What happened
In what feels like a sigh-of-relief reaction, investors traded shares of Lemonade (LMND -0.46%) higher on Thursday. The next-generation insurer's stock rose roughly in sync with the S&P 500 index following the announcement that the company had closed a long-simmering acquisition.
So what
Lemonade is now the proud owner of artificial-intelligence-powered auto insurance specialist Metromile. That completes a deal valued at around $500 million when it was signed last November.
The acquirer said in a press release that most Metromile employees will transition to jobs at Lemonade, likely in its recently established Lemonade Car unit. This includes Metromile's now-former CEO Dan Preston, who has become Lemonade's senior vice president of strategic initiatives. Metromile's branding, as well as its foundational mobile app, will continue to be used during a transitional phase. Ultimately, both will be transferred into Lemonade's branding and consumer-facing software.
Now what
Metromile is an emerging business of note in the next-generation car insurance space. Like its new parent company, it harnesses machine-learning technology to calculate individual clients' risks, and aims to make its offerings intuitive and user-friendly. So it's a good fit for Lemonade, and it's small enough to provide room for growth -- it has just north of $110 million in annual premiums, although it's licensed in all U.S. states but one.
Lemonade management continues to wax optimistic about Metromile. In Thursday's press release, co-founder and co-CEO Shai Wininger said that owning the business "will make the most delightful car insurance also the most competitive, precise, and fair."
