Hagerty Raises 2026 Profit Outlook as Adjusted EBITDA Climbs 43%

Hagerty (HGTY) raised its 2026 profit outlook after adjusted EBITDA increased 43% in the first nine months of the year, as growth in policies and premiums offset the accounting effects of its new fronting arrangement with Markel. The company now expects full-year adjusted EBITDA of $305 million to $315 million, up from its previous forecast of $270 million to $280 million.

Hagerty also increased its 2026 net income forecast to between $48 million and $60 million from $18 million to $30 million. The projection includes about $199 million of pre-tax transitional costs tied to deferred ceding commissions on policies written before the Markel arrangement took effect on Jan. 1, 2026.

For the nine months ended Sept. 30, adjusted EBITDA rose to $257 million from $180 million a year earlier. GAAP net income fell to $32 million from $121 million, reflecting $189 million of transitional costs associated with the Markel arrangement. Those costs declined from $89 million in the first quarter to $64 million in the second and $36 million in the third, and Hagerty expects approximately $10 million in the fourth quarter as the remaining 2025 policies expire.

Third-quarter adjusted EBITDA increased to $97 million from $59 million, while net income declined to $36 million from $46 million. The quarter included $36 million of pre-tax fronting-related transitional costs.

Premium and policy growth

Written premium increased 18% to $1.10 billion during the first nine months of 2026. Hagerty added a record 402,000 new members during the period, lifting policies in force by 18% year over year to 1.9 million members. Retention was 88.2%.

Earned premium rose 42% to $757 million after Hagerty Re’s quota share increased to 100% under the Markel Fronting Arrangement. Under the new structure, Hagerty Re earns all of the premium and assumes all of the risk, while Markel issues policies and provides administrative support in exchange for a fronting fee of about 2%.

The shift gives Hagerty expanded underwriting and claims authority but materially changes the presentation of its revenue and expenses. Commission and fee revenue declined 84% during the first nine months because intercompany commission revenue and related ceding commission expenses are eliminated in consolidation.

As a result, total revenue fell 7% to $1.02 billion despite growth in written and earned premiums. Third-quarter revenue declined 9% to $354 million. Hagerty said the lower reported revenue reflected the accounting impact of the Markel transition rather than a reduction in premium volume.

Hagerty Re reported a loss ratio of 37.8% and a combined ratio of 85.2% for the first nine months. Loss and loss-adjustment expenses included $32 million of favorable estimate changes: a $26 million reduction in estimated current-year losses recorded in the third quarter and a $6 million reduction related to the 2025 accident year recorded in the first quarter.

Marketplace and membership businesses

Marketplace revenue increased 8% to $97 million, supported by higher auction sales and increased financing revenue following an expansion of the Broad Arrow Capital credit facility. Membership and other revenue rose 4% to $65 million, including 10% growth in Hagerty Drivers Club membership revenue.

Net investment income increased 29% to $34 million, while net investment gains totaled $6 million for the nine-month period.

Updated 2026 outlook

Hagerty expects 2026 written premium of $1.385 billion to $1.397 billion, representing growth of 16% to 17% from 2025. That range was unchanged from the prior outlook.

The company now forecasts revenue of $1.34 billion to $1.354 billion, compared with its previous range of $1.325 billion to $1.34 billion. Revenue would still be 7% to 8% below 2025 because of the accounting treatment associated with the fronting arrangement.

Hagerty’s operating priorities include expanding its State Farm rollout, improving technology for agent and business-to-business distribution, investing in claims handling and implementing the Duck Creek platform. The company is targeting 3 million policies in force by 2030.

The transition also increases Hagerty’s exposure to underwriting volatility because Hagerty Re now assumes 100% of the risk on policies written under the Markel arrangement. The company identified catastrophe losses, claims frequency and severity, pricing of new products, reinsurance counterparty risk, regulatory obligations and technology disruptions among its principal uncertainties. Execution risks also include the State Farm rollout, Broad Arrow’s auction and financing strategies, and the integration and expected benefits of the Bennetts Motorcycling Services acquisition.