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Jul 25, 2024

Erie Indemnity Reports Second Quarter 2024 Results

Net Income per Diluted Share was $3.13 for the Quarter and $5.52 for the Six Months of 2024 ERIE, Pa. , July 25, 2024 /PRNewswire/ -- Erie Indemnity Company (NASDAQ: ERIE ) today announced financial results for the quarter and six months ending June 30, 2024 .  Net income was $163.9 million , or

Net Income per Diluted Share was $3.13 for the Quarter and $5.52 for the Six Months of 2024

ERIE, Pa., July 25, 2024 /PRNewswire/ -- Erie Indemnity Company (NASDAQ: ERIE) today announced financial results for the quarter and six months ending June 30, 2024.  Net income was $163.9 million, or $3.13 per diluted share, in the second quarter of 2024, compared to $117.9 million, or $2.25 per diluted share, in the second quarter of 2023.  Net income was $288.5 million, or $5.52 per diluted share, in the first six months of 2024, compared to $204.1 million, or $3.90 per diluted share, in the first six months of 2023.

2Q and First Half 2024

(in thousands)

2Q'24

2Q'23

1H'24

1H'23

Operating income

$      190,208

$      134,158

$      329,020

$      244,701

Investment income

13,827

11,627

28,906

6,895

Other income

3,292

3,305

6,703

6,642

Income before income taxes

207,327

149,090

364,629

258,238

Income tax expense

43,424

31,238

76,174

54,145

Net income

$      163,903

$      117,852

$      288,455

$      204,093






 

                                   2Q 2024 Highlights                                   

Operating income before taxes increased $56.1 million, or 41.8 percent, in the second quarter of 2024 compared to the second quarter of 2023.

  • Management fee revenue - policy issuance and renewal services increased $127.5 million, or 20.1 percent, in the second quarter of 2024 compared to the second quarter of 2023.
  • Management fee revenue - administrative services increased $1.4 million, or 9.0 percent, in the second quarter of 2024 compared to the second quarter of 2023.
  • Cost of operations - policy issuance and renewal services
    • Commissions increased $68.8 million in the second quarter of 2024 compared to the second quarter of 2023, primarily driven by the growth in direct and affiliated assumed written premium and, to a lesser extent, an increase in agent incentive compensation related to profitable growth.
    • Non-commission expense increased $4.1 million in the second quarter of 2024 compared to the second quarter of 2023. Underwriting and policy processing expense increased $4.2 million primarily due to increased underwriting report and personnel costs. Information technology costs decreased $3.8 million primarily due to a decrease in professional fees and personnel costs. Customer service costs increased $2.0 million primarily due to increased personnel costs and credit card processing fees.

Income from investments before taxes totaled $13.8 million in the second quarter of 2024 compared to $11.6 million in the second quarter of 2023.  Net investment income was $16.0 million in the second quarter of 2024 compared to $13.5 million in the second quarter of 2023. 

                                   First Half 2024 Highlights                                   

Operating income before taxes increased $84.3 million, or 34.5 percent, in the first six months of 2024 compared to the first six months of 2023.

  • Management fee revenue - policy issuance and renewal services increased $235.1 million, or 19.7 percent, in the first six months of 2024 compared to the first six months of 2023.
  • Management fee revenue - administrative services increased $3.2 million, or 10.3 percent, in the first six months of 2024 compared to the first six months of 2023.
  • Cost of operations - policy issuance and renewal services
    • Commissions increased $135.8 million in the first six months of 2024 compared to the first six months of 2023, primarily driven by the growth in direct and affiliated assumed written premium and, to a lesser extent, an increase in agent incentive compensation related to profitable growth.
    • Non-commission expense increased $18.4 million in the first six months of 2024 compared to the first six months of 2023. Underwriting and policy processing expense increased $8.7 million primarily due to increased underwriting report and personnel costs. Information technology costs decreased $7.5 million primarily due to a decrease in professional fees and personnel costs largely driven by an increase in capitalized labor costs related to technology initiatives. Sales and advertising expense increased $5.2 million primarily due to increased agent-related and advertising costs. Customer service costs increased $4.0 million primarily due to increased personnel costs and credit card processing fees. Administrative and other costs increased $8.0 million primarily due to increased personnel costs, charitable contributions and professional fees.

Income from investments before taxes totaled $28.9 million in the first six months of 2024 compared to $6.9 million in the first six months of 2023.  Net investment income was $31.9 million in the first six months of 2024 compared to $15.7 million in the first six months of 2023.  Net investment income included $0.3 million of limited partnership earnings in the first six months of 2024 compared to losses of $10.7 million in the first six months of 2023.  Net realized and unrealized gains were $0.1 million in the first six months of 2024 compared to losses of $7.0 million in the first six months of 2023.

Webcast Information

Indemnity has scheduled a pre-recorded audio broadcast on the Web for 10:00 AM ET on July 26, 2024.  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 12th 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 17th 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 7 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, including technological innovations;
    • dependence upon the independent agency system; and
    • ability to maintain our brand, including 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 economic or social 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 subscribers at 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;
  • compliance with complex and evolving laws and regulations and outcome of pending and potential litigation;
  • factors affecting the quality and liquidity of our investment portfolio; and
  • 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 June 30,


Six months ended June 30,



2024


2023


2024


2023



(Unaudited)


(Unaudited)

Operating revenue









Management fee revenue - policy issuance and renewal services


$        760,886


$        633,339


$   1,426,572


$   1,191,429

Management fee revenue - administrative services


17,051


15,636


33,985


30,825

Administrative services reimbursement revenue


206,028


184,466


397,595


357,293

Service agreement revenue


6,473


6,429


12,987


12,788

Total operating revenue


990,438


839,870


1,871,139


1,592,335










Operating expenses









Cost of operations - policy issuance and renewal services


594,202


521,246


1,144,524


990,341

Cost of operations - administrative services


206,028


184,466


397,595


357,293

Total operating expenses


800,230


705,712


1,542,119


1,347,634

Operating income


190,208


134,158


329,020


244,701










Investment income









Net investment income


16,010


13,535


31,913


15,718

Net realized and unrealized investment (losses) gains


(1,795)


(1,737)


58


(7,019)

Net impairment losses recognized in earnings


(388)


(171)


(3,065)


(1,804)

Total investment income


13,827


11,627


28,906


6,895










Other income


3,292


3,305


6,703


6,642

Income before income taxes


207,327


149,090


364,629


258,238

Income tax expense


43,424


31,238


76,174


54,145

Net income


$        163,903


$        117,852


$      288,455


$      204,093










Net income per share









Class A common stock – basic


$              3.52


$              2.53


$            6.19


$            4.38

Class A common stock – diluted


$              3.13


$              2.25


$            5.52


$            3.90

Class B common stock – basic and diluted


$               528


$               380


$             929


$             657










Weighted average shares outstanding – Basic









Class A common stock


46,189,042


46,189,026


46,189,028


46,188,923

Class B common stock


2,542


2,542


2,542


2,542










Weighted average shares outstanding – Diluted









Class A common stock


52,305,299


52,299,974


52,303,551


52,298,298

Class B common stock


2,542


2,542


2,542


2,542










Dividends declared per share









Class A common stock


$            1.275


$              1.19


$            2.55


$            2.38

Class B common stock


$          191.25


$          178.50


$        382.50


$        357.00

 

Erie Indemnity Company

Statements of Financial Position

(in thousands)




June 30,
2024


December 31,
2023



(Unaudited)



Assets





Current assets:





Cash and cash equivalents (includes restricted cash of $14,027 and $12,542, respectively)


$        170,634


$        144,055

Available-for-sale securities


47,734


82,017

Receivables from Erie Insurance Exchange and affiliates, net


708,171


625,338

Prepaid expenses and other current assets


83,529


69,321

Accrued investment income


10,204


9,458

Total current assets


1,020,272


930,189






Available-for-sale securities, net


946,525


879,224

Available-for-sale securities lent


6,125


0

Equity securities


80,128


84,253

Fixed assets, net


469,145


442,610

Agent loans, net


56,813


58,434

Defined benefit pension plan


65,221


34,320

Other assets, net


47,731


42,934

Total assets


$     2,691,960


$     2,471,964






Liabilities and shareholders' equity





Current liabilities:





Commissions payable


$        413,205


$        353,709

Agent incentive compensation


44,870


68,077

Accounts payable and accrued liabilities


198,689


175,622

Dividends payable


59,377


59,377

Contract liability


41,570


41,210

Deferred executive compensation


8,216


10,982

Securities lending payable


6,345


0

Total current liabilities


772,272


708,977






Defined benefit pension plan


26,591


26,260

Contract liability


20,645


19,910

Deferred executive compensation


16,341


20,936

Deferred income taxes, net


5,192


11,481

Other long-term liabilities


22,106


21,565

Total liabilities


863,147


809,129






Shareholders' equity


1,828,813


1,662,835

Total liabilities and shareholders' equity


$     2,691,960


$     2,471,964

 

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/erie-indemnity-reports-second-quarter-2024-results-302206563.html

SOURCE Erie Indemnity Company

Scott Beilharz, Investor Relations, 1-800-458-0811 ext. 7312 or 814/870-7312, scott.beilharz@erieinsurance.com