Hagerty: 2027 should reveal underlying earnings power

Hagerty reported a first-half net loss of $5 million, compared with net income of $74 million a year earlier. The loss reflects $153 million of transitional costs tied to the Markel Fronting Arrangement, primarily the amortization of deferred ceding commissions on policies written before 2026. Those costs are expected to run off by year-end.

Underlying results were stronger. Adjusted EBITDA increased 32% to $160 million, written premium rose 19%, and operating cash flow climbed 91%. Hagerty also raised its full-year net income outlook to $18 million to $30 million.

Here are the strategic takeaways:

State Farm is turning into a multi-year growth engine

Hagerty’s partnership with State Farm is moving beyond new business generation into large-scale policy conversions. Agents are now selling Hagerty policies in 37 states, while conversions of State Farm’s existing collector car portfolio are underway and expected to continue into 2028.

Management also highlighted growing opportunities with Progressive, Liberty Mutual, and other national carriers, suggesting partnerships—not pricing—are becoming the company’s primary growth driver.

The addressable market keeps expanding

Hagerty believes collector insurance is evolving beyond traditional classics. Quote volume from Gen X, Millennials, and Gen Z now accounts for more than 60% of demand, driven by 1980s-2000s Japanese, German, and American enthusiast vehicles.

Its Enthusiast Plus program, initially launched in Colorado, is expanding into additional states as Hagerty targets a broader market of roughly 36 million enthusiast vehicles currently insured by standard auto carriers.

Independent agents are the next growth lever

Despite partnerships with major carriers, Hagerty still sees untapped potential across its network of approximately 54,000 independent agents.

The company is investing in straight-through processing, automated vehicle identification, and agent education to help producers identify collector and enthusiast vehicles already sitting inside standard personal auto books.

2027 should reveal the company’s true earnings power

Management repeatedly emphasized that 2026 remains distorted by accounting changes associated with the Markel fronting transition. Those temporary items disappear next year, leaving financial results that more closely reflect Hagerty’s underlying premium growth and operating leverage.

The company expects written premium growth of 16% to 17% this year and increased guidance for adjusted EBITDA to $270 million-$280 million.