The firm is planning on further “cost-containment initiatives”
After posting a $15 million net loss for the first quarter of 2023, Hagerty revealed a major restructuring charge.
Its $5.5 million makeover involves a labor reduction and lowered hiring plans, as well as additional cost-cutting initiatives.
The reorganization is expected to result in incremental annualized cost reductions of $20 to $25 million, with roughly $15 million realized in 2023.
McKeel Hagerty, CEO of Hagerty, stated that the initiatives will “accelerate [the MGA’s] path to profitability.”
Hagerty has increased its full-year 2023 net income forecast (from a $13 million loss to a $7 million profit) and adjusted EBITDA forecast (from $55 to $75 million).
The CEO also mentioned the company’s continuous investment in Hagerty Marketplace and its online platform.
“The opportunity within Marketplace (Hagerty’s platform) is vast, and we will be disciplined in our approach to balance growth with providing the customer support and protection that bolsters our reputation as the trusted brand for auto enthusiasts,” he said.
“Pivot to profitable growth”
In December and April, the specialist MGA laid off over 200 employees (approximately 6% and 4% of its employment, respectively) in order to “drive efficiencies to achieve growth and profitability goals.”
Hagerty’s first-quarter overall revenue surged by 30% to $218.4 million, while written premium growth jumped by 18% to $182.9 million. The company’s loss ratio for the first quarter was 41.3%, down from 41.4% the previous year.
McKeel Hagerty praised the results, calling them a “strong start” for the company in what he described as a challenging macroeconomic environment.
“We are confident that the opportunities we have identified to monetize our addressable market will expand our share, and we have thoughtfully prioritized our growth initiatives in 2023 to significantly improve our profitability and fund our purpose to save driving and fuel car culture for future generations,” the company said in a statement.
According to its annual report, Hagerty insures over 2.2 million antique cars and vehicles globally. The Traverse City, Michigan-based corporation has operations in the United States, Canada, Germany, and the United Kingdom.
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