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    HGTY
    Earnings call· Jun 2026(Q2 FY26)

    Hagerty Q2 FY26 earnings call HGTY

    Aug 5, 2026 Source

    Executive summary

    Hagerty Q2 FY26 — Record Growth and Raised Full-Year Outlook

    Hagerty delivered a record-breaking first half of 2026, driven by strong new member acquisition and the benefits of its new Markel fronting arrangement, which significantly boosted earned premium and adjusted EBITDA. Despite GAAP accounting noise related to the transition, the underlying business performance is robust, leading to a significant increase in full-year guidance for written premium, GAAP net income, and adjusted EBITDA. The company continues to expand its market reach through strategic partnerships and a focus on the growing 'Enthusiast Plus' demographic, while maintaining underwriting discipline.

    Highlights

    5

    • First half of 2026 was the best in Hagerty's history, with record gains in policies in force, written premium, earned premium, and adjusted EBITDA.

    • Written premium growth of 19% in Q2 and H1, well ahead of prior full-year expectations of 15% to 16%.

    • Earned premium jumped 42% to $252 million in Q2 due to strong written premium gains and 100% quota share under the new Markel fronting arrangement.

    • Adjusted EBITDA grew 32% to $160 million in H1, driven by increasing scale and cost discipline.

    • Added a record 279,000 new members in H1, surpassing the 3 million vehicle insured milestone in Q2.

    Concerns

    3

    • Reported GAAP revenue in H1 was down 6% to $667 million due to accounting mechanics from the new Markel fronting arrangement.

    • GAAP net loss was $5 million in H1, reflecting the Markel fronting arrangement and amortization of deferred seating commissions.

    • Retention went down 50 basis points year over year and 30 basis points sequentially to 88%, though still within historical range.

    Guidance & targets

    7
    CategoryTargetConfidence
    Full-year Written Premium Growth
    16% to 17%
    high materiality
    High
    Full-year GAAP Net Income
    $18 million to $30 million
    high materiality
    High
    Full-year Adjusted EBITDA
    $270 million to $280 million
    high materiality
    High
    State Farm Policy Conversions Completion
    Fully alive with State Farm by 2028
    medium materiality
    High
    2027 GAAP P&L Normalization
    Clean, steady-state P&L
    medium materiality
    High
    2027 GAAP Revenue Tracking
    More closely track mid-teens written premium growth
    medium materiality
    High
    2030 Policies in Force Target
    3 million policies
    high materiality
    High

    Segment performance

    1
    SegmentRevenueYoYQoQMargin
    Hagerty Marketplace
    Total sales grew 17% in the first half of 2026. Broad Arrow, the high-end live auction business, was the key driver of growth. Private sales were down against a strong prior-year period. The marketplace is also viewed as a customer acquisition machine.
    Broad Arrow Sales Growth: 74%Broad Arrow Sell-Through Rate: 91%
    		$65 million17%——

    Operational metrics

    19
    New Members Added
    279,000record for any comparable six-month period
    H1 FY26

    Boosted by State Farm conversions.

    Vehicles Insured Milestone
    3 million
    Q2 FY26

    Blew through this milestone in the second quarter.

    Enthusiast Plus Quote Volume from Younger Generations
    60%
    YTD

    Quote volume from Gen X, Millennials, and Gen Z now exceeds 60% of total demand.

    Adjusted EBITDA
    $160 millionup 32% year-over-year
    H1 FY26

    Due to benefits of increasing scale combined with cost discipline.

    GAAP Net Loss
    $5 million
    H1 FY26

    Reflecting accounting mechanics from the new Markel fronting arrangement.

    GAAP Revenue
    $667 milliondown 6%
    H1 FY26

    Due to accounting mechanics from the new Markel fronting arrangement.

    Earned Premium
    $252 milliongrew 42%
    Q2 FY26

    Reflecting PIF count-driven written premium gains combined with the increase to 100% quota share in the U.S. book.

    Commission and Fee Revenue
    $24 million
    Q2 FY26

    No longer comparable to prior periods due to elimination of Markel-related commissions in consolidation.

    Marketplace Revenue
    $40 millionup 48%
    Q2 FY26

    Thanks to strong gains for both auction and private sales.

    Hagerty Drivers Club Paid Memberships Growth
    10%
    Q2 FY26

    Reflected in Membership and other revenue.

    Net Investment Income
    $11 million
    Q2 FY26

    Benefiting from larger Hagerty RE investment portfolio and steady returns from fixed income allocation.

    Adjusted EBITDA
    $75 million
    Q2 FY26

    Resulting in first half EBITDA of $160 million.

    GAAP Net Income
    $8 million
    Q2 FY26

    Includes $64 million amortization of deferred seating commissions for 2025 policies.

    Income Tax Benefit
    $6 millionversus an expense of $6 million in prior year
    Q2 FY26

    Driven by non-reversing differences between taxable income and pre-tax book income related to Markel fronting arrangement.

    Unrestricted Cash
    $298 million
    June 2026

    As of June 2026.

    Total Debt
    $216 million
    June 2026

    As of June 2026.

    New Acquisition Expenses Capitalized
    $57 million
    H1 FY26

    These expenses are expected to normalize in 2027, leading to a cleaner P&L.

    GAAP Basic and Diluted Loss Per Share
    $0.02
    Q2 FY26

    Net loss attributable to Class A common shareholders was $2 million.

    Adjusted Loss Per Share
    $0.02
    Q2 FY26

    Based on approximately 361 million weighted average shares of Class A common stock outstanding.

    Industry KPIs

    5
    MetricValueDetails
    Combined ratio90%%
    Capital returnsNot on the agenda over the near term
    Net investment income$11 millionUSD
    Retention persistency88%%
    Net premiums written earned19%%

    Product announcements

    1
    ProductTypeDetails
    Enthusiast Plus programexpansion

    Deals & partnerships

    4
    Bennett'sAcquisition of the second largest specialty motorcycle insurer in the United Kingdom.34 million pounds

    Acquired Bennett's, the second largest specialty motorcycle insurer in the United Kingdom, for 34 million pounds. This opportunistic acquisition is expected to boost scale in an exciting market with a strong member-focused business model.

    State FarmRollout of the highly integrated State Farm Classic Plus program and conversion of existing policies.

    New tranches of states are coming online as planned and on budget for new policy sales. The conversion of State Farm's existing 525,000 collector car policies to the Hagerty platform is also progressing well, with 14 states completing the transition by 2028.

    Liberty MutualNew partnership for insurance programs.

    Excited about the new partnership with Liberty Mutual, with piloting of more programs expected in the coming months.

    ProgressiveSecuring larger cohorts of vehicles and evolving the relationship to cover older vehicles.

    Progress made on securing larger cohorts of vehicles with Progressive. The relationship has evolved to cover vehicles 25 years old and older, expanding the addressable market for quotes.

    Risks & headwinds

    3
    Accounting noise from Markel fronting arrangementFY26

    GAAP revenue down 6% in H1, GAAP net loss of $5 million in H1

    Mitigation: Underlying business performance is stronger than ever; GAAP P&L expected to normalize in 2027 as transition costs amortize and acquisition expenses normalize.

    Inflationary pressures on combined ratioQ2 FY26

    Combined ratio at 90% in Q2

    Mitigation: Investments in underwriting team and in-house claims capabilities result in better outcomes for members and lower loss costs.

    Seasonality of new business and policy growthH2 FY26

    Growth tapers off in Q4

    Mitigation: Normal seasonal pattern is understood and reflected in past numbers; new accounting for earned premium has a smoothing effect on revenue.

    What to watch in Q3 FY26

    4

    GAAP P&L Normalization

    FY27
    CurrentH1 FY26 GAAP net loss of $5M, GAAP revenue down 6%
    TargetProgress towards a clean, steady-state P&L in 2027

    Why it matters

    The normalization of GAAP financials is crucial for investors to clearly assess the underlying profitability and growth of the business, currently masked by transition costs.

    We anticipate that 2027 should reflect a clean, steady-state P&L as these acquisition expenses normalized.

    Q&A highlights

    6

    Has the strategy for integrating 54,000 independent agents shifted to help sell Hagerty policies?

    The independent agent channel is key, but challenging due to its size. The strategy involves focusing on high-producing agents, moving 'zero to one' agents, and educating them on the expanding definition of classic cars to include enthusiast vehicles, using data, communications, and education.

    “We want to be that partner in an agent's office when somebody like this comes in, not just with a really vintage car, but with one of these enthusiast vehicles that they need to send it to us.”

    asked by Thomas Mcjoynt-Griffith · answered by McKeel Hagerty

    2 min read6 chapters

    Detailed Narrative

    01

    Markel Fronting Arrangement Impact and Financial Presentation

    The new Markel fronting arrangement, effective January 1, 2026, significantly altered Hagerty's GAAP financial presentation. While it led to a 6% decline in reported GAAP revenue and a $5 million GAAP net loss in H1, it structurally improved economics by increasing Hagerty's underwriting profits and investment income through a 100% quota share on its US book. This transition also causes MGA commission revenue and seating commission expense to eliminate in consolidation, making current period GAAP figures not directly comparable to prior years. The company expects a cleaner, steady-state P&L in 2027 as these transition effects normalize.

    02

    Record Member and Policy Growth

    Hagerty achieved its best first half in history, adding a record 279,000 new members and surpassing the 3 million vehicle insured milestone in Q2. This growth is driven by expanding interest in both classic and modern enthusiast vehicles, particularly from younger generations (Gen X, Millennials, Gen Z) whose quote volume now exceeds 60% of total demand. The company's high PIF growth and 88% retention rate provide strong visibility into future revenue streams.

    03

    Omni-Channel Distribution and Partnerships

    Omni-channel distribution is a key competitive advantage. The rollout of the State Farm Classic Plus program is progressing well, with agents selling new policies in 37 states and 14 states completing policy conversions by 2028. Hagerty is also expanding partnerships with Liberty Mutual and Progressive, with the latter now covering vehicles 25 years and older. Investments are being made in the independent agency channel to better inform and activate 54,000 agents through straight-through processing and educational resources, targeting an addressable market of 36 million vehicles.

    04

    Hagerty Marketplace Performance

    The Hagerty Marketplace, the company's buy and sell business, saw total sales grow 17% to $65 million in H1. Broad Arrow, the high-end live auction business, was a key driver with a 74% sales increase and a 91% sell-through rate. While private sales were down against a strong prior-year comparable, the marketplace serves as a crucial customer acquisition machine, reinforcing the Hagerty brand and generating potential insurance policies from every vehicle transaction.

    05

    Underwriting Discipline and Cost Management

    Hagerty-Ree maintained strong underwriting discipline, with a combined ratio of 88% in H1 and 90% in Q2, despite inflationary pressures. The company attributes this to 40 years of proprietary data and members who care for their vehicles. Adjusted EBITDA growth of 32% in H1 to $160 million reflects increasing scale combined with effective cost discipline. Investments in underwriting teams and in-house claims capabilities are expected to result in better outcomes and lower loss costs.

    06

    Capital Allocation Strategy

    Hagerty's capital allocation priorities are, first, investments that expand policy count, deepen the flywheel, and improve unit economics; second, strategic acquisitions like Bennett's that expand ecosystem presence (typically modest and infrequent); and third, returning capital to shareholders. The company stated that returning capital to shareholders is not a near-term agenda item given the high returns generated by investing in the business.

    AI-generated summary of the company’s earnings call. Not investment advice.