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You are here: Home / Insurance News | Massachusetts / Insurtech | Innovation / Insurtech | Funding / Root Announces 330 Person Layoff & $300 Million Term Loan Facility with BlackRock

Root Announces 330 Person Layoff & $300 Million Term Loan Facility with BlackRock

February 8, 2022 by AC Editor

Restructuring Comes in Response to Evolving Post-Pandemic Marketplace


on January 20, 2022, Root Insurance Co-founder and CEO Alex Timm announced in a letter that the online insurance platform would be saying goodbye to approximately 330 team players as a result of an “organizational alignment.”

The letter noted how the Covid-19 pandemic had touched every part of the economy, affecting many companies including his own.

The following is a reprint of the letter posted to the Root website:

“Today, at our all-company meeting, I announced an organizational realignment that will drive efficiency and increased focus on Root’s strategic priorities. The most difficult part of this realignment is that we will say goodbye to approximately 330 team members throughout the business. As the pandemic has continued to evolve, touching every part of our economy, our company has been no exception. Supply chain and inflationary pressures have caused historic levels of loss cost increases. 

We are confident we are building an enduring organization poised for future growth. This realignment will further focus our efforts on differentiating and diversifying our distribution and continuing to improve our insurance operations and customer experience. Our strategic priorities include continuing to execute pricing changes that address the increase in insurance costs while building our embedded insurance product. Our commitment to using differentiated technology to disrupt the car insurance industry remains core to everything we do. This refinement is critical to maintaining that commitment. All impacted team members will be supported with financial and career placement aid.

I am deeply grateful to all Root team members, past and present, for their continued commitment to bringing our vision to life. I’ll provide additional details on Root’s Q4 / Full Year 2021 Earnings Call scheduled for February 24, 2022.”

Root Announces Closing of New Term Loan Facility with BlackRock

Interestingly, six days after announcing the company’s “organizational realignment”, the company announced the successful completion of a new term loan facility with the private equity firm BlackRock. According to the terms of the loan, the five-year, $300 million term loan will carry an interest rate of term SOFR *9%. In return, Root has issued Black warrants equal to 2% of all issued and outstanding shares on a diluted basis and with an exercise price of $9.00 per share. The shares carry an expiration date of the earlier maturity of the term loan or the full cash repayment of said loan.

“We are pleased with the successful execution of this new term facility. It accomplished several important objectives including extending our debt maturity and further enhancing our liquidity position with a partner focused on the long-term success of Root,” said Root Co-Founder and CEO Alex Timm. “We are executing on a disciplined strategy to create enduring value through strong underwriting results, the development of our embedded product, and prudent capital management.”

Mark Lawrence, Managing Director on BlackRock’s global credit team, said: “We are excited to form a long-term partnership with Root, an auto Insurtech company with differentiated technology, and we recognize the potential of the innovative embedded product the company is developing through their exclusive partnership with Carvana.”

Founded in 2015 in Columbus, Ohio, Root’s original purpose was to develop an online-only property and casualty insurtech platform focused on “tackling the archaic car insurance industry using date and technology to base rates primarily on how people actually drive, not who they are.”

Since then, the company has gone on to raise approximately $827.5 million in funding according to Crunchbase. It also conducted an IPO and currently trades on NASDAQ. As of February 7, its share price was trading at $1.87 done from its 52-week high of $22.69.

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Filed Under: Insurtech | Funding, Latest News Tagged With: Agency Checklists, Insurtech News, Mass. Insurance News, massachusetts insurance news, New England Insurance News, Root

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