Root (NASDAQ: ROOT) shares skyrocketed 30% in midday trading Thursday as the insurtech company delivered a stunning fourth-quarter profit for 2024, smashing analyst forecasts.
The auto insurer reported adjusted earnings of $1.30 per share, a sharp turnaround from the expected $0.52 loss. Revenue for the quarter reached $326.7 million, beating the $291.34 million that analysts had estimated.
The company’s strong showing stemmed from significant growth in its business. Root saw a 21% increase in policies in force, bringing the total to 414,862, while gross premiums written rose 18% to $331 million compared to the same quarter last year. The company also tightened its financial metrics, with the gross combined ratio dropping 19 percentage points to 90.6% and the net combined ratio falling 20 points to 91.5%.
“Ten years ago, we believed we could build a better insurance company by meeting consumers where they were with delightful experiences at a great price all by leveraging data science machine learning,” Alex Timm, Co-Founder & CEO commented. “Our 2024 results demonstrate the effectiveness of these principles, showing profitability, strong growth, a stellar loss ratio, and an extensive partnership pipeline—all within a decade of our founding.”
For the full year 2024, Root (NASDAQ: ROOT) reported a net income of $31 million, a dramatic turnaround from the $147 million loss in 2023. Gross premiums written for the year climbed 66% to $1.3 billion. The company attributed its success to its proprietary technology platform and sophisticated data science algorithms, which delivered a robust underwriting performance reflected in a 58.9% gross loss ratio for 2024.
Looking ahead, the company plans to keep investing in its pricing and underwriting technology while prioritizing profitable growth across its distribution channels.
