EX-99 3 exh99-1.txt PRESS RELEASE ISSUED JULY 24, 2003 EXHIBIT 99.1 STATEMENTS OF OPERATIONS AND FINANCIAL POSITION AND OTHER INFORMATION WILL FOLLOW ERIE INDEMNITY COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except per share data) Three months ended June 30, Six months endedd June30, (unaudited) (unaudited) 2003 2002 2003 2002 ---------------------------- --------------------------- OPERATING REVENUE: Management Fee Revenue $ 232,737 $ 206,575 $ 439,983 $ 384,827 Premiums Earned 47,219 40,434 92,401 77,653 Service Agreement Revenue 6,863 7,776 13,347 15,118 ---------- ---------- ---------- ---------- Total operating revenue $ 286,819 $ 254,785 $ 545,731 $ 477,598 ---------- ---------- ---------- ---------- OPERATING EXPENSES: Cost of Management Operations $ 170,087 $ 147,504 $ 324,460 $ 276,296 Losses and Loss Expenses Incurred 39,364 34,050 76,864 63,387 Policy Acquisition and Other Underwriting Expenses 14,135 12,430 27,487 23,927 ---------- ---------- ---------- ---------- Total operating expenses $ 223,586 $ 193,984 $ 428,811 $ 363,610 ---------- ---------- ---------- ---------- OTHER INCOME AND EXPENSES: Investment income, net of expenses $ 14,219 $ 14,133 $ 28,538 $ 26,837 Realized Gains (Losses) on Investments 3,376 (5,801) 3,969 (4,581) Equity in (Losses) Earnings of Limited Partnerships (1,420) 2,221 (2,746) 307 ---------- ---------- ---------- ---------- Total other income and expenses $ 16,175 $ 10,553 $ 29,761 $ 22,563 ---------- ---------- ---------- ---------- Income before income taxes and equity in earnings of Erie Family Life Insurance Company $ 79,408 $ 71,354 $ 146,681 $ 136,551 Less: Provision for Income Taxes 26,522 23,730 48,982 45,441 Equity in Earnings of Erie Family Life Insurance Company, net of tax 1,572 202 2,659 917 ---------- ---------- ---------- ---------- Net income $ 54,458 $ 47,826 $ 100,358 $ 92,027 ========== ========== ========== ========== Net income per share $ 0.77 $ 0.67 $ 1.41 $ 1.29 ========== ========== ========== ========== Weighted average shares outstanding 70,997 71,144 70,997 71,162 ========== ========== ========== ========== DIVIDENDS DECLARED Class A non-voting common $ 0.19 $ 0.17 $ 0.38 $ 0.34 ---------- ---------- ---------- ---------- Class B common $ 28.50 $ 25.50 $ 57.00 $ 51.00 ---------- ---------- ---------- ----------
8 Erie Indemnity Company CONSOLIDATED STATEMENTS OF OPERATIONS - SEGMENT BASIS (Amounts in thousands, except per share data) Three months ended June 30 Six months ended June 30 (unaudited) (unaudited) 2003 2002 2003 2002 -------------------------- ------------------------ MANAGEMENT OPERATIONS Management fee revenue $ 232,737 $ 206,575 $ 439,983 $ 384,827 Service agreement revenue 6,863 7,776 13,347 15,118 ---------- ---------- ---------- ---------- Total revenue from management operations 239,600 214,351 $ 453,330 $ 399,945 Cost of management operations 170,087 147,504 324,460 276,296 ---------- ---------- ---------- ---------- Income from management operations $ 69,513 $ 66,847 $ 128,870 $ 123,649 ---------- ---------- ---------- ---------- INSURANCE UNDERWRITING OPERATIONS Premiums earned $ 47,219 $ 40,434 $ 92,401 $ 77,653 ---------- ---------- ---------- ---------- Losses and loss adjustment expenses incurred 39,364 34,050 $ 76,864 $ 63,387 Policy acquisition and other underwriting expenses 14,135 12,430 27,487 23,927 ---------- ---------- ---------- ---------- Total losses and expenses $ 53,499 $ 46,480 $ 104,351 $ 87,314 ---------- ---------- ---------- ---------- Underwriting loss $ (6,280) $ (6,046) $ (11,950) $ (9,661) ---------- ---------- ---------- ---------- INVESTMENT OPERATIONS Net investment income $ 14,219 $ 14,133 $ 28,538 $ 26,837 Net realized gains (losses) on investments 3,376 (5,801) 3,969 (4,581) Equity in (losses) earnings of limited partnerships (1,420) 2,221 (2,745) 307 Equity in earnings of Erie Family Life Insurance Company 1,690 218 2,859 986 ---------- ---------- ---------- ---------- Net revenue from investment operations $ 17,865 $ 10,771 $ 32,621 $ 23,549 Income before income taxes $ 81,098 $ 71,572 $ 149,541 $ 137,537 Provision for income taxes 26,640 23,746 49,183 45,510 ---------- ---------- ---------- ---------- Net income $ 54,458 $ 47,826 $ 100,358 $ 92,027 ========== ========== ========== ========== Net income per share $ 0.77 $ 0.67 $ 1.41 $ 1.29 ========== ========== ========== ========== Net income excluding net realized gains (losses) and related taxes $ 52,264 $ 51,596 $ 97,778 $ 95,005 ========== ========== ========== ========== WEIGHTED AVERAGE SHARES OUTSTANDING 70,997 71,143 70,997 71,162 ========== ========== ========== ==========
Erie Indemnity Company CONSOLIDATED STATEMENTS OF OPERATIONS - SEGMENT BASIS - Continued (Dollars in thousands) The table below reconciles the Company's GAAP-basis net income to net income excluding net realized gains or losses and related income taxes. Management believes this measure assists the financial statement reader in interpreting and evaluating the financial results of the Company by removing the effects of gain or losses from investment sales, which could significantly impact the Company's financial results from one period to another based on the timing of investment sales and resulting gains or losses, which may or may not be recurring. Three months ended June 30 Six months ended June 30 (unaudited) (unaudited) 2003 2002 2003 2002 --------------------------- ------------------------- Net income $ 54,458 $ 47,826 $ 100,358 $ 92,027 Net realized gains (losses) on investments 3,376 (5,801) 3,969 (4,581) Income tax (expense) benefit on realized gains (losses) (1,182) 2,031 (1,389) 1,603 ---------- ---------- ---------- ---------- Realized gains (losses) net of income tax (expense) benefit 2,194 (3,770) 2,580 (2,978) ---------- ---------- ---------- ---------- Net income excluding net realized gains (losses) and related taxes $ 52,264 $ 51,596 $ 97,778 $ 95,005 ========== ========== ========== ==========
9 Erie Indemnity Company CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Amounts in thousands, except per share data) June 30 December 31 2003 2002 (unaudited) ------------ ----------- ASSETS Investments Fixed maturities $ 784,566 $ 708,068 Equity securities Preferred stock 155,796 157,563 Common stock 40,774 36,515 Other invested assets 106,437 96,613 ----------- ----------- Total investments $ 1,087,573 $ 998,759 Cash and cash equivalents $ 139,820 $ 85,712 Equity in Erie Family Life Insurance Company 59,434 48,545 Premiums receivable from policyholders 268,074 239,704 Receivables from affiliates 928,412 829,049 Other assets 168,024 155,907 ----------- ----------- Total assets $ 2,651,337 $ 2,357,676 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Unpaid losses and loss adjustment expenses $ 780,837 $ 717,015 Unearned premiums 439,214 393,091 Other liabilities 330,123 260,198 ----------- ----------- Total liabilities $ 1,550,174 $ 1,370,304 Total shareholders' equity $ 1,101,163 $ 987,372 ----------- ----------- Total liabilities and shareholders' equity $ 2,651,337 $ 2,357,676 =========== =========== Book value per share $15.51 $13.91 Shares outstanding 70,997 70,997
10 Erie Indemnity Company Segment Information Management fee revenue by line of business: Three months ended June 30 % Six months ended June 30 % 2003 2002 Change 2003 2002 Change (In thousands) ------------------------------------------------------------------------------------ Private passenger auto $ 117,549 $ 107,330 9.5% $ 222,755 $ 201,844 10.4% Commercial auto 20,110 17,718 13.5 39,107 34,185 14.4 Homeowners 39,718 33,541 18.4 67,530 56,313 19.9 Commercial multi-peril 26,392 24,036 9.8 51,445 45,372 13.4 Workers' compensation 20,247 17,674 14.6 42,628 35,778 19.1 All other lines of business 9,721 6,276 54.9 17,918 11,335 58.1 --------------------------------------------------------------------------------- Total $ 233,737 $ 206,575 13.1% $ 441,383 $ 384,827 14.7% Allowance for management fee returned on cancelled policies 1,000 0 0.0 1,400 0 0.0 --------------------------------------------------------------------------------- Total management fee revenue $ 232,737 $ 206,575 12.7% $ 439,983 $ 384,827 14.3% =================================================================================
Growth rate of policies in force for Property and Casualty Group insurance operations: All other Private 12-mth. 12-mth. lines of 12-mth. Total 12-mth. passenger growth growth personal growth Personal growth Date auto rate Homeowners rate business rate Lines rate ------------------------------------------------------------------------------------------------------ 12/31/2001 1,432,747 7.1% 1,075,816 9.0% 215,134 11.5% 2,723,697 8.2% 03/31/2002 1,469,617 8.3 1,104,806 10.1 222,061 12.2 2,796,484 9.3 06/30/2002 1,512,335 9.4 1,146,639 11.4 231,951 13.4 2,890,925 10.5 09/30/2002 1,554,425 10.4 1,190,651 13.1 240,410 14.4 2,985,486 11.8 12/31/2002 1,591,161 11.1 1,230,895 14.4 249,544 16.0 3,071,600 12.8 03/31/2003 1,623,429 10.5 1,263,118 14.3 257,327 15.9 3,143,874 12.4 06/30/2003 1,650,225 9.1 1,293,575 12.8 264,423 14.0 3,208,223 11.0 All other 12-mth. CML* 12-mth. 12-mth. lines of 12-mth. Total 12-mth. CML* growth multi- growth Workers' growth commercial growth Commercial growth auto rate peril rate comp. rate business rate Lines rate ---------------------------------------------------------------------------------------------------------------------------- 12/31/2001 96,100 9.7% 166,214 11.6% 52,033 10.3% 71,539 9.9% 385,886 10.7% 03/31/2002 98,926 10.7 171,283 12.5 53,320 10.8 73,392 10.7 396,921 11.5 06/30/2002 102,447 11.6 179,761 13.9 55,607 11.9 75,884 11.7 413,699 12.6 09/30/2002 105,353 11.8 185,608 14.4 57,375 12.5 78,131 11.5 426,467 13.0 12/31/2002 108,069 12.5 190,787 14.8 58,930 13.3 79,772 11.5 437,558 13.4 03/31/2003 109,963 11.2 194,911 13.8 60,104 12.7 81,356 10.9 446,334 12.4 06/30/2003 112,911 10.2 201,614 12.2 61,932 11.4 83,826 10.5 460,283 11.3 12-mth. Total growth Date All lines rate ------------------------------- 12/31/2001 3,109,583 8.5% 03/31/2002 3,193,405 9.6 06/30/2002 3,304,624 10.8 09/30/2002 3,411,953 11.9 12/31/2002 3,509,158 12.8 03/31/2003 3,590,208 12.4 06/30/2003 3,668,506 11.0 *CML = Commercial
11 Policy retention trends for Property and Casualty Group insurance operations: Private All other passenger CML* CML* Workers' lines of Date auto auto Homeowners multi-peril comp. business Total ------------------------------------------------------------------------------------------------------------------- 12/31/2001 92.2% 90.5% 90.2% 88.0% 88.4% 88.2% 90.9% 03/31/2002 92.3 90.9 90.2 88.8 89.3 88.1 90.9 06/30/2002 92.4 91.1 90.4 89.0 89.5 88.3 91.0 09/30/2002 92.5 90.8 90.5 88.7 89.5 88.2 91.1 12/31/2002 92.6 91.0 90.5 88.7 89.4 88.5 91.2 03/31/2003 92.5 91.3 90.6 89.1 90.2 88.5 91.2 06/30/2003 92.2 91.1 90.5 88.4 89.4 88.4 91.0 *CML = Commercial
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 the opinion of management, 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. Three months ended Six months ended -------------------------- -------------------------- (In thousands) June 30, June 30, June 30, June 30, Statutory Accounting Basis 2003 2002 2003 2002 -------------------------- -------------------------- (unaudited) (unaudited) Premiums earned $ 832,147 $ 719,877 $ 1,634,794 $ 1,386,306 -------------------------- -------------------------- Losses and loss adjustment expenses $ 643,028 $ 601,741 $ 1,322,883 $ 1,117,656 Insurance underwriting and other expenses 266,195 246,679 508,865 466,009 -------------------------- -------------------------- Net underwriting loss $ (77,076) $ (128,543) $ (196,954) $ (197,359) -------------------------- -------------------------- Net investment income 57,110 60,256 111,175 113,999 Net realized gains (losses) 111,569 (71,998) 78,214 (74,834) Federal income tax benefit (5,151) (25,809) (46,681) (36,184) -------------------------- -------------------------- Net loss $ 96,754 $ (114,476) $ 39,116 $ (122,010) ========================== ==========================
As of (In thousands) June 30, December 31, Statutory Accounting Basis 2003 2002 ------------ ------------ (unaudited) Cash and invested assets $ 6,585,491 $ 5,967,051 Total assets 7,633,674 7,007,803 =========== =========== Claims and unearned premium reserves 4,316,262 3,962,218 Total liabilities 5,342,289 4,892,032 =========== =========== Policyholders' surplus $ 2,291,385 $ 2,115,771 =========== =========== 12