Erie Indemnity Reports Third Quarter 2024 Results

Rhea-AI Summary

Erie Indemnity Company (NASDAQ: ERIE) reported strong financial results for Q3 2024. Net income reached $159.8 million ($3.06 per diluted share), up from $131.0 million in Q3 2023. For the first nine months of 2024, net income was $448.3 million ($8.57 per diluted share), compared to $335.1 million in 2023. Operating income before taxes increased 21.3% to $180.1 million in Q3. Management fee revenue from policy issuance and renewal services grew 18.5% to $120.1 million. Investment income improved significantly, with net investment income of $17.3 million in Q3 2024 versus $14.6 million in Q3 2023.

Positive

• Net income increased 22% YoY to $159.8 million in Q3 2024
• Operating income before taxes grew 21.3% to $180.1 million
• Management fee revenue increased 18.5% in Q3 2024
• Investment income improved with $17.3 million in Q3 2024 vs $14.6 million in Q3 2023
• Net realized gains of $2.9 million in Q3 2024 vs losses of $2.2 million in Q3 2023

Negative

• Increased operating costs with non-commission expenses up $23.3 million in Q3
• Higher underwriting and policy processing expenses, up $5.1 million
• Increased IT costs of $3.6 million due to hardware and software expenses
• Net impairment losses of $3.8 million in first nine months of 2024

Insights

Financial Analyst

Erie Indemnity delivered strong financial performance in Q3 2024, with $159.8 million in net income, representing a 22% increase from Q3 2023. Key highlights include:

• Operating income grew by 21.3%, driven by an 18.5% increase in management fee revenue
• Investment income surged to $19.5 million, up from $12.3 million year-over-year
• Net investment gains of $2.9 million reversed last year's losses of $2.2 million

The company's core business shows robust growth, with increased premium volume and improved operational efficiency despite higher costs. The significant improvement in investment performance and strong management fee growth indicate a healthy business trajectory. However, rising operational costs, particularly in personnel and technology, warrant monitoring.

Net Income per Diluted Share was $3.06 for the Quarter and $8.57 for the Nine Months of 2024

ERIE, Pa., Oct. 31, 2024 /PRNewswire/ -- Erie Indemnity Company (NASDAQ: ERIE) today announced financial results for the quarter and nine months ending September 30, 2024.  Net income was $159.8 million, or $3.06 per diluted share, in the third quarter of 2024, compared to $131.0 million, or $2.51 per diluted share, in the third quarter of 2023.  Net income was $448.3 million, or $8.57 per diluted share, in the first nine months of 2024, compared to $335.1 million, or $6.41 per diluted share, in the first nine months of 2023.

 

3Q and Nine Months 2024
(in thousands)	3Q'24	3Q'23	2024	2023
Operating income	$      180,125	$      148,471	$      509,145	$      393,172
Investment income	19,549	12,302	48,455	19,197
Other income	1,168	3,001	7,871	9,643
Income before income taxes	200,842	163,774	565,471	422,012
Income tax expense	41,012	32,734	117,186	86,879
Net income	$      159,830	$      131,040	$      448,285	$      335,133

 

3Q 2024 Highlights

Operating income before taxes increased $31.7 million, or 21.3 percent, in the third quarter of 2024 compared to the third quarter of 2023.

• Management fee revenue - policy issuance and renewal services increased $120.1 million, or 18.5 percent, in the third quarter of 2024 compared to the third quarter of 2023.
• Management fee revenue - administrative services increased $1.0 million, or 6.2 percent, in the third quarter of 2024 compared to the third quarter of 2023.
• Cost of operations - policy issuance and renewal services
  • Commissions increased $66.3 million in the third quarter of 2024 compared to the third quarter of 2023, primarily driven by the growth in direct and affiliated assumed written premium and, to a lesser extent, an increase in agent incentive compensation related to the profitability component.
  • Non-commission expense increased $23.3 million in the third quarter of 2024 compared to the third quarter of 2023. Underwriting and policy processing expense increased $5.1 million primarily due to increased underwriting report and personnel costs. Information technology costs increased $3.6 million primarily due to an increase in hardware and software costs and personnel costs, partially offset by a decrease in professional fees. Sales and advertising expense increased $4.4 million primarily due to increased costs from community development initiatives and agent-related costs. Administrative and other costs increased $7.6 million primarily due to increased personnel costs.

Income from investments before taxes totaled $19.5 million in the third quarter of 2024 compared to $12.3 million in the third quarter of 2023.  Net investment income was $17.3 million in the third quarter of 2024 compared to $14.6 million in the third quarter of 2023.  Net realized and unrealized gains were $2.9 million in the third quarter of 2024 compared to losses of $2.2 million in the third quarter of 2023.

Nine Months 2024 Highlights

Operating income before taxes increased $116.0 million, or 29.5 percent, in the first nine months of 2024 compared to the first nine months of 2023.

• Management fee revenue - policy issuance and renewal services increased $355.3 million, or 19.3 percent, in the first nine months of 2024 compared to the first nine months of 2023.
• Management fee revenue - administrative services increased $4.2 million, or 8.9 percent, in the first nine months of 2024 compared to the first nine months of 2023.
• Cost of operations - policy issuance and renewal services
  • Commissions increased $202.1 million in the first nine months of 2024 compared to the first nine months of 2023, primarily driven by the growth in direct and affiliated assumed written premium and, to a lesser extent, an increase in agent incentive compensation related to the profitability component.
  • Non-commission expense increased $41.7 million in the first nine months of 2024 compared to the first nine months of 2023. Underwriting and policy processing expense increased $13.7 million primarily due to increased underwriting report and personnel costs. Information technology costs decreased $3.9 million primarily due to a decrease in professional fees, partially offset by an increase in hardware and software costs. Sales and advertising expense increased $9.6 million primarily due to increased agent-related costs and costs from community development initiatives. Customer service costs increased $6.7 million primarily due to increased personnel costs and credit card processing fees. Administrative and other costs increased $15.6 million primarily due to increased personnel costs, professional fees and charitable contributions.

Income from investments before taxes totaled $48.5 million in the first nine months of 2024 compared to $19.2 million in the first nine months of 2023.  Net investment income was $49.2 million in the first nine months of 2024 compared to $30.4 million in the first nine months of 2023.  Net investment income included $0.1 million of limited partnership earnings in the first nine months of 2024 compared to losses of $10.7 million in the first nine months of 2023.  Net realized and unrealized gains were $3.0 million in the first nine months of 2024 compared to losses of $9.2 million in the first nine months of 2023.  Net impairment losses recognized in earnings were $3.8 million in the first nine months of 2024 compared to $1.9 million in the first nine months of 2023.

Webcast Information

Indemnity has scheduled a pre-recorded audio broadcast on the Web for 10:00 AM ET on November 1, 2024.  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 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 and economic or social inflation;
  • 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 or data 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 Statements of Operations (dollars in thousands, except per share data)
		Three months ended September 30,				Nine months ended September 30,
		2024		2023		2024		2023
		(Unaudited)				(Unaudited)
Operating revenue
Management fee revenue - policy issuance and renewal services		$        769,162		$        649,049		$   2,195,734		$   1,840,478
Management fee revenue - administrative services		17,154		16,151		51,139		46,976
Administrative services reimbursement revenue		206,754		187,118		604,349		544,411
Service agreement revenue		6,816		6,620		19,803		19,408
Total operating revenue		999,886		858,938		2,871,025		2,451,273
Operating expenses
Cost of operations - policy issuance and renewal services		613,007		523,349		1,757,531		1,513,690
Cost of operations - administrative services		206,754		187,118		604,349		544,411
Total operating expenses		819,761		710,467		2,361,880		2,058,101
Operating income		180,125		148,471		509,145		393,172
Investment income
Net investment income		17,322		14,642		49,235		30,360
Net realized and unrealized investment gains (losses)		2,925		(2,227)		2,983		(9,246)
Net impairment losses recognized in earnings		(698)		(113)		(3,763)		(1,917)
Total investment income		19,549		12,302		48,455		19,197
Other income		1,168		3,001		7,871		9,643
Income before income taxes		200,842		163,774		565,471		422,012
Income tax expense		41,012		32,734		117,186		86,879
Net income		$        159,830		$        131,040		$      448,285		$      335,133
Net income per share
Class A common stock – basic		$              3.43		$              2.81		$            9.63		$            7.20
Class A common stock – diluted		$              3.06		$              2.51		$            8.57		$            6.41
Class B common stock – basic and diluted		$               515		$               422		$          1,444		$          1,079
Weighted average shares outstanding – Basic
Class A common stock		46,189,059		46,189,037		46,189,038		46,188,962
Class B common stock		2,542		2,542		2,542		2,542
Weighted average shares outstanding – Diluted
Class A common stock		52,306,514		52,299,369		52,301,001		52,298,655
Class B common stock		2,542		2,542		2,542		2,542
Dividends declared per share
Class A common stock		$            1.275		$              1.19		$          3.825		$            3.57
Class B common stock		$          191.25		$          178.50		$        573.75		$        535.50

 

Erie Indemnity Company Statements of Financial Position (in thousands)
		September 30, 2024		December 31, 2023
		(Unaudited)
Assets
Current assets:
Cash and cash equivalents (includes restricted cash of $23,547 and $12,542, respectively)		$        221,213		$        144,055
Available-for-sale securities		48,575		82,017
Receivables from Erie Insurance Exchange and affiliates, net		736,973		625,338
Prepaid expenses and other current assets, net		80,141		69,321
Accrued investment income		10,456		9,458
Total current assets		1,097,358		930,189
Available-for-sale securities, net		1,000,282		879,224
Available-for-sale securities lent		8,135		0
Equity securities		85,346		84,253
Fixed assets, net		480,707		442,610
Agent loans, net		79,829		58,434
Defined benefit pension plan		64,172		34,320
Other assets, net		48,318		42,934
Total assets		$     2,864,147		$     2,471,964
Liabilities and shareholders' equity
Current liabilities:
Commissions payable		$        426,341		$        353,709
Agent incentive compensation		60,073		68,077
Accounts payable and accrued liabilities		194,649		175,622
Dividends payable		59,377		59,377
Contract liability		42,754		41,210
Deferred executive compensation		15,836		10,982
Securities lending payable		7,905		0
Total current liabilities		806,935		708,977
Defined benefit pension plan		27,757		26,260
Contract liability		21,220		19,910
Deferred executive compensation		24,010		20,936
Deferred income taxes, net		12,777		11,481
Other long-term liabilities		23,493		21,565
Total liabilities		916,192		809,129
Shareholders' equity		1,947,955		1,662,835
Total liabilities and shareholders' equity		$     2,864,147		$     2,471,964

 

View original content to download multimedia:https://www.prnewswire.com/news-releases/erie-indemnity-reports-third-quarter-2024-results-302292987.html

SOURCE Erie Indemnity Company

FAQ

What was Erie Indemnity's (ERIE) earnings per share in Q3 2024?

Erie Indemnity reported earnings of $3.06 per diluted share in Q3 2024, compared to $2.51 per diluted share in Q3 2023.

How much did ERIE's management fee revenue grow in Q3 2024?

Management fee revenue for policy issuance and renewal services increased by $120.1 million, or 18.5%, in Q3 2024 compared to Q3 2023.

What was Erie Indemnity's (ERIE) net income for the first nine months of 2024?

Erie Indemnity's net income for the first nine months of 2024 was $448.3 million, or $8.57 per diluted share.

How did ERIE's investment income perform in Q3 2024?

ERIE's net investment income increased to $17.3 million in Q3 2024, compared to $14.6 million in Q3 2023.