Root, Inc. Reports Significant Financial Improvements in Q3 and Nine-Month Periods

Root, Inc., a technology-driven holding company specializing in personal auto and renters insurance, reported significant financial improvements for the third quarter and the first nine months of 2024 compared to the same periods in 2023. The company, which operates primarily through a direct-to-consumer model, saw total revenues for the three months ended September 30, 2024, reach $305.7 million, a substantial increase of $190.4 million (165.1%) from $115.3 million in the prior year. For the nine-month period, total revenues rose to $849.8 million, up $589.6 million (226.6%) from $260.2 million.

Net premiums earned for the third quarter were $279.3 million, reflecting a remarkable increase of $179.3 million (179.3%) compared to $100.0 million in 2023. The nine-month figures showed net premiums earned of $771.2 million, an increase of $547.3 million (244.4%) from $223.9 million. This growth was driven by a rise in gross premiums written, which reached $331.7 million for the third quarter, up 47.9% from $224.2 million, and $970.6 million for the nine months, a 92.6% increase from $503.9 million.

The company reported a net income of $22.8 million for the third quarter, a significant turnaround from a net loss of $(45.8) million in the same quarter of 2023. For the nine months, net income was $8.8 million, compared to a loss of $(123.4) million in the prior year. This improvement was attributed to enhanced operational efficiency and a strategic reduction in quota share reinsurance, which decreased the percentage of gross premiums ceded to reinsurers from 37.4% in Q3 2023 to 11.9% in Q3 2024.

Root's operating income for the third quarter was $34.4 million, a notable recovery from an operating loss of $(34.0) million in the previous year. The adjusted EBITDA also showed significant improvement, reaching $41.6 million for the third quarter, compared to a loss of $(19.4) million in 2023.

The company has been actively managing its expenses, with sales and marketing expenses increasing by 159.5% to $34.0 million in Q3 2024, primarily due to heightened direct performance marketing efforts. Other insurance expenses rose by 22.4% to $22.4 million, driven by increased premium write-offs linked to a larger number of policies in force.

As of September 30, 2024, Root maintained a robust cash position with $674.8 million in cash and cash equivalents, supporting its operational and capital expenditure needs. The company also amended its term loan in October 2024, resulting in a new principal amount of $200.0 million with a maturity date of October 29, 2030, and a variable interest rate structure.

Overall, Root, Inc. demonstrated a strong recovery in financial performance, driven by strategic initiatives and operational efficiencies, positioning the company for continued growth in the competitive insurance market.