Cover Page
Cover Page - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Mar. 01, 2023 | Jun. 30, 2022 | |
Document Information [Line Items] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Current Fiscal Year End Date | --12-31 | ||
Document Period End Date | Dec. 31, 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 Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | true | ||
Entity Ex Transition Period | false | ||
ICFR Auditor Attestation Flag | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 262.1 | ||
Documents Incorporated by Reference | Portions of the registrant's definitive Proxy Statement for its 2023 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission within 120 days of December 31, 2022, are incorporated by reference into Part III, Items 10-14 of this Annual Report on Form 10-K. | ||
Entity Central Index Key | 0001840776 | ||
Amendment Flag | false | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2022 | ||
Class A common stock, par value $0.0001 per share | |||
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 | 83,211,595 | ||
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$11.50 per share | ||
Trading Symbol | HGTY.WS | ||
Security Exchange Name | NYSE | ||
Class V Common Stock | |||
Document Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 251,033,906 |
Audit Information
Audit Information | 12 Months Ended |
Dec. 31, 2022 | |
Audit Information [Abstract] | |
Auditor Firm ID | 34 |
Auditor Name | DELOITTE & TOUCHE LLP |
Auditor Location | Detroit, Michigan |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
REVENUE: | ||
Revenue from contract with customer | $ 384,527 | $ 323,255 |
Earned premium | 403,061 | 295,824 |
Total revenue | 787,588 | 619,079 |
OPERATING EXPENSES: | ||
Salaries and benefits | 199,542 | 171,901 |
Ceding commission | 191,150 | 140,983 |
Losses and loss adjustment expenses | 182,402 | 122,080 |
Sales expense | 140,781 | 107,483 |
General and administrative services | 89,068 | 64,558 |
Depreciation and amortization | 33,887 | 22,144 |
Restructuring, impairment and related charges, net | 18,324 | 0 |
Total operating expenses | 855,154 | 629,149 |
OPERATING INCOME (LOSS) | (67,566) | (10,070) |
Change in fair value of warrant liabilities | 41,899 | (42,540) |
Revaluation gain on previously held equity method investment | 34,735 | 0 |
Interest and other income (expense) | 2,028 | (1,993) |
INCOME (LOSS) BEFORE INCOME TAX EXPENSE | 11,096 | (54,603) |
Income tax benefit (expense) | (7,017) | (6,751) |
Income (loss) from equity method investment, net of tax | (1,676) | 0 |
NET INCOME (LOSS) | 2,403 | (61,354) |
Net loss (income) attributable to non-controlling interest | 29,675 | 398 |
Net loss (income) attributable to redeemable non-controlling interest | 0 | 14,598 |
NET INCOME (LOSS) ATTRIBUTABLE TO CONTROLLING INTEREST | $ 32,078 | $ (46,358) |
Earnings (loss) per share of Class A Common Stock: | ||
Basic (in dollars per share) | $ 0.39 | $ (0.56) |
Diluted (in dollars per share) | (0.56) | |
Class A Common Stock | ||
Earnings (loss) per share of Class A Common Stock: | ||
Basic (in dollars per share) | 0.39 | (0.56) |
Diluted (in dollars per share) | $ (0.07) | $ (0.56) |
Weighted-average shares of Class A Common Stock outstanding: | ||
Basic (in shares) | 82,728 | 82,327 |
Diluted (in shares) | 336,147 | 82,327 |
Commission and fee revenue | ||
REVENUE: | ||
Revenue from contract with customer | $ 307,238 | $ 271,571 |
Membership, marketplace and other revenue | ||
REVENUE: | ||
Revenue from contract with customer | $ 77,289 | $ 51,684 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Statement of Comprehensive Income [Abstract] | ||
Net income (loss) | $ 2,403 | $ (61,354) |
Other comprehensive income (loss), net of tax: | ||
Foreign currency translation adjustments | (1,834) | (792) |
Derivative instruments | 2,699 | 1,019 |
Other comprehensive income (loss) | 865 | 227 |
Comprehensive income (loss) | 3,268 | (61,127) |
Comprehensive loss (income) attributable to non-controlling interest | 29,675 | 398 |
Comprehensive loss (income) attributable to redeemable non-controlling interest | 0 | 14,598 |
Comprehensive income (loss) attributable to controlling interest | $ 32,943 | $ (46,131) |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Current Assets: | ||
Cash and cash equivalents | $ 95,172 | $ 275,332 |
Restricted cash and cash equivalents | 444,019 | 328,640 |
Accounts receivable | 58,255 | 46,729 |
Premiums receivable | 100,700 | 75,297 |
Commission receivable | 60,151 | 57,596 |
Prepaid expenses and other current assets | 45,651 | 30,155 |
Notes receivable | 25,493 | 0 |
Deferred acquisition costs, net | 107,342 | 81,535 |
Total current assets | 936,783 | 895,284 |
Long-Term Assets: | ||
Prepaid expenses and other non-current assets | 37,082 | 30,565 |
Notes receivable | 11,934 | 0 |
Property and equipment, net | 25,256 | 28,363 |
Lease right-of-use assets | 82,398 | 0 |
Intangible assets, net | 104,024 | 76,171 |
Goodwill | 115,041 | 11,488 |
Total long-term assets | 375,735 | 146,587 |
TOTAL ASSETS | 1,312,518 | 1,041,871 |
Current Liabilities: | ||
Accounts payable | 16,282 | 9,084 |
Losses payable | 55,516 | 34,482 |
Provision for unpaid losses and loss adjustment expenses | 111,741 | 74,869 |
Unearned premiums | 235,462 | 175,199 |
Commissions payable | 77,075 | 60,603 |
Due to insurers | 68,171 | 58,031 |
Advanced premiums | 17,084 | 13,867 |
Contract liabilities | 25,257 | 21,723 |
Current lease liabilities | 7,556 | 0 |
Accrued expenses and other current liabilities | 53,211 | 47,960 |
Total current liabilities | 667,355 | 495,818 |
Long-Term Liabilities: | ||
Accrued expenses | 7,952 | 13,166 |
Contract liabilities | 19,169 | 19,667 |
Long-term lease liabilities | 80,772 | 0 |
Long-term debt | 108,280 | 135,500 |
Deferred tax liability | 12,850 | 10,510 |
Warrant liabilities | 45,561 | 89,366 |
Other long-term liabilities | 3,210 | 7,043 |
Total long-term liabilities | 277,794 | 275,252 |
TOTAL LIABILITIES | 945,149 | 771,070 |
Commitments and Contingencies (Note 24) | ||
Redeemable non-controlling interest (Note 18) | 0 | 593,277 |
STOCKHOLDERS' EQUITY | ||
Preferred stock, $0.0001 par value (20,000,000 shares authorized, no shares issued and outstanding as of December 31, 2022 and 2021, respectively) | 0 | 0 |
Additional paid-in capital | 549,034 | 160,189 |
Accumulated earnings (deficit) | (489,602) | (482,276) |
Accumulated other comprehensive income (loss) | (213) | (1,727) |
Total stockholders' equity: | 59,252 | (323,781) |
Non-controlling interest | 308,117 | 1,305 |
Total equity (Note 18) | 367,369 | (322,476) |
TOTAL LIABILITIES AND EQUITY | 1,312,518 | 1,041,871 |
Class A Common Stock | ||
STOCKHOLDERS' EQUITY | ||
Common stock | 8 | 8 |
Class V Common Stock | ||
STOCKHOLDERS' EQUITY | ||
Common stock | $ 25 | $ 25 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 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 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Members' and Stockholders' Equity - USD ($) $ in Thousands | Total | Cumulative Effect, Period of Adoption, Adjustment | Class A Common Stock | Class V Common Stock | Total Stockholders' / Members' Equity | Total Stockholders' / Members' Equity Cumulative Effect, Period of Adoption, Adjustment | Members' Equity | Common Stock Class A Common Stock | Common Stock Class V Common Stock | Additional Paid in Capital | Accumulated Earnings (Deficit) | Accumulated Earnings (Deficit) Cumulative Effect, Period of Adoption, Adjustment | Accumulated Other Comprehensive Income/(Loss) | Non-controlling Interest | Non-controlling Interest Cumulative Effect, Period of Adoption, Adjustment |
Members' Equity, beginning balance at Dec. 31, 2020 | $ 62,320 | ||||||||||||||
Stockholders' Equity, beginning balance (in shares) at Dec. 31, 2020 | 0 | 0 | |||||||||||||
Stockholders' Equity, beginning balance at Dec. 31, 2020 | $ 117,321 | $ 117,198 | $ 0 | $ 0 | $ 0 | $ 56,832 | $ (1,954) | $ 123 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Net income (loss) before transaction | (3,401) | (3,089) | (3,089) | (312) | |||||||||||
Other comprehensive income (loss) before transaction | 248 | 248 | 248 | ||||||||||||
Distributions before transaction | (4,056) | (4,056) | (4,056) | ||||||||||||
Non-controlling interest issued capital before transaction | 1,580 | 1,580 | |||||||||||||
Business Combination | (21,181) | (21,181) | (58,264) | $ 8 | $ 25 | 526,711 | (489,661) | ||||||||
Business Combination (in shares) | 82,327,000 | 251,034,000 | |||||||||||||
Net income (loss) after transaction | (46,444) | (46,358) | (46,358) | (86) | |||||||||||
Other comprehensive income (loss) after transaction | (21) | (21) | (21) | ||||||||||||
Fair value adjustment for redeemable non-controlling interest | (366,522) | (366,522) | (366,522) | ||||||||||||
Members' Equity, ending balance at Dec. 31, 2021 | 0 | ||||||||||||||
Stockholders' Equity, ending balance (in shares) at Dec. 31, 2021 | 82,327,466 | 251,033,906 | 82,327,000 | 251,034,000 | |||||||||||
Stockholders' Equity, ending balance at Dec. 31, 2021 | (322,476) | $ 4,314 | (323,781) | $ 1,066 | $ 8 | $ 25 | 160,189 | (482,276) | $ 1,066 | (1,727) | 1,305 | $ 3,248 | |||
Beginning balance at Dec. 31, 2020 | 0 | ||||||||||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||||||||||||
Business Combination | 238,265 | ||||||||||||||
Net income (loss) | (11,510) | ||||||||||||||
Fair value adjustment for redeemable non-controlling interest | 366,522 | ||||||||||||||
Ending balance at Dec. 31, 2021 | 593,277 | ||||||||||||||
Stockholders' Equity, ending balance (in shares) at Dec. 02, 2021 | 82,327,466 | 251,033,906 | |||||||||||||
Stockholders' Equity, beginning balance (in shares) at Dec. 31, 2021 | 82,327,466 | 251,033,906 | 82,327,000 | 251,034,000 | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Net income (loss) before transaction | (3,851) | (3,679) | (3,679) | (172) | |||||||||||
Other comprehensive income (loss) before transaction | 1,657 | 1,657 | 1,657 | ||||||||||||
Non-controlling interest issued capital before transaction | 1,700 | 1,700 | |||||||||||||
Business Combination | 73,253 | 9,613 | 9,613 | 63,640 | |||||||||||
Business Combination (in shares) | 714,000 | ||||||||||||||
Net income (loss) after transaction | 17,459 | 35,757 | 35,757 | (18,298) | |||||||||||
Other comprehensive income (loss) after transaction | (792) | (792) | (792) | ||||||||||||
Fair 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 | ||||||||||
Exercise of warrants (in shares) | 125,000 | ||||||||||||||
Exercise of warrants | 1,906 | 1,906 | 1,906 | ||||||||||||
Restricted stock issued (in shares) | 37,000 | ||||||||||||||
Restricted stock issued | 0 | ||||||||||||||
Stock-based compensation | 12,129 | 12,129 | 12,129 | ||||||||||||
Reallocation between controlling and non-controlling interest | $ 0 | $ (41,144) | (1,323) | (40,470) | 649 | $ 41,144 | |||||||||
Members' Equity, ending balance at Dec. 31, 2022 | $ 0 | ||||||||||||||
Stockholders' Equity, ending balance (in shares) at Dec. 31, 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 Dec. 31, 2022 | $ 367,369 | $ 59,252 | $ 8 | $ 25 | $ 549,034 | $ (489,602) | $ (213) | $ 308,117 | |||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||||||||||||
Net income (loss) | (11,205) | ||||||||||||||
Fair 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 Dec. 31, 2022 | $ 0 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
OPERATING ACTIVITIES: | ||
Net income (loss) | $ 2,403 | $ (61,354) |
Adjustments to reconcile net income (loss) to net cash from operating activities: | ||
Change in fair value of warrant liabilities | (41,899) | 42,540 |
Loss on equity method investment | 1,676 | 0 |
Revaluation gain on previously held equity method investment | (34,735) | 0 |
Impairment of operating lease right-of-use assets | 4,698 | 0 |
Depreciation and amortization expense | 33,887 | 22,144 |
Provision for deferred taxes | 2,973 | 3,038 |
Loss on disposals of equipment, software and other assets | 4,316 | 2,425 |
Stock-based compensation expense | 12,129 | 0 |
Non-cash lease expense | 10,875 | 0 |
Other | 533 | 155 |
Changes in assets and liabilities: | ||
Accounts receivable | (24,059) | (13,449) |
Premiums receivable | (25,403) | (22,669) |
Commission receivable | (2,574) | (3,005) |
Prepaid expenses and other assets | (12,021) | (18,523) |
Deferred acquisition costs | (25,807) | (22,963) |
Accounts payable | 10,834 | (2,890) |
Losses payable | 21,034 | 12,502 |
Provision for unpaid losses and loss adjustment expenses | 36,872 | 19,882 |
Unearned premiums | 60,263 | 50,491 |
Commissions payable | 16,472 | 16,805 |
Due to insurers | 10,427 | 8,883 |
Advanced premiums | 3,259 | 124 |
Contract liabilities | (2,285) | 2,049 |
Operating lease liabilities | (9,779) | 0 |
Accrued expenses and other current liabilities | 1,239 | 6,096 |
Net Cash Provided by Operating Activities | 55,328 | 42,281 |
INVESTING ACTIVITIES: | ||
Purchases of property, equipment and software | (44,375) | (43,370) |
Acquisitions, net of cash acquired | (15,404) | (14,609) |
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 | (6,123) | 0 |
Proceeds from notes receivable | 370 | 0 |
Purchase of fixed income securities | (4,234) | (12,246) |
Maturities of fixed income securities | 1,216 | 1,183 |
Other investing activities | (721) | 48 |
Net Cash Used in Investing Activities | (91,521) | (68,994) |
FINANCING ACTIVITIES: | ||
Payments on long-term debt | (122,500) | (42,500) |
Payments on long-term debt | 94,367 | 109,000 |
Contribution from non-controlling interest | 1,700 | 1,580 |
Distributions | 0 | (4,056) |
Deferred financing costs | 0 | (962) |
Cash received in Business Combination | 0 | 789,661 |
Cash consideration to HHC at Closing of Business Combination | 0 | (489,661) |
Payment of capitalized transaction costs | (1,651) | (30,991) |
Net Cash Provided by (Used in) Financing Activities | (28,084) | 332,071 |
Effect of exchange rate changes on cash and cash equivalents and restricted cash and cash equivalents | (504) | (464) |
Change in cash and cash equivalents and restricted cash and cash equivalents | (64,781) | 304,894 |
Beginning cash and cash equivalents and restricted cash and cash equivalents | 603,972 | 299,078 |
Ending cash and cash equivalents and restricted cash and cash equivalents | 539,191 | 603,972 |
NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Purchase of property, equipment and software | 1,592 | 4,668 |
Warrant liabilities recognized in Business Combination | 0 | 46,826 |
CASH PAID FOR: | ||
Interest | 4,868 | 2,502 |
Income taxes | 5,253 | 2,160 |
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents [Abstract] | ||
Cash and cash equivalents | 95,172 | 275,332 |
Restricted cash and cash equivalents | 444,019 | 328,640 |
Total cash and cash equivalents and restricted cash and cash equivalents on the Consolidated Statements of Cash Flows | 539,191 | 603,972 |
Broad Arrow Group Acquisition | ||
NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Acquisitions | 73,253 | 0 |
Other Acquisitions | ||
NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Acquisitions | $ 8,273 | $ 3,774 |
Summary of Significant Accounti
Summary of Significant Accounting Policies and New Accounting Standards | 12 Months Ended |
Dec. 31, 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 — In these notes to the Consolidated Financial Statements, "we," "our," "us," "Hagerty," "HGTY," and the "Company" refer to Hagerty, Inc., formerly known as Aldel Financial Inc. ("Aldel"), and its consolidated subsidiaries including The Hagerty Group, LLC ("The Hagerty Group"), unless the context requires otherwise. Hagerty is a global market leader in providing insurance for classic cars and enthusiast vehicles. In addition, Hagerty provides an automotive enthusiast platform that engages, entertains and connects with its insurance policyholders and Hagerty Drivers Club (" HDC") paid subscribers ("Members") and other car enthusiasts. 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 and collector motor vehicle 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 through 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 and collector 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 Hagerty's 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 23 — Related-Party Transactions for additional information. • The business produced by Hagerty's 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 and collector auto risks produced by Hagerty's U.K. MGA. In connection with this 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 23 — Related-Party Transactions for additional information. The Company earns subscription revenue through HDC membership offerings. HDC memberships are sold as a bundled product which give Members access to our products and services, including Hagerty Drivers Club Magazine, automotive enthusiast events, our proprietary vehicle valuation tool, emergency roadside services and special vehicle-related discounts. Marketplace offers services for buying and selling collector vehicles through classified listings, auctions and private sales, and also provides asset-based financing. The Company also owns and operates collector vehicle events, including The Amelia and Greenwich Concours d'Elegance, earning revenue through ticket sales and sponsorships. Lastly, the Company operates Hagerty Garage + Social, a network of world-class vehicle storage and exclusive social club facilities for classic, collector and exotic car owners. In January 2022, the Company entered into a joint venture with Broad Arrow Group, Inc. and its consolidated subsidiaries ("Broad Arrow"), pursuant to which Hagerty invested $15.3 million in exchange for equity ownership of approximately 40% of Broad Arrow. Then, in August 2022, the Company acquired the remaining 60% equity interest in Broad Arrow in exchange for approximately $73.3 million of equity consideration consisting of Class A Common Stock and limited liability units in The Hagerty Group ("Hagerty Group Units"). As a result of this acquisition, the Company and Broad Arrow expect to further leverage their respective product offerings and continue to build Marketplace. Refer to Note 9 — Acquisitions and Investments for additional information. The Company’s headquarters are located in Traverse City, Michigan. Basis of Presentation — The Company's Consolidated Financial Statements are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and pursuant to the rules and regulations of the Securities and Exchange Commission 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 periods presented. Principles of Consolidation — The Company's Consolidated Financial Statements contain the accounts of Hagerty and its majority-owned or controlled subsidiaries. The Company had economic ownership of 24.5% and 24.7% of The Hagerty Group as of December 31, 2022 and 2021, respectively. 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 Consolidated Statements of Operations, Consolidated Statements of Comprehensive Income (Loss), Consolidated Balance Sheets and the Consolidated Statements of Changes in Members' and Stockholders' Equity. From January 2022 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. Refer to Note 9 — Acquisitions and Investments for additional information. All 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, and Aldel Merger Sub LLC (" Merger Sub") , a Delaware limited liability company and wholly owned subsidiary of Aldel (the "Business Combination") . I n 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 id entified 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 by 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 8 — 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 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 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). Foreign currency transaction gains and losses are recognized within "Interest and other income (expense)" in the Consolidated Statements of Operations. Cash and Cash Equivalents and Restricted Cash and Cash Equivalents — Cash includes amounts held in banks in operating accounts and money market funds. The Company considers money market funds with maturities within 90 days of the purchase date to be equivalent to cash. At December 31, 2022 and 2021, the Company’s cash accounts exceeded federally insured limits. The Company maintains cash collected by its MGAs for premiums from insured parties that have not yet been remitted to insurance companies. These funds are required to be held in trust and segregated from operating cash. These funds and a corresponding liability are included within "Restricted cash and cash equivalents" and "Due to insurers", respectively, on the Consolidated Balance Sheets. The Company has also established a trust account for the benefit of the ceding insurer as security for Hagerty Re's obligations for losses, loss expenses, unearned premium and profit-sharing commissions. The use of this fund is restricted to the payment of these amounts and is included within "Restricted cash and cash equivalents" on the Consolidated Balance Sheets. Accounts Receivable — Accounts receivable are recorded, and revenue is recognized, at the latter of the billed or policy effective date, net of estimated cancellations. Ceded Reinsurance Premiums — Ceded reinsurance premiums are recognized pro-rata over the term of the reinsurance treaties and are recorded as a reduction of "Earned premium" in the Consolidated Statements of Operations. The portion of the reinsurance premium related to the unexpired portions of the treaties at the end of the reporting period is reflected within "Prepaid expenses and other current assets" on the Consolidated Balance Sheets. Prepaid Expenses and Other Assets — Prepaid expenses and other assets consist primarily of prepaid sales and general and administrative services expenses, prepaid Software-as-a-Service ("SaaS") implementation costs and fixed income investments. • Prepaid expenses are recorded at cost and amortized over the service term. • SaaS implementation costs are recorded as incurred in prepaid expenses. The Company expenses the costs incurred during the preliminary project stage and, upon management approval, capitalizes the direct implementation costs once the development phase begins. The Company monitors implementation on an ongoing basis and capitalizes the costs of any major improvements or new functionality. Once the software is fully implemented, the ongoing maintenance costs are expensed. • Fixed income investments consist of Canadian provincial and municipal bonds which qualify as debt securities under ASC Topic 320 Investments – Debt Securities . Fixed income investments are classified as held-to-maturity, as the Company has the intent and ability to hold these investments to maturity, and as a result are carried at amortized cost on the Consolidated Balance Sheets. Amortized cost is the amount at which an investment is acquired, adjusted for applicable accrued interest and accretion of discount or amortization of premium. Premium or discount is amortized on a straight-line basis to maturity. Pricing information for each fixed income security is obtained from our outside investment manager. The Company ultimately determines whether the inputs and the resulting market values are reasonable. Market pricing is based on fair value level 2 guidance using observable inputs such as quoted prices for similar assets at the measurement date. Refer to Note 15 — Fair Value Measurements for additional information. Notes Receivable — Notes receivable, net of an allowance for loan losses, includes amounts due on term loans secured by collateral consisting of collector cars. Any potential allowance for loan losses is estimated based upon 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 typically have an initial maturity of up to two years with an option to renew for one year increments, and accrue interest based on the stated rate in the loan agreement. The valuation of collector vehicles is inherently subjective, and the realizable value of collector cars often fluctuates over time. Refer to Note 5 — Notes Receivable for additional information. Deferred Acquisition Costs — Deferred acquisition costs are comprised of ceding commission and premium taxes that relate directly to the successful acquisition of new or renewal policy premiums by Hagerty Re. Acquisition costs are deferred and recognized in income over the period of the exposure in the underlying insurance treaties. The Company evaluates the recoverability of deferred acquisition costs by determining if the sum of future-earned premiums is greater than the expected future claims and expenses. Anticipated investment income is also a factor in this determination. If a loss is probable on the unexpired portion of policies in force, a premium deficiency reserve is recognized. At December 31, 2022 and 2021, the deferred acquisition costs were considered fully recoverable and no premium deficiency reserve was recorded. Property and Equipment — Property and equipment are recorded at cost and depreciated over the estimated useful life of each asset. Leasehold improvements are amortized over the shorter of either the lease term or the estimated useful lives of the improvements. Useful lives for financial reporting range from three Leases — The Company evaluates its contracts to determine whether such contracts contain a lease at inception. A contract contains a lease if the contract conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. At commencement, contracts containing a lease are further evaluated for classification as an operating lease or finance lease. Operating lease right-of-use ("ROU") assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term, discounted using the Company's incremental borrowing rate. The Company estimates the incremental borrowing rate based on qualitative factors including company specific credit rating, lease term, impact of collateral, general economics and the interest rate environment. Operating lease liabilities represent the present value of lease payments not yet paid. Operating lease ROU assets are based upon the operating lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives, and impairment of operating lease assets. The Company made a policy election not to recognize ROU assets and lease liabilities for short-term leases for all asset classes. The Company has real estate lease agreements that contain lease and non-lease components, which are accounted for as a single lease component. The Company’s leases often contain fixed rent escalations over the lease term. The Company recognizes expense for these leases on a straight-line basis over the lease term. The Company also has lease agreements that are subject to annual changes in the Consumer Price Index ("CPI"). While lease liabilities are not remeasured as a result of changes to the CPI, changes to the CPI are treated as variable lease payments and recognized in the period in which the obligation for those payments has incurred. The Company’s lease agreements may contain variable costs such as common area maintenance, operating expenses, real estate taxes or other costs. Variable lease costs are expensed as incurred within "General and administrative services" in the Consolidated Statements of Operations. The Company’s lease agreements generally do not contain any residual value guarantees or restrictive covenants. The Company has the option to extend most of its lease agreements, with renewals ranging from one The Company’s primary operating leases consist of office space and Hagerty Garage + Social locations. The Company’s leases have remaining terms of one Intangible Assets — Intangible assets are recorded at cost and amortized over the estimated useful life of each intangible asset. Acquired intangible assets are initially valued at fair value using generally accepted valuation methods appropriate for the type of intangible assets. Intangible assets primarily consist of insurance policy renewal rights, internally developed software, trade names, non-compete agreements and customer relationships. Amortization is recorded using the straight-line method over their estimated useful lives as it approximates the pattern over which economic benefits are realized. Insurance policy renewal rights, internally developed software, trade names, non-complete agreements and customer relationships are amortized over 3 to 25 years. For internally developed software, the Company expenses the costs incurred during the preliminary project stage and capitalizes the direct development costs (including the associated payroll and related costs for employees working on development and outside contractor costs) once management approval is obtained. Refer to Note 10 — Goodwill and Intangible Assets for additional information. Impairment of Long-Lived Assets — The Company reviews all long-lived assets that have finite lives for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable in accordance with ASC Topic 360, Impairment and Disposal of Long-Lived Assets ("ASC 360"). If it is determined the carrying amount of the asset is not recoverable, the Company recognizes an impairment loss as an operating expense in the current period in the Consolidated Statements of Operations. Determination of the recoverability of long-lived assets is based on an estimate of the undiscounted cash flows resulting from the use of the assets and its eventual disposition. If the carrying value of the long-lived asset is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as necessary. For the Company's operating leases, the circumstances that might lead to an impairment of the associated ROU assets and leasehold improvements may include situations when the space is sublet or available for sublease and we do not expect to fully recover the costs of the lease. During the year ended December 31, 2022, the Company recognized an impairment charge of $4.7 million related to operating lease ROU assets, which was recorded within "Restructuring, impairment and related charges, net" in the Consolidated Statements of Operations. Refer to Note 14 — Restructuring, Impairment and Related Charges for additional information. During the year ended December 31, 2021, the Company did not identify any impairment indicators. Goodwill — Goodwill represents the excess of the cost of a business combination, as defined in ASC 805, over the fair value of net assets acquired, including identifiable intangible assets. Goodwill is tested for impairment at the reporting unit level annually as of October 1, and whenever indicators of impairment exist. The Company evaluates for the potential impairment of goodwill by assessing qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Qualitative factors include industry and market considerations, overall financial performance, and other relevant events and circumstances affecting the reporting unit. If after performing the qualitative assessment, the Company determines it is more likely than not that the fair value of the reporting unit is less than its carrying amount, the Company performs a quantitative fair value test. The primary valuation method used in the quantitative impairment assessment to determine the fair value of the reporting unit has been a discounted cash flow model. The Company primarily uses a discounted cash flow model to determine the fair value of its reporting units, but other valuation methods or comparable transactions may be used when appropriate and applicable to determine the fair value of a reporting unit. The Company did not recognize any goodwill impairments during the years ended December 31, 2022 and 2021. Losses Payable — Losses payable represents the amount of losses paid and billed by the primary carrier that have not been paid by Hagerty Re as of the balance sheet date. Provision for Unpaid Losses and Loss Adjustment Expenses — The provision for unpaid losses and loss adjustment expenses is the difference between the estimated cost of losses incurred and the amount of paid losses as of the reporting date. This reserve reflects management’s best estimate of losses related to both reported claims and IBNR claims. The reserve also includes estimates of all expenses associated with processing and settling reported and unreported claims. Given the inherent complexity and uncertainty regarding the estimate of our ultimate cost of settling claims, reserves are reviewed quarterly and periodically throughout the year by comparing historical results and current results to calculate new development factors. In estimating loss and loss adjustment expense reserves, our actuarial reserving group considers claim cycle time, claims settlement practices, adequacy of case reserves over time and current economic conditions. Because actual experience can differ from key assumptions used in estimating reserves, there may be significant variation in the development of these reserves and the actual losses and loss adjustment expenses ultimately paid in the future. These adjustments to the loss and loss adjustment expense reserves and related reinsurance recoverables are recognized in the Consolidated Statements of Operations in the period in which the change occurs. The amount of any reinsurance recoverable is determined by applying contract language specific to the Company’s third-party reinsurance program to losses and loss expenses arising from claims occurring as a result of a qualifying event. Reinsurance recoverables are recorded within "Prepaid expenses and other current assets" on the Consolidated Balance Sheets. Due to Insurers — Due to insurers represents the net amount of premium due to carriers based on the respective contract with each carrier. The net amount due is equal to the gross written premium less the Company’s commission for policies that have reached their effective date. Advanced Premiums — Advanced premiums represent the gross written premium received from insurance Members prior to the effective date of the policy. At the effective date of the policy, advanced premiums are reclassified to "Due to insurers" and commission revenue is recognized in the Consolidated Statements of Operations. Accrued Expenses — Accrued expenses consist primarily of amounts owed for wages, payroll taxes, incentive compensation, benefits, professional services and future installments for purchase consideration resulting from asset acquisitions and business combinations. 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, are recorded at fair value as a liability. The fair value of this liability is subject to remeasurement each reporting period and the Company utilizes a Monte Carlo simulation model to value the warrants. The change in the fair value of the warrants is recognized within "Change in fair value of warrant liabilities" in the Consolidated Statements of Operations each reporting period. Refer to Note 20 — Warrant Liabilities for additional information. Derivative Instruments — The Company enters into certain derivative financial instruments, when available on a cost-effective basis, to mitigate its risk associated with changes in interest rates. The Company accounts for derivatives in accordance with ASC 815, which establishes accounting and reporting standards requiring that all derivative instruments (including certain derivative instruments embedded in other contracts), whether designated as hedging relationships or not, be recorded on the Consolidated Balance Sheets as either an asset or liability measured at fair value. If a derivative is designated as a cash flow hedge for accounting purposes, the effective portion of the change in the fair value of the derivative is recorded in "Other comprehensive income (loss)". If a derivative is not designated as an accounting hedge for accounting purposes, the change in fair value is recognized within "Interest and other income (expense)" in the Consolidated Statements of Operations each reporting period. All derivative instruments are managed on a consolidated basis to efficiently minimize exposures. Gains and losses related to the derivative instruments are expected to be largely offset by gains and losses on the underlying asset or liability. The Company does not use derivative financial instruments for speculative purposes. The Company is exposed to credit loss in the event of nonperformance by the counterparties on derivative contracts. It is the Company’s policy to manage its credit risk on these transactions by dealing only with financial institutions having a long-term credit rating of "A" or better. 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 . Acquisitions — The Company accounts for acquisitions of entities or asset groups that qualify as businesses using the acquisition method of accounting in accordance with ASC 805. Purchase consideration is allocated to the tangible and intangible assets acquired and liabilities assumed based on the estimated fair values as of the acquisition date, which are measured in accordance with the principles outlined in ASC Topic 820, Fair Value Measurement ("ASC 820"). The determination of fair value requires management to make estimates about discount rates, future expected cash flows, market conditions and other future events that are highly subjective in nature. The excess of the total purchase consideration over the fair value of the identified net assets acquired is recognized as goodwill. The results of the acquired businesses are included in the results of operations beginning from the date of acquisition. Acquisition-related costs are expensed as incurred. Revenue Recognition — The Company recognizes revenue under both ASC Topic 606, Revenue from Contracts with Customers ("ASC 606") and ASC Topic 944, Financial Services — Insurance ("ASC 944"). Commission and fee revenue Hagerty earns commissions from its insurance carrier partners for new and renewal policies, as well as fees paid by the carriers’ insureds for the binding of insurance coverage. The Company has identified the insurance carrier as its customer and determined that the transaction price is the estimated commissions to be received over the term of the policy. The transaction is determined based on an estimate of premiums placed, net of a constraint for policy changes and cancellations. These commissions and fees, including those paid via installment plan, are earned when the policy becomes effective, as all rights are passed to the insured and the obligation to pay a claim resides with the carrier. Under the terms of many of its contracts with insurance carrier partners, the Company has the opportunity to earn an annual contingent underwriting commission ("CUC"), or profit share, based on the calendar-year performance of the insurance book of business with each of those insurance carrier partners. The Company’s CUC agreements are based on written or earned premium and loss ratio results. Each insurance carrier partner contract and related CUC is calculated independently. The CUCs represent a form of variable consideration associated with the placement of coverage, for which the Company earns commissions and fees. Under ASC 606, the Company must estimate the amount of consideration that it will become entitled to receive during the calendar year such that a significant reversal of revenue is not probable. As such, CUCs are recognized as a contract asset within "Commission receivable" on the Consolidated Balance Sheets in the period that the policy is issued using the applicable premium and payout factors based on the estimated loss ratio from the contract. Revenue from CUCs is recognized throughout the year and settled annually. Earned premium Reinsurance premium revenue is earned by Hagerty Re under ASC 944, and represents the earned portion of gross written premiums that Hagerty Re has assumed under quota share reinsurance agreements with our insurance carrier partners. Earned premium is recognized over the term of the policy, which is generally 12 months, with the unearned portion recorded as "Unearned premiums" on the Consolidated Balance Sheets. Membership, marketplace and other revenue The Company earns subscription revenue through membership offerings. HDC memberships are sold as a bundled product which give Members access to its products and services, including Hagerty Drivers Club Magazine, automotive enthusiast events, the Company's proprietary vehicle valuation tool, emerg |
Revenue
Revenue | 12 Months Ended |
Dec. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | 2 — Revenue Disaggregation of Revenue — The following table presents Hagerty's revenue by distribution channel offering, as well as a reconciliation to total revenue for the years ended December 31, 2022 and 2021: Agent Direct Total in thousands Year Ended December 31, 2022 Commission and fee revenue $ 133,584 $ 113,864 $ 247,448 Contingent commission 32,899 26,891 59,790 Membership revenue — 45,234 45,234 Marketplace and other revenue — 32,055 32,055 Total revenue from customer contracts $ 166,483 $ 218,044 $ 384,527 Earned premium recognized under ASC 944 403,061 Total revenue $ 787,588 Year Ended December 31, 2021 Commission and fee revenue $ 115,310 $ 98,926 $ 214,236 Contingent commission 29,552 27,783 57,335 Membership revenue — 40,605 40,605 Marketplace and other revenue — 11,079 11,079 Total revenue from customer contracts $ 144,862 $ 178,393 $ 323,255 Earned premium recognized under ASC 944 295,824 Total revenue $ 619,079 The following table presents Hagerty's revenue disaggregated by geographic area, as well as a reconciliation to total revenue for the years ended December 31, 2022 and 2021: U.S. Canada Europe Total in thousands Year Ended December 31, 2022 Commission and fee revenue $ 224,255 $ 19,142 $ 4,051 $ 247,448 Contingent commission 59,664 — 126 59,790 Membership revenue 41,893 3,341 — 45,234 Marketplace and other revenue 29,920 767 1,368 32,055 Total revenue from customer contracts $ 355,732 $ 23,250 $ 5,545 $ 384,527 Earned premium recognized under ASC 944 403,061 Total revenue $ 787,588 Year Ended December 31, 2021 Commission and fee revenue $ 193,520 $ 16,782 $ 3,934 $ 214,236 Contingent commission 57,424 (383) 294 57,335 Membership revenue 37,688 2,917 — 40,605 Marketplace and other revenue 9,448 301 1,330 11,079 Total revenue from customer contracts $ 298,080 $ 19,617 $ 5,558 $ 323,255 Earned premium recognized under ASC 944 295,824 Total revenue $ 619,079 Earned Premium — The following table presents Hagerty Re's total premiums assumed and the change in unearned premiums for the years ended December 31, 2022 and 2021: Year Ended December 31, 2022 2021 in thousands Underwriting income: Premiums assumed $ 474,293 $ 353,925 Reinsurance premiums ceded (10,749) (7,920) Net premiums assumed 463,544 346,005 Change in unearned premiums (60,263) (50,491) Change in deferred reinsurance premiums (220) 310 Net premiums earned $ 403,061 $ 295,824 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 Consolidated Balance Sheets. 2022 2021 in thousands Contract assets $ 60,151 $ 57,596 Contract liabilities $ 44,426 $ 41,390 Contract assets consist of 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. For the year ended December 31, 2022, the increase in contract assets was primarily due to $59.8 million of CUC that was recognized but not received, offset by $57.2 million of CUC that had been included in the year ended December 31, 2021 contract assets and subsequently received in the current year. Contract liabilities consist of cash collected in advance of revenue recognition, which primarily includes HDC membership. In addition, the Company entered into an agreement with State Farm Mutual Automobile Insurance Company ("State Farm") in 2020 and received an advanced commission payment to offset costs of system development (refer to Note 17 — Related-Party Transactions for additional information). For the year ended December 31, 2022, the increase in contract liabilities was due to $60.2 million of advanced consideration received for which revenue was not recognized in the period, primarily related to HDC memberships, partially offset by $57.2 million of revenue recognized during the period that had been included in the year ended December 31, 2021 contract liabilities balance. |
Deferred Acquisition Costs
Deferred Acquisition Costs | 12 Months Ended |
Dec. 31, 2022 | |
Deferred Policy Acquisition Costs Disclosures [Abstract] | |
Deferred Acquisition Costs | 3 — Deferred Acquisition Costs The following table presents a reconciliation of the changes in deferred acquisition costs for the periods specified below: 2022 2021 in thousands Deferred acquisition costs as of January 1, $ 81,535 $ 58,572 Acquisition costs deferred 216,957 163,946 Amortization charged to income (191,150) (140,983) Deferred acquisition costs as of December 31, $ 107,342 $ 81,535 |
Prepaid Expenses and Other Asse
Prepaid Expenses and Other Assets | 12 Months Ended |
Dec. 31, 2022 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Prepaid Expenses and Other Assets | 4 — Prepaid Expenses and Other Assets Prepaid expenses and other assets, current and long-term, consist of: December 31, 2022 2021 in thousands Prepaid sales, general and administrative expenses $ 24,234 $ 18,004 Prepaid SaaS implementation costs 18,501 16,318 Fixed income investments 12,986 10,785 Contract costs 6,576 4,160 Media content 5,580 3,335 Other (1) 14,856 8,118 Prepaid expenses and other assets $ 82,733 $ 60,720 (1) As of December 31, 2022, other assets primarily includes $4.0 million of other investments, $3.3 million of fair value of interest rate swap, $2.5 million of collector vehicle investments, $1.4 million of deferred financing costs related to our Credit Facility and $1.4 million related the Company's outstanding reinsurance recoverable. |
Notes Receivable
Notes Receivable | 12 Months Ended |
Dec. 31, 2022 | |
Receivables [Abstract] | |
Notes Receivable | 5 — Notes Receivable In January 2022, the Company entered into a joint venture with Broad Arrow, pursuant to which Hagerty acquired an approximately 40% equity ownership in Broad Arrow. Then in August 2022, the Company acquired the remaining 60% equity interest in Broad Arrow. Refer to Note 9 — Acquisitions and Investments for additional information. Broad Arrow Capital ("BAC"), a subsidiary of Broad Arrow, makes term loans to high-net-worth individuals and businesses secured by collector cars. Term loans typically have an initial maturity of up to two years, often with an option to renew for one year increments, and carry a fixed or variable rate of interest. The carrying value of the loan portfolio approximates its fair value due to the typical short-term maturity and market rate of interest associated with most loans. The Company 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 LTV ratio is reassessed on a quarterly basis or more frequently if there is a material change in the circumstances related to the loan, the value of the collateral, the disposal plans for the collateral, or if an event of default occurs. The Company believes the LTV ratio is the critical credit quality indicator for the secured loans made by BAC. In estimating the realizable value of a collector car pledged as collateral for a loan, the Company relies on management's expertise in the collector car market and considers an array of factors impacting the current and expected future value of the car including the 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. All loans are secured by the underlying collateral. As of December 31, 2022, the Company's net notes receivable balance was $37.4 million, of which $25.5 million was classified within current assets and $11.9 million was classified within long-term assets on the 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. The table below provides the aggregate LTV ratio for the Company's loan portfolio as of December 31, 2022: December 31, 2022 in thousands Secured loans $ 37,427 Estimate of collateral value $ 75,802 Aggregate LTV ratio 49.4 % The Company 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 December 31, 2022 . A loan is considered to be impaired if management determines 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 December 31, 2022, there were no impaired loans outstanding. Allowance for Loan Losses The Company and management do not believe there is a material risk of loan loss based on the aggregate LTV ratio of 49.4% and, to a lesser extent, its understanding of the creditworthiness of the borrowers. Therefore, as of December 31, 2022, there is no allowance for loan losses recorded. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | 6 — Property and Equipment The following table summarizes the carrying value of the Company's property and equipment. December 31, 2022 2021 in thousands Land and land improvements $ 930 $ 930 Buildings 1,200 1,748 Leasehold improvements 9,299 10,309 Furniture and equipment 13,194 15,121 Computer equipment and software 21,698 20,405 Automobiles 791 738 Total property and equipment $ 47,112 $ 49,251 Less: accumulated depreciation (21,856) (20,888) Property and equipment, net $ 25,256 $ 28,363 Property and equipment depreciation expense was $6.6 million and $6.4 million for the years ended December 31, 2022 and 2021, respectively. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
Leases | 7 — Leases The following table summarizes the components of the Company's operating lease expense: Year Ended December 31, 2022 in thousands Operating lease expense (1) $ 10,737 Short-term lease expense (1) 187 Variable lease expense (1) (3) 3,943 Sublease revenue (2) (156) Lease cost, net $ 14,711 (1) Classified within "General and administrative services" on the Consolidated Statements of Operations. (2) Classified within "Membership, marketplace and other revenue" on the Consolidated Statements of Operations. (3) Amounts include payments for maintenance, taxes, insurance and payments affected by the CPI. Supplemental balance sheet information related to operating leases is as follows: December 31, 2022 in thousands Operating lease ROU assets $ 82,398 Other current liabilities 7,556 Operating lease liabilities 80,772 Total operating lease liabilities $ 88,328 Other Supplemental Information ROU assets obtained in exchange for new operating lease liabilities (in thousands) (1) $ 82,398 Gains (losses) on sales and leaseback transactions, net (in thousands) $ 4,314 Weighted-average lease term 10.23 Weighted-average discount rate 5.5 % (1) Includes the transition adjustment of $72.8 million for operating lease ROU assets recorded as of January 1, 2022, upon adoption ASC 842. The following table summarizes information about the amount and timing of our future operating lease commitments as of December 31, 2022: in thousands 2023 $ 12,129 2024 12,206 2025 11,765 2026 11,176 2027 10,984 Thereafter 58,530 Total lease payments 116,790 Less: imputed interest (28,462) Total lease liabilities $ 88,328 The following table summarizes future minimum rental payments due under our operating leases in accordance with Topic 840 as of December 31, 2021: in thousands 2022 $ 9,068 2023 8,783 2024 8,587 2025 8,451 2026 7,936 Thereafter 53,940 Total $ 96,765 Total rent expense for the year ended December 31, 2021 was $7.4 million. During the year ended December 31, 2022, the Company recognized an impairment charge of $4.7 million related to operating lease ROU assets, which was recorded within "Restructuring, impairment and related charges, net" in the Consolidated Statements of Operations. Refer to Note 14 — Restructuring, Impairment and Related Charges for additional information. |
Business Combination
Business Combination | 12 Months Ended |
Dec. 31, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Business Combination | 8 — 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 20 — 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 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 22 — 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 cash 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 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 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 Marketplace. Fair Value of Consideration Transferred The Broad Arrow Acquisition is being accounted for as a business combination achieved in stages (i.e., a 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, which was derived from the Hagerty, Inc. stock price of $13.47 as of the close date and thus represents a Level 1 fair value measurement. As a result of the remeasurement, the Company recorded a net gain of approximately $34.7 million within the Consolidated Statements of Operations for the year ended December 31, 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 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. The carrying value of the acquired loans approximate their fair value due to the typical short-term maturity and market rate of interest associated with most loans. Refer to Note 5 — Notes Receivable for additional information with respect to the Notes receivable acquired. (2) The fair value of identifiable intangible assets is a Level 3 fair value 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 consists of 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 non-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 Marketplace through Broad Arrow's various service offerings, including buying, selling and financing of collector cars through classified listings, auctions and facilitating private sales, as well as the assembled workforce and various other factors. The Company recognized $0.9 million of acquisition related expenses associated with the Broad Arrow Acquisition in its Consolidated Statements of Operations for the year ended December 31, 2022. The acquisition of Broad Arrow was not material to the Company's 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 Consolidated Financial Statements since the acquisition date. The Company's Consolidated Statements of Operations include total revenue and income before taxes of approximately $10.8 million and $0.9 million, respectively, 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 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 Marketplace business to establish relationships with their dealer partners and facilitate growth in 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 years ended December 31, 2022 and 2021, the Company completed various acquisitions, which had an aggregate purchase price of $7.0 million and $15.4 million, respectively. These acquisitions resulted in cash disbursements of $6.1 million during the year ended December 31, 2022, net of cash acquired. |
Acquisitions and Investments
Acquisitions and Investments | 12 Months Ended |
Dec. 31, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisitions and Investments | 8 — 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 20 — 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 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 22 — 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 cash 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 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 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 Marketplace. Fair Value of Consideration Transferred The Broad Arrow Acquisition is being accounted for as a business combination achieved in stages (i.e., a 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, which was derived from the Hagerty, Inc. stock price of $13.47 as of the close date and thus represents a Level 1 fair value measurement. As a result of the remeasurement, the Company recorded a net gain of approximately $34.7 million within the Consolidated Statements of Operations for the year ended December 31, 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 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. The carrying value of the acquired loans approximate their fair value due to the typical short-term maturity and market rate of interest associated with most loans. Refer to Note 5 — Notes Receivable for additional information with respect to the Notes receivable acquired. (2) The fair value of identifiable intangible assets is a Level 3 fair value 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 consists of 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 non-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 Marketplace through Broad Arrow's various service offerings, including buying, selling and financing of collector cars through classified listings, auctions and facilitating private sales, as well as the assembled workforce and various other factors. The Company recognized $0.9 million of acquisition related expenses associated with the Broad Arrow Acquisition in its Consolidated Statements of Operations for the year ended December 31, 2022. The acquisition of Broad Arrow was not material to the Company's 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 Consolidated Financial Statements since the acquisition date. The Company's Consolidated Statements of Operations include total revenue and income before taxes of approximately $10.8 million and $0.9 million, respectively, 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 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 Marketplace business to establish relationships with their dealer partners and facilitate growth in 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 years ended December 31, 2022 and 2021, the Company completed various acquisitions, which had an aggregate purchase price of $7.0 million and $15.4 million, respectively. These acquisitions resulted in cash disbursements of $6.1 million during the year ended December 31, 2022, net of cash acquired. |
Acquisitions and Investments | 9 — 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 cash 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 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 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 Marketplace. Fair Value of Consideration Transferred The Broad Arrow Acquisition is being accounted for as a business combination achieved in stages (i.e., a 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, which was derived from the Hagerty, Inc. stock price of $13.47 as of the close date and thus represents a Level 1 fair value measurement. As a result of the remeasurement, the Company recorded a net gain of approximately $34.7 million within the Consolidated Statements of Operations for the year ended December 31, 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 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. The carrying value of the acquired loans approximate their fair value due to the typical short-term maturity and market rate of interest associated with most loans. Refer to Note 5 — Notes Receivable for additional information with respect to the Notes receivable acquired. (2) The fair value of identifiable intangible assets is a Level 3 fair value 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 consists of 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 non-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 Marketplace through Broad Arrow's various service offerings, including buying, selling and financing of collector cars through classified listings, auctions and facilitating private sales, as well as the assembled workforce and various other factors. The Company recognized $0.9 million of acquisition related expenses associated with the Broad Arrow Acquisition in its Consolidated Statements of Operations for the year ended December 31, 2022. The acquisition of Broad Arrow was not material to the Company's 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 Consolidated Financial Statements since the acquisition date. The Company's Consolidated Statements of Operations include total revenue and income before taxes of approximately $10.8 million and $0.9 million, respectively, 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 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 Marketplace business to establish relationships with their dealer partners and facilitate growth in 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 years ended December 31, 2022 and 2021, the Company completed various acquisitions, which had an aggregate purchase price of $7.0 million and $15.4 million, respectively. These acquisitions resulted in cash disbursements of $6.1 million during the year ended December 31, 2022, net of cash acquired. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | 10 — 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 acquisition (1) 103,553 6,743 Goodwill as of December 31, $ 115,041 $ 11,488 (1) Goodwill resulting from acquisitions for the year ended December 31, 2022 includes $98.6 million related to the Broad Arrow Acquisition. Refer to Note 9 — Acquisitions and Investments for additional information. Intangible Assets The cost and accumulated amortization of intangible assets as of December 31, 2022 and 2021 are as follows: Weighted Average Useful Life December 31, 2022 2021 in thousands Insurance policy renewal rights 9.9 $ 17,282 $ 17,557 Internally developed software 3.1 109,764 76,865 Trade names and trademarks 14.0 12,541 5,004 Relationships and customer lists 15.4 13,890 5,652 Other 4.4 1,434 1,464 Intangible assets 154,911 106,542 Less: accumulated amortization (50,887) (30,371) Intangible assets, net $ 104,024 $ 76,171 Intangible asset amortization expense was $21.8 million and $12.8 million for the years ended December 31, 2022 and 2021 respectively. The estimated future aggregate amortization expense as of December 31, 2022 is as follows (in thousands): 2023 $ 29,663 2024 26,714 2025 17,746 2026 8,671 2027 3,742 Thereafter 17,488 Total $ 104,024 |
Provision for Unpaid Losses and
Provision for Unpaid Losses and Loss Adjustment Expenses | 12 Months Ended |
Dec. 31, 2022 | |
Insurance [Abstract] | |
Provision for Unpaid Losses and Loss Adjustment Expenses | 11 — Provision for Unpaid Losses and Loss Adjustment Expenses The following table presents the provision for unpaid losses and loss adjustment expenses at December 31, 2022 and 2021: Year Ended December 31, 2022 2021 in thousands Outstanding losses reported $ 65,981 $ 38,207 IBNR 44,917 36,662 Net reserves for unpaid losses and loss adjustment expenses $ 110,898 $ 74,869 Reinsurance recoverables 843 — Gross reserves for unpaid losses and loss adjustment expenses $ 111,741 $ 74,869 The following table presents a reconciliation of beginning and ending provision for unpaid losses and loss adjustment expenses, net of amounts recoverable from reinsurers: Year Ended December 31, 2022 2021 in thousands Gross unpaid losses and loss adjustment expenses, beginning of year $ 74,869 $ 54,988 Less: Reinsurance recoverable — — Net unpaid losses and loss adjustment expenses, beginning of the year $ 74,869 $ 54,988 Incurred losses and loss adjustment expenses: Current accident year $ 186,478 $ 132,481 Prior accident year (1) (4,076) (10,401) Total incurred losses and loss adjustment expenses $ 182,402 $ 122,080 Payments: Current accident year $ 109,555 $ 76,559 Prior accident year 36,803 25,656 Total payments $ 146,358 $ 102,215 Effect of foreign currency rate changes (15) 16 Net reserves for losses and loss adjustment expenses, end of year $ 110,898 $ 74,869 Reinsurance recoverables 843 — Gross reserves for losses and loss adjustment expenses, end of year $ 111,741 $ 74,869 (1) In both years presented, prior accident year development reflects lower than originally estimated incurred claims related to frequency and severity in accident years 2017 to 2021. 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. Hurricane Ian was a significant catastrophic event that occurred during the third quarter of 2022 generating losses to Hagerty Re of $15.3 million. Our catastrophe reinsurance program provided recovery of $5.3 million in losses in excess of our $10.0 million retention. As of December 31, 2022, the Company had outstanding reinsurance recoverables of $1.4 million, all related to Hurricane Ian. The Company incurred a reinstatement premium of $0.7 million in connection with our catastrophe reinsurance treaty following the Hurricane Ian claim. 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. In determining management’s best estimate of the reserves for losses and loss adjustment expenses as of December 31, 2022 and 2021, consideration was given both to the actuarial point estimate and a number of other internal and external factors, including: • the uncertainty around inflationary costs, both economic and social inflation; • estimates of expected losses through the use of historical loss data; • the changing mix of business due to large growth in modern collectible cars which carry a different risk profile than the risks associated with classic cars; • legislative and judicial changes in the jurisdictions in which the company writes insurance, and • management's industry experience. The following factors are relevant to the additional information included in the tables following: • Table organization : The tables are organized by accident year and include policies written on an occurrence basis. • Groupings : Reserves for losses and loss adjustment expenses are grouped by line of business. The Company believes that losses included in each line of business have homogenous risk characteristics with similar development patterns and would generally be subject to similar trends. • Claim counts : The Company considers a reported claim to be one claim for each claimant for each loss occurrence. • Limitations: There are limitations that should be considered on the reported claim count data in the tables below, including: claim counts are presented only on a reported (not an ultimate) basis. The following table presents a summary of total gross reserves for losses and loss adjustment expenses by line of business for the periods specified below: December 31, 2022 2021 in thousands Auto $ 111,575 $ 74,573 Marine 166 296 Total gross reserves for losses and loss adjustment expenses $ 111,741 $ 74,869 The following tables present incurred losses and loss adjustment expenses, by accident year, undiscounted and net of reinsurance recoveries. a) Auto (dollars in thousands) Reserves for Losses and Loss Adjustment Expenses Incurred But Not Reported Cumulative Number of Reported Claims Reporting Years Ended December 31, Accident Year 2017* 2018* 2019* 2020* 2021* 2022 As of December 31, 2022 2017 $ 18,594 $ 18,594 $ 18,594 $ 18,594 $ 18,409 $ 18,284 $ 44 11,031 2018 40,422 40,287 40,287 37,516 37,491 3 20,641 2019 63,642 63,642 59,660 59,660 631 23,780 2020 90,110 86,608 85,111 2,833 27,092 2021 131,643 129,259 9,215 35,116 2022 186,073 32,056 36,604 Total $ 515,878 $ 44,782 154,264 Cumulative paid losses and loss adjustment expenses from the table below (405,131) — Reserves for losses and loss adjustment expenses before 2017, net of reinsurance — — Effect of foreign currency rate changes (15) (15) Reserves for losses and loss adjustment expenses, undiscounted and net of reinsurance $ 110,732 $ 44,767 Cumulative paid losses and loss adjustment expenses by accident year (in thousands): As of December 31, Accident Year 2017* 2018* 2019* 2020* 2021* 2022 2017 $ 11,410 $ 16,655 $ 17,442 $ 17,530 $ 17,897 $ 18,122 2018 23,915 34,992 35,899 36,414 36,807 2019 37,910 51,491 55,617 57,393 2020 53,167 73,402 78,079 2021 75,933 105,475 2022 109,255 Total $ 405,131 * Unaudited required supplemental information. b) Marine: (dollars in thousands) Reserves Cumulative Reporting Years Ended December 31, Accident Year 2017* 2018* 2019* 2020* 2021* 2022 As of December 31, 2022 2017 $ 198 $ 198 $ 198 $ 198 $ 183 $ 183 $ — 124 2018 437 437 437 489 514 — 189 2019 893 893 835 835 — 192 2020 915 975 1,002 16 205 2021 854 757 44 210 2022 405 90 114 Total $ 3,696 $ 150 1,034 Cumulative paid losses and loss adjustment expenses from the table below (3,530) — Reserves for losses and loss adjustment expenses before the 2017 accident year — — Reserves for losses and loss adjustment expenses, undiscounted and net of reinsurance $ 166 $ 150 Cumulative paid losses and loss adjustment expenses by accident year (in thousands): Accident Year 2017* 2018* 2019* 2020* 2021* 2022 2017 $ 138 $ 183 $ 183 182 $ 182 $ 183 2018 332 426 425 431 514 2019 514 828 835 835 2020 568 967 985 2021 625 713 2022 300 Total $ 3,530 * Unaudited required supplemental information. The following table presents supplementary information about average historical claims duration as of December 31, 2022 based on the cumulative incurred and paid losses and allocated loss adjustment expenses presented above. Average Annual Percentage of Payout of Incurred Claims by Age (in Years), Net of Reinsurance unaudited Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Auto 62.4 % 21.0 % 8.8 % 3.6 % 1.6 % 1.4 % Marine 77.9 % 21.4 % 0.9 % (0.3) % — % — % 13 — Statutory Capital and Surplus Dividend Restrictions — Under Bermuda law, Hagerty Re is prohibited from declaring or making payment of a dividend if it fails to meet its minimum solvency margin or minimum liquidity ratio. Prior approval from the Bermuda Monetary Authority ("BMA") is also required if Hagerty Re's proposed dividend payments would exceed 25% of its prior year-end total statutory capital and surplus. The amount of dividends which could be paid in 2023 without prior approval is $32.9 million. Capital Restrictions — In Bermuda, Hagerty Re is subject to the Bermuda Solvency Capital Requirement ("BSCR") administered by the BMA. No regulatory action is taken if an insurer’s capital and surplus is equal to or in excess of its enhanced capital requirement determined by the BSCR model. In addition, the BMA has established a target capital level for each insurer, which is 120% of the enhanced capital requirement. Hagerty Re maintained sufficient statutory capital and surplus to comply with regulatory requirements as of December 31, 2022. Statutory Financial Information — Hagerty Re prepares its statutory financial statements in conformity with the accounting principles set forth in Bermuda in The Insurance Act 1978, amendments thereto and related regulations. As of December 31, 2022 and 2021, the general business statutory capital and surplus of the Company was $131.7 million and $107.3 million, respectively, and the general business statutory net income of Hagerty Re was $24.4 million and $25.2 million for the years ended December 31, 2022 and 2021, respectively. |
Reinsurance
Reinsurance | 12 Months Ended |
Dec. 31, 2022 | |
Insurance [Abstract] | |
Reinsurance | 12 — Reinsurance Hagerty Re purchases catastrophe reinsurance to protect held capital from large catastrophic events and to provide earnings protection and stability. As of December 31, 2022, Hagerty Re's program provides $100.0 million of excess of loss coverage per event retention of $10.0 million. The top layer ($10.0 million excess of $90.0 million) can also be used to provide $10.0 million of aggregate catastrophe protection attaching after $12.5 million of annual catastrophe loss. The Company retains 25% of the liability of this top and aggregate cover. It is the Company’s intention to renew the program annually after adjusting for portfolio growth. Hagerty Re renegotiated its catastrophe reinsurance coverage effective January 1, 2023. The 2023 program splits catastrophe exposure between accounts with total insured values ("TIV") up to $5.0 million, which are afforded $105.0 million of coverage excess of a per event retention of $25.0 million in two layers; $25.0 million excess of $25.0 million and $55.0 million excess of $50.0 million. Accounts with TIV of $5.0 million and above will be covered by a separate catastrophe program which provides $30.0 million excess of per event retention of $9.0 million in one layer; $21.0 million excess of $9.0 million. Reinsurance contracts do not relieve Hagerty Re from its primary liability to the ceding carriers according to the terms of its reinsurance treaties. Failure of reinsurers to honor their obligations could result in additional losses to Hagerty Re. Hagerty Re evaluates the financial condition of its reinsurers and monitors concentration of credit risk arising from its exposure to individual reinsurers. All of Hagerty Re's reinsurers have an A.M. Best rating of A- (excellent) or better, or fully collateralize their maximum obligation under the treaty. |
Statutory Capital and Surplus
Statutory Capital and Surplus | 12 Months Ended |
Dec. 31, 2022 | |
Insurance [Abstract] | |
Statutory Capital and Surplus | 11 — Provision for Unpaid Losses and Loss Adjustment Expenses The following table presents the provision for unpaid losses and loss adjustment expenses at December 31, 2022 and 2021: Year Ended December 31, 2022 2021 in thousands Outstanding losses reported $ 65,981 $ 38,207 IBNR 44,917 36,662 Net reserves for unpaid losses and loss adjustment expenses $ 110,898 $ 74,869 Reinsurance recoverables 843 — Gross reserves for unpaid losses and loss adjustment expenses $ 111,741 $ 74,869 The following table presents a reconciliation of beginning and ending provision for unpaid losses and loss adjustment expenses, net of amounts recoverable from reinsurers: Year Ended December 31, 2022 2021 in thousands Gross unpaid losses and loss adjustment expenses, beginning of year $ 74,869 $ 54,988 Less: Reinsurance recoverable — — Net unpaid losses and loss adjustment expenses, beginning of the year $ 74,869 $ 54,988 Incurred losses and loss adjustment expenses: Current accident year $ 186,478 $ 132,481 Prior accident year (1) (4,076) (10,401) Total incurred losses and loss adjustment expenses $ 182,402 $ 122,080 Payments: Current accident year $ 109,555 $ 76,559 Prior accident year 36,803 25,656 Total payments $ 146,358 $ 102,215 Effect of foreign currency rate changes (15) 16 Net reserves for losses and loss adjustment expenses, end of year $ 110,898 $ 74,869 Reinsurance recoverables 843 — Gross reserves for losses and loss adjustment expenses, end of year $ 111,741 $ 74,869 (1) In both years presented, prior accident year development reflects lower than originally estimated incurred claims related to frequency and severity in accident years 2017 to 2021. 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. Hurricane Ian was a significant catastrophic event that occurred during the third quarter of 2022 generating losses to Hagerty Re of $15.3 million. Our catastrophe reinsurance program provided recovery of $5.3 million in losses in excess of our $10.0 million retention. As of December 31, 2022, the Company had outstanding reinsurance recoverables of $1.4 million, all related to Hurricane Ian. The Company incurred a reinstatement premium of $0.7 million in connection with our catastrophe reinsurance treaty following the Hurricane Ian claim. 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. In determining management’s best estimate of the reserves for losses and loss adjustment expenses as of December 31, 2022 and 2021, consideration was given both to the actuarial point estimate and a number of other internal and external factors, including: • the uncertainty around inflationary costs, both economic and social inflation; • estimates of expected losses through the use of historical loss data; • the changing mix of business due to large growth in modern collectible cars which carry a different risk profile than the risks associated with classic cars; • legislative and judicial changes in the jurisdictions in which the company writes insurance, and • management's industry experience. The following factors are relevant to the additional information included in the tables following: • Table organization : The tables are organized by accident year and include policies written on an occurrence basis. • Groupings : Reserves for losses and loss adjustment expenses are grouped by line of business. The Company believes that losses included in each line of business have homogenous risk characteristics with similar development patterns and would generally be subject to similar trends. • Claim counts : The Company considers a reported claim to be one claim for each claimant for each loss occurrence. • Limitations: There are limitations that should be considered on the reported claim count data in the tables below, including: claim counts are presented only on a reported (not an ultimate) basis. The following table presents a summary of total gross reserves for losses and loss adjustment expenses by line of business for the periods specified below: December 31, 2022 2021 in thousands Auto $ 111,575 $ 74,573 Marine 166 296 Total gross reserves for losses and loss adjustment expenses $ 111,741 $ 74,869 The following tables present incurred losses and loss adjustment expenses, by accident year, undiscounted and net of reinsurance recoveries. a) Auto (dollars in thousands) Reserves for Losses and Loss Adjustment Expenses Incurred But Not Reported Cumulative Number of Reported Claims Reporting Years Ended December 31, Accident Year 2017* 2018* 2019* 2020* 2021* 2022 As of December 31, 2022 2017 $ 18,594 $ 18,594 $ 18,594 $ 18,594 $ 18,409 $ 18,284 $ 44 11,031 2018 40,422 40,287 40,287 37,516 37,491 3 20,641 2019 63,642 63,642 59,660 59,660 631 23,780 2020 90,110 86,608 85,111 2,833 27,092 2021 131,643 129,259 9,215 35,116 2022 186,073 32,056 36,604 Total $ 515,878 $ 44,782 154,264 Cumulative paid losses and loss adjustment expenses from the table below (405,131) — Reserves for losses and loss adjustment expenses before 2017, net of reinsurance — — Effect of foreign currency rate changes (15) (15) Reserves for losses and loss adjustment expenses, undiscounted and net of reinsurance $ 110,732 $ 44,767 Cumulative paid losses and loss adjustment expenses by accident year (in thousands): As of December 31, Accident Year 2017* 2018* 2019* 2020* 2021* 2022 2017 $ 11,410 $ 16,655 $ 17,442 $ 17,530 $ 17,897 $ 18,122 2018 23,915 34,992 35,899 36,414 36,807 2019 37,910 51,491 55,617 57,393 2020 53,167 73,402 78,079 2021 75,933 105,475 2022 109,255 Total $ 405,131 * Unaudited required supplemental information. b) Marine: (dollars in thousands) Reserves Cumulative Reporting Years Ended December 31, Accident Year 2017* 2018* 2019* 2020* 2021* 2022 As of December 31, 2022 2017 $ 198 $ 198 $ 198 $ 198 $ 183 $ 183 $ — 124 2018 437 437 437 489 514 — 189 2019 893 893 835 835 — 192 2020 915 975 1,002 16 205 2021 854 757 44 210 2022 405 90 114 Total $ 3,696 $ 150 1,034 Cumulative paid losses and loss adjustment expenses from the table below (3,530) — Reserves for losses and loss adjustment expenses before the 2017 accident year — — Reserves for losses and loss adjustment expenses, undiscounted and net of reinsurance $ 166 $ 150 Cumulative paid losses and loss adjustment expenses by accident year (in thousands): Accident Year 2017* 2018* 2019* 2020* 2021* 2022 2017 $ 138 $ 183 $ 183 182 $ 182 $ 183 2018 332 426 425 431 514 2019 514 828 835 835 2020 568 967 985 2021 625 713 2022 300 Total $ 3,530 * Unaudited required supplemental information. The following table presents supplementary information about average historical claims duration as of December 31, 2022 based on the cumulative incurred and paid losses and allocated loss adjustment expenses presented above. Average Annual Percentage of Payout of Incurred Claims by Age (in Years), Net of Reinsurance unaudited Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Auto 62.4 % 21.0 % 8.8 % 3.6 % 1.6 % 1.4 % Marine 77.9 % 21.4 % 0.9 % (0.3) % — % — % 13 — Statutory Capital and Surplus Dividend Restrictions — Under Bermuda law, Hagerty Re is prohibited from declaring or making payment of a dividend if it fails to meet its minimum solvency margin or minimum liquidity ratio. Prior approval from the Bermuda Monetary Authority ("BMA") is also required if Hagerty Re's proposed dividend payments would exceed 25% of its prior year-end total statutory capital and surplus. The amount of dividends which could be paid in 2023 without prior approval is $32.9 million. Capital Restrictions — In Bermuda, Hagerty Re is subject to the Bermuda Solvency Capital Requirement ("BSCR") administered by the BMA. No regulatory action is taken if an insurer’s capital and surplus is equal to or in excess of its enhanced capital requirement determined by the BSCR model. In addition, the BMA has established a target capital level for each insurer, which is 120% of the enhanced capital requirement. Hagerty Re maintained sufficient statutory capital and surplus to comply with regulatory requirements as of December 31, 2022. Statutory Financial Information — Hagerty Re prepares its statutory financial statements in conformity with the accounting principles set forth in Bermuda in The Insurance Act 1978, amendments thereto and related regulations. As of December 31, 2022 and 2021, the general business statutory capital and surplus of the Company was $131.7 million and $107.3 million, respectively, and the general business statutory net income of Hagerty Re was $24.4 million and $25.2 million for the years ended December 31, 2022 and 2021, respectively. |
Restructuring, Impairment and R
Restructuring, Impairment and Related Charges | 12 Months Ended |
Dec. 31, 2022 | |
Restructuring and Related Activities [Abstract] | |
Restructuring, Impairment and Related Charges | 14 — Restructuring, Impairment and Related Charges In 2022, management approved an initiative to increase operational efficiencies and flexibility by transitioning to a "remote first" work model for employees. This initiative primarily included the rationalization of the Company's office space throughout the U.S., Canada and the U.K. and, as a result, during the year ended December 31, 2022, the Company recognized an impairment charge of $4.7 million related to operating lease ROU assets, as well as a loss on disposal of assets of $1.5 million related to leasehold improvements associated with the impaired leases, all of which was recorded within "Restructuring, impairment and related charges, net" in the Consolidated Statements of Operations. This initiative was substantially complete in 2022. Additionally, in the fourth quarter of 2022, the Board approved a voluntary retirement program ("VRP") as well as a reduction in force ("RIF"). The Company recorded restructuring charges related to the VRP and RIF of $12.2 million during the year ended December 31, 2022, of which $4.2 million was related to the VRP and $8.0 million was related to the RIF and all of which was recorded within "Restructuring, impairment and related charges, net" in the Consolidated Statements of Operations. The following is a reconciliation of the restructuring liability which is included within "Accrued expenses and other current liabilities" on the Consolidated Balance Sheets. These costs are expected to be settled in the first quarter of 2023. in thousands Balance at December 31, 2021 $ — Costs incurred and charged to expense 18,324 Costs paid or otherwise settled (8,854) Balance at December 31, 2022 $ 9,470 |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 15 — Fair Value Measurements Hagerty measures and discloses fair values in accordance with the provisions of ASC 820. The Company’s 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 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 17 — 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 20 — Warrant Liabilities for additional information. The following table summarizes the significant inputs in the valuation model as of December 31, 2022: Inputs Private Placement Warrants Underwriter Warrants OTM Warrants PIPE Warrants Exercise price $11.50 $11.50 $15.00 $11.50 Common stock price $8.41 $8.41 $8.41 $8.41 Volatility 47.7% 47.7% 45.0% 47.7% Expected term of the warrants 3.92 3.92 8.93 3.92 Risk-free rate 4.10% 4.10% 3.90% 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 December 31, 2022 and 2021, is shown in the table below: Fair Value Measurements Total Level 1 Level 2 Level 3 in thousands December 31, 2022 Financial Assets Interest rate swaps $ 3,294 $ — $ 3,294 $ — Total $ 3,294 $ — $ 3,294 $ — Financial Liabilities Public warrants $ 12,880 $ 12,880 $ — $ — Private placement warrants 673 — — 673 Underwriter warrants 75 — — 75 OTM warrants 4,706 — — 4,706 PIPE warrants 27,227 — — 27,227 Total $ 45,561 $ 12,880 $ — $ 32,681 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 years ended December 31, 2022 and 2021: Private Placement Warrants Underwriter Warrants OTM Warrants PIPE Warrants Total in thousands Balance at December 31, 2020 $ — $ — $ — $ — $ — Issuance of warrant liabilities 460 51 2,899 31,800 35,210 Change in fair value of warrant liabilities 788 88 3,950 24,087 28,913 Balance at December 31, 2021 1,248 139 6,849 55,887 64,123 Change in fair value of warrant liabilities (575) (64) (2,143) (26,754) (29,536) Exercise of warrants — — — (1,906) (1,906) Balance at December 31, 2022 $ 673 $ 75 $ 4,706 $ 27,227 $ 32,681 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 within Hagerty Re's as of December 31, 2022 and 2021: Carrying Amount Estimated Fair Value in thousands December 31, 2022 Fixed income securities, short-term $ 6,296 $ 6,205 Fixed income securities, long-term 6,690 6,316 Total $ 12,986 $ 12,521 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 December 31, 2022 or 2021. The Company did not record any gains or losses on these securities during the years ended December 31, 2022 or 2021. |
Debt
Debt | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Debt | 16 — Debt As of the indicated dates, the principal amount of Hagerty's debt consisted of the following: December 31, 2022 2021 in thousands Credit Facility $ 105,000 $ 135,500 Notes payable 3,280 1,000 Total debt outstanding $ 108,280 $ 136,500 Less: current portion — (1,000) Total long-term debt outstanding $ 108,280 $ 135,500 Credit Facility — In September 2022 and December 2022, The Hagerty Group entered into the Fourth and Fifth Amendment to Amended and Restated Credit Agreement ("Credit Agreement"), respectively, 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 amendments primarily included definition updates, accommodating draws in the British Pound ("GBP") and the Euro ("EUR"), 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 of up to $25.0 million and borrowings in GBP and EUR of up to $25.0 million in the aggregate. The current term of the Credit Agreement expires 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 6.57% and 1.61% as of December 31, 2022 and 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 December 31, 2022, the Company was in compliance with the financial covenants under the Credit Agreement. Notes Payable In October and November 2022, the Company entered into notes payable agreements in the U.K., which are used to fund notes receivable within our Marketplace financing operations and are secured by the underlying vehicles. As of December 31, 2022, the outstanding balance on the notes payable was $3.3 million. The notes payable accrue interest at fixed rates ranging from 7.0% to 8.5% and are due in 2024. The Company had a $2.0 million note payable related to a business combination for the future 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 due. |
Interest Rate Swaps
Interest Rate Swaps | 12 Months Ended |
Dec. 31, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Interest Rate Swaps | 17 — 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 Consolidated Statements of Operations. As of December 31, 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 Consolidated Balance Sheets and the change in fair value is recorded within "Derivative instruments" in the Consolidated Statements of Comprehensive Income (Loss). 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 | 12 Months Ended |
Dec. 31, 2022 | |
Equity [Abstract] | |
Members' and Stockholders' Equity | 18 — 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 December 31, 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 December 31, 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 December 31, 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 8 — 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 December 31, 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. As of December 31, 2022, Class V Common Stock and associated Hagerty Group Units held by the Legacy Unit Holders are exchangeable on a one-for-one basis for shares of Class A Common Stock. At the end of each reporting period, The Hagerty Group equity attributable to Hagerty, Inc. and other unit holders is reallocated to reflect their current ownership in 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 the 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 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 | 18 — 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 December 31, 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 December 31, 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 December 31, 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 8 — 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 December 31, 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. As of December 31, 2022, Class V Common Stock and associated Hagerty Group Units held by the Legacy Unit Holders are exchangeable on a one-for-one basis for shares of Class A Common Stock. At the end of each reporting period, The Hagerty Group equity attributable to Hagerty, Inc. and other unit holders is reallocated to reflect their current ownership in 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 the 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 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 (Loss) Per Share
Earnings (Loss) Per Share | 12 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) Per Share | 19 — Earnings (Loss) Per Share The following table sets forth the calculation of Basic EPS and Diluted EPS for the years ended December 31, 2022 and 2021. Basic EPS is computed using Net income (loss) attributable to controlling interest, divided by the weighted average number of shares of Class A Common Stock outstanding during the period. Diluted EPS is computed using Net income (loss) attributable to controlling interest divided by the weighted average number of shares of Class A Common Stock outstanding during the period, adjusted to give effect to potentially dilutive securities. The Company's potentially dilutive securities consist of (1) unexercised warrants and unissued stock-based restricted stock units, performance restricted stock units and employee stock purchase plan shares, all using the Treasury Stock Method and (2) non-controlling interest Hagerty Group Units using the "If-converted" Method. In the computation of Diluted EPS, Net income (loss) attributable to controlling interest is adjusted to remove the change in fair value associated with the Company's warrant liabilities that are potentially dilutive and net income (loss) associated with non-controlling interest in Hagerty Group Units. Year Ended December 31, 2022 2021 in thousands (except per share amounts) Numerator: Net income (loss) attributable to controlling interest $ 32,078 $ (46,358) Adjustments: Change in fair value of potentially dilutive warrant liabilities (27,392) — Net income (loss) attributable to non-controlling interest Hagerty Group Units (28,642) — Adjusted net income (loss) attributable to Class A Common Stock shareholders $ (23,956) $ (46,358) Denominator: Weighted average shares of Class A Common Stock outstanding — basic 82,728 82,327 Adjustments: Conversion of non-controlling interest Hagerty Group Units to shares of Class A Common Stock 252,806 — Warrants 613 — Stock-based compensation awards — — Weighted average shares of Class A Common Stock outstanding — diluted 336,147 82,327 Earnings (loss) per share attributable to Class A Common Stock shareholders Basic $ 0.39 $ (0.56) Diluted $ (0.07) $ (0.56) |
Warrant Liabilities
Warrant Liabilities | 12 Months Ended |
Dec. 31, 2022 | |
Other Liabilities Disclosure [Abstract] | |
Warrant Liabilities | 20 — 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, 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 is exercisable for one share of the Company's Class A Common Stock at a price of $11.50 per share, subject to adjustments, subject to additional vesting requirements as outlined within the warrant agreements covering those securities , 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, 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. 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 is exercisable for one share of the Company's Class A Common Stock at a price of $15.00 per share, subject to adjustments and additional vesting requirements as outlined within the warrant agreements covering those securities, 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. 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, 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. 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 Consolidated Statements of Operations. The Company recognized a $41.9 million gain and a $42.5 million loss as a result of a decrease and increase in the fair value of the warrant liability for the year ended December 31, 2022 and 2021, respectively. For the year ended December 31, 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 Consolidated Balance Sheets. There were no warrants exercised during the year ended December 31, 2021. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation | 21 — 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 options generally vest over a two five Stock-based compensation expense is recognized within "Salaries and benefits", "General and administrative services" and "Restructuring, impairment and related charges, net" in the Consolidated Statements of Operations. The Company accounts for forfeitures as they occur. The following table summarizes stock-based compensation expense recognized during the year ended December 31, 2022. As the first stock-based compensation grant occurred in the second quarter of 2022, there was no stock-based compensation expense during the year ended December 31, 2021. Year Ended December 31, 2022 in thousands Restricted stock units $ 9,814 Performance restricted stock units 2,146 Employee stock purchase plan 169 Total stock-based compensation expense $ 12,129 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 year ended December 31, 2022, with a weighted average fair value of $10.76. Unrecognized compensation expense related to restricted stock units as of December 31, 2022 was $24.9 million, which the Company expects to recognize over a weighted average period of 3.47 years. The following table provides a summary of the restricted stock unit activity during the year ended December 31, 2022: Restricted Stock Units Weighted Average Fair Value Unvested balance as of December 31, 2021 — $ — Granted 3,340,547 10.76 Vested (37,071) 10.79 Forfeited (108,438) 10.79 Unvested balance as of December 31, 2022 3,195,038 $ 10.76 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: Performance Restricted Stock Units Weighted average grant-date fair value per share $5.19 Expected stock volatility 35% Expected term (in years) 7.0 Risk-free interest rate 2.5% Dividend yield —% The following table provides information about performance restricted stock units outstanding during the year ended December 31, 2022: Performance Restricted Stock Units Weighted Average Fair Value Outstanding as of December 31, 2021 — $ — Granted 3,707,136 5.19 Outstanding as of December 31, 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 administers 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 last six months, beginning on April 3 and October 3 each year, and the initial offering period began 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 December 31, 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 | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Taxation | 22 — Taxation United States — The Hagerty Group is taxed as a pass-through ownership structure under provisions of the IRC and a similar section of state income tax law except for 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 the Hagerty Group Unit Holders, including the Company. The Company is taxed as a corporation under the IRC and pays corporate, federal, state and local taxes with respect to income allocated from The Hagerty Group. The Company has a TRA with the Legacy Unit Holders that requires the Company to pay 85% of the tax savings that are realized as a result of increases in the tax basis in The Hagerty Group’s assets as a result of an exchange of Hagerty Group Units and Class V Common Stock for Class A Common Stock or cash. Canada — Canadian entities are taxed as non-resident corporations and subject to income tax in Canada under provisions of the Canadian Revenue Agency. United Kingdom — U.K. entities are taxed as corporations and subject to income tax in the U.K. under provisions of HM Revenue & Customs. Bermuda — Hagerty Re has received an undertaking from the Bermuda government exempting it from all local income, withholding and capital gains taxes until March 31, 2035. At present time no such taxes are levied in Bermuda. Hagerty Re made an irrevocable election under Section 953(d) of the U.S. IRC, as amended, to be taxed as a U.S. domestic corporation. As a result of this "domestic election", Hagerty Re is subject to U.S. taxation on its worl d-wide income as if it were a U.S. corporation. In accordance with an agreement between Hagerty Re and the Internal Revenue Service ("IRS"), Hagerty Re established an irrevocable letter of credit with the IRS in 2021. Income (loss) before income tax expense includes the following components: Year Ended December 31, 2022 2021 in thousands United States $ 24,778 $ (44,434) Foreign (13,682) (10,169) Total $ 11,096 $ (54,603) Total income tax expense (benefit) attributable to income (loss) for the years ended December 31, 2022 and 2021 consists of the following components: Year Ended December 31, 2022 2021 in thousands Current: Federal $ 4,041 $ 3,753 State 3 — Foreign — (40) $ 4,044 $ 3,713 Deferred: Federal $ 2,999 $ 3,038 State (26) — Foreign — — 2,973 3,038 Total $ 7,017 $ 6,751 Income tax expense (benefit) 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: Year Ended December 31, 2022 2021 in thousands (except percentages) Income tax (benefit) expense at statutory rate $ 2,330 21 % $ (11,467) 21 % State taxes (479) (4) % (163) 0 % Loss not subject to entity-level taxes 8,727 79 % 6,485 (12) % Foreign rate differential (375) (3) % (276) 1 % Change in valuation allowance 5,647 51 % 2,759 (5) % Change in fair value of warrant liability (8,799) (79) % 8,933 (16) % Permanent items 852 8 % 477 (1) % Other, net (886) (8) % 3 0 % Income tax expense (benefit) $ 7,017 65 % $ 6,751 (12) % Deferred tax assets and liabilities reflect temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount recognized for tax purposes, as adjusted for foreign currency translation. At December 31, 2022 and 2021, the tax effects of temporary differences that give rise to significant portions of the deferred tax provision are as follows: December 31, 2022 2021 in thousands Deferred tax assets Discount on provision for losses and loss adjustment expenses $ 802 $ 557 Unearned premiums 9,886 7,345 Accrued professional fees — 5 Unrealized foreign currency gain 229 70 Excess tax basis 159,337 168,014 Net operating loss ("NOL") and other carryforwards 17,197 6,492 Other 457 315 Gross deferred tax asset 187,908 182,798 Less: valuation allowance (176,116) (174,821) Total net deferred tax assets $ 11,792 $ 7,977 Deferred tax liabilities Deferred acquisition costs $ (22,542) $ (17,122) Excise tax accrual (1,068) (1,279) Unrealized foreign currency gain (229) (70) Unrealized investment gain (37) (16) Intangible assets (759) — Other (7) — Total deferred tax liabilities $ (24,642) $ (18,487) Net deferred tax liability $ (12,850) $ (10,510) 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. As a result, the Company had provided a valuation allowance of $176.1 million and $174.8 million as of December 31, 2022 and 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 25.6%. 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 Consolidated Balance Sheets. The estimated value of the TRA recorded by the Company at December 31, 2022 was $3.2 million, a decrease of $0.3 million in value from the Closing, which was recorded in "Interest and other income (expense)" within the Consolidated Statements of Operations. The Company recorded a deferred tax asset for the difference between outside tax basis and book basis of the Company’s investment in assets of The Hagerty Group of $167.4 million at the Closing with an offsetting valuation allowance as it was more likely than not that the deferred tax asset will not be realized. These amounts were recorded to "Additional paid-in capital". At December 31, 2022, the deferred tax asset and offsetting valuation allowance is $159.3 million, adjusted from the Closing for net losses and nondeductible expenses. The Company has income tax NOL carryforwards related to U.S. and foreign operations of approximately $93.5 million and $47.0 million as of December 31, 2022 and 2021, respectively. The Company has recorded a deferred tax asset of $17.2 million reflecting the benefit of these loss carryforwards as of December 31, 2022. Of the deferred tax assets, $10.4 million does not expire, and the remaining $6.8 million expires as follows: in thousands 2036 $ 396 2037 710 2038 848 2039 — 2040 1,153 2041 1,427 2042 $ 2,238 The Company is subject to taxation and files income tax returns in the U.S. federal jurisdiction, as well as many state and foreign jurisdictions. As of December 31, 2022, tax years 2019, 2020 and 2021 are subject to examination by the tax authorities. With few exceptions, as of December 31, 2022, the Company is no longer subject to U.S. federal, state, local or foreign examinations for years before 2019. The Canadian statute of limitation for tax year 2018 was open as of December 31, 2022 and remains open because the Company is currently under examination by the Canadian Revenue Agency for that year. The calculation of our tax liabilities involves uncertainties in the application of complex tax laws and regulations in a multitude of jurisdictions across our global operations. ASC 740 states that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits. The Comapny records uncertain tax benefits ("UTB") as liabilities in accordance with ASC 740 and adjusts these liabilities when management's conclusion changes as a result of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the current estimate of the UTB liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which new information is available. As of December 31, 2022 and 2021, the Company did not have any unrecognized tax benefits and had no material accrued interest or penalties related to uncertain tax positions. If recorded, interest and penalties would be recorded within "Income tax benefit (expense)" in the Consolidated Statements of Operations. In August 2022, the Inflation Reduction Act ("IRA") was enacted into law. Among the provisions in the IRA was a 15% corporate minimum tax effective for years beginning after December 31, 2022, and a 1% tax on share repurchases after December 31, 2022. The Company does not expect the tax provisions of the IRA to have a material impact on its results. |
Related-Party Transactions
Related-Party Transactions | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions [Abstract] | |
Related-Party Transactions | 23 — Related-Party Transactions As of December 31, 2022, Markel had a 23.0% ownership in The Hagerty Group and 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 State Farm agents, will have access to Hagerty features and services which is expected to begin in the second 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 beginning with the ability to issue policies. 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. Additionally, we have the opportunity to offer HDC membership to State Farm Classic+ customers which provides Hagerty an additional revenue opportunity. 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 due to insurer liabilities and commission revenue under the agreement with Markel subsidiaries: December 31, 2022 2021 in thousands (except percentages) Due to insurer $ 64,873 $ 54,850 Percent of total 95 % 95 % Year Ended December 31, 2022 2021 Commission revenue $ 285,254 $ 239,432 Percent of total 95 % 90 % Reinsurance Agreement Under a quota share agreement with Evanston, Hagerty Re reinsured 70% and 60% of the risks for the years ended December 31, 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 years ended December 31, 2022 and 2021, respectively, written through the Company’s U.K. MGA. All balances listed below are related to business with a Markel affiliate: December 31, 2022 2021 Assets: in thousands Premiums receivable $ 97,897 $ 72,697 Deferred acquisition costs, net 103,869 78,449 Total assets $ 201,766 $ 151,146 Liabilities: Losses payable $ 53,800 $ 33,459 Provision for unpaid losses and loss adjustment expenses 106,436 70,680 Unearned premiums 227,192 167,541 Commissions payable 75,898 59,511 Total liabilities $ 463,326 $ 331,191 Year Ended December 31, 2022 2021 Revenue: in thousands Earned premium $ 386,696 $ 281,794 Expenses: Ceding commission $ 184,124 $ 134,946 Losses and loss adjustment expenses 182,340 116,396 Total expenses $ 366,464 $ 251,342 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 Marketplace, who received Hagerty Group Units as a part of this transaction. Refer to Note 9 — Acquisitions and Investments for additional information. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 24 — 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 Consolidated Balance Sheets. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | 25 — Subsequent Events Management has evaluated subsequent events through March 14, 2023, which is the date these Consolidated Financial Statements were issued and no subsequent events were identified that required adjustment to or disclosure in the Consolidated Financial Statements. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies and New Accounting Standards (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation — The Company's Consolidated Financial Statements are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and pursuant to the rules and regulations of the Securities and Exchange Commission 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 periods presented. |
Principles of Consolidation | Principles of Consolidation — The Company's Consolidated Financial Statements contain the accounts of Hagerty and its majority-owned or controlled subsidiaries. The Company had economic ownership of 24.5% and 24.7% of The Hagerty Group as of December 31, 2022 and 2021, respectively. 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 Consolidated Statements of Operations, Consolidated Statements of Comprehensive Income (Loss), Consolidated Balance Sheets and the Consolidated Statements of Changes in Members' and Stockholders' Equity. From January 2022 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. Refer to Note 9 — Acquisitions and Investments for additional information. |
Business Combination | Business Combination — On December 2, 2021 (the "Closing"), The Hagerty Group completed a business combination with Aldel, and Aldel Merger Sub LLC (" Merger Sub") , a Delaware limited liability company and wholly owned subsidiary of Aldel (the "Business Combination") . I n 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 id entified 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 by 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 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 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). Foreign currency transaction gains and losses are recognized within "Interest and other income (expense)" in the Consolidated Statements of Operations. |
Cash and Cash Equivalents | Cash and Cash Equivalents and Restricted Cash and Cash Equivalents — Cash includes amounts held in banks in operating accounts and money market funds. The Company considers money market funds with maturities within 90 days of the purchase date to be equivalent to cash. At December 31, 2022 and 2021, the Company’s cash accounts exceeded federally insured limits. The Company maintains cash collected by its MGAs for premiums from insured parties that have not yet been remitted to insurance companies. These funds are required to be held in trust and segregated from operating cash. These funds and a corresponding liability are included within "Restricted cash and cash equivalents" and "Due to insurers", respectively, on the Consolidated Balance Sheets. The Company has also established a trust account for the benefit of the ceding insurer as security for Hagerty Re's obligations for losses, loss expenses, unearned premium and profit-sharing commissions. The use of this fund is restricted to the payment of these amounts and is included within "Restricted cash and cash equivalents" on the Consolidated Balance Sheets. |
Restricted Cash and Cash Equivalents | Cash and Cash Equivalents and Restricted Cash and Cash Equivalents — Cash includes amounts held in banks in operating accounts and money market funds. The Company considers money market funds with maturities within 90 days of the purchase date to be equivalent to cash. At December 31, 2022 and 2021, the Company’s cash accounts exceeded federally insured limits. The Company maintains cash collected by its MGAs for premiums from insured parties that have not yet been remitted to insurance companies. These funds are required to be held in trust and segregated from operating cash. These funds and a corresponding liability are included within "Restricted cash and cash equivalents" and "Due to insurers", respectively, on the Consolidated Balance Sheets. The Company has also established a trust account for the benefit of the ceding insurer as security for Hagerty Re's obligations for losses, loss expenses, unearned premium and profit-sharing commissions. The use of this fund is restricted to the payment of these amounts and is included within "Restricted cash and cash equivalents" on the Consolidated Balance Sheets. |
Accounts Receivable | Accounts Receivable — Accounts receivable are recorded, and revenue is recognized, at the latter of the billed or policy effective date, net of estimated cancellations. |
Reinsurance Premiums Ceded, Losses Payable, Due to Insurers and Advanced Premiums | Ceded Reinsurance Premiums — Ceded reinsurance premiums are recognized pro-rata over the term of the reinsurance treaties and are recorded as a reduction of "Earned premium" in the Consolidated Statements of Operations. The portion of the reinsurance premium related to the unexpired portions of the treaties at the end of the reporting period is reflected within "Prepaid expenses and other current assets" on the Consolidated Balance Sheets. Losses Payable — Losses payable represents the amount of losses paid and billed by the primary carrier that have not been paid by Hagerty Re as of the balance sheet date. Due to Insurers — Due to insurers represents the net amount of premium due to carriers based on the respective contract with each carrier. The net amount due is equal to the gross written premium less the Company’s commission for policies that have reached their effective date. Advanced Premiums — Advanced premiums represent the gross written premium received from insurance Members prior to the effective date of the policy. At the effective date of the policy, advanced premiums are reclassified to "Due to insurers" and commission revenue is recognized in the Consolidated Statements of Operations. |
Prepaid Expenses and Other Assets | Prepaid Expenses and Other Assets — Prepaid expenses and other assets consist primarily of prepaid sales and general and administrative services expenses, prepaid Software-as-a-Service ("SaaS") implementation costs and fixed income investments. • Prepaid expenses are recorded at cost and amortized over the service term. • SaaS implementation costs are recorded as incurred in prepaid expenses. The Company expenses the costs incurred during the preliminary project stage and, upon management approval, capitalizes the direct implementation costs once the development phase begins. The Company monitors implementation on an ongoing basis and capitalizes the costs of any major improvements or new functionality. Once the software is fully implemented, the ongoing maintenance costs are expensed. • Fixed income investments consist of Canadian provincial and municipal bonds which qualify as debt securities under ASC Topic 320 Investments – Debt Securities . Fixed income investments are classified as held-to-maturity, as the Company has the intent and ability to hold these investments to maturity, and as a result are carried at amortized cost on the Consolidated Balance Sheets. Amortized cost is the amount at which an investment is acquired, adjusted for applicable accrued interest and accretion of discount or amortization of premium. Premium or discount is amortized on a straight-line basis to maturity. Pricing information for each fixed income security is obtained from our outside investment manager. The Company ultimately determines whether the inputs and the resulting market values are reasonable. Market pricing is based on fair value level 2 guidance using observable inputs such as quoted prices for similar assets at the measurement date. Refer to Note 15 — Fair Value Measurements for additional information. |
Deferred Acquisition Costs | Deferred Acquisition Costs — Deferred acquisition costs are comprised of ceding commission and premium taxes that relate directly to the successful acquisition of new or renewal policy premiums by Hagerty Re. Acquisition costs are deferred and recognized in income over the period of the exposure in the underlying insurance treaties. The Company evaluates the recoverability of deferred acquisition costs by determining if the sum of future-earned premiums is greater than the expected future claims and expenses. Anticipated investment income is also a factor in this determination. If a loss is probable on the unexpired portion of policies in force, a premium deficiency reserve is recognized. At December 31, 2022 and 2021, the deferred acquisition costs were considered fully recoverable and no premium deficiency reserve was recorded. |
Property and Equipment | Property and Equipment — Property and equipment are recorded at cost and depreciated over the estimated useful life of each asset. Leasehold improvements are amortized over the shorter of either the lease term or the estimated useful lives of the improvements. Useful lives for financial reporting range from three |
Leases | Leases — The Company evaluates its contracts to determine whether such contracts contain a lease at inception. A contract contains a lease if the contract conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. At commencement, contracts containing a lease are further evaluated for classification as an operating lease or finance lease. Operating lease right-of-use ("ROU") assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term, discounted using the Company's incremental borrowing rate. The Company estimates the incremental borrowing rate based on qualitative factors including company specific credit rating, lease term, impact of collateral, general economics and the interest rate environment. Operating lease liabilities represent the present value of lease payments not yet paid. Operating lease ROU assets are based upon the operating lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives, and impairment of operating lease assets. The Company made a policy election not to recognize ROU assets and lease liabilities for short-term leases for all asset classes. The Company has real estate lease agreements that contain lease and non-lease components, which are accounted for as a single lease component. The Company’s leases often contain fixed rent escalations over the lease term. The Company recognizes expense for these leases on a straight-line basis over the lease term. The Company also has lease agreements that are subject to annual changes in the Consumer Price Index ("CPI"). While lease liabilities are not remeasured as a result of changes to the CPI, changes to the CPI are treated as variable lease payments and recognized in the period in which the obligation for those payments has incurred. The Company’s lease agreements may contain variable costs such as common area maintenance, operating expenses, real estate taxes or other costs. Variable lease costs are expensed as incurred within "General and administrative services" in the Consolidated Statements of Operations. The Company’s lease agreements generally do not contain any residual value guarantees or restrictive covenants. The Company has the option to extend most of its lease agreements, with renewals ranging from one The Company’s primary operating leases consist of office space and Hagerty Garage + Social locations. The Company’s leases have remaining terms of one |
Intangible Assets | Intangible Assets — Intangible assets are recorded at cost and amortized over the estimated useful life of each intangible asset. Acquired intangible assets are initially valued at fair value using generally accepted valuation methods appropriate for the type of intangible assets. Intangible assets primarily consist of insurance policy renewal rights, internally developed software, trade names, non-compete agreements and customer relationships. Amortization is recorded using the straight-line method over their estimated useful lives as it approximates the pattern over which economic benefits are realized. Insurance policy renewal rights, internally developed software, trade names, non-complete agreements and customer relationships are amortized over 3 to 25 years. For internally developed software, the Company expenses the costs incurred during the preliminary project stage and capitalizes the direct development costs (including the associated payroll and related costs for employees working on development and outside contractor costs) once management approval is obtained. Refer to Note 10 — Goodwill and Intangible Assets for additional information. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets — The Company reviews all long-lived assets that have finite lives for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable in accordance with ASC Topic 360, Impairment and Disposal of Long-Lived Assets ("ASC 360"). If it is determined the carrying amount of the asset is not recoverable, the Company recognizes an impairment loss as an operating expense in the current period in the Consolidated Statements of Operations. Determination of the recoverability of long-lived assets is based on an estimate of the undiscounted cash flows resulting from the use of the assets and its eventual disposition. If the carrying value of the long-lived asset is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as necessary. For the Company's operating leases, the circumstances that might lead to an impairment of the associated ROU assets and leasehold improvements may include situations when the space is sublet or available for sublease and we do not expect to fully recover the costs of the lease. During the year ended December 31, 2022, the Company recognized an impairment charge of $4.7 million related to operating lease ROU assets, which was recorded within "Restructuring, impairment and related charges, net" in the Consolidated Statements of Operations. Refer to Note 14 — Restructuring, Impairment and Related Charges for additional information. During the year ended December 31, 2021, the Company did not identify any impairment indicators. |
Goodwill | Goodwill — Goodwill represents the excess of the cost of a business combination, as defined in ASC 805, over the fair value of net assets acquired, including identifiable intangible assets. Goodwill is tested for impairment at the reporting unit level annually as of October 1, and whenever indicators of impairment exist. The Company evaluates for the potential impairment of goodwill by assessing qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Qualitative factors include industry and market considerations, overall financial performance, and other relevant events and circumstances affecting the reporting unit. If after performing the qualitative assessment, the Company determines it is more likely than not that the fair value of the reporting unit is less than its carrying amount, the Company performs a quantitative fair value test. The primary valuation method used in the quantitative impairment assessment to determine the fair value of the reporting unit has been a discounted cash flow model. The Company primarily uses a discounted cash flow model to determine the fair value of its reporting units, but other valuation methods or comparable transactions may be used when appropriate and applicable to determine the fair value of a reporting unit. The Company did not recognize any goodwill impairments during the years ended December 31, 2022 and 2021. |
Provision for Unpaid Losses and Loss Adjustment Expenses | Provision for Unpaid Losses and Loss Adjustment Expenses — The provision for unpaid losses and loss adjustment expenses is the difference between the estimated cost of losses incurred and the amount of paid losses as of the reporting date. This reserve reflects management’s best estimate of losses related to both reported claims and IBNR claims. The reserve also includes estimates of all expenses associated with processing and settling reported and unreported claims. Given the inherent complexity and uncertainty regarding the estimate of our ultimate cost of settling claims, reserves are reviewed quarterly and periodically throughout the year by comparing historical results and current results to calculate new development factors. In estimating loss and loss adjustment expense reserves, our actuarial reserving group considers claim cycle time, claims settlement practices, adequacy of case reserves over time and current economic conditions. Because actual experience can differ from key assumptions used in estimating reserves, there may be significant variation in the development of these reserves and the actual losses and loss adjustment expenses ultimately paid in the future. These adjustments to the loss and loss adjustment expense reserves and related reinsurance recoverables are recognized in the Consolidated Statements of Operations in the period in which the change occurs. The amount of any reinsurance recoverable is determined by applying contract language specific to the Company’s third-party reinsurance program to losses and loss expenses arising from claims occurring as a result of a qualifying event. Reinsurance recoverables are recorded within "Prepaid expenses and other current assets" on the Consolidated Balance Sheets. |
Accrued Expenses | Accrued Expenses — Accrued expenses consist primarily of amounts owed for wages, payroll taxes, incentive compensation, benefits, professional services and future installments for purchase consideration resulting from asset acquisitions and business combinations. |
Warrant Liabilities | 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, are recorded at fair value as a liability. The fair value of this liability is subject to remeasurement each reporting period and the Company utilizes a Monte Carlo simulation model to value the warrants. The change in the fair value of the warrants is recognized within "Change in fair value of warrant liabilities" in the Consolidated Statements of Operations each reporting period. Refer to Note 20 — Warrant Liabilities for additional information. |
Derivative Instruments | Derivative Instruments — The Company enters into certain derivative financial instruments, when available on a cost-effective basis, to mitigate its risk associated with changes in interest rates. The Company accounts for derivatives in accordance with ASC 815, which establishes accounting and reporting standards requiring that all derivative instruments (including certain derivative instruments embedded in other contracts), whether designated as hedging relationships or not, be recorded on the Consolidated Balance Sheets as either an asset or liability measured at fair value. If a derivative is designated as a cash flow hedge for accounting purposes, the effective portion of the change in the fair value of the derivative is recorded in "Other comprehensive income (loss)". If a derivative is not designated as an accounting hedge for accounting purposes, the change in fair value is recognized within "Interest and other income (expense)" in the Consolidated Statements of Operations each reporting period. All derivative instruments are managed on a consolidated basis to efficiently minimize exposures. Gains and losses related to the derivative instruments are expected to be largely offset by gains and losses on the underlying asset or liability. The Company does not use derivative financial instruments for speculative purposes. The Company is exposed to credit loss in the event of nonperformance by the counterparties on derivative contracts. It is the Company’s policy to manage its credit risk on these transactions by dealing only with financial institutions having a long-term credit rating of "A" or better. |
Acquisitions | Acquisitions — The Company accounts for acquisitions of entities or asset groups that qualify as businesses using the acquisition method of accounting in accordance with ASC 805. Purchase consideration is allocated to the tangible and intangible assets acquired and liabilities assumed based on the estimated fair values as of the acquisition date, which are measured in accordance with the principles outlined in ASC Topic 820, Fair Value Measurement ("ASC 820"). The determination of fair value requires management to make estimates about discount rates, future expected cash flows, market conditions and other future events that are highly subjective in nature. The excess of the total purchase consideration over the fair value of the identified net assets acquired is recognized as goodwill. The results of the acquired businesses are included in the results of operations beginning from the date of acquisition. Acquisition-related costs are expensed as incurred. |
Revenue Recognition, Contract Assets and Liabilities and Contract Costs | Revenue Recognition — The Company recognizes revenue under both ASC Topic 606, Revenue from Contracts with Customers ("ASC 606") and ASC Topic 944, Financial Services — Insurance ("ASC 944"). Commission and fee revenue Hagerty earns commissions from its insurance carrier partners for new and renewal policies, as well as fees paid by the carriers’ insureds for the binding of insurance coverage. The Company has identified the insurance carrier as its customer and determined that the transaction price is the estimated commissions to be received over the term of the policy. The transaction is determined based on an estimate of premiums placed, net of a constraint for policy changes and cancellations. These commissions and fees, including those paid via installment plan, are earned when the policy becomes effective, as all rights are passed to the insured and the obligation to pay a claim resides with the carrier. Under the terms of many of its contracts with insurance carrier partners, the Company has the opportunity to earn an annual contingent underwriting commission ("CUC"), or profit share, based on the calendar-year performance of the insurance book of business with each of those insurance carrier partners. The Company’s CUC agreements are based on written or earned premium and loss ratio results. Each insurance carrier partner contract and related CUC is calculated independently. The CUCs represent a form of variable consideration associated with the placement of coverage, for which the Company earns commissions and fees. Under ASC 606, the Company must estimate the amount of consideration that it will become entitled to receive during the calendar year such that a significant reversal of revenue is not probable. As such, CUCs are recognized as a contract asset within "Commission receivable" on the Consolidated Balance Sheets in the period that the policy is issued using the applicable premium and payout factors based on the estimated loss ratio from the contract. Revenue from CUCs is recognized throughout the year and settled annually. Earned premium Reinsurance premium revenue is earned by Hagerty Re under ASC 944, and represents the earned portion of gross written premiums that Hagerty Re has assumed under quota share reinsurance agreements with our insurance carrier partners. Earned premium is recognized over the term of the policy, which is generally 12 months, with the unearned portion recorded as "Unearned premiums" on the Consolidated Balance Sheets. Membership, marketplace and other revenue The Company earns subscription revenue through membership offerings. HDC memberships are sold as a bundled product which give Members access to its products and services, including Hagerty Drivers Club Magazine, automotive enthusiast events, the Company's proprietary vehicle valuation tool, emergency roadside services and special vehicle-related discounts. Hagerty Garage + Social storage memberships include storage in addition to the HDC Member benefits. Revenue from the sale of HDC and storage membership subscriptions is recognized ratably over the period of the membership, resulting in contract liabilities at December 31, 2022 and 2021. The Company treats the membership as a single performance obligation to provide access to stated Member benefits over the life of the membership, which is currently one year. Marketplace earns fee-based revenue from the sale of collector vehicles through classified listings, live and time-based online auctions and brokered private sales, as well as finance revenue from term loans to high-net-worth individuals and businesses secured by collector cars. Fee-based revenue earned by Marketplace is recognized when the underlying sale is completed. Finance revenue is recognized when earned based on the amount of the outstanding loan, the applicable interest rate on the loan and the length of time the loan was outstanding during the period. Lastly, other revenue includes sponsorship, admission, advertising, valuation and registration income. Other revenue is recognized when the performance obligation for the related product or service is satisfied. Contract Assets and Liabilities — The Company recognizes contract assets for amounts due to the Company for CUCs earned but not yet billed under terms of the contract. Contract assets are recorded within "Commission receivable" on the Consolidated Balance Sheets. Contract liabilities are recorded primarily as deferred revenue when payments are received in advance of performance under a contract before the transfer of goods or services to a customer or fulfillment of the contract obligations. Contract liabilities consist primarily of an advanced commission payment, along with the obligation to fulfill HDC membership benefits over the one Contract Costs — The Company accounts for contract costs under ASC Topic 340, Other Assets and Deferred Costs , which requires companies to defer certain incremental costs to obtain customer contracts and certain costs to fulfill customer contracts. The Company capitalizes the incremental costs to obtain contracts, which are primarily related to commission payments on new policy sales. These deferred costs are amortized within "Sales expense" in the Consolidated Statements of Operations based on the average expected life of the insurance policy and are included within "Prepaid expenses and other assets" on the Company’s Consolidated Balance Sheets as of December 31, 2022 and 2021. |
Advertising | Advertising — Advertising and sales promotion costs are expensed the first time the advertising or sales promotion takes place. Advertising costs were $27.8 million and $24.1 million for the years ended December 31, 2022 and 2021, respectively, and are reflected as a component of "Sales expense" in the Consolidated Statements of Operations. |
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 for certain U.S. corporate subsidiaries and 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 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 22 — 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 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 when it is more likely than not that all or a portion of a deferred tax asset will not be realized. 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. As of December 31, 2022 and 2021, the Company did not have any unrecognized tax benefits and had no material accrued interest or penalties related to uncertain tax positions. If recorded, interest and penalties would be recorded as "Income tax benefit (expense)" within the Consolidated Statements of Operations. 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 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. • 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 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 Consolidated Balance Sheets as of December 31, 2021. 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. As a result of the amendment, the redeemable non-controlling interest was accreted to its redemption value as of March 23, 2022 and subsequently removed from temporary equity and recorded to equity as non-controlling interest. |
Earnings Per Share | Earnings Per Share — The Company 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. |
Self Insurance | Self-Insurance — The Company has elected to self-insure certain costs related to U.S. employee health benefit and short-term disability programs. Costs resulting from self-insured losses are charged to expense when incurred. The Company has purchased insurance that limits its aggregate annual exposure for healthcare costs to approximately $11.4 million and $10.8 million for the years ended December 31, 2022 and 2021, respectively. Total expenses for healthcare claims incurred for the years ended December 31, 2022 and 2021 were approximately $13.2 million and $10.9 million, respectively. Healthcare claims are recorded within "Salaries and benefits" on the Consolidated Statements of Operations. As of December 31, 2022 and 2021, the Company has recorded approximately $1.2 million and $0.9 million as an estimate of IBNR claims, respectively. The amount of actual losses incurred could differ materially from the estimate reflected in these financial statements. |
Postretirement Benefits | Postretirement Benefits — The Company offers postretirement benefits. In the U.S., the Company offers a 401(k) plan covering substantially all U.S. employees. The plan provides for 4.0% matching contributions. Contributions to the plan were $6.2 million and $4.9 million for the years ended December 31, 2022 and 2021, respectively. |
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 will be 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 Consolidated Financial Statements during the year ended December 31, 2021. Leases — In February 2016, the FASB issued ASC 842, which supersedes the lease requirements in ASC Topic 840, Leases ("ASC 840"). The new guidance requires companies to recognize the assets and liabilities for the rights and obligations created by leased assets, initially measured at the present value of lease payments. ASC 842 and subsequent amendments are designed to increase transparency and comparability among organizations with leasing activities. In June 2020, the FASB issued ASU No. 2020-05, Effective Dates for Certain Entities, which deferred the effective date for nonpublic entities, including emerging growth companies, that had not yet adopted the original ASU. Utilizing the amended guidance, management adopted this standard effective January 1, 2022 under the modified retrospective approach. The Company, upon adopting ASC 842, measured the operating lease liability as the present value of the remaining rental payments as defined in ASC 840. The ROU asset equaled the lease liability, adjusted by any unamortized lease incentives, deferred rent accrual and initial direct costs. Adoption of this standard resulted in the Company recognizing initial ROU assets and lease liabilities of $72.8 million. The guidance requires sellers in a sale-leaseback transaction to recognize the entire gain from the sale of an underlying asset at the time of sale rather than over the leaseback term. The carrying value of the deferred gain on the single sale-leaseback transaction executed prior to January 1, 2022 is approximately $4.3 million and was recorded as an increase to retained earnings at adoption. The adoption of this standard did not have a material impact on the Consolidated Statements of Operations or Consolidated Statements of Cash Flows. The Company elected the transition method permitted by ASU 2018-11, which does not adjust prior comparative periods to align with the new standard. The Company elected the package of practical expedients not to reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs and the lessee practical expedient to combine lease and non-lease components for all asset classes. In addition, the Company did not elect the hindsight practical expedient. The expense of operating leases under ASC 842 is generally recognized on a straight-line basis which is calculated as the total lease cost divided by the lease term and is recognized in the Consolidated Statements of Operations. 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 ("ASC 848"), which provides optional relief to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference London Inter-Bank Offered Rate ("LIBOR") or another reference rate expected to be discontinued because of reference rate reform. 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. As of September 2022, all of Hagerty's outstanding debt bears interest at variable interest rates, primarily based on the Term Secured Overnight Financing Rate ("SOFR"). The adoption of these ASUs did not have a material impact on the Company's Consolidated Financial Statements and related disclosures. Recent Accounting Guidance Not Yet Adopted 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 deferred 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 Consolidated Financial Statements and related disclosures. |
Revenue (Tables)
Revenue (Tables) | 12 Months Ended |
Dec. 31, 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 years ended December 31, 2022 and 2021: Agent Direct Total in thousands Year Ended December 31, 2022 Commission and fee revenue $ 133,584 $ 113,864 $ 247,448 Contingent commission 32,899 26,891 59,790 Membership revenue — 45,234 45,234 Marketplace and other revenue — 32,055 32,055 Total revenue from customer contracts $ 166,483 $ 218,044 $ 384,527 Earned premium recognized under ASC 944 403,061 Total revenue $ 787,588 Year Ended December 31, 2021 Commission and fee revenue $ 115,310 $ 98,926 $ 214,236 Contingent commission 29,552 27,783 57,335 Membership revenue — 40,605 40,605 Marketplace and other revenue — 11,079 11,079 Total revenue from customer contracts $ 144,862 $ 178,393 $ 323,255 Earned premium recognized under ASC 944 295,824 Total revenue $ 619,079 The following table presents Hagerty's revenue disaggregated by geographic area, as well as a reconciliation to total revenue for the years ended December 31, 2022 and 2021: U.S. Canada Europe Total in thousands Year Ended December 31, 2022 Commission and fee revenue $ 224,255 $ 19,142 $ 4,051 $ 247,448 Contingent commission 59,664 — 126 59,790 Membership revenue 41,893 3,341 — 45,234 Marketplace and other revenue 29,920 767 1,368 32,055 Total revenue from customer contracts $ 355,732 $ 23,250 $ 5,545 $ 384,527 Earned premium recognized under ASC 944 403,061 Total revenue $ 787,588 Year Ended December 31, 2021 Commission and fee revenue $ 193,520 $ 16,782 $ 3,934 $ 214,236 Contingent commission 57,424 (383) 294 57,335 Membership revenue 37,688 2,917 — 40,605 Marketplace and other revenue 9,448 301 1,330 11,079 Total revenue from customer contracts $ 298,080 $ 19,617 $ 5,558 $ 323,255 Earned premium recognized under ASC 944 295,824 Total revenue $ 619,079 |
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 years ended December 31, 2022 and 2021: Year Ended December 31, 2022 2021 in thousands Underwriting income: Premiums assumed $ 474,293 $ 353,925 Reinsurance premiums ceded (10,749) (7,920) Net premiums assumed 463,544 346,005 Change in unearned premiums (60,263) (50,491) Change in deferred reinsurance premiums (220) 310 Net premiums earned $ 403,061 $ 295,824 |
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 Consolidated Balance Sheets. 2022 2021 in thousands Contract assets $ 60,151 $ 57,596 Contract liabilities $ 44,426 $ 41,390 |
Deferred Acquisition Costs (Tab
Deferred Acquisition Costs (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Deferred Policy Acquisition Costs Disclosures [Abstract] | |
Schedule of Deferred Acquisition Costs | The following table presents a reconciliation of the changes in deferred acquisition costs for the periods specified below: 2022 2021 in thousands Deferred acquisition costs as of January 1, $ 81,535 $ 58,572 Acquisition costs deferred 216,957 163,946 Amortization charged to income (191,150) (140,983) Deferred acquisition costs as of December 31, $ 107,342 $ 81,535 |
Prepaid Expenses and Other As_2
Prepaid Expenses and Other Assets (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Prepaid Expenses and Other Assets, Current and Long-term | Prepaid expenses and other assets, current and long-term, consist of: December 31, 2022 2021 in thousands Prepaid sales, general and administrative expenses $ 24,234 $ 18,004 Prepaid SaaS implementation costs 18,501 16,318 Fixed income investments 12,986 10,785 Contract costs 6,576 4,160 Media content 5,580 3,335 Other (1) 14,856 8,118 Prepaid expenses and other assets $ 82,733 $ 60,720 (1) As of December 31, 2022, other assets primarily includes $4.0 million of other investments, $3.3 million of fair value of interest rate swap, $2.5 million of collector vehicle investments, $1.4 million of deferred financing costs related to our Credit Facility and $1.4 million related the Company's outstanding reinsurance recoverable. |
Notes Receivable (Tables)
Notes Receivable (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Receivables [Abstract] | |
Financing Receivable Credit Quality Indicators | The table below provides the aggregate LTV ratio for the Company's loan portfolio as of December 31, 2022: December 31, 2022 in thousands Secured loans $ 37,427 Estimate of collateral value $ 75,802 Aggregate LTV ratio 49.4 % |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment, Net | The following table summarizes the carrying value of the Company's property and equipment. December 31, 2022 2021 in thousands Land and land improvements $ 930 $ 930 Buildings 1,200 1,748 Leasehold improvements 9,299 10,309 Furniture and equipment 13,194 15,121 Computer equipment and software 21,698 20,405 Automobiles 791 738 Total property and equipment $ 47,112 $ 49,251 Less: accumulated depreciation (21,856) (20,888) Property and equipment, net $ 25,256 $ 28,363 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
Components of Operating Lease Expense | The following table summarizes the components of the Company's operating lease expense: Year Ended December 31, 2022 in thousands Operating lease expense (1) $ 10,737 Short-term lease expense (1) 187 Variable lease expense (1) (3) 3,943 Sublease revenue (2) (156) Lease cost, net $ 14,711 (1) Classified within "General and administrative services" on the Consolidated Statements of Operations. (2) Classified within "Membership, marketplace and other revenue" on the Consolidated Statements of Operations. (3) Amounts include payments for maintenance, taxes, insurance and payments affected by the CPI. Supplemental balance sheet information related to operating leases is as follows: December 31, 2022 in thousands Operating lease ROU assets $ 82,398 Other current liabilities 7,556 Operating lease liabilities 80,772 Total operating lease liabilities $ 88,328 Other Supplemental Information ROU assets obtained in exchange for new operating lease liabilities (in thousands) (1) $ 82,398 Gains (losses) on sales and leaseback transactions, net (in thousands) $ 4,314 Weighted-average lease term 10.23 Weighted-average discount rate 5.5 % (1) Includes the transition adjustment of $72.8 million for operating lease ROU assets recorded as of January 1, 2022, upon adoption ASC 842. |
Schedule of Maturities of Lease Liabilities | The following table summarizes information about the amount and timing of our future operating lease commitments as of December 31, 2022: in thousands 2023 $ 12,129 2024 12,206 2025 11,765 2026 11,176 2027 10,984 Thereafter 58,530 Total lease payments 116,790 Less: imputed interest (28,462) Total lease liabilities $ 88,328 |
Schedule of Future Minimum Lease Payments | The following table summarizes future minimum rental payments due under our operating leases in accordance with Topic 840 as of December 31, 2021: in thousands 2022 $ 9,068 2023 8,783 2024 8,587 2025 8,451 2026 7,936 Thereafter 53,940 Total $ 96,765 |
Business Combination (Tables)
Business Combination (Tables) | 12 Months Ended |
Dec. 31, 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) | 12 Months Ended |
Dec. 31, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | 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, which was derived from the Hagerty, Inc. stock price of $13.47 as of the close date and thus represents a Level 1 fair value measurement. As a result of the remeasurement, the Company recorded a net gain of approximately $34.7 million within the Consolidated Statements of Operations for the year ended December 31, 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. |
Asset Acquisition | 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. The carrying value of the acquired loans approximate their fair value due to the typical short-term maturity and market rate of interest associated with most loans. Refer to Note 5 — Notes Receivable for additional information with respect to the Notes receivable acquired. (2) The fair value of identifiable intangible assets is a Level 3 fair value 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 consists of 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 non-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) | 12 Months Ended |
Dec. 31, 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 acquisition (1) 103,553 6,743 Goodwill as of December 31, $ 115,041 $ 11,488 (1) Goodwill resulting from acquisitions for the year ended December 31, 2022 includes $98.6 million related to the Broad Arrow Acquisition. Refer to Note 9 — Acquisitions and Investments for additional information. |
Schedule of Finite-Lived Intangible Assets | The cost and accumulated amortization of intangible assets as of December 31, 2022 and 2021 are as follows: Weighted Average Useful Life December 31, 2022 2021 in thousands Insurance policy renewal rights 9.9 $ 17,282 $ 17,557 Internally developed software 3.1 109,764 76,865 Trade names and trademarks 14.0 12,541 5,004 Relationships and customer lists 15.4 13,890 5,652 Other 4.4 1,434 1,464 Intangible assets 154,911 106,542 Less: accumulated amortization (50,887) (30,371) Intangible assets, net $ 104,024 $ 76,171 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The estimated future aggregate amortization expense as of December 31, 2022 is as follows (in thousands): 2023 $ 29,663 2024 26,714 2025 17,746 2026 8,671 2027 3,742 Thereafter 17,488 Total $ 104,024 |
Provision for Unpaid Losses a_2
Provision for Unpaid Losses and Loss Adjustment Expenses (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Insurance [Abstract] | |
Schedule of Liability for Unpaid Claims and Claims Adjustment Expense | The following table presents the provision for unpaid losses and loss adjustment expenses at December 31, 2022 and 2021: Year Ended December 31, 2022 2021 in thousands Outstanding losses reported $ 65,981 $ 38,207 IBNR 44,917 36,662 Net reserves for unpaid losses and loss adjustment expenses $ 110,898 $ 74,869 Reinsurance recoverables 843 — Gross reserves for unpaid losses and loss adjustment expenses $ 111,741 $ 74,869 The following table presents a reconciliation of beginning and ending provision for unpaid losses and loss adjustment expenses, net of amounts recoverable from reinsurers: Year Ended December 31, 2022 2021 in thousands Gross unpaid losses and loss adjustment expenses, beginning of year $ 74,869 $ 54,988 Less: Reinsurance recoverable — — Net unpaid losses and loss adjustment expenses, beginning of the year $ 74,869 $ 54,988 Incurred losses and loss adjustment expenses: Current accident year $ 186,478 $ 132,481 Prior accident year (1) (4,076) (10,401) Total incurred losses and loss adjustment expenses $ 182,402 $ 122,080 Payments: Current accident year $ 109,555 $ 76,559 Prior accident year 36,803 25,656 Total payments $ 146,358 $ 102,215 Effect of foreign currency rate changes (15) 16 Net reserves for losses and loss adjustment expenses, end of year $ 110,898 $ 74,869 Reinsurance recoverables 843 — Gross reserves for losses and loss adjustment expenses, end of year $ 111,741 $ 74,869 (1) In both years presented, prior accident year development reflects lower than originally estimated incurred claims related to frequency and severity in accident years 2017 to 2021. The following table presents a summary of total gross reserves for losses and loss adjustment expenses by line of business for the periods specified below: December 31, 2022 2021 in thousands Auto $ 111,575 $ 74,573 Marine 166 296 Total gross reserves for losses and loss adjustment expenses $ 111,741 $ 74,869 |
Short-duration Insurance Contracts, Claims Development | The following tables present incurred losses and loss adjustment expenses, by accident year, undiscounted and net of reinsurance recoveries. a) Auto (dollars in thousands) Reserves for Losses and Loss Adjustment Expenses Incurred But Not Reported Cumulative Number of Reported Claims Reporting Years Ended December 31, Accident Year 2017* 2018* 2019* 2020* 2021* 2022 As of December 31, 2022 2017 $ 18,594 $ 18,594 $ 18,594 $ 18,594 $ 18,409 $ 18,284 $ 44 11,031 2018 40,422 40,287 40,287 37,516 37,491 3 20,641 2019 63,642 63,642 59,660 59,660 631 23,780 2020 90,110 86,608 85,111 2,833 27,092 2021 131,643 129,259 9,215 35,116 2022 186,073 32,056 36,604 Total $ 515,878 $ 44,782 154,264 Cumulative paid losses and loss adjustment expenses from the table below (405,131) — Reserves for losses and loss adjustment expenses before 2017, net of reinsurance — — Effect of foreign currency rate changes (15) (15) Reserves for losses and loss adjustment expenses, undiscounted and net of reinsurance $ 110,732 $ 44,767 Cumulative paid losses and loss adjustment expenses by accident year (in thousands): As of December 31, Accident Year 2017* 2018* 2019* 2020* 2021* 2022 2017 $ 11,410 $ 16,655 $ 17,442 $ 17,530 $ 17,897 $ 18,122 2018 23,915 34,992 35,899 36,414 36,807 2019 37,910 51,491 55,617 57,393 2020 53,167 73,402 78,079 2021 75,933 105,475 2022 109,255 Total $ 405,131 * Unaudited required supplemental information. b) Marine: (dollars in thousands) Reserves Cumulative Reporting Years Ended December 31, Accident Year 2017* 2018* 2019* 2020* 2021* 2022 As of December 31, 2022 2017 $ 198 $ 198 $ 198 $ 198 $ 183 $ 183 $ — 124 2018 437 437 437 489 514 — 189 2019 893 893 835 835 — 192 2020 915 975 1,002 16 205 2021 854 757 44 210 2022 405 90 114 Total $ 3,696 $ 150 1,034 Cumulative paid losses and loss adjustment expenses from the table below (3,530) — Reserves for losses and loss adjustment expenses before the 2017 accident year — — Reserves for losses and loss adjustment expenses, undiscounted and net of reinsurance $ 166 $ 150 Cumulative paid losses and loss adjustment expenses by accident year (in thousands): Accident Year 2017* 2018* 2019* 2020* 2021* 2022 2017 $ 138 $ 183 $ 183 182 $ 182 $ 183 2018 332 426 425 431 514 2019 514 828 835 835 2020 568 967 985 2021 625 713 2022 300 Total $ 3,530 * Unaudited required supplemental information. |
Short-duration Insurance Contracts, Schedule of Historical Claims Duration | The following table presents supplementary information about average historical claims duration as of December 31, 2022 based on the cumulative incurred and paid losses and allocated loss adjustment expenses presented above. Average Annual Percentage of Payout of Incurred Claims by Age (in Years), Net of Reinsurance unaudited Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Auto 62.4 % 21.0 % 8.8 % 3.6 % 1.6 % 1.4 % Marine 77.9 % 21.4 % 0.9 % (0.3) % — % — % |
Restructuring, Impairment and_2
Restructuring, Impairment and Related Charges (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Related Costs | The following is a reconciliation of the restructuring liability which is included within "Accrued expenses and other current liabilities" on the Consolidated Balance Sheets. These costs are expected to be settled in the first quarter of 2023. in thousands Balance at December 31, 2021 $ — Costs incurred and charged to expense 18,324 Costs paid or otherwise settled (8,854) Balance at December 31, 2022 $ 9,470 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 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 December 31, 2022: Inputs Private Placement Warrants Underwriter Warrants OTM Warrants PIPE Warrants Exercise price $11.50 $11.50 $15.00 $11.50 Common stock price $8.41 $8.41 $8.41 $8.41 Volatility 47.7% 47.7% 45.0% 47.7% Expected term of the warrants 3.92 3.92 8.93 3.92 Risk-free rate 4.10% 4.10% 3.90% 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 December 31, 2022 and 2021, is shown in the table below: Fair Value Measurements Total Level 1 Level 2 Level 3 in thousands December 31, 2022 Financial Assets Interest rate swaps $ 3,294 $ — $ 3,294 $ — Total $ 3,294 $ — $ 3,294 $ — Financial Liabilities Public warrants $ 12,880 $ 12,880 $ — $ — Private placement warrants 673 — — 673 Underwriter warrants 75 — — 75 OTM warrants 4,706 — — 4,706 PIPE warrants 27,227 — — 27,227 Total $ 45,561 $ 12,880 $ — $ 32,681 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 years ended December 31, 2022 and 2021: Private Placement Warrants Underwriter Warrants OTM Warrants PIPE Warrants Total in thousands Balance at December 31, 2020 $ — $ — $ — $ — $ — Issuance of warrant liabilities 460 51 2,899 31,800 35,210 Change in fair value of warrant liabilities 788 88 3,950 24,087 28,913 Balance at December 31, 2021 1,248 139 6,849 55,887 64,123 Change in fair value of warrant liabilities (575) (64) (2,143) (26,754) (29,536) Exercise of warrants — — — (1,906) (1,906) Balance at December 31, 2022 $ 673 $ 75 $ 4,706 $ 27,227 $ 32,681 |
Debt Securities, Held-to-maturity | The following table discloses the fair value and related carrying amount of fixed income investments held within Hagerty Re's as of December 31, 2022 and 2021: Carrying Amount Estimated Fair Value in thousands December 31, 2022 Fixed income securities, short-term $ 6,296 $ 6,205 Fixed income securities, long-term 6,690 6,316 Total $ 12,986 $ 12,521 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) | 12 Months Ended |
Dec. 31, 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: December 31, 2022 2021 in thousands Credit Facility $ 105,000 $ 135,500 Notes payable 3,280 1,000 Total debt outstanding $ 108,280 $ 136,500 Less: current portion — (1,000) Total long-term debt outstanding $ 108,280 $ 135,500 |
Members' and Stockholders' Eq_2
Members' and Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Equity [Abstract] | |
Schedule of Other Ownership Interests | The following table summarizes the ownership of Hagerty Group Units in The Hagerty Group as of December 31, 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 (Loss) Per Share (Tabl
Earnings (Loss) Per Share (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings (Loss) Per Share, Basic and Diluted | The following table sets forth the calculation of Basic EPS and Diluted EPS for the years ended December 31, 2022 and 2021. Basic EPS is computed using Net income (loss) attributable to controlling interest, divided by the weighted average number of shares of Class A Common Stock outstanding during the period. Diluted EPS is computed using Net income (loss) attributable to controlling interest divided by the weighted average number of shares of Class A Common Stock outstanding during the period, adjusted to give effect to potentially dilutive securities. The Company's potentially dilutive securities consist of (1) unexercised warrants and unissued stock-based restricted stock units, performance restricted stock units and employee stock purchase plan shares, all using the Treasury Stock Method and (2) non-controlling interest Hagerty Group Units using the "If-converted" Method. In the computation of Diluted EPS, Net income (loss) attributable to controlling interest is adjusted to remove the change in fair value associated with the Company's warrant liabilities that are potentially dilutive and net income (loss) associated with non-controlling interest in Hagerty Group Units. Year Ended December 31, 2022 2021 in thousands (except per share amounts) Numerator: Net income (loss) attributable to controlling interest $ 32,078 $ (46,358) Adjustments: Change in fair value of potentially dilutive warrant liabilities (27,392) — Net income (loss) attributable to non-controlling interest Hagerty Group Units (28,642) — Adjusted net income (loss) attributable to Class A Common Stock shareholders $ (23,956) $ (46,358) Denominator: Weighted average shares of Class A Common Stock outstanding — basic 82,728 82,327 Adjustments: Conversion of non-controlling interest Hagerty Group Units to shares of Class A Common Stock 252,806 — Warrants 613 — Stock-based compensation awards — — Weighted average shares of Class A Common Stock outstanding — diluted 336,147 82,327 Earnings (loss) per share attributable to Class A Common Stock shareholders Basic $ 0.39 $ (0.56) Diluted $ (0.07) $ (0.56) |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Summary of Stock-based Compensation Expense | The following table summarizes stock-based compensation expense recognized during the year ended December 31, 2022. As the first stock-based compensation grant occurred in the second quarter of 2022, there was no stock-based compensation expense during the year ended December 31, 2021. Year Ended December 31, 2022 in thousands Restricted stock units $ 9,814 Performance restricted stock units 2,146 Employee stock purchase plan 169 Total stock-based compensation expense $ 12,129 |
Schedule of Restricted Stock Units Activity | The following table provides a summary of the restricted stock unit activity during the year ended December 31, 2022: Restricted Stock Units Weighted Average Fair Value Unvested balance as of December 31, 2021 — $ — Granted 3,340,547 10.76 Vested (37,071) 10.79 Forfeited (108,438) 10.79 Unvested balance as of December 31, 2022 3,195,038 $ 10.76 |
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: Performance Restricted Stock Units Weighted average grant-date fair value per share $5.19 Expected stock volatility 35% Expected term (in years) 7.0 Risk-free interest rate 2.5% Dividend yield —% |
Schedule of Performance-Based Units Activity | The following table provides information about performance restricted stock units outstanding during the year ended December 31, 2022: Performance Restricted Stock Units Weighted Average Fair Value Outstanding as of December 31, 2021 — $ — Granted 3,707,136 5.19 Outstanding as of December 31, 2022 3,707,136 $ 5.19 |
Taxation (Tables)
Taxation (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income before Income Tax, Domestic and Foreign | Income (loss) before income tax expense includes the following components: Year Ended December 31, 2022 2021 in thousands United States $ 24,778 $ (44,434) Foreign (13,682) (10,169) Total $ 11,096 $ (54,603) |
Schedule of Components of Income Tax Expense (Benefit) | Total income tax expense (benefit) attributable to income (loss) for the years ended December 31, 2022 and 2021 consists of the following components: Year Ended December 31, 2022 2021 in thousands Current: Federal $ 4,041 $ 3,753 State 3 — Foreign — (40) $ 4,044 $ 3,713 Deferred: Federal $ 2,999 $ 3,038 State (26) — Foreign — — 2,973 3,038 Total $ 7,017 $ 6,751 |
Schedule of Effective Income Tax Rate Reconciliation | Income tax expense (benefit) 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: Year Ended December 31, 2022 2021 in thousands (except percentages) Income tax (benefit) expense at statutory rate $ 2,330 21 % $ (11,467) 21 % State taxes (479) (4) % (163) 0 % Loss not subject to entity-level taxes 8,727 79 % 6,485 (12) % Foreign rate differential (375) (3) % (276) 1 % Change in valuation allowance 5,647 51 % 2,759 (5) % Change in fair value of warrant liability (8,799) (79) % 8,933 (16) % Permanent items 852 8 % 477 (1) % Other, net (886) (8) % 3 0 % Income tax expense (benefit) $ 7,017 65 % $ 6,751 (12) % |
Schedule of Deferred Tax Assets and Liabilities | At December 31, 2022 and 2021, the tax effects of temporary differences that give rise to significant portions of the deferred tax provision are as follows: December 31, 2022 2021 in thousands Deferred tax assets Discount on provision for losses and loss adjustment expenses $ 802 $ 557 Unearned premiums 9,886 7,345 Accrued professional fees — 5 Unrealized foreign currency gain 229 70 Excess tax basis 159,337 168,014 Net operating loss ("NOL") and other carryforwards 17,197 6,492 Other 457 315 Gross deferred tax asset 187,908 182,798 Less: valuation allowance (176,116) (174,821) Total net deferred tax assets $ 11,792 $ 7,977 Deferred tax liabilities Deferred acquisition costs $ (22,542) $ (17,122) Excise tax accrual (1,068) (1,279) Unrealized foreign currency gain (229) (70) Unrealized investment gain (37) (16) Intangible assets (759) — Other (7) — Total deferred tax liabilities $ (24,642) $ (18,487) Net deferred tax liability $ (12,850) $ (10,510) |
Summary of Operating Loss Carryforwards | Of the deferred tax assets, $10.4 million does not expire, and the remaining $6.8 million expires as follows: in thousands 2036 $ 396 2037 710 2038 848 2039 — 2040 1,153 2041 1,427 2042 $ 2,238 |
Related-Party Transactions (Tab
Related-Party Transactions (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions | The following tables provide information about Markel-affiliated due to insurer liabilities and commission revenue under the agreement with Markel subsidiaries: December 31, 2022 2021 in thousands (except percentages) Due to insurer $ 64,873 $ 54,850 Percent of total 95 % 95 % Year Ended December 31, 2022 2021 Commission revenue $ 285,254 $ 239,432 Percent of total 95 % 90 % |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies and New Accounting Standards (Details) | 12 Months Ended | ||||||
Dec. 31, 2022 USD ($) segment | Dec. 31, 2022 GBP (£) segment | Dec. 31, 2021 USD ($) | Aug. 31, 2022 | Jan. 31, 2022 | Jan. 01, 2022 USD ($) | Dec. 02, 2021 | |
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||||
Amount retained | $ 10,000,000 | £ 1,000,000 | |||||
Number of operating segments | segment | 1 | 1 | |||||
Number of reportable segments | segment | 1 | 1 | |||||
Impairment of operating lease right-of-use assets | $ 4,698,000 | $ 0 | |||||
Goodwill, impairment loss | $ 0 | 0 | |||||
Membership period | 1 year | 1 year | |||||
Advertising expense | $ 27,800,000 | 24,100,000 | |||||
Tax benefit distributions to noncontrolling interest holders, percent | 85% | ||||||
Tax benefit retained by parent, percent | 15% | ||||||
Annual exposure limit | 11,400,000 | 10,800,000 | |||||
Losses and loss adjustment expenses | 182,402,000 | 122,080,000 | |||||
Self insurance reserve | $ 1,200,000 | 900,000 | |||||
Matching contribution | 4% | 4% | |||||
Defined contribution plan | $ 6,200,000 | 4,900,000 | |||||
Media content | 5,580,000 | 3,335,000 | |||||
Operating lease ROU assets | 82,398,000 | 0 | $ 72,800,000 | ||||
Total lease liabilities | 88,328,000 | 72,800,000 | |||||
Accumulated earnings (deficit) | (489,602,000) | (482,276,000) | |||||
Accounting Standards Update 2020-05 | |||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||||
Accumulated earnings (deficit) | $ 4,300,000 | ||||||
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% | ||||||
Labor And Related Expense | |||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||||
Losses and loss adjustment expenses | $ 13,200,000 | 10,900,000 | |||||
Cumulative Effect, Period of Adoption, Adjustment | |||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||||
Media content | $ 3,300,000 | ||||||
Minimum | |||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||||
Renewal term | 1 year | ||||||
Remaining lease term | 1 year | ||||||
Minimum | Insurance policy renewal rights | |||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||||
Intangible asset useful life | 3 years | 3 years | |||||
Minimum | Internally developed software | |||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||||
Intangible asset useful life | 3 years | 3 years | |||||
Minimum | Trade Names | |||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||||
Intangible asset useful life | 3 years | 3 years | |||||
Minimum | Noncompete Agreements | |||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||||
Intangible asset useful life | 3 years | 3 years | |||||
Minimum | Customer Relationships | |||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||||
Intangible asset useful life | 3 years | 3 years | |||||
Maximum | |||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||||
Renewal term | 20 years | ||||||
Remaining lease term | 14 years | ||||||
Maximum | Insurance policy renewal rights | |||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||||
Intangible asset useful life | 25 years | 25 years | |||||
Maximum | Internally developed software | |||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||||
Intangible asset useful life | 25 years | 25 years | |||||
Maximum | Trade Names | |||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||||
Intangible asset useful life | 25 years | 25 years | |||||
Maximum | Noncompete Agreements | |||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||||
Intangible asset useful life | 25 years | 25 years | |||||
Maximum | Customer Relationships | |||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||||
Intangible asset useful life | 25 years | 25 years | |||||
Computers | Minimum | |||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||||
Property, plant and equipment, useful life | 3 years | 3 years | |||||
Computers | Maximum | |||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||||
Property, plant and equipment, useful life | 7 years | 7 years | |||||
Automobiles | Minimum | |||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||||
Property, plant and equipment, useful life | 3 years | 3 years | |||||
Automobiles | Maximum | |||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||||
Property, plant and equipment, useful life | 7 years | 7 years | |||||
Office furniture | Minimum | |||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||||
Property, plant and equipment, useful life | 3 years | 3 years | |||||
Office furniture | Maximum | |||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||||
Property, plant and equipment, useful life | 7 years | 7 years | |||||
Building and Building Improvements | |||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||||
Property, plant and equipment, useful life | 39 years | 39 years | |||||
The Hagerty Group, LLC | |||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||||
LLC ownership percent | 24.50% | 24.50% | 24.70% | ||||
Member Hubs Holding, LLC | The Hagerty Group, LLC | |||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||||
LLC ownership percent | 80% | 80% |
Revenue - Disaggregation of Rev
Revenue - Disaggregation of Revenue By Distribution Channel Offering and Geographical Area (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Disaggregation of Revenue [Line Items] | ||
Total revenue from customer contracts | $ 384,527 | $ 323,255 |
Earned premium recognized under ASC 944 | 403,061 | 295,824 |
Total revenue | 787,588 | 619,079 |
U.S. | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from customer contracts | 355,732 | 298,080 |
Canada | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from customer contracts | 23,250 | 19,617 |
Europe | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from customer contracts | 5,545 | 5,558 |
Agent | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from customer contracts | 166,483 | 144,862 |
Direct | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from customer contracts | 218,044 | 178,393 |
Commission and fee revenue | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from customer contracts | 307,238 | 271,571 |
Commission and fee revenue | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from customer contracts | 247,448 | 214,236 |
Commission and fee revenue | U.S. | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from customer contracts | 224,255 | 193,520 |
Commission and fee revenue | Canada | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from customer contracts | 19,142 | 16,782 |
Commission and fee revenue | Europe | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from customer contracts | 4,051 | 3,934 |
Commission and fee revenue | Agent | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from customer contracts | 133,584 | 115,310 |
Commission and fee revenue | Direct | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from customer contracts | 113,864 | 98,926 |
Contingent commission | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from customer contracts | 59,790 | 57,335 |
Contingent commission | U.S. | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from customer contracts | 59,664 | 57,424 |
Contingent commission | Canada | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from customer contracts | 0 | (383) |
Contingent commission | Europe | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from customer contracts | 126 | 294 |
Contingent commission | Agent | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from customer contracts | 32,899 | 29,552 |
Contingent commission | Direct | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from customer contracts | 26,891 | 27,783 |
Membership, marketplace and other revenue | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from customer contracts | 77,289 | 51,684 |
Membership revenue | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from customer contracts | 45,234 | 40,605 |
Membership revenue | U.S. | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from customer contracts | 41,893 | 37,688 |
Membership revenue | Canada | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from customer contracts | 3,341 | 2,917 |
Membership revenue | Europe | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from customer contracts | 0 | 0 |
Membership revenue | Agent | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from customer contracts | 0 | 0 |
Membership revenue | Direct | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from customer contracts | 45,234 | 40,605 |
Marketplace and other revenue | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from customer contracts | 32,055 | 11,079 |
Marketplace and other revenue | U.S. | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from customer contracts | 29,920 | 9,448 |
Marketplace and other revenue | Canada | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from customer contracts | 767 | 301 |
Marketplace and other revenue | Europe | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from customer contracts | 1,368 | 1,330 |
Marketplace and other revenue | Agent | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from customer contracts | 0 | 0 |
Marketplace and other revenue | Direct | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from customer contracts | $ 32,055 | $ 11,079 |
Revenue - Earned Premium (Detai
Revenue - Earned Premium (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Underwriting income: | ||
Premiums assumed | $ 474,293 | $ 353,925 |
Reinsurance premiums ceded | (10,749) | (7,920) |
Net premiums assumed | 463,544 | 346,005 |
Change in unearned premiums | (60,263) | (50,491) |
Change in deferred reinsurance premiums | (220) | 310 |
Net premiums earned | $ 403,061 | $ 295,824 |
Revenue - Customer Assets and L
Revenue - Customer Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Change In Contract With Customer Asset [Roll Forward] | ||
Contract assets | $ 60,151 | $ 57,596 |
Contract liabilities | $ 44,426 | $ 41,390 |
Revenue - Narrative (Details)
Revenue - Narrative (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Capitalized Contract Cost [Line Items] | |
CUC recognized | $ 59.8 |
Contract with Customer, Asset, Received | (57.2) |
Current | |
Capitalized Contract Cost [Line Items] | |
Membership and other revenue deferred during the period | 60.2 |
Revenue recognized, partially offset | $ (57.2) |
Deferred Acquisition Costs (Det
Deferred Acquisition Costs (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Movement Analysis of Deferred Policy Acquisition Costs [Roll Forward] | ||
Deferred acquisition costs beginning balance | $ 81,535 | $ 58,572 |
Acquisition costs deferred | 216,957 | 163,946 |
Amortization charged to income | (191,150) | (140,983) |
Deferred acquisition costs ending balance | $ 107,342 | $ 81,535 |
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 | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid sales, general and administrative expenses | $ 24,234 | $ 18,004 |
Prepaid SaaS implementation costs | 18,501 | 16,318 |
Fixed income investments | 12,986 | 10,785 |
Contract costs | 6,576 | 4,160 |
Media content | 5,580 | 3,335 |
Other | 14,856 | 8,118 |
Prepaid expenses and other assets | 82,733 | $ 60,720 |
Other investments | 4,000 | |
Interest rate swap | 3,300 | |
Collector vehicles | 2,500 | |
Deferred financing costs | 1,400 | |
Outstanding reinsurance recoverable | $ 1,400 |
Notes Receivable - Narrative (D
Notes Receivable - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Aug. 31, 2022 | Dec. 31, 2021 | |
Financing Receivable, Allowance for Credit Loss [Line Items] | |||
Loan to value ratio | 65% | ||
Notes receivable | $ 37,427 | ||
Notes receivable, current | 25,493 | $ 0 | |
Notes receivable, Noncurrent | $ 11,934 | $ 0 | |
Broad Arrow Group, Inc. | |||
Financing Receivable, Allowance for Credit Loss [Line Items] | |||
Business combination, percentage of voting interest acquired | 60% | ||
Loans maturity term | 2 years | ||
Loans, renewal option, term | 1 year |
Notes Receivable - Aggregate LT
Notes Receivable - Aggregate LTV Ratio (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Receivables [Abstract] | |
Secured loans | $ 37,427 |
Estimate of collateral value | $ 75,802 |
Aggregate LTV ratio | 49.40% |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 47,112 | $ 49,251 |
Less: accumulated depreciation | (21,856) | (20,888) |
Property and equipment, net | 25,256 | 28,363 |
Depreciation | 6,600 | 6,400 |
Land and land improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 930 | 930 |
Buildings | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 1,200 | 1,748 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 9,299 | 10,309 |
Furniture and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 13,194 | 15,121 |
Computer equipment and software | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 21,698 | 20,405 |
Automobiles | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 791 | $ 738 |
Leases - Operating Lease Expens
Leases - Operating Lease Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Leases [Abstract] | ||
Operating lease expense | $ 10,737 | $ 7,400 |
Short-term lease expense (1) | 187 | |
Variable lease expense (1) (3) | 3,943 | |
Sublease revenue (2) | (156) | |
Lease cost, net | $ 14,711 |
Leases - Supplemental Balance S
Leases - Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 01, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Leases [Abstract] | |||
Operating lease ROU assets | $ 72,800 | $ 82,398 | $ 0 |
Current lease liabilities | 7,556 | 0 | |
Operating lease liabilities | 80,772 | 0 | |
Total lease liabilities | 72,800 | 88,328 | |
ROU assets obtained in exchange for new operating lease liabilities | $ 72,800 | $ 82,398 | |
Gains (losses) on sales and leaseback transactions, net | $ 4,314 | ||
Weighted-average lease term | 10 years 2 months 23 days | ||
Weighted-average discount rate | 5.50% |
Leases - Maturities of Lease Li
Leases - Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Jan. 01, 2022 |
Leases [Abstract] | ||
2023 | $ 12,129 | |
2024 | 12,206 | |
2025 | 11,765 | |
2026 | 11,176 | |
2027 | 10,984 | |
Thereafter | 58,530 | |
Total lease payments | 116,790 | |
Less: imputed interest | (28,462) | |
Total lease liabilities | $ 88,328 | $ 72,800 |
Leases - Future Minimum Lease P
Leases - Future Minimum Lease Payments (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Leases [Abstract] | ||
2022 | $ 9,068 | |
2023 | 8,783 | |
2024 | 8,587 | |
2025 | 8,451 | |
2026 | 7,936 | |
Thereafter | $ 53,940 | |
Total | $ 96,765 |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Leases [Abstract] | ||
Rent expense | $ 10,737 | $ 7,400 |
Impairment of operating lease right-of-use assets | $ 4,698 | $ 0 |
Business Combination - Narrativ
Business Combination - Narrative (Details) - USD ($) $ in Thousands | 1 Months Ended | |||
Dec. 02, 2021 | Dec. 31, 2021 | Dec. 31, 2022 | Dec. 01, 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 | ||
Consideration received on transaction | $ 703,900 | |||
Cash paid to shareholders | 489,661 | |||
Common stock, shares, outstanding (in shares) | 338,961,435 | |||
Acquisition related costs | $ 41,900 | |||
Tax benefit distributions to noncontrolling interest holders, percent | 85% | |||
Additional Paid in Capital | ||||
Business Acquisition [Line Items] | ||||
Transaction costs | $ 32,600 | |||
Members' Equity | Hagerty Holding Corp. | ||||
Business Acquisition [Line Items] | ||||
Stock converted (in shares) | 176,033,906 | |||
Members' Equity | Markel | ||||
Business Acquisition [Line Items] | ||||
Stock converted (in shares) | 75,000,000 | |||
Class V Common Stock | ||||
Business Acquisition [Line Items] | ||||
Common stock, shares, outstanding (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] | ||||
Common stock, shares, outstanding (in shares) | 82,327,466 | 82,327,466 | 83,202,969 | |
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 | |||
Common stock, shares, outstanding (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 | 12 Months Ended | ||||
Dec. 02, 2021 | Aug. 31, 2022 | Apr. 30, 2022 | Jan. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Asset Acquisition [Line Items] | ||||||
Payments to acquire equity method investments | $ 15,250 | $ 0 | ||||
Acquisition related costs | $ 41,900 | |||||
Aggregate purchase price | 7,000 | $ 15,400 | ||||
Cash disbursements | 6,100 | |||||
Speed Digital LLC | Director | ||||||
Asset Acquisition [Line Items] | ||||||
Percentage of purchase price received by related party | 100% | |||||
Broad Arrow Group, Inc. | ||||||
Asset Acquisition [Line Items] | ||||||
Total equity consideration | $ 73,300 | 73,253 | ||||
Share price (in dollars per share) | $ 13.47 | |||||
Acquisition related costs | 900 | |||||
Revenue of acquiree | 10,800 | |||||
Income of acquiree | $ 900 | |||||
Speed Digital LLC | ||||||
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] | ||||||
Payments to acquire equity method investments | $ 15,300 |
Acquisitions and Investments _2
Acquisitions and Investments - Summary of Fair Value of Broad Arrow (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |
Aug. 31, 2022 | Dec. 31, 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] | |||
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 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Business Acquisition [Line Items] | ||||
Goodwill | $ 115,041 | $ 11,488 | $ 4,745 | |
Broad Arrow Group, Inc. | ||||
Business 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 | |||
Prepaid expenses and other non-current assets | 6,200 | |||
Cash and equivalents | 2,800 | |||
Notes receivables | 2,600 | |||
Notes payable | (7,000) | |||
Contract liabilities | (5,300) | |||
Accounts payable | (700) | |||
Broad Arrow Group, Inc. | Trade Names | ||||
Business Acquisition [Line Items] | ||||
Intangible assets, net | $ 3,100 | |||
Weighted average useful life | 5 years |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Goodwill [Line Items] | ||
Goodwill, beginning balance | $ 11,488 | $ 4,745 |
Goodwill, Acquired During Period | 103,553 | 6,743 |
Goodwill, ending balance | 115,041 | $ 11,488 |
Broad Arrow Group Acquisition | ||
Goodwill [Line Items] | ||
Goodwill, Acquired During Period | $ 98,600 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Cost and Accumulated Amortization (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets | $ 154,911 | $ 106,542 |
Less: accumulated amortization | (50,887) | (30,371) |
Intangible assets, net | 104,024 | 76,171 |
Amortization of intangible assets | 21,800 | 12,800 |
Insurance policy renewal rights | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets | $ 17,282 | 17,557 |
Insurance policy renewal rights | Weighted Average | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible asset useful life | 9 years 10 months 24 days | |
Internally developed software | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets | $ 109,764 | 76,865 |
Internally developed software | Weighted Average | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible asset useful life | 3 years 1 month 6 days | |
Trade names and trademarks | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets | $ 12,541 | 5,004 |
Trade names and trademarks | Weighted Average | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible asset useful life | 14 years | |
Relationships and customer lists | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets | $ 13,890 | 5,652 |
Relationships and customer lists | Weighted Average | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible asset useful life | 15 years 4 months 24 days | |
Other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets | $ 1,434 | $ 1,464 |
Other | Weighted Average | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible asset useful life | 4 years 4 months 24 days |
Goodwill and Intangible Assets-
Goodwill and Intangible Assets- Future Amortization Expense (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2023 | $ 29,663 | |
2024 | 26,714 | |
2025 | 17,746 | |
2026 | 8,671 | |
2027 | 3,742 | |
Thereafter | 17,488 | |
Intangible assets, net | $ 104,024 | $ 76,171 |
Provision for Unpaid Losses a_3
Provision for Unpaid Losses and Loss Adjustment Expenses - Provision (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Insurance [Abstract] | |||
Outstanding losses reported | $ 65,981 | $ 38,207 | |
IBNR | 44,917 | 36,662 | |
Net reserves for unpaid losses and loss adjustment expenses | 110,898 | 74,869 | $ 54,988 |
Reinsurance recoverables | 843 | 0 | 0 |
Provision for unpaid losses and loss adjustment expenses | $ 111,741 | $ 74,869 | $ 54,988 |
Provision for Unpaid Losses a_4
Provision for Unpaid Losses and Loss Adjustment Expenses - Provision Reconciliation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | |||
Net unpaid losses and loss adjustment expenses, beginning of the year | $ 74,869 | $ 54,988 | |
Incurred losses and loss adjustment expenses: | |||
Current accident year | 186,478 | 132,481 | |
Prior accident year | (4,076) | (10,401) | |
Total incurred losses and loss adjustment expenses | 182,402 | 122,080 | |
Payments: | |||
Current accident year | 109,555 | 76,559 | |
Prior accident year | 36,803 | 25,656 | |
Total payments | 146,358 | 102,215 | |
Effect of foreign currency rate changes | (15) | 16 | |
Net reserves for losses and loss adjustment expenses, end of year | 110,898 | 74,869 | |
Reinsurance recoverables | 843 | 0 | $ 0 |
Provision for unpaid losses and loss adjustment expenses | $ 111,741 | $ 74,869 | $ 54,988 |
Provision for Unpaid Losses a_5
Provision for Unpaid Losses and Loss Adjustment Expenses - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Sep. 30, 2022 | Dec. 31, 2020 | |
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||||
Provision for unpaid losses and loss adjustment expenses | $ 111,741 | $ 74,869 | $ 54,988 | |
Current accident year | 186,478 | 132,481 | ||
Reinsurance recoverables | 843 | 0 | $ 0 | |
Current accident year | 109,555 | $ 76,559 | ||
U S Auto | ||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||||
Current accident year | 6,500 | |||
Hurricane Ian | ||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||||
Provision for unpaid losses and loss adjustment expenses | $ 15,300 | |||
Allowance for credit loss, recovery | 5,300 | |||
Current accident year | 10,000 | |||
Reinsurance recoverables | 1,400 | |||
Reinsurance premiums | $ 700 |
Provision for Unpaid Losses a_6
Provision for Unpaid Losses and Loss Adjustment Expenses - Provision by Insurance Product (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Liability for Claims and Claims Adjustment Expense [Line Items] | |||
Total gross reserves for losses and loss adjustment expenses | $ 111,741 | $ 74,869 | $ 54,988 |
Auto | |||
Liability for Claims and Claims Adjustment Expense [Line Items] | |||
Total gross reserves for losses and loss adjustment expenses | 111,575 | 74,573 | |
Marine | |||
Liability for Claims and Claims Adjustment Expense [Line Items] | |||
Total gross reserves for losses and loss adjustment expenses | $ 166 | $ 296 |
Provision for Unpaid Losses a_7
Provision for Unpaid Losses and Loss Adjustment Expenses - Incurred and Paid Losses (Details) $ in Thousands | Dec. 31, 2022 USD ($) claim | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | Dec. 31, 2019 USD ($) | Dec. 31, 2018 USD ($) | Dec. 31, 2017 USD ($) |
Auto | ||||||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||||
Incurred losses and loss adjustment expense | $ 515,878 | |||||
Cumulative paid losses and loss adjustment expenses from the table below | (405,131) | |||||
Reserves for losses and loss adjustment expenses before 2017, net of reinsurance | 0 | |||||
Effect of foreign currency rate changes | (15) | |||||
Reserves for losses and loss adjustment expenses, undiscounted and net of reinsurance | 110,732 | |||||
Reserves for Losses and Loss Adjustment Expenses Incurred But Not Reported | 44,782 | |||||
Effect of foreign currency rate changes | (15) | |||||
Reserves for losses and loss adjustment expenses, undiscounted and net of reinsurance | $ 44,767 | |||||
Cumulative Number of Reported Claims | claim | 154,264 | |||||
Auto | 2017 | ||||||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||||
Incurred losses and loss adjustment expense | $ 18,284 | $ 18,409 | $ 18,594 | $ 18,594 | $ 18,594 | $ 18,594 |
Cumulative paid losses and loss adjustment expenses from the table below | (18,122) | (17,897) | (17,530) | (17,442) | (16,655) | (11,410) |
Reserves for Losses and Loss Adjustment Expenses Incurred But Not Reported | $ 44 | |||||
Cumulative Number of Reported Claims | claim | 11,031 | |||||
Auto | 2018 | ||||||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||||
Incurred losses and loss adjustment expense | $ 37,491 | 37,516 | 40,287 | 40,287 | 40,422 | |
Cumulative paid losses and loss adjustment expenses from the table below | (36,807) | (36,414) | (35,899) | (34,992) | (23,915) | |
Reserves for Losses and Loss Adjustment Expenses Incurred But Not Reported | $ 3 | |||||
Cumulative Number of Reported Claims | claim | 20,641 | |||||
Auto | 2019 | ||||||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||||
Incurred losses and loss adjustment expense | $ 59,660 | 59,660 | 63,642 | 63,642 | ||
Cumulative paid losses and loss adjustment expenses from the table below | (57,393) | (55,617) | (51,491) | (37,910) | ||
Reserves for Losses and Loss Adjustment Expenses Incurred But Not Reported | $ 631 | |||||
Cumulative Number of Reported Claims | claim | 23,780 | |||||
Auto | 2020 | ||||||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||||
Incurred losses and loss adjustment expense | $ 85,111 | 86,608 | 90,110 | |||
Cumulative paid losses and loss adjustment expenses from the table below | (78,079) | (73,402) | (53,167) | |||
Reserves for Losses and Loss Adjustment Expenses Incurred But Not Reported | $ 2,833 | |||||
Cumulative Number of Reported Claims | claim | 27,092 | |||||
Auto | 2021 | ||||||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||||
Incurred losses and loss adjustment expense | $ 129,259 | 131,643 | ||||
Cumulative paid losses and loss adjustment expenses from the table below | (105,475) | (75,933) | ||||
Reserves for Losses and Loss Adjustment Expenses Incurred But Not Reported | $ 9,215 | |||||
Cumulative Number of Reported Claims | claim | 35,116 | |||||
Auto | 2022 | ||||||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||||
Incurred losses and loss adjustment expense | $ 186,073 | |||||
Cumulative paid losses and loss adjustment expenses from the table below | (109,255) | |||||
Reserves for Losses and Loss Adjustment Expenses Incurred But Not Reported | $ 32,056 | |||||
Cumulative Number of Reported Claims | claim | 36,604 | |||||
Marine | ||||||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||||
Incurred losses and loss adjustment expense | $ 3,696 | |||||
Cumulative paid losses and loss adjustment expenses from the table below | (3,530) | |||||
Reserves for losses and loss adjustment expenses before 2017, net of reinsurance | 0 | |||||
Reserves for losses and loss adjustment expenses, undiscounted and net of reinsurance | 166 | |||||
Reserves for Losses and Loss Adjustment Expenses Incurred But Not Reported | $ 150 | |||||
Cumulative Number of Reported Claims | claim | 1,034 | |||||
Marine | 2017 | ||||||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||||
Incurred losses and loss adjustment expense | $ 183 | 183 | 198 | 198 | 198 | 198 |
Cumulative paid losses and loss adjustment expenses from the table below | (183) | (182) | (182) | (183) | (183) | $ (138) |
Reserves for Losses and Loss Adjustment Expenses Incurred But Not Reported | $ 0 | |||||
Cumulative Number of Reported Claims | claim | 124 | |||||
Marine | 2018 | ||||||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||||
Incurred losses and loss adjustment expense | $ 514 | 489 | 437 | 437 | 437 | |
Cumulative paid losses and loss adjustment expenses from the table below | (514) | (431) | (425) | (426) | $ (332) | |
Reserves for Losses and Loss Adjustment Expenses Incurred But Not Reported | $ 0 | |||||
Cumulative Number of Reported Claims | claim | 189 | |||||
Marine | 2019 | ||||||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||||
Incurred losses and loss adjustment expense | $ 835 | 835 | 893 | 893 | ||
Cumulative paid losses and loss adjustment expenses from the table below | (835) | (835) | (828) | $ (514) | ||
Reserves for Losses and Loss Adjustment Expenses Incurred But Not Reported | $ 0 | |||||
Cumulative Number of Reported Claims | claim | 192 | |||||
Marine | 2020 | ||||||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||||
Incurred losses and loss adjustment expense | $ 1,002 | 975 | 915 | |||
Cumulative paid losses and loss adjustment expenses from the table below | (985) | (967) | $ (568) | |||
Reserves for Losses and Loss Adjustment Expenses Incurred But Not Reported | $ 16 | |||||
Cumulative Number of Reported Claims | claim | 205 | |||||
Marine | 2021 | ||||||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||||
Incurred losses and loss adjustment expense | $ 757 | 854 | ||||
Cumulative paid losses and loss adjustment expenses from the table below | (713) | $ (625) | ||||
Reserves for Losses and Loss Adjustment Expenses Incurred But Not Reported | $ 44 | |||||
Cumulative Number of Reported Claims | claim | 210 | |||||
Marine | 2022 | ||||||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||||
Incurred losses and loss adjustment expense | $ 405 | |||||
Cumulative paid losses and loss adjustment expenses from the table below | (300) | |||||
Reserves for Losses and Loss Adjustment Expenses Incurred But Not Reported | $ 90 | |||||
Cumulative Number of Reported Claims | claim | 114 |
Provision for Unpaid Losses a_8
Provision for Unpaid Losses and Loss Adjustment Expenses - Historical Claims Duration (Details) | Dec. 31, 2022 |
Auto | |
Liability for Claims and Claims Adjustment Expense [Line Items] | |
Year 1 | 62.40% |
Year 2 | 21% |
Year 3 | 8.80% |
Year 4 | 3.60% |
Year 5 | 1.60% |
Year 6 | 1.40% |
Marine | |
Liability for Claims and Claims Adjustment Expense [Line Items] | |
Year 1 | 77.90% |
Year 2 | 21.40% |
Year 3 | 0.90% |
Year 4 | (0.30%) |
Year 5 | 0% |
Year 6 | 0% |
Reinsurance (Details)
Reinsurance (Details) $ in Millions | 12 Months Ended | ||
Jan. 01, 2023 USD ($) letter_of_credit | Dec. 31, 2022 GBP (£) letter_of_credit | Dec. 31, 2022 USD ($) letter_of_credit | |
Effects of Reinsurance [Line Items] | |||
Excess retention, amount reinsured | $ 100 | ||
Amount retained | £ 1,000,000 | $ 10 | |
Retained top and aggregate cover | 25% | 25% | |
Total insured value | $ 5 | ||
Amount reinsured per event | 30 | ||
Amount retained per event | $ 9 | ||
Number of coverage layers | letter_of_credit | 1 | 1 | |
Subsequent Event | |||
Effects of Reinsurance [Line Items] | |||
Total insured value | $ 5 | ||
Amount reinsured per event | 105 | ||
Amount retained per event | $ 25 | ||
Number of coverage layers | letter_of_credit | 2 | ||
Reinsurance Policy, Type [Axis]: Catastrophe Reinsurance Layer One | |||
Effects of Reinsurance [Line Items] | |||
Amount reinsured per event | $ 21 | ||
Amount retained per event | 9 | ||
Reinsurance Policy, Type [Axis]: Catastrophe Reinsurance Layer One | Subsequent Event | |||
Effects of Reinsurance [Line Items] | |||
Amount reinsured per event | $ 25 | ||
Amount retained per event | 25 | ||
Reinsurance Policy, Type [Axis]: Catastrophe Reinsurance Layer Two | Subsequent Event | |||
Effects of Reinsurance [Line Items] | |||
Amount reinsured per event | 55 | ||
Amount retained per event | $ 50 | ||
Reinsurance Policy, Type [Axis]: Catastrophe Reinsurance Top Layer | |||
Effects of Reinsurance [Line Items] | |||
Excess retention, amount reinsured | 10 | ||
Amount retained | 90 | ||
Reinsurance Policy, Type [Axis]: Catastrophe Reinsurance Top Layer Additional Coverage | |||
Effects of Reinsurance [Line Items] | |||
Excess retention, amount reinsured | 10 | ||
Amount retained | $ 12.5 |
Statutory Capital and Surplus (
Statutory Capital and Surplus (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Insurance [Abstract] | ||
Statutory amount available for dividend payments without prior approval | $ 32.9 | |
Statutory capital and surplus, balance | 131.7 | $ 107.3 |
Statutory net income amount | $ 24.4 | $ 25.2 |
Restructuring, Impairment and_3
Restructuring, Impairment and Related Charges (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Restructuring Cost and Reserve [Line Items] | ||
Impairment of operating lease right-of-use assets | $ 4,698 | $ 0 |
Gain (loss) on disposition of leasehold improvements | 1,500 | |
Restructuring, impairment and related charges | 12,200 | |
Voluntary Retirement Program | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring, impairment and related charges | 4,200 | |
Reduction In Force | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring, impairment and related charges | $ 8,000 |
Restructuring, Impairment and_4
Restructuring, Impairment and Related Charges - Reconciliation of Restructuring Liability (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Restructuring Reserve [Roll Forward] | ||
Beginning balance | $ 0 | |
Costs incurred and charged to expense | 18,324 | $ 0 |
Costs paid or otherwise settled | (8,854) | |
Ending balance | $ 9,470 | $ 0 |
Fair Value Measurements - Warra
Fair Value Measurements - Warrant Liabilities (Details) - shares | Dec. 31, 2022 | Dec. 02, 2021 |
Class of Warrant or Right [Line Items] | ||
Warrants outstanding (in shares) | 19,483,550 | 20,005,550 |
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) | Dec. 31, 2022 $ / shares USD ($) year |
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 | 8.41 |
Private placement warrants | Volatility | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants measurement input | 0.477 |
Private placement warrants | Expected term of the warrants | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants measurement input | year | 3.92 |
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 | 8.41 |
Underwriter Warrants | Volatility | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants measurement input | 0.477 |
Underwriter Warrants | Expected term of the warrants | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants measurement input | year | 3.92 |
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 | 8.41 |
OTM Warrants | Volatility | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants measurement input | 0.450 |
OTM Warrants | Expected term of the warrants | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants measurement input | year | 8.93 |
OTM Warrants | Risk-free rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants measurement input | 0.0390 |
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 | 8.41 |
PIPE Warrants | Volatility | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants measurement input | 0.477 |
PIPE Warrants | Expected term of the warrants | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants measurement input | year | 3.92 |
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 | Dec. 31, 2022 | Dec. 31, 2021 |
Financial Assets | ||
Total | $ 3,294 | $ 531 |
Financial Liabilities | ||
Total | 45,561 | 89,366 |
Public warrants | ||
Financial Liabilities | ||
Warrants | 12,880 | 25,243 |
Private placement warrants | ||
Financial Liabilities | ||
Warrants | 673 | 1,248 |
Underwriter Warrants | ||
Financial Liabilities | ||
Warrants | 75 | 139 |
OTM Warrants | ||
Financial Liabilities | ||
Warrants | 4,706 | 6,849 |
PIPE Warrants | ||
Financial Liabilities | ||
Warrants | 27,227 | 55,887 |
Interest rate swaps | ||
Financial Assets | ||
Interest rate swaps | 3,294 | 531 |
Level 1 | ||
Financial Assets | ||
Total | 0 | 0 |
Financial Liabilities | ||
Total | 12,880 | 25,243 |
Level 1 | Public warrants | ||
Financial Liabilities | ||
Warrants | 12,880 | 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 | 3,294 | 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 | 3,294 | 531 |
Level 3 | ||
Financial Assets | ||
Total | 0 | 0 |
Financial Liabilities | ||
Total | 32,681 | 64,123 |
Level 3 | Public warrants | ||
Financial Liabilities | ||
Warrants | 0 | 0 |
Level 3 | Private placement warrants | ||
Financial Liabilities | ||
Warrants | 673 | 1,248 |
Level 3 | Underwriter Warrants | ||
Financial Liabilities | ||
Warrants | 75 | 139 |
Level 3 | OTM Warrants | ||
Financial Liabilities | ||
Warrants | 4,706 | 6,849 |
Level 3 | PIPE Warrants | ||
Financial Liabilities | ||
Warrants | 27,227 | 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 - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning balance | $ 64,123 | $ 0 |
Issuance of warrant liabilities | 35,210 | |
Change in fair value of warrant liabilities | (29,536) | 28,913 |
Exercise of warrants | (1,906) | |
Ending balance | 32,681 | 64,123 |
Private placement warrants | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning balance | 1,248 | 0 |
Issuance of warrant liabilities | 460 | |
Change in fair value of warrant liabilities | (575) | 788 |
Exercise of warrants | 0 | |
Ending balance | 673 | 1,248 |
Underwriter Warrants | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning balance | 139 | 0 |
Issuance of warrant liabilities | 51 | |
Change in fair value of warrant liabilities | (64) | 88 |
Exercise of warrants | 0 | |
Ending balance | 75 | 139 |
OTM Warrants | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning balance | 6,849 | 0 |
Issuance of warrant liabilities | 2,899 | |
Change in fair value of warrant liabilities | (2,143) | 3,950 |
Exercise of warrants | 0 | |
Ending balance | 4,706 | 6,849 |
PIPE Warrants | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning balance | 55,887 | 0 |
Issuance of warrant liabilities | 31,800 | |
Change in fair value of warrant liabilities | (26,754) | 24,087 |
Exercise of warrants | (1,906) | |
Ending balance | $ 27,227 | $ 55,887 |
Fair Value Measurements - Carry
Fair Value Measurements - Carrying Value and Estimated Fair Value (Details) - Fixed Income Securities - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Other-than-temporary impairment loss | $ 0 | $ 0 |
Reported Value Measurement | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed income securities, short-term | 6,296,000 | 1,189,000 |
Fixed income securities, long-term | 6,690,000 | 9,596,000 |
Total | 12,986,000 | 10,785,000 |
Level 2 | Estimate of Fair Value Measurement | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed income securities, short-term | 6,205,000 | 1,188,000 |
Fixed income securities, long-term | 6,316,000 | 9,476,000 |
Total | $ 12,521,000 | $ 10,664,000 |
Debt - Schedule of Long-Term De
Debt - Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Debt Instrument [Line Items] | |||
Total debt outstanding | $ 108,280 | $ 136,500 | |
Less: current portion | 0 | (1,000) | |
Total long-term debt outstanding | 108,280 | 135,500 | |
Notes payable | |||
Debt Instrument [Line Items] | |||
Total debt outstanding | 3,280 | 1,000 | $ 2,000 |
Revolving Credit Facility | Line of Credit | |||
Debt Instrument [Line Items] | |||
Total debt outstanding | $ 105,000 | $ 135,500 |
Debt - Narrative (Details)
Debt - Narrative (Details) | 12 Months Ended | ||||
Mar. 01, 2022 USD ($) | Dec. 31, 2022 USD ($) letter_of_credit installment | Dec. 31, 2021 USD ($) | Oct. 27, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Debt Instrument [Line Items] | |||||
Long-term debt | $ 108,280,000 | $ 136,500,000 | |||
Repayments of long-term debt | $ 122,500,000 | 42,500,000 | |||
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 | ||||
Notes payable | |||||
Debt Instrument [Line Items] | |||||
Long-term debt | $ 3,280,000 | 1,000,000 | $ 2,000,000 | ||
Number of payment installments | installment | 2 | ||||
Fixed rate | 3.25% | ||||
Repayments of long-term debt | $ 1,000,000 | $ 1,000,000 | |||
Notes payable | U.K. | |||||
Debt Instrument [Line Items] | |||||
Long-term debt | $ 3,300,000 | ||||
Notes payable | U.K. | Minimum | |||||
Debt Instrument [Line Items] | |||||
Fixed rate | 7% | ||||
Notes payable | U.K. | Maximum | |||||
Debt Instrument [Line Items] | |||||
Fixed rate | 8.50% | ||||
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 | 6.57% | 1.61% | |||
Long-term debt | $ 105,000,000 | $ 135,500,000 | |||
Revolving Credit Facility | Foreign Line of Credit | |||||
Debt Instrument [Line Items] | |||||
Maximum borrowing capacity | 25,000,000 | ||||
Letter of Credit | Line of Credit | |||||
Debt Instrument [Line Items] | |||||
Maximum borrowing capacity | $ 25,000,000 |
Interest Rate Swaps (Details)
Interest Rate Swaps (Details) - Interest rate swaps | Dec. 31, 2022 swap | Sep. 30, 2022 | Dec. 31, 2020 USD ($) | Mar. 31, 2017 USD ($) |
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) | Dec. 31, 2022 vote $ / shares shares | Dec. 31, 2021 $ / 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 | |||
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 | |
Conversion ratio | 1 | |||
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) - shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Class of Stock [Line Items] | ||
Units Owned (in shares) | 338,961,435 | |
The Hagerty Group, LLC | ||
Class of Stock [Line Items] | ||
Ownership percentage by Hagerty, Inc | 24.50% | 24.70% |
Ownership percentage by noncontrolling interest | 75.50% | |
Total ownership percentage | 100% | |
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 |
Members' and Stockholders' Eq_5
Members' and Stockholders' Equity - Redeemable Noncontrolling Interest (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 23, 2022 | Mar. 22, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Class of Stock [Line Items] | ||||
Redeemable noncontrolling interest, accreted redemption value | $ 2,100,000 | $ 0 | $ 593,277 | |
Redeemable noncontrolling interest, accretion | $ 1,600,000 | (1,560,420) | (366,522) | |
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 | (162,100) | (162,095) | $ (366,522) | |
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 | $ (1,400,000) | (1,398,325) | ||
Removal of the redeemable feature of the non-controlling interest | 1,400,000 | 1,398,325 | ||
Non-controlling Interest | ||||
Class of Stock [Line Items] | ||||
Removal of the redeemable feature of the non-controlling interest | $ 215,600 | $ 215,550 |
Earnings (Loss) Per Share (Deta
Earnings (Loss) Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Numerator: | ||
Net income (loss) attributable to controlling interest | $ 32,078 | $ (46,358) |
Change in fair value of potentially dilutive warrant liabilities | (27,392) | 0 |
Net income (loss) attributable to non-controlling interest Hagerty Group Units | (28,642) | 0 |
Adjusted net income (loss) attributable to Class A Common Stock shareholders | (23,956) | (46,358) |
Adjusted net income (loss) attributable to Class A Common Stock shareholders | $ (23,956) | $ (46,358) |
Denominator: | ||
Earnings (loss) per share/unit - basic (in dollars per share) | $ 0.39 | $ (0.56) |
Earnings (loss) per share/unit - diluted (in dollars per share) | $ (0.56) | |
Class A Common Stock | ||
Denominator: | ||
Weighted average shares/members' units - diluted (in shares) | 82,728 | 82,327 |
Conversion of non-controlling interest Hagerty Group units to class A common stock (in shares) | 252,806 | 0 |
Warrants (in shares) | 613 | 0 |
Stock-based compensation awards (in shares) | 0 | 0 |
Weighted average shares outstanding, diluted (in shares) | 336,147 | 82,327 |
Earnings (loss) per share/unit - basic (in dollars per share) | $ 0.39 | $ (0.56) |
Earnings (loss) per share/unit - diluted (in dollars per share) | $ (0.07) | $ (0.56) |
Warrant Liabilities (Details)
Warrant Liabilities (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 02, 2021 | |
Class of Warrant or Right [Line Items] | |||
Warrants outstanding (in shares) | 19,483,550 | 20,005,550 | |
Change in fair value of warrant liabilities | $ (41,899) | $ 42,540 | |
Warrants exercised (in shares) | 0 | ||
Warrant liabilities | $ 45,561 | $ 89,366 | |
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 | |
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 | 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 | 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 | 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 | 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 | 12 Months Ended | |
Apr. 30, 2022 USD ($) d $ / shares | Dec. 31, 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) | 31,378,154 | ||
Options | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period | 2 years | ||
Options | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period | 5 years | ||
Restricted Stock Units (RSUs) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Granted (in shares) | 3,340,547 | ||
Granted (in dollars per share) | $ / shares | $ 10.76 | ||
Unrecognized compensation cost | $ | $ 24,900,000 | ||
Weighted average recognition period (in years) | 3 years 5 months 19 days | ||
Performance Restricted Stock Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Granted (in shares) | 3,707,136 | ||
Granted (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 | ||
Performance Restricted Stock Units | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period | 3 years | ||
Performance Restricted Stock Units | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period | 7 years | ||
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 | Employee stock purchase plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Common stock reserved for future issuance (in shares) | 11,495,220 | ||
Employees contribution | 50% | ||
Purchase price | 90% | ||
Stock purchased under ESPP plan (in shares) | 0 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock-based Compensation Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | $ 12,129 | $ 0 |
Employee stock purchase plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | 169 | |
Restricted Stock Units (RSUs) | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | 9,814 | |
Performance Restricted Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | $ 2,146 |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock Unit Activity (Details) - Restricted Stock Units (RSUs) | 12 Months Ended |
Dec. 31, 2022 $ / shares shares | |
Restricted Stock Units | |
Beginning balance (in shares) | shares | 0 |
Granted (in shares) | shares | 3,340,547 |
Vested (in shares) | shares | (37,071) |
Forfeited (in shares) | shares | (108,438) |
Ending balance (in shares) | shares | 3,195,038 |
Weighted Average Fair Value | |
Beginning balance (in dollars per share) | $ / shares | $ 0 |
Granted (in dollars per share) | $ / shares | 10.76 |
Vested (in dollars per share) | $ / shares | 10.79 |
Forfeited (in dollars per share) | $ / shares | 10.79 |
Ending balance (in dollars per share) | $ / shares | $ 10.76 |
Stock-Based Compensation - Gran
Stock-Based Compensation - Grant-date Fair Value of Performance Stock Units (Details) - Performance Restricted Stock Units | 12 Months Ended |
Dec. 31, 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 stock volatility | 35% |
Expected term (in years) | 7 years |
Risk-free interest rate | 2.50% |
Dividend yield | 0% |
Stock-Based Compensation - Perf
Stock-Based Compensation - Performance Stock Units Outstanding (Details) - Performance Restricted Stock Units | 12 Months Ended |
Dec. 31, 2022 $ / shares shares | |
Restricted Stock Units | |
Beginning balance (in shares) | shares | 0 |
Granted (in shares) | shares | 3,707,136 |
Ending balance (in shares) | shares | 3,707,136 |
Weighted Average Fair Value | |
Beginning balance (in dollars per share) | $ / shares | $ 0 |
Granted (in dollars per share) | $ / shares | 5.19 |
Ending balance (in dollars per share) | $ / shares | $ 5.19 |
Taxation - Income Before Income
Taxation - Income Before Income Tax Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | ||
United States | $ 24,778 | $ (44,434) |
Foreign | (13,682) | (10,169) |
INCOME (LOSS) BEFORE INCOME TAX EXPENSE | $ 11,096 | $ (54,603) |
Taxation - Income Tax Expense (
Taxation - Income Tax Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Current: | ||
Federal | $ 4,041 | $ 3,753 |
State | 3 | 0 |
Foreign | 0 | (40) |
Current income tax expense (benefit) | 4,044 | 3,713 |
Deferred: | ||
Federal | 2,999 | 3,038 |
State | (26) | 0 |
Foreign | 0 | 0 |
Deferred income tax expense (benefit) | 2,973 | 3,038 |
Total | $ 7,017 | $ 6,751 |
Taxation - Income Tax Rate Reco
Taxation - Income Tax Rate Reconciliation (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Amount | ||
Income tax (benefit) expense at statutory rate | $ 2,330 | $ (11,467) |
State taxes | (479) | (163) |
Loss not subject to entity-level taxes | 8,727 | 6,485 |
Foreign rate differential | (375) | (276) |
Change in valuation allowance | 5,647 | 2,759 |
Change in fair value of warrant liability | (8,799) | 8,933 |
Permanent items | 852 | 477 |
Other, net | (886) | 3 |
Total | $ 7,017 | $ 6,751 |
Percent | ||
Income tax (benefit) expense at statutory rate | 21% | 21% |
State taxes | (4.00%) | 0% |
Loss not subject to entity-level taxes | 79% | (12.00%) |
Foreign rate differential | (3.00%) | 1% |
Change in valuation allowance | 51% | (5.00%) |
Change in fair value of warrant liability | (79.00%) | (16.00%) |
Permanent items | 8% | (1.00%) |
Other, net | (8.00%) | 0% |
Income tax expense (benefit) | 65% | (12.00%) |
Taxation - Deferred Tax Assets
Taxation - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 02, 2021 |
Deferred tax assets | |||
Discount on provision for losses and loss adjustment expenses | $ 802 | $ 557 | |
Unearned premiums | 9,886 | 7,345 | |
Accrued professional fees | 0 | 5 | |
Unrealized foreign currency gain | 229 | 70 | |
Excess tax basis | 159,337 | 168,014 | $ 167,400 |
Net operating loss ("NOL") and other carryforwards | 17,197 | 6,492 | |
Other | 457 | 315 | |
Gross deferred tax asset | 187,908 | 182,798 | |
Less: valuation allowance | (176,116) | (174,821) | |
Total net deferred tax assets | 11,792 | 7,977 | |
Deferred tax liabilities | |||
Deferred acquisition costs | (22,542) | (17,122) | |
Excise tax accrual | (1,068) | (1,279) | |
Unrealized foreign currency gain | (229) | (70) | |
Unrealized investment gain | (37) | (16) | |
Intangible assets | (759) | 0 | |
Other | (7) | 0 | |
Total deferred tax liabilities | (24,642) | (18,487) | |
Net deferred tax liability | $ (12,850) | $ (10,510) |
Taxation - Narrative (Details)
Taxation - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 02, 2021 | |
Operating Loss Carryforwards [Line Items] | |||
Valuation allowance | $ 176,116 | $ 174,821 | |
Tax savings rate | 25.60% | ||
Tax receivable agreement, fair value | 3,200 | $ 3,500 | |
TRA, increase (decrease) in fair value | (300) | ||
Excess tax basis | 159,337 | 168,014 | $ 167,400 |
Net operating loss ("NOL") and other carryforwards | 17,200 | ||
Foreign Tax Authority | |||
Operating Loss Carryforwards [Line Items] | |||
Operating loss carryforwards | 93,500 | $ 47,000 | |
Deferred tax assets, operating loss carryforwards, not subject to expiration | 10,400 | ||
Deferred tax assets, operating loss carryforwards, subject to expiration | $ 6,800 |
Taxation - Operating Loss Carry
Taxation - Operating Loss Carryforward Expiration (Details) - Foreign Tax Authority $ in Thousands | Dec. 31, 2022 USD ($) |
Operating Loss Carryforwards [Line Items] | |
Deferred tax assets, operating loss carryforwards, subject to expiration | $ 6,800 |
Expiring 2036 | |
Operating Loss Carryforwards [Line Items] | |
Deferred tax assets, operating loss carryforwards, subject to expiration | 396 |
Expiring 2037 | |
Operating Loss Carryforwards [Line Items] | |
Deferred tax assets, operating loss carryforwards, subject to expiration | 710 |
Expiring 2038 | |
Operating Loss Carryforwards [Line Items] | |
Deferred tax assets, operating loss carryforwards, subject to expiration | 848 |
Expiring 2039 | |
Operating Loss Carryforwards [Line Items] | |
Deferred tax assets, operating loss carryforwards, subject to expiration | 0 |
Expiring 2040 | |
Operating Loss Carryforwards [Line Items] | |
Deferred tax assets, operating loss carryforwards, subject to expiration | 1,153 |
Expiring 2041 | |
Operating Loss Carryforwards [Line Items] | |
Deferred tax assets, operating loss carryforwards, subject to expiration | 1,427 |
Expiring 2042 | |
Operating Loss Carryforwards [Line Items] | |
Deferred tax assets, operating loss carryforwards, subject to expiration | $ 2,238 |
Related-Party Transactions - Na
Related-Party Transactions - Narrative (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||||
Aug. 31, 2022 | Apr. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Jan. 31, 2022 | |
Broad Arrow Group, Inc. | ||||||
Related Party Transaction [Line Items] | ||||||
Business combination, percentage of voting interest acquired | 60% | |||||
Total equity consideration | $ 73,300 | $ 73,253 | ||||
Speed Digital LLC | ||||||
Related Party Transaction [Line Items] | ||||||
Purchase price | $ 15,000 | |||||
Broad Arrow Group, Inc. | ||||||
Related Party Transaction [Line Items] | ||||||
Equity method investment, ownership percentage | 40% | |||||
Affiliated Entity | Advanced Commission Payment | State Farm | ||||||
Related Party Transaction [Line Items] | ||||||
Related party transaction, amounts of transaction | $ 20,000 | |||||
Affiliated Entity | Reinsurance Agreement | ||||||
Related Party Transaction [Line Items] | ||||||
Reinsured risk, percentage | 70% | 60% | ||||
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 LLC | 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) - Affiliated Entity - Alliance Agreement - Markel - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Related Party Transaction [Line Items] | ||
Due to insurer | $ 64,873 | $ 54,850 |
Commission revenue | $ 285,254 | $ 239,432 |
Due To Related Parties | Related Party Concentration Risk | ||
Related Party Transaction [Line Items] | ||
Percent of total | 95% | 95% |
Revenue from Contract with Customer Benchmark | Related Party Concentration Risk | ||
Related Party Transaction [Line Items] | ||
Percent of total | 95% | 90% |
Related-Party Transactions - Re
Related-Party Transactions - Reinsurance Agreement (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Related Party Transaction [Line Items] | |||
Premiums receivable | $ 100,700 | $ 75,297 | |
Deferred acquisition costs, net | 107,342 | 81,535 | $ 58,572 |
TOTAL ASSETS | 1,312,518 | 1,041,871 | |
Losses payable | 55,516 | 34,482 | |
Provision for unpaid losses and loss adjustment expenses | 111,741 | 74,869 | $ 54,988 |
Unearned premiums | 235,462 | 175,199 | |
Commissions payable | 77,075 | 60,603 | |
TOTAL LIABILITIES | 945,149 | 771,070 | |
Earned premium | 403,061 | 295,824 | |
Ceding commission | 191,150 | 140,983 | |
Losses and loss adjustment expenses | 182,402 | 122,080 | |
Total operating expenses | 855,154 | 629,149 | |
Affiliated Entity | Reinsurance Agreement | Markel | |||
Related Party Transaction [Line Items] | |||
Premiums receivable | 97,897 | 72,697 | |
Deferred acquisition costs, net | 103,869 | 78,449 | |
TOTAL ASSETS | 201,766 | 151,146 | |
Losses payable | 53,800 | 33,459 | |
Provision for unpaid losses and loss adjustment expenses | 106,436 | 70,680 | |
Unearned premiums | 227,192 | 167,541 | |
Commissions payable | 75,898 | 59,511 | |
TOTAL LIABILITIES | 463,326 | 331,191 | |
Earned premium | 386,696 | 281,794 | |
Ceding commission | 184,124 | 134,946 | |
Losses and loss adjustment expenses | 182,340 | 116,396 | |
Total operating expenses | $ 366,464 | $ 251,342 |