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Erie Indemnity Reports First Quarter 2017 Results

 

Earnings Up 4.3 percent, Net Income per Diluted Share Up 4.5 percent for the Quarter

Erie, Pa. - May 1, 2017 - Erie Indemnity Company (NASDAQ: ERIE) today announced financial results for the quarter ending March 31, 2017.  Net income was $47.9 million, or $0.91 per diluted share, in the first quarter of 2017, compared to $45.9 million, or $0.87 per diluted share, in the first quarter of 2016.

"We are off to a good start in 2017.  Solid topline growth combined with prudent expense management and improved investment returns, resulted in increased earnings per share for the quarter," said Tim NeCastro, President and CEO.

 

1Q 2017

(dollars in thousands)

1Q'16

1Q'17

 

Net revenue from operations

$

67,665

 

$

66,534

 

 

Investment income, net of interest expense

2,559

 

6,420

 

 

Income before income taxes

70,224

 

72,954

 

 

Income tax expense

24,329

 

25,078

 

 

Net income

$

45,895

 

$

47,876

 

 

Gross margin from operations

18.1

%

16.7

%

 

  

1Q 2017 Highlights

Net revenue from operations decreased $1.1 million, or 1.7 percent, in the first quarter of 2017 compared to the first quarter of 2016.

Income from investments before taxes totaled $6.6 million in the first quarter of 2017 compared to $2.6 million in the first quarter of 2016.  Net investment income was $6.0 million in the first quarter of 2017 compared to $4.7 million in the first quarter of 2016, while net realized gains on investments were $0.5 million in the first quarter of 2017 compared to realized losses of $1.1 million in the first quarter of 2017.

Webcast Information

Indemnity has scheduled a conference call and live audio broadcast on the Web for 10:00 AM ET on May 2, 2017.  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 website by 12:30 PM ET.

Erie Insurance Group

According to A.M. Best Company, Erie Insurance Group, based in Erie, Pennsylvania, is the 10th largest homeowners insurer and 12th largest automobile insurer in the United States based on direct premiums written and the 15th 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 5 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.

 

Erie Indemnity Company

Statements of Operations

(dollars in thousands, except per share data)

 

 

Three months ended March 31,

 

 

2017

 

2016

 

 

(Unaudited)

Operating revenue

 

 

 

 

Management fee revenue, net

 

$

392,058

 

 

$

367,458

 

Service agreement revenue

 

7,258

 

 

7,270

 

Total operating revenue

 

399,316

 

 

374,728

 

 

 

 

 

 

Operating expenses

 

 

 

 

Commissions

 

220,478

 

 

208,714

 

Salaries and employee benefits

 

59,740

 

 

53,289

 

All other operating expenses

 

52,564

 

 

45,060

 

Total operating expenses

 

332,782

 

 

307,063

 

Net revenue from operations

 

66,534

 

 

67,665

 

 

 

 

 

 

Investment income

 

 

 

 

Net investment income

 

5,978

 

 

4,662

 

Net realized investment gains (losses)

 

516

 

 

(1,088

)

Net impairment losses recognized in earnings

 

(121

)

 

(345

)

Equity in earnings (losses) of limited partnerships

 

213

 

 

(670

)

Total investment income

 

6,586

 

 

2,559

 

Interest expense, net

 

166

 

 

 

Income before income taxes

 

72,954

 

 

70,224

 

Income tax expense

 

25,078

 

 

24,329

 

Net income

 

$

47,876

 

 

$

45,895

 

 

 

 

 

 

 

 

 

 

 

Earnings Per Share

 

 

 

 

Net income per share

 

 

 

 

ClassA common stock – basic

 

$

1.03

 

 

$

0.99

 

ClassA common stock – diluted

 

$

0.91

 

 

$

0.87

 

ClassB common stock – basic and diluted

 

$

154

 

 

$

148

 

 

 

 

 

 

Weighted average shares outstanding – Basic

 

 

 

 

ClassA common stock

 

46,188,522

 

 

46,189,068

 

ClassB common stock

 

2,542

 

 

2,542

 

 

 

 

 

 

Weighted average shares outstanding – Diluted

 

 

 

 

ClassA common stock

 

52,408,560

 

 

52,523,927

 

ClassB common stock

 

2,542

 

 

2,542

 

 

 

 

 

 

Dividends declared per share

 

 

 

 

ClassA common stock

 

$

0.7825

 

 

$

0.7300

 

ClassB common stock

 

$

117.3750

 

 

$

109.5000

 


Erie Indemnity Company

Statements of Financial Position

(in thousands)

 

 

March 31, 2017

 

December 31, 2016

 

 

(Unaudited)

 

 

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

110,418

 

 

$

189,072

 

Available-for-sale securities

 

77,412

 

 

56,138

 

Receivables from Erie Insurance Exchange and affiliates

 

392,319

 

 

378,540

 

Prepaid expenses and other current assets

 

39,065

 

 

30,169

 

Federal income taxes recoverable

 

0

 

 

5,260

 

Accrued investment income

 

6,504

 

 

6,337

 

Total current assets

 

625,718

 

 

665,516

 

 

 

 

 

 

Available-for-sale securities

 

642,457

 

 

657,153

 

Limited partnership investments

 

54,457

 

 

58,159

 

Fixed assets, net

 

68,685

 

 

69,142

 

Deferred income taxes, net

 

52,495

 

 

53,889

 

Note receivable from Erie Family Life Insurance Company

 

25,000

 

 

25,000

 

Other assets

 

21,224

 

 

20,096

 

Total assets

 

$

1,490,036

 

 

$

1,548,955

 

 

 

 

 

 

Liabilities and shareholders' equity

 

 

 

 

Current liabilities:

 

 

 

 

Commissions payable

 

$

219,256

 

 

$

210,559

 

Agent bonuses

 

32,882

 

 

114,772

 

Accounts payable and accrued liabilities

 

81,551

 

 

88,153

 

Dividends payable

 

36,441

 

 

36,441

 

Deferred executive compensation

 

14,613

 

 

19,675

 

Federal income taxes payable

 

19,478

 

 

0

 

Total current liabilities

 

404,221

 

 

469,600

 

 

 

 

 

 

Defined benefit pension plans

 

211,415

 

 

221,827

 

Employee benefit obligations

 

605

 

 

756

 

Deferred executive compensation

 

16,212

 

 

13,233

 

Long-term borrowings

 

24,753

 

 

24,766

 

Other long-term liabilities

 

2,972

 

 

1,863

 

Total liabilities

 

660,178

 

 

732,045

 

 

 

 

 

 

Shareholders’ equity

 

829,858

 

 

816,910

 

Total liabilities and shareholders’ equity

 

$

1,490,036

 

 

$

1,548,955

 

 

 

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