Erie Indemnity Reports First Quarter 2022 Results

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The net income was $68.6 millionearnings per diluted share was $1.31

ERIE, Pa., April 28, 2022 /PRNewswire/ — Erie Indemnity Company (NASDAQ: ERIE) today announced its financial results for the quarter ending March 31, 2022. Net income was $68.6 millionor $1.31 per diluted share, in the first quarter of 2022, versus $73.6 millionor $1.41 per diluted share, in the first quarter of 2021.

Q1 2022

(in thousands)

1Q’22

1Q’21


Operating result

$84,312

$76,095


investment income

3,009

17,988


Interest expense and other, net

526

1,528


income before taxes

86,795

92,555


income tax expense

18,176

18,989


Net revenue

$68,619

$73,566







First Quarter 2022 Highlights



Pre-tax operating profit increased $8.2 millioni.e. 10.8%, in the first quarter of 2022 compared to the first quarter of 2021.

  • Management Fee Revenue – Increase in Policy Issuance and Renewal Services $32.3 millioni.e. 7.1%, in the first quarter of 2022 compared to the first quarter of 2021.
  • Management fee income – administrative services down $0.5 millioni.e. 3.6%, in the first quarter of 2022 compared to the first quarter of 2021.
  • Transaction costs – policy issuance and renewal services
      • Increased commissions $19.8 million in the first quarter of 2022 compared to the first quarter of 2021, mainly driven by growth in deemed direct and affiliated written premiums, mainly in lines of business that pay a higher commission rate.
      • Non-commission expenses increased $4.2 million in the first quarter of 2022 compared to the first quarter of 2021. Sales and advertising increased $1.8 million primarily due to agent-related expenses. Increase in administrative and other costs $3.1 million mainly due to an increase in professional fees compared to the same period in 2021.

Investment income before taxes totaled $3.0 million in the first quarter of 2022 compared to $18.0 million in the first quarter of 2021. Net investment income was $10.5 million in the first quarter of 2022 compared to $17.1 million in the first quarter of 2021. Net investment income includes $2.8 million of the Partnership’s earnings in the first quarter of 2022 compared to $9.0 million in the first quarter of 2021. Net realized and unrealized losses on investments were $7.3 million in the first quarter of 2022 compared to net realized and unrealized gains of $0.8 million in the first quarter of 2021.

Webcast Information
Indemnity has scheduled a pre-recorded audio webcast for 10:00 a.m. ET on April 29, 2022. Investors can access the pre-recorded audio webcast by logging on to www.erieinsurance.com.

Erie Insurance Group
According to AM Best Company, Erie Insurance Group, based in Erie, Pennsylvaniais the 12and largest home insurer, 13and the largest automobile insurer and the 13th largest commercial lines insurer in the United States based on direct written premiums. Founded in 1925, Erie Insurance is a Fortune 500 company and the 16th largest property and casualty insurer in United States based on the total number of net premium lines written. Rated A+ (superior) by AM Best, ERIE has over 6 million policies in force and operates in 12 states and the District of Columbia.

Press releases and more information are available at of ERIE website at www.erieinsurance.com.

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“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995:
Statements contained herein that are not historical facts are forward-looking statements and, as such, are subject to risks and uncertainties that could cause actual events and results to differ, possibly substantially, from those discussed here. Forward-looking statements relate to future trends, events or results and include, without limitation, statements and assumptions on which such statements are based that relate to our plans, strategies, objectives, expectations, intentions and adequacy of resources. Examples of forward-looking statements are discussions relating to premium and investment income, expenses, results of operations and compliance with contractual and regulatory requirements. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Therefore, actual results may differ materially from what is expressed or anticipated in such forward-looking statements. Among the risks and uncertainties, in addition to those set forth in our filings with the Securities and Exchange Commission, that could cause actual results and future events to differ from those set forth or contemplated in the forward-looking statements, include the following: :

  • dependence on our relationship with the Erie Insurance Exchange (“Exchange”) and management fees under the Exchange’s underwriter agreement;
  • dependence on our relationship with the Exchange and the growth of the Exchange, including:
    • general commercial and economic conditions;
    • factors affecting competition in the insurance industry;
    • dependence on the system of independent agencies; and
    • ability to maintain our reputation for customer service;
  • dependence on our relationship with the Bourse and the financial condition of the Bourse, including:
    • the Exchange’s ability to maintain acceptable financial strength ratings;
    • factors affecting the quality and liquidity of the Exchange’s investment portfolio;
    • changes in government regulation of the insurance industry;
    • litigation and regulatory actions;
    • the emergence of significant unexpected events, including pandemics;
    • emerging claims and coverage issues in the industry; and
    • severe weather or other catastrophic losses, including terrorism;
  • the costs of providing policy issuance and renewal services to the Exchange under the Subscription Agreement;
  • ability to attract and retain talented managers and employees;
  • ability to ensure system availability and effectively manage technology initiatives;
  • difficulties relating to technological failures or data security, including cyberattacks;
  • ability to maintain uninterrupted business operations;
  • the outcome of pending and potential litigation;
  • factors affecting the quality and liquidity of our investment portfolio; and
  • our ability to meet liquidity needs and access capital.

A forward-looking statement speaks only as of the date it is made and reflects our analysis only as of that date. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changes in assumptions or otherwise.

Erie Indemnity Company

Transaction States

(in thousands of dollars, except per share data)




Three months ended March 31



2022


2021



(Unaudited)

Operating revenue





Management Fee Revenue – Policy Issuance and Renewal Services


$487,992


$455,718

Revenue from management fees – administrative services


14,313


14,847

Reimbursement revenue from administrative services


163,327


153,533

Service contract revenue


6,478


6,079

Total operating revenue


672 110


630 177






Operating Expenses





Transaction costs – policy issuance and renewal services


424 471


400 549

Cost of operations – administrative services


163,327


153,533

Total operating expenses


587 798


554,082

Operating result


84,312


76,095






investment income





Net investment income


10,504


17,097

Net realized and unrealized investment gains (losses)


(7,279)


804

Net recoveries of impairment (losses) recognized in profit or loss


(216)


87

Total investment income


3,009


17,988






Interest expense


999


1,009

Other income (expenses)


473


(519)

income before taxes


86,795


92,555

income tax expense


18,176


18,989

Net revenue


$68,619


$73,566






Net earnings per share





Class A common stock – basic


$1.47


$1.58

Class A common shares – diluted


$1.31


$1.41

Class B common shares – basic and diluted


$221


$237






Weighted Average Shares Outstanding – Basic





Class A common shares


46,188,761


46,188,860

Class B common shares


2,542


2,542






Weighted average number of shares outstanding – Diluted





Class A common shares


52,300,501


52,315,958

Class B common shares


2,542


2,542






Dividends declared per share





Class A common shares


$1,110


$1,035

Class B common shares


$166.50


$155.25

Erie Indemnity Company

Statements of financial position

(in thousands)




March, 31st, 2022


The 31st of December, 2021



(Unaudited)



Assets





Current assets:





Cash and cash equivalents


$141,305


$183,702

Titles available for sale


46 155


38,396

Claims on Erie Insurance Exchange and affiliates, net


478,754


479 123

Prepaid expenses and other current assets


78,877


56 206

Accrued investment income


6,255


6,303

Total current assets


751,346


763 730






Securities available for sale, net


877 165


907 689

Equity securities


78,069


87,743

Fixed assets, net


396,072


374,802

Loans to agents, net


61,579


58,683

Deferred income taxes, net


9,818


145

other assets


49,804


49,265

Total assets


$2,223,853


$2,242,057






Liabilities and equity





Current liabilities:





Fees payable


$287,989


$270,746

Agent bonuses


31,507


120,437

Accounts payable and accrued liabilities


186 386


138,317

Dividends payable


51,693


51,693

Contractual responsibility


34,872


34,935

Executive deferred compensation


6,752


12,637

Current portion of long-term borrowings


2,132


2,098

Total current liabilities


601 331


630 863






Defined benefit pension plans


139 231


130,383

Long-term borrowings


91 177


91,734

Contractual responsibility


17,493


17,686

Executive deferred compensation


13,821


14,571

Other long-term liabilities


26,600


14,342

Total responsibilities


889 653


899 579






Equity


1,334,200


1,342,478

Total liabilities and equity


$2,223,853


$2,242,057

SOURCE Erie Indemnity Company

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