San Francisco based car insurance start-up Metromile has announced that it plans to restructure its reinsurance program going forward, as the company reported improved performance over 2020.
Metromile recorded a net loss of $37.4 million for 2020, as it narrowed its annual loss from $69.8 million in 2019 and $65.7 million in 2018.
Through 2020, the start-up ceded 85% of its premium to five reinsurance partners in an arrangement that it said helped to finance its capital needs in addition to mitigating risks.
But going forward and given the strength of Metromile’s current balance sheet, the company is working to restructure its current reinsurance programs.
It claims the new arrangements will allow it to manage its surplus at the insurance carrier at a lower cost of capital.
“We will continue to monitor our reinsurance needs, including new quota share arrangements to maintain adequate capital levels at the insurance company,” Metromile explained.
The firm ended 2020 with 92,635 policies in force, up 5.1% from the end of 2019.
However, its insurance revenue decreased modestly from $103.3 million in 2019 to $101.3 million last year.
Unlike other motor insurers, Metromile’s premium is primarily a product of its customers’ total number of miles driven, so fluctuations in driving patterns can affect its average premium per policy.
In particular, the surge in the COVID-19 pandemic and resulting government restrictions in Q4 2020 caused miles driven to decrease by 21.5% relative to the same period in 2019.
In 2021, Metromile expects to end the year with between 125,000 and 133,000 policies in force, which are expected to steadily increase throughout the year as marketing channels mature and it launches in additional markets.