Hagerty, Inc. Q3 FY2025 earnings call

• Highlights: Total revenue up 18%, operating margins improved, net income and adjusted EBITDA grew. Strategic priorities: Expand specialty insurance (e.g., Enthusiast Plus), simplify/m integrate membership, expand marketplace internationally. Partnerships: Signed with Liberty Mutual and Safeco to engage collector car customers. Technology: Investing in re-platforming for efficiency. Markel fronting: Moving to 100% premium/risk control starting 2026, a 25% increase from current quota share.

Total revenue increased 18% to $380 million. New business count was fueled by a 13% increase in written premium and 14% growth in commission revenue. Earned premium in Hagerty Reinsurance increased 12%. Membership, marketplace and other revenue jumped 54% due to the launch of the European auction business, inventory sales, and private transactions. In Q3, operating profit was $34 million, an increase of 240% with operating margins jumping 590 basis points to 9%. Net income in Q3 was $46 million, up 143% from $19 million the prior year, and adjusted EBITDA increased 106% to $50 million. For the first 9 months, operating margins jumped 350 basis points, net income was $121 million (up 73%), and adjusted EBITDA was $153 million (up 46%).

2025 outlook: Increased revenue growth to 14%-15%, net income expected $124M-$129M (58%-65% growth), adjusted EBITDA $170M-$176M (37%-41% growth). Marketplace growth: Continues but live auctions growth may decelerate next year as calendar is full.

• Catastrophe risk: Collectible vehicles may still be affected by disasters. - Partnership execution risk: Ensuring successful integration of partnerships. - Technology risk: Challenges in technology re-platforming. - Seasonality/market risk: Seasonality in business and market volatility impact results.

Q: Quantification of Liberty Mutual and Safeco partnership impact?

A: Tens of thousands of customers, part of omnichannel strategy, book roll with economics sharing.

Q: Enthusiast Plus PIF growth and loss ratios?

A: Early days, live in one state, rolling out new states, too early to specify loss results but positive so far.

Q: Written premium acceleration and pricing?

A: Trailing 12-month basis smoother, State Farm-driven with seasonal factors, post-State Farm intake may trend down.

Q: Marketplace growth and seasonality?

A: Marketplace growing quickly, live auctions growth may decelerate next year, private sales episodic but sustainable.

Q: October PIF growth details?

A: State Farm integration flywheel turning, aiming for 25-27 states active.

Q: Markel fronting arrangement impact?

A: Technical changes, taking 100% risk/results, minimal headcount/G&A impact, preparing for full operation.

Q: EBITDA trends with Markel change?

A: Disclosure/balance sheet changes, moving from Article 5 to 7, investment income above line, deferred costs, walkthrough planned.

Q: Marketplace business margins?

A: Contributes to bottom line, profitable on contribution, live auctions 10%-ish buyers premium, private sales varies.