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
|
|
|
|
|
|
|
|
|
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
|
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