Erie Indemnity(US:ERIE)2020-07-31 01:34Financial Performance - Operating income decreased by 5.6% to $91.2 million in Q2 2020 compared to Q2 2019, and by 3.2% to $176.9 million for the six months ended June 30, 2020[137]. - Net income decreased by 6.6% to $82.0 million in Q2 2020, and by 13.3% to $141.3 million for the six months ended June 30, 2020[137]. - Total investment income increased by 19.7% to $11.6 million in Q2 2020 compared to Q2 2019, but decreased by 87.9% to $2.4 million for the six months ended June 30, 2020[137]. - Net investment income decreased by $0.7 million to $7.373 million in Q2 2020, and by $0.8 million to $15.742 million for the six months ended June 30, 2020, compared to the same periods in 2019[179]. - Total investment income increased by 19.7% to $11.553 million in Q2 2020, but decreased by 87.9% to $2.358 million for the six months ended June 30, 2020, compared to the same periods in 2019[179]. Revenue and Premiums - Management fee revenue for policy issuance and renewal services increased by 0.7% to $483.8 million in Q2 2020, and by 1.8% to $927.5 million for the six months ended June 30, 2020[139]. - Premiums generated from new business decreased by 18.6% to $190 million in Q2 2020, while renewal business premiums increased by 3.0% to $1.8 billion[157]. - Direct and affiliated assumed premiums written by the Exchange increased by 0.5% to $2.0 billion in Q2 2020, and by 1.9% to $3.9 billion for the six months ended June 30, 2020[147]. - Total commercial lines premiums written decreased by 0.1% to $579 million in Q2 2020 compared to Q2 2019, with a 1.2% increase in policies in force and a 3.3% increase in average premium per policy[159]. - Statutory direct written premiums grew by 1.9% to $3.9 billion for the six months ended June 30, 2020, compared to the same period in 2019[187]. Costs and Expenses - Cost of operations for policy issuance and renewal services increased by 2.2% to $413.9 million in Q2 2020, primarily due to higher agent incentives[140]. - Non-commission expenses increased by $3.6 million in Q2 2020, with information technology costs rising by $2.3 million due to remote work support[173]. - Claims handling services expenses increased by 3.3% to $131.474 million in Q2 2020 compared to $127.296 million in Q2 2019[175]. Impact of COVID-19 - The ongoing COVID-19 pandemic has created uncertainty in economic conditions, potentially affecting premium revenue and management fees[143]. - The ongoing COVID-19 pandemic may negatively impact the Exchange's premiums and management fees due to recessionary conditions and changes in consumer activity[161]. - The company incurred additional technology costs to support remote working conditions, which may continue to increase due to the pandemic[135]. Investment and Cash Flow - The carrying value of total investments increased to $963.173 million as of June 30, 2020, from $893.735 million at December 31, 2019[191]. - Net cash provided by operating activities was $127.3 million in the first six months of 2020, an increase of 11.6% compared to $114.4 million in the same period in 2019[201][204]. - Net cash used in investing activities was $115.4 million in the first six months of 2020, compared to net cash provided of $42.2 million in the same period in 2019[202][204]. - Net cash used in financing activities totaled $90.9 million in the first six months of 2020, with dividends paid to shareholders amounting to $89.9 million, a 7.2% increase from $83.8 million in 2019[203][204]. Shareholder Information - The company purchased 26,410 shares of Class A nonvoting common stock at a total cost of $4.6 million during the first six months of 2020[208]. - There were no repurchases of Class A nonvoting common stock under the stock repurchase program in the first six months of 2020[207]. - The company remains in compliance with bank covenants as of June 30, 2020[212].