recoverable (1) 36.3 18.5 Net unpaid loss and LAE as of January 1 10.0 9.7 Add: Incurred losses and LAE, net of reinsurance, related to: Current year 73.2 54.8 Prior years (1.3) (0.1) Total incurred 71.9 54.7 Deduct: Paid losses and LAE, net of reinsurance, related to: Current year 49.2 44.6 Prior years 7.5 9.8 Total paid 56.7 54.4 Foreign currency translation gain (loss) — — Unpaid loss and LAE, net of reinsurance recoverable, as of December 31 25.2 10.0 Reinsurance recoverable as of December 31 (1) 72.7 36.3 Unpaid loss and LAE, gross of reinsurance recoverable, as of December 31 $ 97.9 $ 46.3 ____________ (1) Reinsurance recoverable in this table includes only ceded unpaid loss and LAE |
Claims development information - incurred and paid losses | The following table presents incurred loss and ALAE, net of reinsurance, as well as IBNR loss reserves and the number of reported claims ($ in millions, except for number of claims): December 31, 2021 Cumulative December 31, 2016 2017 2018 2019 2020 2021 IBNR (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Accident Year 2016 $ — $ — $ — $ — $ — $ — $ — 8 2017 — 1.7 1.7 1.7 1.7 1.7 — 1,758 2018 — — 15.0 13.5 13.4 13.4 — 10,528 2019 — — — 46.0 46.0 46.2 — 19,483 2020 — — — — 53.2 51.8 1.1 30,212 2021 — — — — — 59.4 11.1 50,821 Total incurred losses and ALAE, net $ 172.5 $ 12.2 112,810 The following table presents cumulative paid loss and ALAE, net of reinsurance ($ in millions): December 31, 2016 2017 2018 2019 2020 2021 (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Accident Year 2016 $ — $ — $ — $ — $ — $ — 2017 — 1.6 1.7 1.7 1.7 1.7 2018 — — 13.2 13.4 13.4 13.4 2019 — — — 36.4 46.1 46.2 2020 — — — — 42.9 50.0 2021 — — — — — 37.9 Total paid losses and ALAE, net $ 149.2 Total unpaid loss and ALAE reserves, net $ 22.9 Ceded unpaid loss and LAE 66.7 Gross unpaid loss and LAE $ 89.6 The following table presents incurred loss and ALAE, net of reinsurance, as well as IBNR loss reserves and the number of reported claims ($ in millions, except for number of claims): December 31, 2021 Cumulative 2020 2021 IBNR (unaudited) Accident Year 2020 $ 0.3 $ 0.2 $ — 20,415 2021 — 10.0 2.1 173,379 Total incurred losses and ALAE, net $ 10.2 $ 2.1 193,794 The following table presents cumulative paid loss and ALAE, net of reinsurance ($ in millions): December 31, 2020 2021 (unaudited) Accident Year 2020 $ 0.4 $ 0.7 2021 — 7.5 Total paid losses and ALAE, net $ 8.2 Total unpaid loss and ALAE reserves, net $ 2.3 Ceded unpaid loss and LAE 6.0 Gross unpaid loss and LAE $ 8.3 |
Historical claims duration | Average annual percentage payout of accident year incurred claims by age, net of reinsurance (unaudited supplementary information) Year 1 Year 2 Year 3 Home and renters 79 % 15 % 4 % Average annual percentage payout of accident year incurred claims by age, net of reinsurance (unaudited supplementary information) Year 1 Year 2 Year 3 Pet 94 % 5 % 1 % |
Reconciliation of net incurred and paid loss information in the loss reserve rollforward and development tables | The reconciliation of the net incurred and paid loss information in the loss reserve rollforward table and development tables with respect to the current accident year is as follows ($ in millions): 2021 Current Accident Year 2021 Prior Accident Year Incurred Paid Incurred Paid Rollforward table Home $ 62.2 $ 40.6 $ (1.2) $ 7.2 Pet 10.9 8.5 (0.1) 0.3 Car 0.1 0.1 — — 73.2 49.2 (1.3) 7.5 Development table Home 59.4 37.9 (1.2) 7.2 Pet 10.0 7.5 (0.1) 0.3 69.4 45.4 (1.3) 7.5 Others — — — — Variance $ 3.8 $ 3.8 $ — $ — Unallocated loss adjustment expense $ 3.8 $ 3.8 |
Other Liabilities and Accrued_2
Other Liabilities and Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Other Liabilities Disclosure [Abstract] | |
Other liabilities and accrued expenses | Other liabilities and accrued expenses consists of the following ($ in millions): December 31, 2021 2020 Lease liabilities (Note 22) $ 22.3 $ — Accrued advertising costs 11.2 6.8 Employee compensation payable 5.4 3.7 Premium taxes payable 5.4 3.2 Income tax payable 4.7 0.3 Accrued professional fees 4.6 2.6 Advance premium 2.0 — Other payables 1.8 2.1 Total other liabilities and accrued expenses $ 57.4 $ 18.7 |
Convertible Preferred Stock a_2
Convertible Preferred Stock and Preferred Stock Warrants (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Temporary Equity Disclosure [Abstract] | |
Convertible preferred stock | As of December 31, 2019, preferred stock consisted of the following ($ in millions, except for share amounts): December 31, 2019 Preferred Preferred Carrying Liquidation Common Stock Series Seed Preferred stock 7,905,140 7,905,140 $ 12.9 $ 13.0 7,905,140 Series A Preferred stock 3,328,774 3,328,774 14.0 13.6 3,328,774 Series B Preferred stock 4,511,417 4,511,417 34.1 34.1 4,511,417 Series C Preferred Stock 8,703,846 8,703,846 119.8 120.1 8,703,846 Series D Preferred Stock 7,107,930 7,107,930 299.4 300.0 7,107,930 31,557,107 31,557,107 $ 480.2 $ 480.8 31,557,107 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Fair value assumptions | The fair value of each option granted during the year ended December 31, 2021 and 2020 is estimated on the date of grant using the Black-Scholes model with the following assumptions (annualized percentage): December 31, 2021 2020 Weighted average expected term (years) 6.13 6.09 Risk-free interest rate 1.3% 0.7% Volatility 48% 40% Expected dividend yield 0% 0% |
Stock options activity | The following table summarizes activity ($ in millions, except for option and average amounts): Stock options Number of Weighted- Weighted- Aggregate Outstanding as of December 31, 2020 4,944,711 $ 20.50 8.30 $ 506.58 Granted 3,054,135 79.97 Exercised (848,992) 10.87 Cancelled (576,110) 54.78 Outstanding as of December 31, 2021 6,573,744 $ 46.03 8.29 $ 85.86 Options exercisable as of December 31, 2021 2,269,352 $ 19.31 7.09 $ 58.35 Options unvested as of December 31, 2021 4,304,392 $ 60.12 8.93 $ 27.51 |
Restricted stock units | Restricted Stock Units Number of shares Grant Date Fair Value Outstanding as of December 31, 2020 — $ — Granted 362,624 71.41 Vested (19,063) 143.49 Cancelled (7,747) 87.54 Outstanding as of December 31, 2021 335,814 66.94 |
Stock-based compensation expense | Stock-based compensation expense from stock options and RSUs granted included and classified in the consolidated statements of operations and comprehensive loss is as follows ($ in millions): December 31, 2021 2020 2019 Loss and loss adjustment expense, net $ 1.5 $ 0.4 $ — Other insurance expense 1.0 0.7 0.6 Sales and marketing 5.1 2.7 1.1 Technology development 18.2 3.1 1.4 General and administrative 18.3 3.7 1.2 Total stock-based compensation expense $ 44.1 $ 10.6 $ 4.3 Stock-based compensation expense classified by award type as included in the consolidated statements of operations and comprehensive loss is as follows ($ in millions): December 31, 2021 2020 2019 Stock options $ 40.1 $ 10.6 $ 4.3 RSUs 4.0 — — Total stock-based compensation expense $ 44.1 $ 10.6 $ 4.3 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Components of net deferred tax assets | The components of the net deferred tax assets are as follows ($ in millions): December 31, 2021 2020 Deferred tax assets: Net operating loss carryforwards $ 127.4 $ 92.7 Deferred ceding commission 7.8 4.8 Lease liabilities 3.4 — Net unearned premium 2.6 1.4 Stock-based compensation 2.4 3.8 Charitable contribution 0.9 4.7 Startup costs 0.7 0.9 Other 0.6 0.3 Total gross deferred tax assets 145.8 108.6 Deferred tax liabilities: Right-of-use assets (3.3) — Depreciation and amortization (2.2) (0.9) Deferred acquisition costs (1.3) (0.8) Total gross deferred tax liabilities (6.8) (1.7) Valuation allowance (139.0) (106.9) Total deferred tax assets, net $ — $ — |
(Loss) income before tax | (Loss) income before tax consists of the following ($ in millions): December 31, 2021 2020 2019 United States $ (240.3) $ (123.6) $ (109.5) Foreign 6.7 2.8 1.6 Total $ (233.6) $ (120.8) $ (107.9) |
Income tax expense | Income tax expense consists of the following ($ in millions): December 31, 2021 2020 2019 Current: Federal $ — $ — $ — State — — — Foreign 7.7 1.5 0.6 Total current 7.7 1.5 0.6 Deferred: Federal $ — $ — $ — State — — — Foreign — — — Total deferred — — — Total income tax expense $ 7.7 $ 1.5 $ 0.6 |
Effective income tax rate reconciliation | A reconciliation of the Company's statutory income tax rate to the Company's effective income tax rate is as follows: December 31, 2021 2020 2019 Income at US statutory rate 21.0 % 21.0 % 21.0 % State taxes, net of federal benefit (8.4) % 12.8 % 13.9 % Permanent differences (1.7) % (1.2) % (1.7) % Return to provision (0.9) % — % — % Foreign rate differential 0.6 % 0.2 % 0.1 % Valuation allowance (13.7) % (33.9) % (33.9) % Other (0.2) % (0.1) % — % Total income taxes (3.3) % (1.2) % (0.6) % |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Earnings Per Share [Abstract] | |
Basic and diluted net loss per share | Basic and diluted net loss per share attributable to common stockholders was calculated as follows: Year Ended December 31, 2021 2020 2019 Numerator: Net loss attributable to common stockholders (in millions) $ (241.3) $ (122.3) $ (108.5) Denominator: Weighted average common shares outstanding — basic and diluted 61,224,433 33,654,828 11,124,397 Net loss per share attributable to common stockholders — basic and diluted $ (3.94) $ (3.63) $ (9.75) |
Antidilutive potential common shares | The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect: December 31, 2021 2020 2019 Options to purchase common stock 6,573,744 4,944,711 4,048,802 Unvested restricted stock 335,814 — — Convertible preferred stock (as converted to common stock) — — 31,557,107 6,909,558 4,944,711 35,605,909 |
Leases (Tables)
Leases (Tables) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Leases [Abstract] | ||
Schedule of Supplemental Cash Flow Related to Operating Leases | Supplemental cash flow information related to operating leases as of December 31, 2021 is as follows ($ in millions): Operating cash outflow from operating leases $ 4.1 ROU assets obtained in exchange for lease liabilities for operating leases $ 19.5 | |
Weighted-Average Remaining Lease Term and Discount Rate, Lessee | Weighted-average remaining lease term and discount rate are as follows: Weighted-average remaining lease term (in years) 4.1 Weighted-average discount rate 4.62 % | |
Operating Lease Maturity | Maturities of operating lease liabilities as of December 31, 2021 is as follows ($ in millions): 2022 $ 4.9 2023 5.2 2024 6.7 2025 6.2 2026 1.6 Thereafter — Total $ 24.6 | The following table presents future minimum lease commitments for operating leases as of December 31, 2020 ($ in millions): 2021 $ 4.8 2022 5.0 2023 2.8 2024 2.8 2025 and thereafter 4.4 Total $ 19.8 |
Geographical Breakdown of Gro_2
Geographical Breakdown of Gross Written Premium (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Segment Reporting [Abstract] | |
Gross written premium by state | The Company has a single reportable segment and offers insurance coverage under the homeowners multi-peril, inland marine and general liability lines of business . Gross written premium by jurisdiction is as follows ($ in millions): Years ended December 31, 2021 2020 2019 Jurisdiction Amount % of GWP Amount % of GWP Amount % of GWP California $ 93.9 25.0 % $ 49.8 23.2 % $ 29.0 25.0 % Texas 72.5 19.3 % 47.8 22.3 % 28.6 24.7 % New York 47.3 12.6 % 26.7 12.5 % 15.8 13.6 % New Jersey 16.7 4.4 % 8.6 4.0 % 4.7 4.1 % Georgia 16.5 4.4 % 11.6 5.4 % 6.2 5.4 % Illinois 15.7 4.2 % 9.8 4.6 % 5.2 4.5 % Pennsylvania 9.7 2.6 % 5.1 2.4 % 2.7 2.3 % Colorado 9.2 2.4 % 4.2 2.0 % 1.2 1.0 % Virginia 8.1 2.2 % 3.9 1.8 % 1.3 1.1 % Maryland 7.7 2.0 % 4.6 2.1 % 2.1 1.8 % All other 78.4 20.9 % 42.3 19.7 % 19.0 16.5 % $ 375.7 100.0 % $ 214.4 100.0 % $ 115.8 100.0 % |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 270.6 | $ 570.8 | ||
Restricted cash | 0 | 0.6 | ||
Total cash, cash equivalents and restricted cash | $ 270.6 | $ 571.4 | $ 270.3 | $ 102.4 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Additional Information (Details) $ in Millions | 12 Months Ended | |||
Dec. 31, 2021USD ($)segment | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Nov. 08, 2021USD ($) | |
Accounting Policies [Abstract] | ||||
Number of reportable segments | segment | 1 | |||
Premium receivable, allowance for doubtful accounts | $ 1.6 | $ 0.5 | ||
Amortization of net deferred acquisition costs | 9.5 | 4.9 | $ 2.1 | |
Matching contributions | 0.9 | 0.5 | 0.3 | |
Advertising expenses | 104.6 | 58.3 | $ 76 | |
Other Assets | ||||
Accounting Policies [Abstract] | ||||
Operating lease, right-of-use asset | (21.9) | 0 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Right-of-use asset | $ 21.9 | $ 0 | ||
Stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Requisite service period | 4 years | |||
ASU 2016-02 | Other Assets | ||||
Accounting Policies [Abstract] | ||||
Operating lease, right-of-use asset | $ (16.9) | $ (0.3) | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Right-of-use asset | 16.9 | 0.3 | ||
ASU 2016-02 | Other Liabilities | ||||
Accounting Policies [Abstract] | ||||
Operating lease liability | 17.2 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Operating lease liability | $ 17.2 | |||
Deferred rent credit | $ (0.3) |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Property and Equipment, Net and Capitalized Internal Use Software (Details) | 12 Months Ended |
Dec. 31, 2021 | |
Computers and electronic equipment | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 3 years |
Furniture and equipment | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 6 years |
Internal use software | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 2 years |
Acquisition of a Business (Deta
Acquisition of a Business (Details) - Metromile $ in Millions | Nov. 08, 2021USD ($) |
Business Acquisition [Line Items] | |
Percent of equity acquired | 100.00% |
Equity value | $ 500 |
Cash value | $ 200 |
Conversion ratio | 19 |
Investments - Amortized Cost an
Investments - Amortized Cost and Fair Values (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Debt Securities, Available-for-sale [Line Items] | ||
Cost or Amortized Cost | $ 696.8 | $ 6.4 |
Gross unrealized gains | 0.1 | 0.2 |
Gross unrealized losses | 5.5 | 0 |
Debt securities, available-for-sale | 691.4 | 6.6 |
Corporate debt securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost or Amortized Cost | 593.4 | 0 |
Gross unrealized gains | 0 | 0 |
Gross unrealized losses | 4.7 | 0 |
Debt securities, available-for-sale | 588.7 | 0 |
U.S. Government obligations | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost or Amortized Cost | 102.2 | 6.4 |
Gross unrealized gains | 0.1 | 0.2 |
Gross unrealized losses | 0.8 | 0 |
Debt securities, available-for-sale | 101.5 | 6.6 |
Municipal securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost or Amortized Cost | 1.2 | 0 |
Gross unrealized gains | 0 | 0 |
Gross unrealized losses | 0 | 0 |
Debt securities, available-for-sale | $ 1.2 | $ 0 |
Investments - Contractual Matur
Investments - Contractual Maturities of Bonds (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Cost or Amortized Cost | ||
Due in one year or less | $ 69.2 | |
Due after one year through five years | 627.6 | |
Due after five years through ten years | 0 | |
Due after ten years | 0 | |
Amortized cost, available-for-sale securities | 696.8 | $ 6.4 |
Fair Value | ||
Due in one year or less | 69.2 | |
Due after one year through five years | 622.2 | |
Due after five years through ten years | 0 | |
Due after ten years | 0 | |
Fair Value | $ 691.4 | $ 6.6 |
Investments - Aging Of Gross Un
Investments - Aging Of Gross Unrealized Losses (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Fair Value | ||
Less than 12 Months | $ 678.1 | $ 0 |
12 Months or More | 0.5 | 0 |
Fair Value | 678.6 | 0 |
Gross Unrealized Losses | ||
Less than 12 Months | (5.5) | 0 |
12 Months or More | 0 | 0 |
Gross Unrealized Losses | (5.5) | 0 |
Corporate debt securities | ||
Fair Value | ||
Less than 12 Months | 581.9 | 0 |
12 Months or More | 0 | 0 |
Fair Value | 581.9 | 0 |
Gross Unrealized Losses | ||
Less than 12 Months | (4.7) | 0 |
12 Months or More | 0 | 0 |
Gross Unrealized Losses | (4.7) | 0 |
U.S. Government obligations | ||
Fair Value | ||
Less than 12 Months | 95 | 0 |
12 Months or More | 0.5 | 0 |
Fair Value | 95.5 | 0 |
Gross Unrealized Losses | ||
Less than 12 Months | (0.8) | 0 |
12 Months or More | 0 | 0 |
Gross Unrealized Losses | (0.8) | 0 |
Municipal securities | ||
Fair Value | ||
Less than 12 Months | 1.2 | 0 |
12 Months or More | 0 | 0 |
Fair Value | 1.2 | 0 |
Gross Unrealized Losses | ||
Less than 12 Months | 0 | 0 |
12 Months or More | 0 | 0 |
Gross Unrealized Losses | $ 0 | $ 0 |
Investments - Special Deposits
Investments - Special Deposits (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Debt Securities, Available-for-sale [Line Items] | ||
U.S. Government obligations | $ 691.4 | $ 6.6 |
Deposits with state insurance departments | ||
Debt Securities, Available-for-sale [Line Items] | ||
U.S. Government obligations | 6.8 | 6.5 |
Deposits with state insurance departments | New York | ||
Debt Securities, Available-for-sale [Line Items] | ||
U.S. Government obligations | 2.8 | 2.8 |
Deposits with state insurance departments | Washington | ||
Debt Securities, Available-for-sale [Line Items] | ||
U.S. Government obligations | 1.2 | 1.2 |
Deposits with state insurance departments | Colorado | ||
Debt Securities, Available-for-sale [Line Items] | ||
U.S. Government obligations | 1.1 | 1.1 |
Deposits with state insurance departments | Nevada | ||
Debt Securities, Available-for-sale [Line Items] | ||
U.S. Government obligations | 0.3 | 0.3 |
Deposits with state insurance departments | North Carolina | ||
Debt Securities, Available-for-sale [Line Items] | ||
U.S. Government obligations | 0.3 | 0.3 |
Deposits with state insurance departments | Virginia | ||
Debt Securities, Available-for-sale [Line Items] | ||
U.S. Government obligations | 0.3 | 0.3 |
Deposits with state insurance departments | Virginia | ||
Debt Securities, Available-for-sale [Line Items] | ||
U.S. Government obligations | 0.2 | 0.2 |
Deposits with state insurance departments | Florida | ||
Debt Securities, Available-for-sale [Line Items] | ||
U.S. Government obligations | 0.4 | 0.2 |
Deposits with state insurance departments | Arkansas | ||
Debt Securities, Available-for-sale [Line Items] | ||
U.S. Government obligations | 0.1 | 0 |
Deposits with state insurance departments | Massachusetts | ||
Debt Securities, Available-for-sale [Line Items] | ||
U.S. Government obligations | $ 0.1 | $ 0.1 |
Investments - Net Investment In
Investments - Net Investment Income (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Net Investment Income [Line Items] | |||
Gross investment income | $ 2 | $ 1.5 | $ 3.4 |
Investment expense | 0.1 | 0 | 0 |
Net investment income | 1.9 | 1.5 | 3.4 |
Interest on cash and cash equivalents | |||
Net Investment Income [Line Items] | |||
Net investment income | 0.4 | 1 | 2.8 |
Fixed maturities | |||
Net Investment Income [Line Items] | |||
Net investment income | 1.5 | 0.1 | 0.1 |
Short-term investments | |||
Net Investment Income [Line Items] | |||
Net investment income | $ 0.1 | $ 0.4 | $ 0.5 |
Investments - Additional Inform
Investments - Additional Information (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021USD ($)security | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | |
Investments, Debt and Equity Securities [Abstract] | |||
Gross unrealized losses (less than in 2020) | $ (5.5) | $ 0 | |
Number of debt securities held, unrealized loss position | security | 259 | ||
Debt securities, available-for-sale | $ 691.4 | 6.6 | |
Realized investment gains | $ 0 | $ 0 | $ 0 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value Hierarchy (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
U.S. Government obligations | $ 691.4 | $ 6.6 |
Short term investments | 110.4 | 0 |
Total | 801.8 | 6.6 |
Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
U.S. Government obligations | 588.7 | 0 |
U.S. Government obligations | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
U.S. Government obligations | 101.5 | 6.6 |
Municipal securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
U.S. Government obligations | 1.2 | 0 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
U.S. Government obligations | 0 | 0 |
Short term investments | 0 | 0 |
Total | 0 | 0 |
Level 1 | Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
U.S. Government obligations | 0 | 0 |
Level 1 | U.S. Government obligations | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
U.S. Government obligations | 0 | 0 |
Level 1 | Municipal securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
U.S. Government obligations | 0 | 0 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
U.S. Government obligations | 691.4 | 6.6 |
Short term investments | 110.4 | 0 |
Total | 801.8 | 6.6 |
Level 2 | Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
U.S. Government obligations | 588.7 | 0 |
Level 2 | U.S. Government obligations | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
U.S. Government obligations | 101.5 | 6.6 |
Level 2 | Municipal securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
U.S. Government obligations | 1.2 | 0 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
U.S. Government obligations | 0 | 0 |
Short term investments | 0 | 0 |
Total | 0 | 0 |
Level 3 | Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
U.S. Government obligations | 0 | 0 |
Level 3 | U.S. Government obligations | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
U.S. Government obligations | 0 | 0 |
Level 3 | Municipal securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
U.S. Government obligations | $ 0 | $ 0 |
Reinsurance - Additional Inform
Reinsurance - Additional Information (Details) - USD ($) $ in Millions | Jul. 01, 2021 | Jun. 30, 2021 | Dec. 31, 2021 |
Effects of Reinsurance [Line Items] | |||
Reinsurance program, minimum Losses threshold | $ 60 | ||
Aggregate Excess of Loss Reinsurance Contract, threshold loss ratio | 50.00% | ||
Aggregate Excess of Loss Reinsurance Contract, deductible - percent of earned premium | 10.00% | ||
Proportional Reinsurance Contracts | |||
Effects of Reinsurance [Line Items] | |||
Percent of contracts subject to participation through reinsurance | 70.00% | 75.00% | |
Ceded commission percentage | 25.00% | ||
Claims funding percentage | 75.00% | ||
Non-Proportional Reinsurance Contracts | |||
Effects of Reinsurance [Line Items] | |||
Percent of contracts subject to participation through reinsurance | 25.00% |
Reinsurance - Reinsurance Recov
Reinsurance - Reinsurance Recoverable (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Insurance [Abstract] | |||
Reinsurance recoverable on paid losses | $ 17.1 | $ 12.7 | |
Ceded unpaid loss and LAE | 72.7 | 36.3 | $ 18.5 |
Total reinsurance recoverable | $ 89.8 | $ 49 |
Reinsurance - Unsecured Reinsur
Reinsurance - Unsecured Reinsurance Recoverable by Reinsurer (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Ceded Credit Risk [Line Items] | ||
Reinsurance recoverable | $ 89.8 | $ 49 |
Ceded Credit Risk, Unsecured | ||
Ceded Credit Risk [Line Items] | ||
Reinsurance recoverable | 100.3 | 56.7 |
Lloyd’s Underwriter Syndicate no. 1084 CSL | Ceded Credit Risk, Unsecured | ||
Ceded Credit Risk [Line Items] | ||
Reinsurance recoverable | 4.4 | 3 |
Lloyd's Underwriter Syndicate no. 2001 AML | Ceded Credit Risk, Unsecured | ||
Ceded Credit Risk [Line Items] | ||
Reinsurance recoverable | 0.7 | 1.2 |
Top Reinsurers | Ceded Credit Risk, Unsecured | ||
Ceded Credit Risk [Line Items] | ||
Reinsurance recoverable | 97 | 51.6 |
Other reinsurers | Ceded Credit Risk, Unsecured | ||
Ceded Credit Risk [Line Items] | ||
Reinsurance recoverable | 3.3 | 5.1 |
A+ | Hannover Rueck SE | Ceded Credit Risk, Unsecured | ||
Ceded Credit Risk [Line Items] | ||
Reinsurance recoverable | 60.2 | 22.2 |
A+ | Swiss Reinsurance America Corporation | Ceded Credit Risk, Unsecured | ||
Ceded Credit Risk [Line Items] | ||
Reinsurance recoverable | 12.4 | 5.8 |
A+ | Arch Reinsurance Limited | Ceded Credit Risk, Unsecured | ||
Ceded Credit Risk [Line Items] | ||
Reinsurance recoverable | 2.4 | 2.7 |
A+ | Munich Reinsurance America Inc | Ceded Credit Risk, Unsecured | ||
Ceded Credit Risk [Line Items] | ||
Reinsurance recoverable | 0.6 | 1.6 |
A | MAPFRE Re, Compania De Reaseguros S.A. | Ceded Credit Risk, Unsecured | ||
Ceded Credit Risk [Line Items] | ||
Reinsurance recoverable | 14.4 | 6.8 |
A | Lloyd's Underwriter Syndicate no. 0033 HIS | Ceded Credit Risk, Unsecured | ||
Ceded Credit Risk [Line Items] | ||
Reinsurance recoverable | 0.8 | 1.6 |
A | Lloyd's Underwriter Syndicate no. 2357 NCL | Ceded Credit Risk, Unsecured | ||
Ceded Credit Risk [Line Items] | ||
Reinsurance recoverable | 0.6 | 1.6 |
A | Hiscox Insurance Company (Bermuda) Ltd | Ceded Credit Risk, Unsecured | ||
Ceded Credit Risk [Line Items] | ||
Reinsurance recoverable | 0.5 | 1.2 |
A++ | Tokio Marine & Nichido Fire Insurance Company Limited | Ceded Credit Risk, Unsecured | ||
Ceded Credit Risk [Line Items] | ||
Reinsurance recoverable | $ 0 | $ 3.9 |
Reinsurance - Impact of Reinsur
Reinsurance - Impact of Reinsurance (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Premium written: | |||
Direct | $ 375.7 | $ 214.4 | $ 115.8 |
Ceded | (273.4) | (171.7) | (11.2) |
Net premium written | 102.3 | 42.7 | 104.6 |
Premium earned: | |||
Direct | 292 | 158.7 | 75.5 |
Ceded | (215) | (81.4) | (11.7) |
Net premium earned | 77 | 77.3 | 63.8 |
Loss and LAE incurred: | |||
Direct | 264.1 | 113.4 | 59.7 |
Ceded | (192.2) | (58.7) | (13.9) |
Net loss and LAE incurred | $ 71.9 | $ 54.7 | $ 45.8 |
Deferred Acquisition Costs (Det
Deferred Acquisition Costs (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Deferred Acquisition Costs: | |||
Balance, January 1 | $ 3.5 | $ 1.8 | |
Add: | |||
Premium taxes and other acquisition costs | 9.8 | 5.8 | |
Direct commissions | 2.4 | 0.8 | |
Less: | |||
Amortization of net deferred acquisition costs | (9.5) | (4.9) | $ (2.1) |
Balance, December 31 | 6.2 | 3.5 | 1.8 |
Other Insurance Expense: | |||
Amortization of net deferred acquisition costs | 9.5 | 4.9 | 2.1 |
Period costs | 14.6 | 9.5 | |
Total other insurance expense | $ 24.1 | $ 14.4 | $ 9.6 |
Property, Plant, and Equipmen_2
Property, Plant, and Equipment - Schedule (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 17.6 | $ 8.1 |
Accumulated depreciation | (5.9) | (2.4) |
Property and equipment, net | 11.7 | 5.7 |
Computer equipment and software | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 11.7 | 4.8 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 4.6 | 2.2 |
Furniture and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 1.3 | $ 1.1 |
Property and Equipment, net - A
Property and Equipment, net - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |||
Depreciation expense | $ 3.7 | $ 1.7 | $ 0.6 |
Capitalized costs for internal-use software | $ 8.1 | $ 3.2 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Intangible assets | $ 0.6 | $ 0.6 |
Other Assets (Details)
Other Assets (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Line Items] | ||
Ceding commission receivable | $ 14.5 | $ 5.4 |
Prepaid expenses | 10.6 | 7.5 |
Investment income due and accrued | 3.4 | 0.9 |
Other | 2.8 | 0.7 |
Total other assets | 53.2 | 14.5 |
Other Assets | ||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Line Items] | ||
Right-of-use asset | $ 21.9 | $ 0 |
Unpaid Loss and Loss Adjustme_3
Unpaid Loss and Loss Adjustment Expense - Activity (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | |||
Unpaid loss and LAE at beginning of period | $ 46.3 | $ 28.2 | |
Less: Reinsurance recoverable at beginning of period | 36.3 | 18.5 | |
Net unpaid loss and LAE at beginning of period | 10 | 9.7 | |
Add: Incurred losses and LAE, net of reinsurance, related to: | |||
Current year | 73.2 | 54.8 | |
Prior years | (1.3) | (0.1) | |
Total incurred | 71.9 | 54.7 | $ 45.8 |
Deduct: Paid losses and LAE, net of reinsurance, related to: | |||
Current year | 49.2 | 44.6 | |
Prior years | 7.5 | 9.8 | |
Total paid | 56.7 | 54.4 | |
Foreign currency translation gain (loss) | 0 | 0 | |
Unpaid loss and LAE, net of reinsurance recoverable, at end of period | 25.2 | 10 | 9.7 |
Reinsurance recoverable at end of period | 72.7 | 36.3 | 18.5 |
Unpaid loss and LAE, gross of reinsurance recoverable, at end of period | $ 97.9 | $ 46.3 | $ 28.2 |
Unpaid Loss and Loss Adjustme_4
Unpaid Loss and Loss Adjustment Expense - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Unusual or Infrequent Item, or Both [Line Items] | ||
Favorable (unfavorable) development on net loss and LAE reserves | $ (1.3) | $ (0.1) |
Current accident year incurred loss and LAE | 73.2 | $ 54.8 |
Winter Storm Uri | ||
Unusual or Infrequent Item, or Both [Line Items] | ||
Current accident year incurred loss and LAE | 6.9 | |
Colorado Wildfires | ||
Unusual or Infrequent Item, or Both [Line Items] | ||
Current accident year incurred loss and LAE | $ 0.8 |
Unpaid Loss and Loss Adjustme_5
Unpaid Loss and Loss Adjustment Expense - Claims Development Information, Incurred Losses (Details) | Dec. 31, 2021USD ($)claim | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) |
Home | ||||||
Claims Development [Line Items] | ||||||
Total incurred losses and ALAE, net | $ 172,500,000 | |||||
IBNR | $ 12,200,000 | |||||
Cumulative Number of Reported Claims | claim | 112,810 | |||||
Pet | ||||||
Claims Development [Line Items] | ||||||
Total incurred losses and ALAE, net | $ 10,200,000 | |||||
IBNR | $ 2,100,000 | |||||
Cumulative Number of Reported Claims | claim | 193,794,000,000 | |||||
2016 | Home | ||||||
Claims Development [Line Items] | ||||||
Total incurred losses and ALAE, net | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
IBNR | $ 0 | |||||
Cumulative Number of Reported Claims | claim | 8 | |||||
2017 | Home | ||||||
Claims Development [Line Items] | ||||||
Total incurred losses and ALAE, net | $ 1,700,000 | 1,700,000 | 1,700,000 | 1,700,000 | $ 1,700,000 | |
IBNR | $ 0 | |||||
Cumulative Number of Reported Claims | claim | 1,758 | |||||
2018 | Home | ||||||
Claims Development [Line Items] | ||||||
Total incurred losses and ALAE, net | $ 13,400,000 | 13,400,000 | 13,500,000 | $ 15,000,000 | ||
IBNR | $ 0 | |||||
Cumulative Number of Reported Claims | claim | 10,528 | |||||
2019 | Home | ||||||
Claims Development [Line Items] | ||||||
Total incurred losses and ALAE, net | $ 46,200,000 | 46,000,000 | $ 46,000,000 | |||
IBNR | $ 0 | |||||
Cumulative Number of Reported Claims | claim | 19,483 | |||||
2020 | Home | ||||||
Claims Development [Line Items] | ||||||
Total incurred losses and ALAE, net | $ 51,800,000 | 53,200,000 | ||||
IBNR | $ 1,100,000 | |||||
Cumulative Number of Reported Claims | claim | 30,212 | |||||
2020 | Pet | ||||||
Claims Development [Line Items] | ||||||
Total incurred losses and ALAE, net | $ 200,000 | $ 300,000 | ||||
IBNR | $ 0 | |||||
Cumulative Number of Reported Claims | claim | 20,415,000,000 | |||||
2021 | ||||||
Claims Development [Line Items] | ||||||
Total incurred losses and ALAE, net | $ 69,400,000 | |||||
2021 | Home | ||||||
Claims Development [Line Items] | ||||||
Total incurred losses and ALAE, net | 59,400,000 | |||||
IBNR | $ 11,100,000 | |||||
Cumulative Number of Reported Claims | claim | 50,821 | |||||
2021 | Pet | ||||||
Claims Development [Line Items] | ||||||
Total incurred losses and ALAE, net | $ 10,000,000 | |||||
IBNR | $ 2,100,000 | |||||
Cumulative Number of Reported Claims | claim | 173,379,000,000 |
Unpaid Loss and Loss Adjustme_6
Unpaid Loss and Loss Adjustment Expense - Claims Development Information, Paid Losses (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Claims Development [Line Items] | ||||||
Ceded unpaid loss and LAE | $ 72.7 | $ 36.3 | $ 18.5 | |||
Unpaid losses and loss adjustment expenses | 97.9 | 46.3 | 28.2 | |||
Home | ||||||
Claims Development [Line Items] | ||||||
Total paid losses and ALAE, net | 149.2 | |||||
Total unpaid loss and ALAE reserves, net | 22.9 | |||||
Ceded unpaid loss and LAE | 66.7 | |||||
Unpaid losses and loss adjustment expenses | 89.6 | |||||
Pet | ||||||
Claims Development [Line Items] | ||||||
Total paid losses and ALAE, net | 8.2 | |||||
Total unpaid loss and ALAE reserves, net | 2.3 | |||||
Ceded unpaid loss and LAE | 6 | |||||
Unpaid losses and loss adjustment expenses | 8.3 | |||||
2016 | Home | ||||||
Claims Development [Line Items] | ||||||
Total paid losses and ALAE, net | 0 | 0 | 0 | $ 0 | $ 0 | $ 0 |
2017 | Home | ||||||
Claims Development [Line Items] | ||||||
Total paid losses and ALAE, net | 1.7 | 1.7 | 1.7 | 1.7 | $ 1.6 | |
2018 | Home | ||||||
Claims Development [Line Items] | ||||||
Total paid losses and ALAE, net | 13.4 | 13.4 | 13.4 | $ 13.2 | ||
2019 | Home | ||||||
Claims Development [Line Items] | ||||||
Total paid losses and ALAE, net | 46.2 | 46.1 | $ 36.4 | |||
2020 | Home | ||||||
Claims Development [Line Items] | ||||||
Total paid losses and ALAE, net | 50 | 42.9 | ||||
2020 | Pet | ||||||
Claims Development [Line Items] | ||||||
Total paid losses and ALAE, net | 0.7 | $ 0.4 | ||||
2021 | ||||||
Claims Development [Line Items] | ||||||
Total paid losses and ALAE, net | 45.4 | |||||
2021 | Home | ||||||
Claims Development [Line Items] | ||||||
Total paid losses and ALAE, net | 37.9 | |||||
2021 | Pet | ||||||
Claims Development [Line Items] | ||||||
Total paid losses and ALAE, net | $ 7.5 |
Unpaid Loss and Loss Adjustme_7
Unpaid Loss and Loss Adjustment Expense - Reconciliation (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Claims Development [Line Items] | ||
Current accident year incurred loss and LAE | $ 73.2 | $ 54.8 |
Rollforward table, current year, paid | 49.2 | 44.6 |
Favorable (unfavorable) development on net loss and LAE reserves | (1.3) | (0.1) |
Rollforward table, prior year, paid | 7.5 | 9.8 |
2021 Current Accident Year | ||
Claims Development [Line Items] | ||
Current accident year incurred loss and LAE | 73.2 | |
Rollforward table, current year, paid | 49.2 | |
Development table, current year, incurred | 69.4 | |
Development table, current year, paid | 45.4 | |
Variance, current year, incurred | 3.8 | |
Variance, current year, paid | 3.8 | |
Unallocated loss adjustment expense, incurred | 3.8 | |
Unallocated loss adjustment expense, paid | 3.8 | |
2021 Prior Accident Year | ||
Claims Development [Line Items] | ||
Favorable (unfavorable) development on net loss and LAE reserves | (1.3) | |
Rollforward table, prior year, paid | 7.5 | |
Development table, prior year, incurred | (1.3) | |
Development table, prior year, paid | 7.5 | |
Variance, prior year, incurred | 0 | |
Variance, prior year, paid | 0 | |
Home | ||
Claims Development [Line Items] | ||
Development table, current year, incurred | 172.5 | |
Development table, current year, paid | 149.2 | |
Home | 2021 Current Accident Year | ||
Claims Development [Line Items] | ||
Current accident year incurred loss and LAE | 62.2 | |
Rollforward table, current year, paid | 40.6 | |
Development table, current year, incurred | 59.4 | |
Development table, current year, paid | 37.9 | |
Home | 2021 Prior Accident Year | ||
Claims Development [Line Items] | ||
Favorable (unfavorable) development on net loss and LAE reserves | (1.2) | |
Rollforward table, prior year, paid | 7.2 | |
Development table, current year, incurred | 51.8 | 53.2 |
Development table, current year, paid | 50 | 42.9 |
Development table, prior year, incurred | (1.2) | |
Development table, prior year, paid | 7.2 | |
Pet | ||
Claims Development [Line Items] | ||
Development table, current year, incurred | 10.2 | |
Development table, current year, paid | 8.2 | |
Pet | 2021 Current Accident Year | ||
Claims Development [Line Items] | ||
Current accident year incurred loss and LAE | 10.9 | |
Rollforward table, current year, paid | 8.5 | |
Development table, current year, incurred | 10 | |
Development table, current year, paid | 7.5 | |
Pet | 2021 Prior Accident Year | ||
Claims Development [Line Items] | ||
Favorable (unfavorable) development on net loss and LAE reserves | (0.1) | |
Rollforward table, prior year, paid | 0.3 | |
Development table, current year, incurred | 0.2 | 0.3 |
Development table, current year, paid | 0.7 | $ 0.4 |
Development table, prior year, incurred | (0.1) | |
Development table, prior year, paid | 0.3 | |
Car | 2021 Current Accident Year | ||
Claims Development [Line Items] | ||
Current accident year incurred loss and LAE | 0.1 | |
Rollforward table, current year, paid | 0.1 | |
Car | 2021 Prior Accident Year | ||
Claims Development [Line Items] | ||
Favorable (unfavorable) development on net loss and LAE reserves | 0 | |
Rollforward table, prior year, paid | 0 | |
Others | 2021 Current Accident Year | ||
Claims Development [Line Items] | ||
Development table, current year, incurred | 0 | |
Development table, current year, paid | 0 | |
Others | 2021 Prior Accident Year | ||
Claims Development [Line Items] | ||
Development table, prior year, incurred | 0 | |
Development table, prior year, paid | $ 0 |
Unpaid Loss and Loss Adjustme_8
Unpaid Loss and Loss Adjustment Expense - Historical Claims Duration (Details) | Dec. 31, 2021 |
Home | |
Short-duration Insurance Contracts, Historical Claims Duration [Line Items] | |
Average annual percentage payout in year 1 | 79.00% |
Average annual percentage payout in year 2 | 15.00% |
Average annual percentage payout in year 3 | 4.00% |
Pet | |
Short-duration Insurance Contracts, Historical Claims Duration [Line Items] | |
Average annual percentage payout in year 1 | 94.00% |
Average annual percentage payout in year 2 | 5.00% |
Average annual percentage payout in year 3 | 1.00% |
Other Liabilities and Accrued_3
Other Liabilities and Accrued Expenses (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Accrued advertising costs | $ 11.2 | $ 6.8 |
Employee compensation payable | 5.4 | 3.7 |
Premium taxes payable | 5.4 | 3.2 |
Income tax payable | 4.7 | 0.3 |
Accrued professional fees | 4.6 | 2.6 |
Advance premium | 2 | 0 |
Other payables | 1.8 | 2.1 |
Total other liabilities and accrued expenses | 57.4 | 18.7 |
Other Liabilities and Accrued Liabilities | ||
Operating lease liability | $ 22.3 | $ 0 |
Convertible Preferred Stock a_3
Convertible Preferred Stock and Preferred Stock Warrants - Additional information (Details) - USD ($) | Jul. 02, 2020 | Jul. 01, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Temporary Equity Disclosure [Abstract] | ||||||
Conversion of convertible preferred stock to common stock upon closing of Initial Public Offering (IPO) (in shares) | 31,557,107 | 31,557,107 | 31,557,107 | |||
Convertible preferred stock, outstanding (shares) | 0 | 0 | 31,557,107 | 24,445,555 | ||
Convertible preferred stock, authorized (shares) | 31,557,107 | |||||
Convertible preferred stock, par value (usd per share) | $ 0.00001 | |||||
Preferred stock, dividend rate | 8.00% | |||||
Aggregate minimum gross proceeds for conversion of preferred stock | $ 50,000,000 |
Convertible Preferred Stock a_4
Convertible Preferred Stock and Preferred Stock Warrants - Schedule (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Temporary Equity [Line Items] | ||||
Convertible preferred stock, authorized (shares) | 31,557,107 | |||
Convertible preferred stock, issued (shares) | 31,557,107 | |||
Convertible preferred stock, outstanding (shares) | 0 | 0 | 31,557,107 | 24,445,555 |
Convertible preferred stock, carrying value | $ 0 | $ 0 | $ 480.2 | $ 180.8 |
Convertible preferred stock, liquidation preference | $ 480.8 | |||
Convertible preferred stock, common stock issuable upon conversion (shares) | 31,557,107 | |||
Series Seed Preferred stock | ||||
Temporary Equity [Line Items] | ||||
Convertible preferred stock, authorized (shares) | 7,905,140 | |||
Convertible preferred stock, issued (shares) | 7,905,140 | |||
Convertible preferred stock, outstanding (shares) | 7,905,140 | |||
Convertible preferred stock, carrying value | $ 12.9 | |||
Convertible preferred stock, liquidation preference | $ 13 | |||
Convertible preferred stock, common stock issuable upon conversion (shares) | 7,905,140 | |||
Series A Preferred stock | ||||
Temporary Equity [Line Items] | ||||
Convertible preferred stock, authorized (shares) | 3,328,774 | |||
Convertible preferred stock, issued (shares) | 3,328,774 | |||
Convertible preferred stock, outstanding (shares) | 3,328,774 | |||
Convertible preferred stock, carrying value | $ 14 | |||
Convertible preferred stock, liquidation preference | $ 13.6 | |||
Convertible preferred stock, common stock issuable upon conversion (shares) | 3,328,774 | |||
Series B Preferred stock | ||||
Temporary Equity [Line Items] | ||||
Convertible preferred stock, authorized (shares) | 4,511,417 | |||
Convertible preferred stock, issued (shares) | 4,511,417 | |||
Convertible preferred stock, outstanding (shares) | 4,511,417 | |||
Convertible preferred stock, carrying value | $ 34.1 | |||
Convertible preferred stock, liquidation preference | $ 34.1 | |||
Convertible preferred stock, common stock issuable upon conversion (shares) | 4,511,417 | |||
Series C Preferred Stock | ||||
Temporary Equity [Line Items] | ||||
Convertible preferred stock, authorized (shares) | 8,703,846 | |||
Convertible preferred stock, issued (shares) | 8,703,846 | |||
Convertible preferred stock, outstanding (shares) | 8,703,846 | |||
Convertible preferred stock, carrying value | $ 119.8 | |||
Convertible preferred stock, liquidation preference | $ 120.1 | |||
Convertible preferred stock, common stock issuable upon conversion (shares) | 8,703,846 | |||
Series D Preferred Stock | ||||
Temporary Equity [Line Items] | ||||
Convertible preferred stock, authorized (shares) | 7,107,930 | |||
Convertible preferred stock, issued (shares) | 7,107,930 | |||
Convertible preferred stock, outstanding (shares) | 7,107,930 | |||
Convertible preferred stock, carrying value | $ 299.4 | |||
Convertible preferred stock, liquidation preference | $ 300 | |||
Convertible preferred stock, common stock issuable upon conversion (shares) | 7,107,930 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Millions | Jan. 14, 2021 | Jul. 02, 2020 | Jul. 01, 2020 | Feb. 18, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2021 | Jul. 07, 2020 |
Sale of Stock [Line Items] | ||||||||
Conversion of convertible preferred stock to common stock upon closing of Initial Public Offering (IPO) (in shares) | 31,557,107 | 31,557,107 | 31,557,107 | |||||
Common stock, authorized (shares) | 200,000,000 | 200,000,000 | 200,000,000 | |||||
Common stock, par value (usd per share) | $ 0.00001 | $ 0.00001 | $ 0.00001 | |||||
Preferred stock, authorized (shares) | 10,000,000 | |||||||
Preferred stock, par value (usd per share) | $ 0.00001 | |||||||
Preferred Stock, Shares Outstanding | 0 | |||||||
Preferred Stock, Shares Issued | 0 | |||||||
The Lemonade Foundation | Affiliated entity | ||||||||
Sale of Stock [Line Items] | ||||||||
Contribution to the Lemonade Foundation (in shares) | 500,000 | 500,000 | ||||||
IPO | ||||||||
Sale of Stock [Line Items] | ||||||||
Common stock sold (shares) | 12,650,000 | |||||||
Common stock sold, price (usd per share) | $ 29 | |||||||
Net proceeds from sale | $ 335.6 | |||||||
Offering costs, expensed | $ 3.5 | |||||||
Underwriter's option | ||||||||
Sale of Stock [Line Items] | ||||||||
Common stock sold (shares) | 718,647 | 1,650,000 | ||||||
Net proceeds from sale | $ 114.6 | |||||||
Follow On Offering | ||||||||
Sale of Stock [Line Items] | ||||||||
Common stock sold (shares) | 3,300,000 | |||||||
Net proceeds from sale | $ 525.7 | |||||||
Follow On Offering, Selling Shareholders | ||||||||
Sale of Stock [Line Items] | ||||||||
Common stock sold (shares) | 1,524,314 | |||||||
Follow On Offering, Selling Shareholders | The Lemonade Foundation | ||||||||
Sale of Stock [Line Items] | ||||||||
Common stock sold (shares) | 100,000 |
Stock-based Compensation - Addi
Stock-based Compensation - Additional Information (Details) $ / shares in Units, $ in Millions | Jul. 28, 2021USD ($)$ / shares | Jul. 02, 2020shares | Jun. 08, 2020USD ($)employee | Dec. 31, 2021USD ($)$ / sharesshares | Dec. 31, 2020USD ($)shares | Dec. 31, 2019USD ($) | Dec. 31, 2017USD ($)employee | Jul. 27, 2021$ / shares | Jul. 31, 2015shares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Stock-based compensation expense | $ 44.1 | $ 10.6 | $ 4.3 | ||||||
Proceeds from release of shares upon repayment | $ 0 | 1.3 | 0 | ||||||
Exercisable, weighted-average exercise price (usd per share) | $ / shares | $ 19.31 | ||||||||
Executives | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Release of shares upon repayment | $ 0.1 | ||||||||
Release of shares upon repayment (shares) | shares | 105,487 | ||||||||
Settlement of subscriptions receivable, number of executive employees | employee | 2 | ||||||||
2020 Plan | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Common stock reserved for issuance (shares) | shares | 5,503,678 | ||||||||
Common stock reserved for issuance, annual increase, percentage of outstanding shares | 5.00% | ||||||||
Maximum shares that may be issued upon exercise of incentive stock options (shares) | shares | 3,650,000 | ||||||||
Common stock available for grant (shares) | shares | 4,942,011 | ||||||||
2020 ESPP | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Common stock reserved for issuance (shares) | shares | 1,000,000 | ||||||||
Common stock reserved for issuance, annual increase, percentage of outstanding shares | 1.00% | ||||||||
Number of shares available for issuance, annual increase (shares) | shares | 1,000,000 | ||||||||
2015 Plan | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Common stock reserved for issuance (shares) | shares | 7,312,590 | ||||||||
Common stock available for grant (shares) | shares | 0 | ||||||||
Stock options | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Stock-based compensation expense | $ 40.1 | 10.6 | 4.3 | ||||||
Unrecognized expense for stock options | $ 101.8 | ||||||||
Unrecognized expense, period for recognition | 1 year 4 months 24 days | ||||||||
Stock options | Executives | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Stock-based compensation expense | $ 0.2 | $ 0.1 | |||||||
Unrecognized expense for stock options | $ 0 | ||||||||
Subscriptions receivable, number of executive employees | employee | 2 | ||||||||
Subscriptions receivable | $ 1.5 | ||||||||
Subscriptions receivable, weighted average interest rate | 1.90% | ||||||||
Proceeds from release of shares upon repayment | $ 1.3 | ||||||||
Stock options | 2015 Plan | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Vesting period | 4 years | ||||||||
Expiration period | 10 years | ||||||||
Unvested restricted stock | Executives | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Awards outstanding (shares) | shares | 513,537 | ||||||||
Stock Option, Repriced | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Stock-based compensation expense | $ 0.8 | ||||||||
Exercisable, weighted-average exercise price (usd per share) | $ / shares | $ 90.70 | ||||||||
Repricing of stock options, incremental expense | $ 3 | ||||||||
Stock Option, Repriced | Minimum | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Exercisable, weighted-average exercise price (usd per share) | $ / shares | $ 142.64 | ||||||||
Stock Option, Repriced | Maximum | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Exercisable, weighted-average exercise price (usd per share) | $ / shares | $ 159.02 | ||||||||
Restricted Stock Units (RSUs) | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Stock-based compensation expense | 4 | $ 0 | $ 0 | ||||||
Unrecognized expense for RSUs | $ 21.2 | ||||||||
Unrecognized expense, period for recognition | 1 year 9 months 18 days |
Stock-based Compensation - Fair
Stock-based Compensation - Fair Value Assumptions (Details) - Stock options | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Weighted average expected term | 6 years 1 month 17 days | 6 years 1 month 2 days |
Risk-free interest rate | 1.30% | 0.70% |
Volatility | 48.00% | 40.00% |
Expected dividend yield | 0.00% | 0.00% |
Stock-based Compensation - Stoc
Stock-based Compensation - Stock Options Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Number of Options | ||
Outstanding (shares) | 4,944,711 | |
Granted (shares) | 3,054,135 | |
Exercised (shares) | (848,992) | |
Cancelled (shares) | (576,110) | |
Outstanding (shares) | 6,573,744 | 4,944,711 |
Exercisable (shares) | 2,269,352 | |
Vested and expected to vest, (shares) | 4,304,392 | |
Weighted- Average Exercise Price | ||
Outstanding (usd per share) | $ 20.50 | |
Granted (usd per share) | 79.97 | |
Exercised (usd per share) | 10.87 | |
Cancelled (usd per share) | 54.78 | |
Outstanding (usd per share) | 46.03 | $ 20.50 |
Exercisable, weighted-average exercise price (usd per share) | 19.31 | |
Vested and expected to vest, weighted-average exercise price (usd per share) | $ 60.12 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract] | ||
Outstanding, weighted-average remaining contractual, term | 8 years 3 months 14 days | 8 years 3 months 18 days |
Exercisable, weighted-average remaining contractual, term | 7 years 1 month 2 days | |
Vested and expected to vest, weighted-average remaining contractual, term | 8 years 11 months 4 days | |
Outstanding, aggregate intrinsic value, outstanding | $ 85,860 | $ 506,580 |
Exercisable, aggregate intrinsic value | 58,350 | |
Vested and expected to vest, aggregate intrinsic value | $ 27,510 |
Stock-based Compensation - Rest
Stock-based Compensation - Restricted Stock Units Activity (Details) - Restricted Stock Units (RSUs) | 12 Months Ended |
Dec. 31, 2021$ / sharesshares | |
Number of shares | |
Outstanding, beginning of period (shares) | shares | 0 |
Granted (shares) | shares | 362,624 |
Vested (shares) | shares | (19,063) |
Cancelled (shares) | shares | (7,747) |
Outstanding, end of period (shares) | shares | 335,814 |
Grant Date Fair Value | |
Outstanding, beginning of period (usd per share) | $ / shares | $ 0 |
Granted (usd per share) | $ / shares | 71.41 |
Vested (usd per share) | $ / shares | 143.49 |
Cancelled (usd per share) | $ / shares | 87.54 |
Outstanding, end of period (usd per share) | $ / shares | $ 66.94 |
Stock-based Compensation - Expe
Stock-based Compensation - Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | $ 44.1 | $ 10.6 | $ 4.3 |
Options to purchase common stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | 40.1 | 10.6 | 4.3 |
Restricted Stock Units (RSUs) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | 4 | 0 | 0 |
Loss and loss adjustment expense, net | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | 1.5 | 0.4 | 0 |
Other insurance expense | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | 1 | 0.7 | 0.6 |
Sales and marketing | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | 5.1 | 2.7 | 1.1 |
Technology development | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | 18.2 | 3.1 | 1.4 |
General and administrative | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | $ 18.3 | $ 3.7 | $ 1.2 |
Income Taxes - Net Deferred Tax
Income Taxes - Net Deferred Tax Assets (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 127.4 | $ 92.7 |
Deferred ceding commission | 7.8 | 4.8 |
Lease liabilities | 3.4 | 0 |
Net unearned premium | 2.4 | 3.8 |
Stock-based compensation | 2.6 | 1.4 |
Charitable contribution | 0.7 | 0.9 |
Startup costs | 0.9 | 4.7 |
Other | 0.6 | 0.3 |
Total gross deferred tax assets | 145.8 | 108.6 |
Deferred tax liabilities: | ||
Right-of-use assets | (3.3) | 0 |
Depreciation and amortization | (2.2) | (0.9) |
Deferred acquisition costs | (1.3) | (0.8) |
Total gross deferred tax liabilities | (6.8) | (1.7) |
Valuation allowance | (139) | (106.9) |
Total deferred tax assets, net | $ 0 | $ 0 |
Income Taxes - (Loss) Income Be
Income Taxes - (Loss) Income Before Tax (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |||
United States | $ (240.3) | $ (123.6) | $ (109.5) |
Foreign | 6.7 | 2.8 | 1.6 |
Loss before income taxes | $ (233.6) | $ (120.8) | $ (107.9) |
Income Taxes - Income Tax Expen
Income Taxes - Income Tax Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Current: | |||
Federal | $ 0 | $ 0 | $ 0 |
State | 0 | 0 | 0 |
Foreign | 7.7 | 1.5 | 0.6 |
Total current | 7.7 | 1.5 | 0.6 |
Deferred: | |||
Federal | 0 | 0 | 0 |
State | 0 | 0 | 0 |
Foreign | 0 | 0 | 0 |
Total deferred | 0 | 0 | 0 |
Total income tax expense | $ 7.7 | $ 1.5 | $ 0.6 |
Income Taxes - Effective Income
Income Taxes - Effective Income Tax Rate Reconciliation (Details) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |||
Income at US statutory rate | 21.00% | 21.00% | 21.00% |
State taxes, net of federal benefit | (8.40%) | 12.80% | 13.90% |
Permanent differences | (1.70%) | (1.20%) | (1.70%) |
Return to provision | (0.90%) | 0.00% | 0.00% |
Foreign rate differential | 0.60% | 0.20% | 0.10% |
Valuation allowance | (13.70%) | (33.90%) | (33.90%) |
Other | (0.20%) | (0.10%) | 0.00% |
Total income taxes | (3.30%) | (1.20%) | (0.60%) |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |||
GILTI gross inclusion in taxable income | $ 14 | $ 5 | $ 5.5 |
Federal | |||
Operating Loss Carryforwards [Line Items] | |||
Net operating loss carryforwards | 518.3 | ||
Net operating loss carryforwards, subject to expiration | 46 | ||
Net operating loss carryforwards, not subject to expiration | 472.3 | ||
State | |||
Operating Loss Carryforwards [Line Items] | |||
Net operating loss carryforwards | $ 292.7 |
Net Loss Per Share - Reconcilia
Net Loss Per Share - Reconciliation (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Numerator: | |||
Net loss attributable to common stockholders - basic | $ (241.3) | $ (122.3) | $ (108.5) |
Net loss attributable to common stockholders - diluted | $ (241.3) | $ (122.3) | $ (108.5) |
Denominator: | |||
Weighted average common shares outstanding - basic (shares) | 61,224,433 | 33,654,828 | 11,124,397 |
Weighted average common shares outstanding - diluted (shares) | 61,224,433 | 33,654,828 | 11,124,397 |
Net loss per share attributable to common stockholders - basic (usd per share) | $ (3.94) | $ (3.63) | $ (9.75) |
Net loss per share attributable to common stockholders - diluted (usd per share) | $ (3.94) | $ (3.63) | $ (9.75) |
Net Loss Per Share - Antidiluti
Net Loss Per Share - Antidilutive Potential Common Shares (Details) - shares | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive potential common shares (shares) | 6,909,558 | 4,944,711 | 35,605,909 |
Options to purchase common stock | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive potential common shares (shares) | 6,573,744 | 4,944,711 | 4,048,802 |
Convertible preferred stock (as converted to common stock) | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive potential common shares (shares) | 0 | 0 | 31,557,107 |
Unvested restricted stock | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive potential common shares (shares) | 335,814 | 0 | 0 |
Related Party Transactions (Det
Related Party Transactions (Details) | Feb. 18, 2020shares | Dec. 31, 2021USD ($)segment | Dec. 31, 2020USD ($)$ / sharesshares | Dec. 31, 2019USD ($) |
Related Party Transaction [Line Items] | ||||
Due to (from) related parties | $ 0 | $ 0 | ||
Common shares contribution to Lemonade Foundation | 0 | 12,200,000 | $ 0 | |
Key stockholder | Travel related expenses | ||||
Related Party Transaction [Line Items] | ||||
Expenses with related parties | $ 100,000 | $ 100,000 | 300,000 | |
Affiliated entity | The Lemonade Foundation | ||||
Related Party Transaction [Line Items] | ||||
Number of shared directors | segment | 2 | |||
Contribution to the Lemonade Foundation (in shares) | shares | 500,000 | 500,000 | ||
Contribution of common stock to related party, fair value (usd per share) | $ / shares | $ 24.36 | |||
Common shares contribution to Lemonade Foundation | $ 12,200,000 | |||
Due from related party | $ 0 | 100,000 | ||
Affiliated entity | Rental expense | ||||
Related Party Transaction [Line Items] | ||||
Expenses with related parties | $ 100,000 | $ 100,000 | $ 100,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Office leases, payment guarantees | ||
Loss Contingencies [Line Items] | ||
Guarantees | $ 0.6 | $ 0.6 |
Leases - Additional Information
Leases - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2022 | |
Subsequent Event [Line Items] | ||||
Operating lease expense | $ 4.2 | |||
Variable lease cost | 0.5 | |||
Short-term lease cost | $ 0.6 | |||
Operating leases, rent expense | $ 3.8 | $ 3 | ||
Subsequent event | ||||
Subsequent Event [Line Items] | ||||
Liabilities for leases that have not yet commenced | $ 3.6 |
Leases - Maturities of Operatin
Leases - Maturities of Operating Lease Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | ||
Year One | $ 4.9 | $ 4.8 |
Year Two | 5.2 | 5 |
Year Three | 6.7 | 2.8 |
Year Four | 6.2 | 2.8 |
Year Five | 1.6 | |
Thereafter | 0 | |
Year Five And After | 4.4 | |
Total | $ 24.6 | $ 19.8 |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flow (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2021USD ($) | |
Leases [Abstract] | |
Operating cash outflow from operating leases | $ 4.1 |
ROU assets obtained in exchange for lease liabilities for operating leases | $ 19.5 |
Leases - Weighted-Average Remai
Leases - Weighted-Average Remaining Lease Term and Discount Rate (Details) | Dec. 31, 2021 |
Leases [Abstract] | |
Weighted-average remaining lease term (in years) | 4 years 1 month 6 days |
Weighted-average discount rate | 4.62% |
Statutory Financial Informati_2
Statutory Financial Information (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Insurance [Abstract] | ||
Statutory capital and surplus | $ 99.4 | $ 61.4 |
Authorized control level RBC | $ 18.2 | $ 10.9 |
Geographical Breakdown of Gro_3
Geographical Breakdown of Gross Written Premium (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021USD ($)segment | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | |
Segment Reporting [Abstract] | |||
Number of reportable segments | segment | 1 | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Amount | $ 375.7 | $ 214.4 | $ 115.8 |
Gross written premium | Geographic Concentration Risk | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
% of GWP | 100.00% | 100.00% | 100.00% |
California | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Amount | $ 93.9 | $ 49.8 | $ 29 |
California | Gross written premium | Geographic Concentration Risk | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
% of GWP | 25.00% | 23.20% | 25.00% |
Texas | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Amount | $ 72.5 | $ 47.8 | $ 28.6 |
Texas | Gross written premium | Geographic Concentration Risk | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
% of GWP | 19.30% | 22.30% | 24.70% |
New York | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Amount | $ 47.3 | $ 26.7 | $ 15.8 |
New York | Gross written premium | Geographic Concentration Risk | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
% of GWP | 12.60% | 12.50% | 13.60% |
New Jersey | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Amount | $ 16.7 | $ 8.6 | $ 4.7 |
New Jersey | Gross written premium | Geographic Concentration Risk | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
% of GWP | 4.40% | 4.00% | 4.10% |
Georgia | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Amount | $ 16.5 | $ 11.6 | $ 6.2 |
Georgia | Gross written premium | Geographic Concentration Risk | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
% of GWP | 4.40% | 5.40% | 5.40% |
Illinois | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Amount | $ 15.7 | $ 9.8 | $ 5.2 |
Illinois | Gross written premium | Geographic Concentration Risk | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
% of GWP | 4.20% | 4.60% | 4.50% |
Pennsylvania | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Amount | $ 9.7 | $ 5.1 | $ 2.7 |
Pennsylvania | Gross written premium | Geographic Concentration Risk | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
% of GWP | 2.60% | 2.40% | 2.30% |
Colorado | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Amount | $ 9.2 | $ 4.2 | $ 1.2 |
Colorado | Gross written premium | Geographic Concentration Risk | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
% of GWP | 2.40% | 2.00% | 1.00% |
Virginia | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Amount | $ 8.1 | $ 3.9 | $ 1.3 |
Virginia | Gross written premium | Geographic Concentration Risk | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
% of GWP | 2.20% | 1.80% | 1.10% |
Maryland | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Amount | $ 7.7 | $ 4.6 | $ 2.1 |
Maryland | Gross written premium | Geographic Concentration Risk | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
% of GWP | 2.00% | 2.10% | 1.80% |
All other | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Amount | $ 78.4 | $ 42.3 | $ 19 |
All other | Gross written premium | Geographic Concentration Risk | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
% of GWP | 20.90% | 19.70% | 16.50% |
Subsequent Events (Details)
Subsequent Events (Details) - 2020 Plan - shares | Jan. 01, 2022 | Jul. 02, 2020 |
Subsequent Event [Line Items] | ||
Common stock reserved for issuance, annual increase, percentage of outstanding shares | 5.00% | |
Subsequent event | ||
Subsequent Event [Line Items] | ||
Number of additional shares authorized (in shares) | 3,083,050 | |
Common stock reserved for issuance, annual increase, percentage of outstanding shares | 5.00% |
Schedule V - Valuation and Qu_2
Schedule V - Valuation and Qualifying Accounts (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Valuation allowance for deferred tax assets | ||
SEC Schedule, 12-09, Valuation and Qualifying Accounts Disclosure [Line Items] | ||
Balance at beginning of period | $ 106.9 | $ 66 |
Additions | ||
Charged to costs and expenses | 32.1 | 40.9 |
Charge to other accounts | 0 | 0 |
(Deductions) | 0 | 0 |
Balance at end of period | 139 | 106.9 |
Allowance for premium receivables | ||
SEC Schedule, 12-09, Valuation and Qualifying Accounts Disclosure [Line Items] | ||
Balance at beginning of period | 0.5 | 0.2 |
Additions | ||
Charged to costs and expenses | 6.2 | 2.2 |
Charge to other accounts | 0 | 0 |
(Deductions) | (5.1) | (1.9) |
Balance at end of period | $ 1.6 | $ 0.5 |