Root Announces Successful Refinancing of Term Loan Facility with BlackRock

COLUMBUS, Ohio, Oct. 30, 2024 (GLOBE NEWSWIRE) — Root, Inc. (NASDAQ: ROOT), the parent company of Root Insurance Company, today announced the successful refinancing of its term loan facility with funds and accounts managed by BlackRock Capital Investment Advisors, LLC and its affiliates (collectively “BlackRock”). These improved terms in the long-standing relationship increase Root’s financial flexibility and significantly reduce its cost of capital.

The amended facility consists of a six-year term loan with a principal amount of $200 million, reducing the previous facility by $100 million. The amended facility, which becomes effective on October 29, has an interest rate of SOFR with a three-month term plus 600 basis points with performance-based step-downs, which represents a reduction of at least 300 basis points over the prior loan reflects term. Root will retain $150 million of available capital, net of financial covenants under the amended facility, consistent with the prior facility.

“We are pleased to complete the refinancing of our term loan, which demonstrates the strength of our business model, our improved operating performance and BlackRock’s continued confidence in our long-term growth prospects,” said Megan Binkley, Chief Financial Officer of Root . “By reducing our capital balance and securing more favorable pricing conditions, we have improved our capital structure while maintaining sufficient growth capital.”

At current interest rates, the modified loan will reduce Root’s interest expense by approximately 50% on a run-rate basis, further accelerating profitability and enabling increased investment in the company’s strategic growth initiatives.

“This refinancing demonstrates BlackRock’s ability to provide comprehensive financing solutions to our borrowers, wherever they are in their growth cycle,” said Corey Schwartz, managing director of BlackRock. “The amended terms and lower cost of capital reflect Root’s strong performance and will enhance its ability to grow as it fuels its continued expansion.”

In the fourth quarter, Root charged approximately $5.5 million in unamortized debt discounts and issuance costs related to the loan repayment and modification. For more details on Root’s amended term loan and this quarter’s results, please visit Root’s investor relations website at ir.joinroot.comwhere you can find the latest letter to shareholders and quarterly report on Form 10-Q.

About Root, Inc.
Root, Inc. (NASDAQ: ROOT), founded in 2015 and based in Columbus, Ohio, is the parent company of Root Insurance Company. Root is revolutionizing insurance through data science and technology to provide consumers with a personalized, convenient and fair experience. The Root app has over 14 million app downloads and has collected nearly 30 billion miles of driving data to inform their insurance offerings.

For more information about Root, please visit root.com.

Contacts:

Media:
[email protected]

Investor Relations:
[email protected]

Forward-Looking Statements
This press release contains forward-looking statements regarding, among other things, the future performance of Root and its consolidated subsidiaries, which are based on Root’s current expectations, forecasts and assumptions and involve risks and uncertainties. These include, but are not limited to, statements regarding: expected interest rate impact on interest expense; our expected financial results for 2024; our ability to retain existing customers, acquire new customers and expand our customer reach; our expectations regarding our future financial performance, including total revenue, gross profit/(loss), net profit/(loss), direct contribution, adjusted EBITDA, net loss and loss adjustment expense, or LAE, ratio, net expense ratio, net combined ratio, gross loss ratio , gross LAE ratio, gross expense ratio, gross combined ratio, marketing and customer acquisition costs, operating expenses, quota share levels, changes in unencumbered cash balances and expansion of our new and renewal premium base; our ability to generate profits, acquire customers, retain customers, contract with additional partners to use the products, or derive other benefits from our integrated insurance offerings; our ability to expand our distribution channels through additional partnership relationships, digital media, independent agents and referrals; our ability to generate significant long-term competitive advantage through our partnership with Carvana and other partnerships; our ability to develop products for embedded insurance and other partners; the impact of supply chain disruptions, increasing inflation, a recession and/or disruptions to properly functioning financial and capital markets and interest rates on our business and financial condition; our ability to remain profitable and expand our capital runway; our goal of becoming licensed in all states in the United States and the timing of obtaining additional licenses and launching in new states; the accuracy and efficiency of our telematics and behavioral data, and our ability to collect and utilize additional data; our ability to significantly improve retention rates and our ability to realize customer retention benefits; our ability to accurately underwrite risk and charge profitable rates; our ability to maintain our business model and improve our capital and marketing efficiencies; our ability to drive improved conversion and reduce customer acquisition costs; our ability to maintain and enhance our brand and reputation; our ability to effectively manage the growth of our business; our ability to raise additional capital efficiently, if at all; our ability to enhance our product offerings, introduce new products and expand into additional lines of insurance; our ability to sell our products to each other and derive greater value from each customer; our lack of operating history and ability to remain profitable; our ability to compete effectively with existing competitors and new market entrants in our industry; future performance of the markets in which we operate; our ability to operate a “capital efficient” business and obtain and maintain a desirable level of reinsurance; the effect of further reductions in the use of reinsurance, which would result in the retention of more premiums and losses and could cause our capital requirements to increase; our ability to achieve economies of scale; our ability to attract, motivate and retain key personnel or hire staff and provide competitive compensation and benefits; our ability to deliver a vertically integrated customer experience; our ability to develop products that use telematics to achieve better customer satisfaction and retention; our ability to protect our intellectual property and all associated costs; our ability to develop an autonomous damage experience; our ability to take early action and respond to changing environments; our ability to meet risk-based capital requirements; our ability to realize the benefits expected from our cross-fronting arrangement in Texas; our ability to expand domestically; our ability to remain in compliance with laws and regulations currently applicable or that may become applicable to our business; the impact of litigation or other losses; changes in law or regulation, or changes in the interpretation of law or regulation by a regulatory authority; our ability to defend against cyber threats and to prevent or recover from a security breach or other significant disruption to our technology systems or those of our partners and third party service providers; the effect of interest rates on our available cash and our ability to maintain compliance with our term loans, including performance and liquidity covenants; our ability to maintain proper and effective internal control over financial reporting; our ability to continue to comply with the listing standards of the Nasdaq Stock Market; and the growth rates of the markets in which we compete.

Root’s actual results may differ materially from those predicted or implied by such forward-looking statements, and reported results should not be considered an indication of future performance. Factors that could cause or contribute to such differences also include, but are not limited to, those factors that could affect Root’s business, results of operations and stock price, included under the headings “Risk Factors” and “The Company’s Discussion and Analysis management of financial condition and Results of Operations” in Root’s 2023 Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q and other filings with the SEC at or on the SEC’s website at www.sec.gov.

Undue reliance should not be placed on the forward-looking statements, which are based on information available to Root as of the date hereof. We assume no obligation to update such statements.