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RBI holds rates steady, sees economic recovery taking root

RBI holds rates steady, sees economic recovery taking root

MUMBAI (Reuters) – The Reserve Bank of India (RBI) left key interest rates unchanged on Friday as widely expected, while keeping policy accommodative to help pull the coronavirus-ravaged economy out of its worst slump in four decades.

FILE PHOTO: A worker walks past the logo of Reserve Bank of India (RBI) inside its office in New Delhi, India July 8, 2019. REUTERS/Anushree Fadnavis

India’s economy has been the worst hit by the pandemic among major countries and new infections continue to climb, but RBI Governor Shaktikanta Das said there were some encouraging signs of a business turnaround and activity could return to growth in the January-March quarter.

As expected, the monetary policy committee (MPC) kept the repo rate, its key lending rate, at 4.0%, while the reverse repo rate or the key borrowing rate stayed at 3.35%.

The RBI has slashed the repo rate by 115 basis points (bps) since late March to cushion the shock from the coronavirus crisis and sweeping lockdowns to check its spread.

The RBI sees India’s real GDP contracting by 9.5% in the current fiscal year, Das said in a webcast after the MPC meeting.

“The MPC is of the view that revival of the economy from an unprecedented COVID-19 pandemic assumes the highest priority in the conduct of monetary policy,” he said.

“The MPC decides to maintain status quo on the policy rate in this meeting and await the easing of inflationary pressures to use the space available for supporting growth further.”

August inflation, at 6.69%, held above the top end of the RBI’s medium-term target range of 2-6% for the fifth consecutive month amid supply disruptions.

“The main reason for inaction today was the stickiness of inflation,” said Shilan Shah, senior India economist at Capital Economics in Singapore.

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Root Insurance, a US-based insurtech, has filed for an IPO

Root Insurance, a US-based insurtech, has filed for an IPO

  •  Root Insurance is targeting a $6 billion valuation in an upcoming IPO.
  • It’ll likely succeed thanks to its improving loss ratio and the increasing demand for usage-based auto insurance.
  • Insider Intelligence publishes hundreds of insights, charts, and forecasts on the Fintech industry with the Fintech Briefing. You can learn more about subscribing here.

The US-based insurtech has filed for an IPO, per TechCrunch. Root has raised a total of $523 million in funding to date and is valued at $3.7 billion, though it’s targeting a $6 billion IPO valuation. The full-stack insurtech sells auto, renters, and homeowners insurance, and is currently available in 29 states.

the global usage based insurance market

Root Insurance is targeting a $6 billion valuation in an upcoming IPO.

Business Insider Intelligence

Root is disrupting the $266 billion auto insurance industry through its use of IoT and AI, and has expanded its coverage to break into other markets. The insurtech collects users’ behavioral data via its mobile app to measure their driving behavior, such as hard braking and speed, to more accurately price each user’s policy. Good drivers save up to 52% compared with traditional insurance options.

The data is processed through machine learning (ML) and helps Root avoid high-risk drivers, decreasing the number of claims it has to pay by 45%. Root expanded its coverage to renters and  homeowners insurance last year, aiming to cross-sell these policies with auto, thus generating additional premiums without having to substantially raise marketing costs. In addition, users can customize and purchase policies, find their insurance card, make changes to their policy, and file a claim all through the Root app—creating a seamless customer experience.

We expect the IPO raise to be a success, as Root is improving its financials and the coronavirus pandemic is encouraging the use of usage-based insurance.

Root’s loss ratio is decreasing

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