ERIE, Pa., April 29, 2021 /PRNewswire/ -- Erie
Indemnity Company (NASDAQ: ERIE)
today announced financial results for the quarter ending
March 31, 2021. Net income was $73.6 million, or $1.41 per diluted share, in the first quarter of
2021, compared to $59.3 million, or
$1.13 per diluted share, in the first
quarter of 2020.
The uncertainty resulting from the COVID-19 pandemic continues
to evolve and the pandemic's ultimate impact and duration remain
uncertain at this time.
1Q
2021
|
(in
thousands)
|
1Q'21
|
1Q'20
|
|
Operating
income
|
$
|
76,095
|
|
$
|
85,691
|
|
|
Investment income
(loss)
|
17,988
|
|
(9,195)
|
|
|
Interest and other
expense,
net
|
1,528
|
|
369
|
|
|
Income before income
taxes
|
92,555
|
|
76,127
|
|
|
Income tax
expense
|
18,989
|
|
16,801
|
|
|
Net income
|
$
|
73,566
|
|
$
|
59,326
|
|
|
|
|
|
|
Operating income before taxes decreased $9.6 million, or 11.2 percent, in the first
quarter of 2021 compared to the first quarter of 2020.
- Management fee revenue - policy issuance and renewal services
increased $12.0 million, or 2.7
percent, in the first quarter of 2021 compared to the first quarter
of 2020.
- Management fee revenue - administrative services increased
$0.1 million, or 0.5 percent, in the
first quarter of 2021 compared to the first quarter of 2020.
- Cost of operations - policy issuance and renewal
services
-
- Commissions increased $9.4
million in the first quarter of 2021 compared to the first
quarter of 2020, driven by the growth in direct and affiliated
assumed written premium, primarily in lines of business that pay a
higher commission rate. To a lesser extent, there was also an
increase in agent incentive compensation for the first quarter of
2021 compared to the first quarter of 2020.
- Non-commission expense increased $11.7
million in the first quarter of 2021 compared to the first
quarter of 2020. Underwriting and policy processing expense
decreased $0.8 million primarily due
to lower personnel costs. Information technology costs increased
$4.2 million primarily due to
increased hardware and software costs and professional fees.
Administrative and other costs increased $8.5 million primarily driven by increased
professional fees and higher incentive plan award accruals due to
improved performance in the first quarter of 2021 compared to the
same period in 2020.
Income from investments before taxes totaled $18.0 million in the first quarter of 2021
compared to a loss from investments of $9.2
million in the first quarter of 2020. Net investment
income was $17.1 million in the first
quarter of 2021 compared to $4.7
million in the first quarter of 2020. Included in net
investment income is $9.0 million of
limited partnership earnings in the first quarter of 2021 and
$3.7 million of limited partnership
losses in the first quarter of 2020. Net realized gains on
investments were $0.8 million in the
first quarter of 2021 compared to net realized losses of
$10.8 million in the first quarter of
2020. Investment losses experienced during the first quarter
of 2020 were primarily due to the significant financial market
volatility resulting from the COVID-19 pandemic.
Webcast Information
Indemnity has scheduled a
pre-recorded audio broadcast on the Web for 10:00 AM
ET on April 30, 2021. 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 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 nearly 6 million policies
in force and operates in 12 states and the District of
Columbia. Erie Insurance Group is a FORTUNE 500
company.
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, 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;
- emerging claims and coverage issues in the industry; and
- severe weather conditions or other catastrophic losses,
including terrorism;
- potential impacts of the COVID-19 pandemic on the growth and
financial condition of the Exchange;
- 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;
- potential impacts of the COVID-19 pandemic on our operations,
the business operations of our customers and/or independent agents,
or our third-party vendor operations;
- 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,
|
|
|
|
2021
|
|
2020
|
|
|
|
(Unaudited)
|
|
Operating
revenue
|
|
|
|
|
|
Management fee revenue
- policy issuance and renewal services, net
|
|
$
|
455,718
|
|
|
$
|
443,750
|
|
|
Management fee revenue
- administrative services, net
|
|
14,847
|
|
|
14,771
|
|
|
Administrative
services reimbursement revenue
|
|
153,533
|
|
|
151,554
|
|
|
Service agreement
revenue
|
|
6,079
|
|
|
6,662
|
|
|
Total operating
revenue
|
|
630,177
|
|
|
616,737
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
Cost of operations -
policy issuance and renewal services
|
|
400,549
|
|
|
379,492
|
|
|
Cost of operations -
administrative services
|
|
153,533
|
|
|
151,554
|
|
|
Total operating
expenses
|
|
554,082
|
|
|
531,046
|
|
|
Operating
income
|
|
76,095
|
|
|
85,691
|
|
|
|
|
|
|
|
|
Investment
income
|
|
|
|
|
|
Net investment
income
|
|
17,097
|
|
|
4,664
|
|
|
Net realized
investment gains (losses)
|
|
804
|
|
|
(10,806)
|
|
|
Net impairment
recoveries (losses) recognized in earnings
|
|
87
|
|
|
(3,053)
|
|
|
Total investment
income (loss)
|
|
17,988
|
|
|
(9,195)
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
1,009
|
|
|
3
|
|
|
Other
expense
|
|
519
|
|
|
366
|
|
|
Income before income
taxes
|
|
92,555
|
|
|
76,127
|
|
|
Income tax
expense
|
|
18,989
|
|
|
16,801
|
|
|
Net
income
|
|
$
|
73,566
|
|
|
$
|
59,326
|
|
|
|
|
|
|
|
|
Net income per
share
|
|
|
|
|
|
Class A common
stock – basic
|
|
$
|
1.58
|
|
|
$
|
1.27
|
|
|
Class A common
stock – diluted
|
|
$
|
1.41
|
|
|
$
|
1.13
|
|
|
Class B common
stock – basic and diluted
|
|
$
|
237
|
|
|
$
|
191
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding – Basic
|
|
|
|
|
|
Class A common
stock
|
|
46,188,860
|
|
|
46,188,789
|
|
|
Class B common
stock
|
|
2,542
|
|
|
2,542
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding – Diluted
|
|
|
|
|
|
Class A common
stock
|
|
52,315,958
|
|
|
52,324,350
|
|
|
Class B common
stock
|
|
2,542
|
|
|
2,542
|
|
|
|
|
|
|
|
|
Dividends declared
per share
|
|
|
|
|
|
Class A common
stock
|
|
$
|
1.035
|
|
|
$
|
0.965
|
|
|
Class B common
stock
|
|
$
|
155.25
|
|
|
$
|
144.75
|
|
|
Erie Indemnity
Company
Statements of
Financial Position
(in
thousands)
|
|
|
|
March 31,
2021
|
|
December 31,
2020
|
|
|
(Unaudited)
|
|
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
135,192
|
|
|
$
|
161,240
|
|
Available-for-sale
securities
|
|
16,847
|
|
|
17,697
|
|
Equity
securities
|
|
146
|
|
|
19
|
|
Receivables from Erie
Insurance Exchange and affiliates, net
|
|
481,481
|
|
|
494,637
|
|
Prepaid expenses and
other current assets
|
|
62,401
|
|
|
52,561
|
|
Accrued investment
income
|
|
5,860
|
|
|
6,146
|
|
Total current
assets
|
|
701,927
|
|
|
732,300
|
|
|
|
|
|
|
Available-for-sale
securities, net
|
|
901,475
|
|
|
910,539
|
|
Equity
securities
|
|
92,785
|
|
|
94,071
|
|
Fixed assets,
net
|
|
282,268
|
|
|
265,341
|
|
Agent loans,
net
|
|
59,916
|
|
|
62,449
|
|
Deferred income
taxes, net
|
|
16,454
|
|
|
12,341
|
|
Other
assets
|
|
44,273
|
|
|
40,081
|
|
Total
assets
|
|
$
|
2,099,098
|
|
|
$
|
2,117,122
|
|
|
|
|
|
|
Liabilities and
shareholders' equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Commissions
payable
|
|
$
|
272,670
|
|
|
$
|
262,338
|
|
Agent
bonuses
|
|
30,766
|
|
|
110,158
|
|
Accounts payable and
accrued liabilities
|
|
168,127
|
|
|
150,706
|
|
Dividends
payable
|
|
48,200
|
|
|
48,200
|
|
Contract
liability
|
|
35,799
|
|
|
36,917
|
|
Deferred executive
compensation
|
|
13,825
|
|
|
17,319
|
|
Current portion of
long-term borrowings
|
|
2,053
|
|
|
2,031
|
|
Total current
liabilities
|
|
571,440
|
|
|
627,669
|
|
|
|
|
|
|
Defined benefit
pension plans
|
|
174,228
|
|
|
164,346
|
|
Long-term
borrowings
|
|
93,311
|
|
|
93,833
|
|
Contract
liability
|
|
18,276
|
|
|
18,878
|
|
Deferred executive
compensation
|
|
16,648
|
|
|
14,904
|
|
Other long-term
liabilities
|
|
17,062
|
|
|
9,444
|
|
Total
liabilities
|
|
890,965
|
|
|
929,074
|
|
|
|
|
|
|
Shareholders'
equity
|
|
1,208,133
|
|
|
1,188,048
|
|
Total liabilities
and shareholders' equity
|
|
$
|
2,099,098
|
|
|
$
|
2,117,122
|
|
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SOURCE Erie Indemnity Company