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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2025


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to _______

Commission file number: 001-40244

HAGERTY, INC.

(Exact name of registrant as specified in its charter)


Delaware		86-1213144
(State of incorporation)		(I.R.S. Employer Identification No.)

121 Drivers Edge, Traverse City, Michigan		49684
(Address of principal executive offices)		(Zip code)

	(800) 922-4050
	Registrant's telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbols

Name of each exchange on which registered

Class A common stock, par value $0.0001 per share

HGTY

The New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

TABLE OF CONTENTS

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The registrant had 100,511,893 shares of Class A Common Stock outstanding and 241,552,156 shares of Class V Common Stock outstanding as of October 24, 2025.

TABLE OF CONTENTS

Table of Contents


Title						Page
Forward Looking Statements						4

Part I – Financial Information						5
Item 1. Financial Statements (Unaudited)						5
Condensed Consolidated Statements of Operations						5
Condensed Consolidated Statements of Comprehensive Income						6
Condensed Consolidated Balance Sheets						7
Condensed Consolidated Statements of Changes in Temporary Equity and Stockholders' Equity						8
Condensed Consolidated Statements of Cash Flows						12
Notes Accompanying the Condensed Consolidated Financial Statements						13
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations						48
Item 3. Quantitative and Qualitative Disclosures About Market Risk						69
Item 4. Controls and Procedures						69

Part II – Other Information						70
Item 1. Legal Proceedings						70
Item 1A. Risk Factors						70
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds						70
Item 3. Defaults Upon Senior Securities						71
Item 4. Mine Safety Disclosures						71
Item 5. Other Information						71
Item 6. Exhibits						72
Signatures						73

TABLE OF CONTENTS

Cautionary Statement Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q (this "Quarterly Report"), as well as other oral or written information we provide, contain statements that constitute "forward-looking statements" within the meaning of the federal securities laws. All statements we provide, other than statements of historical fact, are forward-looking statements, including those regarding our future operating results and financial position, our business strategy and plans, products, services, and technology implementations, market conditions, growth and trends, expansion plans and opportunities, and our objectives for future operations. The words "anticipate," "believe," "envision," "estimate," "expect," "intend," "may," "plan," "predict," "project," "target," "potential," "will," "would," "could," "should," "continue," "ongoing," "contemplate," and similar expressions, and the negative of these expressions, are intended to identify forward-looking statements.

We have based these forward-looking statements largely on our current expectations about future events, which may not materialize. Actual results could differ materially and adversely from those anticipated or implied in our forward-looking statements. Some of the factors that could cause actual results to differ from our expectations include the risks and uncertainties described in Item 1A of Part II — Risk Factors of this Quarterly Report and Item 1A of Part I — Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2024, which highlight, among other risks, our ability to:

•compete effectively within our industry and attract and retain our insurance policyholders and paid Hagerty Drivers Club ("HDC") subscribers (collectively, "Members");

•maintain key strategic relationships with our insurance distribution and underwriting carrier partners;

•prevent, monitor, and detect fraudulent activity;

•manage risks associated with disruptions, interruptions, outages or other issues with our technology platforms or our use of third-party services;

•accelerate the adoption of our membership and marketplace products and services, as well as any new insurance programs and products we offer;

•enter into and successfully implement the proposed fronting arrangement with Markel Group Inc. (together with its subsidiaries, "Markel") on acceptable terms and obtain all required regulatory approvals, and, if achieved, realize the anticipated benefits;

•underwrite and price new products, including Enthusiast+, consistent with expected loss ratios and risk tolerances;

•execute Broad Arrow's marketplace, private sale and financing strategies;

•manage the cyclical nature of the insurance business and broader macroeconomic conditions, including inflation, interest rates and potential recessionary pressures;

•address unexpected increases in the frequency or severity of claims, including catastrophe losses; and

•comply with the numerous laws and regulations applicable to our business, including state, federal and foreign laws relating to insurance and rate increases, privacy, the internet, and accounting matters.

You should not rely on forward-looking statements as predictions of future events. We operate in a very competitive and rapidly changing environment and new risks emerge from time to time. The forward-looking statements in this Quarterly Report represent our views as of the date hereof. We undertake no obligation to update any of these forward-looking statements for any reason after the date of this Quarterly Report.

Where You Can Find More Information

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, as well as any amendments to those reports, are available free of charge through our website at investor.hagerty.com after we file them with, or furnish them to, the Securities and Exchange Commission ("SEC"). We use our investor relations website, investor.hagerty.com, as a means of disclosing information which may be of interest or material to our investors and for complying with disclosure obligations under Regulation FD. Accordingly, investors should monitor our investor relations website, in addition to following our press releases, SEC filings, public conference calls, webcasts, and social media channels. Information contained on or accessible through our website or social media channels is not a part of, and is not incorporated by reference into, this Quarterly Report or any other report or document we file with the SEC. Any reference to our website in this Quarterly Report is intended to be an inactive textual reference only.

Unless the context indicates otherwise, the terms "we," "our," "us," "Hagerty," and the "Company" refer to Hagerty, Inc. and its consolidated subsidiaries, including The Hagerty Group, LLC ("THG").

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Hagerty, Inc.

Condensed Consolidated Statements of Operations (Unaudited)


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024

REVENUE:	in thousands (except per share amounts)
Commission and fee revenue	$	137,103	$	116,161	$	380,677	$	333,817
Earned premium, net	187,039		165,686		534,179		474,917
Membership, marketplace and other revenue	55,852		41,527		153,430		99,573
Total revenue	379,994		323,374		1,068,286		908,307
OPERATING EXPENSES:
Salaries and benefits	68,110		47,192		191,275		161,001
Ceding commissions, net	87,411		77,501		247,682		221,877
Losses and loss adjustment expenses	78,626		99,430		224,969		226,515
Sales expense	77,672		59,141		199,678		146,791
General and administrative expenses	24,445		20,837		69,204		62,072
Depreciation and amortization	9,413		9,184		27,734		29,758
Gain related to divestiture	—		—		—		(87)
Total operating expenses	345,677		313,285		960,542		847,927
OPERATING INCOME	34,317		10,089		107,744		60,380
Loss related to warrant liabilities, net	—		(463)		—		(8,544)

Interest and other income (expense), net (Note 20)	(20,980)		8,359		(8,262)		27,945
INCOME BEFORE TAXES	13,337		17,985		99,482		79,781
Income tax (expense) benefit	32,834		1,022		21,184		(9,918)
NET INCOME	46,171		19,007		120,666		69,863
Net income attributable to non-controlling interest	(25,323)		(14,122)		(80,474)		(55,951)
Accretion of Series A Convertible Preferred Stock	(1,903)		(1,875)		(5,653)		(5,552)
NET INCOME ATTRIBUTABLE TO CLASS A COMMON STOCKHOLDERS	$	18,945	$	3,010	$	34,539	$	8,360

Earnings per share of Class A Common Stock:
Basic	$	0.18	$	0.03	$	0.35	$	0.09
Diluted	$	0.11	$	0.03	$	0.29	$	0.09

Weighted average shares of Class A Common Stock outstanding:
Basic	96,167		89,691		92,326		86,689
Diluted	347,240		89,691		346,672		87,601

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

See Note 21 for information regarding Related-Party Transactions.

TABLE OF CONTENTS

Hagerty, Inc.

Condensed Consolidated Statements of Comprehensive Income (Unaudited)


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024

	in thousands
Net income	$	46,171	$	19,007	$	120,666	$	69,863
Other comprehensive income, net of tax:
Change in net unrealized gain (loss) on available-for-sale investments	1,893		7,970		6,978		8,718
Foreign currency translation adjustments	720		402		2,427		(425)
Change in unrealized loss on interest rate swap	—		—		—		(2,234)
Other comprehensive income	2,613		8,372		9,405		6,059
Comprehensive income	48,784		27,379		130,071		75,922
Comprehensive income attributable to non-controlling interest	(27,200)		(20,380)		(87,367)		(60,475)
Accretion of Series A Convertible Preferred Stock	(1,903)		(1,875)		(5,653)		(5,552)
Comprehensive income attributable to Class A Common Stockholders	$	19,681	$	5,124	$	37,051	$	9,895

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

See Note 21 for information regarding Related-Party Transactions.

TABLE OF CONTENTS

Hagerty, Inc.

Condensed Consolidated Balance Sheets (Unaudited)


	September 30,		December 31,
	2025		2024

ASSETS	in thousands (except share amounts)
Current Assets:
Cash and cash equivalents	$	160,386	$	104,784
Restricted cash and cash equivalents	172,261		128,061
Investments	130,147		73,957
Accounts receivable	107,476		84,763
Premiums receivable	230,919		153,748
Commissions receivable	27,404		20,430
Notes receivable	94,158		45,417
Deferred acquisition costs, net	192,496		156,466
Other current assets	99,073		90,779
Total current assets	1,214,320		858,405
Investments	543,772		515,570
Notes receivable	17,807		11,555

Lease right-of-use assets	42,229		44,485
Intangible assets, net	88,452		90,107
Goodwill	114,150		114,123
Deferred tax assets	45,265		—
Other long-term assets	85,960		75,093
TOTAL ASSETS	$	2,151,955	$	1,709,338
LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable, accrued expenses and other current liabilities	$	147,868	$	104,496
Current portion of long-term debt	73,118		792
Losses payable and provision for unpaid losses and loss adjustment expenses	276,678		266,878
Ceding commissions payable	107,473		77,389
Advance premiums and due to insurers	171,616		108,352
Unearned premiums	439,395		357,539

Total current liabilities	1,216,148		915,446
Long-term lease liabilities	40,511		43,178
Long-term debt, net	104,386		104,968
Deferred tax liability	24,185		18,065
Tax receivable agreement liability	37,913		1,956

Other long-term liabilities	14,021		17,556
TOTAL LIABILITIES	1,437,164		1,101,169
Commitments and Contingencies (Note 22)	—		—
TEMPORARY EQUITY
Preferred stock, $0.0001 par value (20,000,000 shares authorized, 8,483,561 Series A Convertible Preferred Stock issued and outstanding as of September 30, 2025 and December 31, 2024)	84,716		84,663
STOCKHOLDERS' EQUITY
Class A Common Stock, $0.0001 par value (500,000,000 shares authorized, 100,426,473 and 90,032,391 issued and outstanding as of September 30, 2025 and December 31, 2024, respectively)	10		9
Class V Common Stock, $0.0001 par value (300,000,000 authorized, 241,552,156 and 251,033,906 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively)	24		25
Additional paid-in capital	622,405		603,780
Accumulated earnings (deficit)	(411,786)		(451,978)
Accumulated other comprehensive income (loss)	998		(1,514)
Total stockholders' equity	211,651		150,322
Non-controlling interest	418,424		373,184
Total equity (Note 17)	630,075		523,506
TOTAL LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS' EQUITY	$	2,151,955	$	1,709,338

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

See Note 21 for information regarding Related-Party Transactions.

TABLE OF CONTENTS

Hagerty, Inc.

Condensed Consolidated Statements of Changes in Temporary Equity and Stockholders' Equity (Unaudited)


					Three months ended September 30, 2025
	Temporary Equity			Stockholders' Equity
	Series A Convertible Preferred Stock			Class A Common Stock			Class V Common Stock			Additional Paid in Capital		Accumulated Earnings (Deficit)		Accumulated Other Comprehensive Income		Total Stockholders' Equity		Non-controlling Interest		Total Equity
in thousands	Shares	Amount		Shares	Amount		Shares	Amount
Balance at July 1, 2025	8,484	$	82,813	90,716	$	9	251,034	$	25	$	604,621	$	(432,634)	$	262	$	172,283	$	405,755	$	578,038
Net income	—	—		—	—		—	—		—		20,848		—		20,848		25,323		46,171
Accretion of Series A Convertible Preferred Stock	—	1,903		—	—		—	—		(1,903)		—		—		(1,903)		—		(1,903)
Other comprehensive income	—	—		—	—		—	—		—		—		736		736		1,877		2,613
Issuance of shares under employee plans, net of shares withheld for employee taxes	—	—		226	—		—	—		(1,084)		—		—		(1,084)		—		(1,084)
Share-based compensation	—	—		—	—		—	—		5,089		—		—		5,089		—		5,089
Exchange of THG units for Class A Common Stock	—	—		9,484	1		(9,482)	(1)		15,929		—		—		15,929		(15,929)		—
Deferred tax assets recorded upon exchange of THG units for shares of Class A Common Stock	—	—		—	—		—	—		6,956		—		—		6,956		—		6,956
Tax receivable agreement liabilities recorded upon exchange of THG units for shares of Class A Common Stock	—	—		—	—		—	—		(5,638)		—		—		(5,638)		—		(5,638)
Distributions paid to non-controlling interest unit holders	—	—		—	—		—	—		—		—		—		—		(167)		(167)
Reallocation between controlling and non-controlling interest	—	—		—	—		—	—		(1,565)		—		—		(1,565)		1,565		—
Balance at September 30, 2025	8,484	$	84,716	100,426	$	10	241,552	$	24	$	622,405	$	(411,786)	$	998	$	211,651	$	418,424	$	630,075

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

See Note 21 for information regarding Related-Party Transactions.

TABLE OF CONTENTS

Hagerty, Inc.

Condensed Consolidated Statements of Changes in Temporary Equity and Stockholders' Equity (Unaudited)


					Nine months ended September 30, 2025
	Temporary Equity			Stockholders' Equity
	Series A Convertible Preferred Stock			Class A Common Stock			Class V Common Stock			Additional Paid in Capital		Accumulated Earnings (Deficit)		Accumulated Other Comprehensive Income (Loss)		Total Stockholders' Equity		Non-controlling Interest		Total Equity
in thousands	Shares	Amount		Shares	Amount		Shares	Amount
Balance at January 1, 2025	8,484	$	84,663	90,032	$	9	251,034	$	25	$	603,780	$	(451,978)	$	(1,514)	$	150,322	$	373,184	$	523,506
Net income	—	—		—	—		—	—		—		40,192		—		40,192		80,474		120,666
Accretion of Series A Convertible Preferred Stock	—	5,653		—	—		—	—		(5,653)		—		—		(5,653)		—		(5,653)
Dividends related to Series A Convertible Preferred Stock	—	(5,600)		—	—		—	—		—		—		—		—		—		—
Other comprehensive income	—	—		—	—		—	—		—		—		2,512		2,512		6,893		9,405
Issuance of shares under employee plans, net of shares withheld for employee taxes	—	—		832	—		—	—		(3,247)		—		—		(3,247)		—		(3,247)
Share-based compensation	—	—		—	—		—	—		14,627		—		—		14,627		—		14,627
Exchange of THG units for Class A Common Stock	—	—		9,562	1		(9,482)	(1)		16,641		—		—		16,641		(16,641)		—
Deferred tax assets recorded upon exchange of THG units for shares of Class A Common Stock	—	—		—	—		—	—		6,956		—		—		6,956		—		6,956
Tax receivable agreement liabilities recorded upon exchange of THG units for shares of Class A Common Stock	—	—		—	—		—	—		(5,638)		—		—		(5,638)		—		(5,638)
Distributions paid to non-controlling interest unit holders	—	—		—	—		—	—		—		—		—		—		(30,547)		(30,547)
Reallocation between controlling and non-controlling interest	—	—		—	—		—	—		(5,061)		—		—		(5,061)		5,061		—
Balance at September 30, 2025	8,484	$	84,716	100,426	$	10	241,552	$	24	$	622,405	$	(411,786)	$	998	$	211,651	$	418,424	$	630,075

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

See Note 21 for information regarding Related-Party Transactions.

TABLE OF CONTENTS

Hagerty, Inc.

Condensed Consolidated Statements of Changes in Temporary Equity and Stockholders' Equity (Unaudited)


					Three months ended September 30, 2024
	Temporary Equity			Stockholders' Equity
	Series A Convertible Preferred Stock			Class A Common Stock			Class V Common Stock			Additional Paid in Capital		Accumulated Earnings (Deficit)		Accumulated Other Comprehensive Income (Loss)		Total Stockholders' Equity		Non-controlling Interest		Total Equity
in thousands	Shares	Amount		Shares	Amount		Shares	Amount
Balance at July 1, 2024	8,484	$	80,913	85,703	$	8	251,034	$	25	$	555,040	$	(459,968)	$	(667)	$	94,438	$	359,955	$	454,393
Net income	—	—		—	—		—	—		—		4,885		—		4,885		14,122		19,007
Accretion of Series A Convertible Preferred Stock	—	1,875		—	—		—	—		(1,875)		—		—		(1,875)		—		(1,875)
Other comprehensive income	—	—		—	—		—	—		—		—		2,114		2,114		6,258		8,372
Issuance of shares under employee plans, net of shares withheld for employee taxes	—	—		212	—		—	—		(1,125)		—		—		(1,125)		—		(1,125)
Warrant Exchange (see Note 6)	—	—		3,876	1		—	—		42,569		—		—		42,570		—		42,570
Share-based compensation	—	—		—	—		—	—		4,092		—		—		4,092		—		4,092
Exchange of THG units for Class A Common Stock	—	—		189	—		—	—		2,055		—		—		2,055		(2,055)		—
Reallocation between controlling and non-controlling interest	—	—		—	—		—	—		1,111		—		—		1,111		(1,111)		—
Balance at September 30, 2024	8,484	$	82,788	89,980	$	9	251,034	$	25	$	601,867	$	(455,083)	$	1,447	$	148,265	$	377,169	$	525,434

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

See Note 21 for information regarding Related-Party Transactions.

TABLE OF CONTENTS

Hagerty, Inc.

Condensed Consolidated Statements of Changes in Temporary Equity and Stockholders' Equity (Unaudited)


					Nine months ended September 30, 2024
	Temporary Equity			Stockholders' Equity
	Series A Convertible Preferred Stock			Class A Common Stock			Class V Common Stock			Additional Paid in Capital		Accumulated Earnings (Deficit)		Accumulated Other Comprehensive Income (Loss)		Total Stockholders' Equity		Non-controlling Interest		Total Equity
in thousands	Shares	Amount		Shares	Amount		Shares	Amount
Balance at January 1, 2024	8,484	$	82,836	84,589	$	8	251,034	$	25	$	561,754	$	(468,995)	$	(88)	$	92,704	$	317,805	$	410,509
Net income	—	—		—	—		—	—		—		13,912		—		13,912		55,951		69,863
Accretion of Series A Convertible Preferred Stock	—	5,552		—	—		—	—		(5,552)		—		—		(5,552)		—		(5,552)
Dividends related to Series A Convertible Preferred Stock	—	(5,600)		—	—		—	—		—		—		—		—		—		—
Other comprehensive income	—	—		—	—		—	—		—		—		1,535		1,535		4,524		6,059
Issuance of shares under employee plans, net of shares withheld for employee taxes	—	—		1,195	—		—	—		(5,713)		—		—		(5,713)		—		(5,713)
Warrant Exchange (see Note 6)	—	—		3,876	1		—	—		42,569		—		—		42,570		—		42,570
Share-based compensation	—	—		—	—		—	—		13,018		—		—		13,018		—		13,018
Exchange of THG units for Class A Common Stock	—	—		320	—		—	—		3,227		—		—		3,227		(3,227)		—
Distributions paid to non-controlling interest THG unitholders	—	—		—	—		—	—		—		—		—		—		(5,320)		(5,320)
Reallocation between controlling and non-controlling interest	—	—		—	—		—	—		(7,436)		—		—		(7,436)		7,436		—
Balance at September 30, 2024	8,484	$	82,788	89,980	$	9	251,034	$	25	$	601,867	$	(455,083)	$	1,447	$	148,265	$	377,169	$	525,434

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

See Note 21 for information regarding Related-Party Transactions.

TABLE OF CONTENTS

Hagerty, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)


	Nine months ended September 30,
	2025		2024

OPERATING ACTIVITIES:	in thousands
Net income	$	120,666	$	69,863
Adjustments to reconcile net income to net cash from operating activities:
Loss on disposals of equipment, software and other assets	1,440		401
Loss related to warrant liabilities, net	—		8,544
Expense related to tax receivable agreement liability	32,275		1,322
Depreciation and amortization	27,734		29,758
Provision for deferred taxes	(34,413)		2,772

Share-based compensation expense	14,627		13,018
Non-cash lease expense	6,590		5,920
Realized (gain) loss on investments, net	(2,150)		(1,783)
(Accretion) amortization of discount and premium, net	(3,489)		(1,755)
Other	1,681		1,775
Changes in operating assets and liabilities:
Accounts, premiums and commissions receivable	(124,250)		(28,062)
Deferred acquisition costs, net	(36,030)		(26,998)
Losses payable and provision for unpaid losses and loss adjustment expenses	9,800		60,328
Ceding commissions payable	30,084		(14,734)
Advance premiums and due to insurers	62,583		48,752
Unearned premiums	81,855		68,344
Operating lease assets and liabilities	(6,876)		(6,781)
Other assets and liabilities, net	7,758		(41,042)
Net Cash Provided by Operating Activities	189,885		189,642
INVESTING ACTIVITIES:
Capital expenditures	(18,499)		(17,278)
Acquisitions, net of cash acquired, and other investments	(2,125)		(23,865)
Issuance of notes receivable	(49,095)		(55,030)
Collection of notes receivable	14,832		32,099
Purchases of fixed maturity securities	(223,055)		(565,838)
Proceeds from sales of fixed maturity securities	41,173		53,253
Proceeds from maturities of fixed maturity securities	122,196		23,766
Purchases of equity securities	(10,565)		(10,602)
Proceeds from sales of equity securities	911		—
Other investing activities	1,421		1,005
Net Cash Used in Investing Activities	(122,806)		(562,490)
FINANCING ACTIVITIES:
Payments on long-term debt	(170,673)		(63,202)
Proceeds from long-term debt, net of issuance costs	240,701		52,718
Distributions paid to non-controlling interest unit holders	(30,547)		(5,320)
Payment of Series A Convertible Preferred Stock dividends	(5,600)		(5,600)
Funding of tax receivable agreement payments	(223)		—
Funding of employee tax obligations upon vesting of share-based payments	(3,536)		(5,713)
Other financing activities	289		—
Net Cash Provided by (Used in) Financing Activities	30,411		(27,117)
Effect of exchange rate changes on cash and cash equivalents and restricted cash and cash equivalents	2,312		(882)

Change in cash and cash equivalents and restricted cash and cash equivalents	99,802		(400,847)
Beginning cash and cash equivalents and restricted cash and cash equivalents	232,845		724,276
Ending cash and cash equivalents and restricted cash and cash equivalents	$	332,647	$	323,429

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

See Note 21 for information regarding Related-Party Transactions.

TABLE OF CONTENTS

Hagerty, Inc.

Notes To Condensed Consolidated Financial Statements (Unaudited)

1 — Business and Basis of Presentation

Hagerty, Inc. is a holding company and the sole managing member of The Hagerty Group, LLC ("THG"). Hagerty, Inc.'s sole material asset is its ownership in THG, through which all of its business is conducted. In these Notes to the Condensed Consolidated Financial Statements, the terms "Hagerty" and the "Company" refer to Hagerty, Inc. and its consolidated subsidiaries unless the context requires otherwise.

Description of Business — Hagerty is a market leader in providing insurance for collector cars and enthusiast vehicles. Through Hagerty's insurance model, the Company acts as a Managing General Agent ("MGA") by underwriting, selling, and servicing collector car and enthusiast vehicle insurance policies. The Company then reinsures approximately 80% of the risks written by its MGA subsidiaries through its wholly owned subsidiary, Hagerty Reinsurance Limited ("Hagerty Re"). In addition, Hagerty offers HDC memberships, which are primarily bundled with its insurance policies and give subscribers access to an array of products and services, including emergency roadside assistance, Hagerty Drivers Club Magazine, automotive enthusiast events, Hagerty's proprietary vehicle valuation tool, and special vehicle-related discounts. The Company also offers a marketplace to complement its insurance membership offerings where automotive enthusiasts can buy, sell, and finance collector cars and enthusiast vehicles.

Basis of Presentation — The Condensed Consolidated Financial Statements are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and pursuant to the regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted from this report, as permitted by such rules and regulations.

The Condensed Consolidated Financial Statements reflect all normal recurring adjustments and accruals that are, in the opinion of management, necessary for a fair statement of the Company's financial position and results of operations for the interim periods presented.

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 ("Annual Report") for the year ended December 31, 2024. The results of operations for the three and nine months ended September 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025.

Principles of Consolidation — The Condensed Consolidated Financial Statements contain the accounts of Hagerty, Inc. and its majority-owned or controlled subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

As the sole managing member of THG, Hagerty operates and controls all of the business affairs of THG and has the sole voting interest in, and controls the management of, THG. Accordingly, Hagerty consolidates THG in its consolidated financial statements, resulting in a non-controlling interest related to the economic interest in THG held by other parties. As of September 30, 2025 and December 31, 2024, Hagerty, Inc.'s economic ownership of THG was 29.0% and 26.1%, respectively.

The financial statements of THG are consolidated by the Company under the voting interest method 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, the Condensed Consolidated Statements of Comprehensive Income, the Condensed Consolidated Balance Sheets, and the Condensed Consolidated Statements of Changes in Temporary Equity and Stockholders' Equity.

2 — Summary of Significant Accounting Policies

Use of Estimates — The preparation of the Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities as of the date of the Condensed Consolidated Financial Statements, as well as the reported amounts of revenue and expenses during the reporting period. Although the estimates are considered reasonable, actual results could materially differ from those estimates.

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Significant estimates made by management include, but are not limited to: (i) the provision for unpaid losses and loss adjustment expenses, including incurred but not reported ("IBNR") claims (see Note 13); (ii) the valuation of the Company's deferred income tax assets (see Note 20); (iii) the amount of the liability associated with the tax receivable agreement entered into in connection with the consummation of the business combination that formed Hagerty, Inc. in 2021 (the "TRA") (the "TRA Liability") (see Note 20); (iv) the fair values of the reporting units used in assessing the recoverability of goodwill; and (v) the valuation and useful lives of intangible assets (see Note 12). Although some variability is inherent in these estimates, management 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 during which those estimates changed.

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 this 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. As of September 30, 2025, the Company has not delayed the adoption of any new or revised accounting standards despite qualifying as an emerging growth company.

Segment Information — The Company has one operating segment and one reportable segment with its Chief Executive Officer ("CEO") acting as the Chief Operating Decision Maker ("CODM"). The Company's segment presentation reflects its business activities which place the automotive enthusiast at the center of operating and resource allocation decisions. Accordingly, the CODM evaluates performance and makes resource allocation decisions using a number of consolidated measures, including consolidated net income. The CODM is also regularly provided with information regarding the Company's significant expenses consistent with the level of information provided in the Condensed Consolidated Statements of Operations, as well as information regarding assets consistent with the level of detail provided on the Condensed Consolidated Balance Sheets. The CODM utilizes such consolidated financial information in connection with the Company's budgeting and forecasting process to monitor budget-to-actual variances when evaluating performance, allocating resources, and establishing management compensation.

Accounting Standards Not Yet Adopted

Income Taxes — In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023-09 - Income Taxes (ASC 740), Improvements to Income Tax Disclosures, which enhances the transparency and decision usefulness of income tax disclosures through changes to the rate reconciliation and income taxes paid information. ASU No. 2023-09 modifies the rules on income tax disclosures to require entities to disclose (i) specific categories in the rate reconciliation, (ii) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign), and (iii) income tax expense or benefit from continuing operations (separated by federal, state, and foreign). ASU No. 2023-09 also requires entities to disclose their income tax payments to international, federal, state, and local jurisdictions, among other changes. ASU No. 2023-09 is effective for annual periods beginning after December 15, 2024. The Company will adopt ASU No. 2023-09 starting with its Annual Report on Form 10-K for the year ended December 31, 2025. Upon adoption, the Company will include the required additional disclosures in its Consolidated Financial Statements. The adoption of the ASU No. 2023-09 will expand the Company's disclosures, but will have no impact on its results of operations or financial position.

Income Statement Expenses — In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (ASC 220-40), which enables investors to better understand an entity's performance, assessing an entity's prospects for future cash flows, and comparing an entity's performance over time and with that of other entities. ASU No. 2024-03 primarily requires entities to disaggregate, in the notes to the financial statements, any relevant expense caption presented in the statement of operations within continuing operations into the following required natural expense categories: purchases of inventory, employee compensation, depreciation, and intangible asset amortization. The new standard does not change the presentation of expense information in the statement of operations. ASU 2024-03 is effective for annual periods beginning after December 15, 2026. The Company is still assessing the impact of ASU No. 2024-03 and, upon adoption, the Company may be required to include certain additional disclosures in its Consolidated Financial Statements.

Internal-Use Software — In September 2025, the FASB issued ASU No. 2025-06, Targeted Improvements to the Accounting for Internal-Use Software (ASC 350-40), which modernizes the accounting guidance for the costs to develop software for internal use. The targeted improvements primarily introduce a new capitalization threshold based on management's commitment to funding and the probability of project completion. It removes all references to a sequential software development method. The new standard does not change the types of costs eligible for capitalization, the point at which capitalization ends, or the associated amortization and impairment guidance. ASU 2025-06 is effective for annual periods beginning after December 15, 2027 and the Company is still assessing its impact.

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A comprehensive list of the Company's significant accounting policies are set forth in Note 1 to the Consolidated Financial Statements contained in its Annual Report.

3 — Supplemental Balance Sheet and Cash Flow Information

Cash and Cash Equivalents and Restricted Cash and Cash Equivalents — As of September 30, 2025 and 2024, cash and cash equivalents and restricted cash and cash equivalents were as follows:


	September 30,
	2025		2024

	in thousands
Cash and cash equivalents	$	160,386	$	147,120
Restricted cash and cash equivalents	172,261		176,309
Total cash and cash equivalents and restricted cash and cash equivalents	$	332,647	$	323,429

Restricted Assets — The Company's MGA subsidiaries collect premiums from insureds on behalf of insurance carriers. Prior to remittance to the insurance carrier, these funds are required to be held in trust for the benefit of the insurance carriers and segregated from the Company's operating cash.

Hagerty Re maintains trust accounts for the benefit of various ceding insurers as security for its obligations for losses, loss expenses, unearned premium, and profit-sharing commissions.

The Company's wholly owned insurance carrier subsidiary, Drivers Edge Insurance Company ("Drivers Edge"), maintains assets on deposit with a number of regulatory authorities to support its insurance operations. Refer to Note 10 — Acquisition for additional information related to the acquisition of Drivers Edge.

BAC and its consolidated subsidiaries maintain bank accounts that are required for the operation of the BAC Credit Facility (as defined in Note 15 — Debt). The funds in these bank accounts represent security under the BAC Credit Facility and their use is restricted to the servicing of the debt outstanding under that facility.

The following table presents the components of the Company's restricted assets as of September 30, 2025 and December 31, 2024:


	Balance Sheet Classification	September 30,		December 31,
		2025		2024

		in thousands
Cash and cash equivalents	Restricted cash and cash equivalents	$	172,261	$	128,061
Fixed maturity securities	Investments	650,622		577,688
Equity securities	Investments	23,297		11,839
Total restricted assets		$	846,180	$	717,588

Variable Interest Entities — Broad Arrow Capital LLC ("BAC") and certain of its subsidiaries transfer notes receivable to wholly owned, bankruptcy-remote, special purpose entities (each, an "SPE") to secure borrowings under the BAC Credit Agreement (as defined in Note 15 — Debt).

These SPEs are considered to be variable interest entities (each, a "VIE") under GAAP and their financial statements are consolidated by BAC, which is the primary beneficiary of the SPEs and also a consolidated subsidiary of the Company. BAC is considered to be the primary beneficiary of the SPEs because it has (i) power over the significant activities of the SPEs through its role as servicer of the notes receivable used to secure borrowings under the BAC Credit Agreement and (ii) the obligation to absorb losses or the right to receive returns that could be significant through its interest in the residual cash flows of the SPEs.

Refer to Note 7 — Notes Receivable and Note 15 — Debt for additional information.

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The following table presents the assets and liabilities of the Company's consolidated VIEs as of September 30, 2025 and December 31, 2024:


	September 30,		December 31,
	2025		2024

ASSETS	in thousands
Cash and cash equivalents	$	4,074	$	1,746
Restricted cash and cash equivalents	4,631		1,221

Notes receivable	92,634		49,337
Other assets	1,192		1,961
TOTAL ASSETS	$	102,531	$	54,265
LIABILITIES
Accounts payable, accrued expenses and other liabilities	$	1,841	$	999
Debt, net	75,000		30,193
TOTAL LIABILITIES	$	76,841	$	31,192

Supplemental Cash Flow Information — The table below presents information regarding the Company's non-cash investing and financing activities, as well as the cash paid for interest and taxes for the nine months ended September 30, 2025 and 2024:


	Nine months ended September 30,
	2025		2024

Non-cash investing activities:	in thousands
Issuance of notes receivable (1)	$	10,105	$	5,290
Collection of notes receivable (1)	$	2,102	$	7,264
Capital expenditures	$	732	$	248

Non-cash financing activities:
Warrant Exchange (Refer to Note 6)	$	—	$	2,006
Exchange of THG units for shares of Class A Common Stock (Refer to Note 17)	$	16,641	$	3,227
Deferred tax assets and TRA liabilities recorded upon exchange of THG units for shares of Class A Common Stock (Refer to Note 20)	$	1,318	$	—

Cash paid for:
Interest	$	7,360	$	5,559
Income taxes	$	12,410	$	17,500

(1) In certain situations, BAC makes loans to refinance accounts receivable balances generated by Broad Arrow Group, Inc. ("Broad Arrow") auctions and private sales. These loans are accounted for on the Condensed Consolidated Balance Sheets as non-cash reclassifications between "Accounts receivable" and "Notes receivable" and are not presented within Investing Activities in the Company's Condensed Consolidated Statements of Cash Flows. Upon repayment, the cash received in settlement of such loans is classified within Operating Activities in the Company's Condensed Consolidated Statements of Cash Flows.

The issuance of shares of Class A Common Stock resulting from the vesting of restricted stock units ("RSUs") is a non-cash financing activity. Refer to Note 18 — Share-Based Compensation for information related to share-based compensation.

4 — Revenue

Disaggregation of Revenue — The tables below present the Company's revenue by distribution channel, as well as a reconciliation to total revenue for the three and nine months ended September 30, 2025 and 2024. Commission and fee revenue and contingent commission revenue earned from the agent distribution channel includes revenue generated through the Company's insurance distribution partnerships, as well as its relationships with independent agents and brokers. Commission and fee revenue and contingent commission revenue earned from the direct distribution channel includes revenue generated by Hagerty's employee agents.

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	Three months ended September 30, 2025
	Agent		Direct		Total

	in thousands
Commission and fee revenue	$	67,685	$	54,049	$	121,734
Contingent commission revenue	8,466		6,903		15,369
Membership revenue	—		15,961		15,961
Marketplace revenue	—		31,208		31,208
Other revenue	—		5,716		5,716
Total revenue from customer contracts	76,151		113,837		189,988
Earned premium, net (recognized under ASC 944)					187,039
Finance revenue (recognized under ASC 310)					2,967
Total revenue					$	379,994


	Three months ended September 30, 2024
	Agent		Direct		Total

	in thousands
Commission and fee revenue	$	57,857	$	47,606	$	105,463
Contingent commission revenue	5,997		4,701		10,698
Membership revenue	—		14,800		14,800
Marketplace revenue	—		19,332		19,332
Other revenue	—		5,165		5,165
Total revenue from customer contracts	63,854		91,604		155,458
Earned premium, net (recognized under ASC 944)					165,686
Finance revenue (recognized under ASC 310)					2,230
Total revenue					$	323,374


	Nine months ended September 30, 2025
	Agent		Direct		Total

	in thousands
Commission and fee revenue	$	186,455	$	152,882	$	339,337
Contingent commission revenue	22,352		18,988		41,340
Membership revenue	—		46,981		46,981
Marketplace revenue	—		82,660		82,660
Other revenue	—		16,524		16,524
Total revenue from customer contracts	208,807		318,035		526,842
Earned premium, net (recognized under ASC 944)					534,179
Finance revenue (recognized under ASC 310)					7,265
Total revenue					$	1,068,286

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	Nine months ended September 30, 2024
	Agent		Direct		Total

	in thousands
Commission and fee revenue	$	164,737	$	136,597	$	301,334
Contingent commission revenue	17,869		14,614		32,483
Membership revenue	—		42,385		42,385
Marketplace revenue	—		32,357		32,357
Other revenue	—		18,847		18,847
Total revenue from customer contracts	182,606		244,800		427,406
Earned premium, net (recognized under ASC 944)					474,917
Finance revenue (recognized under ASC 310)					5,984
Total revenue					$	908,307

The following tables present Hagerty's revenue disaggregated by geographic area, as well as a reconciliation to total revenue for the three months ended September 30, 2025 and 2024:


	Three months ended September 30, 2025
	U.S.		Canada		Europe		Total

	in thousands
Commission and fee revenue	$	112,179	$	7,556	$	1,999	$	121,734
Contingent commission revenue	15,072		—		297		15,369
Membership revenue	14,895		1,057		9		15,961
Marketplace revenue	25,303		3,729		2,176		31,208
Other revenue	5,026		63		627		5,716
Total revenue from customer contracts	172,475		12,405		5,108		189,988
Earned premium, net (recognized under ASC 944)							187,039
Finance revenue (recognized under ASC 310)							2,967
Total revenue							$	379,994


	Three months ended September 30, 2024
	U.S.		Canada		Europe		Total

	in thousands
Commission and fee revenue	$	96,688	$	6,952	$	1,823	$	105,463
Contingent commission revenue	10,544		—		154		10,698
Membership revenue	13,844		955		1		14,800
Marketplace revenue	19,037		43		252		19,332
Other revenue	4,539		130		496		5,165
Total revenue from customer contracts	144,652		8,080		2,726		155,458
Earned premium, net (recognized under ASC 944)							165,686
Finance revenue (recognized under ASC 310)							2,230
Total revenue							$	323,374

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The following tables present Hagerty's revenue disaggregated by geographic area, as well as a reconciliation to total revenue for the nine months ended September 30, 2025 and 2024:


	Nine months ended September 30, 2025
	U.S.		Canada		Europe		Total

	in thousands
Commission and fee revenue	$	313,219	$	20,549	$	5,569	$	339,337
Contingent commission revenue	39,835		—		1,505		41,340
Membership revenue	43,930		3,032		19		46,981
Marketplace revenue	63,664		7,670		11,326		82,660
Other revenue	14,680		316		1,528		16,524
Total revenue from customer contracts	475,328		31,567		19,947		526,842
Earned premium, net (recognized under ASC 944)							534,179
Finance revenue (recognized under ASC 310)							7,265
Total revenue							$	1,068,286


	Nine months ended September 30, 2024
	U.S.		Canada		Europe		Total

	in thousands
Commission and fee revenue	$	277,613	$	18,878	$	4,843	$	301,334
Contingent commission revenue	32,235		—		248		32,483
Membership revenue	39,592		2,792		1		42,385
Marketplace revenue	31,161		580		616		32,357
Other revenue	17,004		520		1,323		18,847
Total revenue from customer contracts	397,605		22,770		7,031		427,406
Earned premium, net (recognized under ASC 944)							474,917
Finance revenue (recognized under ASC 310)							5,984
Total revenue							$	908,307

Refer to Note 14 — Reinsurance for information regarding "Earned premium, net" recognized under ASC Topic 944, Financial Services - Insurance ("ASC 944"). Refer to Note 7 — Notes Receivable for information regarding "Finance revenue" recognized under ASC Topic 310, Receivables ("ASC 310").

Contract Assets and Liabilities — The following table is a summary of the Company's contract assets and liabilities as of September 30, 2025 and December 31, 2024:


	September 30,		December 31,
	2025		2024

	in thousands
Contract assets	$	18,689	$	15,860
Contract liabilities	$	50,703	$	47,239

Contract assets, which are reported within "Commissions receivable" on the Condensed Consolidated Balance Sheets, primarily consist of contingent underwriting commission ("CUC") receivables, which are earned throughout the year with 80% of the CUC receivables from Markel settled monthly and the remaining 20% settled annually.

Contract liabilities consist of cash collected in advance of revenue recognition and primarily includes the unrecognized portion of HDC membership fees, the unrecognized portion of the advanced commission payment received from State Farm Mutual Automobile Insurance Company ("State Farm"), and, to a much lesser extent, cash collected in advance of the completion of marketplace private sales. Refer to Note 21 — Related-Party Transactions for additional information regarding the Company's master alliance agreement with State Farm.

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5 — Investments

The Company holds a diversified investment portfolio, consisting of fixed maturity securities and, to a much lesser extent, equity securities, with the fixed maturity securities classified as available-for-sale. As of September 30, 2025, all fixed maturity securities had an investment grade rating from at least one nationally recognized rating organization.

The following tables summarize the Company's available-for-sale investments as of September 30, 2025 and December 31, 2024:


	September 30, 2025
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value

Fixed maturity securities:	in thousands
Corporate	$	246,554	$	4,113	$	(144)	$	250,523
U.S. Treasury	174,317		695		(206)		174,806
States and municipalities	27,209		812		—		28,021
Foreign	27,814		84		(5)		27,893
Asset-backed securities	30,065		338		(44)		30,359
Mortgage-backed securities	136,792		2,630		(402)		139,020
Total fixed maturity securities	$	642,751	$	8,672	$	(801)	$	650,622


	December 31, 2024
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value

Fixed maturity securities:	in thousands
Corporate	$	230,917	$	1,226	$	(954)	$	231,189
U.S. Treasury	146,211		424		(760)		145,875
States and municipalities	31,543		134		(92)		31,585
Foreign	21,022		59		(24)		21,057
Asset-backed securities	23,625		175		(120)		23,680
Mortgage-backed securities	125,351		396		(1,445)		124,302
Total fixed maturity securities	$	578,669	$	2,414	$	(3,395)	$	577,688

Security holdings in an unrealized loss position

The following table summarizes gross unrealized losses and the estimated fair value of available-for-sale fixed maturity securities that have continuously been in an unrealized loss position, as well as the length of time that such securities were in an unrealized loss position, as of September 30, 2025:


	September 30, 2025
	Less than 12 months				12 months or longer				Total
	Estimated fair value		Gross unrealized losses		Estimated fair value		Gross unrealized losses		Estimated fair value		Gross unrealized losses

Fixed maturity securities:	in thousands
Corporate	$	—	$	—	$	11,426	$	(144)	$	11,426	$	(144)
U.S. Treasury	16,552		(72)		23,777		(134)		40,329		(206)

Foreign	8,237		(5)		—		—		8,237		(5)
Asset-backed securities	1,516		(2)		1,876		(42)		3,392		(44)
Mortgage-backed securities	1,244		(6)		19,246		(396)		20,490		(402)
Total fixed maturity securities	$	27,549	$	(85)	$	56,325	$	(716)	$	83,874	$	(801)

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As of September 30, 2025, the Company held 36 available-for-sale fixed maturity securities in an unrealized loss position with a total estimated fair value of $83.9 million and gross unrealized losses of $0.8 million. Of those securities, 23 were in a continuous unrealized loss position for one year or longer as of September 30, 2025. The Company regularly reviews all fixed maturity securities within its investment portfolio to determine whether a credit loss has occurred. Based on the Company's review as of September 30, 2025, unrealized losses were a result of interest rate changes which were not credit-specific issues.

As of December 31, 2024, no credit loss allowance was recorded and all unrealized losses on available-for-sale fixed maturity securities were in such position for less than one year.

Contractual maturities of available-for-sale fixed maturity securities

The following table summarizes the contractual maturities of the Company's available-for-sale investments as of September 30, 2025:



	Amortized Cost		Estimated Fair Value

	in thousands
Due in one year or less	$	106,600	$	106,851
Due after one year through five years	271,631		275,364
Due after five years through ten years	97,663		99,028

Mortgage-backed and asset-backed securities	166,857		169,379
Total fixed maturity securities	$	642,751	$	650,622

Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

Net investment income

The following table presents the components of net investment income, which is recorded within "Interest and other income (expense), net" in the Condensed Consolidated Statements of Operations, for the three and nine months ended September 30, 2025 and 2024:


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024

Interest income:	in thousands
Cash and cash equivalents and restricted cash and cash equivalents	$	2,543	$	4,514	$	7,267	$	21,154
Fixed maturity securities	7,716		5,127		21,644		8,921
Total interest income	10,259		9,641		28,911		30,075
Dividends on equity securities	42		34		121		58
Gross investment income	10,301		9,675		29,032		30,133
Investment expenses	(149)		(91)		(406)		(213)
Net investment income	$	10,152	$	9,584	$	28,626	$	29,920

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Net realized and unrealized gains (losses) on investments

The table below presents the components of pre-tax net investment gains (losses), which is recorded within "Interest and other income (expense), net" in the Condensed Consolidated Statements of Operations, and the pre-tax change in net unrealized gains included in the Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2025 and 2024. The gross amounts of realized investment gains and losses on fixed maturity securities were not material to the Condensed Consolidated Financial Statements and are presented on a net basis in the table below:


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024

Fixed maturity securities:	in thousands
Net realized investment gains	$	116	$	700	$	347	$	731
Equity securities:
Total change in fair value of equity securities	1,155		574		1,803		1,052
Net investment gains	$	1,271	$	1,274	$	2,150	$	1,783
Change in net unrealized gains on available-for-sale investments included in Other comprehensive income:
Fixed maturity securities	$	2,406	$	10,081	$	8,827	$	11,032

6 — Fair Value Measurements

Fair value measurements are classified 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 management judges to be significant to the fair value measurement in its entirety.

The three levels of the fair value hierarchy are as follows:

•Level 1 — Quoted prices are available in active markets for identical assets or liabilities as of the reporting 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 — Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date for substantially the full term of the asset or liability.

•Level 3 — Pricing inputs are unobservable, but management believes that such inputs 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, if any, at the end of the reporting period. There were no transfers between levels during the current and prior reporting periods.

Investments

Fixed maturity securities are classified as Level 2 within the fair value hierarchy and equity securities are classified as Level 1. The fair value of these investments is determined after considering various sources of information, including information provided by a third-party pricing service, which provides prices for substantially all of the Company's fixed maturity securities and equity securities. In determining fair value, the Company generally does not adjust the prices obtained from the pricing service. The Company obtains an understanding of the pricing service's valuation methodologies and related inputs, which include, but are not limited to, reported trades, benchmark yields, issuer spreads, bids, offers, duration, credit ratings, estimated cash flows, and prepayment speeds.

Refer to Note 5 — Investments for additional information related to the Company's investment portfolio.

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Interest rate swap

In December 2020, the Company entered into an interest rate swap with an original notional amount of $35.0 million, a fixed swap rate of 0.81%, and a maturity date in December 2025. The interest rate swap was designated as a cash flow hedge and the Company formally documented the relationship between the interest rate swap and its variable rate borrowings, as well as its risk management objective and strategy for undertaking the hedge transaction. The Company also assessed whether the interest rate swap was highly effective in offsetting variability in the cash flows of its variable rate borrowings. The hedge was deemed highly effective at inception and on an ongoing basis; therefore, any changes in fair value were recorded within "Change in unrealized loss on interest rate swap" in the Condensed Consolidated Statements of Comprehensive Income. The differential paid or received on the interest rate swap agreement was recognized as an adjustment to interest expense within "Interest and other income (expense), net" in the Condensed Consolidated Statements of Operations.

In the second quarter of 2024, the Company reduced its borrowings under the Prior JPM Credit Facility (as defined in Note 15 — Debt) below the $35.0 million notional amount of the interest rate swap and, as a result, the interest rate swap was settled prior to its maturity date.

The interest rate swap was classified as Level 2 within the fair value hierarchy. The significant inputs used to determine the fair value of the interest rate swap, such as the Secured Overnight Financing Rate ("SOFR") forward curve, are considered observable market inputs.

Warrant liabilities

The Company's Public Warrants were classified as Level 1 within the fair value hierarchy as they were measured utilizing quoted market prices. The Company's Private Warrants, Underwriter Warrants, OTM Warrants, and PIPE Warrants were classified as Level 3 within the fair value hierarchy. The Company utilized a Monte Carlo simulation model to measure the fair value of the Level 3 warrants. The Company's Monte Carlo simulation model included assumptions related to the expected stock price volatility, expected term, dividend yield, and risk-free interest rate.

In July 2024, the Company completed an exchange offer under which holders of the Company's warrants were issued 3,876,201 shares of Class A Common Stock in exchange for 19,483,539 warrants, with a nominal cash settlement paid in lieu of fractional shares (the "Warrant Exchange"). No warrants remained outstanding following the completion of the Warrant Exchange.

The Company recorded increases to "Class A Common Stock" and "Additional paid-in capital", representing the $42.6 million fair value of the Class A Common Stock that was issued in connection with the Warrant Exchange. The difference between the fair value of the warrants immediately prior to the Warrant Exchange and the fair value of Class A Common Stock issued resulted in a $2.0 million loss, which is reflected within "Loss related to warrant liabilities, net" in the Condensed Consolidated Statements of Operations.

The following table presents a reconciliation of the Company's warrant liabilities that were classified as Level 3 within the fair value hierarchy for the nine months ended September 30, 2024:


	Private Warrants		Underwriter Warrants		OTM Warrants		PIPE Warrants		Total

	in thousands
Balance at December 31, 2023	$	476	$	53	$	3,981	$	20,020	$	24,530
Change in fair value of warrant liabilities	55		5		546		4,056		4,662
Warrant Exchange	(531)		(58)		(4,527)		(24,076)		(29,192)
Balance at September 30, 2024	$	—	$	—	$	—	$	—	$	—

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Summary of assets and liabilities measured at fair value

The fair values of the Company's financial assets as of September 30, 2025 and December 31, 2024 are shown in the following tables:


	Estimated Fair Value as of September 30, 2025
	Total		Level 1		Level 2		Level 3

	in thousands
Investments:
Corporate	$	250,523	$	—	$	250,523	$	—
U.S. Treasury	174,806		—		174,806		—
States and municipalities	28,021		—		28,021		—
Foreign	27,893		—		27,893		—
Asset-backed securities	30,359		—		30,359		—
Mortgage-backed securities	139,020		—		139,020		—
Common stocks	23,297		23,297		—		—
Total	$	673,919	$	23,297	$	650,622	$	—

	Estimated Fair Value as of December 31, 2024
	Total		Level 1		Level 2		Level 3

	in thousands
Investments:
Corporate	$	231,189	$	—	$	231,189	$	—
U.S. Treasury	145,875		—		145,875		—
States and municipalities	31,585		—		31,585		—
Foreign	21,057		—		21,057		—
Asset-backed securities	23,680		—		23,680		—
Mortgage-backed securities	124,302		—		124,302		—
Common stocks	11,839		11,839		—		—
Total	$	589,527	$	11,839	$	577,688	$	—

7 — Notes Receivable

Broad Arrow Capital

BAC provides financing solutions to qualified collectors and businesses by structuring loans secured by collector cars. The loans underwritten by BAC include term loans and short-term bridge financings. The loans underwritten by BAC are recorded on the Condensed Consolidated Balance Sheets within "Notes receivable".

Loans carry either a fixed or variable rate of interest and typically require periodic interest payments over the life of the loan with the principal amount due at maturity. Loans have an initial maturity of up to two years, often with an option for the borrower to renew for one year increments, provided the borrower remains in good standing, including maintaining a specified targeted loan-to-value ("LTV") ratio for the loan. As of September 30, 2025, the loans underwritten by BAC were classified as Level 3 within the fair value hierarchy, with the carrying values of the loans approximating their fair values due to the relatively short-term maturities and the variable interest rates associated with most loans. The lending activities of BAC are funded, in part, with borrowings drawn from the BAC Credit Facility, with the remainder funded by the Company's available liquidity. Refer to Note 15 — Debt for additional information regarding the BAC Credit Facility.

BAC aims to mitigate the risk associated with a potential devaluation in collateral by targeting an LTV ratio of 65% or less (i.e., the principal loan amount divided by the estimated value of the collateral at the time of underwriting). The LTV ratio is reassessed on a quarterly basis or if the loan is renewed. The LTV ratio is reassessed more frequently if there is a material change in the circumstances related to the loan, including if there is a material change in the value of the collateral, a material change in the borrower's disposal plans for the collateral, or if an event of default occurs. If, as a result of this reassessment, the LTV ratio increases above the target level, the borrower may be asked to make principal payments and/or post sufficient additional collateral to reduce the LTV ratio as a condition of future financing, renewal, or to avoid a default. In the event of a default by a borrower, BAC is entitled to sell the collateral to recover the outstanding principal, accrued interest balance, and any expenses incurred with respect to the recovery process.

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Management considers the valuation of the underlying collateral and the LTV ratio to be the two most critical credit quality indicators for the loans made by BAC. In estimating the value of the underlying collateral for BAC's loans, management utilizes its expertise in the collector car market and considers an array of factors impacting the current and expected sale value of each car including the year, make, model, mileage, history, and in the case of classic cars, the provenance, quality of restoration (if applicable), the originality of the body, chassis, and mechanical components, and comparable market transaction values.

The repayment of BAC's loans can be adversely impacted by a borrower's deteriorating financial circumstances, a decline in the collector car market in general or in the value of the collateral, which may be concentrated within certain marques, vintages, or types of cars. In addition, in situations when BAC's claim on the collateral is subject to a legal dispute, the ability to realize proceeds from the collateral may be limited or delayed.

As of September 30, 2025, BAC's net notes receivable balance was $100.1 million, of which $82.4 million was classified within current assets and $17.7 million was classified within long-term assets on the Condensed Consolidated Balance Sheets. As of December 31, 2024, BAC's net notes receivable balance was $57.0 million, of which $45.4 million was classified within current assets and $11.6 million was classified within long-term assets on the Condensed Consolidated Balance Sheets. The classification of a loan as current or long-term is based on the contractual maturity date of the loan as of the balance sheet date.

The table below provides the aggregate LTV ratio for BAC's loan portfolio as of September 30, 2025 and December 31, 2024:


	September 30,			December 31,
	2025			2024

	in thousands
Secured loans	$	100,055		$	56,972
Estimate of collateral value	$	171,541		$	95,778
Aggregate LTV ratio	58.3		%	59.5		%

Management considers a loan to be past due when an interest payment is not paid within 10 business days of the monthly due date, or if the principal amount is not repaid by the contractual maturity date. Typically, a loan becomes past due only for a short period of time during which the loan is renewed or collateral is sold to satisfy the borrower's obligations. As of September 30, 2025 and December 31, 2024, the amount of past due principal and interest payments was not material.

A non-accrual loan is a loan for which future finance revenue is not recorded due to management's determination that it is probable that future interest on the loan will not be collectible. When a loan is placed on non-accrual status, any accrued interest receivable deemed not collectible is reversed against finance revenue. Any cash receipts subsequently received on non-accrual loans are first applied to reduce the recorded principal balance of the loan, with any proceeds in excess of the principal balance then applied to interest and expenses owed by the borrower. As of September 30, 2025 and December 31, 2024, there were no non-accrual loans.

As of September 30, 2025 and December 31, 2024, the allowance for expected credit losses related to the BAC loan portfolio was not material based on management's quarterly evaluation, which takes into consideration a number of factors including the level of historical losses for similar loans, the quality of the collateral, the LTV ratio of the loans, management's overall assessment of the current circumstances and risks related to each loan, and, to a lesser extent, the circumstances related to each borrower.

Other Notes Receivable

From time-to-time, Broad Arrow provides financing for its auction and private sale buyers, retaining a security interest in the purchased vehicle. The resulting loans are typically interest-bearing with required periodic interest payments and, in certain cases, required periodic principal payments. As of September 30, 2025, the related outstanding Notes receivable balance was $9.7 million and was classified within current assets on the Condensed Consolidated Balance Sheets.

Broad Arrow also makes consignor advances secured by vehicle(s) that are contractually committed, in the near term, to be offered for sale at auction. Consignor advances allow sellers to receive funds upon consignment for an auction that will occur up to one year in the future and normally have short-term maturities. In the event the vehicle(s) are not successfully sold at auction, the consignor can repay the outstanding principal and accrued interest of the advance or convert the advance to a BAC loan. As of September 30, 2025, the outstanding Notes receivable balance associated with consignor advances was $2.1 million and was classified within current assets on the Condensed Consolidated Balance Sheets.

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Under certain circumstances, Broad Arrow also provides loans to certain car dealers to finance the purchase of collectible cars, retaining a security interest in the purchased vehicle. In these situations, Broad Arrow acquires a partial ownership interest in the car in addition to providing the loan. Upon the eventual sale of the acquired car, the loan is repaid. As of September 30, 2025, this outstanding Notes receivable balance was $0.1 million and was recorded within long-term assets on the Condensed Consolidated Balance Sheets.

These loans are classified on the Condensed Consolidated Statements of Cash Flows within Operating Activities as they are made in support of Broad Arrow's auction and private sale activities.

Concentration Risk

As of September 30, 2025, there were no borrowers with loan balances that exceeded 10% of the total notes receivable balance.

8 — Other Assets

As of September 30, 2025 and December 31, 2024, other assets, current and long-term, consisted of:


	September 30,		December 31,
	2025		2024

	in thousands
Prepaid software-as-a-service ("SaaS") implementation costs	$	55,588	$	41,110
Prepaid sales, general and administrative expenses	21,961		20,134
Deferred reinsurance premiums ceded	24,216		18,521
Inventory (1)	14,168		18,484
Property and equipment, net	17,110		18,205
Reinsurance recoverable	17,831		11,927
Other investments	10,533		10,312
Contract costs	9,940		9,399
Accrued investment income	4,703		4,827
Deferred financing costs related to revolving credit facilities	3,284		3,489
Other	5,699		9,464
Other assets	$	185,033	$	165,872

(1) Inventory primarily includes vehicles owned by Broad Arrow that have been purchased for resale purposes.

As of September 30, 2025, Other primarily included $2.7 million of collector vehicle investments, $1.6 million related to capitalized digital media content, and a $1.3 million tax receivable. As of December 31, 2024, Other primarily included $2.5 million of collector vehicle investments, $2.2 million related to capitalized digital media content, and a $2.0 million tax receivable.

9 — Leases

The following table summarizes the components of the Company's operating lease expense for the three and nine months ended September 30, 2025 and 2024:


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024

	in thousands
Operating lease expense (1)	$	2,364	$	1,882	$	6,590	$	5,920
Variable lease expense (1) (2)	993		1,505		2,761		3,475
Sublease revenue (3)	(254)		(344)		(809)		(1,000)
Lease cost, net	$	3,103	$	3,043	$	8,542	$	8,395

(1) Classified within "General and administrative expenses" in the Condensed Consolidated Statements of Operations.

(2) Amounts include payments for maintenance, taxes, insurance, and payments affected by the Consumer Price Index.

(3) Classified within "Membership, marketplace and other revenue" in the Condensed Consolidated Statements of Operations.

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The following tables summarize supplemental balance sheet information related to operating leases as of September 30, 2025 and December 31, 2024:


	September 30,		December 31,
	2025		2024

	in thousands
Operating lease ROU assets	$	42,229	$	44,485

Current lease liabilities (1)	6,860		6,715
Long-term lease liabilities	40,511		43,178
Total operating lease liabilities	$	47,371	$	49,893

(1) Current lease liabilities are recorded within "Accounts payable, accrued expenses and other current liabilities" on the Condensed Consolidated Balance Sheets.


	September 30,			December 31,
	2025			2024

	in thousands
ROU assets obtained in exchange for new operating lease liabilities	$	2,374		$	1,317
Weighted average lease term	7.63			8.23
Weighted average discount rate	5.1		%	5.0		%

The following table summarizes information about the amount and timing of the Company's future operating lease commitments as of September 30, 2025:


	in thousands
2025 - remaining	$	2,333
2026	8,971
2027	8,518
2028	8,446
2029	6,665
Thereafter	22,757
Total lease payments	57,690
Less: imputed interest	(10,319)
Total lease liabilities	$	47,371

10 — Acquisition

On September 1, 2024, the Company's subsidiary, Hagerty Insurance Holdings, Inc., acquired all of the issued and outstanding capital stock of Consolidated National Insurance Company, which was subsequently renamed Drivers Edge Insurance Company, for a purchase price of $19.3 million, including $0.9 million in direct and incremental transaction costs. The acquisition of Drivers Edge was accounted for as an asset acquisition with the $19.3 million purchase price allocated to approved state licenses ($11.3 million), cash and cash equivalents ($3.9 million), restricted fixed maturity securities ($3.7 million), and restricted cash and cash equivalents ($0.4 million).

In the third quarter of 2025, Drivers Edge launched Enthusiast+ in Colorado and the Company plans to implement a phased, nationwide rollout over the next four years. Enthusiast+ is a new insurance product tailored for modern enthusiast vehicles that are typically driven more frequently and stored more flexibly than traditional collector cars and is designed to broaden the Company's addressable market by offering coverage to a wider range of vehicles and customer profiles.

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11 — Divestiture

In June 2024, THG sold substantially all of the assets and liabilities of Motorsport Reg ("MSR"), a motorsport membership, licensing and event online management system, to a third party. The material elements of the sale consideration include a fixed purchase price and a contingent payment opportunity, based on future performance. The Company recognized a $0.1 million gain related to the sale of MSR in the second quarter of 2024, which was recorded within "Gain related to divestiture" on the Company's Condensed Consolidated Statements of Operations.

12 — Intangible Assets

The cost and accumulated amortization of intangible assets as of September 30, 2025 and December 31, 2024 are as follows:


	September 30, 2025
	Weighted average useful life	Gross carrying amount		Accumulated amortization		Net carrying amount

		in thousands
Internally developed software	3.4	$	149,831	$	(97,638)	$	52,193
Renewal rights	10.0	21,647		(10,064)		11,583
Trade names and trademarks	14.2	11,867		(4,113)		7,754
State licenses (1)	Indefinite	11,263		—		11,263
Relationships and customer lists	15.5	7,907		(2,248)		5,659
Other	3.6	619		(619)		—
Total intangible assets		$	203,134	$	(114,682)	$	88,452

(1) Represents approved state licenses related to the acquisition of Drivers Edge. Refer to Note 10 — Acquisition for additional details.


	December 31, 2024
	Weighted average useful life	Gross carrying amount		Accumulated amortization		Net carrying amount

		in thousands
Internally developed software	3.3	$	136,235	$	(82,903)	$	53,332
Renewal rights	9.9	19,187		(8,458)		10,729
Trade names and trademarks	14.1	12,061		(3,393)		8,668
State licenses (1)	Indefinite	11,263		—		11,263
Relationships and customer lists	15.4	7,975		(1,896)		6,079
Other	4.2	1,065		(1,029)		36
Total intangible assets		$	187,786	$	(97,679)	$	90,107

(1) Represents approved state licenses related to the acquisition of Drivers Edge. Refer to Note 10 — Acquisition for additional details.

Intangible asset amortization expense was $5.7 million and $6.2 million for the three months ended September 30, 2025 and 2024, respectively, and $17.9 million and $20.5 million for the nine months ended September 30, 2025 and 2024, respectively.

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Estimated future aggregate amortization expense related to intangible assets as of September 30, 2025 is as follows:


	in thousands
2025 - remaining	$	6,013
2026	22,475
2027	19,142
2028	13,165
2029	5,393
Thereafter	11,001
Total	$	77,189

13 — Provision for Unpaid Losses and Loss Adjustment Expenses

The following table presents a reconciliation of the beginning and ending provision for unpaid losses and loss adjustment expenses, net of amounts recoverable from various reinsurers:


	Nine months ended September 30,
		2025		2024

		in thousands
Gross reserves for unpaid losses and loss adjustment expenses, beginning		$	168,492	$	136,507
Less: Reinsurance recoverable on unpaid losses and loss adjustment expenses		5,769		2,235
Net reserves for unpaid losses and loss adjustment expenses, beginning		162,723		134,272
Incurred losses and loss adjustment expenses:
Current accident year		224,969		226,515

Total incurred losses and loss adjustment expenses		224,969		226,515
Payments:
Current accident year		61,819		50,683
Prior accident years		63,571		59,090
Total payments		125,390		109,773
Effect of foreign currency rate changes		(63)		84
Net reserves for unpaid losses and loss adjustment expenses, ending		262,239		251,098
Reinsurance recoverable on unpaid losses and loss adjustment expenses		14,406		7,738
Gross reserves for unpaid losses and loss adjustment expenses, ending		$	276,645	$	258,836

Losses and loss adjustment expenses for the nine months ended September 30, 2025 and 2024 includes approximately $10.3 million of pre-tax losses related to the Southern California Wildfires and approximately $24.7 million of pre-tax losses related to Hurricane Helene, respectively.

Reserving Methodology

The Company records an estimate of quarterly losses and loss adjustment expenses in the Condensed Consolidated Statements of Operations using an annual loss ratio, which is based on statistical analysis performed by the Company's internal and external actuarial teams that consider several factors, including projected levels of catastrophe events. Management believes this approach provides a more consistent view of loss experience over the year given the seasonality of the Company's business. The annual loss ratio is reviewed throughout the year and adjusted, as necessary.

The provision for unpaid losses and loss adjustment expenses recorded on the Condensed Consolidated Balance Sheets represents (i) the difference between management's estimate of the ultimate cost of losses and loss adjustment expenses incurred by the Company and (ii) the amount of paid losses as of the reporting date. These reserves reflect management's best estimate of unpaid losses related to reported claims and IBNR claims and also include management's best estimate of all expenses associated with processing and settling reported and unreported claims.

Reserves are reviewed by management quarterly and periodically throughout the year by combining historical results and current actual results to calculate new development factors. Claims are analyzed and reported based on the year in which the loss occurred (i.e., on an accident year basis). Accident year data is classified and utilized within actuarial models to prepare estimates of required reserves for payments to be made in the future.

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When estimating reserves, the Company utilizes several actuarial reserving methods which consider historical claim reporting patterns, claim cycle time, claim frequency and severity, claims settlement practices, adequacy of case reserves over time, seasonality, and current economic conditions. Reserve estimates produced by various actuarial reserving methods are further analyzed to determine the actuarial central estimate which represents the expected value over the range of reasonably possible outcomes.

14 — Reinsurance

The following table presents the Company's total premiums assumed and ceded on a written and earned basis for the three and nine months ended September 30, 2025 and 2024:


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024

Premiums written:	in thousands
Assumed	$	228,882	$	199,721	$	652,205	$	574,742
Ceded	(10,999)		(9,906)		(42,068)		(42,875)
Net	$	217,883	$	189,815	$	610,137	$	531,867

Premiums earned:
Assumed	$	199,679	$	176,611	$	570,588	$	506,398
Ceded	(12,640)		(10,925)		(36,409)		(31,481)
Net	$	187,039	$	165,686	$	534,179	$	474,917

The following table presents total loss and loss adjustment expenses assumed and ceded for the three and nine months ended September 30, 2025 and 2024:


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024

Losses and loss adjustment expenses:	in thousands
Assumed	$	81,788	$	101,254	$	243,173	$	235,390
Ceded	(3,162)		(1,824)		(18,204)		(8,875)
Net	$	78,626	$	99,430	$	224,969	$	226,515

Ceded Reinsurance

Hagerty Re purchases catastrophe reinsurance to protect its capital from large catastrophic events and to provide earnings protection and stability. Hagerty Re renegotiated its catastrophe reinsurance coverage effective January 1, 2025, with terms and limits similar to 2024. The 2025 catastrophe reinsurance program for accounts with total insured values ("TIV") of up to $5.0 million affords coverage in excess of a per event retention of $28.0 million in two layers; $27.0 million excess of $28.0 million, and $50.0 million excess of $55.0 million. Additionally, Hagerty Re purchases facultative reinsurance to cede a portion of the physical damage exposure related to certain high value vehicles.

Hagerty Re cedes 100% of its physical damage exposure on U.S. accounts written or renewed with TIV equal to or greater than $5.0 million ("High-Net-Worth Accounts") via quota share agreements with various reinsurers. These High-Net-Worth Accounts are assumed 100% from a wholly owned subsidiary of Markel. Certain reinsurers involved in these quota share agreements are related parties. Refer to Note 21 — Related-Party Transactions for additional information.

Hagerty Re receives ceding commissions related to premiums ceded under reinsurance contracts related to High-Net-Worth Accounts. Ceding commissions are recognized ratably over the terms of the related policies, which are generally 12 months, and are recorded within "Ceding commissions, net" in the Company's Condensed Consolidated Statements of Operations. Deferred portions of ceding commissions received are included in "Deferred acquisition costs, net" on the Company's Condensed Consolidated Balance Sheets.

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15 — Debt

As of September 30, 2025 and December 31, 2024, "Long-term debt, net" consisted of the following:


		September 30,		December 31,
	Maturity	2025		2024

		in thousands
2025 JPM Credit Facility	March 2030	$	77,484	$	—
Prior JPM Credit Facility (1)	October 2026	—		50,296
BAC Credit Facility	December 2026	75,000		30,193
State Farm Term Loan	September 2033	25,000		25,000
Notes payable	October 2025	496		792
Total debt		177,980		106,281
Less: BAC Credit Facility, current portion		(72,622)		—
Less: Notes payable, current portion		(496)		(792)
Less: Unamortized debt issuance costs related to the State Farm Term Loan		(476)		(521)
Total long-term debt, net		$	104,386	$	104,968

(1) The Prior JPM Credit Facility, originally scheduled to mature in October 2026, was terminated upon the initiation of the 2025 JPM Credit Facility.

2025 JPM Credit Facility

In March 2025, THG entered into a credit agreement with JPMorgan Chase Bank, N.A. ("JPM"), as administrative agent, issuing bank and swingline lender, the foreign subsidiary borrowers thereto, and the other financial institutions party thereto as lenders (the "2025 JPM Credit Agreement").

The 2025 JPM Credit Agreement provides for a senior unsecured revolving credit facility (the "2025 JPM Credit Facility") with an aggregate borrowing capacity of $375.0 million. The 2025 JPM Credit Agreement includes (i) a $175.0 million sublimit for letters of credit, (ii) a $100.0 million sublimit for foreign currency borrowings, and (iii) an uncommitted accordion feature of $75.0 million, plus an unlimited amount so long as THG's net leverage ratio is below 3.25. The 2025 JPM Credit Agreement matures in March 2030, but may be extended if agreed to by THG and the lenders party thereto. Any unpaid balance on the 2025 JPM Credit Facility is due at maturity.

THG used borrowings from the 2025 JPM Credit Facility to repay in full all indebtedness, liabilities and other obligations outstanding under, and terminated, THG's prior credit agreement with JPM, as administrative agent, issuing bank and swingline lender, the foreign subsidiary borrowers party thereto, and the other financial institutions party thereto as lenders (the "Prior JPM Credit Agreement"). THG incurred approximately $1.0 million in fees for the 2025 JPM Credit Agreement, which, along with the remaining unamortized fees associated with the Prior JPM Credit Agreement, are being amortized over the agreement's five-year term.

The 2025 JPM Credit Facility accrues interest at the applicable reference rate, primarily Term SOFR, depending on the currency of the borrowing plus an applicable margin determined by the Company's net leverage ratio for the preceding period (as defined in the 2025 JPM Credit Facility). The effective interest rates related to the 2025 JPM Credit Agreement and the Prior JPM Credit Agreement were 5.74% and 6.88% for the nine months ended September 30, 2025 and 2024, respectively.

The 2025 JPM Credit Agreement requires THG to, among other things, meet certain financial covenants, including a minimum fixed charge coverage ratio test and a maximum leverage ratio test. As of September 30, 2025, THG was in compliance with these financial covenants.

As of September 30, 2025, the carrying value of the outstanding borrowings under the 2025 JPM Credit Facility approximated its fair value due to the variable interest rates associated with the outstanding borrowings.

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BAC Credit Facility

BAC and its wholly owned subsidiary BAC Funding 2023-1, LLC, as borrower, have a revolving credit agreement (the "BAC Credit Agreement") that provides for a revolving credit facility (the "BAC Credit Facility") with an aggregate commitment of $75.0 million. The BAC Credit Facility's borrowing base is determined by the carrying value of certain BAC notes receivable, which is then limited by the amount of the aggregate commitment. As of September 30, 2025, the applicable borrowing base for the BAC Credit Agreement was $79.2 million, and the outstanding borrowings were $75.0 million.

The revolving borrowing period of the BAC Credit Facility expires in December 2025, followed by an amortization period until it ultimately matures in December 2026. The borrowing period and the maturity date of the BAC Credit Facility may be extended by one year if requested by BAC and agreed by the administrative agent. BAC is not a borrower or guarantor of the BAC Credit Facility.

BAC and certain of its subsidiaries may transfer notes receivable to wholly owned, bankruptcy remote SPEs to secure borrowings under the BAC Credit Facility, isolating these assets from the Company's other obligations. Recourse is limited to (i) an obligation of the applicable seller to repurchase a note receivable if it is determined that there was a breach of any representation or warranty relating to such note receivable as of the relevant date specified in the related transfer agreement and (ii) a limited guarantee for certain liabilities that may result under certain foreign exchange hedging activity of one of the SPEs.

BAC and BAC Funding 2023-1, LLC are required, among other things, to meet certain financial covenants including that BAC, as the servicer, maintain a minimum tangible net worth, minimum liquidity balances, and an indebtedness to tangible net worth ratio. As of September 30, 2025, the Company was in compliance with the financial covenants under the BAC Credit Agreement.

As of September 30, 2025, the carrying value of the $75.0 million in outstanding borrowings under the BAC Credit Facility approximated its fair value due to the variable interest rates associated with the outstanding borrowings. The current portion of the outstanding BAC Credit Agreement borrowings is recorded within "Current portion of long-term debt" on the Condensed Consolidated Balance Sheets.

State Farm Term Loan

In September 2023, Hagerty Re entered into an unsecured term loan credit facility with State Farm in the aggregate principal amount of $25.0 million (the "State Farm Term Loan"). The State Farm Term Loan bears interest at a rate of 8.0% per annum and will mature in September 2033. State Farm is a related party to the Company. Refer to Note 21 — Related-Party Transactions for additional information.

Notes Payable

As of September 30, 2025 and December 31, 2024, the Company had outstanding notes payable, which are used to fund certain loans made by BAC in the United Kingdom ("U.K."), totaling $0.5 million and $0.8 million, respectively. The effective interest rate for the notes payable is 9.8% with repayment due October 2025. Refer to Note 7 — Notes Receivable for additional information on the lending activities of BAC.

Letters of Credit

As of September 30, 2025, the Company has authorized three letters of credit for a total of $10.8 million for operational purposes, primarily related to Hagerty Re's Section 953(d) tax structuring election, and to a much lesser extent, a requirement under a quota share agreement, and lease down payment support.

16 — Convertible Preferred Stock

In June 2023, the Company entered into a Securities Purchase Agreement (the "Purchase Agreement") with certain accredited investors (the "Investors"), pursuant to which it closed, issued and sold (the "Closing") to the Investors an aggregate of 8,483,561 shares of the Company's newly-designated Series A Convertible Preferred Stock, par value $0.0001 per share, for an aggregate purchase price of $80.0 million, at a per-share purchase price of $9.43 (the "Series A Purchase Price" and the transaction, the "Private Placement").

The Investors include State Farm, Markel, and individuals related to Hagerty Holding Corp. ("HHC"). State Farm and Markel each own over 5% of the Company's outstanding common stock. McKeel Hagerty, the Company's CEO and the Chairman of its Board of Directors (the "Board"), along with Tammy Hagerty, may be deemed to control HHC, the controlling stockholder of the Company. Both State Farm and Markel can nominate one director to the Board, while HHC can nominate two directors. Refer to Note 17 — Stockholders' Equity and Note 21 — Related-Party Transactions for additional information.

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The net proceeds from the Private Placement after deducting issuance costs of approximately $0.8 million were $79.2 million, which was recorded within Temporary Equity on the Company's Condensed Consolidated Balance Sheets. The Company used the net proceeds from the Private Placement for general corporate purposes.

As of September 30, 2025, the estimated redemption value of the Series A Convertible Preferred Stock was $107.8 million, which represents the maximum cash payment, including cumulative dividends, that would be required to be paid if the Optional Term Redemption provision in the Certificate of Designations, as summarized below, is exercised as of the earliest possible redemption date of June 23, 2028. The decision to redeem the Series A Convertible Preferred Stock for cash is made at the discretion of the Company; however, the Company is controlled by HHC through its voting control of the Company. Accordingly, the redemption of the Series A Convertible Preferred Stock is considered outside the control of the Company and, as a result, the Series A Convertible Preferred Stock is recorded within Temporary Equity on the Company's Condensed Consolidated Balance Sheets.

The Company has elected to apply the accretion method to adjust the carrying value of the Series A Convertible Preferred Stock to its estimated redemption value. Amounts recognized to accrete the Series A Convertible Preferred Stock to its estimated redemption value are treated as a deemed dividend and are recorded as a reduction to "Additional paid-in capital". The estimated redemption value may vary in subsequent periods and the Company has elected to recognize such changes prospectively.

The captioned sections below provide a summary of the material terms of the Series A Convertible Preferred Stock, as set forth in the Certificate of Designations, Preferences and Rights of the Series A Convertible Preferred Stock (the "Certificate of Designations").

Ranking — The Series A Convertible Preferred Stock ranks senior to the Class A Common Stock, the Class V Common Stock, and each other class or series of shares of the Company that the Company may issue in the future the terms of which do not expressly provide that such class or series ranks equally with, or senior to, the Series A Convertible Preferred Stock, with respect to dividend rights and/or rights upon liquidation, winding up or dissolution.

Dividends — Dividends on the Series A Convertible Preferred Stock are cumulative and accrue from the date of issuance at the rate per annum of 7% of the Series A Purchase Price of each share, plus the amount of previously accrued dividends, compounded annually (the "Accruing Dividends"). The Company may elect to pay the Accruing Dividends either in cash or in additional shares of Series A Convertible Preferred Stock. Prior to the third anniversary of the Closing, the Series A Convertible Preferred Stock will participate on an as-converted basis in dividends declared and paid on the Class A Common Stock. In each of June 2025 and 2024, the Company paid $5.6 million, respectively, of cash dividends on the Series A Convertible Preferred Stock to the Investors.

Conversion — Any shares of Series A Convertible Preferred Stock may, at the option of the holder, be converted at any time into shares of Class A Common Stock. The conversion price for the Series A Convertible Preferred Stock is initially $11.79 and is subject to adjustment upon certain events, including a stock split, a reverse stock split, or a dividend of the Class A Common Stock or Class V Common Stock to the Company's common stockholders (as adjusted, the "Conversion Price"). The Company may require such conversion (i) if the closing price per share of Class A Common Stock, for at least twenty (20) of any thirty (30) consecutive trading days, exceeds: (a) on or after the third and prior to the seventh anniversary of the Closing, 150% of the Conversion Price; or (b) on or after the seventh and prior to the tenth anniversary of the Closing, 100% of the Conversion Price; and (ii) on or after the tenth anniversary of the Closing. The conversion rate in effect at any applicable time (the "Conversion Rate") is the quotient obtained by dividing the Series A Purchase Price by the Conversion Price.

As of September 30, 2025, no shares of Series A Convertible Preferred Stock had been converted and the outstanding shares of Series A Convertible Preferred Stock were convertible into 6,785,410 shares of Class A Common Stock.

Voting — The Series A Convertible Preferred Stock votes together with the Class A Common Stock on an as-converted basis, and not as a separate class. The Investors have veto rights over (i) changes to the terms of the Certificate of Designations or the Company's certificate of incorporation or bylaws that adversely impact the Series A Convertible Preferred Stock and (ii) the issuance of equity securities senior to the Series A Convertible Preferred Stock or other securities convertible thereto.

Liquidation Preference — In the event of any liquidation, dissolution or winding up of the Company, each share of Series A Convertible Preferred Stock will be paid the greater of (i) the Series A Purchase Price plus any Accruing Dividends accrued but unpaid thereon, and (ii) the amount that such share of Series A Convertible Preferred Stock would have received had it converted into the Class A Common Stock immediately prior to such liquidation, dissolution or winding up of the Company (the "Liquidation Preference"). After payment of the Liquidation Preference, the Series A Convertible Preferred Stock will no longer be convertible and will not participate in any distribution made to the holders of the Class A Common Stock or Class V Common Stock.

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Change of Control — Upon a merger, consolidation, sale or other change of control transaction as described in the Certificate of Designations (a "Change of Control"), either (i) the Company may elect to redeem the Series A Convertible Preferred Stock or (ii) each holder of Series A Convertible Preferred Stock, individually, may require the Company to redeem all or any portion of the Series A Convertible Preferred Stock. The redemption price per share to be paid by the Company would be the greater of: (a) the Series A Purchase Price plus any accrued but unpaid Accruing Dividends multiplied by (i) if prior to or on the third anniversary of the Closing, 120%; (ii) if after the third but prior to or on the fifth anniversary of the Closing, 110%; (iii) if after the fifth anniversary of the Closing, 100%; and (b) the amount such share of Series A Convertible Preferred Stock would have received had it converted into the Class A Common Stock prior to the Change of Control. Any shares of Series A Convertible Preferred Stock that are not so redeemed will automatically convert into shares of Class A Common Stock and be paid in connection with the Change of Control.

Fundamental Transaction — In the event of any acquisition by the Company with a transaction value of at least $500.0 million or any equity or debt financing by the Company that raises at least $500.0 million, either (i) the Company may elect to redeem the Series A Convertible Preferred Stock, or (ii) each holder of Series A Convertible Preferred Stock, individually, may require the Company to redeem all or any portion of its Series A Convertible Preferred Stock. The redemption price per share to be paid by the Company would be the Series A Convertible Preferred Stock plus any accrued but unpaid Accruing Dividends multiplied by: (a) if prior to or on the third anniversary of the Closing, 120%; (b) if after the third but prior to or on the fifth anniversary of the Closing, 110%; (c) if after the fifth but prior to or on the sixth anniversary of the Closing, 108%; (d) if after the sixth but prior to or on the seventh anniversary of the Closing, 106%; (e) if after the seventh but prior to or on the eighth anniversary of the Closing, 104%; (f) if after the eighth but prior to or on the ninth anniversary of the Closing, 102%; or (g) if after the ninth anniversary of the Closing, 100%.

Optional Term Redemption — Any time after the fifth anniversary of the Closing, the Company may redeem all or any portion of the then-outstanding shares of the Series A Convertible Preferred Stock for cash (a "Term Redemption"). The redemption price per share to be paid by the Company would be equal to the greater of: (i) the Series A Purchase Price plus any accrued but unpaid Accruing Dividends multiplied by: (a) if after the fifth but prior to the sixth anniversary of the Closing, 110%; (b) if on or after the sixth but prior to the seventh anniversary of the Closing, 108%; (c) if on or after the seventh but prior to the eighth anniversary of the Closing, 106%; (d) if on or after the eighth but prior to the ninth anniversary of the Closing, 104%; (e) if on or after the ninth but prior to tenth anniversary of the Closing, 102%; or (f) if on or after the tenth anniversary of the Closing, 100%; and (ii) the amount such share of Series A Convertible Preferred Stock would have received had it converted into Class A Common Stock prior to the Term Redemption.

Registration Rights Agreement — In connection with the Private Placement, the Company entered into a registration rights agreement with the Investors (the "Registration Rights Agreement") pursuant to which, the Investors will be entitled to certain demand, shelf and piggyback registration rights with respect to the Series A Convertible Preferred Stock and shares of the Class A Common Stock issuable upon conversion thereof.

17 — Stockholders' Equity

Class A Common Stock

Hagerty, Inc. is authorized to issue 500,000,000 shares of Class A Common Stock with a par value of $0.0001 per share. Holders of Class A Common Stock are entitled to one vote for each share. As of September 30, 2025 and December 31, 2024, there were 100,426,473 and 90,032,391 shares of Class A Common Stock issued and outstanding, respectively.

Class V Common Stock

Hagerty, Inc. 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, Inc. Holders of Class V Common Stock are entitled to 10 votes for each share. In connection with the business combination that formed Hagerty, Inc. in 2021, shares of Class V Common Stock were issued to HHC and Markel (together, the "Legacy Unit Holders") along with an equivalent number of THG units. Each share of Class V Common Stock, together with the corresponding THG unit, is exchangeable for one share of Class A Common Stock. As of September 30, 2025 and December 31, 2024, there were 241,552,156 and 251,033,906 shares of Class V Common Stock issued and outstanding, respectively. See "Exchange of THG Units" below.

Preferred Stock

Hagerty, Inc. is authorized to issue 20,000,000 shares of Preferred Stock with a par value of $0.0001 per share. The Board has the authority to issue shares of Preferred Stock with such designations, voting and other rights and preferences as may be determined from time to time.

As of September 30, 2025 and December 31, 2024, there were 8,483,561 shares of Preferred Stock issued and outstanding, which may, at the option of the holder, be converted at any time into shares of Class A Common Stock. Refer to Note 16 — Convertible Preferred Stock for additional information.

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Non-controlling Interests

Hagerty, Inc. owns one THG unit for each share of Class A Common Stock outstanding, and is the sole managing member of THG. As a result, Hagerty, Inc. consolidates the financial statements of THG into its Condensed Consolidated Financial Statements. The Company reports a non-controlling interest representing the economic interest in THG held by other unit holders of THG.

The following table summarizes the changes in ownership of THG units for the periods presented:


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024
THG units held by Hagerty, Inc.
Beginning of period	90,715,648		85,703,286		90,032,391		84,588,536
Issuance of shares under employee plans	226,575		211,582		831,530		1,194,808
Exchange of THG units for Class A Common Stock	9,484,250		189,294		9,562,552		320,818
Warrant Exchange (refer to Note 6)	—		3,876,201		—		3,876,201
End of period	100,426,473		89,980,363		100,426,473		89,980,363
Ownership percentage
Beginning of period	26.2	%	25.1	%	26.1	%	24.9	%
End of period	29.0	%	26.1	%	29.0	%	26.1	%

THG units held by other unit holders
Beginning of period	255,100,044		255,367,640		255,178,346		255,499,164
Exchange of THG units for Class A Common Stock	(9,484,250)		(189,294)		(9,562,552)		(320,818)
End of period	245,615,794		255,178,346		245,615,794		255,178,346
Ownership percentage
Beginning of period	73.8	%	74.9	%	73.9	%	75.1	%
End of period	71.0	%	73.9	%	71.0	%	73.9	%

Total THG units outstanding	346,042,267		345,158,709		346,042,267		345,158,709

At the end of each reporting period, THG equity attributable to Hagerty, Inc. and the non-controlling interest unit holders, respectively, is reallocated to reflect their current ownership in THG.

Shares Issued Under Employee Plans

Employees of THG subsidiaries are awarded share-based compensation in the form of RSUs and performance restricted stock units ("PRSUs") under the 2021 Stock Incentive Plan. Upon the vesting of these awards, the employees receive shares of Class A Common Stock and the Company is issued an equivalent number of THG units, thereby increasing its ownership interest in THG. Employees of THG subsidiaries may also participate in the 2021 Employee Stock Purchase Plan under which these employees may purchase shares of Class A Common Stock at a discounted price and the Company is issued an equivalent number of THG units.

During the nine months ended September 30, 2025 and 2024, the Company received 797,980 and 1,194,808 THG units, respectively, in connection with shares of Class A Common Stock that were issued as a result of share-based compensation awards vesting under the 2021 Stock Incentive Plan. In addition, during the nine months ended September 30, 2025, the Company received 33,550 THG units in connection with shares of Class A Common Stock that were issued related to the 2021 Employee Stock Purchase Plan. No shares related to the Company's 2021 Employee Stock Purchase Plan were issued during the nine months ended September 30, 2024.

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Exchange of THG Units

Each THG unit and, if applicable, the associated share of Class V Common Stock, are exchangeable for, at the Company's option, one share of Class A Common Stock or cash. If the Company elects for an exchange to be settled in cash, the cash used to settle the exchange must be funded through a new equity offering of Class A Common Stock. Upon completion of any THG unit exchange, shares of any exchanged Class V Common Stock are cancelled and Hagerty, Inc. retains the exchanged THG units. Changes in Hagerty, Inc.'s ownership interest in THG while retaining its controlling interest are accounted for as equity transactions. Accordingly, exchanges of THG units by unit holders other than Hagerty, Inc. increase Hagerty, Inc.'s ownership in THG, thereby reducing the amount recorded as "Non-controlling interest" and increasing "Additional paid-in capital".

In the third quarter of 2025, HHC completed an exchange of 9,481,750 THG units, together with the corresponding shares of Class V Common Stock, for 9,481,750 shares of Class A Common Stock (the "THG Unit Exchange"). Upon the consummation of the THG Unit Exchange, the exchanged shares of Class V Common Stock were cancelled. In addition, during the nine months ended September 30, 2025 and 2024, certain other holders of THG units that do not hold corresponding shares of Class V Common Stock exchanged approximately 80,802 and 320,818, respectively, THG units for an equal number of shares of Class A Common Stock.

Immediately following the THG Unit Exchange, pursuant to an underwriting agreement dated as of August 7, 2025, (the "Underwriting Agreement"), by and among the Company, THG, the Underwriters and the Selling Stockholders named therein, HHC sold 9,481,750 shares of Class A Common Stock to the Underwriters (the "Secondary Offering"). The Company did not sell any securities in the Secondary Offering and did not receive any proceeds from the sale of shares by the Selling Stockholders in the Secondary Offering. The Company incurred $1.2 million in expenses associated with the THG Unit Exchange and Secondary Offering, which were recorded within "General and administrative expenses" on the Condensed Consolidated Statements of Operations.

These exchanges resulted in reductions to "Non-controlling interest" and corresponding increases to "Additional paid-in capital" of $16.6 million and $3.2 million, during the nine months ended September 30, 2025 and 2024, respectively.

THG Preferred Units

In connection with the Private Placement, the Fourth Amended and Restated Limited Liability Company Agreement of THG was amended and restated in the form of a Fifth Amended and Restated Limited Liability Company Agreement (as subsequently amended and restated, the "THG LLC Agreement"), to, among other things, create a new series of preferred units within THG (the "THG Preferred Units"). The terms of the THG Preferred Units parallel the terms of the Series A Convertible Preferred Stock and are held entirely by Hagerty, Inc.

The THG Preferred Units are recorded on the financial statements of THG based on their estimated redemption value, which represents the maximum cash payment, including cumulative dividends, that would be required to be paid to Hagerty, Inc. if the Optional Term Redemption of the Series A Convertible Preferred Stock is exercised. Amounts recognized to accrete the THG Preferred Units to their estimated redemption value are treated as a deemed dividend due to Hagerty, Inc. The amount of this deemed dividend is attributed entirely to Hagerty, Inc. prior to allocating the remainder of THG's consolidated net income between controlling and non-controlling interests. In each of June 2025 and 2024, THG paid $5.6 million of cash dividends to Hagerty, Inc. on the THG Preferred Units. Refer to Note 16 — Convertible Preferred Stock for additional information on the Private Placement and the Series A Convertible Preferred Stock.

Distributions to Unit Holders of THG

Under the terms of the THG LLC Agreement, THG is obligated to make tax distributions to its unit holders. During the nine months ended September 30, 2025 and 2024, THG made tax distributions of $30.5 million and $5.3 million, respectively, to non-controlling interest unit holders and $11.9 million and $1.1 million, respectively, of tax distributions to Hagerty, Inc.

18 — Share-Based Compensation

The Company's 2021 Stock Incentive Plan provides for the issuance of up to approximately 38.3 million shares of Class A Common Stock to employees and non-employee directors. The 2021 Stock Incentive Plan allows for the issuance of incentive stock options, non-qualified stock options, restricted stock awards, stock appreciation rights, RSUs, and PRSUs. As of September 30, 2025, there were approximately 25.9 million shares available for future grants under the 2021 Stock Incentive Plan.

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Share-based compensation expense related to employees is recognized within "Salaries and benefits" in the Condensed Consolidated Statements of Operations. Share-based compensation expense related to non-employee directors is recognized within "General and administrative expenses" in the Condensed Consolidated Statements of Operations. The Company recognizes forfeitures of share-based compensation awards in the period in which they occur.

The following table summarizes share-based compensation expense recognized during the three and nine months ended September 30, 2025 and 2024:


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024

	in thousands
Restricted stock units	$	3,579	$	2,962	$	10,500	$	10,004
Performance restricted stock units	1,510		1,130		4,127		3,014

Total share-based compensation expense	$	5,089	$	4,092	$	14,627	$	13,018

Restricted Stock Units

RSUs typically vest over a two to five-year period based on the requisite service period. The grant date fair value is determined based on the closing market price of the Class A Common Stock on the business day prior to the grant date and the related share-based compensation expense is recognized over the requisite service period on a straight-line basis.

The following table provides a summary of RSU activity during the nine months ended September 30, 2025:


	Restricted Stock Units	Weighted Average Grant Date Fair Value
Unvested balance as of December 31, 2024	3,682,679	$	9.65
Granted	1,166,295	9.07
Vested (1)	(1,174,388)	9.57
Forfeited	(85,048)	9.21
Unvested balance as of September 30, 2025	3,589,538	$	9.50

(1) For the nine months ended September 30, 2025, 797,980 shares of Class A Common Stock were issued related to the vesting of RSUs in the period, net of shares withheld for the funding of employee tax obligations.

The following table provides additional data related to RSU award activity during the nine months ended September 30, 2025 and 2024:


	Nine months ended September 30,
	2025		2024

	in thousands (except years)
Total fair value of shares vested (1)	$	11,241	$	18,324
Unrecognized compensation expense	$	25,934	$	28,962
Weighted average period awards are expected to be recognized (in years)	2.56		2.93

(1) The tax impact related to vested RSUs for the nine months ended September 30, 2025 and 2024 was not material to the Company's Condensed Consolidated Financial Statements.

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Performance Restricted Stock Units

Market Condition PRSUs

In April 2022, the Company's CEO was granted 3,707,136 market condition PRSUs, which provide him the opportunity to receive up to 3,707,136 shares of Class A Common Stock. The award had a grant date fair value of approximately $19.2 million, which was estimated using a Monte Carlo simulation model. These PRSUs have both market-based and service-based vesting conditions. Shares of Class A Common Stock issuable under this award can be earned based on the achievement of the following stock price targets: (i) 25% of the shares can be earned when the stock price of the Class A Common Stock exceeds $20.00 per share for 60 consecutive days, (ii) 25% of the shares can be earned when the stock price of the Class A Common Stock exceeds $25.00 per share for 60 consecutive days, and (iii) 50% of the shares can be earned when the stock price of the Class A Common Stock exceeds $30.00 per share for 60 consecutive days. These market-based conditions must be met in order for the PRSUs to vest; therefore, it is possible that no shares will ultimately vest. If any of the market-based conditions are met, the PRSUs will vest contingent upon continued service through the earlier of three years after achievement of the stock price target or the end of the seven-year performance period. As of September 30, 2025, no market condition PRSUs had vested.

The Company will recognize the entire $19.2 million of compensation expense for this award over the requisite service period, regardless of whether such market-based conditions are met. As of September 30, 2025, unrecognized compensation expense related to this award was $9.2 million, which the Company expects to recognize over a period of 3.50 years.

The following table summarizes the assumptions and related information used to determine the grant-date fair value of the market condition PRSUs awarded in April 2022:


Inputs						Performance Restricted Stock Units
Weighted average grant-date fair value per share						$5.19
Expected stock volatility						35%
Expected term (in years)						7.0
Risk-free interest rate						2.5%
Dividend yield						—%

Performance Condition PRSUs

In March 2024, the Talent, Culture, and Compensation Committee (the "Compensation Committee") of the Board adopted another form of PRSU award agreement (the "2024 PRSU Agreement") to be used for awards of PRSUs to certain employees under the Company's 2021 Stock Incentive Plan.

PRSUs granted under the 2024 PRSU Agreement will be eligible to vest subject to the satisfaction of both performance-based and service-based conditions. The performance-based vesting condition will be satisfied contingent upon the Company's level of performance over the designated performance period (the "Performance Period") as measured against a financial performance target (the "Performance Target"), each as determined by the Compensation Committee. Following the end of the Performance Period, the Compensation Committee will determine the applicable attained performance level with payout percentages ranging from 35% to 200% (each, a "Payout Percentage") of the target number of PRSUs awarded. In the event of a Change in Control (as defined in the 2024 PRSU Agreement) before the end of a scheduled Performance Period, the Compensation Committee retains discretion to end the Performance Period early and measure performance levels as of a revised measurement date.

If both the service-based and performance-based vesting conditions are satisfied, the PRSU holder will be entitled to receive the number of shares of Class A Common Stock, if any, determined by multiplying the aggregate number of PRSUs subject to the applicable PRSU Agreement by the applicable Payout Percentage that corresponds to the level of achievement of the Performance Target pursuant to the payout formula approved by the Compensation Committee.

The amount of compensation expense ultimately recognized for PRSUs issued under the 2024 PRSU Agreement will be based on the Company's ultimate performance relative to the Performance Target. The amount of compensation expense recognized prior to the end of the Performance Period is dependent upon management's assessment of the likelihood of achieving the applicable payout levels. If, as a result of management's assessment, it is projected that a greater number of PRSUs will vest than previously anticipated, a life-to-date adjustment to increase compensation expense is recorded in the period when such determination is made. Conversely, if, as a result of management's assessment, it is projected that a lower number of PRSUs will vest than previously anticipated, a life-to-date adjustment to decrease compensation expense is recorded in the period when such determination is made.

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The following table provides a summary of the activity related to PRSUs granted under the 2024 PRSU Agreement during the nine months ended September 30, 2025:


			Performance Restricted Stock Units

Hagerty, Inc. 10-Q