Erie Indemnity Co. ERIE

NAS: ERIE | ISIN: US29530P1021   28/03/2024
401,57 USD (-1,62%)
(-1,62%)   28/03/2024

Erie Indemnity Reports First Quarter 2023 Results

Net Income was $86.2 million, Earnings per Diluted Share was $1.65

ERIE, Pa., April 27, 2023 /PRNewswire/ -- Erie Indemnity Company (NASDAQ: ERIE) today announced financial results for the quarter ending March 31, 2023.  Net income was $86.2 million, or $1.65 per diluted share, in the first quarter of 2023, compared to $68.6 million, or $1.31 per diluted share, in the first quarter of 2022.

1Q 2023

(in thousands)

1Q'23

1Q'22


Operating income

$      110,543

$        84,312


Investment (loss) income

(4,732)

3,009


Interest expense and other (income), net

(3,337)

526


Income before income taxes

109,148

86,795


Income tax expense

22,907

18,176


Net income

$        86,241

$        68,619






 

1Q 2023 Highlights

Operating income before taxes increased $26.2 million, or 31.1 percent, in the first quarter of 2023 compared to the first quarter of 2022.

  • Management fee revenue - policy issuance and renewal services increased $70.1 million, or 14.4 percent, in the first quarter of 2023 compared to the first quarter of 2022.
  • Management fee revenue - administrative services increased $0.9 million, or 6.1 percent, in the first quarter of 2023 compared to the first quarter of 2022.
  • Cost of operations - policy issuance and renewal services
  •  
    • Commissions increased $27.7 million in the first quarter of 2023 compared to the first quarter of 2022, primarily driven by the growth in direct and affiliated assumed written premium, partially offset by a decrease in agent incentive compensation. 
  •  
    • Non-commission expense increased $17.0 million in the first quarter of 2023 compared to the first quarter of 2022.  Underwriting and policy processing expense increased $2.7 million primarily due to increased personnel and underwriting report costs.  Information technology costs increased $11.5 million primarily due to increased professional fees, hardware and software costs, and personnel costs.  Administrative and other costs increased $2.9 million primarily due to an increase in personnel costs related to compensation and building occupancy costs, partially offset by a decrease in professional fees.  Personnel costs in all expense categories were also impacted by lower pension costs due to an increase in the discount rate compared to 2022.

Loss from investments before taxes totaled $4.7 million in the first quarter of 2023 compared to income from investments before taxes of $3.0 million in the first quarter of 2022.  Net investment income was $2.2 million in the first quarter of 2023 compared to $10.5 million in the same period of 2022.  Included in net investment income is $10.8 million of limited partnership losses in the first quarter of 2023 compared to earnings of $2.8 million in the first quarter of 2022.  Net realized and unrealized losses on investments were $5.3 million in the first quarter of 2023 compared to $7.3 million in the first quarter of 2022.

Webcast Information

Indemnity has scheduled a pre-recorded audio broadcast on the Web for 10:00 AM ET on April 28, 2023.  Investors may access the pre-recorded audio broadcast by logging on to www.erieinsurance.com.

Erie Insurance Group

According to A.M. Best Company, Erie Insurance Group, based in Erie, Pennsylvania, is the 11th largest homeowners insurer, 13th largest automobile insurer and 13th largest commercial lines insurer in the United States based on direct premiums written.  Founded in 1925, Erie Insurance is a Fortune 500 company and the 19th largest property/casualty insurer in the United States based on total lines net premium written.  Rated A+ (Superior) by A.M. Best, ERIE has more than 6 million policies in force and operates in 12 states and the District of Columbia. 

News releases and more information are available on ERIE's website at www.erieinsurance.com.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995:

Statements contained herein that are not historical fact are forward-looking statements and, as such, are subject to risks and uncertainties that could cause actual events and results to differ, perhaps materially, from those discussed herein.  Forward-looking statements relate to future trends, events or results and include, without limitation, statements and assumptions on which such statements are based that are related 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, operating results, 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 outcomes and results may differ materially from what is expressed or forecasted 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 upon our relationship with the Erie Insurance Exchange ("Exchange") and the management fee under the agreement with the subscribers at the Exchange;
  • dependence upon our relationship with the Exchange and the growth of the Exchange, including:
  •  
    • general business and economic conditions;
  •  
    • factors affecting insurance industry competition;
  •  
    • dependence upon the independent agency system; and
  •  
    • ability to maintain our reputation for customer service;
  • dependence upon our relationship with the Exchange and the financial condition of the Exchange, 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;
  •  
    • emergence of significant unexpected events, including pandemics and inflation;
  •  
    • emerging claims and coverage issues in the industry; and
  •  
    • severe weather conditions or other catastrophic losses, including terrorism;
  • costs of providing policy issuance and renewal services to the Exchange under the subscriber's agreement;
  • ability to attract and retain talented management and employees;
  • ability to ensure system availability and effectively manage technology initiatives;
  • difficulties with technology or data security breaches, including cyber attacks;
  • ability to maintain uninterrupted business operations;
  • 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 on which 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

Statements of Operations

(dollars in thousands, except per share data)




Three months ended March 31,



2023


2022



(Unaudited)

Operating revenue





Management fee revenue - policy issuance and renewal services


$         558,090


$         487,992

Management fee revenue - administrative services


15,189


14,313

Administrative services reimbursement revenue


172,827


163,327

Service agreement revenue


6,359


6,478

Total operating revenue


752,465


672,110






Operating expenses





Cost of operations - policy issuance and renewal services


469,095


424,471

Cost of operations - administrative services


172,827


163,327

Total operating expenses


641,922


587,798

Operating income


110,543


84,312






Investment income





Net investment income


2,183


10,504

Net realized and unrealized investment losses


(5,282)


(7,279)

Net impairment losses recognized in earnings


(1,633)


(216)

Total investment (loss) income


(4,732)


3,009






Interest expense



999

Other income


3,337


473

Income before income taxes


109,148


86,795

Income tax expense


22,907


18,176

Net income


$           86,241


$           68,619






Net income per share





Class A common stock – basic


$                1.85


$               1.47

Class A common stock – diluted


$                1.65


$               1.31

Class B common stock – basic and diluted


$                 278


$                221






Weighted average shares outstanding – Basic





Class A common stock


46,188,819


46,188,761

Class B common stock


2,542


2,542






Weighted average shares outstanding – Diluted





Class A common stock


52,296,621


52,300,501

Class B common stock


2,542


2,542






Dividends declared per share





Class A common stock


$                1.19


$               1.11

Class B common stock


$            178.50


$           166.50

 

Erie Indemnity Company

Statements of Financial Position

(in thousands)




March 31,
2023


December 31,
2022



(Unaudited)



Assets





Current assets:





Cash and cash equivalents


$         122,376


$         142,090

Available-for-sale securities


57,470


24,267

Receivables from Erie Insurance Exchange and affiliates, net


533,306


524,937

Prepaid expenses and other current assets


62,738


79,201

Accrued investment income


8,191


8,301

Total current assets


784,081


778,796






Available-for-sale securities, net


858,196


870,394

Equity securities


72,963


72,560

Fixed assets, net


417,339


413,874

Agent loans, net


59,315


60,537

Other assets


32,075


43,295

Total assets


$      2,223,969


$     2,239,456






Liabilities and shareholders' equity





Current liabilities:





Commissions payable


$         322,910


$         300,028

Agent bonuses


20,565


95,166

Accounts payable and accrued liabilities


168,142


165,915

Dividends payable


55,419


55,419

Contract liability


37,187


36,547

Deferred executive compensation


7,345


12,036

Total current liabilities


611,568


665,111






Defined benefit pension plans


53,522


51,224

Contract liability


18,142


17,895

Deferred executive compensation


12,634


13,724

Deferred income taxes, net


16,081


14,075

Other long-term liabilities


25,055


29,019

Total liabilities


737,002


791,048






Shareholders' equity


1,486,967


1,448,408

Total liabilities and shareholders' equity


$      2,223,969


$     2,239,456

 

 

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SOURCE Erie Indemnity Company

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