HGTY 10-K & 10-Q changes, risk factors and insider trading
Hagerty, Inc. · NYSE · Insurance Agents, Brokers & Service · CIK 1840776 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Like others in our industry, we face potential exposures to operational disruptions caused by cyber breaches or resiliency failures impacting us or third party technology providers upon whom we rely, which could impair website availability and crucial technology operations.”
New heading “Future legal or regulatory requirements impacting internet and mobile technologies, marketing and advertising practices, transactions, or the collection and use of personal data may impact how we interact with our Members and prospective Members, and could adversely affect our business, financial condition, and results of operations.”
New heading “We may not be able to prevent or address the misappropriation of Hagerty-owned data or websites.”
New heading “Rapid evolution and adoption of artificial intelligence could adversely affect our competitive position, operations, and brand.”
New heading “The imposition of tariffs on imported goods could increase costs, reduce consumer spending on collector cars and related services, and negatively impact our business, financial condition, and results of operations.”
New heading “Rapid growth may strain our infrastructure, resources, and relationships, which could then impair service quality, operational execution, and financial performance of our Insurance segment.”
New heading “The shift to Hagerty Re assuming 100% of the risk for policies written through the Markel Fronting Arrangement increases our exposure to underwriting volatility, catastrophes, reinsurance counterparty risk, and legal, compliance, and regulatory risks, which could adversely affect the capital, liquidity, and results of our Insurance segment.”
New heading “Expansion into new markets exposes our Marketplace segment to complex, inconsistent global regulations and higher compliance costs, which may result in disruption to our ongoing businesses.”
New heading “Our entry into the Markel Fronting Arrangement will reduce our reported commission revenue and ceding commission expense beginning in 2026 and reduce period‑to‑period comparability of our Consolidated Financial Statements.”
New heading “Our entry into the Markel Fronting Arrangement may not result in the commercial benefits we are expecting.”
New heading “We are subject to VAT and other indirect tax laws in multiple jurisdictions, and the complexity and interpretation of these rules could result in additional tax liabilities and compliance costs.”
Removed heading “Like others in our industry, we are subject to cyberattacks, and our reliance on third party providers for technology and service means our operations could be disrupted due to the lack of resiliency in the operations of other companies, or a breach in their obligations to us, and could impair the operability of our website and other technology-based operations.”
Removed heading “Rising interest rates increase our cost of borrowing and could adversely affect our results of operations.”
Removed heading “Any future legal or regulatory requirements impacting our internet and mobile technologies and applications, or that restrict our ability to market, advertise, transact, and collect or use personal data, may impact how we interact with our Members and prospective Members, and could have an adverse effect on our business, financial condition, and results of operations.”
Removed heading “We may not be able to prevent or address the misappropriation of Hagerty-owned data.”
Removed heading “We qualify as an "emerging growth company" within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies, it could make our securities less attractive to investors and may make it more difficult to compare our performance to the performance of other public companies.”
Largest changes
“Like others in our industry, we are subject to cyberattacks, and our reliance on third party providers for technology and service means our operations could be disrupted due to the lack of resiliency in the operations of other companies, or a breach in their obligations to us, and could impair the operability of our website and other technology-based operations.”see in full comparison
“The shift to Hagerty Re assuming 100% of the risk for policies written through the Markel Fronting Arrangement increases our exposure to underwriting volatility, catastrophes, reinsurance counterparty risk, and legal, compliance, and regulatory risks, which could adversely affect the capital, liquidity, and results of our Insurance segment.”see in full comparison
“It is possible that the laws and regulations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices. As new laws, regulations, and consumer expectations are adopted, our compliance obligations may increase. Regulators may reinterpret or amend existing requirements, require changes to our operations, or impose penalties that restrict certain activities. …”see in full comparison
“Like others in our industry, we face potential exposures to operational disruptions caused by cyber breaches or resiliency failures impacting us or third party technology providers upon whom we rely, which could impair website availability and crucial technology operations.”see in full comparison
“The imposition of tariffs on imported goods could increase costs, reduce consumer spending on collector cars and related services, and negatively impact our business, financial condition, and results of operations.”see in full comparison
“Expansion into new markets exposes our Marketplace segment to complex, inconsistent global regulations and higher compliance costs, which may result in disruption to our ongoing businesses.”see in full comparison
Full comparison: every changed paragraph (184)
Described belowBelow are certain risks and uncertainties that we believe are applicable to our business and the industry in which we operate, and some of which are beyond our control. The following factorsThese are not the only risks and uncertainties we face. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that affect us. You should carefully read the followingthese risks as well as the cautionary statements referred to in "Cautionary Statement Regarding Forward-Looking Statements" herein. If any of the risks and uncertainties described below or elsewhere in this Annual Report actually occur, our business, financial condition or results of operations could be materially and adversely affected, the trading price of our securities could decline, and you might lose all or part of your investment.
•our ability to prevent, monitormonitor, and detect fraudulent activity;
•new products and services with limited operating history that may not achieve profitability as quickly as anticipated, or at all;
•the performance of our investment portfolio, which is subject to a variety of investment risks;
•the limited operating history of some of our membership and marketplace products and services, as well as the success of any new insurance programs and products we offer;
•tariffs on imported goods, which may increase our costs and reduce consumer spending on collector cars and related services, which could adversely affect our business, financial condition, and results of operations;
•compliance with the numerous laws and regulations applicable to our business, including state, federal and foreign laws relating to insurance and rate increases, privacy and cybersecurity, marketing and advertising, digital services, accounting matters, tax, anti-money launderinglaundering, and economic sanctions;
•our ability to realize the anticipated benefits from the growth and integration of our marketplaceMarketplace segment offerings with our other businesses;
•the potential for significant fluctuations in the collector car market and asset values, which may materially impact our ability to obtain and sell consigned propertyvehicles and may have an adverse effect on the loan-to-value ("LTV") ratio of our loan portfolio within ourthe marketplaceMarketplace businesssegment;
•the accounting implications of the Markel Fronting Arrangement, which will impact the recognition of commission revenue and ceding commission expense, may not be readily understood by market participants;
•the fact that we are a "controlled company" within the meaning of the NYSE listing requirements, and, as a result, we will qualify for, and intend to rely on, exemptions from certain corporate governance requirements;
•whether investors or stockholder advisory firms view our stock structure unfavorably, particularly our dual-class structure;
•the fact that we are a "controlled company" within the meaning of the NYSE listing requirements, as a result, we will qualify for, and intend to rely on, exemptions from certain corporate governance requirements;
•whether investors or securities analysts view our stock structure unfavorably, particularly our dual-class structure;
•the factpotential that the price of our securities may be volatile or may decline regardless of our operating performance; and
•the fact that ourHagerty, Inc.'s only material asset is ourits interest in THG, and, accordingly, weit will depend on distributions from THG to pay ourtaxes taxes, includingand payments under the Tax Receivable Agreement ("TRA").
We have experienced significant Member growth overin therecent pastyears. several years, and our continuedOur business and revenue growth are dependentdepend on our ability to continuously attract and retain MembersMembers, andwhich we cannot beassure, sure we will be successful in these efforts, or thatand Member retention levels will not materiallymay decline.
We believe that the continuedour growth of our business depends in part uponon our ability to: (i) retain our existing Members; (ii) add new Members in our current markets, as well as new geographic markets; (iii) add new insurance programs and products; and (iv) continue to grow our offering of non-insurance automotive enthusiast-related products. Increasing our Member count, expanding into new geographic markets, and introducing new product and service offerings may be time-consuming and expensive. In addition, if existing Members and consumers do not perceive our offerings to be of value, including if we introduce new or adjust existing features, coverage or service offerings, or change the mix of offerings in a manner that is not favorably received, we may not be able to retain existing Members or attract new Members. We may also, from time to time, adjust pricing or the pricing model itself, which may not be well received by Members or consumers, and which may result in cancelled insurance policies or HDC memberships and fewer new Members joining our programs.
Many of our Members are referred to us by existing Members. IfTherefore, if our efforts to satisfy our existing Members are not successful, we may not be able to attract new Members, and as a result, our ability to grow our business will be adversely affected. Similarly, a large percentage of our revenues are derived from direct-to-consumer sales, including through digital channels. If we fail to meet consumer expectations for the Member experience through digital or other sales channels, our growth may be impacted through the loss of existing Members or inability to attract new Members.
A significant loss of Members could lead to higher loss ratios or declining revenue; either ofrevenue, which would adversely impact our profitability. If we are unable to remain competitive onwith Member experience, pricing, or insurance coverage options, our ability to grow and retain our business may also be adversely affected. In addition, we might not be able to accurately predict risk segmentation of new and renewal Members or potential Members, which could also reduce our profitability.
A large percentage of our Insurance segment products and services are distributed through a few relationships and the loss of business provided by any one of them could have an adverse effect on us.
In addition to our direct sales efforts and independent channels, we market our insurance products through several insurance distribution partners. For the year ended December 31, 2024,2025, approximately 15%17% of our commissiongross revenueswritten werepremium was attributable to fourfive distribution partner marketing relationships. For twothree of these distribution partners, we have long-term arrangements, one of which has anhave expiration datedates in 20292029, 2030, and the other in 2030.2033. The other relationships have shorter durations. Upon expiration or termination of these agreements, these partners may decide not to continuediscontinue to distributedistributing our products and services or may be unwilling to do so on terms acceptable to us. If we are not successful in maintaining existing relationships and continuing to expand our distribution relationships, or if we encounter regulatory, technological, or other impediments to delivering our products and services to Members through these relationships, our ability to retain Members and grow our business could be adversely impacted. In addition, the broker/agent relationships with many of the partners we work with may change and their own internal strategy about how products are marketed may change, and, where we do not have exclusivity, we face competition by providers who seek to build or strengthen the relationships withoutwith our distribution partners, which could cause a loss of focus on or exposure to our products and services, adversely impacting new sales.
We may not be able to prevent, monitor, or detect fraudulent activity, including transactions with insurance policies or payments of claims as well as transactions through our marketplaceMarketplace business.segment.
If we fail to maintain adequate systems and processes to prevent, monitor, and detect fraud, including employeeemployee, fraud,agent, agentpolicy, fraud,vendor, fraudulent policy acquisitions, vendor fraud, buyermarketplace, or seller marketplace salesclaims fraud, or fraudulent claims activity, our business could be materially adversely impacted. Fraud schemes have become increasingly more sophisticated and are ever evolving into different and creative avenues of fraudulent activity. While we believe that any past incidents of fraudulent activity have been relatively isolated, we cannot be certain that our systems and processes will always be adequate to detect such activity as fraudulent activity and schemes continue to evolve. OurWhile our employees are required to take comprehensive anti-fraud training,training and we use a variety of tools to protect against fraud, but thethese trainings and these tools may not always be successful at preventing fraud.
Like others in our industry, we face potential exposures to operational disruptions caused by cyber breaches or resiliency failures impacting us or third party technology providers upon whom we rely, which could impair website availability and crucial technology operations.
Cyberattacks, denial-of-service attacks, ransomware attacks, business email compromises, computer malware, viruses, social engineering (including phishing) and other malicious internet-based activity are prevalent in our industry, and such attacks continue to increase with frequency, levels of sophistication, and persistence. We utilize third-party providers to host, transmit, or otherwise process electronic data in connection with our business activities. We and/or our vendors and business partners may experience attacks, unavailable systems, unauthorized access, or disclosure due to theft or misuse, denial-of-service attacks, sophisticated attacks by nation-state and nation-state supported actors, and advanced persistent threat intrusions. Despite our efforts to ensure the security, privacy, integrity, confidentiality, availability, and authenticity of information technology networks and systems, processing and information, we may not be able to fully anticipate, or to implement effective measures against all data security and privacy threats. The recovery systems, security protocols, network protection mechanisms, and other security measures that we have integrated into our systems, networks, and physical facilities, may not be adequate to prevent or detect service interruption, system failure, data loss or theft, or other material adverse consequences.
Any regulatory enforcement actions, such as the inquiry related to unauthorized access into our online quote feature described in the section "Data Security Incident" within Note 25 — Commitments and Contingencies in Item 8 of Part II of this Annual Report, or future cyberattacks on our systems, could result in reputational damage and/or cause current and prospective Members to stop using our services. Further, we may be required to expend significant financial and operational resources in response to a security breach, which could be costly and divert resources and the attention of our management and key personnel away from our business operations. Any of the foregoing could have a material adverse effect on our business, financial condition, and results of operations.
We utilize numerous technology platforms throughout our business for various functions, including platforms to gather Member data to price and administer our insurance products, for claims management, to issue and service our membership products, provide valuation services, and transact live and digital auctions. We use proprietary algorithms in certain circumstances within our underwriting processes for efficiency. Our technology platforms require continued development and are complex. The continuous development, maintenance, and operation of our technology platforms may entail unforeseen difficulties, including material performance problems or undetected defects or errors. We may encounter technical obstacles, and it is possible that we may discover additional problems that prevent our technology from operating properly. If our platforms do not function reliably, we may incorrectly underwrite or bill our Members, price insurance products, or pay or deny insurance claims made by our Members. These errors could result in inadequate insurance premiums collected relative to claims made, resulting in increased financial losses. These errors could also cause Member dissatisfaction with us, which could cause Members to cancel or fail to renew their insurance policies with us or make it less likely that prospective Members obtain new insurance policies from us. Additionally, platform errors may lead to unintentional bias in underwriting, exposing us to legal or regulatory liability and harm to our brand and reputation. If material performance, defects, or errors persist we may be forced to terminate our technology agreements and incur substantial additional costs transitioning to alternative solutions. Any of these eventualities could result in a material adverse effect on our business, financial condition, and results of operations.
Our future success depends on us keeping pace with technological advances for interacting with our Members. New technology is complex, expensive, and requires an ongoing commitment of significant resources to implement. While we are implementing new technology, we must also continue to develop, implement, and maintain the security and confidentiality of our proprietary legacy technology in compliance with complex evolving privacy and cybersecurity laws. Changes to existing laws, their interpretation or implementation, or the introduction of new laws could impede the use of our legacy technology and/or the implementation of new technology. If we are delayed or unable to effectively update our technology or implement new technology it could result in systemic inefficiencies, negatively impact our competitive position and result in a material adverse effect on our business, financial condition, and results of operations.
Future legal or regulatory requirements impacting internet and mobile technologies, marketing and advertising practices, transactions, or the collection and use of personal data may impact how we interact with our Members and prospective Members, and could adversely affect our business, financial condition, and results of operations.
We rely on the internet and mobile technologies to execute our business strategy and are subject to laws and regulations governing our marketing, advertising, and sales—online and offline—including the collection, use, retention, security, transfer, disclosure, and other processing of personal information. Existing and future laws, regulations, and consumer expectations may impede our use of the internet and mobile technologies and applications to interact with current and future Members and to effectively market, advertise, and sell our products and services. In particular, complex and evolving privacy laws regulate our ability to use personal data for targeted or cross-contextual behavioral advertising. Any of these outcomes could adversely affect our business, growth, member engagement, financial condition, and results of operations.
It is possible that the laws and regulations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices. As new laws, regulations, and consumer expectations are adopted, our compliance obligations may increase. Regulators may reinterpret or amend existing requirements, require changes to our operations, or impose penalties that restrict certain activities. At the same time, we may be subject to individual or class action claims by plaintiffs using both new and pre-existing laws based on new technologies, some of which are part of our sales and marketing efforts. Future legal developments, regulatory interpretations, or enforcement actions could require changes to our practices or otherwise increase our compliance risk.
Any actual or perceived noncompliance could harm our reputation and erode consumer trust, reduce engagement and revenue, and result in investigations, enforcement actions, or litigation by governmental entities or private parties, including matters such as the "Data Security Incident" referenced within Note 25 — Commitments and Contingencies in Item 8 of Part II of this Annual Report. Any such proceeding or action could hurt our reputation, force us to incur significant additional expense and time in defending regulatory proceedings or legal actions, and may result in the imposition of monetary liability. Court or regulatory orders may also demand the disgorgement of personal data and any algorithms trained on, or products or services derived from, such personal data. Regulatory proceedings or legal actions could increase our operational costs and decrease use of our mobile applications or websites by current and future Members. They may also divert management attention, increase operating costs, reduce Member usage of our mobile applications or websites, require indemnification of third parties, and result in losses that are not fully covered by insurance.
We may not be able to prevent or address the misappropriation of Hagerty-owned data or websites.
From time to time, third parties may misappropriate our data through website scraping, bots, or other means and aggregate this data on their websites with data from other companies. In addition, copycat websites or mobile apps may misappropriate data and attempt to imitate our brand or the functionality of our website or our mobile applications. Although we may take technological and legal steps to detect and stop these activities, we may not identify all instances in a timely manner, and our efforts may be ineffective or insufficient to halt them.
Our ability to enforce rights may be limited, particularly against operators located outside the U.S. Regardless of outcome, efforts to address misappropriation may require significant time and expense and could divert resources. Misappropriation or copycat activity could also confuse consumers or advertisers, harm our brand, and adversely affect our business, financial condition, or results of operations.
Rapid evolution and adoption of artificial intelligence could adversely affect our competitive position, operations, and brand.
Artificial intelligence ("AI") technologies are evolving rapidly, and competitors or new market entrants may develop or deploy AI more effectively than we do, which could reduce our competitive advantages in product features, pricing, risk management, customer acquisition, and operating efficiency. If our AI adoption or commercialization is delayed or limited by cost, talent, data, or other constraints, we may fail to meet customer expectations, lose market share, or experience margin pressure.
Our use of AI may also produce unintended or harmful outcomes, including inaccurate or biased outputs, reduced transparency, degraded customer experiences, operational disruptions, data governance or security failures (including privacy, consent, cross-border transfer, and leakage), and reputational harm. Deficiencies in data governance, data labeling, or rights to training data, as well as misuse by vendors or partners, or noncompliance with evolving laws and standards, could increase regulatory scrutiny and expose us to legal claims or penalties. Any of these risks could reduce demand for our offerings, impair relationships with customers and partners, and adversely affect our business, financial condition, and results of operations.
We rely on the expertise of our Chief Executive Officer and other key employees. If we are unable tocannot attract, retain, or motivate key personnel, our business may be severely impacted.
Our success depends on the ability to attract, retain, and motivate a highly skilled and diverse management team and workforce. Our Chief Executive Officer is well known and respected in our industry. He is an integral part of our brandbrand, and his departure would likely create difficulty with respect to both the perception and execution of our business. Additionally, the loss of key personnel within our senior managementmanagement, Insurance segment, and BroadMarketplace Arrowsegment teams might significantly delay or prevent the achievement of our strategic business objectives and could harm our business. We rely on a small number of specialized experts, the loss of any one of whom could have a disproportionate impact on our business. Our compensation arrangements, such as our equity award programs, may not always be successful in attracting new employees and retaining and motivating our existing employees. Moreover, if and when our equity awards are substantially vested, employees under such equity arrangements may be more likely to leave, particularly if the underlying shares have seen a significant appreciation in value.
Our inability to ensure that we have the depth and breadth of management and personnel with the necessary skills and experience could impedeaffect our ability to deliver growth objectives and execute our operational strategy. As we continue to expand and grow, we will need to promote or hire additional staff, and it may be difficult to attract or retain such individuals in a timely manner and without incurring significant additional costs. If we are not ableunable to integrate new team members or if they do not perform adequately, our business may be harmed.
Our business is rapidly growing and evolving, and we have many competitors across our different offerings. The marketsevolving in which we operate are highly competitive and we may not continue to compete effectively within our industry.markets. We face competition from large, well-capitalized national and international companies, including other insurance providers, technology companies, automotive media companies, established automotive auction and marketplace providers, other well-financed companies seeking new opportunities, or new competitors withusing technologicaltechnologically advanced systems such as artificial intelligence, or other innovations. Many of our competitors have substantial resources, experienced management, and strong marketing, underwriting, and pricing capabilities. Because collector auto insurance constitutes a significant portion of our overall business, we may be more sensitive than other providers of insurance to, and more adversely affected by, trends that could decrease auto insurance rates or reduce demand or distribution channels for auto insurance over time, such as industry advances in mileage-based or usage-based insurance offerings, departures by some insurers from certain states that are prone to natural disasters, changes in vehicle technology, autonomous or semi-autonomous vehicles, or vehicle sharing arrangements. In addition, there are limited barriers to entry in the automotive lifestyle business. Accordingly, more established brands with significantly more resources may compete against us in the automotive lifestyle business in the future. If we are unable to compete effectively, we may not be able to grow our business and our financial condition and results of operations may be adversely affected.
We have recently completed strategic acquisitions, including Drivers Edge in September 2024 and Broad Arrow in August 2022 and Drivers Edge in September 2024.2022. In the future, we may pursue additional acquisitions or investments to grow our business in line with our strategic objectives. Our acquisitions or investments may not achieve their intended purpose or the desired return sought. Worse,Additionally, our acquisitions and investments may also result in unforeseen liabilities, expenses, or negative consequences, including contingent liabilities, high implementation costs, misalignment of culture, burdensome regulatory requirements, tax liabilities, and distraction of senior management from pursuing more profitable strategic objectives. If we are unable to effectively execute and integrate strategic acquisitions and make profitable investments, we may not be able to grow our business and our financial condition and results of operations may be adversely affected.
Like others in our industry, we are subject to cyberattacks, and our reliance on third party providers for technology and service means our operations could be disrupted due to the lack of resiliency in the operations of other companies, or a breach in their obligations to us, and could impair the operability of our website and other technology-based operations.
Cyberattacks, denial-of-service attacks, ransomware attacks, business email compromises, computer malware, viruses, social engineering (including phishing) and other malicious internet-based activity are prevalent in our industry and such attacks continue to increase with frequency, levels of sophistication, and persistence. We utilize third-party providers to host, transmit, or otherwise process electronic data in connection with our business activities. We and/or our vendors and business partners may experience attacks, unavailable systems, unauthorized access, or disclosure due to theft or misuse, denial-of-service attacks, sophisticated attacks by nation-state and nation-state supported actors, and advanced persistent threat intrusions. Despite our efforts to ensure the security, privacy, integrity, confidentiality, availability, and authenticity of information technology networks and systems, processing and information, we may not be able to anticipate, or to implement, preventive and remedial measures effective against all data security and privacy threats. The recovery systems, security protocols, network protection mechanisms, and other security measures that we have integrated into our systems, networks, and physical facilities, may not be adequate to prevent or detect service interruption, system failure, data loss or theft, or other material adverse consequences.
Any regulatory enforcement actions, such as the inquiry related to unauthorized access into our online quote feature described in the section titled 2021 Data Security Incident within Note 25 — Commitments and Contingencies in Item 8 of Part II of this Annual Report, or future cyberattacks on our systems, could result in reputational damage and/or our current and prospective Members to stop using our services. Further, we may be required to expend significant financial and operational resources in response to a security breach, which could be costly and divert resources and the attention of our management and key personnel away from our business operations. Any of the foregoing could have a material adverse effect on our business, financial condition and results of operations.
SomeFrom oftime ourto membershiptime andwe marketplaceintroduce new products and services are newer andthat have limited operating history, which makesmaking it difficult to forecast operating results. We may not showachieve profitability from these newer productsofferings as quickly as we anticipateanticipated, or at all.
We currently rely on a limited number of financial institutions and payment facilitators/processors to provide payment processing services, including the processing of payments from credit cards and debit cards, and our business would be disrupted if any of the banks and/or vendors become unwilling or unable to provide these services to us, and we are unable to find a suitable replacement on a timely basis. If we or our processing banks/vendors fail to maintain adequate systems for the authorization and processing of creditfinancial cardpayment transactions, it could cause one or more of the majorfinancial creditinstitutions cardor companiesacquiring banks to disallow our continued use of their payment products. In addition, if these systems fail to work properly and, as a result, we do not charge our customers’ creditpayment cardsmethod on a timely basis, or at all, our business, financial condition and results of operations could be harmed.
The payment methods that we offer also subject us to potential fraud and theft by criminals, who are becoming increasingly more sophisticated, seeking to obtain unauthorized access to, or exploit weaknesses that may exist in the payment systems. There are potential legal, contractual, and regulatory risks if we are not able to properly process payments. If we are unable to comply with applicable rules or requirements for the payment methods that we accept, or if payment-related data is compromised due to a cybersecurity incident or a breach, we may be liable for significant costs incurred by payment regulatory bodies, payment card issuing banks and other third parties, subject to fines and higher transaction fees, subject to potential litigation or enforcement action, or our ability to accept or facilitate certain types of payments may be impaired.
RisingCurrent economic conditions including inflation and interest ratesrate uncertainty may affect demand for our products and services.
Unfavorable global economic conditions, including elevated inflation, higher interest rates, unemployment rate fluctuations, and volatility in the financial markets, create uncertainty in consumer discretionary spending. In such environments, consumers may reduce spending on collector cars and enthusiast vehicles, and related services, which could decrease demand for our products and services and negatively impact our revenue and profitability. Although the Federal Reserve Board lowered the federal funds rate by an aggregate of 75 basis points in 2025 and has indicated that rates may decrease further in 2026, there is no certainty as to the magnitude or timing of any such decreases, or whether rates will stabilize or increase. A sustained elevated interest rate environment, or any significant increases in benchmark interest rates, could increase our cost of borrowing, reduce credit availability, and adversely affect our ability to raise capital through the issuance of equity or debt on acceptable terms, particularly if equity markets become less favorable. These dynamics may also dampen consumer financing availability for purchases of collectible cars and enthusiast vehicles, further constraining demand. The combined impact of reduced consumer demand, higher capital costs, and tighter financing conditions could have a material adverse effect on our business, financial condition, and results of operations.
The imposition of tariffs on imported goods could increase costs, reduce consumer spending on collector cars and related services, and negatively impact our business, financial condition, and results of operations.
The recent imposition of tariffs on certain imported goods could affect the availability and cost of parts to repair our insureds' vehicles, which could impact our cost of claims, insurance premiums, and customer satisfaction. Additionally, a significant number of collectible cars and enthusiast vehicles and related parts are imported from outside the U.S., and imposition of tariffs could impact our Marketplace business by increasing the cost of importing vehicles for sale. While we have not yet identified material direct effects from the recent changes in tariffs and other trade measures in our business, the long-term consequences of these actions remain uncertain and could negatively affect both the overall economy and our business. Any prolonged downturns in the economy or decreases in consumer demand for collector cars and related services could materially adversely affect our business, financial condition, and results of operations.
Global economic conditions, including elevated inflation and interest rates, have resulted in uncertainty in consumer discretionary spending, unemployment rate fluctuations and overall volatility in the financial markets. These unfavorable economic conditions may lead consumers to reduce their spending on collectible cars and related services, which in turn could lead to a decrease in the demand for our products and services. Our sensitivity to economic cycles and any related fluctuation in consumer demand may have a material adverse effect on our business, results of operations, and financial condition.
Rising interest rates increase our cost of borrowing and could adversely affect our results of operations.
Although the Federal Reserve Board lowered the federal funds rate by an aggregate of 75 basis points in 2024 and indicated that rates are expected to decrease further in 2025, there is no certainty how significant, if any, such rate cuts will be. A sustained elevated interest rate environment will have a corresponding impact to our costs of borrowing and may have an adverse impact on our ability to raise funds through the offering of our securities or through the issuance of debt due to higher debt capital costs, diminished credit availability, and less favorable equity markets. Any significant federal fund rate increases may have a material adverse effect on our business, financial condition, and results of operations.
We utilize numerous technology platforms throughout our business for various functions, including to gather Member data to price and administer our insurance products, including platforms for claims management, to issue and service our membership products, provide valuation services, and transact live and digital auctions. We use proprietary algorithms in certain circumstances within our underwriting processes for efficiency. Our technology platforms require continued development and are complex. The continuous development, maintenance, and operation of our technology platforms may entail unforeseen difficulties, including material performance problems or undetected defects or errors. We may encounter technical obstacles, and it is possible that we may discover additional problems that prevent our technology from operating properly. If our platforms do not function reliably, we may incorrectly underwrite or bill our Members, price insurance products, or pay or deny insurance claims made by our Members. These errors could result in inadequate insurance premiums collected relative to claims made, resulting in increased financial losses. These errors could also cause Member dissatisfaction with us, which could cause Members to cancel or fail to renew their insurance policies with us or make it less likely that prospective Members obtain new insurance policies from us. Additionally, technology platform errors may lead to unintentional bias and discrimination in the underwriting process, which could subject us to legal or regulatory liability and harm our brand and reputation. If material performance, defects, or errors persist we may be forced to terminate our technology agreements and incur substantial additional costs transitioning to alternative solutions. Any of these eventualities could result in a material adverse effect on our business, financial condition and results of operations.
Our future success depends on us keeping pace with technological advances for interacting with our Members. New technology is complex, expensive, and requires an ongoing commitment of significant resources to implement. While we are implementing new technology, we must also continue to develop, implement, and maintain the security and confidentiality of our proprietary legacy technology in compliance with complex evolving privacy and cybersecurity laws. Changes to existing laws, their interpretation or implementation, or the introduction of new laws could impede the use of our legacy technology and/or the implementation of new technology. If we are delayed or unable to effectively update our technology or implement new technology it could result in systemic inefficiencies, negatively impact our competitive position and result in a material adverse effect on our business, financial condition and results of operations.
Any future legal or regulatory requirements impacting our internet and mobile technologies and applications, or that restrict our ability to market, advertise, transact, and collect or use personal data, may impact how we interact with our Members and prospective Members, and could have an adverse effect on our business, financial condition, and results of operations.
Management's Discussion & Analysis (MD&A)
New heading “Reportable Segments”
New heading “Transition to Article 7 Reporting Framework”
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New heading “Marketplace revenue”
New heading “Key Operating Metrics”
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New heading “Insurance Segment”
New heading “Net investment income and Net investment gains”
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New heading “How This Measures is Useful”
New heading “Limitations of the Usefulness of This Measure”
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New heading “How These Measures Are Useful”
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Removed heading “Losses and loss adjustment expenses”
Removed heading “Year Ended December 31, 2024 compared to the Year Ended December 31, 2023”
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Removed heading “Gains, losses, and impairments related to divestitures”
Removed heading “Gain (loss) related to warrant liabilities, net”
Removed heading “Interest and other income (expense), net”
Removed heading “Goodwill and Intangible Assets”
Largest changes
“Restructuring, impairment and related charges, net”see in full comparison
“We define EBITDA as consolidated Net income, excluding Interest expense and other, net, Income tax expense (benefit), and Depreciation and amortization. …”see in full comparison
“We define Adjusted EBITDA as consolidated Net income, excluding net interest and other income (expense), income tax expense, and depreciation and amortization, further adjusted to exclude (i) net gains and losses related to our warrant liabilities; (ii) share-based compensation expense; and when applicable, (iii) restructuring, impairment and related charges; (iv) gains, losses and impairments related to divestitures; and (v) certain other unusual items.”see in full comparison
“Gains, losses, and impairments related to divestitures”see in full comparison
“In 2023, the Board approved a reduction in force (the "2023 RIF") following a strategic review of business processes as we focus on driving efficiencies in order to achieve growth and profitability goals. As a result of these actions, we recognized $5.4 million in employee severance-related expenses and a $0.4 million impairment charge to write-down the value of certain digital media content assets. …”see in full comparison
Full comparison: every changed paragraph (258)
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Consolidated Financial Statements and related Notes included in Item 8 of Part II of this Annual Report.Report, including Note 4 — Segment Reporting and Disaggregated Revenue. Beginning with this Annual Report, our Consolidated Financial Statements are presented in accordance with Article 7 of Regulation S-X and reflect our new Insurance and Marketplace segments. This discussionManagement's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") contains forward-looking statements based upon current expectations that involve risks and uncertainties. Please refer to the section in this Annual Report entitled "Cautionary Statement Regarding Forward-Looking Statements".
We are a market leader in providing insurance for collector cars and enthusiast vehicles, helping the automotive enthusiast community protect and enjoy their special cars for more than 40 years. Our insurance products are complemented by HDC, our renowned car events, and our media and entertainment platforms. We also operate a trusted marketplace where collectors and enthusiasts can buy and sell a wide range of vehicles, from entry level enthusiast vehicles to high value collector cars, primarily though Broad Arrow live auctions and brokered private sales. In addition, through our marketplace, BAC provides financing solutions by structuring loans secured by collector cars. Together, our integrated automotive ecosystem fosters a vibrant community where enthusiasts connect, share their passion, and access resources that enhance their ownership experience. Our vision is to be the world's most trusted and preferred brand for automotive enthusiasts to insure, buy, sell, and enjoy their special cars.
Reportable Segments
Due to the continued revenue growth and recent geographic expansion of the marketplace business, beginning in the fourth quarter of 2025, we updated our segment reporting to reflect two operating and reportable segments: Insurance and Marketplace. Previously, we operated as a single operating and reportable segment. We have recast prior period segment information to conform to the current presentation in this Annual Report. For more information regarding segment reporting, refer to Note 4 — Segment Reporting and Disaggregated Revenue in Item 8 of Part II of this Annual Report.
Transition to Article 7 Reporting Framework
Beginning with this Annual Report, we present our Consolidated Financial Statements in accordance with Article 7 of Regulation S-X ("Article 7"), which governs financial reporting for insurance companies. In prior reporting periods, we presented our Consolidated Financial Statements in accordance with Article 5 of Regulation S-X ("Article 5"), which is applicable to entities operating in non-specialized industries. The adoption of Article 7 reflects the continued expansion of our insurance operations, including expanded risk assumption under the Markel Fronting Arrangement and the introduction of our Enthusiast+ product.
Investors should note that the transition to Article 7 results in presentation differences that may affect comparability when compared to the financial statements presented in prior SEC filings, including the discontinuation of a classified balance sheet and the reclassification of certain line items on the Consolidated Balance Sheets. In addition, "Net investment income" and "Net investment gains" are now reported as components of revenue within the Consolidated Statements of Operations. Prior period information has been recast in this Annual Report to conform to the requirements of Article 7.
We are a market leader in providing insurance for collector cars and enthusiast vehicles. Through our insurance model, we act as an MGA by underwriting, selling, and servicing collector car and enthusiast vehicle insurance policies. Due to our consistent track record of delivering strong underwriting results, we then reinsure approximately 80% of the risks written by our MGA subsidiaries through our wholly owned subsidiary, Hagerty Re. In addition, we offer HDC memberships, which are primarily bundled with our insurance policies and give subscribers access to an array of products and services, including emergency roadside assistance, Hagerty Drivers Club Magazine, automotive enthusiast events, our proprietary vehicle valuation tool, and special vehicle-related discounts. We also offer a marketplace to complement our insurance and membership offerings where automotive enthusiasts can buy, sell, and finance collector cars and enthusiast vehicles. Through these offerings, our vision is to be the world's most trusted and preferred brand for automotive enthusiasts to protect, buy, sell, and enjoy their special cars.
Business Review
In 2023, we began a review of certain components of our operations which resulted in the sale or reorganization of certain businesses, including Hagerty Garage + Social, DriveShare, and Motorsport Reg ("MSR"). This initiative supports our strategy to prioritize investments and resources in the areas of our business that offer the strongest growth and profit potential. As a result of this review, in 2023, we recognized approximately $4.0 million of losses and impairments related to actions taken with respect to Hagerty Garage + Social and DriveShare. In addition, in 2024, we recognized a $0.1 million gain related to the sale of MSR. We may incur additional losses and/or impairment charges in future periods as a result of actions which we may take related to this review. Refer to Note 11 — Divestitures in Item 8 of Part II of this Annual Report for additional information.
On December 31, 2025, we entered into new contractual arrangements and amended the terms of our existing contractual arrangements with Markel and its affiliates. These coordinated transactions form the Markel Fronting Arrangement, which became effective January 1, 2026. Under the Markel Fronting Arrangement: (i) we continue to issue policies through Essentia, with our underwriting authority (including pricing decisions, rate filing, insurance rating, and risk selections) and claims authority expanded to the maximum levels permitted by applicable law; (ii) we have assumed increased administrative responsibilities for the policies issued through Essentia; (iii) Hagerty Re controls 100% of the premium and assumes 100% of the risk for policies written through Essentia; and (iv) Hagerty Re pays an initial fronting fee, representing 2% of written premium, to Markel for administrative support, which incrementally decreases based on the level of written premium in each calendar year. We expect these changes to result in increased profitability and additional control, allowing for enhanced operational efficiencies.
Due to the expanded underwriting and claims authority granted to us under the Markel Fronting Arrangement, we now control the Markel book of business. While our U.S. MGA subsidiary and Hagerty Re will continue to operate in the same manner they have historically, beginning on January 1, 2026, the benefit of our MGA services will be received by Hagerty Re and not Markel. As a result, effective in the first quarter of 2026, we will not recognize commission revenue or the associated ceding commission expense for policies issued through the Markel Fronting Arrangement in our Consolidated Financial Statements. However, ceding commissions associated with Markel policies issued in 2025 will continue to be recognized as expense ratably over the remaining term of those policies throughout 2026. In addition, policy acquisition costs incurred by our U.S. MGA subsidiary for Markel policies issued in 2026 will be deferred and amortized over the policy term. Although we expect the Markel Fronting Arrangement to result in increased profitability, our reported commission revenue and policy acquisition costs, including ceding commission expense, will be lower than in prior periods, reflecting the new contractual terms governing our relationship with Markel.
California Wildfires
In January 2025, Southern California experienced severe and destructive wildfires, notably the Palisades fire and the Eaton fire. We currently estimate that pre-tax losses resulting from these wildfires will be approximately $11.0 million, which is below our 2025 catastrophe reinsurance program per event retention of $28.0 million. There is inherent variability in estimates of early loss projections and claims severity, particularly in high-damage regions. Accordingly, our estimate may change as additional information emerges. Losses from the California wildfires will be reflected in our results for the three months ending March 31, 2025.
In 2024, we reported Net Income of $78.3 million, representing a $50.1 million, or 177.9%, increase compared to 2023 and Adjusted EBITDA (a non-GAAP financial measure) of $124.5 million, representing a $36.3 million, or 41.2%, increase compared to 2023. This improvement is primarily attributable to continued Written Premium growth (+$137.3 million), which drove a 15.8% increase in Commission and fee revenue earned by our MGA subsidiaries and a 21.0% increase in Earned premium at Hagerty Re. These revenue increases were partially offset by losses related to Hurricane Helene and Hurricane Milton, which totaled $26.7 million. Also significantly impacting our results for the period was a higher balance of investable assets, as well as the diversification of our investment portfolio to include higher yielding fixed maturity securities, which resulted in a $12.6 million, or 46.7%, increase in interest income.
Key Performance Indicators
The tables below present a summary of our Key Performance Indicators, which include important operational metrics, as well as certain financial measures prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and non-GAAP financial measures. We use these Key Performance Indicators to evaluate our business, measure our performance, identify trends against planned initiatives, prepare financial projections, and make strategic decisions. We believe these Key Performance Indicators are useful in evaluating our performance when read together with our Consolidated Financial Statements prepared in accordance with GAAP.
(1) Total Written Premium is the total amount of insurance premium written by our MGA subsidiaries on behalf of our insurance carrier partners during the period. Total Written Premium reflects the direct economic benefit of our policy acquisition efforts and is closely correlated with the growth of insurance commission revenue generated by our MGA subsidiaries and earned premium generated by Hagerty Re.
(2) Hagerty Re Loss Ratio is the ratio of (i) Hagerty Re's losses and loss adjustment expenses to (ii) its earned premium. Hagerty Re Loss Ratio allows us to evaluate our historical loss patterns and make necessary and appropriate adjustments. Refer to "Losses and Loss Adjustment Expenses" below for additional information regarding the changes in Hagerty Re Loss Ratio between the current and prior year period.
(3) Hagerty Re Combined Ratio is the ratio of (i) Hagerty Re's losses, loss adjustment expenses, and underwriting expenses to (ii) its earned premium. Hagerty Re's underwriting expenses primarily include ceding commissions paid to insurance carrier partners and, to a lesser extent, certain administrative expenses. Hagerty Re Combined Ratio provides a benchmark to evaluate underwriting profitability, including expense trends. A combined ratio under 100% indicates underwriting income while a combined ratio exceeding 100% indicates an underwriting loss.
(4) New Business Count represents the number of new insurance policies issued by our MGA subsidiaries during the period. New Business Count is an important metric to assess our financial performance because policy growth is critical to our success. While we benefit from strong policy retention through renewals, new policies more than offset those cancelled or non-renewed at expiration. New policies also often mean new relationships and an opportunity to sell additional products and services.
(5) Refer to "Non-GAAP Financial Measures" below for a description of this non-GAAP financial measure and a reconciliation to the most comparable GAAP amount.
(6) Policies in Force ("PIF") represents the number of current and active insurance policies as of the end of the period. PIF is an important metric to assess our financial performance because policy growth drives revenue growth, increases brand awareness and market penetration, generates additional insight to improve the performance of our platform, and provides key data to assist us in strategic decision making.
(7) PIF Retention represents the percentage of expiring insurance policies that are renewed on the renewal effective date, calculated on a rolling twelve months basis. PIF Retention is an important measurement of the number of policies retained each year, which contributes to our recurring revenue streams including commissions earned by our MGA subsidiaries, HDC membership fees, and earned premium generated by Hagerty Re.
(8) Vehicles in Force represents the number of current insured vehicles as of the end of the period. Vehicles in Force is an important metric to assess our financial performance because insured vehicle growth drives our revenue growth and increases market penetration.
(9) HDC Paid Member Count represents the number of current Members who pay an annual membership subscription as of the end of the period. HDC Paid Member Count is an important metric because it helps us measure membership revenue growth and provides an opportunity to customize our value proposition and benefits to specific types of enthusiasts, both by demographic and vehicle interest.
(10) NPS is an important measure of the overall strength of our relationship with Members. NPS is measured twice annually through a web-based survey sent by email invitation to a random sample of existing Members, which currently excludes customers in our marketplace business, and is reported annually using an average of the two surveys. Often referred to as a barometer of brand loyalty and engagement, NPS is well-known in our industry as a strong indicator of growth and retention.
Under the terms of our contracts with certain insurance carrier partners, we have the opportunity to earn a contingent underwriting commission based on the results of the book of business, including the level of written or earned premium and loss ratio. Contingent underwriting commissionsCUCs are recognized in the period that the policy is issued based on our estimate of the amount thatcommission we will become entitled to receive during the calendar year such that a significant reversal of revenue is not probable.
Earned premiumpremium, net
Earned premiumpremium, net represents the earned portion of written premiums that Hagerty Re has assumed under quota share reinsurance agreements with our insurance carrier partners, net of premiums ceded to various reinsurers and the cost of catastrophe reinsurance coverage.reinsurers. Premiums assumed and ceded are recognized on a pro-rata basis over the term of the reinsured policies, which is generally 12 months. The cost of catastrophe reinsurance coverage is recognized over the contract period in proportion to the related earned premium.
Membership, marketplaceMembership and other revenue
We earn subscription revenue throughfrom the sale of HDC memberships, which are primarily bundled with our insurance policies and give subscribersmembers access to an array of products and services, including emergency roadside assistance, Hagerty Drivers Club Magazine, special access to automotive enthusiast events, our proprietary vehicle valuation tool, and special vehicle-related discounts. Revenue from the sale of HDC memberships is recognized ratably over the period of the membership. The membership is treated as a single performance obligation to provide access to stated Member benefits over the life of the membership, which is currently one year.
Other revenue also includes sponsorship, admission, advertising, valuation, registration, and sublease income. Other revenue is recognized when the performance obligation for the related product or service is satisfied.
Net investment income
Net investment income primarily consists of interest earned on our cash, cash equivalents, and fixed maturity securities, and, to a lesser extent, dividends earned from equity securities. Net investment income is recorded net of related investment management expenses. The principal factors that influence net investment income are the size, composition, and yield of our investment portfolio.
Net investment gains
Net investment gains represents the cumulative difference between the cost basis (or carrying value) and the net proceeds received from the sale of investments during the period, as well as the change in fair value of our equity securities between periods.
Marketplace revenue
Revenue from the sale of HDC memberships is recognized ratably over the period of the membership. The membership is treated as a single performance obligation to provide access to stated Member benefits over the life of the membership, which is currently one year.
Our marketplace business earns commission and fee-based revenue primarily from the sale of collector cars and enthusiast vehicles through live auctions, time-based digital auctions, and brokered private sales. FromThrough time-to-time,our marketplace business, we also earn revenue from the sale of collector cars and enthusiast vehicles that we have beenopportunistically acquired opportunisticallyfor resale. In addition, we earn finance revenue from loans made to qualified collectors and placedbusinesses insecured inventory.by their collector cars.
In addition, we also earn finance revenue from loans made to qualified collectors and businesses secured by their collector cars.
Fee-basedCommission and fee-based marketplace revenue is recognized on a net basis when the underlying sale is completed, which is generally upon the matching of a seller and buyer in a legally binding auction or private sale transaction. Revenue from the sale of inventoryacquired collector cars and enthusiast vehicles is recognized on a gross basis at the point in time when title and control of the carvehicle is transferred to the buyer, which is generally upon collection of the full purchase price. Finance revenue is recognized over time as earned based on the amount of the outstanding loan, the applicable interest rate on the loan, and the length of time the loan was outstanding during the period.
Losses and loss adjustment expenses represent our best estimate of the losses and associated settlement costs related to the risks we assume. Losses consist of claims paid, case reserves, and IBNR costs, which are recorded net of estimated recoveries from reinsurance, salvage, and subrogation. Loss adjustment expenses consist of the cost associated with processing and settling claims.
Throughout the year, we record an estimate of quarterly losses and loss adjustment expenses in the Consolidated Statements of Operations using an annual loss ratio, which is based on statistical analysis performed by our internal and external actuarial teams and considers several factors, including projected levels of catastrophe events and development patterns. The annual loss ratio is reviewed regularly and adjusted, as necessary. Management believes this approach provides a more consistent view of loss experience over the year given the seasonality of our business.
Ceding commissions, net represents the commissions paid by Hagerty Re to our insurance carrier partners for the risk assumed under the quota share agreements with those carriers. These commissions represent Hagerty Re's pro-rata share of the carrier's costs including (i) policy acquisition costs, which principally consist of the commissions earned by our MGA subsidiaries; (ii) general and administrative costs; and (iii) other costs. Ceding commissions are recorded net of commissions received by Hagerty Re from reinsurers related to ceded reinsurance premiums. Ceding commissions, net is recognized ratably over the term of the related policies, which is generally 12 months.
Sales expense includes costs related to the sale and servicing of insurance policies, as well as costs related to our membership and marketplace offerings, such as broker expense, cost of sales, promotion expense, and travel and entertainment expenses. Broker expense is the compensation paid to our agent partners and national broker partners when an insurance policy is written by our MGA subsidiaries through a broker relationship. Broker expense generally trends with written premium growth. Cost of sales includes payment processing fees, emergency roadside service costs, postage and other variable costs associated with the sale and servicing of a policy.
Cost of sales also represents direct costs associated with the sale of vehicles and memorabilia through auctions and private sales, including the purchase price and associated direct costs of inventory when Broad Arrow opportunistically purchases inventory to be sold through auctions or private sales, as well as interest expense and borrowing costs associated with the BAC Credit Facility. Promotion expense includes various costs related to branding, events, advertising, marketing, and customer acquisition.
Salaries and benefits consistconsists primarily of costs related to employee compensation, payroll taxes, employee benefits, and employee development costs. Employee compensation includes wages, as well as various forms of incentive compensation, including share-based compensation. Employee benefits primarily include the cost of our retirement, medical, dental, wellness, and severance plans. Costs related to employee education, training, and recruiting are included in employee development costs. Salaries and benefits are expensed as incurred except for costs that are required to be capitalized, which are then amortized over the useful life of the asset created, primarilysuch as internally developed software and software-as-a-service ("SaaS") implementation costs. Salaries and benefits are expected to increase in dollar amount over time as the business continues to grow but will likely decrease as a percent of revenue.
Ceding commissions, net represents the commissions paid by Hagerty Re to insurance carrier partners for the risk assumed under the quota share agreements with those carriers. These commissions represent Hagerty Re's pro-rata share of the carrier's costs including (i) policy acquisition costs, which consists of the commissions earned by our MGA subsidiaries, (ii) general and administrative costs, and (iii) other costs. Ceding commissions are recorded net of commissions received by Hagerty Re related to ceded reinsurance premiums. Ceding commissions, net is recognized ratably over the term of the related reinsurance policies, which is generally 12 months.
Losses and loss adjustment expenses
Losses and loss adjustment expenses represent our best estimate of the losses and associated settlement costs related to the risk assumed by Hagerty Re. Losses consist of claims paid, case reserves, and incurred but not reported costs, which are recorded net of estimated recoveries from reinsurance, salvage and subrogation. Loss adjustment expenses consist of the cost associated with processing and settling claims. The estimates utilized in determining the amount of losses and loss adjustment expenses recorded in a period are based on statistical analysis performed by our internal and external actuarial team. Reserves are reviewed regularly and adjusted, as necessary, to reflect our estimate of the ultimate cost of settlement.
Sales expense includes costs related to the sale and servicing of insurance policies, as well as costs related to our membership and marketplace offerings, such as broker expense, cost of sales, promotion expense, and travel and entertainment expenses. Broker expense is the compensation paid to our agent partners and national broker partners when an insurance policy is written by our MGA subsidiaries through a broker relationship. Broker expense generally tracks with written premium growth. Cost of sales includes payment processing fees, emergency roadside service costs, postage and other variable costs associated with the sale and servicing of a policy. Cost of sales also includes the cost of vehicles held in inventory and sold through our marketplace business, as well as interest expense and borrowing costs associated with the BAC credit facility ("BAC Credit Facility"). Promotion expense includes various costs related to branding, events, advertising, marketing, and customer acquisition. Sales expenses, in general, are expensed as incurred and will trend with revenue growth.
General and administrative expenses primarily consists of expenses related to non-capitalized hardware and software, professional services, and occupancy costs. These costs are expensed as incurred. We expect this expense category to modestly increase in dollar amount over time as the business continues to grow but will likely decrease as a percentage of revenue over the next few years after we reach scale to handle incoming business from new partnerships.
Depreciation and amortization reflects the recognition of the cost of our investments in various assets over their useful lives. Depreciation expense relates to computer hardware, furniture and equipment, and leasehold improvements. Amortization relates to internally developed software, SaaS implementation,implementation costs, and finite-lived intangible assets associated with acquisitions. Depreciation and amortization are expected to increase in dollar amount over time but will likely decrease as a percent of revenue as investments in platform technology reach scale.
Gain (loss)Loss related to warrant liabilities, net
Prior to the Warrant Exchange, our warrants were accounted for as liabilities and were measured at fair value each reporting period, with changes in fair value recognized aswithin non-operating income"Loss (expensegain) related to warrant liabilities, net" in our Consolidated Statements of Operations. In general, under the fair value accounting model, in periods when our stock price increased, the warrant liability increased, and we recognized additional expense. In periods when our stock price decreased, the warrant liability decreased, and we recognized additional income. In addition, "Gain (loss) related to warrant liabilities, net" includes the loss on the Warrant Exchange recorded in the third quarter of 2024. Refer to Note 20 — Warrant Exchange in Item 8 of Part II of this Annual Report for additional information regarding the Company's Warrant Exchange.
Interest expense and other income (expense),other, net
Interest expense and other income (expense),other, net primarily includes interest income related to cash balances and fixed maturity securities, dividend income on equity securities, realized gains or losses from the sale of fixed maturity securities, and realized and unrealized gains and losses related to equity securities. Additionally, Interest and other income (expense), net includes interest expense related to outstanding borrowings, primarily related to our current and prior revolving credit facilities with JPMorgan Chase Bank, N.A. ("JPM"), as well as the JPMState CreditFarm FacilityTerm Loan (as defined in Note 1718 — Long-Term Debt in Item 8 of Part II of this Annual Report). Interest expense and other, net also includes changes in the estimated value of the liability related to our TRA ("TRA Liability") withbetween HHC and Markel.periods. Refer to Note 23 — Taxation in Item 8 of Part II of this Annual Report for additional information related to the TRA.
Income tax benefit (expense)
Key Operating Metrics
What changed in the latest 10-Q
Risk Factors
As of the date of this Quarterly Report, there have been no material changes to our risk factors as previously disclosed in our Annual Report. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC. Additional risks that we currently do not know about or currently view as immaterial may also materially adversely affect our business, financial condition, or operating results.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
New heading “Recent Developments”
New heading “Pending Acquisition”
New heading “Results of Operations for the Three Months Ended June 30, 2026 and 2025”
New heading “Interest expense and other, net”
New heading “Amortization of deferred LPT gain”
New heading “Interest expense”
New heading “Change in TRA Liability”
New heading “Results of Operations for the Six Months Ended June 30, 2026 and 2025”
New heading “Financial Highlights”
New heading “Insurance Segment”
New heading “Earned premium, net”
New heading “Losses and loss adjustment expenses, net”
New heading “Policy acquisition costs, net”
New heading “Underwriting and other insurance expenses”
New heading “Net investment income and Net investment gains”
New heading “Commission and fee revenue”
New heading “Membership and other revenue”
New heading “Selling, general, and administrative expenses”
New heading “Marketplace Segment”
New heading “Interest expense and other, net”
New heading “Amortization of deferred LPT gain”
New heading “Interest expense”
New heading “Change in TRA Liability”
New heading “Income tax (expense) benefit”
Removed heading “Results of Operations”
Removed heading “Off-Balance Sheet Arrangements”
Largest changes
“Results of Operations for the Three Months Ended June 30, 2026 and 2025”see in full comparison
“Results of Operations for the Six Months Ended June 30, 2026 and 2025”see in full comparison
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Complementing our insurance offerings, we operate a trusted marketplace where collectors and enthusiasts can buy and sell a wide range of vehicles, from entry level enthusiast vehicles to high value collector cars. Through our marketplace, we also provide financing solutions by structuring and issuing loans secured by collector cars.
Due to the expanded underwriting and claims authority granted to us under the Markel Fronting Arrangement, we now control the Essentia book of business. While our United States ("U.S.") MGA subsidiary and Hagerty Re continue to operate in the same manner they have historically, beginning on January 1, 2026, the benefit of our MGA services with respect to the Essentia book of business is being received by Hagerty Re and not Essentia. As a result, effective in the first quarter of 2026, we are no longer recognizing commission revenue or the associated ceding commission expense for Essentia-originated policies in our Condensed Consolidated Financial Statements. However, ceding commission expense associated with Essentia policies issued in 2025 will continue to be recognized ratably over the remaining term of those policies throughout 2026. In addition, policy acquisition costs incurred by our U.S. MGA subsidiary for Essentia policies issued in 2026 willare bebeing deferred and amortized over the policy term. Although we expect the Markel Fronting Arrangement to result in increased profitability, our reported commission revenue and ceding commission expense will be lower than in prior periods, reflecting the new contractual terms governing our relationship with Markel.
On December 31, 2025, in connection with the Markel Fronting Arrangement, we entered into a loss portfolio transfer agreement (the "LPT Agreement") that became effective on January 1, 2026. Pursuant to the LPT Agreement, Hagerty Re assumed 100% of the net retained liabilities for Essentia-originated policies issued prior to January 1, 2026 and received $50.5 million in cash consideration. WeFor areadditional accountinginformation forregarding the Markel Fronting Arrangement and the LPT AgreementAgreement, usingrefer theto depositNote method3 — Markel Fronting Arrangement in Item 1 of accounting.Part At inception, we recorded the $50.5 millionI of cashthis considerationQuarterly received as a deposit liability within "Other liabilities" on the Condensed Consolidated Balance Sheets. As of January 1, 2026, the estimated value of the liabilities assumed under the LPT Agreement was $42.7 million, resulting in an initial deferred gain of $7.8 million, which is being recognized over the expected period of future claim payments within "Interest expense and other, net" in the Condensed Consolidated Statements of Operations.Report.
Recent Developments
Pending Acquisition
On June 30, 2026, the Company's subsidiary, Hagerty International Holdings Limited, entered into a definitive agreement to acquire all of the issued shares of Bennetts Motorcycling Services Limited ("Bennetts"), a specialty motorcycle insurance broker in the United Kingdom ("U.K."), for a purchase price of approximately £34.0 million (approximately $43.0 million as of June 30, 2026). The transaction is subject to regulatory approval and other customary closing conditions and is expected to close during the third quarter of 2026.
This acquisition builds on the international momentum Hagerty has established through Broad Arrow Auctions, which has expanded its European presence over the past year. Together, both brands can create a more integrated enthusiast platform in the U.K. – combining specialty insurance, live and digital auctions and community engagement across both motorcycles and enthusiast cars with additional cross-sell opportunities.
Earned premium, netpremium represents the earned portion of written premiums assumed under quota share reinsurance agreements with insurance carriers, net of premiums ceded to various reinsurers. Premiums assumed and ceded are recognized on a pro-rata basis over the term of the reinsured policies, which is generally 12 months.
Effective January 1, 2026, commission revenue for Essentia-originated policies is no longer recognized in our Condensed Consolidated Statements of Operations, reflecting the new contractual terms governing our relationship with Markel, as discussed in more detail above under "Markel Fronting Arrangement". Commission and fee revenue will continuecontinues to include commissions earned from our other MGA activities, including from a subsidiary of State Farm Mutual Automobile Insurance Company ("State Farm") and our insurance carrier partners in Canada and the U.K. State Farm is a related party to the Company. Refer to Note 20 — Related-Party Transactions in Item 1 of Part I of this Quarterly Report for additional information on related party transactions with State Farm.
Our marketplace business earnsgenerates revenue from two principal sources: (i) commission and fee-based revenue primarilyearned from the sale of collector cars and enthusiast vehicles through live auctions, time-based digital auctions, and brokered private sales.sales; Throughand our marketplace business, we also earn(ii) revenue fromearned on the sale of collector cars and enthusiast vehicles that we have opportunistically acquired for resale. In addition, we earn finance revenue from loans made to qualified collectors and businesses secured by their collector cars.
Other revenue alsoprimarily includes sponsorship, admission, advertising, valuation, registration, and subleaseadvertising income.revenue. Other revenue is recognized when the performance obligation for the related product or service is satisfied.
Losses and loss adjustment expenses, netexpenses represents our best estimate of the losses and associated settlement costs related to the risks we assume. Losses consist of claims paid, case reserves, and incurred but not reported ("IBNR") costs, which are recorded net of estimated recoveries from reinsurance, salvage, and subrogation. Loss adjustment expenses consist of the cost associated with processing and settling claims.
Losses and loss adjustment expenses, netexpenses also includes the impact of reserve adjustments recorded to reflect the favorable or unfavorable development of prior accident year claims.
Policy acquisition costs, netcosts represents costs directly related to the successful acquisition or renewal of insurance policies where we assume risk.
Prior to January 1, 2026, Policy acquisition costs, netcosts included only the ceding commissions paid by Hagerty Re to insurance carriers for the risks assumed under the quota share agreements with those carriers. These commissions represented Hagerty Re's pro-rata share of the carrier's costs including (i) policy acquisition costs, which principally consisted of the commissions earned by our U.S. MGA subsidiary related to the Essentia book of business; (ii) general and administrative costs; and (iii) other costs.
Effective January 1, 2026, the definition of Policy acquisition costs, netcosts includes costs incurred by our U.S. MGA subsidiary for the successful acquisition or renewal of insurance policies issued under the Markel Fronting Arrangement. The policy acquisition costs associated with the Markel Fronting Arrangement primarily include (i) third-party broker commissionsexpense; (ii) certain salaries, benefits, and other costs associated with underwriting, policyselling, issuance, processing,issuing, and sellingprocessing activitiespolicies; (iii) fees paid to the fronting feescarrier; and (iv) premium taxes. Policy acquisition costs also includes ceding commissions paid by Hagerty Re to other insurance carriers for the risks assumed under quota share agreements.
Policy acquisition costs,costs net isare recognized ratably over the term of the related policies, which is generally 12 months.
Underwriting and other insurance expenses consists of the operating costs incurred in connection with our risk taking activities that are not classified within Losses and loss adjustment expenses, net or Policy acquisition costs, net.
Underwriting and other insurance expenses consists of the operating costs incurred in connection with our risk taking activities. Effective January 1, 2026, as a result of the Markel Fronting Arrangement through which we assumed control of the Essentia book of business, Underwriting and other insurance expenses include costs incurred by our U.S. MGA subsidiary that are associated with our underwriting operations such as underwritingcertain staff compensationsalaries and relatedbenefit benefits,costs, technology and systems costs that support the underwriting process, and expenses related to risk evaluation and pricing. Also included are general and administrative expenses attributable to the operations of our risk taking activities, including facilities costs, professional services fees, regulatory and compliance costs, and other overhead expenses. Prior to January 1, 2026, such costs were reported within Selling, general, and administrative expenses.
Interest expense and other, netother primarily includes interest expense related to outstanding borrowings, primarily related to our current and prior revolving credit facilitiesfacility with JPMorgan Chase Bank, N.A. ("JPM"), as well as the State Farm Term Loan (as defined in Note 14 — Debt in Item 1 of Part I of this Quarterly Report). Interest expense and other, netother also includes the amortization of the gain from the LPT Agreement andAgreement, changes in the estimated value of the liability associated with the Tax Receivable Agreement ("TRA") ("TRA Liability"), betweenand periods.foreign currency transaction gains and losses. Refer to Note 3 — Markel Fronting Arrangement in Item 1 of Part I of this Quarterly Report for additional information related to the LPT Agreement. Refer to Note 19 — Taxation in Item 1 of Part I of this Quarterly Report for additional information related to the TRA.
Hagerty, Inc. is taxed as a corporation and pays corporate federal, state, and local taxes with respect to income allocated from THG. Hagerty, Inc., Hagerty Insurance Holdings, Inc., Broad Arrow Group, Inc. ("Broad Arrow"),Arrow, Hagerty Radwood, Inc., and various foreign subsidiaries are treated as taxable entities and income taxes are provided where applicable. Hagerty Insurance Holdings, Inc. files a consolidated tax return with its wholly owned corporate subsidiaries Hagerty Re and Drivers Edge Insurance Company ("Drivers Edge").
Hagerty Re Loss Ratio represents the ratioratio, expressed as a percentage, of (i) Hagerty Re's losses and loss adjustment expenses to (ii) its earned premium. Hagerty Re Loss Ratio is calculated using Hagerty Re's standalone financial statements,statements. which inFor the currentthree periodand excludesix $5.9months ended June 30, 2026, this excludes $3.2 million and $9.1 million, respectively, of claims handling expenses incurred by our MGA subsidiaries on behalf of Hagerty Re. Hagerty Re's standalone financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). This metric allows us to evaluate Hagerty Re's loss patterns on the basis of its standalone GAAP financial statements and maketrack necessaryloss experience and appropriateidentify adjustments.trends that inform our pricing, reserving, and reinsurance decisions.
Hagerty Re Combined Ratio represents the ratioratio, expressed as a percentage, of (i) Hagerty Re's losses, loss adjustment expenses, policy acquisition costs, and underwriting and other insurance expenses to (ii) its earned premium. Hagerty Re's underwriting expenses primarily include policy acquisition costs and, to a lesser extent, certain administrative expenses. Hagerty Re Combined Ratio is calculated using Hagerty Re's standalone GAAP financial statements,statements. which inFor the currentthree periodand includesix $11.5months ended June 30, 2026, this includes $43.7 million and $55.2 million, respectively, of commissions paid to our MGA subsidiaries that are eliminated in consolidation. This metric provides a benchmark to evaluate Hagerty Re's underwriting profitability on the basis of its standalone GAAP financial statements. A combined ratio under 100% indicates underwriting income while a combined ratio exceeding 100% indicates an underwriting loss.
Net Auction Sales represents the total purchase price paid by buyers, excluding our buyer's premium and fees, for vehicles and memorabilia purchased through Broad Arrow's live and online auctions, as well as through Hagerty Marketplace's online sale platform.
Results of Operations for the Three Months Ended June 30, 2026 and 2025
For the three months ended March 31, 2026, we reported a Net loss of $12.7 million, representing a $40.0 million decrease compared to the prior year, and Adjusted EBITDA of $85.2 million, representing a $37.0 million, or 76.9%, increase compared to the prior year.
In our Insurance segment, Loss before taxes for the three months ended March 31, 2026 was $20.4 million, representing a $53.3 million decrease from the prior period. The loss for the current period is due to the transition of our business under the Markel Fronting Arrangement, which resulted in a decrease in Commission and fee revenue and the recognition of non-cash costs to amortize the remaining deferred ceding commissions for Essentia policies written in 2025. These factors were partially offset by a $70.3 million, or 41.5%, increase in Earned premium, net, reflecting the increase to our quota share percentage from 80% to 100% under the Markel Fronting Arrangement, as well as the continued growth of that book of business.
In our Marketplace segment, Income before taxes for the three months ended March 31, 2026 was $0.8 million, compared to $1.5 million in the prior period. Current period results reflect a lower level of Broad Arrow inventory sales, as prior year results included the one-time sale of vehicles acquired from The Academy of Art University Collection. This decrease in inventory sales was largely offset by an increase in auction revenue due to strong results at the 2026 auction at The Amelia, which saw an 81% increase in Aggregate Auction Sales from the prior year.
(2) Adjusted EBITDA, Adjusted Net Income (Loss), and Adjusted Diluted EPS are non-GAAP financial measures. Please see the section titled "Non-GAAP Financial Measures" below for a description of these non-GAAP financial measures and a reconciliation to the most comparable GAAP measure.measure, as well as a reconciliation of prior year Adjusted EBITDA to the current year presentation.
For the three months ended June 30, 2026, we reported Net income of $8.0 million, representing a $39.2 million, or 83.0%, decrease compared to the prior year, and Adjusted EBITDA of $74.5 million, representing a $1.9 million, or 2.6%, increase compared to the prior year.
In our Insurance segment, Income before taxes for the three months ended June 30, 2026 was $2.8 million, representing a $58.0 million decrease from the prior year. This decrease is due to the transition of our business under the Markel Fronting Arrangement, which resulted in lower Commission and fee revenue and the recognition of non-cash costs to amortize the remaining deferred ceding commissions for Essentia policies written in 2025. These factors are partially offset by a $74.2 million, or 41.7%, increase in Earned premium, net, reflecting the increase to our quota share percentage from 80% to 100% under the Markel Fronting Arrangement, as well as the continued growth of that book of business.
In our Marketplace segment, Income before taxes for the three months ended June 30, 2026 was $1.1 million, compared to a loss of $2.0 million in the prior period. The improved Marketplace segment results are principally due to increased auction revenue, which was driven by an 80.3% increase in Net Auction Sales from the 2026 Concorso d’Eleganza Villa d’Este Auction, reflecting further growth of Broad Arrow's international business.
Results of Operations
The following table summarizes Insurance segment results of operations for the three months ended MarchJune 31,30, 2026 and 2025, and the dollar and percentage changechanges between the two periods:
The following table provides a reconciliation of the standalone results of operations for our Hagerty Re and MGA+ reporting units,units for the three months ended June 30, 2026, which reflect the continuing operations of those businesses, to total insurance segment results of operations included in our Condensed Consolidated Statements of Operations. This table is presented solely to improve the year-over-year comparability of our financial statements and should not be viewed on a standalone basis. It should be read together with our Condensed Consolidated Statements of Operations: and the accompanying notes.
(1a) Represents Hagerty Re's earned premium and associated policy acquisition costs related to Essentia policies issued in 2025.
(2b) Represents Hagerty Re's earned premium and associated policy acquisition costs related to Essentia policies issued in 2026 and through other carriers.
(3) Our MGA subsidiaries incur costs to fulfill certain underwriting and claims handling functions and incur related costs on behalf of Hagerty Re, for which they are compensated through an intercompany commission paid by Hagerty Re. These costs are reflected within the standalone results of our MGA+ reporting unit within Losses and loss adjustment expenses, net, and Underwriting and other insurance expenses.
(4c) The MGA+ reporting unit includes our MGA operations, as well as our membership, eventsevents, and media activities.
(d) Our MGA subsidiaries incur costs to fulfill certain underwriting and claims handling functions on behalf of Hagerty Re, for which they are compensated through an intercompany commission paid by Hagerty Re. These costs are reflected within the standalone results of our MGA+ reporting unit within "Losses and loss adjustment expenses, net" and "Underwriting and other insurance expenses".
(5e) ReflectsThese consolidation entries are made in consolidation to eliminate intercompany commission revenue and ceding commission expense between the Hagerty Re and MGA+ reporting units, as well as entries made to defer policy acquisition costs incurred by the MGA+ reporting unit. Such policy acquisition costs are amortized over the underlying policy term.units.
(f) These consolidation entries are made to defer $32.1 million in policy acquisition costs incurred by the MGA+ reporting unit in their standalone results of operations, which are then amortized over the underlying policy term in our Condensed Consolidated Statements of Operations. For the three months ended June 30, 2026, the amortization of such deferred policy acquisition costs totaled $12.2 million.
(g) Refer to Note 5 — Segment Reporting and Disaggregated Revenue in Item 1 of Part I of this Quarterly Report for a reconciliation of Insurance segment Income before taxes to consolidated Income before taxes.
Earned premium, net was $239.6$252.0 million for the three months ended MarchJune 31,30, 2026, an increase of $70.3$74.2 million, or 41.5%,41.7%, compared to 2025. This increase wasis primarily driven by our entry into the Markel Fronting Arrangement, which became effective January 1, 2026 and increased Hagerty Re's U.S. quota share from approximately 80% to 100%, including for in-force policies written in 2025. To a lesser extent, the increase wasis driven by continued growth ofin subject premiums written through our MGA subsidiaries.
The following tables present premiums assumed and earned, as well as the related quota share percentages for the three months ended MarchJune 31,30, 2026 and 2025:
(1) In 2026, we did not reinsure classic auto risks produced by our United Kingdom ("U.K.") MGA subsidiary, and the prior book of business is in run-off.
(2) Represents the portion of total written premium subject to reinsurance agreements.
(2) Represents the portion of total written premium subject to reinsurance agreements.
Losses and loss adjustment expenses, net were $97.9$110.7 million for the three months ended MarchJune 31,30, 2026, an increase of $26.8$35.5 million, or 37.7%,47.2%, compared to 2025. This increase is primarily the result of the Markel Fronting Arrangement, which increased Hagerty Re's U.S. quota share from approximately 80% to 100% as of January 1, 2026 for all in-force policies. To a lesser extent, the increase wasis driven by continued growth of subject premiums written through our MGA subsidiaries. For the three months ended March 31, 2026, the Hagerty Re loss ratio was 38.4%, a decrease of 3.6% from 2025, when the Hagerty Re loss ratio was 42.0%. The lower loss ratio is driven by favorable experience in prior accident years, primarily due to the emergence of lower physical damage losses for the 2025 accident year.
For the three months ended June 30, 2026, the Hagerty Re Loss Ratio was 42.7%, an increase of 0.4% from 2025, when the Hagerty Re Loss Ratio was 42.3%. Refer to the section "Losses and loss adjustment expenses, net" under the Results of Operations for the six months ended June 30, 2026 for further discussion.
Policy acquisition costs, net were $83.6 million for the three months ended June 30, 2026, an increase of $0.7 million, or 0.8%, compared to 2025. Policy acquisition costs, net remained relatively flat despite growth in earned premium, reflecting a change in the composition of expenses following the transition of our business under the Markel Fronting Arrangement. Refer to the discussion of Policy acquisition costs, net within the section "Components of Our Results of Operations" above for additional details.
Policy acquisition costs, net were $101.9 million for the three months ended March 31, 2026, an increase of $24.6 million, or 31.8%, compared to 2025. This increase is due to the transition of our business under the Markel Fronting Arrangement, which resulted in incremental ceding commission expense for in-force policies written in 2025 and assumed at 100% on January 1, 2026. This increase was partially offset by the deferral of costs incurred by our U.S. MGA subsidiary for the successful acquisition or renewal of insurance policies issued under the Markel Fronting Arrangement, beginning in 2026. These deferred costs are amortized over the average policy life of 12 months. For further details on our accounting policy related to deferred acquisition costs, refer to Note 2 — Summary of Significant Accounting Policies in Item 1 of Part I of this Quarterly Report for additional information.
Underwriting and other insurance expenses were $59.6$62.9 million for the three months ended MarchJune 31,30, 2026, an increase of $58.2$61.7 million compared to 2025. This increase is primarily due to the transition of our business under the Markel Fronting Arrangement, which required a different classification of certain costs in our Condensed Consolidated Statements of Operations. Beginning in 2026, because we now control the Essentia book of business, certain operating costs incurred by our U.S. MGA subsidiary in support of our risk taking activities are classified within "Underwriting and other insurance expenses.expenses". In 2025, prior to assuming control of the Essentia book of business, these costs were categorized within "Selling, general, and administrative expenses.expenses".
Net investment income and Net investment lossesgains
The following table presents the components of Net investment income and Net investment lossesgains related to the Insurance segment for the three months ended MarchJune 31,30, 2026 and 2025:
The increase in Net investment income wasis due to an increase in the size of our fixed maturity securities portfolio for the three months ended March 31, 2026, when compared to the prior year. The increase in Net investment lossesgains wasis primarily driven by unrealized lossesgains on equity securities in the period.
Commission and fee revenue was $16.4$23.7 million for the three months ended MarchJune 31,30, 2026, a decrease of $83.9$119.6 million, or 83.6%,83.5%, compared to 2025. This decrease wasis primarily due to the transition of our business under the Markel Fronting Arrangement. Due to the expanded underwriting and claims authority granted to us under the Markel Fronting Arrangement, we now control the Essentia book of business and, as a result, beginning on January 1, 2026, the benefit of our MGA services is being received by Hagerty Re and not Essentia. As a result, effective in the first quarter of 2026, we no longer recognize commission revenue for Essentia-originated policies in our Condensed Consolidated Financial Statements. This decrease wasis partially offset by an increase of $5.4$5.0 million related to policies written under the State Farm Master Alliance Agreement.
Membership and other revenue was $22.1$21.4 million for the three months ended MarchJune 31,30, 2026, an increase of $1.3$0.6 million, or 6.0%,3.0%, compared to 2025. This increase wasis primarily due to a $1.5 million, or 10.3%,10.1%, increase in revenue attributable to new insurance policies issued with a bundled HDC membership.membership, partially offset by a decrease of $0.7 million in advertising revenue.
Selling, general, and administrative expenses were $46.9$55.9 million for the three months ended MarchJune 31,30, 2026, a decrease of $69.1$75.7 million, or 59.6%,57.5%, compared to 2025. This decrease is primarily due to the transition of our business under the Markel Fronting Arrangement, which required a different classification of certain costs in our Condensed Consolidated Statements of Operations. Beginning in 2026, because we now control the Essentia book of business, certain costs incurred by our U.S. MGA subsidiary in support of our risk taking activities, are classified within "Losses and loss adjustment expenses, net,net", "Policy acquisition costs, net,net", and "Underwriting and other insurance expenses.expenses". In 2025, prior to assuming control of the Essentia book of business, these costs were categorized within "Selling, general, and administrative expenses.expenses".
The following table summarizes Marketplace segment results of operations for the three months ended MarchJune 31,30, 2026 and 2025, and the dollar and percentage changechanges between the two periods:
HGTY insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 1 Form 4 filing (1 insider, 1 trade date, 9,500 shares, about $99.4K) and open-market sales in 3 filings (2 insiders, 5 trade dates, 10,650,958 shares, about $122.2M; 2 of these filings say the sales were made under a Rule 10b5-1 trading plan). Net open-market shares: -10,641,458 (purchases minus sales); net value about -$122.1M.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-10-02 | Chafey Diana |
Grant/award | 979 | $12.79 | $12.5K |
| 2026-10-02 | Mcclymont Patrick |
Grant/award | 1,192 | $12.79 | $15.2K |
| 2026-10-01 | Chafey Diana |
Shares withheld for tax | 1,076 | $13.46 | $14.5K |
| 2026-10-01 | Delaney Kevin M |
Shares withheld for tax |
959 | $13.46 | $12.9K |
| 2026-09-24 | Kauffman Robert I |
Gift | 74,000 | — | — |
| 2026-09-11 | Markel Group Inc. |
Conversion | 7,836,411 | — | — |
| 2026-09-11 | Hagerty Holding Corp. |
Open-market sale | 1,387,500 | $11.47 | $15.9M |
| 2026-09-11 | Hagerty Holding Corp. |
Conversion | 1,387,500 | — | — |
| 2026-09-09 | Hagerty Holding Corp. |
Open-market sale | 9,250,000 | $11.47 | $106.1M |
| 2026-09-09 | Hagerty Holding Corp. |
Conversion | 9,250,000 | — | — |
| 2026-07-02 | Delaney Kevin M |
Open-market sale |
3,113 | $12.25 | $38.1K |
| 2026-07-01 | Briglia Jeffrey Edward |
Shares withheld for tax | 4,892 | $12.06 | $59.0K |
| 2026-07-01 | Bjornstad Henrik Waersted |
Grant/award | 10,114 | — | — |
| 2026-07-01 | Delaney Kevin M |
Open-market sale |
9,440 | $12.10 | $114.2K |
| 2026-07-01 | Delaney Kevin M |
Shares withheld for tax |
2,525 | $12.06 | $30.5K |
| 2026-06-30 | Delaney Kevin M |
Open-market sale |
905 | $12.01 | $10.9K |
| 2026-05-15 | Kuczinski Anthony J |
Open-market purchase | 9,500 | $10.46 | $99.4K |
Well-known investors holding HGTY (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Markel Group (Tom Gayner) | 2026-06-30 | 3,108,000 | $35.9M | 0.27% | No change |
| Renaissance Technologies | 2026-06-30 | 73,268 | $873.4K | 0.0% | Reduced 54% |
| Two Sigma Investments | 2026-06-30 | 71,610 | $853.6K | 0.0% | Reduced 22% |
| D. E. Shaw & Co. | 2026-06-30 | 48,129 | $573.7K | 0.0% | Reduced 44% |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 36,414 | $434.1K | 0.0% | Added 68% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 32,337 | $385.5K | 0.0% | Added 156% |
| Millennium Management (Israel Englander) | 2026-06-30 | 14,182 | $169.0K | 0.0% | Reduced 73% |