Hagerty (NYSE:HGTY) reported second-quarter results marked by continued policy growth, higher written and earned premiums, and increased adjusted EBITDA, prompting the specialty insurer to raise its full-year outlook.
Chief Executive Officer and Chairman McKeel Hagerty said the first half of 2026 was the company’s strongest on record based on growth in policies in force, written premium, earned premium and adjusted EBITDA. The company surpassed 3 million insured vehicles during the second quarter and added a record 279,000 new members in the first half, aided by State Farm policy conversions.
Markel Arrangement Changes Reported Financial Presentation
Hagerty reassumed 100% of underwriting risk on its U.S. book beginning Jan. 1 under the Markel Fronting Arrangement. McClymont said the structure provides Hagerty with a 25% step-up in underwriting profits and investment income, but it also changes the presentation of its GAAP revenue and income statement.
First-half reported GAAP revenue declined 6% to $667 million despite 19% written premium growth, as MGA commission revenue and related ceding commission expense are eliminated in consolidation. Hagerty reported GAAP net income of $8 million in the second quarter, while its first-half GAAP net loss was $5 million.
Second-quarter net loss attributable to Class A common shareholders was $2 million, or $0.02 per share on both a GAAP and adjusted basis. The company’s second-quarter results included $64 million in amortization of deferred ceding commissions related to 2025 policies.
McClymont said Hagerty capitalized about $57 million in new acquisition expenses during the first half, with $16 million recognized through the income statement. That created a $41 million cumulative first-half benefit, including $20 million during the second quarter. The company expects that benefit to decline to $15 million in the second half and to be absent in the fourth quarter as policy acquisition expense amortization catches up with costs.
Management expects the accounting effects of the fronting transition to be largely resolved in 2027, when revenue and earnings should present a more normalized view of operating performance.
Profitability, Cash Flow and Outlook
Hagerty Re reported a 90% combined ratio during the second quarter, following an 88% combined ratio for the first half. The first-half loss ratio was 41%. Management cited investments in underwriting and in-house claims capabilities as factors supporting member outcomes and lower loss costs.
Adjusted EBITDA was $75 million in the second quarter and $160 million in the first half, up 32% year over year. Operating cash flow for the first six months totaled $186 million, nearly double the amount generated in the first half of 2025.
As of June, Hagerty had $298 million of unrestricted cash and $216 million of total debt, including $88 million of back leverage associated with Broad Arrow’s portfolio of collector-car loans.
Based on first-half performance and momentum entering the second half, the company raised its 2026 guidance. Hagerty now expects:
- Written premium growth of 16% to 17% for the full year.
- GAAP net income of $18 million to $30 million.
- Adjusted EBITDA of $270 million to $280 million.
McClymont said stronger-than-expected cost efficiency and better Marketplace profitability were contributing to the increased EBITDA outlook. He also noted that Hagerty’s Marketplace business, which includes auctions and private sales, had performed better than expected and had major sales planned for the second half.
Distribution Expansion and Marketplace Growth
Management said growth was broad-based across its distribution channels. The State Farm Classic+ program was active for new Hagerty policies in 37 states as of the end of the second quarter. Conversion of State Farm’s existing 525,000 collector-car policies was underway in 14 states, with Hagerty maintaining its target to complete the transition by 2028.
The company said its independent agency channel includes 54,000 agents and remains a significant opportunity. Hagerty is investing in automated vehicle-identification tools, straight-through processing and agent education to identify enthusiast vehicles insured under standard daily-driver policies.
Hagerty also cited expanding relationships with carriers including Progressive and Liberty Mutual. McClymont said the Progressive relationship has expanded beyond vehicles built before 1981 to include vehicles that are at least 25 years old, adding 17 years of potential vehicle cohorts on a rolling basis.
Enthusiast+, Hagerty’s offering for more modern enthusiast vehicles, was performing in line with revised pricing assumptions in Colorado. The company expanded the program into three additional states in July. McKeel Hagerty said younger collectors were increasingly driving demand, with year-to-date quote volume from Gen X, millennial and Gen Z consumers exceeding 60% of total demand.
Bennetts Acquisition and Marketplace Results
After the quarter ended, Hagerty acquired Bennetts, the second-largest specialty motorcycle insurer in the United Kingdom, for £34 million. McClymont said the acquisition immediately triples Hagerty’s scale in the U.K. market. Management characterized acquisitions as likely to be modest and infrequent, with capital allocation remaining focused primarily on investments that grow policy count, improve unit economics and deepen the company’s member ecosystem.
Hagerty Marketplace generated $65 million in first-half total sales, up 17%. Broad Arrow, the company’s high-end live auction business, recorded a 74% increase in first-half sales and a 91% sell-through rate. Private sales declined from the prior-year period, which had benefited from the sale of a large single-owner collection.
McKeel Hagerty said the marketplace operation also serves as a customer-acquisition channel, as vehicles sold through auctions and private transactions may become Hagerty insurance policies. The company said it remains focused on reaching 3 million policies by 2030.
About Hagerty (NYSE:HGTY)
Hagerty is a specialized automotive lifestyle and insurance company that caters primarily to collectible car enthusiasts. Its core business centers on offering classic vehicle insurance policies designed to protect antique, vintage and specialty automobiles, motorcycles and boats. These policies typically feature agreed-value coverage, flexible usage options and access to restoration services, aligning with the unique needs of collectors and hobbyists.
Beyond insurance, Hagerty operates a comprehensive suite of community and content services under its automotive lifestyle brand.
