Hagerty Reports First Quarter 2026 Results; Reaffirms 2026 Growth Outlook
Rhea-AI Summary
Hagerty (NYSE: HGTY) reported Q1 2026 results and reaffirmed 2026 guidance. Key Q1 metrics: Written Premium $289M (+18%), Earned Premium $240M (+42%), Policies in force 1.8M (+15%), Adjusted EBITDA $85M (+77%). Q1 included $89M pre-tax transitional costs from the Markel fronting arrangement; total revenue declined 5% to $312M. Full‑year 2026 outlook: Written Premium +15%–16%, Total Revenue down (12)%–(11)%, Net Loss $(51M)–$(41M) including ~ $190M transitional costs, Adjusted EBITDA $236M–$247M.
AI-generated analysis. Not financial advice.
Positive
- Written premium +18% to $289 million in Q1 2026
- Earned premium +42% to $240 million in Q1 2026
- Policies in force +15% to 1.8 million (record 112,000 new policies)
- Adjusted EBITDA +77% to $85 million in Q1 2026
- Reaffirmed 2026 written premium guidance of +15%–16%
Negative
- Net loss of $13 million in Q1 2026 including $89 million transitional costs
- Total revenue down 5% year‑over‑year to $312 million in Q1 2026
- Commission and fee revenue down 84% to $16 million in Q1 2026
- 2026 revenue guidance down (12)% to (11)% reflecting fronting arrangement
- Full‑year 2026 net loss guidance $(51M)–$(41M) including ~$190M transitional costs
- Unrestricted cash $212 million versus total debt $229 million
News Market Reaction – HGTY
On the day this news was published, HGTY declined 2.14%, reflecting a moderate negative market reaction.
Data tracked by StockTitan Argus on the day of publication.
Key Figures
Market Reality Check
Peers on Argus
HGTY was up 2.18% pre-news while sector peers were mixed (e.g., MCY +2.09%, SIGI +1.83%, KMPR -2.22%, WTM -1.00%, LMND +2.66%). No broad, aligned sector move is indicated.
Previous Earnings Reports
| Date | Event | Sentiment | Move | Catalyst |
|---|---|---|---|---|
| Feb 26 | Full-year 2025 earnings | Positive | +4.0% | Reported strong 2025 growth and introduced 2026 outlook with expected transitional costs. |
| Nov 04 | Q3 2025 earnings | Positive | -1.3% | Raised 2025 outlook after broad revenue growth and margin expansion across segments. |
| Aug 04 | Q2 2025 earnings | Positive | +7.3% | Delivered strong revenue, premium and Marketplace growth; increased full-year 2025 guidance. |
| May 07 | Q1 2025 earnings | Positive | +9.8% | Reported robust Q1 growth and reaffirmed 2025 outlook despite investment and wildfire impacts. |
| Mar 04 | Full-year 2024 earnings | Positive | -1.1% | Announced strong 2024 revenue, premium, and EBITDA growth with optimistic 2025 guidance. |
Recent earnings releases have generally been received positively, with 3 aligned positive reactions and 2 negative divergences despite strong reported growth.
Over the last five earnings-related announcements, Hagerty has consistently highlighted strong growth in revenue, written premium, and profitability. Full-year 2024 and 2025 results showed double‑digit revenue and written premium gains and rising Adjusted EBITDA, while quarterly 2025 reports repeatedly raised outlooks. The company also outlined the transition to a new Markel fronting and 100% quota share structure with expected transitional costs. Today’s Q1 2026 release, featuring premium growth, higher earned premium, and reaffirmed 2026 outlook, fits this pattern of emphasizing durable growth amid business model evolution.
Historical Comparison
Over the past five earnings releases, HGTY’s average next‑day move was about 3.74%, with mostly positive reactions to growth-focused updates.
Earnings updates have traced Hagerty’s evolution from strong 2024–2025 growth into 2026, adding a 100% quota share with Markel and framing transitional costs against steady premium and EBITDA expansion.
Market Pulse Summary
This announcement highlights strong Q1 2026 growth in written premium, earned premium, and membership, while reaffirming a 15–16% written premium outlook and solid Adjusted EBITDA guidance. Reported net loss and a modest revenue decline mainly reflect the new Markel fronting and 100% quota share structure, which changes accounting presentation. Historically, Hagerty has delivered consistent revenue, premium, and EBITDA expansion. Investors may watch how transitional costs trend through 2026 and whether combined ratio improvements and Marketplace momentum continue.
Key Terms
fronting arrangement financial
loss ratio financial
combined ratio financial
Adjusted EBITDA financial
non-GAAP financial
AI-generated analysis. Not financial advice.
First quarter 2026 Highlights
- Completed strategic evolution to assume control of Markel program and
100% of premium post transition to fronting arrangement - Strong underlying operational performance with growth in written premiums, earned premium and members
- Transition to fronting arrangement resulted in decrease to reported revenue as previously disclosed
- Written Premium increased
18% to$289 million - Policies in force increased
15% to 1.8 million with a record 112,000 new policies added in the first quarter
- Policies in force increased
- Earned premium increased
42% to$240 million - Net Loss of
$13 million $89 million $27 million - Adjusted EBITDA (a non-GAAP measure) increased
77% to$85 million $48 million - Reaffirmed 2026 Outlook for Written Premium growth of
15% to16%
"First quarter results and the breadth of momentum across our ecosystem give us increasing confidence in our full year outlook that we reaffirmed today. We delivered
"Our business momentum is showing up across the ecosystem - and Broad Arrow is no exception. During the first quarter, Broad Arrow hosted the most successful sale in the 31-year history of Amelia Car Week, delivering
FIRST QUARTER 2026 FINANCIAL HIGHLIGHTS
- First quarter 2026 Written Premium increased
18% year-over-year to$289 million - First quarter 2026 Earned Premium increased
42% year-over-year to$240 million 100% quota share under the new fronting arrangement- Policies in Force Retention was
88.5% as of March 31, 2026 compared to89.0% in the prior year period, and policies in force count increased15% year-over-year to 1.8 million
- Policies in Force Retention was
- First quarter 2026 Commission and fee revenue decreased
84% year-over-year to$16 million - First quarter 2026 Marketplace revenue decreased
12% year-over-year to$26 million - First quarter 2026 Membership and other revenue increased
6% year-over-year to$22 million - Hagerty Drivers Club (HDC) paid members increased
6% year-over-year to over 940,000
- Hagerty Drivers Club (HDC) paid members increased
- First quarter 2026 Net investment income increased
13% year-over-year to$10 million - First quarter 2026 Total Revenue decreased
5% year-over-year to$312 million - First quarter 2026 Loss before taxes of
$21 million $89 million - First quarter 2026 Hagerty Re Loss Ratio was
38.4% compared to42.0% in the prior year period, including$6 million - First quarter 2026 Hagerty Re Combined Ratio was
86.5% compared to88.5% in the prior year period
- First quarter 2026 Hagerty Re Combined Ratio was
- Transition to new fronting arrangement and Article 7 reporting results in a different classification of certain expenses, impacting the period-to-period comparability of Policy acquisition costs, net (
+ ), Underwriting and other insurance expenses ($25 million + ), and Selling, general, and administrative expenses ($58 million - )$72 million - First quarter 2026 Net Loss of
$13 million $89 million $27 million - First quarter 2026 Adjusted EBITDA (a non-GAAP measure) increased
77% year-over-year to$85 million $48 million - First quarter 2026 Basic and Diluted Loss Per Share were
$(0.06) $(0.04) - The Company had
$212 million $229 million $110 million
The definitions and reconciliations of non-GAAP financial measures are provided under the heading Key Performance Indicators and Certain Non-GAAP Financial Measures at the end of this press release.
2026 OUTLOOK - SUSTAINED COMPOUNDING GROWTH
We believe 2026 is on track to be another great year of underlying profit growth for Hagerty as our team executes on our long-term plan to deliver compounding premium growth through investing in our long-term competitive advantages with our member-centric approach. As of January 1, 2026, we moved to a
- For full year 2026, Hagerty anticipates:
- Written Premium growth of
15% to16% - Total Revenue change of (12)% to (11)%, as Markel-related commission revenue is eliminated under the Markel Fronting Arrangement1
- Net Loss of
$(51) million $(41) million ~ of Markel Fronting Arrangement transitional costs2$190 million - Adjusted EBITDA of
$236 million $247 million
- Written Premium growth of
2026 Outlook ($) | 2026 Outlook (%) | ||||||||
in thousands | 2025 Results | Low End | High End | Low End | High End | ||||
Total Written Premium | 15 % | 16 % | |||||||
Total Revenue1 | (12) % | (11) % | |||||||
Net Income (Loss)2, 3 | N/M | N/M | |||||||
Adjusted EBITDA4 | — % | 4 % | |||||||
1 | Revenue guidance reflects the accounting impact of the Markel Fronting Arrangement. Beginning in 2026, we now control the Essentia book of business with the benefit of our MGA services received by Hagerty Re and not Essentia. As a result, commission revenue and the associated ceding commission expense for policies issued through the Markel Fronting Arrangement are now eliminated in consolidation. Although we expect the arrangement to result in increased profitability (as reflected in Adjusted EBITDA), reported commission revenue and ceding commission expense will be significantly lower than prior periods, affecting period-to-period comparability. 2025 commission revenue associated with our alliance agreement with Markel was |
2 | The projected Net Loss includes approximately |
3 | Full year 2025 Net Income includes (i) the benefit from the |
4 | See Non-GAAP Financial Measures below for additional information regarding this non-GAAP financial measure. |
N/M = Not meaningful |
Conference Call Details
Hagerty will hold a conference call to discuss the financial results on Wednesday, May 6, 2026 10:00 am Eastern Time. A webcast of the conference call, including its Investor Presentation highlighting first quarter 2026 financial results, will be available on Hagerty's investor relations website at investor.hagerty.com. The dial-in for the conference call is (877) 423-9813 (toll-free) or (201) 689-8573 (international). Please dial the number 10 minutes prior to the scheduled start time.
A webcast replay of the call will be available at investor.hagerty.com following the call.
Forward-Looking Statements
This press release contains statements that constitute "forward-looking statements" within the meaning of the federal securities laws. All statements we provide, other than statements of historical fact, are forward-looking statements, including those regarding Hagerty's future operating results and financial position, Hagerty's business strategy and plans, products, services, and technology implementations, market conditions, growth and trends, expansion plans and opportunities, and Hagerty's objectives for future operations. The words "anticipate," "believe," "envision," "estimate," "expect," "intend," "may," "plan," "predict," "project," "target," "potential," "will," "would," "could," "should," "continue," "ongoing," "contemplate," and similar expressions, and the negatives of these expressions, are intended to identify forward-looking statements.
Hagerty has based these forward-looking statements largely on current expectations about future events, which may not materialize. Actual results could differ materially and adversely from those anticipated or implied in forward-looking statements. These factors include, among other things, Hagerty's ability to: (i) compete effectively within Hagerty's industry and attract and retain insurance policyholders and paid Hagerty Drivers Club ("HDC") subscribers; (ii) maintain key strategic relationships with Hagerty's insurance distribution and underwriting carrier partners; (iii) prevent, monitor, and detect fraudulent activity; (iv) manage risks associated with disruptions, interruptions, outages, or other issues with Hagerty's technology platforms or use of third-party services; (v) accelerate the adoption of Hagerty's membership and marketplace products and services, as well as any new insurance programs and products offered; (vi) successfully implement the fronting arrangement consummated with Markel and realize 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
The forward-looking statements in this release represent Hagerty's views as of the date hereof. You should not rely on forward-looking statements as predictions of future events. We operate in a very competitive and rapidly changing environment and new risks emerge from time to time. This presentation should be read in conjunction with the information included in filings with the SEC and press releases. Understanding the information contained in these filings is important in order to fully understand Hagerty's reported financial results and business outlook for future periods. In addition, this presentation contains certain "non-GAAP financial measures". The non-GAAP measures are presented for supplemental informational purposes only. These financial measures are not recognized measures under GAAP and should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. Reconciliations to the most directly comparable financial measure calculated and presented in accordance with GAAP are provided in the appendix to this presentation.
About Hagerty
Hagerty is a company built by drivers for drivers, protecting 2.9 million vehicles in
For more information, please visit www.hagerty.com or www.newsroom.hagerty.com. Never Stop Driving®.
Category: Financial
Source: Hagerty
Hagerty, Inc. | ||||||||
Condensed Consolidated Statements of Operations (Unaudited) | ||||||||
Three months ended March 31, | ||||||||
2026 | 2025 | $ Change | % Change | |||||
REVENUES: | in thousands (except percentages and per share amounts) | |||||||
Earned premium, net | $ 239,642 | $ 169,355 | $ 70,287 | 41.5 % | ||||
Commission and fee revenue | 16,435 | 100,287 | (83,852) | (83.6) % | ||||
Marketplace revenue | 25,652 | 29,086 | (3,434) | (11.8) % | ||||
Membership and other revenue | 22,127 | 20,865 | 1,262 | 6.0 % | ||||
Net investment income | 10,263 | 9,058 | 1,205 | 13.3 % | ||||
Net investment losses | (2,289) | (315) | (1,974) | N/M | ||||
Total revenue | 311,830 | 328,336 | (16,506) | (5.0) % | ||||
EXPENSES: | ||||||||
Losses and loss adjustment expenses | 97,919 | 71,130 | 26,789 | 37.7 % | ||||
Policy acquisition costs, net | 101,922 | 77,333 | 24,589 | 31.8 % | ||||
Underwriting and other insurance expenses | 59,588 | 1,357 | 58,231 | N/M | ||||
Selling, general, and administrative expenses | 72,416 | 144,045 | (71,629) | (49.7) % | ||||
Interest expense and other, net | 922 | 1,689 | (767) | (45.4) % | ||||
Total expenses | 332,767 | 295,554 | 37,213 | 12.6 % | ||||
INCOME (LOSS) BEFORE TAXES | (20,937) | 32,782 | (53,719) | (163.9) % | ||||
Income tax (expense) benefit | 8,192 | (5,489) | 13,681 | N/M | ||||
NET INCOME (LOSS) | (12,745) | 27,293 | (40,038) | (146.7) % | ||||
Net (income) loss attributable to non-controlling interest | 8,254 | (18,922) | 27,176 | 143.6 % | ||||
Accretion of Series A Convertible Preferred Stock | (2,030) | (1,875) | 155 | 8.3 % | ||||
NET INCOME (LOSS) ATTRIBUTABLE TO CLASS A COMMON STOCKHOLDERS | $ (6,521) | $ 6,496 | $ (13,017) | (200.4) % | ||||
Earnings (loss) per share of Class A Common Stock: | ||||||||
Basic | $ (0.06) | $ 0.07 | ||||||
Diluted | $ (0.06) | $ 0.07 | ||||||
Weighted average shares of Class A Common Stock outstanding: | ||||||||
Basic | 101,034 | 90,047 | ||||||
Diluted | 101,034 | 346,311 | ||||||
N/M = Not meaningful |
Hagerty, Inc. | ||||
Condensed Consolidated Balance Sheets (Unaudited) | ||||
March 31, | December 31, | |||
2026 | 2025 | |||
ASSETS | in thousands (except share amounts) | |||
Fixed maturity securities available-for-sale, at fair value (amortized cost: | $ 673,100 | $ 696,271 | ||
Equity securities, at fair value | 47,804 | 34,871 | ||
Total investments | 720,904 | 731,142 | ||
Cash and cash equivalents | 212,371 | 160,177 | ||
Restricted cash and cash equivalents | 154,362 | 138,823 | ||
Accounts receivable | 27,993 | 98,872 | ||
Premiums receivable | 92,446 | 180,529 | ||
Deferred acquisition costs, net | 143,552 | 179,224 | ||
Reinsurance recoverables | 11,863 | 15,296 | ||
Prepaid reinsurance premiums | 40,405 | 21,950 | ||
Notes receivable | 148,944 | 113,887 | ||
Intangible assets, net | 89,125 | 88,915 | ||
Goodwill | 114,150 | 114,164 | ||
Deferred tax assets | 40,092 | 43,011 | ||
Other assets | 228,386 | 207,986 | ||
TOTAL ASSETS | $ 2,024,593 | $ 2,093,976 | ||
LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS' EQUITY | ||||
Accounts payable and accrued expenses | $ 85,847 | $ 111,947 | ||
Advance premiums | 50,748 | 28,287 | ||
Due to insurers | 14,366 | 94,930 | ||
Losses payable and reserves for unpaid losses and loss adjustment expenses | 203,987 | 264,204 | ||
Unearned premiums | 508,003 | 412,058 | ||
Ceding commissions payable | 1,870 | 86,165 | ||
Debt, net | 228,608 | 177,907 | ||
Contract liabilities | 46,383 | 46,450 | ||
Deferred tax liability | 5,697 | 23,489 | ||
Tax receivable agreement liability | 38,284 | 39,829 | ||
Other liabilities | 106,757 | 61,684 | ||
TOTAL LIABILITIES | 1,290,550 | 1,346,950 | ||
Commitments and Contingencies | — | — | ||
TEMPORARY EQUITY | ||||
Preferred stock, | 88,648 | 86,618 | ||
STOCKHOLDERS' EQUITY | ||||
Class A Common Stock, | 10 | 10 | ||
Class V Common Stock, | 24 | 24 | ||
Additional paid-in capital | 626,166 | 623,013 | ||
Accumulated earnings (deficit) | (407,451) | (402,960) | ||
Accumulated other comprehensive income (loss) | (66) | 1,229 | ||
Total stockholders' equity | 218,683 | 221,316 | ||
Non-controlling interest | 426,712 | 439,092 | ||
Total equity | 645,395 | 660,408 | ||
TOTAL LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS' EQUITY | $ 2,024,593 | $ 2,093,976 | ||
1 | The Series A Convertible Preferred Stock is recorded within Temporary Equity because it has equity conversion and cash redemption features. |
Hagerty, Inc. | |||
Condensed Consolidated Statements of Cash Flows (Unaudited) | |||
Three months ended March 31, | |||
2026 | 2025 | ||
OPERATING ACTIVITIES: | in thousands | ||
Net income (loss) | $ (12,745) | $ 27,293 | |
Adjustments to reconcile net income (loss) to net cash from operating activities: | |||
Loss on disposals of equipment, software, and other assets | 213 | 1,136 | |
Depreciation and amortization | 9,706 | 9,488 | |
Provision for deferred taxes | (13,528) | (939) | |
Share-based compensation expense | 4,617 | 4,392 | |
Non-cash lease expense | 2,108 | 2,109 | |
Net investment losses | 2,289 | 315 | |
(Accretion) amortization of discount and premium, net | (1,358) | (1,184) | |
Amortization of gain on loss portfolio transfer | (1,308) | — | |
Other | 575 | 1,852 | |
Changes in assets and liabilities: | |||
Accounts and premiums receivable | 157,636 | (42,812) | |
Deferred acquisition costs, net | 35,672 | 4,196 | |
Reinsurance recoverables | 3,433 | (7,561) | |
Prepaid reinsurance premiums | (18,455) | (8,285) | |
Advance premiums | 22,512 | 19,921 | |
Due to insurers | (80,441) | 25,336 | |
Losses payable and reserves for unpaid losses and loss adjustment expenses | (60,217) | (14,958) | |
Unearned premiums | 95,945 | (5,377) | |
Ceding commissions payable | (84,295) | 1,926 | |
Other assets and liabilities, net | (46,106) | 26,982 | |
Net Cash Provided by Operating Activities | 16,253 | 43,830 | |
INVESTING ACTIVITIES: | |||
Capital expenditures | (7,712) | (5,389) | |
Issuance of notes receivable | (48,133) | (9,886) | |
Collection of notes receivable | 14,014 | 1,650 | |
Purchases of fixed maturity securities | (149,982) | (39,150) | |
Purchases of equity securities | (51,041) | (246) | |
Proceeds from maturities and sales of fixed maturity securities | 167,537 | 48,526 | |
Proceeds from sales of equity securities | 35,405 | 247 | |
Other investing activities | (13) | (233) | |
Net Cash Used in Investing Activities | (39,925) | (4,481) | |
FINANCING ACTIVITIES: | |||
Repayments of debt | (6,159) | (120,880) | |
Proceeds from debt, net of issuance costs | 57,911 | 160,067 | |
Proceeds from loss portfolio transfer | 50,500 | — | |
Claims payments made from loss portfolio transfer | (9,248) | — | |
Distributions paid to non-controlling interest unit holders | (359) | (24,676) | |
Funding of TRA Liability payments | (1,545) | (223) | |
Funding of employee tax obligations upon vesting of share-based payments | (61) | (44) | |
Net Cash Provided by Financing Activities | 91,039 | 14,244 | |
Effect of exchange rate changes on cash and cash equivalents and restricted cash and cash equivalents | 366 | (130) | |
Change in cash and cash equivalents and restricted cash and cash equivalents | 67,733 | 53,463 | |
Beginning cash and cash equivalents and restricted cash and cash equivalents | 299,000 | 232,845 | |
Ending cash and cash equivalents and restricted cash and cash equivalents | $ 366,733 | $ 286,308 | |
Key Performance Indicators and Non-GAAP Financial Measures
Key Performance Indicators
The tables below present a summary of our Key Performance Indicators, which include important operational metrics, as well as certain financial measures prepared in accordance with accounting principles generally accepted in
Three months ended March 31, | ||||||||
2026 | 2025 | Change | ||||||
GAAP Financial Measures | dollars in thousands (except per share amounts) | |||||||
Total Revenue 1 | $ 311,830 | $ 328,336 | $ (16,506) | (5.0) % | ||||
Income (loss) before taxes | $ (20,937) | $ 32,782 | $ (53,719) | (163.9) % | ||||
Net Income (Loss) | $ (12,745) | $ 27,293 | $ (40,038) | (146.7) % | ||||
Basic Earnings (Loss) Per Share | $ (0.06) | $ 0.07 | $ (0.13) | (185.7) % | ||||
Diluted Earnings (Loss) Per Share | $ (0.06) | $ 0.07 | $ (0.13) | (185.7) % | ||||
Non-GAAP Financial Measures | ||||||||
Adjusted EBITDA | $ 85,185 | $ 48,151 | $ 37,034 | 76.9 % | ||||
Adjusted Net Income (Loss) | $ (13,144) | $ 25,352 | $ (38,496) | (151.8) % | ||||
Adjusted Diluted EPS | $ (0.04) | $ 0.07 | $ (0.11) | (157.1) % | ||||
Insurance Operational Metrics | ||||||||
Total Written Premium | $ 288,946 | $ 244,327 | $ 44,619 | 18.3 % | ||||
Net Assumed Premium | $ 317,346 | $ 155,651 | $ 161,695 | 103.9 % | ||||
Hagerty Re Loss Ratio | 38.4 % | 42.0 % | (3.6) % | N/M | ||||
Hagerty Re Combined Ratio | 86.5 % | 88.5 % | (2.0) % | N/M | ||||
New Business Count — Insurance | 111,896 | 55,309 | 56,587 | 102.3 % | ||||
Marketplace Operational Metrics | ||||||||
Aggregate Auction Sales | $ 135,379 | $ 75,336 | $ 60,043 | 79.7 % | ||||
Net Auction Sales | $ 123,436 | $ 68,213 | $ 55,223 | 81.0 % | ||||
Private Sales | $ 36,830 | $ 53,669 | $ (16,839) | (31.4) % | ||||
BAC Average Loan Portfolio | $ 135,270 | $ 62,784 | $ 72,486 | 115.5 % | ||||
N/M = Not meaningful | |
1 | Total Revenue for the three months ended March 31, 2025 has been recast to include Net investment income and Net investment losses as components of revenue in accordance with the Article 7 reporting standards adopted in 2025. Total revenue as previously presented in accordance with Article 5 was |
March 31, | ||||||||
2026 | 2025 | Change | ||||||
Insurance Operational Metrics | dollars in thousands | |||||||
Policies in Force | 1,760,400 | 1,524,927 | 235,473 | 15.4 % | ||||
Policies in Force Retention | 88.5 % | 89.0 % | (0.5) % | N/M | ||||
Vehicles in Force | 2,910,661 | 2,609,209 | 301,452 | 11.6 % | ||||
HDC Paid Member Count | 940,313 | 889,390 | 50,923 | 5.7 % | ||||
Marketplace Operational Metrics | ||||||||
BAC Loan Portfolio Balance | $ 142,956 | $ 73,192 | $ 69,764 | 95.3 % | ||||
N/M = Not meaningful |
Adjusted EBITDA
We define EBITDA as consolidated Net income (loss), excluding Interest expense and other, net, Income tax expense (benefit), and Depreciation and amortization. We define Adjusted EBITDA as EBITDA, further adjusted to (i) exclude net investment gains and losses; (ii) deduct interest expense related to the State Farm Term Loan; (iii) exclude share-based compensation expense; and when applicable, exclude (iv) restructuring, impairment and related charges; (v) gains, losses and impairments related to divestitures; and (vi) certain other unusual items, such as Markel Fronting Arrangement transitional costs during the three months ended March 31, 2026.
How This Measure is Useful
When used in conjunction with GAAP financial measures, Adjusted EBITDA is a supplemental measure of operating performance that we believe is a useful measure to evaluate our performance period over period and relative to our competitors and peers. Management uses Adjusted EBITDA to evaluate our operating performance on a consistent basis, as it removes the impact of items not directly resulting from our core operations. We believe the presentation of Adjusted EBITDA provides securities analysts, investors, and other interested parties with a supplemental view of our operating performance that enhances their understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives.
Limitations of the Usefulness of This Measure
Adjusted EBITDA may differ from similarly titled measures used by other companies due to different methods of calculation, which could reduce the usefulness of this non-GAAP financial measure when comparing our performance to that of other companies. Presentation of Adjusted EBITDA is not intended to be considered in isolation or a substitute for, or superior to, the financial information prepared in accordance with GAAP. A reconciliation of Adjusted EBITDA to Net income (loss), the most directly comparable GAAP measure, is presented below.
Three months ended March 31, | ||||
2026 | 2025 | |||
in thousands | ||||
Net income (loss) | $ (12,745) | $ 27,293 | ||
Interest expense and other, net 1 | 922 | 1,689 | ||
Income tax expense (benefit) | (8,192) | 5,489 | ||
Depreciation and amortization | 9,706 | 9,488 | ||
EBITDA | (10,309) | 43,959 | ||
Markel Fronting Arrangement transitional costs 2 | 88,958 | — | ||
Net investment losses | 2,289 | 315 | ||
Interest expense related to State Farm Term Loan 3 | (515) | (515) | ||
Share-based compensation expense | 4,617 | 4,392 | ||
Other unusual items 4 | 145 | — | ||
Adjusted EBITDA | $ 85,185 | $ 48,151 | ||
1 | Excludes interest expense related to the BAC Credit Facility, which is recorded within "Selling, general, and administrative expenses" in the Condensed Consolidated Statements of Operations. |
2 | Represents the amortization of deferred ceding commissions paid to Markel for policies written prior to January 1, 2026. These costs relate exclusively to policies written prior to our entry into the Markel Fronting Arrangement and are being fully amortized ratably over the remaining term of those policies through December 31, 2026. We expect the amortization of these deferred ceding commissions to decline from |
3 | Interest expense related to the State Farm Term Loan is charged against Adjusted EBITDA as it is directly attributable to the operations of Hagerty Re. |
4 | For the three months ended March 31, 2026, other unusual items includes additional severance expenses associated with the actions taken in the fourth quarter of 2025. |
As a result of our transition to the Article 7 reporting standards, Net investment income is reported as a component of revenue and is no longer an adjustment in our reconciliation from Net income (loss) to Adjusted EBITDA. In addition, interest expense related to the State Farm Term Loan is now deducted from Adjusted EBITDA as it is directly attributable to Hagerty Re, which generates a significant portion of our net investment income. The following table presents a reconciliation of Adjusted EBITDA as presented in the prior period in accordance with Article 5, to the current presentation in accordance with Article 7:
Three months ended | |
in thousands | |
Prior presentation of Adjusted EBITDA | $ 39,608 |
Net investment income | 9,058 |
Interest expense related to State Farm Term Loan | (515) |
Current presentation of Adjusted EBITDA | $ 48,151 |
The following table reconciles Adjusted EBITDA for the year ended December 31, 2026 Outlook to the most directly comparable GAAP measure, which is Net income (loss):
2026 Low | 2026 High | |||
in thousands | ||||
Net loss 1 | $ (51,000) | $ (41,000) | ||
Interest expense and other, net 2 | 5,000 | 5,000 | ||
Income tax expense | 33,000 | 34,000 | ||
Depreciation and amortization | 40,000 | 40,000 | ||
Share-based compensation expense | 19,000 | 19,000 | ||
Markel Fronting Arrangement transitional costs 1 | 190,000 | 190,000 | ||
Adjusted EBITDA | $ 236,000 | $ 247,000 | ||
1 | Represents the amortization of deferred ceding commissions paid to Markel for policies written prior to January 1, 2026. These costs relate exclusively to policies written prior to our entry into the Markel Fronting Arrangement and are being fully amortized ratably over the remaining term of those policies through December 31, 2026. We expect the amortization of these deferred ceding commissions to decline from |
2 | Excludes interest expense related to the BAC Credit Facility, which is recorded within "Selling, general, and administrative expenses" in the Condensed Consolidated Statements of Operations. |
Adjusted Net Income (Loss) and Adjusted Diluted EPS
Adjusted Net Income (Loss) represents Net income (loss) attributable to Class A Common Stockholders, assuming the full exchange of all outstanding THG units and Series A Convertible Preferred Stock for shares of Class A Common Stock, adjusted to exclude (i) net investment gains and losses; and when applicable, (ii) changes in the TRA Liability; (iii) gains and losses related to divestitures; and (iv) certain other unusual items, each of which we do not believe are directly related to our core operations and may not be indicative of our ongoing performance. Adjusted Diluted EPS is calculated by dividing Adjusted Net Income (Loss) by the weighted average shares of Class A Common Stock outstanding, assuming the full exchange of all outstanding THG units, Series A Convertible Preferred Stock, and unvested share-based compensation awards.
How These Measures Are Useful
When used in conjunction with GAAP financial measures, Adjusted Net Income (Loss) and Adjusted Diluted EPS are supplemental measures of operating performance that we believe are useful measures to evaluate our performance period over period and relative to our competitors and peers. Management uses Adjusted Net Income (Loss) and Adjusted Diluted EPS to evaluate our operating performance on a consistent basis to make strategic and operational decisions. We believe these measures provide management and investors with useful information regarding trends in our business that may not otherwise be apparent when relying solely on GAAP measures. By assuming the full exchange of all outstanding THG units and Series A Convertible Preferred Stock, we believe these measures facilitate comparisons with other companies that have different organizational and tax structures, as well as comparisons period over period because it eliminates the effect of any changes in Net income (loss) attributable to Class A Common Stockholders driven by increases in Hagerty, Inc.'s ownership in THG, which is unrelated to our operating performance, and excludes items that are unusual or may not be indicative of our ongoing performance.
Limitations of the Usefulness of These Measures
Adjusted Net Income (Loss) and Adjusted Diluted EPS may differ from similarly titled measures used by other companies due to different methods of calculation. Presentation of Adjusted Net Income (Loss) and Adjusted Diluted EPS should not be considered alternatives to Net income (loss) attributable to Class A Common Stockholders and Diluted EPS, as determined under GAAP. While these measures are useful in evaluating our performance, they assume the full exchange of all outstanding THG units and Series A Convertible Preferred Stock for shares of Class A Common Stock, which has not occurred and may not occur. Further, the adjustments made to arrive at Adjusted Net Income (Loss) exclude certain expenses and income that may recur in the future. Adjusted Net Income (Loss) and Adjusted Diluted EPS should be evaluated in conjunction with our GAAP financial results. A reconciliation of Adjusted Net Income (Loss) to Net income (loss) attributable to Class A Common Stockholders, the most directly comparable GAAP measure, and the computation of Adjusted Diluted EPS are presented below.
Three months ended March 31, | ||||
2026 | 2025 | |||
Numerator: | in thousands (except per share amounts) | |||
Net income (loss) attributable to Class A Common Stockholders | $ (6,521) | $ 6,496 | ||
Adjustments: | ||||
Accretion of Series A Convertible Preferred Stock | 2,030 | 1,875 | ||
Net income (loss) attributable to non-controlling interest | (8,254) | 18,922 | ||
Net investment losses | 2,289 | 315 | ||
Other unusual items 1 | 145 | — | ||
Tax impact of above adjustments 2 | (2,833) | (2,256) | ||
Adjusted Net Income (Loss) | $ (13,144) | $ 25,352 | ||
Denominator: | ||||
Weighted average shares of Class A Common Stock outstanding — Diluted | 101,034 | 346,311 | ||
Adjustments: | ||||
Assumed exchange of non-controlling interest THG units for shares of Class A Common Stock | 245,102 | — | ||
Assumed conversion of shares of Series A Convertible Preferred Stock into shares of Class A Common Stock | 6,785 | 6,785 | ||
Assumed vesting of share-based compensation awards | 8,007 | 6,881 | ||
Adjusted weighted average shares of Class A Common Stock outstanding — Diluted | 360,928 | 359,977 | ||
Adjusted Diluted EPS | $ (0.04) | $ 0.07 | ||
Three months ended March 31, | ||||
2026 | 2025 | |||
Diluted EPS | $ (0.06) | $ 0.07 | ||
Impact of assumed exchange, conversion, or vesting of remaining potentially dilutive securities 3 | 0.02 | 0.01 | ||
Non-GAAP adjustments 4 | — | (0.01) | ||
Adjusted Diluted EPS | $ (0.04) | $ 0.07 | ||
1 | For the three months ended March 31, 2026, other unusual items includes additional severance expenses associated with the actions taken in the fourth quarter of 2025. |
2 | Represents the tax effect of the aforementioned adjustments to reflect corporate income taxes at an estimated effective tax rate of |
3 | Assumes the exchange of all outstanding THG units, Series A Convertible Preferred Stock, and unvested share-based compensation awards for shares of Class A Common Stock, resulting in the elimination of the non-controlling interest and recognition of the Net income (loss) attributable to non-controlling interest, as well as elimination of the accretion of Series A Convertible Preferred Stock. |
4 | Represents the per share impact of non-GAAP adjustments for each period. Refer to the reconciliation above for additional information. |
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SOURCE Hagerty