Hagerty (HGTY) Q1 FY26 earnings call: guidance and Q&A

Given Q1 EBITDA is strong, should we annualize it, or are there seasonal factors and expense ramps that will affect the full-year trend?

Business seasonality has not changed, and expenses are expected to ramp up over the year as headcount slots are filled. Therefore, Q1 results should not be simply annualized for full-year projections.

“I wouldn't just annualize the first quarter. Hopefully, that's helpful that gives you a direction.”

asked by Pablo Singzon · answered by Patrick McClymont

How is increasing competition in personal auto affecting the classic car insurance business, and how does it impact the rollout of Enthusiast Plus?

When standard auto rates increase, it creates shopping behavior that benefits Hagerty. Currently, standard auto carriers are holding steady, but Hagerty's core business is seeing strong PIF growth. The current market environment does not heavily influence Enthusiast Plus plans as it's in early rollout in one state.

“we're seeing very strong year-over-year PIF growth in the core business, not just because of the additional new partnership accounts that are coming in from State Farm and others.”

asked by Pablo Singzon · answered by McKeel Hagerty

Given the European auction expansion, what is Hagerty's appetite for international expansion of its insurance business?

Hagerty has had an international business for over 20 years in the U.K. The strategy for Europe is to first understand the market through successful auctions, then decide if insurance needs to be added. Brexit has made direct insurance operations across Europe more difficult from the U.K., so the focus is currently on rounding out the auction schedule on the continent.

“the order of things for us first is understand the market with these European auctions, getting that kind of sales team in force, in place, understanding the event environment and then deciding whether insurance is something that needs to be added on the back.”

asked by Michael Phillips · answered by McKeel Hagerty

Can you elaborate on the strengthening of the in-house claims team, its reasons, and how it relates to business changes?

Hagerty has always handled claims in-house, but with 100% risk retention, investments were made to upgrade the team. This involves bringing big auto industry claims expertise while understanding the unique nature of repairing vintage cars. The team has increased the number of claims handled in-house, leading to increased velocity, better customer service, and improved economic outcomes, acting as a differentiator.

“The claims organization that they've changed the mix, right? The meaningfully increased the number of claims that are dealt with in-house versus using independent adjusters. And every time they've increased that baseline, they've proven that the return on that is pretty compelling.”

asked by Michael Phillips · answered by Patrick McClymont

How should we think about PIF seasonality, especially with the State Farm conversions, and will Q1 remain the lowest growth quarter?

State Farm conversions are driving a meaningful, non-seasonal increase in PIF. The traditional business still follows seasonal trends, with Q1 typically being lower and ramping up through summer. Overall, there's attractive healthy growth in the traditional core business alongside State Farm.

“So this year -- last year, this year, next year, we do have the impact of the State Farm conversions. And so that's driving a meaningful increase in PIF. And that is not seasonal, right?”

asked by Elyse Greenspan · answered by Patrick McClymont

Can you revisit the prior year development, its source (e.g., lower severity), and any read-through for reserve seasoning?

The $6.5 million PYD reduction in Q1 was predominantly from the 2025 accident year, continuing a trend from Q4. It's a combination of good severity, lower frequency, and improved claims outcomes. The historical book of losses is maturing attractively, leading to a better position. This is a mark-to-market for prior years, and the company feels solid about its current position.

“So the prior year is about $6.5 million reduction that we had in the first quarter. And you'll recall in the fourth quarter, we had about a $20.5 million reduction in reserves. So this is a continuation.”

asked by Charles Peters · answered by Patrick McClymont

Can you quantify the benefit of members voluntarily insuring appreciating vehicles for higher guaranteed values?

Over the last 15 years, this factor has averaged low single digits annually. While some years it might tick down or be mid-to-high single digits, the long-term average is low single digits. This is a structural advantage compared to standard auto where vehicles depreciate.

“Yes, Mark, we've looked at all that over the last 15 years, as McKeel described, on average, it ends up being low single digits. In those 15 years, there's only 2 years where it ticked down a little bit, and that can happen. And then some years, it's mid-single digits or even high single digits. But in the long run, it ends up being that low single-digit type number.”

asked by Mark Hughes · answered by Patrick McClymont