Markel & State Farm fuel specialty auto insurer Hagerty for growth

Markel,  State Farm and founders ponied up $105 million for US specialty automotive insurer Hagerty in a private placement of convertible preferred stock plus debt that Hagerty said would push the pace of growth in its core segment.

State Farm led with a $50 million contribution to the preferred equity placement, or 62.5% of the total, and added $25 million in debt financing to Hagerty unit Hagerty Re. Markel put up $15 million, or 18.75%, of the new convertible preferred equity.

Hagerty, an automotive enthusiast brand offering membership programmes as well as specialty insurance operating primarily as an MGA, also includes Bermuda class 3 reinsurance unit Hagerty Re.

For Markel, Hagerty is the group's “most significant” minority stake investment with Markel claiming a 23% stake as of end-Q1 2023, the latest quarterly report indicated. Markel underwrites insurance for Hagerty, a portion of which is ceded to Hagerty Re. In Q1 2023, Markel took $165.0 million in gross written premium on the partnership, ceding $124.6 million back to Hagerty Re.

Markel Group CEO Tom Gayner said: “Hagerty is an important partner for our insurance business, and we are excited to see them further expand their insurance offerings by finding new and innovative ways to serve automotive enthusiasts.”

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