Slide 1: Investor Presentation
~ Investor Presentation Speakers: MckKeel Hagerty | Chief Executive Officer HA ERTY Patrick McClymont | SVP & Chief Financial Officer
Slide 2: Forward Looking Statements / Non-GAAP Financial Measures
FORWARD LOOKING STATEMENTS / NON-GAAP FINANCIAL MEASURES This presentation contains forward-looking statements within the meaning of Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that are not historical facts. These forward-looking statements ref
Slide 3: YTD 2022 Key Highlights
Total Revenue Growth of 27% Written Premium growth of 15% Acquired Broad Arrow Group (Marketplace for buying, selling and financing collector cars) and successfully executed the first live Motorlux auction in Monterey with over $55 million in total vehicle sales State Farm partnership progressing we
Slide 4: Proven Track Record of Profitable Long-Term Growth
PROVEN TRACK RECORD OF PROFITABLE LONG-TERM GROWTH 1 Hagerty’s year-to-date loss ratio of 46.8% includes the $10.0 million impact from Hurricane Ian (3.4%) as well as the increased U.S. liability reserves of $6.5 million (2.2%). Recently implemented rate changes expected to drive 2023 loss ratios in
Slide 5: Hagerty Marketplace
» Marketplace represents a large and growing opportunity for Hagerty » Significant adjacent market opportunity demonstrated by ~300,000 cars transacting for ~$12.5 billion through Hagerty’s insurance book over the last twelve months » Executed first live auction at Motorlux in Monterey with $55 mill
Slide 6: Hagerty + State Farm Partnership
HAGERTY + STATE FARM PARTNERSHIP » Digital and technology teams are progressing through the testing phase and regulatory approval process for the State Farm partnership » Expect to begin activating State Farm’s 19,200 agents to sell classic car policies in the first half of 2023 » Anticipated averag
Slide 7: On Mission, On Track: 2022 + Beyond
On Mission On Track 2022 + Beyond YTD 2022 Progress Insurance » Grow omnichannel distribution (onboard new partners and deepen existing) » Expand share of insurance underwriting profit » Deliver frictionless member experience (sales, service, claims) » State Farm partnership progress continues with
Slide 8: YTD Q3 2022 Consolidated Financial Highlights
1 Hagerty’s year-to-date loss ratio of 46.8% includes the $10.0 million impact from Hurricane Ian (3.4%) and increased U.S. reserves of $6.5 million (2.2%). 2 See Appendix for additional information regarding these non-GAAP measures. 46.8% Loss Ratio1Total Revenue 88% Retention (1)% $456 Revenue per
Slide 9: Revenue Components
REVENUE COMPONENTS 1 Includes base commissions, payment plan fees and contingent underwriting commissions. 2 Currently applies to U.S. and U.K. programs. Generally described as an arrangement where underwriting risk and profit is shared proportionately. $168 $217 $79 $107 $13 $24 $76 $86 Q3 2021 Q3
Slide 10: Adjusted EBITDA and Net Income Earnings Analysis
1 Adjusted EBITDA and Net Income (Loss) in 2022 were negatively impacted by $16.5 million in losses related to Hurricane Ian and increased 2022 U.S. reserves, as well as a $4.1 million reduction in contingent underwriting commissions. 2 See Appendix for additional information regarding this non-GAAP
Slide 11: 2022 Outlook
1 See Appendix for additional information regarding these non-GAAP financial measures. 2 The difference between Net Income (Loss) and Adjusted EBITDA is due primarily to a $37.9 million gain for the nine months ended September 30, 2022 resulting from a decrease in the fair value of warrant liabiliti
Slide 12: Appendix
APPENDIX
Slide 13: Key Performance Indicators + Supplemental Financial Information
1 See Appendix for additional information regarding these non-GAAP financial measures. 2 Metrics measured as of the end of the period. 3 Hagerty’s third quarter 2022 loss ratio of 56.4% and year-to-date 2022 loss ratio of 46.8% includes the $10.0 million impact from Hurricane Ian (9.3% and 3.4%, res
Slide 14: Quarterly Key Performance Indicators
2 Hagerty’s third quarter 2022 loss ratio of 56.4% and year-to-date 2022 loss ratio of 46.8% includes the $10.0 million impact from Hurricane Ian (9.3% and 3.4%, respectively) and increased U.S. reserves of $6.5 million (6.1% and 2.2%, respectively). 1 Metrics measured as of the end of the period. Q
Slide 15: Historical Seasonality Trends: Written Premium and New Business
Total Written Premium New Business Count (Insurance) HISTORICAL SEASONALITY TRENDS | SUPPLEMENTAL DETAIL $ IN THOUSANDS Q1 Q2 Q3 Q4 Total 2018 82,514 137,943 123,385 86,621 430,463 2019 96,732 158,501 142,030 99,747 497,010 2020 112,421 184,423 163,520 117,870 578,234 2021 133,707 208,091 192,091 14
Slide 16: Historical Seasonality Trends: Revenue and Operating Income
21% 28% 28% 24% Q1 Q2 Q3 Q4 0% 10% 20% 30% 40% (15)% 60% 57% (2)% Q1 Q2 Q3 Q4 (30)% (20)% (10)% —% 10% 20% 30% 40% 50% 60% 70% Total Revenue Total Operating Income 4 YEAR AVERAGE 4 YEAR AVERAGE Geographic footprint of our North American book creates seasonal differences by quarter for revenue and to
Slide 17: Revenue Components by Quarter
1 Includes base commissions, payment plan fees and contingent underwriting commissions. REVENUE COMPONENTS BY QUARTER 50 53 57 60 63 70 79 83 89 94 107 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 46 72 68 50 54 83 76 58 62 96 86 Q1 2020 Q2 2020 Q3 2020 Q4
Slide 18: Policies and Vehicles in Force
1 Metrics measured as of the end of the period. SUPPLEMENTAL FINANCIAL INFORMATION Policies and Vehicles in Force Policies in Force1 Q1 2021 Q1 2022 Q2 2021 Q2 2022 Q3 2021 Q3 2022 U.S. 1,020,638 1,101,557 1,051,423 1,124,545 1,072,634 1,140,892 CAN 126,039 136,136 131,494 140,820 134,196 142,671 U.
Slide 19: Paid Membership Counts
Paid Membership Counts U.S. Q3 2021 Q3 2022 Insurance Member 436,774 462,289 Insurance + HDC 624,596 660,304 HDC Standalone 30,809 29,769 Total U.S. Paid Member Count 1,092,179 1,152,362 Canada Insurance Member 79,386 82,728 Insurance + HDC 53,563 58,085 HDC Standalone 2,781 1,582 Total Canada Paid
Slide 20: Adjusted EBITDA
Adjusted EBITDA We define Adjusted EBITDA as net income (loss) (the most directly comparable GAAP measure) before interest, income taxes, and depreciation and amortization (EBITDA), adjusted to exclude changes in fair value of warrant liabilities, stock based compensation expense, gains and losses f
Slide 21: Contribution Margin and Contribution Margin Ratio
Contribution Margin and Contribution Margin Ratio We define Contribution Margin as total revenue less operating expenses adding back our fixed operating expenses such as depreciation and amortization, general and administrative costs and shared service salaries and benefits expenses. We define Contr
Slide 22: Adjusted Earnings (Loss) Per Share
We define Adjusted Earnings (Loss) Per Share ("Adjusted EPS") as consolidated Net income (loss) attributable to both our controlling and non-controlling interest, less the change in fair value of our warrants and the revaluation gain on previously held equity method investment, divided by our outsta
Slide 23: Never Stop Driving
Never Stop Driving HAGERTY