Hagerty, the world's leading brand for auto enthusiasts, has announced its acquisition of CNIC (Consolidated National Insurance Company) for an estimated $18.4 million. This move is part of Hagerty's evolution to capture commissions plus underwriting profits, working closely with its partner Markel. The acquisition will allow Hagerty to incorporate a direct underwriting carrier model, remove frictional costs, and create more value for customers leveraging the company's high-growth, differentiated brokerage platform.
Incorporating CNIC into its ecosystem will widen Hagerty's aperture with new products and coverage offerings to fill an underserved segment of the classic and enthusiast vehicle market, particularly in the post-1980 enthusiast segment where penetration is currently less than 2%.
Hagerty's management expressed optimism about the acquisition, highlighting the significant opportunity presented by post-1980 vehicles for growth, given their low current penetration rate. The company aims to continue driving high rates of written premium growth and retention of underwriting profits.
In response to the news, the company's shares have moved -1.3%, and are now trading at a price of $8.27.
The company's full 8-K submission is available here.
| 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|
| Revenue (k) | $499,548 | $619,079 | $787,588 | $952,173 |
| Revenue Growth | n/a | 23.93% | 27.22% | 20.9% |
| Interest Income (k) | $1,508 | -$1,993 | $2,028 | $18,080 |
| Operating Margins | 3% | -2% | -9% | -2% |
| Net Margins | 2% | -7% | 4% | 1% |
| Net Income (k) | $10,039 | -$46,358 | $32,078 | $10,413 |
| Depreciation & Amort. (k) | $4,700 | $22,144 | $33,887 | $44,443 |
| Earnings Per Share | $100.39 | -$0.56 | $0.1 | $0.03 |
| EPS Growth | n/a | -100.56% | 117.86% | -70.0% |
| Diluted Shares (k) | 100 | 82,327 | 336,147 | 334,246 |
| Free Cash Flow (k) | $46,314 | -$1,089 | $10,953 | $61,484 |
| Capital Expenditures | $38,258 | $43,370 | $44,375 | $32,502 |
| Current Ratio | 1.33 | 1.81 | 1.4 | 1.4 |
| Total Debt (k) | $70,000 | $136,500 | $108,280 | $75,764 |
| Net Debt / EBITDA | 1.55 | -11.5 | -0.39 | -0.58 |
Hagerty has low leverage levels, rapidly growing revenues and decreasing reinvestment in the business, and positive cash flows. However, the firm has declining EPS growth. Finally, we note that Hagerty has just enough current assets to cover current liabilities, as shown by its current ratio of 1.4.
