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