Pablo Singzon: The rate filings that you referenced for 2023, I think it was in the press release.
Patrick McClymont: Yes. So, we started influencing rate increases in 35 states late last year. That’s all flowing through now. We’ve got a second round of rate increases that €“in the remaining states that happened this year, that’s all baked into how we think about the loss ratio. And so, we think that with those rate increases, we’re going to get back to that 41% area that we’ve had historically.
Pablo Singzon: Thank you. And then the second question I had, so just excluding the impairment charge, operating expenses excluding D&A grew about 14% this quarter versus 28% growth in revenues. Is that a sort of should assume in 2023 for you to get, by my math, about the 5 points of margin expansion you need to get your targets?
Patrick McClymont: Yes. So, I think the way we’re looking at it is in 2022, at the end of the year, we ended up with a slight EBITDA loss of $2 million and so what are the kind of the big reconciling items to get from that up to the guidance that we’ve talked about? One would be the annualized savings that we realized from our cost reduction initiatives and so that’s close to $20 million. And those actions we implemented right at the beginning of the year. And so, we’re going to get essentially a full-years’ worth of benefit from them. In addition to that, we’ve talked about Ian, we’ve talked about the reserve increase and so that’s about $16.5 million. So, those are the two biggest reconciling items. And then our marketplace business, a couple of things going on there.
One is, we now own it for the full-year. And it did 14 million of revenue last year. So, roughly if you double that because we own it now for the full-year, plus hopefully there’s some growth. And that business is profitable, right? Those live auctions are designed to be profitable. And so that will actually help from a cash flow standpoint EBITDA. So, that’s sort of mid-single-digits. And then the other one is the increase in written premium. So, what we talked about the 11% to 13% and having that flow through. And so when we add it all together, that gets you sort of the midpoint of that that we talked about. So, hopefully that gives you the reconciliation. On the expense side of things, we’re going to actually take G&A down in 2023 relative to where we were in 2022 on an absolute basis.
Other expenses are increasing, but they’re increasing at a lower rate than what we’ve shown over the last couple of years. So, we’ve reduced some expenses on absolute basis and we’ve bent the curve on others and all in the effort to get to the profitability that we’re talking about.
Pablo Singzon: Thanks. That’s helpful.
Operator: Thank you. At this time, I’d like to turn the floor back over to McKeel for closing comments.
McKeel Hagerty: All right. Thank you, operator, and thank you everybody for your questions. , Hagerty, thank you for your excellent work in 2022 and commitment to delivering great results for our stakeholders in 2023. We appreciate your dedication and think it is an exciting time to be part of Hagerty. I remain as optimistic as ever about the opportunity for Hagerty to grow over the coming years as we are in the early days of leveraging our branded ecosystem. And I’m encouraged by the direction we are headed in 2023. While the strategy for expanding our reach is largely unchanged. We will execute against it with a heightened focus on efficiency. We all learn and grow year-after-year and become stronger in the process. Thank you for joining our call today and never stop driving.
Operator: Ladies and gentlemen, thank you for your participation. This concludes today’s event. You may disconnect your lines or logoff the webcast at this time and enjoy the rest of your day.
