Greetings. Welcome to the Hagerty Full Year 2021 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. A short video will be played to the webcast followed by prepared remarks from Hagerty.

Good afternoon, ladies and gentlemen. Thank you for joining us on Hagerty Fourth Quarter and Full-Year 2021 Earnings Conference Call. Please note that this call will be simultaneously webcast on the Investor Relations section of the Company’s corporate website at investor.hagerty.com. Our first Shareholder Letter covering this period is also posted on the IR website. Joining the call today are McKeel Hagerty, Chief Executive Officer; and Fred Turcotte, Chief Financial Officer. Before we start, I would like to remind everyone that the discussion today may contain statements related to our business that may be considered forward-looking including statements concerning our expected future business and financial performance; our ability to maintain existing members and acquire new ones; our plans to expand market share, including planned investments and partnerships; expectations regarding key operational metrics and other statements regarding our plans and prospects. Forward-looking statements are often identified with words such as we expect, we anticipate, we believe or similar expressions. These statements reflect our view only as of today, March 24, 2022, and should not be considered or viewed as of any subsequent date. We do not undertake any obligation to update or revise any forward-looking statements. Forward-looking statements do not promise or guarantee future performance and are subject to a variety of risks and uncertainties that could cause actual results to differ materially from our expectations. For a discussion of material risks and other important factors that could affect our actual results, please refer to those contained in our Form 10-K filed with the SEC this evening, which is available on the Investor Relations section of our website and on the SEC’s website at sec.gov. Finally, during today's call, we will refer to certain non-GAAP financial measures. A discussion of these non-GAAP financial measures along with reconciliations to the most directly comparable GAAP measure is included in our earnings release, stockholder letter, investor deck and Form 10-K, copies of which can be found on our Investor Relations website. Unless otherwise noted on today's call, all comparisons are on a year-over-year basis. And with that, I'd like to turn the call over to McKeel Hagerty. McKeel?

Hello, I'm McKeel Hagerty, CEO of Hagerty. This is our first earnings call as a public company. Before we dive into the financials, I want to tell you a little bit about Hagerty and what we're all about. We're more than just a financially strong company with a long track record of robust annual returns and a core business built on steady and sticky contractual revenue, strong branding, and a culture that consistently delivers net promoter scores in the 80s. We're also more than just a company with outstanding growth potential. We're a company about the enduring 130 year old love affair between people and cars. My parents started Hagerty in 1984 because they couldn't find anyone willing to insure the vintage wooden boats they loved so much. To them, it was all about the passion and making it easier for people to enjoy their favorite pastime without having to explain how special their boat was or how much it was worth. We simply took that approach and expanded it to enthusiast cars. Then we took it a lot farther. Yes, our core business, insurance is 92% of our revenue right now. That's a huge strength. It's the bedrock beneath our financial strength, stable growth, and our recurring revenue. We already insure more than 2 million vehicles and there's a lot more room to grow as you'll see on our deck. Over 500 million people around the globe express an interest in cars. 69 million people in the United States alone declare themselves automotive enthusiasts, 43 million vehicles in North America alone that fall into our insurance target, and 72% of all vehicles went up in value in 2021, with an 8% to 9% historical annual appreciation. But we have also been making investments to capitalize on the passion side of the business, automotive events and driving experiences, seller media content, a robust membership organization, and more, all centered around helping people dive deeper into what they love to do. We are already seeing the benefits of our investments with growing persistence and steady increases in lifetime value. The more branded products we offer, the more value we create and the more share of wallet we earn. Why? Because driving is an enriching human experience on many levels. People grow attached to these objects called automobiles, which represent freedom, self-expression, fun, competition, status, community, friends, and groups. Why is that important to you as an investor? Because the simple fact is that car people, our people, wake up in the morning asking, what do I need to do to protect my beloved automobile? How do I enhance my automotive experience or knowledge? How do I upgrade my car or collection of cars? And how do I spend more time with my car and other car enthusiasts? That's incredibly powerful. People generally spend discretionary income on things that bring them joy. Especially since COVID, which taught us that people doubled down on their pastimes and hobbies. Commuting miles went down while pleasure miles went up. So, that's who we are at Hagerty. We are the only company building an ecosystem of automotive services, data and intelligence offerings, and entertainment to help car lovers get more out of these mechanical devices they are attached to. It's a massive goal with a large and growing total addressable market. We are built to tap into and grow this market for the long term. Lastly, one question that has been consistently raised since we started the process of becoming a publicly-listed company, is what we think the future of cars and driving will look like in the age of EVs or even autonomous vehicles? It's a valid question that we engage with on a number of levels. First, we love EVs and think they will be an important extension of the history of automobiles and driving in the future. This will be especially true of the higher performance models and those built with aspirational designs. Our world of enthusiast vehicles is large and has many areas of interest, and we view our role as stewards of driving, automotive competition, and the joy of owning something fun to drive. Therefore, our purpose as an organization is to save driving and car culture for future generations. We know that this will happen gradually. So, this is why we set out on a mission to grow a global organization large enough and profitable enough to help serve this larger purpose. This is why going public was so important to us. Now, let's move on to the financials. Fred?

Thank you, McKeel. I wanted to start by sharing how honored I am to welcome all of you to our first earnings call as a public company. As you know, Hagerty went public on December 2, 2021, and we could not have done it without the support of one team Hagerty, all of our members, customers, and partners, both existing and new to the company. I also wanted to thank the investors and analysts who have shown interest and taken the time to get to know our company, dig into the financials, and share their perspectives on the business. As McKeel mentioned earlier, we have a large and growing total addressable market, which gives us a substantial runway for growth across several product offerings. There is tremendous room ahead that we believe will allow us to achieve our stated long-term purpose and mission. We have confidence in our ability to monetize the genuine passion and love for cars in our world and are working to earn more of the discretionary spending in our markets, utilizing our omni-channel distribution and integrated insurance, membership and marketplace platform across the automotive ecosystem we have built over the last decade. Our 2021 results continue our long-term drive for persistent market-leading top-line growth, which has grown 27% on a compound annual growth basis over the last three years. This past year, we expanded our Hagerty community by 14% to 2.4 million members and we increased the number of insured vehicles by 13% to 2.1 million. We grew our list of unique automotive events by adding The Amelia, McCall’s Motorworks, and the Detroit Concours d’Elegance. We increased our community centers for automotive enthusiasts by adding three garage and social locations in Delray Beach, Florida; Seattle, Washington; and Toronto, Ontario, Canada. We efficiently utilize digital media to facilitate social interaction with the Hagerty brand with 1.9 million YouTube subscribers, enjoying 7.2 million hours of Hagerty content. And we provided more than 5.4 million vehicle values that were researched on our Hagerty Valuation Tools. Pivoting to our 2021 financial results, all of which are compared on a year-over-year basis. Total revenue grew 24% to $619.1 million. Commission and fee revenue grew 15% to $271.6 million, driven by 245,000 new business policies and solid policy retention above 89%. Membership and other revenue increased 21% to $51.7 million benefiting from an increase in total members of 14%, a pickup in HDC paid membership, and a continued new membership adoption rate of 75% of new insureds. Finally, earned premium grew 34% to $295.8 million driven by new written premium growth, policy retention, and the continued expansion of our U.S. contractual quota share. We continue to benefit from our increasing share of reinsurance underwriting revenue under our long-term contracts in the U.S., Canada, and the UK. Importantly, this is incremental revenue we earn on top of the revenue we generate by selling new insurance policies and renewing above 89% of existing ones. Hagerty Re, our 100% owned Bermudian subsidiary was capitalized with $38 million and finished '20 and '21 with retained earnings of $44 million and $70 million respectively. In 2021, this business earned $32 million in pre-tax income, implying a 34% pre-tax return on average equity. We were extremely excited to see revenue per member increase by 13% to $499, as members expanded their use of our fee-based product and service offerings, and we realized the impact of a higher quota share percentage of underwriting income. Written premium grew 17% year-over-year to $674.3 million with solid underwriting performance in all distribution channels. We are also very pleased to see that our policy retention levels remained very strong at above 89%. We remain extremely pleased with our national insurance partner strategy, the top 10 of which grew 17% on a compound annual growth rate basis over the last three years. We believe deepening our penetration rate with these partners, alongside the addition of new partners, such as State Farm, will continue to provide a significant level of long-term recurring contractual revenue growth. Importantly, our loss ratio remained stable year-over-year at 41%. We have been able to implement pricing increases to keep loss costs as a percentage of earned premium at this level. We are also delighted to see an increase in new members joining our community for car lovers through Hagerty Drivers Club, as paid member count increased 12% to 719,000. We think this is a testament to the numerous value-added services HDC provides our members. We expect to expand our service offerings in 2022. Summarizing, we continue to benefit from higher contractual insurance revenue from our increasing quota share, organic premium growth, and new revenue sources from our distribution relationships, media partnerships, owned events, and Hagerty Garage + Social, vehicle storage and enthusiasts club locations. Turning to profitability. For the full year of 2021, we reported an operating loss of $10.1 million compared to operating income of $15.8 million in 2020. Net loss was $61.4 million versus net income of $10.1 million a year earlier. Earnings per share was negative $0.56, based on our weighted average shares of Class A common stock outstanding, excluding shares attributable to redeemable Class V shares, which are required to be treated as a redeemable, non-controlling interest in our financial statements. Our 2021 full year reported results were adversely affected by several unique and non-recurring expenses associated with our New York Stock Exchange listing and Up-C organizational structure. We recorded a fair value loss of $42.5 million related to our private and public warrants, which are required to be treated as liabilities versus equity and marked to market under GAAP rules in our audited financial statements. We also recorded a $9.3 million one-time charge for accelerated vesting in connection with the determination of our existing long-term executive incentive plan. In addition, in connection with our digital and system transformation project, we retired a third-party policy management system, recording a $1.7 million loss on disposal for capitalized software. And we incurred certain other non-recurring losses of $2.2 million. These adjustments have been included in our adjusted EBITDA results. Importantly, not included in adjusted EBITDA, we incurred $31 million of additional non-recurring expenses in 2021 to scale operations to onboard the State Farm partnership and to launch the Hagerty Marketplace initiative. These expenses include substantial pre-revenue costs for the design, development and integration of new digital platforms with new and existing internal and distribution partner legacy insurance management and agency reporting systems. In order to accommodate the scale that these new initiatives command, for example, the State Farm partnership increases our existing policies enforced by 37%. In order to accommodate that, investments were made to add new team members in the sales, service, and agency distribution areas, stand up a new member service center in Dublin, Ohio, and increased network and infrastructure capabilities. We believe the underlying performance of the business in 2021 should be viewed exclusive of these costs. Our contribution margin or the amount of total revenue that exceeds variable costs and is available to pay fixed costs and/or reinvest in growth was 26% in 2021. We use contribution margin to analyze the relationship between costs, volume, and profit as revenue grows. Our adjusted EBITDA was $25.4 million in 2021. We believe adjusted EBITDA is an important supplemental measure of operating performance on a consistent basis as it removes the impact of items which are non-recurring and not a direct result from our core operations. We expect to use this measure, as well as contribution margin going forward. Looking ahead, we believe we are well positioned to invest for long-term growth with $275 million of unrestricted cash on our balance sheet at 12/31/21 and increased flexibility gained by our renegotiated syndicated credit facility, which provides an additional $145 million in funds as of 12/31/21. We will continue to invest in all areas as we knit together our new insurance, membership and marketplace sales, service and experiential platforms. Our digital platform transformation in these areas is on plan to be substantially completed by late 2023. We view the delays in the launch of our State Farm relationship and the Hagerty Drivers Club membership as timing related, and we remain extremely excited about both opportunities. State Farm adds significant scale, growth, and revenue opportunity. We would expect new business and renewal of 460,000 plus policies to commence in late 2022, with premium written in all 50 states by the end of 2023. As it relates to the bottom line, after 2022, we expect to realize increased operating leverage as the $60 million to $70 million we have spent to support these partnerships and Marketplace are operationalized and more top-line revenue starts to flow through to earnings. We have provided guidance for the full year 2022 across several key performance indicators. Going forward, we intend to provide annual guidance with quarterly updates on our progress. We have also provided additional supplemental information in our investor supplement, which we believe will assist investors and the analyst community when developing their financial thesis on Hagerty. We hope it helps. We look forward to working with you all over the months and years ahead. Thanks for your time and your support of Hagerty. And now, I'll turn it back to McKeel.

Thank you, Fred. I will spend just a few more minutes describing some strategic growth initiatives that will accelerate in the months and years to come. With State Farm, Fred already described the numbers, so I will put them in context. First, it's important to note that a substantial portion of our growth already comes from sticky partnerships with large insurance companies. For years, many of the largest companies have worked with us to handle the special insurance needs the car enthusiasts have, from providing valuations on these cars with our proprietary valuation tools, to providing specialty coverage and service, to handling the unique claims that would be difficult for a typical automobile claims department to manage. We value all of these partnerships and we treat them individually with no cross-selling of products and services so that they know their core books of business are well protected while the enthusiast cars are handled by a market leader in Hagerty. State Farm is just the latest of these partnerships, but it will also be our largest. Therefore, we have taken our time to get it right for launch. In addition to rolling over the initial book of more than 460,000 policies, we will also be actively engaging their 19,200 agents to write new policies in the program. All the while, we'll be offering all State Farm clients access to the Hagerty Drivers Club. It is intended to commence later this year and will provide the largest single source of growth in our company's history. It is important to note that State Farm also became a significant investor in Hagerty during our business combination in 2021. As part of this, they have a Board seat, which is served by none other than their CEO, Michael Tipsord. Our relationship with State Farm has a 10 year contract and we look forward to many years of a deep partnership. The second initiative I wanted to discuss, as covered in the investor deck, is our move into an automotive marketplace. While we have quietly been rolling out pieces of our marketplace strategy with things like our Hagerty Valuation Tools and Automotive Intelligence team and our peer-to-peer rental business, DriveShare, our next move commenced in January with our investment in the Broad Arrow Group. A newly created company filled with a team of highly respected veterans from the automotive auction world, Broad Arrow will anchor a number of our new initiatives going forward through a joint venture structure. The marketplace opportunity for us is very large. In 2021 alone, our insurance members bought and sold an estimated $9.5 billion in vehicles. Our intention is to use our data advantages and our partnership with Broad Arrow to develop buying and selling tools and experiences that focus on trust, integrity, and transparency. Some of the activities contemplated are already indicated in the deck, while several others will roll out in the coming months and years. There are also many internal synergies that our marketplace activities will draw upon and amplify. In addition to buying and selling, Hagerty Marketplace also ties nicely into our media activities, events, membership offerings, digital innovation, as well as our impact and ESG activities. Finally, we have many other initiatives in flight that will also help us drive growth in the months and years ahead. These include growing our reinsurance quota shares to gain more of the economics in our underwriting relationships, increasing our appetite for more types of enthusiast vehicles and vehicle segments, expanding our membership offerings, more media and events, and innovations like mileage-based insurance offerings from our digital labs, and so on. In an effort to create more on-ramps to the car world and to engage the next generations, we also recently announced a partnership with Polyphony Studios to be embedded in the latest version of the best-selling video game on the Sony PlayStation platform, Gran Turismo 7. This is exciting because of the reach implied by the millions of active users on such platforms, but also because it is our first foray into the interactive gaming world. In closing, Hagerty is a growth company that is built on a very large passion space in the economy that was often overlooked or underserved. Our history in the insurance and membership space provides a strong platform to grow and to expand what we do and to invest in a larger ecosystem of offerings. As a public company, we have the opportunity to accelerate our plans and to use a higher profile to our advantage. Hagerty went public for a simple reason: to better serve the vast community of people who love cars. We aim to do this for the long haul and at a large scale. We are ready for the drive. Thank you.

I am not seeing any questions at this time and I will turn the call back over to management.

Thank you, operator. We actually did receive a few questions in the IR inbox for management. The first question is a three-part question. Why was State Farm delayed? Can you assure that they will launch in late 2022? And have any of the economics changed?

Thank you. It's a great question, and an important one for us. First of all, let me take the second one. We're very confident that we will launch the partnership in late 2022. Although there's a very large set of work streams to deliver this product, that's important to us. But first and foremost, we knew the size of this partnership, so we had to get it right. It’s a long-term partnership. State Farm made a big commitment to us. We made a big commitment to them. And that's why we are truly committed to making sure that we deliver the highest possible experience for their customers, who will be our future members. The reasons for the delay are a couple of major factors. One, this is a brand new insurance company within the State Farm world that requires state filings, licenses, forms, filings, all of that sort of thing. Those take a little bit longer than sometimes expected. We have done a lot of these types of partnerships, so we know how this can happen. But it's really the technical integrations around this program that are very, very complex between billing, offering the new offering Hagerty Drivers Club, which is unique both in the State Farm world and for us, as well as all of the data feeds going back and forth. So, regarding the final piece: have any of the economics changed? The contract remains the same. It’s a 10-year sticky, deep contract. We are committed to each other. They are excited about it. We are excited about it. And the economics have not changed. I think the thing to note, as Fred mentioned and I mentioned as well, is that the opportunity is actually now a little bit larger, which is a good thing. When we first started talking about this last year, it was 410,000 policies converting; now it's 460,000 or more. And we will also have the opportunity to offer new business through State Farm's 19,200 agents, and again, as always in addition to Hagerty Drivers Club. So, we are very confident about the end of 2022.

There is a second question, which is: what drove the Hagerty Drivers Club price delays? And do you anticipate being able to implement the pricing increase in 2022?

Another great question. Hagerty Drivers Club is such a key part of our overall growth strategy. We are confident we are going to be able to make pricing adjustments in 2022. The main reasons for not launching these earlier were really about wanting to be very sensitive to the persistence of our members to maintain a very high Net Promoter Score and to make sure that we could add more value. Hagerty Drivers Club is so unique in the automotive world that we just don't like to add price to it unless we add value, and the big key for us that we were waiting to launch, which we didn't talk about last year, was our move in the marketplace. So, the pricing changes, which are fully baked into our projections here, our outlook are largely due for us waiting to create more value and to build in some of those marketplace features.

Another question that was received: 2022 outlook seems to be impacted on both the revenue and expense side. Can you give us a bit more detail on the outlook for revenue? Additionally, will a lot of the expenses that you are incurring roll off by the end of 2022 such that 2023 can be a year of strong operating leverage?

Thank you. I can take that one. We are not providing 2023 guidance, but we can say that a majority of the spend to onboard State Farm, as well as the Hagerty Marketplace, should roll off by the end of 2022. When you think about revenue, we had included State Farm and pricing increases in our prior 2022 projections. And so, with the delay of each of those, we are adjusting our 2022 outlook. On the expense side, we see a huge runway for growth and we feel this is the perfect time to make investments that will generate incremental growth longer-term. From an EPS guidance perspective, as you'll see in our slide deck on slide number 20, we do provide a range of EPS growth improvement of 35% to 75% for 2022.

And the final question that was received: What opportunities are you most excited about over the next two to three years?

Well, that's a fun one. We're excited about the future. We're a growth company and we're excited to be a public company getting ready to take advantage of all that brings. For sure, the State Farm launch, getting that up and running is important to us. It's a big, long, sticky relationship, many, many years in the making. So getting that up and running and bringing them into partnership with us is going to be absolutely awesome. So we're excited about that from a growth standpoint and we're confident that we can make it work very well. The marketplace, as I’ve highlighted in my remarks, is a very important strategic initiative for us. And it's just going to start rolling out with new features, new ways that we can start approaching that very large opportunity, which reflects a very large total addressable market on the transactional side. There are additional partnerships not mentioned that are in the pipeline and that we're in the process of negotiating that haven't been announced or named. We are working on those. So I'm excited about those over the coming periods of time, more media, more events. That's how we engage our members. It's an automotive passion space. And so we have to keep working to build those audiences out there, building and partnering in some cases with more properties to create greater reach, and more contact and intimacy with our very passionate car-loving members.

Operator, we have no further questions. So, I will now turn it over to management for closing remarks.

All right, well, thank you very much. It's been fun for us to prepare for all of this. We are really excited about the future of Hagerty. As I said, we're building and investing for the long haul and for greater scale. And we hope you appreciate the materials we put forward to you and thank you very much for your time and attention onward and upward.

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.