Skip to main content

Erie Indemnity Reports Second Quarter 2019 Results

View WebcastInvestor Supplement | Statement of Operations

Net Income per Diluted Share up 10.1 percent for the Quarter and 12.1 percent for the First Half of 2019

Erie, Pa. - July 25, 2019 - Erie Indemnity Company (NASDAQ: ERIE) today announced financial results for the quarter and six months ending June 30, 2019.  Net income was $87.8 million, or $1.68 per diluted share, in the second quarter of 2019, compared to $79.7 million, or $1.52 per diluted share, in the second quarter of 2018.  Net income was $163.1 million, or $3.12 per diluted share, in the first six months of 2019, compared to $145.5 million, or $2.78 per diluted share, in the first six months of 2018.

2Q 2019

(in thousands)

2Q'19

2Q'18

Operating income

$96,610

$95,323

Investment income

9,652

6,207

Interest expense and other income, net

224

544

Income before income taxes

106,038

100,986

Income tax expense

18,284

21,280

Net income

$87,754

$79,706

(in thousands)

Operating income

2Q'19

$96,610

2Q'18

$95,323

(in thousands)

Investment income

2Q'19

9,652

2Q'18

6,207

(in thousands)

Interest expense and other income, net

2Q'19

224

2Q'18

544

(in thousands)

Income before income taxes

2Q'19

106,038

2Q'18

100,986

(in thousands)

Income tax expense

2Q'19

18,284

2Q'18

21,280

First Half 2019

(in thousands)

1H'19

1H'18

Operating income

$182,732 

$172,890

Investment income

19,447

12,370

Interest expense and other income, net

626

1,053

Income before income taxes

201,553

184,207

Income tax expense

38,488

38,743

Net income

$163,065

$145,464

(in thousands)

Operating income

1H'19

$182,732 

1H'18

$172,890

(in thousands)

Investment income

1H'19

19,447

1H'18

12,370

(in thousands)

Interest expense and other income, net

1H'19

626

1H'18

1,053

(in thousands)

Income before income taxes

1H'19

201,553

1H'18

184,207

(in thousands)

Income tax expense

1H'19

38,488

1H'18

38,743

2Q 2019 Highlights

Operating income before taxes increased $1.3 million, or 1.3 percent, in the second quarter of 2019 compared to the second quarter of 2018.

  • Management fee revenue - policy issuance and renewal services increased $25.9 million, or 5.7 percent, in the second quarter of 2019 compared to the second quarter of 2018.
  • Management fee revenue - administrative services increased $0.9 million, or 6.7 percent, in the second quarter of 2019 compared to the second quarter of 2018.
  • Cost of operations - policy issuance and renewal services
  • Commissions increased $11.7 million in the second quarter of 2019 compared to the second quarter of 2018, as a result of the 5.6 percent increase in direct and affiliated assumed premiums written by the Exchange, partially offset by lower agent incentive costs related to less profitable growth, compared to the second quarter of 2018.
  • Non-commission expense increased $13.7 million in the second quarter of 2019 compared to the second quarter of 2018.Information technology costs increased $6.2 million primarily due to increased professional fees.Customer service costs increased $1.5 million primarily due to increased personnel costs.Administrative and other expenses increased $4.7 million primarily driven by an increase in long-term incentive plan cost due to a higher company stock price during the second quarter of 2019 compared to the second quarter of 2018.Personnel costs in all expense categories for the second quarter of 2019 were impacted by additional bonuses awarded to all employees of approximately $1.1 million.
  • The administrative services reimbursement revenue and corresponding cost of operations increased both total operating revenue and total operating expenses by $146.1 million in the second quarter of 2019, but had no net impact on operating income.

Income from investments before taxes totaled $9.7 million in the second quarter of 2019 compared to $6.2 million in the second quarter of 2018.  Net realized gains increased $1.3 million in the second quarter of 2019 compared to the second quarter of 2018.  Net investment income was $8.0 million in the second quarter of 2019 compared to $7.1 million in the second quarter of 2018.  Earnings from limited partnerships were $0.4 million in the second quarter of 2019 compared to losses of $0.2 million in the second quarter of 2018.

First Half 2019 Highlights

Operating income before taxes increased $9.8 million, or 5.7 percent, in the first six months of 2019 compared to the first six months of 2018.

  • Management fee revenue - policy issuance and renewal services increased $50.9 million, or 5.9 percent, in the first six months of 2019 compared to the first six months of 2018.
  • Management fee revenue allocated to administrative services increased $1.8 million, or 6.7 percent, in the first six months of 2019 compared to the first six months of 2018.
  • Cost of operations - policy issuance and renewal services
  • Commissions increased $20.6 million in the first six months of 2019 compared to the first six months of 2018, as a result of the 5.8 percent increase in direct and affiliated assumed premiums written by the Exchange, partially offset by lower agent incentive costs related to less profitable growth, compared to the first six months of 2018.
  • Non-commission expense increased $21.7 million for the six months ended June 30, 2019 compared to the same period in 2018.Information technology costs increased $11.7 million primarily due to increased professional fees.Administrative and other expenses increased $9.0 million primarily driven by an increase in long-term incentive plan cost due to a higher company stock price during the six months ended June 30, 2019 compared to the six months ended June 30, 2018.Personnel costs in all expense categories were impacted by additional bonuses awarded to all employees of approximately $1.1 million for the six months ended June 30, 2019 and $4.8 million for the six months ended June 30, 2018.
  • The administrative services reimbursement revenue and corresponding cost of operations increased both total operating revenue and total operating expenses by $288.6 million in the first six months of 2019, but had no net impact on operating income.

Income from investments before taxes totaled $19.4 million in the first six months of 2019 compared to $12.4 million in the first six months of 2018.  Net realized gains on investments were $3.8 million in the first six months of 2019 compared to net realized losses of $0.5 million in the first six months of 2018.  Net investment income was $16.5 million in the first six months of 2019 compared to $13.9 million in the first six months of 2018, while losses on limited partnerships were $0.7 million in the first six months of 2019 compared to $0.4 million in the first six months of 2018.

Webcast Information

Indemnity has scheduled a pre-recorded audio broadcast on the Web for 10:00 AM ET on July 26, 2019.  Investors may access the pre-recorded audio broadcast by logging on to www.erieinsurance.com.