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Lemonade Announces Extension of CAC Financing Agreement with General Catalyst

Lemonade (NYSE: LMND), the digital insurance company powered by AI and social impact, today announced the extension and expansion of its financing relationship with General Catalyst (GC) - AKA ‘Synthetic Agents’ - whereby GC finances up to 80% of Lemonade’s spending specifically related to customer acquisition cost (CAC).

Under the original agreement, GC agreed to finance up to $150 million of CAC spend for the 18 months from July 2023 through December 2024. With today’s announcement, the agreement has been extended through December 2025, and an incremental $140 million will be made available to Lemonade.

All other material business terms in the original agreement remain unchanged.

This extension provides additional certainty and tactical support for Lemonade’s capital-light growth strategy - a key assumption underpinning the company’s multi-year view on liquidity, which was discussed in the Q3 2023 Letter to Shareholders.

About Lemonade

Lemonade offers renters, homeowners, car, pet, and life insurance. Powered by artificial intelligence and social impact, Lemonade’s full stack insurance carriers in the US and the EU replace brokers and bureaucracy with bots and machine learning, aiming for zero paperwork and instant everything. A Certified B-Corp, Lemonade gives unused premiums to nonprofits selected by its community, during its annual Giveback. Lemonade is currently available in the United States, Germany, the Netherlands, France, and the UK, and continues to expand globally.

Follow @lemonade_inc on Twitter for updates.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Press Release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

All statements other than statements of historical fact contained in this Press Release, including without limitation statements regarding the anticipated benefits of the amended and restated customer acquisition agreement with General Catalyst and expectations regarding its impact on our capital-light growth strategy and multi-year view on liquidity, the expected future results of operations and financial position, and our ability to effectively manage the growth of our business are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements expressed or implied to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to the following: our history of losses and the fact that we may not achieve or maintain profitability in the future; our ability to retain and expand our customer base; the risk that the “Lemonade” brand may not become as widely known as incumbents’ brands or the brand may become tarnished; the denial of claims or our failure to accurately and timely pay claims; our ability to attain greater value from each user; the novelty of our business model and its unpredictable efficacy and susceptibility to unintended consequences; the possibility that we could be forced to modify or eliminate our Giveback; our limited operating history; our ability to manage our growth effectively; the intense competition in the segments of the insurance industry in which we operate; risks related to the availability of reinsurance at current levels and prices; our exposure to counterparty risks; our ability to maintain our risk-based capital at the required levels; our ability to expand our product offerings; risks, including regulatory risks, related to the operation, development, and implementation of our proprietary artificial intelligence algorithms and telematics based pricing model; legislation or legal requirements that may affect how we communicate with customers; our reliance on artificial intelligence, telematics, mobile technology, and our digital platforms to collect data that we utilize in our business; our dependence on search engines, social media platforms, digital app stores, content-based online advertising and other online sources to attract consumers to our website and our online app; our ability to obtain additional capital to the extent required to grow our business, which may not be available on terms acceptable to us or at all; periodic examinations by state insurance regulators; our actual or perceived failure to protect customer information and other data as a result of security incidents or real or perceived errors, failures or bugs in our systems, website or app, respect customers’ privacy, or comply with data privacy and security laws and regulations; underwriting risks accurately and charging competitive yet profitable rates to customers; potentially significant expenses incurred in connection with any new products before generating revenue from such products; risks associated with any costs incurred and other risks as we expand our business in the U.S. and internationally; our ability to successfully combine the businesses of Lemonade and Metromile and realize the anticipated benefits of the merger; the cyclical nature of the insurance industry; risks related to our ability to comply with extensive insurance industry regulations and additional regulatory requirements specific to other vertical markets that we enter or have entered; our ability to predict the impacts of severe weather events and catastrophes, including the effects of climate change and global pandemics, on our business and the global economy generally; increasing scrutiny, actions, and changing expectations on environmental, social, and governance matters; fluctuations of our results of operations on a quarterly and annual basis; our utilization of customer and third party data in underwriting our policies; limitations in the analytical models used to assess and predict our exposure to catastrophe losses; risks related to potential losses that could be greater than our loss and loss adjustment expense reserves; the minimum capital and surplus requirements our insurance subsidiaries are required to have; assessments and other surcharges from state guaranty funds; our status and obligations as a public benefit corporation; the ability of significant shareholders to influence the outcome of important transactions, including a change in control; our operations in Israel and the current political, economic, and military instability, including the evolving conflict in Israel and surrounding region; and the impact of the amended and restated customer investment agreement with General Catalyst which is unpredictable, and the arrangement may not function as expected.

These and other important factors described under the caption "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed on March 3, 2023, our periodic report on Form 10-Q for the period ended September 30, 2023 filed on November 3, 2023, our other periodic reports, and in our other subsequent filings with the SEC, could cause actual results to differ materially from those indicated by the forward-looking statements made in this Press Release. Any such forward-looking statements represent management’s beliefs as of the date of this Press Release. While we may elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause our views to change.

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