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Erie Indemnity Reports Second Quarter 2022 Results
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Erie Indemnity Reports Second Quarter 2022 Results

Net Income per Diluted Share was $1.53 for the Quarter and $2.84 for the Six Months of 2022

ERIE, Pa., July 28, 2022 /PRNewswire/ — Erie Indemnity Company (NASDAQ: ERIE) today announced financial results for the quarter and six months ending June 30, 2022.  Net income was $80.1 million, or $1.53 per diluted share, in the second quarter of 2022, compared to $79.0 million, or $1.51 per diluted share, in the second quarter of 2021.  Net income was $148.8 million, or $2.84 per diluted share, in the first six months of 2022, compared to $152.6 million, or $2.92 per diluted share, in the first six months of 2021.

2Q and First Half 2022


(in thousands)

2Q’22

2Q’21


1H’22

1H’21


Operating income

$      104,000

$        85,065


$    188,312

$    161,160


Investment (loss) income

(2,094)

16,418


915

34,406


Interest expense and other, net

558

1,587


1,084

3,115


Income before income taxes

101,348

99,896


188,143

192,451


Income tax expense

21,201

20,867


39,377

39,856


Net income

$        80,147

$        79,029


$    148,766

$    152,595









 

2Q 2022 Highlights

Operating income before taxes increased $18.9 million, or 22.3 percent, in the second quarter of 2022 compared to the second quarter of 2021.

  • Management fee revenue – policy issuance and renewal services increased $42.3 million, or 8.4 percent, in the second quarter of 2022 compared to the second quarter of 2021.
  • Management fee revenue – administrative services decreased $0.2 million, or 1.3 percent, in the second quarter of 2022 compared to the second quarter of 2021.
  • Cost of operations – policy issuance and renewal services
    • Commissions increased $14.3 million in the second quarter of 2022 compared to the second quarter of 2021, 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 $9.4 million in the second quarter of 2022 compared to the second quarter of 2021. Information technology costs increased $5.0 million primarily due to increased hardware and software costs and increased professional fees. Administrative and other costs increased $5.5 million primarily due to an increase in professional fees and increased personnel costs related to compensation. Personnel costs in all expense categories were also impacted by lower estimated costs for incentive plan awards related to underwriting performance.

Loss from investments before taxes totaled $2.1 million in the second quarter of 2022 compared to income from investments before taxes of $16.4 million in the second quarter of 2021.  Net investment income was $8.3 million in the second quarter of 2022 compared to $13.7 million in the second quarter of 2021.  Included in net investment income is $0.3 million of limited partnership losses in the second quarter of 2022 compared to earnings of $6.2 million in the second quarter of 2021.  Net realized and unrealized losses on investments were $10.3 million in the second quarter of 2022 compared to net realized and unrealized gains of $2.8 million in the second quarter of 2021.

First Half 2022 Highlights

Operating income before taxes increased $27.2 million, or 16.8 percent, in the first six months of 2022 compared to the first six months of 2021.

  • Management fee revenue – policy issuance and renewal services increased $74.6 million, or 7.8 percent, in the first six months of 2022 compared to the first six months of 2021.
  • Management fee revenue – administrative services decreased $0.7 million, or 2.5 percent, in the first six months of 2022 compared to the first six months of 2021.
  • Cost of operations – policy issuance and renewal services
    • Commissions increased $34.0 million in the first six months of 2022 compared to the first six months of 2021, 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 $13.6 million in the first six months of 2022 compared to the first six months of 2021. Information technology costs increased $4.3 million primarily due to increased hardware and software costs. Administrative and other costs increased $8.6 million primarily driven by increased professional fees. Personnel costs in all expense categories were also impacted by lower estimated costs for incentive plan awards related to underwriting performance.

Income from investments before taxes totaled $0.9 million in the first six months of 2022 compared to $34.4 million in the first six months of 2021.  Net investment income was $18.8 million in the first six months of 2022 compared to $30.7 million in the first six months of 2021.  Included in net investment income is $2.5 million of limited partnership earnings in the first six months of 2022 compared to $15.2 million in the first six months of 2021.  Net realized and unrealized losses on investments totaled $17.6 million in the first six months of 2022 compared to net realized and unrealized gains of $3.6 million in the first six months of 2021.

Webcast Information

Indemnity has scheduled a pre-recorded audio broadcast on the Web for 10:00 AM ET on July 29, 2022.  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;
    • 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 June 30,


Six months ended June 30,



2022


2021


2022


2021



(Unaudited)


(Unaudited)

Operating revenue









Management fee revenue – policy issuance and renewal services


$         544,555


$        502,271


$    1,032,547


$        957,989

Management fee revenue – administrative services


14,476


14,667


28,789


29,514

Administrative services reimbursement revenue


160,675


157,190


324,002


310,723

Service agreement revenue


6,437


5,902


12,915


11,981

  Total operating revenue


726,143


680,030


1,398,253


1,310,207










Operating expenses









Cost of operations – policy issuance and renewal services


461,468


437,775


885,939


838,324

Cost of operations – administrative services


160,675


157,190


324,002


310,723

  Total operating expenses


622,143


594,965


1,209,941


1,149,047

Operating income


104,000


85,065


188,312


161,160










Investment income









Net investment income


8,268


13,650


18,772


30,747

Net realized and unrealized investment (losses) gains


(10,324)


2,769


(17,603)


3,573

Net impairment (losses) recoveries recognized in earnings


(38)


(1)


(254)


86

Total investment (loss) income


(2,094)


16,418


915


34,406










Interest expense


895


1,039


1,894


2,048

Other income (expense)


337


(548)


810


(1,067)

Income before income taxes


101,348


99,896


188,143


192,451

Income tax expense


21,201


20,867


39,377


39,856

Net income


$           80,147


$          79,029


$       148,766


$        152,595










Net income per share









Class A common stock – basic


$                1.72


$               1.70


$              3.19


$               3.28

Class A common stock – diluted


$                1.53


$               1.51


$              2.84


$               2.92

Class B common stock – basic and diluted


$                 258


$                255


$               479


$                491










Weighted average shares outstanding – Basic









Class A common stock


46,188,845


46,188,289


46,188,803


46,188,573

Class B common stock


2,542


2,542


2,542


2,542










Weighted average shares outstanding – Diluted









Class A common stock


52,296,139


52,302,370


52,298,321


52,309,163

Class B common stock


2,542


2,542


2,542


2,542










Dividends declared per share









Class A common stock


$                1.11


$             1.035


$              2.22


$             2.070

Class B common stock


$           166.50


$          155.25


$         333.00


$          310.50

 

Erie Indemnity Company

Statements of Financial Position

(in thousands)




June 30,  

2022


December 31,

2021



(Unaudited)



Assets





Current assets:





Cash and cash equivalents


$           90,324


$         183,702

Available-for-sale securities


57,150


38,396

Receivables from Erie Insurance Exchange and affiliates, net


538,283


479,123

Prepaid expenses and other current assets


50,508


56,206

Accrued investment income


6,839


6,303

Total current assets


743,104


763,730






Available-for-sale securities, net


832,577


907,689

Equity securities


71,448


87,743

Fixed assets, net


402,475


374,802

Agent loans, net


61,865


58,683

Deferred income taxes, net


20,491


145

Other assets


48,262


49,265

Total assets


$      2,180,222


$     2,242,057






Liabilities and shareholders’ equity





Current liabilities:





Commissions payable


$         305,984


$         270,746

Agent bonuses


55,146


120,437

Accounts payable and accrued liabilities


141,861


138,317

Dividends payable


51,693


51,693

Contract liability


35,836


34,935

Deferred executive compensation


6,045


12,637

Short-term borrowings


40,000


Current portion of long-term borrowings



2,098

Total current liabilities


636,565


630,863






Defined benefit pension plans


148,078


130,383

Long-term borrowings



91,734

Contract liability


17,740


17,686

Deferred executive compensation


11,199


14,571

Other long-term liabilities


27,234


14,342

Total liabilities


840,816


899,579






Shareholders’ equity


1,339,406


1,342,478

Total liabilities and shareholders’ equity


$      2,180,222


$     2,242,057

 

 

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/erie-indemnity-reports-second-quarter-2022-results-301594600.html

SOURCE Erie Indemnity Company

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