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Erie Indemnity Reports Third Quarter 2022 Results

Net Income per Diluted Share was $1.61 for the Quarter and $4.46 for the Nine Months of 2022

ERIE, Pa., October 27, 2022 - Erie Indemnity Company (NASDAQ: ERIE) today announced financial results for the quarter and nine months ending September 30, 2022.  Net income was $84.3 million, or $1.61 per diluted share, in the third quarter of 2022, compared to $90.2 million, or $1.72 per diluted share, in the third quarter of 2021.  Net income was $233.1 million, or $4.46 per diluted share, in the first nine months of 2022, compared to $242.8 million, or $4.64 per diluted share, in the first nine months of 2021.

3Q 2022

(in thousands)

3Q'22

3Q'21

Operating Income

$106,472

$95,103

Investment income (loss)

(571)

20,598

Interest and other expense, net

(447)

1,575

Income before income taxes

106,348

114,126

Income tax expense

22,035

23,903

Net income

$84,313

$90,223

(in thousands)

Operating Income

3Q'22

$106,472

3Q'21

$95,103

(in thousands)

Investment income (loss)

3Q'22

(571)

3Q'21

20,598

(in thousands)

Interest and other expense, net

3Q'22

(447)

3Q'21

1,575

(in thousands)

Income before income taxes

3Q'22

106,348

3Q'21

114,126

(in thousands)

Income tax expense

3Q'22

22,035

3Q'21

23,903

(in thousands)

Net income

3Q'22

$84,313

3Q'21

$90,223

Nine Months 2022

(in thousands)

2022

2021

Operating Income

$294,784

$256,263

Investment Income (loss)

344

55,004

Interest and other expense, net

637

4,690

Income before income taxes

294,491

306,577

Income tax expense

61,412

63,759

Net income

$233,079

$242,818

(in thousands)

Operating Income

2022

$294,784

2021

$256,263

(in thousands)

Investment Income (loss)

2022

344

2021

55,004

(in thousands)

Interest and other expense, net

2022

637

2021

4,690

(in thousands)

Income before income taxes

2022

294,491

2021

306,577

(in thousands)

Income tax expense

2022

61,412

2021

63,759

(in thousands)

Net income

2022

$233,079

2021

$242,818

3Q 2022 Highlights

Operating income before taxes increased $11.4 million, or 12.0 percent, in the third quarter of 2022 compared to the third quarter of 2021.

  • Management fee revenue - policy issuance and renewal services increased $46.8 million, or 9.3 percent, in the third quarter of 2022 compared to the third quarter of 2021.
  • Management fee revenue - administrative services increased $0.2 million, or 1.3 percent, in the third quarter of 2022 compared to the third quarter of 2021.
  • Cost of operations - policy issuance and renewal services
    • Commissions increased $21.6 million in the third quarter of 2022 compared to the third quarter of 2021, primarily driven by the growth in direct and affiliated assumed written premium, partially offset by a decrease in agent incentive compensation.
    • Non-commission expense increased $14.2 million in the third quarter of 2022 compared to the third quarter of 2021.Underwriting and policy processing expense increased $2.9 million primarily due to increased postage and underwriting report costs. Information technology costs increased $3.7 million primarily due to increased professional fees and hardware and software costs, partially offset by decreased personnel costs. Administrative and other costs increased $6.4 million primarily due to an increase in personnel costs related to compensation and increased professional fees.

Loss from investments before taxes totaled $0.6 million in the third quarter of 2022 compared to income from investments before taxes of $20.6 million in the third quarter of 2021.  Net investment income was $5.8 million in the third quarter of 2022 compared to $18.9 million in the third quarter of 2021.  Included in net investment income is $4.6 million of limited partnership losses in the third quarter of 2022 compared to earnings of $11.5 million in the third quarter of 2021.  Net realized and unrealized losses on investments were $6.2 million in the third quarter of 2022 compared to net realized and unrealized gains of $1.6 million in the third quarter of 2021.

Nine Months 2022 Highlights

Operating income before taxes increased $38.5 million, or 15.0 percent, in the first nine months of 2022 compared to the first nine months of 2021.

  • Management fee revenue - policy issuance and renewal services increased $121.3 million, or 8.3 percent, in the first nine months of 2022 compared to the first nine months of 2021.
  • Management fee revenue - administrative services decreased $0.5 million, or 1.2 percent, in the first nine months of 2022 compared to the first nine months of 2021.
  • Cost of operations - policy issuance and renewal services
    • Commissions increased $55.6 million in the first nine months of 2022 compared to the first nine months of 2021, primarily driven by the growth in direct and affiliated assumed written premium, partially offset by a decrease in agent incentive compensation.
    • Non-commission expense increased $27.8 million in the first nine months of 2022 compared to the first nine months of 2021.Underwriting and policy processing expense increased $3.0 million primarily driven by increased underwriting report costs. Information technology costs increased $7.9 million primarily due to increased hardware and software costs and professional fees, partially offset by decreased personnel costs. Sales and advertising increased $3.1 million primarily due to agent related expenses. Administrative and other costs increased $15.0 million primarily driven by increased professional fees and personnel costs related to compensation. Personnel costs in all expense categories were also impacted by lower estimated costs for incentive plan awards related to underwriting performance.

Income from investments before taxes totaled $0.3 million in the first nine months of 2022 compared to $55.0 million in the first nine months of 2021.  Net investment income was $24.6 million in the first nine months of 2022 compared to $49.6 million in the first nine months of 2021.  Included in net investment income is $2.2 million of limited partnership losses in the first nine months of 2022 compared to earnings of $26.7 million in the first nine months of 2021.  Net realized and unrealized losses on investments totaled $23.8 million in the first nine months of 2022 compared to net realized and unrealized gains of $5.2 million in the first nine months of 2021.

Webcast Information

Indemnity has scheduled a pre-recorded audio broadcast on the Web for 10:00 AM ET on October 28, 2022.  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 11th 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 19th 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.