Hagerty announces Q2 results

Hagerty, a lifestyle brand and leading specialty insurance provider focused on the global automotive enthusiast market, has announced its financial results for the second quarter of 2023.

“We delivered first half revenue growth of 28% as the Hagerty ecosystem of products and services is resonating with car enthusiasts,” said McKeel Hagerty, CEO of Hagerty. “These excellent results were powered by robust written premium growth of 17%, earned premium growth of 34%, and membership and marketplace revenue growth of 53%. Our revenue engine is firing on all cylinders, and we now expect full year 2023 revenue to grow 23-27%.

“Given the strong conversion of this incremental revenue into profits, we have also increased our 2023 outlook for net income and adjusted EBITDA,” he said. “Our significantly improved profitability, combined with the additional capital raised from our strategic investors positions us well to invest in our growth opportunities over the coming years and save driving and car culture for future generations."

Financial Highlights for Q2

• Total Revenue increased by 27% to $261.2 million compared to the same period last year.
• Written Premium grew by 16% to $275.9 million.
• Commission and fee revenue saw a 15% increase to $110.2 million.
• Policies in Force Retention stood at 88% as of June 30, 2023.
• Loss Ratio for the quarter was 42.0%, slightly higher than the previous year.
• The company experienced a 35% increase in earned premium, reaching $127.5 million.
• Membership, marketplace, and other revenue grew by 44% year-over-year to $23.6 million.
• Hagerty Driver's Club (HDC) paid members increased by 7% to approximately 792,000.

Operational Highlights for Q2

• Operating Income for the quarter was $17.3 million compared to $2.4 million in the same period last year.
• Year-to-date results include restructuring charges of $8.4 million, primarily associated with cost containment initiatives.
• Incremental annualized cost savings of $20 to $25 million are anticipated, with around $15 million expected to be realized in 2023.
• Depreciation and amortization for the year-to-date period was $24.1 million, indicating an increase compared to the prior year.
• Net Income for Q2 2023 was $15.5 million, a significant improvement from the previous year's loss.
• Adjusted EBITDA for the quarter rose to $34.4 million.

Outlook for 2023

Despite uncertainties in the macro environment, Hagerty said it was confident in its ability to achieve sustained profitable growth in the coming years. The company has identified opportunities to further expand its share of the addressable market, prioritize growth initiatives, and improve profitability.

Read next: Hagerty reports $15 million Q1 loss, confirms restructuring charge

Key outlook points for 2023 include total revenue growth of 23-27%, sustained double-digit written premium growth, enhanced marketplace experiences, increased loyalty and referrals, and a stronger integration of its insurance business. Net income is projected to range from $(12)-8 million, with adjusted EBITDA expected to be $60-80 million.

Earlier this month, Hagerty announced the appointment of Diana Chafey as chief legal officer. In June, the company announced a successful $105 million capital raise.

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