Erie Indemnity Reports First Quarter 2025 Results

Rhea-AI Summary

Erie Indemnity Company (NASDAQ: ERIE) reported strong financial results for Q1 2025, with net income rising to $138.4 million ($2.65 per diluted share) compared to $124.6 million ($2.38 per diluted share) in Q1 2024.

Key highlights include:

• Operating income before taxes increased 9.1% to $151.4 million
• Management fee revenue from policy issuance and renewal services grew 13.4% to $755 million
• Investment income improved to $19.5 million from $15.1 million
• Total operating revenue reached $989.4 million, up from $880.7 million

Cost increases were noted in commissions ($61.1 million increase) and non-commission expenses ($16.3 million increase), primarily due to growth in written premiums, increased personnel costs, and higher technology investments.

Positive

• Net income increased 11.1% year-over-year to $138.4 million
• Operating income before taxes grew 9.1% to $151.4 million
• Management fee revenue increased 13.4% to $755 million
• Investment income improved 29.6% to $19.5 million
• Total operating revenue rose 12.3% to $989.4 million

Negative

• Commission expenses increased significantly by $61.1 million
• Non-commission expenses rose by $16.3 million due to higher personnel and technology costs
• Net realized and unrealized investment gains decreased to $0.5 million from $1.9 million

Insights

Financial Analyst

Erie Indemnity posted impressive Q1 results with 11.1% net income growth and 13.4% management fee revenue increase, demonstrating strong operational performance.

Erie Indemnity delivered robust Q1 2025 financial performance with net income reaching $138.4 million ($2.65 per diluted share), an 11.1% increase from $124.6 million in Q1 2024. This growth stems from significant revenue expansion, particularly the 13.4% increase in management fee revenue from policy issuance and renewal services, which totaled $755 million.

Operating income before taxes grew 9.1% to $151.4 million, though at a slower pace than revenue due to rising costs. Commission expenses increased substantially, driven by growth in written premiums, while non-commission expenses rose $16.3 million. Notably, IT costs jumped $11.3 million due to increased hardware, software, and personnel expenses.

Investment performance showed marked improvement with total investment income reaching $19.5 million, up from $15.1 million in Q1 2024. Net investment income grew 25.4% year-over-year, while impairment losses decreased from $2.7 million to $0.9 million.

The company maintains strong financial stability as evidenced by its A+ (Superior) rating from A.M. Best. Erie's market position remains solid as the 12th largest homeowners insurer and 13th largest automobile insurer in the United States.

Shareholder returns improved with quarterly dividends increasing 7.1% to $1.365 per Class A share, reflecting management's confidence in continued profitability. The company's balance sheet remains healthy with $260.4 million in cash and cash equivalents as of March 31, 2025.

Net Income was $138.4 million, Earnings per Diluted Share was $2.65

ERIE, Pa., April 24, 2025 /PRNewswire/ -- Erie Indemnity Company (NASDAQ: ERIE) today announced financial results for the quarter ending March 31, 2025.  Net income was $138.4 million, or $2.65 per diluted share, in the first quarter of 2025, compared to $124.6 million, or $2.38 per diluted share, in the first quarter of 2024.

1Q 2025
(in thousands)	1Q'25		1Q'24
Operating income	$      151,376		$      138,812
Investment income	19,536		15,079
Other income	3,834		3,411
Income before income taxes	174,746		157,302
Income tax expense	36,329		32,750
Net income	$      138,417		$      124,552

 

1Q 2025 Highlights

Operating income before taxes increased $12.6 million, or 9.1 percent, in the first quarter of 2025 compared to the first quarter of 2024.

• Management fee revenue - policy issuance and renewal services increased $89.4 million, or 13.4 percent, in the first quarter of 2025 compared to the first quarter of 2024.
• Management fee revenue - administrative services increased $0.7 million, or 4.2 percent, in the first quarter of 2025 compared to the first quarter of 2024.
• Cost of operations - policy issuance and renewal services
  • Commissions increased $61.1 million in the first quarter of 2025, compared to the first quarter of 2024, primarily driven by the growth in direct and affiliated assumed written premium and, to a lesser extent, an increase in agent incentive compensation.
  • Non-commission expense increased $16.3 million in the first quarter of 2025 compared to the first quarter of 2024. Underwriting and policy processing expense increased $3.1 million primarily due to increased personnel costs. Information technology costs increased $11.3 million primarily due to an increase in hardware and software costs and personnel costs and a decrease in capitalized professional fees related to technology initiatives. Customer service costs increased $1.6 million primarily due to increased personnel costs and credit card processing fees. Personnel costs in the first quarter of 2025 were impacted by increased compensation including higher estimated costs for incentive plan awards compared to 2024.

Income from investments before taxes totaled $19.5 million in the first quarter of 2025 compared to $15.1 million in the first quarter of 2024.  Net investment income was $19.9 million in the first quarter of 2025 compared to $15.9 million in the first quarter of 2024.  Net realized and unrealized gains on investments were $0.5 million in the first quarter of 2025 compared to $1.9 million in the first quarter of 2024.  Net impairment losses recognized in earnings were $0.9 million in the first quarter of 2025 compared to $2.7 million in the first quarter of 2024.

Webcast Information

Indemnity has scheduled a pre-recorded audio broadcast on the Web for 10:00 AM ET on April 25, 2025.  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 12^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 17^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 7 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 impacting the timing of premium rates charged for policies;
  • factors affecting insurance industry competition, including technological innovations;
  • dependence upon the independent agency system; and
  • ability to maintain our brand, including 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, economic or social inflation, and changes in tariff policies;
  • 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 subscribers at 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, data or network security breaches, including cyber attacks;
• ability to maintain uninterrupted business operations;
• compliance with complex and evolving laws and regulations and outcome of pending and potential litigation;
• factors affecting the quality and liquidity of our investment portfolio; and
• 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 Consolidated Statements of Operations (dollars in thousands, except per share data)
		Three months ended March 31,
		2025		2024
		(Unaudited)
Operating revenue
Management fee revenue - policy issuance and renewal services		$           755,049		$           665,686
Management fee revenue - administrative services		17,645		16,934
Administrative services reimbursement revenue		210,273		191,567
Service agreement revenue		6,432		6,514
Total operating revenue		989,399		880,701
Operating expenses
Cost of operations - policy issuance and renewal services		627,750		550,322
Cost of operations - administrative services		210,273		191,567
Total operating expenses		838,023		741,889
Operating income		151,376		138,812
Investment income
Net investment income		19,948		15,903
Net realized and unrealized investment gains		502		1,853
Net impairment losses recognized in earnings		(914)		(2,677)
Total investment income		19,536		15,079
Other income		3,834		3,411
Income before income taxes		174,746		157,302
Income tax expense		36,329		32,750
Net income		$           138,417		$           124,552
Net income per share
Class A common stock – basic		$                  2.97		$                  2.67
Class A common stock – diluted		$                  2.65		$                  2.38
Class B common stock – basic and diluted		$                   446		$                   401
Weighted average shares outstanding – Basic
Class A common stock		46,188,903		46,189,014
Class B common stock		2,542		2,542
Weighted average shares outstanding – Diluted
Class A common stock		52,304,384		52,301,803
Class B common stock		2,542		2,542
Dividends declared per share
Class A common stock		$                1.365		$               1.275
Class B common stock		$              204.75		$             191.25

 

Erie Indemnity Company Consolidated Statements of Financial Position (in thousands)
		March 31, 2025		December 31, 2024
		(Unaudited)
Assets
Current assets:
Cash and cash equivalents (includes restricted cash of $25,164 and $23,559, respectively)		$         260,379		$         298,397
Available-for-sale securities		52,976		44,604
Receivables from Erie Insurance Exchange and affiliates, net		719,898		707,060
Prepaid expenses and other current assets, net		78,387		83,902
Accrued investment income		10,849		11,069
Total current assets		1,122,489		1,145,032
Available-for-sale securities, net		1,047,540		991,726
Equity securities		81,814		85,891
Available-for-sale and equity securities lent		12,289		7,285
Fixed assets, net		513,088		513,494
Agent loans, net		85,723		80,597
Defined benefit pension plan		57,480		21,311
Other assets, net		47,805		43,278
Total assets		$     2,968,228		$     2,888,614
Liabilities and shareholders' equity
Current liabilities:
Commissions payable		$         429,380		$         408,309
Agent incentive compensation		42,190		75,458
Accounts payable and accrued liabilities		210,708		190,028
Dividends payable		63,569		63,569
Contract liability		44,102		42,761
Deferred executive compensation		9,636		14,874
Securities lending payable		12,706		7,513
Total current liabilities		812,291		802,512
Defined benefit pension plan		26,197		28,070
Contract liability		21,703		21,170
Deferred executive compensation		22,944		19,721
Deferred income taxes, net		3,704		6,418
Other long-term liabilities		14,038		23,465
Total liabilities		900,877		901,356
Shareholders' equity		2,067,351		1,987,258
Total liabilities and shareholders' equity		$     2,968,228		$     2,888,614

 

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SOURCE Erie Indemnity Company

FAQ

What was Erie Indemnity's (ERIE) earnings per share in Q1 2025?

Erie Indemnity reported earnings of $2.65 per diluted share in Q1 2025, up from $2.38 in Q1 2024.

How much did ERIE's management fee revenue increase in Q1 2025?

Management fee revenue for policy issuance and renewal services increased by $89.4 million or 13.4% compared to Q1 2024.

What was Erie Indemnity's (ERIE) total operating revenue in Q1 2025?

Total operating revenue was $989.4 million in Q1 2025, compared to $880.7 million in Q1 2024.

How much did ERIE's investment income grow in Q1 2025?

Investment income increased to $19.5 million in Q1 2025 from $15.1 million in Q1 2024.

What dividend did Erie Indemnity (ERIE) declare for Q1 2025?

Erie Indemnity declared a dividend of $1.365 per share for Class A common stock and $204.75 for Class B common stock.