Hagerty, Inc.

Greetings and welcome to the Hagerty first quarter 2025 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Jay Koval, Senior Vice President of Investor Relations. Please go ahead.

Thank you, Operator, and good morning, everyone. Thank you all for joining us to discuss Hagerty's results for the first quarter of 2025. I'm joined this morning by McKeel Hagerty, Chief Executive Officer and Chairman, and Patrick McClimat, Chief Financial Officer. During this morning's conference call, we will refer to an accompanying presentation that is available on Hagerty's Investor Relations section of the company's corporate website at investor.hagerty.com. Our earnings release, slides, and letter to stockholders covering this period are also posted on the IR website, as well as our 8K filing. Today's discussion contains forward-looking statements and non-GAAP financial metrics, as described further on slide two of the earnings presentation. Forward-looking statements include statements about our expected future business and financial performance and are not promises or guarantees of future performance. They are subject to a variety of risks and uncertainties that could cause the actual results to differ materially from our expectations. For a discussion of material risks and important factors that could affect our actual results, please refer to those contained in our filings with the SEC, which are also available on our Industrial Relations website and at sec.gov. The appendix of the presentation also contains reconciliations of our non-GAAP metrics to the most directly comparable GAAP measures that are further supplemented by this morning's 8K filing. And with that, I will turn the call over to McKeel.

Thanks, Jay, and good morning, everyone. We appreciate you taking the time to join Hagerty's first quarter 2025 earnings call. Northern Michigan is known for its long, snowy winters, and this year was no exception. As the last of the snow banks have finally melted, our Hagerty members are busy preparing their toys for the driving season, and we will be there to help them protect and enjoy their special cars. We are also ready to welcome a record number of new members who are buying their first enthusiast vehicle or transitioning their vehicle coverage to Hagerty, given our guaranteed value proposition and the excellent service from Hagerty's passionate team of auto enthusiasts. One team Hagerty loves your cars as much as you do. And it shows in our results with yet another solid quarter of top and bottom line growth during the first three months of 2025. So let me start by thanking our 1700 Hagerty team members for their great execution as we position Hagerty to create value for shareholders for many years to come. Let me dig into the key highlights from our first quarter shown on slide three, where total revenue increased 18%, New business count fueled a 12% increase in written premium and a 13 cent growth in our commission revenue. Earned premium from our risk-taking entity, Agrity Reinsurance, increased 12%. And membership, marketplace, and other revenue jumped 60%, propelled by successful auctions at the Amelia Comfort and the Academy of Arts University in February. Moving to profitability, during the first three months of this year, our operating margin jumped another 360 basis points, resulting in net income gains of 233% and adjusted EBITDA growth of 45%. Over a two-year period, first quarter net income increased by $42 million and adjusted EBITDA by $33 million. And we believe the best is yet to come for our margin expansion story thanks to increasing economies of scale as we double our policies and force the 3 million by 2030. Let's move on to slide four and remind you of our 2025 strategic priorities built around three themes, simpler, faster, and better integrated. First and most impactful to our long-term trajectory is to expand our specialty insurance offerings to protect more of the collectible vehicle TAM, including the modern enthusiast vehicle space. Second is to simplify and better integrate our membership experience across products and services, creating revenue synergies and driving cost efficiencies. Third is to expand our marketplace business internationally, leveraging the trust we have built in the United States. This includes our upcoming auction at the Villa d'Este Concorso on Lake Como, Italy, the first of our multi-year partnership with BMW at this prestigious event. Fourth, we will continue to leverage Hagerty's unique and authentic car culture as a key differentiator for future members. The engagement and excellence from one team Hagerty creates a repeatable winning formula for stakeholders. We are investing in the major technology replatforming that will enable scalable growth while delivering excellent experiences for our members with greater efficiency. Slide five goes into more detail around the investments we are making in our technology transformation, including the transition to the cloud-based insurance platform, Duck Creek. We are pleased to report that our 2025 technology investments are running on schedule and on budget. As we discussed at length last quarter, these near-term investments should result in greater long-term efficiency for our teams and better experiences for our members, which should enable future growth and margin expansion. Our technology spend should trend down as percent of revenue as we accelerate the top line in 2026 and 2027 and drive margins higher. Before Patrick digs into the numbers, I want to highlight a few more reasons why we believe that we are such a compelling investment opportunity. Hagerty is a U.S.-centric company with over 90% of our revenue generated in the United States, positioning us well to weather noise from tariffs. And we operate in a highly regulated and mandated industry that enjoys great defensive characteristics. This creates predictable revenue streams, especially given our excellent retention and persistent share gains for the Hagerty brand. Our track record speaks to a highly differentiated business model that can thrive regardless of the economic cycle. Our compound annual growth rate in written premiums since 2005 is over 13%, but even during the darkest moments of the great financial crisis, we maintained high single-digit written premium growth. While volatile market conditions might make consumers think twice about buying another special car this year or cause consumers to forego a vacation, The extra time spent at home creates opportunities to enjoy their existing enthusiast vehicles. Full of all together, we believe that we are well positioned to deliver high rates of profitable growth for many years to come. Let me now turn the call over to Patrick to share more details on our first quarter results and our reaffirmed 2025 outlook.