Root, Inc.

Good morning, my name is Chris, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Root Inc. Q3 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star, then the number one on your telephone keypad. To withdraw your question, please press star one again. Thank you. Matt LaMalva, Head of Investor Relations. You may begin.

Good morning and thank you for joining us today. Root is hosting this call to discuss its third quarter 2023 earnings results. Participating on today's call are Alex Timm, co-founder and chief executive officer, and Megan Binkley, chief financial officer. Last evening, Root issued a shareholder letter announcing its financial results. All this call will reflect items discussed within that document. For more complete information about our financial performance, We also encourage you to read our third quarter 2023 Form 10Q, which was filed with the Securities and Exchange Commission last evening. Before we begin, I want to remind you that matters discussed on today's call will include forward-looking statements related to our operating performance, financial goals, and business outlook, which are based on management's current beliefs and assumptions. Please note that these forward-looking statements reflect our opinions as of the date of this call, and we undertake no obligation to revise this information as a result of new developments that may occur. Forward-looking statements are subject to various risks, uncertainties, and other factors that could cause our actual results to differ materially from those expected and described today. In addition, we are subject to a number of risks that may significantly impact our business and financial results. For a more detailed description of our risk factors, please review our Form 10-K for the year ended December 31, 2022, as well as our shareholder letter and third quarter Form 10-Q. A replay of this conference call will be available on our website under the Investor Relations section. I would also like to remind you that during the call, we will discuss some non-GAAP measures while talking about Root's performance. You can find reconciliations of those historical measures to the nearest comparable GAAP measures in our shareholder letter and our Form 10-Q filed with the SEC, which are posted on our website at ir.joinroot.com. I will now turn the call over to Alex Timm, Root's co-founder and CEO.

Thank you, Matt. Q3 marks an excellent quarter for Root. We broke company records for both gross written premiums and direct contribution this quarter. For the third consecutive quarter, we saw material growth in new writings in our direct channel. We grew total new writings 141% over last quarter and 376% over the third quarter of 2022, all while posting a gross loss ratio of 66%. Management's top priority remains driving Root to profitability. we developed a three-part plan to get us there. One, drive to healthy margins on our business by hitting our target loss ratios. Two, reduce fixed expenses to materially lower our burn rate. And three, efficiently grow to scale profitability. We have successfully executed on one and two, as has been demonstrated in previous quarters. Our performance in Q3 shows our ability to execute on all three. We believe this, combined with advancements in our reinsurance strategy, which Megan will detail, has put us on a clear path to growth and profitability. The strong growth this quarter was primarily driven by our direct channel. This can be attributed to our rapid response to inflation, our advancements in segmentation and underwriting, and our ability to leverage favorable marketing conditions with our automated marketing approach. Today, we are in a strong position as we continue to exceed profitability targets on our new business. If we see changes in the environment or degradation in our loss ratios, Our systems are designed to automatically pull back on growth. Our objective remains to optimize for profit. Roots Embedded Channel is a core part of our distribution strategy, and we continue to believe it is a meaningful part of our foundation for long-term growth. Our embedded product is now active in 33 states, with new writings and premiums up quarter over quarter. Additionally, we launched several partnerships this quarter, and we believe we have a strong funnel for future launches. All of this is made possible by Roots technology and data science. This strategic advantage allows for quick responses to an ever-changing environment, more accurately priced business, and seamless quote-to-bind experiences. With continued investment in our data and technology, we are building an enduring company and driving Root to profitability with the capital we have. We are grateful to our customers, employees, and investors. Lastly, I would like to announce that Frank Palmer will be leaving Root at the end of the year. We are grateful for his contributions, and thanks to his leadership, have established strong pricing and underwriting teams who have fully assumed his previous duties. I'll now turn the call over to Megan to discuss our operating results in more detail.