Erie Indemnity Reports Second Quarter 2020 Results

Erie, Pa. - July 30, 2020 - Erie Indemnity Company (NASDAQ: ERIE) today announced financial results for the quarter and six months ending June 30, 2020. Net income was $82.0 million, or $1.57 per diluted share, in the second quarter of 2020,compared to $87.8 million, or $1.68 per diluted share, in the second quarter of 2019. Net income was $141.3 million, or $2.70 per diluted share, in the first six months of 2020, compared to $163.1 million, or $3.12 per dilutedshare, in the first six months of 2019.

The significant disruption to the economy and financial markets resulting from the COVID-19 pandemic that began in the first quarter of 2020 continues to evolve and the pandemic's ultimate impact and duration remain highly uncertainat this time. The Exchange experienced declines in new business in the second quarter of 2020 due to business disruptions and recessionary conditions which impacted our management fee revenue. The financial markets partiallyrecovered in the second quarter of 2020, improving our investment results compared the first quarter of 2020.

2Q 2020

First Half 2020

2Q 2020 Highlights

Operating income before taxes decreased $5.4 million, or 5.6 percent, in the second quarter of 2020 compared to the second quarter of 2019.

• Management fee revenue - policy issuance and renewal services increased $3.3 million, or 0.7 percent, in the second quarter of 2020 compared to the second quarter of 2019.
• Management fee revenue - administrative services increased $0.6 million, or 4.4 percent, in the second quarter of 2020 compared to the second quarter of 2019.
• Cost of operations - policy issuance and renewal services
• Commissions increased $5.2 million in the second quarter of 2020 compared to the second quarter of 2019, primarily driven by increases in agent incentive compensation.The estimated agent incentive payouts at June 30, 2020 are basedon actual underwriting results for the two prior years and current year-to-date actual results and forecasted results for the remainder of 2020.Therefore, fluctuations in the current quarter underwriting results can impact theestimated incentive payout on a quarter-to-quarter basis. The Exchange experienced a significant decrease in automobile claims frequency beginning in March 2020 that continued through the second quarter of 2020 as a result of theCOVID-19 pandemic which improved the agent profitability component of the agent incentive bonus.
• Non-commission expense increased $3.6 million in the second quarter of 2020 compared to the second quarter of 2019.Information technology costs increased $2.3 million driven by increases in hardware and software costs primarilyto support remote work capabilities for our employees and professional fees.Sales and advertising costs increased $1.6 million primarily driven by a new program to support agent charitable giving in response to the COVID-19pandemic.Personnel costs in all categories increased slightly as increases in salaries and wages resulting from higher vacation accruals were partially offset by lower medical expenses due to the COVID-19 pandemic.

Income from investments before taxes totaled $11.6 million in the second quarter of 2020 compared to $9.7 million in the second quarter of 2019. Net realized gains on investments were $6.5 million in the second quarter of 2020compared to $1.3 million in the second quarter of 2019 reflecting a partial financial market recovery. Net investment income was $7.4 million in the second quarter of 2020 compared to $8.0 million in the second quarter of2019. Losses from limited partnerships were $2.3 million in the second quarter of 2020 compared to earnings of $0.4 million in the second quarter of 2019.

First Half 2020 Highlights

• Management fee revenue - policy issuance and renewal services increased $16.0 million, or 1.8 percent, in the first six months of 2020 compared to the first six months of 2019.Operating income before taxes decreased $5.9million, or 3.2 percent, in the first six months of 2020 compared to the first six months of 2019.
• Management fee revenue - administrative services increased $1.4 million, or 5.1 percent, in the first six months of 2020 compared to the first six months of 2019.
• Cost of operations - policy issuance and renewal services
• Commissions increased $14.2 million in the first six months of 2020 compared to the first six months of 2019, primarily driven by increases in agent incentive compensation. The increase was also driven by the growth in direct andaffiliated assumed premiums written by the Exchange of 1.9 percent in the first six months of 2020.
• Non-commission expense increased $8.6 million in the first six months of 2020 compared to the first six months of 2019.Information technology costs increased $5.3 million primarily due to increases in hardware and software costs,professional fees, and personnel costs.Underwriting and policy processing expense increased $2.8 million primarily due to increased personnel costs.Sales and advertising costs increased $2.0 million primarily driven by personnelcosts and a new program to support agent charitable giving in response to the COVID-19 pandemic.Administrative and other costs decreased $2.4 million primarily driven by the change in the company stock price, which experienced alower increase during the six months ended June 30, 2020 compared to the same period in 2019.Increased personnel costs in all categories included higher vacation accruals as employees took less vacation in the first six months as aresult of the COVID-19 pandemic.

Income from investments before taxes totaled $2.4 million in the first six months of 2020 compared to of $19.4 million in the first six months of 2019. Net investment income was $15.7 million in the first six months of 2020compared to $16.5 million in the first six months of 2019. Net realized losses were $4.3 million in the first six months of 2020 compared to net realized gains of $3.8 million in the first six months of 2019 driven by decreases inthe fair value of equity securities due to significant financial market volatility resulting from the COVID-19 pandemic. Net impairment losses of $3.1 million in the first six months of 2020 were also driven by the COVID-19pandemic's impact on the financial markets. Losses from limited partnerships were $6.0 million in the first six months of 2020 compared to losses of $0.7 million in the first six months of 2019.

Webcast Information

Indemnity has scheduled a pre-recorded audio broadcast on the Web for 10:00 AM ET on July 31, 2020. 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 11^th largest homeowners insurer and 12^th largest automobile insurer in the UnitedStates based on direct premiums written and the 16^th 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 nearly 6 million policies in force and operates in 12 states and the District of Columbia. Erie Insurance Group is a FORTUNE 500 company.