Management Meeting: Growth is Slower on Heavy Competition, But Profits Stronger

Research evidence excerpt

Management Meeting: Growth is Slower on Heavy Competition, But Profits Stronger

Insurance: Insurtech

Root

TD SECURITIES (USA) LLC QUICK TAKE: COMPANY UPDATE

June 9, 2026

Price: $53.85 (06/9/2026) Management Meeting: Growth is Slower on

Price Target: $125.00 Heavy Competition, But Profits Stronger

HOLD (2)

ESG SCORE: 58/100

Andrew Kligerman THE TD COWEN INSIGHT

212 468 8440

We recently met with CEO Alex Timm and CFO Megan Binkley. They commented on the

andrew.kligerman@tdsecurities.com

increasingly competitive personal auto environment, where profitability is at "record levels".

Daniel Bergman While ROOT's growth is currently slower "by design", profitability will likely be higher given

617 946 3747 reduced ad spend. ROOT also described its AI / tech advantages, and expects "fairly

dan.bergman@tdsecurities.com

aggressive" buybacks if the price is right.

Alfred Miller

212 468 8453 Competitive Landscape is "Very Hot" — CEO Timm

alfred.miller@tdsecurities.com

Many players are lowering rate and continuing robust ad spend, creating a more competitive

Jeff Tong growth landscape. Mr. Timm says policy shopping will likely hold or continue to subside as

212 468 8450

prices continue to decrease, driving higher industry retention.

jeff.tong@tdsecurities.com

ROOT has accordingly pulled back on sales & marketing spend (1Q26 net ratio was 7.5%, vs

Adittya Parthasarathy, CFA

12.4% q/q and 16.0% y/y). ROOT often makes growth investments counter-cyclical to most212 468 8449

adittya.parthasarathy@tdsecurities.com of the industry, as returns are higher when competition is lower. Some carriers are getting

"aggressive" with their marketing spend.

Key Data

Symbol NYSE: ROOT Combined Ratio (C/R) Will Likely Be Lower, Amidst Hot Competitive Environment

Market Cap $755.0MM

Mr.