Root, the parent company of Root Insurance, has closed a term loan facility with BlackRock Financial Management.
The five-year, $300m term loan will carry an interest rate of term SOFR + 9%. In conjunction with the term loan, Root issued BlackRock warrants equal to 2% of all issued and outstanding shares on a diluted basis at an exercise price of $9 per share which carry an expiration date of the earlier of the maturity of the term loan or the full cash repayment of the term loan.
According to a report by Coverager, the company laid off 330 employees last week.
Root Insurance is a property-casualty InsurTech that offers personalised, affordable coverage in an app. Using technology in smartphones to measure driving behaviour such as braking, speed of turns, driving times, and route regularity, Root determines who is a safe driver and who isn’t.
Root said by only insuring safe drivers, it can offer more affordable car insurance rates. Root also offers hassle-free and affordable app-based renters insurance, providing coverage that’s easy to understand and is personalised around real consumer needs.
Alex Timm, Root co-founder and CEO, said, “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.
“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.”
Root Insurance recently partnered with Tractable to bolster its claims operations. As part of the deal, Root will implement the Al Subro solution to help it assess and respond to subrogation demands more accurately and efficiently. The insurer will benefit from AI technology to accelerate its end-to-end claims process, beginning with subrogation.
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