Lemonade CEO Daniel Schreiber joins Caroline Hyde to discuss the insurtech company’s positive third-quarter earnings and its foray into the car insurance business.
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What do you make of investors reaction to the purchase.
I’m honestly not that much. We tend to try and shy away from the

gyrations of any particular day. As you said today we announced
stellar results. I think for the quarter we surprised I think by

exceeding a lot of our market expectations 101 percent growth in
revenue. So feeling good about the fundamentals trying to manage

the business rather than the stock. And then having launched car
insurance just last week an overnight last night announcing the

acquisition of Matt Miller Mile we feel the winds and our sale
and a lot of opportunity ahead of us. Are you worried though

that perhaps investors are also sort of stating a kind of a
concern here in terms of the price being paid or or how you’re

going to be adding to the symbiosis of the two businesses what
you think you need to prove to them.

Actually almost all of the analysts who cover us brought out
very positive coverage to the market reaction in terms of the

stock price is not reflecting what we’re hearing from the
institutional investor base or from the retail investor base. We

do see this oftentimes acquisitions get rewarded so to speak
with negative returns on the first day as investors digest the

news and update their models. I’m actually incredibly
optimistic.

I think tremendous synergies in the deal that we’ve just
announced. We are acquiring a company that has over 150 million

or roughly 150 million dollars of enforced premium. We’re paying
an enterprise value of just 200 million dollars. They have 250

million dollars in the bank and they’ve got 10 years of
experience in using data science for coinsurance. Having

monitored billions of miles and let the A.I. algorithms crunch
those they really one of a kind and have capabilities that are

unavailable to our competitors. And I think put us in a very
strong position as we enter this new market space. I can see

that it helps certainly with your offerings and being able to
offer many types of insurance across one particular business. So

I could get my renter’s insurance and I can get my pet
insurance. They get my car insurance for them. How will add to

profitability. Daniel.
So you absolutely right. We ISE period 16 months ago just as

homeowners and we’ve since added pat and life and now Kyra. So
we’re sucking moving at a fast clip our profitability in the

long run. I think we’ll benefit tremendously from this that
we’re entering such a huge market. Ostensibly an almost

unlimited market from where we’re standing. We’re talking
massive like 300 billion dollars in the US alone. So for us this

creates tremendous headroom. Not that we were particularly
cramped to start with but it really does help with the unit

economics because the bundling and the cross-selling however
great unlock of value and profitability come from. So as we

launched Pat Insurance for example we suddenly saw 30 percent of
our sales coming at zero customer acquisition cost because

existing customers were buying pet insurance and increasing
their premiums three or four fold. So hundreds of percent

increase. So we’ve seen the same as we launched life and car
really is the biggest unlock of all. In a sense we’ve been

operating with one hand tied behind our back. We try selling
homeowners insurance which is the bulk of our business without

the ability to bundle coinsurance and you’re at a distinct
disadvantage. So being able to add these capabilities I think

unlocks tremendous value for existing business. And when you
look at a one point four million customers they are spending

today of a billion dollars on coinsurance. They’ve just not had
the opportunity to spend it with us. And I think from all

perspectives it’s got to be good news.