8-K: Hagerty Reports Strong Q2 2026 Results, Boosts Outlook

Hagerty, Inc. announced robust Q2 2026 financial results, showcasing significant growth in members and written premium, and raised its full-year 2026 outlook.

Summary

• Hagerty, Inc. reported strong operational performance for Q2 2026, with written premium growing 19% year-over-year to $425 million and year-to-date written premium reaching $713 million.
• The company added a record 279,000 new members in the first half of 2026, leading to a 19% year-over-year increase in policies in force to 1.9 million.
• Adjusted EBITDA for the first half of 2026 increased by 32% to $160 million, indicating underlying business strength.
• Despite a reported net loss of $5 million for the first half of 2026 due to $153 million in transitional costs related to the Markel Fronting Arrangement, the company's operational metrics show significant improvement.
• Hagerty has increased its full-year 2026 outlook, now expecting written premium growth of 16-17%, net income between $18 million and $30 million, and Adjusted EBITDA of $270 million to $280 million.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this as a positive report, with strong operational growth metrics and an increased full-year outlook, despite accounting impacts from a strategic transition.

Positives

• Written premium grew 19% year-over-year in Q2 2026 to $425 million and 19% year-over-year in the first half to $713 million.
• A record 279,000 new members were added in the first half of 2026, resulting in a 19% increase in policies in force to 1.9 million.
• Adjusted EBITDA for the first half of 2026 increased 32% to $160 million.
• Cash flow from operating activities increased 91% to $186 million in the first half of 2026.
• The company raised its full-year 2026 outlook for written premium growth (16-17%), net income ($18M-$30M), and Adjusted EBITDA ($270M-$280M).
• Broad Arrow auction sales grew 17% in the first half, with a strong 91% auction sell-through rate.
• The acquisition of Bennetts in the UK is expected to triple Hagerty's scale in the UK specialty motorcycle insurance market.

Negatives

• The company reported a net loss of $5 million for the first half of 2026, compared to a net income of $74 million in the prior year period, largely due to $153 million in transitional costs related to the Markel Fronting Arrangement.
• Total revenue for the first half of 2026 decreased by 6% to $667 million, primarily due to the accounting impact of the Markel Fronting Arrangement eliminating commission and fee revenue.
• Commission and fee revenue decreased by 84% year-over-year in the first half of 2026 due to the transition to the Markel Fronting Arrangement.

Risks

• The company faces risks related to 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 under the Markel Fronting Arrangement.
• Potential risks include the ability to underwrite and price new products, such as Enthusiast+, consistent with expected loss ratios and risk tolerances.
• The company must manage the cyclical nature of the insurance business and broader macroeconomic conditions, including inflation, interest rates, and potential recessionary pressures.
• There is a risk of unexpected increases in the frequency or severity of claims, including catastrophe losses.
• The successful completion of the acquisition of Bennetts on expected terms or timeline, or the realization of its anticipated benefits, is a risk.

Future Outlook

Hagerty has increased its full-year 2026 outlook, projecting written premium growth of 16% to 17%, net income between $18 million and $30 million, and Adjusted EBITDA between $270 million and $280 million. The company anticipates continued compounding profit growth.

Management Comments

• "The first half of 2026 has been the best in Hagerty's history, and our results give us the confidence to significantly increase our full year outlook."
• "We delivered year-to-date written premium growth of 19% and Adjusted EBITDA gains of 32%, reflecting the compounding power of our model as we now control 100% of the economics on our U.S. book."
• "Our momentum is showing up across every part of the Hagerty ecosystem, including crossing three million insured vehicles."
• "Broad Arrow delivered first half revenue growth of 17%, with a 91% auction sell-through rate and demand from buyers on multiple continents."
• "In the third quarter, we will welcome the team and members of Bennetts, the United Kingdom's second largest specialty motorcycle insurance broker to the Hagerty family, tripling our scale in that market."

Industry Context

StockSavvy.ai notes that Hagerty's results reflect a strategic shift towards greater control over its insurance economics via the Markel Fronting Arrangement, a common strategy in the specialty insurance sector to capture more value. The strong growth in members and engagement metrics aligns with broader trends of niche community building and specialized service offerings in enthusiast markets.

Comparison to Industry Standards

• Hagerty's written premium growth of 19% in H1 2026 significantly outpaces the average CAGR of 5% for the 'Industry Top 100' companies.
• The company's loss ratio of 40.6% in H1 2026 is substantially lower than the industry average of 68% for the 'Industry Top 100'.
• Hagerty's combined ratio of 88.1% in H1 2026 is also favorable compared to the industry average loss ratio, suggesting better operational efficiency.
• The company's target market penetration for pre-1981 vehicles is 15.3%, indicating a strong position in its core segment, while post-1980 vehicle penetration is 3.1%, showing room for growth.

Stakeholder Impact

• Shareholders: Increased full-year outlook and strong operational growth are positive indicators for shareholder value.
• Members: Continued investment in the Hagerty Drivers Club and community-focused initiatives aim to enhance member value and engagement.
• Employees: The acquisition of Bennetts and continued growth suggest potential for expanded opportunities.
• Partners (Carriers/Agencies): The strategic shift under the Markel Fronting Arrangement aims to provide greater control and potentially better economics, while maintaining partnerships.

Next Steps

• Continue to grow the core insurance business.
• Broaden and deepen partnerships with top carriers.
• Expand the Enthusiast+ product into more states.
• Make it easier for agencies to do business with Hagerty.
• Produce automotive media and intelligence.
• Accelerate live and digital auctions.
• Welcome Bennetts employees and members to the Hagerty family.
• Continue to monitor and manage risks associated with the Markel Fronting Arrangement.

Key Dates

Recommendation

The company is demonstrating strong operational growth and has raised its outlook, which is positive. However, the significant transitional costs associated with the Markel Fronting Arrangement and the resulting GAAP net loss warrant a cautious approach. While the underlying business is performing well, the accounting complexities and the ongoing integration of acquisitions suggest a 'hold' rating until the full impact of these strategic shifts becomes clearer and the transitional costs subside.

Keywords

specialty insurance, collector cars, automotive, memberships, auctions, financial results, growth outlook, Markel Fronting Arrangement