Hannover Re commits up to $250 million to fund Lemonade’s growth

Lemonade has entered into a new financing agreement with Hannover Re (Ireland) DAC, under which the reinsurer will provide up to $250 million to support the insurtech’s sales and marketing efforts beginning January 1, 2027.

Under the agreement, Hannover Re will finance up to 80% of Lemonade’s monthly growth spending, subject to a cap of $20 million per customer cohort. The arrangement allows for up to $150 million of outstanding capital during 2027 and up to $250 million during 2028.

Lemonade will repay the financing using a predetermined percentage of premiums collected from the customer cohorts generated by the funded marketing spend. Hannover Re’s return is tied to the three-year U.S. Treasury rate plus 5.8%, with Lemonade retaining all future premiums from those cohorts once the financing has been fully repaid.

The deal gives Lemonade another source of growth capital tied directly to customer acquisition economics, rather than traditional equity financing.

It also resembles Lemonade’s earlier arrangement with General Catalyst. Beginning in 2023, General Catalyst agreed to finance up to 80% of Lemonade’s customer acquisition costs, with repayment tied to the premiums generated by those customers. That arrangement was later expanded to a total commitment of up to $290 million and extended through the end of 2025.