8-K: Hagerty Accelerates Growth, Posts Record Profitability in 2025

Hagerty, Inc. reported a 17% increase in total revenue and a 91% surge in net income for full year 2025, driven by strong new business growth and strategic investments.

Summary

• Total Revenue increased 17% to $1,456 million in 2025.
• Net Income surged 91% to $149 million in 2025.
• Adjusted EBITDA grew 46% to $237 million in 2025.
• Written Premium increased 14% to $1,194 million in 2025.
• Added a record 371,000 new members in 2025, making progress towards the 3 million policy-in-force target by 2030.
• Marketplace revenue increased 119% to $119 million, driven by European expansion and private sales.
• Successfully renegotiated the Markel arrangement to assume 100% of underwriting and investment economics starting January 1, 2026, expecting a 25% boost in underwriting profits.
• Policies in Force Retention was 88.7% as of December 31, 2025.
• Hagerty Re Combined Ratio improved to 86.6% in 2025 from 94.1% in 2024.
• 2026 outlook projects Written Premium growth of 15% to 16%, but a Net Loss of $(51) million to $(41) million due to ~$190 million in non-cash transition costs related to the Markel Fronting Arrangement. Adjusted EBITDA for 2026 is projected at $236 million to $247 million.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this as a strong performance, with Hagerty exceeding its 2025 financial outlook and making significant strategic advancements. While the 2026 net loss due to transition costs is notable, it's a non-cash accounting impact related to a beneficial long-term strategic shift.

Positives

• Record profitability with Net Income growth of 91% to $149 million in 2025.
• Strong top-line growth: Total Revenue up 17% to $1,456 million and Written Premium up 14% to $1,194 million.
• Record new business growth, adding 371,000 new members in 2025.
• Significant expansion in Marketplace revenue, up 119% to $119 million, driven by European expansion and private sales.
• Improved underwriting performance with Hagerty Re Combined Ratio at 86.6% (down from 94.1% in 2024) and Loss Ratio at 39.3% (down from 46.4% in 2024).
• Strategic Markel arrangement renegotiation to 100% quota share, expected to boost underwriting profits by 25% starting 2026.
• New partnership with Liberty Mutual and Safeco expected to drive growth from 2027.
• Successful rollout of State Farm Classic+ program to 27 states, with conversion of policies in seven states.
• Launch of Enthusiast+ on Duck Creek platform in Colorado to capture late-model collectible insurance flow.
• Exceeded initial 2025 outlook for Total Revenue, Net Income, and Adjusted EBITDA.

Negatives

• Projected Net Loss of $(51) million to $(41) million for 2026, primarily due to approximately $190 million of transitional, non-cash costs related to the Markel Fronting Arrangement.
• Total Revenue for 2026 is projected to decrease by (12)% to (11)% due to accounting changes related to the Markel Fronting Arrangement, as commission revenue is eliminated in consolidation.
• Policies in Force Retention slightly decreased to 88.7% as of December 31, 2025, from 89.0% in the prior year.
• Interest expense and other, net for full year 2025 included a $32 million expense related to a change in the TRA liability.

Risks

• Ability to compete effectively and attract/retain insurance policyholders and HDC subscribers.
• Maintaining key strategic relationships with insurance distribution and underwriting carrier partners.
• Preventing, monitoring, and detecting fraudulent activity.
• Managing risks associated with disruptions, interruptions, outages, or other issues with technology platforms or use of third-party services.
• Accelerating the adoption of membership and marketplace products/services, as well as any new insurance programs and products offered.
• Successfully implementing the fronting arrangement consummated with Markel and realizing 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.
• Underwriting and pricing new products, including Enthusiast+, consistent with expected loss ratios and risk tolerances.
• Executing Broad Arrow's private sale, auction, and financing strategies.
• Managing the cyclical nature of the insurance business and broader macroeconomic conditions, including inflation, interest rates, and potential recessionary pressures.
• Achieving investment objectives and avoiding losses in the investment portfolio.
• Addressing unexpected increases in the frequency or severity of claims, including catastrophe losses.
• Complying with numerous laws and regulations applicable to the 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.

Future Outlook

Hagerty anticipates continued compounding profit growth and reinvestment in its member-centric model for 2026, projecting mid-teens written premium growth (15-16%) and underlying margin expansion. The full 100% quota share arrangement with Markel, effective January 1, 2026, is expected to boost underwriting profits by 25% and generate higher rates of underlying profit growth and cash flow, despite an anticipated GAAP net loss for 2026 due to non-cash transition costs. The company aims to double policies in force to 3 million by 2030.

Management Comments

• "2025 was a standout year for Hagerty, defined by accelerating momentum and record new business count. Top-line gains of 17% were fueled by written premium growth of 14%, and we efficiently converted this revenue into a 91% surge in net income. We also reinvested significantly in our business, including our technology transformation, the launch of Enthusiast+, the roll-out of State Farm to 27 states, as well as our Marketplace expansion into Europe."
• "In 2026, we will continue to invest back into our member-centric model to drive durable, compounding growth, with written premiums expected to increase 15% to 16%. 2026 also marks a major milestone for Hagerty as we move to a 100% quota share with our long-term partner, Markel. We believe this evolution, combined with our technology-led efficiency initiatives, positions us to generate even higher rates of underlying profit growth and cash flow for our shareholders over the coming years."
• "Our goal is bold but simple: double policies in force to 3 million, and 2025 puts us firmly on that trajectory."
• "Our strategy is grounded in a simple truth: growth only matters when its high quality, sustainable, and deeply member-focused. That means maintaining underwriting discipline and delivering a stable, predictable combined ratio below 90% year-after-year."

Industry Context

StockSavvy.ai notes that Hagerty's strong 2025 performance, particularly its 17% revenue growth and 91% net income surge, significantly outpaces general industry trends, which often see more modest growth. The company's focus on the enthusiast vehicle market, including rising generations like Gen X and Millennials, positions it uniquely against broader auto insurance providers. The strategic shift to a 100% quota share with Markel and expansion into Europe for its marketplace activities demonstrate a proactive approach to market capture and profitability enhancement, differentiating it from competitors focused solely on traditional insurance models.

Comparison to Industry Standards

• Hagerty's U.S. Auto Written Premium CAGR of 13% (2010-2025) significantly outperforms the Industry Top 100's CAGR of 5% over the same period.
• Hagerty's average Loss Ratio of 39% (2010-2025) is substantially lower and more stable compared to the Industry Top 100's average Loss Ratio of 68%.
• The company's combined ratio of ~87% for 2025 (including a $21 million reserve reduction) demonstrates strong underwriting discipline, aligning with its stated goal of maintaining a combined ratio below 90% year-after-year, which is a benchmark for healthy insurance operations.

Stakeholder Impact

• Shareholders: Expected higher rates of underlying profit growth and cash flow in coming years due to Markel arrangement; enhanced trading volumes from secondary offering.
• Policyholders/Members: Continued investment in member experience, new products (Enthusiast+), expanded partnerships (State Farm, Liberty Mutual/Safeco), and enhanced claims handling expertise.
• Employees (One Team Hagerty): Acknowledged for hard work and dedication, positioning the company for future growth.
• Partners (Markel, State Farm, Liberty Mutual/Safeco): Evolved and new partnerships indicate strengthened relationships and expanded business opportunities.

Next Steps

• Continue compounding profit growth and reinvestment in the member-centric model in 2026.
• Implement the Markel fronting arrangement with 100% quota share and realize anticipated benefits.
• Accelerate insurance growth with the ongoing State Farm rollout across remaining states, with the balance following in 2027.
• Leverage technology to enhance agent distribution and accelerate business-to-business efforts.
• Further invest in claims handling expertise for members.
• Refine Hagerty Drivers Club value proposition and leverage car culture.
• Invest in technology and Duck Creek platform implementation.
• Convert approximately half a million policies to the new State Farm Classic+ program.
• Continue building out the European marketplace team.
• Achieve the goal of doubling policies in force to 3 million by 2030.

Key Dates

Recommendation

Hagerty's 2025 results demonstrate exceptional growth across key metrics, significantly exceeding its own guidance. The strategic shift to a 100% quota share with Markel, while incurring temporary non-cash accounting losses in 2026, is a long-term positive expected to boost underwriting profits and cash flow. The company's differentiated model, consistent premium growth, and superior loss ratio compared to industry averages, coupled with aggressive expansion into new markets and demographics, position it for sustained high-quality growth. The new partnerships and technology investments further solidify its competitive advantage in the specialized automotive enthusiast market.

Keywords

Hagerty, HGTY, SEC Filing, Q4 2025 Results, Financial Performance, Insurance, Specialty Vehicle Insurance, Collector Cars, Marketplace, Broad Arrow Auctions, Markel Arrangement, State Farm Partnership, Enthusiast+, Written Premium, Net Income, Adjusted EBITDA, Automotive Enthusiast, Financial Reporting