Technology company Root Inc., the Columbus, Ohio-based parent company of Root Insurance, is conducting an internal investigation into a series of payments made without prior disclosure to the company’s management by a former senior marketing employee last year.

The transactions involve payments of at least $9.5 million, transferred from the company at the former employee’s direction, to “entities in which the former employee had an interest,” according to Root’s U.S. Securities and Exchange Commission filing. A spokesperson for Root said that due to the ongoing investigation, the company is not able to comment at this time.

Of the estimated $9.5 million in payments, $0.4 million was reflected as expense in the company’s financial results for the third quarter of 2022, ending on Sept. 30. The remaining $9.1 million was recognized as a prepaid expense within other assets in Root’s condensed consolidated balance sheet as of the same date, the SEC filing said.

The company voluntarily notified the U.S. Department of Justice, the SEC and certain state regulators, the filing said, and plans to “pursue recovery of these funds through all legally available means and cooperate with law enforcement as appropriate.”

Root also said that it does not expect these payments to affect the company’s financial results as reported in its annual year-end report for 2021, filed with the SEC on Feb. 23, 2022.

News of the unauthorized marketing payments comes after Root said in a letter to shareholders for the third quarter of 2022 that it had implemented a number of efforts to strengthen the company’s financial foundations, including reducing marketing spend $60 million during the quarter compared with Q3 2021.

“We are utilizing our deep understanding by customer segment and geography to drive profitable new writings through our direct offering with very limited marketing,” the letter said.

This move was on the back of Root’s reported Q3 2022 net loss of $64 million, down from a net loss of $133 million during the same quarter in 2021, Carrier Management reported. In an effort to further reduce expenses, Root also said in its Q3 2022 earnings call that it made the decision in November to reduce its headcount by 17 percent as it works to right-size its non-headcount expenses as well.

“We expect these actions to collectively lower run rate expenses $50 million annually,” Rob Bateman, Root’s chief financial officer, said during the call.

This announcement marked the company’s second round of job cuts for 2022. It began the year by announcing in January that it had laid off approximately 330 team members throughout its business. Timm, in an emailed statement to Carrier Management, cited pandemic losses as factoring into that initial decision.

“As the pandemic has continued to evolve, supply chain and inflationary pressures have caused historic levels of loss cost increases,” he said.

At the same time, the InsurTech reported for Q3 2022 a 14-point year-over-year reduction in its gross loss ratio to 79 percent—effectively tripling the margins of Root’s business, according to Timm. He said in the letter that the organization is in a position to drive growth in profitable segments, adding that the company is showing “clear progress” on its strategy of accelerating new writings growth on Root’s embedded platform while materially reducing loss ratio year-over-year.

“Our number one priority is to become self-funding in coming years, allowing us to control our own destiny,” Timm said in the letter.