Erie Indemnity Reports Full Year and Fourth Quarter 2023 Results

About this update from Erie Indemnity Company

Net Income per Diluted Share was $2.12 for the Quarter and $8.53 for the Year ERIE, Pa. , Feb. 26, 2024 /PRNewswire/ -- Erie Indemnity Company (NASDAQ: ERIE ) today announced financial results for the full year and quarter ending December 31, 2023 . Net income was $446.1 million , or $8.53 per diluted share, in 2023, compared to $298.6 million , or $5.71 per diluted share, in 2022. Net income was $110.9 million , or $2.12 per diluted share, in the fourth quarter of 2023, compared to $65.5 million , or $1.25 per diluted share, in the fourth quarter of 2022. 4Q and Full Year 2023 (in thousands) 4Q'23 4Q'22 2023 2022 Operating income $ 127,084 $ 81,430 $ 520,256 $ 376,214 Investment income 9,771 288 28,968 632 Interest expense and other (income), net (3,069) (243) (12,712) 394 Income before income taxes 139,924 81,961 561,936 376,452 Income tax expense 28,996 16,471 115,875 77,883 Net income $ 110,928 $ 65,490 $ 446,061 $ 298,569 2023 Full Year Highlights Operating income before taxes increased $144.0 million , or 38.3 percent, in 2023 compared to 2022. Management fee revenue - policy issuance and renewal services increased $354.2 million , or 17.0 percent, in 2023 compared to 2022. Management fee revenue - administrative services increased $5.3 million , or 9.2% in 2023 compared to 2022. Cost of operations - policy issuance and renewal services Commissions increased $169.0 million in 2023 compared to 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 $46.9 million in 2023 compared to 2022. Underwriting and policy processing costs increased $9.4 million primarily due to policies in force growth. Information technology costs increased $18.6 million primarily due to increased professional fees, personnel costs, and hardware and software costs. Administrative and other expenses increased $20.0 million primarily due to an increase in personnel costs. Personnel costs in 2023 were impacted by increased compensation including higher estimated costs for incentive plan awards, partially offset by lower pension costs due to an increase in the discount rate compared to 2022. Increases in incentive plan costs were driven by improved direct written premium and policies in force growth and Indemnity's higher stock price at year-end 2023 compared to 2022. The administrative services reimbursement revenue and corresponding cost of operations increased both total operating revenue and total operating expenses by $737.1 million in 2023 and $668.3 million in 2022, but had no net impact on operating income. Income from investments before taxes totaled $29.0 million in 2023 compared to $0.6 million in 2022. Net investment income was $44.6 million in 2023 compared to $28.6 million in 2022. Net investment income included limited partnership losses of $11.3 million in 2023 compared to $10.4 million in 2022. Net realized and unrealized losses on investments were $5.8 million in 2023 compared to $27.3 million in 2022. Net impairment losses recognized in earnings were $9.8 million in 2023 compared to $0.7 million in 2022. 4Q 2023 Highlights Operating income before taxes increased $45.7 million , or 56.1 percent, in the fourth quarter of 2023 compared to the fourth quarter of 2022. Management fee revenue - policy issuance and renewal services increased $98.0 million , or 19.5 percent, in the fourth quarter of 2023 compared to the fourth quarter of 2022. Management fee revenue - administrative services increased $1.8 million , or 12.2 percent in the fourth quarter of 2023 compared to the fourth quarter of 2022. Cost of operations - policy issuance and renewal services Commissions increased $53.1 million in the fourth quarter of 2023 compared to the fourth quarter of 2022 primarily driven by the growth in direct and affiliated assumed written premium. Non-commission expense increased $1.2 million in the fourth quarter of 2023 compared to the fourth quarter of 2022. Information technology costs increased $2.9 million primarily due to increased professional fees and personnel costs. Sales and advertising costs decreased $2.4 million primarily due to decreased advertising expenses. Customer service costs increased $0.8 million primarily due to increased bank charges and personnel costs. The administrative services reimbursement revenue and corresponding cost of operations increased both total operating revenue and total operating expenses by $192.7 million in the fourth quarter of 2022 and $175.6 million in the fourth quarter of 2022, but had no net impact on operating income. Income from investments before taxes totaled $9.8 million in the fourth quarter of 2023 compared to $0.3 million in the fourth quarter of 2022. Net investment income was $14.2 million in the fourth quarter of 2023 compared to $4.0 million in the fourth quarter of 2022. Net investment income included limited partnership losses of $0.6 million in the fourth quarter of 2023 compared to $8.3 million in the fourth quarter of 2022. Net realized and unrealized gains on investments were $3.4 million in the fourth quarter of 2023 compared to losses of $3.5 million in the fourth quarter of 2022. Net impairment losses recognized in earnings were $7.8 million in the fourth quarter of 2023 compared to $0.2 million in the fourth quarter of 2022. Webcast Information Indemnity has scheduled a pre-recorded audio broadcast on the Web for 10:00 AM ET on February 27, 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, 12th 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, 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 December 31 , Twelve months ended December 31 , 2023 2022 2023 2022 (Unaudited) Operating revenue Management fee revenue - policy issuance and renewal services $ 601,595 $ 503,633 $ 2,442,073 $ 2,087,846 Management fee revenue - administrative services 16,693 14,877 63,669 58,323 Administrative services reimbursement revenue 192,728 175,613 737,139 668,268 Service agreement revenue 6,651 6,512 26,059 25,687 Total operating revenue 817,667 700,635 3,268,940 2,840,124 Operating expenses Cost of operations - policy issuance and renewal services 497,855 443,592 2,011,545 1,795,642 Cost of operations - administrative services 192,728 175,613 737,139 668,268 Total operating expenses 690,583 619,205 2,748,684 2,463,910 Operating income 127,084 81,430 520,256 376,214 Investment income Net investment income 14,212 3,979 44,572 28,585 Net realized and unrealized investment gains (losses) 3,408 (3,453) (5,838) (27,286) Net impairment losses recognized in earnings (7,849) (238) (9,766) (667) Total investment income 9,771 288 28,968 632 Interest expense — — — 2,009 Other income 3,069 243 12,712 1,615 Income before income taxes 139,924 81,961 561,936 376,452 Income tax expense 28,996 16,471 115,875 77,883 Net income $ 110,928 $ 65,490 $ 446,061 $ 298,569 Earnings Per Share Net income per share Class A common stock – basic $ 2.38 $ 1.41 $ 9.58 $ 6.41 Class A common stock – diluted $ 2.12 $ 1.25 $ 8.53 $ 5.71 Class B common stock – basic and diluted $ 357 $ 211 $ 1,437 $ 962 Weighted average shares outstanding – Basic Class A common stock 46,189,041 46,189,028 46,188,981 46,188,916 Class B common stock 2,542 2,542 2,542 2,542 Weighted average shares outstanding – Diluted Class A common stock 52,301,676 52,298,903 52,299,411 52,297,990 Class B common stock 2,542 2,542 2,542 2,542 Dividends declared per share Class A common stock $ 1.275 $ 1.190 $ 4.845 $ 4.520 Class B common stock $ 191.25 $ 178.50 $ 726.75 $ 678.00 Erie Indemnity Company Statements of Financial Position (in thousands) December 31, 2023 December 31, 2022 Assets Current assets: Cash and cash equivalents (includes restricted cash of $12,542 and $11,932 , respectively) $ 144,055 $ 142,090 Available-for-sale securities 82,017 24,267 Receivables from Erie Insurance Exchange and affiliates, net 625,338 524,937 Prepaid expenses and other current assets 69,321 79,201 Accrued investment income 9,458 8,301 Total current assets 930,189 778,796 Available-for-sale securities, net 879,224 870,394 Equity securities 84,253 72,560 Fixed assets, net 442,610 413,874 Agent loans, net 58,434 60,537 Defined benefit pension plan 34,320 0 Other assets, net 42,934 43,295 Total assets $ 2,471,964 $ 2,239,456 Liabilities and shareholders' equity Current liabilities: Commissions payable $ 353,709 $ 300,028 Agent incentive compensation 68,077 95,166 Accounts payable and accrued liabilities 175,622 165,915 Dividends payable 59,377 55,419 Contract liability 41,210 36,547 Deferred executive compensation 10,982 12,036 Total current liabilities 708,977 665,111 Defined benefit pension plans 26,260 51,224 Contract liability 19,910 17,895 Deferred executive compensation 20,936 13,724 Deferred income taxes, net 11,481 14,075 Other long-term liabilities 21,565 29,019 Total liabilities 809,129 791,048 Shareholders' equity 1,662,835 1,448,408 Total liabilities and shareholders' equity $ 2,471,964 $ 2,239,456 View original content to download multimedia: https://www.prnewswire.com/news-releases/erie-indemnity-reports-full-year-and-fourth-quarter-2023-results-302071431.html SOURCE Erie Indemnity Company

View stock analysis, news, and events for Erie Indemnity Company