Slide 1: Q4 2021 Investor Presentation
Speakers: McKeel Hagerty | Chief Executive Officer Frederick J. Turcotte | 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 Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements may relate to, but are not
Slide 3: The Hagerty Story
THE HAGERT Y STORY 01 02 03 04 05 06 07 Our purpose is to save driving and car culture for future generations Our mission is to build a global business of scale to fund our purpose, create a place where team members thrive and to drive positive impact on the world Since 1984, Hagerty has helped prot
Slide 4: Hagerty Q4 2021
HAGERTY Q4 : 2021 | 4
Slide 5: The Enthusiast Community is an Expansive and Growing Addressable Market
THE MARKET The Enthusiast Community is an Expansive and Growing Addressable Market GROWING PASSIONATEVAST (1) Per Facebook analytics, Facebook members who have expressed an interest in or ‘Liked” automobiles or associated interests; (2) Per Hagerty company reports based on aggregate data of various
Slide 6: Framework for Monetizing the Total U.S. Addressable Market (Insurance and Vehicle TAM)
Collectible vehicles insured Insurance Policies in Force Written premium Total U.S. market written premium Hagerty share Hagerty share Insurable collectible vehicles Average policy premium ÷ x = = =÷ U.S. INSURANCE TAM U.S. VEHICLE TAM 1.8M(1) 1.1M(2) $596M(3) $12B-$15B ~4% ~4% 43M $557 (1) U.S. onl
Slide 7: Framework for Monetizing the Total U.S. Addressable Market (Membership and Transactional TAM)
Total members Insurable collector vehicles Total U.S.market value Hagerty share Hagerty share Total enthusiasts Average vehicle value ÷ × = = → U.S. TRANSACTIONAL TAM (3) U.S. MEMBERSHIP TAM 2.2M(1) 43M $825B ~3% <1% 69M ~$19k (1) Total members = HDC members, insurance members, Hagerty guests and Ha
Slide 8: Opportunity to Monetize at Scale - Total U.S. Addressable Market
HAGERT Y MARKET SHARE Opportunity to Monetize at Scale - Total U.S. Addressable Market Current Market Share Long-term Target Vehicle count ~4% 7%-10% Written premium ~4% 9%-12% Membership count ~3% 7%-10% Transactional <1% 6%-9% HDC conversion opportunity* *For illustrative purposes only, for every
Slide 9: 2021 Milestones & Highlights
2021 MILESTONES & HIGHLIGHTS » Successfully completed our business combination with Aldel Financial Inc. » Became the first automotive insurance, membership and media brand to go public » Grew our global membership family to 2.4 million, including 1.2 million paid members » Maintained a Net Promoter
Slide 10: 2021 Consolidated Financial Highlights
$674M Written Premium 17% ↑ 41% Loss Ratio 0% $160M Contribution Margin* 9% ↑ $258M Equity Proceeds ($.17) Adjusted Earnings Per Share* $145M Undrawn Syndicated Credit Facility $619M Total Revenue 24% ↑ 719k HDC Paid Member Count 12% ↑ $499 Revenue per Paid Member 13% ↑ 89% Retention 1.0% ↓ $25M Adj
Slide 11: Revenue Components
REVENUE COMPONENTS $301 $97 $30 $174 CAGR 27% $397 $157 $38 $202 $500 $221 $43 $236 $619 $296 $52 $271 M ill io ns Total revenue 2018 2019 2020 2021 Commission + fee revenue » Premium growth averaging* 16% » New business written premium average* growth 19% » Average* Policies in Force retention at 9
Slide 12: Earnings Analysis
EARNINGS ANALYSIS Net Income Adjusted EBITDA M ill io ns $8 $16 2018 $4 $20 2019 $10 $30 2020 2021 ($61) $25 GAAP Net Income (Loss) includes substantial pre-revenue costs related to scaling infrastructure, human resources, occupancy, newly–developed digital platforms and legacy systems to accommodat
Slide 13: Contribution Margin and Contribution Margin Ratio
CONTRIBUTION MARGIN AND CONTRIBUTION MARGIN RATIO Contribution Margin is the amount of Total Revenue that exceeds variable costs, representing the amount of revenue available to cover fixed costs and reinvest for growth. % of Total % of Total % of Total 2019 Revenue 2020 Revenue 2021 Revenue Total R
Slide 14: 2022 Outlook
2022 Outlook HAGERTY 2021 | 14
Slide 15: Hagerty + State Farm Partnership
HAGERT Y + STATE FARM PARTNERSHIP Leverage and Monetize at Scale Our partnership » $500M investment » Board seat » 460,000+ collector policies » 19,200 agents » 10-year contract Our expectations » Initial rollout end of 2022 » Up to 75% HDC adoption rate on new insurance policies » Average annual re
Slide 16: Building an Ecosystem for the Automotive World
BUILDING AN ECOSYSTEM FOR THE AUTOMOTIVE WORLD Insurance Driving Events Owned Events & Experiences Restoration & Transport Membership Valuation Classifieds DriveShare Garage + Social Private Sale Dealers & Brokers Auctions Asset- Based Lending Car Club Partnerships Media & Entertainment Car Lovers E
Slide 17: Collector Vehicle Transactional Market
» U.S. is approximately 59% of the global collector vehicle market based on vehicle count, representing $825B of market value » In 2021, Hagerty observed 280k buy/sell vehicle transactions representing $9.5B in total value on its U.S. insurance book or approximately 1% of the U.S. total market value
Slide 18: Hagerty Marketplace
Hagerty owned Joint venture with Broad Arrow Group HAGERT Y MARKETPLACE Leverage Hagerty Valuation Tools, membership and media content assets to build a comprehensive, trust-based suite of transactional offerings to drive data, revenue and engagement Buy/Sell Asset-Based Lending Private Sales Hagert
Slide 19: Marketplace Synergies
MARKETPLACE SYNERGIES Hagerty Marketp la c e Insurance » Buy or sell collector cars » Drive insurance quotes » Referrals » Vehicle retention enhanced » Trusted buy/sell/rent experience for HDC members » Drive audience » Help grow HDC membership revenue » Drive Garage + Social occupancy and membershi
Slide 20: 2022 Outlook
2022 OUTLOOK Principal difference in 2022 as compared to guidance relates to the delay in launch of State Farm and market timing relative to HDC product launch. Total Written Premium Growth ↑ 14% - 18% 32% Total Revenue Growth ↑ 24% - 28% 36% Policies in Force Retention 89% - 90% 90% Total Members ↑
Slide 21: Driving Future Growth
DRIVING FUTURE GROWTH Insurance » Grow omni-channel distribution (onboard new partners & deepen existing) » Expand share of insurance underwriting profit » Deliver frictionless member experience (sales, service, claims) Media + Entertainment » Develop owned and operated events » Expand digital audie
Slide 22: Ready to Roar
READY TO ROAR At Hagerty, our purpose is to ‘Save Driving & Car Culture for Future Generations.’ To meet that challenge, we are building an ecosystem of products, services and entertainment for car lovers that honors and catalyzes the passion for cars and driving. McKEEL HAGERTY HAGERTY 2021 | 22
Slide 23: Appendix
APPENDIX
Slide 24: Key Performance Indicators + Supplemental Financial Information
KEY PERFORMANCE INDICATORS + SUPPLEMENTAL FINANCIAL INFORMATION 2020 2021 HDC Paid Member Count 641,343 718,583 Total Written Premium $578,234,262 $674,305,411 New Business Count (Insurance) 236,665 244,478 Policies in Force Retention 90.0% 89.1% Loss Ratio 41.3% 41.3% Revenue per Paid Member $442 $
Slide 25: Supplemental Financial Information: Member Counts
SUPPLEMENTAL FINANCIAL INFORMATION Total member count U.S. 2019 2020 2021 Insurance Only 344,297 412,420 443,137 Insurance + HDC 521,471 568,285 630,323 HDC Standalone 26,248 21,632 31,817 Total Paid 892,016 1,002,337 1,105,277 2019 2020 2021 U.S. 840,193 977,180 1,142,122 Canada 26,740 38,686 47,65
Slide 26: Supplemental Financial Information: Policies and Vehicles in Force
SUPPLEMENTAL FINANCIAL INFORMATION Policies and Vehicles in Force HAGERTY 2021 | 26 Policies in Force 2021 US 1,080,909 CAN 133,515 UK 32,632 Total 1,247,056 Vehicles Covered 2021 US 1,861,248 CAN 188,518 UK 53,419 Total 2,103,185
Slide 27: Reconciliation of Non-GAAP Metrics: Net Income to Adjusted EBITDA
RECONCILIATION OF NON-GAAP METRICS Net Income (Loss) to Adjusted EBITDA 2018 2019 2020 2021 Net Income (Loss) $8,474 $4,207 $10,039 ($61,354) Interest and Other (Income) Expense 17 (608) 987 1,993 Income Tax Expense 122 7,250 4,820 6,751 Depreciation and Amortization 7,755 8,950 11,800 22,144 Change
Slide 28: Reconciliation of Non-GAAP Metrics: Operating Income to Contribution Margin
RECONCILIATION OF NON-GAAP METRICS Operating Income (Loss) to Contribution Margin Contribution Margin and Contribution Margin Ratio We define Contribution Margin as total revenue less operating expense plus our fixed operating expenses such as depreciation and amortization, general and administrativ
Slide 29: Reconciliation of Non-GAAP Metrics: EPS to Adjusted EPS
RECONCILIATION OF NON-GAAP METRICS Earnings Per Share to Adjusted Earnings Per Share HAGERTY 2021 | 29 2021 Net income (loss) attributable to controlling interest** ($46,358) Net income (loss) attributable to non-controlling interest (398) Net income (loss) attributable to redeemable non-controlling
Slide 30: Never Stop Driving
Never Stop Driving HAGERTY