Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


Date of Report (Date of Earliest Event Reported):			July 25, 2023


			ERIE INDEMNITY COMPANY
			(Exact name of registrant as specified in its charter)

Pennsylvania

0-24000

25-0466020

(State or other jurisdiction

(Commission

(IRS Employer

of incorporation)

File Number)

Identification No.)

100 Erie Insurance Place,

Erie,

Pennsylvania

16530

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code:

814

870-2000


			Not applicable
			Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Class A common stock,

stated value $0.0292 per share

ERIE

NASDAQ Stock Market, LLC

(Title of each class)

(Trading Symbol)

(Name of each exchange on which registered)

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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Item 2.02 Results of Operations and Financial Condition.

On July 27, 2023, Erie Indemnity Company (the “Company”) issued a press release announcing financial results for the quarter and six months ended June 30, 2023. Copies of the press release and financial information are attached hereto and are incorporated herein by reference as Exhibit 99.1 and Exhibit 99.2, respectively.

On July 28, 2023 at 10:00 a.m. the Company will provide a pre-recorded Webcast that is complementary to the press release announcing financial results for the quarter and six months ended June 30, 2023.

Item 8.01 Other Events.

At its meeting on July 25, 2023, the Company's Board of Directors approved the following quarterly dividend on shares of Erie Indemnity Company Class A common stock:

Dividend Number: 373

Class A Rate Per Share: $1.19

Declaration Date: July 25, 2023

Ex-Dividend Date: October 4, 2023

Record Date: October 5, 2023

Payable Date: October 20, 2023

Item 9.01 Financial Statements and Exhibits.

Exhibit 99.1 Press Release

Exhibit 99.2 Financial Information

Exhibit 104 Cover Page Interactive Data File (embedded within the Inline XBRL document)

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Exhibit Index



Exhibit No.						Description

99.1						Press Release
99.2						Financial Information
104						Cover Page Interactive Data File (embedded within the Inline XBRL document)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Erie Indemnity Company

July 27, 2023

By:

/s/ Julie M. Pelkowski

Name: Julie M. Pelkowski

Title: Executive Vice President & CFO

Exhibit 99.1

Erie Indemnity Reports Second Quarter 2023 Results

Net Income per Diluted Share was $2.25 for the Quarter and $3.90 for the Six Months of 2023

Erie, Pa., July 27, 2023 - Erie Indemnity Company (NASDAQ: ERIE) today announced financial results for the quarter and six months ending June 30, 2023. Net income was $117.9 million, or $2.25 per diluted share, in the second quarter of 2023, compared to $80.1 million, or $1.53 per diluted share, in the second quarter of 2022. Net income was $204.1 million, or $3.90 per diluted share, in the first six months of 2023, compared to $148.8 million, or $2.84 per diluted share, in the first six months of 2022.



2Q and First Half 2023


(in thousands)	2Q'23		2Q'22		1H'23	1H'22
Operating income	$	134,158	$	104,000		$	244,701	$	188,312
Investment income (loss)	11,627		(2,094)			6,895		915
Interest expense and other (income), net	(3,305)		558			(6,642)		1,084
Income before income taxes	149,090		101,348			258,238		188,143
Income tax expense	31,238		21,201			54,145		39,377
Net income	$	117,852	$	80,147		$	204,093	$	148,766

2Q 2023 Highlights

Operating income before taxes increased $30.2 million, or 29.0 percent, in the second quarter of 2023 compared to the second quarter of 2022.

•Management fee revenue - policy issuance and renewal services increased $88.8 million, or 16.3 percent, in the second quarter of 2023 compared to the second quarter of 2022.

•Management fee revenue - administrative services increased $1.2 million, or 8.0 percent, in the second quarter of 2023 compared to the second quarter of 2022.

•Cost of operations - policy issuance and renewal services

◦Commissions increased $43.7 million in the second quarter of 2023 compared to the second quarter of 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 $16.1 million in the second quarter of 2023 compared to the second quarter of 2022. Underwriting and policy processing expense increased $3.7 million primarily due to increased personnel and postage costs. Information technology costs increased $3.3 million primarily due to increased personnel costs and professional fees. Sales and advertising expense increased $1.8 million primarily due to increased agent related costs. Administrative and other costs increased $7.7 million primarily due to an increase in personnel costs, partially offset by a decrease in professional fees. Personnel costs were impacted by increased compensation including higher estimated costs for

incentive plan awards due to increased direct written premium and policies in force growth, partially offset by lower pension costs due to an increase in the discount rate compared to 2022.

Income from investments before taxes totaled $11.6 million in the second quarter of 2023 compared to loss from investments before taxes of $2.1 million in the second quarter of 2022. Net investment income was $13.5 million in the second quarter of 2023 compared to $8.3 million in the second quarter of 2022. Net investment income included less than $0.1 million of limited partnership earnings in the second quarter of 2023 compared to losses of $0.3 million in the second quarter of 2022. Net realized and unrealized losses on investments were $1.7 million in the second quarter of 2023 compared to $10.3 million in the second quarter of 2022.

First Half 2023 Highlights

Operating income before taxes increased $56.4 million, or 29.9 percent, in the first six months of 2023 compared to the first six months of 2022.

•Management fee revenue - policy issuance and renewal services increased $158.9 million, or 15.4 percent, in the first six months of 2023 compared to the first six months of 2022.

•Management fee revenue - administrative services increased $2.0 million, or 7.1 percent, in the first six months of 2023 compared to the first six months of 2022.

•Cost of operations - policy issuance and renewal services

◦Commissions increased $71.3 million in the first six months of 2023 compared to the first six months of 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 $33.1 million in the six months ended June 30, 2023 compared to the first six months of 2022. Underwriting and policy processing expense increased $6.4 million primarily due to increased personnel and postage costs. Information technology costs increased $14.8 million primarily due to increased professional fees, personnel costs, and hardware and software costs. Sales and advertising expense increased $1.9 million primarily due to increased personnel and agent related costs. Administrative and other costs increased $10.6 million primarily due to an increase in personnel costs, partially offset by a decrease in professional fees. Personnel costs were impacted by increased compensation including higher estimated costs for incentive plan awards due to increased direct written premium and policies in force growth, partially offset by lower pension costs due to an increase in the discount rate compared to 2022.

Income from investments before taxes totaled $6.9 million in the first six months of 2023 compared to $0.9 million in the first six months of 2022. Net investment income was $15.7 million in the first six months of 2023 compared to $18.8 million in the first six months of 2022. Net investment income included $10.7 million of limited partnership losses in the first six months of 2023 compared to earnings of $2.5 million in the first six months of 2022. Net realized and unrealized losses on investments were $7.0 million in the first six months of 2023 compared to $17.6 million in the first six months of 2022.

Webcast Information

Indemnity has scheduled a pre-recorded audio broadcast on the Web for 10:00 AM ET on July 28, 2023. 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;

◦dependence upon the independent agency system; and

◦ability to maintain our reputation;

•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 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 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.

Exhibit 99.2

Erie Indemnity Company

Statements of Operations

(dollars in thousands, except per share data)


	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
	(Unaudited)				(Unaudited)
Operating revenue
Management fee revenue - policy issuance and renewal services	$	633,339	$	544,555	$	1,191,429	$	1,032,547
Management fee revenue - administrative services	15,636		14,476		30,825		28,789
Administrative services reimbursement revenue	184,466		160,675		357,293		324,002
Service agreement revenue	6,429		6,437		12,788		12,915
Total operating revenue	839,870		726,143		1,592,335		1,398,253

Operating expenses
Cost of operations - policy issuance and renewal services	521,246		461,468		990,341		885,939
Cost of operations - administrative services	184,466		160,675		357,293		324,002

Total operating expenses	705,712		622,143		1,347,634		1,209,941
Operating income	134,158		104,000		244,701		188,312

Investment income
Net investment income	13,535		8,268		15,718		18,772
Net realized and unrealized investment losses	(1,737)		(10,324)		(7,019)		(17,603)
Net impairment losses recognized in earnings	(171)		(38)		(1,804)		(254)

Total investment income (loss)	11,627		(2,094)		6,895		915

Interest expense	—		895		—		1,894
Other income	3,305		337		6,642		810
Income before income taxes	149,090		101,348		258,238		188,143
Income tax expense	31,238		21,201		54,145		39,377
Net income	$	117,852	$	80,147	$	204,093	$	148,766


Net income per share
Class A common stock – basic	$	2.53	$	1.72	$	4.38	$	3.19
Class A common stock – diluted	$	2.25	$	1.53	$	3.90	$	2.84
Class B common stock – basic and diluted	$	380	$	258	$	657	$	479


Weighted average shares outstanding – Basic
Class A common stock	46,189,026		46,188,845		46,188,923		46,188,803
Class B common stock	2,542		2,542		2,542		2,542

Weighted average shares outstanding – Diluted
Class A common stock	52,299,974		52,296,139		52,298,298		52,298,321
Class B common stock	2,542		2,542		2,542		2,542

Dividends declared per share
Class A common stock	$	1.19	$	1.11	$	2.38	$	2.22
Class B common stock	$	178.50	$	166.50	$	357.00	$	333.00

Erie Indemnity Company

Statements of Financial Position

(in thousands)


	June 30, 2023		December 31, 2022
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	142,996	$	142,090
Available-for-sale securities	63,510		24,267

Receivables from Erie Insurance Exchange and affiliates, net	591,008		524,937
Prepaid expenses and other current assets	66,399		79,201

Accrued investment income	8,890		8,301
Total current assets	872,803		778,796

Available-for-sale securities, net	857,442		870,394
Equity securities	77,220		72,560

Fixed assets, net	422,903		413,874
Agent loans, net	60,367		60,537

Other assets	34,776		43,295
Total assets	$	2,325,511	$	2,239,456

Liabilities and shareholders' equity
Current liabilities:
Commissions payable	$	347,795	$	300,028
Agent bonuses	37,443		95,166
Accounts payable and accrued liabilities	164,718		165,915
Dividends payable	55,419		55,419
Contract liability	39,046		36,547
Deferred executive compensation	7,672		12,036



Total current liabilities	652,093		665,111

Defined benefit pension plans	55,075		51,224

Contract liability	18,892		17,895
Deferred executive compensation	13,539		13,724
Deferred income taxes, net	15,647		14,075
Other long-term liabilities	25,353		29,019
Total liabilities	780,599		791,048










Shareholders’ equity	1,544,912		1,448,408
Total liabilities and shareholders’ equity	$	2,325,511	$	2,239,456

Document and Entity Information	Jul. 25, 2023
Cover [Abstract]
Document Type	8-K
Document Period End Date	Jul. 25, 2023
Entity Registrant Name	ERIE INDEMNITY COMPANY
Entity Incorporation, State or Country Code	PA
Entity File Number	0-24000
Entity Tax Identification Number	25-0466020
Entity Address, Address Line One	100 Erie Insurance Place,
Entity Address, City or Town	Erie,
Entity Address, State or Province	PA
Entity Address, Postal Zip Code	16530
City Area Code	814
Local Phone Number	870-2000
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Class A common stock,
Trading Symbol	ERIE
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false
Entity Central Index Key	0000922621
Amendment Flag	false