Root Inc. terminated 330 employees Thursday, about 20% of its workforce, citing a need to increase efficiency and strategic focus because of financial pressures from the ongoing coronavirus pandemic.
Claims losses have hit "historic levels" for the six-year-old Root Insurance Co. Supply shortages and other causes of inflation are increasing costs of vehicle repair and replacement.
"We are confident we are building an enduring organization poised for future growth," CEO Alex Timm said in a letter to staff following a morning all-staff meeting, which the company provided to Columbus Business First. "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."
Most of the jobs are in the sales and claims departments, according to a regulatory filing. The company projects $7 million to $8 million for severance payments, benefits and related restructuring costs this quarter.
Root (Nasdaq:ROOT) said it would provide financial and career placement aid to affected workers.
The company has offices in downtown Columbus and a call center at Easton, but in the fall it announced a hybrid remote or in-office work policy.
Timm's statement said the job cuts were "the most difficult part of this realignment."
"I am deeply grateful to all Root team members, past and present, for their continued commitment to bringing our vision to life," the letter said.
Executives will not be available for interviews until after the company releases fourth-quarter and full-year results on Feb. 24, a spokeswoman said.
Several affected employees announced their departures on LinkedIn early Thursday afternoon, and executives with other Columbus technology companies – including Root veterans – offered support and listed job openings.
The company had Ohio's largest ever IPO in October 2020, debuting at $27 per share. The stock fell below $3 early this month and closed Thursday at $2.28.
Co-founder Dan Manges, founding board member Chris Olsen – partner at initial investor Drive Capital LLC – and several key executives have stepped down over the past year. Some employees have left to form new startups.
