Erie Indemnity Company (NASDAQ: ERIE) today announced financial results for the quarter and six months ending June 30, 2023. Net income was $117.9 million, or $2.25 per diluted share, in the second quarter of 2023, compared to $80.1 million, or $1.53 per diluted share, in the second quarter of 2022. Net income was $204.1 million, or $3.90 per diluted share, in the first six months of 2023, compared to $148.8 million, or $2.84 per diluted share, in the first six months of 2022.
2Q and first half 2023
|
(in thousands) |
2Q'23 |
2Q'22 |
1H'23 |
1H'22 |
|---|---|---|---|---|
|
Operating income |
$134,158 |
$104,000 |
$244,701 |
$188,312 |
|
Investment income (loss) |
11,627 |
(2,094) |
6,895 |
915 |
|
Interest expense and other (income), net |
(3,305) |
558 |
(6,642) |
1,084 |
|
Income before income and taxes |
149,090 |
101,348 |
258,238 |
188,143 |
|
Income tax expense |
31,238 |
21,201 |
54,145 |
39,377 |
|
Net income |
$117,852 |
$80,147 |
$204,093 |
$148,766 |
2Q 2023 Highlights
Operating income before taxes increased $30.2 million, or 29.0 percent, in the second quarter of 2023 compared to the second quarter of 2022.
- Management fee revenue - policy issuance and renewal services increased $88.8 million, or 16.3 percent, in the second quarter of 2023 compared to the second quarter of 2022.
- Management fee revenue - administrative services increased $1.2 million, or 8.0 percent, in the second quarter of 2023 compared to the second quarter of 2022.
- Cost of operations - policy issuance and renewal services
- Commissions increased $43.7 million in the second quarter of 2023 compared to the second quarter of 2022, 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 $16.1 million in the second quarter of 2023 compared to the second quarter of 2022.Underwriting and policy processing expense increased $3.7 million primarily due to increased personnel and postage costs. Information technology costs increased $3.3 million primarily due to increased personnel costs and professional fees. Sales and advertising expense increased $1.8 million primarily due to increased agent related costs. Administrative and other costs increased $7.7 million primarily due to an increase in personnel costs, partially offset by a decrease in professional fees. Personnel costs were impacted by increased compensation including higher estimated costs for incentive plan awards due to increased direct written premium and policies in force growth, partially offset by lower pension costs due to an increase in the discount rate compared to 2022.
Income from investments before taxes totaled $11.6 million in the second quarter of 2023 compared to loss from investments before taxes of $2.1 million in the second quarter of 2022. Net investment income was $13.5 million in the second quarter of 2023 compared to $8.3 million in the second quarter of 2022. Net investment income included less than $0.1 million of limited partnership earnings in the second quarter of 2023 compared to losses of $0.3 million in the second quarter of 2022. Net realized and unrealized losses on investments were $1.7 million in the second quarter of 2023 compared to $10.3 million in the second quarter of 2022.
First Half 2023 Highlights
Operating income before taxes increased $56.4 million, or 29.9 percent, in the first six months of 2023 compared to the first six months of 2022.
- Management fee revenue - policy issuance and renewal services increased $158.9 million, or 15.4 percent, in the first six months of 2023 compared to the first six months of 2022.
- Management fee revenue - administrative services increased $2.0 million, or 7.1 percent, in the first six months of 2023 compared to the first six months of 2022.
- Cost of operations - policy issuance and renewal services
- Commissions increased $71.3 million in the first six months of 2023 compared to the first six months of 2022, 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 $33.1 million in the six months ended June 30, 2023 compared to the first six months of 2022.Underwriting and policy processing expense increased $6.4 million primarily due to increased personnel and postage costs. Information technology costs increased $14.8 million primarily due to increased professional fees, personnel costs, and hardware and software costs. Sales and advertising expense increased $1.9 million primarily due to increased personnel and agent related costs. Administrative and other costs increased $10.6 million primarily due to an increase in personnel costs, partially offset by a decrease in professional fees. Personnel costs were impacted by increased compensation including higher estimated costs for incentive plan awards due to increased direct written premium and policies in force growth, partially offset by lower pension costs due to an increase in the discount rate compared to 2022.
Income from investments before taxes totaled $6.9 million in the first six months of 2023 compared to $0.9 million in the first six months of 2022. Net investment income was $15.7 million in the first six months of 2023 compared to $18.8 million in the first six months of 2022. Net investment income included $10.7 million of limited partnership losses in the first six months of 2023 compared to earnings of $2.5 million in the first six months of 2022. Net realized and unrealized losses on investments were $7.0 million in the first six months of 2023 compared to $17.6 million in the first six months of 2022.
Webcast Information
Indemnity has scheduled a pre-recorded audio broadcast on the Web for 10:00 AM ET on July 28, 2023. Investors may access the pre-recorded audio broadcast by logging on to www.erieinsurance.com.