Earnings release
Page 1
Hagerty Reports Third Quarter 2026 Results; Increases 2026 Growth Outlook November 3, 2026 Year-to-date 2026 Highlights: Strong underlying operational performance with record increase in Members, Written Premium, and Earned Premium Written Premium grew 18% year-over-year to $1,099 million Added a record 402,000 new members during the first nine months of 2026, with 18% policy in force growth to 1.9 million members Earned Premium increased 42% to $757 million Combined ratio for Hagerty Re of 85.2%, including $32 million of lower estimated losses, with $26 million related to the current accident year and $6 million for the 2025 accident year Transition to Markel Fronting Arrangement on January 1, 2026 resulted in decrease to reported revenue as previously disclosed Net Income of $32 million, including $189 million of pre-tax Markel Fronting Arrangement transitional costs, compared to Net Income of $121 million in the prior year period Adjusted EBITDA (a non-GAAP measure) increased 43% to $257 million, compared to $180 million in the prior year period Cash Flow from Operating Activities increased 48% to $280 million Increased 2026 Profit Outlook – Net Income range of $48–$60 million and Adjusted EBITDA range of $305–$315 million TRAVERSE CITY, Mich., Nov. 3, 2026 /PRNewswire/ -- Hagerty, Inc. (NYSE: HGTY) makes it easier and more enjoyable for car enthusiasts to drive and celebrate the vehicles they love — through specialty vehicle insurance, live and digital auctions, engaging media and events, and the Hagerty Drivers Club, the world's largest membership community of car lovers. Today the company announced financial results for the three and nine months ended September 30, 2026. "Third quarter results marked the continuation of the excellent business momentum from the first half of 2026. We grew written premium 18% during the first nine months as we added a record 402,000 new members. Net Income was $32 million and Adjusted EBITDA grew 43% to $257 million, reflecting strong written premium growth combined with the move to controlling 100% of the economics under the new Markel Fronting Arrangement. Given the strength of our results and current trajectory, we are again increasing our expectations for full year 2026," said McKeel Hagerty, Chief Executive Officer and Chairman of Hagerty. "We have built one of the most engaging membership models in the automotive world. This differentiated approach powers sustained written premium growth from adding new members, deepening relationships and creating opportunities to sell other products and services. The Hagerty ecosystem is delivering, with record sales at Monterey car week and an 83% increase in auction sales so far this year," added Mr. Hagerty. THIRD QUARTER 2026 FINANCIAL HIGHLIGHTS Third quarter 2026 Written Premium increased 16% year-over-year to $386 million, and year-to-date 2026 Written Premium increased 18% year-over-year to $1,099 million Third quarter 2026 Earned Premium increased 42% year-over-year to $265 million, and year-to-date 2026 Earned Premium increased 42% year-over-year to $757 million Driven by the Markel Fronting Arrangement which increased Hagerty Re's U.S. quota share from 80% to 100% (including in-force policies written in 2025), as well as growth in subject premiums written by our MGA subsidiaries Policies in Force Retention was 88.2% as of September 30, 2026 compared to 88.6% in the prior year period, and Policies in Force count increased 18% year-over-year to 1.9 million Third quarter 2026 MGA+ reporting unit Commission and fee revenue increased 16% to $160 million, and year-to-date 2026 MGA+ reporting unit Commission and fee revenue increased 17% year-over-year to $447 million, reflecting organic growth in the Essentia and State Farm books of business Assuming control of the Essentia book through the Markel Fronting Arrangement on January 1, 2026 requires the elimination of $138 million of Commission and fee revenue in the third quarter of 2026 and $385 million in the
Page 2
year-to-date period in the Condensed Consolidated Statements of Operations On a consolidated basis, third quarter 2026 Commission and fee revenue decreased 84% year-over-year to $22 million, and year-to-date 2026 Commission and fee revenue decreased 84% year-over-year to $62 million Third quarter 2026 Marketplace revenue decreased 6% year-over-year to $32 million, and year-to-date 2026 Marketplace revenue increased 8% year-over-year to $97 million 83% year-to-date growth in auction sales was offset by lower inventory sales Third quarter 2026 Membership and other revenue increased 2% year-over-year to $22 million, and year-to-date 2026 Membership and other revenue increased 4% year-over-year to $65 million Hagerty Drivers Club (HDC) paid members increased 6% year-over-year to over 977,000 Third quarter 2026 Net investment income increased 25% year-over-year to $13 million, and year-to-date 2026 Net investment income increased 19% year-over-year to $34 million Third quarter 2026 Total Revenue decreased 9% year-over-year to $354 million, and year-to-date 2026 Total Revenue decreased 7% year-over-year to $1,021 million, reflecting the transition to the Markel Fronting Arrangement Third quarter 2026 Hagerty Re Loss Ratio was 32.6% compared to 42.0% in the prior year period, and year-to-date 2026 Hagerty Re Loss Ratio was 37.8% compared to 42.1% in the prior year period Third quarter 2026 Hagerty Re Combined Ratio was 79.7% compared to 89.6% in the prior year period, and year-to-date 2026 Hagerty Re Combined Ratio was 85.2% compared to 89.3% in the prior year period Third quarter 2026 Hagerty Re Loss and Combined Ratios were helped by a $26 million reduction to our estimate of loss and loss adjustment expenses for the current accident year recorded in the third quarter, and year-to-date also includes a $6 million reduction to our estimate of 2025 accident year losses recorded in the first quarter of 2026 Third quarter 2026 Policy acquisition costs, net decreased 29% to $62 million, and year-to-date 2026 Policy acquisition costs, net were flat at $248 million. This variance is a result of a change in the composition of expenses following the transition of our business under the Markel Fronting Arrangement, partially offset by growth in earned premium. The transition to the Markel Fronting Arrangement and adoption of Article 7 reporting standards for insurance companies reclassified certain costs among expense captions on the Condensed Consolidated Statements of Operations, reducing period-over-period comparability of individual captions without affecting total expenses. Beginning in 2026, following our assumption of control over the Essentia book of business, operating costs incurred by our U.S. MGA subsidiary in support of risk-taking activities are classified within Underwriting and other insurance expenses, versus Selling, general, and administrative expenses Together, third quarter 2026 Underwriting and other insurance expenses and Selling, general, and administrative expenses within the Insurance segment decreased 13% to $121 million, and year-to-date 2026 decreased 11% to $347 million. This decrease was primarily a result of the deferral of costs incurred by our MGA subsidiary for the successful acquisition or renewal of insurance policies issued under the Markel Fronting Arrangement. In 2025, these costs were expensed as incurred Third quarter 2026 Income before taxes of $41 million, including $36 million of Markel Fronting Arrangement transitional costs, and year-to-date 2026 Income before taxes of $23 million, including $189 million of Markel Fronting Arrangement transitional costs Third quarter 2026 Net Income of $36 million, including $36 million of pre-tax Markel Fronting Arrangement transitional costs, compared to Net Income of $46 million in the prior year period, and year-to-date 2026 Net Income of $32 million, compared to Net Income of $121 million in the prior year period, including $189 million of pre-tax Markel Fronting Arrangement transitional costs Third quarter 2026 Adjusted EBITDA (a non-GAAP measure) increased 64% year-over-year to $97 million, compared to $59 million in the prior year period, and year-to-date 2026 Adjusted EBITDA increased 43% year-over-year to $257 million, compared to $180 million in the prior year period Third quarter 2026 Basic and Diluted Earnings Per Share were both $0.08, and year-to-date 2026 Basic and Diluted Earnings Per Share were $0.00 Third quarter 2026 Adjusted Diluted Earnings Per Share (a non-GAAP measure) was $0.10, and year-to-date 2026 Adjusted Diluted Earnings Per Share was $0.05 Year-to-date 2026 Cash Flow from Operating Activities increased 48% to $280 million As of September 30, the Company had $461 million of unrestricted cash and $247 million of total debt, $103 million of which was back leverage for Broad Arrow Capital's portfolio of loans collateralized by collector cars The definitions and reconciliations of non-GAAP financial measures are provided under the heading Key Performance Indicators and Non-GAAP Financial Measures at the end of this press release. INCREASED 2026 OUTLOOK - COMPOUNDING GROWTH We believe 2026 is on track to be another great year of underlying profit growth for Hagerty as our team executes on our long-term plan to deliver compounding premium growth through investing in our long-term competitive advantages with our member-centric approach. As of January 1, 2026, we moved to a 100% quota share arrangement with our long-term partner, Markel, where we retain 100% of the premium and risk from our high-quality, historically low volatility underwriting. We also remain focused on delivering this growth more efficiently through the benefits of scale, continued cost discipline, and investments in our technology platform. For full year 2026, Hagerty anticipates: Written Premium growth of 16%–17%
Page 3
Total Revenue change of (8)%–(7)%, as Markel-related commission revenue is eliminated under the Markel Fronting Arrangement1 Net Income of $48 million–$60 million, including ~$199 million of Markel Fronting Arrangement transitional costs 2 Adjusted EBITDA of $305 million–$315 million Prior 2026 Outlook1 ($) Revised 2026 Outlook ($) in thousands 2025 Results Low End High End Low End High End Total Written Premium $1,193,548 $1,385,000 $1,397,000 $1,385,000 $1,397,000 Total Revenue2 $1,456,389 $1,325,000 $1,340,000 $1,340,000 $1,354,000 Net Income3, 4 $149,225 $18,000 $30,000 $48,000 $60,000 Adjusted EBITDA5 $236,791 $270,000 $280,000 $305,000 $315,000 1 Prior 2026 Outlook shared on the Company's second quarter earnings call on August 5th, 2026. 2 Revenue guidance reflects the accounting impact of the Markel Fronting Arrangement. Beginning in 2026, we now control the Essentia book of business with the benefit of our MGA services received by Hagerty Re and not Essentia. As a result, commission revenue and the associated ceding commission expense for policies issued through the Markel Fronting Arrangement are now eliminated in consolidation. Although we expect the arrangement to result in increased profitability (as reflected in Adjusted EBITDA), reported commission revenue and ceding commission expense will be significantly lower than prior periods, affecting period-to-period comparability. 2025 commission revenue associated with our alliance agreement with Markel was $437 million and 2025 ceding commission expense related to the Company's reinsurance quota share agreement with Markel was $344 million. 3 The projected Net Income includes approximately $199 million of pre-tax transitional costs related to the Markel Fronting Arrangement representing deferred ceding commissions paid to Markel for policies written prior to January 1, 2026, which will be fully amortized ratably over the remaining term of those policies throughout 2026. This amortization will decline to approximately $10 million in Q4 2026 as 2025 policies expire. Excluding these transitional costs, we expect 2026 to reflect underlying profitability improvement. 4 Full year 2025 Net Income includes (i) the benefit from the $42 million release of a portion of our valuation allowance, partially offset by a $32 million loss related to the change in value of the TRA liability; and (ii) a $21 million reduction in reserves in the fourth quarter, primarily related to favorable development for the 2024 accident year and improvement in current accident year experience. 5 See section "Key Performance Indicators and Non-GAAP Financial Measures" below for additional information regarding this non-GAAP financial measure. Conference Call Details Hagerty will hold a conference call to discuss the financial results on Tuesday, November 3, 2026 10:00 am Eastern Time. A webcast of the conference call, including its Investor Presentation highlighting third quarter 2026 financial results, will be available on Hagerty's investor relations website at investor.hagerty.com. To dial-in for the conference call, please register using the link found here to receive your unique dial-in and PIN. Please dial the number 10 minutes prior to the scheduled start time. A webcast replay of the call will be available at investor.hagerty.com following the call. Forward-Looking Statements This press release contains statements that constitute "forward-looking statements" within the meaning of the federal securities laws. All statements we provide, other than statements of historical fact, are forward-looking statements, including those regarding Hagerty's future operating results and financial position, Hagerty's business strategy and plans, products, services, and technology implementations, market conditions, growth and trends, expansion plans and opportunities, and Hagerty's objectives for future operations. The words "anticipate," "believe," "envision," "estimate," "expect," "intend," "may," "plan," "predict," "project," "target," "potential," "will," "would," "could," "should," "continue," "ongoing," "contemplate," and similar expressions, and the negatives of these expressions, are intended to identify forward-looking statements. Hagerty has based these forward-looking statements largely on current expectations about future events, which may not materialize. Actual results could differ materially and adversely from those anticipated or implied in forward-looking statements. These factors include, among other things, Hagerty's ability to: (i) compete effectively within Hagerty's industry and attract and retain insurance policyholders and paid Hagerty Drivers Club ("HDC") subscribers; (ii) maintain key strategic relationships with Hagerty's insurance distribution and underwriting carrier partners; (iii) prevent, monitor, and detect fraudulent activity; (iv) manage risks associated with disruptions, interruptions, outages, or other issues with Hagerty's technology platforms or use of third-party services; (v) accelerate the adoption of Hagerty's membership and marketplace products and services, as well as any new insurance programs and products offered; (vi) successfully implement the fronting arrangement consummated with Markel and realize the anticipated benefits while also managing the increased exposure to underwriting volatility, catastrophes, reinsurance counterparty risk, and legal, compliance, and regulatory risks resulting from the shift to Hagerty Re assuming 100% of the risk for policies written through this arrangement; (vii) underwrite and price new products, including Enthusiast+, consistent with expected loss ratios and risk tolerances; (viii) execute Broad Arrow's private sale, auction, and financing strategies; (ix) complete acquisitions or investments on the expected terms or timeline, or at all, and realize the benefits of such acquisitions and investments, including expected earnings enhancements and synergies, including those anticipated from the recently completed acquisition of Bennetts Motorcycling Services Limited ; (x) manage the cyclical nature of the insurance business and broader macroeconomic conditions, including inflation, interest rates, and potential recessionary pressures; (xi) achieve Hagerty's
Page 4
investment objectives and avoid losses in the investment portfolio; (xii) address unexpected increases in the frequency or severity of claims, including catastrophe losses; and (xiii) comply with numerous laws and regulations applicable to Hagerty's business, including without limitation state, federal, and foreign laws relating to insurance and rate increases, privacy and cybersecurity, marketing and advertising, digital services, accounting matters, tax, anti-money laundering, and economic sanctions. The forward-looking statements in this release represent Hagerty's views as of the date hereof. You should not rely on forward- looking statements as predictions of future events. We operate in a very competitive and rapidly changing environment and new risks emerge from time to time. This press release should be read in conjunction with the information included in filings with the SEC and press releases. Understanding the information contained in these filings is important in order to fully understand Hagerty's reported financial results and business outlook for future periods. In addition, this press release contains certain "non-GAAP financial measures". The non-GAAP measures are presented for supplemental informational purposes only. These financial measures are not recognized measures under GAAP and should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. Reconciliations to the most directly comparable financial measure calculated and presented in accordance with GAAP are provided under the heading "Key Performance Indicators and Non-GAAP Financial Measures" below. About Hagerty, Inc. (NYSE: HGTY) Hagerty is a company built by drivers for drivers, protecting 3.1 million vehicles in the United States, Canada and the UK. We make it easier and more enjoyable for car enthusiasts to drive and celebrate the vehicles they love through innovative vehicle insurance products, live and digital auctions, engaging media and events, and the Hagerty Drivers Club, the world's largest membership community of car lovers. For more information, please visit www.hagerty.com or www.newsroom.hagerty.com. Never Stop Driving®. Category: Financial Source: Hagerty Hagerty, Inc. Condensed Consolidated Statements of Operations (Unaudited) Three months ended September 30, 2026 2025 Change REVENUES: in thousands (except percentages and per share amounts) Earned premium, net $ 265,113 $ 187,039 $ 78,074 41.7 % Commission and fee revenue 21,586 137,103 (115,517) (84.3) % Marketplace revenue 32,164 34,356 (2,192) (6.4) % Membership and other revenue 21,908 21,496 412 1.9 % Net investment income 12,720 10,152 2,568 25.3 % Net investment gains 751 1,271 (520) (40.9) % Total revenue 354,242 391,417 (37,175) (9.5) % EXPENSES: Losses and loss adjustment expenses, net 90,261 78,626 11,635 14.8 % Policy acquisition costs, net 62,214 87,411 (25,197) (28.8) % Underwriting and other insurance expenses 66,716 1,500 65,216 N/M Selling, general, and administrative expenses 92,766 178,140 (85,374) (47.9) % Interest expense and other, net 886 32,403 (31,517) (97.3) % Total expenses 312,843 378,080 (65,237) (17.3) % INCOME BEFORE TAXES 41,399 13,337 28,062 N/M Income tax (expense) benefit (5,130) 32,834 (37,964) (115.6) % NET INCOME 36,269 46,171 (9,902) (21.4) % Net income attributable to non-controlling interest (26,058) (25,323) (735) (2.9) % Accretion of Series A Convertible Preferred Stock (1,826) (1,903) (77) (4.0) % NET INCOME ATTRIBUTABLE TO CLASS A COMMON STOCKHOLDERS $ 8,385 $ 18,945 $ (10,560) (55.7) % Earnings per share of Class A Common Stock: Basic $ 0.08 $ 0.18 Diluted $ 0.08 $ 0.11
Page 5
Weighted average shares of Class A Common Stock outstanding: Basic 106,097 96,167 Diluted 107,800 347,240 N/M = Not meaningful Hagerty, Inc. Condensed Consolidated Statements of Operations (Unaudited) Nine months ended September 30, 2026 2025 Change REVENUES: in thousands (except percentages and per share amounts) Earned premium, net $ 756,711 $ 534,179 $ 222,532 41.7 % Commission and fee revenue 61,686 380,677 (318,991) (83.8) % Marketplace revenue 97,474 90,328 7,146 7.9 % Membership and other revenue 65,396 63,102 2,294 3.6 % Net investment income 33,986 28,626 5,360 18.7 % Net investment gains 5,641 2,150 3,491 162.4 % Total revenue 1,020,894 1,099,062 (78,168) (7.1) % EXPENSES: Losses and loss adjustment expenses, net 298,889 224,969 73,920 32.9 % Policy acquisition costs, net 247,777 247,682 95 — % Underwriting and other insurance expenses 189,251 4,079 185,172 N/M Selling, general, and administrative expenses 260,447 483,812 (223,365) (46.2) % Interest expense and other, net 1,836 39,038 (37,202) (95.3) % Total expenses 998,200 999,580 (1,380) (0.1) % INCOME BEFORE TAXES 22,694 99,482 (76,788) (77.2) % Income tax (expense) benefit 8,871 21,184 (12,313) (58.1) % NET INCOME 31,565 120,666 (89,101) (73.8) % Net income attributable to non-controlling interest (25,565) (80,474) 54,909 68.2 % Accretion of Series A Convertible Preferred Stock (5,804) (5,653) 151 2.7 % NET INCOME ATTRIBUTABLE TO CLASS A COMMON STOCKHOLDERS $ 196 $ 34,539 $ (34,343) (99.4) % Earnings (loss) per share of Class A Common Stock: Basic $ 0.00 $ 0.35 Diluted $ 0.00 $ 0.29 Weighted average shares of Class A Common Stock outstanding: Basic 102,995 92,326 Diluted 102,995 346,672 N/M = Not meaningful Hagerty, Inc. Condensed Consolidated Balance Sheets (Unaudited) September 30, December 31, 2026 2025 ASSETS in thousands (except share amounts)
Page 6
Fixed maturity securities available-for-sale, at fair value (amortized cost: $639,905 and $687,813 as of September 30, 2026 and December 31, 2025, respectively) $ 620,823 $ 696,271 Equity securities, at fair value 84,103 34,871 Total investments 704,926 731,142 Cash and cash equivalents 460,796 160,177 Restricted cash and cash equivalents 132,767 138,823 Accounts receivable 27,519 98,872 Premiums receivable 125,223 180,529 Deferred acquisition costs, net 75,516 179,224 Reinsurance recoverables 17,061 15,296 Prepaid reinsurance premiums 53,025 21,950 Notes receivable 168,110 113,887 Intangible assets, net 90,483 88,915 Goodwill 114,134 114,164 Deferred tax assets 86,318 43,011 Other assets 223,556 207,986 TOTAL ASSETS $ 2,279,434 $ 2,093,976 LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS' EQUITY Accounts payable and accrued expenses $ 122,101 $ 111,947 Advance premiums 44,006 28,287 Due to insurers 19,047 94,930 Losses payable and reserves for unpaid losses and loss adjustment expenses 232,132 264,204 Unearned premiums 642,769 412,058 Ceding commissions payable 4,545 86,165 Debt, net 246,398 177,907 Contract liabilities 51,560 46,450 Deferred tax liability 308 23,489 Tax receivable agreement liability 62,858 39,829 Other liabilities 101,491 61,684 TOTAL LIABILITIES 1,527,215 1,346,950 Commitments and Contingencies — — TEMPORARY EQUITY Preferred stock, $0.0001 par value (20,000,000 shares authorized, 8,483,561 Series A Convertible Preferred Stock issued and outstanding as of September 30, 2026 and December 31, 2025) 1 86,822 86,618 STOCKHOLDERS' EQUITY Class A Common Stock, $0.0001 par value (500,000,000 shares authorized, 120,569,434 and 100,706,893 issued and outstanding as of September 30, 2026 and December 31, 2025, respectively) 12 10 Class V Common Stock, $0.0001 par value (300,000,000 authorized, 223,078,245 and 241,552,156 shares issued and outstanding as of September 30, 2026 and December 31, 2025, respectively) 22 24 Additional paid-in capital 659,683 623,013 Accumulated earnings (deficit) (396,960) (402,960) Accumulated other comprehensive income (loss) (5,498) 1,229 Total stockholders' equity 257,259 221,316 Non-controlling interest 408,138 439,092 Total equity 665,397 660,408 TOTAL LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS' EQUITY $ 2,279,434 $ 2,093,976 _______________________________________ 1 The Series A Convertible Preferred Stock is recorded within Temporary Equity because it has equity conversion and cash redemption features. Hagerty, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) Nine months ended September 30,
Page 7
2026 2025 OPERATING ACTIVITIES: in thousands Net income $ 31,565 $ 120,666 Adjustments to reconcile net income to net cash from operating activities: Loss on disposals of equipment, software, and other assets 2,947 1,440 Expense related to TRA Liability — 32,275 Depreciation and amortization 29,213 27,734 Provision for deferred taxes (33,718) (34,413) Impairment of operating lease right-of-use assets 2,057 — Share-based compensation expense 14,926 14,627 Non-cash lease expense 6,279 6,590 Net investment gains (5,641) (2,150) (Accretion) amortization of discount and premium, net (1,821) (3,489) Amortization of gain on loss portfolio transfer (4,478) — Other 472 1,681 Changes in assets and liabilities: Accounts and premiums receivable 118,273 (118,634) Deferred acquisition costs, net 103,708 (36,030) Reinsurance recoverables (1,765) (5,903) Prepaid reinsurance premiums (31,075) (5,674) Advance premiums 15,772 12,656 Due to insurers (75,556) 49,927 Losses payable and reserves for unpaid losses and loss adjustment expenses (32,072) 9,800 Unearned premiums 230,711 81,855 Ceding commissions payable (81,620) 30,084 Other assets and liabilities, net (8,032) 6,843 Net Cash Provided by Operating Activities 280,145 189,885 INVESTING ACTIVITIES: Capital expenditures (23,564) (18,499) Acquisitions, net of cash acquired, and other investments (701) (2,125) Issuance of notes receivable (119,687) (49,095) Collection of notes receivable 72,538 14,832 Purchases of fixed maturity securities (302,630) (223,055) Purchases of equity securities (79,300) (10,565) Proceeds from maturities and sales of fixed maturity securities 352,660 163,369 Proceeds from sales of equity securities 35,395 911 Other investing activities (751) 1,421 Net Cash Used in Investing Activities (66,040) (122,806) FINANCING ACTIVITIES: Repayments of debt (80,950) (170,673) Proceeds from debt, net of issuance costs 150,605 240,701 Proceeds from loss portfolio transfer 50,500 — Claims payments made from loss portfolio transfer (16,876) — Distributions paid to non-controlling interest unit holders (11,132) (30,547) Payment of Series A Convertible Preferred Stock dividends (5,600) (5,600) Funding of TRA Liability payments (1,545) (223) Funding of employee tax obligations upon vesting of share-based payments (4,845) (3,536) Other financing activities 309 289 Net Cash Provided by Financing Activities 80,466 30,411 Effect of exchange rate changes on cash and cash equivalents and restricted cash and cash equivalents (8) 2,312 Change in cash and cash equivalents and restricted cash and cash equivalents 294,563 99,802 Beginning cash and cash equivalents and restricted cash and cash equivalents 299,000 232,845 Ending cash and cash equivalents and restricted cash and cash equivalents $ 593,563 $ 332,647
Page 8
Key Performance Indicators and Non-GAAP Financial Measures 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 Condensed Consolidated Financial Statements prepared in accordance with GAAP. Three months ended September 30, 2026 2025 Change GAAP Financial Measures dollars in thousands (except per share amounts) Total revenue 1 $ 354,242 $ 391,417 $ (37,175) (9.5) % Income before taxes $ 41,399 $ 13,337 $ 28,062 N/M Net income $ 36,269 $ 46,171 $ (9,902) (21.4) % Net income attributable to Class A Common Stockholders $ 8,385 $ 18,945 $ (10,560) (55.7) % Basic earnings per share ("EPS") $ 0.08 $ 0.18 $ (0.10) (55.6) % Diluted EPS $ 0.08 $ 0.11 $ (0.03) (27.3) % Non-GAAP Financial Measures Adjusted EBITDA $ 97,051 $ 59,351 $ 37,700 63.5 % Adjusted Net Income $ 35,618 $ 33,540 $ 2,078 6.2 % Adjusted Diluted EPS $ 0.10 $ 0.09 $ 0.01 11.1 % Insurance Operational Metrics Total Written Premium $ 385,972 $ 334,048 $ 51,924 15.5 % Net Assumed Premium $ 306,495 $ 217,883 $ 88,612 40.7 % Hagerty Re Loss Ratio 32.6 % 42.0 % (9.4) % N/M Hagerty Re Combined Ratio 79.7 % 89.6 % (9.9) % N/M New Business Count — Insurance 123,321 114,513 8,808 7.7 % Marketplace Operational Metrics Aggregate Auction Sales $ 111,610 $ 67,500 $ 44,110 65.3 % Net Auction Sales $ 102,497 $ 61,771 $ 40,726 65.9 % Private Sales $ 99,910 $ 53,124 $ 46,786 88.1 % BAC Average Loan Portfolio $ 154,638 $ 97,106 $ 57,532 59.2 % _________________________________ N/M = Not meaningful 1 Total Revenue for the three months ended September 30, 2025 has been recast to include "Net investment income" and "Net investment gains" as components of revenue in accordance with the Article 7 reporting standards adopted in 2025. Total revenue as previously presented in accordance with Article 5 was $380 million for the three months ended September 30, 2025. Nine months ended September 30, 2026 2025 Change GAAP Financial Measures dollars in thousands (except per share amounts) Total revenue 1 $ 1,020,894 $ 1,099,062 $ (78,168) (7.1) % Income before taxes $ 22,694 $ 99,482 $ (76,788) (77.2) % Net income $ 31,565 $ 120,666 $ (89,101) (73.8) % Net income attributable to Class A Common Stockholders $ 196 $ 34,539 $ (34,343) (99.4) % Basic EPS $ 0.00 $ 0.35 $ (0.35) (100.0) % Diluted EPS $ 0.00 $ 0.29 $ (0.29) (100.0) % Non-GAAP Financial Measures Adjusted EBITDA $ 256,741 $ 180,147 $ 76,594 42.5 %
Page 9
Adjusted Net Income $ 16,286 $ 102,342 $ (86,056) (84.1) % Adjusted Diluted EPS $ 0.05 $ 0.28 $ (0.23) (82.1) % Insurance Operational Metrics Total Written Premium $ 1,099,420 $ 934,360 $ 165,060 17.7 % Net Assumed Premium $ 956,993 $ 610,137 $ 346,856 56.8 % Hagerty Re Loss Ratio 37.8 % 42.1 % (4.3) % N/M Hagerty Re Combined Ratio 85.2 % 89.3 % (4.1) % N/M New Business Count — Insurance 402,168 257,694 144,474 56.1 % Marketplace Operational Metrics Aggregate Auction Sales $ 351,435 $ 192,244 $ 159,191 82.8 % Net Auction Sales $ 320,307 $ 174,821 $ 145,486 83.2 % Private Sales $ 180,876 $ 221,569 $ (40,693) (18.4) % BAC Average Loan Portfolio $ 145,860 $ 80,374 $ 65,486 81.5 % N/M = Not meaningful 1 Total Revenue for the nine months ended September 30, 2025 has been recast to include "Net investment income" and "Net investment gains" as components of revenue in accordance with the Article 7 reporting standards adopted in 2025. Total revenue as previously presented in accordance with Article 5 was $1,068 million for the nine months ended September 30, 2025. September 30, 2026 2025 Change Insurance Operational Metrics dollars in thousands Policies in Force 1,909,254 1,617,231 292,023 18.1 % Policies in Force Retention 88.2 % 88.6 % (0.4) % N/M Vehicles in Force 3,105,819 2,739,037 366,782 13.4 % HDC Paid Member Count 977,456 920,725 56,731 6.2 % Marketplace Operational Metrics BAC Loan Portfolio Balance $ 162,254 $ 100,055 $ 62,199 62.2 % N/M = Not meaningful Adjusted EBITDA We define EBITDA as consolidated Net income, excluding Interest expense and other, net, Income tax expense (benefit), and Depreciation and amortization. We define Adjusted EBITDA as EBITDA, further adjusted to (i) exclude net investment gains and losses; (ii) deduct interest expense related to the State Farm Term Loan; (iii) exclude share-based compensation expense; and when applicable, exclude (iv) restructuring, impairment and related charges; (v) gains, losses and impairments related to divestitures; and (vi) certain other unusual items, such as Markel Fronting Arrangement transitional costs incurred during the three and nine months ended September 30, 2026. How This Measure is Useful When used in conjunction with GAAP financial measures, Adjusted EBITDA is a supplemental measure of operating performance that we believe is a useful measure to evaluate our performance period over period and relative to our competitors and peers. Management uses Adjusted EBITDA to evaluate our operating performance on a consistent basis, as it removes the impact of items not directly resulting from our core operations. We believe the presentation of Adjusted EBITDA provides securities analysts, investors, and other interested parties with a supplemental view of our operating performance that enhances their understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives. Limitations of the Usefulness of This Measure Adjusted EBITDA may differ from similarly titled measures used by other companies due to different methods of calculation, which could reduce the usefulness of this non-GAAP financial measure when comparing our performance to that of other companies. Presentation of Adjusted EBITDA should not be considered in isolation or a substitute for, or superior to, the financial information prepared in accordance with GAAP. A reconciliation of Adjusted EBITDA to Net income (loss), the most directly comparable GAAP measure, is presented below. Three months ended September 30, Nine months ended September 30,
Page 10
2026 2025 2026 2025 in thousands Net income $ 36,269 $ 46,171 $ 31,565 $ 120,666 Interest expense and other, net 1 886 32,403 1,836 39,038 Income tax expense (benefit) 5,130 (32,834) (8,871) (21,184) Depreciation and amortization 9,791 9,413 29,213 27,734 EBITDA 52,076 55,153 53,743 166,254 Net investment gains (751) (1,271) (5,641) (2,150) Interest expense related to State Farm Term Loan 2 (515) (515) (1,545) (1,545) Share-based compensation expense 5,216 5,089 14,926 14,627 Markel Fronting Arrangement transitional costs 3 35,836 — 188,905 — Other unusual items 4 5,189 895 6,353 2,961 Adjusted EBITDA $ 97,051 $ 59,351 $ 256,741 $ 180,147 1 Excludes interest expense related to the BAC Credit Facility, which is recorded within "Selling, general, and administrative expenses" in the Condensed Consolidated Statements of Operations. 2 Interest expense related to the State Farm Term Loan is charged against Adjusted EBITDA as it is directly attributable to the operations of Hagerty Re. 3 Represents the amortization of deferred ceding commissions paid to Markel for policies written prior to January 1, 2026. These costs relate exclusively to policies written prior to our entry into the Markel Fronting Arrangement and are being fully amortized ratably over the remaining term of those policies through December 31, 2026. The amortization of these deferred ceding commissions was $89 million in the first quarter of 2026, $64 million in the second quarter of 2026, $36 million in the third quarter of 2026, and we expect it to decline to approximately $10.0 million in the fourth quarter of 2026 as the remaining 2025 policy terms run off. Management excludes these costs from Adjusted EBITDA because they are transitional charges related solely to deferred ceding commissions on policies written prior to January 1, 2026, are expected to run off by December 31, 2026, and are not indicative of our ongoing operating performance under the Markel Fronting Arrangement. 4 For the nine months ended September 30, 2026, other unusual items includes: (i) a loss related to the write-down of certain fixed assets classified as held-for-sale; (ii) the impairment of certain operating lease right-of-use assets; (iii) professional fees related to the acquisition of Bennetts, as well as the 2026 THG Unit Exchange and related secondary offering; and (iv) additional severance expenses associated with the actions taken in the fourth quarter of 2025. For the nine months ended September 30, 2025, other unusual items includes certain legal settlement expenses, professional fees associated with the 2025 THG Unit Exchange and related secondary offering, and certain material severance expenses. As a result of our transition to Article 7 reporting standards, Net investment income is reported as a component of revenue and is no longer an adjustment in our reconciliation from Net income to Adjusted EBITDA. In addition, interest expense related to the State Farm Term Loan is now deducted from Adjusted EBITDA as it is directly attributable to Hagerty Re, which generates a significant portion of our net investment income. The following table presents a reconciliation of Adjusted EBITDA as presented in the prior period in accordance with Article 5, to the current presentation in accordance with Article 7: Three months ended Nine months ended September 30, 2025 September 30, 2025 in thousands Prior presentation of Adjusted EBITDA $ 49,714 $ 153,066 Net investment income 10,152 28,626 Interest expense related to State Farm Term Loan (515) (1,545) Current presentation of Adjusted EBITDA $ 59,351 $ 180,147 The following table reconciles Adjusted EBITDA for the year ended December 31, 2026 Outlook to the most directly comparable GAAP measure, which is Net income: 2026 Low 2026 High in thousands Net income $ 48,000 $ 60,000 Interest expense and other, net 1 2,000 2,000 Income tax benefit (11,000) (13,000) Depreciation and amortization 40,000 40,000 Share-based compensation expense 21,000 21,000 Other unusual items 2 6,000 — 6,000 Markel Fronting Arrangement transitional costs 3 199,000 199,000
Page 11
Adjusted EBITDA $ 305,000 $ 315,000 1 Excludes interest expense related to the BAC Credit Facility, which is recorded within "Selling, general, and administrative expenses" in the Condensed Consolidated Statements of Operations. 2 Other unusual items include: (i) a loss related to the write-down of certain fixed assets classified as held-for-sale; (ii) the impairment of certain operating lease right-of-use assets; (iii) professional fees related to the acquisition of Bennetts, as well as the 2026 THG Unit Exchange and related secondary offering; and (iv) additional severance expenses associated with the actions taken in the fourth quarter of 2025. 3 Represents the amortization of deferred ceding commissions paid to Markel for policies written prior to January 1, 2026. These costs relate exclusively to policies written prior to our entry into the Markel Fronting Arrangement and are being fully amortized ratably over the remaining term of those policies through December 31, 2026. The amortization of these deferred ceding commissions was $89 million in the first quarter of 2026, $64 million in the second quarter of 2026, $36 million in the third quarter of 2026, and we expect it to decline to approximately $10.0 million in the fourth quarter of 2026 as the remaining 2025 policy terms run off. Management excludes these costs from Adjusted EBITDA because they are transitional charges related solely to deferred ceding commissions on policies written prior to January 1, 2026, are expected to run off by December 31, 2026, and are not indicative of our ongoing operating performance under the Markel Fronting Arrangement. Adjusted Net Income and Adjusted Diluted EPS Adjusted Net Income represents Net income attributable to Class A Common Stockholders, assuming the full exchange or conversion of all outstanding THG units and Series A Convertible Preferred Stock for shares of Class A Common Stock, adjusted to exclude (i) net investment gains and losses; and when applicable, (ii) expense related to the TRA Liability; (iii) restructuring, impairment and related charges; (iv) gains, losses, and impairments related to divestitures; and (v) certain other unusual items. Adjusted Diluted EPS is calculated by dividing Adjusted Net Income by the weighted average shares of Class A Common Stock outstanding, assuming the full exchange, conversion, or vesting of all outstanding THG units, Series A Convertible Preferred Stock, and unvested share-based compensation awards. How These Measures Are Useful When used in conjunction with GAAP financial measures, Adjusted Net Income and Adjusted Diluted EPS are supplemental measures of operating performance that we believe are useful measures to evaluate our performance period over period and relative to our competitors and peers. Management uses Adjusted Net Income and Adjusted Diluted EPS to evaluate our operating performance on a consistent basis, as it removes the impact of items not directly resulting from our core operations. We believe these measures provide securities analysts, investors, and other interested parties with a supplemental view of our operating performance that enhances their understanding of our business and results of operations that may not otherwise be apparent when relying solely on GAAP measures. By assuming the full exchange or conversion of all outstanding THG units and Series A Convertible Preferred Stock, we believe these measures facilitate comparisons with other companies that have different organizational and tax structures, as well as comparisons period over period because it eliminates the effect of any changes in Net income attributable to Class A Common Stockholders driven by increases in Hagerty, Inc.'s ownership in THG, which is unrelated to our operating performance, and excludes items that are unusual or may not be indicative of our ongoing performance. Limitations of the Usefulness of These Measures Adjusted Net Income and Adjusted Diluted EPS may differ from similarly titled measures used by other companies due to different methods of calculation, which could reduce the usefulness of this non-GAAP financial measure when comparing our performance to that of other companies. Presentation of Adjusted Net Income and Adjusted Diluted EPS should not be considered in isolation or a substitute for, or superior to, the financial information prepared in accordance with GAAP. While these measures are useful in evaluating our performance, they assume the full exchange or conversion of all outstanding THG units and Series A Convertible Preferred Stock for shares of Class A Common Stock, which has not occurred and may not occur. Further, the adjustments made to arrive at Adjusted Net Income exclude certain expenses and income that may recur in the future. Adjusted Net Income and Adjusted Diluted EPS should be evaluated in conjunction with our GAAP financial results. A reconciliation of Adjusted Net Income to Net income attributable to Class A Common Stockholders, the most directly comparable GAAP measure, and the computation of Adjusted Diluted EPS are presented below. Three months ended September 30, Nine months ended September 30, 2026 2025 2026 2025 Numerator: in thousands (except per share amounts) Net income attributable to Class A Common Stockholders $ 8,385 $ 18,945 $ 196 $ 34,539 Adjustments: Accretion of Series A Convertible Preferred Stock 1,826 1,903 5,804 5,653 Net income attributable to non-controlling interest 26,058 25,323 25,565 80,474 Net investment gains (751) (1,271) (5,641) (2,150) Expense related to TRA Liability — 29,197 — 32,275 Other unusual items 1 5,189 895 6,353 2,961
Page 12
Tax impact of above adjustments 2 (5,089) (41,452) (15,991) (51,410) Adjusted Net Income $ 35,618 $ 33,540 $ 16,286 $ 102,342 Denominator: Weighted average shares of Class A Common Stock outstanding — Diluted 107,800 347,240 102,995 346,672 Adjustments: Assumed exchange of non-controlling interest THG units for shares of Class A Common Stock 240,970 — 243,676 — Assumed conversion of shares of Series A Convertible Preferred Stock into shares of Class A Common Stock 6,785 6,785 6,785 6,785 Assumed vesting of share-based compensation awards 5,690 7,069 7,884 7,300 Adjusted weighted average shares of Class A Common Stock outstanding — Diluted 361,245 361,094 361,340 360,757 Adjusted Diluted EPS $ 0.10 $ 0.09 $ 0.05 $ 0.28 Three months ended September 30, Nine months ended September 30, 2026 2025 2026 2025 Diluted EPS $ 0.08 $ 0.11$ 0.00$ 0.29 Impact of assumed exchange, conversion, or vesting of remaining potentially dilutive securities 3 0.02 0.01 0.09 0.04 Non-GAAP adjustments 4 0.00 (0.03) (0.04) (0.05) Adjusted Diluted EPS $ 0.10$ 0.09$ 0.05$ 0.28 1 For the nine months ended September 30, 2026, other unusual items includes: (i) a loss related to the write-down of certain fixed assets classified as held-for-sale; (ii) the impairment of certain operating lease right-of-use assets; (iii) professional fees related to the acquisition of Bennetts, as well as the 2026 THG Unit Exchange and related secondary offering; and (iv) additional severance expenses associated with the actions taken in the fourth quarter of 2025. For the nine months ended September 30, 2025, other unusual items includes certain legal settlement expenses, professional fees associated with the 2025 THG Unit Exchange and related secondary offering, and certain material severance expenses. 2 Represents the tax effect of the aforementioned adjustments to reflect corporate income taxes at an estimated effective tax rate of 22.3% and 20.5% for the three months ended September 30, 2026 and 2025, respectively, and 30.4% and 22.8% for the nine months ended September 30, 2026 and 2025, respectively, which considers the U.S. federal statutory rate of 21%, a combined state income tax rate of approximately 5% (net of federal benefits and required valuation allowances), and certain material permanent items. 3 Assumes the exchange, conversion, or vesting of all outstanding THG units, Series A Convertible Preferred Stock, and unvested share-based compensation awards for shares of Class A Common Stock, resulting in the elimination of the non-controlling interest and recognition of the Net income attributable to non-controlling interest, as well as the elimination of the accretion of Series A Convertible Preferred Stock. 4 Represents the per share impact of non-GAAP adjustments for each period. Refer to the reconciliation above for additional information. Comparability Bridge 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 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 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 are being deferred and amortized over the policy term. Accordingly, our entry into the Markel Fronting Arrangement has reduced the period ‑to‑period comparability of our Condensed Consolidated Financial Statements. The following table provides a reconciliation of the standalone results of operations for our Hagerty Re and MGA+ reporting units for the three months ended September 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: Three months ended September 30, 2026
Page 13
Hagerty Re: Essentia Policy Year 2025 (a) Hagerty Re: Essentia Policy Year 2026 & Other Carriers (b) Hagerty Re Total MGA+ (c) Consolidation Entries Insurance Segment REVENUES: in thousands Earned premium, net $ 87,989 $ 177,124 $ 265,113 $ — $ — $ 265,113 Commission and fee revenue — 159,503 (137,917) (e) 21,586 Membership and other revenue — 21,908 — 21,908 Net investment income 10,980 1,304 — 12,284 Net investment gains 751 — — 751 Total revenue 276,844 182,715 (137,917) 321,642 EXPENSES: Losses and loss adjustment expenses, net 86,463 3,798 (d) — 90,261 Policy acquisition costs, net: Ceding commission expense 40,024 74,942 114,966 — (81,157) (e) 33,809 Other policy acquisition costs 8,286 — 20,119 (f) 28,405 Underwriting and other insurance expenses 1,648 95,884 (d) (30,816) (f) 66,716 Selling, general, and administrative expenses — 54,575 — 54,575 Interest expense and other, net (1,022) 15 — (1,007) Total expenses 210,341 154,272 (91,854) 272,759 INCOME BEFORE TAXES $ 66,503 $ 28,443 $ (46,063) $ 48,883 (g) (a) Represents Hagerty Re's earned premium and associated policy acquisition costs related to Essentia policies issued in 2025. (b) Represents Hagerty Re's earned premium and associated policy acquisition costs related to Essentia policies issued in 2026 and through other carriers. (c) The MGA+ reporting unit includes our MGA operations, as well as our membership, events, 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". (e) These consolidation entries are made to eliminate intercompany commission revenue and ceding commission expense between the Hagerty Re and MGA+ reporting units. (f) These consolidation entries are made to defer $30.8 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 September 30, 2026, the amortization of such deferred policy acquisition costs totaled $20.1 million. (g) 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. The following table provides a reconciliation of the standalone results of operations for our Hagerty Re and MGA+ reporting units for the nine months ended September 30, 2026, which reflect the continuing operations of those businesses, to 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. Nine months ended September 30, 2026 Hagerty Re: Essentia Policy Year 2025 (a) Hagerty Re: Essentia Policy Year 2026 & Other Carriers (b) Hagerty Re Total MGA+ (c) Consolidation Entries Insurance Segment REVENUES: in thousands Earned premium, net $ 463,627 $ 293,084 $ 756,711 $ — $ — $ 756,711 Commission and fee revenue — 446,952 (385,266) (e) 61,686 Membership and other revenue — 65,396 — 65,396 Net investment income 29,906 3,123 — 33,029 Net investment gains 5,641 — — 5,641 Total revenue 792,258 515,471 (385,266) 922,463
Page 14
EXPENSES: Losses and loss adjustment expenses, net 285,950 12,939 (d) — 298,889 Policy acquisition costs, net: Ceding commission expense 210,995 122,642 333,637 — (136,345) (e) 197,292 Other policy acquisition costs 14,073 — 36,412 (f) 50,485 Underwriting and other insurance expenses 10,688 266,624 (d) (88,061) (f) 189,251 Selling, general, and administrative expenses — 157,372 — 157,372 Interest expense and other, net (2,933) 807 — (2,126) Total expenses 641,415 437,742 (187,994) 891,163 INCOME BEFORE TAXES $ 150,843 $ 77,729 $ (197,272) $ 31,300 (g) (a) Represents Hagerty Re's earned premium and associated policy acquisition costs related to Essentia policies issued in 2025. (b) Represents Hagerty Re's earned premium and associated policy acquisition costs related to Essentia policies issued in 2026 and through other carriers. (c) The MGA+ reporting unit includes our MGA operations, as well as our membership, events, 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". (e) These consolidation entries are made to eliminate intercompany commission revenue and ceding commission expense between the Hagerty Re and MGA+ reporting units. (f) These consolidation entries are made to defer $88.1 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 nine months ended September 30, 2026, the amortization of such deferred policy acquisition costs totaled $36.4 million. (g) 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. View original content to download multimedia: https://www.prnewswire.com/news-releases/hagerty-reports-third-quarter- 2026-results-increases-2026-growth-outlook-302927103.html SOURCE Hagerty Hagerty Investor: Investor@hagerty.com; Hagerty Media: Press@hagerty.com