Hagerty, Inc.

Previous wording

Complementing our insurance offerings, we operate a trusted marketplace where collectors and enthusiasts can buy and sell a wide range of vehicles, from entry level enthusiast vehicles to high value collector cars. Through our marketplace, we also provide financing solutions by structuring loans secured by collector cars.

Current wording

Complementing our insurance offerings, we operate a trusted marketplace where collectors and enthusiasts can buy and sell a wide range of vehicles, from entry level enthusiast vehicles to high value collector cars. Through our marketplace, we also provide financing solutions by structuring and issuing loans secured by collector cars.

Previous wording

Due to the expanded underwriting and claims authority granted to us under the Markel Fronting Arrangement, we now control the Essentia book of business. While our United States ("U.S.") MGA subsidiary and Hagerty Re continue to operate in the same manner they have historically, beginning on January 1, 2026, the benefit of our MGA services with respect to the Essentia book of business is being received by Hagerty Re and not Essentia. As a result, effective in the first quarter of 2026, we are no longer recognizing commission revenue or the associated ceding commission expense for Essentia-originated policies in our Condensed Consolidated Financial Statements. However, ceding commission expense associated with Essentia policies issued in 2025 will continue to be recognized ratably over the remaining term of those policies throughout 2026. In addition, policy acquisition costs incurred by our U.S. MGA subsidiary for Essentia policies issued in 2026 will be deferred and amortized over the policy term. Although we expect the Markel Fronting Arrangement to result in increased profitability, our reported commission revenue and ceding commission expense will be lower than in prior periods, reflecting the new contractual terms governing our relationship with Markel.

Current wording

Due to the expanded underwriting and claims authority granted to us under the Markel Fronting Arrangement, we now control the Essentia book of business. While our United States ("U.S.") MGA subsidiary and Hagerty Re continue to operate in the same manner they have historically, beginning on January 1, 2026, the benefit of our MGA services with respect to the Essentia book of business is being received by Hagerty Re and not Essentia. As a result, effective in the first quarter of 2026, we are no longer recognizing commission revenue or the associated ceding commission expense for Essentia-originated policies in our Condensed Consolidated Financial Statements. However, ceding commission expense associated with Essentia policies issued in 2025 will continue to be recognized ratably over the remaining term of those policies throughout 2026. In addition, policy acquisition costs incurred by our U.S. MGA subsidiary for Essentia policies issued in 2026 are being deferred and amortized over the policy term. Although we expect the Markel Fronting Arrangement to result in increased profitability, our reported commission revenue and ceding commission expense will be lower than in prior periods, reflecting the new contractual terms governing our relationship with Markel.

Previous wording

On December 31, 2025, in connection with the Markel Fronting Arrangement, we entered into a loss portfolio transfer agreement (the "LPT Agreement") that became effective on January 1, 2026. Pursuant to the LPT Agreement, Hagerty Re assumed 100% of the net retained liabilities for Essentia-originated policies issued prior to January 1, 2026 and received $50.5 million in cash consideration. We are accounting for the LPT Agreement using the deposit method of accounting. At inception, we recorded the $50.5 million of cash consideration received as a deposit liability within "Other liabilities" on the Condensed Consolidated Balance Sheets. As of January 1, 2026, the estimated value of the liabilities assumed under the LPT Agreement was $42.7 million, resulting in an initial deferred gain of $7.8 million, which is being recognized over the expected period of future claim payments within "Interest expense and other, net" in the Condensed Consolidated Statements of Operations.

Current wording

On December 31, 2025, in connection with the Markel Fronting Arrangement, we entered into a loss portfolio transfer agreement (the "LPT Agreement") that became effective on January 1, 2026. Pursuant to the LPT Agreement, Hagerty Re assumed 100% of the net retained liabilities for Essentia-originated policies issued prior to January 1, 2026 and received $50.5 million in cash consideration. For additional information regarding the Markel Fronting Arrangement and the LPT Agreement, refer to Note 3 — Markel Fronting Arrangement in Item 1 of Part I of this Quarterly Report.

Previous wording

Due to the continued revenue growth and recent geographic expansion of the marketplace business, beginning in the fourth quarter of 2025, we updated our segment reporting to reflecttwo operating and reportable segments: Insurance and Marketplace. Previously, we operated as a single operating and reportable segment. We have recast prior period segment information to conform to the current presentation in this Quarterly Report. For more information regarding segment reporting, refer to Note 5 — Segment Reporting and Disaggregated Revenue in Item 1 of Part I of this Quarterly Report.

Current wording

Due to the continued revenue growth and recent geographic expansion of the marketplace business, beginning in the fourth quarter of 2025, we updated our segment reporting to reflect two operating and reportable segments: Insurance and Marketplace. Previously, we operated as a single operating and reportable segment. We have recast prior period segment information to conform to the current presentation in this Quarterly Report. For more information regarding segment reporting, refer to Note 5 — Segment Reporting and Disaggregated Revenue in Item 1 of Part I of this Quarterly Report.

Previous wording

Earned premium, net represents the earned portion of written premiums assumed under quota share reinsurance agreements with insurance carriers, net of premiums ceded to various reinsurers. Premiums assumed and ceded are recognized on a pro-rata basis over the term of the reinsured policies, which is generally 12 months.

Current wording

Earned premium represents the earned portion of written premiums assumed under quota share reinsurance agreements with insurance carriers, net of premiums ceded to various reinsurers. Premiums assumed and ceded are recognized on a pro-rata basis over the term of the reinsured policies, which is generally 12 months.

Previous wording

Effective January 1, 2026, commission revenue for Essentia-originated policies is no longer recognized in our Condensed Consolidated Statements of Operations, reflecting the new contractual terms governing our relationship with Markel, as discussed in more detail above under "Markel Fronting Arrangement". Commission and fee revenue will continue to include commissions earned from our other MGA activities, including from a subsidiary of State Farm Mutual Automobile Insurance Company ("State Farm") and our insurance carrier partners in Canada and the U.K. State Farm is a related party to the Company. Refer to Note 20 — Related-Party Transactions in Item 1 of Part I of this Quarterly Report for additional information on related party transactions with State Farm.

Current wording

Effective January 1, 2026, commission revenue for Essentia-originated policies is no longer recognized in our Condensed Consolidated Statements of Operations, reflecting the new contractual terms governing our relationship with Markel, as discussed in more detail above under "Markel Fronting Arrangement". Commission and fee revenue continues to include commissions earned from our other MGA activities, including from a subsidiary of State Farm Mutual Automobile Insurance Company ("State Farm") and our insurance carrier partners in Canada and the U.K. State Farm is a related party to the Company. Refer to Note 20 — Related-Party Transactions in Item 1 of Part I of this Quarterly Report for additional information on related party transactions with State Farm.

Previous wording

Our marketplace business earns commission and fee-based revenue primarily from the sale of collector cars and enthusiast vehicles through live auctions, time-based digital auctions, and brokered private sales. Through our marketplace business, we also earn revenue from the sale of collector cars and enthusiast vehicles that we have opportunistically acquired for resale. In addition, we earn finance revenue from loans made to qualified collectors and businesses secured by their collector cars.

Current wording

Our marketplace business generates revenue from two principal sources: (i) commission and fee-based revenue earned from the sale of collector cars and enthusiast vehicles through live auctions, time-based digital auctions, and brokered private sales; and (ii) revenue earned on the sale of collector cars and enthusiast vehicles that we have opportunistically acquired for resale. In addition, we earn finance revenue from loans made to qualified collectors and businesses secured by their collector cars.

Previous wording

Other revenue also includes sponsorship, admission, advertising, valuation, registration, and sublease income. Other revenue is recognized when the performance obligation for the related product or service is satisfied.

Current wording

Other revenue primarily includes sponsorship, admission, and advertising revenue. Other revenue is recognized when the performance obligation for the related product or service is satisfied.

Previous wording

Losses and loss adjustment expenses, net represents our best estimate of the losses and associated settlement costs related to the risks we assume. Losses consist of claims paid, case reserves, and incurred but not reported ("IBNR") costs, which are recorded net of estimated recoveries from reinsurance, salvage, and subrogation. Loss adjustment expenses consist of the cost associated with processing and settling claims.

Current wording

Losses and loss adjustment expenses represents our best estimate of the losses and associated settlement costs related to the risks we assume. Losses consist of claims paid, case reserves, and incurred but not reported ("IBNR") costs, which are recorded net of estimated recoveries from reinsurance, salvage, and subrogation. Loss adjustment expenses consist of the cost associated with processing and settling claims.

Previous wording

Losses and loss adjustment expenses, net also includes the impact of reserve adjustments recorded to reflect the favorable or unfavorable development of prior accident year claims.

Current wording

Losses and loss adjustment expenses also includes the impact of reserve adjustments recorded to reflect the favorable or unfavorable development of prior accident year claims.

Previous wording

Policy acquisition costs, net represents costs directly related to the successful acquisition or renewal of insurance policies where we assume risk.

Current wording

Policy acquisition costs represents costs directly related to the successful acquisition or renewal of insurance policies where we assume risk.

Previous wording

Prior to January 1, 2026, Policy acquisition costs, net included only the ceding commissions paid by Hagerty Re to insurance carriers for the risks assumed under the quota share agreements with those carriers. These commissions represented Hagerty Re's pro-rata share of the carrier's costs including (i) policy acquisition costs, which principally consisted of the commissions earned by our U.S. MGA subsidiary related to the Essentia book of business; (ii) general and administrative costs; and (iii) other costs.

Current wording

Prior to January 1, 2026, Policy acquisition costs included only the ceding commissions paid by Hagerty Re to insurance carriers for the risks assumed under the quota share agreements with those carriers. These commissions represented Hagerty Re's pro-rata share of the carrier's costs including (i) policy acquisition costs, which principally consisted of the commissions earned by our U.S. MGA subsidiary related to the Essentia book of business; (ii) general and administrative costs; and (iii) other costs.

Previous wording

Effective January 1, 2026, the definition of Policy acquisition costs, net includes costs incurred by our U.S. MGA subsidiary for the successful acquisition or renewal of insurance policies issued under the Markel Fronting Arrangement. The policy acquisition costs associated with the Markel Fronting Arrangement primarily include (i) third-party broker commissions; (ii) certain salaries, benefits, and other costs associated with underwriting, policy issuance, processing, and selling activities; (iii) fronting fees; and (iv) premium taxes.

Current wording

Effective January 1, 2026, the definition of Policy acquisition costs includes costs incurred by our U.S. MGA subsidiary for the successful acquisition or renewal of insurance policies issued under the Markel Fronting Arrangement. The policy acquisition costs associated with the Markel Fronting Arrangement primarily include (i) third-party broker expense; (ii) certain salaries, benefits, and other costs associated with underwriting, selling, issuing, and processing policies; (iii) fees paid to the fronting carrier; and (iv) premium taxes. Policy acquisition costs also includes ceding commissions paid by Hagerty Re to other insurance carriers for the risks assumed under quota share agreements.

Previous wording

Policy acquisition costs, net is recognized ratably over the term of the related policies, which is generally 12 months.

Current wording

Policy acquisition costs are recognized ratably over the term of the related policies, which is generally 12 months.

Previous wording

Effective January 1, 2026, as a result of the Markel Fronting Arrangement through which we assumed control of the Essentia book of business, Underwriting and other insurance expenses include costs incurred by our U.S. MGA subsidiary that are associated with our underwriting operations such as underwriting staff compensation and related benefits, technology and systems costs that support the underwriting process, and expenses related to risk evaluation and pricing. Also included are general and administrative expenses attributable to the operations of our risk taking activities, including facilities costs, professional services fees, regulatory and compliance costs, and other overhead expenses. Prior to January 1, 2026, such costs were reported within Selling, general, and administrative expenses.

Current wording

Underwriting and other insurance expenses consists of the operating costs incurred in connection with our risk taking activities. Effective January 1, 2026, as a result of the Markel Fronting Arrangement through which we assumed control of the Essentia book of business, Underwriting and other insurance expenses include costs incurred by our U.S. MGA subsidiary that are associated with our underwriting operations such as certain salaries and benefit costs, technology and systems costs that support the underwriting process, and expenses related to risk evaluation and pricing. Also included are general and administrative expenses attributable to the operations of our risk taking activities, including facilities costs, professional services fees, regulatory and compliance costs, and other overhead expenses. Prior to January 1, 2026, such costs were reported within Selling, general, and administrative expenses.

Previous wording

Interest expense and other, net primarily includes interest expense related to outstanding borrowings, primarily related to our current and prior revolving credit facilities with JPMorgan Chase Bank, N.A. ("JPM"), as well as the State Farm Term Loan (as defined in Note 14 — Debt in Item 1 of Part I of this Quarterly Report). Interest expense and other, net also includes the amortization of the gain from the LPT Agreement and changes in the estimated value of the liability associated with the Tax Receivable Agreement ("TRA") ("TRA Liability") between periods. Refer to Note 3 — Markel Fronting Arrangement in Item 1 of Part I of this Quarterly Report for additional information related to the LPT Agreement. Refer to Note 19 — Taxation in Item 1 of Part I of this Quarterly Report for additional information related to the TRA.

Current wording

Interest expense and other primarily includes interest expense related to outstanding borrowings, primarily related to our credit facility with JPMorgan Chase Bank, N.A. ("JPM"), as well as the State Farm Term Loan (as defined in Note 14 — Debt in Item 1 of Part I of this Quarterly Report). Interest expense and other also includes the amortization of the gain from the LPT Agreement, changes in the estimated value of the liability associated with the Tax Receivable Agreement ("TRA") ("TRA Liability"), and foreign currency transaction gains and losses. Refer to Note 3 — Markel Fronting Arrangement in Item 1 of Part I of this Quarterly Report for additional information related to the LPT Agreement. Refer to Note 19 — Taxation in Item 1 of Part I of this Quarterly Report for additional information related to the TRA.

Previous wording

Hagerty, Inc. is taxed as a corporation and pays corporate federal, state, and local taxes with respect to income allocated from THG. Hagerty, Inc., Hagerty Insurance Holdings, Inc., Broad Arrow Group, Inc. ("Broad Arrow"), Hagerty Radwood, Inc., and various foreign subsidiaries are treated as taxable entities and income taxes are provided where applicable. Hagerty Insurance Holdings, Inc. files a consolidated tax return with its wholly owned corporate subsidiaries Hagerty Re and Drivers Edge Insurance Company ("Drivers Edge").

Current wording

Hagerty, Inc. is taxed as a corporation and pays corporate federal, state, and local taxes with respect to income allocated from THG. Hagerty, Inc., Hagerty Insurance Holdings, Inc., Broad Arrow, Hagerty Radwood, Inc., and various foreign subsidiaries are treated as taxable entities and income taxes are provided where applicable. Hagerty Insurance Holdings, Inc. files a consolidated tax return with its wholly owned corporate subsidiaries Hagerty Re and Drivers Edge Insurance Company ("Drivers Edge").

Previous wording

Hagerty Re Loss Ratio represents the ratio of (i) Hagerty Re's losses and loss adjustment expenses to (ii) its earned premium. Hagerty Re Loss Ratio is calculated using Hagerty Re's standalone financial statements, which in the current period exclude $5.9 million of claims handling expenses incurred by our MGA subsidiaries on behalf of Hagerty Re. Hagerty Re's standalone financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). This metric allows us to evaluate Hagerty Re's loss patterns on the basis of its standalone GAAP financial statements and make necessary and appropriate adjustments.

Current wording

Hagerty Re Loss Ratio represents the ratio, expressed as a percentage, of (i) Hagerty Re's losses and loss adjustment expenses to (ii) its earned premium. Hagerty Re Loss Ratio is calculated using Hagerty Re's standalone financial statements. For the three and six months ended June 30, 2026, this excludes $3.2 million and $9.1 million, respectively, of claims handling expenses incurred by our MGA subsidiaries on behalf of Hagerty Re. Hagerty Re's standalone financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). This metric allows us to evaluate Hagerty Re's loss patterns on the basis of its standalone GAAP financial statements and track loss experience and identify trends that inform our pricing, reserving, and reinsurance decisions.

Previous wording

Hagerty Re Combined Ratio represents the ratio of (i) Hagerty Re's losses, loss adjustment expenses, and underwriting expenses to (ii) its earned premium. Hagerty Re's underwriting expenses primarily include policy acquisition costs and, to a lesser extent, certain administrative expenses. Hagerty Re Combined Ratio is calculated using Hagerty Re's standalone GAAP financial statements, which in the current period include $11.5 million of commissions paid to our MGA subsidiaries that are eliminated in consolidation. This metric provides a benchmark to evaluate Hagerty Re's underwriting profitability on the basis of its standalone GAAP financial statements. A combined ratio under 100% indicates underwriting income while a combined ratio exceeding 100% indicates an underwriting loss.

Current wording

Hagerty Re Combined Ratio represents the ratio, expressed as a percentage, of (i) Hagerty Re's losses, loss adjustment expenses, policy acquisition costs, and underwriting and other insurance expenses to (ii) its earned premium. Hagerty Re Combined Ratio is calculated using Hagerty Re's standalone GAAP financial statements. For the three and six months ended June 30, 2026, this includes $43.7 million and $55.2 million, respectively, of commissions paid to our MGA subsidiaries that are eliminated in consolidation. This metric provides a benchmark to evaluate Hagerty Re's underwriting profitability on the basis of its standalone GAAP financial statements. A combined ratio under 100% indicates underwriting income while a combined ratio exceeding 100% indicates an underwriting loss.

Previous wording

Net Auction Sales represents the total purchase price paid by buyers, excluding buyer's premium and fees, for vehicles and memorabilia purchased through Broad Arrow's live and online auctions, as well as through Hagerty Marketplace's online sale platform.

Current wording

Net Auction Sales represents the total purchase price paid by buyers, excluding our buyer's premium and fees, for vehicles and memorabilia purchased through Broad Arrow's live and online auctions, as well as through Hagerty Marketplace's online sale platform.

Previous wording

Adjusted EBITDA, Adjusted Net Income (Loss), and Adjusted Diluted EPS are non-GAAP financial measures. Please see the section titled "Non-GAAP Financial Measures" below for a description of these non-GAAP financial measures and a reconciliation to the most comparable GAAP measure.

Current wording

(2)Adjusted EBITDA, Adjusted Net Income (Loss), and Adjusted Diluted EPS are non-GAAP financial measures. Please see the section titled "Non-GAAP Financial Measures" below for a description of these non-GAAP financial measures and a reconciliation to the most comparable GAAP measure, as well as a reconciliation of prior year Adjusted EBITDA to the current year presentation.

Previous wording

The following table summarizes Insurance segment results of operations for the three months ended March 31, 2026 and 2025, and the dollar and percentage change between the two periods:

Current wording

The following table summarizes Insurance segment results of operations for the three months ended June 30, 2026 and 2025, and the dollar and percentage changes between the two periods:

Previous wording

(2)Represents Hagerty Re's earned premium and associated policy acquisition costs related to Essentia policies issued in 2026 and through other carriers.

Current wording

(b)Represents Hagerty Re's earned premium and associated policy acquisition costs related to Essentia policies issued in 2026 and through other carriers.

Previous wording

(4)The MGA+ reporting unit includes our MGA operations, as well as our membership, events and media activities.

Current wording

(c)The MGA+ reporting unit includes our MGA operations, as well as our membership, events, and media activities.

Previous wording

(3)Our MGA subsidiaries incur costs to fulfill certain underwriting and claims handling functions and incur related costs on behalf of Hagerty Re, for which they are compensated through an intercompany commission paid by Hagerty Re. These costs are reflected within the standalone results of our MGA+ reporting unit within Losses and loss adjustment expenses, net, and Underwriting and other insurance expenses.

Current wording

(d)Our MGA subsidiaries incur costs to fulfill certain underwriting and claims handling functions on behalf of Hagerty Re, for which they are compensated through an intercompany commission paid by Hagerty Re. These costs are reflected within the standalone results of our MGA+ reporting unit within "Losses and loss adjustment expenses, net" and "Underwriting and other insurance expenses".

Previous wording

(5)Reflects entries made in consolidation to eliminate intercompany commission revenue and ceding commission expense between the Hagerty Re and MGA+ reporting units, as well as entries made to defer policy acquisition costs incurred by the MGA+ reporting unit. Such policy acquisition costs are amortized over the underlying policy term.

Current wording

(e)These consolidation entries are made to eliminate intercompany commission revenue and ceding commission expense between the Hagerty Re and MGA+ reporting units.

Previous wording

Earned premium, net was $239.6 million for the three months ended March 31, 2026, an increase of $70.3 million, or 41.5%, compared to 2025. This increase was primarily driven by our entry into the Markel Fronting Arrangement, which became effective January 1, 2026 and increased Hagerty Re's U.S. quota share from approximately 80% to 100%, including for in-force policies written in 2025. To a lesser extent, the increase was driven by continued growth of subject premiums written through our MGA subsidiaries.

Current wording

Earned premium, net was $252.0 million for the three months ended June 30, 2026, an increase of $74.2 million, or 41.7%, compared to 2025. This increase is primarily driven by our entry into the Markel Fronting Arrangement, which became effective January 1, 2026 and increased Hagerty Re's U.S. quota share from approximately 80% to 100%, including for in-force policies written in 2025. To a lesser extent, the increase is driven by growth in subject premiums written through our MGA subsidiaries.

Previous wording

(1)In 2026, we did not reinsure classic auto risks produced by our United Kingdom ("U.K.") MGA subsidiary, and the prior book of business is in run-off.

Current wording

(1)In 2025, we did not reinsure classic auto risks produced by our U.K. MGA subsidiary, and the prior book of business is in run-off.

Previous wording

Losses and loss adjustment expenses, net were $97.9 million for the three months ended March 31, 2026, an increase of $26.8 million, or 37.7%, compared to 2025. This increase is primarily the result of the Markel Fronting Arrangement, which increased Hagerty Re's U.S. quota share from approximately 80% to 100% as of January 1, 2026 for all in-force policies. To a lesser extent, the increase was driven by continued growth of subject premiums written through our MGA subsidiaries. For the three months ended March 31, 2026, the Hagerty Re loss ratio was 38.4%, a decrease of 3.6% from 2025, when the Hagerty Re loss ratio was 42.0%. The lower loss ratio is driven by favorable experience in prior accident years, primarily due to the emergence of lower physical damage losses for the 2025 accident year.

Current wording

Losses and loss adjustment expenses, net were $110.7 million for the three months ended June 30, 2026, an increase of $35.5 million, or 47.2%, compared to 2025. This increase is primarily the result of the Markel Fronting Arrangement, which increased Hagerty Re's U.S. quota share from approximately 80% to 100% as of January 1, 2026 for all in-force policies. To a lesser extent, the increase is driven by continued growth of subject premiums written through our MGA subsidiaries.

Previous wording

Underwriting and other insurance expenses were $59.6 million for the three months ended March 31, 2026, an increase of $58.2 million compared to 2025. This increase is primarily due to the transition of our business under the Markel Fronting Arrangement, which required a different classification of certain costs in our Condensed Consolidated Statements of Operations. Beginning in 2026, because we now control the Essentia book of business, operating costs incurred by our U.S. MGA subsidiary in support of our risk taking activities are classified within Underwriting and other insurance expenses. In 2025, prior to assuming control of the Essentia book of business, these costs were categorized within Selling, general, and administrative expenses.

Current wording

Underwriting and other insurance expenses were $62.9 million for the three months ended June 30, 2026, an increase of $61.7 million compared to 2025. This increase is primarily due to the transition of our business under the Markel Fronting Arrangement, which required a different classification of certain costs in our Condensed Consolidated Statements of Operations. Beginning in 2026, because we now control the Essentia book of business, certain operating costs incurred by our U.S. MGA subsidiary in support of our risk taking activities are classified within "Underwriting and other insurance expenses". In 2025, prior to assuming control of the Essentia book of business, these costs were categorized within "Selling, general, and administrative expenses".

Previous wording

The following table presents the components of Net investment income and Net investment losses for the three months ended March 31, 2026 and 2025:

Current wording

The following table presents the components of Net investment income and Net investment gains related to the Insurance segment for the three months ended June 30, 2026 and 2025:

Previous wording

The increase in Net investment income was due to an increase in the size of our fixed maturity securities portfolio for the three months ended March 31, 2026, when compared to the prior year. The increase in Net investment losses was primarily driven by unrealized losses on equity securities in the period.

Current wording

The increase in Net investment income is due to an increase in the size of our fixed maturity securities portfolio when compared to the prior year. The increase in Net investment gains is primarily driven by unrealized gains on equity securities in the period.

Previous wording

Commission and fee revenue was $16.4 million for the three months ended March 31, 2026, a decrease of $83.9 million, or 83.6%, compared to 2025. This decrease was primarily due to the transition of our business under the Markel Fronting Arrangement. Due to the expanded underwriting and claims authority granted to us under the Markel Fronting Arrangement, we now control the Essentia book of business and, as a result, beginning on January 1, 2026, the benefit of our MGA services is being received by Hagerty Re and not Essentia. As a result, effective in the first quarter of 2026, we no longer recognize commission revenue for Essentia-originated policies in our Condensed Consolidated Financial Statements. This decrease was partially offset by an increase of $5.4 million related to policies written under the State Farm Master Alliance Agreement.

Current wording

Commission and fee revenue was $23.7 million for the three months ended June 30, 2026, a decrease of $119.6 million, or 83.5%, compared to 2025. This decrease is primarily due to the transition of our business under the Markel Fronting Arrangement. Due to the expanded underwriting and claims authority granted to us under the Markel Fronting Arrangement, we now control the Essentia book of business and, as a result, beginning on January 1, 2026, the benefit of our MGA services is being received by Hagerty Re and not Essentia. As a result, effective in the first quarter of 2026, we no longer recognize commission revenue for Essentia-originated policies in our Condensed Consolidated Financial Statements. This decrease is partially offset by an increase of $5.0 million related to policies written under the State Farm Master Alliance Agreement.

Previous wording

Selling, general, and administrative expenses were $46.9 million for the three months ended March 31, 2026, a decrease of $69.1 million, or 59.6%, compared to 2025. This decrease is primarily due to the transition of our business under the Markel Fronting Arrangement, which required a different classification of certain costs in our Condensed Consolidated Statements of Operations. Beginning in 2026, because we now control the Essentia book of business, certain costs incurred by our U.S. MGA subsidiary in support of our risk taking activities, are classified within Losses and loss adjustment expenses, net, Policy acquisition costs, net, and Underwriting and other insurance expenses. In 2025, prior to assuming control of the Essentia book of business, these costs were categorized within Selling, general, and administrative expenses.

Current wording

Selling, general, and administrative expenses were $55.9 million for the three months ended June 30, 2026, a decrease of $75.7 million, or 57.5%, compared to 2025. This decrease is primarily due to the transition of our business under the Markel Fronting Arrangement, which required a different classification of certain costs in our Condensed Consolidated Statements of Operations. Beginning in 2026, because we now control the Essentia book of business, certain costs incurred by our U.S. MGA subsidiary in support of our risk taking activities, are classified within "Losses and loss adjustment expenses, net", "Policy acquisition costs, net", and "Underwriting and other insurance expenses". In 2025, prior to assuming control of the Essentia book of business, these costs were categorized within "Selling, general, and administrative expenses".

Previous wording

The following table summarizes Marketplace segment results of operations for the three months ended March 31, 2026 and 2025, and the dollar and percentage change between the two periods:

Current wording

The following table summarizes Marketplace segment results of operations for the three months ended June 30, 2026 and 2025, and the dollar and percentage changes between the two periods:

Previous wording

(1)Selling expenses include direct costs associated with the sale of vehicles and memorabilia through auctions and private sales, including the purchase price and associated direct costs of inventory when Broad Arrow opportunistically purchases inventory to be sold through auctions or private sales, as well as interest expense and borrowing costs associated with the BAC Credit Facility.

Current wording

(1)Selling expenses include direct costs associated with the sale of vehicles and memorabilia through auctions and private sales, including the purchase price and associated direct costs of inventory when Broad Arrow opportunistically purchases vehicles to be sold through auctions or private sales, as well as interest expense and borrowing costs associated with the BAC Credit Facility.

Previous wording

Our provision for income taxes was a benefit of $8.2 million, resulting in an effective tax rate of 39.1% for the three months ended March 31, 2026, compared to an expense of $5.5 million, resulting in an effective tax rate of 16.7% for the three months ended March 31, 2025. The change in income tax benefit (expense) period over period is driven by non-reversing temporary differences between taxable income and pre-tax book income related to the Markel Fronting Arrangement, partially offset by higher earnings in Hagerty Re and an increase in Hagerty, Inc.'s allocable share of income from THG.

Current wording

For the three months ended June 30, 2026, we recorded an income tax benefit of $5.8 million, resulting in an effective tax rate of (260.3)%, compared to income tax expense of $6.2 million for the three months ended June 30, 2025, resulting in an effective tax rate of 11.5%. The change in income tax benefit (expense) period over period is driven by non-reversing temporary differences between taxable income and pre-tax book income related to the Markel Fronting Arrangement, partially offset by higher earnings in Hagerty Re and an increase in Hagerty, Inc.'s allocable share of income from THG.

Previous wording

For the three months ended March 31, 2026, we reported a Net loss of $12.7 million, representing a $40.0 million decrease compared to the prior year, and Adjusted EBITDA of $85.2 million, representing a $37.0 million, or 76.9%, increase compared to the prior year.

Current wording

For the six months ended June 30, 2026, we reported a Net loss of $4.7 million, representing a $79.2 million decrease compared to the prior year, and Adjusted EBITDA of $159.7 million, representing a $38.9 million, or 32.2%, increase compared to the prior year.

Previous wording

In our Insurance segment, Loss before taxes for the three months ended March 31, 2026 was $20.4 million, representing a $53.3 million decrease from the prior period. The loss for the current period is due to the transition of our business under the Markel Fronting Arrangement, which resulted in a decrease in Commission and fee revenue and the recognition of non-cash costs to amortize the remaining deferred ceding commissions for Essentia policies written in 2025. These factors were partially offset by a $70.3 million, or 41.5%, increase in Earned premium, net, reflecting the increase to our quota share percentage from 80% to 100% under the Markel Fronting Arrangement, as well as the continued growth of that book of business.

Current wording

In our Insurance segment, Loss before taxes for the six months ended June 30, 2026 was $17.6 million, representing a $111.2 million decrease from the prior year. The loss for the current period is due to the transition of our business under the Markel Fronting Arrangement, which resulted in a decrease in Commission and fee revenue and the recognition of non-cash costs to amortize the remaining deferred ceding commissions for Essentia policies written in 2025. These factors are partially offset by a $144.5 million, or 41.6%, increase in Earned premium, net, reflecting the increase to our quota share percentage from 80% to 100% under the Markel Fronting Arrangement, as well as the continued growth of that book of business.

Previous wording

The following table provides a reconciliation of the standalone results of operations for our Hagerty Re and MGA+ reporting units, which reflect the continuing operations of those businesses, to our Condensed Consolidated Statements of Operations:

Current wording

The following table provides a reconciliation of the standalone results of operations for our Hagerty Re and MGA+ reporting units for the six months ended June 30, 2026, which reflect the continuing operations of those businesses, to our Condensed Consolidated Statements of Operations. This table is presented solely to improve the year-over-year comparability of our financial statements and should not be viewed on a standalone basis. It should be read together with our Condensed Consolidated Statements of Operations and the accompanying notes.