United States securities and exchange commission logo
December 22, 2020
John M. Butler
President and Chief Executive Officer
INSU Acquisition Corp. II
2929 Arch Street, Suite 1703
Philadelphia, PA 19104-2870
Re: INSU Acquisition
Corp. II
Registration
Statement on Form S-4
File No. 333-250989
Filed November 27,
2020
Dear Mr. Butler:
We have reviewed your registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by amending your registration
statement and providing the
requested information. If you do not believe our comments apply to your
facts and
circumstances or do not believe an amendment is appropriate, please tell
us why in your
response.
After reviewing any amendment to your registration statement and
the information you
provide in response to these comments, we may have additional comments.
Registration Statement on Form S-4
Questions and Answers
What are the material U.S. federal income tax consequences of the Merger
to Metromile
Stockholders?, page 12
1. Please revise to
highlight, if true, that you have an opinion from tax counsel filed as an
exhibit to this
Registration Statement that the merger will qualify as a Section
368(a) reorganization
and that the merger will be tax free to stockholders and to recast the
description of the tax
implications to clearly reflect this opinion or advise. If counsel is
unable to give a clear
opinion on the tax consequences, briefly describe this
uncertainty. Refer to
Item 601(b)(4) of Regulation S-K and Section III of Staff Legal
Bulletin No. 19.
John M. Butler
FirstName LastNameJohn
INSU Acquisition Corp. II M. Butler
Comapany22,
December NameINSU
2020 Acquisition Corp. II
December
Page 2 22, 2020 Page 2
FirstName LastName
Summary
Interests of Certain Persons in the Merger, page 20
2. Please quantify where practicable the total value of each category of
interests of insiders
in the merger including any related out-of-pocket expenses to be
reimbursed and revise
similar disclosure throughout accordingly.
Selected Unaudited Pro Forma Condensed Combined Financial Information, page 25
3. Please revise to include a cross reference to the Unaudited Pro Forma
Condensed
Combined Financial Information so that readers can more easily
understand the context of
adjustments resulting from the pro forma combination presented here.
Material U.S. Federal Income Tax Consequences, page 135
4. Although you reference a tax opinion to be filed as Exhibit 8.1 on the
material tax
consequences and indicate that this discussion is that opinion, you
have not clearly stated
the material tax consequences, particularly whether the merger will
qualify as a Section
368(a) reorganization and be tax-free to stockholders, or not. A
description of the law
does not satisfy the requirement to provide an opinion on the material
tax consequences of
the transaction. The tax opinion should address and express a
conclusion for each material
federal tax consequence, clearly identify each material tax
consequence being opined
upon, set forth tax counsel's opinion as to each identified tax item
and the basis for the
opinion. If counsel is unable to opine on a material tax consequence,
the opinion
should state this fact clearly and provide the reason for the
inability to opine on a material
tax consequence. Refer to Item 601(b)(4) of Regulation S-K, to
Securities Act
Release No. 33-6900 and Section III of Staff Legal Bulletin No. 19.
Information about Metromile, page 157
5. In the fourth paragraph you state that your per-mile insurance
policies save your
customers, on average, 47% over what they were paying their previous
auto insurer.
Please state the source or basis or advise.
6. Please provide the basis for the statement in the fifth paragraph and
elsewhere that
"[w]hile 35% of drivers drive more than half the total miles driven
and cause more than
half of the insured losses each year, they pay the same rates as the
65% of drivers who
drive less than half the miles driven and cause less than half the
insured losses."
7. In the fifth paragraph, you state that your per-mile rate is in part
calculated based on data
about how a driver actually drives and then "billing each customer
monthly based on their
actual miles driven" and that you "provide significant savings to the
vast majority of
drivers." Please clarify whether customers are also billed based on
the data collected on
how they drive, quantify "the vast majority of drivers" and disclose,
if known, what
percentage of customers do not realize savings based on driving habits
and what
percentage of customers do not realize savings based on miles driven.
John M. Butler
FirstName LastNameJohn
INSU Acquisition Corp. II M. Butler
Comapany22,
December NameINSU
2020 Acquisition Corp. II
December
Page 3 22, 2020 Page 3
FirstName LastName
8. Please clarify on page 158 what Net Promoter Score (NPS) measures, how
it is calculated,
whether it is based on third-party data, and how it is significant to
your business.
Industry and market opportunity
Limited use of technology, page 163
9. You state that few large carriers have started to substantially build
out capabilities for
using technological developments and data science to adjust pricing
models to consider
variable factors. Clarify these "variable factors;" for example,
whether you refer to miles
driven and driving habits. Also provide an objective measure of "few"
and balance your
disclosure generally to account for the insurance companies that are
offering
customers lower rates based on actual miles driven and driving habits.
Competitive Strengths
Customer-oriented approach with fierce member loyalty, page 164
10. Please advise us of the basis for statements that your customers have
"fierce loyalty" or
revise to describe this loyalty objectively.
11. For balance, address the number of complaints to state regulators
regarding Metromile
relative to its size compared to competitors or advise.
Our Operating Model, page 165
12. You state here that your revenue and gross profit are significantly
impacted by your
reinsurance program. As such, please provide a separate subsection in
which you describe
the material features and terms of your reinsurance program. Please
quantify the number
of reinsurance agreements you currently have, identify any material
reinsurers and discuss
the material terms of your reinsurance agreements.
Recent Developments Affecting Comparability, page 183
13. You state that the decrease in gross earned premium was primarily due
to the decrease in
overall miles driven as a result of the COVID-19 pandemic. Please
revise to describe in
greater detail the impact of the pandemic on miles driven, including
whether and to what
extent this trend has changed during the periods presented.
Non-GAAP Financial Measures, page 191
14. We note your presentation of Non-GAAP Contribution Profit / Loss and
Contribution
Margin and the use of GAAP gross profit / loss and margin as the most
directly
comparable GAAP measures. Based on your disclosures on page 186, it
appears that
reinsurance ceding commissions are part of Sales, Marketing and Other
Acquisition Costs,
which do not appear to be considered when arriving at gross profit.
Please tell us whether
your GAAP gross profit / loss is fully loaded and why reinsurance
ceding commissions
should not be considered in the calculation.
John M. Butler
FirstName LastNameJohn
INSU Acquisition Corp. II M. Butler
Comapany22,
December NameINSU
2020 Acquisition Corp. II
December
Page 4 22, 2020 Page 4
FirstName LastName
Critical Accounting Policies and Estimates
Unpaid Losses and LAE Reserves, page 195
15. In order to show investors the potential variability in the most
recent estimate of your loss
reserve, quantify and present (preferably in a tabular format) the
impact that reasonably
likely changes in the key assumptions you have identified may have on
reported results,
financial position and liquidity. Explain why you believe the
scenarios quantified are
reasonably likely. See FR-72.
Description of Securities, page 208
16. Please revise the description of the company s capital stock to
disclose your exclusive
forum provisions, clearly describing any risks or other impacts on
investors, any
uncertainty about enforceability and whether they apply to federal
securities law claims.
Please also revise the risk factor on page 72 to provide a description
of the provision that
is consistent with Annex E. Please also tell us whether the changes to
the exclusive forum
provision should be included in the summary of material differences
between your charter
and the Business Combination Charter on pages 117-119.
Consolidated Balance Sheets, page F-33
17. Please revise your presentation to present your marketable securities
as the first asset line
pursuant to Rule 7-03(a)1 of Regulation S-X.
1. Overview and Basis of Presentation
Losses and Loss Adjustment Expenses, page F-43
18. We note your disclosures here and elsewhere (e.g., Note 8 and MD&A)
regarding
estimation of reserves for unpaid losses and LAE. Please enhance your
disclosures to
provide a more fulsome and detailed discussion of your methodologies
used; for example,
if multiple actuarial methods are used, provide context as to which
methods may be used
and when. If methodologies have changed over the periods covered,
discuss the impact of
such changes. Refer to ASC 944-40-50-1, ASC 944-40-50-4F, ASC
944-40-50-4I, and
2A3 of Guide 6.
6. Deferred Policy Acquisition Costs, Net, page F-55
19. Please tell us and revise your disclosures where appropriate to
clarify your accounting
policy for any excess ceding commissions over and above the portion
that represents the
recovery of deferred policy acquisition costs.
8. Loss and Loss Adjustment Expense Reserve, page F-55
20. We note your disclosure on page 195 regarding the differing typical
durations of property
damage settlements and personal liability and injury claims
settlements. Please revise to
disaggregate these in your claims development tables, or tell us how
you concluded that
John M. Butler
INSU Acquisition Corp. II
December 22, 2020
Page 5
disaggregation was not necessary. Refer to ASC 944-40-50-4H.
21. We note your disclosure that your favorable prior-year development in
2019 resulted from
re-estimation of unpaid losses and LAE. Please tell us and revise your
disclosures to
provide some more granularity regarding the drivers for this change.
22. We note your 10-year table disclosure of incurred loss and loss
adjustment expenses, net
of reinsurance on page F-57. Please revise to show the cumulative best
estimate at the end
of each year in the columns, consistent with the example in ASC
944-40-55-9E and with
traditional industry practice. Development on a yearly basis should be
shown separately,
if desired.
23. Please revise your disclosures to include a reconciliation of your
10-year table(s) to your
balance sheet liability. See ASC 944-40-50-4C.
24. We note that the third line of the reconciliation table on page F-55
says that it is Net
balance at end of period. If this should read beginning of
period, please revise; if not,
explain which period end you are referring to, since the bottom of the
table also has a
Balance at end of period.
25. We note that Total incurred loss and loss adjustment expense in
the table on page F-55
is $39,524, $30,622, and $11,988 for December 31, 2018 and 2019 and
for September 30,
2020, respectively. Please explain why these amounts differ from the
Losses and loss
adjustment expenses as shown on your consolidated statements of
operations.
9. Reinsurance,
FirstName page F-57 M. Butler
LastNameJohn
Comapany
26. NameINSU
Please Acquisition
revise, here Corp.
or elsewhere II
as appropriate, to identify your
significant reinsurers and
their22,
December respective ratings.
2020 Page 5
FirstName LastName
John M. Butler
FirstName LastNameJohn
INSU Acquisition Corp. II M. Butler
Comapany22,
December NameINSU
2020 Acquisition Corp. II
December
Page 6 22, 2020 Page 6
FirstName LastName
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
Refer to Rules 460 and 461 regarding requests for acceleration. Please
allow adequate
time for us to review any amendment prior to the requested effective date of
the registration
statement.
You may contact Lory Empie at 202-551-3714 or Cara Lubit at 202-551-5909
if you
have questions regarding comments on the financial statements and related
matters. Please
contact Jessica Livingston at 202-551-3448 or Justin Dobbie at 202-551-3469
with any other
questions.
Sincerely,
Division of
Corporation Finance
Office of Finance