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Tuesday, November 10, 2026

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Root $ROOT, the car insurer that prices drivers on how they actually drive, closed Friday at $43.37/share, down 24.1% in two days from $57.15 before its Q3 report, even though it earned $14.4M against a $5.4M loss a year ago. In my August 10 update, I said $ROOT was riding out the soft market (when large carriers cut prices and spend heavily to win customers) by protecting margins instead of buying growth, and Q3 showed exactly that trade-off. Premiums in force (the annualized premium on every active policy) fell 5.4% y/y, nearly double Q2’s 2.8% drop. Growth in policies offset the lower premium per policy through Q1, but policies were flat from June at 484,037 (+3.8% y/y) while premium per policy fell 8.9% to $1,441. Basically, this means that $ROOT’s customers are paying less on average, and Root’s customer count has barely moved since June, so the total it collects from customers each year is shrinking (down 5.4% from a year earlier, to $1.40B). CEO Alex Timm said larger carriers raised marketing and cut prices during the quarter, so $ROOT gave up direct-channel growth where returns fell below its targets. CFO Megan Binkley expects year-end policies in force to be “broadly in line with the third quarter.” But new business through partners and independent agents still rose 19% y/y and made up 52% of the total, up from 44% a year earlier. The quarter’s big partnership win was Carvana $CVNA, the online used-car seller, which renewed its embedded insurance deal (coverage sold with the car) on August 31. Timm said the program had sold “well over 250,000 policies” by then. Carvana’s new warrants for up to ~1.5M shares (~10% of the share count) vest on policy milestones through August 2028, so it only earns them by selling more Root policies. In October, $ROOT also launched a pilot with Hyundai, one of its existing partners. At 14 Phoenix-area dealerships, buyers who finance or lease a new Hyundai through Hyundai Capital America get six months of Root insurance free if they enroll and qualify. The pilot puts $ROOT in front of car buyers at the dealership, the way Carvana does online.

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