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