☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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 |
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 | ||||||||||||
Warrants, each whole warrant exercisable for one share of Class A common stock, each at an exercise price of $11.50 per share | HGTY.WS | The New York Stock Exchange | ||||||||||||
Large accelerated filer | ☐ | Accelerated filer | ☐ | ||||||||
Non-accelerated filer | ☒ | Smaller reporting company | ☒ | ||||||||
Emerging growth company | ☒ |
Title | Page | |||||||
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
REVENUES: | in thousands (except per share amounts) | ||||||||||||||||||||||
Commission and fee revenue | $ | 95,506 | $ | 83,443 | $ | 157,967 | $ | 137,816 | |||||||||||||||
Earned premium | 94,100 | 70,437 | 183,232 | 133,671 | |||||||||||||||||||
Membership and other revenue | 16,411 | 13,529 | 32,629 | 25,122 | |||||||||||||||||||
Total revenues | 206,017 | 167,409 | 373,828 | 296,609 | |||||||||||||||||||
OPERATING EXPENSES: | |||||||||||||||||||||||
Salaries and benefits | 53,271 | 41,698 | 99,747 | 79,847 | |||||||||||||||||||
Ceding commission | 45,255 | 33,678 | 87,633 | 64,067 | |||||||||||||||||||
Losses and loss adjustment expenses | 38,620 | 29,152 | 75,539 | 55,345 | |||||||||||||||||||
Sales expense | 37,455 | 28,360 | 65,892 | 48,712 | |||||||||||||||||||
General and administrative services | 20,729 | 15,222 | 40,187 | 30,064 | |||||||||||||||||||
Depreciation and amortization | 8,300 | 5,025 | 15,447 | 9,396 | |||||||||||||||||||
Total operating expenses | 203,630 | 153,135 | 384,445 | 287,431 | |||||||||||||||||||
OPERATING INCOME (LOSS) | 2,387 | 14,274 | (10,617) | 9,178 | |||||||||||||||||||
Change in fair value of warrant liabilities | (5,400) | — | 26,286 | — | |||||||||||||||||||
Interest and other income (expense) | (353) | (187) | (1,037) | (624) | |||||||||||||||||||
INCOME (LOSS) BEFORE INCOME TAX EXPENSE | (3,366) | 14,087 | 14,632 | 8,554 | |||||||||||||||||||
Income tax expense | (2,138) | (1,584) | (4,168) | (2,902) | |||||||||||||||||||
Income (loss) on equity method investment, net of tax | (39) | — | (141) | — | |||||||||||||||||||
NET INCOME (LOSS) | (5,543) | 12,503 | 10,323 | 5,652 | |||||||||||||||||||
Net loss (income) attributable to non-controlling interest | 7 | 91 | 11,648 | 136 | |||||||||||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO CONTROLLING INTEREST | $ | (5,536) | $ | 12,594 | $ | 21,971 | $ | 5,788 | |||||||||||||||
Earnings (loss) per share of Class A Common Stock | |||||||||||||||||||||||
Basic | $ | (0.07) | N/A | $ | 0.27 | N/A | |||||||||||||||||
Diluted | $ | (0.07) | N/A | $ | (0.02) | N/A | |||||||||||||||||
Weighted-average shares of Class A Common Stock outstanding: | |||||||||||||||||||||||
Basic | 82,452 | N/A | 82,443 | N/A | |||||||||||||||||||
Diluted | 82,452 | N/A | 334,702 | N/A | |||||||||||||||||||
Earnings (loss) per Members' Unit | |||||||||||||||||||||||
Basic and diluted | N/A | $ | 125.94 | N/A | $ | 57.88 | |||||||||||||||||
Weighted-average units outstanding: | |||||||||||||||||||||||
Basic and diluted | N/A | 100 | N/A | 100 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
in thousands | |||||||||||||||||||||||
Net income (loss) | $ | (5,543) | $ | 12,503 | 10,323 | $ | 5,652 | ||||||||||||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||||||||||
Foreign currency translation adjustments | (1,022) | (39) | (748) | 186 | |||||||||||||||||||
Derivative instruments | 388 | (173) | 1,933 | 608 | |||||||||||||||||||
Other comprehensive income (loss) | (634) | (212) | 1,185 | 794 | |||||||||||||||||||
Comprehensive income (loss) | (6,177) | 12,291 | 11,508 | 6,446 | |||||||||||||||||||
Comprehensive loss (income) attributable to non-controlling interest | 7 | 91 | 11,648 | 136 | |||||||||||||||||||
Comprehensive income (loss) attributable to controlling interest | $ | (6,170) | $ | 12,382 | $ | 23,156 | $ | 6,582 |
June 30, 2022 | December 31, 2021 | ||||||||||
ASSETS | in thousands (except share amounts) | ||||||||||
Current Assets: | |||||||||||
Cash and cash equivalents | $ | 180,165 | $ | 275,332 | |||||||
Restricted cash and cash equivalents | 381,284 | 328,640 | |||||||||
Accounts receivable | 57,999 | 46,729 | |||||||||
Premiums receivable | 141,931 | 75,297 | |||||||||
Commission receivable | 33,791 | 57,596 | |||||||||
Prepaid expenses and other current assets | 40,606 | 30,155 | |||||||||
Deferred acquisition costs, net | 104,841 | 81,535 | |||||||||
Total current assets | 940,617 | 895,284 | |||||||||
Property and equipment, net | 28,160 | 28,363 | |||||||||
Long-Term Assets: | |||||||||||
Prepaid expenses and other non-current assets | 38,816 | 30,565 | |||||||||
Intangible assets, net | 95,754 | 76,171 | |||||||||
Goodwill | 16,525 | 11,488 | |||||||||
Equity method investments | 15,109 | — | |||||||||
Total long-term assets | 166,204 | 118,224 | |||||||||
TOTAL ASSETS | $ | 1,134,981 | $ | 1,041,871 | |||||||
LIABILITIES AND EQUITY | |||||||||||
Current Liabilities: | |||||||||||
Accounts payable | $ | 11,227 | $ | 9,084 | |||||||
Losses payable and provision for unpaid losses and loss adjustment expenses | 123,921 | 109,351 | |||||||||
Unearned premiums | 224,595 | 175,199 | |||||||||
Commissions payable | 75,398 | 60,603 | |||||||||
Due to insurers | 110,226 | 58,031 | |||||||||
Advanced premiums | 28,853 | 13,867 | |||||||||
Accrued expenses | 45,455 | 46,074 | |||||||||
Contract liabilities | 24,984 | 21,723 | |||||||||
Other current liabilities | 2,783 | 1,886 | |||||||||
Total current liabilities | 647,442 | 495,818 | |||||||||
Long-Term Liabilities: | |||||||||||
Accrued expenses | 10,676 | 13,166 | |||||||||
Contract liabilities | 18,833 | 19,667 | |||||||||
Long-term debt | 87,000 | 135,500 | |||||||||
Deferred tax liability | 12,967 | 10,510 | |||||||||
Warrant liabilities | 61,174 | 89,366 | |||||||||
Other long-term liabilities | 7,368 | 7,043 | |||||||||
Total long-term liabilities | 198,018 | 275,252 | |||||||||
TOTAL LIABILITIES | $ | 845,460 | $ | 771,070 | |||||||
(continued) |
June 30, 2022 | December 31, 2021 | ||||||||||
in thousands (except share amounts) | |||||||||||
Commitments and Contingencies (Note 17) | |||||||||||
Redeemable non-controlling interest (Note 11) | $ | — | $ | 593,277 | |||||||
STOCKHOLDERS' / MEMBERS' EQUITY | |||||||||||
Preferred stock, $0.0001 par value (20,000,000 shares authorized, no shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively) | — | — | |||||||||
Class A common stock, $0.0001 par value (500,000,000 shares authorized, 82,452,214 and 82,327,466 issued and outstanding as of June 30, 2022 and December 31, 2021, respectively) | 8 | 8 | |||||||||
Class V common stock, $0.0001 par value (300,000,000 authorized, 251,033,906 shares issued and outstanding as of June 30, 2022 and December 31, 2021) | 25 | 25 | |||||||||
Additional paid-in capital | 532,922 | 160,189 | |||||||||
Accumulated earnings (deficit) | (460,304) | (482,276) | |||||||||
Accumulated other comprehensive income (loss) | (542) | (1,727) | |||||||||
Total stockholders' / members' equity | 72,109 | (323,781) | |||||||||
Non-controlling interest | 217,412 | 1,305 | |||||||||
Total equity (Note 11) | 289,521 | (322,476) | |||||||||
TOTAL LIABILITIES AND EQUITY | $ | 1,134,981 | $ | 1,041,871 | |||||||
(concluded) |
Members' Equity | Class A Common Stock | Class V Common Stock | Additional Paid in Capital | Accumulated Earnings (Deficit) | Accumulated Other Comprehensive Income/(Loss) | Total Stockholders' / Members' Equity | Non-controlling Interest | Total Equity | Redeemable Non-controlling Interest | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
in thousands | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2021 | $ | — | 82,327 | $ | 8 | 251,034 | $ | 25 | $ | 160,189 | $ | (482,276) | $ | (1,727) | $ | (323,781) | $ | 1,305 | $ | (322,476) | $ | 593,277 | |||||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) before exchange agreement amendment | — | — | — | — | — | — | (3,679) | — | (3,679) | (172) | (3,851) | (11,205) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) before exchange agreement amendment | — | — | — | — | — | — | 1,657 | 1,657 | — | 1,657 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of warrants | — | 125 | — | — | — | 1,906 | — | — | 1,906 | — | 1,906 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Redemption value adjustment for redeemable non-controlling interest | — | — | — | — | — | (162,095) | (1,398,325) | — | (1,560,420) | — | (1,560,420) | 1,560,418 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Removal of the redeemable feature of the non-controlling interest | — | — | — | — | — | 528,615 | 1,398,325 | — | 1,926,940 | 215,550 | 2,142,490 | (2,142,490) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) subsequent to exchange agreement amendment | — | — | — | — | — | — | 31,187 | — | 31,187 | (264) | 30,923 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) subsequent to exchange agreement amendment | — | — | — | — | — | — | — | 162 | 162 | — | 162 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2022 | $ | — | 82,452 | $ | 8 | 251,034 | $ | 25 | $ | 528,615 | $ | (454,768) | $ | 92 | $ | 73,972 | $ | 216,419 | $ | 290,391 | $ | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | — | — | — | — | — | — | (5,536) | — | (5,536) | (7) | (5,543) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | — | — | — | (634) | (634) | — | (634) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of warrants | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | 4,307 | — | — | 4,307 | — | 4,307 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-controlling interest issued capital | — | — | — | — | — | — | — | — | — | 1,000 | 1,000 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2022 | $ | — | 82,452 | $ | 8 | 251,034 | $ | 25 | $ | 532,922 | $ | (460,304) | $ | (542) | $ | 72,109 | $ | 217,412 | $ | 289,521 | $ | — |
Members' Equity | Class A Common Stock | Class V Common Stock | Additional Paid in Capital | Accumulated Earnings (Deficit) | Accumulated Other Comprehensive Income/(Loss) | Total Stockholders' / Members' Equity | Non-controlling Interest | Total Equity | Redeemable Non-controlling Interest | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
in thousands | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2020 | $ | 62,320 | — | $ | — | — | $ | — | $ | — | $ | 56,832 | $ | (1,954) | $ | 117,198 | $ | 123 | $ | 117,321 | $ | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | — | — | — | — | — | — | (6,806) | — | (6,806) | (45) | (6,851) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | — | — | — | 1,006 | 1,006 | — | 1,006 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2021 | $ | 62,320 | — | $ | — | — | $ | — | $ | — | $ | 50,026 | $ | (948) | $ | 111,398 | $ | 78 | $ | 111,476 | $ | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | — | — | — | — | — | — | 12,594 | — | 12,594 | (91) | 12,503 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | — | — | — | (212) | (212) | — | (212) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Distributions | (4,056) | — | — | — | — | — | — | (4,056) | (4,056) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-controlling interest issued capital | — | — | — | — | — | — | — | — | — | 400 | 400 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2021 | $ | 58,264 | — | $ | — | — | $ | — | $ | — | $ | 62,620 | $ | (1,160) | $ | 119,724 | $ | 387 | $ | 120,111 | $ | — |
Six months ended June 30, | |||||||||||
2022 | 2021 | ||||||||||
OPERATING ACTIVITIES: | in thousands | ||||||||||
Net income (loss) | $ | 10,323 | $ | 5,652 | |||||||
Adjustments to reconcile net income (loss) to net cash from operating activities: | |||||||||||
Change in fair value of warrant liabilities | (26,286) | — | |||||||||
Depreciation and amortization expense | 15,447 | 9,396 | |||||||||
Provision for deferred taxes | 2,553 | 2,699 | |||||||||
Loss on disposals of equipment, software and other assets | 361 | 2,158 | |||||||||
Stock-based compensation expense | 4,307 | — | |||||||||
Other | 229 | 193 | |||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | (11,447) | (11,076) | |||||||||
Premiums receivable | (66,634) | (58,636) | |||||||||
Commission receivable | 23,787 | 24,390 | |||||||||
Prepaid expenses and other assets | (14,395) | (14,611) | |||||||||
Deferred acquisition costs | (23,307) | (20,776) | |||||||||
Accounts payable | 1,899 | (3,994) | |||||||||
Losses payable and provision for unpaid losses and loss adjustment expenses | 14,570 | 14,176 | |||||||||
Unearned premiums | 49,395 | 44,300 | |||||||||
Commissions payable | 14,795 | 15,322 | |||||||||
Due to insurers | 52,486 | 47,831 | |||||||||
Advanced premiums | 15,032 | 12,365 | |||||||||
Accrued expenses | (5,185) | (6,318) | |||||||||
Contract liabilities | 2,337 | 2,288 | |||||||||
Other current liabilities | (342) | 2,715 | |||||||||
Net Cash Provided by Operating Activities | 59,925 | 68,074 | |||||||||
INVESTING ACTIVITIES: | |||||||||||
Purchases of property, equipment and software | (21,520) | (19,035) | |||||||||
Acquisitions, net of cash acquired | (13,520) | (8,709) | |||||||||
Purchase of equity method investment | (15,250) | — | |||||||||
Purchase of fixed income securities | (2,448) | (7,446) | |||||||||
Maturities of fixed income securities | 1,216 | — | |||||||||
Other investing activities | (1,639) | 21 | |||||||||
Net Cash Used in Investing Activities | $ | (53,161) | $ | (35,169) | |||||||
(continued) |
Six months ended June 30, | |||||||||||
2022 | 2021 | ||||||||||
FINANCING ACTIVITIES: | in thousands | ||||||||||
Payments on long-term debt | $ | (90,500) | $ | (22,500) | |||||||
Proceeds from long-term debt | 42,000 | 40,500 | |||||||||
Contribution from minority interest | 1,000 | 400 | |||||||||
Payments on notes payable | (1,000) | (1,000) | |||||||||
Distributions | — | (4,056) | |||||||||
Net Cash Used in Financing Activities | (48,500) | 13,344 | |||||||||
Effect of exchange rate changes on cash and cash equivalents and restricted cash and cash equivalents | (787) | 174 | |||||||||
Change in cash and cash equivalents and restricted cash and cash equivalents | (42,523) | 46,423 | |||||||||
Beginning cash and cash equivalents and restricted cash and cash equivalents | 603,972 | 299,078 | |||||||||
Ending cash and cash equivalents and restricted cash and cash equivalents | $ | 561,449 | $ | 345,501 | |||||||
NON-CASH INVESTING ACTIVITIES: | |||||||||||
Purchase of property and equipment and software | $ | 4,389 | $ | 4,426 | |||||||
Acquisitions | $ | 7,500 | $ | — | |||||||
CASH PAID FOR: | |||||||||||
Interest | $ | 2,037 | $ | 1,026 | |||||||
Income taxes | $ | 5,250 | $ | 2,200 | |||||||
(concluded) |
2022 | 2021 | ||||||||||
in thousands | |||||||||||
Cash and cash equivalents | $ | 180,165 | $ | 49,135 | |||||||
Restricted cash and cash equivalents | 381,284 | 296,366 | |||||||||
Total cash and cash equivalents and restricted cash and cash equivalents on the Condensed Consolidated Statements of Cash Flows | $ | 561,449 | $ | 345,501 |
Agent | Direct | Total | |||||||||||||||
in thousands | |||||||||||||||||
Three months ended June 30, 2022 | |||||||||||||||||
Commission and fee revenue | $ | 40,193 | $ | 35,479 | $ | 75,672 | |||||||||||
Contingent commission | 10,857 | 8,977 | 19,834 | ||||||||||||||
Membership revenue | — | 11,131 | 11,131 | ||||||||||||||
Other revenue | — | 5,280 | 5,280 | ||||||||||||||
Total revenue from customer contracts | $ | 51,050 | $ | 60,867 | $ | 111,917 | |||||||||||
Earned premium recognized under ASC 944 | 94,100 | ||||||||||||||||
Total revenue | $ | 206,017 | |||||||||||||||
Three months ended June 30, 2021 | |||||||||||||||||
Commission and fee revenue | $ | 34,901 | $ | 30,851 | $ | 65,752 | |||||||||||
Contingent commission | 9,561 | 8,130 | 17,691 | ||||||||||||||
Membership revenue | — | 9,878 | 9,878 | ||||||||||||||
Other revenue | — | 3,651 | 3,651 | ||||||||||||||
Total revenue from customer contracts | $ | 44,462 | $ | 52,510 | $ | 96,972 | |||||||||||
Earned premium recognized under ASC 944 | 70,437 | ||||||||||||||||
Total revenue | $ | 167,409 |
Agent | Direct | Total | |||||||||||||||
in thousands | |||||||||||||||||
Six months ended June 30, 2022 | |||||||||||||||||
Commission and fee revenue | $ | 66,392 | $ | 58,152 | $ | 124,544 | |||||||||||
Contingent commission | 18,232 | 15,191 | 33,423 | ||||||||||||||
Membership revenue | — | 21,449 | 21,449 | ||||||||||||||
Other revenue | — | 11,180 | 11,180 | ||||||||||||||
Total revenue from customer contracts | $ | 84,624 | $ | 105,972 | $ | 190,596 | |||||||||||
Earned premium recognized under ASC 944 | 183,232 | ||||||||||||||||
Total revenue | $ | 373,828 | |||||||||||||||
Six months ended June 30, 2021 | |||||||||||||||||
Commission and fee revenue | $ | 57,555 | $ | 50,306 | $ | 107,861 | |||||||||||
Contingent commission | 16,158 | 13,797 | 29,955 | ||||||||||||||
Membership revenue | — | 19,554 | 19,554 | ||||||||||||||
Other revenue | — | 5,568 | 5,568 | ||||||||||||||
Total revenue from customer contracts | $ | 73,713 | $ | 89,225 | $ | 162,938 | |||||||||||
Earned premium recognized under ASC 944 | 133,671 | ||||||||||||||||
Total revenue | $ | 296,609 |
U.S. | Canada | Europe | Total | ||||||||||||||||||||
in thousands | |||||||||||||||||||||||
Three months ended June 30, 2022 | |||||||||||||||||||||||
Commission and fee revenue | $ | 66,400 | $ | 7,956 | $ | 1,316 | $ | 75,672 | |||||||||||||||
Contingent commission | 19,798 | — | 36 | 19,834 | |||||||||||||||||||
Membership revenue | 10,288 | 843 | — | 11,131 | |||||||||||||||||||
Other revenue | 4,754 | 152 | 374 | 5,280 | |||||||||||||||||||
Total revenue from customer contracts | $ | 101,240 | $ | 8,951 | $ | 1,726 | $ | 111,917 | |||||||||||||||
Earned premium recognized under ASC 944 | 94,100 | ||||||||||||||||||||||
Total revenue | $ | 206,017 | |||||||||||||||||||||
Three months ended June 30, 2021 | |||||||||||||||||||||||
Commission and fee revenue | $ | 57,715 | $ | 6,797 | $ | 1,240 | $ | 65,752 | |||||||||||||||
Contingent commission | 17,750 | — | (59) | 17,691 | |||||||||||||||||||
Membership revenue | 9,167 | 711 | — | 9,878 | |||||||||||||||||||
Other revenue | 3,196 | 49 | 406 | 3,651 | |||||||||||||||||||
Total revenue from customer contracts | $ | 87,828 | $ | 7,557 | $ | 1,587 | $ | 96,972 | |||||||||||||||
Earned premium recognized under ASC 944 | 70,437 | ||||||||||||||||||||||
Total revenue | $ | 167,409 |
U.S. | Canada | Europe | Total | ||||||||||||||||||||
in thousands | |||||||||||||||||||||||
Six months ended June 30, 2022 | |||||||||||||||||||||||
Commission and fee revenue | $ | 112,070 | $ | 10,274 | $ | 2,200 | $ | 124,544 | |||||||||||||||
Contingent commission | 33,266 | — | 157 | 33,423 | |||||||||||||||||||
Membership revenue | 19,779 | 1,670 | — | 21,449 | |||||||||||||||||||
Other revenue | 10,066 | 470 | 644 | 11,180 | |||||||||||||||||||
Total revenue from customer contracts | $ | 175,181 | $ | 12,414 | $ | 3,001 | $ | 190,596 | |||||||||||||||
Earned premium recognized under ASC 944 | 183,232 | ||||||||||||||||||||||
Total revenue | $ | 373,828 | |||||||||||||||||||||
Six months ended June 30, 2021 | |||||||||||||||||||||||
Commission and fee revenue | $ | 97,215 | $ | 8,690 | $ | 1,956 | $ | 107,861 | |||||||||||||||
Contingent commission | 29,869 | 18 | 68 | 29,955 | |||||||||||||||||||
Membership revenue | 18,179 | 1,375 | — | 19,554 | |||||||||||||||||||
Other revenue | 4,799 | 71 | 698 | 5,568 | |||||||||||||||||||
Total revenue from customer contracts | $ | 150,062 | $ | 10,154 | $ | 2,722 | $ | 162,938 | |||||||||||||||
Earned premium recognized under ASC 944 | 133,671 | ||||||||||||||||||||||
Total revenue | $ | 296,609 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
in thousands | |||||||||||||||||||||||
Underwriting income: | |||||||||||||||||||||||
Premiums assumed | $ | 139,627 | $ | 108,635 | $ | 237,255 | $ | 181,239 | |||||||||||||||
Reinsurance premiums ceded | — | (933) | (9,690) | (8,465) | |||||||||||||||||||
Net premiums assumed | 139,627 | 107,702 | 227,565 | 172,774 | |||||||||||||||||||
Change in unearned premiums | (43,123) | (36,545) | (49,395) | (44,300) | |||||||||||||||||||
Change in deferred reinsurance premiums | (2,404) | (720) | 5,062 | 5,197 | |||||||||||||||||||
Net premiums earned | $ | 94,100 | $ | 70,437 | $ | 183,232 | $ | 133,671 |
June 30, 2022 | December 31, 2021 | ||||||||||
in thousands | |||||||||||
Contract assets | $ | 33,791 | $ | 57,596 | |||||||
Contract liabilities | $ | 43,817 | $ | 41,390 |
June 30, 2022 | December 31, 2021 | ||||||||||
in thousands | |||||||||||
Prepaid sales, general and administrative expenses | $ | 22,437 | $ | 18,004 | |||||||
Prepaid SaaS implementation costs | 16,742 | 16,318 | |||||||||
Fixed income investments | 11,848 | 10,785 | |||||||||
Contract costs | 4,704 | 4,160 | |||||||||
Media content | 4,545 | 3,335 | |||||||||
Deferred reinsurance premiums ceded | 5,373 | 310 | |||||||||
Other | 13,773 | 7,808 | |||||||||
Prepaid expenses and other assets | $ | 79,422 | $ | 60,720 |
Business Combination | |||||
in thousands | |||||
Cash in trust, net of redemptions | $ | 85,811 | |||
Cash, PIPE | 703,850 | ||||
Less: transaction costs and advisory fees | (41,859) | ||||
Less: Cash consideration to HHC at Closing | (489,661) | ||||
Net cash received from Business Combination | $ | 258,141 |
Weighted Average Useful Life | June 30, 2022 | December 31, 2021 | |||||||||||||||
in thousands | |||||||||||||||||
Renewal rights | 9.9 | $ | 17,758 | $ | 17,557 | ||||||||||||
Internally developed software | 3.1 | 96,376 | 76,865 | ||||||||||||||
Trade names and trademarks | 17.0 | 9,408 | 5,004 | ||||||||||||||
Relationships and customer lists | 15.6 | 10,449 | 5,652 | ||||||||||||||
Other | 4.4 | 1,460 | 1,464 | ||||||||||||||
Intangible assets | 135,451 | 106,542 | |||||||||||||||
Less: accumulated amortization | (39,697) | (30,371) | |||||||||||||||
Intangible assets, net | $ | 95,754 | $ | 76,171 |
2022 | $ | 13,123 | |||
2023 | 29,010 | ||||
2024 | 20,965 | ||||
2025 | 10,901 | ||||
2026 | 3,205 | ||||
Thereafter | 18,550 | ||||
Total | $ | 95,754 |
Six months ended June 30, | |||||||||||
2022 | 2021 | ||||||||||
in thousands | |||||||||||
Net unpaid losses and loss adjustment expenses, beginning of period | $ | 74,869 | $ | 54,988 | |||||||
Incurred losses and loss adjustment expenses: | |||||||||||
Current accident year | 75,539 | 55,345 | |||||||||
Prior accident year | — | — | |||||||||
Total incurred losses and loss adjustment expenses | 75,539 | 55,345 | |||||||||
Payments: | |||||||||||
Current accident year | 6,698 | 5,658 | |||||||||
Prior accident year | 19,706 | 13,527 | |||||||||
Total payments | 26,404 | 19,185 | |||||||||
Effect of foreign currency rate changes | (83) | (4) | |||||||||
Net reserves for losses and loss adjustment expenses, end of period | 123,921 | 91,144 | |||||||||
Reinsurance recoverable | — | — | |||||||||
Gross reserves for losses and loss adjustment expenses, end of period | $ | 123,921 | $ | 91,144 |
Inputs | Private Placement Warrants | Underwriter Warrants | OTM Warrants | PIPE Warrants | ||||||||||||||||||||||
Exercise price | $11.50 | $11.50 | $15.00 | $11.50 | ||||||||||||||||||||||
Common stock price | $11.49 | $11.49 | $11.49 | $11.49 | ||||||||||||||||||||||
Volatility | 29.3% | 29.3% | 31.0% | 29.3% | ||||||||||||||||||||||
Expected term of the warrants | 4.43 | 4.43 | 9.43 | 4.43 | ||||||||||||||||||||||
Risk-free rate | 3.14% | 3.14% | 3.11% | 3.14% | ||||||||||||||||||||||
Dividend yield | —% | —% | —% | —% |
Fair Value Measurements | |||||||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
in thousands | |||||||||||||||||||||||
June 30, 2022 | |||||||||||||||||||||||
Financial Assets | |||||||||||||||||||||||
Interest rate swaps | $ | 2,528 | $ | — | $ | 2,528 | $ | — | |||||||||||||||
Total | $ | 2,528 | $ | — | $ | 2,528 | $ | — | |||||||||||||||
Financial Liabilities | |||||||||||||||||||||||
Public warrants | $ | 17,538 | $ | 17,538 | $ | — | $ | — | |||||||||||||||
Private placement warrants | 846 | — | — | 846 | |||||||||||||||||||
Underwriter warrants | 95 | — | — | 95 | |||||||||||||||||||
OTM warrants | 5,548 | — | — | 5,548 | |||||||||||||||||||
PIPE warrants | 37,147 | — | — | 37,147 | |||||||||||||||||||
Total | $ | 61,174 | $ | 17,538 | $ | — | $ | 43,636 | |||||||||||||||
December 31, 2021 | |||||||||||||||||||||||
Financial Assets | |||||||||||||||||||||||
Interest rate swaps | $ | 531 | $ | — | $ | 531 | $ | — | |||||||||||||||
Total | $ | 531 | $ | — | $ | 531 | $ | — | |||||||||||||||
Financial Liabilities | |||||||||||||||||||||||
Public warrants | $ | 25,243 | $ | 25,243 | $ | — | $ | — | |||||||||||||||
Private placement warrants | 1,248 | — | — | 1,248 | |||||||||||||||||||
Underwriter warrants | 139 | — | — | 139 | |||||||||||||||||||
OTM warrants | 6,849 | — | — | 6,849 | |||||||||||||||||||
PIPE warrants | 55,887 | — | — | 55,887 | |||||||||||||||||||
Total | $ | 89,366 | $ | 25,243 | $ | — | $ | 64,123 |
Private Placement Warrants | Underwriter Warrants | OTM Warrants | PIPE Warrants | Total | |||||||||||||||||||||||||
in thousands | |||||||||||||||||||||||||||||
Balance at December 31, 2021 | $ | 1,248 | $ | 139 | $ | 6,849 | $ | 55,887 | $ | 64,123 | |||||||||||||||||||
Change in fair value of warrant liabilities | (402) | (44) | (1,301) | (16,834) | (18,581) | ||||||||||||||||||||||||
Exercise of warrants | — | — | — | (1,906) | (1,906) | ||||||||||||||||||||||||
Transfers In (Out) of Level 3 | — | — | — | — | — | ||||||||||||||||||||||||
Balance at June 30, 2022 | $ | 846 | $ | 95 | $ | 5,548 | $ | 37,147 | $ | 43,636 |
Carrying Amount | Estimated Fair Value | ||||||||||
in thousands | |||||||||||
June 30, 2022 | |||||||||||
Fixed income securities, short-term | $ | 1,175 | $ | 1,182 | |||||||
Fixed income securities, long-term | 10,673 | 10,815 | |||||||||
Total | $ | 11,848 | $ | 11,997 | |||||||
December 31, 2021 | |||||||||||
Fixed income securities, short-term | $ | 1,189 | $ | 1,188 | |||||||
Fixed income securities, long-term | 9,596 | 9,476 | |||||||||
Total | $ | 10,785 | $ | 10,664 |
June 30, 2022 | December 31, 2021 | ||||||||||
in thousands | |||||||||||
Credit Facility | $ | 87,000 | $ | 135,500 | |||||||
Note payable | — | 1,000 | |||||||||
Total debt outstanding | $ | 87,000 | $ | 136,500 | |||||||
Less: current portion | — | (1,000) | |||||||||
Total long-term debt outstanding | $ | 87,000 | $ | 135,500 |
Owner | Units Owned | Ownership Percentage | ||||||||||||
Hagerty, Inc. controlling interest | 82,452,214 | 24.7 | % | |||||||||||
Non-controlling interest | 251,033,906 | 75.3 | % | |||||||||||
Total | 333,486,120 | 100.0 | % |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
in thousands (except per share/unit amounts) | |||||||||||||||||||||||
Numerator: | |||||||||||||||||||||||
Net income (loss) attributable to controlling interest | $ | (5,536) | $ | 12,594 | $ | 21,971 | $ | 5,788 | |||||||||||||||
Adjustment of change in fair value of potentially dilutive warrant liabilities | — | — | (17,280) | — | |||||||||||||||||||
Adjustment of non-controlling interest from conversion of Class V Common Stock | — | — | (11,237) | — | |||||||||||||||||||
Adjusted net income (loss) to common shareholders | $ | (5,536) | $ | 12,594 | $ | (6,546) | $ | 5,788 | |||||||||||||||
Denominator: | |||||||||||||||||||||||
Basic Class A Common Stock outstanding | 82,452 | N/A | 82,443 | N/A | |||||||||||||||||||
Add: Dilutive effect of warrants | — | N/A | 1,225 | N/A | |||||||||||||||||||
Add: Dilutive effect of conversion of Class V Common Stock | — | N/A | 251,034 | N/A | |||||||||||||||||||
Add: Dilutive effect of stock-based compensation awards | — | N/A | — | N/A | |||||||||||||||||||
Diluted Class A Common Stock outstanding | 82,452 | N/A | 334,702 | N/A | |||||||||||||||||||
Weighted average Members' Units - basic and diluted | N/A | 100 | N/A | 100 | |||||||||||||||||||
Earnings (loss) per share of Class A Common Stock - basic | $ | (0.07) | N/A | $ | 0.27 | N/A | |||||||||||||||||
Earnings (loss) per share of Class A Common Stock - diluted | $ | (0.07) | N/A | $ | (0.02) | N/A | |||||||||||||||||
Earnings (loss) per unit - basic and diluted | N/A | $ | 125.94 | N/A | $ | 57.88 |
Three months ended June 30, 2022 | Six months ended June 30, 2022 | ||||||||||
in thousands | |||||||||||
Restricted stock units | $ | 3,592 | $ | 3,592 | |||||||
Performance restricted stock units | 715 | 715 | |||||||||
Total stock-based equity awards | $ | 4,307 | $ | 4,307 |
Restricted Stock | Weighted Average Fair Value | ||||||||||
Unvested balance as of December 31, 2021 | — | $ | — | ||||||||
Granted | 3,173,231 | 10.79 | |||||||||
Forfeited | (29,779) | 10.79 | |||||||||
Unvested balance as of June 30, 2022 | 3,143,452 | $ | 10.79 |
Inputs | Performance Restricted Stock Units | |||||||
Weighted average grant-date fair value per share | $5.19 | |||||||
Expected term (in years) | 7.0 | |||||||
Expected stock volatility | 35% | |||||||
Dividend yield | —% | |||||||
Risk-free interest rate | 2.5% |
Units | Weighted Average Fair Value | ||||||||||
Outstanding as of December 31, 2021 | — | $ | — | ||||||||
Granted | 3,707,136 | 5.19 | |||||||||
Outstanding as of June 30, 2022 | 3,707,136 | $ | 5.19 |
Six months ended June 30, | |||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||
in thousands (except percentages) | |||||||||||||||||||||||
Income tax expense (benefit) at statutory rate | $ | 3,073 | 21 | % | $ | 1,796 | 21 | % | |||||||||||||||
State taxes | (142) | (1) | % | — | — | % | |||||||||||||||||
Loss not subject to entity-level taxes | 4,692 | 32 | % | 185 | 2 | % | |||||||||||||||||
Foreign rate differential | (175) | (1) | % | (112) | (1) | % | |||||||||||||||||
Change in valuation allowance | 2,002 | 14 | % | 1,033 | 12 | % | |||||||||||||||||
Change in fair value of warrant liabilities | (5,520) | (38) | % | — | — | % | |||||||||||||||||
Permanent items | 238 | 2 | % | — | — | % | |||||||||||||||||
Income tax expense | $ | 4,168 | 29 | % | $ | 2,902 | 34 | % |
June 30, 2022 | December 31, 2021 | ||||||||||
in thousands (except percentages) | |||||||||||
Due to insurer | $ | 99,289 | $ | 54,850 | |||||||
Percent of total | 90 | % | 95 | % |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
in thousands (except percentages) | |||||||||||||||||||||||
Commission revenue | $ | 86,716 | $ | 75,575 | $ | 146,252 | $ | 126,693 | |||||||||||||||
Percent of total | 93 | % | 92 | % | 94 | % | 93 | % |
June 30, 2022 | December 31, 2021 | ||||||||||
Assets | in thousands | ||||||||||
Premiums receivable | $ | 135,015 | $ | 72,697 | |||||||
Deferred acquisition costs, net | 101,076 | 78,449 | |||||||||
Total assets | $ | 236,091 | $ | 151,146 | |||||||
Liabilities | |||||||||||
Losses payable and provision for unpaid losses and loss adjustment expenses | $ | 116,202 | $ | 104,139 | |||||||
Unearned premiums | 215,629 | 167,541 | |||||||||
Commissions payable | 72,493 | 59,511 | |||||||||
Total liabilities | $ | 404,324 | $ | 331,191 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Revenue | in thousands | ||||||||||||||||||||||
Earned premium | $ | 89,738 | $ | 67,108 | $ | 175,428 | $ | 127,469 | |||||||||||||||
Expenses | |||||||||||||||||||||||
Ceding commission | $ | 43,415 | $ | 31,558 | $ | 84,303 | $ | 61,326 | |||||||||||||||
Losses and loss adjustment expenses | 36,808 | 27,520 | 71,379 | 52,266 | |||||||||||||||||||
Total expenses | $ | 80,223 | $ | 59,078 | $ | 155,682 | $ | 113,592 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Total Revenue (in thousands) | $206,017 | $167,409 | $373,828 | $296,609 | |||||||||||||||||||
New Business Count (Insurance) | 74,922 | 77,013 | 122,436 | 128,812 | |||||||||||||||||||
Total Written Premium (in thousands) | $237,697 | $208,091 | $392,487 | $341,798 | |||||||||||||||||||
Loss Ratio | 41.0% | 41.4% | 41.2% | 41.4% | |||||||||||||||||||
Operating Income (Loss) (in thousands) | $2,387 | $14,274 | $(10,617) | $9,178 | |||||||||||||||||||
Contribution Margin (in thousands) | $61,032 | $53,466 | $98,178 | $84,546 | |||||||||||||||||||
Net Income (Loss) (in thousands) | $(5,543) | $12,503 | $10,323 | $5,652 | |||||||||||||||||||
Adjusted EBITDA (in thousands) | $16,065 | $19,299 | $10,106 | $20,338 | |||||||||||||||||||
Basic Earnings (Loss) Per Share | $(0.07) | N/A | $0.27 | N/A | |||||||||||||||||||
Adjusted Earnings (Loss) Per Share | $(0.02) | N/A | $0.03 | N/A |
June 30, 2022 | December 31, 2021 | ||||||||||
Policies in Force | 1,292,138 | 1,247,056 | |||||||||
Policies in Force Retention | 88.2% | 89.1% | |||||||||
HDC Paid Member Count | 742,825 | 718,583 | |||||||||
Net Promoter Score (NPS) | 82.0 | 82.0 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
in thousands (except percentages) | |||||||||||||||||||||||
Total revenue | $ | 206,017 | $ | 167,409 | $ | 373,828 | $ | 296,609 | |||||||||||||||
Less: total operating expenses | 203,630 | 153,135 | 384,445 | 287,431 | |||||||||||||||||||
Operating income (loss) | $ | 2,387 | $ | 14,274 | $ | (10,617) | $ | 9,178 | |||||||||||||||
Operating income (loss) margin | 1 | % | 9 | % | (3) | % | 3 | % | |||||||||||||||
Add: fixed operating expenses | $ | 58,645 | $ | 39,192 | $ | 108,795 | $ | 75,368 | |||||||||||||||
Contribution Margin | $ | 61,032 | $ | 53,466 | $ | 98,178 | $ | 84,546 | |||||||||||||||
Contribution Margin Ratio | 30 | % | 32 | % | 26 | % | 29 | % |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
in thousands | |||||||||||||||||||||||
Net income (loss) | $ | (5,543) | $ | 12,503 | $ | 10,323 | $ | 5,652 | |||||||||||||||
Interest and other (income) expense | 353 | 187 | 1,037 | 624 | |||||||||||||||||||
Income tax expense | 2,138 | 1,584 | 4,168 | 2,902 | |||||||||||||||||||
Depreciation and amortization | 8,300 | 5,025 | 15,447 | 9,396 | |||||||||||||||||||
Change in fair value of warrant liabilities | 5,400 | — | (26,286) | — | |||||||||||||||||||
Stock-based compensation expense | 4,307 | — | 4,307 | — | |||||||||||||||||||
Net (gain) loss from asset disposals | — | — | — | 1,764 | |||||||||||||||||||
Other non-recurring (gains) losses (1) | 1,110 | — | 1,110 | — | |||||||||||||||||||
Adjusted EBITDA | $ | 16,065 | $ | 19,299 | $ | 10,106 | $ | 20,338 | |||||||||||||||
Three months ended June 30, 2022 | Six months ended June 30, 2022 | |||||||||||||
in thousands (except per share amounts) | ||||||||||||||
Numerator: | ||||||||||||||
Net income (loss) attributable to controlling interest(1) | $ | (5,536) | $ | 21,971 | ||||||||||
Net income (loss) attributable to non-controlling interest | (7) | (11,648) | ||||||||||||
Consolidated net income (loss)(2) | $ | (5,543) | $ | 10,323 | ||||||||||
Denominator: | ||||||||||||||
Weighted-average shares of Class A Common Stock outstanding: | ||||||||||||||
Basic(1) | 82,452 | 82,443 | ||||||||||||
Potentially dilutive shares outstanding: | ||||||||||||||
Class V Common Stock outstanding | 251,034 | 251,034 | ||||||||||||
Warrants outstanding | 19,484 | 19,484 | ||||||||||||
Unvested stock-based compensation awards | 6,851 | 6,851 | ||||||||||||
Potentially dilutive shares outstanding | 277,369 | 277,369 | ||||||||||||
Fully dilutive shares outstanding(2) | 359,821 | 359,812 | ||||||||||||
Basic EPS = (Net income (loss) attributable to controlling interest / Weighted-average shares of Class A Common Stock outstanding)(1) | $ | (0.07) | $ | 0.27 | ||||||||||
Adjusted EPS = (Consolidated net income (loss) / Fully dilutive shares outstanding)(2) | $ | (0.02) | $ | 0.03 | ||||||||||
Three months ended June 30, | |||||||||||||||||||||||
2022 | 2021 | $ Change | % Change | ||||||||||||||||||||
REVENUES: | in thousands (except percentages) | ||||||||||||||||||||||
Commission and fee revenue | $ | 95,506 | $ | 83,443 | $ | 12,063 | 14.5 | % | |||||||||||||||
Earned premium | 94,100 | 70,437 | 23,663 | 33.6 | % | ||||||||||||||||||
Membership and other revenue | 16,411 | 13,529 | 2,882 | 21.3 | % | ||||||||||||||||||
Total revenues | 206,017 | 167,409 | 38,608 | 23.1 | % | ||||||||||||||||||
OPERATING EXPENSES: | |||||||||||||||||||||||
Salaries and benefits | 53,271 | 41,698 | 11,573 | 27.8 | % | ||||||||||||||||||
Ceding commission | 45,255 | 33,678 | 11,577 | 34.4 | % | ||||||||||||||||||
Losses and loss adjustment expenses | 38,620 | 29,152 | 9,468 | 32.5 | % | ||||||||||||||||||
Sales expense | 37,455 | 28,360 | 9,095 | 32.1 | % | ||||||||||||||||||
General and administrative services | 20,729 | 15,222 | 5,507 | 36.2 | % | ||||||||||||||||||
Depreciation and amortization | 8,300 | 5,025 | 3,275 | 65.2 | % | ||||||||||||||||||
Total operating expenses | 203,630 | 153,135 | 50,495 | 33.0 | % | ||||||||||||||||||
OPERATING INCOME (LOSS) | 2,387 | 14,274 | (11,887) | (83.3) | % | ||||||||||||||||||
Change in fair value of warrant liabilities | (5,400) | — | (5,400) | (100.0) | % | ||||||||||||||||||
Interest and other income (expense) | (353) | (187) | (166) | (88.8) | % | ||||||||||||||||||
INCOME (LOSS) BEFORE INCOME TAX EXPENSE | (3,366) | 14,087 | (17,453) | (123.9) | % | ||||||||||||||||||
Income tax expense | (2,138) | (1,584) | (554) | (35.0) | % | ||||||||||||||||||
Income (loss) on equity method investment, net of tax | (39) | — | (39) | (100.0) | % | ||||||||||||||||||
NET INCOME (LOSS) | $ | (5,543) | $ | 12,503 | $ | (18,046) | (144.3) | % |
U.S. | Canada | U.K. | Total | ||||||||||||||||||||
in thousands (except percentages) | |||||||||||||||||||||||
Three months ended June 30, 2022 | |||||||||||||||||||||||
Subject premium | $ | 185,636 | $ | 21,523 | $ | 3,070 | $ | 210,229 | |||||||||||||||
Quota share percentage | 70.0 | % | 35.0 | % | 70.0 | % | 66.4 | % | |||||||||||||||
Assumed premium in Hagerty Re | $ | 129,946 | $ | 7,533 | $ | 2,149 | $ | 139,628 | |||||||||||||||
Net ceding commission | $ | 42,410 | $ | 1,841 | $ | 1,004 | $ | 45,255 | |||||||||||||||
Three months ended June 30, 2021 | |||||||||||||||||||||||
Subject premium | $ | 169,416 | $ | 18,118 | $ | 1,072 | $ | 188,606 | |||||||||||||||
Quota share percentage | 60.0 | % | 35.0 | % | 60.0 | % | 57.6 | % | |||||||||||||||
Assumed premium in Hagerty Re | $ | 101,650 | $ | 6,341 | $ | 643 | $ | 108,634 | |||||||||||||||
Net ceding commission | $ | 32,168 | $ | 1,439 | $ | 71 | $ | 33,678 |
Six months ended June 30, | |||||||||||||||||||||||
2022 | 2021 | $ Change | % Change | ||||||||||||||||||||
REVENUES: | in thousands (except percentages) | ||||||||||||||||||||||
Commission and fee revenue | $ | 157,967 | $ | 137,816 | $ | 20,151 | 14.6 | % | |||||||||||||||
Earned premium | 183,232 | 133,671 | 49,561 | 37.1 | % | ||||||||||||||||||
Membership and other revenue | 32,629 | 25,122 | 7,507 | 29.9 | % | ||||||||||||||||||
Total revenues | 373,828 | 296,609 | 77,219 | 26.0 | % | ||||||||||||||||||
OPERATING EXPENSES: | |||||||||||||||||||||||
Salaries and benefits | 99,747 | 79,847 | 19,900 | 24.9 | % | ||||||||||||||||||
Ceding commission | 87,633 | 64,067 | 23,566 | 36.8 | % | ||||||||||||||||||
Losses and loss adjustment expenses | 75,539 | 55,345 | 20,194 | 36.5 | % | ||||||||||||||||||
Sales expense | 65,892 | 48,712 | 17,180 | 35.3 | % | ||||||||||||||||||
General and administrative services | 40,187 | 30,064 | 10,123 | 33.7 | % | ||||||||||||||||||
Depreciation and amortization | 15,447 | 9,396 | 6,051 | 64.4 | % | ||||||||||||||||||
Total operating expenses | 384,445 | 287,431 | 97,014 | 33.8 | % | ||||||||||||||||||
OPERATING INCOME (LOSS) | (10,617) | 9,178 | (19,795) | (215.7) | % | ||||||||||||||||||
Change in fair value of warrant liabilities | 26,286 | — | 26,286 | 100.0 | % | ||||||||||||||||||
Interest and other income (expense) | (1,037) | (624) | (413) | (66.2) | % | ||||||||||||||||||
INCOME (LOSS) BEFORE INCOME TAX EXPENSE | 14,632 | 8,554 | 6,078 | 71.1 | % | ||||||||||||||||||
Income tax expense | (4,168) | (2,902) | (1,266) | (43.6) | % | ||||||||||||||||||
Income (loss) on equity method investment, net of tax | (141) | — | (141) | (100.0) | % | ||||||||||||||||||
NET INCOME (LOSS) | $ | 10,323 | $ | 5,652 | $ | 4,671 | 82.6 | % |
U.S. | Canada | U.K. | Total | ||||||||||||||||||||
in thousands (except percentages) | |||||||||||||||||||||||
Six months ended June 30, 2022 | |||||||||||||||||||||||
Subject premium | $ | 320,382 | $ | 27,279 | $ | 4,914 | $ | 352,575 | |||||||||||||||
Quota share percentage | 70.0 | % | 35.0 | % | 70.0 | % | 67.3 | % | |||||||||||||||
Assumed premium in Hagerty Re | $ | 224,268 | $ | 9,548 | $ | 3,440 | $ | 237,256 | |||||||||||||||
Net ceding commission | $ | 82,816 | $ | 3,331 | $ | 1,486 | $ | 87,633 | |||||||||||||||
Six months ended June 30, 2021 | |||||||||||||||||||||||
Subject premium | $ | 287,557 | $ | 23,032 | $ | 1,072 | $ | 311,661 | |||||||||||||||
Quota share percentage | 60.0 | % | 35.0 | % | 60.0 | % | 58.2 | % | |||||||||||||||
Assumed premium in Hagerty Re | $ | 172,534 | $ | 8,061 | $ | 643 | $ | 181,238 | |||||||||||||||
Net ceding commission | $ | 61,255 | $ | 2,741 | $ | 71 | $ | 64,067 |
Six months ended June 30, | |||||||||||||||||||||||
2022 | 2021 | $ Change | % Change | ||||||||||||||||||||
in thousands (except percentages) | |||||||||||||||||||||||
Net Cash Provided by Operating Activities | $ | 59,925 | $ | 68,074 | $ | (8,149) | (12.0) | % | |||||||||||||||
Net Cash Used in Investing Activities | (53,161) | (35,169) | (17,992) | (51.2) | % | ||||||||||||||||||
Net Cash Used in Financing Activities | $ | (48,500) | $ | 13,344 | $ | (61,844) | (463.5) | % |
Six months ended June 30, | |||||||||||||||||||||||
2022 | 2021 | $ Change | % Change | ||||||||||||||||||||
in thousands (except percentages) | |||||||||||||||||||||||
Net income (loss) | $ | 10,323 | $ | 5,652 | $ | 4,671 | 82.6 | % | |||||||||||||||
Non-cash adjustments to net income (loss) | (3,389) | 14,446 | (17,835) | (123.5) | % | ||||||||||||||||||
Changes in operating assets and liabilities | 52,991 | 47,976 | 5,015 | 10.5 | % | ||||||||||||||||||
Net Cash Provided by Operating Activities | $ | 59,925 | $ | 68,074 | $ | (8,149) | (12.0) | % |
Total | 2022 | 2023 | 2024 | 2025 | 2026 | Thereafter | |||||||||||||||||||||||||||||||||||
in thousands | |||||||||||||||||||||||||||||||||||||||||
Debt | $ | 87,000 | $ | — | $ | — | $ | — | $ | — | $ | 87,000 | $ | — | |||||||||||||||||||||||||||
Interest payments | 956 | 137 | 273 | 273 | 273 | — | — | ||||||||||||||||||||||||||||||||||
Operating leases | 99,230 | 4,921 | 9,676 | 9,536 | 9,455 | 8,985 | 56,657 | ||||||||||||||||||||||||||||||||||
Purchase commitments | 16,941 | 7,634 | 5,459 | 3,848 | — | — | — | ||||||||||||||||||||||||||||||||||
Total | $ | 204,127 | $ | 12,692 | $ | 15,408 | $ | 13,657 | $ | 9,728 | $ | 95,985 | $ | 56,657 |
2021 | |||||||||||||||||||||||
First Quarter | Second Quarter | Third Quarter | Fourth Quarter (1) | ||||||||||||||||||||
in thousands | |||||||||||||||||||||||
Commission and fee revenue | $ | 54,373 | $ | 83,443 | $ | 76,188 | $ | 57,567 | |||||||||||||||
Earned premium | 63,234 | 70,437 | 78,700 | 83,453 | |||||||||||||||||||
Membership and other revenue | 11,593 | 13,529 | 13,198 | 13,364 | |||||||||||||||||||
Total revenues | $ | 129,200 | $ | 167,409 | $ | 168,086 | $ | 154,384 | |||||||||||||||
Total operating expenses | 134,296 | 153,135 | 166,328 | 175,390 | |||||||||||||||||||
Operating income (loss) | $ | (5,096) | $ | 14,274 | $ | 1,758 | $ | (21,006) | |||||||||||||||
Net income (loss) | $ | (6,850) | $ | 12,503 | $ | (548) | $ | (66,459) | |||||||||||||||
2022 | |||||||||||||||||||||||
First Quarter (2) | Second Quarter (3) | Third Quarter | Fourth Quarter | ||||||||||||||||||||
in thousands | |||||||||||||||||||||||
Commission and fee revenue | $ | 62,461 | $ | 95,506 | N/A | N/A | |||||||||||||||||
Earned premium | 89,132 | 94,100 | N/A | N/A | |||||||||||||||||||
Membership and other revenue | 16,218 | 16,411 | N/A | N/A | |||||||||||||||||||
Total revenues | $ | 167,811 | $ | 206,017 | N/A | N/A | |||||||||||||||||
Total operating expenses | 180,815 | 203,630 | N/A | N/A | |||||||||||||||||||
Operating income (loss) | $ | (13,004) | $ | 2,387 | N/A | N/A | |||||||||||||||||
Net income (loss) | $ | 15,866 | $ | (5,543) | N/A | N/A | |||||||||||||||||
Exhibit No. | Description | |||||||
2.1* | ||||||||
3.1 | ||||||||
3.2 | ||||||||
4.1 | ||||||||
4.2 | ||||||||
4.3 | ||||||||
4.4 | ||||||||
4.5 | ||||||||
31.1 | ||||||||
31.2 | ||||||||
32.1# | ||||||||
32.2# | ||||||||
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. | |||||||
# | This certification is deemed not filed for 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. |
HAGERTY, INC. | ||||||||||||||
By: | /s/ McKeel O Hagerty | |||||||||||||
McKeel O Hagerty | ||||||||||||||
Chief Executive Officer |
HAGERTY, INC. | ||||||||||||||
By: | /s/ Frederick J. Turcotte | |||||||||||||
Frederick J. Turcotte | ||||||||||||||
Chief Financial Officer |
Date: August 10, 2022 | |||||||||||
By: | /s/ McKeel O Hagerty | ||||||||||
McKeel O Hagerty | |||||||||||
Chief Executive Officer | |||||||||||
(Principle Executive Officer) |
Date: August 10, 2022 | |||||||||||
By: | /s/ Frederick J. Turcotte | ||||||||||
Frederick J. Turcotte | |||||||||||
Chief Financial Officer | |||||||||||
(Principal Financial and Accounting Officer) |
Date: August 10, 2022 | |||||||||||
By: | /s/ McKeel O Hagerty | ||||||||||
McKeel O Hagerty | |||||||||||
Chief Executive Officer | |||||||||||
(Principle Executive Officer) |
Date: August 10, 2022 | |||||||||||
By: | /s/ Frederick J. Turcotte | ||||||||||
Frederick J. Turcotte | |||||||||||
Chief Financial Officer | |||||||||||
(Principal Financial and Accounting Officer) |