COVER PAGE
COVER PAGE - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Feb. 17, 2022 | Jun. 30, 2021 | |
Document Information [Line Items] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2021 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Transition Report | false | ||
Entity File Number | 001-39658 | ||
Entity Registrant Name | ROOT, INC. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 84-2717903 | ||
Entity Address, Address Line One | 80 E. Rich Street | ||
Entity Address, Address Line Two | Suite 500 | ||
Entity Address, City or Town | Columbus | ||
Entity Address, State or Province | OH | ||
Entity Address, Postal Zip Code | 43215 | ||
City Area Code | 866 | ||
Local Phone Number | 980-9431 | ||
Title of 12(b) Security | Class A common stock,$0.0001 par value per share | ||
Trading Symbol | ROOT | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Entity Public Float | $ 1,204.8 | ||
Documents Incorporated by Reference | DOCUMENTS INCORPORATED BY REFERENCE Part III of this report incorporates by reference specific portions of the Registrant’s Notice of Annual Meeting and Proxy Statement relating to the Annual Meeting of Stockholders to be held on or about June 7, 2022. | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2021 | ||
Document Fiscal Period Focus | FY | ||
Entity Central Index Key | 0001788882 | ||
Class A Common Stock | |||
Document Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 154.5 | ||
Class B Common Stock | |||
Document Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 99.5 |
AUDIT INFORMATION
AUDIT INFORMATION | 12 Months Ended |
Dec. 31, 2021 | |
Audit Information [Abstract] | |
Auditor Firm ID | 34 |
Auditor Name | DELOITTE & TOUCHE LLP |
Auditor Location | Columbus, Ohio |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Investments: | ||
Fixed maturities available-for-sale, at fair value (amortized cost: $129.5 and $215.4 at December 31, 2021 and December 31, 2020, respectively) | $ 129,900,000 | $ 221,000,000 |
Short-term investments (amortized cost: zero and $3.0 at December 31, 2021 and December 31, 2020, respectively) | 0 | 3,000,000 |
Other investments | 4,700,000 | 500,000 |
Total investments | 134,600,000 | 224,500,000 |
Cash and cash equivalents | 706,000,000 | 1,112,800,000 |
Restricted cash | 1,000,000 | 1,000,000 |
Premiums receivable, net of allowance of $5.4 and $3.5 at December 31, 2021 and December 31, 2020, respectively | 148,100,000 | 130,100,000 |
Reinsurance recoverable, net of allowance of $0.2 and zero at December 31, 2021 and December 31, 2020, respectively | 155,000,000 | 124,800,000 |
Prepaid reinsurance premiums | 100,800,000 | 112,800,000 |
Other assets | 73,800,000 | 56,300,000 |
Total assets | 1,319,300,000 | 1,762,300,000 |
Liabilities: | ||
Loss and loss adjustment expense reserves | 320,200,000 | 237,200,000 |
Unearned premiums | 180,100,000 | 157,100,000 |
Long-term debt and warrants | 0 | 188,200,000 |
Reinsurance premiums payable | 101,600,000 | 89,100,000 |
Accounts payable and accrued expenses | 29,100,000 | 48,000,000 |
Other liabilities | 39,900,000 | 10,300,000 |
Total liabilities | 670,900,000 | 729,900,000 |
Commitments and Contingencies (Note 12) | ||
Redeemable convertible preferred stock, $0.0001 par value, 14.1 and zero shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively (liquidation preference of $126.5 and zero, respectively) (Note 10) | 112,000,000 | 0 |
Stockholders’ equity: | ||
Treasury stock, at cost | 0 | (800,000) |
Additional paid-in capital | 1,806,100,000 | 1,775,600,000 |
Accumulated other comprehensive income | 400,000 | 5,600,000 |
Accumulated loss | (1,270,100,000) | (748,000,000) |
Total stockholders’ equity | 536,400,000 | 1,032,400,000 |
Total liabilities, redeemable convertible preferred stock and stockholders’ equity | 1,319,300,000 | 1,762,300,000 |
Class A Common Stock | ||
Stockholders’ equity: | ||
Common stock | 0 | 0 |
Class B Common Stock | ||
Stockholders’ equity: | ||
Common stock | $ 0 | $ 0 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Amortized cost, fixed maturities | $ 129,500,000 | $ 215,400,000 |
Amortized cost, short term investments | 0 | 3,000,000 |
Allowance for premiums receivable | 5,400,000 | 3,500,000 |
Allowance for credit loss | $ 200,000 | $ 0 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock issued (in shares) | 14,100,000 | 0 |
Preferred stock, outstanding (in shares) | 14,100,000 | 0 |
Preferred stock, liquidation preference | $ 126,500,000 | $ 0 |
Class A Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares issued (in shares) | 142,900,000 | 59,400,000 |
Common stock, shares outstanding (in shares) | 142,900,000 | 59,400,000 |
Class B Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares issued (in shares) | 109,900,000 | 192,200,000 |
Common stock, shares outstanding (in shares) | 109,900,000 | 192,200,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Revenues: | |||
Net premiums earned | $ 310.3 | $ 322.5 | $ 275.3 |
Net investment income | 5 | 5.4 | 5.2 |
Net realized gains on investments | 2.4 | 0.3 | 0 |
Fee income | 20.9 | 17.4 | 9.7 |
Other income | 6.8 | 1.2 | 0 |
Total revenues | 345.4 | 346.8 | 290.2 |
Operating expenses: | |||
Loss and loss adjustment expenses | 392.3 | 362.8 | 321.4 |
Sales and marketing | 270.2 | 139.7 | 109.6 |
Other insurance expense (benefit) | 5 | (1.8) | 52.3 |
Technology and development | 65.5 | 52.9 | 24 |
General and administrative | 97.6 | 78.5 | 43 |
Total operating expenses | 830.6 | 632.1 | 550.3 |
Operating loss | (485.2) | (285.3) | (260.1) |
Interest expense | (20) | (77.7) | (22.3) |
Loss on early extinguishment of debt | (15.9) | 0 | 0 |
Loss before income tax expense | (521.1) | (363) | (282.4) |
Income tax expense | 0 | 0 | 0 |
Net loss | (521.1) | (363) | (282.4) |
Other comprehensive (loss) income: | |||
Changes in net unrealized (losses) gains on investments | (5.2) | 5 | 0.6 |
Comprehensive loss | $ (526.3) | $ (358) | $ (281.8) |
Loss per common share, basic (in dollars per share) | $ (2.09) | $ (4.81) | $ (8.33) |
Loss per common share, diluted (in dollars per share) | $ (2.09) | $ (4.81) | $ (8.33) |
Weighted-average common shares outstanding, basic (in shares) | 249.2 | 75.5 | 33.9 |
Weighted-average common shares outstanding, diluted (in shares) | 249.2 | 75.5 | 33.9 |
CONSOLIDATED STATEMENTS OF REDE
CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) - USD ($) shares in Millions, $ in Millions | Total | Cumulative Effect, Period of Adoption, Adjustment | Cumulative Effect, Period of Adoption, Adjusted Balance | Series E Preferred Stock | Preferred Stock | Class A and Class B Common Stock | Class A and Class B Common StockCumulative Effect, Period of Adoption, Adjusted Balance | Class A and Class B Common StockClass A Common Stock | Class A and Class B Common StockClass A Common StockCumulative Effect, Period of Adoption, Adjusted Balance | Class A and Class B Common StockClass B Common Stock | Class A and Class B Common StockClass B Common StockCumulative Effect, Period of Adoption, Adjusted Balance | Treasury Stock | Treasury StockCumulative Effect, Period of Adoption, Adjusted Balance | Additional Paid-In Capital | Additional Paid-In CapitalCumulative Effect, Period of Adoption, Adjusted Balance | Accumulated Other Comprehensive Income | Accumulated Other Comprehensive IncomeCumulative Effect, Period of Adoption, Adjusted Balance | Accumulated Loss | Accumulated LossCumulative Effect, Period of Adoption, Adjustment | Accumulated LossCumulative Effect, Period of Adoption, Adjusted Balance |
Beginning balance (in shares) at Dec. 31, 2018 | 136.4 | |||||||||||||||||||
Beginning balance at Dec. 31, 2018 | $ 189.6 | |||||||||||||||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | ||||||||||||||||||||
Preferred stock—issued, net of issuance costs (in shares) | 21.2 | |||||||||||||||||||
Preferred stock—issued, net of issuance costs | $ 349.6 | |||||||||||||||||||
Preferred stock—SAFE conversion (in shares) | 1.3 | |||||||||||||||||||
Preferred stock—SAFE conversion | $ 21.2 | |||||||||||||||||||
Ending balance (in shares) at Dec. 31, 2019 | 158.9 | |||||||||||||||||||
Ending balance at Dec. 31, 2019 | $ 560.4 | |||||||||||||||||||
Beginning balance (in shares) at Dec. 31, 2018 | 0 | 41.5 | ||||||||||||||||||
Treasury stock, beginning balance (in shares) at Dec. 31, 2018 | 4.5 | |||||||||||||||||||
Beginning balance at Dec. 31, 2018 | (102.7) | $ 0 | $ (0.1) | $ 0 | $ 0 | $ (102.6) | ||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||||||
Net loss | (282.4) | (282.4) | ||||||||||||||||||
Changes in other comprehensive income | 0.6 | 0.6 | ||||||||||||||||||
Tender offer and subsequent conversion (Note 11) | 8.6 | 8.6 | ||||||||||||||||||
Common stock—option exercises and restricted stock units vesting, net of shares withheld for employee taxes (in shares) | 2.9 | |||||||||||||||||||
Common stock—option exercises and restricted stock units vesting, net of shares withheld for employee taxes | 1.9 | 1.9 | ||||||||||||||||||
Reclassification of early-exercised stock option to liabilities | (1.4) | (1.4) | ||||||||||||||||||
Common stock—share-based compensation expense | 1.4 | 1.4 | ||||||||||||||||||
Treasury stock, ending balance (in shares) at Dec. 31, 2019 | 4.5 | |||||||||||||||||||
Ending balance (in shares) at Dec. 31, 2019 | 0 | 44.4 | ||||||||||||||||||
Ending balance at Dec. 31, 2019 | $ (374) | 0 | $ (0.1) | 10.5 | 0.6 | (385) | ||||||||||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | ||||||||||||||||||||
Change in Accounting Principle, Type [Extensible Enumeration] | Accounting Standards Update 2016-13 | |||||||||||||||||||
Tender offer and subsequent conversion (Note 11) (in shares) | 2.9 | |||||||||||||||||||
Conversion of redeemable convertible preferred stock to common stock from IPO (in shares) | 161.8 | |||||||||||||||||||
Conversion of redeemable convertible preferred stock to common stock from IPO | $ 560.4 | |||||||||||||||||||
Ending balance (in shares) at Dec. 31, 2020 | 0 | 0 | ||||||||||||||||||
Ending balance at Dec. 31, 2020 | $ 0 | $ 0 | ||||||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||||||
Net loss | (363) | (363) | ||||||||||||||||||
Changes in other comprehensive income | 5 | 5 | ||||||||||||||||||
Tender offer and subsequent conversion (in shares) | (2.9) | |||||||||||||||||||
Tender offer and subsequent conversion (Note 11) | 25.1 | 25.1 | ||||||||||||||||||
Conversion of redeemable convertible preferred stock to common stock from IPO (in shares) | 161.8 | |||||||||||||||||||
Conversion of redeemable convertible preferred stock to common stock from IPO | 560.4 | 560.4 | ||||||||||||||||||
Common stock—issuance of shares from IPO and concurrent private placement, net of issuance costs (in shares) | 42.7 | |||||||||||||||||||
Common stock—issuance of shares from IPO and concurrent private placement, net of issuance costs | 1,098.1 | 1,098.1 | ||||||||||||||||||
Conversion of Class B to Class A common stock (in shares) | 16.7 | (16.7) | ||||||||||||||||||
Warrants exercise (in shares) | 3.3 | |||||||||||||||||||
Warrants exercise | $ 75.2 | 75.2 | ||||||||||||||||||
Common stock—option exercises and restricted stock units vesting, net of shares withheld for employee taxes (in shares) | 2.8 | 2.8 | ||||||||||||||||||
Common stock—option exercises and restricted stock units vesting, net of shares withheld for employee taxes | $ 1.9 | 1.9 | ||||||||||||||||||
Reclassification of early-exercised stock option to liabilities (in shares) | (0.1) | |||||||||||||||||||
Reclassification of early-exercised stock option to liabilities | 0.2 | 0.2 | ||||||||||||||||||
Common stock—share-based compensation expense | 3.7 | 3.7 | ||||||||||||||||||
Settlement of related party loan (in shares) | (0.4) | 0.1 | ||||||||||||||||||
Settlement of related party loan | (0.2) | $ (0.7) | 0.5 | |||||||||||||||||
Treasury stock, ending balance (in shares) at Dec. 31, 2020 | 4.6 | 4.6 | ||||||||||||||||||
Ending balance (in shares) at Dec. 31, 2020 | 59.4 | 59.4 | 192.2 | 192.2 | ||||||||||||||||
Ending balance at Dec. 31, 2020 | 1,032.4 | $ (1) | $ 1,031.4 | 0 | $ 0 | $ (0.8) | $ (0.8) | 1,775.6 | $ 1,775.6 | 5.6 | $ 5.6 | (748) | $ (1) | $ (749) | ||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | ||||||||||||||||||||
Preferred stock—issued, net of issuance costs (in shares) | 14.1 | |||||||||||||||||||
Preferred stock—issued, net of issuance costs | $ 126.5 | |||||||||||||||||||
Preferred stock and related warrants issuance costs | $ (14.5) | |||||||||||||||||||
Ending balance (in shares) at Dec. 31, 2021 | 14.1 | |||||||||||||||||||
Ending balance at Dec. 31, 2021 | $ 112 | |||||||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||||||
Net loss | (521.1) | (521.1) | ||||||||||||||||||
Changes in other comprehensive income | $ (5.2) | (5.2) | ||||||||||||||||||
Conversion of Class B to Class A common stock (in shares) | 81.5 | (81.5) | ||||||||||||||||||
Common stock—option exercises and restricted stock units vesting, net of shares withheld for employee taxes (in shares) | 2.8 | 2.4 | 0.5 | |||||||||||||||||
Common stock—option exercises and restricted stock units vesting, net of shares withheld for employee taxes | $ 4.4 | 4.4 | ||||||||||||||||||
Reclassification of early-exercised stock option to liabilities (in shares) | (0.4) | (1.3) | ||||||||||||||||||
Reclassification of early-exercised stock option to liabilities | (0.2) | (0.2) | ||||||||||||||||||
Common stock—share-based compensation expense | 19.3 | 19.3 | ||||||||||||||||||
Warrant compensation expense | 8.8 | 8.8 | ||||||||||||||||||
Treasury Stock retired (in shares) | (4.6) | |||||||||||||||||||
Retirement of treasury shares | 0 | $ 0.8 | (0.8) | |||||||||||||||||
Preferred stock and related warrants issuance costs | (1) | (1) | ||||||||||||||||||
Treasury stock, ending balance (in shares) at Dec. 31, 2021 | 0 | |||||||||||||||||||
Ending balance (in shares) at Dec. 31, 2021 | 142.9 | 109.9 | ||||||||||||||||||
Ending balance at Dec. 31, 2021 | $ 536.4 | $ 0 | $ 0 | $ 1,806.1 | $ 0.4 | $ (1,270.1) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Cash flows from operating activities: | |||
Net loss | $ (521.1) | $ (363) | $ (282.4) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Share-based compensation | 19.3 | 3.7 | 1.4 |
Warrant compensation expense | 8.8 | 0 | 0 |
Tender offer | 0 | 25.1 | 8.6 |
Depreciation and amortization | 16.6 | 15.6 | 4.9 |
Bad debt expense | 20.9 | 23.6 | 9 |
Loss on early extinguishment of debt | 15.9 | 0 | 0 |
SAFE fair value adjustment | 0 | 0 | 11.2 |
Warrants fair value adjustment | 0 | 54.7 | 0 |
Paid-in-kind interest expense | 10.6 | 9.1 | 0.8 |
Paid-in-kind interest paid | (20.5) | 0 | 0 |
Net realized gains on investments | (2.4) | (0.3) | 0 |
Change in fair value of equity securities | (3.8) | 0 | 0 |
Changes in operating assets and liabilities: | |||
Premiums receivable | (39.7) | (31) | (96.7) |
Reinsurance recoverable | (30.4) | (99.5) | (9.2) |
Prepaid reinsurance premiums | 12 | (95.4) | (4.6) |
Other assets | 0.8 | (21.7) | (3.7) |
Losses and loss adjustment expenses reserves | 83 | 96.5 | 107.4 |
Unearned premiums | 23 | 11.7 | 98.1 |
Reinsurance premiums payable | 12.5 | 63.4 | 6.1 |
Accounts payable and accrued expenses | (19.2) | 18.2 | 19.2 |
Other liabilities | 10.3 | 2.1 | 2.7 |
Net cash used in operating activities | (403.4) | (287.2) | (127.2) |
Cash flows from investing activities: | |||
Purchases of investments | (17) | (158.4) | (138.1) |
Proceeds from maturities, call and pay downs of investments | 34.7 | 42.5 | 36.2 |
Sales of investments | 70.4 | 17.9 | 0 |
Purchases of indefinite-lived intangible assets and transaction costs | 0 | (8.9) | 0 |
Capitalization of internally developed software | (6.6) | (5.4) | (5.5) |
Purchases of fixed assets | (4.6) | (1.8) | (6.6) |
Net cash provided by (used in) investing activities | 76.9 | (114.1) | (114) |
Cash flows from financing activities: | |||
Proceeds from exercise of stock options and restricted stock units, net of tax proceeds/(withholding) | 3.2 | 2.1 | 1.9 |
Proceeds from issuance of common stock from IPO and concurrent private placements, net of issuance costs | 0 | 1,098.1 | 0 |
Proceeds from issuance of preferred stock and related warrants | 126.5 | 0 | 349.6 |
Payment of preferred stock and related warrants issuance costs | (10.5) | 0 | 0 |
Proceeds from issuance of debt and related warrants, net of issuance costs | 0 | 12 | 189.5 |
Repayments of long-term debt | (199.5) | (13.5) | (15.5) |
Proceeds from SAFE | 0 | 0 | 10 |
Purchases of treasury stock | 0 | (0.2) | 0 |
Net cash (used in) provided by financing activities | (80.3) | 1,098.5 | 535.5 |
Net (decrease) increase in cash, cash equivalents and restricted cash | (406.8) | 697.2 | 294.3 |
Cash, cash equivalents and restricted cash at beginning of year | 1,113.8 | 416.6 | 122.3 |
Cash, cash equivalents and restricted cash at end of year | $ 707 | $ 1,113.8 | $ 416.6 |
NATURE OF BUSINESS
NATURE OF BUSINESS | 12 Months Ended |
Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF BUSINESS | NATURE OF BUSINESSRoot, Inc. is a holding company which, directly or indirectly, maintains 100% ownership of each of its subsidiaries, including, among others, Root Insurance Company, an Ohio-domiciled insurance company; Root Property & Casualty Insurance Company, a Delaware-domiciled insurance company; and Root Reinsurance Company, Ltd., a Cayman Islands-domiciled reinsurance company; together with Root, Inc. “we,” “us” or “our.” We were formed in 2015 and began writing personal auto insurance in July 2016. We are a technology company operating a primarily direct-to-consumer model with the majority of our personal insurance customers acquired through mobile applications. We offer auto and renters insurance products underwritten by Root Insurance Company and Root Property & Casualty Insurance Company. |
BASIS OF PRESENTATION AND SUMMA
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Consolidation —The consolidated financial statements include the accounts of Root, Inc. and its subsidiaries, all of which are wholly owned. These financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. All intercompany accounts and transactions have been eliminated. To conform to the current year presentation, certain prior year amounts have been reclassified. Use of Estimates —The preparation of consolidated financial statements requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates reflected in our consolidated financial statements include, but are not limited to, reserves for loss and loss adjustment expense, or LAE, premium write-offs, fair value of warrants, intangible asset impairment and valuation allowance for income taxes. COVID-19 —In March 2020, the World Health Organization declared COVID-19 to be a global pandemic. The pandemic and related measures taken to contain the spread of COVID-19, such as government-mandated business closures, orders to “shelter in place” and travel and transportation restrictions, have negatively affected the U.S. and global economies, disrupted global supply chains, and led to unemployment. We, and other businesses within the insurance industry have been impacted by certain individual state bulletins that were issued in 2020 and outlined COVID-19-related premium relief efforts, including restrictions on the ability to cancel policies for non-payment, requirements to defer insurance premium payments for up to 60 days and restrictions on increasing policy premiums. The COVID-19 pandemic and governmental responses thereto have impacted and may further impact the broader economic environment, including creating or exacerbating supply chain disruptions and inflation and negatively impacting unemployment levels, economic growth, the proper functioning of financial and capital markets and interest rates. As a result of certain factors related to the COVID-19 global pandemic we continue to file in multiple states to establish rates that more closely follow the evolving loss cost trends. As the COVID-19 pandemic continues, there is uncertainty around the severity and duration of the pandemic and the pandemic’s potential impact on our business and our financial performance. Accordingly, we cannot predict the impact that it may have on our future results of operations and financial condition. Debt and Equity Issuance Costs —Debt and equity issuance costs, which primarily consist of advisor, legal, accounting, and other third-party fees directly related to issuing debt and equity instruments, are capitalized as other assets in our consolidated balance sheets as incurred. We incurred such costs in connection with our investment agreement we entered into with Carvana on August 21, 2021, or the Investment Agreement, and term loan agreement. Upon close of the related transaction, these deferred issuance costs are generally offset against the related proceeds. Debt issuance costs are subsequently amortized over the term of the financing agreement as interest expense on the consolidated statements of operations and comprehensive loss. Asset Acquisition —In November 2020, we acquired all of the authorized, issued and outstanding shares of Catlin Indemnity Company, renamed Root Property & Casualty, for $22.8 million, which included cash, cash equivalents, and accrued investment income of $14.4 million and insurance license indefinite-lived intangible assets of $8.4 million. The transaction costs associated with this acquisition were $0.5 million and were allocated to the insurance license indefinite-lived intangible assets acquired. This acquisition will expand our ability to sell personal auto insurance in 48 states and the District of Columbia. We accounted for the acquisition of Root Property & Casualty as an asset acquisition because substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets (the insurance licenses) and the acquisition of Root Property & Casualty did not include an input and a substantive process that together significantly contribute to the ability to create outputs and therefore does not meet the definition of a business under GAAP. Accordingly, we recognized the acquired assets at fair value as of the acquisition date, with transaction costs allocated to the insurance license indefinite-lived intangible assets. Indefinite-Lived Intangible Assets —In connection with the acquisition of Root Property & Casualty, we recognized insurance licenses of $8.9 million, including transaction costs, as of December 31, 2021 and 2020 in other assets in our consolidated balance sheets. We incur a minimal fee to renew each license. These intangible assets are not amortized, but instead are tested for impairment annually or when indicators of impairment exist. The impairment test for indefinite-lived intangibles involves first assessing qualitative factors to determine if it is more likely than not that the fair value of the indefinite-lived intangible asset is less than its carrying amount. If so, then a quantitative test is performed to compare the estimated fair value of the indefinite-lived intangible asset to the respective asset's carrying amount. The evaluation requires the use of estimates and significant judgments and considers the weight of evidence and significance of all identified events and circumstances and most relevant drivers of fair value, both positive and negative, in determining whether it is more likely than not that the fair value of the indefinite-lived intangible asset is less than its carrying amount. No impairment was recognized for 2021 or 2020. Segment Information —Our chief operating decision maker is the Chief Executive Officer. The chief operating decision maker manages operations, allocates resources, and evaluates financial performance on a company-wide basis. We operate in one reporting segment providing direct-to-consumer insurance products to customers. Statement of Cash Flows —The supplemental disclosures for cash and non-cash flows for the years ended December 31, 2021, 2020 and 2019 are as follows: 2021 2020 2019 (in millions) Supplemental disclosures: Interest paid $ 23.9 $ 4.5 $ 4.3 Federal income taxes paid — — — Leasehold improvements - non-cash 1.5 — 1.5 Conversion of debt to preferred stock - non-cash — — 11.2 Conversion of preferred stock to common stock - non-cash — 560.4 — Conversion of warrants to common stock - non-cash — 75.0 — Lease liabilities arising from obtaining right-of-use asset 9.9 — — Investment Agreement issuance costs - non-cash 9.1 — — Purchases of treasury stock - non-cash — 0.5 — Cash, Cash Equivalents and Restricted Cash —Cash consists of cash on deposit. Cash equivalents are short-term, highly liquid investments that mature within three months from the date of origination and are principally stated at amortized cost, which approximates their fair value. Restricted cash consists of amounts held by a financial institution to satisfy letter of credit requirements for certain property leases. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amount in the consolidated statements of cash flows: 2021 2020 (in millions) Cash and cash equivalents $ 706.0 $ 1,112.8 Restricted cash 1.0 1.0 Total cash, cash equivalents and restricted cash shown in the statement of cash flows $ 707.0 $ 1,113.8 Book Overdraft —If checks are issued in excess of the amount of cash on hand, a book overdraft shall be reclassified to accounts payable on the consolidated balance sheets. When a check is issued whereby a disbursement account is used to write the check, but the account is not funded until the check is presented for payment this "negative cash" balance is included in cash and cash equivalents on the consolidated balance sheets, if the funding account has sufficient funds. Investments —Investments in debt securities are classified as short-term and available-for-sale securities and are carried at fair value with any unrealized gains and losses, net of taxes, recorded as a component of accumulated other comprehensive income. Management regularly reviews our securities for signs of impairment, an assessment requiring significant management judgment. Beginning with our adoption of Financial Accounting Standards Board, or FASB, Accounting Standard Update, or ASU, No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments as of January 1, 2021, the criteria that management considers are the financial condition of the issuer, including receipt of scheduled principal and interest cash flows, fair value of a security that has fallen below the amortized value, maturity dates, current economic conditions and intent to sell, including if it is more likely than not that we will be required to sell the security before recovery. We then assess whether the decline in value is due to non-credit related or credit related factors. Non-credit related declines in market value are recorded as unrealized losses in accumulated other comprehensive income. If we determine that the decline is credit related, we establish an allowance for credit losses equal to the difference between the discounted cash flow model and the amortized value, which is recorded in net realized gains (losses) on investments in our consolidated statements of operations and comprehensive loss. This allowance may be subsequently adjusted for recoveries or further credit losses. Prior to January 1, 2021, we were under an incurred loss model whereby we reviewed our securities for signs of other than temporary impairment. The criteria were similar to those noted above, except we also considered the length of time a security was in an unrealized loss position. When a debt security was determined to have an other than temporary impairment, the impairment charge was separated into an amount representing the credit loss, which would be recognized in earnings as a realized loss and the amount related to non-credit factors, which would be recognized in other comprehensive income. Subsequent recoveries of other than temporary impairment were not recognized. No such credit losses were recognized in 2021, nor were there other than temporary impairments recognized in 2020 or 2019. Other investments primarily consist of private equity investments without a readily determinable fair value. We elected to account for these investments at cost minus any impairment, plus or minus changes resulting from observable price changes in orderly transactions for an identical or a similar investment of the same issuer. Such changes are accounted for within net investment income on our consolidated statements of operations and comprehensive loss. We also invest in Low Income Housing Tax Credits, or LIHTC, projects by way of investing in a limited liability entity to offset Georgia premium taxes. The purpose of these investments is to encourage private capital investments into regions within Georgia that are in need of economic development, while providing tax credits and operating loss tax benefits to investors. We account for this investment using the cost method because our interest in the limited liability entity is so minor that we have virtually no influence over the entity’s operating and financial policies. When we utilize the tax credits, the associated investment becomes impaired. Impairment of the investment is recognized within net investment income in our consolidated statements of operations and comprehensive loss. Fair Value Measurements —Fair value is defined as the price that would be received upon selling an asset or the price paid to transfer a liability on the measurement date in the principal or most advantageous market for the asset or liability in an orderly transaction between willing market participants. A three-tier hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair values are: Level 1 - Financial assets and liabilities for which inputs are observable and are obtained from reliable quoted prices in active markets for identical assets and liabilities. Level 2 - Financial assets and liabilities for which values are based on quoted prices in markets that are not active or for which values are based on similar assets and liabilities that are actively traded. This also includes pricing models for which the inputs are corroborated by market data. Level 3 - Financial assets and liabilities for which values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Premiums, Premiums Receivable and Premium Write-offs —Premiums written are deferred and earned pro rata over the policy period. Unearned premium is established to cover the unexpired portion of premiums written. A premium deficiency, as measured on a gross basis, is recorded when the sum of expected losses, LAE, unamortized acquisition costs and maintenance costs exceed the recorded unearned premium reserve and anticipated investment income. A premium deficiency reserve is recognized as a reduction of deferred acquisition costs and, if necessary, by accruing an additional liability for the deficiency, with a corresponding charge to operations. We did not record a premium deficiency reserve in 2021, 2020 or 2019. In August 2021, we commenced a fronting arrangement with an unaffiliated Texas county mutual insurance company, or the fronting carrier. We route all of our new auto policies, and, over time, expect to route certain renewal auto policies, in Texas through the fronting carrier whereby we assume 100% of the related premium and losses on those policies. The fronting arrangement allows us to have greater rating and underwriting flexibility. Premiums assumed are deferred and earned pro rata over the policy period. Unearned premium is established to cover the unexpired portion of premiums assumed. Premiums receivable represents premiums written but not yet collected. Generally, premiums are collected prior to providing risk coverage, minimizing our exposure to credit risk. Due to a variety of factors, certain premiums billed may not be collected, for which we establish an allowance for doubtful accounts based primarily on an analysis of historical collection experience, adjusted for current economic conditions. Allowance for credit losses was $5.4 million and $3.5 million as of December 31, 2021 and 2020, respectively, on the consolidated balance sheets. A policy is considered past due on the first day after its due date and policies greater than 90 days past due are written-off. We recognized bad debt expense of $20.9 million, $23.6 million and $9.0 million for the years ended December 31, 2021, 2020 and 2019, respectively. Fee Income —Fee income consists of the flat fee we charge to those policyholders who pay premiums on an installment basis. The fee relates to the additional administrative costs associated with processing more frequent billings. We recognize this fee income in the period in which we process each installment. Other Income —Other income primarily comprises revenue earned from distributing website and app policy inquiry leads in geographies where we do not have a presence, recognized when we generate the lead; commissions earned for homeowners policies placed with third-party insurance companies where we have no exposure to the insured risk, recognized on the effective date of the associated policy; and sale of enterprise technology products to provide telematics-based data collection and trip tracking, recognized ratably as the service is performed. Sales and Marketing —Sales and marketing expenses includes spend related to performance and embedded channels, channel media, advertising, branding, public relations, consumer insights and referral fees. These expenses also include related employee costs including salaries, health benefits, bonuses, employee retirement plan related expenses and employee share-based compensation expense, or Personnel Costs, and overhead allocated based on headcount, or Overhead. It also includes warrant compensation expense related to our embedded channel. We incur sales and marketing expenses for all product offerings. Sales and marketing costs are expensed as incurred. Other Insurance Expense (Benefit) —Other insurance expense (benefit) includes underwriting expenses, credit card and policy processing expenses, premium write-offs, insurance license expenses, and Personnel Costs and Overhead related to actuarial and certain data science activities. Other insurance expense (benefit) also includes amortization of deferred acquisition costs like premium taxes and report costs related to the successful acquisition of a policy. Other insurance expense (benefit) is expensed as incurred, except for costs related to deferred acquisition costs that are capitalized and subsequently amortized over the same period in which the related premiums are earned. These expenses are also recognized net of ceding commissions earned from our quota share reinsurance agreements. The ceding commission provides for reimbursement of both direct and other periodic acquisition costs, including certain underwriting and marketing costs, and is presented as a reduction of other insurance expense (benefit). Technology and development —Technology and development expense consists of software development costs related to our mobile app and homegrown information technology systems; third-party services related to infrastructure support; Personnel Costs and Overhead for engineering, product, technology, and certain data science activities; and amortization of internally developed software. Technology and development is expensed as incurred, except for development and testing costs related to internally developed software that are capitalized and subsequently amortized over the expected useful life. General and Administrative —General and administrative expenses primarily relate to external professional service expenses; Personnel Costs and Overhead for corporate functions; and depreciation expense for computers, furniture and other fixed assets. General and administrative expenses are expensed as incurred. Policy Acquisition Costs —Acquisition costs consist primarily of premium taxes, certain marketing costs and underwriting expenses, and fronting carrier commissions, net of ceding commissions, related to the successful acquisition of new or renewal business. They are deferred and amortized over the same period in which the related premiums are earned. Ceding commissions relating to reinsurance agreements are recorded as a reimbursement for both deferrable and non-deferrable acquisition costs. The portion of the ceding commission that is equal to the pro rata share of acquisition costs based on quota share percentage is recorded as an offset to the gross deferred acquisition costs. Any portion of the ceding commission that exceeds the acquisition costs of the business ceded is recorded as excess ceding commission, a deferred liability, and amortized over the same period in which the related premiums are earned. Deferred acquisition costs, net of accumulated amortization, was $2.8 million and $1.7 million as of December 31, 2021 and 2020, respectively.We amortized deferred acquisition costs of $26.4 million, $17.1 million and $12.2 million for the years ended December 31, 2021, 2020 and 2019, respectively. Loss and Loss Adjustment Expense and Reserves —Loss and LAE reserves include an amount determined using adjuster determined case-base estimates for reported claims and actuarial determined unpaid claim estimates using past experience and historical emergence patterns for unreported losses and LAE. These reserves are a liability established to cover the estimated ultimate cost to settle insured losses. The estimation of the liability for loss and LAE reserves is complex and includes subjective considerations and management’s judgement. The actuarial methods to determine unpaid loss es timates consider loss trends, contract interpretation, mix of business, regulatory environment, economic conditions, inflation and other risk factors impacting claims settlement. The method used to estimate unpaid LAE liability is based on claims transaction data, including the relative cost of adjusting and settling a range of claim types from express material damage claims to more complex injury cases. There is considerable uncertainty associated with the actuarial estimates, and therefore no assurance can be made that the ultimate unpaid claim liability will not vary materially from such estimates. These loss estimates are continually reviewed by management and adjusted as necessary, with adjustments included in the period determined and recorded in loss and LAE on our consolidated statements of operations and comprehensive loss. As such, loss and LAE reserves represent management’s best estimate of the ultimate liability related to reported and unreported claims. Our loss and LAE reserves are recorded gross of reinsurance and net of amounts expected to be received from salvage (the amount recovered from a total loss claims expense) and subrogation (the right to recover payments from third parties). Loss and LAE is recorded net of amounts ceded to reinsurers. We enter into reinsurance contracts to limit our exposure to potential losses as well as to provide additional capacity for growth. These expenses are a function of the size and term of the insurance policies we write and the loss experience associated with the underlying risks. Loss and LAE may be paid out over a period of years. Various other expenses incurred during claims processing are allocated to LAE. These amounts include claims Personnel Costs, software expense, internally developed software amortization, and Overhead. Reinsurance —In the ordinary course of business, we cede and retrocede a portion of our business written and assumed, respectively, to reinsurers to limit the maximum net loss potential arising from large risks and catastrophes. These arrangements, known as treaties, provide for reinsurance coverage on quota-share and excess-of-loss basis. All reinsurance contracts provide for indemnification against loss or liability relating to insurance risk and have been accounted for as reinsurance. Although the ceding of reinsurance does not discharge us from our primary liability to the policyholder, the insurance company that assumes the coverage assumes the related liability. Amounts recoverable from and payable to reinsurers are estimated in a manner consistent with the claim liability associated with the reinsured business. Reinsurance premiums, commissions and expense reimbursements related to reinsured business are accounted for on a basis consistent with the basis used in accounting for the original policies issued and the terms of the reinsurance contracts. Premiums ceded to other companies have been reported as a reduction of premiums earned and are recognized over the remaining policy period based on the reinsurance protection provided. Amounts applicable to reinsurance ceded for unearned premium reserves are reported as a prepaid reinsurance premiums asset in the accompanying consolidated balance sheets and as reduction of unearned premiums in Note 6, “Reinsurance.” Ceding commissions received in connection with reinsurance ceded have been accounted for as a reduction of other insurance (benefit) expense in the consolidated statements of operations and comprehensive loss. Some of our reinsurance agreements provide for adjustment of commissions or amount of coverage based on loss experience. We recognize the asset or liability arising from these adjustable features in the period the adjustment occurs, which is calculated based on experience to-date under the agreement. In the event that all or any of the reinsuring companies might be unable to meet their obligations under existing reinsurance agreements, we would be liable for such defaulted amounts. We evaluate and monitor the financial condition associated with our reinsurers in order to minimize our exposure to significant losses from reinsurer insolvencies. We obtain our reinsurance from a diverse group of reinsurers and monitor concentration as well as financial strength ratings of the reinsurers to minimize counterparty credit risk. To recognize this risk of credit loss, we have established an allowance for credit losses based on the probability of default and the expected loss given default as influenced by factors such as the reinsurer’s credit rating and average life of our reinsurance recoverables. Allowance for credit losses was $0.2 million and zero as of December 31, 2021 and 2020, respectively. Income Taxes —For the 2021 tax year, Root, Inc. will file a consolidated federal income tax return with Caret Holdings, Inc., Root Insurance Company, Root Property & Casualty, Root Lone Star Insurance Agency, Inc, and Root Reinsurance Company, Ltd. The consolidated return also includes Root Insurance Agency, LLC, Root Enterprise, LLC and Root Scout, LLC, which are disregarded entities under Caret Holdings, Inc. for federal income tax purposes. Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are recognized to the extent that there is sufficient positive evidence, as allowed under the Accounting Standard Codification, or ASC, 740, Income Taxes , to support the recoverability of those deferred tax assets. We establish a valuation allowance to the extent that there is insufficient evidence to support the recoverability of the deferred tax asset under ASC 740. In making such a determination, management considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies, and results of recent operations. If it is determined that the deferred tax assets would be realizable in the future in excess of their net recorded amount, an adjustment would be made to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. A valuation allowance of $255.0 million and $137.3 million was established as of December 31, 2021 and 2020, respectively. Further details are discussed in Note 9, "Income Taxes." We recognize the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained under examination by the appropriate taxing authority. Interest and penalties on our reserve for uncertain tax positions are recognized as a component of tax expense. As of December 31, 2021 and 2020, we did not have any unrecognized tax benefits for uncertain tax positions and had no accrued interest or penalties related to uncertain tax positions. Internally Developed Software —We review our software development activity and capitalize costs during the application development phase under ASC 350-40, Internal-Use Software. These costs are amortized on a straight-line basis over a five-year period. Internally developed software costs are assessed for impairment at least quarterly, which also ensures that the assets are still in service. If there are assets identified as no longer in use, the remaining unamortized costs will be fully amortized. We amortized internally developed software of $3.7 million, $2.4 million and $1.4 million for the years ended December 31, 2021, 2020 and 2019, respectively. The capitalized cost and accumulated amortization of internally developed software at December 31, 2021 and 2020 are as follows: 2021 2020 (dollars in millions) Internally developed software $ 20.5 $ 13.9 Accumulated amortization (8.0) (4.3) Internally developed software, net $ 12.5 $ 9.6 Fixed Assets —Fixed Assets are carried at cost, net of accumulated depreciation. We capitalize purchases of fixed assets with costs greater than $1,000, including computers, furniture, and leasehold improvements. Depreciation on computers and furniture is recognized on a straight-line basis over a useful life of three years and five years, respectively. Depreciation on leasehold improvements is recognized on a straight-line basis over the shorter of their useful life or the life of the lease. When certain events or changes in operating conditions occur, an impairment assessment may be performed on the recoverability of the carrying amounts. For the years ended December 31, 2021, 2020 and 2019, depreciation expense was $4.6 million, $3.1 million and $1.7 million, respectively. The capitalized cost and accumulated depreciation of fixed assets at December 31, 2021 and 2020 are as follows: 2021 2020 (dollars in millions) Computers $ 7.0 $ 4.5 Furniture 3.4 3.4 Leasehold improvements 9.8 6.3 Total fixed assets, at cost $ 20.2 $ 14.2 Accumulated depreciation (9.9) (5.3) Fixed assets, net $ 10.3 $ 8.9 Employee Share-Based Compensation —We award share-based compensation, including stock options with only a service condition, stock options with service and performance conditions, restricted stock units, or RSUs, and restricted stock, to our officers, directors, employees, and certain advisors through approval from the Compensation Committee of the Board of Directors. We have also granted warrants to purchase shares of the Company’s Class A common stock to Carvana, which vest based upon achievement of certain performance conditions. Share-based compensation expense is recognized based on the grant date fair value of the awards, which is determined using the Black-Scholes Merton, or BSM, option-pricing model. The BSM option pricing model requires inputs based on certain subjective assumptions, including the expected stock price volatility, the expected term of the options, the risk-free interest rate for a period that approximates the expected term of the option, and our expected dividend yield. The fair value of common stock underlying the stock options, restricted stock and RSUs granted before our initial public offering, or IPO, had historically been determined by our Board of Directors, with input from management, and considering third-party valuations of our common stock. Because there had been no public market for our common stock, our Board of Directors had determined its fair value at the time of grant of the pre-IPO option by considering a number of objective and subjective factors, including financing investment rounds, operating and financial performance, the lack of liquidity of share capital and general and industry specific economic outlook, among other factors. Our Board of Directors determined the fair value of common stock based on valuations performed using the Option Pricing Method and the Probability Weighted Expected Return Method subject to relevant facts and circumstances. In connection with our IPO, our common stock became listed on the Nasdaq Global Select Market and we use these market prices for the fair value of our common shares. Stock options are generally exercisable for a period up to ten years from the grant date. We recognize forfeitures as they occur, which generally results in the reversal of previously recognized expense for nonvested awards. In the event of |
INVESTMENTS
INVESTMENTS | 12 Months Ended |
Dec. 31, 2021 | |
Investments, Debt and Equity Securities [Abstract] | |
INVESTMENTS | INVESTMENTS The amortized cost and fair value of short-term investments and available-for-sale fixed maturity securities at December 31, 2021 and 2020 are as follows: 2021 Amortized Cost Allowance for Expected Credit Losses (1) Gross Unrealized Gains Gross Unrealized Losses Fair Value (dollars in millions) Fixed maturities: U.S. Treasury securities and agencies $ 23.7 $ — $ — $ (0.4) $ 23.3 Municipal securities 20.4 — 0.3 (0.1) 20.6 Corporate debt securities 48.2 — 0.7 (0.2) 48.7 Residential mortgage-backed securities 3.5 — — — 3.5 Commercial mortgage backed securities 30.2 — 0.2 (0.1) 30.3 Other debt obligations 3.5 — — — 3.5 Total $ 129.5 $ — $ 1.2 $ (0.8) $ 129.9 _______________ (1) We adopted ASU 2016-13 and the related amendments as of January 1, 2021. For additional information refer to Note 2, “Basis of Presentation and Summary of Significant Accounting Policies.” 2020 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value (dollars in millions) Fixed maturities: U.S. Treasury securities and agencies $ 16.9 $ 0.1 $ — $ 17.0 Municipal securities 22.6 0.8 — 23.4 Corporate debt securities 87.5 3.1 (0.1) 90.5 Residential mortgage-backed securities 7.8 — — 7.8 Commercial mortgage backed securities 57.1 1.3 — 58.4 Other debt obligations 23.5 0.4 — 23.9 Total fixed maturities 215.4 5.7 (0.1) 221.0 Short-term investments 3.0 — — 3.0 Total $ 218.4 $ 5.7 $ (0.1) $ 224.0 Management reviewed the available-for-sale securities at each balance sheet date to consider whether it was necessary to recognize a credit loss as of December 31, 2021 or other-than-temporary impairment as of December 31, 2020 related to any of the above securities. We do not intend on selling the investments and it is not more likely than not that we will be required to sell the security before recovery. Management concluded that the available-for-sale securities’ unrealized losses were due to non-credit related factors and, therefore, there was no allowance for credit loss recognized for the year ended December 31, 2021 and no other-than-temporary impairments recognized for the year ended December 31, 2020. Other Investments As of December 31, 2021 and 2020, other investments related to our private equity investments were $4.7 million and $0.5 million, respectively. We recognized $3.8 million of unrealized gains in 2021 resulting from observable price changes within net investment income in our consolidated statements of operations and comprehensive loss. There were no realized gains or impairment losses recognized on these investments for the years ended December 31, 2021 and 2020. The following tables reflect the gross unrealized losses and fair value of bonds, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31, 2021 and 2020: 2021 Less than 12 Months 12 Months or More Total Fair Value Unrealized Fair Value Unrealized Fair Value Unrealized (dollars in millions) Bonds: U.S. Treasury securities and agencies $ 7.5 $ (0.1) $ 14.0 $ (0.3) $ 21.5 $ (0.4) Municipal securities 8.9 (0.1) — — 8.9 (0.1) Corporate debt securities 12.7 (0.1) 1.6 (0.1) 14.3 (0.2) Residential mortgage-backed securities 1.9 — 0.5 — 2.4 — Commercial mortgage-backed securities 8.7 (0.1) — — 8.7 (0.1) Total bonds $ 39.7 $ (0.4) $ 16.1 $ (0.4) $ 55.8 $ (0.8) 2020 Less than 12 Months 12 Months or More Total Fair Value Unrealized Fair Value Unrealized Fair Value Unrealized (dollars in millions) Bonds: U.S. Treasury securities and agencies $ 15.7 $ — $ — $ — $ — $ 15.7 $ — Municipal securities 2.3 — — — 2.3 — Corporate debt securities 2.9 (0.1) — — 2.9 (0.1) Residential mortgage-backed securities 3.7 — — — 3.7 — Commercial mortgage-backed securities 4.9 — — — 4.9 — Other debt obligations 0.1 — — — 0.1 — Total bonds $ 29.6 $ (0.1) $ — $ — $ 29.6 $ (0.1) The following table reflects the gross and net realized gains and losses on short-term investments and fixed maturities that have been included in the consolidated statements of operations and comprehensive loss for the years ended December 31, 2021, 2020 and 2019: 2021 2020 2019 (dollars in millions) Realized gains on investments $ 2.5 $ 0.5 $ — Realized losses on investments (0.1) (0.2) — Net realized gains on investments $ 2.4 $ 0.3 $ — The following table sets forth the amortized cost and fair value of short-term investments and fixed maturity securities by contractual maturity at December 31, 2021: 2021 Amortized Cost Fair Value (dollars in millions) Due in one year or less $ 24.6 $ 24.5 Due after one year through five years 83.5 83.9 Due five years through 10 years 7.8 7.8 Due after 10 years 13.6 13.7 Total $ 129.5 $ 129.9 The following table sets forth the components of net investment income for the years ended December 31, 2021, 2020 and 2019: 2021 2020 2019 (dollars in millions) Interest on bonds $ 2.4 $ 4.2 $ 1.8 Interest on deposits and cash equivalents 1.1 1.7 3.8 Other investments 3.8 — — Total 7.3 5.9 5.6 Investment expense (2.3) (0.5) (0.4) Net investment income $ 5.0 $ 5.4 $ 5.2 The following tables summarize the credit ratings of investments at December 31, 2021 and 2020 December 31, 2021 Amortized Cost Fair Value % of Total S&P Global rating or equivalent (dollars in millions) AAA $ 70.9 $ 70.8 54.5 % AA+, AA, AA-, A-1 14.7 14.8 11.4 A+, A, A- 33.4 33.6 25.9 BBB+, BBB, BBB- 10.5 10.7 8.2 Total $ 129.5 $ 129.9 100.0 % December 31, 2020 Amortized Cost Fair Value % of Total S&P Global rating or equivalent (dollars in millions) AAA $ 116.5 $ 118.7 53.0 % AA+, AA, AA-, A-1 22.7 23.3 10.4 A+, A, A- 57.5 59.4 26.5 BBB+, BBB, BBB- 21.7 22.6 10.1 Total $ 218.4 $ 224.0 100.0 % Pursuant to certain regulatory requirements, we are required to hold assets on deposit with various state insurance departments for the benefit of policyholders. These special deposits are included in fixed maturities available-for-sale on the consolidated balance sheets. As of December 31, 2021 and 2020, these required deposits had an amortized cost of $13.4 million and $12.8 million, respectively, and fair value of $13.8 million and $13.6 million, respectively. |
FAIR VALUE OF FINANCIAL INSTRUM
FAIR VALUE OF FINANCIAL INSTRUMENTS | 12 Months Ended |
Dec. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | FAIR VALUE OF FINANCIAL INSTRUMENTS The following tables provide information about our financial assets measured and reported at fair value as of December 31, 2021 and 2020: 2021 Level 1 Level 2 Level 3 Total (dollars in millions) Assets Fixed maturities: U.S. Treasury securities and agencies $ 22.6 $ 0.7 $ — $ 23.3 Municipal securities — 20.6 — 20.6 Corporate debt securities — 48.7 — 48.7 Residential mortgage-backed securities — 3.5 — 3.5 Commercial mortgage-backed securities — 30.3 — 30.3 Other debt obligations — 3.5 — 3.5 Total fixed maturities 22.6 107.3 — 129.9 Cash equivalents 127.0 — — 127.0 Total Assets at fair value $ 149.6 $ 107.3 $ — $ 256.9 2020 Level 1 Level 2 Level 3 Total (dollars in millions) Assets Fixed maturities: U.S. Treasury securities and agencies $ 17.0 $ — $ — $ 17.0 Municipal securities — 23.4 — 23.4 Corporate debt securities — 90.5 — 90.5 Residential mortgage-backed securities — 7.8 — 7.8 Commercial mortgage-backed securities — 58.4 — 58.4 Other debt obligations — 23.9 — 23.9 Total fixed maturities 17.0 204.0 — 221.0 Short-term investments 2.2 0.8 — 3.0 Cash equivalents 568.4 — — 568.4 Total Assets at fair value $ 587.6 $ 204.8 $ — $ 792.4 We estimate the fair value of all our different classes of Level 2 fixed rate maturities and short-term investments by using quoted prices from a combination of an independent pricing vendor or broker/dealer, pricing models, quoted prices of securities with similar characteristics or discounted cash flows. Private Equity Investments Measured at Fair Value on a Non-Recurring Basis Private equity investments that have been remeasured during the period due to an observable event or impairment are classified within Level 3 in the fair value hierarchy because we estimate the value based on valuation methods which may include a combination of the observable transaction price at the transaction date and other unobservable inputs including volatility, rights, and obligations of the investments we hold. See Note 3, “Investments,” for further information on our private equity investments. Fair Value of Long-Term Debt The carrying amount of long-term debt is recorded at historical amounts. The fair value of outstanding long-term debt as of December 31, 2020 was classified within Level 2 of the fair value hierarchy. The fair value was based on a model referencing observable interest rates and spreads to project and discount cash flows to present value. There was no outstanding long-term debt as of December 31, 2021, see Note 7, “Long-term Debt,” for further information. As of December 31, 2021 and 2020, the carrying amounts and fair values of these financial instruments were as follows: Carrying amount as of December 31, 2021 Estimated Fair Value as of December 31, 2021 Carrying amount as of December 31, 2020 Estimated Fair Value as of December 31, 2020 (dollars in millions) Long-term debt $ — $ — $ 188.2 $ 209.0 |
LOSS AND LOSS ADJUSTMENT EXPENS
LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES | 12 Months Ended |
Dec. 31, 2021 | |
Insurance [Abstract] | |
LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES | LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES The following provides a reconciliation of the beginning and ending reserve balances for loss and LAE, net of reinsurance: 2021 2020 2019 (dollars in millions) Gross loss and LAE reserves, January 1 $ 237.2 $ 140.7 $ 33.3 Reinsurance recoverable on unpaid losses (79.6) (18.9) (11.4) Net loss and LAE reserves, January 1 157.6 121.8 21.9 Net incurred loss and LAE related to: Current year 405.9 341.9 312.6 Prior years (13.6) 20.9 8.8 Total incurred 392.3 362.8 321.4 Net paid loss and LAE related to: Current year 226.4 216.3 194.6 Prior years 82.8 110.7 26.9 Total paid 309.2 327.0 221.5 Net loss and LAE reserves, December 31 240.7 157.6 121.8 Plus reinsurance recoverable on unpaid losses 79.5 79.6 18.9 Gross loss and LAE reserves, December 31 $ 320.2 $ 237.2 $ 140.7 Incurred losses and LAE attributable to prior accident years was a decrease of $13.6 million and an increase of $20.9 million and $8.8 million during 2021, 2020 and 2019, respectively. The decrease to incurred losses for prior accident years in 2021 of approximately $13.6 million was primarily due to lower-than-expected reported losses on bodily injury claims, and higher than expected subrogation and salvage recoveries from accident year 2020 material damage claims. The year ended December 31, 2020 also included development of incurred losses related to accident years 2019 and prior as a result of a change in estimate. The adjustments recorded in the year ended December 31, 2020 were necessary in order to effectuate management’s best estimate for determining the estimated ultimate cost of settling claims using our knowledge and experience about past and current events and developments. The increase to incurred losses for prior accident years in 2020 of approximately $20.9 million was primarily due to higher than estimated reported losses for bodily injury claims, as well as higher loss emergence on collision claims from prior accident years due to a slower cycle time for reported claims. The increase to incurred losses for prior accident years in 2019 of approximately $8.8 million was primarily due to higher than estimated reported losses from bodily injury, uninsured and under-insured bodily injury, and property damage coverages. The following table shows incurred and paid losses and allocated loss adjustment expenses, or ALAE, development by accident year for private passenger auto in aggregate, cumulative claim frequency is defined as the number of reported claims at the claim level which includes reported claims that do not result in a liability: Incurred Losses and ALAE—Net of Reinsurance Accident Year 2017 (unaudited) 2018 (unaudited) 2019 (unaudited) 2020 (unaudited) 2021 IBNR Reported Claims (1) (dollars in millions) 2017 $ 1.2 $ 1.1 $ 1.1 $ 1.1 $ 1.1 $ — 553 2018 42.3 48.3 49.6 48.7 0.4 18,105 2019 287.3 306.3 304.7 2.8 90,105 2020 295.9 287.7 10.6 117,028 2021 341.6 62.9 146,270 Total $ 983.8 $ 76.7 372,061 Cumulative Paid Losses and ALAE—Net of Reinsurance Accident Year 2017 (unaudited) 2018 (unaudited) 2019 (unaudited) 2020 (unaudited) 2021 (dollars in millions) 2017 $ 0.6 $ 0.9 $ 1.0 $ 1.1 $ 1.1 2018 20.6 44.6 48.1 48.1 2019 177.0 277.7 296.2 2020 182.0 238.5 2021 179.4 Total $ 763.3 Loss and ALAE reserves—net of reinsurance $ 220.5 _______________ (1) Reported by claim event. The following table sets forth the reconciliation of the claims development tables to the balance sheet losses and ALAE reserves, with separate disclosure of unallocated LAE, or ULAE, and reinsurance recoverable on unpaid losses for the years ended December 31: 2021 2020 (dollars in millions) Loss and ALAE reserves—net of reinsurance $ 220.5 $ 144.0 ULAE reserves—net of reinsurance 20.2 13.6 Reinsurance recoverables on unpaid losses 79.5 79.6 Total loss and LAE reserves—gross of reinsurance $ 320.2 $ 237.2 The following table sets forth the historical average annual percentage payout of incurred losses and ALAE (claims duration), net of reinsurance, as of December 31, 2021: Year 1 2 3 4 5 Incremental Paid (1) 54.1 % 32.3 % 7.4 % 4.5 % — % _______________ Procedures Manual as the basis of their statutory accounting practices. Root Insurance Company and Root Property & Casualty maintained statutory capital and surplus as of December 31, 2021 and 2020 and had statutory net loss for the years ended December 31, 2021, 2020 and 2019 as follows: Statutory Net Loss Statutory Capital and Surplus 2021 2020 2019 (1) 2021 2020 (in millions) Root Insurance Company $ (126.9) $ (123.8) $ (157.6) $ 91.5 $ 100.1 Root Property & Casualty (33.4) (25.5) — 21.8 16.3 Total $ (160.3) $ (149.3) $ (157.6) $ 113.3 $ 116.4 _______________ (1) Root Property and Casualty was acquired during the year-ended December 31, 2020; as such, statutory net loss is not included in periods prior to the acquisition. The payment of dividends by Root Insurance Company and Root Property & Casualty are subject to restrictions set forth in the insurance laws and regulations of the States of Ohio and Delaware, respectively, or the insurance laws. The insurance laws require domestic insurance companies to notify the supervisory superintendent, commissioner and/or director to seek prior regulatory approval to pay a dividend or distribute cash or other property if the fair market value thereof, together with that of other dividends or distributions made in the preceding twelve months, exceeds the greater of (1) 10% of statutory-basis policyholders' surplus as of the prior December 31st or (2) the statutory-basis net income of the insurer as of the prior December 31st. During the years ended December 31, 2021, 2020 and 2019, we did not pay any dividends. The insurance laws also require domestic insurers to seek prior regulatory approval for any dividend paid from other than earned surplus. Earned surplus is defined under the insurance laws as the amount equal to our unassigned funds as set forth in its most recent statutory financial statements, including net unrealized capital gains and losses. Additionally, following any dividend, an insurers policyholder surplus must be reasonable in relation to the insurer's outstanding liabilities and adequate for its financial needs. |
REINSURANCE
REINSURANCE | 12 Months Ended |
Dec. 31, 2021 | |
Insurance [Abstract] | |
REINSURANCE | REINSURANCE The following table reflects amounts affecting the consolidated balance sheets and statements of operations and comprehensive loss for reinsurance as of and for the years ended December 31: 2021 2020 2019 (dollars in millions) Loss and LAE reserves: Direct $ 313.2 $ 237.2 $ 140.7 Assumed 7.0 — — Ceded (79.5) (79.6) (18.9) Net loss and LAE reserves $ 240.7 $ 157.6 $ 121.8 Unearned premiums: Direct $ 170.6 $ 157.1 $ 145.4 Assumed 9.5 — — Ceded (100.8) (112.8) (17.4) Net unearned premiums $ 79.3 $ 44.3 $ 128.0 Premiums written: Direct $ 725.9 $ 616.8 $ 451.1 Assumed 16.7 — — Ceded (397.3) (378.0) (82.3) Net premiums written $ 345.3 $ 238.8 $ 368.8 Premiums earned: Direct $ 712.3 $ 605.2 $ 352.9 Assumed 7.3 — — Ceded (409.3) (282.7) (77.6) Net premiums earned $ 310.3 $ 322.5 $ 275.3 Losses and LAE incurred: Direct $ 683.9 $ 557.6 $ 395.0 Assumed 10.9 — — Ceded (302.5) (194.8) (73.6) Net losses and LAE incurred $ 392.3 $ 362.8 $ 321.4 If our reinsurance was cancelled at December 31, 2021 and 2020, the maximum amount of return ceded commissions due with the return of unearned premiums would have been $26.5 million and $27.2 million, respectively. Our reinsurance recoverable on unpaid losses gross of the provision for loss corridor, loss ratio caps and allowance for credit losses was $160.7 million and $109.1 million as of December 31, 2021 and 2020, respectively. As of December 31, 2021 and 2020, we recorded a provision for sliding scale commission of zero and $8.1 million, respectively, in reinsurance premiums payable on the consolidated balance sheets. As of December 31, 2021 and 2020, a provision for loss corridor of $80.4 million and $29.5 million, respectively, was recorded as a contra-asset in reinsurance recoverable on the consolidated balance sheets. Gross written premium by state is as follows for the years ended December 31, 2021, 2020 and 2019: For the Years Ended December 31, 2021 2020 2019 Amount % of Total Amount % of Total Amount % of Total State (dollars in millions) Texas (1) $ 152.3 20.5 % $ 132.5 21.5 % $ 94.7 21.0 % Georgia 79.2 10.7 72.4 11.7 44.0 9.8 Louisiana 42.2 5.7 28.0 4.5 15.3 3.4 Pennsylvania 39.8 5.4 30.2 4.9 25.2 5.6 Utah 33.8 4.6 26.0 4.2 17.6 3.9 Nevada 33.6 4.5 19.1 3.1 2.4 0.5 Colorado 33.5 4.5 20.2 3.3 8.1 1.8 South Carolina 26.3 3.5 9.6 1.6 14.4 3.2 Missouri 24.7 3.3 26.8 4.3 22.0 4.9 Arizona 23.5 3.2 28.4 4.6 26.7 5.9 All others states 253.7 34.1 223.6 36.3 180.7 40.0 Total $ 742.6 100.0 % $ 616.8 100.0 % $ 451.1 100.0 % ______________ |
LONG-TERM DEBT
LONG-TERM DEBT | 12 Months Ended |
Dec. 31, 2021 | |
Debt Disclosure [Abstract] | |
LONG-TERM DEBT | LONG-TERM DEBTThe Term Loan A was a term loan with a group of syndicated financial institutions that matured on October 15, 2021. Interest was paid monthly and was determined on a floating interest rate calculated on the one-month LIBOR plus an applicable margin of 4%. As a part of the amended the Term Loan A, the syndicate committed, pro rata, to a $100 million revolving loan, which also expired on October 15, 2021. Commitment fees accrued at 0.50% per annum on the daily amount of unused revolving loan and was paid quarterly. For any amounts drawn on the revolving loan, interest accrued and was paid consistent with the Term Loan A. In addition, there was a letter of credit fee of 4% per annum on the average daily amount of issued letters of credit against the revolver and a 0.125% per annum fronting fee based on the average daily amount of letter of credit exposure. Upon the maturity of Term Loan A, we repaid the outstanding Term Loan A principal balance of $98.8 million and accrued interest and fees of $0.2 million. We had no letters of credit outstanding or amounts drawn against the revolving loan on the date of termination. The Term Loan B was a note we issued to a private equity investor that had a maturity date of November 25, 2024. We extinguished the Term Loan B on November 8, 2021. Interest was determined on a floating interest rate calculated on the three-month LIBOR plus an applicable margin of 10.5%. We paid interest pursuant to the terms of the loan agreement and had the option to pay-in-kind, or PIK, on the Term Loan B until October 15, 2021. PIK interest was added to the principal balance every three months until we no longer elected to PIK interest, at which point interest would be paid quarterly. We had elected to PIK interest on the Term Loan B from the original date of closing through October 15, 2021. As a part of the Term Loan B, we issued warrants to purchase 2.8 million shares of our common stock with a strike price of $0.0001 per share and an expiration date of November 25, 2026. These warrants were classified as liabilities within long-term debt on the consolidated balance sheets because they could be settled with a variable number of our shares. Upon the completion of our IPO in 2020, all warrants were exercised and shares of Class B common stock were issued. As a result, the warrant liability was remeasured immediately prior to the IPO and reclassified to additional paid-in capital on our consolidated balance sheets. During the year ended December 31, 2021 and 2020, we recognized an adjustment of zero and $54.7 million, respectively, to the fair value of the warrants within interest expense of our consolidated statements of operations and comprehensive loss. On November 8, 2021, we extinguished the Term Loan B for $120.9 million, consisting of $100.0 million principal balance and $20.9 million of accrued interest, including PIK interest, and fees. We also amortized the remaining unamortized discount and debt and warrant issuance costs, all of which resulted in a loss on early extinguishment of debt of $15.9 million that was recognized in our consolidated statements of operations and comprehensive loss for the year ended December 31, 2021. The following summarizes the carrying value of long-term debt and warrants as of December 31, 2021 and 2020: 2021 2020 (dollars in millions) Term Loan A $ — $ 99.5 Term Loan B — 100.0 Total — 199.5 Accrued interest payable — 10.2 Unamortized discount and debt and warrant issuance costs — (21.5) Total $ — $ 188.2 |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2021 | |
Leases [Abstract] | |
LEASES | LEASES We primarily have operating leases for offices that support our corporate, claims and customer service functions. We determine if an arrangement is a lease at inception by evaluating whether the arrangement conveys the right to use an identified asset and whether we obtain substantially all of the economic benefits from and have the ability to direct the use of the asset. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Operating lease right-of-use assets and corresponding operating lease liabilities are recognized upon the commencement date based primarily on the present value of lease payments over the lease term. We use the implicit rate of the lease, if it is readily determinable, in determining the present value of lease payments. Our leases generally do not provide an implicit rate. Therefore, we use a collateralized incremental borrowing rate that incorporates information available at commencement date, including our company-specific interest rates from recent debt issuances, which we adjusted to obtain our company-specific interest rate risk. We also leverage commercial mortgage-backed securities, or CMBS, rates, for transactions with similar values, origination dates, geographies and property types as the respective lease, which are adjusted using linear interpolation if the lease term falls between the published CMBS terms. As of December 31, 2021, our leases had a weighted-average discount rate of 10.8%. Our leases have remaining lease terms from approximately one year up to approximately six years with a weighted-average remaining lease term of 4.4 years as of December 31, 2021. As of December 31, 2021, we recognized an operating lease liability of $14.1 million and corresponding right-of-use asset of $5.1 million. Operating lease liabilities are included in other liabilities other assets We recently announced a new initiative that empowers employees to work where it works best on an individual level. Based on resulting feedback, we started evaluating office space needs and closed our Easton facility in Columbus, Ohio. Our Easton facility has no future economic benefit, so we determined the cease-use date occurred in December 2021. Accordingly, we accelerated the amortization of the remaining right-of-use asset and recognized $2.0 million of lease expense within general and administrative expenses in our consolidated statements of operations and comprehensive loss for the year ended December 31, 2021. We also sublease certain office space, resulting in sublease income. Sublease income and the related assets and cash flows are not material to our consolidated financial statements as of and for the year ended December 31, 2021. Sublease income is recognized as a reduction to operating lease expense in our consolidated statements of operations and comprehensive loss. Future lease payments as of December 31, 2021 were as follows: Operating Leases (dollars in millions) 2022 $ 4.3 2023 4.4 2024 4.3 2025 1.5 2026 1.5 2027 and thereafter 1.6 Total future lease payments 17.6 Less: imputed interest (3.5) Total lease liabilities $ 14.1 As previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020 under the prior lease accounting guidance, the following table summarizes, by remaining maturity, future commitments related to operating leases and other arrangements as of December 31, 2020: Operating Leases (dollars in millions) 2021 $ 3.9 2022 4.4 2023 4.4 2024 4.3 2025 1.5 2026 and thereafter 3.1 Total $ 21.6 Base rent and related rent expenses were $4.8 million and $2.4 million for the years ended December 31, 2020 and 2019, respectively. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES We had no income tax expense (benefit) for the years ended December 31, 2021, 2020 and 2019: 2021 2020 2019 (dollars in millions) Current: Federal $ — $ — $ — State — — — Total current — — — Deferred: Federal — — — State — — — Total deferred — — — Total income tax expense (benefit) $ — $ — $ — The income tax expense (benefit) differed from the amounts computed by applying the statutory U.S. federal income tax rate of 21% in 2021, 2020 and 2019 to pretax income as a result of the following: 2021 2020 2019 (dollars in millions) Loss before income taxes $ (521.1) $ (363.0) $ (282.4) Statutory U.S. federal income tax benefit (109.4) 21.0 % (76.2) 21.0 % (59.3) 21.0 % Valuation allowance on deferred tax assets 116.7 (22.4) 61.5 (16.9) 57.4 (20.3) Warrants fair value adjustment — — 11.5 (3.2) — — Share-based compensation (3.3) 0.6 5.0 (1.4) 1.7 (0.6) Nondeductible compensation 1.8 (0.3) — — — — State net operating loss (4.9) 0.9 (3.1) 0.9 (2.2) 0.8 Other (0.9) 0.2 1.3 (0.4) 2.4 (0.9) Income tax expense (benefit) $ — — % $ — — % $ — — % The following table sets forth the tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2021 and 2020: 2021 2020 (dollars in millions) Deferred tax assets: Unpaid losses and loss adjustment expenses $ 2.5 $ 1.5 Unearned premium reserves 3.8 1.9 Nondeductible accruals 0.5 0.9 Deferred rent 2.0 1.4 Research and development credits 0.9 0.9 Disallowed interest carryforward 9.6 3.7 Bad debt expense 1.2 0.8 Excess ceding commission 2.2 — Deferred compensation 2.5 1.4 Stock compensation 5.4 0.5 Other 2.6 0.6 State net operating loss carryforward 10.2 5.3 Net operating loss carryforward 217.4 124.1 Gross deferred assets 260.8 143.0 Less valuation allowance (255.0) (137.3) Total deferred tax assets, less valuation allowance 5.8 5.7 Deferred tax liabilities: Internally developed software 2.7 2.1 Fixed assets 2.2 1.9 Deferred acquisition costs 0.6 0.4 Unrealized gains 0.1 1.2 Other 0.2 0.1 Deferred tax liabilities 5.8 5.7 Net deferred tax asset $ — $ — The above amounts were calculated in accordance with ASC 740, Income Taxes . The application of ASC 740 requires a company to evaluate the recoverability of deferred tax assets and to establish a valuation allowance if necessary to reduce the carrying value of the deferred tax asset to an amount which is more likely than not to be realized. Considerable judgment is required in determining whether a valuation allowance is necessary, and if so, the amount of such valuation allowance. In evaluating the need for a valuation allowance we include many factors, including: (1) the nature of the deferred tax assets and liabilities; (2) whether they are ordinary or capital; (3) the timing of expected reversal; (4) taxable income in prior carry back years as well as projected taxable earnings exclusive of reversing temporary differences and carry forwards; (5) the length of time that carryovers can be used; (6) unique tax rules that would impact the utilization of the deferred tax assets; and (7) any tax planning strategies that we would employ to avoid a tax benefit expiring unused. Although lack of realization is not assured, we believe it is more likely than not that the deferred tax assets will not be realized. As such, a valuation allowance of $255.0 million has been established. We have carryforwards related to net operating losses of $1,042.6 million, of which $496.1 million begin to expire in tax years 2035 through 2041, with the remaining $546.5 million carried forward indefinitely. We also have carryforwards for credits related to research and development costs of $0.9 million which expire between tax years 2036 through 2038, and state operating losses of $113.8 million which expire between tax years 2029 through 2041. |
CAPITAL STOCK
CAPITAL STOCK | 12 Months Ended |
Dec. 31, 2021 | |
Equity [Abstract] | |
Capital Stock | Capital Stock In October 2021, we issued redeemable convertible preferred stock to Carvana pursuant to the Investment Agreement. We received $126.5 million of gross proceeds from the issuance of 14.1 million shares of redeemable convertible preferred stock designated as the Series A Preferred Stock and issued Carvana eight tranches of warrants to purchase shares of the Company’s Class A common stock. Further details on the warrants are discussed in Note 11, "Share-Based Compensation." In connection with the Investment Agreement, we incurred issuance costs of $19.6 million, $9.0 million of which are contingent upon the success of the Investment Agreement as measured by achievement of certain warrant vesting milestones. We allocated the issuance costs between the preferred stock and the warrants based on their relative fair values. The warrants are recognized on a pro-rata basis considering Carvana’s progress toward achieving the milestones, and the allocated issuance costs are reclassified from other assets to contra-equity on that same pro-rata basis. As of December 31, 2021, issuance costs were recognized in our consolidated balance sheets as follows: $14.5 million as contra-redeemable convertible preferred stock; $1.0 million as contra-additional paid-in capital; and $4.1 million as other assets. The carrying value of our preferred stock was $112.0 million as of December 31, 2021. In October 2021, our Board of Directors approved the retirement of 4.6 million shares of Class A common stock that were held in treasury at $0.8 million. In October 2020, we completed our IPO, which resulted in the issuance and sale of 24.2 million shares of Class A common stock at the IPO price of $27.00. Concurrently, we issued and sold 18.5 million shares of our Class A common stock in private placements. We received net proceeds of $1.1 billion after deducting certain underwriting discounts and commissions and other offering costs of $57.5 million. All shares of our common stock and redeemable convertible preferred stock outstanding immediately prior to our IPO were converted into shares of our Class B common stock, and all warrants were exercised into shares of Class B common stock. In October 2020, our Board of Directors approved our amended and restated certificate of incorporation, which authorized additional shares bringing our total authorized shares to 1,000.0 million of Class A common stock, 269.0 million shares of Class B common stock and 100.0 million shares of preferred stock. All classes of stock have a par value of $0.0001 per share. As of December 31, 2021, the Company had issued and outstanding: 142.9 million shares of Class A common stock, 109.9 million shares of Class B common stock, and 14.1 million shares of preferred stock that had a redemption value of $126.5 million. The voting, dividend and liquidation rights of the holders of our Class A and Class B common stock are subject to and qualified by the rights, powers, and preferences of the holders of the preferred stock. Other rights, privileges, and preferences of our capital stock are as follows: Dividends —Class A and Class B common stock are entitled to the same dividend rights. We shall not declare, pay, or set aside any dividends on shares of any other class or series of capital stock unless the holders of the preferred stock then outstanding shall first receive, or simultaneously receive, a dividend. Beginning after the fifth anniversary of the Integrated Platform becoming available to customers, Series A Preferred Stockholders are entitled to receive, when, as and if declared by the Board of Directors, a dividend at an annual rate of 5% of the liquidation preference per share of Series A Preferred Stock, if our 90-day volume-weighted average price, or VWAP, per share of Class A common stock is below the conversion price at that time. Voting Rights —Our Class B common stock has ten votes per share and our Class A common stock has one vote per share. Holders of preferred stock are entitled to vote, together with the holders of Class A common stock and Class B common stock, on an as-converted basis on all matters submitted to a vote of the holders of Class A common stock and Class B common stock. Liquidation Preferences —In the event of any voluntary or involuntary liquidation, dissolution, or winding up of our business, after payment or provision for payment of the debts and other liabilities of the Company, the holders of Series A Preferred Stock are entitled to receive, before any distribution out of the assets of the Company may be made to or set aside for the holders of any common stock, an amount per share equal to the greater of (i) $9.00 per share plus the amount of any accrued but unpaid dividends thereon as of such date and (ii) the amount such preferred stockholders would have received had they, immediately prior to such an event, converted such shares of Series A Preferred Stock into Class A common stock. Thereafter, holders of Class A and Class B common stock are entitled to any remaining proceeds on a pro-rata basis. Class A and Class B common stock are entitled to the same liquidation rights. Conversion and Transfer —Each share of Class B common stock is convertible at any time into one share of Class A common stock. Future transfers by holders of our Class B common stock will generally result in those shares converting into shares of our Class A common stock, subject to limited exceptions, such as certain transfers effected for tax or estate planning purposes. Series A Preferred Stock shall be convertible, at the option of the holder thereof, at any time, or from time to time, into shares of Class A common stock at a conversion rate equal to the liquidation preference divided by the conversion price. As of December 31, 2021, the conversion price was $9.00 per share and the Series A Preferred Stock was convertible into 14.1 million shares of Class A common stock. To the extent that such conversion would cause the holder to hold in excess of 9.9% of the voting stock, such conversion would be subject to approval from (a) the Delaware Insurance Commissioner and (b) the Ohio Director of Insurance. Redemption and Balance Sheet Classification —The redeemable convertible preferred stock is classified as mezzanine equity because while it is not mandatorily redeemable, it will become convertible or redeemable at the option of the preferred stockholder in connection with any change of control of the Company, which is considered not solely within our control. |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
SHARE-BASED COMPENSATION | SHARE-BASED COMPENSATION 2020 Equity Incentive Plan We maintain an equity incentive plan, the 2020 Equity Incentive Plan, or the 2020 Plan, for the issuance and grant of equity awards (restricted stock, RSUs, and incentive and nonqualified stock options) to our officers, directors, employees and certain advisors. As of December 31, 2021, the number of shares authorized under the 2020 Plan was 53.8 million Class A common shares, inclusive of available shares previously reserved for issuance under the 2015 Equity Incentive Plan, or the 2015 Plan, and subject to increase for awards previously issued under the 2015 Plan which are forfeited or lapse unexercised. In addition, this reserve will automatically increase on January 1 of each year, which commenced on January 1, 2021 and will end on (and including) January 1, 2030, in an amount equal to 4% of the total number of shares of capital stock outstanding on December 31st of the preceding year. However, the Board may act prior to January 1st of a given year to provide that the increase for such year will be a lesser number of shares of Class A common shares. The aggregate maximum number of shares of Class A common stock that may be issued pursuant to the exercise of incentive stock options is 120.0 million shares. As of December 31, 2021, the number of shares available for issuance under the 2020 Plan was 21.9 million. In October 2020, our Board of Directors adopted and our stockholders approved the 2020 Employee Stock Purchase Plan, or ESPP, which became effective immediately prior to our IPO date. The number of shares of Class A common stock initially reserved for issuance under the ESPP is limited to 5.0 million shares. In addition, the number of shares reserved for issuance under the ESPP is subject to an annual increase on the first day of each calendar year beginning on January 1, 2021 and ending on and including January 1, 2030, in an amount equal to the lesser of (i) 1% of the total number of shares of capital stock outstanding on December 31st of the preceding year and (ii) 7.5 million shares of Class A common stock. Our Board of Directors may act prior to January 1st of a given year to provide that the increase for such year will be a lesser number of shares of Class A common stock. 2015 Equity Incentive Plan In 2015, the Board of Directors of the Company adopted the 2015 Plan under which the Company could grant equity awards (restricted stock, and incentive and nonqualified stock options) to its officers, directors, employees and certain advisors. In October 2020, this plan was superseded by the 2020 Plan and all reserved shares under the 2015 Plan were transferred to the 2020 Plan. Warrants As part of the Investment Agreement discussed in Note 10, “Capital Stock,” we issued Carvana eight tranches of warrants, comprised of three tranches of “short-term warrants” and five tranches of “long-term warrants.” However, the exercisability of certain tranches are subject to Carvana’s decision to exercise certain other tranches. If Carvana exercises short-term tranches, then long-term tranche 1 warrants are cancelled and the remaining long-term tranches would be reduced such that Carvana will have the opportunity to purchase a maximum of 129.1 million shares of Class A common stock. As of December 31, 2021, we determined that all short-term warrants were probable of vesting. Under that scenario, it is not a possible outcome for the long-term warrants to also vest, so they are considered not probable of vesting. We recognized $8.8 million of warrant compensation expense related to these equity-classified warrants based on progress toward completing the Integrated Platform. This expense is included in sales and marketing of our consolidated statements of operations and comprehensive loss. All of these warrants are out-of-the-money and therefore have no intrinsic value as of December 31, 2021. The short-term warrants will expire three years following the earlier of the date of completion of the Integrated Platform and 18 months following closing of the Investment Agreement, such earlier date, the Reference Date, and the long-term warrants will expire five years after the Reference Date. The following table provides other key terms of the warrants: Warrants Exercise Price Shares Issued Grant Date Fair Value per Share Vesting Condition Short-Term Tranche 1 $ 10.00 42.6 $ 0.42 Completing the Integrated Platform Tranche 2 $ 11.00 57.8 $ 0.37 50,000 policy originations Tranche 3 $ 12.00 28.7 $ 0.18 75,000 policy originations Total Short-Term 129.1 Long-Term Tranche 1 $ 10.00 25.8 $ 0.42 100,000 policy originations Tranche 2 $ 12.50 26.9 $ 0.35 200,000 policy originations Tranche 3 $ 15.00 27.1 $ 0.24 300,000 policy originations Tranche 4 $ 22.50 26.1 $ 0.09 400,000 policy originations Tranche 5 $ 30.00 23.2 $ 0.04 500,000 policy originations Total Long-Term 129.1 The fair value of the warrants is estimated on the date of grant using a Monte Carlo simulation with Geometric Brownian Motion that uses certain inputs, assumptions and estimates, as follows: expected term of five years, based on the contractual term of the warrants; risk-free interest rate of 0.9%, based on U.S. Constant Maturity Yield Curve over a similar term; dividend rate of 0.0%, based on our historical and expected future dividend payouts, which may be subject to change in the future; and volatility of 45%, based on historical and implied volatility of comparable publicly held companies, because we did not have sufficient company-specific volatility at the time of grant, and other factors. Employee Share-Based Compensation The following table displays employee share-based compensation expense recorded in the consolidated statements of operations and comprehensive loss: Years Ended December 31, 2021 2020 2019 (dollars in millions) Share-based compensation expense: Loss and loss adjustment expenses $ 1.5 $ 0.6 $ — Sales and marketing 1.0 1.0 — Other insurance expense (benefit) 1.6 1.0 — Technology and development 4.5 5.8 — General and administrative 10.7 20.4 10.0 Total share-based compensation expense $ 19.3 $ 28.8 $ 10.0 The following table provides total employee share-based compensation expense by type of award: Years Ended December 31, 2021 2020 2019 (dollars in millions) Share-based compensation expense: Restricted stock unit expense $ 14.9 $ 0.6 $ — Stock option expense 4.4 28.2 10.0 Total share-based compensation expense $ 19.3 $ 28.8 $ 10.0 In March 2020, a current investor completed a tender offer for common stock from vested shareholders, many of whom were employees or members of the Board of Directors. To encourage participation, the tender offer was made at a price in excess of the fair value of our common stock. In February 2019, a similar tender offer by another investor was completed. As a result, we recognized $25.1 million and $8.6 million of share-based compensation expense related to these tender offers during the years ended December 31, 2020 and 2019, respectively. As of December 31, 2021, there was $4.8 million, $35.7 million and $66.1 million of unrecognized compensation cost related to unvested stock options, warrants and RSUs, respectively. The remaining costs are expected to be recognized over a period of five years for unvested stocks options, two years for warrants and four years for RSUs. Restricted Stock Units A summary of RSU activity for the year ended December 31, 2021 is as follows: Restricted Stock Units Number of Shares Weighted-Average Aggregate Intrinsic Value (in millions, except exercise price) Nonvested at January 1, 2020 — $ — $ — Granted 0.4 17.72 Vested — 7.25 0.3 Forfeited, expired or canceled — 22.89 Nonvested at December 31, 2020 0.4 18.41 $ 6.2 Granted 12.2 9.17 Vested (0.1) 18.09 1.0 Forfeited, expired or canceled (3.6) 10.24 Nonvested at December 31, 2021 8.9 $ 9.02 $ 27.4 Stock Options A summary of option activity for the years ended December 31, 2021 and 2020 is as follows: Options Number of Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (in Years) Aggregate Intrinsic Value (in millions, except exercise price and term amounts) Outstanding at January 1, 2020 12.3 $ 1.42 8.22 $ 70.4 Granted 1.6 7.76 Exercised (2.8) 0.70 41.5 Forfeited, expired or canceled (0.7) 5.00 Outstanding at December 31, 2020 10.4 $ 2.39 7.75 $ 137.7 Granted — 10.82 Exercised (2.8) 1.68 24.1 Forfeited, expired or canceled (1.1) 4.44 Outstanding at December 31, 2021 6.5 2.36 6.12 $ 9.5 A summary of total options outstanding and exercisable at December 31, 2021: Options Outstanding and Exercisable Options Number of Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (in Years) (in millions, except exercise price and term amounts) Range of Exercise Prices: $0.01 - $1.00 2.7 $ 0.30 4.76 $1.00 - $2.50 2.8 $ 2.40 7.20 $2.50 - $13.00 1.0 $ 7.67 6.86 The 2020 Plan permits the optionee to early exercise options to obtain preferred tax treatment before the completion of the award’s requisite service or vesting period. If the employee terminates employment before the end of this period, the 2020 and 2015 Plans allow us to repurchase the shares, at our option, at the exercise price of the award. The repurchase feature is used to incentivize the employee to remain through the requisite service or vesting period to receive the full economic benefit of the award. Given the repurchase feature functions as a forfeiture provision for nonvested shares, we record the exercise cost of nonvested shares as a deposit liability for those shares settling in cash. As the shares vest, the deposit liability is reduced and additional paid-in capital is increased. As of December 31, 2021 and 2020, the early exercise deposit liability was $0.1 million and $1.3 million, respectively, and is included in other liabilities on the consolidated balance sheets. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES During the normal course of business, we enter into various agreements to purchase services, primarily data and information technology based services, that are enforceable and legally binding. Certain supply contracts contain penalty provisions for early termination, in addition to variable costs that are based on volume and usage. We do not expect to incur penalty payments under these provisions that would materially affect our financial position, results of operations or cash flows. The following table summarizes, by remaining maturity, future commitments related to other arrangements as of December 31, 2021: Purchase (dollars in millions) 2022 $ 8.1 2023 4.8 2024 0.9 2025 0.6 2026 and thereafter — Total $ 14.4 From time to time, we are party to litigation and legal proceedings relating to our business operations. Except as disclosed below, we do not believe that we are party to any current or pending legal action that could reasonably be expected to have a material adverse effect on our financial condition or results of operations and cash flow. On March 19, 2021, a purported class action complaint was filed against the Company and certain of its current officers and directors in the U.S. District Court for the Southern District of Ohio (Case No. 2:21-cv-01197) on behalf of certain Root shareholders. The complaint alleges that defendants made false or misleading statements and omissions of purportedly material fact, in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and of Sections 11 and 15 of the Securities Act of 1933, in connection with and following the Company’s IPO. The complaint seeks unspecified damages. The Company believes that the claims in this lawsuit are without merit and intends to defend against them vigorously. The lawsuit is in the early stages and, at this time, we are unable to predict the outcome and we cannot estimate the likelihood or magnitude of our possible or potential loss contingency. We are contingently liable for possible future assessments under regulatory requirements for insolvencies and impairments of unaffiliated insurance companies. |
OTHER COMPREHENSIVE (LOSS) INCO
OTHER COMPREHENSIVE (LOSS) INCOME AND ACCUMULATED OTHER COMPREHENSIVE INCOME | 12 Months Ended |
Dec. 31, 2021 | |
Equity [Abstract] | |
OTHER COMPREHENSIVE (LOSS) INCOME AND ACCUMULATED OTHER COMPREHENSIVE INCOME | OTHER COMPREHENSIVE (LOSS) INCOME AND ACCUMULATED OTHER COMPREHENSIVE INCOME The following table presents the changes in our accumulated other comprehensive income, or AOCI, for the years ended December 31, 2021, 2020 and 2019: 2021 2020 2019 (dollars in millions) Accumulated other comprehensive income beginning balance $ 5.6 $ 0.6 $ — Other comprehensive (loss) income before reclassifications (2.8) 5.3 0.6 Net realized gains on investments reclassified from AOCI to net loss (2.4) (0.3) — Net current period other comprehensive (loss) income (5.2) 5.0 0.6 Accumulated other comprehensive income ending balance $ 0.4 $ 5.6 $ 0.6 |
LOSS PER SHARE
LOSS PER SHARE | 12 Months Ended |
Dec. 31, 2021 | |
Earnings Per Share [Abstract] | |
LOSS PER SHARE | LOSS PER SHARE The following table displays the computation of basic and diluted loss per share for both Class A and Class B common stock for the years ended December 31, 2021, 2020 and 2019: For the Years Ended December 31, 2021 2020 2019 (in millions, except per share amounts) Net loss $ (521.1) $ (363.0) $ (282.4) Weighted-average common shares outstanding: basic and diluted (both Class A and B) 249.2 75.5 33.9 Loss per common share: basic and diluted (both Class A and B) $ (2.09) $ (4.81) $ (8.33) We excluded the following potentially dilutive common stock equivalents, presented based on amounts outstanding at each year end, from the computation of diluted EPS attributable to common stockholders for the years indicated because including them would have had an anti-dilutive effect: As of December 31, 2021 2020 2019 (in millions) Options to purchase common stock 6.5 10.4 12.3 Nonvested shares subject to repurchase 2.2 5.0 7.2 Restricted stock units 8.9 0.4 — Redeemable convertible preferred stock (as converted to common stock) 14.1 — 158.9 Warrants to purchase common stock (1) 129.1 — — Warrants to purchase redeemable convertible preferred stock (as converted to common stock) — — 0.6 Total 160.8 15.8 179.0 _______________ (1) Warrants outstanding as of December 31, 2021 would result in a maximum of 129.1 million shares of Class A common stock, if they vest and are fully exercised by Carvana for cash. |
STATUTORY FINANCIAL INFORMATION
STATUTORY FINANCIAL INFORMATION | 12 Months Ended |
Dec. 31, 2021 | |
Insurance [Abstract] | |
STATUTORY FINANCIAL INFORMATION | LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES The following provides a reconciliation of the beginning and ending reserve balances for loss and LAE, net of reinsurance: 2021 2020 2019 (dollars in millions) Gross loss and LAE reserves, January 1 $ 237.2 $ 140.7 $ 33.3 Reinsurance recoverable on unpaid losses (79.6) (18.9) (11.4) Net loss and LAE reserves, January 1 157.6 121.8 21.9 Net incurred loss and LAE related to: Current year 405.9 341.9 312.6 Prior years (13.6) 20.9 8.8 Total incurred 392.3 362.8 321.4 Net paid loss and LAE related to: Current year 226.4 216.3 194.6 Prior years 82.8 110.7 26.9 Total paid 309.2 327.0 221.5 Net loss and LAE reserves, December 31 240.7 157.6 121.8 Plus reinsurance recoverable on unpaid losses 79.5 79.6 18.9 Gross loss and LAE reserves, December 31 $ 320.2 $ 237.2 $ 140.7 Incurred losses and LAE attributable to prior accident years was a decrease of $13.6 million and an increase of $20.9 million and $8.8 million during 2021, 2020 and 2019, respectively. The decrease to incurred losses for prior accident years in 2021 of approximately $13.6 million was primarily due to lower-than-expected reported losses on bodily injury claims, and higher than expected subrogation and salvage recoveries from accident year 2020 material damage claims. The year ended December 31, 2020 also included development of incurred losses related to accident years 2019 and prior as a result of a change in estimate. The adjustments recorded in the year ended December 31, 2020 were necessary in order to effectuate management’s best estimate for determining the estimated ultimate cost of settling claims using our knowledge and experience about past and current events and developments. The increase to incurred losses for prior accident years in 2020 of approximately $20.9 million was primarily due to higher than estimated reported losses for bodily injury claims, as well as higher loss emergence on collision claims from prior accident years due to a slower cycle time for reported claims. The increase to incurred losses for prior accident years in 2019 of approximately $8.8 million was primarily due to higher than estimated reported losses from bodily injury, uninsured and under-insured bodily injury, and property damage coverages. The following table shows incurred and paid losses and allocated loss adjustment expenses, or ALAE, development by accident year for private passenger auto in aggregate, cumulative claim frequency is defined as the number of reported claims at the claim level which includes reported claims that do not result in a liability: Incurred Losses and ALAE—Net of Reinsurance Accident Year 2017 (unaudited) 2018 (unaudited) 2019 (unaudited) 2020 (unaudited) 2021 IBNR Reported Claims (1) (dollars in millions) 2017 $ 1.2 $ 1.1 $ 1.1 $ 1.1 $ 1.1 $ — 553 2018 42.3 48.3 49.6 48.7 0.4 18,105 2019 287.3 306.3 304.7 2.8 90,105 2020 295.9 287.7 10.6 117,028 2021 341.6 62.9 146,270 Total $ 983.8 $ 76.7 372,061 Cumulative Paid Losses and ALAE—Net of Reinsurance Accident Year 2017 (unaudited) 2018 (unaudited) 2019 (unaudited) 2020 (unaudited) 2021 (dollars in millions) 2017 $ 0.6 $ 0.9 $ 1.0 $ 1.1 $ 1.1 2018 20.6 44.6 48.1 48.1 2019 177.0 277.7 296.2 2020 182.0 238.5 2021 179.4 Total $ 763.3 Loss and ALAE reserves—net of reinsurance $ 220.5 _______________ (1) Reported by claim event. The following table sets forth the reconciliation of the claims development tables to the balance sheet losses and ALAE reserves, with separate disclosure of unallocated LAE, or ULAE, and reinsurance recoverable on unpaid losses for the years ended December 31: 2021 2020 (dollars in millions) Loss and ALAE reserves—net of reinsurance $ 220.5 $ 144.0 ULAE reserves—net of reinsurance 20.2 13.6 Reinsurance recoverables on unpaid losses 79.5 79.6 Total loss and LAE reserves—gross of reinsurance $ 320.2 $ 237.2 The following table sets forth the historical average annual percentage payout of incurred losses and ALAE (claims duration), net of reinsurance, as of December 31, 2021: Year 1 2 3 4 5 Incremental Paid (1) 54.1 % 32.3 % 7.4 % 4.5 % — % _______________ Procedures Manual as the basis of their statutory accounting practices. Root Insurance Company and Root Property & Casualty maintained statutory capital and surplus as of December 31, 2021 and 2020 and had statutory net loss for the years ended December 31, 2021, 2020 and 2019 as follows: Statutory Net Loss Statutory Capital and Surplus 2021 2020 2019 (1) 2021 2020 (in millions) Root Insurance Company $ (126.9) $ (123.8) $ (157.6) $ 91.5 $ 100.1 Root Property & Casualty (33.4) (25.5) — 21.8 16.3 Total $ (160.3) $ (149.3) $ (157.6) $ 113.3 $ 116.4 _______________ (1) Root Property and Casualty was acquired during the year-ended December 31, 2020; as such, statutory net loss is not included in periods prior to the acquisition. The payment of dividends by Root Insurance Company and Root Property & Casualty are subject to restrictions set forth in the insurance laws and regulations of the States of Ohio and Delaware, respectively, or the insurance laws. The insurance laws require domestic insurance companies to notify the supervisory superintendent, commissioner and/or director to seek prior regulatory approval to pay a dividend or distribute cash or other property if the fair market value thereof, together with that of other dividends or distributions made in the preceding twelve months, exceeds the greater of (1) 10% of statutory-basis policyholders' surplus as of the prior December 31st or (2) the statutory-basis net income of the insurer as of the prior December 31st. During the years ended December 31, 2021, 2020 and 2019, we did not pay any dividends. The insurance laws also require domestic insurers to seek prior regulatory approval for any dividend paid from other than earned surplus. Earned surplus is defined under the insurance laws as the amount equal to our unassigned funds as set forth in its most recent statutory financial statements, including net unrealized capital gains and losses. Additionally, following any dividend, an insurers policyholder surplus must be reasonable in relation to the insurer's outstanding liabilities and adequate for its financial needs. |
GEOGRAPHICAL BREAKDOWN OF GROSS
GEOGRAPHICAL BREAKDOWN OF GROSS WRITTEN PREMIUM | 12 Months Ended |
Dec. 31, 2021 | |
Insurance [Abstract] | |
GEOGRAPHICAL BREAKDOWN OF GROSS WRITTEN PREMIUM | REINSURANCE The following table reflects amounts affecting the consolidated balance sheets and statements of operations and comprehensive loss for reinsurance as of and for the years ended December 31: 2021 2020 2019 (dollars in millions) Loss and LAE reserves: Direct $ 313.2 $ 237.2 $ 140.7 Assumed 7.0 — — Ceded (79.5) (79.6) (18.9) Net loss and LAE reserves $ 240.7 $ 157.6 $ 121.8 Unearned premiums: Direct $ 170.6 $ 157.1 $ 145.4 Assumed 9.5 — — Ceded (100.8) (112.8) (17.4) Net unearned premiums $ 79.3 $ 44.3 $ 128.0 Premiums written: Direct $ 725.9 $ 616.8 $ 451.1 Assumed 16.7 — — Ceded (397.3) (378.0) (82.3) Net premiums written $ 345.3 $ 238.8 $ 368.8 Premiums earned: Direct $ 712.3 $ 605.2 $ 352.9 Assumed 7.3 — — Ceded (409.3) (282.7) (77.6) Net premiums earned $ 310.3 $ 322.5 $ 275.3 Losses and LAE incurred: Direct $ 683.9 $ 557.6 $ 395.0 Assumed 10.9 — — Ceded (302.5) (194.8) (73.6) Net losses and LAE incurred $ 392.3 $ 362.8 $ 321.4 If our reinsurance was cancelled at December 31, 2021 and 2020, the maximum amount of return ceded commissions due with the return of unearned premiums would have been $26.5 million and $27.2 million, respectively. Our reinsurance recoverable on unpaid losses gross of the provision for loss corridor, loss ratio caps and allowance for credit losses was $160.7 million and $109.1 million as of December 31, 2021 and 2020, respectively. As of December 31, 2021 and 2020, we recorded a provision for sliding scale commission of zero and $8.1 million, respectively, in reinsurance premiums payable on the consolidated balance sheets. As of December 31, 2021 and 2020, a provision for loss corridor of $80.4 million and $29.5 million, respectively, was recorded as a contra-asset in reinsurance recoverable on the consolidated balance sheets. Gross written premium by state is as follows for the years ended December 31, 2021, 2020 and 2019: For the Years Ended December 31, 2021 2020 2019 Amount % of Total Amount % of Total Amount % of Total State (dollars in millions) Texas (1) $ 152.3 20.5 % $ 132.5 21.5 % $ 94.7 21.0 % Georgia 79.2 10.7 72.4 11.7 44.0 9.8 Louisiana 42.2 5.7 28.0 4.5 15.3 3.4 Pennsylvania 39.8 5.4 30.2 4.9 25.2 5.6 Utah 33.8 4.6 26.0 4.2 17.6 3.9 Nevada 33.6 4.5 19.1 3.1 2.4 0.5 Colorado 33.5 4.5 20.2 3.3 8.1 1.8 South Carolina 26.3 3.5 9.6 1.6 14.4 3.2 Missouri 24.7 3.3 26.8 4.3 22.0 4.9 Arizona 23.5 3.2 28.4 4.6 26.7 5.9 All others states 253.7 34.1 223.6 36.3 180.7 40.0 Total $ 742.6 100.0 % $ 616.8 100.0 % $ 451.1 100.0 % ______________ |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2021 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS In January 2022, we entered into a $300.0 million five On January 20, 2022, in response to inflation and loss cost trends and to further drive efficiency and increased focus on our strategic priorities, we instituted an organizational realignment, including an involuntary workforce reduction affecting approximately 330 employees, which represented approximately 20% of our workforce. The majority of the reduction was driven by optimizing certain sales and claims departments, especially claims support staff in first notice of loss. These departments saw a reduced workload that corresponded with the strategic reduction in marketing spend and lower claims volume in the second half of the year. A majority of the affected employees were notified on January 20, 2022, with most job eliminations effective in January 2022. In the first quarter of 2022, we have recognized charges of $6.8 million for severance, benefits and related costs as a result of these actions, of which $4.3 million of these charges are expected to result in cash expenditures. Additionally, we expect to incur real estate exit costs comprising accelerated amortization of certain right of use assets and related leasehold improvements and furniture and fixtures of approximately $2.4 million. We continue to review the potential impact of the realignment, including additional facility lease exits and employee-related costs, and are unable to estimate any additional restructuring costs or charges at this time. |
Schedule II_ Condensed Combined
Schedule II: Condensed Combined Financial Information of Registrant | 12 Months Ended |
Dec. 31, 2021 | |
Condensed Financial Information Disclosure [Abstract] | |
Schedule II: Condensed Combined Financial Information of Registrant | ROOT, INC. and CARET HOLDINGS, INC. Schedule II: Condensed Combined Financial Information of Registrant Balance Sheets (Parent Company) (in millions, except par value) As of December 31, 2021 2020 Assets Other investments $ 4.7 $ 0.5 Cash and cash equivalents 432.3 1,043.1 Restricted cash 1.0 1.0 Investments in subsidiaries — 115.0 Other assets 49.3 34.6 Intercompany receivable 261.8 43.3 Total Assets $ 749.1 $ 1,237.5 Liabilities, Redeemable Convertible Preferred Stock and Stockholders’ Equity Liabilities: Long-term debt and warrants $ — $ 188.2 Investments in subsidiaries 58.5 — Accounts payable and accrued expenses 8.8 8.2 Other liabilities 24.5 8.7 Intercompany payable 8.9 — Total liabilities 100.7 205.1 Commitments and Contingencies Redeemable convertible preferred stock, $0.0001 par value, 14.1 and zero shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively (liquidation preference of $126.5 and zero, respectively) 112.0 — Stockholders’ equity: Class A common stock, $0.0001 par value, 142.9 and 59.4 shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively — — Class B common stock, $0.0001 par value, 109.9 and 192.2 shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively — — Treasury stock, at cost — (0.8) Additional paid-in capital 1,806.1 1,775.6 Accumulated other comprehensive income 0.4 5.6 Accumulated loss (1,270.1) (748.0) Total stockholders’ equity 536.4 1,032.4 Total liabilities, redeemable convertible preferred stock and stockholders’ equity $ 749.1 $ 1,237.5 See Notes to Condensed Combined Financial Statements ROOT, INC. and CARET HOLDINGS, INC. Schedule II: Condensed Combined Financial Information of Registrant Statements of Operations and Comprehensive Loss (Parent Company) (in millions) For the Years Ended December 31, 2021 2020 2019 Revenue: Net investment income $ 4.6 $ 0.9 $ 1.6 Total revenue 4.6 0.9 1.6 Operating expenses: Sales and marketing 10.0 — — Other insurance expense 2.9 — — Technology and development 42.5 19.5 3.5 General and administrative 5.3 37.8 15.7 Total operating expenses 60.7 57.3 19.2 Operating loss (56.1) (56.4) (17.6) Interest expense (20.0) (77.7) (22.3) Loss on early extinguishment of debt (15.9) — — Loss before income tax expense (92.0) (134.1) (39.9) Income tax expense — — — Net loss before equity net loss of subsidiaries (92.0) (134.1) (39.9) Net loss of subsidiaries (429.1) (228.9) (242.5) Net loss (521.1) (363.0) (282.4) Other comprehensive (loss) income: Other comprehensive (loss) income of subsidiaries (5.2) 5.0 0.6 Comprehensive loss $ (526.3) $ (358.0) $ (281.8) See Notes to Condensed Combined Financial Statements ROOT, INC. and CARET HOLDINGS, INC. Schedule II: Condensed Combined Financial Information of Registrant Statements of Cash Flows (Parent Company) (in millions) For the Years Ended December 31, 2021 2020 2019 Cash flows from operating activities: Net loss $ (521.1) $ (363.0) $ (282.4) Adjustments to reconcile net loss to net cash used in operating activities: Share-based compensation 19.3 3.7 1.4 Warrant compensation expense 8.8 — — Tender offer — 25.1 8.6 Depreciation and amortization, net 13.1 11.8 3.5 Change in equity in subsidiaries 429.1 228.9 242.5 Loss on early extinguishment of debt 15.9 — — SAFE fair value adjustment — — 11.2 Warrants fair value adjustment — 54.7 — Paid-in kind interest expense 10.6 9.1 0.8 Paid-in-kind interest paid (20.5) — — Change in fair value of equity securities (3.8) — — Changes in operating assets and liabilities: Other assets 4.2 (15.5) (1.2) Accounts payable and accrued expenses 0.4 3.8 4.9 Other liabilities (3.5) 2.1 0.6 Intercompany, net (209.6) (23.6) (7.2) Net cash used in operating activities (257.1) (62.9) (17.3) Cash flows from investing activities: Purchases of investments (0.4) (0.5) — Proceeds from maturities, call and pay downs of fixed maturities available-for-sale — — 1.7 Capitalization of internally developed software (6.6) (5.4) (3.9) Purchases of fixed assets (4.6) (1.8) (6.5) Investment in subsidiaries (261.8) (201.9) (333.0) Net cash used in investing activities (273.4) (209.6) (341.7) Cash flows from financing activities: Proceeds from issuance of common stock from IPO and concurrent private placements, net of issuance cost — 1,098.1 — Proceeds from exercise of stock options and restricted stock units, net of tax proceeds/(withholding) 3.2 2.1 1.9 Proceeds from issuance of preferred stock and related warrants 126.5 — 349.6 Payment of preferred stock and related warrants issuance costs (10.5) — — Proceeds from debt and warrants issuance, net of issuance cost — 12.0 189.5 Repayments of long-term debt (199.5) (13.5) (15.5) Proceeds from SAFE — — 10.0 Purchases of treasury stock — (0.2) — Net cash (used in) provided by financing activities (80.3) 1,098.5 535.5 Net (decrease) increase in cash and cash equivalents (610.8) 826.0 176.5 Cash, cash equivalents and restricted cash at beginning of year 1,044.1 218.1 41.6 Cash, cash equivalents and restricted cash at end of year $ 433.3 $ 1,044.1 $ 218.1 See Notes to Condensed Combined Financial Statements ROOT, INC. and CARET HOLDINGS, INC. Notes to Condensed Combined Financial Statements (Parent Company) 1. Business Caret Holdings, Inc. is a holding company which was formed in 2015 to develop and launch a direct-to-consumer personal automobile insurance and mobile technology company. In August 2019 a new holding company, Root, Inc. was formed, which became the parent of Caret Holdings, Inc. and maintains 100% ownership of Caret Holdings, Inc. 2. Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation and Combination —The condensed combined financial statements include the accounts of Root, Inc. and its wholly owned subsidiary, Caret Holdings, Inc., and are prepared in accordance with accounting principles generally accepted in the United States. All intercompany accounts and transactions have been eliminated. These financial statements have been combined in order to present comparative parent company financial statements for 2021, 2020 and 2019 and should be read in conjunction with our consolidated financial statements. Use of Estimates —The preparation of condensed combined financial statements requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Statement of Cash Flows —The supplemental disclosures for cash and non-cash flows for the years ended December 31, 2021, 2020 and 2019 are as follows: 2021 2020 2019 (in millions) Supplemental disclosures: Interest paid $ 23.9 $ 4.5 $ 4.3 Federal income taxes paid — — — Leasehold improvements - non-cash 1.5 — 1.5 Conversion of debt to preferred stock - non-cash — — 11.2 Conversion of preferred stock to common stock - non-cash — 560.4 — Conversion of warrants to common stock - non-cash — 75.0 — Lease liabilities arising from obtaining right-of-use asset 9.9 — — Carvana investment agreement issuance costs - non-cash 9.1 — — Purchases of treasury stock - non-cash — 0.5 — The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed combined balance sheets that sum to the total of the same such amount in the condensed combined statements of cash flows: 2021 2020 (in millions) Cash and cash equivalents $ 432.3 $ 1,043.1 Restricted cash 1.0 1.0 Total cash, cash equivalents and restricted cash shown in the statement of cash flows $ 433.3 $ 1,044.1 Investments in Subsidiaries —As of December 31, 2021, Caret Holdings, Inc had a negative investment in subsidiaries balance of $58.5 million primarily related to accumulated losses from subsidiaries. In accordance with applicable accounting guidance, we reclassified the negative investment in subsidiaries balance to the liabilities section of our combined balance sheet. 3. Guarantees Root, Inc. entered into an agreement with the Superintendent of Insurance, State of Ohio, (the “Superintendent”) guaranteeing that Root Insurance Company will maintain certain capital and surplus requirements or risk-based capital levels, whichever is greater, and such additional surplus as the Superintendent requires. The guarantee remains in effect until such time as the Superintendent may release Root, Inc. in writing. 4. Subsequent Events In January 2022, we entered into a $300.0 million five On January 20, 2022, in response to inflation and loss cost trends and to further drive efficiency and increased focus on our strategic priorities, we instituted an organizational realignment, including an involuntary workforce reduction affecting approximately 330 employees, which represented approximately 20% of our workforce. The majority of the reduction was driven by optimizing certain sales and claims departments, especially claims support staff in first notice of loss. These departments saw a reduced workload that corresponded with the strategic reduction in marketing spend and lower claims volume in the second half of the year. A majority of the affected employees were notified on January 20, 2022, with most job eliminations effective in January 2022.In the first quarter of 2022, we have recognized charges of $6.8 million for severance, benefits and related costs as a result of these actions, of which $4.3 million of these charges are expected to result in cash expenditures. Additionally, we expect to incur real estate exit costs comprising accelerated amortization of certain right of use assets and related leasehold improvements and furniture and fixtures of approximately $2.4 million. We continue to review the potential impact of the realignment, including additional facility lease exits and employee-related costs, and are unable to estimate any additional restructuring costs or charges at this time. |
Schedule V_ Valuation and Quali
Schedule V: Valuation and Qualifying Accounts | 12 Months Ended |
Dec. 31, 2021 | |
SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | |
Schedule V: Valuation and Qualifying Accounts | ROOT, INC. AND SUBSIDIARIES Schedule V: Valuation and Qualifying Accounts For the Years Ended December 31, 2021, 2020 and 2019 (in millions) Additions Balance at Charged to costs and expenses Charge to other accounts (1) Deductions Balance at end of period Year Ended December 31, 2019 Valuation allowance for deferred tax assets $ 19.4 $ 57.4 $ — $ — $ 76.8 Allowance for premium receivables $ — $ 9.0 $ — $ (7.0) $ 2.0 Year Ended December 31, 2020 Valuation allowance for deferred tax assets $ 76.8 $ 61.5 $ (1.0) $ — $ 137.3 Allowance for premium receivables $ 2.0 $ 23.6 $ — $ (22.1) $ 3.5 Year Ended December 31, 2021 Valuation allowance for deferred tax assets $ 137.3 $ 116.7 $ 1.0 $ — $ 255.0 Allowance for premium receivables $ 3.5 $ 20.9 $ 0.8 $ (19.8) $ 5.4 Allowance for reinsurance recoverables $ — $ — $ 0.2 $ — $ 0.2 ______________ |
BASIS OF PRESENTATION AND SUM_2
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation and Consolidation—The consolidated financial statements include the accounts of Root, Inc. and its subsidiaries, all of which are wholly owned. These financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. All intercompany accounts and transactions have been eliminated. |
Consolidation | To conform to the current year presentation, certain prior year amounts have been reclassified. |
Use of Estimates | Use of Estimates—The preparation of consolidated financial statements requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates reflected in our consolidated financial statements include, but are not limited to, reserves for loss and loss adjustment expense, or LAE, premium write-offs, fair value of warrants, intangible asset impairment and valuation allowance for income taxes. |
Debt and Equity Issuance Costs | Debt and Equity Issuance Costs —Debt and equity issuance costs, which primarily consist of advisor, legal, accounting, and other third-party fees directly related to issuing debt and equity instruments, are capitalized as other assets in our consolidated balance sheets as incurred. We incurred such costs in connection with our investment agreement we entered into with Carvana on August 21, 2021, or the Investment Agreement, and term loan agreement. Upon close of the related transaction, these deferred issuance costs are generally offset against the related proceeds. Debt issuance costs are subsequently amortized over the term of the financing agreement as interest expense on the consolidated statements of operations and comprehensive loss. |
Asset Acquisition | We accounted for the acquisition of Root Property & Casualty as an asset acquisition because substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets (the insurance licenses) and the acquisition of Root Property & Casualty did not include an input and a substantive process that together significantly contribute to the ability to create outputs and therefore does not meet the definition of a business under GAAP. Accordingly, we recognized the acquired assets at fair value as of the acquisition date, with transaction costs allocated to the insurance license indefinite-lived intangible assets. |
Indefinite-Lived Intangible Assets | Indefinite-Lived Intangible Assets —In connection with the acquisition of Root Property & Casualty, we recognized insurance licenses of $8.9 million, including transaction costs, as of December 31, 2021 and 2020 in other assets in our consolidated balance sheets. We incur a minimal fee to renew each license. These intangible assets are not amortized, but instead are tested for impairment annually or when indicators of impairment exist. The impairment test for indefinite-lived intangibles involves first assessing qualitative factors to determine if it is more likely than not that the fair value of the indefinite-lived intangible asset is less than its carrying amount. If so, then a quantitative test is performed to compare the estimated fair value of the indefinite-lived intangible asset to the respective asset's carrying amount. The evaluation requires the use of estimates and significant judgments and considers the weight of evidence and significance of all identified events and circumstances and most relevant drivers of fair value, both positive and negative, in determining whether it is more likely than not that the fair value of the indefinite-lived intangible asset is less than its carrying amount. No impairment was recognized for 2021 or 2020. |
Segment Information | Segment Information—Our chief operating decision maker is the Chief Executive Officer. The chief operating decision maker manages operations, allocates resources, and evaluates financial performance on a company-wide basis. We operate in one reporting segment providing direct-to-consumer insurance products to customers. |
Cash, Cash Equivalents and Restricted Cash | Cash, Cash Equivalents and Restricted Cash—Cash consists of cash on deposit. Cash equivalents are short-term, highly liquid investments that mature within three months from the date of origination and are principally stated at amortized cost, which approximates their fair value. Restricted cash consists of amounts held by a financial institution to satisfy letter of credit requirements for certain property leases. |
Book Overdraft | Book Overdraft—If checks are issued in excess of the amount of cash on hand, a book overdraft shall be reclassified to accounts payable on the consolidated balance sheets. When a check is issued whereby a disbursement account is used to write the check, but the account is not funded until the check is presented for payment this "negative cash" balance is included in cash and cash equivalents on the consolidated balance sheets, if the funding account has sufficient funds. |
Investments | Investments —Investments in debt securities are classified as short-term and available-for-sale securities and are carried at fair value with any unrealized gains and losses, net of taxes, recorded as a component of accumulated other comprehensive income. Management regularly reviews our securities for signs of impairment, an assessment requiring significant management judgment. Beginning with our adoption of Financial Accounting Standards Board, or FASB, Accounting Standard Update, or ASU, No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments as of January 1, 2021, the criteria that management considers are the financial condition of the issuer, including receipt of scheduled principal and interest cash flows, fair value of a security that has fallen below the amortized value, maturity dates, current economic conditions and intent to sell, including if it is more likely than not that we will be required to sell the security before recovery. We then assess whether the decline in value is due to non-credit related or credit related factors. Non-credit related declines in market value are recorded as unrealized losses in accumulated other comprehensive income. If we determine that the decline is credit related, we establish an allowance for credit losses equal to the difference between the discounted cash flow model and the amortized value, which is recorded in net realized gains (losses) on investments in our consolidated statements of operations and comprehensive loss. This allowance may be subsequently adjusted for recoveries or further credit losses. Prior to January 1, 2021, we were under an incurred loss model whereby we reviewed our securities for signs of other than temporary impairment. The criteria were similar to those noted above, except we also considered the length of time a security was in an unrealized loss position. When a debt security was determined to have an other than temporary impairment, the impairment charge was separated into an amount representing the credit loss, which would be recognized in earnings as a realized loss and the amount related to non-credit factors, which would be recognized in other comprehensive income. Subsequent recoveries of other than temporary impairment were not recognized. No such credit losses were recognized in 2021, nor were there other than temporary impairments recognized in 2020 or 2019. Other investments primarily consist of private equity investments without a readily determinable fair value. We elected to account for these investments at cost minus any impairment, plus or minus changes resulting from observable price changes in orderly transactions for an identical or a similar investment of the same issuer. Such changes are accounted for within net investment income on our consolidated statements of operations and comprehensive loss. |
Fair Value Measurements | Fair Value Measurements —Fair value is defined as the price that would be received upon selling an asset or the price paid to transfer a liability on the measurement date in the principal or most advantageous market for the asset or liability in an orderly transaction between willing market participants. A three-tier hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair values are: Level 1 - Financial assets and liabilities for which inputs are observable and are obtained from reliable quoted prices in active markets for identical assets and liabilities. Level 2 - Financial assets and liabilities for which values are based on quoted prices in markets that are not active or for which values are based on similar assets and liabilities that are actively traded. This also includes pricing models for which the inputs are corroborated by market data. Level 3 - Financial assets and liabilities for which values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. |
Premiums Earned | Premiums, Premiums Receivable and Premium Write-offs —Premiums written are deferred and earned pro rata over the policy period. Unearned premium is established to cover the unexpired portion of premiums written. A premium deficiency, as measured on a gross basis, is recorded when the sum of expected losses, LAE, unamortized acquisition costs and maintenance costs exceed the recorded unearned premium reserve and anticipated investment income. A premium deficiency reserve is recognized as a reduction of deferred acquisition costs and, if necessary, by accruing an additional liability for the deficiency, with a corresponding charge to operations. We did not record a premium deficiency reserve in 2021, 2020 or 2019. In August 2021, we commenced a fronting arrangement with an unaffiliated Texas county mutual insurance company, or the fronting carrier. We route all of our new auto policies, and, over time, expect to route certain renewal auto policies, in Texas through the fronting carrier whereby we assume 100% of the related premium and losses on those policies. The fronting arrangement allows us to have greater rating and underwriting flexibility. Premiums assumed are deferred and earned pro rata over the policy period. Unearned premium is established to cover the unexpired portion of premiums assumed. |
Premiums Receivable | Premiums receivable represents premiums written but not yet collected. Generally, premiums are collected prior to providing risk coverage, minimizing our exposure to credit risk. Due to a variety of factors, certain premiums billed may not be collected, for which we establish an allowance for doubtful accounts based primarily on an analysis of historical collection experience, adjusted for current economic conditions. |
Premium Write-offs | A policy is considered past due on the first day after its due date and policies greater than 90 days past due are written-off. |
Fee and Other Income | Fee Income —Fee income consists of the flat fee we charge to those policyholders who pay premiums on an installment basis. The fee relates to the additional administrative costs associated with processing more frequent billings. We recognize this fee income in the period in which we process each installment. Other Income —Other income primarily comprises revenue earned from distributing website and app policy inquiry leads in geographies where we do not have a presence, recognized when we generate the lead; commissions earned for homeowners policies placed with third-party insurance companies where we have no exposure to the insured risk, recognized on the effective date of the associated policy; and sale of enterprise technology products to provide telematics-based data collection and trip tracking, recognized ratably as the service is performed. |
Sales and Marketing | Sales and Marketing —Sales and marketing expenses includes spend related to performance and embedded channels, channel media, advertising, branding, public relations, consumer insights and referral fees. These expenses also include related employee costs including salaries, health benefits, bonuses, employee retirement plan related expenses and employee share-based compensation expense, or Personnel Costs, and overhead allocated based on General and Administrative —General and administrative expenses primarily relate to external professional service expenses; Personnel Costs and Overhead for corporate functions; and depreciation expense for computers, furniture and other fixed assets. General and administrative expenses are expensed as incurred. |
Other Insurance Expense (Benefit) | Other Insurance Expense (Benefit) —Other insurance expense (benefit) includes underwriting expenses, credit card and policy processing expenses, premium write-offs, insurance license expenses, and Personnel Costs and Overhead related to actuarial and certain data science activities. Other insurance expense (benefit) also includes amortization of deferred acquisition costs like premium taxes and report costs related to the successful acquisition of a policy. Other insurance expense (benefit) is expensed as incurred, except for costs related to deferred acquisition costs that are capitalized and subsequently amortized over the same period in which the related premiums are earned. |
Technology and development | Technology and development —Technology and development expense consists of software development costs related to our mobile app and homegrown information technology systems; third-party services related to infrastructure support; Personnel Costs and Overhead for engineering, product, technology, and certain data science activities; and amortization of internally developed software. Technology and development is expensed as incurred, except for development and testing costs related to internally developed software that are capitalized and subsequently amortized over the expected useful life. |
General and Administrative | Sales and Marketing —Sales and marketing expenses includes spend related to performance and embedded channels, channel media, advertising, branding, public relations, consumer insights and referral fees. These expenses also include related employee costs including salaries, health benefits, bonuses, employee retirement plan related expenses and employee share-based compensation expense, or Personnel Costs, and overhead allocated based on General and Administrative —General and administrative expenses primarily relate to external professional service expenses; Personnel Costs and Overhead for corporate functions; and depreciation expense for computers, furniture and other fixed assets. General and administrative expenses are expensed as incurred. |
Policy Acquisition Costs | Policy Acquisition Costs—Acquisition costs consist primarily of premium taxes, certain marketing costs and underwriting expenses, and fronting carrier commissions, net of ceding commissions, related to the successful acquisition of new or renewal business. They are deferred and amortized over the same period in which the related premiums are earned. Ceding commissions relating to reinsurance agreements are recorded as a reimbursement for both deferrable and non-deferrable acquisition costs. The portion of the ceding commission that is equal to the pro rata share of acquisition costs based on quota share percentage is recorded as an offset to the gross deferred acquisition costs. Any portion of the ceding commission that exceeds the acquisition costs of the business ceded is recorded as excess ceding commission, a deferred liability, and amortized over the same period in which the related premiums are earned. Deferred acquisition costs, net of accumulated amortization, was $2.8 million and $1.7 million as of December 31, 2021 and 2020, respectively. |
Loss and Loss Adjustment Expense and Reserves | Loss and Loss Adjustment Expense and Reserves —Loss and LAE reserves include an amount determined using adjuster determined case-base estimates for reported claims and actuarial determined unpaid claim estimates using past experience and historical emergence patterns for unreported losses and LAE. These reserves are a liability established to cover the estimated ultimate cost to settle insured losses. The estimation of the liability for loss and LAE reserves is complex and includes subjective considerations and management’s judgement. The actuarial methods to determine unpaid loss es timates consider loss trends, contract interpretation, mix of business, regulatory environment, economic conditions, inflation and other risk factors impacting claims settlement. The method used to estimate unpaid LAE liability is based on claims transaction data, including the relative cost of adjusting and settling a range of claim types from express material damage claims to more complex injury cases. There is considerable uncertainty associated with the actuarial estimates, and therefore no assurance can be made that the ultimate unpaid claim liability will not vary materially from such estimates. These loss estimates are continually reviewed by management and adjusted as necessary, with adjustments included in the period determined and recorded in loss and LAE on our consolidated statements of operations and comprehensive loss. As such, loss and LAE reserves represent management’s best estimate of the ultimate liability related to reported and unreported claims. Our loss and LAE reserves are recorded gross of reinsurance and net of amounts expected to be received from salvage (the amount recovered from a total loss claims expense) and subrogation (the right to recover payments from third parties). Loss and LAE is recorded net of amounts ceded to reinsurers. We enter into reinsurance contracts to limit our exposure to potential losses as well as to provide additional capacity for growth. These expenses are a function of the size and term of the insurance policies we write and the loss experience associated with the underlying risks. Loss and LAE may be paid out over a period of years. Various other expenses incurred during claims processing are allocated to LAE. These amounts include claims Personnel Costs, software expense, internally developed software amortization, and Overhead. |
Reinsurance | Reinsurance —In the ordinary course of business, we cede and retrocede a portion of our business written and assumed, respectively, to reinsurers to limit the maximum net loss potential arising from large risks and catastrophes. These arrangements, known as treaties, provide for reinsurance coverage on quota-share and excess-of-loss basis. All reinsurance contracts provide for indemnification against loss or liability relating to insurance risk and have been accounted for as reinsurance. Although the ceding of reinsurance does not discharge us from our primary liability to the policyholder, the insurance company that assumes the coverage assumes the related liability. Amounts recoverable from and payable to reinsurers are estimated in a manner consistent with the claim liability associated with the reinsured business. Reinsurance premiums, commissions and expense reimbursements related to reinsured business are accounted for on a basis consistent with the basis used in accounting for the original policies issued and the terms of the reinsurance contracts. Premiums ceded to other companies have been reported as a reduction of premiums earned and are recognized over the remaining policy period based on the reinsurance protection provided. Amounts applicable to reinsurance ceded for unearned premium reserves are reported as a prepaid reinsurance premiums asset in the accompanying consolidated balance sheets and as reduction of unearned premiums in Note 6, “Reinsurance.” Ceding commissions received in connection with reinsurance ceded have been accounted for as a reduction of other insurance (benefit) expense in the consolidated statements of operations and comprehensive loss. Some of our reinsurance agreements provide for adjustment of commissions or amount of coverage based on loss experience. We recognize the asset or liability arising from these adjustable features in the period the adjustment occurs, which is calculated based on experience to-date under the agreement. |
Income Taxes | Income Taxes —For the 2021 tax year, Root, Inc. will file a consolidated federal income tax return with Caret Holdings, Inc., Root Insurance Company, Root Property & Casualty, Root Lone Star Insurance Agency, Inc, and Root Reinsurance Company, Ltd. The consolidated return also includes Root Insurance Agency, LLC, Root Enterprise, LLC and Root Scout, LLC, which are disregarded entities under Caret Holdings, Inc. for federal income tax purposes. Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are recognized to the extent that there is sufficient positive evidence, as allowed under the Accounting Standard Codification, or ASC, 740, Income Taxes , to support the recoverability of those deferred tax assets. We establish a valuation allowance to the extent that there is insufficient evidence to support the recoverability of the deferred tax asset under ASC 740. In making such a determination, management considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies, and results of recent operations. If it is determined that the deferred tax assets would be realizable in the future in excess of their net recorded amount, an adjustment would be made to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. A valuation allowance of $255.0 million and $137.3 million was established as of December 31, 2021 and 2020, respectively. Further details are discussed in Note 9, "Income Taxes." |
Internally Developed Software | Internally Developed Software —We review our software development activity and capitalize costs during the application development phase under ASC 350-40, Internal-Use Software. |
Fixed Assets | Fixed Assets—Fixed Assets are carried at cost, net of accumulated depreciation. We capitalize purchases of fixed assets with costs greater than $1,000, including computers, furniture, and leasehold improvements. Depreciation on computers and furniture is recognized on a straight-line basis over a useful life of three years and five years, respectively. Depreciation on leasehold improvements is recognized on a straight-line basis over the shorter of their useful life or the life of the lease. When certain events or changes in operating conditions occur, an impairment assessment may be performed on the recoverability of the carrying amounts. |
Employee Share-Based Compensation | Employee Share-Based Compensation —We award share-based compensation, including stock options with only a service condition, stock options with service and performance conditions, restricted stock units, or RSUs, and restricted stock, to our officers, directors, employees, and certain advisors through approval from the Compensation Committee of the Board of Directors. We have also granted warrants to purchase shares of the Company’s Class A common stock to Carvana, which vest based upon achievement of certain performance conditions. Share-based compensation expense is recognized based on the grant date fair value of the awards, which is determined using the Black-Scholes Merton, or BSM, option-pricing model. The BSM option pricing model requires inputs based on certain subjective assumptions, including the expected stock price volatility, the expected term of the options, the risk-free interest rate for a period that approximates the expected term of the option, and our expected dividend yield. The fair value of common stock underlying the stock options, restricted stock and RSUs granted before our initial public offering, or IPO, had historically been determined by our Board of Directors, with input from management, and considering third-party valuations of our common stock. Because there had been no public market for our common stock, our Board of Directors had determined its fair value at the time of grant of the pre-IPO option by considering a number of objective and subjective factors, including financing investment rounds, operating and financial performance, the lack of liquidity of share capital and general and industry specific economic outlook, among other factors. Our Board of Directors determined the fair value of common stock based on valuations performed using the Option Pricing Method and the Probability Weighted Expected Return Method subject to relevant facts and circumstances. In connection with our IPO, our common stock became listed on the Nasdaq Global Select Market and we use these market prices for the fair value of our common shares. Stock options are generally exercisable for a period up to ten years from the grant date. We recognize forfeitures as they occur, which generally results in the reversal of previously recognized expense for nonvested awards. In the event of an involuntary termination that results in the cancellation of an award, the remaining unrecognized compensation cost for the entire award is recognized in the period of cancellation. If the award is cancelled and concurrently replaced upon termination, it follows modification accounting, typically as a Type III improbable-to-probable modification whereby it is effectively treated as a forfeiture and new grant as of the date of termination. Stock options with only a service condition generally vest over four years - 25% cliff vests after one year and approximately 2% vests each month over three years thereafter. Stock options with service and performance conditions generally vest ratably over a four-year period assuming achievement of the performance conditions. The compensation expense associated with nonvested stock options that have performance conditions is dependent on our periodic assessment of the probability of the performance conditions being achieved. If deemed probable, we recognize compensation expense on a straight-line basis over the requisite service period. If a performance condition is no longer probable of achievement, any previously recognized compensation expense is reversed and no subsequent compensation expense is recognized until achievement is once again probable, at which point a cumulative catch-up is recognized. RSUs generally vest over four years - 25% cliff vests after one year and approximately 2% vests each month over three years thereafter. Certain other RSUs vest in accordance with one of the following patterns: over four years - 25% cliff vests after one year and in equal increments quarterly over three years thereafter, over four years in equal quarterly increments, or fully cliff vest after one year. We generally recognize share-based compensation expense ratably over the respective vesting period. Warrant Compensation —In October 2021, we closed the Investment Agreement with the Carvana Group, LLC, or Carvana, that included the issuance of 14.1 million shares of redeemable convertible preferred stock designated as the Series A Convertible Preferred Stock and the issuance of eight tranches of warrants to purchase shares of the Company’s Class A common stock. As part of the investment agreement, we and Carvana also entered into a five-year commercial agreement whereby our auto insurance products will be embedded into Carvana’s online car buying platform, or Integrated Platform. The commercial agreement provides for agent commissions payable to Carvana for policy origination and an enterprise total loss replacement vehicle solution. The Carvana warrants compensation expense is recognized based on the grant date fair value of the award, which was determined using a Monte Carlo simulation in a risk-neutral framework, as contemplated in the Income Approach of valuation. Specifically, future equity is simulated in each period assuming a Geometric Brownian Motion. We considered the features of the warrants and the interdependency of exercise decisions between the Short-Term Warrants and the Long-Term Warrants in using the Monte Carlo simulation in order to determine the optimum exercise decision. The optimum exercise decision was made by choosing the option which would give the highest aggregate expected value to the holder in each of the 100,000 simulated paths. The payoff of each path is then calculated based on the simulated equity and discounted back to time zero using the applicable risk-free rates. The fair value of the warrants are then calculated as the average value from all simulation paths. Employing a Monte Carlo simulation with Geometric Brownian Motion requires a range of inputs for each uncertain variable, and establishing linkage between the assumptions, if necessary. Inputs and assumptions used in our analysis included our stock price at grant date, exercise prices, the term of the warrants, equity volatility, risk-free rate and dividend yield. Additional considerations included a discount for lack of marketability resulting from Carvana’s five-year lock-up period. These warrants vest as the parties’ develop an integrated automobile insurance solution for Carvana’s online car buying platform, or the Integrated Platform, and insurance sales through the Integrated Platform. The associated compensation expense is dependent on our periodic assessment of the probability of the milestones being achieved. If deemed probable, we recognize compensation expense on a pro-rata basis considering progress toward achieving the milestones. If a performance condition is no longer probable of achievement, any previously recognized compensation expense is reversed and no subsequent compensation expense is recognized until achievement is once again probable, at which point a cumulative catch-up is recognized. In determining the classification as equity, we followed guidance issued within FASB ASC 480, Distinguishing Liabilities from Equity, and FASB ASC 815, Derivatives and Hedging. |
Net Loss Per Share | Net Loss Per Share —Net loss per share, or EPS, results are a key indicator of the overall performance relative to each share of our outstanding common stock. Basic EPS share for both Class A and Class B common stock is computed by dividing net loss attributable to common stockholders by the weighted-average number of common shares vested and outstanding during the period. In addition to common shares outstanding, the computation of basic EPS includes instruments for which the holder is deemed to have the present rights to share in current period earnings (loss) with common stockholders. Accordingly, the warrants issued in connection with our Term Loan B were included in the 2020 and 2019 weighted-average number of common shares outstanding because they had an insignificant exercise price of $0.0001 per share and were therefore considered outstanding common shares for computation of basic EPS. Diluted EPS for both Class A and Class B common stock includes all the components of basic EPS, plus the dilutive effect of common stock equivalents, but excludes those common stock equivalents from the calculation of diluted EPS when the effect of inclusion, assessed individually, would be anti-dilutive. Notable dilutive securities relevant to our operations are stock options, performance stock options, nonvested shares subject to repurchase, restricted stock units, warrants and redeemable convertible preferred stock. We have operated at a loss for the years ended December 31, 2021, 2020 and 2019. Therefore, the conversion of common stock equivalents would increase the denominator of the EPS calculation and create a lower loss per share. Therefore, these common stock equivalents are considered antidilutive and diluted EPS is equal to basic EPS. Losses are allocated equally between both classes of common stock because they are entitled to the same liquidation and dividend rights. |
Recently Adopted Accounting Pronouncements and Registrant Filing Status | Recently Adopted Accounting Pronouncements and Registrant Filing Status —Prior to December 31, 2021, we qualified as an “emerging growth company,” or EGC, under the Jumpstart Our Business Startups Act of 2012, or JOBS Act. We previously elected to adopt certain new or revised accounting guidance within the same time period as private companies as permitted by our status as an EGC. We became a large accelerated filer on December 31, 2021, and lost our status as an EGC. Accordingly, we will follow the adoption criteria of public companies for new accounting pronouncements beginning with this Annual Report on Form 10-K. Prior to this Annual Report on Form 10-K, our financial statements did not reflect adoption of certain amended guidance that public companies generally may have been required to adopt, but we were not required to adopt based on our EGC status. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . ASU 2016-13 amends previous guidance on the impairment measurement of financial assets, including reinsurance recoverables, available-for-sale securities, and premium receivables, by requiring an entity to recognize an allowance for expected credit losses as a contra asset, rather than impairment as losses are incurred. The amended guidance is intended to result in more timely recognition of expected credit losses and enhance the accounting and disclosure of credit losses on financial assets. The ASU requires a cumulative-effect change to retained earnings (accumulated loss) in the period of adoption and prospective changes on previously recorded impairments, to the extent applicable. As a result of losing EGC status as of December 31, 2021, and because ASU 2016-13 may only be adopted as of the beginning of a fiscal year, we adopted this ASU effective January 1, 2021 using a modified retrospective approach. We recognized a $1.0 million cumulative effect transition adjustment to beginning accumulated loss relating to $0.8 million for current expected credit losses on our premiums receivable and $0.2 million for current expected credit losses on our reinsurance recoverables. The adoption of the accounting guidance did not have a material impact on our available-for-sale securities. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) , or ASU 2016-02. The main provision of ASU 2016-02 requires the recognition of right-of-use lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. The guidance also requires disclosures that meet the objective of enabling financial statement users to assess the amount, timing, and uncertainty of related cash flows. We adopted ASU 2016-02 on January 1, 2021. We elected various practical expedients which include: not applying the amended lease accounting guidance to comparative periods; including the carry forward of our leases without reassessing whether any contracts are leases or contain leases, lease classification and initial direct costs; and excluding leases with a term of 12 months or less from lease liability and right-of-use asset recognition. We did not elect the hindsight practical expedient. Our lease agreements contain lease components and non-lease components, both of which we have elected to account for as a single lease component for our real estate asset class. Operating lease expense for operating lease right-of-use assets is recognized on a straight-line basis over the lease term, which may include options to extend or terminate the lease when it is reasonably certain to do so and there is a significant economic incentive to exercise that option. Upon adoption of ASU 2016-02, we recognized an operating lease liability of $16.2 million and corresponding right-of-use asset of $9.9 million, which includes the effect of $6.3 million from reclassifying previously recognized deferred rent and lease exit liabilities as an offset, in accordance with the transition guidance. These lease assets and liabilities are recorded as other assets and other liabilities on the condensed consolidated balance sheets. This transition adjustment was reflected as a non-cash transaction in our condensed consolidated statements of cash flows. The transition did not have a material impact on our results of operations, liquidity or debt covenant compliance under our debt agreements during the year. For additional information refer to Note 8, “Leases.” In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40). The main provisions of ASU 2020-06 removes certain bifurcation models for convertible debt instruments and convertible preferred stock. Therefore, the embedded conversion feature no longer are separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging |
BASIS OF PRESENTATION AND SUM_3
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Schedule of capitalized computer software | The capitalized cost and accumulated amortization of internally developed software at December 31, 2021 and 2020 are as follows: 2021 2020 (dollars in millions) Internally developed software $ 20.5 $ 13.9 Accumulated amortization (8.0) (4.3) Internally developed software, net $ 12.5 $ 9.6 |
Schedule of fixed assets | The capitalized cost and accumulated depreciation of fixed assets at December 31, 2021 and 2020 are as follows: 2021 2020 (dollars in millions) Computers $ 7.0 $ 4.5 Furniture 3.4 3.4 Leasehold improvements 9.8 6.3 Total fixed assets, at cost $ 20.2 $ 14.2 Accumulated depreciation (9.9) (5.3) Fixed assets, net $ 10.3 $ 8.9 |
Schedule of supplemental disclosures | The supplemental disclosures for cash and non-cash flows for the years ended December 31, 2021, 2020 and 2019 are as follows: 2021 2020 2019 (in millions) Supplemental disclosures: Interest paid $ 23.9 $ 4.5 $ 4.3 Federal income taxes paid — — — Leasehold improvements - non-cash 1.5 — 1.5 Conversion of debt to preferred stock - non-cash — — 11.2 Conversion of preferred stock to common stock - non-cash — 560.4 — Conversion of warrants to common stock - non-cash — 75.0 — Lease liabilities arising from obtaining right-of-use asset 9.9 — — Investment Agreement issuance costs - non-cash 9.1 — — Purchases of treasury stock - non-cash — 0.5 — |
Schedule of cash and cash equivalents | The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amount in the consolidated statements of cash flows: 2021 2020 (in millions) Cash and cash equivalents $ 706.0 $ 1,112.8 Restricted cash 1.0 1.0 Total cash, cash equivalents and restricted cash shown in the statement of cash flows $ 707.0 $ 1,113.8 |
Schedule of cash and cash equvalents | The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amount in the consolidated statements of cash flows: 2021 2020 (in millions) Cash and cash equivalents $ 706.0 $ 1,112.8 Restricted cash 1.0 1.0 Total cash, cash equivalents and restricted cash shown in the statement of cash flows $ 707.0 $ 1,113.8 |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of AFS debt securities | The amortized cost and fair value of short-term investments and available-for-sale fixed maturity securities at December 31, 2021 and 2020 are as follows: 2021 Amortized Cost Allowance for Expected Credit Losses (1) Gross Unrealized Gains Gross Unrealized Losses Fair Value (dollars in millions) Fixed maturities: U.S. Treasury securities and agencies $ 23.7 $ — $ — $ (0.4) $ 23.3 Municipal securities 20.4 — 0.3 (0.1) 20.6 Corporate debt securities 48.2 — 0.7 (0.2) 48.7 Residential mortgage-backed securities 3.5 — — — 3.5 Commercial mortgage backed securities 30.2 — 0.2 (0.1) 30.3 Other debt obligations 3.5 — — — 3.5 Total $ 129.5 $ — $ 1.2 $ (0.8) $ 129.9 _______________ (1) We adopted ASU 2016-13 and the related amendments as of January 1, 2021. For additional information refer to Note 2, “Basis of Presentation and Summary of Significant Accounting Policies.” 2020 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value (dollars in millions) Fixed maturities: U.S. Treasury securities and agencies $ 16.9 $ 0.1 $ — $ 17.0 Municipal securities 22.6 0.8 — 23.4 Corporate debt securities 87.5 3.1 (0.1) 90.5 Residential mortgage-backed securities 7.8 — — 7.8 Commercial mortgage backed securities 57.1 1.3 — 58.4 Other debt obligations 23.5 0.4 — 23.9 Total fixed maturities 215.4 5.7 (0.1) 221.0 Short-term investments 3.0 — — 3.0 Total $ 218.4 $ 5.7 $ (0.1) $ 224.0 The following table reflects the gross and net realized gains and losses on short-term investments and fixed maturities that have been included in the consolidated statements of operations and comprehensive loss for the years ended December 31, 2021, 2020 and 2019: 2021 2020 2019 (dollars in millions) Realized gains on investments $ 2.5 $ 0.5 $ — Realized losses on investments (0.1) (0.2) — Net realized gains on investments $ 2.4 $ 0.3 $ — The following table sets forth the amortized cost and fair value of short-term investments and fixed maturity securities by contractual maturity at December 31, 2021: 2021 Amortized Cost Fair Value (dollars in millions) Due in one year or less $ 24.6 $ 24.5 Due after one year through five years 83.5 83.9 Due five years through 10 years 7.8 7.8 Due after 10 years 13.6 13.7 Total $ 129.5 $ 129.9 |
Schedule of unrealized losses | The following tables reflect the gross unrealized losses and fair value of bonds, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31, 2021 and 2020: 2021 Less than 12 Months 12 Months or More Total Fair Value Unrealized Fair Value Unrealized Fair Value Unrealized (dollars in millions) Bonds: U.S. Treasury securities and agencies $ 7.5 $ (0.1) $ 14.0 $ (0.3) $ 21.5 $ (0.4) Municipal securities 8.9 (0.1) — — 8.9 (0.1) Corporate debt securities 12.7 (0.1) 1.6 (0.1) 14.3 (0.2) Residential mortgage-backed securities 1.9 — 0.5 — 2.4 — Commercial mortgage-backed securities 8.7 (0.1) — — 8.7 (0.1) Total bonds $ 39.7 $ (0.4) $ 16.1 $ (0.4) $ 55.8 $ (0.8) 2020 Less than 12 Months 12 Months or More Total Fair Value Unrealized Fair Value Unrealized Fair Value Unrealized (dollars in millions) Bonds: U.S. Treasury securities and agencies $ 15.7 $ — $ — $ — $ — $ 15.7 $ — Municipal securities 2.3 — — — 2.3 — Corporate debt securities 2.9 (0.1) — — 2.9 (0.1) Residential mortgage-backed securities 3.7 — — — 3.7 — Commercial mortgage-backed securities 4.9 — — — 4.9 — Other debt obligations 0.1 — — — 0.1 — Total bonds $ 29.6 $ (0.1) $ — $ — $ 29.6 $ (0.1) |
Schedule of net investment income | The following table sets forth the components of net investment income for the years ended December 31, 2021, 2020 and 2019: 2021 2020 2019 (dollars in millions) Interest on bonds $ 2.4 $ 4.2 $ 1.8 Interest on deposits and cash equivalents 1.1 1.7 3.8 Other investments 3.8 — — Total 7.3 5.9 5.6 Investment expense (2.3) (0.5) (0.4) Net investment income $ 5.0 $ 5.4 $ 5.2 |
Schedule of credit ratings | The following tables summarize the credit ratings of investments at December 31, 2021 and 2020 December 31, 2021 Amortized Cost Fair Value % of Total S&P Global rating or equivalent (dollars in millions) AAA $ 70.9 $ 70.8 54.5 % AA+, AA, AA-, A-1 14.7 14.8 11.4 A+, A, A- 33.4 33.6 25.9 BBB+, BBB, BBB- 10.5 10.7 8.2 Total $ 129.5 $ 129.9 100.0 % December 31, 2020 Amortized Cost Fair Value % of Total S&P Global rating or equivalent (dollars in millions) AAA $ 116.5 $ 118.7 53.0 % AA+, AA, AA-, A-1 22.7 23.3 10.4 A+, A, A- 57.5 59.4 26.5 BBB+, BBB, BBB- 21.7 22.6 10.1 Total $ 218.4 $ 224.0 100.0 % |
FAIR VALUE OF FINANCIAL INSTR_2
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value of assets and liabilities | The following tables provide information about our financial assets measured and reported at fair value as of December 31, 2021 and 2020: 2021 Level 1 Level 2 Level 3 Total (dollars in millions) Assets Fixed maturities: U.S. Treasury securities and agencies $ 22.6 $ 0.7 $ — $ 23.3 Municipal securities — 20.6 — 20.6 Corporate debt securities — 48.7 — 48.7 Residential mortgage-backed securities — 3.5 — 3.5 Commercial mortgage-backed securities — 30.3 — 30.3 Other debt obligations — 3.5 — 3.5 Total fixed maturities 22.6 107.3 — 129.9 Cash equivalents 127.0 — — 127.0 Total Assets at fair value $ 149.6 $ 107.3 $ — $ 256.9 2020 Level 1 Level 2 Level 3 Total (dollars in millions) Assets Fixed maturities: U.S. Treasury securities and agencies $ 17.0 $ — $ — $ 17.0 Municipal securities — 23.4 — 23.4 Corporate debt securities — 90.5 — 90.5 Residential mortgage-backed securities — 7.8 — 7.8 Commercial mortgage-backed securities — 58.4 — 58.4 Other debt obligations — 23.9 — 23.9 Total fixed maturities 17.0 204.0 — 221.0 Short-term investments 2.2 0.8 — 3.0 Cash equivalents 568.4 — — 568.4 Total Assets at fair value $ 587.6 $ 204.8 $ — $ 792.4 |
Schedule of carrying amounts and fair values of financial instruments | As of December 31, 2021 and 2020, the carrying amounts and fair values of these financial instruments were as follows: Carrying amount as of December 31, 2021 Estimated Fair Value as of December 31, 2021 Carrying amount as of December 31, 2020 Estimated Fair Value as of December 31, 2020 (dollars in millions) Long-term debt $ — $ — $ 188.2 $ 209.0 |
LOSS AND LOSS ADJUSTMENT EXPE_2
LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Insurance [Abstract] | |
Schedule of ALAE by accident year | The following table shows incurred and paid losses and allocated loss adjustment expenses, or ALAE, development by accident year for private passenger auto in aggregate, cumulative claim frequency is defined as the number of reported claims at the claim level which includes reported claims that do not result in a liability: Incurred Losses and ALAE—Net of Reinsurance Accident Year 2017 (unaudited) 2018 (unaudited) 2019 (unaudited) 2020 (unaudited) 2021 IBNR Reported Claims (1) (dollars in millions) 2017 $ 1.2 $ 1.1 $ 1.1 $ 1.1 $ 1.1 $ — 553 2018 42.3 48.3 49.6 48.7 0.4 18,105 2019 287.3 306.3 304.7 2.8 90,105 2020 295.9 287.7 10.6 117,028 2021 341.6 62.9 146,270 Total $ 983.8 $ 76.7 372,061 Cumulative Paid Losses and ALAE—Net of Reinsurance Accident Year 2017 (unaudited) 2018 (unaudited) 2019 (unaudited) 2020 (unaudited) 2021 (dollars in millions) 2017 $ 0.6 $ 0.9 $ 1.0 $ 1.1 $ 1.1 2018 20.6 44.6 48.1 48.1 2019 177.0 277.7 296.2 2020 182.0 238.5 2021 179.4 Total $ 763.3 Loss and ALAE reserves—net of reinsurance $ 220.5 _______________ (1) Reported by claim event. |
Reconciliation of claims development to liability | The following table shows incurred and paid losses and allocated loss adjustment expenses, or ALAE, development by accident year for private passenger auto in aggregate, cumulative claim frequency is defined as the number of reported claims at the claim level which includes reported claims that do not result in a liability: Incurred Losses and ALAE—Net of Reinsurance Accident Year 2017 (unaudited) 2018 (unaudited) 2019 (unaudited) 2020 (unaudited) 2021 IBNR Reported Claims (1) (dollars in millions) 2017 $ 1.2 $ 1.1 $ 1.1 $ 1.1 $ 1.1 $ — 553 2018 42.3 48.3 49.6 48.7 0.4 18,105 2019 287.3 306.3 304.7 2.8 90,105 2020 295.9 287.7 10.6 117,028 2021 341.6 62.9 146,270 Total $ 983.8 $ 76.7 372,061 Cumulative Paid Losses and ALAE—Net of Reinsurance Accident Year 2017 (unaudited) 2018 (unaudited) 2019 (unaudited) 2020 (unaudited) 2021 (dollars in millions) 2017 $ 0.6 $ 0.9 $ 1.0 $ 1.1 $ 1.1 2018 20.6 44.6 48.1 48.1 2019 177.0 277.7 296.2 2020 182.0 238.5 2021 179.4 Total $ 763.3 Loss and ALAE reserves—net of reinsurance $ 220.5 _______________ (1) Reported by claim event. |
Reconciliation of reserve balances for loss and LAE, net of reinsurance | The following provides a reconciliation of the beginning and ending reserve balances for loss and LAE, net of reinsurance: 2021 2020 2019 (dollars in millions) Gross loss and LAE reserves, January 1 $ 237.2 $ 140.7 $ 33.3 Reinsurance recoverable on unpaid losses (79.6) (18.9) (11.4) Net loss and LAE reserves, January 1 157.6 121.8 21.9 Net incurred loss and LAE related to: Current year 405.9 341.9 312.6 Prior years (13.6) 20.9 8.8 Total incurred 392.3 362.8 321.4 Net paid loss and LAE related to: Current year 226.4 216.3 194.6 Prior years 82.8 110.7 26.9 Total paid 309.2 327.0 221.5 Net loss and LAE reserves, December 31 240.7 157.6 121.8 Plus reinsurance recoverable on unpaid losses 79.5 79.6 18.9 Gross loss and LAE reserves, December 31 $ 320.2 $ 237.2 $ 140.7 The following table sets forth the reconciliation of the claims development tables to the balance sheet losses and ALAE reserves, with separate disclosure of unallocated LAE, or ULAE, and reinsurance recoverable on unpaid losses for the years ended December 31: 2021 2020 (dollars in millions) Loss and ALAE reserves—net of reinsurance $ 220.5 $ 144.0 ULAE reserves—net of reinsurance 20.2 13.6 Reinsurance recoverables on unpaid losses 79.5 79.6 Total loss and LAE reserves—gross of reinsurance $ 320.2 $ 237.2 |
Schedule of historical claims | The following table sets forth the historical average annual percentage payout of incurred losses and ALAE (claims duration), net of reinsurance, as of December 31, 2021: Year 1 2 3 4 5 Incremental Paid (1) 54.1 % 32.3 % 7.4 % 4.5 % — % _______________ |
REINSURANCE (Tables)
REINSURANCE (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Insurance [Abstract] | |
Schedule of direct premiums written | The following table reflects amounts affecting the consolidated balance sheets and statements of operations and comprehensive loss for reinsurance as of and for the years ended December 31: 2021 2020 2019 (dollars in millions) Loss and LAE reserves: Direct $ 313.2 $ 237.2 $ 140.7 Assumed 7.0 — — Ceded (79.5) (79.6) (18.9) Net loss and LAE reserves $ 240.7 $ 157.6 $ 121.8 Unearned premiums: Direct $ 170.6 $ 157.1 $ 145.4 Assumed 9.5 — — Ceded (100.8) (112.8) (17.4) Net unearned premiums $ 79.3 $ 44.3 $ 128.0 Premiums written: Direct $ 725.9 $ 616.8 $ 451.1 Assumed 16.7 — — Ceded (397.3) (378.0) (82.3) Net premiums written $ 345.3 $ 238.8 $ 368.8 Premiums earned: Direct $ 712.3 $ 605.2 $ 352.9 Assumed 7.3 — — Ceded (409.3) (282.7) (77.6) Net premiums earned $ 310.3 $ 322.5 $ 275.3 Losses and LAE incurred: Direct $ 683.9 $ 557.6 $ 395.0 Assumed 10.9 — — Ceded (302.5) (194.8) (73.6) Net losses and LAE incurred $ 392.3 $ 362.8 $ 321.4 Gross written premium by state is as follows for the years ended December 31, 2021, 2020 and 2019: For the Years Ended December 31, 2021 2020 2019 Amount % of Total Amount % of Total Amount % of Total State (dollars in millions) Texas (1) $ 152.3 20.5 % $ 132.5 21.5 % $ 94.7 21.0 % Georgia 79.2 10.7 72.4 11.7 44.0 9.8 Louisiana 42.2 5.7 28.0 4.5 15.3 3.4 Pennsylvania 39.8 5.4 30.2 4.9 25.2 5.6 Utah 33.8 4.6 26.0 4.2 17.6 3.9 Nevada 33.6 4.5 19.1 3.1 2.4 0.5 Colorado 33.5 4.5 20.2 3.3 8.1 1.8 South Carolina 26.3 3.5 9.6 1.6 14.4 3.2 Missouri 24.7 3.3 26.8 4.3 22.0 4.9 Arizona 23.5 3.2 28.4 4.6 26.7 5.9 All others states 253.7 34.1 223.6 36.3 180.7 40.0 Total $ 742.6 100.0 % $ 616.8 100.0 % $ 451.1 100.0 % ______________ |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of long term debt | The following summarizes the carrying value of long-term debt and warrants as of December 31, 2021 and 2020: 2021 2020 (dollars in millions) Term Loan A $ — $ 99.5 Term Loan B — 100.0 Total — 199.5 Accrued interest payable — 10.2 Unamortized discount and debt and warrant issuance costs — (21.5) Total $ — $ 188.2 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Leases [Abstract] | |
Schedule of future lease payments | Future lease payments as of December 31, 2021 were as follows: Operating Leases (dollars in millions) 2022 $ 4.3 2023 4.4 2024 4.3 2025 1.5 2026 1.5 2027 and thereafter 1.6 Total future lease payments 17.6 Less: imputed interest (3.5) Total lease liabilities $ 14.1 |
Schedule of future minimum rental payments for operating leases | As previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020 under the prior lease accounting guidance, the following table summarizes, by remaining maturity, future commitments related to operating leases and other arrangements as of December 31, 2020: Operating Leases (dollars in millions) 2021 $ 3.9 2022 4.4 2023 4.4 2024 4.3 2025 1.5 2026 and thereafter 3.1 Total $ 21.6 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Schedule of components of income tax expense (benefit) | We had no income tax expense (benefit) for the years ended December 31, 2021, 2020 and 2019: 2021 2020 2019 (dollars in millions) Current: Federal $ — $ — $ — State — — — Total current — — — Deferred: Federal — — — State — — — Total deferred — — — Total income tax expense (benefit) $ — $ — $ — |
Schedule of effective income tax reconciliation | The income tax expense (benefit) differed from the amounts computed by applying the statutory U.S. federal income tax rate of 21% in 2021, 2020 and 2019 to pretax income as a result of the following: 2021 2020 2019 (dollars in millions) Loss before income taxes $ (521.1) $ (363.0) $ (282.4) Statutory U.S. federal income tax benefit (109.4) 21.0 % (76.2) 21.0 % (59.3) 21.0 % Valuation allowance on deferred tax assets 116.7 (22.4) 61.5 (16.9) 57.4 (20.3) Warrants fair value adjustment — — 11.5 (3.2) — — Share-based compensation (3.3) 0.6 5.0 (1.4) 1.7 (0.6) Nondeductible compensation 1.8 (0.3) — — — — State net operating loss (4.9) 0.9 (3.1) 0.9 (2.2) 0.8 Other (0.9) 0.2 1.3 (0.4) 2.4 (0.9) Income tax expense (benefit) $ — — % $ — — % $ — — % |
Schedule of deferred tax assets and liabilities | The following table sets forth the tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2021 and 2020: 2021 2020 (dollars in millions) Deferred tax assets: Unpaid losses and loss adjustment expenses $ 2.5 $ 1.5 Unearned premium reserves 3.8 1.9 Nondeductible accruals 0.5 0.9 Deferred rent 2.0 1.4 Research and development credits 0.9 0.9 Disallowed interest carryforward 9.6 3.7 Bad debt expense 1.2 0.8 Excess ceding commission 2.2 — Deferred compensation 2.5 1.4 Stock compensation 5.4 0.5 Other 2.6 0.6 State net operating loss carryforward 10.2 5.3 Net operating loss carryforward 217.4 124.1 Gross deferred assets 260.8 143.0 Less valuation allowance (255.0) (137.3) Total deferred tax assets, less valuation allowance 5.8 5.7 Deferred tax liabilities: Internally developed software 2.7 2.1 Fixed assets 2.2 1.9 Deferred acquisition costs 0.6 0.4 Unrealized gains 0.1 1.2 Other 0.2 0.1 Deferred tax liabilities 5.8 5.7 Net deferred tax asset $ — $ — |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Summary of warrants issued | The following table provides other key terms of the warrants: Warrants Exercise Price Shares Issued Grant Date Fair Value per Share Vesting Condition Short-Term Tranche 1 $ 10.00 42.6 $ 0.42 Completing the Integrated Platform Tranche 2 $ 11.00 57.8 $ 0.37 50,000 policy originations Tranche 3 $ 12.00 28.7 $ 0.18 75,000 policy originations Total Short-Term 129.1 Long-Term Tranche 1 $ 10.00 25.8 $ 0.42 100,000 policy originations Tranche 2 $ 12.50 26.9 $ 0.35 200,000 policy originations Tranche 3 $ 15.00 27.1 $ 0.24 300,000 policy originations Tranche 4 $ 22.50 26.1 $ 0.09 400,000 policy originations Tranche 5 $ 30.00 23.2 $ 0.04 500,000 policy originations Total Long-Term 129.1 |
Schedule of share-based compensation expense | The following table displays employee share-based compensation expense recorded in the consolidated statements of operations and comprehensive loss: Years Ended December 31, 2021 2020 2019 (dollars in millions) Share-based compensation expense: Loss and loss adjustment expenses $ 1.5 $ 0.6 $ — Sales and marketing 1.0 1.0 — Other insurance expense (benefit) 1.6 1.0 — Technology and development 4.5 5.8 — General and administrative 10.7 20.4 10.0 Total share-based compensation expense $ 19.3 $ 28.8 $ 10.0 The following table provides total employee share-based compensation expense by type of award: Years Ended December 31, 2021 2020 2019 (dollars in millions) Share-based compensation expense: Restricted stock unit expense $ 14.9 $ 0.6 $ — Stock option expense 4.4 28.2 10.0 Total share-based compensation expense $ 19.3 $ 28.8 $ 10.0 |
Summary of RSU activity | Restricted Stock Units A summary of RSU activity for the year ended December 31, 2021 is as follows: Restricted Stock Units Number of Shares Weighted-Average Aggregate Intrinsic Value (in millions, except exercise price) Nonvested at January 1, 2020 — $ — $ — Granted 0.4 17.72 Vested — 7.25 0.3 Forfeited, expired or canceled — 22.89 Nonvested at December 31, 2020 0.4 18.41 $ 6.2 Granted 12.2 9.17 Vested (0.1) 18.09 1.0 Forfeited, expired or canceled (3.6) 10.24 Nonvested at December 31, 2021 8.9 $ 9.02 $ 27.4 |
Summary of option activity | A summary of option activity for the years ended December 31, 2021 and 2020 is as follows: Options Number of Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (in Years) Aggregate Intrinsic Value (in millions, except exercise price and term amounts) Outstanding at January 1, 2020 12.3 $ 1.42 8.22 $ 70.4 Granted 1.6 7.76 Exercised (2.8) 0.70 41.5 Forfeited, expired or canceled (0.7) 5.00 Outstanding at December 31, 2020 10.4 $ 2.39 7.75 $ 137.7 Granted — 10.82 Exercised (2.8) 1.68 24.1 Forfeited, expired or canceled (1.1) 4.44 Outstanding at December 31, 2021 6.5 2.36 6.12 $ 9.5 |
Schedule of exercise price range | A summary of total options outstanding and exercisable at December 31, 2021: Options Outstanding and Exercisable Options Number of Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (in Years) (in millions, except exercise price and term amounts) Range of Exercise Prices: $0.01 - $1.00 2.7 $ 0.30 4.76 $1.00 - $2.50 2.8 $ 2.40 7.20 $2.50 - $13.00 1.0 $ 7.67 6.86 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of purchase obligations | The following table summarizes, by remaining maturity, future commitments related to other arrangements as of December 31, 2021: Purchase (dollars in millions) 2022 $ 8.1 2023 4.8 2024 0.9 2025 0.6 2026 and thereafter — Total $ 14.4 |
OTHER COMPREHENSIVE (LOSS) IN_2
OTHER COMPREHENSIVE (LOSS) INCOME AND ACCUMULATED OTHER COMPREHENSIVE INCOME (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Equity [Abstract] | |
Schedule of AOCI | The following table presents the changes in our accumulated other comprehensive income, or AOCI, for the years ended December 31, 2021, 2020 and 2019: 2021 2020 2019 (dollars in millions) Accumulated other comprehensive income beginning balance $ 5.6 $ 0.6 $ — Other comprehensive (loss) income before reclassifications (2.8) 5.3 0.6 Net realized gains on investments reclassified from AOCI to net loss (2.4) (0.3) — Net current period other comprehensive (loss) income (5.2) 5.0 0.6 Accumulated other comprehensive income ending balance $ 0.4 $ 5.6 $ 0.6 |
LOSS PER SHARE (Tables)
LOSS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Earnings Per Share [Abstract] | |
Schedule of earnings per share | The following table displays the computation of basic and diluted loss per share for both Class A and Class B common stock for the years ended December 31, 2021, 2020 and 2019: For the Years Ended December 31, 2021 2020 2019 (in millions, except per share amounts) Net loss $ (521.1) $ (363.0) $ (282.4) Weighted-average common shares outstanding: basic and diluted (both Class A and B) 249.2 75.5 33.9 Loss per common share: basic and diluted (both Class A and B) $ (2.09) $ (4.81) $ (8.33) |
Schedule of anti-dilutive securities | We excluded the following potentially dilutive common stock equivalents, presented based on amounts outstanding at each year end, from the computation of diluted EPS attributable to common stockholders for the years indicated because including them would have had an anti-dilutive effect: As of December 31, 2021 2020 2019 (in millions) Options to purchase common stock 6.5 10.4 12.3 Nonvested shares subject to repurchase 2.2 5.0 7.2 Restricted stock units 8.9 0.4 — Redeemable convertible preferred stock (as converted to common stock) 14.1 — 158.9 Warrants to purchase common stock (1) 129.1 — — Warrants to purchase redeemable convertible preferred stock (as converted to common stock) — — 0.6 Total 160.8 15.8 179.0 _______________ (1) Warrants outstanding as of December 31, 2021 would result in a maximum of 129.1 million shares of Class A common stock, if they vest and are fully exercised by Carvana for cash. |
STATUTORY FINANCIAL INFORMATI_2
STATUTORY FINANCIAL INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Insurance [Abstract] | |
Schedule of statutory financial information | Root Insurance Company and Root Property & Casualty maintained statutory capital and surplus as of December 31, 2021 and 2020 and had statutory net loss for the years ended December 31, 2021, 2020 and 2019 as follows: Statutory Net Loss Statutory Capital and Surplus 2021 2020 2019 (1) 2021 2020 (in millions) Root Insurance Company $ (126.9) $ (123.8) $ (157.6) $ 91.5 $ 100.1 Root Property & Casualty (33.4) (25.5) — 21.8 16.3 Total $ (160.3) $ (149.3) $ (157.6) $ 113.3 $ 116.4 _______________ |
GEOGRAPHICAL BREAKDOWN OF GRO_2
GEOGRAPHICAL BREAKDOWN OF GROSS WRITTEN PREMIUM (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Insurance [Abstract] | |
Schedule of gross premiums written | The following table reflects amounts affecting the consolidated balance sheets and statements of operations and comprehensive loss for reinsurance as of and for the years ended December 31: 2021 2020 2019 (dollars in millions) Loss and LAE reserves: Direct $ 313.2 $ 237.2 $ 140.7 Assumed 7.0 — — Ceded (79.5) (79.6) (18.9) Net loss and LAE reserves $ 240.7 $ 157.6 $ 121.8 Unearned premiums: Direct $ 170.6 $ 157.1 $ 145.4 Assumed 9.5 — — Ceded (100.8) (112.8) (17.4) Net unearned premiums $ 79.3 $ 44.3 $ 128.0 Premiums written: Direct $ 725.9 $ 616.8 $ 451.1 Assumed 16.7 — — Ceded (397.3) (378.0) (82.3) Net premiums written $ 345.3 $ 238.8 $ 368.8 Premiums earned: Direct $ 712.3 $ 605.2 $ 352.9 Assumed 7.3 — — Ceded (409.3) (282.7) (77.6) Net premiums earned $ 310.3 $ 322.5 $ 275.3 Losses and LAE incurred: Direct $ 683.9 $ 557.6 $ 395.0 Assumed 10.9 — — Ceded (302.5) (194.8) (73.6) Net losses and LAE incurred $ 392.3 $ 362.8 $ 321.4 Gross written premium by state is as follows for the years ended December 31, 2021, 2020 and 2019: For the Years Ended December 31, 2021 2020 2019 Amount % of Total Amount % of Total Amount % of Total State (dollars in millions) Texas (1) $ 152.3 20.5 % $ 132.5 21.5 % $ 94.7 21.0 % Georgia 79.2 10.7 72.4 11.7 44.0 9.8 Louisiana 42.2 5.7 28.0 4.5 15.3 3.4 Pennsylvania 39.8 5.4 30.2 4.9 25.2 5.6 Utah 33.8 4.6 26.0 4.2 17.6 3.9 Nevada 33.6 4.5 19.1 3.1 2.4 0.5 Colorado 33.5 4.5 20.2 3.3 8.1 1.8 South Carolina 26.3 3.5 9.6 1.6 14.4 3.2 Missouri 24.7 3.3 26.8 4.3 22.0 4.9 Arizona 23.5 3.2 28.4 4.6 26.7 5.9 All others states 253.7 34.1 223.6 36.3 180.7 40.0 Total $ 742.6 100.0 % $ 616.8 100.0 % $ 451.1 100.0 % ______________ |
NATURE OF BUSINESS (Details)
NATURE OF BUSINESS (Details) | Dec. 31, 2021 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Ownership percentage | 100.00% |
BASIS OF PRESENTATION AND SUM_4
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Details) $ / shares in Units, $ in Millions | 1 Months Ended | 12 Months Ended | ||
Nov. 30, 2020USD ($)state | Dec. 31, 2021USD ($)segment$ / shares | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | |
Asset Acquisition [Line Items] | ||||
Purchases of indefinite-lived intangible assets and transaction costs | $ 0 | $ (8.9) | $ 0 | |
Impairment of intangible assets | $ 0 | 0 | ||
Number of reportable segments | segment | 1 | |||
Allowance for premiums receivable | $ 5.4 | 3.5 | ||
Bad debt expense | 20.9 | 23.6 | 9 | |
Deferred policy acquisition cost | 2.8 | 1.7 | ||
Amortization of deferred acquisition costs | 26.4 | 17.1 | 12.2 | |
Valuation allowance | $ 255 | 137.3 | ||
Amortization period | 5 years | |||
Amortization expense | $ 3.7 | 2.4 | 1.4 | |
Depreciation expense | $ 4.6 | 3.1 | $ 1.7 | |
Exercise price of warrants (in dollars per share) | $ / shares | $ 0.0001 | |||
Computers | ||||
Asset Acquisition [Line Items] | ||||
Useful life | 3 years | |||
Furniture | ||||
Asset Acquisition [Line Items] | ||||
Useful life | 5 years | |||
Catlin | ||||
Asset Acquisition [Line Items] | ||||
Purchase consideration | $ 22.8 | |||
Cash, cash equivalents, and accrued investment income acquired | 14.4 | |||
Indefinite-lived intangible assets acquired | 8.4 | |||
Payment to acquire assets | $ 0.5 | |||
Number of states auto policies written | state | 48 | |||
Root Property & Casualty | ||||
Asset Acquisition [Line Items] | ||||
Purchases of indefinite-lived intangible assets and transaction costs | $ 8.9 | $ 8.9 |
BASIS OF PRESENTATION AND SUM_5
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Supplemental Cash Flow (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Accounting Policies [Abstract] | |||
Interest paid | $ 23.9 | $ 4.5 | $ 4.3 |
Federal income taxes paid | 0 | 0 | 0 |
Leasehold improvements - non-cash | 1.5 | 0 | 1.5 |
Conversion of debt to preferred stock - non-cash | 11.2 | ||
Conversion of preferred stock to common stock - non-cash | 0 | 560.4 | 0 |
Conversion of warrants to common stock - non-cash | 0 | 75 | 0 |
Lease liabilities arising from obtaining right-of-use asset | 9.9 | 0 | 0 |
Investment Agreement issuance costs - non-cash | 9.1 | 0 | 0 |
Purchases of treasury stock - non-cash | $ 0 | $ 0.5 | $ 0 |
BASIS OF PRESENTATION AND SUM_6
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 706 | $ 1,112.8 | ||
Restricted cash | 1 | 1 | ||
Total cash, cash equivalents and restricted cash shown in the statement of cash flows | $ 707 | $ 1,113.8 | $ 416.6 | $ 122.3 |
BASIS OF PRESENTATION AND SUM_7
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Internally Developed Software (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Accounting Policies [Abstract] | ||
Internally developed software | $ 20.5 | $ 13.9 |
Accumulated amortization | (8) | (4.3) |
Internally developed software, net | $ 12.5 | $ 9.6 |
BASIS OF PRESENTATION AND SUM_8
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Fixed Assets (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Property, Plant and Equipment [Line Items] | ||
Total fixed assets, at cost | $ 20.2 | $ 14.2 |
Accumulated depreciation | (9.9) | (5.3) |
Fixed assets, net | 10.3 | 8.9 |
Computers | ||
Property, Plant and Equipment [Line Items] | ||
Total fixed assets, at cost | 7 | 4.5 |
Furniture | ||
Property, Plant and Equipment [Line Items] | ||
Total fixed assets, at cost | 3.4 | 3.4 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total fixed assets, at cost | $ 9.8 | $ 6.3 |
BASIS OF PRESENTATION AND SUM_9
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Employee Share-Based Compensation (Details) | 12 Months Ended | |||
Dec. 31, 2021shares | Oct. 31, 2021trancheshares | Oct. 01, 2021tranche | Dec. 31, 2020shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Preferred stock issued (in shares) | 14,100,000 | 0 | ||
Preferred stock, outstanding (in shares) | 14,100,000 | 0 | ||
Carvana | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Preferred stock issued (in shares) | 14,100,000 | |||
Number of tranches | tranche | 8 | 8 | ||
Investment agreement, term of agreement | 5 years | |||
Options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Exercisable period | 10 years | |||
Vesting period | 4 years | |||
Service and performance period | 4 years | |||
Options | Tranche 1 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 1 year | |||
Vesting percentage | 25.00% | |||
Options | Tranche 2 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 3 years | |||
Vesting percentage | 2.00% | |||
RSUs | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 4 years | |||
RSUs | Tranche 1 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 1 year | |||
Vesting percentage | 25.00% | |||
RSUs | Tranche 2 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 3 years | |||
Vesting percentage | 2.00% | |||
Other Certain RSUs 1 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 4 years | |||
Other Certain RSUs 1 | Tranche 1 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 1 year | |||
Vesting percentage | 25.00% | |||
Other Certain RSUs 2 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 4 years | |||
Other Certain RSUs 3 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 1 year |
BASIS OF PRESENTATION AND SU_10
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - ASUs (Details) - USD ($) | Jan. 01, 2021 | Dec. 31, 2021 | Dec. 31, 2020 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Allowance for premiums receivable | $ 5,400,000 | $ 3,500,000 | |
Provision for loss corridor | 200,000 | $ 0 | |
Total lease liabilities | 14,100,000 | ||
Right-of-use asset | $ 5,100,000 | ||
Accounting Standards Update 2016-13 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Transition adjustment | $ 1,000,000 | ||
Allowance for premiums receivable | 800,000 | ||
Provision for loss corridor | 200,000 | ||
Accounting Standards Update 2016-02 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Total lease liabilities | 16,200,000 | ||
Right-of-use asset | 9,900,000 | ||
Reclassification of deferred rent and lease liabilities | $ 6,300,000 |
INVESTMENTS - Amortized Cost an
INVESTMENTS - Amortized Cost and Fair Value (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Debt Securities, Available-for-sale [Line Items] | ||
Total Amortized cost | $ 129.5 | $ 218.4 |
Allowance for Expected Credit Losses | 0 | |
Gross Unrealized Gains | 1.2 | 5.7 |
Gross Unrealized Losses | (0.8) | (0.1) |
Fair Value | 129.9 | 224 |
Fixed maturities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Total Amortized cost | 215.4 | |
Gross Unrealized Gains | 5.7 | |
Gross Unrealized Losses | (0.1) | |
Fair Value | 129.9 | 221 |
U.S. Treasury securities and agencies | ||
Debt Securities, Available-for-sale [Line Items] | ||
Total Amortized cost | 23.7 | 16.9 |
Allowance for Expected Credit Losses | 0 | |
Gross Unrealized Gains | 0 | 0.1 |
Gross Unrealized Losses | (0.4) | 0 |
Fair Value | 23.3 | 17 |
Municipal securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Total Amortized cost | 20.4 | 22.6 |
Allowance for Expected Credit Losses | 0 | |
Gross Unrealized Gains | 0.3 | 0.8 |
Gross Unrealized Losses | (0.1) | 0 |
Fair Value | 20.6 | 23.4 |
Corporate debt securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Total Amortized cost | 48.2 | 87.5 |
Allowance for Expected Credit Losses | 0 | |
Gross Unrealized Gains | 0.7 | 3.1 |
Gross Unrealized Losses | (0.2) | (0.1) |
Fair Value | 48.7 | 90.5 |
Residential mortgage-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Total Amortized cost | 3.5 | 7.8 |
Allowance for Expected Credit Losses | 0 | |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 3.5 | 7.8 |
Commercial mortgage backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Total Amortized cost | 30.2 | 57.1 |
Allowance for Expected Credit Losses | 0 | |
Gross Unrealized Gains | 0.2 | 1.3 |
Gross Unrealized Losses | (0.1) | 0 |
Fair Value | 30.3 | 58.4 |
Other debt obligations | ||
Debt Securities, Available-for-sale [Line Items] | ||
Total Amortized cost | 3.5 | 23.5 |
Allowance for Expected Credit Losses | 0 | |
Gross Unrealized Gains | 0 | 0.4 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | $ 3.5 | 23.9 |
Short-term investments | ||
Debt Securities, Available-for-sale [Line Items] | ||
Total Amortized cost | 3 | |
Gross Unrealized Gains | 0 | |
Gross Unrealized Losses | 0 | |
Fair Value | $ 3 |
INVESTMENTS- Other investments
INVESTMENTS- Other investments (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Investments, Debt and Equity Securities [Abstract] | ||
Other investments | $ 4.7 | $ 0.5 |
Unrealized gains | $ 3.8 |
INVESTMENTS - Unrealized Losses
INVESTMENTS - Unrealized Losses (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items] | |||
Less than 12 months, fair value | $ 39.7 | $ 29.6 | |
Less than 12 months, unrealized loss | (0.4) | (0.1) | |
12 Months or more, fair value | 16.1 | 0 | |
12 months or more, unrealized loss | (0.4) | 0 | |
Total, fair value | 55.8 | 29.6 | |
Total, unrealized loss | (0.8) | (0.1) | |
Realized gains on investments | 2.5 | 0.5 | $ 0 |
Realized losses on investments | (0.1) | (0.2) | 0 |
Net realized gains on investments | 2.4 | 0.3 | $ 0 |
U.S. Treasury securities and agencies | |||
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items] | |||
Less than 12 months, fair value | 7.5 | 15.7 | |
Less than 12 months, unrealized loss | (0.1) | 0 | |
12 Months or more, fair value | 14 | 0 | |
12 months or more, unrealized loss | (0.3) | 0 | |
Total, fair value | 21.5 | 15.7 | |
Total, unrealized loss | (0.4) | 0 | |
Municipal securities | |||
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items] | |||
Less than 12 months, fair value | 8.9 | 2.3 | |
Less than 12 months, unrealized loss | (0.1) | 0 | |
12 Months or more, fair value | 0 | 0 | |
12 months or more, unrealized loss | 0 | 0 | |
Total, fair value | 8.9 | 2.3 | |
Total, unrealized loss | (0.1) | 0 | |
Corporate debt securities | |||
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items] | |||
Less than 12 months, fair value | 12.7 | 2.9 | |
Less than 12 months, unrealized loss | (0.1) | (0.1) | |
12 Months or more, fair value | 1.6 | 0 | |
12 months or more, unrealized loss | (0.1) | 0 | |
Total, fair value | 14.3 | 2.9 | |
Total, unrealized loss | (0.2) | (0.1) | |
Residential mortgage-backed securities | |||
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items] | |||
Less than 12 months, fair value | 1.9 | 3.7 | |
Less than 12 months, unrealized loss | 0 | 0 | |
12 Months or more, fair value | 0.5 | 0 | |
12 months or more, unrealized loss | 0 | 0 | |
Total, fair value | 2.4 | 3.7 | |
Total, unrealized loss | 0 | 0 | |
Commercial mortgage backed securities | |||
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items] | |||
Less than 12 months, fair value | 8.7 | 4.9 | |
Less than 12 months, unrealized loss | (0.1) | 0 | |
12 Months or more, fair value | 0 | 0 | |
12 months or more, unrealized loss | 0 | 0 | |
Total, fair value | 8.7 | 4.9 | |
Total, unrealized loss | $ (0.1) | 0 | |
Other debt obligations | |||
Debt Securities, Available-for-sale, Unrealized Loss Position [Line Items] | |||
Less than 12 months, fair value | 0.1 | ||
Less than 12 months, unrealized loss | 0 | ||
12 Months or more, fair value | 0 | ||
12 months or more, unrealized loss | 0 | ||
Total, fair value | 0.1 | ||
Total, unrealized loss | $ 0 |
INVESTMENTS - Contractual Matur
INVESTMENTS - Contractual Maturity (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Amortized Cost | ||
Due in one year or less, amortized cost | $ 24.6 | |
Due after one year through five years, amortized cost | 83.5 | |
Due five years through 10 years, amortized cost | 7.8 | |
Due after 10 years, amortized cost | 13.6 | |
Total Amortized cost | 129.5 | $ 218.4 |
Fair Value | ||
Due in one year or less, fair value | 24.5 | |
Due after one year through five years, fair value | 83.9 | |
Due five years through 10 years, fair value | 7.8 | |
Due after 10 years, fair value | 13.7 | |
Total investments | $ 129.9 | $ 224 |
INVESTMENTS - Net Investment In
INVESTMENTS - Net Investment Income (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Net Investment Income [Line Items] | |||
Total | $ 7.3 | $ 5.9 | $ 5.6 |
Investment expense | (2.3) | (0.5) | (0.4) |
Net investment income | 5 | 5.4 | 5.2 |
Interest on bonds | |||
Net Investment Income [Line Items] | |||
Total | 2.4 | 4.2 | 1.8 |
Interest on deposits and cash equivalents | |||
Net Investment Income [Line Items] | |||
Total | 1.1 | 1.7 | 3.8 |
Other investments | |||
Net Investment Income [Line Items] | |||
Total | $ 3.8 | $ 0 | $ 0 |
INVESTMENTS - Credit Ratings (D
INVESTMENTS - Credit Ratings (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | $ 129.5 | $ 218.4 |
Fair Value | $ 129.9 | $ 224 |
AFS securities | Credit rating | ||
Debt Securities, Available-for-sale [Line Items] | ||
Concentration percentage | 100.00% | 100.00% |
AAA | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | $ 70.9 | $ 116.5 |
Fair Value | $ 70.8 | $ 118.7 |
AAA | AFS securities | Credit rating | ||
Debt Securities, Available-for-sale [Line Items] | ||
Concentration percentage | 54.50% | 53.00% |
AA+, AA, AA-, A-1 | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | $ 14.7 | $ 22.7 |
Fair Value | $ 14.8 | $ 23.3 |
AA+, AA, AA-, A-1 | AFS securities | Credit rating | ||
Debt Securities, Available-for-sale [Line Items] | ||
Concentration percentage | 11.40% | 10.40% |
A+, A, A- | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | $ 33.4 | $ 57.5 |
Fair Value | $ 33.6 | $ 59.4 |
A+, A, A- | AFS securities | Credit rating | ||
Debt Securities, Available-for-sale [Line Items] | ||
Concentration percentage | 25.90% | 26.50% |
BBB+, BBB, BBB- | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | $ 10.5 | $ 21.7 |
Fair Value | $ 10.7 | $ 22.6 |
BBB+, BBB, BBB- | AFS securities | Credit rating | ||
Debt Securities, Available-for-sale [Line Items] | ||
Concentration percentage | 8.20% | 10.10% |
INVESTMENTS - Special Deposits
INVESTMENTS - Special Deposits (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Investments, Debt and Equity Securities [Abstract] | ||
Amortized costs of special deposits | $ 13.4 | $ 12.8 |
Fair of special deposits | $ 13.8 | $ 13.6 |
FAIR VALUE OF FINANCIAL INSTR_3
FAIR VALUE OF FINANCIAL INSTRUMENTS - Balance Sheet Grouping (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Assets | ||
AFS securities | $ 129.9 | $ 224 |
Cash equivalents | 127 | 568.4 |
Total Assets at fair value | 256.9 | 792.4 |
U.S. Treasury securities and agencies | ||
Assets | ||
AFS securities | 23.3 | 17 |
Municipal securities | ||
Assets | ||
AFS securities | 20.6 | 23.4 |
Corporate debt securities | ||
Assets | ||
AFS securities | 48.7 | 90.5 |
Residential mortgage-backed securities | ||
Assets | ||
AFS securities | 3.5 | 7.8 |
Commercial mortgage backed securities | ||
Assets | ||
AFS securities | 30.3 | 58.4 |
Other debt obligations | ||
Assets | ||
AFS securities | 3.5 | 23.9 |
Fixed maturities | ||
Assets | ||
AFS securities | 129.9 | 221 |
Short-term investments | ||
Assets | ||
AFS securities | 3 | |
Level 1 | ||
Assets | ||
Cash equivalents | 127 | 568.4 |
Total Assets at fair value | 149.6 | 587.6 |
Level 1 | U.S. Treasury securities and agencies | ||
Assets | ||
AFS securities | 22.6 | 17 |
Level 1 | Municipal securities | ||
Assets | ||
AFS securities | 0 | 0 |
Level 1 | Corporate debt securities | ||
Assets | ||
AFS securities | 0 | 0 |
Level 1 | Residential mortgage-backed securities | ||
Assets | ||
AFS securities | 0 | 0 |
Level 1 | Commercial mortgage backed securities | ||
Assets | ||
AFS securities | 0 | 0 |
Level 1 | Other debt obligations | ||
Assets | ||
AFS securities | 0 | 0 |
Level 1 | Fixed maturities | ||
Assets | ||
AFS securities | 22.6 | 17 |
Level 1 | Short-term investments | ||
Assets | ||
AFS securities | 2.2 | |
Level 2 | ||
Assets | ||
Cash equivalents | 0 | 0 |
Total Assets at fair value | 107.3 | 204.8 |
Level 2 | U.S. Treasury securities and agencies | ||
Assets | ||
AFS securities | 0.7 | 0 |
Level 2 | Municipal securities | ||
Assets | ||
AFS securities | 20.6 | 23.4 |
Level 2 | Corporate debt securities | ||
Assets | ||
AFS securities | 48.7 | 90.5 |
Level 2 | Residential mortgage-backed securities | ||
Assets | ||
AFS securities | 3.5 | 7.8 |
Level 2 | Commercial mortgage backed securities | ||
Assets | ||
AFS securities | 30.3 | 58.4 |
Level 2 | Other debt obligations | ||
Assets | ||
AFS securities | 3.5 | 23.9 |
Level 2 | Fixed maturities | ||
Assets | ||
AFS securities | 107.3 | 204 |
Level 2 | Short-term investments | ||
Assets | ||
AFS securities | 0.8 | |
Level 3 | ||
Assets | ||
Cash equivalents | 0 | 0 |
Total Assets at fair value | 0 | 0 |
Level 3 | U.S. Treasury securities and agencies | ||
Assets | ||
AFS securities | 0 | 0 |
Level 3 | Municipal securities | ||
Assets | ||
AFS securities | 0 | 0 |
Level 3 | Corporate debt securities | ||
Assets | ||
AFS securities | 0 | 0 |
Level 3 | Residential mortgage-backed securities | ||
Assets | ||
AFS securities | 0 | 0 |
Level 3 | Commercial mortgage backed securities | ||
Assets | ||
AFS securities | 0 | 0 |
Level 3 | Other debt obligations | ||
Assets | ||
AFS securities | 0 | 0 |
Level 3 | Fixed maturities | ||
Assets | ||
AFS securities | $ 0 | 0 |
Level 3 | Short-term investments | ||
Assets | ||
AFS securities | $ 0 |
FAIR VALUE OF FINANCIAL INSTR_4
FAIR VALUE OF FINANCIAL INSTRUMENTS - Long Term Debt (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt outstanding | $ 0 | $ 188,200,000 |
Level 2 | Carrying amount | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | 0 | 188,200,000 |
Level 2 | Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | $ 0 | $ 209,000,000 |
LOSS AND LOSS ADJUSTMENT EXPE_3
LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES-Schedule of Reserve Balance (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | |||
Gross loss and LAE reserves, January 1 | $ 237.2 | $ 140.7 | $ 33.3 |
Reinsurance recoverable on unpaid losses | (79.6) | (18.9) | (11.4) |
Net loss and LAE reserves, January 1 | 157.6 | 121.8 | 21.9 |
Net incurred loss and LAE related to: | |||
Current year | 405.9 | 341.9 | 312.6 |
Prior years | (13.6) | 20.9 | 8.8 |
Total incurred | 392.3 | 362.8 | 321.4 |
Net paid loss and LAE related to: | |||
Current year | 226.4 | 216.3 | 194.6 |
Prior years | 82.8 | 110.7 | 26.9 |
Total paid | 309.2 | 327 | 221.5 |
Net loss and LAE reserves | 240.7 | 157.6 | 121.8 |
Plus reinsurance recoverable on unpaid losses | 79.5 | 79.6 | 18.9 |
Gross loss and LAE reserves, December 31 | $ 320.2 | $ 237.2 | $ 140.7 |
LOSS AND LOSS ADJUSTMENT EXPE_4
LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Insurance [Abstract] | |||
Incurred losses and LAE attributable to prior accident years | $ (13.6) | $ 20.9 | $ 8.8 |
LOSS AND LOSS ADJUSTMENT EXPE_5
LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES - LAE by Accident Year (Details) $ in Millions | Dec. 31, 2021USD ($)claimstate | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) |
Claims Development [Line Items] | |||||
Incurred Losses and ALAE—Net of Reinsurance | $ 983.8 | ||||
IBNR | $ 76.7 | ||||
Reported Claims | claim | 372,061 | ||||
Cumulative Paid Losses and ALAE—Net of Reinsurance | $ 763.3 | ||||
Loss and ALAE reserves—net of reinsurance | 220.5 | ||||
2017 | |||||
Claims Development [Line Items] | |||||
Incurred Losses and ALAE—Net of Reinsurance | 1.1 | $ 1.1 | $ 1.1 | $ 1.1 | $ 1.2 |
IBNR | $ 0 | ||||
Reported Claims | state | 553 | ||||
Cumulative Paid Losses and ALAE—Net of Reinsurance | $ 1.1 | 1.1 | 1 | 0.9 | $ 0.6 |
2018 | |||||
Claims Development [Line Items] | |||||
Incurred Losses and ALAE—Net of Reinsurance | 48.7 | 49.6 | 48.3 | 42.3 | |
IBNR | $ 0.4 | ||||
Reported Claims | claim | 18,105 | ||||
Cumulative Paid Losses and ALAE—Net of Reinsurance | $ 48.1 | 48.1 | 44.6 | $ 20.6 | |
2019 | |||||
Claims Development [Line Items] | |||||
Incurred Losses and ALAE—Net of Reinsurance | 304.7 | 306.3 | 287.3 | ||
IBNR | $ 2.8 | ||||
Reported Claims | claim | 90,105 | ||||
Cumulative Paid Losses and ALAE—Net of Reinsurance | $ 296.2 | 277.7 | $ 177 | ||
2020 | |||||
Claims Development [Line Items] | |||||
Incurred Losses and ALAE—Net of Reinsurance | 287.7 | 295.9 | |||
IBNR | $ 10.6 | ||||
Reported Claims | claim | 117,028 | ||||
Cumulative Paid Losses and ALAE—Net of Reinsurance | $ 238.5 | $ 182 | |||
2021 | |||||
Claims Development [Line Items] | |||||
Incurred Losses and ALAE—Net of Reinsurance | 341.6 | ||||
IBNR | $ 62.9 | ||||
Reported Claims | claim | 146,270 | ||||
Cumulative Paid Losses and ALAE—Net of Reinsurance | $ 179.4 |
LOSS AND LOSS ADJUSTMENT EXPE_6
LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES - Reconciliation (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Insurance [Abstract] | ||||
Loss and ALAE reserves—net of reinsurance | $ 220.5 | $ 144 | ||
ULAE reserves—net of reinsurance | 20.2 | 13.6 | ||
Reinsurance recoverables on unpaid losses | 79.5 | 79.6 | $ 18.9 | $ 11.4 |
Loss and loss adjustment expense reserves | $ 320.2 | $ 237.2 | $ 140.7 | $ 33.3 |
LOSS AND LOSS ADJUSTMENT EXPE_7
LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES - Historical Claims (Details) | Dec. 31, 2021 |
Insurance [Abstract] | |
Incremental Paid, Year 1 | 54.10% |
Incremental Paid, Year 2 | 32.30% |
Incremental Paid, Year 3 | 7.40% |
Incremental Paid, Year 4 | 4.50% |
Incremental Paid, Year 5 | 0.00% |
REINSURANCE (Details)
REINSURANCE (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Loss and LAE reserves: | ||||
Direct | $ 313.2 | $ 237.2 | $ 140.7 | |
Assumed | 7 | 0 | 0 | |
Ceded | (79.5) | (79.6) | (18.9) | $ (11.4) |
Net loss and LAE reserves | 240.7 | 157.6 | 121.8 | $ 21.9 |
Unearned premiums: | ||||
Direct | 170.6 | 157.1 | 145.4 | |
Assumed | 9.5 | 0 | 0 | |
Ceded | (100.8) | (112.8) | (17.4) | |
Net unearned premiums | 79.3 | 44.3 | 128 | |
Premiums written: | ||||
Direct | 725.9 | 616.8 | 451.1 | |
Assumed | 16.7 | 0 | 0 | |
Ceded | (397.3) | (378) | (82.3) | |
Net premiums written | 345.3 | 238.8 | 368.8 | |
Premiums earned: | ||||
Direct | 712.3 | 605.2 | 352.9 | |
Assumed | 7.3 | 0 | 0 | |
Ceded | (409.3) | (282.7) | (77.6) | |
Net premiums earned | 310.3 | 322.5 | 275.3 | |
Losses and LAE incurred: | ||||
Direct | 683.9 | 557.6 | 395 | |
Assumed | 10.9 | 0 | 0 | |
Ceded | (302.5) | (194.8) | (73.6) | |
Net losses and LAE incurred | 392.3 | 362.8 | $ 321.4 | |
Maximum amount of ceded commissions returned | 26.5 | 27.2 | ||
Reinsurance recoverable unpaid losses | 160.7 | 109.1 | ||
Provision for sliding scale commissions | 0 | 8.1 | ||
Provision for loss corridor | $ 80.4 | $ 29.5 |
LONG-TERM DEBT - Narrative (Det
LONG-TERM DEBT - Narrative (Details) - USD ($) $ / shares in Units, shares in Millions | Nov. 08, 2021 | Oct. 15, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Jan. 31, 2022 |
Debt Instrument [Line Items] | ||||||
Exercise price of warrants (in dollars per share) | $ 0.0001 | |||||
Adjustment to fair value of warrants | $ 0 | $ 54,700,000 | $ 0 | |||
Loss on early extinguishment of debt | $ (15,900,000) | $ 0 | $ 0 | |||
Common stock | ||||||
Debt Instrument [Line Items] | ||||||
Warrants outstanding (in shares) | 2.8 | |||||
Exercise price of warrants (in dollars per share) | $ 0.0001 | |||||
Amended Term Loan B | Term loan | LIBOR | ||||||
Debt Instrument [Line Items] | ||||||
Variable rate percentage | 10.50% | |||||
Term Loan A | Term loan | LIBOR | ||||||
Debt Instrument [Line Items] | ||||||
Variable rate percentage | 4.00% | |||||
Term Loan | Subsequent event | ||||||
Debt Instrument [Line Items] | ||||||
Debt amount | $ 300,000,000 | |||||
Revolving Loan | Amended Term Loan A | Line of Credit | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | $ 100,000,000 | |||||
Unused fee percentage | 0.50% | |||||
Repayment of debt | $ 98,800,000 | |||||
Payment of accrued interest and fees | $ 200,000 | |||||
Revolving Loan | Amended Term Loan B | Line of Credit | ||||||
Debt Instrument [Line Items] | ||||||
Repayment of debt | $ 100,000,000 | |||||
Payment of accrued interest and fees | 20,900,000 | |||||
Retirement of debt | $ 120,900,000 | |||||
Letter of Credit | Amended Term Loan A | Line of Credit | ||||||
Debt Instrument [Line Items] | ||||||
Average daily amount fee percentage | 4.00% | |||||
Fronting fee percentage | 0.125% | |||||
Letters of credit outstanding | $ 0 |
LONG-TERM DEBT - Schedule Of De
LONG-TERM DEBT - Schedule Of Debt (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Debt Instrument [Line Items] | ||
Total | $ 0 | $ 199,500,000 |
Accrued interest payable | 0 | 10,200,000 |
Unamortized discount and debt and warrant issuance costs | 0 | (21,500,000) |
Total | 0 | 188,200,000 |
Term loan | Term Loan A | ||
Debt Instrument [Line Items] | ||
Total | 0 | 99,500,000 |
Term loan | Term Loan B | ||
Debt Instrument [Line Items] | ||
Total | $ 0 | $ 100,000,000 |
LEASES - Narrative (Details)
LEASES - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Lessee, Lease, Description [Line Items] | |||
Weighted average discount rate ( in percent) | 10.80% | ||
Weighted average remaining lease term | 4 years 4 months 24 days | ||
Total lease liabilities | $ 14.1 | ||
Right-of-use asset | 5.1 | ||
Operating lease, cost | 5 | ||
Operating lease, liabilities | $ 3.8 | ||
Operating Lease, Liability, Statement of Financial Position [Extensible Enumeration] | Other liabilities | ||
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Other assets | ||
Rent expense | $ 4.8 | $ 2.4 | |
General and administrative | |||
Lessee, Lease, Description [Line Items] | |||
Lease expense due to early termination | $ 2 | ||
Minimum | |||
Lessee, Lease, Description [Line Items] | |||
Remaining lease term | 1 year | ||
Maximum | |||
Lessee, Lease, Description [Line Items] | |||
Remaining lease term | 6 years |
LEASES - Future Lease Payments
LEASES - Future Lease Payments (Details) $ in Millions | Dec. 31, 2021USD ($) |
Leases [Abstract] | |
2022 | $ 4.3 |
2023 | 4.4 |
2024 | 4.3 |
2025 | 1.5 |
2026 | 1.5 |
2027 and thereafter | 1.6 |
Total future lease payments | 17.6 |
Less: imputed interest | (3.5) |
Total lease liabilities | $ 14.1 |
LEASES - Operating Lease Maturi
LEASES - Operating Lease Maturities (Details) $ in Millions | Dec. 31, 2020USD ($) |
Leases [Abstract] | |
2021 | $ 3.9 |
2022 | 4.4 |
2023 | 4.4 |
2024 | 4.3 |
2025 | 1.5 |
2026 and thereafter | 3.1 |
Total | $ 21.6 |
INCOME TAXES - Income Tax Expen
INCOME TAXES - Income Tax Expense (Benefit) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Current: | |||
Federal | $ 0 | $ 0 | $ 0 |
State | 0 | 0 | 0 |
Total current | 0 | 0 | 0 |
Deferred: | |||
Federal | 0 | 0 | 0 |
State | 0 | 0 | 0 |
Total deferred | 0 | 0 | 0 |
Total income tax expense (benefit) | $ 0 | $ 0 | $ 0 |
INCOME TAXES - Effective Income
INCOME TAXES - Effective Income Tax Reconciliation (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |||
Loss before income taxes | $ (521.1) | $ (363) | $ (282.4) |
Amount | |||
Statutory U.S. federal income tax benefit | (109.4) | (76.2) | (59.3) |
Valuation allowance on deferred tax assets | 116.7 | 61.5 | 57.4 |
Warrants fair value adjustment | 0 | 11.5 | 0 |
Share-based compensation | (3.3) | 5 | 1.7 |
Nondeductible compensation | 1.8 | 0 | 0 |
State net operating loss | (4.9) | (3.1) | (2.2) |
Other | (0.9) | 1.3 | 2.4 |
Total income tax expense (benefit) | $ 0 | $ 0 | $ 0 |
Percent | |||
Statutory U.S. federal income tax benefit | 21.00% | 21.00% | 21.00% |
Valuation allowance on deferred tax assets | (22.40%) | (16.90%) | (20.30%) |
Warrants fair value adjustment | 0.00% | (3.20%) | 0.00% |
Share-based compensation | 0.60% | (1.40%) | (0.60%) |
Nondeductible compensation | (0.30%) | 0.00% | 0.00% |
State net operating loss | 0.90% | 0.90% | 0.80% |
Other | 0.20% | (0.40%) | (0.90%) |
Income tax expense (benefit) | 0.00% | 0.00% | 0.00% |
INCOME TAXES - Deferred Tax Ass
INCOME TAXES - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Deferred tax assets: | ||
Unpaid losses and loss adjustment expenses | $ 2.5 | $ 1.5 |
Unearned premium reserves | 3.8 | 1.9 |
Nondeductible accruals | 0.5 | 0.9 |
Deferred rent | 2 | 1.4 |
Research and development credits | 0.9 | 0.9 |
Disallowed interest carryforward | 9.6 | 3.7 |
Bad debt expense | 1.2 | 0.8 |
Excess ceding commission | 2.2 | 0 |
Deferred compensation | 2.5 | 1.4 |
Stock compensation | 5.4 | 0.5 |
Other | 2.6 | 0.6 |
State net operating loss carryforward | 10.2 | 5.3 |
Net operating loss carryforward | 217.4 | 124.1 |
Gross deferred assets | 260.8 | 143 |
Less valuation allowance | (255) | (137.3) |
Total deferred tax assets, less valuation allowance | 5.8 | 5.7 |
Deferred tax liabilities: | ||
Internally developed software | 2.7 | 2.1 |
Fixed assets | 2.2 | 1.9 |
Deferred acquisition costs | 0.6 | 0.4 |
Unrealized gains | 0.1 | 1.2 |
Other | 0.2 | 0.1 |
Deferred tax liabilities | 5.8 | 5.7 |
Net deferred tax asset | $ 0 | $ 0 |
INCOME TAXES - Additional Infor
INCOME TAXES - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |||
Federal income tax rate | 21.00% | 21.00% | 21.00% |
Valuation allowance | $ 255 | $ 137.3 | |
Operating Loss Carryforwards [Line Items] | |||
Net operating loss carryforwards | 1,042.6 | ||
Net operating loss carryforwards, subject to expiration | 496.1 | ||
Net operating loss carryforwards, not subject to expiration | 546.5 | ||
State | |||
Operating Loss Carryforwards [Line Items] | |||
Net operating loss carryforwards | 113.8 | ||
Research and development costs | |||
Operating Loss Carryforwards [Line Items] | |||
Tax credit carryforwards | $ 0.9 |
CAPITAL STOCK (Details)
CAPITAL STOCK (Details) $ / shares in Units, $ in Millions | 1 Months Ended | 12 Months Ended | |||||
Oct. 31, 2021USD ($)tranche$ / sharesshares | Oct. 31, 2020USD ($)vote$ / sharesshares | Dec. 31, 2021USD ($)$ / sharesshares | Dec. 31, 2020USD ($)$ / sharesshares | Dec. 31, 2019USD ($) | Oct. 01, 2021tranche | Dec. 31, 2018USD ($) | |
Temporary Equity [Line Items] | |||||||
Preferred stock issued (in shares) | 14,100,000 | 0 | |||||
Preferred stock, outstanding (in shares) | 14,100,000 | 0 | |||||
Debt issuance costs | $ | $ 19.6 | ||||||
Carrying value | $ | $ 112 | $ 0 | $ 560.4 | $ 189.6 | |||
Treasury Stock retired (in shares) | 4,600,000 | ||||||
Retirement of treasury shares | $ | $ 0.8 | 0 | |||||
Issuance costs | $ | 10.5 | 0 | $ 0 | ||||
Shares authorized (in shares) | 100,000,000 | ||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 | ||||||
Par value (in dollars per share) | $ / shares | $ 0.0001 | ||||||
Preferred stock, liquidation preference | $ | $ 126.5 | $ 0 | |||||
Preferred stock, dividend percentage | 5.00% | ||||||
Ownership percentage | 100.00% | ||||||
Root, Inc | Carvana | |||||||
Temporary Equity [Line Items] | |||||||
Ownership percentage | 9.90% | ||||||
Carvana | |||||||
Temporary Equity [Line Items] | |||||||
Preferred stock issued (in shares) | 14,100,000 | ||||||
Number of tranches | tranche | 8 | 8 | |||||
Common stock, shares issued (in shares) | 14,100,000 | ||||||
Conversion price (usd per share) | $ / shares | $ 9 | $ 9 | |||||
IPO | |||||||
Temporary Equity [Line Items] | |||||||
Proceeds from sale of stock | $ | $ 1,100 | ||||||
Issuance costs | $ | $ 57.5 | ||||||
Common stock | IPO | |||||||
Temporary Equity [Line Items] | |||||||
Stock sold in transaction (in shares) | 24,200,000 | ||||||
Price of stock sold (in dollars per share) | $ / shares | $ 27 | ||||||
Redeemable convertible preferred stock (as converted to common stock) | |||||||
Temporary Equity [Line Items] | |||||||
Debt issuance costs | $ | $ 14.5 | ||||||
Additional Paid-In Capital | |||||||
Temporary Equity [Line Items] | |||||||
Debt issuance costs | $ | 1 | ||||||
Other Assets | |||||||
Temporary Equity [Line Items] | |||||||
Debt issuance costs | $ | $ 4.1 | ||||||
Short Term Warrant | |||||||
Temporary Equity [Line Items] | |||||||
Number of tranches | tranche | 3 | ||||||
Debt issuance costs | $ | $ 9 | ||||||
Class A Common Stock | |||||||
Temporary Equity [Line Items] | |||||||
Common stock, shares authorized (in shares) | 1,000,000,000 | ||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | |||||
Common stock, shares issued (in shares) | 142,900,000 | 59,400,000 | |||||
Common stock, shares outstanding (in shares) | 142,900,000 | 59,400,000 | |||||
Voting rights | vote | 1 | ||||||
Conversion of Stock | 1 | ||||||
Carry value | $ | $ 0 | $ 0 | |||||
Class A Common Stock | Private placement | |||||||
Temporary Equity [Line Items] | |||||||
Stock sold in transaction (in shares) | 18,500,000 | ||||||
Class B Common Stock | |||||||
Temporary Equity [Line Items] | |||||||
Common stock, shares authorized (in shares) | 269,000,000 | ||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | |||||
Common stock, shares issued (in shares) | 109,900,000 | 192,200,000 | |||||
Common stock, shares outstanding (in shares) | 109,900,000 | 192,200,000 | |||||
Voting rights | vote | 10 | ||||||
Carry value | $ | $ 0 | $ 0 | |||||
Series A Preferred Stock | Carvana | |||||||
Temporary Equity [Line Items] | |||||||
Proceeds from issuance of convertible stock | $ | $ 126.5 |
SHARE-BASED COMPENSATION - Narr
SHARE-BASED COMPENSATION - Narrative (Details) $ in Millions | Oct. 01, 2021trancheshares | Dec. 31, 2021USD ($)shares | Dec. 31, 2021USD ($)shares | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Oct. 31, 2021tranche | Oct. 31, 2020shares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Total share-based compensation expense | $ 19.3 | $ 28.8 | $ 10 | ||||
Carvana | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of tranches | tranche | 8 | 8 | |||||
Short Term Warrant | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of tranches | tranche | 3 | ||||||
Expiration period | 3 years | 18 months | |||||
Long Term Warrant | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of tranches | tranche | 5 | ||||||
Expiration period | 5 years | ||||||
Options | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Total share-based compensation expense | 4.4 | 28.2 | 10 | ||||
Unrecognized compensation cost, options | $ 4.8 | $ 4.8 | |||||
Remaining cost to be recognized | 5 years | ||||||
RSUs | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Total share-based compensation expense | $ 14.9 | 0.6 | 0 | ||||
Unrecognized compensation cost | 66.1 | $ 66.1 | |||||
Remaining cost to be recognized | 4 years | ||||||
Warrants | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Expected term | 5 years | ||||||
Risk free interest rate | 0.90% | ||||||
Expected dividend rate | 0.00% | ||||||
Expected volatility rate | 45.00% | ||||||
Total share-based compensation expense | $ 8.8 | ||||||
Unrecognized compensation cost | $ 35.7 | $ 35.7 | |||||
Remaining cost to be recognized | 2 years | ||||||
Class A Common Stock | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Shares issued (in shares) | shares | 129,100,000 | ||||||
Class A Common Stock | Short Term Warrant | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Shares issued (in shares) | shares | 129,100,000 | 129,100,000 | |||||
Class A Common Stock | Long Term Warrant | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Shares issued (in shares) | shares | 129,100,000 | 129,100,000 | |||||
Tender offer | Common stock | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Total share-based compensation expense | 25.1 | $ 8.6 | |||||
Other liabilities | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Exercise deposit liability | $ 0.1 | $ 0.1 | $ 1.3 | ||||
2020 Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Shares authorized (in shares) | shares | 53,800,000 | 53,800,000 | |||||
Annual shares increase, percentage of outstanding stock | 4.00% | 4.00% | |||||
Shares available for issuance (in shares) | shares | 21,900,000 | 21,900,000 | |||||
2020 Plan | Class A Common Stock | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Maximum shares allowed to be issued (in shares) | shares | 120,000,000 | 120,000,000 | |||||
2020 ESPP | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Annual shares increase, percentage of outstanding stock | 1.00% | ||||||
2020 ESPP | Class A Common Stock | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Shares authorized (in shares) | shares | 5,000,000 | ||||||
Shares outstanding, annual shares increase (in shares) | shares | 7,500,000 |
SHARE-BASED COMPENSATION- Sched
SHARE-BASED COMPENSATION- Schedule of Warrants (Details) - $ / shares shares in Millions | 12 Months Ended | |
Dec. 31, 2021 | Oct. 01, 2021 | |
Class of Warrant or Right [Line Items] | ||
Exercise price of warrants (in dollars per share) | $ 0.0001 | |
Class A Common Stock | ||
Class of Warrant or Right [Line Items] | ||
Shares issued (in shares) | 129.1 | |
Short Term Warrant | Class A Common Stock | ||
Class of Warrant or Right [Line Items] | ||
Shares issued (in shares) | 129.1 | |
Short Term Warrant | Tranche 1 | ||
Class of Warrant or Right [Line Items] | ||
Exercise price of warrants (in dollars per share) | $ 10 | |
Short Term Warrant | Tranche 1 | Class A Common Stock | ||
Class of Warrant or Right [Line Items] | ||
Shares issued (in shares) | 42.6 | |
Grant date fair value per share (in dollars per share) | $ 0.42 | |
Short Term Warrant | Tranche 2 | ||
Class of Warrant or Right [Line Items] | ||
Exercise price of warrants (in dollars per share) | $ 11 | |
Short Term Warrant | Tranche 2 | Class A Common Stock | ||
Class of Warrant or Right [Line Items] | ||
Shares issued (in shares) | 57.8 | |
Grant date fair value per share (in dollars per share) | $ 0.37 | |
Short Term Warrant | Tranche 3 | ||
Class of Warrant or Right [Line Items] | ||
Exercise price of warrants (in dollars per share) | $ 12 | |
Short Term Warrant | Tranche 3 | Class A Common Stock | ||
Class of Warrant or Right [Line Items] | ||
Shares issued (in shares) | 28.7 | |
Grant date fair value per share (in dollars per share) | $ 0.18 | |
Long Term Warrant | Class A Common Stock | ||
Class of Warrant or Right [Line Items] | ||
Shares issued (in shares) | 129.1 | |
Long Term Warrant | Tranche 1 | ||
Class of Warrant or Right [Line Items] | ||
Exercise price of warrants (in dollars per share) | $ 10 | |
Long Term Warrant | Tranche 1 | Class A Common Stock | ||
Class of Warrant or Right [Line Items] | ||
Shares issued (in shares) | 25.8 | |
Grant date fair value per share (in dollars per share) | $ 0.42 | |
Long Term Warrant | Tranche 2 | ||
Class of Warrant or Right [Line Items] | ||
Exercise price of warrants (in dollars per share) | $ 12.50 | |
Long Term Warrant | Tranche 2 | Class A Common Stock | ||
Class of Warrant or Right [Line Items] | ||
Shares issued (in shares) | 26.9 | |
Grant date fair value per share (in dollars per share) | $ 0.35 | |
Long Term Warrant | Tranche 3 | ||
Class of Warrant or Right [Line Items] | ||
Exercise price of warrants (in dollars per share) | $ 15 | |
Long Term Warrant | Tranche 3 | Class A Common Stock | ||
Class of Warrant or Right [Line Items] | ||
Shares issued (in shares) | 27.1 | |
Grant date fair value per share (in dollars per share) | $ 0.24 | |
Long Term Warrant | Tranche 4 | ||
Class of Warrant or Right [Line Items] | ||
Exercise price of warrants (in dollars per share) | $ 22.50 | |
Long Term Warrant | Tranche 4 | Class A Common Stock | ||
Class of Warrant or Right [Line Items] | ||
Shares issued (in shares) | 26.1 | |
Grant date fair value per share (in dollars per share) | $ 0.09 | |
Long Term Warrant | Tranche 5 | ||
Class of Warrant or Right [Line Items] | ||
Exercise price of warrants (in dollars per share) | $ 30 | |
Long Term Warrant | Tranche 5 | Class A Common Stock | ||
Class of Warrant or Right [Line Items] | ||
Shares issued (in shares) | 23.2 | |
Grant date fair value per share (in dollars per share) | $ 0.04 |
SHARE-BASED COMPENSATION - Shar
SHARE-BASED COMPENSATION - Share-based Compensation Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Total share-based compensation expense | $ 19.3 | $ 28.8 | $ 10 |
RSUs | |||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Total share-based compensation expense | 14.9 | 0.6 | 0 |
Options | |||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Total share-based compensation expense | 4.4 | 28.2 | 10 |
Loss and loss adjustment expenses | |||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Total share-based compensation expense | 1.5 | 0.6 | 0 |
Sales and marketing | |||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Total share-based compensation expense | 1 | 1 | 0 |
Other insurance (benefit) expense | |||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Total share-based compensation expense | 1.6 | 1 | 0 |
Technology and development | |||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Total share-based compensation expense | 4.5 | 5.8 | 0 |
General and administrative | |||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Total share-based compensation expense | $ 10.7 | $ 20.4 | $ 10 |
SHARE-BASED COMPENSATION - RSU
SHARE-BASED COMPENSATION - RSU Activity (Details) - RSUs - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Number of Shares | ||
Beginning balance (in shares) | 0.4 | 0 |
Granted (in shares) | 12.2 | 0.4 |
Vested (in shares) | (0.1) | 0 |
Forfeited, expired or canceled (in shares) | (3.6) | 0 |
Ending balance (in shares) | 8.9 | 0.4 |
Weighted-Average Grant Date Fair Value per Share | ||
Beginning balance, weighted-average grant date fair value (in dollars per shares) | $ 18.41 | $ 0 |
Granted, weighted-average grant date fair value (in dollars per shares) | 9.17 | 17.72 |
Vested, weighted-average grant date fair value (in dollars per shares) | 18.09 | 7.25 |
Forfeited, expired or canceled, weighted-average grant date fair value (in dollars per share) | 10.24 | 22.89 |
Ending balance, weighted-average grant date fair value (in dollars per shares) | $ 9.02 | $ 18.41 |
Aggregate Intrinsic Value | ||
Beginning balance | $ 6.2 | $ 0 |
Vested | 1 | 0.3 |
Ending balance | $ 27.4 | $ 6.2 |
SHARE-BASED COMPENSATION - Opti
SHARE-BASED COMPENSATION - Option Activity (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Number of Shares | |||
Outstanding, beginning balance (in shares) | 10.4 | 12.3 | |
Granted (in shares) | 0 | 1.6 | |
Exercised (in shares) | (2.8) | (2.8) | |
Forfeited, expired or canceled (in shares) | (1.1) | (0.7) | |
Outstanding, ending balance (in shares) | 6.5 | 10.4 | 12.3 |
Weighted-Average Exercise Price | |||
Outstanding, beginning balance, weighted-average exercise price (in dollars per share) | $ 2,390,000 | $ 1,420,000 | |
Granted, weighted-average exercise price (in dollars per share) | 10.82 | 7,760,000 | |
Exercised, weighted-average exercise price (in dollars per share) | 1.68 | 700,000 | |
Forfeited, expired and canceled, weighted-average exercise price (in dollars per share) | 4.44 | 5,000,000 | |
Outstanding, ending balance, weighted-average exercise price (in dollars per share) | $ 2.36 | $ 2,390,000 | $ 1,420,000 |
Outstanding, weighted-average remaining contractual term (in years) | 6 years 1 month 13 days | 7 years 9 months | 8 years 2 months 19 days |
Outstanding, aggregate intrinsic value | $ 9.5 | $ 137.7 | $ 70.4 |
Exercised, aggregate intrinsic value | $ 24.1 | $ 41.5 |
SHARE-BASED COMPENSATION - Exer
SHARE-BASED COMPENSATION - Exercise Price Range (Details) | 12 Months Ended |
Dec. 31, 2021$ / sharesshares | |
$0.01 - $1.00 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Exercise price range, min (in dollars per share) | $ 0.01 |
Exercise price range, max (in dollars per share) | $ 1 |
Options outstanding, number of shares (in shares) | shares | 2,700,000 |
Options outstanding, weighted-average exercise price (in dollars per share) | $ 0.30 |
Options outstanding, weighted-average remaining contractual term (in years) | 4 years 9 months 3 days |
Options exercisable, number of shares (in shares) | shares | 2,700,000 |
Options exercisable, weighted-average exercise price (in dollars per share) | $ 0.30 |
Options exercisable, weighted-average remaining contractual term (in years) | 4 years 9 months 3 days |
$1.00 - $2.50 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Exercise price range, min (in dollars per share) | $ 1 |
Exercise price range, max (in dollars per share) | $ 2.50 |
Options outstanding, number of shares (in shares) | shares | 2,800,000 |
Options outstanding, weighted-average exercise price (in dollars per share) | $ 2.40 |
Options outstanding, weighted-average remaining contractual term (in years) | 7 years 2 months 12 days |
Options exercisable, number of shares (in shares) | shares | 2,800,000 |
Options exercisable, weighted-average exercise price (in dollars per share) | $ 2.40 |
Options exercisable, weighted-average remaining contractual term (in years) | 7 years 2 months 12 days |
$2.50 - $13.00 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Exercise price range, min (in dollars per share) | $ 2.50 |
Exercise price range, max (in dollars per share) | $ 13 |
Options outstanding, number of shares (in shares) | shares | 1,000,000 |
Options outstanding, weighted-average exercise price (in dollars per share) | $ 7.67 |
Options outstanding, weighted-average remaining contractual term (in years) | 6 years 10 months 9 days |
Options exercisable, number of shares (in shares) | shares | 1,000,000 |
Options exercisable, weighted-average exercise price (in dollars per share) | $ 7.67 |
Options exercisable, weighted-average remaining contractual term (in years) | 6 years 10 months 9 days |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details) $ in Millions | Dec. 31, 2021USD ($) |
Purchase Obligations | |
2022 | $ 8.1 |
2023 | 4.8 |
2024 | 0.9 |
2025 | 0.6 |
2026 and thereafter | 0 |
Total | $ 14.4 |
OTHER COMPREHENSIVE (LOSS) IN_3
OTHER COMPREHENSIVE (LOSS) INCOME AND ACCUMULATED OTHER COMPREHENSIVE INCOME (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Beginning balance | $ 1,032.4 | $ (374) | $ (102.7) |
Net current period other comprehensive (loss) income | (5.2) | 5 | 0.6 |
Ending balance | 536.4 | 1,032.4 | (374) |
Change in net unrealized gains on investment: | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Beginning balance | 5.6 | 0.6 | 0 |
Other comprehensive (loss) income before reclassifications | (2.8) | 5.3 | 0.6 |
Net realized gains on investments reclassified from AOCI to net loss | (2.4) | (0.3) | 0 |
Net current period other comprehensive (loss) income | (5.2) | 5 | 0.6 |
Ending balance | $ 0.4 | $ 5.6 | $ 0.6 |
LOSS PER SHARE (Details)
LOSS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Earnings Per Share [Abstract] | |||
Net loss | $ (521.1) | $ (363) | $ (282.4) |
Weighted-average common shares outstanding, basic (in shares) | 249.2 | 75.5 | 33.9 |
Weighted-average common shares outstanding, diluted (in shares) | 249.2 | 75.5 | 33.9 |
Loss per common share, basic (in dollars per share) | $ (2.09) | $ (4.81) | $ (8.33) |
Loss per common share, diluted (in dollars per share) | $ (2.09) | $ (4.81) | $ (8.33) |
LOSS PER SHARE - Schedule of An
LOSS PER SHARE - Schedule of Anti-Dilutive Securities (Details) - shares shares in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Anti-dilutive securities (in shares) | 160.8 | 15.8 | 179 |
Maximum | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Warrants outstanding (in shares) | 129.1 | ||
Options to purchase common stock | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Anti-dilutive securities (in shares) | 6.5 | 10.4 | 12.3 |
Nonvested shares subject to repurchase | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Anti-dilutive securities (in shares) | 2.2 | 5 | 7.2 |
Restricted stock units | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Anti-dilutive securities (in shares) | 8.9 | 0.4 | 0 |
Redeemable convertible preferred stock (as converted to common stock) | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Anti-dilutive securities (in shares) | 14.1 | 0 | 158.9 |
Warrants to purchase common stock | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Anti-dilutive securities (in shares) | 129.1 | 0 | 0 |
Warrants to purchase redeemable convertible preferred stock (as converted to common stock) | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Anti-dilutive securities (in shares) | 0 | 0 | 0.6 |
STATUTORY FINANCIAL INFORMATI_3
STATUTORY FINANCIAL INFORMATION (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Statutory Accounting Practices [Line Items] | |||
Total | $ (160.3) | $ (149.3) | $ (157.6) |
Statutory Capital and Surplus | 113.3 | 116.4 | |
Root Insurance Company | |||
Statutory Accounting Practices [Line Items] | |||
Total | (126.9) | (123.8) | (157.6) |
Statutory Capital and Surplus | 91.5 | 100.1 | |
Root Property & Casualty | |||
Statutory Accounting Practices [Line Items] | |||
Total | (33.4) | (25.5) | $ 0 |
Statutory Capital and Surplus | $ 21.8 | $ 16.3 |
GEOGRAPHICAL BREAKDOWN OF GRO_3
GEOGRAPHICAL BREAKDOWN OF GROSS WRITTEN PREMIUM (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Effects of Reinsurance [Line Items] | |||
Gross premiums written | $ 742.6 | $ 616.8 | $ 451.1 |
Texas | |||
Effects of Reinsurance [Line Items] | |||
Gross premiums written | 152.3 | 132.5 | 94.7 |
Georgia | |||
Effects of Reinsurance [Line Items] | |||
Gross premiums written | 79.2 | 72.4 | 44 |
Louisiana | |||
Effects of Reinsurance [Line Items] | |||
Gross premiums written | 42.2 | 28 | 15.3 |
Pennsylvania | |||
Effects of Reinsurance [Line Items] | |||
Gross premiums written | 39.8 | 30.2 | 25.2 |
Utah | |||
Effects of Reinsurance [Line Items] | |||
Gross premiums written | 33.8 | 26 | 17.6 |
Nevada | |||
Effects of Reinsurance [Line Items] | |||
Gross premiums written | 33.6 | 19.1 | 2.4 |
Colorado | |||
Effects of Reinsurance [Line Items] | |||
Gross premiums written | 33.5 | 20.2 | 8.1 |
South Carolina | |||
Effects of Reinsurance [Line Items] | |||
Gross premiums written | 26.3 | 9.6 | 14.4 |
Missouri | |||
Effects of Reinsurance [Line Items] | |||
Gross premiums written | 24.7 | 26.8 | 22 |
Arizona | |||
Effects of Reinsurance [Line Items] | |||
Gross premiums written | 23.5 | 28.4 | 26.7 |
All others states | |||
Effects of Reinsurance [Line Items] | |||
Gross premiums written | $ 253.7 | $ 223.6 | $ 180.7 |
Geographic Concentration Risk | Gross Written Premiums | |||
Effects of Reinsurance [Line Items] | |||
Concentration percentage | 100.00% | 100.00% | 100.00% |
Geographic Concentration Risk | Texas | Gross Written Premiums | |||
Effects of Reinsurance [Line Items] | |||
Concentration percentage | 20.50% | 21.50% | 21.00% |
Geographic Concentration Risk | Georgia | Gross Written Premiums | |||
Effects of Reinsurance [Line Items] | |||
Concentration percentage | 10.70% | 11.70% | 9.80% |
Geographic Concentration Risk | Louisiana | Gross Written Premiums | |||
Effects of Reinsurance [Line Items] | |||
Concentration percentage | 5.70% | 4.50% | 3.40% |
Geographic Concentration Risk | Pennsylvania | Gross Written Premiums | |||
Effects of Reinsurance [Line Items] | |||
Concentration percentage | 5.40% | 4.90% | 5.60% |
Geographic Concentration Risk | Utah | Gross Written Premiums | |||
Effects of Reinsurance [Line Items] | |||
Concentration percentage | 4.60% | 4.20% | 3.90% |
Geographic Concentration Risk | Nevada | Gross Written Premiums | |||
Effects of Reinsurance [Line Items] | |||
Concentration percentage | 4.50% | 3.10% | 0.50% |
Geographic Concentration Risk | Colorado | Gross Written Premiums | |||
Effects of Reinsurance [Line Items] | |||
Concentration percentage | 4.50% | 3.30% | 1.80% |
Geographic Concentration Risk | South Carolina | Gross Written Premiums | |||
Effects of Reinsurance [Line Items] | |||
Concentration percentage | 3.50% | 1.60% | 3.20% |
Geographic Concentration Risk | Missouri | Gross Written Premiums | |||
Effects of Reinsurance [Line Items] | |||
Concentration percentage | 3.30% | 4.30% | 4.90% |
Geographic Concentration Risk | Arizona | Gross Written Premiums | |||
Effects of Reinsurance [Line Items] | |||
Concentration percentage | 3.20% | 4.60% | 5.90% |
Geographic Concentration Risk | All others states | Gross Written Premiums | |||
Effects of Reinsurance [Line Items] | |||
Concentration percentage | 34.10% | 36.30% | 40.00% |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) $ / shares in Units, shares in Millions | Jan. 20, 2022USD ($)numberOfEmployee | Jan. 31, 2022USD ($)$ / sharesshares | Dec. 31, 2021USD ($)$ / shares | Dec. 31, 2020USD ($) |
Subsequent Event [Line Items] | ||||
Unamortized discount and debt issuance costs | $ 0 | $ 21,500,000 | ||
Exercise price of warrants (in dollars per share) | $ / shares | $ 0.0001 | |||
Subsequent event | ||||
Subsequent Event [Line Items] | ||||
Debt instrument, term | 5 years | |||
Additional warrant to purchase shares (in percent) | 1.00% | |||
Number of positions eliminated | numberOfEmployee | 330 | |||
Percentage of positions eliminated | 20.00% | |||
Accelerated amortization | $ 2,400,000 | |||
Subsequent event | Employee Severance | ||||
Subsequent Event [Line Items] | ||||
Restructuring charges | $ 6,800,000 | |||
Payments for restructuring | 4,300,000 | |||
Subsequent event | Term Loan | ||||
Subsequent Event [Line Items] | ||||
Debt amount | 300,000,000 | |||
Unamortized discount and debt issuance costs | $ 15,200,000 | |||
Interest rate (in percent) | 0.26161% | |||
Subsequent event | Class A Common Stock | ||||
Subsequent Event [Line Items] | ||||
Warrants outstanding (in shares) | shares | 5.7 | |||
Exercise price of warrants (in dollars per share) | $ / shares | $ 9 | |||
Subsequent event | SOFR | Term Loan | ||||
Subsequent Event [Line Items] | ||||
Variable rate percentage | 9.00% |
Schedule II_ Condensed Combin_2
Schedule II: Condensed Combined Financial Information of Registrant - Balance Sheet (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Assets | ||||
Other investments | $ 4,700,000 | $ 500,000 | ||
Cash and cash equivalents | 706,000,000 | 1,112,800,000 | ||
Restricted cash | 1,000,000 | 1,000,000 | ||
Other assets | 73,800,000 | 56,300,000 | ||
Total assets | 1,319,300,000 | 1,762,300,000 | ||
Liabilities: | ||||
Long-term debt and warrants | 0 | 188,200,000 | ||
Accounts payable and accrued expenses | 29,100,000 | 48,000,000 | ||
Other liabilities | 39,900,000 | 10,300,000 | ||
Total liabilities | 670,900,000 | 729,900,000 | ||
Commitments and Contingencies (Note 12) | ||||
Redeemable convertible preferred stock, $0.0001 par value, 14.1 and zero shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively (liquidation preference of $126.5 and zero, respectively) (Note 10) | 112,000,000 | 0 | $ 560,400,000 | $ 189,600,000 |
Stockholders’ equity: | ||||
Treasury stock, at cost | 0 | (800,000) | ||
Additional paid-in capital | 1,806,100,000 | 1,775,600,000 | ||
Accumulated other comprehensive income | 400,000 | 5,600,000 | ||
Accumulated loss | (1,270,100,000) | (748,000,000) | ||
Total stockholders’ equity | 536,400,000 | 1,032,400,000 | $ (374,000,000) | $ (102,700,000) |
Total liabilities, redeemable convertible preferred stock and stockholders’ equity | 1,319,300,000 | 1,762,300,000 | ||
Class A Common Stock | ||||
Stockholders’ equity: | ||||
Common stock | 0 | 0 | ||
Class B Common Stock | ||||
Stockholders’ equity: | ||||
Common stock | 0 | 0 | ||
Parent Company | ||||
Assets | ||||
Other investments | 4,700,000 | 500,000 | ||
Cash and cash equivalents | 432,300,000 | 1,043,100,000 | ||
Restricted cash | 1,000,000 | 1,000,000 | ||
Investments in subsidiaries | 0 | 115,000,000 | ||
Other assets | 49,300,000 | 34,600,000 | ||
Intercompany receivable | 261,800,000 | 43,300,000 | ||
Total assets | 749,100,000 | 1,237,500,000 | ||
Liabilities: | ||||
Long-term debt and warrants | 0 | 188,200,000 | ||
Investments in subsidiaries | 58,500,000 | 0 | ||
Accounts payable and accrued expenses | 8,800,000 | 8,200,000 | ||
Other liabilities | 24,500,000 | 8,700,000 | ||
Intercompany payable | 8,900,000 | 0 | ||
Total liabilities | 100,700,000 | 205,100,000 | ||
Commitments and Contingencies (Note 12) | ||||
Redeemable convertible preferred stock, $0.0001 par value, 14.1 and zero shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively (liquidation preference of $126.5 and zero, respectively) (Note 10) | 112,000,000 | 0 | ||
Stockholders’ equity: | ||||
Treasury stock, at cost | 0 | (800,000) | ||
Additional paid-in capital | 1,806,100,000 | 1,775,600,000 | ||
Accumulated other comprehensive income | 400,000 | 5,600,000 | ||
Accumulated loss | (1,270,100,000) | (748,000,000) | ||
Total stockholders’ equity | 536,400,000 | 1,032,400,000 | ||
Total liabilities, redeemable convertible preferred stock and stockholders’ equity | 749,100,000 | 1,237,500,000 | ||
Parent Company | Class A Common Stock | ||||
Stockholders’ equity: | ||||
Common stock | 0 | 0 | ||
Parent Company | Class B Common Stock | ||||
Stockholders’ equity: | ||||
Common stock | $ 0 | $ 0 |
Schedule II_ Condensed Combin_3
Schedule II: Condensed Combined Financial Information of Registrant - Balance Sheet Additional (Details) - USD ($) $ / shares in Units, $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 | Oct. 31, 2020 |
Condensed Balance Sheet Statements, Captions [Line Items] | |||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | |
Preferred stock issued (in shares) | 14,100,000 | 0 | |
Preferred stock, outstanding (in shares) | 14,100,000 | 0 | |
Preferred stock, liquidation preference | $ 126.5 | $ 0 | |
Common stock, par value (in dollars per share) | $ 0.0001 | ||
Class A Common Stock | |||
Condensed Balance Sheet Statements, Captions [Line Items] | |||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | |
Common stock, shares issued (in shares) | 142,900,000 | 59,400,000 | |
Common stock, shares outstanding (in shares) | 142,900,000 | 59,400,000 | |
Class B Common Stock | |||
Condensed Balance Sheet Statements, Captions [Line Items] | |||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | |
Common stock, shares issued (in shares) | 109,900,000 | 192,200,000 | |
Common stock, shares outstanding (in shares) | 109,900,000 | 192,200,000 | |
Parent Company | |||
Condensed Balance Sheet Statements, Captions [Line Items] | |||
Preferred stock issued (in shares) | 14,100,000 | 0 | |
Preferred stock, outstanding (in shares) | 14,100,000 | 0 |
Schedule II_ Condensed Combin_4
Schedule II: Condensed Combined Financial Information of Registrant - Statement of Operations and Comprehensive Loss (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Revenues: | |||
Net investment income | $ 5 | $ 5.4 | $ 5.2 |
Total revenues | 345.4 | 346.8 | 290.2 |
Operating expenses: | |||
Sales and marketing | 270.2 | 139.7 | 109.6 |
Other insurance expense (benefit) | 5 | (1.8) | 52.3 |
Technology and development | 65.5 | 52.9 | 24 |
General and administrative | 97.6 | 78.5 | 43 |
Total operating expenses | 830.6 | 632.1 | 550.3 |
Operating loss | (485.2) | (285.3) | (260.1) |
Interest expense | (20) | (77.7) | (22.3) |
Loss on early extinguishment of debt | (15.9) | 0 | 0 |
Income tax expense | 0 | 0 | 0 |
Net loss | (521.1) | (363) | (282.4) |
Comprehensive loss | (526.3) | (358) | (281.8) |
Parent Company | |||
Revenues: | |||
Net investment income | 4.6 | 0.9 | 1.6 |
Total revenues | 4.6 | 0.9 | 1.6 |
Operating expenses: | |||
Sales and marketing | 10 | 0 | 0 |
Other insurance expense (benefit) | 2.9 | 0 | 0 |
Technology and development | 42.5 | 19.5 | 3.5 |
General and administrative | 5.3 | 37.8 | 15.7 |
Total operating expenses | 60.7 | 57.3 | 19.2 |
Operating loss | (56.1) | (56.4) | (17.6) |
Interest expense | (20) | (77.7) | (22.3) |
Loss on early extinguishment of debt | (15.9) | 0 | 0 |
Loss before income tax expense | (92) | (134.1) | (39.9) |
Income tax expense | 0 | 0 | 0 |
Net loss before equity net loss of subsidiaries | (92) | (134.1) | (39.9) |
Net loss of subsidiaries | (429.1) | (228.9) | (242.5) |
Net loss | (521.1) | (363) | (282.4) |
Other comprehensive (loss) income of subsidiaries | (5.2) | 5 | 0.6 |
Comprehensive loss | $ (526.3) | $ (358) | $ (281.8) |
Schedule II_ Condensed Combin_5
Schedule II: Condensed Combined Financial Information of Registrant - Statement of Cash Flows (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Cash flows from operating activities: | |||
Net loss | $ (521.1) | $ (363) | $ (282.4) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Share-based compensation | 19.3 | 3.7 | 1.4 |
Warrant compensation expense | 8.8 | 0 | 0 |
Tender offer | 0 | 25.1 | 8.6 |
Depreciation and amortization | 16.6 | 15.6 | 4.9 |
Loss on early extinguishment of debt | 15.9 | 0 | 0 |
SAFE fair value adjustment | 0 | 0 | 11.2 |
Warrants fair value adjustment | 0 | 54.7 | 0 |
Paid-in-kind interest expense | 10.6 | 9.1 | 0.8 |
Paid-in-kind interest paid | (20.5) | 0 | 0 |
Change in fair value of equity securities | (3.8) | 0 | 0 |
Changes in operating assets and liabilities: | |||
Other assets | 0.8 | (21.7) | (3.7) |
Accounts payable and accrued expenses | (19.2) | 18.2 | 19.2 |
Other liabilities | 10.3 | 2.1 | 2.7 |
Net cash used in operating activities | (403.4) | (287.2) | (127.2) |
Cash flows from investing activities: | |||
Purchases of investments | (17) | (158.4) | (138.1) |
Proceeds from maturities, call and pay downs of investments | 34.7 | 42.5 | 36.2 |
Capitalization of internally developed software | (6.6) | (5.4) | (5.5) |
Purchases of fixed assets | (4.6) | (1.8) | (6.6) |
Net cash provided by (used in) investing activities | 76.9 | (114.1) | (114) |
Cash flows from financing activities: | |||
Proceeds from issuance of common stock from IPO and concurrent private placements, net of issuance costs | 0 | 1,098.1 | 0 |
Issuance costs | 10.5 | 0 | 0 |
Proceeds from issuance of debt and related warrants, net of issuance costs | 0 | 12 | 189.5 |
Repayments of long-term debt | (199.5) | (13.5) | (15.5) |
Proceeds from SAFE | 0 | 0 | 10 |
Purchases of treasury stock | 0 | (0.2) | 0 |
Net cash (used in) provided by financing activities | (80.3) | 1,098.5 | 535.5 |
Net (decrease) increase in cash, cash equivalents and restricted cash | (406.8) | 697.2 | 294.3 |
Cash, cash equivalents and restricted cash at beginning of year | 1,113.8 | 416.6 | 122.3 |
Cash, cash equivalents and restricted cash at end of year | 707 | 1,113.8 | 416.6 |
Supplemental disclosures: | |||
Interest paid | 23.9 | 4.5 | 4.3 |
Federal income taxes paid | 0 | 0 | 0 |
Leasehold improvements - non-cash | 1.5 | 0 | 1.5 |
Conversion of debt to preferred stock - non-cash | 11.2 | ||
Conversion of preferred stock to common stock - non-cash | 0 | 560.4 | 0 |
Conversion of warrants to common stock - non-cash | 0 | 75 | 0 |
Lease liabilities arising from obtaining right-of-use asset | 9.9 | 0 | 0 |
Investment Agreement issuance costs - non-cash | 9.1 | 0 | 0 |
Purchases of treasury stock - non-cash | 0 | 0.5 | 0 |
Cash and cash equivalents | 706 | 1,112.8 | |
Restricted cash | 1 | 1 | |
Total cash, cash equivalents and restricted cash shown in the statement of cash flows | 707 | 1,113.8 | 416.6 |
Parent Company | |||
Cash flows from operating activities: | |||
Net loss | (521.1) | (363) | (282.4) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Share-based compensation | 19.3 | 3.7 | 1.4 |
Warrant compensation expense | 8.8 | 0 | 0 |
Tender offer | 0 | 25.1 | 8.6 |
Depreciation and amortization | 13.1 | 11.8 | 3.5 |
Change in equity in subsidiaries | 429.1 | 228.9 | 242.5 |
Loss on early extinguishment of debt | 15.9 | 0 | 0 |
SAFE fair value adjustment | 0 | 0 | 11.2 |
Warrants fair value adjustment | 0 | 54.7 | 0 |
Paid-in-kind interest expense | 10.6 | 9.1 | 0.8 |
Paid-in-kind interest paid | (20.5) | 0 | 0 |
Change in fair value of equity securities | (3.8) | 0 | 0 |
Changes in operating assets and liabilities: | |||
Other assets | 4.2 | (15.5) | (1.2) |
Accounts payable and accrued expenses | 0.4 | 3.8 | 4.9 |
Other liabilities | (3.5) | 2.1 | 0.6 |
Intercompany, net | (209.6) | (23.6) | (7.2) |
Net cash used in operating activities | (257.1) | (62.9) | (17.3) |
Cash flows from investing activities: | |||
Purchases of investments | (0.4) | (0.5) | 0 |
Proceeds from maturities, call and pay downs of investments | 0 | 0 | 1.7 |
Capitalization of internally developed software | (6.6) | (5.4) | (3.9) |
Purchases of fixed assets | (4.6) | (1.8) | (6.5) |
Investment in subsidiaries | (261.8) | (201.9) | (333) |
Net cash provided by (used in) investing activities | (273.4) | (209.6) | (341.7) |
Cash flows from financing activities: | |||
Proceeds from issuance of common stock from IPO and concurrent private placements, net of issuance costs | 0 | 1,098.1 | 0 |
Proceeds from exercise of stock options and restricted stock units, net of tax proceeds/(withholding) | 3.2 | 2.1 | 1.9 |
Proceeds from issuance of preferred stock and related warrants | 126.5 | 0 | 349.6 |
Issuance costs | (10.5) | 0 | 0 |
Proceeds from issuance of debt and related warrants, net of issuance costs | 0 | 12 | 189.5 |
Repayments of long-term debt | (199.5) | (13.5) | (15.5) |
Proceeds from SAFE | 0 | 0 | 10 |
Purchases of treasury stock | 0 | (0.2) | 0 |
Net cash (used in) provided by financing activities | (80.3) | 1,098.5 | 535.5 |
Net (decrease) increase in cash, cash equivalents and restricted cash | (610.8) | 826 | 176.5 |
Cash, cash equivalents and restricted cash at beginning of year | 1,044.1 | 218.1 | 41.6 |
Cash, cash equivalents and restricted cash at end of year | 433.3 | 1,044.1 | 218.1 |
Supplemental disclosures: | |||
Interest paid | 23.9 | 4.5 | 4.3 |
Federal income taxes paid | 0 | 0 | 0 |
Leasehold improvements - non-cash | 1.5 | 0 | 1.5 |
Conversion of debt to preferred stock - non-cash | 0 | 0 | 11.2 |
Conversion of preferred stock to common stock - non-cash | 0 | 560.4 | 0 |
Conversion of warrants to common stock - non-cash | 0 | 75 | 0 |
Lease liabilities arising from obtaining right-of-use asset | 9.9 | 0 | 0 |
Investment Agreement issuance costs - non-cash | 9.1 | 0 | 0 |
Purchases of treasury stock - non-cash | 0 | 0.5 | 0 |
Cash and cash equivalents | 432.3 | 1,043.1 | |
Restricted cash | 1 | 1 | |
Total cash, cash equivalents and restricted cash shown in the statement of cash flows | $ 433.3 | $ 1,044.1 | $ 218.1 |
Schedule II_ Condensed Combin_6
Schedule II: Condensed Combined Financial Information of Registrant - Additional Information (Details) $ / shares in Units, shares in Millions | Jan. 20, 2022numberOfEmployee | Jan. 31, 2022USD ($)$ / sharesshares | Dec. 31, 2021USD ($)$ / shares | Dec. 31, 2020USD ($) |
Subsequent Event [Line Items] | ||||
Unamortized discount and debt issuance costs | $ 0 | $ 21,500,000 | ||
Exercise price of warrants (in dollars per share) | $ / shares | $ 0.0001 | |||
Parent Company | ||||
Subsequent Event [Line Items] | ||||
Investments in subsidiaries | $ 58,500,000 | $ 0 | ||
Subsequent event | ||||
Subsequent Event [Line Items] | ||||
Debt instrument, term | 5 years | |||
Additional warrant to purchase shares (in percent) | 1.00% | |||
Number of positions eliminated | numberOfEmployee | 330 | |||
Percentage of positions eliminated | 20.00% | |||
Subsequent event | Employee Severance | ||||
Subsequent Event [Line Items] | ||||
Restructuring charges | $ 6,800,000 | |||
Payments for restructuring | 4,300,000 | |||
Subsequent event | Term Loan | ||||
Subsequent Event [Line Items] | ||||
Debt amount | 300,000,000 | |||
Unamortized discount and debt issuance costs | $ 15,200,000 | |||
Interest rate (in percent) | 0.26161% | |||
Subsequent event | Class A Common Stock | ||||
Subsequent Event [Line Items] | ||||
Warrants outstanding (in shares) | shares | 5.7 | |||
Exercise price of warrants (in dollars per share) | $ / shares | $ 9 | |||
Subsequent event | SOFR | Term Loan | ||||
Subsequent Event [Line Items] | ||||
Variable rate percentage | 9.00% |
Schedule V_ Valuation and Qua_2
Schedule V: Valuation and Qualifying Accounts (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Jan. 01, 2021 | |
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | ||||
Allowance for premiums receivable | $ 5,400,000 | $ 3,500,000 | ||
Provision for loss corridor | 200,000 | 0 | ||
Accounting Standards Update 2016-13 | ||||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | ||||
Transition adjustment | $ 1,000,000 | |||
Allowance for premiums receivable | 800,000 | |||
Provision for loss corridor | $ 200,000 | |||
Valuation allowance for deferred tax assets | ||||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | ||||
Balance at beginning of period | 137,300,000 | 76,800,000 | $ 19,400,000 | |
Charged to costs and expenses | 116,700,000 | 61,500,000 | 57,400,000 | |
Charge to other accounts | 1,000,000 | (1,000,000) | 0 | |
Deductions | 0 | 0 | 0 | |
Balance at end of period | 255,000,000 | 137,300,000 | 76,800,000 | |
Allowance for premium receivables | ||||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | ||||
Balance at beginning of period | 3,500,000 | 2,000,000 | 0 | |
Charged to costs and expenses | 20,900,000 | 23,600,000 | 9,000,000 | |
Charge to other accounts | 800,000 | 0 | 0 | |
Deductions | (19,800,000) | (22,100,000) | (7,000,000) | |
Balance at end of period | 5,400,000 | 3,500,000 | $ 2,000,000 | |
Allowance for reinsurance recoverables | ||||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | ||||
Balance at beginning of period | 0 | |||
Charged to costs and expenses | 0 | |||
Charge to other accounts | 200,000 | |||
Deductions | 0 | |||
Balance at end of period | $ 200,000 | $ 0 |