Could Lemonade's Auto Insurance Business Finally Jump to the Next Level?

Insurance disruptor Lemonade (NYSE: LMND) has gained serious traction in its core businesses of renters, homeowners, and pet insurance. However, its initial rollout of Lemonade Car -- its auto insurance product -- has been rather slow, despite being the highest-potential insurance type offered by the company so far.

Last November, Lemonade announced its agreement to acquire auto insurance technology company Metromile in an all-stock deal in order to jump-start its auto insurance business. Nearly nine months later, the acquisition has been finalized, and Metromile is officially a part of Lemonade. Here's why investors should pay attention and what it could mean for Lemonade over the long term.

The Metromile acquisition adds $110 million in car insurance premiums to Lemonade's business, and also adds $155 million in cash to the company's already cash-rich balance sheet (the company had over $1 billion in cash and investments at the end of the first quarter). Lemonade paid for the acquisition with about $145 million worth of stock, so this already looks like a great deal.

Source Fool.com