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Root. Inc, a car insurance provider based in Ohio raised $724 million after offering 26.8 million shares during its initial public offering (IPO) on Wednesday.

Root initially proposed an IPO price between $22 and $25 per share. Late Tuesday, the company announced that it is pricing its Class A common stock to the public for $27 per share.

It started trading its stock under the symbol "ROOT" on the Nasdaq Global Select Market on Wednesday.

Root's market debut put its valuation around $6.5 billion. It is the largest electronic-based car insurance IPO to launch this year. For example, in May, SelectQuote Inc successfully raised $360 million with a final listing valuing the company at $3.25 billion. Another insurance provider, Lemonade Inc, backed by SoftBank Group, raised $319 million in July and is valued at $1.6 billion.

Barclays, Goldman Sachs, Morgan Stanley, Barclays, and Wells Fargo Securities served as lead underwriters for Root's market debut.

Root began offerings its services to customers in 2015, and has since developed smartphone-administered driving tests as well as an algorithm to give customers quotes, leading to solid profits.

In 2019, Root raked in $290.2 million in revenue and posted a net loss of $282.4 million. It turns out that the first six months of 2020 were profitable for Root, generating revenue of $245.4 million with a net loss of $144.5 million. The company currently has $200 million in debt.

Root CEO expects large market-share shifts in the auto insurance industry

In an interview with Reuters, Root co-founder and CEO Alexander Timm said, "There will be some short-term noise from COVID - with less driving - but I think that will normalize." He added, "You're going to see pretty large market-share shifts (in the automotive insurance industry), that are driven by competitors that have modern technology."

Root's record-breaking IPO in the car insurance industry points to the technological future of car insurance, which older and more established car insurance firms will have to eventually to shift towards.

Especially with the COVID-19 pandemic, Root's contactless method for getting customers quotes from their smartphones certainly has played a role in the company's profits throughout the first six months of 2020.

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