Hagerty (HGTY) Q4 2024: Record 279K New Members Drive 20% Revenue Growth Amid Elevated Tech Investment
Hagerty sustained robust top-line momentum with a 20% revenue increase fueled by record membership gains and solid insurance premium growth. The company is investing $20 million in a multi-year technology transformation to enable scalable growth, which will temper near-term margin expansion but position Hagerty for accelerated profit in 2026 and beyond. The ramp of the State Farm Classic Plus program and expansion of specialty insurance offerings underpin the long-term doubling of policy count ambition by 2030.
Summary
- Membership Expansion as Growth Engine: Record 279,000 new members in 2024 reinforce Hagerty’s deepening engagement model.
- Technology Investment Tradeoff: $20 million elevated spend in 2025 slows margin gains but lays foundation for scalable growth.
- Strategic Partnership Scale-up: State Farm Classic Plus rollout to 25 states initiates a multi-year premium growth acceleration.
Business Overview
Hagerty is a specialty vehicle insurance provider and automotive enthusiast brand, generating revenue primarily through insurance premiums, membership subscriptions, and marketplace transactions related to collectible and enthusiast vehicles. Its core segments include specialty insurance underwriting via its managing general agent (MGA) business, the Hagerty Drivers Club membership program, and the Broad Arrow marketplace for collector car sales and financing. Hagerty’s business model leverages deep automotive expertise and a strong community brand to drive customer loyalty and recurring revenue.
Performance Analysis
Hagerty reported full-year 2024 total revenue of $1.2 billion, a 20% increase year-over-year, driven by a record addition of 279,000 new members and a 15% rise in written premiums to $1.044 billion. The company’s insurance business remains the backbone, with a consistent 89% policy retention rate and an 8% increase in insured vehicles to 2.6 million. Marketplace revenue nearly doubled, reaching $54.3 million, reflecting expanding car sales activity and auction events.
Profitability improved markedly, with operating income rising 538% to $66 million despite a $27 million pre-tax impact from hurricanes Helene and Milton. Operating margins expanded 450 basis points year-over-year, supported by disciplined expense management that kept general and administrative costs down 3.4%. Adjusted EBITDA grew 41% to $124.5 million, and net income surged 178% to $78.3 million, reflecting both operational leverage and improved investment income from a diversified portfolio.
- Robust Insurance Growth: Written premium growth of 15% aligns with Hagerty’s decade-long compound annual growth rate, underscoring the predictability of its recurring revenue model.
- Marketplace Momentum: Marketplace revenue growth of 90% evidences expanding ancillary services that complement core insurance offerings.
- Margin Expansion Despite Catastrophes: Hurricanes and wildfires impacted loss ratios and margins, yet Hagerty’s claims service and reinsurance arrangements mitigated bottom-line effects.
The results demonstrate Hagerty’s ability to scale while maintaining strong customer engagement and profitability, although near-term margin expansion will moderate due to significant technology investments in 2025.
Executive Commentary
"This quarter marks the eighth straight quarter in a row of executing on our strategy to deliver high rates of top line growth while more efficiently translating that revenue into profitability and cash flow. We have a long straightaway ahead, given only a 5% share today of the 48 million collectible car opportunity in the U.S."
McKeel Hagerty, Chief Executive Officer and Chairman
"In 2025, these investments aggregate to $20 million of elevated spend, primarily in our new technology platform, Duck Creek... While these multi-year implementations are complex and expensive, APEX will simplify and improve the member experience with enhanced security and workflow automation, all while lowering marginal operating costs."
McKeel Hagerty, Chief Executive Officer and Chairman
Strategic Positioning
1. Expanding Specialty Insurance Offerings
Hagerty is broadening its underwriting aperture with new products targeting more modern enthusiast vehicles, addressing a significant underpenetrated segment. The launch of Enthusiast Plus and the State Farm Classic Plus program, which will cover over 25 states in 2025, are key growth levers expected to accelerate written premium growth and policy count expansion.
2. Technology Platform Transformation
The multi-year APEX program, centered on the Duck Creek insurance software platform, is a strategic investment to replace legacy systems that limit scalability and operational efficiency. This cloud-based architecture will enable automation, enhanced risk segmentation, and improved member self-service, positioning Hagerty for accelerated growth and margin expansion starting in 2026.
3. Integrated Membership and Marketplace Ecosystem
Hagerty leverages its 876,000 paid members in the Hagerty Drivers Club to drive engagement, retention, and cross-promotion of marketplace offerings. The marketplace business, including Broad Arrow auctions, is expanding internationally, notably with a high-profile auction at Villa d’Este in Italy, enhancing Hagerty’s global footprint and fueling private party sales and financing.
4. Capital and Margin Discipline
The company maintains a disciplined focus on cost containment and capital allocation, with general and administrative expenses down 3.4% in 2024 despite growth initiatives. Reinsurance arrangements and a diversified investment portfolio support margin stability amid catastrophe events and market volatility.
5. Partnership-Driven Growth Model
Hagerty’s relationships with nine of the top ten U.S. car insurance companies, including the significant State Farm partnership, underpin its distribution strategy. These alliances provide access to a broad customer base and reinforce Hagerty’s position as the leading specialty insurer in the collectible vehicle market.
Key Considerations
Hagerty’s 2024 results and 2025 outlook highlight several critical factors shaping its trajectory:
- Technology Investment Impact: Elevated platform spend in 2025 creates a temporary profit margin pinch but is essential for scalable growth and operational efficiency.
- Policy Count Doubling Ambition: Targeting three million policies by 2030 depends heavily on successful State Farm Classic Plus rollout and new product adoption.
- Catastrophe Exposure and Claims Service: While catastrophe losses impact loss ratios, Hagerty’s rapid claims response and reinsurance mitigate financial risk and bolster member loyalty.
- Marketplace International Expansion: European auction presence signals strategic intent to grow beyond the U.S. and diversify revenue streams.
- Tariff and Supply Chain Risks: Inflationary pressures on parts costs are expected to be gradual and less acute than in broader auto markets, given the fragmented supply chain for collectible vehicles.
Risks
Hagerty faces risks from natural catastrophes, regulatory pricing approval delays, and execution challenges related to its technology transformation and scaling of new insurance products. The company’s reliance on strategic partnerships introduces dependency risk, and macroeconomic factors could influence collectible vehicle market dynamics and consumer spending behavior.
Forward Outlook
For the first quarter of 2025, Hagerty anticipates continued top-line growth driven by the State Farm Classic Plus program expansion and strong retention. Full-year 2025 guidance includes:
- Written premium growth of 13 to 14 percent
- Total revenue growth of 12 to 13 percent
- Net income growth of 30 to 40 percent
- Adjusted EBITDA growth of 21 to 29 percent
Management highlighted that the elevated $20 million technology investment and approximately $11 million pre-tax wildfire impact will moderate margin expansion in 2025, with substantial profit acceleration expected in subsequent years.
Takeaways
Hagerty’s Q4 and full-year 2024 results reflect a company successfully scaling its niche specialty insurance and automotive enthusiast ecosystem while investing heavily in foundational technology to support future growth.
- Consistent Growth Engine: The record addition of 279,000 new members and 15% premium growth confirm Hagerty’s strong brand and customer loyalty in a specialized market.
- Strategic Investment Horizon: The deliberate tradeoff of near-term margin expansion for long-term scalable infrastructure shows management’s focus on sustainable value creation.
- Partnership Leverage: The State Farm Classic Plus program and other partnerships are pivotal to Hagerty’s goal of doubling its policy base by 2030, representing a material growth inflection point.
Conclusion
Hagerty’s fourth quarter and full-year 2024 results underscore the company’s leadership in specialty vehicle insurance and its commitment to investing in technology and partnerships that will drive accelerated growth and profitability in the coming years. While near-term margins face pressure from elevated platform investments, the strategic positioning and strong member engagement set the stage for sustained compounding value creation.
Industry Read-Through
Hagerty’s performance offers insight into the growing importance of niche specialization and customer engagement in insurance markets, where deep expertise and community building can drive durable competitive advantages. Its technology transformation highlights the necessity for legacy insurers to modernize platforms to scale effectively. The company’s success in leveraging partnerships reflects a broader industry trend toward collaborative distribution models. Additionally, Hagerty’s ability to manage catastrophe risk and maintain strong retention amid inflationary pressures provides a useful case study for insurers navigating volatile macro environments.