8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): October 25, 2018

Erie Indemnity Company

__________________________________________

(Exact name of registrant as specified in its charter)

Pennsylvania	0-24000	25-0466020
_____________________ (State or other jurisdiction	_____________ (Commission	______________ (I.R.S. Employer
of incorporation)	File Number)	Identification No.)
100 Erie Insurance Place, Erie, Pennsylvania		16530
_______________________________ (Address of principal executive offices)		___________ (Zip Code)

Registrant’s telephone number, including area code: (814) 870-2000

Not Applicable

______________________________________________

Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934. [  ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange

Act. [  ]

Item 2.02 Results of Operations and Financial Condition.

On October 25, 2018, Erie Indemnity Company (the "Company") issued a press release announcing financial results for the quarter and nine months ended September 30, 2018. Copies of the press release and financial information are attached hereto and are incorporated herein by reference as Exhibit 99.1 and Exhibit 99.2, respectively.

On October 26, 2018 at 10:00 a.m. the Company will provide a pre-recorded Webcast that is complimentary to the press release announcing financial results for the quarter and nine months ended September 30, 2018.

Item 9.01 Financial Statements and Exhibits.

Exhibit 99.1 Press Release

Exhibit 99.2 Financial Information

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Erie Indemnity Company
October 25, 2018	By:	/s/ Gregory J. Gutting
		Name: Gregory J. Gutting
		Title: Executive Vice President & CFO

Exhibit Index

Exhibit No.	Description
99.1	Press Release
99.2	Financial Information

EX-99.1

Exhibit 99.1

Erie Indemnity Reports Third Quarter 2018 Results

Net Income per Diluted Share up 37.4 percent for the Quarter and 37.0 percent Year to Date

Erie, Pa. - October 25, 2018 - Erie Indemnity Company (NASDAQ: ERIE) today announced financial results for the quarter ending September 30, 2018. Net income was $80.4 million, or $1.54 per diluted share, in the third quarter of 2018, compared to $58.5 million, or $1.12 per diluted share, in the third quarter of 2017. Net income was $225.9 million, or $4.32 per diluted share, in the first nine months of 2018, compared to $164.9 million, or $3.15 per diluted share, in the first nine months of 2017.

3Q and Nine Months 2018
(dollars in thousands)	3Q'18		3Q'17		2018		2017
Operating income	$	96,695	$	81,239	$	269,585	$	231,627
Investment income	8,431		8,418		20,801		21,458
Interest expense and other, net	655		792		1,708		2,031
Income before income taxes	104,471		88,865		288,678		251,054
Income tax expense	24,025		30,322		62,768		86,108
Net income	$	80,446	$	58,543	$	225,910	$	164,946

3Q 2018 Highlights

Operating income before taxes increased $15.5 million, or 19.0 percent, in the third quarter of 2018 compared to the third quarter of 2017, as the growth in total operating revenue outpaced the growth in total operating expenses.

• Management fee revenue - policy issuance and renewal services increased $16.1 million, or 3.7 percent, in the third quarter of 2018 compared to the third quarter of 2017.

• Management fee revenue allocated to administrative services was $13.5 million in the third quarter of 2018. No management fee revenue was allocated to administrative services in the third quarter of 2017.

• Cost of operations - policy issuance and renewal services

– Commissions increased $8.1 million in the third quarter of 2018 compared to the third quarter of 2017, as a result of the 7.1 percent increase in direct and assumed premiums written by the Exchange, slightly offset by lower agent incentive costs related to less profitable growth, compared to the third quarter of 2017.

– Non-commission expense increased $5.9 million in the third quarter of 2018 compared to the same period in 2017. Information technology costs increased $4.0 million primarily due to higher professional fees. Administrative and other expenses increased $2.4 million primarily due to higher professional fees and personnel costs. Personnel costs in all expense categories were impacted by lower estimated costs for incentive plan awards related to underwriting performance.

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• The administrative services reimbursement revenue and corresponding cost of operations increased both total operating revenue and total operating expenses by $140.2 million in the third quarter of 2018, but had no net impact on operating income.

Income from investments before taxes totaled $8.4 million in both the third quarters of 2018 and 2017. Net investment income was $7.7 million in the third quarter of 2018 compared to $6.0 million in the third quarter of 2017, while earnings on limited partnerships were $0.8 million in the third quarter of 2018 compared to $1.5 million in the third quarter of 2017.

Income before income taxes increased $15.6 million in the third quarter of 2018, while income tax expense decreased $6.3 million in the third quarter of 2018, due to the lower income tax rate of 21% which became effective January 1, 2018.

Nine Months 2018 Highlights

Operating income before taxes increased $38.0 million, or 16.4 percent, in the first nine months of 2018 compared to the first nine months of 2017, as the growth in total operating revenue outpaced the growth in total operating expenses.

• Management fee revenue - policy issuance and renewal services increased $43.3 million, or 3.4 percent, in the first nine months of 2018 compared to the first nine months of 2017.

• Management fee revenue allocated to administrative services was $39.9 million in the first nine months of 2018. No management fee revenue was allocated to administrative services in the first nine months of 2017.

• Cost of operations - policy issuance and renewal services

– Commissions increased $31.9 million in the first nine months of 2018 compared to the first nine months of 2017, as a result of the 6.9 percent increase in direct and assumed premiums written by the Exchange, slightly offset by lower agent incentive costs related to less profitable growth, compared to the first nine months of 2017.

– Non-commission expense increased $12.9 million for the nine months ended September 30, 2018 compared to the same period in 2017. Underwriting and policy processing costs increased $5.3 million primarily due to increased personnel costs and underwriting report costs. Information technology costs increased $2.7 million primarily due to increased personnel costs. Customer service costs increased $3.4 million primarily due to increased personnel costs and credit card processing fees. Personnel costs in all expense categories were higher due to additional bonuses of approximately $4.8 million awarded to all employees as a result of tax savings realized from the lower corporate income tax rate that became effective January 1, 2018 as well as increased pension and medical costs. The total increase in personnel costs was somewhat offset by lower estimated costs for incentive plan awards related to underwriting performance.

• The administrative services reimbursement revenue and corresponding cost of operations increased both total operating revenue and total operating expenses by $432.6 million in the first nine months of 2018, but had no net impact on operating income.

Income from investments before taxes totaled $20.8 million in the first nine months of 2018 compared to $21.5 million in the first nine months of 2017. Net realized losses on investments were $0.5 million in the first nine months of 2018

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compared to net realized gains of $1.5 million in the first nine months of 2017 and earnings on limited partnerships were $0.4 million in the first nine months of 2018 compared to $1.9 million in the first nine months of 2017, while net investment income was $21.6 million in the first nine months of 2018 compared to $18.2 million in the first nine months of 2017.

Income before income taxes increased $37.6 million in the first nine months of 2018, while income tax expense decreased $23.3 million in the first nine months of 2018, due to the lower income tax rate of 21% which became effective January 1, 2018.

Webcast Information

Indemnity has scheduled a pre-recorded audio broadcast on the Web for 10:00 AM ET on October 26, 2018.  Investors may access the pre-recorded audio broadcast by logging on to www.erieinsurance.com.

Erie Insurance Group

According to A.M. Best Company, Erie Insurance Group, based in Erie, Pennsylvania, is the 9^th largest homeowners insurer and 11^th largest automobile insurer in the United States based on direct premiums written and the 16^th largest property/casualty insurer in the United States based on total lines net premium written.  The Group, rated A+ (Superior) by A.M. Best Company, has more than 5 million policies in force and operates in 12 states and the District of Columbia. Erie Insurance Group is a FORTUNE 500 company.

News releases and more information about Erie Insurance Group are available at www.erieinsurance.com.

***

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995:

Statements contained herein that are not historical fact are forward-looking statements and, as such, are subject to risks and uncertainties that could cause actual events and results to differ, perhaps materially, from those discussed herein.  Forward-looking statements relate to future trends, events or results and include, without limitation, statements and assumptions on which such statements are based that are related to our plans, strategies, objectives, expectations, intentions, and adequacy of resources.  Examples of forward-looking statements are discussions relating to premium and investment income, expenses, operating results, and compliance with contractual and regulatory requirements.  Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict.  Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements.  Among the risks and uncertainties, in addition to those set forth in our filings with the Securities and Exchange Commission, that could cause actual results and future events to differ from those set forth or contemplated in the forward-looking statements include the following:

• dependence upon our relationship with the Exchange and the management fee under the agreement with the subscribers at the Exchange;

• dependence upon our relationship with the Exchange and the growth of the Exchange, including:

◦ general business and economic conditions;

◦ factors affecting insurance industry competition;

◦ dependence upon the independent agency system; and

◦ ability to maintain our reputation for customer service;

• dependence upon our relationship with the Exchange and the financial condition of the Exchange, including:

◦ the Exchange's ability to maintain acceptable financial strength ratings;

◦ factors affecting the quality and liquidity of the Exchange's investment portfolio;

◦ changes in government regulation of the insurance industry;

◦ emerging claims and coverage issues in the industry; and

◦ severe weather conditions or other catastrophic losses, including terrorism;

• costs of providing policy issuance and renewal services to the Exchange under the subscriber's agreement;

• credit risk from the Exchange;

• ability to attract and retain talented management and employees;

• ability to ensure system availability and effectively manage technology initiatives;

• difficulties with technology or data security breaches, including cyber attacks;

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• ability to maintain uninterrupted business operations;

• factors affecting the quality and liquidity of our investment portfolio;

• our ability to meet liquidity needs and access capital; and

• outcome of pending and potential litigation.

A forward-looking statement speaks only as of the date on which it is made and reflects our analysis only as of that date.  We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changes in assumptions, or otherwise.

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EX-99.2

Exhibit 99.2

Erie Indemnity Company

Statements of Operations

(dollars in thousands, except per share data)

	Three months ended September 30,					Nine months ended September 30,
	2018		2017			2018			2017
	(Unaudited)					(Unaudited)
Operating revenue
Management fee revenue - policy issuance and renewal services, net	$	451,361	$	435,214		$	1,311,911		$	1,268,591
Management fee revenue - administrative services, net	13,521		—			39,894			—
Administrative services reimbursement revenue	140,172		—			432,642			—
Service agreement revenue	7,072		7,278			21,297			21,781
Total operating revenue	612,126		442,492			1,805,744			1,290,372
Operating expenses
Cost of operations - policy issuance and renewal services	375,259		361,253			1,103,517			1,058,745
Cost of operations - administrative services	140,172		—			432,642			—
Total operating expenses	515,431		361,253			1,536,159			1,058,745
Operating income	96,695		81,239			269,585			231,627
Investment income
Net investment income	7,659		5,982			21,583			18,202
Net realized investment gains (losses)	0		899			(497		)	1,539
Net impairment losses recognized in earnings	0		0			(646		)	(182		)
Equity in earnings of limited partnerships	772		1,537			361			1,899
Total investment income	8,431		8,418			20,801			21,458
Interest expense, net	709		377			1,864			800
Other income (expense)	54		(415		)	156			(1,231		)
Income before income taxes	104,471		88,865			288,678			251,054
Income tax expense	24,025		30,322			62,768			86,108
Net income	$	80,446	$	58,543		$	225,910		$	164,946
Net income per share
Class A common stock – basic	$	1.73	$	1.26		$	4.85		$	3.54
Class A common stock – diluted	$	1.54	$	1.12		$	4.32		$	3.15
Class B common stock – basic	$	259	$	189		$	728		$	531
Class B common stock – diluted	$	259	$	189		$	727		$	531
Weighted average shares outstanding – Basic
Class A common stock	46,188,941		46,188,949			46,188,522			46,186,109
Class B common stock	2,542		2,542			2,542			2,542
Weighted average shares outstanding – Diluted
Class A common stock	52,317,438		52,316,876			52,313,642			52,342,450
Class B common stock	2,542		2,542			2,542			2,542
Dividends declared per share
Class A common stock	$	0.8400	$	0.7825		$	2.5200		$	2.3475
Class B common stock	$	126.000	$	117.375		$	378.000		$	352.125

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Erie Indemnity Company

Statements of Financial Position

(in thousands)

	September 30, 2018		December 31, 2017
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	244,688	$	215,721
Available-for-sale securities	105,031		71,190
Receivables from Erie Insurance Exchange and affiliates	463,620		418,328
Prepaid expenses and other current assets	44,014		34,890
Federal income taxes recoverable	0		29,900
Note receivable from Erie Family Life Insurance Company	25,000		25,000
Accrued investment income	6,504		6,853
Total current assets	888,857		801,882
Available-for-sale securities	599,164		687,523
Equity securities	12,511		—
Limited partnership investments	37,088		45,122
Fixed assets, net	121,684		83,149
Deferred income taxes, net	37,660		19,390
Other assets	62,539		28,793
Total assets	$	1,759,503	$	1,665,859
Liabilities and shareholders' equity
Current liabilities:
Commissions payable	$	257,015	$	228,124
Agent bonuses	79,308		122,528
Accounts payable and accrued liabilities	113,204		104,533
Dividends payable	39,119		39,116
Contract liability	34,086		—
Deferred executive compensation	11,071		15,605
Federal income taxes payable	9,310		0
Current portion of long-term borrowings	1,395		0
Total current liabilities	544,508		509,906
Defined benefit pension plans	154,736		207,530
Employee benefit obligations	69		423
Contract liability	17,903		—
Deferred executive compensation	13,104		14,452
Long-term borrowings	98,332		74,728
Other long-term liabilities	9,828		1,476
Total liabilities	838,480		808,515
Shareholders’ equity	921,023		857,344
Total liabilities and shareholders’ equity	$	1,759,503	$	1,665,859

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