Root Inc. followed up its first ever quarterly net profit in the third quarter with another in the last quarter of 2024, and finished with the first profitable year in the company’s history.
The Columbus, Ohio-based parent company of Root Insurance founded in 2015 posted a fourth quarter net income of $22.1 million compared to a loss of $24 million during the same period the year prior. The company turned a profit of $30.9 million for the full year 2024. A year ago it booked a net loss of more than $147 million.
The net combined ratio for Q4 was 91.5 compared to nearly 112 for Q4 2023.
“Ten years ago, we believed that engineering and automation would allow us to reduce prices for customers by operating more efficiently,” CEO Alex Timm said in a shareholder letter. “Today, our proprietary technology has propelled us to net income profitability, with a lot of room for growth given we still operate in small portion of the overall market.”
Root grew policies 21% in 2024, to 414,862. Gross premiums written increased 66% to $1.3 billion.
“This growth was not the product of having the largest teams or the biggest marketing budget—it was a product of superior technology and data science,” Timm continued in the letter.
Root said it has plans to expand into new states, with Minnesota the latest. Right now the insurer operates in 35 states, with filings pending in a more.
Meanwhile, the partnership channel has grown 115%. Nearly a third of new writings in the fourth quarter can be attributed to the partnership channel – Caravan Insurance and Goosehead Insurance.
During a conference call with analysts, Timm said Root will remain “laser-focused” on disciplined underwriting, driven by its technology and algorithms. He said the insurer has been able to reduce rates in select states for good drivers, but “it is important to note we do not set prices with the primary goal to gain market share.”
“I think you are going to see us file and continue to see some modest rate decreases,” Timm told analysts. “You will see that apply some pressure to average premiums. At the same time, we are still growing our independent agency channel as well as our partnership channel.”
Timm said those policies “retain longer,” and are “fatter policies,” with more vehicles associated with them. So, overall, on a per policy basis, rates may be flat to modestly increasing, Timm added.
Questioned on the impact of tariffs, Timm said Root isn’t making any predictions but its technology platform can detect changes in real time and its reserving system is automated.
“We can respond with rate trend,” he said. “If a disruption like that happens in the macroeconomic landscape or through tariffs or otherwise, being on a tech chassis actually positions you better than a lot of our incumbent competitors. We’re constantly monitoring that, and we are prepared to act very quickly and swiftly if anything changes in the environment.”
Topics Profit Loss InsurTech Tech
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