‘Pivotal’ Q3 Sees Insurtech Root Achieves Net Income Profit for the First Time

For the first time in the company’s history, Root Inc. recorded a quarterly net income profit.

The Columbus, Ohio-based parent company of Root Insurance founded in 2015 recorded third quarter net income of about $23 million compared to a net loss of about $46 million a year ago during the same period. For the year thus far, Root Inc. is also in the positive with net income of nearly $9 million compared to a loss of $123.4 million last year.

“This is a pivotal moment for Root. This quarter validates the strength of our business model, our technology, and our customer value proposition,” said co-founder and CEO Alex Timm in a shareholder letter. “We have maintained conviction that our data science and machine learning acumen, our modern technology stack, and our delightful customer experiences would ultimately combine to drive the company to net income profitability. And that’s exactly what happened.”

For the quarter, Root turned in a combined ratio of 91.1—much improved from 143.1 recorded in Q3 2023. Net premiums earned increased $179.3 million to $279.3 million in Q3 2024, as the insurtech said it ceded less gross premiums to reinsurers.

Policies-in-force in Q3 increased 57% to 407,313 compared to 259,522 in Q3 2023. Timm touted Root’s diversified distribution strategy, including its partnership channel that saw a 131% increase in new writings in Q3.

“Independent agents are an important resource for customers with more complex insurance needs, and comprise a meaningful and stable portion of the market,” Timm said. “Root is not only able to offer competitive pricing and coverage to consumers, but through our API integrations with agent platforms, we are also able to provide ease of use and a fast purchasing experience, which benefits both the customer and agent alike.”

In August Root announced a technology integration partnership with personal lines insurance agency Goosehead Insurance.

The direct channel benefitted from what Root said was a reduction in competition in 2023, resulting in a doubling of the insurer’s book of business in less than a year. Timm said the book is weighted with new policyholders, resulting in lower retention following the rapid growth. But as the trend normalizes, the CEO said the “current level of marketing investment and diversified distribution in the partnership channel will result in a return to growing policies in force.”

Root currently operates in 34 states and is “actively expanding” with a goal to become national.

According to the insurtech, it recently refinanced and reduced debt, resulting in a reduction in interest of about 50%.