Root, Inc. reported its financial results for the first quarter of 2025, demonstrating continued GAAP net income profitability with $18.4 million in net income. The company achieved total revenues of $349.4 million, a substantial increase from $254.9 million in Q1 2024, highlighting significant top-line growth.
Net premiums earned grew to $321.3 million, up from $230.3 million in the prior year, driven by an increase in policies in force and an 8.9% year-over-year rise in premiums per policy. The gross accident period loss ratio remained strong at 57.9%, contributing to an improved net loss and LAE ratio of 64.0% from 72.3%, showcasing effective underwriting.
Operating income significantly improved to $23.7 million from $5.4 million in Q1 2024, reflecting enhanced operational efficiency. The company's balance sheet strengthened, holding $609.4 million in cash and cash equivalents and $347 million in unencumbered capital. Operating cash flow was positive at $26.8 million, marking four consecutive quarters of positive operating cash flow.
Root strategically reduced its reliance on external quota share reinsurance, with ceded premiums earned dropping to approximately 6.7% of gross premiums earned, down from 16.3% in Q1 2024. This shift, combined with a $5.7 million decrease in interest expense due to debt refinancing, enhances the economics of the business and supports sustainable profitability.
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