Skip to main content

Erie Indemnity Reports Full Year and Fourth Quarter 2016 Results

Net Income per Diluted Share Up 20.6 percent for the Full Year

Erie, Pa. - February 23, 2017 - Erie Indemnity Company (NASDAQ: ERIE) today announced financial results for the full year and quarter ending December 31, 2016.  Net income was $210.4 million, or $4.01 per diluted share, for the full year 2016, compared to $174.7 million, or $3.33 per diluted share, in 2015.  Net income was $45.8 million, or $0.87 per diluted share, in the fourth quarter of 2016, compared to $30.1 million, or $0.57 per diluted share, in the fourth quarter of 2015.  The growth in 2016 for the fourth quarter and full year was driven by increased net revenue from operations as revenue growth outpaced the growth in expenses.

"We continue to grow profitably", said Tim NeCastro, President and CEO.  "The dedicated work of our Agents and Employees has once again enabled us to beat the industry forecast for 2016 and as we embark upon 2017, we are well positioned for continued long-term growth and value creation."

2016 Total Year Highlights

Net revenue from operations before taxes increased $59.8 million, or 25.7 percent, in 2016 compared to 2015.

  • Management fee revenue increased $91.9 million, or 6.2 percent, in 2016 compared to 2015.  
  • Commissions increased $45.9 million in 2016 compared to 2015 as a result of the 6.2 percent increase in direct and assumed premiums written by the Exchange.  
  • Non-commission expense decreased $14.6 million in 2016 compared to 2015.  Information technology costs decreased $2.1 million primarily due to decreased personnel costs somewhat offset by an increase in professional fees.  Customer service costs decreased $4.7 million primarily due to decreased credit card processing fees and personnel costs.  Administrative and other costs decreased $7.8 million due to decreased personnel costs, including incentive compensation forfeited by senior executives who separated from service during 2016, somewhat offset by an increase in professional fees.  Personnel costs in all expense categories were impacted by decreased pension costs primarily due to an increase in the pension discount rate as well as decreased medical costs.       
  • The gross margin for 2016 was 18.3 percent, compared to 15.4 percent for 2015. 

Income from investments before taxes totaled $27.8 million in 2016, compared to $33.7 million in 2015.  Earnings from limited partnerships were $7.0 million in 2016 compared to earnings of $17.0 million in 2015.

4Q 2016 Highlights

Net revenue from operations before taxes increased $14.8 million, or 35.5 percent, in the fourth quarter of 2016 compared to the fourth quarter of 2015.

  • Management fee revenue increased $23.3 million, or 6.7 percent, in the fourth quarter of 2016 compared to the fourth quarter of 2015. 
  • Commissions increased $10.1 million in the fourth quarter of 2016 compared to the fourth quarter of 2015 as a result of the 6.4 percent increase in direct and assumed premiums written by the Exchange.
  • Non-commission expense decreased $1.8 million in the fourth quarter of 2016 compared to the fourth quarter of 2015.  Information technology costs increased $4.3 million primarily due to an increase in professional fees.  Customer service costs decreased $1.8 million primarily due to decreased credit card processing fees and personnel costs.  Administrative and other costs decreased $4.0 million due to decreased personnel costs, including incentive compensation forfeited by senior executives who separated from service during 2016, somewhat offset by an increase in professional fees.  Personnel costs in all expense categories were impacted by decreased pension costs primarily due to an increase in the pension discount rate.       
  • The gross margin in the fourth quarter of 2016 was 14.9 percent, compared to 11.7 percent in the fourth quarter of 2015. 

Income from investments before taxes totaled $13.5 million in the fourth quarter of 2016, compared to $4.2 million in the fourth quarter of 2015.  Earnings from limited partnerships were $7.3 million in the fourth quarter of 2016 compared to earnings of $0.1 million in the fourth quarter of 2015.

Webcast Information

Indemnity has scheduled a conference call and live audio broadcast on the Web for 10:00 AM ET on February 24, 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.