Q2 2025 Hagerty Inc Earnings Call
The conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jay Cazos, Senior Vice President of Investor Relations. Thank you. You may begin. Thank you, operator, and good morning, everyone. Thanks for joining us to discuss Hagerty's results for the second quarter of 2025. I'm joined this morning by McKeel Hagerty, Chief Executive Officer and Chairman, and Patrick McClymont, 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.
Our earnings release slides and letter to stockholders 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 financial performance and are not promises or guarantees of future performance. They are subject to a variety of risks and uncertainties that could cause the actual results to differ materially from our expectations.
For a discussion of material risks and important factors that could affect our actual results, please refer to those contained in our filings with the SEC, which are also available on our investor relations website at sec.gov.
The appendix of the presentation also contains reconciliations of our non-GAAP metrics to the most directly comparable GAAP measures, further supplemented by this morning's 8-K filing.
And with that, I will turn the call over to Michael.
Thanks, Jay, and good morning, everyone. We appreciate you taking the time to join Hagerty for the Q2 2025 earnings call.
This summer has been another great driving season as we remain on track to welcome a record number of new members to Hagerty in 2025, helping them protect, buy, sell, and enjoy their special cars.
After four decades in the car world, I have learned that everyone has their own car story. Ranging from someone who loves brass horseless carriages to modern-day, high-performance vehicles, off-road vehicles, vintage woody wagons, American-made muscle cars, and Japanese K cars.
Regardless of the type of vehicle, we know it's special to that member, leading to an emotional connection that inspires safer driving habits, which in turn leads to lower claims frequency and consistently strong underwriting results.
And our team of auto enthusiasts is here to provide excellent service, guaranteed value coverage, and a suite of Hagerty products and services to help celebrate their vehicle.
This passion and love of cars, shared by Team Hagerty and our members, results in sustained high rates of growth.
Let me dig into some highlights from the first half of 2025 shown on slide 3.
Total revenue increased 18%.
New business count fueled an 11% increase in written premium and a 12% growth in our commission revenue.
Earned premium for a risk-taking entity, Hagerty, reinsurance increased 12%, and membership Marketplace and other revenue jumped 68%, due to higher inventory sales and the launch of our European auction business.
Moving to profitability during the first six months of the year. Our operating margins jumped another 210 basis points, resulting in net income gains of 46% and adjusted EBITDA growth of 28%.
Over the last 3 years, we have expanded first half operating margins by nearly 14 percentage points, and we expect to continue gains. As we double our policies in force, we aim to reach 3 million by 2030.
Let's move on to slide 4, which details our 2025 strategic priorities built around three themes: simpler, faster, and better integrated.
First is to expand our specialty insurance offerings to protect more of the collectible market, including modern enthusiast vehicles, with the launch of our Enthusiast Plus program in Colorado two weeks ago.
Second, we aim to simplify and better integrate the membership experience across our products and services, creating revenue synergies and driving cost efficiency. This is how we engage with our members in a unique and authentic way.
Third, we plan to expand our marketplace business internationally, leveraging the trust that we have built in the United States.
We announced two additional European auctions on the heels of the excellent results from our inaugural vide Este auction in May, where we achieved a 78% sell-through rate.
These include auctions built around partnerships with the ZOUT Concours in Belgium and Otto Zurich in Switzerland.
In Broad Arrow, we aim to be the most trusted brand to help people around the world buy and sell special vehicles.
And finally, we are investing in the technology replatforming that will enable efficiency gains shown on slide 5.
I would note that we recently launched Enthusiast Plus on Duck Creek, a leading cloud-based insurance platform. Our technology spend should trend down as a percent of revenue. As we accelerate the top line in 2026 and 2027, we will begin to realize the efficiency benefits from these investments.
Before I turn the call over to Patrick to share more details on our results and increase the 2025 outlook, I wanted to walk you through the recently announced fronting arrangement with our long-standing partner, Markel, shown on slide 6. As you know, we have had a highly successful partnership with Markel that began in 2013 when they acquired Essentia to underwrite Hagerty's U.S. business. In 2017, we began to assume 25% of the premium and risk associated with our high-quality book of business and steadily increased it to the current quota share of 80%, with Markel retaining 20%.
On July 24th, we announced that we had signed a LOI to move to a new fronting arrangement with Markle, where Hagerty would control 100% of the premium and risk commencing in 2026, while paying a 2% fronting fee to Markle to issue policies and provide administrative support.
The evolution of this partnership will result in increased profitability for Hagerty in the form of additional underwriting and investment income, along with greater operational control.
We are excited to continue partnering with Markel and believe the new arrangement will position us to unlock even more value for Hagerty shareholders over the coming years.
Patrick.
Thank you, and good morning everyone. Let me dig into the second quarter results in more detail, shown on slides 7 and 8.
In the quarter, we delivered 18% growth in total revenue to $369 million.
New business count games, combined with industry-leading retention of 89%.
Proven 11% increase in written premium.
This 11% is below the 13% to 14% growth we expect for the full year. Even our expectations for faster growth in the second half, as State Farm ramps up.
Our 2-year rates written premium growth during the first half were over 30% and should remain steady at those levels in the second half, as growth accelerated back into the mid-teens during July.
Revenue grew 11% to $143 million.
Earned premium increased 13% to $178 million.
Our loss ratio remains steady at 42%, and membership Marketplace and other revenue jumped 78% to $48 million.
In just three years, we have quickly established ourselves as a leading auction house with unparalleled automotive expertise across Hagerty's products.
Focused on cultivating trusted, long-term relationships with our customers.
Turning now to profitability, shown on slides 9 and 10, we reported an operating profit of $48 million in the second quarter, with operating margins up 70 basis points to 13%.
We are maintaining tight discipline on our costs to translate double-digit commission gains into faster rates of profit growth.
GNA increased 6%, primarily due to higher software licensing costs from our technology transformation. Salaries and benefits grew 11% due to merit increases and additional headcount to support our growth.
Adjusted EVA increased 20% to $64 million as we improve the efficiency of our business model.
Our growing capital base at Hagerty, combined with a balanced investment strategy, resulted in $11 million in second quarter investment income. Interest in other income was $6 million, which included $2 million of interest expense and a $3 million non-cash increase in the tax liability related to our partnership structure.
In total, we delivered second quarter net income of $47 million compared to $43 million a year earlier, an increase of 11%.
Net income attributable to Class A common shareholders was $9 million, after attribution of earnings to the non-controlling interest and accretion on the preferred stock.
Gap: Basic and diluted earnings per share were 9 cents, based on 91 million shares of Class A common stock outstanding.
We ended the quarter with $140 million in unrestricted cash.
And $176 million of total debt, which includes $39 million in back leverage for our portfolio of collateralized loans.
Let me wrap up with our updated outlook for 2025.
School year expectations for revenue and profits are shown on slide 11.
Given our first-half results and solid business momentum, we are increasing our 2025 revenue expectations.
At 13 to 14% growth.
Powered by similar rates of written premium growth and strong gains from our Marketplace business.
We are also increasing our assumptions for margin expansion and now expect net income of $112 million to $120 million.
Up 43 to 53%.
And adjusted Evita 162 to 172 million of 30 to 38% compared to 2024.
In addition to executing on our 2025 strategic priorities, we are well positioned to deliver accelerated growth as we move into 2026.
Field by State Farms ramp and market share gains.
We are excited to welcome their 525,000 current program members and to help them grow their classic business.
Our partnership pipeline is strong and growing as the top 50 carriers realize that they could benefit from a partnership with Hagerty.
Help them fuel their own growth and improve retention with our differentiated approach to caring for their members and special cars.
Enthusiast Plus should become a material growth driver over the medium term, as we target more of the modern Enthusiast vehicles, with the right product and pricing to service these vehicles.
As we continue to get smarter utilizing our data to target members with superior driving characteristics and their special toys.
We have more precisely defined our target market for 25- to 40-year-old cars.
That are more likely to be collectible versus just an older vehicle that might still be used as a daily driver.
This includes filtering by vehicle, body type, equipment, and powertrain packages, as well as original MSRP.
In 1999, the Toyota Camry would be a good example of this.
We believe we have a long runway in front of us, given our penetration of this 35 million car target market is only 6.7%.
When you combine our topline momentum and growth levers with our ongoing efficiency initiatives and the proposed Markle fronting arrangement.
We believe we're pulling together all the ingredients necessary for strong shareholder value creation over the coming years.
With that, let us now open the call to your questions.
Thank you. We will now be conducting a question-and-answer session.
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1 moment, please while we pull for questions.
Our first question comes from Mark Hughes with True Security. Please proceed with your question.
Yeah, thank you. Good morning.
Good morning, Mark.
The, uh, Marketplace revenue, quite strong this quarter. Do you have any, uh,
Thoughts on kind of pacing on Q3, Q4 when you look at the events that you've got in front of you.
What's the trajectory of that going to be? And then, when we look at your full-year total revenue guide, how much of that is Marketplace? I don't know if you can share that detail.
Sure. First, on the second quarter, we had a very strong second quarter in terms of private sales, some of which included inventory sales. I think we've talked about the fact that...
Opportunistically, at times, we will purchase cars, and then resell those either at auction or, in this case, privately.
And the way that that works, just through the accounting, is, you know, the full sale price of the car ends up being the revenue.
And obviously, we're doing it to make the margin on that. So, there was a fair bit of that activity in the second quarter and then just private sales, even when we're not talking about inventory. Um, so, pure agency transactions.
Also, it has been quite strong in the first half of this year. So I think that's a key driver for the year-to-date revenue. And then, the second half of the year, um,
The growth really will come. We feel good. In a week or so, we've got Monterey coming up, and that auction came together well. We'll see what happens in the room, as always.
Very good. When you, uh, $20 million in incremental technology spending.
What's the, uh, outlook when we think about 2026? Is that all going to, uh,
Are we going to go away, or is that, uh, going to drop by half? Any thoughts on that?
Yeah, we, uh, I think we've talked about this on previous calls, and we try to be very careful with our language. We're intentionally not describing it as a one-time thing that would go away. Is your suggestion...
The concept is that, um, we had to increase spending, so it's $20 million, $15 million of which is related to technology. The other $5 million is really related to Marketplace. And so, putting together the team and, you know, for the auctions that I just talked about, um, we have meaningfully grown our footprint in Europe to support the business. But the $15 million, the way to think about it is it's the fact that as we've invested heavily in our new technology platform, which is now actually in use, we've launched Enthusiast Plus and we're selling policies. Um,
Think of that as pre-revenue spending, right? So we spent on both technology and people to get ready to launch the platform. Now, we're starting to actually sell on the platform, but we're only in one state; it'll ramp up over time. So what we're trying to explain is there's a pinch point in profitability because we're spending those dollars in advance of when the revenue shows up.
So the concept is not that it goes away. It's that will actually be delivering real revenues um both from the insurance side and the marketplace side on a go forward basis. So we we we gave Clarity on that really to just to explain that pinch Point, does that help mark?
It does. So that's, uh, costs that you'll be leveraging. I think I understand what you're saying.
How about the, uh, yeah, so the licenses, the licenses for our new platform, which is a Duck Creek platform.
We started spending money on those in 2025, and for the first half of the year, there was no revenue associated with the second half of '25. There's a little bit as we launched Enthusiast Plus, but it ramps up from there, and similarly on the marketplace, right? We hired those people, and now in the second half of the year, we'll start producing revenue against it.
Yeah. The uh
Earnings, uh, impact from the Markle shift, other things equal, is that...
How would we look at that, uh, contribution to the bottom line?
Sure. So
And we put out a set of slides when we announced that 10 days ago, whenever it was. The concept is, you know, by picking up the incremental 20 percentage points of quota share, going from 80% quota share up to 100%.
The benefits to us are: 1. We get the incremental underwriting profit on that.
And as you know, that, you know, within Hagerty, the way that that business works is, it runs at about a.
89% combined ratio.
So, on the incremental 20 points, we'd expect to earn, you know, call it 11 points of operating profit. And so that's a meaningful benefit at the Hagerty rev level.
And you can take the current book of business that we're running and close it up by the incremental 20 percentage points of quota share. And that's a way to think about how it flows through.
Additionally, we're now getting that earned premium within Hagerty Re, and she'll be able to make the investment income on that as well. Um, and you were earning something like I think 4% to 4.4% right now on investment earnings. So those are the two big economic drivers. Um, we do have to staff up a little bit, um, you know, we're taking on new scope of work, and so that's a little bit of an offset to the two positives. But I think if you just focus on the incremental investment earnings and the incremental underlying profit, you'll get most of the answer.
Understood. If I could just squeeze in one more, when you think about the, uh,
Shopping behavior of the customers. I think you've mentioned on earlier calls that some of the higher pricing across the industry is.
perhaps been beneficial as
As consumers have shopped around and you've had an attractive offering, um, how would you characterize the market right now? In terms of just the potential flow related to, um, the dynamics across the broader space?
Yeah, I'm happy to take a crack at it, McQuillen. Sure, Edie. Um, you work with all the top insurance companies, and so we talked about what they're seeing in their core business, and you shared with them what we're seeing.
And the general theme now, with the exception of progressive, is you know, people are seeing this being a year where unit growth is a bit below what they'd expected.
And so I I would say it's it's somewhat of a balanced market. Right now we're not in 1 of those phases where there's intense spending on new customer generation in the broad industry that's leading to those high levels of shopping. Um you know maybe that we saw in years past it seems more muted again with the exception of progressive you. Having said that our, our quote volume continues to be very strong and up year-over-year. And so we're, we're confident from a new business perspective, uh, but, but maybe not kind of the frothy environment that you can see in other times,
Very good. Thank you.
As a reminder, if you would like to ask a question, please press *1 on your telephone keypad. Our next question comes from Greg Peters with Raymond James. Please proceed with your question.
Hey, good morning, everyone. Um, I, uh, I wanted to go back to your expansion entity in Europe and maybe you can help. And I know you've talked about this before. So, um, just maybe remind me about what you see in terms of the adjustable market for your business as we think about the next couple of years.
Yeah, um, hey Greg, it's McKeel. Um, thanks for that. We're pretty excited about our expansion into Europe.
Um, and you know, really with...
Auctions being the lead step here. Um,
The auction at Villa d'Este, which is a very, very high-end auction and concours environment that takes place at Como.
A concourse, actually. Um, that was a real estimate that we had that team go out there and build this business for us in Europe.
And it, you know, we can't emphasize enough that, um, you know, live auctions and private sales are very client-oriented. So in order to have the business, you can't just hang the shingle out and hope for the best. It's very much like if you have the team, you have the specialists; they are, they go out and generate the business.
Find the potential buyers and hold the auction room, especially if you do it at a fun place like Como and Villa d'Este, so you know you're off to a good start. Then the idea being that, you know, with the two additional options at the Zoo de Vincennes in Belgium, which is a very well-attended, high-end...
You know, at the Concorso environment, lots of different motoring activities take place. Their long history of auctions has been very successful there. That was the next one we announced, and then on to Auto Zürich, which is very strong.
Both Enthusiast and kind of more towards this modern Enthusiast car. They call them young timers actually over in Europe kind of the the Germans speaking term for that kind of newer vehicle category which is where all the expansion is and where a lot of our um I guess most greatest demand is in our auction business. So what we think we've done here is built the right team for Europe.
We're focusing on the right. Most growing Marketplace, um, rather than trying to just beat, you know, kind of beat into a, a tougher Market of, you know, older cars and, uh, where there, there's a lot more, it's a little bit frothier. Um, at that high end and what what we found already is, again, great team, plenty of demand, and, uh, you know, a lot of sort of early indications that we've made the right, uh, moves at the right time. So, so far so good in Europe. We, you know, we look to see the next couple of years of an even, um, bigger auction calendar for us in Europe and also build out that Private Sales capability. Um, so looking forward to that, as well, as a full auction schedule for us, um, in the US,
Right. Um, thanks for that detail. Uh, um, can we get to State Farm? I know, you know, this this is seems like it's beginning to, um, really impact your financials. Um, maybe you can give us a sense of how, where you are in the process of of the State State Farm in integration and rolling out your business to their to their all of their agents.
Yeah, happy to. So, um, you know, this is a very important partnership for us and it will be long in the future. Um, you know, State Farm, if you think of it as, like, job to be done, they hired us to help really serve those passionate car people that they had on their books. But you know, they they're, they're big insurance company and this was not an area they specialized in. So right now, I think we're live in 17 States. We might have added a few more, even 16 16, I think we're adding a couple more even as soon as this week and that is focused on new business. So this is where, when you open up to the agents, uh, in those state to all all state in, or State Farm in total, has a little over 19,000 agents. So each, you know, state has
Already doing new business in, uh, four of those states. And now we're starting the process of rolling the existing books in those four states over to us.
So it's up and running. The next couple of years are going to be, you know, high volume, both from a new business standpoint, as well as starting that.
that, um,
You know that roll over the existing business with them and um, you know, so far so good. It, it was a it's complicated technology and, uh, integration of the teams worked really hard to make sure that we were, you know, both doing it correctly, the way we want to do it on our end. And then, you know, mating up with State Farms very large systems. Um, you know, has been a heavy lift, but we're happy to say we're up and running and and so far so good. The best thing that we're seeing is is that the new business numbers that we every time we turn on the the states. The agents are very excited to be able to have access to this product and they're a highly motivated sales team. So it we would look to see this to be an ever, you know, more important part of our new business story.
Do you do? Thanks for that. That's, that's interesting. Do you have, you know, do you have an objective like to be in 30 states by the end of the year? Or I mean, ultimately, I guess your objective is to be in all of their states. But maybe there's nuances of, you know, um, at State Farm that prevent just this us a, a, a straight line roll out. Maybe you can. Yeah, they, they have a clear, Cadence.
They have a clear Cadence that they're, you know, they want to be careful that they, you know, they can precum, they can train their agents, they can create all their territory, and Regional people to, to be ready for this. Um, I think the goal is, you know, something in the 20s, right? Um, 25 states by the end of the year. Yeah, 25 States and that swung up and down 1 state or 2. The idea would be to be in all of the available States, um, by, you know, the over the next couple of years, there are states, like, California for all things you read about in the news that tend to be challenging and lag a little bit. And they will for this too. Um, and also it's important to note that State Farm doesn't do business in every single state, I think notably like Massachusetts. I don't think they do have do business there, uh, for this type of, of business. So yes, the goal is to be an all and um you know I think just a double click on the 1 Thing. This is not 1 of those cases as we have with other partners where it's you know, you put the product on the shelf and you hope that somebody buys it in the store.
This is a case where there's a big chunk of business that will roll over to us as some of these states roll on and we get into the conversion process. So it's just different, you know, than when sometimes we, you know, it's exciting to turn on a new partner, and you hope they sell a lot. They're both going to sell a lot and convert a lot, so that's why State Farm's quite important to us.
Makes sense. I guess the the last question and you touched upon it in your comments and and your answer before but just just curious about the background in the change of the fronting arrangement with Markel.
Um, and you know what? What got you to the point where you wanted to go to 100% retention? Just curious how you were thinking about that going into those conversations?
Coming up. Well, Pat, I'll start, and Patrick can fill in if there are details I missed here. Um, if from the very beginning, 2013, the very...
Base core, intention of the business is that we would eventually take risk and we would eventually take all of the risk. Um, the form of that, you know, being an MGA and how we would take risk behind it, via quota share, Arrangement, was that became the most practical way to do it through the years starting in 2017, ramping up the quota, share to the current 80%. But from the beginning, this is a, you know, this is a friendly
The intended evolution of how the business would work, including both the timing and the terms of that final phase, where you go from 80% to 100%, has always been something that we would be discussing with Markle through the years.
Level and we’re ready to take on that last 20%.
Right. Um, thanks for the answers, me and Patrick.
Thank you, Greg. Good to hear from you, okay?
Our next question comes from Pablo Singson with JP Morgan. Please proceed with your question.
Hi, this is Kevin on for Pablo. Um, so premium growth in the first half of 2025 is running a little below your full-year outlook. Why is that, and what factors do you think will help recovery in the second half?
Sure. It's, uh, Patrick. So, it's a little light to what we had, uh, planned for and expected. Just a few factors going on there. Um, one is on the new business front. It's coming in a little bit below what we'd expected.
And most of that is intentional. Um, we have de-emphasized growth in certain markets where we just didn't see adequate profitability.
Um, and so you can think about markets like California and New York, and we're working on changes in those markets to get back to a position where we can grow again. But we did pause that a bit in the first half of the year.
Um, and then we've actually transitioned our direct approach in terms of how we spent. Um, we refined our model and we're much more focused on a return on advertising sales approach versus previously, we were more focused on minimizing our cost to acquire a customer.
And you can imagine that the logical outcome, right? We're getting what we believe are better customers as measured by our expected lifetime value. Um, but in some cases, we're getting fewer customers. We're just optimizing for a different metric now.
So those are the factors that went into it. Um, you know, we actually feel very good about both of those decisions, and we think that things will change in the markets where we had to slow down a bit. We're really excited about our new approach to maximizing returns on new customers.
And then the second half of the year. Um, what we're going to see is we just talked at length about State Farm, that will start to really ramp up. And, uh, we talked about the fact that we're in 16.
Um, the original four have started conversions.
We've got another seven or so states that will start conversions in the fall timetable, and so that really does ramp up in the latter part of the year.
Is that helpful?
Yeah, yes. Thank you. Um, and then a follow-up to that, the tax rate in the first half has been running a little low. Do you have an expected tax rate for the second half of the year?
Uh, not at this time in our, our tax situation is quite interesting. The nature of the partnership structure that we have. Um, and then with the the new big beautiful, bill act, we're still doing our analysis of what the implications of that are and so we don't have an update on that right now, it's implied. And what we put in terms of the net income guidance,
Uh, but there are some moving pieces right now.
Okay, thank you.
Our next question comes from Mark Hughes with Truist Securities. Please proceed with your question.
Yeah, thanks for taking the follow-up, Patrick, on the State Farm arrangement. The, uh, marginal economics on that business, given the kind of risk structure, I think, uh,
State Farm retaining, uh, risk. How does that work? Uh, you know, just in terms of the latest thoughts on how it flows through the P&L with that written premium being quite strong, but then kind of flowing through the.
Rest of the income statement a little differently.
Sure, the way to think about State Farm is that there is no risk. It's written on State Farm paper, and there is no quota share to Hagerty. So this is a pure agency relationship.
And then, the way to think about it is,
State Farm continues to do all the distribution Wright, State Farm agents are managing these. Excuse me, the existing customers, uh, they're going out and finding the new customers and managing that whole scope of work.
You can kind of think about that as sort of like a broker relationship. In our normal business, you know, where we're paying brokers.
Whatever it ends up being: 10%, 12%, 13%.
In the State Farm situation, it's their paper. They've got their own sales force and so kind of carve that economics out. So, the easiest way to think about it is in our core MGA for the core program. The commissions are kind of 41% to 42%, depending on where the CUC shakes out.
Distribution costs.
The commission that we're getting for the State Farm relationship is.
Kind of 11 or 12 points less than the 42. So it's still very attractive and healthy commissions for all the value that we're adding. You just back out that distribution component.
And then, if you look at the state form book, ultimately it's going to be, you know, right now there are 525,000 vehicles.
Um, the pricing on their book is a bit less than what ours would be in terms of the average premium.
Uh, and that will evolve over time. But our opportunity is to convert all that business, help them continue to grow, and we will be earning a 30, you know, low 30-ish type percent commission on that book of business. And we're doing it through the core MGA, right? So everything else we're leveraging, our existing expertise, our existing process. And so we anticipate this being a very profitable business. Then whatever we sell in terms of HTC to the new State Farm members will be incremental economics for us.
Is that helpful mark?
Sure is appreciated. Run it down. Thank you.
Our next question comes from Mike Zerky with DMO Capital Markets. Please proceed with your question.
Hi thanks. Good morning. Um, I think just, uh, 1 question on. Um, pricings or or pricing or premium per per vehicle Trends. Um, looks like it's trending down a bit. Um, the overall Market. Um, lot, you know, we kind of conceived lost Foster Pro 9 and, uh, competitions building. Um, any comments there and I, I believe just to intertwine in you. You just said to State Farm, average premiums, uh, per vehicle are also a bit lower than the the portfolio. Thanks.
um,
just looking a little bit on the, on the outside in approach, and, and thanks for the question. It's a good 1. As you, you may know, we publish a something that we call our Hagerty value index. Um, it's through our valuation tools, we have a have an amazing team of people that track the market out there. Um, it is true based on the index. You look at that that pricing or valuation specifically of cars is
You know, call it soft flat, um, whatever it is, especially um, at the high end.
But it's remaining quite steady. What you—what? You don't see in uncertain economic times, in this market, is a lot of, say, um, panic selling. Or, gosh, my car isn’t increasing in value this year, so I'm going to go sell it. People just hang on to it and continue to pay their insurance premiums. So, valuation is, is, um,
You know, from a, again, that index and marketplace standpoint, kind of.
Soft to flat, but holding steady by almost every measure. I'm not sure if that addresses the second part of the question, though, Patrick's.
Was there anything on that? Yeah, you know, the.
The average premium, you know, it can tend to move around a bit. Right now, what we're seeing relative to...
Last year, in our own expectations, is, you know, pretty much in line. So
We're not as Michael said, the the elements that drive rate for us are going to be obviously rate changes and we did have a a period where we were increasing rates. Um it's going back a couple of years in most of the states and and so that has washed its way through the book. Um, we do have valuation typically long-term Trend, we see values increase
And right now, we're more in a stable market, so there's less rate that's coming from increasing the underlying values.
But there's nothing that we're looking at. That gives us pause and you you mentioned something about increased competition. I if you clarify that question, what what are you seeing or what are you looking for? Their
Uh we just um yeah your your answer is helpful just um increase competition. We're just meeting from a top-down level of looking at just pricing uh kpis. Um um you know, for for other competitors and and the industry. And you can see CPI data too.
So, um, okay.
And how it comes to.
Sorry, go ahead.
I see when it comes to competition within our niche, right? Things operate very differently in the collector car niche. And so when we look at the specialists who compete, um,
It feels pretty normal, right? You can see pockets where people are competitive and other pockets where it's less. So, we're not seeing something fundamentally different on that front either.
Okay, got it. And, um, if we had divided...
A tiny bit over the last couple of years, is there anything we should be thinking about in terms of initiatives to increase vehicles per policy?
Yeah, I mean, it's thank you. It's, it's a great question. It's a be, you know, for us, it's a beautiful thing. People tend to have, I think we're at 1.7 vehicles per policy today. If you think about kind of the Core Business and what we call our Flex business,
Um, you know, one of the entire reasons we've launched the Enthusiast Plus program is to be able to say yes more to the inbound business that is coming our way.
Um, sometimes this will be somebody adding additional vehicles to their policy that we otherwise could not underwrite because of whatever, you know, sort of pricing or risk dynamics that we didn't feel comfortable with in the core program. And then it's also really meant to say yes to more, uh, newer customers that we don't currently have, so that doesn't necessarily increase the 1.7, but allows us to say yes more. The intention with that Enthusiast Plus Plus business is that it will have higher average premiums, so, you know, for us.
The big initiative, and it's been a multi-year, complicated initiative, has been the launch of Enthusiast Plus. This includes buying the driver's side insurance company, which we mentioned is live in a single state that will start expanding over the coming months and quarters.
Um, and then standing up the entire new, what we call our Apex platform, which is to be able to handle all of that newer business with more flexible pricing, um, as well as eventually to to manage the core business over time. So I, you know, I must say that between the tech and the launch of Enthusiast. Plus, it's been a, it's been kind of a month of celebrations here, um, after lots of year a couple several years. And and certainly a lot of quarters and months of of hard work, so that should start addressing that.
Thank you.
We've reached the end of our Q&A session, and I would now like to pass the floor back over to Michael for closing comments.
Thank you, operator. And thanks to all of you for your continued support. AERT is firing on all cylinders, and we have solid business momentum and a long straightaway in front of us.
Sustaining this trajectory year after year requires great talent. Over the last month, we have been able to fill three key positions with top-tier talent that we believe will be critical to our long-term success.
This includes hiring Adam Van Loon, our new Head of Omni Channel Insurance Distribution, after a career of working at Bain, Chubb, and Plymouth Rock. We also hired Jesse McKendree to lead our insurance products after great success at Geico, Progressive, and Lemonade. Our third addition to Hagerty is Mark Burns, who was brought on board to tightly integrate his brand and marketing efforts across our suite of products and services for car lovers.
1 team, Hagerty has never been stronger, and with that, we look forward to seeing some of you over the next 2 weeks as we head to Monterey Car Week, including our 2-day Broad Arrow Auctions, where we will present some of the best cars yet. Until then, never stop driving.