Financial Data and Key Metrics Changes - Total revenue increased by 18% to $320 million in Q1 2025, driven by a 12% increase in written premium and a 13% growth in commission revenue [7][14] - Net income rose by 233% to $27 million compared to $8 million a year earlier, with adjusted EBITDA growing by 45% to $40 million [9][19] - Operating margin improved by 360 basis points to 8%, with operating profit reaching $26 million, a 110% increase [17][19] Business Line Data and Key Metrics Changes - Membership marketplace and other revenue surged by 60% to $50 million, supported by successful auctions [8][15] - Earned premium from the risk-taking entity, AgriLife Reinsurance, increased by 12% to $169 million [14][19] - The MGA membership and marketplace businesses accounted for nearly half of total revenue, with rapidly expanding margins [17] Market Data and Key Metrics Changes - The company operates primarily in the U.S., generating over 90% of its revenue domestically, which positions it well against tariff-related risks [12] - The company reported a loss ratio of 42%, which includes $10 million in losses from Southern California wildfires [14][19] Company Strategy and Development Direction - The strategic priorities for 2025 focus on expanding specialty insurance offerings, simplifying the membership experience, and expanding the marketplace business internationally [9][10] - The company is investing in technology transformation, including a transition to a cloud-based insurance platform, which is expected to enhance efficiency and scalability [11][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering high rates of profitable growth, citing a compound annual growth rate in written premium of over 13% since 2005 [12][13] - The company reaffirmed its 2025 guidance, expecting top-line revenue growth of 12% to 13% and net income of $102 million to $110 million, reflecting a 30% to 40% increase [20] Other Important Information - The company is preparing for significant auctions, including a partnership with BMW at the Villa D'Este Concorso in Italy [10][15] - The company ended the quarter with $128 million in cash and $147 million in total debt, including $32 million in back leverage for loans collateralized by collectible cars [19] Q&A Session Summary Question: Can you provide an update on the relative margins generated from marketplace revenues? - Management indicated that the live auction business significantly contributed to profitability, with contribution profit margins around 30% to 35% for successful sales, compared to about 10% for the risk-taking business [23][27] Question: What is the impact of tariffs on Hagerty's business? - Management believes tariffs will have a muted impact on their business, as many vehicles are older and parts are often manufactured domestically, thus not significantly affected by tariff changes [34][36][38] Question: How has shopping behavior changed recently? - Management noted strong shopping activity industry-wide, although growth was slightly slower than anticipated due to weather and large events causing pauses in activity [39][41][45] Question: What is the outlook for membership and marketplace revenue growth for the full year? - Management affirmed guidance for the entire business, indicating a good start to live auctions and a solid schedule for the remainder of the year [47][48] Question: Can you elaborate on the new Enthusiast Plus program? - The program aims to cater to younger buyers interested in newer vehicles, allowing the company to expand its underwriting capabilities and capture more business [49][50][51] Question: How will the $20 million in annual expenses impact future quarters? - Management indicated that expenses would be incurred ratably throughout the year, with approximately 15% of the $20 million appearing in Q1 [64][66]

Financial Data and Key Metrics Changes - Total revenue increased by 18% to $320 million in Q1 2025, driven by a 12% increase in written premium and a 13% growth in commission revenue [6][12] - Net income rose by 233% to $27 million compared to $8 million a year earlier, with adjusted EBITDA increasing by 45% to $40 million [7][16] - Operating margin improved by 360 basis points to 8%, with operating profit reaching $26 million, a 110% increase [14][16] Business Line Data and Key Metrics Changes - Membership marketplace and other revenue surged by 60% to $50 million, supported by successful auctions [6][13] - Earned premium from the risk-taking entity, AgriLife Reinsurance, increased by 12% to $169 million [12][16] - The MGA membership and marketplace businesses accounted for nearly half of total revenue, with rapidly expanding margins [14] Market Data and Key Metrics Changes - The company maintains a strong retention rate of 89%, contributing to the growth in written premium [12] - The auction business, particularly live auctions, significantly contributed to revenue growth, with successful events at Amelia Island and the American Academy of Art University [13][22] Company Strategy and Development Direction - The company aims to expand specialty insurance offerings to cover more collectible vehicles, including modern enthusiast vehicles [7][8] - Plans to simplify and better integrate the membership experience across products and services to create revenue synergies and drive cost efficiencies [8] - International expansion of the marketplace business is a priority, with upcoming auctions in Italy as part of a multi-year partnership with BMW [8][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering high rates of profitable growth, supported by a differentiated business model and strong customer retention [10][11] - The company reaffirmed its 2025 guidance, expecting top-line revenue growth of 12% to 13% and net income growth of 30% to 40% [17] - Management noted that while the start of 2025 was solid, growth is anticipated to ramp up in the second half of the year, particularly with State Farm partnerships [40] Other Important Information - The company is investing in technology transformation, including a transition to a cloud-based insurance platform, which is expected to enhance long-term efficiency [9][10] - The company ended the quarter with $128 million in cash and $147 million in total debt, including $32 million in back leverage for loans collateralized by collectible cars [16] Q&A Session Summary Question: Can you provide an update on the relative margins generated from marketplace revenues? - Management indicated that the live auction business had strong contribution profit margins of 30% to 35%, significantly higher than the risk-taking business, which operates at about a 10% profit margin [20][23] Question: What is the anticipated impact of tariffs on Hagerty's book? - Management believes tariffs will have a muted impact on the business, as many vehicles are not affected by changes in the tariff regime, particularly those over 25 years old [29][32] Question: Can you update on shopping behavior as the driving season approaches? - Management noted strong shopping activity industry-wide, with quote volume remaining robust, although growth was slightly slower than anticipated due to various factors, including weather and large events [36][40] Question: What is the outlook for membership and marketplace revenue growth for the full year? - Management affirmed guidance for the entire business, indicating a good start to the year in live auctions, with several events scheduled for the remainder of the year [43] Question: Can you elaborate on the new Enthusiast Plus program? - The program aims to cater to younger buyers interested in newer cars, allowing the company to expand its underwriting capabilities and capture more business [45][46] Question: How will the $20 million in annual expenses from technology spending impact future margins? - Management clarified that the expenses are not one-time but will continue as part of ongoing operations, impacting margins in 2025 while supporting future growth [50][55]