Core Viewpoint - Hagerty reported its financial results for the second quarter of 2025 during a conference call, highlighting key metrics and future expectations [2][3]. Group 1: Company Overview - The conference call was hosted by Jason Koval, Senior Vice President of Investor Relations, with participation from McKeel Hagerty, CEO and Chairman, and Patrick McClymont, CFO [3]. - An accompanying presentation was made available on Hagerty's Investor Relations section of the corporate website, including the earnings release, slides, and a letter to stockholders [4]. Group 2: Financial Performance - The discussion included forward-looking statements and non-GAAP financial metrics, indicating expectations for future business and financial performance [5].

Insurance operations strongly contributed to profitability, with risk managed through Hagerty Re reinsurance vehicles. Loss ratios stood at 44% on average over the last three years, well below industry averages. This reinsurance approach means Hagerty transfers around 80% of its insurance risk as of FY2024 and expects to maintain this level in FY2025, leaving Hagerty less exposed to catastrophic events such as wildfires. Sales in core insurance, MGA programs, and fee commissions rose thanks in part to the o ...

Hagerty (HGTY) Q2 2025 Earnings Call August 04, 2025 10:00 AM ET Company ParticipantsJay Koval - SVP - IR & CommunicationsMcKeel Hagerty - CEO & ChairmanPatrick McClymont - CFOC. Gregory Peters - MD - InsuranceKevin Wijendra - Equity Research AssociateConference Call ParticipantsMark Hughes - AnalystMichael Zaremski - MD & Senior Equity Research AnalystOperatorGreetings, and welcome to the Hagerty Second Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only ...

Financial Data and Key Metrics Changes - Total revenue increased by 18% to $369 million, driven by an 11% increase in written premium and a 12% growth in commission revenue [6][13] - Net income rose by 11% to $47 million compared to $43 million a year earlier, with adjusted EBITDA increasing by 20% to $64 million [15][16] - Operating margins improved by 70 basis points to 13%, with a significant increase in operating profit to $48 million [15][16] Business Line Data and Key Metrics Changes - Earned premium for Hagerty Reinsurance increased by 12%, while membership marketplace and other revenue surged by 68% due to higher inventory sales and the launch of the European auction business [6][7] - Mission and fee revenue grew by 11% to $143 million, and earned premium increased by 13% to $178 million [14] Market Data and Key Metrics Changes - The company reported a strong retention rate of 89%, contributing to the growth in written premium [13] - The marketplace revenue showed strong performance, particularly in private sales and inventory sales, which were key drivers for year-to-date revenue [24][25] Company Strategy and Development Direction - The company aims to expand specialty insurance offerings, simplify the membership experience, and grow the marketplace business internationally [8][9] - A new fronting arrangement with Markel will allow the company to control 100% of the premium and risk starting in 2026, enhancing profitability and operational control [12][58] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving 13% to 14% revenue growth for 2025, supported by strong business momentum and the integration with State Farm [18][65] - The company is optimistic about the long-term growth potential, particularly in the collectible car market, where current penetration is only 6.7% [20] Other Important Information - The company has filled key positions with experienced talent to support long-term success, including new hires in distribution, insurance products, and brand marketing [86] - The technology spending is expected to trend down as revenue accelerates in 2026 and 2027, following significant investments in a new cloud-based insurance platform [10][29] Q&A Session Summary Question: Marketplace revenue performance and future trajectory - Management noted strong second-quarter performance in private sales and inventory sales, with expectations for continued growth in the second half due to upcoming auctions [24][25] Question: Incremental technology spending outlook for 2026 - Management clarified that the $20 million in technology spending is not a one-time expense but rather an investment in future revenue generation [28][29] Question: Earnings impact from the Markel shift - The transition to a 100% quota share arrangement is expected to yield significant underwriting profit and investment income, enhancing overall profitability [33][34] Question: Customer shopping behavior and market dynamics - Management indicated a balanced market with muted growth expectations, but strong quote volume and confidence in new business generation [37][38] Question: European expansion and addressable market - The company is optimistic about its European expansion, focusing on high-end auctions and private sales, with plans for a larger auction calendar in the coming years [42][45] Question: State Farm integration progress - The integration is progressing well, with the company live in 17 states and plans to expand to 25 states by the end of the year, focusing on both new business and existing customer rollovers [47][52] Question: Pricing trends and competition - Management acknowledged a stable pricing environment in the collector car niche, with no significant changes in competition dynamics [76][81] Question: Initiatives to increase vehicles per policy - The launch of the Enthusiast Plus program aims to increase the number of vehicles per policy by allowing the company to underwrite more diverse vehicle types [82][84]

Part I – Financial Information [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents Hagerty's unaudited condensed consolidated financial statements for the quarterly period ended June 30, 2025 [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company reported significant year-over-year revenue growth and improved net income for the periods ending June 30, 2025 Key Operational Results (in thousands, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | $368,699 | $313,225 | $688,292 | $584,933 | | **Operating Income** | $47,699 | $38,067 | $73,427 | $50,291 | | **Net Income** | $47,202 | $42,657 | $74,495 | $50,856 | | **Net Income Attributable to Class A Common Stockholders** | $9,098 | $8,539 | $15,594 | $5,350 | | **Basic EPS** | $0.09 | $0.09 | $0.16 | $0.06 | | **Diluted EPS** | $0.09 | $0.09 | $0.16 | $0.06 | [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets grew to $2.04 billion, with corresponding increases in liabilities and equity as of June 30, 2025 Balance Sheet Summary (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | $2,040,575 | $1,709,338 | | Cash and cash equivalents | $140,300 | $104,784 | | Investments | $601,574 | $589,527 | | **Total Liabilities** | $1,379,724 | $1,101,169 | | Long-term debt, net | $153,383 | $104,968 | | **Total Equity** | $578,038 | $523,506 | [Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow decreased while financing activities provided cash, reversing a prior-year trend for H1 2025 Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | **Net Cash Provided by Operating Activities** | $97,714 | $122,255 | | **Net Cash Used in Investing Activities** | ($31,839) | ($479,937) | | **Net Cash Provided by (Used in) Financing Activities** | $29,480 | ($50,783) | | **Change in cash and cash equivalents** | $97,741 | ($408,754) | [Notes to Financial Statements](index=13&type=section&id=Notes%20Accompanying%20the%20Condensed%20Consolidated%20Financial%20Statements) Details the company's business model, accounting policies, revenue, investments, debt, and related-party transactions - Hagerty operates as a Managing General Agent (MGA) for collector car insurance, reinsuring approximately **80% of the risk** through its subsidiary, Hagerty Re[34](index=34&type=chunk) - The company has **one reportable segment**, with the CEO acting as the Chief Operating Decision Maker (CODM), who evaluates performance based on consolidated measures like net income[45](index=45&type=chunk) - In July 2024, the company completed a warrant exchange, issuing **3.9 million shares** of Class A Common Stock for 19.5 million warrants[76](index=76&type=chunk) - Significant related-party transactions exist with **Markel** (underwriting and reinsurance) and **State Farm** (alliance agreement, reinsurance, and a term loan)[191](index=191&type=chunk)[192](index=192&type=chunk)[196](index=196&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=52&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Details strong revenue growth, a proposed new fronting arrangement with Markel, and analysis of key performance indicators [Overview and Recent Developments](index=52&type=section&id=Overview%20and%20Recent%20Developments) Hagerty, a leader in collector car insurance, announced a non-binding letter of intent for a new fronting arrangement with Markel - On July 24, 2025, Hagerty announced a non-binding letter of intent for a **Proposed Fronting Arrangement with Markel**, expected to be effective January 1, 2026[210](index=210&type=chunk) - Under the proposed arrangement, Hagerty Re would control **100% of the premium** and assume **100% of the risk** for policies written through Essentia, paying Markel an initial 2% fronting fee[211](index=211&type=chunk) [Key Performance Indicators](index=54&type=section&id=Key%20Performance%20Indicators) Total Written Premium grew 11.3% and Policies in Force increased by 3.5% as of June 30, 2025 Key Performance Indicators - Six Months Ended June 30 | Metric | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Written Premium | $600,312 thousand | $539,459 thousand | 11.3% | | Hagerty Re Loss Ratio | 42.2% | 41.1% | 1.1 ppt | | New Business Count - Insurance | 143,181 | 148,335 | (3.5)% | | Adjusted EBITDA | $103,352 thousand | $80,440 thousand | 28.5% | Key Performance Indicators - As of Period End | Metric | June 30, 2025 | Dec 31, 2024 | % Change | | :--- | :--- | :--- | :--- | | Policies in Force | 1,559,798 | 1,506,451 | 3.5% | | Policies in Force Retention | 88.7% | 89.0% | (0.3) ppt | | HDC Paid Member Count | 907,963 | 875,822 | 3.7% | [Results of Operations](index=59&type=section&id=Results%20of%20Operations) Total revenue increased 17.7% and operating income grew 46.0% for H1 2025, driven by higher premiums and marketplace sales - For Q2 2025, commission and fee revenue grew **11.2% YoY**, driven by policy renewals with a **14.3% increase** in underlying premiums due to rate increases[241](index=241&type=chunk)[242](index=242&type=chunk) - Q2 2025 Marketplace revenue surged by **$20.5 million YoY**, driven by higher inventory sales and the inaugural auction at Concorso d'Eleganza Villa d'Este[248](index=248&type=chunk) - For H1 2025, the Hagerty Re loss ratio was **42.2%**, which included **$10.3 million** in pre-tax catastrophe losses from the Southern California wildfires in January 2025[276](index=276&type=chunk) - H1 2025 Sales expense increased **39.2% YoY**, mainly due to a **$27.5 million** increase in cost of sales from higher marketplace inventory sales[277](index=277&type=chunk) [Liquidity and Capital Resources](index=67&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains sufficient liquidity through cash, operations, and credit facilities, despite a decrease in operating cash flow - Primary liquidity sources are cash balances, operating cash flows, and borrowings from the **2025 JPM Credit Facility** and the **BAC Credit Facility**[285](index=285&type=chunk) - In March 2025, the company entered into a new **$375.0 million** senior unsecured revolving credit facility with JPM, maturing in March 2030[289](index=289&type=chunk)[290](index=290&type=chunk) - Net cash from operating activities decreased by **$24.5 million** in H1 2025 compared to H1 2024, primarily due to the timing of CUC settlements and catastrophe claim payments[304](index=304&type=chunk)[307](index=307&type=chunk) - The estimated value of the Tax Receivable Agreement (TRA) Liability was **$5.1 million** as of June 30, 2025[312](index=312&type=chunk) [Non-GAAP Financial Measures](index=74&type=section&id=Non-GAAP%20Financial%20Measures) Adjusted EBITDA increased 28.5% to $103.4 million and Adjusted EPS rose to $0.21 for H1 2025 Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Line Item | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Net income** | **$74,495** | **$50,856** | | Interest and other (income) expense, net | ($12,718) | ($19,586) | | Income tax expense | $11,650 | $10,940 | | Depreciation and amortization | $18,321 | $20,574 | | **EBITDA** | **$91,748** | **$62,784** | | Loss related to warrant liabilities, net | — | $8,081 | | Share-based compensation expense | $9,538 | $8,926 | | Other unusual items | $2,066 | $736 | | **Adjusted EBITDA** | **$103,352** | **$80,440** | Adjusted EPS Calculation | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Adjusted consolidated net income (Numerator) | $74,495 thousand | $58,937 thousand | | Fully dilutive shares outstanding (Denominator) | 360,971 thousand | 359,428 thousand | | **Adjusted EPS** | **$0.21** | **$0.16** | [Quantitative and Qualitative Disclosures About Market Risk](index=77&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material changes to its market risk during the first six months of 2025 - There have been **no material changes** to the company's market risk during the first six months of 2025[328](index=328&type=chunk) [Controls and Procedures](index=77&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective with no material changes to internal controls - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of June 30, 2025[330](index=330&type=chunk) - **No changes occurred** during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[331](index=331&type=chunk) Part II – Other Information [Legal Proceedings](index=78&type=section&id=Item%201.%20Legal%20Proceedings) The company faces no legal actions expected to have a material adverse effect on its financial position - The company is subject to various claims and legal actions from the ordinary course of business but does **not expect them to have a material adverse effect**[332](index=332&type=chunk) [Risk Factors](index=78&type=section&id=Item%201A.%20Risk%20Factors) New risks include the potential failure of the proposed Markel fronting arrangement and the impact of rising interest rates - A new risk factor highlights the uncertainty surrounding the finalization and potential benefits of the **Proposed Fronting Arrangement with Markel**, noting it is subject to negotiation, definitive documentation, and regulatory approvals[336](index=336&type=chunk)[337](index=337&type=chunk) - The company identifies **rising interest rates and tariffs** as a risk that could increase costs and reduce consumer demand for discretionary items like collector cars, potentially harming business results[338](index=338&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=78&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds during the period - None[339](index=339&type=chunk) [Other Information](index=80&type=section&id=Item%205.%20Other%20Information) No director or executive officer adopted or terminated a Rule 10b5-1 trading arrangement during the second quarter - During Q2 2025, **no director or executive officer** adopted or terminated a Rule 10b5-1 trading arrangement[342](index=342&type=chunk)

Financial Performance - Total revenue grew by 18% to $688 million[5] - Operating income increased by 46% to $73 million[9] - Net income increased by 46% to $74 million[9] - Adjusted EBITDA increased by 28% to $103 million[9] Revenue Components - Commission and fee revenue increased by 12%[9, 25] - Membership, Marketplace, and other revenue increased significantly by 68%[9, 25] Marketplace growth was 232%[9] - Earned premium in Hagerty Re grew by 12%[25] Future Outlook - The company aims to double policies in force to 30 million by 2030[10, 15] - Revised 2025 outlook projects total revenue between $1356 million and $1368 million, a 13%-14% increase[41] - Revised 2025 outlook projects net income between $112 million and $120 million, a 43%-53% increase[41] - Revised 2025 outlook projects Adjusted EBITDA between $162 million and $172 million, a 30%-38% increase[41] Strategic Initiatives - Hagerty entered into a non-binding LOI with Markel to control 100% of the premium in 2026[7, 16]

While Hagerty has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Hagerty, Inc. (HGTY) came out with quarterly earnings of $0.13 per share, beating t ...

For Immediate Release Hagerty Reports Second Quarter 2025 Results Increases 2025 Outlook for Revenue and Profit Growth TRAVERSE CITY, Michigan, August 4, 2025 /PRNewswire/ – Hagerty, Inc. (NYSE: HGTY), an automotive enthusiast brand and leading specialty vehicle insurance provider, announced today financial results for the three and six months ended June 30, 2025. "We delivered solid results during the first half of 2025 with revenue growth of 18%, net income gains of 46%, and Adjusted EBITDA gains of 28%. ...

Core Insights - Hagerty, Inc. reported strong financial results for the first half of 2025, with revenue growth of 18%, net income growth of 46%, and Adjusted EBITDA growth of 28% [2][5][19] - The company has increased its 2025 revenue growth outlook to 13-14% and expects net income growth of 43-53% [3][5] Financial Performance - Total revenue for Q2 2025 increased 18% year-over-year to $368.7 million, with year-to-date revenue also up 18% to $688.3 million [5][6] - Written premium for Q2 2025 rose 11% year-over-year to $356.0 million, with year-to-date written premium increasing 11% to $600.3 million [5][6] - Marketplace revenue surged 327% year-over-year to $26.8 million in Q2 2025, and year-to-date marketplace revenue increased 232% to $55.8 million [5][6] - Operating income for Q2 2025 increased 25% year-over-year to $47.7 million, with year-to-date operating income up 46% to $73.4 million [5][6] - Net income for Q2 2025 rose 11% year-over-year to $47.2 million, while year-to-date net income increased 46% to $74.5 million [5][6] Key Metrics - The company maintained a Policies in Force Retention rate of 88.7% as of June 30, 2025, with total insured vehicles increasing 6% year-over-year to 2.7 million [6][24] - The Loss Ratio for Q2 2025 was 42.3%, compared to 41.1% in the prior year period [6][24] - Membership, marketplace, and other revenue increased 78% year-over-year to $47.6 million in Q2 2025 [6][24] Outlook - Hagerty anticipates continued revenue growth and margin expansion in 2025, with planned investments of $20 million primarily in technology [8][16] - The company is positioned for sustained profit growth through its focus on insurance, membership, and marketplace businesses [8][16]

McKendry is responsible for driving continuous and transformational improvement for Hagerty's insurance products. This includes product development and implementation, pricing, underwriting, reserving, and reinsurance. His focus will be on expanding and evolving Hagerty's offerings through data and customer driven insights. McKendry brings to his role at Hagerty more than two decades of experience from GEICO, Lemonade, Metromile, and Progressive. "Adam and Jesse are accomplished leaders with impressive trac ...