ERIE, Pa., Oct. 30, 2014
/PRNewswire/ -- Erie Indemnity Company (NASDAQ: ERIE) today announced financial results for
the quarter ending September 30, 2014.
"ERIE continues to achieve
strong results through sound execution of our business strategy and
the steadfast commitment of our Agents, Customers and Employees,"
says Terry Cavanaugh, president and
chief executive officer. "As we look to 2015, we are
well-positioned for continued long-term growth and value
creation."
Net income attributable to Indemnity was $47 million, or $0.90 per diluted share, in the third quarter of
2014, compared to $46 million, or
$0.87 per diluted share, in the third
quarter of 2013. Net income attributable to Indemnity was
$142 million, or $2.71 per diluted share, in the first nine months
of 2014, compared to $127 million, or
$2.41 per diluted share, in the first
nine months of 2013. For the third quarter of 2014, the
growth was driven by increased revenue from management operations,
and for the first nine months of 2014, the growth was driven by
increased revenue from management operations and lower expense
growth.
3Q 2014 Highlights
- Results of the Erie Insurance Group's
Operations(1)
|
|
|
|
|
|
|
Indemnity
shareholder
interest
|
Noncontrolling
interest
(Exchange)
|
Elimination of
related party
transactions
|
Erie
Insurance
Group
|
(dollars in
millions)
|
3Q'14
|
3Q'13
|
3Q'14
|
3Q'13
|
3Q'14
|
3Q'13
|
3Q'14
|
3Q'13
|
Management
operations
|
$
|
62
|
|
$
|
60
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(54)
|
|
$
|
(52)
|
|
$
|
8
|
|
$
|
8
|
|
Property and casualty
insurance operations(2)
|
—
|
|
—
|
|
38
|
|
24
|
|
57
|
|
55
|
|
95
|
|
79
|
|
Life insurance
operations(2)
|
—
|
|
—
|
|
10
|
|
10
|
|
0
|
|
(1)
|
|
10
|
|
9
|
|
Investment
operations
|
8
|
|
10
|
|
32
|
|
294
|
|
(3)
|
|
(2)
|
|
37
|
|
302
|
|
Income from operations
before income
taxes and
noncontrolling interest
|
70
|
|
70
|
|
80
|
|
328
|
|
—
|
|
—
|
|
150
|
|
398
|
|
Provision for income
taxes
|
23
|
|
24
|
|
19
|
|
107
|
|
—
|
|
—
|
|
42
|
|
131
|
|
Net income
|
$
|
47
|
|
$
|
46
|
|
$
|
61
|
|
$
|
221
|
|
$
|
—
|
|
$
|
—
|
|
$
|
108
|
|
$
|
267
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The consolidated
financial statements of Erie Indemnity Company ("Indemnity")
reflect the consolidated results of Indemnity and the Erie
Insurance Exchange ("Exchange"), which we refer to collectively as
the "Erie Insurance Group." Indemnity, or Indemnity
shareholder interest, refers to the interest in Erie Indemnity
Company owned by the Class A and Class B shareholders. The
Exchange refers to the noncontrolling interest held for the
interest of the subscribers (policyholders), and includes its
interest in its property and casualty subsidiaries and Erie Family
Life Insurance Company ("EFL").
|
|
|
(2)
|
All property and
casualty and life insurance results accrue to the interest of the
subscribers (policyholders) of the Exchange, or noncontrolling
interest.
|
Management Operations
Revenue from management operations increased $29 million, or 8.5 percent, in the third quarter
of 2014, compared to the third quarter of 2013. Direct
written premium of the property and casualty insurance operations,
upon which the management fee is calculated, increased 8.8 percent
in the third quarter of 2014, due to a 4.5 percent increase in
policies in force and a 4.1 percent increase in the year-over-year
average premium per policy at September 30, 2014. The
management fee rate was 25 percent for both the third quarters of
2014 and 2013.
Commissions increased $21 million,
or 11.5 percent, in the third quarter of 2014, compared to the
third quarter of 2013, primarily due to the 8.8 percent increase in
direct written premium of the property and casualty insurance
operations. Commission growth outpaced direct premium written
growth primarily due to an increase in agent incentive costs.
Non-commission expense increased $6
million, or 7.1 percent, in the third quarter of 2014,
compared to the third quarter of 2013. Professional fees
increased $2 million while
underwriting reports, personnel costs, credit card fees, and
postage and printing expenses each increased $1 million.
Management
Operations
|
|
|
|
Indemnity
shareholder
interest
|
(dollars in
millions)
|
3Q'14
|
3Q'13
|
Management fee
revenue, net
|
$
|
362
|
|
$
|
333
|
|
Service agreement
revenue
|
8
|
|
8
|
|
Total revenue from
management operations
|
$
|
370
|
|
$
|
341
|
|
Commissions
|
$
|
208
|
|
$
|
187
|
|
Non-commission
expense
|
100
|
|
94
|
|
Total cost of
management operations
|
$
|
308
|
|
$
|
281
|
|
Income from management
operations before taxes
|
$
|
62
|
|
$
|
60
|
|
Gross
margin
|
16.5
|
%
|
17.7
|
%
|
|
|
|
|
|
Investment Operations
Income from investment operations before taxes totaled
$8 million in the third quarter of
2014, compared to $10 million in the
third quarter of 2013. Net realized gains on investments and
equity in earnings of limited partnerships both decreased
$1 million.
Investment
Operations
|
|
|
|
Indemnity
shareholder
interest
|
(dollars in
millions)
|
3Q'14
|
3Q'13
|
Net investment
income
|
$
|
4
|
|
$
|
4
|
|
Net realized gains on
investments
|
0
|
|
1
|
|
Net impairment losses
recognized in earnings
|
0
|
|
0
|
|
Equity in earnings of
limited partnerships
|
4
|
|
5
|
|
Income from investment
operations before taxes
|
$
|
8
|
|
$
|
10
|
|
|
|
|
|
|
Nine Months Ended
September 30, 2014 Results of the Erie Insurance Group's
Operations(1)
|
|
|
|
|
|
|
Indemnity
shareholder
interest
|
Noncontrolling
interest
(Exchange)
|
Elimination of
related party
transactions
|
Erie
Insurance
Group
|
(dollars in
millions)
|
2014
|
2013
|
2014
|
2013
|
2014
|
2013
|
2014
|
2013
|
Management
operations
|
$
|
188
|
|
$
|
168
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(165)
|
|
$
|
(145)
|
|
$
|
23
|
|
$
|
23
|
|
Property and casualty
insurance operations(2)
|
—
|
|
—
|
|
(249)
|
|
46
|
|
177
|
|
155
|
|
(72)
|
|
201
|
|
Life insurance
operations(2)
|
—
|
|
—
|
|
33
|
|
34
|
|
(1)
|
|
(2)
|
|
32
|
|
32
|
|
Investment
operations
|
26
|
|
25
|
|
455
|
|
824
|
|
(11)
|
|
(8)
|
|
470
|
|
841
|
|
Income from operations
before income
taxes and
noncontrolling interest
|
214
|
|
193
|
|
239
|
|
904
|
|
—
|
|
—
|
|
453
|
|
1,097
|
|
Provision for income
taxes
|
72
|
|
66
|
|
61
|
|
297
|
|
—
|
|
—
|
|
133
|
|
363
|
|
Net income
|
$
|
142
|
|
$
|
127
|
|
$
|
178
|
|
$
|
607
|
|
$
|
—
|
|
$
|
—
|
|
$
|
320
|
|
$
|
734
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The consolidated
financial statements of Erie Indemnity Company ("Indemnity")
reflect the consolidated results of Indemnity and the Erie
Insurance Exchange ("Exchange"), which we refer to collectively as
the "Erie Insurance Group." Indemnity, or Indemnity
shareholder interest, refers to the interest in Erie Indemnity
Company owned by the Class A and Class B shareholders. The
Exchange refers to the noncontrolling interest held for the
interest of the subscribers (policyholders), and includes its
interest in its property and casualty subsidiaries and Erie Family
Life Insurance Company ("EFL").
|
|
|
(2)
|
All property and
casualty and life insurance results accrue to the interest of the
subscribers (policyholders) of the Exchange, or noncontrolling
interest.
|
Indemnity's management operations pretax income totaled
$188 million in the first nine months
of 2014, compared to $168 million in
the first nine months of 2013. The increase resulted in a
gross margin of 17.5 percent for the first nine months of 2014,
compared to 17.1 percent for the first nine months of 2013.
Indemnity's investment operations pretax income totaled
$26 million in the first nine months
of 2014, compared to $25 million in
the first nine months of 2013.
Webcast Information
Indemnity has scheduled a conference call and live audio
broadcast on the Web for 10:00 AM ET on October 31,
2014. Investors may access the live audio broadcast by
logging on to www.erieinsurance.com. Indemnity recommends
visiting the website at least 15 minutes prior to the Webcast to
download and install any necessary software. A Webcast audio
replay will be available on the Investor Relations page of the Erie
Insurance Group's website by 12:30 PM
ET.
About the Erie Insurance Group
According to A.M. Best Company, Erie Insurance Group, based in
Erie, Pennsylvania, is the
11th largest homeowners insurer and 12th
largest automobile insurer in the United
States based on direct premiums written and the
16th largest property/casualty insurer in the United States based on total lines net
premium written. The Group, rated A+ (Superior) by A.M. Best
Company, has more than 4.9 million policies in force and operates
in 11 states and the District of
Columbia. Erie Insurance Group is a FORTUNE 500 and Barron's
500 company. Erie Insurance is proud to have received the
J.D. Power award for "Highest in Customer Satisfaction with the
Auto Insurance Purchase Experience" two years in a row.
ERIE has also been recognized by
Forbes as one of America's 50 Most Trustworthy
Financial Companies and is on the list of Ward's 50 Group of
top performing insurance companies, which analyzes the financial
performance of 3,000 property and casualty companies and recognizes
the top performers for achieving outstanding results in safety,
consistency and financial performance over a five-year period
(2009-2013).
News releases and more information about Erie Insurance Group
are available 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, agency relationships, 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:
Risk factors related to the Indemnity shareholder interest:
- dependence on Indemnity's relationship with the Exchange and
the management fee under the agreement with the subscribers at the
Exchange;
- costs of providing services to the Exchange under the
subscriber's agreement;
- ability to attract and retain talented management and
employees;
- ability to maintain uninterrupted business operations;
- factors affecting the quality and liquidity of Indemnity's
investment portfolio;
- credit risk from the Exchange;
- Indemnity's ability to meet liquidity needs and access capital;
and
- outcome of pending and potential litigation against
Indemnity.
Risk factors related to the non-controlling interest owned by
the Exchange, which includes the Property and Casualty Group and
EFL:
- general business and economic conditions;
- dependence upon the independent agency system;
- ability to maintain our reputation for customer service;
- factors affecting insurance industry competition;
- changes in government regulation of the insurance
industry;
- premium rates and reserves must be established from forecasts
of ultimate costs;
- emerging claims, coverage issues in the industry, and changes
in reserve estimates related to the property and casualty
business;
- changes in reserve estimates related to the life business;
- severe weather conditions or other catastrophic losses,
including terrorism;
- the Exchange's ability to acquire reinsurance coverage and
collectability from reinsurers;
- factors affecting the quality and liquidity of the Exchange's
investment portfolio;
- the Exchange's ability to meet liquidity needs and access
capital;
- the Exchange's ability to maintain acceptable financial
strength rating;
- outcome of pending and potential litigation against the
Exchange; and
- dependence upon the service provided by Indemnity.
A forward-looking statement speaks only as of the date on which
it is made and reflects Indemnity's analysis only as of that date.
Indemnity undertakes 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
Consolidated Statements of Operations (dollars in
millions, except per share data)
|
|
|
Three months
ended
September 30,
|
|
Nine months ended
September 30,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Revenues
|
(Unaudited)
|
|
(Unaudited)
|
Premiums
earned
|
$
|
1,355
|
|
$
|
1,241
|
|
$
|
3,962
|
|
$
|
3,631
|
Net investment
income
|
115
|
|
109
|
|
335
|
|
316
|
Net realized
investment (losses) gains
|
(85)
|
|
191
|
|
104
|
|
501
|
Net impairment losses
recognized in earnings
|
(1)
|
|
(9)
|
|
(1)
|
|
(10)
|
Equity in earnings of
limited partnerships
|
34
|
|
37
|
|
111
|
|
112
|
Other
income
|
8
|
|
8
|
|
24
|
|
24
|
Total
revenues
|
1,426
|
|
1,577
|
|
4,535
|
|
4,574
|
Benefits and
expenses
|
|
|
|
|
|
|
|
Insurance losses and
loss expenses
|
935
|
|
868
|
|
3,095
|
|
2,571
|
Policy acquisition
and underwriting expenses
|
341
|
|
311
|
|
987
|
|
906
|
Total benefits and
expenses
|
1,276
|
|
1,179
|
|
4,082
|
|
3,477
|
|
|
|
|
|
|
|
|
Income from
operations before income taxes and noncontrolling
interest
|
150
|
|
398
|
|
453
|
|
1,097
|
Provision for income
taxes
|
42
|
|
131
|
|
133
|
|
363
|
Net
income
|
$
|
108
|
|
$
|
267
|
|
$
|
320
|
|
$
|
734
|
|
|
|
|
|
|
|
|
Less: Net income
attributable to noncontrolling interest in consolidated entity –
Exchange
|
61
|
|
221
|
|
178
|
|
607
|
|
|
|
|
|
|
|
|
Net income
attributable to Indemnity
|
$
|
47
|
|
$
|
46
|
|
$
|
142
|
|
$
|
127
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per
Share
|
|
|
|
|
|
|
|
Net income
attributable to Indemnity per share
|
|
|
|
|
|
|
|
Class A common
stock – basic
|
$
|
1.01
|
|
$
|
0.98
|
|
$
|
3.05
|
|
$
|
2.71
|
Class A
common stock – diluted
|
$
|
0.90
|
|
$
|
0.87
|
|
$
|
2.71
|
|
$
|
2.41
|
Class B common
stock – basic
|
$
|
151
|
|
$
|
147
|
|
$
|
458
|
|
$
|
406
|
Class B common
stock – diluted
|
$
|
151
|
|
$
|
147
|
|
$
|
457
|
|
$
|
406
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding attributable to Indemnity –
Basic
|
|
|
|
|
|
|
|
Class A common
stock
|
46,189,068
|
|
46,656,911
|
|
46,267,694
|
|
46,707,971
|
Class B common
stock
|
2,542
|
|
2,542
|
|
2,542
|
|
2,542
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding attributable to Indemnity –
Diluted
|
|
|
|
|
|
|
|
Class A common
stock
|
52,387,164
|
|
52,851,250
|
|
52,465,790
|
|
52,902,310
|
Class B common
stock
|
2,542
|
|
2,542
|
|
2,542
|
|
2,542
|
|
|
|
|
|
|
|
|
Dividends declared
per share
|
|
|
|
|
|
|
|
Class A common
stock
|
$
|
0.6350
|
|
$
|
0.5925
|
|
$
|
1.9050
|
|
$
|
1.7775
|
Class B common
stock
|
$
|
95.2500
|
|
$
|
88.8750
|
|
$
|
285.7500
|
|
$
|
266.6250
|
Erie Indemnity
Company
Results of the Erie Insurance Group's Operations by Interest
(Unaudited) (in millions)
|
|
|
Indemnity
shareholder interest
|
|
Noncontrolling interest
(Exchange)
|
|
Eliminations of
related
party transactions
|
|
Erie Insurance
Group
|
|
Three months
ended
September 30,
|
|
Three months
ended
September 30,
|
|
Three months ended
S
eptember 30,
|
|
Three months
ended
September 30,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Management
operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management fee
revenue, net
|
$
|
362
|
|
$
|
333
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(362)
|
|
$
|
(333)
|
|
$
|
—
|
|
$
|
—
|
Service agreement
revenue
|
8
|
|
8
|
|
—
|
|
—
|
|
—
|
|
—
|
|
8
|
|
8
|
Total revenue from
management operations
|
370
|
|
341
|
|
—
|
|
—
|
|
(362)
|
|
(333)
|
|
8
|
|
8
|
Cost of management
operations
|
308
|
|
281
|
|
—
|
|
—
|
|
(308)
|
|
(281)
|
|
—
|
|
—
|
Income from
management operations before taxes
|
62
|
|
60
|
|
—
|
|
—
|
|
(54)
|
|
(52)
|
|
8
|
|
8
|
Property and
casualty insurance operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net premiums
earned
|
—
|
|
—
|
|
1,333
|
|
1,221
|
|
—
|
|
—
|
|
1,333
|
|
1,221
|
Losses and loss
expenses
|
—
|
|
—
|
|
908
|
|
841
|
|
(1)
|
|
(1)
|
|
907
|
|
840
|
Policy acquisition and
underwriting expenses
|
—
|
|
—
|
|
387
|
|
356
|
|
(56)
|
|
(54)
|
|
331
|
|
302
|
Income from
property and casualty insurance operations before
taxes
|
—
|
|
—
|
|
38
|
|
24
|
|
57
|
|
55
|
|
95
|
|
79
|
Life insurance
operations: (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenue
|
—
|
|
—
|
|
48
|
|
47
|
|
0
|
|
(1)
|
|
48
|
|
46
|
Total benefits and
expenses
|
—
|
|
—
|
|
38
|
|
37
|
|
0
|
|
0
|
|
38
|
|
37
|
Income from life
insurance operations before taxes
|
—
|
|
—
|
|
10
|
|
10
|
|
0
|
|
(1)
|
|
10
|
|
9
|
Investment
operations: (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment
income
|
4
|
|
4
|
|
90
|
|
83
|
|
(3)
|
|
(2)
|
|
91
|
|
85
|
Net realized gains
(losses) on investments
|
0
|
|
1
|
|
(88)
|
|
188
|
|
—
|
|
—
|
|
(88)
|
|
189
|
Net impairment losses
recognized in earnings
|
0
|
|
0
|
|
0
|
|
(9)
|
|
—
|
|
—
|
|
0
|
|
(9)
|
Equity in earnings of
limited partnerships
|
4
|
|
5
|
|
30
|
|
32
|
|
—
|
|
—
|
|
34
|
|
37
|
Income from
investment operations before taxes
|
8
|
|
10
|
|
32
|
|
294
|
|
(3)
|
|
(2)
|
|
37
|
|
302
|
Income from
operations before income taxes and noncontrolling
interest
|
70
|
|
70
|
|
80
|
|
328
|
|
—
|
|
—
|
|
150
|
|
398
|
Provision for income
taxes
|
23
|
|
24
|
|
19
|
|
107
|
|
—
|
|
—
|
|
42
|
|
131
|
Net
income
|
$
|
47
|
|
$
|
46
|
|
$
|
61
|
|
$
|
221
|
|
$
|
—
|
|
$
|
—
|
|
$
|
108
|
|
$
|
267
|
|
|
(1)
|
Earnings on life
insurance related invested assets are integral to the evaluation of
the life insurance operations because of the long duration of life
products. On that basis, for presentation purposes, the life
insurance operations in the table above include life insurance
related investment results.
|
Erie Indemnity
Company
Results of the Erie Insurance Group's Operations by Interest
(Unaudited) (in millions)
|
|
|
Indemnity
shareholder interest
|
|
Noncontrolling interest
(Exchange)
|
|
Eliminations of
related party transactions
|
|
Erie Insurance
Group
|
|
Nine months ended
September 30,
|
|
Nine months ended
September 30,
|
|
Nine months ended
September 30,
|
|
Nine months ended
September 30,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Management
operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management fee
revenue, net
|
$
|
1,047
|
|
$
|
965
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(1,047)
|
|
$
|
(965)
|
|
$
|
—
|
|
$
|
—
|
Service agreement
revenue
|
23
|
|
23
|
|
—
|
|
—
|
|
—
|
|
—
|
|
23
|
|
23
|
Total revenue from
management operations
|
1,070
|
|
988
|
|
—
|
|
—
|
|
(1,047)
|
|
(965)
|
|
23
|
|
23
|
Cost of management
operations
|
882
|
|
820
|
|
—
|
|
—
|
|
(882)
|
|
(820)
|
|
—
|
|
—
|
Income from
management operations before taxes
|
188
|
|
168
|
|
—
|
|
—
|
|
(165)
|
|
(145)
|
|
23
|
|
23
|
Property and
casualty insurance operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net premiums
earned
|
—
|
|
—
|
|
3,899
|
|
3,573
|
|
—
|
|
—
|
|
3,899
|
|
3,573
|
Losses and loss
expenses
|
—
|
|
—
|
|
3,016
|
|
2,495
|
|
(4)
|
|
(4)
|
|
3,012
|
|
2,491
|
Policy acquisition and
underwriting expenses
|
—
|
|
—
|
|
1,132
|
|
1,032
|
|
(173)
|
|
(151)
|
|
959
|
|
881
|
(Loss) income
from property and casualty insurance operations before
taxes
|
—
|
|
—
|
|
(249)
|
|
46
|
|
177
|
|
155
|
|
(72)
|
|
201
|
Life insurance
operations: (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenue
|
—
|
|
—
|
|
144
|
|
139
|
|
(1)
|
|
(2)
|
|
143
|
|
137
|
Total benefits and
expenses
|
—
|
|
—
|
|
111
|
|
105
|
|
0
|
|
0
|
|
111
|
|
105
|
Income from life
insurance operations before taxes
|
—
|
|
—
|
|
33
|
|
34
|
|
(1)
|
|
(2)
|
|
32
|
|
32
|
Investment
operations: (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment
income
|
12
|
|
11
|
|
263
|
|
243
|
|
(11)
|
|
(8)
|
|
264
|
|
246
|
Net realized gains on
investments
|
1
|
|
1
|
|
95
|
|
492
|
|
—
|
|
—
|
|
96
|
|
493
|
Net impairment losses
recognized in earnings
|
0
|
|
0
|
|
0
|
|
(9)
|
|
—
|
|
—
|
|
0
|
|
(9)
|
Equity in earnings of
limited partnerships
|
13
|
|
13
|
|
97
|
|
98
|
|
—
|
|
—
|
|
110
|
|
111
|
Income from
investment operations before taxes
|
26
|
|
25
|
|
455
|
|
824
|
|
(11)
|
|
(8)
|
|
470
|
|
841
|
Income from
operations before income taxes and noncontrolling
interest
|
214
|
|
193
|
|
239
|
|
904
|
|
—
|
|
—
|
|
453
|
|
1,097
|
Provision for income
taxes
|
72
|
|
66
|
|
61
|
|
297
|
|
—
|
|
—
|
|
133
|
|
363
|
Net
income
|
$
|
142
|
|
$
|
127
|
|
$
|
178
|
|
$
|
607
|
|
$
|
—
|
|
$
|
—
|
|
$
|
320
|
|
$
|
734
|
|
|
(1)
|
Earnings on life
insurance related invested assets are integral to the evaluation of
the life insurance operations because of the long duration of life
products. On that basis, for presentation purposes, the life
insurance operations in the table above include life insurance
related investment results.
|
Erie Indemnity Company
Reconciliation of Operating
Income to Net Income
Reconciliation of operating income to net income
We disclose operating income, a non-GAAP financial measure, to
enhance our investors' understanding of our performance related to
the Indemnity shareholder interest. Our method of calculating
this measure may differ from those used by other companies, and
therefore comparability may be limited.
Indemnity defines operating income as net income excluding
realized capital gains and losses, impairment losses and related
federal income taxes.
Indemnity uses operating income to evaluate the results of its
operations. It reveals trends that may be obscured by the net
effects of realized capital gains and losses including impairment
losses. Realized capital gains and losses, including
impairment losses, may vary significantly between periods and are
generally driven by business decisions and economic developments
such as capital market conditions which are not related to our
ongoing operations. We are aware that the price to earnings
multiple commonly used by investors as a forward-looking valuation
technique uses operating income as the denominator. Operating
income should not be considered as a substitute for net income
prepared in accordance with U.S. generally accepted accounting
principles ("GAAP") and does not reflect Indemnity's overall
profitability.
The following table reconciles operating income and net income
for the Indemnity shareholder interest:
|
Indemnity Shareholder
Interest
|
|
Three months
ended
September 30,
|
|
Nine months
ended
September 30,
|
(in millions, except per share data)
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
(Unaudited)
|
|
(Unaudited)
|
Operating income
attributable to Indemnity
|
$
|
47
|
|
$
|
45
|
|
$
|
141
|
|
$
|
126
|
Net realized gains
and impairments on investments
|
0
|
|
1
|
|
1
|
|
1
|
Income tax
expense
|
0
|
|
0
|
|
0
|
|
0
|
Realized gains and
impairments, net of income taxes
|
0
|
|
1
|
|
1
|
|
1
|
Net income
attributable to Indemnity
|
$
|
47
|
|
$
|
46
|
|
$
|
142
|
|
$
|
127
|
|
|
|
|
|
|
|
|
Per Indemnity
Class A common share-diluted:
|
|
|
|
|
|
|
|
Operating income
attributable to Indemnity
|
$
|
0.90
|
|
$
|
0.86
|
|
$
|
2.70
|
|
$
|
2.40
|
Net realized gains
and impairments on investments
|
0.00
|
|
0.01
|
|
0.02
|
|
0.01
|
Income tax
expense
|
0.00
|
|
0.00
|
|
(0.01)
|
|
0.00
|
Realized gains and
impairments, net of income taxes
|
0.00
|
|
0.01
|
|
0.01
|
|
0.01
|
Net income
attributable to Indemnity
|
$
|
0.90
|
|
$
|
0.87
|
|
$
|
2.71
|
|
$
|
2.41
|
Erie Indemnity
Company
Consolidated Statements of Financial Position (in
millions)
|
|
|
September 30,
2014
|
|
December 31,
2013
|
|
(Unaudited)
|
|
|
Assets
|
|
|
|
Investments –
Indemnity
|
|
|
|
Available-for-sale
securities, at fair value:
|
|
|
|
Fixed
maturities
|
$
|
563
|
|
$
|
526
|
Equity
securities
|
25
|
|
50
|
Limited
partnerships
|
134
|
|
146
|
Other invested
assets
|
1
|
|
1
|
Investments –
Exchange
|
|
|
|
Available-for-sale
securities, at fair value:
|
|
|
|
Fixed
maturities
|
8,902
|
|
8,162
|
Equity
securities
|
917
|
|
819
|
Trading securities,
at fair value
|
3,125
|
|
3,202
|
Limited
partnerships
|
939
|
|
940
|
Other invested
assets
|
20
|
|
20
|
Total
investments
|
14,626
|
|
13,866
|
|
|
|
|
Cash and cash
equivalents (Exchange portion of $334 and $403,
respectively)
|
379
|
|
452
|
Premiums receivable
from policyholders – Exchange
|
1,323
|
|
1,167
|
Reinsurance
recoverable – Exchange
|
165
|
|
172
|
Deferred income taxes
– Indemnity
|
2
|
|
2
|
Deferred acquisition
costs – Exchange
|
603
|
|
566
|
Other assets
(Exchange portion of $366 and $337, respectively)
|
480
|
|
451
|
Total
assets
|
$
|
17,578
|
|
$
|
16,676
|
|
|
|
|
Liabilities and
shareholders' equity
|
|
|
|
Liabilities
|
|
|
|
Indemnity
liabilities
|
|
|
|
Other
liabilities
|
$
|
482
|
|
$
|
476
|
Exchange
liabilities
|
|
|
|
Losses and loss
expense reserves
|
3,933
|
|
3,747
|
Life policy and
deposit contract reserves
|
1,801
|
|
1,758
|
Unearned
premiums
|
2,896
|
|
2,598
|
Deferred income
taxes
|
465
|
|
450
|
Other
liabilities
|
165
|
|
97
|
Total
liabilities
|
9,742
|
|
9,126
|
|
|
|
|
Indemnity's
shareholders' equity
|
771
|
|
734
|
|
|
|
|
Noncontrolling
interest in consolidated entity – Exchange
|
7,065
|
|
6,816
|
Total
equity
|
7,836
|
|
7,550
|
Total liabilities,
shareholders' equity and noncontrolling interest
|
$
|
17,578
|
|
$
|
16,676
|
Logo -
http://photos.prnewswire.com/prnh/20041112/ERIELOGO
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/erie-indemnity-reports-third-quarter-2014-results-358604831.html
SOURCE Erie Indemnity Company