ERIE 8-K
Erie Indemnity Co (ERIE)
8-K
2021-07-29
For: 2021-07-27
View Original
Added on
April 10, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
| stated value $0.0292 per share | |||||||||||||||||
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On July 29, 2021, Erie Indemnity Company (the "Company") issued a press release announcing financial results for the quarter and six months ended June 30, 2021. Copies of the press release and financial information are attached hereto and are incorporated herein by reference as Exhibit 99.1 and Exhibit 99.2, respectively.
On July 30, 2021 at 10:00 a.m. the Company will provide a pre-recorded Webcast that is complementary to the press release announcing financial results for the quarter and six months ended June 30, 2021.
Item 8.01 Other Events.
At its meeting on July 27, 2021, the Company's Board of Directors approved the following quarterly dividend on shares of Erie Indemnity Company Class A common stock:
Dividend Number: 365
Class A Rate Per Share: $1.035
Declaration Date: July 27, 2021
Ex-Dividend Date: October 4, 2021
Record Date: October 5, 2021
Payable Date: October 20, 2021
Item 9.01 Financial Statements and Exhibits.
Exhibit 99.1 Press Release
Exhibit 99.2 Financial Information
Exhibit 104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
Exhibit Index
| Exhibit No. | Description | |||||||
| 99.1 | ||||||||
| 99.2 | ||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Erie Indemnity Company | ||||||||||||||
| July 29, 2021 | By: | /s/ Gregory J. Gutting | ||||||||||||
| Name: Gregory J. Gutting | ||||||||||||||
| Title: Executive Vice President & CFO | ||||||||||||||
Exhibit 99.1
Erie Indemnity Reports Second Quarter 2021 Results
Net Income per Diluted Share was $1.51 for the Quarter and $2.92 for the Six Months of 2021
Erie, Pa. - July 29, 2021 - Erie Indemnity Company (NASDAQ: ERIE) today announced financial results for the quarter and six months ending June 30, 2021. Net income was $79.0 million, or $1.51 per diluted share, in the second quarter of 2021, compared to $82.0 million, or $1.57 per diluted share, in the second quarter of 2020. Net income was $152.6 million, or $2.92 per diluted share, in the first six months of 2021, compared to $141.3 million, or $2.70 per diluted share, in the first six months of 2020.
The uncertainty resulting from the COVID-19 pandemic continues to evolve and the pandemic's ultimate impact and duration remain uncertain at this time.
| 2Q and First Half 2021 | ||||||||||||||||||||
| (in thousands) | 2Q'21 | 2Q'20 | 1H21 | 1H20 | ||||||||||||||||
| Operating income | $ | 85,065 | $ | 91,189 | $ | 161,160 | $ | 176,880 | ||||||||||||
| Investment income | 16,418 | 11,553 | 34,406 | 2,358 | ||||||||||||||||
| Interest and other expense, net | 1,587 | 260 | 3,115 | 629 | ||||||||||||||||
| Income before income taxes | 99,896 | 102,482 | 192,451 | 178,609 | ||||||||||||||||
| Income tax expense | 20,867 | 20,505 | 39,856 | 37,306 | ||||||||||||||||
| Net income | $ | 79,029 | $ | 81,977 | $ | 152,595 | $ | 141,303 | ||||||||||||
| 2Q 2021 Highlights | ||||||||||||||||||||||||||
Operating income before taxes decreased $6.1 million, or 6.7 percent, in the second quarter of 2021 compared to the second quarter of 2020.
•Management fee revenue - policy issuance and renewal services increased $18.5 million, or 3.8 percent, in the second quarter of 2021 compared to the second quarter of 2020.
•Management fee revenue - administrative services decreased $0.1 million, or 1.0 percent, in the second quarter of 2021 compared to the second quarter of 2020.
•Cost of operations - policy issuance and renewal services
◦Commissions increased $14.7 million in the second quarter of 2021 compared to the second quarter of 2020, driven by the growth in direct and affiliated assumed written premium, primarily in lines of business that pay a higher commission rate. To a lesser extent, there was also an increase in agent incentive compensation for the second quarter of 2021 compared to the second quarter of 2020.
◦Non-commission expense increased $9.2 million in the second quarter of 2021 compared to the second quarter of 2020. Underwriting and policy processing expense increased $3.3 million primarily due to increased personnel costs and underwriting report costs. Information technology costs increased $2.9 million primarily due to increased hardware and software costs as well as increased personnel costs. Administrative and other costs increased $3.6 million primarily driven by increased building and
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equipment depreciation and professional fees in the second quarter of 2021 compared to the same period in 2020. Personnel costs in all expense categories for the second quarter of 2021 were impacted by higher medical costs compared to the prior year as the COVID-19 pandemic reduced elective procedures in 2020.
Income from investments before taxes totaled $16.4 million in the second quarter of 2021 compared to $11.6 million in the second quarter of 2020. Net investment income was $13.7 million in the second quarter of 2021 compared to $5.0 million in the second quarter of 2020. Included in net investment income is $6.2 million of limited partnership earnings in the second quarter of 2021 and $2.3 million of limited partnership losses in the second quarter of 2020. Net realized gains on investments were $2.8 million in the second quarter of 2021 compared to $6.5 million in the second quarter of 2020.
| First Half 2021 Highlights | ||||||||||||||||||||||||||
Operating income before taxes decreased $15.7 million, or 8.9 percent, in the first six months of 2021 compared to the first six months of 2020.
•Management fee revenue - policy issuance and renewal services increased $30.4 million, or 3.3 percent, in the first six months of 2021 compared to the first six months of 2020.
•Management fee revenue - administrative services decreased $0.1 million, or 0.2 percent, in the first six months of 2021 compared to the first six months of 2020.
•Cost of operations - policy issuance and renewal services
◦Commissions increased $24.1 million in the first six months of 2021 compared to the first six months of 2020, driven by the growth in direct and affiliated assumed written premium, primarily in lines of business that pay a higher commission rate. To a lesser extent, there was also an increase in agent incentive compensation for the first six months 2021 compared to the first six months of 2020.
◦Non-commission expense increased $20.8 million for the six months ended June 30, 2021 compared to the same period in 2020. Underwriting and policy processing costs increased $2.5 million primarily due to increased underwriting report costs and personnel costs. Information technology costs increased $7.2 million primarily due to increased hardware and software costs and personnel costs. Administrative and other costs increased $12.1 million primarily driven by increased personnel costs and professional fees compared to the same period in 2020. Personnel costs in all expense categories were impacted by higher pension costs and higher medical costs compared to the prior year as the COVID-19 pandemic reduced elective procedures in 2020.
Income from investments before taxes totaled $34.4 million in the first six months of 2021 compared to $2.4 million in the first six months of 2020. Net investment income was $30.7 million in the first six months of 2021 compared to $9.7 million in the first six months of 2020. Included in net investment income is $15.2 million of limited partnership earnings in the first six months of 2021 and $6.0 million of limited partnership losses in the first six months of 2020. Net realized gains on investments were $3.6 million in the first six months of 2021 compared to net realized losses of $4.3 million in the first six months of 2020.
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Webcast Information
Indemnity has scheduled a pre-recorded audio broadcast on the Web for 10:00 AM ET on July 30, 2021. 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 12th largest homeowners insurer, 13th largest automobile insurer and 13th 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 16th 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 about Erie Insurance Group are available at www.erieinsurance.com.
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"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;
◦emerging claims and coverage issues in the industry; and
◦severe weather conditions or other catastrophic losses, including terrorism;
•potential impacts of the COVID-19 pandemic on the growth and financial condition of the Exchange;
•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;
•potential impacts of the COVID-19 pandemic on our operations, the business operations of our customers and/or independent agents, or our third-party vendor operations;
•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.
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Exhibit 99.2
Erie Indemnity Company
Statements of Operations
(dollars in thousands, except per share data)
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||||||||||||
| Operating revenue | ||||||||||||||||||||||||||
| Management fee revenue - policy issuance and renewal services | $ | 502,271 | $ | 483,795 | $ | 957,989 | $ | 927,545 | ||||||||||||||||||
| Management fee revenue - administrative services | 14,667 | 14,813 | 29,514 | 29,584 | ||||||||||||||||||||||
| Administrative services reimbursement revenue | 157,190 | 151,965 | 310,723 | 303,519 | ||||||||||||||||||||||
| Service agreement revenue | 5,902 | 6,446 | 11,981 | 13,108 | ||||||||||||||||||||||
| Total operating revenue | 680,030 | 657,019 | 1,310,207 | 1,273,756 | ||||||||||||||||||||||
| Operating expenses | ||||||||||||||||||||||||||
| Cost of operations - policy issuance and renewal services | 437,775 | 413,865 | 838,324 | 793,357 | ||||||||||||||||||||||
| Cost of operations - administrative services | 157,190 | 151,965 | 310,723 | 303,519 | ||||||||||||||||||||||
| Total operating expenses | 594,965 | 565,830 | 1,149,047 | 1,096,876 | ||||||||||||||||||||||
| Operating income | 85,065 | 91,189 | 161,160 | 176,880 | ||||||||||||||||||||||
| Investment income | ||||||||||||||||||||||||||
| Net investment income | 13,650 | 5,044 | 30,747 | 9,708 | ||||||||||||||||||||||
| Net realized investment gains (losses) | 2,769 | 6,526 | 3,573 | (4,280) | ||||||||||||||||||||||
| Net impairment (losses) recoveries recognized in earnings | (1) | (17) | 86 | (3,070) | ||||||||||||||||||||||
| Total investment income | 16,418 | 11,553 | 34,406 | 2,358 | ||||||||||||||||||||||
| Interest expense, net | 1,039 | 2 | 2,048 | 5 | ||||||||||||||||||||||
| Other expense | 548 | 258 | 1,067 | 624 | ||||||||||||||||||||||
| Income before income taxes | 99,896 | 102,482 | 192,451 | 178,609 | ||||||||||||||||||||||
| Income tax expense | 20,867 | 20,505 | 39,856 | 37,306 | ||||||||||||||||||||||
| Net income | $ | 79,029 | $ | 81,977 | $ | 152,595 | $ | 141,303 | ||||||||||||||||||
| Net income per share | ||||||||||||||||||||||||||
| Class A common stock – basic | $ | 1.70 | $ | 1.76 | $ | 3.28 | $ | 3.03 | ||||||||||||||||||
| Class A common stock – diluted | $ | 1.51 | $ | 1.57 | $ | 2.92 | $ | 2.70 | ||||||||||||||||||
| Class B common stock – basic and diluted | $ | 255 | $ | 264 | $ | 491 | $ | 455 | ||||||||||||||||||
| Weighted average shares outstanding – Basic | ||||||||||||||||||||||||||
| Class A common stock | 46,188,289 | 46,187,808 | 46,188,573 | 46,188,299 | ||||||||||||||||||||||
| Class B common stock | 2,542 | 2,542 | 2,542 | 2,542 | ||||||||||||||||||||||
| Weighted average shares outstanding – Diluted | ||||||||||||||||||||||||||
| Class A common stock | 52,302,370 | 52,302,981 | 52,309,163 | 52,313,667 | ||||||||||||||||||||||
| Class B common stock | 2,542 | 2,542 | 2,542 | 2,542 | ||||||||||||||||||||||
| Dividends declared per share | ||||||||||||||||||||||||||
| Class A common stock | $ | 1.035 | $ | 0.965 | $ | 2.070 | $ | 1.930 | ||||||||||||||||||
| Class B common stock | $ | 155.25 | $ | 144.75 | $ | 310.50 | $ | 289.50 | ||||||||||||||||||
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Erie Indemnity Company
Statements of Financial Position
(in thousands)
| June 30, 2021 | December 31, 2020 | |||||||||||||
| (Unaudited) | ||||||||||||||
| Assets | ||||||||||||||
| Current assets: | ||||||||||||||
| Cash and cash equivalents | $ | 156,038 | $ | 161,240 | ||||||||||
| Available-for-sale securities | 20,856 | 17,697 | ||||||||||||
| Equity securities | 207 | 19 | ||||||||||||
| Receivables from Erie Insurance Exchange and affiliates, net | 504,013 | 494,637 | ||||||||||||
| Prepaid expenses and other current assets | 59,574 | 52,561 | ||||||||||||
| Accrued investment income | 6,121 | 6,146 | ||||||||||||
| Total current assets | 746,809 | 732,300 | ||||||||||||
| Available-for-sale securities, net | 915,942 | 910,539 | ||||||||||||
| Equity securities | 93,798 | 94,071 | ||||||||||||
| Fixed assets, net | 280,402 | 265,341 | ||||||||||||
| Agent loans, net | 60,070 | 62,449 | ||||||||||||
| Deferred income taxes, net | 17,971 | 12,341 | ||||||||||||
| Other assets | 48,652 | 40,081 | ||||||||||||
| Total assets | $ | 2,163,644 | $ | 2,117,122 | ||||||||||
| Liabilities and shareholders' equity | ||||||||||||||
| Current liabilities: | ||||||||||||||
| Commissions payable | $ | 284,234 | $ | 262,338 | ||||||||||
| Agent bonuses | 62,694 | 110,158 | ||||||||||||
| Accounts payable and accrued liabilities | 150,346 | 150,706 | ||||||||||||
| Dividends payable | 48,200 | 48,200 | ||||||||||||
| Contract liability | 35,742 | 36,917 | ||||||||||||
| Deferred executive compensation | 8,581 | 17,319 | ||||||||||||
| Current portion of long-term borrowings | 2,064 | 2,031 | ||||||||||||
| Total current liabilities | 591,861 | 627,669 | ||||||||||||
| Defined benefit pension plans | 184,111 | 164,346 | ||||||||||||
| Long-term borrowings | 92,795 | 93,833 | ||||||||||||
| Contract liability | 18,135 | 18,878 | ||||||||||||
| Deferred executive compensation | 13,773 | 14,904 | ||||||||||||
| Other long-term liabilities | 17,867 | 9,444 | ||||||||||||
| Total liabilities | 918,542 | 929,074 | ||||||||||||
| Shareholders’ equity | 1,245,102 | 1,188,048 | ||||||||||||
| Total liabilities and shareholders’ equity | $ | 2,163,644 | $ | 2,117,122 | ||||||||||
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