Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Mar. 01, 2023 | Jun. 30, 2022 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2022 | ||
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 | $ 753,587,881 | ||
Entity Common Stock, Shares Outstanding | 69,301,430 | ||
Documents Incorporated by Reference | Portions of the Registrant’s definitive Proxy Statement relating to its 2023 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 | 2022 | ||
Document Fiscal Period Focus | FY |
Audit Information
Audit Information | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022 | Dec. 31, 2021 |
Investments | ||
Fixed maturities available-for-sale, at fair value (amortized cost: $673.5 million and $696.8 million as of December 31, 2022 and 2021, respectively) | $ 650.3 | $ 691.4 |
Short-term investments (cost: $99.9 million and $110.4 million as of December 31, 2022 and 2021, respectively) | 99.8 | 110.4 |
Total investments | 750.1 | 801.8 |
Cash, cash equivalents and restricted cash | 286.5 | 270.6 |
Premium receivable, net of allowance for credit losses of $2.7 million and $1.6 million as of December 31, 2022 and 2021, respectively | 179.6 | 127 |
Reinsurance recoverable | 156.8 | 89.8 |
Prepaid reinsurance premium | 164.5 | 149.6 |
Deferred acquisition costs | 6.9 | 6.2 |
Property and equipment, net | 19.6 | 11.7 |
Intangible assets | 32.5 | 0.6 |
Goodwill | 19 | 0 |
Other assets | 75.2 | 53.2 |
Total assets | 1,690.7 | 1,510.5 |
Liabilities and Stockholders' Equity | ||
Unpaid losses and loss adjustment expenses | 256.2 | 97.9 |
Unearned premium | 288 | 207.7 |
Trade payables | 1.1 | 1 |
Funds held for reinsurance treaties | 136 | 103.1 |
Deferred ceding commission | 39.7 | 36.5 |
Ceded premium payable | 18.4 | 18.7 |
Other liabilities and accrued expenses | 84.5 | 57.4 |
Total liabilities | 823.9 | 522.3 |
Commitments and contingencies (Note 20) | ||
Stockholders' equity | ||
Common stock, $0.00001 par value, 200,000,000 shares authorized as of December 31, 2022 and 2021; 69,275,030 shares and 61,660,996 shares issued and outstanding as of December 31, 2022 and 2021, respectively | 0 | 0 |
Additional paid-in capital | 1,754.1 | 1,553.5 |
Accumulated deficit | (859.7) | (561.9) |
Accumulated other comprehensive loss | (27.6) | (3.4) |
Total stockholders' equity | 866.8 | 988.2 |
Total liabilities and stockholders' equity | $ 1,690.7 | $ 1,510.5 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Fixed maturities available-for-sale, amortized cost | $ 673.5 | $ 696.8 |
Short term investments, cost | 99.9 | 110.4 |
Premium receivable, allowance for doubtful accounts | $ 2.7 | $ 1.6 |
Common stock, par value (usd per share) | $ 0.00001 | $ 0.00001 |
Common stock, authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, issued (in shares) | 69,275,030 | 61,660,996 |
Common stock, outstanding (in shares) | 69,275,030 | 61,660,996 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Revenue | |||
Net earned premium | $ 172.4 | $ 77 | $ 77.3 |
Ceding commission income | 64.1 | 44.9 | 15.3 |
Net investment income | 8.4 | 1.9 | 1.5 |
Commission and other income | 11.8 | 4.6 | 0.3 |
Total revenue | 256.7 | 128.4 | 94.4 |
Expense | |||
Loss and loss adjustment expense, net | 167.3 | 71.9 | 54.7 |
Other insurance expense | 44 | 24.1 | 14.4 |
Sales and marketing | 138.3 | 141.6 | 80.4 |
Technology development | 79.6 | 51.8 | 19.4 |
General and administrative | 122.3 | 72.6 | 46.3 |
Total expense | 551.5 | 362 | 215.2 |
Loss before income taxes | (294.8) | (233.6) | (120.8) |
Income tax expense | 3 | 7.7 | 1.5 |
Net loss | (297.8) | (241.3) | (122.3) |
Other comprehensive loss, net of tax | |||
Unrealized (loss) gain on investments in fixed maturities | (18.4) | (5.7) | 0.1 |
Foreign currency translation adjustment | (5.8) | 0.5 | 1.6 |
Comprehensive loss | $ (322) | $ (246.5) | $ (120.6) |
Per share data: | |||
Net loss per share attributable to common stockholders - basic (usd per share) | $ (4.59) | $ (3.94) | $ (3.63) |
Net loss per share attributable to common stockholders - diluted (usd per share) | $ (4.59) | $ (3.94) | $ (3.63) |
Weighted average common shares outstanding - basic (in shares) | 64,921,524 | 61,224,433 | 33,654,828 |
Weighted average common shares outstanding - diluted (in shares) | 64,921,524 | 61,224,433 | 33,654,828 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) - USD ($) $ in Millions | Total | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) |
Beginning balance (in shares) at Dec. 31, 2019 | 31,557,107 | ||||
Beginning balance at Dec. 31, 2019 | $ 480.2 | ||||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||
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 (in shares) at Dec. 31, 2020 | 0 | ||||
Ending balance at Dec. 31, 2020 | $ 0 | ||||
Beginning balance (in shares) at Dec. 31, 2019 | 11,271,228 | ||||
Beginning balance at Dec. 31, 2019 | (182.5) | $ 0 | $ 15.7 | $ (198.3) | $ 0.1 |
Increase (Decrease) in Stockholders' Deficit [Roll Forward] | |||||
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 | 480.2 | |||
Issuance of common stock (in shares) | 12,650,000 | ||||
Issuance of common stock | 338 | 338 | |||
Contribution to the Lemonade Foundation (in shares) | 500,000 | ||||
Contribution to the Lemonade Foundation | 12.2 | 12.2 | |||
Release of shares upon repayment (in shares) | 513,537 | ||||
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 (loss) | 1.7 | 1.7 | |||
Ending balance (in shares) at Dec. 31, 2020 | 56,774,294 | ||||
Ending balance at Dec. 31, 2020 | $ 541 | $ 0 | 859.8 | (320.6) | 1.8 |
Ending balance (in shares) at Dec. 31, 2021 | 0 | ||||
Ending balance at Dec. 31, 2021 | $ 0 | ||||
Increase (Decrease) in Stockholders' Deficit [Roll Forward] | |||||
Issuance of common stock (in shares) | 4,018,647 | ||||
Issuance of common stock | 640.3 | 640.3 | |||
Exercise of stock options (in shares) | 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 (loss) | $ (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) |
Ending balance (in shares) at Dec. 31, 2022 | 0 | ||||
Ending balance at Dec. 31, 2022 | $ 0 | ||||
Increase (Decrease) in Stockholders' Deficit [Roll Forward] | |||||
Issuance of common stock from acquisition of Metromile (Note 5) (in shares) | 6,901,934 | ||||
Issuance of common stock from acquisition of Metromile (Note 5) | $ 137.7 | 137.7 | |||
Exercise of stock options (in shares) | 448,368 | 712,100 | |||
Exercise of stock options | $ 3.6 | 3.6 | |||
Stock-based compensation | 59.3 | 59.3 | |||
Net loss | (297.8) | (297.8) | |||
Other comprehensive income (loss) | $ (24.2) | (24.2) | |||
Ending balance (in shares) at Dec. 31, 2022 | 69,275,030 | 69,275,030 | |||
Ending balance at Dec. 31, 2022 | $ 866.8 | $ 0 | $ 1,754.1 | $ (859.7) | $ (27.6) |
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 | |
Statement of Stockholders' Equity [Abstract] | ||
Issuance costs and underwriting fees | $ 22.8 | $ 31.3 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from operating activities: | |||
Net loss | $ (297.8) | $ (241.3) | $ (122.3) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depreciation and amortization | 12.2 | 3.7 | 1.7 |
Stock-based compensation | 59.3 | 44.1 | 10.6 |
Amortization of premium (discount) on bonds | 6.7 | (4.2) | (0.4) |
Provision for bad debt | 8.7 | 6.2 | 2.2 |
Common shares contribution to Lemonade Foundation | 0 | 0 | 12.2 |
Unrealized loss on money market funds | 0 | 0 | 0.1 |
Changes in operating assets and liabilities: | |||
Premium receivable | (43.8) | (47.2) | (34.2) |
Reinsurance recoverable | (52.6) | (40.8) | (28.7) |
Prepaid reinsurance premium | (14.9) | (58.3) | (90.3) |
Deferred acquisition costs | (0.8) | (2.7) | (1.7) |
Other assets | (7) | (38.6) | (12) |
Unpaid losses and loss adjustment expenses | 74 | 51.6 | 18.1 |
Unearned premium | 65.1 | 83.9 | 55.8 |
Trade payables | (0.7) | (0.4) | 0.7 |
Funds held for reinsurance treaties | 32.9 | 41 | 62.1 |
Deferred ceding commission | 3.2 | 14.1 | 22.4 |
Ceded premium payable | (12.4) | 5.7 | 9.1 |
Other liabilities and accrued expenses | 4.9 | 38.6 | 2.9 |
Net cash used in operating activities | (163) | (144.6) | (91.7) |
Cash flows from investing activities: | |||
Acquisition of business, net of cash acquired | 98.8 | 0 | 0 |
Proceeds from short-term investments sold or matured | 224.5 | 20.2 | 70 |
Proceeds from bonds sold or matured | 138 | 27.2 | 2.3 |
Cost of short-term investments acquired | (136.7) | (130.8) | (14.9) |
Cost of bonds acquired | (133.4) | (712) | (2.9) |
Purchases of property and equipment | (10.1) | (9.4) | (4.4) |
Net cash provided by (used in) investing activities | 181.1 | (804.8) | 50.1 |
Cash flows from financing activities: | |||
Proceeds from Initial Public Offering and Follow-on Offering, net of underwriting discounts and commissions and offering costs | 0 | 640.3 | 338 |
Proceeds from release of shares upon repayment | 0 | 0 | 1.3 |
Proceeds from stock exercises | 3.6 | 9.3 | 1.8 |
Net cash provided by financing activities | 3.6 | 649.6 | 341.1 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (5.8) | (1) | 1.6 |
Net increase (decrease) in cash, cash equivalents and restricted cash | 15.9 | (300.8) | 301.1 |
Cash, cash equivalents and restricted cash at beginning of year | 270.6 | 571.4 | 270.3 |
Cash, cash equivalents and restricted cash at end of year | 286.5 | 270.6 | 571.4 |
Supplemental disclosure of cash flow information: | |||
Cash paid for income taxes | 3.4 | 3.2 | 1.6 |
Non-cash transactions: | |||
Warrants assumed from acquisition of Metromile | $ 0.3 | $ 0 | $ 0 |
Nature of the Business
Nature of the Business | 12 Months Ended |
Dec. 31, 2022 | |
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 property and casualty insurance subsidiaries and non-insurance 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., E.U. and U.K. operations: (1) Lemonade Insurance Company (“LIC”), a licensed and regulated 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 licensed insurance agent in New York and in all other states where the LIC’s insurance products are available, and also acts as agent for other insurance companies in distributing their insurance products; (3) Lemonade Ltd., a company organized under the laws of Israel which provides technology, research and development, management, marketing and other services to the companies in the group; (4) Lemonade Insurance N.V., a Netherlands public limited company; (5) Lemonade Agency B.V., a Netherlands private limited liability company, (6) Lemonade B.V., a Netherlands private limited liability company; (7) Lemonade Life Insurance Agency, LLC, a limited liability company which acts as the distribution and marketing agent for the sale and servicing of life insurance products; (8) Lemonade E&S Insurance Agency, LLC, a limited liability company licensed as an excess and surplus lines insurance broker; (9) Metromile, LLC, a limited liability company, which is an intermediate holding company for other entities; (10) Metromile Operating Company, a corporation, which provides certain services for its subsidiaries; (11) Metromile Insurance Company (“MIC”), a stock property and casualty insurance company in Delaware and all other states where MIC’s insurance products are available; (12) Metromile Insurance Services LLC, a limited liability company licensed as an insurance agent in California and in all other states where MIC’s insurance products are available, and acts as an agent for other insurance companies in distributing their insurance products; (13) Metromile Enterprise Solutions, LLC, a California limited liability company; and (14) Lemonade Tech B.V., a Netherlands private limited liability company which provides technology, research and development services to the companies in the group. |
Basis of Presentation
Basis of Presentation | 12 Months Ended |
Dec. 31, 2022 | |
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 COVID-19 pandemic 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, 2022, 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, 2022 | |
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, intangible assets, 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, 2022 | |
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 Officers. The chief operating decision makers also manages operations, allocate resources, and evaluate financial performance on a company-wide basis. The Company operates in one reporting segment within the United States, Europe and U.K., 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, 2022 and 2021, ($ in millions). December 31, 2022 2021 Cash and cash equivalents $ 282.5 $ 270.6 Restricted cash 4.0 — Total cash, cash equivalents and restricted cash $ 286.5 $ 270.6 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 certain office leases. The Company also collects insurance policy premiums that it holds in a segregated cash account for transmittal to the underwriting carrier, or settlement of insurance related claims. 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, intangible assets, warrants liability 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. Allowance for credit losses amounted to $2.7 million as of December 31, 2022 and $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, 2022 and December 31, 2021. 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 costs, which primarily consist of commissions and premium taxes, related to each policy the Company successfully 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 $17.0 million, $9.5 million , and $4.9 million for the years ended December 31, 2022, 2021, and 2020 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 Intangible assets are recorded at their acquisition date fair values which involves the use of valuation methodologies appropriate for determining the market value of each asset. These valuation methodologies use various assumptions that are inherently subjective. Identifiable intangible assets consist of value of business acquired and technology, which are subject to amortization, and insurance licenses and trademark associated with the Company’s name acquired in 2019, which are not subject to amortization. Indefinite-lived intangible assets are tested for impairment at least annually, or more frequently if events or such as a change in business circumstances that indicates the carrying value of the assets may not be recoverable. 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. There were no circumstances that indicate that the carrying amount of intangible assets deemed to have an indefinite useful life may not be recoverable for the years ended December 31, 2022 and 2021. Intangible assets subject to amortization are amortized over the estimated useful life and reviewed for impairment when indicators exists. Goodwill Goodwill is the excess of purchase price over the fair value of net assets acquired. Goodwill is not amortized, but instead is reviewed for impairment at the reporting unit level on an annual basis, during the fourth quarter, or more frequently if indicators of impairment exist. The annual impairment test for goodwill is initially completed through a qualitative assessment to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying value. If facts and circumstances determine that it is not more likely than not that a reporting unit fair value is less than its carrying amount, then additional testing of goodwill is not required. However, if we determine that it is more likely than not that the fair value of a reporting unit is less than the carrying value, then we will perform a quantitative analysis. The quantitative analysis compares the estimated fair value of a reporting unit to its carrying value, including goodwill. If the fair value exceeds the carrying value, goodwill is considered not the be impaired. However, if the carrying value exceeds the fair value of a reporting unit, an impairment loss will be recognized in the amount of the excess carrying value over fair value limited by the total amount of goodwill for the reporting unit. There were no circumstances that indicate that the carrying value of goodwill was more likely than not greater than the fair value of a reporting unit for the year ended December 31, 2022. 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. 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 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 $2.2 million , $0.9 million and $0.5 million for the years ended December 31, 2022, 2021 and 2020, 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, 2022 and 2021. 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 which is when the performance obligation is completed . 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 premium taxes incurred on the successful acquisition of business written on a direct basis, 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 $88.5 million, $104.6 million and $58.3 million for the years ended December 31, 2022, 2021 and 2020, 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, non-income based taxes, insurance, charitable donations, 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 operating lease liabilities only if the Company is reasonably certain that the option will be exercised. Variable lease costs are recorded as expense in the period the obligation is incurred and are not included in the Company’s operating lease liabilities. 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. F |
Acquisition of Metromile
Acquisition of Metromile | 12 Months Ended |
Dec. 31, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisition of Metromile | Acquisition of Metromile On July 28, 2022 (the "Acquisition Date"), the Company completed its acquisition of Metromile, Inc. (“Metromile"), a leading digital insurance platform in the United States that offers real-time, personalized car insurance policies by the mile (the "Metromile Acquisition"). The Company acquired 100% of Metromile's equity through an all-stock transaction based upon the exchange ratio of 0.05263 shares of Lemonade for each outstanding share of Metromile. As a result of the acquisition, Metromile stockholders received 6,901,934 shares of Lemonade's common stock, with minimal cash paid in lieu of fractional shares. In addition, upon closing of the Metromile Acquisition, the Company assumed all outstanding and unexercised options, and outstanding restricted stock units (collectively referred to as "replacement awards") as of the Acquisition Date, which were converted into corresponding awards using the same exchange ratio of 0.05263 and with substantially identical terms and conditions prior to the close of the Metromile Acquisition. Fair value of consideration transferred for the Metromile Acquisition is as follows ($ in millions): Metromile issued and outstanding stock exchanged for Lemonade common stock (1) $ 136.9 Contingent consideration (2) — Metromile vested awards exchanged for Lemonade awards (3) 0.8 Total Purchase Consideration $ 137.7 (1) The fair value of 6,901,934 shares issued and exchanged for Lemonade common stock was determined based on the closing price at acquisition date of $19.84, and includes a minimal amount of cash paid in lieu of fractional shares. (2) Contingent consideration represents Metromile's contingently issuable shares that are convertible into Lemonade common stock in accordance with the exchange ratio as set forth in the merger agreement. In accordance with ASC 805-30-25-5, contingent consideration shall be recognized and measured at fair value as of the Acquisition Date. Given that the contingencies are not probable of being met within the contingency period, no fair value was assessed for these Metromile shares. (3) Fair value of replacement awards related to services rendered prior to the acquisition are included as part of purchase consideration. The unvested portion of fair value attributable to these replacement awards of $4.3 million comprised of $0.1 million for assumed options and $4.2 million for assumed restricted stock units ("RSUs"), and associated with future service will be recognized as expense over the future service period. This Metromile Acquisition increased the Company's geographic footprint as a tech-enabled insurance provider and is expected to accelerate growth of the Lemonade car product, including other product offerings. The Metromile Acquisition was accounted for as a business combination using the acquisition method of accounting in accordance with ASC 805, Business Combinations (“ASC 805”). The purchase price was allocated to assets acquired and liabilities assumed based on the estimated fair values at the Acquisition Date. The excess of the purchase price over the fair value of the net assets acquired was allocated to goodwill, and will not be deductible for tax purposes. Goodwill from this business combination is primarily attributable to synergies from future expected economic benefits, enhanced revenue growth from expanded capabilities and geographic presence, including cost savings from streamlined operations and enhanced operational efficiencies. The following table presents the preliminary allocation of purchase consideration recorded on the condensed consolidated balance sheet as of the Acquisition Date ($ in millions): Assets acquired Fixed maturities, available for sale, at fair value $ 1.8 Short-term investments 64.2 Cash, cash equivalents and restricted cash 98.8 Premiums receivable 17.4 Reinsurance recoverable 14.5 Property and equipment 4.6 VOBA 1.7 Intangible assets - technology 28.0 Intangible assets - insurance licenses 7.5 Other assets 14.7 Total assets acquired $ 253.2 Liabilities assumed Unpaid loss and loss adjustment expenses $ 84.4 Unearned premium 15.1 Trade payables 0.8 Ceded premium payable 12.0 Other liabilities and accrued expenses 22.2 Total liabilities assumed $ 134.5 Total identifiable net assets acquired $ 118.7 Total purchase consideration $ 137.7 Goodwill $ 19.0 Estimated fair values of assets acquired and liabilities assumed from Metromile are subject to change as we obtain additional information, and will be updated and finalized within the measurement period that will not extend beyond 12 months from the Acquisition Date. The amounts, based on preliminary valuations and subject to final adjustment, allocated to intangible assets are as follows ($ in millions): Fair Value Weighted-Average Useful Life Technology $ 28.0 3 to 5 years Insurance licenses 7.5 N/A Total $ 35.5 The results of operations for Metromile of $35.0 million of revenue and $36.4 million of net loss from the date of the acquisition to the year ended December 31, 2022, have been included within the accompanying consolidated statements of operations and comprehensive loss. The Company incurred transaction and integration costs of approximately $8.4 million for the year ended December 31, 2022. These expenses were included in General and administrative expenses within the Company’s consolidated statements of operations and comprehensive loss for the year ended December 31, 2022. The following unaudited supplemental pro forma combined financial information presents the Company’s results of operations for the year ended December 31, 2022 and 2021 as if the Metromile Acquisition had occurred on January 1, 2021. The pro forma financial information is presented for comparative purposes only and is not necessarily indicative of the Company’s operating results that may have actually occurred had the Metromile Acquisition been completed on January 1, 2021. In addition, the unaudited pro forma financial information does not give effect to any anticipated cost savings, operating efficiencies or other synergies that may be associated with the acquisition, or any estimated costs that have been or will be incurred by the Company to integrate the assets and operations of Metromile. Unaudited Pro Forma: December 31, 2022 2021 Total Revenue $ 309.3 $ 228.4 Net loss $ (383.0) $ (458.1) The unaudited pro forma financial information reflects pro forma adjustments to present the combined pro forma results of operations as if the acquisition had occurred on January 1, 2021 to give effect to certain events the Company believes to be directly attributable to the acquisition. These pro forma adjustments primarily include: • a net decrease in amortization expense of $2.0 million that would have been recognized due to acquired intangible assets; • an increase of $10.0 million for acquisition-related transaction costs; • a decrease in operating revenues of $4.9 million due to the elimination of deferred revenues and assigned no value at the Acquisition Date; • a decrease to amortization expense of $1.3 million due to the elimination of unamortized deferred acquisition costs; • an increase to income of $0.6 million due to the adjustment of the loss and loss adjustment expense reserves at fair value; and • an increase in income of $2.0 million due to the depreciation of ROU assets and lease expense upon adoption of ASC 842. |
Investments
Investments | 12 Months Ended |
Dec. 31, 2022 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | Investments Unrealized gains and losses The following tables present cost or amortized cost and fair values of investments in fixed maturities at December 31, 2022 and 2021, respectively ($ in millions): Cost or Gross Fair Gains Losses December 31, 2022 Corporate debt securities $ 549.7 $ 0.1 $ (19.6) $ 530.2 U.S. Government obligations 121.0 — (3.7) 117.3 Asset-backed securities 2.8 — — 2.8 Municipal securities — — — — Total $ 673.5 $ 0.1 $ (23.3) $ 650.3 December 31, 2021 Corporate debt securities $ 593.4 $ — $ (4.7) $ 588.7 U.S. Government obligations 102.2 0.1 (0.8) 101.5 Asset-backed securities — — — — Municipal securities 1.2 — — 1.2 $ 696.8 $ 0.1 $ (5.5) $ 691.4 Gross unrealized losses for investments in fixed maturities was $23.3 million and $5.5 million as of December 31, 2022 and 2021. Gross unrealized gains and losses were recorded as a component of accumulated other comprehensive income. Contractual maturities of bonds The following table presents the cost or amortized cost and estimated fair value of investments in fixed maturities as of December 31, 2022 by contractual maturity ($ 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, 2022 Cost or Fair Value Due in one year or less $ 242.3 $ 238.0 Due after one year through five years 431.2 412.3 Due after five years through ten years — — Due after ten years — — Total $ 673.5 $ 650.3 Aging of gross unrealized losses The following tables present the gross unrealized losses and related fair values for the Company's investment in fixed maturities, grouped by duration of time in a continuous unrealized loss position as of December 31, 2022 and 2021 ($ in millions): Less than 12 Months 12 Months or More Total Fair Value Gross Fair Value Gross Fair Value Gross December 31, 2022 Corporate debt securities $ 83.6 $ (2.1) $ 428.1 $ (17.5) $ 511.7 $ (19.6) U.S. Government obligations 29.6 (0.2) 85.1 (3.5) 114.7 (3.7) Asset-backed securities 2.8 — — — 2.8 — Municipal securities — — — — — — Total $ 116.0 $ (2.3) $ 513.2 $ (21.0) $ 629.2 $ (23.3) 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) Asset-backed securities — — — — — — Municipal securities 1.2 — — — 1.2 — Total $ 678.1 $ (5.5) $ 0.5 $ — $ 678.6 $ (5.5) Gross unrealized losses for investments in fixed maturities for twelve months or more was $21.0 million and less than $0.1 million for the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022, 262 of the securities held were in an unrealized loss position . The Company determined that unrealized losses on investment in 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 these investments in fixed maturities, and it is not more likely than not that that the Company will be required to sell these investments in fixed maturities before the recovery of the amortized cost basis. No allowance for credit losses related to any of these securities was recorded for the years ended December 31, 2022 and 2021. Special deposits Bonds with a total carrying value of $11.8 million and $6.8 million at December 31, 2022 and 2021, respectively, which are included in fixed maturities available-for-sale on the consolidated balance sheets, were deposited with various state insurance departments, as required, to comply with state insurance laws. The carrying value of bonds deposited with each respective state is as follows ($ in millions): December 31, U.S. State 2022 2021 New York $ 2.8 $ 2.8 Delaware 2.8 — Washington 1.2 1.2 Colorado 1.1 1.1 Virginia 0.8 0.3 New Mexico 0.6 0.3 North Carolina 0.6 0.3 New Jersey 0.6 — Nevada 0.4 0.4 Arkansas 0.3 0.1 Florida 0.2 0.2 Massachusetts 0.2 0.1 Kansas 0.1 — Kentucky 0.1 — Total $ 11.8 $ 6.8 Net investment income An analysis of net investment income follows ($ in millions): December 31, 2022 2021 2020 Interest on cash and cash equivalents $ 1.2 $ 0.4 $ 1.0 Fixed maturities 5.7 1.5 0.1 Short-term investments 1.9 0.1 0.4 Total 8.8 2.0 1.5 Investment expense 0.4 0.1 — Net investment income $ 8.4 $ 1.9 $ 1.5 Investment gains and losses The Company had pre-tax realized capital losses of $0.4 million for the year ended December 31, 2022. There were no pre-tax realized capital gains and losses for the years ended December 31, 2021 and 2020. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The following tables present the Company's fair value hierarchy for financial assets and liabilities measured as of December 31, 2022 and 2021 ($ in millions): December 31, 2022 Level 1 Level 2 Level 3 Total Financial Assets: Corporate debt securities $ — $ 530.2 $ — $ 530.2 U.S. Government obligations — 117.3 — 117.3 Asset-backed securities — 2.8 — 2.8 Municipal securities — — — — Fixed maturities — 650.3 — 650.3 Short term investments — 99.8 — 99.8 Total $ — $ 750.1 $ — $ 750.1 Financial Liabilities: Warrant liability $ — $ — $ 0.3 $ 0.3 December 31, 2021 Level 1 Level 2 Level 3 Total Financial Assets: Corporate debt securities $ — $ 588.7 $ — 588.7 U.S. Government obligations — 101.5 — 101.5 Asset-backed securities — — — — Municipal securities — 1.2 — 1.2 Fixed maturities — 691.4 — 691.4 Short term investments — 110.4 — 110.4 Total $ — $ 801.8 $ — $ 801.8 Financial Liabilities: Warrant liability $ — $ — $ — $ — 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, 2022 and 2021. Warrant liability As part of the Metromile Acquisition as discussed in Note 5, public and private warrants were assumed and are measured at fair value on a recurring basis at the end of the reporting period, and classified as level 3 for fair value hierarchy disclosure purposes. These warrants do not meet the criteria for equity treatment and are recorded as a liability and presented under “Other Liabilities and Accrued Expenses” on the consolidated balance sheet at fair value, with changes in fair value recognized and presented under “General and Administrative expenses” in the consolidated statement of operations and comprehensive loss. The Company utilized the binomial Monte-Carlo simulation to estimate the fair value of these warrants which are currently not actively traded as of reporting date, and are determined based on the following assumptions: December 31, 2022 Weighted average expected term (years) 3.11 Risk-free interest rate 4.2% Volatility 80% Expected dividend yield — The following table below presents the change in fair value of the warrant liability ($ in millions): December 31, 2022 Balance as of January 1 $ — Initial measurement of warrants liability as of July 31, 2022 0.5 Change in fair value (0.2) Balance as of December 31 $ 0.3 |
Reinsurance
Reinsurance | 12 Months Ended |
Dec. 31, 2022 | |
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 potentially 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 and on June 30, 2022. 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 55% effective July 1, 2022. In addition, the Company purchased a new reinsurance program to protect against catastrophe risk in the U.S that exceed $80 million in losses effective July 1, 2022. Other non-proportional reinsurance contracts were renewed with terms similar to the expiring contracts. The Company also had a multi-year Aggregate Excess of Loss Reinsurance Contract which expired on June 30, 2020, which covered against both catastrophe and non-catastrophe events, and provided excess of loss reinsurance on a per cohort basis excess of a cohort’s 50% Loss Ratio subject to an aggregate (i.e., a portfolio level) deductible of 10% of earned premium. A cohort as it relates to this reinsurance contract is a notional grouping of policyholders on the books of the Company. After a policy is bound, the new policyholder is asked to designate to which non-profit group he/she would prefer any charitable donation that the Company may make be contributed. All policyholders identifying the same non-profit group constitute one cohort. Metromile entered into a Quota Share reinsurance agreement effective January 1, 2022 through June 30, 2023. Under the terms of the agreement, the Company cedes 30% of premiums and losses to reinsurers. Reinsurance recoverable Amounts recoverable from reinsurers are recognized in a manner consistent with the claims liabilities associated with the reinsurance placement and presented on the balance sheet as reinsurance recoverable. Such balance as of December 31, 2022 and 2021 are presented in the table below ($ in millions). December 31, 2022 2021 Reinsurance recoverable on paid losses $ 32.2 $ 17.1 Ceded unpaid loss and LAE 124.6 72.7 Total reinsurance recoverable $ 156.8 $ 89.8 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, 2022 and 2021 with all but one having an A.M. Best rating of A (Excellent) or better ($ in millions): AM Best December 31, Reinsurer 2022 2021 A+ Hannover Rueck SE $ 100.1 $ 60.2 A+ Swiss Reinsurance America Corporation 27.6 12.4 A MAPFRE Re, Compania De Reaseguros S.A. 23.8 14.4 NR Lloyd's Underwriter Syndicate No. 1084 CSL 4.3 4.4 NR Lloyd's Underwriter Syndicate no. 2791 MAP 1.0 — NR Lloyd's Underwriter Syndicate no. 2001 AML 0.5 0.7 A Lloyd's Underwriter Syndicate no. 0033 HIS 0.4 0.8 A+ Munich Reinsurance America Inc 0.4 0.6 A Lloyd's Underwriter Syndicate no. 2357 NCL 0.4 0.6 A++ General Reinsurance Corporation 0.4 — $ 158.9 $ 94.1 Other reinsurers 0.7 6.2 $ 159.6 $ 100.3 Premium written, earned and losses and LAE incurred The impact of reinsurance treaties on the Company's consolidated statements of operations and comprehensive income is as follows ($ in millions): December 31, 2022 2021 2020 Premium written: Direct $ 555.6 $ 375.7 $ 214.4 Assumed 0.1 — — Ceded (333.1) (273.4) (171.7) Net premium written $ 222.6 $ 102.3 $ 42.7 Premium earned: Direct $ 490.5 $ 292.0 $ 158.7 Assumed — — — Ceded (318.1) (215.0) (81.4) Net premium earned $ 172.4 $ 77.0 $ 77.3 Loss and LAE incurred: Direct $ 441.0 $ 264.1 $ 113.4 Assumed — — — Ceded (273.7) (192.2) (58.7) Net loss and LAE incurred $ 167.3 $ 71.9 $ 54.7 |
Deferred Acquisition Costs
Deferred Acquisition Costs | 12 Months Ended |
Dec. 31, 2022 | |
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 insurance policies 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, 2022 2021 Deferred Acquisition Costs: Balance, January 1 $ 6.2 $ 3.5 Add: Premium taxes and other acquisition costs 14.1 9.8 Direct commissions 3.6 2.4 Less: Amortization of net deferred acquisition costs (17.0) (9.5) Balance, December 31 $ 6.9 $ 6.2 Other Insurance Expense: Amortization of net deferred acquisition costs $ 17.0 $ 9.5 Period costs 27.0 14.6 Total other insurance expense $ 44.0 $ 24.1 |
Property and Equipment, net
Property and Equipment, net | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022 2021 Computer equipment and software $ 20.7 $ 11.7 Leasehold improvements 13.4 4.6 Furniture and equipment 3.7 1.3 37.8 17.6 Accumulated depreciation (18.2) (5.9) Property and equipment, net $ 19.6 $ 11.7 Depreciation expense was $6.9 million, $3.7 million and $1.7 million for the years ended December 31, 2022, 2021 and 2020, 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 $16.0 million and $8.1 million for the years ended December 31, 2022 and 2021, respectively. Capitalized amounts are include d as a component of property and equipment under computer equipment and software. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Intangible Assets Identifiable intangible assets consist of the following ($ in millions): December 31, 2022 December 31, 2021 Weighted Average Useful Life Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Insurance licenses Indefinite $ 7.5 $ — $ 7.5 $ — $ — $ — Trademark Indefinite 0.6 — 0.6 0.6 — 0.6 Technology 3 28.0 3.9 24.1 — — — VOBA 0.5 1.7 1.4 0.3 — — — $ 37.8 $ 5.3 $ 32.5 $ 0.6 $ — $ 0.6 Intangible assets noted in the above table were acquired as part of the Metromile acquisition except for a trademark associated with the Company’s name which was acquired in 2019. The Company intends to maintain the trademark and renewals will take place as needed. Amortization expense amounted to $5.3 million for the year ended December 31, 2022, and there was no amortization expense for the year ended December 31, 2021 and 2020, respectively. Amortization expense is included in “General and Administrative Expense” in the consolidated statement of operations and comprehensive loss. As of December 31, 2022, the estimated aggregate amortization expense for the Company’s intangible assets for the next five years is as follows ($ in millions): 2023 $ 9.6 2024 9.3 2025 5.5 2026 — 2027 — Thereafter — $ 24.4 |
Other Assets
Other Assets | 12 Months Ended |
Dec. 31, 2022 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other Assets | Other Assets Other assets consists of the following ($ in millions): December 31, 2022 2021 Right-of-Use assets (Note 21) $ 26.4 $ 21.9 Ceding commission receivable 21.0 14.5 Prepaid expenses 14.0 10.6 Income tax receivable 5.0 — Investment income due and accrued 3.7 3.4 Other 5.1 2.8 Total other assets $ 75.2 53.2 |
Unpaid Loss and Loss Adjustment
Unpaid Loss and Loss Adjustment Expense | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022 and 2021 ($ in millions): December 31, 2022 2021 Unpaid loss and LAE as of January 1 $ 97.9 $ 46.3 Less: Reinsurance recoverable (1) 72.7 36.3 Net unpaid loss and LAE as of January 1 25.2 10.0 Add: Incurred losses and LAE, net of reinsurance, related to: Current year 170.5 73.2 Prior years (3.2) (1.3) Total incurred 167.3 71.9 Deduct: Paid losses and LAE, net of reinsurance, related to: Current year 106.9 49.2 Prior years 30.1 7.5 Total paid 137.0 56.7 Unpaid loss and LAE, net of reinsurance recoverable acquired from Metromile 76.2 — Unpaid loss and LAE, net of reinsurance recoverable, as of December 31 131.6 25.2 Reinsurance recoverable as of December 31 (1) 124.6 72.7 Unpaid loss and LAE, gross of reinsurance recoverable, as of December 31 $ 256.2 $ 97.9 ____________ (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 $3.2 million and $1.3 million as of December 31, 2022 and December 31, 2021, respectively. No additional premium or returned premium have been accrued as a result of prior year effects. For the year ended December 31, 2022, current accident year incurred loss and LAE included $0.4 million of net incurred loss and LAE from Hurricane Ian and $7.6 million from winter storm Elliott. The net incurred loss and LAE from Hurricane Ian and winter storm Elliott as of December 31, 2022 represents the Company’s best estimates based upon information currently available. 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 $0.8 million relating to wildfires in Colorado. The net incurred loss and LAE from Uri and from the wildfires as of December 31, 2022 represents the Company's best estimates based upon information currently available. The Company compiles and aggregates its claims data by grouping the claims according to the year in which the claim occurred (Accident Year) when analyzing claim payment and emergence patterns and trends over time. For the purpose of defining claims frequency, the number of reported claims is by loss occurrence and includes claims that do not result in a liability or payment associated with these claims. The following is information about incurred and paid loss development as of December 31, 2022, net of reinsurance, as well as cumulative claim frequency and the total of IBNR liabilities included within the net incurred loss amounts. The Company separates home and renters claim experience from its pet claim experience when analyzing incurred and paid loss and allocated loss adjustment expenses, as there are distinct differences in the development and claim count emergence patterns. The information about incurred and paid claims development for the years ended prior to December 31, 2022, is presented as unaudited supplementary information. Home and Renters Incurred loss and allocated loss adjustment expense ("ALAE"), net of re insurance The following table presents incurred loss and ALAE, net of reinsurance, as well as IBNR loss reserves, net of reinsurance, and the number of reported claims ($ in millions, except for number of claims): December 31, 2022 Cumulative December 31, 2016 2017 2018 2019 2020 2021 2022 IBNR (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Accident Year 2016 $ — $ — $ — $ — $ — $ — $ — $ — 8 2017 — 1.7 1.7 1.7 1.7 1.7 1.7 — 1,758 2018 — — 15.0 13.5 13.4 13.4 13.4 — 10,530 2019 — — — 46.0 46.1 46.3 46.3 — 19,492 2020 — — — — 53.0 51.5 51.5 0.5 30,205 2021 — — — — — 59.4 55.9 2.3 53,285 2022 — — — — — — 96.5 28.8 51,808 Total incurred losses and ALAE, net $ 265.3 $ 31.6 167,086 Amounts in accident year 2016 for the years ended December 31, 2016, 2017, 2018, 2019, 2020, 2021 and 2022 were less than $0.1 million, respectively. IBNR, net of reinsurance as of December 31, 2022 for accident years 2016, 2017, 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 2022 (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Accident Year 2016 $ — $ — $ — $ — $ — $ — $ — 2017 — 1.6 1.7 1.7 1.7 1.7 1.7 2018 — — 13.2 13.2 13.4 13.4 13.4 2019 — — — 36.4 46.1 46.3 46.3 2020 — — — — 43.1 50.2 51.3 2021 — — — — — 37.8 53.4 2022 — — — — — — 52.7 Total paid losses and ALAE, net $ 218.8 Total unpaid loss and ALAE reserves, net $ 46.9 Ceded unpaid loss and LAE $ 101.0 Gross unpaid loss and LAE $ 147.9 Cumulative paid loss and ALAE, net of reinsurance related to accident year 2016 was less than $0.1 million during the years ended December 31, 2016, 2017, 2018 , 2019, 2020, 2021, and 2022, respectively. Average annual percentage payout of accident year incurred claims by age, net of reinsurance (unaudited supplementary information) Year 1 Year 2 Year 3 Home and renters 80 % 15 % 5 % Pet Incurred loss and allocated loss adjustment expense, net of re insurance The following table presents incurred loss and ALAE, net of reinsurance, as well as IBNR loss reserves, net of reinsurance, and the number of reported claims ($ in millions, except for number of claims): December 31, 2022 Cumulative December 31, 2020 2021 2022 IBNR (unaudited) (unaudited) Accident Year 2020 $ 0.7 $ 0.6 $ 1.0 $ — 20,796 2021 — 10.0 9.7 0.2 195,156 2022 — — 27.4 0.5 345,557 Total incurred losses and ALAE, net $ 38.1 $ 0.7 561,509 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 2022 (unaudited) (unaudited) Accident Year 2020 $ 0.4 $ 0.6 $ 0.7 2021 — 7.6 9.4 2022 — — 21.8 Total paid losses and ALAE, net $ 31.9 Total unpaid loss and ALAE reserves, net $ 5.9 Ceded unpaid loss and LAE 11.3 Gross unpaid loss and LAE $ 17.2 Average annual percentage payout of accident year incurred claims by age, net of reinsurance (unaudited supplementary information) Year 1 Year 2 Year 3 Pet 88 % 11 % 1 % Car Incurred loss and allocated loss adjustment expense ("ALAE"), net of re insurance (1) The following table presents incurred loss and ALAE, net of reinsurance, as well as IBNR loss reserves, net of reinsurance, and the number of reported claims ($ in millions, except for number of claims): December 31, 2022 Cumulative 2016 2017 2018 2019 2020 2021 2022 IBNR (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Accident Year 2016 $ 1.6 $ 2.0 $ 1.7 $ 1.7 $ 1.8 $ 1.9 $ 2.0 $ 0.1 1,630 2017 — 28.6 30.0 30.2 31.4 32.3 32.5 0.9 29,073 2018 — — 31.4 29.7 31.9 31.8 33.9 3.0 44,104 2019 — — — 24.2 24.0 23.2 24.6 3.2 51,129 2020 — — — — 10.8 12.0 11.8 3.1 37,311 2021 — — — — — 75.3 75.3 6.6 42,985 2022 — — — — — — 80.6 21.9 42,605 Total incurred losses and ALAE, net $ 260.7 $ 38.8 248,837 (1) Table above retrospectively includes Metromile's historical incurred accident year claim information for periods presented. Car Cumulative paid loss and ALAE, net of reinsurance (1) The following table presents cumulative paid loss and ALAE, net of reinsurance ($ in millions): December 31, 2016 2017 2018 2019 2020 2021 2022 (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Accident Year 2016 $ 0.2 $ 1.2 $ 1.5 $ 1.7 $ 1.7 $ 1.9 $ 1.9 2017 — 17.3 24.3 28.1 30.1 30.8 31.7 2018 — — 16.8 24.4 28.2 27.6 30.2 2019 — — — 13.5 18.7 14.5 18.8 2020 — — — — 5.2 (0.9) 5.6 2021 — — — — — 38.4 58.9 2022 — — — — — — 44.1 Total paid losses and ALAE, net $ 191.2 Total unpaid loss and ALAE reserves, net (2) $ 71.5 Ceded unpaid loss and LAE $ 12.3 Gross unpaid loss and LAE $ 83.8 (1) Table above retrospectively includes Metromile's historical paid accident year claim information for periods presented. (2) Includes the fair value adjustment on insurance contract intangible liability of $2.0 million. Average annual percentage payout of accident year incurred claims by age, net of reinsurance (unaudited supplementary information) Year 1 Year 2 Year 3 Car 52 % 22 % 26 % The reconciliation of the net incurred and paid loss information in the loss reserve rollforward table and development tables with respect to the current accident year is as follows ($ in millions): December 31, 2022 Unpaid Loss and ALAE, net Home and renters $ 46.9 Pet 5.9 Car 71.5 124.3 Reinsurance recoverable on Unpaid Loss and ALAE, net Home and renters 101.0 Pet 11.3 Car 12.3 124.6 Unallocated LAE 7.3 Gross Unpaid Loss and Loss Adjustment Expenses $ 256.2 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 subsidiaries 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 $105.9 million and $99.4 million as of December 31, 2022 and 2021, respectively. LIC’s capital and surplus exceeded its authorized control level RBC of $28.2 million and $18.2 million as of December 31, 2022 and 2021, respectively. MIC’s statutory capital and surplus amounted to $38.5 million as of December 31, 2022. MIC’s capital and surplus exceeded its authorized control level RBC of $8.7 million as of December 31, 2022. Statutory Dividend Restriction The payment of dividends by 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, 2022 and 2021, LIC was not eligible to make dividend payments. The payment of dividends by MIC is restricted by the laws of the State of Delaware. The maximum amount that can be paid without prior notice or approval is the greater of 10% of surplus as regards policyholders as of the preceding December 31, or net income not including realized capital gains for the twelve-month period ending the preceding December 31. Because the Company has an unassigned deficit at December 31, 2022 and 2021, MIC’s dividend policy is governed by Section 5005(B) of the Delaware insurance code whereby a domestic insurer may not declare or pay a dividend or other distribution from any source other than earned surplus without the commissioner’s prior approval. MIC paid no dividends to the Company in 2022 and 2021. |
Other Liabilities and Accrued E
Other Liabilities and Accrued Expenses | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022 2021 Lease liabilities (Note 21) $ 35.2 $ 22.3 Employee compensation payable 12.8 5.4 Uncertain tax position 8.1 — Accrued advertising costs 6.8 11.2 Premium taxes payable 6.2 5.4 Accrued professional fees 5.5 4.6 Advance premium 2.1 2.0 Accrued hosting and software 2.0 0.6 Income taxes payable 0.6 4.7 Warrant liability 0.3 — Other payables 4.9 1.2 Total $ 84.5 $ 57.4 |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2022 | |
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, 2020. In connection with the IPO, the Company's outstanding convertible preferred stock were converted into 31,557,107 shares of common stock. 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 . On July 28, 2022, the Company completed its acquisition of Metromile in which 6,901,934 shares of Lemonade’s common stock were issued to Metromile stockholders as discussed in Note 5. As of December 31, 2022 and 2021, 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 19). 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, 2022 and 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, 2022 and 2021, there were no shares of undesignated preferred stock issued or outstanding. Warrants On October 14, 2022, the Company entered into an omnibus agreement (the “Omnibus Agreement”) and a warrant agreement (the “Warrant Agreement” and, together with the Omnibus Agreement, the “Agreements”) with Chewy Insurance Services, LLC (the “Warrantholder”) in connection with the execution of an agency agreement on the same date between the Company, Lemonade Insurance Agency, LLC, Lemonade Insurance Company and the Warrantholder. In connection with the Agreements, the Company issued to the Warrantholder a warrant to purchase up to 3,352,025 shares of the Company’s common stock with an exercise price of $0.01 per share, which will vest in installments on a yearly basis for a period of five years, subject to certain performance requirements. Vesting events and thresholds as specified in the Warrant Agreement. |
Stock-based Compensation
Stock-based Compensation | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022, there we re 3,214,826 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, 2022. 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, 2022, 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. Assumed Share Option Plans As part of the Metromile Acquisition, the Company assumed the Metromile 2011 Incentive Stock Plan (“2011 Plan”) and Metromile 2021 Incentive Stock Plan (“2021 Plan”) (collectively referred to as “Assumed Plans”).The equity awards assumed of 404,207 were granted from the respective Assumed Plans and will be settled in the Company’s common stock (see Note 5). The remaining unallocated shares reserved under both the 2011 and 2021 Plan were cancelled and no new awards will be granted under these Assumed Plans. Options granted to employees and non-employees The fair value of each option granted during the year ended December 31, 2022 and 2021 is estimated on the date of grant using the Black-Scholes model with the following assumptions: December 31, 2022 2021 Weighted average expected term (years) 6.10 6.13 Risk-free interest rate 2.7% 1.3% Volatility 47% 48% 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 weighted-average amounts): Stock options Number of Weighted- Weighted- Aggregate Outstanding as of December 31, 2021 6,573,744 $ 46.03 8.29 $ 85.86 Granted (1) 4,351,371 27.47 Exercised (448,368) 7.97 Canceled (716,090) 50.11 Outstanding as of December 31, 2022 9,760,657 $ 39.43 8.17 $ 8.05 Options exercisable as of December 31, 2022 3,420,165 $ 28.38 6.87 $ 7.93 Options unvested as of December 31, 2022 6,340,492 $ 45.37 8.89 $ 0.11 (1) includes assumed options of 72,410 from Metromile Acquisition (See Note 5) 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 $0.7 million and $0.8 million for the years ended December 31, 2022 and 2021. 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, 2021 335,814 $ 66.94 Granted (1) 1,821,066 22.50 Vested (263,732) 37.26 Canceled (241,905) 27.42 Outstanding as of December 31, 2022 1,651,243 27.92 (1) includes assumed restricted stock units of 331,797 from the Metromile Acquisition (See Note 5) 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, including assumed awards from the Metromile Acquisition for the year ended December 31, 2022, as follows ($ in millions): December 31, 2022 2021 2020 Loss and loss adjustment expense, net $ 2.7 $ 1.5 $ 0.4 Other insurance expense 1.6 1.0 0.7 Sales and marketing 6.6 5.1 2.7 Technology development 24.4 18.2 3.1 General and administrative 24.0 18.3 3.7 Total stock-based compensation expense $ 59.3 $ 44.1 $ 10.6 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, 2022 2021 2020 Stock options $ 47.8 $ 40.1 $ 10.6 RSUs 11.5 4.0 — Total stock-based compensation expense $ 59.3 $ 44.1 $ 10.6 The total unrecognized expense granted to employees and non-employees outstanding as of December 31, 2022 was $95.7 million for stock options and $42.5 million for RSUs, with a remaining weighted average vesting period of 1.4 years for stock options and 1.6 years for RSUs . |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Corporate tax rates Lemonade, Inc., together with its U.S. subsidiaries, is taxed under the tax laws of the United States and the statutory enacted corporate income tax rate for the years ended December 31, 2022 and 2021 is approximately 21%. The Israeli Parliament approved the Economic Efficiency Law (Legislative Amendments for Applying the Economic Policy for the 2017 and 2018 Budget Years), which reduced the corporate income tax rate to 23%. The statutory enacted corporate tax rate in the Netherlands is approximately 25%. Deferred taxes Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company's deferred tax assets are comprised of operating loss carryforwards and other temporary differences. The components of the net deferred tax assets are as follows ($ in millions): December 31, 2022 2021 Deferred tax assets: Net operating loss carryforwards $ 262.2 $ 127.4 Deferred ceding commission 8.6 7.8 Lease liabilities 5.6 3.4 Unrealized loss on investments 5.5 — Net unearned premium 5.3 2.6 Stock-based compensation 3.7 2.4 Charitable contribution 1.6 0.9 Startup costs 0.5 0.7 Other — 0.6 Total gross deferred tax assets 293.0 145.8 Deferred tax liabilities: Right-of-use assets (3.8) (3.3) Depreciation and amortization (1.0) (2.2) Deferred acquisition costs (1.4) (1.3) Other (3.8) — Total gross deferred tax liabilities (10.0) (6.8) Valuation allowance (283.0) (139.0) Total deferred tax assets, net $ — $ — Income tax expense Loss before tax consists of the following ($ in millions): December 31, 2022 2021 2020 United States $ (225.5) $ (240.3) $ (123.6) Foreign (69.3) 6.7 2.8 Total $ (294.8) $ (233.6) $ (120.8) Income tax expense consists of the following ($ in millions): December 31, 2022 2021 2020 Current: Federal $ — $ — $ — State — — — Foreign 3.0 7.7 1.5 Total current 3.0 7.7 1.5 Deferred: Federal $ — $ — $ — State — — — Foreign — — — Total deferred — — — Total income tax expense $ 3.0 $ 7.7 $ 1.5 As of December 31, 2022 and 2021 respectively, $8.0 million and $0, if recognized, would decrease the effective tax rate. The 2022 increase of $8.0 million relates to the implementation of the transfer pricing methodology. The Company recognizes interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying consolidated statement of operations. For the years ended December 31, 2022 and 2021, respectively, the Company did not accrue and recognize interest expense related to uncertain tax positions. We do not believe it is reasonably possible that our unrecognized tax benefits could increase or decrease within the next 12 months. Balance at December 31, 2021 $ — Increase (decrease) on tax positions for prior years — Increase (decrease) on tax positions for current year 8.0 Settlements with taxing authorities — Reduction due to lapse of the applicable statute of limitations — Balance at December 31, 2022 $ 8.0 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, 2022 2021 2020 Income at US statutory rate 21.0 % 21.0 % 21.0 % State taxes, net of federal benefit 2.5 % (8.4) % 12.8 % Permanent differences (3.7) % (1.7) % (1.2) % Return to provision — % (0.9) % — % Foreign rate differential 0.2 % 0.6 % 0.2 % Valuation allowance (18.1) % (13.7) % (33.9) % Uncertain tax position (2.7) % — % — % Other (0.2) % (0.2) % (0.1) % Total income taxes (1.0) % (3.3) % (1.2) % 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, 2022, 2021 and 2020 and had a gross inclusion o f $0.0 million , $14.0 million and $5.0 million respective ly, in its taxable income. Net operating loss carryforward As of December 31, 2022, the Company has federal losses for tax purposes of $236.3 million, which can be offset against future taxable income. Of this federal loss carryforward, $15.7 million in losses will begin to expire in 2035 and $220.6 million in losses can be carried forward indefinitely. As of December 31, 2022, the Company has state and local losses for tax purposes of $25.8 million which will begin to expire in 2030. The Company's income tax returns for 2019 through 2021 remain subject to examination by the U.S. tax authorities. Inflation Reduction Act On August 16, 2022, the President of the United States signed into law the Inflation Reduction Act (“ACT”), which included a new corporate alternative minimum tax (“CAMT”). The ACT and CAMT is effective for tax years beginning after 2022. Based upon the projected adjusted financial statement income for 2023, the reporting entity (or the controlled group for which the reporting entity is a member) has determined that average “adjusted financial statement” is below the threshold for the 2023 tax year such that it does not expect to be required to perform the CAMT calculations nor be liable for any CAMT. |
Net Loss per Share
Net Loss per Share | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022 2021 2020 Numerator: Net loss attributable to common stockholders (in millions) $ (297.8) $ (241.3) $ (122.3) Denominator: Weighted average common shares outstanding — basic and diluted 64,921,524 61,224,433 33,654,828 Net loss per share attributable to common stockholders — basic and diluted $ (4.59) $ (3.94) $ (3.63) The Company's potentially dilutive securities, which include stock options and warrants to purchase shares of common 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, 2022 2021 2020 Options to purchase common stock 9,760,657 6,573,744 4,944,711 Unvested restricted stock 1,651,243 335,814 — Warrants for common stock (1) 412,969 — — 11,824,869 6,909,558 4,944,711 (1) Each outstanding warrant of Metromile assumed by the Company are converted automatically into warrants denominated in the Company’s common stock with the number of warrants and exercise price adjusted based on the exchange ratio of 0.05263 |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022, 2021 and 2020, the Company incurred travel related expenses in the amount of approximately $0.2 million, $0.1 million and $0.1 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, 2022, 2021 and 2020 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, 2022 and 2021. The Company’s Co-Chief Executive Officers, both of whom are also members of the Company’s board of directors, are the two sole members of the board of directors of the Lemonade Foundation. The Company contributed 500,000 shares of common stock with a fair market value of $24.36 per share (see Note 15), and recorded $12.2 million of non-cash expense within general and administrative expense for the year ended December 31, 2020. There were no outstanding amounts due to or from the Lemonade Foundation as of December 31, 2022 and 2021. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
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. The Company records accruals for loss contingencies with these legal matters when it is probable that a liability will be incurred, and the amount of loss can be reasonably estimated. The Company has been made a party to class action litigation alleging that certain of our business practices are or were improper. The Company accrued a liability for this matter in accordance with ASC 450, Contingencies (“ASC 450”), and was settled in October 2022. Metromile Shareholder Litigation Matter Following the announcement of Metromile’s acquisition by the Company, multiple complaints were filed against Metromile and certain former officers and directors alleging that Metromile’s disclosures concerning the transaction were incomplete. Metromile also received demands to inspect its books and records under Delaware General Corporation Law Section 220, and one stockholder commenced litigation to enforce inspection rights. All of the foregoing complaints have been voluntarily dismissed with the plaintiffs reserving their rights to seek a fee in connection with each respective litigation. The Company will continue to monitor all legal issues and assess whether to accrue liability in accordance with ASC 450 based on new information and as further developments arise. Charges and guarantees The Company provided guarantees in an aggregate amount of $2.7 million as of December 31, 2022 and $0.6 million as of December 31, 2020 with respect to certain office leases. There were no guarantees as of December 31, 2021. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
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. The Company also entered into a lease agreement to lease an office space in Scottsdale, Arizona that expires in November 2024. The Company also occupies an office space in Amsterdam, Netherlands with lease that expires in February 2027. As part of the Metromile Acquisition (Note 5), the Company acquired two lease agreements for an office space in San Francisco, California that expires in 2030 and an office space in Tempe, Arizona that expires in 2024. Operating lease expense under ASC 842 for leased facilities is presented below: December 31, 2022 2021 Operating lease expense $ 7.0 $ 4.2 Short term lease expense 0.2 0.6 Variable lease cost 0.2 0.5 $ 7.4 $ 5.3 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 is as follows ($ in millions): December 31, 2022 2021 Operating cash outflow from operating leases $ 6.5 $ 4.1 ROU assets obtained in exchange for lease liabilities for operating leases $ 11.0 $ 19.5 Weighted-average remaining lease term and discount rate are as follows: December 31, 2022 2021 Weighted-average remaining lease term (in years) 4.7 4.1 Weighted-average discount rate 4.62 % 4.62 % Maturities of operating lease liabilities as of December 31, 2022 is as follows ($ in millions): 2023 $ 8.8 2024 10.1 2025 9.0 2026 4.6 2027 2.6 Thereafter 6.1 Total $ 41.2 |
Statutory Financial Information
Statutory Financial Information | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022 and 2021 ($ in millions): December 31, 2022 2021 Unpaid loss and LAE as of January 1 $ 97.9 $ 46.3 Less: Reinsurance recoverable (1) 72.7 36.3 Net unpaid loss and LAE as of January 1 25.2 10.0 Add: Incurred losses and LAE, net of reinsurance, related to: Current year 170.5 73.2 Prior years (3.2) (1.3) Total incurred 167.3 71.9 Deduct: Paid losses and LAE, net of reinsurance, related to: Current year 106.9 49.2 Prior years 30.1 7.5 Total paid 137.0 56.7 Unpaid loss and LAE, net of reinsurance recoverable acquired from Metromile 76.2 — Unpaid loss and LAE, net of reinsurance recoverable, as of December 31 131.6 25.2 Reinsurance recoverable as of December 31 (1) 124.6 72.7 Unpaid loss and LAE, gross of reinsurance recoverable, as of December 31 $ 256.2 $ 97.9 ____________ (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 $3.2 million and $1.3 million as of December 31, 2022 and December 31, 2021, respectively. No additional premium or returned premium have been accrued as a result of prior year effects. For the year ended December 31, 2022, current accident year incurred loss and LAE included $0.4 million of net incurred loss and LAE from Hurricane Ian and $7.6 million from winter storm Elliott. The net incurred loss and LAE from Hurricane Ian and winter storm Elliott as of December 31, 2022 represents the Company’s best estimates based upon information currently available. 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 $0.8 million relating to wildfires in Colorado. The net incurred loss and LAE from Uri and from the wildfires as of December 31, 2022 represents the Company's best estimates based upon information currently available. The Company compiles and aggregates its claims data by grouping the claims according to the year in which the claim occurred (Accident Year) when analyzing claim payment and emergence patterns and trends over time. For the purpose of defining claims frequency, the number of reported claims is by loss occurrence and includes claims that do not result in a liability or payment associated with these claims. The following is information about incurred and paid loss development as of December 31, 2022, net of reinsurance, as well as cumulative claim frequency and the total of IBNR liabilities included within the net incurred loss amounts. The Company separates home and renters claim experience from its pet claim experience when analyzing incurred and paid loss and allocated loss adjustment expenses, as there are distinct differences in the development and claim count emergence patterns. The information about incurred and paid claims development for the years ended prior to December 31, 2022, is presented as unaudited supplementary information. Home and Renters Incurred loss and allocated loss adjustment expense ("ALAE"), net of re insurance The following table presents incurred loss and ALAE, net of reinsurance, as well as IBNR loss reserves, net of reinsurance, and the number of reported claims ($ in millions, except for number of claims): December 31, 2022 Cumulative December 31, 2016 2017 2018 2019 2020 2021 2022 IBNR (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Accident Year 2016 $ — $ — $ — $ — $ — $ — $ — $ — 8 2017 — 1.7 1.7 1.7 1.7 1.7 1.7 — 1,758 2018 — — 15.0 13.5 13.4 13.4 13.4 — 10,530 2019 — — — 46.0 46.1 46.3 46.3 — 19,492 2020 — — — — 53.0 51.5 51.5 0.5 30,205 2021 — — — — — 59.4 55.9 2.3 53,285 2022 — — — — — — 96.5 28.8 51,808 Total incurred losses and ALAE, net $ 265.3 $ 31.6 167,086 Amounts in accident year 2016 for the years ended December 31, 2016, 2017, 2018, 2019, 2020, 2021 and 2022 were less than $0.1 million, respectively. IBNR, net of reinsurance as of December 31, 2022 for accident years 2016, 2017, 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 2022 (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Accident Year 2016 $ — $ — $ — $ — $ — $ — $ — 2017 — 1.6 1.7 1.7 1.7 1.7 1.7 2018 — — 13.2 13.2 13.4 13.4 13.4 2019 — — — 36.4 46.1 46.3 46.3 2020 — — — — 43.1 50.2 51.3 2021 — — — — — 37.8 53.4 2022 — — — — — — 52.7 Total paid losses and ALAE, net $ 218.8 Total unpaid loss and ALAE reserves, net $ 46.9 Ceded unpaid loss and LAE $ 101.0 Gross unpaid loss and LAE $ 147.9 Cumulative paid loss and ALAE, net of reinsurance related to accident year 2016 was less than $0.1 million during the years ended December 31, 2016, 2017, 2018 , 2019, 2020, 2021, and 2022, respectively. Average annual percentage payout of accident year incurred claims by age, net of reinsurance (unaudited supplementary information) Year 1 Year 2 Year 3 Home and renters 80 % 15 % 5 % Pet Incurred loss and allocated loss adjustment expense, net of re insurance The following table presents incurred loss and ALAE, net of reinsurance, as well as IBNR loss reserves, net of reinsurance, and the number of reported claims ($ in millions, except for number of claims): December 31, 2022 Cumulative December 31, 2020 2021 2022 IBNR (unaudited) (unaudited) Accident Year 2020 $ 0.7 $ 0.6 $ 1.0 $ — 20,796 2021 — 10.0 9.7 0.2 195,156 2022 — — 27.4 0.5 345,557 Total incurred losses and ALAE, net $ 38.1 $ 0.7 561,509 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 2022 (unaudited) (unaudited) Accident Year 2020 $ 0.4 $ 0.6 $ 0.7 2021 — 7.6 9.4 2022 — — 21.8 Total paid losses and ALAE, net $ 31.9 Total unpaid loss and ALAE reserves, net $ 5.9 Ceded unpaid loss and LAE 11.3 Gross unpaid loss and LAE $ 17.2 Average annual percentage payout of accident year incurred claims by age, net of reinsurance (unaudited supplementary information) Year 1 Year 2 Year 3 Pet 88 % 11 % 1 % Car Incurred loss and allocated loss adjustment expense ("ALAE"), net of re insurance (1) The following table presents incurred loss and ALAE, net of reinsurance, as well as IBNR loss reserves, net of reinsurance, and the number of reported claims ($ in millions, except for number of claims): December 31, 2022 Cumulative 2016 2017 2018 2019 2020 2021 2022 IBNR (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Accident Year 2016 $ 1.6 $ 2.0 $ 1.7 $ 1.7 $ 1.8 $ 1.9 $ 2.0 $ 0.1 1,630 2017 — 28.6 30.0 30.2 31.4 32.3 32.5 0.9 29,073 2018 — — 31.4 29.7 31.9 31.8 33.9 3.0 44,104 2019 — — — 24.2 24.0 23.2 24.6 3.2 51,129 2020 — — — — 10.8 12.0 11.8 3.1 37,311 2021 — — — — — 75.3 75.3 6.6 42,985 2022 — — — — — — 80.6 21.9 42,605 Total incurred losses and ALAE, net $ 260.7 $ 38.8 248,837 (1) Table above retrospectively includes Metromile's historical incurred accident year claim information for periods presented. Car Cumulative paid loss and ALAE, net of reinsurance (1) The following table presents cumulative paid loss and ALAE, net of reinsurance ($ in millions): December 31, 2016 2017 2018 2019 2020 2021 2022 (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Accident Year 2016 $ 0.2 $ 1.2 $ 1.5 $ 1.7 $ 1.7 $ 1.9 $ 1.9 2017 — 17.3 24.3 28.1 30.1 30.8 31.7 2018 — — 16.8 24.4 28.2 27.6 30.2 2019 — — — 13.5 18.7 14.5 18.8 2020 — — — — 5.2 (0.9) 5.6 2021 — — — — — 38.4 58.9 2022 — — — — — — 44.1 Total paid losses and ALAE, net $ 191.2 Total unpaid loss and ALAE reserves, net (2) $ 71.5 Ceded unpaid loss and LAE $ 12.3 Gross unpaid loss and LAE $ 83.8 (1) Table above retrospectively includes Metromile's historical paid accident year claim information for periods presented. (2) Includes the fair value adjustment on insurance contract intangible liability of $2.0 million. Average annual percentage payout of accident year incurred claims by age, net of reinsurance (unaudited supplementary information) Year 1 Year 2 Year 3 Car 52 % 22 % 26 % The reconciliation of the net incurred and paid loss information in the loss reserve rollforward table and development tables with respect to the current accident year is as follows ($ in millions): December 31, 2022 Unpaid Loss and ALAE, net Home and renters $ 46.9 Pet 5.9 Car 71.5 124.3 Reinsurance recoverable on Unpaid Loss and ALAE, net Home and renters 101.0 Pet 11.3 Car 12.3 124.6 Unallocated LAE 7.3 Gross Unpaid Loss and Loss Adjustment Expenses $ 256.2 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 subsidiaries 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 $105.9 million and $99.4 million as of December 31, 2022 and 2021, respectively. LIC’s capital and surplus exceeded its authorized control level RBC of $28.2 million and $18.2 million as of December 31, 2022 and 2021, respectively. MIC’s statutory capital and surplus amounted to $38.5 million as of December 31, 2022. MIC’s capital and surplus exceeded its authorized control level RBC of $8.7 million as of December 31, 2022. Statutory Dividend Restriction The payment of dividends by 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, 2022 and 2021, LIC was not eligible to make dividend payments. The payment of dividends by MIC is restricted by the laws of the State of Delaware. The maximum amount that can be paid without prior notice or approval is the greater of 10% of surplus as regards policyholders as of the preceding December 31, or net income not including realized capital gains for the twelve-month period ending the preceding December 31. Because the Company has an unassigned deficit at December 31, 2022 and 2021, MIC’s dividend policy is governed by Section 5005(B) of the Delaware insurance code whereby a domestic insurer may not declare or pay a dividend or other distribution from any source other than earned surplus without the commissioner’s prior approval. MIC paid no dividends to the Company in 2022 and 2021. |
Geographical Breakdown of Gross
Geographical Breakdown of Gross Written Premium | 12 Months Ended |
Dec. 31, 2022 | |
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 and private passenger auto lines of business . Gross written premium by jurisdiction is as follows ($ in millions): Years ended December 31, 2022 2021 2020 Jurisdiction Amount % of GWP Amount % of GWP Amount % of GWP California $ 142.0 25.6 % $ 93.9 25.0 % $ 49.8 23.2 % Texas 91.3 16.4 % 72.5 19.3 % 47.8 22.3 % New York 66.0 11.9 % 47.3 12.6 % 26.7 12.5 % New Jersey 28.3 5.1 % 16.7 4.4 % 8.6 4.0 % Illinois 26.3 4.7 % 15.7 4.2 % 9.8 4.6 % Georgia 19.8 3.6 % 16.5 4.4 % 11.6 5.4 % Washington 15.8 2.8 % 5.4 1.4 % 1.1 0.5 % Colorado 15.8 2.8 % 9.2 2.4 % 4.2 2.0 % Pennsylvania 14.4 2.6 % 9.7 2.6 % 5.1 2.4 % Virginia 13.0 2.3 % 8.1 2.2 % 3.9 1.8 % All others 123.0 22.2 % 80.7 21.5 % 45.8 21.3 % $ 555.7 100.0 % $ 375.7 100.0 % $ 214.4 100.0 % |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2022 | |
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, 2023, the 2020 Incentive Compensation Plan share pool was increased by 3,463,751 shares, equal to 5% of the aggregate number of outstanding common stock as of December 31, 2022. There was no increase in the 2020 ESPP share pool as of January 1, 2023 (Refer to Note 16). |
Schedule V - Valuation and Qual
Schedule V - Valuation and Qualifying Accounts | 12 Months Ended |
Dec. 31, 2022 | |
SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | |
Schedule V - Valuation and Qualifying Accounts | VALUATION AND QUALIFYING ACCOUNTS Additions ($ in millions) Balance at Charged to Charge (Deductions) Balance at Year Ended December 31, 2022 Valuation allowance for deferred tax assets $ 139.0 $ 144.0 $ — $ — $ 283.0 Allowance for premium receivables $ 1.6 $ 1.1 $ — $ — $ 2.7 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 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
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, intangible assets, 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 Officers. The chief operating decision makers also manages operations, allocate resources, and evaluate financial performance on a company-wide basis. The Company operates in one reporting segment within the United States, Europe and U.K., 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 certain office leases. The Company also collects insurance policy premiums that it holds in a segregated cash account for transmittal to the underwriting carrier, or settlement of insurance related claims. 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, intangible assets, warrants liability 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. |
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, 2022 and December 31, 2021. 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 costs, which primarily consist of commissions and premium taxes, related to each policy the Company successfully 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. |
Property and equipment, net | Property and equipment are stated at cost, net of accumulated depreciation. |
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 | Intangible assets are recorded at their acquisition date fair values which involves the use of valuation methodologies appropriate for determining the market value of each asset. These valuation methodologies use various assumptions that are inherently subjective. Identifiable intangible assets consist of value of business acquired and technology, which are subject to amortization, and insurance licenses and trademark associated with the Company’s name acquired in 2019, which are not subject to amortization. Indefinite-lived intangible assets are tested for impairment at least annually, or more frequently if events or such as a change in business circumstances that indicates the carrying value of the assets may not be recoverable. 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. There were no circumstances that indicate that the carrying amount of intangible assets deemed to have an indefinite useful life may not be recoverable for the years ended December 31, 2022 and 2021. Intangible assets subject to amortization are amortized over the estimated useful life and reviewed for impairment when indicators exists. |
Goodwill | Goodwill is the excess of purchase price over the fair value of net assets acquired. Goodwill is not amortized, but instead is reviewed for impairment at the reporting unit level on an annual basis, during the fourth quarter, or more frequently if indicators of impairment exist. The annual impairment test for goodwill is initially completed through a qualitative assessment to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying value. If facts and circumstances determine that it is not more likely than not that a reporting unit fair value is less than its carrying amount, then additional testing of goodwill is not required. However, if we determine that it is more likely than not that the fair value of a reporting unit is less than the carrying value, then we will perform a quantitative analysis. The quantitative analysis compares the estimated fair value of a reporting unit to its carrying value, including goodwill. If the fair value exceeds the carrying value, goodwill is considered not the be impaired. However, if the carrying value exceeds the fair value of a reporting unit, an impairment loss will be recognized in the amount of the excess carrying value over fair value limited by the total amount of goodwill for the reporting unit. There were no circumstances that indicate that the carrying value of goodwill was more likely than not greater than the fair value of a reporting unit for the year ended December 31, 2022. |
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. |
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 | 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. |
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, 2022 and 2021. 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 which is when the performance obligation is completed . 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 premium taxes incurred on the successful acquisition of business written on a direct basis, 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. |
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, non-income based taxes, insurance, charitable donations, 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 operating lease liabilities only if the Company is reasonably certain that the option will be exercised. Variable lease costs are recorded as expense in the period the obligation is incurred and are not included in the Company’s operating lease liabilities. 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. |
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 subsidiaries, 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, 2022 and 2021, 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 classifies all interest and penalties related to uncertain tax positions as income tax expense. |
Net loss per share | 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 and assumed warrants to purchase common shares of the Company are considered potential dilutive common shares. 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, 2022, 2021 and 2020. |
Recently adopted 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 adopted new accounting guidance within the same time periods as public companies, beginning with the 2021 Annual Report. Prior to the 2021 Annual Report, the Company’s 2021 quarterly filings did not reflect adoption of the following 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 pronouncement Income Taxes ASU 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes (“ASU 2019-12”), 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 became effective for the Company for annual periods beginning after December 15, 2021, including interim periods within that fiscal year, and 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 Losse s (Topic 326): M easurement of Credit Losses on Financial Instruments (“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. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Cash and cash equivalents | The following represents the Company's cash, cash equivalents and restricted cash as of December 31, 2022 and 2021, ($ in millions). December 31, 2022 2021 Cash and cash equivalents $ 282.5 $ 270.6 Restricted cash 4.0 — Total cash, cash equivalents and restricted cash $ 286.5 $ 270.6 |
Restricted cash | The following represents the Company's cash, cash equivalents and restricted cash as of December 31, 2022 and 2021, ($ in millions). December 31, 2022 2021 Cash and cash equivalents $ 282.5 $ 270.6 Restricted cash 4.0 — Total cash, cash equivalents and restricted cash $ 286.5 $ 270.6 |
Schedule of 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, 2022 2021 Computer equipment and software $ 20.7 $ 11.7 Leasehold improvements 13.4 4.6 Furniture and equipment 3.7 1.3 37.8 17.6 Accumulated depreciation (18.2) (5.9) Property and equipment, net $ 19.6 $ 11.7 |
Acquisition of Metromile (Table
Acquisition of Metromile (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Purchase Price for Acquisition | Fair value of consideration transferred for the Metromile Acquisition is as follows ($ in millions): Metromile issued and outstanding stock exchanged for Lemonade common stock (1) $ 136.9 Contingent consideration (2) — Metromile vested awards exchanged for Lemonade awards (3) 0.8 Total Purchase Consideration $ 137.7 (1) The fair value of 6,901,934 shares issued and exchanged for Lemonade common stock was determined based on the closing price at acquisition date of $19.84, and includes a minimal amount of cash paid in lieu of fractional shares. (2) Contingent consideration represents Metromile's contingently issuable shares that are convertible into Lemonade common stock in accordance with the exchange ratio as set forth in the merger agreement. In accordance with ASC 805-30-25-5, contingent consideration shall be recognized and measured at fair value as of the Acquisition Date. Given that the contingencies are not probable of being met within the contingency period, no fair value was assessed for these Metromile shares. (3) Fair value of replacement awards related to services rendered prior to the acquisition are included as part of purchase consideration. The unvested portion of fair value attributable to these replacement awards of $4.3 million comprised of $0.1 million for assumed options and $4.2 million for assumed restricted stock units ("RSUs"), and associated with future service will be recognized as expense over the future service period. |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table presents the preliminary allocation of purchase consideration recorded on the condensed consolidated balance sheet as of the Acquisition Date ($ in millions): Assets acquired Fixed maturities, available for sale, at fair value $ 1.8 Short-term investments 64.2 Cash, cash equivalents and restricted cash 98.8 Premiums receivable 17.4 Reinsurance recoverable 14.5 Property and equipment 4.6 VOBA 1.7 Intangible assets - technology 28.0 Intangible assets - insurance licenses 7.5 Other assets 14.7 Total assets acquired $ 253.2 Liabilities assumed Unpaid loss and loss adjustment expenses $ 84.4 Unearned premium 15.1 Trade payables 0.8 Ceded premium payable 12.0 Other liabilities and accrued expenses 22.2 Total liabilities assumed $ 134.5 Total identifiable net assets acquired $ 118.7 Total purchase consideration $ 137.7 Goodwill $ 19.0 |
Finite-Lived and Indefinite-Lived Intangible Assets Acquired as Part of Business Combination | The amounts, based on preliminary valuations and subject to final adjustment, allocated to intangible assets are as follows ($ in millions): Fair Value Weighted-Average Useful Life Technology $ 28.0 3 to 5 years Insurance licenses 7.5 N/A Total $ 35.5 |
Business Acquisition, Pro Forma Information | Unaudited Pro Forma: December 31, 2022 2021 Total Revenue $ 309.3 $ 228.4 Net loss $ (383.0) $ (458.1) |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Investments, Debt and Equity Securities [Abstract] | |
Amortized cost and fair values | The following tables present cost or amortized cost and fair values of investments in fixed maturities at December 31, 2022 and 2021, respectively ($ in millions): Cost or Gross Fair Gains Losses December 31, 2022 Corporate debt securities $ 549.7 $ 0.1 $ (19.6) $ 530.2 U.S. Government obligations 121.0 — (3.7) 117.3 Asset-backed securities 2.8 — — 2.8 Municipal securities — — — — Total $ 673.5 $ 0.1 $ (23.3) $ 650.3 December 31, 2021 Corporate debt securities $ 593.4 $ — $ (4.7) $ 588.7 U.S. Government obligations 102.2 0.1 (0.8) 101.5 Asset-backed securities — — — — Municipal securities 1.2 — — 1.2 $ 696.8 $ 0.1 $ (5.5) $ 691.4 |
Contractual maturities of bonds | The following table presents the cost or amortized cost and estimated fair value of investments in fixed maturities as of December 31, 2022 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, 2022 Cost or Fair Value Due in one year or less $ 242.3 $ 238.0 Due after one year through five years 431.2 412.3 Due after five years through ten years — — Due after ten years — — Total $ 673.5 $ 650.3 |
Aging of gross unrealized losses | The following tables present the gross unrealized losses and related fair values for the Company's investment in fixed maturities, grouped by duration of time in a continuous unrealized loss position as of December 31, 2022 and 2021 ($ in millions): Less than 12 Months 12 Months or More Total Fair Value Gross Fair Value Gross Fair Value Gross December 31, 2022 Corporate debt securities $ 83.6 $ (2.1) $ 428.1 $ (17.5) $ 511.7 $ (19.6) U.S. Government obligations 29.6 (0.2) 85.1 (3.5) 114.7 (3.7) Asset-backed securities 2.8 — — — 2.8 — Municipal securities — — — — — — Total $ 116.0 $ (2.3) $ 513.2 $ (21.0) $ 629.2 $ (23.3) 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) Asset-backed securities — — — — — — Municipal securities 1.2 — — — 1.2 — Total $ 678.1 $ (5.5) $ 0.5 $ — $ 678.6 $ (5.5) |
Special deposits | The carrying value of bonds deposited with each respective state is as follows ($ in millions): December 31, U.S. State 2022 2021 New York $ 2.8 $ 2.8 Delaware 2.8 — Washington 1.2 1.2 Colorado 1.1 1.1 Virginia 0.8 0.3 New Mexico 0.6 0.3 North Carolina 0.6 0.3 New Jersey 0.6 — Nevada 0.4 0.4 Arkansas 0.3 0.1 Florida 0.2 0.2 Massachusetts 0.2 0.1 Kansas 0.1 — Kentucky 0.1 — Total $ 11.8 $ 6.8 |
Net investment income | An analysis of net investment income follows ($ in millions): December 31, 2022 2021 2020 Interest on cash and cash equivalents $ 1.2 $ 0.4 $ 1.0 Fixed maturities 5.7 1.5 0.1 Short-term investments 1.9 0.1 0.4 Total 8.8 2.0 1.5 Investment expense 0.4 0.1 — Net investment income $ 8.4 $ 1.9 $ 1.5 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Schedule of 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, 2022 and 2021 ($ in millions): December 31, 2022 Level 1 Level 2 Level 3 Total Financial Assets: Corporate debt securities $ — $ 530.2 $ — $ 530.2 U.S. Government obligations — 117.3 — 117.3 Asset-backed securities — 2.8 — 2.8 Municipal securities — — — — Fixed maturities — 650.3 — 650.3 Short term investments — 99.8 — 99.8 Total $ — $ 750.1 $ — $ 750.1 Financial Liabilities: Warrant liability $ — $ — $ 0.3 $ 0.3 December 31, 2021 Level 1 Level 2 Level 3 Total Financial Assets: Corporate debt securities $ — $ 588.7 $ — 588.7 U.S. Government obligations — 101.5 — 101.5 Asset-backed securities — — — — Municipal securities — 1.2 — 1.2 Fixed maturities — 691.4 — 691.4 Short term investments — 110.4 — 110.4 Total $ — $ 801.8 $ — $ 801.8 Financial Liabilities: Warrant liability $ — $ — $ — $ — |
Fair Value Measurement Inputs and Valuation Techniques | The Company utilized the binomial Monte-Carlo simulation to estimate the fair value of these warrants which are currently not actively traded as of reporting date, and are determined based on the following assumptions: December 31, 2022 Weighted average expected term (years) 3.11 Risk-free interest rate 4.2% Volatility 80% Expected dividend yield — |
Schedule of Warrant Liability | The following table below presents the change in fair value of the warrant liability ($ in millions): December 31, 2022 Balance as of January 1 $ — Initial measurement of warrants liability as of July 31, 2022 0.5 Change in fair value (0.2) Balance as of December 31 $ 0.3 |
Reinsurance (Tables)
Reinsurance (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022 and 2021 are presented in the table below ($ in millions). December 31, 2022 2021 Reinsurance recoverable on paid losses $ 32.2 $ 17.1 Ceded unpaid loss and LAE 124.6 72.7 Total reinsurance recoverable $ 156.8 $ 89.8 AM Best December 31, Reinsurer 2022 2021 A+ Hannover Rueck SE $ 100.1 $ 60.2 A+ Swiss Reinsurance America Corporation 27.6 12.4 A MAPFRE Re, Compania De Reaseguros S.A. 23.8 14.4 NR Lloyd's Underwriter Syndicate No. 1084 CSL 4.3 4.4 NR Lloyd's Underwriter Syndicate no. 2791 MAP 1.0 — NR Lloyd's Underwriter Syndicate no. 2001 AML 0.5 0.7 A Lloyd's Underwriter Syndicate no. 0033 HIS 0.4 0.8 A+ Munich Reinsurance America Inc 0.4 0.6 A Lloyd's Underwriter Syndicate no. 2357 NCL 0.4 0.6 A++ General Reinsurance Corporation 0.4 — $ 158.9 $ 94.1 Other reinsurers 0.7 6.2 $ 159.6 $ 100.3 |
Impact of reinsurance | The impact of reinsurance treaties on the Company's consolidated statements of operations and comprehensive income is as follows ($ in millions): December 31, 2022 2021 2020 Premium written: Direct $ 555.6 $ 375.7 $ 214.4 Assumed 0.1 — — Ceded (333.1) (273.4) (171.7) Net premium written $ 222.6 $ 102.3 $ 42.7 Premium earned: Direct $ 490.5 $ 292.0 $ 158.7 Assumed — — — Ceded (318.1) (215.0) (81.4) Net premium earned $ 172.4 $ 77.0 $ 77.3 Loss and LAE incurred: Direct $ 441.0 $ 264.1 $ 113.4 Assumed — — — Ceded (273.7) (192.2) (58.7) Net loss and LAE incurred $ 167.3 $ 71.9 $ 54.7 |
Deferred Acquisition Costs (Tab
Deferred Acquisition Costs (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Insurance [Abstract] | |
Schedule of policy acquisition costs deferred and amortized | The following table presents the policy acquisition costs deferred and amortized ($ in millions): December 31, 2022 2021 Deferred Acquisition Costs: Balance, January 1 $ 6.2 $ 3.5 Add: Premium taxes and other acquisition costs 14.1 9.8 Direct commissions 3.6 2.4 Less: Amortization of net deferred acquisition costs (17.0) (9.5) Balance, December 31 $ 6.9 $ 6.2 Other Insurance Expense: Amortization of net deferred acquisition costs $ 17.0 $ 9.5 Period costs 27.0 14.6 Total other insurance expense $ 44.0 $ 24.1 |
Property and Equipment, net (Ta
Property and Equipment, net (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of 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, 2022 2021 Computer equipment and software $ 20.7 $ 11.7 Leasehold improvements 13.4 4.6 Furniture and equipment 3.7 1.3 37.8 17.6 Accumulated depreciation (18.2) (5.9) Property and equipment, net $ 19.6 $ 11.7 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | Identifiable intangible assets consist of the following ($ in millions): December 31, 2022 December 31, 2021 Weighted Average Useful Life Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Insurance licenses Indefinite $ 7.5 $ — $ 7.5 $ — $ — $ — Trademark Indefinite 0.6 — 0.6 0.6 — 0.6 Technology 3 28.0 3.9 24.1 — — — VOBA 0.5 1.7 1.4 0.3 — — — $ 37.8 $ 5.3 $ 32.5 $ 0.6 $ — $ 0.6 |
Schedule of Intangible Assets | Identifiable intangible assets consist of the following ($ in millions): December 31, 2022 December 31, 2021 Weighted Average Useful Life Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Insurance licenses Indefinite $ 7.5 $ — $ 7.5 $ — $ — $ — Trademark Indefinite 0.6 — 0.6 0.6 — 0.6 Technology 3 28.0 3.9 24.1 — — — VOBA 0.5 1.7 1.4 0.3 — — — $ 37.8 $ 5.3 $ 32.5 $ 0.6 $ — $ 0.6 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | As of December 31, 2022, the estimated aggregate amortization expense for the Company’s intangible assets for the next five years is as follows ($ in millions): 2023 $ 9.6 2024 9.3 2025 5.5 2026 — 2027 — Thereafter — $ 24.4 |
Other Assets (Tables)
Other Assets (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of other assets | Other assets consists of the following ($ in millions): December 31, 2022 2021 Right-of-Use assets (Note 21) $ 26.4 $ 21.9 Ceding commission receivable 21.0 14.5 Prepaid expenses 14.0 10.6 Income tax receivable 5.0 — Investment income due and accrued 3.7 3.4 Other 5.1 2.8 Total other assets $ 75.2 53.2 |
Unpaid Loss and Loss Adjustme_2
Unpaid Loss and Loss Adjustment Expense (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022 and 2021 ($ in millions): December 31, 2022 2021 Unpaid loss and LAE as of January 1 $ 97.9 $ 46.3 Less: Reinsurance recoverable (1) 72.7 36.3 Net unpaid loss and LAE as of January 1 25.2 10.0 Add: Incurred losses and LAE, net of reinsurance, related to: Current year 170.5 73.2 Prior years (3.2) (1.3) Total incurred 167.3 71.9 Deduct: Paid losses and LAE, net of reinsurance, related to: Current year 106.9 49.2 Prior years 30.1 7.5 Total paid 137.0 56.7 Unpaid loss and LAE, net of reinsurance recoverable acquired from Metromile 76.2 — Unpaid loss and LAE, net of reinsurance recoverable, as of December 31 131.6 25.2 Reinsurance recoverable as of December 31 (1) 124.6 72.7 Unpaid loss and LAE, gross of reinsurance recoverable, as of December 31 $ 256.2 $ 97.9 ____________ (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, net of reinsurance, and the number of reported claims ($ in millions, except for number of claims): December 31, 2022 Cumulative December 31, 2016 2017 2018 2019 2020 2021 2022 IBNR (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Accident Year 2016 $ — $ — $ — $ — $ — $ — $ — $ — 8 2017 — 1.7 1.7 1.7 1.7 1.7 1.7 — 1,758 2018 — — 15.0 13.5 13.4 13.4 13.4 — 10,530 2019 — — — 46.0 46.1 46.3 46.3 — 19,492 2020 — — — — 53.0 51.5 51.5 0.5 30,205 2021 — — — — — 59.4 55.9 2.3 53,285 2022 — — — — — — 96.5 28.8 51,808 Total incurred losses and ALAE, net $ 265.3 $ 31.6 167,086 The following table presents cumulative paid loss and ALAE, net of reinsurance ($ in millions): December 31, 2016 2017 2018 2019 2020 2021 2022 (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Accident Year 2016 $ — $ — $ — $ — $ — $ — $ — 2017 — 1.6 1.7 1.7 1.7 1.7 1.7 2018 — — 13.2 13.2 13.4 13.4 13.4 2019 — — — 36.4 46.1 46.3 46.3 2020 — — — — 43.1 50.2 51.3 2021 — — — — — 37.8 53.4 2022 — — — — — — 52.7 Total paid losses and ALAE, net $ 218.8 Total unpaid loss and ALAE reserves, net $ 46.9 Ceded unpaid loss and LAE $ 101.0 Gross unpaid loss and LAE $ 147.9 The following table presents incurred loss and ALAE, net of reinsurance, as well as IBNR loss reserves, net of reinsurance, and the number of reported claims ($ in millions, except for number of claims): December 31, 2022 Cumulative December 31, 2020 2021 2022 IBNR (unaudited) (unaudited) Accident Year 2020 $ 0.7 $ 0.6 $ 1.0 $ — 20,796 2021 — 10.0 9.7 0.2 195,156 2022 — — 27.4 0.5 345,557 Total incurred losses and ALAE, net $ 38.1 $ 0.7 561,509 The following table presents cumulative paid loss and ALAE, net of reinsurance ($ in millions): December 31, 2020 2021 2022 (unaudited) (unaudited) Accident Year 2020 $ 0.4 $ 0.6 $ 0.7 2021 — 7.6 9.4 2022 — — 21.8 Total paid losses and ALAE, net $ 31.9 Total unpaid loss and ALAE reserves, net $ 5.9 Ceded unpaid loss and LAE 11.3 Gross unpaid loss and LAE $ 17.2 The following table presents incurred loss and ALAE, net of reinsurance, as well as IBNR loss reserves, net of reinsurance, and the number of reported claims ($ in millions, except for number of claims): December 31, 2022 Cumulative 2016 2017 2018 2019 2020 2021 2022 IBNR (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Accident Year 2016 $ 1.6 $ 2.0 $ 1.7 $ 1.7 $ 1.8 $ 1.9 $ 2.0 $ 0.1 1,630 2017 — 28.6 30.0 30.2 31.4 32.3 32.5 0.9 29,073 2018 — — 31.4 29.7 31.9 31.8 33.9 3.0 44,104 2019 — — — 24.2 24.0 23.2 24.6 3.2 51,129 2020 — — — — 10.8 12.0 11.8 3.1 37,311 2021 — — — — — 75.3 75.3 6.6 42,985 2022 — — — — — — 80.6 21.9 42,605 Total incurred losses and ALAE, net $ 260.7 $ 38.8 248,837 (1) Table above retrospectively includes Metromile's historical incurred accident year claim information for periods presented. The following table presents cumulative paid loss and ALAE, net of reinsurance ($ in millions): December 31, 2016 2017 2018 2019 2020 2021 2022 (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Accident Year 2016 $ 0.2 $ 1.2 $ 1.5 $ 1.7 $ 1.7 $ 1.9 $ 1.9 2017 — 17.3 24.3 28.1 30.1 30.8 31.7 2018 — — 16.8 24.4 28.2 27.6 30.2 2019 — — — 13.5 18.7 14.5 18.8 2020 — — — — 5.2 (0.9) 5.6 2021 — — — — — 38.4 58.9 2022 — — — — — — 44.1 Total paid losses and ALAE, net $ 191.2 Total unpaid loss and ALAE reserves, net (2) $ 71.5 Ceded unpaid loss and LAE $ 12.3 Gross unpaid loss and LAE $ 83.8 (1) Table above retrospectively includes Metromile's historical paid accident year claim information for periods presented. (2) Includes the fair value adjustment on insurance contract intangible liability of $2.0 million. |
Historical claims duration | Average annual percentage payout of accident year incurred claims by age, net of reinsurance (unaudited supplementary information) Year 1 Year 2 Year 3 Home and renters 80 % 15 % 5 % Average annual percentage payout of accident year incurred claims by age, net of reinsurance (unaudited supplementary information) Year 1 Year 2 Year 3 Pet 88 % 11 % 1 % Average annual percentage payout of accident year incurred claims by age, net of reinsurance (unaudited supplementary information) Year 1 Year 2 Year 3 Car 52 % 22 % 26 % |
Reconciliation of net incurred and paid loss information in the loss reserve rollforward and development tables | The reconciliation of the net incurred and paid loss information in the loss reserve rollforward table and development tables with respect to the current accident year is as follows ($ in millions): December 31, 2022 Unpaid Loss and ALAE, net Home and renters $ 46.9 Pet 5.9 Car 71.5 124.3 Reinsurance recoverable on Unpaid Loss and ALAE, net Home and renters 101.0 Pet 11.3 Car 12.3 124.6 Unallocated LAE 7.3 Gross Unpaid Loss and Loss Adjustment Expenses $ 256.2 |
Other Liabilities and Accrued_2
Other Liabilities and Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Other Liabilities Disclosure [Abstract] | |
Other liabilities and accrued expenses | Other liabilities and accrued expenses consists of the following ($ in millions): December 31, 2022 2021 Lease liabilities (Note 21) $ 35.2 $ 22.3 Employee compensation payable 12.8 5.4 Uncertain tax position 8.1 — Accrued advertising costs 6.8 11.2 Premium taxes payable 6.2 5.4 Accrued professional fees 5.5 4.6 Advance premium 2.1 2.0 Accrued hosting and software 2.0 0.6 Income taxes payable 0.6 4.7 Warrant liability 0.3 — Other payables 4.9 1.2 Total $ 84.5 $ 57.4 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Fair value assumptions | The fair value of each option granted during the year ended December 31, 2022 and 2021 is estimated on the date of grant using the Black-Scholes model with the following assumptions: December 31, 2022 2021 Weighted average expected term (years) 6.10 6.13 Risk-free interest rate 2.7% 1.3% Volatility 47% 48% Expected dividend yield 0% 0% |
Stock options activity | The following table summarizes activity ($ in millions, except for option and weighted-average amounts): Stock options Number of Weighted- Weighted- Aggregate Outstanding as of December 31, 2021 6,573,744 $ 46.03 8.29 $ 85.86 Granted (1) 4,351,371 27.47 Exercised (448,368) 7.97 Canceled (716,090) 50.11 Outstanding as of December 31, 2022 9,760,657 $ 39.43 8.17 $ 8.05 Options exercisable as of December 31, 2022 3,420,165 $ 28.38 6.87 $ 7.93 Options unvested as of December 31, 2022 6,340,492 $ 45.37 8.89 $ 0.11 (1) includes assumed options of 72,410 from Metromile Acquisition (See Note 5) |
Restricted stock units | Restricted Stock Units Number of shares Grant Date Fair Value Outstanding as of December 31, 2021 335,814 $ 66.94 Granted (1) 1,821,066 22.50 Vested (263,732) 37.26 Canceled (241,905) 27.42 Outstanding as of December 31, 2022 1,651,243 27.92 (1) includes assumed restricted stock units of 331,797 from the Metromile Acquisition (See Note 5) |
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, including assumed awards from the Metromile Acquisition for the year ended December 31, 2022, as follows ($ in millions): December 31, 2022 2021 2020 Loss and loss adjustment expense, net $ 2.7 $ 1.5 $ 0.4 Other insurance expense 1.6 1.0 0.7 Sales and marketing 6.6 5.1 2.7 Technology development 24.4 18.2 3.1 General and administrative 24.0 18.3 3.7 Total stock-based compensation expense $ 59.3 $ 44.1 $ 10.6 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, 2022 2021 2020 Stock options $ 47.8 $ 40.1 $ 10.6 RSUs 11.5 4.0 — Total stock-based compensation expense $ 59.3 $ 44.1 $ 10.6 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022 2021 Deferred tax assets: Net operating loss carryforwards $ 262.2 $ 127.4 Deferred ceding commission 8.6 7.8 Lease liabilities 5.6 3.4 Unrealized loss on investments 5.5 — Net unearned premium 5.3 2.6 Stock-based compensation 3.7 2.4 Charitable contribution 1.6 0.9 Startup costs 0.5 0.7 Other — 0.6 Total gross deferred tax assets 293.0 145.8 Deferred tax liabilities: Right-of-use assets (3.8) (3.3) Depreciation and amortization (1.0) (2.2) Deferred acquisition costs (1.4) (1.3) Other (3.8) — Total gross deferred tax liabilities (10.0) (6.8) Valuation allowance (283.0) (139.0) Total deferred tax assets, net $ — $ — |
Loss before tax | Loss before tax consists of the following ($ in millions): December 31, 2022 2021 2020 United States $ (225.5) $ (240.3) $ (123.6) Foreign (69.3) 6.7 2.8 Total $ (294.8) $ (233.6) $ (120.8) |
Income tax expense | Income tax expense consists of the following ($ in millions): December 31, 2022 2021 2020 Current: Federal $ — $ — $ — State — — — Foreign 3.0 7.7 1.5 Total current 3.0 7.7 1.5 Deferred: Federal $ — $ — $ — State — — — Foreign — — — Total deferred — — — Total income tax expense $ 3.0 $ 7.7 $ 1.5 |
Unrecognized Tax Benefits Roll Forward | We do not believe it is reasonably possible that our unrecognized tax benefits could increase or decrease within the next 12 months. Balance at December 31, 2021 $ — Increase (decrease) on tax positions for prior years — Increase (decrease) on tax positions for current year 8.0 Settlements with taxing authorities — Reduction due to lapse of the applicable statute of limitations — Balance at December 31, 2022 $ 8.0 |
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, 2022 2021 2020 Income at US statutory rate 21.0 % 21.0 % 21.0 % State taxes, net of federal benefit 2.5 % (8.4) % 12.8 % Permanent differences (3.7) % (1.7) % (1.2) % Return to provision — % (0.9) % — % Foreign rate differential 0.2 % 0.6 % 0.2 % Valuation allowance (18.1) % (13.7) % (33.9) % Uncertain tax position (2.7) % — % — % Other (0.2) % (0.2) % (0.1) % Total income taxes (1.0) % (3.3) % (1.2) % |
Net Loss per Share (Tables)
Net Loss per Share (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022 2021 2020 Numerator: Net loss attributable to common stockholders (in millions) $ (297.8) $ (241.3) $ (122.3) Denominator: Weighted average common shares outstanding — basic and diluted 64,921,524 61,224,433 33,654,828 Net loss per share attributable to common stockholders — basic and diluted $ (4.59) $ (3.94) $ (3.63) |
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, 2022 2021 2020 Options to purchase common stock 9,760,657 6,573,744 4,944,711 Unvested restricted stock 1,651,243 335,814 — Warrants for common stock (1) 412,969 — — 11,824,869 6,909,558 4,944,711 (1) Each outstanding warrant of Metromile assumed by the Company are converted automatically into warrants denominated in the Company’s common stock with the number of warrants and exercise price adjusted based on the exchange ratio of 0.05263 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
Schedule of Operating Lease Expense and Supplemental Cash Flow Related to Operating Leases | Operating lease expense under ASC 842 for leased facilities is presented below: December 31, 2022 2021 Operating lease expense $ 7.0 $ 4.2 Short term lease expense 0.2 0.6 Variable lease cost 0.2 0.5 $ 7.4 $ 5.3 Supplemental cash flow information related to operating leases is as follows ($ in millions): December 31, 2022 2021 Operating cash outflow from operating leases $ 6.5 $ 4.1 ROU assets obtained in exchange for lease liabilities for operating leases $ 11.0 $ 19.5 |
Schedule of Weighted-Average Remaining Lease Term and Discount Rate, Lessee | Weighted-average remaining lease term and discount rate are as follows: December 31, 2022 2021 Weighted-average remaining lease term (in years) 4.7 4.1 Weighted-average discount rate 4.62 % 4.62 % |
Schedule of Operating Lease Maturity | Maturities of operating lease liabilities as of December 31, 2022 is as follows ($ in millions): 2023 $ 8.8 2024 10.1 2025 9.0 2026 4.6 2027 2.6 Thereafter 6.1 Total $ 41.2 |
Geographical Breakdown of Gro_2
Geographical Breakdown of Gross Written Premium (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
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 and private passenger auto lines of business . Gross written premium by jurisdiction is as follows ($ in millions): Years ended December 31, 2022 2021 2020 Jurisdiction Amount % of GWP Amount % of GWP Amount % of GWP California $ 142.0 25.6 % $ 93.9 25.0 % $ 49.8 23.2 % Texas 91.3 16.4 % 72.5 19.3 % 47.8 22.3 % New York 66.0 11.9 % 47.3 12.6 % 26.7 12.5 % New Jersey 28.3 5.1 % 16.7 4.4 % 8.6 4.0 % Illinois 26.3 4.7 % 15.7 4.2 % 9.8 4.6 % Georgia 19.8 3.6 % 16.5 4.4 % 11.6 5.4 % Washington 15.8 2.8 % 5.4 1.4 % 1.1 0.5 % Colorado 15.8 2.8 % 9.2 2.4 % 4.2 2.0 % Pennsylvania 14.4 2.6 % 9.7 2.6 % 5.1 2.4 % Virginia 13.0 2.3 % 8.1 2.2 % 3.9 1.8 % All others 123.0 22.2 % 80.7 21.5 % 45.8 21.3 % $ 555.7 100.0 % $ 375.7 100.0 % $ 214.4 100.0 % |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Additional Information (Details) $ in Millions | 12 Months Ended | |||
Dec. 31, 2022 USD ($) segment | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | Jan. 01, 2021 USD ($) | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Number of reportable segments | segment | 1 | |||
Premium receivable, allowance for doubtful accounts | $ 2.7 | $ 1.6 | ||
Amortization of net deferred acquisition costs | 17 | 9.5 | $ 4.9 | |
Matching contributions | 2.2 | 0.9 | 0.5 | |
Advertising expenses | 88.5 | 104.6 | $ 58.3 | |
Right-of-use assets | 26.4 | 21.9 | ||
Lease, liabilities | $ 35.2 | $ 22.3 | ||
Options to purchase common stock | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Requisite service period | 4 years | |||
ASU 2016-02 | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Right-of-use assets | $ 16.9 | |||
Lease, liabilities | 17.2 | |||
Deferred rent credit | $ 0.3 | |||
Internal use software | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Estimated useful life | 2 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 282.5 | $ 270.6 | ||
Restricted cash | 4 | 0 | ||
Total cash, cash equivalents and restricted cash | $ 286.5 | $ 270.6 | $ 571.4 | $ 270.3 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Property and Equipment, Net (Details) | 12 Months Ended |
Dec. 31, 2022 | |
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 |
Acquisition of Metromile - Addi
Acquisition of Metromile - Additional Information (Details) $ in Millions | 5 Months Ended | 12 Months Ended | |||
Jul. 28, 2022 USD ($) shares | Dec. 31, 2022 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Business Acquisition [Line Items] | |||||
Amortization expense | $ 5.3 | $ 0 | $ 0 | ||
Metromile | |||||
Business Acquisition [Line Items] | |||||
Percent of equity acquired | 100% | ||||
Conversion ratio | 0.05263 | ||||
Shares issued for acquisition (in shares) | shares | 6,901,934 | ||||
Business acquisition, pro forma revenue | $ 35 | 309.3 | 228.4 | ||
Net loss | 36.4 | (383) | $ (458.1) | ||
Transaction expenses | 8.4 | ||||
Acquired of intangible assets | $ 35.5 | ||||
Metromile | Acquisition-related Costs | |||||
Business Acquisition [Line Items] | |||||
Acquired of intangible assets | 2 | ||||
Business acquisition, transaction costs | $ 10 | 10 | |||
Deferred revenue | 4.9 | ||||
Amortization expense | 1.3 | ||||
Income taxes | 0.6 | ||||
Metromile | Acquisition-related Costs | ASU 2016-02 | |||||
Business Acquisition [Line Items] | |||||
Income taxes | $ 2 |
Acquisition of Metromile - Sche
Acquisition of Metromile - Schedule of Fair Value of Consideration Transferred (Details) - Metromile $ / shares in Units, $ in Millions | Jul. 28, 2022 USD ($) $ / shares shares |
Business Acquisition [Line Items] | |
Metromile issued and outstanding stock exchanged for Lemonade common stock | $ 136.9 |
Contingent consideration | 0 |
Metromile vested awards exchanged for Lemonade awards | 0.8 |
Total purchase consideration | $ 137.7 |
Shares issued for acquisition (in shares) | shares | 6,901,934 |
Business acquisition, share price (usd per share) | $ / shares | $ 19.84 |
Remaining replacement awards, fair value | $ 4.3 |
Options to purchase common stock | |
Business Acquisition [Line Items] | |
Remaining replacement awards, fair value | 0.1 |
RSUs | |
Business Acquisition [Line Items] | |
Remaining replacement awards, fair value | $ 4.2 |
Acquisition of Metromile - Sc_2
Acquisition of Metromile - Schedule of Recognized Identified Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Millions | Jul. 28, 2022 | Dec. 31, 2022 | Dec. 31, 2021 |
Liabilities assumed | |||
Goodwill | $ 19 | $ 0 | |
Metromile | |||
Assets acquired | |||
Fixed maturities, available for sale, at fair value | $ 1.8 | ||
Short-term investments | 64.2 | ||
Cash, cash equivalents and restricted cash | 98.8 | ||
Premiums receivable | 17.4 | ||
Reinsurance recoverable | 14.5 | ||
Property and equipment | 4.6 | ||
VOBA | 1.7 | ||
Other assets | 14.7 | ||
Total assets acquired | 253.2 | ||
Liabilities assumed | |||
Unpaid loss and loss adjustment expenses | 84.4 | ||
Unearned premium | 15.1 | ||
Trade payables | 0.8 | ||
Ceded premium payable | 12 | ||
Other liabilities and accrued expenses | 22.2 | ||
Total liabilities assumed | 134.5 | ||
Total identifiable net assets acquired | 118.7 | ||
Total purchase consideration | 137.7 | ||
Goodwill | 19 | ||
Metromile | Technology | |||
Assets acquired | |||
Intangible assets | 28 | ||
Metromile | Insurance licenses | |||
Assets acquired | |||
Intangible assets | $ 7.5 |
Acquisition of Metromile - Busi
Acquisition of Metromile - Business Combinations and Asset Acquisitions (Details) - Metromile $ in Millions | Jul. 28, 2022 USD ($) |
Finite-Lived Intangible Assets [Line Items] | |
Fair Value | $ 35.5 |
Technology | |
Finite-Lived Intangible Assets [Line Items] | |
Fair Value | $ 28 |
Technology | Minimum | |
Finite-Lived Intangible Assets [Line Items] | |
Weighted-Average Useful Life | 3 years |
Technology | Maximum | |
Finite-Lived Intangible Assets [Line Items] | |
Weighted-Average Useful Life | 5 years |
Insurance licenses | |
Finite-Lived Intangible Assets [Line Items] | |
Fair Value | $ 7.5 |
Acquisition of Metromile - Bu_2
Acquisition of Metromile - Business Combinations and Asset Acquisitions (Details) - Metromile - USD ($) $ in Millions | 5 Months Ended | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Finite-Lived Intangible Assets [Line Items] | |||
Total Revenue | $ 35 | $ 309.3 | $ 228.4 |
Net loss | $ 36.4 | $ (383) | $ (458.1) |
Investments -Amortized Cost and
Investments -Amortized Cost and Fair Values (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Debt Securities, Available-for-sale [Line Items] | ||
Cost or Amortized Cost | $ 673.5 | $ 696.8 |
Gross unrealized gains | 0.1 | 0.1 |
Gross unrealized losses | (23.3) | (5.5) |
Fair Value | 650.3 | 691.4 |
Corporate debt securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost or Amortized Cost | 549.7 | 593.4 |
Gross unrealized gains | 0.1 | 0 |
Gross unrealized losses | (19.6) | (4.7) |
Fair Value | 530.2 | 588.7 |
U.S. Government obligations | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost or Amortized Cost | 121 | 102.2 |
Gross unrealized gains | 0 | 0.1 |
Gross unrealized losses | (3.7) | (0.8) |
Fair Value | 117.3 | 101.5 |
Asset-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost or Amortized Cost | 2.8 | 0 |
Gross unrealized gains | 0 | 0 |
Gross unrealized losses | 0 | 0 |
Fair Value | 2.8 | 0 |
Municipal securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost or Amortized Cost | 0 | 1.2 |
Gross unrealized gains | 0 | 0 |
Gross unrealized losses | 0 | 0 |
Fair Value | $ 0 | $ 1.2 |
Investments - Additional Inform
Investments - Additional Information (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 USD ($) security | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Investments, Debt and Equity Securities [Abstract] | |||
Gross unrealized losses | $ 23.3 | $ 5.5 | |
Gross unrealized losses, twelve months or more (less than) | $ 21 | 0 | |
Number of debt securities held, unrealized loss position | security | 262 | ||
Financing receivable, allowance for credit loss | $ 0 | 0 | |
Fixed maturities | 650.3 | 691.4 | |
Realized investment gains | $ 0.4 | $ 0 | $ 0 |
Investments - Contractual Matur
Investments - Contractual Maturities of Bonds (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Cost or Amortized Cost | ||
Due in one year or less | $ 242.3 | |
Due after one year through five years | 431.2 | |
Due after five years through ten years | 0 | |
Due after ten years | 0 | |
Cost or Amortized Cost | 673.5 | $ 696.8 |
Fair Value | ||
Due in one year or less | 238 | |
Due after one year through five years | 412.3 | |
Due after five years through ten years | 0 | |
Due after ten years | 0 | |
Fair Value | $ 650.3 | $ 691.4 |
Investments - Aging Of Gross Un
Investments - Aging Of Gross Unrealized Losses (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Fair Value | ||
Less than 12 Months | $ 116 | $ 678.1 |
12 Months or More | 513.2 | 0.5 |
Fair Value | 629.2 | 678.6 |
Gross Unrealized Losses | ||
Less than 12 Months | (2.3) | (5.5) |
12 Months or More | (21) | 0 |
Gross Unrealized Losses | (23.3) | (5.5) |
Corporate debt securities | ||
Fair Value | ||
Less than 12 Months | 83.6 | 581.9 |
12 Months or More | 428.1 | 0 |
Fair Value | 511.7 | 581.9 |
Gross Unrealized Losses | ||
Less than 12 Months | (2.1) | (4.7) |
12 Months or More | (17.5) | 0 |
Gross Unrealized Losses | (19.6) | (4.7) |
U.S. Government obligations | ||
Fair Value | ||
Less than 12 Months | 29.6 | 95 |
12 Months or More | 85.1 | 0.5 |
Fair Value | 114.7 | 95.5 |
Gross Unrealized Losses | ||
Less than 12 Months | (0.2) | (0.8) |
12 Months or More | (3.5) | 0 |
Gross Unrealized Losses | (3.7) | (0.8) |
Asset-backed securities | ||
Fair Value | ||
Less than 12 Months | 2.8 | 0 |
12 Months or More | 0 | 0 |
Fair Value | 2.8 | 0 |
Gross Unrealized Losses | ||
Less than 12 Months | 0 | 0 |
12 Months or More | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Municipal securities | ||
Fair Value | ||
Less than 12 Months | 0 | 1.2 |
12 Months or More | 0 | 0 |
Fair Value | 0 | 1.2 |
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, 2022 | Dec. 31, 2021 |
Debt Securities, Available-for-sale [Line Items] | ||
Fixed maturities | $ 650.3 | $ 691.4 |
Deposits with state insurance departments | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fixed maturities | 11.8 | 6.8 |
Deposits with state insurance departments | New York | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fixed maturities | 2.8 | 2.8 |
Deposits with state insurance departments | Delaware | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fixed maturities | 2.8 | 0 |
Deposits with state insurance departments | Washington | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fixed maturities | 1.2 | 1.2 |
Deposits with state insurance departments | Colorado | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fixed maturities | 1.1 | 1.1 |
Deposits with state insurance departments | Virginia | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fixed maturities | 0.8 | 0.3 |
Deposits with state insurance departments | New Mexico | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fixed maturities | 0.6 | 0.3 |
Deposits with state insurance departments | North Carolina | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fixed maturities | 0.6 | 0.3 |
Deposits with state insurance departments | New Jersey | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fixed maturities | 0.6 | 0 |
Deposits with state insurance departments | Nevada | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fixed maturities | 0.4 | 0.4 |
Deposits with state insurance departments | Arkansas | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fixed maturities | 0.3 | 0.1 |
Deposits with state insurance departments | Florida | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fixed maturities | 0.2 | 0.2 |
Deposits with state insurance departments | Massachusetts | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fixed maturities | 0.2 | 0.1 |
Deposits with state insurance departments | Kansas | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fixed maturities | 0.1 | 0 |
Deposits with state insurance departments | Kentucky | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fixed maturities | $ 0.1 | $ 0 |
Investments - Net Investment In
Investments - Net Investment Income (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Net Investment Income [Line Items] | |||
Net investment income | $ 8.4 | $ 1.9 | $ 1.5 |
Gross investment income | 8.8 | 2 | 1.5 |
Investment expense | 0.4 | 0.1 | 0 |
Interest on cash and cash equivalents | |||
Net Investment Income [Line Items] | |||
Net investment income | 1.2 | 0.4 | 1 |
Fixed maturities | |||
Net Investment Income [Line Items] | |||
Net investment income | 5.7 | 1.5 | 0.1 |
Short-term investments | |||
Net Investment Income [Line Items] | |||
Net investment income | $ 1.9 | $ 0.1 | $ 0.4 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value Hierarchy for Financial Assets and Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Financial Assets: | ||
Fixed maturities | $ 650.3 | $ 691.4 |
Short term investments | 99.8 | 110.4 |
Total Financial Assets | 750.1 | 801.8 |
Corporate debt securities | ||
Financial Assets: | ||
Fixed maturities | 530.2 | 588.7 |
U.S. Government obligations | ||
Financial Assets: | ||
Fixed maturities | 117.3 | 101.5 |
Asset-backed securities | ||
Financial Assets: | ||
Fixed maturities | 2.8 | 0 |
Municipal securities | ||
Financial Assets: | ||
Fixed maturities | 0 | 1.2 |
Warrant liability | ||
Financial Liabilities: | ||
Warrant liability | 0.3 | 0 |
Level 1 | ||
Financial Assets: | ||
Fixed maturities | 0 | 0 |
Short term investments | 0 | 0 |
Total Financial Assets | 0 | 0 |
Level 1 | Corporate debt securities | ||
Financial Assets: | ||
Fixed maturities | 0 | 0 |
Level 1 | U.S. Government obligations | ||
Financial Assets: | ||
Fixed maturities | 0 | 0 |
Level 1 | Asset-backed securities | ||
Financial Assets: | ||
Fixed maturities | 0 | 0 |
Level 1 | Municipal securities | ||
Financial Assets: | ||
Fixed maturities | 0 | 0 |
Level 1 | Warrant liability | ||
Financial Liabilities: | ||
Warrant liability | 0 | 0 |
Level 2 | ||
Financial Assets: | ||
Fixed maturities | 650.3 | 691.4 |
Short term investments | 99.8 | 110.4 |
Total Financial Assets | 750.1 | 801.8 |
Level 2 | Corporate debt securities | ||
Financial Assets: | ||
Fixed maturities | 530.2 | 588.7 |
Level 2 | U.S. Government obligations | ||
Financial Assets: | ||
Fixed maturities | 117.3 | 101.5 |
Level 2 | Asset-backed securities | ||
Financial Assets: | ||
Fixed maturities | 2.8 | 0 |
Level 2 | Municipal securities | ||
Financial Assets: | ||
Fixed maturities | 0 | 1.2 |
Level 2 | Warrant liability | ||
Financial Liabilities: | ||
Warrant liability | 0 | 0 |
Level 3 | ||
Financial Assets: | ||
Fixed maturities | 0 | 0 |
Short term investments | 0 | 0 |
Total Financial Assets | 0 | 0 |
Level 3 | Corporate debt securities | ||
Financial Assets: | ||
Fixed maturities | 0 | 0 |
Level 3 | U.S. Government obligations | ||
Financial Assets: | ||
Fixed maturities | 0 | 0 |
Level 3 | Asset-backed securities | ||
Financial Assets: | ||
Fixed maturities | 0 | 0 |
Level 3 | Municipal securities | ||
Financial Assets: | ||
Fixed maturities | 0 | 0 |
Level 3 | Warrant liability | ||
Financial Liabilities: | ||
Warrant liability | $ 0.3 | $ 0 |
Fair Value Measurements - Fai_2
Fair Value Measurements - Fair Value Assumptions (Details) - Warrant liability | Dec. 31, 2022 |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Weighted average expected term (years) | 3 years 1 month 9 days |
Risk-free interest rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants, measurement input | 0.042 |
Volatility | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants, measurement input | 0.80 |
Expected dividend yield | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants, measurement input | 0 |
Fair Value Measurements - Chang
Fair Value Measurements - Change in Fair Value of Warrant (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Warrants Roll Forward [Abstract] | |
Warrants beginning balance | $ 0 |
Initial measurement of warrants liability as of July 31, 2022 | 0.5 |
Change in fair value | (0.2) |
Warrants ending balance | $ 0.3 |
Reinsurance - Additional Inform
Reinsurance - Additional Information (Details) - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended | |
Jul. 01, 2022 | Jun. 30, 2021 | Dec. 31, 2022 | |
Effects of Reinsurance [Line Items] | |||
Reinsurance program, minimum losses threshold | $ 80 | ||
Reinsurance contract, threshold loss ratio | 50% | ||
Percent of earned premium | 10% | ||
Reinsurance Contract [Axis]: Non-Proportional Reinsurance Contracts | |||
Effects of Reinsurance [Line Items] | |||
Percent of contracts subject to participation through reinsurance | 25% | ||
Reinsurance Contract [Axis]: Proportional Reinsurance Contracts | |||
Effects of Reinsurance [Line Items] | |||
Percent of contracts subject to participation through reinsurance | 55% | 75% | |
Ceded commission percentage | 25% | ||
Claims funding percentage | 75% | ||
Reinsurance Contract [Axis]: Quota Share Reinsurance | |||
Effects of Reinsurance [Line Items] | |||
Percent of contracts subject to participation through reinsurance | 30% |
Reinsurance - Reinsurance Recov
Reinsurance - Reinsurance Recoverable (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Insurance [Abstract] | |||
Reinsurance recoverable on paid losses | $ 32.2 | $ 17.1 | |
Ceded unpaid loss and LAE | 124.6 | 72.7 | $ 36.3 |
Total reinsurance recoverable | $ 156.8 | $ 89.8 |
Reinsurance - Unsecured Reinsur
Reinsurance - Unsecured Reinsurance Recoverable by Reinsurer (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Ceded Credit Risk [Line Items] | ||
Reinsurance recoverable | $ 156.8 | $ 89.8 |
Ceded Credit Risk, Unsecured | ||
Ceded Credit Risk [Line Items] | ||
Reinsurance recoverable | 159.6 | 100.3 |
Lloyd's Underwriter Syndicate No. 1084 CSL | Ceded Credit Risk, Unsecured | ||
Ceded Credit Risk [Line Items] | ||
Reinsurance recoverable | 4.3 | 4.4 |
Lloyd's Underwriter Syndicate no. 2791 MAP | Ceded Credit Risk, Unsecured | ||
Ceded Credit Risk [Line Items] | ||
Reinsurance recoverable | 1 | 0 |
Lloyd's Underwriter Syndicate no. 2001 AML | Ceded Credit Risk, Unsecured | ||
Ceded Credit Risk [Line Items] | ||
Reinsurance recoverable | 0.5 | 0.7 |
Top Reinsurers | Ceded Credit Risk, Unsecured | ||
Ceded Credit Risk [Line Items] | ||
Reinsurance recoverable | 158.9 | 94.1 |
Other reinsurers | Ceded Credit Risk, Unsecured | ||
Ceded Credit Risk [Line Items] | ||
Reinsurance recoverable | 0.7 | 6.2 |
A+ | Hannover Rueck SE | Ceded Credit Risk, Unsecured | ||
Ceded Credit Risk [Line Items] | ||
Reinsurance recoverable | 100.1 | 60.2 |
A+ | Swiss Reinsurance America Corporation | Ceded Credit Risk, Unsecured | ||
Ceded Credit Risk [Line Items] | ||
Reinsurance recoverable | 27.6 | 12.4 |
A+ | Munich Reinsurance America Inc | Ceded Credit Risk, Unsecured | ||
Ceded Credit Risk [Line Items] | ||
Reinsurance recoverable | 0.4 | 0.6 |
A | MAPFRE Re, Compania De Reaseguros S.A. | Ceded Credit Risk, Unsecured | ||
Ceded Credit Risk [Line Items] | ||
Reinsurance recoverable | 23.8 | 14.4 |
A | Lloyd's Underwriter Syndicate no. 0033 HIS | Ceded Credit Risk, Unsecured | ||
Ceded Credit Risk [Line Items] | ||
Reinsurance recoverable | 0.4 | 0.8 |
A | Lloyd's Underwriter Syndicate no. 2357 NCL | Ceded Credit Risk, Unsecured | ||
Ceded Credit Risk [Line Items] | ||
Reinsurance recoverable | 0.4 | 0.6 |
A++ | General Reinsurance Corporation | Ceded Credit Risk, Unsecured | ||
Ceded Credit Risk [Line Items] | ||
Reinsurance recoverable | $ 0.4 | $ 0 |
Reinsurance - Impact of Reinsur
Reinsurance - Impact of Reinsurance (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Premium written: | |||
Direct | $ 555.6 | $ 375.7 | $ 214.4 |
Assumed | 0.1 | 0 | 0 |
Ceded | (333.1) | (273.4) | (171.7) |
Net premium written | 222.6 | 102.3 | 42.7 |
Premium earned: | |||
Direct | 490.5 | 292 | 158.7 |
Assumed | 0 | 0 | 0 |
Ceded | (318.1) | (215) | (81.4) |
Net premium earned | 172.4 | 77 | 77.3 |
Loss and LAE incurred: | |||
Direct | 441 | 264.1 | 113.4 |
Assumed | 0 | 0 | 0 |
Ceded | (273.7) | (192.2) | (58.7) |
Net loss and LAE incurred | $ 167.3 | $ 71.9 | $ 54.7 |
Deferred Acquisition Costs (Det
Deferred Acquisition Costs (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Deferred Acquisition Costs: | |||
Balance, January 1 | $ 6.2 | $ 3.5 | |
Add: | |||
Premium taxes and other acquisition costs | 14.1 | 9.8 | |
Direct commissions | 3.6 | 2.4 | |
Less: | |||
Amortization of net deferred acquisition costs | (17) | (9.5) | $ (4.9) |
Balance, December 31 | 6.9 | 6.2 | 3.5 |
Other Insurance Expense: | |||
Amortization of net deferred acquisition costs | 17 | 9.5 | 4.9 |
Period costs | 27 | 14.6 | |
Total other insurance expense | $ 44 | $ 24.1 | $ 14.4 |
Property and Equipment, net - S
Property and Equipment, net - Schedule of Property and Equipment, Net (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 37.8 | $ 17.6 |
Accumulated depreciation | (18.2) | (5.9) |
Property and equipment, net | 19.6 | 11.7 |
Computer equipment and software | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 20.7 | 11.7 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 13.4 | 4.6 |
Furniture and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 3.7 | $ 1.3 |
Property and Equipment, net - A
Property and Equipment, net - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |||
Depreciation expense | $ 6.9 | $ 3.7 | $ 1.7 |
Capitalized costs for internal-use software | $ 16 | $ 8.1 |
Intangible Assets - Schedule of
Intangible Assets - Schedule of intangible assets (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Finite-Lived Intangible Assets [Line Items] | ||
Accumulated Amortization | $ 5.3 | $ 0 |
Net Carrying Amount | 24.4 | |
Indefinite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 37.8 | 0.6 |
Intangible assets | 32.5 | 0.6 |
Insurance licenses | ||
Indefinite-Lived Intangible Assets [Line Items] | ||
Intangible assets | 7.5 | 0 |
Trademark | ||
Indefinite-Lived Intangible Assets [Line Items] | ||
Intangible assets | $ 0.6 | 0.6 |
Technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Useful Life | 3 years | |
Gross Carrying Amount | $ 28 | 0 |
Accumulated Amortization | 3.9 | 0 |
Net Carrying Amount | $ 24.1 | 0 |
VOBA | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Useful Life | 6 months | |
Gross Carrying Amount | $ 1.7 | 0 |
Accumulated Amortization | 1.4 | 0 |
Net Carrying Amount | $ 0.3 | $ 0 |
Intangible Assets - Additional
Intangible Assets - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Amortization expense | $ 5.3 | $ 0 | $ 0 |
Intangible Assets - Schedule _2
Intangible Assets - Schedule of Intangible Assets, Amortization Expense (Details) $ in Millions | Dec. 31, 2022 USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2023 | $ 9.6 |
2024 | 9.3 |
2025 | 5.5 |
2026 | 0 |
2027 | 0 |
Thereafter | 0 |
Net Carrying Amount | $ 24.4 |
Other Assets (Details)
Other Assets (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Right-of-Use assets (Note 21) | $ 26.4 | $ 21.9 |
Ceding commission receivable | 21 | 14.5 |
Prepaid expenses | 14 | 10.6 |
Income tax receivable | 5 | 0 |
Investment income due and accrued | 3.7 | 3.4 |
Other | 5.1 | 2.8 |
Total other assets | $ 75.2 | $ 53.2 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Total other assets | Total other assets |
Unpaid Loss and Loss Adjustme_3
Unpaid Loss and Loss Adjustment Expense - Activity (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | |||
Unpaid loss and LAE at beginning of period | $ 97.9 | $ 46.3 | |
Less: Reinsurance recoverable at beginning of period | 72.7 | 36.3 | |
Net unpaid loss and LAE at beginning of period | 25.2 | 10 | |
Add: Incurred losses and LAE, net of reinsurance, related to: | |||
Current year | 170.5 | 73.2 | |
Prior years | (3.2) | (1.3) | |
Total incurred | 167.3 | 71.9 | $ 54.7 |
Deduct: Paid losses and LAE, net of reinsurance, related to: | |||
Current year | 106.9 | 49.2 | |
Prior years | 30.1 | 7.5 | |
Total paid | 137 | 56.7 | |
Unpaid loss and LAE, net of reinsurance recoverable, at end of period | 131.6 | 25.2 | 10 |
Reinsurance recoverable at end of period | 124.6 | 72.7 | 36.3 |
Unpaid loss and LAE, gross of reinsurance recoverable, at end of period | 256.2 | 97.9 | $ 46.3 |
Metromile | |||
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | |||
Net unpaid loss and LAE at beginning of period | 0 | ||
Deduct: Paid losses and LAE, net of reinsurance, related to: | |||
Unpaid loss and LAE, net of reinsurance recoverable, at end of period | $ 76.2 | $ 0 |
Unpaid Loss and Loss Adjustme_4
Unpaid Loss and Loss Adjustment Expense - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||||||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Unusual or Infrequent Item, or Both [Line Items] | |||||||
Favorable development on net loss and LAE reserves | $ (3.2) | $ (1.3) | |||||
Current accident year incurred loss and LAE | 170.5 | 73.2 | |||||
Home and renters | |||||||
Unusual or Infrequent Item, or Both [Line Items] | |||||||
Accident amount | 0.1 | 0.1 | $ 0.1 | $ 0.1 | $ 0.1 | $ 0.1 | $ 0.1 |
IBNR, net of reinsurance | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 | ||
Cumulative paid loss and ALAE, net of reinsurance | 0.1 | 0.1 | $ 0.1 | $ 0.1 | $ 0.1 | $ 0.1 | $ 0.1 |
Hurricane Ian | |||||||
Unusual or Infrequent Item, or Both [Line Items] | |||||||
Current accident year incurred loss and LAE | 0.4 | ||||||
Winter Storm Elliott | |||||||
Unusual or Infrequent Item, or Both [Line Items] | |||||||
Current accident year incurred loss and LAE | $ 7.6 | ||||||
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) $ in Millions | Dec. 31, 2022 USD ($) claim segment | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | Dec. 31, 2019 USD ($) | Dec. 31, 2018 USD ($) | Dec. 31, 2017 USD ($) | Dec. 31, 2016 USD ($) |
Home and renters | |||||||
Claims Development [Line Items] | |||||||
Total incurred losses and ALAE, net | $ 265.3 | ||||||
IBNR | $ 31.6 | ||||||
Cumulative Number of Reported Claims | claim | 167,086 | ||||||
Pet | |||||||
Claims Development [Line Items] | |||||||
Total incurred losses and ALAE, net | $ 38.1 | ||||||
IBNR | $ 0.7 | ||||||
Cumulative Number of Reported Claims | segment | 561,509,000,000 | ||||||
Car | |||||||
Claims Development [Line Items] | |||||||
Total incurred losses and ALAE, net | $ 260.7 | ||||||
IBNR | $ 38.8 | ||||||
Cumulative Number of Reported Claims | segment | 248,837 | ||||||
2016 | Home and renters | |||||||
Claims Development [Line Items] | |||||||
Total incurred losses and ALAE, net | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
IBNR | $ 0 | ||||||
Cumulative Number of Reported Claims | segment | 8 | ||||||
2016 | Car | |||||||
Claims Development [Line Items] | |||||||
Total incurred losses and ALAE, net | $ 2 | 1.9 | 1.8 | 1.7 | 1.7 | 2 | $ 1.6 |
IBNR | $ 0.1 | ||||||
Cumulative Number of Reported Claims | segment | 1,630 | ||||||
2017 | Home and renters | |||||||
Claims Development [Line Items] | |||||||
Total incurred losses and ALAE, net | $ 1.7 | 1.7 | 1.7 | 1.7 | 1.7 | 1.7 | |
IBNR | $ 0 | ||||||
Cumulative Number of Reported Claims | claim | 1,758 | ||||||
2017 | Car | |||||||
Claims Development [Line Items] | |||||||
Total incurred losses and ALAE, net | $ 32.5 | 32.3 | 31.4 | 30.2 | 30 | $ 28.6 | |
IBNR | $ 0.9 | ||||||
Cumulative Number of Reported Claims | segment | 29,073 | ||||||
2018 | Home and renters | |||||||
Claims Development [Line Items] | |||||||
Total incurred losses and ALAE, net | $ 13.4 | 13.4 | 13.4 | 13.5 | 15 | ||
IBNR | $ 0 | ||||||
Cumulative Number of Reported Claims | claim | 10,530 | ||||||
2018 | Car | |||||||
Claims Development [Line Items] | |||||||
Total incurred losses and ALAE, net | $ 33.9 | 31.8 | 31.9 | 29.7 | $ 31.4 | ||
IBNR | $ 3 | ||||||
Cumulative Number of Reported Claims | segment | 44,104 | ||||||
2019 | Home and renters | |||||||
Claims Development [Line Items] | |||||||
Total incurred losses and ALAE, net | $ 46.3 | 46.3 | 46.1 | 46 | |||
IBNR | $ 0 | ||||||
Cumulative Number of Reported Claims | claim | 19,492 | ||||||
2019 | Car | |||||||
Claims Development [Line Items] | |||||||
Total incurred losses and ALAE, net | $ 24.6 | 23.2 | 24 | $ 24.2 | |||
IBNR | $ 3.2 | ||||||
Cumulative Number of Reported Claims | segment | 51,129 | ||||||
2020 | Home and renters | |||||||
Claims Development [Line Items] | |||||||
Total incurred losses and ALAE, net | $ 51.5 | 51.5 | 53 | ||||
IBNR | $ 0.5 | ||||||
Cumulative Number of Reported Claims | claim | 30,205 | ||||||
2020 | Pet | |||||||
Claims Development [Line Items] | |||||||
Total incurred losses and ALAE, net | $ 1 | 0.6 | 0.7 | ||||
IBNR | $ 0 | ||||||
Cumulative Number of Reported Claims | segment | 20,796,000,000 | ||||||
2020 | Car | |||||||
Claims Development [Line Items] | |||||||
Total incurred losses and ALAE, net | $ 11.8 | 12 | $ 10.8 | ||||
IBNR | $ 3.1 | ||||||
Cumulative Number of Reported Claims | segment | 37,311 | ||||||
2021 | Home and renters | |||||||
Claims Development [Line Items] | |||||||
Total incurred losses and ALAE, net | $ 55.9 | 59.4 | |||||
IBNR | $ 2.3 | ||||||
Cumulative Number of Reported Claims | claim | 53,285 | ||||||
2021 | Pet | |||||||
Claims Development [Line Items] | |||||||
Total incurred losses and ALAE, net | $ 9.7 | 10 | |||||
IBNR | $ 0.2 | ||||||
Cumulative Number of Reported Claims | segment | 195,156,000,000 | ||||||
2021 | Car | |||||||
Claims Development [Line Items] | |||||||
Total incurred losses and ALAE, net | $ 75.3 | $ 75.3 | |||||
IBNR | $ 6.6 | ||||||
Cumulative Number of Reported Claims | segment | 42,985 | ||||||
2022 | Home and renters | |||||||
Claims Development [Line Items] | |||||||
Total incurred losses and ALAE, net | $ 96.5 | ||||||
IBNR | $ 28.8 | ||||||
Cumulative Number of Reported Claims | claim | 51,808 | ||||||
2022 | Pet | |||||||
Claims Development [Line Items] | |||||||
Total incurred losses and ALAE, net | $ 27.4 | ||||||
IBNR | $ 0.5 | ||||||
Cumulative Number of Reported Claims | segment | 345,557,000,000 | ||||||
2022 | Car | |||||||
Claims Development [Line Items] | |||||||
Total incurred losses and ALAE, net | $ 80.6 | ||||||
IBNR | $ 21.9 | ||||||
Cumulative Number of Reported Claims | segment | 42,605 |
Unpaid Loss and Loss Adjustme_6
Unpaid Loss and Loss Adjustment Expense - Claims Development Information, Paid Losses (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Claims Development [Line Items] | |||||||
Total unpaid loss and ALAE reserves, net | $ 124.3 | ||||||
Ceded unpaid loss and LAE | 124.6 | $ 72.7 | $ 36.3 | ||||
Gross unpaid loss and LAE | 256.2 | 97.9 | 46.3 | ||||
Home and renters | |||||||
Claims Development [Line Items] | |||||||
Total paid losses and ALAE, net | 218.8 | ||||||
Total unpaid loss and ALAE reserves, net | 46.9 | ||||||
Ceded unpaid loss and LAE | 101 | ||||||
Gross unpaid loss and LAE | 147.9 | ||||||
Pet | |||||||
Claims Development [Line Items] | |||||||
Total paid losses and ALAE, net | 31.9 | ||||||
Total unpaid loss and ALAE reserves, net | 5.9 | ||||||
Ceded unpaid loss and LAE | 11.3 | ||||||
Gross unpaid loss and LAE | 17.2 | ||||||
Car | |||||||
Claims Development [Line Items] | |||||||
Total paid losses and ALAE, net | 191.2 | ||||||
Total unpaid loss and ALAE reserves, net | 71.5 | ||||||
Ceded unpaid loss and LAE | 12.3 | ||||||
Gross unpaid loss and LAE | 83.8 | ||||||
Fair value adjustment on insurance contract intangible liability | 2 | ||||||
2016 | Home and renters | |||||||
Claims Development [Line Items] | |||||||
Total paid losses and ALAE, net | 0 | 0 | 0 | $ 0 | $ 0 | $ 0 | $ 0 |
2016 | Car | |||||||
Claims Development [Line Items] | |||||||
Total paid losses and ALAE, net | 1.9 | 1.9 | 1.7 | 1.7 | 1.5 | 1.2 | $ 0.2 |
2017 | Home and renters | |||||||
Claims Development [Line Items] | |||||||
Total paid losses and ALAE, net | 1.7 | 1.7 | 1.7 | 1.7 | 1.7 | 1.6 | |
2017 | Car | |||||||
Claims Development [Line Items] | |||||||
Total paid losses and ALAE, net | 31.7 | 30.8 | 30.1 | 28.1 | 24.3 | $ 17.3 | |
2018 | Home and renters | |||||||
Claims Development [Line Items] | |||||||
Total paid losses and ALAE, net | 13.4 | 13.4 | 13.4 | 13.2 | 13.2 | ||
2018 | Car | |||||||
Claims Development [Line Items] | |||||||
Total paid losses and ALAE, net | 30.2 | 27.6 | 28.2 | 24.4 | $ 16.8 | ||
2019 | Home and renters | |||||||
Claims Development [Line Items] | |||||||
Total paid losses and ALAE, net | 46.3 | 46.3 | 46.1 | 36.4 | |||
2019 | Car | |||||||
Claims Development [Line Items] | |||||||
Total paid losses and ALAE, net | 18.8 | 14.5 | 18.7 | $ 13.5 | |||
2020 | Home and renters | |||||||
Claims Development [Line Items] | |||||||
Total paid losses and ALAE, net | 51.3 | 50.2 | 43.1 | ||||
2020 | Pet | |||||||
Claims Development [Line Items] | |||||||
Total paid losses and ALAE, net | 0.7 | 0.6 | 0.4 | ||||
2020 | Car | |||||||
Claims Development [Line Items] | |||||||
Total paid losses and ALAE, net | 5.6 | (0.9) | $ 5.2 | ||||
2021 | Home and renters | |||||||
Claims Development [Line Items] | |||||||
Total paid losses and ALAE, net | 53.4 | 37.8 | |||||
2021 | Pet | |||||||
Claims Development [Line Items] | |||||||
Total paid losses and ALAE, net | 9.4 | 7.6 | |||||
2021 | Car | |||||||
Claims Development [Line Items] | |||||||
Total paid losses and ALAE, net | 58.9 | $ 38.4 | |||||
2022 | Home and renters | |||||||
Claims Development [Line Items] | |||||||
Total paid losses and ALAE, net | 52.7 | ||||||
2022 | Pet | |||||||
Claims Development [Line Items] | |||||||
Total paid losses and ALAE, net | 21.8 | ||||||
2022 | Car | |||||||
Claims Development [Line Items] | |||||||
Total paid losses and ALAE, net | $ 44.1 |
Unpaid Loss and Loss Adjustme_7
Unpaid Loss and Loss Adjustment Expense - Historical Claims Duration (Details) | Dec. 31, 2022 |
Home and renters | |
Short-duration Insurance Contracts, Historical Claims Duration [Line Items] | |
Average annual percentage payout in year 1 | 80% |
Average annual percentage payout in year 2 | 15% |
Average annual percentage payout in year 3 | 5% |
Pet | |
Short-duration Insurance Contracts, Historical Claims Duration [Line Items] | |
Average annual percentage payout in year 1 | 88% |
Average annual percentage payout in year 2 | 11% |
Average annual percentage payout in year 3 | 1% |
Car | |
Short-duration Insurance Contracts, Historical Claims Duration [Line Items] | |
Average annual percentage payout in year 1 | 52% |
Average annual percentage payout in year 2 | 22% |
Average annual percentage payout in year 3 | 26% |
Unpaid Loss and Loss Adjustme_8
Unpaid Loss and Loss Adjustment Expense - Unpaid Loss and Loss Adjustment Expenses (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Claims Development [Line Items] | |||
Unpaid Loss and ALAE, net | $ 124.3 | ||
Reinsurance recoverable on Unpaid Loss and ALAE, net | 124.6 | $ 72.7 | $ 36.3 |
Unallocated LAE | 7.3 | ||
Gross unpaid loss and LAE | 256.2 | $ 97.9 | $ 46.3 |
Home and renters | |||
Claims Development [Line Items] | |||
Unpaid Loss and ALAE, net | 46.9 | ||
Reinsurance recoverable on Unpaid Loss and ALAE, net | 101 | ||
Gross unpaid loss and LAE | 147.9 | ||
Pet | |||
Claims Development [Line Items] | |||
Unpaid Loss and ALAE, net | 5.9 | ||
Reinsurance recoverable on Unpaid Loss and ALAE, net | 11.3 | ||
Gross unpaid loss and LAE | 17.2 | ||
Car | |||
Claims Development [Line Items] | |||
Unpaid Loss and ALAE, net | 71.5 | ||
Reinsurance recoverable on Unpaid Loss and ALAE, net | 12.3 | ||
Gross unpaid loss and LAE | $ 83.8 |
Other Liabilities and Accrued_3
Other Liabilities and Accrued Expenses (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Other Liabilities Disclosure [Abstract] | ||
Lease liabilities (Note 21) | $ 35.2 | $ 22.3 |
Employee compensation payable | 12.8 | 5.4 |
Uncertain tax position | 8.1 | 0 |
Accrued advertising costs | 6.8 | 11.2 |
Premium taxes payable | 6.2 | 5.4 |
Accrued professional fees | 5.5 | 4.6 |
Advance premium | 2.1 | 2 |
Accrued hosting and software | 2 | 0.6 |
Income taxes payable | 0.6 | 4.7 |
Warrant liability | 0.3 | 0 |
Other payables | 4.9 | 1.2 |
Total | $ 84.5 | $ 57.4 |
Operating Lease, Liability, Statement of Financial Position [Extensible Enumeration] | Total | Total |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |||||||||
Jul. 28, 2022 | Feb. 01, 2021 | Jan. 14, 2021 | Jul. 02, 2020 | Feb. 18, 2020 | Dec. 31, 2020 | Dec. 31, 2022 | Oct. 14, 2022 | 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 | ||||||||
Common stock, authorized (in 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 (in shares) | 10,000,000 | 10,000,000 | 10,000,000 | |||||||
Preferred stock, par value (usd per share) | $ 0.00001 | $ 0.00001 | $ 0.00001 | |||||||
Preferred stock, shares issued (in shares) | 0 | 0 | ||||||||
Preferred stock, shares outstanding (in shares) | 0 | 0 | ||||||||
Omnibus Agreement | ||||||||||
Sale of Stock [Line Items] | ||||||||||
Class of warrant issued of common stock (in shares) | 3,352,025 | |||||||||
Exercise price (usd per share) | $ 0.01 | |||||||||
The Lemonade Foundation | Affiliated entity | ||||||||||
Sale of Stock [Line Items] | ||||||||||
Contribution to the Lemonade Foundation (in shares) | 500,000 | 500,000 | ||||||||
Metromile | ||||||||||
Sale of Stock [Line Items] | ||||||||||
Shares issued for acquisition (in shares) | 6,901,934 | |||||||||
IPO | ||||||||||
Sale of Stock [Line Items] | ||||||||||
Common stock sold (in 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 (in shares) | 718,647 | 1,650,000 | ||||||||
Net proceeds from sale | $ 114.6 | |||||||||
Follow On Offering | ||||||||||
Sale of Stock [Line Items] | ||||||||||
Common stock sold (in shares) | 3,300,000 | |||||||||
Net proceeds from sale | $ 525.7 | |||||||||
Follow On Offering, Selling Shareholders | ||||||||||
Sale of Stock [Line Items] | ||||||||||
Common stock sold (in shares) | 1,524,314 | |||||||||
Follow On Offering, Selling Shareholders | The Lemonade Foundation | ||||||||||
Sale of Stock [Line Items] | ||||||||||
Common stock sold (in shares) | 100,000 |
Stock-based Compensation - Addi
Stock-based Compensation - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||||||
Jul. 28, 2021 | Jul. 02, 2020 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Jul. 27, 2021 | Jul. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Exercisable, weighted-average exercise price (usd per share) | $ 28.38 | ||||||
Stock-based compensation expense | $ 59.3 | $ 44.1 | $ 10.6 | ||||
Stock options | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Stock-based compensation expense | 47.8 | 40.1 | 10.6 | ||||
Unrecognized expense, stock options | $ 95.7 | ||||||
Unrecognized expense, period for recognition | 1 year 4 months 24 days | ||||||
Stock Option, Repriced | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Exercisable, weighted-average exercise price (usd per share) | $ 90.70 | ||||||
Repricing of stock options, incremental expense | $ 3 | ||||||
Stock-based compensation expense | $ 0.7 | 0.8 | |||||
Stock Option, Repriced | Minimum | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Exercisable, weighted-average exercise price (usd per share) | $ 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) | $ 159.02 | ||||||
RSUs | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Stock-based compensation expense | 11.5 | $ 4 | $ 0 | ||||
Unrecognized expense, RSUs | $ 42.5 | ||||||
Unrecognized expense, period for recognition | 1 year 7 months 6 days | ||||||
2020 Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Common stock reserved for issuance (in shares) | 5,503,678 | ||||||
Common stock reserved for issuance, annual increase, percentage of outstanding shares | 5% | ||||||
Maximum shares that may be issued upon exercise of incentive stock options (in shares) | 3,650,000 | ||||||
Additional shares authorized (in shares) | 3,214,826 | ||||||
2020 ESPP | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Common stock reserved for issuance (in shares) | 1,000,000 | ||||||
Common stock reserved for issuance, annual increase, percentage of outstanding shares | 1% | ||||||
Additional shares authorized (in shares) | 0 | ||||||
Number of shares available for issuance, annual increase (in shares) | 1,000,000 | ||||||
2015 Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Common stock reserved for issuance (in shares) | 7,312,590 | ||||||
Additional shares authorized (in shares) | 0 | ||||||
2015 Plan | Stock options | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting period | 4 years | ||||||
Expiration period | 10 years | ||||||
Incentive Stock Plan 2021 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Share-based compensation equity awards granted (in shares) | 404,207 |
Stock-based Compensation - Fair
Stock-based Compensation - Fair Value Assumptions (Details) - Stock options | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Weighted average expected term (years) | 6 years 1 month 6 days | 6 years 1 month 17 days |
Risk-free interest rate | 2.70% | 1.30% |
Volatility | 47% | 48% |
Expected dividend yield | 0% | 0% |
Stock-based Compensation - Stoc
Stock-based Compensation - Stock Options Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Number of Options | ||
Outstanding (in shares) | 6,573,744 | |
Granted (in shares) | 4,351,371 | |
Exercised (in shares) | (448,368) | |
Canceled (in shares) | (716,090) | |
Outstanding (in shares) | 9,760,657 | 6,573,744 |
Exercisable (in shares) | 3,420,165 | |
Unvested (in shares) | 6,340,492 | |
Weighted- Average Exercise Price | ||
Outstanding (usd per share) | $ 46.03 | |
Granted (usd per share) | 27.47 | |
Exercised (usd per share) | 7.97 | |
Canceled (usd per share) | 50.11 | |
Outstanding (usd per share) | 39.43 | $ 46.03 |
Exercisable, weighted-average exercise price (usd per share) | 28.38 | |
Unvested, weighted-average exercise price (usd per share) | $ 45.37 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract] | ||
Outstanding, weighted-average remaining contractual, term | 8 years 2 months 1 day | 8 years 3 months 14 days |
Exercisable, weighted-average remaining contractual, term | 6 years 10 months 13 days | |
Unvested, weighted-average remaining contractual, term | 8 years 10 months 20 days | |
Outstanding, aggregate intrinsic value, outstanding | $ 8,050 | $ 85,860 |
Exercisable, aggregate intrinsic value | 7,930 | |
Unvested, aggregate intrinsic value | $ 110 | |
Assumed from acquisition (in shares) | 72,410 |
Stock-based Compensation - Rest
Stock-based Compensation - Restricted Stock Units Activity (Details) - RSUs | 12 Months Ended |
Dec. 31, 2022 $ / shares shares | |
Number of shares | |
Outstanding (in shares) | 335,814 |
Granted (in shares) | 1,821,066 |
Vested (in shares) | (263,732) |
Canceled (in shares) | (241,905) |
Outstanding (in shares) | 1,651,243 |
Grant Date Fair Value | |
Outstanding (usd per share) | $ / shares | $ 66.94 |
Granted (usd per share) | $ / shares | 22.50 |
Vested (usd per share) | $ / shares | 37.26 |
Canceled (usd per share) | $ / shares | 27.42 |
Outstanding (usd per share) | $ / shares | $ 27.92 |
Assumed (in shares) | 331,797 |
Stock-based Compensation - Expe
Stock-based Compensation - Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | $ 59.3 | $ 44.1 | $ 10.6 |
Stock options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | 47.8 | 40.1 | 10.6 |
RSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | 11.5 | 4 | 0 |
Loss and loss adjustment expense, net | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | 2.7 | 1.5 | 0.4 |
Other insurance expense | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | 1.6 | 1 | 0.7 |
Sales and marketing | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | 6.6 | 5.1 | 2.7 |
Technology development | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | 24.4 | 18.2 | 3.1 |
General and administrative | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | $ 24 | $ 18.3 | $ 3.7 |
Income Taxes - Net Deferred Tax
Income Taxes - Net Deferred Tax Assets (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 262.2 | $ 127.4 |
Deferred ceding commission | 8.6 | 7.8 |
Lease liabilities | 5.6 | 3.4 |
Unrealized loss on investments | 5.5 | 0 |
Net unearned premium | 5.3 | 2.6 |
Stock-based compensation | 3.7 | 2.4 |
Charitable contribution | 1.6 | 0.9 |
Startup costs | 0.5 | 0.7 |
Other | 0 | 0.6 |
Total gross deferred tax assets | 293 | 145.8 |
Deferred tax liabilities: | ||
Right-of-use assets | (3.8) | (3.3) |
Depreciation and amortization | (1) | (2.2) |
Deferred acquisition costs | (1.4) | (1.3) |
Other | (3.8) | 0 |
Total gross deferred tax liabilities | (10) | (6.8) |
Valuation allowance | (283) | (139) |
Total deferred tax assets, net | $ 0 | $ 0 |
Income Taxes - Loss Before Tax
Income Taxes - Loss Before Tax (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |||
United States | $ (225.5) | $ (240.3) | $ (123.6) |
Foreign | (69.3) | 6.7 | 2.8 |
Loss before income taxes | $ (294.8) | $ (233.6) | $ (120.8) |
Income Taxes - Income Tax Expen
Income Taxes - Income Tax Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Current: | |||
Federal | $ 0 | $ 0 | $ 0 |
State | 0 | 0 | 0 |
Foreign | 3 | 7.7 | 1.5 |
Total current | 3 | 7.7 | 1.5 |
Deferred: | |||
Federal | 0 | 0 | 0 |
State | 0 | 0 | 0 |
Foreign | 0 | 0 | 0 |
Total deferred | 0 | 0 | 0 |
Total income tax expense | $ 3 | $ 7.7 | $ 1.5 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Operating Loss Carryforwards [Line Items] | |||
Effective income tax reconciliation | $ 8 | $ 0 | |
Increase from implementation of transfer pricing | 8 | ||
Interest and penalties related to unrecognized tax benefits | 0 | 0 | |
Gross inclusion in taxable income | 0 | $ 14 | $ 5 |
Federal | |||
Operating Loss Carryforwards [Line Items] | |||
Net operating loss carryforwards | 236.3 | ||
Net operating loss carryforwards, subject to expiration | 15.7 | ||
Net operating loss carryforwards, not subject to expiration | 220.6 | ||
State | |||
Operating Loss Carryforwards [Line Items] | |||
Net operating loss carryforwards | $ 25.8 |
Income Taxes - Unrecognized Tax
Income Taxes - Unrecognized Tax Benefits (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |
Balance at December 31, 2021 | $ 0 |
Increase (decrease) on tax positions for prior years | 0 |
Increase (decrease) on tax positions for current year | 8 |
Settlements with taxing authorities | 0 |
Reduction due to lapse of the applicable statute of limitations | 0 |
Balance at December 31, 2022 | $ 8 |
Income Taxes - Effective Income
Income Taxes - Effective Income Tax Rate Reconciliation (Details) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |||
Income at US statutory rate | 21% | 21% | 21% |
State taxes, net of federal benefit | 2.50% | (8.40%) | 12.80% |
Permanent differences | (3.70%) | (1.70%) | (1.20%) |
Return to provision | 0% | (0.90%) | 0% |
Foreign rate differential | 0.20% | 0.60% | 0.20% |
Valuation allowance | (18.10%) | (13.70%) | (33.90%) |
Uncertain tax position | (2.70%) | 0% | 0% |
Other | (0.20%) | (0.20%) | (0.10%) |
Total income taxes | (1.00%) | (3.30%) | (1.20%) |
Net Loss per Share - Reconcilia
Net Loss per Share - Reconciliation (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Numerator: | |||
Net loss attributable to common stockholders - basic | $ (297.8) | $ (241.3) | $ (122.3) |
Net loss attributable to common stockholders - diluted | $ (297.8) | $ (241.3) | $ (122.3) |
Denominator: | |||
Weighted average common shares outstanding - basic (in shares) | 64,921,524 | 61,224,433 | 33,654,828 |
Weighted average common shares outstanding - diluted (in shares) | 64,921,524 | 61,224,433 | 33,654,828 |
Net loss per share attributable to common stockholders - basic (usd per share) | $ (4.59) | $ (3.94) | $ (3.63) |
Net loss per share attributable to common stockholders - diluted (usd per share) | $ (4.59) | $ (3.94) | $ (3.63) |
Net Loss per Share - Antidiluti
Net Loss per Share - Antidilutive Potential Common Shares (Details) | 12 Months Ended | |||
Jul. 28, 2022 | Dec. 31, 2022 shares | Dec. 31, 2021 shares | Dec. 31, 2020 shares | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive potential common stock (in shares) | 11,824,869 | 6,909,558 | 4,944,711 | |
Metromile | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Conversion ratio | 0.05263 | |||
Options to purchase common stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive potential common stock (in shares) | 9,760,657 | 6,573,744 | 4,944,711 | |
Unvested restricted stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive potential common stock (in shares) | 1,651,243 | 335,814 | 0 | |
Warrants for common stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive potential common stock (in shares) | 412,969 | 0 | 0 |
Related Party Transactions (Det
Related Party Transactions (Details) | 12 Months Ended | |||
Feb. 18, 2020 shares | Dec. 31, 2022 USD ($) director | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) $ / shares shares | |
Related Party Transaction [Line Items] | ||||
Due to (from) related parties | $ 0 | $ 0 | ||
Common shares contribution to Lemonade Foundation | $ 0 | 0 | $ 12,200,000 | |
Affiliated entity | The Lemonade Foundation | ||||
Related Party Transaction [Line Items] | ||||
Number of shared directors | director | 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 | 0 | ||
Travel related expenses | Key stockholder | ||||
Related Party Transaction [Line Items] | ||||
Expenses with related parties (less than) | 200,000 | 100,000 | 100,000 | |
Rental expense | Affiliated entity | ||||
Related Party Transaction [Line Items] | ||||
Expenses with related parties (less than) | $ 100,000 | $ 100,000 | $ 100,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Office leases, payment guarantees | |||
Loss Contingencies [Line Items] | |||
Guarantees | $ 2.7 | $ 0 | $ 0.6 |
Leases - Additional Information
Leases - Additional Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2020 | |
Leases [Abstract] | ||
Number of leases | $ 2 | |
Operating leases, rent expense | $ 3,800,000 |
Leases - Operating Lease Expens
Leases - Operating Lease Expense (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Leases [Abstract] | ||
Operating lease expense | $ 7 | $ 4.2 |
Short term lease expense | 0.2 | 0.6 |
Variable lease cost | 0.2 | 0.5 |
Operating lease expense, Total | $ 7.4 | $ 5.3 |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flow (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Leases [Abstract] | ||
Operating cash outflow from operating leases | $ 6.5 | $ 4.1 |
ROU assets obtained in exchange for lease liabilities for operating leases | $ 11 | $ 19.5 |
Leases - Weighted-Average Remai
Leases - Weighted-Average Remaining Lease Term and Discount Rate (Details) | Dec. 31, 2022 | Dec. 31, 2021 |
Leases [Abstract] | ||
Weighted-average remaining lease term (in years) | 4 years 8 months 12 days | 4 years 1 month 6 days |
Weighted-average discount rate | 4.62% | 4.62% |
Leases - Maturities of Operatin
Leases - Maturities of Operating Lease Liabilities (Details) $ in Millions | Dec. 31, 2022 USD ($) |
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | |
2023 | $ 8.8 |
2024 | 10.1 |
2025 | 9 |
2026 | 4.6 |
2027 | 2.6 |
Thereafter | 6.1 |
Total | $ 41.2 |
Statutory Financial Informati_2
Statutory Financial Information (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Lemonade Insurance Company | ||
Statutory Accounting Practices [Line Items] | ||
Statutory capital and surplus | $ 105.9 | $ 99.4 |
Authorized control level RBC | 28.2 | $ 18.2 |
Metromile Insurance Company | ||
Statutory Accounting Practices [Line Items] | ||
Statutory capital and surplus | 38.5 | |
Authorized control level RBC | $ 8.7 |
Geographical Breakdown of Gro_3
Geographical Breakdown of Gross Written Premium (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Amount | $ 555.7 | $ 375.7 | $ 214.4 |
Gross written premium | Geographic Concentration Risk | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
% of GWP | 100% | 100% | 100% |
California | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Amount | $ 142 | $ 93.9 | $ 49.8 |
California | Gross written premium | Geographic Concentration Risk | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
% of GWP | 25.60% | 25% | 23.20% |
Texas | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Amount | $ 91.3 | $ 72.5 | $ 47.8 |
Texas | Gross written premium | Geographic Concentration Risk | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
% of GWP | 16.40% | 19.30% | 22.30% |
New York | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Amount | $ 66 | $ 47.3 | $ 26.7 |
New York | Gross written premium | Geographic Concentration Risk | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
% of GWP | 11.90% | 12.60% | 12.50% |
New Jersey | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Amount | $ 28.3 | $ 16.7 | $ 8.6 |
New Jersey | Gross written premium | Geographic Concentration Risk | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
% of GWP | 5.10% | 4.40% | 4% |
Illinois | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Amount | $ 26.3 | $ 15.7 | $ 9.8 |
Illinois | Gross written premium | Geographic Concentration Risk | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
% of GWP | 4.70% | 4.20% | 4.60% |
Georgia | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Amount | $ 19.8 | $ 16.5 | $ 11.6 |
Georgia | Gross written premium | Geographic Concentration Risk | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
% of GWP | 3.60% | 4.40% | 5.40% |
Washington | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Amount | $ 15.8 | $ 5.4 | $ 1.1 |
Washington | Gross written premium | Geographic Concentration Risk | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
% of GWP | 2.80% | 1.40% | 0.50% |
Colorado | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Amount | $ 15.8 | $ 9.2 | $ 4.2 |
Colorado | Gross written premium | Geographic Concentration Risk | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
% of GWP | 2.80% | 2.40% | 2% |
Pennsylvania | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Amount | $ 14.4 | $ 9.7 | $ 5.1 |
Pennsylvania | Gross written premium | Geographic Concentration Risk | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
% of GWP | 2.60% | 2.60% | 2.40% |
Virginia | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Amount | $ 13 | $ 8.1 | $ 3.9 |
Virginia | Gross written premium | Geographic Concentration Risk | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
% of GWP | 2.30% | 2.20% | 1.80% |
All others | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Amount | $ 123 | $ 80.7 | $ 45.8 |
All others | Gross written premium | Geographic Concentration Risk | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
% of GWP | 22.20% | 21.50% | 21.30% |
Subsequent Events (Details)
Subsequent Events (Details) - 2020 Plan - shares | Jan. 01, 2023 | Jul. 02, 2020 |
Subsequent Event [Line Items] | ||
Common stock reserved for issuance, annual increase, percentage of outstanding shares | 5% | |
Subsequent event | ||
Subsequent Event [Line Items] | ||
Number of additional shares authorized (in shares) | 3,463,751 | |
Common stock reserved for issuance, annual increase, percentage of outstanding shares | 5% |
Schedule V - Valuation and Qu_2
Schedule V - Valuation and Qualifying Accounts (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Valuation allowance for deferred tax assets | ||
SEC Schedule, 12-09, Valuation and Qualifying Accounts Disclosure [Line Items] | ||
Balance at beginning of period | $ 139 | $ 106.9 |
Additions | ||
Charged to costs and expenses | 144 | 32.1 |
Charge to other accounts | 0 | 0 |
(Deductions) | 0 | 0 |
Balance at end of period | 283 | 139 |
Allowance for premium receivables | ||
SEC Schedule, 12-09, Valuation and Qualifying Accounts Disclosure [Line Items] | ||
Balance at beginning of period | 1.6 | 0.5 |
Additions | ||
Charged to costs and expenses | 1.1 | 6.2 |
Charge to other accounts | 0 | 0 |
(Deductions) | 0 | (5.1) |
Balance at end of period | $ 2.7 | $ 1.6 |