Erie Indemnity Reports Third Quarter 2009 Results
ERIE, Pa., Oct 29, 2009 /PRNewswire-FirstCall via COMTEX/ --
Company: Erie Indemnity Co. (ERIE)
3Q 2009 Highlights
-- Net income per share-diluted was $0.69 per share in the third quarter
2009 compared to $0.07 per share in the third quarter of 2008.
-- Impairment losses were $0.04 per share, after tax, for the third
quarter of 2009 compared to $0.42 per share, after tax, from the
third quarter 2008.
-- Net operating income per share (excluding net realized gains or losses
and impairments on investments and related taxes) increased to $0.66 per
share in the third quarter of 2009 from $0.54 per share for the same
period one year ago.
-- Equity in earnings of EFL was $0.09 per share, after tax, for the
third quarter of 2009 compared to losses of $0.16 per share, after
tax, from the third quarter 2008.
-- Losses from limited partnership investments were $0.10 per share,
after tax, for the third quarter of 2009 compared to earnings of
$0.01 per share, after tax, from the third quarter 2008.
-- Gross margins from management operations decreased to 18.1 percent in
the third quarter of 2009 compared to 19.3 percent in the third quarter
of 2008.
-- GAAP combined ratios of the insurance underwriting operations decreased
to 98.1 percent in the third quarter of 2009 from 99.4 percent in the
third quarter of 2008.
-- Revenue from investment operations totaled $8.3 million for the third
quarter of 2009, compared to losses of $40.2 million for the third
quarter of 2008.
Erie Indemnity Company (Nasdaq: ERIE) announced today third quarter 2009 earnings of $39.7 million, or $0.69 per diluted share, compared to $4.2 million, or $0.07 per diluted share, from the third quarter of 2008. Operating income (excluding net realized gains or losses and impairments on investments and related taxes) increased to $38.2 million, or $0.66 per share, in the third quarter of 2009 from $31.1 million, or $0.54 per share, for the same period one year ago.
Details of Third Quarter 2009 Segment Results:
Segment Results
---------------
(in millions) 3Q'09 3Q'08
----- -----
Management Operations $47.2 $49.4
Insurance Underwriting
Operations 1.0 0.3
Investment Operations 8.3 (40.2)
--- ------
Income before income taxes $56.5 $9.5
Provision for income taxes 16.8 5.3
---- ---
Net Income $39.7 $4.2
----- ----
Management operations
Pre-tax income from management operations decreased to $47.2 million in the third quarter of 2009 from $49.4 million in the third quarter of 2008.
Gross margins from management operations decreased to 18.1 percent in the third quarter of 2009 compared to 19.3 percent in the third quarter of 2008. Management fee revenue increased 2.0 percent for the quarter ended September 30, 2009. Direct written premiums of the Property and Casualty Group, upon which the management fee is calculated, increased 2.0 percent in the third quarter of 2009, compared to the third quarter of 2008, reflecting an increase in policies in force offset by decreasing average premium per policy.
Policies in force grew 3.4 percent to over 4.1 million at September 30, 2009. Growth in policies in force is the result of continuing improvements in policyholder retention and increases in new policies sold. The policyholder retention ratio increased to 90.7 percent at September 30, 2009, compared to 90.6 percent at December 31, 2008, and 90.5 percent at September 30, 2008. The year-over-year average premium per policy decreased 2.2 percent to $932 at September 30, 2009 compared to $953 at September 30, 2008. This decrease was driven by market conditions causing shifts to lower exposure coverages and higher deductibles.
The cost of management operations increased 3.6 percent to $214.2 million in the third quarter of 2009 from $206.7 million for the same period in 2008. Commission costs, the largest component of the cost of management operations, increased to $146.6 million, or 2.3 percent, in the third quarter 2009 from $143.3 million in the third quarter of 2008. Third quarter cost of management operations, excluding commission costs, increased 6.8 percent to $67.6 million from $63.3 million primarily driven by contract labor costs related to various technology initiatives.
Insurance underwriting operations
Insurance underwriting operations generated income before income tax of $1.0 million in the third quarter of 2009 compared to $0.3 million for the same period in 2008. GAAP combined ratios of the insurance underwriting operations decreased to 98.1 percent in the third quarter of 2009 from 99.4 percent in the third quarter of 2008.
-- The loss and loss adjustment expense ratio related to the current
accident year, excluding catastrophe losses, was 65.6% in the third
quarter of 2009, which was 1.8 points higher than the third quarter of
2008.
-- Development of prior accident year direct loss reserves improved the
combined ratio by 4.3 points, or $2.3 million, in the third quarter of
2009 compared to 0.4 points for the third quarter of 2008.
-- Catastrophe losses contributed 2.4 points and 8.1 points to the GAAP
combined ratio in the third quarters of 2009 and 2008, respectively.
-- Our GAAP combined ratio was also impacted 5.2 points, or $2.8 million,
as a result of the write-off of assumed involuntary reinsurance premium
related to the North Carolina Beach and Coastal Plans deemed
uncollectible as a result of recent state legislation.
Investment operations
Investment operations generated income before income tax of $8.3 million for the third quarter of 2009, compared to losses before income tax of $40.2 million for the third quarter of 2008.
-- Net investment income, which includes primarily interest and dividends
on the Company's bonds and stocks, decreased by 7.4 percent to $9.5
million for the quarter ended September 30, 2009, from $10.2 million for
the same period in 2008. This decrease was driven by lower preferred
stock dividends.
-- Net realized gains on investments totaled $5.5 million compared to
losses of $3.9 million in the third quarters of 2009 and 2008,
respectively, as a result of market valuation adjustments on our common
stock trading portfolio. Unrealized gains of $4.5 million were recorded
on common stock in the third quarter of 2009 versus unrealized losses of
$3.4 million in the third quarter of 2008.
-- Net impairment losses recognized in earnings totaled $3.2 million in the
third quarter of 2009 compared to $37.4 million in the third quarters of
2008.
-- Equity in losses of limited partnerships totaled $8.8 million in the
third quarter of 2009 compared to earnings of $1.1 million in the third
quarter of 2008.
-- Equity in earnings of Erie Family Life Insurance Company was $5.4
million in the third quarter of 2009, compared to losses of $10.1
million in the third quarter of 2008, primarily due to lower impairment
charges recognized on investments in the third quarter of 2009.
Nine Month 2009 Summary
Erie Indemnity net income totaled $83.5 million, or $1.46 per share-diluted, for the first nine months of 2009 compared to $75.5 million, or $1.30 per share-diluted, for the nine months ending September 30, 2008.
According to A.M. Best Company, Erie Insurance Group, based in Erie, Pennsylvania, is the 14(th) largest automobile insurer in the United States based on direct premiums written and the 18(th) largest property/casualty insurer in the United States based on total lines net premium written. The Group, rated A+ (Superior) by A.M. Best Company, has over 4.1 million policies in force and operates in 11 states and the District of Columbia.
Erie Insurance earned J.D. Power and Associates' award for "Highest in Customer Satisfaction with the Auto Insurance Shopping Experience." This recognition is based on the results of the 2009 Insurance Shopping Study, which evaluates the experience of customers purchasing a new auto insurance policy. Erie Insurance has also been recognized on the list of Ward's 50 Group of top performing insurance companies The Ward's 50 award analyzes the financial performance of 3,000 property and casualty companies and 800 life-health insurance companies and recognizes the top performers for achieving outstanding financial results in safety and consistency over a five-year period (2004-2008).
"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995:
Certain statements contained herein are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are not in the present or past tense and can generally be identified by the use of words such as "anticipate," "believe," "estimate," "expect," "intend," "likely," "plan," "project," "seek," "should," "target," "will," and other expressions that indicate future trends and events. Forward-looking statements 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 such statements are discussions relating to management fee revenue, cost of management operations, underwriting, premium and investment income volumes, and agency appointments. Such 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 that could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements are the following:
-- factors affecting the property/casualty and life insurance industries
generally, including price competition, legislative and regulatory
developments;
-- government regulation of the insurance industry including approval of
rate increases;
-- the size, frequency and severity of claims;
-- natural disasters;
-- exposure to environmental claims;
-- fluctuations in interest rates;
-- inflation and general business conditions;
-- the geographic concentration of our business as a result of being a
regional company;
-- the accuracy of our pricing and loss reserving methodologies;
-- changes in driving habits; our ability to maintain our business
operations including our information technology system;
-- our dependence on the independent agency system;
-- the quality and liquidity of our investment portfolio;
-- our dependence on our relationship with Erie Insurance Exchange; and
-- the other risks and uncertainties discussed or indicated in all
documents filed by the Company with the Securities and Exchange
Commission.
A forward-looking statement speaks only as of the date on which it is made and reflects the Company's analysis only as of that date. The Company undertakes 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.
News releases and more information about Erie Insurance Group are available at http://www.erieinsurance.com.
Erie Indemnity Company
Consolidated Statements of Operations
(dollars in thousands, except per share data)
Three months ended Nine months ended
September 30, September 30,
2009 2008 2009 2008
---- ---- ---- ----
(unaudited) (unaudited)
Operating revenue
Management fee
revenue, net $238,752 $234,120 $701,270 $692,737
Premiums earned 52,989 52,057 156,849 155,719
Service agreement
revenue 8,730 8,340 25,911 23,480
----- ----- ------ ------
Total operating
revenue 300,471 294,517 884,030 871,936
--------------------- ------- ------- ------- -------
Operating expenses
Cost of management
operations 202,412 195,297 581,648 577,754
Losses and loss
adjustment expenses
incurred 33,746 37,185 111,834 104,768
Policy acquisition
and other underwriting
expenses 16,146 12,311 41,056 36,592
------ ------ ------ ------
Total operating
expenses 252,304 244,793 734,538 719,114
--------------------- ------- ------- ------- -------
Investment income
(loss) - unaffiliated
Investment income,
net of expenses 9,466 10,218 31,526 33,357
Realized gains
(losses) on
investments 5,453 (3,925) 5,086 (18,368)
Net impairment
losses recognized
in earnings (3,232) (37,431) (10,384) (61,834)
Equity in (losses)
earnings of limited
partnerships (8,752) 1,057 (63,581) 20,310
--------------------- ------ ----- ------- ------
Total investment
income (loss) -
unaffiliated 2,935 (30,081) (37,353) (26,535)
---------------------- ----- ------- ------- -------
Income before income
taxes and equity
in earnings
(losses) of Erie
Family Life Insurance 51,102 19,643 112,139 126,287
Provision for income
taxes 16,440 6,011 33,918 40,550
Equity in earnings
(losses) of Erie
Family Life
Insurance,
net of tax 5,024 (9,384) 5,328 (10,197)
----- ------ ----- -------
Net income $39,686 $4,248 $83,549 $75,540
======= ====== ======= =======
Net income
per share:
Class A common
stock - basic $0.77 $0.08 $1.62 $1.45
===== ===== ===== =====
Class A common
stock - diluted 0.69 0.07 1.46 1.30
==== ==== ==== ====
Class B common
stock - basic
and diluted 112.06 15.92 239.96 216.59
====== ===== ====== ======
Weighted average
shares outstanding:
Class A common
stock - basic 51,252,693 51,376,513 51,255,234 51,984,203
========== ========== ========== ==========
Class A common
stock - diluted 57,383,900 57,533,591 57,393,641 58,141,281
========== ========== ========== ==========
Class B common
stock - basic
and diluted 2,546 2,551 2,549 2,551
===== ===== ===== =====
Dividends declared
per share:
Class A common
stock $0.45 $0.44 $1.35 $1.32
===== ===== ===== =====
Class B common
stock 67.50 66.00 202.50 198.00
===== ===== ====== ======
Erie Indemnity Company
Consolidated Statements of Operations - Segment Basis
(amounts in thousands, except per share data)
Three months ended Nine months ended
September 30, September 30,
2009 2008 2009 2008
---- ---- ---- ----
(unaudited) (unaudited)
Management operations
Management fee revenue $252,624 $247,723 $742,166 $733,131
Service agreement revenue 8,730 8,340 25,911 23,480
------------------------- ----- ----- ------ ------
Total revenue from
management operations 261,354 256,063 768,077 756,611
Cost of management operations 214,175 206,652 615,541 611,426
----------------------------- ------- ------- ------- -------
Income from
management operations 47,179 49,411 152,536 145,185
---------------------- ------ ------ ------- -------
Insurance underwriting
operations
Premiums earned 52,989 52,057 156,849 155,719
--------------- ------ ------ ------- -------
Losses and loss adjustment
expenses incurred 33,746 37,185 111,834 104,768
Policy acquisition and other
underwriting expenses 18,255 14,559 48,059 43,313
---------------------------- ------ ------ ------ ------
Total losses and expenses 52,001 51,744 159,893 148,081
---------------------------- ------ ------ ------- -------
Underwriting income (loss) 988 313 (3,044) 7,638
----------------------------- --- --- ------ -----
Investment operations
Investment income,
net of expenses 9,466 10,218 31,526 33,357
Realized gains (losses)
on investments 5,453 (3,925) 5,086 (18,368)
Net impairment losses
recognized in earnings (3,232) (37,431) (10,384) (61,834)
Equity in (losses) earnings
of limited partnerships (8,752) 1,057 (63,581) 20,310
Equity in earnings (losses)
of Erie Family Life Insurance 5,402 (10,090) 5,729 (10,965)
------------------------------ ----- ------- ----- -------
Net revenue (loss) from
investment operations 8,337 (40,171) (31,624) (37,500)
-------------------------- ----- ------- ------- -------
Income before income taxes 56,504 9,553 117,868 115,323
Provision for income taxes 16,818 5,305 34,319 39,783
------------- ------- ------ ------- -------
Net income $39,686 $4,248 $83,549 $75,540
============= ======= ====== ======= =======
Net income per share -
Class A basic $0.77 $0.08 $1.62 $1.45
========================= ===== ===== ===== =====
Net income per share -
Class A diluted 0.69 0.07 1.46 1.30
========================= ==== ==== ==== ====
Net income per share -
Class B basic and diluted 112.06 15.92 239.96 216.59
============================ ====== ===== ====== ======
Weighted average shares
outstanding - Class A diluted 57,384 57,534 57,394 58,141
=============================== ====== ====== ====== ======
Amounts presented on a segment basis are gross of
intercompany/intersegment items.
Erie Indemnity Company
Reconciliation of Operating Income to Net Income
Definition of non-GAAP and operating measures
---------------------------------------------
We believe that investors' understanding of our performance is enhanced
by the disclosure of the following non-GAAP financial measure. Our
method of calculating this measure may differ from those used by other
companies and therefore comparability may be limited.
Operating income is net income excluding realized capital gains and
losses and impairment losses and related federal income taxes. We
elected the fair value measurement option for our common stock portfolio
effective January 1, 2008. As such, changes in value related to common
stocks are reported in earnings. These unrealized gains or losses are
included in the net realized losses/gains on investments on the
Consolidated Statements of Operations that is used to calculate
operating income. Equity in earnings or losses of Erie Family Life
Insurance Company and equity in earnings or losses of limited
partnerships are not excluded from the calculation of operating income.
Equity in earnings or losses of limited partnerships includes the
respective investment's realized capital gains and losses, as well as
unrealized gains and losses.
Net income is the GAAP measure that is most directly comparable to
operating income.
We use operating income to evaluate the results of operations. It
reveals trends in our management services, insurance underwriting and
investment operations that may be obscured by the net effects of
realized capital gains and losses including impairment losses.
Realized capital gains and losses including impairment losses, may vary
significantly between periods and are generally driven by business
decisions and economic developments such as capital market conditions,
the timing of which is unrelated to our management services and
insurance underwriting processes. We believe it is useful for
investors to evaluate these components separately and in the aggregate
when reviewing our performance. We are aware that the price to earnings
multiple commonly used by investors as a forward-looking valuation
technique uses operating income as the denominator. Operating income
should not be considered as a substitute for net income and does not
reflect our overall profitability.
The following table reconciles operating income and net income for the
periods ended September 30, 2009 and 2008:
Three months ended Nine months ended
(in thousands, except per September 30, September 30,
share data) 2009 2008 2009 2008
---- ---- ---- ----
(Unaudited) (Unaudited)
Operating income $38,242 $31,129 $86,993 $127,671
Net realized gains (losses)
and impairments on
investments 2,221 (41,356) (5,298) (80,202)
Income tax (expense) benefit (777) 14,475 1,854 28,071
---- ------ ----- ------
Realized gains (losses)
and impairments, net of
income taxes 1,444 (26,881) (3,444) (52,131)
----- ------- ------ -------
Net income $39,686 $4,248 $83,549 $75,540
======= ====== ======= =======
Three months ended Nine months ended
September 30, September 30,
Per Class A share - diluted: 2009 2008 2009 2008
---- ---- ---- ----
(Unaudited) (Unaudited)
Operating income $0.66 $0.54 $1.52 $2.20
Net realized gains (losses)
and impairments on
investments 0.04 (0.72) (0.09) (1.38)
Income tax (expense) benefit (0.01) 0.25 0.03 0.48
----- ---- ---- ----
Realized gains (losses)
and impairments, net of
income taxes 0.03 (0.47) (0.06) (0.90)
---- ----- ----- -----
Net income $0.69 $0.07 $1.46 $1.30
===== ===== ===== =====
Erie Indemnity Company
Consolidated Statements of Financial Position
(amounts in thousands, except per share data)
September 30, December 31,
2009 2008
---- ----
(unaudited)
Assets
Investments
Available-for-sale securities, at fair value:
Fixed maturities $646,908 $563,429
Equity securities 40,499 55,281
Trading securities, at fair value 41,072 33,338
Other invested assets 249,266 300,391
------- -------
Total investments 977,745 952,439
Cash and cash equivalents 36,872 61,073
Equity in Erie Family Life Insurance 71,006 29,236
Premiums receivable from policyholders 251,784 244,760
Receivables from affiliates 1,194,373 1,130,610
Other assets 177,700 195,268
------- -------
Total assets $2,709,480 $2,613,386
========== ==========
Liabilities and shareholders' equity
Liabilities
Unpaid losses and loss adjustment expenses $982,972 $965,081
Unearned premiums 452,815 424,370
Other liabilities 395,578 432,060
------- -------
Total liabilities 1,831,365 1,821,511
Total shareholders' equity 878,115 791,875
------- -------
Total liabilities and
shareholders' equity $2,709,480 $2,613,386
========== ==========
Book value per share $15.31 $13.79
====== ======
Shares outstanding 57,363 57,405
====== ======
Erie Indemnity Company
Reconciliation of Property and Casualty Group to Indemnity Results
(dollars in thousands) Three months ended Nine months ended
September 30, September 30,
2009 2008 2009 2008
------------------------- ---- ---- ---- ----
Property and Casualty Group
insurance underwriting
operations (SAP basis)
Direct underwriting results
Direct written
premium $1,008,901 $989,291 $2,974,265 $2,937,724
---------- -------- ---------- ----------
Premiums earned 965,100 956,771 2,870,287 2,857,056
------- ------- --------- ---------
Loss and loss
adjustment expenses
incurred 622,297 695,208 2,027,762 1,900,836
Policy acquisition
and other
underwriting expenses 277,832 271,140 834,408 810,256
------- ------- ------- -------
Total losses
and expenses 900,129 966,348 2,862,170 2,711,092
------- ------- --------- ---------
Direct underwriting
income (loss) 64,971 (9,577) 8,117 145,964
------ ------ ----- -------
Nonaffiliated reinsurance
underwriting results
Assumed voluntary-
less ceded
retrocessions 3,212 831 3,176 486
Assumed involuntary (42,680) 15,497 (39,503) 13,092
Less: Ceded 5,743 (3,313) 27,181 14,984
----- ------ ------ ------
Nonaffiliated
reinsurance
underwriting income (45,211) 19,641 (63,508) (1,406)
------- ------- -------- --------
Net underwriting income
(loss) (SAP basis) $19,760 $10,064 ($55,391) $144,558
======= ======= ======== ========
Erie Indemnity insurance
underwriting operations
(SAP to GAAP basis)
Percent of pool assumed
by the Indemnity
Company 5.50% 5.50% 5.50% 5.50%
---- ---- ---- ----
Indemnity preliminary
underwriting income
(loss) (SAP basis) $1,087 $554 ($3,047) $7,951
SAP to GAAP adjustments (99) (241) 3 (313)
--- ---- --- ----
Indemnity underwriting
income (loss) before
tax (GAAP basis) $988 $313 ($3,044) $7,638
==== ==== ======= ======
Property & Casualty Group (SAP basis)
Net basis
---------
Loss and LAE ratio 63.1% 70.7% 70.8% 66.7%
Underwriting ratio 26.5 27.0 27.5 27.2
Policyholder dividends
ratio 0.0 0.0 0.0 0.1
--- --- --- ---
Statutory combined ratio 89.6 97.7 98.3 94.0
---- ---- ---- ----
Adjusted combined ratio,
excluding profit
component 85.8 93.6 94.0 89.8
Direct business
---------------
Loss ratio points from
prior accident year
reserve development -
(redundancy) deficiency (4.3) (0.4) (0.2) (3.2)
Loss ratio points from
prior accident years
from salvage and
subrogation
recoveries collected (0.9) (1.0) (1.9) (2.0)
---- ---- ---- ----
Total loss ratio
points from prior
accident years (5.2) (1.4) (2.1) (5.2)
---- ---- ---- ----
Loss ratio points from
catastrophes 2.4 8.0 3.8 4.2
Erie Indemnity Company
GAAP combined ratio 98.1 99.4 101.9 95.1
GAAP loss ratio points
from catastrophes 2.4 8.1 3.9 4.2
------------------------- --- --- --- ---
SAP basis represents statutory accounting principles as codified by the
National Association of Insurance Commissioners (NAIC).
Selected financial data of Erie Insurance Exchange:
---------------------------------------------------
The selected financial data below is derived from the Erie Insurance
Exchange's financial statements prepared in accordance with Statutory
Accounting Principles. In our opinion, all adjustments consisting
only of normal recurring accruals, considered necessary for a fair
presentation have been included. The financial data set forth below is
only a summary.
(dollars in thousands) Three months ended Nine months ended
Statutory accounting basis September 30, September 30,
2009 2008 2009 2008
---- ---- ---- ----
(unaudited) (unaudited)
Premiums earned $921,050 $902,260 $2,718,765 $2,694,802
Losses, loss adjustment
expenses and
underwriting expenses 902,388 892,731 2,771,110 2,558,171
Net underwriting
income (loss) 18,662 9,529 (52,345) 136,631
------ ----- ------- -------
Total investment
income (loss) 27,588 (269,878) (163,820) (294,141)
------ -------- -------- --------
Income (loss) before
income taxes 46,250 (260,349) (216,165) (157,510)
Federal income tax
expense (benefit) 13,468 15,800 (34,096) 129,164
------ ------ ------- -------
Net income (loss) $32,782 ($276,149) ($182,069) ($286,674)
======= ========= ========= =========
(dollars in thousands) As of As of
Statutory accounting September December
basis 30, 31,
2009 2008
---- ----
(unaudited)
Cash and invested
assets $8,262,437 $7,595,727
Other assets 1,345,768 1,552,902
--------- ---------
Total assets $9,608,205 $9,148,629
========== ==========
Loss, loss adjustment
expense and
unearned
premium reserves $4,909,177 $4,768,240
Other liabilities 407,944 334,399
------- -------
Total liabilities 5,317,121 5,102,639
--------- ---------
Policyholders'
surplus 4,291,084 4,045,990
--------- ---------
Total liabilities
and policyholders'
surplus $9,608,205 $9,148,629
========== ==========
Management fee revenue by major lines of business - Segment basis:
------------------------------------------------------------------
Three months ended Nine months ended
(dollars in September 30, % September 30, %
thousands) 2009 2008 Change 2009 2008 Change
---- ---- ------ ---- ---- ------
Private
passenger
auto $125,048 $122,011 2.5% $358,386 $352,065 1.8%
Homeowners 55,957 52,266 7.1 150,942 141,806 6.4
Commercial
multi-peril 26,151 25,877 1.1 85,173 84,570 0.7
Commercial
auto 17,891 18,351 -2.5 58,645 60,707 -3.4
Workers
compensation 13,700 15,831 -13.5 49,747 56,535 -12.0
All other
lines
of business 13,477 12,987 3.8 40,673 38,748 5.0
------ ------ --- ------ ------ ---
252,224 247,323 2.0 743,566 734,431 1.2
Change in
allowance for
management fee
returned on
cancelled
policies 400 400 (1,400) (1,300)
--- --- ------ ------
Management fee
revenue, net
of allowance $252,624 $247,723 2.0% $742,166 $733,131 1.2%
======== ======== === ======== ======== ===
Management
fee rate 25.00% 25.00% 25.00% 25.00%
===== ===== ===== =====
Growth rates of policies in force for Property and
Casualty Group insurance operations by major lines of
business:
------------------------------------------------------
Private 12-mth. 12-mth.
Passenger growth growth
Date Auto rate Homeowners rate
---- ---- ---- ---------- ----
09/30/2007 1,649,801 0.8% 1,408,114 2.5%
12/31/2007 1,651,234 1.1 1,413,712 2.6
03/31/2008 1,655,869 1.2 1,420,250 2.6
06/30/2008 1,667,446 1.4 1,433,504 2.5
09/30/2008 1,677,151 1.7 1,446,779 2.7
12/31/2008 1,683,526 2.0 1,454,797 2.9
03/31/2009 1,694,583 2.3 1,466,227 3.2
06/30/2009 1,709,580 2.5 1,483,763 3.5
09/30/2009 1,721,388 2.6 1,498,285 3.6
12-mth. Total 12-mth.
All Other growth Personal growth
Date Personal Lines rate Lines rate
---- -------------- ---- ----- ----
09/30/2007 316,786 6.2% 3,374,701 2.0%
12/31/2007 321,431 6.6 3,386,377 2.2
03/31/2008 325,926 6.7 3,402,045 2.3
06/30/2008 332,922 6.8 3,433,872 2.4
09/30/2008 340,566 7.5 3,464,496 2.7
12/31/2008 346,953 7.9 3,485,276 2.9
03/31/2009 353,470 8.5 3,514,280 3.3
06/30/2009 362,582 8.9 3,555,925 3.6
09/30/2009 369,253 8.4 3,588,926 3.6
12-mth. 12-mth.
growth CML* growth
Date CML* Auto rate Multi-Peril rate
---- --------- ---- ----------- ----
09/30/2007 122,154 2.2% 226,302 3.9%
12/31/2007 122,558 2.3 228,214 4.4
03/31/2008 122,882 2.5 229,577 4.7
06/30/2008 123,955 1.9 234,393 4.8
09/30/2008 124,418 1.9 236,994 4.7
12/31/2008 124,205 1.3 237,228 3.9
03/31/2009 123,747 0.7 236,804 3.1
06/30/2009 124,917 0.8 240,970 2.8
09/30/2009 125,149 0.6 243,771 2.9
12-mth. 12-mth.
Workers growth All Other growth
Date Comp. rate CML* Lines rate
---- ----- ---- ---------- ----
09/30/2007 54,341 (0.1)% 96,167 3.8%
12/31/2007 54,720 1.5 96,464 4.1
03/31/2008 54,927 2.7 96,511 3.9
06/30/2008 55,801 3.4 97,745 3.3
09/30/2008 56,381 3.8 98,786 2.7
12/31/2008 56,704 3.6 98,796 2.4
03/31/2009 56,661 3.2 98,622 2.2
06/30/2009 57,549 3.1 99,973 2.3
09/30/2009 58,238 3.3 101,157 2.4
Total 12-mth.
CML* growth
Date Lines rate
---- ----- ----
09/30/2007 498,964 3.0%
12/31/2007 501,956 3.5
03/31/2008 503,897 3.8
06/30/2008 511,894 3.7
09/30/2008 516,579 3.5
12/31/2008 516,933 3.0
03/31/2009 515,834 2.4
06/30/2009 523,409 2.2
09/30/2009 528,315 2.3
12-mth.
Total growth
Date All Lines rate
---- --------- ----
09/30/2007 3,873,665 2.1%
12/31/2007 3,888,333 2.4
03/31/2008 3,905,942 2.5
06/30/2008 3,945,766 2.5
09/30/2008 3,981,075 2.8
12/31/2008 4,002,209 2.9
03/31/2009 4,030,114 3.2
06/30/2009 4,079,334 3.4
09/30/2009 4,117,241 3.4
CML* = Commercial
Policy retention trends for Property and Casualty Group
insurance operations by major lines of business:
-------------------------------------------------------
Private CML* All Total
Passenger Home- CML* Multi- Workers Other All
Date Auto owners Auto Peril Comp. Lines Lines
---- ---- ------- ----- ------ ----- ----- ------
09/30/2007 91.3% 90.1% 88.2% 86.1% 86.8% 87.5% 90.0%
12/31/2007 91.5 90.3 88.2 86.0 86.8 87.8 90.2
03/31/2008 91.6 90.5 88.4 86.5 87.6 87.9 90.4
06/30/2008 91.6 90.7 87.9 86.2 87.5 88.1 90.4
09/30/2008 91.7 91.0 87.8 86.0 87.2 88.2 90.5
12/31/2008 91.8 91.1 87.6 85.6 86.6 88.5 90.6
03/31/2009 91.9 91.4 87.5 85.7 86.3 88.8 90.8
06/30/2009 91.9 91.6 87.3 85.2 85.7 89.1 90.8
09/30/2009 91.9 91.4 87.0 84.9 85.8 88.8 90.7
CML* = Commercial
Average premium per policy trends for Property and
Casualty Group insurance operations by major lines
of business:
---------------------------------------------------
Private 12-mth. 12-mth.
Passenger percent Home- percent
Date Auto change owners change
---- ---- ------ ------ ------
09/30/2007 $1,093 (2.6)% $519 (2.1)%
12/31/2007 1,092 (1.6) 518 (1.5)
03/31/2008 1,091 (0.8) 518 (1.1)
06/30/2008 1,088 (0.5) 514 (1.2)
09/30/2008 1,086 (0.6) 511 (1.5)
12/31/2008 1,085 (0.6) 511 (1.4)
03/31/2009 1,081 (0.9) 512 (1.2)
06/30/2009 1,076 (1.1) 516 0.4
09/30/2009 1,076 (0.9) 520 1.8
All Other 12-mth. Total 12-mth.
Personal percent Personal percent
Date Lines change Lines change
---- ----- ------ ----- ------
09/30/2007 $352 1.1% $783 (2.9)%
12/31/2007 353 1.1 782 (1.9)
03/31/2008 354 1.4 781 (1.3)
06/30/2008 353 0.6 777 (1.1)
09/30/2008 354 0.6 774 (1.1)
12/31/2008 356 0.8 773 (1.2)
03/31/2009 358 1.1 771 (1.3)
06/30/2009 359 1.7 769 (1.0)
09/30/2009 359 1.4 770 (0.5)
12-mth. 12-mth.
percent Workers percent
Date CML* Auto change Comp. change
---- --------- ------ ----- ------
09/30/2007 $2,600 (3.9)% $5,780 (4.4)%
12/31/2007 2,577 (4.1) 5,602 (6.4)
03/31/2008 2,568 (3.6) 5,453 (7.8)
06/30/2008 2,530 (3.7) 5,236 (11.3)
09/30/2008 2,514 (3.3) 5,067 (12.3)
12/31/2008 2,505 (2.8) 4,951 (11.6)
03/31/2009 2,483 (3.3) 4,792 (12.1)
06/30/2009 2,439 (3.6) 4,555 (13.0)
09/30/2009 2,420 (3.7) 4,354 (14.1)
All Other 12-mth. Total 12-mth.
CML* percent CML* percent
Date Lines change Lines change
---- ----- ------ ----- ------
09/30/2007 $1,592 (4.6)% $2,295 (5.0)%
12/31/2007 1,581 (4.6) 2,262 (5.5)
03/31/2008 1,576 (4.0) 2,240 (5.3)
06/30/2008 1,546 (4.3) 2,187 (6.3)
09/30/2008 1,536 (3.5) 2,157 (6.0)
12/31/2008 1,533 (3.0) 2,141 (5.3)
03/31/2009 1,537 (2.5) 2,122 (5.3)
06/30/2009 1,511 (2.3) 2,067 (5.5)
09/30/2009 1,496 (2.6) 2,030 (5.9)
12-mth.
Total percent
Date All Lines change
---- --------- ------
09/30/2007 $978 (3.3)%
12/31/2007 973 (2.8)
03/31/2008 969 (2.2)
06/30/2008 960 (2.4)
09/30/2008 953 (2.6)
12/31/2008 949 (2.5)
03/31/2009 944 (2.6)
06/30/2009 936 (2.5)
09/30/2009 932 (2.2)
CML* = Commercial
Property & Casualty Group Adjusted Combined Ratio by Major Lines of
Business (SAP Basis) - Direct Business
Three Months ended September 30, 2009
---------------------------------------------------
Prior Year** Current
Reserve Accident
Development Year
Calendar* Deficiency Catastrophe Excluding
Year (Redundancy) Losses Catastrophes
---------------------------------------------------
Private passenger
auto 91.6% 0.0% 0.3% 91.3%
Homeowners 87.0% 0.2% 9.0% 77.8%
Other personal
lines 67.7% (11.8)% 3.1% 76.4%
Total personal
lines 89.3% (0.5)% 2.9% 86.9%
Commercial
multi-peril 101.1% 6.2% 3.3% 91.6%
Commercial auto 79.2% (15.7)% (0.1)% 95.0%
Workers
compensation 67.9% (49.4)% 0.0% 117.3%
Other commercial
lines 79.8% (13.8)% 1.1% 92.5%
Total commercial
lines 85.6% (14.4)% 1.4% 98.6%
Grand total -
direct business
only 87.9% (4.3)% 2.4% 89.8%
Three Months ended September 30, 2008
---------------------------------------------------
Prior Year** Current
Reserve Accident
Development Year
Calendar* Deficiency Catastrophe Excluding
Year (Redundancy) Losses Catastrophes
---------------------------------------------------
Private passenger
auto 82.9% (3.5)% 1.2% 85.2%
Homeowners 116.6% 0.8% 30.7% 85.1%
Other personal
lines 68.2% (11.4)% 11.3% 68.3%
Total personal
lines 91.6% (2.6)% 9.8% 84.4%
Commercial
multi-peril 119.2% 4.2% 9.2% 105.8%
Commercial auto 81.0% 0.0% 0.4% 80.6%
Workers
compensation 115.8% 6.6% 0.0% 109.2%
Other commercial
lines 144.3% 22.7% 0.2% 121.4%
Total commercial
lines 109.4% 4.9% 3.7% 100.8%
Grand total -
direct business
only 96.6% (0.4)% 8.0% 89.0%
Nine Months Ended September 30, 2009
---------------------------------------------------
Prior Year** Current
Reserve Accident
Development Year
Calendar* Deficiency Catastrophe Excluding
Year (Redundancy) Losses Catastrophes
---------------------------------------------------
Private passenger
auto 94.1% 2.0% 0.6% 91.5%
Homeowners 104.7% 2.1% 13.7% 88.9%
Other personal
lines 77.3% (7.7)% 4.5% 80.5%
Total personal
lines 96.3% 1.6% 4.5% 90.2%
Commercial
multi-peril 108.8% 9.9% 5.2% 93.7%
Commercial auto 76.3% (10.8)% 1.2% 85.9%
Workers
compensation 81.8% (18.8)% 0.0% 100.6%
Other commercial
lines 62.2% (16.2)% 0.7% 77.7%
Total commercial
lines 89.7% (4.8)% 2.5% 92.0%
Grand total -
direct business
only 94.4% (0.2)% 3.8% 90.8%
Nine Months Ended September 30, 2008
---------------------------------------------------
Prior Year** Current
Reserve Accident
Development Year
Calendar* Deficiency Catastrophe Excluding
Year (Redundancy) Losses Catastrophes
---------------------------------------------------
Private passenger
auto 83.8% (5.7)% 0.8% 88.7%
Homeowners 98.3% (3.3)% 15.6% 86.0%
Other personal
lines 75.5% (6.4)% 5.9% 76.0%
Total personal
lines 87.5% (5.1)% 5.1% 87.5%
Commercial
multi-peril 100.8% 0.0% 4.7% 96.1%
Commercial auto 79.3% (6.6)% 0.6% 85.3%
Workers
compensation 107.0% 5.9% 0.0% 101.1%
Other commercial
lines 108.5% 23.0% 0.3% 85.2%
Total commercial
lines 97.0% 1.3% 2.0% 93.7%
Grand total -
direct business
only 90.3% (3.2)% 4.2% 89.3%
*The calendar year combined ratio represents the adjusted statutory
combined ratio, which removes the profit component of the management
fee earned by the Company.
**The prior accident year reserve development does not include the
effects of salvage and subrogation recoveries.
SOURCE Erie Indemnity Company
http://www.erieinsurance.com
Copyright (C) 2009 PR Newswire. All rights reserved
News Provided by COMTEX
Company: Erie Indemnity Co. (ERIE)
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