Erie Indemnity Company (ERIE) Bundle
A Brief History of Erie Indemnity Company
Founded in 1925, Erie Indemnity Company (ERIE) operates as a provider of insurance products. The company markets its services through a network of independent agents. As of 2024, ERIE has established itself as a significant player in the property and casualty insurance market, primarily in the United States.
Financial Performance Highlights
For the third quarter of 2024, ERIE reported a net income of $159.8 million, reflecting a 22% increase from $131.0 million in the same quarter of 2023. The diluted net income per share for the third quarter was $3.06, up from $2.51 in the prior year.
In the nine months ending September 30, 2024, the net income reached $448.3 million, a 33.8% increase compared to $335.1 million for the same period in 2023.
| Financial Metric | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 |
|---|---|---|---|---|
| Net Income | $159.8 million | $131.0 million | $448.3 million | $335.1 million |
| Net Income per Share (Diluted) | $3.06 | $2.51 | $8.57 | $6.41 |
| Operating Income | $180.1 million | $148.5 million | $509.1 million | $393.2 million |
| Total Investment Income | $19.5 million | $12.3 million | $48.5 million | $19.2 million |
Dividends and Shareholder Returns
In 2024, ERIE declared dividends of $1.275 per share for Class A common stock and $191.25 per share for Class B common stock. This marks a 7.1% increase in dividends compared to 2023.
Assets and Shareholder Equity
As of September 30, 2024, ERIE reported total shareholders' equity of $1.95 billion, an increase from $1.66 billion at the end of 2023. The company’s total assets were valued at $2.86 billion as of the same date.
| Balance Sheet Metric | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Total Assets | $2.86 billion | $2.47 billion |
| Total Shareholders' Equity | $1.95 billion | $1.66 billion |
Market Position and Future Outlook
ERIE holds a substantial market share in the property and casualty insurance sector, with a focus on personal and commercial lines. The company has been expanding its market presence through strategic initiatives and enhancing its product offerings to meet the evolving needs of its customers. As of 2024, the direct and affiliated assumed premiums written by the Exchange increased to $9.0 billion, a growth of 19.1% year-over-year.
The company continues to navigate a competitive landscape while focusing on operational efficiency and customer satisfaction to drive future growth.
A Who Owns Erie Indemnity Company (ERIE)
Current Ownership Structure
As of 2024, Erie Indemnity Company (ERIE) has a dual-class share structure consisting of Class A and Class B common stock. Class A shares are the primary voting shares, while Class B shares are convertible into Class A shares at a rate of 2,400 Class A shares for one Class B share.
Shareholder Composition
The following table outlines the shareholder composition of Erie Indemnity Company:
| Share Class | Shares Outstanding | Voting Rights | Ownership Percentage |
|---|---|---|---|
| Class A | 46,189,068 | 1 vote per share | Approximately 98.2% |
| Class B | 2,542 | 2,400 votes per share | Approximately 1.8% |
Major Shareholders
As of 2024, significant shareholders of Erie Indemnity Company include:
- Erie Insurance Exchange - the primary customer and the largest shareholder.
- Institutional investors, including various mutual funds and pension funds.
- Individual investors holding Class A and Class B shares.
Financial Performance Indicators
For the third quarter of 2024, Erie Indemnity reported:
- Net income: $159.83 million
- Net income per share (diluted): $3.06
- Total assets: $2.864 billion
- Total shareholders' equity: $1.948 billion
Dividends Declared
In 2024, Erie Indemnity declared the following dividends:
| Share Class | Dividend Per Share | Total Dividend Amount |
|---|---|---|
| Class A | $1.275 | $58.89 million |
| Class B | $191.25 | $486,000 |
Recent Market Trends
In the third quarter of 2024, Erie Indemnity's management fee revenue increased to $769.16 million, attributed to a growth in direct and affiliated assumed premiums written by the Erie Insurance Exchange, which reached $3.2 billion, an 18.4% increase compared to the same period in 2023.
Ownership Changes
Ownership of shares can be influenced by market conditions, and as of September 30, 2024, the company had repurchased shares as part of its treasury stock strategy, holding 22,110,132 shares at a cost of $1.169 billion.
Conclusion on Market Position
Erie Indemnity Company holds a strong market position, backed by the Erie Insurance Exchange, which is rated A+ "Superior" by A.M. Best, indicating a robust financial condition.
Erie Indemnity Company (ERIE) Mission Statement
Mission Statement Overview
The mission statement of Erie Indemnity Company (ERIE) focuses on providing high-quality insurance services and maintaining strong relationships with policyholders and agents. The company emphasizes integrity, reliability, and customer satisfaction in all its operations. ERIE aims to be a trusted partner in risk management, ensuring that clients feel secure and supported in their insurance needs.
Financial Performance Indicators
As of September 30, 2024, Erie Indemnity Company reported significant growth in various financial metrics, reflecting the effectiveness of its mission-driven approach.
| Financial Metric | Q3 2024 | Q3 2023 | Year-over-Year Change (%) |
|---|---|---|---|
| Net Income | $159.83 million | $131.04 million | 22.0% |
| Operating Income | $180.13 million | $148.47 million | 21.3% |
| Total Revenue | $2.2 billion | $1.8 billion | 22.2% |
| Management Fee Revenue | $769.2 million | $649.0 million | 18.5% |
| Dividends Declared (Class A) | $1.275 per share | $1.19 per share | 7.1% |
Premiums Written
Direct and affiliated assumed premiums written by the Exchange increased significantly, indicating the company's growth in market share and customer trust.
| Premium Type | Q3 2024 | Q3 2023 | Year-over-Year Change (%) |
|---|---|---|---|
| Total Premiums Written | $3.2 billion | $2.7 billion | 18.4% |
| Personal Lines Premiums | $2.3 billion | $1.9 billion | 20.1% |
| Commercial Lines Premiums | $828 million | $727 million | 13.9% |
Average Premium per Policy
The average premium per policy has shown a notable increase, reflecting the company's ability to adjust pricing in response to market conditions.
| Policy Type | Average Premium Q3 2024 | Average Premium Q3 2023 | Year-over-Year Change (%) |
|---|---|---|---|
| All Lines of Business | $1,200 | $1,065 | 12.8% |
| New Business | $1,150 | $995 | 15.9% |
Investment Performance
Investment income has increased, contributing positively to overall financial health.
| Investment Metric | Q3 2024 | Q3 2023 | Year-over-Year Change (%) |
|---|---|---|---|
| Total Investment Income | $19.55 million | $12.30 million | 58.9% |
| Net Investment Income | $17.32 million | $14.64 million | 18.3% |
Market Position and Future Outlook
The company continues to enhance its market position by focusing on customer-centric services, leveraging technology for better efficiency, and maintaining strong relationships with agents. The outlook remains positive with projected growth in both personal and commercial lines.
As of September 30, 2024, Erie Indemnity Company holds an A+ "Superior" rating from A.M. Best, indicating strong financial stability and the ability to meet policyholder obligations.
How Erie Indemnity Company (ERIE) Works
Business Model
Erie Indemnity Company operates primarily as the attorney-in-fact for Erie Insurance Exchange, providing management services. The company generates revenue through management fees based on premiums written by the Exchange. For 2024, the management fee rate was maintained at 25%.
Financial Performance
As of September 30, 2024, Erie Indemnity Company reported a net income of $159.8 million, a 22.0% increase from $131.0 million in the same period of 2023. The diluted earnings per share rose to $3.06 from $2.51.
| Financial Metrics | Q3 2024 | Q3 2023 | % Change |
|---|---|---|---|
| Net Income | $159.8 million | $131.0 million | 22.0% |
| Operating Income | $180.1 million | $148.5 million | 21.3% |
| Total Investment Income | $19.5 million | $12.3 million | 58.9% |
| Management Fee Revenue | $769.2 million | $649.0 million | 18.5% |
| Direct and Affiliated Premiums Written | $3.2 billion | $2.7 billion | 18.4% |
Revenue Sources
Revenue is generated from two main streams: management fee revenue from policy issuance and renewal services and administrative services. In Q3 2024, management fee revenue for policy issuance and renewal services was $769.2 million, while administrative services revenue reached $17.2 million.
Cost Structure
The total cost of operations for policy issuance and renewal services increased by 17.1% to $613.0 million in Q3 2024 compared to Q3 2023. This rise was attributed to higher commission expenses and personnel costs.
| Cost Metrics | Q3 2024 | Q3 2023 | % Change |
|---|---|---|---|
| Cost of Operations | $613.0 million | $523.3 million | 17.1% |
| Commissions Paid to Agents | $1.068 billion | $889.5 million | 20.1% |
| Personnel Costs | $189.1 million | $178.2 million | 6.4% |
Investment Performance
Total investment income increased significantly, reaching $19.5 million in Q3 2024, compared to $12.3 million in Q3 2023, primarily due to higher net investment income and realized gains.
Cash Flow Analysis
For the nine months ended September 30, 2024, net cash provided by operating activities was $417.8 million, up from $232.8 million in the corresponding period of 2023.
| Cash Flow Metrics | 2024 | 2023 |
|---|---|---|
| Net Cash Provided by Operating Activities | $417.8 million | $232.8 million |
| Net Cash Used in Investing Activities | ($170.4 million) | ($105.7 million) |
| Net Cash Used in Financing Activities | ($170.2 million) | ($166.3 million) | Net Increase in Cash | $77.2 million | ($39.2 million) |
Market Position and Outlook
Erie Indemnity Company’s financial strength is supported by the Erie Insurance Exchange, which has an A+ "Superior" rating from A.M. Best. As of September 30, 2024, the company's total assets were $2.86 billion, with total liabilities of $916.2 million.
| Balance Sheet Metrics | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Total Assets | $2.86 billion | $2.47 billion |
| Total Liabilities | $916.2 million | $809.1 million |
| Total Shareholders' Equity | $1.95 billion | $1.66 billion |
Dividends
Dividends declared per share for Class A stock were $1.275 and for Class B stock $191.25 in Q3 2024.
How Erie Indemnity Company (ERIE) Makes Money
Revenue Streams
Erie Indemnity Company generates revenue primarily through management fees charged for policy issuance and renewal services, as well as administrative services. In the third quarter of 2024, total management fee revenue from policy issuance and renewal services was $769.2 million, an increase of 18.5% compared to $649.0 million in the same quarter of 2023. For the nine months ending September 30, 2024, this revenue reached $2.2 billion, up from $1.8 billion in 2023, reflecting a 19.3% increase.
Management Fee Revenue
The management fee revenue is based on a rate of 25% applied to direct and affiliated assumed premiums written by the Erie Insurance Exchange. This fee structure is crucial as it directly correlates to the volume of premiums written. In Q3 2024, direct and affiliated assumed premiums increased by 18.4% to $3.2 billion compared to the same quarter in 2023, and for the nine months, premiums reached $9.0 billion, up 19.1% year-over-year.
| Period | Management Fee Revenue (Policy Issuance & Renewal) | Direct & Affiliated Assumed Premiums | Management Fee Rate |
|---|---|---|---|
| Q3 2024 | $769.2 million | $3.2 billion | 25% |
| Q3 2023 | $649.0 million | $2.7 billion | 25% |
| 9 Months 2024 | $2.2 billion | $9.0 billion | 25% |
| 9 Months 2023 | $1.8 billion | $7.6 billion | 25% |
Cost of Operations
The cost of operations for policy issuance and renewal services rose to $613.0 million in Q3 2024, a 17.1% increase from $523.3 million in Q3 2023. For the nine-month period, the cost increased to $1.8 billion from $1.5 billion, marking a 16.1% increase. This rise is primarily attributed to higher commission expenses associated with the growth in premiums written and increased personnel costs.
Investment Income
Erie Indemnity also earns income from investments. In Q3 2024, total investment income was $19.5 million, up 58.9% from $12.3 million in the same quarter of 2023. For the nine months, total investment income rose to $48.5 million from $19.2 million in 2023. This increase was driven by higher net investment income and net realized and unrealized gains compared to the previous year.
| Period | Total Investment Income | Net Investment Income | Net Realized & Unrealized Gains (Losses) |
|---|---|---|---|
| Q3 2024 | $19.5 million | $17.3 million | $2.9 million |
| Q3 2023 | $12.3 million | $14.6 million | ($2.2 million) |
| 9 Months 2024 | $48.5 million | $49.2 million | $3.0 million |
| 9 Months 2023 | $19.2 million | $30.4 million | ($9.2 million) |
Administrative Services Revenue
Administrative services revenue, which includes service agreement revenue and administrative services reimbursement revenue, also contributes to overall earnings. In Q3 2024, administrative services revenue totaled $223.9 million, an increase of 10.2% from Q3 2023. This revenue is recognized over the duration of the service contract, typically four years.
| Period | Administrative Services Revenue | Service Agreement Revenue |
|---|---|---|
| Q3 2024 | $223.9 million | $6.8 million |
| Q3 2023 | $203.3 million | $6.6 million |
| 9 Months 2024 | $655.5 million | $19.8 million |
| 9 Months 2023 | $591.4 million | $19.4 million |
Summary of Financial Performance
For the third quarter of 2024, Erie Indemnity reported a net income of $159.8 million, a 22.0% increase from $131.0 million in Q3 2023. The net income per diluted share increased to $3.06 from $2.51 in the previous year. For the nine months ended September 30, 2024, net income was $448.3 million, a 33.8% increase from $335.1 million in 2023.
| Period | Net Income | Net Income per Share (Diluted) |
|---|---|---|
| Q3 2024 | $159.8 million | $3.06 |
| Q3 2023 | $131.0 million | $2.51 |
| 9 Months 2024 | $448.3 million | $8.57 |
| 9 Months 2023 | $335.1 million | $6.41 |
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Article updated on 8 Nov 2024
Resources:
- Erie Indemnity Company (ERIE) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Erie Indemnity Company (ERIE)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Erie Indemnity Company (ERIE)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.