InsurTech Root Inc. posted a net loss for the fourth quarter 2023 of $24 million and a net loss for the year of $147.4 million.

Results were improvements from net losses of about $58.3 million for fourth quarter 2022 and about $298 million for all of 2022.

The Columbus, Ohio-based company’s fourth-quarter net combined ratio was about 112, an improvement from the near 180 combined ratio of fourth-quarter 2022. Root finished 2023 with a combined ratio of 133.2 versus 195 the year prior.

Co-Founder and CEO Alex Timm said in a letter to shareholders that Root remains “in the early chapters of disrupting the auto insurance industry” but in 2023 “significantly bolstered [the company’s] pricing and underwriting technology while optimizing our expense structure, putting us in an increasingly strong position throughout 2023.”

“Importantly, we believe we have now achieved scale in the business,” he said while claiming that Root last year was one of the fastest growing auto insurers in the country.

Net premiums written for the fourth quarter and full year were about $229 million and $573.2 million compared to $55.3 million and about $269 million, respectively, in 2022.

Timm said the direct channel was the company’s primary growth driver in 2023, driven by marketing and organic traffic. He said Root continues to grow partnerships with plans to “continue to eliminate friction in the purchase experience by moving partners to fully embedded experiences.” Embedded as a percentage of new writings was 8 percent in fourth-quarter 2023, down from 33 percent in the first quarter.

With improvement in losses and expenses, Timm said Root’s profitability now depends on its marketing spend.

“It’s important to note that we believe we could achieve profitability in the near term if we determined reducing our marketing investments was the best approach to drive shareholder value,” he wrote to shareholders. “However, this would require us to forgo significant amounts of accretive business, reduce our share of market, and ultimately come at the expense of building long-term shareholder value.”

This article was originally published by Insurance Journal. Reporter Chad Hemenway is the National Editor of Insurance Journal