Cloud-Based Insurance Will Expand Enthusiast And Collector Markets

Key Takeaways

• Expansion into modern vehicle insurance and digital infrastructure enhances market reach and operational efficiency, supporting sustained revenue and long-term margin growth.
  
• Growing wealth and international expansion, combined with strategic partnerships and recurring revenue streams, drive demand and earnings stability across Hagerty’s ecosystem.
  
• Demographic shifts, rising costs, climate risks, and reliance on a niche market threaten Hagerty’s long-term revenue, profitability, and ability to expand sustainably.

Catalysts

Provides insurance services for collector cars and enthusiast vehicles in the United States.

• Expansion into the modern enthusiast vehicle segment through new insurance offerings like Enthusiast Plus is expected to broaden Hagerty's addressable market and capture younger, digitally native car enthusiasts, supporting sustained written premium and revenue growth.
  
• Hagerty’s investments in digital infrastructure—such as its transition to a cloud-based insurance platform and replatforming of core systems—are positioned to create a scalable, more efficient business, enabling operating leverage and long-term margin expansion as the top line accelerates.
  
• Rapid growth in high-net-worth individuals, both domestically and internationally, combined with Hagerty's ongoing international marketplace expansion (e.g., Villa d’Este auction in Europe), provides a tailwind for collectible vehicle demand and insurance policies, fueling both premium growth and higher-margin event/marketplace revenue streams.
  
• The increasing popularity of collectible cars as alternative investments continues to drive demand for specialty insurance and automotive-related services, positioning Hagerty’s diversified ecosystem (membership, events, storage, financing, auctions) to deliver higher revenue and expanding profit margins.
  
• Strategic partnerships, such as State Farm Classic Plus, and continued high retention rates (89%) create recurring, defensible revenue streams while leveraging Hagerty’s data-driven underwriting approach to improve loss ratios and earnings stability, with a positive long-term impact on net margins and earnings growth.

Hagerty Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Hagerty's revenue will grow by 13.2% annually over the next 3 years.
• Analysts assume that profit margins will increase from 1.4% today to 8.2% in 3 years time.
• Analysts expect earnings to reach $149.0 million (and earnings per share of $2.59) by about July 2028, up from $18.1 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 31.3x on those 2028 earnings, down from 51.6x today. This future PE is greater than the current PE for the US Insurance industry at 14.2x.
• Analysts expect the number of shares outstanding to grow by 1.01% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.4%, as per the Simply Wall St company report.

Hagerty Future Earnings Per Share Growth

Risks

• Hagerty’s focus on classic and collectible vehicle insurance exposes it to long-term secular risks such as the shift toward electric and autonomous vehicles, urbanization, and declining car ownership among younger generations, which could significantly reduce the addressable market and weigh on long-term revenue growth.
  
• Demographic and cultural shifts—especially if digital-native, younger consumers show less affinity for traditional car culture and collectible vehicles—threaten the long-term effectiveness of Hagerty’s membership and enthusiast network, potentially increasing marketing costs and depressing future net margins.
  
• Rising costs from technology replatforming (e.g., Duck Creek/Apex), international expansion, and additional personnel may become a permanent baseline expense rather than one-off investments, putting persistent pressure on operating leverage and suppressing margin improvement if top-line growth slows.
  
• The company’s concentration in a cyclical luxury niche leaves it vulnerable to economic downturns and demographic risk, leading to revenue and earnings volatility if classic/collector car values or demand falter, especially as Hagerty undertakes international expansion where market dynamics are less proven.
  
• Increasing frequency and severity of extreme weather events (e.g., wildfires, hurricanes), as highlighted by the $10 million Q1 wildfire claims, may raise future loss ratios and reinsurance costs, adversely impacting underwriting profitability, earnings stability, and ultimately net margins over time.

Valuation

• The analysts have a consensus price target of $11.0 for Hagerty based on their expectations of its future earnings growth, profit margins and other risk factors.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $1.8 billion, earnings will come to $149.0 million, and it would be trading on a PE ratio of 31.3x, assuming you use a discount rate of 6.4%.
• Given the current share price of $10.3, the analyst price target of $11.0 is 6.4% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.