Hagerty, Inc. Q4 FY2025 earnings call

• Team preparing for spring driving season and new members in 2026, emphasizing member - centric approach and innovation with new products/services. - Handily exceeded 2025 expectations with revenue up 17% and net income up 91%, driven by record new business count, efficiency gains, stable underwriting, and better loss trends. - 2025 was third straight year of strong top - line growth and efficient profit translation, with revenue compounded 23% per year since going public, net income increased over $200 million. - 2025 highlights include 371,000 new members, 14% written premium growth, marketplace revenue jumping 119%, successful auctions in Europe, and Broad Arrow becoming official auction house of The Quail. - 2026 priorities: implementing new fronting arrangement with Markel, expanding State Farm Classic Plus, refining distribution strategy, maintaining claims expertise quality, enhancing member - centric approach, and continuing tech transformation.

In 2025, total revenue was up 17% with net income surging 91%. The company has two segments: insurance and marketplace. Insurance segment had written premiums growing 19% in Q4 2025, with commission and fee revenue jumping 18% to $106 million, earned premium up 14% to $193 million. Marketplace revenue increased 80% to $29 million in Q4 2025. For full year 2025, commission and fee revenue grew 15%, marketplace revenue jumped 119% to $119 million, membership and other revenue grew 4% to $82 million. The loss ratio in 2025 was 39%, combined ratio 87% including 3 points from $21 million reserve reduction. Hagerty-Ree's return on equity for 2025 was 34%.

• Anticipate 2026 written premium growth of 15 to 16% acceleration from 2025's 14%. - 2026 GAAP net income anticipated to be minus 41 to minus $51 million. - Adjusted EBITDA expected between $236 and $247 million. - Elimination of commission revenue means 2026 revenue below 2025 at $1.28 - $1.3 billion. - About $190 million of seating commission expense from 2025 still on balance sheet in 2026, non - cash transitional expense, declining to zero by year - end 2026. - Qualifying policy acquisition costs for MGA subsidiaries under fronting arrangement deferred and amortized over policy term, using adjusted EBITDA to understand underlying profit and cash flow growth.

Q: On guidance, with net loss midpoint and 190 tax effect, is still below 2025 net income?

A: Focus on adjusted EBITDA guidance, 2025 had reserve release, strip that out and 2026 adjusted EBITDA shows ~10% growth.

Q: On loss ratio this quarter and 2026, current accident year improvement and guidance?

A: Loss ratio this quarter with reserve release was 31%, back out reserve release it moves to around 42%, 2026 guidance is low 40s, around 41%.

Q: On written premium guidance, assumptions and State Farm conversions?

A: Written premium growth from traditional, State Farm accelerating in 2026, 27 states by end of 2025 with seven doing conversions, rolling out more this year.

Q: On TAM change, assumption?

A: TAM grows over time as additional enthusiast vehicles join, regular update.

Q: On commission and fee revenue in 26, state farm and XUS operations?

A: Commissions from MGA services still flow through, but upon consolidation commission revenue and seeding commission go away, other parts like U.K. business and State Farm still show as revenue.

Q: On marketplace revenue and income statement flow through?

A: Marketplace business important, live and digital auctions growing, private sale business chunky and episodic.

Q: On AI and technology, correlation with classic cars and deployment?

A: AI used in fraud detection, valuation, administrative functions, personalization of service, experiments in various areas.

Q: On State Farm 525,000 policies, 2026 ramp?

A: 27 states by end of 2025, accelerating conversion in 2026, most states up and running by end of 2026, few stretch to 2027.

Q: On loss ratio trending 2026 vs 2025 excluding PYD?

A: Still think around low 40% range, ~41%, with first and second quarter booking to that and third and fourth quarter potential adjustments.

Q: On partnerships, pipeline for new partners?

A: Active discussions with potential partners, new partnership with Liberty Mutual and Safeco, others in conversation.

Q: On free cash generation 2026 and AI distribution?

A: Cash conversion similar to 2025, CapEx related to IT consistent, AI piloting in marketing for lead generation and demand gen.

Q: On written premium per policy 2026 and acquisition costs deferral?

A: State Farm business with lower premiums pulling down written premium per policy, core business growth and rate increases tailwind; acquisition costs for MGA subsidiaries deferred and amortized over policy term, ramp up in 2026, normalized in 2027