Erie Indemnity Reports First Quarter 2023 Results

About this update from Erie Indemnity Company

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 View original content to download multimedia: https://www.prnewswire.com/news-releases/erie-indemnity-reports-first-quarter-2023-results-301808312.html SOURCE Erie Indemnity Company

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