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Table of Contents

As filed with the U.S. Securities and Exchange Commission on December 14, 2021

Registration No. 333-           

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Lemonade, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware
(State of Incorporation)

4899
(Primary Standard Industrial
Classification Code Number)
5 Crosby Street, 3rd Floor
New York, NY 10013
(844) 733-8666

32-0469673
(IRS Employer Identification No.)

(Address, including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

Daniel Schreiber

Chief Executive Officer

5 Crosby Street, 3rd Floor

New York, NY 10013

(844) 733-8666

(Name, Address, including Zip Code, and Telephone Number, including Area Code, of Agent for Service)

Copies to:

Marc D. Jaffe, Esq.
Robert M. Katz, Esq.
Rachel W. Sheridan, Esq.
Latham & Watkins LLP
1271 Avenue of the Americas
New York, NY 10020
(212) 906-1200

Rajab S. Abbassi, P.C., Esq.
Sophia Hudson, P.C., Esq.
Edward J. Lee, P.C., Esq.
Kirkland & Ellis LLP
601 Lexington Avenue
New York, NY 10022
(212) 446-4800

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this registration statement is declared effective.

If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, please check the following box.

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the “Securities Act”), check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer 

Non-accelerated filer 

Smaller reporting company 

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. 

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)

CALCULATION OF REGISTRATION FEE

Title of each class of securities to be registered

Amount to be
registered(1)

Proposed
maximum
offering price per
share(2)

Proposed
maximum
aggregate
offering price(2)

Amount of
registration fee(3)

Common Stock, $0.00001 par value per share

6,748,318

N/A

$314,784,727.68

$29,180.54

(1)The number of shares of common stock, $0.00001 par value per share (“Lemonade common stock”), of the registrant, Lemonade, Inc. (“Lemonade”), being registered is based upon the estimated maximum number of shares of Lemonade common stock issuable upon completion of the merger of Citrus Merger Sub A, Inc., a Delaware corporation and a direct, wholly owned subsidiary of Lemonade with and into Metromile, Inc., a Delaware corporation (“Metromile”) with Metromile as the surviving corporation (the “Initial Surviving Corporation”) (the “first merger”) followed by the merger of the Initial Surviving Corporation with and into Citrus Merger Sub B, LLC, a Delaware limited liability company and a direct, wholly owned subsidiary of Lemonade with Citrus Merger Sub B, LLC as the surviving limited liability company (the “second merger” and, together with the first merger, the “mergers”), each as described in the proxy statement/prospectus contained herein, and is calculated based upon (a) 128,221,885 shares of common stock, $0.0001 par value per share (“Metromile common stock”), of Metromile estimated to be outstanding and subject to equity-based awards of Metromile immediately prior to the mergers based on the number of shares presently outstanding and subject to equity-based awards of Metromile, and that may be issued prior to the mergers, multiplied by (b) the exchange ratio in the mergers of 0.05263 shares of Lemonade common stock for each share of Metromile common stock.
(2)Estimated solely for purposes of calculating the registration fee required by Section 6(b) of the Securities Act of 1933, as amended (the “Securities Act”), and calculated in accordance with Rules 457(c) and 457(f)(1) promulgated thereunder. The proposed maximum aggregate offering price is solely for the purposes of calculating the registration fee and was calculated based upon the market value of shares of Metromile common stock (the securities to be cancelled in the mergers) in accordance with Rule 457(c) under the Securities Act as follows: the product of (a) $2.455, the average of the high and low prices per share of Metromile common stock on December 8, 2021, as quoted on the Nasdaq Capital Market, and (b) 128,221,885, the estimated maximum number of shares of Metromile common stock that may be exchanged for the shares of Lemonade common stock being registered.
(3)Calculated pursuant to Section 6(b) of the Securities Act at a rate equal to $92.70 per $1,000,000 of the proposed maximum aggregate offering price.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the registration statement shall become effective on such date as the U.S. Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this proxy statement/prospectus is not complete and may be changed. A registration statement relating to the securities described in this proxy statement/prospectus has been filed with the U.S. Securities and Exchange Commission. These securities may not be issued or sold until the registration statement filed with the U.S. Securities and Exchange Commission is effective. This proxy statement/prospectus does not constitute an offer to sell or the solicitation of offers to buy these securities in any jurisdiction where the offer or sale is not permitted.

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PRELIMINARYSUBJECT TO COMPLETION, DATED DECEMBER 14, 2021

Graphic

MERGER PROPOSAL— YOUR VOTE IS VERY IMPORTANT

Dear Metromile Stockholder:

You are cordially invited to attend a special meeting (the “Metromile special meeting”) of the stockholders of Metromile, Inc., a Delaware corporation (the “Company,” “Metromile”, “we” or “us”), to be held on , 2022, at , Pacific Time. In light of the continuing public health concerns resulting from the COVID-19 pandemic, the Metromile special meeting will be held as a completely “virtual meeting.” You will be able to attend and vote during the special meeting via a live webcast by visiting www.virtualshareholdermeeting.com/MILE2022SM. Prior to the Metromile special meeting, you will still be able to vote by Internet, by telephone or by mail. Holders of record of common stock, par value $0.0001 per share, of Metromile (“Metromile common stock”) at the close of business on , (the “record date”), will be entitled to vote at the Metromile special meeting or any adjournment thereof. We encourage you to allow ample time for online check-in, which will open at , Pacific Time.

On November 8, 2021, Metromile entered into an Agreement and Plan of Merger (the “merger agreement”), by and among Metromile, Lemonade, Inc. (“Lemonade”), Citrus Merger Sub A, Inc., a wholly owned subsidiary of Lemonade (“Acquisition Sub I”), and Citrus Merger Sub B, LLC, a wholly owned subsidiary of Lemonade (“Acquisition Sub II”) that provides for the acquisition of Metromile by Lemonade. Upon the terms and subject to the conditions set forth in the merger agreement, (i) Acquisition Sub I will merge with and into Metromile, with Metromile continuing as the surviving entity (the “Initial Surviving Corporation”) (the “first merger”) and (ii) the Initial Surviving Corporation will then merge with and into Acquisition Sub II, with Acquisition Sub II continuing as the surviving entity and as a wholly owned subsidiary of Lemonade (the “second merger” and, together with the first merger, the “mergers”).

Upon the successful completion of the first merger, each issued and outstanding share of Metromile common stock outstanding immediately prior to the effective time of the first merger (other than treasury shares and shares held by Lemonade or Acquisition Sub I) will be converted into the right to receive 0.05263 shares of Lemonade common stock (the “exchange ratio”), with cash (without interest and subject to any required tax withholding) being paid in lieu of any fractional shares of Lemonade common stock that Metromile stockholders would otherwise be entitled to receive in the first merger.

Because the exchange ratio is fixed, the market value of the merger consideration to Metromile stockholders may fluctuate with the market price of Lemonade common stock and will not be known at the time that Metromile stockholders vote on the mergers. Based on the Lemonade common stock price of $69.53 per share, which was the closing sale price per share of Lemonade common stock on NYSE on November 5, 2021, the last full trading day prior to public announcement of the mergers, the implied value of the merger consideration to Metromile stockholders was $3.66 per share of Metromile common stock. On December 10, 2021, the latest practicable trading day before the date of the filing of this proxy statement/prospectus, the closing price of Lemonade common stock on NYSE was $43.21 per share, resulting in an implied value of the merger consideration to Metromile stockholders of $2.27 per share of Metromile common stock. We encourage you to obtain current quotes for both the Lemonade and Metromile common stock before voting at the Metromile special meeting.

At the Metromile special meeting, you will be asked to consider and vote on (a) a proposal to adopt the merger agreement (the “merger proposal”) and (b) a proposal to adjourn the Metromile special meeting to another time and place to solicit additional proxies, if necessary or appropriate, if there are insufficient votes to approve the merger proposal (the “adjournment proposal”). The Metromile board of directors unanimously recommends that you vote “FOR” each of the two proposals to be considered at the Metromile special meeting.

Contemporaneously with the execution of the merger agreement, certain stockholders of Metromile holding approximately 11.3% of the outstanding shares of Metromile common stock as of the date thereof, including all members of the Metromile board of directors and certain officers (the “Metromile supporting stockholders”), entered into voting and support agreements (the “voting and support agreements”) with Lemonade, pursuant to which the Metromile supporting stockholders agreed to, among other things, vote all of their shares in Metromile; (i) in favor of the adoption of the merger agreement and approval of the mergers and other transactions contemplated by the merger agreement; (ii) in favor of any adjournment recommended by Metromile with respect to any Metromile stockholders meeting to the extent permitted or required pursuant to the merger agreement; (iii) against any alternative acquisition proposal or transaction; (iv) against any merger, sale of substantial assets or liquidation of Metromile; and (v) against any proposal, action or agreement that would reasonably be expected to impede, interfere with, delay or postpone, prevent or otherwise impair the mergers or the other transactions contemplated by the merger agreement. A copy of the form of voting and support agreement is attached as Annex C hereto.

We cannot complete the mergers unless the merger proposal is approved by Metromile stockholders. Assuming a quorum is present at the Metromile special meeting, approval of the merger proposal requires the affirmative vote of the holders of a majority of the voting power of the outstanding shares of Metromile common stock entitled to vote at the Metromile special meeting on the merger proposal. Your vote on these matters is very important, regardless of the number of shares you own. Whether or not you plan to virtually attend the Metromile special meeting, please vote by proxy over the Internet or telephone using the instructions included with the proxy card accompanying this proxy statement/prospectus, or otherwise follow the voting instructions provided in this proxy statement/prospectus.

This proxy statement/prospectus provides you with important information about the Metromile special meeting, the mergers and each of the proposals. We encourage you to read the entire document carefully, in particular the information under “Risk Factors” for a discussion of risks relevant to the mergers.

We look forward to the successful completion of the transaction.

Sincerely,

John Butler

Chairman of the Board

Metromile, Inc.

* * * * *

Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of the mergers, the adoption of the merger agreement, the Lemonade common stock to be issued in connection with the mergers or any of the other transactions described in this proxy statement/prospectus, or determined if this proxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

This proxy statement/prospectus is dated as of, and is first being mailed to Metromile stockholders on or about, .

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Graphic

Metromile, Inc.

425 Market Street, Suite 700

San Francisco, California 94105

(888) 242-5204

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON , 2022

To the Stockholders of Metromile, Inc.:

Notice is hereby given that Metromile, Inc. (“Metromile”) will hold a special meeting of its stockholders (the “Metromile special meeting”) virtually via live webcast on , 2022, beginning at , Pacific Time.

In light of ongoing developments related to the COVID-19 pandemic, the Metromile special meeting will be held solely in a virtual meeting format via a live webcast. You will be able to attend the Metromile special meeting by visiting www.virtualshareholdermeeting.com/MILE2022SM. We encourage you to allow ample time for online check-in, which will open at , Pacific Time.

The Metromile special meeting will be held for the purpose of Metromile stockholders considering and voting on the following proposals:

1.A proposal to adopt the Agreement and Plan of Merger, dated as of November 8, 2021 (as it may be amended from time to time, the “merger agreement”) by and among Metromile, Lemonade, Inc. (“Lemonade”), Citrus Merger Sub A, Inc., a wholly owned subsidiary of Lemonade (“Acquisition Sub I”) and Citrus Merger Sub B, LLC, a wholly owned subsidiary of Lemonade (“Acquisition Sub II”) (such proposal, the “merger proposal”); and
2.A proposal to approve the adjournment of the Metromile special meeting to another time and place to solicit additional proxies, if necessary or appropriate, if there are insufficient votes to approve the merger proposal (the “adjournment proposal”).

Metromile will transact no other business at the Metromile special meeting except such business as may properly be brought before the Metromile special meeting or any adjournment thereof. The accompanying proxy statement/prospectus, including the merger agreement attached as Annex A hereto, contains further information relating to these matters.

Only holders of record of common stock, par value $0.0001 per share, of Metromile (“Metromile common stock”) at the close of business the record date on are entitled to notice of and to vote at the Metromile special meeting and any adjournment thereof.

The Metromile board of directors has unanimously determined that the merger of Acquisition Sub I with and into Metromile (the “first merger”) and the merger of the surviving company from the first merger with and into Acquisition Sub II (the “second merger” and, together with the first merger, the “mergers”) are fair to and in the best interests of Metromile and its stockholders, and approved and declared advisable the execution and delivery of the merger agreement, the performance by Metromile of its covenants and agreements contained in the merger agreement and the transactions contemplated thereby, including the mergers. Accordingly, the Metromile board of directors unanimously recommends that Metromile stockholders vote:

“FOR” the merger proposal; and
“FOR” the adjournment proposal.

Your vote is very important, regardless of the number of shares of Metromile common stock you own. The parties cannot complete the mergers without approval of the merger proposal. Assuming a quorum is present at the Metromile special meeting, approval of the merger proposal requires the affirmative vote of the holders of a majority of the voting power of the outstanding shares of Metromile common stock entitled to vote at the Metromile special meeting on the merger proposal.

Whether or not you plan to virtually attend the Metromile special meeting, please vote by proxy over the Internet or telephone using the instructions included with the accompanying proxy card, or otherwise follow the voting instruction provided in this proxy statement/prospectus. If you hold your shares of Metromile common stock through a broker, bank or other nominee in “street name” (instead of as a registered holder) please follow the instructions on the voting instruction form provided by your bank, broker or nominee to vote your shares. The list of Metromile stockholders entitled to vote at the Metromile special meeting will be available electronically via the Metromile special meeting website for examination by any Metromile stockholder for any purpose germane to the Metromile special meeting beginning ten days prior to the Metromile special meeting up until the conclusion of the Metromile special meeting.

If you have any questions about the mergers, please contact Metromile at (888) 242-5204 or write to legal@metromile.com. Paper communications may be sent to Metromile, Inc., Attn: Corporate Secretary, 425 Market Street, Suite 700, San Francisco, California 94105.

If you have any questions about how to vote or direct a vote in respect of your shares of Metromile common stock, please contact Metromile’s proxy solicitor, Morrow Sodali, by phone at (800) 662-5200 or by email at MILE@investor.morrowsodali.com.

By Order of the Board of Directors,

Dan Preston

Chief Executive Officer

Metromile, Inc.

San Francisco, California

Dated:

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REFERENCES TO ADDITIONAL INFORMATION

This proxy statement/prospectus incorporates important business and financial information about Lemonade from other documents that Lemonade has filed with the SEC and that are not contained in and are instead incorporated by reference in this proxy statement/prospectus. For a list of documents incorporated by reference in this proxy statement/prospectus, see “Where You Can Find More Information.” This information is available for you, without charge, to review through the SEC’s website at www.sec.gov.

You may request a copy of this proxy statement/prospectus, any of the documents incorporated by reference in this proxy statement/prospectus or other information filed with the SEC by Lemonade or Metromile, without charge, by written request directed to the appropriate company at the following contacts:

For Lemonade stockholders:

Lemonade, Inc.

Attention: Investor Relations
ir@lemonade.com

    

For Metromile stockholders:

Metromile, Inc.
Attention: Corporate Secretary

legal@metromile.com

In order for you to receive timely delivery of the documents in advance of the Metromile special meeting to be held on  , 2022, you must request the information no later than  .

If you have any questions about the Metromile special meeting, or need to obtain proxy cards or other information, please contact Metromile’s proxy solicitor at the following contact:

Morrow Sodali LLC

333 Ludlow Street, 5th Floor, South Tower

Stamford, Connecticut 06902

Tel: Toll-Free (800) 622-5200 or (203) 658-9400

Email: MILE@investor.morrowsodali.com

The contents of the websites of the SEC, Lemonade, Metromile or any other entity are not incorporated in this proxy statement/prospectus. The information about how you can obtain certain documents that are incorporated by reference in this proxy statement/prospectus at these websites is being provided only for your convenience.

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ABOUT THIS PROXY STATEMENT/PROSPECTUS

This proxy statement/prospectus, which forms part of a registration statement on Form S-4 filed with the SEC by Lemonade (Registration No. 333- ), constitutes a prospectus of Lemonade under Section 5 of the Securities Act with respect to the shares of Lemonade common stock (as defined below) to be issued to Metromile stockholders pursuant to the Agreement and Plan of Merger, dated November 8, 2021, by and among Lemonade, Lemonade’s Acquisition Subs (as defined below) and Metromile (as it may be amended from time to time, the “merger agreement”). This document also constitutes a proxy statement of Metromile under Section 14(a) of the Exchange Act. This proxy statement/prospectus also constitutes a notice of meeting to Metromile stockholders with respect to the Metromile special meeting.

Lemonade has supplied all information contained or incorporated by reference in this proxy statement/prospectus relating to Lemonade and its Acquisition Subs, and Metromile has supplied all such information relating to Metromile. Lemonade and Metromile have both contributed to such information relating to the mergers.

Lemonade and Metromile have not authorized anyone to provide you with information that is different from that contained or incorporated by reference in this proxy statement/prospectus. This proxy statement/prospectus is dated , and you should not assume that the information contained in this proxy statement/ prospectus is accurate as of any date other than such date unless otherwise specifically provided herein.

Further, you should not assume that the information incorporated by reference in this proxy statement/prospectus is accurate as of any date other than the date of the incorporated document. Neither the mailing of this proxy statement/prospectus to Metromile stockholders nor the issuance by Lemonade of shares of Lemonade common stock pursuant to the merger agreement will create any implication to the contrary.

This proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction.

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TABLE OF CONTENTS

    

Page

REFERENCES TO ADDITIONAL INFORMATION

i

ABOUT THIS PROXY STATEMENT/PROSPECTUS

ii

QUESTIONS AND ANSWERS

iv

SUMMARY

1

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

12

MARKET PRICE AND DIVIDEND INFORMATION

14

RISK FACTORS

15

THE PARTIES TO THE MERGERS

63

THE METROMILE SPECIAL MEETING

65

PROPOSAL 1: ADOPTION OF THE MERGER AGREEMENT

72

PROPOSAL 2: ADJOURNMENT OF THE METROMILE SPECIAL MEETING

73

THE MERGERS

74

THE MERGER AGREEMENT

99

VOTING AND SUPPORT AGREEMENTS

123

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF METROMILE

125

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

126

COMPARATIVE SHARE INFORMATION

137

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF METROMILE

138

BUSINESS OF METROMILE

156

REGULATION

171

INTERESTS OF LEMONADE DIRECTORS AND EXECUTIVE OFFICERS IN THE MERGERS

180

INTERESTS OF METROMILE DIRECTORS AND EXECUTIVE OFFICERS IN THE MERGERS

181

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGERS

188

COMPARISON OF STOCKHOLDERS’ RIGHTS

192

NO APPRAISAL RIGHTS

199

LEGAL MATTERS

200

EXPERTS

201

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF LEMONADE

202

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF METROMILE

204

STOCKHOLDER PROPOSALS

206

HOUSEHOLDING OF PROXY MATERIALS

207

WHERE YOU CAN FIND MORE INFORMATION

208

TRANSFER AGENT

210

TRADEMARK NOTICE

211

INDEX TO FINANCIAL STATEMENTS

F-1

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QUESTIONS AND ANSWERS

The following are brief answers to certain questions that you, as a Metromile stockholder, may have regarding the mergers and the other matters being considered at the Metromile special meeting. You are urged to carefully read this proxy statement/prospectus and the other documents referred to in this proxy statement/prospectus in their entirety because this section may not provide all the information that is important to you regarding these matters. See “Summary” for a summary of important information regarding the merger agreement, the mergers and the related transactions. Additional important information is contained in the annexes to, and the documents incorporated by reference in, this proxy statement/prospectus. You may obtain the information incorporated by reference in this proxy statement/prospectus, without charge, by following the instructions under “Where You Can Find More Information.”

Why am I receiving this proxy statement/prospectus?

This proxy statement/prospectus serves as a proxy statement for the Metromile special meeting.

You are receiving this proxy statement/prospectus because Metromile has agreed to be acquired by Lemonade through a series of mergers of Lemonade’s Acquisition Subs with and into Metromile, with Metromile continuing as the surviving corporation in the mergers and becoming a wholly owned subsidiary of Lemonade. The merger agreement, which governs the terms and conditions of the mergers, is attached as Annex A hereto.

Your vote is required in connection with the mergers. Metromile is sending these materials to its stockholders to help them decide how to vote their shares with respect to the adoption of the merger agreement and other important matters.

What matters am I being asked to vote on?

In order to complete the mergers, among other things, Metromile stockholders must approve the merger proposal.

Metromile is holding the Metromile special meeting to obtain approval of the merger proposal. Additionally, the Metromile special meeting may be adjourned to another time and place if necessary or appropriate in order to permit the solicitation of additional proxies if there are insufficient votes to approve the merger proposal. Accordingly, Metromile is asking Metromile stockholders to authorize the holder of any proxy solicited by the Metromile board of directors to vote in favor of the merger proposal and the adjournment proposal.

Your vote is very important, regardless of the number of shares that you own. The approval of the merger proposal is a condition to the obligations of Lemonade and Metromile to complete the mergers. However, the approval of the adjournment proposal is not a condition to the obligations of Lemonade or Metromile to complete the mergers.

When and where will the Metromile special meeting take place?

In light of ongoing developments related to the COVID-19 pandemic, the Metromile special meeting will be held solely in a virtual meeting format via live webcast. You will be able to attend and vote during the special meeting via a live webcast by visiting www.virtualshareholdermeeting.com/MILE2022SM. We encourage you to allow ample time for online check-in, which begins at Pacific Time. In order to attend the virtual Special Meeting and vote online, you will need the control number included on your proxy card or on the instructions that accompanied your proxy materials. The control number is designed to verify your identity and allow you to vote your shares at the Metromile special meeting or to vote by proxy prior to the Metromile special meeting. See “The Metromile Special Meeting—Virtually Attending the Metromile Special Meeting.”

Even if you plan to virtually attend the Metromile special meeting, Metromile recommends that you vote by proxy in advance as described below so that your vote will be counted if you later decide not to or become unable to virtually attend the Metromile special meeting.

If you hold your shares of Metromile common stock through a broker, bank or other nominee in “street name” (instead of as a registered holder) please follow the instructions on the voting instruction form provided by your bank, broker or nominee to vote your shares.

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How important is my vote?

Your vote “FOR” each proposal presented at the Metromile special meeting is very important, regardless of the number of shares that you own, and you are encouraged to submit a proxy as soon as possible. The mergers cannot be completed unless the merger proposal is approved by Metromile stockholders.

What will Metromile stockholders receive for their shares of Metromile common stock if the mergers are completed?

If the mergers are completed, each share of Metromile common stock outstanding as of immediately prior to the first effective time will be converted into the right to receive 0.05263 shares of Lemonade common stock (the “exchange ratio”). Each Metromile stockholder will receive cash (without interest and subject to any required tax withholding) in lieu of any fractional shares of Lemonade common stock that such Metromile stockholder would otherwise receive in the mergers. Any cash amounts to be received by a Metromile stockholder in lieu of fractional shares of Lemonade common stock will be rounded to the nearest whole cent.

Because Lemonade will issue a fixed number of shares of Lemonade common stock in exchange for each share of Metromile common stock, the value of the merger consideration that Metromile stockholders will receive in the mergers will depend on the market price of shares of Lemonade common stock at the time the mergers are completed. The market price of shares of Lemonade common stock that Metromile stockholders receive at the time the mergers are completed could be greater than, less than or the same as the market price of shares of Lemonade common stock on the date of this proxy statement/prospectus or at the time of the Metromile special meeting. Accordingly, you should obtain current market quotations for Lemonade common stock and Metromile common stock before deciding how to vote on the merger proposal. Lemonade common stock is traded on the NYSE and Metromile common stock is traded on the Nasdaq Capital Market under the symbols “LMND” and “MILE,” respectively. Metromile warrants are traded on the Nasdaq Capital Market under the symbol “MILEW”. Shares of common stock of the combined company will trade on NYSE under the symbol “LMND” after completion of the mergers.

For more information regarding the merger consideration to be received by Metromile stockholders if the mergers are completed, see “The Merger Agreement—Merger Consideration.”

How does the Metromile board of directors recommend I vote at the Metromile special meeting?

The Metromile board of directors unanimously recommends that you vote “FOR” the merger proposal and “FOR” the adjournment proposal. For more information regarding the recommendation of the Metromile board of directors, please see “The Merger—Recommendation of the Metromile Board of Directors; Metromile’s Reasons for the Merger.”

In considering the recommendations of the Metromile board of directors, Metromile stockholders should be aware that Metromile directors and executive officers have interests in the mergers that are different from, or in addition to, their interests as Metromile stockholders generally. These interests include, among others, the payment of severance benefits and acceleration of outstanding Metromile equity awards upon certain terminations of employment or service, the payment of certain incentive bonuses related to the mergers and the combined company’s agreement to indemnify Metromile directors and executive officers against certain claims and liabilities. For a more complete description of these interests, see “Interests of Metromile Directors and Executive Officers in the Merger.”

Who is entitled to vote at the Metromile special meeting?

All holders of record of shares of Metromile common stock who held shares at the close of business on (the “record date”) are entitled to receive notice of, and to vote at, the Metromile special meeting. Each such holder of Metromile common stock is entitled to cast one vote for each share of Metromile common stock that such holder owned of record as of the record date on each matter properly brought before the Metromile special meeting. Virtual attendance at the Metromile special meeting via the Metromile special meeting website is not required to vote. See below and “The Metromile Special Meeting—Methods of Voting” for instructions on how to vote without virtually attending the Metromile special meeting.

What is a proxy?

A proxy is a stockholder’s legal designation of another person to vote shares owned by such stockholder on their behalf. The document used to designate a proxy to vote your shares of Metromile common stock is referred to as a “proxy card.”

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How many votes do I have at the Metromile special meeting?

Each Metromile stockholder is entitled to one vote for each share of Metromile common stock held of record as of the close of business on the record date for each proposal. As of the close of business on the record date, there were a total of shares of Metromile common stock outstanding.

What constitutes a quorum for the Metromile special meeting?

A quorum is the minimum number of shares required to be represented, either through virtual attendance or through representation by proxy, to hold a valid meeting.

The holders of a majority of the voting power of the outstanding shares of Metromile common stock entitled to vote at the Metromile special meeting must be virtually present via the Metromile special meeting website or represented by proxy in order to constitute a quorum.

Where will the Lemonade common stock that I receive in the mergers be publicly traded?

The shares of Lemonade common stock to be issued to Metromile stockholders in the mergers will be listed for trading on NYSE under the symbol “LMND.”

What happens if the mergers are not completed?

If the merger proposal is not approved by Metromile stockholders or if the mergers are not completed for any other reason, Metromile stockholders will not receive the merger consideration or any other consideration in connection with the mergers, and their shares of Metromile common stock will remain outstanding.

If the mergers are not completed, Metromile will remain an independent public company, and the Metromile common stock will continue to be listed and traded on the Nasdaq Capital Market under the symbol “MILE.”

If the merger agreement is terminated under specified circumstances, including if the Metromile board of directors changes its recommendation, Metromile may be required to pay Lemonade a termination fee of $12.5 million (the “termination fee”). See “The Merger Agreement—Termination Fee.”

How can I virtually vote my shares at the Metromile special meeting?

Shares held directly in your name as a Metromile stockholder of record may be virtually voted at the Metromile special meeting via the Metromile special meeting website. We encourage you to allow ample time for online check-in, which begins at    Pacific Time.

If you hold your shares of Metromile common stock through a broker, bank or other nominee in “street name” (instead of as a registered holder) please follow the instructions on the voting instruction form provided by your bank, broker or nominee to vote your shares. See “The Metromile Special Meeting—Virtually Attending the Metromile Special Meeting.”

Even if you plan to virtually attend the Metromile special meeting via the Metromile special meeting website, Metromile recommends that you vote by proxy in advance as described below so that your vote will be counted if you later decide not to, or become unable to virtually attend the Metromile special meeting.

For additional information on virtually attending the Metromile special meeting, see “The Metromile Special Meeting.”

How can I vote my shares without virtually attending the Metromile special meeting?

Whether you hold your shares directly as a stockholder of record of Metromile or beneficially in “street name,” you may direct your vote by proxy without virtually attending the Metromile special meeting. If you are a stockholder of record, you can vote by proxy over the Internet, by telephone or by mail by following the instructions provided in the enclosed proxy card. If you hold shares beneficially in “street name,” you should follow the voting instructions provided by your bank, broker or other nominee.

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For additional information on voting procedures, see “The Metromile Special Meeting.”

What is a “broker non-vote”?

Under NYSE rules, banks, brokers and other nominees may use their discretion to vote “uninstructed” shares (i.e., shares of record held by banks, brokers or other nominees, but with respect to which the beneficial owner of such shares has not provided instructions on how to vote on a particular proposal) with respect to matters that are considered to be “routine,” but not with respect to “non-routine” matters. A “broker non-vote” occurs on an item when (a) a bank, broker or other nominee has discretionary authority to vote on one or more proposals to be voted on at a meeting of stockholders, but is not permitted to vote on other proposals without instructions from the beneficial owner of the shares, and (b) the beneficial owner fails to provide the bank, broker or other nominee with such instructions. Because all of the proposals currently expected to be voted on at the Metromile special meeting are non-routine matters under NYSE rules for which brokers do not have discretionary authority to vote, Metromile does not expect there to be any broker non-votes at the Metromile special meeting.

What stockholder vote is required for the approval of each proposal at the Metromile special meeting? What will happen if I fail to vote or abstain from voting on each proposal at the Metromile special meeting?

Proposal 1: Merger Proposal

Assuming a quorum is present at the Metromile special meeting, approval of the merger proposal requires the affirmative vote of the holders of a majority of the voting power of the outstanding shares of Metromile common stock entitled to vote at the Metromile special meeting on the merger proposal. Accordingly, an abstention on the merger proposal will have the same effect as a vote “AGAINST” the merger proposal. In addition, any shares not virtually present or represented by proxy (including due to the failure of a Metromile stockholder who holds shares in “street name” through a bank, broker or other nominee to provide voting instructions to such bank, broker or other nominee) will have the same effect as a vote “AGAINST” the merger proposal.

Proposal 2: Adjournment Proposal

Whether or not a quorum is present at the Metromile special meeting, approval of the adjournment proposal requires the affirmative vote of the holders of a majority of the voting power of the outstanding shares of Metromile common stock that are virtually present via the Metromile special meeting website or represented by proxy and entitled to vote at the Metromile special meeting. Accordingly, any shares not virtually present or represented by proxy (including due to the failure of a Metromile stockholder who holds shares in “street name” through a bank, broker or other nominee to provide voting instructions to such bank, broker or other nominee) will have no effect on the outcome of the adjournment proposal. An abstention on the adjournment proposal will have the same effect as a vote “AGAINST” the adjournment proposal.

Are there any stockholders who have already committed to voting in favor of any of the proposals?

Yes. Contemporaneously with the execution of the merger agreement, Lemonade and certain stockholders of Metromile (the “Metromile supporting stockholders”) entered into the voting and support agreements. Pursuant to the voting and support agreements, the Metromile supporting stockholders agreed to, among other things, vote all of the shares in Metromile that they owned as of the record date at the Metromile special meeting (i) in favor of the adoption of the merger agreement, (ii) against any acquisition proposal, and (iii) against any proposal, action or agreement that would reasonably be expected to impede, interfere with, delay or postpone, prevent or otherwise impair the mergers or the other transactions contemplated by the merger agreement. A copy of the form of voting and support agreement is attached as Annex C to this proxy statement/prospectus. For more information, please see “Voting and Support Agreements.”

What is the difference between holding shares as a stockholder of record and as a beneficial owner of shares held in “street name”?

If your shares of Metromile common stock are registered directly in your name with Metromile’s transfer agent, you are considered the stockholder of record with respect to those shares. As the stockholder of record, you have the right to vote directly at the Metromile special meeting. You may also grant a proxy directly to Metromile or to a third party to vote your shares at the Metromile special meeting.

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If your shares of Metromile common stock are held by a bank, broker or other nominee, you are considered the beneficial owner of shares held in “street name.” Your bank, broker or other nominee will send you, as the beneficial owner, a package describing the procedures for voting your shares. You should follow the instructions provided by them to vote your shares.

If my shares of Metromile common stock are held in “street name” by my bank, broker or other nominee, will my bank, broker or other nominee automatically vote those shares for me?

No. Your bank, broker or other nominee will only be permitted to vote your shares of Metromile common stock if you instruct your bank, broker or other nominee how to vote. You should follow the procedures provided by your bank, broker or other nominee regarding the voting of your shares. Under NYSE rules, banks, brokers and other nominees who hold shares of Metromile common stock in “street name” for their customers have authority to vote on “routine” proposals when they have not received instructions from beneficial owners. However, banks, brokers and other nominees are prohibited from exercising their voting discretion with respect to non-routine matters, which include all the proposals currently scheduled to be considered and voted on at the Metromile special meeting. As a result, absent specific instructions from the beneficial owner of such shares, banks, brokers and other nominees are not empowered to vote such shares.

The effect of not instructing your bank, broker or other nominee how you wish to vote your shares of Metromile common stock will be the same as a vote “AGAINST” the merger proposal, but will have no effect on the adjournment proposal.

What should I do if I receive more than one set of voting materials for the Metromile special meeting?

If you hold shares of Metromile common stock in “street name” and also directly in your name as a stockholder of record or otherwise, or if you hold shares of Metromile common stock in more than one brokerage account, you may receive more than one set of voting materials relating to the Metromile special meeting.

Record Holders. For shares held directly, in order to ensure that all of your shares of Metromile common stock are voted, please vote by proxy over the Internet or telephone using the instructions included with the accompanying proxy card, or otherwise follow the voting instruction provided in this proxy statement/prospectus.

Shares in “street name.For shares held in “street name” through a bank, broker or other nominee, you should follow the procedures provided by your bank, broker or other nominee to submit a proxy or vote your shares.

If a stockholder gives a proxy, how are the shares of Metromile common stock voted?

Regardless of the method you choose to vote, the individuals named on the enclosed proxy card will vote your shares of Metromile common stock in the way that you indicate. For each item before the Metromile special meeting, you may specify whether your shares of Metromile common stock, should be voted for or against, or abstain from voting.

How will my shares of Metromile common stock be voted if I return a blank proxy?

If you sign, date and return your proxy card but do not indicate how you want your shares of Metromile common stock to be voted, then your shares of Metromile common stock will be voted in accordance with the recommendation of the Metromile board of directors: “FOR” the merger proposal and “FOR” the adjournment proposal.

Can I change my vote after I have submitted my proxy?

Any Metromile stockholder giving a proxy has the right to revoke their proxy and change their vote before the proxy is voted at the Metromile special meeting by doing any of the following:

subsequently submitting a new proxy (including over the Internet or telephone) for the Metromile special meeting, provided the new proxy is received by the deadline specified on the accompanying proxy card;
giving written notice of your revocation to Metromile’s Corporate Secretary; or
virtually attending and voting at the Metromile special meeting via the Metromile special meeting website.

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Your attendance at the Metromile special meeting will not revoke your proxy unless you (i) either give written notice of revocation to Metromile’s Corporate Secretary before your proxy is exercised or (ii) virtually attend and vote your shares at the Metromile special meeting.

Execution or revocation of a proxy will not in any way affect your right to virtually attend and vote at the Metromile special meeting via the Metromile special meeting website. Written notices of revocation and other communications relating to the revocation of proxies should be addressed to:

Metromile, Inc.

Attention: Corporate Secretary

425 Market Street, Suite 700

San Francisco, California 94105

See “The Metromile Special Meeting—Revocability of Proxies.”

If I hold my shares in “street name,” can I change my voting instructions after I have submitted voting instructions to my bank, broker or other nominee?

If your shares are held in the name of a bank, broker or other nominee and you previously provided voting instructions to your bank, broker or other nominee, you should follow the instructions provided by your bank, broker or other nominee in order to revoke or change your voting instructions.

Do Metromile stockholders have dissenters’ or appraisal rights?

Metromile stockholders are not entitled to appraisal or dissenters’ rights under the DGCL in connection with the mergers. If Metromile stockholders are not in favor of the mergers, they may vote against the merger proposal or choose to abstain from voting on the merger proposal. See “No Appraisal Rights.” Information about how Metromile stockholders may vote on the proposals being considered in connection with the mergers can be found under “The Metromile Special Meeting.”

Are there any risks that I should consider in deciding whether to vote for the approval of the merger proposal?

Yes. You should read and carefully consider the risk factors set forth under “Risk Factors.” You also should read and carefully consider the risk factors relating to Lemonade that are contained in the documents that are incorporated by reference in this proxy statement/prospectus.

What happens if I sell my shares of Metromile common stock after the record date but before the Metromile special meeting?

The record date is earlier than the date of the Metromile special meeting. If you sell or otherwise transfer your shares of Metromile common stock after the record date but before the Metromile special meeting, you will, unless special arrangements are made, retain your right to vote at the Metromile special meeting.

Who will solicit and pay the cost of soliciting proxies?

Metromile has engaged Morrow Sodali LLC (“Morrow Sodali”) to assist in the solicitation of proxies for the Metromile special meeting. Metromile estimates that it will pay Morrow Sodali a fee of approximately $17,000, plus reimbursement for certain reasonable, documented out-of-pocket expenses. Metromile has agreed to indemnify Morrow Sodali against various liabilities and expenses that relate to or arise out of its solicitation of proxies (subject to certain exceptions).

Metromile also may be required to reimburse banks, brokers and other custodians, nominees and fiduciaries or their respective agents for their expenses in forwarding proxy materials to beneficial owners of Metromile common stock. Metromile directors, officers and employees also may solicit proxies by telephone, by electronic means or in person. They will not be paid any additional amounts for soliciting proxies.

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When are the mergers expected to be completed?

Subject to the satisfaction or waiver of the closing conditions described under “The Merger Agreement— Conditions to the Completion of the Merger,” including approval of the merger proposal, the mergers are currently expected to be completed by mid-calendar year 2022. However, neither Lemonade nor Metromile can predict the actual date on which the mergers will be completed, or if the mergers will be completed at all, because completion of the mergers is subject to conditions and factors beyond the control of both companies, including the receipt of certain required regulatory approvals and consents and approval of the merger proposal by the Metromile stockholders. Lemonade and Metromile hope to complete the mergers as soon as reasonably practicable. Also see “The Merger—Regulatory Approvals.”

What respective equity stakes will current Lemonade and Metromile stockholders hold in Lemonade immediately following the mergers?

Based on the anticipated treatment of equity-based awards and the number of shares of Lemonade and Metromile common stock outstanding on December 10, 2021, the latest practicable date prior to the date of this proxy statement/prospectus, upon completion of the mergers, former Metromile stockholders are expected to own approximately 9.9% of the outstanding shares of Lemonade common stock and Lemonade stockholders immediately prior to the mergers are expected to own approximately 90.1% of the outstanding shares of Lemonade common stock. The relative ownership interests of Lemonade stockholders and former Metromile stockholders in the combined company immediately following the mergers will depend on the number of shares of Lemonade and Metromile common stock issued and outstanding immediately prior to the mergers.

How will I receive the merger consideration to which I am entitled?

If you hold your shares of Metromile common stock in book-entry form, whether through The Depository Trust Company (“DTC”) or otherwise, you will not be required to take any specific actions to exchange your shares of Metromile common stock for shares of Lemonade common stock. Such shares will, following the first effective time, be automatically exchanged for shares of Lemonade common stock (in book-entry form) and cash in lieu of any fractional shares of Metromile common stock to which you are entitled. If you instead hold your shares of Metromile common stock in certificated form, then, after receiving the proper documentation from you following the first effective time, the exchange agent will deliver to you the shares of Lemonade common stock (in book-entry form) and cash in lieu of any fractional shares of Lemonade common stock to which you are entitled. See “The Merger Agreement—Exchange of Shares.”

What should I do now?

You should read this proxy statement/prospectus carefully and in its entirety, including the annexes. Then, you may vote by proxy over the Internet or telephone using the instructions included with the accompanying proxy card, or promptly complete your proxy card and return it in the enclosed postage-paid envelope, so that your shares will be voted in accordance with your instructions.

How can I find more information about Lemonade and Metromile?

You can find more information about Lemonade and Metromile by reading this proxy statement/prospectus and from various sources described under “Where You Can Find More Information.”

What are the U.S. federal income tax consequences of the mergers to U.S. Holders of Metromile common stock?

Metromile and Lemonade intend that the mergers, taken together, should qualify as a “reorganization” within the meaning of Section 368(a) of the Code for U.S. federal income tax purposes (the “Intended Tax Treatment.”) Assuming the mergers so qualify, a U.S. holder (as defined under “Material U.S. Federal Income Tax Consequences of the Mergers”) of Metromile common stock generally will not recognize any gain or loss for U.S. federal income tax purposes upon the exchange of Metromile common stock for Lemonade common stock in the first merger, except with respect to cash received by such U.S. holder in lieu of fractional shares of Lemonade common stock.

However, it is not a condition to Metromile’s obligation or Lemonade’s obligation to consummate the transactions contemplated by the merger agreement that the mergers qualify for the Intended Tax Treatment or that Metromile or Lemonade receive an opinion from counsel to that effect. Whether or not the mergers qualify for the Intended Tax Treatment depends on facts that will not be known until the mergers are completed and on the treatment of the right under the merger agreement of current and former holders of

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Metromile common stock to receive Lemonade Additional Shares in respect of their right to the Metromile Additional Shares (as described in “The Merger Agreement—Treatment of Additional Shares”). Furthermore, neither Metromile nor Lemonade intends to request a ruling from the IRS regarding the U.S. federal income tax consequences of the mergers. Accordingly, no assurance can be given that the mergers will qualify for the Intended Tax Treatment or that the IRS will not challenge the conclusion that the mergers will qualify for the Intended Tax Treatment or that a court would not sustain such a challenge. If, contrary to expectations, the mergers do not qualify for the Intended Tax Treatment, U.S. holders of Metromile stock could be subject to U.S. federal income tax upon the receipt of Lemonade common stock in the first merger.

See “Material U.S. Federal Income Tax Consequences of the Mergers” for a more complete description of material U.S. federal income tax consequences of the mergers. The discussion of the material U.S. federal income tax consequences contained in this proxy statement/prospectus is intended to provide only a general discussion and is not a complete analysis or description of all potential U.S. federal income tax consequences of the mergers that may vary with, or are dependent on, individual circumstances. In addition, it does not address the effects of any foreign, state or local tax laws or any U.S. federal tax laws other than U.S. federal income tax laws. Tax matters are very complicated and the tax consequences of the mergers to each U.S. holder of Metromile common stock may depend on such stockholder’s particular facts and circumstances. Please consult your tax advisors as to the specific tax consequences to you of the mergers.

Whom do I call if I have questions about the Metromile special meeting or the mergers?

If you have questions about the Metromile special meeting or the mergers, or desire additional copies of this proxy statement/prospectus or additional proxies, you may contact Metromile’s proxy solicitor:

Morrow Sodali LLC

333 Ludlow Street, 5th Floor, South Tower

Stamford, Connecticut 06902

Tel: Toll-Free (800) 622-5200 or (203) 658-9400

Email: MILE@investor.morrowsodali.com

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SUMMARY

For your convenience, provided below is a brief summary of certain information contained in this proxy statement/prospectus. This summary highlights selected information from this proxy statement/prospectus and does not contain all of the information that may be important to you as a Metromile stockholder. To understand the mergers fully and for a more complete description of the terms of the mergers, you should read carefully this entire proxy statement/prospectus, its annexes and the other documents to which you are referred. Items in this summary include a page reference directing you to a more complete description of those items. You may obtain the information incorporated by reference in this proxy statement/prospectus, without charge, by following the instructions under “Where You Can Find More Information.”

The Parties to the Mergers

Lemonade, Inc.

Lemonade is rebuilding insurance from the ground up on a digital substrate and an innovative business model. By leveraging technology, data, artificial intelligence, contemporary design, and behavioral economics, Lemonade believes it is making insurance more delightful, more affordable, more precise, and more socially impactful. To that end, Lemonade has built a vertically-integrated company with wholly-owned insurance carriers in the United States and Europe, and the full technology stack to power them. Lemonade is headquartered in New York, New York. Lemonade’s principal executive offices are located at 5 Crosby Street, 3rd Floor, New York, New York 10013, and its telephone number is (844) 733-8666.

Metromile, Inc.

Metromile is a leading digital insurance platform in the United States. With data science at its foundation, Metromile offers real-time, personalized auto insurance policies by the mile instead of the industry’s reliance on approximations that have historically made prices unfair. Metromile’s digitally native offering is built around the modern driver’s needs, featuring automated claims, complimentary smart driving features and annual average savings of 47% over what they were paying their previous auto insurer. In addition, through Metromile Enterprise, Metromile licenses its technology platform to insurance companies around the world. Metromile’s cloud-based software as a service enables carriers to operate with greater efficiency, automate claims to expedite resolution, reduce losses associated with fraud, and unlock the productivity of employees. Metromile is headquartered in San Francisco, California. Metromile’s principal executive offices are located at 425 Market Street, Suite 700, San Francisco, California 94105, and its telephone number is (888) 242-5204.

Citrus Merger Sub A, Inc.

Citrus Merger Sub A, Inc. was formed by Lemonade solely in contemplation of the first merger, and has not conducted any business and does not have any assets, liabilities or obligations of any nature other than as set forth in the merger agreement. Upon the terms and subject to the conditions set forth in the merger agreement, Citrus Merger Sub A, Inc. will merge with and into Metromile, with Metromile continuing as the surviving entity (the “Initial Surviving Corporation”). Citrus Merger Sub A, Inc.’s principal executive offices is located at 5 Crosby Street, 3rd Floor, New York, New York 10013, and its telephone number is (844) 733-8666.

Citrus Merger Sub B, LLC

Citrus Merger Sub B, LLC was formed by Lemonade solely in contemplation of the second merger, and has not conducted any business and does not have any assets, liabilities or obligations of any nature other than as set forth in the merger agreement. Upon the terms and subject to the conditions set forth in the merger agreement, following the first merger, the Initial Surviving Corporation will merge with and into Citrus Merger Sub B, LLC, with Citrus Merger Sub B, LLC continuing as the surviving entity and as a wholly owned subsidiary of Lemonade. Citrus Merger Sub B, LLC’s principal executive offices is located at 5 Crosby Street, 3rd Floor, New York, New York 10013, and its telephone number is (844) 733-8666.

The Mergers and the Merger Agreement

The terms and conditions of the mergers are contained in the merger agreement, a copy of which is attached as Annex A hereto. Lemonade and Metromile encourage you to read the merger agreement carefully and in its entirety, as it is the legal document that governs the mergers.

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The merger agreement provides that, subject to the terms and conditions of the merger agreement, (i) Acquisition Sub I will merge with and into Metromile, with Metromile continuing as the Initial Surviving Corporation and (ii) the Initial Surviving Corporation will then merge with and into Acquisition Sub II, with Acquisition Sub II continuing as the surviving entity and as a wholly owned subsidiary of Lemonade.

Merger Consideration

At the first effective time, each share of Metromile common stock (other than shares held in treasury by Metromile or held directly by Lemonade or Acquisition Sub I (which shares will be cancelled)) that was issued and outstanding immediately prior to the first effective time will be converted into the right to receive 0.05263 shares of Lemonade common stock as well as cash (without interest and less any applicable withholding taxes) in lieu of any fractional shares of Lemonade common stock.

The exchange ratio is fixed, which means that it will not change between now and the date of the mergers, regardless of any changes in the market price of Lemonade or Metromile common stock.

Treatment of Metromile Equity Awards

Except as set forth in the immediately following sentence, each Metromile stock option, whether vested or unvested, that is outstanding and unexercised immediately prior to the first effective time will, as of the first effective time, be assumed by Lemonade and automatically converted into a stock option to acquire a number of shares of Lemonade common stock (rounded down to the nearest whole share) equal to the product of (i) the number of shares subject to the Metromile stock option and (ii) the exchange ratio, with an exercise price per share of Lemonade common stock (rounded up to the nearest whole cent) equal to (A) the per share exercise price of the Metromile stock option divided by (B) the exchange ratio. Each outstanding and unexercised Metromile stock option held by any individual who was not employed by or providing services to Metromile as of November 8, 2021, will, as of the effective time, be converted into the right to receive an amount in cash, without interest, equal to the product of (1) the excess, if any, of the product of (x) the average of the volume weighted average trading prices per share of Lemonade common stock on NYSE on each of the 20 consecutive trading days ending on (and including) the trading day that is three trading days prior to the date of effective time and (y) the exchange ratio (which we refer to as the “per Metromile share cash consideration”), over the exercise price per share of such Metromile stock option, multiplied by (2) the total number of shares subject to such Metromile stock option (the “Option Consideration”). Any such Metromile stock option that has an exercise price per share that is greater than or equal to the per Metromile share cash consideration will be cancelled for no consideration.

Except as set forth in the immediately following sentence, each Metromile restricted stock unit award (which we refer to as a “Metromile RSU award”) that is outstanding immediately prior to the first effective time will, as of the first effective time, be assumed by Lemonade and automatically converted into an award of Lemonade restricted stock units (which we refer to as a “Lemonade RSU award”) covering a number of shares of Lemonade common stock equal to (i) the number of shares of Metromile common stock underlying such Metromile RSU award multiplied by (ii) the exchange ratio. Each outstanding Metromile RSU award held by Metromile’s non-employee directors and each Metromile RSU award that is outstanding and vests based on the achievement of one or more performance criteria will be cancelled and converted automatically into the right to receive an amount in cash equal to the per Metromile share cash consideration in respect of each share of common stock underlying such Metromile RSU award (in the case of performance-based Metromile RSU awards, based on actual performance) (the “RSU Consideration”). For purposes of the foregoing, the determination of actual performance with respect to any performance-based Metromile RSU awards and the number of shares underlying the Metromile RSU award that vest as of the effective time as a result of such performance will be made by Metromile prior to the effective time in accordance with the terms and conditions of the applicable award agreement.

Aside from the foregoing adjustments, each Metromile stock option and Metromile RSU Award that is assumed by Lemonade will generally remain subject to the same vesting and other terms and conditions that applied to such award immediately prior to the effective time.

Recommendation of the Metromile Board of Directors; Metromile’s Reasons for the Mergers

The Metromile board of directors unanimously recommends that you vote “FOR” the merger proposal and “FOR” the adjournment proposal. For a description of some of the factors considered by the Metromile board of directors in (a) determining that the mergers are fair to and in the best interests of Metromile and its stockholders; (b) approving and declaring advisable the execution and delivery of the merger agreement, the performance by Metromile of its covenants and agreements contained therein and the transactions contemplated thereby, including the mergers, on the terms and subject to the conditions set forth in the merger agreement;

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and (c) directing that the adoption of the merger agreement be submitted to a vote at a meeting of Metromile stockholders, and additional information on the recommendation of the Metromile board of directors, see “The Merger—Recommendation of the Metromile Board of Directors; Metromile’s Reasons for the Merger.”

Opinion of Metromile’s Financial Advisor

Metromile has engaged Allen & Company LLC (“Allen & Company”) as Metromile’s financial advisor in connection with the mergers. In connection with this engagement, Allen & Company delivered a written opinion, dated November 8, 2021, to the Metromile board of directors as to the fairness, from a financial point of view and as of the date of such opinion, of the exchange ratio provided for in the merger agreement. The full text of Allen & Company’s written opinion, dated November 8, 2021, which describes the assumptions made, procedures followed, matters considered and qualifications and limitations on the review undertaken, is attached to this proxy statement/prospectus as Annex B hereto and is incorporated by reference herein in its entirety. The description of Allen & Company’s opinion set forth in this proxy statement/prospectus is qualified in its entirety by reference to the full text of Allen & Company’s opinion. Allen & Company’s opinion and advisory services were intended for the benefit and use of the Metromile board of directors (in its capacity as such) in connection with its evaluation of the exchange ratio from a financial point of view and did not address any other terms, aspects or implications of the mergers. Allen & Company’s opinion did not constitute a recommendation as to the course of action that Metromile (or the Metromile board of directors or any committee thereof) should pursue in connection with the mergers or otherwise address the merits of the underlying decision by Metromile to engage in the mergers, including in comparison to other strategies or transactions that might be available to Metromile or which Metromile might engage in or consider. Allen & Company’s opinion does not constitute advice or a recommendation to any securityholder or other person as to how to vote or act on any matter relating to the mergers or otherwise.

The Metromile Special Meeting

The Metromile special meeting is scheduled to be held virtually via live webcast on  , 2022, beginning at , Pacific Time, unless adjourned or postponed to a later date.

In light of ongoing developments related to the COVID-19 pandemic, the Metromile special meeting will be held solely in a virtual meeting format via live webcast. We encourage you to allow ample time for online check-in, which begins at , Pacific Time.

The purpose of the Metromile special meeting is to consider and vote on each of the following proposals:

Proposal 1: Adoption of the merger agreement. and
Proposal 2: Adjournment of the Metromile special meeting.

Metromile stockholders must approve the merger proposal as a condition to the completion of the mergers. If Metromile stockholders fail to approve the merger proposal, the mergers will not occur. The vote on the merger proposal is a vote separate and apart from the vote to approve the adjournment proposal. Accordingly, a Metromile stockholder may vote to approve the merger proposal and vote not to approve the adjournment proposal, and vice versa.

Only holders of record of shares of Metromile common stock outstanding as of the close of business on the record date are entitled to notice of, and to vote at, the Metromile special meeting or any adjournment thereof. Metromile stockholders may cast one vote for each share of Metromile common stock that they own of record as of the record date.

A quorum of Metromile stockholders is necessary to conduct the Metromile special meeting. The presence, virtually via the Metromile special meeting website or by proxy, of the holders of a majority of the issued and outstanding shares of Metromile common stock entitled to vote at the Metromile special meeting will constitute a quorum. All shares of Metromile common stock represented by a valid proxy and all abstentions will be counted as present for purposes of establishing a quorum. All of the proposals for consideration at the Metromile special meeting are considered “non-routine” matters under NYSE rules, and, therefore, brokers are not permitted to vote on any of the matters to be considered at the Metromile special meeting unless they have received instructions from the beneficial owners. As a result, no “broker non-votes” are expected at the meeting, and shares held in “street name” will not be counted as present for the purpose of determining the existence of a quorum unless the Metromile stockholder provides their bank, broker or other nominee with voting instructions for at least one of the proposals brought before the Metromile special meeting.

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Assuming a quorum is present at the Metromile special meeting, approval of the merger proposal requires the affirmative vote of the holders of a majority of the voting power of the outstanding shares of Metromile common stock entitled to vote at the Metromile special meeting on the merger proposal. Accordingly, an abstention or other failure to vote on the merger proposal will have the same effect as a vote “AGAINST” the merger proposal.

Whether or not a quorum is present at the Metromile special meeting, approval of the adjournment proposal requires the affirmative vote of the holders of a majority of the voting power of the outstanding shares of Metromile common stock that are virtually present via the Metromile special meeting website or represented by proxy and entitled to vote at the Metromile special meeting. Accordingly, any shares not virtually present or represented by proxy (including due to the failure of a Metromile stockholder who holds shares in “street name” through a bank, broker or other nominee to provide voting instructions to such bank, broker or other nominee) will have no effect on the outcome of the adjournment proposal. An abstention or other failure of any shares virtually present or represented by proxy and entitled to vote at the Metromile special meeting on the adjournment proposal to vote on the adjournment proposal will have the same effect as a vote “AGAINST” the adjournment proposal.

Interests of Lemonade Directors and Executive Officers in the Mergers

As of the date of this proxy statement/prospectus, Lemonade directors and executive officers do not have interests in the mergers that are different from, or in addition to, the interests of other Lemonade stockholders generally.

Interests of Metromile Directors and Executive Officers in the Mergers

In considering the recommendations of the Metromile board of directors, Metromile stockholders should be aware that Metromile directors and executive officers have interests in the mergers, including financial interests, which may be different from, or in addition to, the interests of other Metromile stockholders generally. The Metromile board of directors was aware of and considered these interests, among other matters, when it determined that the mergers are fair to and in the best interests of Metromile and its stockholders, approved and declared advisable the merger agreement and the transactions contemplated thereby, including the mergers, and recommended that Metromile stockholders approve the merger proposal. See the section of this proxy statement/prospectus entitled “The Merger — Background of the Merger” and the section of this proxy statement/prospectus entitled “The Merger — Recommendation of the Metromile Board of Directors; Metromile’s Reasons for the Merger.”

These interests include the following:

Effective as of the first effective time, each Metromile stock option and Metromile RSU Award that is outstanding immediately prior to the first effective time, including those held by our directors and executive officers, will be assumed by Lemonade or cashed out, in each case, as specified in the merger agreement.
Severance payments and benefits may be payable to Metromile executive officers upon certain qualifying terminations of employment in connection with or following a change of control such as the mergers.
Certain Metromile executive officers are eligible to receive retention awards in connection with or following the mergers.
Metromile executive officers and directors are entitled to continued indemnification and insurance coverage under their respective existing indemnification agreements executed with Metromile (collectively, the “indemnification agreements”) and the merger agreement.

For a more complete description of these interests, see “The Merger — Interests of Metromile Directors and Executive Officers in the Merger.”

Governance of the Combined Company

Upon consummation of the mergers, the executive management team of Lemonade is expected to remain unchanged and consist of members of the Lemonade executive management team prior to the mergers, including Lemonade’s executive officers set forth below in “Interests of Lemonade Directors and Executive Officers in the Merger.”

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Organizational Documents and Directors and Officers of the Initial Surviving Corporation

At the first effective time, Metromile’s certificate of incorporation as in effect immediately prior to the first effective time will continue as the certificate of incorporation of the Initial Surviving Corporation. At the first effective time, Metromile’s bylaws as in effect immediately prior to the first effective time will continue as the bylaws of the Initial Surviving Corporation.

Organizational Documents and Directors and Officers of the Surviving Company

At the second effective time, Acquisition Sub II (the “Surviving Company”) certificate of formation will be amended and restated in its entirety in substantially the form of the certificate of formation set forth in an exhibit to the merger agreement. At the second effective time, the Surviving Company’s limited liability company agreement will be amended and restated in its entirety in substantially the form of the limited liability company agreement set forth in an exhibit to the merger agreement except that the name of the Surviving Company will be changed to “Metromile, LLC.” Acquisition Sub II’s directors and officers immediately prior to the second effective time will become the initial directors and officers of Metromile, LLC.

Security Ownership of Certain Beneficial Owners and Management of Metromile

At the close of business on December 10, 2021, the latest practicable date prior to the date of this proxy statement/prospectus, Metromile directors and executive officers and their affiliates, as a group, beneficially owned approximately 18,877,706 shares of Metromile common stock, collectively representing approximately 14.3% of the shares of Metromile common stock outstanding on such date. Metromile currently expects that all Metromile directors and executive officers will vote their shares “FOR” the merger proposal and “FOR” the adjournment proposal. For more information regarding the security ownership of Metromile directors and executive officers, see “Security Ownership of Certain Beneficial Owners and Management of Metromile.”

Regulatory Approvals

Lemonade, the Acquisition Subs and Metromile have each agreed to cooperate with each other and to use (and to cause their subsidiaries to use) their respective reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary to cause the conditions to the closing of the mergers to be satisfied as promptly as reasonably practicable (and in any event no later than August 8, 2022 (which, pursuant to the terms of the merger agreement, may be extended to November 8, 2022 in certain circumstances related to the receipt of required regulatory approvals and the absence of restraints under applicable legal requirements) (the “end date”) and to consummate the transactions contemplated by the merger agreement, including to obtain all necessary, proper or advisable regulatory consents and approvals as promptly as reasonably practicable, subject to certain limits. See “The Merger—Regulatory Approvals.”

The obligations of Lemonade and Metromile to consummate the mergers are subject to, among other conditions, the expiration or termination of all waiting periods (and any agreed upon extensions of any waiting period or commitment not to consummate the mergers for any period of time) applicable to the consummation of the mergers under the HSR Act, the absence of any agreement pending or in effect between Lemonade and any governmental entity not to close the mergers, and the receipt of certain required regulatory approvals and consents.

Ownership of the Combined Company

Based on the anticipated treatment of equity-based awards and the number of shares of Lemonade and Metromile common stock outstanding as of December 10, 2021, the latest practicable date prior to the date of this proxy statement/prospectus, upon completion of the mergers, former Metromile stockholders are expected to own approximately 9.9% of the outstanding shares of Lemonade common stock and Lemonade stockholders immediately prior to the mergers are expected to own approximately 90.1% of the outstanding shares of Lemonade common stock. The relative ownership interests of Lemonade stockholders and former Metromile stockholders in the combined company immediately following the mergers will depend on the number of shares of Lemonade and Metromile common stock issued and outstanding immediately prior to the mergers.

No Appraisal Rights

The Metromile stockholders are not entitled to appraisal of their shares or dissenters’ rights with respect to the mergers.

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Conditions to the Completion of the Mergers

The obligations of each of Lemonade and Metromile to complete the mergers are subject to the satisfaction or waiver, in whole or in part (to the extent permitted by applicable law), at or prior to the closing, of each of the following conditions:

the SEC having declared effective the registration statement on Form S-4 of which this proxy statement/prospectus forms a part, and the absence of any stop order or pending (or threatened) proceedings by the SEC with respect thereto;
approval by Metromile stockholders of the merger proposal;
the expiration or termination of all waiting periods (and any agreed upon extensions of any waiting period or commitment not to consummate the mergers for any period of time) applicable to the consummation of the mergers under the HSR Act, the absence of any agreement pending or in effect between Lemonade and any governmental entity not to close the mergers, and the receipt of certain required regulatory consents and approvals;
the approval for listing by the NYSE of the shares of Lemonade common stock to be issued to Metromile stockholders in the mergers, including shares of Lemonade common stock to be issued in connection with assumed Metromile equity awards; and
the absence of any law or order by any governmental entity of competent jurisdiction preventing, enjoining or making illegal the consummation of the mergers.

In addition, each party’s obligation to complete the mergers is subject to, among other things, the accuracy of certain representations and warranties of the other party and the compliance by such other party with certain of its covenants, in each case, subject to the materiality standards set forth in the merger agreement, and the absence of the occurrence of any material adverse effect.

Neither Lemonade nor Metromile can be certain when, or if, the conditions to the mergers will be satisfied or waived, or that the mergers will be completed.

No Solicitation of Acquisition Proposals

As more fully described under “The Merger Agreement—No Solicitation of Acquisition Proposals,” subject to the exceptions summarized below, Metromile has agreed that it will not (a) solicit, initiate, knowingly encourage or knowingly facilitate any inquiries regarding, or the submission or announcement by any person of, any proposal or offer that constitutes, or would reasonably be expected to lead to, an acquisition proposal (as defined under “The Merger Agreement—No Solicitation of Acquisition Proposals”), (b) furnish any information regarding such party or its subsidiaries in connection with, or for the purpose of soliciting, initiating, encouraging or facilitating, or in response to, any inquiry, proposal or offer that constitutes or would reasonably be expected to lead to an acquisition proposal, (c) engage in, enter into, continue or otherwise participate in any discussions or negotiations with any person with respect to any acquisition proposal or any inquiry, proposal or offer that would reasonably be expected to lead to an acquisition proposal, (d) approve, adopt, recommend, agree to or enter into, or propose to approve, adopt, recommend, agree to or enter into, any letter of intent, memorandum of understanding or similar document, agreement, commitment or agreement in principle with respect to any acquisition proposal or (e) resolve or agree to do any of the foregoing.

Notwithstanding the restrictions described above, if at any time prior to obtaining approval of the merger proposal, Metromile receives a bona fide, written acquisition proposal after the date of the merger agreement that did not result from a material breach of the non-solicitation provisions in the merger agreement and that the Metromile board of directors determines in good faith (after consultation with its outside legal counsel and financial advisor) constitutes or could reasonably be expected to lead to a superior proposal (as defined under “The Merger Agreement—No Solicitation of Acquisition Proposals”), Metromile may (a) engage in discussions or negotiations with the party making the acquisition proposal and (b) furnish information with respect to Metromile to the party making the acquisition proposal, subject to certain conditions and obligations in the merger agreement. Metromile has also agreed to notify Lemonade promptly following (and in any event, within one business day of the receipt of) any acquisition proposal or any request for information that is reasonably likely to lead to an acquisition proposal and to keep Lemonade reasonably informed on a current basis (and in any event, within one business day) as to the status of any acquisition proposal, including informing Lemonade of any material change to such acquisition proposal’s terms, the status of any negotiations, and any change in its intentions.

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In addition, at any time prior to obtaining approval of the merger proposal, Metromile will be permitted, through its representatives or otherwise, to seek clarification from (but not, unless otherwise allowed pursuant to the merger agreement, to engage in any negotiations with or provide any non-public information to) any person that has made an acquisition proposal solely to clarify and understand the terms and conditions of such proposal to provide adequate information for the Metromile board of directors to make an informed determination with respect to such acquisition proposal.

No Change of Recommendation

The merger agreement provides that, among other restrictions and subject to certain exceptions, the Metromile board of directors will not (a) withhold, withdraw, modify, amend or qualify (or publicly propose to do so), in a manner adverse to Lemonade, the Metromile board of directors’ recommendation to Metromile stockholders to adopt the merger agreement or (b) approve, recommend or declare advisable (or publicly propose to do so) any acquisition proposal.

Notwithstanding the restrictions described above, at any time prior to obtaining the approval by Metromile stockholders of the merger proposal, the Metromile board of directors may make a change of recommendation if it determines in good faith (after consultation with its outside legal counsel and financial advisor) that such acquisition proposal constitutes a superior proposal and that failure to take such action with respect to such acquisition proposal would reasonably be expected to be inconsistent with the Metromile board of directors’ fiduciary duties to Metromile and its stockholders under applicable law (and subject to compliance with certain obligations set forth in the merger agreement, including providing Lemonade with prior notice and the opportunity to negotiate for a period to match the terms of the superior proposal. In addition, such change of recommendation would entitle Lemonade to terminate the merger agreement and collect a termination fee of $12.5 million (the “termination fee”) from Metromile.

In addition, the Metromile board of directors is permitted, under certain circumstances prior to obtaining Metromile stockholder approval of the merger proposal, and subject to compliance with certain obligations set forth in the merger agreement (including providing Lemonade with prior notice and the opportunity to negotiate during such notice period to amend the terms of the merger agreement) to make a change of recommendation in response to an intervening event (unrelated to an acquisition proposal) and as such term is defined in the section "The Merger Agreement -- Change in Recommendation -- Permitted Change of Recommendation — Intervening Event" if the Metromile board of directors determines in good faith (after consultation with its outside legal counsel and financial advisor) that the failure to do so would be reasonably likely to be inconsistent with its fiduciary duties.

Termination of the Merger Agreement

The merger agreement may be terminated and the mergers abandoned:

by mutual written consent of Lemonade and Metromile at any time prior to the effective time;
by either Lemonade or Metromile, if the mergers have not been consummated on or prior to the end date, including any automatic extension thereof (however, a party may not terminate the merger agreement if such party’s material breach of any of its obligations under the merger agreement materially contributed to the failure of the closing to have occurred by the end date);
by either Lemonade or Metromile, if a governmental authority of competent jurisdiction issues a final and non-appealable order or adopts or enacts a law that is final and non-appealable that permanently prevents, enjoins or makes illegal the consummation of the mergers (however, a party may not terminate the merger agreement if the material breach by such party (or any affiliate of such party) of any such party’s obligations under the merger agreement shall have been the primary cause of, or primarily resulted in, the issuance or continued existence of such order or law);
by Lemonade, if Metromile has made a change of recommendation, prior to Metromile obtaining its required stockholder approval;
by Lemonade, if Metromile breaches the merger agreement non-solicitation provisions in any material respect;
by either party, if the merger proposal is not approved at the Metromile special meeting, including any adjournment thereof;
by either party, if any representation or warranty of the other party becomes inaccurate or the other party breaches any covenant in the merger agreement and such inaccuracy or breach (a) would result in the failure of certain conditions to

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closing and (b) is not curable by the end date or, if curable and the other party is using reasonable best efforts to cure, is not cured by the date that is 30 days following written notice describing such breach (however, the terminating party may not exercise this termination right if it is then in breach of any representation, warranty or agreement contained in the merger agreement which breach would give rise to the failure of a condition to the merger agreement regarding accuracy of representations and warranties and compliance with covenants).

Termination Fee

The termination fee will be payable by Metromile only once and not in duplication even though the termination fee may be payable by Metromile pursuant to multiple circumstances.

Metromile has agreed to pay the termination fee to Lemonade if the merger agreement is terminated. Metromile is also required to pay the termination fee if the merger agreement is terminated in certain circumstances, including if the merger agreement is terminated by Lemonade in the event of a change of recommendation by the Metromile board of directors.

Furthermore, except in the case of “actual, common law fraud or willful breach” with respect to Metromile’s representations and warranties set forth in the merger agreement, if Lemonade receives the termination fee, then the termination fee will be Lemonade’s sole and exclusive remedy against Metromile, its affiliates and its and their respective representatives in connection with the merger agreement.

Voting and Support Agreements

Contemporaneously with the execution of the merger agreement, Lemonade and certain stockholders of Metromile entered into the voting and support agreements. Pursuant to the voting and support agreements, the Metromile supporting stockholders agreed to, among other things, vote all of their shares in Metromile that they own as of the record date at the Metromile special meeting (i) in favor of the adoption of the merger agreement, (ii) against any acquisition proposal, and (iii) against any proposal, action or agreement that would reasonably be expected to impede, interfere with, delay or postpone, prevent or otherwise impair the mergers or the other transactions contemplated by the merger agreement.

A copy of the form of the Voting and Support Agreements is attached as Annex C to this proxy statement/prospectus.

Accounting Treatment

Lemonade prepares its financial statements in accordance with GAAP. The merger will be accounted for using the acquisition method of accounting under the provisions of ASC 805, INSU SPAC transactions. Lemonade’s management has evaluated the guidance contained in ASC 805 with respect to the identification of the acquirer in the merger and concluded, based on a consideration of the pertinent facts and circumstances, that Lemonade will be the acquirer for financial accounting purposes. Accordingly, Lemonade’s cost to acquire Metromile has been allocated to Metromile’s acquired assets and liabilities based upon their estimated fair values. The allocation of the purchase price is estimated and is dependent upon estimates of certain valuations that are subject to change. In addition, the final purchase price of Lemonade’s acquisition of Metromile will not be known until the date of the completion of the merger and could vary materially from the preliminary purchase price. Accordingly, the final acquisition accounting adjustments may be materially different from the preliminary unaudited pro forma adjustments presented.

The financial condition and results of operations of Lemonade after completion of the mergers will include the operating results of Metromile beginning from the closing date of the mergers (the “closing date”), but will not be restated retroactively to reflect the historical financial condition or results of operations of Metromile. The earnings of Lemonade following completion of the mergers will reflect acquisition accounting adjustments, including the effect of changes in the carrying value for assets and liabilities on depreciation expense and amortization expense. Indefinite-lived intangible assets, including goodwill, will not be amortized but will be tested for impairment at least annually, and all tangible and intangible assets including goodwill will be tested for impairment when certain indicators are present. If, in the future, Lemonade determines that tangible or intangible assets (including goodwill) are impaired, Lemonade would record an impairment charge at that time.

Material U.S. Federal Income Tax Consequences of the Mergers

Metromile and Lemonade intend that the mergers, taken together, should qualify as a “reorganization” within the meaning of Section 368(a) of the Code for U.S. federal income tax purposes (the “Intended Tax Treatment”).

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Assuming the mergers, taken together, so qualify, a U.S. holder (as defined under “Material U.S. Federal Income Tax Consequences of the Mergers”) of Metromile common stock generally will not recognize any gain or loss for U.S. federal income tax purposes upon the exchange of Metromile common stock for Lemonade common stock in the first merger, except with respect to cash received by such U.S. holder in lieu of fractional shares of Lemonade common stock.

However, it is not a condition to Metromile’s obligation or Lemonade’s obligation to consummate the transactions contemplated by the merger agreement that the mergers qualify for the Intended Tax Treatment or that Metromile or Lemonade receive an opinion from counsel to that effect. Whether or not the mergers qualify for the Intended Tax Treatment depends on facts that will not be known until the mergers are completed and on the treatment of the right under the merger agreement of current and former holders of Metromile common stock to receive Lemonade Additional Shares in respect of their right to the to Metromile Additional Shares (as described in “The Merger Agreement—Treatment of Additional Shares”). Furthermore, neither Metromile nor Lemonade intends to request a ruling from the IRS regarding the U.S. federal income tax consequences of the mergers. Accordingly, no assurance can be given that the mergers will qualify for the Intended Tax Treatment or that the IRS will not challenge the conclusion that the mergers will qualify for the Intended Tax Treatment or that a court would not sustain such a challenge. If, contrary to expectations, the mergers do not qualify for the Intended Tax Treatment, U.S. holders of Metromile stock could be subject to U.S. federal income tax upon the receipt of Lemonade common stock in the first merger.

See “Material U.S. Federal Income Tax Consequences of the Mergers” for a more complete description of material U.S. federal income tax consequences of the mergers. The discussion of the material U.S. federal income tax consequences contained in this proxy statement/prospectus is intended to provide only a general discussion and is not a complete analysis or description of all potential U.S. federal income tax consequences of the mergers that may vary with, or are dependent on, individual circumstances. In addition, it does not address the effects of any foreign, state or local tax laws or any U.S. federal tax laws other than U.S. federal income tax laws.

Tax matters are very complicated and the tax consequences of the mergers to each U.S. holder of Metromile common stock may depend on such stockholder’s particular facts and circumstances. Please consult your tax advisors as to the specific tax consequences to you of the mergers.

Comparison of Stockholders’ Rights

Upon completion of the mergers, Metromile stockholders receiving shares of Lemonade common stock will become Lemonade stockholders. The rights of Lemonade stockholders will be governed by the DGCL and the Lemonade charter and bylaws in effect at the second effective time. As Lemonade and Metromile are both Delaware corporations, the rights of Lemonade and Metromile stockholders are not materially different. However, there are certain differences between the rights of Lemonade stockholders under the Lemonade charter and bylaws and the rights of of Metromile stockholders under the Metromile charter and bylaws. See “Comparison of Stockholders’ Rights.”

Listing of Lemonade Common Stock; Delisting and Deregistration of Metromile Common Stock

It is a condition to the mergers that the shares of Lemonade common stock to be issued to Metromile stockholders in connection with the mergers be approved for listing on the NYSE, subject to official notice of issuance. If the mergers are completed, Metromile common stock will be delisted from the Nasdaq Capital Market and deregistered under the Exchange Act, following which Metromile will no longer be required to file periodic reports with the SEC with respect to Metromile common stock.

Metromile has agreed to cooperate with Lemonade prior to the closing to cause the Metromile common stock to be delisted from the Nasdaq Capital Market and deregistered under the Exchange Act as soon as practicable following the effective time.

Summary of Risk Factors 

The mergers, including the possibility that the mergers may not be completed, involves a number of risks. In evaluating the proposals set forth in this proxy statement/prospectus, you should carefully read this proxy statement/prospectus, including the annexes, and especially consider the factors discussed in the section entitled “Risk Factors”. Below is a summary of such risk factors:

Risks Relating to the Mergers

The exchange ratio is fixed and will not be adjusted in the event of any change in the price of either Lemonade or Metromile common stock; therefore, the value of the consideration that Metromile stockholders will receive in the mergers is uncertain;

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The market price of Lemonade common stock will continue to fluctuate after the mergers;
The mergers may not be completed and the merger agreement may be terminated in accordance with its terms;
The termination of the merger agreement could negatively impact Lemonade or Metromile and the trading prices of the Lemonade or Metromile common stock;
The market price for shares of Lemonade common stock may be affected by factors different from, or in addition to, those that historically have affected or currently affect the market prices of shares of Lemonade or Metromile common stock;
The shares of common stock of the combined company to be received by Metromile stockholders as a result of the mergers will have rights different from the shares of Metromile common stock;
After the mergers, Metromile stockholders will have a significantly lower ownership and voting interest in Lemonade than they currently have in Metromile and will exercise less influence over management and policies of the combined company;
Until the completion of the mergers or the termination of the merger agreement in accordance with its terms, Lemonade and Metromile are each prohibited from entering into certain transactions and taking certain actions that might otherwise be beneficial to Lemonade, Metromile and/or their respective stockholders;
Obtaining certain required regulatory consents and approvals and satisfying closing conditions may prevent or delay completion of the mergers;
Lemonade and Metromile must obtain certain regulatory consents and approvals to consummate the mergers, which, if delayed, not granted or granted with burdensome or unacceptable conditions, could prevent, substantially delay or impair consummation of the mergers, result in additional expenditures of money and resources or reduce the anticipated benefits of the mergers;
Failure to attract, motivate and retain executives and other key employees could diminish the anticipated benefits of the mergers;
The mergers, and uncertainty regarding the mergers, may cause customers, strategic partners and others to delay or defer decisions concerning Lemonade or Metromile and adversely affect each company’s ability to effectively manage its respective business;
Whether or not the mergers are completed, the announcement and pendency of the mergers could cause disruptions in the businesses of Lemonade and Metromile, which could have an adverse effect on their respective businesses and financial results; and
The U.S. federal income tax treatment of the right of current and former holders of Metromile common stock to receive Lemonade common stock with respect to the Metromile Additional Shares is unclear.

Risks Relating to the Combined Company

Combining the businesses of Lemonade and Metromile may be more difficult, costly or time-consuming than expected and the combined company may fail to realize the anticipated benefits of the mergers, which may adversely affect the combined company’s business results and negatively affect the value of the combined company’s common stock;
The failure to successfully integrate the businesses and operations of Lemonade and Metromile in the expected time frame may adversely affect the combined company’s future results;
The combined company may not be able to retain customers, which could have an adverse effect on the combined company’s business and operations. Third parties may terminate or alter existing contracts or relationships with Lemonade or Metromile;

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The combined company may be exposed to increased litigation, which could have an adverse effect on the combined company’s business and operations;
Declaration, payment and amounts of dividends, if any, distributed to stockholders of the combined company will be uncertain; and
The combined company is subject to risks arising from the ongoing COVID-19 pandemic.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

The registration statement on Form S-4 of which this proxy statement/prospectus forms a part, the documents that Lemonade and Metromile refer you to in the registration statement and oral statements made or to be made by Lemonade and Metromile include certain “forward-looking statements” within the meaning of, and subject to the safe harbor created by, Section 27A of the Securities Act, Section 21E of the Exchange Act and the Private Securities Litigation Reform Act of 1995 (together, the “safe harbor provisions”). All statements other than statements of historical fact contained in this proxy statement/prospectus, including without limitation statements about the beliefs and expectations of Lemonade and Metromile management relating to the mergers and the combined company’s future results of operations and financial position, are forward-looking statements. Words such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential”, or “continue” or the negative of these terms or other similar expressions are intended to identify such forward-looking statements that are intended to be covered by the safe harbor provisions. Investors are cautioned that any forward-looking statements are subject to known and unknown risks and uncertainties, many of which are beyond the control of both companies, and which may cause actual results and future trends to differ materially from those matters expressed in, or implied or projected by, such forward-looking statements, which speak only as of the date of this proxy statement/prospectus. Although these forward-looking statements are based on assumptions that Lemonade and Metromile management, as applicable, believe to be reasonable, they can give no assurance that these expectations will prove to be correct. Investors are cautioned not to place undue reliance on these forward-looking statements. Among the risks and uncertainties that could cause actual results to differ from those described in forward-looking statements are the following:

the occurrence of any change, event, series of events or circumstances that could give rise to the termination of the merger agreement, including a termination of the merger agreement under circumstances that could require Metromile to pay a termination fee to Lemonade;
uncertainties related to the timing of the receipt of certain required regulatory approvals and consents for the mergers and the possibility that Lemonade and Metromile may be required to accept conditions that could reduce or eliminate the anticipated benefits of the mergers as a condition to obtaining such approvals or consents or that such approvals or consents might not be obtained at all;
the price of Lemonade and Metromile common stock could change before the completion of the mergers, including as a result of uncertainty as to the long-term value of the common stock of the combined company or as a result of broader stock market movements;
the possibility that the parties are unable to complete the mergers due to the failure of Metromile stockholders to adopt the merger agreement, or the failure to satisfy any of the other conditions to the completion of the mergers, or unexpected delays in satisfying any conditions;
delays in closing, or the failure to close, the mergers for any reason, could negatively impact Lemonade, Metromile or the combined company;
risks that the pendency or completion of the mergers and the other transactions contemplated by the merger agreement disrupt current plans and operations, which may adversely impact Lemonade’s or Metromile’s respective businesses;
difficulties or delays in integrating the businesses of Lemonade and Metromile following completion of the mergers or fully realizing the anticipated synergies or other benefits expected from the mergers;
certain restrictions during the pendency of the proposed mergers that may impact the ability of Lemonade or Metromile to pursue certain business opportunities or strategic transactions;
the risk of legal proceedings that may be instituted against Lemonade, Metromile, their directors and/or others relating to the mergers;
risks related to the diversion of the attention and time of Lemonade or Metromile management from ongoing business concerns;

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the risk that the proposed mergers or any announcement relating to the proposed mergers could have an adverse effect on the ability of Lemonade or Metromile to retain and hire key personnel or maintain relationships with customers, suppliers, distributors, vendors, strategic partners or other third parties, including regulators and other governmental authorities or agencies, or on Lemonade’s or Metromile’s respective operating results and businesses generally;
the potentially significant amount of any costs, fees, expenses, impairments or charges related to the mergers;
the potential dilution of Lemonade and Metromile stockholders’ ownership percentage of the combined company as compared to their ownership percentage of Lemonade or Metromile, as applicable, prior to the mergers;
the business, economic, political and other conditions in the countries in which Lemonade or Metromile operate;
events beyond the control of Lemonade and Metromile, such as acts of terrorism or the continuation or worsening of the COVID-19 pandemic and changes in applicable law, including changes in Lemonade’s or Metromile’s estimates of their expected tax rate based on current tax law;
the potential dilution of the combined company’s earnings per share as a result of the mergers; and
Metromile directors and executive officers having interests in the mergers that are different from, or in addition to, the interests of Metromile stockholders generally.

For further discussion of these and other risks, contingencies and uncertainties applicable to Lemonade and Metromile, their respective businesses and the proposed mergers, see “Risk Factors” in this proxy statement/prospectus and in similarly titled sections in Lemonade’s and Metromile’s other filings with the SEC that are incorporated by reference herein. See “Where You Can Find More Information.”

All subsequent written or oral forward-looking statements attributable to Lemonade, Metromile or any person acting on either of their behalf are expressly qualified in their entirety by these cautionary statements. Neither Lemonade nor Metromile is under any obligation to update, alter or otherwise revise any forward-looking statements, whether written or oral, that may be made from time to time, whether as a result of new information, future events or otherwise, and each expressly disclaims any obligation to do so, except as may be required by law.

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MARKET PRICE AND DIVIDEND INFORMATION

Market Price

Shares of Lemonade common stock are listed for trading on the NYSE under the symbol “LMND.” Shares of Metromile common stock are listed for trading on the Nasdaq Capital Market under the symbol “MILE.” Metromile warrants are listed for trading on the Nasdaq Capital Market under the symbol “MILEW.”

On November 5, 2021, the last trading day before the public announcement of the signing of the merger agreement, the closing sale price per share of Lemonade common stock on the NYSE was $69.53, the closing sale price per share of Metromile common stock on the Nasdaq Capital Market was $3.08 and the closing price per warrant of Metromile warrants on the Nasdaq Capital Market was $0.58. As of December 10, 2021, the latest practicable date prior to the date of this proxy statement/prospectus, the closing price per share of Lemonade common stock on the NYSE was $43.21, the closing price per share of Metromile common stock on the Nasdaq Capital Market was $2.23 and the closing price per warrant of Metromile warrants on the Nasdaq Capital Market was $0.24.

Because the exchange ratio will not be adjusted for changes in the market price of either Lemonade common stock or Metromile common stock, the market value of the shares of Lemonade common stock that holders of Metromile common stock will have the right to receive on the effective date of the mergers may vary significantly from the market value of the shares of Lemonade common stock that holders of Metromile common stock would receive if the mergers were completed on the date of this proxy statement/​prospectus. As a result, you should obtain recent market prices of Lemonade common stock and Metromile common stock prior to voting your shares. See “Risk Factors — Risks Relating to the Merger.”

Holders

As of December 10, 2021, the latest practicable date prior to the date of this proxy statement/prospectus, there were 116 holders of record of Metromile common stock and 4 holders of record of Metromile warrants.

Dividends

To date, neither Lemonade nor Metromile has declared or paid any dividends on the Lemonade common stock or Metromile common stock, respectively. Any future determination to pay cash dividends on the Lemonade common stock will be at the discretion of the Lemonade board of directors and will be dependent upon Lemonade’s financial condition, results of operations, capital requirements, general business conditions and such other factors as the Lemonade board of directors may deem relevant.

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RISK FACTORS

In considering how to vote on the proposals to be considered and voted on at the Metromile special meeting, you are urged to carefully consider all of the information contained or incorporated by reference in this proxy statement/prospectus. See “Where You Can Find More Information.” You should also read and consider the risks associated with each of the businesses of Lemonade and Metromile because those risks will affect the combined company. The risks associated with the business of Lemonade can be found in Lemonade’s Annual Report on Form 10-K for the fiscal year ended March 31, 2020, which is incorporated by reference to this proxy statement/prospectus and the risks associated with the business of Metromile can be found below. In addition, you are urged to carefully consider the following material risks relating to the mergers and the businesses of Lemonade, Metromile and the combined company.

Risks Relating to the Mergers

Because the exchange ratio is fixed and will not be adjusted in the event of any change in the price of either Lemonade or Metromile common stock, the value of the consideration that Metromile stockholders will actually receive in the mergers is uncertain.

Upon completion of the mergers, each share of Metromile common stock outstanding immediately prior to the mergers, other than shares held in treasury by Metromile or held directly by Lemonade or Acquisition Sub I, will be converted into the right to receive 0.05263 shares of Lemonade common stock (with cash, without interest and less any applicable withholding taxes, in lieu of any fractional shares of Lemonade common stock). This exchange ratio is fixed in the merger agreement and will not be adjusted for changes in the market price of either Lemonade or Metromile common stock prior to the completion of the mergers. The market prices of Lemonade and Metromile common stock have fluctuated prior to and after the date of the announcement of the merger agreement and may continue to fluctuate from the date of this proxy statement/prospectus to the date of the Metromile special meeting, and through the date the mergers are consummated.

Because the value of the merger consideration will depend on the market price of Lemonade common stock at the time the mergers are completed, Metromile stockholders will not know or be able to determine at the time of the Metromile special meeting the market value of the merger consideration they would receive upon completion of the mergers.

Stock price changes may result from a variety of factors, including, among others, general market and economic conditions, changes in Lemonade’s or Metromile’s respective businesses, operations and prospects, the uncertainty as to the extent of the duration, scope and impact of the COVID-19 pandemic, market assessments of the likelihood that the mergers will be completed, interest rates, general market, industry and economic conditions and other factors generally affecting the respective prices of Lemonade and Metromile common stock, federal, state and local legislation, governmental regulation and legal developments in the industry segments in which Lemonade and Metromile operate, and the timing of the mergers and receipt of required regulatory approvals and consents.

Many of these factors are beyond the control of Lemonade and Metromile, and neither Lemonade nor Metromile is permitted to terminate the merger agreement solely due to a decline in the market price of the common stock of the other party. Metromile stockholders are urged to obtain current market quotations for Lemonade and Metromile common stock in determining whether to vote in favor of the merger proposal.

The market price of Lemonade common stock will continue to fluctuate after the mergers.

Upon completion of the mergers, Metromile stockholders will become holders of Lemonade common stock. The market price of the common stock of the combined company may continue to fluctuate, potentially significantly, following completion of the mergers, including for the reasons described above. As a result, former Metromile stockholders could lose some or all of the value of their investment in Lemonade common stock. In addition, any significant price or volume fluctuations in the stock market generally could have a material adverse effect on the market for, or liquidity of, the Lemonade common stock received in the mergers, regardless of the combined company’s actual operating performance.

The mergers may not be completed and the merger agreement may be terminated in accordance with its terms.

The mergers are subject to a number of conditions that must be satisfied or waived (to the extent permitted) prior to the completion of the mergers, including the approval by Metromile stockholders of the merger proposal. These conditions are described

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under “The Merger Agreement — Conditions to the Completion of the Merger.” These conditions to the completion of the mergers, some of which are beyond the control of Lemonade and Metromile, may not be satisfied or waived in a timely manner or at all, and, accordingly, the mergers may be delayed or not completed.

Additionally, either Lemonade or Metromile may terminate the merger agreement under certain circumstances, including, among other reasons, if the mergers are not completed by the end date. In addition, if the merger agreement is terminated under specified circumstances, including if the Metromile board of directors changes its recommendation, Metromile may be required to pay Lemonade a termination fee of $12.5 million. See “The Merger Agreement — Termination of the Merger Agreement” and “The Merger Agreement — Termination Fee” for a more complete discussion of the circumstances under which the merger agreement could be terminated and when a termination fee may be payable by Metromile.

The termination of the merger agreement could negatively impact Lemonade or Metromile and the trading prices of the Lemonade or Metromile common stock.

If the mergers are not completed for any reason, including because Metromile stockholders fail to approve the merger proposal, the ongoing businesses of Lemonade and Metromile may be adversely affected and, without realizing any of the expected benefits of having completed the mergers, Lemonade and Metromile would be subject to a number of risks, including the following:

each company may experience negative reactions from the financial markets, including negative impacts on its stock price;
each company may experience negative reactions from its customers and employees;
each company will be required to pay its respective costs relating to the mergers, such as financial advisory, legal, financing and accounting costs and associated fees and expenses, whether or not the mergers are completed;
the merger agreement places certain restrictions on the conduct of each company’s business prior to completion of the mergers and such restrictions, the waiver of which is subject to the consent of the other company, may prevent Lemonade and Metromile from taking actions during the pendency of the mergers that might otherwise be beneficial (see “The Merger Agreement — Conduct of Business Prior to the Merger’s Completion” for a description of the restrictive covenants applicable to Lemonade and Metromile); and
matters relating to the mergers (including integration planning) will require substantial commitments of time and resources by Lemonade and Metromile management, which could otherwise have been devoted to day-to-day operations or to other opportunities that may have been beneficial to Lemonade or Metromile, as applicable, as an independent company.

The market price for shares of Lemonade common stock may be affected by factors different from, or in addition to, those that historically have affected or currently affect the market prices of shares of Lemonade or Metromile common stock.

Upon consummation of the mergers, Lemonade stockholders and Metromile stockholders will both hold shares of common stock in the combined company. Lemonade’s businesses differ from those of Metromile, and Metromile’s businesses differ from those of Lemonade, and, accordingly, the results of operations of the combined company will be affected by some factors that are different from those currently or historically affecting the independent results of operations of Lemonade and Metromile. The results of operations of the combined company may also be affected by factors different from those that currently affect or have historically affected either Lemonade or Metromile. For a discussion of the businesses of each of Lemonade and Metromile and some important factors to consider in connection with those businesses, see “The Parties to the Merger” and the other information contained or incorporated in this proxy statement/prospectus. See “Where You Can Find More Information.”

Based on the anticipated treatment of equity-based awards and the number of shares of Metromile common stock outstanding as of December 10, 2021, the latest practicable date prior to the date of this proxy statement/prospectus, it is expected that Lemonade may issue up to approximately 6,748,318 shares of Lemonade common stock in the mergers. Former Metromile stockholders may decide not to hold the shares of Lemonade common stock that they will receive in the mergers, and Lemonade stockholders may decide to reduce their investment in Lemonade as a result of the changes to Lemonade’s investment profile as a result of the mergers. Other Metromile stockholders, such as funds with limitations on their permitted holdings of stock in individual issuers, may be required to sell the shares of Lemonade common stock that they receive in the mergers. Such sales of Lemonade common stock could have the effect of depressing the market price for Lemonade common stock.

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The shares of common stock of the combined company to be received by Metromile stockholders as a result of the mergers will have rights different from the shares of Metromile common stock.

Upon completion of the mergers, Metromile stockholders will no longer be stockholders of Metromile, but will instead become stockholders of Lemonade. As Lemonade and Metromile are both Delaware corporations, the rights of Lemonade and Metromile stockholders are not materially different. However, there are certain differences between the rights of Lemonade stockholders under Lemonade’s amended and restated certificate of incorporation (the “Lemonade charter”) and Lemonade’s amended and restated bylaws (the “Lemonade bylaws”) and the rights of Metromile stockholders under Metromile’s amended and restated certificate of incorporation (the “Metromile charter”) and Metromile’s amended and restated bylaws (the “Metromile bylaws.”) See “Comparison of Stockholders’ Rights” for a discussion of these rights.

After the mergers, Metromile stockholders will have a significantly lower ownership and voting interest in Lemonade than they currently have in Metromile and will exercise less influence over management and policies of the combined company.

Based on the anticipated treatment of equity-based awards and the number of shares of Lemonade and Metromile common stock outstanding on December 10, 2021, the latest practicable date prior to the date of this proxy statement/prospectus, upon completion of the mergers, former Metromile stockholders are expected to own approximately 9.9% of the outstanding shares of Lemonade common stock and Lemonade stockholders immediately prior to the mergers are expected to own approximately 90.1% of the outstanding shares of Lemonade common stock. Consequently, former Metromile stockholders will have less influence over the management and policies of the combined company than they currently have over the management and policies of Metromile.

Until the completion of the mergers or the termination of the merger agreement in accordance with its terms, Lemonade and Metromile are each prohibited from entering into certain transactions and taking certain actions that might otherwise be beneficial to Lemonade, Metromile and/or their respective stockholders.

From and after the date of the merger agreement and prior to completion of the mergers, the merger agreement restricts Lemonade and Metromile from taking specified actions without the consent of the other party and requires that the business of each company and its respective subsidiaries be conducted in the ordinary course in all material respects. These restrictions may prevent Lemonade or Metromile, as applicable, from taking actions during the pendency of the mergers that might otherwise be beneficial. Adverse effects arising from these restrictions during the pendency of the mergers could be exacerbated by any delays in consummation of the mergers or termination of the merger agreement. See “The Merger Agreement — Conduct of Business Prior to the Merger’s Completion.”

Obtaining required approvals and satisfying closing conditions may prevent or delay completion of the mergers.

The mergers are subject to a number of conditions to closing as specified in the merger agreement. These closing conditions include, among others, the approval by Metromile stockholders of the merger proposal, the effectiveness of the registration statement on Form S-4 of which this proxy statement/prospectus forms a part registering the Lemonade common stock issuable pursuant to the merger agreement and the absence of any stop order or proceedings by the SEC with respect thereto, the expiration or earlier termination of any applicable waiting period and any agreed upon extensions of any waiting period or commitment not to consummate the mergers for any period of time) applicable to the consummation of the mergers under the HSR Act, the receipt of certain regulatory consents and approvals, approval for listing on the NYSE of the shares of Lemonade common stock to be issued pursuant to the merger agreement, and the absence of governmental restraints or prohibitions preventing the consummation of the mergers. The obligation of each of Lemonade and Metromile to consummate the mergers are also conditioned on, among other things, the truth and accuracy of the representations and warranties made by the other party on the date of the merger agreement and on the closing date (subject to certain materiality and material adverse effect qualifiers), and the performance by the other party in all material respects of its obligations under the merger agreement. No assurance can be given that the other required stockholder, governmental and regulatory consents and approvals will be obtained or that the other required conditions to closing will be satisfied, and, if all required consents and approvals are obtained and the required conditions are satisfied, no assurance can be given as to the terms, conditions and timing of such consents and approvals. Any delay in completing the mergers could cause the combined company not to realize, or to be delayed in realizing, some or all of the benefits that Lemonade and Metromile expect to achieve if the mergers are successfully completed within its expected time frame. For a more complete summary of the conditions that must be satisfied or waived prior to completion of the mergers, see “The Merger Agreement — Conditions to the Completion of the Merger.”

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Lemonade and Metromile must obtain certain regulatory consents and approvals to consummate the mergers, which, if delayed, not granted or granted with burdensome or unacceptable conditions, could prevent, substantially delay or impair consummation of the mergers, result in additional expenditures of money and resources or reduce the anticipated benefits of the mergers.

The completion of the mergers is subject to the expiration or termination of all waiting periods (and any agreed upon extensions of any waiting period or commitment not to consummate the mergers for any period of time) applicable to the consummation of the mergers under the HSR Act, the absence of any agreement pending or in effect between Lemonade and any governmental entity not to close, and the receipt of certain additional regulatory consents and approvals.

With respect to United States antitrust and competition laws, under the HSR Act, the mergers may not be completed until Notification and Report Forms have been filed with the U.S. Federal Trade Commission (the “FTC”) and the U.S. Department of Justice (the “DOJ”) and the applicable waiting period (or any extension thereof) has expired or been terminated. A transaction requiring notification under the HSR Act may not be completed until the expiration of the applicable 30-day waiting period following the parties’ filing of their respective HSR notifications or the early termination of that waiting period, at the earliest. If the FTC or the DOJ issues a Request for Additional Information and Documentary Material (a “Second Request”) prior to the expiration of the waiting period, the parties must observe an additional 30-day waiting period, which begins to run only after both parties have substantially complied with the Second Request, unless the waiting period is terminated earlier or the parties otherwise agree to extend the waiting period (or commit not to consummate the mergers for a specified period of time). Each of Lemonade and Metromile filed an HSR Notification and Report Form with the FTC and the DOJ on December 3, 2021.

At any time before or after consummation of the mergers, notwithstanding the expiration or termination of the applicable waiting period under the HSR Act, the DOJ or the FTC, could take such action under antitrust or competition laws as it deems necessary or desirable in the public interest, including seeking to enjoin the completion of the mergers, seeking divestiture of substantial assets of the parties or requiring the parties to license, or hold separate, assets or to terminate existing relationships and contractual rights. Under certain circumstances, private parties may also seek to take legal action against the mergers under antitrust or competition laws.

Any one of these requirements, limitations, costs, divestitures or restrictions imposed by antitrust authorities could jeopardize or delay the completion, or reduce the anticipated benefits, of the mergers. There is no assurance that Lemonade and Metromile will obtain all required regulatory consents or approvals on a timely basis, or at all. Failure to obtain the necessary consents and approvals could substantially delay or prevent the consummation of the mergers, which could negatively impact both Lemonade and Metromile.

Failure to attract, motivate and retain executives and other key employees could diminish the anticipated benefits of the mergers.

The success of the mergers will depend in part on the combined company’s ability to retain the talents and dedication of the professionals currently employed by Lemonade and Metromile. It is possible that these employees may decide not to remain with Lemonade or Metromile, as applicable, while the mergers are pending, or with the combined company. If key employees terminate their employment, or if an insufficient number of employees are retained to maintain effective operations, the combined company’s business activities may be adversely affected and management’s attention may be diverted from successfully integrating Lemonade and Metromile to hiring suitable replacements, all of which may cause the combined company’s business to suffer. In addition, Lemonade and Metromile may not be able to locate suitable replacements for any key employees that leave either company or offer employment to potential replacements on reasonable terms. In addition, there could be disruptions to or distractions for the workforce and management, including disruptions associated with integrating employees into the combined company. No assurance can be given that the combined company will be able to attract or retain key employees of Lemonade and Metromile to the same extent that those companies have been able to attract or retain their own employees in the past.

The mergers, and uncertainty regarding the mergers, may cause customers, strategic partners and others to delay or defer decisions concerning Lemonade or Metromile and adversely affect each company’s ability to effectively manage its respective business.

The mergers will happen only if the stated conditions are met, including the approval by Metromile stockholders of the merger proposal and the receipt of required regulatory approvals, and consents among other conditions. Many of the conditions are beyond the control of Lemonade and Metromile, and both parties also have certain rights to terminate the merger agreement.

Accordingly, there may be uncertainty regarding the completion of the mergers. This uncertainty may cause customers, strategic partners or others that deal with Lemonade or Metromile to delay or defer entering into contracts with Lemonade or Metromile or making other decisions concerning Lemonade or Metromile or seek to change or cancel existing business relationships with

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Lemonade or Metromile, which could negatively affect their respective businesses. Any delay or deferral of those decisions or changes in existing agreements could have an adverse impact on the respective businesses of Lemonade and Metromile, regardless of whether the mergers are ultimately completed.

In addition, the merger agreement restricts Lemonade, Metromile and their respective subsidiaries from taking certain actions during the pendency of the mergers without the consent of the other party. These restrictions may prevent Lemonade and Metromile from pursuing attractive business opportunities or strategic transactions that may arise prior to the completion of the mergers. See “The Merger Agreement — Conduct of Business Prior to the Merger’s Completion” for a description of the restrictive covenants to which each of Lemonade and Metromile is subject.

Whether or not the mergers are completed, the announcement and pendency of the mergers could cause disruptions in the businesses of Lemonade and Metromile, which could have an adverse effect on their respective businesses and financial results.

Whether or not the mergers are completed, the announcement and pendency of the mergers could cause disruptions in the businesses of Lemonade and Metromile, including by diverting the attention of Lemonade and Metromile management toward the completion of the mergers. In addition, Lemonade and Metromile have each diverted significant management resources in an effort to complete the mergers and are each subject to restrictions contained in the merger agreement on the conduct of their respective businesses. If the mergers are not completed, Lemonade and Metromile will have incurred significant costs, including the diversion of management resources, for which they will have received little or no benefit.

Metromile directors and executive officers may have interests in the mergers that may be different from, or in addition to, the interests of Metromile stockholders generally.

In considering the recommendations of the Metromile board of directors to vote in favor of the proposals described in this proxy statement/prospectus, stockholders should be aware that Metromile directors and executive officers may have interests in the mergers, including financial interests, which may be different from, or in addition to, the interests of Metromile stockholders generally.

Metromile stockholders should be aware of these interests when they consider the recommendation of the Metromile board of directors that they vote to approve the merger proposal. The Metromile board of directors was aware of and considered these interests, among other matters, in reaching its determination that the mergers are fair to and in the best interests of Metromile and its stockholders, approving and declaring advisable the merger agreement and the transactions contemplated thereby, including the mergers, and recommending that Metromile stockholders approve the merger proposal. The interests of Metromile directors and executive officers are described in more detail under “Interests of Metromile Directors and Executive Officers in the Merger.”

Lemonade or Metromile may waive one or more of the closing conditions without re-soliciting stockholder approval from Metromile stockholders.

To the extent permitted by law, Lemonade or Metromile may determine to waive, in whole or part, one or more of the conditions to their respective obligations to consummate the mergers. Metromile expects to evaluate the materiality of any waiver and its effect on Metromile stockholders in light of the facts and circumstances at the time to determine whether any amendment of this proxy statement/prospectus or any re-solicitation of proxies is required in light of such waiver. Any determination as to whether to waive any condition to the consummation of the mergers, and as to whether to re-solicit stockholder approval and/or amend this proxy statement/prospectus as a result of such waiver, will be made by Metromile at the time of such waiver based on the facts and circumstances as they exist at that time.

The merger agreement contains provisions that could discourage a potential competing acquirer that might be willing to pay more to acquire or merge with Metromile.

The merger agreement contains “no shop” provisions that restrict the ability of Metromile to, among other things (each as described under “The Merger Agreement — No Solicitation of Acquisition Proposals”):

solicit, initiate, knowingly encourage or knowingly facilitate any inquiries regarding, or the submission or announcement by any person of, any proposal or offer that constitutes, or would reasonably be expected to lead to, an acquisition proposal;

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furnish any information regarding Metromile or its subsidiaries in connection with, or for the purpose of soliciting, initiating, encouraging or facilitating, or in response to, any inquiry, proposal or offer that constitutes or would reasonably be expected to lead to an acquisition proposal;
engage in, enter into, continue or otherwise participate in any discussions or negotiations with any person with respect to any acquisition proposal or any inquiry, proposal or offer that would reasonably be expected to lead to any acquisition proposal; or
approve, adopt, recommend, agree to or enter into, or propose to approve, adopt, recommend, agree to or enter into, any letter of intent, memorandum of understanding or similar document, agreement, commitment, or agreement in principle with respect to any acquisition proposal.

Furthermore, there are only limited exceptions to the requirement under the merger agreement that the Metromile board of directors not withdraw, modify, amend or qualify the Metromile board of directors’ required recommendation to Metromile stockholders to adopt the merger agreement (the “Metromile recommendation”). Although the Metromile board of directors is permitted to effect a change of recommendation, after complying with certain procedures set forth in the merger agreement, in response to a superior proposal or to an intervening event (if the Metromile board of directors determines in good faith that a failure to do so would be reasonably likely to be inconsistent with its fiduciary duties under applicable law), such change of recommendation would entitle Lemonade to terminate the merger agreement and collect a termination fee from Metromile. See “The Merger Agreement — Termination of the Merger Agreement” and “The Merger Agreement — Termination Fee.”

These provisions could discourage a potential competing acquirer from considering or proposing an acquisition or merger of Metromile, even if it were prepared to pay consideration with a higher value than that implied by the exchange ratio in the merger, or might result in a potential competing acquirer proposing to pay a lower per share price than it might otherwise have proposed to pay because of the added expense of the termination fee.

The mergers will involve substantial costs.

Lemonade and Metromile have incurred and expect to incur non-recurring costs associated with combining the operations of the two companies, as well as transaction fees and other costs related to the mergers. These costs and expenses include fees paid to financial, legal and accounting advisors, facilities and systems consolidation costs, severance and other potential employment-related costs, filing fees, printing expenses and other related charges. Some of these costs are payable by Lemonade or Metromile regardless of whether the mergers are completed.

The combined company will also incur restructuring and integration costs in connection with the mergers. The costs related to restructuring will be expensed as a cost of the ongoing results of operations of the combined company. There are processes, policies, procedures, operations, technologies and systems that must be integrated in connection with the mergers and the integration of Metromile’s business with Lemonade’s business. Although Lemonade expects that the elimination of duplicative costs, strategic benefits, and additional income, as well as the realization of other efficiencies related to the integration of the businesses, may offset incremental transaction, merger-related and restructuring costs over time, any net benefit may not be achieved in the near term or at all. Many of these costs will be borne by Lemonade even if the mergers are not completed. While Lemonade has assumed that certain expenses would be incurred in connection with the mergers and the other transactions contemplated by the merger agreement, there are many factors beyond Lemonade’s control that could affect the total amount or the timing of the integration and implementation expenses.

Metromile stockholders will not be entitled to appraisal rights in the mergers.

Appraisal rights are statutory rights that, if applicable under law, enable stockholders of a corporation to dissent from an extraordinary transaction, such as a merger, and to demand that such corporation pay the fair value for their shares as determined by a court in a judicial proceeding instead of receiving the consideration offered to such stockholders in connection with the extraordinary transaction. Under the DGCL, stockholders generally do not have appraisal rights if the shares of stock they hold are either listed on a national securities exchange or held of record by more than 2,000 holders. Notwithstanding the foregoing, appraisal rights are available if stockholders are required by the terms of the merger agreement to accept for their shares anything other than (a) shares of stock of the surviving corporation, (b) shares of stock of another corporation that will either be listed on a national securities exchange or held of record by more than 2,000 holders, (c) cash in lieu of fractional shares or (d) any combination of the foregoing.

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Because Lemonade common stock is listed on the NYSE, a national securities exchange, and because Metromile stockholders are not required by the terms of the merger agreement to accept for their shares of Metromile common stock anything other than shares of Lemonade common stock and cash in lieu of fractional shares, holders of Metromile common stock are not entitled to appraisal rights in connection with the mergers. See “No Appraisal Rights.”

Lawsuits may in the future be filed against Lemonade or Metromile, or against Lemonade or Metromile directors, challenging the mergers, and an adverse ruling in any such lawsuit may prevent the mergers from becoming effective or from becoming effective within the expected time frame.

Transactions like the proposed mergers are frequently subject to litigation or other legal proceedings, including actions alleging that the Lemonade or Metromile board of directors breached their respective fiduciary duties to their stockholders by entering into the merger agreement, by failing to obtain a greater value in the transaction for their stockholders or otherwise. Neither Lemonade nor Metromile can provide assurance that such litigation or other legal proceedings will not be brought. If litigation or other legal proceedings are in fact brought against Lemonade or Metromile, or against the Lemonade or Metromile board of directors, they will defend against it, but might not be successful in doing so. An adverse outcome in such matters, as well as the costs and efforts of a defense even if successful, could have a material adverse effect on the business, results of operation or financial position of Lemonade, Metromile or the combined company, including through the possible diversion of either company’s resources or distraction of key personnel.

Furthermore, one of the conditions to the completion of the mergers is that no injunction by any court or other governmental entity of competent jurisdiction will be in effect that prevents, enjoins or makes illegal the consummation of the mergers. As such, if any of the plaintiffs are successful in obtaining an injunction preventing the consummation of the mergers, that injunction may prevent the mergers from becoming effective or from becoming effective within the expected time frame.

The consummation of the transactions contemplated under the merger agreement are not conditioned upon the receipt of an opinion of counsel to the effect that the mergers will qualify for the Intended Tax Treatment, and neither Metromile nor Lemonade intends to request a ruling from the IRS regarding the U.S. federal income tax consequences of the mergers.

The mergers, taken together, are intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Code for U.S. federal income tax purposes (the “Intended Tax Treatment”). Assuming the mergers so qualify, a U.S. holder (as defined under “Material U.S. Federal Income Tax Consequences of the Mergers”) of Metromile common stock generally will not recognize any gain or loss for U.S. federal income tax purposes upon the exchange of Metromile common stock for Lemonade common stock in the first merger, except with respect to cash received by such U.S holder in lieu of fractional shares of Lemonade common stock.

However, it is not a condition to Metromile’s obligation or Lemonade’s obligation to consummate the transactions contemplated by the merger agreement that the mergers qualify for the Intended Tax Treatment or that Metromile or Lemonade receive an opinion from counsel to that effect. Whether or not the mergers qualify for the Intended Tax Treatment depends in part on whether holders of Metromile stock receive a sufficient amount of Lemonade common stock in the first merger to preserve a substantial part of their interest in Metromile through ownership of Lemonade common stock. The satisfaction of such requirement will not be known until the mergers are completed and depends on the treatment of the right under the merger agreement of current and former holders of Metromile common stock to receive Lemonade common stock in respect of their right to the Metromile Additional Shares (as described in “The Merger Agreement — Treatment of Additional Shares”). Furthermore, neither Metromile nor Lemonade intends to request a ruling from the IRS regarding the U.S. federal income tax consequences of the mergers. Accordingly, no assurance can be given that the mergers will qualify for the Intended Tax Treatment or that the IRS will not challenge the conclusion that the mergers will qualify for the Intended Tax Treatment or that a court would not sustain such a challenge. If, contrary to expectations, the mergers do not qualify for the Intended Tax Treatment, U.S. holders of Metromile stock could be subject to U.S. federal income tax upon the receipt of Lemonade common stock in the first merger.

See “Material U.S. Federal Income Tax Consequences of the Mergers” for a more complete description of material U.S. federal income tax consequences of the mergers. The discussion of the material U.S. federal income tax consequences contained in this proxy statement/prospectus is intended to provide only a general discussion and is not a complete analysis or description of all potential U.S. federal income tax consequences of the mergers that may vary with, or are dependent on, individual circumstances. In addition, it does not address the effects of any foreign, state or local tax laws or any U.S. federal tax laws other than U.S. federal income tax laws. Tax matters are very complicated and the tax consequences of the mergers to each U.S. holder of Metromile common stock may depend on such stockholder’s particular facts and circumstances. Please consult your tax advisors as to the specific tax consequences to you of the mergers.

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Risks Relating to the Combined Company

Combining the businesses of Lemonade and Metromile may be more difficult, costly or time-consuming than expected and the combined company may fail to realize the anticipated benefits of the mergers, which may adversely affect the combined company’s business results and negatively affect the value of the combined company’s common stock.

The success of the mergers will depend on, among other things, the ability of Lemonade and Metromile to combine their businesses in a manner that facilitates growth opportunities. Lemonade and Metromile have entered into the merger agreement because each believes that the mergers and the other transactions contemplated by the merger agreement are fair to and in the best interests of their respective stockholders and that combining the businesses of Lemonade and Metromile will produce benefits. See “The Merger — Recommendation of the Metromile Board of Directors; Metromile’s Reasons for the Merger.”

However, Lemonade and Metromile must successfully combine their respective businesses in a manner that permits these benefits to be realized. In addition, the combined company must achieve the anticipated growth without adversely affecting current revenues and investments in future growth. If the combined company is not able to successfully achieve these objectives, the anticipated benefits of the mergers may not be realized fully, or at all, or may take longer to realize than expected.

An inability to realize the full extent of the anticipated benefits of the mergers and the other transactions contemplated by the merger agreement, as well as any delays encountered in the integration process, could have an adverse effect upon the revenues, level of expenses and operating results of the combined company, which may adversely affect the value of the common stock of the combined company.

In addition, the actual integration may result in additional and unforeseen expenses, and the anticipated benefits of the integration plan may not be realized. Actual growth and any potential cost savings, if achieved, may be lower than what Lemonade and Metromile expect and may take longer to achieve than anticipated. If Lemonade and Metromile are not able to adequately address integration challenges, they may be unable to successfully integrate their operations or realize the anticipated benefits of the integration of the two companies.

The failure to successfully integrate the businesses and operations of Lemonade and Metromile in the expected time frame may adversely affect the combined company’s future results.

Lemonade and Metromile have operated and, until the completion of the mergers, will continue to operate independently. There can be no assurances that their businesses can be integrated successfully. It is possible that the integration process could result in the loss of key Lemonade or Metromile employees, the loss of customers, the disruption of either company’s or both companies’ ongoing businesses, inconsistencies in standards, controls, procedures and policies, unexpected integration issues, higher than expected integration costs and an overall post-completion integration process that takes longer than originally anticipated. Specifically, the following issues, among others, must be addressed in integrating the operations of Lemonade and Metromile in order to realize the anticipated benefits of the mergers so the combined company performs as expected:

combining the companies’ operations and corporate functions;
combining the businesses of Lemonade and Metromile and meeting the capital requirements of the combined company, in a manner that permits the combined company to achieve any cost savings or other synergies anticipated to result from the mergers, the failure of which would result in the anticipated benefits of the mergers not being realized in the time frame currently anticipated or at all;
integrating personnel from the two companies, especially in the COVID-19 environment which has required employees to work remotely in many locations;
integrating the companies’ technologies and technologies licensed from third parties;
integrating and unifying the offerings and services available to customers;
identifying and eliminating redundant and underperforming functions and assets;

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harmonizing the companies’ operating practices, employee development and compensation programs, internal controls and other policies, procedures and processes;
maintaining existing agreements with customers, suppliers, distributors and vendors, avoiding delays in entering into new agreements with prospective customers, suppliers, distributors and vendors, and leveraging relationships with such third parties for the benefit of the combined company;
addressing possible differences in business backgrounds, corporate cultures and management philosophies;
consolidating the companies’ administrative and information technology infrastructure;
coordinating distribution and marketing efforts;
managing the movement of certain positions to different locations;
coordinating geographically dispersed organizations; and
effecting actions that may be required in connection with obtaining regulatory or other governmental approvals and consents.

In addition, at times the attention of certain members of Lemonade’s and Metromile’s management and each company’s respective resources may be focused on completion of the mergers and the integration of the businesses of the two companies and diverted from day-to-day business operations or other opportunities that may have been beneficial to such company, which may disrupt each company’s ongoing business and the business of the combined company.

The combined company may not be able to retain customers, which could have an adverse effect on the combined company’s business and operations. Third parties may terminate or alter existing contracts or relationships with Lemonade or Metromile.

As a result of the mergers, the combined company may experience impacts on relationships with customers that may harm the combined company’s business and results of operations. Certain customers may seek to terminate or modify contractual obligations following the mergers whether or not contractual rights are triggered as a result of the mergers. There can be no guarantee that customers will remain with or continue to have a relationship with the combined company or do so on the same or similar contractual terms following the mergers. If any customers seek to terminate or modify contractual obligations or discontinue the relationship with the combined company, then the combined company’s business and results of operations may be harmed.

Lemonade and Metromile also have contracts with landlords, licensors and other business partners which may require Lemonade or Metromile, as applicable, to obtain consent from these other parties in connection with the mergers, or which may otherwise contain limitations applicable to such contracts following the mergers. If these consents cannot be obtained, the combined company may suffer a loss of potential future revenue, incur costs and lose rights that may be material to the combined company’s business. In addition, third parties with whom Lemonade or Metromile currently have relationships may terminate or otherwise reduce the scope of their relationship with either party in anticipation of the mergers. Any such disruptions could limit the combined company’s ability to achieve the anticipated benefits of the mergers. The adverse effect of any such disruptions could also be exacerbated by a delay in the completion of the mergers or by a termination of the merger agreement.

The combined company may be exposed to increased litigation, which could have an adverse effect on the combined company’s business and operations.

The combined company may be exposed to increased litigation from stockholders, customers, suppliers, distributors, consumers and other third parties due to the combination of Lemonade’s and Metromile’s businesses following the mergers. Such litigation may have an adverse impact on the combined company’s business and results of operations or may cause disruptions to the combined company’s operations.

Declaration, payment and amounts of dividends, if any, distributed to stockholders of the combined company will be uncertain.

Lemonade and Metromile have not historically paid cash dividends on their common stock. Whether any dividends are declared or paid to stockholders of the combined company, and the amounts of any such dividends that are declared or paid, are uncertain and depend on a number of factors. The Lemonade board of directors will have the discretion to determine the dividend policy of the

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combined company, including the amount and timing of dividends, if any, that the combined company may declare from time to time, which may be impacted by any of the following factors:

the combined company may not have enough cash to pay such dividends or to repurchase shares due to its cash requirements, capital spending plans, cash flow or financial position;
decisions on whether, when and in which amounts to make any future distributions will remain at all times entirely at the discretion of the Lemonade board of directors, which could change its dividend practices at any time and for any reason;
the amount of dividends that the combined company may distribute to its stockholders is subject to restrictions under Delaware law; and
certain limitations on the amount of dividends subsidiaries of the combined company can distribute to the combined company, as imposed by state law, regulators or agreements.

Stockholders should be aware that they have no contractual or other legal right to dividends that have not been declared.

The combined company is subject to risks arising from the ongoing COVID-19 pandemic.

The outbreak of COVID-19, which the World Health Organization declared a pandemic in March 2020, has spread across the globe and disrupted the global economy. Governmental actions to reduce the spread of COVID-19 have negatively impacted the macroeconomic environment in many ways, while the pandemic itself has significantly increased economic uncertainty and abruptly reduced economic activity.

The extent to which the COVID-19 pandemic will impact the combined company is highly uncertain and is difficult to predict. The pandemic’s effects and their extent will depend on various factors, including, but not limited to, the duration, scope and impact of the pandemic, restrictions on business and social distancing guidelines that may be requested or mandated by governmental authorities and how quickly and to what extent normal economic and operating conditions can resume. Relevant adverse consequences of the pandemic could include reduced liquidity, increased volatility of the combined company’s stock price, operational disruption or failure due to spread of disease within the combined company or due to restrictions on business and social distancing guidelines imposed or requested by governmental authorities, unavailability of raw materials, disruption in the supply chain and increased cybersecurity and fraud risks due to increased online and remote activity, as well as the adverse consequences of a macroeconomic slowdown, recession or depression.

Even after the COVID-19 pandemic has subsided, the combined company may continue to experience adverse impacts to its business as a result of the global economic impact of the COVID-19 pandemic, including reduced availability of credit, adverse impacts on liquidity and the negative financial effects from any recession or depression that may occur.

Risks Relating to Metromile

Metromile has a history of net losses and could continue to incur substantial net losses in the future.

Metromile has incurred recurring losses on an annual basis since its incorporation in 2011. Metromile incurred net losses of $120.1 million and $41.3 million for the year ended December 31, 2020, and the three months ended June 30, 2021, respectively. Metromile had an accumulated deficit of $366.6 million and $511.5 million as of December 31, 2020, and June 30, 2021, respectively.

The principal driver of its losses to date is its insured losses paid associated with accidents and other insured events by its customers. Establishing adequate premium rates is necessary to generate sufficient revenue to offset losses, LAE and other costs. If Metromile does not accurately assess the risks that it underwrites, the premiums that Metromile charges may not be adequate to cover its losses and expenses, which would adversely affect its results of operations and its profitability. Moreover, as Metromile continues to invest in its business, Metromile expects expenses to continue to increase in the near term. Such expenses may occur in the areas of telematics, digital marketing, brand advertising, consumer-facing technologies, core insurance operations services and lines of business not presently offered by Metromile. These investments may not result in increased revenue or growth in its business. If Metromile fails to manage its losses or to grow its revenue sufficiently to keep pace with its investments and other expenses, its business will be seriously harmed.

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In addition, Metromile will incur additional expenses to support its growth. As a public company, Metromile will incur significant legal, accounting and other expenses that Metromile did not incur as a private company. Metromile may encounter unforeseen or unpredictable factors, including unforeseen operating expenses, complications or delays, which may also result in increased costs. Further, it is difficult to predict the size and growth rate of its market or demand for its services and success of current or potential future competitors. As a result, Metromile may not achieve or maintain profitability in future periods.

Metromile may lose existing customers or fail to acquire new customers.

Metromile believe that growth of its business and revenue depends upon its ability to continue to grow its business in the geographic markets that Metromile currently serves by retaining its existing customers and adding new customers in its current as well as new geographic markets. Expanding into new geographic markets takes time, requires it to navigate and comply with extensive regulations and may occur more slowly than Metromile expects or than it has occurred in the past. If Metromile loses customers, its value will diminish. In particular, while loss performance has improved over time as more customers renew their policies and remain policyholders for longer, a future loss of customers could lead to higher loss ratios or loss ratios that cease to decline, which would adversely impact its profitability. If Metromile fails to remain competitive on customer experience, pricing, and insurance coverage options, its ability to grow its business may also be adversely affected. In addition, Metromile may fail to accurately predict risk segmentation of new customers or potential customers, which could also reduce its profitability.

While a key part of its business strategy is to retain and add customers in its existing markets and into its current product offerings, Metromile also intends to expand its operations into new markets and new product offerings. In doing so, Metromile may incur losses or otherwise fail to enter new markets or offer new products successfully. Its expansion into new markets and product offerings may place it in unfamiliar competitive environments and involve various risks, including competition, government regulation, the need to invest significant resources and the possibility that returns on such investments will not be achieved for several years or at all.

There are many factors that could negatively affect Metromile’s ability to grow its customer base, including if:

Metromile loses customers to new market entrants and/or existing competitors;
Metromile does not obtain regulatory approvals necessary for expansion into new markets or in relation to its products (such as underwriting and rating requirements);
Metromile fails to effectively use search engines, social media platforms, digital app stores, content-based online advertising, and other current and emerging online sources for generating traffic to its website and its mobile app;
its digital platform experiences disruptions;
Metromile suffers reputational harm to its brand including from negative publicity, whether accurate or inaccurate;
Metromile fails to expand geographically;
Metromile fails to offer new and competitive products, to provide effective updates to its existing products or to keep pace with technological improvements in its industry;
customers have difficulty installing, updating or otherwise accessing its app or website on mobile devices or web browsers as a result of actions by it or third parties;
customers prefer less technological solutions or are unable or unwilling to adopt or embrace new technology;
the perception emerges that purchasing insurance products online is not as effective as purchasing those products through traditional offline methods;
technical or other problems frustrate the customer experience, particularly if those problems prevent Metromile from generating quotes or paying claims in a fast and reliable manner; or

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Metromile is unable to address customer concerns regarding the content, privacy, and security of its digital platform.

Metromile’s inability to overcome these challenges could impair its ability to attract new customers and retain existing customers, and could have a material adverse effect on its business, operating results and financial condition.

Metromile may require additional capital to support business growth or to satisfy its regulatory capital and surplus requirements, and this capital might not be available on acceptable terms, if at all.

Metromile intends to continue to make investments to support its business growth and may require additional funds to respond to business challenges, including the need to develop new features and products or enhance its existing products and services, satisfy its regulatory capital and surplus requirements, cover losses, improve its operating infrastructure or acquire complementary businesses and technologies. Many factors will affect its capital needs as well as their amount and timing, including its growth and profitability, regulatory requirements, market disruptions and other developments. If its present capital and surplus is insufficient to meet its current or future operating requirements, including regulatory capital and surplus requirements, or to cover losses, Metromile may need to raise additional funds through financings or curtail its growth. Metromile evaluates financing opportunities from time to time, and its ability to obtain financing will depend, among other things, on its development efforts, business plans and operating performance, as well as the condition of the capital markets at the time Metromile seeks financing. Metromile cannot be certain that additional financing will be available to it on favorable terms, or at all.

If Metromile raises additional funds through future issuances of equity or convertible debt securities, its existing stockholders could suffer significant dilution, and any new equity securities Metromile issues could have rights, preferences and privileges superior to those of holders of its Common Stock. As an insurance company, Metromile is subject to extensive laws and regulations in every jurisdiction in which Metromile conducts business, and any such issuances of equity or convertible debt securities to secure additional funds may be impeded by regulatory approvals or requirements imposed by such regulatory authorities if such issuances were deemed to result in a person acquiring “control” of its company under applicable insurance laws and regulations. Such regulatory requirements may require potential investors to disclose their organizational structure and detailed financial statements as well as require managing partners, directors and/or senior officers submit biographical affidavits which may deter funds from investing in Metromile. Moreover, any debt financing, in addition to its outstanding credit facilities, that Metromile secures in the future could subject it to restrictive covenants relating to its capital raising activities, its ability to make certain types of investments or payments, and other financial and operational matters, which may increase its difficulty to obtain additional capital or to pursue business opportunities, including new product offerings and potential acquisitions. Metromile may not be able to obtain additional financing on terms favorable to it, if at all. If Metromile is unable to obtain adequate financing or financing on terms satisfactory to it when Metromile requires it, its ability to continue to support its business growth and to respond to business challenges could be impaired, and its business, revenue, results of operations and financial condition may be materially harmed.

Further, Metromile is restricted by covenants in its credit agreements. These covenants restrict, among other things, its ability to incur additional debt without lender consent or grant liens over its assets, which may limit its ability to obtain additional funds.

The COVID-19 pandemic has caused disruption to Metromile’s operations and may negatively impact its business, key metrics, and results of operations in numerous ways that remain unpredictable.

Metromile’s business has been and may continue to be impacted by the effects of the outbreak COVID-19, which was declared a global pandemic in March 2020. This pandemic and related measures taken to contain the spread of COVID-19, such as government-mandated business closures, orders to “shelter in place” (“SIPs”) and travel and transportation restrictions, have negatively affected the U.S. and global economies, disrupted global supply chains, and led to unprecedented levels of unemployment. Beginning in the second quarter of 2020, its business was favorably impacted by the SIPs as its customers drove less. While its premiums collected declined due to per-mile billing, Metromile had a corresponding material decline in incurred losses. Its business has also been impacted by certain state regulations related to COVID-19 relief efforts, including restrictions on the ability to cancel policies for non-payment, requiring deferral of insurance premium payments for up to 60 days and restrictions on increasing policy premiums. Metromile continues to assess and update its business continuity plans in the context of this pandemic, including taking steps in an effort to help keep its employees healthy and safe. The spread of COVID-19 has caused it to modify its business practices (including employee travel, employee work locations in certain cases, and cancellation of physical participation in meetings, events, and conferences), and Metromile expects to take further actions as may be required or recommended by government authorities or as Metromile determines are in the best interests of its employees and customers. Furthermore, COVID-19 has impacted and may further impact the broader economies of affected countries, including negatively impacting economic growth, the proper functioning of financial and capital markets, foreign currency exchange rates, and interest rates. It is possible that the pandemic will cause an

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economic slowdown of potentially extended duration, as well as a global recession. This could result in an increase in costs associated with claims under its policies, as well as an increase in the number of customers experiencing difficulty paying premiums, any of which could have a material adverse effect on its business and results of operations. It is also possible that working from home or other remote work arrangements adopted during the SIPs become permanent on a widespread basis, thereby resulting in further reduction in premiums collected due to per-mile billing, or a permanent reduced need for auto insurance. Furthermore, due to COVID-19’s negative impact on driving, regulators in many states continue to mandate or request that auto insurance companies refund a portion of their premium to their policyholders to reflect the insurer’s decrease in projected loss exposure due to the virus. In all of the states in which Metromile operates, state insurance regulators have either encouraged, strongly suggested or mandated insurers to provide COVID-19-related consumer relief. Regulators in several states in which Metromile operates or into which Metromile plans to expand placed a mandatory moratorium on non-pay cancellations and could revive, add to, extend, or expand the scope of such moratoriums, providing consumers grace periods ranging from 60 days to indefinite (based on the term of emergency orders) in duration, during which premium did not need to be paid in a timely fashion. These moratoriums resulted in an increase of premium write-offs from 1.9% for the year ending December 31, 2019 to 2.4% for the year ending December 31, 2020. Premium write-offs have been immaterial to date, but could be significant in the future. There were still several states with bulletins effective after December 31, 2020, and depending on the unpredictable nature of the pandemic and SIPs such moratoriums could be revived, added to, or extended. These mandates and similar regulations or suggestions could negatively impact its ability to charge or increase premiums to adequately cover its losses and could result in continued increased premium write-offs. 44 Though Metromile continues to monitor the COVID-19 pandemic closely, due to the speed with which it continues to develop, the global breadth of its spread, the range of governmental and community reactions thereto and the unknown timing or effectiveness of any vaccine or treatment, there is considerable uncertainty around its duration and ultimate impact. The impact of the pandemic may also exacerbate the other risks described in these Risk Factors, and additional impacts may arise that Metromile is not currently aware of, any of which could have a material effect on it. In addition, if there is a future resurgence of COVID-19, these negative impacts on its business may be further exacerbated. As a result, the full extent of the impact of the pandemic on its overall financial and operating results, whether in the near or long term, cannot be reasonably estimated at this time.

Metromile’s future growth and profitability depend in part on its ability to successfully operate in an insurance industry that is highly competitive.

Many of its primary competitors have well-established national brands and market similar products. Its competitors include large national insurance companies as well as up-and-coming companies. Several of these established national insurance companies are larger than us and have significant competitive advantages, including better name recognition, strong financial ratings, greater resources, easier access to capital, and offer more types of insurance than Metromile does, such as homeowners and renters, which are often bundled together to help attract and retain customers. Its business model and technology is also still nascent compared to the established business models of the well-established incumbents in the insurance market. In addition, the insurance industry consistently attracts well-capitalized new entrants to the market. Its future growth will depend in large part on its ability to grow its insurance business in which traditional insurance companies retain certain advantages. In particular, unlike Metromile, many of these competitors offer customers the ability to purchase multiple other types of insurance coverage and “bundle” them together into one policy and, in certain circumstances, include an umbrella liability policy for additional coverage at competitive prices. Moreover, Metromile may in the future expand into new lines of business and offer additional products beyond automobile insurance, and as Metromile does so, Metromile could face intense competition from traditional insurance companies that are already established in such markets. These new insurance products could take months to be approved by regulatory authorities or may not be approved at all. Metromile has invested in growth strategies by utilizing unique customer value propositions, differentiated product offerings and distinctive advertising campaigns. If Metromile is unsuccessful through these strategies in generating new business, retaining a sufficient number of customers or retaining or acquiring key relationships, its ability to maintain or increase premiums written or the ability to sell its products could be adversely impacted. Because of the competitive nature of the insurance industry, there can be no assurance that Metromile will continue to compete effectively within its industry, or that competitive pressures will not have a material effect on our business, results of operations or financial condition.

Metromile relies on telematics, mobile technology and its digital platform to collect data points that Metromile evaluates in pricing and underwriting its insurance policies, managing claims and customer support, and improving business processes. To the extent regulators prohibit or restrict its collection or use of this data, its business could be harmed.

Metromile uses telematics, mobile technology and its digital platform to collect data points that Metromile evaluates in pricing and underwriting certain of its insurance policies, managing claims and customer support, and improving business processes. If federal, state or international regulators were to determine that the type of data Metromile collects, the process Metromile uses for collecting this data or how Metromile uses it unfairly discriminates against a protected class of people, regulators could move to

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prohibit or restrict its collection or use of this data. In addition, if legislation were to restrict its ability to collect driving behavior data, it could impair its capacity to underwrite insurance cost effectively, negatively impacting its revenue and earnings. 45 Due to Proposition 103 in California, its largest market, Metromile is currently limited in its ability to use telematics data beyond miles-driven to underwrite insurance, including data on how the car is driven. This could hinder its ability to accurately assess the risks that Metromile underwrites in other states if they were to pass similar laws or regulations. In three other states where Metromile currently operates, Metromile does not use behavioral telematics data because it is either permitted, but Metromile opted out given uncertainty regarding the impact such data would have on pricing or it is voluntary (meaning the policyholder has to opt in). As Metromile aims to be a fully national provider of insurance across 49 states and the District of Columbia by 2022, Metromile will need to comply with the rules and regulations of each market. At this time, Metromile does not know which of its target markets prohibit, permit with conditions, or fully permit the use of behavioral telematics to set premiums, and if permitted, if this will be of benefit to us in pricing. While Metromile is currently in discussions with regulators to allow the use of telematics to a greater extent to underwrite and price insurance policies, Metromile cannot predict the outcome of these discussions, and there can be no assurance that state regulators will revise regulations accordingly, if at all, nor that current permissive states will further restrict the use of such data.

Although there is currently limited federal and state legislation outside of California restricting Metromile’s ability to collect driving behavior data, private organizations are implementing principles and guidelines to protect driver privacy. The Alliance of Automobile Manufacturers and Global Automakers established their Consumer Privacy Protection Principles to provide member automobile manufacturers with a framework with which to consider privacy and build privacy into their products and services while the National Automobile Dealers Association has partnered with the Future of Privacy Forum to produce consumer education guidelines that explain the kinds of information that may be collected by consumers’ cars, the guidelines that govern how it is collected and used, and the options consumers may have to protect their vehicle data. The Global Alliance for Vehicle Data Access is another organization that was formed to advocate for driver ownership of all vehicle data, particularly for insurance underwriting purposes. If federal or state legislators were to pass laws limiting our ability to collect driver data, such legislation could have a material adverse effect on Metromile’s business, financial condition or results of operations.

Some state regulators have expressed interest in the use of external data sources, algorithms and/or predictive models in insurance underwriting or rating. Specifically, regulators have raised questions about the potential for unfair discrimination, disparate impact, and lack of transparency associated with the use of external consumer data. A determination by federal or state regulators that the data points Metromile collects and the process Metromile uses for collecting this data unfairly discriminates against a protected class of people could subject it to fines and other sanctions, including, but not limited to, disciplinary action, revocation and suspension of licenses, and withdrawal of product forms. Any such event could, in turn, materially and adversely affect its business, financial condition, results of operations and prospects. Although Metromile has implemented policies and procedures into its business operations that Metromile feels are appropriately calibrated to its machine learning and automation-driven operations, these policies and procedures may prove inadequate to manage its use of this nascent technology, resulting in a greater likelihood of inadvertent legal or compliance failures.

In addition, the National Association of Insurance Commissioners (“NAIC”), announced on July 23, 2020 the formation of a new Race and Insurance Special Committee (the “Special Committee”). The Special Committee is tasked with analyzing the level of diversity and inclusion within the insurance sector, identifying current practices in the insurance industry that disadvantage minorities and making recommendations to increase diversity and inclusion within the insurance sector and address practices that disadvantage minorities. The Special Committee may look into strengthening the unfair discrimination laws, such as prohibiting the use of credit scores in the underwriting of auto insurance. Any new unfair discrimination legislation that would prohibit us from using data that Metromile currently uses or plans to use in the future to underwrite insurance could negatively impact its business.

Regulators may also require it to disclose the external data Metromile uses, algorithms and/or predictive matters prior to approving its underwriting models and rates. Such disclosures could put its intellectual property at risk.

Additionally, existing laws, such as the California Consumer Privacy Act (the “CCPA”), future and recently adopted laws, such as the California Privacy Rights Act (the “CRPA”), and evolving attitudes about privacy protection may impair its ability to collect, use, and maintain data points of sufficient type or quantity to develop and train our algorithms. If such laws or regulations were enacted federally or in a large number of states in which Metromile operates, it could impact the integrity and quality of its pricing and underwriting processes.

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Metromile depends on search engines, social media platforms, digital app stores, content-based online advertising and other online sources to attract consumers to its website and its mobile app both rapidly and cost-effectively. If these third parties change their listings or increase their pricing, if its relationship with them deteriorates or terminates, or due to other factors beyond its control, Metromile may be unable to attract new customers rapidly and cost-effectively, which would adversely affect its business and results of operations.

Its success depends on its ability to attract consumers to its website and its mobile app and convert them into customers in a rapid and cost-effective manner. Metromile depends in large part on search engines, social media platforms, digital app stores, content-based online advertising and other online sources for traffic to its website and its mobile app, which are material sources for new consumers.

With respect to search engines, Metromile is included in search results as a result of both paid search listings, where Metromile purchases specific search terms that result in the inclusion of its advertisement, and free search listings, which depend on algorithms used by search engines. For paid search listings, if one or more of the search engines or other online sources on which Metromile relies for purchased listings modifies or terminates its relationship with us, its expenses could rise if Metromile is required to pay a higher price for such listings or if the alternatives Metromile finds are more expensive, or Metromile could lose consumers and traffic to its website could decrease, any of which could have a material adverse effect on its business, results of operations and financial condition. For free search listings, if search engines on which Metromile relies for algorithmic listings modify their algorithms, its websites may appear less prominently or not at all in search results, which could result in reduced traffic to its websites, as a result of which Metromile might attract fewer new customers.

Metromile’s ability to maintain or increase the number of consumers who purchase its products after being directed to its website or its mobile app from other digital platforms depends on many factors that are not within its control. Search engines, social media platforms and other online sources often revise their algorithms and introduce new advertising products. If one or more of the search engines or other online sources on which Metromile relies for traffic to its website and its mobile app were to modify its general methodology for how it displays its advertisements or keyword search results, resulting in fewer consumers clicking through to its website and its mobile app, its business and operating results are likely to suffer. In addition, if its online display advertisements are no longer effective or are not able to reach certain consumers due to consumers’ use of ad-blocking software, its business and operating results could suffer.

Additionally, changes in regulations could limit the ability of search engines and social media platforms, including but not limited to Google and Facebook, to collect data from users and engage in targeted advertising, making them less effective in disseminating its advertisements to its target customers. For example, the proposed Designing Accounting Safeguards to Help Broaden Oversight and Regulations on Data (“DASHBOARD”) Act would mandate annual disclosure to the SEC of the type and “aggregate value” of user data used by harvesting companies, such as Facebook, Google and Amazon, including how revenue is generated by user data and what measures are taken to protect the data. If the costs of advertising on search engines and social media platforms increase, Metromile may incur additional marketing expenses or be required to allocate a larger portion of its marketing spend to other channels and its business and operating results could be adversely affected. Similarly, changes to regulations applicable to the insurance brokerage and distribution business may limit its ability to rely on key distribution platforms, if the third-party distribution platforms are unable to continue to distribute its insurance products without an insurance producer license pursuant to applicable insurance law and regulations.

The marketing of its insurance products depends on its ability to cultivate and maintain cost-effective and otherwise satisfactory relationships with digital app stores, in particular, those operated by Google and Apple. As Metromile grows, it may struggle to maintain cost-effective marketing strategies, and our customer acquisition costs could rise substantially. Furthermore, because many of its customers access our insurance products through a mobile app, Metromile depends on the Apple App Store and the Google Play Store to distribute its mobile app.

Operating system platforms and application stores controlled by third parties, such as Apple and Google, may change their terms of service or policies in a manner that increases our costs or impacts Metromile’s ability to distribute its mobile app, collect data through it, and market its products.

Metromile is subject to the terms of service and policies governing the operating system platforms on which its mobile app runs and the application stores through which Metromile distributes its mobile app, such as those operated by Apple and Google. These terms of service and policies govern the distribution, operation and promotion of applications on such platforms and stores. These platforms and stores have broad discretion to change and interpret their terms of service and policies in a manner that may adversely

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affect its business. For example, an operating system platform or application store may increase fees associated with access to it, restrict the collection of data through mobile apps that run on those platforms, restrict how that data is used and shared, and limit how mobile app publishers advertise online.

Metromile relies on telematics to collect data points from an OBD-II device in customers’ vehicles. This data is used to accurately bill the miles they have driven, evaluate pricing and underwriting risks, manage claims and customer support, and improve business processes. Limitations on its ability to collect, use or share telematics and other data derived from the OBD-II device, as well as new technologies that block its ability to collect, use or share such data, could significantly diminish the value of its platform and have an adverse effect on its ability to generate revenue. Limitations or blockages on its ability to collect, use or share data derived from use of its mobile app may also restrict its ability to analyze such data to facilitate its product improvement, research and development and advertising activities. For example, in June 2020, Apple announced plans to require applications using its mobile operating systems to obtain an end-user’s permission to track them or access their device’s advertising identifier for advertising and advertising measurement purposes, as well as other restrictions that could adversely affect Metromile’s business.

If Metromile was to violate, or be perceived to have violated, the terms of service or policies of an operating system platform or application store, the provider may limit or block our access to it. It is possible that an operating system platform or application store might limit, eliminate or otherwise interfere with the distribution of our mobile app, the features Metromile provides and the manner in which Metromile markets its mobile app, or give preferential treatment on their platforms or stores to a competitor. To the extent either or both of them do so, its business, results of operations and financial condition could be adversely affected.

Furthermore, one of the factors Metromile uses to evaluate its customer satisfaction and market position is our Apple App Store ratings. This rating, however, may not be a reliable indicator of its customer satisfaction relative to other companies who are rated on the Apple App Store since, to date, Metromile has received a fraction of the number of reviews of some of the companies Metromile benchmarks against, and thus its number of positive reviews may not be as meaningful.

Metromile’s expansion within the United States will subject us to additional costs and risks, and its plans may not be successful.

Metromile’s success depends in significant part on its ability to expand into additional markets in the United States and abroad. Metromile is currently licensed in the District of Columbia and 49 states of the United States, with licenses active in 46 states and the District of Columbia, and write business in eight of those states. Metromile plans to have a presence in almost all states by 2022 but cannot guarantee that Metromile will be able to provide nationwide coverage on that timeline or at all. Moreover, one or more states could revoke its license to operate, or implement additional regulatory hurdles that could preclude or inhibit its ability to obtain or maintain its license in such states. As Metromile seeks to expand in the United States, Metromile may incur significant operating expenses, although its expansion may not be successful for a variety of reasons, including because of:

barriers to obtaining the required government approvals, licenses or other authorizations;
failures in identifying and entering into joint ventures with strategic partners, both domestically and internationally, or entering into joint ventures that do not produce the desired results;
challenges in, and the cost of, complying with various laws and regulatory standards, including with respect to the insurance business and insurance distribution, capital and outsourcing requirements, data privacy, tax, claims handling, and local regulatory restrictions;
difficulty in recruiting and retaining licensed, talented and capable employees;
competition from local incumbents that already own market share, better understand the local market, may market and operate more effectively and may enjoy greater local affinity or awareness;
differing demand dynamics, which may make its product offerings less successful; or
currency exchange restrictions or costs and exchange rate fluctuations, or significant increases to import tariffs.

Expansion into new markets in the United States will also require additional investments by Metromile both in marketing and with respect to securing applicable regulatory approvals. These incremental costs may result from hiring additional personnel, from engaging third-party service providers and from incurring other research and development costs. If Metromile invests substantial time

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and resources to expand its operations while its revenues from those additional operations do not exceed the expense of establishing and maintaining them, or if Metromile is unable to manage these risks effectively, its business, results of operations and financial condition could be adversely affected. If Metromile fails to grow its geographic footprint or geographic growth occurs at a slower rate than expected, its business, results of operations and financial condition could be materially and adversely affected.

Metromile’s technology platform may not operate properly or as Metromile expects it to operate.

Metromile utilizes its technology platform to gather customer data in order to determine whether or not to write and how to price its insurance products. Similarly, Metromile uses its technology platform to process many of its claims. Its technology platform is expensive and complex, its continuous development, maintenance and operation may entail unforeseen difficulties including material performance problems or undetected defects or errors. Metromile may encounter technical obstacles, and it is possible that Metromile may discover additional problems that prevent its technology from operating properly. If its platform does not function reliably, Metromile may incorrectly select its customers, bill its customers, price insurance products or incorrectly pay or deny insurance claims made by its customers. These errors could result in inadequate insurance premiums paid relative to claims made, resulting in increased financial losses. These errors could also cause customer dissatisfaction with Metromile, which could cause customers to cancel or fail to renew their insurance policies with it or make it less likely that prospective customers obtain new insurance policies from it. Additionally, technology platform errors may lead to unintentional bias and discrimination in the underwriting process, which could subject it to legal or regulatory liability and harm its brand and reputation. Any of these eventualities could result in a material adverse effect on its business, results of operations and financial condition.

Metromile depends on third-party technology providers to support its telematics data acquisition.

Metromile utilizes telematics technology to gather data that Metromile uses to underwrite insurance policies, bill customers, and manage claims and customer service. Its telematics hardware is designed and manufactured and telematics data services are provided to it by third parties. These companies may fail to provide it accurate or complete data due to technical or operating failures, their hardware may have errors that inaccurately collect or represent driver behavior, car location, or other sensor data, or they may go stop offering their services to it. If Metromile is delivered inaccurate or no data due to these failures, Metromile may overpay claims, underbill customers, or create customer dissatisfaction that causes customers to cancel their insurance policies with it. Any of these eventualities could result in a material adverse effect on its business, results of operations and financial condition.

Regulatory changes may limit its ability to develop or implement its telematics-based pricing model and/or may eliminate or restrict the confidentiality of its proprietary technology.

Its future success depends on its ability to continue to develop and implement its telematics-based pricing model, and to maintain the confidentiality of its proprietary technology. Changes to existing laws, their interpretation or implementation, or new laws could impede its use of this technology, or require that Metromile discloses its proprietary technology to its competitors, which could negatively impact its competitive position and result in a material adverse effect on its business, results of operations, and financial condition. For example, the November 2020 ballot measure in California, which was formally adopted, will enact the CPRA, which mandates issuance of regulations providing California residents with the right to information about the logic of certain algorithmic decisions about them and the right to opt-out of such decisions. Such regulations, and similar laws that could be enacted in other states, could require disclosure of its proprietary technology, limit the effectiveness of its products and reduce demand for them.

Metromile’s brand may not become as widely known or accepted as incumbents’ brands or the brand may become tarnished.

Many of its competitors have brands that are well-recognized. As a relatively new entrant into the insurance market, Metromile has spent, and expect that Metromile will for the foreseeable future continue to spend, considerable amounts of money and other resources on creating brand awareness and building its reputation. Metromile may not be able to build brand awareness to levels matching its competitors, and its efforts at building, maintaining and enhancing its reputation could fail and/or may not be cost-effective. Complaints or negative publicity about its business practices, its marketing and advertising campaigns (including marketing affiliations or partnerships), its compliance with applicable laws, the integrity of the data that Metromile provides to consumers or business partners, data privacy and security issues, and other aspects of its business, whether real or perceived, could diminish confidence in its brand, which could adversely affect its reputation and business. As Metromile expands its product offerings and enter new markets, Metromile will need to establish its reputation with new customers, and to the extent Metromile is not successful in creating positive impressions, its business in these newer markets could be adversely affected. While Metromile may choose to engage in a broader marketing campaign to further promote its brand, this effort may not be successful or cost effective. If Metromile is

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unable to maintain or enhance its reputation or enhance consumer awareness of its brand in a cost-effective manner, its business, results of operations and financial condition could be materially adversely affected.

Metromile may not continue to grow at historical rates or achieve or maintain profitability in the future.

Metromile’s limited operating history may make it difficult to evaluate its current business and its future prospects. While its revenue has grown in recent periods, this growth rate may not be sustainable and should not be considered indicative of future performance, and Metromile may not realize sufficient revenue to achieve or maintain profitability. As Metromile grows its business, Metromile expects its revenue growth rates may slow in future periods due to a number of reasons, which may include slowing demand for its service, increasing competition, a decrease in the growth of its overall market, and its failure to capitalize on growth opportunities or the maturation of its business. Metromile has incurred net losses on an annual basis since its inception, and may incur significant losses in the future for a number of reasons, including insufficient growth in the number of customers, a failure to retain its existing customers, and increasing competition, as well as other risks described in these Risk Factors, and Metromile may encounter unforeseen expenses, difficulties, complications and delays and other unknown factors. Metromile expects to continue to make investments in the development and expansion of its business, which may not result in increased or sufficient revenue or growth, as a result of which Metromile may not be able to achieve or maintain profitability.

Metromile relies on highly skilled and experienced personnel and if Metromile is unable to attract, retain or motivate key personnel or hire qualified personnel, its business may be seriously harmed. In addition, the loss of key senior management personnel could harm its business and future prospects.

Its performance largely depends on the talents and efforts of highly-skilled and experienced individuals. Its future success depends on its continuing ability to identify, hire, develop, motivate and retain highly skilled and experienced personnel and, if Metromile are unable to hire and train a sufficient number of qualified employees for any reason, Metromile may not be able to maintain or implement its current initiatives or grow, or its business may contract and Metromile may lose market share. Moreover, certain of its competitors or other insurance or technology businesses may seek to hire its employees. Metromile cannot assure you that its equity incentives and other compensation will provide adequate incentives to attract, retain and motivate employees in the future, particularly if the market price of its Common Stock does not increase or declines. If Metromile does not succeed in attracting, retaining and motivating highly qualified personnel, its business may be seriously harmed.

Metromile depends on its senior management, including Dan Preston, its Chief Executive Officer, and Paw Andersen, its Chief Technology Officer, as well as other key personnel. Metromile may not be able to retain the services of any of its senior management or other key personnel, as their employment is at-will and they could leave at any time. If Metromile loses the services of one or more of its senior management and other key personnel, including as a result of the COVID-19 pandemic, Metromile may not be able to successfully manage its business, meet competitive challenges or achieve its growth objectives. Further, to the extent that its business grows, Metromile will need to attract and retain additional qualified management personnel in a timely manner, and Metromile may not be able to do so. Its future success depends on its continuing ability to identify, hire, develop, motivate, retain and integrate highly skilled personnel in all areas of its organization.

New legislation or legal requirements may affect how Metromile communicates with its customers, which could have a material adverse effect on its business model, financial condition, and results of operations.

State and federal lawmakers, insurance regulators, and advisory groups such as the NAIC are focusing upon the use of artificial intelligence broadly, including concerns about transparency, deception, and fairness in particular. Changes in laws or regulations, or changes in the interpretation of laws or regulations by a regulatory authority, specific to the use of artificial intelligence, may decrease Metromile’s revenues and earnings and may require it to change the manner in which Metromile conducts some aspects of its business. Metromile may also be required to disclose its proprietary software to regulators, putting its intellectual property at risk, in order to receive regulatory approval to use such artificial intelligence in the underwriting of insurance and/or the payment of claims. In addition, its business and operations are subject to various U.S. federal, state, and local consumer protection laws, including laws which place restrictions on the use of automated tools and technologies to communicate with wireless telephone subscribers or consumers generally. For example, a California law, effective as of July 2019, makes it unlawful for any person to use a bot to communicate with a person in California online with the intent to mislead the other person about its artificial identity for the purpose of knowingly deceiving the person about the content of the communication in order to incentivize a purchase of goods or services in a commercial transaction. Although Metromile has taken steps to mitigate its liability for violations of this and other laws restricting the use of electronic communication tools, no assurance can be given that Metromile will not be exposed to civil litigation or regulatory enforcement. Further, to the extent that any changes in law or regulation further restrict the ways in which Metromile communicates

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with prospective or current customers before or during onboarding, customer care, or claims management, these restrictions could result in a material reduction in its customer acquisition and retention, reducing the growth prospects of its business, and adversely affecting its financial condition and future cash flows.

Severe weather events and other catastrophes, including the effects of climate change, are inherently unpredictable and may have a material adverse effect on Metromile’s financial results and financial condition.

Metromile’s business may be exposed to catastrophic events such as tornadoes, tsunamis, tropical storms (including hurricanes), earthquakes, windstorms, hailstorms, severe thunderstorms, wildfires and other fires, as well as non-natural events such as explosions, riots, terrorism, or war, which could cause operating results to vary significantly from one period to the next. Metromile may incur catastrophe losses in its business in excess of: (1) those experienced in prior years, (2) the average expected level used in pricing, (3) current reinsurance coverage limits, or (4) loss estimates from external tornado, hail, hurricane and earthquake models at various levels of probability. In addition, Metromile is subject to customer insurance claims arising from weather events such as winter storms, rain, hail and high winds.

The incidence and severity of weather conditions are largely unpredictable. There is generally an increase in the frequency and severity of customer insurance claims when severe weather conditions occur. The incidence and severity of severe weather conditions and catastrophes are inherently unpredictable and the occurrence of one catastrophe does not render the possibility of another catastrophe greater or lower. The extent of losses from a catastrophe is a function of both the total amount of insured exposure in the area affected by the event and the severity of the event. In particular, severe weather and other catastrophes could significantly increase Metromile’s costs due to a surge in claims following such events and/or legal and regulatory changes in response to catastrophes that may impair its ability to limit our liability under its policies. Severe weather conditions and catastrophes can cause greater losses for us, which can cause its liquidity and financial condition to deteriorate. Given its current state mix and performance of our book, Metromile does not currently carry event reinsurance coverage for severe weather events. In addition, reinsurance placed in the market also carries some counterparty credit risk.

Climate change may affect the occurrence of certain natural events, such as an increase in the frequency or severity of wind and thunderstorm events, eruptions of volcanoes, and tornado or hailstorm events due to increased convection in the atmosphere; more frequent wildfires and subsequent landslides in certain geographies; higher incidence of deluge flooding and the potential for an increase in severity of the hurricane events due to higher sea surface temperatures. Additionally, climate change may cause an impact on the demand, price and availability of insurance, as well as the value of its investment portfolio. Due to significant variability associated with future changing climate conditions, Metromile is unable to predict the impact climate change will have on its business.

Denial of claims or Metromile’s failure to accurately and timely pay claims could materially and adversely affect its business, financial condition, results of operations, brand and prospects.

Under the terms of its policies, Metromile is required to accurately and timely evaluate and pay claims. Its ability to do so depends on a number of factors, including the efficacy of its claims processing, the training and experience of its claims adjusters, including its third-party claims administrators, and its ability to develop or select and implement appropriate procedures and systems to support its claims functions. Metromile believes that the speed at which its technology-based claims processing platform allows it to process and pay claims is a differentiating factor for its business relative to its competitors, and an increase in the average time to process claims could lead to customer dissatisfaction and undermine its reputation and position in the insurance marketplace. If its claims adjusters or third-party claims administrators are unable to effectively process its volume of claims, its ability to grow its business while maintaining high levels of customer satisfaction could be compromised, which in turn, could adversely affect its operating margins. Any failure to pay claims accurately or timely could also lead to regulatory and administrative actions or other legal proceedings and litigation against it, or result in damage to its reputation, any one of which could materially and adversely affect its business, financial condition, results of operations, brand and prospects.

Unexpected increases in the frequency or severity of claims may adversely affect Metromile’s results of operations and financial condition.

Metromile’s business may experience volatility in claim frequency from time to time, and short-term trends may not continue over the longer term. Changes in claim frequency may result from changes in mix of business, miles driven, distracted driving, macroeconomic or other factors. A significant increase in claim frequency could have an adverse effect on its results of operations and financial condition.

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Changes in bodily injury claim severity are impacted by inflation in medical costs, litigation trends and precedents, regulation and the overall safety of automobile travel. Changes in auto property damage claim severity are driven primarily by inflation in the cost to repair vehicles, including parts and labor rates, the mix of vehicles that are declared total losses, model year mix as well as used car values. While actuarial models for pricing and reserving typically include an expected level of inflation, unanticipated increases in claim severity can arise from events that are inherently difficult to predict. Although we pursue various loss management initiatives to mitigate future increases in claim severity, there can be no assurances that these initiatives will successfully identify or reduce the effect of future increases in claim severity.

Failure to maintain Metromile’s risk-based capital at the required levels could adversely affect its ability to maintain regulatory authority to conduct its business.

Metromile is required to have sufficient capital and surplus in order to comply with insurance regulatory requirements, support its business operations and minimize its risk of insolvency. The NAIC has developed a system to test the adequacy of statutory capital and surplus of U.S.-based insurers, known as risk-based capital, that all states have adopted. This system establishes the minimum amount of capital and surplus necessary for an insurance company to support its overall business operations in consideration of its size and risk profile. It identifies insurers that may be inadequately capitalized by looking at certain risk factors, including asset risk, credit risk and underwriting risk with respect to the insurer’s business in order to determine an insurer’s authorized control level risk-based capital. An insurer’s risk-based capital ratio measures the relationship between its total adjusted capital and its authorized control level risk-based capital.

Insurers with a ratio falling below certain calculated thresholds may be subject to varying degrees of regulatory action, including heightened supervision, examination, rehabilitation or liquidation. An insurance company with total adjusted capital that is less than 200% of its authorized control level risk-based capital is at a company action level, which would require the insurance company to file a risk-based capital plan that, among other things, contains proposals of corrective actions the company intends to take that are reasonably expected to result in the elimination of the company action level event. Additional action level events occur when the insurer’s total adjusted capital falls below 150%, 100% and 70% of its authorized control level risk-based capital. Lower percentages trigger increasingly severe regulatory responses. In the event of a mandatory control level event (triggered when an insurer’s total adjusted capital falls below 70% of its authorized control level risk-based capital), an insurer’s primary regulator is required to take steps to place the insurer into receivership. As part of its regulatory review and approval of this transaction, the Delaware Department of Insurance required us to enter into a Capital Maintenance Agreement (the “CMA”). The CMA requires Metromile, if the transaction closes, to ensure that the regulated insurance subsidiary, Metromile Insurance Company, will have and maintain total adjusted capital in an amount equal to at least 300% of the insurance company’s authorized control level risk based capital from the close of the transaction until a date to be determined by the regulator in mid-2025. Being required to maintain capital levels above the statutory requirement could put constraints on our ability to deploy capital to which Metromile’s competitors are not subject.

In addition, the NAIC Insurance Regulatory Information System (the “IRIS”), is a collection of analytical tools designed to provide state insurance regulators with an integrated approach to screening and analyzing the financial condition of insurance companies operating in their respective states. If its ratios fall outside of the usual range for one or more ratios set forth by the IRIS for any number of reasons, it could subject Metromile to heightened regulatory scrutiny or measures, or create investor uncertainty around the stability of its financial condition, which could harm its business.

Further, the NAIC has promulgated a Model Regulation to Define Standards and Commissioner’s Authority for Companies Deemed to be in Hazardous Financial Condition (the “Hazardous Financial Condition Standards”), which has been adopted by many states in whole or part. If its financial condition is deemed by state insurance regulators to meet the Hazardous Financial Conditions Standards, it could subject us to heightened regulatory scrutiny or measures, or create uncertainty around the stability of its financial condition, which could harm its business. As a relatively new entrant to the insurance industry, Metromile may face additional capital and surplus requirements as compared to those of its larger and more established competitors. Failure to maintain adequate risk-based capital at the levels required by law and/or the Delaware Department of Insurance as described above could result in increasingly onerous reporting and examination requirements and could adversely affect its ability to maintain regulatory authority to conduct its business.

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Security incidents, or real or perceived errors, failures or bugs in Metromile’s systems, website or app could impair its operations, compromise its confidential information or its customers’ personal information, damage its reputation and brand, and harm its business and operating results.

Metromile’s continued success depends on its systems, applications, and software continuing to operate and to meet the changing needs of its customers and users. Metromile relies on its technology and engineering staff and vendors to successfully implement changes to and maintain its systems and services in an efficient and secure manner. Like all information systems and technology, its website and mobile app may contain or develop material errors, failures, vulnerabilities or bugs, particularly when new features or capabilities are released, and may be subject to computer viruses or malicious code, break-ins, phishing impersonation attacks, attempts to overload its servers with denial-of-service or other attacks, ransomware and similar incidents or disruptions from unauthorized use of its computer systems, as well as unintentional incidents causing data leakage, any of which could lead to interruptions, delays or website or mobile app shutdowns.

Operating its business and products involves the collection, storage, use and transmission of sensitive, proprietary and confidential information, including personal information, pertaining to its current, prospective and past customers, staff, contractors, and business partners. The security measures Metromile takes to protect this information may be breached as a result of computer malware, viruses, social engineering, ransomware attacks, hacking and cyberattacks, including by state-sponsored and other sophisticated organizations. Such incidents have become more prevalent in recent years. For example, attempts to fraudulently induce its personnel into disclosing usernames, passwords or other information that can be used to access its systems and the information in them have increased and could be successful. Its security measures could also be compromised by its personnel, theft or errors, or be insufficient to prevent exploitation of security vulnerabilities in software or systems on which Metromile relies. Such incidents have in the past resulted in unauthorized access to certain personal information, and may in the future result in unauthorized, unlawful or inappropriate use, destruction or disclosure of, access to, or inability to access the sensitive, proprietary and confidential information that Metromile handles. These incidents may remain undetected for extended periods of time.

Metromile relies on third-party service providers to provide critical services that help it deliver its solutions and operate its business. These providers may support or operate critical business systems for it or store or process the same sensitive, proprietary and confidential information that Metromile handles. These service providers may not have adequate security measures and could experience a security incident that compromises the confidentiality, integrity or availability of the systems they operate for it or the information they process on its behalf. Such occurrences could adversely affect its business to the same degree as if Metromile had experienced these occurrences directly and Metromile may not have recourse to the responsible third-party service providers for the resulting liability Metromile incurs.

Because there are many different cybercrime and hacking techniques and such techniques continue to evolve, Metromile may be unable to anticipate attempted security breaches, react in a timely manner or implement adequate preventative measures. While Metromile has developed systems and processes designed to protect the integrity, confidentiality and security of its and its customers’ confidential and personal information under its control, Metromile cannot assure you that any security measures that Metromile or its third-party service providers have implemented will be effective against current or future security threats.

A security breach or other security incident of Metromile’s systems, data, website or app has occurred in the past, and may occur in the future. For example, in January 2021, Metromile discovered a security incident related to its online pre-filled quote form and application process, which resulted in unknown person(s) accessing personal information of certain individuals, including individuals’ driver’s license numbers. An actual security breach or incident, a material vulnerability, or the perception that one has occurred or exists, could result in a loss of customer confidence in the security of its platform and damage to its reputation and brand; reduce demand for its insurance products; disrupt normal business operations; require it to expend significant capital and resources to investigate and remedy the incident, and prevent recurrence and comply with any breach notification obligations; and subject it to litigation (including class actions), regulatory enforcement action, fines, penalties, and other liability, which could adversely affect its business, financial condition and results of operations.

Even if Metromile takes steps that Metromile believes are adequate to protect it from cyber threats, hacking against its competitors or other companies in its industry could create the perception among its customers or potential customers that its digital platform is not safe to use. Security incidents could also damage our IT systems and its ability to make the financial reports and other public disclosures required of public companies. These risks are likely to increase as we continue to grow and process, store and transmit an increasingly large volume of data.

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Metromile may be unable to prevent, monitor or detect fraudulent activity, including policy acquisitions or payments of claims that are fraudulent in nature.

If Metromile fails to maintain adequate systems and processes to prevent, monitor and detect fraud, including fraudulent policy acquisitions or claims activity, or if inadvertent errors occur with such prevention, monitoring and detection systems due to human or computer error, its business could be materially adversely impacted. While Metromile believes past incidents of fraudulent activity have been relatively isolated, Metromile cannot be certain that its systems and processes will always be adequate in the face of increasingly sophisticated and ever-changing fraud schemes. Metromile uses a variety of tools to protect against fraud, but these tools may not always be successful at preventing such fraud.

Instances of fraud may result in increased costs, including possible settlement and litigation expenses, and could have a material adverse effect on its business and reputation. In addition, failure to monitor and detect fraud and otherwise comply with state Special Investigation Unit requirements can result in regulatory fines or penalties.

Metromile is subject to stringent and changing privacy and data security laws, regulations, and standards related to data privacy and security. Its actual or perceived failure to comply with such obligations could harm its reputation, subject it to significant fines and liability, or adversely affect its business.

In the United States, insurance companies are subject to the privacy provisions of the federal Gramm-Leach-Bliley Act and the NAIC Insurance Information and Privacy Protection Model Act, to the extent adopted and implemented by various state legislatures and insurance regulators. The regulations implementing these laws require insurance companies to disclose their privacy practices to consumers, allow them to opt-in or opt-out, depending on the state, of the sharing of certain personal information with unaffiliated third parties, and maintain certain security controls to protect their information. Violators of these laws face regulatory enforcement action, substantial civil penalties, injunctions, and in some states, private lawsuits for damages.

Privacy and data security regulation in the U.S. is rapidly evolving. For example, California recently enacted the CCPA, which became effective January 1, 2020. The CCPA and related regulations give California residents expanded rights to access and request deletion of their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is used and shared. The CCPA provides for civil penalties for violations, as well as a private right of action for certain data breaches, which is expected to increase the volume and success of class action data breach litigation. In addition to increasing its compliance costs and potential liability, the CCPA’s restrictions on “sales” of personal information may restrict Metromile’s use of cookies and similar technologies for advertising purposes. The CCPA excludes information covered by Gramm-Leach-Bliley Act, the Driver’s Privacy Protection Act, the Fair Credit Reporting Act (the “California Financial Information Privacy Act”) from the CCPA’s scope, but the CCPA’s definition of “personal information” is broad and may encompass other information that Metromile maintains. Some observers have noted that the CCPA could mark the beginning of a trend toward more stringent privacy legislation in the U.S., and multiple states have enacted or proposed similar laws. There is also discussion in Congress of new comprehensive federal data protection and privacy law to which Metromile likely would be subject if it is enacted.

In addition, California voters approved the November 2020 ballot measure which will enact the CPRA, substantially expanding the requirements of the CCPA. As of January 1, 2023, the CPRA will give consumers the ability to limit use of precise geolocation information and other categories of information classified as “sensitive”; add e-mail addresses and passwords to the list of personal information that, if lost or breached, would give the affected consumers the right to bring private lawsuits; increase the maximum penalties threefold for violations concerning consumers under age 16; and establish the California Privacy Protection Agency to implement and enforce the new law, as well as impose administrative fines. The effects of the CCPA, CPRA and other similar state or federal laws are potentially significant and may require it to modify its data processing practices and policies, incur substantial compliance costs and subject it to increased potential liability.

In addition to privacy and data security requirements under applicable laws, Metromile is subject to the Payment Card Industry Data Security Standard (“PCI DSS”), a self-regulatory standard that requires companies that process payment card data to implement certain data security measures. If Metromile or its payment processors fail to comply with the PCI DSS, Metromile may incur significant fines or liability and lose access to major payment card systems. Industry groups may in the future adopt additional self-regulatory standards by which Metromile is legally or contractually bound. If Metromile expands into Europe, Metromile may also face particular privacy, data security, and data protection risks in connection with requirements of the General Data Protection Regulation (E.U.) 2016/679 (“GDPR”) and other data protection regulations. Among other stringent requirements, the GDPR restricts transfers of data outside of the E.U. to countries deemed to lack adequate privacy protections (such as the U.S.), unless an appropriate safeguard specified by the GDPR is implemented. A July 16, 2020 decision of the Court of Justice of the European Union invalidated

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a key mechanism for lawful data transfer to the U.S. and called into question the viability of its primary alternative. As such, the ability of companies to lawfully transfer personal data from the E.U. to the U.S. is presently uncertain. Other countries have enacted or are considering enacting similar cross-border data transfer rules or data localization requirements. These developments could limit its ability to deliver its products in the E.U. and other foreign markets. In addition, any failure or perceived failure to comply with these rules may result in regulatory fines or penalties including orders that require it to change the way Metromile processes data.

Additionally, Metromile is subject to the terms of its privacy policies, privacy-related disclosures, and contractual and other privacy-related obligations to its customers and other third parties. Any failure or perceived failure by it or third parties Metromile works with to comply with these policies, disclosures, and obligations to customers or other third parties, or privacy or data security laws may result in governmental or regulatory investigations, enforcement actions, regulatory fines, criminal compliance orders, litigation or public statements against Metromile by consumer advocacy groups or others, and could cause customers to lose trust in it, all of which could be costly and have an adverse effect on its business.

Metromile relies on its mobile application to execute its business strategy. Government regulation of the internet and the use of mobile applications in particular is evolving, and unfavorable changes could seriously harm its business.

Metromile relies on its mobile application to execute its business strategy. Metromile is subject to general business regulations and laws as well as federal and state regulations and laws specifically governing the internet and the use of mobile applications in particular. Existing and future laws and regulations may impede the growth of the internet or other online services, and increase the cost of providing online services. These regulations and laws may involve taxes, tariffs, privacy and data security, anti-spam, content protection, electronic contracts and communications, electronic signatures and consents, consumer protection and social media marketing. It is at times not clear how existing laws governing issues such as property ownership, sales and other taxes and consumer privacy apply to the internet and the use of mobile applications in particular, as the vast majority of these laws were adopted prior to the advent of the internet and the use of mobile applications and do not contemplate or address the unique issues raised by the internet. It is possible that general business regulations and laws, or those specifically governing the internet and the use of mobile applications in particular, may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices. Metromile cannot be sure that its practices have complied, currently comply or will comply fully with all such laws and regulations. Any failure, or perceived failure, by it to comply with any of these laws or regulations could result in damage to its reputation, a loss in business and proceedings or actions against it by governmental entities or others. Any such proceeding or action could hurt its reputation, force it to spend significant amounts in defense of these proceedings, distract its management, increase its costs of doing business and decrease the use of its mobile application or website by consumers and suppliers and may result in the imposition of monetary liability. Metromile may also be contractually liable to indemnify and hold harmless third parties from the costs or consequences of non-compliance with any such laws or regulations.

Metromile’s intellectual property rights are valuable, and any inability to protect them could reduce the value of its products, services and brand.

Metromile’s trade secrets, trademarks, copyrights, patents, and other intellectual property rights are important assets for us. Metromile relies on, and expects to continue to rely on, various agreements with its employees, independent contractors, consultants and third parties with whom Metromile has relationships, as well as trademark, trade dress, domain name, copyright, patent, and trade secret laws, to protect its brand and other intellectual property rights. Such agreements may not effectively prevent unauthorized use or disclosure of its confidential information, intellectual property or technology and may not provide an adequate remedy in the event of unauthorized use or disclosure of its confidential information, intellectual property or technology, and Metromile may fail to consistently obtain, police and enforce such agreements. Additionally, various factors outside its control pose a threat to its intellectual property rights, as well as to its products, services and technologies. For example, Metromile may fail to obtain effective intellectual property protection, or effective intellectual property protection may not be available in every country in which its products and services are available. Also, the efforts Metromile has taken to protect its intellectual property rights may not be sufficient or effective in all cases. For example, governmental entities that grant intellectual property rights may deny its applications for such rights despite its best efforts.

Additionally, granted intellectual property rights are subject to challenge. Successful challenges may result in such rights being narrowed in scope or declared invalid or unenforceable. Despite its efforts to obtain and protect broad intellectual property rights, there can be no assurance Metromile’s intellectual property rights will be sufficient to protect against others offering products or services that are substantially similar to ours and compete with its business, and unauthorized parties may attempt to copy aspects of its technology and use information that Metromile considers proprietary. Competitors or other third parties may also attempt to circumvent or design around its intellectual property rights.

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In addition to registered intellectual property rights such as trademark registrations, Metromile relies on non-registered proprietary information and technology, such as trade secrets, confidential information, know-how and technical information. Certain information or technology that Metromile endeavors to protect as trade secrets may not be eligible for trade secret protection in all jurisdictions, or the measures Metromile undertakes to establish and maintain such trade secret protection may be inadequate. In order to protect its proprietary information and technology, Metromile relies in part on agreements with its employees, investors, independent contractors and other third parties that place restrictions on the use and disclosure of this intellectual property. In some cases, these agreements may not adequately protect its trade secrets, these agreements may be breached, or this intellectual property, including trade secrets, may otherwise be disclosed or become known to its competitors, which could cause it to lose a competitive advantage resulting from this intellectual property. However, its employees, independent contractors or other third parties with whom Metromile does business may nonetheless use intellectual property owned by others in their work for it, and disputes may arise as to the rights in related or resulting know-how and inventions. Current or future legal requirements may require it to disclose certain proprietary information or technology, such as its proprietary algorithms, to regulators or other third parties, including its competitors, which could impair or result in the loss of trade secret protection for such information or technology. The loss of trade secret protection could make it easier for third parties to compete with Metromile’s products and services by copying functionality. In addition, any changes in, or unexpected interpretations of, intellectual property laws may compromise its ability to enforce its trade secret and intellectual property rights. Costly and time-consuming litigation could be necessary to enforce and determine the scope of its proprietary rights, and failure to obtain or maintain protection of its trade secrets or other proprietary information could harm its business, results of operations and competitive position.

Metromile has filed, and may continue in the future to file, applications to protect certain of its innovations and intellectual property. Metromile does not know whether any of its applications will result in the issuance of a patent, trademark or copyright, as applicable, or whether the examination process will require it to narrow its claims or otherwise limit the scope of such intellectual property. In addition, Metromile may not receive competitive advantages from the rights granted under its intellectual property. Its existing intellectual property, and any intellectual property granted to it or that Metromile otherwise acquires in the future, may be contested, circumvented or invalidated, and Metromile may not be able to prevent third parties from infringing its intellectual property rights. Therefore, the exact effect of the protection of this intellectual property cannot be predicted with certainty. Because obtaining patent protection requires disclosing its inventions to the public, such disclosure may facilitate its competitors developing improvements to its innovations. Given this risk, Metromile may sometimes choose not to seek patent protection for certain innovations and instead rely on trade secret protection. Any failure to adequately obtain such patent protection, or other intellectual property protection, could later prove to adversely impact its business.

Metromile currently holds various domain names relating to its brand, including Metromile.com. Failure to protect its domain names could adversely affect its reputation and brand and make it more difficult for users to find its website and its mobile app. Metromile may be unable, without significant cost or at all, to prevent third parties from acquiring domain names that are similar to, infringe upon or otherwise decrease the value of its trademarks and other proprietary rights.

Metromile may be required to spend significant resources in order to monitor and protect its intellectual property rights, and some violations may be difficult or impossible to detect. For example, infringement of patent rights related to internal software processes may be difficult to detect. Litigation to protect and enforce its intellectual property rights could be costly, time-consuming and distracting to management and could result in the impairment or loss of portions of its intellectual property. Its efforts to enforce its intellectual property rights may be met with defenses, counterclaims and countersuits attacking the validity and enforceability of its intellectual property rights or asserting that Metromile infringes third-party intellectual property rights. The unauthorized copying or use of its proprietary technology, as well as any costly litigation or diversion of its management’s attention and resources, could impair the functionality of its platform, delay introductions of enhancements to its platform, result in its substituting inferior or more costly technologies into its platform or harm its reputation or brand. In addition, Metromile may be required to license additional technology from third parties to develop and market new offerings or platform features, which may not be on commercially reasonable terms or at all and could adversely affect its ability to compete.

Although Metromile takes measures to protect its intellectual property, if Metromile is unable to prevent the unauthorized use or exploitation of its intellectual property, the value of is brand, content, and other intangible assets may be diminished, competitors may be able to more effectively mimic its service and methods of operations, the perception of its business and service to customers and potential customers may become confused, and its ability to attract customers may be adversely affected. Any failure to protect its intellectual property could adversely impact its business, results of operations and financial condition. While Metromile takes precautions designed to protect its intellectual property, it may still be possible for competitors and other unauthorized third parties to copy its technology and use its proprietary brand, content and information to create or enhance competing solutions and services, which could adversely affect its competitive position in its rapidly evolving and highly competitive industry. Some license provisions

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that protect against unauthorized use, copying, transfer and disclosure of its technology may be unenforceable under the laws of certain jurisdictions and foreign countries. While Metromile enters into confidentiality and invention assignment agreements with its employees and consultants and enter into confidentiality agreements with its third-party providers and strategic partners, Metromile cannot assure you that these agreements will be effective in controlling access to, and use and distribution of, its products and proprietary information. Further, these agreements do not prevent its competitors from independently developing technologies that are substantially equivalent or superior to its offerings.

Some of Metromile’s products and services contain open source software, which may pose particular risks to its proprietary software, products, and services in a manner that could have a negative effect on its business.

Metromile uses open source software in its products and services and anticipate continuing to use open source software in the future. Some open source software licenses require those who distribute open source software as part of their own software product to publicly disclose all or part of the source code of such software product or to make available any derivative works of the open source code on unfavorable terms or at no cost, and Metromile may be subject to such terms. The terms of certain open source licenses to which Metromile is subject have not been interpreted by U.S. or foreign courts, and there is a risk that open source software licenses could be construed in a manner that imposes unanticipated conditions or restrictions on its ability to provide or distribute its products or services. Additionally, Metromile could face claims from third parties claiming ownership of, or demanding release of, the open source software or derivative works that Metromile develops using such software, which could include its proprietary source code, or otherwise seeking to enforce the terms of the applicable open source license. These claims could result in litigation and could require it to make its software source code freely available, purchase a costly license or cease offering the implicated products or services unless and until Metromile can re-engineer such source code to eliminate use of such open source software. This re-engineering process could require it to expend significant additional research and development resources, and Metromile may not be able to complete the re-engineering process successfully. In addition to risks related to license requirements, use of certain open source software can lead to greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties, assurance of title or controls on the origin or operation of the open source software, which are risks that cannot be eliminated, and could, if not properly addressed, negatively affect our business. Metromile has established processes to help alleviate these risks, including a review process for screening requests from its development teams for the use of open source software, but Metromile cannot be sure that all of its use of open source software is in a manner that is consistent with its current policies and procedures, or will not subject us to liability. Any of these risks could be difficult to eliminate or manage, and, if not addressed, could have a negative effect on its business, financial condition and operating results.

Claims by others that Metromile infringes or has infringed their proprietary technology or other intellectual property rights could harm its business.

Companies in the internet and technology industries are frequently subject to litigation based on allegations of infringement or other violations of intellectual property rights. In addition, certain companies and rights holders seek to enforce and monetize patents or other intellectual property rights they own, have purchased or have otherwise obtained. As Metromile gains an increasingly high public profile, the possibility of intellectual property rights claims against it grows. From time to time, third parties may assert claims of infringement of intellectual property rights against it. Although Metromile may have meritorious defenses, there can be no assurance that Metromile will be successful in defending against these allegations or in reaching a business resolution that is satisfactory to Metromile. Its competitors and others may now and in the future have significantly larger and more mature patent portfolios than it. In addition, future litigation may involve patent holding companies or other adverse patent owners who have no relevant product or service revenue and against whom its own patents may therefore provide little or no deterrence or protection. Many potential litigants, including some of our competitors and patent-holding companies, have the ability to dedicate substantial resources to the assertion of their intellectual property rights. Any claim of infringement by a third party, even those without merit, could cause it to incur substantial costs defending against the claim, could distract its management from its business and could require it to cease use of such intellectual property. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, Metromile risks compromising its confidential information during this type of litigation. Metromile may be required to pay substantial damages, royalties or other fees in connection with a claimant securing a judgment against it, Metromile may be subject to an injunction or other restrictions that prevent it from using or distributing our intellectual property, or from operating under its brand, or Metromile may agree to a settlement that prevents it from distributing its offerings or a portion thereof, which could adversely affect its business, results of operations and financial condition.

With respect to any intellectual property rights claim, Metromile may have to seek out a license to continue operations found or alleged to violate such rights, which may not be available, or if available, may not be available on favorable or commercially reasonable terms and may significantly increase our operating expenses. Some licenses may be non-exclusive, and therefore its

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competitors may have access to the same technology licensed to it. If a third party does not offer it a license to its intellectual property on reasonable terms, or at all, Metromile may be required to develop alternative, non-infringing technology, which could require significant time (during which Metromile would be unable to continue to offer its affected offerings), effort and expense and may ultimately not be successful. Any of these events could adversely affect its business, results of operations and financial condition. 59

Metromile may be subject to compliance obligations arising from medical information privacy regulations.

By processing certain personal injury data on behalf of its clients, Metromile may be subject to compliance obligations under privacy and data security-related laws specific to the protection of healthcare or medical information. Although Metromile may be subject to the Health Insurance Portability and Accountability Act (“HIPAA”), the Health Information Technology for Economic and Clinical Health Act (the “HITECH Act”) and comparable state laws, Metromile does not have a process in place to assess or align its privacy and security practices specifically against requirements for protecting medical information.

Metromile may be unable to prevent or address the misappropriation of its data.

From time to time, third parties may misappropriate Metromile’s data through website scraping, bots or other means and aggregate this data on their websites with data from other companies. In addition, copycat websites or mobile apps may misappropriate data and attempt to imitate its brand or the functionality of its website or its mobile app. If Metromile becomes aware of such websites or mobile apps, Metromile intends to employ technological or legal measures in an attempt to halt their operations. However, Metromile may be unable to detect all such websites or mobile apps in a timely manner and, even if Metromile could, technological and legal measures may be insufficient to halt their operations. In some cases, particularly in the case of websites or mobile apps operating outside of the U.S., its available remedies may not be adequate to protect it against the effect of the operation of such websites or mobile apps. Regardless of whether Metromile can successfully enforce its rights against the operators of these websites or mobile apps, any measures that Metromile may take could require it to expend significant financial or other resources, which could harm its business, results of operations or financial condition. In addition, to the extent that such activity creates confusion among consumers or advertisers, its brand and business could be harmed.

If Metromile’s customers were to claim that the policies they purchased failed to provide adequate or appropriate coverage, Metromile could face claims that could harm our business, results of operations and financial condition.

Although Metromile aims to provide adequate and appropriate coverage under each of its policies, customers could purchase policies that prove to be inadequate or inappropriate. If such customers were to bring a claim or claims alleging that we failed in its responsibilities to provide them with the type or amount of coverage that they sought to purchase, Metromile could be found liable for amounts significantly in excess of the policy limit, resulting in an adverse effect on its business, results of operations and financial condition. While Metromile maintains errors and omissions insurance coverage to protect it against such liability, such coverage may be insufficient or inadequate.

If Metromile is unable to underwrite risks accurately or charge competitive yet profitable rates to its customers, its business, results of operations and financial condition will be adversely affected.

In general, the premiums for its insurance policies are established at the time a policy is issued and, therefore, before all of its underlying costs are known. The accuracy of its pricing depends on its ability to adequately assess risks, estimate losses and comply with state insurance regulations. Like other insurance companies, Metromile relies on estimates and assumptions in setting its premium rates. Metromile also utilizes the data that Metromile gathers through its interactions with its customers, as evaluated and curated by its technology-based pricing platform.

Establishing adequate premium rates is necessary, together with investment income, if any, to generate sufficient revenue to offset losses, LAE, and other costs. If Metromile does not accurately assess the risks that Metromile underwrites, the premiums that Metromile charges may not be adequate to cover its losses and expenses, which would adversely affect its results of operations and its profitability. Moreover, if Metromile determines that its prices are too low, insurance regulations may preclude us from being able to cancel insurance contracts, non-renew customers, or raise premiums. Alternatively, Metromile could set its premiums too high, which could reduce its competitiveness and lead to fewer customers and lower revenues, which could have a material adverse effect on its business, results of operations and financial condition.

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Pricing involves the acquisition and analysis of historical loss data and the projection of future trends, loss costs and expenses, and inflation trends, among other factors, for each of its products in multiple risk tiers and many different markets. In order to accurately price its policies, Metromile must:

collect and properly analyze a substantial volume of data from its customers;
develop, test and apply appropriate actuarial projections and rating formulas;
review and evaluate competitive product offerings and pricing dynamics;
closely monitor and timely recognize changes in trends;
project both frequency and severity of its customers’ losses with reasonable accuracy; and
in many states obtain regulatory approval for these processes and the resulting rates.

There are no assurances that Metromile will have success in implementing its pricing methodology accurately in accordance with our assumptions. Its ability to accurately price its policies is subject to a number of risks and uncertainties, including:

insufficient or unreliable data;
incorrect or incomplete analysis of available data;
uncertainties generally inherent in estimates and assumptions;
our failure to implement appropriate actuarial projections and rating formulas or other pricing methodologies;
incorrect or incomplete analysis of the competitive environment;
regulatory constraints on rate increases or the use of certain types of data; and
its failure to accurately estimate investment yields and the duration of its liability for loss and loss adjustment expenses, as well as unanticipated court decisions, legislation or regulatory action.

To address the potential inadequacy of its current business model, Metromile may be compelled to increase the amount allocated to cover policy claims, increase premium rates or adopt tighter underwriting standards, any of which may result in a decline in new business and renewals and, as a result, could have a material adverse effect on its business, results of operations and financial condition.

Metromile’s product development cycles are complex and subject to regulatory approval, and Metromile may incur significant expenses before we generate revenues, if any, from new products.

Because Metromile’s products are highly technical and require rigorous testing and regulatory approvals, development cycles can be complex. Moreover, development projects can be technically challenging and expensive, and may be delayed or defeated by the inability to obtain licensing or other regulatory approvals. The nature of these development cycles may cause it to experience delays between the time Metromile incurs expenses associated with research and development and the time Metromile generates revenues, if any, from such expenses. If Metromile expends a significant amount of resources on research and development and its efforts do not lead to the successful introduction or improvement of products that are competitive in the marketplace, this could materially and adversely affect its business and results of operations. Additionally, anticipated customer demand for a product Metromile is developing could decrease after the development cycle has commenced. Such decreased customer demand may cause it to fall short of its sales targets, and Metromile may nonetheless be unable to avoid substantial costs associated with the product’s development. If Metromile is unable to complete product development cycles successfully and in a timely fashion and generate revenues from such future products, the growth of its business may be harmed.

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Litigation and legal proceedings filed by or against Metromile and its subsidiaries could have a material adverse effect on its business, results of operations and financial condition.

From time to time, Metromile is subject to allegations, and may be party to litigation and legal proceedings relating to its business operations. Litigation and other proceedings may include complaints from or litigation by customers or reinsurers, related to alleged breaches of contract or otherwise. Metromile expects that as its market share increases, competitors may pursue litigation to require it to change its business practices or offerings and limit its ability to compete effectively.

As is typical in the insurance industry, Metromile continually faces risks associated with litigation of various types arising in the normal course of its business operations, including disputes relating to insurance claims under its policies as well as other general commercial and corporate litigation. Although Metromile is not currently involved in any material litigation with its customers, members of the insurance industry are periodically the target of class action lawsuits and other types of litigation, some of which involve claims for substantial or indeterminate amounts, and the outcomes of which are unpredictable. This litigation is based on a variety of issues, including sale of insurance and claim settlement practices. In addition, because Metromile employs a technology platform to collect customer data, it is possible that customers or consumer groups could bring individual or class action claims alleging that its methods of collecting data and pricing risk are impermissibly discriminatory. Metromile cannot predict with any certainty whether Metromile will be involved in such litigation in the future or what impact such litigation would have on its business. If Metromile was to be involved in litigation and it was determined adversely, it could require it to pay significant damages or to change aspects of its operations, either of which could have a material adverse effect on its financial results. Even claims without merit can be time-consuming and costly to defend, and may divert management’s attention and resources away from its business and adversely affect its business, results of operations and financial condition. Additionally, routine lawsuits over claims that are not individually material could in the future become material if aggregated with a substantial number of similar lawsuits. In addition to increasing costs, a significant volume of customer complaints or litigation could also adversely affect its brand and reputation, regardless of whether such allegations have merit or whether it is liable. Metromile cannot predict with certainty the costs of defense, the costs of prosecution, insurance coverage or the ultimate outcome of litigation or other proceedings filed by or against us, including remedies or damage awards, and adverse results in such litigation, and other proceedings may harm its business and financial condition.

The utilization of Metromile’s net operating loss carryforwards may be limited.

As of December 31, 2020, Metromile had gross U.S. federal income tax net operating losses (“NOLs”), of approximately $279 million available to offset its future taxable income, if any, prior to consideration of annual limitations that may be imposed under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), or otherwise. Of its NOLs, $142 million of losses will begin to expire in 2031 through 2040 and $137 million of losses can be carried forward indefinitely.

As a result of the mergers, Lemonade generally will succeed to Metromile’s NOLs, but Lemonade may be unable to fully use such NOLs, if at all. Under Section 382 of the Code, if a corporation undergoes an “ownership change” (very generally defined as a greater than 50% change, by value, in the corporation’s equity ownership by certain stockholders or groups of stockholders over a rolling three-year period), the corporation’s ability to use its pre-ownership change NOLs to offset its post-ownership change income may be limited. Metromile has experienced ownership changes in the past, and Metromile will experience an ownership change as a result of the mergers. In addition, Lemonade may experience an ownership change in the future as a result of subsequent shifts in its stock ownership, some of which may be outside of its control. Future regulatory changes could also limit its ability to utilize its NOLs. To the extent Metromile NOLs are not utilized to offset future taxable income, Lemonade’s net income and cash flows may be adversely affected. The Tax Cuts and Jobs Act (the “Tax Act”), as modified by the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), among other things, includes changes to U.S. federal tax rates and the rules governing NOL carryforwards. For U.S. federal NOLs arising in tax years beginning after December 31, 2017, with certain exceptions, including for insurance companies that are not life insurance companies, the Tax Act as modified by the CARES Act limits a taxpayer’s ability to utilize NOL carryforwards in taxable years beginning after December 31, 2020 to 80% of taxable income. In addition, U.S. federal NOLs arising in tax years beginning after December 31, 2017, with an exception for insurance companies that are not life insurance companies, can be carried forward indefinitely. For U.S. federal NOLs for insurance companies that are not life insurance companies subject to taxation under Part 2 of subchapter L of the Code, NOLs may be carried forward for 20 taxable years regardless of when they arise. The income of insurance companies that are not life insurance companies is generally not subject to a percentage limitation for offset by group NOLs. Deferred tax assets for NOLs will need to be measured at the applicable tax rate in effect when the NOLs are expected to be utilized. The new limitation on use of NOLs may significantly impact Lemonade’s ability to utilize the Metromile NOLs to offset taxable income in the future. In addition, for state income tax purposes, there may be periods during which the use of net operating loss carryforwards is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed. For example,

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California recently imposed limits on the usability of California state net operating losses to offset taxable income in tax years beginning after 2019 and before 2023.

Metromile’s enterprise software business unit has limited operating history, which makes it difficult to forecast operating results from the business unit, and Metromile may not achieve the expected operating results in the future.

Metromile established the enterprise software business unit in 2018 and signed its first customer the same year. Since then, Metromile has seen a growth in revenue and deployments. However, as a result of its limited operating history, its ability to forecast future operating results from this business unit, including revenues, cash flows and profitability, is limited and subject to many uncertainties. The historical revenue growth in this business unit should not be considered indicative of its future performance.

Furthermore, the enterprise business unit’s revenue and customer growth could slow or decline for a number of reasons, including slowing demand for its products, increased competition, changes to technology, a decrease in growth in the overall market, or its failure, for any reason, to continue to take advantage of growth opportunities. Moreover, Metromile has encountered and will continue to encounter a number of risks and uncertainties frequently experienced by growing companies in the technology industry, such as the risks and uncertainties described in this proxy statement/prospectus. If its assumptions regarding these risks and uncertainties are incorrect or change due to changes in its market, or if Metromile does not address these risks successfully, the enterprise business unit’s operating and financial results could differ materially from its expectations and this business unit could suffer.

Metromile’s enterprise software business has relied on, and is expected to continue to rely on, orders from a relatively small number of customers for a substantial portion of its revenue, and the loss of any of these customers would significantly harm its operating and financial results.

Its revenue is dependent on orders from customers in the property and casualty (“P&C”) insurance industry, which may be adversely affected by economic, environmental, social, and geo-political conditions. Metromile currently charges customers a license fee for its enterprise software that is proportional to the size of their business. This means Metromile can expect to make more revenue from one large-sized customer (as measured by the size of the customer’s business) than from several small-sized customers (as measured by the size of their business). Metromile currently relies on and expect to continue to rely on a relatively small number of large-sized customers to account for a majority of its revenue. As a result, if Metromile fails to successfully sell its products and services to one or more of these large-sized customers in any particular period or fail to identify additional potential large-sized customers, or such customers purchase fewer of its products or services, defer or cancel purchase orders for any reason, fail to renew their license or subscription agreements or otherwise terminate their relationship with it for any reason, the results of operations and financial condition of the enterprise business unit would be significantly harmed.

Metromile’s Metromile Enterprise business may cost more to operate than anticipated.

Metromile Enterprise has historically generated more cash than operating expenses due to prepaid revenue and service fees associated with signed deployments. As customer deployments increase, customers request new features, and upgrades and investments are required, Metromile may need to accelerate its spend meaningfully and this could adversely impact its operating income.

The market in which the enterprise software business operates is highly competitive, and if Metromile does not compete effectively, its business, its financial condition, and results of operations could be harmed.

The market in which its enterprise software business operates is rapidly evolving and highly competitive. As it continues to mature and evolve, existing competitors will continue to introduce new, innovative products, and new competitors will continue to enter, thereby further intensifying competition.

Metromile faces competition from a number of sources:

Large, well-established, P&C software providers that have been selling into the P&C industry for quite some time seeking to introduce new features or launch product(s) that mimic the functionality of some of its product(s);
Large, well-established, custom software development and professional services companies offering bespoke software that competes with some or all of its enterprise software products; and

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New or emerging entrants seeking to develop competing technology products.

Metromile competes based on a number of factors, including innovativeness of its products, demonstrable breadth of use cases, maturity of software, speed of deployment, total cost of ownership of its products, customer service and support, brand recognition of the core Metromile business and ease of implementation. Some of its competitors have substantially greater customer relationships, and financial, technical and other resources than Metromile does, and may be able to respond more effectively than it to new opportunities, technologies and customer needs. As a result, competition may negatively impact its ability to attract new customers or retain existing ones, or put downward pressure on its prices, any of which could materially harm its business, results of operations and financial condition.

Metromile’s enterprise software products expose it to liability associated with customer contracts and the use of their customers data.

Metromile Enterprise is a cloud-based subscription software solution provided to global P&C insurers. Through the deployment of this service, insurers may share or provide Metromile with customer data or aggregated data that reveals personally identifying information about the insurers’ customers. This data exposes it to material liability if it is publicly disclosed, copied, or used in an inadvertent way that violates the terms of its contract with its enterprise business unit’s customers, or their terms of service with their customers, or state or national laws.

Metromile may become subject to intellectual property disputes or other claims of infringement, which are costly and may subject it to significant liability and increased costs of doing business.

Metromile competes in a market where there are a large number of patents, copyrights, trademarks, trade secrets, and other intellectual and proprietary rights, as well as disputes regarding infringement of these rights. In particular, leading companies in the software industry own large numbers of patents, copyrights, trademarks and trade secrets, which they may use to assert claims against it. From time to time, third parties holding such intellectual property rights, including leading companies, competitors, patent holding companies and/or non-practicing entities, may assert patent, copyright, trademark or other intellectual property claims against it.

Although Metromile believes that its products and services do not infringe upon the intellectual property rights of third parties, Metromile cannot assure that third parties will not assert infringement or misappropriation claims against it with respect to current or future products or services, or that any such assertions will not require it to enter into royalty arrangements or result in costly litigation, or result in it being unable to use certain intellectual property. Metromile cannot assure that Metromile is not infringing or otherwise violating any third-party intellectual property rights.

Any intellectual property litigation to which Metromile becomes a party may require it to do one or more of the following:

cease selling, licensing, or using products or features that incorporate the intellectual property rights that Metromile allegedly infringes, misappropriates, or violates;
make substantial payments for legal fees, settlement payments, or other costs or damages, including indemnification of third parties;
obtain a license or enter into a royalty agreement, either of which may not be available on reasonable terms or at all, in order to obtain the right to sell or use the relevant intellectual property; or
redesign the allegedly infringing products to avoid infringement, misappropriation, or violation, which could be costly, time-consuming, or impossible.

Any of these events or any adverse result in any litigation claims against us could have a material adverse effect on its business, financial condition, and results of operations.

A significant portion of Metromile’s future operating profit gains are expected to arise from the growth in its enterprise software revenue, which may not be realized.

Metromile’s Metromile Enterprise business is a new and growing business. While Metromile has several new customer deployments active or underway, there is no guarantee that these deployments will materially increase revenue if customers cancel

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their contracts, reduce their desired level of services, or new customers do not sign up for the services. Any of which could significantly harm its business, operating results and financial condition.

The insurance business, including the market for automobile, renters’ and homeowners’ insurance, is historically cyclical in nature, and Metromile may experience periods with excess underwriting capacity and unfavorable premium rates, which could adversely affect its business.

Historically, insurers have experienced significant fluctuations in operating results due to competition, frequency and severity of catastrophic events, levels of capacity, adverse litigation trends, regulatory constraints, general economic conditions, and other factors. The supply of insurance is related to prevailing prices, the level of insured losses and the level of capital available to the industry that, in turn, may fluctuate in response to changes in rates of return on investments being earned in the insurance industry. As a result, the insurance business historically has been a cyclical industry characterized by periods of intense price competition due to excessive underwriting capacity as well as periods when shortages of capacity increased premium levels. Demand for insurance depends on numerous factors, including the frequency and severity of catastrophic events, levels of capacity, the introduction of new capital providers and general economic conditions. All of these factors fluctuate and may contribute to price declines generally in the insurance industry.

Metromile cannot predict with certainty whether market conditions will improve, remain constant or deteriorate. Negative market conditions may impair its ability to underwrite insurance at rates Metromile considers appropriate and commensurate relative to the risk assumed. Additionally, negative market conditions could result in a decline in policies sold, an increase in the frequency of claims and premium defaults, and an uptick in the frequency of falsification of claims. If Metromile cannot underwrite insurance at appropriate rates, its ability to transact business will be materially and adversely affected. Any of these factors could lead to an adverse effect on Metromile’s business, results of operations and financial condition.

Reinsurance may be unavailable at current levels and prices, which may limit Metromile’s ability to underwrite new policies. Furthermore, reinsurance subjects it to counterparty risk and may not be adequate to protect it against losses, which could have a material effect on its results of operations and financial condition.

Reinsurance is a contract by which an insurer, which may be referred to as the ceding insurer, agrees with a second insurer, called a reinsurer, that the reinsurer will cover a portion of the losses incurred by the ceding insurer in the event a claim is made under one or more policies issued by the ceding insurer, in exchange for a premium. Metromile’s regulated insurance subsidiary, Metromile Insurance Company, obtains reinsurance to help manage its exposure to property and casualty insurance risks. Although its reinsurance counterparties are liable to it according to the terms of the reinsurance policies, it remains primarily liable to its policyholders as the direct insurers on all risks reinsured. As a result, reinsurance does not eliminate the obligation of its regulated insurance subsidiary to pay all claims, and Metromile is subject to the risk that one or more of its reinsurers will be unable or unwilling to honor its obligations, that the reinsurers will not pay in a timely fashion, or that its losses are so large that they exceed the limits inherent in its reinsurance contracts, limiting recovery. Metromile is also subject to the risk that under applicable insurance laws and regulations Metromile may not be able to take credit for the reinsurance on its financial statements and instead would be required to hold separate admitted assets as reserves to cover claims on the risks that Metromile has ceded to the reinsurer. Reinsurers may become financially unsound by the time they are called upon to pay amounts due, which may not occur for many years, in which case Metromile may have no legal ability to recover what is due to it under our agreement with such reinsurer. Any disputes with reinsurers regarding coverage under reinsurance contracts could be time consuming, costly, and uncertain of success.

Market conditions beyond Metromile’s control impact the availability and cost of the reinsurance we purchase. No assurances can be made that reinsurance will remain continuously available to it to the same extent and on the same terms and rates as is currently available, as such availability depends in part on factors outside of its control. A new contract may not provide sufficient reinsurance protection. Market forces and external factors, such as significant losses from weather and seismic events (like hurricanes or earthquakes) or terrorist attacks or an increase in capital and surplus requirements, impact the availability and cost of the reinsurance it purchases. If Metromile was unable to maintain its current level of reinsurance or purchase new reinsurance protection in amounts that Metromile considers sufficient at acceptable prices, Metromile would have to either accept an increase in its catastrophe exposure, reduce its insurance underwritings, or develop or seek other alternatives.

The unavailability of acceptable reinsurance protection would have a materially adverse impact on its business model, which depends on reinsurance companies to absorb any unfavorable variance from the level of losses anticipated at underwriting. If Metromile is unable to obtain adequate reinsurance at reasonable rates, Metromile would have to increase its risk exposure or reduce the level of its underwriting commitments, each of which could have a material adverse effect upon its business volume and

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profitability. Alternatively, Metromile could elect to pay higher than anticipated rates for reinsurance coverage, which could have a material adverse effect upon its profitability unless policy premium rates could also be raised, in most cases subject to approval by state regulators, to offset this additional cost.

Reinsurance subjects Metromile to risks of its reinsurers and may not be adequate to protect it against losses arising from ceded insurance, which could have a material effect on its results of operations and financial condition.

The collectability of reinsurance recoverables is subject to uncertainty arising from a number of factors, including changes in market conditions, whether insured losses meet the qualifying conditions of the reinsurance contract and whether reinsurers, their affiliates, or certain regulatory bodies have the financial capacity and willingness to make payments under the terms of a reinsurance treaty or contract. Any disruption, volatility and uncertainty in the financial reinsurance markets may decrease Metromile’s ability to access such markets on favorable terms or at all. In addition, Metromile is subject to the risk that one or more of its reinsurers will not honor its obligations, that the reinsurers will not pay in a timely fashion, or that its losses are so large that they exceed the limits inherent in its reinsurance contracts, limiting recovery. Reinsurers may become financially unsound by the time that they are called upon to pay amounts due, which may not occur for many years, in which case Metromile may have no legal ability to recover what is due to it under its agreement with such reinsurer. In addition, any disputes with reinsurers regarding coverage under reinsurance contracts could be time consuming, costly, and uncertain of success. Metromile’s inability to collect a material recovery from a reinsurer could have a material effect on its results of operations and financial condition.

Metromile is subject to extensive regulation and potential further restrictive regulation may increase its operating costs and limit its growth.

Metromile is subject to extensive laws by the individual state insurance departments in the states in which Metromile transacts business. These laws are complex and subject to change. Changes may sometimes lead to additional expenses, increased legal exposure, increased required reserves or capital and surplus, delays in implementing desired rate increases or business operations, and additional limits on its ability to grow or to achieve targeted profitability. Laws to which its licensed insurance carriers and producer subsidiaries are subject include, but are not limited to:

prior approval of transactions resulting in a change of control;
approval of policy forms and premiums;
approval of intercompany service agreements;
statutory and risk-based capital solvency requirements, including the minimum capital and surplus our regulated insurance subsidiary must maintain pursuant to applicable laws and the CMA entered into as required by the Delaware Department of Insurance described above;
establishing minimum reserves that insurance carriers must hold to pay projected insurance claims;
required participation by Metromile’s regulated insurance subsidiary in state guaranty funds;
restrictions on the type and concentration of Metromile’s regulated insurance subsidiary’s investments;
restrictions on the advertising and marketing of insurance;
restrictions on the adjustment and settlement of insurance claims;
restrictions on the use of rebates to induce a policyholder to purchase insurance;
restrictions on the sale, solicitation and negotiation of insurance;
restrictions on the sharing of insurance commissions and payment of referral fees;
prohibitions on the underwriting of insurance on the basis of race, sex, religion and other protected classes;

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restrictions on Metromile’s ability to use telematics to underwrite and price insurance policies, such as in California, its largest market, and other states in which Metromile operates or may operate in the future;
restrictions on the ability of Metromile’s regulated insurance subsidiary to pay dividends to Metromile or enter into certain related party transactions without prior regulatory approval;
rules requiring the maintenance of statutory deposits for the benefit of policyholders;
privacy regulation and data security;
state-mandated premium rebates, refunds, or reductions as a result of potentially lower risk exposure due to the COVID-19 pandemic and related emergency orders;
regulation of corporate governance and risk management; and
periodic examinations of operations, finances, market conduct and claims practices; and required periodic financial reporting.

To the extent Metromile decides to expand its current product offerings to include other insurance products, this would subject it to additional regulatory requirements and scrutiny in each state in which Metromile elects to offer such products. Most states have also adopted legislation prohibiting unfair methods of competition and unfair or deceptive acts and practices in the business of insurance as well as unfair claims practices. Prohibited practices include, but are not limited to, misrepresentations, false advertising, coercion, disparaging other insurers, unfair claims settlement procedures, and discrimination in the business of insurance. Noncompliance with any of such state statutes may subject us to regulatory action by the relevant state insurance regulator, and possibly private litigation. States also regulate various aspects of the contractual relationships between insurers and independent agents as well as, in certain states, insurers and third-party administrators.

Although state insurance regulators have primary responsibility for administering and enforcing insurance regulations in the United States, such laws and regulations are further administered and enforced by a number of additional governmental authorities, each of which exercises a degree of interpretive latitude, including state securities administrators; state attorneys general as well as federal agencies including the SEC, the Financial Industry Regulatory Authority, the Federal Reserve Board, the Federal Insurance Office, the U.S. Department of Labor, the U.S. Department of Justice and the National Labor Relations Board. Consequently, compliance with any particular regulator’s or enforcement authority’s interpretation of a legal issue may not result in compliance with another’s interpretation of the same issue, particularly when compliance is judged in hindsight. Such regulations or enforcement actions are often responsive to current consumer and political sensitivities, which may arise after a major event. Such rules and regulations may result in rate suppression, limit Metromile’s ability to manage its exposure to unprofitable or volatile risks, or lead to fines, premium refunds or other adverse consequences. The federal government also may regulate aspects of its businesses, such as the protection of consumer confidential information or the use of consumer insurance (credit) scores to underwrite and assess the risk of customers under the Fair Credit Reporting Act (“FCRA”). Among other things, the FCRA requires that insurance companies (i) have a permissible purpose before obtaining and using a consumer report for underwriting purposes and (ii) comply with related notice and recordkeeping requirements. Failure to comply with federal requirements under the FCRA or any other applicable federal laws could subject us to regulatory fines and other sanctions. In addition, given its short operating history to-date and rapid rate of growth, Metromile is vulnerable to regulators identifying errors in the policy forms we use, the rates Metromile charges, with respect to its customer communications. As a result of such noncompliance, regulators could impose fines, rebates or other penalties, including cease-and-desist orders with respect to its operations in an individual state, or all states, until the identified noncompliance is rectified.

In addition, there is risk that any particular regulator’s or enforcement authority’s interpretation of a legal issue or the scope of a regulator’s authority may change over time to Metromile’s detriment. There is also a risk that changes in the overall legal environment may cause it to change its views regarding the actions Metromile needs to take from a legal risk management perspective. This would necessitate changes to its practices that may adversely impact its business. Furthermore, in some cases, these laws and regulations are designed to protect or benefit the interests of a specific constituency rather than a range of constituencies. State insurance laws and regulations are generally intended to protect the interests of purchasers or users of insurance products, rather than the holders of securities that Metromile issues. For example, state insurance laws are generally prescriptive with respect to the content and timeliness of notices Metromile must provide policyholders. Failure to comply with state insurance laws and regulations in the future could have a material adverse effect on its business, operating results and financial condition.

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Additionally, the federal government could pass a law expanding its authority to regulate the insurance industry, expanding federal regulation over Metromile’s business to its detriment. These laws and regulations may limit its ability to grow, to raise additional capital or to improve the profitability of its business.

Metromile’s ability to retain state licenses depends on its ability to meet licensing requirements established by the NAIC and adopted by each state, subject to variations across states. If Metromile is unable to satisfy the applicable licensing requirements of any particular state, Metromile could lose its license to do business in that state, which would result in the temporary or permanent cessation of its operations in that state. Alternatively, if Metromile is unable to satisfy applicable state licensing requirements, Metromile may be subject to additional regulatory oversight, have its license suspended, or be subject to the seizure of assets. Any such events could adversely affect our business, results of operations or financial condition.

A regulatory environment that requires rate increases to be approved and that can dictate underwriting practices and mandate participation in loss sharing arrangements may adversely affect Metromile’s results of operations and financial condition.

From time to time, political events and positions affect the insurance market, including efforts to suppress rates to a level that may not allow Metromile to reach targeted levels of profitability. For example, if its loss ratio compares favorably to that of the industry, state or provincial regulatory authorities may impose rate rollbacks, require it to pay premium refunds to policyholders, or challenge or otherwise delay its efforts to raise rates even if the property and casualty industry generally is not experiencing regulatory challenges to rate increases. Such challenges affect its ability to obtain approval for rate changes that may be required to achieve targeted levels of profitability and returns on equity. In particular due to the COVID-19 pandemic, state regulators and legislators are under increased political pressure to provide financial relief to policyholders through premium rebates or requiring insurers to pay claims arising from COVID-19 related losses, regardless of the applicable policy’s exclusions.

In addition, certain states have enacted laws that require an insurer conducting business in that state to participate in assigned risk plans, reinsurance facilities and joint underwriting associations. Certain states also require insurers to offer coverage to all consumers, often restricting an insurer’s ability to charge the price it might otherwise charge. In these markets, Metromile may be compelled to underwrite significant amounts of business at lower-than-desired rates, possibly leading to an unacceptable return on equity. Laws and regulations of many states also limit an insurer’s ability to discontinue writing some or all of its business or to withdraw from one or more lines of insurance, except pursuant to a plan that is approved by the state insurance department. Additionally, as addressed above, certain states require insurers to participate in guaranty funds for impaired or insolvent insurance companies. These funds periodically assess losses against all insurance companies doing business in the state. Its results of operations and financial condition could be adversely affected by any of these factors.

State insurance regulators impose additional reporting requirements regarding enterprise risk on insurance holding company systems, with which Metromile must comply as an insurance holding company.

In the past decade, various state insurance regulators have increased their focus on risks within an insurer’s holding company system that may pose enterprise risk to the insurer. In 2012, the NAIC adopted significant amendments to the Insurance Holding Company Act and related regulations (the “NAIC Amendments”). The NAIC Amendments are designed to respond to perceived gaps in the regulation of insurance holding company systems in the United States. One of the major changes is a requirement that an insurance holding company system’s ultimate controlling person submit annually to its lead state insurance regulator an “enterprise risk report” that identifies activities, circumstances or events involving one or more affiliates of an insurer that, if not remedied properly, are likely to have a material adverse effect upon the financial condition or liquidity of the insurer or its insurance holding company system as a whole. As the ultimate controlling person in our insurance holding company system, Metromile is required to file an annual enterprise risk report in one or more states. Other changes include the requirement that a controlling person submit prior notice to its domiciliary insurance regulator of a divestiture of control, having detailed minimum requirements for cost sharing and management agreements between an insurer and its affiliates and expanding of the agreements between an insurer and its affiliates to be filed with its domiciliary insurance regulator, including states in which the insurer is commercially domiciled. The NAIC Amendments must be adopted by the individual state legislatures and insurance regulators in order to be effective, and many states have already done so.

In 2012, the NAIC also adopted the Risk Management and Own Risk and Solvency Assessment Model Act (the “ORSA Model Act”). The ORSA Model Act, as adopted by the various states, requires an insurance holding company system’s Chief Risk Officer to submit annually to its lead state insurance regulator an Own Risk and Solvency Assessment Summary Report (“ORSA”). The ORSA is a confidential internal assessment appropriate to the nature, scale and complexity of an insurer, conducted by that insurer of the material and relevant risks identified by the insurer associated with an insurer’s current business plan and the sufficiency of capital

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resources to support those risks. The ORSA Model Act must be adopted by the individual state legislature and insurance regulators in order to be effective. Metromile cannot predict the impact, if any, that any other regulatory requirements may have on its business, financial condition or results of operations.

There is also risk that insurance holding company systems may become subject to group capital requirements at the holding company level. The NAIC is currently working to develop a group capital calculation framework that regulators may use for informational purposes. As envisioned, the framework is intended to complement the current holding company analytics framework by providing additional information to the lead state regulator for use in assessing group risks and capital adequacy. The NAIC has not promulgated a model law or regulation on this subject.

The increasing adoption by states of cybersecurity regulations could impose additional compliance burdens on Metromile and expose it to additional liability.

In response to the growing threat of cyber-attacks in the insurance industry, certain jurisdictions have begun to consider new cybersecurity measures, including the adoption of cybersecurity regulations. On October 24, 2017, the NAIC adopted its Insurance Data Security Model Law, intended to serve as model legislation for states to enact in order to govern cybersecurity and data protection practices of insurers, insurance agents, and other licensed entities registered under state insurance laws. Alabama, Connecticut, Delaware, Indiana, Iowa, Louisiana, Maine, Michigan, Mississippi, New Hampshire, North Dakota, Ohio, South Carolina and Virginia have adopted versions of the Insurance Data Security Model Law, each with a different effective date, and other states may adopt versions of the Insurance Data Security Model Law in the future. The New York Department of Financial Services has promulgated its own Cybersecurity Requirements for Financial Services Companies that is not based upon the Insurance Data Security Model Law and requires insurance companies to establish and maintain a cybersecurity program and implement and maintain cybersecurity policies and procedures with specific requirements. In addition, some jurisdictions, such as California, Colorado, Massachusetts, Nevada, and Virginia have enacted more generalized data security laws that apply to certain data that Metromile processes. Although Metromile takes steps to comply with financial industry cybersecurity regulations and other data security laws and believe Metromile is materially compliant with their requirements, its failure to comply with new or existing cybersecurity regulations could result in material regulatory actions and other penalties. In addition, efforts to comply with new or existing cybersecurity regulations could impose significant costs on its business, which could materially and adversely affect its business, financial condition or results of operations.

Metromile relies on technology and intellectual property from third parties for pricing and underwriting its insurance policies, handling claims and maximizing automation, the unavailability or inaccuracy of which could limit the functionality of its products and disrupt its business.

Metromile uses technology and intellectual property licensed from unaffiliated third parties in certain of its products, and Metromile may license additional third-party technology and intellectual property in the future. Any errors or defects in this third-party technology and intellectual property could result in harm to its brand and business. In addition, licensed technology and intellectual property may not continue to be available on commercially reasonable terms, or at all.

Further, although Metromile believes that there are currently adequate replacements for the third-party technology and intellectual property Metromile presently uses, the loss of its right to use any of this technology and intellectual property could result in delays in producing or delivering affected products until equivalent technology or intellectual property is identified, licensed or otherwise procured, and integrated. Its business would be disrupted if any technology and intellectual property Metromile licenses from others or functional equivalents of this software were either no longer available to it or no longer offered to it on commercially reasonable terms or prices. In either case, Metromile would be required either to attempt to redesign its products to function with technology and intellectual property available from other parties or to develop these components itself, which would result in increased costs and could result in delays in product sales and the release of new product offerings. Alternatively, Metromile might be forced to limit the features available in affected products. Any of these results could harm its business, results of operations and financial condition.

Metromile is subject to payment processing risk.

Metromile currently relies exclusively on one third-party vendor to provide payment processing services, including the processing of payments from credit cards and debit cards, and its business would be disrupted if this vendor refuses to provide these services to it and Metromile is unable to find a suitable replacement on a timely basis or at all. If Metromile or its processing vendor fail to maintain adequate systems for the authorization and processing of credit card transactions, it could cause one or more of the major credit card companies to disallow its continued use of their payment products. In addition, if these systems fail to work properly and, as a result,

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Metromile does not charge our customers’ credit cards on a timely basis or at all, its business, revenue, results of operations and financial condition could be harmed.

The payment methods that Metromile offers also subject it to potential fraud and theft by criminals, who are becoming increasingly more sophisticated, seeking to obtain unauthorized access to or exploit weaknesses that may exist in the payment systems. If Metromile fails to comply with applicable rules or requirements for the payment methods Metromile accepts, or if payment-related data are compromised due to a breach of data, Metromile may be liable for significant costs incurred by payment card issuing banks and other third parties or subject to fines and higher transaction fees, or its ability to accept or facilitate certain types of payments may be impaired. In addition, its customers could lose confidence in certain payment types, which may result in a shift to other payment types or potential changes to its payment systems that may result in higher costs. If Metromile fails to adequately control fraudulent credit card transactions, Metromile may face civil liability, diminished public perception of its security measures, and significantly higher credit card-related costs, each of which could harm its business, results of operations and financial condition.

Metromile’s success depends upon the insurance industry continuing to move online at its current pace and the continued growth and acceptance of online and mobile app-based products and services as effective alternatives to traditional offline products and services.

Metromile provides automobile insurance products through its website and its online and mobile apps that compete with traditional offline counterparts. Metromile does not offer insurance through traditional, offline brokers or agents. Metromile believes that the continued growth and acceptance of online products and services as well as those offered through mobile devices generally will depend, to a large extent, on the continued growth in commercial use of the internet and mobile apps, and the continued migration of traditional offline markets and industries online.

Purchasers of insurance may develop the perception that purchasing insurance products online or through a mobile app is not as effective as purchasing such products through a broker or other traditional offline methods, and the insurance market may not migrate online as quickly as (or at the levels that) Metromile expects. Moreover, if, for any reason, an unfavorable perception develops that telematics, mobile engagement, a technology-based platform and/or bots are less efficacious than traditional offline methods of purchasing insurance, underwriting, and claims processing, or if it is perceived that its processes lead to unfair outcomes, its business, results of operations and financial condition could be adversely affected.

Metromile’s actual incurred losses may be greater than our loss and loss adjustment expense reserves, which could have a material adverse effect on its financial condition and results of operations.

Metromile’s financial condition and results of operations depend on its ability to accurately price risk and assess potential losses and loss adjustment expenses under the terms of the policies we underwrite. Reserves do not represent an exact calculation of liability. Rather, reserves represent an estimate of what the expected ultimate settlement and administration of claims will cost, and the ultimate liability may be greater than or less than the current estimate. In its industry, there is always the risk that reserves may prove inadequate since Metromile may underestimate the cost of claims and claims administration.

Metromile bases its estimates on its assessment of known facts and circumstances, as well as estimates of future trends in claim severity, claim frequency, judicial theories of liability, and other factors. These variables are affected by both internal and external events that could increase its exposure to losses, including changes in actuarial projections, claims handling procedures, inflation, severe weather, climate change, economic and judicial trends and legislative and regulatory changes. Metromile regularly monitors reserves using new information on reported claims and a variety of statistical techniques to update its current estimate. Its estimates could prove to be inadequate, and this underestimation could have a material adverse effect on its financial condition.

Recorded claim reserves, including case reserves and incurred but not reported (“IBNR”), claims reserves, are based on our estimates of losses after considering known facts and interpretations of the circumstances, including settlement agreements. Additionally, models that rely on the assumption that past loss development patterns will persist into the future are used. Internal factors are considered including our experience with similar cases, actual claims paid, historical trends involving claim payment patterns, pending levels of unpaid claims, loss management programs, product mix, state mix, contractual terms, industry payment and reporting patterns, and changes in claim reporting and settlement practices. External factors are also considered, such as court decisions, changes in law and litigation imposing unintended coverage. Metromile also considers benefits, such as the availability of multiple limits for a single loss occurrence. Regulatory requirements and economic conditions are also considered.

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Because reserves are estimates of the unpaid portion of losses and expenses for events that have occurred, including IBNR losses, the establishment of appropriate reserves, including reserves for catastrophes, is an inherently uncertain and complex process that is regularly refined to reflect current estimation processes and practices. The ultimate cost of losses may vary materially from recorded reserves and such variance may adversely affect its results of operations and financial condition as the reserves and reinsurance recoverables are re-estimated.

If any of its insurance reserves should prove to be inadequate for the reasons discussed above, or for any other reason, Metromile will be required to increase reserves, resulting in a reduction in its net income and stockholders’ equity in the period in which the deficiency is identified. Future loss experience substantially in excess of established reserves could also have a material adverse effect on future earnings and liquidity and financial rating, which would affect its ability to attract new business or to retain existing customers.

Performance of Metromile’s investment portfolio is subject to a variety of investment risks that may adversely affect its financial results.

Metromile’s results of operations depend, in part, on the performance of its investment portfolio. Metromile seek to hold a diversified portfolio of investments in accordance with its investment policy, which is routinely reviewed by the Investment Committee of our Board of Directors (the “Board”). However, its investments are subject to general economic and market risks as well as risks inherent to particular securities.

Metromile’s primary market risk exposures are to changes in interest rates. See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Quantitative and Qualitative Disclosures about Market Risk.” In recent years, interest rates have been at or near historic lows. A protracted low interest rate environment would continue to place pressure on its net investment income, particularly as it relates to fixed income securities and short-term investments, which, in turn, may adversely affect our operating results. Future increases in interest rates could cause the values of its fixed income securities portfolios to decline, with the magnitude of the decline depending on the maturity of the securities included in our portfolio and the amount by which interest rates increase. Some fixed income securities have call or prepayment options, which create possible reinvestment risk in declining rate environments. Other fixed income securities, such as asset-backed securities, carry prepayment risk or, in a rising interest rate environment, may not prepay as quickly as expected.

The value of our investment portfolio is subject to the risk that certain investments may default or become impaired due to deterioration in the financial condition of one or more issuers of the securities Metromile holds, or due to deterioration in the financial condition of an insurer that guarantees an issuer’s payments on such investments. Downgrades in the credit ratings of fixed maturities also have a significant negative effect on the market valuation of such securities.

Such factors could reduce our net investment income and result in realized investment losses. Its investment portfolio is subject to increased valuation uncertainties when investment markets are illiquid. The valuation of investments is more subjective when markets are illiquid, thereby increasing the risk that the estimated fair value (i.e., the carrying amount) of the securities Metromile holds in its portfolio does not reflect prices at which actual transactions would occur.

Risks for all types of securities are managed through the application of our investment policy, which establishes investment parameters that include, but are not limited to, maximum percentages of investment in certain types of securities and minimum levels of credit quality, which Metromile believes are within applicable guidelines established by the NAIC as it relates to the portfolio of Metromile Insurance Company. The maximum percentage and types of securities Metromile may invest in are subject to insurance laws and regulations, which may change. Failure to comply with these laws and regulations would cause non-conforming investments to be treated as non-admitted assets for purposes of measuring statutory surplus and, in certain circumstances, Metromile would be required to dispose of such investments.

Although Metromile seeks to preserve its capital, Metromile cannot be certain that its investment objectives will be achieved, and results may vary substantially over time. In addition, although Metromile seeks to employ investment strategies that are not correlated with its insurance and reinsurance exposures, losses in its investment portfolio may occur at the same time as underwriting losses and, therefore, exacerbate the adverse effect of the losses on it.

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Unexpected changes in the interpretation of our coverage or provisions, including loss limitations and exclusions, in Metromile’s policies could have a material adverse effect on its financial condition and results of operations.

There can be no assurances that specifically negotiated loss limitations or exclusions in its policies will be enforceable in the manner Metromile intends, or at all. As industry practices and legal, judicial, social, and other conditions change, unexpected and unintended issues related to claims and coverage may emerge. For example, many of its policies limit the period during which a customer may bring a claim, which may be shorter than the statutory period under which such claims can be brought against our customers. While these limitations and exclusions help it assess and mitigate its loss exposure, it is possible that a court or regulatory authority could nullify or void a limitation or exclusion, or legislation could be enacted modifying or barring the use of such limitations or exclusions. These types of governmental actions could result in higher than anticipated losses and loss adjustment expenses, which could have a material adverse effect on its financial condition or results of operations. In addition, court decisions, such as the 1995 Montrose decision in California, could read policy exclusions narrowly so as to expand coverage, thereby requiring insurers to create and write new exclusions. Under the insurance laws, the insurer typically has the burden of proving an exclusion applies and any ambiguities in the terms of a loss limitation or exclusion provision are typically construed against the insurer. These issues may adversely affect its business by either broadening coverage beyond its underwriting intent or by increasing the frequency or severity of claims. In some instances, these changes may not become apparent until sometime after Metromile has issued insurance contracts that are affected by the changes. As a result, the full extent of liability under its insurance contracts may not be known for many years after a contract is issued.

Concentration of ownership among Metromile’s existing executive officers, directors and their respective affiliates may prevent new investors from influencing significant corporate decisions.

At the closing of the Merger, Metromile’s affiliates, executive officers, directors and their respective affiliates as a group beneficially owned approximately 15% of Metromile’s outstanding Common Stock. As a result, these stockholders are able to exercise a significant level of control over all matters requiring stockholder approval, including the election of directors, amendment of its Certificate of Incorporation and approval of significant corporate transactions. This control could have the effect of delaying or preventing a change of control of it or changes in management and will make the approval of certain transactions difficult or impossible without the support of these stockholders.

Metromile does not expect to declare any dividends in the foreseeable future.

Metromile does not anticipate declaring any cash dividends to holders of Common Stock in the foreseeable future. Consequently, investors may need to rely on sales of their shares after price appreciation, which may never occur, as the only way to realize any future gains on their investment.

Provisions in Metromile’s charter and Delaware law may inhibit a takeover of Metromile, which could limit the price investors might be willing to pay in the future for its Common Stock and could entrench management.

Metromile’s Certificate of Incorporation contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests. These provisions include the ability of the Board to designate the terms of and issue new series of preferred shares, which may make more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities. These anti-takeover defenses could discourage, delay or prevent a transaction involving a change in control of Metromile. These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing and cause us to take corporate actions other than those you desire.

A market for Metromile’s securities may not continue, which would adversely affect the liquidity and price of its securities.

The price of Metromile’s securities may fluctuate significantly due to general market and economic conditions. An active trading market for our securities may not be sustained.

Metromile will incur significant costs and obligations as a result of being a public company.

Metromile has only recently become a publicly traded company. As a publicly traded company, Metromile has and will incur significant legal, accounting and other expenses that Metromile was not required to incur in the past. These expenses will increase once Metromile was no longer an “emerging growth company” as defined under the Jumpstart Its Business Startups Act of 2012 (the

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“JOBS Act”). In addition, new and changing laws, regulations and standards relating to corporate governance and public disclosure for public companies, including Dodd Frank, the Sarbanes-Oxley Act, regulations related thereto and the rules and regulations of the SEC and Nasdaq, have increased the costs and the time that must be devoted to compliance matters. Metromile expects these rules and regulations will increase our legal and financial costs and lead to a diversion of management time and attention from revenue-generating activities.

For as long as we remain an “emerging growth company” as defined in the JOBS Act, Metromile may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies.” Metromile may remain an “emerging growth company” until December 31, 2025 or such earlier time that Metromile has more than $1.07 billion in annual revenues, have more than $700.0 million in market value of its Common Stock held by non-affiliates, or issue more than $1.0 billion of non-convertible debt over a three-year period. To the extent Metromile chooses not to use exemptions from various reporting requirements under the JOBS Act, or if Metromile no longer can be classified as an “emerging growth company,” Metromile expects that it will incur additional compliance costs, which will reduce its ability to operate profitably.

As an “emerging growth company,” Metromile cannot be certain if the reduced disclosure requirements applicable to “emerging growth companies” will make its Common Stock less attractive to investors.

As an “emerging growth company,” Metromile may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including not being required to obtain an assessment of the effectiveness of its internal controls over financial reporting from its independent registered public accounting firm pursuant to Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards, which Metromile has elected to do.

Metromile cannot predict if investors will find its Common Stock less attractive because Metromile will rely on these exemptions. If some investors find its Common Stock less attractive as a result, there may be a less active market for its Common Stock, its share price may be more volatile and the price at which its securities trade could be less than if it did not use these exemptions.

If Metromile does not develop and implement all required accounting practices and policies, Metromile may be unable to provide the financial information required of a U.S. publicly traded company in a timely and reliable manner.

As Legacy Metromile was a privately held company, it was not required to adopt all of the financial reporting and disclosure procedures and controls required of a U.S. publicly traded company. Metromile expects that the implementation of all required accounting practices and policies and the hiring of additional financial staff will increase its operating costs and require its management to devote significant time and resources to such implementation. If Metromile fails to develop and maintain effective internal controls and procedures and disclosure procedures and controls, Metromile may be unable to provide financial information and required SEC reports that are timely and reliable. Any such delays or deficiencies could harm it, including by limiting its ability to obtain financing, either in the public capital markets or from private sources and damaging its reputation, which in either cause could impede its ability to implement our growth strategy. In addition, any such delays or deficiencies could result in its failure to meet the requirements for continued listing of its Common Stock on Nasdaq.

Metromile may issue additional shares of Common Stock or other equity securities without your approval, which would dilute your ownership interest in us and may depress the market price of its common stock.

Metromile may issue additional shares of Common Stock or other equity securities in the future in connection with, among other things, future acquisitions, repayment of outstanding indebtedness or grants under its 2021 Equity Incentive Plan (the “2021 Plan”) without stockholder approval in a number of circumstances.

Metromile’s issuance of additional Common Stock or other equity securities could have one or more of the following effects:

its existing stockholders’ proportionate ownership interest in it will decrease;
the amount of cash available per share, including for payment of dividends in the future, may decrease;

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the relative voting strength of each previously outstanding share of Common Stock may be diminished; and
the market price of its Common Stock may decline.

If Metromile’s performance does not meet market expectations, the price of its securities may decline.*

If Metromile’s performance does not meet market expectations, the price of its Common Stock may decline from the price of its Common Stock prior to the Closing. The trading price of its Common Stock could be volatile and subject to wide fluctuations in response to various factors, some of which are beyond its control. Any of the factors listed below could have a material adverse effect on your investment in our Common Stock and its Common Stock may trade at prices significantly below the price you paid for them.

Factors affecting the trading price of its Common Stock may include:

actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to it;
changes in the market’s expectations about its operating results;
its operating results failing to meet market expectations in a particular period;
changes in financial estimates and recommendations by securities analysts concerning it or the insurance industry and market in general;
operating and stock price performance of other companies that investors deem comparable to it;
changes in laws and regulations affecting its business;
changes in the interpretation or enforcement of statutes and regulations affecting its business;
commencement of, or involvement in, litigation involving it;
changes in its capital structure, such as future issuances of securities or the incurrence of additional debt;
the volume of shares of its Common Stock available for public sale;
any significant change in its board or management;
sales of substantial amounts of Common Stock by its directors, executive officers or significant stockholders or the anticipation of sales or lock-up expirations; and
general economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations and acts of war or terrorism.

Broad market and industry factors may depress the market price of Metromile’s Common Stock irrespective of its operating performance. The stock market in general and Nasdaq have experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected. The trading prices and valuations of these stocks, and of its securities, may not be predictable. A loss of investor confidence in the market for companies in the insurance industry or the stocks of other companies which investors perceive to be similar to it could depress its stock price regardless of its business, prospects, financial conditions or results of operations. A decline in the market price of its Common Stock also could adversely affect its ability to issue additional securities and its ability to obtain additional financing in the future.

There is no guarantee that the Public Warrants may ever be in the money, and they may expire worthless.

The exercise price for Metromile’s Warrants is $11.50 per share. There can be no assurance that the Public Warrants will be in the money prior to their expiration and, as such, they may expire worthless.

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The terms of its Warrants may be amended in a manner that may be adverse to the holders. The Warrant Agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us provides that the terms of the Warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but requires the approval by the holders of at least 65% of the then outstanding Public Warrants to make any change that adversely affects the interests of the registered holders. Accordingly, Metromile may amend the terms of the Warrants in a manner adverse to a holder if holders of at least 65% of the then outstanding Public Warrants approve of such amendment. Metromile’s ability to amend the terms of the Warrants with the consent of at least 65% of the then outstanding Public Warrants is unlimited. Examples of such amendments could be amendments to, among other things, increase the exercise price of the Warrants, shorten the exercise period or decrease the number of shares of its Common Stock purchasable upon exercise of a Warrant.

Metromile may redeem your unexpired Warrants prior to their exercise at a time that is disadvantageous to you, thereby making your Warrants worthless.

Metromile has the ability to redeem outstanding Warrants (excluding any Placement Warrants held by the Sponsor, Cantor Fitzgerald & Co (“Cantor”) or their permitted transferees) at any time after they become exercisable and prior to their expiration, at $0.01 per Warrant, provided that the last reported sales price (or the closing bid price of its Common Stock in the event the shares of its Common Stock are not traded on any specific trading day) of the Common Stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations and the like) on each of 20 trading days within the 30 trading-day period ending on the third business day prior to the date on which Metromile sends proper notice of such redemption, provided that on the date Metromile gives notice of redemption and during the entire period thereafter until the time Metromile redeems the Warrants, Metromile has an effective registration statement under the Securities Act covering the shares of Common Stock issuable upon exercise of the Warrants and a current prospectus relating to them is available. If and when the Warrants become redeemable by it, Metromile may exercise its redemption right even if Metromile is unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding Warrants could force a Warrant holder: (i) to exercise its Warrants and pay the exercise price therefore at a time when it may be disadvantageous for it to do so, (ii) to sell its Warrants at the then-current market price when it might otherwise wish to hold its Warrants or (iii) to accept the nominal redemption price which, at the time the outstanding Warrants are called for redemption, will be substantially less than the market value of its Warrants.

Metromile may not be able to timely and effectively implement controls and procedures required by Section 404 of the Sarbanes-Oxley Act of 2002 or which could have a material adverse effect on its business.

Commencing with Metromile’s annual report for the year ending December 31, 2021, Metromile is required to provide management’s attestation on internal controls. The standards required for a public company under Section 404 of the Sarbanes-Oxley Act are significantly more stringent than those required of Legacy Metromile as a privately-held company. Management may not be able to effectively and timely implement controls and procedures that adequately respond to the increased regulatory compliance and reporting requirements that are applicable to it. If Metromile is not able to implement the additional requirements of Section 404 in a timely manner or with adequate compliance, Metromile may not be able to assess whether its internal controls over financial reporting are effective, which may subject it to adverse regulatory consequences and could harm investor confidence and lead to a decrease in the market price of its Common Stock.

Pursuant to the JOBS Act, Metromile’s independent registered public accounting firm was not required to attest to the effectiveness of its internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act due to Metromile being an “emerging growth company.”

Section 404 of the Sarbanes-Oxley Act requires annual management assessments of the effectiveness of its internal control over financial reporting, and generally requires in the same report a report by its independent registered public accounting firm on the effectiveness of its internal control over financial reporting. However, under the JOBS Act, its independent registered public accounting firm was not required to attest to the effectiveness of its internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act due to Metromile being an “emerging growth company.” Metromile will be an “emerging growth company” until the earlier of (1) the last day of the fiscal year (a) following September 8, 2025, the fifth anniversary of INSU’s IPO, (b) in which we have total annual gross revenue of at least $1.07 billion or (c) in which Metromile is deemed to be a large accelerated filer, which means the market value of its Common Stock that is held by non-affiliates exceeds $700.0 million as of the last business day of its prior second fiscal quarter, and (2) the date on which Metromile has issued more than $1.0 billion in non-convertible debt during the prior three-year period. Accordingly, for the years ended December 31, 2020 and 2019, stockholders do not have the benefit of an independent assessment of the effectiveness of its internal control environment. Metromile expects to lose their emerging growth company status as of December 31, 2021.

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Metromile has identified a material weakness in its internal control over financial reporting which, if not remediated, could result in material misstatements in its financial statements.

Metromile amended and restated certain items in its Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on March 31, 2021 (the “Amended Annual Report”), including INSU’s consolidated financial statements and related disclosures as of and for the year ended December 31, 2020 (the “Restatement”). In connection with the Restatement, management re-evaluated the Company’s disclosure controls and procedures as of December 31, 2020 and identified a material weakness in internal control over financial reporting relating to the accounting treatment for certain complex financial instruments. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of its annual or interim financial statements will not be prevented or detected on a timely basis.

Metromile is taking steps to remediate the identified material weakness by, among other things, devoting significant effort and resources to the remediation and improvement of its internal control over financial reporting as it relates to the accounting treatment for complex financial instruments. However, Metromile cannot be certain that such measures will remediate the identified material weakness or that we will not identify additional material weaknesses in its internal control over financial reporting in the future.

If Metromile is unable to remediate the identified material weakness, its ability to record, process and report financial information and required SEC reports in an accurate and timely manner could be adversely affected. Any such failure could negatively affect the market price of its Common Stock, cause investors to lose confidence in its reported financial information, subject us to litigation or investigation by the SEC or other regulatory authorities and generally materially adversely impact its business and results of operations.

Metromile’s ability to meet expectations and projections in any research or reports published by securities or industry analysts, or a lack of coverage by securities or industry analysts, could result in a depressed market price and limited liquidity for its Common Stock.

The trading market for Metromile’s Common Stock is influenced by the research and reports that industry or securities analysts may publish about it, its business, its market, or its competitors. If no securities or industry analysts commence coverage of it, its stock price would likely be less than that which would obtain if Metromile had such coverage and the liquidity, or trading volume of its Common Stock may be limited, making it more difficult for a stockholder to sell shares at an acceptable price or amount. If any analysts do cover Metromile, their projections may vary widely and may not accurately predict the results Metromile actually achieves. Its share price may decline if its actual results do not match the projections of research analysts covering it. Similarly, if one or more of the analysts who write reports on it downgrades its stock or publishes inaccurate or unfavorable research about its business, its share price could decline. If one or more of these analysts ceases coverage of it or fails to publish reports on it regularly, its share price or trading volume could decline.

Metromile may be subject to securities litigation, which is expensive and could divert management attention.

Its share price may be volatile and, in the past, companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. Metromile may be the target of this type of litigation in the future. Litigation of this type could result in substantial costs and diversion of management’s attention and resources, which could have a material adverse effect on business, financial condition, results of operations and prospects. Any adverse determination in litigation could also subject it to significant liabilities.

Metromile’s Certificate of Incorporation provides that the Court of Chancery of the State of Delaware and the federal district courts of the United States of America will be the exclusive forums for substantially all disputes between it and its stockholders, which could limit its stockholders’ ability to obtain a favorable judicial forum for disputes with it or its directors, officers or employees.

Metromile’s Certificate of Incorporation provides that the Court of Chancery of the State of Delaware (or, if and only if the Court of Chancery of the State of Delaware lacks subject matter jurisdiction, any state court located within the State of Delaware or, if and only if all such state courts lack subject matter jurisdiction, the federal district court for the District of Delaware) is the exclusive forum for the following claims or causes of action under Delaware statutory or common law: (a) any derivative claim or cause of action brought on its behalf; (b) any claim or cause of action for breach of a fiduciary duty owed by any of its current or former directors, officers or other employees to it or its stockholders; (c) any claim or cause of action against it or any of its current or former directors, officers or other employees, arising out of or pursuant to any provision of the Delaware General Corporation Law (the “DGCL”), its certificate of incorporation or its Bylaws; (d) any claim or cause of action seeking to interpret, apply, enforce or

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determine the validity of its certificate of incorporation or its Bylaws; (e) any action or proceeding as to which the DGCL confers jurisdiction to the Court of Chancery of the State of Delaware; and (f) any claim or cause of action against it or any of its current or former directors, officers or other employees that is governed by the internal-affairs doctrine, in all cases to the fullest extent permitted by law and subject to the court having personal jurisdiction over the indispensable parties named as defendants. This provision would not apply to claims or causes of action brought to enforce a duty or liability created by the Exchange Act, or any other claim for which the federal courts have exclusive jurisdiction, or the Securities Act.

Furthermore, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all such Securities Act actions. Accordingly, both state and federal courts have jurisdiction to entertain such claims. To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, its Certificate of Incorporation provides that the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act. While the Delaware courts have determined that such choice of forum provisions are facially valid, a stockholder may nevertheless seek to bring a claim in a venue other than those designated in the exclusive forum provisions. In such instance, Metromile would expect to vigorously assert the validity and enforceability of the exclusive forum provisions of its Certificate of Incorporation. This may require significant additional costs associated with resolving such action in other jurisdictions and there can be no assurance that the provision will be enforced by a court in those other jurisdictions.

These exclusive forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with Metromile or its directors, officers, or other employees, which may discourage lawsuits against it and its directors, officers and other employees. If a court were to find either exclusive-forum provision in its Certificate of Incorporation to be inapplicable or unenforceable in an action, Metromile may incur additional costs associated with resolving the dispute in other jurisdictions, which could seriously harm its business.

Changes in law or regulations, or a failure to comply with any laws and regulations, may adversely affect Metromile’s business, investments and results of operations.

Metromile is subject to laws and regulations enacted by national, regional and local governments, including in particular, reporting and other requirements under the Exchange Act. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations and their interpretation and application may also change from time to time and those changes could have a material adverse effect on its business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could result in fines, injunctive relief or similar remedies which could be costly to it or limit its ability to operate.

Metromile has incurred significant transaction and transition costs in connection with the INSU SPAC transaction.

Metromile has incurred and expect to incur significant, non-recurring costs in connection with consummating the INSU SPAC transaction and operating as a public company following the consummation of the INSU SPAC transaction. Metromile may also incur additional costs to retain key employees. Certain expenses incurred in connection with the Merger Agreement and the transactions contemplated thereby (including the INSU SPAC transaction) have been or will be paid by it. Metromile’s transaction expenses as a result of the INSU SPAC transaction are currently estimated at approximately $38.0 million. The amount of the deferred underwriting commissions was not adjusted for any shares that were redeemed in connection with the INSU SPAC transaction.

Metromile may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on its financial condition, results of operations and its stock price, which could cause you to lose some or all of your investment.

Although INSU conducted due diligence on Metromile in connection with the INSU SPAC transaction, this diligence may not have surfaced all material issues present in Metromile’s business. Moreover, factors outside of Metromile’s business and outside of its control may later arise. As a result of these factors, Metromile may be forced to write down or write off assets, restructure operations, or incur impairment or other charges that could result in losses. Further, unexpected risks may arise and previously known risks may materialize in a manner not consistent with its risk analysis. Even though these charges may be non-cash items and not have an immediate impact on its liquidity, the fact that Metromile reports charges of this nature could contribute to negative market perceptions about it or its securities. Accordingly, its securities could suffer a reduction in value. Metromile’s security holders are unlikely to have a remedy for such reduction in value, unless stockholders are able to successfully claim that the reduction in stock value was due to the breach by its officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to

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bring a private claim that the proxy statement relating to the INSU SPAC transaction contained an actionable material misstatement or material omission.

If the INSU SPAC transaction’s benefits do not meet the expectations of investors or financial analysts, the market price of Metromile’s securities may decline.

If the benefits of the INSU SPAC transaction do not meet the expectations of investors or securities analysts, the market price of Metromile’s securities may decline. Fluctuations in the price of its securities could contribute to the loss of all or part of your investment. Immediately prior to the INSU SPAC transaction, there was no public market for Metromile’s stock and trading in the shares of its securities was not active. If an active market for its securities develops and continues, the trading price of its securities could be volatile and subject to wide fluctuations in response to various factors, some of which are beyond its control. Any of the factors listed below could have a material adverse effect on your investment in its securities and its securities may trade at prices significantly below the price you paid for them. In such circumstances, the trading price of its securities may not recover and may experience a further decline.

Factors affecting the trading price of Metromile’s securities may include:

actual or anticipated fluctuations in its quarterly financial results or the quarterly financial results of companies perceived to be similar to it;
changes in the market’s expectations about its operating results;
the public’s reaction to its press releases, its other public announcements and its filings with the SEC;
speculation in the press or investment community;
success of competitors;
its operating results failing to meet the expectation of securities analysts or investors in a particular period;
changes in financial estimates and recommendations by securities analysts concerning it or the market in general;
operating and stock price performance of other companies that investors deem comparable to it;
its ability to market new and enhanced services on a timely basis;
changes in laws and regulations affecting its business;
commencement of, or involvement in, litigation involving it following the INSU SPAC transaction;
changes in its capital structure following the INSU SPAC transaction, such as future issuances of securities or the incurrence of additional debt;
the volume of securities available for public sale;
any major change in the Board or management;
sales of substantial amounts of securities by its directors, officers or significant stockholders or the perception that such sales could occur;
the realization of any of the other risks described herein;
additions or departures of key personnel;
failure to comply with the requirements of Nasdaq;

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failure to comply with the Sarbanes-Oxley Act of 2002 or other laws or regulations;
actual, potential or perceived control, accounting or reporting problems;
changes in accounting principles, policies and guidelines; and
general economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations and acts of war or terrorism.

Broad market and industry factors may materially harm the market price of Metromile’s securities irrespective of its operating performance. The stock market in general and Nasdaq have experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected. The trading prices and valuations of these stocks, and of its securities, may not be predictable. A loss of investor confidence in the market for the stocks of other companies which investors perceive to be similar to the post-combination company could depress its stock price regardless of its business, prospects, financial conditions or results of operations. A decline in the market price of its securities also could adversely affect its ability to issue additional securities and its ability to obtain additional financing in the future.

In the past, securities class action litigation has often been initiated against companies following periods of volatility in their stock price. This type of litigation could result in substantial costs and divert Metromile’s management’s attention and resources, and could also require it to make substantial payments to satisfy judgments or to settle litigation.

Future acquisitions or investments could disrupt Metromile’s business and harm its financial condition.

In the future Metromile may pursue acquisitions or investments that Metromile believe will help it achieve its strategic objectives. There is no assurance that such acquisitions or investments will perform as expected or will be successfully integrated into its business or generate substantial revenue, and Metromile may overestimate cash flow, underestimate costs or fail to understand the risks of or related to any investment or acquired business. The process of acquiring a business, product or technology can also cause it to incur various expenses and create unforeseen operating difficulties, expenditures and other challenges, whether or not those acquisitions are consummated, such as:

intense competition for suitable acquisition targets, which could increase prices and adversely affect its ability to consummate deals on favorable or acceptable terms;
inadequacy of reserves for losses and loss adjustment expenses;
failure or material delay in closing a transaction, including as a result of regulatory review and approvals;
regulatory conditions attached to the approval of the acquisition and other regulatory hurdles;
a need for additional capital that was not anticipated at the time of the acquisition;
anticipated benefits not materializing or being lower than anticipated;
diversion of management time and focus from operating its business to addressing acquisition integration challenges;
transition of the acquired company’s customers;
difficulties in integrating the technologies, operations, existing contracts and personnel of an acquired company;
retention of employees or business partners of an acquired company;
cultural challenges associated with integrating employees from the acquired company into its organization;
integration of the acquired company’s accounting, management information, human resources and other administrative systems;

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the need to implement or improve controls, procedures and policies at a business that prior to the acquisition may have lacked effective controls, procedures and policies;
coordination of product development and sales and marketing functions;
theft of its trade secrets or confidential information that Metromile shares with potential acquisition candidates;
risk that an acquired company or investment in new offerings cannibalizes a portion of its existing business;
adverse market reaction to an acquisition;
liability for activities of the acquired company before the acquisition, including patent and trademark infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities; and
litigation or other claims in connection with the acquired company, including claims from terminated employees, users, former stockholders or other third parties.

If Metromile is unable to address these difficulties and challenges or other problems encountered in connection with any future acquisition or investment, Metromile might not realize the anticipated benefits of that acquisition or investment and Metromile might incur unanticipated liabilities or otherwise suffer harm to its business generally.

To the extent that Metromile pay the consideration for any future acquisitions or investments in cash, it would reduce the amount of cash available to it for other purposes. Future acquisitions or investments could also result in dilutive issuances of its equity securities or the incurrence of debt, contingent liabilities, amortization expenses, increased interest expenses or impairment charges against goodwill on its consolidated balance sheet, any of which could seriously harm its business.

Metromile expects a number of factors to cause its results of operations to fluctuate on a quarterly and annual basis, which may make it difficult to predict its future performance.

Metromile’s revenue and results of operations could vary significantly from quarter to quarter and year to year, and may fail to match periodic expectations as a result of a variety of factors, many of which are outside of its control. Its results may vary from period to period as a result of fluctuations in the number of customers purchasing its insurance products and renewing their agreements with it as well as fluctuations in the timing and amount of its expenses. In addition, the insurance industry is subject to its own cyclical trends and uncertainties, including extreme weather which is often seasonal and may result in volatility in claims reporting and payment patterns. Fluctuations and variability across the industry may also affect its revenue. As a result, comparing Metromile’s results of operations on a period-to-period basis may not be meaningful, and the results of any one period should not be relied on as an indication of future performance. Its results of operations may not meet the expectations of investors or public market analysts who follow it, which may adversely affect its stock price. In addition to other risks described in these Risk Factors, and elsewhere in this proxy statement/prospectus, factors that may contribute to the variability of its quarterly and annual results include:

its ability to attract new customers and retain existing customers, including in a cost-effective manner;
its ability to accurately forecast revenue and losses and appropriately plan its expenses;
its ability to develop and offer new products, including in a cost-effective manner;
the effects of changes in search engine placement and prominence;
the effects of increased competition on its business;
its ability to successfully maintain its position in and expand in existing markets as well as successfully enter new markets;
its ability to protect its existing intellectual property and to create new intellectual property;
its ability to maintain an adequate rate of growth and effectively manage that growth;

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its ability to keep pace with technology changes in the insurance, mobile and automobile industries;
the success of its sales and marketing efforts;
costs associated with defending claims, including accident and coverage claims, intellectual property infringement claims, misclassifications and related judgments or settlements;
the impact of, and changes in, governmental or other regulation affecting its business;
the attraction and retention of qualified employees and key personnel;
its ability to choose and effectively manage third-party service providers;
its ability to identify and engage in joint ventures and strategic partnerships, both domestically and internationally;
the effects of natural or man-made catastrophic events;
the effectiveness of its internal controls; and
changes in its tax rates or exposure to additional tax liabilities.

New or changing technologies, including those impacting personal transportation, could cause a disruption in Metromile’s business model, which may materially impact its results of operations and financial condition.

If Metromile fails to anticipate the impact on its business of changing technology, including automotive technology, its ability to successfully operate may be materially impaired. Metromile’s business could also be affected by potential technological changes, such as autonomous or partially autonomous vehicles or technologies that facilitate ride, car or home sharing, or vehicles with built-in telematics features. Such changes could disrupt the demand for products from current customers, create coverage issues or impact the frequency or severity of losses, or reduce the size of the automobile insurance market, causing our business to decline. Since auto insurance constitutes substantially all of its current business, Metromile is more sensitive than other insurers and more adversely affected by trends that could decrease auto insurance rates or reduce demand for auto insurance over time. Metromile may not be able to respond effectively to these changes, which could have a material effect on its results of operations and financial condition.

A significant portion of Metromile’s total outstanding shares of its Common Stock are restricted from immediate resale but may be sold into the market in the near future. This could cause the market price of its common stock to drop significantly, even if its business is doing well.

Sales of a substantial number of shares of Metromile’s Common Stock in the public market could occur at any time. Metromile has filed a registration statement to register for resale the shares issued in the private placement that closed concurrent with the INSU SPAC transaction, and certain other holders pursuant to a registration rights agreement. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of its Common Stock. Metromile is unable to predict the effect that sales may have on the prevailing market price of its Common Stock and Public Warrants.

To the extent its warrants are exercised, additional shares of its Common Stock will be issued, which will result in dilution to the holders of its Common Stock and increase the number of shares eligible for resale in the public market. Sales, or the potential sales, of substantial numbers of shares in the public market by certain selling securityholders, subject to certain restrictions on transfer until the termination of applicable lock-up periods, could increase the volatility of the market price of its Common Stock or adversely affect the market price of its Common Stock.

The announcement and pendency of the mergers may result in disruptions to Metromile’s business.

The merger agreement generally requires Metromile to operate its business in t