Earnings Up 19.1 percent, Net Income per Diluted Share Up 19.3 percent for the Quarter
Erie Indemnity Company (NASDAQ: ERIE) today announced financial results for the full year and the quarter ending December 31, 2015. Net income was $174.7 million, or $3.33 per diluted share, for the full year 2015, compared to $167.5 million, or $3.18 per diluted share, in 2014. Net income was $30.1 million, or $0.57 per diluted share, in the fourth quarter of 2015, compared to $25.3 million, or $0.48 per diluted share, in the fourth quarter of 2014. The growth in 2015 for the fourth quarter and full year was driven by increased net revenue from operations and increased investment income, primarily due to an increase in earnings from limited partnerships.
"The strong results we saw in 2015, our 90th year in business, reflect our continued commitment to and execution of our business strategy that will provide long-term value for our customers and shareholders," said Terry Cavanaugh, President and CEO.
4Q and Total Year 2015
|
(dollars in thousands) |
4Q'14 |
4Q'15 |
2014 |
2015 |
|---|---|---|---|---|
|
Net revenue from operations |
$ 35,413 |
$ 41,839 |
$ 222,847 |
$ 232,541 |
|
Investment income |
2,342 |
4,244 |
28,417 |
33,708 |
|
Income before income taxes |
37,755 |
46,083 |
251,264 |
266,249 |
|
Income tax expense |
12,459 |
15,950 |
83,759 |
91,571 |
|
Net income |
$ 25,296 |
$ 30,133 |
$ 167,505 |
$ 174,678 |
|
Gross margin from operations |
10.5 % |
11.7 % |
15.8 % |
15.4 % |
2015 Total Year Highlights
Net revenue from operations before taxes increased $9.7 million, or 4.3 percent, in 2015 compared to 2014.
- Management fee revenue increased $99.3 million, or 7.2 percent, in 2015 compared to 2014.
- Commissions increased $64.9 million in 2015 compared to 2014. The majority of the increase was driven by the 7.3 percent increase in direct and assumed premiums written by the Exchange, while approximately one-quarter of the increase was due to higher agent incentive costs primarily related to profitable growth.
- Non-commission expense increased $23.8 million in 2015 compared to 2014. Underwriting and policy processing costs increased $8.0 million due to increased personnel and postage costs. Information technology costs increased $2.3 million primarily due to hardware and software costs. Sales and advertising costs increased $4.1 million primarily due to personnel costs. Customer service costs increased $2.8 million due to an increase in personnel costs and credit card processing fees. Administrative and other costs increased $6.6 million due to personnel costs and professional fees. Personnel costs in all expense categories were impacted by increased pension and medical costs, and increased estimates for incentive plan compensation costs related to underwriting performance.
- The gross margin for 2015 was 15.4 percent, compared to 15.8 percent for 2014. The 0.4 point decrease in gross margin was driven primarily by the increased agent incentive costs discussed above.
Income from investments before taxes totaled $33.7 million in 2015, compared to $28.4 million in 2014. Earnings from limited partnerships were $17.0 million in 2015 compared to earnings of $10.9 million in 2014.
4Q 2015 Highlights
Net revenue from operations before taxes increased $6.4 million, or 18.1 percent, in the fourth quarter of 2015 compared to the fourth quarter of 2014.
- Management fee revenue increased $19.5 million, or 5.9 percent, in the fourth quarter of 2015 compared to the fourth quarter of 2014.
- Commissions increased $11.2 million in the fourth quarter of 2015, compared to the fourth quarter of 2014. The majority of the increase was driven by the 6.2 percent increase in direct and assumed premiums written by the Exchange.
- Non-commission expense increased $1.5 million in the fourth quarter of 2015 compared to the fourth quarter of 2014. Underwriting and policy processing costs increased $1.7 million due to increased personnel costs. Sales and advertising costs increased $1.7 million due to increased personnel and advertising costs. Administrative and other expenses decreased $2.0 million due to professional fees. All other operating costs increased $0.1 million.
- The gross margin in the fourth quarter of 2015 was 11.7 percent, compared to 10.5 percent in the fourth quarter of 2014.
Income from investments before taxes totaled $4.2 million in the fourth quarter of 2015, compared to $2.3 million in the fourth quarter of 2014. Earnings from limited partnerships were $0.1 million in the fourth quarter of 2015 compared to losses of $1.7 million in the fourth quarter of 2014.
Webcast Information
Indemnity has scheduled a conference call and live audio broadcast on the Web for 10:00 AM ET on February 26, 2016. 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.