Lemonade entered into a New Business Financing Agreement with Hannover Re to secure up to $250 million in capital to fund its sales and marketing growth efforts. The agreement is effective from January 1, 2027, through December 31, 2028, creating a direct financial obligation for the company.
Key Details
- Financing Amount: Up to $250 million in total outstanding capital. The limit is $150 million through the end of 2027 and increases to $250 million for 2028.
- Terms of Financing: Hannover will finance up to 80% of Lemonade's monthly growth spend, capped at $20 million per customer cohort. Repayment will be made from premiums collected from these funded cohorts.
- Cost of Capital: The rate of return paid to Hannover Re on the financed amount is the 3-year U.S. Treasury Bill rate plus 5.8%. Once repaid for a specific cohort, Lemonade retains all future premiums.