Root, Inc.

Previous wording

Claims operations remain a critical driver of our unit economics and long-term competitiveness. We continue to invest in automation, workflow optimization, and advanced analytical tools designed to improve accuracy, speed, and consistency in claims handling. Improvements to the claim process not only support customer satisfaction but also reinforces the stability of loss ratios and improves long-term cost efficiency by reducing operating expenses.

Current wording

Claims operations remain a critical driver of our unit economics and long-term competitiveness. We continue to invest in automation, workflow optimization, and advanced analytical tools designed to improve accuracy, speed, and consistency in claims handling. Improvements to the claim process not only support customer satisfaction but also reinforce the stability of loss ratios and improve long-term cost efficiency by reducing operating expenses.

Previous wording

We have significantly reduced the utilization of reinsurance through a strategic reduction of external quota share. The changes to the reinsurance program aim to deliver improved economics. Our diversified approach to reinsurance allows us to optimize capital requirements while remaining flexible in response to changes in market conditions or changes specific to our own business. We may choose to amend, commute, and/or non-renew certain third-party reinsurance arrangements in the future, which may result in us retaining more or less of our business. To the extent we retain a larger share of our book of business, our capital requirements may increase.

Current wording

We have significantly reduced the utilization of reinsurance through a strategic reduction of external quota share. The changes to the reinsurance program aim to deliver improved economics. Our diversified approach to reinsurance allows us to optimize capital requirements while remaining flexible in response to changes in market conditions or changes specific to our own business. We may choose to commute certain third-party reinsurance arrangements in the future, which may result in us retaining more or less of our business. To the extent we retain a larger share of our book of business, our capital requirements may increase.

Previous wording

We define direct contribution, a non-GAAP financial measure, as gross profit excluding net investment income, net realized gains on investments, acquisition expenses which include report costs and commission expenses related to our partnership channel, and fixed expenses, which include certain warrant compensation expense related to policies originating through the integrated automobile insurance solution for Carvana’s online buying platform, or Integrated Platform, overhead allocated based on headcount, or Overhead, and salaries, health benefits, bonuses, employee retirement plan-related expenses and employee share-based compensation expense, or Personnel Costs, licenses, professional fees and other expenses. Further impacts related to reinsurance are excluded, and these consist of ceded premiums earned, ceded loss and LAE, and net ceding commission and other. Net ceding commission and other is comprised of ceding commission received in connection with reinsurance ceded, partially offset by amortization of excess ceding commission, and other impacts of reinsurance ceded which are included in other insurance expense. After these adjustments, the resulting calculation is inclusive of only those gross variable costs of revenue incurred on the successful acquisition of business. We view direct contribution as an important metric because we believe it measures profitability of our total policy portfolio prior to the impact of reinsurance.

Current wording

We define direct contribution, a non-GAAP financial measure, as gross profit excluding net investment income, net realized losses on investments, acquisition expenses which include report costs and commission expenses related to our partnership channel, and fixed expenses, which include certain warrant compensation expense related to policies originating through the integrated automobile insurance solution for Carvana’s online buying platform, or Integrated Platform, overhead allocated based on headcount, or Overhead, and salaries, health benefits, bonuses, employee retirement plan-related expenses and employee share-based compensation expense, or Personnel Costs, licenses, professional fees and other expenses. Further impacts related to reinsurance are excluded, and these consist of ceded premiums earned, ceded loss and LAE, and net ceding commission and other. Net ceding commission and other is comprised of ceding commission received in connection with reinsurance ceded, amortization of excess ceding commission, and other impacts of reinsurance ceded which are included in other insurance expense. After these adjustments, the resulting calculation is inclusive of only those gross variable costs of revenue incurred on the successful acquisition of business. We view direct contribution as an important metric because we believe it measures profitability of our total policy portfolio prior to the impact of reinsurance.

Previous wording

We define adjusted EBITDA, a non-GAAP financial measure, as net income excluding interest expense, income tax expense, depreciation and amortization, share-based compensation, loss on extinguishment of debt, warrant compensation expense, restructuring charges, certain legal fees and other items that do not reflect our ongoing operating performance. After these adjustments, the resulting calculation represents expenses directly attributable to our operating performance. We use adjusted EBITDA as an internal performance measure in the management of our operations because we believe it provides management and other users of our financial information useful insight into our results of operations and underlying business performance. Adjusted EBITDA should not be viewed as a substitute for net income calculated in accordance with GAAP, and other companies may define adjusted EBITDA differently.

Current wording

We define adjusted EBITDA, a non-GAAP financial measure, as net income (loss) excluding interest expense which includes interest incurred on our long-term debt, certain fees that are expensed and does not include the amortization of discount and debt issuance costs; income tax expense; depreciation and amortization, including the amortization of discount and debt issuance costs; share-based compensation; loss on extinguishment of debt; warrant compensation expense; restructuring charges; certain legal fees and other items that do not reflect our ongoing operating performance. After these adjustments, the resulting calculation represents expenses directly attributable to our operating performance. We use adjusted EBITDA as an internal performance measure in the management of our operations because we believe it provides management and other users of our financial information useful insight into our results of operations and underlying business performance. Adjusted EBITDA should not be viewed as a substitute for net income (loss) calculated in accordance with GAAP, and other companies may define adjusted EBITDA differently.

Previous wording

See the section titled “—Non-GAAP Financial Measures” for a reconciliation of net income to adjusted EBITDA.

Current wording

See the section titled “—Non-GAAP Financial Measures” for a reconciliation of net income (loss) to adjusted EBITDA.

Previous wording

Net realized gains on investments represents the difference between the amount received by us on the sale of an investment as compared to the investment’s amortized cost basis.

Current wording

Net realized losses on investments represents the difference between the amount received by us on the sale of an investment as compared to the investment’s amortized cost basis.

Previous wording

Loss and LAE include the costs incurred for claims, payments made and estimated future payments to be made to or on behalf of our policyholders, including expenses needed to adjust or settle claims, net of amounts ceded to reinsurers. Loss and LAE 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 unpaid loss estimates consider loss trends, mix of business, 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.

Current wording

Loss and LAE include the costs incurred for claims, payments made and estimated future payments to be made to or on behalf of our policyholders, including expenses needed to adjust or settle claims, net of amounts ceded to reinsurers. Loss and LAE include an amount determined using adjuster determined case-based 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 unpaid loss estimates consider loss trends, mix of business, 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.

Previous wording

Net premiums earned increased primarily due to reduced cessions of gross premiums earned to reinsurers between periods and an increase in policies in force as a result of continued growth in our partnership channel, partially offset by a decrease in premiums per policy resulting from a shift in customer and state mix.

Current wording

Net premiums earned decreased primarily due to a decrease in premiums per policy resulting from a shift in customer and state mix, partially offset by reduced cessions of gross premiums earned to reinsurers between periods and an increase in policies in force as a result of continued growth in our partnership channel.

Previous wording

During the three months ended June 30, 2026 and 2025, we ceded approximately 1.2% and 4.9% of our gross premiums earned, respectively. The change in cessions between periods was primarily driven by a strategic reduction of quota share reinsurance.

Current wording

During the three months ended September 30, 2026 and 2025, we ceded approximately 0.9% and 3.5% of our gross premiums earned, respectively. The change in cessions between periods was primarily driven by a strategic reduction of quota share reinsurance.

Previous wording

Gross premiums written decreased for the three months ended June 30, 2026, primarily due to a decline in new writings in our direct channel as a result of lower direct performance marketing spend. This was primarily driven by heightened competition in the marketing environment. This was partially offset by continued growth in new writings in our partnership channel compared to the same period in 2025. The decrease in gross premiums earned was primarily due to a decrease in premiums per policy, partially offset by greater policies in force compared to the same period in 2025.

Current wording

Gross premiums written decreased for the three months ended September 30, 2026, primarily due to a decrease in premiums per policy in the direct and partnership channels and a decline in new writings in our direct channel as a result of lower direct performance marketing spend amid heightened competition in the marketing environment. This was partially offset by continued growth in new writings in our partnership channel compared to the same period in 2025. The decrease in gross premiums earned was primarily due to a decrease in premiums per policy, partially offset by greater policies in force compared to the same period in 2025.

Previous wording

Loss and LAE increased due to reduced cessions of losses to reinsurers driven by a strategic reduction of quota share reinsurance for the three months ended June 30, 2026 compared to the same period in 2025. This increase was partially offset by a reduction of loss and LAE reserves on prior periods due to lower than expected reported activity.

Current wording

Loss and LAE decreased due to fewer losses incurred on decreased gross premiums earned volume and favorable loss and LAE reserve development in prior accident years, stemming from lower-than-anticipated claim emergence for the three months ended September 30, 2026 compared to the same period in 2025. This decrease was partially offset by reduced cessions of losses to reinsurers driven by a strategic reduction of quota share reinsurance.

Previous wording

Gross accident period loss ratio increased to 61.6% for the three months ended June 30, 2026, from 57.4% for the same period in 2025. The change in the ratio was driven by higher loss costs as a result of increased severity per claim due to higher vehicle repair and medical costs and a shift in channel mix. This was partially offset by business tenure mix and favorable weather-related losses. We observed a mid-single digit increase in accident period severity per claim and a low-single-digit increase in claim frequency for the three months ended June 30, 2026 compared to the same period in 2025 across our bodily injury, collision, and property damage coverages.

Current wording

Gross accident period loss ratio increased to 61.1% for the three months ended September 30, 2026, from 56.5% for the same period in 2025. The change in the ratio was driven by higher loss costs as a result of increased severity per claim due to higher vehicle repair and medical costs and a shift in channel mix and higher claim frequency. This was partially offset by shifts in business tenure mix. We observed a low-single digit increase in accident period severity per claim and a low-single-digit increase in claim frequency for the three months ended September 30, 2026 compared to the same period in 2025 across our bodily injury, collision, and property damage coverages.

Previous wording

Sales and marketing expense decreased due to lower acquisition expense driven by a $10.6 million decrease in direct performance marketing spend. This reduction reflects a continued disciplined deployment of spend to optimize efficiency in a heightened competitive marketing environment, while maintaining returns in line with our estimated targets.

Current wording

Sales and marketing expense decreased due to lower acquisition expense driven by a $4.9 million decrease in direct performance marketing spend and a $2.1 million decrease in experimental marketing spend. This reduction reflects a continued disciplined deployment of spend to optimize efficiency in a heightened competitive marketing environment, while maintaining returns in line with our estimated targets.

Previous wording

Other insurance expense increased primarily due to an increase in our acquisition expenses. This was driven by a $3.9 million increase in commissions paid and increased amortization of deferred policy acquisition costs of $2.7 million. We also experienced a $4.2 million decrease in net ceding commission contra-expense as a result of a decline in ceded premiums written, largely attributable to a strategic reduction of quota share reinsurance. Fixed expenses increased primarily due to a $1.6 million increase in Carvana warrant expense related to our outstanding warrant structure with Carvana. Variable expenses decreased primarily due to a $2.3 million decrease in premium taxes as a result of less gross written premium.

Current wording

Other insurance expense decreased primarily due to a decrease in our fixed expenses. This was primarily driven by a $15.3 million decrease in Carvana warrant expense as a result of a cumulative expense catch-up recognized in the third quarter of 2025 when the short-term warrants expired and the long-term warrants became probable of vesting under the old warrant structure. This was partially offset by an increase in acquisition expense primarily driven by a $3.6 million increase in commissions expense and a $1.1 million increase in partnership expenses related to the continued growth in our partnership channel, including the build-out and appointment of independent agents. We also experienced a $2.9 million decrease in net ceding commission contra-expense as a result of a decline in ceded premiums written, largely attributable to a strategic reduction of quota share reinsurance.

Previous wording

General and administrative expense decreased primarily due to a $4.6 million reduction in Personnel Costs. This decline was primarily comprised of a decrease in short-term incentive plan compensation expense due to change in expected performance achievement between periods and a decrease in performance-based restricted stock unit compensation expense resulting from changes in the probability of achieving growth-related performance targets.

Current wording

General and administrative expense decreased primarily due to a $5.9 million reduction in Personnel Costs. This decline was primarily comprised of a decrease in performance-based restricted stock unit compensation expense resulting from changes in the probability of achieving growth-related performance targets and a decrease in short-term incentive plan compensation expense due to change in expected performance achievement between periods.

Previous wording

Changes in net unrealized (losses) gains on investments decreased to net unrealized losses primarily due to an increase in market interest rates and widening credit spreads during the period, influenced by broader macroeconomic and geopolitical uncertainties, which negatively impacted the fair value of fixed maturity securities.

Current wording

Changes in net unrealized (losses) gains on investments reflected an unrealized loss for the three months ended September 30, 2026, compared to an unrealized gain in the same period in 2025. This shift is primarily due to an increase in market interest rates during the period, influenced by broader macroeconomic and geopolitical uncertainties, which negatively impacted the fair value of fixed maturity securities.

Previous wording

During the six months ended June 30, 2026 and 2025, we ceded approximately 1.5% and 5.8% of our gross premiums earned, respectively. The change in cessions between periods was primarily driven by a strategic reduction of quota share reinsurance.

Current wording

During the nine months ended September 30, 2026 and 2025, we ceded approximately 1.3% and 5.0% of our gross premiums earned, respectively. The change in cessions between periods was primarily driven by a strategic reduction of quota share reinsurance.

Previous wording

The following table presents gross premiums written, ceded premiums written, net premiums written, gross premiums earned, ceded premiums earned and net premiums earned for the six months ended June 30, 2026 and 2025:

Current wording

The following table presents gross premiums written, ceded premiums written, net premiums written, gross premiums earned, ceded premiums earned and net premiums earned for the nine months ended September 30, 2026 and 2025:

Previous wording

Gross premiums written decreased for the six months ended June 30, 2026, primarily due to a decline in new writings in our direct channel as a result of lower direct performance marketing spend. This was primarily driven by heightened competition in the marketing environment and slower growth during the tax refund season in 2026, compared to 2025, which benefited from a pull-forward of demand driven by concerns around tariff policy. This was partially offset by continued growth in new writings in our partnership channel compared to the same period in 2025. The increase in gross premiums earned was primarily due to greater policies in force, partially offset by a decrease in premiums per policy compared to the same period in 2025.

Current wording

Gross premiums written decreased for the nine months ended September 30, 2026, primarily due to a decrease in premiums per policy in the direct and partnership channels and a decline in new writings in our direct channel. Lower direct channel new writings reflected lower direct performance marketing spend amid heightened competition in the marketing environment and slower growth during the tax refund season in 2026, compared to 2025, which benefited from a pull-forward of demand driven by concerns around tariff policy. This was partially offset by continued growth in new writings in our partnership channel compared to the same period in 2025. The increase in gross premiums earned was primarily due to greater policies in force, partially offset by a decrease in premiums per policy compared to the same period in 2025.

Previous wording

Net investment income decreased primarily due to a $4.4 million impairment loss recognized on an equity investment. The impairment loss included the reversal of $3.8 million of previously recognized unrealized gains, and the initial cash investment of $0.6 million.

Current wording

Net investment income decreased primarily due to a $4.4 million impairment loss recognized on an equity investment. The impairment loss included the reversal of $3.8 million of previously recognized unrealized gains, and the initial cash investment of $0.6 million. This was partially offset by a $1.3 million increase in investment income reflecting a shift in investment mix.

Previous wording

Loss and LAE increased due to additional losses incurred on increased gross premiums earned volume and reduced cessions of losses to reinsurers driven by a strategic reduction of quota share reinsurance for the six months ended June 30, 2026 compared to the same period in 2025. This volume-driven increase was partially offset by a reduction of loss and LAE reserves on prior periods due to lower than expected reported activity and the identification of additional subrogation opportunities resulting from model improvements.

Current wording

Loss and LAE increased due to additional losses incurred on increased gross premiums earned volume and reduced cessions of losses to reinsurers driven by a strategic reduction of quota share reinsurance for the nine months ended September 30, 2026 compared to the same period in 2025. This volume-driven increase was partially offset by a reduction of loss and LAE reserves on prior periods due to lower than expected reported activity and the identification of additional subrogation opportunities resulting from model improvements.

Previous wording

Gross accident period loss ratio increased to 59.7% for the six months ended June 30, 2026, from 56.0% for the same period in 2025. The change in the ratio was driven by higher loss costs as a result of increased severity per claim due to higher vehicle repair and medical costs and a shift in channel mix. This was partially offset by favorable weather-related losses and business tenure mix. We observed a mid-single digit increase in accident period severity per claim, while claim frequency remained consistent for the six months ended June 30, 2026 compared to the same period in 2025 across our bodily injury, collision, and property damage coverages.

Current wording

Gross accident period loss ratio increased to 59.7% for the nine months ended September 30, 2026, from 56.2% for the same period in 2025. The change in the ratio was driven by a shift in channel mix and higher loss costs as a result of increased severity per claim due to higher vehicle repair and medical costs. This was partially offset by shifts in business tenure mix and favorable weather-related losses. We observed a mid-single digit increase in accident period severity per claim, while claim frequency remained relatively consistent for the nine months ended September 30, 2026 compared to the same period in 2025 across our bodily injury, collision, and property damage coverages.

Previous wording

Sales and marketing expense decreased due to lower acquisition expense driven by a $35.4 million decrease in direct performance marketing spend. This reduction reflects a continued disciplined deployment of spend to optimize efficiency in a heightened competitive marketing environment, while maintaining returns in line with our estimated targets. The decrease was also influenced by slower new writing growth during the tax refund season in 2026, compared to 2025, which benefited from a pull-forward of demand driven by concerns around tariff policy.

Current wording

Sales and marketing expense decreased due to lower acquisition expense driven by a $40.3 million decrease in direct performance marketing spend. This reduction reflects a continued disciplined deployment of spend to optimize efficiency in a heightened competitive marketing environment, while maintaining returns in line with our estimated targets. The decrease was also influenced by slower new writing growth during the tax refund season in 2026, compared to 2025, which benefited from a pull-forward of demand driven by concerns around tariff policy.

Previous wording

Other insurance expense increased primarily due to an increase in our acquisition expenses. This was driven by a $12.8 million increase in commissions paid, increased amortization of deferred policy acquisition costs of $5.3 million, and a $3.2 million increase in partnership expenses related to the continued growth in our partnership channel, including the build-out and appointment of independent agents. We also experienced a $8.8 million decrease in net ceding commission contra-expense as a result of a decline in ceded premiums written, largely attributable to a strategic reduction of quota share reinsurance. Fixed expenses increased primarily due to a $3.5 million increase in Carvana warrant expense related to our outstanding warrant structure with Carvana. Variable expenses decreased primarily due to a $1.7 million decrease in premium taxes as a result of less gross premiums written.

Current wording

Other insurance expense increased primarily due to an increase in our acquisition expenses. This was driven by a $21.7 million increase in commission expense and a $4.3 million increase in partnership expenses related to the continued growth in our partnership channel, including the build-out and appointment of independent agents. We also experienced an $11.7 million decrease in net ceding commission contra-expense as a result of a decline in ceded premiums written, largely attributable to a strategic reduction of quota share reinsurance. The increase in acquisition expenses was partially offset by a decrease in fixed expenses, primarily due to an $11.8 million decrease in Carvana warrant expense as a result of a cumulative expense catch-up recognized in the third quarter of 2025 when the short-term warrants expired and the long-term warrants became probable of vesting under the old warrant structure.

Previous wording

Technology and development expense increased primarily due to a $5.3 million increase in Personnel Costs, driven by increased headcount which reflects a continued investment in our product delivery teams and technology.

Current wording

Technology and development expense increased primarily due to a $5.6 million increase in Personnel Costs, driven by increased headcount which reflects a continued investment in our product delivery teams and technology.

Previous wording

General and administrative expense decreased primarily due to an $8.2 million reduction in Personnel Costs. This decline was primarily comprised of a decrease in performance-based restricted stock unit compensation expense resulting from changes in the probability of achieving growth-related performance targets and a decrease in short-term incentive plan compensation expense due to change in expected performance achievement between periods.

Current wording

General and administrative expense decreased primarily due to a $10.5 million reduction in Personnel Costs. This decline was primarily comprised of a decrease in short-term incentive plan compensation expense due to change in expected performance achievement between periods and a decrease in performance-based restricted stock unit compensation expense resulting from changes in the probability of achieving growth-related performance targets.

Previous wording

The following table provides a reconciliation of total revenue to direct contribution for the three and six months ended June 30, 2026 and 2025:

Current wording

The following table provides a reconciliation of total revenue to direct contribution for the three and nine months ended September 30, 2026 and 2025:

Previous wording

(1) Adjustments from other insurance expense consists of acquisition expenses, including report costs and commission expenses related to our partnership channel of $32.0 million and $64.7 million for the three and six months ended June 30, 2026, respectively, and $25.0 million and $44.7 million for the three and six months ended June 30, 2025, respectively. Adjustments from other insurance expense also consists of fixed expenses, including warrant compensation expense related to policies originating through the Integrated Platform, Personnel Costs, Overhead, licenses, professional fees and other of $5.1 million and $10.9 million for the three and six months ended June 30, 2026, respectively, and $4.6 million and $7.1 million for the three and six months ended June 30, 2025, respectively.

Current wording

(1) Adjustments from other insurance expense consists of acquisition expenses, including report costs and commission expenses related to our partnership channel of $32.3 million and $97.0 million for the three and nine months ended September 30, 2026, respectively, and $28.5 million and $73.2 million for the three and nine months ended September 30, 2025, respectively. Adjustments from other insurance expense also consists of fixed expenses, including warrant compensation expense related to policies originating through the Integrated Platform, Personnel Costs, Overhead, licenses, professional fees and other of $6.0 million and $16.9 million for the three and nine months ended September 30, 2026, respectively, and $21.6 million and $28.7 million for the three and nine months ended September 30, 2025, respectively.

Previous wording

(2) Net ceding commission and other is comprised of ceding commissions received in connection with reinsurance ceded, partially offset by amortization of excess ceding commission and other impacts of reinsurance ceded.

Current wording

(2) Net ceding commission and other is comprised of ceding commission received in connection with reinsurance ceded, amortization of excess ceding commission, and other impacts of reinsurance ceded.

Previous wording

The following table provides a reconciliation of net income to adjusted EBITDA for the three and six months ended June 30, 2026 and 2025:

Current wording

The following table provides a reconciliation of net income (loss) to adjusted EBITDA for the three and nine months ended September 30, 2026 and 2025:

Previous wording

(1) Restructuring costs consist of real estate exit costs which includes depreciation and amortization of zero for the three and six months ended June 30, 2026 and $0.1 million for the three and six months ended June 30, 2025.

Current wording

(1) Restructuring costs consist of real estate exit costs which include depreciation and amortization of zero for the three and nine months ended September 30, 2026 and zero and $0.1 million for the three and nine months ended September 30, 2025, respectively.

Previous wording

We are organized as a holding company, but our primary operations are conducted by three of our wholly-owned insurance subsidiaries, Root Insurance Company and Root Property & Casualty Insurance Company, both Ohio-domiciled insurance companies, and Root Florida Insurance Company, a Florida-domiciled insurance company. The payment of dividends by our insurance subsidiaries is subject to restrictions set forth in the insurance laws and regulations of the State of Ohio and the State of Florida. Our domestic insurance subsidiaries are not permitted to pay any dividends without approval of the applicable superintendent, commissioner and/or director. During the six months ended June 30, 2026, the Ohio Department of Insurance approved Root Insurance Company to pay two extraordinary dividends. As a result, over that period, $15.0 million was paid to Caret Holdings, Inc., its parent company.

Current wording

We are organized as a holding company, but our primary operations are conducted by four of our wholly-owned insurance subsidiaries, Root Insurance Company, Root Property & Casualty Insurance Company, and Root Select Insurance Company, all three of which are Ohio-domiciled insurance companies, and Root Florida Insurance Company, a Florida-domiciled insurance company. The payment of dividends by our insurance subsidiaries is subject to restrictions set forth in the insurance laws and regulations of the State of Ohio and the State of Florida. Our domestic insurance subsidiaries are limited on the amount of dividends that can be paid without approval of the applicable superintendent, commissioner and/or director. During the nine months ended September 30, 2026, the Ohio Department of Insurance approved two extraordinary dividends for Root Insurance Company and one extraordinary dividend for Root Property & Casualty Insurance Company. As a result, over that period, Root Insurance Company and Root Property & Casualty Insurance Company each paid $15.0 million to Caret Holdings, Inc., its parent company.

Previous wording

Our wholly-owned, Cayman Islands-based reinsurance subsidiary, Root Reinsurance Company, Ltd., or Root Re, maintains a Class B(iii) insurer license under the Cayman Islands Monetary Authority, or CIMA. At June 30, 2026, Root Re was subject to compliance with certain capital levels and a net premiums earned to capital ratio up to 15:1, which we maintained as of June 30, 2026. The capital ratio can fluctuate at Root Re’s election, subject to regulatory approval. Root Re’s primary sources of funds are assumed insurance premiums, net investment income and capital contributions from the holding company. These funds are primarily used to pay claims and operating expenses and to purchase investments. Root Re must notify CIMA before it can pay any dividend to the holding company. During the six months ended June 30, 2026, Root Re paid dividends of $30.0 million to Caret Holdings, Inc.

Current wording

Our wholly-owned, Cayman Islands-based reinsurance subsidiary, Root Reinsurance Company, Ltd., or Root Re, maintains a Class B(iii) insurer license under the Cayman Islands Monetary Authority, or CIMA. At September 30, 2026, Root Re was subject to compliance with certain capital levels and a net premiums earned to capital ratio up to 15:1, which we maintained as of September 30, 2026. The capital ratio can fluctuate at Root Re’s election, subject to regulatory approval. Root Re’s primary sources of funds are assumed insurance premiums, net investment income and capital contributions from the holding company. These funds are primarily used to pay claims and operating expenses and to purchase investments. Root Re must notify CIMA before it can pay any dividend to the holding company. During the nine months ended September 30, 2026, Root Re paid dividends of $49.0 million to Caret Holdings, Inc.

Previous wording

In May 2026, we prepaid our six-year Amended Term Loan in the aggregate principal amount of $200.0 million in full. The prepayment resulted in a loss on extinguishment of debt of $4.9 million, primarily related to accelerated amortization of debt discount and issuance costs and a prepayment premium. We entered into a senior secured term loan with a principal balance of $200.0 million and a maturity date of May 2029. We are required to make quarterly principal payments starting September 30, 2026 equal to approximately 0.25% of the original principal amount in each of the first two years following the closing date and 1.25% quarterly in the third year, with the unpaid balance due at maturity. Interest is variable and calculated between SOFR plus 3.0% and SOFR plus 3.75% and is payable quarterly in cash. The SOFR margin is based upon the debt-to-capital ratio which is calculated on the last day of each quarter beginning on September 30, 2026 as discussed further in Note 7, “Long-Term Debt,” in the Notes to the Condensed Consolidated Financial Statements - Unaudited.

Current wording

In May 2026, we prepaid our six-year Amended Term Loan in the aggregate principal amount of $200.0 million in full. The prepayment resulted in a loss on extinguishment of debt of $4.9 million, primarily related to accelerated amortization of debt discount and issuance costs and a prepayment premium. We entered into a senior secured term loan with a principal balance of $200.0 million and a maturity date of May 4, 2029. We are required to make quarterly principal payments, which commenced on September 30, 2026, equal to approximately 0.25% of the original principal amount in each of the first two years following the closing date and 1.25% quarterly in the third year, with the unpaid balance due at maturity. Interest is variable and calculated between SOFR plus 3.0% and SOFR plus 3.75% and is payable quarterly in cash. The SOFR margin is based upon the debt-to-capital ratio which is calculated on the last day of each quarter as discussed further in Note 7, “Long-Term Debt,” in the Notes to the Condensed Consolidated Financial Statements - Unaudited.

Previous wording

In May 2026, we announced that our board of directors approved a share repurchase authorization of up to $75.0 million of Class A common stock, or Repurchase Program. We may utilize various methods to effect repurchases, which could include open market purchases, privately negotiated transactions, block purchases, accelerated share repurchase agreements or a combination of methods, including pursuant to trading plans adopted under Rule 10b5-1 under the Exchange Act. The Repurchase Program does not have a set expiration date and may be modified, suspended, or discontinued at any time at the discretion of our board of directors. The timing and amount of any repurchases under the Repurchase Program will depend upon several factors, including market and business factors.

Current wording

In May 2026, we announced that our board of directors approved a share repurchase authorization of up to $75.0 million of Class A common stock, excluding transaction costs, or Repurchase Program. We may utilize various methods to effect repurchases, which could include open market purchases, privately negotiated transactions, block purchases, accelerated share repurchase agreements or a combination of methods, including pursuant to trading plans adopted under Rule 10b5-1 under the Exchange Act. The Repurchase Program does not have a set expiration date and may be modified, suspended, or discontinued at any time at the discretion of our board of directors. The timing and amount of any repurchases under the Repurchase Program will depend upon several factors, including market and business factors.

Previous wording

During the three months ended June 30, 2026, we repurchased and immediately retired 0.4 million shares of our Class A common stock for an aggregate amount, including transaction costs, of $20.8 million under the Repurchase Program. As of June 30, 2026, $54.3 million remained available and authorized for repurchases.

Current wording

During the nine months ended September 30, 2026, we repurchased and immediately retired 0.7 million shares of our Class A common stock for an aggregate amount, including transaction costs, of $36.4 million under the Repurchase Program. As of September 30, 2026, $38.8 million remained available and authorized for repurchases.

Previous wording

As of June 30, 2026, we had $509.6 million in cash and cash equivalents, of which $239.5 million was held outside of regulated insurance entities. We also had restricted cash and cash equivalents of $65.2 million and $517.1 million in marketable securities.

Current wording

As of September 30, 2026, we had $596.3 million in cash and cash equivalents, of which $261.6 million was held outside of regulated insurance entities. We also had restricted cash and cash equivalents of $75.3 million and $433.7 million in marketable securities.

Previous wording

Our debt covenants require us to maintain cash and cash equivalents held with the lender to be at least 25% of the outstanding principal balance of the senior secured term loan. As of June 30, 2026, we maintained $50.0 million of restricted cash and cash equivalents with the lender.

Current wording

Our debt covenants require us to maintain cash and cash equivalents held with the lender to be at least 25% of the outstanding principal balance of the senior secured term loan. As of September 30, 2026, we maintained $49.9 million of restricted cash and cash equivalents with the lender.

Previous wording

Net cash provided by operating activities for the six months ended June 30, 2026 was $66.8 million compared to $78.8 million for the six months ended June 30, 2025. The decrease in cash provided by operating activities was due to changes in premiums not yet earned, loss and LAE reserves and premiums owed to the fronting carrier due to greater growth in policies in force in the six months ended June 30, 2025, compared to the same period in 2026. This was partially offset by the timing of premium and reinsurance receipts and higher net income between the periods.

Current wording

Net cash provided by operating activities for the nine months ended September 30, 2026 was $114.1 million compared to $136.4 million for the nine months ended September 30, 2025. The decrease in cash provided by operating activities was due to changes in premiums not yet earned, loss and LAE reserves and premiums owed to the fronting carrier due to greater growth in policies in force in the nine months ended September 30, 2025, compared to the same period in 2026. This was partially offset by the timing of premium and reinsurance receipts and higher net income between the periods.

Previous wording

Net cash used in investing activities for the six months ended June 30, 2026 was $146.3 million compared to $17.6 million for the six months ended June 30, 2025. The increase in cash used in investing activities was primarily due to net purchases of investment grade marketable securities associated with liquidity management and capital requirements for our insurance operations.

Current wording

Net cash used in investing activities for the nine months ended September 30, 2026 was $80.0 million compared to $59.2 million for the nine months ended September 30, 2025. The increase in cash used in investing activities was primarily due to purchases of investment grade marketable securities associated with liquidity management and capital requirements for our insurance operations. This was partially offset by sales of investments primarily due to repositioning our fixed income portfolio. The repositioning is intended to enhance portfolio yield and future net investment income by reinvesting sale proceeds into higher-yielding securities.