Hagerty has announced a significant restructuring charge after reporting a $15 million net loss for the first quarter of 2023.
Its $5.5 million overhaul includes a reduction in its workforce and slimmed hiring plans, as well as further cost-containment initiatives.
The company anticipates incremental annualized cost savings of between $20 to $25 million from the restructuring, with approximately $15 million to be realized in 2023.
Hagerty CEO McKeel Hagerty expressed confidence the plans would “accelerate [the MGA’s] path to profitability.”
Hagerty has raised its full year 2023 outlook for net income (from a $13 million loss to $7 million profit) and adjusted EBITDA (between $55 to $75 million).
The CEO also cited continued investment in Hagerty Marketplace and the firm’s online platform.
“The opportunity within Marketplace (Hagerty’s platform) is vast, and we will be disciplined in our approach to balance growth with providing the customer support and protection that bolsters our reputation as the trusted brand for auto enthusiasts,” he said.
The specialty MGA initiated two layoffs in December and April, shedding almost 200 staff (about 6% and 4% of its workforce, respectively) as it sought to “drive efficiencies to achieve growth and profitability goals.”
First quarter total revenue for Hagerty grew 30% to $218.4 million and written premium growth also increased 18% to $182.9 million compared to the previous year. The firm’s loss ratio for Q1 stood at 41.3%. compared to 41.4% the year before.
McKeel Hagerty has hailed the results as a “strong start” for the company amid what he called a volatile macroeconomic environment.
“We are confident that the opportunities we have identified to monetize our addressable market will expand our share, and we have thoughtfully prioritized our growth initiatives in 2023 to significantly improve our profitability and fund our purpose to save driving and fuel car culture for future generations,” the company said in a news release.
Hagerty provides insurance coverage for some 2.2 million classic cars and vehicles worldwide, according to its annual report. The Traverse City, Michigan headquartered company operates in the US, Canada, Germany, and the UK.
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