TRAVERSE CITY — Vintage car insurer Hagerty Insurance expects to double its size in the next three to four years, the company's chief executive officer said.
That’s a significant goal for a company that already employs about 550 people in the Traverse City area and another 100 elsewhere, making Hagerty one of the region’s most prolific employers. CEO McKeel Hagerty said the company's rapid growth is linked to a collector car insurance market that's thriving globally.
“It’s a profitable business that’s growing very rapidly,” Hagerty said. “We will absolutely double the size of this business within the next three years to the end of the fourth year. We are on a path to do it.”
Hagerty said the challenge of such accelerated growth is putting the company in a better financial position while managing risk and the cost.
“We have to make sure it’s financially strong so we can continue,” Hagerty said. “We have 600 families that, at least in some part, depend on us.”
Hagerty Insurance founders Frank and Louise Hagerty never intended the company to be so big, with annual U.S. sales that now hover near $200 million. The company was founded in 1984 at the Hagerty family home as a hobby business that could help fund the couple's retirement.
"We always say that this business really started in the basement of my parents’ home, in the house that I grew up in out on the Peninsula," McKeel Hagerty said. "It was really meant to be more of a retirement business. It was never meant to be a big company by any stretch."
The original Hagerty Marine Insurance targeted the niche market of insuring classic wooden boats. The 1991 expansion into the classic car insurance market was rough, Hagerty said, but new marketing strategies spread the word nationally, and business soared. Hagerty remains a family business to this day with McKeel's sisters, Kim and Tammy, on Hagerty's Board of Directors.
"You grow, you try to get infrastructure in place, you grow more, try to get more infrastructure in place," McKeel Hagerty said. "You’ve got to move. You’ve got to build buildings, you have to do all of these things. The challenges of the growth -- it's fun to think about, but the challenges became very complex.
"We hired like 65 or 70 people again in Traverse City last year," McKeel Hagerty said. "There was one year where we hired 165 people, and that was the scariest year ever because I remember thinking, 'Oh my goodness, where are we going to put them? Have we lost control? Do we really need them?'"
There are no plans to take the company public as it enjoys what Hagerty terms a boom market in the classic car industry. The company's tracking of high-end price guides for classic cars rivals the price of gold and far outpaced the Dow Jones industrial average and the median U.S. home price since 2006.
"An absolute boom time in the collector car space, and it's not just in the United States," Hagerty said. "We are in the perfect scenario for cars to be really on the upswing."
Hagerty does not believe the current market is a bubble because classic cars' interest is global. Sweden, he said, imports 4,000 to 5,000 American muscle cars annually. There are still significant risks, though, as was evidenced by Hurricane Sandy. The hurricane caused "millions and millions of dollars in claims," Hagerty said.
"Our expertise is in valuing these vehicles, putting coverage in place and now doing it internationally," he said. "We want to do this one thing really well so we can have confidence in saying we are literally being the best we can be, and the growth will come."