Hagerty, Inc. (HGTY): BCG Matrix [Dec-2025 Updated]

Honestly, looking at Hagerty, Inc.'s (HGTY) late 2025 portfolio, it's a classic story of a strong core funding big swings. You've got your core insurance business printing cash-expecting $170 million to $176 million in Adjusted EBITDA-while simultaneously pouring fuel on high-growth 'Stars' like specialty insurance seeing 13% written premium growth. But the real drama is in the 'Question Marks,' where the Marketplace segment is exploding at 135% revenue growth but still needs to prove it can scale profitably, all while the company manages the drag of legacy IT costing $20 million to fix. Let's dive into the four quadrants to see exactly where you should expect capital to flow next year.

Background of Hagerty, Inc. (HGTY)

You're looking at Hagerty, Inc. (HGTY) and trying to map out its business units for a strategic review, so let's lay down what the company actually is as of late 2025. Hagerty, Inc. isn't just a standard insurance carrier; it's built itself as the world's largest provider of specialty insurance for classic vehicles, wrapped up in a broader automotive enthusiast brand. The company's stated purpose is to save driving and fuel car culture for future generations. That mission is supported by a business model that intentionally blends insurance, membership services, and a marketplace into a single ecosystem for car lovers.

The roots of Hagerty, Inc. go back to 1984 when it started by providing insurance for wooden boats, but the pivot that defined its future came in 1991 when it moved into classic car insurance. Today, its core offerings include the Guaranteed Value® specialty vehicle insurance, the Hagerty Drivers Club (HDC) membership, the Hagerty Marketplace for buying and selling collector vehicles, and the industry-standard Hagerty Valuation Tool. This integrated approach is key; for instance, the Hagerty Drivers Club acts as the main anchor of this ecosystem and boasts more than 900k paid members as of the third quarter of 2025.

Financially, Hagerty, Inc. has shown strong momentum leading into the end of 2025. For the first nine months of the fiscal year, the company reported total revenue growth of 18% year-over-year, hitting a record $1.0683 billion. Profitability is accelerating even faster; year-to-date net income for that same nine-month period jumped 73% to $120.7 million. The main insurance product, Written Premium, climbed 13% to $934.4 million over the first nine months of 2025.

What's interesting from a growth perspective is how quickly its non-insurance revenue streams are scaling up. The Marketplace revenue, for example, surged by 135% year-to-date in 2025. This performance led Hagerty, Inc. to raise its full-year 2025 outlook for the second time, now projecting Total Revenue growth in the 14-15% range and Net Income growth between 58-65%. The company is defintely translating its niche focus into strong financial results. As of Q3 2025, the trailing twelve-month revenue stood at approximately $1.36 billion.

The company's distribution is also telling; the direct channel accounts for roughly 45% of its total business, leveraging its strong brand equity for organic, low-cost customer acquisition. Furthermore, Hagerty, Inc. has exclusive arrangements with nine of the top ten national auto insurers, which is a significant competitive advantage because standard carriers aren't equipped to handle the specialized underwriting for appreciating collectibles. By the end of the first nine months of 2025, the total number of insured vehicles reached 2.7 million.

Hagerty, Inc. (HGTY) - BCG Matrix: Stars

You're looking at the engine room of Hagerty, Inc. (HGTY) right now, the segment where market share is high and the market itself is still expanding rapidly. These are the businesses that demand capital to maintain their lead, but they are the ones that will secure the future profitability you're after.

The core Specialty Vehicle Insurance business is showing serious momentum. For the first nine months of 2025, Written Premium growth year-to-date hit 13%, bringing the total Written Premium to $934.4 million. This growth is being fueled by strategic distribution wins, like the State Farm Classic Plus Program. This major partnership is actively rolling out across more than 25 states in 2025, which is accelerating new business count month-over-month. October saw the highest Policy in Force or PIF growth in Hagerty, Inc.'s history, driven by these State Farm policy conversions ramping up.

Underwriting performance in this Star segment is defintely best-in-class. For the year-to-date through Q3 2025, the reported loss ratio for Hagerty Re stood at 42.1%. To put that in perspective, major property and casualty peers like Travelers reported combined ratios around 92% and AIG around 86.8% in recent quarters, while the general industry average loss ratio is cited around 68%. This highlights the premium positioning of Hagerty, Inc.'s niche focus.

Here's a quick look at how that underwriting strength compares:

The overall financial outlook reflects this strength. Hagerty, Inc. has raised its full-year 2025 guidance again, now projecting total revenue growth in the range of 14-15%. This translates to a targeted total revenue between $1.368 billion and $1.380 billion for the full year 2025. This investment phase, which includes over $20 million in elevated spend for technology like Duck Creek and staffing for the State Farm partnership, is what keeps these Stars consuming cash while they build market dominance.

The key drivers supporting this Star positioning include:

• YTD Q3 2025 Written Premium growth: 13%.
• Projected 2025 Total Revenue Growth: 14-15%.
• State Farm Classic Plus rollout: Over 25 states in 2025.
• YTD Q3 2025 Total Revenue: $1,068.3 million.

If Hagerty, Inc. maintains this market share as the high-growth niche matures, these units are set to transition into Cash Cows. Finance: draft 13-week cash view by Friday.

Hagerty, Inc. (HGTY) - BCG Matrix: Cash Cows

You're looking at the core engine of Hagerty, Inc. (HGTY) here, the business units that generate the surplus cash needed to fund the Stars and Question Marks. These are the high market share, low growth segments that provide stability.

Established Commission and Fee Revenue: The stable, high-retention book of specialty policies is the bedrock. Year-to-date through the third quarter of 2025, Commission and fee revenue reached $380.7 million, marking a 14% increase year-over-year. Looking just at the third quarter of 2025, this revenue stream delivered $137.1 million, which was an 18.0% jump compared to the third quarter of 2024. This consistent flow is exactly what you expect from a market leader in a mature segment.

Hagerty Drivers Club (HDC): This is your recurring revenue stream with strong stickiness. For the first quarter of 2025, Hagerty Drivers Club (HDC) paid members grew by 7% year-over-year, reaching approximately 889,000 members. By the end of the third quarter of 2025, the community expanded further to over 920,000 members.

Here's a quick look at the core metrics supporting this segment's Cash Cow status:

• Hagerty Drivers Club paid members (Q1 2025): Approximately 889,000.
• Policies in Force Retention (as of June 30, 2025): 88.7%.
• Policies in Force Retention (Q3 2025): 89%.
• Total insured vehicles (as of Q3 2025): 2.7 million.

Adjusted EBITDA: The financial output from these established operations is robust. For the full year 2025, Hagerty, Inc. anticipates delivering between $170 million to $176 million in Adjusted EBITDA. This projection represents a growth rate of 37% to 41% compared to 2024. Year-to-date through the third quarter of 2025, the company already achieved an Adjusted EBITDA of $153.1 million, which is a 46% increase year-over-year. This cash flow is explicitly earmarked to fund all growth investments.

Brand Equity: The core Hagerty brand acts as a low-cost asset reinforcing the insurance moat. This intangible value translates into superior customer metrics that keep acquisition costs relatively low for the core insurance business.

The strength of the brand and customer loyalty can be quantified:

You see the results of this strong brand equity in the retention figures; keeping customers is cheaper than finding new ones, so defintely these Cash Cows are where the operational leverage is most visible.

Hagerty, Inc. (HGTY) - BCG Matrix: Dogs

You're looking at the areas within Hagerty, Inc. (HGTY) that consume resources without delivering commensurate returns, the classic Dogs of the portfolio. These units are characterized by low market share in low-growth areas, and the capital tied up here needs careful consideration.

The most concrete drag comes from the Legacy IT Infrastructure. Modernization efforts, specifically the transition to the Duck Creek platform, require a significant, non-routine capital outlay. For fiscal year 2025, Hagerty, Inc. budgeted $\text{\$20 million}$ of elevated spend, primarily directed at this new technology platform. This investment is necessary to replace aging systems that are acting as a drag on efficiency, even as core businesses show strong growth.

To frame the context of this necessary investment against the backdrop of the company's overall financial activity through the third quarter of 2025, consider these figures:

The Redundant Systems Costs are embedded within the technology transition. Running parallel systems during the Duck Creek platform migration creates near-term operating expense pressure. This is reflected in the year-to-date increase in software-related costs contributing to the $\text{11.5%}$ rise in General and administrative expenses through the third quarter of 2025.

For the Non-Core, Low-Conversion Media, the lack of direct funnel feed suggests these activities are not generating the high relative returns seen elsewhere. While specific segment revenue is not isolated, the broader context shows high growth in other areas, making these non-core efforts relatively weaker performers:

• Year-to-date 2025 Marketplace revenue reached $\text{\$89.9 million}$, showing a $\text{135%}$ year-over-year increase through Q3 2025.
• Year-to-date 2025 Net Income stood at $\text{\$120.7 million}$ through Q3 2025.
• Year-to-date 2025 Adjusted EBITDA reached $\text{\$153.1 million}$ through Q3 2025.
• Year-to-date 2025 Depreciation and amortization was $\text{\$18.3 million}$ as of Q2 2025.

These units are candidates for divestiture or severe pruning, as expensive turn-around plans rarely succeed when the market itself isn't growing. Finance: draft a zero-based budget review for all non-insurance/non-marketplace content spend by December 15th.

Hagerty, Inc. (HGTY) - BCG Matrix: Question Marks

You're looking at the high-potential, high-cash-burn units of Hagerty, Inc. (HGTY) here-the Question Marks. These are areas in rapidly expanding markets where the company has yet to secure a dominant position, meaning they need serious capital infusion to climb the growth curve or risk becoming Dogs. For Hagerty in 2025, this quadrant is defined by nascent revenue streams and major strategic bets.

Marketplace Segment (Broad Arrow)

The Marketplace segment is showing the explosive growth characteristic of a Question Mark. For the year-to-date through Q3 2025, this segment generated $89.9 million in revenue, marking an increase of 135% year-over-year. To put that growth in context, Q3 2025 alone saw Marketplace revenue hit $34.2 million, a 58% jump from Q3 2024. Still, relative to the total revenue of $1,068.3 million year-to-date, this segment remains a small revenue base requiring significant investment to capture more of the market share. It's a high-growth area, but the returns aren't yet scaled.

Here's a quick look at the revenue dynamics:

Enthusiast+ Product Launch

The launch of new products, such as the Enthusiast+ offering, represents a classic Question Mark scenario. These are new insurance solutions designed to capture a broader segment of the enthusiast market beyond traditional classics. The expansion of the Drivers Edge Enthusiast+ program into Wisconsin on September 10, 2025, shows active market penetration efforts. The underlying technology platform, built on Duck Creek, is a key investment area, with elevated technology spend aggregating to $20 million for the full year 2025. You need market adoption here to move this from a cash consumer to a Star.

• Platform modernization uses Duck Creek technology.
• Elevated technology spend for 2025 is approximately $20 million.
• Enthusiast+ program expansion is an active growth strategy.

European Market Expansion

International expansion, particularly into Europe, fits the Question Mark profile perfectly: massive potential growth but requiring substantial upfront capital to build share against established local players. Management has signaled this is a focus area, noting large investments in future growth, including building our European Marketplace team. Replicating the U.S. market share and profitability overseas is a capital-intensive effort that will consume cash for the near term while Hagerty, Inc. (HGTY) works to gain traction.

New Markel Fronting Arrangement

The proposed shift in the fronting arrangement with Markel, set to begin January 1, 2026, is a high-stakes move designed to convert future profitability potential into current control, a key strategic decision for a Question Mark. This move aims to elevate a segment that currently has lower direct returns due to fee structures. Under the new structure, Hagerty Re will assume 100% of the underwriting and investment economics. This contrasts sharply with the current setup where Hagerty Re assumes 80% of the risk and pays a 47% ceding commission to Markel.

The cost of this control is an initial fronting fee of 2% paid to Markel. The upside is significant: the transition will simplify financial reporting by eliminating commission revenues and ceding-commission expenses from consolidated statements. Furthermore, Markel will remain a 23% shareholder in Hagerty, Inc. (HGTY) post-arrangement. This is the investment needed to potentially turn a high-growth area into a Star.

Here are the key financial mechanics of the transition: