Q2 2026 Hagerty Inc Earnings Call Transcript
Key Points
- Hagerty Inc (HGTY) delivered record first-half 2026 results, with written premium growth of 19%, driven by a record 279,000 new members added and surpassing the $3 million vehicle insured milestone.
- The company raised its full-year 2026 guidance, now expecting written premium growth of 16% to 17%, GAAP net income of $18 million to $30 million, and adjusted EBITDA of $270 million to $280 million.
- The State Farm partnership is accelerating, with agents selling new Hagerty policies in 37 states and conversions of existing policies progressing on pace to complete by 2028.
- Hagerty Re's combined ratio remained strong at 88% for the first half, demonstrating exceptional underwriting discipline and a loss ratio of 41%.
- The acquisition of Bennix, the second largest specialty motorcycle insurer in the UK, immediately triples Hagerty's scale in that market and is expected to be a strategic growth driver.
- The company's marketplace business, particularly Broad Arrow, saw sales increase 74% in the first half, with a 91% sell-through rate, reinforcing the customer acquisition flywheel.
- Operating cash flow nearly doubled to $186 million in the first half of 2026, reflecting the improved economics of the new Markel fronting arrangement.
- Reported GAAP revenue declined 6% in the first half of 2026, and the company posted a GAAP net loss of $5 million due to accounting mechanics from the new Markel fronting arrangement, which may confuse investors.
- The company's retention rate declined by 50 basis points year-over-year to 88%, with a slight downtrend in the core book, although management noted it is within historical range.
- The Enthusiast Plus program is still in its early stages, and while performing in line with revised pricing assumptions, it remains a startup mode with limited contribution to overall results.
- The company's GAAP presentation will continue to be impacted by the Markel fronting transition throughout 2026, with a $41 million cumulative benefit from capitalized acquisition expenses expected to diminish in the second half.
- Capital allocation priorities do not include returning capital to shareholders in the near term, as the company focuses on investing in growth and strategic acquisitions.
- The company faces inflationary pressures on loss costs, which were noted as a factor in the second quarter combined ratio of 90%.
- Private sales in the marketplace business were down against the prior year period, which had benefited from a large single-owner collection sale.
Hello and welcome to Hagerty's second quarter 2026 Earnings Call and Webcast.
(Operator Instructions)Jay Koval, Head of Investor Relations
Thank you, operator, and good morning, everyone, and thank you for joining us to discuss Hagerty's results for the second quarter of 2026. I'm joined this morning by McKeel Hagerty, Chief Executive Officer and Chairman and Patrick McClimate, Chief Financial Officer. During this morning's conference call, we will refer to an accompanying presentation that is available on Hagerty's Investor Relations section of the company's corporate website at investor.hagerty.com.
Our earnings release slides and letter to stockholder covering this period are also posted on the IR website as well as our 8-K filing. Today's discussion contains forward-looking statements and non-GAAP financial metrics as described further on slide 2 of the earnings presentation. Forward-looking statements include statements about our expected future business and
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