Hagerty, Inc.

Greetings and welcome to the Hagerty fourth 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 during the conference, please press star zero on your telephone keypad. Please note this call is being recorded. I would now like to turn the conference over to your host today, Jay Koval, Senior Vice President of Investor Relations. Thank you, sir. You may begin.

Thank you, Operator, and good morning, everyone. And thank you for joining us to discuss Hagerty's results for the fourth quarter of 2025. I'm joined this morning by McKeel Hagerty, Chief Executive Officer and Chairman, and Patrick McClima, 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 AK filing. Today's discussion contains forward-looking statements and non-GAAP financial metrics, as described further in 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 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 investor 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 AK filing. And with that, I'll turn the call over to Michiel.

Thanks, Jay, and good morning, everyone. We appreciate you taking the time to join Hagerty's fourth quarter 2025 earnings call. As we approach the spring driving season, our team is hard at work preparing for the onslaught of new members we expect to add to the Hagerty ecosystem in 2026. Our members' cars are very special to them. and they are equally special to One Team Hagerty. This inherent love for their toys results in fundamentally better risk profiles due to the way our members care for their prized possessions. And Hagerty has the automotive expertise and guaranteed value proposition they are looking for to protect their cars. This includes innovating with new products and services that align Hagerty with our members' needs. Our member-centric approach built around the automotive passion Combined with our reinvestment posture positions us to spin the flywheel faster, resulting in high rates of sustained written premium growth and even faster growth in profits, which should lead to strong returns for shareholders. Let me dig into our excellent results for full year 2025. Slide three shows how we handily exceeded our original expectations from a year ago, with revenue up 17% and net income surging 91%. Our profit growth benefited from record new business count and efficiency gains, as well as stable underwriting and better than anticipated loss trends, which permitted us to reduce reserves by $21 million. 2025 marked the third straight year of executing on our strategy to deliver high rates of top line growth while more efficiently translating incremental revenue into profits and cash flow. Since going public four years ago, we have compounded revenue by 23% per year and increased net income by over $200 million, reflecting the strength and differentiation of the Hagerty business model as our profit growth is driven by adding new members and not the rate cycle. Operating cash flow is growing quickly, up 24% to 219 million. This cash flow positions us to lengthen our leadership position by reinvesting back into our value proposition for members. With excellent retention and strong net promoter scores, we are operating from a position of strength as we look to grow our share of the 36 million vehicle target market from just 7% today. Slide four shares some additional 2025 highlights. First, we welcome the record 371,000 new members to Hagerty's ecosystem of products and services. Written premium gains of 14% accelerated throughout the year and were better than anticipated thanks to share gains from our recurring revenue model. Importantly, our underwriting is not just high quality, but also low volatility. We ended the year selling new State Farm Classic Plus business in 27 states, and we are converting their US book of 525,000 vehicles in seven of those states. We also announced a new partnership with Liberty Mutual and Safeco. Marketplace and our auction businesses had an incredible year with revenue more than doubling as we expanded into Europe with auctions in Italy, Belgium, and Switzerland. Total transaction value of vehicles sold at auction and through private transactions came in at $566 million, making Hagerty the number two global player after just three short years in the market. Net income jumped 91% to $149 million. As compounding premium growth, cost discipline, resource prioritization, and terrific execution by one team, Hagerty is fueling steady margin expansion. We also evolved our relationship with Markel by signing a new fronting arrangement where we retain 100% of the premium beginning January 1 of this year. For some perspective, it's an extremely rare occurrence in the insurance world to transition from earning a commission to capturing full economics. And we have been working toward this moment for over a decade, taking on more and more of the risk and premium, culminating with the recent move from 80% to 100%. We are excited to continue partnering with Markel as we deliver seamless experiences for Hagerty members with greater operational control. Our technology and digital teams are steadily moving us toward a modern cloud-based architecture that should result in future efficiency gains and scalable growth, including the launch of Enthusiast Plus on Duck Creek to capitalize on the burgeoning demand from younger generations of car lovers. We have continued to deepen our bench strength through several strategic hires across insurance, claims, technology, and marketplace. And finally, the estate of my late sister, Kim Haggerty, executed a secondary share offering that increased our float and trading volumes as we worked toward being a more fully distributed public company. This is a long list of milestones, but at its core, 2025 was a year of investing for the future while delivering in the present. Let me move on to slide five and walk you through Hagerty's 2026 priorities, which are focused on further enhancing the member experience while becoming more efficient at delivering great products and services. First is implementing our new fronting arrangement with Markel, which creates a step function increase in potential underwriting profitability and investment income. To transition to this new 2% fronting arrangement, we are building out our internal team so we can control all aspects of our insurance risk including administrative functions and regulatory filings. With this arrangement comes a complex set of non-cash transitional costs that Patrick will discuss in more detail. But the key takeaway is that our underlying profit and cash flow increase under the new arrangement. Our second priority is State Farm Classic Plus expansion and conversion of additional states. We will also prudently expand our Enthusiast Plus product after launching in Colorado last summer. Third is to refine our distribution strategy with partners and accelerate our B2B efforts, including agent distribution enhancements that should drive additional share gains for Hagerty. Fourth is to maintain the quality of our growth through further investment in our claims expertise. This includes building out the material damage and special investigative teams to ensure the claims are handled very quickly and accurately. Fifth is to enhance our member-centric approach and refine the HDC or Hagerty Drivers Club value proposition. And finally, we will continue our multi-year tech transformation and Duck Creek implementation. Executing on these priorities in 2026 should result in another year of strong underlying growth in premiums and cash flow. Let me now turn the call over to Patrick to share more details on our results and initial 2026 outlook.