- Earnings call transcript Q3 2022

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Operator

Greetings, and welcome to Hagerty's Third Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jay Koval, Head of Investor Relations. you. Thank

begin. may You

Jason Koval

simultaneously Good us and XXXX for note corporate will Call. operator. section Investor you the of Earnings and for Please company's be call this joining Hagerty's at that on afternoon, you, the gentlemen, Relations investor.hagerty.com. ladies website thank Conference webcast Thank Third Quarter

also slides IR website. the accompanying release to earnings on quarterly letter stockholders posted covering Our and this period are

Officer. Executive Joining the Officer; Chief call Chief McClymont, Hagerty, today and Financial are Patrick McKeel

remind regarding ability you that expand we and the I other forward-looking, start, key like our performance, to related future maintain and acquire and business statements plans regarding Before to may today our our market new including expected statements can investments that contain and to our would including discussion plans considered financial members, expectations business operational our statements share, to concerning prospects. metrics existing partnerships, and be

words or or reflect we identified views expect, any such to as considered often we are our as view forward-looking of should our expressions. statements similar XX, statements. not of today, be update subsequent not We with undertake Forward-looking any do and as obligation date. November believe revise These any we anticipate, statements

from statements materially subject our Forward-looking performance results expectations. could that promises of of risks uncertainties differ and guarantees to future not are or are and variety actual a cause to the

results, our available Relations the of Investor For refer with on at actual affect discussion material those a please and sec.gov. 's could contained important risks website Hagerty other are our that to and which SEC, filings in factors

along year-over-year a basis. directly on comparisons SEC's these financial Copies of we certain and our noted reconciliation And the non-GAAP Founder found over to call, XX-Q. be turn measure to Form Hagerty, can investor financial the a Investor included comparable like and today's CEO. I'd our is GAAP call, are in sec.gov. non-GAAP all today's during and most in measures. that, website press deck A section website Finally, otherwise to which our at refer the on discussion of with release, Relations measures, call the McKeel on of Unless to will with

McKeel Hagerty

and Jay, to our joining results. discuss quarter third you Thank us morning, for Thanks, everyone. good

company we into strength third we planned quarter, welcome for business earnings for Turcotte X.X which first excited differentiated he CFO. the are call I him projects. the auto special the of get collaboration. Fred Before advisory to thank retirement I decade highly helping into ago months his enthusiast to pleased as our want Patrick market. are and with very and Overall, X want our announced resiliency role of outstanding reflect as Fred's with moves addressing to our and a the Hagerty's strategic model We results, service quarter also new a

the quarter the actions more XX% quarter, to rate into and modern today. grew key Let's start percentage third the new of XX% drove new offset supporting XX% through X third pressures. written include highlights deck, growth revenue September customers vehicles shares pulling and the growth, metric winning the to XX, in our during In count the Written points. the with brand enthusiast The year-to-date first year-to-date is premium This premium in X underpins revenue premium increases while growth which the months. total growth Slide accelerated is investor key resulting Hagerty of an to ecosystem in the X some during XX%. XXXX. points XX%, mix Hagerty's other inflationary includes growth that marketplace, our quarter evolving jumped and X of revenue impressive third Total contributed business rate

QX locations, first well as the of consolidating our broad Re, and Hagerty revenue as strong to business addition social Hagerty membership quarter into Arrow Group our Marketplace. growth was our fully continued In garage

very including million. Farm quarter, profits, And During continued auction Hagerty XXXX. to revenue invest people our the anticipate successful team solid California. as members on X.X our during the of under in contributed technology and Marketplace partnership ownership, the in the integration both Motorlux State X% to we half active the Monterey, rolling grew out side the year-over-year Total and first

as and to drive Drivers memberships these Farm Club Hagerty initial Classic-plus the their expect as new offering grow we We Hagerty for XX-year help for program customers. growth contract meaningful State scale well powered as Hagerty

including share from encouraged we'll our the XXXX, share online marketplaces on revenue of full toward year details and We pricing by call. on on outlook $XX for in to which deliver live heightened contribution property casualty full gains strong end and on to a positions our economic quarter our quota XXXX space. XX% XX% environment Club premium, We year-to-date are a auctions, broader double-digit Hagerty well despite more as growth Re, volatility outlook fourth believe continued very a as well for and written single-tier of us a previous high track year revenue across XXXX this growth, in trajectory move keeps specific challenging Drivers our us Hagerty the

through most passion on time We also love our downturns. auto of defensive their enthusiasts recurring the spend business characteristics continue economic as tested model to

consistent X of constrained offering our for say rarefied growth, last the occupy to Score. services their the highlights cars enjoy Net delivered take their good decade. experience, auto improve As the vehicles, we special and it resulting that the has in Everything over and premium the retention model easier products dinner in written high done care resources. is Promoter people air to do toys collector prioritization excellent to my compounding their make and enthusiasts Slide an mother at table, loves of

written vehicles the expanded compared lower rate at growth. Sandy, average. Even outperformance the down XX% ratios Xx premium disastrous over special these year. last from Our remained with in increases X loss loss loss collecting growth the estimated the decade to following through of of we our roughly data, X significantly ago, under consistently underwrite our XXXX Hurricane coming able decades over to the ratio were months industry's and impact at we After than ratios industry XX%, the a industry with back bring

Our lines, loss in X while points to Hurricane higher the in ratio from driven ratios of quarter the risk Re ratio to by liability ultimate the our X.X compared $XX estimated maintain to percentage prudent million was was level reinsurance strengthened in $X.X performance management. to increases due approach resulting and of X.X loss our net U.S. months, first higher we XX%, given underlying year-to-date a percentage Ian's solid Hagerty exposure needs. due million successful XX%, to reserves. the third of losses in to business our points Ian increased losses remained over liability and And limited loss reserve by to reserves severity

closer The around stability for and year rate expect to model to favorably stable points due robust year the Retention the our our reinvest to paves policies. remained business market the and has a recently slightly which highlighting XX% XX We in the the the Roughly impact growth. XX%, rate sales. next driven these love the single-vehicle future which to and for of us new to Even industry range sales, based loss our below XX% this average. implemented our by allows on to far consumers, return year XX%, of resale and experiences products year compares to of strength higher-than-normal platform been way through of deliver for with is Hagerty X/X expectations retention attrition strength percentage after loss excluding to ratio, from increases. ratio our combined so vehicle ratio

are leads for update the to trust a why strength Hagerty excited me buy, our sell and range, value future to an high our browse, we on potential high Marketplace growing of still which collectible and vehicle count brand the are as to net our Importantly, proposition, and in members finance cars. we platform a so single-digit about testament

we in vehicles, sold a this generating Slide live conducted quarter, lots $XX the cars of XX% of with These year auctions. size generate can in vehicle we so with million first as Broad XXXX plan is with the Motorlux value more well escrow we Taylor in trillion. total and sales, our in with Jim In As options. of of Equally the product we U.S. trusted our financing XX% our Arrow value-added this with Monterey, X sold. buyers shown as is of The over including reminder, sellers title recent million consumers EBITDA and $XX margins, Monterey, opportunity $X recent X. auction both auctions on from for serve services in million fourth services, online our $X in Hagerty launch vehicle acquired collector Group the August revenue competitors. commission a differentiate higher Actions can certification over substantial of offering vehicles, of exciting the where brand encouraged are as auction and platform as in time-based

nationwide their today, gaining If you Facebook of to X% in would it typically at classified in regional market $X network sales, result were vehicles ads, they transaction small a billion, revenue. When versus dealer assume typical year in vehicles XX% value a billion consumers decide potential to on net to and trade access $XX markets, a of commission sell a implies hands, which local total rely that of buyers. including

its fair sales opportunity sure move more the Our on than focused online. these team making is Hagerty captures share as of

is on sales well XX%. the transaction track at context, vehicle competitor in to year close For space over value for is this in the billion and growing annual largest $X

the ecosystem, marketplace on path XXXX. on Drivers immediately new Group recapture Hagerty As insurance clear the make we mentioned introducing services our to last by quarter, the underwrote side be and up buyer standalone merits, We automotive that see expected accretive Broad policy Club. entertainment to but product, and is investment of lifestyle Arrow to options its we the the in including consumers a Hagerty

regulatory well, see State progressing and with as Farm to hard approvals partnership testing continue phase. work on integrating our the the seeking X, progressing is Slide teams Our through systems and you'll

the ecosystem to experiences successful our membership media culture Marketplace's and State Hagerty for and to customers stand we experience automotive and increasing communities across during normalization the platform. quota and State purpose And and existing customers lovers car As both with state-by-state anticipate help need are policies and the this growth including passion key car will up Hagerty, XXXX, investments to towards on the through significant have we in high-quality delivery Farm an future and facilitate first digital that others. our we solid and and shareholders their save for XXX,XXX scaled auto expect, to services post our the for And the our including we partnership unlock Farm, convert half beginning products launch, share to through for and highlights generations. for we our the in will the end, will that entertainment next of believe ecosystem, XXXX. At for Farm's catalyzes building and milestones creating the that that up entertainment business, progress revenue that basis of excited create of we of begin To XX,XXX platform access our is strong growth with State agents with slide X year and a connectivity program. continued agent to cars of and providing that the social meet We of continue value several human win-win Re, been content honors companies around world a classic driving work new activating to driving. year-to-date interaction

the cash Patrick? on I XXXX. early return to financial other these improve importantly, that, improving Patrick a elevated business long-term for we delivering containment continuing already model. best-in-class take decade, over to thoughts of margins in experiences results next strategy allocation on to members. This will profitability execute to As including about and turn financial and investments. to strategy disciplined flow remain detail, into an call we the we our our includes committed more side With growth approach to resource most to by think on discuss But the our great our and cost the will

Patrick McClymont

good of a Team I Fred has One transition. everyone. the and today to Board morning, effort like this also part tremendous this would thank Thank here McKeel the for into as for you, making he It's opportunity McKeel, put smooth and be great to Hagerty. and thank

the me into let on my months into start sharing job. of thoughts early quarterly Before X the Hagerty, some by digging financials,

This space. the see proposition well X% Farm. partnerships and as value such a is our customer auto just unique the ahead highly organic take growing powerful brand, for share is compelling. space share as First, new runway the in Hagerty be as enthusiast large powered fragmented, State and market a market and growth will use trusted double-digit insured to long relationships as of incremental by we today, With opportunity we

more ongoing Second, stream us the for the in Markel's build base fast-growing profit of allow that Hagerty create a should through to assume platform risk our the evolution Re and we high-quality, company. to capital Essentia underwrite

the now job across auto ecosystem these made Hagerty just and is enthusiasts Hagerty's status and during Third, has investments quickly together to for our offerings a years, market weave And community leverage simply, we bolt-on opportunistic strategic our our synergies to for we without is drive XXXX. to Hagerty's fortunate scale enthusiast the when have starting deals. deliver be deliver drive platform at market, the vehicles. profit back sizable of transactional comes getting comes to ambitions growth the last member going brand strong Marketplace transactions, It's to profitable fourth, trusted large may Put our our growth today. and drivers and can over wind when additional our several and it in it to profitability. and need significant while we revenue for coming small are the X.X-million can years, team in

I management resources. of believe is expense As prioritization a newly area arrived CFO, can one we improve and our

results, rollout can the such and Much outpaced heightened of top support partnerships growth year-to-date due State You to large-scale in line. technology this this as expense in Marketplace. where investment see the our Farm of is to our

which new considerable costs. comes our to is with public, due to go decision Some

in added people achieve in not positive we events our manage imperative we Marketplace. can anticipated insurance also to and order. businesses in growth growth deliver we've revenue but and profitability new and costs is the generation and areas traditional so such Additionally, carefully support as membership cash It we our that short just

exceeded margins XX%. our context, XXXX historical EBITDA XXXX from For to

financial is improving significant from upside So there our discipline.

taking the We in the expenses below necessary our are to to for budgeting steps deep rate meaningfully season our a slow and in in growth XXXX currently the growth revenues.

have heavily contractors relied During on to and the we development, few product projects. years, engineering digital high-price past software other do

down of lower at winding work and total are the cost. contracts many these a remaining in-sourcing We

reduce all looking of our to price We both. are at expenses or third-party carefully and working scope,

We retirement recently program. also a announced voluntary

are We at fresh expenses. all a taking look

ones strategies, to infrastructure, dragged the and businesses is ones save and company core that and Additionally, prioritizing culture to flow insurance, add last long-term few a viewing generations. high-growth we necessary Hagerty and will that with a to cash allow are our growth the for future rightsized have and on during most car years. value membership we various generate our shareholders initiatives the profits our us the and reward marketplace our fund profitability deemphasizing driving the

Total basis all X third written to Now the year-to-date the for delivered into revenue million. the quarter, a grew let's quarter, dig of X-point revenue XX% retention $XXX growth. contribution from XX% shown business driven a second Slides grew We solid numbers XX% on the of $XXX growth force third $XX some and policy solid new Commission grew premium across and from in to premium fee streams. X. total by XX%. On revenue acceleration of million, million. quarter rate to written represents from This

other commission or to higher a XX%. member retention $X commissions million contingent grew that by revenue, written premium elevated of social. in $XXX XX% CUC underwriting successful members the ratio, well from contractual addition quarter in and commissions as base XX% U.S. and in driven owned $XXX. paid our and Monterey. reduced and was as including from to million, impacted $XX paid increase and share new our increased and garage an in increase growth marketplace per Earned million, by loss underwriting in primarily quota by Ian revenue grew This reinsurance commissions premium Marketplace Revenue While million. were $X the policy Marketplace, total growth, to XX%, benefiting XX-point Motorlux events very auction the Membership to XX% revenue an revenue increased premiums, total Hurricane fueled from negatively by

Slide on XX. Turning to profitability

net operating decline of million year third includes of are we XXXX, For to reported million an we profit of the quarter $XX in million reserves $XX strategy our the for a reinstate reserving $X prior operating cost an our costs. to Ian $X insurance increase This for loss million compared U.S. period. $X.X driven reinsurance Ian, claims and for claims in following million auto liability higher by

physical premium last our damage, towards recently, Let U.S. The provide item. color some business. have this but we goes on severity of on seen me increase liability our majority

of estimated to reserves a strengthened a in level reserves third us the maintain quarter needs. the our compared we As prudent result, to ultimate allowing

We to drive should our the that XX% increases down rate back are loss implementing ratios area.

out average in recorded as public gain warrant of fair revaluation earnings per shares share to adjustment as Arrow The in of gain this our investments liability quarter. on was makes State million also both outstanding. last technology of versus the was of marketplace our on would a reflects Hagerty to on investments and Net quarter and $XX primarily million in Group. our the Broad value private accelerated organization, week's the $X.XX Broad to profitability including investments Arrow reduced $XX based look stake common Our online our the a people related I the the for and loss related Class partnership $XX and we but equity that XXXX, In budget Farm well warrants in are and income stock significant million related third across on GAAP weighted Marketplace. $X auctions. earlier. year our net A launch million decrease note quarter a time, of EPS

shares Holding On the shares which held adjusted given operating by the simple Corp. out the of per B items Hagerty basis, including stripping the will and $X.XX the Class these and total calculation losses EPS is we both what see a loss XX-Q, would with added using you was is the numerator Markel more that of a outstanding, expect denominator. you in line above. share, in of So discussed

a was EBITDA items the through. same adjusted in the quarter compared Our driven period, by third already for took I $X year of million cost $XX loss to prior million the

our to XX. let's Now outlook Slide shown on turn revised XXXX

mid-teens both in by net new revenue growth. we revenue high share As for business build and higher and the McKeel quota of growth and the revenue quota [Ascensia] These premium acquisitions. to single-digit on was XXXX. outlook growth share in the Marketplace, In in the we mentioned, offset that that Arrow's towards momentum growth Hagerty mind Broad high quarter pressures us been and Marketplace rates, our in with end auctions. the including written outstanding, to our XX% current XXXX on balanced, premium Keep expect should continue augmented through has increase are count full Written help with to combined year live Hagerty our digital Re. rate for increases drive auctions tracking inflationary from into is increased XX% in organic fourth will well and during

delivering significant of revenue operating items. with EPS our In which leverage mentioned Ian, growth summary, growth P&L. the is expect by million. expectations down a range previously to year is We similarly This auto investment, and year driven XXXX position $XX Full U.S. impacted Hagerty be now million of by Moving for forward. consistent the us will EBITDA reserves a CUC. for almost income remains costs and and top-tier these full related $X entirely lower GAAP are the to XXXX year increased loss net adjusted going to sustained lower and

steps to the in and taking flow closing are the cost and the of initiatives, comments. for necessary prioritization top ahead. back line in With compounding resources. strength to McKeel that, We the turn including Meanwhile, invest and cash brand long-term in will Hagerty our XXXX, continue of the call me improve we let profitability bottom years to containment growth

McKeel Hagerty

Patrick. Thanks,

pivot beat against addressable better grow missing that the Hagerty our public to market we want the our managing never through I to includes growth potential highly to to hard bottom enthusiast the begin outsized committed profitable our a discipline, to high and on fragmented, public your future amazing we will our task for we've a come mission. as call have without profitably growth brand like top growth company us This the towards we'd fund of you open questions. that teams of growth growth and ambitions. opportunities in are today, the the up and focus, to In joining and work but have as more teams executing business to anniversary first growing and for a sizable faster expect approach leader challenges company, been great great drive we these require and XXXX, space. line assembled The up are a returns to work reflect and even As line our This intense auto all rates is that shareholders. accomplished. into as Thank large, leveraging positioned for to on the

Operator

Hughes with [Operator first the of Mark question Our from Instructions] line Truist. comes

Mark Hughes

The growth. the increase, of X% you new the balance business said

great. I think higher be How increase increases as? was your could loss what that's was in now you rate of give and mix. What you to do little a should could some ideas written would And may what you be that to but -- trend kind filing if the described things, What's relative costs. thoughts premium see is there, liability us be? us be losses few a of you on you a rate So rate evolving give the much in rate? going that this few

Patrick McClymont

Sure. Happy to.

So the I filed XX think, think to in, rates, we've states. way about

then And get through we to subsequent planning starting fourth year. that's as and continue rate and the flow through to filing deeper into into quarter will a So next on we're now flow XXXX. in

of should year. it in And single that call digits, the think you filtering as the And high over so that. about we'll see X%, something increased course rates like

is now, growth overall of than valuation in to it the and written mid-teens a it's That's between between the more rate, of valuation. premium. In X. kind impact Right terms it's contributing the rate mix

Mark Hughes

loss liability pricing And seeing, the you you're costs? in the you what's trend? severity, and given trend X%, that see how frequency new up If cost take is severity the loss do if your

McKeel Hagerty

Mark, on McKeel. we thing seeing, Hagerty we're heart. is elevated prudent The big dear we're take the adjustment because some and that's in of and of kind that that liability where kind wanted to it's that Re. really I'll make -- near to it's my focused experience that on

this direct is out I guess So often as underwriting of the business. I it inflation, kind of describe of the would control social things

So our rate filings the books couple us of are underlying next for really really are us. focused in to the so which really, constructed liability manageable. for area, damage positive for the through wash and business weighted the the quarters, side, on and remains heavily will really really that's what's the starting premiums The way physical and are

Patrick McClymont

up the happened little I But bit, going look and and at quarter strengthening to happened what that If a at reserve terms if on where loss we just during add go a and what XX.X% we of back the -- basis. then was you we'll the look year-to-date to you in ended ratio, took your question.

to the is in about X.X and that Ian, about we're U.S. points it X.X you If that's put talking about side, this the reserves points. increase off

think filters think the to on you And right kind when be as rate in area about basis. we'll that so the XX% go-forward a those, back of get through, we you And XX%. down then

Mark Hughes

your gross Was higher? that retention? Okay. the $XX from Ian, loss then And the hit was million

Patrick McClymont

our retention. That's Yes.

a in then So we've program. million the higher the was got cap loss $XX gross and

cost And program, pretty are total our that's -- exposure. the million. to around X reinstatement but that's reinsurance then so reinstate is the cost And and much those the $X

Mark Hughes

The X months? change on Farm cost Yes. last on think State -- was Is said timing? you there the any schedule. change it any and in I over the

McKeel Hagerty

McKeel the again. It's and No, way at all technology really first our teams we're through towards tracking year. well well this it. working making and half point, of we're testing. the the just are for It's complex that Mark, wiring really next year --

there. outlook positive So

Mark Hughes

ramp-up to dollar costs so speak, And for with Farm. State did associated out the break you the pre-spending, amount a

done I updates past. quarter. Do you think you've have that the in for any this

Patrick McClymont

earnings not sure but it's It's in the Q. the Q. know the I'm in in I

McKeel Hagerty

up numbers. It's after call the -- with can the is. It run you I through follow to

Mark Hughes

in get think Hagerty then up question. paid it's I'll If I your the Club, target Okay. a was Drivers just there. X%. The X% Q, it final And to

range You're going that away. about on in all any where you the feel that We better to or How now. update maybe that. to nuance trending economy But is can inflation is inflation, growth going any related think that trend. here is

McKeel Hagerty

front Drivers we're if our which underlying customer you kind Hagerty a talking uptake through a about of get of rate kind sort new just Club of Well, typically, because is typically an It's of Drivers door, then Hagerty we this actually to positively value the trended program. Club real, percentage added insurance quote We've we this have year. of very the think, uptake. some

We continue to merchandise it well.

for that nonowners. So it's works our both as well high-value kind for insurers package a low-cost, of well

it's well there. well, so holding in to very actually trying So

Patrick McClymont

on items on about. the Mark, year-to-date those of just for side, We're at questions underneath that the talked $XX XX slides on basis your on million right-hand EBITDA. a earnings you adjusted Page

Farm. So the pre-revenue cost related to State

Mark Hughes

Okay. appreciate that.

Operator

Greg comes question the Peters James. line Raymond from with Next of

Sidney Schultz

Greg. for actually is on Sid This

wanted it ratio. touch of loss the kind the I commissions. with know trends to just contingent First, on

is And so point basis? is based full with a [indiscernible] could so, year just a the Or loss if where that it is there loss remind you and it us, on the ratio results? on more -- could calendar ratio contingents if quarterly

McKeel Hagerty

here. Thank ratio. It's definitely track calendar does overall you, loss year It with the McKeel Sid.

thing. loaded kind fully So it's year complex of a a

some top could we've of this I Yes, of loss off a and beyond you it where long loss be a very we're a scenario but X time, it to the contingency there So that ratio, have been catastrophic the when of be -- just definitely, like underwriting of of scope is anything bit at sliding it the the would imagine little commission. it we we require predictive -- far change would how to could able so But out business. mix a -- And but take can have things of work. the the

in like percentage fairly what the change we're contingency off it's this of So fact could relative a yes, for slight while underwriting there the to it's point that will year, be. a be minimal anticipating commission CUC

Patrick McClymont

we're CUC So in shakes loaded right if now, how tracking XX% area, how balance fourth of of and fully out sort the it's based that for is the quarter. upon we'll the see X.X%

And a CUC of purposes then capped it's at very for the modest So $X an is impact. million. impact event

would to individual there really we have point, into multiple McKeel's that. events And so to before get be

Sidney Schultz

out early back by state I then that makes Yes, the next Farm know year. pivoting partnership. to sense. Okay. State And it's state start just to rolling maybe expected

curious, And target benefits all get states? you're to the partnership full completed to beginning the so maybe the we at see or have to just trying in the for start is of of a XXXX. of Or sense I'm rollout date there time period a should shooting just

insight there helpful. any would So be

McKeel Hagerty

we this difference the Yes. and underlying Farms that the Farm State kind pricing State the our great way, by we program But -- the programs It's that we X-year question a each policy. one always and One product are -- policies, are other. program, of one X-month described which key way. difference is and between and mirror write

full XXXX. relationship and would those like up kind is we going should you half a full to a the it benefit -- is really very rolled what you get if The as of of Farm is policies books to board. benefit to months of the XX XXXX book getting of into turning is this we State start it were the latter and take plus the to the the once that to states to of getting of typically, this which and of running, about that roll, hope the XX get further we roll So talked perform on -- on book do all XXX,XXX during people getting accelerated rest on very benefit

So shorter it a roll were than if us. book it definitely XXXX. blend But into for will normal

Operator

Piper comes next of Paul Newsome question Our the from line with Sandler.

Paul Newsome

growing? getting step you do is you're what PIF you to over PIF market what are of Or the customer going -- think is doing, market? versus do is that with of rate. what count the are overall the just prospectively? you to think you count growth of sort think market over you you back actually any -- of you you're think gaining Maybe think think sort you're do the great Obviously, view you actual size what's And How relative on

McKeel Hagerty

earlier part pretty the very, look Thank down in year are that we lot definitely, from their very of are we the, at many with low say, it's you. an don't at companies some this about count market, PIF of focused a any but partners slowing as the for if that PIF to cases. insurers large on year those advertising of you. nice in the our of seeing kind auto know of a insurance X% from all Well, kind we Yes, spends kind who counts it, of Yes. of hear us, which time regular lot spend

So X% this the year overall for us. the of environment. strongly We about of given feel it, really uncertainty kind

shutting other then economy like financial kind in a the previous see going dot-com down PIF not both time. year. crisis growth, experience little you'll aren't might of the but the thing. what dip kind bit is focused confidence as hiccups this of line crisis in even role financial as that's complete and we've our during and they People normal economic the slowdowns, of Our way for of it's to on, and top bit a just little in When that reflect seen be a a the the in all And it. a back we example, a prices,

X%. So we're quite happy with the

Patrick McClymont

So key we retention, vehicle. provider. move reason sold us the to of that they've to And peel they've because XX% for if right? the you is the lose another part main the It's that not people is And decided back, retention.

the strip vehicle, selling you retention our XX%. if like is out So

it's so people and growing an stable business. and we're we're incredibly so And keeping of book

Paul Newsome

was your I number return insurers company. it sounds the to no. to talk accidents It a bodily if change. bit a to answer the I standard auto be is because larger, than, hoping as say, that And about that talk auto like coming little of severity from different seems you well insurance to could issues you saw a But you any saw be potentially source increased may maybe well. And quarter, due could more this as was we expensive as claims. injury curious of reserve

McKeel Hagerty

tends long-term of of Yes. exact Thank kind interesting when be look world. you. insurance what And it almost the happens the results we our opposite of when at to the regular it's you program, in things, auto see

I are changes to the what way what's especially being that stuff, parts related they're physical know challenges, and we So supply claims they prices of car lot the vehicle and up the are driving insurance industry damage in in has a regular with auto think the is that's chain used costs seeing. those

vehicle be And purely nothing liability on we almost if the our with part dragged cases, we why stands can nature that reserves even probably some and from insure. into of that to -- topping taking as system it's get motorists, in And do of underinsured extra us, our came just where that's claims. now that the of and million liability and makes these the rate it stuff. focused related because that legal is we area, It's things and For settlements to liability settlements the that today, of that extra $X.X were up kind sense. right and on taking have

Patrick McClymont

Paul, the just behind that. numbers And

comes XX% are typical and in losses opposite, not our just The our on So when the XX% us for a damage. but physical value quite physical it's industry, of are close, and liability. XX% liability at look if the like more you is pretty XX% to right? And industry it the year,

So we different a profile. just very have

Paul Newsome

consider probably of part The so? that's bodily do that injury your Or liability? that you

McKeel Hagerty

underinsured pretty in as you -- the like unfortunate insured PIP -- we household. state, MedPay get from and basis, us year where look you that but dragged it, how kind getting at piece way or that bodily the it's motorists kind person's we're get the kind why on extra that jury but And That's of and of of state-by-state get rates -- on depending that's in and of where we the again, Yes. is it's that's we're confident a are why or for ahead are the and a rates in a what -- but injury of our kind that's challenged it's of you kind right with the that. forward, on lot constructed, just trials, any and that's an the going perspective, of customer the

Paul Newsome

lots last costs. And I talk then in all Okay. to excitement of topic about higher wanted about the reinsurance insurance industry

talk affect do a little business than prospectively, see Your not others. if you higher year? could is that reinsurance we next bit structure or about the Could your cost could how different

McKeel Hagerty

had And good of bit us. talking it's losses well the other insurance million holding retention also is too like it things insurers of going the reinsurance to like next little is It's below being actually costs reinsurance a layer. we to we've certainly cheap $XX I And to Ian, you. benefit I working maybe business is I Well, related that without to happen and this higher that, we're our everybody reinsurance is guess as a specific about losses It's thank know is would know lot thinking what's conferences our and through going say still and year But actual business. this. about we're it where breath the model But for a how was model. year. to a penetrated that even not first running that a what with underlying what their being because than

favorable ability renewal, this go go for in underwrite, a reinsurance then, year. in good being forward even how next So we forward control we'll do based a with first was hit losses how how we price rate feel to while confidently next on we to what able pretty about the we able our to we that confident year our and feel be for renegotiating pretty

Patrick McClymont

is million. that $XX see flows you'll And in gross the about through Q, the

$XX getting to And $XX is in papers. other we're retention then that is other that million on risk sitting the that million. [indiscernible]. what just flows There's our and is And book our just on so through --

for So that fraction have salvage total underwriting. to or of done the before was speaks been of said event, what model and should so And we're the a it the a that's nature us $XX lot the with of work. risks this it million we've

helping and vehicles. these the another one their offering store we've before So field member is in our events of move stories to team people got is And vehicles member. where

daily So different a it's just than drivers. very

Paul Newsome

Again, I your sort the loss. going structure of just was to within cost [indiscernible] system actually

what I to with hurricane hard it is. it up picks respect think losses, the [indiscernible] company? Ian the is too that

McKeel Hagerty

the spring. renewal actually feeling We're what about good pretty like that in will look

Operator

line JPMorgan. question Singzon the of comes Pablo from Our next with

Pablo Singzon

for regarding breakout see on benefit contribution follow comments that improvement us Just a magnitude Where up as one should provide fixed for wanted of there? I me. you filtering basis and expense margin? to was expenses if you management. operating expense curious comments on And frame that any given could well your I through? the we do as

Patrick McClymont

Yes.

the So right we're the really in And that different to was P&L look the across budgeting now. down businesses. took process we all approach and up

a look new, set of think, that. I really and with it eyes helpful people challenged at me we've so fresh to is being with And

one would just we're the so the that on, areas focused And labor. be cost of

building automate And sure us leverage. make we're so that an to and there are opportunities operating for

the won't revenue. that rate go-forward a to increase we have And on same increasing we're at basis, so headcount

we we around so of side labor things bit there'll can do the And things be a think fair better. where

another I G&A area. is think

-- think unavoidable, efficient of bit I some on be do bit come the mentioned, a they of there's opportunities a lean. and are and I As other more structure we But being public where call, these a the more with some company. could

at we'll feel there may and are right? things are little expense is the So us so top could but to broker that, be sponsorships. really opportunity advertising others driving there's there for an a an great -- that there's even cost And about So do looking be things we costs increase, that on the then that differently, be opportunity where the sales some to going that. side, sales and line, events,

things up grow and we've the we've grow business main -- And the small, framework then like going that. going down. written mid-teens. much added And premium is on can Marketplace. incredibly that to but that faster than they're are really in robust we're the side So got this

been that sure rate. to pull make from a of the And years, to resources the we've that, rate over got And at discount just mid-teens. right? last grow underlying same So growth couple the the growing going to they've overall that's at up our

sure to pretty so the on that to quickly. we curve -- we're profitability get side bend just And to we're that going make cost

Operator

There are for no McKeel the over back call further remarks. queue. questions I'd to hand closing to Hagerty in the like

McKeel Hagerty

really the future I us. but for Well, car here to you that on keep out please And we again. you culture taps think business I pretty of thanks that's a passion, the into attention. special build for generations. and assured, Rest differentiated mission part and further also having questions we're taps appreciate future over a that also more profitability both model really have the highly if insurance automotive questions us efficient, hopefully, we today. reach other driving And of that our saving the love but have time. allow in and to a parts model focusing a the any time into of see business that enhance business will other going

work, about all be excited excited support. with your able shareholders. appreciate to We deliver we're this and build to So this of our team our for plan

on driving. keep So

Operator

teleconference. for participation. today's you your Thank gentlemen, this and Ladies does conclude

time, lines disconnect wonderful may have at your a day. this You and

Hagerty (HGTY) 13 Nov 222022 Q3 Earnings call transcript