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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2025


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to _______

Commission file number: 001-40244

HAGERTY, INC.

(Exact name of registrant as specified in its charter)


Delaware		86-1213144
(State of incorporation)		(I.R.S. Employer Identification No.)

121 Drivers Edge, Traverse City, Michigan		49684
(Address of principal executive offices)		(Zip code)

	(800) 922-4050
	Registrant's telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbols

Name of each exchange on which registered

Class A common stock, par value $0.0001 per share

HGTY

The New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

TABLE OF CONTENTS

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The registrant had 100,511,893 shares of Class A Common Stock outstanding and 241,552,156 shares of Class V Common Stock outstanding as of October 24, 2025.

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Table of Contents


Title						Page
Forward Looking Statements						4

Part I – Financial Information						5
Item 1. Financial Statements (Unaudited)						5
Condensed Consolidated Statements of Operations						5
Condensed Consolidated Statements of Comprehensive Income						6
Condensed Consolidated Balance Sheets						7
Condensed Consolidated Statements of Changes in Temporary Equity and Stockholders' Equity						8
Condensed Consolidated Statements of Cash Flows						12
Notes Accompanying the Condensed Consolidated Financial Statements						13
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations						48
Item 3. Quantitative and Qualitative Disclosures About Market Risk						69
Item 4. Controls and Procedures						69

Part II – Other Information						70
Item 1. Legal Proceedings						70
Item 1A. Risk Factors						70
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds						70
Item 3. Defaults Upon Senior Securities						71
Item 4. Mine Safety Disclosures						71
Item 5. Other Information						71
Item 6. Exhibits						72
Signatures						73

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Cautionary Statement Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q (this "Quarterly Report"), as well as other oral or written information we provide, contain statements that constitute "forward-looking statements" within the meaning of the federal securities laws. All statements we provide, other than statements of historical fact, are forward-looking statements, including those regarding our future operating results and financial position, our business strategy and plans, products, services, and technology implementations, market conditions, growth and trends, expansion plans and opportunities, and our objectives for future operations. The words "anticipate," "believe," "envision," "estimate," "expect," "intend," "may," "plan," "predict," "project," "target," "potential," "will," "would," "could," "should," "continue," "ongoing," "contemplate," and similar expressions, and the negative of these expressions, are intended to identify forward-looking statements.

We have based these forward-looking statements largely on our current expectations about future events, which may not materialize. Actual results could differ materially and adversely from those anticipated or implied in our forward-looking statements. Some of the factors that could cause actual results to differ from our expectations include the risks and uncertainties described in Item 1A of Part II — Risk Factors of this Quarterly Report and Item 1A of Part I — Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2024, which highlight, among other risks, our ability to:

•compete effectively within our industry and attract and retain our insurance policyholders and paid Hagerty Drivers Club ("HDC") subscribers (collectively, "Members");

•maintain key strategic relationships with our insurance distribution and underwriting carrier partners;

•prevent, monitor, and detect fraudulent activity;

•manage risks associated with disruptions, interruptions, outages or other issues with our technology platforms or our use of third-party services;

•accelerate the adoption of our membership and marketplace products and services, as well as any new insurance programs and products we offer;

•enter into and successfully implement the proposed fronting arrangement with Markel Group Inc. (together with its subsidiaries, "Markel") on acceptable terms and obtain all required regulatory approvals, and, if achieved, realize the anticipated benefits;

•underwrite and price new products, including Enthusiast+, consistent with expected loss ratios and risk tolerances;

•execute Broad Arrow's marketplace, private sale and financing strategies;

•manage the cyclical nature of the insurance business and broader macroeconomic conditions, including inflation, interest rates and potential recessionary pressures;

•address unexpected increases in the frequency or severity of claims, including catastrophe losses; and

•comply with the numerous laws and regulations applicable to our business, including state, federal and foreign laws relating to insurance and rate increases, privacy, the internet, and accounting matters.

You should not rely on forward-looking statements as predictions of future events. We operate in a very competitive and rapidly changing environment and new risks emerge from time to time. The forward-looking statements in this Quarterly Report represent our views as of the date hereof. We undertake no obligation to update any of these forward-looking statements for any reason after the date of this Quarterly Report.

Where You Can Find More Information

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, as well as any amendments to those reports, are available free of charge through our website at investor.hagerty.com after we file them with, or furnish them to, the Securities and Exchange Commission ("SEC"). We use our investor relations website, investor.hagerty.com, as a means of disclosing information which may be of interest or material to our investors and for complying with disclosure obligations under Regulation FD. Accordingly, investors should monitor our investor relations website, in addition to following our press releases, SEC filings, public conference calls, webcasts, and social media channels. Information contained on or accessible through our website or social media channels is not a part of, and is not incorporated by reference into, this Quarterly Report or any other report or document we file with the SEC. Any reference to our website in this Quarterly Report is intended to be an inactive textual reference only.

Unless the context indicates otherwise, the terms "we," "our," "us," "Hagerty," and the "Company" refer to Hagerty, Inc. and its consolidated subsidiaries, including The Hagerty Group, LLC ("THG").

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PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Hagerty, Inc.

Condensed Consolidated Statements of Operations (Unaudited)


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024

REVENUE:	in thousands (except per share amounts)
Commission and fee revenue	$	137,103	$	116,161	$	380,677	$	333,817
Earned premium, net	187,039		165,686		534,179		474,917
Membership, marketplace and other revenue	55,852		41,527		153,430		99,573
Total revenue	379,994		323,374		1,068,286		908,307
OPERATING EXPENSES:
Salaries and benefits	68,110		47,192		191,275		161,001
Ceding commissions, net	87,411		77,501		247,682		221,877
Losses and loss adjustment expenses	78,626		99,430		224,969		226,515
Sales expense	77,672		59,141		199,678		146,791
General and administrative expenses	24,445		20,837		69,204		62,072
Depreciation and amortization	9,413		9,184		27,734		29,758
Gain related to divestiture	—		—		—		(87)
Total operating expenses	345,677		313,285		960,542		847,927
OPERATING INCOME	34,317		10,089		107,744		60,380
Loss related to warrant liabilities, net	—		(463)		—		(8,544)

Interest and other income (expense), net (Note 20)	(20,980)		8,359		(8,262)		27,945
INCOME BEFORE TAXES	13,337		17,985		99,482		79,781
Income tax (expense) benefit	32,834		1,022		21,184		(9,918)
NET INCOME	46,171		19,007		120,666		69,863
Net income attributable to non-controlling interest	(25,323)		(14,122)		(80,474)		(55,951)
Accretion of Series A Convertible Preferred Stock	(1,903)		(1,875)		(5,653)		(5,552)
NET INCOME ATTRIBUTABLE TO CLASS A COMMON STOCKHOLDERS	$	18,945	$	3,010	$	34,539	$	8,360

Earnings per share of Class A Common Stock:
Basic	$	0.18	$	0.03	$	0.35	$	0.09
Diluted	$	0.11	$	0.03	$	0.29	$	0.09

Weighted average shares of Class A Common Stock outstanding:
Basic	96,167		89,691		92,326		86,689
Diluted	347,240		89,691		346,672		87,601

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

See Note 21 for information regarding Related-Party Transactions.

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Hagerty, Inc.

Condensed Consolidated Statements of Comprehensive Income (Unaudited)


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024

	in thousands
Net income	$	46,171	$	19,007	$	120,666	$	69,863
Other comprehensive income, net of tax:
Change in net unrealized gain (loss) on available-for-sale investments	1,893		7,970		6,978		8,718
Foreign currency translation adjustments	720		402		2,427		(425)
Change in unrealized loss on interest rate swap	—		—		—		(2,234)
Other comprehensive income	2,613		8,372		9,405		6,059
Comprehensive income	48,784		27,379		130,071		75,922
Comprehensive income attributable to non-controlling interest	(27,200)		(20,380)		(87,367)		(60,475)
Accretion of Series A Convertible Preferred Stock	(1,903)		(1,875)		(5,653)		(5,552)
Comprehensive income attributable to Class A Common Stockholders	$	19,681	$	5,124	$	37,051	$	9,895

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

See Note 21 for information regarding Related-Party Transactions.

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Hagerty, Inc.

Condensed Consolidated Balance Sheets (Unaudited)


	September 30,		December 31,
	2025		2024

ASSETS	in thousands (except share amounts)
Current Assets:
Cash and cash equivalents	$	160,386	$	104,784
Restricted cash and cash equivalents	172,261		128,061
Investments	130,147		73,957
Accounts receivable	107,476		84,763
Premiums receivable	230,919		153,748
Commissions receivable	27,404		20,430
Notes receivable	94,158		45,417
Deferred acquisition costs, net	192,496		156,466
Other current assets	99,073		90,779
Total current assets	1,214,320		858,405
Investments	543,772		515,570
Notes receivable	17,807		11,555

Lease right-of-use assets	42,229		44,485
Intangible assets, net	88,452		90,107
Goodwill	114,150		114,123
Deferred tax assets	45,265		—
Other long-term assets	85,960		75,093
TOTAL ASSETS	$	2,151,955	$	1,709,338
LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable, accrued expenses and other current liabilities	$	147,868	$	104,496
Current portion of long-term debt	73,118		792
Losses payable and provision for unpaid losses and loss adjustment expenses	276,678		266,878
Ceding commissions payable	107,473		77,389
Advance premiums and due to insurers	171,616		108,352
Unearned premiums	439,395		357,539

Total current liabilities	1,216,148		915,446
Long-term lease liabilities	40,511		43,178
Long-term debt, net	104,386		104,968
Deferred tax liability	24,185		18,065
Tax receivable agreement liability	37,913		1,956

Other long-term liabilities	14,021		17,556
TOTAL LIABILITIES	1,437,164		1,101,169
Commitments and Contingencies (Note 22)	—		—
TEMPORARY EQUITY
Preferred stock, $0.0001 par value (20,000,000 shares authorized, 8,483,561 Series A Convertible Preferred Stock issued and outstanding as of September 30, 2025 and December 31, 2024)	84,716		84,663
STOCKHOLDERS' EQUITY
Class A Common Stock, $0.0001 par value (500,000,000 shares authorized, 100,426,473 and 90,032,391 issued and outstanding as of September 30, 2025 and December 31, 2024, respectively)	10		9
Class V Common Stock, $0.0001 par value (300,000,000 authorized, 241,552,156 and 251,033,906 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively)	24		25
Additional paid-in capital	622,405		603,780
Accumulated earnings (deficit)	(411,786)		(451,978)
Accumulated other comprehensive income (loss)	998		(1,514)
Total stockholders' equity	211,651		150,322
Non-controlling interest	418,424		373,184
Total equity (Note 17)	630,075		523,506
TOTAL LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS' EQUITY	$	2,151,955	$	1,709,338

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

See Note 21 for information regarding Related-Party Transactions.

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Hagerty, Inc.

Condensed Consolidated Statements of Changes in Temporary Equity and Stockholders' Equity (Unaudited)


					Three months ended September 30, 2025
	Temporary Equity			Stockholders' Equity
	Series A Convertible Preferred Stock			Class A Common Stock			Class V Common Stock			Additional Paid in Capital		Accumulated Earnings (Deficit)		Accumulated Other Comprehensive Income		Total Stockholders' Equity		Non-controlling Interest		Total Equity
in thousands	Shares	Amount		Shares	Amount		Shares	Amount
Balance at July 1, 2025	8,484	$	82,813	90,716	$	9	251,034	$	25	$	604,621	$	(432,634)	$	262	$	172,283	$	405,755	$	578,038
Net income	—	—		—	—		—	—		—		20,848		—		20,848		25,323		46,171
Accretion of Series A Convertible Preferred Stock	—	1,903		—	—		—	—		(1,903)		—		—		(1,903)		—		(1,903)
Other comprehensive income	—	—		—	—		—	—		—		—		736		736		1,877		2,613
Issuance of shares under employee plans, net of shares withheld for employee taxes	—	—		226	—		—	—		(1,084)		—		—		(1,084)		—		(1,084)
Share-based compensation	—	—		—	—		—	—		5,089		—		—		5,089		—		5,089
Exchange of THG units for Class A Common Stock	—	—		9,484	1		(9,482)	(1)		15,929		—		—		15,929		(15,929)		—
Deferred tax assets recorded upon exchange of THG units for shares of Class A Common Stock	—	—		—	—		—	—		6,956		—		—		6,956		—		6,956
Tax receivable agreement liabilities recorded upon exchange of THG units for shares of Class A Common Stock	—	—		—	—		—	—		(5,638)		—		—		(5,638)		—		(5,638)
Distributions paid to non-controlling interest unit holders	—	—		—	—		—	—		—		—		—		—		(167)		(167)
Reallocation between controlling and non-controlling interest	—	—		—	—		—	—		(1,565)		—		—		(1,565)		1,565		—
Balance at September 30, 2025	8,484	$	84,716	100,426	$	10	241,552	$	24	$	622,405	$	(411,786)	$	998	$	211,651	$	418,424	$	630,075

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

See Note 21 for information regarding Related-Party Transactions.

TABLE OF CONTENTS

Hagerty, Inc.

Condensed Consolidated Statements of Changes in Temporary Equity and Stockholders' Equity (Unaudited)


					Nine months ended September 30, 2025
	Temporary Equity			Stockholders' Equity
	Series A Convertible Preferred Stock			Class A Common Stock			Class V Common Stock			Additional Paid in Capital		Accumulated Earnings (Deficit)		Accumulated Other Comprehensive Income (Loss)		Total Stockholders' Equity		Non-controlling Interest		Total Equity
in thousands	Shares	Amount		Shares	Amount		Shares	Amount
Balance at January 1, 2025	8,484	$	84,663	90,032	$	9	251,034	$	25	$	603,780	$	(451,978)	$	(1,514)	$	150,322	$	373,184	$	523,506
Net income	—	—		—	—		—	—		—		40,192		—		40,192		80,474		120,666
Accretion of Series A Convertible Preferred Stock	—	5,653		—	—		—	—		(5,653)		—		—		(5,653)		—		(5,653)
Dividends related to Series A Convertible Preferred Stock	—	(5,600)		—	—		—	—		—		—		—		—		—		—
Other comprehensive income	—	—		—	—		—	—		—		—		2,512		2,512		6,893		9,405
Issuance of shares under employee plans, net of shares withheld for employee taxes	—	—		832	—		—	—		(3,247)		—		—		(3,247)		—		(3,247)
Share-based compensation	—	—		—	—		—	—		14,627		—		—		14,627		—		14,627
Exchange of THG units for Class A Common Stock	—	—		9,562	1		(9,482)	(1)		16,641		—		—		16,641		(16,641)		—
Deferred tax assets recorded upon exchange of THG units for shares of Class A Common Stock	—	—		—	—		—	—		6,956		—		—		6,956		—		6,956
Tax receivable agreement liabilities recorded upon exchange of THG units for shares of Class A Common Stock	—	—		—	—		—	—		(5,638)		—		—		(5,638)		—		(5,638)
Distributions paid to non-controlling interest unit holders	—	—		—	—		—	—		—		—		—		—		(30,547)		(30,547)
Reallocation between controlling and non-controlling interest	—	—		—	—		—	—		(5,061)		—		—		(5,061)		5,061		—
Balance at September 30, 2025	8,484	$	84,716	100,426	$	10	241,552	$	24	$	622,405	$	(411,786)	$	998	$	211,651	$	418,424	$	630,075

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

See Note 21 for information regarding Related-Party Transactions.

TABLE OF CONTENTS

Hagerty, Inc.

Condensed Consolidated Statements of Changes in Temporary Equity and Stockholders' Equity (Unaudited)


					Three months ended September 30, 2024
	Temporary Equity			Stockholders' Equity
	Series A Convertible Preferred Stock			Class A Common Stock			Class V Common Stock			Additional Paid in Capital		Accumulated Earnings (Deficit)		Accumulated Other Comprehensive Income (Loss)		Total Stockholders' Equity		Non-controlling Interest		Total Equity
in thousands	Shares	Amount		Shares	Amount		Shares	Amount
Balance at July 1, 2024	8,484	$	80,913	85,703	$	8	251,034	$	25	$	555,040	$	(459,968)	$	(667)	$	94,438	$	359,955	$	454,393
Net income	—	—		—	—		—	—		—		4,885		—		4,885		14,122		19,007
Accretion of Series A Convertible Preferred Stock	—	1,875		—	—		—	—		(1,875)		—		—		(1,875)		—		(1,875)
Other comprehensive income	—	—		—	—		—	—		—		—		2,114		2,114		6,258		8,372
Issuance of shares under employee plans, net of shares withheld for employee taxes	—	—		212	—		—	—		(1,125)		—		—		(1,125)		—		(1,125)
Warrant Exchange (see Note 6)	—	—		3,876	1		—	—		42,569		—		—		42,570		—		42,570
Share-based compensation	—	—		—	—		—	—		4,092		—		—		4,092		—		4,092
Exchange of THG units for Class A Common Stock	—	—		189	—		—	—		2,055		—		—		2,055		(2,055)		—
Reallocation between controlling and non-controlling interest	—	—		—	—		—	—		1,111		—		—		1,111		(1,111)		—
Balance at September 30, 2024	8,484	$	82,788	89,980	$	9	251,034	$	25	$	601,867	$	(455,083)	$	1,447	$	148,265	$	377,169	$	525,434

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

See Note 21 for information regarding Related-Party Transactions.

TABLE OF CONTENTS

Hagerty, Inc.

Condensed Consolidated Statements of Changes in Temporary Equity and Stockholders' Equity (Unaudited)


					Nine months ended September 30, 2024
	Temporary Equity			Stockholders' Equity
	Series A Convertible Preferred Stock			Class A Common Stock			Class V Common Stock			Additional Paid in Capital		Accumulated Earnings (Deficit)		Accumulated Other Comprehensive Income (Loss)		Total Stockholders' Equity		Non-controlling Interest		Total Equity
in thousands	Shares	Amount		Shares	Amount		Shares	Amount
Balance at January 1, 2024	8,484	$	82,836	84,589	$	8	251,034	$	25	$	561,754	$	(468,995)	$	(88)	$	92,704	$	317,805	$	410,509
Net income	—	—		—	—		—	—		—		13,912		—		13,912		55,951		69,863
Accretion of Series A Convertible Preferred Stock	—	5,552		—	—		—	—		(5,552)		—		—		(5,552)		—		(5,552)
Dividends related to Series A Convertible Preferred Stock	—	(5,600)		—	—		—	—		—		—		—		—		—		—
Other comprehensive income	—	—		—	—		—	—		—		—		1,535		1,535		4,524		6,059
Issuance of shares under employee plans, net of shares withheld for employee taxes	—	—		1,195	—		—	—		(5,713)		—		—		(5,713)		—		(5,713)
Warrant Exchange (see Note 6)	—	—		3,876	1		—	—		42,569		—		—		42,570		—		42,570
Share-based compensation	—	—		—	—		—	—		13,018		—		—		13,018		—		13,018
Exchange of THG units for Class A Common Stock	—	—		320	—		—	—		3,227		—		—		3,227		(3,227)		—
Distributions paid to non-controlling interest THG unitholders	—	—		—	—		—	—		—		—		—		—		(5,320)		(5,320)
Reallocation between controlling and non-controlling interest	—	—		—	—		—	—		(7,436)		—		—		(7,436)		7,436		—
Balance at September 30, 2024	8,484	$	82,788	89,980	$	9	251,034	$	25	$	601,867	$	(455,083)	$	1,447	$	148,265	$	377,169	$	525,434

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

See Note 21 for information regarding Related-Party Transactions.

TABLE OF CONTENTS

Hagerty, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)


	Nine months ended September 30,
	2025		2024

OPERATING ACTIVITIES:	in thousands
Net income	$	120,666	$	69,863
Adjustments to reconcile net income to net cash from operating activities:
Loss on disposals of equipment, software and other assets	1,440		401
Loss related to warrant liabilities, net	—		8,544
Expense related to tax receivable agreement liability	32,275		1,322
Depreciation and amortization	27,734		29,758
Provision for deferred taxes	(34,413)		2,772

Share-based compensation expense	14,627		13,018
Non-cash lease expense	6,590		5,920
Realized (gain) loss on investments, net	(2,150)		(1,783)
(Accretion) amortization of discount and premium, net	(3,489)		(1,755)
Other	1,681		1,775
Changes in operating assets and liabilities:
Accounts, premiums and commissions receivable	(124,250)		(28,062)
Deferred acquisition costs, net	(36,030)		(26,998)
Losses payable and provision for unpaid losses and loss adjustment expenses	9,800		60,328
Ceding commissions payable	30,084		(14,734)
Advance premiums and due to insurers	62,583		48,752
Unearned premiums	81,855		68,344
Operating lease assets and liabilities	(6,876)		(6,781)
Other assets and liabilities, net	7,758		(41,042)
Net Cash Provided by Operating Activities	189,885		189,642
INVESTING ACTIVITIES:
Capital expenditures	(18,499)		(17,278)
Acquisitions, net of cash acquired, and other investments	(2,125)		(23,865)
Issuance of notes receivable	(49,095)		(55,030)
Collection of notes receivable	14,832		32,099
Purchases of fixed maturity securities	(223,055)		(565,838)
Proceeds from sales of fixed maturity securities	41,173		53,253
Proceeds from maturities of fixed maturity securities	122,196		23,766
Purchases of equity securities	(10,565)		(10,602)
Proceeds from sales of equity securities	911		—
Other investing activities	1,421		1,005
Net Cash Used in Investing Activities	(122,806)		(562,490)
FINANCING ACTIVITIES:
Payments on long-term debt	(170,673)		(63,202)
Proceeds from long-term debt, net of issuance costs	240,701		52,718
Distributions paid to non-controlling interest unit holders	(30,547)		(5,320)
Payment of Series A Convertible Preferred Stock dividends	(5,600)		(5,600)
Funding of tax receivable agreement payments	(223)		—
Funding of employee tax obligations upon vesting of share-based payments	(3,536)		(5,713)
Other financing activities	289		—
Net Cash Provided by (Used in) Financing Activities	30,411		(27,117)
Effect of exchange rate changes on cash and cash equivalents and restricted cash and cash equivalents	2,312		(882)

Change in cash and cash equivalents and restricted cash and cash equivalents	99,802		(400,847)
Beginning cash and cash equivalents and restricted cash and cash equivalents	232,845		724,276
Ending cash and cash equivalents and restricted cash and cash equivalents	$	332,647	$	323,429

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

See Note 21 for information regarding Related-Party Transactions.

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Hagerty, Inc.

Notes To Condensed Consolidated Financial Statements (Unaudited)

1 — Business and Basis of Presentation

Hagerty, Inc. is a holding company and the sole managing member of The Hagerty Group, LLC ("THG"). Hagerty, Inc.'s sole material asset is its ownership in THG, through which all of its business is conducted. In these Notes to the Condensed Consolidated Financial Statements, the terms "Hagerty" and the "Company" refer to Hagerty, Inc. and its consolidated subsidiaries unless the context requires otherwise.

Description of Business — Hagerty is a market leader in providing insurance for collector cars and enthusiast vehicles. Through Hagerty's insurance model, the Company acts as a Managing General Agent ("MGA") by underwriting, selling, and servicing collector car and enthusiast vehicle insurance policies. The Company then reinsures approximately 80% of the risks written by its MGA subsidiaries through its wholly owned subsidiary, Hagerty Reinsurance Limited ("Hagerty Re"). In addition, Hagerty offers HDC memberships, which are primarily bundled with its insurance policies and give subscribers access to an array of products and services, including emergency roadside assistance, Hagerty Drivers Club Magazine, automotive enthusiast events, Hagerty's proprietary vehicle valuation tool, and special vehicle-related discounts. The Company also offers a marketplace to complement its insurance membership offerings where automotive enthusiasts can buy, sell, and finance collector cars and enthusiast vehicles.

Basis of Presentation — The Condensed Consolidated Financial Statements are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and pursuant to the regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted from this report, as permitted by such rules and regulations.

The Condensed Consolidated Financial Statements reflect all normal recurring adjustments and accruals that are, in the opinion of management, necessary for a fair statement of the Company's financial position and results of operations for the interim periods presented.

These financial statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in the Company's Annual Report on Form 10-K ("Annual Report") for the year ended December 31, 2024. The results of operations for the three and nine months ended September 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025.

Principles of Consolidation — The Condensed Consolidated Financial Statements contain the accounts of Hagerty, Inc. and its majority-owned or controlled subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

As the sole managing member of THG, Hagerty operates and controls all of the business affairs of THG and has the sole voting interest in, and controls the management of, THG. Accordingly, Hagerty consolidates THG in its consolidated financial statements, resulting in a non-controlling interest related to the economic interest in THG held by other parties. As of September 30, 2025 and December 31, 2024, Hagerty, Inc.'s economic ownership of THG was 29.0% and 26.1%, respectively.

The financial statements of THG are consolidated by the Company under the voting interest method in accordance with Accounting Standards Codification ("ASC") Topic 810, Consolidations ("ASC 810"). Non-controlling interest is presented separately on the Condensed Consolidated Statements of Operations, the Condensed Consolidated Statements of Comprehensive Income, the Condensed Consolidated Balance Sheets, and the Condensed Consolidated Statements of Changes in Temporary Equity and Stockholders' Equity.

2 — Summary of Significant Accounting Policies

Use of Estimates — The preparation of the Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities as of the date of the Condensed Consolidated Financial Statements, as well as the reported amounts of revenue and expenses during the reporting period. Although the estimates are considered reasonable, actual results could materially differ from those estimates.

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Significant estimates made by management include, but are not limited to: (i) the provision for unpaid losses and loss adjustment expenses, including incurred but not reported ("IBNR") claims (see Note 13); (ii) the valuation of the Company's deferred income tax assets (see Note 20); (iii) the amount of the liability associated with the tax receivable agreement entered into in connection with the consummation of the business combination that formed Hagerty, Inc. in 2021 (the "TRA") (the "TRA Liability") (see Note 20); (iv) the fair values of the reporting units used in assessing the recoverability of goodwill; and (v) the valuation and useful lives of intangible assets (see Note 12). Although some variability is inherent in these estimates, management believes that the current estimates are reasonable in all material respects. These estimates are reviewed regularly and adjusted as necessary. Adjustments related to changes in estimates are reflected in the Company's results of operations in the period during which those estimates changed.

Emerging Growth Company — The Company currently qualifies as an "emerging growth company" under the Jumpstart Our Business Startups Act of 2012 and can delay the adoption of new or revised accounting standards until those standards would apply to private companies.

The Company intends to avail itself of this extended transition period and, therefore, the Company may not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies or have opted out of using such extended transition period. As of September 30, 2025, the Company has not delayed the adoption of any new or revised accounting standards despite qualifying as an emerging growth company.

Segment Information — The Company has one operating segment and one reportable segment with its Chief Executive Officer ("CEO") acting as the Chief Operating Decision Maker ("CODM"). The Company's segment presentation reflects its business activities which place the automotive enthusiast at the center of operating and resource allocation decisions. Accordingly, the CODM evaluates performance and makes resource allocation decisions using a number of consolidated measures, including consolidated net income. The CODM is also regularly provided with information regarding the Company's significant expenses consistent with the level of information provided in the Condensed Consolidated Statements of Operations, as well as information regarding assets consistent with the level of detail provided on the Condensed Consolidated Balance Sheets. The CODM utilizes such consolidated financial information in connection with the Company's budgeting and forecasting process to monitor budget-to-actual variances when evaluating performance, allocating resources, and establishing management compensation.

Accounting Standards Not Yet Adopted

Income Taxes — In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023-09 - Income Taxes (ASC 740), Improvements to Income Tax Disclosures, which enhances the transparency and decision usefulness of income tax disclosures through changes to the rate reconciliation and income taxes paid information. ASU No. 2023-09 modifies the rules on income tax disclosures to require entities to disclose (i) specific categories in the rate reconciliation, (ii) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign), and (iii) income tax expense or benefit from continuing operations (separated by federal, state, and foreign). ASU No. 2023-09 also requires entities to disclose their income tax payments to international, federal, state, and local jurisdictions, among other changes. ASU No. 2023-09 is effective for annual periods beginning after December 15, 2024. The Company will adopt ASU No. 2023-09 starting with its Annual Report on Form 10-K for the year ended December 31, 2025. Upon adoption, the Company will include the required additional disclosures in its Consolidated Financial Statements. The adoption of the ASU No. 2023-09 will expand the Company's disclosures, but will have no impact on its results of operations or financial position.

Income Statement Expenses — In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (ASC 220-40), which enables investors to better understand an entity's performance, assessing an entity's prospects for future cash flows, and comparing an entity's performance over time and with that of other entities. ASU No. 2024-03 primarily requires entities to disaggregate, in the notes to the financial statements, any relevant expense caption presented in the statement of operations within continuing operations into the following required natural expense categories: purchases of inventory, employee compensation, depreciation, and intangible asset amortization. The new standard does not change the presentation of expense information in the statement of operations. ASU 2024-03 is effective for annual periods beginning after December 15, 2026. The Company is still assessing the impact of ASU No. 2024-03 and, upon adoption, the Company may be required to include certain additional disclosures in its Consolidated Financial Statements.

Internal-Use Software — In September 2025, the FASB issued ASU No. 2025-06, Targeted Improvements to the Accounting for Internal-Use Software (ASC 350-40), which modernizes the accounting guidance for the costs to develop software for internal use. The targeted improvements primarily introduce a new capitalization threshold based on management's commitment to funding and the probability of project completion. It removes all references to a sequential software development method. The new standard does not change the types of costs eligible for capitalization, the point at which capitalization ends, or the associated amortization and impairment guidance. ASU 2025-06 is effective for annual periods beginning after December 15, 2027 and the Company is still assessing its impact.

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A comprehensive list of the Company's significant accounting policies are set forth in Note 1 to the Consolidated Financial Statements contained in its Annual Report.

3 — Supplemental Balance Sheet and Cash Flow Information

Cash and Cash Equivalents and Restricted Cash and Cash Equivalents — As of September 30, 2025 and 2024, cash and cash equivalents and restricted cash and cash equivalents were as follows:


	September 30,
	2025		2024

	in thousands
Cash and cash equivalents	$	160,386	$	147,120
Restricted cash and cash equivalents	172,261		176,309
Total cash and cash equivalents and restricted cash and cash equivalents	$	332,647	$	323,429

Restricted Assets — The Company's MGA subsidiaries collect premiums from insureds on behalf of insurance carriers. Prior to remittance to the insurance carrier, these funds are required to be held in trust for the benefit of the insurance carriers and segregated from the Company's operating cash.

Hagerty Re maintains trust accounts for the benefit of various ceding insurers as security for its obligations for losses, loss expenses, unearned premium, and profit-sharing commissions.

The Company's wholly owned insurance carrier subsidiary, Drivers Edge Insurance Company ("Drivers Edge"), maintains assets on deposit with a number of regulatory authorities to support its insurance operations. Refer to Note 10 — Acquisition for additional information related to the acquisition of Drivers Edge.

BAC and its consolidated subsidiaries maintain bank accounts that are required for the operation of the BAC Credit Facility (as defined in Note 15 — Debt). The funds in these bank accounts represent security under the BAC Credit Facility and their use is restricted to the servicing of the debt outstanding under that facility.

The following table presents the components of the Company's restricted assets as of September 30, 2025 and December 31, 2024:


	Balance Sheet Classification	September 30,		December 31,
		2025		2024

		in thousands
Cash and cash equivalents	Restricted cash and cash equivalents	$	172,261	$	128,061
Fixed maturity securities	Investments	650,622		577,688
Equity securities	Investments	23,297		11,839
Total restricted assets		$	846,180	$	717,588

Variable Interest Entities — Broad Arrow Capital LLC ("BAC") and certain of its subsidiaries transfer notes receivable to wholly owned, bankruptcy-remote, special purpose entities (each, an "SPE") to secure borrowings under the BAC Credit Agreement (as defined in Note 15 — Debt).

These SPEs are considered to be variable interest entities (each, a "VIE") under GAAP and their financial statements are consolidated by BAC, which is the primary beneficiary of the SPEs and also a consolidated subsidiary of the Company. BAC is considered to be the primary beneficiary of the SPEs because it has (i) power over the significant activities of the SPEs through its role as servicer of the notes receivable used to secure borrowings under the BAC Credit Agreement and (ii) the obligation to absorb losses or the right to receive returns that could be significant through its interest in the residual cash flows of the SPEs.

Refer to Note 7 — Notes Receivable and Note 15 — Debt for additional information.

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The following table presents the assets and liabilities of the Company's consolidated VIEs as of September 30, 2025 and December 31, 2024:


	September 30,		December 31,
	2025		2024

ASSETS	in thousands
Cash and cash equivalents	$	4,074	$	1,746
Restricted cash and cash equivalents	4,631		1,221

Notes receivable	92,634		49,337
Other assets	1,192		1,961
TOTAL ASSETS	$	102,531	$	54,265
LIABILITIES
Accounts payable, accrued expenses and other liabilities	$	1,841	$	999
Debt, net	75,000		30,193
TOTAL LIABILITIES	$	76,841	$	31,192

Supplemental Cash Flow Information — The table below presents information regarding the Company's non-cash investing and financing activities, as well as the cash paid for interest and taxes for the nine months ended September 30, 2025 and 2024:


	Nine months ended September 30,
	2025		2024

Non-cash investing activities:	in thousands
Issuance of notes receivable (1)	$	10,105	$	5,290
Collection of notes receivable (1)	$	2,102	$	7,264
Capital expenditures	$	732	$	248

Non-cash financing activities:
Warrant Exchange (Refer to Note 6)	$	—	$	2,006
Exchange of THG units for shares of Class A Common Stock (Refer to Note 17)	$	16,641	$	3,227
Deferred tax assets and TRA liabilities recorded upon exchange of THG units for shares of Class A Common Stock (Refer to Note 20)	$	1,318	$	—

Cash paid for:
Interest	$	7,360	$	5,559
Income taxes	$	12,410	$	17,500

(1) In certain situations, BAC makes loans to refinance accounts receivable balances generated by Broad Arrow Group, Inc. ("Broad Arrow") auctions and private sales. These loans are accounted for on the Condensed Consolidated Balance Sheets as non-cash reclassifications between "Accounts receivable" and "Notes receivable" and are not presented within Investing Activities in the Company's Condensed Consolidated Statements of Cash Flows. Upon repayment, the cash received in settlement of such loans is classified within Operating Activities in the Company's Condensed Consolidated Statements of Cash Flows.

The issuance of shares of Class A Common Stock resulting from the vesting of restricted stock units ("RSUs") is a non-cash financing activity. Refer to Note 18 — Share-Based Compensation for information related to share-based compensation.

4 — Revenue

Disaggregation of Revenue — The tables below present the Company's revenue by distribution channel, as well as a reconciliation to total revenue for the three and nine months ended September 30, 2025 and 2024. Commission and fee revenue and contingent commission revenue earned from the agent distribution channel includes revenue generated through the Company's insurance distribution partnerships, as well as its relationships with independent agents and brokers. Commission and fee revenue and contingent commission revenue earned from the direct distribution channel includes revenue generated by Hagerty's employee agents.

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	Three months ended September 30, 2025
	Agent		Direct		Total

	in thousands
Commission and fee revenue	$	67,685	$	54,049	$	121,734
Contingent commission revenue	8,466		6,903		15,369
Membership revenue	—		15,961		15,961
Marketplace revenue	—		31,208		31,208
Other revenue	—		5,716		5,716
Total revenue from customer contracts	76,151		113,837		189,988
Earned premium, net (recognized under ASC 944)					187,039
Finance revenue (recognized under ASC 310)					2,967
Total revenue					$	379,994


	Three months ended September 30, 2024
	Agent		Direct		Total

	in thousands
Commission and fee revenue	$	57,857	$	47,606	$	105,463
Contingent commission revenue	5,997		4,701		10,698
Membership revenue	—		14,800		14,800
Marketplace revenue	—		19,332		19,332
Other revenue	—		5,165		5,165
Total revenue from customer contracts	63,854		91,604		155,458
Earned premium, net (recognized under ASC 944)					165,686
Finance revenue (recognized under ASC 310)					2,230
Total revenue					$	323,374


	Nine months ended September 30, 2025
	Agent		Direct		Total

	in thousands
Commission and fee revenue	$	186,455	$	152,882	$	339,337
Contingent commission revenue	22,352		18,988		41,340
Membership revenue	—		46,981		46,981
Marketplace revenue	—		82,660		82,660
Other revenue	—		16,524		16,524
Total revenue from customer contracts	208,807		318,035		526,842
Earned premium, net (recognized under ASC 944)					534,179
Finance revenue (recognized under ASC 310)					7,265
Total revenue					$	1,068,286

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	Nine months ended September 30, 2024
	Agent		Direct		Total

	in thousands
Commission and fee revenue	$	164,737	$	136,597	$	301,334
Contingent commission revenue	17,869		14,614		32,483
Membership revenue	—		42,385		42,385
Marketplace revenue	—		32,357		32,357
Other revenue	—		18,847		18,847
Total revenue from customer contracts	182,606		244,800		427,406
Earned premium, net (recognized under ASC 944)					474,917
Finance revenue (recognized under ASC 310)					5,984
Total revenue					$	908,307

The following tables present Hagerty's revenue disaggregated by geographic area, as well as a reconciliation to total revenue for the three months ended September 30, 2025 and 2024:


	Three months ended September 30, 2025
	U.S.		Canada		Europe		Total

	in thousands
Commission and fee revenue	$	112,179	$	7,556	$	1,999	$	121,734
Contingent commission revenue	15,072		—		297		15,369
Membership revenue	14,895		1,057		9		15,961
Marketplace revenue	25,303		3,729		2,176		31,208
Other revenue	5,026		63		627		5,716
Total revenue from customer contracts	172,475		12,405		5,108		189,988
Earned premium, net (recognized under ASC 944)							187,039
Finance revenue (recognized under ASC 310)							2,967
Total revenue							$	379,994


	Three months ended September 30, 2024
	U.S.		Canada		Europe		Total

	in thousands
Commission and fee revenue	$	96,688	$	6,952	$	1,823	$	105,463
Contingent commission revenue	10,544		—		154		10,698
Membership revenue	13,844		955		1		14,800
Marketplace revenue	19,037		43		252		19,332
Other revenue	4,539		130		496		5,165
Total revenue from customer contracts	144,652		8,080		2,726		155,458
Earned premium, net (recognized under ASC 944)							165,686
Finance revenue (recognized under ASC 310)							2,230
Total revenue							$	323,374

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The following tables present Hagerty's revenue disaggregated by geographic area, as well as a reconciliation to total revenue for the nine months ended September 30, 2025 and 2024:


	Nine months ended September 30, 2025
	U.S.		Canada		Europe		Total

	in thousands
Commission and fee revenue	$	313,219	$	20,549	$	5,569	$	339,337
Contingent commission revenue	39,835		—		1,505		41,340
Membership revenue	43,930		3,032		19		46,981
Marketplace revenue	63,664		7,670		11,326		82,660
Other revenue	14,680		316		1,528		16,524
Total revenue from customer contracts	475,328		31,567		19,947		526,842
Earned premium, net (recognized under ASC 944)							534,179
Finance revenue (recognized under ASC 310)							7,265
Total revenue							$	1,068,286


	Nine months ended September 30, 2024
	U.S.		Canada		Europe		Total

	in thousands
Commission and fee revenue	$	277,613	$	18,878	$	4,843	$	301,334
Contingent commission revenue	32,235		—		248		32,483
Membership revenue	39,592		2,792		1		42,385
Marketplace revenue	31,161		580		616		32,357
Other revenue	17,004		520		1,323		18,847
Total revenue from customer contracts	397,605		22,770		7,031		427,406
Earned premium, net (recognized under ASC 944)							474,917
Finance revenue (recognized under ASC 310)							5,984
Total revenue							$	908,307

Refer to Note 14 — Reinsurance for information regarding "Earned premium, net" recognized under ASC Topic 944, Financial Services - Insurance ("ASC 944"). Refer to Note 7 — Notes Receivable for information regarding "Finance revenue" recognized under ASC Topic 310, Receivables ("ASC 310").

Contract Assets and Liabilities — The following table is a summary of the Company's contract assets and liabilities as of September 30, 2025 and December 31, 2024:


	September 30,		December 31,
	2025		2024

	in thousands
Contract assets	$	18,689	$	15,860
Contract liabilities	$	50,703	$	47,239

Contract assets, which are reported within "Commissions receivable" on the Condensed Consolidated Balance Sheets, primarily consist of contingent underwriting commission ("CUC") receivables, which are earned throughout the year with 80% of the CUC receivables from Markel settled monthly and the remaining 20% settled annually.

Contract liabilities consist of cash collected in advance of revenue recognition and primarily includes the unrecognized portion of HDC membership fees, the unrecognized portion of the advanced commission payment received from State Farm Mutual Automobile Insurance Company ("State Farm"), and, to a much lesser extent, cash collected in advance of the completion of marketplace private sales. Refer to Note 21 — Related-Party Transactions for additional information regarding the Company's master alliance agreement with State Farm.

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5 — Investments

The Company holds a diversified investment portfolio, consisting of fixed maturity securities and, to a much lesser extent, equity securities, with the fixed maturity securities classified as available-for-sale. As of September 30, 2025, all fixed maturity securities had an investment grade rating from at least one nationally recognized rating organization.

The following tables summarize the Company's available-for-sale investments as of September 30, 2025 and December 31, 2024:


	September 30, 2025
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value

Fixed maturity securities:	in thousands
Corporate	$	246,554	$	4,113	$	(144)	$	250,523
U.S. Treasury	174,317		695		(206)		174,806
States and municipalities	27,209		812		—		28,021
Foreign	27,814		84		(5)		27,893
Asset-backed securities	30,065		338		(44)		30,359
Mortgage-backed securities	136,792		2,630		(402)		139,020
Total fixed maturity securities	$	642,751	$	8,672	$	(801)	$	650,622


	December 31, 2024
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value

Fixed maturity securities:	in thousands
Corporate	$	230,917	$	1,226	$	(954)	$	231,189
U.S. Treasury	146,211		424		(760)		145,875
States and municipalities	31,543		134		(92)		31,585
Foreign	21,022		59		(24)		21,057
Asset-backed securities	23,625		175		(120)		23,680
Mortgage-backed securities	125,351		396		(1,445)		124,302
Total fixed maturity securities	$	578,669	$	2,414	$	(3,395)	$	577,688

Security holdings in an unrealized loss position

The following table summarizes gross unrealized losses and the estimated fair value of available-for-sale fixed maturity securities that have continuously been in an unrealized loss position, as well as the length of time that such securities were in an unrealized loss position, as of September 30, 2025:


	September 30, 2025
	Less than 12 months				12 months or longer				Total
	Estimated fair value		Gross unrealized losses		Estimated fair value		Gross unrealized losses		Estimated fair value		Gross unrealized losses

Fixed maturity securities:	in thousands
Corporate	$	—	$	—	$	11,426	$	(144)	$	11,426	$	(144)
U.S. Treasury	16,552		(72)		23,777		(134)		40,329		(206)

Foreign	8,237		(5)		—		—		8,237		(5)
Asset-backed securities	1,516		(2)		1,876		(42)		3,392		(44)
Mortgage-backed securities	1,244		(6)		19,246		(396)		20,490		(402)
Total fixed maturity securities	$	27,549	$	(85)	$	56,325	$	(716)	$	83,874	$	(801)

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As of September 30, 2025, the Company held 36 available-for-sale fixed maturity securities in an unrealized loss position with a total estimated fair value of $83.9 million and gross unrealized losses of $0.8 million. Of those securities, 23 were in a continuous unrealized loss position for one year or longer as of September 30, 2025. The Company regularly reviews all fixed maturity securities within its investment portfolio to determine whether a credit loss has occurred. Based on the Company's review as of September 30, 2025, unrealized losses were a result of interest rate changes which were not credit-specific issues.

As of December 31, 2024, no credit loss allowance was recorded and all unrealized losses on available-for-sale fixed maturity securities were in such position for less than one year.

Contractual maturities of available-for-sale fixed maturity securities

The following table summarizes the contractual maturities of the Company's available-for-sale investments as of September 30, 2025:



	Amortized Cost		Estimated Fair Value

	in thousands
Due in one year or less	$	106,600	$	106,851
Due after one year through five years	271,631		275,364
Due after five years through ten years	97,663		99,028

Mortgage-backed and asset-backed securities	166,857		169,379
Total fixed maturity securities	$	642,751	$	650,622

Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

Net investment income

The following table presents the components of net investment income, which is recorded within "Interest and other income (expense), net" in the Condensed Consolidated Statements of Operations, for the three and nine months ended September 30, 2025 and 2024:


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024

Interest income:	in thousands
Cash and cash equivalents and restricted cash and cash equivalents	$	2,543	$	4,514	$	7,267	$	21,154
Fixed maturity securities	7,716		5,127		21,644		8,921
Total interest income	10,259		9,641		28,911		30,075
Dividends on equity securities	42		34		121		58
Gross investment income	10,301		9,675		29,032		30,133
Investment expenses	(149)		(91)		(406)		(213)
Net investment income	$	10,152	$	9,584	$	28,626	$	29,920

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Net realized and unrealized gains (losses) on investments

The table below presents the components of pre-tax net investment gains (losses), which is recorded within "Interest and other income (expense), net" in the Condensed Consolidated Statements of Operations, and the pre-tax change in net unrealized gains included in the Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2025 and 2024. The gross amounts of realized investment gains and losses on fixed maturity securities were not material to the Condensed Consolidated Financial Statements and are presented on a net basis in the table below:


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024

Fixed maturity securities:	in thousands
Net realized investment gains	$	116	$	700	$	347	$	731
Equity securities:
Total change in fair value of equity securities	1,155		574		1,803		1,052
Net investment gains	$	1,271	$	1,274	$	2,150	$	1,783
Change in net unrealized gains on available-for-sale investments included in Other comprehensive income:
Fixed maturity securities	$	2,406	$	10,081	$	8,827	$	11,032

6 — Fair Value Measurements

Fair value measurements are classified within one of three levels in the fair value hierarchy. The level assigned to a fair value measurement is based on the lowest level input that management judges to be significant to the fair value measurement in its entirety.

The three levels of the fair value hierarchy are as follows:

•Level 1 — Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

•Level 2 — Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date for substantially the full term of the asset or liability.

•Level 3 — Pricing inputs are unobservable, but management believes that such inputs are predicated on the assumptions market participants would use to measure the asset or liability at fair value.

The Company's policy is to recognize significant transfers between levels, if any, at the end of the reporting period. There were no transfers between levels during the current and prior reporting periods.

Investments

Fixed maturity securities are classified as Level 2 within the fair value hierarchy and equity securities are classified as Level 1. The fair value of these investments is determined after considering various sources of information, including information provided by a third-party pricing service, which provides prices for substantially all of the Company's fixed maturity securities and equity securities. In determining fair value, the Company generally does not adjust the prices obtained from the pricing service. The Company obtains an understanding of the pricing service's valuation methodologies and related inputs, which include, but are not limited to, reported trades, benchmark yields, issuer spreads, bids, offers, duration, credit ratings, estimated cash flows, and prepayment speeds.

Refer to Note 5 — Investments for additional information related to the Company's investment portfolio.

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Interest rate swap

In December 2020, the Company entered into an interest rate swap with an original notional amount of $35.0 million, a fixed swap rate of 0.81%, and a maturity date in December 2025. The interest rate swap was designated as a cash flow hedge and the Company formally documented the relationship between the interest rate swap and its variable rate borrowings, as well as its risk management objective and strategy for undertaking the hedge transaction. The Company also assessed whether the interest rate swap was highly effective in offsetting variability in the cash flows of its variable rate borrowings. The hedge was deemed highly effective at inception and on an ongoing basis; therefore, any changes in fair value were recorded within "Change in unrealized loss on interest rate swap" in the Condensed Consolidated Statements of Comprehensive Income. The differential paid or received on the interest rate swap agreement was recognized as an adjustment to interest expense within "Interest and other income (expense), net" in the Condensed Consolidated Statements of Operations.

In the second quarter of 2024, the Company reduced its borrowings under the Prior JPM Credit Facility (as defined in Note 15 — Debt) below the $35.0 million notional amount of the interest rate swap and, as a result, the interest rate swap was settled prior to its maturity date.

The interest rate swap was classified as Level 2 within the fair value hierarchy. The significant inputs used to determine the fair value of the interest rate swap, such as the Secured Overnight Financing Rate ("SOFR") forward curve, are considered observable market inputs.

Warrant liabilities

The Company's Public Warrants were classified as Level 1 within the fair value hierarchy as they were measured utilizing quoted market prices. The Company's Private Warrants, Underwriter Warrants, OTM Warrants, and PIPE Warrants were classified as Level 3 within the fair value hierarchy. The Company utilized a Monte Carlo simulation model to measure the fair value of the Level 3 warrants. The Company's Monte Carlo simulation model included assumptions related to the expected stock price volatility, expected term, dividend yield, and risk-free interest rate.

In July 2024, the Company completed an exchange offer under which holders of the Company's warrants were issued 3,876,201 shares of Class A Common Stock in exchange for 19,483,539 warrants, with a nominal cash settlement paid in lieu of fractional shares (the "Warrant Exchange"). No warrants remained outstanding following the completion of the Warrant Exchange.

The Company recorded increases to "Class A Common Stock" and "Additional paid-in capital", representing the $42.6 million fair value of the Class A Common Stock that was issued in connection with the Warrant Exchange. The difference between the fair value of the warrants immediately prior to the Warrant Exchange and the fair value of Class A Common Stock issued resulted in a $2.0 million loss, which is reflected within "Loss related to warrant liabilities, net" in the Condensed Consolidated Statements of Operations.

The following table presents a reconciliation of the Company's warrant liabilities that were classified as Level 3 within the fair value hierarchy for the nine months ended September 30, 2024:


	Private Warrants		Underwriter Warrants		OTM Warrants		PIPE Warrants		Total

	in thousands
Balance at December 31, 2023	$	476	$	53	$	3,981	$	20,020	$	24,530
Change in fair value of warrant liabilities	55		5		546		4,056		4,662
Warrant Exchange	(531)		(58)		(4,527)		(24,076)		(29,192)
Balance at September 30, 2024	$	—	$	—	$	—	$	—	$	—

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Summary of assets and liabilities measured at fair value

The fair values of the Company's financial assets as of September 30, 2025 and December 31, 2024 are shown in the following tables:


	Estimated Fair Value as of September 30, 2025
	Total		Level 1		Level 2		Level 3

	in thousands
Investments:
Corporate	$	250,523	$	—	$	250,523	$	—
U.S. Treasury	174,806		—		174,806		—
States and municipalities	28,021		—		28,021		—
Foreign	27,893		—		27,893		—
Asset-backed securities	30,359		—		30,359		—
Mortgage-backed securities	139,020		—		139,020		—
Common stocks	23,297		23,297		—		—
Total	$	673,919	$	23,297	$	650,622	$	—

	Estimated Fair Value as of December 31, 2024
	Total		Level 1		Level 2		Level 3

	in thousands
Investments:
Corporate	$	231,189	$	—	$	231,189	$	—
U.S. Treasury	145,875		—		145,875		—
States and municipalities	31,585		—		31,585		—
Foreign	21,057		—		21,057		—
Asset-backed securities	23,680		—		23,680		—
Mortgage-backed securities	124,302		—		124,302		—
Common stocks	11,839		11,839		—		—
Total	$	589,527	$	11,839	$	577,688	$	—

7 — Notes Receivable

Broad Arrow Capital

BAC provides financing solutions to qualified collectors and businesses by structuring loans secured by collector cars. The loans underwritten by BAC include term loans and short-term bridge financings. The loans underwritten by BAC are recorded on the Condensed Consolidated Balance Sheets within "Notes receivable".

Loans carry either a fixed or variable rate of interest and typically require periodic interest payments over the life of the loan with the principal amount due at maturity. Loans have an initial maturity of up to two years, often with an option for the borrower to renew for one year increments, provided the borrower remains in good standing, including maintaining a specified targeted loan-to-value ("LTV") ratio for the loan. As of September 30, 2025, the loans underwritten by BAC were classified as Level 3 within the fair value hierarchy, with the carrying values of the loans approximating their fair values due to the relatively short-term maturities and the variable interest rates associated with most loans. The lending activities of BAC are funded, in part, with borrowings drawn from the BAC Credit Facility, with the remainder funded by the Company's available liquidity. Refer to Note 15 — Debt for additional information regarding the BAC Credit Facility.

BAC aims to mitigate the risk associated with a potential devaluation in collateral by targeting an LTV ratio of 65% or less (i.e., the principal loan amount divided by the estimated value of the collateral at the time of underwriting). The LTV ratio is reassessed on a quarterly basis or if the loan is renewed. The LTV ratio is reassessed more frequently if there is a material change in the circumstances related to the loan, including if there is a material change in the value of the collateral, a material change in the borrower's disposal plans for the collateral, or if an event of default occurs. If, as a result of this reassessment, the LTV ratio increases above the target level, the borrower may be asked to make principal payments and/or post sufficient additional collateral to reduce the LTV ratio as a condition of future financing, renewal, or to avoid a default. In the event of a default by a borrower, BAC is entitled to sell the collateral to recover the outstanding principal, accrued interest balance, and any expenses incurred with respect to the recovery process.

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Management considers the valuation of the underlying collateral and the LTV ratio to be the two most critical credit quality indicators for the loans made by BAC. In estimating the value of the underlying collateral for BAC's loans, management utilizes its expertise in the collector car market and considers an array of factors impacting the current and expected sale value of each car including the year, make, model, mileage, history, and in the case of classic cars, the provenance, quality of restoration (if applicable), the originality of the body, chassis, and mechanical components, and comparable market transaction values.

The repayment of BAC's loans can be adversely impacted by a borrower's deteriorating financial circumstances, a decline in the collector car market in general or in the value of the collateral, which may be concentrated within certain marques, vintages, or types of cars. In addition, in situations when BAC's claim on the collateral is subject to a legal dispute, the ability to realize proceeds from the collateral may be limited or delayed.

As of September 30, 2025, BAC's net notes receivable balance was $100.1 million, of which $82.4 million was classified within current assets and $17.7 million was classified within long-term assets on the Condensed Consolidated Balance Sheets. As of December 31, 2024, BAC's net notes receivable balance was $57.0 million, of which $45.4 million was classified within current assets and $11.6 million was classified within long-term assets on the Condensed Consolidated Balance Sheets. The classification of a loan as current or long-term is based on the contractual maturity date of the loan as of the balance sheet date.

The table below provides the aggregate LTV ratio for BAC's loan portfolio as of September 30, 2025 and December 31, 2024:


	September 30,			December 31,
	2025			2024

	in thousands
Secured loans	$	100,055		$	56,972
Estimate of collateral value	$	171,541		$	95,778
Aggregate LTV ratio	58.3		%	59.5		%

Management considers a loan to be past due when an interest payment is not paid within 10 business days of the monthly due date, or if the principal amount is not repaid by the contractual maturity date. Typically, a loan becomes past due only for a short period of time during which the loan is renewed or collateral is sold to satisfy the borrower's obligations. As of September 30, 2025 and December 31, 2024, the amount of past due principal and interest payments was not material.

A non-accrual loan is a loan for which future finance revenue is not recorded due to management's determination that it is probable that future interest on the loan will not be collectible. When a loan is placed on non-accrual status, any accrued interest receivable deemed not collectible is reversed against finance revenue. Any cash receipts subsequently received on non-accrual loans are first applied to reduce the recorded principal balance of the loan, with any proceeds in excess of the principal balance then applied to interest and expenses owed by the borrower. As of September 30, 2025 and December 31, 2024, there were no non-accrual loans.

As of September 30, 2025 and December 31, 2024, the allowance for expected credit losses related to the BAC loan portfolio was not material based on management's quarterly evaluation, which takes into consideration a number of factors including the level of historical losses for similar loans, the quality of the collateral, the LTV ratio of the loans, management's overall assessment of the current circumstances and risks related to each loan, and, to a lesser extent, the circumstances related to each borrower.

Other Notes Receivable

From time-to-time, Broad Arrow provides financing for its auction and private sale buyers, retaining a security interest in the purchased vehicle. The resulting loans are typically interest-bearing with required periodic interest payments and, in certain cases, required periodic principal payments. As of September 30, 2025, the related outstanding Notes receivable balance was $9.7 million and was classified within current assets on the Condensed Consolidated Balance Sheets.

Broad Arrow also makes consignor advances secured by vehicle(s) that are contractually committed, in the near term, to be offered for sale at auction. Consignor advances allow sellers to receive funds upon consignment for an auction that will occur up to one year in the future and normally have short-term maturities. In the event the vehicle(s) are not successfully sold at auction, the consignor can repay the outstanding principal and accrued interest of the advance or convert the advance to a BAC loan. As of September 30, 2025, the outstanding Notes receivable balance associated with consignor advances was $2.1 million and was classified within current assets on the Condensed Consolidated Balance Sheets.

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Under certain circumstances, Broad Arrow also provides loans to certain car dealers to finance the purchase of collectible cars, retaining a security interest in the purchased vehicle. In these situations, Broad Arrow acquires a partial ownership interest in the car in addition to providing the loan. Upon the eventual sale of the acquired car, the loan is repaid. As of September 30, 2025, this outstanding Notes receivable balance was $0.1 million and was recorded within long-term assets on the Condensed Consolidated Balance Sheets.

These loans are classified on the Condensed Consolidated Statements of Cash Flows within Operating Activities as they are made in support of Broad Arrow's auction and private sale activities.

Concentration Risk

As of September 30, 2025, there were no borrowers with loan balances that exceeded 10% of the total notes receivable balance.

8 — Other Assets

As of September 30, 2025 and December 31, 2024, other assets, current and long-term, consisted of:


	September 30,		December 31,
	2025		2024

	in thousands
Prepaid software-as-a-service ("SaaS") implementation costs	$	55,588	$	41,110
Prepaid sales, general and administrative expenses	21,961		20,134
Deferred reinsurance premiums ceded	24,216		18,521
Inventory (1)	14,168		18,484
Property and equipment, net	17,110		18,205
Reinsurance recoverable	17,831		11,927
Other investments	10,533		10,312
Contract costs	9,940		9,399
Accrued investment income	4,703		4,827
Deferred financing costs related to revolving credit facilities	3,284		3,489
Other	5,699		9,464
Other assets	$	185,033	$	165,872

(1) Inventory primarily includes vehicles owned by Broad Arrow that have been purchased for resale purposes.

As of September 30, 2025, Other primarily included $2.7 million of collector vehicle investments, $1.6 million related to capitalized digital media content, and a $1.3 million tax receivable. As of December 31, 2024, Other primarily included $2.5 million of collector vehicle investments, $2.2 million related to capitalized digital media content, and a $2.0 million tax receivable.

9 — Leases

The following table summarizes the components of the Company's operating lease expense for the three and nine months ended September 30, 2025 and 2024:


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024

	in thousands
Operating lease expense (1)	$	2,364	$	1,882	$	6,590	$	5,920
Variable lease expense (1) (2)	993		1,505		2,761		3,475
Sublease revenue (3)	(254)		(344)		(809)		(1,000)
Lease cost, net	$	3,103	$	3,043	$	8,542	$	8,395

(1) Classified within "General and administrative expenses" in the Condensed Consolidated Statements of Operations.

(2) Amounts include payments for maintenance, taxes, insurance, and payments affected by the Consumer Price Index.

(3) Classified within "Membership, marketplace and other revenue" in the Condensed Consolidated Statements of Operations.

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The following tables summarize supplemental balance sheet information related to operating leases as of September 30, 2025 and December 31, 2024:


	September 30,		December 31,
	2025		2024

	in thousands
Operating lease ROU assets	$	42,229	$	44,485

Current lease liabilities (1)	6,860		6,715
Long-term lease liabilities	40,511		43,178
Total operating lease liabilities	$	47,371	$	49,893

(1) Current lease liabilities are recorded within "Accounts payable, accrued expenses and other current liabilities" on the Condensed Consolidated Balance Sheets.


	September 30,			December 31,
	2025			2024

	in thousands
ROU assets obtained in exchange for new operating lease liabilities	$	2,374		$	1,317
Weighted average lease term	7.63			8.23
Weighted average discount rate	5.1		%	5.0		%

The following table summarizes information about the amount and timing of the Company's future operating lease commitments as of September 30, 2025:


	in thousands
2025 - remaining	$	2,333
2026	8,971
2027	8,518
2028	8,446
2029	6,665
Thereafter	22,757
Total lease payments	57,690
Less: imputed interest	(10,319)
Total lease liabilities	$	47,371

10 — Acquisition

On September 1, 2024, the Company's subsidiary, Hagerty Insurance Holdings, Inc., acquired all of the issued and outstanding capital stock of Consolidated National Insurance Company, which was subsequently renamed Drivers Edge Insurance Company, for a purchase price of $19.3 million, including $0.9 million in direct and incremental transaction costs. The acquisition of Drivers Edge was accounted for as an asset acquisition with the $19.3 million purchase price allocated to approved state licenses ($11.3 million), cash and cash equivalents ($3.9 million), restricted fixed maturity securities ($3.7 million), and restricted cash and cash equivalents ($0.4 million).

In the third quarter of 2025, Drivers Edge launched Enthusiast+ in Colorado and the Company plans to implement a phased, nationwide rollout over the next four years. Enthusiast+ is a new insurance product tailored for modern enthusiast vehicles that are typically driven more frequently and stored more flexibly than traditional collector cars and is designed to broaden the Company's addressable market by offering coverage to a wider range of vehicles and customer profiles.

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11 — Divestiture

In June 2024, THG sold substantially all of the assets and liabilities of Motorsport Reg ("MSR"), a motorsport membership, licensing and event online management system, to a third party. The material elements of the sale consideration include a fixed purchase price and a contingent payment opportunity, based on future performance. The Company recognized a $0.1 million gain related to the sale of MSR in the second quarter of 2024, which was recorded within "Gain related to divestiture" on the Company's Condensed Consolidated Statements of Operations.

12 — Intangible Assets

The cost and accumulated amortization of intangible assets as of September 30, 2025 and December 31, 2024 are as follows:


	September 30, 2025
	Weighted average useful life	Gross carrying amount		Accumulated amortization		Net carrying amount

		in thousands
Internally developed software	3.4	$	149,831	$	(97,638)	$	52,193
Renewal rights	10.0	21,647		(10,064)		11,583
Trade names and trademarks	14.2	11,867		(4,113)		7,754
State licenses (1)	Indefinite	11,263		—		11,263
Relationships and customer lists	15.5	7,907		(2,248)		5,659
Other	3.6	619		(619)		—
Total intangible assets		$	203,134	$	(114,682)	$	88,452

(1) Represents approved state licenses related to the acquisition of Drivers Edge. Refer to Note 10 — Acquisition for additional details.


	December 31, 2024
	Weighted average useful life	Gross carrying amount		Accumulated amortization		Net carrying amount

		in thousands
Internally developed software	3.3	$	136,235	$	(82,903)	$	53,332
Renewal rights	9.9	19,187		(8,458)		10,729
Trade names and trademarks	14.1	12,061		(3,393)		8,668
State licenses (1)	Indefinite	11,263		—		11,263
Relationships and customer lists	15.4	7,975		(1,896)		6,079
Other	4.2	1,065		(1,029)		36
Total intangible assets		$	187,786	$	(97,679)	$	90,107

(1) Represents approved state licenses related to the acquisition of Drivers Edge. Refer to Note 10 — Acquisition for additional details.

Intangible asset amortization expense was $5.7 million and $6.2 million for the three months ended September 30, 2025 and 2024, respectively, and $17.9 million and $20.5 million for the nine months ended September 30, 2025 and 2024, respectively.

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Estimated future aggregate amortization expense related to intangible assets as of September 30, 2025 is as follows:


	in thousands
2025 - remaining	$	6,013
2026	22,475
2027	19,142
2028	13,165
2029	5,393
Thereafter	11,001
Total	$	77,189

13 — Provision for Unpaid Losses and Loss Adjustment Expenses

The following table presents a reconciliation of the beginning and ending provision for unpaid losses and loss adjustment expenses, net of amounts recoverable from various reinsurers:


	Nine months ended September 30,
		2025		2024

		in thousands
Gross reserves for unpaid losses and loss adjustment expenses, beginning		$	168,492	$	136,507
Less: Reinsurance recoverable on unpaid losses and loss adjustment expenses		5,769		2,235
Net reserves for unpaid losses and loss adjustment expenses, beginning		162,723		134,272
Incurred losses and loss adjustment expenses:
Current accident year		224,969		226,515

Total incurred losses and loss adjustment expenses		224,969		226,515
Payments:
Current accident year		61,819		50,683
Prior accident years		63,571		59,090
Total payments		125,390		109,773
Effect of foreign currency rate changes		(63)		84
Net reserves for unpaid losses and loss adjustment expenses, ending		262,239		251,098
Reinsurance recoverable on unpaid losses and loss adjustment expenses		14,406		7,738
Gross reserves for unpaid losses and loss adjustment expenses, ending		$	276,645	$	258,836

Losses and loss adjustment expenses for the nine months ended September 30, 2025 and 2024 includes approximately $10.3 million of pre-tax losses related to the Southern California Wildfires and approximately $24.7 million of pre-tax losses related to Hurricane Helene, respectively.

Reserving Methodology

The Company records an estimate of quarterly losses and loss adjustment expenses in the Condensed Consolidated Statements of Operations using an annual loss ratio, which is based on statistical analysis performed by the Company's internal and external actuarial teams that consider several factors, including projected levels of catastrophe events. Management believes this approach provides a more consistent view of loss experience over the year given the seasonality of the Company's business. The annual loss ratio is reviewed throughout the year and adjusted, as necessary.

The provision for unpaid losses and loss adjustment expenses recorded on the Condensed Consolidated Balance Sheets represents (i) the difference between management's estimate of the ultimate cost of losses and loss adjustment expenses incurred by the Company and (ii) the amount of paid losses as of the reporting date. These reserves reflect management's best estimate of unpaid losses related to reported claims and IBNR claims and also include management's best estimate of all expenses associated with processing and settling reported and unreported claims.

Reserves are reviewed by management quarterly and periodically throughout the year by combining historical results and current actual results to calculate new development factors. Claims are analyzed and reported based on the year in which the loss occurred (i.e., on an accident year basis). Accident year data is classified and utilized within actuarial models to prepare estimates of required reserves for payments to be made in the future.

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When estimating reserves, the Company utilizes several actuarial reserving methods which consider historical claim reporting patterns, claim cycle time, claim frequency and severity, claims settlement practices, adequacy of case reserves over time, seasonality, and current economic conditions. Reserve estimates produced by various actuarial reserving methods are further analyzed to determine the actuarial central estimate which represents the expected value over the range of reasonably possible outcomes.

14 — Reinsurance

The following table presents the Company's total premiums assumed and ceded on a written and earned basis for the three and nine months ended September 30, 2025 and 2024:


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024

Premiums written:	in thousands
Assumed	$	228,882	$	199,721	$	652,205	$	574,742
Ceded	(10,999)		(9,906)		(42,068)		(42,875)
Net	$	217,883	$	189,815	$	610,137	$	531,867

Premiums earned:
Assumed	$	199,679	$	176,611	$	570,588	$	506,398
Ceded	(12,640)		(10,925)		(36,409)		(31,481)
Net	$	187,039	$	165,686	$	534,179	$	474,917

The following table presents total loss and loss adjustment expenses assumed and ceded for the three and nine months ended September 30, 2025 and 2024:


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024

Losses and loss adjustment expenses:	in thousands
Assumed	$	81,788	$	101,254	$	243,173	$	235,390
Ceded	(3,162)		(1,824)		(18,204)		(8,875)
Net	$	78,626	$	99,430	$	224,969	$	226,515

Ceded Reinsurance

Hagerty Re purchases catastrophe reinsurance to protect its capital from large catastrophic events and to provide earnings protection and stability. Hagerty Re renegotiated its catastrophe reinsurance coverage effective January 1, 2025, with terms and limits similar to 2024. The 2025 catastrophe reinsurance program for accounts with total insured values ("TIV") of up to $5.0 million affords coverage in excess of a per event retention of $28.0 million in two layers; $27.0 million excess of $28.0 million, and $50.0 million excess of $55.0 million. Additionally, Hagerty Re purchases facultative reinsurance to cede a portion of the physical damage exposure related to certain high value vehicles.

Hagerty Re cedes 100% of its physical damage exposure on U.S. accounts written or renewed with TIV equal to or greater than $5.0 million ("High-Net-Worth Accounts") via quota share agreements with various reinsurers. These High-Net-Worth Accounts are assumed 100% from a wholly owned subsidiary of Markel. Certain reinsurers involved in these quota share agreements are related parties. Refer to Note 21 — Related-Party Transactions for additional information.

Hagerty Re receives ceding commissions related to premiums ceded under reinsurance contracts related to High-Net-Worth Accounts. Ceding commissions are recognized ratably over the terms of the related policies, which are generally 12 months, and are recorded within "Ceding commissions, net" in the Company's Condensed Consolidated Statements of Operations. Deferred portions of ceding commissions received are included in "Deferred acquisition costs, net" on the Company's Condensed Consolidated Balance Sheets.

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15 — Debt

As of September 30, 2025 and December 31, 2024, "Long-term debt, net" consisted of the following:


		September 30,		December 31,
	Maturity	2025		2024

		in thousands
2025 JPM Credit Facility	March 2030	$	77,484	$	—
Prior JPM Credit Facility (1)	October 2026	—		50,296
BAC Credit Facility	December 2026	75,000		30,193
State Farm Term Loan	September 2033	25,000		25,000
Notes payable	October 2025	496		792
Total debt		177,980		106,281
Less: BAC Credit Facility, current portion		(72,622)		—
Less: Notes payable, current portion		(496)		(792)
Less: Unamortized debt issuance costs related to the State Farm Term Loan		(476)		(521)
Total long-term debt, net		$	104,386	$	104,968

(1) The Prior JPM Credit Facility, originally scheduled to mature in October 2026, was terminated upon the initiation of the 2025 JPM Credit Facility.

2025 JPM Credit Facility

In March 2025, THG entered into a credit agreement with JPMorgan Chase Bank, N.A. ("JPM"), as administrative agent, issuing bank and swingline lender, the foreign subsidiary borrowers thereto, and the other financial institutions party thereto as lenders (the "2025 JPM Credit Agreement").

The 2025 JPM Credit Agreement provides for a senior unsecured revolving credit facility (the "2025 JPM Credit Facility") with an aggregate borrowing capacity of $375.0 million. The 2025 JPM Credit Agreement includes (i) a $175.0 million sublimit for letters of credit, (ii) a $100.0 million sublimit for foreign currency borrowings, and (iii) an uncommitted accordion feature of $75.0 million, plus an unlimited amount so long as THG's net leverage ratio is below 3.25. The 2025 JPM Credit Agreement matures in March 2030, but may be extended if agreed to by THG and the lenders party thereto. Any unpaid balance on the 2025 JPM Credit Facility is due at maturity.

THG used borrowings from the 2025 JPM Credit Facility to repay in full all indebtedness, liabilities and other obligations outstanding under, and terminated, THG's prior credit agreement with JPM, as administrative agent, issuing bank and swingline lender, the foreign subsidiary borrowers party thereto, and the other financial institutions party thereto as lenders (the "Prior JPM Credit Agreement"). THG incurred approximately $1.0 million in fees for the 2025 JPM Credit Agreement, which, along with the remaining unamortized fees associated with the Prior JPM Credit Agreement, are being amortized over the agreement's five-year term.

The 2025 JPM Credit Facility accrues interest at the applicable reference rate, primarily Term SOFR, depending on the currency of the borrowing plus an applicable margin determined by the Company's net leverage ratio for the preceding period (as defined in the 2025 JPM Credit Facility). The effective interest rates related to the 2025 JPM Credit Agreement and the Prior JPM Credit Agreement were 5.74% and 6.88% for the nine months ended September 30, 2025 and 2024, respectively.

The 2025 JPM Credit Agreement requires THG to, among other things, meet certain financial covenants, including a minimum fixed charge coverage ratio test and a maximum leverage ratio test. As of September 30, 2025, THG was in compliance with these financial covenants.

As of September 30, 2025, the carrying value of the outstanding borrowings under the 2025 JPM Credit Facility approximated its fair value due to the variable interest rates associated with the outstanding borrowings.

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BAC Credit Facility

BAC and its wholly owned subsidiary BAC Funding 2023-1, LLC, as borrower, have a revolving credit agreement (the "BAC Credit Agreement") that provides for a revolving credit facility (the "BAC Credit Facility") with an aggregate commitment of $75.0 million. The BAC Credit Facility's borrowing base is determined by the carrying value of certain BAC notes receivable, which is then limited by the amount of the aggregate commitment. As of September 30, 2025, the applicable borrowing base for the BAC Credit Agreement was $79.2 million, and the outstanding borrowings were $75.0 million.

The revolving borrowing period of the BAC Credit Facility expires in December 2025, followed by an amortization period until it ultimately matures in December 2026. The borrowing period and the maturity date of the BAC Credit Facility may be extended by one year if requested by BAC and agreed by the administrative agent. BAC is not a borrower or guarantor of the BAC Credit Facility.

BAC and certain of its subsidiaries may transfer notes receivable to wholly owned, bankruptcy remote SPEs to secure borrowings under the BAC Credit Facility, isolating these assets from the Company's other obligations. Recourse is limited to (i) an obligation of the applicable seller to repurchase a note receivable if it is determined that there was a breach of any representation or warranty relating to such note receivable as of the relevant date specified in the related transfer agreement and (ii) a limited guarantee for certain liabilities that may result under certain foreign exchange hedging activity of one of the SPEs.

BAC and BAC Funding 2023-1, LLC are required, among other things, to meet certain financial covenants including that BAC, as the servicer, maintain a minimum tangible net worth, minimum liquidity balances, and an indebtedness to tangible net worth ratio. As of September 30, 2025, the Company was in compliance with the financial covenants under the BAC Credit Agreement.

As of September 30, 2025, the carrying value of the $75.0 million in outstanding borrowings under the BAC Credit Facility approximated its fair value due to the variable interest rates associated with the outstanding borrowings. The current portion of the outstanding BAC Credit Agreement borrowings is recorded within "Current portion of long-term debt" on the Condensed Consolidated Balance Sheets.

State Farm Term Loan

In September 2023, Hagerty Re entered into an unsecured term loan credit facility with State Farm in the aggregate principal amount of $25.0 million (the "State Farm Term Loan"). The State Farm Term Loan bears interest at a rate of 8.0% per annum and will mature in September 2033. State Farm is a related party to the Company. Refer to Note 21 — Related-Party Transactions for additional information.

Notes Payable

As of September 30, 2025 and December 31, 2024, the Company had outstanding notes payable, which are used to fund certain loans made by BAC in the United Kingdom ("U.K."), totaling $0.5 million and $0.8 million, respectively. The effective interest rate for the notes payable is 9.8% with repayment due October 2025. Refer to Note 7 — Notes Receivable for additional information on the lending activities of BAC.

Letters of Credit

As of September 30, 2025, the Company has authorized three letters of credit for a total of $10.8 million for operational purposes, primarily related to Hagerty Re's Section 953(d) tax structuring election, and to a much lesser extent, a requirement under a quota share agreement, and lease down payment support.

16 — Convertible Preferred Stock

In June 2023, the Company entered into a Securities Purchase Agreement (the "Purchase Agreement") with certain accredited investors (the "Investors"), pursuant to which it closed, issued and sold (the "Closing") to the Investors an aggregate of 8,483,561 shares of the Company's newly-designated Series A Convertible Preferred Stock, par value $0.0001 per share, for an aggregate purchase price of $80.0 million, at a per-share purchase price of $9.43 (the "Series A Purchase Price" and the transaction, the "Private Placement").

The Investors include State Farm, Markel, and individuals related to Hagerty Holding Corp. ("HHC"). State Farm and Markel each own over 5% of the Company's outstanding common stock. McKeel Hagerty, the Company's CEO and the Chairman of its Board of Directors (the "Board"), along with Tammy Hagerty, may be deemed to control HHC, the controlling stockholder of the Company. Both State Farm and Markel can nominate one director to the Board, while HHC can nominate two directors. Refer to Note 17 — Stockholders' Equity and Note 21 — Related-Party Transactions for additional information.

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The net proceeds from the Private Placement after deducting issuance costs of approximately $0.8 million were $79.2 million, which was recorded within Temporary Equity on the Company's Condensed Consolidated Balance Sheets. The Company used the net proceeds from the Private Placement for general corporate purposes.

As of September 30, 2025, the estimated redemption value of the Series A Convertible Preferred Stock was $107.8 million, which represents the maximum cash payment, including cumulative dividends, that would be required to be paid if the Optional Term Redemption provision in the Certificate of Designations, as summarized below, is exercised as of the earliest possible redemption date of June 23, 2028. The decision to redeem the Series A Convertible Preferred Stock for cash is made at the discretion of the Company; however, the Company is controlled by HHC through its voting control of the Company. Accordingly, the redemption of the Series A Convertible Preferred Stock is considered outside the control of the Company and, as a result, the Series A Convertible Preferred Stock is recorded within Temporary Equity on the Company's Condensed Consolidated Balance Sheets.

The Company has elected to apply the accretion method to adjust the carrying value of the Series A Convertible Preferred Stock to its estimated redemption value. Amounts recognized to accrete the Series A Convertible Preferred Stock to its estimated redemption value are treated as a deemed dividend and are recorded as a reduction to "Additional paid-in capital". The estimated redemption value may vary in subsequent periods and the Company has elected to recognize such changes prospectively.

The captioned sections below provide a summary of the material terms of the Series A Convertible Preferred Stock, as set forth in the Certificate of Designations, Preferences and Rights of the Series A Convertible Preferred Stock (the "Certificate of Designations").

Ranking — The Series A Convertible Preferred Stock ranks senior to the Class A Common Stock, the Class V Common Stock, and each other class or series of shares of the Company that the Company may issue in the future the terms of which do not expressly provide that such class or series ranks equally with, or senior to, the Series A Convertible Preferred Stock, with respect to dividend rights and/or rights upon liquidation, winding up or dissolution.

Dividends — Dividends on the Series A Convertible Preferred Stock are cumulative and accrue from the date of issuance at the rate per annum of 7% of the Series A Purchase Price of each share, plus the amount of previously accrued dividends, compounded annually (the "Accruing Dividends"). The Company may elect to pay the Accruing Dividends either in cash or in additional shares of Series A Convertible Preferred Stock. Prior to the third anniversary of the Closing, the Series A Convertible Preferred Stock will participate on an as-converted basis in dividends declared and paid on the Class A Common Stock. In each of June 2025 and 2024, the Company paid $5.6 million, respectively, of cash dividends on the Series A Convertible Preferred Stock to the Investors.

Conversion — Any shares of Series A Convertible Preferred Stock may, at the option of the holder, be converted at any time into shares of Class A Common Stock. The conversion price for the Series A Convertible Preferred Stock is initially $11.79 and is subject to adjustment upon certain events, including a stock split, a reverse stock split, or a dividend of the Class A Common Stock or Class V Common Stock to the Company's common stockholders (as adjusted, the "Conversion Price"). The Company may require such conversion (i) if the closing price per share of Class A Common Stock, for at least twenty (20) of any thirty (30) consecutive trading days, exceeds: (a) on or after the third and prior to the seventh anniversary of the Closing, 150% of the Conversion Price; or (b) on or after the seventh and prior to the tenth anniversary of the Closing, 100% of the Conversion Price; and (ii) on or after the tenth anniversary of the Closing. The conversion rate in effect at any applicable time (the "Conversion Rate") is the quotient obtained by dividing the Series A Purchase Price by the Conversion Price.

As of September 30, 2025, no shares of Series A Convertible Preferred Stock had been converted and the outstanding shares of Series A Convertible Preferred Stock were convertible into 6,785,410 shares of Class A Common Stock.

Voting — The Series A Convertible Preferred Stock votes together with the Class A Common Stock on an as-converted basis, and not as a separate class. The Investors have veto rights over (i) changes to the terms of the Certificate of Designations or the Company's certificate of incorporation or bylaws that adversely impact the Series A Convertible Preferred Stock and (ii) the issuance of equity securities senior to the Series A Convertible Preferred Stock or other securities convertible thereto.

Liquidation Preference — In the event of any liquidation, dissolution or winding up of the Company, each share of Series A Convertible Preferred Stock will be paid the greater of (i) the Series A Purchase Price plus any Accruing Dividends accrued but unpaid thereon, and (ii) the amount that such share of Series A Convertible Preferred Stock would have received had it converted into the Class A Common Stock immediately prior to such liquidation, dissolution or winding up of the Company (the "Liquidation Preference"). After payment of the Liquidation Preference, the Series A Convertible Preferred Stock will no longer be convertible and will not participate in any distribution made to the holders of the Class A Common Stock or Class V Common Stock.

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Change of Control — Upon a merger, consolidation, sale or other change of control transaction as described in the Certificate of Designations (a "Change of Control"), either (i) the Company may elect to redeem the Series A Convertible Preferred Stock or (ii) each holder of Series A Convertible Preferred Stock, individually, may require the Company to redeem all or any portion of the Series A Convertible Preferred Stock. The redemption price per share to be paid by the Company would be the greater of: (a) the Series A Purchase Price plus any accrued but unpaid Accruing Dividends multiplied by (i) if prior to or on the third anniversary of the Closing, 120%; (ii) if after the third but prior to or on the fifth anniversary of the Closing, 110%; (iii) if after the fifth anniversary of the Closing, 100%; and (b) the amount such share of Series A Convertible Preferred Stock would have received had it converted into the Class A Common Stock prior to the Change of Control. Any shares of Series A Convertible Preferred Stock that are not so redeemed will automatically convert into shares of Class A Common Stock and be paid in connection with the Change of Control.

Fundamental Transaction — In the event of any acquisition by the Company with a transaction value of at least $500.0 million or any equity or debt financing by the Company that raises at least $500.0 million, either (i) the Company may elect to redeem the Series A Convertible Preferred Stock, or (ii) each holder of Series A Convertible Preferred Stock, individually, may require the Company to redeem all or any portion of its Series A Convertible Preferred Stock. The redemption price per share to be paid by the Company would be the Series A Convertible Preferred Stock plus any accrued but unpaid Accruing Dividends multiplied by: (a) if prior to or on the third anniversary of the Closing, 120%; (b) if after the third but prior to or on the fifth anniversary of the Closing, 110%; (c) if after the fifth but prior to or on the sixth anniversary of the Closing, 108%; (d) if after the sixth but prior to or on the seventh anniversary of the Closing, 106%; (e) if after the seventh but prior to or on the eighth anniversary of the Closing, 104%; (f) if after the eighth but prior to or on the ninth anniversary of the Closing, 102%; or (g) if after the ninth anniversary of the Closing, 100%.

Optional Term Redemption — Any time after the fifth anniversary of the Closing, the Company may redeem all or any portion of the then-outstanding shares of the Series A Convertible Preferred Stock for cash (a "Term Redemption"). The redemption price per share to be paid by the Company would be equal to the greater of: (i) the Series A Purchase Price plus any accrued but unpaid Accruing Dividends multiplied by: (a) if after the fifth but prior to the sixth anniversary of the Closing, 110%; (b) if on or after the sixth but prior to the seventh anniversary of the Closing, 108%; (c) if on or after the seventh but prior to the eighth anniversary of the Closing, 106%; (d) if on or after the eighth but prior to the ninth anniversary of the Closing, 104%; (e) if on or after the ninth but prior to tenth anniversary of the Closing, 102%; or (f) if on or after the tenth anniversary of the Closing, 100%; and (ii) the amount such share of Series A Convertible Preferred Stock would have received had it converted into Class A Common Stock prior to the Term Redemption.

Registration Rights Agreement — In connection with the Private Placement, the Company entered into a registration rights agreement with the Investors (the "Registration Rights Agreement") pursuant to which, the Investors will be entitled to certain demand, shelf and piggyback registration rights with respect to the Series A Convertible Preferred Stock and shares of the Class A Common Stock issuable upon conversion thereof.

17 — Stockholders' Equity

Class A Common Stock

Hagerty, Inc. is authorized to issue 500,000,000 shares of Class A Common Stock with a par value of $0.0001 per share. Holders of Class A Common Stock are entitled to one vote for each share. As of September 30, 2025 and December 31, 2024, there were 100,426,473 and 90,032,391 shares of Class A Common Stock issued and outstanding, respectively.

Class V Common Stock

Hagerty, Inc. is authorized to issue 300,000,000 shares of Class V Common Stock with a par value of $0.0001 per share. Class V Common Stock represents voting, non-economic interests in Hagerty, Inc. Holders of Class V Common Stock are entitled to 10 votes for each share. In connection with the business combination that formed Hagerty, Inc. in 2021, shares of Class V Common Stock were issued to HHC and Markel (together, the "Legacy Unit Holders") along with an equivalent number of THG units. Each share of Class V Common Stock, together with the corresponding THG unit, is exchangeable for one share of Class A Common Stock. As of September 30, 2025 and December 31, 2024, there were 241,552,156 and 251,033,906 shares of Class V Common Stock issued and outstanding, respectively. See "Exchange of THG Units" below.

Preferred Stock

Hagerty, Inc. is authorized to issue 20,000,000 shares of Preferred Stock with a par value of $0.0001 per share. The Board has the authority to issue shares of Preferred Stock with such designations, voting and other rights and preferences as may be determined from time to time.

As of September 30, 2025 and December 31, 2024, there were 8,483,561 shares of Preferred Stock issued and outstanding, which may, at the option of the holder, be converted at any time into shares of Class A Common Stock. Refer to Note 16 — Convertible Preferred Stock for additional information.

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Non-controlling Interests

Hagerty, Inc. owns one THG unit for each share of Class A Common Stock outstanding, and is the sole managing member of THG. As a result, Hagerty, Inc. consolidates the financial statements of THG into its Condensed Consolidated Financial Statements. The Company reports a non-controlling interest representing the economic interest in THG held by other unit holders of THG.

The following table summarizes the changes in ownership of THG units for the periods presented:


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024
THG units held by Hagerty, Inc.
Beginning of period	90,715,648		85,703,286		90,032,391		84,588,536
Issuance of shares under employee plans	226,575		211,582		831,530		1,194,808
Exchange of THG units for Class A Common Stock	9,484,250		189,294		9,562,552		320,818
Warrant Exchange (refer to Note 6)	—		3,876,201		—		3,876,201
End of period	100,426,473		89,980,363		100,426,473		89,980,363
Ownership percentage
Beginning of period	26.2	%	25.1	%	26.1	%	24.9	%
End of period	29.0	%	26.1	%	29.0	%	26.1	%

THG units held by other unit holders
Beginning of period	255,100,044		255,367,640		255,178,346		255,499,164
Exchange of THG units for Class A Common Stock	(9,484,250)		(189,294)		(9,562,552)		(320,818)
End of period	245,615,794		255,178,346		245,615,794		255,178,346
Ownership percentage
Beginning of period	73.8	%	74.9	%	73.9	%	75.1	%
End of period	71.0	%	73.9	%	71.0	%	73.9	%

Total THG units outstanding	346,042,267		345,158,709		346,042,267		345,158,709

At the end of each reporting period, THG equity attributable to Hagerty, Inc. and the non-controlling interest unit holders, respectively, is reallocated to reflect their current ownership in THG.

Shares Issued Under Employee Plans

Employees of THG subsidiaries are awarded share-based compensation in the form of RSUs and performance restricted stock units ("PRSUs") under the 2021 Stock Incentive Plan. Upon the vesting of these awards, the employees receive shares of Class A Common Stock and the Company is issued an equivalent number of THG units, thereby increasing its ownership interest in THG. Employees of THG subsidiaries may also participate in the 2021 Employee Stock Purchase Plan under which these employees may purchase shares of Class A Common Stock at a discounted price and the Company is issued an equivalent number of THG units.

During the nine months ended September 30, 2025 and 2024, the Company received 797,980 and 1,194,808 THG units, respectively, in connection with shares of Class A Common Stock that were issued as a result of share-based compensation awards vesting under the 2021 Stock Incentive Plan. In addition, during the nine months ended September 30, 2025, the Company received 33,550 THG units in connection with shares of Class A Common Stock that were issued related to the 2021 Employee Stock Purchase Plan. No shares related to the Company's 2021 Employee Stock Purchase Plan were issued during the nine months ended September 30, 2024.

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Exchange of THG Units

Each THG unit and, if applicable, the associated share of Class V Common Stock, are exchangeable for, at the Company's option, one share of Class A Common Stock or cash. If the Company elects for an exchange to be settled in cash, the cash used to settle the exchange must be funded through a new equity offering of Class A Common Stock. Upon completion of any THG unit exchange, shares of any exchanged Class V Common Stock are cancelled and Hagerty, Inc. retains the exchanged THG units. Changes in Hagerty, Inc.'s ownership interest in THG while retaining its controlling interest are accounted for as equity transactions. Accordingly, exchanges of THG units by unit holders other than Hagerty, Inc. increase Hagerty, Inc.'s ownership in THG, thereby reducing the amount recorded as "Non-controlling interest" and increasing "Additional paid-in capital".

In the third quarter of 2025, HHC completed an exchange of 9,481,750 THG units, together with the corresponding shares of Class V Common Stock, for 9,481,750 shares of Class A Common Stock (the "THG Unit Exchange"). Upon the consummation of the THG Unit Exchange, the exchanged shares of Class V Common Stock were cancelled. In addition, during the nine months ended September 30, 2025 and 2024, certain other holders of THG units that do not hold corresponding shares of Class V Common Stock exchanged approximately 80,802 and 320,818, respectively, THG units for an equal number of shares of Class A Common Stock.

Immediately following the THG Unit Exchange, pursuant to an underwriting agreement dated as of August 7, 2025, (the "Underwriting Agreement"), by and among the Company, THG, the Underwriters and the Selling Stockholders named therein, HHC sold 9,481,750 shares of Class A Common Stock to the Underwriters (the "Secondary Offering"). The Company did not sell any securities in the Secondary Offering and did not receive any proceeds from the sale of shares by the Selling Stockholders in the Secondary Offering. The Company incurred $1.2 million in expenses associated with the THG Unit Exchange and Secondary Offering, which were recorded within "General and administrative expenses" on the Condensed Consolidated Statements of Operations.

These exchanges resulted in reductions to "Non-controlling interest" and corresponding increases to "Additional paid-in capital" of $16.6 million and $3.2 million, during the nine months ended September 30, 2025 and 2024, respectively.

THG Preferred Units

In connection with the Private Placement, the Fourth Amended and Restated Limited Liability Company Agreement of THG was amended and restated in the form of a Fifth Amended and Restated Limited Liability Company Agreement (as subsequently amended and restated, the "THG LLC Agreement"), to, among other things, create a new series of preferred units within THG (the "THG Preferred Units"). The terms of the THG Preferred Units parallel the terms of the Series A Convertible Preferred Stock and are held entirely by Hagerty, Inc.

The THG Preferred Units are recorded on the financial statements of THG based on their estimated redemption value, which represents the maximum cash payment, including cumulative dividends, that would be required to be paid to Hagerty, Inc. if the Optional Term Redemption of the Series A Convertible Preferred Stock is exercised. Amounts recognized to accrete the THG Preferred Units to their estimated redemption value are treated as a deemed dividend due to Hagerty, Inc. The amount of this deemed dividend is attributed entirely to Hagerty, Inc. prior to allocating the remainder of THG's consolidated net income between controlling and non-controlling interests. In each of June 2025 and 2024, THG paid $5.6 million of cash dividends to Hagerty, Inc. on the THG Preferred Units. Refer to Note 16 — Convertible Preferred Stock for additional information on the Private Placement and the Series A Convertible Preferred Stock.

Distributions to Unit Holders of THG

Under the terms of the THG LLC Agreement, THG is obligated to make tax distributions to its unit holders. During the nine months ended September 30, 2025 and 2024, THG made tax distributions of $30.5 million and $5.3 million, respectively, to non-controlling interest unit holders and $11.9 million and $1.1 million, respectively, of tax distributions to Hagerty, Inc.

18 — Share-Based Compensation

The Company's 2021 Stock Incentive Plan provides for the issuance of up to approximately 38.3 million shares of Class A Common Stock to employees and non-employee directors. The 2021 Stock Incentive Plan allows for the issuance of incentive stock options, non-qualified stock options, restricted stock awards, stock appreciation rights, RSUs, and PRSUs. As of September 30, 2025, there were approximately 25.9 million shares available for future grants under the 2021 Stock Incentive Plan.

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Share-based compensation expense related to employees is recognized within "Salaries and benefits" in the Condensed Consolidated Statements of Operations. Share-based compensation expense related to non-employee directors is recognized within "General and administrative expenses" in the Condensed Consolidated Statements of Operations. The Company recognizes forfeitures of share-based compensation awards in the period in which they occur.

The following table summarizes share-based compensation expense recognized during the three and nine months ended September 30, 2025 and 2024:


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024

	in thousands
Restricted stock units	$	3,579	$	2,962	$	10,500	$	10,004
Performance restricted stock units	1,510		1,130		4,127		3,014

Total share-based compensation expense	$	5,089	$	4,092	$	14,627	$	13,018

Restricted Stock Units

RSUs typically vest over a two to five-year period based on the requisite service period. The grant date fair value is determined based on the closing market price of the Class A Common Stock on the business day prior to the grant date and the related share-based compensation expense is recognized over the requisite service period on a straight-line basis.

The following table provides a summary of RSU activity during the nine months ended September 30, 2025:


	Restricted Stock Units	Weighted Average Grant Date Fair Value
Unvested balance as of December 31, 2024	3,682,679	$	9.65
Granted	1,166,295	9.07
Vested (1)	(1,174,388)	9.57
Forfeited	(85,048)	9.21
Unvested balance as of September 30, 2025	3,589,538	$	9.50

(1) For the nine months ended September 30, 2025, 797,980 shares of Class A Common Stock were issued related to the vesting of RSUs in the period, net of shares withheld for the funding of employee tax obligations.

The following table provides additional data related to RSU award activity during the nine months ended September 30, 2025 and 2024:


	Nine months ended September 30,
	2025		2024

	in thousands (except years)
Total fair value of shares vested (1)	$	11,241	$	18,324
Unrecognized compensation expense	$	25,934	$	28,962
Weighted average period awards are expected to be recognized (in years)	2.56		2.93

(1) The tax impact related to vested RSUs for the nine months ended September 30, 2025 and 2024 was not material to the Company's Condensed Consolidated Financial Statements.

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Performance Restricted Stock Units

Market Condition PRSUs

In April 2022, the Company's CEO was granted 3,707,136 market condition PRSUs, which provide him the opportunity to receive up to 3,707,136 shares of Class A Common Stock. The award had a grant date fair value of approximately $19.2 million, which was estimated using a Monte Carlo simulation model. These PRSUs have both market-based and service-based vesting conditions. Shares of Class A Common Stock issuable under this award can be earned based on the achievement of the following stock price targets: (i) 25% of the shares can be earned when the stock price of the Class A Common Stock exceeds $20.00 per share for 60 consecutive days, (ii) 25% of the shares can be earned when the stock price of the Class A Common Stock exceeds $25.00 per share for 60 consecutive days, and (iii) 50% of the shares can be earned when the stock price of the Class A Common Stock exceeds $30.00 per share for 60 consecutive days. These market-based conditions must be met in order for the PRSUs to vest; therefore, it is possible that no shares will ultimately vest. If any of the market-based conditions are met, the PRSUs will vest contingent upon continued service through the earlier of three years after achievement of the stock price target or the end of the seven-year performance period. As of September 30, 2025, no market condition PRSUs had vested.

The Company will recognize the entire $19.2 million of compensation expense for this award over the requisite service period, regardless of whether such market-based conditions are met. As of September 30, 2025, unrecognized compensation expense related to this award was $9.2 million, which the Company expects to recognize over a period of 3.50 years.

The following table summarizes the assumptions and related information used to determine the grant-date fair value of the market condition PRSUs awarded in April 2022:


Inputs						Performance Restricted Stock Units
Weighted average grant-date fair value per share						$5.19
Expected stock volatility						35%
Expected term (in years)						7.0
Risk-free interest rate						2.5%
Dividend yield						—%

Performance Condition PRSUs

In March 2024, the Talent, Culture, and Compensation Committee (the "Compensation Committee") of the Board adopted another form of PRSU award agreement (the "2024 PRSU Agreement") to be used for awards of PRSUs to certain employees under the Company's 2021 Stock Incentive Plan.

PRSUs granted under the 2024 PRSU Agreement will be eligible to vest subject to the satisfaction of both performance-based and service-based conditions. The performance-based vesting condition will be satisfied contingent upon the Company's level of performance over the designated performance period (the "Performance Period") as measured against a financial performance target (the "Performance Target"), each as determined by the Compensation Committee. Following the end of the Performance Period, the Compensation Committee will determine the applicable attained performance level with payout percentages ranging from 35% to 200% (each, a "Payout Percentage") of the target number of PRSUs awarded. In the event of a Change in Control (as defined in the 2024 PRSU Agreement) before the end of a scheduled Performance Period, the Compensation Committee retains discretion to end the Performance Period early and measure performance levels as of a revised measurement date.

If both the service-based and performance-based vesting conditions are satisfied, the PRSU holder will be entitled to receive the number of shares of Class A Common Stock, if any, determined by multiplying the aggregate number of PRSUs subject to the applicable PRSU Agreement by the applicable Payout Percentage that corresponds to the level of achievement of the Performance Target pursuant to the payout formula approved by the Compensation Committee.

The amount of compensation expense ultimately recognized for PRSUs issued under the 2024 PRSU Agreement will be based on the Company's ultimate performance relative to the Performance Target. The amount of compensation expense recognized prior to the end of the Performance Period is dependent upon management's assessment of the likelihood of achieving the applicable payout levels. If, as a result of management's assessment, it is projected that a greater number of PRSUs will vest than previously anticipated, a life-to-date adjustment to increase compensation expense is recorded in the period when such determination is made. Conversely, if, as a result of management's assessment, it is projected that a lower number of PRSUs will vest than previously anticipated, a life-to-date adjustment to decrease compensation expense is recorded in the period when such determination is made.

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The following table provides a summary of the activity related to PRSUs granted under the 2024 PRSU Agreement during the nine months ended September 30, 2025:


	Performance Restricted Stock Units	Weighted Average Grant Date Fair Value
Unvested balance as of December 31, 2024	295,166	$	9.33
Granted	243,365	9.04


Unvested balance as of September 30, 2025	538,531	$	9.20

As of September 30, 2025, the maximum number of shares of Class A Common Stock that may be issued with respect to PRSUs granted under the 2024 PRSU Agreement is 1,077,062, assuming full achievement of the Performance Target.

The following table provides additional data related to performance condition PRSU award activity during the nine months ended September 30, 2025 and 2024:


	Nine months ended September 30,
	2025		2024

	in thousands (except years)

Unrecognized compensation expense	$	5,343	$	5,324
Weighted average period awards are expected to be recognized (in years)	1.99		2.50

Employee Stock Purchase Plan

The 2021 Employee Stock Purchase Plan (the "ESPP") allows substantially all of the Company's employees to purchase shares of Class A Common Stock at a discount. As of September 30, 2025, 261,866 shares had been purchased under the ESPP and there were approximately 11.2 million shares available for future purchases.

19 — Earnings Per Share

Basic earnings per share is calculated under the Two-Class Method using basic Net income available to Class A Common Stockholders, divided by the weighted average number of shares of Class A Common Stock outstanding during the period.

Diluted earnings per share is calculated using diluted Net income available to Class A Common Stockholders divided by the weighted average number of shares of Class A Common Stock outstanding during the period, adjusted to give effect to potentially dilutive securities.

The Company's potentially dilutive securities consist of (i) unvested restricted stock units, shares issuable under the ESPP, and unexercised warrants (prior to the completion of the Warrant Exchange) with the dilutive effect calculated using the Treasury Stock Method, (ii) unvested performance restricted stock units with the dilutive effect calculated using the Contingently Issuable Method, and (iii) non-controlling interest THG units and Series A Convertible Preferred Stock, with the dilutive effect calculated using the more dilutive of the If-Converted Method and the Two-Class Method.

In periods in which the Company reports a net loss attributable to Class A Common Stockholders, diluted net loss per share attributable to Class A Common Stockholders would be equal to basic net loss per share because potentially dilutive shares of Class A Common Stock are not assumed to be issued if their effect is anti-dilutive.

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The following table summarizes the basic and diluted earnings per share calculations for the three and nine months ended September 30, 2025 and 2024:


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024

	in thousands (except per share amounts)
Basic Earnings per Share
Net income available to Class A Common Stockholders	$	17,696	$	2,798	$	32,174	$	7,753
Weighted average shares of Class A Common Stock outstanding	96,167		89,691		92,326		86,689
Basic earnings per share	$	0.18	$	0.03	$	0.35	$	0.09

Diluted Earnings per Share
Net income available to Class A Common Stockholders	$	39,408	$	2,798	$	100,699	$	7,802
Weighted average shares of Class A Common Stock outstanding	347,240		89,691		346,672		87,601
Diluted earnings per share	$	0.11	$	0.03	$	0.29	$	0.09

Net income available to Class A Common Stockholders
Net income	$	46,171	$	19,007	$	120,666	$	69,863
Net income attributable to non-controlling interest	(25,323)		(14,122)		(80,474)		(55,951)

Accretion of Series A Convertible Preferred Stock	(1,903)		(1,875)		(5,653)		(5,552)
Undistributed earnings allocated to Series A Convertible Preferred Stock	(1,249)		(212)		(2,365)		(607)
Net income available to Class A Common Stockholders, Basic	17,696		2,798		32,174		7,753
Undistributed earnings allocated to Series A Convertible Preferred Stock	479		—		394		—
Adjustment for potentially dilutive THG units	21,146		—		68,059		—

Adjustment for potentially dilutive share-based compensation awards	87		—		72		49

Net income available to Class A Common Stockholders, Diluted	$	39,408	$	2,798	$	100,699	$	7,802

Weighted Average Shares of Class A Common Stock Outstanding
Weighted average shares of Class A Common Stock outstanding, Basic	96,167		89,691		92,326		86,689
Adjustment for potentially dilutive THG units	249,870		—		253,363		—

Adjustment for potentially dilutive share-based compensation awards	1,203		—		983		912

Weighted average shares of Class A Common Stock outstanding, Diluted	347,240		89,691		346,672		87,601

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The following table summarizes the weighted average potential shares of Class A Common Stock excluded from diluted earnings per share of Class A Common Stock as their effect would be anti-dilutive for the three and nine months ended September 30, 2025 and 2024:


	Three months ended September 30,		Nine months ended September 30,
	2025	2024	2025	2024

	in thousands
THG units	—	255,252	—	255,378
Series A Convertible Preferred Stock	6,785	6,785	6,785	6,785
Unvested shares associated with share-based compensation awards	4,080	7,746	3,941	3,918

Total	10,865	269,783	10,726	266,081

20 — Taxation

United States — With the exception of certain U.S. corporate and foreign subsidiaries, THG is taxed as a pass-through ownership structure under provisions of the Internal Revenue Code ("IRC") and a similar section of state income tax law. As such, any taxable income or loss generated by THG is passed through to and included in the taxable income or loss of THG unit holders, including Hagerty, Inc.

Hagerty, Inc. is taxed as a corporation under the IRC and pays corporate, federal, state, and local taxes with respect to income allocated from THG. Hagerty, Inc., Hagerty Insurance Holdings, Inc., Broad Arrow, Hagerty Radwood, Inc., and various foreign subsidiaries are treated as taxable entities and income taxes are provided where applicable. Hagerty Insurance Holdings, Inc. files a consolidated tax return with its wholly owned corporate subsidiaries Hagerty Re and Drivers Edge.

Canada — Hagerty's Canadian entities are taxed as non-resident corporations and subject to income tax in Canada under provisions of the Canadian Revenue Agency.

United Kingdom — Hagerty's U.K. entities are taxed as corporations and subject to income tax in the U.K. under provisions of HM Revenue & Customs.

Bermuda — Hagerty Re made an irrevocable election under Section 953(d) of the IRC, as amended, to be taxed as a U.S. domestic corporation. As a result, Hagerty Re is subject to U.S. taxation on its world-wide income as if it were a U.S. corporation. In accordance with an agreement between Hagerty Re and the IRS, Hagerty Re established an irrevocable letter of credit with the Internal Revenue Service ("IRS") in 2021.

Tax Legislation — On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted. The law contains several key provisions including the reinstatement of immediate expensing of qualifying research and development expenses and permanent extensions of certain provisions within the Tax Cuts and Jobs Act. The immediate expensing provisions of the OBBBA is expected to reduce the Company's cash taxes payable for the 2025 tax year. Additionally, the OBBBA enacted changes to the entity aggregation rule, which ensures that all related companies within a corporate group are treated as one single entity when applying the limitations on deductibility of executive compensation. These changes resulted in a $1.0 million reduction to Company's deferred tax assets related to share-based compensation and a corresponding recognition of income tax expense in the third quarter of 2025.

The Organisation for Economic Co-operation and Development has a framework to implement a global minimum corporate tax rate of 15% for companies with global revenues and profits above certain thresholds (referred to as "Pillar 2"). Certain aspects of Pillar 2 became effective on January 1, 2024 and other aspects became effective on January 1, 2025. While it's uncertain whether the U.S. will enact legislation to adopt Pillar 2, certain countries in which the Company operates have adopted legislation, and other countries are in the process of introducing legislation to implement Pillar 2. While the Company's effective income tax rate and cash income tax payments could increase in future years as a result of the global minimum tax, management does not expect there will be a material impact to the Company's effective tax rate or its results of operations. The Company's assessment could be affected by legislative guidance and future enactment of additional provisions within the Pillar 2 framework.

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Income Tax Expense — For the nine months ended September 30, 2025 and 2024, income tax expense reflected in the Condensed Consolidated Statements of Operations differs from the tax computed by applying the statutory U.S. federal rate of 21% to "Income tax (benefit) expense" as follows:


	Nine months ended September 30,
	2025				2024

	in thousands (except percentages)
Income tax expense at statutory rate	$	20,891	21.0	%	$	16,754	21.0	%
State taxes	38		—	%	360		0.5	%
Net impact of noncontrolling interest and non-partnership operations on partnership outside basis	(4,983)		(5.0)	%	(7,992)		(10.0)	%
Foreign rate differential	11		—	%	(165)		(0.2)	%
Change in valuation allowance	(38,072)		(38.3)	%	(1,319)		(1.7)	%
(Gain) loss related to warrant liabilities, net	—		—	%	1,794		2.2	%
Permanent items	1,124		1.1	%	507		0.6	%
Effect of changes in tax rates	475		0.5	%	—		—	%
Other, net	(668)		(0.7)	%	(21)		—	%
Income tax (benefit) expense	$	(21,184)	(21.4)	%	$	9,918	12.4	%

Deferred Tax Assets — The Company has historically maintained a full valuation allowance on its deferred tax assets related to the difference between the outside tax basis and book basis of its investment in the assets of THG. The realization of deferred tax assets is dependent upon the generation of future taxable income sufficient to utilize these deferred tax assets. As of December 31, 2024, management concluded that it was more likely than not that certain deferred tax assets, including the deferred tax asset for the investment in the assets of THG, would not be realized because the Company was in a three-year cumulative loss position and the generation of sufficient future taxable income to utilize these deferred tax assets was uncertain.

As of each reporting period, management considers new evidence, both positive and negative, that could affect its view of the future realization of its deferred tax assets. As of September 30, 2025, management's continued assessment of the realizability of the Company's deferred tax assets concluded that sufficient future taxable income will be generated to realize a portion of the deferred tax assets related to the outside basis in its investment in THG and other tax attributes of the Hagerty, Inc. filing entity. In assessing the realizability of these deferred tax assets, management considered all sources of positive and negative evidence, including (i) that the Company had achieved cumulative three-year profitability during the quarter; (ii) that the Company's forecasts indicated continued profitability; and (iii) other positive business factors. Based on this evaluation, management determined it was appropriate to release a portion of the valuation allowance previously recorded against the Company's federal and state deferred tax assets. As a result, $38.1 million of the valuation allowance was released during the third quarter of 2025 and a corresponding income tax benefit was recognized within "Income tax (expense) benefit" on the Condensed Consolidated Statements of Operations.

As of September 30, 2025 and December 31, 2024, the Company had deferred tax assets of $168.0 million and $148.1 million, respectively, related to the outside basis difference in its investment in THG. A portion of the total outside basis difference is expected to reverse only upon the eventual sale of the Company's interest in THG, which would likely result in a capital loss. Accordingly, as of September 30, 2025 and December 31, 2024, the Company maintained a corresponding valuation allowance of $136.8 million and $148.1 million, respectively, against the deferred tax assets associated with the outside basis difference.

Tax Examinations — The Company is subject to taxation and files income tax returns in the U.S. federal jurisdiction, as well as many state and foreign jurisdictions. As of September 30, 2025, tax years 2020 to 2023 are subject to examination by various tax authorities. With few exceptions, as of September 30, 2025, the Company is no longer subject to U.S. federal, state, local or foreign examinations for years before 2020. THG is currently under audit by the IRS for the 2021 tax year.

The Canadian Revenue Agency closed its examinations of the Company for the 2018 tax year in March 2024 and for the 2020-2022 tax years in February 2025, with no changes to previously filed tax returns.

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Uncertain Tax Positions — The calculation of the Company's tax liabilities involves uncertainties in the application of complex tax laws and regulations in a multitude of jurisdictions across its global operations. ASC Topic 740, Income Taxes ("ASC 740") states that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits.

The Company records uncertain tax benefits ("UTB") as liabilities in accordance with ASC 740 and adjusts these liabilities when management's conclusion changes as a result of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the current estimate of the UTB liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which new information is available.

As of September 30, 2025 and December 31, 2024, the Company did not have any unrecognized tax benefits and had no material accrued interest or penalties related to uncertain tax positions. If recorded, interest and penalties would be recorded within "Income tax (expense) benefit" in the Condensed Consolidated Statements of Operations.

TRA Liability — In connection with the consummation of the business combination that formed Hagerty, Inc. in 2021, Hagerty, Inc. entered into a TRA with the Legacy Unit Holders. The TRA provides for payment to the Legacy Unit Holders of 85% of the U.S. federal, state and local income tax savings realized by Hagerty, Inc. as a result of the increases in tax basis and certain other tax benefits, as outlined in the Business Combination Agreement, upon the exchange of THG units and shares of Hagerty, Inc. Class V Common Stock for shares of Hagerty, Inc. Class A Common Stock or cash. The Business Combination Agreement is provided as Exhibit 2.1, incorporated by reference within Item 6. Exhibits, in this Quarterly Report. In connection with the filing of its 2019 income tax return, THG made an election under Section 754 of the IRC for each taxable year in which TRA exchanges occur. This election cannot be revoked without the permission of the IRS Commissioner and will be in place for any future exchange of THG units. The remaining 15% cash tax savings resulting from the basis adjustments will be retained by Hagerty, Inc.

The amount and timing of any payments under the TRA will vary depending on a number of factors, including, but not limited to, the increase in tax basis of THG's assets, the timing of any future redemptions, exchanges or purchases of THG units held by Legacy Unit Holders, the price of Hagerty, Inc. Class A Common Stock at the time of the redemption, exchange or purchase, the extent to which redemptions or exchanges are taxable, the amount and timing of the taxable income that Hagerty, Inc. generates in the future, the tax rates then applicable, and the portion of the payments under the TRA constituting imputed interest.

In general, under the TRA, cash tax savings result in a year when the tax liability of Hagerty, Inc. for the year, computed without regard to the deductions attributable to the amortization of the basis increase and other deductions that arise in connection with the payment of the cash consideration under the TRA or the exchange of THG units and shares of Hagerty, Inc. Class V Common Stock for shares of Hagerty, Inc. Class A Common Stock, would be more than the tax liability for the year taking into account such deductions. Payments under the TRA are due when the Company produces taxable income and the resulting cash tax liability is reduced by deducting the amortization of the basis increase on a filed tax return. The payments under the TRA are expected to be substantial.

The estimation of the TRA Liability is, by its nature, imprecise and subject to significant assumptions regarding the amount and timing of Hagerty Inc.'s future taxable income. Based on Hagerty, Inc.'s forecast of future taxable income, as of September 30, 2025, the estimated value of the TRA Liability was $39.9 million, including $34.8 million recorded in the third quarter of 2025. This amount includes (i) $5.6 million related to the THG Unit Exchange and recorded as an increase to "Additional paid-in capital" on the Condensed Consolidated Balance Sheets and (ii) $29.2 million related to prior THG unit exchanges and recorded in connection with the release of the valuation allowance within "Interest and other income (expense), net" on the Condensed Consolidated Statements of Operations. Refer to Note 17 — Stockholders' Equity for additional information about the THG Unit Exchange.

As of September 30, 2025, $2.0 million of the $39.9 million TRA Liability was classified as a current liability within "Accounts payable, accrued expenses and other current liabilities" and $37.9 million was classified as a long-term liability within "Tax receivable agreement liability" on the Condensed Consolidated Balance Sheets. As of December 31, 2024, the estimated value of the TRA Liability was $2.2 million, of which $0.2 million was classified as a current liability within "Accounts payable, accrued expenses and other current liabilities" and $2.0 million was classified as a long-term liability within "Tax receivable agreement liability" on the Condensed Consolidated Balance Sheets.

For the three and nine months ended September 30, 2025, changes in the value of the TRA Liability recorded within "Interest and other income (expense), net" on the Condensed Consolidated Statements of Operations were $29.2 million and $32.3 million, respectively. For the three and nine months ended September 30, 2024, the change in the value of the TRA Liability recorded within "Interest and other income (expense), net" on the Condensed Consolidated Statements of Operations was $1.3 million.

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During the nine months ended September 30, 2025, Hagerty, Inc. made TRA payments of $0.2 million to the Legacy Unit Holders. There were no such TRA payments during the nine months ended September 30, 2024.

21 — Related-Party Transactions

As of September 30, 2025, Markel and State Farm had the following equity interests in Hagerty and, as a result, are considered related parties:


	Markel			State Farm
Equity Interest	Shares/Units	Percentage of total outstanding (1)		Shares/Units	Percentage of total outstanding (1)
Hagerty, Inc. Class A Common Stock	3,108,000	3.1	%	51,800,000	51.6	%
Hagerty, Inc. Class V Common Stock	75,000,000	31.0	%	—	—	%
Hagerty, Inc. Series A Convertible Preferred Stock	1,590,668	18.8	%	5,302,226	62.5	%
THG units	75,000,000	21.7	%	—	—	%

Controlling interest	3,108,000	3.1	%	51,800,000	51.6	%
Non-controlling interest	75,000,000	30.5	%	—	—	%

(1) The percentages reflected represent only the ownership of the specific security identified in each row, and are not reflective of the total economic ownership in Hagerty.

Refer to Note 17 — Stockholders' Equity and Note 16 — Convertible Preferred Stock for a description of each equity interest in the table above.

Markel

Alliance Agreement

The Company and Markel have an alliance agreement (the "Markel Alliance Agreement") and associated agency agreement pursuant to which policies sold by Hagerty's U.S. MGAs are underwritten by Essentia Insurance Company and reinsured with Evanston Insurance Company ("Evanston"), both of which are wholly owned subsidiaries of Markel.

The following tables provide information related to Markel-affiliated "Commission revenue" and "Due to insurer" liabilities associated with the Markel Alliance Agreement:


	Three months ended September 30,						Nine months ended September 30,
	2025			2024			2025			2024

	in thousands (except percentages)
Commission revenue	$	122,386		$	105,461		$	343,813		$	305,105
Percent of total	91		%	92		%	92		%	93		%


	September 30,			December 31,
	2025			2024

	in thousands (except percentages)
Due to insurer	$	123,343		$	78,792
Percent of total	92		%	94		%

Refer to Note 4 — Revenue for information on related party balances within "Commissions receivable," which primarily consist of CUC receivables due from Markel.

Reinsurance Agreement

Hagerty Re has a quota share agreement with Evanston to assume approximately 80% of the risks written through the Company's U.S. MGAs, with the exception of High-Net-Worth Accounts, in which Hagerty Re assumes 100% of the risk. Refer to Note 14 — Reinsurance for additional information on the Company's reinsurance programs.

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The following tables summarize all balances related to the Company's reinsurance business with Markel subsidiaries:


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024

Revenue:	in thousands
Earned premium, net	$	191,315	$	170,921	$	549,289	$	489,577
Expenses:
Ceding commission, net	$	88,998	$	79,193	$	253,333	$	226,589
Losses and loss adjustment expenses	78,194		98,070		232,703		227,491
Total expenses	$	167,192	$	177,263	$	486,036	$	454,080


	September 30,		December 31,
	2025		2024

Assets:	in thousands
Premiums receivable	$	221,014	$	150,436
Commissions receivable	1,326		489
Deferred acquisition costs, net	194,169		160,360
Other current assets	4,505		2,926
Total assets	$	421,014	$	314,211
Liabilities:
Accounts payable, accrued expenses and other current liabilities	$	2,381	$	806
Losses payable and provision for unpaid losses and loss adjustment expenses	261,300		254,422
Ceding commissions payable	103,319		76,001
Unearned premiums	420,353		347,501
Total liabilities	$	787,353	$	678,730

Pursuant to the terms of the quota share agreement with Evanston, Hagerty Re maintains assets in trust for the benefit of Evanston. These assets are included within "Restricted cash and cash equivalents" and "Investments" on the Company's Condensed Consolidated Balance Sheets. The assets held in trust for the benefit of Evanston totaled $650.1 million and $589.2 million as of September 30, 2025 and December 31, 2024, respectively.

State Farm

Alliance Agreement

Hagerty has a 10-year master alliance agreement and associated managing general underwriter agreement with State Farm, under which State Farm Classic+ policies are offered to State Farm's customers through State Farm agents. This program began issuing policies in certain states in September 2023. Several states were added in the nine months ended September 30, 2025, with additional states planned for the remainder of 2025 and 2026. Under the master alliance agreement, State Farm paid Hagerty an advanced commission of $20.0 million, which is being recognized as "Commission and fee revenue" over the remaining life of the arrangement. In addition, the Company is paid a commission for underwriting, binding coverage, and issuing State Farm Classic+ policies and can offer HDC memberships to State Farm Classic+ customers, providing Hagerty with an additional revenue opportunity.

Reinsurance Agreement

Hagerty Re has a quota share agreement to cede 50% of the risk assumed from a subsidiary of Markel in relation to High-Net-Worth Accounts to Oglesby Reinsurance Company, a wholly owned subsidiary of State Farm. Refer to Note 14 — Reinsurance for additional information on the Company's reinsurance programs.

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The following tables summarize all balances related to the risk ceded by Hagerty Re to State Farm subsidiaries:


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024

Revenue:	in thousands
Earned premium, net (1)	$	(4,923)	$	(4,089)	$	(14,114)	$	(12,111)
Expenses:
Ceding commission, net (2)	$	(2,559)	$	(2,126)	$	(7,339)	$	(6,298)
Losses and loss adjustment expenses (3)	(1,577)		(906)		(9,084)		(4,510)
Total expenses	$	(4,136)	$	(3,032)	$	(16,423)	$	(10,808)

(1) Represents premiums ceded to State Farm subsidiaries, which are accounted for as a reduction to "Earned premium, net".

(2) Represents commissions from State Farm subsidiaries related to ceded reinsurance, which are accounted for as a reduction to "Ceding commissions, net".

(3) Represents loss recoveries associated with reinsurance ceded to State Farm subsidiaries, which are accounted for as a reduction to "Losses and loss adjustment expenses".


	September 30,		December 31,
	2025		2024

Assets:	in thousands
Commissions receivable	$	2,780	$	2,095
Deferred acquisition costs, net (1)	(5,330)		(4,448)
Other current assets (2)	17,596		14,758
Total assets	$	15,046	$	12,405
Liabilities:
Accounts payable, accrued expenses and other current liabilities (3)	$	5,346	$	4,028
Total liabilities	$	5,346	$	4,028

(1) Represents unearned ceding commission received from State Farm subsidiaries.

(2) Represents unearned deferred ceded premium and reinsurance recoverables from State Farm subsidiaries.

(3) Represents reinsurance premiums due to State Farm subsidiaries.

State Farm Term Loan

In September 2023, Hagerty Re entered into an unsecured term loan facility with State Farm in an aggregate principal amount of $25.0 million and an interest rate of 8.0% per annum. The State Farm Term Loan will mature in September 2033. Refer to Note 15 — Debt for additional information.

Other Related Party Transactions

From time-to-time, in the ordinary course of business, related parties, such as members of the Board and management, purchase insurance policies from the Company, receive payments on claims required by the Company's insurance policies, and buy and sell collector cars and enthusiast vehicles through marketplace auctions or in private transactions.

22 — Commitments and Contingencies

Employee Compensation Agreements — In the ordinary course of conducting its business, the Company enters into certain employee compensation agreements from time to time which commit it to severance obligations in the event an employee terminates employment with the Company. If applicable, these obligations are recorded as accrued expenses on the Condensed Consolidated Balance Sheets.

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Litigation — From time to time, the Company is involved in various claims and legal actions that arise in the ordinary course of business. Management is required to assess the likelihood of any adverse judgments or outcomes related to these legal contingencies, as well as potential ranges of probable or reasonably possible losses. The determination of the amount of any losses to be recorded or disclosed as a result of these contingencies is based on a careful analysis of each individual exposure with, in some cases, the assistance of outside legal counsel. The amount of losses recorded or disclosed for such contingencies may change in the future due to new developments in each matter or a change in legal or settlement strategy. While the impact of any one or more legal claims or proceedings could be material to the Company's operating results in any period, management does not believe that the outcome of any of these pending claims or proceedings (including the data security incident discussed below), individually or in the aggregate, will have a material adverse effect on the Company's consolidated financial condition or liquidity.

Data Security Incident — In 2021, the Company experienced an unauthorized access into its online insurance quote feature whereby attackers used personal information already in their possession to obtain additional consumer data, including driver's license numbers. The unauthorized access issue has been remediated; however, the incident became the subject of coordinated industry-wide regulatory investigations. In October 2025, the Company entered into consent orders with each of the New York Department of Financial Services (the "NY DFS") and the New York Attorney General (the "NY AG") to settle all claims related to these investigations. Pursuant to the consent orders, the Company agreed to pay $1.85 million to the NY DFS and $1.3 million to the NY AG, respectively. These amounts, which were recorded as a liability in the Company's Condensed Consolidated Financial Statements prior to the third quarter of 2025, will be paid in the fourth quarter of 2025.

23 — Subsequent Events

Management has evaluated subsequent events through November 4, 2025, which is the date these Condensed Consolidated Financial Statements were issued, and no material subsequent events were identified that are required to be reported.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Annual Report on Form 10-K ("Annual Report") and our Condensed Consolidated Financial Statements and related Notes included in Item 1 of Part I of this Quarterly Report. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Please refer to the section in this Quarterly Report entitled "Cautionary Statement Regarding Forward-Looking Statements".

Overview

We are a market leader in providing insurance for collector cars and enthusiast vehicles. Through our insurance model, we act as a Managing General Agent ("MGA") by underwriting, selling, and servicing collector car and enthusiast vehicle insurance policies. Due to our consistent track record of delivering strong underwriting results, we currently reinsure approximately 80% of the risks written by our MGA subsidiaries through our wholly owned subsidiary, Hagerty Reinsurance Limited ("Hagerty Re").

We also offer Hagerty Drivers Club ("HDC") memberships, which are primarily bundled with our insurance policies and give subscribers access to an array of products and services, including emergency roadside assistance, Hagerty Drivers Club Magazine, automotive enthusiast events, our proprietary vehicle valuation tool, and special vehicle-related discounts. In addition, we offer a marketplace to complement our insurance and membership offerings where automotive enthusiasts can buy, sell, and finance collector cars and enthusiast vehicles.

Through these offerings, our vision is to be the world's most trusted and preferred brand for automotive enthusiasts to protect, buy, sell, and enjoy their special cars.

Recent Developments

Markel Proposed Fronting Arrangement

On July 24, 2025, we announced our entry into a non-binding letter of intent with respect to a proposed fronting arrangement (the "Proposed Fronting Arrangement") with Markel Group Inc. (together with its subsidiaries, "Markel"). The Proposed Fronting Arrangement is expected to be signed in the fourth quarter of 2025 and become effective on January 1, 2026. Markel is the ultimate parent company of Essentia Insurance Company ("Essentia"), which serves as the dedicated carrier for the specialty collector vehicle insurance policies sold by our U.S. MGA subsidiaries.

Under the Proposed Fronting Arrangement: (i) we would continue to issue policies through Essentia, but our underwriting authority (including pricing decisions, rate filing, insurance rating, and risk selections) and claims authority would be expanded to the maximum levels permitted by applicable law; (ii) we would increase our administrative responsibilities for the policies issued through Essentia; (iii) Hagerty Re would control 100% of the premium and assume 100% of the risk for policies written through Essentia; and (iv) Hagerty Re would initially pay a 2% fronting fee to Markel for administrative support, which would incrementally decrease based on the volume of policies issued by Essentia in each calendar year. We expect these changes to result in increased profitability and additional control allowing for enhanced operational efficiencies.

The Proposed Fronting Arrangement remains subject to the negotiation and execution of definitive documentation and the receipt of all required regulatory approvals, and there can be no assurance that the Proposed Fronting Arrangement will be completed on the terms described herein or at all.

Enthusiast+ Product

Through our wholly owned insurance carrier subsidiary, Drivers Edge Insurance Company ("Drivers Edge"), we recently launched Enthusiast+, a new insurance product tailored for modern enthusiast vehicles that are typically driven more frequently and stored more flexibly than traditional collector cars. This product is designed to broaden our addressable market by offering coverage to a wider range of vehicles and customer profiles.

Enthusiast+ policies are expected to command higher premiums and, given the distinct risk characteristics of the targeted vehicles and customer segments, are anticipated to have higher loss ratios relative to our traditional insurance offerings. The product features differentiated pricing and advanced coverage options, representing a strategic evolution in our risk profile and business model. We expect that Enthusiast+ policies will generate attractive returns for us, widen our funnel of insurable vehicles and aid in our growth.

The initial launch of Enthusiast+ took place in Colorado in the third quarter of 2025. We plan to implement a phased, nationwide rollout over the next four years. We believe that Enthusiast+ will enable us to better meet the needs of modern vehicle enthusiasts and contribute to the long-term growth and diversification of our insurance portfolio.

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Business Review

We are reviewing certain components of our operations, which in 2023 and 2024 resulted in the sale or reorganization of certain businesses, including Hagerty Garage + Social, DriveShare, and Motorsport Reg ("MSR"). This initiative supports our strategy to prioritize investments and resources in the areas of our business that offer the strongest growth and profit potential. As a result of this review, in 2023, we recognized approximately $4.0 million of losses and impairments related to actions taken with respect to Hagerty Garage + Social and DriveShare. We may incur additional losses and/or impairment charges in future periods as a result of actions which we may take related to this review.

Financial Highlights

For the three months ended September 30, 2025, we reported Net income of $46.2 million, representing a $27.2 million, or 142.9%, increase compared to the prior year, and Adjusted EBITDA of $49.7 million, representing a $25.5 million, or 105.7%, increase compared to the prior year. These improvements are primarily attributable to 16.1% growth in Written Premium, which drove an 18.0% increase in Commission and fee revenue and a 12.9% increase in Earned premium, net. The comparison to the prior year is also favorably impacted by a lower level of losses and loss adjustment expenses as prior year results included $24.7 million of estimated pre-tax losses related to Hurricane Helene. In addition, current year results reflect significantly higher levels of Broad Arrow inventory sales and private sale commissions.

For the nine months ended September 30, 2025, we reported Net income of $120.7 million, representing a $50.8 million, or 72.7%, increase compared to the prior year, and Adjusted EBITDA of $153.1 million, representing a $48.5 million, or 46.3%, increase compared to the prior year. These improvements are primarily attributable to 13.0% growth in Written Premium, which drove a 14.0% increase in Commission and fee revenue and a 12.5% increase in Earned premium, net. The comparison to the prior year is also favorably impacted by a lower level of losses and loss adjustment expenses as prior year results included $24.7 million of estimated pre-tax losses related to Hurricane Helene. In addition, current year results reflect significantly higher levels of Broad Arrow inventory sales and private sale commissions, as well as the results from Broad Arrow's inaugural auction at Concorso d’Eleganza Villa d’Este.

Adjusted EBITDA is a non-GAAP financial measure. Please see the section titled "Non-GAAP Financial Measures" below for a description of non-GAAP financial measures and a reconciliation to the most comparable GAAP measure.

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Key Performance Indicators

The tables below present a summary of our Key Performance Indicators, which include important operational metrics, as well as certain financial measures prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and non-GAAP financial measures. We use these Key Performance Indicators to evaluate our business, measure our performance, identify trends against planned initiatives, prepare financial projections, and make strategic decisions. We believe these Key Performance Indicators are useful in evaluating our performance when read together with our Condensed Consolidated Financial Statements prepared in accordance with GAAP.


	Three months ended September 30,
	2025			2024			Change

Operational Metrics	dollars in thousands (except per share amounts)
Total Written Premium (1)	$	334,048		$	287,609		$	46,439		16.1	%
Hagerty Re Loss Ratio (2)	42.0		%	60.0		%	(18.0)		%	N/M
Hagerty Re Combined Ratio (3)	89.6		%	107.7		%	(18.1)		%	N/M
New Business Count — Insurance (4)	114,513			77,418			37,095			47.9	%

GAAP Financial Measures
Total Revenue	$	379,994		$	323,374		$	56,620		17.5	%
Operating Income	$	34,317		$	10,089		$	24,228		240.1	%
Net Income	$	46,171		$	19,007		$	27,164		142.9	%
Basic Earnings Per Share	$	0.18		$	0.03		$	0.15		N/M
Diluted Earnings Per Share	$	0.11		$	0.03		$	0.08		N/M

Non-GAAP Financial Measures
Adjusted EBITDA (5)	$	49,714		$	24,165		$	25,549		105.7	%
Adjusted Earnings Per Share (5)	$	0.13		$	0.05		$	0.08		160.0	%

N/M = Not meaningful






















	Nine months ended September 30,
	2025			2024			Change

Operational Metrics	dollars in thousands (except per share amounts)
Total Written Premium (1)	$	934,360		$	827,068		$	107,292		13.0	%
Hagerty Re Loss Ratio (2)	42.1		%	47.7		%	(5.6)		%	N/M
Hagerty Re Combined Ratio (3)	89.3		%	95.1		%	(5.8)		%	N/M
New Business Count — Insurance (4)	257,694			225,753			31,941			14.1	%

GAAP Financial Measures
Total Revenue	$	1,068,286		$	908,307		$	159,979		17.6	%
Operating Income	$	107,744		$	60,380		$	47,364		78.4	%
Net Income	$	120,666		$	69,863		$	50,803		72.7	%
Basic Earnings Per Share	$	0.35		$	0.09		$	0.26		N/M
Diluted Earnings Per Share	$	0.29		$	0.09		$	0.20		N/M

Non-GAAP Financial Measures
Adjusted EBITDA (5)	$	153,066		$	104,605		$	48,461		46.3	%
Adjusted Earnings Per Share (5)	$	0.34		$	0.22		$	0.12		54.5	%

N/M = Not meaningful

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	September 30,		December 31,
	2025		2024		Change

Operational Metrics
Policies in Force (6)	1,617,231		1,506,451		110,780		7.4	%
Policies in Force Retention (7)	88.6	%	89.0	%	(0.4)	%	N/M
Vehicles in Force (8)	2,739,037		2,576,700		162,337		6.3	%
HDC Paid Member Count (9)	920,725		875,822		44,903		5.1	%
Net Promoter Score (10)	82		82		—		—	%

N/M = Not meaningful

(1) Total Written Premium is the total amount of insurance premium written by our MGA subsidiaries on behalf of our insurance carrier partners during the period. Total Written Premium reflects the direct economic benefit of our policy acquisition efforts and is closely correlated with the growth of insurance commission revenue generated by our MGA subsidiaries and earned premium generated by Hagerty Re.

(2) Hagerty Re Loss Ratio is the ratio of (i) Hagerty Re's losses and loss adjustment expenses to (ii) its earned premium. Hagerty Re Loss Ratio allows us to evaluate our historical loss patterns and make necessary and appropriate adjustments. Refer to "Losses and Loss Adjustment Expenses" below within "Components of Our Results of Operations" for additional information regarding our quarterly estimate of losses and loss adjustment expenses.

(3) Hagerty Re Combined Ratio is the ratio of (i) Hagerty Re's losses, loss adjustment expenses, and underwriting expenses to (ii) its earned premium. Hagerty Re's underwriting expenses primarily include ceding commissions and, to a lesser extent, certain administrative expenses. Hagerty Re Combined Ratio provides a benchmark to evaluate underwriting profitability. A combined ratio under 100% indicates underwriting income while a combined ratio exceeding 100% indicates an underwriting loss.

(4) New Business Count represents the number of new insurance policies issued by our MGA subsidiaries during the period. New Business Count is an important metric to assess our financial performance because policy growth is critical to our success. While we benefit from strong policy retention through renewals, new policies more than offset those cancelled or non-renewed at expiration. New policies also often mean new relationships and an opportunity to sell additional products and services.

(5) Refer to "Non-GAAP Financial Measures" below for a description of this non-GAAP financial measure and a reconciliation to the most comparable GAAP measure.

(6) Policies in Force ("PIF") represents the number of current and active insurance policies as of the end of the period. PIF is an important metric to assess our financial performance because policy growth drives revenue growth, increases brand awareness and market penetration, generates additional insight to improve the performance of our platform, and provides key data to assist us in strategic decision making.

(7) PIF Retention represents the percentage of expiring insurance policies that are renewed on the renewal effective date, calculated on a rolling twelve months basis. PIF Retention is an important measurement of the number of policies retained each year, which contributes to our recurring revenue streams including commissions earned by our MGA subsidiaries, HDC membership fees, and earned premium generated by Hagerty Re.

(8) Vehicles in Force represents the number of current insured vehicles as of the end of the period. Vehicles in Force is an important metric to assess our financial performance because insured vehicle growth drives revenue growth and increases market penetration.

(9) HDC Paid Member Count represents the number of current Members who pay an annual membership subscription as of the end of the period. HDC Paid Member Count is an important metric because it helps us measure membership revenue growth and provides an opportunity to customize our value proposition and benefits to specific types of enthusiasts, both by demographic and vehicle interest.

(10) Net Promoter Score ("NPS") is an important measure of the overall strength of our relationship with insurance policyholders and paid HDC subscribers (collectively referred to as "Members"). NPS is measured twice annually through a web-based survey sent by email invitation to a random sample of existing Members, which currently excludes customers in our marketplace business, and is reported annually using an average of the two surveys. Often referred to as a barometer of brand loyalty and engagement, NPS is well-known in our industry as a strong indicator of growth and retention.

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Components of Our Results of Operations

Revenue

Commission and fee revenue

We generate commission and fee revenue through our MGA subsidiaries, primarily from the underwriting, sale, and servicing of collector car and enthusiast vehicle insurance policies on behalf of our insurance carrier partners. Commissions are earned for both new and renewed policies. Commission and fee revenue is earned when the policy becomes effective, net of allowances for policy changes and cancellations.

Under the terms of our contracts with certain insurance carrier partners, we have the opportunity to earn a contingent underwriting commission based on the results of the book of business, including the level of written or earned premium and loss ratio. Contingent underwriting commissions ("CUC") are recognized in the period that the policy is issued based on our estimate of the amount that we will become entitled to receive during the calendar year such that a significant reversal of revenue is not probable.

Earned premium, net

Earned premium, net represents the earned portion of written premiums that Hagerty Re has assumed under quota share reinsurance agreements with our insurance carrier partners, net of premiums ceded to various reinsurers and the cost of catastrophe reinsurance coverage. Premiums assumed and ceded are recognized on a pro-rata basis over the term of the reinsured policies, which is generally 12 months. The cost of catastrophe reinsurance coverage is recognized over the contract period in proportion to the related earned premium.

Membership, marketplace and other revenue

We earn subscription revenue through HDC memberships, which are primarily bundled with our insurance policies and give subscribers access to an array of products and services, including emergency roadside assistance, Hagerty Drivers Club Magazine, automotive enthusiast events, our proprietary vehicle valuation tool, and special vehicle-related discounts.

Revenue from the sale of HDC memberships is recognized ratably over the period of the membership. The membership is treated as a single performance obligation to provide access to stated Member benefits over the life of the membership, which is currently one year.

Our marketplace business earns fee-based revenue primarily from the sale of collector cars and enthusiast vehicles through live auctions, time-based digital auctions, and brokered private sales. Through our marketplace business, we also earn revenue from the sale of collector cars and enthusiast vehicles that we have opportunistically acquired for resale. In addition, we earn finance revenue from loans made to qualified collectors and businesses secured by their collector cars.

Fee-based marketplace revenue is recognized when the underlying sale is completed, which is generally upon the matching of a seller and buyer in a legally binding auction or private sale transaction. Revenue from the sale of acquired collector cars and enthusiast vehicles is recognized at the point in time when title and control of the vehicle is transferred to the buyer, which is generally upon collection of the full purchase price. Finance revenue is recognized over time as earned based on the amount of the outstanding loan, the applicable interest rate on the loan, and the length of time the loan was outstanding during the period.

Operating Expenses

Salaries and benefits

Salaries and benefits consist primarily of costs related to employee compensation, payroll taxes, employee benefits, and employee development costs. Employee compensation includes wages, as well as various forms of incentive compensation, including share-based compensation. Employee benefits primarily include the cost of our retirement, medical, dental, wellness, and severance plans. Costs related to employee education, training, and recruiting are considered employee development costs. Salaries and benefits are expensed as incurred except for costs that are required to be capitalized, which are amortized over the useful life of the asset created, such as internally developed software and software-as-a-service ("SaaS") implementation costs. Salaries and benefits are expected to increase in dollar amount over time as the business continues to grow but will likely decrease as a percent of revenue.

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Ceding commissions, net

Ceding commissions, net represents the commissions paid by Hagerty Re to insurance carrier partners for the risk assumed under the quota share agreements with those carriers. These commissions represent Hagerty Re's pro-rata share of the carrier's costs including (i) policy acquisition costs, which consists of the commissions earned by our MGA subsidiaries, (ii) general and administrative costs, and (iii) other costs. Ceding commissions are recorded net of commissions received by Hagerty Re related to ceded reinsurance premiums. Ceding commissions, net is recognized ratably over the term of the related reinsurance policies, which is generally 12 months.

Losses and loss adjustment expenses

Losses and loss adjustment expenses represent our best estimate of the losses and associated settlement costs related to the risks assumed by Hagerty Re. Losses consist of claims paid, case reserves, and incurred but not reported costs, which are recorded net of estimated recoveries from reinsurance, salvage and subrogation. Loss adjustment expenses consist of the cost associated with processing and settling claims.

We record an estimate of quarterly losses and loss adjustment expenses in the Condensed Consolidated Statements of Operations using an annual loss ratio, which is based on statistical analysis performed by our internal and external actuarial teams and considers several factors, including projected levels of catastrophe events. Management believes this approach provides a more consistent view of loss experience over the year given the seasonality of Hagerty Re's business. The annual loss ratio is reviewed throughout the year and adjusted, as necessary.

Sales expense

Sales expense includes costs related to the sale and servicing of insurance policies, as well as costs related to our membership and marketplace offerings, such as broker expense, cost of sales, promotion expense, and travel and entertainment expenses. Broker expense is the compensation paid to our agent partners and national broker partners when an insurance policy is written by our MGA subsidiaries through a broker relationship. Broker expense generally trends with written premium growth. Cost of sales includes payment processing fees, emergency roadside service costs, postage and other variable costs associated with the sale and servicing of a policy. Cost of sales also includes the cost of acquired vehicles sold through our marketplace business, and sales commissions related to our marketplace business, as well as interest expense and borrowing costs associated with the Broad Arrow Capital LLC ("BAC") credit facility ("BAC Credit Facility"). Promotion expense includes various costs related to branding, events, advertising, marketing, and customer acquisition. Sales expenses, in general, are expensed as incurred and will trend with revenue growth.

General and administrative expenses

General and administrative expenses primarily consists of expenses related to non-capitalized hardware and software, professional services, and occupancy costs. These costs are expensed as incurred. We expect this expense category to modestly increase in dollar amount over time as the business continues to grow but will likely decrease as a percentage of revenue over the next few years after we reach scale to handle incoming business from new partnerships.

Depreciation and amortization

Depreciation and amortization reflects the recognition of the cost of our investments in various assets over their useful lives. Depreciation expense relates to computer hardware, furniture and equipment, and leasehold improvements. Amortization relates to internally developed software, SaaS implementation costs, and finite-lived intangible assets associated with acquisitions. Depreciation and amortization are expected to increase in dollar amount over time but will likely decrease as a percent of revenue as investments in platform technology reach scale.

Other Items

Loss related to warrant liabilities, net

In July 2024, we completed an exchange offer under which holders of our warrants were issued 3,876,201 shares of Class A Common Stock in exchange for 19,483,539 warrants, with a nominal cash settlement paid in lieu of fractional shares (the "Warrant Exchange"). No warrants remained outstanding following the completion of the Warrant Exchange.

Prior to the Warrant Exchange, our warrants were accounted for as liabilities and were measured at fair value each reporting period, with changes in fair value recognized as non-operating income (expense) in our Condensed Consolidated Statements of Operations. In general, under the fair value accounting model, in periods when our stock price increased, the warrant liability increased, and we recognized additional expense. In periods when our stock price decreased, the warrant liability decreased, and we recognized additional income.

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Interest and other income (expense), net

Interest and other income (expense), net primarily includes interest income related to cash balances and fixed maturity securities, realized gains or losses from the sale of fixed maturity securities, and realized and unrealized gains and losses related to equity securities. Additionally, Interest and other income (expense), net includes interest expense related to outstanding borrowings, primarily related to our current and prior revolving credit facilities with JPMorgan Chase Bank, N.A. ("JPM"), as well as the State Farm Term Loan (as defined in Note 15 — Debt in Item 1 of Part I of this Quarterly Report). Lastly, Interest and other income (expense), net also includes expense related to changes in the value of the liability related to our Tax Receivable Agreement ("TRA") (the "TRA Liability") with Hagerty Holding Corp. ("HHC") and Markel (together the "Legacy Unit Holders"). Refer to Note 20 — Taxation in Item 1 of Part I of this Quarterly Report for additional information related to the TRA.

Income tax (expense) benefit

The Hagerty Group, LLC ("THG") is taxed as a pass-through ownership structure under provisions of the Internal Revenue Code ("IRC") and a similar section of state income tax law. As such, any taxable income or loss generated by THG is passed through to and included in the taxable income or loss of THG unit holders, including Hagerty, Inc.

Hagerty, Inc. is taxed as a corporation and pays corporate federal, state, and local taxes with respect to income allocated from THG. Hagerty, Inc., Hagerty Insurance Holdings, Inc., Broad Arrow Group, Inc. ("Broad Arrow"), Hagerty Radwood, Inc., and various foreign subsidiaries are treated as taxable entities and income taxes are provided where applicable. Hagerty Insurance Holdings, Inc. files a consolidated tax return with its wholly owned corporate subsidiaries Hagerty Re and Drivers Edge.

Results of Operations

Three Months Ended September 30, 2025 compared to the Three Months Ended September 30, 2024

The following table summarizes our results of operations for the three months ended September 30, 2025 and 2024, and the dollar and percentage changes between the two periods:


	Three months ended September 30,
	2025		2024		$ Change		% Change

REVENUE:	in thousands (except percentages)
Commission and fee revenue	$	137,103	$	116,161	$	20,942	18.0	%
Earned premium, net	187,039		165,686		21,353		12.9	%
Membership, marketplace and other revenue	55,852		41,527		14,325		34.5	%
Total revenue	379,994		323,374		56,620		17.5	%
OPERATING EXPENSES:
Salaries and benefits	68,110		47,192		20,918		44.3	%
Ceding commissions, net	87,411		77,501		9,910		12.8	%
Losses and loss adjustment expenses	78,626		99,430		(20,804)		(20.9)	%
Sales expense	77,672		59,141		18,531		31.3	%
General and administrative expenses	24,445		20,837		3,608		17.3	%
Depreciation and amortization	9,413		9,184		229		2.5	%
Total operating expenses	345,677		313,285		32,392		10.3	%
OPERATING INCOME	34,317		10,089		24,228		240.1	%
Loss related to warrant liabilities, net	—		(463)		463		N/M
Interest and other income (expense), net	(20,980)		8,359		(29,339)		N/M
INCOME BEFORE TAXES	13,337		17,985		(4,648)		(25.8)	%
Income tax benefit	32,834		1,022		31,812		N/M
NET INCOME	$	46,171	$	19,007	$	27,164	142.9	%

N/M = Not meaningful

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Revenue

Commission and fee revenue

Commission and fee revenue was $137.1 million for the three months ended September 30, 2025, an increase of $20.9 million, or 18.0%, compared to 2024. This increase was driven by both policy renewals and new policies, which contributed $15.3 million and $5.6 million, respectively, to the year-over-year improvement.

The increase in revenue from policy renewals was primarily driven by a 14.6% increase in underlying policy premiums, as well as continued strong policy retention. The increase in renewal policy premiums is the result of rate increases in several states due to inflation and higher vehicle repair costs, both of which drive higher premiums and, in turn, higher commission revenue. The increase in revenue from new policies was driven by a 47.9% increase in new policies written when compared to the prior year period, principally resulting from business generated by our master alliance agreement with State Farm Mutual Automobile Insurance Company ("State Farm"). Refer to Note 21 — Related-Party Transactions in Item 1 of Part I of this Quarterly Report for additional information with respect to our master alliance agreement with State Farm.

Commission and fee revenue from agent sources increased $12.3 million, or 19.3%, and Commission and fee revenue from direct sources increased $8.6 million, or 16.5%, during the three months ended September 30, 2025. Commission rates vary based on geography, but do not differ by distribution channel (i.e., whether they are direct-sourced or agent-sourced).

Earned premium, net

Earned premium, net was $187.0 million for the three months ended September 30, 2025, an increase of $21.4 million, or 12.9%, compared to 2024. This increase was primarily due to continued growth of subject premiums written through our MGA subsidiaries, which increased $33.3 million, or 12.9%, compared to the three months ended September 30, 2024.

The following tables present the amount of premiums assumed and earned, as well as the related quota share percentages for the three months ended September 30, 2025 and 2024:


	Three months ended September 30, 2025
	U.S.			Canada			U.K. (1)			Total

	in thousands (except percentages)
Subject premium (2)	$	271,043		$	19,532		$	—		$	290,575
Quota share percentage	81.0		%	50.0		%	80.0		%	78.8		%
Assumed premium	219,116			9,766			—			228,882
Reinsurance premiums ceded										(10,999)
Net assumed premium										217,883
Change in unearned premiums										(29,202)
Change in deferred reinsurance premiums										(1,642)
Earned premium, net										$	187,039

(1) Effective January 1, 2024, we are no longer reinsuring classic auto risks produced by our United Kingdom ("U.K.") MGA affiliate, and the book is in run-off.

(2) Represents the portion of total written premium written by our MGA subsidiaries that is subject to reinsurance agreements with our insurance carrier partners.

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	Three months ended September 30, 2024
	U.S.			Canada			U.K. (1)			Total

	in thousands (except percentages)
Subject premium (2)	$	239,301		$	17,967		$	(4)		$	257,264
Quota share percentage	81.0		%	35.0		%	80.0		%	77.6		%
Assumed premium	193,437			6,288			(4)			199,721
Reinsurance premiums ceded										(9,906)
Net assumed premium										189,815
Change in unearned premiums										(23,109)
Change in deferred reinsurance premiums										(1,020)
Earned premium, net										$	165,686

(1) Effective January 1, 2024, we are no longer reinsuring classic auto risks produced by our U.K. MGA affiliate, and the book is in run-off.

(2) Represents the portion of total written premium written by our MGA subsidiaries that is subject to reinsurance agreements with our insurance carrier partners.

Membership, marketplace and other revenue

Membership, marketplace and other revenue was $55.9 million for the three months ended September 30, 2025, an increase of $14.3 million, or 34.5%, compared to 2024.

Membership fee revenue was $16.0 million for the three months ended September 30, 2025, an increase of $1.2 million, or 7.9%, compared to 2024, which was primarily attributable to a $1.0 million, or 7.6%, increase in revenue attributable to new insurance policies issued with a bundled HDC membership. For the three months ended September 30, 2025 and 2024, membership fees were 28.6% and 35.6%, respectively, of the Membership, marketplace and other revenue total.

Marketplace revenue was $34.2 million for the three months ended September 30, 2025, an increase of $12.6 million, or 58.5%, compared to 2024. This improvement was principally due to significantly higher levels of inventory sales and private sale commissions. For the three months ended September 30, 2025 and 2024, Marketplace revenue was 61.2% and 51.9%, respectively, of the Membership, marketplace and other revenue total.

Other revenue, which includes sponsorship, admission, advertising, valuation, and sublease revenue, totaled $5.7 million for the three months ended September 30, 2025, an increase of $0.6 million, or 10.7%, compared to 2024. This increase was primarily attributable to higher admission and sponsorship revenue related to our Motorlux event at Monterey Car Week, as well as higher advertising revenue. For the three months ended September 30, 2025 and 2024, other revenue was 10.2% and 12.4%, respectively, of the Membership, marketplace and other revenue total.

Costs and Expenses

Salaries and benefits

Salaries and benefits were $68.1 million for the three months ended September 30, 2025, an increase of $20.9 million, or 44.3%, compared to 2024. This increase was primarily driven by higher accrued incentive compensation, reflecting stronger performance compared to the prior year, when losses related to Hurricane Helene significantly reduced accrued incentive compensation. To a lesser extent, Salaries and benefits increased as a result of increased headcount and merit increases year-over-year.

Ceding commissions, net

Ceding commissions, net was $87.4 million for the three months ended September 30, 2025, an increase of $9.9 million, or 12.8%, compared to 2024. This increase is primarily attributable to the 12.9% increase in Earned premium, net discussed above.

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The following table summarizes the components of Ceding commissions, net for the three months ended September 30, 2025 and 2024:


	Three months ended September 30,
	2025			2024

Ceding commission:	in thousands (except percentages)
Ceding commission – reinsurance assumed	$	92,634		$	81,660
Ceding commission – reinsurance ceded	(5,223)			(4,159)
Ceding commissions, net	$	87,411		$	77,501
Percentage of earned premium	46.7		%	46.8		%

Losses and loss adjustment expenses

Losses and loss adjustment expenses were $78.6 million for the three months ended September 30, 2025, a decrease of $20.8 million, or 20.9%, compared to 2024. This decrease was primarily driven by $24.7 million of estimated pre-tax losses incurred in 2024 related to Hurricane Helene, for which there were no comparable losses in the current year period. This factor was partially offset by increased losses due to the 12.9% increase in Earned premium, net discussed above.

For the three months ended September 30, 2025, our loss ratio was 42.0%, including the impact of catastrophe losses. For the three months ended September 30, 2024, our loss ratio was 60.0%, including the impact of catastrophe losses, primarily Hurricane Helene, which resulted in $24.7 million of estimated pre-tax losses.

Sales expense

Sales expense was $77.7 million for the three months ended September 30, 2025, an increase of $18.5 million, or 31.3%, compared to 2024. This increase was due, in part, to a $14.7 million increase in cost of sales, predominantly as a result of a higher level of marketplace inventory sales, as well as a $1.8 million increase in sales commissions, consistent with revenue growth within the marketplace business. In addition, broker expense increased $2.3 million, consistent with the written premium growth within the agent insurance distribution channel.

General and administrative expenses

General and administrative expenses were $24.4 million for the three months ended September 30, 2025, an increase of $3.6 million, or 17.3%, compared to 2024. This increase was primarily attributable to a $2.8 million increase in professional fees, driven by transaction costs associated with an exchange of THG units for Class A Common Stock (the "THG Unit Exchange") and related secondary offering consummated in the third quarter of 2025, as well as professional fees related to the Proposed Fronting Arrangement and Broad Arrow's global expansion. Lastly, costs related to software-related costs increased $1.4 million, primarily driven by costs related to our new insurance policy management system. Refer to Note 17 — Stockholders' Equity in Item 1 of Part I of this Quarterly Report for additional information related to the THG Unit Exchange and related secondary offering.

Depreciation and amortization

Depreciation and amortization expense was $9.4 million for the three months ended September 30, 2025, an increase of $0.2 million, or 2.5%, compared to 2024. This increase was primarily attributable to amortization of SaaS implementation costs related to our new insurance policy management system. This increase was offset by a smaller base of in-service fixed assets and finite-lived intangible assets as of September 30, 2025.

Other Items

Loss related to warrant liabilities, net

During the three months ended September 30, 2024, Loss related to warrant liabilities, net was $0.5 million. The $0.5 million loss in the prior year period consists of a $2.0 million loss related to the Warrant Exchange, partially offset by a $1.5 million gain resulting from the change in fair value of our then outstanding warrant liabilities. There were no warrants outstanding during the three months ended September 30, 2025 due to the Warrant Exchange transaction that was completed in July 2024. Refer to Note 6 — Fair Value Measurements in Item 1 of Part I of this Quarterly Report for additional information with respect to our warrants.

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Interest and other income (expense), net

The following table presents the components of Interest and other income (expense), net for the three months ended September 30, 2025 and 2024:


	Three months ended September 30,
	2025		2024		$ Change		% Change

	in thousands (except percentages)
Interest income	$	10,259	$	9,641	$	618	6.4	%
Interest expense	(2,018)		(1,447)		(571)		39.5	%
Net investment gains	1,271		1,274		(3)		(0.2)	%
Expense related to TRA Liability	(29,197)		(1,322)		(27,875)		N/M
Other income (expense), net	(1,295)		213		(1,508)		N/M
Interest and other income (expense), net	$	(20,980)	$	8,359	$	(29,339)	N/M

N/M = Not meaningful

Interest and other income (expense), net decreased $29.3 million during the three months ended September 30, 2025, compared to 2024, primarily due to expense related to the TRA Liability. In the third quarter of 2025, we determined it was appropriate to release a portion of the valuation allowance previously recorded against our federal and state deferred tax assets. In connection with this release, we remeasured our TRA Liability, resulting in an expense of $29.2 million, recorded within Interest and other income (expense), net, representing 85% of the expected tax benefit to be paid to the Legacy Unit Holders. Refer to Note 20 — Taxation in Item 1 of Part I of this Quarterly Report for additional information.

Income tax (expense) benefit

We are the sole managing member of THG, and as a result, consolidate its financial results. THG is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, THG is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by THG is passed through and included in the taxable income or loss of its members, including Hagerty, Inc., on a pro rata basis. Hagerty, Inc. is subject to U.S. federal, state and local income taxes with respect to its allocable share of any taxable income or loss of THG, as well as any of its stand-alone income or loss. In addition, Hagerty Insurance Holdings, Inc., Broad Arrow, Hagerty Radwood, Inc. and various foreign subsidiaries are treated as taxable entities. Hagerty Insurance Holdings, Inc. files a consolidated tax return with its wholly owned corporate subsidiaries Hagerty Re and Drivers Edge.

We have historically maintained a full valuation allowance on our deferred tax assets related to the difference between the outside tax basis and book basis of our investment in the assets of THG. The realization of deferred tax assets is dependent upon the generation of future taxable income sufficient to utilize these deferred tax assets. As of each reporting date, we consider new evidence, both positive and negative, that could affect our view of the future realization of our deferred tax assets. As of December 31, 2024, we concluded that it was more likely than not that certain deferred tax assets, including the deferred tax asset for the investment in the assets of THG, would not be realized because we were in a three-year cumulative loss position and the generation of sufficient future taxable income to utilize these deferred tax assets was uncertain.

As of September 30, 2025, our continued assessment of the realizability of our deferred tax assets concluded that sufficient sources of future taxable income will be generated to realize a portion of the deferred tax assets related to the outside basis in our investment in THG and other tax attributes of the Hagerty, Inc. filing entity. In assessing the realizability of these deferred tax assets, we considered all sources of positive and negative evidence, including (i) that we had achieved cumulative three-year profitability during the quarter; (ii) that our forecasts indicated continued profitability; and (iii) other positive business factors. Based on this evaluation, we determined it was appropriate to release a portion of the valuation allowance previously recorded against our federal and state deferred tax assets. As a result, $38.1 million of the valuation allowance was released during the third quarter of 2025 and a corresponding income tax benefit was recognized within "Income tax (expense) benefit" on the Condensed Consolidated Statements of Operations.

For the three months ended September 30, 2025, we recorded an income tax benefit of $32.8 million, representing an increase of $31.8 million compared to 2024. This increase was primarily a result of the release of the valuation allowance discussed above.

Refer to Note 20 — Taxation in Item 1 of Part I of this Quarterly Report for additional information with respect to items affecting our effective tax rate.

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Nine Months Ended September 30, 2025 compared to the Nine Months Ended September 30, 2024

The following table summarizes our results of operations for the nine months ended September 30, 2025 and 2024, and the dollar and percentage change between the two periods:


	Nine months ended September 30,
	2025		2024		$ Change		% Change

REVENUE:	in thousands (except percentages)
Commission and fee revenue	$	380,677	$	333,817	$	46,860	14.0	%
Earned premium, net	534,179		474,917		59,262		12.5	%
Membership, marketplace and other revenue	153,430		99,573		53,857		54.1	%
Total revenue	1,068,286		908,307		159,979		17.6	%
OPERATING EXPENSES:
Salaries and benefits	191,275		161,001		30,274		18.8	%
Ceding commissions, net	247,682		221,877		25,805		11.6	%
Losses and loss adjustment expenses	224,969		226,515		(1,546)		(0.7)	%
Sales expense	199,678		146,791		52,887		36.0	%
General and administrative expenses	69,204		62,072		7,132		11.5	%
Depreciation and amortization	27,734		29,758		(2,024)		(6.8)	%
Gain related to divestiture	—		(87)		87		N/M
Total operating expenses	960,542		847,927		112,615		13.3	%
OPERATING INCOME	107,744		60,380		47,364		78.4	%
Loss related to warrant liabilities, net	—		(8,544)		8,544		N/M
Interest and other income (expense), net	(8,262)		27,945		(36,207)		(129.6)	%
INCOME BEFORE TAXES	99,482		79,781		19,701		24.7	%
Income tax (expense) benefit	21,184		(9,918)		31,102		N/M
NET INCOME	$	120,666	$	69,863	$	50,803	72.7	%

N/M = Not meaningful

Revenue

Commission and fee revenue

Commission and fee revenue was $380.7 million for the nine months ended September 30, 2025, an increase of $46.9 million, or 14.0%, compared to 2024. This increase was driven by policy renewals, which contributed $41.7 million to the year-over-year improvement, and to a lesser extent, new policies, which resulted in a $5.1 million increase in revenue.

The increase in revenue from policy renewals was primarily driven by a 15.0% increase in underlying policy premiums, as well as continued strong policy retention. The increase in renewal policy premiums is the result of rate increases in several states due to inflation and higher vehicle repair costs, both of which contribute to higher premiums and, in turn, higher commission revenue. The increase in revenue from new policies was primarily driven by a 14.1% increase in new policies written when compared to the prior year period, principally resulting from business generated by our master alliance agreement with State Farm. Refer to Note 21 — Related-Party Transactions in Item 1 of Part I of this Quarterly Report for additional information with respect to our master alliance agreement with State Farm.

Commission and fee revenue from agent sources increased $26.2 million, or 14.3%, and Commission and fee revenue from direct sources increased $20.7 million, or 13.7%, during the nine months ended September 30, 2025. Commission rates vary based on geography, but do not differ by distribution channel (i.e., whether they are direct-sourced or agent-sourced).

Earned premium, net

Earned premium, net was $534.2 million for the nine months ended September 30, 2025, an increase of $59.3 million, or 12.5%, compared to 2024. This increase was primarily due to continued growth of subject premiums written through our MGA subsidiaries, which increased $88.3 million, or 12.0%, compared to the nine months ended September 30, 2024.

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The following tables present premiums assumed and earned by the Company, as well as the related quota share percentages for the nine months ended September 30, 2025 and 2024:


	Nine months ended September 30, 2025
	U.S.			Canada			U.K. (1)			Total

	in thousands (except percentages)
Subject premium (2)	$	773,099		$	54,058		$	(37)		$	827,120
Quota share percentage	81.0		%	50.0		%	80.0		%	78.9		%
Assumed premium	625,205			27,029			(29)			652,205
Reinsurance premiums ceded										(42,068)
Net assumed premium										610,137
Change in unearned premiums										(81,616)
Change in deferred reinsurance premiums										5,658
Earned premium, net										$	534,179

(1) Effective January 1, 2024, we are no longer reinsuring classic auto risks produced by our U.K. MGA affiliate, and the book is in run-off.

(2) Represents the portion of total written premium written by our MGA subsidiaries that is subject to reinsurance agreements with our insurance carrier partners.















	Nine months ended September 30, 2024
	U.S.			Canada			U.K. (1)			Total

	in thousands (except percentages)
Subject premium (2)	$	689,745		$	49,192		$	(156)		$	738,781
Quota share percentage	81.0		%	35.0		%	80.0		%	77.8		%
Assumed premium	557,650			17,217			(125)			574,742
Reinsurance premiums ceded										(42,875)
Net assumed premium										531,867
Change in unearned premiums										(68,344)
Change in deferred reinsurance premiums										11,394
Earned premium, net										$	474,917

(1) Effective January 1, 2024, we are no longer reinsuring classic auto risks produced by our U.K. MGA affiliate, and the book is in run-off.

(2) Represents the portion of total written premium written by our MGA subsidiaries that is subject to reinsurance agreements with our insurance carrier partners.

Membership, marketplace and other revenue

Membership, marketplace and other revenue was $153.4 million for the nine months ended September 30, 2025, an increase of $53.9 million, or 54.1%, compared to 2024.

Membership fee revenue was $47.0 million for the nine months ended September 30, 2025, an increase of $4.6 million, or 10.8%, compared to 2024, which was primarily due to a $4.2 million, or 10.7%, increase in revenue attributable to new insurance policies issued with a bundled HDC membership. For the nine months ended September 30, 2025 and 2024, membership fees were 30.6% and 42.6%, respectively, of total Membership, marketplace and other revenue.

Marketplace revenue was $89.9 million for the nine months ended September 30, 2025, an increase of $51.6 million compared to 2024. This improvement was principally due to significantly higher levels of inventory sales, including cars acquired from The Academy of Art University Collection and sold at auction in February 2025, as well as increased private sale commissions. To a lesser extent, the increase in Marketplace revenue was attributable to revenues earned from Broad Arrow's inaugural auction at Concorso d’Eleganza Villa d’Este, which was held in May 2025. For the nine months ended September 30, 2025 and 2024, Marketplace revenue was 58.6% and 38.5%, respectively, of total Membership, marketplace and other revenue.

Other revenue, which primarily includes sponsorship, admission, advertising, valuation, and sublease revenue, was $16.5 million for the nine months ended September 30, 2025, a decrease of $2.3 million, or 12.3%, compared to 2024. This decrease was primarily attributable to the loss of registration fee revenue attributable to MSR, which was sold in June 2024. For the nine months ended September 30, 2025 and 2024, other revenue was 10.8% and 18.9%, respectively, of total Membership, marketplace and other revenue. Refer to Note 11 — Divestiture in Item 1 of Part I of this Quarterly Report for additional information related to the sale of MSR.

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Costs and Expenses

Salaries and benefits

Salaries and benefits were $191.3 million for the nine months ended September 30, 2025, an increase of $30.3 million, or 18.8%, compared to 2024. This increase was primarily driven by higher accrued incentive compensation, reflecting stronger performance compared to the prior year, when losses related to Hurricane Helene significantly reduced accrued incentive compensation. To a lesser extent, Salaries and benefits increased as a result of increased headcount and merit increases year-over-year.

Ceding commissions, net

Ceding commissions, net was $247.7 million for the nine months ended September 30, 2025, an increase of $25.8 million, or 11.6%, compared to 2024. This increase is primarily attributable to the 12.5% increase in Earned premium, net discussed above.

The following table summarizes the components of Ceding commissions, net for the nine months ended September 30, 2025 and 2024:


	Nine months ended September 30,
	2025			2024

Ceding commission:	in thousands (except percentages)
Ceding commission – reinsurance assumed	$	262,622		$	233,840
Ceding commission – reinsurance ceded	(14,940)			(11,963)
Ceding commissions, net	$	247,682		$	221,877
Percentage of earned premium	46.4		%	46.7		%

Losses and loss adjustment expenses

Losses and loss adjustment expenses were $225.0 million for the nine months ended September 30, 2025, a decrease of $1.5 million, or 0.7%, compared to 2024. This decrease was primarily driven by $24.7 million of estimated pre-tax losses incurred in 2024 related to Hurricane Helene, for which there were no comparable losses in the current year period. This factor was almost entirely offset by increased losses due to the 12.5% increase in Earned premium, net discussed above.

For the nine months ended September 30, 2025, our loss ratio was 42.1%, including the impact of $10.3 million of pre-tax catastrophe losses resulting from the Southern California wildfires in January 2025. For the nine months ended September 30, 2024, our loss ratio was 47.7%, including the impact of catastrophe losses, primarily Hurricane Helene, which resulted in $24.7 million of estimated pre-tax losses.

Sales expense

Sales expense was $199.7 million for the nine months ended September 30, 2025, an increase of $52.9 million, or 36.0%, compared to 2024. This increase was due, in part, to a $42.2 million increase in cost of sales, predominantly as a result of a higher level of marketplace inventory sales, as well as a $6.1 million increase in sales commissions, consistent with revenue growth within the marketplace business. In addition, broker expense increased $6.1 million, consistent with the written premium growth within the agent insurance distribution channel.

General and administrative expenses

General and administrative expenses were $69.2 million for the nine months ended September 30, 2025, an increase of $7.1 million, or 11.5%, compared to 2024. This increase was primarily due to a $3.5 million increase in software-related costs, largely driven by costs related to our new insurance policy management system, and to a lesser extent, a $1.8 million increase in professional fees. The increase in professional fees is primarily driven by transaction costs associated with the THG Unit Exchange and related secondary offering that was consummated in the third quarter of 2025, as well as professional fees related to the Proposed Fronting Arrangement and Broad Arrow's global expansion. Refer to Note 17 — Stockholders' Equity in Item 1 of Part I of this Quarterly Report for additional information related to the THG Unit Exchange and related secondary offering.

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Depreciation and amortization

Depreciation and amortization expense was $27.7 million for the nine months ended September 30, 2025, a decrease of $2.0 million, or 6.8%, compared to 2024. This decrease was primarily driven by a smaller base of in-service fixed assets and finite-lived intangible assets as of September 30, 2025, when compared to the same period in 2024.

Loss related to warrant liabilities, net

During the nine months ended September 30, 2024, Loss related to warrant liabilities, net was $8.5 million. The $8.5 million loss in the prior year period consists of a $2.0 million loss related to the Warrant Exchange and a $6.5 million loss related to the change in fair value of our then outstanding warrant liabilities. There were no warrants outstanding during the nine months ended September 30, 2025 due to the Warrant Exchange transaction that was completed in July 2024. Refer to Note 6 — Fair Value Measurements in Item 1 of Part I of this Quarterly Report for additional information with respect to our warrants.

Interest and other income (expense), net

The following table summarizes the components of Interest and other income (expense), net for the nine months ended September 30, 2025 and 2024:


	Nine months ended September 30,
	2025		2024		$ Change		% Change

	in thousands (except percentages)
Interest income	$	28,911	$	30,075	$	(1,164)	(3.9)%
Interest expense	(5,925)		(4,289)		(1,636)		38.1%
Net investment gains	2,150		1,783		367		20.6%
Expense related to TRA Liability	(32,275)		(1,322)		(30,953)		N/M
Other income (expense), net	(1,123)		1,698		(2,821)		(166.1)%
Interest and other income (expense), net	$	(8,262)	$	27,945	$	(36,207)	(129.6)%

N/M = Not meaningful

Interest and other income (expense), net decreased $36.2 million during the nine months ended September 30, 2025, compared to 2024, primarily due to expense related to the TRA Liability, as discussed below. To a lesser extent, the decrease was also due to a $2.3 million non-recurring gain on the sale of an interest rate swap in the second quarter of 2024, lower yields on fixed income securities, and an increase in Interest expense, primarily due to higher net borrowings under the 2025 JPM Credit Facility.

In the third quarter of 2025, we determined it was appropriate to release a portion of the valuation allowance previously recorded against our federal and state deferred tax assets. In connection with this release, we remeasured our TRA Liability, resulting in an expense of $29.2 million, recorded within "Interest and other income (expense), net" on the Condensed Consolidated Statements of Operations, representing 85% of the expected tax benefit to be paid to the Legacy Unit Holders. Refer to Note 20 — Taxation in Item 1 of Part I of this Quarterly Report for additional information.

Income tax (expense) benefit

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As of September 30, 2025, our continued assessment of the realizability of our deferred tax assets concluded that sufficient sources of future taxable income will be generated to realize a portion of the deferred tax assets related to the outside basis in our investment in THG and other tax attributes of the Hagerty, Inc. filing entity. In assessing the realizability of these deferred tax assets, we considered all sources of positive and negative evidence, including (i) that we achieved cumulative three-year profitability during the quarter; (ii) that our forecasts indicated continued profitability; and (iii) other positive business factors. Based on this evaluation, we determined it was appropriate to release a portion of the valuation allowance previously recorded against our federal and state deferred tax assets. As a result, $38.1 million of the valuation allowance was released during the third quarter of 2025 and a corresponding income tax benefit was recognized within "Income tax (expense) benefit" on the Condensed Consolidated Statements of Operations.

For the nine months ended September 30, 2025, income tax benefit was $21.2 million, representing an increase of $31.1 million compared to 2024. This increase was primarily a result of the release of the valuation allowance discussed above.

Refer to Note 20 — Taxation in Item 1 of Part I of this Quarterly Report for additional information with respect to items affecting our effective tax rate.

Liquidity and Capital Resources

Maintaining a strong balance sheet and capital position is a top priority for us. As a holding company without direct operations, we manage liquidity globally and across all operating subsidiaries.

Sources and Uses of Liquidity

Our sources of liquidity include our: (i) balances of cash and cash equivalents; (ii) net working capital; (iii) cash flows from operations; (iv) borrowings from the 2025 JPM Credit Facility (as defined below) to fund the general corporate needs of THG and its subsidiaries; and (v) borrowings from the BAC Credit Facility (as defined below) to fund a portion of the lending activities of BAC.

Our primary liquidity needs and capital requirements include cash required for: (i) funding the business operations of THG and its subsidiaries; (ii) funding strategic investments and acquisitions; (iii) servicing and repayment of borrowings under the 2025 JPM Credit Facility, the BAC Credit Facility, and the unsecured term loan credit facility with State Farm (the "State Farm Term Loan"); (iv) funding potential cash dividend payments on the Series A Convertible Preferred Stock; (v) payment of income taxes; (vi) funding required distributions to the non-controlling interest unit holders of THG; and (vii) funding required payments to Legacy Unit Holders under the TRA.

As of September 30, 2025, we believe that our sources of liquidity will be sufficient to provide an adequate level of capital to support our anticipated short and long-term commitments, operating needs, and capital requirements.

Financing Arrangements

2025 JPM Credit Facility

In March 2025, THG entered into a credit agreement with JPM, as administrative agent, issuing bank and swingline lender, the foreign subsidiary borrowers thereto, and the other financial institutions party thereto as lenders (the "2025 JPM Credit Agreement").

The 2025 JPM Credit Agreement provides for a senior unsecured revolving credit facility (the "2025 JPM Credit Facility") with an aggregate borrowing capacity of $375.0 million. The 2025 JPM Credit Agreement matures in March 2030, but may be extended if agreed to by THG and the lenders party thereto. Any unpaid balance on the 2025 JPM Credit Facility is due at maturity. As of September 30, 2025, total outstanding borrowings under the 2025 JPM Credit Facility were $77.5 million.

The 2025 JPM Credit Agreement requires us to, among other things, meet certain financial covenants, including a minimum fixed charge coverage ratio test and a maximum leverage ratio test. As of September 30, 2025, we were in compliance with these financial covenants.

BAC Credit Facility

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BAC and certain of its subsidiaries may transfer notes receivable to wholly owned, bankruptcy remote special purpose entities (each, an "SPE") to secure borrowings, isolating these assets from our other obligations. Recourse is limited to (i) an obligation of the applicable seller to repurchase a note receivable if it is determined that there was a breach of any representation or warranty relating to such note receivable as of the relevant date specified in the related transfer agreement and (ii) a limited guarantee for certain liabilities that may result under certain foreign exchange hedging activity of one of the SPEs.

BAC and BAC Funding 2023-1, LLC are required, among other things, to meet certain financial covenants including that BAC, as the servicer, maintain a minimum tangible net worth, minimum liquidity balances, and an indebtedness to tangible net worth ratio. As of September 30, 2025, we were in compliance with the financial covenants under the BAC Credit Agreement.

Refer to Note 15 — Debt in Item 1 of Part I of this Quarterly Report for additional information related to the 2025 JPM Credit Agreement and BAC Credit Agreement.

Capital and Dividend Restrictions

We are a holding company with no material assets other than our ownership interest in THG and its operating subsidiaries. Accordingly, our ability to meet our cash requirements depends on THG's financial performance and the distributions we receive from THG. Our subsidiaries' ability to make distributions, pay dividends and make other payments may be regulated by the states and territories where they are domiciled.

For a discussion of the risks associated with our holding company structure, refer to Item 1A. Risk Factors — Risks Related to Tax — "We are a holding company, and our only material asset is our interest in THG, and we will therefore be dependent upon distributions made by THG to pay taxes, make payments under the TRA and pay other expenses." in our Annual Report.

Capital Restrictions

Our reinsurance company, Hagerty Re, is subject to the Bermuda Solvency Capital Requirement ("BSCR"), which establishes a target capital level and enhanced capital requirements for each insurer. As of September 30, 2025, Hagerty Re maintained sufficient statutory capital and surplus to comply with the BSCR.

Similarly, our U.S. insurance company subsidiary, Drivers Edge, which holds certificates of authority in 41 states, is subject to state-specific minimum capital and surplus requirements, as well as risk-based capital ("RBC") requirements. RBC levels are reported on an annual basis. As of September 30, 2025, Drivers Edge maintained sufficient capital and surplus levels to comply with state insurance regulations.

Dividend Restrictions

Under Bermuda law, Hagerty Re is prohibited from declaring or issuing a dividend if it fails to meet its minimum solvency margin or minimum liquidity ratio. Prior approval from the BMA is also required if Hagerty Re's proposed dividend payments would exceed 25% of its prior year-end total statutory capital and surplus. Based on these restrictions, during 2025, Hagerty Re can pay $67.9 million in dividends without prior BMA approval; however, the amount that Hagerty Re can pay in dividends is further limited by the amount of unrestricted cash and liquid investments held outside of restricted accounts, which totaled $49.4 million as of September 30, 2025. As of September 30, 2025, there were no plans to issue dividends from Hagerty Re.

Similarly, state statutes restrict the amount of dividends that Drivers Edge may pay without prior approval of state insurance regulators. As of September 30, 2025, there were no plans to issue dividends from Drivers Edge and a change in such plans may require regulatory approval.

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Comparative Cash Flows

The following table summarizes our cash flow data for the nine months ended September 30, 2025 and 2024:


	Nine months ended September 30,
	2025		2024		$ Change		% Change

	in thousands (except percentages)
Net Cash Provided by Operating Activities	$	189,885	$	189,642	$	243	0.1	%
Net Cash Used in Investing Activities	$	(122,806)	$	(562,490)	$	(439,684)	(78.2)	%
Net Cash Provided by (Used in) Financing Activities	$	30,411	$	(27,117)	$	57,528	N/M

N/M = Not meaningful

Operating Activities

Cash provided by operating activities primarily consists of Net income, adjusted for non-cash items, and changes in working capital balances. Net cash provided by operating activities for the nine months ended September 30, 2025 and 2024 is presented below:


	Nine months ended September 30,
	2025		2024		$ Change		% Change

	in thousands (except percentages)
Net income	$	120,666	$	69,863	$	50,803	72.7	%
Non-cash adjustments to Net income	44,295		59,972		(15,677)		(26.1)	%
Changes in operating assets and liabilities	24,924		59,807		(34,883)		(58.3)	%
Net Cash Provided by Operating Activities	$	189,885	$	189,642	$	243	0.1	%

Net cash provided by operating activities for the nine months ended September 30, 2025 was $189.9 million, an increase of $0.2 million, or 0.1%, compared to 2024. This increase was due to a $35.1 million increase in Net income, net of non-cash adjustments, partially offset by a $34.9 million decrease in cash from operating assets and liabilities.

The $34.9 million decrease in net cash from operating assets and liabilities was primarily driven by the timing of the settlement of CUC receivables and payables, which resulted in a $29.8 million net decrease in operating cash flows, as well as claim payments made by Hagerty Re related to recent catastrophe events, including Hurricane Helene, Hurricane Milton, and the Southern California wildfires. To a lesser extent, the decrease was driven by extended payment term receivables associated with Broad Arrow auction and private sales transactions in the period.

Investing Activities

Cash used in investing activities for the nine months ended September 30, 2025 decreased by $439.7 million when compared to 2024, almost entirely due to the diversification of our investment portfolio during the nine months ended September 30, 2024, which resulted in the purchase of investment-grade fixed maturity securities and, to a much lesser extent, equity securities. This factor was partially offset by a $11.3 million increase in net fundings of BAC notes receivable.

Financing Activities

Cash from financing activities for the nine months ended September 30, 2025 increased $57.5 million when compared to 2024 primarily due to net proceeds received from credit facility borrowings, which was largely used to fund issuances of notes receivable by BAC. These proceeds were partially offset by a $25.2 million increase in required tax distributions to THG non-controlling interest unit holders.

Tax Receivable Agreement

We expect to have adequate capital resources to meet the requirements and obligations under the TRA entered into with the Legacy Unit Holders. The TRA requires us to pay Legacy Unit Holders 85% of the amount of cash savings, if any, under U.S. federal, state and local income tax or franchise tax realized as a result of (i) any increase in tax basis of Hagerty, Inc.'s assets resulting from (a) the purchase of THG units from any of the Legacy Unit Holders using the net proceeds from any future offering, (b) redemptions or exchanges by the Legacy Unit Holders of Class V Common Stock and THG units for shares of Class A Common Stock, or (c) payments under the TRA, and (ii) tax benefits related to imputed interest deemed arising as a result of payments made under the TRA.

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Legacy Unit Holders may, subject to certain conditions and transfer restrictions as described in the Legacy Unit Holders Exchange Agreement executed in connection with the business combination that formed Hagerty, Inc. in 2021, redeem or exchange their Class V Common Stock and THG units for shares of Class A Common Stock of Hagerty, Inc. on a one-for-one basis. THG made an election under Section 754 of the IRC with the filing of its 2019 income tax return, which cannot be revoked without the permission of the IRS Commissioner and will be in place for any future exchange of THG units. The redemptions and exchanges are expected to result in increases in the tax basis of the tangible and intangible assets of THG. These increases in tax basis may reduce the amount of tax that we would otherwise be required to pay in the future. This payment obligation as a part of the TRA is an obligation of Hagerty, Inc. and not of THG. For purposes of the TRA, the cash tax savings in income tax will be computed by comparing the actual income tax liability of Hagerty, Inc. (calculated with certain assumptions) to the amount of such taxes that Hagerty, Inc. would have been required to pay had there been no increase to the tax basis of the assets of THG as a result of the redemptions or exchanges and had Hagerty, Inc. not entered into the TRA. Estimating the amount of payments that may be made under the TRA is by nature imprecise, insofar as the calculation of amounts payable depends on a variety of factors.

As of September 30, 2025, the estimated value of the TRA Liability was $39.9 million, of which $2.0 million was classified as a current liability within "Accounts payable, accrued expenses and other current liabilities" and $37.9 million was classified as a long-term liability within "Tax receivable agreement liability" on the Condensed Consolidated Balance Sheets.

During the nine months ended September 30, 2025, we made TRA payments of $0.2 million. No such payments were made during the nine months ended September 30, 2024.

Off-Balance Sheet Arrangements

We do not have any material off-balance sheet arrangements as of September 30, 2025.

Critical Accounting Policies and Estimates

The preparation of the unaudited Condensed Consolidated Financial Statements in accordance with GAAP requires management to make significant judgments, assumptions, and estimates that materially affect the amounts reported in the Company's Condensed Consolidated Financial Statements. Management's judgments, assumptions, and estimates are based on historical experience, future expectations, and other factors that are believed to be reasonable as of the date of the Condensed Consolidated Financial Statements. Actual results may ultimately differ from management's original estimates, as future events and circumstances sometimes do not develop as expected.

Our accounting policies are set forth in Note 1 — Summary of Significant Accounting Policies and New Accounting Standards to Consolidated Financial Statements contained in our Annual Report.

New Accounting Standards

New accounting standards are described in Note 2 — Summary of Significant Accounting Policies in Item 1 of Part I of this Quarterly Report, which are incorporated herein by reference.

Non-GAAP Financial Measures

Adjusted EBITDA

We define Adjusted EBITDA as consolidated Net income, excluding net interest and other income (expense), income tax expense, and depreciation and amortization, further adjusted to exclude (i) net gains and losses related to our warrant liabilities prior to the Warrant Exchange; (ii) share-based compensation expense; and when applicable, (iii) restructuring, impairment and related charges; (iv) gains, losses and impairments related to divestitures; and (v) certain other unusual items. Refer to Note 6 — Fair Value Measurements in Item 1 of Part I of this Quarterly Report for additional information regarding the Warrant Exchange.

We present Adjusted EBITDA because we consider it to be an important supplemental measure of our performance and believe it is frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in our industry. Management uses Adjusted EBITDA as a measure of the operating performance of our business on a consistent basis, as it removes the impact of items not directly resulting from our core operations.

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By providing this non-GAAP financial measure, together with a reconciliation to Net income, which is the most comparable GAAP measure, we believe we are enhancing investors' understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives. However, Adjusted EBITDA has limitations as an analytical tool, and should not be considered in isolation, or as an alternative to, or a substitute for Net income or other financial statement data presented in our Condensed Consolidated Financial Statements as indicators of financial performance. Our definition of Adjusted EBITDA may be different than similarly titled measures used by other companies in our industry, which could reduce the usefulness of this non-GAAP financial measure when comparing our performance to that of other companies.

The following table reconciles Adjusted EBITDA to the most directly comparable GAAP measure, which is Net income:


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024

	in thousands
Net income	$	46,171	$	19,007	$	120,666	$	69,863
Interest and other (income) expense, net (1) (2)	20,980		(8,359)		8,262		(27,945)
Income tax expense (benefit) (3)	(32,834)		(1,022)		(21,184)		9,918
Depreciation and amortization	9,413		9,184		27,734		29,758
EBITDA	43,730		18,810		135,478		81,594
Loss related to warrant liabilities, net	—		463		—		8,544
Share-based compensation expense	5,089		4,092		14,627		13,018
Gain related to divestiture	—		—		—		(87)
Other unusual items (4)	895		800		2,961		1,536
Adjusted EBITDA	$	49,714	$	24,165	$	153,066	$	104,605

(1) Excludes interest expense related to the BAC Credit Facility, which is recorded within "Sales expense" in the Condensed Consolidated Statements of Operations.

(2) Principally includes interest income, net investment income related to our investment portfolio, and interest expense, as well as changes in the value of the TRA liability, which totaled $29.2 million and $32.3 million during the three and nine months ended September 30, 2025, respectively, and $1.3 million during the three and nine months ended September 30, 2024. Refer to Note 20 — Taxation in Item 1 of Part I of this Quarterly Report for additional information.

(3) Income tax expense (benefit) for the three and nine months ended September 30, 2025 includes a $38.1 million benefit related to the release of a portion of the valuation allowance against our deferred tax assets. Refer to Note 20 — Taxation in Item 1 of Part I of this Quarterly Report for additional information.

(4) For the three and nine months ended September 30, 2025, other unusual items includes certain legal settlement expenses, professional fees associated with the THG Unit Exchange and related Secondary Offering, and certain material severance expenses. For the three and nine months ended September 30, 2024, other unusual items includes professional fees associated with the Warrant Exchange. Refer to Note 17 — Stockholders' Equity in Item 1 of Part I of this Quarterly Report for additional information with respect to the THG Unit Exchange and Note 6 — Fair Value Measurements in Item 1 of Part I of this Quarterly Report for additional information with respect to our warrants.

Adjusted EPS

We define Adjusted Earnings Per Share ("Adjusted EPS") as consolidated Net income, excluding net gains and losses related to our warrant liabilities prior to the Warrant Exchange, divided by our outstanding and total potentially dilutive securities, which includes (i) the weighted average issued and outstanding shares of Class A Common Stock; (ii) all issued and outstanding non-controlling interest units of THG; (iii) all issued and outstanding shares of our Series A Convertible Preferred Stock on an as-converted basis; and (iv) all unissued share-based compensation awards. Refer to Note 6 — Fair Value Measurements in Item 1 of Part I of this Quarterly Report for additional information regarding the Warrant Exchange.

The most directly comparable GAAP measure to Adjusted EPS is basic earnings per share ("Basic EPS"), which is calculated as Net income available to Class A Common Stockholders divided by the weighted average number of Class A Common Stock shares outstanding during the period.

We present Adjusted EPS because we consider it to be an important supplemental measure of our operating performance and believe it is used by securities analysts, investors and other interested parties in evaluating the consolidated performance of other companies in our industry. We also believe that Adjusted EPS, which compares our consolidated Net income with our weighted average number of Class A Common Stock shares outstanding and potentially dilutive shares, provides useful information to investors regarding our performance on a consolidated and diluted basis.

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Management uses Adjusted EPS (i) as a measure of the operating performance of our business on a consolidated and diluted basis; (ii) to evaluate the performance and effectiveness of our operational strategies; and (iii) as a preferred predictor of core operating performance, comparisons to prior periods and competitive positioning.

We caution investors that Adjusted EPS is not a recognized measure under GAAP and should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, including Basic EPS, and that Adjusted EPS, as we define it, may be defined or calculated differently by other companies. In addition, Adjusted EPS has limitations as an analytical tool and should not be considered as a measure of profit or loss per share.

The following table reconciles Adjusted EPS to the most directly comparable GAAP measure, which is Basic EPS:


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024

	in thousands (except per share amounts)
Numerator:
Net income available to Class A Common Stockholders (1)	$	17,696	$	2,798	$	32,174	$	7,753
Accretion of Series A Convertible Preferred Stock	1,903		1,875		5,653		5,552
Undistributed earnings allocated to Series A Convertible Preferred Stock	1,249		212		2,365		607
Net income attributable to non-controlling interest	25,323		14,122		80,474		55,951
Consolidated net income	46,171		19,007		120,666		69,863
Loss related to warrant liabilities, net	—		463		—		8,544
Adjusted consolidated net income (2)	$	46,171	$	19,470	$	120,666	$	78,407

Denominator:
Weighted average shares of Class A Common Stock outstanding (1)	96,167		89,691		92,326		86,689
Total potentially dilutive securities outstanding:
Non-controlling interest THG units	245,616		255,178		245,616		255,178
Series A Convertible Preferred Stock, on an as-converted basis	6,785		6,785		6,785		6,785
Total unissued share-based compensation awards	8,374		8,076		8,374		8,076
Potentially dilutive shares outstanding	260,775		270,039		260,775		270,039
Dilutive shares outstanding (2)	356,942		359,730		353,101		356,728

Basic EPS (1)	$	0.18	$	0.03	$	0.35	$	0.09

Adjusted EPS (2)	$	0.13	$	0.05	$	0.34	$	0.22

(1) Numerator and Denominator, respectively, of the GAAP measure Basic EPS

(2) Numerator and Denominator, respectively, of the non-GAAP measure Adjusted EPS

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes to our market risk during the nine months ended September 30, 2025. For a discussion of our exposure to market risk, refer to the market risk disclosures set forth in Item 7A of Part II, "Quantitative and Qualitative Disclosures About Market Risk" in our Annual Report.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this Quarterly Report.

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2025.

Changes in Internal Controls Over Financial Reporting

There were no changes to our internal control over financial reporting that occurred during the three months ended September 30, 2025, which were identified in connection with management's evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we are involved in various claims and legal actions that arise in the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, we do not believe that the ultimate resolution of these actions will have a material adverse effect on our financial position, results of operations, liquidity or capital resources.

Future litigation may be necessary to defend ourselves and our partners by determining the scope, enforceability and validity of third party proprietary rights or to establish our proprietary rights. The results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

Refer to Note 22 — Commitments and Contingencies in Item 1 of Part I of this Quarterly Report for additional information related to legal proceedings.

ITEM 1A. RISK FACTORS

Other than the risk factor below, as of the date of this Quarterly Report, there have been no material changes to our risk factors as previously disclosed in our Annual Report. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC. Additional risks that we currently do not know about or currently view as immaterial may also materially adversely affect our business, financial condition, or operating results.

We may be unable to successfully enter into the Proposed Fronting Arrangement with Markel and, even if completed, we may be unable to realize the anticipated benefits from the Proposed Fronting Arrangement.

On July 24, 2025, we announced that we had entered into a non-binding letter of intent regarding the Potential Fronting Arrangement with Markel. Because the letter of intent is non-binding, either party may terminate discussions at any time prior to the execution of definitive agreements. The consummation of the Proposed Fronting Arrangement is subject to the negotiation and execution of definitive binding documentation and the receipt of all required regulatory approvals. There can be no assurance that the Proposed Fronting Arrangement will be completed on the terms currently contemplated, within the anticipated timeframe, or at all. Factors that could prevent the completion of the Proposed Fronting Arrangement include, among others, the inability of the parties to agree on commercially acceptable terms, a decision by either party to pursue alternative counterparties or arrangements, or the failure to obtain necessary regulatory approvals.

Furthermore, even if we are able to enter into definitive agreements and complete the Proposed Fronting Arrangement, we may not realize the anticipated benefits of the arrangement. The success of the Proposed Fronting Arrangement will depend on a variety of factors, including the effective implementation by both parties, changes in market or industry conditions, regulatory developments, and other factors, many of which are outside of our control. As a result, there can be no assurance that the Proposed Fronting Arrangement will achieve its intended objectives or that it will not have an adverse effect on our business, financial condition, or results of operations.

Rising interest rates and the imposition of tariffs on imported goods could increase costs, reduce consumer spending on collector cars and related services, and negatively impact our business, results of operations and financial condition.

Our business depends on consumer demand for collectible cars and related services, which may decline in response to unfavorable economic conditions, such as high inflation or interest rates, or changes in trade and regulatory policies. Consumer spending on discretionary items, such as collector cars and related services, may be influenced by various factors beyond our control, such as unemployment, income levels, consumer confidence, and financial market volatility. When economic conditions deteriorate, consumers may reduce or postpone their spending on collector cars and related services, which could lower the demand for our products and services. Moreover, changes in tariffs, trade policy, or laws and policies affecting foreign trade, manufacturing, development and investment could increase our costs. For example, the recent imposition of tariffs on certain imported goods could affect the availability and cost of parts to repair our insureds' vehicles, which could impact our cost of claims, insurance premiums and customer satisfaction. While we have not yet identified direct effects from the recent changes in tariffs and other trade measures in our business, the long-term consequences of these actions remain uncertain and could negatively affect both the overall economy and our business. Any prolonged downturns in the economy or decreases in consumer demand for collector cars and related services could materially adversely affect our business, results of operations, and financial condition.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

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ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Trading Arrangements of Directors and Executive Officers

Except as described below, during the three months ended September 30, 2025, no director or executive officer of the Company has adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.

On September 15, 2025, Kenneth Ahn, our President, Marketplace, in his capacity as sole member of Quadrifoglio Holdings LLC ("Quadrifoglio"), adopted a programmed plan of transactions intended to satisfy the affirmative defense provided by Rule 10b5-1 (the "Ahn 10b5-1 Plan"). The Ahn 10b5-1 Plan provides for a first possible trade date of December 15, 2025, and terminates automatically on the earlier of the execution of all trades contemplated by the Ahn 10b5-1 Plan or July 31, 2026. The aggregate number of shares to be sold pursuant to the Ahn 10b5-1 Plan is 500,000 shares of Class A Common Stock, which Quadrifoglio will obtain upon the conversion of 500,000 THG units that it currently holds into shares of Class A Common Stock.

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ITEM 6. EXHIBITS

(a) Financial statements and financial statement schedules filed as part of this report are listed in the index included in Item 1 of Part I of this Quarterly Report.

(b) Exhibits. As required by Item 601 of Regulation S-K, the following are exhibits to this report.


Exhibit No.						Description
2.1*						Business Combination Agreement, dated as of August 17, 2021, by and among Aldel Financial Inc. Aldel Merger Sub LLC and The Hagerty Group, LLC (incorporated by reference to Exhibit 2.1 of the Company’s Form 8-K (File No. 001-40244), filed with the SEC on August 18, 2021).
3.1						Third Amended and Restated Certificate of Incorporation of the Company, dated December 2, 2021 (incorporated by reference to Exhibit 3.1 of the Company’s Amendment No.3 to Form S-1 (File No. 333-261810), filed with the SEC on January 20, 2023).
3.2						Amended and Restated By-Laws of the Company, dated December 2, 2021 (incorporated by reference to Exhibit 3.2 of the Company’s Form 8-K (File No. 001-40244), filed with the SEC on December 8, 2021).
3.3						Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock of the Company dated June 23, 2023 (incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K (File No. 001-40244), filed with the SEC on June 23, 2023).
31.1						Certification of the Chief Executive Officer Pursuant to Rule 13a-14(a).
31.2						Certification of the Chief Financial Officer Pursuant to Rule 13a-14(a).
32.1#						Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 .
32.2#						Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 .
101.INS						XBRL Instance Document.
101.SCH						XBRL Taxonomy Extension Schema Document.
101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB						XBRL Taxonomy Extension Label Linkbase Document.
101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF						XBRL Taxonomy Extension Definition Linkbase Document.
104						Cover Page Interactive Data File (formatted as Inline XBRL).


*						The schedules and exhibits to this agreement have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the SEC upon request. In addition, portions of this exhibit have been redacted pursuant to Item 601(b)(10)(iv) of Regulation S-K because the registrant customarily and actually treats that information as private or confidential and the omitted information is not material.

#						This certification is not deemed filed for the purpose of Section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.

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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on November 4, 2025.

HAGERTY, INC.

By:

/s/ McKeel O Hagerty

McKeel O Hagerty

Chief Executive Officer

HAGERTY, INC.

By:

/s/ Patrick McClymont

Patrick McClymont

Chief Financial Officer