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Insurtech Root, a telematics-based insurer, yesterday announced its full-year 2020 results. While key metrics like premium growth, customer numbers and claims ratio improved, net losses increased 56% compared to 2019 and the total cost of acquiring consumers is unsustainable at $3,370 for 2020.

Root recorded a loss of $133.2 million for the quarter ended December 31, an increase of 56% from $85.4 million for the same period in 2019. For the full year of 2020, the net loss was $363 million, or a 26% increase over 2019.

Revenue fell to $50.9 million in the quarter from $106.5 million in the fourth quarter of 2019, and the company attributed the decline to a new reinsurance program it mentioned several times, including the fact that it was not renewed in January because it believed it would get more favorable terms in April.

Root Insurance Quarterly Results

Root’s preferred revenue metric is direct premium earned. That metric jumped by 30% in the quarter from the same period in 2019 to $155 million or $605 million in 2020.

Policies in force grew 15% over the year to 322,759, but lost 3.4% of the paying auto customers it had at the end of the first quarter of 2020. Its 4Q2020 customer acquisition costs amounted to $147,619 per new customer. The Company also had 7,739 renters policies in place as of December 31

Root Insurance Customer Acquisition Costs

For 2021, the company said it is slowing expansion into new states, but they still hope to cover 85% of the addressable car market by the end of 2021.

As with their first earnings report, investors were not impressed with the result: Shares fell about 8% in trading after the stock market closed below $15 ~ 44% below its IPO price of $27.

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