8-K: Hagerty Reports Strong 2024 Results, Projects Continued Growth in 2025

Hagerty announces a 20% increase in full-year 2024 revenue, reaching $1.2 billion, and provides an optimistic outlook for 2025 with projected revenue and profit growth.

Summary

• Hagerty, Inc. reported its financial results for the fiscal quarter and year ended December 31, 2024.
• Full year 2024 total revenue increased by 20% year-over-year, reaching $1.2 billion.
• Written premium for the full year increased by 15% year-over-year to $1.044 billion.
• The company added a record 279,000 new members in 2024.
• Marketplace revenue saw a significant increase of 90% year-over-year, totaling $54.3 million for the full year.
• Operating income for the full year increased by 538% year-over-year to $66.4 million.
• Net income for the full year increased by 178% year-over-year to $78.3 million.
• Adjusted EBITDA for the full year increased by 41% year-over-year to $124.5 million.
• Hagerty projects total revenue growth of 12-13% in 2025, with written premium gains of 13-14%.
• Net income is expected to grow by 30-40%, and Adjusted EBITDA by 21-29% in 2025.
• The company anticipates rolling out the State Farm Classic Plus program to over 25 states in 2025.
• Hagerty aims to more than double its policy count to three million by 2030.
• Elevated technology investments of $20 million are planned for 2025, primarily in the new Duck Creek platform.
• The Southern California wildfires are estimated to have an $11 million pre-tax impact in the first quarter of 2025.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong financial results and growth projections. While there are some challenges noted, the overall tone is optimistic and confident.

Positives

• Hagerty experienced significant revenue growth in 2024, reaching $1.2 billion, a 20% increase year-over-year.
• The company's membership base grew substantially, with a record 279,000 new members added in 2024.
• Marketplace revenue saw a remarkable increase of 90% year-over-year, indicating strong performance in this segment.
• Operating income increased significantly by 538% year-over-year, demonstrating improved profitability.
• Net income increased by 178% year-over-year, showcasing strong financial performance.
• Adjusted EBITDA increased by 41% year-over-year, reflecting efficient operations.
• Hagerty projects continued growth in 2025, with revenue expected to increase by 12-13%.
• The company's customer-centric model and automotive expertise are expected to drive further growth.
• Hagerty enjoys a high Net Promoter Score of 82, indicating strong customer satisfaction.
• Policies in Force Retention was 89.0% as of December 31, 2024.
• Hagerty Drivers Club (HDC) paid members increased 7% year-over-year to approximately 876,000.

Negatives

• The loss ratio for the full year 2024 was 46.4%, including a 5.6% impact from catastrophe losses, compared to 41.5% in the prior year period.
• Hurricanes Helene and Milton negatively impacted full year operating margins by 230 bps.
• The Southern California wildfires are estimated to have an $11 million pre-tax impact in the first quarter of 2025.

Risks

• The company's ability to compete effectively and retain policyholders and subscribers is crucial for future success.
• Maintaining key strategic relationships with insurance distribution and underwriting carrier partners is essential.
• The company must effectively manage risks associated with disruptions to its technology platforms.
• Unexpected increases in the frequency or severity of claims could negatively impact financial results.
• The company must comply with numerous laws and regulations applicable to its business.
• The Southern California wildfires are estimated to have an $11 million pre-tax impact in the first quarter of 2025.

Future Outlook

Hagerty anticipates written premium growth of 13-14% and total revenue growth of 12-13% for full year 2025. Net income growth of 30-40% and Adjusted EBITDA growth of 21-29% are also projected. The company expects to more than double its policy count to three million by 2030.

Management Comments

• McKeel Hagerty, CEO and Chairman of Hagerty, stated that 2024 was another excellent year with 20% revenue growth fueled by a record 279,000 new members.
• Mr. Hagerty noted that investments are being made to improve Hagerty and become more efficient in delivering on the brand promise.
• Mr. Hagerty expects written premium growth of 13-14% in 2025 due to Hagerty's customer-centric model and automotive expertise.
• Mr. Hagerty anticipates top-line growth to accelerate in the back half of 2025 with the rollout of the State Farm Classic Plus program.
• Mr. Hagerty added that 2025 will be a year of elevated investment into technology platforms to enable accelerated growth in 2026 and beyond.

Industry Context

Hagerty's focus on the collectible car market and its high Net Promoter Score differentiate it from traditional insurance companies. The partnership with BMW AG for the Concorso d'Eleganza Villa d'Este further solidifies Hagerty's position in the high-end automotive market.

Comparison to Industry Standards

• Hagerty's Net Promoter Score of 82 significantly exceeds the industry average of 39, indicating superior customer satisfaction.
• While specific competitor data isn't provided, Hagerty's growth rates in revenue and membership suggest a strong competitive position within the specialty vehicle insurance market.
• The company's focus on a niche market and its deep understanding of collectible vehicles provide a competitive advantage over general insurance providers.

Stakeholder Impact

• Shareholders can expect continued growth and profitability, with potential for increased stock value.
• Employees can anticipate a stable and growing company with opportunities for advancement.
• Customers will benefit from improved services and a continued focus on customer satisfaction.
• Suppliers can expect continued business and potential for growth.
• Creditors can be confident in the company's ability to meet its financial obligations.

Next Steps

• Roll out the State Farm Classic Plus program to over 25 states in 2025.
• Continue investing in technology platforms, particularly the Duck Creek platform.
• Focus on growing the Insurance, Membership, and Marketplace businesses.
• Present over 70 of the world's highest quality collector cars at auction at The Concorso d’Eleganza Villa d’Este on May 24th.

Key Dates