A pay per mile insurance company hoping to disrupt the highly fragmented market is going public via a SPAC deal.
The SPAC Deal: Metromile is going public vis SPAC INSU Acquisition Corp II INAQ. The enterprise value given the to the company is $956 million.
The $160 million PIPE is led by investors including Social Capital, led by Chamath Palihapitiya and existing Metromile shareholder Mark Cuban. Palihapitiya tweeted today that Warren Buffett has Geico, and he will now have Metromile.
Shares of the new company will trade on the NASDAQ as MLE when the deal is complete. Existing INSU Acquisition shareholders will own 17.6% of the new company.
Buffett had Geico.— Chamath Palihapitiya (@chamath) November 24, 2020
I pick @Metromile.
The company announced today that it is going public via a SPAC ($INAQ) and I led the PIPE.
This is an incredible company disrupting car insurance and giving customers a best in class experience.
My one pager is attached. pic.twitter.com/r0ibZ0Tq5Z
About Metromile: Using a pay per mile operating model, Metromile seeks to revolutionize the fragmented auto insurance market.
The company says two-thirds of U.S. drivers are considered low mileage and are overpaying for insurance. Metromile saves users an average of 47% and is the largest pay per mile company.
Metromile has a free trial product called Ride Along that lets users see if they are low mileage and how much they will save. The company says 65% of auto insurance customers subsidize the other 35% of the market.
Metromile will expand to 49 states by the end of 2022. The company is in eight states now and will be in 21 by the end of 2021.
An example in the investor presentation lists a $29 fixed fee and 5.4 cents per mile driven under a Metromile plan.
“The option to pay for insurance by the mile is a game changer and why I’m incredibly excited about Metromile’s future!” said Cuban.
Insurance Market: The auto insurance market is highly fragmented in the U.S worth $250 billion.
No U.S. carrier owns 20% share of the auto insurance market and over 110 carriers have $100 million or more in annual revenue. The largest auto insurance companies in the U.S. are StateFarm, Geico, Progressive and Allstate.
Financials: Metromile sees its annual run rate hitting $1 billion by 2024. The software revenue is expected to hit $48 million by 2024 with four companies currently using the company’s cloud SaaS platform.
Growth: The SPAC deal will give Metromile cash to expand on its growth initiatives.
Metromile launched Enterprise in 2019, which helps incumbent insurers transition to the growing digital age, which could be a huge growth driver down the road.
The company sees long term growth opportunities of cross selling insurance in the homeowners, renters, pet and maintenance markets.
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