HGTY 10-Q Quarterly Report June 30, 2025

HAGERTY, INC.

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PROXIES

DEF 14A	Filed on April 24, 2025
DEF 14A	Filed on Dec. 31, 2024
DEF 14A	Filed on April 25, 2024
DEF 14A	Filed on Dec. 31, 2023
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DEF 14A	Filed on April 27, 2022

hgty-20250630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to _______

Commission file number: 001-40244

HAGERTY, INC.

(Exact name of registrant as specified in its charter)


Delaware		86-1213144
(State of incorporation)		(I.R.S. Employer Identification No.)

121 Drivers Edge , Traverse City , Michigan		49684
(Address of principal executive offices)		(Zip code)

	(800) 922-4050
	Registrant's telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbols

Name of each exchange on which registered

Class A common stock, par value $0.0001 per share

HGTY

The New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

TABLE OF CONTENTS

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The registrant had 90,942,223 shares of Class A Common Stock outstanding and 251,033,906 shares of Class V Common Stock outstanding as of July 25, 2025.

TABLE OF CONTENTS

Table of Contents


Title						Page
Forward Looking Statements						4

Part I – Financial Information						5
Item 1. Financial Statements (Unaudited)						5
Condensed Consolidated Statements of Operations						5
Condensed Consolidated Statements of Comprehensive Income						6
Condensed Consolidated Balance Sheets						7
Condensed Consolidated Statements of Changes in Temporary Equity and Stockholders' Equity						8
Condensed Consolidated Statements of Cash Flows						12
Notes Accompanying the Condensed Consolidated Financial Statements						13
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations						48
Item 3. Quantitative and Qualitative Disclosures About Market Risk						68
Item 4. Controls and Procedures						68

Part II – Other Information						69
Item 1. Legal Proceedings						69
Item 1A. Risk Factors						69
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds						69
Item 3. Defaults Upon Senior Securities						70
Item 4. Mine Safety Disclosures						70
Item 5. Other Information						70
Item 6. Exhibits						71
Signatures						72

TABLE OF CONTENTS

Cautionary Statement Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q (this "Quarterly Report"), as well as other oral or written information we provide, contain 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 our future operating results and financial position, our business strategy and plans, products, services, and technology implementations, market conditions, growth and trends, expansion plans and opportunities, and our 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 negative of these expressions, are intended to identify forward-looking statements.

We have based these forward-looking statements largely on our current expectations about future events, which may not materialize. Actual results could differ materially and adversely from those anticipated or implied in our forward-looking statements. Some of the factors that could cause actual results to differ from our expectations include the risks and uncertainties described in Item 1A of Part II — Risk Factors of this Quarterly Report and Item 1A of Part I — Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2024, which highlight, among other risks, our ability to:

• compete effectively within our industry and attract and retain our insurance policyholders and paid Hagerty Drivers Club ("HDC") subscribers (collectively, "Members");

• maintain key strategic relationships with our insurance distribution and underwriting carrier partners;

• prevent, monitor, and detect fraudulent activity;

• manage risks associated with disruptions, interruptions, outages or other issues with our technology platforms or our use of third-party services;

• accelerate the adoption of our membership and marketplace products and services, as well as any new insurance programs and products we offer;

• complete the proposed fronting arrangement with Markel Group Inc. (together with its subsidiaries, "Markel") and achieve its intended benefits;

• manage the cyclical nature of the insurance business, including through any periods of recession, economic downturn or inflation;

• address unexpected increases in the frequency or severity of claims; and

• comply with the numerous laws and regulations applicable to our business, including state, federal and foreign laws relating to insurance and rate increases, privacy, the internet, and accounting matters.

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. The forward-looking statements in this Quarterly Report represent our views as of the date hereof. We undertake no obligation to update any of these forward-looking statements for any reason after the date of this Quarterly Report.

Where You Can Find More Information

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, as well as any amendments to those reports, are available free of charge through our website at investor.hagerty.com after we file them with, or furnish them to, the Securities and Exchange Commission ("SEC"). We use our investor relations website, investor.hagerty.com, as a means of disclosing information which may be of interest or material to our investors and for complying with disclosure obligations under Regulation FD. Accordingly, investors should monitor our investor relations website, in addition to following our press releases, SEC filings, public conference calls, webcasts, and social media channels. Information contained on or accessible through our website or social media channels is not a part of, and is not incorporated by reference into, this Quarterly Report or any other report or document we file with the SEC. Any reference to our website in this Quarterly Report is intended to be an inactive textual reference only.

Unless the context indicates otherwise, the terms "we," "our," "us," "Hagerty," and the "Company" refer to Hagerty, Inc. and its consolidated subsidiaries, including The Hagerty Group, LLC ("THG").

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Hagerty, Inc.

Condensed Consolidated Statements of Operations (Unaudited)


	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024

REVENUE:	in thousands (except per share amounts)
Commission and fee revenue	$	143,287	$	128,816	$	243,574	$	217,656
Earned premium	177,785		157,612		347,140		309,231
Membership, marketplace and other revenue	47,627		26,797		97,578		58,046
Total revenue	368,699		313,225		688,292		584,933
OPERATING EXPENSES:
Salaries and benefits	64,062		57,693		123,165		113,809
Ceding commissions, net	82,938		73,446		160,271		144,376
Losses and loss adjustment expenses	75,213		64,729		146,343		127,085
Sales expense	67,380		47,990		122,006		87,650
General and administrative expenses	22,574		21,373		44,759		41,235
Depreciation and amortization	8,833		10,014		18,321		20,574
Gain related to divestiture	—		( 87 )		—		( 87 )
Total operating expenses	321,000		275,158		614,865		534,642
OPERATING INCOME	47,699		38,067		73,427		50,291
Loss related to warrant liabilities, net	—		( 1,941 )		—		( 8,081 )
Interest and other income (expense), net	5,664		12,342		12,718		19,586
INCOME BEFORE INCOME TAX EXPENSE	53,363		48,468		86,145		61,796
Income tax expense	( 6,161 )		( 5,811 )		( 11,650 )		( 10,940 )
NET INCOME	47,202		42,657		74,495		50,856
Net income attributable to non-controlling interest	( 36,229 )		( 32,279 )		( 55,151 )		( 41,829 )
Accretion of Series A Convertible Preferred Stock	( 1,875 )		( 1,839 )		( 3,750 )		( 3,677 )
NET INCOME ATTRIBUTABLE TO CLASS A COMMON STOCKHOLDERS	$	9,098	$	8,539	$	15,594	$	5,350

Earnings per share of Class A Common Stock:
Basic	$	0.09	$	0.09	$	0.16	$	0.06
Diluted	$	0.09	$	0.09	$	0.16	$	0.06

Weighted average shares of Class A Common Stock outstanding:
Basic	90,698		85,687		90,374		85,171
Diluted	90,698		85,687		91,247		86,072

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

See Note 21 for information regarding Related-Party Transactions.

TABLE OF CONTENTS

Hagerty, Inc.

Condensed Consolidated Statements of Comprehensive Income (Unaudited)


	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024

	in thousands
Net income	$	47,202	$	42,657	$	74,495	$	50,856
Other comprehensive income (loss), net of tax:
Change in net unrealized gain on available-for-sale investments	1,048		748		5,085		748
Foreign currency translation adjustments	1,683		( 196 )		1,707		( 827 )
Change in unrealized loss on interest rate swap	—		( 2,271 )		—		( 2,234 )
Other comprehensive income (loss)	2,731		( 1,719 )		6,792		( 2,313 )
Comprehensive income	49,933		40,938		81,287		48,543
Comprehensive income attributable to non-controlling interest	( 38,243 )		( 30,991 )		( 60,167 )		( 40,095 )
Accretion of Series A Convertible Preferred Stock	( 1,875 )		( 1,839 )		( 3,750 )		( 3,677 )
Comprehensive income attributable to Class A Common Stockholders	$	9,815	$	8,108	$	17,370	$	4,771

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

See Note 21 for information regarding Related-Party Transactions.

TABLE OF CONTENTS

Hagerty, Inc.

Condensed Consolidated Balance Sheets (Unaudited)


	June 30,		December 31,
	2025		2024

ASSETS	in thousands (except share amounts)
Current Assets:
Cash and cash equivalents	$	140,300	$	104,784
Restricted cash and cash equivalents	190,286		128,061
Investments	119,326		73,957
Accounts receivable	107,925		84,763
Premiums receivable	249,830		153,748
Commissions receivable	27,362		20,430
Notes receivable	83,478		45,417
Deferred acquisition costs, net	178,430		156,466
Other current assets	116,047		90,779
Total current assets	1,212,984		858,405
Investments	482,248		515,570
Notes receivable	17,931		11,555
Property and equipment, net	17,259		18,205
Lease right-of-use assets	42,549		44,485
Intangible assets, net	86,732		90,107
Goodwill	114,165		114,123
Other long-term assets	66,707		56,888
TOTAL ASSETS	$	2,040,575	$	1,709,338
LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable, accrued expenses and other current liabilities	$	138,349	$	73,383
Losses payable and provision for unpaid losses and loss adjustment expenses	259,050		266,878
Ceding commissions payable	113,080		77,389
Advance premiums and due to insurers	188,403		108,352
Unearned premiums	410,496		357,539
Contract liabilities	36,602		31,905
Total current liabilities	1,145,980		915,446
Long-term lease liabilities	40,903		43,178
Long-term debt, net	153,383		104,968
Deferred tax liability	21,857		18,065
Contract liabilities	14,334		15,334
Other long-term liabilities	3,267		4,178
TOTAL LIABILITIES	1,379,724		1,101,169
Commitments and Contingencies (Note 22)	—		—
TEMPORARY EQUITY
Preferred stock, $ 0.0001 par value ( 20,000,000 shares authorized, 8,483,561 Series A Convertible Preferred Stock issued and outstanding as of June 30, 2025 and December 31, 2024)	82,813		84,663
STOCKHOLDERS' EQUITY
Class A Common Stock, $ 0.0001 par value ( 500,000,000 shares authorized, 90,715,648 and 90,032,391 issued and outstanding as of June 30, 2025 and December 31, 2024, respectively)	9		9
Class V Common Stock, $ 0.0001 par value ( 300,000,000 authorized, 251,033,906 shares issued and outstanding as of June 30, 2025 and December 31, 2024)	25		25
Additional paid-in capital	604,621		603,780
Accumulated earnings (deficit)	( 432,634 )		( 451,978 )
Accumulated other comprehensive income (loss)	262		( 1,514 )
Total stockholders' equity	172,283		150,322
Non-controlling interest	405,755		373,184
Total equity (Note 17)	578,038		523,506
TOTAL LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS' EQUITY	$	2,040,575	$	1,709,338

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

See Note 21 for information regarding Related-Party Transactions.

TABLE OF CONTENTS

Hagerty, Inc.

Condensed Consolidated Statements of Changes in Temporary Equity and Stockholders' Equity (Unaudited)


					Three months ended June 30, 2025
	Temporary Equity			Stockholders' Equity
	Series A Convertible Preferred Stock			Class A Common Stock			Class V Common Stock			Additional Paid in Capital		Accumulated Earnings (Deficit)		Accumulated Other Comprehensive Income (Loss)		Total Stockholders' Equity		Non-controlling Interest		Total Equity
in thousands	Shares	Amount		Shares	Amount		Shares	Amount
Balance at April 1, 2025	8,484	$	86,538	90,065	$	9	251,034	$	25	$	606,972	$	( 443,607 )	$	( 455 )	$	162,944	$	369,713	$	532,657
Net income	—	—		—	—		—	—		—		10,973		—		10,973		36,229		47,202
Accretion of Series A Convertible Preferred Stock	—	1,875		—	—		—	—		( 1,875 )		—		—		( 1,875 )		—		( 1,875 )
Dividends related to Series A Convertible Preferred Stock	—	( 5,600 )		—	—		—	—		—		—		—		—		—		—
Other comprehensive income	—	—		—	—		—	—		—		—		717		717		2,014		2,731
Issuance of shares under employee plans, net of shares withheld for employee taxes	—	—		597	—		—	—		( 2,119 )		—		—		( 2,119 )		—		( 2,119 )
Share-based compensation	—	—					—	—		5,146		—		—		5,146		—		5,146
Exchange of THG units for Class A Common Stock	—	—		54	—		—	—		478		—		—		478		( 478 )		—
Distributions paid to non-controlling interest unit holders	—	—		—	—		—	—		—		—		—		—		( 5,704 )		( 5,704 )
Reallocation between controlling and non-controlling interest	—	—		—	—		—	—		( 3,981 )		—		—		( 3,981 )		3,981		—
Balance at June 30, 2025	8,484	$	82,813	90,716	$	9	251,034	$	25	$	604,621	$	( 432,634 )	$	262	$	172,283	$	405,755	$	578,038

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

See Note 21 for information regarding Related-Party Transactions.

TABLE OF CONTENTS

Hagerty, Inc.

Condensed Consolidated Statements of Changes in Temporary Equity and Stockholders' Equity (Unaudited)


					Six months ended June 30, 2025
	Temporary Equity			Stockholders' Equity
	Series A Convertible Preferred Stock			Class A Common Stock			Class V Common Stock			Additional Paid in Capital		Accumulated Earnings (Deficit)		Accumulated Other Comprehensive Income (Loss)		Total Stockholders' Equity		Non-controlling Interest		Total Equity
in thousands	Shares	Amount		Shares	Amount		Shares	Amount
Balance at January 1, 2025	8,484	$	84,663	90,032	$	9	251,034	$	25	$	603,780	$	( 451,978 )	$	( 1,514 )	$	150,322	$	373,184	$	523,506
Net income	—	—		—	—		—	—		—		19,344		—		19,344		55,151		74,495
Accretion of Series A Convertible Preferred Stock	—	3,750		—	—		—	—		( 3,750 )		—		—		( 3,750 )		—		( 3,750 )
Dividends related to Series A Convertible Preferred Stock	—	( 5,600 )		—	—		—	—		—		—		—		—		—		—
Other comprehensive income	—	—		—	—		—	—		—		—		1,776		1,776		5,016		6,792
Issuance of shares under employee plans, net of shares withheld for employee taxes	—	—		606	—		—	—		( 2,163 )		—		—		( 2,163 )		—		( 2,163 )
Share-based compensation	—	—		—	—		—	—		9,538		—		—		9,538		—		9,538
Exchange of THG units for Class A Common Stock	—	—		78	—		—	—		712		—		—		712		( 712 )		—
Distributions paid to non-controlling interest unit holders	—	—		—	—		—	—		—		—		—		—		( 30,380 )		( 30,380 )
Reallocation between controlling and non-controlling interest	—	—		—	—		—	—		( 3,496 )		—		—		( 3,496 )		3,496		—
Balance at June 30, 2025	8,484	$	82,813	90,716	$	9	251,034	$	25	$	604,621	$	( 432,634 )	$	262	$	172,283	$	405,755	$	578,038

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

See Note 21 for information regarding Related-Party Transactions.

TABLE OF CONTENTS

Hagerty, Inc.

Condensed Consolidated Statements of Changes in Temporary Equity and Stockholders' Equity (Unaudited)


					Three months ended June 30, 2024
	Temporary Equity			Stockholders' Equity
	Series A Convertible Preferred Stock			Class A Common Stock			Class V Common Stock			Additional Paid in Capital		Accumulated Earnings (Deficit)		Accumulated Other Comprehensive Income (Loss)		Total Stockholders' Equity		Non-controlling Interest		Total Equity
in thousands	Shares	Amount		Shares	Amount		Shares	Amount
Balance at April 1, 2024	8,484	$	84,674	84,656	$	8	251,034	$	25	$	564,082	$	( 470,346 )	$	( 236 )	$	93,533	$	327,286	$	420,819
Net income	—	—		—	—		—	—		—		10,378		—		10,378		32,279		42,657
Accretion of Series A Convertible Preferred Stock	—	1,839		—	—		—	—		( 1,839 )		—		—		( 1,839 )		—		( 1,839 )
Dividends related to Series A Convertible Preferred Stock	—	( 5,600 )		—	—		—	—		—		—		—		—		—		—
Other comprehensive loss	—	—		—	—		—	—		—		—		( 431 )		( 431 )		( 1,288 )		( 1,719 )
Issuance of shares under employee plans, net of shares withheld for employee taxes	—	—		916	—		—	—		( 4,588 )		—		—		( 4,588 )		—		( 4,588 )
Share-based compensation	—	—		—	—		—	—		4,383		—		—		4,383		—		4,383
Exchange of THG units for Class A Common Stock	—	—		131	—		—	—		1,172		—		—		1,172		( 1,172 )		—
Distributions paid to non-controlling interest unit holders	—	—		—	—		—	—		—		—		—		—		( 5,320 )		( 5,320 )
Reallocation between controlling and non-controlling interest	—	—		—	—		—	—		( 8,170 )		—		—		( 8,170 )		8,170		—
Balance at June 30, 2024	8,484	$	80,913	85,703	$	8	251,034	$	25	$	555,040	$	( 459,968 )	$	( 667 )	$	94,438	$	359,955	$	454,393

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

See Note 21 for information regarding Related-Party Transactions.

TABLE OF CONTENTS

Hagerty, Inc.

Condensed Consolidated Statements of Changes in Temporary Equity and Stockholders' Equity (Unaudited)


					Six months ended June 30, 2024
	Temporary Equity			Stockholders' Equity
	Series A Convertible Preferred Stock			Class A Common Stock			Class V Common Stock			Additional Paid in Capital		Accumulated Earnings (Deficit)		Accumulated Other Comprehensive Income (Loss)		Total Stockholders' Equity		Non-controlling Interest		Total Equity
in thousands	Shares	Amount		Shares	Amount		Shares	Amount
Balance at January 1, 2024	8,484	$	82,836	84,589	$	8	251,034	$	25	$	561,754	$	( 468,995 )	$	( 88 )	$	92,704	$	317,805	$	410,509
Net income	—	—		—	—		—	—		—		9,027		—		9,027		41,829		50,856
Accretion of Series A Convertible Preferred Stock	—	3,677		—	—		—	—		( 3,677 )		—		—		( 3,677 )		—		( 3,677 )
Dividends related to Series A Convertible Preferred Stock	—	( 5,600 )		—	—		—	—		—		—		—		—		—		—
Other comprehensive loss	—	—		—	—		—	—		—		—		( 579 )		( 579 )		( 1,734 )		( 2,313 )
Issuance of shares under employee plans, net of shares withheld for employee taxes	—	—		983	—		—	—		( 4,588 )		—		—		( 4,588 )		—		( 4,588 )
Share-based compensation	—	—		—	—		—	—		8,926		—		—		8,926		—		8,926
Exchange of THG units for Class A Common Stock	—	—		131	—		—	—		1,172		—		—		1,172		( 1,172 )		—
Distributions paid to non-controlling interest unit holders	—	—		—	—		—	—		—		—		—		—		( 5,320 )		( 5,320 )
Reallocation between controlling and non-controlling interest	—	—		—	—		—	—		( 8,547 )		—		—		( 8,547 )		8,547		—
Balance at June 30, 2024	8,484	$	80,913	85,703	$	8	251,034	$	25	$	555,040	$	( 459,968 )	$	( 667 )	$	94,438	$	359,955	$	454,393

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

See Note 21 for information regarding Related-Party Transactions.

TABLE OF CONTENTS

Hagerty, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)


	Six months ended June 30,
	2025		2024

OPERATING ACTIVITIES:	in thousands
Net income	$	74,495	$	50,856
Adjustments to reconcile net income to net cash from operating activities:
Loss on disposals of equipment, software and other assets	1,211		—
Loss related to warrant liabilities, net	—		8,081
Increase (decrease) in tax receivable agreement liability	3,078		—
Depreciation and amortization	18,321		20,574
Provision for deferred taxes	2,061		1,984
Share-based compensation expense	9,538		8,926
Non-cash lease expense	4,226		4,038
Realized (gain) loss on investments, net	( 879 )		( 548 )
(Accretion) amortization of discount and premium, net	( 2,316 )		( 769 )
Other	355		1,312
Changes in operating assets and liabilities:
Accounts, premiums and commissions receivable	( 148,883 )		( 39,306 )
Deferred acquisition costs, net	( 21,964 )		( 17,670 )
Losses payable and provision for unpaid losses and loss adjustment expenses	( 7,828 )		19,037
Ceding commissions payable	35,691		( 7,639 )
Advance premiums and due to insurers	78,846		75,869
Unearned premiums	52,957		45,234
Operating lease assets and liabilities	( 4,534 )		( 4,531 )
Other assets and liabilities, net	3,339		( 43,193 )
Net Cash Provided by Operating Activities	97,714		122,255
INVESTING ACTIVITIES:
Capital expenditures	( 11,549 )		( 11,936 )
Acquisitions, net of cash acquired, and other investments	—		( 3,843 )
Issuance of notes receivable	( 26,617 )		( 32,136 )
Collection of notes receivable	8,091		19,354
Purchases of fixed maturity securities	( 98,455 )		( 455,766 )
Proceeds from sales of fixed maturity securities	21,341		7,570
Proceeds from maturities of fixed maturity securities	75,470		5,596
Purchases of equity securities	( 347 )		( 9,407 )
Proceeds from sales of equity securities	378		—
Other investing activities	( 151 )		631
Net Cash Used in Investing Activities	( 31,839 )		( 479,937 )
FINANCING ACTIVITIES:
Payments on long-term debt	( 124,493 )		( 60,757 )
Proceeds from long-term debt, net of issuance costs	192,339		25,482
Distributions paid to non-controlling interest unit holders	( 30,380 )		( 5,320 )
Payment of Series A Convertible Preferred Stock dividends	( 5,600 )		( 5,600 )
Funding of TRA liability payments	( 223 )		—
Funding of employee tax obligations upon vesting of share-based payments	( 2,452 )		( 4,588 )
Other financing activities	289		—
Net Cash Provided by (Used in) Financing Activities	29,480		( 50,783 )
Effect of exchange rate changes on cash and cash equivalents and restricted cash and cash equivalents	2,386		( 289 )

Change in cash and cash equivalents and restricted cash and cash equivalents	97,741		( 408,754 )
Beginning cash and cash equivalents and restricted cash and cash equivalents	232,845		724,276
Ending cash and cash equivalents and restricted cash and cash equivalents	$	330,586	$	315,522

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

See Note 21 for information regarding Related-Party Transactions.

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Hagerty, Inc.

Notes To Condensed Consolidated Financial Statements (Unaudited)

1 — Business and Basis of Presentation

Hagerty, Inc. is a holding company and the sole managing member of The Hagerty Group, LLC ("THG"). Hagerty, Inc.'s sole material asset is its ownership in THG, through which all of its business is conducted. In these Notes to the Condensed Consolidated Financial Statements, the terms "Hagerty" and the "Company" refer to Hagerty, Inc. and its consolidated subsidiaries unless the context requires otherwise. In addition, the Company's insurance policyholders and paid Hagerty Drivers Club ("HDC") subscribers are collectively referred to as "Members".

Description of Business — Hagerty is a market leader in providing insurance for collector cars and enthusiast vehicles. Through Hagerty's insurance model, the Company acts as a Managing General Agent ("MGA") by underwriting, selling, and servicing collector car and enthusiast vehicle insurance policies. The Company then reinsures approximately 80 % of the risks written by its MGA subsidiaries through its wholly owned subsidiary, Hagerty Reinsurance Limited ("Hagerty Re"). In addition, Hagerty offers HDC memberships, which are primarily bundled with its insurance policies and give subscribers access to an array of products and services, including emergency roadside assistance, Hagerty Drivers Club Magazine, automotive enthusiast events, Hagerty's proprietary vehicle valuation tool, and special vehicle-related discounts. The Company also offers a marketplace to complement its insurance membership offerings where automotive enthusiasts can buy, sell, and finance collector cars and enthusiast vehicles.

Basis of Presentation — The Condensed Consolidated Financial Statements are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and pursuant to the regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted from this report, as permitted by such rules and regulations.

The Condensed Consolidated Financial Statements reflect all normal recurring adjustments and accruals that are, in the opinion of management, necessary for a fair statement of the Company's financial position and results of operations for the interim periods presented.

These financial statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in the Company's Annual Report on Form 10-K ("Annual Report") for the year ended December 31, 2024. The results of operations for the three and six months ended June 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025.

Principles of Consolidation — The Condensed Consolidated Financial Statements contain the accounts of Hagerty, Inc. and its majority-owned or controlled subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

As the sole managing member of THG, Hagerty operates and controls all of the business affairs of THG and has the sole voting interest in, and controls the management of, THG. Accordingly, Hagerty consolidates THG in its consolidated financial statements, resulting in a non-controlling interest related to the economic interest in THG held by other parties. As of June 30, 2025 and December 31, 2024, Hagerty, Inc.'s economic ownership of THG was 26.2 % and 26.1 %, respectively.

The financial statements of THG are consolidated by the Company under the voting interest method in accordance with Accounting Standards Codification ("ASC") Topic 810, Consolidations ("ASC 810"). Non-controlling interest is presented separately on the Condensed Consolidated Statements of Operations, the Condensed Consolidated Statements of Comprehensive Income, the Condensed Consolidated Balance Sheets, and the Condensed Consolidated Statements of Changes in Temporary Equity and Stockholders' Equity.

2 — Summary of Significant Accounting Policies

Use of Estimates — The preparation of the Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities as of the date of the Condensed Consolidated Financial Statements, as well as the reported amounts of revenue and expenses during the reporting period. Although the estimates are considered reasonable, actual results could materially differ from those estimates.

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Significant estimates made by management include, but are not limited to: (i) the provision for unpaid losses and loss adjustment expenses, including incurred but not reported ("IBNR") claims (see Note 13); (ii) the valuation of the Company's deferred income tax assets (see Note 20); (iii) the amount of the liability associated with the Tax Receivable Agreement ("TRA") (the "TRA Liability") (see Note 20); (iv) the fair values of the reporting units used in assessing the recoverability of goodwill; and (v) the valuation and useful lives of intangible assets (see Note 12). Although some variability is inherent in these estimates, management believes that the current estimates are reasonable in all material respects. These estimates are reviewed regularly and adjusted as necessary. Adjustments related to changes in estimates are reflected in the Company's results of operations in the period during which those estimates changed.

Emerging Growth Company — The Company currently qualifies as an "emerging growth company" under the Jumpstart Our Business Startups Act of 2012 and can delay the adoption of new or revised accounting standards until those standards would apply to private companies.

The Company intends to avail itself of this extended tra nsition period and, therefore, the Company may not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies or have opted out of using such extended transition period. As of June 30, 2025, the Company has not delayed the adoption of any new or revised accounting standards despite qualifying as an emerging growth company.

Segment Information — The Company has one operating segment and one reportable segment with the Chief Executive Officer ("CEO") acting as the Chief Operating Decision Maker ("CODM"). The Company's segment presentation reflects its business activities which place the automotive enthusiast at the center of operating and resource allocation decisions. Accordingly, the CODM evaluates performance and makes resource allocation decisions using a number of consolidated measures, including consolidated net income. The CODM is also regularly provided with information regarding the Company's significant expenses consistent with the level of information provided in the Condensed Consolidated Statements of Operations, as well as information regarding assets consistent with the level of detail provided on the Condensed Consolidated Balance Sheets. The CODM utilizes such consolidated financial information in connection with the Company's budgeting and forecasting process to monitor budget-to-actual variances when evaluating performance, allocating resources, and establishing management compensation.

Accounting Standards Not Yet Adopted

Income Taxes — In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023-09 - Income Taxes (ASC 740) , Improvements to Income Tax Disclosures , which enhances the transparency and decision usefulness of income tax disclosures through changes to the rate reconciliation and income taxes paid information. ASU No. 2023-09 modifies the rules on income tax disclosures to require entities to disclose (i) specific categories in the rate reconciliation, (ii) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign), and (iii) income tax expense or benefit from continuing operations (separated by federal, state and foreign). ASU No. 2023-09 also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes. ASU No. 2023-09 is effective for annual periods beginning after December 15, 2024. The Company will adopt ASU No. 2023-09 starting with its Annual Report on Form 10-K for the year ended December 31, 2025. Upon adoption, the Company will include the required additional disclosures in its Consolidated Financial Statements. The adoption of the ASU No. 2023-09 will expand the Company's disclosures, but will have no impact on its results of operations or financial position.

Income Statement Expenses — In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (ASC 220-40) , which enables investors to better understand an entity's performance, assessing an entity's prospects for future cash flows, and comparing an entity's performance over time and with that of other entities. ASU No. 2024-03 primarily requires entities to disaggregate, in the notes to the financial statements, any relevant expense caption presented in the statement of operations within continuing operations into the following required natural expense categories: purchases of inventory, employee compensation, depreciation, and intangible asset amortization. The new standard does not change the presentation of expense information in the statement of operations. ASU 2024-03 is effective for annual periods beginning after December 15, 2026. The Company is still assessing the impact of ASU No. 2024-03 and, upon adoption, the Company may be required to include certain additional disclosures in its Consolidated Financial Statements.

A comprehensive list of the Company's significant accounting policies are set forth in Note 1 to the Consolidated Financial Statements contained in its Annual Report.

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3 — Supplemental Balance Sheet and Cash Flow Information

Cash and Cash Equivalents and Restricted Cash and Cash Equivalents — As of June 30, 2025 and 2024, cash and cash equivalents and restricted cash and cash equivalents were as follows:


	June 30,
	2025		2024

	in thousands
Cash and cash equivalents	$	140,300	$	120,936
Restricted cash and cash equivalents	190,286		194,586
Total cash and cash equivalents and restricted cash and cash equivalents	$	330,586	$	315,522

Restricted Assets — The Company's MGA subsidiaries collect premiums from insureds on behalf of insurance carriers. Prior to remittance to the insurance carrier, these funds are required to be held in trust for the benefit of the insurance carriers and segregated from the Company's operating cash.

Hagerty Re maintains trust accounts for the benefit of various ceding insurers as security for its obligations for losses, loss expenses, unearned premium, and profit-sharing commissions.

Our wholly owned insurance carrier subsidiary, Drivers Edge Insurance Company ("Drivers Edge"), maintains assets on deposit with a number of regulatory authorities to support its insurance operations. Refer to Note 10 — Acquisition for additional information related to the Company's acquisition of Drivers Edge.

BAC and its consolidated subsidiaries maintain bank accounts that are required for the operation of the BAC Credit Facility (as defined in Note 15 — Debt). The funds in these bank accounts represent security under the BAC Credit Facility and their use is restricted to the servicing of the debt outstanding under that facility.

The following table presents the components of the Company's restricted assets as of June 30, 2025 and December 31, 2024:


	Balance Sheet Classification	June 30,		December 31,
		2025		2024

		in thousands
Cash and cash equivalents	Restricted cash and cash equivalents	$	190,286	$	128,061
Fixed maturity securities	Investments	589,118		577,688
Equity securities	Investments	12,456		11,839
Total restricted assets		$	791,860	$	717,588

Variable Interest Entities — Broad Arrow Capital LLC ("BAC") and certain of its subsidiaries transfer notes receivable to wholly owned, bankruptcy-remote, special purpose entities (each, an "SPE") to secure borrowings under the BAC Credit Agreement (as defined in Note 15 — Debt).

These SPEs are considered to be variable interest entities (each, a "VIE") under GAAP and their financial statements are consolidated by BAC, which is the primary beneficiary of the SPEs and also a consolidated subsidiary of the Company. BAC is considered to be the primary beneficiary of the SPEs because it has (i) power over the significant activities of the SPEs through its role as servicer of the notes receivable used to secure borrowings under the BAC Credit Agreement and (ii) the obligation to absorb losses or the right to receive returns that could be significant through its interest in the residual cash flows of the SPEs.

Refer to Note 7 — Notes Receivable and Note 15 — Debt for additional information.

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The following table presents the assets and liabilities of the Company's consolidated VIEs as of June 30, 2025 and December 31, 2024:


	June 30,		December 31,
	2025		2024

ASSETS	in thousands
Cash and cash equivalents	$	802	$	1,746
Restricted cash and cash equivalents	4,431		1,221

Notes receivable	64,646		49,337
Other assets	1,448		1,961
TOTAL ASSETS	$	71,327	$	54,265
LIABILITIES
Accounts payable, accrued expenses and other current liabilities (1)	$	23,924	$	999
Long-term debt, net	17,275		30,193
TOTAL LIABILITIES	$	41,199	$	31,192

(1) As of June 30, 2025, Accounts payable, accrued expenses and other current liabilities includes the current portion of outstanding borrowings under the BAC Credit Facility (as defined in Note 15 — Debt) totaling $ 21.6 million.

Supplemental Cash Flow Information — The table below presents information regarding the Company's non-cash investing and financing activities, as well as the cash paid for interest and taxes for the six months ended June 30, 2025 and 2024:


	Six months ended June 30,
	2025		2024

Non-cash investing activities:	in thousands
Issuance of notes receivable (1)	$	9,816	$	2,474
Collection of notes receivable (1)	$	1,884	$	6,478
Capital expenditures	$	801	$	212


Non-cash financing activities:
Exchange of THG units for Class A Common Stock (Refer to Note 17)	$	712	$	1,172

Cash paid for:
Interest	$	4,337	$	3,454
Income taxes	$	11,794	$	15,800

(1) In certain situations, BAC makes loans to refinance accounts receivable balances generated by Broad Arrow Group, Inc. ("Broad Arrow") auctions and private sales. These loans are accounted for on the Condensed Consolidated Balance Sheets as non-cash reclassifications between "Accounts receivable" and "Notes receivable" and are not presented within Investing Activities in the Company's Condensed Consolidated Statements of Cash Flows. Upon repayment, the cash received in settlement of such loans is classified within Operating Activities in the Company's Condensed Consolidated Statements of Cash Flows.

The issuance of Class A Common Stock resulting from the vesting of restricted stock units ("RSUs") is a non-cash financing activity. Refer to Note 18 — Share-Based Compensation for information related to share-based compensation.

4 — Revenue

Disaggregation of Revenue — The tables below present the Company's revenue by distribution channel, as well as a reconciliation to total revenue for the three and six months ended June 30, 2025 and 2024. Commission and fee revenue and contingent commission revenue earned from the agent distribution channel includes revenue generated through the Company's insurance distribution partnerships, as well as its relationships with independent agents and brokers. Commission and fee revenue and contingent commission revenue earned from the direct distribution channel includes revenue generated by Hagerty's employee agents.

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	Three months ended June 30, 2025
	Agent		Direct		Total

	in thousands
Commission and fee revenue	$	69,678	$	58,755	$	128,433
Contingent commission revenue	8,102		6,752		14,854
Membership revenue	—		15,674		15,674
Marketplace revenue	—		24,316		24,316
Other revenue	—		5,185		5,185
Total revenue from customer contracts	77,780		110,682		188,462
Earned premium (recognized under ASC 944)					177,785
Finance revenue (recognized under ASC 310)					2,452
Total revenue					$	368,699


	Three months ended June 30, 2024
	Agent		Direct		Total

	in thousands
Commission and fee revenue	$	62,833	$	53,272	$	116,105
Contingent commission revenue	6,856		5,855		12,711
Membership revenue	—		14,133		14,133
Marketplace revenue	—		4,100		4,100
Other revenue	—		6,396		6,396
Total revenue from customer contracts	69,689		83,756		153,445
Earned premium (recognized under ASC 944)					157,612
Finance revenue (recognized under ASC 310)					2,168
Total revenue					$	313,225


	Six months ended June 30, 2025
	Agent		Direct		Total

	in thousands
Commission and fee revenue	$	118,770	$	98,833	$	217,603
Contingent commission revenue	13,886		12,085		25,971
Membership revenue	—		31,020		31,020
Marketplace revenue	—		51,452		51,452
Other revenue	—		10,808		10,808
Total revenue from customer contracts	132,656		204,198		336,854
Earned premium (recognized under ASC 944)					347,140
Finance revenue (recognized under ASC 310)					4,298
Total revenue					$	688,292

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	Six months ended June 30, 2024
	Agent		Direct		Total

	in thousands
Commission and fee revenue	$	106,880	$	88,991	$	195,871
Contingent commission revenue	11,872		9,913		21,785
Membership revenue	—		27,585		27,585
Marketplace revenue	—		13,025		13,025
Other revenue	—		13,682		13,682
Total revenue from customer contracts	118,752		153,196		271,948
Earned premium (recognized under ASC 944)					309,231
Finance revenue (recognized under ASC 310)					3,754
Total revenue					$	584,933

The following tables present Hagerty's revenue disaggregated by geographic area, as well as a reconciliation to total revenue for the three months ended June 30, 2025 and 2024:


	Three months ended June 30, 2025
	U.S.		Canada		Europe		Total

	in thousands
Commission and fee revenue	$	116,074	$	10,109	$	2,250	$	128,433
Contingent commission revenue	13,909		—		945		14,854
Membership revenue	14,647		1,021		6		15,674
Marketplace revenue	13,849		3,928		6,539		24,316
Other revenue	4,484		87		614		5,185
Total revenue from customer contracts	162,963		15,145		10,354		188,462
Earned premium (recognized under ASC 944)							177,785
Finance revenue (recognized under ASC 310)							2,452
Total revenue							$	368,699


	Three months ended June 30, 2024
	U.S.		Canada		Europe		Total

	in thousands
Commission and fee revenue	$	104,909	$	9,309	$	1,887	$	116,105
Contingent commission revenue	12,663		—		48		12,711
Membership revenue	13,204		929		—		14,133
Marketplace revenue	3,720		65		315		4,100
Other revenue	5,648		223		525		6,396
Total revenue from customer contracts	140,144		10,526		2,775		153,445
Earned premium (recognized under ASC 944)							157,612
Finance revenue (recognized under ASC 310)							2,168
Total revenue							$	313,225

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The following tables present Hagerty's revenue disaggregated by geographic area, as well as a reconciliation to total revenue for the six months ended June 30, 2025 and 2024:


	Six months ended June 30, 2025
	U.S.		Canada		Europe		Total

	in thousands
Commission and fee revenue	$	201,040	$	12,993	$	3,570	$	217,603
Contingent commission revenue	24,763		—		1,208		25,971
Membership revenue	29,035		1,975		10		31,020
Marketplace revenue	38,361		3,941		9,150		51,452
Other revenue	9,654		253		901		10,808
Total revenue from customer contracts	302,853		19,162		14,839		336,854
Earned premium (recognized under ASC 944)							347,140
Finance revenue (recognized under ASC 310)							4,298
Total revenue							$	688,292


	Six months ended June 30, 2024
	U.S.		Canada		Europe		Total

	in thousands
Commission and fee revenue	$	180,925	$	11,926	$	3,020	$	195,871
Contingent commission revenue	21,691		—		94		21,785
Membership revenue	25,748		1,837		—		27,585
Marketplace revenue	12,124		537		364		13,025
Other revenue	12,465		390		827		13,682
Total revenue from customer contracts	252,953		14,690		4,305		271,948
Earned premium (recognized under ASC 944)							309,231
Finance revenue (recognized under ASC 310)							3,754
Total revenue							$	584,933

Refer to Note 14 — Reinsurance for information regarding "Earned premium" recognized under ASC Topic 944, Financial Services - Insurance ("ASC 944"). Refer to Note 7 — Notes Receivable for information regarding "Finance revenue" recognized under ASC Topic 310, Receivables ("ASC 310").

Contract Assets and Liabilities — The following table is a summary of the Company's contract assets and liabilities as of June 30, 2025 and December 31, 2024:


	June 30,		December 31,
	2025		2024

	in thousands
Contract assets	$	14,687	$	15,860
Contract liabilities	$	50,936	$	47,239

Contract assets, which are reported within "Commissions receivable" on the Condensed Consolidated Balance Sheets, primarily consist of contingent underwriting commission ("CUC") receivables, which are earned throughout the year with 80 % of the CUC receivables from Markel settled monthly and the remaining 20 % settled annually.

Contract liabilities consist of cash collected in advance of revenue recognition and primarily includes the unrecognized portion of HDC membership fees, the unrecognized portion of the advanced commission payment received from State Farm Mutual Automobile Insurance Company ("State Farm"), and, to a much lesser extent, cash collected in advance of the completion of marketplace private sales. Refer to Note 21 — Related-Party Transactions for additional information regarding the Company's master alliance agreement with State Farm.

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5 — Investments

The Company holds a diversified investment portfolio, consisting of fixed maturity securities and, to a much lesser extent, equity securities, with the fixed maturity securities classified as available-for-sale. As of June 30, 2025, all fixed maturity securities had an investment grade rating from at least one nationally recognized rating organization.

Available-for-sale investments

The following tables summarize the Company's available-for-sale investments as of June 30, 2025 and December 31, 2024:


	June 30, 2025
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value

Fixed maturity securities:	in thousands
Corporate	$	228,280	$	3,338	$	( 284 )	$	231,334
U.S. Treasury	154,013		575		( 234 )		154,354
States and municipalities	29,849		775		—		30,624
Foreign	20,788		68		( 4 )		20,852
Asset-backed securities	27,571		380		( 50 )		27,901
Mortgage-backed securities	123,170		1,590		( 707 )		124,053
Total fixed maturity securities	$	583,671	$	6,726	$	( 1,279 )	$	589,118


	December 31, 2024
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value

Fixed maturity securities:	in thousands
Corporate	$	230,917	$	1,226	$	( 954 )	$	231,189
U.S. Treasury	146,211		424		( 760 )		145,875
States and municipalities	31,543		134		( 92 )		31,585
Foreign	21,022		59		( 24 )		21,057
Asset-backed securities	23,625		175		( 120 )		23,680
Mortgage-backed securities	125,351		396		( 1,445 )		124,302
Total fixed maturity securities	$	578,669	$	2,414	$	( 3,395 )	$	577,688

On a quarterly basis, fixed maturity securities with unrealized losses are reviewed to determine whether the decline in fair value is attributable to a material credit loss. As of June 30, 2025, no credit loss allowance was recorded and all unrealized losses on available-for-sale fixed maturity securities were in such position for less than one year. It is management's intent to hold these investments to recovery, or maturity, if necessary, to recover the decline in valuation as prices accrete to par.

The following table summarizes the contractual maturities of the Company's available-for-sale investments as of June 30, 2025:



	Amortized Cost		Estimated Fair Value

	in thousands
Due in one year or less	$	106,666	$	106,871
Due after one year through five years	260,297		263,595
Due after five years through ten years	65,968		66,698

Mortgage-backed and asset-backed securities	150,740		151,954
Total fixed maturity securities	$	583,671	$	589,118

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Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

Net investment income

The following table presents the components of net investment income, which is recorded within "Interest and other income (expense), net" in the Condensed Consolidated Statements of Operations, for the three and six months ended June 30, 2025 and 2024:


	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024

Interest income:	in thousands
Cash and cash equivalents and restricted cash and cash equivalents	$	2,564	$	7,561	$	4,724	$	16,640
Fixed maturity securities	6,943		3,648		13,928		3,794
Total interest income	9,507		11,209		18,652		20,434
Dividends on equity securities	39		24		79		24
Gross investment income	9,546		11,233		18,731		20,458
Investment expenses	( 130 )		( 122 )		( 257 )		( 122 )
Net investment income	$	9,416	$	11,111	$	18,474	$	20,336

Net realized and unrealized gains (losses) on investments

The table below presents the components of pre-tax net investment gains (losses), which is recorded within "Interest and other income (expense), net" in the Condensed Consolidated Statements of Operations, and the pre-tax change in net unrealized gains (losses) included in the Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2025 and 2024. The gross amounts of realized investment gains and losses on fixed maturity securities were not material to the Condensed Consolidated Financial Statements and are presented on a net basis in the table below.


	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024

Fixed maturity securities:	in thousands
Net realized investment gains (losses)	$	16	$	( 31 )	$	231	$	( 31 )
Equity securities:
Total change in fair value of equity securities	1,178		478		648		478
Net investment gains	$	1,194	$	447	$	879	$	447
Change in net unrealized gains (losses) on available-for-sale investments included in Other comprehensive income (loss):
Fixed maturity securities	$	1,323	$	( 951 )	$	6,421	$	( 951 )

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6 — Fair Value Measurements

Fair value measurements are classified within one of three levels in the fair value hierarchy. The level assigned to a fair value measurement is based on the lowest level input that management judges to be significant to the fair value measurement in its entirety.

The three levels of the fair value hierarchy are as follows:

• Level 1 — Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

• Level 2 — Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date for substantially the full term of the asset or liability.

• Level 3 — Pricing inputs are unobservable, but management believes that such inputs are predicated on the assumptions market participants would use to measure the asset or liability at fair value.

The Company's policy is to recognize significant transfers between levels, if any, at the end of the reporting period. There were no transfers between levels during the current and prior reporting periods.

Investments

Fixed maturity securities are classified as Level 2 within the fair value hierarchy and equity securities are classified as Level 1. The fair value of these investments is determined after considering various sources of information, including information provided by a third-party pricing service, which provides prices for substantially all of the Company's fixed maturity securities and equity securities. In determining fair value, the Company generally does not adjust the prices obtained from the pricing service. The Company obtains an understanding of the pricing service's valuation methodologies and related inputs, which include, but are not limited to, reported trades, benchmark yields, issuer spreads, bids, offers, duration, credit ratings, estimated cash flows, and prepayment speeds.

Refer to Note 5 — Investments for additional information related to the Company's investment portfolio.

Interest rate swap

In December 2020, the Company entered into an interest rate swap with an original notional amount of $ 35.0 million, a fixed swap rate of 0.81 %, and a maturity date in December 2025. The interest rate swap was designated as a cash flow hedge and the Company formally documented the relationship between the interest rate swap and its variable rate borrowings, as well as its risk management objective and strategy for undertaking the hedge transaction. The Company also assessed whether the interest rate swap was highly effective in offsetting variability in the cash flows of its variable rate borrowings. The hedge was deemed highly effective at inception and on an ongoing basis; therefore, any changes in fair value were recorded within "Change in unrealized loss on interest rate swap" in the Condensed Consolidated Statements of Comprehensive Income. The differential paid or received on the interest rate swap agreement was recognized as an adjustment to interest expense within "Interest and other income (expense), net" in the Condensed Consolidated Statements of Operations.

In the second quarter of 2024, the Company reduced its borrowings under the Prior JPM Credit Facility (as defined in Note 15 — Debt) below the $ 35.0 million notional amount of the interest rate swap and, as a result, the interest rate swap was settled prior to its maturity date.

The interest rate swap was classified as Level 2 within the fair value hierarchy. The significant inputs used to determine the fair value of the interest rate swap, such as the Secured Overnight Financing Rate ("SOFR") forward curve, are considered observable market inputs.

Warrant liabilities

The Company's Public Warrants were classified as Level 1 within the fair value hierarchy as they were measured utilizing quoted market prices. The Company's Private Warrants, Underwriter Warrants, OTM Warrants, and PIPE Warrants were classified as Level 3 within the fair value hierarchy. The Company utilized a Monte Carlo simulation model to measure the fair value of the Level 3 warrants. The Company's Monte Carlo simulation model included assumptions related to the expected stock price volatility, expected term, dividend yield, and risk-free interest rate.

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The following table presents a reconciliation of the Company's warrant liabilities that were classified as Level 3 within the fair value hierarchy for the six months ended June 30, 2024:


	Private Warrants		Underwriter Warrants		OTM Warrants		PIPE Warrants		Total

	in thousands
Balance at December 31, 2023	$	476	$	53	$	3,981	$	20,020	$	24,530
Change in fair value of warrant liabilities	81		9		696		4,995		5,781
Balance at June 30, 2024	$	557	$	62	$	4,677	$	25,015	$	30,311

In July 2024, the Company completed an exchange offer under which holders of the Company's warrants were issued 3,876,201 shares of Class A Common Stock in exchange for 19,483,539 warrants, with a nominal cash settlement paid in lieu of fractional shares (the "Warrant Exchange"). No warrants remained outstanding following the completion of the Warrant Exchange.

Summary of assets and liabilities measured at fair value

The fair values of the Company's financial assets and liabilities as of June 30, 2025 and December 31, 2024 are shown in the following tables:


	Estimated Fair Value as of June 30, 2025
	Total		Level 1		Level 2		Level 3

Financial Assets	in thousands
Investments:
Corporate	$	231,334	$	—	$	231,334	$	—
U.S. Treasury	154,354		—		154,354		—
States and municipalities	30,624		—		30,624		—
Foreign	20,852		—		20,852		—
Asset-backed securities	27,901		—		27,901		—
Mortgage-backed securities	124,053		—		124,053		—
Common stocks	12,456		12,456		—		—
Total	$	601,574	$	12,456	$	589,118	$	—

	Estimated Fair Value as of December 31, 2024
	Total		Level 1		Level 2		Level 3

Financial Assets	in thousands
Investments:
Corporate	$	231,189	$	—	$	231,189	$	—
U.S. Treasury	145,875		—		145,875		—
States and municipalities	31,585		—		31,585		—
Foreign	21,057		—		21,057		—
Asset-backed securities	23,680		—		23,680		—
Mortgage-backed securities	124,302		—		124,302		—
Common stocks	11,839		11,839		—		—
Total	$	589,527	$	11,839	$	577,688	$	—

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7 — Notes Receivable

Broad Arrow Capital — BAC provides financing solutions to qualified collectors and businesses by structuring loans secured by collector cars. The loans underwritten by BAC include term loans and short-term bridge financings. The loans underwritten by BAC are recorded on the Condensed Consolidated Balance Sheets within "Notes receivable".

Loans carry either a fixed or variable rate of interest and typically require periodic interest payments over the life of the loan with the principal amount due at maturity. Loans have an initial maturity of up to two years , often with an option for the borrower to renew for one year increments, provided the borrower remains in good standing, including maintaining a specified targeted loan-to-value ("LTV") ratio for the loan. As of June 30, 2025, the loans underwritten by BAC were classified as Level 3 within the fair value hierarchy, with the carrying values of the loans approximating their fair values due to the relatively short-term maturities and the variable interest rates associated with most loans. The lending activities of BAC are funded, in part, with borrowings drawn from the BAC Credit Facility, with the remainder funded by the Company's available liquidity. Refer to Note 15 — Debt for additional information regarding the BAC Credit Facility.

BAC aims to mitigate the risk associated with a potential devaluation in collateral by targeting an LTV ratio of 65 % or less (i.e., the principal loan amount divided by the estimated value of the collateral at the time of underwriting). The LTV ratio is reassessed on a quarterly basis or if the loan is renewed. The LTV ratio is reassessed more frequently if there is a material change in the circumstances related to the loan, including if there is a material change in the value of the collateral, a material change in the borrower's disposal plans for the collateral, or if an event of default occurs. If, as a result of this reassessment, the LTV ratio increases above the target level, the borrower may be asked to make principal payments and/or post sufficient additional collateral to reduce the LTV ratio as a condition of future financing, renewal, or to avoid a default. In the event of a default by a borrower, BAC is entitled to sell the collateral to recover the outstanding principal, accrued interest balance, and any expenses incurred with respect to the recovery process.

Management considers the valuation of the underlying collateral and the LTV ratio to be the two most critical credit quality indicators for the loans made by BAC. In estimating the value of the underlying collateral for BAC's loans, management utilizes its expertise in the collector car market and considers an array of factors impacting the current and expected sale value of each car including the year, make, model, mileage, history, and in the case of classic cars, the provenance, quality of restoration (if applicable), the originality of the body, chassis, and mechanical components, and comparable market transaction values.

The repayment of BAC's loans can be adversely impacted by a borrower's deteriorating financial circumstances, a decline in the collector car market in general or in the value of the collateral, which may be concentrated within certain marques, vintages, or types of cars. In addition, in situations when BAC's claim on the collateral is subject to a legal dispute, the ability to realize proceeds from the collateral may be limited or delayed.

As of June 30, 2025, BAC's net notes receivable balance was $ 84.5 million, of which $ 69.2 million was classified within current assets and $ 15.3 million was classified within long-term assets on the Condensed Consolidated Balance Sheets. As of December 31, 2024, BAC's net notes receivable balance was $ 57.0 million, of which $ 45.4 million was classified within current assets and $ 11.6 million was classified within long-term assets on the Condensed Consolidated Balance Sheets. The classification of a loan as current or long-term is based on the contractual maturity date of the loan as of the balance sheet date.

The table below provides the aggregate LTV ratio for BAC's loan portfolio as of June 30, 2025 and December 31, 2024:


	June 30,			December 31,
	2025			2024

	in thousands
Secured loans	$	84,515		$	56,972
Estimate of collateral value	$	142,716		$	95,778
Aggregate LTV ratio	59.2		%	59.5		%

Management considers a loan to be past due when an interest payment is not paid within 10 business days of the monthly due date, or if the principal amount is not repaid by the contractual maturity date. Typically, a loan becomes past due only for a short period of time during which the loan is renewed or collateral is sold to satisfy the borrower's obligations. As of June 30, 2025 and December 31, 2024, the amount of past due principal and interest payments was not material.

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A non-accrual loan is a loan for which future finance revenue is not recorded due to management's determination that it is probable that future interest on the loan will not be collectible. When a loan is placed on non-accrual status, any accrued interest receivable deemed not collectible is reversed against finance revenue. Any cash receipts subsequently received on non-accrual loans are first applied to reduce the recorded principal balance of the loan, with any proceeds in excess of the principal balance then applied to interest and expenses owed by the borrower. As of June 30, 2025 and December 31, 2024, there were no non-accrual loans.

As of June 30, 2025 and December 31, 2024, the allowance for expected credit losses related to the BAC loan portfolio was not material based on management's quarterly risk assessment, which takes into consideration a number of factors including the level of historical losses for similar loans, the quality of the collateral, the LTV ratio of the loans, management's overall assessment of the current circumstances and risks related to each loan, and, to a lesser extent, the circumstances related to each borrower.

Other Notes Receivable — From time-to-time, Broad Arrow provides financing for its auction and private sale buyers, retaining a security interest in the purchased vehicle. The resulting loans are typically interest-bearing with required periodic interest payments and, in certain cases, required periodic principal payments. As of June 30, 2025, the related outstanding loan balance was $ 12.8 million and was classified within current Notes Receivable on the Condensed Consolidated Balance Sheets.

Broad Arrow also makes consignor advances secured by vehicle(s) that are contractually committed, in the near term, to be offered for sale at auction. Consignor advances allow sellers to receive funds upon consignment for an auction that will occur up to one year in the future and normally have short-term maturities. In the event the vehicle(s) are not successfully sold at auction, the consignor can repay the outstanding principal and accrued interest of the consignor advance or convert the consignor advance to a BAC loan. As of June 30, 2025, outstanding consignor advances were $ 1.5 million and were classified within current Notes Receivable on the Condensed Consolidated Balance Sheets.

Under certain circumstances, Broad Arrow also provides loans to certain car dealers to finance the purchase of collectible cars, retaining a security interest in the purchased vehicle. In these situations, Broad Arrow acquires a partial ownership interest in the car in addition to providing the loan. Upon the eventual sale of the acquired car, the loan is repaid. As of June 30, 2025, this outstanding loan balance was $ 2.6 million and was recorded within long-term Notes Receivable on the Condensed Consolidated Balance Sheets.

These loans are classified on the Condensed Consolidated Statements of Cash Flows within Operating Activities as they are made in support of Broad Arrow's auction and private sale activities.

Concentration Risk — As of June 30, 2025, three borrowers each had loan balances that exceeded 10% of the total notes receivable balance. These loans total $ 33.3 million, representing 33 % of the total loan portfolio. The collateral related to these loans was $ 50.7 million, resulting in an aggregate LTV ratio of 66 %.

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8 — Other Assets

As of June 30, 2025 and December 31, 2024, other assets, current and long-term, consisted of:


	June 30,		December 31,
	2025		2024

	in thousands
Prepaid software-as-a-service ("SaaS") implementation costs	$	52,021	$	41,110
Prepaid sales, general and administrative expenses	25,108		20,134
Deferred reinsurance premiums ceded	25,846		18,521
Inventory (1)	17,700		18,484
Reinsurance recoverable	22,317		11,927
Other investments	10,540		10,312
Contract costs	9,759		9,399
Accrued investment income	4,880		4,827
Deferred financing costs related to revolving credit facilities	3,656		3,489
Other	10,927		9,464
Other assets	$	182,754	$	147,667

(1) Inventory primarily includes vehicles owned by Broad Arrow that have been purchased for resale purposes.

As of June 30, 2025, Other primarily included a $ 4.5 million tax receivable, $ 2.7 million of collector vehicle investments, $ 1.8 million related to capitalized digital media content, and a $ 1.5 million receivable related to a prior year divestiture. As of December 31, 2024, Other primarily included $ 2.5 million of collector vehicle investments, $ 2.2 million related to capitalized digital media content, and a $ 2.0 million tax receivable.

9 — Leases

The following table summarizes the components of the Company's operating lease expense for the three and six months ended June 30, 2025 and 2024:


	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024

	in thousands
Operating lease expense (1)	$	2,116	$	1,841	$	4,226	$	4,038
Variable lease expense (1) (2)	874		1,304		1,768		1,970
Sublease revenue (3)	( 254 )		( 353 )		( 555 )		( 656 )
Lease cost, net	$	2,736	$	2,792	$	5,439	$	5,352

(1) Classified within "General and administrative expenses" in the Condensed Consolidated Statements of Operations.

(2) Amounts include payments for maintenance, taxes, insurance, and payments affected by the Consumer Price Index.

(3) Classified within "Membership, marketplace and other revenue" in the Condensed Consolidated Statements of Operations.

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The following tables summarize supplemental balance sheet information related to operating leases as of June 30, 2025 and December 31, 2024:


	June 30,		December 31,
	2025		2024

	in thousands
Operating lease ROU assets	$	42,549	$	44,485

Current lease liabilities (1)	6,777		6,715
Long-term lease liabilities	40,903		43,178
Total operating lease liabilities	$	47,680	$	49,893

(1) Current lease liabilities are recorded within "Accounts payable, accrued expenses and other current liabilities" on the Condensed Consolidated Balance Sheets.


	June 30,			December 31,
	2025			2024

	in thousands
ROU assets obtained in exchange for new operating lease liabilities	$	916		$	1,317
Weighted average lease term	7.88			8.23
Weighted average discount rate	5.0		%	5.0		%

The following table summarizes information about the amount and timing of the Company's future operating lease commitments as of June 30, 2025:


	in thousands
2025 - remaining	$	4,611
2026	8,624
2027	8,160
2028	8,074
2029	6,281
Thereafter	22,548
Total lease payments	58,298
Less: imputed interest	( 10,618 )
Total lease liabilities	$	47,680

10 — Acquisition

On September 1, 2024, the Company's subsidiary, Hagerty Insurance Holdings, Inc., acquired all of the issued and outstanding capital stock of Consolidated National Insurance Company, which was subsequently renamed Drivers Edge, for a purchase price of $ 19.3 million, including $ 0.9 million in direct and incremental transaction costs. The acquisition of Drivers Edge was accounted for as an asset acquisition with the $ 19.3 million purchase price allocated to approved state licenses ($ 11.3 million), cash and cash equivalents ($ 3.9 million), restricted fixed maturity securities ($ 3.7 million), and restricted cash and cash equivalents ($ 0.4 million).

11 — Divestiture

In June 2024, THG sold substantially all of the assets and liabilities of Motorsport Reg ("MSR"), a motorsport membership, licensing and event online management system, to a third party. The material elements of the sale consideration include a fixed purchase price and a contingent payment opportunity, based on future performance. The Company recognized a $ 0.1 million gain related to the sale of MSR in the second quarter of 2024, which was recorded within "Gain related to divestiture" on the Company's Condensed Consolidated Statements of Operations.

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12 — Intangible Assets

The cost and accumulated amortization of intangible assets as of June 30, 2025 and December 31, 2024 are as follows:


	June 30, 2025
	Weighted average useful life	Gross carrying amount		Accumulated amortization		Net carrying amount

		in thousands
Internally developed software	3.4	$	144,579	$	( 92,928 )	$	51,651
Renewal rights	9.9	19,631		( 9,658 )		9,973
Trade names and trademarks	14.2	11,867		( 3,824 )		8,043
State licenses (1)	Indefinite	11,263		—		11,263
Relationships and customer lists	15.5	7,914		( 2,119 )		5,795
Other	3.6	620		( 613 )		7
Total intangible assets		$	195,874	$	( 109,142 )	$	86,732

(1) Represents approved state licenses related to the acquisition of Drivers Edge. Refer to Note 10 — Acquisition for additional details.


	December 31, 2024
	Weighted average useful life	Gross carrying amount		Accumulated amortization		Net carrying amount

		in thousands
Internally developed software	3.3	$	136,235	$	( 82,903 )	$	53,332
Renewal rights	9.9	19,187		( 8,458 )		10,729
Trade names and trademarks	14.1	12,061		( 3,393 )		8,668
State licenses (1)	Indefinite	11,263		—		11,263
Relationships and customer lists	15.4	7,975		( 1,896 )		6,079
Other	4.2	1,065		( 1,029 )		36
Total intangible assets		$	187,786	$	( 97,679 )	$	90,107

(1) Represents approved state licenses related to the acquisition of Drivers Edge. Refer to Note 10 — Acquisition for additional details.

Intangible asset amortization expense was $ 5.8 million and $ 6.9 million for the three months ended June 30, 2025 and 2024, respectively, and $ 12.2 million and $ 14.3 million for the six months ended June 30, 2025 and 2024, respectively.

Estimated future aggregate amortization expense related to intangible assets as of June 30, 2025 is as follows:


	in thousands
2025 - remaining	$	11,908
2026	20,779
2027	17,309
2028	11,037
2029	4,905
Thereafter	9,531
Total	$	75,469

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13 — Provision for Unpaid Losses and Loss Adjustment Expenses

The following table presents a reconciliation of the beginning and ending provision for unpaid losses and loss adjustment expenses related to Hagerty Re, net of amounts recoverable from various reinsurers:


	Six months ended June 30,
		2025		2024

		in thousands
Gross reserves for unpaid losses and loss adjustment expenses, beginning		$	168,492	$	136,507
Less: Reinsurance recoverable on unpaid losses and loss adjustment expenses		5,769		2,235
Net reserves for unpaid losses and loss adjustment expenses, beginning		162,723		134,272
Incurred losses and loss adjustment expenses:
Current accident year		146,343		127,085

Total incurred losses and loss adjustment expenses		146,343		127,085
Payments:
Current accident year		21,250		11,409
Prior accident years		47,244		40,376
Total payments		68,494		51,785
Effect of foreign currency rate changes		233		( 113 )
Net reserves for unpaid losses and loss adjustment expenses, ending		240,805		209,459
Reinsurance recoverable on unpaid losses and loss adjustment expenses		18,138		7,624
Gross reserves for unpaid losses and loss adjustment expenses, ending		$	258,943	$	217,083

Losses and loss adjustment expenses for the six months ended June 30, 2025 includes approximately $ 10.3 million of pre-tax losses related to the Southern California Wildfires.

Reserving Methodology

The Company records an estimate of quarterly losses and loss adjustment expenses in the Condensed Consolidated Statements of Operations using an annual loss ratio, which is based on statistical analysis performed by the Company's internal and external actuarial teams that consider several factors, including projected levels of catastrophe events. Management believes this approach provides a more consistent view of loss experience over the year given the seasonality of Hagerty Re's business. The annual loss ratio is reviewed throughout the year and adjusted, as necessary.

The provision for unpaid losses and loss adjustment expenses recorded on the Condensed Consolidated Balance Sheets represents (i) the difference between management's estimate of the ultimate cost of losses and loss adjustment expenses incurred by Hagerty Re and (ii) the amount of paid losses as of the reporting date. These reserves reflect management's best estimate of unpaid losses related to reported claims and IBNR claims and also include management's best estimate of all expenses associated with processing and settling reported and unreported claims.

Reserves are reviewed by management quarterly and periodically throughout the year by combining historical results and current actual results to calculate new development factors. Claims are analyzed and reported based on the year in which the loss occurred (i.e., on an accident year basis). Accident year data is classified and utilized within actuarial models to prepare estimates of required reserves for payments to be made in the future.

When estimating reserves, the Company utilizes several actuarial reserving methods which consider historical claim reporting patterns, claim cycle time, claim frequency and severity, claims settlement practices, adequacy of case reserves over time, seasonality, and current economic conditions. Reserve estimates produced by various actuarial reserving methods are further analyzed to determine the actuarial central estimate which represents the expected value over the range of reasonably possible outcomes.

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14 — Reinsurance

The following table presents Hagerty Re's total premiums assumed and ceded on a written and earned basis for the three and six months ended June 30, 2025 and 2024:


	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024

	in thousands
Premiums written:
Assumed	$	247,812	$	217,907	$	423,323	$	375,021
Ceded	( 11,209 )		( 10,143 )		( 31,069 )		( 32,969 )
Net	$	236,603	$	207,764	$	392,254	$	342,052

Premiums earned:
Assumed	$	189,976	$	168,100	$	370,909	$	329,787
Ceded	( 12,191 )		( 10,488 )		( 23,769 )		( 20,556 )
Net	$	177,785	$	157,612	$	347,140	$	309,231

The following table presents gross, ceded, and net losses and loss adjustment expenses incurred for the three and six months ended June 30, 2025 and 2024:


	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024

	in thousands
Gross losses and loss adjustment expenses	$	78,059	$	66,394	$	161,385	$	134,136
Ceded losses and loss adjustment expenses	( 2,846 )		( 1,665 )		( 15,042 )		( 7,051 )
Net losses and loss adjustment expenses	$	75,213	$	64,729	$	146,343	$	127,085

Ceded Reinsurance

Hagerty Re purchases catastrophe reinsurance to protect its capital from large catastrophic events and to provide earnings protection and stability. Hagerty Re renegotiated its catastrophe reinsurance coverage effective January 1, 2025, with terms and limits similar to 2024. The 2025 catastrophe reinsurance program for accounts with total insured values ("TIV") of up to $ 5.0 million affords coverage in excess of a per event retention of $ 28.0 million in two layers; $ 27.0 million excess of $ 28.0 million, and $ 50.0 million excess of $ 55.0 million. Additionally, Hagerty Re purchases facultative reinsurance to cede a portion of the physical damage exposure related to certain high value vehicles.

Hagerty Re cedes 100 % of its physical damage exposure on U.S. accounts written or renewed with TIV equal to or greater than $ 5.0 million ("High-Net-Worth Accounts") via quota share agreements with various reinsurers. These High-Net-Worth Accounts are assumed 100 % from a wholly owned subsidiary of Markel. Certain reinsurers involved in these quota share agreements are related parties. Refer to Note 21 — Related-Party Transactions for additional information.

Hagerty Re receives ceding commissions related to premiums ceded under reinsurance contracts related to High-Net-Worth Accounts. Ceding commissions are recognized ratably over the terms of the related policies, which are generally 12 months, and are recorded within "Ceding commissions, net" in the Company's Condensed Consolidated Statements of Operations. Deferred portions of ceding commissions received are included in "Deferred acquisition costs, net" on the Company's Condensed Consolidated Balance Sheets.

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15 — Debt

As of June 30, 2025 and December 31, 2024, "Long-term debt, net" consisted of the following:


		June 30,		December 31,
	Maturity	2025		2024

		in thousands
2025 JPM Credit Facility	March 2030	$	111,599	$	—
Prior JPM Credit Facility (1)	October 2026	—		50,296
BAC Credit Facility	December 2026	38,871		30,193
State Farm Term Loan	September 2033	25,000		25,000
Notes payable	2025	580		792
Total debt		176,050		106,281
Less: BAC Credit Facility, current portion		( 21,596 )		—
Less: Notes payable, current portion		( 580 )		( 792 )
Less: Unamortized debt issuance costs related to the State Farm Term Loan		( 491 )		( 521 )
Total long-term debt, net		$	153,383	$	104,968

(1) The Prior JPM Credit Facility, originally scheduled to mature in October 2026, was terminated upon the initiation of the 2025 JPM Credit Facility.

2025 JPM Credit Facility

In March 2025, THG entered into a credit agreement with JPMorgan Chase Bank, N.A. ("JPM"), as administrative agent, issuing bank and swingline lender, the foreign subsidiary borrowers thereto, and the other financial institutions party thereto as lenders (the "2025 JPM Credit Agreement").

The 2025 JPM Credit Agreement provides for a senior unsecured revolving credit facility (the "2025 JPM Credit Facility") with an aggregate borrowing capacity of $ 375.0 million. The 2025 JPM Credit Agreement includes (i) a $ 175.0 million sublimit for letters of credit, (ii) a $ 100.0 million sublimit for foreign currency borrowings, and (iii) an uncommitted accordion feature of $ 75.0 million, plus an unlimited amount so long as THG's net leverage ratio is below 3.25 . The 2025 JPM Credit Agreement matures in March 2030, but may be extended if agreed to by THG and the lenders party thereto. Any unpaid balance on the 2025 JPM Credit Facility is due at maturity.

THG used borrowings from the 2025 JPM Credit Facility to repay in full all indebtedness, liabilities and other obligations outstanding under, and terminated, THG's prior credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, issuing bank and swingline lender, the foreign subsidiary borrowers party thereto, and the other financial institutions party thereto as lenders ("Prior JPM Credit Agreement"). THG incurred approximately $ 1.0 million in fees for the 2025 JPM Credit Agreement, which, along with the remaining unamortized fees associated with the Prior JPM Credit Agreement, are being amortized over the agreement's five-year term.

The 2025 JPM Credit Facility accrues interest at the applicable reference rate, primarily Term SOFR, depending on the currency of the borrowing plus an applicable margin determined by the Company's net leverage ratio for the preceding period (as defined in the 2025 JPM Credit Facility). The effective interest rates related to the 2025 JPM Credit Agreement and the Prior JPM Credit Agreement were 5.81 % and 6.90 % for the six months ended June 30, 2025 and 2024, respectively.

The 2025 JPM Credit Agreement requires THG to, among other things, meet certain financial covenants, including a minimum fixed charge coverage ratio test and a maximum leverage ratio test. As of June 30, 2025, THG was in compliance with these financial covenants.

As of June 30, 2025, the carrying value of the outstanding borrowings under the 2025 JPM Credit Facility approximated its fair value due to the variable interest rates associated with the outstanding borrowings.

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BAC Credit Facility

BAC and its wholly owned subsidiary BAC Funding 2023-1, LLC, as borrower, have a revolving credit agreement (the "BAC Credit Agreement") that provides for a revolving credit facility (the "BAC Credit Facility") with an aggregate borrowing capacity of $ 75.0 million. The BAC Credit Facility's borrowing base is determined by the carrying value of certain BAC notes receivable. As of June 30, 2025, the applicable borrowing base and outstanding borrowings for the BAC Credit Agreement were $ 38.9 million.

The revolving borrowing period expires in December 2025, followed by an amortization period until the BAC Credit Facility ultimately matures in December 2026. The borrowing period and the maturity date may be extended by one year if requested by BAC and agreed by the administrative agent. BAC is not a borrower or guarantor of the BAC Credit Facility.

BAC and certain of its subsidiaries may transfer notes receivable to wholly owned, bankruptcy remote SPEs to secure borrowings, isolating these assets from the Company's other obligations. Recourse is limited to (i) an obligation of the applicable seller to repurchase a note receivable if it is determined that there was a breach of any representation or warranty relating to such note receivable as of the relevant date specified in the related transfer agreement and (ii) a limited guarantee for certain liabilities that may result under certain foreign exchange hedging activity of one of the SPEs.

BAC and BAC Funding 2023-1, LLC are required, among other things, to meet certain financial covenants including that BAC, as the servicer, maintain a minimum tangible net worth, minimum liquidity balances, and an indebtedness to tangible net worth ratio. As of June 30, 2025, the Company was in compliance with the financial covenants under the BAC Credit Agreement.

As of June 30, 2025, the carrying value of the $ 38.9 million in outstanding borrowings under the BAC Credit Facility approximated its fair value due to the variable interest rates associated with the outstanding borrowings. The current portion of the outstanding BAC Credit Agreement borrowings is recorded within "Accounts payable, accrued expenses and other current liabilities" on the Condensed Consolidated Balance Sheets.

State Farm Term Loan

In September 2023, Hagerty Re entered into an unsecured term loan credit facility with State Farm in the aggregate principal amount of $ 25.0 million (the "State Farm Term Loan"). The State Farm Term Loan bears interest at a rate of 8.0 % per annum and will mature in September 2033. State Farm is a related party to the Company. Refer to Note 21 — Related-Party Transactions for additional information.

Notes Payable

As of June 30, 2025 and December 31, 2024, the Company had outstanding notes payable, which are used to fund certain loans made by BAC in the United Kingdom ("U.K."), totaling $ 0.6 million and $ 0.8 million, respectively. The effective interest rates for these notes payable is 9.8 % with repayment due between August and October 2025. Refer to Note 7 — Notes Receivable for additional information on the lending activities of BAC.

Letters of Credit

As of June 30, 2025, the Company has authorized three letters of credit for a total of $ 10.8 million for operational purposes, primarily related to Hagerty Re's Section 953(d) tax structuring election, and to a much lesser extent, a requirement under a quota share agreement, and lease down payment support.

16 — Convertible Preferred Stock

In June 2023, the Company entered into a Securities Purchase Agreement (the "Purchase Agreement") with certain accredited investors (the "Investors"), pursuant to which it closed, issued and sold (the "Closing") to the Investors an aggregate of 8,483,561 shares of the Company's newly-designated Series A Convertible Preferred Stock, par value $ 0.0001 per share, for an aggregate purchase price of $ 80.0 million, at a per-share purchase price of $ 9.43 (the "Series A Purchase Price" and the transaction, the "Private Placement").

The Investors include State Farm, Markel, and individuals related to Hagerty Holding Corp. ("HHC"). State Farm and Markel each own over 5 % of the outstanding common stock. McKeel Hagerty, the Company's CEO and the Chairman of its Board of Directors (the "Board"), along with Tammy Hagerty, may be deemed to control HHC, the controlling stockholder of the Company. Both State Farm and Markel can nominate one director to the Board, while HHC can nominate two directors. Refer to Note 17 — Stockholders' Equity and Note 21 — Related-Party Transactions for additional information.

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The net proceeds from the Private Placement after deducting issuance costs of approximately $ 0.8 million were $ 79.2 million, which was recorded within Temporary Equity on the Company's Condensed Consolidated Balance Sheets. The Company used the net proceeds from the Private Placement for general corporate purposes.

As of June 30, 2025, the estimated redemption value of the Series A Convertible Preferred Stock was $ 107.8 million, which represents the maximum cash payment, including cumulative dividends, that would be required to be paid if the Optional Term Redemption provision in the Certificate of Designations, as summarized below, is exercised as of the earliest possible redemption date of June 23, 2028. The decision to redeem the Series A Convertible Preferred Stock for cash is made at the discretion of the Company; however, the Company is controlled by HHC through its voting control of the Company. Accordingly, the redemption of the Series A Convertible Preferred Stock is considered outside the control of the Company and, as a result, the Series A Convertible Preferred Stock is recorded within Temporary Equity on the Company's Condensed Consolidated Balance Sheets.

The Company has elected to apply the accretion method to adjust the carrying value of the Series A Convertible Preferred Stock to its estimated redemption value. Amounts recognized to accrete the Series A Convertible Preferred Stock to its estimated redemption value are treated as a deemed dividend and are recorded as a reduction to "Additional paid-in capital". The estimated redemption value may vary in subsequent periods and the Company has elected to recognize such changes prospectively.

The captioned sections below provide a summary of the material terms of the Series A Convertible Preferred Stock, as set forth in the Certificate of Designations, Preferences and Rights of the Series A Convertible Preferred Stock (the "Certificate of Designations").

Ranking — The Series A Convertible Preferred Stock ranks senior to the Class A Common Stock, the Class V Common Stock, and each other class or series of shares of the Company that the Company may issue in the future the terms of which do not expressly provide that such class or series ranks equally with, or senior to, the Series A Convertible Preferred Stock, with respect to dividend rights and/or rights upon liquidation, winding up or dissolution.

Dividends — Dividends on the Series A Convertible Preferred Stock are cumulative and accrue from the date of issuance at the rate per annum of 7 % of the Series A Purchase Price of each share, plus the amount of previously accrued dividends, compounded annually (the "Accruing Dividends"). The Company may elect to pay the Accruing Dividends either in cash or in additional shares of Series A Convertible Preferred Stock. Prior to the third anniversary of the Closing, the Series A Convertible Preferred Stock will participate on an as-converted basis in dividends declared and paid on the Class A Common Stock. In June 2025 and 2024, the Company paid $ 5.6 million, respectively, of cash dividends on the Series A Convertible Preferred Stock to the Investors.

Conversion — Any shares of Series A Convertible Preferred Stock may, at the option of the holder, be converted at any time into shares of Class A Common Stock. The conversion price for the Series A Convertible Preferred Stock is initially $ 11.79 and is subject to adjustment upon certain events, including a stock split, a reverse stock split, or a dividend of the Class A Common Stock or Class V Common Stock to the Company's common stockholders (as adjusted, the "Conversion Price"). The Company may require such conversion (i) if the closing price per share of Class A Common Stock, for at least twenty ( 20 ) of any thirty ( 30 ) consecutive trading days, exceeds: (a) on or after the third and prior to the seventh anniversary of the Closing, 150 % of the Conversion Price; or (b) on or after the seventh and prior to the tenth anniversary of the Closing, 100 % of the Conversion Price; and (ii) on or after the tenth anniversary of the Closing. The conversion rate in effect at any applicable time (the "Conversion Rate") is the quotient obtained by dividing the Series A Purchase Price by the Conversion Price.

As of June 30, 2025, no shares of Series A Convertible Preferred Stock had been converted and the outstanding shares of Series A Convertible Preferred Stock were convertible into 6,785,410 shares of Class A Common Stock.

Voting — The Series A Convertible Preferred Stock votes together with the Class A Common Stock on an as-converted basis, and not as a separate class. The Investors have veto rights over (i) changes to the terms of the Certificate of Designations or the Company's certificate of incorporation or bylaws that adversely impact the Series A Convertible Preferred Stock and (ii) the issuance of equity securities senior to the Series A Convertible Preferred Stock or other securities convertible thereto.

Liquidation Preference — In the event of any liquidation, dissolution or winding up of the Company, each share of Series A Convertible Preferred Stock will be paid the greater of (i) the Series A Purchase Price plus any Accruing Dividends accrued but unpaid thereon, and (ii) the amount that such share of Series A Convertible Preferred Stock would have received had it converted into the Class A Common Stock immediately prior to such liquidation, dissolution or winding up of the Company (the "Liquidation Preference"). After payment of the Liquidation Preference, the Series A Convertible Preferred Stock will no longer be convertible and will not participate in any distribution made to the holders of the Class A Common Stock or Class V Common Stock.

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Change of Control — Upon a merger, consolidation, sale or other change of control transaction as described in the Certificate of Designations (a "Change of Control"), either (i) the Company may elect to redeem the Series A Convertible Preferred Stock or (ii) each holder of Series A Convertible Preferred Stock, individually, may require the Company to redeem all or any portion of the Series A Convertible Preferred Stock. The redemption price per share to be paid by the Company would be the greater of: (a) the Series A Purchase Price plus any accrued but unpaid Accruing Dividends multiplied by (i) if prior to or on the third anniversary of the Closing, 120 %; (ii) if after the third but prior to or on the fifth anniversary of the Closing, 110 %; (iii) if after the fifth anniversary of the Closing, 100 %; and (b) the amount such share of Series A Convertible Preferred Stock would have received had it converted into the Class A Common Stock prior to the Change of Control. Any shares of Series A Convertible Preferred Stock that are not so redeemed will automatically convert into shares of Class A Common Stock and be paid in connection with the Change of Control.

Fundamental Transaction — In the event of any acquisition by the Company with a transaction value of at least $ 500.0 million or any equity or debt financing by the Company that raises at least $ 500.0 million, either (i) the Company may elect to redeem the Series A Convertible Preferred Stock, or (ii) each holder of Series A Convertible Preferred Stock, individually, may require the Company to redeem all or any portion of its Series A Convertible Preferred Stock. The redemption price per share to be paid by the Company would be the Series A Convertible Preferred Stock plus any accrued but unpaid Accruing Dividends multiplied by: (a) if prior to or on the third anniversary of the Closing, 120 %; (b) if after the third but prior to or on the fifth anniversary of the Closing, 110 %; (c) if after the fifth but prior to or on the sixth anniversary of the Closing, 108 %; (d) if after the sixth but prior to or on the seventh anniversary of the Closing, 106 %; (e) if after the seventh but prior to or on the eighth anniversary of the Closing, 104 %; (f) if after the eighth but prior to or on the ninth anniversary of the Closing, 102 %; or (g) if after the ninth anniversary of the Closing, 100 %.

Optional Term Redemption — Any time after the fifth anniversary of the Closing, the Company may redeem all or any portion of the then-outstanding shares of the Series A Convertible Preferred Stock for cash (a "Term Redemption"). The redemption price per share to be paid by the Company would be equal to the greater of: (i) the Series A Purchase Price plus any accrued but unpaid Accruing Dividends multiplied by: (a) if after the fifth but prior to the sixth anniversary of the Closing, 110 %; (b) if on or after the sixth but prior to the seventh anniversary of the Closing, 108 %; (c) if on or after the seventh but prior to the eighth anniversary of the Closing, 106 %; (d) if on or after the eighth but prior to the ninth anniversary of the Closing, 104 %; (e) if on or after the ninth but prior to tenth anniversary of the Closing, 102 %; or (f) if on or after the tenth anniversary of the Closing, 100 %; and (ii) the amount such share of Series A Convertible Preferred Stock would have received had it converted into Class A Common Stock prior to the Term Redemption.

Registration Rights Agreement — In connection with the Private Placement, the Company entered into a registration rights agreement with the Investors (the "Registration Rights Agreement") pursuant to which, the Investors will be entitled to certain demand, shelf and piggyback registration rights with respect to the Series A Convertible Preferred Stock and shares of the Class A Common Stock issuable upon conversion thereof.

17 — Stockholders' Equity

Class A Common Stock

Hagerty, Inc. is authorized to issue 500,000,000 shares of Class A Common Stock with a par value of $ 0.0001 per share. Holders of Class A Common Stock are entitled to one vote for each share. As of June 30, 2025 and December 31, 2024, there were 90,715,648 and 90,032,391 shares of Class A Common Stock issued and outstanding, respectively.

Class V Common Stock

Hagerty, Inc. is authorized to issue 300,000,000 shares of Class V Common Stock with a par value of $ 0.0001 per share. Class V Common Stock represents voting, non-economic interests in Hagerty, Inc. Holders of Class V Common Stock are entitled to 10 votes for each share. In connection with the business combination that formed Hagerty, Inc. in 2021, shares of Class V Common Stock were issued to HHC and Markel (together, the "Legacy Unit Holders") along with an equivalent number of THG units, as discussed below under "Exchange of THG Units". Each share of Class V Common Stock, together with the corresponding unit of THG, is exchangeable for one share of Class A Common Stock. As of June 30, 2025 and December 31, 2024, there were 251,033,906 shares of Class V Common Stock issued and outstanding.

Preferred Stock

Hagerty, Inc. is authorized to issue 20,000,000 shares of Preferred Stock with a par value of $ 0.0001 per share. The Board has the authority to issue shares of Preferred Stock with such designations, voting and other rights and preferences as may be determined from time to time.

As of June 30, 2025 and December 31, 2024, there were 8,483,561 shares of Preferred Stock issued and outstanding, which may, at the option of the holder, be converted at any time into shares of Class A Common Stock. Refer to Note 16 — Convertible Preferred Stock for additional information.

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Non-controlling Interests

Hagerty, Inc. owns one THG unit for each share of Class A Common Stock outstanding, and is the sole managing member of THG. As a result, Hagerty, Inc. consolidates the financial statements of THG into its Condensed Consolidated Financial Statements. The Company reports a non-controlling interest representing the economic interest in THG held by other unit holders of THG.

The following table summarizes the changes in ownership of THG units for the periods presented:


	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024
THG units held by Hagerty, Inc.
Beginning of period	90,064,663		84,655,539		90,032,391		84,588,536
Issuance of shares under employee plans	596,683		916,223		604,955		983,226
Exchange of THG units for Class A Common Stock	54,302		131,524		78,302		131,524

End of period	90,715,648		85,703,286		90,715,648		85,703,286
Ownership percentage
Beginning of period	26.1	%	24.9	%	26.1	%	24.9	%
End of period	26.2	%	25.1	%	26.2	%	25.1	%

THG units held by other unit holders
Beginning of period	255,154,346		255,499,164		255,178,346		255,499,164
Exchange of THG units for Class A Common Stock	( 54,302 )		( 131,524 )		( 78,302 )		( 131,524 )
End of period	255,100,044		255,367,640		255,100,044		255,367,640
Ownership percentage
Beginning of period	73.9	%	75.1	%	73.9	%	75.1	%
End of period	73.8	%	74.9	%	73.8	%	74.9	%

Total THG units outstanding	345,815,692		341,070,926		345,815,692		341,070,926

At the end of each reporting period, THG equity attributable to Hagerty, Inc. and the non-controlling interest unit holders, respectively, is reallocated to reflect their current ownership in THG.

Shares Issued Under Employee Plans

Employees of THG subsidiaries are awarded share-based compensation in the form of RSUs and performance restricted stock units ("PRSUs") under the 2021 Stock Incentive Plan. Upon the vesting of these awards, the employees receive shares of Class A Common Stock and the Company is issued an equivalent number of THG units, thereby increasing its ownership interest in THG. Employees of THG subsidiaries may also participate in the 2021 Employee Stock Purchase Plan under which these employees may purchase shares of Class A Common Stock at a discounted price and the Company is issued an equivalent number of THG units.

During the six months ended June 30, 2025 and 2024, the Company received 571,405 and 983,226 THG units, respectively, in connection with shares of Class A Common Stock that were issued as a result of share-based compensation awards vesting under the 2021 Stock Incentive Plan. In addition, during the six months ended June 30, 2025, the Company received 33,550 THG units in connection with shares of Class A Common Stock that were issued related to the 2021 Employee Stock Purchase Plan. No shares related to the Company's 2021 Employee Stock Purchase Plan were issued during the six months ended June 30, 2024.

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Exchange of THG Units

Each THG unit and, if applicable, the associated share of Class V Common Stock, are exchangeable for, at the Company's option, one share of Class A Common Stock or cash. If the Company elects for an exchange to be settled in cash, the cash used to settle the exchange must be funded through a new equity offering of Class A Common Stock. Upon completion of any THG unit exchange, shares of any exchanged Class V Common Stock are cancelled and Hagerty, Inc. retains the exchanged THG units. Changes in Hagerty, Inc.'s ownership interest in THG while retaining its controlling interest are accounted for as equity transactions. Accordingly, exchanges of THG units by unit holders other than Hagerty, Inc. increase Hagerty, Inc.'s ownership in THG, thereby reducing the amount recorded as "Non-controlling interest" and increasing "Additional paid-in capital".

During the six months ended June 30, 2025 and 2024, 78,302 and 131,524 , respectively, THG units were exchanged for an equal number of shares of Class A Common Stock. These exchanges resulted in reductions to "Non-controlling interest" and corresponding increases to "Additional paid-in capital" of $ 0.7 million and $ 1.2 million representing the fair value of Class A Common Stock on the date of each exchange during the six months ended June 30, 2025 and 2024, respectively.

THG Preferred Units

In connection with the Private Placement, the Fourth Amended and Restated Limited Liability Company Agreement of THG was amended and restated in the form of a Fifth Amended and Restated Limited Liability Company Agreement (as subsequently amended and restated, the " THG LLC Agreement") , to, among other things, create a new series of preferred units within THG (the " THG Preferred Units"). The terms of the THG Preferred Units parallel the terms of the Series A Convertible Preferred Stock and are held entirely by Hagerty, Inc.

The THG Preferred Units are recorded on the financial statements of THG based on their estimated redemption value, which represents the maximum cash payment, including cumulative dividends, that would be required to be paid to Hagerty, Inc. if the Optional Term Redemption of the Series A Convertible Preferred Stock is exercised. Amounts recognized to accrete the THG Preferred Units to their estimated redemption value are treated as a deemed dividend due to Hagerty, Inc. The amount of this deemed dividend is attributed entirely to Hagerty, Inc. prior to allocating the remainder of THG's net income between controlling and non-controlling interests. In June 2025 and 2024, THG paid $ 5.6 million, respectively, of cash dividends to Hagerty, Inc. on the THG Preferred Units. Refer to Note 16 — Convertible Preferred Stock for additional information on the Private Placement and the Series A Convertible Preferred Stock.

Distributions to Unit Holders of THG

Under the terms of the THG LLC Agreement, THG is obligated to make tax distributions to its unit holders. During the six months ended June 30, 2025 and 2024, THG made tax distributions of $ 30.4 million and $ 5.3 million, respectively, to non-controlling interest unit holders and $ 11.8 million and $ 1.1 million, respectively, of tax distributions to Hagerty, Inc.

18 — Share-Based Compensation

The Company's 2021 Stock Incentive Plan provides for the issuance of up to approximately 38.3 million shares of Class A Common Stock to employees and non-employee directors. The 2021 Stock Incentive Plan allows for the issuance of incentive stock o ptions, non-qualified stock options, restricted stock awards, stock appreciation rights, RSUs, and PRSUs. As of June 30, 2025, there were approximately 25.9 million shares available for future grants under the 2021 Stock Incentive Plan.

Share-based compensation expense related to employees is recognized within "Salaries and benefits" in the Condensed Consolidated Statements of Operations. Share-based compensation expense related to non-employee directors is recognized within "General and administrative expenses" in the Condensed Consolidated Statements of Operations. The Company recognizes forfeitures of share-based compensation awards in the period in which they occur.

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The following table summarizes share-based compensation expense recognized during the three and six months ended June 30, 2025 and 2024:


	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024

	in thousands
Restricted stock units	$	3,719	$	3,214	$	6,921	$	7,042
Performance restricted stock units	1,427		1,169		2,617		1,884

Total share-based compensation expense	$	5,146	$	4,383	$	9,538	$	8,926

Restricted Stock Units

RSUs typically vest over a two to five-year period based on the requisite service period. The grant date fair value is determined based on the closing market price of the Class A Common Stock on the business day prior to the grant date and the related share-based compensation expense is recognized over the requisite service period on a straight-line basis.

The following table provides a summary of RSU activity during the six months ended June 30, 2025:


	Restricted Stock Units	Weighted Average Grant Date Fair Value
Unvested balance as of December 31, 2024	3,682,679	$	9.65
Granted	1,134,502	9.04
Vested (1)	( 841,333 )	9.59
Forfeited	( 47,617 )	9.27
Unvested balance as of June 30, 2025	3,928,231	$	9.49

(1) For the six months ended June 30, 2025, 571,405 shares of Class A Common Stock were issued related to the vesting of RSUs in the period, net of shares withheld for the funding of employee tax obligations.

The following table provides additional data related to RSU award activity during the six months ended June 30, 2025 and 2024:


	Six months ended June 30,
	2025		2024

	in thousands (except years)
Total fair value of shares vested (1)	$	8,067	$	15,291
Unrecognized compensation expense	$	29,479	$	31,530
Weighted-average period awards are expected to be recognized (in years)	2.73		3.12

(1) The tax impact related to vested RSUs for the six months ended June 30, 2025 and 2024 was not material to the Company's Condensed Consolidated Financial Statements due to the full valuation allowance on the Company's deferred tax asset for the investment in the assets of THG.

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Performance Restricted Stock Units

Market Condition PRSUs

In April 2022, the Company's CEO was granted 3,707,136 market condition PRSUs, which provide him the opportunity to receive up to 3,707,136 shares of Class A Common Stock. The award had a grant date fair value of approximately $ 19.2 million, which was estimated using a Monte Carlo simulation model. These PRSUs have both market-based and service-based vesting conditions. Shares of Class A Common Stock issuable under this award can be earned based on the achievement of the following stock price targets: (i) 25 % of the shares can be earned when the stock price of the Class A Common Stock exceeds $ 20.00 per share for 60 consecutive days, (ii) 25 % of the shares can be earned when the stock price of the Class A Common Stock exceeds $ 25.00 per share for 60 consecutive days, and (iii) 50 % of the shares can be earned when the stock price of the Class A Common Stock exceeds $ 30.00 per share for 60 consecutive days. These market-based conditions must be met in order for the PRSUs to vest; therefore, it is possible that no shares will ultimately vest. If any of the market-based conditions are met, the PRSUs will vest contingent upon continued service through the earlier of three years after achievement of the stock price target or the end of the seven-year performance period. As of June 30, 2025, no market condition PRSUs had vested.

The Company will recognize the entire $ 19.2 million of compensation expense for this award over the requisite service period, regardless of whether such market-based conditions are met. As of June 30, 2025, unrecognized compensation expense related to this award was $ 9.9 million, which the Company expects to recognize over a period of 3.75 years.

The following table summarizes the assumptions and related information used to determine the grant-date fair value of the market condition PRSUs awarded in April 2022:


Inputs						Performance Restricted Stock Units
Weighted average grant-date fair value per share						$ 5.19
Expected stock volatility						35 %
Expected term (in years)						7.0
Risk-free interest rate						2.5 %
Dividend yield						— %

Performance Condition PRSUs

In March 2024, the Talent, Culture, and Compensation Committee (the "Compensation Committee") of the Board adopted another form of PRSU award agreement (the "2024 PRSU Agreement") to be used for awards of PRSUs to certain employees under the Company's 2021 Stock Incentive Plan.

PRSUs granted under the 2024 PRSU Agreement will be eligible to vest subject to the satisfaction of both performance-based and service-based conditions. The performance-based vesting condition will be satisfied contingent upon the Company's level of performance over the designated performance period (the "Performance Period") as measured against a financial performance target (the "Performance Target"), each as determined by the Compensation Committee. Following the end of the Performance Period, the Compensation Committee will determine the applicable attained performance level with payout percentages ranging from 35 % to 200 % (each, a "Payout Percentage") of the target number of PRSUs awarded. In the event of a Change in Control (as defined in the 2024 PRSU Agreement) before the end of a scheduled Performance Period, the Compensation Committee retains discretion to end the Performance Period early and measure performance levels as of a revised measurement date.

If both the service-based and performance-based vesting conditions are satisfied, the PRSU holder will be entitled to receive the number of shares of Class A Common Stock, if any, determined by multiplying the aggregate number of PRSUs subject to the applicable PRSU Agreement by the applicable Payout Percentage that corresponds to the level of achievement of the Performance Target pursuant to the payout formula approved by the Compensation Committee.

The amount of compensation expense ultimately recognized for PRSUs issued under the 2024 PRSU Agreement will be based on the Company's ultimate performance relative to the Performance Target. The amount of compensation expense recognized prior to the end of the Performance Period is dependent upon management's assessment of the likelihood of achieving the applicable payout levels. If, as a result of management's assessment, it is projected that a greater number of PRSUs will vest than previously anticipated, a life-to-date adjustment to increase compensation expense is recorded in the period when such determination is made. Conversely, if, as a result of management's assessment, it is projected that a lower number of PRSUs will vest than previously anticipated, a life-to-date adjustment to decrease compensation expense is recorded in the period when such determination is made.

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The following table provides a summary of the activity related to PRSUs granted under the 2024 PRSU Agreement during the six months ended June 30, 2025:


	Performance Restricted Stock Units	Weighted Average Grant Date Fair Value
Unvested balance as of December 31, 2024	295,166	$	9.33
Granted	243,365	9.04


Unvested balance as of June 30, 2025	538,531	$	9.20

As of June 30, 2025, the maximum number of shares of Class A Common Stock that may be issued with respect to PRSUs granted under the 2024 PRSU Agreement is 1,077,062 , assuming full achievement of the Performance Target.

The following table provides additional data related to performance condition PRSU award activity during the six months ended June 30, 2025 and 2024:


	Six months ended June 30,
	2025		2024

	in thousands (except years)

Unrecognized compensation expense	$	5,767	$	4,903
Weighted-average period awards are expected to be recognized (in years)	2.19		2.75

Employee Stock Purchase Plan

The 2021 Employee Stock Purchase Plan (the "ESPP") allows substantially all of the Company's employees to purchase shares of Class A Common Stock at a discount. As of June 30, 2025, 261,866 shares had been purchased under the ESPP and there were approximately 11.2 million shares available for future purchases.

19 — Earnings Per Share

Basic earnings per share is calculated under the Two-Class Method using basic Net income available to Class A Common Stockholders, divided by the weighted average number of shares of Class A Common Stock outstanding during the period.

Diluted earnings per share is calculated using diluted Net income available to Class A Common Stockholders divided by the weighted average number of shares of Class A Common Stock outstanding during the period, adjusted to give effect to potentially dilutive securities.

The Company's potentially dilutive securities consist of (i) unvested share-based compensation awards, shares issuable under the employee stock purchase plan, and unexercised warrants (prior to completion of the Warrant Exchange) with the dilutive effect calculated using the Treasury Stock Method, and (ii) non-controlling interest THG units and Series A Convertible Preferred Stock, with the dilutive effect calculated using the more dilutive of the If-Converted Method and the Two-Class Method.

In periods in which the Company reports a net loss attributable to Class A Common Stockholders, diluted net loss per share attributable to Class A Common Stockholders would be equal to basic net loss per share because potentially dilutive shares of Class A Common Stock are not assumed to be issued if their effect is anti-dilutive.

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The following table summarizes the basic and diluted earnings per share calculations for the three and six months ended June 30, 2025 and 2024:


	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024

	in thousands (except per share amounts)
Basic Earnings per Share
Net income available to Class A Common Stockholders	$	8,465	$	7,912	$	14,505	$	4,955
Weighted-average shares of Class A Common Stock outstanding	90,698		85,687		90,374		85,171
Basic earnings per share	$	0.09	$	0.09	$	0.16	$	0.06

Diluted Earnings per Share
Net income available to Class A Common Stockholders	$	8,465	$	7,912	$	14,574	$	5,007
Weighted-average shares of Class A Common Stock outstanding	90,698		85,687		91,247		86,072
Diluted earnings per share	$	0.09	$	0.09	$	0.16	$	0.06

Net income available to Class A Common Stockholders
Net income	$	47,202	$	42,657	$	74,495	$	50,856
Net income attributable to non-controlling interest	( 36,229 )		( 32,279 )		( 55,151 )		( 41,829 )

Accretion of Series A Convertible Preferred Stock	( 1,875 )		( 1,839 )		( 3,750 )		( 3,677 )
Undistributed earnings allocated to Series A Convertible Preferred Stock	( 633 )		( 627 )		( 1,089 )		( 395 )
Net income available to Class A Common Stockholders, Basic	8,465		7,912		14,505		4,955
Undistributed earnings allocated to Series A Convertible Preferred Stock	—		—		—		—
Adjustment for potentially dilutive THG units	—		—		—		—
Adjustment for potentially dilutive Series A Convertible Preferred Stock	—		—		—		—
Adjustment for potentially dilutive share-based compensation awards	—		—		69		52
Adjustment for potentially dilutive warrants	—		—		—		—
Net income available to Class A Common Stockholders, Diluted	$	8,465	$	7,912	$	14,574	$	5,007

Weighted Average Shares of Class A Common Stock Outstanding
Weighted average shares of Class A Common Stock outstanding, Basic	90,698		85,687		90,374		85,171
Adjustment for potentially dilutive THG units	—		—		—		—
Adjustment for potentially dilutive Series A Convertible Preferred Stock	—		—		—		—
Adjustment for potentially dilutive share-based compensation awards	—		—		873		901
Adjustment for potentially dilutive warrants	—		—		—		—
Weighted average shares of Class A Common Stock outstanding, Diluted	90,698		85,687		91,247		86,072

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The following table summarizes the weighted average potential shares of Class A Common Stock excluded from diluted earnings per share of Class A Common Stock as their effect would be anti-dilutive for the three and six months ended June 30, 2025 and 2024:


	Three months ended June 30,		Six months ended June 30,
	2025	2024	2025	2024

	in thousands
THG units	255,105	255,384	255,138	255,441
Series A Convertible Preferred Stock	6,785	6,785	6,785	6,785
Unvested shares associated with share-based compensation awards	8,580	7,943	4,453	3,855
Warrants	—	19,484	—	19,484
Total	270,470	289,596	266,376	285,565

20 — Taxation

United States — With the exception of certain U.S. corporate and foreign subsidiaries, THG is taxed as a pass-through ownership structure under provisions of the Internal Revenue Code ("IRC") and a similar section of state income tax law. As such, any taxable income or loss generated by THG is passed through to and included in the taxable income or loss of THG unit holders, including Hagerty, Inc.

Hagerty, Inc. is taxed as a corporation under the IRC and pays corporate, federal, state, and local taxes with respect to income allocated from THG. Hagerty, Inc., Hagerty Insurance Holdings, Inc., Broad Arrow, Hagerty Radwood, Inc., and various foreign subsidiaries are treated as taxable entities and income taxes are provided where applicable. Hagerty Insurance Holdings, Inc. files a consolidated tax return with its wholly owned corporate subsidiaries Hagerty Re and Drivers Edge.

Canada — Hagerty's Canadian entities are taxed as non-resident corporations and subject to income tax in Canada under provisions of the Canadian Revenue Agency.

United Kingdom — Hagerty's U.K. entities are taxed as corporations and subject to income tax in the U.K. under provisions of HM Revenue & Customs.

Bermuda — Hagerty Re made an irrevocable election under Section 953(d) of the IRC, as amended, to be taxed as a U.S. domestic corporation. As a result, Hagerty Re is subject to U.S. taxation on its world-wide income as if it were a U.S. corporation. In accordance with an agreement between Hagerty Re and the IRS, Hagerty Re established an irrevocable letter of credit with the Internal Revenue Service ("IRS") in 2021.

Tax Legislation — On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted. The law contains several key provisions including the reinstatement of immediate expensing of qualifying research and development expenses and permanent extensions of certain provisions within the Tax Cuts and Jobs Act. The Company is still evaluating the impact of the OBBBA on its Consolidated Financial Statements.

The Organisation for Economic Co-operation and Development has a framework to implement a global minimum corporate tax rate of 15% for companies with global revenues and profits above certain thresholds (referred to as "Pillar 2"). Certain aspects of Pillar 2 became effective on January 1, 2024 and other aspects became effective on January 1, 2025. While it's uncertain whether the U.S. will enact legislation to adopt Pillar 2, certain countries in which the Company operates have adopted legislation, and other countries are in the process of introducing legislation to implement Pillar 2. While the Company's effective income tax rate and cash income tax payments could increase in future years as a result of the global minimum tax, management does not expect there will be a material impact to the Company's effective tax rate or its results of operations. The Company's assessment could be affected by legislative guidance and future enactment of additional provisions within the Pillar 2 framework.

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Income Tax Expense — For the six months ended June 30, 2025 and 2024, income tax expense reflected in the Condensed Consolidated Statements of Operations differs from the tax computed by applying the statutory U.S. federal rate of 21% to "Income before income tax expense" as follows:


	Six months ended June 30,
	2025				2024

	in thousands (except percentages)
Income tax expense at statutory rate	$	18,091	21	%	$	12,977	21	%
State taxes	917		1	%	259		—	%
(Income) loss not subject to entity-level taxes	( 4,711 )		( 5 )	%	( 3,382 )		( 5 )	%
Foreign rate differential	468		1	%	( 156 )		—	%
Change in valuation allowance	( 1,234 )		( 1 )	%	( 738 )		( 1 )	%
(Gain) loss related to warrant liabilities, net	—		—	%	1,697		3	%
Permanent items	32		—	%	346		1	%
Effect of changes in tax rates	( 1,236 )		( 1 )	%	—		—	%
Other, net	( 677 )		( 1 )	%	( 63 )		—	%
Income tax expense	$	11,650	15	%	$	10,940	18	%

Deferred Tax Assets — As of June 30, 2025 and December 31, 2024, the Company had deferred tax assets of $ 148.5 million and $ 148.1 million, respectively, related to the difference between the outside tax basis and book basis of its investment in the assets of THG. The Company's deferred tax assets are reduced by a valuation allowance when management believes it is more likely than not that some, or all, of the deferred tax assets will not be realized.

The Company evaluates the realizability of its deferred tax assets on a quarterly basis using all available evidence, both positive and negative. The realization of deferred tax assets is dependent on the Company's ability to generate sufficient future taxable income during periods prior to the expiration of tax attributes to fully utilize these assets. After considering all positive and negative evidence of taxable income in the carryback and carryforward periods, as permitted by law, as of June 30, 2025 and December 31, 2024, management concluded that it is more likely than not that certain deferred tax assets, including the deferred tax asset for the investment in the assets of THG, will not be realized. As a result, the Company recorded a valuation allowance o f $ 176.4 million a nd $ 176.2 million against its deferred tax assets as of June 30, 2025 and December 31, 2024, respectively.

Given the Company's recent history of earnings and anticipated future earnings, management believes there is a reasonable possibility that, within the next twelve months, sufficient positive evidence may become available to allow management to reach a conclusion that a significant portion of the valuation allowance recorded against the U.S. deferred tax assets will be reversed. Reversal of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense in the period the reversal is recorded. In addition, a corresponding increase to the estimated value of the liability related to the TRA Liability, may be required to be recognized with the resulting expense recorded within "Interest and other income (expense), net" in the Condensed Consolidated Statements of Operations. The exact timing and amount of the valuation allowance reversal, and any corresponding increase to the TRA Liability, are subject to change on the basis of the level of profitability that is actually achieved.

Tax Examinations — The Company is subject to taxation and files income tax returns in the U.S. federal jurisdiction, as well as many state and foreign jurisdictions. As of June 30, 2025, tax years 2020 to 2023 are subject to examination by various tax authorities. With few exceptions, as of June 30, 2025, the Company is no longer subject to U.S. federal, state, local or foreign examinations for years before 2020. THG is currently under audit by the IRS for the 2021 tax year.

The Canadian Revenue Agency closed its examinations of the Company for the 2018 tax year in March 2024 and for the 2020-2022 tax years in February 2025, with no changes to previously filed tax returns.

Uncertain Tax Positions — The calculation of the Company's tax liabilities involves uncertainties in the application of complex tax laws and regulations in a multitude of jurisdictions across its global operations. ASC Topic 740, Income Taxes ("ASC 740") states that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits.

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The Company records uncertain tax benefits ("UTB") as liabilities in accordance with ASC 740 and adjusts these liabilities when management's conclusion changes as a result of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the current estimate of the UTB liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which new information is available.

As of June 30, 2025 and December 31, 2024 , the Company did not have any unrecognized tax benefits and had no material accrued interest or penalties related to uncertain tax positions. If recorded, interest and penalties would be recorded within "Income tax expense" in the Condensed Consolidated Statements of Operations.

Tax Receivable Agreement Liability — In connection with the consummation of the business combination that formed Hagerty, Inc. in 2021, Hagerty, Inc. entered into a TRA with the Legacy Unit Holders. The TRA provides for payment to the Legacy Unit Holders of 85 % of the U.S. federal, state and local income tax savings realized by Hagerty, Inc. as a result of the increases in tax basis and certain other tax benefits as outlined in the Business Combination Agreement upon the exchange of THG units and shares of Hagerty, Inc. Class V Common Stock for shares of Hagerty, Inc. Class A Common Stock or cash. The Business Combination Agreement is provided as Exhibit 2.1, incorporated by reference within Item 6. Exhibits, in this Quarterly Report. In connection with the filing of its 2019 income tax return THG made an election under Section 754 of the IRC for each taxable year in which TRA exchanges occur. This election cannot be revoked without the permission of the IRS Commissioner and will be in place for any future exchange of THG units. The remaining 15 % cash tax savings resulting from the basis adjustments will be retained by Hagerty, Inc.

The amount and timing of any payments under the TRA will vary depending on a number of factors, including, but not limited to, the increase in tax basis of THG's assets, the timing of any future redemptions, exchanges or purchases of THG units held by Legacy Unit Holders, the price of Hagerty, Inc. Class A Common Stock at the time of the redemption, exchange or purchase, the extent to which redemptions or exchanges are taxable, the amount and timing of the taxable income that Hagerty, Inc. generates in the future, the tax rates then applicable, and the portion of the payments under the TRA constituting imputed interest.

In general, under the TRA, cash tax savings result in a year when the tax liability of Hagerty, Inc. for the year, computed without regard to the deductions attributable to the amortization of the basis increase and other deductions that arise in connection with the payment of the cash consideration under the TRA or the exchange of THG units and shares of Hagerty, Inc. Class V Common Stock for shares of Hagerty, Inc. Class A Common Stock, would be more than the tax liability for the year taking into account such deductions. Payments under the TRA will not be due until the Company produces taxable income and the resulting cash tax liability is reduced by deducting the amortization of the basis increase on a filed tax return. The payments under the TRA are expected to be substantial.

As of June 30, 2025, the estimated value of the TRA Liability was $ 5.1 million, of which $ 2.0 million was classified as a current liability within "Accounts payable, accrued expenses and other current liabilities" and $ 3.1 million was classified as a long-term liability within "Other long-term liabilities" on the Condensed Consolidated Balance Sheets. As of December 31, 2024, the estimated value of the TRA Liability was $ 2.2 million, of which $ 0.2 million was classified as a current liabilities within "Accounts payable, accrued expenses and other current liabilities" and $ 2.0 million was classified as a long-term liability within "Other long-term liabilities" on the Condensed Consolidated Balance Sheets.

During the six months ended June 30, 2025, Hagerty, Inc. made TRA payments of $ 0.2 million to the Legacy Unit Holders. There were no such TRA payments during the six months ended June 30, 2024.

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21 — Related-Party Transactions

As of June 30, 2025, Markel and State Farm had the following equity interests in Hagerty and, as a result, are considered related parties:


	Markel			State Farm
Equity Interest	Shares/Units	Percentage of total outstanding (1)		Shares/Units	Percentage of total outstanding (1)
Hagerty, Inc. Class A Common Stock	3,108,000	3.4	%	51,800,000	57.1	%
Hagerty, Inc. Class V Common Stock	75,000,000	29.9	%	—	—	%
Hagerty, Inc. Series A Convertible Preferred Stock	1,590,668	18.8	%	5,302,226	62.5	%
THG units	75,000,000	21.7	%	—	—	%

Controlling interest	3,108,000	3.4	%	51,800,000	57.1	%
Non-controlling interest	75,000,000	29.4	%	—	—	%

(1) The percentages reflected represent only the ownership of the specific security identified in each row, and are not reflective of the total economic ownership in Hagerty.

Refer to Note 17 — Stockholders' Equity and Note 16 — Convertible Preferred Stock for a description of each equity interest in the table above.

Markel

Alliance Agreement

The Company and Markel have an alliance agreement (the "Markel Alliance Agreement") and associated agency agreement pursuant to which policies sold by Hagerty's U.S. MGAs are underwritten by Essentia Insurance Company and reinsured with Evanston Insurance Company ("Evanston"), both of which are wholly owned subsidiaries of Markel.

The following tables provide information related to Markel-affiliated "Commission revenue" and "Due to insurer" liabilities associated with the Markel Alliance Agreement:


	Three months ended June 30,						Six months ended June 30,
	2025			2024			2025			2024

	in thousands (except percentages)
Commission revenue	$	127,454		$	115,975		$	221,427		$	199,644
Percent of total	91		%	92		%	92		%	93		%


	June 30,			December 31,
	2025			2024

	in thousands (except percentages)
Due to insurer	$	135,906		$	78,792
Percent of total	89		%	94		%

Refer to Note 4 — Revenue for information on related party balances within "Commissions receivable," which primarily consist of CUC receivables due from Markel.

Reinsurance Agreement

Hagerty Re has a quota share agreement with Evanston to assume approximately 80 % of the risks written through the Company's U.S. MGAs, with the exception of High-Net-Worth Accounts in which Hagerty Re assumes 100 % of the risk. Refer to Note 14 — Reinsurance for additional information on the Company's reinsurance programs.

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The following tables summarize all balances related to the Company's reinsurance business with Markel subsidiaries:


	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024

Revenue:	in thousands
Earned premium	$	182,913	$	162,536	$	357,974	$	318,656
Expenses:
Ceding commission, net	$	84,868	$	75,033	$	164,335	$	147,396
Losses and loss adjustment expenses	74,598		64,266		154,509		129,421
Total expenses	$	159,466	$	139,299	$	318,844	$	276,817


	June 30,		December 31,
	2025		2024

Assets:	in thousands
Premiums receivable	$	236,368	$	150,436
Commissions receivable	1,777		489
Deferred acquisition costs, net	180,745		160,360
Other current assets	4,947		2,926
Total assets	$	423,837	$	314,211
Liabilities:
Accounts payable, accrued expenses and other current liabilities	$	3,214	$	806
Losses payable and provision for unpaid losses and loss adjustment expenses	244,779		254,422
Ceding commissions payable	107,428		76,001
Unearned premiums	393,676		347,501
Total liabilities	$	749,097	$	678,730

Pursuant to the terms of the quota share agreement with Evanston, Hagerty Re maintains assets in trust for the benefit of Evanston. These assets are included within "Restricted cash and cash equivalents" and "Investments" on the Company's Condensed Consolidated Balance Sheets. The assets held in trust for the benefit of Evanston totaled $ 584.3 million and $ 589.2 million as of June 30, 2025 and December 31, 2024, respectively.

State Farm

Alliance Agreement

Hagerty has a 10-year master alliance agreement and associated managing general underwriter agreement with State Farm, under which State Farm Classic+ policies are offered to State Farm's customers through State Farm agents. This program began issuing policies in certain states in September 2023. Several states were added in the first half of 2025, with additional states planned for the remainder of 2025 and 2026. Under the master alliance agreement, State Farm paid Hagerty an advanced commission of $ 20.0 million, which is being recognized as "Commission and fee revenue" over the remaining life of the arrangement. In addition, the Company is paid a commission for underwriting, binding coverage, and issuing State Farm Classic+ policies and can offer HDC memberships to State Farm Classic+ customers, providing Hagerty with an additional revenue opportunity. Commission revenue associated with State Farm Classic+ policies was not material to the Company's Condensed Consolidated Financial Statements for the six months ended June 30, 2025 and 2024.

Reinsurance Agreement

Hagerty Re has a quota share agreement to cede 50 % of the risk assumed from a subsidiary of Markel in relation to High-Net-Worth Accounts to Oglesby Reinsurance Company, a wholly owned subsidiary of State Farm. Refer to Note 14 — Reinsurance for additional information on the Company's reinsurance programs.

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The following tables summarize all balances related to the risk ceded by Hagerty Re to State Farm subsidiaries:


	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024

Revenue:	in thousands
Earned premium (1)	$	( 4,735 )	$	( 4,069 )	$	( 9,191 )	$	( 8,022 )
Expenses:
Ceding commission, net (2)	$	( 2,463 )	$	( 2,117 )	$	( 4,780 )	$	( 4,172 )
Losses and loss adjustment expenses (3)	( 1,420 )		( 813 )		( 7,507 )		( 3,604 )
Total expenses	$	( 3,883 )	$	( 2,930 )	$	( 12,287 )	$	( 7,776 )

(1) Represents premiums ceded to State Farm subsidiaries, which are accounted for as a reduction to "Earned premium".

(2) Represents commissions from State Farm subsidiaries related to ceded reinsurance, which are accounted for as a reduction to "Ceding commissions, net".

(3) Represents loss recoveries associated with reinsurance ceded to State Farm subsidiaries, which are accounted for as a reduction to "Losses and loss adjustment expenses".


	June 30,		December 31,
	2025		2024

Assets:	in thousands
Commissions receivable	$	5,502	$	2,095
Deferred acquisition costs, net (1)	( 5,171 )		( 4,448 )
Other current assets (2)	20,562		14,758
Total assets	$	20,893	$	12,405
Liabilities:
Accounts payable, accrued expenses and other current liabilities (3)	$	10,582	$	4,028
Total liabilities	$	10,582	$	4,028

(1) Represents unearned ceding commission received from State Farm subsidiaries.

(2) Represents unearned deferred ceded premium and reinsurance recoverables from State Farm subsidiaries.

(3) Represents reinsurance premiums due to State Farm subsidiaries.

State Farm Term Loan

In September 2023, Hagerty Re entered into an unsecured term loan facility with State Farm in an aggregate principal amount of $ 25.0 million and an interest rate of 8.0 % per annum. The State Farm Term Loan will mature in September 2033. Refer to Note 15 — Debt for additional information.

Other Related Party Transactions

From time-to-time, in the ordinary course of business, related parties, such as members of the Board and management, purchase insurance policies from the Company, receive payments on claims required by the Company's insurance policies, and buy and sell collector cars and enthusiast vehicles through marketplace auctions or in private transactions.

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22 — Commitments and Contingencies

Employee Compensation Agreements — In the ordinary course of conducting its business, the Company enters into certain employee compensation agreements from time to time which commit it to severance obligations in the event an employee terminates employment with the Company. If applicable, these obligations are recorded as accrued expenses on the Condensed Consolidated Balance Sheets.

Litigation — From time to time, the Company is involved in various claims and legal actions that arise in the ordinary course of business. Management is required to assess the likelihood of any adverse judgments or outcomes related to these legal contingencies, as well as potential ranges of probable or reasonably possible losses. The determination of the amount of any losses to be recorded or disclosed as a result of these contingencies is based on a careful analysis of each individual exposure with, in some cases, the assistance of outside legal counsel. The amount of losses recorded or disclosed for such contingencies may change in the future due to new developments in each matter or a change in legal or settlement strategy. While the impact of any one or more legal claims or proceedings could be material to the Company's operating results in any period, management does not believe that the outcome of any of these pending claims or proceedings (including the data security incident discussed below), individually or in the aggregate, will have a material adverse effect on the Company's consolidated financial condition or liquidity.

Data Security Incident — In 2021, the Company experienced an unauthorized access into its online insurance quote feature whereby attackers used personal information already in their possession to obtain additional consumer data, including driver's license numbers . The unauthorized access issue has been remediated. This incident is the subject of coordinated industry-wide regulatory investigations. The Company could be subject to litigation, fines, penalties, and/or settlements related to this incident. The Company has accrued an estimated liability related to this incident based on the facts known by management and developed through its assessment of the current status of ongoing dialog with the regulatory investigators. The amount of the estimated liability is not material to the Company's Condensed Consolidated Financial Statements. The amount of any fines, penalties, and/or settlements related to this incident could differ from the amount currently accrued and such difference is not currently estimable.

23 — Subsequent Events

Management has evaluated subsequent events through August 4, 2025, which is the date these Condensed Consolidated Financial Statements were issued, and no material subsequent events were identified that are required to be reported.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Annual Report on Form 10-K ("Annual Report") and our Condensed Consolidated Financial Statements and related Notes included in Item 1 of Part I of this Quarterly Report. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Please refer to the section in this Quarterly Report entitled "Cautionary Statement Regarding Forward-Looking Statements".

Overview

We are a market leader in providing insurance for collector cars and enthusiast vehicles. Through our insurance model, we act as a Managing General Agent ("MGA") by underwriting, selling, and servicing collector car and enthusiast vehicle insurance policies. Due to our consistent track record of delivering strong underwriting results, we currently reinsure approximately 80% of the risks written by our MGA subsidiaries through our wholly owned subsidiary, Hagerty Reinsurance Limited ("Hagerty Re"). Refer to "Recent Developments" below for information on emerging developments related to a proposed fronting arrangement (the "Proposed Fronting Arrangement") with Markel Group Inc. (together with its subsidiaries, "Markel").

We also offer Hagerty Drivers Club ("HDC") memberships, which are primarily bundled with our insurance policies and give subscribers access to an array of products and services, including emergency roadside assistance, Hagerty Drivers Club Magazine, automotive enthusiast events, our proprietary vehicle valuation tool, and special vehicle-related discounts. In addition, we offer a marketplace to complement our insurance and membership offerings where automotive enthusiasts can buy, sell, and finance collector cars and enthusiast vehicles.

Through these offerings, our vision is to be the world's most trusted and preferred brand for automotive enthusiasts to protect, buy, sell, and enjoy their special cars.

Recent Developments

On July 24, 2025, we announced our entry into a non-binding letter of intent with respect to the Proposed Fronting Arrangement with Markel that is expected to be signed in 2025 and become effective on January 1, 2026. Markel is the ultimate parent company of Essentia Insurance Company ("Essentia"), which serves as the dedicated carrier for the specialty collector vehicle insurance policies sold by our U.S. MGA subsidiaries.

Under the Proposed Fronting Arrangement: (i) our underwriting (including pricing decisions, rate filing, insurance rating and risk selections) and claims authorities would be expanded to the maximum levels permitted by applicable law; (ii) Hagerty Re would control 100% of the premium and assume 100% of the risk for policies written through Essentia; (iii) we would continue to issue policies through Essentia and would increase our administrative responsibilities; and (iv) Hagerty Re would initially pay a 2% fronting fee to Markel for administrative support, which would incrementally decrease based on the volume of policies issued by Essentia in each calendar year. We expect these changes to result in increased profitability and additional control allowing for enhanced operational efficiencies.

The Proposed Fronting Arrangement remains subject to the negotiation and execution of definitive documentation and the receipt of all required regulatory approvals, and there can be no assurance that the Proposed Fronting Arrangement will be completed on the terms described herein or at all.

Business Review

We are reviewing certain components of our operations, which in 2023 and 2024 resulted in the sale or reorganization of certain businesses, including Hagerty Garage + Social, DriveShare, and Motorsport Reg ("MSR"). This initiative supports our strategy to prioritize investments and resources in the areas of our business that offer the strongest growth and profit potential. As a result of this review, in 2023, we recognized approximately $4.0 million of losses and impairments related to actions taken with respect to Hagerty Garage + Social and DriveShare. We may incur additional losses and/or impairment charges in future periods as a result of actions which we may take related to this review.

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Financial Highlights

For the three months ended June 30, 2025, we reported Net income of $47.2 million, representing a $4.5 million, or 10.7%, increase compared to the prior year, and Adjusted EBITDA of $63.7 million, representing a $10.6 million, or 20.0%, increase compared to the prior year. These improvements are primarily attributable to 10.8% growth in Written Premium, which drove an 11.2% increase in Commission and fee revenue and a 12.8% increase in Earned premium. The comparison to the prior year is also favorably impacted by significantly higher levels of Broad Arrow inventory sales and private sale commissions, as well as the results from Broad Arrow's inaugural auction at Concorso d’Eleganza Villa d’Este.

For the six months ended June 30, 2025, we reported Net income of $74.5 million, representing a $23.6 million, or 46.5%, increase compared to the prior year, and Adjusted EBITDA of $103.4 million, representing a $22.9 million, or 28.5%, increase compared to the prior year. These improvements are primarily attributable to 11.3% growth in Written Premium, which drove a 11.9% increase in Commission and fee revenue and a 12.3% increase in Earned premium. The comparison to the prior year is also favorably impacted by significantly higher levels of Broad Arrow inventory sales and private sale commissions, as well as the results from Broad Arrow's inaugural auction at Concorso d’Eleganza Villa d’Este.

Adjusted EBITDA is a non-GAAP financial measure. Refer to "Non-GAAP Financial Measures" below for a description of non-GAAP financial measures and a reconciliation to the most comparable GAAP measure.

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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 the United States of America ("GAAP") and non-GAAP financial measures. We use these Key Performance Indicators to evaluate our business, measure our performance, identify trends against planned initiatives, prepare financial projections, and make strategic decisions. We believe these Key Performance Indicators are useful in evaluating our performance when read together with our Condensed Consolidated Financial Statements prepared in accordance with GAAP.


	Three months ended June 30,
		2025			2024			Change

Operational Metrics		dollars in thousands (except per share amounts)
Total Written Premium (1)		$	355,985		$	321,173		$	34,812		10.8	%
Hagerty Re Loss Ratio (2)		42.3		%	41.1		%	1.2		%	N/M
Hagerty Re Combined Ratio (3)		89.6		%	88.1		%	1.5		%	N/M
New Business Count — Insurance (4)		87,872			89,049			(1,177)			(1.3)	%

GAAP Financial Measures
Total Revenue		$	368,699		$	313,225		$	55,474		17.7	%
Operating Income		$	47,699		$	38,067		$	9,632		25.3	%
Net Income		$	47,202		$	42,657		$	4,545		10.7	%
Basic Earnings Per Share		$	0.09		$	0.09		$	—		—	%
Diluted Earnings Per Share		$	0.09		$	0.09		$	—		—	%

Non-GAAP Financial Measures
Adjusted EBITDA (5)		$	63,744		$	53,113		$	10,631		20.0	%
Adjusted Earnings Per Share (5)		$	0.13		$	0.12		$	0.01		8.3	%

	Six months ended June 30,
		2025			2024			Change

Operational Metrics		dollars in thousands (except per share amounts)
Total Written Premium (1)		$	600,312		$	539,459		$	60,853		11.3	%
Hagerty Re Loss Ratio (2)		42.2		%	41.1		%	1.1		%	N/M
Hagerty Re Combined Ratio (3)		89.1		%	88.3		%	0.8		%	N/M
New Business Count — Insurance (4)		143,181			148,335			(5,154)			(3.5)	%

GAAP Financial Measures
Total Revenue		$	688,292		$	584,933		$	103,359		17.7	%
Operating Income		$	73,427		$	50,291		$	23,136		46.0	%
Net Income		$	74,495		$	50,856		$	23,639		46.5	%
Basic Earnings Per Share		$	0.16		$	0.06		$	0.10		166.7	%
Diluted Earnings Per Share		$	0.16		$	0.06		$	0.10		166.7	%

Non-GAAP Financial Measures
Adjusted EBITDA (5)		$	103,352		$	80,440		$	22,912		28.5	%
Adjusted Earnings Per Share (5)		$	0.21		$	0.16		$	0.05		31.3	%

N/M = Not meaningful

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	June 30,		December 31,
	2025		2024		Change

Operational Metrics
Policies in Force (6)	1,559,798		1,506,451		53,347		3.5	%
Policies in Force Retention (7)	88.7	%	89.0	%	(0.3)	%	N/M
Vehicles in Force (8)	2,664,611		2,576,700		87,911		3.4	%
HDC Paid Member Count (9)	907,963		875,822		32,141		3.7	%
Net Promoter Score (10)	82		82		—		—	%

N/M = Not meaningful

(1) Total Written Premium is the total amount of insurance premium written by our MGA subsidiaries on behalf of our insurance carrier partners during the period. Total Written Premium reflects the direct economic benefit of our policy acquisition efforts and is closely correlated with the growth of insurance commission revenue generated by our MGA subsidiaries and earned premium generated by Hagerty Re.

(2) Hagerty Re Loss Ratio is the ratio of (i) Hagerty Re's losses and loss adjustment expenses to (ii) its earned premium. Hagerty Re Loss Ratio allows us to evaluate our historical loss patterns and make necessary and appropriate adjustments. Refer to "Losses and Loss Adjustment Expenses" below within "Components of Our Results of Operations" for additional information regarding our quarterly estimate of losses and loss adjustment expenses.

(3) Hagerty Re Combined Ratio is the ratio of (i) Hagerty Re's losses, loss adjustment expenses, and underwriting expenses to (ii) its earned premium. Hagerty Re's underwriting expenses primarily include ceding commissions and, to a lesser extent, certain administrative expenses. Hagerty Re Combined Ratio provides a benchmark to evaluate underwriting profitability, including expense trends. A combined ratio under 100% indicates underwriting income while a combined ratio exceeding 100% indicates an underwriting loss.

(4) New Business Count represents the number of new insurance policies issued by our MGA subsidiaries during the period. New Business Count is an important metric to assess our financial performance because policy growth is critical to our success. While we benefit from strong policy retention through renewals, new policies more than offset those cancelled or non-renewed at expiration. New policies also often mean new relationships and an opportunity to sell additional products and services.

(5) Refer to "Non-GAAP Financial Measures" below for a description of this non-GAAP financial measure and a reconciliation to the most comparable GAAP measure.

(6) Policies in Force ("PIF") represents the number of current and active insurance policies as of the end of the period. PIF is an important metric to assess our financial performance because policy growth drives revenue growth, increases brand awareness and market penetration, generates additional insight to improve the performance of our platform, and provides key data to assist us in strategic decision making.

(7) PIF Retention represents the percentage of expiring insurance policies that are renewed on the renewal effective date, calculated on a rolling twelve months basis. PIF Retention is an important measurement of the number of policies retained each year, which contributes to our recurring revenue streams including commissions earned by our MGA subsidiaries, HDC membership fees, and earned premium generated by Hagerty Re.

(8) Vehicles in Force represents the number of current insured vehicles as of the end of the period. Vehicles in Force is an important metric to assess our financial performance because insured vehicle growth drives revenue growth and increases market penetration.

(9) HDC Paid Member Count represents the number of current Members who pay an annual membership subscription as of the end of the period. HDC Paid Member Count is an important metric because it helps us measure membership revenue growth and provides an opportunity to customize our value proposition and benefits to specific types of enthusiasts, both by demographic and vehicle interest.

(10) Net Promoter Score ("NPS") is an important measure of the overall strength of our relationship with insurance policyholders and paid HDC subscribers (collectively referred to as "Members"). NPS is measured twice annually through a web-based survey sent by email invitation to a random sample of existing Members, which currently excludes customers in our marketplace business, and is reported annually using an average of the two surveys. Often referred to as a barometer of brand loyalty and engagement, NPS is well-known in our industry as a strong indicator of growth and retention.

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Components of Our Results of Operations

Revenue

Commission and fee revenue

We generate commission and fee revenue through our MGA subsidiaries, primarily from the underwriting, sale, and servicing of collector car and enthusiast vehicle insurance policies on behalf of our insurance carrier partners. Commissions are earned for both new and renewed policies. Commission and fee revenue is earned when the policy becomes effective, net of allowances for policy changes and cancellations.

Under the terms of our contracts with certain insurance carrier partners, we have the opportunity to earn a contingent underwriting commission based on the results of the book of business, including the level of written or earned premium and loss ratio. Contingent underwriting commissions ("CUC") are recognized in the period that the policy is issued based on our estimate of the amount that we will become entitled to receive during the calendar year such that a significant reversal of revenue is not probable.

Earned premium

Earned premium represents the earned portion of written premiums that Hagerty Re has assumed under quota share reinsurance agreements with our insurance carrier partners, net of premiums ceded to various reinsurers and the cost of catastrophe reinsurance coverage. Premiums assumed and ceded are recognized on a pro-rata basis over the term of the reinsured policies, which is generally 12 months. The cost of catastrophe reinsurance coverage is recognized over the contract period in proportion to the related earned premium.

Membership, marketplace and other revenue

We earn subscription revenue through HDC memberships, which are primarily bundled with our insurance policies and give subscribers access to an array of products and services, including emergency roadside assistance, Hagerty Drivers Club Magazine, automotive enthusiast events, our proprietary vehicle valuation tool, and special vehicle-related discounts.

Revenue from the sale of HDC memberships is recognized ratably over the period of the membership. The membership is treated as a single performance obligation to provide access to stated Member benefits over the life of the membership, which is currently one year.

Our marketplace business earns fee-based revenue primarily from the sale of collector cars and enthusiast vehicles through live auctions, time-based digital auctions, and brokered private sales. Through our marketplace business, we also earn revenue from the sale of collector cars and enthusiast vehicles that we have opportunistically acquired for resale. In addition, we also earn finance revenue from loans made to qualified collectors and businesses secured by their collector cars.

Fee-based marketplace revenue is recognized when the underlying sale is completed, which is generally upon the matching of a seller and buyer in a legally binding auction or private sale transaction. Revenue from the sale of acquired collector cars and enthusiast vehicles is recognized at the point in time when title and control of the vehicle is transferred to the buyer, which is generally upon collection of the full purchase price. Finance revenue is recognized over time as earned based on the amount of the outstanding loan, the applicable interest rate on the loan, and the length of time the loan was outstanding during the period.

Operating Expenses

Salaries and benefits

Salaries and benefits consist primarily of costs related to employee compensation, payroll taxes, employee benefits, and employee development costs. Employee compensation includes wages, as well as various forms of incentive compensation, including share-based compensation. Employee benefits primarily include the cost of our retirement, medical, dental, wellness, and severance plans. Costs related to employee education, training, and recruiting are recorded in employee development costs. Salaries and benefits are expensed as incurred except for costs that are required to be capitalized, which are amortized over the useful life of the asset created, such as internally developed software and software-as-a-service ("SaaS") implementation costs. Salaries and benefits are expected to increase in dollar amount over time as the business continues to grow but will likely decrease as a percent of revenue.

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Ceding commissions, net

Ceding commissions, net represents the commissions paid by Hagerty Re to insurance carrier partners for the risk assumed under the quota share agreements with those carriers. These commissions represent Hagerty Re's pro-rata share of the carrier's costs including (i) policy acquisition costs, which consists of the commissions earned by our MGA subsidiaries, (ii) general and administrative costs, and (iii) other costs. Ceding commissions are recorded net of commissions received by Hagerty Re related to ceded reinsurance premiums. Ceding commissions, net is recognized ratably over the term of the related reinsurance policies, which is generally 12 months.

Losses and loss adjustment expenses

Losses and loss adjustment expenses represent our best estimate of the losses and associated settlement costs related to the risks assumed by Hagerty Re. Losses consist of claims paid, case reserves, and incurred but not reported costs, which are recorded net of estimated recoveries from reinsurance, salvage and subrogation. Loss adjustment expenses consist of the cost associated with processing and settling claims.

We record an estimate of quarterly losses and loss adjustment expenses in the Condensed Consolidated Statements of Operations using an annual loss ratio, which is based on statistical analysis performed by our internal and external actuarial team and considers several factors, including projected levels of catastrophe events. Management believes this approach provides a more consistent view of loss experience over the year given the seasonality of Hagerty Re's business. The annual loss ratio is reviewed throughout the year and adjusted, as necessary.

Sales expense

Sales expense includes costs related to the sale and servicing of insurance policies, as well as costs related to our membership and marketplace offerings, such as broker expense, cost of sales, promotion expense, and travel and entertainment expenses. Broker expense is the compensation paid to our agent partners and national broker partners when an insurance policy is written by our MGA subsidiaries through a broker relationship. Broker expense generally tracks with written premium growth. Cost of sales includes payment processing fees, emergency roadside service costs, postage and other variable costs associated with the sale and servicing of a policy. Cost of sales also includes the cost of acquired vehicles sold through our marketplace business, and sales commissions related to our marketplace business, as well as interest expense and borrowing costs associated with the Broad Arrow Capital LLC ("BAC") credit facility ("BAC Credit Facility"). Promotion expense includes various costs related to branding, events, advertising, marketing, and customer acquisition. Sales expenses, in general, are expensed as incurred and will trend with revenue growth.

General and administrative expenses

General and administrative expenses primarily consists of expenses related to non-capitalized hardware and software, professional services, and occupancy costs. These costs are expensed as incurred. We expect this expense category to modestly increase in dollar amount over time as the business continues to grow but will likely decrease as a percentage of revenue over the next few years after we reach scale to handle incoming business from new partnerships.

Depreciation and amortization

Depreciation and amortization reflects the recognition of the cost of our investments in various assets over their useful lives. Depreciation expense relates to computer hardware, furniture and equipment, and leasehold improvements. Amortization relates to internally developed software, SaaS implementation costs, and finite-lived intangible assets associated with acquisitions. Depreciation and amortization are expected to increase in dollar amount over time but will likely decrease as a percent of revenue as investments in platform technology reach scale.

Other Items

Loss related to warrant liabilities, net

In July 2024, we completed an exchange offer under which holders of our warrants were issued 3,876,201 shares of Class A Common Stock in exchange for 19,483,539 warrants, with a nominal cash settlement paid in lieu of fractional shares (the "Warrant Exchange"). No warrants remained outstanding following the completion of the Warrant Exchange.

Prior to the Warrant Exchange, our warrants were accounted for as liabilities and were measured at fair value each reporting period, with changes in fair value recognized as non-operating income (expense) in our Condensed Consolidated Statements of Operations. In general, under the fair value accounting model, in periods when our stock price increased, the warrant liability increased, and we recognized additional expense. In periods when our stock price decreased, the warrant liability decreased, and we recognized additional income.

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Interest and other income (expense), net

Interest and other income (expense), net primarily includes interest income related to cash balances and fixed maturity securities, realized gains or losses from the sale of fixed maturity securities, and realized and unrealized gains and losses related to equity securities. Additionally, Interest and other income (expense), net includes interest expense related to outstanding borrowings, primarily related to our current and prior revolving credit facilities with JPMorgan Chase Bank, N.A. ("JPM"), as well as the State Farm Term Loan (as defined in Note 15 — Debt in Item 1 of Part I of this Quarterly Report) and changes in the value of the liability related to our Tax Receivable Agreement ("TRA") (the "TRA Liability") with Hagerty Holding Corp. ("HHC") and Markel (together the "Legacy Unit Holders"). Refer to Note 20 — Taxation in Item 1 of Part I of this Quarterly Report for additional information related to the TRA.

Income tax expense

The Hagerty Group, LLC ("THG") is taxed as a pass-through ownership structure under provisions of the Internal Revenue Code ("IRC") and a similar section of state income tax law. As such, any taxable income or loss generated by THG is passed through to and included in the taxable income or loss of THG unit holders, including Hagerty, Inc.

Hagerty, Inc. is taxed as a corporation and pays corporate federal, state, and local taxes with respect to income allocated from THG. Hagerty, Inc., Hagerty Insurance Holdings, Inc., Broad Arrow Group, Inc. ("Broad Arrow"), Hagerty Radwood, Inc., and various foreign subsidiaries are treated as taxable entities and income taxes are provided where applicable. Hagerty Insurance Holdings, Inc. files a consolidated tax return with its wholly owned corporate subsidiaries Hagerty Re and Drivers Edge Insurance Company ("Drivers Edge").

Results of Operations

Three Months Ended June 30, 2025 compared to the Three Months Ended June 30, 2024

The following table summarizes our results of operations for the three months ended June 30, 2025 and 2024, and the dollar and percentage changes between the two periods:


	Three months ended June 30,
	2025		2024		$ Change		% Change

REVENUE:	in thousands (except percentages)
Commission and fee revenue	$	143,287	$	128,816	$	14,471	11.2	%
Earned premium	177,785		157,612		20,173		12.8	%
Membership, marketplace and other revenue	47,627		26,797		20,830		77.7	%
Total revenue	368,699		313,225		55,474		17.7	%
OPERATING EXPENSES:
Salaries and benefits	64,062		57,693		6,369		11.0	%
Ceding commissions, net	82,938		73,446		9,492		12.9	%
Losses and loss adjustment expenses	75,213		64,729		10,484		16.2	%
Sales expense	67,380		47,990		19,390		40.4	%
General and administrative expenses	22,574		21,373		1,201		5.6	%
Depreciation and amortization	8,833		10,014		(1,181)		(11.8)	%
Gain related to divestiture	—		(87)		87		N/M
Total operating expenses	321,000		275,158		45,842		16.7	%
OPERATING INCOME	47,699		38,067		9,632		25.3	%
Loss related to warrant liabilities, net	—		(1,941)		1,941		N/M
Interest and other income (expense), net	5,664		12,342		(6,678)		(54.1)	%
INCOME BEFORE INCOME TAX EXPENSE	53,363		48,468		4,895		10.1	%
Income tax expense	(6,161)		(5,811)		(350)		6.0	%
NET INCOME	$	47,202	$	42,657	$	4,545	10.7	%

N/M = Not meaningful

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Revenue

Commission and fee revenue

Commission and fee revenue was $143.3 million for the three months ended June 30, 2025, an increase of $14.5 million, or 11.2%, compared to 2024. This increase was driven by policy renewals, which contributed $14.4 million to the year-over-year improvement. Commission and fee revenue related to new policies was consistent with the prior year period.

The increase in revenue from policy renewals was primarily driven by a 14.3% increase in underlying policy premiums, as well as continued strong policy retention. The increase in renewal policy premiums is the result of rate increases in several states due to inflation and higher vehicle repair costs, both of which drive higher premiums and, in turn, higher commission revenue.

Commission and fee revenue from agent sources increased $8.1 million, or 11.6%, and Commission and fee revenue from direct sources increased $6.4 million, or 10.8%, during the three months ended June 30, 2025. Commission rates vary based on geography, but do not differ by distribution channel (i.e., whether they are direct-sourced or agent-sourced).

Earned premium

Earned premium at Hagerty Re was $177.8 million for the three months ended June 30, 2025, an increase of $20.2 million, or 12.8%, compared to 2024. This increase was almost entirely due to continued growth of subject premiums written through our MGA subsidiaries, which increased $33.7 million, or 11.9%, compared to the three months ended June 30, 2024.

The following tables present the amount of premiums assumed and earned by Hagerty Re, as well as the related quota share percentages for the three months ended June 30, 2025 and 2024:


	Three months ended June 30, 2025
	U.S.			Canada			U.K. (1)			Total

	in thousands (except percentages)
Subject premium (2)	$	290,188		$	27,014		$	(43)		$	317,159
Quota share percentage	81.0		%	50.0		%	80.0		%	78.1		%
Assumed premium in Hagerty Re	234,339			13,507			(34)			247,812
Reinsurance premiums ceded										(11,209)
Net assumed premium										236,603
Change in unearned premiums										(57,836)
Change in deferred reinsurance premiums										(982)
Earned premium										$	177,785

	Three months ended June 30, 2024
	U.S.			Canada			U.K. (1)			Total

	in thousands (except percentages)
Subject premium (2)	$	259,380		$	24,270		$	(154)		$	283,496
Quota share percentage	81.0		%	35.0		%	80.0		%	76.9		%
Assumed premium in Hagerty Re	209,534			8,495			(122)			217,907
Reinsurance premiums ceded										(10,143)
Net assumed premium										207,764
Change in unearned premiums										(49,808)
Change in deferred reinsurance premiums										(344)
Earned premium										$	157,612

(1) Effective January 1, 2024, Hagerty Re is no longer reinsuring classic auto risks produced by its United Kingdom ("U.K.") MGA affiliate, and the book is in run-off.

(2) Represents the portion of total written premium written by our MGA subsidiaries that is subject to reinsurance agreements between our insurance carrier partners and Hagerty Re.

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Membership, marketplace and other revenue

Membership, marketplace and other revenue was $47.6 million for the three months ended June 30, 2025, an increase of $20.8 million, or 77.7%, compared to 2024.

Membership fee revenue was $15.7 million for the three months ended June 30, 2025, an increase of $1.5 million, or 10.9%, compared to 2024. This increase was primarily attributable to a $1.4 million, or 10.7%, increase in revenue attributable to new policies issued with a bundled HDC membership. For the three months ended June 30, 2025 and 2024, membership fees were 32.9% and 52.7%, respectively, of the Membership, marketplace and other revenue total.

Marketplace revenue was $26.8 million for the three months ended June 30, 2025, an increase of $20.5 million compared to 2024. This improvement was principally due to significantly higher levels of inventory sales and private sale commissions. To a lesser extent, the increase in Marketplace revenue was due to revenues earned from Broad Arrow's inaugural auction at Concorso d’Eleganza Villa d’Este, which was held in May 2025. For the three months ended June 30, 2025 and 2024, Marketplace revenue was 56.2% and 23.4%, respectively, of the Membership, marketplace and other revenue total.

Other revenue, which includes sponsorship, admission, advertising, valuation, and sublease revenue, totaled $5.2 million for the three months ended June 30, 2025, a decrease of $1.2 million, or 18.9%, compared to 2024. This decrease was primarily attributable to the loss of registration fee revenue associated with MSR, which was sold in June 2024, partially offset by an increase in advertising revenue. For the three months ended June 30, 2025 and 2024, other revenue was 10.9% and 23.9%, respectively, of the Membership, marketplace and other revenue total. Refer to Note 11 — Divestiture in Item 1 of Part I of this Quarterly Report for additional information related to the sale of MSR.

Costs and Expenses

Salaries and benefits

Salaries and benefits were $64.1 million for the three months ended June 30, 2025, an increase of $6.4 million, or 11.0%, compared to 2024. This increase was primarily due to annual merit increases, which occur in the second quarter of each year, as well as increased headcount year over year.

Ceding commissions, net

Ceding commissions, net was $82.9 million for the three months ended June 30, 2025, an increase of $9.5 million, or 12.9%, compared to 2024. This increase is primarily attributable to the 12.8% increase in Earned premium discussed above.

The following table summarizes the components of Ceding commissions, net for the three months ended June 30, 2025 and 2024:


	Three months ended June 30,
	2025			2024

	in thousands (except percentages)
Ceding commission:
Ceding commission – reinsurance assumed	$	87,950		$	77,428
Ceding commission – reinsurance ceded	(5,012)			(3,982)
Ceding commissions, net	$	82,938		$	73,446
Percentage of earned premium	46.7		%	46.6		%

Losses and loss adjustment expenses

Losses and loss adjustment expenses were $75.2 million for the three months ended June 30, 2025, an increase of $10.5 million, or 16.2%, compared to 2024. This increase was primarily driven by the 12.8% increase in Hagerty Re Earned premium discussed above.

For the three months ended June 30, 2025, our loss ratio was 42.3%, including the impact of catastrophe losses. For the three months ended June 30, 2024, our loss ratio was 41.1%, including the impact of catastrophe losses.

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Sales expense

Sales expense was $67.4 million for the three months ended June 30, 2025, an increase of $19.4 million, or 40.4%, compared to 2024. This increase was due, in part, to a $15.3 million increase in cost of sales, predominantly as a result of a higher level of marketplace inventory sales, as well as a $3.6 million increase in sales commissions, consistent with revenue growth within the marketplace business. In addition, broker expense increased $2.2 million, consistent with the written premium growth within the agent insurance distribution channel.

General and administrative expenses

General and administrative expenses expense was $22.6 million for the three months ended June 30, 2025, an increase of $1.2 million, or 5.6%, compared to 2024. This increase was primarily due to an increase in software-related costs, partially offset by a $0.6 million decrease in professional services.

Depreciation and amortization

Depreciation and amortization expense was $8.8 million for the three months ended June 30, 2025, a decrease of $1.2 million, or 11.8%, compared to 2024. This decrease was primarily attributable to a smaller base of in-service fixed assets and finite-lived intangible assets as of June 30, 2025 when compared to the same period in 2024.

Other Items

Loss related to warrant liabilities, net

During the three months ended June 30, 2024, Loss related to warrant liabilities, net was $1.9 million as a result of the change in fair value of our then outstanding warrant liabilities. There were no warrants outstanding during the three months ended June 30, 2025 due to the Warrant Exchange transaction that was completed in July 2024. Refer to Note 6 — Fair Value Measurements in Item 1 of Part I of this Quarterly Report for additional information with respect to our warrants.

Interest and other income (expense), net

The following table presents the components of Interest and other income (expense), net for the three months ended June 30, 2025 and 2024:


	Three months ended June 30,
	2025		2024		$ Change		% Change

	in thousands (except percentages)
Interest income	$	9,507	$	11,209	$	(1,702)	(15.2)	%
Interest expense	(1,999)		(1,471)		(528)		35.9	%
Net investment gains	1,194		510		684		134.1	%
Other income (expense), net	(3,038)		2,094		(5,132)		N/M
Interest and other income (expense), net	$	5,664	$	12,342	$	(6,678)	(54.1)	%

N/M = Not meaningful

Interest and other income (expense), net decreased $6.7 million, or 54.1%, during the three months ended June 30, 2025, compared to 2024. This decrease was primarily due to a $3.1 million increase in the TRA Liability in the second quarter of 2025 and a $2.3 million gain on the sale of an interest rate swap in the second quarter of 2024, as well as lower yields on fixed income securities.

Income tax expense

We are the sole managing member of THG, and as a result, consolidate its financial results. THG is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, THG is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by THG is passed through and included in the taxable income or loss of its members, including Hagerty, Inc., on a pro rata basis. Hagerty, Inc. is subject to U.S. federal, state and local income taxes with respect to its allocable share of any taxable income or loss of THG, as well as any of its stand-alone income or loss. In addition, Hagerty Insurance Holdings, Inc., Broad Arrow, Hagerty Radwood, Inc. and various foreign subsidiaries are treated as taxable entities. Hagerty Insurance Holdings, Inc. files a consolidated tax return with its wholly owned corporate subsidiaries Hagerty Re and Drivers Edge.

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For the three months ended June 30, 2025, income tax expense was $6.2 million, representi ng an increase of $0.4 million, or 6.0%, compared to 2024. This increase was primarily due to an increase in THG earnings attributable to Hagerty, Inc. Refer to Note 20 — Taxation in Item 1 of Part I of this Quarterly Report for additional information with respect to items affecting our effective tax rate.

Six Months Ended June 30, 2025 compared to the Six Months Ended June 30, 2024

The following table summarizes our results of operations for the six months ended June 30, 2025 and 2024, and the dollar and percentage change between the two periods:


	Six months ended June 30,
	2025		2024		$ Change		% Change

REVENUE:	in thousands (except percentages)
Commission and fee revenue	$	243,574	$	217,656	$	25,918	11.9	%
Earned premium	347,140		309,231		37,909		12.3	%
Membership, marketplace and other revenue	97,578		58,046		39,532		68.1	%
Total revenue	688,292		584,933		103,359		17.7	%
OPERATING EXPENSES:
Salaries and benefits	123,165		113,809		9,356		8.2	%
Ceding commissions, net	160,271		144,376		15,895		11.0	%
Losses and loss adjustment expenses	146,343		127,085		19,258		15.2	%
Sales expense	122,006		87,650		34,356		39.2	%
General and administrative expenses	44,759		41,235		3,524		8.5	%
Depreciation and amortization	18,321		20,574		(2,253)		(11.0)	%
Gain related to divestiture	—		(87)		87		N/M
Total operating expenses	614,865		534,642		80,223		15.0	%
OPERATING INCOME	73,427		50,291		23,136		46.0	%
Loss related to warrant liabilities, net	—		(8,081)		8,081		N/M
Interest and other income (expense), net	12,718		19,586		(6,868)		(35.1)	%
INCOME BEFORE INCOME TAX EXPENSE	86,145		61,796		24,349		39.4	%
Income tax expense	(11,650)		(10,940)		(710)		6.5	%
NET INCOME	$	74,495	$	50,856	$	23,639	46.5	%

N/M = Not meaningful

Revenue

Commission and fee revenue

Commission and fee revenue was $243.6 million for the six months ended June 30, 2025, an increase of $25.9 million, or 11.9%, compared to 2024. This increase was driven by policy renewals, which contributed $26.4 million to the year-over-year improvement, partially offset by a $0.5 million decrease in revenue related to new policies.

The increase in revenue from policy renewals was primarily driven by a 15.3% increase in underlying policy premiums, as well as continued strong policy retention. The increase in renewal policy premiums is the result of rate increases in several states due to inflation and higher vehicle repair costs, both of which contribute to higher premiums and, in turn, higher commission revenue.

The decrease in revenue from new policies was primarily driven by a 3.5% decrease in new business count, the effect of which was partially offset by rate increases in several states due to inflation and higher vehicle repair costs.

Commission and fee revenue from agent sources increased $13.9 million, or 11.7%, and Commission and fee revenue from direct sources increased $12.0 million, or 12.1%, during the six months ended June 30, 2025. Commission rates vary based on geography, but do not differ by distribution channel (i.e., whether they are direct-sourced or agent-sourced).

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Earned premium

Earned premium at Hagerty Re was $347.1 million for the six months ended June 30, 2025, an increase of $37.9 million, or 12.3%, compared to 2024. This increase was primarily due to continued growth of subject premiums written through our MGA subsidiaries, which increased $55.0 million, or 11.4%, compared to the six months ended June 30, 2024.

The following tables present premiums assumed and earned by Hagerty Re, as well as the related quota share percentages for the six months ended June 30, 2025 and 2024:


	Six months ended June 30, 2025
	U.S.			Canada			U.K. (1)			Total

	in thousands (except percentages)
Subject premium (2)	$	502,056		$	34,526		$	(37)		$	536,545
Quota share percentage	81.0		%	50.0		%	80.0		%	78.9		%
Assumed premium in Hagerty Re	406,089			17,263			(29)			423,323
Reinsurance premiums ceded										(31,069)
Net assumed premium										392,254
Change in unearned premiums										(52,414)
Change in deferred reinsurance premiums										7,300
Earned premium										$	347,140

	Six months ended June 30, 2024
	U.S.			Canada			U.K. (1)			Total

	in thousands (except percentages)
Subject premium (2)	$	450,444		$	31,225		$	(152)		$	481,517
Quota share percentage	81.0		%	35.0		%	80.0		%	77.9		%
Assumed premium in Hagerty Re	364,213			10,929			(121)			375,021
Reinsurance premiums ceded										(32,969)
Net assumed premium										342,052
Change in unearned premiums										(45,235)
Change in deferred reinsurance premiums										12,414
Earned premium										$	309,231

(1) Effective January 1, 2024, Hagerty Re is no longer reinsuring classic auto risks produced by its U.K. MGA affiliate, and the book is in run-off.

(2) Represents the portion of total written premium written by our MGA subsidiaries that is subject to reinsurance agreements between our insurance carrier partners and Hagerty Re.

Membership, marketplace and other revenue

Membership, marketplace and other revenue was $97.6 million for the six months ended June 30, 2025, an increase of $39.5 million, or 68.1%, compared to 2024.

Membership fee revenue was $31.0 million for the six months ended June 30, 2025, an increase of $3.4 million, or 12.5%, compared to 2024. This increase was primarily due to a $3.2 million, or 12.4%, increase in revenue attributable to new insurance policies issued with a bundled HDC membership. For the six months ended June 30, 2025 and 2024, membership fees were 31.8% and 47.5%, respectively, of total Membership, marketplace and other revenue.

Marketplace revenue was $55.8 million for the six months ended June 30, 2025, an increase of $39.0 million compared to 2024. This improvement was principally due to significantly higher levels of inventory sales, including cars acquired from The Academy of Art University Collection and sold at auction in February 2025, as well as increased private sale commissions. To a lesser extent, the increase in Marketplace revenue was attributable to revenues earned from Broad Arrow's inaugural auction at Concorso d’Eleganza Villa d’Este, which was held in May 2025. For the six months ended June 30, 2025 and 2024, Marketplace revenue was 57.1% and 28.9%, respectively, of total Membership, marketplace and other revenue.

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Other revenue, which primarily includes sponsorship, admission, advertising, valuation, and sublease revenue, was $10.8 million for the six months ended June 30, 2025, a decrease of $2.9 million, or 21.0%, compared to 2024. This decrease was primarily attributable to the loss of registration fee revenue attributable to MSR, which was sold in June 2024, as well as a lower level of sponsorship revenue and a decrease in admission revenue due to poor weather at this year's Amelia Concours d'Elegance. For the six months ended June 30, 2025 and 2024, other revenue was 11.1% and 23.6%, respectively, of total Membership, marketplace and other revenue. Refer to Note 11 — Divestiture in Item 1 of Part I of this Quarterly Report for additional information related to the sale of MSR.

Costs and Expenses

Salaries and benefits

Salaries and benefits were $123.2 million for the six months ended June 30, 2025, an increase of $9.4 million, or 8.2%, compared to 2024. This increase was primarily due to annual merit increases, which occur in the second quarter of each year, as well as increased headcount year over year.

Ceding commissions, net

Ceding commissions, net was $160.3 million for the six months ended June 30, 2025, an increase of $15.9 million, or 11.0%, compared to 2024. This increase is primarily attributable to the 12.3% increase in Earned premium discussed above.

The following table summarizes the components of Ceding commissions, net for the six months ended June 30, 2025 and 2024:


	Six months ended June 30,
	2025			2024

	in thousands (except percentages)
Ceding commission:
Ceding commission – reinsurance assumed	$	169,988		$	152,180
Ceding commission – reinsurance ceded	(9,717)			(7,804)
Ceding commissions, net	$	160,271		$	144,376
Percentage of earned premium	46.2		%	46.7		%

Losses and loss adjustment expenses

Losses and loss adjustment expenses were $146.3 million for the six months ended June 30, 2025, an increase of $19.3 million, or 15.2%, compared to 2024. This increase was primarily driven by the 12.3% increase in Hagerty Re Earned premium discussed above.

For the six months ended June 30, 2025, our loss ratio was 42.2%, including the impact of $10.3 million of pre-tax catastrophe losses resulting from the Southern California wildfires in January 2025. For the six months ended June 30, 2024, our loss ratio was 41.1%, including the impact of catastrophe losses.

Sales expense

Sales expense was $122.0 million for the six months ended June 30, 2025, an increase of $34.4 million, or 39.2%, compared to 2024. This increase was due, in part, to a $27.5 million increase in cost of sales, predominantly as a result of a higher level of marketplace inventory sales, as well as a $4.3 million increase in sales commissions, consistent with revenue growth within the marketplace business. In addition, broker expense increased $3.9 million, consistent with the written premium growth within the agent insurance distribution channel.

General and administrative expenses

General and administrative expenses were $44.8 million for the six months ended June 30, 2025, an increase of $3.5 million, or 8.5%, compared to 2024. This increase was primarily due to an increase in software-related costs, partially offset by a $0.9 million decrease in professional services.

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Depreciation and amortization

Depreciation and amortization expense was $18.3 million for the six months ended June 30, 2025, a decrease of $2.3 million, or 11.0%, compared to 2024. The decrease was primarily driven by a smaller base of in-service fixed assets and finite-lived intangible assets as of June 30, 2025, when compared to the same period in 2024.

Loss related to warrant liabilities, net

During the six months ended June 30, 2024, Loss related to warrant liabilities, net was $8.1 million as a result of the change in fair value of our then outstanding warrant liabilities. There were no warrants outstanding during the six months ended June 30, 2025 due to the Warrant Exchange transaction that was completed in July 2024. Refer to Note 6 — Fair Value Measurements in Item 1 of Part I of this Quarterly Report for additional information with respect to our warrants.

Interest and other income (expense), net

The following table summarizes the components of Interest and other income (expense), net for the six months ended June 30, 2025 and 2024:


	Six months ended June 30,
	2025		2024		$ Change		% Change

	in thousands (except percentages)
Interest income	$	18,652	$	20,434	$	(1,782)	(8.7)%
Interest expense	(3,907)		(2,842)		(1,065)		37.5%
Net investment gains	879		510		369		72.4%
Other income (expense), net	(2,906)		1,484		(4,390)		N/M
Interest and other income (expense), net	$	12,718	$	19,586	$	(6,868)	(35.1)%

N/M = Not meaningful

Interest and other income (expense), net decreased $6.9 million, or 35.1%, during the six months ended June 30, 2025, compared to 2024. This decrease was primarily due to a $3.1 million increase in the TRA Liability in the second quarter of 2025 and a $2.3 million gain on the sale of an interest rate swap in the second quarter of 2024, as well as lower yields on fixed income securities. In addition, Interest expense increased, primarily due to higher net borrowings under the 2025 JPM Credit Facility.

Income tax expense

For the six months ended June 30, 2025, income tax expense was $11.7 million, representing an increase of $0.7 million, or 6.5%, compared to 2024. This increase was primarily due to an increase in THG earnings attributable to Hagerty, Inc. Refer to Note 20 — Taxation in Item 1 of Part I of this Quarterly Report for additional information with respect to items affecting our effective tax rate.

Liquidity and Capital Resources

Maintaining a strong balance sheet and capital position is a top priority for us. As a holding company without direct operations, we manage liquidity globally and across all operating subsidiaries.

Sources and Uses of Liquidity

Our sources of liquidity include our: (i) balances of cash and cash equivalents; (ii) net working capital; (iii) cash flows from operations; (iv) borrowings from the 2025 JPM Credit Facility (as defined below) to fund the general corporate needs of THG and its subsidiaries; and (v) borrowings from the BAC Credit Facility (as defined below) to fund a portion of the lending activities of BAC.

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Our primary liquidity needs and capital requirements include cash required for: (i) funding the business operations of THG and its subsidiaries; (ii) funding strategic investments and acquisitions; (iii) servicing and repayment of borrowings under the 2025 JPM Credit Facility, the BAC Credit Facility, and the unsecured term loan credit facility with State Farm Mutual Automobile Insurance Company ("State Farm") (the "State Farm Term Loan"); (iv) funding potential cash dividend payments on the Series A Convertible Preferred Stock; (v) payment of income taxes; (vi) funding required distributions to the non-controlling interest unit holders of THG; and (vii) funding required payments to Legacy Unit Holders under the TRA.

As of June 30, 2025, we believe that our sources of liquidity will be sufficient to provide an adequate level of capital to support our anticipated short and long-term commitments, operating needs, and capital requirements.

Financing Arrangements

2025 JPM Credit Facility

In March 2025, THG entered into a credit agreement with JPM as administrative agent, issuing bank and swingline lender, the foreign subsidiary borrowers thereto, and the other financial institutions party thereto as lenders (the "2025 JPM Credit Agreement").

The 2025 JPM Credit Agreement provides for a senior unsecured revolving credit facility (the "2025 JPM Credit Facility") with an aggregate borrowing capacity of $375.0 million. The 2025 JPM Credit Agreement matures in March 2030, but may be extended if agreed to by THG and the lenders party thereto. Any unpaid balance on the 2025 JPM Credit Facility is due at maturity. As of June 30, 2025, total outstanding borrowings under the 2025 JPM Credit Facility were $111.6 million.

The 2025 JPM Credit Agreement requires us to, among other things, meet certain financial covenants, including a minimum fixed charge coverage ratio test and a maximum leverage ratio test. As of June 30, 2025, we were in compliance with these financial covenants.

BAC Credit Facility

BAC and its wholly owned subsidiary BAC Funding 2023-1, LLC, as borrower, have a revolving credit agreement (the "BAC Credit Agreement") that provides for a revolving credit facility (the "BAC Credit Facility") with an aggregate borrowing capacity of $75.0 million. The BAC Credit Facility's borrowing base is determined by the carrying value of certain BAC notes receivable. As of June 30, 2025, the applicable borrowing base and outstanding borrowings for the BAC Credit Agreement were $38.9 million.

BAC and certain of its subsidiaries may transfer notes receivable to wholly owned, bankruptcy remote special purpose entities (each, an "SPE") to secure borrowings, isolating these assets from our other obligations. Recourse is limited to (i) an obligation of the applicable seller to repurchase a note receivable if it is determined that there was a breach of any representation or warranty relating to such note receivable as of the relevant date specified in the related transfer agreement and (ii) a limited guarantee for certain liabilities that may result under certain foreign exchange hedging activity of one of the SPEs.

BAC and BAC Funding 2023-1, LLC are required, among other things, to meet certain financial covenants including that BAC, as the servicer, maintain a minimum tangible net worth, minimum liquidity balances, and an indebtedness to tangible net worth ratio. As of June 30, 2025, we were in compliance with the financial covenants under the BAC Credit Agreement.

Refer to Note 15 — Debt in Item 1 of Part I of this Quarterly Report for additional information related to the 2025 JPM Credit Agreement and BAC Credit Agreement.

Capital and Dividend Restrictions

We are a holding company with no material assets other than our ownership interest in THG and its operating subsidiaries. Accordingly, our ability to meet our cash requirements depends on THG's financial performance and the distributions we receive from THG. Our subsidiaries' ability to make distributions, pay dividends and make other payments may be regulated by the states and territories where they are domiciled.

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For a discussion of the risks associated with our holding company structure, refer to Item 1A. Risk Factors — Risks Related to Tax — " We are a holding company, and our only material asset is our interest in THG, and we will therefore be dependent upon distributions made by THG to pay taxes, make payments under the TRA and pay other expenses. " in our Annual Report.

Capital Restrictions

Our reinsurance company, Hagerty Re, is subject to the Bermuda Solvency Capital Requirement ("BSCR"), which establishes a target capital level and enhanced capital requirements for each insurer. As of June 30, 2025, Hagerty Re maintained sufficient statutory capital and surplus to comply with the BSCR.

Similarly, our U.S. insurance company subsidiary, Drivers Edge, which holds certificates of authority in 39 states, is subject to state-specific minimum capital and surplus requirements, as well as risk-based capital ("RBC") requirements. RBC levels are reported on an annual basis. As of June 30, 2025, Drivers Edge maintained sufficient capital and surplus levels to comply with state insurance regulations.

Dividend Restrictions

Under Bermuda law, Hagerty Re is prohibited from declaring or issuing a dividend if it fails to meet its minimum solvency margin or minimum liquidity ratio. Prior approval from the BMA is also required if Hagerty Re's proposed dividend payments would exceed 25% of its prior year-end total statutory capital and surplus. Based on these restrictions, during 2025, Hagerty Re can pay $67.9 million in dividends without prior BMA approval; however, the amount that Hagerty Re can pay in dividends is further limited by the amount of unrestricted cash and liquid investments held outside of restricted accounts, which totaled $47.1 million as of June 30, 2025. As of June 30, 2025, there were no plans to issue dividends from Hagerty Re.

Similarly, state statutes restrict the amount of dividends that Drivers Edge may pay without prior approval of state insurance regulators. As of June 30, 2025, there were no plans to issue dividends from Drivers Edge and a change in such plans may require regulatory approval.

Comparative Cash Flows

The following table summarizes our cash flow data for the six months ended June 30, 2025 and 2024:


	Six months ended June 30,
	2025		2024		$ Change		% Change

	in thousands (except percentages)
Net Cash Provided by Operating Activities	$	97,714	$	122,255	$	(24,541)	(20.1)	%
Net Cash Used in Investing Activities	$	(31,839)	$	(479,937)	$	(448,098)	(93.4)	%
Net Cash Provided by (Used in) Financing Activities	$	29,480	$	(50,783)	$	80,263	N/M

N/M = Not meaningful

Operating Activities

Cash provided by operating activities primarily consists of Net income, adjusted for non-cash items, and changes in working capital balances. Net cash provided by operating activities for the six months ended June 30, 2025 and 2024 is presented below:


	Six months ended June 30,
	2025		2024		$ Change		% Change

	in thousands (except percentages)
Net income	$	74,495	$	50,856	$	23,639	46.5	%
Non-cash adjustments to Net income	35,595		43,598		(8,003)		(18.4)	%
Changes in operating assets and liabilities	(12,376)		27,801		(40,177)		N/M
Net Cash Provided by Operating Activities	$	97,714	$	122,255	$	(24,541)	(20.1)	%

N/M = Not meaningful

Net cash provided by operating activities for the six months ended June 30, 2025 was $97.7 million, a decrease of $24.5 million, or 20.1%, compared to 2024. This decrease was due to a $40.2 million decrease in cash from operating assets and liabilities, partially offset by a $15.6 million increase in Net income, net of non-cash adjustments. The $8.0

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million decrease in non-cash adjustments to Net income was primarily the result of an $8.1 million fair value loss related to our warrant liabilities in the prior year. There was no such charge in the current year as our warrants were settled in connection with the consummation of the Warrant Exchange in the third quarter of 2024.

The $40.2 million decrease in net cash from operating assets and liabilities was primarily driven by the timing of the settlement of CUC receivables and payables, which resulted in a $31.6 million net decrease in operating cash flows, as well as claim payments made by Hagerty Re related to recent catastrophe events, including Hurricane Helene, Hurricane Milton, and the Southern California wildfires. To a lesser extent, the decrease was driven by extended payment term receivables associated with Broad Arrow auction and private sales transactions in the period. This decrease in net cash from operating assets and liabilities was partially offset by a $9.7 million increase in Reinsurance Premiums Payable due to a difference in the timing of settlements versus the prior period and to a lesser extent, growth of ceded High-Net-Worth Accounts written premium.

Investing Activities

Cash used in investing activities for the six months ended June 30, 2025 decreased by $448.1 million when compared to 2024, almost entirely due to the diversification of our investment portfolio during the six months ended June 30, 2024, which resulted in the purchase of investment-grade fixed maturity securities and, to a much lesser extent, equity securities.

Financing Activities

Cash from financing activities for the six months ended June 30, 2025 increased $80.3 million when compared to 2024 primarily due to net proceeds received from credit facility borrowings, partially offset by a $25.1 million increase in required tax distributions to THG non-controlling interest unit holders.

Tax Receivable Agreement

We expect to have adequate capital resources to meet the requirements and obligations under the TRA entered into with the Legacy Unit Holders. The TRA requires us to pay Legacy Unit Holders 85% of the amount of cash savings, if any, under U.S. federal, state and local income tax or franchise tax realized as a result of (i) any increase in tax basis of Hagerty, Inc.'s assets resulting from (a) the purchase of THG units from any of the Legacy Unit Holders using the net proceeds from any future offering, (b) redemptions or exchanges by the Legacy Unit Holders of Class V Common Stock and THG units for shares of Class A Common Stock, or (c) payments under the TRA, and (ii) tax benefits related to imputed interest deemed arising as a result of payments made under the TRA.

Legacy Unit Holders may, subject to certain conditions and transfer restrictions as described in the Legacy Unit Holders Exchange Agreement executed in connection with the business combination that formed Hagerty, Inc. in 2021, redeem or exchange their Class V Common Stock and THG units for shares of Class A Common Stock of Hagerty, Inc. on a one-for-one basis. THG made an election under Section 754 of the IRC with the filing of its 2019 income tax return, which cannot be revoked without the permission of the IRS Commissioner and will be in place for any future exchange of THG units. The redemptions and exchanges are expected to result in increases in the tax basis of the tangible and intangible assets of THG. These increases in tax basis may reduce the amount of tax that we would otherwise be required to pay in the future. This payment obligation as a part of the TRA is an obligation of Hagerty, Inc. and not of THG. For purposes of the TRA, the cash tax savings in income tax will be computed by comparing the actual income tax liability of Hagerty, Inc. (calculated with certain assumptions) to the amount of such taxes that Hagerty, Inc. would have been required to pay had there been no increase to the tax basis of the assets of THG as a result of the redemptions or exchanges and had Hagerty, Inc. not entered into the TRA. Estimating the amount of payments that may be made under the TRA is by nature imprecise, insofar as the calculation of amounts payable depends on a variety of factors.

During the six months ended June 30, 2025, the Company made TRA payments of $0.2 million. No such payments were made during the six months ended June 30, 2024.

Off-Balance Sheet Arrangements

We do not have any material off-balance sheet arrangements as of June 30, 2025.

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Critical Accounting Policies and Estimates

The preparation of the unaudited Condensed Consolidated Financial Statements in accordance with GAAP requires management to make significant judgments, assumptions, and estimates that materially affect the amounts reported in the Company's Condensed Consolidated Financial Statements. Management's judgments, assumptions, and estimates are based on historical experience, future expectations, and other factors that are believed to be reasonable as of the date of the Condensed Consolidated Financial Statements. Actual results may ultimately differ from management's original estimates, as future events and circumstances sometimes do not develop as expected.

Our accounting policies are set forth in Note 1 — Summary of Significant Accounting Policies and New Accounting Standards to Consolidated Financial Statements contained in our Annual Report.

New Accounting Standards

New accounting standards are described in Note 2 — Summary of Significant Accounting Policies in Item 1 of Part I of this Quarterly Report, which are incorporated herein by reference.

Non-GAAP Financial Measures

Adjusted EBITDA

We define Adjusted EBITDA as consolidated Net income, excluding net interest and other income (expense), income tax expense, and depreciation and amortization, further adjusted to exclude (i) net gains and losses related to our warrant liabilities prior to the Warrant Exchange; (ii) share-based compensation expense; and when applicable, (iii) restructuring, impairment and related charges; (iv) gains, losses and impairments related to divestitures; and (v) certain other unusual items. Refer to Note 6 — Fair Value Measurements in Item 1 of Part I of this Quarterly Report for additional information regarding the Warrant Exchange.

We present Adjusted EBITDA because we consider it to be an important supplemental measure of our performance and believe it is frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in our industry. We use Adjusted EBITDA as a measure of the operating performance of our business on a consistent basis, as it removes the impact of items not directly resulting from our core operations.

By providing this non-GAAP financial measure, together with a reconciliation to Net income, which is the most comparable GAAP measure, we believe we are enhancing investors' understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives. However, Adjusted EBITDA has limitations as an analytical tool, and should not be considered in isolation, or as an alternative to, or a substitute for Net income or other financial statement data presented in our Condensed Consolidated Financial Statements as indicators of financial performance. Our definition of Adjusted EBITDA may be different than similarly titled measures used by other companies in our industry, which could reduce the usefulness of this non-GAAP financial measure when comparing our performance to that of other companies.

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The following table reconciles Adjusted EBITDA to the most directly comparable GAAP measure, which is Net income:


	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024

	in thousands
Net income	$	47,202	$	42,657	$	74,495	$	50,856
Interest and other (income) expense, net (1) (2)	(5,664)		(12,342)		(12,718)		(19,586)
Income tax expense	6,161		5,811		11,650		10,940
Depreciation and amortization	8,833		10,014		18,321		20,574
EBITDA	56,532		46,140		91,748		62,784
Loss related to warrant liabilities, net	—		1,941		—		8,081
Share-based compensation expense	5,146		4,383		9,538		8,926
Gain related to divestiture	—		(87)		—		(87)
Other unusual items (3)	2,066		736		2,066		736
Adjusted EBITDA	$	63,744	$	53,113	$	103,352	$	80,440

(1) Excludes interest expense related to the BAC Credit Facility, which is recorded within "Sales expense" in the Condensed Consolidated Statements of Operations.

(2) Includes interest income and net investment income related to our investment portfolio.

(3) Other unusual items includes certain legal settlement expenses, certain professional fees, and certain material severance expenses for the three and six months ended June 30, 2025, and professional fees associated with the Warrant Exchange for the three and six months ended June 30, 2024. Refer to Note 6 — Fair Value Measurements in Item 1 of Part I of this Quarterly Report for additional information with respect to our warrants.

Adjusted EPS

We define Adjusted Earnings Per Share ("Adjusted EPS") as consolidated Net income, excluding net gains and losses related to our warrant liabilities prior to the Warrant Exchange, divided by our outstanding and total potentially dilutive securities, which includes (i) the weighted average issued and outstanding shares of Class A Common Stock; (ii) all issued and outstanding non-controlling interest units of THG; (iii) all issued and outstanding shares of our Series A Convertible Preferred Stock on an as-converted basis; (iv) all unissued share-based compensation awards; and (v) all unexercised warrants outstanding prior to the Warrant Exchange. Refer to Note 6 — Fair Value Measurements in Item 1 of Part I of this Quarterly Report for additional information regarding the Warrant Exchange.

The most directly comparable GAAP measure to Adjusted EPS is basic earnings per share ("Basic EPS"), which is calculated as Net income available to Class A Common Stockholders divided by the weighted average number of Class A Common Stock shares outstanding during the period.

We present Adjusted EPS because we consider it to be an important supplemental measure of our operating performance and believe it is used by securities analysts, investors and other interested parties in evaluating the consolidated performance of other companies in our industry. We also believe that Adjusted EPS, which compares our consolidated Net income with our outstanding and potentially dilutive shares, provides useful information to investors regarding our performance on a fully consolidated and fully diluted basis.

Management uses Adjusted EPS (i) as a measurement of operating performance of our business on a fully consolidated and fully diluted basis; (ii) to evaluate the performance and effectiveness of our operational strategies; and (iii) as a preferred predictor of core operating performance, comparisons to prior periods and competitive positioning.

We caution investors that Adjusted EPS is not a recognized measure 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, including Basic EPS, and that Adjusted EPS, as we define it, may be defined or calculated differently by other companies. In addition, Adjusted EPS has limitations as an analytical tool and should not be considered as a measure of profit or loss per share.

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The following table reconciles Adjusted EPS to the most directly comparable GAAP measure, which is Basic EPS:


	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024

	in thousands (except per share amounts)
Numerator:
Net income available to Class A Common Stockholders (1)	$	8,465	$	7,912	$	14,505	$	4,955
Accretion of Series A Convertible Preferred Stock	1,875		1,839		3,750		3,677
Undistributed earnings allocated to Series A Convertible Preferred Stock	633		627		1,089		395
Net income attributable to non-controlling interest	36,229		32,279		55,151		41,829
Consolidated net income	47,202		42,657		74,495		50,856
Loss related to warrant liabilities, net	—		1,941		—		8,081
Adjusted consolidated net income (2)	$	47,202	$	44,598	$	74,495	$	58,937

Denominator:
Weighted average shares of Class A Common Stock outstanding (1)	90,698		85,687		90,374		85,171
Total potentially dilutive securities outstanding:
Non-controlling interest THG units	255,100		255,368		255,100		255,368
Series A Convertible Preferred Stock, on an as-converted basis	6,785		6,785		6,785		6,785
Total unissued share-based compensation awards	8,712		8,228		8,712		8,228
Total warrants outstanding (3)	—		3,876		—		3,876
Potentially dilutive shares outstanding	270,597		274,257		270,597		274,257
Fully dilutive shares outstanding (2)	361,295		359,944		360,971		359,428

Basic EPS (1)	$	0.09	$	0.09	$	0.16	$	0.06

Adjusted EPS (2)	$	0.13	$	0.12	$	0.21	$	0.16

(1) Numerator and Denominator, respectively, of the GAAP measure Basic EPS

(2) Numerator and Denominator, respectively, of the non-GAAP measure Adjusted EPS

(3) For the three and six months ended June 30, 2024, the dilutive impact of the outstanding warrants included in the calculation of Adjusted EPS represents the number of Class A Common Stock shares issued in relation to the warrant exchange transaction that closed in July 2024. Refer to Note 6 — Fair Value Measurements in Item 1 of Part I of this Quarterly Report for additional information with respect to the warrant exchange transaction.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes to our market risk during the six months ended June 30, 2025. For a discussion of our exposure to market risk, refer to the market risk disclosures set forth in Item 7A of Part II, "Quantitative and Qualitative Disclosures About Market Risk" in our Annual Report.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this Quarterly Report.

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2025.

Changes in Internal Controls Over Financial Reporting

There were no changes to our internal control over financial reporting that occurred during the three months ended June 30, 2025, which were identified in connection with management's evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we are involved in various claims and legal actions that arise in the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, we do not believe that the ultimate resolution of these actions will have a material adverse effect on our financial position, results of operations, liquidity or capital resources.

Future litigation may be necessary to defend ourselves and our partners by determining the scope, enforceability and validity of third party proprietary rights or to establish our proprietary rights. The results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

Refer to Note 22 — Commitments and Contingencies in Item 1 of Part I of this Quarterly Report for additional information related to legal proceedings.

ITEM 1A. RISK FACTORS

Other than the risk factor below, as of the date of this Quarterly Report, there have been no material changes to our risk factors as previously disclosed in our Annual Report. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC. Additional risks that we currently do not know about or currently view as immaterial may also materially adversely affect our business, financial condition, or operating results.

We may be unable to successfully enter into the Proposed Fronting Arrangement with Markel and, even if completed, we may be unable to realize the anticipated benefits from the Proposed Fronting Arrangement.

On July 24, 2025, we announced that we had entered into a non-binding letter of intent regarding the Potential Fronting Arrangement with Markel. Because the letter of intent is non-binding, either party may terminate discussions at any time prior to the execution of definitive agreements. The consummation of the Proposed Fronting Arrangement is subject to the negotiation and execution of definitive binding documentation and the receipt of all required regulatory approvals. There can be no assurance that the Proposed Fronting Arrangement will be completed on the terms currently contemplated, within the anticipated timeframe, or at all. Factors that could prevent the completion of the Proposed Fronting Arrangement include, among others, the inability of the parties to agree on commercially acceptable terms, a decision by either party to pursue alternative counterparties or arrangements, or the failure to obtain necessary regulatory approvals.

Furthermore, even if we are able to enter into definitive agreements and complete the Proposed Fronting Arrangement, we may not realize the anticipated benefits of the arrangement. The success of the Proposed Fronting Arrangement will depend on a variety of factors, including the effective implementation by both parties, changes in market or industry conditions, regulatory developments, and other factors, many of which are outside of our control. As a result, there can be no assurance that the Proposed Fronting Arrangement will achieve its intended objectives or that it will not have an adverse effect on our business, financial condition, or results of operations.

Rising interest rates and the imposition of tariffs on imported goods could increase costs, reduce consumer spending on collector cars and related services, and negatively impact our business, results of operations and financial condition.

Our business depends on consumer demand for collectible cars and related services, which may decline in response to unfavorable economic conditions, such as high inflation or interest rates, or changes in trade and regulatory policies. Consumer spending on discretionary items, such as collector cars and related services, may be influenced by various factors beyond our control, such as unemployment, income levels, consumer confidence, and financial market volatility. When economic conditions deteriorate, consumers may reduce or postpone their spending on collector cars and related services, which could lower the demand for our products and services. Moreover, changes in tariffs, trade policy, or laws and policies affecting foreign trade, manufacturing, development and investment could increase our costs. For example, the recent imposition of tariffs on certain imported goods could affect the availability and cost of parts to repair our insureds' vehicles, which could impact our cost of claims, insurance premiums and customer satisfaction. While we have not yet identified direct effects from the recent changes in tariffs and other trade measures in our business, the long-term consequences of these actions remain uncertain and could negatively affect both the overall economy and our business. Any prolonged downturns in the economy or decreases in consumer demand for collector cars and related services could materially adversely affect our business, results of operations, and financial condition.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

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ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Trading Arrangements of Directors and Executive Officers

During the three months ended June 30, 2025, no director or executive officer of the Company has adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.

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ITEM 6. EXHIBITS

(a) Financial statements and financial statement schedules filed as part of this report are listed in the index included in Item 1 of Part I of this Quarterly Report.

(b) Exhibits. As required by Item 601 of Regulation S-K, the following are exhibits to this report.


Exhibit No.						Description
2.1*						Business Combination Agreement, dated as of August 17, 2021, by and among Aldel Financial Inc. Aldel Merger Sub LLC and The Hagerty Group, LLC (incorporated by reference to Exhibit 2.1 of the Company’s Form 8-K (File No. 001-40244), filed with the SEC on August 18, 2021).
3.1						Third Amended and Restated Certificate of Incorporation of the Company, dated December 2, 2021 (incorporated by reference to Exhibit 3.1 of the Company’s Amendment No.3 to Form S-1 (File No. 333-261810), filed with the SEC on January 20, 2023).
3.2						Amended and Restated By-Laws of the Company, dated December 2, 2021 (incorporated by reference to Exhibit 3.2 of the Company’s Form 8-K (File No. 001-40244), filed with the SEC on December 8, 2021).
3.3						Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock of the Company dated June 23, 2023 (incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K (File No. 001-40244), filed with the SEC on June 23, 2023).
31.1						Certification of the Chief Executive Officer Pursuant to Rule 13a-14(a) .
31.2						Certification of the Chief Financial Officer Pursuant to Rule 13a-14(a) .
32.1#						Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 .
32.2#						Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 .
101.INS						XBRL Instance Document.
101.SCH						XBRL Taxonomy Extension Schema Document.
101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB						XBRL Taxonomy Extension Label Linkbase Document.
101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF						XBRL Taxonomy Extension Definition Linkbase Document.
104						Cover Page Interactive Data File (formatted as Inline XBRL).


*						The schedules and exhibits to this agreement have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the SEC upon request. In addition, portions of this exhibit have been redacted pursuant to Item 601(b)(10)(iv) of Regulation S-K because the registrant customarily and actually treats that information as private or confidential and the omitted information is not material.

#						This certification is not deemed filed for the purpose of Section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.

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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on August 4, 2025 .

HAGERTY, INC.

By:

/s/ McKeel O Hagerty

McKeel O Hagerty

Chief Executive Officer

HAGERTY, INC.

By:

/s/ Patrick McClymont

Patrick McClymont

Chief Financial Officer

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Part I - Financial Information Item 1. Financial Statements Note 16 Convertible Preferred Stock Item 2. Management S Discussion and Analysis Of Financial Condition and Results Of Operations Item 1A. Risk Factors Item 3. Quantitative and Qualitative Disclosures About Market Risk Item 4. Controls and Procedures Part II Other Information Item 1. Legal Proceedings Item 2. Unregistered Sales Of Equity Securities and Use Of Proceeds Item 3. Defaults Upon Senior Securities Item 4. Mine Safety Disclosures Item 5. Other Information Item 6. Exhibits

Exhibits

2.1* Business Combination Agreement, dated as of August 17, 2021, by and among Aldel Financial Inc. Aldel Merger Sub LLC and The Hagerty Group, LLC (incorporated by reference to Exhibit 2.1 of the Companys Form 8-K (File No. 001-40244), filed with the SEC on August 18, 2021). 3.1 Third Amended and Restated Certificate of Incorporation of the Company, dated December 2, 2021 (incorporated by reference to Exhibit 3.1 of the Companys Amendment No.3 to Form S-1 (File No. 333-261810), filed with the SEC on January 20, 2023). 3.2 Amended and Restated By-Laws of the Company, dated December 2, 2021 (incorporated by reference to Exhibit 3.2 of the Companys Form 8-K (File No. 001-40244), filed with the SEC on December 8, 2021). 3.3 Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock of the Company dated June 23, 2023 (incorporated by reference to Exhibit 3.1 of the Companys Form 8-K (File No. 001-40244), filed with the SEC on June 23, 2023). 31.1 Certification of the Chief Executive Officer Pursuant to Rule 13a-14(a). 31.2 Certification of the Chief Financial Officer Pursuant to Rule 13a-14(a). 32.1# Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350. 32.2# Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.

HGTY 10-Q Quarter ended June 30, 2025

Exhibits