Core Viewpoint - Hagerty, Inc. announced a secondary public offering of 8,700,000 shares of its Class A Common Stock, with an additional option for underwriters to purchase up to 1,305,000 shares [1][2]. Company Overview - Hagerty is a leading specialty vehicle insurance provider and automotive enthusiast brand, serving over 900,000 members in its Hagerty Drivers Club and catering to the 67 million Americans who identify as car enthusiasts [9]. Offering Details - The proceeds from the sale will not benefit Hagerty directly; instead, they will be used by the Selling Stockholders for a redemption related to the estate of Kim Hagerty [2]. - The underwriting team includes Keefe, Bruyette & Woods, J.P. Morgan, BMO Capital Markets, Citizens Capital Markets, Wells Fargo Securities, and Oppenheimer & Co. [2]. Regulatory Information - Hagerty has filed a registration statement with the SEC for the offering, which includes a prospectus that potential investors should review for complete information [3].

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 ...

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][12] - Net income rose by 11% to $47 million compared to $43 million a year earlier, with adjusted EBITDA increasing by 20% to $64 million [16][17] - Operating margins improved by 70 basis points to 13%, with operating profit reported at $48 million [14][17] Business Line Data and Key Metrics Changes - Earned premium for Hagerty Reinsurance increased by 12% [7] - Membership marketplace and other revenue surged by 68% to $48 million, attributed to higher inventory sales and the launch of the European auction business [7][13] - Commission revenue grew by 11% to $143 million [12][13] Market Data and Key Metrics Changes - The company reported a retention rate of 89%, which is considered industry-leading [12] - The two-year rate of written premium growth during the first half was over 30%, with expectations for mid-teen growth in the second half [12][17] Company Strategy and Development Direction - The company aims to expand specialty insurance offerings, simplify the membership experience, and grow its marketplace business internationally [8][9] - A new fronting arrangement with Markel will allow Hagerty to control 100% of the premium and risk starting in 2026, enhancing profitability and operational control [10][11] - The Enthusiast Plus program was launched to target modern enthusiast vehicles, aiming to capture a larger share of the collectible market [8][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving 13% to 14% revenue growth for 2025, driven by strong marketplace gains and written premium growth [17] - The partnership with State Farm is expected to significantly contribute to new business, with plans to expand into 25 states by the end of the year [46][52] - The company sees a long runway for growth, with only 6.7% penetration in its target market of 35 million collectible cars [19] Other Important Information - The company has filled three key positions to strengthen its leadership team, which is expected to contribute to long-term success [84] - 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 [9][29] Q&A Session Summary Question: Marketplace revenue performance and outlook for Q3 and Q4 - Management noted strong private sales and inventory sales in Q2, with upcoming auctions expected to drive incremental growth in the second half [23][27] Question: Incremental technology spending outlook for 2026 - Management clarified that the increased spending is not a one-time expense but necessary for ongoing technology and marketplace initiatives [28][30] Question: Earnings impact from the Markel shift - The transition to 100% quota share is expected to yield significant underwriting profit and investment income, enhancing overall profitability [33][34] Question: Current market dynamics and customer shopping behavior - Management indicated a balanced market with muted growth expectations, but strong quote volume and confidence in new business [37][38] Question: Addressable market for European expansion - Management expressed excitement about the European auction expansion, focusing on high-demand segments and building a strong team [41][44] Question: State Farm integration progress - The integration is progressing well, with new business already operational in 17 states and plans to roll over existing business [46][48] Question: Pricing trends and competition - Management acknowledged soft pricing trends in the collector car market but noted stability in premium rates and competitive dynamics [75][79] Question: Initiatives to increase vehicles per policy - The launch of the Enthusiast Plus program aims to increase acceptance of additional vehicles on policies, potentially raising average premiums [80][82]

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]

Group 1: Earnings Performance - Hagerty, Inc. reported quarterly earnings of $0.13 per share, exceeding the Zacks Consensus Estimate of $0.11 per share, and showing an increase from $0.12 per share a year ago, resulting in an earnings surprise of +18.18% [1] - The company posted revenues of $368.7 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 4.00%, compared to year-ago revenues of $313.23 million [2] - Over the last four quarters, Hagerty has surpassed consensus EPS estimates three times and topped consensus revenue estimates four times [2] Group 2: Stock Performance and Outlook - Hagerty shares have increased by approximately 3.8% since the beginning of the year, while the S&P 500 has gained 6.1% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the upcoming quarter is $0.10 on revenues of $364.63 million, and for the current fiscal year, it is $0.32 on revenues of $1.36 billion [7] Group 3: Industry Context - The Insurance - Property and Casualty industry, to which Hagerty belongs, is currently ranked in the top 39% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5] - The unfavorable estimate revisions trend prior to the earnings release has resulted in a Zacks Rank 4 (Sell) for Hagerty, indicating expected underperformance in the near future [6]

[Executive Summary and Business Outlook](index=1&type=section&id=Executive%20Summary%20and%20Business%20Outlook) This section provides an overview of the company's strong financial performance in the first half of 2025, including CEO commentary, detailed Q2 and YTD financial highlights, and an increased full-year 2025 outlook [CEO Commentary](index=1&type=section&id=CEO%20Commentary) McKeel Hagerty, CEO, highlighted solid first-half 2025 results with significant revenue, net income, and Adjusted EBITDA growth, alongside margin expansion and strategic investments. He also noted an increased 2025 outlook and the planned evolution of the Markel partnership for 2026 - Hagerty delivered solid results in the first half of 2025 with **revenue growth of 18%**, **net income gains of 46%**, and **Adjusted EBITDA gains of 28%**[3](index=3&type=chunk) - Strategic investments include rolling out State Farm Classic+, launching the Enthusiast+ product, building the European Marketplace team, and investing in technology for future margin expansion[3](index=3&type=chunk) - The company increased its 2025 revenue growth outlook to **13-14%** and net income growth to **43-53%**[4](index=4&type=chunk) - A non-binding LOI was announced for a new fronting arrangement with Markel, aiming for Hagerty to control **100% of the premium** as of January 1, 2026[4](index=4&type=chunk)[5](index=5&type=chunk) [Second Quarter and YTD 2025 Financial Highlights](index=1&type=section&id=SECOND%20QUARTER%20AND%20YTD%202025%20FINANCIAL%20HIGHLIGHTS) Hagerty reported strong financial and operational performance for Q2 and YTD 2025, with significant year-over-year growth across total revenue, written premium, and particularly in marketplace revenue. Profitability metrics like operating income, net income, and Adjusted EBITDA also saw substantial increases, while key operational metrics like policies in force retention remained stable and total insured vehicles grew Q2 2025 Financial Highlights (in millions) | Metric | Value (Q2 2025) | YoY Change | | :-------------------------------- | :-------------- | :--------- | | Total Revenue | $368.7 million | +18% | | Written Premium | $356.0 million | +11% | | Marketplace Revenue | $26.8 million | +327% | | Operating Income | $47.7 million | +25% | | Net Income | $47.2 million | +11% | | Adjusted EBITDA | $63.7 million | +20% | | Basic & Diluted EPS | $0.09 | 0% | YTD 2025 Financial Highlights (in millions) | Metric | Value (YTD 2025) | YoY Change | | :-------------------------------- | :-------------- | :--------- | | Total Revenue | $688.3 million | +18% | | Written Premium | $600.3 million | +11% | | Marketplace Revenue | $55.8 million | +232% | | Operating Income | $73.4 million | +46% | | Net Income | $74.5 million | +46% | | Adjusted EBITDA | $103.4 million | +28% | | Basic & Diluted EPS | $0.16 | 166.7% | - Policies in Force Retention was **88.7%** as of June 30, 2025, consistent with the prior year period, while total insured vehicles increased **6%** year-over-year to **2.7 million**[6](index=6&type=chunk) - Hagerty Drivers Club (HDC) paid members increased **6%** year-over-year to approximately **908,000**[6](index=6&type=chunk) - The Loss Ratio for Q2 2025 was **42.3%** (including **1.6%** from catastrophe losses), up from **41.1%** in the prior year period. YTD 2025 Loss Ratio was **42.2%** (including **4.1%** from catastrophe losses), also up from **41.1%**[6](index=6&type=chunk) - The company ended the quarter with **$140.3 million** of unrestricted cash and **$176.1 million** of total debt[9](index=9&type=chunk) [2025 Outlook - Sustained Revenue Growth and Margin Expansion](index=4&type=section&id=2025%20OUTLOOK%20-%20SUSTAINED%20REVENUE%20GROWTH%20AND%20MARGIN%20EXPANSION) Hagerty has increased its full-year 2025 outlook for revenue and profit growth, anticipating continued strong performance. The revised outlook incorporates $20 million in elevated technology investments and a $10 million pre-tax impact from Southern California wildfires Revised Full Year 2025 Outlook (in thousands) | Metric | Prior 2025 Outlook (Low-High) | Revised 2025 Outlook (Low-High) | | :---------------- | :------------------------------ | :------------------------------ | | Total Written Premium | $1,180,000 - $1,191,000 | $1,180,000 - $1,191,000 | | Total Revenue | $1,344,000 - $1,356,000 | $1,356,000 - $1,368,000 | | Net Income | $102,000 - $110,000 | $112,000 - $120,000 | | Adjusted EBITDA | $150,000 - $160,000 | $162,000 - $172,000 | - For full year 2025, Hagerty anticipates Written Premium growth of **13-14%**, Total Revenue growth of **13-14%**, Net Income growth of **43-53%**, and Adjusted EBITDA growth of **30-38%**[13](index=13&type=chunk) - Profit ranges for 2025 incorporate **$20 million** of elevated technology investments, primarily in the new Duck Creek platform, and approximately **$10 million** pre-tax impact from the Southern California wildfires[10](index=10&type=chunk)[12](index=12&type=chunk) [Condensed Consolidated Financial Statements](index=6&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents the unaudited condensed consolidated statements of operations, balance sheets, and cash flows, detailing the company's financial position and performance for Q2 and YTD 2025 [Condensed Consolidated Statements of Operations (Unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20(Unaudited)) The condensed consolidated statements of operations show strong revenue growth for both the three and six months ended June 30, 2025, driven by increases across all revenue streams, particularly membership, marketplace, and other revenue. Operating income and net income also saw significant year-over-year improvements Three Months Ended June 30 (in thousands) | Metric | 2025 | 2024 | $ Change | % Change | | :-------------------------------- | :------- | :------- | :------- | :------- | | Commission and fee revenue | $143,287 | $128,816 | $14,471 | 11.2 % | | Earned premium | $177,785 | $157,612 | $20,173 | 12.8 % | | Membership, marketplace and other revenue | $47,627 | $26,797 | $20,830 | 77.7 % | | **Total revenue** | **$368,699** | **$313,225** | **$55,474** | **17.7 %** | | Total operating expenses | $321,000 | $275,158 | $45,842 | 16.7 % | | **OPERATING INCOME** | **$47,699** | **$38,067** | **$9,632** | **25.3 %** | | **NET INCOME** | **$47,202** | **$42,657** | **$4,545** | **10.7 %** | | Basic Earnings Per Share | $0.09 | $0.09 | $0 | 0 % | Six Months Ended June 30 (in thousands) | Metric | 2025 | 2024 | $ Change | % Change | | :-------------------------------- | :------- | :------- | :------- | :------- | | Commission and fee revenue | $243,574 | $217,656 | $25,918 | 11.9 % | | Earned premium | $347,140 | $309,231 | $37,909 | 12.3 % | | Membership, marketplace and other revenue | $97,578 | $58,046 | $39,532 | 68.1 % | | **Total revenue** | **$688,292** | **$584,933** | **$103,359** | **17.7 %** | | Total operating expenses | $614,865 | $534,642 | $80,223 | 15.0 % | | **OPERATING INCOME** | **$73,427** | **$50,291** | **$23,136** | **46.0 %** | | **NET INCOME** | **$74,495** | **$50,856** | **$23,639** | **46.5 %** | | Basic Earnings Per Share | $0.16 | $0.06 | $0.10 | 166.7 % | [Condensed Consolidated Balance Sheets (Unaudited)](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(Unaudited)) The balance sheet as of June 30, 2025, shows an increase in total assets, primarily driven by higher cash and cash equivalents, restricted cash, investments, and various receivables. Total liabilities also increased, notably in accounts payable, advance premiums, and unearned premiums, while total equity grew Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :---------------- | | Cash and cash equivalents | $140,300 | $104,784 | | Restricted cash and cash equivalents | $190,286 | $128,061 | | Investments | $119,326 | $73,957 | | Premiums receivable | $249,830 | $153,748 | | **Total current assets** | **$1,212,984** | **$858,405** | | **TOTAL ASSETS** | **$2,040,575** | **$1,709,338** | | Accounts payable, accrued expenses and other current liabilities | $138,349 | $73,383 | | Advance premiums and due to insurers | $188,403 | $108,352 | | Unearned premiums | $410,496 | $357,539 | | **Total current liabilities** | **$1,145,980** | **$915,446** | | Long-term debt, net | $153,383 | $104,968 | | **TOTAL LIABILITIES** | **$1,379,724** | **$1,101,169** | | Total equity | $578,038 | $523,506 | [Condensed Consolidated Statements of Cash Flows (Unaudited)](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) For the six months ended June 30, 2025, net cash provided by operating activities decreased compared to the prior year, while net cash used in investing activities significantly reduced. Net cash provided by financing activities turned positive, primarily due to higher proceeds from long-term debt Six Months Ended June 30 (in thousands) | Metric | 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 and restricted cash and cash equivalents | $97,741 | $(408,754) | | Ending cash and cash equivalents and restricted cash and cash equivalents | $330,586 | $315,522 | - Net cash provided by operating activities decreased primarily due to changes in accounts, premiums, and commissions receivable, partially offset by increases in advance premiums and unearned premiums[28](index=28&type=chunk) - Net cash used in investing activities significantly reduced from **$(479,937) thousand** in 2024 to **$(31,839) thousand** in 2025, mainly due to lower purchases of fixed maturity securities and higher proceeds from sales and maturities[28](index=28&type=chunk) - Net cash provided by financing activities turned positive, driven by a substantial increase in proceeds from long-term debt (**$192,339 thousand** in 2025 vs. **$25,482 thousand** in 2024)[28](index=28&type=chunk) [Key Performance Indicators and Non-GAAP Financial Measures](index=10&type=section&id=Key%20Performance%20Indicators%20and%20Certain%20Non-GAAP%20Financial%20Measures) This section outlines key operational and financial performance indicators, including detailed reconciliations for non-GAAP measures like Adjusted EBITDA and Adjusted EPS, providing insights into core business performance [Key Performance Indicators](index=10&type=section&id=Key%20Performance%20Indicators) Hagerty's Key Performance Indicators for Q2 and YTD 2025 demonstrate strong growth in Total Written Premium and Total Revenue, alongside improved profitability metrics like Operating Income, Net Income, and Adjusted EBITDA. Operational metrics show stable retention and growth in insured vehicles and paid members, despite a slight decrease in new business count Q2 2025 Key Performance Indicators (in thousands, except percentages) | Metric | 2025 | 2024 | Change | % Change | | :-------------------------- | :------- | :------- | :------- | :------- | | Total Written Premium | $355,985 | $321,173 | $34,812 | 10.8 % | | Hagerty Re Loss Ratio | 42.3 % | 41.1 % | 1.2 % | N/M | | Hagerty Re Combined Ratio | 89.6 % | 88.1 % | 1.5 % | N/M | | New Business Count — Insurance | 87,872 | 89,049 | (1,177) | (1.3)% | | Total Revenue | $368,699 | $313,225 | $55,474 | 17.7 % | | Operating Income | $47,699 | $38,067 | $9,632 | 25.3 % | | Net Income | $47,202 | $42,657 | $4,545 | 10.7 % | | Adjusted EBITDA | $63,744 | $53,113 | $10,631 | 20.0 % | YTD 2025 Key Performance Indicators (in thousands, except percentages) | Metric | 2025 | 2024 | Change | % Change | | :-------------------------- | :------- | :------- | :------- | :------- | | Total Written Premium | $600,312 | $539,459 | $60,853 | 11.3 % | | Hagerty Re Loss Ratio | 42.2 % | 41.1 % | 1.1 % | N/M | | Hagerty Re Combined Ratio | 89.1 % | 88.3 % | 0.8 % | N/M | | New Business Count — Insurance | 143,181 | 148,335 | (5,154) | (3.5)% | | Total Revenue | $688,292 | $584,933 | $103,359 | 17.7 % | | Operating Income | $73,427 | $50,291 | $23,136 | 46.0 % | | Net Income | $74,495 | $50,856 | $23,639 | 46.5 % | | Adjusted EBITDA | $103,352 | $80,440 | $22,912 | 28.5 % | Operational Metrics (as of June 30, 2025, except percentages) | Metric | 2025 | 2024 | Change | % Change | | :-------------------------- | :---------- | :---------- | :------- | :------- | | Policies in Force | 1,559,798 | 1,506,451 | 53,347 | 3.5 % | | Policies in Force Retention | 88.7 % | 89.0 % | (0.3)% | N/M | | Vehicles in Force | 2,664,611 | 2,576,700 | 87,911 | 3.4 % | | HDC Paid Member Count | 907,963 | 875,822 | 32,141 | 3.7 % | | Net Promoter Score (NPS) | 82 | 82 | — | 0 % | [Adjusted EBITDA](index=11&type=section&id=Adjusted%20EBITDA) Adjusted EBITDA is a non-GAAP financial measure used by Hagerty to assess core operating performance by excluding non-operating and non-cash items. For Q2 and YTD 2025, Adjusted EBITDA increased by 20% and 28.5% respectively, and the company projects a 30-38% growth for the full year 2025 - Adjusted EBITDA is defined as consolidated Net income, excluding net interest and other income (expense), income tax expense, and depreciation and amortization, further adjusted for warrant liabilities, share-based compensation, restructuring, divestiture-related items, and certain other unusual items[32](index=32&type=chunk) Adjusted EBITDA Reconciliation (in thousands) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :-------------------------- | :------- | :------- | :------- | :------- | | Net income | $47,202 | $42,657 | $74,495 | $50,856 | | EBITDA | $56,532 | $46,140 | $91,748 | $62,784 | | Adjusted EBITDA | $63,744 | $53,113 | $103,352 | $80,440 | 2025 Outlook Adjusted EBITDA Reconciliation (in thousands) | Metric | 2025 Low | 2025 High | | :-------------------------- | :------- | :-------- | | Net income | $112,000 | $120,000 | | Adjusted EBITDA | $162,000 | $172,000 | [Adjusted EPS](index=12&type=section&id=Adjusted%20EPS) Adjusted EPS is a non-GAAP measure that provides insight into Hagerty's operating performance on a fully consolidated and diluted basis. For Q2 2025, Adjusted EPS was $0.13, and for YTD 2025, it was $0.21, showing an increase from the prior year periods - Adjusted EPS is defined as consolidated Net income, excluding net gains and losses related to warrant liabilities prior to the Warrant Exchange, divided by outstanding and total potentially dilutive securities[37](index=37&type=chunk) Adjusted EPS Reconciliation (in thousands, except per share amounts) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :-------------------------- | :------- | :------- | :------- | :------- | | Consolidated net income | $47,202 | $42,657 | $74,495 | $50,856 | | Adjusted consolidated net income | $47,202 | $44,598 | $74,495 | $58,937 | | Basic EPS | $0.09 | $0.09 | $0.16 | $0.06 | | Adjusted EPS | $0.13 | $0.12 | $0.21 | $0.16 | [Corporate Information and Disclosures](index=5&type=section&id=Corporate%20Information%20and%20Disclosures) This section provides essential corporate information, including conference call details, forward-looking statements, and an overview of Hagerty, Inc.'s mission and business activities [Conference Call Details](index=5&type=section&id=Conference%20Call%20Details) Hagerty scheduled a conference call for August 4, 2025, at 10:00 am ET to discuss the second quarter 2025 financial results, with webcast and dial-in options available - A conference call to discuss financial results was scheduled for **August 4, 2025, at 10:00 am Eastern Time**[14](index=14&type=chunk) - A webcast of the conference call and Investor Presentation is available on Hagerty's investor relations website at **investor.hagerty.com**[14](index=14&type=chunk)[15](index=15&type=chunk) - Dial-in numbers for the conference call are **(877) 423-9813** (toll-free) or **(201) 689-8573** (international)[14](index=14&type=chunk) [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) This section contains a standard disclaimer that the press release includes forward-looking statements about Hagerty's future performance, strategy, and market conditions. It warns that actual results could differ materially due to various risks, including competition, strategic partnerships, technology issues, market adoption, the Markel arrangement, and regulatory compliance - The press release contains forward-looking statements regarding Hagerty's future operating results, financial position, business strategy, plans, products, services, technology implementations, market conditions, growth, trends, expansion plans, opportunities, and objectives[16](index=16&type=chunk) - Actual results could differ materially due to factors such as competition, ability to attract and retain policyholders, maintaining strategic relationships, preventing fraud, managing technology risks, accelerating product adoption, successfully implementing the Markel fronting arrangement, managing insurance business cyclicality, addressing claims, and complying with regulations[17](index=17&type=chunk) [About Hagerty, Inc.](index=5&type=section&id=About%20Hagerty,%20Inc.) Hagerty, Inc. is an automotive enthusiast brand dedicated to preserving car culture, serving as a leading provider of specialty vehicle insurance, valuation data, auction services, events, and entertainment. It operates globally and fosters a community through its Hagerty Drivers Club - Hagerty is an automotive enthusiast brand committed to saving driving and fueling car culture for future generations[19](index=19&type=chunk) - The company is a leading provider of specialty vehicle insurance, expert car valuation data and insights, live and digital car auction services, immersive events, and automotive entertainment[19](index=19&type=chunk) - Hagerty operates in Canada and the U.K. and is home to Hagerty Drivers Club, a community of over **900,000 members**[19](index=19&type=chunk)

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]