Root(US:ROOT)2023-08-03 19:17Financial Data and Key Metrics Changes - The company reported a net loss of $37 million, which is a 62% improvement year-over-year [84] - Adjusted EBITDA improved by 81% over the prior year, resulting in a loss of $12 million [84] - The gross accident period loss ratio decreased to 68%, showing a slight improvement over Q1 [82] Business Line Data and Key Metrics Changes - Gross written premium for Q2 was $145 million, an 8% increase quarter-over-quarter [83] - Gross earned premium for Q2 was $132 million, a slight increase over the first quarter [83] - The company experienced a 65% quarter-over-quarter growth in new writings [76] Market Data and Key Metrics Changes - The company noted that 80% of its footprint is now rate adequate or at single-digit indications [54] - The competitive environment has led to favorable marketing costs, which the company is monitoring closely [78] Company Strategy and Development Direction - The long-term strategy focuses on retaining more business and reducing reinsurance costs [2] - The company aims to leverage technology and machine learning to improve pricing and underwriting [79] - The company is committed to disciplined growth while maintaining profitability [26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to achieve profitability with existing capital [80] - The company anticipates elevated cash burn in the second half of the year due to increased acquisition spending [87] - Management is optimistic about the growth potential from partnerships, particularly with Carvana [20] Other Important Information - The company ended Q2 with $520 million of unencumbered cash, a minimal change from $524 million at the end of Q1 [85] - The company has been decreasing its external session percentage as business improves [66] Q&A Session Summary Question: What is driving the elevated cash burn in the second half of the year? - Management clarified that the cash burn is a result of increased marketing and acquisition spending, but emphasized that growth is not at the expense of profit [24][26] Question: Can you discuss the new pricing model and its impact on loss ratios? - Management highlighted that the new pricing model is 17% more accurate and is expected to improve loss ratios moving forward [12][15] Question: What is the status of the Carvana partnership? - Management reported strong growth in the Carvana partnership, with customer adoption tripling [19][20] Question: How much of the states are now rate adequate? - Management indicated that 80% of their footprint is now rate adequate or at single-digit indications [54] Question: What are the future pricing assumptions around frequency? - Management noted that they are targeting high single digits for overall trends, considering both frequency and severity [56]