Hagerty (NYSE:HGTY) reported a 332% rise in net income to $16M and adjusted Earnings Per Share of $0.04 for the quarter ended March 31, 2022.
Some notable takeaways from the quarter include:
- The firm reported $168M in total revenue, up 30% year-over-year (YoY) with written premium increasing 16% to $155M. Commission and fee revenue grew 15% to $63M, driven primarily by the sale of roughly 48,000 new policies and policy in-force retention of 89%. Premium growth was also positively impacted by a 10-basis point increase in contractual reinsurance quota to 70%. During the quarter, average written premium on new business grew 15%.
- Membership subscription revenue, which is generated through membership offerings and other automotive services sold to policyholders, increased 40% to $16 million. Additionally, insurance policy adoption rates from paid members increased 100 basis points to 76%. Active membership grew 11% to 2.5 million through March 31, 2022, of which 1.3 million are paid members.
- Within Hagerty’s reinsurance business, earned premium in the quarter grew 41% to $89M, benefits by new written premium growth, policy retention, and a 10-point increase in contractual reinsurance quota share to 70%. Total written premium grew 16% YoY to $155M and its loss ratio remained stable at 41%.
- The combined Ratio for the first quarter was 89.5%, down slightly from 89.8% in the prior year.
- Strategic alliances with distributions partners remain a key driver of Hagerty’s growth. Key partnerships include Essentia, a Markle company, for which Hagerty is the exclusive MGA, and Aviva, In Q4 2022, Hagerty expects to launch its partnership with State Farm. This strategic alliance will provide classic car coverage under the banner State Farm Classic+ and will allow owners to bundle their home and traditional auto insurance with the classic car coverage.
- Strategic priorities for the company through the balance of the year include growing its omni-channel distribution channels, expanding its share of insurance underwriting profit, and improving its member experience. Within its reinsurance division, the company will seek to continue to increase contractual quota share.
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