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

ERIE, Pa., Oct. 27, 2022 /PRNewswire/ -- 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 and Nine Months 2022
(in thousands)	3Q'22	3Q'21	2022	2021
Operating income	$ 106,472	$ 95,103	$ 294,784	$ 256,263
Investment (loss) income	(571)	20,598	344	55,004
Interest expense and other, net	(447)	1,575	637	4,690
Income before income taxes	106,348	114,126	294,491	306,577
Income tax expense	22,035	23,903	61,412	63,759
Net income	$ 84,313	$ 90,223	$ 233,079	$ 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 11^th largest homeowners insurer, 13^th largest automobile insurer and 13^th 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 19^th 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.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995:

Statements contained herein that are not historical fact are forward-looking statements and, as such, are subject to risks and uncertainties that could cause actual events and results to differ, perhaps materially, from those discussed herein. Forward-looking statements relate to future trends, events or results and include, without limitation, statements and assumptions on which such statements are based that are related to our plans, strategies, objectives, expectations, intentions, and adequacy of resources. Examples of forward-looking statements are discussions relating to premium and investment income, expenses, operating results, and compliance with contractual and regulatory requirements. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. Among the risks and uncertainties, in addition to those set forth in our filings with the Securities and Exchange Commission, that could cause actual results and future events to differ from those set forth or contemplated in the forward-looking statements include the following:

dependence upon our relationship with the Erie Insurance Exchange ("Exchange") and the management fee under the agreement with the subscribers at the Exchange;
dependence upon our relationship with the Exchange and the growth of the Exchange, including:

general business and economic conditions;
factors affecting insurance industry competition;
dependence upon the independent agency system; and
ability to maintain our reputation for customer service;

dependence upon our relationship with the Exchange and the financial condition of the Exchange, including:

the Exchange's ability to maintain acceptable financial strength ratings;
factors affecting the quality and liquidity of the Exchange's investment portfolio;
changes in government regulation of the insurance industry;
litigation and regulatory actions;
emergence of significant unexpected events, including pandemics;
emerging claims and coverage issues in the industry; and
severe weather conditions or other catastrophic losses, including terrorism;

costs of providing policy issuance and renewal services to the Exchange under the subscriber's agreement;
ability to attract and retain talented management and employees;
ability to ensure system availability and effectively manage technology initiatives;
difficulties with technology or data security breaches, including cyber attacks;
ability to maintain uninterrupted business operations;
outcome of pending and potential litigation;
factors affecting the quality and liquidity of our investment portfolio; and
our ability to meet liquidity needs and access capital.

A forward-looking statement speaks only as of the date on which it is made and reflects our analysis only as of that date. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changes in assumptions, or otherwise.

Erie Indemnity Company Statements of Operations (dollars in thousands, except per share data)

	Three months ended September 30,		Nine months ended September 30,
	2022	2021	2022	2021
	(Unaudited)		(Unaudited)
Operating revenue
Management fee revenue - policy issuance and renewal services	$ 551,666	$ 504,891	$ 1,584,213	$ 1,462,880
Management fee revenue - administrative services	14,657	14,471	43,446	43,985
Administrative services reimbursement revenue	168,653	162,410	492,655	473,133
Service agreement revenue	6,260	6,067	19,175	18,048
Total operating revenue	741,236	687,839	2,139,489	1,998,046

Operating expenses
Cost of operations - policy issuance and renewal services	466,111	430,326	1,352,050	1,268,650
Cost of operations - administrative services	168,653	162,410	492,655	473,133
Total operating expenses	634,764	592,736	1,844,705	1,741,783
Operating income	106,472	95,103	294,784	256,263

Investment income
Net investment income	5,834	18,858	24,606	49,605
Net realized and unrealized investment (losses) gains	(6,230)	1,610	(23,833)	5,183
Net impairment (losses) recoveries recognized in earnings	(175)	130	(429)	216
Total investment (loss) income	(571)	20,598	344	55,004

Interest expense	115	1,034	2,009	3,082
Other income (expense)	562	(541)	1,372	(1,608)
Income before income taxes	106,348	114,126	294,491	306,577
Income tax expense	22,035	23,903	61,412	63,759
Net income	$ 84,313	$ 90,223	$ 233,079	$ 242,818

Net income per share
Class A common stock – basic	$ 1.81	$ 1.94	$ 5.00	$ 5.21
Class A common stock – diluted	$ 1.61	$ 1.72	$ 4.46	$ 4.64
Class B common stock – basic and diluted	$ 272	$ 291	$ 751	$ 782

Weighted average shares outstanding – Basic
Class A common stock	46,189,025	46,189,035	46,188,878	46,188,729
Class B common stock	2,542	2,542	2,542	2,542

Weighted average shares outstanding – Diluted
Class A common stock	52,296,411	52,305,245	52,297,685	52,307,859
Class B common stock	2,542	2,542	2,542	2,542

Dividends declared per share
Class A common stock	$ 1.11	$ 1.035	$ 3.33	$ 3.105
Class B common stock	$ 166.50	$ 155.25	$ 499.50	$ 465.75

Erie Indemnity Company Statements of Financial Position (in thousands)

	September 30, 2022	December 31, 2021
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$ 97,664	$ 183,702
Available-for-sale securities	25,750	38,396
Receivables from Erie Insurance Exchange and affiliates, net	544,353	479,123
Prepaid expenses and other current assets	49,360	56,206
Accrued investment income	7,352	6,303
Total current assets	724,479	763,730

Available-for-sale securities, net	848,937	907,689
Equity securities	68,969	87,743
Fixed assets, net	408,750	374,802
Agent loans, net	60,673	58,683
Deferred income taxes, net	20,859	145
Other assets	45,085	49,265
Total assets	$ 2,177,752	$ 2,242,057

Liabilities and shareholders' equity
Current liabilities:
Commissions payable	$ 310,225	$ 270,746
Agent bonuses	77,609	120,437
Accounts payable and accrued liabilities	149,020	138,317
Dividends payable	51,693	51,693
Contract liability	36,786	34,935
Deferred executive compensation	8,859	12,637
Current portion of long-term borrowings	—	2,098
Total current liabilities	634,192	630,863

Defined benefit pension plans	131,222	130,383
Long-term borrowings	—	91,734
Contract liability	18,024	17,686
Deferred executive compensation	11,441	14,571
Other long-term liabilities	26,294	14,342
Total liabilities	821,173	899,579

Shareholders' equity	1,356,579	1,342,478
Total liabilities and shareholders' equity	$ 2,177,752	$ 2,242,057

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SOURCE Erie Indemnity Company

Erie Indemnity Reports Third Quarter 2022 Results