Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.
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| Statement |
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| And we continue to feel good about the performance right now |
| Written premiums grew 16% and commission revenue grew 18% on strong underwriting results |
| We've been able to maintain our top line momentum while implementing actions that are driving a swift return towards historic double digit margins |
| We have delivered consistent low to mid-teens written premium growth over the last decade |
| Over the first nine months, we have grown written premiums by 16% on top of last year's 15% gains, and total revenue has jumped 28% compared to last year's 27% growth |
| Our marketplace is in its infancy, but we're very encouraged by the first year results and ability to deliver profitable growth and our move towards controlling our destiny and reducing frictional costs as a full stack insurer will allow us to capture more of the profit from our strong and stable underwriting results |
| Fast forward to today, during the first nine months of 2023, we have delivered adjusted EBITDA of $78 million a year-over-year improvement of $78 million |
| On the bottom line, we have driven 10 points of adjusted EBITDA margin expansion over the first nine months |
| And we're really pleased to be able to continue publishing, insights into the marketplace and we think it really helps people make informed decisions about buying and selling |
| I would point out that we are on track to deliver an 8 percentage point improvement in our adjusted EBITDA margins this year |
| This is even more impressive as we have continued to thoughtfully invest in our long term growth opportunities |
| As McKeel mentioned given the consistently strong visible top line momentum in our business, we are increasing our outlook for total revenue growth to 26% to 27%, powered by written premium growth of 15% to 16% as we add around a quarter of a million new members in 2023 |
| So the underlying business produced meaningfully improved net income results primarily driven by the significantly improved operating margins as we successfully execute on our profitable growth ambitions |
| In summary, we are creating a visible path to becoming a leaner, stronger, and more profitable company that can self-fund our high rates of growth year after year |
| The Hagerty brand and value proposition is resonating with consumers, we're seeing double digit rate increases as the industry endures unprecedented inflationary pressures |
| And our risk taking entity, Hagerty Reinsurance, earned premium over the first nine months jumped 32% due to the growth in written premium and our increased level of quota share to 80% as we assume more of the risk and premium associated with our stable underwriting capabilities |
| So the underlying strength in the core insurance business is a key driver |
| So, better top line performance, making some changes on the cost structure, keeping discipline on the cost structure, we've had a good first three quarters of the year |
| We believe our membership business known as Hagerty Driver's Club is an extra gear for our insurance business by helping fuel high customer satisfaction and retention |
| We deliver stable underwriting results in large part due to the passion and care that our members describe to their prized possessions |
| Earned premium grew 30% to $140 million driven by new written premium growth and the 10 point increase in our contractual reinsurance quota share in 2023 to 80% |
| And I think that's proving out this year very nicely |
| The financial rigor we have implemented over the last year is allowing us to maintain these high rates of growth, while delivering the bottom line results that will fund our growth ambitions and create value for shareholders over the coming years |
| Our adjusted EBITDA during the third quarter was $37 million, a $47 million improvement over the $10 million loss in the prior year period |
| Commission and fee revenue grew 21% to $103 million due to the written premium gains and the normalization of contingent underwriting commissions in the absence of Hurricane Kim |
| In the third quarter, we delivered 27% growth in total revenue to $276 million with written premium growth of 15% powered by robust growth from the new business count and a bump in retention |
| Our productivity initiatives will drive strong cash flow generation over the coming years on top of the $132 million of year-to-date operating cash flow |
| And the way that fourth quarter started, October was another strong month consistent with what we saw earlier in the year |
| So, for us we refer to that as enthusiast vehicles, and it too is performing very, very well |
| But I think it's really important for a team of 1700 people at Hagerty, to stop and to celebrate all that we have accomplished over the last 12 months, simply put we are successfully executing on the strategy we set forth at the end of 2022 to significantly improve our profitability without negatively impacting our high rates of organic growth |
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| So I think you're asking, it's a challenging broader market for standard auto and what implications that has for our ability to write new business -- Pablo Singzon To the extent that you partner with these institutions, and you might use the same distributors, right, recognizing that you have a different book, but there is some -- there's still some interconnection there |
| We definitely saw a softening at the top end of car market starting back in Monterey in August, where virtually all of the live auctions saw a little bit of softness as well as, kind of weakening interest in the top end of the market |
| And on the liability side, which we had discussed in previous calls had some worse results last year largely due to, several years of liability claims coming through due to the pandemic in a one year period of time |
| First, I believe I read something from Hagerty insider on the strength of the collectible car market weakening a bit this year |
| We are largely through what is thus far been an uneventful cat season in the Atlantic |
| Expense growth was too fast, technology spend, too great, and we weren't delivering the flow through you would expect from a rapidly scaling business model built around a great brand |
| They're worried about availability in certain markets like California, but we've still been open for business with them, even in states like California |
| Operating profit included a $4 million loss and impairment related to the termination of the garage and social joint venture and failed drive share |
| And both Garage and Social, and DriveShare were loss making |
| So it might slow down a little bit at the volume at the top end |
| So the first question is to what extent is Hagerty's ability to write the business implements by disruption in the broader personalised market price, whether it's customers seeing large increases under renewals or insurers not going through the right business in certain states |
| We're mindful of the fact that the larger industry is very, very focused on their own sometimes challenged results |
| And the disruption has really been almost two years long |
| Until then, never stop driving |
| They are subject to a variety of risks and uncertainties that could cause the actual results to differ materially from our expectations |
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