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Erie Indemnity Reports Third Quarter 2021 Results

Net Income per Diluted Share was $1.72 for the Quarter and $4.64 for the Nine Months of 2021

ERIE, Pa., October 28, 2021 - Erie Indemnity Company (NASDAQ: ERIE) today announced financial results for the quarter and nine months ending September 30, 2021.  Net income was $90.2 million, or $1.72 per diluted share, in the third quarter of 2021, compared to $89.2 million, or $1.71 per diluted share, in the third quarter of 2020.  Net income was $242.8 million, or $4.64 per diluted share, in the first nine months of 2021, compared to $230.5 million, or $4.41 per diluted share, in the first nine months of 2020.

The uncertainty resulting from the COVID-19 pandemic continues to evolve and the pandemic's ultimate impact and duration remain uncertain at this time. 

3Q and Nine Months 2021

(in thousands)

3Q'21

3Q'20

Operating income

$ 95,103

$ 96,225

Investment income  (loss)

20,598

16,438

Interest expense and other income, net

1,575

967

Income before income taxes

114,126

111.696

Income tax expense

23,903

22,480

Net income

$ 90,223

$ 89,216

(in thousands)

Operating income

3Q'21

$ 95,103

3Q'20

$ 96,225

(in thousands)

Investment income  (loss)

3Q'21

20,598

3Q'20

16,438

(in thousands)

Interest expense and other income, net

3Q'21

1,575

3Q'20

967

(in thousands)

Income before income taxes

3Q'21

114,126

3Q'20

111.696

(in thousands)

Income tax expense

3Q'21

23,903

3Q'20

22,480

Nine Months 2022

(in thousands)

2021

2020

Operating income

$ 256,263

$ 273,105

Investment income  (loss)

55,004

  18,796  

Interest expense and other income, net

4,690

1,596

Income before income taxes

306,577

290,305

Income tax expense

63,759

59,786

Net income

$ 242,818

$ 230,519

(in thousands)

Operating income

2021

$ 256,263

2020

$ 273,105

(in thousands)

Investment income  (loss)

2021

55,004

2020

  18,796  

(in thousands)

Interest expense and other income, net

2021

4,690

2020

1,596

(in thousands)

Income before income taxes

2021

306,577

2020

290,305

(in thousands)

Income tax expense

2021

63,759

2020

59,786


3Q 2021 Highlights

Operating income before taxes decreased $1.1 million, or 1.2 percent, in the third quarter of 2021 compared to the third quarter of 2020.

  • Management fee revenue - policy issuance and renewal services increased $20.3 million, or 4.2 percent, in the third quarter of 2021 compared to the third quarter of 2020.
  • Management fee revenue - administrative services decreased $0.4 million, or 2.9 percent, in the third quarter of 2021 compared to the third quarter of 2020.
  • Cost of operations - policy issuance and renewal services
    • Commissions increased $14.9 million in the third quarter of 2021 compared to the third quarter of 2020, driven by the growth in direct and affiliated assumed written premium, primarily in lines of business that pay a higher commission rate.To a lesser extent, there was also an increase in agent incentive compensation for the third quarter of 2021 compared to the third quarter of 2020.
    • Non-commission expense increased $5.9 million in the third quarter of 2021 compared to the third quarter of 2020.Information technology costs increased $3.8 million primarily due to increased hardware and software costs as well as increased personnel costs.Sales and advertising increased $1.3 million primarily due to personnel costs.Administrative and other costs increased $0.5 million primarily driven by increased building and equipment depreciation compared to the same period in 2020.Personnel costs in all expense categories for the third quarter of 2021 were impacted by higher medical costs compared to the prior year as the COVID-19 pandemic reduced elective procedures in 2020 and higher incentive plan award accruals due to increase direct written premium growth.

Income from investments before taxes totaled $20.6 million in the third quarter of 2021 compared to $16.4 million in the third quarter of 2020.  Net investment income was $18.9 million in the third quarter of 2021 compared to $10.6 million in the third quarter of 2020.  Included in net investment income is $11.5 million of limited partnership earnings in the third quarter of 2021 compared to $3.6 million in the third quarter of 2020.  Net realized gains on investments were $1.6 million in the third quarter of 2021 compared to $5.9 million in the third quarter of 2020.

Nine Months 2021 Highlights

Operating income before taxes decreased $16.8 million, or 6.2 percent, in the first nine months of 2021 compared to the first nine months of 2020.

  • Management fee revenue - policy issuance and renewal services increased $50.8 million, or 3.6 percent, in the first nine months of 2021 compared to the first nine months of 2020.
  • Management fee revenue - administrative services decreased $0.5 million, or 1.1 percent, in the first nine months of 2021 compared to the first nine months of 2020.
  • Cost of operations - policy issuance and renewal services
    • Commissions increased $39.0 million in the first nine months of 2021 compared to the first nine months of 2020, driven by the growth in direct and affiliated assumed written premium, primarily in lines of business that pay a higher commission rate.To a lesser extent, there was also an increase in agent incentive compensation for the first nine months 2021 compared to the first nine months of 2020.For the nine months ended September 30, 2020, lower claims frequency and related loss expense due to the COVID-19 pandemic impacted agent compensation related to the profitability component.
    • Non-commission expense increased $26.8 million for the nine months ended September 30, 2021 compared to the same period in 2020.Underwriting and policy processing expense increased $2.6 million primarily due to increased personnel costs and underwriting report costs.Information technology costs increased $10.9 million primarily due to increased hardware and software costs and personnel costs.Administrative and other costs increased $12.6 million primarily driven by increased building and equipment depreciation, professional fees and personnel costs compared to the same period in 2020.Personnel costs in all expense categories were impacted by higher medical costs compared to the prior year as the COVID-19 pandemic reduced elective procedures in 2020 and higher incentive plan award accruals due to increase direct written premium growth.

Income from investments before taxes totaled $55.0 million in the first nine months of 2021 compared to $18.8 million in the first nine months of 2020.  Net investment income was $49.6 million in the first nine months of 2021 compared to $20.4 million in the first nine months of 2020.  Included in net investment income is $26.7 million of limited partnership earnings in the first nine months of 2021 and $2.4 million of limited partnership losses in the first nine months of 2020.  Net realized gains on investments were $5.2 million in the first nine months of 2021 compared to $1.6 million in the first nine months of 2020.

Webcast Information

Indemnity has scheduled a pre-recorded audio broadcast on the Web for 10:00 AM ET on October 29, 2021.  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 12th largest homeowners insurer, 13th largest automobile insurer and 13th largest commercial lines insurer in the United States based on direct premiums written.  Founded in 1925, Erie Insurance is a Fortune 500 company and the 16th largest property/casualty insurer in the United States based on total lines net premium written.  Rated A+ (Superior) by A.M. Best, ERIE has more than 6 million policies in force and operates in 12 states and the District of Columbia. 

News releases and more information are available on ERIE's website at www.erieinsurance.com.