Car insurtech Root Insurance premiums in Q3 2022 decreased by 26% to $151 mn

Root Insurance shared its Q3 2022 results. To further improve cash flow, insurtech is prioritizing resources that support its “go forward strategy.” As a result, the company reduced its headcount by roughly 20%.

Root Insurance continues to rightsize its non-headcount expenses. Root expects these actions to collectively lower run rate expenses $50 million annually.

  • The company ended the quarter with 255,279 auto policies in force, a decrease of 125,557 compared to Q3 2021. In Q2 2022, the company had 297,716 auto policies.
  • Gross written premium for the quarter stood at $150.7 million, a ~26% decrease from the same period last year.
  • Gross accident period loss ratio was 79.5%, a ~13 point improvement compared to Q3 2021.
  • Premium per auto policy was $1,150, a 17% increase compared to the same quarter of last year.
  • Net loss for the quarter stood at $64 million, while in Q2 2021 the company reported a net loss of $133 million. Since the beginning of the year, Root recorded a $230.3 million loss.
  • Sales and marketing expense continued to decline – the company spent $5.7 million compared to $65.4 million in Q3 2021. For the first nine months of 2022, Root spent $45.8 million on sales marketing compared to $245.5 million for the same period last year.
  • During the quarter, 38% of all new policies were from Carvana. The company is finalizing a deal with its second embedded partner in the coming months.
  • Cash, cash equivalents and restricted cash at end of period stood at $820.7 million.
  • Year-to-date, implemented 41 filings with an average rate increase of 35% representing 97% of its total book.

Our third quarter shows clear progress on our strategy: accelerating new writings growth on our embedded platform while materially reducing our loss ratio year-over-year, bucking industry trend. We continue to take action to position ourselves to significantly decrease cash burn while driving towards positive operating cash flow. Our number one priority is to become self-funding in coming years, allowing us to control our own destiny

A Root spokesperson provided the following statement:

“Today, we announced an organizational realignment focused on Root’s path to profitability and becoming capital self-sufficient, while transforming our distribution from primarily direct to primarily embedded. The most difficult part of this realignment is that we said goodbye to employees throughout the business. We are deeply grateful to all Root employees, past and present, for their continued commitment to our vision of disrupting the car insurance industry.”

by Peter Sonner