Erie Indemnity Reports First Quarter 2001 Earnings

Apr 19, 2001, 01:00 ET from Erie Indemnity Company

    ERIE, Pa., April 19 /PRNewswire/ -- Erie Indemnity Company (Nasdaq:   ERIE),
 the management company for the Erie Insurance Group, announced a 6.6 percent
 increase in operating earnings per share for the first quarter of 2001 to $.48
 per share from $.45 for the same period one year ago.  Net income declined
 slightly as a result of decreased earnings from investments including
 decreased realized gains on investments.
     Operating income (net income less realized gains and related federal
 income taxes) increased 5.3 percent, or $1,715,737, to $34,322,780 in the
 first quarter of 2001 from $32,607,043 for the same period in 2000.  Operating
 income was bolstered by improved management operations, which grew as a result
 of a 12.8 percent increase in management fees, based on the direct written
 premiums of the Erie Insurance Group.
     Direct written premiums grew 12.8 percent on strong new policy growth,
 gains in policy retention, improved commercial lines pricing and more stable
 personal lines pricing.  Personal lines premium grew 8.6 percent during the
 first quarter 2001 while commercial lines grew 24.1 percent during the same
 period.  Policies in force grew at an annual rate of 6.9 percent through
 March 31, 2001 while the policy retention rate improved to 91.0 percent from
 90.7 percent in the first quarter 2001 compared to the first quarter 2000.
     "The combination of consistent and significant increases in quality agency
 appointments and our traditional steady as you go approach to underwriting
 during the record 10-year-soft cycle in pricing has positioned us to increase
 our market share and grow the Company at a pace that exceeds industry growth
 and retention rates in a meaningful way," said Stephen Milne, president and
 CEO of Erie Insurance Group.
     Management fee revenue grew 12.8 percent to $145,669,105 in the first
 quarter of 2001 from $129,098,508 for the same period in 2000.  The growth in
 the management fee revenue was a direct result of the growth in written
 premiums from $516,394,026 for the quarter ended March 31, 2000 to
 $582,676,418 for the same period ended 2001.  Total revenues from management
 operations increased $17,750,027, or 13.2 percent, to $152,081,454 for the
 first quarter of 2001.
     The cost of management operations increased 11.4 percent from $97,713,545
 in the first quarter of 2000 to $108,881,196 for the same period in 2001.
 Commission costs totaled $73,592,987 for the first quarter of 2001, an
 11.8 percent increase over the $65,816,070 reported in the first quarter of
 2000.  Commission costs grew more slowly than the rate of growth in direct
 premium written in the first quarter 2001 due to lowered accruals for agent
 contingency awards.
     The cost of management operations excluding commission costs increased
 10.6 percent for the three months ended March 31, 2001 to $35,288,209 from
 $31,897,475 recorded in the first quarter of 2000.  Other operating costs,
 excluding commissions, were affected by increased consulting fees related to
 information technology initiatives and increased personnel costs in 2001.
     Net revenue from the Company's management operations rose 18.0 percent to
 $43,200,258 for the three months ended March 31, 2001 compared to $36,617,882
 for the same period in 2000.
     The Company's insurance underwriting operations recorded underwriting
 losses of $3,537,907 and $3,202,914 in the first quarter of 2001 and 2000,
 respectively.  The Company recognized premiums earned of $32,173,914 for the
 quarter ended March 31, 2001, a 7.6 percent increase over the $29,891,067
 reported in the first quarter of 2000.  The 2001 underwriting loss resulted
 from increased losses in the direct business of the Company's
 property/casualty subsidiaries, primarily in private passenger automobile and
 homeowners insurance and continued losses in commercial insurance.
 Catastrophe losses for the quarter ended March 31, 2001 were $70,069.  There
 were no catastrophe losses in the first quarter of 2000.
     Net revenue from investment operations for the first quarter of 2001
 decreased to $12,196,084 from $19,514,795 in 2000.  Net investment income
 increased 4.6 percent for the first quarter of 2001 to $12,142,942 from
 $11,610,569 for the first quarter 2000.  During the first quarter of 2000,
 with the equity markets at record levels, the Company realized significant
 gains on sales of available-for-sale securities in its investment portfolio of
 $5,504,512.  During the first quarter of 2001, despite the decline in the
 equity markets, the Company was able to generate realized gains on investments
 of $711,576.  Equity in earnings of limited partnerships recorded a
 partnership loss of $1,402,645 in the first quarter of 2001 compared to a
 partnership gain of $992,374 for the same period in 2000.  The loss in 2001
 was related to partnership losses in the private equity sector of the
 Company's limited partnership investments, which were also affected by market
 conditions.
     The combined results from management, insurance underwriting and
 investment operations generated net income for the quarter ended March 31,
 2001 of $34,785,305, or $.49 per share compared to $36,184,976, or $.50 per
 share, earned during the first quarter of 2000.
 
     Erie Indemnity Company is the principal management company for the member
 companies of the Erie Insurance Group, which includes the Erie Insurance
 Exchange, Flagship City Insurance Company, Erie Insurance Company, Erie
 Insurance Property and Casualty Company, Erie Insurance Company of New York
 and Erie Family Life Insurance Company.
     According to A. M. Best Company, Erie Insurance Group, based in Erie,
 Pennsylvania, is the 18th largest private passenger automobile insurer in the
 United States based on direct premiums written and the 29th largest
 property/casualty insurer in the United States based on total lines net
 premium written.  The Group, whose home office is located in Erie,
 Pennsylvania, has more than 3.1 million policies in force and operates in
 10 states and the District of Columbia.  Erie Insurance is rated A++
 (superior) by A.M. Best Company and is listed in Ward's Top 50 for financial
 security and stability.  News releases and more information about Erie
 Insurance Group are available at http://www.erieinsurance.com.
 
     "Safe Harbor" Statement Under the Private Securities Litigation Reform Act
 of 1995: Certain forward-looking statements contained herein involve risks and
 uncertainties.  Many factors could cause future results to differ materially
 from those discussed.  Examples of such factors include variations in
 catastrophe losses due to changes in weather patterns or other natural causes;
 changes in insurance regulations or legislation that disadvantage the members
 of the Group in the marketplace and recession, economic conditions or stock
 market changes affecting pricing or demand for insurance products or ability
 to generate investment income.  Growth and profitability have been and will be
 potentially materially affected by these and other factors.
 
 
                             Erie Indemnity Company
                     CONSOLIDATED STATEMENTS OF OPERATIONS
 
                                               Three months ended March 31
                                                       (unaudited)
                                                   2001            2000
     MANAGEMENT OPERATIONS
     Management fee revenue                    $145,669,105    $129,098,508
     Service agreement revenue                    6,412,349       5,232,919
         Total revenue from management
          operations                           $152,081,454    $134,331,427
     Cost of management operations              108,881,196      97,713,545
         Net revenue from management
          operations                            $43,200,258     $36,617,882
     INSURANCE UNDERWRITING OPERATIONS
     Premiums earned                            $32,173,914     $29,891,067
     Losses and loss adjustment expenses
      incurred                                  $26,961,142     $24,663,153
     Policy acquisition and other
      underwriting expenses                       8,750,679       8,430,828
        Total losses and expenses               $35,711,821     $33,093,981
        Underwriting loss                       $(3,537,907)    $(3,202,914)
     INVESTMENT OPERATIONS
     Equity in earnings of Erie Family
      Life Insurance Company                       $744,211      $1,407,340
     Equity in (losses) earnings of
      limited partnerships                       (1,402,645)        992,374
     Net investment income                       12,142,942      11,610,569
     Net realized gain on investments               711,576       5,504,512
        Net revenue from investment
         operations                             $12,196,084     $19,514,795
        Income before income taxes              $51,858,435     $52,929,763
     Provision for income taxes                  17,073,130      16,744,787
        Net income                              $34,785,305     $36,184,976
        Net income per share                          $0.49           $0.50
 
        Operating income                        $34,322,780     $32,607,043
        Operating income per share                    $0.48           $0.45
 
     DIVIDENDS DECLARED
     Class A non-voting common                      $0.1525          $0.135
     Class B common                                 $22.875          $20.25
     WEIGHTED AVERAGE SHARES OUTSTANDING         71,416,234      72,300,010
 
 
                             Erie Indemnity Company
                 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
 
                                                March 31         December 31
                                                  2001              2000
                                               (unaudited)
     ASSETS
     Investments
     Fixed maturities                          $521,613,920      $531,546,127
     Equity securities
         Preferred stock                        135,813,688       109,080,592
         Common stock                            88,513,987        95,365,777
     Other invested assets                       81,016,789        74,822,529
         Total investments                     $826,958,384      $810,815,025
 
     Cash and cash equivalents                   $7,260,931       $38,778,338
     Equity in Erie Family Life Insurance
      Company                                    43,908,940        42,331,458
     Premiums receivable from
      policyholders                             158,955,572       156,268,484
     Receivables from affiliates                584,197,412       532,008,287
     Other assets                               104,349,777       100,397,974
        Total assets                         $1,725,631,016    $1,680,599,566
 
 
     LIABILITIES AND SHAREHOLDERS' EQUITY
     Liabilities
     Unpaid losses and loss adjustment
      expenses                                 $485,866,331      $477,879,246
     Unearned premiums                          270,412,287       263,854,795
     Other liabilities                          164,242,728       159,850,296
        Total liabilities                      $920,521,346      $901,584,337
        Total shareholders' equity             $805,109,670      $779,015,229
        Total liabilities and
         shareholders' equity                $1,725,631,016    $1,680,599,566
     Book value per share                            $11.27            $10.91
     Shares outstanding                          71,407,223        71,424,323
 
 

SOURCE Erie Indemnity Company
    ERIE, Pa., April 19 /PRNewswire/ -- Erie Indemnity Company (Nasdaq:   ERIE),
 the management company for the Erie Insurance Group, announced a 6.6 percent
 increase in operating earnings per share for the first quarter of 2001 to $.48
 per share from $.45 for the same period one year ago.  Net income declined
 slightly as a result of decreased earnings from investments including
 decreased realized gains on investments.
     Operating income (net income less realized gains and related federal
 income taxes) increased 5.3 percent, or $1,715,737, to $34,322,780 in the
 first quarter of 2001 from $32,607,043 for the same period in 2000.  Operating
 income was bolstered by improved management operations, which grew as a result
 of a 12.8 percent increase in management fees, based on the direct written
 premiums of the Erie Insurance Group.
     Direct written premiums grew 12.8 percent on strong new policy growth,
 gains in policy retention, improved commercial lines pricing and more stable
 personal lines pricing.  Personal lines premium grew 8.6 percent during the
 first quarter 2001 while commercial lines grew 24.1 percent during the same
 period.  Policies in force grew at an annual rate of 6.9 percent through
 March 31, 2001 while the policy retention rate improved to 91.0 percent from
 90.7 percent in the first quarter 2001 compared to the first quarter 2000.
     "The combination of consistent and significant increases in quality agency
 appointments and our traditional steady as you go approach to underwriting
 during the record 10-year-soft cycle in pricing has positioned us to increase
 our market share and grow the Company at a pace that exceeds industry growth
 and retention rates in a meaningful way," said Stephen Milne, president and
 CEO of Erie Insurance Group.
     Management fee revenue grew 12.8 percent to $145,669,105 in the first
 quarter of 2001 from $129,098,508 for the same period in 2000.  The growth in
 the management fee revenue was a direct result of the growth in written
 premiums from $516,394,026 for the quarter ended March 31, 2000 to
 $582,676,418 for the same period ended 2001.  Total revenues from management
 operations increased $17,750,027, or 13.2 percent, to $152,081,454 for the
 first quarter of 2001.
     The cost of management operations increased 11.4 percent from $97,713,545
 in the first quarter of 2000 to $108,881,196 for the same period in 2001.
 Commission costs totaled $73,592,987 for the first quarter of 2001, an
 11.8 percent increase over the $65,816,070 reported in the first quarter of
 2000.  Commission costs grew more slowly than the rate of growth in direct
 premium written in the first quarter 2001 due to lowered accruals for agent
 contingency awards.
     The cost of management operations excluding commission costs increased
 10.6 percent for the three months ended March 31, 2001 to $35,288,209 from
 $31,897,475 recorded in the first quarter of 2000.  Other operating costs,
 excluding commissions, were affected by increased consulting fees related to
 information technology initiatives and increased personnel costs in 2001.
     Net revenue from the Company's management operations rose 18.0 percent to
 $43,200,258 for the three months ended March 31, 2001 compared to $36,617,882
 for the same period in 2000.
     The Company's insurance underwriting operations recorded underwriting
 losses of $3,537,907 and $3,202,914 in the first quarter of 2001 and 2000,
 respectively.  The Company recognized premiums earned of $32,173,914 for the
 quarter ended March 31, 2001, a 7.6 percent increase over the $29,891,067
 reported in the first quarter of 2000.  The 2001 underwriting loss resulted
 from increased losses in the direct business of the Company's
 property/casualty subsidiaries, primarily in private passenger automobile and
 homeowners insurance and continued losses in commercial insurance.
 Catastrophe losses for the quarter ended March 31, 2001 were $70,069.  There
 were no catastrophe losses in the first quarter of 2000.
     Net revenue from investment operations for the first quarter of 2001
 decreased to $12,196,084 from $19,514,795 in 2000.  Net investment income
 increased 4.6 percent for the first quarter of 2001 to $12,142,942 from
 $11,610,569 for the first quarter 2000.  During the first quarter of 2000,
 with the equity markets at record levels, the Company realized significant
 gains on sales of available-for-sale securities in its investment portfolio of
 $5,504,512.  During the first quarter of 2001, despite the decline in the
 equity markets, the Company was able to generate realized gains on investments
 of $711,576.  Equity in earnings of limited partnerships recorded a
 partnership loss of $1,402,645 in the first quarter of 2001 compared to a
 partnership gain of $992,374 for the same period in 2000.  The loss in 2001
 was related to partnership losses in the private equity sector of the
 Company's limited partnership investments, which were also affected by market
 conditions.
     The combined results from management, insurance underwriting and
 investment operations generated net income for the quarter ended March 31,
 2001 of $34,785,305, or $.49 per share compared to $36,184,976, or $.50 per
 share, earned during the first quarter of 2000.
 
     Erie Indemnity Company is the principal management company for the member
 companies of the Erie Insurance Group, which includes the Erie Insurance
 Exchange, Flagship City Insurance Company, Erie Insurance Company, Erie
 Insurance Property and Casualty Company, Erie Insurance Company of New York
 and Erie Family Life Insurance Company.
     According to A. M. Best Company, Erie Insurance Group, based in Erie,
 Pennsylvania, is the 18th largest private passenger automobile insurer in the
 United States based on direct premiums written and the 29th largest
 property/casualty insurer in the United States based on total lines net
 premium written.  The Group, whose home office is located in Erie,
 Pennsylvania, has more than 3.1 million policies in force and operates in
 10 states and the District of Columbia.  Erie Insurance is rated A++
 (superior) by A.M. Best Company and is listed in Ward's Top 50 for financial
 security and stability.  News releases and more information about Erie
 Insurance Group are available at http://www.erieinsurance.com.
 
     "Safe Harbor" Statement Under the Private Securities Litigation Reform Act
 of 1995: Certain forward-looking statements contained herein involve risks and
 uncertainties.  Many factors could cause future results to differ materially
 from those discussed.  Examples of such factors include variations in
 catastrophe losses due to changes in weather patterns or other natural causes;
 changes in insurance regulations or legislation that disadvantage the members
 of the Group in the marketplace and recession, economic conditions or stock
 market changes affecting pricing or demand for insurance products or ability
 to generate investment income.  Growth and profitability have been and will be
 potentially materially affected by these and other factors.
 
 
                             Erie Indemnity Company
                     CONSOLIDATED STATEMENTS OF OPERATIONS
 
                                               Three months ended March 31
                                                       (unaudited)
                                                   2001            2000
     MANAGEMENT OPERATIONS
     Management fee revenue                    $145,669,105    $129,098,508
     Service agreement revenue                    6,412,349       5,232,919
         Total revenue from management
          operations                           $152,081,454    $134,331,427
     Cost of management operations              108,881,196      97,713,545
         Net revenue from management
          operations                            $43,200,258     $36,617,882
     INSURANCE UNDERWRITING OPERATIONS
     Premiums earned                            $32,173,914     $29,891,067
     Losses and loss adjustment expenses
      incurred                                  $26,961,142     $24,663,153
     Policy acquisition and other
      underwriting expenses                       8,750,679       8,430,828
        Total losses and expenses               $35,711,821     $33,093,981
        Underwriting loss                       $(3,537,907)    $(3,202,914)
     INVESTMENT OPERATIONS
     Equity in earnings of Erie Family
      Life Insurance Company                       $744,211      $1,407,340
     Equity in (losses) earnings of
      limited partnerships                       (1,402,645)        992,374
     Net investment income                       12,142,942      11,610,569
     Net realized gain on investments               711,576       5,504,512
        Net revenue from investment
         operations                             $12,196,084     $19,514,795
        Income before income taxes              $51,858,435     $52,929,763
     Provision for income taxes                  17,073,130      16,744,787
        Net income                              $34,785,305     $36,184,976
        Net income per share                          $0.49           $0.50
 
        Operating income                        $34,322,780     $32,607,043
        Operating income per share                    $0.48           $0.45
 
     DIVIDENDS DECLARED
     Class A non-voting common                      $0.1525          $0.135
     Class B common                                 $22.875          $20.25
     WEIGHTED AVERAGE SHARES OUTSTANDING         71,416,234      72,300,010
 
 
                             Erie Indemnity Company
                 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
 
                                                March 31         December 31
                                                  2001              2000
                                               (unaudited)
     ASSETS
     Investments
     Fixed maturities                          $521,613,920      $531,546,127
     Equity securities
         Preferred stock                        135,813,688       109,080,592
         Common stock                            88,513,987        95,365,777
     Other invested assets                       81,016,789        74,822,529
         Total investments                     $826,958,384      $810,815,025
 
     Cash and cash equivalents                   $7,260,931       $38,778,338
     Equity in Erie Family Life Insurance
      Company                                    43,908,940        42,331,458
     Premiums receivable from
      policyholders                             158,955,572       156,268,484
     Receivables from affiliates                584,197,412       532,008,287
     Other assets                               104,349,777       100,397,974
        Total assets                         $1,725,631,016    $1,680,599,566
 
 
     LIABILITIES AND SHAREHOLDERS' EQUITY
     Liabilities
     Unpaid losses and loss adjustment
      expenses                                 $485,866,331      $477,879,246
     Unearned premiums                          270,412,287       263,854,795
     Other liabilities                          164,242,728       159,850,296
        Total liabilities                      $920,521,346      $901,584,337
        Total shareholders' equity             $805,109,670      $779,015,229
        Total liabilities and
         shareholders' equity                $1,725,631,016    $1,680,599,566
     Book value per share                            $11.27            $10.91
     Shares outstanding                          71,407,223        71,424,323
 
 SOURCE  Erie Indemnity Company