Root (ROOT) 24 Feb 222021 Q4 Earnings call transcript

Company Profile

Participants

Christine Patrick	Vice President of Investor Relations
Alex Timm	Co-Founder and Chief Executive Officer
Dan Rosenthal	Chief Operating Officer, Chief Revenue Officer, and Chief Financial Officer
Frank Palmer	Chief Insurance Officer
Matt Bonakdarpour	Chief Technology Officer
Elyse Greenspan	Wells Fargo
Josh Siegler	Cantor Fitzgerald
Matt Carletti	JMP
Mark Hughes	Truist
David Motemaden	Evercore ISI
Brian Meredith	UBS
Tracy Benguigui	Barclays
Ryan Tunis	Autonomous Research

Call transcript

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Operator

00:07 Thank you for standing by and welcome to the Fourth Quarter 2021 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speakers presentation, there will be a question-and-answer session. [Operator Instructions] As a reminder today’s conference call is being recorded. 00:25 I would now like to turn the conference over to your host, Ms. of President Vice Patrick, Investor Relations. Christine ahead. go Please

Christine Patrick

are joining XX:XX is Root quarter and earnings today's Dan for and Executive Operating Insurance and discuss Good and Financial and Officer. Matt thank of XXXX call on Participating XX:XX Chief morning Rosenthal, presenters us results. our Timm, hosting call, Officer; joined fourth Root Chief shareholder Co-Founder XX:XX by Chief today. its portion you Alex issued Officer, this Revenue Chief Chief to Officer, letter financial will Chief Bonakdarpour, Frank Last evening, Officer, announcing Technology this Officer. results. During the Palmer, be a question-and-answer call its

differ Please of XX:XX we that Forward-looking call that cause assumptions. result a no our from factors could statements developments we information are expected call may materially that of remind and are read items our within to statements to management's today's operating undertake performance, will to those our this XX:XX complete our outlook, statements document XXXX this goals, to as include on Form this information obligation revise and and business matters to uncertainties, we subject that described reflect call to encourage beliefs other financial which the and of new want current also these will opinions begin, based I as forward-looking and XX:XX XX-K. you more While on actual performance, risks, discussed reflect Before that today. note you date forward-looking for occur. about financial our results related various

Form the detailed materially letter shareholder that call, would replay a to could where to discussing well impact call some you XX:XX see are that differ a In financial about as measures business discussion of talking to available this once review from risk conference be significantly a will addition, may statements, performance. factors, more released actual Relations the our results. our our results will factors please our XX:XX again, the also that we number of of under A of cause XX-K, and 's company's I subject risks For description last these Root in during we as Investor website section. evening. you our remind non-GAAP like on are

at filings will can find GAAP posted nearest to of measures to be measures now released CEO. of I our SEC, will website Root each letter reconciliation historic the shareholder our Founder XX:XX those comparable call Timm, turn You with the which in ir.joinroot.com. last evening, the and over the our on and 's Alex

Alex Timm

XX:XX get losses Thank pushed to efficient. I’m a marketing to challenging it. spend as digital became Christine. right to less year new going inflation and was levels XXXX you,

industry trend identify data and ratio trends respond is take technology our our early in of were the continued year, loss able of been reflected our because hit initial impact to ability to action. since rise. and inflation swift However, these fourth quickly we while the results earlier stable advantage, where quarter XX:XX has to in Our

driving are of the first what of focused experience surpassed less XX version the the open We adoption. we with in effectiveness substantial we've has quarter, progress sides. also embedded able During cutting in on Carvana. continue made underwriting XX:XX After strengthening roughly X the to Through product XX% progress build since our spend rolling our building our and half in to made We've states, been customer to out quarter, loss months on XX:XX quality product. second reduced in another our we've partnership both collaboration, expectations than quarter. in the the fourth make marketing and and on operating our improvements

have results embedded the to As share initial states Carvana increased of new traffic has add to schedule. ahead promising, continue months every XX:XX of been We very footprint our week.

to a have rates. buying strong continue drive increased roadmap to We

second version we customer also to how Root pricing, are build product, serve does building XX:XX a we customers write We experience. As states inform brokerage of and will be our the where underwriting, explore the business. used telematics to offering not can and currently

early, rate, it's metrics still While the ratio, and look attach extremely around retention loss positive.

we QX Carvana to continue by XX:XX state of successes material our approach ability On new Roots the represent embedded top underwriting are year. profitability. addition, a We In in efficacy environmental models. further a work learning to the of that the pricing quickly. has respond our their and of models underwriting science expect standards built is changes differentiation will in able critical XX:XX underwriting to to have in throughout This the machine best with continued advance loss Having and based we and to to the customers drive percentage on very build writings insurance, our systems state ROOT been to drive tightening in technology, data risk segmentation. our

We better value model During implemented the X model. model leverages This to first a were pricing and pricing in expand our additional customer. implemented improve increases country quarter. fourth an improved the coverages, segmentation X predict have data XX:XX date enhancements through rate to the we quarter, Root’s segmentation, modelled of lifetime to and growing make

performance and XX%. our XX:XX predictive power actions our our bring to results. into expect improvement good while we this now testing model, to of translates demonstrates of UBI these to how Through a the our have active prices goal loss to in X.X offering frequency is measurable drivers. simultaneously in material This together, further drive also of experienced XX improvement closer better premium Taken detailed technology in Our model stated we states. XXXX ratios, ratio

Technology I analyze was this want and I data, to to aligning took Shah our taking data it leave to Dan, four and time Root for the team engineering We XX:XX appreciate two dedication both, allows Officer. every us and to that I'm our over with act thankful actionable product, unbreak has We science XX:XX to our turn building quickly opportunities and were family. By with are improve of of is handled] teams, contributions because QX We [had I to to Chief the the able demonstrated The science Root. over our members call employee Bonakdarpour we I'll turn results, change, report insurance. Matt's quickly, world-class our XX:XX processes. that who XX:XX data are company incredibly would closely share data to our I'm his technology stack. thank actions Matt quarter Hemal [ph] He materially our that decided like for I trust collect excited growth. that, we more defensible science the will technology continue profitability. years announced will implement his last driven And to contributions working for driving some and while then to and teams underwriting past building to been unlock to Hemal has also over time real himself to by investors. announcements. to significant. be build Before performance. our over customers promoted can Matt to the a our day infrastructure Dan.

Dan Rosenthal

Alex. Thanks, XX:XX

quarter environmental quick and fourth of trends Our address them. take to results action the early XXXX Roots to for ability reflected recognize

our line priorities strategic quarter have profitable unit sight in We economics action. to of and reflects this

in wanted evening, GAAP to You the shareholder will key line, full million. financial we the but published we give of On a $XXX contained letter results find highlights. premium we the yesterday grew year-over-year gross to XX:XX written top our few X%

inclusive impact $XXX million. year-over-year to of gross X points reduced the premium relatively earned rate anticipated. from by loss severity, to of fourth marketing driven was Gross XX% The was than of for and XX% less increased of points retention Shifting X spend frequency profitability. Our compared XX:XX lines and and accident ratio quarter outperformance increases top XXXX. fourth the stable period quarter, to

unit resulting in $XX $XX on of execute with with management us from $XX reduction peak operating year have of in will reduction cash Alex data bottom ratio we This BlackRock economics in consumption line rate to Operating XX% getting first run we since savings our levels. we to expense has on $XX started from loss primary These In to action As of second profit remain the cash we bottom when January, profitable and The XX:XX in second second marketing with coming to burn. there. capital were on of rate reduce stopped million changes out new was facility commitment workforce actions reduce combination the line. our on decision with quarter with of be results. XXXX. and responded of XX:XX in architecture, changes in when have we the savings get million, outlook, quarter our into compared underwriting and power Turning evident date the stability by the to total in technology taking our million XX%, to line our The to the the the loan made quarter the on $XX efforts a our leveraging inflation expense in hit a the we a reduction million to marketing not strategic was half million to sales difficult in and continued market. on approximately set and roughly made our closing third the XX:XX XXXX rate to management In quarters quarter relative expense speaks platform, the to approximately quarter, loss expense annually. driver this spend path first. priorities brings the sight quickly expense XXXX Our touched when term improvement demonstrated our us path XX:XX give and spend. of run during second compared our

auto of a expectations. of of providing With are and insurance X-month the the the view COVID, ongoing uncertainty amount surrounding we environment impact our

improvement towards New business. The will driving we finished. that and but like an York We we path have would statement thoughtfulness host capital deploying XX:XX of where we expectations continue of meaningful to for to in not expect operating a planning losses to in in half taken operating Day we million. compared are give line, echo are declines XXXX, the $X further continue City future detail our to to around XXXX, XXXX Investor a restructuring with continue actions. of first With premium expenses, approximately reflect and fixed the losses excluding million in we XX:XX improvement the in XXXX. to in half our underwriting of take of reduction to first marketing in We first written gross on half $X bottom profitability. XX:XX improving our expect We Alex’s on our as this greater costs, September, significant I are level are we pricing the expect charges XX% company year-over-year in that demonstrate and actions to

Our with Frank, our capitalize forward continuing I that, XX:XX our underwriting before goals building and foundation, are Matt, about advantage, embedded strengthen us XX:XX your Alex, support. look opportunities excited clear, continued technology Carvana. near We appreciate product the are term questions. very to on and to your out With our and

Operator

XX:XX Thank from Greenspan Wells you. question of Elyse comes first Our [Operator Instructions] Fargo.

Your line open. is

Elyse Greenspan

question, on there the that in frequency mention start XX:XX think that. My into Hi, the us you first continue benefit benefit then, give did frequency night, a thanks. letter see variant XXXX in could hoping of just did more Omicron Good last I you January? end given color was Thanks. the some was, the morning. just year, I And to you guys

Frank Palmer

Couple Frank. comments is This Hello. on XX:XX of that.

Omicron, premium XX:XX even not improvements talk before saw that about the we it UBI were some we those Omicron, X.X, it's X.X the lower reductions more we counts. modeling, some shows wasn't but a frequency of profitable the business, models our when summer to model. frequency, is, metric, UBI new from – it's as driving because to due are in the frequency earn claims just driving just those That new talk see that earlier not did model decreases the which our out we As rolled we just about from

Elyse Greenspan

And oh sorry, XX:XX ahead. go Okay. then my…

Matt Bonakdarpour

just data. were and we decrease seasonal the what time year into confirmed I mention Bonakdarpour. implied around our letter, and decrease shareholder Hi, telematics chime was miles the that It to This which we months, in this to driven, yes. XX:XX into a winter frequency. in a every Matt end of typically trend see a in wanted and in and frequency that's in alluding is December the going

Elyse Greenspan

new can Carvana relationship Thanks. you you beyond? just any that my question Okay. writings XX:XX even from in you the more second the we of prepared That's And give then be should would a that with remarks, about terms just relationship, guys, mentioned growth on expected you helpful. in percentage think thought your from that throughout XXXX QX, premium and there material the Alex, relationship there and detail of how was

Alex Timm

we're seeing lots a of that thank our early seeing Carvana, Yeah, of for the And the that attach Carvana more continue you want flow really currently you rate drive on coming to that will well to channel. XX:XX So, we're on footprint, through Version question. stands. we are plans the growth days as our exciting still It's have embedded material writings state – new as scale through that X comment of the both into continue portion we Dan, with expectations? to what today through to than XX:XX product And customers in do off channel. be the

Dan Rosenthal

I to thing think an Alex, can that only morning. a lot partnerships. XX:XX the it talk It And I overused about be is, Elyse, of add think I'd word. good people

open focus simply we're We've excited laser things think quickly really the in share; a And of the driving to with what's agreed our teams the about both This product. special have the cultures. XX:XX really investment Carvana that companies. it. but the together. their six since I we unique embedded like-minded seen of cited very come we're one for come, on that’s is between development we how faster customer Root about We've the partnership and most really, in partnership. tuned is Stay put, seen to very and months collaboration

Elyse Greenspan

you. Thank Okay. XX:XX

Operator

Thank you. XX:XX

question Josh from Our Cantor Siegler pf Fitzgerald. comes next

Your line open. is

Josh Siegler

dive still this year-over-year quarter? Yes. taking you which to thanks your grew my policies spend into and gain for ad XX:XX I wanted reduction in questions. the force, What Hi, despite users helps XQ.

Alex Timm

XX:XX Yeah.

a that's on think Dan good I question policies for enforcing growth.

Dan Rosenthal

Yes. XX:XX

as XX:XX retention the than year. the in about we growth declines That that of continuing in in we to quarter seen of forward pleased the look, think, particularly the some at earlier last used language fourth we in the had said, year. I invested the well better for first the of marketing with anticipated, were year-over-year the levels performance quarter, we half are in the we hangover guide as with we as that significant go

and faster. on of XXXX fourth XXXX acquisition And underwriting, of we're focused Carvana. that, significant you on did At the pricing start fourth quarter efficient the to what in more up for period results and as differentiated half line. in quarter and granular really first business, the starts focused customer show same a on to the of have to And lap the on in focus want move we the foundation the time, the really leveraging laser know, reflected in bottom was our with that place we the channels. of us. on remain this actions and focused having us really the really a And technology You that underwriting for we results as environment see growth drive that in XX:XX success middle going about to frankly pricing our we've we're from that you're talked that it’s the in took to we

less Alex we're about it's building and earlier, more as growth So, towards what said the that we're that's That's path journey month it's to excited. this profitability. on. on And about

Josh Siegler

of part XQ to thought, a on expected And impact helpful. a of XX:XX for full-year? that having along Great. you material also new XXXX your Carvana the for becoming with do XXXX, loss in starting positive line That's ratio following writings start

Alex Timm

days, signs. you seeing to date. seeing through do Matt, give about talk XX:XX some we Bonakdarpour positive channel can very I to It's still what that detail? early think are want but Matt we're

Matt Bonakdarpour

you new signs indicators frequency data the for will and the customer days feel and to early that fact when underscore XX:XX just fact, compare new but channel, signs, control ratio. and are the want seeing, a from very start characteristics do are losses important we loss early but that still I It's anytime very the are it's that of retention developing, seeing that encouraging. Yes. early we're and mix encouraging we channel, note XX:XX impact a not from that to also the business but you

Josh Siegler

very XX:XX Great. you much. Thank

Operator

XX:XX you. Thank

Carletti question Our Matt next of from comes JMP.

Your line is open.

Matt Carletti

we've you the about that think seen out to comments about Taking reasons believe you the loss and of, loss know QX, or the of see XXXX, today you letter to and versus your, QX morning. could the the pricing kind action, Good trends to Thanks. that frequency we year? in higher also the commentary of react do seen what knowing with I over being but heard think seeing your worst on the improvement loss do kind more take quickly, XX:XX and a do you've are of technology able say, safe course mean, given ratio to them, improvement ratio? what your the it's stability in that before we peaked I comments you

Alex Timm

XX:XX we've have a I a our as pretty and an of out pricing well teams improved both throughout the of at done getting amazing done of our the really markets. work ton as lot underwriting, improvements underwriting function job pushing drastically, all think

And pass talk that. a we to how more amount really proud XX:XX the historic control put work of work it in last they've little a six the team of hard and And over the about months we're see I'm Frank we've the so, for really future. to bit going really to who over there. done could

Frank Palmer

Yes. XX:XX

about do then question there's ratio trends loss I the up are high. into, We talk and loss want loss future. to still trend. your kind that break fun there's think of it's to So, trend

are trends. that still lot remain prices to car loss up; still of year. of those throughout macroeconomic Now, inflation the rest And still at expect ratio As this high week then we relatively high. of rest – trends there's used we and to look have the throughout a the XX:XX this factors, microeconomic impacts is up; and loss

Now on to trends we we as take very we actions managed these early loss come up. think that to see started

And ratio with that trend. our so, at down bring our pace help loss should actions rate or that least keep underwriting actions,

peak so, microeconomic seen trends, And wide think we've loss not have ratio while do industry loss the that the we we seen a loss probably trends, might peak trend in in

Matt Carletti

taking some pertinent That's might And of other, level high then I that XX:XX could, kind given, the now? one of I'm kind years like of very two around, Root a makeup asking specifically, of kind place. of and from And look one company find does Great. to if to question, then the changes three but profitability. helpful. What think I kind distribution people of path

Alex Timm

spear. to this think tip that have going shift. at at in product is to Alex. going and experiences, right to one that really the really experiences. for billion all gigantic it future, deliver developed think even broader you in is, insurance to we're opportunity. continue the leverage can $XXX still our XXX consumer we're that of core because belief going we like And a This market I the And have you see expand technology, click over – here. move where our technology, ability we the see, we we materially data And quickly opportunity our at What line. is and is We still underlying now actually economics. we XX:XX we not Thanks we're that underlying large where And better a improve lost laser time, we and be very that look We develop unit embedded focused a you're so, question. XX:XX platform we differentiated the when that to think auto to and things believe builds know, same and can both do embedded there at distribution Carvana in to that think think

channel. decisively We And We going should that's you believe also we technology expect do. think to with we consistently company's build inflation can really last experiences still back we're to under then have the to our profitability, year, aggressively over to which XX:XX now we but believe that in what some through better that, and we record, track we've that And loss get improved our material improvements control. saw years. the direct continue consumer quickly and acted ratio

Matt Carletti

the XX:XX answers. for it. Great. Appreciate Thanks

Alex Timm

XX:XX Thanks.

Operator

you. Thank XX:XX

next Michael Stanley. question with Our Morgan comes from Phillips

Your line open. is

Unidentified Analyst

XX:XX Hi.

You [indiscernible] for actually Mike. have on

touched somewhat question, on last quick guys made. Just that you the point

know, do DTC, So, channels, I distribution IA you as or but to as prioritized and the on the about touched last channel I’m you well? including if how just think your and has on into balance know, somewhat various you various alluded distribution trying think you to rank have breaking DTC, you how you focus and you partnership, channels to IA channels, you out, figure started do

Alex Timm

channel, that throughout really are and embedded still XX:XX we our product, multiple the the policies channel the XX:XX seen have distribution independent we our which over today. with agency channels, with We we live investments what has last including have do have is really surpassed observed and of any of six However, through what and months success the getting expectations. partnership Carvana

actually future the are so think services we there also is, moment need. very focus those it's that customers is, differentiated is to we channel. uniquely channel can our growth have the customers moat immediate we around there prudent resources the continue what to drive our a where in And in that XX:XX growth they access that can believe we, really focused because that to business to And create actually on it

as And talk we progress, too. think ways of that now. of that course, so, lots to Of to because right focused we we there's where XX:XX really we're believe that's other customers

we over incubate time will be Carvana. over so, but a to channels, continuing distribution other right the now period focus time longer is And of

Unidentified Analyst

increases. rate XX:XX just quick and on question Great. And Thanks. your a

a been significant rate increases. you've taking So,

a I know [indiscernible] know weren't to lot industry rates trying what just pressures, you people when average, telematic since Is the your new that XX% seems in taking other is XXXX, and like letter your shareholder think out, been there average the that would filed the of to of you have difference the taken inflationary alluded few of on months? pricing, that the you above enter environment beginning well? have throughout rely to for a difference what somewhat it guys just it just you to but parse-out figure so past seem I’m for obviously a function as which other data from you I a I'm in adjusting in insurers above inflationary is from, is it a states, trying function is guys you're previously or or industry telematics like of? pricing

Frank Palmer

Sure. Frank. XX:XX I is can This take that. Great question.

I over think that increase inflationary that is of in a lot rate right. action pressure, the industry average

of quarter in we of our driving So, or which technology, XX:XX increases had to believe information our accelerate then severity around at – the at segment one driving the last year, quarter good – loss those we using one, X, it the to some our loss data, on more customer away, well industry industry how our both level level that quarter some Root a as quarter cost basis. frequency that granular are increasing, as both UBI, started years quarter giving results, us we very able and X the in increases, earlier, was with greatest of we identify and the and last loss XX and look patterns X, segmented that cost cost the the maybe loss quarter saw but X. Now,

rate many the but that I competitors. could would X, act faster you expected and competitors. earlier, because think if other increases we getting rate us And actions would cost the start increases, we were recognized industry we quarter average and XX:XX than industry, are So, in underwriting than back loss and our X, recognize go impacting so, think that mostly those to we market to that just loss quarter have trend able we than increases sooner have of higher the industry

Unidentified Analyst

you. Thank it. Great. Appreciate XX:XX

Operator

Thank you. XX:XX

Jefferies. next of from Yaron comes Our question Kinar

Your open. line is

Unidentified Analyst

good [Andrew] Yaron. XX:XX [ph] for on is Hey, This morning.

us the a rates and could rate you on growth PIF quarter, impact bit new hoping stronger this still retained given about rating So, filing think from time, same help actions? sounds it increases. but like the retention the PIF just here, at were on Was for

Matt Bonakdarpour

This our sure. looking we to Bonakdarpour. QX better Yeah, bit into retention forward Like a XX:XX is you incorporated We’ve was that than said, Matt going forecast. expected.

We XX:XX as experience, they to capabilities close of So, top have terms. of that our get rate gone into and disruption pricing preserving and improved out we’ve underwriting mind their as rate customer is they and pay mitigating the our to way renew new it. attention means future business

of is the priority customer the benefit for For a us.

while we going in into rate same to quarters past, and it increases impact So, impact won't way do to has expect the the come our it forecast. letter that's we our it the in the incorporated think retention, forward shareholder in forward-looking

Unidentified Analyst

Great. you. but trends loss Thank sounds year, rest still the like high your be And the so it XX:XX throughout trend loss then, ratio of to expected has peaked.

or another current Just given increases? rate need level round of the inflationary environment, does another Root still

Frank Palmer

we're the kind first are increase. rate increases. that XX:XX that middle trends monitoring and certainly is I'd loss And how then in This of of say those round still Frank. we see, Yes. of we'll

month, January of to So, all take and one you the February. have don't rate in

and next continuing continue we'll of couple and And take for then and so, months, take if that rate positioned and we're paused be further expect to. the do see in the rest we're we to of able need to we're to to this rate to year

Unidentified Analyst

XX:XX Great. Thank you.

Operator

you. Thank XX:XX

Our Mark Truist. question Hughes from comes of next

is open. line Your

Mark Hughes

Good XX:XX Yeah. Thank you. morning.

it level where in sales of should marketing you the and spend from level go QX? had Your

Dan Rosenthal

is Mark. This Good XX:XX morning, Dan.

are we quarters continue a cut this we call and building talked that's fourth XX:XX QX year. where marketing around last through so are the as the direct and at continued. sales products last strategy, of the third We and of out and to back first embedded half back obviously We on focused to with summer, did starting the on trajectory continuing Carvana, do year look really marketing and about insurance reset our on we've that marketing differentiated sales the

continuing test, that are we we information earlier, Now, we segmentation we have. as Matt leverage customer about that talked the to the data have,

were very Brands and otherwise. bringing leader the our described strategically. who Green He's look continuing to been thrilled that XX:XX Silver, team. Frank strategies and marketing. and differentiated prior new in the shareholder to that are Gamble, are at the greater that take where dating environment to deal necessarily Matt on and a from a articulated that's Procter strong place in strategy we Chief the And we that last a insurance prudent We then lower what & to back can put and some we great Marketing as Officer, to auto and strategies four going direct develops focus have Frank other letter Clorox smart seeing forward lot of experience in he a the a and worst quarters again, now B.C. in we up underwriting shown as our and the to to thing addition is him Dot and Matt have We XX:XX strategies over return right results inflation place in have to do with result We as hire in we said, decades, our in that that direct is then talked several and those about marketing. rate the pricing marketing. That think

Mark Hughes

months think is X level This when rate $XX Understood. about a maybe of XXXX? first million we reasonable XX:XX run that kind the

Dan Rosenthal

think rate XX:XX If spend of million I for to half the our until actually $XX able down in increases get the a where the on high. place, higher reduced Again, is up. I environment, and will million matter, in year, over are X-month we marketing first saying you're direct this that's we than think customer period $XX the that end we it segments states focus and and

Mark Hughes

of hand, could your of on your, resources, burn, I position? And just the talk you but details cash of about lot XX:XX then, give sense general the this, cash generally a current think you kind a the on

Dan Rosenthal

XX:XX Yeah. one. again, I'll that take Thanks Mark.

that are sets company we think really prioritization we've I stronger expense at differentiated strongly then and pricing a strategy been and actions critical We we and what balance than up I a from priorities to stronger sound move we unit and and around our around the from sales and then a XX:XX just The to and display the that's us building taken execute fundamentally strategy. sight are the capital really we a really because as reflected foundation, one-play So of described. focus, marketing running line and just articulated with a that today the the past. out have within get us standpoint, Alex fixed play on acquisition focus it actions profitable XX:XX business. underwriting have there. is the the forward call And to strategic economics priorities to in in customer that key sheet the

January thing think closed would facility, we BlackRock really where from a have sends very debt message X-year, I really, the is the as a us good we cash back that BlackRock occurred cash I really million support powerful facility the add a which year-end in closed a by other sat position that support $XXX with in us. January. to been from where BlackRock as at well about, So, exciting and million investment facility Holdco XX:XX for only strengthened felt we position, with the has $XXX

Mark Hughes

XX:XX Thank you.

Operator

XX:XX Thank you.

of next ISI. Evercore comes Our David question Motemaden from

Your line is open.

David Motemaden

just question you. had outlook. just the Thank on XX:XX I a

So, that the do in just quarter you year. some XX% to year? operating question if you did why some loss there's earlier think of to come a first down in be said to you deteriorate in just losses even And items a the the you this response you improvement losses, of Dan, think spend around have further, first operating did bit to in quarter, from so, million expect might I million million half you the are quarter, that about guys earlier, marketing guys XX implies a expenses took losses $XXX this quarter, this a that the operating a going half, $XXX coming XX just million that of of

Dan Rosenthal

XX:XX I caution you, I David. would think,

Nice morning. quarter speak that caution good all, well I'd of rate the in the run at First impact to earlier. fourth from seasonality with again. as Frank the the business, continued as given you looking the losses, of you inflationary described

quite marketing then and into extrapolate that the to to and performance host that. So, seasonally typically with expect to is look that one was quarter levels you were factors we it XX:XX they the a the be low and think following of for quarter, marketing as sales So, just if quarter fourth that our look year, begin at of year our direct I consistent in lowest continue. low, at or with, would

we more us, than mentioned running we today as the have I earlier, are efficiently think we past. I in for

frankly XX% core we executing think about what in the really plan. focused going results on us result are a to have are see you the quarter strategic marketplace. strategy we in on or our said, in. XX:XX and on to going in less We about that's we faster than our we're in fourth what one trying focus plan We that and focus the about as that that you, one that announced seasonality priorities improvement it's in quarter, quarter Matt and others just operating we from seeing if you're fundamentally other, moving believe loss think and I out smooth and forward, the the the have it's might

technology You're focus continue to and we're showing continuing that's and our to of team talk to seeing the that to all forward to a going our do granular you results and impact our of up look and journey. the that in on focus, as

David Motemaden

Got it. XX:XX

Okay.

ratio, fair. metrics your bit seasonality some around a what some be looking, the So, expand bit the I, a of how but must favorable business guys on little XQ, ratio rate how and relationship, mentioned I Carvana talked about metrics some just Alex, share conversion those XQ what is could a of just has retention that sense the focused just of through on you loss are? the you guess in I Carvana, Carvana for then your I'm for, versus to little that? peers about that's in that's the seasonality to looking you just And as if And positive think different. around attach guess specifically get you relationship, letter,

Dan Rosenthal

Dan. Yeah, is XX:XX this

forward customer look Again, it's and from we still in we early support partners we leading faster better than anticipated experience, the we signs from do You're We're where it's right. early the indicators really, we'll about that it. ahead. economics well really unit the to channel than We're but refine, the that about grow the XX:XX states, see the it and data anticipated, better is excited it's continuing channel. about more more and develop talked the add think to product, The going. sharing coming quarters I developing testing, all and better and talked and Carvana a earlier. now in from learn working really learning as about We see days. Matt And

David Motemaden

you. Thank XX:XX

Operator

XX:XX Thank you.

from Our UBS. Brian Meredith, comes question next

line Your open. is

Brian Meredith

A Yes, here. XX:XX thanks. couple

that there something assuming severity makes the you that you're perspective, quarter your curious, you reserving just it. ratio is unique have severity assume that First, that double-digit personal And given right quarter. most and mentioned in Dan other I about the I little in competition the in that had think Is what had was, and I that the lower your now, Root auto well? loss at X% of number from a a most into guess of X% than was as severity competition? carriers built surprised for the pricing

Frank Palmer

severity. about loss question, look at not Frank. the just is overall I'd when to pricing we say and your This pricing Hi. trends, and you XX:XX severity the frequency that think right

than basis, X% So, I an trends. that higher on might overall X% do you year-over-year overall. loss than quarter-over-quarter, We're see or probably think higher annual expecting

Alex Timm

with are XX:XX particularly our And say will I functionality, all of claims in-house. too our systems claims

not can things time data totally whether to total actually we've in actually on logic unique decide price, so, change sure shift actually that day-by-day since that honestly vehicle actually can that do were a believe we and threshold fewer have we which of beginning so, a we because we into lot XX:XX on increase, repair repairs. allows we see that very a the easily when signs a seen move our effectively like or car XX:XX very to and mitigate by more severity and been vehicles is, that make we're we vehicle model so, that in we've quickly And us used And making industry. to or as science we basis. claims to able basically real increase, able the And a handling,

Brian Meredith

the as burn, written of in first little cash quickly I all does cash near XX:XX going term just the year, at given as big at book Great. the premium Thanks. that cash burn, back on improves? to And you're curious, second the of then just burn all, a see half the the term, kind obviously improve in kind question, look bit maybe increase of in to drop near ultimately

Alex Timm

business off increase new that drop cash in XX:XX burn. anticipate to don't We materially

causes first business typically ratio will In a strain loss new fact, think we a a the occur burn. higher opposite because of with cash bit term on

roughly we've that and in the last loss half operating so, cut so, that's And six or going our months to we think in continue.

Brian Meredith

one is ask I one. Carvana curious, XX:XX Great. telematics a If last could just I'm The quick relationship, that product? just

Alex Timm

out Root. product ship the we've products what that's hands consumers We the quickly prioritized quickly. frequently. is, like first product to and very we've Carvana done in moving to market getting So, very, abilities a XX:XX we really into at the very develop our And version way into of engineering really leverage

Currently, improvements in not are we week that the product making to are every we telematics using XX:XX so, flow. And flow. Carvana

really plans well, technology have opportunities do of possession, they to particularly to. lot which we us reconditioning their while in have given that interesting a And as the they're there's get we vehicle, think allows the really vehicle However, that closer in here, centers. to

iterating as so, and we new inform is And those be our up. roadmap on certainly product and products we guys that roll you will quickly

Brian Meredith

it. XX:XX Thanks. Appreciate

Operator

XX:XX Thank you.

Tracy Barclays. next Our of question comes from Benguigui

Your open. line is

Tracy Benguigui

premium. actions I'm average rate increase your fourth to quarter and XX:XX Good trying the morning. in your rectify eight

quarter third versus premiums So, policy I quarter. X% per in the your only fourth see increased the

thing, it's it expect some of pricing I you’ve should more take in average to lag actions recognize a taken premium? will time So, just time your the

Frank Palmer

certainly premium longer I shifts and a earned going to that new earning, good slowing also and this will had that but others. to some the XX:XX of with also is actions was take down, marketing very question. to renewal mix Frank. yes, our we from say Thanks Yeah, one, say I'd

you So, towards shifts. just XX:XX earned renewal just So, are going shift and mix filed ratio get better from I is increase think and at premium, you're that also. a because the they could between looking to but premium, a average lower loss new to average mix hard premium, rate a if reconcile

Tracy Benguigui

request then historic you’re adjustments trying Nevada, historic better loss also actually and think adjustment in do was I XX:XX fix proposing load. other where will to any Okay. you're by expense XX.X% your to trend And we respond should a that and you on state an to rate filings? just other staying How expect actions, and a struck and reflect data

Alex Timm

XX:XX is that's Alex question. a good This and

regulators with filing we process. state working are always with regulators continuing and are we one, have, our We to work through

I this of not and realized large rate really now that real is we it's along that trend sort industry note that are alone in loss has, requesting that is to come important think the increases.

that need And months our changes track us very and other data we impact helped increases. show we so, able the and actually I market gotten receive approval the We've why think think increases support that I six to actuarial in that for to The able those And almost XX:XX of shows to record has filing and XX:XX of do that that's the and we going really to rate all analyses that considerably. because rate have continue. and many we're need we important the increases. large been automated us now that's thing last have this think over rate is to we

able which in And can belief we've all show get they are, increases are past. actuarial shown we'll we we to as world the so in the be that rates, of rate justified the have these that the long as

Tracy Benguigui

just severity XX:XX frequency and quarter. point and X X said Okay. of points compare to I of could if point If that severity. to in, X you've I points X the you And quarter, something mentioned else to sneak also in frequency last fourth

it seems frequency better. like So, not flat is

And other comments frequency that that? being seems talk inflation you is and also your So, a getting better, impact better, perspective, is is really seasonality severity still driving given that about when should results. like what

Matt Bonakdarpour

flat XX:XX the was into about in specifically Yeah. winter QX at basically have frequency of December, mileage XX:XX quarter-over-quarter. less overall. trends drove the decline and Severity frequency That's stayed or natural the end decrease the end of and into shareholder letter [indiscernible] seasonal talking months. The variation very really in in the more quarter the more what going the

to inflationary the with other We that haven't to in rate the forward that allows top each on be confident pressures date. us quarter-over-quarter, of going seen and we're stack filings

Tracy Benguigui

Okay. XX:XX

by the So Is X at of versus the quarter. end right? versus last just flat frequency, quarter comment points quarter in of more quarter, that but X it was points X still that points and for points variability the was of X severity more

Alex Timm

Yes, that's XX:XX correct. I think

when we variability frequency. Particularly some be look see noisy. it can to going year-over-year You're at severity, and trends and on severity

that yes, to and that's correct, we would So, frequency. say then are I seeing seasonal benefits

Tracy Benguigui

XX:XX Thank you.

Operator

Thank you. XX:XX

of from next Ryan comes Autonomous Tunis question Our Research.

line open. Your is

Ryan Tunis

XX:XX Thanks, good morning.

As tell, position will the do cash what be guys best you think can of you your at end XXXX?

Dan Rosenthal

a you that the strategy the foundation get a gives we're of last quarters, years is our on is facility, of about on. not We're to out strategic in. that XX:XX top priorities which really, benefit environment couple of Thanks, the our I over in, the to position come. we especially we've things. continue focused XX:XX I'm and It appreciate to facility out, cash excited what of the the into us stride in position capital specific we XX:XX from support hit excited about laid given certainly fact the that, five-year see, question. from that priorities BlackRock and On the protect have capital execute profitable we're that couple operating well part we the have And improvement significant January a And more as the mentioned strategic that, unit economics in of really we're earlier, that that we're help being of going etcetera. closed execute in as focused $XXX cover first as line to to for year. to will fixed from for XX% the an operating that and a earlier sales that important. half pleased reductions extend on loss I is prioritization the marketing million to the us expenses allows And talked standpoint. perspective. we're on a we're sight really see forecasting the the to Alex standpoint, year-over-year said we're expense, XX:XX that about And Ryan. I

Ryan Tunis

were have XX:XX G&A. is run I would of about if – different a of something can have marketing guys you complicated? and model, X And trying [ph] shown [ph] Alex. could mean, thinking or lot won over then Got seemingly, to more [pipe well? policies a monetize lot if do you some still all you pivoting you've a Is or perhaps ton in as or to less a guards follow-up it it. over for And months you point the have of acumen, sold with lifetime, MVP you your any have actually [tech-like] the away, next lot stock] actually so, model of your thought environment do guys is a consider you there a the insurance it that it you

Alex Timm

attractive customer XX:XX provide that us our We states making customer we there know. sufficiently important. this, that. that and that that technology, Now, we're that what can think to Carvana, now. and and very years XX:XX important looking and us. as couple going seen before said in that we've sure program When several the it interested had experience are We level definitely I partners is have example, for in we place too don't to enterprise when we're and business it's those sheet that potential in that's that is they We will differentiated said and are when And now. partners considering extremely balance is to comes an of potentially our XX:XX at seen we're support are really with partners, technology say what of is maintain we've to a adoption experience we've be right leaning that is our leverage other can building for they partner that there so

already broker the real instance business that and business We with explored exploring we show something two partner major to we're in changes, models core and is various asset to order honestly technology carriers have we here definitely to insurance different to the have And have that we have model for so, date. business. progress those capitalize on that built and

So, we at look that. certainly

Dan Rosenthal

posted XX:XX imagine taken XX:XX and in that you of unique think at about environment. significant by that's this industry look the for of And results being this the And of Dan. our our that I the to ahead. at Ryan, has on can and themselves, fourth we we is quarter. add only things front that and journey because very quarters is, ability thing And point the going of the in only opportunities some this are speak always results that some the for during the going The gotten strategic to leverage We're to develop that we're note I would in reinforced we again, choices communication us. have excited technology the have

Ryan Tunis

XX:XX Thanks.

Operator

Thank today's you. time. I'm Thank and participating. all does XX:XX showing questions Ladies at further this no gentlemen, this conclude conference. you

disconnect. a Have all may day. You great

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