Investor Supplement | Statement of Operations
Erie, Pa. - February 22, 2018 - Erie Indemnity Company (NASDAQ: ERIE) today announced financial results for the full year and quarter ending December 31, 2017. Net income was $197.0 million, or $3.76 per diluted share, for the full year 2017, compared to $210.4 million, or $4.01 per diluted share, in 2016. Net income was $32.1 million, or $0.61 per diluted share, in the fourth quarter of 2017, compared to $45.8 million, or $0.87 per diluted share, in the fourth quarter of 2016. Net income was reduced by $10.1 million for the fourth quarter and year ended December 31, 2017 due to the enactment of the Tax Cuts and Jobs Act ("TCJA") on December 22, 2017, which reduced fourth quarter and full year Class A diluted earnings per share by $0.19.
4Q and Full Year 2017 |
|||||||||||||||
(dollars in thousands) |
4Q'17 |
4Q'16 |
2017 |
2016 |
|||||||||||
Operating income |
$57,958 |
$56,685 |
$288,372 |
$292,364 |
|||||||||||
Investment income, net of interest expense |
6,683 |
13,438 |
27,323 |
27,727 |
|||||||||||
Income before income taxes |
64,641 |
70,123 |
315,695 |
320,091 |
|||||||||||
Income tax expense |
32,588 |
24,337 |
118,696 |
109,725 |
|||||||||||
Net income |
$32,053 |
$45,786 |
$196,999 |
$210,366 |
|||||||||||
Gross margin from operations |
14.4% |
14.9% |
17.0% |
18.3% |
2017 Full Year Highlights
Operating income before taxes decreased $4.0 million, or 1.4 percent, in 2017 compared to 2016.
Income from investments before taxes and net of interest expense totaled $27.3 million in 2017 compared to $27.7 million in 2016. Net investment income and realized investment gains were $25.9 million in 2017 compared to $21.2 million in 2016. Earnings from limited partnerships were $2.8 million in 2017 compared to $7.0 million in 2016.
Income tax expense in 2017 was impacted by the enactment of the TCJA, which reduced the corporate income tax rate from 35% to 21%. Income tax expense increased by $10.1 million related to the TCJA, which included an increase of $19.9 million related to the re-measurement of our net deferred tax asset partially offset by a deferred tax benefit of $9.8 million primarily related to the acceleration of pension contributions.
4Q 2017 Highlights
Operating income before taxes increased $1.3 million, or 2.2 percent, in the fourth quarter of 2017 compared to the fourth quarter of 2016.
Income from investments before taxes and net of interest expense totaled $6.7 million in the fourth quarter of 2017, compared to $13.4 million in the fourth quarter of 2016. Earnings from limited partnerships were $0.9 million in the fourth quarter of 2017 compared to earnings of $7.3 million in the fourth quarter of 2016.
Income tax expense in the fourth quarter of 2017 included an increase of $10.1 million due to the enactment of the TCJA.
Webcast Information
Indemnity has scheduled a conference call and live audio broadcast on the Web for 10:00 AM ET on February 23, 2018. 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 11th 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.
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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:
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CONTACT: Scott Beilharz, Investment Relations, 800-458-0811, x7312 or 814-870-7312, Scott.Beilharz@erieinsurance.com