Hagerty Goes Public in a $3 Billion Deal
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The famous classic car insurance company Hagerty has elected to go public.
Hagerty doesn’t do anything half-heartedly, it seems—its deal with Aldel Financial is valued at $3.13 billion dollars.
Hagerty was valued at over $3 billion.
Hagerty going public means more classic car investment options
CNBC reported on the merger between Hagerty and a special purpose acquisition company, SPAC Aldel Financial (ADF.N).
This opens up a new way for stock market investors to invest in the fast-growing classic car market.
Car enthusiasts who usually don’t see good investment options might also want to look at Hagerty.
The classic car market has been doing especially well in recent years. Values are up 6% in 2021 compared to 2020. In the past decade, classic cars have shot up 193% in value, and this trend will likely continue.
Car prices in general have been going wild due to the pandemic chip shortage. This has benefited classic cars, as people’s interest in them has actually been accelerated by COVID-19, according to Hagerty CEO McKeel Hagerty.
Notably, classic car auction sales at Monterey Car Week were up 35% over 2019, to $345 million.
Hagerty’s deal with Aldel includes a $704 million private investment in public equity (PIPE). The merger is expected to deliver $820 million in gross proceeds to the merged company, which is a hefty amount.
After the deal closes, they will start trading on the New York Stock Exchange under the stock symbol HGTY.
Due to Hagerty going public, we can expect them to have more plans to expand the company. Whether this will have a substantial impact on classic car premium rates remains to be seen.
How does classic car insurance work?
Classic car insurance is much cheaper than regular car insurance. This is because classic cars are typically prized vehicles and aren’t driven daily.
If you own an extremely rare or expensive car, the premium will likely go up to match the value.
As for what counts as a classic car, it depends on the insurance company you’re looking at.
In general, if your vehicle meets at least one of the following criteria, it will probably be eligible for classic car insurance:
- The vehicle is at least 25 years old
- It’s modified or is a hotrod
- It’s an exotic/luxury car brand (that’s also over 25 years of age)
- It’s a high-performance muscle car
But being eligible doesn’t automatically mean your car qualifies for a classic insurance policy. To keep rates affordable, companies set limitations, which may even include capped mileage.
For many policies, the classic car must be driven rarely and stored securely. For example, Hagerty has a list of requirements on how a vehicle must be stored and used.
Car shows and meets are permitted, of course! Otherwise, there wouldn’t be so many amazing exhibited vehicles.
There’s also a difference between a classic car and a vintage/antique car, as vintage cars are even older. They will usually have similar policies though.
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