Markel Alliance Agreement and Reinsurance Agreement
We are a party to a number of agreements with Markel, which prior to the Business Combination owned 25% of the equity of Hagerty and following the Closing became a related person as a result of its director designation rights and stock ownership in connection with the Business Combination. Pursuant to the terms of the Fourth Amended and Restated Master Alliance Agreement, dated as of December 8, 2021, between us and Markel, we entered into a business relationship with Markel (the “Alliance”) involving the marketing, production, underwriting, selling and administration of personal property and casualty insurance for classic and collector motor vehicles and other automotive collectibles within the U.S. In connection with the Alliance, the parties, or certain of their subsidiaries, have entered into an agency agreement, a claims services agreement and a claims management agreement pursuant to which we, or certain of our subsidiaries, provide claims management services and agency services to Essentia Insurance Company, a Missouri-domiciled insurance company owned by Markel (“Essentia”). We have agreed pursuant to the Alliance that all insurance policies produced by us and our subsidiaries in the U.S. will be underwritten by Essentia unless Markel consents otherwise. Further, pursuant to a quota share reinsurance agreement between Hagerty Re and Evanston Insurance Company, an Illinois-domiciled insurance company owned by Markel (“Evanston”), in exchange for a fee, Evanston retrocedes to Hagerty Re a quota share of certain liabilities that it reinsures for Essentia. In 2021, Hagerty Re entered into a reinsurance agreement with Markel International Insurance Company Limited to reinsure classic auto risks produced by Hagerty’s U.K. MGA. Markel International Insurance Company Limited is a subsidiary of Markel. During the years ended December 31, 2019, December 31, 2020 and December 31, 2021, Hagerty received approximately $334,794,000, $521,226,000 and $430,145,000, respectively, from Markel in consideration for these services.
Employment of Soon Hagerty
Soon Hagerty, the wife of McKeel O. Hagerty, our CEO, serves as Senior Vice President of Brand of Hagerty. During the years ended December 31, 2019, December 31, 2020 and December 31, 2021, Ms. Hagerty earned approximately $189,190, $301,276 and $345,812, respectively, in total compensation from Hagerty.
Tammy Hagerty, the sister of McKeel O. Hagerty, our CEO, served on the board of directors of Hagerty prior to the Business Combination. During the years ended December 31, 2019, December 31, 2020 and December 31, 2021, Ms. Hagerty earned approximately $168,755, $100,000 and $115,000, respectively, in total compensation from Hagerty.
Louise Hagerty, the mother of McKeel O. Hagerty, our CEO, is paid a founder’s stipend per the Founder’s Agreement. During the years ended December 31, 2019, December 31, 2020 and December 31, 2021, Ms. Hagerty was paid approximately $194,976, $175,026 and $183,440, respectively, from Hagerty and is due to receive $192,259 in 2022.
Employment of Daria Smith
Daria Chernysheva, the wife of Kelly Smith, Hagerty’s Chief Strategy Officer, serves as a consultant to Hagerty under contract through her company Vavara, LLC. As of December 31, 2021, Mr. Smith and Ms. Chernysheva
co-owned
Vavara, LLC. Vavara, LLC supports the ongoing product design and development of various Hagerty initiatives under a Master Services Agreement dated October 2020 and the most recent statement of work executed dated July 2021 which has been renewed for 2022. During the years ended December 31, 2020 and December 31, 2021, Hagerty paid Vavara, LLC approximately $14,144 and $180,285, respectively.