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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q

(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2020
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from____________to____________

Commission File Number:001-39658
ROOT, INC.
(Exact name of Registrant as specified in its charter)
Delaware84-2717903
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
80 E. Rich Street, Suite 500
Columbus, Ohio
43215
(Address of principal executive offices)(Zip Code)
(866) 980-9431
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A common stock,
$0.0001 par value per share
ROOTNasdaq Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐Accelerated filer ☐
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒
As of November 24, 2020, the number of outstanding shares of the registrant’s Class A common stock, par value $0.0001 per share, was 59,443,588, and the number of outstanding shares of the registrant’s Class B common stock, par value $0.0001 per share, was 191,354,938.



TABLE OF CONTENTS
Page



SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will” or “would” or the negative of these words or other similar terms or expressions. These forward-looking statements include, but are not limited to, statements concerning the following:
our ability to retain existing customers and acquire new customers;
our expectations regarding our future financial performance, including total revenue, gross profit, adjusted gross profit, direct loss ratio, marketing costs, direct LAE ratio, quota share levels and expansion of our renewal premium base;
the impact of the COVID-19 pandemic;
our goal to be licensed in all states in the United States and the timing of obtaining additional licenses;
the accuracy and efficiency of our telematics and behavioral data, and our ability to gather and leverage additional data;
our ability to underwrite risks accurately and charge profitable rates;
our ability to maintain our business model and improve our capital and marketing efficiency;
our ability to drive improved conversion and decrease the cost of customer acquisition;
our ability to maintain and enhance our brand and reputation;
our ability to effectively manage the growth of our business;
our ability to improve our product offerings, introduce new products and expand into additional insurance lines;
our ability to cross sell our products and attain greater value from each customer;
our lack of operating history and ability to attain profitability;
our ability to compete effectively with existing competitors and new market entrants in our industry;
future performance of the markets in which we operate;
our ability to operate a “capital-light” business and obtain and maintain reinsurance contracts;
our ability to expand our distribution channels through additional partnership relationships, digital media and referrals;
our ability to protect our intellectual property and any costs associated therewith;
our ability to expand domestically and internationally;
our ability to raise additional capital;
our ability to meet risk-based capital requirements;
our ability to stay in compliance with laws and regulation that currently apply or become applicable to our business; and



the growth rates of the markets in which we compete.
You should not rely on forward-looking statements as predictions of future events. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described under the header “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained herein. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.
The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made and we undertake no obligation to update them to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law.
Unless the context otherwise indicates, references in this report to the terms “Root,” “the Company,” “we,” “our” and “us” refer to Root, Inc. and its subsidiaries.

We may announce material business and financial information to our investors using our investor relations website (ir.joinroot.com). We therefore encourage investors and others interested in Root to review the information that we make available on our website, in addition to following our filings with the Securities and Exchange Commission, webcasts, press releases and conference calls.



Part I.  Financial Information
Item 1.  Financial Statements
ROOT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED
As of
September 30,December 31,
20202019
(in millions, except par value )
Assets
Investments:
Fixed maturities available-for sale, at fair value (amortized cost: $216.4 and $118.7 at September 30, 2020 and December 31, 2019, respectively)
$222.0 $119.3 
Short-term investments (amortized cost: $2.5 and $3.5 at September 30, 2020 and December 31, 2019, respectively)
2.5 3.5 
Total investments 224.5 122.8 
Cash and cash equivalents217.8 391.7 
Restricted cash1.0 24.9 
Premiums receivable, net of allowance of $7.1 and $2.0 at September 30, 2020 and December 31, 2019, respectively
138.4 122.7 
Reinsurance recoverable104.1 25.3 
Prepaid reinsurance premiums119.1 17.4 
Fixed assets, net9.6 10.2 
Deferred acquisition costs1.8 3.3 
Other assets22.2 10.3 
Total assets$838.5 $728.6 
Liabilities, Redeemable Convertible Preferred Stock and Stockholders’ Deficit
Liabilities:
Loss and loss adjustment expense reserves$225.3 $140.7 
Unearned premiums165.1 145.4 
Long-term debt and warrants220.0 192.2 
Reinsurance premiums payable166.4 25.7 
Accounts payable and accrued expenses61.5 29.8 
Other liabilities10.2 8.4 
Total liabilities848.5 542.2 
Commitments and Contingencies (Note 11)
Redeemable convertible preferred stock, $0.0001 par value, 161.8 and 158.9 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively (liquidation preference of $597.5 and $549.8 at September 30, 2020 and December 31, 2019, respectively) (Note 8)
560.4 560.4 
Stockholders’ deficit:
Common stock, $0.0001 par value, 42.5 and 44.4 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively (Note 8)
  
Treasury stock, at cost(0.8)(0.1)
Additional paid-in capital39.5 10.5 
Accumulated other comprehensive income5.6 0.6 
Accumulated loss(614.7)(385.0)
Total stockholders’ deficit(570.4)(374.0)
Total liabilities, redeemable convertible preferred stock and stockholders’ deficit$838.5 $728.6 
See Notes to the Condensed Consolidated Financial Statements - Unaudited
1


ROOT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - UNAUDITED
Three Months Ended
September 30,
Nine Months Ended September 30,
2020201920202019
(in millions, except per share data)
Net premiums earned$44.9 $75.8 $278.4 $174.4 
Net investment income1.1 1.1 4.3 2.8 
Net realized gains on investments0.1  0.2  
Fee income4.4 2.7 13.0 6.5 
Total revenue50.5 79.6 295.9 183.7 
Operating expenses:
Loss and loss adjustment expenses76.1 100.9 303.3 210.5 
Sales and marketing36.9 34.4 90.1 73.6 
Other insurance (benefit) expense(26.3)15.2 0.3 34.1 
Technology and development12.9 7.0 40.2 15.4 
General and administrative16.6 9.0 58.8 31.4 
Total operating expenses116.2 166.5 492.7 365.0 
Interest expense19.5 13.3 32.9 15.9 
Loss before income tax expense(85.2)(100.2)(229.7)(197.2)
Income tax expense    
Net loss(85.2)(100.2)(229.7)(197.2)
Other comprehensive income:
Changes in unrealized gain on investments
0.1 0.1 5.0 0.8 
Comprehensive loss$(85.1)$(100.1)$(224.7)$(196.4)
Loss per common share: basic and diluted$(2.20)$(2.88)$(5.94)$(5.99)
Weighted-average common shares outstanding: basic and diluted38.8 34.8 38.7 32.9 
See Notes to the Condensed Consolidated Financial Statements - Unaudited

2



ROOT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT - UNAUDITED
Redeemable Convertible Preferred StockCommon StockTreasury StockAdditional Paid-in CapitalAccumulated Other Comprehensive IncomeAccumulated LossTotal Stockholders' Deficit
SharesAmountSharesAmountSharesAmount
(in millions)
Balance—July 1, 2020161.8 $560.4 41.4 $ 4.6 $(0.8)$37.6 $5.5 $(529.5)$(487.2)
Comprehensive loss:
Net loss— — — — — — — — (85.2)(85.2)
Changes in other comprehensive income— — — — — — — 0.1 — 0.1 
Common stock—option exercises— — 1.0 — — — 0.9 — — 0.9 
Reclassification of early-exercised stock option from liabilities
— — 0.1 — — — 0.2 — — 0.2 
Common stock—share-based compensation expense— — — — — — 0.8 — — 0.8 
Balance—September 30, 2020161.8 $560.4 42.5 $ 4.6 $(0.8)$39.5 $5.6 $(614.7)$(570.4)
Balance—January 1, 2020158.9 $560.4 44.4 $ 4.5 $(0.1)$10.5 $0.6 $(385.0)$(374.0)
Comprehensive loss:
Net loss— — — — — — — — (229.7)(229.7)
Changes in other comprehensive income— — — — — — — 5.0 — 5.0 
Tender offer and subsequent conversion (Note 9)2.9 — (2.9)— — — 25.1 — — 25.1 
Common stock—option exercises— — 1.5 — — — 1.2 — — 1.2 
Reclassification of early-exercised stock option from liabilities
— — (0.1)— — — 0.3 — — 0.3 
Common stock—share-based compensation expense— — — — — — 1.9 — — 1.9 
Settlement of related party loan (Note 10)— — (0.4)— 0.1 (0.7)0.5 — — (0.2)
Balance—September 30, 2020161.8 $560.4 42.5 $ 4.6 $(0.8)$39.5 $5.6 $(614.7)$(570.4)
See Notes to the Condensed Consolidated Financial Statements - Unaudited

3


ROOT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT - UNAUDITED (CONTINUED)
Redeemable Convertible Preferred StockCommon StockTreasury StockAdditional Paid-in CapitalAccumulated Other Comprehensive IncomeAccumulated LossTotal Stockholders' Deficit
SharesAmountSharesAmountSharesAmount
(in millions)
Balance—July 1, 2019136.4 $189.6 43.2 $ 4.5 $(0.1)$9.5 $0.7 $(199.6)$(189.5)
Comprehensive loss:
Net loss— — — — — — — — (100.2)(100.2)
Changes in other comprehensive income— — — — — — — 0.1 0.1 
Common stock—option exercises— — 1.1 — — — 1.2 — — 1.2 
Reclassification of early-exercised stock option to liabilities
— — — — — — (1.1)— — (1.1)
Common stock—shared-based compensation expense— — — — — — 0.3 — — 0.3 
Preferred stock—series E, net of issuance costs of $0.1
21.2 349.9 — — — — — — — — 
Preferred stock—SAFE conversion1.3 21.2 — — — — — — — — 
Balance—September 30, 2019158.9 $560.7 44.3 $ 4.5 $(0.1)$9.9 $0.8 $(299.8)$(289.2)
Balance—January 1, 2019136.4 $189.6 41.5 $ 4.5 $(0.1)$ $ $(102.6)$(102.7)
Comprehensive loss:
Net loss— — — — — — — — (197.2)(197.2)
Changes in other comprehensive income— — — — — — — 0.8 — 0.8 
Tender offer— — — — — — 8.6 — — 8.6 
Common stock—option exercises— — 2.8 — — — 1.8 — — 1.8 
Reclassification of early-exercised stock option to liabilities
— — — — — — (1.3)— — (1.3)
Common stock—shared-based compensation expense— — — — — — 0.8 — — 0.8 
Preferred stock—series E, net of issuance costs of $0.1
21.2 349.9 — — — — — — — — 
Preferred stock—SAFE conversion1.3 21.2 — — — — — — — — 
Balance—September 30, 2019158.9 $560.7 44.3 $ 4.5 $(0.1)$9.9 $0.8 $(299.8)$(289.2)
See Notes to the Condensed Consolidated Financial Statements - Unaudited

4


ROOT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
Nine Months Ended September 30,
20202019
(in millions)
Cash flows from operating activities:
Net loss$(229.7)$(197.2)
Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation1.9 0.8 
Tender offer25.1 8.6 
Depreciation and amortization10.6 2.4 
Bad debt expense16.7 5.4 
Warrants fair value adjustment16.0  
Payment-in-kind interest expense6.8  
Realized gains on investments(0.2) 
SAFE fair value adjustment 11.2 
Changes in operating assets and liabilities:
Premiums receivable(32.4)(66.7)
Reinsurance recoverable(78.8)(22.3)
Prepaid reinsurance premiums(101.7)(6.2)
Deferred acquisition costs1.5 (1.6)
Other assets(9.6)(0.6)
Losses and loss adjustment expenses reserves84.6 77.2 
Unearned premiums19.7 74.1 
Reinsurance premiums payable140.7 25.4 
Accounts payable and accrued expenses31.6 15.9 
Other liabilities2.4 1.0 
Net cash used in operating activities(94.8)(72.6)
Cash flows from investing activities:
Purchases of investments(138.1)(104.3)
Proceeds from maturities, call and pay downs of investments31.2 29.9 
Sales of investments9.4  
Capitalization of internally developed software(3.9)(4.1)
Purchases of fixed assets(1.7)(3.8)
Net cash used in investing activities(103.1)(82.3)
Cash flows from financing activities:
Proceeds from exercise of stock options1.4 1.8 
Proceeds from issuance of preferred stock, net 349.9 
Purchase of treasury stock(0.2) 
Proceeds from debt issuance13.5 100.0 
Debt issuance costs(1.4)(2.7)
Repayments of long-term debt(13.2)(15.3)
Proceeds from SAFE 10.0 
Net cash provided by financing activities0.1 443.7 
Net (decrease) increase in cash, cash equivalents and restricted cash (197.8)288.8 
Cash, cash equivalents and restricted cash at beginning of year416.6 122.3 
Cash, cash equivalents and restricted cash at end of year$218.8 $411.1 
Supplemental disclosures:
Interest paid$3.3 $2.8 
Income taxes paid  
Leasehold improvements - non-cash 0.4 
Purchase of treasury stock - non-cash0.5  
See Notes to the Condensed Consolidated Financial Statements - Unaudited

5


ROOT, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
1.NATURE OF BUSINESS
Root, Inc. is a holding company which, directly or indirectly, maintains 100% ownership of each of its subsidiaries, including Root Insurance Company, an Ohio domiciled insurance company (together with Root, Inc. “We,” “us” or “our”). We were formed in 2015 and began writing personal auto insurance in July 2016.
We are a technology company revolutionizing personal insurance with a pricing model based upon fairness and a modern customer experience. We operate a direct-to-consumer model with more than 75% of our customers acquired through mobile applications. We offer auto and renters insurance products underwritten by Root Insurance Company. As of September 30, 2020, we wrote auto policies in 30 states and were licensed in six additional states and the District of Columbia. As of September 30, 2020, we offered renters insurance in nine states.
2.BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation—In our opinion, all adjustments necessary for a fair presentation of the condensed consolidated financial statements have been included. All such adjustments are of a normal and recurring nature. These condensed consolidated financial statements are unaudited and, accordingly, should be read in conjunction with the consolidated financial statements and notes included in the final prospectus dated October 27, 2020, as filed with the SEC pursuant to Rule 424(b)(4) under the Securities Act of 1933 on October 29, 2020.
Basis of Consolidation—The unaudited condensed consolidated financial statements include the accounts of Root, Inc. and its subsidiaries, all of which are wholly owned. These financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. All intercompany accounts and transactions have been eliminated.
Use of Estimates—The preparation of the unaudited condensed consolidated financial statements requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates reflected in our unaudited condensed consolidated financial statements include, but are not limited to, reserves for loss and loss adjustment expense, premium write-offs and valuation allowances for income taxes.
COVID-19—In December 2019, COVID-19 was first reported in Wuhan, China and in March 2020, the World Health Organization declared a global pandemic. The global pandemic has severely impacted businesses worldwide, including within the insurance industry. We have been impacted by certain individual state bulletins that outline COVID-19 premium relief efforts, including restrictions on the ability to cancel policies for non-payment, requirements to defer insurance premium payments for up to 60 days and restrictions on increasing policy premiums. COVID-19 has impacted and may further impact the broader economic environment, including negatively impacting unemployment levels, economic growth, the proper functioning of financial and capital markets and interest rates. As the COVID-19 pandemic continues to develop, there is uncertainty around the severity and duration of the pandemic and the pandemic’s potential impact on our business and our financial performance.
Other Insurance Expense—Other insurance expense includes underwriting expenses; credit card and policy processing expenses; premium write-offs; insurance license expenses; and salaries, health benefits, bonuses, employee retirement plan related expenses, share-based compensation expenses, and overhead allocated based on headcount related to actuarial and certain data science activities. Other insurance expense also includes amortization of deferred acquisition costs like premium taxes and report costs related to the successful acquisition of a policy. Other insurance expense is expensed as incurred, except for costs related to deferred acquisition costs that are capitalized and subsequently amortized over the same period in which the related premiums are earned.


6


These expenses are also recognized net of ceding commissions earned from our quota share reinsurance agreements. The ceding commission provides for reimbursement of both direct and other periodic acquisition costs, including certain underwriting and marketing costs, and is presented as a reduction of other insurance expense. Under our new quota share reinsurance structure effective July 1, 2020, which is on a loss occurring basis, we began ceding approximately 70% of direct earned premiums to our third-party reinsurers. We recognize ceding commissions in proportion to recognition of the direct written premiums during the quarter, including the remaining unearned premiums on ceded policies upon the inception of our new quota share reinsurance agreement.

Deferred Offering Costs—Deferred offering costs, which primarily consist of legal, accounting, and other third-party fees directly related to our initial public offering, or IPO, are capitalized as incurred. Upon consummation of the IPO, these deferred offering costs were offset against the IPO proceeds. Deferred offering costs were $0.7 million as of September 30, 2020.
Recently Adopted Financial Accounting Standards—In August 2018, the FASB issued Accounting Standards Update No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement, to help entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement (hosting arrangement) by providing guidance for determining when the arrangement includes a software license. We early adopted ASU 2018-15 on January 1, 2020. The adoption of this standard did not have a material impact on our condensed consolidated financial statements or notes to the condensed consolidated financial statements.
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes. The amendments in the update simplify the accounting for income taxes by, among other things, removing the exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or a gain from other items like comprehensive income, and recognizing franchise tax that is partially based on income as an income-based tax. We early adopted ASU 2019-12 on January 1, 2020. The adoption of this standard did not have a material impact on our condensed consolidated financial statements or notes to the condensed consolidated financial statements.
Upcoming Accounting Pronouncements—We currently qualify as an "emerging growth company" under the Jumpstart Our Business Startups Act of 2012, whereby we have the option to adopt new or revised accounting guidance within the same time periods as private companies. We have elected this option, but may ultimately determine it is preferable to take advantage of early adoption provisions offered within the applicable guidance.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The main provision of ASU 2016-02 requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. The effective date of ASU 2016-02 is for annual reporting periods beginning after December 15, 2021, and interim reporting periods beginning after December 15, 2022. We are currently evaluating the impact of this ASU.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 amends previous guidance on the impairment of financial instruments by adding an impairment model that allows an entity to recognize expected credit losses as an allowance rather than impairing as they are incurred. The new guidance is intended to reduce complexity of credit impairment models and result in a more timely recognition of expected credit losses. The effective date of ASU 2016-13 is for reporting periods beginning after December 15, 2022. We are currently evaluating the impact of this ASU.


7


3.INVESTMENTS
The amortized cost and fair value of short-term investments and available-for-sale fixed maturity securities at September 30, 2020 and December 31, 2019 are as follows:
September 30, 2020
Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value
(dollars in millions)
Bonds and short-term investments:
U.S. Treasury securities and agencies$5.1 $0.1 $ $5.2 
Municipal securities20.2 0.8  21.0 
Corporate debt securities95.8 3.1  98.9 
Residential mortgage-backed securities11.1 0.1 (0.1)11.1 
Commercial mortgage backed securities57.9 1.2 (0.1)59.0 
Other debt obligations28.8 0.5  29.3 
Total$218.9 $5.8 $(0.2)$224.5 
December 31, 2019
Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value
(dollars in millions)
Bonds and short-term investments:
U.S. Treasury securities and agencies$12.7 $0.1 $ $12.8 
Municipal securities10.2 0.1  10.3 
Corporate debt securities38.8 0.4 (0.1)39.1 
Residential mortgage-backed securities3.3   3.3 
Commercial mortgage backed securities31.5 0.1 (0.1)31.5 
Other debt obligations25.7 0.1  25.8 
Total$122.2 $0.8 $(0.2)$122.8 
The following tables reflect the gross unrealized losses, fair value on bonds, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at September 30, 2020 and December 31, 2019:
September 30, 2020
Less than 12 Months12 Months or MoreTotal
Fair ValueUnrealized
Loss
Fair ValueUnrealized
Loss
Fair ValueUnrealized
Loss
(dollars in millions)
Bonds:
Municipal securities$2.7 $ $ $ $2.7 $ 
Corporate debt securities7.6    7.6  
Residential mortgage-backed securities
6.8 (0.1)  6.8 (0.1)
Commercial mortgage-backed securities
3.6 (0.1)  3.6 (0.1)
Total bonds$20.7 $(0.2)$ $ $20.7 $(0.2)

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December 31, 2019
Less than 12 Months12 Months or MoreTotal
Fair ValueUnrealized
Loss
Fair ValueUnrealized
Loss
Fair ValueUnrealized
Loss
(dollars in millions)
Bonds:
Municipal securities$5.5 $ $ $ $5.5 $ 
Corporate debt securities12.8 (0.1)  12.8 (0.1)
Residential mortgage-backed securities
1.9    1.9  
Commercial mortgage-backed securities
24.5 (0.1)  24.5 (0.1)
Other debt obligations7.4    7.4  
Total bonds$52.1 $(0.2)$ $ $52.1 $(0.2)
There were no other-than-temporary impairments recognized in the nine months ended September 30, 2020 or 2019, respectively.
The amortized cost and fair value of short-term investments and fixed maturity securities by contractual maturity at September 30, 2020 and December 31, 2019 are as follows:
September 30, 2020December 31, 2019
Amortized CostFair ValueAmortized CostFair Value
(dollars in millions)
Due in one year or less$13.7 $13.9 $14.3 $14.3 
Due after one year through five years149.9 154.6 81.6 82.1 
Due five years through 10 years18.1 18.4 4.9 4.9 
Due after 10 years37.2 37.6 21.4 21.5 
Total$218.9 $224.5 $122.2 $122.8 
Net realized gains on short-term investments and fixed maturity securities were $0.1 million and zero for the three months ended September 30, 2020 and 2019, respectively. Net realized gains on short-term investments and fixed maturity securities were $0.2 million and zero for the nine months ended September 30, 2020 and 2019, respectively.

9


The following table sets forth the components of net investment income for the three months and nine months ended September 30, 2020 and 2019:
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
(dollars in millions)
Interest on bonds$1.1 $(0.8)$3.2 $1.0 
Interest on deposits and cash equivalents0.1 2.0 1.4 2.0 
Total1.2 1.2 4.6 3.0 
Investment expense(0.1)(0.1)(0.3)(0.2)
Net investment income$1.1 $1.1 $4.3 $2.8 
The following tables summarize the credit ratings of investments at September 30, 2020 and December 31, 2019:
September 30, 2020
Amortized CostFair Value% of Total
Fair Value
S&P Global rating or equivalent(dollars in millions)
AAA$113.3 $115.5 51.4 %
AA+, AA, AA-, A-119.4 20.19.0 
A+, A, A-65.0 66.929.8 
BBB+, BBB, BBB-21.2 22.09.8 
Total$218.9 $<