Metromile, the auto insurance provider basing premiums on mileage and previously impacted by COVID-19-related economic challenges that led to workforce reductions, is pursuing a listing on the public markets through a special purpose acquisition company (SPAC).

Established in 2011 and currently under the leadership of CEO Dan Preston, the company has entered into a definitive merger agreement with INSU Acquisition Corp. II, resulting in an equity valuation of $1.3 billion.

Metromile successfully secured $160 million in private investment through a PIPE investment, spearheaded by Social Capital, the firm led by Chamath Palihapitiya. This funding round also included participation from existing investors like Hudson Structured Capital Management and Mark Cuban, alongside new investors Miller Value and Clearbridge. Upon completion of the merger, Metromile anticipates having approximately $294 million in cash reserves.

These funds will be allocated to reducing current debt and fueling expansion initiatives. Specifically, the company intends to grow its team to support both its direct-to-consumer insurance and enterprise-focused operations, and broaden its service area from its current eight states to 21 states by the end of the following year, with a goal of nationwide availability by the end of 2022.

Metromile has gained recognition for its innovative approach to the traditional auto insurance model, particularly in how it determines pricing. Rather than a fixed rate, Metromile calculates charges based on the number of miles driven, a figure accurately tracked through a device connected to the vehicle. The company estimates that roughly two-thirds of drivers in the U.S. fall into the category of low mileage. By utilizing a per-mile billing system, Metromile asserts that its customers typically realize savings of 47% compared to their prior insurance providers.

Complementing its insurance services, Metromile developed a mobile application offering features beyond claims filing, such as alerts regarding potential parking infractions related to street cleaning schedules. Leveraging data collected from three billion miles of driving, the company now employs predictive modeling to reduce costs for customers and enhance their overall experience.

In 2019, the company also launched an enterprise division, providing a cloud-based software-as-a-service solution to established insurance companies. Metromile licenses key components of its technology, including tools for automating claims processing and identifying fraudulent activity.

The onset of the COVID-19 pandemic initially presented obstacles for Metromile, which had previously experienced rapid growth in the Bay Area. The company responded by reducing its workforce by approximately 100 employees as part of a cost-cutting effort. The company explained that pandemic-related stay-at-home directives, which resulted in reduced driving, negatively impacted its business. The pandemic also encouraged drivers to seek more affordable insurance options reflecting their decreased mileage.

Investor Mark Cuban expressed optimism about the company’s prospects in a statement accompanying the SPAC announcement.

“Metromile delivers a vital insurance option during a period of economic difficulty, unemployment, and the rise of remote work,” Cuban stated. “The ability to pay for insurance based on mileage is a significant advantage, and I am very enthusiastic about Metromile’s future.”

Chamath Palihapitiya of Social Capital echoed this sentiment, stating on Twitter, “Buffett had Geico. I choose @Metromile.”

Metromile has since reinstated previously laid-off employees and brought back those who had been furloughed earlier in the year. Currently, the company employs over 230 individuals and anticipates continued workforce growth, expecting substantial expansion in both its consumer and enterprise sectors over the coming years.

The transaction is projected to be finalized in the first quarter of 2021. The resulting entity will be known as Metromile Inc. and will continue to trade on the NASDAQ exchange under the ticker symbol “MLE.”