Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2022 | Oct. 21, 2022 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-40244 | |
Entity Registrant Name | HAGERTY, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 86-1213144 | |
Entity Address, Address Line One | 121 Drivers Edge | |
Entity Address, City or Town | Traverse City | |
Entity Address, State or Province | MI | |
Entity Address, Postal Zip Code | 49684 | |
City Area Code | (800) | |
Local Phone Number | 922-4050 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001840776 | |
Amendment Flag | false | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2022 | |
Current Fiscal Year End Date | --12-31 | |
Class A Common Stock | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Class A common stock, par value $0.0001 per share | |
Trading Symbol | HGTY | |
Security Exchange Name | NYSE | |
Entity Common Stock, Shares Outstanding (in shares) | 83,202,969 | |
Warrants, each whole warrant exercisable for one share of Class A common stock, each at an exercise price of $11.50 per share | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Warrants, each whole warrant exercisable for one shareof Class A common stock, each at an exercise price of$11.50 per share | |
Trading Symbol | HGTY.WS | |
Security Exchange Name | NYSE | |
Class V Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding (in shares) | 251,033,906 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
REVENUE: | ||||
Revenue from contract with customer | $ 109,270 | $ 89,386 | $ 299,866 | $ 252,324 |
Earned premium | 107,487 | 78,699 | 290,719 | 212,370 |
Total revenue | 216,757 | 168,085 | 590,585 | 464,694 |
OPERATING EXPENSES: | ||||
Salaries and benefits | 50,120 | 42,287 | 149,867 | 122,134 |
Ceding commission | 50,415 | 37,195 | 138,048 | 101,262 |
Losses and loss adjustment expenses | 60,605 | 32,298 | 136,144 | 87,643 |
Sales expense | 44,097 | 32,098 | 109,989 | 80,810 |
General and administrative services | 23,853 | 16,563 | 64,040 | 46,627 |
Depreciation and amortization | 8,890 | 5,886 | 24,337 | 15,282 |
Total operating expenses | 237,980 | 166,327 | 622,425 | 453,758 |
OPERATING INCOME (LOSS) | (21,223) | 1,758 | (31,840) | 10,936 |
Change in fair value of warrant liabilities | 11,583 | 0 | 37,869 | 0 |
Revaluation gain on previously held equity method investment | 34,735 | 0 | 34,735 | 0 |
Interest and other income (expense) | 662 | (417) | (375) | (1,041) |
INCOME (LOSS) BEFORE INCOME TAX EXPENSE | 25,757 | 1,341 | 40,389 | 9,895 |
Income tax benefit (expense) | 91 | (1,888) | (4,077) | (4,790) |
Income (loss) from equity method investment, net of tax | (1,535) | 0 | (1,676) | 0 |
NET INCOME (LOSS) | 24,313 | (547) | 34,636 | 5,105 |
Net loss (income) attributable to non-controlling interest | (9,599) | 68 | 2,049 | 204 |
NET INCOME (LOSS) ATTRIBUTABLE TO CONTROLLING INTEREST | $ 14,714 | $ (479) | $ 36,685 | $ 5,309 |
Earnings (loss) per Members' Unit | ||||
Basic (in dollars per share) | $ (4.79) | $ 53.09 | ||
Diluted (in dollars per share) | $ (4.79) | $ 53.09 | ||
Weighted-average units outstanding: | ||||
Basic (in shares) | 100 | 100 | ||
Diluted (in shares) | 100 | 100 | ||
Class A Common Stock | ||||
Earnings (loss) per Members' Unit | ||||
Basic (in dollars per share) | $ 0.18 | $ 0.44 | ||
Diluted (in dollars per share) | $ 0.07 | $ 0.03 | ||
Weighted-average units outstanding: | ||||
Basic (in shares) | 82,816 | 82,569 | ||
Diluted (in shares) | 336,768 | 335,392 | ||
Commission and fee revenue | ||||
REVENUE: | ||||
Revenue from contract with customer | $ 85,457 | $ 76,188 | $ 243,424 | $ 214,004 |
Membership, marketplace and other revenue | ||||
REVENUE: | ||||
Revenue from contract with customer | $ 23,813 | $ 13,198 | $ 56,442 | $ 38,320 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 24,313 | $ (547) | $ 34,636 | $ 5,105 |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency translation adjustments | (2,173) | (812) | (2,921) | (626) |
Derivative instruments | 987 | 69 | 2,920 | 677 |
Other comprehensive income (loss) | (1,186) | (743) | (1) | 51 |
Comprehensive income (loss) | 23,127 | (1,290) | 34,635 | 5,156 |
Comprehensive loss (income) attributable to non-controlling interest | (9,599) | 68 | 2,049 | 204 |
Comprehensive income (loss) attributable to controlling interest | $ 13,528 | $ (1,222) | $ 36,684 | $ 5,360 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Current Assets: | ||
Cash and cash equivalents | $ 180,417 | $ 275,332 |
Restricted cash and cash equivalents | 435,916 | 328,640 |
Accounts receivable | 69,730 | 46,729 |
Premiums receivable | 135,293 | 75,297 |
Commission receivable | 48,213 | 57,596 |
Prepaid expenses and other current assets | 47,428 | 30,155 |
Notes receivable | 22,390 | 0 |
Deferred acquisition costs, net | 114,172 | 81,535 |
Total current assets | 1,053,559 | 895,284 |
Property and equipment, net | 28,142 | 28,363 |
Long-Term Assets: | ||
Prepaid expenses and other non-current assets | 39,110 | 30,565 |
Notes receivable | 7,347 | 0 |
Intangible assets, net | 101,536 | 76,171 |
Goodwill | 115,031 | 11,488 |
Total long-term assets | 263,024 | 118,224 |
TOTAL ASSETS | 1,344,725 | 1,041,871 |
Current Liabilities: | ||
Accounts payable | 26,374 | 9,084 |
Losses payable and provision for unpaid losses and loss adjustment expenses | 162,925 | 109,351 |
Unearned premiums | 249,823 | 175,199 |
Commissions payable | 81,712 | 60,603 |
Due to insurers | 98,189 | 58,031 |
Advanced premiums | 24,113 | 13,867 |
Accrued expenses | 48,167 | 46,074 |
Contract liabilities | 27,830 | 21,723 |
Other current liabilities | 1,404 | 1,886 |
Total current liabilities | 720,537 | 495,818 |
Long-Term Liabilities: | ||
Accrued expenses | 9,167 | 13,166 |
Contract liabilities | 18,833 | 19,667 |
Long-term debt | 136,000 | 135,500 |
Deferred tax liability | 13,546 | 10,510 |
Warrant liabilities | 49,591 | 89,366 |
Other long-term liabilities | 7,292 | 7,043 |
Total long-term liabilities | 234,429 | 275,252 |
TOTAL LIABILITIES | 954,966 | 771,070 |
Commitments and Contingencies | ||
Redeemable non-controlling interest | 0 | 593,277 |
STOCKHOLDERS' / MEMBERS' EQUITY | ||
Preferred stock, $0.0001 par value (20,000,000 shares authorized, no shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively) | 0 | 0 |
Additional paid-in capital | 546,393 | 160,189 |
Accumulated earnings (deficit) | (445,590) | (482,276) |
Accumulated other comprehensive income (loss) | (1,728) | (1,727) |
Total stockholders' / members' equity (deficit) | 99,108 | (323,781) |
Non-controlling interest | 290,651 | 1,305 |
Total equity | 389,759 | (322,476) |
TOTAL LIABILITIES AND EQUITY | 1,344,725 | 1,041,871 |
Class A Common Stock | ||
STOCKHOLDERS' / MEMBERS' EQUITY | ||
Common stock | 8 | 8 |
Class V Common Stock | ||
STOCKHOLDERS' / MEMBERS' EQUITY | ||
Common stock | $ 25 | $ 25 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 02, 2021 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | |
Preferred stock, shares authorized (in shares) | 20,000,000 | 20,000,000 | |
Preferred stock, shares issued (in shares) | 0 | 0 | |
Preferred stock, shares outstanding (in shares) | 0 | 0 | |
Common stock, shares, outstanding (in shares) | 338,961,435 | ||
Class A Common Stock | |||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | |
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 | |
Common stock, shares, issued (in shares) | 83,202,969 | 82,327,466 | |
Common stock, shares, outstanding (in shares) | 83,202,969 | 82,327,466 | 82,327,466 |
Class V Common Stock | |||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | |
Common stock, shares authorized (in shares) | 300,000,000 | 300,000,000 | |
Common stock, shares, issued (in shares) | 251,033,906 | 251,033,906 | |
Common stock, shares, outstanding (in shares) | 251,033,906 | 251,033,906 | 251,033,906 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Changes in Members' and Stockholders' Equity (Unaudited) - USD ($) $ in Thousands | Total | Class A Common Stock | Class V Common Stock | Total Stockholders' / Members' Equity | Member Units | Common Stock Class A Common Stock | Common Stock Class V Common Stock | Additional Paid in Capital | Accumulated Earnings (Deficit) | Accumulated Other Comprehensive Income/(Loss) | Non-controlling Interest |
Members' Equity, beginning balance at Dec. 31, 2020 | $ 117,321 | $ 117,198 | $ 62,320 | $ 56,832 | $ (1,954) | $ 123 | |||||
Stockholders' Equity, beginning balance (in shares) at Dec. 31, 2020 | 0 | 0 | |||||||||
Stockholders' Equity, beginning balance at Dec. 31, 2020 | $ 0 | $ 0 | $ 0 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Net income (loss) | (6,851) | (6,806) | (6,806) | (45) | |||||||
Other comprehensive income (loss) | 1,006 | 1,006 | 1,006 | ||||||||
Members' Equity, ending balance at Mar. 31, 2021 | 111,476 | 111,398 | 62,320 | 50,026 | (948) | 78 | |||||
Stockholders' Equity, ending balance (in shares) at Mar. 31, 2021 | 0 | 0 | |||||||||
Stockholders' Equity, ending balance at Mar. 31, 2021 | $ 0 | $ 0 | 0 | ||||||||
Beginning balance at Dec. 31, 2020 | 0 | ||||||||||
Ending balance at Mar. 31, 2021 | 0 | ||||||||||
Members' Equity, beginning balance at Dec. 31, 2020 | 117,321 | 117,198 | 62,320 | 56,832 | (1,954) | 123 | |||||
Stockholders' Equity, beginning balance (in shares) at Dec. 31, 2020 | 0 | 0 | |||||||||
Stockholders' Equity, beginning balance at Dec. 31, 2020 | $ 0 | $ 0 | 0 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Net income (loss) | 5,105 | ||||||||||
Other comprehensive income (loss) | 51 | ||||||||||
Members' Equity, ending balance at Sep. 30, 2021 | 118,921 | 118,502 | 58,264 | 62,141 | (1,903) | 419 | |||||
Stockholders' Equity, ending balance (in shares) at Sep. 30, 2021 | 0 | 0 | |||||||||
Stockholders' Equity, ending balance at Sep. 30, 2021 | $ 0 | $ 0 | 0 | ||||||||
Beginning balance at Dec. 31, 2020 | 0 | ||||||||||
Ending balance at Sep. 30, 2021 | 0 | ||||||||||
Members' Equity, beginning balance at Mar. 31, 2021 | 111,476 | 111,398 | 62,320 | 50,026 | (948) | 78 | |||||
Stockholders' Equity, beginning balance (in shares) at Mar. 31, 2021 | 0 | 0 | |||||||||
Stockholders' Equity, beginning balance at Mar. 31, 2021 | $ 0 | $ 0 | 0 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Net income (loss) | 12,503 | 12,594 | 12,594 | (91) | |||||||
Other comprehensive income (loss) | (212) | (212) | (212) | ||||||||
Distributions | (4,056) | (4,056) | (4,056) | ||||||||
Non-controlling interest issued capital | 400 | 400 | |||||||||
Members' Equity, ending balance at Jun. 30, 2021 | 120,111 | 119,724 | 58,264 | 62,620 | (1,160) | 387 | |||||
Stockholders' Equity, ending balance (in shares) at Jun. 30, 2021 | 0 | 0 | |||||||||
Stockholders' Equity, ending balance at Jun. 30, 2021 | $ 0 | $ 0 | 0 | ||||||||
Beginning balance at Mar. 31, 2021 | 0 | ||||||||||
Ending balance at Jun. 30, 2021 | 0 | ||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Net income (loss) | (547) | (479) | (479) | (68) | |||||||
Other comprehensive income (loss) | (743) | (743) | (743) | ||||||||
Non-controlling interest issued capital | 100 | 100 | |||||||||
Members' Equity, ending balance at Sep. 30, 2021 | 118,921 | 118,502 | $ 58,264 | 62,141 | (1,903) | 419 | |||||
Stockholders' Equity, ending balance (in shares) at Sep. 30, 2021 | 0 | 0 | |||||||||
Stockholders' Equity, ending balance at Sep. 30, 2021 | $ 0 | $ 0 | 0 | ||||||||
Ending balance at Sep. 30, 2021 | 0 | ||||||||||
Stockholders' Equity, beginning balance (in shares) at Dec. 31, 2021 | 82,327,466 | 251,033,906 | 82,327,000 | 251,034,000 | |||||||
Stockholders' Equity, beginning balance at Dec. 31, 2021 | (322,476) | (323,781) | $ 8 | $ 25 | 160,189 | (482,276) | (1,727) | 1,305 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Net income (loss) before exchange agreement amendment | (3,851) | (3,679) | (3,679) | (172) | |||||||
Other comprehensive income (loss) before exchange agreement amendment | 1,657 | 1,657 | 1,657 | ||||||||
Exercise of warrants (in shares) | 125,000 | ||||||||||
Exercise of warrants | 1,906 | 1,906 | 1,906 | ||||||||
Redemption value adjustment for redeemable non-controlling interest | (1,560,420) | (1,560,420) | (162,095) | (1,398,325) | |||||||
Removal of the redeemable feature of the non-controlling interest | 2,142,490 | 1,926,940 | 528,615 | 1,398,325 | 215,550 | ||||||
Net income (loss) subsequent to exchange agreement amendment | 30,923 | 31,187 | 31,187 | (264) | |||||||
Other comprehensive income (loss) subsequent to exchange agreement amendment | 162 | 162 | 162 | ||||||||
Stockholders' Equity, ending balance (in shares) at Mar. 31, 2022 | 82,452,000 | 251,034,000 | |||||||||
Stockholders' Equity, ending balance at Mar. 31, 2022 | 290,391 | 73,972 | $ 8 | $ 25 | 528,615 | (454,768) | 92 | 216,419 | |||
Beginning balance at Dec. 31, 2021 | 593,277 | ||||||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||||||||
Net income (loss) before exchange agreement amendment | (11,205) | ||||||||||
Redemption value adjustment for redeemable non-controlling interest | 1,560,418 | ||||||||||
Removal of the redeemable feature of the non-controlling interest | (2,142,490) | ||||||||||
Ending balance at Mar. 31, 2022 | 0 | ||||||||||
Stockholders' Equity, beginning balance (in shares) at Dec. 31, 2021 | 82,327,466 | 251,033,906 | 82,327,000 | 251,034,000 | |||||||
Stockholders' Equity, beginning balance at Dec. 31, 2021 | (322,476) | $ (323,781) | $ 8 | $ 25 | 160,189 | (482,276) | (1,727) | $ 1,305 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Net income (loss) | 34,636 | ||||||||||
Other comprehensive income (loss) | $ (1) | ||||||||||
Stockholders' Equity, ending balance (in shares) at Sep. 30, 2022 | 338,961,435 | 83,202,969 | 251,033,906 | 83,202,969 | 83,203,000 | 251,034,000 | 255,758,466 | ||||
Stockholders' Equity, ending balance at Sep. 30, 2022 | $ 389,759 | $ 99,108 | $ 8 | $ 25 | 546,393 | (445,590) | (1,728) | $ 290,651 | |||
Beginning balance at Dec. 31, 2021 | 593,277 | ||||||||||
Ending balance at Sep. 30, 2022 | 0 | ||||||||||
Stockholders' Equity, beginning balance (in shares) at Mar. 31, 2022 | 82,452,000 | 251,034,000 | |||||||||
Stockholders' Equity, beginning balance at Mar. 31, 2022 | 290,391 | 73,972 | $ 8 | $ 25 | 528,615 | (454,768) | 92 | 216,419 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Net income (loss) | (5,543) | (5,536) | (5,536) | (7) | |||||||
Other comprehensive income (loss) | (634) | (634) | (634) | ||||||||
Stock-based compensation | 4,307 | 4,307 | 4,307 | ||||||||
Non-controlling interest issued capital | 1,000 | 1,000 | |||||||||
Stockholders' Equity, ending balance (in shares) at Jun. 30, 2022 | 82,452,000 | 251,034,000 | |||||||||
Stockholders' Equity, ending balance at Jun. 30, 2022 | 289,521 | 72,109 | $ 8 | $ 25 | 532,922 | (460,304) | (542) | 217,412 | |||
Beginning balance at Mar. 31, 2022 | 0 | ||||||||||
Ending balance at Jun. 30, 2022 | 0 | ||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Net income (loss) | 24,313 | 14,714 | 14,714 | 9,599 | |||||||
Other comprehensive income (loss) | (1,186) | (1,186) | (1,186) | ||||||||
Restricted stock issued | 0 | 37 | |||||||||
Stock-based compensation | 3,858 | 3,858 | 3,858 | ||||||||
Broad Arrow acquisition | $ 73,253 | $ 9,613 | $ 714 | 9,613 | $ 63,640 | ||||||
Stockholders' Equity, ending balance (in shares) at Sep. 30, 2022 | 338,961,435 | 83,202,969 | 251,033,906 | 83,202,969 | 83,203,000 | 251,034,000 | 255,758,466 | ||||
Stockholders' Equity, ending balance at Sep. 30, 2022 | $ 389,759 | $ 99,108 | $ 8 | $ 25 | $ 546,393 | $ (445,590) | $ (1,728) | $ 290,651 | |||
Ending balance at Sep. 30, 2022 | $ 0 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
OPERATING ACTIVITIES: | ||||||
Net income (loss) | $ 24,313 | $ (547) | $ (6,851) | $ 34,636 | $ 5,105 | |
Adjustments to reconcile net income (loss) to net cash from operating activities: | ||||||
Change in fair value of warrant liabilities | (11,583) | 0 | (37,869) | 0 | ||
Loss on equity method investment | 1,535 | 0 | 1,676 | 0 | ||
Revaluation gain on previously held equity method investment | (34,735) | 0 | (34,735) | 0 | ||
Depreciation and amortization expense | 8,890 | 5,886 | 24,337 | 15,282 | ||
Provision for deferred taxes | 3,373 | 3,901 | ||||
Loss on disposals of equipment, software and other assets | 1,131 | 2,319 | ||||
Stock-based compensation expense | 8,165 | 0 | ||||
Other | 242 | 163 | ||||
Changes in operating assets and liabilities: | ||||||
Accounts receivable | (21,122) | (16,548) | ||||
Premiums receivable | (59,995) | (54,051) | ||||
Commission receivable | 9,364 | 9,584 | ||||
Prepaid expenses and other assets | (16,294) | (16,302) | ||||
Deferred acquisition costs | (32,637) | (30,865) | ||||
Accounts payable | 16,842 | (1,812) | ||||
Losses payable and provision for unpaid losses and loss adjustment expenses | 53,574 | 26,623 | ||||
Unearned premiums | 74,624 | 67,041 | ||||
Commissions payable | 21,109 | 22,443 | ||||
Due to insurers | 40,876 | 36,589 | ||||
Advanced premiums | 10,363 | 7,625 | ||||
Accrued expenses | (4,801) | 2,946 | ||||
Contract liabilities | (9) | 4,560 | ||||
Other current liabilities | 713 | 756 | ||||
Net Cash Provided by Operating Activities | 93,563 | 85,359 | ||||
INVESTING ACTIVITIES: | ||||||
Purchases of property, equipment and software | (33,429) | (31,163) | ||||
Acquisitions, net of cash acquired | (12,715) | (11,345) | ||||
Purchase of previously held equity method investment | (15,250) | 0 | ||||
Issuance of note receivable to previously held equity investment | (7,000) | 0 | ||||
Issuance of notes receivable | (8,391) | 0 | ||||
Purchase of fixed income securities | (2,448) | (12,433) | ||||
Maturities of fixed income securities | 1,216 | 1,206 | ||||
Other investing activities | (1,662) | (26) | ||||
Net Cash Used in Investing Activities | (79,679) | (53,761) | ||||
FINANCING ACTIVITIES: | ||||||
Payments on long-term debt | (90,500) | (18,000) | ||||
Proceeds from long-term debt | 91,000 | 67,500 | ||||
Contribution from non-controlling interest | 1,000 | 500 | ||||
Payments on notes payable | (1,000) | (1,000) | ||||
Distributions | 0 | (4,056) | ||||
Net Cash Provided by Financing Activities | 500 | 44,944 | ||||
Effect of exchange rate changes on cash and cash equivalents and restricted cash and cash equivalents | (2,023) | (196) | ||||
Change in cash and cash equivalents and restricted cash and cash equivalents | 12,361 | 76,346 | ||||
Beginning cash and cash equivalents and restricted cash and cash equivalents | $ 299,078 | 603,972 | 299,078 | $ 299,078 | ||
Ending cash and cash equivalents and restricted cash and cash equivalents | 616,333 | 375,424 | 616,333 | 375,424 | 603,972 | |
NON-CASH INVESTING ACTIVITIES: | ||||||
Purchase of property and equipment and software | 4,137 | 5,789 | ||||
CASH PAID FOR: | ||||||
Interest | 2,965 | 1,636 | ||||
Income taxes | 5,253 | 2,200 | ||||
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents [Abstract] | ||||||
Cash and cash equivalents | 180,417 | 47,879 | 180,417 | 47,879 | 275,332 | |
Restricted cash and cash equivalents | 435,916 | 327,545 | 435,916 | 327,545 | ||
Total cash and cash equivalents and restricted cash and cash equivalents on the Condensed Consolidated Statements of Cash Flows | $ 616,333 | $ 375,424 | 616,333 | 375,424 | $ 603,972 | |
Broad Arrow acquisition | ||||||
NON-CASH INVESTING ACTIVITIES: | ||||||
Acquisition | 73,253 | 0 | ||||
Other acquisitions | ||||||
NON-CASH INVESTING ACTIVITIES: | ||||||
Acquisition | $ 7,500 | $ 3,763 |
Summary of Significant Accounti
Summary of Significant Accounting Policies and New Accounting Standards | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies and New Accounting Standards | 1 — Summary of Significant Accounting Policies and New Accounting Standards Description of Business — Hagerty, Inc. ("Hagerty" or the "Company") and its consolidated subsidiaries, including The Hagerty Group, LLC ("The Hagerty Group"), is a global market leader in providing insurance for classic and enthusiast vehicles. In addition, Hagerty provides an automotive enthusiast platform that engages, entertains and connects with car enthusiasts and its members. The Company operates several entities which collectively support Hagerty's revenue streams. Hagerty earns commission and fee revenue for the distribution and servicing of classic automobile and boat insurance policies written through personal and commercial lines agency agreements with multiple insurance carriers in the United States ("U.S."), Canada and the United Kingdom ("U.K."). Reinsurance premiums are earned in Hagerty Reinsurance Limited ("Hagerty Re") which is registered as a Class 3A reinsurer under the Bermuda Insurance Act 1978. Hagerty Re solely reinsures the classic auto and marine risks written through Hagerty's Managing General Agency ("MGA") entities in the U.S., Canada and the U.K. • The business produced by the U.S. MGAs is written by Essentia Insurance Company ("Essentia") and reinsured with its affiliate, Evanston Insurance Company ("Evanston"). In turn, Hagerty Re a ssumes premiums through a quota share agreement with Evanston. Essentia and Evanston are wholly owned subsidiaries of Markel Corporation ("Markel"), which is a related party. Refer to Note 17 — Related-Party Transactions for additional information. • The business produced by the Canadian MGA is written by Aviva Canada Inc. ("Aviva"), through Aviva's Canadian subsidiary, Elite Insurance Company ("Elite"). In turn, Hagerty Re assumes premiums through a quota share agreement with Elite. • In 2021, Hagerty Re entered into a reinsurance agreement with Markel International Insurance Company Limited to reinsure classic auto risks produced by Hagerty's U.K. MGA. In connection with this new agreement, Hagerty Re purchased reinsurance to limit its liability to £1,000,000 per claim, as U.K. law requires unlimited liability coverage. Markel International Insurance Company Limited is a subsidiary of Markel, which is a related party. Refer to Note 17 — Related-Party Transactions for additional information. The Company earns subscription revenue through membership offerings and other automotive services sold to policyholders and classic vehicle enthusiasts. Membership offerings include, but are not limited to, private label roadside assistance, digital and linear video content, an award-winning magazine, valuation services, exclusive events and automotive third-party discounts. The Company owns and operates collector vehicle events, including the Amelia and Greenwich Concours d'Elegance, earning revenue through ticket sales and sponsorships. The Company also operates Hagerty Garage + Social, a network of world-class vehicle storage and exclusive social club facilities for classic, collector and exotic cars owners. The Company owns and operates Hagerty Marketplace, which offers services for buying, selling and financing collector vehicles through classified listings, auctions and facilitating private sales. In August 2022, the Company acquired the remaining 60% outstanding equity interest of Broad Arrow Group, Inc., and its consolidated subsidiaries ("Broad Arrow"). The acquisition will enable the Company to further leverage respective product offerings under Hagerty Marketplace. Refer to Note 6 — Acquisitions and Investments for additional information. The Company’s headquarters are located in Traverse City, Michigan. Basis of Presentation — The Company's Condensed Consolidated Financial Statements were prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and with the instructions for Quarterly Reports on Form 10-Q and Regulation S-X and include the accounts of Hagerty, Inc. and The Hagerty Group with its consolidated subsidiaries. The financial statements reflect all normal recurring adjustments and accruals that are, in the opinion of management, necessary for a fair statement of financial position and results of operations for the interim periods presented. Interim financial statements do not include all of the information and notes required by GAAP for annual consolidated financial statements. 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 for the year ended December 31, 2021. The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. Principles of Consolidation — The Company's Condensed Consolidated Financial Statements contain the accounts of Hagerty and its majority-owned or controlled subsidiaries. As of September 30, 2022, the Company had economic ownership of 24.5% of The Hagerty Group. In addition, Member Hubs Holding, LLC ("MHH"), which operates as Hagerty Garage + Social, is an 80% owned subsidiary of The Hagerty Group. The Company consolidates these entities under the voting interest method guidance 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, Condensed Consolidated Statements of Comprehensive Income (Loss), Condensed Consolidated Balance Sheets, and Condensed Consolidated Statements of Changes in Members' and Stockholders' Equity. Prior to August 2022, the Company owned approximately 40% of the outstanding equity interest of Broad Arrow and accounted for it as an equity method investment. Subsequent to the acquisition of the remaining 60% outstanding equity interest of Broad Arrow in August 2022, Broad Arrow became a wholly-owned subsidiary of the Company and as a result, is consolidated in accordance with ASC 810. All significant intercompany accounts and transactions have been eliminated in consolidation. Business Combination — On December 2, 2021, (the "Closing"), The Hagerty Group completed a business combination with Aldel Financial Inc. ("Aldel"), and Aldel Merger Sub LLC ("Merger Sub"), a Delaware limited liability company and wholly owned subsidiary of Aldel (the "Business Combination"). In connection with the Closing, Aldel changed its name from Aldel Financial Inc. to Hagerty, Inc. The Business Combination was accounted for as a common control reverse acquisition for which The Hagerty Group was determined to be the accounting acquirer and Aldel was treated as the "acquired" company. The Hagerty Group issued equity for the net assets of Aldel, accompanied by a recapitalization. Business combinations in which the legal acquirer is not the accounting acquirer are commonly referred to as "reverse acquisitions". A reverse acquisition occurs when the entity that issues securities (legal acquirer) is identified as the acquiree for accounting purposes and the entity whose equity interests are acquired (the legal acquiree) is identified as the acquirer for accounting purposes. Reverse acquisitions are accounted for in accordance with Subtopic 805-40 of ASC Topic 805, Business Combinations ("ASC 805"). While other factors were evaluated but not considered to have a material impact on the determination, The Hagerty Group was determined to be the accounting acquirer based on the following factors: • Hagerty Holding Corp. ("HHC") controlled the operating company prior to the Business Combination and controls the Company subsequent to the Business Combination through control of the board of directors (the "Board") as well as having majority voting ownership. • The Hagerty Group’s management is also the management of the Company. • The Hagerty Group is larger as compared to Aldel based on assets, revenue and earnings. Unless otherwise indicated or the context otherwise requires, "Hagerty" and "the Company" refer to the business and operations of The Hagerty Group and its consolidated subsidiaries prior to the Business Combination and to Hagerty, Inc. and its consolidated subsidiaries, including The Hagerty Group, following the consummation of the Business Combination. Refer to Note 5 — Business Combination for additional information. 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 such 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. Use of Estimates — The preparation of the Company's Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements and 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. Segment Information — The Company has one operating segment and one reportable segment. The Company’s Chief Operating Decision Maker ("CODM") is the Chief Executive Officer ("CEO"), who makes resource allocation decisions and assesses performance based on financial information presented on a consolidated basis. The Company’s management approach is to utilize an internally developed strategic decision making framework with its members at the center of all decisions, which requires the CODM to have a consolidated view of the operations so that decisions can be made in the best interest of Hagerty and its members. Foreign Currency Translation — The Company translates its foreign operations’ assets and liabilities denominated in foreign currencies into U.S. dollars at current rates of exchange as of the balance sheet date, and income and expense items at the average exchange rate for the reporting period. Translation adjustments resulting from exchange rate fluctuations are recorded in "Foreign currency translation adjustments", a component of Accumulated other comprehensive income (loss). Transaction gains and losses are recognized in "Interest and other income (expense)" within the Condensed Consolidated Statements of Operations. Notes Receivable — Notes receivable, net of an allowance for loan losses, includes amounts due on term loans secured by collector vehicles. The allowance for loan losses is estimated based upon historical experience, the impact of current economic conditions on the collateral value, knowledge about the client's financial standing and other factors and is evaluated periodically. Term loans are recorded on the date the loan is made based on the loan amount in the agreement. Term loans normally have an initial maturity of one year with an option to renew for an additional year, and accrue interest based on the stated rate in the loan agreement. As a result, the valuation of collector vehicles is inherently subjective, and the realizable value of collector vehicles often fluctuates over time. Refer to Note 4 — Notes Receivable for additional information. Equity Method Investments — The Company applies the equity method of accounting to 20% to 50% owned investments where Hagerty exercises significant influence, in accordance with ASC Topic 323 Investments—Equity Method and Joint Ventures . Warrant Liabilities — The Company accounts for its outstanding warrants in accordance with ASC Topic 815 Derivatives and Hedging ("ASC 815"). The warrants do not meet the criteria for equity treatment and as such, the Company recorded at fair value as a non-cash liability. This liability is subject to remeasurement each reporting period and utilizes a Monte Carlo simulation model to value the warrants. The change in the fair value of the warrants is recognized in the Condensed Consolidated Statements of Operations each reporting period. Refer to Note 14 — Warrant Liabilities for additional information. Income Taxes — The Hagerty Group 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, except Hagerty Re, Broad Arrow and various foreign subsidiaries. Any taxable income or loss generated by The Hagerty Group is passed through to and included in the taxable income or loss of all holders of limited liability units in The Hagerty Group ("Hagerty Group Units"), which includes Hagerty, Inc. Hagerty, Inc. is taxed as a corporation and pays corporate federal, state and local taxes with respect to income allocated from The Hagerty Group. Hagerty, Inc., Hagerty Re, Broad Arrow and various foreign subsidiaries are treated as taxable entities and income taxes are provided where applicable. Refer to Note 16 — Taxation for additional information. Where applicable, income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax-credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Condensed Consolidated Statements of Operations in the period that includes the enactment date. Deferred tax assets are recognized to the extent that there is sufficient positive evidence as allowed under the ASC Topic 740, Income Taxes ("ASC 740"), to support the recoverability of those deferred tax assets. The Company establishes a valuation allowance to the extent that there is insufficient evidence to support the recoverability of the deferred tax asset under ASC 740. In making such a determination, management considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If it is determined that the deferred tax assets would be realizable in the future in excess of their net recorded amount, an adjustment would be made to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. Tax Receivable Agreement Liability — In connection with the Business Combination, Hagerty, Inc. entered into a TRA with HHC and Markel (together 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 Hagerty Group Units and Class V Common Stock of the Company for Class A Common Stock of the Company or cash. The Hagerty Group will have in effect an election under Section 754 of the IRC effective for each taxable year in which an exchange of Hagerty Group Units occurs. The remaining 15% cash tax savings resulting from the basis adjustments will be retained by Hagerty, Inc. In general, 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 Hagerty Group Units and Class V Common Stock for Class A Common Stock, would be more than the tax liability for the year taking into account such deductions. Payments under the TRA will not be due until 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 estimated value of the TRA is recorded in "Other long-term liabilities" on the Condensed Consolidated Balance Sheets. Hagerty, Inc. accounts for the effects of the basis increases as follows: • Hagerty, Inc. records an increase in deferred tax assets for the income tax effects of the increases in tax basis based on enacted federal and state income tax rates at the date of the exchange. • Hagerty, Inc. evaluates the ability to realize the full benefit represented by the deferred tax asset based on an analysis that will consider expectations of future earnings, among other things. If Hagerty, Inc. determines that the full benefit is not likely to be realized, a valuation allowance is established to reduce the amount of the deferred tax assets to an amount that is more likely than not to be realized. • At the Closing, Hagerty, Inc. recorded 85% of the estimated realizable tax benefit as an increase to the liability due under the TRA, which is recorded within "Other long-term liabilities", with a decrease to "Additional paid-in capital" on the Condensed Consolidated Balance Sheets. The remaining 15% of the estimated realizable tax benefit will be retained by Hagerty, Inc. All of the effects of changes in any of the estimates after the date of the redemption or exchange will be recorded within "Interest and other income (expense)" in the Condensed Consolidated Statements of Operations. Redeemable Non-controlling Interest — In connection with the Business Combination, Hagerty, Inc. entered into an exchange agreement with the Legacy Unit Holders ("Legacy Unit Holders Exchange Agreement"). The Legacy Unit Holders Exchange Agreement permitted the Legacy Unit Holders to exchange Class V Common Stock and associated Hagerty Group Units for an equivalent amount of Class A Common Stock or, at the option of the Company, for cash. Because the Company had the option to redeem the non-controlling interest for cash and the Company is controlled by the Legacy Unit Holders through their voting control, the non-controlling interest was considered redeemable as the redemption was considered outside the Company's control. Redeemable non-controlling interest represented the economic interests of the Legacy Unit Holders. Income or loss was attributed to the redeemable non-controlling interest based on the weighted average ownership of the Hagerty Group Units outstanding during the period held by the Legacy Unit Holders. The redeemable non-controlling interest was measured at the greater of the initial fair value or the redemption value and was required to be presented as temporary equity on the Condensed Consolidated Balance Sheets as of December 31, 2021. Earnings Per Share — Hagerty calculates basic and dilutive earnings per share ("EPS") in accordance with ASC Topic 260 Earnings Per Share ("ASC 260"). Basic earnings per share is computed by dividing Net income (loss) attributable to controlling interest by the weighted-average number of shares of Class A Common Stock outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities were exercised, resulting in the issuance of shares of Class A Common Stock that would then share in the earnings of Hagerty, Inc. In periods in which the Company reports a net loss available to stockholders, diluted net loss per share available to stockholders would be equal to basic net loss per share available to stockholders, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. Stock-Based Compensation — Hagerty issues restricted stock units and performance restricted stock units under the 2021 Equity Incentive Plan. The grant date fair value for restricted stock units is determined based on the closing price of the Company's common stock on the business day prior to grant. Hagerty uses a Monte Carlo simulation model to estimate the fair value of performance restricted stock units. Stock-based compensation expense is recognized over the applicable requisite service period of the award, generally using the straight-line method. Forfeitures are recorded as they occur. Refer to Note 15 — Stock-Based Compensation for additional information. Recently Adopted Accounting Guidance Media Content — In March 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2019-02, Improvements to Accounting for Costs of Films and License Agreements for Program Materials , to align the accounting for production costs of an episodic television series with the accounting for production costs of films by removing the content distinction for capitalization. As a result of adopting this ASU on January 1, 2021, the Company applied the guidance of ASC Topic 926, Entertainment – Films for the original content the Company self-produces and where the intellectual property is owned by the Company. For content the Company produces, the costs associated with production, including development costs, direct costs and production overhead are capitalized and amortized over the estimated useful life of the asset. The adoption of the ASU had a $3.3 million impact on the Company’s Condensed Consolidated Financial Statements through December 31, 2021. Reference Rate Reform — In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (ASC Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting , which provides optional relief to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. Additionally, in January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (ASC Topic 848) , which clarifies that certain optional expedients and exceptions in ASC 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. Both ASUs were effective immediately upon issuance and adoption of these ASUs did not have a material impact on the Company's Condensed Consolidated Financial Statements and related disclosures. Convertible Instruments and Contracts — In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity , which simplifies the accounting for convertible instruments by eliminating certain separation models and will generally be reported as a single liability at its amortized cost. In addition, ASU 2020-06 eliminates the treasury stock method to calculate diluted EPS for convertible instruments and requires the use of the if-converted method. The amendments in ASU 2020-06 are effective for the Company as of January 1, 2022 with the option to early adopt as of January 1, 2021. The Company early adopted ASU 2020-06 effective January 1, 2021 and the adoption of the ASU did not have an impact on the Company's Condensed Consolidated Financial Statements. Recent Accounting Guidance Not Yet Adopted Leases — In February 2016, the FASB issued ASU 2016-02, Leases ("ASC 842"), which supersedes the lease requirements in ASC Topic 840, Leases ("ASC 840"). This guidance increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the Condensed Consolidated Balance Sheets. The guidance requires disclosure to enable users of the Condensed Consolidated Financial Statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The transition to ASU No. 2016-02 requires the recognition and measurement of leases at the beginning of the earliest period presented using a modified retrospective approach. In June 2020, the FASB issued ASU No. 2020-05, Effective Dates for Certain Entities , which deferred the effective date for nonpublic entities and emerging growth companies that had not yet adopted the original ASU. Under the amended guidance, the leasing standard will be effective for the Company’s fiscal year beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022, with early adoption permitted. The Company is an emerging growth company and has elected to adopt ASC 842 with its 2022 Annual Financial Statements. The Company is currently evaluating the effect of adoption of these standards on the Company's Condensed Consolidated Financial Statements and related disclosures and expects to record a material right-of-use asset and liability on the Condensed Consolidated Balance Sheets related to the Company's operating leases. Upon adoption, the Company expects to elect the package of practical expedients, which, among other things, does not require the Company to reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs. The Company will continue to finalize the implementation of new processes and the assessment of the impact of this adoption on the Company's Condensed Consolidated Financial Statements and related disclosures. Credit Losses — In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (ASC Topic 326): Measurement of Credit Losses on Financial Instruments , which requires a company to consider forward looking information to determine current estimated credit losses, for all financial instruments that are not accounted for at fair value through net income (loss). ASU No. 2019-10 defers the effective date of ASU No. 2016-13 to January 1, 2023. The Company does not expect the adoption of ASU No. 2016-13 to have a material impact on the Company's Condensed Consolidated Financial Statements and related disclosures. |
Revenue
Revenue | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | 2 — Revenue In August 2022, the Company acquired the remaining 60% outstanding equity interest of Broad Arrow. Revenue from Broad Arrow, which offers services for buying, selling and financing collector cars, primarily through auctions and facilitating private sales is recognized at the time of sale pursuant to ASC Topic 606, Revenue from Contracts with Customers. Revenue related to Broad Arrow is recognized in Membership, marketplace and other revenue within the Condensed Consolidated Statements of Operations. Refer to Note 6 — Acquisitions and Investments for additional information. Agent Direct Total in thousands Three months ended September 30, 2022 Commission and fee revenue $ 37,998 $ 33,031 $ 71,029 Contingent commission 7,937 6,491 14,428 Membership revenue — 11,375 11,375 Marketplace and other revenue — 12,438 12,438 Total revenue from customer contracts $ 45,935 $ 63,335 $ 109,270 Earned premium recognized under ASC 944 107,487 Total revenue $ 216,757 Three months ended September 30, 2021 Commission and fee revenue $ 32,895 $ 28,491 $ 61,386 Contingent commission 7,106 7,696 14,802 Membership revenue — 10,411 10,411 Marketplace and other revenue — 2,787 2,787 Total revenue from customer contracts $ 40,001 $ 49,385 $ 89,386 Earned premium recognized under ASC 944 78,699 Total revenue $ 168,085 Agent Direct Total in thousands Nine months ended September 30, 2022 Commission and fee revenue $ 104,390 $ 91,183 $ 195,573 Contingent commission 26,169 21,682 47,851 Membership revenue — 32,824 32,824 Marketplace and other revenue — 23,618 23,618 Total revenue from customer contracts $ 130,559 $ 169,307 $ 299,866 Earned premium recognized under ASC 944 290,719 Total revenue $ 590,585 Nine months ended September 30, 2021 Commission and fee revenue $ 90,450 $ 78,797 $ 169,247 Contingent commission 23,264 21,493 44,757 Membership revenue — 29,965 29,965 Marketplace and other revenue — 8,355 8,355 Total revenue from customer contracts $ 113,714 $ 138,610 $ 252,324 Earned premium recognized under ASC 944 212,370 Total revenue $ 464,694 The following table presents Hagerty's revenue disaggregated by geographic area, as well as a reconciliation to total revenue for the three and nine months ended September 30, 2022 and 2021: U.S. Canada Europe Total in thousands Three months ended September 30, 2022 Commission and fee revenue $ 63,941 $ 5,940 $ 1,148 $ 71,029 Contingent commission 14,491 — (63) 14,428 Membership revenue 10,538 837 — 11,375 Marketplace and other revenue 11,740 227 471 12,438 Total revenue from customer contracts $ 100,710 $ 7,004 $ 1,556 $ 109,270 Earned premium recognized under ASC 944 107,487 Total revenue $ 216,757 Three months ended September 30, 2021 Commission and fee revenue $ 54,919 $ 5,293 $ 1,174 $ 61,386 Contingent commission 15,134 (373) 41 14,802 Membership revenue 9,664 747 — 10,411 Marketplace and other revenue 2,322 101 364 2,787 Total revenue from customer contracts $ 82,039 $ 5,768 $ 1,579 $ 89,386 Earned premium recognized under ASC 944 78,699 Total revenue $ 168,085 U.S. Canada Europe Total in thousands Nine months ended September 30, 2022 Commission and fee revenue $ 176,011 $ 16,214 $ 3,348 $ 195,573 Contingent commission 47,757 — 94 47,851 Membership revenue 30,317 2,507 — 32,824 Marketplace and other revenue 21,806 697 1,115 23,618 Total revenue from customer contracts $ 275,891 $ 19,418 $ 4,557 $ 299,866 Earned premium recognized under ASC 944 290,719 Total revenue $ 590,585 Nine months ended September 30, 2021 Commission and fee revenue $ 152,134 $ 13,983 $ 3,130 $ 169,247 Contingent commission 45,003 (355) 109 44,757 Membership revenue 27,843 2,122 — 29,965 Marketplace and other revenue 7,121 172 1,062 8,355 Total revenue from customer contracts $ 232,101 $ 15,922 $ 4,301 $ 252,324 Earned premium recognized under ASC 944 212,370 Total revenue $ 464,694 Earned Premium — The following table presents Hagerty Re's total premiums assumed and the change in unearned premiums for the three and nine months ended September 30, 2022 and 2021: Three months ended Nine months ended 2022 2021 2022 2021 in thousands Underwriting income: Premiums assumed $ 136,187 $ 103,359 $ 373,442 $ 284,598 Reinsurance premiums ceded (1,268) — (10,958) (8,465) Net premiums assumed 134,919 103,359 362,484 276,133 Change in unearned premiums (25,229) (22,741) (74,624) (67,041) Change in deferred reinsurance premiums (2,203) (1,919) 2,859 3,278 Net premiums earned $ 107,487 $ 78,699 $ 290,719 $ 212,370 Contract Assets and Liabilities — The following table is a summary of the Company's contract assets and liabilities for the periods specified below. Contract assets are classified as "Commission receivable", and liabilities are classified as "Contract liabilities" within current and non-current liabilities on the Condensed Consolidated Balance Sheets. September 30, 2022 December 31, 2021 in thousands Contract assets $ 48,213 $ 57,596 Contract liabilities $ 46,663 $ 41,390 Contract assets consist of contingent underwriting commission ("CUC") receivables, which are earned throughout the year and received in the first quarter of the following year. As such, the Commission receivable balance is generally smallest in the first quarter, and grows throughout the year as additional CUC receivables are accrued. Contract liabilities consist of cash collected in advance of revenue recognition, which primarily includes HDC membership and the State Farm advanced commission (refer to Note 17 — Related-Party Transactions for additional information). |
Prepaid Expenses and Other Asse
Prepaid Expenses and Other Assets | 9 Months Ended |
Sep. 30, 2022 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Prepaid Expenses and Other Assets | 3 — Prepaid Expenses and Other Assets The following table is a summary of current and long-term prepaid expenses and other assets as of September 30, 2022 and December 31, 2021: September 30, 2022 December 31, 2021 in thousands Prepaid sales, general and administrative expenses $ 18,788 $ 18,004 Prepaid SaaS implementation costs 18,217 16,318 Fixed income investments 11,094 10,785 Reinsurance recoverable (1) 8,100 — Contract costs 4,978 4,160 Media content 4,833 3,335 Deferred reinsurance premiums ceded 3,169 310 Other (2) 17,359 7,808 Prepaid expenses and other assets $ 86,538 $ 60,720 (1) Reinsurance recoverable represents recoverable losses in excess of $10.0 million related to Hurricane Ian. Refer to Note 8 — Provision for Unpaid Losses and Loss Adjustment Expenses for additional information. (2) As of September 30, 2022, other assets primarily includes $4.0 million of other investments, $3.5 million of fair value of interest rate swap, $2.8 million of taxes receivable, $2.5 million of collector vehicle investments and $1.1 million of deferred financing costs. |
Notes Receivable
Notes Receivable | 9 Months Ended |
Sep. 30, 2022 | |
Receivables [Abstract] | |
Notes Receivable | 4 — Notes Receivable In August 2022, the Company acquired the remaining outstanding equity interest in Broad Arrow. Broad Arrow makes term loans secured by collector cars, primarily to high net worth clients and businesses. Term loans primarily have an initial maturity of one year with an option to renew for an additional year, and typically carry a variable market rate of interest. As these loans typically mature in one year, the carrying value of the loans approximates fair value. In estimating the realizable value of collector cars pledged as collateral for loans, we consider the current and expected future value based on our expertise in the collector car market. As of September 30, 2022, the net notes receivable balance of Broad Arrow was $29.7 million, of which $22.4 million was classified within current assets and $7.3 million was classified within long-term assets on our Condensed Consolidated Balance Sheets. The classification of a loan as current or non-current takes into account the contractual maturity date of the loan, as well as the likelihood of renewing the loan on or before its contractual maturity date. Broad Arrow aims to mitigate the risk associated with a potential devaluation in collateral by targeting a maximum loan-to-value ("LTV") ratio of 65% (i.e., the principal loan amount divided by the estimated collateral value). The Company believes that the quality of the collateral and the creditworthiness of the borrower are the critical credit quality indicators for the secured loans made by Broad Arrow. Key factors in assessing the quality of the collateral include year, make, model, mileage, history, and in the case of classic cars provenance, quality of restoration (if applicable), and originality of body, chassis and mechanical components, and comparable market transaction values. These factors help determine the value of the collateral in calculating the LTV ratio. The creditworthiness of the borrower is based on their financial and credit history. The table below provides the aggregate LTV ratio for the Broad Arrow loan portfolio as of September 30, 2022: September 30, 2022 in thousands Secured loans $ 29,737 Estimate of collateral value $ 62,457 Aggregate LTV ratio 48 % Broad Arrow considers a loan to be past due when interest payments are not paid within 10 days of the monthly due date, or if principal payments are not paid by the contractual maturity date. There were no past due loans as of September 30, 2022 . A loan is considered to be impaired when we determine that it is probable that a portion of the principal and interest owed by the borrower will not be recovered after taking into account the estimated realizable value of the collateral securing the loan, as well as the ability of the borrower to repay any shortfall between the value of the collateral and the amount of the loan. The determination of whether a specific loan is impaired, and the amount of any required allowance, is based on the facts available to management and is reevaluated and adjusted as additional facts become known. If a loan is considered to be impaired, finance revenue is no longer recognized and steps are taken to restructure or take possession of the collateral, if necessary, bad debt expense is recorded for any principal or accrued interest that is deemed uncollectible. As of September 30, 2022, there were no impaired Broad Arrow loans outstanding. Allowance for Loan Losses The Company has no history of past due loans and does not believe there is a risk of loan loss based on criteria of clients served, no known adverse client developments and the sustained economic value of the collector cars used as collateral. Therefore, as of September 30, 2022, there is no allowance for loan losses recorded. |
Business Combination
Business Combination | 9 Months Ended |
Sep. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Business Combination | 5 — Business Combination On December 2, 2021, through The Hagerty Group, the Company completed the Business Combination , pursuant to the Business Combination Agreement with Aldel and Merger Sub , with The Hagerty Group surviving as a subsidiary of the Company immediately following the Business Combination . In connection with the closing of the Business Combination, the registrant changed its name from Aldel Financial Inc. to Hagerty, Inc. Pursuant to the terms of the Business Combination Agreement (1) Merger Sub was merged with and into The Hagerty Group, whereupon the separate limited liability company existence of Merger Sub ceased to exist and The Hagerty Group became the surviving company and continues to exist under the Delaware Limited Liability Company Act and (2) the existing limited liability company agreement of The Hagerty Group was amended and restated to, among other thing s, make Aldel a member of The Hagerty Group . As outlined within the Business Combination Agreement, certain accredited investors or qualified institutional buyers (the "PIPE Investors") entered into the Subscription Agreement, pursuant to which the PIPE Investors agreed to purcha se 70,385,000 shares (the "PIPE Shares") of the Company’s Class A Common Stock and 12,669,300 warrants to purchase shares of Class A Common Stock (the " PIPE Warrants " and, together with the PIPE Shares, the "PIPE Securities") for an aggregate purchase price of $703.9 million. The sale of the PIPE Securities was consummated concurrently with the Closing. In connection with the consummation of the Business Combination : • all of the existing limited liability company interests of The Hagerty Group held by HHC were converted into (1) $489.7 million in cash, (2) 176,033,906 Hagerty Group Units, and (3) 176,033,906 shares of Class V Common Stock; • all of the existing limited liability company interests of The Hagerty Group held by Markel were converted into (1) 75,000,000 Hagerty Group Units, and (2) 75,000,000 shares of Class V Common Stock of the Company; • 3,005,034 shares of Aldel 's 11,500,000 Class A Common Stock subject to redemption were redeemed, resulting in 8,494,966 Class A Common Stock still outstanding; • all of the 2,875,000 outstanding shares of Aldel's Class B Common Stock were converted into shares of Class A Common Stock on a one-for-one basis; and • 572,500 outstanding shares of Aldel's Class A Common Stock became Hagerty Class A Common Stock. Immediately after giving effect to the Business Combination , there were 82,327,466 shares of Hagerty Class A Common Stock outstanding , 251,033,906 shares of Hagerty Class V Common Stock outstanding and 20,005,550 warrants outstanding which can be converted on a one-for-one basis to Class A Common Stock . Refer to Note 14 — Warrant Liabilities for additional information on the Company's warrants. Following the Closing, the Company is organized as a C corporation and owns an equity interest in The Hagerty Group in what is commonly known as an "Up-C" structure in which substantially all of the assets and liabilities of the Company are held by The Hagerty Group. In connection with the Business Combination , the Company incurred direct and incremental costs of approxima tely $41.9 million, consisting of primarily investment banking, insurance and professional fees, of which $32.6 million were recorded as a reduction of "Additional-paid-in-capital" within the Condensed Consolidated Balance Sheets. In connection with the Business Combination, Hagerty, Inc. entered into the 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 related to the transactions contemplated under the Business Combination Agreement upon the exchange of Hagerty Group Units and Class V Common Stock for Class A Common Stock and Hagerty Group Units or cash. Refer to Note 16 — Taxation for additional information related to the TRA. The following table is a summary of the cash inflows and outflows related to the Business Combination: 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 Broad Arrow Acquisition In January 2022, Hagerty entered into a joint venture with Broad Arrow, pursuant to which Hagerty invested $15.3 million in exchange for equity ownership of approximately 40% of Broad Arrow. The Company followed equity method accounting for its investment in Broad Arrow with the carrying amount included within "Equity method investments" on the Condensed Consolidated Balance Sheets as of June 30, 2022 and the Company's share of income (loss) within "Income (loss) from equity method investment, net of tax" on the Condensed Consolidated Statements of Operations. In August 2022, the Company acquired the remaining 60% outstanding equity interest of Broad Arrow from the former Broad Arrow shareholders (the "Contributors"), in exchange for equity consideration ("Broad Arrow Acquisition"). The equity consideration consisted of Class A Common Stock and Hagerty Group Units. The number of Class A Common Stock shares and Hagerty Group Units issued was calculated using a 20 day Volume Weighted Average Stock Price of Hagerty, Inc. prior to the closing date on August 16, 2022, pursuant to the Contribution and Exchange Agreement. The fair value of the purchase consideration of $73.3 million was calculated based on the Hagerty, Inc. stock price of $13.47 as of the closing date in accordance with ASC 820. As a result of the Broad Arrow Acquisition, the Company and Broad Arrow expect to further leverage their respective product offerings and continue to build Hagerty Marketplace. Fair Value of Consideration Transferred The Broad Arrow Acquisition will be accounted for as a business combination achieved in stages (step acquisition), in accordance with ASC 805-10-25. The following table summarizes the fair value of Broad Arrow as of the date of the Broad Arrow Acquisition (in thousands): Total equity consideration $ 73,253 Fair value of previously held equity interest in Broad Arrow (1) 48,309 Total consideration and value to be allocated to net assets $ 121,562 (1) The Broad Arrow Acquisition is considered a step acquisition, and accordingly, the Company remeasured its pre-existing 40% equity interest in Broad Arrow immediately prior to completion of the acquisition to its estimated fair value of approximately $48.3 million. As a result of the remeasurement, the Company recorded a net gain of approximately $34.7 million within the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2022, representing the excess of the approximate $48.3 million estimated fair value of its pre-existing 40% equity interest over its transaction date carrying value of approximately $13.6 million. Allocation of Consideration Transferred The acquisition of Broad Arrow was reflected in our Condensed Consolidated Financial Statements as a step acquisition and as such we remeasured our pre-existing 40% equity interest in Broad Arrow to fair value as discussed above. The fair value of our previously held equity interest immediately prior to the completion of the Broad Arrow Acquisition is derived from the Hagerty, Inc. stock price of $13.47 as of the closing date and thus represents a Level 1 measurement. The fair values assigned to identifiable assets acquired and liabilities assumed are preliminary based on management's estimates and assumptions and could result in changes to the amounts recorded below. The Company expects to finalize the valuation as soon as practicable, but no longer than one year from the acquisition date, as permitted in accordance with ASC 805. The following table summarizes the preliminary purchase consideration and the purchase price allocation to fair values of the identifiable assets acquired and liabilities assumed as of the date of the Broad Arrow Acquisition: Notes receivable (1) $ 21,594 Intangible assets, net (2) 3,100 Other assets (3) 11,756 Other liabilities (4) (13,449) Total identifiable net assets acquired 23,001 Goodwill 98,561 Total consideration and value to be allocated to net assets $ 121,562 (1) Broad Arrow makes term loans, particularly to high net worth clients and businesses, that are secured by collector vehicles. Refer to Note 4 — Notes Receivable for additional information with respect to the Notes receivable acquired. (2) The fair value of identifiable intangible assets was a Level 3 measurement, estimated using significant assumptions that are not observable in the market through the use of a discounted cash flow model with inputs including discount rate and terminal growth rate as well as return on assets. Identifiable intangible assets include trade names of $3.1 million with a 5-year estimated useful life. (3) Other assets includes $6.2 million of Prepaid expenses and other current assets, $2.8 million of cash acquired and $2.6 million of Accounts receivable. (4) Other liabilities includes a $7.0 million Note payable, $5.3 million of Contract liabilities and $0.7 million of Accounts payable. The excess of the purchase price over the aggregate estimated fair values of identifiable assets acquired and liabilities assumed was recorded as goodwill. The goodwill recognized is primarily a result of the expected enhancement of our Hagerty Marketplace business through Broad Arrow's various service offerings, including buying, selling and financing of collector vehicles through classified listings, auctions and facilitating private sales, as well as the assembled workforce of and various other factors. The Company recognized $0.8 million of acquisition related expenses associated with the Broad Arrow Acquisition in its Condensed Consolidated Statements of Operations for the nine months ended September 30, 2022. The acquisition of Broad Arrow was not material to the Company's Condensed Consolidated Statements of Operations. Therefore, pro forma results of operations related to this acquisition have not been presented. As Broad Arrow is now a wholly-owned subsidiary of the Company, the Company now consolidates the results of Broad Arrow in accordance with ASC 810, and the financial results of Broad Arrow have been included within the Company's Condensed Consolidated Financial Statements since the acquisition date. The Company's Condensed Consolidated Statements of Operations include total revenue and income before taxes of approximately $5.9 million and $2.1 million, attributable to Broad Arrow since the acquisition date. Speed Digital Acquisition In April 2022, Hagerty acquired Speed Digital LLC ("Speed Digital") for a purchase price of $15.0 million. The Company paid $7.5 million at closing with an additional two annual installments of $3.75 million each to be paid in 2023 and 2024. Speed Digital was previously wholly owned indirectly by Robert Kauffman, a director on the Company's Board, who will receive 100% of the proceeds of the purchase price. Speed Digital operates a software as a service ("SaaS") business primarily serving collector car dealers and auction houses, and an advertising and content syndication platform, which includes Motorious.com. The Company acquired Speed Digital to enhance the Hagerty Marketplace business to establish relationships with their dealer partners and facilitate growth in Hagerty Marketplace products; augment the Company's automotive intelligence data; and allow Motorious.com to drive audience engagement, content distribution, and advertising revenue. Other Acquisitions Lastly, during the nine months ended September 30, 2022 and 2021, the Company completed various acquisitions, which had an aggregate purchase price of $3.5 million and $12.4 million, respectively. |
Acquisitions and Investments
Acquisitions and Investments | 9 Months Ended |
Sep. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisitions and Investments | 5 — Business Combination On December 2, 2021, through The Hagerty Group, the Company completed the Business Combination , pursuant to the Business Combination Agreement with Aldel and Merger Sub , with The Hagerty Group surviving as a subsidiary of the Company immediately following the Business Combination . In connection with the closing of the Business Combination, the registrant changed its name from Aldel Financial Inc. to Hagerty, Inc. Pursuant to the terms of the Business Combination Agreement (1) Merger Sub was merged with and into The Hagerty Group, whereupon the separate limited liability company existence of Merger Sub ceased to exist and The Hagerty Group became the surviving company and continues to exist under the Delaware Limited Liability Company Act and (2) the existing limited liability company agreement of The Hagerty Group was amended and restated to, among other thing s, make Aldel a member of The Hagerty Group . As outlined within the Business Combination Agreement, certain accredited investors or qualified institutional buyers (the "PIPE Investors") entered into the Subscription Agreement, pursuant to which the PIPE Investors agreed to purcha se 70,385,000 shares (the "PIPE Shares") of the Company’s Class A Common Stock and 12,669,300 warrants to purchase shares of Class A Common Stock (the " PIPE Warrants " and, together with the PIPE Shares, the "PIPE Securities") for an aggregate purchase price of $703.9 million. The sale of the PIPE Securities was consummated concurrently with the Closing. In connection with the consummation of the Business Combination : • all of the existing limited liability company interests of The Hagerty Group held by HHC were converted into (1) $489.7 million in cash, (2) 176,033,906 Hagerty Group Units, and (3) 176,033,906 shares of Class V Common Stock; • all of the existing limited liability company interests of The Hagerty Group held by Markel were converted into (1) 75,000,000 Hagerty Group Units, and (2) 75,000,000 shares of Class V Common Stock of the Company; • 3,005,034 shares of Aldel 's 11,500,000 Class A Common Stock subject to redemption were redeemed, resulting in 8,494,966 Class A Common Stock still outstanding; • all of the 2,875,000 outstanding shares of Aldel's Class B Common Stock were converted into shares of Class A Common Stock on a one-for-one basis; and • 572,500 outstanding shares of Aldel's Class A Common Stock became Hagerty Class A Common Stock. Immediately after giving effect to the Business Combination , there were 82,327,466 shares of Hagerty Class A Common Stock outstanding , 251,033,906 shares of Hagerty Class V Common Stock outstanding and 20,005,550 warrants outstanding which can be converted on a one-for-one basis to Class A Common Stock . Refer to Note 14 — Warrant Liabilities for additional information on the Company's warrants. Following the Closing, the Company is organized as a C corporation and owns an equity interest in The Hagerty Group in what is commonly known as an "Up-C" structure in which substantially all of the assets and liabilities of the Company are held by The Hagerty Group. In connection with the Business Combination , the Company incurred direct and incremental costs of approxima tely $41.9 million, consisting of primarily investment banking, insurance and professional fees, of which $32.6 million were recorded as a reduction of "Additional-paid-in-capital" within the Condensed Consolidated Balance Sheets. In connection with the Business Combination, Hagerty, Inc. entered into the 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 related to the transactions contemplated under the Business Combination Agreement upon the exchange of Hagerty Group Units and Class V Common Stock for Class A Common Stock and Hagerty Group Units or cash. Refer to Note 16 — Taxation for additional information related to the TRA. The following table is a summary of the cash inflows and outflows related to the Business Combination: 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 Broad Arrow Acquisition In January 2022, Hagerty entered into a joint venture with Broad Arrow, pursuant to which Hagerty invested $15.3 million in exchange for equity ownership of approximately 40% of Broad Arrow. The Company followed equity method accounting for its investment in Broad Arrow with the carrying amount included within "Equity method investments" on the Condensed Consolidated Balance Sheets as of June 30, 2022 and the Company's share of income (loss) within "Income (loss) from equity method investment, net of tax" on the Condensed Consolidated Statements of Operations. In August 2022, the Company acquired the remaining 60% outstanding equity interest of Broad Arrow from the former Broad Arrow shareholders (the "Contributors"), in exchange for equity consideration ("Broad Arrow Acquisition"). The equity consideration consisted of Class A Common Stock and Hagerty Group Units. The number of Class A Common Stock shares and Hagerty Group Units issued was calculated using a 20 day Volume Weighted Average Stock Price of Hagerty, Inc. prior to the closing date on August 16, 2022, pursuant to the Contribution and Exchange Agreement. The fair value of the purchase consideration of $73.3 million was calculated based on the Hagerty, Inc. stock price of $13.47 as of the closing date in accordance with ASC 820. As a result of the Broad Arrow Acquisition, the Company and Broad Arrow expect to further leverage their respective product offerings and continue to build Hagerty Marketplace. Fair Value of Consideration Transferred The Broad Arrow Acquisition will be accounted for as a business combination achieved in stages (step acquisition), in accordance with ASC 805-10-25. The following table summarizes the fair value of Broad Arrow as of the date of the Broad Arrow Acquisition (in thousands): Total equity consideration $ 73,253 Fair value of previously held equity interest in Broad Arrow (1) 48,309 Total consideration and value to be allocated to net assets $ 121,562 (1) The Broad Arrow Acquisition is considered a step acquisition, and accordingly, the Company remeasured its pre-existing 40% equity interest in Broad Arrow immediately prior to completion of the acquisition to its estimated fair value of approximately $48.3 million. As a result of the remeasurement, the Company recorded a net gain of approximately $34.7 million within the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2022, representing the excess of the approximate $48.3 million estimated fair value of its pre-existing 40% equity interest over its transaction date carrying value of approximately $13.6 million. Allocation of Consideration Transferred The acquisition of Broad Arrow was reflected in our Condensed Consolidated Financial Statements as a step acquisition and as such we remeasured our pre-existing 40% equity interest in Broad Arrow to fair value as discussed above. The fair value of our previously held equity interest immediately prior to the completion of the Broad Arrow Acquisition is derived from the Hagerty, Inc. stock price of $13.47 as of the closing date and thus represents a Level 1 measurement. The fair values assigned to identifiable assets acquired and liabilities assumed are preliminary based on management's estimates and assumptions and could result in changes to the amounts recorded below. The Company expects to finalize the valuation as soon as practicable, but no longer than one year from the acquisition date, as permitted in accordance with ASC 805. The following table summarizes the preliminary purchase consideration and the purchase price allocation to fair values of the identifiable assets acquired and liabilities assumed as of the date of the Broad Arrow Acquisition: Notes receivable (1) $ 21,594 Intangible assets, net (2) 3,100 Other assets (3) 11,756 Other liabilities (4) (13,449) Total identifiable net assets acquired 23,001 Goodwill 98,561 Total consideration and value to be allocated to net assets $ 121,562 (1) Broad Arrow makes term loans, particularly to high net worth clients and businesses, that are secured by collector vehicles. Refer to Note 4 — Notes Receivable for additional information with respect to the Notes receivable acquired. (2) The fair value of identifiable intangible assets was a Level 3 measurement, estimated using significant assumptions that are not observable in the market through the use of a discounted cash flow model with inputs including discount rate and terminal growth rate as well as return on assets. Identifiable intangible assets include trade names of $3.1 million with a 5-year estimated useful life. (3) Other assets includes $6.2 million of Prepaid expenses and other current assets, $2.8 million of cash acquired and $2.6 million of Accounts receivable. (4) Other liabilities includes a $7.0 million Note payable, $5.3 million of Contract liabilities and $0.7 million of Accounts payable. The excess of the purchase price over the aggregate estimated fair values of identifiable assets acquired and liabilities assumed was recorded as goodwill. The goodwill recognized is primarily a result of the expected enhancement of our Hagerty Marketplace business through Broad Arrow's various service offerings, including buying, selling and financing of collector vehicles through classified listings, auctions and facilitating private sales, as well as the assembled workforce of and various other factors. The Company recognized $0.8 million of acquisition related expenses associated with the Broad Arrow Acquisition in its Condensed Consolidated Statements of Operations for the nine months ended September 30, 2022. The acquisition of Broad Arrow was not material to the Company's Condensed Consolidated Statements of Operations. Therefore, pro forma results of operations related to this acquisition have not been presented. As Broad Arrow is now a wholly-owned subsidiary of the Company, the Company now consolidates the results of Broad Arrow in accordance with ASC 810, and the financial results of Broad Arrow have been included within the Company's Condensed Consolidated Financial Statements since the acquisition date. The Company's Condensed Consolidated Statements of Operations include total revenue and income before taxes of approximately $5.9 million and $2.1 million, attributable to Broad Arrow since the acquisition date. Speed Digital Acquisition In April 2022, Hagerty acquired Speed Digital LLC ("Speed Digital") for a purchase price of $15.0 million. The Company paid $7.5 million at closing with an additional two annual installments of $3.75 million each to be paid in 2023 and 2024. Speed Digital was previously wholly owned indirectly by Robert Kauffman, a director on the Company's Board, who will receive 100% of the proceeds of the purchase price. Speed Digital operates a software as a service ("SaaS") business primarily serving collector car dealers and auction houses, and an advertising and content syndication platform, which includes Motorious.com. The Company acquired Speed Digital to enhance the Hagerty Marketplace business to establish relationships with their dealer partners and facilitate growth in Hagerty Marketplace products; augment the Company's automotive intelligence data; and allow Motorious.com to drive audience engagement, content distribution, and advertising revenue. Other Acquisitions Lastly, during the nine months ended September 30, 2022 and 2021, the Company completed various acquisitions, which had an aggregate purchase price of $3.5 million and $12.4 million, respectively. |
Acquisitions and Investments | 6 — Acquisitions and Investments Broad Arrow Acquisition In January 2022, Hagerty entered into a joint venture with Broad Arrow, pursuant to which Hagerty invested $15.3 million in exchange for equity ownership of approximately 40% of Broad Arrow. The Company followed equity method accounting for its investment in Broad Arrow with the carrying amount included within "Equity method investments" on the Condensed Consolidated Balance Sheets as of June 30, 2022 and the Company's share of income (loss) within "Income (loss) from equity method investment, net of tax" on the Condensed Consolidated Statements of Operations. In August 2022, the Company acquired the remaining 60% outstanding equity interest of Broad Arrow from the former Broad Arrow shareholders (the "Contributors"), in exchange for equity consideration ("Broad Arrow Acquisition"). The equity consideration consisted of Class A Common Stock and Hagerty Group Units. The number of Class A Common Stock shares and Hagerty Group Units issued was calculated using a 20 day Volume Weighted Average Stock Price of Hagerty, Inc. prior to the closing date on August 16, 2022, pursuant to the Contribution and Exchange Agreement. The fair value of the purchase consideration of $73.3 million was calculated based on the Hagerty, Inc. stock price of $13.47 as of the closing date in accordance with ASC 820. As a result of the Broad Arrow Acquisition, the Company and Broad Arrow expect to further leverage their respective product offerings and continue to build Hagerty Marketplace. Fair Value of Consideration Transferred The Broad Arrow Acquisition will be accounted for as a business combination achieved in stages (step acquisition), in accordance with ASC 805-10-25. The following table summarizes the fair value of Broad Arrow as of the date of the Broad Arrow Acquisition (in thousands): Total equity consideration $ 73,253 Fair value of previously held equity interest in Broad Arrow (1) 48,309 Total consideration and value to be allocated to net assets $ 121,562 (1) The Broad Arrow Acquisition is considered a step acquisition, and accordingly, the Company remeasured its pre-existing 40% equity interest in Broad Arrow immediately prior to completion of the acquisition to its estimated fair value of approximately $48.3 million. As a result of the remeasurement, the Company recorded a net gain of approximately $34.7 million within the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2022, representing the excess of the approximate $48.3 million estimated fair value of its pre-existing 40% equity interest over its transaction date carrying value of approximately $13.6 million. Allocation of Consideration Transferred The acquisition of Broad Arrow was reflected in our Condensed Consolidated Financial Statements as a step acquisition and as such we remeasured our pre-existing 40% equity interest in Broad Arrow to fair value as discussed above. The fair value of our previously held equity interest immediately prior to the completion of the Broad Arrow Acquisition is derived from the Hagerty, Inc. stock price of $13.47 as of the closing date and thus represents a Level 1 measurement. The fair values assigned to identifiable assets acquired and liabilities assumed are preliminary based on management's estimates and assumptions and could result in changes to the amounts recorded below. The Company expects to finalize the valuation as soon as practicable, but no longer than one year from the acquisition date, as permitted in accordance with ASC 805. The following table summarizes the preliminary purchase consideration and the purchase price allocation to fair values of the identifiable assets acquired and liabilities assumed as of the date of the Broad Arrow Acquisition: Notes receivable (1) $ 21,594 Intangible assets, net (2) 3,100 Other assets (3) 11,756 Other liabilities (4) (13,449) Total identifiable net assets acquired 23,001 Goodwill 98,561 Total consideration and value to be allocated to net assets $ 121,562 (1) Broad Arrow makes term loans, particularly to high net worth clients and businesses, that are secured by collector vehicles. Refer to Note 4 — Notes Receivable for additional information with respect to the Notes receivable acquired. (2) The fair value of identifiable intangible assets was a Level 3 measurement, estimated using significant assumptions that are not observable in the market through the use of a discounted cash flow model with inputs including discount rate and terminal growth rate as well as return on assets. Identifiable intangible assets include trade names of $3.1 million with a 5-year estimated useful life. (3) Other assets includes $6.2 million of Prepaid expenses and other current assets, $2.8 million of cash acquired and $2.6 million of Accounts receivable. (4) Other liabilities includes a $7.0 million Note payable, $5.3 million of Contract liabilities and $0.7 million of Accounts payable. The excess of the purchase price over the aggregate estimated fair values of identifiable assets acquired and liabilities assumed was recorded as goodwill. The goodwill recognized is primarily a result of the expected enhancement of our Hagerty Marketplace business through Broad Arrow's various service offerings, including buying, selling and financing of collector vehicles through classified listings, auctions and facilitating private sales, as well as the assembled workforce of and various other factors. The Company recognized $0.8 million of acquisition related expenses associated with the Broad Arrow Acquisition in its Condensed Consolidated Statements of Operations for the nine months ended September 30, 2022. The acquisition of Broad Arrow was not material to the Company's Condensed Consolidated Statements of Operations. Therefore, pro forma results of operations related to this acquisition have not been presented. As Broad Arrow is now a wholly-owned subsidiary of the Company, the Company now consolidates the results of Broad Arrow in accordance with ASC 810, and the financial results of Broad Arrow have been included within the Company's Condensed Consolidated Financial Statements since the acquisition date. The Company's Condensed Consolidated Statements of Operations include total revenue and income before taxes of approximately $5.9 million and $2.1 million, attributable to Broad Arrow since the acquisition date. Speed Digital Acquisition In April 2022, Hagerty acquired Speed Digital LLC ("Speed Digital") for a purchase price of $15.0 million. The Company paid $7.5 million at closing with an additional two annual installments of $3.75 million each to be paid in 2023 and 2024. Speed Digital was previously wholly owned indirectly by Robert Kauffman, a director on the Company's Board, who will receive 100% of the proceeds of the purchase price. Speed Digital operates a software as a service ("SaaS") business primarily serving collector car dealers and auction houses, and an advertising and content syndication platform, which includes Motorious.com. The Company acquired Speed Digital to enhance the Hagerty Marketplace business to establish relationships with their dealer partners and facilitate growth in Hagerty Marketplace products; augment the Company's automotive intelligence data; and allow Motorious.com to drive audience engagement, content distribution, and advertising revenue. Other Acquisitions Lastly, during the nine months ended September 30, 2022 and 2021, the Company completed various acquisitions, which had an aggregate purchase price of $3.5 million and $12.4 million, respectively. |
Acquisitions and Investments | 6 — Acquisitions and Investments Broad Arrow Acquisition In January 2022, Hagerty entered into a joint venture with Broad Arrow, pursuant to which Hagerty invested $15.3 million in exchange for equity ownership of approximately 40% of Broad Arrow. The Company followed equity method accounting for its investment in Broad Arrow with the carrying amount included within "Equity method investments" on the Condensed Consolidated Balance Sheets as of June 30, 2022 and the Company's share of income (loss) within "Income (loss) from equity method investment, net of tax" on the Condensed Consolidated Statements of Operations. In August 2022, the Company acquired the remaining 60% outstanding equity interest of Broad Arrow from the former Broad Arrow shareholders (the "Contributors"), in exchange for equity consideration ("Broad Arrow Acquisition"). The equity consideration consisted of Class A Common Stock and Hagerty Group Units. The number of Class A Common Stock shares and Hagerty Group Units issued was calculated using a 20 day Volume Weighted Average Stock Price of Hagerty, Inc. prior to the closing date on August 16, 2022, pursuant to the Contribution and Exchange Agreement. The fair value of the purchase consideration of $73.3 million was calculated based on the Hagerty, Inc. stock price of $13.47 as of the closing date in accordance with ASC 820. As a result of the Broad Arrow Acquisition, the Company and Broad Arrow expect to further leverage their respective product offerings and continue to build Hagerty Marketplace. Fair Value of Consideration Transferred The Broad Arrow Acquisition will be accounted for as a business combination achieved in stages (step acquisition), in accordance with ASC 805-10-25. The following table summarizes the fair value of Broad Arrow as of the date of the Broad Arrow Acquisition (in thousands): Total equity consideration $ 73,253 Fair value of previously held equity interest in Broad Arrow (1) 48,309 Total consideration and value to be allocated to net assets $ 121,562 (1) The Broad Arrow Acquisition is considered a step acquisition, and accordingly, the Company remeasured its pre-existing 40% equity interest in Broad Arrow immediately prior to completion of the acquisition to its estimated fair value of approximately $48.3 million. As a result of the remeasurement, the Company recorded a net gain of approximately $34.7 million within the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2022, representing the excess of the approximate $48.3 million estimated fair value of its pre-existing 40% equity interest over its transaction date carrying value of approximately $13.6 million. Allocation of Consideration Transferred The acquisition of Broad Arrow was reflected in our Condensed Consolidated Financial Statements as a step acquisition and as such we remeasured our pre-existing 40% equity interest in Broad Arrow to fair value as discussed above. The fair value of our previously held equity interest immediately prior to the completion of the Broad Arrow Acquisition is derived from the Hagerty, Inc. stock price of $13.47 as of the closing date and thus represents a Level 1 measurement. The fair values assigned to identifiable assets acquired and liabilities assumed are preliminary based on management's estimates and assumptions and could result in changes to the amounts recorded below. The Company expects to finalize the valuation as soon as practicable, but no longer than one year from the acquisition date, as permitted in accordance with ASC 805. The following table summarizes the preliminary purchase consideration and the purchase price allocation to fair values of the identifiable assets acquired and liabilities assumed as of the date of the Broad Arrow Acquisition: Notes receivable (1) $ 21,594 Intangible assets, net (2) 3,100 Other assets (3) 11,756 Other liabilities (4) (13,449) Total identifiable net assets acquired 23,001 Goodwill 98,561 Total consideration and value to be allocated to net assets $ 121,562 (1) Broad Arrow makes term loans, particularly to high net worth clients and businesses, that are secured by collector vehicles. Refer to Note 4 — Notes Receivable for additional information with respect to the Notes receivable acquired. (2) The fair value of identifiable intangible assets was a Level 3 measurement, estimated using significant assumptions that are not observable in the market through the use of a discounted cash flow model with inputs including discount rate and terminal growth rate as well as return on assets. Identifiable intangible assets include trade names of $3.1 million with a 5-year estimated useful life. (3) Other assets includes $6.2 million of Prepaid expenses and other current assets, $2.8 million of cash acquired and $2.6 million of Accounts receivable. (4) Other liabilities includes a $7.0 million Note payable, $5.3 million of Contract liabilities and $0.7 million of Accounts payable. The excess of the purchase price over the aggregate estimated fair values of identifiable assets acquired and liabilities assumed was recorded as goodwill. The goodwill recognized is primarily a result of the expected enhancement of our Hagerty Marketplace business through Broad Arrow's various service offerings, including buying, selling and financing of collector vehicles through classified listings, auctions and facilitating private sales, as well as the assembled workforce of and various other factors. The Company recognized $0.8 million of acquisition related expenses associated with the Broad Arrow Acquisition in its Condensed Consolidated Statements of Operations for the nine months ended September 30, 2022. The acquisition of Broad Arrow was not material to the Company's Condensed Consolidated Statements of Operations. Therefore, pro forma results of operations related to this acquisition have not been presented. As Broad Arrow is now a wholly-owned subsidiary of the Company, the Company now consolidates the results of Broad Arrow in accordance with ASC 810, and the financial results of Broad Arrow have been included within the Company's Condensed Consolidated Financial Statements since the acquisition date. The Company's Condensed Consolidated Statements of Operations include total revenue and income before taxes of approximately $5.9 million and $2.1 million, attributable to Broad Arrow since the acquisition date. Speed Digital Acquisition In April 2022, Hagerty acquired Speed Digital LLC ("Speed Digital") for a purchase price of $15.0 million. The Company paid $7.5 million at closing with an additional two annual installments of $3.75 million each to be paid in 2023 and 2024. Speed Digital was previously wholly owned indirectly by Robert Kauffman, a director on the Company's Board, who will receive 100% of the proceeds of the purchase price. Speed Digital operates a software as a service ("SaaS") business primarily serving collector car dealers and auction houses, and an advertising and content syndication platform, which includes Motorious.com. The Company acquired Speed Digital to enhance the Hagerty Marketplace business to establish relationships with their dealer partners and facilitate growth in Hagerty Marketplace products; augment the Company's automotive intelligence data; and allow Motorious.com to drive audience engagement, content distribution, and advertising revenue. Other Acquisitions Lastly, during the nine months ended September 30, 2022 and 2021, the Company completed various acquisitions, which had an aggregate purchase price of $3.5 million and $12.4 million, respectively. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill The following is a reconciliation of the changes in the Company's goodwill for the periods specified below: 2022 2021 in thousands Goodwill as of January 1, $ 11,488 $ 4,745 Goodwill resulting from acquisitions (1) 103,543 6,328 Goodwill as of September 30, $ 115,031 $ 11,073 (1) Goodwill resulting from acquisitions for the nine months ended September 30, 2022 includes $98.6 million related to the Broad Arrow Acquisition. Refer to Note 6 — Acquisitions and Investments for additional information. The cost and accumulated amortization of intangible assets as of September 30, 2022 and December 31, 2021 are as follows: Weighted Average Useful Life September 30, 2022 December 31, 2021 in thousands Renewal rights 9.9 $ 17,184 $ 17,557 Internally developed software 3.1 105,367 76,865 Trade names and trademarks 14.3 12,541 5,004 Relationships and customer lists 15.6 10,426 5,652 Other 4.4 1,429 1,464 Intangible assets 146,947 106,542 Less: accumulated amortization (45,411) (30,371) Intangible assets, net $ 101,536 $ 76,171 Intangible asset amortization expense was $5.9 million and $3.5 million for the three months ended September 30, 2022 and 2021, respectively, and $15.4 million and $8.9 million for the nine months ended September 30, 2022 and 2021, respectively. The estimated future aggregate amortization expense as of September 30, 2022 is as follows (in thousands): 2022 $ 6,154 2023 32,577 2024 24,534 2025 15,684 2026 3,766 Thereafter 18,821 Total $ 101,536 |
Provision for Unpaid Losses and
Provision for Unpaid Losses and Loss Adjustment Expenses | 9 Months Ended |
Sep. 30, 2022 | |
Insurance [Abstract] | |
Provision for Unpaid Losses and Loss Adjustment Expenses | 8 — 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 reinsurers: Nine months ended 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 136,144 87,643 Prior accident year — — Total incurred losses and loss adjustment expenses 136,144 87,643 Payments: Current accident year 27,939 20,604 Prior accident year 27,759 18,403 Total payments 55,698 39,007 Effect of foreign currency rate changes (490) (33) Net reserves for losses and loss adjustment expenses, end of period 154,825 103,591 Reinsurance recoverable 8,100 — Gross reserves for losses and loss adjustment expenses, end of period $ 162,925 $ 103,591 In updating Hagerty Re's loss reserve estimates, inputs are considered and evaluated from many sources, including actual claims data, the performance of prior reserve estimates, observed industry trends, and internal review processes, including the views of the Company’s actuary. These inputs are used to improve evaluation techniques and to analyze and assess the change in estimated ultimate losses for each accident year by line of business. These analyses produce a range of indications from various methods, from which an actuarial point estimate is selected. Current year incurred losses and loss adjustment expenses for the nine months ended September 30, 2022 included $10.0 million of estimated net losses related to Hurricane Ian. This amount is equal to the Company's retention under its catastrophe reinsurance program. Claims from Hurricane Ian, which made landfall on September 28, 2022, are still being reported. At this time, we are utilizing various loss estimation techniques to project ultimate losses from Hurricane Ian, including reviews of the modeled loss estimates that factor in third party industry loss estimates, detailed policy level reviews and direct contact with insureds and brokers. Importantly, any further losses above $10.0 million will be recoverable under the Company's catastrophe reinsurance program. Additionally, the Company strengthened reserves for U.S. auto liability by $6.5 million for the 2022 accident year. Liability claims severity in this line has been increasing across the industry and the Company in 2022. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 9 — Fair Value Measurements Hagerty measures and discloses fair values in accordance with the provisions of ASC 820. The Company’s recurring significant fair value measurements primarily relate to interest rate swaps, warrant liabilities and fixed income investments. The Company uses valuation techniques based on inputs such as observable data, independent market data and/or unobservable data. Additionally, Hagerty makes assumptions in valuing its assets and liabilities, including assumptions about risk and the risks inherent in the inputs to the valuation techniques. The Company classifies fair value measurements 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 is significant to the fair value measurement in its entirety. Assessing the significance of a particular input requires judgment. The three levels of the fair value hierarchy are as follows: • Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities that are accessible at the measurement 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 — Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable for substantially the full term of the asset or liability. • Level 3 — Unobservable inputs that management believes 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 at the end of the reporting period. Recurring fair value measurements Interest rate swaps Interest rate swaps are determined to be Level 2 within the fair value hierarchy. The significant inputs, such as the Secured Overnight Financing Rate ("SOFR") forward curve, of interest rate swaps are considered observable market inputs. The Company monitors the credit and nonperformance risk associated with its counterparty and believes them to be insignificant. Refer to Note 11 — Interest Rate Swaps for additional information. Warrant liabilities The Company's 5,750,000 Public Warrants are Level 1 within the fair value hierarchy as they are measured utilizing quoted market prices. The Company has determined that its private warrants are Level 3 within the fair value hierarchy. The Company's private warrants include 257,500 Private Placement Warrants, 28,750 Underwriter Warrants, 1,300,000 OTM Warrants and 12,147,300 PIPE Warrants. The Company utilizes a Monte Carlo simulation model to measure the fair value of the private warrants. The Company’s Monte Carlo simulation model includes assumptions related to the expected stock-price volatility, expected term, dividend yield and risk-free interest rate. Refer to Note 14 — Warrant Liabilities for additional information. The following table summarizes the significant inputs in the valuation model as of September 30, 2022: Inputs Private Placement Warrants Underwriter Warrants OTM Warrants PIPE Warrants Exercise price $11.50 $11.50 $15.00 $11.50 Common stock price $8.99 $8.99 $8.99 $8.99 Volatility 43.7% 43.7% 41.0% 43.7% Expected term of the warrants 4.18 4.18 9.18 4.18 Risk-free rate 4.10% 4.10% 3.80% 4.10% Dividend yield —% —% —% —% The Company estimates the volatility of its common stock based on factors including, but not limited to, implied volatility of the Public Warrants, the historical performance of comparable companies, and management's understanding of the volatility associated with similar instruments of other entities. The risk-free rate is based on the yield of the U.S. Treasury Constant Maturity for a term that approximates the expected remaining life, which is assumed to be the remaining contractual term, of the warrants. The dividend rate is based on the Company’s historical rate, which the Company anticipates to remain at zero. The fair value of the Company's financial assets and liabilities measured at fair value on a recurring basis at September 30, 2022 and December 31, 2021, is shown in the table below: Fair Value Measurements Total Level 1 Level 2 Level 3 in thousands September 30, 2022 Financial Assets Interest rate swaps $ 3,516 $ — $ 3,516 $ — Total $ 3,516 $ — $ 3,516 $ — Financial Liabilities Public warrants $ 14,088 $ 14,088 $ — $ — Private placement warrants 727 — — 727 Underwriter warrants 81 — — 81 OTM warrants 4,888 — — 4,888 PIPE warrants 29,807 — — 29,807 Total $ 49,591 $ 14,088 $ — $ 35,503 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 The following table presents a reconciliation of the Company's warrant liabilities that are classified as Level 3 within the fair value hierarchy for the nine months ended September 30, 2022: 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 (521) (58) (1,961) (24,174) (26,714) Exercise of warrants — — — (1,906) (1,906) Transfers In (Out) of Level 3 — — — — — Balance at September 30, 2022 $ 727 $ 81 $ 4,888 $ 29,807 $ 35,503 Fixed Income Investments The Company has fixed income investments that consist of Canadian Sovereign, Provincial and Municipal fixed income securities held in a trust account to meet the requirements of a third-party insurer, Aviva, in connection with Hagerty Re's reinsurance agreement. The Company classifies its fixed income investments in connection with its reinsurance agreement as held-to-maturity, as the Company has the intent and ability to hold these investments to maturity. The Company has determined that its fixed income investments are Level 2 within the fair value hierarchy, as these investments are valued using observable inputs such as quoted prices for similar assets at the measurement date. The following table discloses the fair value and related carrying amount of fixed income investments held by Hagerty Re as of September 30, 2022 and December 31, 2021: Carrying Amount Estimated Fair Value in thousands September 30, 2022 Fixed income securities, short-term $ 2,218 $ 2,170 Fixed income securities, long-term 8,876 8,436 Total $ 11,094 $ 10,606 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 The Company has reviewed the portfolio for other than temporary impairments and concluded that no impairment exists as of September 30, 2022. The Company did not record any gains or losses on these securities during the nine months ended September 30, 2022 or 2021. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Debt | 10 — Debt As of the indicated dates, the principal amount of Hagerty's debt consisted of the following: September 30, 2022 December 31, 2021 in thousands Credit Facility $ 136,000 $ 135,500 Note payable — 1,000 Total debt outstanding $ 136,000 $ 136,500 Less: current portion — (1,000) Total long-term debt outstanding $ 136,000 $ 135,500 Credit Facility — In September 2022, the Company entered into a Fourth Amendment to Amended and Restated Credit Agreement ("Credit Agreement"), which amended the terms of its revolving credit facility ("Credit Facility") with JPMorgan Chase Bank, N.A., as administrative agent, and the other financial institutions party thereto from time to time as lenders. The amendment primarily included definition updates, transitioning the pricing terms from LIBOR to Term SOFR and changes to the financial covenants. The aggregate amount of commitments available to the Company under the Credit Facility is $230.0 million. The Credit Agreement also provides for an uncommitted incremental facility under which the Company may request one or more increases in the amount of the commitments available under the Credit Facility in an aggregate amount not to exceed $50.0 million. Additionally, the Credit Agreement also provides for the issuance of letters of credit and the making of discretionary swing line loans, with sublimits of $25.0 million and $3.0 million, respectively, or lesser amounts in the event the available aggregate commitments are less than such sublimits. The current term of the Credit Agreement matures in October 2026 and may be extended by one year on an annual basis if agreed to by the Company and the lenders party thereto. Any unpaid balance on the Credit Facility is due at maturity. The Credit Facility accrues interest at the Term SOFR Rate plus an applicable margin determined by the Company's net leverage ratio for the preceding period (as defined in the Credit Agreement). The effective borrowing rate was 5.15% and 1.61% as of September 30, 2022 and December 31, 2021, respectively. The Credit Facility borrowings are collateralized by Company assets, except for the assets of the Company’s U.K., Bermuda and German subsidiaries and the non-wholly owned subsidiaries of MHH. Under the Credit Agreement, the Company is required, among other things, to meet certain financial covenants (as defined in the Credit Agreement), including a fixed charge coverage ratio and a leverage ratio. As of September 30, 2022 and December 31, 2021, the Company was in compliance with the covenants under the Credit Agreement. Note Payable — The Company had a $2.0 million note payable related to a business combination for the purchase installment payments, with a fixed interest rate of 3.25%. The note was paid in two equal installments, $1.0 million of which was paid in 2021. The note payable matured March 1, 2022 at which time the second installment of $1.0 million was paid. |
Interest Rate Swaps
Interest Rate Swaps | 9 Months Ended |
Sep. 30, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Interest Rate Swaps | 11 — Interest Rate Swaps Hagerty's interest rate swap agreements are used to fix the interest rate on a portion of the Company's existing variable rate debt to reduce the exposure to interest rate fluctuations. The notional amounts of the interest rate swap agreements are used to measure interest to be paid or received and do not represent the amount of exposure to credit loss. The differential paid or received on the interest rate swap agreements is recognized as an adjustment to interest expense within "Interest and other income (expense)" in the Condensed Consolidated Statements of Operations. As of September 30, 2022, the Company had one outstanding interest rate swap, which was entered into in December 2020, with an original notional amount of $35.0 million. In September 2022, the interest rate swap was amended to replace LIBOR with Term SOFR and the fixed swap rate is now 0.81%. The estimated fair value of interest rate swap is included within either "Prepaid expenses and other non-current assets" or "Other long-term liabilities" on the Condensed Consolidated Balance Sheets and the change in fair value is recorded within "Derivative instruments" in the Condensed Consolidated Statements of Comprehensive Income (Loss). The interest rate swap matures in December 2023. As of December 31, 2021, the Company had an additional interest rate swap outstanding, which was entered into in March 2017, with an original notional amount of $15.0 million at a fixed swap rate of 2.20%. The interest rate swap matured in March 2022. |
Members' and Stockholders' Equi
Members' and Stockholders' Equity | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
Members' and Stockholders' Equity | 12 — Members' and Stockholders' Equity Hagerty, Inc. Class A Common Stock — Hagerty 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, 2022, there were 83,202,969 shares of Class A Common Stock issued and outstanding. Class V Common Stock — Hagerty 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. Holders of Class V Common Stock are entitled to 10 votes for each share. As of September 30, 2022, there were 251,033,906 shares of Class V Common Stock issued and outstanding. Preferred Stock — Hagerty is authorized to issue 20,000,000 shares of Preferred Stock with a par value of $0.0001 per share. Hagerty's 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, 2022, there were no shares of Preferred Stock issued and outstanding. The Hagerty Group Members' Equity — Prior to the Business Combination, The Hagerty Group had one class of partnership interests consisting of 100,000 units outstanding with no par value. At the Closing, all units were converted to Hagerty Group Units as discussed in Note 5 — Business Combination. Hagerty Group Units — Hagerty Group Units are a unit of economic interest in The Hagerty Group. The following table summarizes the ownership of Hagerty Group Units in The Hagerty Group as of September 30, 2022: Units Owned Ownership Percentage Hagerty Group Units held by Hagerty, Inc. 83,202,969 24.5 % Hagerty Group Units held by other unit holders 255,758,466 75.5 % Total 338,961,435 100.0 % Non-controlling Interest — Hagerty, Inc. is the sole managing member of The Hagerty Group and, as a result, consolidates the financial results of The Hagerty Group. Hagerty, Inc. reports a non-controlling interest representing the economic interest in The Hagerty Group held by other unit holders of The Hagerty Group. Additionally, non-controlling interest represents the portion of economic ownership of MHH that is not owned or controlled by The Hagerty Group. Hagerty, Inc. consolidates its ownership of The Hagerty Group and MHH under the voting interest method. Redeemable Non-controlling Interest — In connection with the Business Combination, Hagerty, Inc. entered into an Exchange Agreement with the Legacy Unit Holders ("Legacy Unit Holders Exchange Agreement"). The Legacy Unit Holders Exchange Agreement permitted the Legacy Unit Holders to exchange Class V Common Stock and associated Hagerty Group Units for an equivalent amount of Class A Common Stock or, at the option of the Company, for cash. Because the Company had the option to redeem the non-controlling interest for cash and the Company is controlled by the Legacy Unit Holders through their voting control, the non-controlling interest was considered redeemable as the redemption was considered outside the Company's control. Redeemable non-controlling interest represented the economic interests of the Legacy Unit Holders. Income or loss was attributed to the redeemable non-controlling interest based on the weighted average ownership of the Hagerty Group Units outstanding during the period held by the Legacy Unit Holders. Class V Common Stock and Hagerty Group Units held by the Legacy Unit Holders are exchangeable at the earlier of 180 days from the close of the Business Combination or when the founder shares are no longer subject to the lock-up period, as defined within the Lock-Up Agreement, dated as of December 2, 2021, between the Company and the Legacy Unit Holders. The redeemable non-controlling interest was measured at the greater of the initial fair value or the redemption value and was required to be presented as temporary equity on the Condensed Consolidated Balance Sheets, with a corresponding adjustment to "Additional paid-in capital" and "Accumulated earnings (deficit)". The total redeemable non-controlling interest as of December 31, 2021 was $593.3 million. For the period from January 1, 2022 to March 23, 2022, additional accretion of $1.6 billion was recognized, with a corresponding adjustment of $162.1 million and $1.4 billion to "Additional paid-in capital" and "Accumulated earnings (deficit)", respectively. On March 23, 2022, the Legacy Unit Holders Exchange Agreement was amended to revise the option for the Company to settle the exchange of Class V Common Stock and associated Hagerty Group Units in cash. Under the terms of the amendment, a cash exchange is only allowable in the event that net cash proceeds are received from a new permanent equity offering. The redeemable non-controlling interest balance of $2.1 billion as of March 23, 2022 was recorded in equity as non-controlling interest with corresponding adjustments of $1.4 billion, $528.6 million, and $215.6 million to "Accumulated earnings (deficit)", "Additional paid-in capital" and "Non-controlling interest", respectively. |
Members' and Stockholders' Equity | 12 — Members' and Stockholders' Equity Hagerty, Inc. Class A Common Stock — Hagerty 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, 2022, there were 83,202,969 shares of Class A Common Stock issued and outstanding. Class V Common Stock — Hagerty 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. Holders of Class V Common Stock are entitled to 10 votes for each share. As of September 30, 2022, there were 251,033,906 shares of Class V Common Stock issued and outstanding. Preferred Stock — Hagerty is authorized to issue 20,000,000 shares of Preferred Stock with a par value of $0.0001 per share. Hagerty's 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, 2022, there were no shares of Preferred Stock issued and outstanding. The Hagerty Group Members' Equity — Prior to the Business Combination, The Hagerty Group had one class of partnership interests consisting of 100,000 units outstanding with no par value. At the Closing, all units were converted to Hagerty Group Units as discussed in Note 5 — Business Combination. Hagerty Group Units — Hagerty Group Units are a unit of economic interest in The Hagerty Group. The following table summarizes the ownership of Hagerty Group Units in The Hagerty Group as of September 30, 2022: Units Owned Ownership Percentage Hagerty Group Units held by Hagerty, Inc. 83,202,969 24.5 % Hagerty Group Units held by other unit holders 255,758,466 75.5 % Total 338,961,435 100.0 % Non-controlling Interest — Hagerty, Inc. is the sole managing member of The Hagerty Group and, as a result, consolidates the financial results of The Hagerty Group. Hagerty, Inc. reports a non-controlling interest representing the economic interest in The Hagerty Group held by other unit holders of The Hagerty Group. Additionally, non-controlling interest represents the portion of economic ownership of MHH that is not owned or controlled by The Hagerty Group. Hagerty, Inc. consolidates its ownership of The Hagerty Group and MHH under the voting interest method. Redeemable Non-controlling Interest — In connection with the Business Combination, Hagerty, Inc. entered into an Exchange Agreement with the Legacy Unit Holders ("Legacy Unit Holders Exchange Agreement"). The Legacy Unit Holders Exchange Agreement permitted the Legacy Unit Holders to exchange Class V Common Stock and associated Hagerty Group Units for an equivalent amount of Class A Common Stock or, at the option of the Company, for cash. Because the Company had the option to redeem the non-controlling interest for cash and the Company is controlled by the Legacy Unit Holders through their voting control, the non-controlling interest was considered redeemable as the redemption was considered outside the Company's control. Redeemable non-controlling interest represented the economic interests of the Legacy Unit Holders. Income or loss was attributed to the redeemable non-controlling interest based on the weighted average ownership of the Hagerty Group Units outstanding during the period held by the Legacy Unit Holders. Class V Common Stock and Hagerty Group Units held by the Legacy Unit Holders are exchangeable at the earlier of 180 days from the close of the Business Combination or when the founder shares are no longer subject to the lock-up period, as defined within the Lock-Up Agreement, dated as of December 2, 2021, between the Company and the Legacy Unit Holders. The redeemable non-controlling interest was measured at the greater of the initial fair value or the redemption value and was required to be presented as temporary equity on the Condensed Consolidated Balance Sheets, with a corresponding adjustment to "Additional paid-in capital" and "Accumulated earnings (deficit)". The total redeemable non-controlling interest as of December 31, 2021 was $593.3 million. For the period from January 1, 2022 to March 23, 2022, additional accretion of $1.6 billion was recognized, with a corresponding adjustment of $162.1 million and $1.4 billion to "Additional paid-in capital" and "Accumulated earnings (deficit)", respectively. On March 23, 2022, the Legacy Unit Holders Exchange Agreement was amended to revise the option for the Company to settle the exchange of Class V Common Stock and associated Hagerty Group Units in cash. Under the terms of the amendment, a cash exchange is only allowable in the event that net cash proceeds are received from a new permanent equity offering. The redeemable non-controlling interest balance of $2.1 billion as of March 23, 2022 was recorded in equity as non-controlling interest with corresponding adjustments of $1.4 billion, $528.6 million, and $215.6 million to "Accumulated earnings (deficit)", "Additional paid-in capital" and "Non-controlling interest", respectively. |
Earnings Per Unit and Share
Earnings Per Unit and Share | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
Earnings Per Unit and Share | 13 — Earnings Per Unit and Share The following table sets forth the calculation of basic EPS, which is based on Net income (loss) attributable to controlling interest for the three and nine months ended September 30, 2022 and 2021, divided by the weighted average of Class A Common Stock and Members' Units outstanding as of September 30, 2022 and 2021, respectively. Diluted EPS of Class A Common Stock and Members' Units is computed by dividing Net income (loss) attributable to controlling interest by the weighted average number of shares of Class A Common Stock and Members' Units outstanding as of September 30, 2022 and 2021, adjusted to give effect to potentially dilutive securities. Potentially dilutive securities for the diluted EPS calculation consists of (1) unexercised warrants and unvested stock-based restricted stock units and performance restricted stock units, all using the Treasury Stock Method and (2) non-controlling interest Hagerty Group Units using the "If-converted" Method. Three months ended Nine months ended 2022 2021 2022 2021 in thousands (except per share/unit amounts) Numerator: Net income (loss) attributable to controlling interest $ 14,714 $ (479) $ 36,685 $ 5,309 Adjustment for change in fair value of potentially dilutive warrant liabilities — — (24,753) — Adjustment for net income attributable to non-controlling interest 9,817 — (1,420) — Adjusted net income (loss) to common shareholders $ 24,531 $ (479) $ 10,512 $ 5,309 Denominator: Weighted average shares of Class A Common Stock outstanding — basic 82,816 N/A 82,569 N/A Effect of dilutive securities: Conversion of non-controlling interest Hagerty Group Units to Class A Common Stock 253,396 N/A 251,821 N/A Warrants — N/A 817 N/A Stock-based compensation awards 556 N/A 185 N/A Weighted average shares of Class A Common Stock outstanding — diluted 336,768 N/A 335,392 N/A Earnings (loss) per share of Class A Common Stock Basic $ 0.18 N/A $ 0.44 N/A Diluted $ 0.07 N/A $ 0.03 N/A Earnings (loss) per Members' Unit — basic and diluted N/A $ (4.79) N/A $ 53.09 Weighted average units outstanding — basic and diluted N/A 100 N/A 100 |
Warrant Liabilities
Warrant Liabilities | 9 Months Ended |
Sep. 30, 2022 | |
Other Liabilities Disclosure [Abstract] | |
Warrant Liabilities | 14 — Warrant Liabilities In connection with the Business Combination, the Company registered 5,750,000 Public Warrants, 257,500 Private Placement Warrants, 28,750 Underwriter Warrants, 1,300,000 OTM Warrants and 12,669,300 PIPE Warrants. Upon the Closing, the following warrants were outstanding to purchase shares of the Company's Class A Common Stock that were issued by Aldel prior to the Business Combination: Public Warrants — Each warrant is exercisable for one share of the Company's Class A Common Stock at a price of $11.50 per share, subject to adjustments, commencing in April 2022, provided that the Company has an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the warrants and a current prospectus relating to them is available and such shares are registered, qualified or exempt from registration under the securities laws of the state of residence of the holder. The warrants may be exercised on a cash basis only for a whole number of shares of the Company’s Class A Common Stock. The warrants expire in December 2026. Private Placement Warrants — Each warrant will be exercisable for one share of the Company's Class A Common Stock at a price of $11.50 per share, subject to adjustments, commencing in December 2022, and subject to additional vesting requirements as outlined within the warrant agreements covering those securities, including the Sponsor Warrant Lock-Up Agreement, dated December 2, 2021, between the Company and the holders of the Private Placement and OTM Warrants (the "Sponsor Warrant Lock-Up Agreement"), provided that the Company has an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the warrants and a current prospectus relating to them is available and such shares are registered, qualified or exempt from registration under the securities laws of the state of residence of the holder. The warrants may be exercised only for a whole number of shares of the Company’s Class A Common Stock. Additionally, the Private Placement Warrants are exercisable on a cashless basis so long as they are held by the Sponsor or any of its permitted transferees. The warrants expire in December 2026. Underwriter Warrants — Each warrant is exercisable for one share of the Company's Class A Common Stock at a price of $11.50 per share, subject to adjustments, commencing in April 2022, provided that the Company has an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the warrants and a current prospectus relating to them is available and such shares are registered, qualified or exempt from registration under the securities laws of the state of residence of the holder. The warrants may be exercised only for a whole number of shares of the Company’s Class A Common Stock. Additionally, the Underwriter Warrants are exercisable on a cashless basis so long as they are held by the Underwriter or any of its permitted transferees. The warrants expire in December 2026. OTM Warrants — Each warrant will be exercisable for one share of the Company's Class A Common Stock at a price of $15.00 per share, subject to adjustments, commencing in December 2022 and subject to additional vesting requirements as outlined within the warrant agreements covering those securities, including the Sponsor Warrant Lock-Up Agreement, provided that the Company has an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the warrants and a current prospectus relating to them is available and such shares are registered, qualified or exempt from registration under the securities laws of the state of residence of the holder. Additionally, the OTM Warrants may be exercised on a cashless basis so long as they continue to be held by the initial purchasers or their permitted transferees. The warrants expire in December 2031. PIPE Warrants — Each warrant is exercisable for one share of the Company's Class A Common Stock at a price of $11.50 per share, subject to adjustments, commencing in January 2022, provided that the Company has an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the warrants and a current prospectus relating to them is available and such shares are registered, qualified or exempt from registration under securities laws of the state of residence of the holder. Additionally, the PIPE Warrants may be exercised on a cashless basis. The warrants expire in December 2026. The Company accounts for these warrants as liabilities in accordance with ASC 815-40. The warrants are measured at fair value each reporting period and the change in fair value is recorded within "Change in fair value of warrant liabilities" in the Condensed Consolidated Statements of Operations. The Company recognized a $11.6 million gain and a $37.9 million gain as a result of a decrease in the fair value of the warrant liability for the three and nine months ended September 30, 2022, respectively. The Company did not have warrants for the three and nine months ended September 30, 2021. For the nine months ended September 30, 2022, 522,000 PIPE warrants were exercised, on a cashless basis, for an equivalent of 124,748 shares of Class A Common Stock. The cashless exercise resulted in a decrease in "Warrant liabilities" and an increase in "Class A Common Stock" and "Additional paid-in capital" of $1.9 million on the Company's Condensed Consolidated Balance Sheets. |
Stock Based Compensation
Stock Based Compensation | 9 Months Ended |
Sep. 30, 2022 | |
Share-based Payment Arrangement [Abstract] | |
Stock Based Compensation | 15 — Stock-Based Compensation In December 2021, the Board approved t he 2021 Equity Incentive Plan, which authorized an aggregate of 38,317,399 shares of Class A Common Stock for issuance to employees and non-employee directors. The 2021 Equity Incentive Plan allows for the issuance of incentive stock o ptions, non-qualified stock options, restricted stock awards, stock appreciation rights, restricted stock units, and performance restricted stock units. The Board determines the period over which stock-based awards become exercisable and awards generally vest over a two Stock-based compensation expense is recognized within "Salaries and benefits" and "General and administrative services" in the Company's Condensed Consolidated Statements of Operations. The Company accounts for forfeitures as they occur. The following table summarizes stock-based compensation expense recognized during the three and nine months ended September 30, 2022: Three months ended Nine months ended in thousands Restricted stock units $ 3,143 $ 6,735 Performance restricted stock units 715 1,430 Total stock-based compensation expense $ 3,858 $ 8,165 Restricted Stock Units The Company grants serviced-based restricted stock units to employees and non-employee directors. Compensation expense for these service-based restricted stock units is based on the closing market price of the Company's Class A Common Stock on the business day prior to grant, and is recognized ratably over the service period. There were $3.3 million of restricted stock units granted during the nine months ended September 30, 2022, with a weighted average fair value of $10.81. Unrecognized compensation expense related to restricted stock units as of September 30, 2022 was $27.9 million, which the Company expects to recognize over a weighted average period of 3.55 years. The following table provides a summary of the restricted stock unit activity during the nine months ended September 30, 2022: Restricted Stock Units Weighted Average Fair Value Unvested balance as of December 31, 2021 — $ — Granted 3,251,560 10.81 Vested (37,071) 10.79 Forfeited (43,537) 10.79 Unvested balance as of September 30, 2022 3,170,952 $ 10.81 Performance Restricted Stock Units In April 2022, the Company granted performance restricted stock units of up to 3,707,136 shares to the Company's CEO. The award had a grant date fair value of approximately $19.2 million using a Monte Carlo simulation model. The performance restricted stock units are both a market and service-based award in accordance with ASC 718. Shares under this award will be earned based on achievement of stock price targets of the Company's Class A Common Stock. 25% of the shares can be earned when the stock price exceeds $20.00 per share for 60 consecutive days, 25% of the shares can be earned when the stock price exceeds $25.00 per share for 60 consecutive days and 50% of the shares can be earned when the stock price exceeds $30.00 per share for 60 consecutive days. These market-based conditions must be met in order for these stock awards to vest, and it is therefore possible that no shares could ultimately vest. Shares earned will vest over the earlier of three years after achievement of the stock price measure or the end of the seven-year performance period. The Company will recognize the entire $19.2 million of compensation expense for this award, regardless of whether such conditions are met, over the requisite service period. The following table summarizes the assumptions and related information used to determine the grant-date fair value of performance restricted stock units awarded for the periods presented: 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% The following table provides a summary of performance restricted stock unit activity during the nine months ended September 30, 2022: Performance Restricted Stock Units Weighted Average Fair Value Outstanding as of December 31, 2021 — $ — Granted 3,707,136 5.19 Outstanding as of September 30, 2022 3,707,136 $ 5.19 Employee Stock Purchase Plan In December 2021, the Company adopted the 2021 Employee Stock Purchase Plan (the "ESPP Plan") . The Compensation Committee of the Board will administer the ESPP Plan , including determination of the time and frequency of offering periods, as well as the terms and conditions of the offerings. The ESPP Plan allows substantially all employees to participate. The offering periods will last six months, beginning on April 3 and October 3 each year, with the initial offering period beginning on October 3, 2022. Eligible employees may contribute up to 50% of their base wages and the purchase price will be 90% of the lesser of the fair market value of the Company's Class A Common Stock on (1) the offering date, and (2) the applicable purchase date. As of September 30, 2022, the total number of Class A Common Stock authorized and reserved for issuance under the ESPP Plan was 11,495,220 shares and no shares had been purchased . |
Taxation
Taxation | 9 Months Ended |
Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
Taxation | 16 — Taxation Income tax expense reflected in the financial statements differs from the tax computed by applying the statutory U.S. federal rate of 21% to "Net income (loss)" before taxes as follows: Nine months ended September 30, 2022 2021 in thousands (except percentages) Income tax expense at statutory rate $ 8,481 21 % $ 2,078 21 % State taxes (51) — % — — % Loss not subject to entity-level taxes 1,402 3 % 1,264 13 % Foreign rate differential (264) (1) % (174) (2) % Change in valuation allowance 2,101 5 % 1,622 16 % Change in fair value of warrant liabilities (7,952) (19) % — — % Permanent items 360 1 % — — % Income tax expense $ 4,077 10 % $ 4,790 48 % Deferred tax assets are reduced by a valuation allowance when management believes it is more likely than not that some, or all, of the deferred tax assets will not be realized. After considering all positive and negative evidence of taxable income in the carryback and carryforward periods as permitted by law, the Company believes it is more likely than not that certain deferred tax assets will not be utilized. The valuation allowance as of September 30, 2022 has been increased for additional foreign net operating losses, additional net operating losses of Hagerty, Inc. and adjusted for changes in foreign exchange rates. The Company had a valuation allowance of $176.3 million and $174.8 million as of September 30, 2022 and December 31, 2021, respectively. Significant inputs and assumptions were used to estimate the future expected payments under the TRA, including the timing of the realization of the tax benefits and a tax savings rate of approximately 25.5%. The estimated value of the TRA recorded by the Company at the Closing was $3.5 million which was limited by the ability to currently utilize tax benefits and was recorded in "Other long-term liabilities" with an offsetting entry to "Additional paid-in capital" within the Condensed Consolidated Balance Sheets. There was no change to the estimated value from the Closing to September 30, 2022. |
Related-Party Transactions
Related-Party Transactions | 9 Months Ended |
Sep. 30, 2022 | |
Related Party Transactions [Abstract] | |
Related-Party Transactions | 17 — Related-Party Transactions As of September 30, 2022, Markel had a 23.0% ownership in The Hagerty Group and State Farm Automobile Insurance Company ("State Farm") had a 14.8% ownership in The Hagerty Group. As such, both Markel and State Farm are considered related parties. State Farm State Farm and Hagerty entered into a master alliance agreement in 2020 to establish an alliance insurance program where State Farm’s customers, through the State Farm agents, would have access to Hagerty features and services which is expected to begin in the first half of 2023. Under this agreement, State Farm paid Hagerty an advanced commission of $20.0 million in 2020, to be recognized into Commission and fee revenue over the life of the contract. The parties have entered into a managing general underwriter agreement where the State Farm Classic+ policy will be offered, through State Farm Classic Insurance Company, a new wholly owned subsidiary of State Farm, subject to any applicable state regulatory review and approval. The State Farm Classic+ policy will be available to new and existing customers through State Farm agents on a state by state basis. Hagerty Insurance Agency, LLC will be paid commission under the managing general underwriter agreement and ancillary agreements for servicing the State Farm Classic+ policies along with the opportunity to earn revenue from Hagerty Drivers Club, LLC connected with Hagerty's membership products and services that, in addition to the State Farm Classic+ policy, are made available to State Farm customers. Markel Alliance Agreement The Company's affiliated U.S. and U.K. MGA subsidiaries have personal and commercial lines of business written with Markel-affiliated carriers. The following tables provide information about Markel-affiliated carriers due to insurer liabilities and commission revenue under the agreement with Markel subsidiaries: September 30, 2022 December 31, 2021 in thousands (except percentages) Due to insurer $ 91,549 $ 54,850 Percent of total 93 % 95 % Three months ended Nine months ended 2022 2021 2022 2021 in thousands (except percentages) Commission revenue $ 78,808 $ 70,459 $ 225,060 $ 197,152 Percent of total 94 % 94 % 94 % 94 % Reinsurance Agreement Under a quota share agreement with Evanston, Hagerty Re reinsured 70% and 60% of the risks for the nine months ended September 30, 2022 and 2021, respectively, written through the Company’s U.S. MGAs. Additionally, under a quota share agreement with Markel International Insurance Company Limited, Hagerty Re reinsured 70% and 60% of the risks for the nine months ended September 30, 2022 and 2021, respectively, written through the Company’s U.K. MGA. All balances listed below are related to business with a Markel affiliate: September 30, 2022 December 31, 2021 Assets: in thousands Premiums receivable $ 130,384 $ 72,697 Deferred acquisition costs, net 110,209 78,449 Total assets $ 240,593 $ 151,146 Liabilities: Losses payable and provision for unpaid losses and loss adjustment expenses $ 154,706 $ 104,139 Unearned premiums 240,387 167,541 Commissions payable 79,650 59,511 Total liabilities $ 474,743 $ 331,191 Three months ended Nine months ended 2022 2021 2022 2021 Revenue: in thousands Earned premium $ 102,958 $ 74,953 $ 278,386 $ 202,422 Expenses: Ceding commission $ 48,421 $ 35,935 $ 132,724 $ 97,261 Losses and loss adjustment expenses 58,900 30,779 130,279 83,045 Total expenses $ 107,321 $ 66,714 $ 263,003 $ 180,306 As a result of the related party transactions disclosed herein, the Company is required to maintain certain cash collected as restricted as it will be used to settle liabilities that result from these related party transactions. Broad Arrow In January 2022, the Company entered into a joint venture with Broad Arrow and acquired approximately 40% equity ownership interest in Broad Arrow. In August 2022, the Company acquired the remaining 60% equity interest of Broad Arrow in exchange for $73.3 million of Class A Common Stock and Hagerty Group Units exchangeable for Class A Common Stock. Prior to the Company's joint venture with Broad Arrow in January 2022, Broad Arrow was majority owned by Kenneth Ahn, the President of Hagerty Marketplace, who received Hagerty Group Units as a part of this transaction. Refer to Note 6 — Acquisitions and Investments for additional information. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 18 — Commitments and Contingencies Litigation — From time to time, Hagerty is 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, Hagerty does not believe that the ultimate resolution of these actions will have a material adverse effect on the Company's financial position, results of operations, liquidity, or capital resources. 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 the Company to severance obligations in the event an employee terminates employment with the Company. If applicable, these obligations are included in the accrued expenses lines of the Condensed Consolidated Balance Sheets. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | 19 — Subsequent Events Management has evaluated subsequent events through November 10, 2022, which is the date these Condensed Consolidated Financial Statements were issued and no subsequent events were identified. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies and New Accounting Standards (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation — The Company's Condensed Consolidated Financial Statements were prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and with the instructions for Quarterly Reports on Form 10-Q and Regulation S-X and include the accounts of Hagerty, Inc. and The Hagerty Group with its consolidated subsidiaries. The financial statements reflect all normal recurring adjustments and accruals that are, in the opinion of management, necessary for a fair statement of financial position and results of operations for the interim periods presented. Interim financial statements do not include all of the information and notes required by GAAP for annual consolidated financial statements. 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 for the year ended December 31, 2021. The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. |
Principles of Consolidation | Principles of Consolidation — The Company's Condensed Consolidated Financial Statements contain the accounts of Hagerty and its majority-owned or controlled subsidiaries. As of September 30, 2022, the Company had economic ownership of 24.5% of The Hagerty Group. In addition, Member Hubs Holding, LLC ("MHH"), which operates as Hagerty Garage + Social, is an 80% owned subsidiary of The Hagerty Group. The Company consolidates these entities under the voting interest method guidance 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, Condensed Consolidated Statements of Comprehensive Income (Loss), Condensed Consolidated Balance Sheets, and Condensed Consolidated Statements of Changes in Members' and Stockholders' Equity. Prior to August 2022, the Company owned approximately 40% of the outstanding equity interest of Broad Arrow and accounted for it as an equity method investment. Subsequent to the acquisition of the remaining 60% outstanding equity interest of Broad Arrow in August 2022, Broad Arrow became a wholly-owned subsidiary of the Company and as a result, is consolidated in accordance with ASC 810. |
Business Combination | Business Combination — On December 2, 2021, (the "Closing"), The Hagerty Group completed a business combination with Aldel Financial Inc. ("Aldel"), and Aldel Merger Sub LLC ("Merger Sub"), a Delaware limited liability company and wholly owned subsidiary of Aldel (the "Business Combination"). In connection with the Closing, Aldel changed its name from Aldel Financial Inc. to Hagerty, Inc. The Business Combination was accounted for as a common control reverse acquisition for which The Hagerty Group was determined to be the accounting acquirer and Aldel was treated as the "acquired" company. The Hagerty Group issued equity for the net assets of Aldel, accompanied by a recapitalization. Business combinations in which the legal acquirer is not the accounting acquirer are commonly referred to as "reverse acquisitions". A reverse acquisition occurs when the entity that issues securities (legal acquirer) is identified as the acquiree for accounting purposes and the entity whose equity interests are acquired (the legal acquiree) is identified as the acquirer for accounting purposes. Reverse acquisitions are accounted for in accordance with Subtopic 805-40 of ASC Topic 805, Business Combinations ("ASC 805"). While other factors were evaluated but not considered to have a material impact on the determination, The Hagerty Group was determined to be the accounting acquirer based on the following factors: • Hagerty Holding Corp. ("HHC") controlled the operating company prior to the Business Combination and controls the Company subsequent to the Business Combination through control of the board of directors (the "Board") as well as having majority voting ownership. • The Hagerty Group’s management is also the management of the Company. • The Hagerty Group is larger as compared to Aldel based on assets, revenue and earnings. Unless otherwise indicated or the context otherwise requires, "Hagerty" and "the Company" refer to the business and operations of The Hagerty Group and its consolidated subsidiaries prior to the Business Combination and to Hagerty, Inc. and its consolidated subsidiaries, including The Hagerty Group, following the consummation of the Business Combination. |
Use of Estimates | Use of Estimates — The preparation of the Company's Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements and 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. |
Segment Information | Segment Information — The Company has one operating segment and one reportable segment. The Company’s Chief Operating Decision Maker ("CODM") is the Chief Executive Officer ("CEO"), who makes resource allocation decisions and assesses performance based on financial information presented on a consolidated basis. The Company’s management approach is to utilize an internally developed strategic decision making framework with its members at the center of all decisions, which requires the CODM to have a consolidated view of the operations so that decisions can be made in the best interest of Hagerty and its members. |
Foreign Currency Translation | Foreign Currency Translation — The Company translates its foreign operations’ assets and liabilities denominated in foreign currencies into U.S. dollars at current rates of exchange as of the balance sheet date, and income and expense items at the average exchange rate for the reporting period. Translation adjustments resulting from exchange rate fluctuations are recorded in "Foreign currency translation adjustments", a component of Accumulated other comprehensive income (loss). Transaction gains and losses are recognized in "Interest and other income (expense)" within the Condensed Consolidated Statements of Operations. |
Notes Receivable and Loans Collateral | Notes Receivable — Notes receivable, net of an allowance for loan losses, includes amounts due on term loans secured by collector vehicles. The allowance for loan losses is estimated based upon historical experience, the impact of current economic conditions on the collateral value, knowledge about the client's financial standing and other factors and is evaluated periodically. Term loans are recorded on the date the loan is made based on the loan amount in the agreement. Term loans normally have an initial maturity of one year with an option to renew for an additional year, and accrue interest based on the stated rate in the loan agreement. As a result, the valuation of collector vehicles is inherently subjective, and the realizable value of collector vehicles often fluctuates over time. Refer to Note 4 — Notes Receivable for additional information. |
Equity Method Investments | Equity Method Investments — The Company applies the equity method of accounting to 20% to 50% owned investments where Hagerty exercises significant influence, in accordance with ASC Topic 323 Investments—Equity Method and Joint Ventures . |
Warrant Liabilities | Warrant Liabilities — The Company accounts for its outstanding warrants in accordance with ASC Topic 815 Derivatives and Hedging |
Income Taxes and Tax Receivable Agreement Liability | Income Taxes — The Hagerty Group 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, except Hagerty Re, Broad Arrow and various foreign subsidiaries. Any taxable income or loss generated by The Hagerty Group is passed through to and included in the taxable income or loss of all holders of limited liability units in The Hagerty Group ("Hagerty Group Units"), which includes Hagerty, Inc. Hagerty, Inc. is taxed as a corporation and pays corporate federal, state and local taxes with respect to income allocated from The Hagerty Group. Hagerty, Inc., Hagerty Re, Broad Arrow and various foreign subsidiaries are treated as taxable entities and income taxes are provided where applicable. Refer to Note 16 — Taxation for additional information. Where applicable, income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax-credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Condensed Consolidated Statements of Operations in the period that includes the enactment date. Deferred tax assets are recognized to the extent that there is sufficient positive evidence as allowed under the ASC Topic 740, Income Taxes ("ASC 740"), to support the recoverability of those deferred tax assets. The Company establishes a valuation allowance to the extent that there is insufficient evidence to support the recoverability of the deferred tax asset under ASC 740. In making such a determination, management considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If it is determined that the deferred tax assets would be realizable in the future in excess of their net recorded amount, an adjustment would be made to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. Tax Receivable Agreement Liability — In connection with the Business Combination, Hagerty, Inc. entered into a TRA with HHC and Markel (together 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 Hagerty Group Units and Class V Common Stock of the Company for Class A Common Stock of the Company or cash. The Hagerty Group will have in effect an election under Section 754 of the IRC effective for each taxable year in which an exchange of Hagerty Group Units occurs. The remaining 15% cash tax savings resulting from the basis adjustments will be retained by Hagerty, Inc. In general, 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 Hagerty Group Units and Class V Common Stock for Class A Common Stock, would be more than the tax liability for the year taking into account such deductions. Payments under the TRA will not be due until 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 estimated value of the TRA is recorded in "Other long-term liabilities" on the Condensed Consolidated Balance Sheets. Hagerty, Inc. accounts for the effects of the basis increases as follows: • Hagerty, Inc. records an increase in deferred tax assets for the income tax effects of the increases in tax basis based on enacted federal and state income tax rates at the date of the exchange. • Hagerty, Inc. evaluates the ability to realize the full benefit represented by the deferred tax asset based on an analysis that will consider expectations of future earnings, among other things. If Hagerty, Inc. determines that the full benefit is not likely to be realized, a valuation allowance is established to reduce the amount of the deferred tax assets to an amount that is more likely than not to be realized. • At the Closing, Hagerty, Inc. recorded 85% of the estimated realizable tax benefit as an increase to the liability due under the TRA, which is recorded within "Other long-term liabilities", with a decrease to "Additional paid-in capital" on the Condensed Consolidated Balance Sheets. The remaining 15% of the estimated realizable tax benefit will be retained by Hagerty, Inc. |
Redeemable Non-controlling Interest | Redeemable Non-controlling Interest — In connection with the Business Combination, Hagerty, Inc. entered into an exchange agreement with the Legacy Unit Holders ("Legacy Unit Holders Exchange Agreement"). The Legacy Unit Holders Exchange Agreement permitted the Legacy Unit Holders to exchange Class V Common Stock and associated Hagerty Group Units for an equivalent amount of Class A Common Stock or, at the option of the Company, for cash. Because the Company had the option to redeem the non-controlling interest for cash and the Company is controlled by the Legacy Unit Holders through their voting control, the non-controlling interest was considered redeemable as the redemption was considered outside the Company's control. Redeemable non-controlling interest represented the economic interests of the Legacy Unit Holders. Income or loss was attributed to the redeemable non-controlling interest based on the weighted average ownership of the Hagerty Group Units outstanding during the period held by the Legacy Unit Holders. The redeemable non-controlling interest was measured at the greater of the initial fair value or the redemption value and was required to be presented as temporary equity on the Condensed Consolidated Balance Sheets as of December 31, 2021. |
Earnings Per Share | Earnings Per Share — Hagerty calculates basic and dilutive earnings per share ("EPS") in accordance with ASC Topic 260 Earnings Per Share ("ASC 260"). Basic earnings per share is computed by dividing Net income (loss) attributable to controlling interest by the weighted-average number of shares of Class A Common Stock outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities were exercised, resulting in the issuance of shares of Class A Common Stock that would then share in the earnings of Hagerty, Inc. In periods in which the Company reports a net loss available to stockholders, diluted net loss per share available to stockholders would be equal to basic net loss per share available to stockholders, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. |
Stock-Based Compensation | Stock-Based Compensation — Hagerty issues restricted stock units and performance restricted stock units under the 2021 Equity Incentive Plan. The grant date fair value for restricted stock units is determined based on the closing price of the Company's common stock on the business day prior to grant. Hagerty uses a Monte Carlo simulation model to estimate the fair value of performance restricted stock units. Stock-based compensation expense is recognized over the applicable requisite service period of the award, generally using the straight-line method. Forfeitures are recorded as they occur. Refer to Note 15 — Stock-Based Compensation for additional information. |
Recently Adopted Accounting Guidance and Accounting Guidance Not Yet Adopted | Recently Adopted Accounting Guidance Media Content — In March 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2019-02, Improvements to Accounting for Costs of Films and License Agreements for Program Materials , to align the accounting for production costs of an episodic television series with the accounting for production costs of films by removing the content distinction for capitalization. As a result of adopting this ASU on January 1, 2021, the Company applied the guidance of ASC Topic 926, Entertainment – Films for the original content the Company self-produces and where the intellectual property is owned by the Company. For content the Company produces, the costs associated with production, including development costs, direct costs and production overhead are capitalized and amortized over the estimated useful life of the asset. The adoption of the ASU had a $3.3 million impact on the Company’s Condensed Consolidated Financial Statements through December 31, 2021. Reference Rate Reform — In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (ASC Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting , which provides optional relief to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. Additionally, in January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (ASC Topic 848) , which clarifies that certain optional expedients and exceptions in ASC 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. Both ASUs were effective immediately upon issuance and adoption of these ASUs did not have a material impact on the Company's Condensed Consolidated Financial Statements and related disclosures. Convertible Instruments and Contracts — In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity , which simplifies the accounting for convertible instruments by eliminating certain separation models and will generally be reported as a single liability at its amortized cost. In addition, ASU 2020-06 eliminates the treasury stock method to calculate diluted EPS for convertible instruments and requires the use of the if-converted method. The amendments in ASU 2020-06 are effective for the Company as of January 1, 2022 with the option to early adopt as of January 1, 2021. The Company early adopted ASU 2020-06 effective January 1, 2021 and the adoption of the ASU did not have an impact on the Company's Condensed Consolidated Financial Statements. Recent Accounting Guidance Not Yet Adopted Leases — In February 2016, the FASB issued ASU 2016-02, Leases ("ASC 842"), which supersedes the lease requirements in ASC Topic 840, Leases ("ASC 840"). This guidance increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the Condensed Consolidated Balance Sheets. The guidance requires disclosure to enable users of the Condensed Consolidated Financial Statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The transition to ASU No. 2016-02 requires the recognition and measurement of leases at the beginning of the earliest period presented using a modified retrospective approach. In June 2020, the FASB issued ASU No. 2020-05, Effective Dates for Certain Entities , which deferred the effective date for nonpublic entities and emerging growth companies that had not yet adopted the original ASU. Under the amended guidance, the leasing standard will be effective for the Company’s fiscal year beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022, with early adoption permitted. The Company is an emerging growth company and has elected to adopt ASC 842 with its 2022 Annual Financial Statements. The Company is currently evaluating the effect of adoption of these standards on the Company's Condensed Consolidated Financial Statements and related disclosures and expects to record a material right-of-use asset and liability on the Condensed Consolidated Balance Sheets related to the Company's operating leases. Upon adoption, the Company expects to elect the package of practical expedients, which, among other things, does not require the Company to reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs. The Company will continue to finalize the implementation of new processes and the assessment of the impact of this adoption on the Company's Condensed Consolidated Financial Statements and related disclosures. Credit Losses — In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (ASC Topic 326): Measurement of Credit Losses on Financial Instruments , which requires a company to consider forward looking information to determine current estimated credit losses, for all financial instruments that are not accounted for at fair value through net income (loss). ASU No. 2019-10 defers the effective date of ASU No. 2016-13 to January 1, 2023. The Company does not expect the adoption of ASU No. 2016-13 to have a material impact on the Company's Condensed Consolidated Financial Statements and related disclosures. |
Revenue (Tables)
Revenue (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | The following table presents Hagerty's revenue by distribution channel offering, as well as a reconciliation to total revenue for the three and nine months ended September 30, 2022 and 2021: Agent Direct Total in thousands Three months ended September 30, 2022 Commission and fee revenue $ 37,998 $ 33,031 $ 71,029 Contingent commission 7,937 6,491 14,428 Membership revenue — 11,375 11,375 Marketplace and other revenue — 12,438 12,438 Total revenue from customer contracts $ 45,935 $ 63,335 $ 109,270 Earned premium recognized under ASC 944 107,487 Total revenue $ 216,757 Three months ended September 30, 2021 Commission and fee revenue $ 32,895 $ 28,491 $ 61,386 Contingent commission 7,106 7,696 14,802 Membership revenue — 10,411 10,411 Marketplace and other revenue — 2,787 2,787 Total revenue from customer contracts $ 40,001 $ 49,385 $ 89,386 Earned premium recognized under ASC 944 78,699 Total revenue $ 168,085 Agent Direct Total in thousands Nine months ended September 30, 2022 Commission and fee revenue $ 104,390 $ 91,183 $ 195,573 Contingent commission 26,169 21,682 47,851 Membership revenue — 32,824 32,824 Marketplace and other revenue — 23,618 23,618 Total revenue from customer contracts $ 130,559 $ 169,307 $ 299,866 Earned premium recognized under ASC 944 290,719 Total revenue $ 590,585 Nine months ended September 30, 2021 Commission and fee revenue $ 90,450 $ 78,797 $ 169,247 Contingent commission 23,264 21,493 44,757 Membership revenue — 29,965 29,965 Marketplace and other revenue — 8,355 8,355 Total revenue from customer contracts $ 113,714 $ 138,610 $ 252,324 Earned premium recognized under ASC 944 212,370 Total revenue $ 464,694 The following table presents Hagerty's revenue disaggregated by geographic area, as well as a reconciliation to total revenue for the three and nine months ended September 30, 2022 and 2021: U.S. Canada Europe Total in thousands Three months ended September 30, 2022 Commission and fee revenue $ 63,941 $ 5,940 $ 1,148 $ 71,029 Contingent commission 14,491 — (63) 14,428 Membership revenue 10,538 837 — 11,375 Marketplace and other revenue 11,740 227 471 12,438 Total revenue from customer contracts $ 100,710 $ 7,004 $ 1,556 $ 109,270 Earned premium recognized under ASC 944 107,487 Total revenue $ 216,757 Three months ended September 30, 2021 Commission and fee revenue $ 54,919 $ 5,293 $ 1,174 $ 61,386 Contingent commission 15,134 (373) 41 14,802 Membership revenue 9,664 747 — 10,411 Marketplace and other revenue 2,322 101 364 2,787 Total revenue from customer contracts $ 82,039 $ 5,768 $ 1,579 $ 89,386 Earned premium recognized under ASC 944 78,699 Total revenue $ 168,085 U.S. Canada Europe Total in thousands Nine months ended September 30, 2022 Commission and fee revenue $ 176,011 $ 16,214 $ 3,348 $ 195,573 Contingent commission 47,757 — 94 47,851 Membership revenue 30,317 2,507 — 32,824 Marketplace and other revenue 21,806 697 1,115 23,618 Total revenue from customer contracts $ 275,891 $ 19,418 $ 4,557 $ 299,866 Earned premium recognized under ASC 944 290,719 Total revenue $ 590,585 Nine months ended September 30, 2021 Commission and fee revenue $ 152,134 $ 13,983 $ 3,130 $ 169,247 Contingent commission 45,003 (355) 109 44,757 Membership revenue 27,843 2,122 — 29,965 Marketplace and other revenue 7,121 172 1,062 8,355 Total revenue from customer contracts $ 232,101 $ 15,922 $ 4,301 $ 252,324 Earned premium recognized under ASC 944 212,370 Total revenue $ 464,694 |
Schedule of Premiums Assumed and the Change in Unearned Premiums | The following table presents Hagerty Re's total premiums assumed and the change in unearned premiums for the three and nine months ended September 30, 2022 and 2021: Three months ended Nine months ended 2022 2021 2022 2021 in thousands Underwriting income: Premiums assumed $ 136,187 $ 103,359 $ 373,442 $ 284,598 Reinsurance premiums ceded (1,268) — (10,958) (8,465) Net premiums assumed 134,919 103,359 362,484 276,133 Change in unearned premiums (25,229) (22,741) (74,624) (67,041) Change in deferred reinsurance premiums (2,203) (1,919) 2,859 3,278 Net premiums earned $ 107,487 $ 78,699 $ 290,719 $ 212,370 |
Contract with Customer, Contract Asset, Contract Liability, and Receivable | The following table is a summary of the Company's contract assets and liabilities for the periods specified below. Contract assets are classified as "Commission receivable", and liabilities are classified as "Contract liabilities" within current and non-current liabilities on the Condensed Consolidated Balance Sheets. September 30, 2022 December 31, 2021 in thousands Contract assets $ 48,213 $ 57,596 Contract liabilities $ 46,663 $ 41,390 |
Prepaid Expenses and Other As_2
Prepaid Expenses and Other Assets (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Prepaid Expenses and Other Assets, Current and Long-term | The following table is a summary of current and long-term prepaid expenses and other assets as of September 30, 2022 and December 31, 2021: September 30, 2022 December 31, 2021 in thousands Prepaid sales, general and administrative expenses $ 18,788 $ 18,004 Prepaid SaaS implementation costs 18,217 16,318 Fixed income investments 11,094 10,785 Reinsurance recoverable (1) 8,100 — Contract costs 4,978 4,160 Media content 4,833 3,335 Deferred reinsurance premiums ceded 3,169 310 Other (2) 17,359 7,808 Prepaid expenses and other assets $ 86,538 $ 60,720 (1) Reinsurance recoverable represents recoverable losses in excess of $10.0 million related to Hurricane Ian. Refer to Note 8 — Provision for Unpaid Losses and Loss Adjustment Expenses for additional information. (2) As of September 30, 2022, other assets primarily includes $4.0 million of other investments, $3.5 million of fair value of interest rate swap, $2.8 million of taxes receivable, $2.5 million of collector vehicle investments and $1.1 million of deferred financing costs. |
Notes Receivable (Tables)
Notes Receivable (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Receivables [Abstract] | |
Financing Receivable Credit Quality Indicators | The table below provides the aggregate LTV ratio for the Broad Arrow loan portfolio as of September 30, 2022: September 30, 2022 in thousands Secured loans $ 29,737 Estimate of collateral value $ 62,457 Aggregate LTV ratio 48 % |
Business Combination (Tables)
Business Combination (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Business Acquisitions, by Acquisition | The following table is a summary of the cash inflows and outflows related to the Business Combination: 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 |
Acquisitions and Investments (T
Acquisitions and Investments (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Equity Method Investments | The following table summarizes the fair value of Broad Arrow as of the date of the Broad Arrow Acquisition (in thousands): Total equity consideration $ 73,253 Fair value of previously held equity interest in Broad Arrow (1) 48,309 Total consideration and value to be allocated to net assets $ 121,562 (1) The Broad Arrow Acquisition is considered a step acquisition, and accordingly, the Company remeasured its pre-existing 40% equity interest in Broad Arrow immediately prior to completion of the acquisition to its estimated fair value of approximately $48.3 million. As a result of the remeasurement, the Company recorded a net gain of approximately $34.7 million within the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2022, representing the excess of the approximate $48.3 million estimated fair value of its pre-existing 40% equity interest over its transaction date carrying value of approximately $13.6 million. |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table summarizes the preliminary purchase consideration and the purchase price allocation to fair values of the identifiable assets acquired and liabilities assumed as of the date of the Broad Arrow Acquisition: Notes receivable (1) $ 21,594 Intangible assets, net (2) 3,100 Other assets (3) 11,756 Other liabilities (4) (13,449) Total identifiable net assets acquired 23,001 Goodwill 98,561 Total consideration and value to be allocated to net assets $ 121,562 (1) Broad Arrow makes term loans, particularly to high net worth clients and businesses, that are secured by collector vehicles. Refer to Note 4 — Notes Receivable for additional information with respect to the Notes receivable acquired. (2) The fair value of identifiable intangible assets was a Level 3 measurement, estimated using significant assumptions that are not observable in the market through the use of a discounted cash flow model with inputs including discount rate and terminal growth rate as well as return on assets. Identifiable intangible assets include trade names of $3.1 million with a 5-year estimated useful life. (3) Other assets includes $6.2 million of Prepaid expenses and other current assets, $2.8 million of cash acquired and $2.6 million of Accounts receivable. (4) Other liabilities includes a $7.0 million Note payable, $5.3 million of Contract liabilities and $0.7 million of Accounts payable. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The following is a reconciliation of the changes in the Company's goodwill for the periods specified below: 2022 2021 in thousands Goodwill as of January 1, $ 11,488 $ 4,745 Goodwill resulting from acquisitions (1) 103,543 6,328 Goodwill as of September 30, $ 115,031 $ 11,073 (1) Goodwill resulting from acquisitions for the nine months ended September 30, 2022 includes $98.6 million related to the Broad Arrow Acquisition. Refer to Note 6 — Acquisitions and Investments for additional information. |
Schedule of Finite-Lived Intangible Assets | The cost and accumulated amortization of intangible assets as of September 30, 2022 and December 31, 2021 are as follows: Weighted Average Useful Life September 30, 2022 December 31, 2021 in thousands Renewal rights 9.9 $ 17,184 $ 17,557 Internally developed software 3.1 105,367 76,865 Trade names and trademarks 14.3 12,541 5,004 Relationships and customer lists 15.6 10,426 5,652 Other 4.4 1,429 1,464 Intangible assets 146,947 106,542 Less: accumulated amortization (45,411) (30,371) Intangible assets, net $ 101,536 $ 76,171 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The estimated future aggregate amortization expense as of September 30, 2022 is as follows (in thousands): 2022 $ 6,154 2023 32,577 2024 24,534 2025 15,684 2026 3,766 Thereafter 18,821 Total $ 101,536 |
Provision for Unpaid Losses a_2
Provision for Unpaid Losses and Loss Adjustment Expenses (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Insurance [Abstract] | |
Schedule of Liability for Unpaid Claims and Claims Adjustment Expense | The following table presents a reconciliation of the beginning and ending provision for unpaid losses and loss adjustment expenses, net of amounts recoverable from reinsurers: Nine months ended 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 136,144 87,643 Prior accident year — — Total incurred losses and loss adjustment expenses 136,144 87,643 Payments: Current accident year 27,939 20,604 Prior accident year 27,759 18,403 Total payments 55,698 39,007 Effect of foreign currency rate changes (490) (33) Net reserves for losses and loss adjustment expenses, end of period 154,825 103,591 Reinsurance recoverable 8,100 — Gross reserves for losses and loss adjustment expenses, end of period $ 162,925 $ 103,591 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement Inputs and Valuation Techniques | The following table summarizes the significant inputs in the valuation model as of September 30, 2022: Inputs Private Placement Warrants Underwriter Warrants OTM Warrants PIPE Warrants Exercise price $11.50 $11.50 $15.00 $11.50 Common stock price $8.99 $8.99 $8.99 $8.99 Volatility 43.7% 43.7% 41.0% 43.7% Expected term of the warrants 4.18 4.18 9.18 4.18 Risk-free rate 4.10% 4.10% 3.80% 4.10% Dividend yield —% —% —% —% |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The fair value of the Company's financial assets and liabilities measured at fair value on a recurring basis at September 30, 2022 and December 31, 2021, is shown in the table below: Fair Value Measurements Total Level 1 Level 2 Level 3 in thousands September 30, 2022 Financial Assets Interest rate swaps $ 3,516 $ — $ 3,516 $ — Total $ 3,516 $ — $ 3,516 $ — Financial Liabilities Public warrants $ 14,088 $ 14,088 $ — $ — Private placement warrants 727 — — 727 Underwriter warrants 81 — — 81 OTM warrants 4,888 — — 4,888 PIPE warrants 29,807 — — 29,807 Total $ 49,591 $ 14,088 $ — $ 35,503 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 |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | The following table presents a reconciliation of the Company's warrant liabilities that are classified as Level 3 within the fair value hierarchy for the nine months ended September 30, 2022: 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 (521) (58) (1,961) (24,174) (26,714) Exercise of warrants — — — (1,906) (1,906) Transfers In (Out) of Level 3 — — — — — Balance at September 30, 2022 $ 727 $ 81 $ 4,888 $ 29,807 $ 35,503 |
Schedule of Carrying Values and Estimated Fair Values of Debt Instruments | The following table discloses the fair value and related carrying amount of fixed income investments held by Hagerty Re as of September 30, 2022 and December 31, 2021: Carrying Amount Estimated Fair Value in thousands September 30, 2022 Fixed income securities, short-term $ 2,218 $ 2,170 Fixed income securities, long-term 8,876 8,436 Total $ 11,094 $ 10,606 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 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | As of the indicated dates, the principal amount of Hagerty's debt consisted of the following: September 30, 2022 December 31, 2021 in thousands Credit Facility $ 136,000 $ 135,500 Note payable — 1,000 Total debt outstanding $ 136,000 $ 136,500 Less: current portion — (1,000) Total long-term debt outstanding $ 136,000 $ 135,500 |
Members' and Stockholders' Eq_2
Members' and Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
Schedule of Other Ownership Interests | The following table summarizes the ownership of Hagerty Group Units in The Hagerty Group as of September 30, 2022: Units Owned Ownership Percentage Hagerty Group Units held by Hagerty, Inc. 83,202,969 24.5 % Hagerty Group Units held by other unit holders 255,758,466 75.5 % Total 338,961,435 100.0 % |
Earnings Per Unit and Share (Ta
Earnings Per Unit and Share (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table sets forth the calculation of basic EPS, which is based on Net income (loss) attributable to controlling interest for the three and nine months ended September 30, 2022 and 2021, divided by the weighted average of Class A Common Stock and Members' Units outstanding as of September 30, 2022 and 2021, respectively. Diluted EPS of Class A Common Stock and Members' Units is computed by dividing Net income (loss) attributable to controlling interest by the weighted average number of shares of Class A Common Stock and Members' Units outstanding as of September 30, 2022 and 2021, adjusted to give effect to potentially dilutive securities. Potentially dilutive securities for the diluted EPS calculation consists of (1) unexercised warrants and unvested stock-based restricted stock units and performance restricted stock units, all using the Treasury Stock Method and (2) non-controlling interest Hagerty Group Units using the "If-converted" Method. Three months ended Nine months ended 2022 2021 2022 2021 in thousands (except per share/unit amounts) Numerator: Net income (loss) attributable to controlling interest $ 14,714 $ (479) $ 36,685 $ 5,309 Adjustment for change in fair value of potentially dilutive warrant liabilities — — (24,753) — Adjustment for net income attributable to non-controlling interest 9,817 — (1,420) — Adjusted net income (loss) to common shareholders $ 24,531 $ (479) $ 10,512 $ 5,309 Denominator: Weighted average shares of Class A Common Stock outstanding — basic 82,816 N/A 82,569 N/A Effect of dilutive securities: Conversion of non-controlling interest Hagerty Group Units to Class A Common Stock 253,396 N/A 251,821 N/A Warrants — N/A 817 N/A Stock-based compensation awards 556 N/A 185 N/A Weighted average shares of Class A Common Stock outstanding — diluted 336,768 N/A 335,392 N/A Earnings (loss) per share of Class A Common Stock Basic $ 0.18 N/A $ 0.44 N/A Diluted $ 0.07 N/A $ 0.03 N/A Earnings (loss) per Members' Unit — basic and diluted N/A $ (4.79) N/A $ 53.09 Weighted average units outstanding — basic and diluted N/A 100 N/A 100 |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Share-based Payment Arrangement [Abstract] | |
Summary of Stock-based Compensation Expense | The following table summarizes stock-based compensation expense recognized during the three and nine months ended September 30, 2022: Three months ended Nine months ended in thousands Restricted stock units $ 3,143 $ 6,735 Performance restricted stock units 715 1,430 Total stock-based compensation expense $ 3,858 $ 8,165 |
Schedule of Restricted Stock Units Activity | The following table provides a summary of the restricted stock unit activity during the nine months ended September 30, 2022: Restricted Stock Units Weighted Average Fair Value Unvested balance as of December 31, 2021 — $ — Granted 3,251,560 10.81 Vested (37,071) 10.79 Forfeited (43,537) 10.79 Unvested balance as of September 30, 2022 3,170,952 $ 10.81 |
Schedule of Grant-date Fair Value of Performance Stock Units | The following table summarizes the assumptions and related information used to determine the grant-date fair value of performance restricted stock units awarded for the periods presented: 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% |
Schedule of Performance-based Units Activity | The following table provides a summary of performance restricted stock unit activity during the nine months ended September 30, 2022: Performance Restricted Stock Units Weighted Average Fair Value Outstanding as of December 31, 2021 — $ — Granted 3,707,136 5.19 Outstanding as of September 30, 2022 3,707,136 $ 5.19 |
Taxation (Tables)
Taxation (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule of Effective Income Tax Rate Reconciliation | Income tax expense reflected in the financial statements differs from the tax computed by applying the statutory U.S. federal rate of 21% to "Net income (loss)" before taxes as follows: Nine months ended September 30, 2022 2021 in thousands (except percentages) Income tax expense at statutory rate $ 8,481 21 % $ 2,078 21 % State taxes (51) — % — — % Loss not subject to entity-level taxes 1,402 3 % 1,264 13 % Foreign rate differential (264) (1) % (174) (2) % Change in valuation allowance 2,101 5 % 1,622 16 % Change in fair value of warrant liabilities (7,952) (19) % — — % Permanent items 360 1 % — — % Income tax expense $ 4,077 10 % $ 4,790 48 % |
Related-Party Transactions (Tab
Related-Party Transactions (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions | The following tables provide information about Markel-affiliated carriers due to insurer liabilities and commission revenue under the agreement with Markel subsidiaries: September 30, 2022 December 31, 2021 in thousands (except percentages) Due to insurer $ 91,549 $ 54,850 Percent of total 93 % 95 % Three months ended Nine months ended 2022 2021 2022 2021 in thousands (except percentages) Commission revenue $ 78,808 $ 70,459 $ 225,060 $ 197,152 Percent of total 94 % 94 % 94 % 94 % September 30, 2022 December 31, 2021 Assets: in thousands Premiums receivable $ 130,384 $ 72,697 Deferred acquisition costs, net 110,209 78,449 Total assets $ 240,593 $ 151,146 Liabilities: Losses payable and provision for unpaid losses and loss adjustment expenses $ 154,706 $ 104,139 Unearned premiums 240,387 167,541 Commissions payable 79,650 59,511 Total liabilities $ 474,743 $ 331,191 Three months ended Nine months ended 2022 2021 2022 2021 Revenue: in thousands Earned premium $ 102,958 $ 74,953 $ 278,386 $ 202,422 Expenses: Ceding commission $ 48,421 $ 35,935 $ 132,724 $ 97,261 Losses and loss adjustment expenses 58,900 30,779 130,279 83,045 Total expenses $ 107,321 $ 66,714 $ 263,003 $ 180,306 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies and New Accounting Standards - Narrative (Details) $ in Thousands | 9 Months Ended | |||||
Sep. 30, 2022 GBP (£) segment | Sep. 30, 2022 USD ($) | Aug. 31, 2022 | Jan. 31, 2022 | Dec. 31, 2021 USD ($) | Dec. 02, 2021 | |
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||||||
Amount retained | £ | £ 1,000,000 | |||||
Number of operating segments | segment | 1 | |||||
Number of reportable segments | segment | 1 | |||||
Tax benefit distributions to noncontrolling interest holders, percent | 85% | |||||
Tax benefit retained by parent, percent | 15% | |||||
Media content | $ | $ 4,833 | $ 3,335 | ||||
Broad Arrow Group Inc | ||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||||||
Equity method investment, ownership percentage | 40% | |||||
Broad Arrow Group Inc | ||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||||||
Business combination, percentage of voting interest acquired | 60% | |||||
Cumulative Effect, Period of Adoption, Adjustment | ||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||||||
Media content | $ | $ 3,300 | |||||
The Hagerty Group, LLC | ||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||||||
Ownership percentage by Hagerty, Inc | 24.50% | |||||
Member Hubs Holding, LLC | The Hagerty Group, LLC | ||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||||||
Ownership percentage by Hagerty, Inc | 80% |
Revenue - Narrative (Details)
Revenue - Narrative (Details) | Aug. 31, 2022 |
Broad Arrow Group Inc | |
Disaggregation of Revenue [Line Items] | |
Business combination, percentage of voting interest acquired | 60% |
Revenue - Disaggregation of Rev
Revenue - Disaggregation of Revenue By Distribution Channel Offering and Geographical Area (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenue from customer contracts | $ 109,270 | $ 89,386 | $ 299,866 | $ 252,324 |
Earned premium recognized under ASC 944 | 107,487 | 78,699 | 290,719 | 212,370 |
Total revenue | 216,757 | 168,085 | 590,585 | 464,694 |
U.S. | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from customer contracts | 100,710 | 82,039 | 275,891 | 232,101 |
Canada | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from customer contracts | 7,004 | 5,768 | 19,418 | 15,922 |
Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from customer contracts | 1,556 | 1,579 | 4,557 | 4,301 |
Agent | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from customer contracts | 45,935 | 40,001 | 130,559 | 113,714 |
Direct | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from customer contracts | 63,335 | 49,385 | 169,307 | 138,610 |
Commission and fee revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from customer contracts | 85,457 | 76,188 | 243,424 | 214,004 |
Commission and fee revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from customer contracts | 71,029 | 61,386 | 195,573 | 169,247 |
Commission and fee revenue | U.S. | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from customer contracts | 63,941 | 54,919 | 176,011 | 152,134 |
Commission and fee revenue | Canada | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from customer contracts | 5,940 | 5,293 | 16,214 | 13,983 |
Commission and fee revenue | Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from customer contracts | 1,148 | 1,174 | 3,348 | 3,130 |
Commission and fee revenue | Agent | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from customer contracts | 37,998 | 32,895 | 104,390 | 90,450 |
Commission and fee revenue | Direct | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from customer contracts | 33,031 | 28,491 | 91,183 | 78,797 |
Contingent commission | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from customer contracts | 14,428 | 14,802 | 47,851 | 44,757 |
Contingent commission | U.S. | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from customer contracts | 14,491 | 15,134 | 47,757 | 45,003 |
Contingent commission | Canada | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from customer contracts | 0 | (373) | 0 | (355) |
Contingent commission | Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from customer contracts | (63) | 41 | 94 | 109 |
Contingent commission | Agent | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from customer contracts | 7,937 | 7,106 | 26,169 | 23,264 |
Contingent commission | Direct | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from customer contracts | 6,491 | 7,696 | 21,682 | 21,493 |
Membership, marketplace and other revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from customer contracts | 23,813 | 13,198 | 56,442 | 38,320 |
Membership revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from customer contracts | 11,375 | 10,411 | 32,824 | 29,965 |
Membership revenue | U.S. | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from customer contracts | 10,538 | 9,664 | 30,317 | 27,843 |
Membership revenue | Canada | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from customer contracts | 837 | 747 | 2,507 | 2,122 |
Membership revenue | Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from customer contracts | 0 | 0 | 0 | 0 |
Membership revenue | Agent | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from customer contracts | 0 | 0 | 0 | 0 |
Membership revenue | Direct | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from customer contracts | 11,375 | 10,411 | 32,824 | 29,965 |
Marketplace and other revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from customer contracts | 12,438 | 2,787 | 23,618 | 8,355 |
Marketplace and other revenue | U.S. | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from customer contracts | 11,740 | 2,322 | 21,806 | 7,121 |
Marketplace and other revenue | Canada | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from customer contracts | 227 | 101 | 697 | 172 |
Marketplace and other revenue | Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from customer contracts | 471 | 364 | 1,115 | 1,062 |
Marketplace and other revenue | Agent | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from customer contracts | 0 | 0 | 0 | 0 |
Marketplace and other revenue | Direct | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue from customer contracts | $ 12,438 | $ 2,787 | $ 23,618 | $ 8,355 |
Revenue - Earned Premium (Detai
Revenue - Earned Premium (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Underwriting income: | ||||
Premiums assumed | $ 136,187 | $ 103,359 | $ 373,442 | $ 284,598 |
Reinsurance premiums ceded | (1,268) | 0 | (10,958) | (8,465) |
Net premiums assumed | 134,919 | 103,359 | 362,484 | 276,133 |
Change in unearned premiums | (25,229) | (22,741) | (74,624) | (67,041) |
Change in deferred reinsurance premiums | (2,203) | (1,919) | 2,859 | 3,278 |
Net premiums earned | $ 107,487 | $ 78,699 | $ 290,719 | $ 212,370 |
Revenue - Contract Assets and L
Revenue - Contract Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Revenue from Contract with Customer [Abstract] | ||
Contract assets | $ 48,213 | $ 57,596 |
Contract liabilities | $ 46,663 | $ 41,390 |
Prepaid Expenses and Other As_3
Prepaid Expenses and Other Assets - Schedule of Prepaid Expenses and Other Assets, Current and Long-term (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||
Prepaid sales, general and administrative expenses | $ 18,788 | $ 18,004 | |
Prepaid SaaS implementation costs | 18,217 | 16,318 | |
Fixed income investments | 11,094 | 10,785 | |
Reinsurance recoverable | 8,100 | 0 | |
Contract costs | 4,978 | 4,160 | |
Media content | 4,833 | 3,335 | |
Deferred reinsurance premiums ceded | 3,169 | 310 | |
Other | 17,359 | 7,808 | |
Prepaid expenses and other assets | 86,538 | $ 60,720 | |
Current accident year | 136,144 | $ 87,643 | |
Other investments | 4,000 | ||
Interest rate swap | 3,500 | ||
Taxes receivable | 2,800 | ||
Collector vehicles | 2,500 | ||
Deferred financing costs | 1,100 | ||
Hurricane | |||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||
Current accident year | $ 10,000 |
Notes Receivable - Narrative (D
Notes Receivable - Narrative (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | |
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Notes receivable | $ 29,737 | |
Notes receivable, current | 22,390 | $ 0 |
Notes receivable, noncurrent | $ 7,347 | $ 0 |
Loan to value ratio | 65% |
Notes Receivable - Aggregate LT
Notes Receivable - Aggregate LTV Ratio (Details) $ in Thousands | Sep. 30, 2022 USD ($) |
Receivables [Abstract] | |
Secured loans | $ 29,737 |
Estimate of collateral value | $ 62,457 |
Aggregate LTV ratio | 48% |
Business Combination - Narrativ
Business Combination - Narrative (Details) - USD ($) $ in Thousands | Dec. 02, 2021 | Sep. 30, 2022 | Apr. 30, 2022 | Dec. 31, 2021 | Dec. 01, 2021 | Sep. 30, 2021 |
Business Acquisition [Line Items] | ||||||
Number of shares issued in transaction (in shares) | 70,385,000 | |||||
Warrants outstanding (in shares) | 20,005,550 | 19,483,550 | 0 | |||
Consideration received on transaction | $ 703,900 | |||||
Cash paid to shareholders | 489,661 | |||||
Units Owned (in shares) | 338,961,435 | |||||
Acquisition related costs | $ 41,900 | |||||
Tax benefit distributions to noncontrolling interest holders, percent | 85% | |||||
Hagerty Holding Corp. | ||||||
Business Acquisition [Line Items] | ||||||
Cash paid to shareholders | $ 489,700 | |||||
Additional Paid in Capital | ||||||
Business Acquisition [Line Items] | ||||||
Transaction costs | $ 32,600 | |||||
Member Units | Hagerty Holding Corp. | ||||||
Business Acquisition [Line Items] | ||||||
Stock converted (in shares) | 176,033,906 | |||||
Member Units | Markel | ||||||
Business Acquisition [Line Items] | ||||||
Stock converted (in shares) | 75,000,000 | |||||
Class V Common Stock | ||||||
Business Acquisition [Line Items] | ||||||
Units Owned (in shares) | 251,033,906 | 251,033,906 | 251,033,906 | |||
Class V Common Stock | Hagerty Holding Corp. | ||||||
Business Acquisition [Line Items] | ||||||
Business Combination (in shares) | 176,033,906 | |||||
Class V Common Stock | Markel | ||||||
Business Acquisition [Line Items] | ||||||
Business Combination (in shares) | 75,000,000 | |||||
Class A Common Stock | ||||||
Business Acquisition [Line Items] | ||||||
Units Owned (in shares) | 82,327,466 | 83,202,969 | 82,327,466 | |||
Number of securities called by each warrant (in shares) | 1 | |||||
Class A Common Stock | Aldel | ||||||
Business Acquisition [Line Items] | ||||||
Stock converted (in shares) | 2,875,000 | |||||
Business Combination (in shares) | 572,500 | |||||
Shares redeemed (in shares) | 3,005,034 | |||||
Units Owned (in shares) | 8,494,966 | 11,500,000 | ||||
Conversion ratio (in shares) | 1 | |||||
PIPE Warrants | ||||||
Business Acquisition [Line Items] | ||||||
Warrants outstanding (in shares) | 12,669,300 | 12,147,300 | ||||
PIPE Warrants | Class A Common Stock | ||||||
Business Acquisition [Line Items] | ||||||
Number of securities called by each warrant (in shares) | 1 |
Business Combination - Schedule
Business Combination - Schedule of Business Combination (Details) $ in Thousands | Dec. 02, 2021 USD ($) |
Business Combination and Asset Acquisition [Abstract] | |
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 |
Acquisitions and Investments -
Acquisitions and Investments - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 9 Months Ended | ||||
Dec. 02, 2021 | Aug. 31, 2022 | Apr. 30, 2022 | Jan. 31, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | |
Asset Acquisition [Line Items] | ||||||
Purchase of previously held equity method investment | $ 15,250 | $ 0 | ||||
Acquisition related costs | $ 41,900 | |||||
Payments to acquire businesses | 3,500 | $ 12,400 | ||||
Speed Digital | Director | ||||||
Asset Acquisition [Line Items] | ||||||
Percentage of purchase price received by related party | 100% | |||||
Broad Arrow Group Inc | ||||||
Asset Acquisition [Line Items] | ||||||
Business combination, percentage of voting interest acquired | 60% | |||||
Business combination, equity consideration issued | $ 73,300 | 73,253 | ||||
Share price (in dollars per share) | $ 13.47 | |||||
Acquisition related costs | 800 | |||||
Revenue of acquiree | 5,900 | |||||
Income of acquiree | $ 2,100 | |||||
Speed Digital | ||||||
Asset Acquisition [Line Items] | ||||||
Purchase price | $ 15,000 | |||||
Cash consideration paid to acquire business | 7,500 | |||||
Contingent liability | $ 3,750 | |||||
Broad Arrow Group Inc | ||||||
Asset Acquisition [Line Items] | ||||||
Purchase of previously held equity method investment | $ 15,300 | |||||
Equity method investment, ownership percentage | 40% |
Acquisitions and Investments _2
Acquisitions and Investments - Summary of Fair Value of Broad Arrow (Details) - Broad Arrow Group Inc - USD ($) $ in Thousands | 1 Months Ended | 9 Months Ended |
Aug. 31, 2022 | Sep. 30, 2022 | |
Asset Acquisition [Line Items] | ||
Total equity consideration | $ 73,300 | $ 73,253 |
Fair value of previously held equity interest in Broad Arrow | 48,309 | |
Total consideration and value to be allocated to net assets | 121,562 | |
Remeasurement net gain | 34,700 | |
Carrying Value | $ 13,600 |
Acquisitions and Investments _3
Acquisitions and Investments - Purchase Price Allocation (Details) - USD ($) $ in Thousands | 1 Months Ended | ||||
Aug. 31, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Dec. 31, 2020 | |
Asset Acquisition [Line Items] | |||||
Goodwill | $ 115,031 | $ 11,488 | $ 11,073 | $ 4,745 | |
Broad Arrow Group Inc | |||||
Asset Acquisition [Line Items] | |||||
Notes receivable | $ 21,594 | ||||
Intangible assets, net | 3,100 | ||||
Other assets | 11,756 | ||||
Other liabilities | (13,449) | ||||
Total identifiable net assets acquired | 23,001 | ||||
Goodwill | 98,561 | ||||
Total consideration and value to be allocated to net assets | 121,562 | ||||
Notes receivable | 2,600 | ||||
Prepaid expenses and other current assets | 6,200 | ||||
Cash and cash equivalents | 2,800 | ||||
Note payable | $ 7,000 | ||||
Contract liabilities | 5,300 | ||||
Accounts payable | 700 | ||||
Broad Arrow Group Inc | Trade Names | |||||
Asset Acquisition [Line Items] | |||||
Intangible assets, net | $ 3,100 | ||||
Weighted average useful life | 5 years |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Changes in Goodwill (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | $ 11,488 | $ 4,745 |
Goodwill resulting from acquisitions | 103,543 | 6,328 |
Goodwill, ending balance | 115,031 | $ 11,073 |
Broad Arrow acquisition | ||
Goodwill [Roll Forward] | ||
Goodwill resulting from acquisitions | $ 98,600 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Cost and Accumulated Amortization (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Finite-Lived Intangible Assets [Line Items] | |||||
Intangible assets | $ 146,947 | $ 146,947 | $ 106,542 | ||
Less: accumulated amortization | (45,411) | (45,411) | (30,371) | ||
Total | 101,536 | 101,536 | 76,171 | ||
Amortization of intangible assets | 5,900 | $ 3,500 | 15,400 | $ 8,900 | |
Renewal rights | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Intangible assets | 17,184 | $ 17,184 | 17,557 | ||
Renewal rights | Weighted Average | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Weighted Average Useful Life | 9 years 10 months 24 days | ||||
Internally developed software | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Intangible assets | 105,367 | $ 105,367 | 76,865 | ||
Internally developed software | Weighted Average | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Weighted Average Useful Life | 3 years 1 month 6 days | ||||
Trade names and trademarks | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Intangible assets | 12,541 | $ 12,541 | 5,004 | ||
Trade names and trademarks | Weighted Average | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Weighted Average Useful Life | 14 years 3 months 18 days | ||||
Relationships and customer lists | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Intangible assets | 10,426 | $ 10,426 | 5,652 | ||
Relationships and customer lists | Weighted Average | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Weighted Average Useful Life | 15 years 7 months 6 days | ||||
Other | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Intangible assets | $ 1,429 | $ 1,429 | $ 1,464 | ||
Other | Weighted Average | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Weighted Average Useful Life | 4 years 4 months 24 days |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Future Amortization Expense (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2022 | $ 6,154 | |
2023 | 32,577 | |
2024 | 24,534 | |
2025 | 15,684 | |
2026 | 3,766 | |
Thereafter | 18,821 | |
Total | $ 101,536 | $ 76,171 |
Provision for Unpaid Losses a_3
Provision for Unpaid Losses and Loss Adjustment Expenses - Unpaid Losses and Loss Adjustment Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | |||||
Net unpaid losses and loss adjustment expenses, beginning of period | $ 74,869 | $ 54,988 | |||
Incurred losses and loss adjustment expenses: | |||||
Current accident year | 136,144 | 87,643 | |||
Prior accident year | 0 | 0 | |||
Total incurred losses and loss adjustment expenses | $ 60,605 | $ 32,298 | 136,144 | 87,643 | |
Payments: | |||||
Current accident year | 27,939 | 20,604 | |||
Prior accident year | 27,759 | 18,403 | |||
Total payments | 55,698 | 39,007 | |||
Effect of foreign currency rate changes | (490) | (33) | |||
Net reserves for losses and loss adjustment expenses, end of period | 154,825 | 103,591 | 154,825 | 103,591 | |
Reinsurance recoverable | 8,100 | 0 | 8,100 | 0 | |
Gross reserves for losses and loss adjustment expenses, end of period | $ 162,925 | $ 103,591 | $ 162,925 | $ 103,591 | $ 109,351 |
Provision for Unpaid Losses a_4
Provision for Unpaid Losses and Loss Adjustment Expenses - Narrative (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Current year incurred losses and loss adjustment expenses | $ 136,144 | $ 87,643 |
Current accident year | 27,939 | $ 20,604 |
U.S. Auto | ||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Current accident year | 6,500 | |
Hurricane | ||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Current year incurred losses and loss adjustment expenses | $ 10,000 |
Fair Value Measurements - Warra
Fair Value Measurements - Warrant liabilities (Details) - shares | Sep. 30, 2022 | Apr. 30, 2022 | Dec. 02, 2021 | Sep. 30, 2021 |
Class of Warrant or Right [Line Items] | ||||
Warrants outstanding (in shares) | 19,483,550 | 20,005,550 | 0 | |
Public warrants | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants outstanding (in shares) | 5,750,000 | 5,750,000 | ||
Private placement warrants | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants outstanding (in shares) | 257,500 | 257,500 | ||
Underwriter Warrants | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants outstanding (in shares) | 28,750 | 28,750 | ||
OTM Warrants | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants outstanding (in shares) | 1,300,000 | 1,300,000 | ||
PIPE Warrants | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants outstanding (in shares) | 12,147,300 | 12,669,300 |
Fair Value Measurements - Input
Fair Value Measurements - Inputs in the Valuation Model (Details) | Sep. 30, 2022 year $ / shares USD ($) |
Private placement warrants | Exercise price | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants measurement input | 11.50 |
Private placement warrants | Common stock price | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants measurement input | 8.99 |
Private placement warrants | Volatility | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants measurement input | 0.437 |
Private placement warrants | Expected term of the warrants | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants measurement input | year | 4.18 |
Private placement warrants | Risk-free rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants measurement input | 0.0410 |
Private placement warrants | Dividend yield | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants measurement input | $ | 0 |
Underwriter Warrants | Exercise price | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants measurement input | 11.50 |
Underwriter Warrants | Common stock price | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants measurement input | 8.99 |
Underwriter Warrants | Volatility | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants measurement input | 0.437 |
Underwriter Warrants | Expected term of the warrants | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants measurement input | year | 4.18 |
Underwriter Warrants | Risk-free rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants measurement input | 0.0410 |
Underwriter Warrants | Dividend yield | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants measurement input | $ | 0 |
OTM Warrants | Exercise price | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants measurement input | 15 |
OTM Warrants | Common stock price | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants measurement input | 8.99 |
OTM Warrants | Volatility | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants measurement input | 0.410 |
OTM Warrants | Expected term of the warrants | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants measurement input | year | 9.18 |
OTM Warrants | Risk-free rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants measurement input | 0.0380 |
OTM Warrants | Dividend yield | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants measurement input | $ | 0 |
PIPE Warrants | Exercise price | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants measurement input | 11.50 |
PIPE Warrants | Common stock price | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants measurement input | 8.99 |
PIPE Warrants | Volatility | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants measurement input | 0.437 |
PIPE Warrants | Expected term of the warrants | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants measurement input | year | 4.18 |
PIPE Warrants | Risk-free rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants measurement input | 0.0410 |
PIPE Warrants | Dividend yield | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants measurement input | $ | 0 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value of Assets and Liabilities (Details) - Fair Value, Recurring - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Financial Assets | ||
Total | $ 3,516 | $ 531 |
Financial Liabilities | ||
Total | 49,591 | 89,366 |
Public warrants | ||
Financial Liabilities | ||
Warrants | 14,088 | 25,243 |
Private placement warrants | ||
Financial Liabilities | ||
Warrants | 727 | 1,248 |
Underwriter Warrants | ||
Financial Liabilities | ||
Warrants | 81 | 139 |
OTM Warrants | ||
Financial Liabilities | ||
Warrants | 4,888 | 6,849 |
PIPE Warrants | ||
Financial Liabilities | ||
Warrants | 29,807 | 55,887 |
Interest rate swaps | ||
Financial Assets | ||
Interest rate swaps | 3,516 | 531 |
Level 1 | ||
Financial Assets | ||
Total | 0 | 0 |
Financial Liabilities | ||
Total | 14,088 | 25,243 |
Level 1 | Public warrants | ||
Financial Liabilities | ||
Warrants | 14,088 | 25,243 |
Level 1 | Private placement warrants | ||
Financial Liabilities | ||
Warrants | 0 | 0 |
Level 1 | Underwriter Warrants | ||
Financial Liabilities | ||
Warrants | 0 | 0 |
Level 1 | OTM Warrants | ||
Financial Liabilities | ||
Warrants | 0 | 0 |
Level 1 | PIPE Warrants | ||
Financial Liabilities | ||
Warrants | 0 | 0 |
Level 1 | Interest rate swaps | ||
Financial Assets | ||
Interest rate swaps | 0 | 0 |
Level 2 | ||
Financial Assets | ||
Total | 3,516 | 531 |
Financial Liabilities | ||
Total | 0 | 0 |
Level 2 | Public warrants | ||
Financial Liabilities | ||
Warrants | 0 | 0 |
Level 2 | Private placement warrants | ||
Financial Liabilities | ||
Warrants | 0 | 0 |
Level 2 | Underwriter Warrants | ||
Financial Liabilities | ||
Warrants | 0 | 0 |
Level 2 | OTM Warrants | ||
Financial Liabilities | ||
Warrants | 0 | 0 |
Level 2 | PIPE Warrants | ||
Financial Liabilities | ||
Warrants | 0 | 0 |
Level 2 | Interest rate swaps | ||
Financial Assets | ||
Interest rate swaps | 3,516 | 531 |
Level 3 | ||
Financial Assets | ||
Total | 0 | 0 |
Financial Liabilities | ||
Total | 35,503 | 64,123 |
Level 3 | Public warrants | ||
Financial Liabilities | ||
Warrants | 0 | 0 |
Level 3 | Private placement warrants | ||
Financial Liabilities | ||
Warrants | 727 | 1,248 |
Level 3 | Underwriter Warrants | ||
Financial Liabilities | ||
Warrants | 81 | 139 |
Level 3 | OTM Warrants | ||
Financial Liabilities | ||
Warrants | 4,888 | 6,849 |
Level 3 | PIPE Warrants | ||
Financial Liabilities | ||
Warrants | 29,807 | 55,887 |
Level 3 | Interest rate swaps | ||
Financial Assets | ||
Interest rate swaps | $ 0 | $ 0 |
Fair Value Measurements - Level
Fair Value Measurements - Level Three Reconciliation (Details) - Warrant Liabilities $ in Thousands | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Beginning balance | $ 64,123 |
Change in fair value of warrant liabilities | (26,714) |
Exercise of warrants | (1,906) |
Transfers In (Out) of Level 3 | 0 |
Ending balance | 35,503 |
Private placement warrants | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Beginning balance | 1,248 |
Change in fair value of warrant liabilities | (521) |
Exercise of warrants | 0 |
Transfers In (Out) of Level 3 | 0 |
Ending balance | 727 |
Underwriter Warrants | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Beginning balance | 139 |
Change in fair value of warrant liabilities | (58) |
Exercise of warrants | 0 |
Transfers In (Out) of Level 3 | 0 |
Ending balance | 81 |
OTM Warrants | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Beginning balance | 6,849 |
Change in fair value of warrant liabilities | (1,961) |
Exercise of warrants | 0 |
Transfers In (Out) of Level 3 | 0 |
Ending balance | 4,888 |
PIPE Warrants | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Beginning balance | 55,887 |
Change in fair value of warrant liabilities | (24,174) |
Exercise of warrants | (1,906) |
Transfers In (Out) of Level 3 | 0 |
Ending balance | $ 29,807 |
Fair Value Measurements - Carry
Fair Value Measurements - Carrying Value and Estimated Fair Value (Details) - Fixed Income Securities - USD ($) | 9 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Other-than-temporary impairment | $ 0 | |
Carrying Amount | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed income securities, short-term | 2,218,000 | $ 1,189,000 |
Fixed income securities, long-term | 8,876,000 | 9,596,000 |
Total | 11,094,000 | 10,785,000 |
Level 2 | Estimated Fair Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed income securities, short-term | 2,170,000 | 1,188,000 |
Fixed income securities, long-term | 8,436,000 | 9,476,000 |
Total | $ 10,606,000 | $ 10,664,000 |
Fair Value Measurements - Nonre
Fair Value Measurements - Nonrecurring Fair Value Measurements (Details) - USD ($) $ in Thousands | 1 Months Ended | 9 Months Ended | |
Aug. 31, 2022 | Sep. 30, 2022 | Jan. 31, 2022 | |
Broad Arrow Group Inc | |||
Asset Acquisition [Line Items] | |||
Equity method investment, ownership percentage | 40% | ||
Broad Arrow Group Inc | |||
Asset Acquisition [Line Items] | |||
Business combination, percentage of voting interest acquired | 60% | ||
Business combination, equity consideration issued | $ 73,300 | $ 73,253 |
Debt - Schedule of Long-Term De
Debt - Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Debt Instrument [Line Items] | |||
Total debt outstanding | $ 136,000 | $ 136,500 | |
Less: current portion | 0 | (1,000) | |
Total long-term debt outstanding | 136,000 | 135,500 | |
Note payable | |||
Debt Instrument [Line Items] | |||
Total debt outstanding | 0 | 1,000 | $ 2,000 |
Revolving Credit Facility | Line of Credit | |||
Debt Instrument [Line Items] | |||
Total debt outstanding | $ 136,000 | $ 135,500 |
Debt - Narrative (Details)
Debt - Narrative (Details) | 9 Months Ended | 12 Months Ended | ||||
Mar. 01, 2022 USD ($) | Sep. 30, 2022 USD ($) installment letter_of_credit | Sep. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) | Oct. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Debt Instrument [Line Items] | ||||||
Total debt outstanding | $ 136,000,000 | $ 136,500,000 | ||||
Repayments of long-term debt | $ 90,500,000 | $ 18,000,000 | ||||
Number of letters of credit authorized | letter_of_credit | 4 | |||||
Letters of credit outstanding, amount | $ 11,600,000 | |||||
Line of Credit | ||||||
Debt Instrument [Line Items] | ||||||
Annual extension term | 1 year | |||||
Note payable | ||||||
Debt Instrument [Line Items] | ||||||
Total debt outstanding | $ 0 | 1,000,000 | $ 2,000,000 | |||
Fixed rate | 3.25% | |||||
Number of payment installments | installment | 2 | |||||
Repayments of long-term debt | $ 1,000,000 | $ 1,000,000 | ||||
Revolving Credit Facility | Line of Credit | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | $ 230,000,000 | |||||
Accordion feature, increase limit | 50,000,000 | |||||
Effective borrowing rate | 5.15% | 1.61% | ||||
Total debt outstanding | $ 136,000,000 | $ 135,500,000 | ||||
Letter of Credit | Line of Credit | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | 25,000,000 | |||||
Swing Line Loan | Line of Credit | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | $ 3,000,000 |
Interest Rate Swaps (Details)
Interest Rate Swaps (Details) - Interest rate swaps | Sep. 30, 2022 USD ($) swap | Dec. 31, 2021 USD ($) |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative, number of instruments held | swap | 1 | |
Derivative notional amount | $ | $ 35,000,000 | $ 15,000,000 |
Derivative fixed interest rate | 0.81% | 2.20% |
Members' and Stockholders' Eq_3
Members' and Stockholders' Equity - Narrative (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | ||||||
Mar. 23, 2022 USD ($) | Mar. 31, 2022 USD ($) | Mar. 22, 2022 USD ($) | Sep. 30, 2022 USD ($) vote $ / shares shares | Dec. 31, 2021 USD ($) $ / shares shares | Dec. 02, 2021 shares | Dec. 01, 2021 class shares | |
Class of Stock [Line Items] | |||||||
Common stock, shares, outstanding (in shares) | 338,961,435 | ||||||
Preferred stock, shares authorized (in shares) | 20,000,000 | 20,000,000 | |||||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | |||||
Preferred stock, shares issued (in shares) | 0 | 0 | |||||
Preferred stock, shares outstanding (in shares) | 0 | 0 | |||||
Number of classes of partnership interest | class | 1 | ||||||
Member unit, outstanding (in shares) | 100,000 | ||||||
Redeemable noncontrolling interest, accreted redemption value | $ | $ 2,100,000 | $ 0 | $ 593,277 | ||||
Redeemable noncontrolling interest, accretion | $ | $ (1,560,420) | $ 1,600,000 | |||||
Removal of the redeemable feature of the non-controlling interest | $ | 2,142,490 | ||||||
Additional Paid in Capital | |||||||
Class of Stock [Line Items] | |||||||
Redeemable noncontrolling interest, accretion | $ | (162,095) | (162,100) | |||||
Removal of the redeemable feature of the non-controlling interest | $ | 528,600 | 528,615 | |||||
Accumulated Earnings (Deficit) | |||||||
Class of Stock [Line Items] | |||||||
Redeemable noncontrolling interest, accretion | $ | (1,398,325) | $ (1,400,000) | |||||
Removal of the redeemable feature of the non-controlling interest | $ | 1,400,000 | 1,398,325 | |||||
Non-controlling Interest | |||||||
Class of Stock [Line Items] | |||||||
Common stock, shares, outstanding (in shares) | 255,758,466 | ||||||
Removal of the redeemable feature of the non-controlling interest | $ | $ 215,600 | $ 215,550 | |||||
Class A Common Stock | |||||||
Class of Stock [Line Items] | |||||||
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 | |||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | |||||
Common stock, votes per share | vote | 1 | ||||||
Common stock, shares, issued (in shares) | 83,202,969 | 82,327,466 | |||||
Common stock, shares, outstanding (in shares) | 83,202,969 | 82,327,466 | 82,327,466 | ||||
Class V Common Stock | |||||||
Class of Stock [Line Items] | |||||||
Common stock, shares authorized (in shares) | 300,000,000 | 300,000,000 | |||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | |||||
Common stock, votes per share | vote | 10 | ||||||
Common stock, shares, issued (in shares) | 251,033,906 | 251,033,906 | |||||
Common stock, shares, outstanding (in shares) | 251,033,906 | 251,033,906 | 251,033,906 |
Members' and Stockholders' Eq_4
Members' and Stockholders' Equity - Ownership (Details) | 9 Months Ended |
Sep. 30, 2022 shares | |
Class of Stock [Line Items] | |
Units Owned (in shares) | 338,961,435 |
Total Stockholders' / Members' Equity | |
Class of Stock [Line Items] | |
Units Owned (in shares) | 83,202,969 |
Non-controlling Interest | |
Class of Stock [Line Items] | |
Units Owned (in shares) | 255,758,466 |
The Hagerty Group, LLC | |
Class of Stock [Line Items] | |
Ownership percentage by Hagerty, Inc | 24.50% |
Ownership percentage by other unit holders | 75.50% |
Total ownership percentage | 100% |
Earnings Per Unit and Share - E
Earnings Per Unit and Share - Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Numerator: | ||||
Net income (loss) attributable to controlling interest | $ 14,714 | $ (479) | $ 36,685 | $ 5,309 |
Adjustment for change in fair value of potentially dilutive warrant liabilities | 0 | 0 | (24,753) | 0 |
Adjustment for net income attributable to non-controlling interest | 9,817 | 0 | (1,420) | 0 |
Adjusted net income (loss) to common shareholders | 24,531 | (479) | 10,512 | 5,309 |
Adjusted net income (loss) to common shareholders | $ 24,531 | $ (479) | $ 10,512 | $ 5,309 |
Denominator: | ||||
Weighted average shares/members' units - basic (in shares) | 100 | 100 | ||
Weighted average shares/members' units - diluted (in shares) | 100 | 100 | ||
Earnings (loss) per share/unit - basic (in dollars per share) | $ (4.79) | $ 53.09 | ||
Earnings (loss) per share/unit - diluted (in dollars per share) | $ (4.79) | $ 53.09 | ||
Class A Common Stock | ||||
Denominator: | ||||
Weighted average shares/members' units - basic (in shares) | 82,816 | 82,569 | ||
Add: Dilutive effect of conversion of Class V Common Stock (in shares) | 253,396 | 251,821 | ||
Add: Dilutive effect of warrants (in shares) | 0 | 817 | ||
Add: Dilutive effect of stock-based compensation awards (in shares) | 556 | 185 | ||
Weighted average shares/members' units - diluted (in shares) | 336,768 | 335,392 | ||
Earnings (loss) per share/unit - basic (in dollars per share) | $ 0.18 | $ 0.44 | ||
Earnings (loss) per share/unit - diluted (in dollars per share) | $ 0.07 | $ 0.03 |
Warrant Liabilities (Details)
Warrant Liabilities (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Apr. 30, 2022 | Dec. 31, 2021 | Dec. 02, 2021 | |
Class of Warrant or Right [Line Items] | |||||||
Warrants outstanding (in shares) | 19,483,550 | 0 | 19,483,550 | 0 | 20,005,550 | ||
Gain on fair value adjustments to warrant liabilities | $ 11,583 | $ 0 | $ 37,869 | $ 0 | |||
Warrant liabilities | $ 49,591 | 49,591 | $ 89,366 | ||||
Warrant Liabilities | |||||||
Class of Warrant or Right [Line Items] | |||||||
Warrant liabilities exercised | $ 1,906 | ||||||
Class A Common Stock | |||||||
Class of Warrant or Right [Line Items] | |||||||
Number of securities called by each warrant (in shares) | 1 | ||||||
Warrants exercised (in shares) | 124,748 | ||||||
Adjustments to additional paid in capital, exercise of warrants | $ 1,900 | ||||||
Public warrants | |||||||
Class of Warrant or Right [Line Items] | |||||||
Warrants outstanding (in shares) | 5,750,000 | 5,750,000 | 5,750,000 | ||||
Exercise price of warrants (in dollars per share) | $ 11.50 | ||||||
Public warrants | Class A Common Stock | |||||||
Class of Warrant or Right [Line Items] | |||||||
Number of securities called by each warrant (in shares) | 1 | ||||||
Private placement warrants | |||||||
Class of Warrant or Right [Line Items] | |||||||
Warrants outstanding (in shares) | 257,500 | 257,500 | |||||
Exercise price of warrants (in dollars per share) | $ 11.50 | ||||||
Private placement warrants | Warrant Liabilities | |||||||
Class of Warrant or Right [Line Items] | |||||||
Warrant liabilities exercised | $ 0 | ||||||
Private placement warrants | Class A Common Stock | |||||||
Class of Warrant or Right [Line Items] | |||||||
Number of securities called by each warrant (in shares) | 1 | ||||||
Underwriter Warrants | |||||||
Class of Warrant or Right [Line Items] | |||||||
Warrants outstanding (in shares) | 28,750 | 28,750 | |||||
Exercise price of warrants (in dollars per share) | $ 11.50 | ||||||
Underwriter Warrants | Warrant Liabilities | |||||||
Class of Warrant or Right [Line Items] | |||||||
Warrant liabilities exercised | 0 | ||||||
Underwriter Warrants | Class A Common Stock | |||||||
Class of Warrant or Right [Line Items] | |||||||
Number of securities called by each warrant (in shares) | 1 | ||||||
OTM Warrants | |||||||
Class of Warrant or Right [Line Items] | |||||||
Warrants outstanding (in shares) | 1,300,000 | 1,300,000 | |||||
Exercise price of warrants (in dollars per share) | $ 15 | ||||||
OTM Warrants | Warrant Liabilities | |||||||
Class of Warrant or Right [Line Items] | |||||||
Warrant liabilities exercised | $ 0 | ||||||
OTM Warrants | Class A Common Stock | |||||||
Class of Warrant or Right [Line Items] | |||||||
Number of securities called by each warrant (in shares) | 1 | ||||||
PIPE Warrants | |||||||
Class of Warrant or Right [Line Items] | |||||||
Warrants outstanding (in shares) | 12,147,300 | 12,669,300 | |||||
Exercise price of warrants (in dollars per share) | $ 11.50 | ||||||
Warrants exercised (in shares) | 522,000 | ||||||
PIPE Warrants | Warrant Liabilities | |||||||
Class of Warrant or Right [Line Items] | |||||||
Warrant liabilities exercised | $ 1,906 | ||||||
PIPE Warrants | Class A Common Stock | |||||||
Class of Warrant or Right [Line Items] | |||||||
Number of securities called by each warrant (in shares) | 1 |
Stock Based Compensation - Narr
Stock Based Compensation - Narrative (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |
Apr. 30, 2022 USD ($) d $ / shares shares | Sep. 30, 2022 USD ($) shares | Sep. 30, 2022 USD ($) $ / shares shares | Dec. 31, 2021 shares | |
2021 Stock Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares available for grant (in shares) | 31,402,240 | 31,402,240 | ||
Options | Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Award vesting period (in years) | 2 years | |||
Options | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Award vesting period (in years) | 5 years | |||
Restricted stock units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Granted (in shares) | 3,300,000 | 3,251,560 | ||
Weighted average fair value per share (in dollars per share) | $ / shares | $ 10.81 | |||
Unrecognized compensation cost | $ | $ 27,900,000 | $ 27,900,000 | ||
Weighted average recognition period (in years) | 3 years 6 months 18 days | |||
Performance restricted stock units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Award vesting period (in years) | 3 years | |||
Granted (in shares) | 3,707,136 | 3,707,136 | ||
Weighted average fair value per share (in dollars per share) | $ / shares | $ 5.19 | |||
Grant date fair value of performance restricted stock units | $ | $ 19,200,000 | |||
Performance period (in years) | 7 years | |||
Performance restricted stock units | Tranche One | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Award vesting rights, percentage | 25% | |||
Share price | $ / shares | $ 20 | |||
Number of consecutive days | d | 60 | |||
Performance restricted stock units | Tranche Two | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Award vesting rights, percentage | 25% | |||
Share price | $ / shares | $ 25 | |||
Number of consecutive days | d | 60 | |||
Performance restricted stock units | Tranche Three | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Award vesting rights, percentage | 50% | |||
Share price | $ / shares | $ 30 | |||
Number of consecutive days | d | 60 | |||
Class A Common Stock | 2021 Stock Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Common stock reserved for future issuance (in shares) | 38,317,399 | |||
Class A Common Stock | Employee Stock | 2021 Employee Stock Purchase Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Employees contribution | 50% | |||
Purchase price | 90% | |||
Common stock reserved for future issuance (in shares) | 11,495,220 | 11,495,220 | ||
Stock purchased under ESPP plan (in shares) | 0 |
Stock Based Compensation - Stoc
Stock Based Compensation - Stock-based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2022 | Sep. 30, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | $ 3,858 | $ 8,165 |
Restricted stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | 3,143 | 6,735 |
Performance restricted stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | $ 715 | $ 1,430 |
Stock Based Compensation - Rest
Stock Based Compensation - Restricted Stock Unit Activity (Details) - Restricted stock units - $ / shares | 3 Months Ended | 9 Months Ended |
Sep. 30, 2022 | Sep. 30, 2022 | |
Restricted Stock Units | ||
Beginning balance (in shares) | 0 | |
Granted (in shares) | 3,300,000 | 3,251,560 |
Vested (in shares) | (37,071) | |
Forfeited (in shares) | (43,537) | |
Ending balance (in shares) | 3,170,952 | 3,170,952 |
Weighted Average Fair Value | ||
Beginning balance (in dollars per share) | $ 0 | |
Granted (in dollars per share) | 10.81 | |
Vested (in dollars per share) | 10.79 | |
Forfeited (in dollars per share) | 10.79 | |
Ending balance (in dollars per share) | $ 10.81 | $ 10.81 |
Stock Based Compensation - Gran
Stock Based Compensation - Grant-date Fair Value of Performance Stock Units (Details) - Performance restricted stock units | 9 Months Ended |
Sep. 30, 2022 $ / shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Weighted average fair value per share (in dollars per share) | $ 5.19 |
Expected term (in years) | 7 years |
Expected stock volatility | 35% |
Dividend yield | 0% |
Risk-free interest rate | 2.50% |
Stock Based Compensation - Perf
Stock Based Compensation - Performance Stock Units Outstanding (Details) - Performance restricted stock units - $ / shares | 1 Months Ended | 9 Months Ended |
Apr. 30, 2022 | Sep. 30, 2022 | |
Performance Restricted Stock Units | ||
Beginning balance (in shares) | 0 | |
Granted (in shares) | 3,707,136 | 3,707,136 |
Ending balance (in shares) | 3,707,136 | |
Weighted Average Fair Value | ||
Beginning balance (in dollars per share) | $ 0 | |
Granted (in dollars per share) | 5.19 | |
Ending balance (in dollars per share) | $ 5.19 |
Taxation - Income Tax Rate Reco
Taxation - Income Tax Rate Reconciliation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Amount | ||||
Income tax expense at statutory rate | $ 8,481 | $ 2,078 | ||
State taxes | (51) | 0 | ||
Loss not subject to entity-level taxes | 1,402 | 1,264 | ||
Foreign rate differential | (264) | (174) | ||
Change in valuation allowance | 2,101 | 1,622 | ||
Change in fair value of warrant liabilities | (7,952) | 0 | ||
Permanent items | 360 | 0 | ||
Total | $ (91) | $ 1,888 | $ 4,077 | $ 4,790 |
Percent | ||||
Income tax expense at statutory rate | 21% | 21% | ||
State taxes | 0% | 0% | ||
Loss not subject to entity-level taxes | 3% | 13% | ||
Foreign rate differential | (1.00%) | (2.00%) | ||
Change in valuation allowance | 5% | 16% | ||
Change in fair value of warrant liabilities | (19.00%) | 0% | ||
Permanent items | 1% | 0% | ||
Income tax expense | 10% | 48% |
Taxation - Narrative (Details)
Taxation - Narrative (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Income Tax Disclosure [Abstract] | ||
Valuation allowance | $ 176.3 | $ 174.8 |
Tax savings rate | 25.50% | |
Tax receivable agreement, fair value | $ 3.5 |
Related-Party Transactions - Na
Related-Party Transactions - Narrative (Details) - USD ($) $ in Thousands | 1 Months Ended | 9 Months Ended | 12 Months Ended | |||
Aug. 31, 2022 | Apr. 30, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2020 | Jan. 31, 2022 | |
Broad Arrow Group Inc | ||||||
Related Party Transaction [Line Items] | ||||||
Equity method investment, ownership percentage | 40% | |||||
Broad Arrow Group Inc | ||||||
Related Party Transaction [Line Items] | ||||||
Business combination, percentage of voting interest acquired | 60% | |||||
Business combination, equity consideration issued | $ 73,300 | $ 73,253 | ||||
Speed Digital | ||||||
Related Party Transaction [Line Items] | ||||||
Purchase price | $ 15,000 | |||||
Affiliated Entity | Reinsurance Agreement | ||||||
Related Party Transaction [Line Items] | ||||||
Reinsured risk, percentage | 70% | 60% | ||||
Affiliated Entity | State Farm | Advanced Commission Payment | ||||||
Related Party Transaction [Line Items] | ||||||
Related party transaction, amounts of transaction | $ 20,000 | |||||
Hagerty, Inc. | Affiliated Entity | Markel | ||||||
Related Party Transaction [Line Items] | ||||||
Ownership percentage by noncontrolling interest | 23% | |||||
Hagerty, Inc. | Affiliated Entity | State Farm | ||||||
Related Party Transaction [Line Items] | ||||||
Ownership percentage by noncontrolling interest | 14.80% | |||||
Speed Digital | Director | ||||||
Related Party Transaction [Line Items] | ||||||
Percentage of purchase price received by related party | 100% |
Related-Party Transactions - Al
Related-Party Transactions - Alliance Agreement (Details) - Markel - Alliance Agreement - Affiliated Entity - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Related Party Transaction [Line Items] | |||||
Due to insurer | $ 91,549 | $ 91,549 | $ 54,850 | ||
Commission revenue | $ 78,808 | $ 70,459 | $ 225,060 | $ 197,152 | |
Due To Related Parties | Related Party Concentration Risk | |||||
Related Party Transaction [Line Items] | |||||
Percent of total | 93% | 95% | |||
Revenue from Contract with Customer Benchmark | Related Party Concentration Risk | |||||
Related Party Transaction [Line Items] | |||||
Percent of total | 94% | 94% | 94% | 94% |
Related-Party Transactions - Re
Related-Party Transactions - Reinsurance Agreement (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Related Party Transaction [Line Items] | |||||
Premiums receivable | $ 135,293 | $ 135,293 | $ 75,297 | ||
Deferred acquisition costs, net | 114,172 | 114,172 | 81,535 | ||
TOTAL ASSETS | 1,344,725 | 1,344,725 | 1,041,871 | ||
Losses payable and provision for unpaid losses and loss adjustment expenses | 162,925 | $ 103,591 | 162,925 | $ 103,591 | 109,351 |
Unearned premiums | 249,823 | 249,823 | 175,199 | ||
Commissions payable | 81,712 | 81,712 | 60,603 | ||
TOTAL LIABILITIES | 954,966 | 954,966 | 771,070 | ||
Earned premium | 107,487 | 78,699 | 290,719 | 212,370 | |
Ceding commission | 50,415 | 37,195 | 138,048 | 101,262 | |
Losses and loss adjustment expenses | 60,605 | 32,298 | 136,144 | 87,643 | |
Total operating expenses | 237,980 | 166,327 | 622,425 | 453,758 | |
Markel | Reinsurance Agreement | Affiliated Entity | |||||
Related Party Transaction [Line Items] | |||||
Premiums receivable | 130,384 | 130,384 | 72,697 | ||
Deferred acquisition costs, net | 110,209 | 110,209 | 78,449 | ||
TOTAL ASSETS | 240,593 | 240,593 | 151,146 | ||
Losses payable and provision for unpaid losses and loss adjustment expenses | 154,706 | 154,706 | 104,139 | ||
Unearned premiums | 240,387 | 240,387 | 167,541 | ||
Commissions payable | 79,650 | 79,650 | 59,511 | ||
TOTAL LIABILITIES | 474,743 | 474,743 | $ 331,191 | ||
Earned premium | 102,958 | 74,953 | 278,386 | 202,422 | |
Ceding commission | 48,421 | 35,935 | 132,724 | 97,261 | |
Losses and loss adjustment expenses | 58,900 | 30,779 | 130,279 | 83,045 | |
Total operating expenses | $ 107,321 | $ 66,714 | $ 263,003 | $ 180,306 |