| | | | 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]

Business Model and Strategy - The Exchange's business model focuses on localized marketing and claims servicing while leveraging centralized support services[22]. - The Exchange's strategic focus includes disciplined underwriting and leveraging a strong surplus position for higher risk-adjusted investment returns[23]. - The Exchange's insurance products are marketed exclusively through independent agents, which influences competitive dynamics[20]. - The Exchange's principal personal lines products include private passenger automobile and homeowners insurance[16]. Financial Performance and Revenue - The Exchange's direct and affiliated assumed written premiums are composed of 71% personal lines and 29% commercial lines for 2024[16]. - The management fee revenue is calculated by multiplying the management fee rate, which may not exceed 25%, by the direct and affiliated assumed premiums written by the Exchange[42]. - The Exchange's revenue generation is primarily dependent on management fees from the premiums written, making it vulnerable to fluctuations in premium volume[41]. - The Exchange's management fee revenue is largely dependent on the direct and affiliated assumed premiums written by the Exchange, which could be adversely affected by unfavorable macroeconomic conditions[44][45]. Employee and Workforce Management - The workforce size increased to 6,715 full-time employees in 2024, up from 6,481 in 2023[30]. - The turnover rate decreased to 8.2% in 2024 from 9.0% in 2023, indicating improved employee retention[30]. - The Exchange's ability to attract and retain talented executives and employees is critical for executing business strategies and maintaining performance[63][64]. Competition and Market Conditions - The Exchange faces significant competition in the property and casualty insurance industry, which may impact its ability to grow and renew business if it cannot keep pace with competitors' innovations[48]. - Deteriorating market conditions may limit access to additional financing or increase financing costs, affecting profitability[83]. Investment and Financial Risks - The Exchange's investment portfolio is primarily composed of fixed income securities, equity securities, and limited partnerships, exposing it to various investment risks[53]. - The investment portfolio consists of approximately 84% fixed maturity securities and 16% equity securities and other investments as of December 31, 2024[76]. - The performance of the investment portfolio is subject to various risks, including interest rate risk and investment credit risk[78]. - Sufficient liquidity and capital levels are necessary to fund growth opportunities and meet financial obligations[82]. - Primary sources of liquidity include management fee revenue and cash flows from the investment portfolio[83]. Operational and Compliance Risks - The operational costs are significantly impacted by commissions to independent agents, which are its largest expense category[61]. - The company is investing in technological developments to improve employee, agent, and customer experiences, which may negatively impact profitability in the short term[62]. - The company faces significant risks related to cyber threats, which could lead to legal, reputational, or financial losses[70]. - The company maintains cyber liability insurance, but it may not cover all costs associated with cyber incidents, and such insurance could become prohibitively expensive[70]. - Business continuity and disaster recovery plans are in place, but there is no assurance that core business operations can be maintained during catastrophic events[71]. - The company is subject to extensive regulations, and compliance may increase costs or impose operational limitations[74]. - The company may face significant litigation risks, including class action lawsuits and regulatory investigations[75]. Data and Claims Risks - The accuracy and sufficiency of data used for pricing policies and financial analysis are essential; inaccuracies could lead to poor business decisions and financial performance[67]. - The financial position could be adversely affected by claims arising from natural catastrophes, with changing climate conditions increasing uncertainty[59].

Financial Performance - Total operating revenue for Q4 2024 reached $924.09 million, a 13.0% increase from $817.67 million in Q4 2023[2] - Net income for the twelve months ended December 31, 2024, was $600.31 million, up 34.4% from $446.06 million in 2023[2] - Class A common stock diluted net income per share increased to $2.91 in Q4 2024, compared to $2.12 in Q4 2023, representing a 37.0% growth[2] - Total operating expenses for Q4 2024 were $756.78 million, a 9.6% increase from $690.58 million in Q4 2023[2] - Net investment income for the twelve months ended December 31, 2024, was $70.16 million, a 57.5% increase from $44.57 million in 2023[2] - Dividends declared per share for Class A common stock increased to $1.365 in Q4 2024, compared to $1.275 in Q4 2023, reflecting a 7.1% increase[2] Balance Sheet - Total assets as of December 31, 2024, were $2.89 billion, a 16.9% increase from $2.47 billion in 2023[4] - Total liabilities as of December 31, 2024, were $901.36 million, up 11.4% from $809.13 million in 2023[4] - Shareholders' equity increased to $1.99 billion in 2024, a 19.5% increase from $1.66 billion in 2023[4] - Cash and cash equivalents increased to $298.40 million in 2024, up 107.2% from $144.06 million in 2023[4]

Core Viewpoint - Erie Indemnity Company reported significant growth in net income and operating income for both the fourth quarter and the full year of 2024 compared to 2023, indicating strong financial performance and operational efficiency. Financial Performance - Net income for 2024 was $600.3 million, or $11.48 per diluted share, up from $446.1 million, or $8.53 per diluted share in 2023 [1][2] - In the fourth quarter of 2024, net income was $152.0 million, or $2.91 per diluted share, compared to $110.9 million, or $2.12 per diluted share in the fourth quarter of 2023 [1][2] Operating Income - Operating income before taxes increased by $156.2 million, or 30.0 percent, in 2024 compared to 2023 [3] - For the fourth quarter of 2024, operating income before taxes rose by $40.2 million, or 31.7 percent, compared to the same quarter in 2023 [5] Revenue Breakdown - Management fee revenue from policy issuance and renewal services increased by $452.0 million, or 18.5 percent, in 2024 compared to 2023 [6] - In the fourth quarter of 2024, management fee revenue from policy issuance and renewal services rose by $96.7 million, or 16.1 percent, compared to the fourth quarter of 2023 [7] Investment Income - Income from investments before taxes totaled $69.3 million in 2024, up from $29.0 million in 2023 [4] - Net investment income was $70.2 million in 2024 compared to $44.6 million in 2023 [4] Cost of Operations - Total operating expenses for 2024 were $3,118.7 million, an increase from $2,748.7 million in 2023 [15] - Commissions increased by $252.9 million in 2024 compared to 2023, driven by growth in direct and affiliated assumed written premium [6] Assets and Liabilities - Total assets as of December 31, 2024, were $2,888.6 million, compared to $2,471.9 million in 2023 [16] - Total liabilities increased to $901.4 million in 2024 from $809.1 million in 2023 [16]