Erie Indemnity Company (NASDAQ:ERIE) Q1 2025 Earnings Conference Call April 25, 2025 10:00 AM ET Company Participants Scott Beilharz - Vice President- Investor Relations Tim NeCastro - President and Chief Executive Officer Julie Pelkowski - Executive Vice President and Chief Financial Officer Conference Call Participants Operator Good morning, and welcome to the Erie Indemnity Company First Quarter 2025 Earnings Conference Call. This call was prerecorded, and there will be no question-and-answer session fol ...

Erie Indemnity (ERIE) came out with quarterly earnings of $2.65 per share, missing the Zacks Consensus Estimate of $3.19 per share. This compares to earnings of $2.38 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -16.93%. A quarter ago, it was expected that this insurance company would post earnings of $2.82 per share when it actually produced earnings of $2.91, delivering a surprise of 3.19%.Over the last four quarters, the ...

Portfolio and Asset Management - The company reported no material changes in its portfolio or asset allocations during the three months ended March 31, 2025, despite ongoing geopolitical risks and economic uncertainties[157]. - The company continues to monitor the economic environment and financial markets to minimize potential risk exposure to cash and investment balances[157]. Stock Repurchase Program - The stock repurchase program authorized a total of $150 million with no time limitation, with 4,894 shares repurchased at an average price of $424.35 during the quarter ending March 31, 2025[175]. - The average price paid for shares repurchased in January 2025 was $379.88, while in March 2025, it was $446.47[175]. Legal Proceedings - The company intends to vigorously defend against allegations in ongoing legal proceedings related to fiduciary duty breaches, with the most recent complaint filed in December 2021[161]. - The company has been involved in multiple legal actions regarding management fees, with claims for damages to be determined at trial[162]. - The company filed a Petition for Writ of Certiorari with the Supreme Court of the United States regarding federal jurisdiction, which was denied on February 26, 2024[169]. - The company is awaiting a decision on an appeal related to a preliminary injunction that would prevent further state court proceedings on the same issues[171]. Internal Controls and Disclosure - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures are effective as of the end of the reporting period[158]. - There have been no changes in internal control over financial reporting that materially affected the company during the three months ended March 31, 2025[159].

| | | | Three months ended March 31, | | | --- | --- | --- | --- | --- | | | | 2025 | | 2024 | | | | | (Unaudited) | | | Operating revenue | | | | | | Management fee revenue - policy issuance and renewal services | $ | 755,049 | $ | 665,686 | | Management fee revenue - administrative services | | 17,645 | | 16,934 | | Administrative services reimbursement revenue | | 210,273 | | 191,567 | | Service agreement revenue | | 6,432 | | 6,514 | | Total operating revenue | | 989,399 | | 880,701 | | Operating expens ...

Net Income was $138.4 million, Earnings per Diluted Share was $2.65ERIE, Pa., April 24, 2025 /PRNewswire/ -- Erie Indemnity Company (NASDAQ: ERIE) today announced financial results for the quarter ending March 31, 2025.  Net income was $138.4 million, or $2.65 per diluted share, in the first quarter of 2025, compared to $124.6 million, or $2.38 per diluted share, in the first quarter of 2024. 1Q 2025 (in thousands) 1Q'25 1Q'24 Operating income $      151,376 $      138,812 Investment income ...

Company Announcement - Erie Indemnity Company will host a pre-recorded audio webcast to discuss its financial results for the first quarter on April 25th at 10 a.m. Eastern Time [1] - A press release detailing the financial results will be issued after the market closes on April 24th [1] Access Information - Participants can access the pre-recorded audio via phone by registering through a provided link and are encouraged to join the call fifteen minutes early to avoid delays [2] - Individuals can subscribe to receive Erie Indemnity financial news via email by visiting the company's website [2] Company Overview - Erie Insurance Group is the 12th largest homeowners insurer, 13th largest automobile insurer, and 13th largest commercial lines insurer in the U.S. based on direct premiums written [3] - Founded in 1925, Erie Insurance is a Fortune 500 company and ranks as the 17th largest property/casualty insurer in the U.S. based on total lines net premium written [3] - The company holds an A+ (Superior) rating from A.M. Best and has over 7 million policies in force, operating in 12 states and the District of Columbia [3]

Core Viewpoint - Growth investors are increasingly focused on identifying stocks with above-average financial growth, which can lead to solid returns, but finding such stocks can be challenging due to inherent risks and volatility [1] Group 1: Company Overview - Erie Indemnity (ERIE) is highlighted as a promising growth stock, supported by a favorable Growth Score and a top Zacks Rank [2] - The company has a historical EPS growth rate of 15.3%, with projected EPS growth of 24.9% this year, significantly outperforming the industry average of 14.5% [4] Group 2: Financial Metrics - Erie Indemnity has an impressive asset utilization ratio (sales-to-total-assets ratio) of 1.38, indicating that the company generates $1.38 in sales for every dollar in assets, compared to the industry average of 0.38 [5] - The company's sales are expected to grow by 11.7% this year, exceeding the industry average growth of 8.4% [6] Group 3: Earnings Estimates - There is a positive trend in earnings estimate revisions for Erie Indemnity, with the current-year earnings estimates increasing by 0.3% over the past month [7] - The combination of a Zacks Rank 2 and a Growth Score of A positions Erie Indemnity favorably for potential outperformance in the market [9]

Core Viewpoint - Investors are seeking growth stocks that can deliver above-average growth and exceptional returns, but identifying such stocks can be challenging due to inherent risks and volatility [1] Group 1: Growth Stock Identification - The Zacks Growth Style Score system aids in identifying promising growth stocks by analyzing real growth prospects beyond traditional metrics [2] - Erie Indemnity (ERIE) is currently recommended due to its favorable Growth Score and top Zacks Rank [2] Group 2: Earnings Growth - Earnings growth is a critical factor for growth investors, with double-digit growth seen as a strong indicator of future stock price gains [3] - Erie Indemnity has a historical EPS growth rate of 15.3%, with projected EPS growth of 24.9% this year, significantly surpassing the industry average of 10.6% [4] Group 3: Cash Flow Growth - High cash flow growth is essential for growth-oriented companies, allowing them to fund new projects without external financing [5] - Erie Indemnity's year-over-year cash flow growth is 32.9%, exceeding the industry average of 26.8% [5] - The company's annualized cash flow growth rate over the past 3-5 years is 13.8%, compared to the industry average of 7.6% [6] Group 4: Earnings Estimate Revisions - Positive trends in earnings estimate revisions correlate strongly with near-term stock price movements [7] - Current-year earnings estimates for Erie Indemnity have been revised upward, with the Zacks Consensus Estimate increasing by 0.3% over the past month [8] Group 5: Overall Positioning - Erie Indemnity holds a Zacks Rank of 2 and a Growth Score of A, positioning it well for potential outperformance in the growth stock category [10]

Core Viewpoint - Erie Indemnity (ERIE) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive trend in earnings estimates which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on changes in earnings estimates, which are closely correlated with near-term stock price movements [4][6]. - An increase in earnings estimates typically leads to higher fair value calculations by institutional investors, resulting in buying or selling actions that affect stock prices [4]. Company Performance Indicators - For the fiscal year ending December 2025, Erie Indemnity is projected to earn $14.34 per share, reflecting a 24.9% increase from the previous year [8]. - Over the past three months, the Zacks Consensus Estimate for Erie Indemnity has risen by 0.3%, indicating a positive outlook from analysts [8]. Zacks Rating System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with only the top 20% receiving a 'Strong Buy' or 'Buy' rating [9][10]. - The upgrade of Erie Indemnity to a Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [10].

Financial Data and Key Metrics Changes - In 2024, Erie Indemnity Company reported net income of $600 million, an increase from just over $446 million in 2023, representing a growth of approximately 34.4% [7][16] - The net income for the fourth quarter of 2024 was $152 million, compared to nearly $111 million in the same period of 2023, marking a 37% increase [16] - The combined ratio for the Exchange improved to 105.7% in Q4 2024 from 111.4% in Q4 2023, and for the full year, it was 110.4%, down from 119.1% in 2023 [14][16] Business Line Data and Key Metrics Changes - Direct written premiums for Erie Insurance Exchange grew by 16% in Q4 2024 and over 18% for the full year compared to the previous year [11] - The total average premium per policy increased by over 13% in 2024 compared to 2023 [12] - Policies in force grew by 4.8% to over 7 million in 2024, although this was a slowdown from 6.9% growth in 2023 [12] Market Data and Key Metrics Changes - Catastrophe losses contributed 9.6 percentage points to the 2024 combined ratio, down from 12.6 percentage points in 2023, indicating a reduction in the impact of weather events [15] - Policyholder retention remained strong at 90.4% [12] Company Strategy and Development Direction - The company is focusing on modernizing technology platforms and processes, which is seen as foundational for future growth and geographic expansion [23][24] - Recent initiatives include migrating legacy systems to modern platforms and enhancing product offerings, such as the expansion of workers' compensation coverage and the launch of Business Auto 2.0% [24][26] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the volatility in the economy, climate, and legal landscape affecting the industry, emphasizing the need for adaptation [23] - The modernization efforts are expected to improve operational efficiency and support future growth [24] Other Important Information - In 2024, the company paid over $237 million in dividends, with a 7.1% increase in the regular quarterly cash dividend approved for 2025 [22] - Erie was recognized as a top 100 employer for workplace culture and received accolades for its internship program [28][29] - Two senior leaders were promoted to executive vice presidents, enhancing the leadership team as the company approaches its centennial [30][31] Summary of Q&A Session Questions and Answers - There was no question and answer session following the recorded call, so no specific questions or answers are available [1]