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Stockholders' Equity | 9 Months Ended
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Sep. 30, 2024
Equity [Abstract] |
Stockholders' Equity | 16 — Stockholders' Equity Class A Common Stock Hagerty, Inc. is authorized to issue 500,000,000 shares of Class A Common Stock with a par value of $0.0001 per share. Holders of Class A Common Stock are entitled to one vote for each share. As of September 30, 2024 and December 31, 2023, there were 89,980,363 and 84,588,536 shares of Class A Common Stock issued and outstanding, respectively. Class V Common Stock Hagerty, Inc. is authorized to issue 300,000,000 shares of Class V Common Stock with a par value of $0.0001 per share. Class V Common Stock represents voting, non-economic interests in Hagerty, Inc. Holders of Class V Common Stock are entitled to 10 votes for each share. In connection with the business combination that formed Hagerty, Inc. in 2021, shares of Class V Common Stock were issued to HHC and Markel (together, the "Legacy Unit Holders") along with an equivalent number of THG units, as discussed below. Each share of Class V Common Stock, together with the corresponding unit of THG, is exchangeable for one share of Class A Common Stock. As of September 30, 2024 and December 31, 2023, there were 251,033,906 shares of Class V Common Stock issued and outstanding. Preferred Stock Hagerty, Inc. is authorized to issue 20,000,000 shares of Preferred Stock with a par value of $0.0001 per share. Hagerty, Inc.'s Board has the authority to issue shares of Preferred Stock with such designations, voting and other rights and preferences as may be determined from time to time. In June 2023, Hagerty, Inc. issued 8,483,561 shares of newly-designated Series A Convertible Preferred Stock, par value $0.0001 per share, for an aggregate purchase price of $80.0 million, at a per-share purchase price of $9.43. As of September 30, 2024 and December 31, 2023, there were 8,483,561 shares of Preferred Stock issued and outstanding. Refer to Note 15 — Convertible Preferred Stock for additional information. Non-controlling Interests Hagerty, Inc. is the sole managing member of THG and, as a result, consolidates the financial statements of THG into its Condensed Consolidated Financial Statements. The Company reports a non-controlling interest representing the economic interest in THG held by other unit holders of THG. Hagerty, Inc. owns one THG unit for each share of Class A Common Stock outstanding. The following table summarizes the changes in ownership of THG units for the periods presented:
| Three months ended September 30, |  | Nine months ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
THG units held by Hagerty, Inc. |  |  |  |  |  |  |
Beginning of period | 85,703,286 |  |  | 84,405,625 |  |  | 84,588,536 |  |  | 83,202,969 |
Issuance of shares under employee plans | 211,582 |  |  | 73,440 |  |  | 1,194,808 |  |  | 1,016,794 |
Exchange of THG units for Class A Common Stock | 189,294 |  |  | — |  |  | 320,818 |  |  | 259,302 |
Warrant Exchange (see Note 17) | 3,876,201 |  |  | — |  |  | 3,876,201 |  |  | — |
End of period | 89,980,363 |  |  | 84,479,065 |  |  | 89,980,363 |  |  | 84,479,065 |
Ownership percentage |  |  |  |  |  |  |
Beginning of period | 25.1 | % |  | 24.8 | % |  | 24.9 | % |  | 24.5 | %
End of period | 26.1 | % |  | 24.8 | % |  | 26.1 | % |  | 24.8 | %
THG units held by other unit holders |  |  |  |  |  |  |
Beginning of period | 255,367,640 |  |  | 255,499,164 |  |  | 255,499,164 |  |  | 255,758,466 |
Exchange of THG units for Class A Common Stock | (189,294) |  |  | — |  |  | (320,818) |  |  | (259,302) |
End of period | 255,178,346 |  |  | 255,499,164 |  |  | 255,178,346 |  |  | 255,499,164 |
Ownership percentage |  |  |  |  |  |  |
Beginning of period | 74.9 | % |  | 75.2 | % |  | 75.1 | % |  | 75.5 | %
End of period | 73.9 | % |  | 75.2 | % |  | 73.9 | % |  | 75.2 | %
Total THG units outstanding | 345,158,709 |  |  | 339,978,229 |  |  | 345,158,709 |  |  | 339,978,229 |
At the end of each reporting period, THG equity attributable to Hagerty, Inc. and the non-controlling unit holders, respectively, is reallocated to reflect their current ownership in THG. Share-Based Compensation Employees of THG subsidiaries are awarded share-based compensation in the form of restricted stock units ("RSUs") and performance restricted stock units ("PRSUs") under the Company's 2021 Stock Incentive Plan. Upon the vesting of these awards, the employees receive shares of Class A Common Stock and the Company is issued an equivalent number of THG units. Employees of THG subsidiaries may also participate in the Company's 2021 Employee Stock Purchase Plan under which these employees may purchase shares of Class A Common Stock at a discounted price and the Company is issued an equivalent number of THG units. During the nine months ended September 30, 2024 and 2023, the Company received 1,194,808 and 1,016,794, respectively, of THG units in connection with shares of Class A Common Stock that were issued as a result of share-based compensation awards vesting under the Company's 2021 Stock Incentive Plan, as well as shares purchased in connection with the ESPP (as defined in 18 — Share-Based Compensation). In addition, during the nine months ended September 30, 2023, the Company received 118,009 of THG units in connection with shares of Class A Common Stock that were issued related to the Company's 2021 Employee Stock Purchase Plan. Exchange of THG Units Each THG unit and, if applicable, the associated share of Class V Common Stock, is exchangeable for one share of Class A Common Stock. In connection with any such exchange, Hagerty, Inc. receives a corresponding number of THG units, thereby increasing its ownership interest in THG. Changes in Hagerty, Inc.'s ownership interest in THG while retaining its controlling interest are accounted for as equity transactions. Accordingly, exchanges of THG units by unit holders other than Hagerty, Inc. increase Hagerty, Inc.'s ownership in THG, thereby reducing the amount recorded as "Non-controlling interest" and increasing "Additional paid-in capital". During the nine months ended September 30, 2024 and 2023, 320,818 and 259,302, respectively, of THG units were exchanged for an equal number of shares of Class A Common Stock. These exchanges resulted in reductions to "Non-controlling interest" and corresponding increases to "Additional paid-in capital" of $3.2 million and $2.3 million, respectively, representing the fair value of Class A Common Stock on the date of each exchange. THG Preferred Units In connection with the Private Placement, the Fourth Amended and Restated Limited Liability Company Agreement of THG was amended and restated in the form of a Fifth Amended and Restated Limited Liability Company Agreement (as subsequently amended and restated, the "THG LLC Agreement"), to, among other things, create a new series of preferred units within THG (the "THG Preferred Units"). The terms of the THG Preferred Units parallel the terms of the Series A Convertible Preferred Stock and are held entirely by Hagerty, Inc. The THG Preferred Units are recorded on the financial statements of THG based on their estimated redemption value, which represents the maximum cash payment, including cumulative dividends, that would be required to be paid to Hagerty, Inc. if the Optional Term Redemption of the Series A Convertible Preferred Stock is exercised. Amounts recognized to accrete the THG Preferred Units to their estimated redemption value are treated as a deemed dividend due to Hagerty, Inc. The amount of this deemed dividend is attributed entirely to Hagerty, Inc. prior to allocating the remainder of THG's net income between controlling and non-controlling interests. In June 2024, THG paid $5.6 million of cash dividends to Hagerty, Inc. on the THG Preferred Units. Refer to Note 15 — Convertible Preferred Stock for additional information on the Private Placement and the Series A Convertible Preferred Stock. Distributions to Unit Holders of THG Under the terms of the THG LLC Agreement, THG is obligated to make tax distributions to its unit holders. During the nine months ended September 30, 2024, THG made tax distributions of $5.3 million to non-controlling interest unit holders and $1.1 million of tax distributions to Hagerty, Inc. There were no such tax distributions during the nine months ended September 30, 2023.
Stockholders' Equity | 16 — Stockholders' Equity Class A Common Stock Hagerty, Inc. is authorized to issue 500,000,000 shares of Class A Common Stock with a par value of $0.0001 per share. Holders of Class A Common Stock are entitled to one vote for each share. As of September 30, 2024 and December 31, 2023, there were 89,980,363 and 84,588,536 shares of Class A Common Stock issued and outstanding, respectively. Class V Common Stock Hagerty, Inc. is authorized to issue 300,000,000 shares of Class V Common Stock with a par value of $0.0001 per share. Class V Common Stock represents voting, non-economic interests in Hagerty, Inc. Holders of Class V Common Stock are entitled to 10 votes for each share. In connection with the business combination that formed Hagerty, Inc. in 2021, shares of Class V Common Stock were issued to HHC and Markel (together, the "Legacy Unit Holders") along with an equivalent number of THG units, as discussed below. Each share of Class V Common Stock, together with the corresponding unit of THG, is exchangeable for one share of Class A Common Stock. As of September 30, 2024 and December 31, 2023, there were 251,033,906 shares of Class V Common Stock issued and outstanding. Preferred Stock Hagerty, Inc. is authorized to issue 20,000,000 shares of Preferred Stock with a par value of $0.0001 per share. Hagerty, Inc.'s Board has the authority to issue shares of Preferred Stock with such designations, voting and other rights and preferences as may be determined from time to time. In June 2023, Hagerty, Inc. issued 8,483,561 shares of newly-designated Series A Convertible Preferred Stock, par value $0.0001 per share, for an aggregate purchase price of $80.0 million, at a per-share purchase price of $9.43. As of September 30, 2024 and December 31, 2023, there were 8,483,561 shares of Preferred Stock issued and outstanding. Refer to Note 15 — Convertible Preferred Stock for additional information. Non-controlling Interests Hagerty, Inc. is the sole managing member of THG and, as a result, consolidates the financial statements of THG into its Condensed Consolidated Financial Statements. The Company reports a non-controlling interest representing the economic interest in THG held by other unit holders of THG. Hagerty, Inc. owns one THG unit for each share of Class A Common Stock outstanding. The following table summarizes the changes in ownership of THG units for the periods presented:
| Three months ended September 30, |  | Nine months ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
THG units held by Hagerty, Inc. |  |  |  |  |  |  |
Beginning of period | 85,703,286 |  |  | 84,405,625 |  |  | 84,588,536 |  |  | 83,202,969 |
Issuance of shares under employee plans | 211,582 |  |  | 73,440 |  |  | 1,194,808 |  |  | 1,016,794 |
Exchange of THG units for Class A Common Stock | 189,294 |  |  | — |  |  | 320,818 |  |  | 259,302 |
Warrant Exchange (see Note 17) | 3,876,201 |  |  | — |  |  | 3,876,201 |  |  | — |
End of period | 89,980,363 |  |  | 84,479,065 |  |  | 89,980,363 |  |  | 84,479,065 |
Ownership percentage |  |  |  |  |  |  |
Beginning of period | 25.1 | % |  | 24.8 | % |  | 24.9 | % |  | 24.5 | %
End of period | 26.1 | % |  | 24.8 | % |  | 26.1 | % |  | 24.8 | %
THG units held by other unit holders |  |  |  |  |  |  |
Beginning of period | 255,367,640 |  |  | 255,499,164 |  |  | 255,499,164 |  |  | 255,758,466 |
Exchange of THG units for Class A Common Stock | (189,294) |  |  | — |  |  | (320,818) |  |  | (259,302) |
End of period | 255,178,346 |  |  | 255,499,164 |  |  | 255,178,346 |  |  | 255,499,164 |
Ownership percentage |  |  |  |  |  |  |
Beginning of period | 74.9 | % |  | 75.2 | % |  | 75.1 | % |  | 75.5 | %
End of period | 73.9 | % |  | 75.2 | % |  | 73.9 | % |  | 75.2 | %
Total THG units outstanding | 345,158,709 |  |  | 339,978,229 |  |  | 345,158,709 |  |  | 339,978,229 |
At the end of each reporting period, THG equity attributable to Hagerty, Inc. and the non-controlling unit holders, respectively, is reallocated to reflect their current ownership in THG. Share-Based Compensation Employees of THG subsidiaries are awarded share-based compensation in the form of restricted stock units ("RSUs") and performance restricted stock units ("PRSUs") under the Company's 2021 Stock Incentive Plan. Upon the vesting of these awards, the employees receive shares of Class A Common Stock and the Company is issued an equivalent number of THG units. Employees of THG subsidiaries may also participate in the Company's 2021 Employee Stock Purchase Plan under which these employees may purchase shares of Class A Common Stock at a discounted price and the Company is issued an equivalent number of THG units. During the nine months ended September 30, 2024 and 2023, the Company received 1,194,808 and 1,016,794, respectively, of THG units in connection with shares of Class A Common Stock that were issued as a result of share-based compensation awards vesting under the Company's 2021 Stock Incentive Plan, as well as shares purchased in connection with the ESPP (as defined in 18 — Share-Based Compensation). In addition, during the nine months ended September 30, 2023, the Company received 118,009 of THG units in connection with shares of Class A Common Stock that were issued related to the Company's 2021 Employee Stock Purchase Plan. Exchange of THG Units Each THG unit and, if applicable, the associated share of Class V Common Stock, is exchangeable for one share of Class A Common Stock. In connection with any such exchange, Hagerty, Inc. receives a corresponding number of THG units, thereby increasing its ownership interest in THG. Changes in Hagerty, Inc.'s ownership interest in THG while retaining its controlling interest are accounted for as equity transactions. Accordingly, exchanges of THG units by unit holders other than Hagerty, Inc. increase Hagerty, Inc.'s ownership in THG, thereby reducing the amount recorded as "Non-controlling interest" and increasing "Additional paid-in capital". During the nine months ended September 30, 2024 and 2023, 320,818 and 259,302, respectively, of THG units were exchanged for an equal number of shares of Class A Common Stock. These exchanges resulted in reductions to "Non-controlling interest" and corresponding increases to "Additional paid-in capital" of $3.2 million and $2.3 million, respectively, representing the fair value of Class A Common Stock on the date of each exchange. THG Preferred Units In connection with the Private Placement, the Fourth Amended and Restated Limited Liability Company Agreement of THG was amended and restated in the form of a Fifth Amended and Restated Limited Liability Company Agreement (as subsequently amended and restated, the "THG LLC Agreement"), to, among other things, create a new series of preferred units within THG (the "THG Preferred Units"). The terms of the THG Preferred Units parallel the terms of the Series A Convertible Preferred Stock and are held entirely by Hagerty, Inc. The THG Preferred Units are recorded on the financial statements of THG based on their estimated redemption value, which represents the maximum cash payment, including cumulative dividends, that would be required to be paid to Hagerty, Inc. if the Optional Term Redemption of the Series A Convertible Preferred Stock is exercised. Amounts recognized to accrete the THG Preferred Units to their estimated redemption value are treated as a deemed dividend due to Hagerty, Inc. The amount of this deemed dividend is attributed entirely to Hagerty, Inc. prior to allocating the remainder of THG's net income between controlling and non-controlling interests. In June 2024, THG paid $5.6 million of cash dividends to Hagerty, Inc. on the THG Preferred Units. Refer to Note 15 — Convertible Preferred Stock for additional information on the Private Placement and the Series A Convertible Preferred Stock. Distributions to Unit Holders of THG Under the terms of the THG LLC Agreement, THG is obligated to make tax distributions to its unit holders. During the nine months ended September 30, 2024, THG made tax distributions of $5.3 million to non-controlling interest unit holders and $1.1 million of tax distributions to Hagerty, Inc. There were no such tax distributions during the nine months ended September 30, 2023.

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