Key Highlights

  • Diluted EPS was USD 0.86 against an estimate of USD 0.63, with USD 14.4 million of net income.
  • Total revenues were USD 381.3 million against an estimate of USD 384.43 million and USD 387.8 million a year earlier.
  • The net combined ratio was 97.2% against 102.1%, and policies in force were 484,037 against 466,320.
  • Cash and cash equivalents were USD 596.3 million, and USD 38.8 million remained authorized for share repurchases.

Root, Inc. (NASDAQ:ROOT) builds its auto insurance Business on telematics, pricing policies on driving behavior, and sells through a direct channel and a Partnership channel that embeds its product with automotive, financial services and independent agent partners. The third quarter showed how that model is shifting: policies in force rose to 484,037 from 466,320, partnership growth accompanied fewer direct writings, and the company reported diluted EPS of USD 0.86.

Channels, Pricing and Reinsurance Approach

Management said the direct channel is tuned to bid for high-intent shoppers while balancing competitive prices against target unit economics, while the partnership channel gives access to customers inside partner experiences. Gross premiums written were USD 357.5 million against USD 387.2 million, which the company tied to lower premiums per policy in both channels and a decline in new direct writings after reduced direct performance Marketing spend amid heightened competition. Premiums per policy were USD 1,441 against USD 1,581.

The company continues to file for rate changes in multiple states to follow loss cost trends, citing higher vehicle repair and medical costs. Because gross loss ratios have stabilized, it has reduced its use of external Quota share reinsurance, and said it may commute certain reinsurance arrangements, which could raise its Capital requirements if it retains more business.

Financial Results

Total revenues were USD 381.3 million against USD 387.8 million. Net premiums earned were USD 352.8 million against USD 360.1 million, net Investment income was USD 8.2 million against USD 7.0 million, and fee income was USD 20.2 million against USD 19.8 million.

Loss and loss adjustment expenses were USD 233.4 million against USD 239.4 million, and sales and marketing expense was USD 32.2 million against USD 40.6 million. The net loss and LAE ratio was 66.2% against 66.5%, and the net expense ratio was 31.0% against 35.6%, while the net combined ratio was 97.2% against 102.1%. Gross Profit was USD 87.7 million against USD 81.4 million, and adjusted EBITDA was USD 33.5 million against USD 33.7 million.

Net income was USD 14.4 million, compared with a net loss of USD 5.4 million a year earlier. Basic EPS was USD 0.90 and diluted EPS was USD 0.86, against a loss of USD 0.35 in the third quarter of 2025. Nine-month Net Income was USD 75.7 million, or USD 4.45 per diluted share.

Capital, Debt and Repurchases

Cash and cash equivalents were USD 596.3 million, of which USD 261.6 million was held outside regulated insurance entities. The company also held restricted cash of USD 75.3 million and USD 433.7 million of marketable securities. In May it prepaid its USD 200.0 million Amended Term Loan, recording a USD 4.9 million loss on extinguishment, and entered a new USD 200.0 million senior secured term Loan maturing May 4, 2029.

The board approved a repurchase authorization of up to USD 75.0 million in May. Over nine months the company repurchased 0.7 million Class A shares for USD 36.4 million, leaving USD 38.8 million authorized.

Next Reporting Checkpoints

Revenue of USD 381.3 million sits alongside net income of USD 14.4 million, a 97.2% net combined ratio and USD 596.3 million of cash and cash equivalents.

Management named several items that carry into coming reports: the agreement to buy real property for about USD 18.3 million for corporate use, with closing scheduled for the fourth quarter of 2026; quarterly principal payments on the term loan, which began September 30, 2026; and continued rate filings across states. It also pointed to its priorities of growing the partnership channel and releasing new pricing model iterations with enhanced telematics features.