Hagerty Inc

ITEM 1A. RISK FACTORS

Other than the risk factor below, as of the date of this Quarterly Report, there have been no material changes to our risk factors as previously disclosed in our Annual Report. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC. Additional risks that we currently do not know about or currently view as immaterial may also materially adversely affect our business, financial condition, or operating results.

We may be unable to successfully enter into the Proposed Fronting Arrangement with Markel and, even if completed, we may be unable to realize the anticipated benefits from the Proposed Fronting Arrangement.

On July 24, 2025, we announced that we had entered into a non-binding letter of intent regarding the Potential Fronting Arrangement with Markel. Because the letter of intent is non-binding, either party may terminate discussions at any time prior to the execution of definitive agreements. The consummation of the Proposed Fronting Arrangement is subject to the negotiation and execution of definitive binding documentation and the receipt of all required regulatory approvals. There can be no assurance that the Proposed Fronting Arrangement will be completed on the terms currently contemplated, within the anticipated timeframe, or at all. Factors that could prevent the completion of the Proposed Fronting Arrangement include, among others, the inability of the parties to agree on commercially acceptable terms, a decision by either party to pursue alternative counterparties or arrangements, or the failure to obtain necessary regulatory approvals.

Furthermore, even if we are able to enter into definitive agreements and complete the Proposed Fronting Arrangement, we may not realize the anticipated benefits of the arrangement. The success of the Proposed Fronting Arrangement will depend on a variety of factors, including the effective implementation by both parties, changes in market or industry conditions, regulatory developments, and other factors, many of which are outside of our control. As a result, there can be no assurance that the Proposed Fronting Arrangement will achieve its intended objectives or that it will not have an adverse effect on our business, financial condition, or results of operations.

Rising interest rates and the imposition of tariffs on imported goods could increase costs, reduce consumer spending on collector cars and related services, and negatively impact our business, results of operations and financial condition.

Our business depends on consumer demand for collectible cars and related services, which may decline in response to unfavorable economic conditions, such as high inflation or interest rates, or changes in trade and regulatory policies. Consumer spending on discretionary items, such as collector cars and related services, may be influenced by various factors beyond our control, such as unemployment, income levels, consumer confidence, and financial market volatility. When economic conditions deteriorate, consumers may reduce or postpone their spending on collector cars and related services, which could lower the demand for our products and services. Moreover, changes in tariffs, trade policy, or laws and policies affecting foreign trade, manufacturing, development and investment could increase our costs. For example, the recent imposition of tariffs on certain imported goods could affect the availability and cost of parts to repair our insureds' vehicles, which could impact our cost of claims, insurance premiums and customer satisfaction. While we have not yet identified direct effects from the recent changes in tariffs and other trade measures in our business, the long-term consequences of these actions remain uncertain and could negatively affect both the overall economy and our business. Any prolonged downturns in the economy or decreases in consumer demand for collector cars and related services could materially adversely affect our business, results of operations, and financial condition.