Root, the Columbus, Ohio-based parent company of Root Insurance Company, has announced a successful refinancing of its term loan facility.
The capital was supplied by funds and accounts managed by BlackRock Capital Investment Advisors and its affiliates. This new agreement introduces improved financial terms that bolster Root’s financial agility and substantially lower its capital costs.
The newly amended facility, effective from October 29th, comprises a six-year term loan at a principal amount of $200m. This marks a $100m reduction from the previous terms. Notably, the loan features an interest rate of 3-month term SOFR plus 600 basis points, including performance-based reductions. These terms represent a minimum 300 basis point decrease from the earlier arrangement. Furthermore, Root will maintain $150m of available capital, aligning with the conditions of the prior facility.
Root specializes in leveraging data science and technology to tailor insurance experiences. The company’s mobile app, which has surpassed 14 million downloads, utilizes extensive driving data to craft personalized insurance solutions. This innovative approach has positioned Root as a leader in the InsurTech sector.
Root Chief Financial Officer Megan Binkley said, “We are excited to complete the refinancing of our term loan, which demonstrates the strength of our business model, our improved operational performance, and BlackRock’s continued confidence in our long-term growth outlook.
“By reducing our principal balance and securing more favorable pricing terms, we’ve enhanced our capital structure while maintaining ample growth capital.”
In the fourth quarter, Root recognized approximately $5.5m in expenses related to unamortized debt discount and issuance costs, owing to loan extinguishment and modifications.
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