QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State of incorporation) | (I.R.S. Employer Identification No.) | |||||||
(Address of principal executive offices) | (Zip code) | |||||||
Registrant's telephone number, including area code |
Title of each class | Trading Symbols | Name of each exchange on which registered | ||||||||||||
of Class A common stock, each at an exercise price of $11.50 per share | ||||||||||||||
Large accelerated filer | ☐ | Accelerated filer | ☐ | ||||||||
☒ | Smaller reporting company | ||||||||||
Emerging growth company |
Title | Page | |||||||
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
REVENUES: | in thousands (except per share amounts) | ||||||||||||||||||||||
Commission and fee revenue | $ | $ | $ | $ | |||||||||||||||||||
Earned premium | |||||||||||||||||||||||
Membership and other revenue | |||||||||||||||||||||||
Total revenues | |||||||||||||||||||||||
OPERATING EXPENSES: | |||||||||||||||||||||||
Salaries and benefits | |||||||||||||||||||||||
Ceding commission | |||||||||||||||||||||||
Losses and loss adjustment expenses | |||||||||||||||||||||||
Sales expense | |||||||||||||||||||||||
General and administrative services | |||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||
Total operating expenses | |||||||||||||||||||||||
OPERATING INCOME (LOSS) | ( | ||||||||||||||||||||||
Change in fair value of warrant liabilities | ( | ||||||||||||||||||||||
Interest and other income (expense) | ( | ( | ( | ( | |||||||||||||||||||
INCOME (LOSS) BEFORE INCOME TAX EXPENSE | ( | ||||||||||||||||||||||
Income tax expense | ( | ( | ( | ( | |||||||||||||||||||
Income (loss) on equity method investment, net of tax | ( | ( | |||||||||||||||||||||
NET INCOME (LOSS) | ( | ||||||||||||||||||||||
Net loss (income) attributable to non-controlling interest | |||||||||||||||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO CONTROLLING INTEREST | $ | ( | $ | $ | $ | ||||||||||||||||||
Earnings (loss) per share of Class A Common Stock | |||||||||||||||||||||||
Basic | $ | ( | N/A | $ | N/A | ||||||||||||||||||
Diluted | $ | ( | N/A | $ | ( | N/A | |||||||||||||||||
Weighted-average shares of Class A Common Stock outstanding: | |||||||||||||||||||||||
Basic | N/A | N/A | |||||||||||||||||||||
Diluted | N/A | N/A | |||||||||||||||||||||
Earnings (loss) per Members' Unit | |||||||||||||||||||||||
Basic and diluted | N/A | $ | N/A | $ | |||||||||||||||||||
Weighted-average units outstanding: | |||||||||||||||||||||||
Basic and diluted | N/A | N/A |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
in thousands | |||||||||||||||||||||||
Net income (loss) | $ | ( | $ | $ | |||||||||||||||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||||||||||
Foreign currency translation adjustments | ( | ( | ( | ||||||||||||||||||||
Derivative instruments | ( | ||||||||||||||||||||||
Other comprehensive income (loss) | ( | ( | |||||||||||||||||||||
Comprehensive income (loss) | ( | ||||||||||||||||||||||
Comprehensive loss (income) attributable to non-controlling interest | |||||||||||||||||||||||
Comprehensive income (loss) attributable to controlling interest | $ | ( | $ | $ | $ |
June 30, 2022 | December 31, 2021 | ||||||||||
ASSETS | in thousands (except share amounts) | ||||||||||
Current Assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash and cash equivalents | |||||||||||
Accounts receivable | |||||||||||
Premiums receivable | |||||||||||
Commission receivable | |||||||||||
Prepaid expenses and other current assets | |||||||||||
Deferred acquisition costs, net | |||||||||||
Total current assets | |||||||||||
Property and equipment, net | |||||||||||
Long-Term Assets: | |||||||||||
Prepaid expenses and other non-current assets | |||||||||||
Intangible assets, net | |||||||||||
Goodwill | |||||||||||
Equity method investments | |||||||||||
Total long-term assets | |||||||||||
TOTAL ASSETS | $ | $ | |||||||||
LIABILITIES AND EQUITY | |||||||||||
Current Liabilities: | |||||||||||
Accounts payable | $ | $ | |||||||||
Losses payable and provision for unpaid losses and loss adjustment expenses | |||||||||||
Unearned premiums | |||||||||||
Commissions payable | |||||||||||
Due to insurers | |||||||||||
Advanced premiums | |||||||||||
Accrued expenses | |||||||||||
Contract liabilities | |||||||||||
Other current liabilities | |||||||||||
Total current liabilities | |||||||||||
Long-Term Liabilities: | |||||||||||
Accrued expenses | |||||||||||
Contract liabilities | |||||||||||
Long-term debt | |||||||||||
Deferred tax liability | |||||||||||
Warrant liabilities | |||||||||||
Other long-term liabilities | |||||||||||
Total long-term liabilities | |||||||||||
TOTAL LIABILITIES | $ | $ | |||||||||
(continued) |
June 30, 2022 | December 31, 2021 | ||||||||||
in thousands (except share amounts) | |||||||||||
Commitments and Contingencies (Note 17) | |||||||||||
Redeemable non-controlling interest (Note 11) | $ | $ | |||||||||
STOCKHOLDERS' / MEMBERS' EQUITY | |||||||||||
Preferred stock, $ | |||||||||||
Class A common stock, $ | |||||||||||
Class V common stock, $ | |||||||||||
Additional paid-in capital | |||||||||||
Accumulated earnings (deficit) | ( | ( | |||||||||
Accumulated other comprehensive income (loss) | ( | ( | |||||||||
Total stockholders' / members' equity | ( | ||||||||||
Non-controlling interest | |||||||||||
Total equity (Note 11) | ( | ||||||||||
TOTAL LIABILITIES AND EQUITY | $ | $ | |||||||||
(concluded) |
Members' Equity | Class A Common Stock | Class V Common Stock | Additional Paid in Capital | Accumulated Earnings (Deficit) | Accumulated Other Comprehensive Income/(Loss) | Total Stockholders' / Members' Equity | Non-controlling Interest | Total Equity | Redeemable Non-controlling Interest | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
in thousands | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2021 | $ | — | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) before exchange agreement amendment | — | — | — | — | — | — | ( | — | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) before exchange agreement amendment | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of warrants | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Redemption value adjustment for redeemable non-controlling interest | — | — | — | — | — | ( | ( | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Removal of the redeemable feature of the non-controlling interest | — | — | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) subsequent to exchange agreement amendment | — | — | — | — | — | — | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) subsequent to exchange agreement amendment | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2022 | $ | — | $ | $ | $ | $ | ( | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | — | — | — | — | — | — | ( | — | ( | ( | ( | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | — | — | — | ( | ( | — | ( | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of warrants | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-controlling interest issued capital | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2022 | $ | — | $ | $ | $ | $ | ( | $ | ( | $ | $ | $ | $ |
Members' Equity | Class A Common Stock | Class V Common Stock | Additional Paid in Capital | Accumulated Earnings (Deficit) | Accumulated Other Comprehensive Income/(Loss) | Total Stockholders' / Members' Equity | Non-controlling Interest | Total Equity | Redeemable Non-controlling Interest | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
in thousands | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2020 | $ | $ | $ | $ | $ | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | — | — | — | — | — | — | ( | — | ( | ( | ( | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2021 | $ | $ | $ | $ | $ | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | — | — | — | — | — | — | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | — | — | — | ( | ( | — | ( | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Distributions | ( | — | — | — | — | — | — | ( | ( | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-controlling interest issued capital | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2021 | $ | $ | $ | $ | $ | $ | ( | $ | $ | $ | $ |
Six months ended June 30, | |||||||||||
2022 | 2021 | ||||||||||
OPERATING ACTIVITIES: | in thousands | ||||||||||
Net income (loss) | $ | $ | |||||||||
Adjustments to reconcile net income (loss) to net cash from operating activities: | |||||||||||
Change in fair value of warrant liabilities | ( | ||||||||||
Depreciation and amortization expense | |||||||||||
Provision for deferred taxes | |||||||||||
Loss on disposals of equipment, software and other assets | |||||||||||
Stock-based compensation expense | |||||||||||
Other | |||||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | ( | ( | |||||||||
Premiums receivable | ( | ( | |||||||||
Commission receivable | |||||||||||
Prepaid expenses and other assets | ( | ( | |||||||||
Deferred acquisition costs | ( | ( | |||||||||
Accounts payable | ( | ||||||||||
Losses payable and provision for unpaid losses and loss adjustment expenses | |||||||||||
Unearned premiums | |||||||||||
Commissions payable | |||||||||||
Due to insurers | |||||||||||
Advanced premiums | |||||||||||
Accrued expenses | ( | ( | |||||||||
Contract liabilities | |||||||||||
Other current liabilities | ( | ||||||||||
Net Cash Provided by Operating Activities | |||||||||||
INVESTING ACTIVITIES: | |||||||||||
Purchases of property, equipment and software | ( | ( | |||||||||
Acquisitions, net of cash acquired | ( | ( | |||||||||
Purchase of equity method investment | ( | ||||||||||
Purchase of fixed income securities | ( | ( | |||||||||
Maturities of fixed income securities | |||||||||||
Other investing activities | ( | ||||||||||
Net Cash Used in Investing Activities | $ | ( | $ | ( | |||||||
(continued) |
Six months ended June 30, | |||||||||||
2022 | 2021 | ||||||||||
FINANCING ACTIVITIES: | in thousands | ||||||||||
Payments on long-term debt | $ | ( | $ | ( | |||||||
Proceeds from long-term debt | |||||||||||
Contribution from minority interest | |||||||||||
Payments on notes payable | ( | ( | |||||||||
Distributions | ( | ||||||||||
Net Cash Used in Financing Activities | ( | ||||||||||
Effect of exchange rate changes on cash and cash equivalents and restricted cash and cash equivalents | ( | ||||||||||
Change in cash and cash equivalents and restricted cash and cash equivalents | ( | ||||||||||
Beginning cash and cash equivalents and restricted cash and cash equivalents | |||||||||||
Ending cash and cash equivalents and restricted cash and cash equivalents | $ | $ | |||||||||
NON-CASH INVESTING ACTIVITIES: | |||||||||||
Purchase of property and equipment and software | $ | $ | |||||||||
Acquisitions | $ | $ | |||||||||
CASH PAID FOR: | |||||||||||
Interest | $ | $ | |||||||||
Income taxes | $ | $ | |||||||||
(concluded) |
2022 | 2021 | ||||||||||
in thousands | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash and cash equivalents | |||||||||||
Total cash and cash equivalents and restricted cash and cash equivalents on the Condensed Consolidated Statements of Cash Flows | $ | $ |
Agent | Direct | Total | |||||||||||||||
in thousands | |||||||||||||||||
Three months ended June 30, 2022 | |||||||||||||||||
Commission and fee revenue | $ | $ | $ | ||||||||||||||
Contingent commission | |||||||||||||||||
Membership revenue | |||||||||||||||||
Other revenue | |||||||||||||||||
Total revenue from customer contracts | $ | $ | $ | ||||||||||||||
Earned premium recognized under ASC 944 | |||||||||||||||||
Total revenue | $ | ||||||||||||||||
Three months ended June 30, 2021 | |||||||||||||||||
Commission and fee revenue | $ | $ | $ | ||||||||||||||
Contingent commission | |||||||||||||||||
Membership revenue | |||||||||||||||||
Other revenue | |||||||||||||||||
Total revenue from customer contracts | $ | $ | $ | ||||||||||||||
Earned premium recognized under ASC 944 | |||||||||||||||||
Total revenue | $ |
Agent | Direct | Total | |||||||||||||||
in thousands | |||||||||||||||||
Six months ended June 30, 2022 | |||||||||||||||||
Commission and fee revenue | $ | $ | $ | ||||||||||||||
Contingent commission | |||||||||||||||||
Membership revenue | |||||||||||||||||
Other revenue | |||||||||||||||||
Total revenue from customer contracts | $ | $ | $ | ||||||||||||||
Earned premium recognized under ASC 944 | |||||||||||||||||
Total revenue | $ | ||||||||||||||||
Six months ended June 30, 2021 | |||||||||||||||||
Commission and fee revenue | $ | $ | $ | ||||||||||||||
Contingent commission | |||||||||||||||||
Membership revenue | |||||||||||||||||
Other revenue | |||||||||||||||||
Total revenue from customer contracts | $ | $ | $ | ||||||||||||||
Earned premium recognized under ASC 944 | |||||||||||||||||
Total revenue | $ |
U.S. | Canada | Europe | Total | ||||||||||||||||||||
in thousands | |||||||||||||||||||||||
Three months ended June 30, 2022 | |||||||||||||||||||||||
Commission and fee revenue | $ | $ | $ | $ | |||||||||||||||||||
Contingent commission | |||||||||||||||||||||||
Membership revenue | |||||||||||||||||||||||
Other revenue | |||||||||||||||||||||||
Total revenue from customer contracts | $ | $ | $ | $ | |||||||||||||||||||
Earned premium recognized under ASC 944 | |||||||||||||||||||||||
Total revenue | $ | ||||||||||||||||||||||
Three months ended June 30, 2021 | |||||||||||||||||||||||
Commission and fee revenue | $ | $ | $ | $ | |||||||||||||||||||
Contingent commission | ( | ||||||||||||||||||||||
Membership revenue | |||||||||||||||||||||||
Other revenue | |||||||||||||||||||||||
Total revenue from customer contracts | $ | $ | $ | $ | |||||||||||||||||||
Earned premium recognized under ASC 944 | |||||||||||||||||||||||
Total revenue | $ |
U.S. | Canada | Europe | Total | ||||||||||||||||||||
in thousands | |||||||||||||||||||||||
Six months ended June 30, 2022 | |||||||||||||||||||||||
Commission and fee revenue | $ | $ | $ | $ | |||||||||||||||||||
Contingent commission | |||||||||||||||||||||||
Membership revenue | |||||||||||||||||||||||
Other revenue | |||||||||||||||||||||||
Total revenue from customer contracts | $ | $ | $ | $ | |||||||||||||||||||
Earned premium recognized under ASC 944 | |||||||||||||||||||||||
Total revenue | $ | ||||||||||||||||||||||
Six months ended June 30, 2021 | |||||||||||||||||||||||
Commission and fee revenue | $ | $ | $ | $ | |||||||||||||||||||
Contingent commission | |||||||||||||||||||||||
Membership revenue | |||||||||||||||||||||||
Other revenue | |||||||||||||||||||||||
Total revenue from customer contracts | $ | $ | $ | $ | |||||||||||||||||||
Earned premium recognized under ASC 944 | |||||||||||||||||||||||
Total revenue | $ |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
in thousands | |||||||||||||||||||||||
Underwriting income: | |||||||||||||||||||||||
Premiums assumed | $ | $ | $ | $ | |||||||||||||||||||
Reinsurance premiums ceded | ( | ( | ( | ||||||||||||||||||||
Net premiums assumed | |||||||||||||||||||||||
Change in unearned premiums | ( | ( | ( | ( | |||||||||||||||||||
Change in deferred reinsurance premiums | ( | ( | |||||||||||||||||||||
Net premiums earned | $ | $ | $ | $ |
June 30, 2022 | December 31, 2021 | ||||||||||
in thousands | |||||||||||
Contract assets | $ | $ | |||||||||
Contract liabilities | $ | $ |
June 30, 2022 | December 31, 2021 | ||||||||||
in thousands | |||||||||||
Prepaid sales, general and administrative expenses | $ | $ | |||||||||
Prepaid SaaS implementation costs | |||||||||||
Fixed income investments | |||||||||||
Contract costs | |||||||||||
Media content | |||||||||||
Deferred reinsurance premiums ceded | |||||||||||
Other | |||||||||||
Prepaid expenses and other assets | $ | $ |
Business Combination | |||||
in thousands | |||||
Cash in trust, net of redemptions | $ | ||||
Cash, PIPE | |||||
Less: transaction costs and advisory fees | ( | ||||
Less: Cash consideration to HHC at Closing | ( | ||||
Net cash received from Business Combination | $ |
Weighted Average Useful Life | June 30, 2022 | December 31, 2021 | |||||||||||||||
in thousands | |||||||||||||||||
Renewal rights | $ | $ | |||||||||||||||
Internally developed software | |||||||||||||||||
Trade names and trademarks | |||||||||||||||||
Relationships and customer lists | |||||||||||||||||
Other | |||||||||||||||||
Intangible assets | |||||||||||||||||
Less: accumulated amortization | ( | ( | |||||||||||||||
Intangible assets, net | $ | $ |
2022 | $ | ||||
2023 | |||||
2024 | |||||
2025 | |||||
2026 | |||||
Thereafter | |||||
Total | $ |
Six months ended June 30, | |||||||||||
2022 | 2021 | ||||||||||
in thousands | |||||||||||
Net unpaid losses and loss adjustment expenses, beginning of period | $ | $ | |||||||||
Incurred losses and loss adjustment expenses: | |||||||||||
Current accident year | |||||||||||
Prior accident year | |||||||||||
Total incurred losses and loss adjustment expenses | |||||||||||
Payments: | |||||||||||
Current accident year | |||||||||||
Prior accident year | |||||||||||
Total payments | |||||||||||
Effect of foreign currency rate changes | ( | ( | |||||||||
Net reserves for losses and loss adjustment expenses, end of period | |||||||||||
Reinsurance recoverable | |||||||||||
Gross reserves for losses and loss adjustment expenses, end of period | $ | $ |
Inputs | Private Placement Warrants | Underwriter Warrants | OTM Warrants | PIPE Warrants | ||||||||||||||||||||||
Exercise price | $ | $ | $ | $ | ||||||||||||||||||||||
Common stock price | $ | $ | $ | $ | ||||||||||||||||||||||
Volatility | ||||||||||||||||||||||||||
Expected term of the warrants | ||||||||||||||||||||||||||
Risk-free rate | ||||||||||||||||||||||||||
Dividend yield |
Fair Value Measurements | |||||||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
in thousands | |||||||||||||||||||||||
June 30, 2022 | |||||||||||||||||||||||
Financial Assets | |||||||||||||||||||||||
Interest rate swaps | $ | $ | $ | $ | |||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||
Financial Liabilities | |||||||||||||||||||||||
Public warrants | $ | $ | $ | $ | |||||||||||||||||||
Private placement warrants | |||||||||||||||||||||||
Underwriter warrants | |||||||||||||||||||||||
OTM warrants | |||||||||||||||||||||||
PIPE warrants | |||||||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||
Financial Assets | |||||||||||||||||||||||
Interest rate swaps | $ | $ | $ | $ | |||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||
Financial Liabilities | |||||||||||||||||||||||
Public warrants | $ | $ | $ | $ | |||||||||||||||||||
Private placement warrants | |||||||||||||||||||||||
Underwriter warrants | |||||||||||||||||||||||
OTM warrants | |||||||||||||||||||||||
PIPE warrants | |||||||||||||||||||||||
Total | $ | $ | $ | $ |
Private Placement Warrants | Underwriter Warrants | OTM Warrants | PIPE Warrants | Total | |||||||||||||||||||||||||
in thousands | |||||||||||||||||||||||||||||
Balance at December 31, 2021 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Change in fair value of warrant liabilities | ( | ( | ( | ( | ( | ||||||||||||||||||||||||
Exercise of warrants | ( | ( | |||||||||||||||||||||||||||
Transfers In (Out) of Level 3 | |||||||||||||||||||||||||||||
Balance at June 30, 2022 | $ | $ | $ | $ | $ |
Carrying Amount | Estimated Fair Value | ||||||||||
in thousands | |||||||||||
June 30, 2022 | |||||||||||
Fixed income securities, short-term | $ | $ | |||||||||
Fixed income securities, long-term | |||||||||||
Total | $ | $ | |||||||||
December 31, 2021 | |||||||||||
Fixed income securities, short-term | $ | $ | |||||||||
Fixed income securities, long-term | |||||||||||
Total | $ | $ |
June 30, 2022 | December 31, 2021 | ||||||||||
in thousands | |||||||||||
Credit Facility | $ | $ | |||||||||
Note payable | |||||||||||
Total debt outstanding | $ | $ | |||||||||
Less: current portion | ( | ||||||||||
Total long-term debt outstanding | $ | $ |
Owner | Units Owned | Ownership Percentage | ||||||||||||
Hagerty, Inc. controlling interest | % | |||||||||||||
Non-controlling interest | % | |||||||||||||
Total | % |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
in thousands (except per share/unit amounts) | |||||||||||||||||||||||
Numerator: | |||||||||||||||||||||||
Net income (loss) attributable to controlling interest | $ | ( | $ | $ | $ | ||||||||||||||||||
Adjustment of change in fair value of potentially dilutive warrant liabilities | ( | ||||||||||||||||||||||
Adjustment of non-controlling interest from conversion of Class V Common Stock | ( | ||||||||||||||||||||||
Adjusted net income (loss) to common shareholders | $ | ( | $ | $ | ( | $ | |||||||||||||||||
Denominator: | |||||||||||||||||||||||
Basic Class A Common Stock outstanding | N/A | N/A | |||||||||||||||||||||
Add: Dilutive effect of warrants | N/A | N/A | |||||||||||||||||||||
Add: Dilutive effect of conversion of Class V Common Stock | N/A | N/A | |||||||||||||||||||||
Add: Dilutive effect of stock-based compensation awards | N/A | N/A | |||||||||||||||||||||
Diluted Class A Common Stock outstanding | N/A | N/A | |||||||||||||||||||||
Weighted average Members' Units - basic and diluted | N/A | N/A | |||||||||||||||||||||
Earnings (loss) per share of Class A Common Stock - basic | $ | ( | N/A | $ | N/A | ||||||||||||||||||
Earnings (loss) per share of Class A Common Stock - diluted | $ | ( | N/A | $ | ( | N/A | |||||||||||||||||
Earnings (loss) per unit - basic and diluted | N/A | $ | N/A | $ |
Three months ended June 30, 2022 | Six months ended June 30, 2022 | ||||||||||
in thousands | |||||||||||
Restricted stock units | $ | $ | |||||||||
Performance restricted stock units | |||||||||||
Total stock-based equity awards | $ | $ |
Restricted Stock | Weighted Average Fair Value | ||||||||||
Unvested balance as of December 31, 2021 | $ | ||||||||||
Granted | |||||||||||
Forfeited | ( | ||||||||||
Unvested balance as of June 30, 2022 | $ |
Inputs | Performance Restricted Stock Units | |||||||
Weighted average grant-date fair value per share | $ | |||||||
Expected term (in years) | ||||||||
Expected stock volatility | ||||||||
Dividend yield | ||||||||
Risk-free interest rate |
Units | Weighted Average Fair Value | ||||||||||
Outstanding as of December 31, 2021 | $ | ||||||||||
Granted | |||||||||||
Outstanding as of June 30, 2022 | $ |
Six months ended June 30, | |||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||
in thousands (except percentages) | |||||||||||||||||||||||
Income tax expense (benefit) at statutory rate | $ | % | $ | % | |||||||||||||||||||
State taxes | ( | ( | % | % | |||||||||||||||||||
Loss not subject to entity-level taxes | % | % | |||||||||||||||||||||
Foreign rate differential | ( | ( | % | ( | ( | % | |||||||||||||||||
Change in valuation allowance | % | % | |||||||||||||||||||||
Change in fair value of warrant liabilities | ( | ( | % | % | |||||||||||||||||||
Permanent items | % | % | |||||||||||||||||||||
Income tax expense | $ | % | $ | % |
June 30, 2022 | December 31, 2021 | ||||||||||
in thousands (except percentages) | |||||||||||
Due to insurer | $ | $ | |||||||||
Percent of total | % | % |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
in thousands (except percentages) | |||||||||||||||||||||||
Commission revenue | $ | $ | $ | $ | |||||||||||||||||||
Percent of total | % | % | % | % |
June 30, 2022 | December 31, 2021 | ||||||||||
Assets | in thousands | ||||||||||
Premiums receivable | $ | $ | |||||||||
Deferred acquisition costs, net | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities | |||||||||||
Losses payable and provision for unpaid losses and loss adjustment expenses | $ | $ | |||||||||
Unearned premiums | |||||||||||
Commissions payable | |||||||||||
Total liabilities | $ | $ |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Revenue | in thousands | ||||||||||||||||||||||
Earned premium | $ | $ | $ | $ | |||||||||||||||||||
Expenses | |||||||||||||||||||||||
Ceding commission | $ | $ | $ | $ | |||||||||||||||||||
Losses and loss adjustment expenses | |||||||||||||||||||||||
Total expenses | $ | $ | $ | $ |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Total Revenue (in thousands) | $206,017 | $167,409 | $373,828 | $296,609 | |||||||||||||||||||
New Business Count (Insurance) | 74,922 | 77,013 | 122,436 | 128,812 | |||||||||||||||||||
Total Written Premium (in thousands) | $237,697 | $208,091 | $392,487 | $341,798 | |||||||||||||||||||
Loss Ratio | 41.0% | 41.4% | 41.2% | 41.4% | |||||||||||||||||||
Operating Income (Loss) (in thousands) | $2,387 | $14,274 | $(10,617) | $9,178 | |||||||||||||||||||
Contribution Margin (in thousands) | $61,032 | $53,466 | $98,178 | $84,546 | |||||||||||||||||||
Net Income (Loss) (in thousands) | $(5,543) | $12,503 | $10,323 | $5,652 | |||||||||||||||||||
Adjusted EBITDA (in thousands) | $16,065 | $19,299 | $10,106 | $20,338 | |||||||||||||||||||
Basic Earnings (Loss) Per Share | $(0.07) | N/A | $0.27 | N/A | |||||||||||||||||||
Adjusted Earnings (Loss) Per Share | $(0.02) | N/A | $0.03 | N/A |
June 30, 2022 | December 31, 2021 | ||||||||||
Policies in Force | 1,292,138 | 1,247,056 | |||||||||
Policies in Force Retention | 88.2% | 89.1% | |||||||||
HDC Paid Member Count | 742,825 | 718,583 | |||||||||
Net Promoter Score (NPS) | 82.0 | 82.0 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
in thousands (except percentages) | |||||||||||||||||||||||
Total revenue | $ | 206,017 | $ | 167,409 | $ | 373,828 | $ | 296,609 | |||||||||||||||
Less: total operating expenses | 203,630 | 153,135 | 384,445 | 287,431 | |||||||||||||||||||
Operating income (loss) | $ | 2,387 | $ | 14,274 | $ | (10,617) | $ | 9,178 | |||||||||||||||
Operating income (loss) margin | 1 | % | 9 | % | (3) | % | 3 | % | |||||||||||||||
Add: fixed operating expenses | $ | 58,645 | $ | 39,192 | $ | 108,795 | $ | 75,368 | |||||||||||||||
Contribution Margin | $ | 61,032 | $ | 53,466 | $ | 98,178 | $ | 84,546 | |||||||||||||||
Contribution Margin Ratio | 30 | % | 32 | % | 26 | % | 29 | % |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
in thousands | |||||||||||||||||||||||
Net income (loss) | $ | (5,543) | $ | 12,503 | $ | 10,323 | $ | 5,652 | |||||||||||||||
Interest and other (income) expense | 353 | 187 | 1,037 | 624 | |||||||||||||||||||
Income tax expense | 2,138 | 1,584 | 4,168 | 2,902 | |||||||||||||||||||
Depreciation and amortization | 8,300 | 5,025 | 15,447 | 9,396 | |||||||||||||||||||
Change in fair value of warrant liabilities | 5,400 | — | (26,286) | — | |||||||||||||||||||
Stock-based compensation expense | 4,307 | — | 4,307 | — | |||||||||||||||||||
Net (gain) loss from asset disposals | — | — | — | 1,764 | |||||||||||||||||||
Other non-recurring (gains) losses (1) | 1,110 | — | 1,110 | — | |||||||||||||||||||
Adjusted EBITDA | $ | 16,065 | $ | 19,299 | $ | 10,106 | $ | 20,338 | |||||||||||||||
Three months ended June 30, 2022 | Six months ended June 30, 2022 | |||||||||||||
in thousands (except per share amounts) | ||||||||||||||
Numerator: | ||||||||||||||
Net income (loss) attributable to controlling interest(1) | $ | (5,536) | $ | 21,971 | ||||||||||
Net income (loss) attributable to non-controlling interest | (7) | (11,648) | ||||||||||||
Consolidated net income (loss)(2) | $ | (5,543) | $ | 10,323 | ||||||||||
Denominator: | ||||||||||||||
Weighted-average shares of Class A Common Stock outstanding: | ||||||||||||||
Basic(1) | 82,452 | 82,443 | ||||||||||||
Potentially dilutive shares outstanding: | ||||||||||||||
Class V Common Stock outstanding | 251,034 | 251,034 | ||||||||||||
Warrants outstanding | 19,484 | 19,484 | ||||||||||||
Unvested stock-based compensation awards | 6,851 | 6,851 | ||||||||||||
Potentially dilutive shares outstanding | 277,369 | 277,369 | ||||||||||||
Fully dilutive shares outstanding(2) | 359,821 | 359,812 | ||||||||||||
Basic EPS = (Net income (loss) attributable to controlling interest / Weighted-average shares of Class A Common Stock outstanding)(1) | $ | (0.07) | $ | 0.27 | ||||||||||
Adjusted EPS = (Consolidated net income (loss) / Fully dilutive shares outstanding)(2) | $ | (0.02) | $ | 0.03 | ||||||||||
Three months ended June 30, | |||||||||||||||||||||||
2022 | 2021 | $ Change | % Change | ||||||||||||||||||||
REVENUES: | in thousands (except percentages) | ||||||||||||||||||||||
Commission and fee revenue | $ | 95,506 | $ | 83,443 | $ | 12,063 | 14.5 | % | |||||||||||||||
Earned premium | 94,100 | 70,437 | 23,663 | 33.6 | % | ||||||||||||||||||
Membership and other revenue | 16,411 | 13,529 | 2,882 | 21.3 | % | ||||||||||||||||||
Total revenues | 206,017 | 167,409 | 38,608 | 23.1 | % | ||||||||||||||||||
OPERATING EXPENSES: | |||||||||||||||||||||||
Salaries and benefits | 53,271 | 41,698 | 11,573 | 27.8 | % | ||||||||||||||||||
Ceding commission | 45,255 | 33,678 | 11,577 | 34.4 | % | ||||||||||||||||||
Losses and loss adjustment expenses | 38,620 | 29,152 | 9,468 | 32.5 | % | ||||||||||||||||||
Sales expense | 37,455 | 28,360 | 9,095 | 32.1 | % | ||||||||||||||||||
General and administrative services | 20,729 | 15,222 | 5,507 | 36.2 | % | ||||||||||||||||||
Depreciation and amortization | 8,300 | 5,025 | 3,275 | 65.2 | % | ||||||||||||||||||
Total operating expenses | 203,630 | 153,135 | 50,495 | 33.0 | % | ||||||||||||||||||
OPERATING INCOME (LOSS) | 2,387 | 14,274 | (11,887) | (83.3) | % | ||||||||||||||||||
Change in fair value of warrant liabilities | (5,400) | — | (5,400) | (100.0) | % | ||||||||||||||||||
Interest and other income (expense) | (353) | (187) | (166) | (88.8) | % | ||||||||||||||||||
INCOME (LOSS) BEFORE INCOME TAX EXPENSE | (3,366) | 14,087 | (17,453) | (123.9) | % | ||||||||||||||||||
Income tax expense | (2,138) | (1,584) | (554) | (35.0) | % | ||||||||||||||||||
Income (loss) on equity method investment, net of tax | (39) | — | (39) | (100.0) | % | ||||||||||||||||||
NET INCOME (LOSS) | $ | (5,543) | $ | 12,503 | $ | (18,046) | (144.3) | % |
U.S. | Canada | U.K. | Total | ||||||||||||||||||||
in thousands (except percentages) | |||||||||||||||||||||||
Three months ended June 30, 2022 | |||||||||||||||||||||||
Subject premium | $ | 185,636 | $ | 21,523 | $ | 3,070 | $ | 210,229 | |||||||||||||||
Quota share percentage | 70.0 | % | 35.0 | % | 70.0 | % | 66.4 | % | |||||||||||||||
Assumed premium in Hagerty Re | $ | 129,946 | $ | 7,533 | $ | 2,149 | $ | 139,628 | |||||||||||||||
Net ceding commission | $ | 42,410 | $ | 1,841 | $ | 1,004 | $ | 45,255 | |||||||||||||||
Three months ended June 30, 2021 | |||||||||||||||||||||||
Subject premium | $ | 169,416 | $ | 18,118 | $ | 1,072 | $ | 188,606 | |||||||||||||||
Quota share percentage | 60.0 | % | 35.0 | % | 60.0 | % | 57.6 | % | |||||||||||||||
Assumed premium in Hagerty Re | $ | 101,650 | $ | 6,341 | $ | 643 | $ | 108,634 | |||||||||||||||
Net ceding commission | $ | 32,168 | $ | 1,439 | $ | 71 | $ | 33,678 |
Six months ended June 30, | |||||||||||||||||||||||
2022 | 2021 | $ Change | % Change | ||||||||||||||||||||
REVENUES: | in thousands (except percentages) | ||||||||||||||||||||||
Commission and fee revenue | $ | 157,967 | $ | 137,816 | $ | 20,151 | 14.6 | % | |||||||||||||||
Earned premium | 183,232 | 133,671 | 49,561 | 37.1 | % | ||||||||||||||||||
Membership and other revenue | 32,629 | 25,122 | 7,507 | 29.9 | % | ||||||||||||||||||
Total revenues | 373,828 | 296,609 | 77,219 | 26.0 | % | ||||||||||||||||||
OPERATING EXPENSES: | |||||||||||||||||||||||
Salaries and benefits | 99,747 | 79,847 | 19,900 | 24.9 | % | ||||||||||||||||||
Ceding commission | 87,633 | 64,067 | 23,566 | 36.8 | % | ||||||||||||||||||
Losses and loss adjustment expenses | 75,539 | 55,345 | 20,194 | 36.5 | % | ||||||||||||||||||
Sales expense | 65,892 | 48,712 | 17,180 | 35.3 | % | ||||||||||||||||||
General and administrative services | 40,187 | 30,064 | 10,123 | 33.7 | % | ||||||||||||||||||
Depreciation and amortization | 15,447 | 9,396 | 6,051 | 64.4 | % | ||||||||||||||||||
Total operating expenses | 384,445 | 287,431 | 97,014 | 33.8 | % | ||||||||||||||||||
OPERATING INCOME (LOSS) | (10,617) | 9,178 | (19,795) | (215.7) | % | ||||||||||||||||||
Change in fair value of warrant liabilities | 26,286 | — | 26,286 | 100.0 | % | ||||||||||||||||||
Interest and other income (expense) | (1,037) | (624) | (413) | (66.2) | % | ||||||||||||||||||
INCOME (LOSS) BEFORE INCOME TAX EXPENSE | 14,632 | 8,554 | 6,078 | 71.1 | % | ||||||||||||||||||
Income tax expense | (4,168) | (2,902) | (1,266) | (43.6) | % | ||||||||||||||||||
Income (loss) on equity method investment, net of tax | (141) | — | (141) | (100.0) | % | ||||||||||||||||||
NET INCOME (LOSS) | $ | 10,323 | $ | 5,652 | $ | 4,671 | 82.6 | % |
U.S. | Canada | U.K. | Total | ||||||||||||||||||||
in thousands (except percentages) | |||||||||||||||||||||||
Six months ended June 30, 2022 | |||||||||||||||||||||||
Subject premium | $ | 320,382 | $ | 27,279 | $ | 4,914 | $ | 352,575 | |||||||||||||||
Quota share percentage | 70.0 | % | 35.0 | % | 70.0 | % | 67.3 | % | |||||||||||||||
Assumed premium in Hagerty Re | $ | 224,268 | $ | 9,548 | $ | 3,440 | $ | 237,256 | |||||||||||||||
Net ceding commission | $ | 82,816 | $ | 3,331 | $ | 1,486 | $ | 87,633 | |||||||||||||||
Six months ended June 30, 2021 | |||||||||||||||||||||||
Subject premium | $ | 287,557 | $ | 23,032 | $ | 1,072 | $ | 311,661 | |||||||||||||||
Quota share percentage | 60.0 | % | 35.0 | % | 60.0 | % | 58.2 | % | |||||||||||||||
Assumed premium in Hagerty Re | $ | 172,534 | $ | 8,061 | $ | 643 | $ | 181,238 | |||||||||||||||
Net ceding commission | $ | 61,255 | $ | 2,741 | $ | 71 | $ | 64,067 |
Six months ended June 30, | |||||||||||||||||||||||
2022 | 2021 | $ Change | % Change | ||||||||||||||||||||
in thousands (except percentages) | |||||||||||||||||||||||
Net Cash Provided by Operating Activities | $ | 59,925 | $ | 68,074 | $ | (8,149) | (12.0) | % | |||||||||||||||
Net Cash Used in Investing Activities | (53,161) | (35,169) | (17,992) | (51.2) | % | ||||||||||||||||||
Net Cash Used in Financing Activities | $ | (48,500) | $ | 13,344 | $ | (61,844) | (463.5) | % |
Six months ended June 30, | |||||||||||||||||||||||
2022 | 2021 | $ Change | % Change | ||||||||||||||||||||
in thousands (except percentages) | |||||||||||||||||||||||
Net income (loss) | $ | 10,323 | $ | 5,652 | $ | 4,671 | 82.6 | % | |||||||||||||||
Non-cash adjustments to net income (loss) | (3,389) | 14,446 | (17,835) | (123.5) | % | ||||||||||||||||||
Changes in operating assets and liabilities | 52,991 | 47,976 | 5,015 | 10.5 | % | ||||||||||||||||||
Net Cash Provided by Operating Activities | $ | 59,925 | $ | 68,074 | $ | (8,149) | (12.0) | % |
Total | 2022 | 2023 | 2024 | 2025 | 2026 | Thereafter | |||||||||||||||||||||||||||||||||||
in thousands | |||||||||||||||||||||||||||||||||||||||||
Debt | $ | 87,000 | $ | — | $ | — | $ | — | $ | — | $ | 87,000 | $ | — | |||||||||||||||||||||||||||
Interest payments | 956 | 137 | 273 | 273 | 273 | — | — | ||||||||||||||||||||||||||||||||||
Operating leases | 99,230 | 4,921 | 9,676 | 9,536 | 9,455 | 8,985 | 56,657 | ||||||||||||||||||||||||||||||||||
Purchase commitments | 16,941 | 7,634 | 5,459 | 3,848 | — | — | — | ||||||||||||||||||||||||||||||||||
Total | $ | 204,127 | $ | 12,692 | $ | 15,408 | $ | 13,657 | $ | 9,728 | $ | 95,985 | $ | 56,657 |
2021 | |||||||||||||||||||||||
First Quarter | Second Quarter | Third Quarter | Fourth Quarter (1) | ||||||||||||||||||||
in thousands | |||||||||||||||||||||||
Commission and fee revenue | $ | 54,373 | $ | 83,443 | $ | 76,188 | $ | 57,567 | |||||||||||||||
Earned premium | 63,234 | 70,437 | 78,700 | 83,453 | |||||||||||||||||||
Membership and other revenue | 11,593 | 13,529 | 13,198 | 13,364 | |||||||||||||||||||
Total revenues | $ | 129,200 | $ | 167,409 | $ | 168,086 | $ | 154,384 | |||||||||||||||
Total operating expenses | 134,296 | 153,135 | 166,328 | 175,390 | |||||||||||||||||||
Operating income (loss) | $ | (5,096) | $ | 14,274 | $ | 1,758 | $ | (21,006) | |||||||||||||||
Net income (loss) | $ | (6,850) | $ | 12,503 | $ | (548) | $ | (66,459) | |||||||||||||||
2022 | |||||||||||||||||||||||
First Quarter (2) | Second Quarter (3) | Third Quarter | Fourth Quarter | ||||||||||||||||||||
in thousands | |||||||||||||||||||||||
Commission and fee revenue | $ | 62,461 | $ | 95,506 | N/A | N/A | |||||||||||||||||
Earned premium | 89,132 | 94,100 | N/A | N/A | |||||||||||||||||||
Membership and other revenue | 16,218 | 16,411 | N/A | N/A | |||||||||||||||||||
Total revenues | $ | 167,811 | $ | 206,017 | N/A | N/A | |||||||||||||||||
Total operating expenses | 180,815 | 203,630 | N/A | N/A | |||||||||||||||||||
Operating income (loss) | $ | (13,004) | $ | 2,387 | N/A | N/A | |||||||||||||||||
Net income (loss) | $ | 15,866 | $ | (5,543) | N/A | N/A | |||||||||||||||||
Exhibit No. | Description | |||||||
2.1* | ||||||||
3.1 | ||||||||
3.2 | ||||||||
4.1 | ||||||||
4.2 | ||||||||
4.3 | ||||||||
4.4 | ||||||||
4.5 | ||||||||
31.1 | ||||||||
31.2 | ||||||||
32.1# | ||||||||
32.2# | ||||||||
101.INS | XBRL Instance Document. | |||||||
101.SCH | XBRL Taxonomy Extension Schema Document. | |||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | |||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | |||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. | |||||||
104 | Cover Page Interactive Data File (formatted as Inline XBRL). |
* | The schedules and exhibits to this agreement have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the SEC upon request. | |||||||
# | This certification is deemed not filed for purpose of Section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act. |
HAGERTY, INC. | ||||||||||||||
By: | /s/ McKeel O Hagerty | |||||||||||||
McKeel O Hagerty | ||||||||||||||
Chief Executive Officer |
HAGERTY, INC. | ||||||||||||||
By: | /s/ Frederick J. Turcotte | |||||||||||||
Frederick J. Turcotte | ||||||||||||||
Chief Financial Officer |
Date: August 10, 2022 | |||||||||||
By: | /s/ McKeel O Hagerty | ||||||||||
McKeel O Hagerty | |||||||||||
Chief Executive Officer | |||||||||||
(Principle Executive Officer) |
Date: August 10, 2022 | |||||||||||
By: | /s/ Frederick J. Turcotte | ||||||||||
Frederick J. Turcotte | |||||||||||
Chief Financial Officer | |||||||||||
(Principal Financial and Accounting Officer) |
Date: August 10, 2022 | |||||||||||
By: | /s/ McKeel O Hagerty | ||||||||||
McKeel O Hagerty | |||||||||||
Chief Executive Officer | |||||||||||
(Principle Executive Officer) |
Date: August 10, 2022 | |||||||||||
By: | /s/ Frederick J. Turcotte | ||||||||||
Frederick J. Turcotte | |||||||||||
Chief Financial Officer | |||||||||||
(Principal Financial and Accounting Officer) |
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ (5,543) | $ 12,503 | $ 10,323 | $ 5,652 |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency translation adjustments | (1,022) | (39) | (748) | 186 |
Derivative instruments | 388 | (173) | 1,933 | 608 |
Other comprehensive income (loss) | (634) | (212) | 1,185 | 794 |
Comprehensive income (loss) | (6,177) | 12,291 | 11,508 | 6,446 |
Comprehensive loss (income) attributable to non-controlling interest | 7 | 91 | 11,648 | 136 |
Comprehensive income (loss) attributable to controlling interest | $ (6,170) | $ 12,382 | $ 23,156 | $ 6,582 |
Summary of Significant Accounting Policies and New Accounting Standards |
6 Months Ended |
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Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies and New Accounting Standards | 1 — Summary of Significant Accounting Policies and New Accounting Standards Description of Business — Hagerty, Inc. ("Hagerty" or the "Company") and its consolidated subsidiaries, including The Hagerty Group, LLC ("The Hagerty Group"), is a global market leader in providing insurance for classic and enthusiast vehicles. In addition, Hagerty provides an automotive enthusiast platform that engages, entertains and connects with car enthusiasts and its members. The Company operates several entities which collectively support Hagerty's revenue streams. Hagerty earns commission and fee revenues for the distribution and servicing of classic automobile and boat insurance policies written through personal and commercial lines agency agreements with multiple insurance carriers in the United States ("U.S."), Canada and the United Kingdom ("U.K."). Reinsurance premiums are earned in Hagerty Reinsurance Limited ("Hagerty Re") which is registered as a Class 3A reinsurer under the Bermuda Insurance Act 1978. Hagerty Re solely reinsures the classic auto and marine risks written through Hagerty's Managing General Agency ("MGA") entities in the U.S., Canada and the U.K. •The business produced by the U.S. MGAs is written by Essentia Insurance Company ("Essentia") and reinsured with its affiliate, Evanston Insurance Company ("Evanston"). In turn, Hagerty Re assumes 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 16 — Related-Party Transactions for additional information. •The business produced by the Canadian MGA is written by Aviva Canada Inc. ("Aviva"), through Aviva's Canadian subsidiary, Elite Insurance Company ("Elite"). In turn, Hagerty Re assumes premiums through a quota share agreement with Elite. •In 2021, Hagerty Re entered into a reinsurance agreement with Markel International Insurance Company Limited to reinsure classic auto risks produced by Hagerty's U.K. MGA. In connection with this new agreement, Hagerty Re purchased reinsurance to limit its liability to £1,000,000 per claim, as U.K. law requires unlimited liability coverage. Markel International Insurance Company Limited is a subsidiary of Markel, which is a related party. Refer to Note 16 — Related-Party Transactions for additional information. The Company earns subscription revenue through membership offerings and other automotive services sold to policyholders and classic vehicle enthusiasts. Membership offerings include, but are not limited to, private label roadside assistance, digital and linear video content, an award-winning magazine, valuation services, exclusive events and automotive third-party discounts. The Company owns and operates collector vehicle events, earning revenue through ticket sales, sponsorships, and event registration service fees through Motorsport Reg. The Company also owns and operates a peer-to-peer classic vehicle rental business for auto enthusiasts, and operates Member Hubs Holding, LLC ("MHH"), which are majority-owned world-class vehicle storage and exclusive social club facilities branded as Hagerty Garage + Social for classic, collector and exotic cars owners. In January 2022, the Company entered into a joint venture with Broad Arrow Group, Inc., a Delaware corporation ("Broad Arrow") that enhances the Company's portfolio of automotive-focused offerings for car enthusiasts under Hagerty Marketplace by offering new services for the buying, selling and financing of collector cars to compliment the Company's automotive-focused offerings. Refer to Note 18 — Subsequent Events for additional information. The Company’s headquarters are located in Traverse City, Michigan. Basis of Presentation — The Company's Condensed Consolidated Financial Statements were prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and with the instructions for Quarterly Reports on Form 10-Q and Regulation S-X and include the accounts of Hagerty, Inc. and The Hagerty Group with its consolidated subsidiaries. The financial statements reflect all normal recurring adjustments and accruals that are, in the opinion of management, necessary for a fair statement of financial position and results of operations for the interim periods presented. Interim financial statements do not include all of the information and notes required by GAAP for annual consolidated financial statements. These financial statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021. The results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. Principles of Consolidation — The Company's Condensed Consolidated Financial Statements contain the accounts of Hagerty and its majority-owned or controlled subsidiaries. As of June 30, 2022, the Company had economic ownership of 24.7% of The Hagerty Group. In addition, MHH is an 80% owned subsidiary of The Hagerty Group. The Company consolidates these entities under the voting interest method guidance in accordance with Accounting Standards Codification ("ASC") Topic 810, Consolidations ("ASC 810"). Non-controlling interest is presented separately on the Condensed Consolidated Statements of Operations, Condensed Consolidated Statements of Comprehensive Income (Loss), Condensed Consolidated Balance Sheets, and Condensed Consolidated Statements of Changes in Members' and Stockholders' Equity. All significant intercompany accounts and transactions have been eliminated in consolidation. Business Combination — On December 2, 2021, (the "Closing"), The Hagerty Group completed a business combination with Aldel Financial Inc. ("Aldel"), and Aldel Merger Sub LLC ("Merger Sub"), a Delaware limited liability company and wholly owned subsidiary of Aldel (the "Business Combination"). In connection with the Closing, Aldel changed its name from Aldel Financial Inc. to Hagerty, Inc. The Business Combination was accounted for as a common control reverse acquisition for which The Hagerty Group was determined to be the accounting acquirer and Aldel was treated as the "acquired" company. The Hagerty Group issued equity for the net assets of Aldel, accompanied by a recapitalization. Business combinations in which the legal acquirer is not the accounting acquirer are commonly referred to as "reverse acquisitions". A reverse acquisition occurs when the entity that issues securities (legal acquirer) is identified as the acquiree for accounting purposes and the entity whose equity interests are acquired (the legal acquiree) is identified as the acquirer for accounting purposes. Reverse acquisitions are accounted for in accordance with Subtopic 805-40 of ASC Topic 805, Business Combinations ("ASC 805"). While other factors were evaluated but not considered to have a material impact on the determination, The Hagerty Group was determined to be the accounting acquirer based on the following factors: •Hagerty Holding Corp. ("HHC") controlled the operating company prior to the Business Combination and controls the Company subsequent to the Business Combination through control of the board of directors (the "Board") as well as having majority voting ownership. •The Hagerty Group’s management is also the management of the Company. •The Hagerty Group is larger as compared to Aldel based on assets, revenues 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 4 — 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 Company's Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Although the estimates are considered reasonable, actual results could materially differ from those estimates. The most significant estimates that are susceptible to notable change in the near-term relates to the provision for unpaid losses and loss adjustment expenses, including incurred but not reported, ("IBNR"), the change in fair value of warrant liabilities and payments due under the Tax Receivable Agreement ("TRA"). Although some variability is inherent in these estimates, the Company believes that the current estimates are reasonable in all material respects. These estimates are reviewed regularly and adjusted, as necessary. Adjustments related to changes in estimates are reflected in the Company’s results of operations in the period for which those estimates changed. 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 the membership patrons 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 membership patrons.Foreign Currency Translation — The Company translates its foreign operations’ assets and liabilities denominated in foreign currencies into U.S. dollars at current rates of exchange as of the balance sheet date, and income and expense items at the average exchange rate for the reporting period. Translation adjustments resulting from exchange rate fluctuations are recorded in "Foreign currency translation adjustments", a component of Accumulated other comprehensive income (loss). Transaction gains and losses are recognized in "Interest and other income (expense)" within the Condensed Consolidated Statements of Operations.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. Refer to Note 5 — Acquisitions and Investments for additional information regarding the Company's equity method investments.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 non-cash liability. This liability is subject to remeasurement each reporting period and utilizes a Monte Carlo simulation model to value the warrants. The change in the fair value of the warrants is recognized in the Condensed Consolidated Statements of Operations each reporting period. Refer to Note 13 — Warrant Liabilities for additional information.Income Taxes — The Hagerty Group is taxed as a pass-through ownership structure under provisions of the Internal Revenue Code ("IRC") and a similar section of state income tax law, except Hagerty Re 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 HHC, Markel and Hagerty, Inc. (together, the "Hagerty Group Unit Holders"). 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 and various foreign subsidiaries are treated as taxable entities and income taxes are provided where applicable. Refer to Note 15 — 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 income in the period that includes the enactment date. Deferred tax assets are recognized to the extent that there is sufficient positive evidence as allowed under the ASC Topic 740, Income Taxes ("ASC 740"), to support the recoverability of those deferred tax assets. The Company establishes a valuation allowance to the extent that there is insufficient evidence to support the recoverability of the deferred tax asset under ASC 740. In making such a determination, management considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If it is determined that the deferred tax assets would be realizable in the future in excess of their net recorded amount, an adjustment would be made to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. Tax Receivable Agreement Liability — In connection with the Business Combination, Hagerty, Inc. entered into the 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 limited liability units in The Hagerty Group ("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 is able to reduce a cash tax liability by the amortization of the basis increase on a filed tax return. The payments under the TRA are expected to be substantial. The estimated value of the TRA is recorded in "Other long-term liabilities" on the Condensed Consolidated Balance Sheets. Hagerty, Inc. accounts for the effects of the basis increases as follows: •Hagerty, Inc. records an increase in deferred tax assets for the income tax effects of the increases in tax basis based on enacted federal and state income tax rates at the date of the exchange. •Hagerty, Inc. evaluates the ability to realize the full benefit represented by the deferred tax asset based on an analysis that will consider expectations of future earnings, among other things. If Hagerty, Inc. determines that the full benefit is not likely to be realized, a valuation allowance is established to reduce the amount of the deferred tax assets to an amount that is more likely than not to be realized. •At the Closing, Hagerty, Inc. recorded 85% of the estimated realizable tax benefit as an increase to the liability due under the TRA, which is recorded within "Other long-term liabilities", and a decrease to "Additional paid-in capital" on the Condensed Consolidated Balance Sheets. The remaining 15% of the estimated realizable tax benefit will be retained by Hagerty, Inc. All of the effects of changes in any of the estimates after the date of the redemption or exchange will be recorded in "Interest and other income (expense)" on the Condensed Consolidated Statements of Operations. Redeemable Non-controlling Interest — In connection with the Business Combination, Hagerty, Inc. entered into an Exchange Agreement with the Legacy Unit Holders ("Exchange Agreement"). The Exchange Agreement permitted the Legacy Unit Holders to exchange Class V Common Stock and associated Hagerty Group Units for an equivalent amount of Class A Common Stock or, at the option of the Company, for cash. Because the Company had the option to redeem the non-controlling interest for cash and the Company is controlled by the Legacy Unit Holders through their voting control, the non-controlling interest was considered redeemable as the redemption was considered outside the Company's control. Redeemable non-controlling interest represented the economic interests of the Legacy Unit Holders. Income or loss was attributed to the redeemable non-controlling interest based on the weighted average ownership of the Hagerty Group Units outstanding during the period held by the Legacy Unit Holders. The redeemable non-controlling interest was measured at the greater of the initial fair value or the redemption value and was required to be presented as temporary equity on the Condensed Consolidated Balance Sheets as of December 31, 2021. On March 23, 2022, the 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. Non-controlling Interest — Effective March 23, 2022, non-controlling interest represents the economic interests of the Legacy Unit Holders 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.Earnings Per Share — Hagerty calculates basic and dilutive earnings per share ("EPS") in accordance with ASC Topic 260 Earnings Per Share ("ASC 260"). Basic earnings per share is computed by dividing Net income (loss) attributable to Hagerty, Inc. 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 or other contracts to issue common stock were exercised, resulting in the issuance of shares of Class A Common Stock that would then share in the earnings of Hagerty, Inc. In periods in which the Company reports a net loss available to stockholders, diluted net loss per share available to stockholders would be equal to basic net loss per share available to stockholders, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.Stock-Based Compensation — Hagerty issues restricted stock units and performance restricted stock units under the 2021 Equity Incentive Plan. The grant date fair value for restricted stock units is determined based on the closing price of the Company's common stock on the business day prior to grant. Hagerty uses a Monte Carlo simulation model to estimate the fair value of performance restricted stock units. Stock-based compensation costs are recognized over the applicable requisite service period of the award, generally using the straight-line method. Forfeitures are recorded as incurred. Refer to Note 14 — Stock-Based Compensation for additional information.Recently Adopted Accounting Guidance Media Content — In March 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2019-02, Improvements to Accounting for Costs of Films and License Agreements for Program Materials, to align the accounting for production costs of an episodic television series with the accounting for production costs of films by removing the content distinction for capitalization. As a result of adopting this ASU on January 1, 2021, the Company applied the guidance of ASC Topic 926, Entertainment - Films for the original content the Company self-produces and where the intellectual property is owned by the Company. For content the Company produces, the costs associated with production, including development costs, direct costs and production overhead 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 Condensed Consolidated Financial Statements through December 31, 2021. Reference Rate Reform — In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (ASC Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional relief to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. Additionally, in January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (ASC Topic 848), which clarifies that certain optional expedients and exceptions in ASC 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. Both ASUs were effective immediately upon issuance and adoption of these ASUs did not have a material impact on the Company's Condensed Consolidated Financial Statements and related disclosures. Convertible Instruments and Contracts — In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for convertible instruments by eliminating certain separation models and will generally be reported as a single liability at its amortized cost. In addition, ASU 2020-06 eliminates the treasury stock method to calculate diluted EPS for convertible instruments and requires the use of the if-converted method. The amendments in ASU 2020-06 are effective for the Company as of January 1, 2022 with the option to early adopt as of January 1, 2021. The Company early adopted ASU 2020-06 effective January 1, 2021 and the adoption of the ASU did not have an impact on the Company's Condensed Consolidated Financial Statements. Recent Accounting Guidance Not Yet Adopted Leases — In February 2016, the FASB issued ASU 2016-02, Leases ("ASC 842"), which supersedes the lease requirements in ASC Topic 840, Leases ("ASC 840"). This guidance increases transparency and comparability among organizations by recognizing lease assets and lease liabilities in the Condensed Consolidated Balance Sheets. The guidance requires disclosure to enable users of the Condensed Consolidated Financial Statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The transition to ASU No. 2016-02 requires the recognition and measurement of leases at the beginning of the earliest period presented using a modified retrospective approach. In June 2020, the FASB issued ASU No. 2020-05, Effective Dates for Certain Entities, which deferred the effective date for nonpublic entities and emerging growth companies that had not yet adopted the original ASU. Under the amended guidance, the leasing standard will be effective for the Company’s fiscal year beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022, with early adoption permitted. The Company is an emerging growth company and has elected to adopt ASC 842 with its 2022 Annual Financial Statements. The Company is currently evaluating the effect of adoption of these standards on the Company's Condensed Consolidated Financial Statements and related disclosures and expects to record a material right-of-use asset and liability on the Condensed Consolidated Balance Sheets related to the Company's operating leases. Upon adoption, the Company expects to elect the package of practical expedients, which, among other things, does not require the Company to reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs. The Company will continue to finalize the implementation of new processes and the assessment of the impact of this adoption on the Company's Condensed Consolidated Financial Statements and related disclosures. Credit Losses — In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (ASC Topic 326): Measurement of Credit Losses on Financial Instruments, which requires a company to consider forward looking information to determine current estimated credit losses, for all financial instruments that are not accounted for at fair value through net income (loss). ASU No. 2019-10 defers the effective date of ASU No. 2016-13 to January 1, 2023. The Company does not expect the adoption of ASU No. 2016-13 to have a material impact on the Company's Condensed Consolidated Financial Statements and related disclosures.
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Revenue | 2 — Revenueisaggregation of Revenue — The following table presents Hagerty's revenue by distribution channel offering, as well as a reconciliation to total revenue for the three and six months ended June 30, 2022 and 2021:
The following table presents Hagerty's revenue disaggregated by geographic area, as well as a reconciliation to total revenue for the three and six months ended June 30, 2022 and 2021:
Earned Premium — The following table presents Hagerty Re's total premiums assumed and the change in unearned premiums for the three and six months ended June 30, 2022 and 2021:
Contract Assets and Liabilities — The following table is a summary of the Company's contract assets and liabilities for the periods specified below. Contract assets are classified as "Commission receivable", and liabilities are classified as "Contract liabilities" within current and non-current liabilities on the Condensed Consolidated Balance Sheets.
Contract assets consist of contingent underwriting commission ("CUC") receivables, which are earned throughout the year and received in the first quarter of the following year. As such, the decrease in contract assets during the period was primarily due to 2021 CUC payments received during the six months ended June 30, 2022. Contract liabilities consist of cash collected in advance of revenue recognition. A large number of HDC membership renewals occur during the summer driving season. As a result, the contract liability is larger during the summer months and will decrease throughout the life of the HDC membership term. As a result, the HDC related contract liability balance increases in the second quarter of each year as renewals are processed.
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Prepaid Expenses and Other Assets |
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Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Prepaid Expenses and Other Assets | 3 — Prepaid Expenses and Other Assets The following table is a summary of current and long-term prepaid expenses and other assets as of June 30, 2022 and December 31, 2021:
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Business Combination |
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination | 4 — 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 things, 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 purchase 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 13 — 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. As of June 30, 2022, the Company held a 24.7% ownership interest in The Hagerty Group. As a result of the Up-C structure, non-controlling interest is held by the Legacy Unit Holders, who retained 75.3% of the economic ownership percentage of The Hagerty Group as of June 30, 2022. In connection with the Business Combination, the Company incurred direct and incremental costs of approximately $41.9 million, consisting of primarily investment banking, insurance and professional fees, of which $32.6 million were recorded as a reduction of Additional-paid-in-capital within the Condensed Consolidated Balance Sheets. In connection with the Business Combination, Hagerty, Inc. entered into the TRA with the Legacy Unit Holders. The TRA provides for payment to the Legacy Unit Holders of 85% of the U.S. federal, state and local income tax savings realized by Hagerty, Inc. as a result of the increases in tax basis and certain other tax benefits related to the transactions contemplated under the Business Combination Agreement upon the exchange of Hagerty Group Units and Class V Common Stock for Class A Common Stock or cash. Refer to Note 15 — 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:
5 — Acquisitions and Investments Acquisitions During the six months ended June 30, 2022 and 2021, the Company paid aggregate cash consideration of $11.0 million and $5.5 million for current period acquisitions, respectively. Speed Digital 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 $3.75 million to be paid in two annual installments occurring in 2023 and 2024. Speed Digital was previously wholly owned indirectly by Robert Kauffman, a director on Hagerty's Board, who will receive 100% of the proceeds of the purchase price. Speed Digital operates a software as a service ("SaaS") business primarily serving collector car dealers and auction houses, and an advertising and content syndication platform, which includes Motorious.com. The Company acquired Speed Digital to enhance the Hagerty Marketplace business to establish relationships with their dealer partners and facilitate growth in Hagerty Marketplace products; augment the Company's automotive intelligence data; and allow Motorious.com to drive audience engagement, content distribution, and advertising revenues. Equity Method Investments Broad Arrow In January 2022, Hagerty entered into a joint venture with Broad Arrow, pursuant to which Hagerty invested $15.3 million in exchange for ownership of approximately 40% of Broad Arrow. Hagerty's President of Hagerty Marketplace, Kenneth Ahn, is the Chief Executive Officer of Broad Arrow. The joint venture between Broad Arrow and Hagerty enhanced the Company's portfolio of automotive-focused offerings for car enthusiasts under Hagerty Marketplace by offering new services for the buying, selling and financing of collector cars. The Company follows equity method accounting for its investment in Broad Arrow with the carrying amount included within "Equity method investments" on the Condensed Consolidated Balance Sheets and the Company's share of income (loss) within "Income (loss) on equity method investment, net of tax" on the Condensed Consolidated Statements of Operations. Refer to Note 18 — Subsequent Events for additional information.
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Acquisitions and Investments |
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions and Investments | 4 — 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 things, 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 purchase 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 13 — 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. As of June 30, 2022, the Company held a 24.7% ownership interest in The Hagerty Group. As a result of the Up-C structure, non-controlling interest is held by the Legacy Unit Holders, who retained 75.3% of the economic ownership percentage of The Hagerty Group as of June 30, 2022. In connection with the Business Combination, the Company incurred direct and incremental costs of approximately $41.9 million, consisting of primarily investment banking, insurance and professional fees, of which $32.6 million were recorded as a reduction of Additional-paid-in-capital within the Condensed Consolidated Balance Sheets. In connection with the Business Combination, Hagerty, Inc. entered into the TRA with the Legacy Unit Holders. The TRA provides for payment to the Legacy Unit Holders of 85% of the U.S. federal, state and local income tax savings realized by Hagerty, Inc. as a result of the increases in tax basis and certain other tax benefits related to the transactions contemplated under the Business Combination Agreement upon the exchange of Hagerty Group Units and Class V Common Stock for Class A Common Stock or cash. Refer to Note 15 — 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:
5 — Acquisitions and Investments Acquisitions During the six months ended June 30, 2022 and 2021, the Company paid aggregate cash consideration of $11.0 million and $5.5 million for current period acquisitions, respectively. Speed Digital 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 $3.75 million to be paid in two annual installments occurring in 2023 and 2024. Speed Digital was previously wholly owned indirectly by Robert Kauffman, a director on Hagerty's Board, who will receive 100% of the proceeds of the purchase price. Speed Digital operates a software as a service ("SaaS") business primarily serving collector car dealers and auction houses, and an advertising and content syndication platform, which includes Motorious.com. The Company acquired Speed Digital to enhance the Hagerty Marketplace business to establish relationships with their dealer partners and facilitate growth in Hagerty Marketplace products; augment the Company's automotive intelligence data; and allow Motorious.com to drive audience engagement, content distribution, and advertising revenues. Equity Method Investments Broad Arrow In January 2022, Hagerty entered into a joint venture with Broad Arrow, pursuant to which Hagerty invested $15.3 million in exchange for ownership of approximately 40% of Broad Arrow. Hagerty's President of Hagerty Marketplace, Kenneth Ahn, is the Chief Executive Officer of Broad Arrow. The joint venture between Broad Arrow and Hagerty enhanced the Company's portfolio of automotive-focused offerings for car enthusiasts under Hagerty Marketplace by offering new services for the buying, selling and financing of collector cars. The Company follows equity method accounting for its investment in Broad Arrow with the carrying amount included within "Equity method investments" on the Condensed Consolidated Balance Sheets and the Company's share of income (loss) within "Income (loss) on equity method investment, net of tax" on the Condensed Consolidated Statements of Operations. Refer to Note 18 — Subsequent Events for additional information.
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Acquisitions and Investments | 5 — Acquisitions and Investments Acquisitions During the six months ended June 30, 2022 and 2021, the Company paid aggregate cash consideration of $11.0 million and $5.5 million for current period acquisitions, respectively. Speed Digital 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 $3.75 million to be paid in two annual installments occurring in 2023 and 2024. Speed Digital was previously wholly owned indirectly by Robert Kauffman, a director on Hagerty's Board, who will receive 100% of the proceeds of the purchase price. Speed Digital operates a software as a service ("SaaS") business primarily serving collector car dealers and auction houses, and an advertising and content syndication platform, which includes Motorious.com. The Company acquired Speed Digital to enhance the Hagerty Marketplace business to establish relationships with their dealer partners and facilitate growth in Hagerty Marketplace products; augment the Company's automotive intelligence data; and allow Motorious.com to drive audience engagement, content distribution, and advertising revenues. Equity Method Investments Broad Arrow In January 2022, Hagerty entered into a joint venture with Broad Arrow, pursuant to which Hagerty invested $15.3 million in exchange for ownership of approximately 40% of Broad Arrow. Hagerty's President of Hagerty Marketplace, Kenneth Ahn, is the Chief Executive Officer of Broad Arrow. The joint venture between Broad Arrow and Hagerty enhanced the Company's portfolio of automotive-focused offerings for car enthusiasts under Hagerty Marketplace by offering new services for the buying, selling and financing of collector cars. The Company follows equity method accounting for its investment in Broad Arrow with the carrying amount included within "Equity method investments" on the Condensed Consolidated Balance Sheets and the Company's share of income (loss) within "Income (loss) on equity method investment, net of tax" on the Condensed Consolidated Statements of Operations
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Acquisitions and Investments | 5 — Acquisitions and Investments Acquisitions During the six months ended June 30, 2022 and 2021, the Company paid aggregate cash consideration of $11.0 million and $5.5 million for current period acquisitions, respectively. Speed Digital 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 $3.75 million to be paid in two annual installments occurring in 2023 and 2024. Speed Digital was previously wholly owned indirectly by Robert Kauffman, a director on Hagerty's Board, who will receive 100% of the proceeds of the purchase price. Speed Digital operates a software as a service ("SaaS") business primarily serving collector car dealers and auction houses, and an advertising and content syndication platform, which includes Motorious.com. The Company acquired Speed Digital to enhance the Hagerty Marketplace business to establish relationships with their dealer partners and facilitate growth in Hagerty Marketplace products; augment the Company's automotive intelligence data; and allow Motorious.com to drive audience engagement, content distribution, and advertising revenues. Equity Method Investments Broad Arrow In January 2022, Hagerty entered into a joint venture with Broad Arrow, pursuant to which Hagerty invested $15.3 million in exchange for ownership of approximately 40% of Broad Arrow. Hagerty's President of Hagerty Marketplace, Kenneth Ahn, is the Chief Executive Officer of Broad Arrow. The joint venture between Broad Arrow and Hagerty enhanced the Company's portfolio of automotive-focused offerings for car enthusiasts under Hagerty Marketplace by offering new services for the buying, selling and financing of collector cars. The Company follows equity method accounting for its investment in Broad Arrow with the carrying amount included within "Equity method investments" on the Condensed Consolidated Balance Sheets and the Company's share of income (loss) within "Income (loss) on equity method investment, net of tax" on the Condensed Consolidated Statements of Operations
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Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets | 6 — Intangible Assets The cost and accumulated amortization of intangible assets as of June 30, 2022 and December 31, 2021 are as follows:
Intangible asset amortization expense was $5.3 million and $3.0 million for the three months ended June 30, 2022 and 2021, respectively, and $9.5 million and $5.4 million for the six months ended June 30, 2022 and 2021, respectively. The estimated future aggregate amortization expense as of June 30, 2022 is as follows (in thousands):
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Provision for Unpaid Losses and Loss Adjustment Expenses |
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Provision for Unpaid Losses and Loss Adjustment Expenses | 7 — Provision for Unpaid Losses and Loss Adjustment Expenses The following table presents a reconciliation of beginning and ending provision for unpaid losses and loss adjustment expenses, net of amounts recoverable from reinsurers:
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | 8 — 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 LIBOR 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 10 — Interest Rate Swaps for additional information. Warrant liabilities The Company's 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 Private Placement Warrants, Underwriter Warrants, OTM Warrants and 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 13 — Warrant Liabilities for additional information. The following table summarizes the significant inputs in the valuation model as of June 30, 2022:
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 June 30, 2022 and December 31, 2021, is shown in the table below:
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 six months ended June 30, 2022:
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 investments as of June 30, 2022 and December 31, 2021:
The Company has reviewed the portfolio for other than temporary impairments and concluded that no impairment exists as of June 30, 2022. The Company did not record any gains or losses on these securities during the six months ended June 30, 2022 or 2021.
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Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | 9 — Debt As of the indicated dates, the principal amount of Hagerty's debt consisted of the following:
The Credit Facility matures in October 2026. There is no other outstanding long-term debt as of June 30, 2022. Credit Facility — In October 2021, the Company entered into a Third Amendment to Amended and Restated Credit Agreement ("Credit Agreement"), which amended the terms of its revolving credit facility ("Credit Facility") with JPMorgan Chase Bank, N.A., as administrative agent, and the other financial institutions party thereto from time to time as lenders. The aggregate amount of commitments available to the Company under the Credit Facility is $230.0 million. The Credit Agreement also provides for an uncommitted incremental facility under which the Company may request one or more increases in the amount of the commitments available under the Credit Facility in an aggregate amount not to exceed $50.0 million. Additionally, the Credit Agreement also provides for the issuance of letters of credit and the making of discretionary swing line loans, with sublimits of $25.0 million and $3.0 million, respectively, or lesser amounts in the event the available aggregate commitments are less than such sublimits. The current term of the Credit Agreement 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 Company may elect that borrowings made under the Credit Facility bear interest at a rate per annum equal to either (1) a base rate equal to the greatest of (a) the prime rate published by the Wall Street Journal, (b) the greater of (i) the federal funds effective rate and (ii) the overnight bank funding rate, in either case, plus 0.5%, and (c) a one-month adjusted LIBOR plus 1.0% or (2) an adjusted LIBOR rate equal to the LIBOR multiplied by the statutory reserve rate, plus, in either case, an applicable margin based on a leverage ratio calculated based on the Company’s financial statements for its four most recent fiscal quarters. The effective borrowing rate was 3.60% and 1.61% as of June 30, 2022 and December 31, 2021, respectively. The Credit Facility borrowings are collateralized by Company assets, except for the assets of the Company’s U.K., Bermuda and German subsidiaries as well as the assets of the Hagerty Events, LLC 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 June 30, 2022 and December 31, 2021, the Company was in compliance with the covenants under the Credit Agreement. The Credit Agreement includes a provision for determining a LIBOR successor rate in the event LIBOR reference rates are no longer available. The alternative benchmark replacement rate is the Secured Overnight Financing Rate ("SOFR"). In addition, the Credit Agreement includes a provision for determining a SOFR successor rate in the event SOFR reference rates are no longer available. If no SOFR successor rate has been determined, the rate will be based on the higher of the Prime Rate or the federal funds rate plus a fixed margin. Note Payable — The Company had a $2.0 million note payable related to a business combination for the purchase installment payments, with a fixed interest rate of 3.25%. The note was paid in two equal installments, $1.0 million of which was paid in 2021. The note payable matured March 1, 2022 at which time the second installment of $1.0 million was paid. Letters of Credit — The Company authorized three letters of credit for a total of $11.1 million for operational purposes related to Section 953(d) tax structuring election and lease down payment support.
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Interest Rate Swaps |
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Jun. 30, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Interest Rate Swaps | 10 — 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)" on the Condensed Consolidated Statements of Operations. As of June 30, 2022, the Company had one outstanding interest rate swap, which was entered into in December 2020, with an original notional amount of $35.0 million at a fixed swap rate of 0.78%. The estimated fair value of interest rate swap is included within either "Prepaid expenses and other non-current assets" or "Other long-term liabilities" on the Condensed Consolidated Balance Sheets and the change in fair value is recorded within "Derivative instruments" in the Condensed Consolidated Statements of Comprehensive Income (Loss). The interest rate swap matures in December 2023. As of December 31, 2021, the Company had an additional interest rate swap outstanding, which was entered into in March 2017, with an original notional amount of $15.0 million at a fixed swap rate of 2.20%. The interest rate swap matured in March 2022. In accordance with ASC 815, the Company designated the December 2020 interest rate swap as a cash flow hedge and formally documented the relationship between the interest rate swap and the variable rate borrowings, as well as its risk management objective and strategy for undertaking the hedge transaction. The Company also assessed, at the hedge’s inception and will continue to assess on an ongoing basis, whether the derivative used in the hedging transaction was highly effective in offsetting changes in the cash flows of the hedged item. The hedge is deemed effective, and therefore, the change in fair value is recorded within "Derivative instruments" in the Condensed Consolidated Statements of Comprehensive Income (Loss). Such amounts are reclassified into interest expense, net from other comprehensive income (loss) during the period in which the hedged item affects earnings. There were no such reclassifications during the six months ended June 30, 2022 and 2021. The Company does not expect to have a reclassification into earnings within the next 12 months.
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Members' and Stockholders' Equity |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Members' and Stockholders' Equity | 11 — Members' and Stockholders' Equity Prior to the Business Combination, The Hagerty Group had one class of partnership interests. These units were recapitalized as Hagerty Group Units in connection with the Business Combination. The partnership interests are reflected as The Hagerty Group's historical members’ equity in the Condensed Consolidated Balance Sheets. As of the Closing and as of June 30, 2022, Hagerty held a 24.7% ownership interest in The Hagerty Group. 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 June 30, 2022, there were 82,452,214 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 June 30, 2022, there were 251,033,906 shares of Class V Common Stock issued and outstanding. Preferred Stock — Hagerty is authorized to issue 20,000,000 shares of Preferred Stock with a par value of $0.0001 per share. Hagerty's Board has the authority to issue shares of Preferred Stock with such designations, voting and other rights and preferences as may be determined from time to time. As of June 30, 2022, there were no shares of Preferred Stock issued and outstanding. Members' Equity — Prior to the Business Combination, The Hagerty Group had 100,000 units outstanding with no par value. At the Closing, all units were converted to Hagerty Group Units and Class V Common Stock as discussed in Note 4 — Business Combination. Redeemable Non-controlling Interest — In connection with the Business Combination, Hagerty, Inc. entered into an Exchange Agreement with the Legacy Unit Holders ("Exchange Agreement"). The Exchange Agreement permitted the Legacy Unit Holders to exchange Class V Common Stock and associated Hagerty Group Units for an equivalent amount of Class A Common Stock or, at the option of the Company, for cash. Because the Company had the option to redeem the non-controlling interest for cash and the Company is controlled by the Legacy Unit Holders through their voting control, the non-controlling interest was considered redeemable as the redemption was considered outside the Company's control. Redeemable non-controlling interest represented the economic interests of the Legacy Unit Holders. Income or loss was attributed to the redeemable non-controlling interest based on the weighted average ownership of the Hagerty Group Units outstanding during the period held by the Legacy Unit Holders. Class V Common Stock and Hagerty Group Units held by the Legacy Unit Holders are exchangeable at the earlier of 180 days from the close of the Business Combination or when the founder shares are no longer subject to the lock-up period, as defined within the Lock-Up Agreement, dated as of December 2, 2021, between the Company and the Legacy Unit Holders. The redeemable non-controlling interest was measured at the greater of the initial fair value or the redemption value and was required to be presented as temporary equity on the Condensed Consolidated Balance Sheets, with a corresponding adjustment to "Additional paid-in capital" and "Accumulated earnings (deficit)". The total redeemable non-controlling interest as of December 31, 2021 was $593.3 million. For the period from January 1, 2022 to March 23, 2022, additional accretion of $1.6 billion was recognized, with a corresponding adjustment of $162.1 million and $1.4 billion to "Additional paid-in capital" and "Accumulated earnings (deficit)", respectively. On March 23, 2022, the 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. Non-controlling Interest — Effective March 23, 2022, non-controlling interest represents the economic interests of the Legacy Unit Holders 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. The following table summarizes the ownership of The Hagerty Group as of June 30, 2022:
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Members' and Stockholders' Equity | 11 — Members' and Stockholders' Equity Prior to the Business Combination, The Hagerty Group had one class of partnership interests. These units were recapitalized as Hagerty Group Units in connection with the Business Combination. The partnership interests are reflected as The Hagerty Group's historical members’ equity in the Condensed Consolidated Balance Sheets. As of the Closing and as of June 30, 2022, Hagerty held a 24.7% ownership interest in The Hagerty Group. 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 June 30, 2022, there were 82,452,214 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 June 30, 2022, there were 251,033,906 shares of Class V Common Stock issued and outstanding. Preferred Stock — Hagerty is authorized to issue 20,000,000 shares of Preferred Stock with a par value of $0.0001 per share. Hagerty's Board has the authority to issue shares of Preferred Stock with such designations, voting and other rights and preferences as may be determined from time to time. As of June 30, 2022, there were no shares of Preferred Stock issued and outstanding. Members' Equity — Prior to the Business Combination, The Hagerty Group had 100,000 units outstanding with no par value. At the Closing, all units were converted to Hagerty Group Units and Class V Common Stock as discussed in Note 4 — Business Combination. Redeemable Non-controlling Interest — In connection with the Business Combination, Hagerty, Inc. entered into an Exchange Agreement with the Legacy Unit Holders ("Exchange Agreement"). The Exchange Agreement permitted the Legacy Unit Holders to exchange Class V Common Stock and associated Hagerty Group Units for an equivalent amount of Class A Common Stock or, at the option of the Company, for cash. Because the Company had the option to redeem the non-controlling interest for cash and the Company is controlled by the Legacy Unit Holders through their voting control, the non-controlling interest was considered redeemable as the redemption was considered outside the Company's control. Redeemable non-controlling interest represented the economic interests of the Legacy Unit Holders. Income or loss was attributed to the redeemable non-controlling interest based on the weighted average ownership of the Hagerty Group Units outstanding during the period held by the Legacy Unit Holders. Class V Common Stock and Hagerty Group Units held by the Legacy Unit Holders are exchangeable at the earlier of 180 days from the close of the Business Combination or when the founder shares are no longer subject to the lock-up period, as defined within the Lock-Up Agreement, dated as of December 2, 2021, between the Company and the Legacy Unit Holders. The redeemable non-controlling interest was measured at the greater of the initial fair value or the redemption value and was required to be presented as temporary equity on the Condensed Consolidated Balance Sheets, with a corresponding adjustment to "Additional paid-in capital" and "Accumulated earnings (deficit)". The total redeemable non-controlling interest as of December 31, 2021 was $593.3 million. For the period from January 1, 2022 to March 23, 2022, additional accretion of $1.6 billion was recognized, with a corresponding adjustment of $162.1 million and $1.4 billion to "Additional paid-in capital" and "Accumulated earnings (deficit)", respectively. On March 23, 2022, the 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. Non-controlling Interest — Effective March 23, 2022, non-controlling interest represents the economic interests of the Legacy Unit Holders 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. The following table summarizes the ownership of The Hagerty Group as of June 30, 2022:
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Earnings Per Unit and Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Unit and Share | 12 — Earnings Per Unit and Share The following table sets forth the calculation of basic EPS, which is based on Net income (loss) attributable to controlling interest for the three and six months ended June 30, 2022 and 2021, divided by the weighted average of Class A Common Stock and Members' Units outstanding as of June 30, 2022 and 2021, respectively. Diluted EPS of Class A Common Stock and Members' Units is computed by dividing Net income (loss) attributable to controlling interest by the weighted average number of shares of Class A Common Stock and Members' Units outstanding as of June 30, 2022 and 2021, adjusted to give effect to potentially dilutive securities. Potentially dilutive securities for the diluted EPS calculation consists of (i) unexercised warrants and unvested stock-based restricted stock units and performance restricted stock units, all using the Treasury Stock Method and (ii) Class V Common Stock using the "If-converted" Method.
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Warrant Liabilities |
6 Months Ended |
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Jun. 30, 2022 | |
Other Liabilities Disclosure [Abstract] | |
Warrant Liabilities | 13 — Warrant Liabilities In connection with the Business Combination, the Company registered 5,750,000 Public Warrants, 257,500 Private Placement Warrants, 28,750 Underwriter Warrants, 1,300,000 OTM Warrants and 12,669,300 PIPE Warrants. Upon the Closing, the following warrants were outstanding to purchase shares of the Company's Class A Common Stock that were issued by Aldel prior to the Business Combination: Public Warrants — Each warrant is exercisable for one share of the Company's Class A Common Stock at a price of $11.50 per share, subject to adjustments, commencing in April 2022, provided that the Company has an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the warrants and a current prospectus relating to them is available and such shares are registered, qualified or exempt from registration under the securities laws of the state of residence of the holder. The warrants may be exercised on a cash basis only for a whole number of shares of the Company’s Class A Common Stock. The warrants expire in December 2026. Private Placement Warrants — Each warrant will be exercisable for one share of the Company's Class A Common Stock at a price of $11.50 per share, subject to adjustments, commencing in December 2022, and subject to additional vesting requirements as outlined within the warrant agreements covering those securities, including the Sponsor Warrant Lock-Up Agreement, dated December 2, 2021, between the Company and the holders of the Private Placement and OTM Warrants (the "Sponsor Warrant Lock-Up Agreement"), provided that the Company has an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the warrants and a current prospectus relating to them is available and such shares are registered, qualified or exempt from registration under the securities laws of the state of residence of the holder. The warrants may be exercised only for a whole number of shares of the Company’s Class A Common Stock. Additionally, the Private Placement Warrants are exercisable on a cashless basis so long as they are held by the Sponsor or any of its permitted transferees. The warrants expire in December 2026. Underwriter Warrants — Each warrant is exercisable for one share of the Company's Class A Common Stock at a price of $11.50 per share, subject to adjustments, commencing in April 2022, provided that the Company has an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the warrants and a current prospectus relating to them is available and such shares are registered, qualified or exempt from registration under the securities laws of the state of residence of the holder. The warrants may be exercised only for a whole number of shares of the Company’s Class A Common Stock. Additionally, the Underwriter Warrants are exercisable on a cashless basis so long as they are held by the Underwriter or any of its permitted transferees. The warrants expire in December 2026. OTM Warrants — Each warrant will be exercisable for one share of the Company's Class A Common Stock at a price of $15.00 per share, subject to adjustments, commencing in December 2022 and subject to additional vesting requirements as outlined within the warrant agreements covering those securities, including the Sponsor Warrant Lock-Up Agreement, provided that the Company has an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the warrants and a current prospectus relating to them is available and such shares are registered, qualified or exempt from registration under the securities laws of the state of residence of the holder. Additionally, the OTM Warrants may be exercised on a cashless basis so long as they continue to be held by the initial purchasers or their permitted transferees. The warrants expire in December 2031. PIPE Warrants — Each warrant is exercisable for one share of the Company's Class A Common Stock at a price of $11.50 per share, subject to adjustments, commencing in January 2022, provided that the Company has an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the warrants and a current prospectus relating to them is available and such shares are registered, qualified or exempt from registration under securities laws of the state of residence of the holder. Additionally, the PIPE Warrants may be exercised on a cashless basis. The warrants expire in December 2026. The Company accounts for these warrants as liabilities in accordance with ASC 815-40. The warrants are measured at fair value each reporting period and the change in fair value is recorded within "Change in fair value of warrant liabilities" in the Condensed Consolidated Statements of Operations. The Company recognized a $5.4 million loss and a $26.3 million gain as a result of an increase and decrease in the fair value of the warrant liability for the three and six months ended June 30, 2022, respectively. The Company did not have warrants for the three and six months ended June 30, 2021. For the six months ended June 30, 2022, 522,000 PIPE warrants were exercised, on a cashless basis, for an equivalent of 124,748 shares of Class A Common Stock. The cashless exercise resulted in a decrease in Warrant liabilities and an increase in Class A Common Stock and Additional paid-in capital of $1.9 million on the Company's Condensed Consolidated Balance Sheets. As of June 30, 2022, a warrant liability of $61.2 million was reflected as a long-term liability on the Company's Condensed Consolidated Balance Sheets and the total number of warrants outstanding was 19,483,550.
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Stock Based Compensation |
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Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Based Compensation | 14 — Stock-Based Compensation In December 2021, the Board approved the 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 options, 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 to five-year period. There were 31,466,811 shares available for future grants under the 2021 Equity Incentive Plan at June 30, 2022. Stock-based compensation expense is recognized within "Salaries and benefits" and "General and administrative services" on the Company's Condensed Consolidated Statements of Operations. The Company accounts for forfeitures as they occur. The following table summarizes stock-based compensation expense recognized during the three and six months ended June 30, 2022:
Restricted Stock Units The Company grants serviced-based restricted stock units to employees and non-employee directors. Compensation cost for these service-based restricted stock units is based on the closing market price of the Company's Class A Common Stock on the grant date, and such costs are recognized ratably over the service period. There were 3.2 million restricted stock units granted during the three and six months ended June 30, 2022, with a weighted average fair value of $10.79. Unrecognized compensation cost related to restricted share units as of June 30, 2022 was $30.3 million, which the Company expects to recognize over a weighted average period of 3.68 years. The following table provides a summary of the restricted stock unit activity during the six months ended June 30, 2022:
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 or not. The fair value will be expensed over the requisite service period. The following table summarizes the assumptions and related information used to determine the grant-date fair value of performance stock units awarded for the periods presented:
The following table provides a summary of performance restricted stock unit activity during the six months ended June 30, 2022:
Employee Stock Purchase Plan In 2021, the Company adopted the 2021 Employee Stock Purchase Plan (the "ESPP Plan"). The ESPP Plan is subject to the provisions of Section 423 of the IRC and regulations thereunder. The Compensation Committee of the Board will administer the ESPP Plan, including determination of the time and frequency of offering periods, as well as the terms and conditions of the offerings. The ESPP Plan allows substantially all employees to participate. As of June 30, 2022, the total number of Class A Common Stock authorized and reserved for issuance under the ESPP Plan was 11,495,220 shares and no shares had been purchased.
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Taxation |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Taxation | 15 — Taxation Income tax expense reflected in the financial statements differs from the tax computed by applying the statutory U.S. federal rate of 21% to "Net income (loss)" before taxes as follows:
Deferred tax assets are reduced by a valuation allowance when management believes it is more likely than not that some, or all, of the deferred tax assets will not be realized. After considering all positive and negative evidence of taxable income in the carryback and carryforward periods as permitted by law, the Company believes it is more likely than not that certain deferred tax assets will not be utilized. The valuation allowance as of June 30, 2022 has been increased for additional foreign net operating losses, additional net operating losses of Hagerty, Inc. and adjusted for changes in foreign exchange rates. The Company had a valuation allowance of $176.7 million and $174.8 million as of June 30, 2022 and December 31, 2021, respectively. Significant inputs and assumptions were used to estimate the future expected payments under the TRA, including the timing of the realization of the tax benefits and a tax savings rate of approximately 25.5%. The estimated value of the TRA recorded by the Company at the Closing was $3.5 million which was limited by the ability to currently utilize tax benefits and was recorded in "Other long-term liabilities" with an offsetting entry to "Additional paid-in capital" within the Condensed Consolidated Balance Sheets. There is no change to the estimated value from the Closing to June 30, 2022.
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Related-Party Transactions |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related-Party Transactions | 16 — Related-Party Transactions As of June 30, 2022, Markel had a 23.4% ownership in the Company and State Farm Automobile Insurance Company ("State Farm") had a 15.0% ownership in the Company. As such, both Markel and State Farm are considered related parties. State Farm State Farm and Hagerty entered into a master alliance agreement in 2020 to establish an alliance insurance program where State Farm’s customers, through the State Farm agents, would have access to Hagerty features and services which is expected to begin in the first half of 2023. Under this agreement, State Farm paid Hagerty an advanced commission of $20.0 million in 2020, to be recognized into Commission and fee revenue over the life of the contract. The parties have entered into a managing general underwriter agreement where the State Farm Classic+ policy will be offered, through State Farm Classic Insurance Company, a new wholly owned subsidiary of State Farm, subject to any applicable state regulatory review and approval. The State Farm Classic+ policy will be available to new and existing customers through State Farm agents on a state by state basis. Hagerty Insurance Agency, LLC will be paid commission under the managing general underwriter agreement and ancillary agreements for servicing the State Farm Classic+ policies along with the opportunity to earn revenue from Hagerty Drivers Club, LLC connected with Hagerty's membership products and services that, in addition to the State Farm Classic+ policy, are made available to State Farm customers. Markel Alliance Agreement: The Company's affiliated U.S. and U.K. MGA subsidiaries have personal and commercial lines of business written with Markel-affiliated carriers. The following tables provide information about Markel-affiliated carriers due to insurer liabilities and commission revenue under the agreement with Markel subsidiaries:
As a result of the related party transactions disclosed herein, the Company is required to maintain certain cash collected as restricted as it will be used to settle liabilities that result from these related party transactions. Broad Arrow In January 2022, the Company entered into a joint venture with Broad Arrow. The President of Hagerty Marketplace, Kenneth Ahn, is Broad Arrow's Chief Executive Officer. Refer to Note 5 — Acquisitions and Investments and Note 18 — Subsequent Events for additional information.
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Commitments and Contingencies |
6 Months Ended |
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Jun. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 17 — Commitments and Contingencies Litigation — From time to time, Hagerty is involved in various claims and legal actions that arise in the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, Hagerty does not believe that the ultimate resolution of these actions will have a material adverse effect on the Company's financial position, results of operations, liquidity, or capital resources. Employee Compensation Agreements — In the ordinary course of conducting its business, the Company enters into certain employee compensation agreements from time to time which commit the Company to severance obligations in the event an employee terminates employment with the Company. If applicable, these obligations are included in the accrued expenses lines of the Condensed Consolidated Balance Sheets.
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Subsequent Events |
6 Months Ended |
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Jun. 30, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | 18 — Subsequent Events On August 9, 2022, the Company entered into a definitive agreement to acquire the remaining 60% of Broad Arrow stock in exchange for $64.8 million of Class A Common Stock and Hagerty Group Units exchangeable for Class A Common Stock. The acquisition will enable Hagerty and Broad Arrow to further leverage their respective product offerings and continue to build the Hagerty Marketplace, a proprietary digital platform to facilitate buying, selling and financing of collector vehicles. The acquisition will be accounted for as a business combination, in accordance with ASC 805, and the Company will consolidate the financial results of Broad Arrow, in accordance with ASC 810.
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Summary of Significant Accounting Policies and New Accounting Standards (Policies) |
6 Months Ended |
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Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation — The Company's Condensed Consolidated Financial Statements were prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and with the instructions for Quarterly Reports on Form 10-Q and Regulation S-X and include the accounts of Hagerty, Inc. and The Hagerty Group with its consolidated subsidiaries. The financial statements reflect all normal recurring adjustments and accruals that are, in the opinion of management, necessary for a fair statement of financial position and results of operations for the interim periods presented. Interim financial statements do not include all of the information and notes required by GAAP for annual consolidated financial statements. These financial statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021. The results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.
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Principles of Consolidation | Principles of Consolidation — The Company's Condensed Consolidated Financial Statements contain the accounts of Hagerty and its majority-owned or controlled subsidiaries. As of June 30, 2022, the Company had economic ownership of 24.7% of The Hagerty Group. In addition, MHH is an 80% owned subsidiary of The Hagerty Group. The Company consolidates these entities under the voting interest method guidance in accordance with Accounting Standards Codification ("ASC") Topic 810, Consolidations ("ASC 810"). Non-controlling interest is presented separately on the Condensed Consolidated Statements of Operations, Condensed Consolidated Statements of Comprehensive Income (Loss), Condensed Consolidated Balance Sheets, and Condensed Consolidated Statements of Changes in Members' and Stockholders' Equity.All significant intercompany accounts and transactions have been eliminated in consolidation. |
Business Combination | Business Combination — On December 2, 2021, (the "Closing"), The Hagerty Group completed a business combination with Aldel Financial Inc. ("Aldel"), and Aldel Merger Sub LLC ("Merger Sub"), a Delaware limited liability company and wholly owned subsidiary of Aldel (the "Business Combination"). In connection with the Closing, Aldel changed its name from Aldel Financial Inc. to Hagerty, Inc. The Business Combination was accounted for as a common control reverse acquisition for which The Hagerty Group was determined to be the accounting acquirer and Aldel was treated as the "acquired" company. The Hagerty Group issued equity for the net assets of Aldel, accompanied by a recapitalization. Business combinations in which the legal acquirer is not the accounting acquirer are commonly referred to as "reverse acquisitions". A reverse acquisition occurs when the entity that issues securities (legal acquirer) is identified as the acquiree for accounting purposes and the entity whose equity interests are acquired (the legal acquiree) is identified as the acquirer for accounting purposes. Reverse acquisitions are accounted for in accordance with Subtopic 805-40 of ASC Topic 805, Business Combinations ("ASC 805"). While other factors were evaluated but not considered to have a material impact on the determination, The Hagerty Group was determined to be the accounting acquirer based on the following factors: •Hagerty Holding Corp. ("HHC") controlled the operating company prior to the Business Combination and controls the Company subsequent to the Business Combination through control of the board of directors (the "Board") as well as having majority voting ownership. •The Hagerty Group’s management is also the management of the Company. •The Hagerty Group is larger as compared to Aldel based on assets, revenues 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.
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Use of Estimates | Use of Estimates — The preparation of Company's Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Although the estimates are considered reasonable, actual results could materially differ from those estimates. The most significant estimates that are susceptible to notable change in the near-term relates to the provision for unpaid losses and loss adjustment expenses, including incurred but not reported, ("IBNR"), the change in fair value of warrant liabilities and payments due under the Tax Receivable Agreement ("TRA"). Although some variability is inherent in these estimates, the Company believes that the current estimates are reasonable in all material respects. These estimates are reviewed regularly and adjusted, as necessary. Adjustments related to changes in estimates are reflected in the Company’s results of operations in the period for which those estimates changed.
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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 the membership patrons 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 membership patrons. |
Foreign Currency Translation | Foreign Currency Translation — The Company translates its foreign operations’ assets and liabilities denominated in foreign currencies into U.S. dollars at current rates of exchange as of the balance sheet date, and income and expense items at the average exchange rate for the reporting period. Translation adjustments resulting from exchange rate fluctuations are recorded in "Foreign currency translation adjustments", a component of Accumulated other comprehensive income (loss). Transaction gains and losses are recognized in "Interest and other income (expense)" within the Condensed Consolidated Statements of Operations. |
Equity Method Investments | Equity Method Investments — The Company applies the equity method of accounting to 20% to 50% owned investments where Hagerty exercises significant influence, in accordance with ASC Topic 323 Investments—Equity Method and Joint Ventures. |
Warrant Liabilities | Warrant Liabilities — The Company accounts for its outstanding warrants in accordance with ASC Topic 815 Derivatives and Hedging ("ASC 815"). The warrants do not meet the criteria for equity treatment and as such, are recorded at fair value as a non-cash liability. This liability is subject to remeasurement each reporting period and utilizes a Monte Carlo simulation model to value the warrants. The change in the fair value of the warrants is recognized in the Condensed Consolidated Statements of Operations each reporting period. |
Income Taxes and Tax Receivable Agreement Liability | Income Taxes — The Hagerty Group is taxed as a pass-through ownership structure under provisions of the Internal Revenue Code ("IRC") and a similar section of state income tax law, except Hagerty Re 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 HHC, Markel and Hagerty, Inc. (together, the "Hagerty Group Unit Holders"). 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 and various foreign subsidiaries are treated as taxable entities and income taxes are provided where applicable. Refer to Note 15 — 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 income in the period that includes the enactment date. Deferred tax assets are recognized to the extent that there is sufficient positive evidence as allowed under the ASC Topic 740, Income Taxes ("ASC 740"), to support the recoverability of those deferred tax assets. The Company establishes a valuation allowance to the extent that there is insufficient evidence to support the recoverability of the deferred tax asset under ASC 740. In making such a determination, management considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If it is determined that the deferred tax assets would be realizable in the future in excess of their net recorded amount, an adjustment would be made to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. Tax Receivable Agreement Liability — In connection with the Business Combination, Hagerty, Inc. entered into the 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 limited liability units in The Hagerty Group ("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 is able to reduce a cash tax liability by the amortization of the basis increase on a filed tax return. The payments under the TRA are expected to be substantial. The estimated value of the TRA is recorded in "Other long-term liabilities" on the Condensed Consolidated Balance Sheets. Hagerty, Inc. accounts for the effects of the basis increases as follows: •Hagerty, Inc. records an increase in deferred tax assets for the income tax effects of the increases in tax basis based on enacted federal and state income tax rates at the date of the exchange. •Hagerty, Inc. evaluates the ability to realize the full benefit represented by the deferred tax asset based on an analysis that will consider expectations of future earnings, among other things. If Hagerty, Inc. determines that the full benefit is not likely to be realized, a valuation allowance is established to reduce the amount of the deferred tax assets to an amount that is more likely than not to be realized. •At the Closing, Hagerty, Inc. recorded 85% of the estimated realizable tax benefit as an increase to the liability due under the TRA, which is recorded within "Other long-term liabilities", and a decrease to "Additional paid-in capital" on the Condensed Consolidated Balance Sheets. The remaining 15% of the estimated realizable tax benefit will be retained by Hagerty, Inc. All of the effects of changes in any of the estimates after the date of the redemption or exchange will be recorded in "Interest and other income (expense)" on the Condensed Consolidated Statements of Operations.
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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 ("Exchange Agreement"). The Exchange Agreement permitted the Legacy Unit Holders to exchange Class V Common Stock and associated Hagerty Group Units for an equivalent amount of Class A Common Stock or, at the option of the Company, for cash. Because the Company had the option to redeem the non-controlling interest for cash and the Company is controlled by the Legacy Unit Holders through their voting control, the non-controlling interest was considered redeemable as the redemption was considered outside the Company's control. Redeemable non-controlling interest represented the economic interests of the Legacy Unit Holders. Income or loss was attributed to the redeemable non-controlling interest based on the weighted average ownership of the Hagerty Group Units outstanding during the period held by the Legacy Unit Holders. The redeemable non-controlling interest was measured at the greater of the initial fair value or the redemption value and was required to be presented as temporary equity on the Condensed Consolidated Balance Sheets as of December 31, 2021. On March 23, 2022, the 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. Non-controlling Interest — Effective March 23, 2022, non-controlling interest represents the economic interests of the Legacy Unit Holders 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.
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Earnings Per Share | Earnings Per Share — Hagerty calculates basic and dilutive earnings per share ("EPS") in accordance with ASC Topic 260 Earnings Per Share ("ASC 260"). Basic earnings per share is computed by dividing Net income (loss) attributable to Hagerty, Inc. 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 or other contracts to issue common stock were exercised, resulting in the issuance of shares of Class A Common Stock that would then share in the earnings of Hagerty, Inc. In periods in which the Company reports a net loss available to stockholders, diluted net loss per share available to stockholders would be equal to basic net loss per share available to stockholders, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. |
Stock-Based Compensation | Stock-Based Compensation — Hagerty issues restricted stock units and performance restricted stock units under the 2021 Equity Incentive Plan. The grant date fair value for restricted stock units is determined based on the closing price of the Company's common stock on the business day prior to grant. Hagerty uses a Monte Carlo simulation model to estimate the fair value of performance restricted stock units. Stock-based compensation costs are recognized over the applicable requisite service period of the award, generally using the straight-line method. Forfeitures are recorded as incurred. Refer to Note 14 — Stock-Based Compensation for additional information. |
Recently Adopted Accounting Guidance and Accounting Guidance Not Yet Adopted | Recently Adopted Accounting Guidance Media Content — In March 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2019-02, Improvements to Accounting for Costs of Films and License Agreements for Program Materials, to align the accounting for production costs of an episodic television series with the accounting for production costs of films by removing the content distinction for capitalization. As a result of adopting this ASU on January 1, 2021, the Company applied the guidance of ASC Topic 926, Entertainment - Films for the original content the Company self-produces and where the intellectual property is owned by the Company. For content the Company produces, the costs associated with production, including development costs, direct costs and production overhead 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 Condensed Consolidated Financial Statements through December 31, 2021. Reference Rate Reform — In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (ASC Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional relief to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. Additionally, in January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (ASC Topic 848), which clarifies that certain optional expedients and exceptions in ASC 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. Both ASUs were effective immediately upon issuance and adoption of these ASUs did not have a material impact on the Company's Condensed Consolidated Financial Statements and related disclosures. Convertible Instruments and Contracts — In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for convertible instruments by eliminating certain separation models and will generally be reported as a single liability at its amortized cost. In addition, ASU 2020-06 eliminates the treasury stock method to calculate diluted EPS for convertible instruments and requires the use of the if-converted method. The amendments in ASU 2020-06 are effective for the Company as of January 1, 2022 with the option to early adopt as of January 1, 2021. The Company early adopted ASU 2020-06 effective January 1, 2021 and the adoption of the ASU did not have an impact on the Company's Condensed Consolidated Financial Statements. Recent Accounting Guidance Not Yet Adopted Leases — In February 2016, the FASB issued ASU 2016-02, Leases ("ASC 842"), which supersedes the lease requirements in ASC Topic 840, Leases ("ASC 840"). This guidance increases transparency and comparability among organizations by recognizing lease assets and lease liabilities in the Condensed Consolidated Balance Sheets. The guidance requires disclosure to enable users of the Condensed Consolidated Financial Statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The transition to ASU No. 2016-02 requires the recognition and measurement of leases at the beginning of the earliest period presented using a modified retrospective approach. In June 2020, the FASB issued ASU No. 2020-05, Effective Dates for Certain Entities, which deferred the effective date for nonpublic entities and emerging growth companies that had not yet adopted the original ASU. Under the amended guidance, the leasing standard will be effective for the Company’s fiscal year beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022, with early adoption permitted. The Company is an emerging growth company and has elected to adopt ASC 842 with its 2022 Annual Financial Statements. The Company is currently evaluating the effect of adoption of these standards on the Company's Condensed Consolidated Financial Statements and related disclosures and expects to record a material right-of-use asset and liability on the Condensed Consolidated Balance Sheets related to the Company's operating leases. Upon adoption, the Company expects to elect the package of practical expedients, which, among other things, does not require the Company to reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs. The Company will continue to finalize the implementation of new processes and the assessment of the impact of this adoption on the Company's Condensed Consolidated Financial Statements and related disclosures. Credit Losses — In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (ASC Topic 326): Measurement of Credit Losses on Financial Instruments, which requires a company to consider forward looking information to determine current estimated credit losses, for all financial instruments that are not accounted for at fair value through net income (loss). ASU No. 2019-10 defers the effective date of ASU No. 2016-13 to January 1, 2023. The Company does not expect the adoption of ASU No. 2016-13 to have a material impact on the Company's Condensed Consolidated Financial Statements and related disclosures.
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Revenue (Tables) |
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Disaggregation of Revenue | The following table presents Hagerty's revenue by distribution channel offering, as well as a reconciliation to total revenue for the three and six months ended June 30, 2022 and 2021:
The following table presents Hagerty's revenue disaggregated by geographic area, as well as a reconciliation to total revenue for the three and six months ended June 30, 2022 and 2021:
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Schedule of Premiums Assumed and the Change in Unearned Premiums | The following table presents Hagerty Re's total premiums assumed and the change in unearned premiums for the three and six months ended June 30, 2022 and 2021:
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Contract with Customer, Contract Asset, Contract Liability, and Receivable | The following table is a summary of the Company's contract assets and liabilities for the periods specified below. Contract assets are classified as "Commission receivable", and liabilities are classified as "Contract liabilities" within current and non-current liabilities on the Condensed Consolidated Balance Sheets.
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Prepaid Expenses and Other Assets (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Prepaid Expenses and Other Assets, Current and Long-term | The following table is a summary of current and long-term prepaid expenses and other assets as of June 30, 2022 and December 31, 2021:
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Business Combination (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisitions, by Acquisition | The following table is a summary of the cash inflows and outflows related to the Business Combination:
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Intangible Assets (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Finite-Lived Intangible Assets | The cost and accumulated amortization of intangible assets as of June 30, 2022 and December 31, 2021 are as follows:
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Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The estimated future aggregate amortization expense as of June 30, 2022 is as follows (in thousands):
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Provision for Unpaid Losses and Loss Adjustment Expenses (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Liability for Unpaid Claims and Claims Adjustment Expense | The following table presents a reconciliation of beginning and ending provision for unpaid losses and loss adjustment expenses, net of amounts recoverable from reinsurers:
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Fair Value Measurements (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurement Inputs and Valuation Techniques | The following table summarizes the significant inputs in the valuation model as of June 30, 2022:
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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 June 30, 2022 and December 31, 2021, is shown in the table below:
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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 six months ended June 30, 2022:
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Schedule of Carrying Values and Estimated Fair Values of Debt Instruments | The following table discloses the fair value and related carrying amount of fixed income investments held within Hagerty Re's investments as of June 30, 2022 and December 31, 2021:
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Debt (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments | As of the indicated dates, the principal amount of Hagerty's debt consisted of the following:
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Members' and Stockholders' Equity (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Ownership Interests | The following table summarizes the ownership of The Hagerty Group as of June 30, 2022:
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Earnings Per Unit and Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | The following table sets forth the calculation of basic EPS, which is based on Net income (loss) attributable to controlling interest for the three and six months ended June 30, 2022 and 2021, divided by the weighted average of Class A Common Stock and Members' Units outstanding as of June 30, 2022 and 2021, respectively. Diluted EPS of Class A Common Stock and Members' Units is computed by dividing Net income (loss) attributable to controlling interest by the weighted average number of shares of Class A Common Stock and Members' Units outstanding as of June 30, 2022 and 2021, adjusted to give effect to potentially dilutive securities. Potentially dilutive securities for the diluted EPS calculation consists of (i) unexercised warrants and unvested stock-based restricted stock units and performance restricted stock units, all using the Treasury Stock Method and (ii) Class V Common Stock using the "If-converted" Method.
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Stock Based Compensation (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Stock-based Compensation Expense | The following table summarizes stock-based compensation expense recognized during the three and six months ended June 30, 2022:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restricted Stock Units Activity | The following table provides a summary of the restricted stock unit activity during the six months ended June 30, 2022:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 stock units awarded for the periods presented:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Performance-based Units Activity | The following table provides a summary of performance restricted stock unit activity during the six months ended June 30, 2022:
|
Taxation (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Effective Income Tax Rate Reconciliation | Income tax expense reflected in the financial statements differs from the tax computed by applying the statutory U.S. federal rate of 21% to "Net income (loss)" before taxes as follows:
|
Related-Party Transactions (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Related Party Transactions | The following tables provide information about Markel-affiliated carriers due to insurer liabilities and commission revenue under the agreement with Markel subsidiaries:
|
Revenue - Earned Premium (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
|
Underwriting income: | ||||
Premiums assumed | $ 139,627 | $ 108,635 | $ 237,255 | $ 181,239 |
Reinsurance premiums ceded | 0 | (933) | (9,690) | (8,465) |
Net premiums assumed | 139,627 | 107,702 | 227,565 | 172,774 |
Change in unearned premiums | (43,123) | (36,545) | (49,395) | (44,300) |
Change in deferred reinsurance premiums | (2,404) | (720) | 5,062 | 5,197 |
Net premiums earned | $ 94,100 | $ 70,437 | $ 183,232 | $ 133,671 |
Revenue - Contract Assets and Liabilities (Details) - USD ($) $ in Thousands |
Jun. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Revenue from Contract with Customer [Abstract] | ||
Contract assets | $ 33,791 | $ 57,596 |
Contract liabilities | $ 43,817 | $ 41,390 |
Prepaid Expenses and Other Assets - Schedule of Prepaid Expenses and Other Assets, Current and Long-term (Details) - USD ($) $ in Thousands |
Jun. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid sales, general and administrative expenses | $ 22,437 | $ 18,004 |
Prepaid SaaS implementation costs | 16,742 | 16,318 |
Fixed income investments | 11,848 | 10,785 |
Contract costs | 4,704 | 4,160 |
Media content | 4,545 | 3,335 |
Deferred reinsurance premiums ceded | 5,373 | 310 |
Other | 13,773 | 7,808 |
Prepaid expenses and other assets | $ 79,422 | $ 60,720 |
Business Combination - 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 - Narrative (Details) - USD ($) $ in Thousands |
1 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Apr. 30, 2022 |
Jun. 30, 2022 |
Jun. 30, 2021 |
Jan. 31, 2022 |
|
Asset Acquisition [Line Items] | ||||
Payments to acquire businesses | $ 11,000 | $ 5,500 | ||
Speed Digital | Director | ||||
Asset Acquisition [Line Items] | ||||
Percentage of purchase price received by related party | 100.00% | |||
Speed Digital | ||||
Asset Acquisition [Line Items] | ||||
Purchase price | $ 15,000 | |||
Cash consideration paid to acquire business | 7,500 | |||
Contingent liability | $ 3,750 | |||
Broad Arrow Group Inc | ||||
Asset Acquisition [Line Items] | ||||
Business combination, initial ownership percentage before acquisition | 40.00% | |||
Broad Arrow Group Inc | ||||
Asset Acquisition [Line Items] | ||||
Equity method investment | $ 15,300 |
Intangible Assets- Future Amortization Expense (Details) - USD ($) $ in Thousands |
Jun. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2022 | $ 13,123 | |
2023 | 29,010 | |
2024 | 20,965 | |
2025 | 10,901 | |
2026 | 3,205 | |
Thereafter | 18,550 | |
Total | $ 95,754 | $ 76,171 |
Provision for Unpaid Losses and Loss Adjustment Expenses (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
Dec. 31, 2021 |
|
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | |||||
Net unpaid losses and loss adjustment expenses, beginning of period | $ 74,869 | $ 54,988 | |||
Incurred losses and loss adjustment expenses: | |||||
Current accident year | 75,539 | 55,345 | |||
Prior accident year | 0 | 0 | |||
Total incurred losses and loss adjustment expenses | $ 38,620 | $ 29,152 | 75,539 | 55,345 | |
Payments: | |||||
Current accident year | 6,698 | 5,658 | |||
Prior accident year | 19,706 | 13,527 | |||
Total payments | 26,404 | 19,185 | |||
Effect of foreign currency rate changes | (83) | (4) | |||
Net reserves for losses and loss adjustment expenses, end of period | 123,921 | 91,144 | 123,921 | 91,144 | |
Reinsurance recoverable | 0 | 0 | 0 | 0 | |
Gross reserves for losses and loss adjustment expenses, end of period | $ 123,921 | $ 91,144 | $ 123,921 | $ 91,144 | $ 109,351 |
Fair Value Measurements - Carrying Value and Estimated Fair Value (Details) - Fixed Income Securities - USD ($) |
6 Months Ended | |
---|---|---|
Jun. 30, 2022 |
Dec. 31, 2021 |
|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Other-than-temporary impairment | $ 0 | |
Carrying Amount | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed income securities, short-term | 1,175,000 | $ 1,189,000 |
Fixed income securities, long-term | 10,673,000 | 9,596,000 |
Total | 11,848,000 | 10,785,000 |
Level 2 | Estimated Fair Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fixed income securities, short-term | 1,182,000 | 1,188,000 |
Fixed income securities, long-term | 10,815,000 | 9,476,000 |
Total | $ 11,997,000 | $ 10,664,000 |
Debt - Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands |
Jun. 30, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|---|
Debt Instrument [Line Items] | |||
Total debt outstanding | $ 87,000 | $ 136,500 | |
Less: current portion | 0 | (1,000) | |
Total long-term debt outstanding | 87,000 | 135,500 | |
Note payable | |||
Debt Instrument [Line Items] | |||
Total debt outstanding | 0 | 1,000 | $ 2,000 |
Revolving Credit Facility | Line of Credit | |||
Debt Instrument [Line Items] | |||
Total debt outstanding | $ 87,000 | $ 135,500 |
Interest Rate Swaps (Details) - Interest rate swaps |
Jun. 30, 2022
USD ($)
swap
|
Dec. 31, 2021
USD ($)
|
---|---|---|
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative, number of instruments held | swap | 1 | |
Derivative notional amount | $ | $ 35,000,000 | $ 15,000,000 |
Derivative fixed interest rate | 0.78% | 2.20% |
Members' and Stockholders' Equity - Ownership (Details) |
6 Months Ended |
---|---|
Jun. 30, 2022
shares
| |
Class of Stock [Line Items] | |
Units Owned (in shares) | 333,486,120 |
Total Stockholders' / Members' Equity | |
Class of Stock [Line Items] | |
Units Owned (in shares) | 82,452,214 |
Non-controlling Interest | |
Class of Stock [Line Items] | |
Units Owned (in shares) | 251,033,906 |
The Hagerty Group, LLC | |
Class of Stock [Line Items] | |
Ownership percentage by Hagerty, Inc | 24.70% |
Ownership percentage by noncontrolling interest | 75.30% |
Total ownership percentage | 100.00% |
Stock Based Compensation - Stock-based Compensation Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended |
---|---|---|
Jun. 30, 2022 |
Jun. 30, 2022 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based equity awards | $ 4,307 | $ 4,307 |
Restricted stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based equity awards | 3,592 | 3,592 |
Performance restricted stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based equity awards | $ 715 | $ 715 |
Stock Based Compensation - Restricted Stock Unit Activity (Details) - Restricted stock units - $ / shares |
3 Months Ended | 6 Months Ended |
---|---|---|
Jun. 30, 2022 |
Jun. 30, 2022 |
|
Restricted Stock | ||
Beginning balance (in shares) | 0 | |
Granted (in shares) | 3,200,000 | 3,173,231 |
Forfeited (in shares) | (29,779) | |
Ending balance (in shares) | 3,143,452 | 3,143,452 |
Weighted Average Fair Value | ||
Beginning balance (in dollars per share) | $ 0 | |
Granted (in dollars per share) | 10.79 | |
Forfeited (in dollars per share) | 10.79 | |
Ending balance (in dollars per share) | $ 10.79 | $ 10.79 |
Stock Based Compensation - Grant-date Fair Value of Performance Stock Units (Details) - Performance restricted stock units |
6 Months Ended |
---|---|
Jun. 30, 2022
$ / shares
| |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Weighted average fair value per share (in dollars per share) | $ 5.19 |
Expected term (in years) | 7 years |
Expected stock volatility | 35.00% |
Dividend yield | 0.00% |
Risk-free interest rate | 2.50% |
Stock Based Compensation - Performance Stock Units Outstanding (Details) - Performance restricted stock units - $ / shares |
1 Months Ended | 6 Months Ended |
---|---|---|
Apr. 30, 2022 |
Jun. 30, 2022 |
|
Units | ||
Beginning balance (in shares) | 0 | |
Granted (in shares) | 3,707,136 | 3,707,136 |
Ending balance (in shares) | 3,707,136 | |
Weighted Average Fair Value | ||
Beginning balance (in dollars per share) | $ 0 | |
Granted (in dollars per share) | 5.19 | |
Ending balance (in dollars per share) | $ 5.19 |
Taxation - Income Tax Rate Reconciliation (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
|
Amount | ||||
Income tax expense (benefit) at statutory rate | $ 3,073 | $ 1,796 | ||
State taxes | (142) | 0 | ||
Loss not subject to entity-level taxes | 4,692 | 185 | ||
Foreign rate differential | (175) | (112) | ||
Change in valuation allowance | 2,002 | 1,033 | ||
Change in fair value of warrant liabilities | (5,520) | 0 | ||
Permanent items | 238 | 0 | ||
Total | $ 2,138 | $ 1,584 | $ 4,168 | $ 2,902 |
Percent | ||||
Income tax expense (benefit) at statutory rate | 21.00% | 21.00% | ||
State taxes | (1.00%) | 0.00% | ||
Loss not subject to entity-level taxes | 32.00% | 2.00% | ||
Foreign rate differential | (1.00%) | (1.00%) | ||
Change in valuation allowance | 14.00% | 12.00% | ||
Change in fair value of warrant liabilities | (38.00%) | 0.00% | ||
Permanent items | 2.00% | 0.00% | ||
Income tax expense | 29.00% | 34.00% |
Taxation - Narrative (Details) - USD ($) $ in Millions |
Jun. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Income Tax Disclosure [Abstract] | ||
Valuation allowance | $ 176.7 | $ 174.8 |
Tax savings rate | 25.50% | |
Tax receivable agreement, fair value | $ 3.5 |
Related-Party Transactions - Narrative (Details) - USD ($) $ in Thousands |
1 Months Ended | 6 Months Ended | 12 Months Ended | |
---|---|---|---|---|
Apr. 30, 2022 |
Jun. 30, 2022 |
Jun. 30, 2021 |
Dec. 31, 2020 |
|
Speed Digital | ||||
Related Party Transaction [Line Items] | ||||
Purchase price | $ 15,000 | |||
Affiliated Entity | Reinsurance Agreement | ||||
Related Party Transaction [Line Items] | ||||
Reinsured risk, percentage | 70.00% | 60.00% | ||
Affiliated Entity | State Farm | Advanced Commission Payment | ||||
Related Party Transaction [Line Items] | ||||
Related party transaction, amounts of transaction | $ 20,000 | |||
Hagerty, Inc. | Affiliated Entity | Markel | ||||
Related Party Transaction [Line Items] | ||||
Ownership percentage by noncontrolling interest | 23.40% | |||
Hagerty, Inc. | Affiliated Entity | State Farm | ||||
Related Party Transaction [Line Items] | ||||
Ownership percentage by noncontrolling interest | 15.00% |
Related-Party Transactions - Alliance Agreement (Details) - Markel - Alliance Agreement - Affiliated Entity - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
Dec. 31, 2021 |
|
Related Party Transaction [Line Items] | |||||
Due to insurer | $ 99,289 | $ 99,289 | $ 54,850 | ||
Commission revenue | $ 86,716 | $ 75,575 | $ 146,252 | $ 126,693 | |
Due To Related Parties | Related Party Concentration Risk | |||||
Related Party Transaction [Line Items] | |||||
Percent of total | 90.00% | 95.00% | |||
Revenue from Contract with Customer Benchmark | Related Party Concentration Risk | |||||
Related Party Transaction [Line Items] | |||||
Percent of total | 93.00% | 92.00% | 94.00% | 93.00% |
Related-Party Transactions - Reinsurance Agreement (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
Dec. 31, 2021 |
|
Related Party Transaction [Line Items] | |||||
Premiums receivable | $ 141,931 | $ 141,931 | $ 75,297 | ||
Deferred acquisition costs, net | 104,841 | 104,841 | 81,535 | ||
TOTAL ASSETS | 1,134,981 | 1,134,981 | 1,041,871 | ||
Losses payable and provision for unpaid losses and loss adjustment expenses | 123,921 | $ 91,144 | 123,921 | $ 91,144 | 109,351 |
Unearned premiums | 224,595 | 224,595 | 175,199 | ||
Commissions payable | 75,398 | 75,398 | 60,603 | ||
TOTAL LIABILITIES | 845,460 | 845,460 | 771,070 | ||
Earned premium | 94,100 | 70,437 | 183,232 | 133,671 | |
Ceding commission | 45,255 | 33,678 | 87,633 | 64,067 | |
Losses and loss adjustment expenses | 38,620 | 29,152 | 75,539 | 55,345 | |
Total operating expenses | 203,630 | 153,135 | 384,445 | 287,431 | |
Markel | Reinsurance Agreement | Affiliated Entity | |||||
Related Party Transaction [Line Items] | |||||
Premiums receivable | 135,015 | 135,015 | 72,697 | ||
Deferred acquisition costs, net | 101,076 | 101,076 | 78,449 | ||
TOTAL ASSETS | 236,091 | 236,091 | 151,146 | ||
Losses payable and provision for unpaid losses and loss adjustment expenses | 116,202 | 116,202 | 104,139 | ||
Unearned premiums | 215,629 | 215,629 | 167,541 | ||
Commissions payable | 72,493 | 72,493 | 59,511 | ||
TOTAL LIABILITIES | 404,324 | 404,324 | $ 331,191 | ||
Earned premium | 89,738 | 67,108 | 175,428 | 127,469 | |
Ceding commission | 43,415 | 31,558 | 84,303 | 61,326 | |
Losses and loss adjustment expenses | 36,808 | 27,520 | 71,379 | 52,266 | |
Total operating expenses | $ 80,223 | $ 59,078 | $ 155,682 | $ 113,592 |
Subsequent Events (Details) - Subsequent Event - Broad Arrow Group Inc $ in Millions |
Aug. 09, 2022
USD ($)
|
---|---|
Subsequent Event [Line Items] | |
Business combination, percentage of voting interest acquired | 60.00% |
Business combination, equity consideration issued | $ 64.8 |
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