Root posts second consecutive quarter of net profitability, reports $31 million in 2024 net income

By Mia MacGregor

Feb 26 - (The Insurer) - Root has posted net income for a second consecutive quarter, generating $22 million in the fourth quarter in what marked a $46 million improvement year over year.

• Second consecutive profitable quarter: $22 million Q4 net income, up $46 million YoY

• Full-year net income of $31 million, a $178 million improvement from 2023

• Gross premiums written up 18% in Q4, 66% for the year

• Gross combined ratio improved 19 points to 90.6% for Q4, improved 22 points to 94.7% for full year

The Ohio-based auto insurtech reported an operating income of $35 million and adjusted Ebitda of $43 million for Q4, all significant improvements from the prior-year period, according to the company.

Root’s gross combined ratio for the quarter improved by 19 points to 90.6%, while the net combined ratio improved by 20 points to 91.5%.

Gross premiums written increased 18% to $331 million, and gross premiums earned rose 54% to $331 million.

The company also reported improvements in its loss ratios.

The gross accident period loss ratio improved by 2 points to 61.4%, while the gross LAE ratio improved by 2 points to 6.9%. Root attributed these gains primarily to favourable prior-period reserve development.

FULL-YEAR RESULTS

For the full year, Root reported a net income of $31 million, marking a $178 million improvement from 2023.

The company also posted full-year operating income of $79 million and an adjusted Ebitda of $112 million, reflecting year-over-year improvements of $180 million and $155 million, respectively.

“Our growth paired with consistently strong underwriting drove the improvement, with a gross combined ratio of 94.7% for the full year 2024 also illustrating the efficiency of acquisition investment and fixed expenses,” the company stated.

The full-year gross combined ratio improved by 22 points to 94.7%, while the net combined ratio improved by 37 points to 96.4%.

Gross premiums written surged 66% to $1.3 billion, and gross premiums earned increased 94% to $1.2 billion.

The gross accident period loss ratio improved by 4 points to 59.9%, and the gross LAE ratio increased by 1 point to 8.6%.

Commenting on the results, Root co-founder and CEO Alex Timm said: “We are extremely proud of our progress in 2024, achieving GAAP net income profitability while also adequately capitalised for future growth. Our differentiation, particularly among public companies, is a relentless focus on the long term.”

“Our approach to running the business is grounded in a unit-economic framework over the life of the customer. We believe this approach — including the ongoing investment in our business, infrastructure and growth — ultimately translates to strong calendar period results as we gain scale; however, it may impact the degree of profitability in any given quarter,” Timm added.