v3.25.2
Supplemental Balance Sheet and Cash Flow Information
 6 Months Ended
Jun. 30, 2025
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Supplemental Balance Sheet and Cash Flow Information
3 — Supplemental Balance Sheet and Cash Flow Information

Cash and Cash Equivalents and Restricted Cash and Cash Equivalents — As of June 30, 2025 and 2024, cash and cash equivalents and restricted cash and cash equivalents were as follows:

June 30,
20252024
in thousands
Cash and cash equivalents$140,300 $120,936 
Restricted cash and cash equivalents190,286 194,586 
Total cash and cash equivalents and restricted cash and cash equivalents
$330,586 $315,522 
Restricted Assets — The Company's MGA subsidiaries collect premiums from insureds on behalf of insurance carriers. Prior to remittance to the insurance carrier, these funds are required to be held in trust for the benefit of the insurance carriers and segregated from the Company's operating cash.

Hagerty Re maintains trust accounts for the benefit of various ceding insurers as security for its obligations for losses, loss expenses, unearned premium, and profit-sharing commissions.

Our wholly owned insurance carrier subsidiary, Drivers Edge Insurance Company ("Drivers Edge"), maintains assets on deposit with a number of regulatory authorities to support its insurance operations. Refer to Note 10 — Acquisition for additional information related to the Company's acquisition of Drivers Edge.

BAC and its consolidated subsidiaries maintain bank accounts that are required for the operation of the BAC Credit Facility (as defined in Note 15 — Debt). The funds in these bank accounts represent security under the BAC Credit Facility and their use is restricted to the servicing of the debt outstanding under that facility.

The following table presents the components of the Company's restricted assets as of June 30, 2025 and December 31, 2024:

Balance Sheet ClassificationJune 30,December 31,
20252024
in thousands
Cash and cash equivalents Restricted cash and cash equivalents$190,286 $128,061 
Fixed maturity securitiesInvestments589,118 577,688 
Equity securitiesInvestments12,456 11,839 
Total restricted assets$791,860 $717,588 
Variable Interest Entities — Broad Arrow Capital LLC ("BAC") and certain of its subsidiaries transfer notes receivable to wholly owned, bankruptcy-remote, special purpose entities (each, an "SPE") to secure borrowings under the BAC Credit Agreement (as defined in Note 15 — Debt).

These SPEs are considered to be variable interest entities (each, a "VIE") under GAAP and their financial statements are consolidated by BAC, which is the primary beneficiary of the SPEs and also a consolidated subsidiary of the Company. BAC is considered to be the primary beneficiary of the SPEs because it has (i) power over the significant activities of the SPEs through its role as servicer of the notes receivable used to secure borrowings under the BAC Credit Agreement and (ii) the obligation to absorb losses or the right to receive returns that could be significant through its interest in the residual cash flows of the SPEs.

Refer to Note 7 — Notes Receivable and Note 15 — Debt for additional information.
The following table presents the assets and liabilities of the Company's consolidated VIEs as of June 30, 2025 and December 31, 2024:

June 30,December 31,
20252024
ASSETSin thousands
Cash and cash equivalents$802 $1,746 
Restricted cash and cash equivalents4,431 1,221 
Notes receivable64,646 49,337 
Other assets1,448 1,961 
TOTAL ASSETS$71,327 $54,265 
LIABILITIES
Accounts payable, accrued expenses and other current liabilities (1)
$23,924 $999 
Long-term debt, net17,275 30,193 
TOTAL LIABILITIES$41,199 $31,192 
(1)    As of June 30, 2025, Accounts payable, accrued expenses and other current liabilities includes the current portion of outstanding borrowings under the BAC Credit Facility (as defined in Note 15 — Debt) totaling $21.6 million.
Supplemental Cash Flow Information — The table below presents information regarding the Company's non-cash investing and financing activities, as well as the cash paid for interest and taxes for the six months ended June 30, 2025 and 2024:

Six months ended June 30,
20252024
Non-cash investing activities:in thousands
Issuance of notes receivable (1)
$9,816 $2,474 
Collection of notes receivable (1)
$1,884 $6,478 
Capital expenditures$801 $212 
Non-cash financing activities:
Exchange of THG units for Class A Common Stock (Refer to Note 17)
$712 $1,172 
Cash paid for:
Interest$4,337 $3,454 
Income taxes$11,794 $15,800 
(1)    In certain situations, BAC makes loans to refinance accounts receivable balances generated by Broad Arrow Group, Inc. ("Broad Arrow") auctions and private sales. These loans are accounted for on the Condensed Consolidated Balance Sheets as non-cash reclassifications between "Accounts receivable" and "Notes receivable" and are not presented within Investing Activities in the Company's Condensed Consolidated Statements of Cash Flows. Upon repayment, the cash received in settlement of such loans is classified within Operating Activities in the Company's Condensed Consolidated Statements of Cash Flows.

The issuance of Class A Common Stock resulting from the vesting of restricted stock units ("RSUs") is a non-cash financing activity. Refer to Note 18 — Share-Based Compensation for information related to share-based compensation.