Root's stock rebounds in Q2 as earnings season heats up

Root Inc.'s stock has recovered from a rough start to 2026, outperforming its insurtech peers and the broader market since the beginning of the second quarter as investors await the release of the company's second-quarter earnings.

Shares of the Columbus, Ohio-based insurer, primarily known for its telematics-driven auto insurance, as well as renters and homeowners insurance coverage, increased 30.3% as of market close on July 23 from March 31 after falling 38.8% in the first quarter.

Hippo Holdings Inc., which focuses on homeowners coverage, is up 5.3% since the start of the quarter, while Lemonade Inc., which sells renters, pet, homeowners and personal auto policies, is down 3.1%. The S&P 500 Insurance Index has risen 11.22% over the same period, while the S&P 500 is up 13.48%.

Root's recovery was aided by its first-quarter earnings release, in which it booked net income of $35.9 million, the most profitable quarter in the company's history and an example of how far the company has come since the days of net losses every quarter.

"Root's done a few things that position themselves well to be able to be nimble in various markets," Keefe, Bruyette and Woods analyst Tommy McJoynt said in an interview. "They've been very good about pricing, being able to be nimble about reflecting changes, whether it be inflation on parts or claims costs, just being smart about staying ahead of any sort of pricing trend that they're seeing."

Root did not respond to a request for comment.

Root has been focused on expanding its geographies, an endeavor that got a boost on July 22 when the company announced the launch of its mobile-first, behavior-based car insurance in New Jersey. The addition of the Garden State brings the number of states it covers to 37.

McJoynt said the company has also diversified its distribution strategy, adding independent agency channels to its direct-to-consumer and partnership distribution channels, such as Carvana Co.

"[Root] is basically taking a similar approach that we've seen with some of the other large carriers where you don't have to be a one-channel writer," McJoynt said. "You can diversify across direct consumer, embedded and agents just to have more sticks in the fire."

Growth rates

Hippo and Lemonade, like Root, are at different levels of profitability and growth potential.

Hippo had its first quarter of positive net income in the second quarter of 2025 and has remained net positive in the three subsequent reporting periods. While Lemonade is still looking for its first positive net income, it set company records for total revenue, gross written premiums and in-force premiums in the first quarter of 2026.

Among the three companies, Root is in a better position for growth, said Kaenan Hertz, managing partner at Insurtech Advisors LLC.

"Root has a chance of growing quicker, but still relatively steady," Hertz said in an interview. "Barring any major hit to their distribution channel, they'll continue to grow new distribution points, and continue to grow it in a way where they believe they've underwritten the risk correctly."

Hippo's road to profitability was long and rugged. The reason, McJoynt said, was the fallout from heavy losses in Texas, primarily from the ice storm in February 2021. He said the insurer had "an oversized concentration of its homeowners book in Texas and they got caught with some bad weather."

McJoynt said Hippo has now pivoted by maintaining a retained homeowners risk book of business and getting into the fronting business with Spinnaker Insurance Co., its P&C subsidiary. The company added to that business in June when it entered a partnership with Accelerant Holdings, a data-driven risk exchange platform for the specialty insurance market.

"Homeowners insurance is still important to them, but a lot of what they're going after is this new fronting arrangement, which is only really kind of a couple of years old, and it's really only recently getting to scale," McJoynt said. "They are adding to that scale with the Accelerant partnership and that should really turbocharge their growth."

Global ambitions

While Root and Hippo work on their presence in the US market, Lemonade is also working on bringing its array of products "across the pond" to a wider audience in the European Union, where it currently writes 4.7% of its gross written premiums. Lemonade lines are available in France, Germany, the Netherlands and the United Kingdom.

Hertz said Lemonade's model is "to do something for everybody in every part of the world ... and their desire to retain more risk is ultimately a shift from sovereign versus rented capacity."

"That will either work or it won't, and if it doesn't work, there's going to be massive volatility, which is why you have reinsurance because you want to limit the volatility," Hertz said.

Lemonade's earnings call is scheduled for July 29 at 8 a.m. Eastern time, while Hippo's call is at 8 a.m. the following day. Root's call is the following week on Aug. 5 at 5 p.m.