About Hagerty

Hagerty, Inc. provides insurance for classic and enthusiast vehicles worldwide. The company consistently earns strong net promoter scores (NPS) by providing auto enthusiasts superior insurance coverage with excellent customer service and at lower prices than traditional carriers. The company has also leveraged its trusted insurance brand to build a leading automotive lifestyle brand. The company offers an automotive enthusiast platform that protects, engages, entertains and connects with its insurance policyholders and Hagerty Drivers Club (HDC) paid subscribers (collectively, Members) and other car enthusiasts. The company has developed an ecosystem of products, services and entertainment for car lovers that catalyzes their passion for cars and driving. The company’s business offers four highly integrated strategic product areas: Insurance, Membership, Marketplace and Media & Entertainment. Insurance The company provides insurance for more than 2.2 million classic cars and enthusiast vehicle worldwide. Its insurance business model positions it to control the pricing and underwriting of the insurance policies, benefit from steady fee-based income and engage directly with consumers. With the company’s vast network of brokers and agents, and through its strategic insurance partners, it is positioned to capture more of the large and growing enthusiast vehicle insurance market over the coming decade. The company’s insurance model generates two types of revenue: commission and fees and earned premium. As a Managing General Agent (MGA), the company underwrites, sells and services policies on behalf of its carriers and earn commission revenue based on the level of written premiums. Then, because the company has confidence in its underwriting, as demonstrated by its predictably low loss ratios, the company reinsures a portion of the written premium through Hagerty Reinsurance Limited (Hagerty Re) and recognize earned premium as additional revenue. The company utilizes its data science capabilities to benefit both its MGA activities, as well as its risk-taking activities through Hagerty Re. Some examples of how the company utilizes data science include: Underwriting and Risk Assessment: Decades of data allow the company to accurately assess the risk associated with insuring collectible cars through actuarial analysis, which leads to more efficient underwriting and appropriate pricing. Market Analysis: Machine learning algorithms are designed to analyze data on collector car sales and values to identify trends and initiate automated marketing, sales and servicing workflows. Customer Service: AI-powered tools provide instant and accurate responses to Member inquiries, freeing up the company’s member service agents to handle more complex issues and improve the Member experience. Claims Processing: Streamlining the claims process by automating routine tasks and flagging potential fraud. The company is investing substantial resources in research and development to enhance its platform, develop new products and features, and improve the speed, scalability, and security of its platform infrastructure. The company’s research and development organization consists of world-class engineering, product, data, and design teams. These teams work collaboratively to bring its products to life, from conception and validation to implementation. Commission Revenue The company earns commission revenue for the distribution and servicing of classic and collector motor vehicle and boat insurance policies written through personal and commercial lines agency agreements with multiple carriers in the U.S., Canada, and the United Kingdom (U.K.). On average, the company generate commissions equal to 32% of the written premium, as well as up to an additional 10% of contingent underwriting commissions based on achieving targeted loss ratios. The company has a track record of success, including high retention rates of nearly 90% and low loss ratios averaging under 40% over the last decade. The company’s insurance offerings are centered around its ‘Guaranteed Value’ insurance policy which differentiates its coverage from the standard auto insurance market. This means the covered vehicles are insured at their true replacement cost, whereas standard auto coverage is insured at a depreciated value. The company works closely with its Members to determine the right amount of coverage for their vehicle, utilizing Hagerty Valuation Tools (HVT), which has been built over decades of collecting vehicle sales information. Omnichannel Distribution The company’s insurance products are unique due to its omnichannel distribution approach — meaning it sells to its insurance Members wherever they need it. This omnichannel approach allows the company to interact with Members across three channels: directly to consumers; through independent agents and brokers; and through strategic distribution partnerships. Direct Sales Channel The company’s direct sales channel is serviced by its employee agents working across all 50 states and three countries to drive new business flow. Approximately 45% of the company’s total U.S. auto written premium is generated through direct sales. The company connects with its Members at multiple points of engagement whereas typical insurance companies engage with their customers only at the point of purchase and upon renewal. The company has built an ecosystem around the automotive enthusiast that results in multiple interactive touchpoints annually. The company’s insurance policy retention rate is nearly 90% with a typical policy life of approximately nine years, resulting in a strong recurring revenue model in large part because of its leading NPS. Independent Agent and Broker Channel Approximately 33% of the company’s total U.S. auto written premium is generated by the agent and broker channel through its relationships with over 45,000 independent agents and brokers, including the independent agents in its partnership channel. The company’s high-engagement and experiential approach to the market is often co-branded by its agents/brokers to deliver auto enthusiasts an experience the agent/broker could not deliver themselves. Partnership Channel The company also markets its insurance products through its insurance distribution partners. Under these arrangements, the company generally makes its specialty insurance products and related services available to the carrier's brokers and the brokers then refer or present to it their clients who cannot obtain through the carrier itself the types of specialty classic or collector car insurance products and services the client wants or needs. Under one distribution partnership, the company serves as the carrier's exclusive managing general underwriter for classic and collector car insurance products. The company’s focus on collector vehicle products and services reduces competitive threats for partners and raises their confidence in trading with it. Furthermore, the company focuses its investments on developing capabilities that serve the interests of the car enthusiast market. This depth and discipline of focus has enabled the company to maintain a ‘neutral’ and non-threatening partner of choice position with the highest quality automobile insurance companies in the market. The company’s business model is attractive to its partners because it offers a full-service solution for their specialty customers and their specialty cars. The company handles product development and pricing, sales and service, underwriting and claims services on behalf of its underwriting carriers, and it offers Member benefits tailored to the enthusiast all through the company’s proprietary technology and by its sales and service teams. For partners, the company focuses on the collector car space allows them to focus on other parts of their business portfolios. The company then align financial interests so both parties enjoy a gain-share approach to the relationship, which creates strong and more durable institutional bonds. Strategic Agreements State Farm Alliance The company entered into a master alliance agreement with State Farm Mutual Automobile Insurance Company (State Farm) to establish an alliance insurance program whereby State Farm’s customers, through State Farm agents, will have access to the company’s features and services. The company expects to begin these services in the second half of 2023, at which point it will add State Farm's approximately 19,200 agents to its partnership channel. As part of its master alliance agreement with State Farm, the company also entered into a managing general underwriter agreement whereby the State Farm Classic+ policy will be offered through State Farm Classic Insurance Company, a new wholly owned subsidiary of State Farm, subject to any applicable state regulatory review and approval. The State Farm Classic+ policy will be available to new and existing customers through State Farm agents on a state-by-state basis. Hagerty Insurance Agency, LLC will be paid a commission under the managing general underwriter agreement and ancillary agreements for servicing the State Farm Classic+ policies. Additionally, the company has the opportunity to offer HDC membership to State Farm Classic+ customers, which provides it an additional revenue opportunity. Markel Alliance Markel is the ultimate parent company of Essentia Insurance Company (Essentia), which serves as the dedicated carrier for specialty classic and collector vehicle insurance policies sold by the company’s affiliated U.S. and U.K. MGA subsidiaries. Essentia is exclusive to the company’s MGAs and writes no business other than insurance policies for the company. Under this arrangement, the company is licensed and appointed as Essentia’s MGA and is authorized to develop insurance products, underwrite, bill and perform claims services for policies written through Essentia. State laws govern many of the activities under this relationship and the company’s MGAs must maintain the appropriate licensing as a producer and, where required, as an MGA, plus additional requirements in some states for claims adjusting. Essentia cedes premiums and risk through quota share reinsurance agreements to the company’s key insurance distribution partners with the remaining retained premium being ceded to its affiliate, Evanston Insurance Company (Evanston). Evanston, in turn, cedes a portion of the business it reinsures from Essentia, to Hagerty Re. For Evanston to take credit for reinsurance under applicable state law, Hagerty Re maintains funds in trust for the benefit of Evanston. The Markel and Hagerty agreements governing the relationship expire at the end of 2030 and include extension periods. Aviva Canada Alliance Aviva Canada Inc. (Aviva) is the parent company of Elite Insurance Company and serves as the carrier for the company’s affiliated Canadian MGA subsidiary (Hagerty Canada) specialty classic and collector vehicle insurance program. The relationship with Aviva in Canada is exclusive with respect to specialty classic and collector vehicle insurance, with the exception of the Quebec province, where a third-party insurance agency carries the appropriate licenses and authority to submit business to Elite Insurance Company. Hagerty Canada receives compensation in the form of a broker commission. Earned Premium The company reinsures a portion of the written premium through Hagerty Re and recognize earned premium as revenue. Hagerty Re, which was formed in Bermuda, shares in increasing amounts of the underwriting profit generated by the sale of insurance policies through its MGA affiliates. The company’s reinsurance capabilities allow it to efficiently deploy capital and create steady, consistent underwriting results. Importantly, the company’s MGA affiliates also handle the claims for its programs so that it can ensure its Members are receiving high levels of service that are focused on the unique requirements of repairing vintage and rare vehicles. Membership The company focuses on Membership offerings is intended to build a community of car lovers that are loyal to the Hagerty brand due to the multiple valuable points of engagement it provides. Typical insurance businesses engage with their customers only a few times a year. Through the company’s diverse Membership offerings, including HDC and Hagerty Garage + Social, it deploys an ecosystem of engagement, including both physical (through events and social functions) and digital platforms (through media content, social media engagement, market news and valuation data) that can result in numerous touchpoints with Members each year. HDC cultivates strong brand loyalty by providing multiple points of engagement to its approximately 753,000 HDC Members. A paid subscription to HDC gives Members access to the company’s products and services, including Hagerty Drivers Club Magazine, automotive enthusiast events, its proprietary vehicle valuation tool, emergency roadside services and special vehicle-related discounts. As of December 31, 2022, approximately three-quarters of new insurance policyholders purchased a subscription to HDC. Hagerty Garage + Social is a growing nationwide platform of premium, climate-controlled clubhouses and car storage facilities. This platform gives the company a physical brand experience capability across a number of strategic markets in the U.S. and Canada. Hagerty Garage + Social locations are in Bedford Hills, New York; Chicago, Illinois; Delray Beach, Florida; Palm Beach, Florida; Miami, Florida; Redmond, Washington; Van Nuys, California; and Culver City, California. In Canada, the company has a location in Burlington, Ontario. At these locations, Hagerty Garage + Social Members can store their collector vehicles, admire other car lovers’ stored vehicles and interact with similarly minded automotive enthusiasts, and experience events, activations and content in a branded, curated unique setting. Marketplace Marketplace leverages the power of the company’s ecosystem to serve car enthusiasts by offering services for buying and selling collector cars. The market for buying and selling collector cars is substantial, encompassing live and time-based online auctions and private sales. The company estimates that there are approximately 45 million insurable collector cars in the U.S. Marketplace utilizes its live and time-based online auctions, conducted through Broad Arrow, as well as private sales through Hagerty Classifieds and Collectors Garage to facilitate the buying and selling of collector cars through the Hagerty ecosystem. Marketplace also conducts asset-backed financing through Broad Arrow Capital. Marketplace utilizes HVT, the company’s valuation tool used by over three million people each year to access current and historic pricing data on more than 40,000 collector vehicle models based on its robust proprietary database of Hagerty Price Guide values dating as far back as 2006. Media & Entertainment Hagerty Media & Entertainment is how the company creates positive ongoing engagement with its current and prospective Members alike. Producing and distributing quality content and operating world-class car events help the company establishes and maintains its brand and bring additional context and value to Hagerty’s various products, including Insurance, Membership and Marketplace. Hagerty Media features the work of the nation’s top automotive content creators, journalists, and storytellers who bring the world of cars to life in exciting and unexpected ways across a variety of digital, print, and video media formats. Hagerty Media produces exclusive media content for the company’s HDC Members, as well as content it makes available for free and is supported by advertising. The company’s media team covers entertainment, news, market information and vehicle valuation trends, all of which generate an engaged audience that drives retention and brings new Members into the company’s ecosystem. The company sponsors or owns more than 1,800 automotive events annually. Hagerty Events encompasses three of the largest Concours d’Elegance in the U.S. and an eclectic mix of small and large events where people share cars and camaraderie, whether these are small, casual touring events or exclusive drives with some of the finest cars in the world. The company’s team operates marquee Concours d’Elegance events, including the Greenwich Concours, the Detroit Concours and The Amelia. The company also owns and operates the California Mille, RADwood, Concours d'Lemons, and the Motorlux event during the Pebble Beach car week. The company monetizes these events through ticket sales and sponsored activations from hundreds of commercial partnerships. Events also create significant synergies with Insurance, Membership and Marketplace. In 2023, the company will integrate live car auctions with some of its bigger owned events, including The Amelia and Motorlux. Intellectual Property As of December 31, 2022, the company had two issued patents in the U.S. and one in Canada. The issued patents generally relate to the company’s vehicle information number decoder, which allows it to determine vehicle configuration details and associated vehicle values, and its method and system for storage and selective sharing of vehicle data. The issued patents are expected to expire in August 2030, May 2031, and May 2033. The company has trademark rights in its name, its logo, and other brand indicia, and has trademark registrations for select marks in the U.S., Canada, the U.K., the European Union (E.U.), and Australia. The company has copyrights for its media and entertainment content and registered copyrights for its vehicle information tools in the U.S. The company also has registered various domain names related to its brand for websites that it uses in its business, including Hagerty.com. Seasonality Due to its significant North American footprint, the company’s revenue streams, and in particular, commission and fee revenue, exhibit seasonality peaking in the middle of the second calendar quarter (year ended December 2022) and diminishing through the rest of the year, with the lowest relative level of commission and fee revenue expected to occur in the fourth calendar quarter and beginning of the first calendar quarter. This seasonality is due to the fact that more vehicles are driven and purchased during the second and third quarters, and the company’s twelve-month policies renew during those same quarters. History Hagerty, Inc. was founded in 2020.