10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from___to___

Commission file number 0-24000

ERIE INDEMNITY COMPANY

(Exact name of registrant as specified in its charter)

Pennsylvania	25-0466020
(State or other jurisdiction of	(IRS Employer
incorporation or organization)	Identification No.)

100 Erie Insurance Place,	Erie,	Pennsylvania	16530
(Address of principal executive offices)			(Zip Code)

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

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Class A common stock,	stated value $0.0292 per share	ERIE	NASDAQ Stock Market, LLC
(Title of each class)		(Trading Symbol)	(Name of each exchange on which registered)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.  See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	☒	Accelerated filer	☐	Non-accelerated filer	☐
Smaller reporting company	☐	Emerging growth company	☐

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the registrant’s Class A Common Stock as of the latest practicable date was 46,189,068 at October 11, 2019.

The number of shares outstanding of the registrant’s Class B Common Stock as of the latest practicable date was 2,542 at October 11, 2019.

PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Statements of Operations – Three and nine months ended September 30, 2019 and 2018
	Statements of Comprehensive Income – Three and nine months ended September 30, 2019 and 2018
	Statements of Financial Position – September 30, 2019 and December 31, 2018
	Statements of Shareholders' Equity – Three and nine months ended September 30, 2019 and 2018
	Statements of Cash Flows – Nine months ended September 30, 2019 and 2018
	Notes to Financial Statements – September 30, 2019
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3.	Quantitative and Qualitative Disclosures About Market Risk
Item 4.	Controls and Procedures
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings
Item 1A.	Risk Factors
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds
Item 6.	Exhibits
	SIGNATURES

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ERIE INDEMNITY COMPANY

STATEMENTS OF OPERATIONS (UNAUDITED)

(dollars in thousands, except per share data)

	Three months ended					Nine months ended
	September 30,					September 30,
	2019			2018		2019			2018
Operating revenue
Management fee revenue - policy issuance and renewal services, net	$	474,427		$	451,361	$	1,385,923		$	1,311,911
Management fee revenue - administrative services, net	14,430			13,521		42,576			39,894
Administrative services reimbursement revenue	142,730			140,172		431,305			432,642
Service agreement revenue	7,155			7,072		20,754			21,297
Total operating revenue	638,742			612,126		1,880,558			1,805,744
Operating expenses
Cost of operations - policy issuance and renewal services	390,105			375,259		1,160,614			1,103,517
Cost of operations - administrative services	142,730			140,172		431,305			432,642
Total operating expenses	532,835			515,431		1,591,919			1,536,159
Operating income	105,907			96,695		288,639			269,585
Investment income
Net investment income	8,652			7,659		25,199			21,583
Net realized investment gains (losses)	1,696			0		5,501			(497		)
Net impairment losses recognized in earnings	(31		)	0		(193		)	(646		)
Equity in earnings of limited partnerships	3,289			772		2,546			361
Total investment income	13,606			8,431		33,053			20,801
Interest expense, net	111			709		832			1,864
Other income	100			54		195			156
Income before income taxes	119,502			104,471		321,055			288,678
Income tax expense	25,333			24,025		63,821			62,768
Net income	$	94,169		$	80,446	$	257,234		$	225,910
Net income per share
Class A common stock – basic	$	2.02		$	1.73	$	5.52		$	4.85
Class A common stock – diluted	$	1.80		$	1.54	$	4.92		$	4.32
Class B common stock – basic	$	303		$	259	$	829		$	728
Class B common stock – diluted	$	303		$	259	$	828		$	727
Weighted average shares outstanding – Basic
Class A common stock	46,189,006			46,188,941		46,188,767			46,188,522
Class B common stock	2,542			2,542		2,542			2,542
Weighted average shares outstanding – Diluted
Class A common stock	52,325,125			52,317,438		52,317,275			52,313,642
Class B common stock	2,542			2,542		2,542			2,542
Dividends declared per share
Class A common stock	$	0.90		$	0.84	$	2.70		$	2.52
Class B common stock	$	135.00		$	126.00	$	405.00		$	378.00

See accompanying notes to Financial Statements. See Note 12, "Accumulated Other Comprehensive Income (Loss)", for amounts reclassified out of accumulated other comprehensive income (loss) into the Statements of Operations. 

3

ERIE INDEMNITY COMPANY

STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(in thousands)

	Three months ended					Nine months ended
	September 30,					September 30,
	2019		2018			2019		2018
Net income	$	94,169	$	80,446		$	257,234	$	225,910
Other comprehensive income (loss), net of tax
Change in unrealized holding gains (losses) on available-for-sale securities	2,330		(492		)	10,387		(6,470		)
Amortization of prior service costs and net actuarial loss on pension and other postretirement plans	1,231		0			3,694		0
Total other comprehensive income (loss), net of tax	3,561		(492		)	14,081		(6,470		)
Comprehensive income	$	97,730	$	79,954		$	271,315	$	219,440

See accompanying notes to Financial Statements. See Note 12, "Accumulated Other Comprehensive Income (Loss)", for amounts reclassified out of accumulated other comprehensive income (loss) into the Statements of Operations.

4

ERIE INDEMNITY COMPANY

STATEMENTS OF FINANCIAL POSITION

(dollars in thousands, except per share data)

 

	September 30,			December 31,
	2019			2018
Assets	(Unaudited)
Current assets:
Cash and cash equivalents	$	344,872		$	266,417
Available-for-sale securities	32,984			402,339
Receivables from Erie Insurance Exchange and affiliates	497,985			449,873
Prepaid expenses and other current assets	47,712			36,892
Federal income taxes recoverable	6,075			8,162
Accrued investment income	5,267			5,263
Total current assets	934,895			1,168,946
Available-for-sale securities	647,649			346,184
Equity securities	55,052			11,853
Limited partnership investments	32,171			34,821
Fixed assets, net	194,170			130,832
Deferred income taxes, net	15,505			24,101
Other assets	95,138			61,590
Total assets	$	1,974,580		$	1,778,327
Liabilities and shareholders' equity
Current liabilities:
Commissions payable	$	272,932		$	241,573
Agent bonuses	73,921			103,462
Accounts payable and accrued liabilities	131,453			111,291
Dividends payable	41,913			41,910
Contract liability	36,318			33,854
Deferred executive compensation	10,328			13,107
Current portion of long-term borrowings	1,959			1,870
Total current liabilities	568,824			547,067
Defined benefit pension plans	136,078			116,866
Long-term borrowings	96,346			97,860
Contract liability	18,648			17,873
Deferred executive compensation	13,017			13,075
Other long-term liabilities	22,396			11,914
Total liabilities	855,309			804,655
Shareholders’ equity
Class A common stock, stated value $0.0292 per share; 74,996,930 shares authorized; 68,299,200 shares issued; 46,189,068 shares outstanding	1,992			1,992
Class B common stock, convertible at a rate of 2,400 Class A shares for one Class B share, stated value $70 per share; 3,070 shares authorized; 2,542 shares issued and outstanding	178			178
Additional paid-in-capital	16,483			16,459
Accumulated other comprehensive loss	(116,203		)	(130,284		)
Retained earnings	2,362,911			2,231,417
Total contributed capital and retained earnings	2,265,361			2,119,762
Treasury stock, at cost; 22,110,132 shares held	(1,158,620		)	(1,157,625		)
Deferred compensation	12,530			11,535
Total shareholders’ equity	1,119,271			973,672
Total liabilities and shareholders’ equity	$	1,974,580		$	1,778,327

See accompanying notes to Financial Statements. 

5

ERIE INDEMNITY COMPANY

STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)

Three and nine months ended September 30, 2019

(dollars in thousands, except per share data)

	Class A common stock		Class B common stock		Additional paid-in-capital		Accumulated other comprehensive income (loss)			Retained earnings			Treasury stock			Deferred compensation			Total shareholders' equity
Balance, December 31, 2018	$	1,992	$	178	$	16,459	$	(130,284	)	$	2,231,417		$	(1,157,625	)	$	11,535		$	973,672
Net income										75,311									75,311
Other comprehensive income							6,710												6,710
Dividends declared:
Class A $0.90 per share										(41,570		)							(41,570		)
Class B $135.00 per share										(343		)							(343		)
Net purchase of treasury stock (1)					24								0						24
Deferred compensation													(1,154		)	1,154			0
Balance, March 31, 2019	$	1,992	$	178	$	16,483	$	(123,574	)	$	2,264,815		$	(1,158,779	)	$	12,689		$	1,013,804
Net income										87,754									87,754
Other comprehensive income							3,810												3,810
Dividends declared:
Class A $0.90 per share										(41,570		)							(41,570		)
Class B $135.00 per share										(344		)							(344		)
Net purchase of treasury stock (1)					0								0						0
Deferred compensation													(443		)	443			0
Rabbi trust distribution (2)													922			(922		)	0
Balance, June 30, 2019	$	1,992	$	178	$	16,483	$	(119,764	)	$	2,310,655		$	(1,158,300	)	$	12,210		$	1,063,454
Net income										94,169									94,169
Other comprehensive income							3,561												3,561
Dividends declared:
Class A $0.90 per share										(41,570		)							(41,570		)
Class B $135.00 per share										(343		)							(343		)
Net purchase of treasury stock (1)					0								0						0
Deferred compensation													(320		)	320			0
Balance, September 30, 2019	$	1,992	$	178	$	16,483	$	(116,203	)	$	2,362,911		$	(1,158,620	)	$	12,530		$	1,119,271

(1) Net purchases of treasury stock in 2019 include the repurchase of our Class A common stock in the open market that were subsequently distributed to satisfy stock based compensation awards. See Note 11, "Capital Stock", for additional information on treasury stock transactions.

(2) Distributions of our Class A shares were made from the rabbi trust to a retired director in 2019.

See accompanying notes to Financial Statements.

6

ERIE INDEMNITY COMPANY

STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)

Three and nine months ended September 30, 2018

(dollars in thousands, except per share data)

	Class A common stock		Class B common stock		Additional paid-in-capital			Accumulated other comprehensive income (loss)			Retained earnings			Treasury stock			Deferred compensation			Total shareholders' equity
Balance, December 31, 2017	$	1,992	$	178	$	16,470		$	(156,059	)	$	2,140,853		$	(1,155,668	)	$	9,578		$	857,344
Cumulative effect adjustments (1)											(38,392		)							(38,392		)
Net income											65,758									65,758
Other comprehensive loss								(5,427		)										(5,427		)
Dividends declared:
Class A $0.84 per share											(38,799		)							(38,799		)
Class B $126.00 per share											(320		)							(320		)
Net purchase of treasury stock (2)					(9		)							0						(9		)
Deferred compensation														(1,663		)	1,663			0
Balance, March 31, 2018	$	1,992	$	178	$	16,461		$	(161,486	)	$	2,129,100		$	(1,157,331	)	$	11,241		$	840,155
Net income											79,706									79,706
Other comprehensive loss								(551		)										(551		)
Dividends declared:
Class A $0.84 per share											(38,799		)							(38,799		)
Class B $126.00 per share											(321		)							(321		)
Net purchase of treasury stock (2)					(2		)							0						(2		)
Deferred compensation														(276		)	276			0
Rabbi trust distribution (3)														608			(608		)	0
Balance, June 30, 2018	$	1,992	$	178	$	16,459		$	(162,037	)	$	2,169,686		$	(1,156,999	)	$	10,909		$	880,188
Net income											80,446									80,446
Other comprehensive loss								(492		)										(492		)
Dividends declared:
Class A $0.84 per share											(38,799		)							(38,799		)
Class B $126.00 per share											(320		)							(320		)
Net purchase of treasury stock (2)					0									0						0
Deferred compensation														(311		)	311			0
Balance, September 30, 2018	$	1,992	$	178	$	16,459		$	(162,529	)	$	2,211,013		$	(1,157,310	)	$	11,220		$	921,023

(1) Cumulative effect adjustments are primarily related to the implementation of new revenue recognition guidance effective January 1, 2018.

(2) Net purchases of treasury stock in 2018 include the repurchase of our Class A common stock in the open market that were subsequently distributed to satisfy stock based compensation awards. See Note 11, "Capital Stock", for additional information on treasury stock transactions.

(3) Distributions of our Class A shares were made from the rabbi trust to a retired director in 2018.

See accompanying notes to Financial Statements.

7

ERIE INDEMNITY COMPANY

STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

	Nine months ended
	September 30,
	2019			2018
Cash flows from operating activities
Management fee received	$	1,387,877		$	1,309,769
Administrative services reimbursements received	420,697			428,071
Service agreement fee received	20,754			21,297
Net investment income received	25,461			26,625
Limited partnership distributions	1,596			6,008
Commissions paid to agents	(669,618		)	(639,574		)
Agents bonuses paid	(112,262		)	(130,657		)
Salaries and wages paid	(138,279		)	(136,868		)
Pension contributions and employee benefits paid	(31,926		)	(106,718		)
General operating expenses paid	(179,799		)	(144,759		)
Administrative services expenses paid	(424,919		)	(427,852		)
Income taxes paid	(60,863		)	(29,208		)
Interest paid	(853		)	(1,820		)
Net cash provided by operating activities	237,866			174,314
Cash flows from investing activities
Purchase of investments:
Available-for-sale securities	(852,886		)	(194,773		)
Equity securities	(46,536		)	(4,087		)
Limited partnerships	(20		)	(217		)
Other investments	(252		)	—
Proceeds from investments:
Available-for-sale securities sales	655,519			125,913
Available-for-sale securities maturities/calls	282,846			98,922
Equity securities	4,505			4,159
Limited partnerships	3,600			3,046
Purchase of fixed assets	(68,363		)	(48,667		)
Agent loan distributions	(16,458		)	(41,767		)
Agent loan repayments	5,804			4,496
Net cash used in investing activities	(32,241		)	(52,975		)
Cash flows from financing activities
Dividends paid to shareholders	(125,737		)	(117,355		)
Net (payments) proceeds from long-term borrowings	(1,433		)	24,983
Net cash used in financing activities	(127,170		)	(92,372		)
Net increase in cash and cash equivalents	78,455			28,967
Cash and cash equivalents, beginning of period	266,417			215,721
Cash and cash equivalents, end of period	$	344,872		$	244,688
Supplemental disclosure of noncash transactions
Operating lease assets obtained in exchange for new operating lease liabilities	$	33,678		$	—
Liability incurred to purchase fixed assets	$	8,286		$	—

See accompanying notes to Financial Statements.

8

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Note 1.  Nature of Operations

Erie Indemnity Company ("Indemnity", "we", "us", "our") is a publicly held Pennsylvania business corporation that has since its incorporation in 1925 served as the attorney-in-fact for the subscribers (policyholders) at the Erie Insurance Exchange ("Exchange").  The Exchange, which also commenced business in 1925, is a Pennsylvania-domiciled reciprocal insurer that writes property and casualty insurance.

Our primary function as attorney-in-fact is to perform policy issuance and renewal services on behalf of the subscribers at the Exchange. We also act as attorney-in-fact on behalf of the Exchange with respect to all claims handling and investment management services, as well as the service provider for all claims handling, life insurance, and investment management services for its insurance subsidiaries, collectively referred to as "administrative services". Acting as attorney-in-fact in these two capacities is done in accordance with a subscriber's agreement (a limited power of attorney) executed individually by each subscriber (policyholder), which appoints us as their common attorney-in-fact to transact certain business on their behalf.  Pursuant to the subscriber's agreement for acting as attorney-in-fact in these two capacities, we earn a management fee calculated as a percentage of the direct and affiliated assumed premiums written by the Exchange.

The policy issuance and renewal services we provide to the Exchange are related to the sales, underwriting and issuance of policies. The sales related services we provide include agent compensation and certain sales and advertising support services. Agent compensation includes scheduled commissions to agents based upon premiums written as well as additional commissions and bonuses to agents, which are earned by achieving targeted measures. The underwriting services we provide include underwriting and policy processing. The remaining services we provide include customer service and administrative support. We also provide information technology services that support all the functions listed above. Included in these expenses are allocations of costs for departments that support these policy issuance and renewal functions.

By virtue of its legal structure as a reciprocal insurer, the Exchange does not have any employees or officers. Therefore, it enters into contractual relationships by and through an attorney-in-fact. Indemnity serves as the attorney-in-fact on behalf of the Exchange with respect to its administrative services. The Exchange's insurance subsidiaries also utilize Indemnity for these services in accordance with the service agreements between each of the subsidiaries and Indemnity. Claims handling services include costs incurred in the claims process, including the adjustment, investigation, defense, recording and payment functions. Life insurance management services include costs incurred in the management and processing of life insurance business. Investment management services are related to investment trading activity, accounting and all other functions attributable to the investment of funds. Included in these expenses are allocations of costs for departments that support these administrative functions. The amounts incurred for these services are reimbursed to Indemnity at cost in accordance with the subscriber's agreement and the service agreements. State insurance regulations require that intercompany service agreements and any material amendments be approved in advance by the state insurance department.

Our results of operations are tied to the growth and financial condition of the Exchange. If any events occurred that impaired the Exchange’s ability to grow or sustain its financial condition, including but not limited to reduced financial strength ratings, disruption in the independent agency relationships, significant catastrophe losses, or products not meeting customer demands, the Exchange could find it more difficult to retain its existing business and attract new business. A decline in the business of the Exchange almost certainly would have as a consequence a decline in the total premiums paid and a correspondingly adverse effect on the amount of the management fees we receive. We also have an exposure to a concentration of credit risk related to the unsecured receivables due from the Exchange for its management fee and cost reimbursements. See Note 13, "Concentrations of Credit Risk".

Note 2.  Significant Accounting Policies

Basis of presentation

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. For further information, refer to the financial statements and footnotes included in our Form 10-K for the year ended December 31, 2018 as filed with the Securities and Exchange Commission on February 21, 2019.

9

Use of estimates

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Recently adopted accounting standards

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Codification ("ASC") 842, "Leases", which requires lessees to recognize assets and liabilities arising from operating leases on the Statements of Financial Position and to disclose certain information about leasing arrangements. We adopted ASC 842 on January 1, 2019 using the optional transition method, which permits entities to apply the new guidance prospectively with certain practical expedients available. We elected the package of practical expedients which among other things allowed us to carry forward the historical lease classifications. We did not elect the hindsight practical expedient in determining the lease term for existing leases.

The adoption of the new standard resulted in the recognition of operating lease assets of $32.7 million and operating lease liabilities of $32.1 million on the Statement of Financial Position at January 1, 2019. The adoption of this standard did not have a material impact on our Statement of Operations and had no impact on our net cash flows.

Recently issued accounting standards

In August 2018, the FASB issued Accounting Standards Update ("ASU") 2018-15, "Intangibles-Goodwill and Other Internal-Use Software", which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. ASU 2018-15 is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. The amendments under ASU 2018-15 may be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption and early adoption is permitted. We plan to adopt this guidance on a prospective basis and do not expect a material impact on our financial statements or disclosures.

In June 2016, the FASB issued ASU 2016-13, "Financial Instruments-Credit Losses", which requires financial assets measured at amortized cost to be presented at the net amount expected to be collected through the use of a new forward-looking expected loss model and credit losses relating to available-for-sale debt securities to be recognized through an allowance for credit losses. ASU 2016-13 is effective for interim and annual reporting periods beginning after December 15, 2019. Early adoption for interim and annual periods beginning after December 15, 2018 is permitted. We have evaluated the impact of this guidance on our financial assets. Our investments are not measured at amortized cost, and therefore do not require the use of a new expected loss model. Our available-for-sale debt securities will continue to be monitored for credit losses, which would be limited to the amount by which the fair value is below amortized cost and reflected as an allowance for credit losses rather than a reduction of the carrying value of the asset. Our receivables from Erie Insurance Exchange and affiliates are unlikely to have a significant credit loss exposure given the financial strength of the Exchange as demonstrated by its strong surplus position, industry ratings, and historical experience of no credit losses. We currently do not record an allowance for credit losses related to our agent loans as historical default amounts have been insignificant and the majority of the loans are senior secured. Accordingly, when we establish an allowance related to agent loans upon adoption of this guidance, we do not expect it to be material. Our cash equivalents include money market mutual funds primarily comprised of U.S. government securities. A corresponding allowance, if any, would be expected to be immaterial. As a result of our evaluation, we do not expect a material impact on our financial statements.

Other assets

Other assets include agent loans, operating lease assets and other long-term prepaid assets. Agent loans are carried at unpaid principal balance with interest recorded in investment income as earned. It is our policy to charge the loans that are in default directly to expense. We do not record an allowance for credit losses on these loans, as the majority of the loans are senior secured and historically have had insignificant default amounts.

The determination of whether an arrangement is a lease, and the related lease classification, is made at inception of a contract. Our leases are classified as operating leases. Operating lease assets and liabilities are recorded at inception based on the present value of the future minimum lease payments over the lease term at commencement date. When an implicit rate for the lease is not available, we use our incremental borrowing rate based on the information available at commencement date to determine the present value of future payments. Lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Most of our lease contracts contain lease and non-lease components. Non-lease components are expensed as incurred. Operating lease assets are included in other assets, and the current and noncurrent portions of the operating lease liabilities are included in accounts payable and accrued expenses and other long-term liabilities, respectively, in the Statement of Financial Position.

10

Note 3.  Revenue

The majority of our revenue is derived from the subscriber’s agreement between us and the subscribers (policyholders) at the Exchange. Pursuant to the subscriber’s agreement, we earn a management fee calculated as a percentage, not to exceed 25%, of all direct and affiliated assumed written premiums of the Exchange.

We allocate a portion of our management fee revenue, currently 25% of the direct and affiliated assumed written premiums of the Exchange, between the two performance obligations we have under the subscriber’s agreement. The first performance obligation is to provide policy issuance and renewal services to the subscribers (policyholders) at the Exchange, and the second is to act as attorney-in-fact on behalf of the Exchange, as well as the service provider for its insurance subsidiaries, with respect to all administrative services. The transaction price, including management fee revenue and administrative service reimbursement revenue, is allocated based on the estimated standalone selling prices developed using industry information and other available information for similar services. We update the transaction price allocation annually based upon the most recent information available. There was no material change to the allocation in 2019.

The first performance obligation is to provide policy issuance and renewal services that result in executed insurance policies between the Exchange or one of its insurance subsidiaries and the subscriber (policyholder). Our customer, the subscriber (policyholder), receives economic benefits when substantially all the policy issuance or renewal services are complete and an insurance policy is issued or renewed by the Exchange or one of its insurance subsidiaries. It is at the time of policy issuance or renewal that the allocated portion of revenue is recognized.

The Exchange, by virtue of its legal structure as a reciprocal insurer, does not have any employees or officers. Therefore, it enters into contractual relationships by and through an attorney-in-fact. Indemnity serves as the attorney-in-fact on behalf of the Exchange with respect to its administrative services in accordance with the subscriber's agreement. The Exchange's insurance subsidiaries also utilize Indemnity for these services in accordance with the service agreements between each of the subsidiaries and Indemnity. Collectively, these services represent a second performance obligation under the subscriber’s agreement and the service agreements. The revenue allocated to this performance obligation is recognized over time as these services are provided. The portion of revenue not yet earned is recorded as a contract liability in the Statements of Financial Position. The administrative services expenses we incur and the related reimbursements we receive are recorded gross in the Statements of Operations.

Indemnity records a receivable from the Exchange for management fee revenue when the premium is written or assumed by the Exchange. Indemnity collects the management fee from the Exchange when the Exchange collects the premiums from the subscribers (policyholders). As the Exchange issues policies with annual terms only, cash collections generally occur within one year.

A constraining estimate exists around the management fee received as consideration related to the potential for management fee to be returned if a policy were to be cancelled mid-term. Management fees are returned to the Exchange when policyholders cancel their insurance coverage mid-term and unearned premiums are refunded to them. We maintain an estimated allowance to reduce the management fee to its estimated net realizable value to account for the potential of mid-term policy cancellations based on historical cancellation rates. This estimated allowance has been allocated between the two performance obligations consistent with the revenue allocation proportions.

The following table disaggregates revenue by our two performance obligations:

	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2019		2018		2019		2018
Management fee revenue - policy issuance and renewal services, net	$	474,427	$	451,361	$	1,385,923	$	1,311,911
Management fee revenue - administrative services, net	14,430		13,521		42,576		39,894
Administrative services reimbursement revenue	142,730		140,172		431,305		432,642
Total administrative services	$	157,160	$	153,693	$	473,881	$	472,536

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Note 4.  Earnings Per Share

Class A and Class B basic earnings per share and Class B diluted earnings per share are calculated under the two-class method. The two-class method allocates earnings to each class of stock based upon its dividend rights.  Class B shares are convertible into Class A shares at a conversion ratio of 2,400 to 1. See Note 11, "Capital Stock".

Class A diluted earnings per share are calculated under the if-converted method, which reflects the conversion of Class B shares to Class A shares. Diluted earnings per share calculations include the dilutive effect of assumed issuance of stock-based awards under compensation plans that have the option to be paid in stock using the treasury stock method.

A reconciliation of the numerators and denominators used in the basic and diluted per-share computations is presented as follows for each class of common stock: 

	Three months ended September 30,
	2019					2018
(dollars in thousands, except per share data)	Allocated net income (numerator)		Weighted shares (denominator)	Per-share amount		Allocated net income (numerator)		Weighted shares (denominator)	Per-share amount
Class A – Basic EPS:
Income available to Class A stockholders	$	93,398	46,189,006	$	2.02	$	79,787	46,188,941	$	1.73
Dilutive effect of stock-based awards	0		35,319	—		0		27,697	—
Assumed conversion of Class B shares	771		6,100,800	—		659		6,100,800	—
Class A – Diluted EPS:
Income available to Class A stockholders on Class A equivalent shares	$	94,169	52,325,125	$	1.80	$	80,446	52,317,438	$	1.54
Class B – Basic EPS:
Income available to Class B stockholders	$	771	2,542	$	303	$	659	2,542	$	259
Class B – Diluted EPS:
Income available to Class B stockholders	$	770	2,542	$	303	$	658	2,542	$	259

	Nine months ended September 30,
	2019					2018
(dollars in thousands, except per share data)	Allocated net income (numerator)		Weighted shares (denominator)	Per-share amount		Allocated net income (numerator)		Weighted shares (denominator)	Per-share amount
Class A – Basic EPS:
Income available to Class A stockholders	$	255,128	46,188,767	$	5.52	$	224,060	46,188,522	$	4.85
Dilutive effect of stock-based awards	0		27,708	—		0		24,320	—
Assumed conversion of Class B shares	2,106		6,100,800	—		1,850		6,100,800	—
Class A – Diluted EPS:
Income available to Class A stockholders on Class A equivalent shares	$	257,234	52,317,275	$	4.92	$	225,910	52,313,642	$	4.32
Class B – Basic EPS:
Income available to Class B stockholders	$	2,106	2,542	$	829	$	1,850	2,542	$	728
Class B – Diluted EPS:
Income available to Class B stockholders	$	2,105	2,542	$	828	$	1,849	2,542	$	727

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Note 5. Fair Value

Financial instruments carried at fair value

Our available-for-sale debt securities and equity securities are recorded at fair value, which is the price that would be received to sell the asset in an orderly transaction between willing market participants as of the measurement date.

Valuation techniques used to derive the fair value of our available-for-sale debt securities and equity securities are based upon observable and unobservable inputs.  Observable inputs reflect market data obtained from independent sources.  Unobservable inputs reflect our own assumptions regarding fair market value for these securities.  Although virtually all of our prices are obtained from third party sources, we also perform an internal pricing review on outliers. The outlier review includes securities with price changes that vary significantly from current market conditions or independent third party price sources. Financial instruments are categorized based upon the following characteristics or inputs to the valuation techniques:

• Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date.

• Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

• Level 3 – Unobservable inputs for the asset or liability.

Estimates of fair values for our investment portfolio are obtained primarily from a nationally recognized pricing service.  Our Level 1 category includes those securities valued using an exchange traded price provided by the pricing service.  The methodologies used by the pricing service that support a Level 2 classification of a financial instrument include multiple verifiable, observable inputs including benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data.  Pricing service valuations for Level 3 securities are based upon proprietary models and are used when observable inputs are not available or in illiquid markets.

In limited circumstances we adjust the price received from the pricing service when, in our judgment, a better reflection of fair value is available based upon corroborating information and our knowledge and monitoring of market conditions such as a disparity in price of comparable securities and/or non-binding broker quotes.  In other circumstances, certain securities are internally priced because prices are not provided by the pricing service.

We perform continuous reviews of the prices obtained from the pricing service.  This includes evaluating the methodology and inputs used by the pricing service to ensure that we determine the proper classification level of the financial instrument.  Price variances, including large periodic changes, are investigated and corroborated by market data.  We have reviewed the pricing methodologies of our pricing service as well as other observable inputs, such as market data, and transaction volumes and believe that the prices adequately consider market activity in determining fair value. 

When a price from the pricing service is not available, values are determined by obtaining broker/dealer quotes and/or market comparables.  When available, we obtain multiple quotes for the same security.  The ultimate value for these securities is determined based upon our best estimate of fair value using corroborating market information.  Our evaluation includes the consideration of benchmark yields, reported trades, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data.

13

The following tables present our fair value measurements on a recurring basis by asset class and level of input as of: 

	September 30, 2019
(in thousands)	Total		Level 1		Level 2		Level 3
Available-for-sale securities:
Corporate debt securities (1)	$	434,206	$	3,214	$	423,934	$	7,058
Residential mortgage-backed securities(1)	107,235		0		107,235		0
Commercial mortgage-backed securities(1)	63,182		0		58,475		4,707
Collateralized debt obligations	70,818		0		68,518		2,300
Other debt securities	5,192		0		5,192		0
Total available-for-sale securities	680,633		3,214		663,354		14,065
Equity securities - nonredeemable preferred stock:(1)
Financial services sector	47,753		25,003		22,750		0
Industrial sector	2,842		0		2,842		0
Utilities sector	2,571		521		2,050		0
Energy sector	1,886		0		1,886		0
Total equity securities	55,052		25,524		29,528		0
Total	$	735,685	$	28,738	$	692,882	$	14,065

	December 31, 2018
(in thousands)	Total		Level 1		Level 2		Level 3
Available-for-sale securities:
U.S. Treasury (1)	$	208,412	$	0	$	208,412	$	0
States & political subdivisions (1)	159,023		0		159,023		0
Corporate debt securities	249,947		0		237,370		12,577
Residential mortgage-backed securities	4,609		0		4,609		0
Commercial mortgage-backed securities	46,515		0		46,515		0
Collateralized debt obligations	64,239		0		64,239		0
Other debt securities	15,778		0		15,778		0
Total available-for-sale securities	748,523		0		735,946		12,577
Equity securities - nonredeemable preferred stock:
Financial services sector	11,853		1,809		10,044		0
Total equity securities	11,853		1,809		10,044		0
Other limited partnership investments (2)	3,206		—		—		—
Total	$	763,582	$	1,809	$	745,990	$	12,577

(1) In the fourth quarter of 2018, we began selling off our municipal bonds as part of a portfolio rebalancing and invested proceeds in short-term U.S. Treasuries. In 2019, proceeds from selling off the remaining municipal bond portfolio and short-term U.S. Treasuries were reinvested in corporate debt, structured and equity securities.

(2) The limited partnership investment measured at fair value represents one real estate fund included on the balance sheet as a limited partnership investment reported under the fair value option using the net asset value (NAV) practical expedient, which is not required to be categorized in the fair value hierarchy. The fair value of this investment is based on our proportionate share of the NAV from the most recent partners' capital statements received from the general partner, which is generally one quarter prior to our balance sheet date. We consider observable market data and perform a review validating the appropriateness of the NAV at each balance sheet date. Liquidation of this fund was completed in January 2019 and a final distribution totaling $3.2 million was received. There were no unfunded commitments related to the investment at December 31, 2018. During the year ended December 31, 2018, no contributions were made and distributions totaling $1.2 million were received from this investment.

14

The following table presents our fair value measurements on a recurring basis by pricing source as of:

	September 30, 2019
(in thousands)	Total		Level 1		Level 2		Level 3
Available-for-sale securities priced using:
Pricing services	$	677,683	$	3,214	$	662,854	$	11,615
Market comparables/broker quotes	2,800		0		500		2,300
Internal modeling	150		0		0		150
Total available-for-sale securities	680,633		3,214		663,354		14,065
Equity securities priced using pricing services	55,052		25,524		29,528		0
Total	$	735,685	$	28,738	$	692,882	$	14,065

Quantitative and Qualitative Disclosures about Unobservable Inputs

The following table presents quantitative information about the significant unobservable inputs utilized in the fair value measurements of Level 3 assets. Level 3 securities where cost is the best estimate of fair value totaled $0.2 million at September 30, 2019 and are excluded from the table below. When a non-binding broker quote was the only input available, the security was classified within Level 3. The quantitative detail of the unobservable inputs is neither provided nor reasonably available to us and therefore has not been included in the table below. These investments totaled $2.4 million at September 30, 2019 and $12.6 million at December 31, 2018. The weighted average is calculated based on estimated fair value.

	September 30, 2019
(dollars in thousands)	Fair value		Valuation techniques	Unobservable input	Range (basis points)	Weighted average (basis points)	Impact of increase in input on estimated fair value
Corporate debt securities - bank loans	$	6,827	Syndicated loan model	Market residual yield (1)	-536 - +1290	+87	Decrease
Commercial mortgage-backed securities	4,707		Relative value pricing model	Credit spread (2)	+35 - +83	+57	Decrease

(1) Values for bank loans classified as Level 3 are determined by our pricing vendor based on model yield curves adjusted for observable inputs. The market residual yield represents a net adjustment to the model yield curve for unobservable input factors.

(2) Values for commercial mortgage-backed securities classified as Level 3 include adjustments to the base spread over the appropriate U.S. Treasury yield assuming no prepayments until penalty provisions have expired.

We review the fair value hierarchy classifications each reporting period.  Transfers between hierarchy levels may occur due to changes in available market observable inputs.

Level 3 Assets – 2019 Quarterly Change:

(in thousands)	Beginning balance at June 30, 2019		Included in earnings(1)			Included in other comprehensive income			Purchases		Sales			Transfers into Level 3(2)		Transfers out of Level 3(2)			Ending balance at September 30, 2019
Available-for-sale securities:
Corporate debt securities	$	6,373	$	16		$	(92	)	$	549	$	(507	)	$	1,850	$	(1,131	)	$	7,058
Commercial mortgage-backed securities	2,551		(6		)	2			0		(3		)	2,846		(683		)	4,707
Collateralized debt obligations	0		0			0			2,300		0			0		0			2,300
Total Level 3 available-for-sale securities	$	8,924	$	10		$	(90	)	$	2,849	$	(510	)	$	4,696	$	(1,814	)	$	14,065

15

Level 3 Assets – 2019 Year-to-Date Change:

(in thousands)	Beginning balance at December 31, 2018		Included in earnings(1)		Included in other comprehensive income			Purchases		Sales			Transfers into Level 3(2)		Transfers out of Level 3(2)			Ending balance at September 30, 2019
Available-for-sale securities:
Corporate debt securities	$	12,577	$	7	$	199		$	1,283	$	(6,779	)	$	9,244	$	(9,473	)	$	7,058
Residential mortgage-backed securities	0		4		15			921		(32		)	0		(908		)	0
Commercial mortgage-backed securities	0		7		(6		)	478		(1,068		)	6,103		(807		)	4,707
Collateralized debt obligations	0		0		0			2,300		0			0		0			2,300
Total Level 3 available-for-sale securities	$	12,577	$	18	$	208		$	4,982	$	(7,879	)	$	15,347	$	(11,188	)	$	14,065

Level 3 Assets – 2018 Quarterly Change:

(in thousands)	Beginning balance at June 30, 2018		Included in earnings(1)		Included in other comprehensive income		Purchases		Sales			Transfers into Level 3(2)		Transfers out of Level 3(2)			Ending balance at September 30, 2018
Available-for-sale securities:
Corporate debt securities	$	11,120	$	3	$	71	$	1,539	$	(1,416	)	$	2,735	$	(5,782	)	$	8,270
Other debt securities	0		0		0		905		0			0		0			905
Total Level 3 available-for-sale securities	$	11,120	$	3	$	71	$	2,444	$	(1,416	)	$	2,735	$	(5,782	)	$	9,175

Level 3 Assets – 2018 Year-to-Date Change:

(in thousands)	Beginning balance at December 31, 2017		Included in earnings(1)		Included in other comprehensive income		Purchases		Sales			Transfers into Level 3(2)		Transfers out of Level 3(2)			Ending balance at September 30, 2018
Available-for-sale securities:
Corporate debt securities	$	7,879	$	4	$	23	$	4,586	$	(2,381	)	$	10,517	$	(12,358	)	$	8,270
Collateralized debt obligations	2,200		0		7		0		0			0		(2,207		)	0
Other debt securities	0		0		0		905		0			0		0			905
Total Level 3 available-for-sale securities	$	10,079	$	4	$	30	$	5,491	$	(2,381	)	$	10,517	$	(14,565	)	$	9,175

(1) These amounts are reported in the Statements of Operations as net investment income and net realized investment gains (losses) for the each of the periods presented above.

(2) Transfers into and/or (out) of Level 3 are primarily attributable to the availability of market observable information and the re-evaluation of the observability of pricing inputs.

The change in unrealized gains or losses included in other comprehensive income related to Level 3 securities held at the reporting date is as follows:

	Three months ended September 30,					Nine months ended September 30,
(in thousands)	2019			2018		2019		2018
Available-for-sale securities:
Corporate debt securities	$	(100	)	$	66	$	112	$	38
Commercial mortgage-backed securities	7			—		132		—
Other debt securities	—			0		—		0
Net unrealized (losses) gains on Level 3 securities held at reporting date	$	(93	)	$	66	$	244	$	38

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Financial instruments disclosed, but not carried at fair value

The following table presents the carrying values and fair value measurements, which are categorized as Level 3 in the fair value hierarchy, of financial instruments disclosed, but not carried at fair value as of:

	September 30, 2019				December 31, 2018
(in thousands)	Carrying value		Fair value		Carrying value		Fair value
Agent loans	$	68,660	$	69,194	$	58,006	$	54,110
Long-term borrowings	98,568		107,169		99,730		94,057

Note 6.  Investments

Available-for-sale securities

See Note 5, "Fair Value" for additional fair value disclosures. The following tables summarize the cost and fair value of our available-for-sale securities as of:

	September 30, 2019
(in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Available-for-sale securities:
Corporate debt securities (1)	$	431,800	$	4,437	$	2,031	$	434,206
Residential mortgage-backed securities(1)	106,401		889		55		107,235
Commercial mortgage-backed securities(1)	61,940		1,263		21		63,182
Collateralized debt obligations	71,087		20		289		70,818
Other debt securities	5,108		92		8		5,192
Total available-for-sale securities	$	676,336	$	6,701	$	2,404	$	680,633

	December 31, 2018
(in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Available-for-sale securities:
U.S. Treasury (1)	$	208,610	$	18	$	216	$	208,412
States & political subdivisions (1)	157,003		2,020		0		159,023
Corporate debt securities	259,362		139		9,554		249,947
Residential mortgage-backed securities	4,603		38		32		4,609
Commercial mortgage-backed securities	47,022		80		587		46,515
Collateralized debt obligations	65,039		30		830		64,239
Other debt securities	15,756		33		11		15,778
Total available-for-sale securities	$	757,395	$	2,358	$	11,230	$	748,523

(1) In the fourth quarter of 2018, we began selling off our municipal bonds as part of a portfolio rebalancing and invested proceeds in short-term U.S. Treasuries. In 2019, proceeds from selling off the remaining municipal bond portfolio and short-term U.S. Treasuries were reinvested in corporate debt, structured, and equity securities.

The amortized cost and estimated fair value of available-for-sale securities at September 30, 2019 are shown below by remaining contractual term to maturity.  Mortgage-backed securities are allocated based upon stated maturity dates.  Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. 

	September 30, 2019
	Amortized		Estimated
(in thousands)	cost		fair value
Due in one year or less	$	32,875	$	32,842
Due after one year through five years	307,299		308,682
Due after five years through ten years	128,109		129,071
Due after ten years	208,053		210,038
Total available-for-sale securities	$	676,336	$	680,633

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The following table presents available-for-sale securities based on length of time in a gross unrealized loss position as of:

	September 30, 2019
	Less than 12 months				12 months or longer				Total
(dollars in thousands)	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair  value		Unrealized losses		No. of holdings
Available-for-sale securities:
Corporate debt securities	$	39,871	$	852	$	30,518	$	1,179	$	70,389	$	2,031	229
Residential mortgage-backed securities	20,440		55		0		0		20,440		55		7
Commercial mortgage-backed securities	7,325		19		538		2		7,863		21		10
Collateralized debt obligations	39,202		84		25,284		205		64,486		289		47
Other debt securities	1,581		8		0		0		1,581		8		1
Total available-for-sale securities	$	108,419	$	1,018	$	56,340	$	1,386	$	164,759	$	2,404	294
Quality breakdown of available-for-sale securities:
Investment grade	$	80,157	$	176	$	46,355	$	255	$	126,512	$	431	85
Non-investment grade	28,262		842		9,985		1,131		38,247		1,973		209
Total available-for-sale securities	$	108,419	$	1,018	$	56,340	$	1,386	$	164,759	$	2,404	294

	December 31, 2018
	Less than 12 months				12 months or longer				Total
(dollars in thousands)	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses		No. of holdings
Available-for-sale securities:
U.S. Treasury	$	129,474	$	19	$	11,656	$	197	$	141,130	$	216	7
Corporate debt securities	157,300		6,866		86,586		2,688		243,886		9,554		635
Residential mortgage-backed securities	777		6		1,618		26		2,395		32		3
Commercial mortgage-backed securities	17,624		175		16,997		412		34,621		587		30
Collateralized debt obligations	55,246		826		1,248		4		56,494		830		39
Other debt securities	8,213		11		0		0		8,213		11		7
Total available-for-sale securities	$	368,634	$	7,903	$	118,105	$	3,327	$	486,739	$	11,230	721
Quality breakdown of available-for-sale securities:
Investment grade	$	242,821	$	1,295	$	98,118	$	1,641	$	340,939	$	2,936	147
Non-investment grade	125,813		6,608		19,987		1,686		145,800		8,294		574
Total available-for-sale securities	$	368,634	$	7,903	$	118,105	$	3,327	$	486,739	$	11,230	721

The above securities have been evaluated and determined to be temporary impairments for which we expect to recover our entire principal plus interest.  The primary components of this analysis include a general review of market conditions and financial performance of the issuer along with the extent and duration at which fair value is less than cost.  Any securities that we intend to sell or will more likely than not be required to sell before recovery are included in other-than-temporary impairments, which are recognized in earnings.

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Net investment income

Investment income, net of expenses, was generated from the following portfolios:

	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2019		2018		2019		2018
Fixed maturities (1)	$	5,449	$	6,243	$	17,098	$	18,616
Equity securities	452		203		734		487
Cash equivalents and other	2,900		1,484		8,025		3,518
Total investment income	8,801		7,930		25,857		22,621
Less: investment expenses	149		271		658		1,038
Investment income, net of expenses	$	8,652	$	7,659	$	25,199	$	21,583

(1) Includes interest earned on note receivable from Erie Family Life Insurance Company of $0.4 million and $1.3 million for the three and nine months ended September 30, 2018, respectively. The note was repaid in full in December 2018.

Realized investment gains (losses)

Realized gains (losses) on investments were as follows:

	Three months ended September 30,						Nine months ended September 30,
(in thousands)	2019			2018			2019			2018
Available-for-sale securities:
Gross realized gains	$	1,320		$	525		$	5,640		$	1,100
Gross realized losses	(248		)	(526		)	(1,411		)	(1,512		)
Net realized gains (losses) on available-for-sale securities	1,072			(1		)	4,229			(412		)
Equity securities	624			(1		)	1,272			(189		)
Miscellaneous	0			2			0			104
Net realized investment gains (losses)	$	1,696		$	0		$	5,501		$	(497	)

The portion of net unrealized gains and losses recognized during the reporting period, related to equity securities still held at the reporting date, is calculated as follows:

	Three months ended September 30,					Nine months ended September 30,
(in thousands)	2019		2018			2019		2018
Equity securities:
Net gains (losses) recognized during the period	$	624	$	(1	)	$	1,272	$	(189	)
Less: net gains (losses) recognized on securities sold	47		(52		)	47		(86		)
Net unrealized gains (losses) recognized on securities held at reporting date	$	577	$	51		$	1,225	$	(103	)

Other-than-temporary impairments on available-for-sale securities recognized in earnings were $31 thousand for the quarter ended September 30, 2019 and there were no impairment losses for the quarter ended September 30, 2018. For the nine months ended September 30, 2019 and 2018, other-than-temporary impairments on available-for-sale securities recognized in earnings were $0.2 million and $0.6 million, respectively. We have the intent to sell all credit-impaired available-for-sale securities; therefore, the entire amount of the impairment charges were included in earnings and no impairments were recognized in other comprehensive income. 

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Limited partnerships

The majority of our limited partnership holdings are considered investment companies where the general partners record assets at fair value. These limited partnerships are recorded using the equity method of accounting and are generally reported on a one-quarter lag; therefore, our year-to-date limited partnership results through September 30, 2019 are comprised of partnership financial results for the fourth quarter of 2018 and first two quarters of 2019.  Given the lag in reporting, our limited partnership results do not reflect the market conditions of the third quarter of 2019. Cash contributions made to and distributions received from the partnerships are recorded in the period in which the transaction occurs. At December 31, 2018 we also owned one real estate limited partnership that did not meet the criteria of an investment company. This partnership prepared audited financial statements on a cost basis. We elected to report this limited partnership under the fair value option, which was based on the NAV from our partner's capital statement reflecting the general partner's estimate of fair value for the fund's underlying assets. Fair value provides consistency in the evaluation and financial reporting for these limited partnerships and limited partnerships accounted for under the equity method. This real estate limited partnership was fully liquidated in January 2019.

Equity in earnings of limited partnerships by method of accounting were as follows:

	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2019		2018		2019		2018
Equity in earnings of limited partnerships - equity method	$	3,289	$	645	$	2,546	$	624
Change in fair value of limited partnerships - fair value option	0		127		0		(263		)
Equity in earnings of limited partnerships	$	3,289	$	772	$	2,546	$	361

The following table summarizes limited partnership investments by sector as of:

(in thousands)	September 30, 2019		December 31, 2018
Private equity	$	29,938	$	28,271
Mezzanine debt	900		1,152
Real estate	1,333		2,192
Real estate - fair value option	0		3,206
Total limited partnership investments	$	32,171	$	34,821

See also Note 14, "Commitments and Contingencies" for investment commitments related to limited partnerships.

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Note 7.  Leases

Lease assets and liabilities recorded on our Statement of Financial Position as of:

(in thousands)	September 30, 2019		December 31, 2018
Operating lease assets	$	23,841	$	—
Operating lease liabilities - current	$	11,366	$	—
Operating lease liabilities - long-term	12,129		—
Total operating lease liabilities	$	23,495	$	—

We currently have leases for real estate, technology equipment, copiers, and vehicles. Our largest operating lease asset at September 30, 2019 of $13.3 million is for office space leased from the Exchange, including the home office. Under this lease, rent is based on rental rates of like property and all operating expenses are the responsibility of the tenant (Indemnity). The lease agreement expires December 31, 2021.

Operating lease costs for the three and nine months ended September 30, 2019 were $3.5 million and $10.7 million, respectively. Of this amount, the Exchange and its subsidiaries reimbursed us $1.5 million and $4.6 million for the three and nine months ended September 30, 2019, respectively, which represents the allocated share of lease costs supporting administrative services activities.

Note 8.  Borrowing Arrangements

Bank line of credit

As of September 30, 2019, we have access to a $100 million bank revolving line of credit with a $25 million letter of credit sublimit that expires on October 30, 2023. As of September 30, 2019, a total of $99.1 million remains available under the facility due to $0.9 million outstanding letters of credit, which reduce the availability for letters of credit to $24.1 million.  We had no borrowings outstanding on our line of credit as of September 30, 2019.  Investments with a fair value of $109.8 million were pledged as collateral on the line at September 30, 2019. The investments pledged as collateral have no trading restrictions and are reported as cash and cash equivalents and available-for-sale securities in the Statements of Financial Position as of September 30, 2019. The banks require compliance with certain covenants, which include leverage ratios and debt restrictions, for our line of credit.  We are in compliance with all covenants at September 30, 2019.

Term loan credit facility

In 2016, we entered into a credit agreement for a $100 million senior secured draw term loan credit facility ("Credit Facility") for the acquisition of real property and construction of an office building that will serve as part of our principal headquarters. On January 1, 2019, the Credit Facility converted to a fully-amortized term loan with monthly payments of principal and interest at a fixed rate of 4.35% over a period of 28 years. Investments with a fair value of $112.0 million were pledged as collateral for the facility and are reported as cash and cash equivalents and available-for-sale securities in the Statements of Financial Position as of September 30, 2019. The bank requires compliance with certain covenants, which include leverage ratios, debt restrictions and minimum net worth, for our Credit Facility. We are in compliance with all covenants at September 30, 2019.

The remaining unpaid balance from the Credit Facility is reported at carrying value on our Statements of Financial Position, net of unamortized loan origination and commitment fees. See Note 5, "Fair Value" for the estimated fair value of these borrowings.

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Annual principal payments

The following table sets forth future principal payments:

(in thousands)
Year		Principal payments
2019	$	512
2020		1,980
2021		2,020
2022		2,110
2023		2,227
Thereafter		89,719

Note 9.  Postretirement Benefits

Pension plans

Our pension plans consist of a noncontributory defined benefit pension plan covering substantially all employees and an unfunded supplemental employee retirement plan for certain members of executive and senior management. Although we are the sponsor of these postretirement plans and record the funded status of these plans, the Exchange and its subsidiaries reimburse us for approximately 59% of the annual benefit expense of these plans, which represents pension benefits for employees performing administrative services and their allocated share of costs for employees in departments that support the administrative functions.

The cost of our pension plans are as follows:

	Three months ended September 30,						Nine months ended September 30,
(in thousands)	2019			2018			2019			2018
Service cost for benefits earned	$	8,463		$	9,513		$	25,390		$	28,539
Interest cost on benefits obligation	9,827			8,845			29,480			26,536
Expected return on plan assets	(11,872		)	(12,815		)	(35,614		)	(38,444		)
Prior service cost amortization	349			339			1,046			1,015
Net actuarial loss amortization	1,279			3,202			3,835			9,606
Pension plan cost (1)	$	8,046		$	9,084		$	24,137		$	27,252

(1) The components of pension plan costs other than the service cost component are included in the line item "Other income" in the Statements of Operations after reimbursements from the Exchange and its subsidiaries.

Note 10.  Income Taxes

Income tax expense is provided on an interim basis based upon our estimate of the annual effective income tax rate, adjusted each quarter for discrete items. For the three months ended September 30, 2019 and 2018, our effective tax rate was 21.2% and 23.0%, respectively, and for the nine months ended September 30, 2019 and 2018, our effective tax rate was 19.9% and 21.7%, respectively. Impacting our effective tax rate in the nine months ended September 30, 2019, was the settlement of an uncertain tax position. An income tax benefit of $4.1 million was recorded in June 2019, including $1.0 million of related interest expense, which reduced our effective tax rate by 1.3% in the nine months ended September 30, 2019.

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Note 11.  Capital Stock

Class A and B common stock

Holders of Class B shares may, at their option, convert their shares into Class A shares at the rate of 2,400 Class A shares per Class B share.  There were no shares of Class B common stock converted into Class A common stock during the nine months ended September 30, 2019 and the year ended December 31, 2018. There is no provision for conversion of Class A shares to Class B shares, and Class B shares surrendered for conversion cannot be reissued.

Stock repurchases

In 2011, our Board of Directors approved a continuation of the current stock repurchase program of $150 million, with no time limitation.  There were no shares repurchased under this program during the nine months ended September 30, 2019 and the year ended December 31, 2018. We had approximately $17.8 million of repurchase authority remaining under this program at September 30, 2019.

During the nine months ended September 30, 2019, we purchased 13,399 shares of our outstanding Class A nonvoting common stock outside of our publicly announced share repurchase program at a total cost of $2.4 million. Of this amount, we purchased 3,246 shares for $0.4 million, or $132.35 per share, for stock-based awards in conjunction with our equity compensation plan, for which the shares were delivered to plan participants in January 2019. We purchased 5,844 shares for $1.2 million, or $198.17 per share, to fund the rabbi trust for the outside director deferred stock compensation plan. The shares were transferred to the rabbi trust in February, May and August 2019. The remaining 4,309 shares were purchased at a total cost of $0.8 million, or $176.26 per share, to fund the rabbi trust for the incentive compensation deferral plan. The shares were transferred to the rabbi trust in February, March, May and August 2019.

During the year ended December 31, 2018, we purchased 27,120 shares of our outstanding Class A nonvoting common stock outside of our publicly announced share repurchase program at a total cost of $3.2 million. Of this amount, we purchased 5,830 shares for $0.7 million, or $117.39 per share, for stock-based awards in conjunction with our equity compensation plan. We purchased 9,285 shares for $1.1 million, or $122.19 per share, to fund the rabbi trust for the outside director deferred stock compensation plan. The remaining 12,005 shares were purchased at a total cost of $1.4 million, or $119.28 per share, to fund the rabbi trust for the incentive compensation deferral plan. These shares were delivered in 2018.

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Note 12.  Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income ("AOCI") (loss) by component, including amounts reclassified to other comprehensive income ("OCI") (loss) and the related line item in the Statements of Operations where net income is presented, are as follows:

	Three months ended									Three months ended
	September 30, 2019									September 30, 2018
(in thousands)	Before Tax			Income Tax			Net			Before Tax			Income Tax			Net
Investment securities:
AOCI (loss), beginning of period	$	1,030		$	216		$	814		$	(4,157	)	$	(873	)	$	(3,284	)
OCI (loss) before reclassifications	3,991			838			3,153			(624		)	(131		)	(493		)
Realized investment (gains) losses	(1,072		)	(225		)	(847		)	1			0			1
Impairment losses	31			7			24			0			0			0
OCI (loss)	2,950			620			2,330			(623		)	(131		)	(492		)
AOCI (loss), end of period	$	3,980		$	836		$	3,144		$	(4,780	)	$	(1,004	)	$	(3,776	)
Pension and other postretirement plans:
AOCI (loss), beginning of period	$	(152,632	)	$	(32,054	)	$	(120,578	)	$	(200,954	)	$	(42,201	)	$	(158,753	)
Amortization of prior service costs (1)	349			74			275			0			0			0
Amortization of net actuarial loss (1)	1,210			254			956			0			0			0
OCI	1,559			328			1,231			0			0			0
AOCI (loss), end of period	$	(151,073	)	$	(31,726	)	$	(119,347	)	$	(200,954	)	$	(42,201	)	$	(158,753	)
Total
AOCI (loss), beginning of period	$	(151,602	)	$	(31,838	)	$	(119,764	)	$	(205,111	)	$	(43,074	)	$	(162,037	)
Investment securities	2,950			620			2,330			(623		)	(131		)	(492		)
Pension and other postretirement plans	1,559			328			1,231			0			0			0
OCI (loss)	4,509			948			3,561			(623		)	(131		)	(492		)
AOCI (loss), end of period	$	(147,093	)	$	(30,890	)	$	(116,203	)	$	(205,734	)	$	(43,205	)	$	(162,529	)

	Nine months ended									Nine months ended
	September 30, 2019									September 30, 2018
(in thousands)	Before Tax			Income Tax			Net			Before Tax			Income Tax			Net
Investment securities:
AOCI (loss), beginning of period	$	(9,169	)	$	(1,926	)	$	(7,243	)	$	3,410		$	716		$	2,694
OCI (loss) before reclassifications	17,185			3,609			13,576			(9,163		)	(1,924		)	(7,239		)
Realized investment (gains) losses	(4,229		)	(888		)	(3,341		)	412			86			326
Impairment losses	193			41			152			646			136			510
Cumulative effect of adopting ASU 2016-01 (2)	—			—			—			(85		)	(18		)	(67		)
OCI (loss)	13,149			2,762			10,387			(8,190		)	(1,720		)	(6,470		)
AOCI (loss), end of period	$	3,980		$	836		$	3,144		$	(4,780	)	$	(1,004	)	$	(3,776	)
Pension and other postretirement plans:
AOCI (loss), beginning of period	$	(155,749	)	$	(32,708	)	$	(123,041	)	$	(200,954	)	$	(42,201	)	$	(158,753	)
Amortization of prior service costs (1)	1,046			220			826			0			0			0
Amortization of net actuarial loss (1)	3,630			762			2,868			0			0			0
OCI	4,676			982			3,694			0			0			0
AOCI (loss), end of period	$	(151,073	)	$	(31,726	)	$	(119,347	)	$	(200,954	)	$	(42,201	)	$	(158,753	)
Total
AOCI (loss), beginning of period	$	(164,918	)	$	(34,634	)	$	(130,284	)	$	(197,544	)	$	(41,485	)	$	(156,059	)
Investment securities	13,149			2,762			10,387			(8,190		)	(1,720		)	(6,470		)
Pension and other postretirement plans	4,676			982			3,694			0			0			0
OCI (loss)	17,825			3,744			14,081			(8,190		)	(1,720		)	(6,470		)
AOCI (loss), end of period	$	(147,093	)	$	(30,890	)	$	(116,203	)	$	(205,734	)	$	(43,205	)	$	(162,529	)

(1) Effective January 1, 2019, amounts reclassified from AOCI related to amortization of prior service costs and net actuarial loss were recorded during interim periods. Prior to 2019, amounts reclassified for these items were recorded on an annual basis. These components are included in the computation of net periodic pension cost. See Note 9, "Postretirement Benefits", for additional information.

(2) ASU 2016-01 required a reclassification of unrealized losses of equity securities from AOCI to retained earnings at January 1, 2018.

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Note 13. Concentrations of Credit Risk

Financial instruments could potentially expose us to concentrations of credit risk, including unsecured receivables from the Exchange. A large majority of our revenue and receivables are from the Exchange and its affiliates. See also Note 1, "Nature of Operations". Management fee amounts and other reimbursements due from the Exchange and its affiliates were $498.0 million and $449.9 million at September 30, 2019 and December 31, 2018, respectively. Given the financial strength of the Exchange and historical experience of no credit losses, we believe it is unlikely these receivables would have a significant credit loss exposure.

Note 14.  Commitments and Contingencies

We have contractual commitments to invest up to $9.8 million related to our limited partnership investments at September 30, 2019.  These commitments are split among private equity securities of $4.4 million and mezzanine debt securities of $5.4 million. These commitments will be funded as required by the limited partnership agreements.

We are involved in litigation arising in the ordinary course of conducting business.  In accordance with current accounting standards for loss contingencies and based upon information currently known to us, we establish reserves for litigation when it is probable that a loss associated with a claim or proceeding has been incurred and the amount of the loss or range of loss can be reasonably estimated.  When no amount within the range of loss is a better estimate than any other amount, we accrue the minimum amount of the estimable loss.  To the extent that such litigation against us may have an exposure to a loss in excess of the amount we have accrued, we believe that such excess would not be material to our financial condition, results of operations, or cash flows.  Legal fees are expensed as incurred.  We believe that our accruals for legal proceedings are appropriate and, individually and in the aggregate, are not expected to be material to our financial condition, results of operations, or cash flows.

We review all litigation on an ongoing basis when making accrual and disclosure decisions.  For certain legal proceedings, we cannot reasonably estimate losses or a range of loss, if any, particularly for proceedings that are in their early stages of development or where the plaintiffs seek indeterminate damages.  Various factors, including, but not limited to, the outcome of potentially lengthy discovery and the resolution of important factual questions, may need to be determined before probability can be established or before a loss or range of loss can be reasonably estimated.  If the loss contingency in question is not both probable and reasonably estimable, we do not establish an accrual and the matter will continue to be monitored for any developments that would make the loss contingency both probable and reasonably estimable.  In the event that a legal proceeding results in a substantial judgment against, or settlement by, us, there can be no assurance that any resulting liability or financial commitment would not have a material adverse effect on the financial condition, results of operations, or cash flows.

Note 15.  Subsequent Events

No items were identified in this period subsequent to the financial statement date that required adjustment or additional disclosure.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of financial condition and results of operations highlights significant factors influencing Erie Indemnity Company ("Indemnity", "we", "us", "our").  This discussion should be read in conjunction with the historical financial statements and the related notes thereto included in Part I, Item 1. "Financial Statements" of this Quarterly Report on Form 10-Q, and with Item 7. "Management’s Discussion and Analysis of Financial Condition and Results of Operations" for the year ended December 31, 2018, as contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 21, 2019.

INDEX

	Page Number
Cautionary Statement Regarding Forward-Looking Information	26
Recent Accounting Standards	27
Operating Overview	27
Results of Operations	29
Financial Condition	35
Liquidity and Capital Resources	37
Critical Accounting Estimates	39

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

"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;

• ability to maintain uninterrupted business operations;

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

26

• 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.

RECENT ACCOUNTING STANDARDS

See Part I, Item 1. "Financial Statements - Note 2, Significant Accounting Policies, of Notes to Financial Statements" contained within this report for a discussion of recently adopted as well as other recently issued accounting standards and the impact on our financial statements if known.

OPERATING OVERVIEW

Overview

We serve as the attorney-in-fact for the subscribers (policyholders) at the Exchange, a reciprocal insurer that writes property and casualty insurance. Our primary function as attorney-in-fact is to perform policy issuance and renewal services on behalf of the subscribers at the Exchange. We also act as attorney-in-fact on behalf of the Exchange, as well as the service provider for its insurance subsidiaries, with respect to all administrative services.

The Exchange is a reciprocal insurance exchange, which is an unincorporated association of individuals, partnerships and corporations that agree to insure one another. Each applicant for insurance to the Exchange signs a subscriber's agreement, which contains an appointment of Indemnity as their attorney-in-fact to transact the business of the Exchange on their behalf. Pursuant to the subscriber’s agreement for acting as attorney-in-fact in these two capacities, we earn a management fee calculated as a percentage of the direct and affiliated assumed premiums written by the Exchange.

Our earnings are primarily driven by the management fee revenue generated for the services we provide to the Exchange. The policy issuance and renewal services we provide to the Exchange are related to the sales, underwriting and issuance of policies. The sales related services we provide include agent compensation and certain sales and advertising support services. Agent compensation includes scheduled commissions to agents based upon premiums written as well as additional commissions and bonuses to agents, which are earned by achieving targeted measures. Agent compensation generally comprises approximately two-thirds of our policy issuance and renewal expenses. The underwriting services we provide include underwriting and policy processing. The remaining services we provide include customer service and administrative support. We also provide information technology services that support all the functions listed above. Included in these expenses are allocations of costs for departments that support these policy issuance and renewal functions.

By virtue of its legal structure as a reciprocal insurer, the Exchange does not have any employees or officers. Therefore, it enters into contractual relationships by and through an attorney-in-fact. Indemnity serves as the attorney-in-fact on behalf of the Exchange with respect to its administrative services. The Exchange's insurance subsidiaries also utilize Indemnity for these services in accordance with the service agreements between each of the subsidiaries and Indemnity. Claims handling services include costs incurred in the claims process, including the adjustment, investigation, defense, recording and payment functions. Life insurance management services include costs incurred in the management and processing of life insurance business. Investment management services are related to investment trading activity, accounting and all other functions attributable to the investment of funds. Included in these expenses are allocations of costs for departments that support these administrative functions. The amounts incurred for these services are reimbursed to Indemnity at cost in accordance with the subscriber's agreement and the service agreements. State insurance regulations require that intercompany service agreements and any material amendments be approved in advance by the state insurance department.

Our results of operations are tied to the growth and financial condition of the Exchange as the Exchange is our sole customer, and our earnings are largely generated from management fees based on the direct and affiliated assumed premiums written by the Exchange. The Exchange generates revenue by insuring preferred and standard risks, with personal lines comprising 71% of the 2018 direct and affiliated assumed written premiums and commercial lines comprising the remaining 29%.  The principal personal lines products are private passenger automobile and homeowners.  The principal commercial lines products are commercial multi-peril, commercial automobile and workers compensation.

27

Financial Overview

	Three months ended September 30,							Nine months ended September 30,
(dollars in thousands, except per share data)	2019		2018		% Change			2019		2018		% Change
	(Unaudited)							(Unaudited)
Operating income	$	105,907	$	96,695	9.5		%	$	288,639	$	269,585	7.1		%
Total investment income	13,606		8,431		61.4			33,053		20,801		58.9
Interest expense, net	111		709		(84.3	)		832		1,864		(55.4	)
Other income	100		54		86.1			195		156		25.2
Income before income taxes	119,502		104,471		14.4			321,055		288,678		11.2
Income tax expense	25,333		24,025		5.4			63,821		62,768		1.7
Net income	$	94,169	$	80,446	17.1		%	$	257,234	$	225,910	13.9		%
Net income per share - diluted	$	1.80	$	1.54	17.0		%	$	4.92	$	4.32	13.9		%

Operating income increased in both the third quarter and nine months ended September 30, 2019, compared to the same periods in 2018. Management fee revenue for policy issuance and renewal services increased 5.1% and 5.6% in the third quarter and nine months ended September 30, 2019, respectively. Management fee revenue is based upon the management fee rate we charge, and the direct and affiliated assumed premiums written by the Exchange. The management fee rate was 25% for both 2019 and 2018. The direct and affiliated assumed premiums written by the Exchange increased 5.2% to $2.0 billion in the third quarter of 2019 and increased 5.6% to $5.7 billion for the nine months ended September 30, 2019, compared to the same periods in 2018.

Cost of operations for policy issuance and renewal services increased 4.0% and 5.2% in the third quarter and nine months ended September 30, 2019, respectively, compared to the same periods in 2018, primarily due to higher commissions driven by direct written premium growth and technology investments in both periods, as well as higher personnel costs in the nine months ended September 30, 2019.

Management fee revenue for administrative services increased $0.9 million to $14.4 million in the third quarter of 2019 and increased $2.7 million to $42.6 million for the nine months ended September 30, 2019, compared to the same periods in 2018. The administrative services reimbursement revenue and corresponding cost of operations increased both total operating revenue and total operating expenses by $142.7 million in the third quarter of 2019 and $431.3 million for the nine months ended September 30, 2019, but had no net impact on operating income in either period.

Total investment income increased $5.2 million in the third quarter of 2019 compared to the same period in 2018, primarily driven by higher equity in earnings of limited partnerships and net realized gains. Total investment income increased $12.3 million for the nine months ended September 30, 2019 compared to the same period in 2018, primarily driven by net realized gains and higher net investment income.

Income tax expense increased $1.3 million in the third quarter and $1.1 million for the nine months ended September 30, 2019 compared to the same periods in 2018. Income tax expense for the nine months ended September 30, 2019 was impacted by an income tax benefit of approximately $4.1 million recorded in the second quarter as a result of settling an uncertain tax position, which reduced our effective tax rate by 1.3%.

General Conditions and Trends Affecting Our Business

Economic conditions

Unfavorable changes in economic conditions, including declining consumer confidence, inflation, high unemployment, and the threat of recession, among others, may lead the Exchange's customers to modify coverage, not renew policies, or even cancel policies, which could adversely affect the premium revenue of the Exchange, and consequently our management fee.  Further, unanticipated increased inflation costs including medical cost inflation, construction and auto repair cost inflation, and tort issues may impact the estimated loss reserves and future premium rates. If any of these items impacted the financial condition or continuing operations of the Exchange, it could have an impact on our financial results.

Financial market volatility

Our portfolio of fixed maturity, equity security, and limited partnership investments is subject to market volatility especially in periods of instability in the worldwide financial markets.  Over time, net investment income could also be impacted by volatility and by the general level of interest rates, which impact reinvested cash flow from the portfolio and business operations. Depending upon market conditions, which are unpredictable and remain uncertain, considerable fluctuation could

28

exist in the fair value of our investment portfolio and reported total investment income, which could have an adverse impact on our financial condition, results of operations, and cash flows.

RESULTS OF OPERATIONS 

Management fee revenue

We have two performance obligations in the subscriber’s agreement, providing policy issuance and renewal services and acting as attorney-in-fact for the Exchange, as well as the service provider for its insurance subsidiaries, with respect to all administrative services. We earn management fees for acting as the attorney-in-fact for the subscribers at the Exchange in these two capacities, and allocate our revenues between our performance obligations.

The management fee is calculated by multiplying all direct and affiliated assumed premiums written by the Exchange by the management fee rate, which is determined by our Board of Directors at least annually.  The management fee rate was set at 25%, the maximum rate, for both 2019 and 2018.  Changes in the management fee rate can affect our revenue and net income significantly. The transaction price, including management fee revenue and administrative service reimbursement revenue, is allocated based on the estimated standalone selling prices developed using industry information and other available information for similar services. We update the transaction price allocation annually based upon the most recent information available. There was no material change to the allocation in 2019.

The following table presents the allocation and disaggregation of revenue for our two performance obligations: 

	Three months ended September 30,								Nine months ended September 30,
(dollars in thousands)	2019			2018			% Change		2019			2018			% Change
	(Unaudited)								(Unaudited)
Policy issuance and renewal services
Direct and affiliated assumed premiums written by the Exchange	$	1,960,441		$	1,863,927		5.2	%	$	5,738,554		$	5,434,720		5.6		%
Management fee rate	24.2		%	24.2		%			24.2		%	24.2		%
Management fee revenue	474,427			451,070			5.2		1,388,730			1,315,202			5.6
Change in allowance for management fee returned on cancelled policies (1)	0			291			NM		(2,807		)	(3,291		)	14.7
Management fee revenue - policy issuance and renewal services, net	$	474,427		$	451,361		5.1	%	$	1,385,923		$	1,311,911		5.6		%
Administrative services
Direct and affiliated assumed premiums written by the Exchange	$	1,960,441		$	1,863,927		5.2	%	$	5,738,554		$	5,434,720		5.6		%
Management fee rate	0.8		%	0.8		%			0.8		%	0.8		%
Management fee revenue	15,683			14,912			5.2		45,908			43,478			5.6
Change in contract liability (2)	(1,241		)	(1,374		)	9.6		(3,293		)	(3,539		)	6.9
Change in allowance for management fee returned on cancelled policies (1)	(12		)	(17		)	33.6		(39		)	(45		)	14.6
Management fee revenue - administrative services, net	14,430			13,521			6.7		42,576			39,894			6.7
Administrative services reimbursement revenue	142,730			140,172			1.8		431,305			432,642			(0.3	)
Total revenue from administrative services	$	157,160		$	153,693		2.3	%	$	473,881		$	472,536		0.3		%

NM = not meaningful

(1) Management fees are returned to the Exchange when policies are cancelled mid-term and unearned premiums are refunded.  We record an estimated allowance for management fees returned on mid-term policy cancellations. This estimated allowance has been allocated between the two performance obligations consistent with the revenue allocation proportion.

(2) Management fee revenue - administrative services is recognized over time as the services are performed. See Part I, Item 1. "Financial Statements - Note 3, Revenue, of Notes to Financial Statements" contained within this report.

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Direct and affiliated assumed premiums written by the Exchange

Direct and affiliated assumed premiums include premiums written directly by the Exchange and premiums assumed from its wholly owned property and casualty subsidiaries. Direct and affiliated assumed premiums written by the Exchange increased 5.2% to $2.0 billion in the third quarter of 2019, from $1.9 billion in the third quarter of 2018, driven by increases in both policies in force and average premium per policy.  Year-over-year policies in force for all lines of business increased 2.2% in the third quarter of 2019 driven by continuing strong policyholder retention, compared to 3.5% in the third quarter of 2018.  The year-over-year average premium per policy for all lines of business increased 3.4% at September 30, 2019, compared to 3.2% at September 30, 2018.

Premiums generated from new business decreased 3.7% to $221 million in the third quarter of 2019. While year-over-year average premium per policy on new business increased 6.6% at September 30, 2019, new business polices written decreased 8.9% in the third quarter of 2019. Premiums generated from new business increased 3.6% to $230 million in the third quarter of 2018. While year-over-year average premium per policy on new business increased 5.4% at September 30, 2018, new business polices written decreased 1.9% in the third quarter of 2018. Premiums generated from renewal business increased 6.4% to $1.7 billion in the third quarter of 2019, compared to an increase of 7.7% to $1.6 billion in the third quarter of 2018.  Underlying the trend in renewal business premiums was an increase in year-over-year average premium per policy of 2.9% at September 30, 2019 and September 30, 2018, respectively, as well as steady policy retention ratios. 

Personal lines – Total personal lines premiums written increased 4.4% to $1.4 billion in the third quarter of 2019, from $1.4 billion in the third quarter of 2018, driven by an increase of 2.1% in total personal lines policies in force and an increase of 3.1% in the total personal lines year-over-year average premium per policy.

Commercial lines – Total commercial lines premiums written increased 7.2% to $530 million in the third quarter of 2019, from $494 million in the third quarter of 2018, driven by a 2.5% increase in total commercial lines policies in force and a 4.0% increase in the total commercial lines year-over-year average premium per policy. 

Future trends-premium revenue – The Exchange plans to continue its efforts to grow premiums and improve its competitive position in the marketplace.  Expanding the size of its agency force through a careful agency selection process and increased market penetration in our existing operating territories is expected to contribute to future growth as existing and new agents build their books of business.

Changes in premium levels attributable to the growth in policies in force and rate changes directly affect the profitability of the Exchange and have a direct bearing on our management fee. Our continued focus on underwriting discipline and the maturing of pricing sophistication models has contributed to the Exchange's steady policy retention ratios and increased average premium per policy.

Policy issuance and renewal services

	Three months ended September 30,						Nine months ended September 30,
(dollars in thousands)	2019		2018		% Change		2019		2018		% Change
	(Unaudited)						(Unaudited)
Management fee revenue - policy issuance and renewal services, net	$	474,427	$	451,361	5.1	%	$	1,385,923	$	1,311,911	5.6		%
Service agreement revenue	7,155		7,072		1.2		20,754		21,297		(2.5	)
	481,582		458,433		5.0		1,406,677		1,333,208		5.5
Cost of policy issuance and renewal services	390,105		375,259		4.0		1,160,614		1,103,517		5.2
Operating income - policy issuance and renewal services	$	91,477	$	83,174	10.0	%	$	246,063	$	229,691	7.1		%

Policy issuance and renewal services

We allocate a portion of the management fee, which currently equates to 24.2% of the direct and affiliated assumed premiums written by the Exchange, for providing policy issuance and renewal services. This portion of the management fee is recognized as revenue when the policy is issued or renewed because it is at that time that the services we provide are substantially complete and the executed insurance policy is transferred to the customer. The increase in management fee revenue for policy issuance and renewal services was driven by the increase in the direct and affiliated assumed premiums written by the Exchange discussed previously.

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Service agreement revenue

Service agreement revenue includes service charges we collect from subscribers/policyholders for providing extended payment terms on policies written and assumed by the Exchange, and late payment and policy reinstatement fees.  The service charges are fixed dollar amounts per billed installment.  The decrease in service agreement revenue for the nine months ended 2019 reflects the continued shift to payment plans that do not incur service charges or offer a premium discount for certain payment methods. 

Cost of policy issuance and renewal services

	Three months ended September 30,							Nine months ended September 30,
(dollars in thousands)	2019		2018		% Change			2019		2018		% Change
	(Unaudited)							(Unaudited)
Commissions:
Total commissions	$	266,983	$	256,770	4.0		%	$	783,221	$	752,437	4.1		%
Non-commission expense: (1)
Underwriting and policy processing	$	37,497	$	35,645	5.2		%	$	115,942	$	112,052	3.5		%
Information technology	41,891		36,467		14.9			121,885		104,797		16.3
Sales and advertising	12,501		13,226		(5.5	)		37,703		40,979		(8.0	)
Customer service	8,006		7,041		13.7			24,342		21,822		11.5
Administrative and other	23,227		26,110		(11.0	)		77,521		71,430		8.5
Total non-commission expense	123,122		118,489		3.9			377,393		351,080		7.5
Total cost of policy issuance and renewal services	$	390,105	$	375,259	4.0		%	$	1,160,614	$	1,103,517	5.2		%

(1) 2018 amounts have been reclassified between categories to conform to the current period presentation.

Commissions – Commissions increased $10.2 million in the third quarter of 2019 and $30.8 million for the nine months ended September 30, 2019, compared to the same respective periods in 2018. The increases were primarily driven by the growth in direct and affiliated assumed premiums written by the Exchange of 5.2% in the third quarter of 2019 and 5.6% for the nine months ended September 30, 2019, partially offset by lower agent incentive costs related to less profitable growth, compared to the same periods in 2018. The estimated agent incentive payouts at September 30, 2019 are based on actual underwriting results for the two prior years and current year-to-date actual results and forecasted results for the remainder of 2019. Therefore, fluctuations in the current quarter underwriting results can impact the estimated incentive payout on a quarter-to-quarter basis.

Non-commission expense – Non-commission expense increased $4.6 million in the third quarter of 2019 compared to the third quarter of 2018. Underwriting and policy processing expense increased $1.9 million primarily due to underwriting report costs and other policy acquisition costs. Information technology costs increased $5.4 million primarily due to increased professional fees. Customer service costs increased $1.0 million primarily due to increased personnel costs. Administrative and other expenses decreased $2.9 million primarily driven by a decrease in long-term incentive plan cost due to a decrease in the company stock price in the third quarter of 2019. Personnel costs in all expense categories were impacted by lower estimated costs for incentive plans related to underwriting performance.

Non-commission expense increased $26.3 million for the nine months ended September 30, 2019 compared to the same period in 2018. Underwriting and policy processing expense increased $3.9 million primarily due to underwriting report costs and other policy acquisition costs. Information technology costs increased $17.1 million primarily due to increased professional fees. Administrative and other expenses increased $6.1 million primarily driven by an increase in long-term incentive plan cost due to a higher company stock price during the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018. Personnel costs in all expense categories were impacted by additional bonuses awarded to all employees of approximately $1.1 million for the nine months ended September 30, 2019 and $4.8 million for the nine months ended September 30, 2018.

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Administrative services

	Three months ended September 30,							Nine months ended September 30,
(dollars in thousands)	2019		2018		% Change			2019		2018		% Change
	(Unaudited)							(Unaudited)
Management fee revenue - administrative services, net	$	14,430	$	13,521	6.7		%	$	42,576	$	39,894	6.7		%
Administrative services reimbursement revenue	142,730		140,172		1.8			431,305		432,642		(0.3	)
Total revenue allocated to administrative services	157,160		153,693		2.3			473,881		472,536		0.3
Administrative services expenses
Claims handling services	124,566		122,205		1.9			376,061		377,854		(0.5	)
Investment management services	8,088		7,834		3.3			25,273		24,607		2.7
Life management services	10,076		10,133		(0.6	)		29,971		30,181		(0.7	)
Operating income - administrative services	$	14,430	$	13,521	6.7		%	$	42,576	$	39,894	6.7		%

Administrative services

We allocate a portion of the management fee, which currently equates to 0.8% of the direct and affiliated assumed premiums written by the Exchange, to the administrative services. This portion of the management fee is recognized as revenue over a four-year period representing the time over which the services are provided. We also report reimbursed costs as revenues, which are recognized monthly as services are provided. The administrative services expenses we incur and the related reimbursements we receive are recorded gross in the Statements of Operations.

Cost of administrative services

By virtue of its legal structure as a reciprocal insurer, the Exchange does not have any employees or officers. Therefore, it enters into contractual relationships by and through an attorney-in-fact. Indemnity serves as the attorney-in-fact on behalf of the Exchange with respect to its administrative services in accordance with the subscriber's agreement. The Exchange's insurance subsidiaries also utilize Indemnity for these services in accordance with the service agreements between each of the subsidiaries and Indemnity. The amounts incurred for these services are reimbursed to Indemnity at cost in accordance with the subscriber's agreement and the service agreements.  We record these reimbursements due from the Exchange and its insurance subsidiaries as a receivable.

Total investment income

A summary of the results of our investment operations is as follows:

	Three months ended September 30,							Nine months ended September 30,
(dollars in thousands)	2019			2018		% Change		2019			2018			% Change
	(Unaudited)							(Unaudited)
Net investment income	$	8,652		$	7,659	13.0	%	$	25,199		$	21,583		16.8	%
Net realized investment gains (losses)	1,696			0		NM		5,501			(497		)	NM
Net impairment losses recognized in earnings	(31		)	0		NM		(193		)	(646		)	70.1
Equity in earnings of limited partnerships	3,289			772		NM		2,546			361			NM
Total investment income	$	13,606		$	8,431	61.4	%	$	33,053		$	20,801		58.9	%

NM = not meaningful

Net investment income

Net investment income primarily includes interest and dividends on our fixed maturity and equity security portfolios, net of investment expenses.  Net investment income increased $1.0 million in the third quarter of 2019, compared to the third quarter of 2018, primarily due to higher income from cash and cash equivalents reflecting higher rates and balances. Net investment income increased $3.6 million for the nine months ended September 30, 2019, compared to the same period in 2018, primarily due to increased income earned from cash and cash equivalents and agent loans, both resulting from higher balances and rates. Those earnings were somewhat offset by decreased income on fixed maturities driven by lower average invested balances.

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Net realized investment gains (losses)

A breakdown of our net realized investment gains (losses) is as follows: 

	Three months ended September 30,						Nine months ended September 30,
(in thousands)	2019			2018			2019			2018
Securities sold:	(Unaudited)						(Unaudited)
Fixed maturities	$	1,072		$	(1	)	$	4,229		$	(412	)
Equity securities	(37		)	(52		)	(37		)	(111		)
Equity securities change in fair value (1)	661			51			1,309			(78		)
Miscellaneous	0			2			0			104
Net realized investment gains (losses) (2)	$	1,696		$	0		$	5,501		$	(497	)

(1) The fair value of our equity portfolio is based upon exchange traded prices provided by a nationally recognized pricing service.

(2) See Part I, Item 1. "Financial Statements - Note 6, Investments, of Notes to Financial Statements" contained within this report for additional disclosures regarding net realized investment gains (losses).

Net realized investment gains during the third quarter and nine months ended September 30, 2019 were primarily driven by gains from sales of fixed maturity securities and market value adjustments on equity securities. The third quarter of 2018 losses from sales of fixed maturity and equity securities were offset by increases in fair value of equity securities and miscellaneous gains. Net realized investment losses during the nine months ended September 30 2018, while driven by sales activity and equity security market value adjustments, were offset somewhat by miscellaneous gains.

Net impairment losses recognized in earnings

Net impairment losses were $31 thousand in the third quarter of 2019 and there were no impairment losses in the third quarter of 2018. For the nine months ended September 30, 2019 and 2018 net impairment losses were $0.2 million and $0.6 million, respectively. Impairments in all applicable periods included securities in an unrealized loss position where we determined the loss was other-than-temporary based on credit factors. Impairment losses for the nine months ended 2018 also included securities in an unrealized loss position with intent to sell prior to expected recovery of our amortized cost basis.

Equity in earnings of limited partnerships

The components of equity in earnings of limited partnerships are as follows:

	Three months ended September 30,					Nine months ended September 30,
(in thousands)	2019			2018		2019			2018
	(Unaudited)					(Unaudited)
Private equity	$	3,273		$	639	$	2,265		$	705
Mezzanine debt	(65		)	125		(121		)	230
Real estate	81			8		402			(574		)
Equity in earnings of limited partnerships	$	3,289		$	772	$	2,546		$	361

Limited partnership earnings pertain to investments in U.S. and foreign private equity, mezzanine debt, and real estate partnerships.  Valuation adjustments are recorded to reflect the changes in fair value of the underlying investments held by the limited partnerships.  These adjustments are recorded as a component of equity in earnings of limited partnerships in the Statements of Operations.

Limited partnership earnings tend to be cyclical based upon market conditions, the age of the partnership, and the nature of the investments.  Generally, limited partnership earnings are recorded on a quarter lag from financial statements we receive from our general partners.  As a consequence, earnings from limited partnerships reported at September 30, 2019 reflect investment valuation changes resulting from the financial markets and the economy in the fourth quarter of 2018 and the first two quarters of 2019.

Limited partnership investments generated gains of $3.3 million and $0.8 million in the third quarters of 2019 and 2018, respectively, and gains of $2.5 million and $0.4 million in the nine months ended September 30, 2019 and 2018, respectively. The private equity and real estate sectors generated higher earnings in the third quarter and nine months ended September 30, 2019, compared to the same periods in 2018.

33

Financial condition of Erie Insurance Exchange

Serving in the capacity of attorney-in-fact for the Exchange, we are dependent on the growth and financial condition of the Exchange, who is our sole customer. The strength of the Exchange and its wholly owned subsidiaries is rated annually by A.M. Best Company. Higher ratings of insurance companies generally indicate financial stability and a strong ability to pay claims. The ratings are generally based upon factors relevant to policyholders and are not directed toward return to investors. The Exchange and each of its property and casualty subsidiaries are rated A+ "Superior". On June 24, 2019, the outlook for the financial strength rating was affirmed as stable. According to A.M. Best, this second highest financial strength rating category is assigned to those companies that, in A.M. Best’s opinion, have achieved superior overall performance when compared to the standards established by A.M. Best and have a superior ability to meet obligations to policyholders over the long term. As of December 31, 2018, only approximately 12% of insurance groups are rated A+ or higher, and the Exchange is included in that group.

The financial statements of the Exchange are prepared in accordance with statutory accounting principles prescribed by the Commonwealth of Pennsylvania. Financial statements prepared under statutory accounting principles focus on the solvency of the insurer and generally provide a more conservative approach than under U.S. generally accepted accounting principles. Statutory direct written premiums of the Exchange and its wholly owned property and casualty subsidiaries grew 5.6% to

$5.7 billion for the nine months ended September 30, 2019 from $5.4 billion for the nine months ended September 30, 2018. These premiums, along with investment income, are the major sources of cash that support the operations of the Exchange. Policyholders’ surplus determined under statutory accounting principles was $9.1 billion at September 30, 2019, $8.6 billion at December 31, 2018, and $9.1 billion at September 30, 2018. The Exchange and its wholly owned property and casualty subsidiaries' year-over-year policy retention ratio continues to be high at 90.1% at September 30, 2019, 90.1% at December 31, 2018, and 89.9% at September 30, 2018.

34

FINANCIAL CONDITION

Investments

Our investment portfolio is managed with the objective of maximizing after-tax returns on a risk-adjusted basis. The following table presents the carrying value of our investments as of:

(dollars in thousands)	September 30, 2019		% to total		December 31, 2018		% to total
	(Unaudited)
Fixed maturities	$	680,633	81	%	$	748,523	88	%
Nonredeemable preferred stock	55,052		7		11,853		1
Limited partnerships:
Private equity	29,938		4		28,271		3
Mezzanine debt	900		0		1,152		0
Real estate	1,333		0		5,398		1
Other investments (1)	69,307		8		58,394		7
Total investments	$	837,163	100	%	$	853,591	100	%

(1) Other investments primarily include agent loans. Agent loans are included with other assets in the Statements of Financial Position.

We continually review our investment portfolio to evaluate positions that might incur other-than-temporary declines in value. We record impairment write-downs on investments in instances where the fair value of the investment is substantially below cost, and we conclude that the decline in fair value is other-than-temporary, which includes consideration for intent to sell.  For all investment holdings, general economic conditions and/or conditions specifically affecting the underlying issuer or its industry, including downgrades by the major rating agencies, are considered in evaluating impairment in value.  In addition to specific factors, other factors considered in our review of investment valuation are the length of time the fair value is below cost and the amount the fair value is below cost.

We individually analyze all positions with emphasis on those that have, in our opinion, declined significantly below cost.  In compliance with current impairment guidance for available-for-sale debt securities, we perform further analysis to determine if a credit-related impairment has occurred.  Some of the factors considered in determining whether a debt security is credit impaired include potential for the default of interest and/or principal, level of subordination, collateral of the issue, compliance with financial covenants, credit ratings and industry conditions.  We have the intent to sell all credit-impaired debt securities; therefore, the entire amount of the impairment charges are included in earnings and no impairments are recorded in other comprehensive income.  We believe our investment valuation philosophy and accounting practices result in appropriate and timely measurement of fair value and recognition of other-than-temporary impairment.

Fixed maturities

Under our investment strategy, we maintain a fixed maturity portfolio that is of high quality and well diversified within each market sector.  This investment strategy also achieves a balanced maturity schedule.  Our fixed maturity portfolio is managed with the goal of achieving reasonable returns while limiting exposure to risk.  As part of a rebalancing of our portfolio, we began selling off our municipal bond portfolio in the fourth quarter of 2018. The proceeds were reinvested in corporate debt and structured securities as well as nonredeemable preferred stock equity securities.

Fixed maturities are carried at fair value with unrealized gains and losses, net of deferred taxes, included in shareholders’ equity.  Net unrealized gains on fixed maturities, net of deferred taxes, amounted to $3.4 million at September 30, 2019, compared to net unrealized losses of $7.0 million at December 31, 2018.

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The following table presents a breakdown of the fair value of our fixed maturity portfolio by sector and rating as of: ⁽¹⁾ 

	September 30, 2019
(in thousands)	(Unaudited)
Industry Sector	AAA		AA		A		BBB		Non- investment grade		Fair value
Basic materials	$	0	$	0	$	3,207	$	3,062	$	7,456	$	13,725
Communications	0		5,018		8,407		8,693		20,485		42,603
Consumer	0		3,121		10,321		47,259		31,724		92,425
Diversified	0		0		0		1,055		461		1,516
Energy	0		0		4,577		17,577		9,305		31,459
Financial	0		4,320		60,758		87,481		10,114		162,673
Industrial	0		0		9,269		13,349		14,808		37,426
Structured securities (2)	93,166		138,054		14,056		1,151		0		246,427
Technology	0		3,022		8,229		12,772		7,349		31,372
Utilities	0		0		2,745		12,303		5,959		21,007
Total	$	93,166	$	153,535	$	121,569	$	204,702	$	107,661	$	680,633

(1)  Ratings are supplied by S&P, Moody’s, and Fitch.  The table is based upon the lowest rating for each security.

(2) Structured securities include residential mortgage-backed securities, commercial mortgage-backed securities, collateralized debt obligations, and asset-backed securities.

Equity Securities

Equity securities consist of nonredeemable preferred stock and are carried at fair value in the Statements of Financial Position with all changes in unrealized gains and losses reflected in the Statements of Operations.

The following table presents an analysis of the fair value of our nonredeemable preferred stock securities by sector as of:

(in thousands)	September 30, 2019		December 31, 2018
	(Unaudited)
Energy	$	1,886	$	—
Financial	47,753		11,853
Industrial	2,842		—
Utilities	2,571		—
Total	$	55,052	$	11,853

Limited partnerships

Investments in limited partnerships have decreased $2.6 million from December 31, 2018 to September 30, 2019.  Changes in partnership values are a function of contributions and distributions, adjusted for market value changes in the underlying investments. The decrease in limited partnership investments was primarily due to net distributions received from the partnerships. We have made no new limited partnership commitments since 2006, and the balance of limited partnership investments is expected to continue to decrease over time as additional distributions are received. The results from our limited partnerships are based upon financial statements received from our general partners, which are generally received on a quarter lag.  As a result, the market values and earnings recorded during 2019 reflect the partnership activity experienced in the fourth quarter of 2018 and the first two quarters of 2019.

36

LIQUIDITY AND CAPITAL RESOURCES

Sources and Uses of Cash

Liquidity is a measure of a company’s ability to generate sufficient cash flows to meet the short- and long-term cash requirements of its business operations and growth needs.  Our liquidity requirements have been met primarily by funds generated from management fee revenue and income from investments.  Cash provided from these sources is used primarily to fund the costs of our management operations including commissions, salaries and wages, pension plans, share repurchases, dividends to shareholders, and the purchase and development of information technology.  We expect that our operating cash needs will be met by funds generated from operations.

Volatility in the financial markets presents challenges to us as we do occasionally access our investment portfolio as a source of cash.  Some of our fixed income investments, despite being publicly traded, are illiquid.  Volatility in these markets could impair our ability to sell certain fixed income securities or cause such securities to sell at deep discounts.  Additionally, our limited partnership investments are significantly less liquid.  We believe we have sufficient liquidity to meet our needs from sources other than the liquidation of securities.

Cash flow activities

The following table provides condensed cash flow information for the nine months ended September 30:

(in thousands)	2019			2018
	(Unaudited)
Net cash provided by operating activities	$	237,866		$	174,314
Net cash used in investing activities	(32,241		)	(52,975		)
Net cash used in financing activities	(127,170		)	(92,372		)
Net increase in cash and cash equivalents	$	78,455		$	28,967

Net cash provided by operating activities was $237.9 million in the first nine months of 2019, compared to $174.3 million in the first nine months of 2018.  This change was primarily due to the fact that we had no pension contribution coupled with lower bonuses paid to agents in the first nine months of 2019. In 2018, our Board approved an $80 million accelerated pension contribution, of which $40 million was contributed in January 2018 and $40 million in April 2018. We are reimbursed approximately 59% of the net periodic benefit cost of the pension plans from the Exchange and its subsidiaries, which includes pension benefits for employees performing administrative services and their allocated share of costs for employees in departments that support the administrative functions. Cash paid for agent bonuses decreased $18.4 million in the first nine months of 2019, compared to the first nine months of 2018, due to less profitable underwriting results.

Net cash used in investing activities was $32.2 million in the first nine months of 2019, compared to $53.0 million in the first nine months of 2018. In the first nine months of 2019, while more proceeds were generated from investment activity, these were offset by higher purchases of available-for-sale securities and equity securities, as well as increased fixed asset purchases primarily related to the home office expansion. Additionally, our future investing activities will be impacted by our limited partnership commitments, which totaled $9.8 million at September 30, 2019, and will be funded as required by the partnerships’ agreements.  Of this amount, the total remaining commitment to fund limited partnerships that invest in private equity securities was $4.4 million and mezzanine debt securities was $5.4 million. Additionally, we have committed to incur future costs related to the construction of the building that will serve as part of our principal headquarters, which is expected to cost $100 million and is being funded by the senior secured draw term loan credit facility of the same amount. As of September 30, 2019, $78.9 million of costs have been paid related to this project.

Net cash used in financing activities totaled $127.2 million in the first nine months of 2019, compared to $92.4 million in the first nine months of 2018. The increase in cash used was due to dividends paid to shareholders and principal payments on the senior secured draw term loan credit facility, which commenced January 1, 2019. Dividends paid to shareholders totaled $125.7 million in the first nine months of 2019 and $117.4 million in the first nine months of 2018. We increased both our Class A and Class B shareholder regular quarterly dividends by 7.1% for 2019, compared to 2018.  There are no regulatory restrictions on the payment of dividends to our shareholders. Future financing activities will include the principal payments due annually over the term of the senior secured draw term loan credit facility, of which $0.5 million will be paid during the remainder of 2019. Financing activities in the first nine months of 2018 were impacted by the final $25 million draw on the senior secured draw term loan credit facility.

There were no repurchases of our Class A nonvoting common stock in the first nine months of 2019 and 2018 in conjunction with our stock repurchase program. In 2011, our Board of Directors approved a continuation of the current stock repurchase

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program of $150 million with no time limitation.  This repurchase authority includes, and is not in addition to, any unspent amounts remaining under the prior authorization.  We had approximately $17.8 million of repurchase authority remaining under this program at September 30, 2019, based upon trade date.

In the first nine months of 2019, we purchased 13,399 shares of our outstanding Class A nonvoting common stock outside of our publicly announced share repurchase program at a total cost of $2.4 million. Of this amount, we purchased 3,246 shares for $0.4 million, or $132.35 per share, for stock-based awards in conjunction with our equity compensation plan, for which the shares were delivered to plan participants in January 2019. We purchased 5,844 shares for $1.2 million, or $198.17 per share, to fund the rabbi trust for the outside director deferred stock compensation plan. The shares were transferred to the rabbi trust in February, May and August 2019. The remaining 4,309 shares were purchased at a total cost of $0.8 million, or $176.26 per share, to fund the rabbi trust for the incentive compensation deferral plan. The shares were transferred to the rabbi trust in February, March, May and August 2019.

In the first nine months of 2018, we purchased 24,692 shares of our outstanding Class A nonvoting common stock outside of our publicly announced share repurchase program at a total cost of $2.9 million. Of this amount, we purchased 5,830 shares for$0.7 million, or $117.39 per share, for stock-based awards in conjunction with our equity compensation plan, for which the shares were delivered to plan participants in January and May 2018. We purchased 6,938 shares for $0.8 million, or $119.52 per share, to fund the rabbi trust for the outside director deferred stock compensation plan. The shares were transferred to the rabbi trust in March, May and August 2018. The remaining 11,924 shares were purchased at a total cost of $1.4 million, or $119.20 per share, to fund the rabbi trust for the incentive compensation deferral plan. The shares were transferred to the rabbi trust in March, May and August 2018.

Capital Outlook

We regularly prepare forecasts evaluating the current and future cash requirements for both normal and extreme risk events.  Should an extreme risk event result in a cash requirement exceeding normal cash flows, we have the ability to meet our future funding requirements through various alternatives available to us.

Outside of our normal operating and investing cash activities, future funding requirements could be met through: 1) cash and cash equivalents, which total approximately $344.9 million at September 30, 2019, 2) a $100 million bank revolving line of credit, and 3) liquidation of unpledged assets held in our investment portfolio, including preferred stock and investment grade bonds, which totaled approximately $406.2 million at September 30, 2019.  Volatility in the financial markets could impair our ability to sell certain fixed income securities or cause such securities to sell at deep discounts.  Additionally, we have the ability to curtail or modify discretionary cash outlays such as those related to shareholder dividends and share repurchase activities.

As of September 30, 2019, we have access to a $100 million bank revolving line of credit with a $25 million letter of credit sublimit that expires on October 30, 2023. As of September 30, 2019, a total of $99.1 million remains available under the facility due to $0.9 million outstanding letters of credit, which reduce the availability for letters of credit to $24.1 million.  We had no borrowings outstanding on our line of credit as of September 30, 2019. Investments with a fair value of $109.8 million were pledged as collateral on the line at September 30, 2019. The investments pledged as collateral have no trading restrictions and are reported as cash and cash equivalents and available-for-sale securities in the Statements of Financial Position.  The banks require compliance with certain covenants, which include leverage ratios and debt restrictions.  We were in compliance with our bank covenants at September 30, 2019.

Off-Balance Sheet Arrangements and Contractual Obligations

Off-balance sheet arrangements include those with unconsolidated entities that may have a material current or future effect on our financial condition or results of operations, including material variable interests in unconsolidated entities that conduct certain activities. We have no material off-balance sheet obligations. As of September 30, 2019, there were no material changes to our future contractual obligations as previously reported in our Annual Report on Form 10-K for the year ended December 31, 2018 other than a $36.1 million contract for software, services and maintenance that was executed in June 2019 that will be paid over the contract term of three years. This contract will be included in "Other commitments" in the Contractual Obligations table.

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CRITICAL ACCOUNTING ESTIMATES

We make estimates and assumptions that have a significant effect on the amounts and disclosures reported in the financial statements.  The most significant estimates relate to investment valuation and retirement benefit plans for employees.  While management believes its estimates are appropriate, the ultimate amounts may differ from estimates provided.  Our most critical accounting estimates are described in Item 7. "Management’s Discussion and Analysis of Financial Condition and Results of Operations" for the year ended December 31, 2018 of our Annual Report on Form 10-K as filed with the Securities and Exchange Commission on February 21, 2019.  See Part I, Item 1. "Financial Statements - Note 5, Fair Value, of Notes to Financial Statements" contained within this report for additional information on our valuation of investments.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our exposure to market risk is primarily related to fluctuations in prices and interest rates.  Quantitative and qualitative disclosures about market risk resulting from changes in prices, interest rates, and other risk exposures for the year ended December 31, 2018 are included in Item 7A. "Quantitative and Qualitative Disclosures About Market Risk", of our Annual Report on Form 10-K as filed with the Securities and Exchange Commission on February 21, 2019.

Although the components of the investment portfolio have changed, there have been no material changes to our reported market risks during the nine months ended September 30, 2019.  For a recent discussion of conditions surrounding our investment portfolio, see the "Operating Overview", "Results of Operations", and "Financial Condition" discussions contained in Part I, Item 2. "Management’s Discussion and Analysis of Financial Condition and Results of Operations" contained within this report.

ITEM 4. CONTROLS AND PROCEDURES

We carried out an evaluation, with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (pursuant to Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report.  Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective.

Our management evaluated, with the participation of the Chief Executive Officer and Chief Financial Officer, any change in our internal control over financial reporting and determined there has been no change in our internal control over financial reporting during the nine months ended September 30, 2019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

State Court Lawsuit Against Erie Indemnity Company

Erie Indemnity Company (“Indemnity”) was named as a defendant in a complaint filed on August 1, 2012 by alleged subscribers of the Erie Insurance Exchange (the “Exchange”) in the Court of Common Pleas Civil Division of Fayette County, Pennsylvania captioned Erie Insurance Exchange, an unincorporated association, by Joseph S. Sullivan and Anita Sullivan, Patricia R. Beltz, and Jenna L. DeBord, trustees ad litem v. Erie Indemnity Co. (the “Sullivan” lawsuit).

As subsequently amended, the complaint alleges that, beginning on September 1, 1997, Indemnity retained “Service Charges” (installment fees) and “Added Service Charges” (late fees and policy reinstatement charges) on policies written by Exchange and its insurance subsidiaries, which allegedly should have been paid to Exchange, in the amount of approximately $308 million. In addition to their claim for monetary relief on behalf of Exchange, Plaintiffs seek an accounting of all so-called intercompany transactions between Indemnity and Exchange from 1996 to date. Plaintiffs allege that Indemnity breached its contractual, fiduciary, and equitable duties by retaining Service Charges and Added Service Charges that should have been retained by Exchange. Plaintiffs bring these same claims under three separate derivative-type theories. First, Plaintiffs purport to bring suit as members of Exchange on behalf of Exchange. Second, Plaintiffs purport to bring suit as trustees ad litem on behalf of Exchange. Third, Plaintiffs purport to bring suit on behalf of Exchange pursuant to Rule 1506 of the Pennsylvania Rules of Civil Procedure, which allows shareholders to bring suit derivatively on behalf of a corporation or similar entity.

Indemnity filed a motion in the state court in November 2012 seeking dismissal of the lawsuit. On December 19, 2013, the court granted Indemnity’s motion in part, holding that the Pennsylvania Insurance Holding Company Act “provides the [Pennsylvania Insurance] Department with special competence to address the subject matter of plaintiff’s claims” and referring “all issues” in the Sullivan lawsuit to the Pennsylvania Insurance Department (the “Department”) for “its views and any determination.” The court stayed all further proceedings and reserved decision on all other grounds for dismissal raised by Indemnity. Plaintiffs sought reconsideration of the court’s order, and on January 13, 2014, the court entered a revised order affirming its prior order and clarifying that the Department “shall decide any and all issues within its jurisdiction.” On January 30, 2014, Plaintiffs asked the court to certify its order to permit an immediate appeal to the Superior Court of Pennsylvania and to stay any proceedings in the Department pending completion of any appeal. On February 18, 2014, the court issued an order denying Plaintiffs’ motion. On March 20, 2014, Plaintiffs filed a petition for review with the Superior Court, which was denied by the Superior Court on May 5, 2014.

The Sullivan matter was assigned to an Administrative Judge within the Department for determination. The parties agreed that an evidentiary hearing was not required, entered into a stipulated record, and submitted briefing to the Department. Oral argument was held before the Administrative Judge on January 6, 2015. On April 29, 2015, the Department issued a declaratory opinion and order: (1) finding that the transactions between Exchange and Indemnity in which Indemnity retained or received revenue from installment and other service charges from Exchange subscribers complied with applicable insurance laws and regulations and that Indemnity properly retained charges paid by Exchange policyholders for certain installment premium payment plans, dishonored payments, policy cancellations, and policy reinstatements; and (2) returning jurisdiction over the matter to the Fayette County Court of Common Pleas.

On May 26, 2015, Plaintiffs appealed the Department’s decision to the Pennsylvania Commonwealth Court. Oral argument was held before the Commonwealth Court en banc on December 9, 2015. On January 27, 2016, the Commonwealth Court issued an opinion vacating the Department’s ruling and directing the Department to return the case to the Court of Common Pleas, essentially holding that the primary jurisdiction referral of the trial court was improper at this time because the allegations of the complaint do not implicate the special competency of the Department.

On February 26, 2016, Indemnity filed a petition for allowance of appeal to the Pennsylvania Supreme Court seeking further review of the Commonwealth Court opinion. On March 14, 2016, Plaintiffs filed an answer opposing Indemnity’s petition for allowance of appeal; and, on March 28, 2016, Indemnity sought permission to file a reply brief in further support of its petition for allowance of appeal. On August 10, 2016, the Pennsylvania Supreme Court denied Indemnity’s petition for allowance of appeal; and the Sullivan lawsuit returned to the Court of Common Pleas of Fayette County.

On September 12, 2016, Plaintiffs filed a motion to stay the Sullivan lawsuit pending the outcome of the Federal Court Lawsuit they filed against Indemnity and former and current Directors of Indemnity on July 8, 2016. (See below.) Indemnity filed an opposition to Plaintiff’s motion to stay on September 19, 2016; and filed amended preliminary objections seeking dismissal of the Sullivan lawsuit on September 20, 2016. The motion to stay and the amended preliminary objections remain pending. On June 27, 2018, Plaintiffs filed a motion for a status conference in the Sullivan lawsuit.

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On July 30, 2018, the Court held a status conference and thereafter lifted the stay of proceedings. On September 28, 2018, Indemnity filed a Motion to Enforce the Federal Judgment in the Beltz II lawsuit, seeking dismissal of the Sullivan lawsuit with prejudice. On October 26, 2018, Plaintiffs filed an opposition to that Motion; and Indemnity filed a reply in further support on November 5, 2018. Oral argument was held on Indemnity’s Motion to Enforce the Federal Judgment on November 20, 2018 and on July 30, 2019. The Motion to Enforce the Federal Judgment remains pending.

Indemnity believes that it continues to have meritorious legal and factual defenses to the Sullivan lawsuit and intends to vigorously defend against all allegations and requests for relief.

Federal Court Lawsuit Against Erie Indemnity Company and Directors

On February 6, 2013, a lawsuit was filed in the United States District Court for the Western District of Pennsylvania, captioned Erie Insurance Exchange, an unincorporated association, by members Patricia R. Beltz, Joseph S. Sullivan and Anita Sullivan, and Patricia R. Beltz, on behalf of herself and others similarly situate v. Richard L. Stover; J. Ralph Borneman, Jr.; Terrence W. Cavanaugh; Jonathan Hirt Hagen; Susan Hirt Hagen; Thomas B. Hagen; C. Scott Hartz; Claude C. Lilly, III; Lucian L. Morrison; Thomas W. Palmer; Martin P. Sheffield; Elizabeth H. Vorsheck; and Robert C. Wilburn (the “Beltz” lawsuit), by alleged policyholders of Exchange who are also the plaintiffs in the Sullivan lawsuit. The individuals named as defendants in the Beltz lawsuit were the then-current Directors of Indemnity.

As subsequently amended, the Beltz lawsuit asserts many of the same allegations and claims for monetary relief as in the Sullivan lawsuit. Plaintiffs purport to sue on behalf of all policyholders of Exchange, or, alternatively, on behalf of Exchange itself. Indemnity filed a motion to intervene as a Party Defendant in the Beltz lawsuit in July 2013, and the Directors filed a motion to dismiss the lawsuit in August 2013. On February 10, 2014, the court entered an order granting Indemnity’s motion to intervene and permitting Indemnity to join the Directors’ motion to dismiss; granting in part the Directors’ motion to dismiss; referring the matter to the Department to decide any and all issues within its jurisdiction; denying all other relief sought in the Directors’ motion as moot; and dismissing the case without prejudice. To avoid duplicative proceedings and expedite the Department’s review, the Parties stipulated that only the Sullivan action would proceed before the Department and any final and non-appealable determinations made by the Department in the Sullivan action will be applied to the Beltz action.

On March 7, 2014, Plaintiffs filed a notice of appeal to the United States Court of Appeals for the Third Circuit. Indemnity filed a motion to dismiss the appeal on March 26, 2014. On November 17, 2014, the Third Circuit deferred ruling on Indemnity’s motion to dismiss the appeal and instructed the parties to address that motion, as well as the merits of Plaintiffs’ appeal, in the parties’ briefing. Briefing was completed on April 2, 2015. In light of the Department’s April 29, 2015 decision in Sullivan, the Parties then jointly requested that the Beltz appeal be voluntarily dismissed as moot on June 5, 2015. The Third Circuit did not rule on the Parties’ request for dismissal and instead held oral argument as scheduled on June 8, 2015. On July 16, 2015, the Third Circuit issued an opinion and judgment dismissing the appeal. The Third Circuit found that it lacked appellate jurisdiction over the appeal, because the District Court’s February 10, 2014 order referring the matter to the Department was not a final, appealable order.

On July 8, 2016, the Beltz plaintiffs filed a new action labeled as a “Verified Derivative And Class Action Complaint” in the United States District Court for the Western District of Pennsylvania. The action is captioned Patricia R. Beltz, Joseph S. Sullivan, and Anita Sullivan, individually and on behalf of all others similarly situated, and derivatively on behalf of Nominal Defendant Erie Insurance Exchange v. Erie Indemnity Company; Kaj Ahlmann; John T. Baily; Samuel P. Black, III; J. Ralph Borneman, Jr.; Terrence W. Cavanaugh; Wilson C. Cooney; LuAnn Datesh; Patricia A. Goldman; Jonathan Hirt Hagen; Thomas B. Hagen; C. Scott Hartz; Samuel P. Katz; Gwendolyn King; Claude C. Lilly, III; Martin J. Lippert; George R. Lucore; Jeffrey A. Ludrof; Edmund J. Mehl; Henry N. Nassau; Thomas W. Palmer; Martin P. Sheffield; Seth E. Schofield; Richard L. Stover; Jan R. Van Gorder; Elizabeth A. Hirt Vorsheck; Harry H. Weil; and Robert C. Wilburn (the “Beltz II” lawsuit). The individual defendants are all present or former Directors of Indemnity (the “Directors”).

The allegations of the Beltz II lawsuit arise from the same fundamental, underlying claims as the Sullivan and prior Beltz litigation, i.e., that Indemnity improperly retained Service Charges and Added Service Charges. The Beltz II lawsuit alleges that the retention of the Service Charges and Added Service Charges was improper because, for among other reasons, that retention constituted a breach of the Subscriber’s Agreement and an Implied Covenant of Good Faith and Fair Dealing by Indemnity, breaches of fiduciary duty by Indemnity and the other defendants, conversion by Indemnity, and unjust enrichment by defendants Jonathan Hirt Hagen, Thomas B. Hagen, and Elizabeth A. Hirt Vorsheck, at the expense of Exchange. The Beltz II lawsuit requests, among other things, that a judgment be entered against the Defendants certifying the action as a class action pursuant to Rule 23 of the Federal Rules of Civil Procedure; declaring Plaintiffs as representatives of the Class and Plaintiffs’ counsel as counsel for the Class; declaring the conduct alleged as unlawful, including, but not limited to, Defendants’ retention of the Service Charges and Added Service Charges; enjoining Defendants from continuing to retain the Service Charges and Added Service Charges; and awarding compensatory and punitive damages and interest.

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On September 23, 2016, Indemnity filed a motion to dismiss the Beltz II lawsuit. On September 30, 2016, the Directors filed their own motions to dismiss the Beltz II lawsuit. On July 17, 2017, the Court granted Indemnity’s and the Directors’ motions to dismiss the Beltz II lawsuit, dismissing the case in its entirety. The Court ruled that “the Subscriber’s Agreement does not govern the separate and additional charges at issue in the Complaint” and, therefore, dismissed the breach of contract claim against Indemnity for failure to state a claim.  The Court also ruled that the remaining claims, including the claims for breach of fiduciary duty against Indemnity and the Directors, are barred by the applicable statutes of limitation or fail to state legally cognizable claims. On August 14, 2017, Plaintiffs filed a notice of appeal to the United States Court of Appeals for the Third Circuit.

On May 10, 2018, the United States Court of Appeals for the Third Circuit affirmed the District Court’s dismissal of the Beltz II lawsuit. On May 24, 2018, Plaintiffs filed a petition seeking rehearing of their appeal before the Third Circuit. The Third Circuit denied that petition on June 14, 2018.

Federal Court Lawsuit Against Erie Indemnity Company and Directors

On December 28, 2017 a lawsuit was filed in the United States District Court for the Western District of Pennsylvania captioned Lynda Ritz, individually and on behalf of all others similarly situated and derivatively on behalf of Nominal Defendant Erie Insurance Exchange v. Erie Indemnity Company, J. Ralph Borneman, Jr., Terrence W. Cavanaugh, Eugene C. Connell, LuAnn Datesh, Jonathan Hirt Hagen, Thomas B. Hagen, C. Scott Hartz, Brian A. Hudson, Sr., Claude C. Lilly, III, George R. Lucore, Thomas W. Palmer, Martin P. Sheffield, Richard L. Stover, Elizabeth A. Hirt Vorsheck, and Robert C. Wilburn, and Erie Insurance Exchange (Nominal Defendant) (the “Ritz” lawsuit). The individual named as Plaintiff is alleged to be a policyholder (subscriber) of the Erie Insurance Exchange (the “Exchange”). With the exception of Terrence W. Cavanaugh and Robert C. Wilburn, the individuals named as Defendants comprise the current Board of Directors of Indemnity. Messrs. Cavanaugh and Wilburn are former Directors of Indemnity (the “Directors”).

The Complaint alleges that since at least 2007, Erie Indemnity Company has taken “unwarranted and excessive” management fees as compensation for its services under the Subscriber’s Agreement.  Count I of the Complaint purports to allege a claim for breach of alleged fiduciary duties against Indemnity and the Directors on behalf of Plaintiff and a putative class of subscribers.  Count II purports to allege a claim for breach of alleged fiduciary duties against Indemnity and the Directors on behalf of Exchange.  Count III purports to allege a claim for breach of contract and an alleged implied covenant of good faith and fair dealing against Indemnity on behalf of Plaintiff and a putative class.  Count IV purports to allege a claim of unjust enrichment against several Directors.

The Complaint seeks compensatory and punitive damages and requests the Court to enjoin Indemnity from continuing to retain excessive management fees; and order such other relief as may be appropriate.

On March 5, 2018, Indemnity filed a motion to dismiss the Ritz lawsuit. The Directors also filed their own motions to dismiss the Ritz lawsuit on March 5, 2018. Plaintiff filed her responses to both motions on April 26, 2018; and Indemnity and the Directors filed their replies in support of their motions on May 25, 2018. On February 4, 2019, the Court granted Indemnity’s and the Directors’ motions to dismiss the Ritz suit in its entirety, with prejudice, on the basis that all of the alleged claims in the Ritz suit are barred and precluded as a matter of law by the judgment entered in favor of Indemnity and the Directors in the Beltz II suit.

On March 4, 2019, Plaintiff filed a Motion for Reconsideration of the Court’s ruling dismissing the suit with prejudice. On April 5, 2019, Indemnity and the Directors filed their opposition to the Motion for Reconsideration. The Motion for Reconsideration was denied on May 13, 2019. Plaintiff declined to appeal the dismissal of the Ritz lawsuit.

For additional information on contingencies, see Part I, Item 1. "Financial Statements - Note 14, Commitments and Contingencies, of Notes to Financial Statements".

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ITEM 1A. RISK FACTORS

There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018 as filed with the Securities and Exchange Commission on February 21, 2019.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

In 2011, our Board of Directors approved a continuation of the current stock repurchase program, authorizing repurchases for a total of $150 million with no time limitation.  This repurchase authority included, and was not in addition to, any unspent amounts remaining under the prior authorization. There were no repurchases of our Class A common stock under this program during the quarter ending September 30, 2019. We had approximately $17.8 million of repurchase authority remaining under this program at September 30, 2019.

During the quarter ending September 30, 2019, we purchased 1,435 shares of our outstanding Class A nonvoting common stock outside of our publicly announced share repurchase program at a total cost of $0.3 million, or $222.73 per share, to fund the rabbi trust for the outside director deferred stock compensation plan and the incentive compensation deferral plan. The shares were transferred to the rabbi trust in August 2019.

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ITEM 6. EXHIBITS

Exhibit
Number	Description of Exhibit
10.1*	Sixth Amendment to Erie Insurance Group Retirement Plan for Employees (As Amended and Restated Effective December 31, 2014), dated September 3, 2019.
31.1*	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32*	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*	Inline XBRL Taxonomy Extension Schema Document.
101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104*	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

* Filed herewith.

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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 thereunto duly authorized.

			Erie Indemnity Company
			(Registrant)
Date:	October 24, 2019	By:	/s/ Timothy G. NeCastro
			Timothy G. NeCastro, President & CEO
		By:	/s/ Gregory J. Gutting
			Gregory J. Gutting, Executive Vice President & CFO

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EX-10.1

Exhibit 10.1

SIXTH AMENDMENT TO

ERIE INSURANCE GROUP

RETIREMENT PLAN FOR EMPLOYEES

(As Amended and Restated effective December 31, 2014)

WHEREAS, Erie Indemnity Company (the “Company”) maintains the Erie Insurance Group Retirement Plan for Employees (the “Plan”) under an amendment and restatement effective December 31, 2014;

WHEREAS, the Plan provides that the Company may amend the Plan; and

WHEREAS, the Company wishes to amend the Plan to provide certain participants with deferred retirement and vested pension benefits an ability to receive Plan benefits in the form of a lump sum during a prescribed period in 2019.

NOW, THEREFORE, effective as of September 1, 2019, the Company hereby amends the Plan as follows:

1. A new paragraph shall be added to Section 7.4 of the Plan and such new paragraph shall read as follows:

Except as provided under Section 7.9, if a former Participant is reemployed by an Employer as a Covered Employee after having received payment of his retirement benefit or deferred vested pension under the Plan in the form of a lump sum:

(a) Such former Participant shall re-enter the Plan effective as of his date of reemployment as a Covered Employee, and his Service and Credited Service (for purposes of determining eligibility for early and disability retirement benefits only) earned during his prior period of Plan participation shall be reinstated on such date;

(b) The Credited Service earned during such former Participant’s prior period of Plan participation, and which had been reflected in the lump sum paid to the former Participant, shall not be recognized for purposes of computing the amount of any benefit under the Plan;

(c) The Compensation earned during such former Participant’s prior period of Plan participation, and which had been reflected in the lump sum paid to the former Participant, shall not be recognized for purposes of computing the amount of any benefit under the Plan; and

(d) Such former Participant may not repay to the Plan all or any portion of the lump sum previously paid from the Plan to the former Participant.

2. Section 7.8(a) of the Plan is amended and restated in its entirety to read as follows:

(a) Notwithstanding any provision of the Plan to the contrary, if the actuarial equivalent present value of any retirement benefit, deferred vested pension or survivor benefit does not exceed $5,000 such benefit shall be paid as soon as practicable in a lump sum equal to such present value. Except as otherwise provided in Section 7.13, no lump sum payments shall be made if the actuarial equivalent present value of the benefit is in excess of this threshold.

3. Article VII of the Plan is amended by adding a new section to the end thereof to read as follows:

7.13 2019 Lump Sum Payment Option Window. During the limited period defined herein, a Qualifying Participant (as defined below) may elect to receive his retirement benefit or deferred vested pension under the conditions set forth in this Section 7.13.

(a) Definitions. For purposes of this Section 7.13, the terms set forth below shall have the meanings set forth below.

(i) The term “Lump Sum Payment Option Window” shall mean the special election period during which a Qualifying Participant may elect to receive payment or commence to receive payment of his retirement benefit or deferred vested pension, even if such Qualifying Participant has not satisfied the eligibility conditions that would otherwise be required to commence payment of his retirement benefit or deferred vested pension (determined without regard to this Section 7.13). The Lump Sum Payment Option Window shall begin on September 17, 2019 and shall end on October 22, 2019.

(ii) The term “Qualifying Participant” shall mean a Participant who satisfies each of the following:

(A) has terminated employment with the Company and all Affiliates, for any reason other than death, on or before the Window Determination Date, and who has not re-entered employment as an employee of the Company or an Affiliate;

(B) has not experienced an Annuity Starting Date or an actual or otherwise required beginning date under Section 7.10(b) of the Plan prior to the Window Election Commencement Date;

(C) whose lump sum payment determined under the provisions of Section 7.8 is greater than $5,000;

(D) whose retirement benefit or deferred vested pension can reasonably be determined based on data available to the Administrator; and

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(E) can be located by the Administrator after a diligent search.

(F) Notwithstanding the foregoing, the term “Qualifying Participant” shall exclude:

(1) any Participant who is not eligible for a retirement benefit ordeferred vested pension benefit under the Plan;

(2) any Participant for whom the Administrator has been provided with documentation evidencing that such Participant’s retirement benefit or deferred vested pension is subject to a qualified domestic relations order as defined in Section 414(p) of the Code or to a pending domestic relations order, temporary restraining order, or other lien (including the order of a court or other state authority assigning any portion of the Participant’s benefit to an alternate payee for which the Plan has not received a domestic relations order) at any time before the Window Election Commencement Date;

(3) any alternate payee under a qualified domestic relations order;

(4) any surviving Spouse or other designated Beneficiary who is eligible for a survivor benefit or a death benefit pursuant to any section of the Plan; and

(5) any Participant whose participation in the Lump Sum Payment Option Window would administratively be impracticable, as the Administrator may advise the Company.

(iii) The term “Special Benefit Election” shall mean the written election made by a Qualifying Participant, in accordance with such rules and procedures as the Administrator may apply to the Lump Sum Payment Option Window, to receive or commence to receive his retirement benefit or deferred vested pension pursuant to the Lump Sum Payment Option Window. For a Special Benefit Election to be valid, the Special Benefit Election for any married Participant must satisfy the requirements for spousal consent, if otherwise applicable under Section 7.6, the completed Special Benefit Election form must be signed and dated on or before October 22, 2019 and such election form must be received by the Administrator or its delegate within an

3

administratively feasible time period, as determined by the Administrator.

(iv) The term “Window Determination Date” shall mean December 31, 2018.

(b) Window Election Commencement Date. Notwithstanding any provision of the Plan to the contrary, any Qualifying Participant who makes a valid Special Benefit Election (as determined by the Administrator) shall receive distribution of his retirement benefit or deferred vested pension in the form of a lump sum or annuity (calculated as set forth below) effective as of December 1, 2019 (the “Window Election Commencement Date”),although the actual payment may be delayed to later in December, 2019 for administrative purposes.

(c) Lump Sum Payment Determination. For any Qualifying Participant who makes a valid Special Benefit Election and elects to receive payment of his retirement benefit or deferred vested pension in the form of a lump sum, the lump sum payment shall be determined as follows:

(i) Participants Otherwise Eligible for Immediate Commencement. With respect to a Qualifying Participant who is eligible for immediate commencement of payment as of the Window Election Commencement Date under the provisions of the Plan other than this Section 7.13, the lump sum payment shall be the greater of the actuarial equivalent present values of the following amounts, each determined by using the applicable interest rate promulgated by the Secretary of the Treasury under Section 417(e)(3)(C) of the Code for November 2018 and the mortality assumptions prescribed by the Secretary of the Treasury pursuant to Section 417(e)(3)(B) of the Code:

(A) the Qualifying Participant’s retirement benefit or deferred vested pension under the Plan, payable in the form of a single life annuity as of his Normal Retirement Date; and

(B) the Qualifying Participant’s retirement benefit or deferred vested pension under the Plan, payable in the form of a single life annuity as of the Window Election Commencement Date.

Notwithstanding the foregoing provisions, the lump sum payment with respect to a Qualifying Participant who has attained Normal Retirement Date shall be the actuarial equivalent present value determined under subparagraph (c)(i)(A) above, increased by an amount equal to the product of the Qualifying Participant’s monthly normal retirement benefit and the number of months, if any, between

4

the Qualifying Participant’s Normal Retirement Date and the Window Election Commencement Date.

(ii) Participants Not Otherwise Eligible for Immediate Commencement. With respect to a Qualifying Participant who is not eligible for immediate commencement of payment as of the Window Election Commencement Date under the provisions of the Plan other than this Section 7.13, the lump sum payment shall be the actuarial equivalent present value of the Qualifying Participant’s retirement benefit or deferred vested pension under the Plan, payable in the form of a single life annuity as of his Normal Retirement Date, determined by using the applicable interest rate promulgated by the Secretary of the Treasury under Section 417(e)(3)(C) of the Code for November 2018 and the mortality assumptions prescribed by the Secretary of the Treasury pursuant to Section 417(e)(3)(B) of the Code.

Any lump sum payment pursuant to this Section 7.13 shall fully settle the Plan’s liability with respect to a Qualifying Participant and no further benefit of any type shall be payable to, or on behalf of, such Qualifying Participant hereunder, except to the extent the Qualifying Participant is a surviving Spouse or Beneficiary with respect to a benefit earned by another Participant under the terms of the Plan (or as provided in Section 7.4 in the event that the Qualifying Participant is rehired after receiving payment and resumes participation in the Plan).

(d) Immediate Annuity Payment. For any Qualifying Participant who makes a valid Special Benefit Election and elects to receive payment of his retirement benefit or deferred vested pension in a form other than a lump sum payment, the Qualifying Participant shall be entitled to elect payment in an immediately commencing annuity in the following optional forms and determined in accordance with the following provisions:

(i)    Participants Otherwise Eligible for Immediate Commencement. With respect to a Qualifying Participant who is eligible for immediate commencement of payment as of the Window Election Commencement Date under the provisions of the Plan other than this Section 7.13, such Qualifying Participant’s retirement benefit or deferred vested pension shall be payable in one of the following optional annuity forms as the Qualifying Participant may elect, and the following early reduction factors and actuarial factors shall apply in the determination of such payment:

(A) Forms. The optional forms from which the Qualifying Participant may elect payment of his immediately commencing annuity shall be all of the annuity payment forms that would otherwise have been available to such Qualifying

5

Participant under the Plan had he made a valid election to commence payment of his retirement benefit or deferred vested pension as of the Window Election Commencement Date (determined without regard to this Section 7.13).

(B) Early Reduction and Actuarial Factors. To the extent otherwise applicable under the Plan, actuarial factors for determining the reduction of the Qualifying Participant’s pension due to early commencement, and for determining actuarial equivalent benefits between available forms of annuity, shall be the factors that would have applied if the Qualifying Participant had made a valid election to commence payment of his retirement benefit or deferred vested pension under the Plan, with a benefit commencement date of the Window Election Commencement Date, and had elected the same form of immediately commencing annuity elected by the Qualifying Participant in his Special Benefit Election (all determined without regard to this Section 7.13).

(ii) Participants Not Otherwise Eligible for Immediate Commencement. With respect to a Qualifying Participant who is not eligible for immediate commencement of payment as of the Window Election Commencement Date under the provisions of the Plan other than this Section 7.13, such Qualifying Participant’s retirement benefit or deferred vested pension shall be payable in one of the following optional annuity forms as the Qualifying Participant may elect, and the following early reduction factors and actuarial factors shall apply in the determination of such payment:

(A) Forms. The optional forms from which the Qualifying Participant may elect payment of his immediately commencing annuity shall be the Automatic Surviving Spouse’s Pension described in Section 7.5 of the Plan, the 75% Joint and Survivor Option described in Section 7.7 with his Spouse as Beneficiary (provided, for both such options, the Qualifying Participant is married to a Spouse as of the Window Election Commencement Date) and the single life annuity described in Section 7.3 of the Plan.

(B) Early Reduction and Actuarial Factors. Actuarial factors for determining the reduction to be applied to the Qualifying Participant’s retirement benefit or deferred vested pension at Normal Retirement Date to reflect early commencement, and for determining actuarial equivalent benefits between available forms of annuity, shall be based on the applicable interest rate promulgated by the Secretary of the Treasury

6

under Section 417(e)(3)(C) of the Code for November 2018 and the mortality assumptions prescribed by the Secretary of the Treasury pursuant to Section 417(e)(3)(B) of the Code.

(e) Form and Validity of Elections. All Special Benefit Elections must be made in writing on a form and in a manner provided by the Administrator, and mailed to the Administrator or its designee, as set forth on such form, on or before October 22, 2019. The Administrator shall have the authority to determine the validity and sufficiency of any Special Benefit Election made during the Lump Sum Payment Option Window. Notwithstanding the foregoing, any Special Benefit Election made by a Qualifying Participant on or before October 22, 2019, as set forth herein, may be revoked by the Qualifying Participant on or before November 30, 2019, in the form and manner provided by the Administrator.

(f) Death After Valid Election and Before Commencement. Subject to the provisions of Article VIII, in the event a Qualifying Participant who has made a valid Special Benefit Election dies before the Window Election Commencement Date, the Qualifying Participant’s surviving Spouse, or in the absence of a surviving Spouse the Qualifying Participant’s estate, shall be paid the lump sum for which such Qualifying Participant was otherwise eligible under this Section 7.13. Such payment shall be made as soon as administratively practicable following the Window Election Commencement Date.

(g) Administration. The Administrator shall have the authority to make and enforce all such rules and procedures as it deems necessary or proper for the administration of the Lump Sum Payment Option Window.

* * * * * * *

IN WITNESS WHEREOF, the Company has caused this Amendment to be executed this 3^rd day of September, 2019.

	ERIE INDEMNITY COMPANY
ATTEST:
/s/ Amy Chapman	By: /s/ Gregory J. Gutting
	Title: EVP & Chief Financial Officer

7

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Timothy G. NeCastro, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Erie Indemnity Company;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected or is reasonably likely to materially affect the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	October 24, 2019
		/s/ Timothy G. NeCastro
		Timothy G. NeCastro
		President & CEO

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Gregory J. Gutting, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Erie Indemnity Company;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected or is reasonably likely to materially affect the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	October 24, 2019
		/s/ Gregory J. Gutting
		Gregory J. Gutting
		Executive Vice President & CFO

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

We, Timothy G. NeCastro, Chief Executive Officer of the Erie Indemnity Company (the "Company"), and Gregory J. Gutting, Chief Financial Officer of the Company, certify, pursuant to § 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. § 1350, that:

(1) The Quarterly Report on Form 10-Q of the Company for the quarterly period ended September 30, 2019 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Timothy G. NeCastro

Timothy G. NeCastro

President & CEO

/s/ Gregory J. Gutting

Gregory J. Gutting

Executive Vice President & CFO

October 24, 2019

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

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Investments - Equity in Earnings (Losses) of Limited Partnerships by Method of Accounting (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Dec. 31, 2018 fund
Investments in limited partnerships
Equity in earnings (losses) of limited partnerships	$ 3,289	$ 772	$ 2,546	$ 361
Equity method of accounting
Investments in limited partnerships
Equity in earnings (losses) of limited partnerships	3,289	645	2,546	624
Fair value option
Investments in limited partnerships
Number of real estate limited partnerships that do not meet the criteria of an investment company | fund					1
Equity in earnings (losses) of limited partnerships	$ 0	$ 127	$ 0	$ (263)

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Investments - Available-For-Sale Securities in a Gross Unrealized Loss Position (Details) $ in Thousands	Sep. 30, 2019 USD ($) Holdings	Dec. 31, 2018 USD ($) Holdings
Investment grade
Fair value
Less than 12 months	$ 80,157	$ 242,821
12 months or longer	46,355	98,118
Total	126,512	340,939
Unrealized losses
Less than 12 months	176	1,295
12 months or longer	255	1,641
Total	$ 431	$ 2,936
No. of holdings | Holdings	85	147
Non-investment grade
Fair value
Less than 12 months	$ 28,262	$ 125,813
12 months or longer	9,985	19,987
Total	38,247	145,800
Unrealized losses
Less than 12 months	842	6,608
12 months or longer	1,131	1,686
Total	$ 1,973	$ 8,294
No. of holdings | Holdings	209	574
U.S. Treasury
Fair value
Less than 12 months		$ 129,474
12 months or longer		11,656
Total		141,130
Unrealized losses
Less than 12 months		19
12 months or longer		197
Total		$ 216
No. of holdings | Holdings		7
Corporate debt securities
Fair value
Less than 12 months	$ 39,871	$ 157,300
12 months or longer	30,518	86,586
Total	70,389	243,886
Unrealized losses
Less than 12 months	852	6,866
12 months or longer	1,179	2,688
Total	$ 2,031	$ 9,554
No. of holdings | Holdings	229	635
Residential mortgage-backed securities
Fair value
Less than 12 months	$ 20,440	$ 777
12 months or longer	0	1,618
Total	20,440	2,395
Unrealized losses
Less than 12 months	55	6
12 months or longer	0	26
Total	$ 55	$ 32
No. of holdings | Holdings	7	3
Commercial mortgage-backed securities
Fair value
Less than 12 months	$ 7,325	$ 17,624
12 months or longer	538	16,997
Total	7,863	34,621
Unrealized losses
Less than 12 months	19	175
12 months or longer	2	412
Total	$ 21	$ 587
No. of holdings | Holdings	10	30
Collateralized debt obligations
Fair value
Less than 12 months	$ 39,202	$ 55,246
12 months or longer	25,284	1,248
Total	64,486	56,494
Unrealized losses
Less than 12 months	84	826
12 months or longer	205	4
Total	$ 289	$ 830
No. of holdings | Holdings	47	39
Other debt securities
Fair value
Less than 12 months	$ 1,581	$ 8,213
12 months or longer	0	0
Total	1,581	8,213
Unrealized losses
Less than 12 months	8	11
12 months or longer	0	0
Total	$ 8	$ 11
No. of holdings | Holdings	1	7
Available-for-sale securities
Fair value
Less than 12 months	$ 108,419	$ 368,634
12 months or longer	56,340	118,105
Total	164,759	486,739
Unrealized losses
Less than 12 months	1,018	7,903
12 months or longer	1,386	3,327
Total	$ 2,404	$ 11,230
No. of holdings | Holdings	294	721

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Fair Value - Level 3 Assets (Details) - Level 3 - Available-for-sale securities - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Roll forward of level 3 fair value measurements on a recurring basis
Beginning balance	$ 8,924	$ 11,120	$ 12,577	$ 10,079
Included in earnings	10	3	18	4
Included in other comprehensive income	(90)	71	208	30
Purchases	2,849	2,444	4,982	5,491
Sales	(510)	(1,416)	(7,879)	(2,381)
Transfers into Level 3	4,696	2,735	15,347	10,517
Transfers out of Level 3	(1,814)	(5,782)	(11,188)	(14,565)
Ending balance	14,065	9,175	14,065	9,175
Change in unrealized gains or losses included in other comprehensive income related to Level 3 securities held at the reporting date
Change in unrealized gains or losses included in other comprehensive income related to Level 3 securities	(93)	66	244	38
Corporate debt securities
Roll forward of level 3 fair value measurements on a recurring basis
Beginning balance	6,373	11,120	12,577	7,879
Included in earnings	16	3	7	4
Included in other comprehensive income	(92)	71	199	23
Purchases	549	1,539	1,283	4,586
Sales	(507)	(1,416)	(6,779)	(2,381)
Transfers into Level 3	1,850	2,735	9,244	10,517
Transfers out of Level 3	(1,131)	(5,782)	(9,473)	(12,358)
Ending balance	7,058	8,270	7,058	8,270
Change in unrealized gains or losses included in other comprehensive income related to Level 3 securities held at the reporting date
Change in unrealized gains or losses included in other comprehensive income related to Level 3 securities	(100)	66	112	38
Residential mortgage-backed securities
Roll forward of level 3 fair value measurements on a recurring basis
Beginning balance			0
Included in earnings			4
Included in other comprehensive income			15
Purchases			921
Sales			(32)
Transfers into Level 3			0
Transfers out of Level 3			(908)
Ending balance	0		0
Commercial mortgage-backed securities
Roll forward of level 3 fair value measurements on a recurring basis
Beginning balance	2,551		0
Included in earnings	(6)		7
Included in other comprehensive income	2		(6)
Purchases	0		478
Sales	(3)		(1,068)
Transfers into Level 3	2,846		6,103
Transfers out of Level 3	(683)		(807)
Ending balance	4,707		4,707
Change in unrealized gains or losses included in other comprehensive income related to Level 3 securities held at the reporting date
Change in unrealized gains or losses included in other comprehensive income related to Level 3 securities	7	0	132	0
Collateralized debt obligations
Roll forward of level 3 fair value measurements on a recurring basis
Beginning balance	0		0	2,200
Included in earnings	0		0	0
Included in other comprehensive income	0		0	7
Purchases	2,300		2,300	0
Sales	0		0	0
Transfers into Level 3	0		0	0
Transfers out of Level 3	0		0	(2,207)
Ending balance	2,300	0	2,300	0
Other debt securities
Roll forward of level 3 fair value measurements on a recurring basis
Beginning balance		0		0
Included in earnings		0		0
Included in other comprehensive income		0		0
Purchases		905		905
Sales		0		0
Transfers into Level 3		0		0
Transfers out of Level 3		0		0
Ending balance		905		905
Change in unrealized gains or losses included in other comprehensive income related to Level 3 securities held at the reporting date
Change in unrealized gains or losses included in other comprehensive income related to Level 3 securities	$ 0	$ 0	$ 0	$ 0

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Accumulated Other Comprehensive Income (Loss)

9 Months Ended

Sep. 30, 2019

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Accumulated Other Comprehensive Income (Loss)

Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income ("AOCI") (loss) by component, including amounts reclassified to other comprehensive income ("OCI") (loss) and the related line item in the Statements of Operations where net income is presented, are as follows:

	Three months ended									Three months ended
	September 30, 2019									September 30, 2018
(in thousands)	Before Tax			Income Tax			Net			Before Tax			Income Tax			Net
Investment securities:
AOCI (loss), beginning of period	$	1,030		$	216		$	814		$	(4,157	)	$	(873	)	$	(3,284	)
OCI (loss) before reclassifications	3,991			838			3,153			(624		)	(131		)	(493		)
Realized investment (gains) losses	(1,072		)	(225		)	(847		)	1			0			1
Impairment losses	31			7			24			0			0			0
OCI (loss)	2,950			620			2,330			(623		)	(131		)	(492		)
AOCI (loss), end of period	$	3,980		$	836		$	3,144		$	(4,780	)	$	(1,004	)	$	(3,776	)
Pension and other postretirement plans:
AOCI (loss), beginning of period	$	(152,632	)	$	(32,054	)	$	(120,578	)	$	(200,954	)	$	(42,201	)	$	(158,753	)
Amortization of prior service costs (1)	349			74			275			0			0			0
Amortization of net actuarial loss (1)	1,210			254			956			0			0			0
OCI	1,559			328			1,231			0			0			0
AOCI (loss), end of period	$	(151,073	)	$	(31,726	)	$	(119,347	)	$	(200,954	)	$	(42,201	)	$	(158,753	)
Total
AOCI (loss), beginning of period	$	(151,602	)	$	(31,838	)	$	(119,764	)	$	(205,111	)	$	(43,074	)	$	(162,037	)
Investment securities	2,950			620			2,330			(623		)	(131		)	(492		)
Pension and other postretirement plans	1,559			328			1,231			0			0			0
OCI (loss)	4,509			948			3,561			(623		)	(131		)	(492		)
AOCI (loss), end of period	$	(147,093	)	$	(30,890	)	$	(116,203	)	$	(205,734	)	$	(43,205	)	$	(162,529	)

	Nine months ended									Nine months ended
	September 30, 2019									September 30, 2018
(in thousands)	Before Tax			Income Tax			Net			Before Tax			Income Tax			Net
Investment securities:
AOCI (loss), beginning of period	$	(9,169	)	$	(1,926	)	$	(7,243	)	$	3,410		$	716		$	2,694
OCI (loss) before reclassifications	17,185			3,609			13,576			(9,163		)	(1,924		)	(7,239		)
Realized investment (gains) losses	(4,229		)	(888		)	(3,341		)	412			86			326
Impairment losses	193			41			152			646			136			510
Cumulative effect of adopting ASU 2016-01 (2)	—			—			—			(85		)	(18		)	(67		)
OCI (loss)	13,149			2,762			10,387			(8,190		)	(1,720		)	(6,470		)
AOCI (loss), end of period	$	3,980		$	836		$	3,144		$	(4,780	)	$	(1,004	)	$	(3,776	)
Pension and other postretirement plans:
AOCI (loss), beginning of period	$	(155,749	)	$	(32,708	)	$	(123,041	)	$	(200,954	)	$	(42,201	)	$	(158,753	)
Amortization of prior service costs (1)	1,046			220			826			0			0			0
Amortization of net actuarial loss (1)	3,630			762			2,868			0			0			0
OCI	4,676			982			3,694			0			0			0
AOCI (loss), end of period	$	(151,073	)	$	(31,726	)	$	(119,347	)	$	(200,954	)	$	(42,201	)	$	(158,753	)
Total
AOCI (loss), beginning of period	$	(164,918	)	$	(34,634	)	$	(130,284	)	$	(197,544	)	$	(41,485	)	$	(156,059	)
Investment securities	13,149			2,762			10,387			(8,190		)	(1,720		)	(6,470		)
Pension and other postretirement plans	4,676			982			3,694			0			0			0
OCI (loss)	17,825			3,744			14,081			(8,190		)	(1,720		)	(6,470		)
AOCI (loss), end of period	$	(147,093	)	$	(30,890	)	$	(116,203	)	$	(205,734	)	$	(43,205	)	$	(162,529	)

(1) Effective January 1, 2019, amounts reclassified from AOCI related to amortization of prior service costs and net actuarial loss were recorded during interim periods. Prior to 2019, amounts reclassified for these items were recorded on an annual basis. These components are included in the computation of net periodic pension cost. See Note 9, "Postretirement Benefits", for additional information.

(2)

ASU 2016-01 required a reclassification of unrealized losses of equity securities from AOCI to retained earnings at January 1, 2018.

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Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Basis of presentation

Basis of presentation

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. For further information, refer to the financial statements and footnotes included in our Form 10-K for the year ended December 31, 2018 as filed with the Securities and Exchange Commission on February 21, 2019.

Use of estimates

Use of estimates

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Recently adopted and issued accounting standards

Recently adopted accounting standards

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Codification ("ASC") 842, "Leases", which requires lessees to recognize assets and liabilities arising from operating leases on the Statements of Financial Position and to disclose certain information about leasing arrangements. We adopted ASC 842 on January 1, 2019 using the optional transition method, which permits entities to apply the new guidance prospectively with certain practical expedients available. We elected the package of practical expedients which among other things allowed us to carry forward the historical lease classifications. We did not elect the hindsight practical expedient in determining the lease term for existing leases.

The adoption of the new standard resulted in the recognition of operating lease assets of $32.7 million and operating lease liabilities of $32.1 million on the Statement of Financial Position at January 1, 2019. The adoption of this standard did not have a material impact on our Statement of Operations and had no impact on our net cash flows.

Recently issued accounting standards

In August 2018, the FASB issued Accounting Standards Update ("ASU") 2018-15, "Intangibles-Goodwill and Other Internal-Use Software", which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. ASU 2018-15 is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. The amendments under ASU 2018-15 may be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption and early adoption is permitted. We plan to adopt this guidance on a prospective basis and do not expect a material impact on our financial statements or disclosures.

In June 2016, the FASB issued ASU 2016-13, "Financial Instruments-Credit Losses", which requires financial assets measured at amortized cost to be presented at the net amount expected to be collected through the use of a new forward-looking expected loss model and credit losses relating to available-for-sale debt securities to be recognized through an allowance for credit losses. ASU 2016-13 is effective for interim and annual reporting periods beginning after December 15, 2019. Early adoption for interim and annual periods beginning after December 15, 2018 is permitted. We have evaluated the impact of this guidance on our financial assets. Our investments are not measured at amortized cost, and therefore do not require the use of a new expected loss model. Our available-for-sale debt securities will continue to be monitored for credit losses, which would be limited to the amount by which the fair value is below amortized cost and reflected as an allowance for credit losses rather than a reduction of the carrying value of the asset. Our receivables from Erie Insurance Exchange and affiliates are unlikely to have a significant credit loss exposure given the financial strength of the Exchange as demonstrated by its strong surplus position, industry ratings, and historical experience of no credit losses. We currently do not record an allowance for credit losses related to our agent loans as historical default amounts have been insignificant and the majority of the loans are senior secured. Accordingly, when we establish an allowance related to agent loans upon adoption of this guidance, we do not expect it to be material. Our cash equivalents include money market mutual funds primarily comprised of U.S. government securities. A corresponding allowance, if any, would be expected to be immaterial. As a result of our evaluation, we do not expect a material impact on our financial statements.

Other assets

Other assets

Other assets include agent loans, operating lease assets and other long-term prepaid assets. Agent loans are carried at unpaid principal balance with interest recorded in investment income as earned. It is our policy to charge the loans that are in default directly to expense. We do not record an allowance for credit losses on these loans, as the majority of the loans are senior secured and historically have had insignificant default amounts.

The determination of whether an arrangement is a lease, and the related lease classification, is made at inception of a contract. Our leases are classified as operating leases. Operating lease assets and liabilities are recorded at inception based on the present value of the future minimum lease payments over the lease term at commencement date. When an implicit rate for the lease is not available, we use our incremental borrowing rate based on the information available at commencement date to determine the present value of future payments. Lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Most of our lease contracts contain lease and non-lease components. Non-lease components are expensed as incurred. Operating lease assets are included in other assets, and the current and noncurrent portions of the operating lease liabilities are included in accounts payable and accrued expenses and other long-term liabilities, respectively, in the Statement of Financial Position.

Earnings per share

Class A and Class B basic earnings per share and Class B diluted earnings per share are calculated under the two-class method. The two-class method allocates earnings to each class of stock based upon its dividend rights.  Class B shares are convertible into Class A shares at a conversion ratio of 2,400 to 1. See Note 11, "Capital Stock".

Class A diluted earnings per share are calculated under the if-converted method, which reflects the conversion of Class B shares to Class A shares. Diluted earnings per share calculations include the dilutive effect of assumed issuance of stock-based awards under compensation plans that have the option to be paid in stock using the treasury stock method.

Fair value of financial instruments

Financial instruments carried at fair value

Our available-for-sale debt securities and equity securities are recorded at fair value, which is the price that would be received to sell the asset in an orderly transaction between willing market participants as of the measurement date.

Valuation techniques used to derive the fair value of our available-for-sale debt securities and equity securities are based upon observable and unobservable inputs.  Observable inputs reflect market data obtained from independent sources.  Unobservable inputs reflect our own assumptions regarding fair market value for these securities.  Although virtually all of our prices are obtained from third party sources, we also perform an internal pricing review on outliers. The outlier review includes securities with price changes that vary significantly from current market conditions or independent third party price sources. Financial instruments are categorized based upon the following characteristics or inputs to the valuation techniques:

• Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date.

• Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

• Level 3 – Unobservable inputs for the asset or liability.

Estimates of fair values for our investment portfolio are obtained primarily from a nationally recognized pricing service.  Our Level 1 category includes those securities valued using an exchange traded price provided by the pricing service.  The methodologies used by the pricing service that support a Level 2 classification of a financial instrument include multiple verifiable, observable inputs including benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data.  Pricing service valuations for Level 3 securities are based upon proprietary models and are used when observable inputs are not available or in illiquid markets.

In limited circumstances we adjust the price received from the pricing service when, in our judgment, a better reflection of fair value is available based upon corroborating information and our knowledge and monitoring of market conditions such as a disparity in price of comparable securities and/or non-binding broker quotes.  In other circumstances, certain securities are internally priced because prices are not provided by the pricing service.

We perform continuous reviews of the prices obtained from the pricing service.  This includes evaluating the methodology and inputs used by the pricing service to ensure that we determine the proper classification level of the financial instrument.  Price variances, including large periodic changes, are investigated and corroborated by market data.  We have reviewed the pricing methodologies of our pricing service as well as other observable inputs, such as market data, and transaction volumes and believe that the prices adequately consider market activity in determining fair value. 

When a price from the pricing service is not available, values are determined by obtaining broker/dealer quotes and/or market comparables.  When available, we obtain multiple quotes for the same security.  The ultimate value for these securities is determined based upon our best estimate of fair value using corroborating market information.  Our evaluation includes the consideration of benchmark yields, reported trades, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data.

Fair value hierarchy classification

We review the fair value hierarchy classifications each reporting period.  Transfers between hierarchy levels may occur due to changes in available market observable inputs.

Limited partnerships

Limited partnerships

The majority of our limited partnership holdings are considered investment companies where the general partners record assets at fair value. These limited partnerships are recorded using the equity method of accounting and are generally reported on a one-quarter lag; therefore, our year-to-date limited partnership results through September 30, 2019 are comprised of partnership financial results for the fourth quarter of 2018 and first two quarters of 2019.  Given the lag in reporting, our limited partnership results do not reflect the market conditions of the third quarter of 2019. Cash contributions made to and distributions received from the partnerships are recorded in the period in which the transaction occurs. At December 31, 2018 we also owned one real estate limited partnership that did not meet the criteria of an investment company. This partnership prepared audited financial statements on a cost basis. We elected to report this limited partnership under the fair value option, which was based on the NAV from our partner's capital statement reflecting the general partner's estimate of fair value for the fund's underlying assets. Fair value provides consistency in the evaluation and financial reporting for these limited partnerships and limited partnerships accounted for under the equity method. This real estate limited partnership was fully liquidated in January 2019.

Commitments and contingencies

We are involved in litigation arising in the ordinary course of conducting business.  In accordance with current accounting standards for loss contingencies and based upon information currently known to us, we establish reserves for litigation when it is probable that a loss associated with a claim or proceeding has been incurred and the amount of the loss or range of loss can be reasonably estimated.  When no amount within the range of loss is a better estimate than any other amount, we accrue the minimum amount of the estimable loss.  To the extent that such litigation against us may have an exposure to a loss in excess of the amount we have accrued, we believe that such excess would not be material to our financial condition, results of operations, or cash flows.  Legal fees are expensed as incurred.  We believe that our accruals for legal proceedings are appropriate and, individually and in the aggregate, are not expected to be material to our financial condition, results of operations, or cash flows.

We review all litigation on an ongoing basis when making accrual and disclosure decisions.  For certain legal proceedings, we cannot reasonably estimate losses or a range of loss, if any, particularly for proceedings that are in their early stages of development or where the plaintiffs seek indeterminate damages.  Various factors, including, but not limited to, the outcome of potentially lengthy discovery and the resolution of important factual questions, may need to be determined before probability can be established or before a loss or range of loss can be reasonably estimated.  If the loss contingency in question is not both probable and reasonably estimable, we do not establish an accrual and the matter will continue to be monitored for any developments that would make the loss contingency both probable and reasonably estimable.  In the event that a legal proceeding results in a substantial judgment against, or settlement by, us, there can be no assurance that any resulting liability or financial commitment would not have a material adverse effect on the financial condition, results of operations, or cash flows.

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Investments (Tables)

9 Months Ended

Sep. 30, 2019

Investments [Abstract]

Schedule of Reconciliation of Cost to Fair Value of Available-For-Sale Securities

The following tables summarize the cost and fair value of our available-for-sale securities as of:

	September 30, 2019
(in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Available-for-sale securities:
Corporate debt securities (1)	$	431,800	$	4,437	$	2,031	$	434,206
Residential mortgage-backed securities(1)	106,401		889		55		107,235
Commercial mortgage-backed securities(1)	61,940		1,263		21		63,182
Collateralized debt obligations	71,087		20		289		70,818
Other debt securities	5,108		92		8		5,192
Total available-for-sale securities	$	676,336	$	6,701	$	2,404	$	680,633

	December 31, 2018
(in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Available-for-sale securities:
U.S. Treasury (1)	$	208,610	$	18	$	216	$	208,412
States & political subdivisions (1)	157,003		2,020		0		159,023
Corporate debt securities	259,362		139		9,554		249,947
Residential mortgage-backed securities	4,603		38		32		4,609
Commercial mortgage-backed securities	47,022		80		587		46,515
Collateralized debt obligations	65,039		30		830		64,239
Other debt securities	15,756		33		11		15,778
Total available-for-sale securities	$	757,395	$	2,358	$	11,230	$	748,523

(1)

In the fourth quarter of 2018, we began selling off our municipal bonds as part of a portfolio rebalancing and invested proceeds in short-term U.S. Treasuries. In 2019, proceeds from selling off the remaining municipal bond portfolio and short-term U.S. Treasuries were reinvested in corporate debt, structured, and equity securities.

Schedule of Amortized Cost and Estimated Fair Value of Available-For-Sale Securities by Remaining Contractual Term to Maturity

The amortized cost and estimated fair value of available-for-sale securities at September 30, 2019 are shown below by remaining contractual term to maturity.  Mortgage-backed securities are allocated based upon stated maturity dates.  Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. 

	September 30, 2019
	Amortized		Estimated
(in thousands)	cost		fair value
Due in one year or less	$	32,875	$	32,842
Due after one year through five years	307,299		308,682
Due after five years through ten years	128,109		129,071
Due after ten years	208,053		210,038
Total available-for-sale securities	$	676,336	$	680,633

Schedule of Available-For-Sale Securities in a Gross Unrealized Loss Position by Length of Time

The following table presents available-for-sale securities based on length of time in a gross unrealized loss position as of:

	September 30, 2019
	Less than 12 months				12 months or longer				Total
(dollars in thousands)	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair  value		Unrealized losses		No. of holdings
Available-for-sale securities:
Corporate debt securities	$	39,871	$	852	$	30,518	$	1,179	$	70,389	$	2,031	229
Residential mortgage-backed securities	20,440		55		0		0		20,440		55		7
Commercial mortgage-backed securities	7,325		19		538		2		7,863		21		10
Collateralized debt obligations	39,202		84		25,284		205		64,486		289		47
Other debt securities	1,581		8		0		0		1,581		8		1
Total available-for-sale securities	$	108,419	$	1,018	$	56,340	$	1,386	$	164,759	$	2,404	294
Quality breakdown of available-for-sale securities:
Investment grade	$	80,157	$	176	$	46,355	$	255	$	126,512	$	431	85
Non-investment grade	28,262		842		9,985		1,131		38,247		1,973		209
Total available-for-sale securities	$	108,419	$	1,018	$	56,340	$	1,386	$	164,759	$	2,404	294

	December 31, 2018
	Less than 12 months				12 months or longer				Total
(dollars in thousands)	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses		No. of holdings
Available-for-sale securities:
U.S. Treasury	$	129,474	$	19	$	11,656	$	197	$	141,130	$	216	7
Corporate debt securities	157,300		6,866		86,586		2,688		243,886		9,554		635
Residential mortgage-backed securities	777		6		1,618		26		2,395		32		3
Commercial mortgage-backed securities	17,624		175		16,997		412		34,621		587		30
Collateralized debt obligations	55,246		826		1,248		4		56,494		830		39
Other debt securities	8,213		11		0		0		8,213		11		7
Total available-for-sale securities	$	368,634	$	7,903	$	118,105	$	3,327	$	486,739	$	11,230	721
Quality breakdown of available-for-sale securities:
Investment grade	$	242,821	$	1,295	$	98,118	$	1,641	$	340,939	$	2,936	147
Non-investment grade	125,813		6,608		19,987		1,686		145,800		8,294		574
Total available-for-sale securities	$	368,634	$	7,903	$	118,105	$	3,327	$	486,739	$	11,230	721

Schedule of Investment Income, Net of Expenses, from Portfolios

Investment income, net of expenses, was generated from the following portfolios:

	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2019		2018		2019		2018
Fixed maturities (1)	$	5,449	$	6,243	$	17,098	$	18,616
Equity securities	452		203		734		487
Cash equivalents and other	2,900		1,484		8,025		3,518
Total investment income	8,801		7,930		25,857		22,621
Less: investment expenses	149		271		658		1,038
Investment income, net of expenses	$	8,652	$	7,659	$	25,199	$	21,583

(1)

Includes interest earned on note receivable from Erie Family Life Insurance Company of $0.4 million and $1.3 million for the three and nine months ended September 30, 2018, respectively. The note was repaid in full in December 2018.

Schedule of Realized Gains and Losses on Investments and Net Unrealized Gains and Losses Recognized during the Reporting Period Related to Equity Securities Held at the Reporting Date

Realized gains (losses) on investments were as follows:

	Three months ended September 30,						Nine months ended September 30,
(in thousands)	2019			2018			2019			2018
Available-for-sale securities:
Gross realized gains	$	1,320		$	525		$	5,640		$	1,100
Gross realized losses	(248		)	(526		)	(1,411		)	(1,512		)
Net realized gains (losses) on available-for-sale securities	1,072			(1		)	4,229			(412		)
Equity securities	624			(1		)	1,272			(189		)
Miscellaneous	0			2			0			104
Net realized investment gains (losses)	$	1,696		$	0		$	5,501		$	(497	)

The portion of net unrealized gains and losses recognized during the reporting period, related to equity securities still held at the reporting date, is calculated as follows:

	Three months ended September 30,					Nine months ended September 30,
(in thousands)	2019		2018			2019		2018
Equity securities:
Net gains (losses) recognized during the period	$	624	$	(1	)	$	1,272	$	(189	)
Less: net gains (losses) recognized on securities sold	47		(52		)	47		(86		)
Net unrealized gains (losses) recognized on securities held at reporting date	$	577	$	51		$	1,225	$	(103	)

Schedule of Limited Partnership Results, Generally Reported on a One Quarter Lag

Equity in earnings of limited partnerships by method of accounting were as follows:

	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2019		2018		2019		2018
Equity in earnings of limited partnerships - equity method	$	3,289	$	645	$	2,546	$	624
Change in fair value of limited partnerships - fair value option	0		127		0		(263		)
Equity in earnings of limited partnerships	$	3,289	$	772	$	2,546	$	361

The following table summarizes limited partnership investments by sector as of:

(in thousands)	September 30, 2019		December 31, 2018
Private equity	$	29,938	$	28,271
Mezzanine debt	900		1,152
Real estate	1,333		2,192
Real estate - fair value option	0		3,206
Total limited partnership investments	$	32,171	$	34,821

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Fair Value - Fair Value Measurements on a Recurring Basis by Pricing Source (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Fair value by pricing source
Available-for-sale securities	$ 680,633
Equity securities priced using pricing services	55,052	$ 11,853
Fair Value, Measurements, Recurring Basis
Fair value by pricing source
Available-for-sale securities	680,633
Total	735,685	763,582
Fair Value, Measurements, Recurring Basis | Pricing services
Fair value by pricing source
Available-for-sale securities	677,683
Equity securities priced using pricing services	55,052
Fair Value, Measurements, Recurring Basis | Market comparables/broker quotes
Fair value by pricing source
Available-for-sale securities	2,800
Fair Value, Measurements, Recurring Basis | Internal modeling
Fair value by pricing source
Available-for-sale securities	150
Fair Value, Measurements, Recurring Basis | Level 1
Fair value by pricing source
Available-for-sale securities	3,214
Total	28,738	1,809
Fair Value, Measurements, Recurring Basis | Level 1 | Pricing services
Fair value by pricing source
Available-for-sale securities	3,214
Equity securities priced using pricing services	25,524
Fair Value, Measurements, Recurring Basis | Level 1 | Market comparables/broker quotes
Fair value by pricing source
Available-for-sale securities	0
Fair Value, Measurements, Recurring Basis | Level 1 | Internal modeling
Fair value by pricing source
Available-for-sale securities	0
Fair Value, Measurements, Recurring Basis | Level 2
Fair value by pricing source
Available-for-sale securities	663,354
Total	692,882	745,990
Fair Value, Measurements, Recurring Basis | Level 2 | Pricing services
Fair value by pricing source
Available-for-sale securities	662,854
Equity securities priced using pricing services	29,528
Fair Value, Measurements, Recurring Basis | Level 2 | Market comparables/broker quotes
Fair value by pricing source
Available-for-sale securities	500
Fair Value, Measurements, Recurring Basis | Level 2 | Internal modeling
Fair value by pricing source
Available-for-sale securities	0
Fair Value, Measurements, Recurring Basis | Level 3
Fair value by pricing source
Available-for-sale securities	14,065
Total	14,065	$ 12,577
Fair Value, Measurements, Recurring Basis | Level 3 | Pricing services
Fair value by pricing source
Available-for-sale securities	11,615
Equity securities priced using pricing services	0
Fair Value, Measurements, Recurring Basis | Level 3 | Market comparables/broker quotes
Fair value by pricing source
Available-for-sale securities	2,300
Fair Value, Measurements, Recurring Basis | Level 3 | Internal modeling
Fair value by pricing source
Available-for-sale securities	$ 150

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Revenue - Narrative (Details)	9 Months Ended
	Sep. 30, 2019 Obligations
Revenue from Contract with Customer [Abstract]
Indemnity's management fee rate as a percent of direct and affiliated assumed written premiums of the Exchange (percentage)	25.00%
Performance obligations under subscriber's agreement	2

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STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Statement of Comprehensive Income [Abstract]
Net income	$ 94,169	$ 80,446	$ 257,234	$ 225,910
Other comprehensive income (loss), net of tax
Change in unrealized holding gains (losses) on available-for-sale securities	2,330	(492)	10,387	(6,470)
Amortization of prior service costs and net actuarial loss on pension and other postretirement plans	1,231	0	3,694	0
Total other comprehensive income (loss), net of tax	3,561	(492)	14,081	(6,470)
Comprehensive income	$ 97,730	$ 79,954	$ 271,315	$ 219,440

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Postretirement Benefits (Tables)

9 Months Ended

Sep. 30, 2019

Retirement Benefits [Abstract]

Schedule of Cost of Pension Plans

The cost of our pension plans are as follows:

	Three months ended September 30,						Nine months ended September 30,
(in thousands)	2019			2018			2019			2018
Service cost for benefits earned	$	8,463		$	9,513		$	25,390		$	28,539
Interest cost on benefits obligation	9,827			8,845			29,480			26,536
Expected return on plan assets	(11,872		)	(12,815		)	(35,614		)	(38,444		)
Prior service cost amortization	349			339			1,046			1,015
Net actuarial loss amortization	1,279			3,202			3,835			9,606
Pension plan cost (1)	$	8,046		$	9,084		$	24,137		$	27,252

(1) The components of pension plan costs other than the service cost component are included in the line item "Other income" in the Statements of Operations after reimbursements from the Exchange and its subsidiaries.

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STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED) (Parenthetical) - $ / shares	3 Months Ended						9 Months Ended
	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Sep. 30, 2019	Sep. 30, 2018
Class A common stock
Dividends declared (in dollars per share)	$ 0.90	$ 0.90	$ 0.90	$ 0.84	$ 0.84	$ 0.84	$ 2.70	$ 2.52
Class B common stock
Dividends declared (in dollars per share)	$ 135.00	$ 135.00	$ 135.00	$ 126.00	$ 126.00	$ 126.00	$ 405.00	$ 378.00

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Earnings Per Share

9 Months Ended

Sep. 30, 2019

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

Class A and Class B basic earnings per share and Class B diluted earnings per share are calculated under the two-class method. The two-class method allocates earnings to each class of stock based upon its dividend rights.  Class B shares are convertible into Class A shares at a conversion ratio of 2,400 to 1. See Note 11, "Capital Stock".

Class A diluted earnings per share are calculated under the if-converted method, which reflects the conversion of Class B shares to Class A shares. Diluted earnings per share calculations include the dilutive effect of assumed issuance of stock-based awards under compensation plans that have the option to be paid in stock using the treasury stock method.

A reconciliation of the numerators and denominators used in the basic and diluted per-share computations is presented as follows for each class of common stock: 

	Three months ended September 30,
	2019					2018
(dollars in thousands, except per share data)	Allocated net income (numerator)		Weighted shares (denominator)	Per-share amount		Allocated net income (numerator)		Weighted shares (denominator)	Per-share amount
Class A – Basic EPS:
Income available to Class A stockholders	$	93,398	46,189,006	$	2.02	$	79,787	46,188,941	$	1.73
Dilutive effect of stock-based awards	0		35,319	—		0		27,697	—
Assumed conversion of Class B shares	771		6,100,800	—		659		6,100,800	—
Class A – Diluted EPS:
Income available to Class A stockholders on Class A equivalent shares	$	94,169	52,325,125	$	1.80	$	80,446	52,317,438	$	1.54
Class B – Basic EPS:
Income available to Class B stockholders	$	771	2,542	$	303	$	659	2,542	$	259
Class B – Diluted EPS:
Income available to Class B stockholders	$	770	2,542	$	303	$	658	2,542	$	259

	Nine months ended September 30,
	2019					2018
(dollars in thousands, except per share data)	Allocated net income (numerator)		Weighted shares (denominator)	Per-share amount		Allocated net income (numerator)		Weighted shares (denominator)	Per-share amount
Class A – Basic EPS:
Income available to Class A stockholders	$	255,128	46,188,767	$	5.52	$	224,060	46,188,522	$	4.85
Dilutive effect of stock-based awards	0		27,708	—		0		24,320	—
Assumed conversion of Class B shares	2,106		6,100,800	—		1,850		6,100,800	—
Class A – Diluted EPS:
Income available to Class A stockholders on Class A equivalent shares	$	257,234	52,317,275	$	4.92	$	225,910	52,313,642	$	4.32
Class B – Basic EPS:
Income available to Class B stockholders	$	2,106	2,542	$	829	$	1,850	2,542	$	728
Class B – Diluted EPS:
Income available to Class B stockholders	$	2,105	2,542	$	828	$	1,849	2,542	$	727

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Borrowing Arrangements

9 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

Borrowing Arrangements

Borrowing Arrangements

Bank line of credit

As of September 30, 2019, we have access to a $100 million bank revolving line of credit with a $25 million letter of credit sublimit that expires on October 30, 2023. As of September 30, 2019, a total of $99.1 million remains available under the facility due to $0.9 million outstanding letters of credit, which reduce the availability for letters of credit to $24.1 million.  We had no borrowings outstanding on our line of credit as of September 30, 2019.  Investments with a fair value of $109.8 million were pledged as collateral on the line at September 30, 2019. The investments pledged as collateral have no trading restrictions and are reported as cash and cash equivalents and available-for-sale securities in the Statements of Financial Position as of September 30, 2019. The banks require compliance with certain covenants, which include leverage ratios and debt restrictions, for our line of credit.  We are in compliance with all covenants at September 30, 2019.

Term loan credit facility

In 2016, we entered into a credit agreement for a $100 million senior secured draw term loan credit facility ("Credit Facility") for the acquisition of real property and construction of an office building that will serve as part of our principal headquarters. On January 1, 2019, the Credit Facility converted to a fully-amortized term loan with monthly payments of principal and interest at a fixed rate of 4.35% over a period of 28 years. Investments with a fair value of $112.0 million were pledged as collateral for the facility and are reported as cash and cash equivalents and available-for-sale securities in the Statements of Financial Position as of September 30, 2019. The bank requires compliance with certain covenants, which include leverage ratios, debt restrictions and minimum net worth, for our Credit Facility. We are in compliance with all covenants at September 30, 2019.

The remaining unpaid balance from the Credit Facility is reported at carrying value on our Statements of Financial Position, net of unamortized loan origination and commitment fees. See Note 5, "Fair Value" for the estimated fair value of these borrowings.

Annual principal payments

The following table sets forth future principal payments:

(in thousands)
Year		Principal payments
2019	$	512
2020		1,980
2021		2,020
2022		2,110
2023		2,227
Thereafter		89,719

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Investments - Limited Partnership Investments by Sector (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Investments in limited partnerships
Asset recorded	$ 32,171	$ 34,821
Private equity
Investments in limited partnerships
Asset recorded	29,938	28,271
Mezzanine debt
Investments in limited partnerships
Asset recorded	900	1,152
Real estate
Investments in limited partnerships
Asset recorded	1,333	2,192
Fair value option | Real estate
Investments in limited partnerships
Asset recorded	$ 0	$ 3,206

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Borrowing Arrangements - Annual Principal Payments (Details) - Secured debt $ in Thousands	Sep. 30, 2019 USD ($)
Future principal payments:
2019	$ 512
2020	1,980
2021	2,020
2022	2,110
2023	2,227
Thereafter	$ 89,719

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Capital Stock - Stock Repurchases (Details) - Class A common stock - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2018	Dec. 31, 2011
Shares purchased outside of stock repurchase program
Total cost of shares purchased outside of publicly announced stock repurchase program	$ 2,400,000	$ 3,200,000
Performance shares
Shares purchased outside of stock repurchase program
Shares purchased outside of publicly announced stock repurchase program for share-based compensation awards (in shares)	13,399	27,120
Equity compensation plan
Shares purchased outside of stock repurchase program
Total cost of shares purchased outside of publicly announced stock repurchase program	$ 400,000	$ 700,000
Average price per share for shares purchased (in dollars per share)	$ 132.35	$ 117.39
Equity compensation plan | Performance shares
Shares purchased outside of stock repurchase program
Shares purchased outside of publicly announced stock repurchase program for share-based compensation awards (in shares)	3,246	5,830
Stock compensation plan for outside directors
Shares purchased outside of stock repurchase program
Total cost of shares purchased outside of publicly announced stock repurchase program	$ 1,200,000	$ 1,100,000
Average price per share for shares purchased (in dollars per share)	$ 198.17	$ 122.19
Stock compensation plan for outside directors | Performance shares
Shares purchased outside of stock repurchase program
Shares purchased outside of publicly announced stock repurchase program for share-based compensation awards (in shares)	5,844	9,285
Incentive compensation deferral plan
Shares purchased outside of stock repurchase program
Total cost of shares purchased outside of publicly announced stock repurchase program	$ 800,000	$ 1,400,000
Average price per share for shares purchased (in dollars per share)	$ 176.26	$ 119.28
Incentive compensation deferral plan | Performance shares
Shares purchased outside of stock repurchase program
Shares purchased outside of publicly announced stock repurchase program for share-based compensation awards (in shares)	4,309	12,005
Stock repurchase program
Stock repurchases
Amount of authorized stock repurchases approved for continuation under the current program			$ 150,000,000
Shares repurchased under stock repurchase program (in shares)	0	0
Approximate amount of repurchase authority remaining under the current stock repurchase program	$ 17,800,000

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Significant Accounting Policies (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Jan. 01, 2019	Dec. 31, 2018
Leases [Abstract]
Operating lease assets	$ 23,841	$ 32,700	$ 0
Operating lease liabilities	$ 23,495	$ 32,100	$ 0

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STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Operating revenue
Operating revenue	$ 638,742,000	$ 612,126,000	$ 1,880,558,000	$ 1,805,744,000
Operating expenses
Operating expenses	532,835,000	515,431,000	1,591,919,000	1,536,159,000
Operating income	105,907,000	96,695,000	288,639,000	269,585,000
Investment income
Net investment income	8,652,000	7,659,000	25,199,000	21,583,000
Net realized investment gains (losses)	1,696,000	0	5,501,000	(497,000)
Net impairment losses recognized in earnings	(31,000)	0	(193,000)	(646,000)
Equity in earnings of limited partnerships	3,289,000	772,000	2,546,000	361,000
Total investment income	13,606,000	8,431,000	33,053,000	20,801,000
Interest expense, net	111,000	709,000	832,000	1,864,000
Other income	100,000	54,000	195,000	156,000
Income before income taxes	119,502,000	104,471,000	321,055,000	288,678,000
Income tax expense	25,333,000	24,025,000	63,821,000	62,768,000
Net income	$ 94,169,000	$ 80,446,000	$ 257,234,000	$ 225,910,000
Class A common stock
Net income per share
Common stock - basic (in dollars per share)	$ 2.02	$ 1.73	$ 5.52	$ 4.85
Common stock - diluted (in dollars per share)	$ 1.80	$ 1.54	$ 4.92	$ 4.32
Weighted average shares outstanding – Basic
Common stock - basic (in shares)	46,189,006	46,188,941	46,188,767	46,188,522
Weighted average shares outstanding – Diluted
Common stock - diluted (in shares)	52,325,125	52,317,438	52,317,275	52,313,642
Dividends declared per share
Common stock (in dollars per share)	$ 0.90	$ 0.84	$ 2.70	$ 2.52
Class B common stock
Net income per share
Common stock - basic (in dollars per share)	303	259	829	728
Common stock - diluted (in dollars per share)	$ 303	$ 259	$ 828	$ 727
Weighted average shares outstanding – Basic
Common stock - basic (in shares)	2,542	2,542	2,542	2,542
Weighted average shares outstanding – Diluted
Common stock - diluted (in shares)	2,542	2,542	2,542	2,542
Dividends declared per share
Common stock (in dollars per share)	$ 135.00	$ 126.00	$ 405.00	$ 378.00
Management fee revenue - policy issuance and renewal services, net
Operating revenue
Operating revenue	$ 474,427,000	$ 451,361,000	$ 1,385,923,000	$ 1,311,911,000
Operating expenses
Operating expenses	390,105,000	375,259,000	1,160,614,000	1,103,517,000
Management fee revenue - administrative services, net
Operating revenue
Operating revenue	14,430,000	13,521,000	42,576,000	39,894,000
Administrative services reimbursement revenue
Operating revenue
Operating revenue	142,730,000	140,172,000	431,305,000	432,642,000
Operating expenses
Operating expenses	142,730,000	140,172,000	431,305,000	432,642,000
Service agreement revenue
Operating revenue
Operating revenue	$ 7,155,000	$ 7,072,000	$ 20,754,000	$ 21,297,000

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Borrowing Arrangements (Tables)

9 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

Schedule of Future Principal Payments

The following table sets forth future principal payments:

(in thousands)
Year		Principal payments
2019	$	512
2020		1,980
2021		2,020
2022		2,110
2023		2,227
Thereafter		89,719

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STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED) - USD ($) $ in Thousands		Total	Class A common stock	Class B common stock	Common stock Class A common stock	Common stock Class B common stock	Additional paid-in-capital	Accumulated other comprehensive income (loss)	Retained earnings	Retained earnings Class A common stock	Retained earnings Class B common stock	Treasury stock	Deferred compensation
Beginning balance at Dec. 31, 2017		$ 857,344			$ 1,992	$ 178	$ 16,470	$ (156,059)	$ 2,140,853			$ (1,155,668)	$ 9,578
Increase (decrease) in shareholders' equity
Net income		65,758							65,758
Other comprehensive income (loss)		(5,427)						(5,427)
Dividends declared:			$ (38,799)	$ (320)						$ (38,799)	$ (320)
Net purchase of treasury stock	[1]	(9)					(9)					0
Deferred compensation		0										(1,663)	1,663
Ending balance at Mar. 31, 2018		840,155			1,992	178	16,461	(161,486)	2,129,100			(1,157,331)	11,241
Beginning balance at Dec. 31, 2017		857,344			1,992	178	16,470	(156,059)	2,140,853			(1,155,668)	9,578
Increase (decrease) in shareholders' equity
Net income		225,910
Other comprehensive income (loss)		(6,470)						(6,470)
Ending balance at Sep. 30, 2018		921,023			1,992	178	16,459	(162,529)	2,211,013			(1,157,310)	11,220
Beginning balance at Mar. 31, 2018		840,155			1,992	178	16,461	(161,486)	2,129,100			(1,157,331)	11,241
Increase (decrease) in shareholders' equity
Net income		79,706							79,706
Other comprehensive income (loss)		(551)						(551)
Dividends declared:			(38,799)	(321)						(38,799)	(321)
Net purchase of treasury stock	[1]	(2)					(2)					0
Deferred compensation		0										(276)	276
Rabbi trust distribution	[2]	0										608	(608)
Ending balance at Jun. 30, 2018		880,188			1,992	178	16,459	(162,037)	2,169,686			(1,156,999)	10,909
Increase (decrease) in shareholders' equity
Net income		80,446							80,446
Other comprehensive income (loss)		(492)						(492)
Dividends declared:			(38,799)	(320)						(38,799)	(320)
Net purchase of treasury stock	[1]	0					0					0
Deferred compensation		0										(311)	311
Ending balance at Sep. 30, 2018		921,023			1,992	178	16,459	(162,529)	2,211,013			(1,157,310)	11,220
Beginning balance at Dec. 31, 2018		973,672			1,992	178	16,459	(130,284)	2,231,417			(1,157,625)	11,535
Increase (decrease) in shareholders' equity
Net income		75,311							75,311
Other comprehensive income (loss)		6,710						6,710
Dividends declared:			(41,570)	(343)						(41,570)	(343)
Net purchase of treasury stock	[3]	24					24					0
Deferred compensation		0										(1,154)	1,154
Ending balance at Mar. 31, 2019		1,013,804			1,992	178	16,483	(123,574)	2,264,815			(1,158,779)	12,689
Beginning balance at Dec. 31, 2018		973,672			1,992	178	16,459	(130,284)	2,231,417			(1,157,625)	11,535
Increase (decrease) in shareholders' equity
Net income		257,234
Other comprehensive income (loss)		14,081						14,081
Ending balance at Sep. 30, 2019		1,119,271			1,992	178	16,483	(116,203)	2,362,911			(1,158,620)	12,530
Beginning balance at Mar. 31, 2019		1,013,804			1,992	178	16,483	(123,574)	2,264,815			(1,158,779)	12,689
Increase (decrease) in shareholders' equity
Net income		87,754							87,754
Other comprehensive income (loss)		3,810						3,810
Dividends declared:			(41,570)	(344)						(41,570)	(344)
Net purchase of treasury stock	[3]	0					0					0
Deferred compensation		0										(443)	443
Rabbi trust distribution	[4]	0										922	(922)
Ending balance at Jun. 30, 2019		1,063,454			1,992	178	16,483	(119,764)	2,310,655			(1,158,300)	12,210
Increase (decrease) in shareholders' equity
Net income		94,169							94,169
Other comprehensive income (loss)		3,561						3,561
Dividends declared:			$ (41,570)	$ (343)						$ (41,570)	$ (343)
Net purchase of treasury stock	[3]	0					0					0
Deferred compensation		0										(320)	320
Ending balance at Sep. 30, 2019		$ 1,119,271			$ 1,992	$ 178	$ 16,483	$ (116,203)	$ 2,362,911			$ (1,158,620)	$ 12,530

[1] Net purchases of treasury stock in 2018 include the repurchase of our Class A common stock in the open market that were subsequently distributed to satisfy stock based compensation awards. See Note 11, "Capital Stock", for additional information on treasury stock transactions.

[2] Distributions of our Class A shares were made from the rabbi trust to a retired director in 2018.

[3] Net purchases of treasury stock in 2019 include the repurchase of our Class A common stock in the open market that were subsequently distributed to satisfy stock based compensation awards. See Note 11, "Capital Stock", for additional information on treasury stock transactions.

[4] Distributions of our Class A shares were made from the rabbi trust to a retired director in 2019.

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Fair Value - Fair Value Measurements on a Recurring Basis by Asset Class and Level of Input (Details)	9 Months Ended		12 Months Ended
	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Dec. 31, 2018 USD ($) fund
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities	$ 680,633,000
Equity securities	55,052,000		$ 11,853,000
Other limited partnership investments
Distributions received from the funds	3,600,000	$ 3,046,000
Contributions made to the funds	20,000	$ 217,000
U.S. Treasury
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities			208,412,000
States & political subdivisions
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities			159,023,000
Corporate debt securities
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities	434,206,000		249,947,000
Residential mortgage-backed securities
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities	107,235,000		4,609,000
Commercial mortgage-backed securities
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities	63,182,000		46,515,000
Collateralized debt obligations
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities	70,818,000		64,239,000
Other debt securities
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities	5,192,000		15,778,000
Available-for-sale securities
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities	680,633,000		748,523,000
Fair Value, Measurements, Recurring Basis
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities	680,633,000
Total	735,685,000		763,582,000
Fair Value, Measurements, Recurring Basis | U.S. Treasury
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities			208,412,000
Fair Value, Measurements, Recurring Basis | States & political subdivisions
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities			159,023,000
Fair Value, Measurements, Recurring Basis | Corporate debt securities
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities	434,206,000		249,947,000
Fair Value, Measurements, Recurring Basis | Residential mortgage-backed securities
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities	107,235,000		4,609,000
Fair Value, Measurements, Recurring Basis | Commercial mortgage-backed securities
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities	63,182,000		46,515,000
Fair Value, Measurements, Recurring Basis | Collateralized debt obligations
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities	70,818,000		64,239,000
Fair Value, Measurements, Recurring Basis | Other debt securities
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities	5,192,000		15,778,000
Fair Value, Measurements, Recurring Basis | Available-for-sale securities
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities	680,633,000		748,523,000
Fair Value, Measurements, Recurring Basis | Equity securities
Fair value measurements on a recurring basis by asset class and level of input
Equity securities	55,052,000		11,853,000
Fair Value, Measurements, Recurring Basis | Nonredeemable preferred stock | Financial services sector
Fair value measurements on a recurring basis by asset class and level of input
Equity securities	47,753,000		$ 11,853,000
Fair Value, Measurements, Recurring Basis | Nonredeemable preferred stock | Industrial sector
Fair value measurements on a recurring basis by asset class and level of input
Equity securities	2,842,000
Fair Value, Measurements, Recurring Basis | Nonredeemable preferred stock | Utilities sector
Fair value measurements on a recurring basis by asset class and level of input
Equity securities	2,571,000
Fair Value, Measurements, Recurring Basis | Nonredeemable preferred stock | Energy sector
Fair value measurements on a recurring basis by asset class and level of input
Equity securities	1,886,000
Fair Value, Measurements, Recurring Basis | Real estate
Other limited partnership investments
Number of real estate funds reported under the fair value option | fund			1
Distributions received from the funds	3,200,000		$ 1,200,000
Unfunded commitments			0
Contributions made to the funds			0
Fair Value, Measurements, Recurring Basis | Level 1
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities	3,214,000
Total	28,738,000		1,809,000
Fair Value, Measurements, Recurring Basis | Level 1 | U.S. Treasury
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities			0
Fair Value, Measurements, Recurring Basis | Level 1 | States & political subdivisions
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities			0
Fair Value, Measurements, Recurring Basis | Level 1 | Corporate debt securities
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities	3,214,000		0
Fair Value, Measurements, Recurring Basis | Level 1 | Residential mortgage-backed securities
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities	0		0
Fair Value, Measurements, Recurring Basis | Level 1 | Commercial mortgage-backed securities
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities	0		0
Fair Value, Measurements, Recurring Basis | Level 1 | Collateralized debt obligations
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities	0		0
Fair Value, Measurements, Recurring Basis | Level 1 | Other debt securities
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities	0		0
Fair Value, Measurements, Recurring Basis | Level 1 | Available-for-sale securities
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities	3,214,000		0
Fair Value, Measurements, Recurring Basis | Level 1 | Equity securities
Fair value measurements on a recurring basis by asset class and level of input
Equity securities	25,524,000		1,809,000
Fair Value, Measurements, Recurring Basis | Level 1 | Nonredeemable preferred stock | Financial services sector
Fair value measurements on a recurring basis by asset class and level of input
Equity securities	25,003,000		1,809,000
Fair Value, Measurements, Recurring Basis | Level 1 | Nonredeemable preferred stock | Industrial sector
Fair value measurements on a recurring basis by asset class and level of input
Equity securities	0
Fair Value, Measurements, Recurring Basis | Level 1 | Nonredeemable preferred stock | Utilities sector
Fair value measurements on a recurring basis by asset class and level of input
Equity securities	521,000
Fair Value, Measurements, Recurring Basis | Level 1 | Nonredeemable preferred stock | Energy sector
Fair value measurements on a recurring basis by asset class and level of input
Equity securities	0
Fair Value, Measurements, Recurring Basis | Level 2
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities	663,354,000
Total	692,882,000		745,990,000
Fair Value, Measurements, Recurring Basis | Level 2 | U.S. Treasury
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities			208,412,000
Fair Value, Measurements, Recurring Basis | Level 2 | States & political subdivisions
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities			159,023,000
Fair Value, Measurements, Recurring Basis | Level 2 | Corporate debt securities
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities	423,934,000		237,370,000
Fair Value, Measurements, Recurring Basis | Level 2 | Residential mortgage-backed securities
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities	107,235,000		4,609,000
Fair Value, Measurements, Recurring Basis | Level 2 | Commercial mortgage-backed securities
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities	58,475,000		46,515,000
Fair Value, Measurements, Recurring Basis | Level 2 | Collateralized debt obligations
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities	68,518,000		64,239,000
Fair Value, Measurements, Recurring Basis | Level 2 | Other debt securities
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities	5,192,000		15,778,000
Fair Value, Measurements, Recurring Basis | Level 2 | Available-for-sale securities
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities	663,354,000		735,946,000
Fair Value, Measurements, Recurring Basis | Level 2 | Equity securities
Fair value measurements on a recurring basis by asset class and level of input
Equity securities	29,528,000		10,044,000
Fair Value, Measurements, Recurring Basis | Level 2 | Nonredeemable preferred stock | Financial services sector
Fair value measurements on a recurring basis by asset class and level of input
Equity securities	22,750,000		10,044,000
Fair Value, Measurements, Recurring Basis | Level 2 | Nonredeemable preferred stock | Industrial sector
Fair value measurements on a recurring basis by asset class and level of input
Equity securities	2,842,000
Fair Value, Measurements, Recurring Basis | Level 2 | Nonredeemable preferred stock | Utilities sector
Fair value measurements on a recurring basis by asset class and level of input
Equity securities	2,050,000
Fair Value, Measurements, Recurring Basis | Level 2 | Nonredeemable preferred stock | Energy sector
Fair value measurements on a recurring basis by asset class and level of input
Equity securities	1,886,000
Fair Value, Measurements, Recurring Basis | Level 3
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities	14,065,000
Total	14,065,000		12,577,000
Fair Value, Measurements, Recurring Basis | Level 3 | U.S. Treasury
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities			0
Fair Value, Measurements, Recurring Basis | Level 3 | States & political subdivisions
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities			0
Fair Value, Measurements, Recurring Basis | Level 3 | Corporate debt securities
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities	7,058,000		12,577,000
Fair Value, Measurements, Recurring Basis | Level 3 | Residential mortgage-backed securities
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities	0		0
Fair Value, Measurements, Recurring Basis | Level 3 | Commercial mortgage-backed securities
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities	4,707,000		0
Fair Value, Measurements, Recurring Basis | Level 3 | Collateralized debt obligations
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities	2,300,000		0
Fair Value, Measurements, Recurring Basis | Level 3 | Other debt securities
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities	0		0
Fair Value, Measurements, Recurring Basis | Level 3 | Available-for-sale securities
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities	14,065,000		12,577,000
Fair Value, Measurements, Recurring Basis | Level 3 | Equity securities
Fair value measurements on a recurring basis by asset class and level of input
Equity securities	0		0
Fair Value, Measurements, Recurring Basis | Level 3 | Nonredeemable preferred stock | Financial services sector
Fair value measurements on a recurring basis by asset class and level of input
Equity securities	0		0
Fair Value, Measurements, Recurring Basis | Level 3 | Nonredeemable preferred stock | Industrial sector
Fair value measurements on a recurring basis by asset class and level of input
Equity securities	0
Fair Value, Measurements, Recurring Basis | Level 3 | Nonredeemable preferred stock | Utilities sector
Fair value measurements on a recurring basis by asset class and level of input
Equity securities	0
Fair Value, Measurements, Recurring Basis | Level 3 | Nonredeemable preferred stock | Energy sector
Fair value measurements on a recurring basis by asset class and level of input
Equity securities	$ 0
Fair Value, Measurements, Recurring Basis | Fair Value Measured at Net Asset Value Per Share | Real estate
Fair value measurements on a recurring basis by asset class and level of input
Other limited partnership investments			$ 3,206,000

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Fair Value

9 Months Ended

Sep. 30, 2019

Fair Value Disclosures [Abstract]

Fair Value

Fair Value

Financial instruments carried at fair value

Our available-for-sale debt securities and equity securities are recorded at fair value, which is the price that would be received to sell the asset in an orderly transaction between willing market participants as of the measurement date.

Valuation techniques used to derive the fair value of our available-for-sale debt securities and equity securities are based upon observable and unobservable inputs.  Observable inputs reflect market data obtained from independent sources.  Unobservable inputs reflect our own assumptions regarding fair market value for these securities.  Although virtually all of our prices are obtained from third party sources, we also perform an internal pricing review on outliers. The outlier review includes securities with price changes that vary significantly from current market conditions or independent third party price sources. Financial instruments are categorized based upon the following characteristics or inputs to the valuation techniques:

• Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date.

• Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

• Level 3 – Unobservable inputs for the asset or liability.

Estimates of fair values for our investment portfolio are obtained primarily from a nationally recognized pricing service.  Our Level 1 category includes those securities valued using an exchange traded price provided by the pricing service.  The methodologies used by the pricing service that support a Level 2 classification of a financial instrument include multiple verifiable, observable inputs including benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data.  Pricing service valuations for Level 3 securities are based upon proprietary models and are used when observable inputs are not available or in illiquid markets.

In limited circumstances we adjust the price received from the pricing service when, in our judgment, a better reflection of fair value is available based upon corroborating information and our knowledge and monitoring of market conditions such as a disparity in price of comparable securities and/or non-binding broker quotes.  In other circumstances, certain securities are internally priced because prices are not provided by the pricing service.

We perform continuous reviews of the prices obtained from the pricing service.  This includes evaluating the methodology and inputs used by the pricing service to ensure that we determine the proper classification level of the financial instrument.  Price variances, including large periodic changes, are investigated and corroborated by market data.  We have reviewed the pricing methodologies of our pricing service as well as other observable inputs, such as market data, and transaction volumes and believe that the prices adequately consider market activity in determining fair value. 

When a price from the pricing service is not available, values are determined by obtaining broker/dealer quotes and/or market comparables.  When available, we obtain multiple quotes for the same security.  The ultimate value for these securities is determined based upon our best estimate of fair value using corroborating market information.  Our evaluation includes the consideration of benchmark yields, reported trades, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data.

The following tables present our fair value measurements on a recurring basis by asset class and level of input as of: 

	September 30, 2019
(in thousands)	Total		Level 1		Level 2		Level 3
Available-for-sale securities:
Corporate debt securities (1)	$	434,206	$	3,214	$	423,934	$	7,058
Residential mortgage-backed securities(1)	107,235		0		107,235		0
Commercial mortgage-backed securities(1)	63,182		0		58,475		4,707
Collateralized debt obligations	70,818		0		68,518		2,300
Other debt securities	5,192		0		5,192		0
Total available-for-sale securities	680,633		3,214		663,354		14,065
Equity securities - nonredeemable preferred stock:(1)
Financial services sector	47,753		25,003		22,750		0
Industrial sector	2,842		0		2,842		0
Utilities sector	2,571		521		2,050		0
Energy sector	1,886		0		1,886		0
Total equity securities	55,052		25,524		29,528		0
Total	$	735,685	$	28,738	$	692,882	$	14,065

	December 31, 2018
(in thousands)	Total		Level 1		Level 2		Level 3
Available-for-sale securities:
U.S. Treasury (1)	$	208,412	$	0	$	208,412	$	0
States & political subdivisions (1)	159,023		0		159,023		0
Corporate debt securities	249,947		0		237,370		12,577
Residential mortgage-backed securities	4,609		0		4,609		0
Commercial mortgage-backed securities	46,515		0		46,515		0
Collateralized debt obligations	64,239		0		64,239		0
Other debt securities	15,778		0		15,778		0
Total available-for-sale securities	748,523		0		735,946		12,577
Equity securities - nonredeemable preferred stock:
Financial services sector	11,853		1,809		10,044		0
Total equity securities	11,853		1,809		10,044		0
Other limited partnership investments (2)	3,206		—		—		—
Total	$	763,582	$	1,809	$	745,990	$	12,577

(1) In the fourth quarter of 2018, we began selling off our municipal bonds as part of a portfolio rebalancing and invested proceeds in short-term U.S. Treasuries. In 2019, proceeds from selling off the remaining municipal bond portfolio and short-term U.S. Treasuries were reinvested in corporate debt, structured and equity securities.

(2) The limited partnership investment measured at fair value represents one real estate fund included on the balance sheet as a limited partnership investment reported under the fair value option using the net asset value (NAV) practical expedient, which is not required to be categorized in the fair value hierarchy. The fair value of this investment is based on our proportionate share of the NAV from the most recent partners' capital statements received from the general partner, which is generally one quarter prior to our balance sheet date. We consider observable market data and perform a review validating the appropriateness of the NAV at each balance sheet date. Liquidation of this fund was completed in January 2019 and a final distribution totaling $3.2 million was received. There were no unfunded commitments related to the investment at December 31, 2018. During the year ended December 31, 2018, no contributions were made and distributions totaling $1.2 million were received from this investment.

The following table presents our fair value measurements on a recurring basis by pricing source as of:

	September 30, 2019
(in thousands)	Total		Level 1		Level 2		Level 3
Available-for-sale securities priced using:
Pricing services	$	677,683	$	3,214	$	662,854	$	11,615
Market comparables/broker quotes	2,800		0		500		2,300
Internal modeling	150		0		0		150
Total available-for-sale securities	680,633		3,214		663,354		14,065
Equity securities priced using pricing services	55,052		25,524		29,528		0
Total	$	735,685	$	28,738	$	692,882	$	14,065

Quantitative and Qualitative Disclosures about Unobservable Inputs

The following table presents quantitative information about the significant unobservable inputs utilized in the fair value measurements of Level 3 assets. Level 3 securities where cost is the best estimate of fair value totaled $0.2 million at September 30, 2019 and are excluded from the table below. When a non-binding broker quote was the only input available, the security was classified within Level 3. The quantitative detail of the unobservable inputs is neither provided nor reasonably available to us and therefore has not been included in the table below. These investments totaled $2.4 million at September 30, 2019 and $12.6 million at December 31, 2018. The weighted average is calculated based on estimated fair value.

	September 30, 2019
(dollars in thousands)	Fair value		Valuation techniques	Unobservable input	Range (basis points)	Weighted average (basis points)	Impact of increase in input on estimated fair value
Corporate debt securities - bank loans	$	6,827	Syndicated loan model	Market residual yield (1)	-536 - +1290	+87	Decrease
Commercial mortgage-backed securities	4,707		Relative value pricing model	Credit spread (2)	+35 - +83	+57	Decrease

(1) Values for bank loans classified as Level 3 are determined by our pricing vendor based on model yield curves adjusted for observable inputs. The market residual yield represents a net adjustment to the model yield curve for unobservable input factors.

(2) Values for commercial mortgage-backed securities classified as Level 3 include adjustments to the base spread over the appropriate U.S. Treasury yield assuming no prepayments until penalty provisions have expired.

We review the fair value hierarchy classifications each reporting period.  Transfers between hierarchy levels may occur due to changes in available market observable inputs.

Level 3 Assets – 2019 Quarterly Change:

(in thousands)	Beginning balance at June 30, 2019		Included in earnings(1)			Included in other comprehensive income			Purchases		Sales			Transfers into Level 3(2)		Transfers out of Level 3(2)			Ending balance at September 30, 2019
Available-for-sale securities:
Corporate debt securities	$	6,373	$	16		$	(92	)	$	549	$	(507	)	$	1,850	$	(1,131	)	$	7,058
Commercial mortgage-backed securities	2,551		(6		)	2			0		(3		)	2,846		(683		)	4,707
Collateralized debt obligations	0		0			0			2,300		0			0		0			2,300
Total Level 3 available-for-sale securities	$	8,924	$	10		$	(90	)	$	2,849	$	(510	)	$	4,696	$	(1,814	)	$	14,065

Level 3 Assets – 2019 Year-to-Date Change:

(in thousands)	Beginning balance at December 31, 2018		Included in earnings(1)		Included in other comprehensive income			Purchases		Sales			Transfers into Level 3(2)		Transfers out of Level 3(2)			Ending balance at September 30, 2019
Available-for-sale securities:
Corporate debt securities	$	12,577	$	7	$	199		$	1,283	$	(6,779	)	$	9,244	$	(9,473	)	$	7,058
Residential mortgage-backed securities	0		4		15			921		(32		)	0		(908		)	0
Commercial mortgage-backed securities	0		7		(6		)	478		(1,068		)	6,103		(807		)	4,707
Collateralized debt obligations	0		0		0			2,300		0			0		0			2,300
Total Level 3 available-for-sale securities	$	12,577	$	18	$	208		$	4,982	$	(7,879	)	$	15,347	$	(11,188	)	$	14,065

Level 3 Assets – 2018 Quarterly Change:

(in thousands)	Beginning balance at June 30, 2018		Included in earnings(1)		Included in other comprehensive income		Purchases		Sales			Transfers into Level 3(2)		Transfers out of Level 3(2)			Ending balance at September 30, 2018
Available-for-sale securities:
Corporate debt securities	$	11,120	$	3	$	71	$	1,539	$	(1,416	)	$	2,735	$	(5,782	)	$	8,270
Other debt securities	0		0		0		905		0			0		0			905
Total Level 3 available-for-sale securities	$	11,120	$	3	$	71	$	2,444	$	(1,416	)	$	2,735	$	(5,782	)	$	9,175

Level 3 Assets – 2018 Year-to-Date Change:

(in thousands)	Beginning balance at December 31, 2017		Included in earnings(1)		Included in other comprehensive income		Purchases		Sales			Transfers into Level 3(2)		Transfers out of Level 3(2)			Ending balance at September 30, 2018
Available-for-sale securities:
Corporate debt securities	$	7,879	$	4	$	23	$	4,586	$	(2,381	)	$	10,517	$	(12,358	)	$	8,270
Collateralized debt obligations	2,200		0		7		0		0			0		(2,207		)	0
Other debt securities	0		0		0		905		0			0		0			905
Total Level 3 available-for-sale securities	$	10,079	$	4	$	30	$	5,491	$	(2,381	)	$	10,517	$	(14,565	)	$	9,175

(1) These amounts are reported in the Statements of Operations as net investment income and net realized investment gains (losses) for the each of the periods presented above.

(2) Transfers into and/or (out) of Level 3 are primarily attributable to the availability of market observable information and the re-evaluation of the observability of pricing inputs.

The change in unrealized gains or losses included in other comprehensive income related to Level 3 securities held at the reporting date is as follows:

	Three months ended September 30,					Nine months ended September 30,
(in thousands)	2019			2018		2019		2018
Available-for-sale securities:
Corporate debt securities	$	(100	)	$	66	$	112	$	38
Commercial mortgage-backed securities	7			—		132		—
Other debt securities	—			0		—		0
Net unrealized (losses) gains on Level 3 securities held at reporting date	$	(93	)	$	66	$	244	$	38

Financial instruments disclosed, but not carried at fair value

The following table presents the carrying values and fair value measurements, which are categorized as Level 3 in the fair value hierarchy, of financial instruments disclosed, but not carried at fair value as of:

	September 30, 2019				December 31, 2018
(in thousands)	Carrying value		Fair value		Carrying value		Fair value
Agent loans	$	68,660	$	69,194	$	58,006	$	54,110
Long-term borrowings	98,568		107,169		99,730		94,057

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Postretirement Benefits

9 Months Ended

Sep. 30, 2019

Retirement Benefits [Abstract]

Postretirement Benefits

Postretirement Benefits

Pension plans

Our pension plans consist of a noncontributory defined benefit pension plan covering substantially all employees and an unfunded supplemental employee retirement plan for certain members of executive and senior management. Although we are the sponsor of these postretirement plans and record the funded status of these plans, the Exchange and its subsidiaries reimburse us for approximately 59% of the annual benefit expense of these plans, which represents pension benefits for employees performing administrative services and their allocated share of costs for employees in departments that support the administrative functions.

The cost of our pension plans are as follows:

	Three months ended September 30,						Nine months ended September 30,
(in thousands)	2019			2018			2019			2018
Service cost for benefits earned	$	8,463		$	9,513		$	25,390		$	28,539
Interest cost on benefits obligation	9,827			8,845			29,480			26,536
Expected return on plan assets	(11,872		)	(12,815		)	(35,614		)	(38,444		)
Prior service cost amortization	349			339			1,046			1,015
Net actuarial loss amortization	1,279			3,202			3,835			9,606
Pension plan cost (1)	$	8,046		$	9,084		$	24,137		$	27,252

(1)

The components of pension plan costs other than the service cost component are included in the line item "Other income" in the Statements of Operations after reimbursements from the Exchange and its subsidiaries.

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Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Sep. 30, 2019	Sep. 30, 2018
Accumulated other comprehensive income (loss), net of tax
AOCI (loss), beginning of period			$ (130,284)				$ (130,284)
Investment securities, OCI (loss)	$ 2,330			$ (492)			10,387	$ (6,470)
Pension and other postretirement plans, OCI (loss)	1,231			0			3,694	0
OCI (loss)	3,561	$ 3,810	6,710	(492)	$ (551)	$ (5,427)	14,081	(6,470)
AOCI (loss), end of period	(116,203)						(116,203)
Investment securities:
Accumulated other comprehensive income (loss), before tax
AOCI (loss), beginning of period	1,030		(9,169)	(4,157)		3,410	(9,169)	3,410
OCI (loss) before reclassifications	3,991			(624)			17,185	(9,163)
Realized investment (gains) losses	(1,072)			1			(4,229)	412
Impairment losses	31			0			193	646
Cumulative effect of adopting ASU 2016-01								(85)
Investment securities, OCI (loss)	2,950			(623)			13,149	(8,190)
AOCI (loss), end of period	3,980	1,030		(4,780)	(4,157)		3,980	(4,780)
Accumulated other comprehensive income (loss), tax
AOCI (loss), beginning of period	216		(1,926)	(873)		716	(1,926)	716
OCI (loss) before reclassifications	838			(131)			3,609	(1,924)
Realized investment (gains) losses	(225)			0			(888)	86
Impairment losses	7			0			41	136
Cumulative effect of adopting ASU 2016-01								(18)
Investment securities, OCI (loss)	620			(131)			2,762	(1,720)
AOCI (loss), end of period	836	216		(1,004)	(873)		836	(1,004)
Accumulated other comprehensive income (loss), net of tax
AOCI (loss), beginning of period	814		(7,243)	(3,284)		2,694	(7,243)	2,694
OCI (loss) before reclassifications	3,153			(493)			13,576	(7,239)
Realized investment (gains) losses	(847)			1			(3,341)	326
Impairment losses	24			0			152	510
Cumulative effect of adopting ASU 2016-01								(67)
Investment securities, OCI (loss)	2,330			(492)			10,387	(6,470)
AOCI (loss), end of period	3,144	814		(3,776)	(3,284)		3,144	(3,776)
Pension and other postretirement plans:
Accumulated other comprehensive income (loss), before tax
AOCI (loss), beginning of period	(152,632)		(155,749)	(200,954)		(200,954)	(155,749)	(200,954)
Amortization of prior service costs	349			0			1,046	0
Amortization of net actuarial loss	1,210			0			3,630	0
Pension and other postretirement plans, OCI (loss)	1,559			0			4,676	0
AOCI (loss), end of period	(151,073)	(152,632)		(200,954)	(200,954)		(151,073)	(200,954)
Accumulated other comprehensive income (loss), tax
AOCI (loss), beginning of period	(32,054)		(32,708)	(42,201)		(42,201)	(32,708)	(42,201)
Amortization of prior service costs	74			0			220	0
Amortization of net actuarial loss	254			0			762	0
Pension and other postretirement plans, OCI (loss)	328			0			982	0
AOCI (loss), end of period	(31,726)	(32,054)		(42,201)	(42,201)		(31,726)	(42,201)
Accumulated other comprehensive income (loss), net of tax
AOCI (loss), beginning of period	(120,578)		(123,041)	(158,753)		(158,753)	(123,041)	(158,753)
Amortization of prior service costs	275			0			826	0
Amortization of net actuarial loss	956			0			2,868	0
Pension and other postretirement plans, OCI (loss)	1,231			0			3,694	0
AOCI (loss), end of period	(119,347)	(120,578)		(158,753)	(158,753)		(119,347)	(158,753)
Total
Accumulated other comprehensive income (loss), before tax
AOCI (loss), beginning of period	(151,602)		(164,918)	(205,111)		(197,544)	(164,918)	(197,544)
Investment securities, OCI (loss)	2,950			(623)			13,149	(8,190)
Pension and other postretirement plans, OCI (loss)	1,559			0			4,676	0
OCI (loss)	4,509			(623)			17,825	(8,190)
AOCI (loss), end of period	(147,093)	(151,602)		(205,734)	(205,111)		(147,093)	(205,734)
Accumulated other comprehensive income (loss), tax
AOCI (loss), beginning of period	(31,838)		(34,634)	(43,074)		(41,485)	(34,634)	(41,485)
Investment securities, OCI (loss)	620			(131)			2,762	(1,720)
Pension and other postretirement plans, OCI (loss)	328			0			982	0
OCI (loss)	948			(131)			3,744	(1,720)
AOCI (loss), end of period	(30,890)	(31,838)		(43,205)	(43,074)		(30,890)	(43,205)
Accumulated other comprehensive income (loss), net of tax
AOCI (loss), beginning of period	(119,764)		(130,284)	(162,037)		(156,059)	(130,284)	(156,059)
Investment securities, OCI (loss)	2,330			(492)			10,387	(6,470)
Pension and other postretirement plans, OCI (loss)	1,231			0			3,694	0
OCI (loss)	3,561	3,810	$ 6,710	(492)	(551)	$ (5,427)	14,081	(6,470)
AOCI (loss), end of period	$ (116,203)	$ (119,764)		$ (162,529)	$ (162,037)		$ (116,203)	$ (162,529)

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Leases (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019	Jan. 01, 2019	Dec. 31, 2018
Lessee, Lease, Description [Line Items]
Operating lease assets	$ 23,841	$ 23,841	$ 32,700	$ 0
Operating lease liabilities - current	11,366	11,366		0
Operating lease liabilities - long-term	12,129	12,129		0
Total operating lease liabilities	23,495	23,495	$ 32,100	$ 0
Operating lease costs	3,500	10,700
Erie Insurance Exchange
Lessee, Lease, Description [Line Items]
Operating lease costs, amount reimbursed from Exchange and its subsidiaries	1,500	4,600
Erie Insurance Exchange | Office Space
Lessee, Lease, Description [Line Items]
Operating lease assets	$ 13,300	$ 13,300

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Postretirement Benefits (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Cost of pension plans:
Service cost for benefits earned	$ 8,463	$ 9,513	$ 25,390	$ 28,539
Interest cost on benefits obligation	9,827	8,845	29,480	26,536
Expected return on plan assets	(11,872)	(12,815)	(35,614)	(38,444)
Prior service cost amortization	349	339	1,046	1,015
Net actuarial loss amortization	1,279	3,202	3,835	9,606
Pension plan cost	$ 8,046	$ 9,084	$ 24,137	$ 27,252
Erie Insurance Exchange
Postretirement Benefits
Postretirement annual benefit expense reimbursed to Indemnity from the Exchange and its subsidiaries (as a percent)			59.00%

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Investments - Amortized Cost and Estimated Fair Value of Available-For-Sale Securities by Contractual Maturity (Details) $ in Thousands	Sep. 30, 2019 USD ($)
Amortized cost
Due in one year or less	$ 32,875
Due after one year through five years	307,299
Due after five years through ten years	128,109
Due after ten years	208,053
Amortized cost	676,336
Estimated fair value
Due in one year or less	32,842
Due after one year through five years	308,682
Due after five years through ten years	129,071
Due after ten years	210,038
Estimated fair value	$ 680,633

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Fair Value - Quantitative and Qualitative Disclosures about Unobservable Inputs (Details) $ in Thousands	Sep. 30, 2019 USD ($)	Jun. 30, 2019 USD ($)	Dec. 31, 2018 USD ($)	Sep. 30, 2018 USD ($)	Jun. 30, 2018 USD ($)	Dec. 31, 2017 USD ($)
Level 3 | Available-for-sale securities
Fair value measurements on a recurring basis, valuation techniques
Fair value, measurement with unobservable inputs	$ 14,065	$ 8,924	$ 12,577	$ 9,175	$ 11,120	$ 10,079
Level 3 | Commercial mortgage-backed securities | Available-for-sale securities
Fair value measurements on a recurring basis, valuation techniques
Fair value, measurement with unobservable inputs	$ 4,707	$ 2,551	0
Minimum | Valuation Technique, Syndicated Loan Model | Corporate debt securities - bank loans
Fair value measurements on a recurring basis, valuation techniques
Debt instrument, measurement input (percent)	(0.0536)
Minimum | Valuation Technique, Relative Value Pricing Model | Commercial mortgage-backed securities
Fair value measurements on a recurring basis, valuation techniques
Debt instrument, measurement input (percent)	0.0035
Maximum | Valuation Technique, Syndicated Loan Model | Corporate debt securities - bank loans
Fair value measurements on a recurring basis, valuation techniques
Debt instrument, measurement input (percent)	0.129
Maximum | Valuation Technique, Relative Value Pricing Model | Commercial mortgage-backed securities
Fair value measurements on a recurring basis, valuation techniques
Debt instrument, measurement input (percent)	0.0083
Weighted Average | Valuation Technique, Syndicated Loan Model | Corporate debt securities - bank loans
Fair value measurements on a recurring basis, valuation techniques
Debt instrument, measurement input (percent)	0.0087
Weighted Average | Valuation Technique, Relative Value Pricing Model | Commercial mortgage-backed securities
Fair value measurements on a recurring basis, valuation techniques
Debt instrument, measurement input (percent)	0.0057
Fair Value, Measurements, Recurring Basis | Level 3 | Available-for-sale securities
Fair value measurements on a recurring basis, valuation techniques
Fair value, measurement with unobservable inputs	$ 2,400		$ 12,600
Fair Value, Measurements, Recurring Basis | Valuation, Held At Cost | Level 3 | Available-for-sale securities
Fair value measurements on a recurring basis, valuation techniques
Fair value, measurement with unobservable inputs	200
Fair Value, Measurements, Recurring Basis | Valuation Technique, Syndicated Loan Model | Level 3 | Corporate debt securities - bank loans | Available-for-sale securities
Fair value measurements on a recurring basis, valuation techniques
Fair value, measurement with unobservable inputs	6,827
Fair Value, Measurements, Recurring Basis | Valuation Technique, Relative Value Pricing Model | Level 3 | Commercial mortgage-backed securities | Available-for-sale securities
Fair value measurements on a recurring basis, valuation techniques
Fair value, measurement with unobservable inputs	$ 4,707

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Investments - Portion of Net Unrealized Gains and Losses Recognized During the Reporting Period Related To Equity Securities (Details) - Equity securities - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Equity securities:
Net gains (losses) recognized during the period	$ 624	$ (1)	$ 1,272	$ (189)
Less: net gains (losses) recognized on securities sold	47	(52)	47	(86)
Net unrealized gains (losses) recognized on securities held at reporting date	$ 577	$ 51	$ 1,225	$ (103)

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Leases (Tables)

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Schedule of Lease Assets and Liabilities Recorded in Statement of Financial Position

Lease assets and liabilities recorded on our Statement of Financial Position as of:

(in thousands)	September 30, 2019		December 31, 2018
Operating lease assets	$	23,841	$	—
Operating lease liabilities - current	$	11,366	$	—
Operating lease liabilities - long-term	12,129		—
Total operating lease liabilities	$	23,495	$	—

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Concentrations of Credit Risk

9 Months Ended

Sep. 30, 2019

Risks and Uncertainties [Abstract]

Concentrations of Credit Risk

Concentrations of Credit Risk

Financial instruments could potentially expose us to concentrations of credit risk, including unsecured receivables from the Exchange. A large majority of our revenue and receivables are from the Exchange and its affiliates. See also Note 1, "Nature of Operations". Management fee amounts and other reimbursements due from the Exchange and its affiliates were $498.0 million and $449.9 million at September 30, 2019 and December 31, 2018, respectively. Given the financial strength of the Exchange and historical experience of no credit losses, we believe it is unlikely these receivables would have a significant credit loss exposure.

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Revenue (Tables)

9 Months Ended

Sep. 30, 2019

Revenue from Contract with Customer [Abstract]

Schedule of Disaggregation of Revenue by Performance Obligation

The following table disaggregates revenue by our two performance obligations:

	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2019		2018		2019		2018
Management fee revenue - policy issuance and renewal services, net	$	474,427	$	451,361	$	1,385,923	$	1,311,911
Management fee revenue - administrative services, net	14,430		13,521		42,576		39,894
Administrative services reimbursement revenue	142,730		140,172		431,305		432,642
Total administrative services	$	157,160	$	153,693	$	473,881	$	472,536

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Revenue

9 Months Ended

Sep. 30, 2019

Revenue from Contract with Customer [Abstract]

Revenue

Revenue

The majority of our revenue is derived from the subscriber’s agreement between us and the subscribers (policyholders) at the Exchange. Pursuant to the subscriber’s agreement, we earn a management fee calculated as a percentage, not to exceed 25%, of all direct and affiliated assumed written premiums of the Exchange.

We allocate a portion of our management fee revenue, currently 25% of the direct and affiliated assumed written premiums of the Exchange, between the two performance obligations we have under the subscriber’s agreement. The first performance obligation is to provide policy issuance and renewal services to the subscribers (policyholders) at the Exchange, and the second is to act as attorney-in-fact on behalf of the Exchange, as well as the service provider for its insurance subsidiaries, with respect to all administrative services. The transaction price, including management fee revenue and administrative service reimbursement revenue, is allocated based on the estimated standalone selling prices developed using industry information and other available information for similar services. We update the transaction price allocation annually based upon the most recent information available. There was no material change to the allocation in 2019.

The first performance obligation is to provide policy issuance and renewal services that result in executed insurance policies between the Exchange or one of its insurance subsidiaries and the subscriber (policyholder). Our customer, the subscriber (policyholder), receives economic benefits when substantially all the policy issuance or renewal services are complete and an insurance policy is issued or renewed by the Exchange or one of its insurance subsidiaries. It is at the time of policy issuance or renewal that the allocated portion of revenue is recognized.

The Exchange, by virtue of its legal structure as a reciprocal insurer, does not have any employees or officers. Therefore, it enters into contractual relationships by and through an attorney-in-fact. Indemnity serves as the attorney-in-fact on behalf of the Exchange with respect to its administrative services in accordance with the subscriber's agreement. The Exchange's insurance subsidiaries also utilize Indemnity for these services in accordance with the service agreements between each of the subsidiaries and Indemnity. Collectively, these services represent a second performance obligation under the subscriber’s agreement and the service agreements. The revenue allocated to this performance obligation is recognized over time as these services are provided. The portion of revenue not yet earned is recorded as a contract liability in the Statements of Financial Position. The administrative services expenses we incur and the related reimbursements we receive are recorded gross in the Statements of Operations.

Indemnity records a receivable from the Exchange for management fee revenue when the premium is written or assumed by the Exchange. Indemnity collects the management fee from the Exchange when the Exchange collects the premiums from the subscribers (policyholders). As the Exchange issues policies with annual terms only, cash collections generally occur within one year.

A constraining estimate exists around the management fee received as consideration related to the potential for management fee to be returned if a policy were to be cancelled mid-term. Management fees are returned to the Exchange when policyholders cancel their insurance coverage mid-term and unearned premiums are refunded to them. We maintain an estimated allowance to reduce the management fee to its estimated net realizable value to account for the potential of mid-term policy cancellations based on historical cancellation rates. This estimated allowance has been allocated between the two performance obligations consistent with the revenue allocation proportions.

The following table disaggregates revenue by our two performance obligations:

	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2019		2018		2019		2018
Management fee revenue - policy issuance and renewal services, net	$	474,427	$	451,361	$	1,385,923	$	1,311,911
Management fee revenue - administrative services, net	14,430		13,521		42,576		39,894
Administrative services reimbursement revenue	142,730		140,172		431,305		432,642
Total administrative services	$	157,160	$	153,693	$	473,881	$	472,536

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Leases

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Leases

Leases

Lease assets and liabilities recorded on our Statement of Financial Position as of:

(in thousands)	September 30, 2019		December 31, 2018
Operating lease assets	$	23,841	$	—
Operating lease liabilities - current	$	11,366	$	—
Operating lease liabilities - long-term	12,129		—
Total operating lease liabilities	$	23,495	$	—

We currently have leases for real estate, technology equipment, copiers, and vehicles. Our largest operating lease asset at September 30, 2019 of $13.3 million is for office space leased from the Exchange, including the home office. Under this lease, rent is based on rental rates of like property and all operating expenses are the responsibility of the tenant (Indemnity). The lease agreement expires December 31, 2021.

Operating lease costs for the three and nine months ended September 30, 2019 were $3.5 million and $10.7 million, respectively. Of this amount, the Exchange and its subsidiaries reimbursed us $1.5 million and $4.6 million for the three and nine months ended September 30, 2019, respectively, which represents the allocated share of lease costs supporting administrative services activities.

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Capital Stock

9 Months Ended

Sep. 30, 2019

Class of Stock Disclosures [Abstract]

Capital Stock

Capital Stock

Class A and B common stock

Holders of Class B shares may, at their option, convert their shares into Class A shares at the rate of 2,400 Class A shares per Class B share.  There were no shares of Class B common stock converted into Class A common stock during the nine months ended September 30, 2019 and the year ended December 31, 2018. There is no provision for conversion of Class A shares to Class B shares, and Class B shares surrendered for conversion cannot be reissued.

Stock repurchases

In 2011, our Board of Directors approved a continuation of the current stock repurchase program of $150 million, with no time limitation.  There were no shares repurchased under this program during the nine months ended September 30, 2019 and the year ended December 31, 2018. We had approximately $17.8 million of repurchase authority remaining under this program at September 30, 2019.

During the nine months ended September 30, 2019, we purchased 13,399 shares of our outstanding Class A nonvoting common stock outside of our publicly announced share repurchase program at a total cost of $2.4 million. Of this amount, we purchased 3,246 shares for $0.4 million, or $132.35 per share, for stock-based awards in conjunction with our equity compensation plan, for which the shares were delivered to plan participants in January 2019. We purchased 5,844 shares for $1.2 million, or $198.17 per share, to fund the rabbi trust for the outside director deferred stock compensation plan. The shares were transferred to the rabbi trust in February, May and August 2019. The remaining 4,309 shares were purchased at a total cost of $0.8 million, or $176.26 per share, to fund the rabbi trust for the incentive compensation deferral plan. The shares were transferred to the rabbi trust in February, March, May and August 2019.

During the year ended December 31, 2018, we purchased 27,120 shares of our outstanding Class A nonvoting common stock outside of our publicly announced share repurchase program at a total cost of $3.2 million. Of this amount, we purchased 5,830 shares for $0.7 million, or $117.39 per share, for stock-based awards in conjunction with our equity compensation plan. We purchased 9,285 shares for $1.1 million, or $122.19 per share, to fund the rabbi trust for the outside director deferred stock compensation plan. The remaining 12,005 shares were purchased at a total cost of $1.4 million, or $119.28 per share, to fund the rabbi trust for the incentive compensation deferral plan. These shares were delivered in 2018.

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Revenue - Disaggregation of Revenues By Performance Obligations (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Disaggregation of revenue by performance obligation
Operating revenue	$ 638,742	$ 612,126	$ 1,880,558	$ 1,805,744
Management fee revenue - policy issuance and renewal services, net
Disaggregation of revenue by performance obligation
Operating revenue	474,427	451,361	1,385,923	1,311,911
Management fee revenue - policy issuance and renewal services, net | Transferred at point in time
Disaggregation of revenue by performance obligation
Operating revenue	474,427	451,361	1,385,923	1,311,911
Management fee revenue - administrative services, net
Disaggregation of revenue by performance obligation
Operating revenue	14,430	13,521	42,576	39,894
Management fee revenue - administrative services, net | Transferred over time
Disaggregation of revenue by performance obligation
Operating revenue	14,430	13,521	42,576	39,894
Administrative services reimbursement revenue
Disaggregation of revenue by performance obligation
Operating revenue	142,730	140,172	431,305	432,642
Administrative services reimbursement revenue | Transferred over time
Disaggregation of revenue by performance obligation
Operating revenue	142,730	140,172	431,305	432,642
Administrative services | Transferred over time
Disaggregation of revenue by performance obligation
Operating revenue	$ 157,160	$ 153,693	$ 473,881	$ 472,536

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STATEMENTS OF FINANCIAL POSITION - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 344,872	$ 266,417
Available-for-sale securities	32,984	402,339
Receivables from Erie Insurance Exchange and affiliates	497,985	449,873
Prepaid expenses and other current assets	47,712	36,892
Federal income taxes recoverable	6,075	8,162
Accrued investment income	5,267	5,263
Total current assets	934,895	1,168,946
Available-for-sale securities	647,649	346,184
Equity securities	55,052	11,853
Limited partnership investments	32,171	34,821
Fixed assets, net	194,170	130,832
Deferred income taxes, net	15,505	24,101
Other assets	95,138	61,590
Total assets	1,974,580	1,778,327
Current liabilities:
Commissions payable	272,932	241,573
Agent bonuses	73,921	103,462
Accounts payable and accrued liabilities	131,453	111,291
Dividends payable	41,913	41,910
Contract liability	36,318	33,854
Deferred executive compensation	10,328	13,107
Current portion of long-term borrowings	1,959	1,870
Total current liabilities	568,824	547,067
Defined benefit pension plans	136,078	116,866
Long-term borrowings	96,346	97,860
Contract liability	18,648	17,873
Deferred executive compensation	13,017	13,075
Other long-term liabilities	22,396	11,914
Total liabilities	855,309	804,655
Shareholders’ equity
Additional paid-in-capital	16,483	16,459
Accumulated other comprehensive loss	(116,203)	(130,284)
Retained earnings	2,362,911	2,231,417
Total contributed capital and retained earnings	2,265,361	2,119,762
Treasury stock, at cost; 22,110,132 shares held	(1,158,620)	(1,157,625)
Deferred compensation	12,530	11,535
Total shareholders’ equity	1,119,271	973,672
Total liabilities and shareholders’ equity	1,974,580	1,778,327
Class A common stock
Shareholders’ equity
Common stock	1,992	1,992
Class B common stock
Shareholders’ equity
Common stock	$ 178	$ 178

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Accumulated Other Comprehensive Income (Loss) (Tables)

9 Months Ended

Sep. 30, 2019

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Schedule of Changes in Accumulated Other Comprehensive Income (Loss) by Component, Including Amounts Reclassified to Other Comprehensive Income (Loss) and the Related Line Item in the Statements of Operations Where Net Income is Presented

Changes in accumulated other comprehensive income ("AOCI") (loss) by component, including amounts reclassified to other comprehensive income ("OCI") (loss) and the related line item in the Statements of Operations where net income is presented, are as follows:

	Three months ended									Three months ended
	September 30, 2019									September 30, 2018
(in thousands)	Before Tax			Income Tax			Net			Before Tax			Income Tax			Net
Investment securities:
AOCI (loss), beginning of period	$	1,030		$	216		$	814		$	(4,157	)	$	(873	)	$	(3,284	)
OCI (loss) before reclassifications	3,991			838			3,153			(624		)	(131		)	(493		)
Realized investment (gains) losses	(1,072		)	(225		)	(847		)	1			0			1
Impairment losses	31			7			24			0			0			0
OCI (loss)	2,950			620			2,330			(623		)	(131		)	(492		)
AOCI (loss), end of period	$	3,980		$	836		$	3,144		$	(4,780	)	$	(1,004	)	$	(3,776	)
Pension and other postretirement plans:
AOCI (loss), beginning of period	$	(152,632	)	$	(32,054	)	$	(120,578	)	$	(200,954	)	$	(42,201	)	$	(158,753	)
Amortization of prior service costs (1)	349			74			275			0			0			0
Amortization of net actuarial loss (1)	1,210			254			956			0			0			0
OCI	1,559			328			1,231			0			0			0
AOCI (loss), end of period	$	(151,073	)	$	(31,726	)	$	(119,347	)	$	(200,954	)	$	(42,201	)	$	(158,753	)
Total
AOCI (loss), beginning of period	$	(151,602	)	$	(31,838	)	$	(119,764	)	$	(205,111	)	$	(43,074	)	$	(162,037	)
Investment securities	2,950			620			2,330			(623		)	(131		)	(492		)
Pension and other postretirement plans	1,559			328			1,231			0			0			0
OCI (loss)	4,509			948			3,561			(623		)	(131		)	(492		)
AOCI (loss), end of period	$	(147,093	)	$	(30,890	)	$	(116,203	)	$	(205,734	)	$	(43,205	)	$	(162,529	)

	Nine months ended									Nine months ended
	September 30, 2019									September 30, 2018
(in thousands)	Before Tax			Income Tax			Net			Before Tax			Income Tax			Net
Investment securities:
AOCI (loss), beginning of period	$	(9,169	)	$	(1,926	)	$	(7,243	)	$	3,410		$	716		$	2,694
OCI (loss) before reclassifications	17,185			3,609			13,576			(9,163		)	(1,924		)	(7,239		)
Realized investment (gains) losses	(4,229		)	(888		)	(3,341		)	412			86			326
Impairment losses	193			41			152			646			136			510
Cumulative effect of adopting ASU 2016-01 (2)	—			—			—			(85		)	(18		)	(67		)
OCI (loss)	13,149			2,762			10,387			(8,190		)	(1,720		)	(6,470		)
AOCI (loss), end of period	$	3,980		$	836		$	3,144		$	(4,780	)	$	(1,004	)	$	(3,776	)
Pension and other postretirement plans:
AOCI (loss), beginning of period	$	(155,749	)	$	(32,708	)	$	(123,041	)	$	(200,954	)	$	(42,201	)	$	(158,753	)
Amortization of prior service costs (1)	1,046			220			826			0			0			0
Amortization of net actuarial loss (1)	3,630			762			2,868			0			0			0
OCI	4,676			982			3,694			0			0			0
AOCI (loss), end of period	$	(151,073	)	$	(31,726	)	$	(119,347	)	$	(200,954	)	$	(42,201	)	$	(158,753	)
Total
AOCI (loss), beginning of period	$	(164,918	)	$	(34,634	)	$	(130,284	)	$	(197,544	)	$	(41,485	)	$	(156,059	)
Investment securities	13,149			2,762			10,387			(8,190		)	(1,720		)	(6,470		)
Pension and other postretirement plans	4,676			982			3,694			0			0			0
OCI (loss)	17,825			3,744			14,081			(8,190		)	(1,720		)	(6,470		)
AOCI (loss), end of period	$	(147,093	)	$	(30,890	)	$	(116,203	)	$	(205,734	)	$	(43,205	)	$	(162,529	)

(1) Effective January 1, 2019, amounts reclassified from AOCI related to amortization of prior service costs and net actuarial loss were recorded during interim periods. Prior to 2019, amounts reclassified for these items were recorded on an annual basis. These components are included in the computation of net periodic pension cost. See Note 9, "Postretirement Benefits", for additional information.

(2)

ASU 2016-01 required a reclassification of unrealized losses of equity securities from AOCI to retained earnings at January 1, 2018.

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STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Cash flows from operating activities
Management fee received	$ 1,387,877	$ 1,309,769
Administrative services reimbursements received	420,697	428,071
Service agreement fee received	20,754	21,297
Net investment income received	25,461	26,625
Limited partnership distributions	1,596	6,008
Commissions paid to agents	(669,618)	(639,574)
Agents bonuses paid	(112,262)	(130,657)
Salaries and wages paid	(138,279)	(136,868)
Pension contributions and employee benefits paid	(31,926)	(106,718)
General operating expenses paid	(179,799)	(144,759)
Administrative services expenses paid	(424,919)	(427,852)
Income taxes paid	(60,863)	(29,208)
Interest paid	(853)	(1,820)
Net cash provided by operating activities	237,866	174,314
Purchase of investments:
Available-for-sale securities	(852,886)	(194,773)
Equity securities	(46,536)	(4,087)
Limited partnerships	(20)	(217)
Other investments	(252)	0
Proceeds from investments:
Available-for-sale securities sales	655,519	125,913
Available-for-sale securities maturities/calls	282,846	98,922
Equity securities	4,505	4,159
Limited partnerships	3,600	3,046
Purchase of fixed assets	(68,363)	(48,667)
Agent loan distributions	(16,458)	(41,767)
Agent loan repayments	5,804	4,496
Net cash used in investing activities	(32,241)	(52,975)
Cash flows from financing activities
Dividends paid to shareholders	(125,737)	(117,355)
Net (payments) proceeds from long-term borrowings	(1,433)	24,983
Net cash used in financing activities	(127,170)	(92,372)
Net increase in cash and cash equivalents	78,455	28,967
Cash and cash equivalents, beginning of period	266,417	215,721
Cash and cash equivalents, end of period	344,872	244,688
Supplemental disclosure of noncash transactions
Operating lease assets obtained in exchange for new operating lease liabilities	33,678	0
Liability incurred to purchase fixed assets	$ 8,286	$ 0

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Borrowing Arrangements - Term Loan Credit Facility (Details) - Secured debt - USD ($)	9 Months Ended
	Sep. 30, 2019	Dec. 31, 2016
Term loan credit facility
Amount of senior secured draw term loan credit facility		$ 100,000,000
Fixed interest rate of credit facility (as a percent)	4.35%
Repayment period of credit facility (in years)	28 years
Fair value of investments pledged as collateral on the credit facility	$ 112,000,000.0

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Capital Stock - Class A and B Common Stock (Details) - Class B common stock - shares	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Common Stock
Ratio for converting shares of Class B common stock into shares of Class A common stock (as a percent)	2400.00%	2400.00%
Class B common stock shares converted into Class A common stock shares (in shares)	0	0

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Investments - Net Investment Income (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Investment income from portfolios
Total investment income	$ 8,801	$ 7,930	$ 25,857	$ 22,621
Less: investment expenses	149	271	658	1,038
Investment income, net of expenses	8,652	7,659	25,199	21,583
Fixed maturities
Investment income from portfolios
Total investment income	5,449	6,243	17,098	18,616
Equity securities
Investment income from portfolios
Total investment income	452	203	734	487
Cash equivalents and other
Investment income from portfolios
Total investment income	$ 2,900	1,484	$ 8,025	3,518
Erie Family Life Insurance Company
Investment income from portfolios
Note receivable from EFL, interest income recognized by Indemnity		$ 400		$ 1,300

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Fair Value - Financial Instruments Disclosed but Not Carried at Fair Value (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Carrying value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Agent loans	$ 68,660	$ 58,006
Long-term borrowings	98,568	99,730
Fair value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Agent loans	69,194	54,110
Long-term borrowings	$ 107,169	$ 94,057

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Commitments and Contingencies (Details) $ in Millions	Sep. 30, 2019 USD ($)
Contractual commitments
Represents the entity's maximum contractual commitments to invest in its limited partnership investments	$ 9.8
Private equity
Contractual commitments
Represents the entity's maximum contractual commitments to invest in its limited partnership investments	4.4
Mezzanine debt
Contractual commitments
Represents the entity's maximum contractual commitments to invest in its limited partnership investments	$ 5.4

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Subsequent Events

9 Months Ended

Sep. 30, 2019

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

No items were identified in this period subsequent to the financial statement date that required adjustment or additional disclosure.

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Fair Value (Tables)

9 Months Ended

Sep. 30, 2019

Fair Value Disclosures [Abstract]

Schedule of Fair Value Measurements on a Recurring Basis by Asset Class and Level of Input

The following tables present our fair value measurements on a recurring basis by asset class and level of input as of: 

	September 30, 2019
(in thousands)	Total		Level 1		Level 2		Level 3
Available-for-sale securities:
Corporate debt securities (1)	$	434,206	$	3,214	$	423,934	$	7,058
Residential mortgage-backed securities(1)	107,235		0		107,235		0
Commercial mortgage-backed securities(1)	63,182		0		58,475		4,707
Collateralized debt obligations	70,818		0		68,518		2,300
Other debt securities	5,192		0		5,192		0
Total available-for-sale securities	680,633		3,214		663,354		14,065
Equity securities - nonredeemable preferred stock:(1)
Financial services sector	47,753		25,003		22,750		0
Industrial sector	2,842		0		2,842		0
Utilities sector	2,571		521		2,050		0
Energy sector	1,886		0		1,886		0
Total equity securities	55,052		25,524		29,528		0
Total	$	735,685	$	28,738	$	692,882	$	14,065

	December 31, 2018
(in thousands)	Total		Level 1		Level 2		Level 3
Available-for-sale securities:
U.S. Treasury (1)	$	208,412	$	0	$	208,412	$	0
States & political subdivisions (1)	159,023		0		159,023		0
Corporate debt securities	249,947		0		237,370		12,577
Residential mortgage-backed securities	4,609		0		4,609		0
Commercial mortgage-backed securities	46,515		0		46,515		0
Collateralized debt obligations	64,239		0		64,239		0
Other debt securities	15,778		0		15,778		0
Total available-for-sale securities	748,523		0		735,946		12,577
Equity securities - nonredeemable preferred stock:
Financial services sector	11,853		1,809		10,044		0
Total equity securities	11,853		1,809		10,044		0
Other limited partnership investments (2)	3,206		—		—		—
Total	$	763,582	$	1,809	$	745,990	$	12,577

(1) In the fourth quarter of 2018, we began selling off our municipal bonds as part of a portfolio rebalancing and invested proceeds in short-term U.S. Treasuries. In 2019, proceeds from selling off the remaining municipal bond portfolio and short-term U.S. Treasuries were reinvested in corporate debt, structured and equity securities.

(2) The limited partnership investment measured at fair value represents one real estate fund included on the balance sheet as a limited partnership investment reported under the fair value option using the net asset value (NAV) practical expedient, which is not required to be categorized in the fair value hierarchy. The fair value of this investment is based on our proportionate share of the NAV from the most recent partners' capital statements received from the general partner, which is generally one quarter prior to our balance sheet date. We consider observable market data and perform a review validating the appropriateness of the NAV at each balance sheet date. Liquidation of this fund was completed in January 2019 and a final distribution totaling $3.2 million was received. There were no unfunded commitments related to the investment at December 31, 2018. During the year ended December 31, 2018, no contributions were made and distributions totaling $1.2 million were received from this investment.

Schedule of Fair Value Measurements on a Recurring Basis by Pricing Source and Quantitative and Qualitative Disclosures about Unobservable Inputs

The following table presents our fair value measurements on a recurring basis by pricing source as of:

	September 30, 2019
(in thousands)	Total		Level 1		Level 2		Level 3
Available-for-sale securities priced using:
Pricing services	$	677,683	$	3,214	$	662,854	$	11,615
Market comparables/broker quotes	2,800		0		500		2,300
Internal modeling	150		0		0		150
Total available-for-sale securities	680,633		3,214		663,354		14,065
Equity securities priced using pricing services	55,052		25,524		29,528		0
Total	$	735,685	$	28,738	$	692,882	$	14,065

Quantitative and Qualitative Disclosures about Unobservable Inputs

The following table presents quantitative information about the significant unobservable inputs utilized in the fair value measurements of Level 3 assets. Level 3 securities where cost is the best estimate of fair value totaled $0.2 million at September 30, 2019 and are excluded from the table below. When a non-binding broker quote was the only input available, the security was classified within Level 3. The quantitative detail of the unobservable inputs is neither provided nor reasonably available to us and therefore has not been included in the table below. These investments totaled $2.4 million at September 30, 2019 and $12.6 million at December 31, 2018. The weighted average is calculated based on estimated fair value.

	September 30, 2019
(dollars in thousands)	Fair value		Valuation techniques	Unobservable input	Range (basis points)	Weighted average (basis points)	Impact of increase in input on estimated fair value
Corporate debt securities - bank loans	$	6,827	Syndicated loan model	Market residual yield (1)	-536 - +1290	+87	Decrease
Commercial mortgage-backed securities	4,707		Relative value pricing model	Credit spread (2)	+35 - +83	+57	Decrease

(1) Values for bank loans classified as Level 3 are determined by our pricing vendor based on model yield curves adjusted for observable inputs. The market residual yield represents a net adjustment to the model yield curve for unobservable input factors.

(2)

Values for commercial mortgage-backed securities classified as Level 3 include adjustments to the base spread over the appropriate U.S. Treasury yield assuming no prepayments until penalty provisions have expired.

Schedule of Roll Forward of Level 3 Fair Value Measurements on a Recurring Basis and Change in Unrealized Gains or Losses in OCI Related to Level 3 Securities

Level 3 Assets – 2019 Quarterly Change:

(in thousands)	Beginning balance at June 30, 2019		Included in earnings(1)			Included in other comprehensive income			Purchases		Sales			Transfers into Level 3(2)		Transfers out of Level 3(2)			Ending balance at September 30, 2019
Available-for-sale securities:
Corporate debt securities	$	6,373	$	16		$	(92	)	$	549	$	(507	)	$	1,850	$	(1,131	)	$	7,058
Commercial mortgage-backed securities	2,551		(6		)	2			0		(3		)	2,846		(683		)	4,707
Collateralized debt obligations	0		0			0			2,300		0			0		0			2,300
Total Level 3 available-for-sale securities	$	8,924	$	10		$	(90	)	$	2,849	$	(510	)	$	4,696	$	(1,814	)	$	14,065

Level 3 Assets – 2019 Year-to-Date Change:

(in thousands)	Beginning balance at December 31, 2018		Included in earnings(1)		Included in other comprehensive income			Purchases		Sales			Transfers into Level 3(2)		Transfers out of Level 3(2)			Ending balance at September 30, 2019
Available-for-sale securities:
Corporate debt securities	$	12,577	$	7	$	199		$	1,283	$	(6,779	)	$	9,244	$	(9,473	)	$	7,058
Residential mortgage-backed securities	0		4		15			921		(32		)	0		(908		)	0
Commercial mortgage-backed securities	0		7		(6		)	478		(1,068		)	6,103		(807		)	4,707
Collateralized debt obligations	0		0		0			2,300		0			0		0			2,300
Total Level 3 available-for-sale securities	$	12,577	$	18	$	208		$	4,982	$	(7,879	)	$	15,347	$	(11,188	)	$	14,065

Level 3 Assets – 2018 Quarterly Change:

(in thousands)	Beginning balance at June 30, 2018		Included in earnings(1)		Included in other comprehensive income		Purchases		Sales			Transfers into Level 3(2)		Transfers out of Level 3(2)			Ending balance at September 30, 2018
Available-for-sale securities:
Corporate debt securities	$	11,120	$	3	$	71	$	1,539	$	(1,416	)	$	2,735	$	(5,782	)	$	8,270
Other debt securities	0		0		0		905		0			0		0			905
Total Level 3 available-for-sale securities	$	11,120	$	3	$	71	$	2,444	$	(1,416	)	$	2,735	$	(5,782	)	$	9,175

Level 3 Assets – 2018 Year-to-Date Change:

(in thousands)	Beginning balance at December 31, 2017		Included in earnings(1)		Included in other comprehensive income		Purchases		Sales			Transfers into Level 3(2)		Transfers out of Level 3(2)			Ending balance at September 30, 2018
Available-for-sale securities:
Corporate debt securities	$	7,879	$	4	$	23	$	4,586	$	(2,381	)	$	10,517	$	(12,358	)	$	8,270
Collateralized debt obligations	2,200		0		7		0		0			0		(2,207		)	0
Other debt securities	0		0		0		905		0			0		0			905
Total Level 3 available-for-sale securities	$	10,079	$	4	$	30	$	5,491	$	(2,381	)	$	10,517	$	(14,565	)	$	9,175

(1) These amounts are reported in the Statements of Operations as net investment income and net realized investment gains (losses) for the each of the periods presented above.

(2) Transfers into and/or (out) of Level 3 are primarily attributable to the availability of market observable information and the re-evaluation of the observability of pricing inputs.

The change in unrealized gains or losses included in other comprehensive income related to Level 3 securities held at the reporting date is as follows:

	Three months ended September 30,					Nine months ended September 30,
(in thousands)	2019			2018		2019		2018
Available-for-sale securities:
Corporate debt securities	$	(100	)	$	66	$	112	$	38
Commercial mortgage-backed securities	7			—		132		—
Other debt securities	—			0		—		0
Net unrealized (losses) gains on Level 3 securities held at reporting date	$	(93	)	$	66	$	244	$	38

Schedule of Financial Instruments Disclosed But Not Carried at Fair Value

The following table presents the carrying values and fair value measurements, which are categorized as Level 3 in the fair value hierarchy, of financial instruments disclosed, but not carried at fair value as of:

	September 30, 2019				December 31, 2018
(in thousands)	Carrying value		Fair value		Carrying value		Fair value
Agent loans	$	68,660	$	69,194	$	58,006	$	54,110
Long-term borrowings	98,568		107,169		99,730		94,057

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Investments - Realized Investment Gains (Losses) and Impairments (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Net realized investment gains (losses)
Net realized investment gains (losses)	$ 1,696,000	$ 0	$ 5,501,000	$ (497,000)
Other-than-temporary impairments on available-for-sale securities
Other-than-temporary impairments on available-for-sale securities recognized in earnings	31,000	0	193,000	646,000
Other-than-temporary impairments on available-for-sale securities recognized in other comprehensive income	0	0	0	0
Available-for-sale securities
Available-for-sale securities:
Gross realized gains	1,320,000	525,000	5,640,000	1,100,000
Gross realized losses	(248,000)	(526,000)	(1,411,000)	(1,512,000)
Net realized gains (losses) on available-for-sale securities	1,072,000	(1,000)	4,229,000	(412,000)
Equity securities
Equity securities
Equity securities	624,000	(1,000)	1,272,000	(189,000)
Miscellaneous
Net realized investment gains (losses)
Miscellaneous	$ 0	$ 2,000	$ 0	$ 104,000

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Investments - Cost and Fair Value of Available-For-Sale Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Available-for-sale securities
Amortized cost	$ 676,336
Estimated fair value	680,633
U.S. Treasury
Available-for-sale securities
Amortized cost		$ 208,610
Gross unrealized gains		18
Gross unrealized losses		216
Estimated fair value		208,412
States & political subdivisions
Available-for-sale securities
Amortized cost		157,003
Gross unrealized gains		2,020
Gross unrealized losses		0
Estimated fair value		159,023
Corporate debt securities
Available-for-sale securities
Amortized cost	431,800	259,362
Gross unrealized gains	4,437	139
Gross unrealized losses	2,031	9,554
Estimated fair value	434,206	249,947
Residential mortgage-backed securities
Available-for-sale securities
Amortized cost	106,401	4,603
Gross unrealized gains	889	38
Gross unrealized losses	55	32
Estimated fair value	107,235	4,609
Commercial mortgage-backed securities
Available-for-sale securities
Amortized cost	61,940	47,022
Gross unrealized gains	1,263	80
Gross unrealized losses	21	587
Estimated fair value	63,182	46,515
Collateralized debt obligations
Available-for-sale securities
Amortized cost	71,087	65,039
Gross unrealized gains	20	30
Gross unrealized losses	289	830
Estimated fair value	70,818	64,239
Other debt securities
Available-for-sale securities
Amortized cost	5,108	15,756
Gross unrealized gains	92	33
Gross unrealized losses	8	11
Estimated fair value	5,192	15,778
Available-for-sale securities
Available-for-sale securities
Amortized cost	676,336	757,395
Gross unrealized gains	6,701	2,358
Gross unrealized losses	2,404	11,230
Estimated fair value	$ 680,633	$ 748,523

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Concentrations of Credit Risk (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Concentrations of credit risk from unsecured receivables
Receivables from Erie Insurance Exchange and its affiliates	$ 497,985	$ 449,873

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

We have contractual commitments to invest up to $9.8 million related to our limited partnership investments at September 30, 2019.  These commitments are split among private equity securities of $4.4 million and mezzanine debt securities of $5.4 million. These commitments will be funded as required by the limited partnership agreements.

We are involved in litigation arising in the ordinary course of conducting business.  In accordance with current accounting standards for loss contingencies and based upon information currently known to us, we establish reserves for litigation when it is probable that a loss associated with a claim or proceeding has been incurred and the amount of the loss or range of loss can be reasonably estimated.  When no amount within the range of loss is a better estimate than any other amount, we accrue the minimum amount of the estimable loss.  To the extent that such litigation against us may have an exposure to a loss in excess of the amount we have accrued, we believe that such excess would not be material to our financial condition, results of operations, or cash flows.  Legal fees are expensed as incurred.  We believe that our accruals for legal proceedings are appropriate and, individually and in the aggregate, are not expected to be material to our financial condition, results of operations, or cash flows.

We review all litigation on an ongoing basis when making accrual and disclosure decisions.  For certain legal proceedings, we cannot reasonably estimate losses or a range of loss, if any, particularly for proceedings that are in their early stages of development or where the plaintiffs seek indeterminate damages.  Various factors, including, but not limited to, the outcome of potentially lengthy discovery and the resolution of important factual questions, may need to be determined before probability can be established or before a loss or range of loss can be reasonably estimated.  If the loss contingency in question is not both probable and reasonably estimable, we do not establish an accrual and the matter will continue to be monitored for any developments that would make the loss contingency both probable and reasonably estimable.  In the event that a legal proceeding results in a substantial judgment against, or settlement by, us, there can be no assurance that any resulting liability or financial commitment would not have a material adverse effect on the financial condition, results of operations, or cash flows.

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Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2019

Earnings Per Share [Abstract]

Schedule of Reconciliation of the Numerators and Denominators Used in the Basic and Diluted Per-Share Computations

A reconciliation of the numerators and denominators used in the basic and diluted per-share computations is presented as follows for each class of common stock: 

	Three months ended September 30,
	2019					2018
(dollars in thousands, except per share data)	Allocated net income (numerator)		Weighted shares (denominator)	Per-share amount		Allocated net income (numerator)		Weighted shares (denominator)	Per-share amount
Class A – Basic EPS:
Income available to Class A stockholders	$	93,398	46,189,006	$	2.02	$	79,787	46,188,941	$	1.73
Dilutive effect of stock-based awards	0		35,319	—		0		27,697	—
Assumed conversion of Class B shares	771		6,100,800	—		659		6,100,800	—
Class A – Diluted EPS:
Income available to Class A stockholders on Class A equivalent shares	$	94,169	52,325,125	$	1.80	$	80,446	52,317,438	$	1.54
Class B – Basic EPS:
Income available to Class B stockholders	$	771	2,542	$	303	$	659	2,542	$	259
Class B – Diluted EPS:
Income available to Class B stockholders	$	770	2,542	$	303	$	658	2,542	$	259

	Nine months ended September 30,
	2019					2018
(dollars in thousands, except per share data)	Allocated net income (numerator)		Weighted shares (denominator)	Per-share amount		Allocated net income (numerator)		Weighted shares (denominator)	Per-share amount
Class A – Basic EPS:
Income available to Class A stockholders	$	255,128	46,188,767	$	5.52	$	224,060	46,188,522	$	4.85
Dilutive effect of stock-based awards	0		27,708	—		0		24,320	—
Assumed conversion of Class B shares	2,106		6,100,800	—		1,850		6,100,800	—
Class A – Diluted EPS:
Income available to Class A stockholders on Class A equivalent shares	$	257,234	52,317,275	$	4.92	$	225,910	52,313,642	$	4.32
Class B – Basic EPS:
Income available to Class B stockholders	$	2,106	2,542	$	829	$	1,850	2,542	$	728
Class B – Diluted EPS:
Income available to Class B stockholders	$	2,105	2,542	$	828	$	1,849	2,542	$	727

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Income Taxes

9 Months Ended

Sep. 30, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Income tax expense is provided on an interim basis based upon our estimate of the annual effective income tax rate, adjusted each quarter for discrete items. For the three months ended September 30, 2019 and 2018, our effective tax rate was 21.2% and 23.0%, respectively, and for the nine months ended September 30, 2019 and 2018, our effective tax rate was 19.9% and 21.7%, respectively. Impacting our effective tax rate in the nine months ended September 30, 2019, was the settlement of an uncertain tax position. An income tax benefit of $4.1 million was recorded in June 2019, including $1.0 million of related interest expense, which reduced our effective tax rate by 1.3% in the nine months ended September 30, 2019.

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Significant Accounting Policies

9 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Significant Accounting Policies

Significant Accounting Policies

Basis of presentation

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. For further information, refer to the financial statements and footnotes included in our Form 10-K for the year ended December 31, 2018 as filed with the Securities and Exchange Commission on February 21, 2019.

Use of estimates

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Recently adopted accounting standards

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Codification ("ASC") 842, "Leases", which requires lessees to recognize assets and liabilities arising from operating leases on the Statements of Financial Position and to disclose certain information about leasing arrangements. We adopted ASC 842 on January 1, 2019 using the optional transition method, which permits entities to apply the new guidance prospectively with certain practical expedients available. We elected the package of practical expedients which among other things allowed us to carry forward the historical lease classifications. We did not elect the hindsight practical expedient in determining the lease term for existing leases.

The adoption of the new standard resulted in the recognition of operating lease assets of $32.7 million and operating lease liabilities of $32.1 million on the Statement of Financial Position at January 1, 2019. The adoption of this standard did not have a material impact on our Statement of Operations and had no impact on our net cash flows.

Recently issued accounting standards

In August 2018, the FASB issued Accounting Standards Update ("ASU") 2018-15, "Intangibles-Goodwill and Other Internal-Use Software", which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. ASU 2018-15 is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. The amendments under ASU 2018-15 may be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption and early adoption is permitted. We plan to adopt this guidance on a prospective basis and do not expect a material impact on our financial statements or disclosures.

In June 2016, the FASB issued ASU 2016-13, "Financial Instruments-Credit Losses", which requires financial assets measured at amortized cost to be presented at the net amount expected to be collected through the use of a new forward-looking expected loss model and credit losses relating to available-for-sale debt securities to be recognized through an allowance for credit losses. ASU 2016-13 is effective for interim and annual reporting periods beginning after December 15, 2019. Early adoption for interim and annual periods beginning after December 15, 2018 is permitted. We have evaluated the impact of this guidance on our financial assets. Our investments are not measured at amortized cost, and therefore do not require the use of a new expected loss model. Our available-for-sale debt securities will continue to be monitored for credit losses, which would be limited to the amount by which the fair value is below amortized cost and reflected as an allowance for credit losses rather than a reduction of the carrying value of the asset. Our receivables from Erie Insurance Exchange and affiliates are unlikely to have a significant credit loss exposure given the financial strength of the Exchange as demonstrated by its strong surplus position, industry ratings, and historical experience of no credit losses. We currently do not record an allowance for credit losses related to our agent loans as historical default amounts have been insignificant and the majority of the loans are senior secured. Accordingly, when we establish an allowance related to agent loans upon adoption of this guidance, we do not expect it to be material. Our cash equivalents include money market mutual funds primarily comprised of U.S. government securities. A corresponding allowance, if any, would be expected to be immaterial. As a result of our evaluation, we do not expect a material impact on our financial statements.

Other assets

Other assets include agent loans, operating lease assets and other long-term prepaid assets. Agent loans are carried at unpaid principal balance with interest recorded in investment income as earned. It is our policy to charge the loans that are in default directly to expense. We do not record an allowance for credit losses on these loans, as the majority of the loans are senior secured and historically have had insignificant default amounts.

The determination of whether an arrangement is a lease, and the related lease classification, is made at inception of a contract. Our leases are classified as operating leases. Operating lease assets and liabilities are recorded at inception based on the present value of the future minimum lease payments over the lease term at commencement date. When an implicit rate for the lease is not available, we use our incremental borrowing rate based on the information available at commencement date to determine the present value of future payments. Lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Most of our lease contracts contain lease and non-lease components. Non-lease components are expensed as incurred. Operating lease assets are included in other assets, and the current and noncurrent portions of the operating lease liabilities are included in accounts payable and accrued expenses and other long-term liabilities, respectively, in the Statement of Financial Position.

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Investments

9 Months Ended

Sep. 30, 2019

Investments [Abstract]

Investments

Investments

Available-for-sale securities

See Note 5, "Fair Value" for additional fair value disclosures. The following tables summarize the cost and fair value of our available-for-sale securities as of:

	September 30, 2019
(in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Available-for-sale securities:
Corporate debt securities (1)	$	431,800	$	4,437	$	2,031	$	434,206
Residential mortgage-backed securities(1)	106,401		889		55		107,235
Commercial mortgage-backed securities(1)	61,940		1,263		21		63,182
Collateralized debt obligations	71,087		20		289		70,818
Other debt securities	5,108		92		8		5,192
Total available-for-sale securities	$	676,336	$	6,701	$	2,404	$	680,633

	December 31, 2018
(in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Available-for-sale securities:
U.S. Treasury (1)	$	208,610	$	18	$	216	$	208,412
States & political subdivisions (1)	157,003		2,020		0		159,023
Corporate debt securities	259,362		139		9,554		249,947
Residential mortgage-backed securities	4,603		38		32		4,609
Commercial mortgage-backed securities	47,022		80		587		46,515
Collateralized debt obligations	65,039		30		830		64,239
Other debt securities	15,756		33		11		15,778
Total available-for-sale securities	$	757,395	$	2,358	$	11,230	$	748,523

(1) In the fourth quarter of 2018, we began selling off our municipal bonds as part of a portfolio rebalancing and invested proceeds in short-term U.S. Treasuries. In 2019, proceeds from selling off the remaining municipal bond portfolio and short-term U.S. Treasuries were reinvested in corporate debt, structured, and equity securities.

The amortized cost and estimated fair value of available-for-sale securities at September 30, 2019 are shown below by remaining contractual term to maturity.  Mortgage-backed securities are allocated based upon stated maturity dates.  Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. 

	September 30, 2019
	Amortized		Estimated
(in thousands)	cost		fair value
Due in one year or less	$	32,875	$	32,842
Due after one year through five years	307,299		308,682
Due after five years through ten years	128,109		129,071
Due after ten years	208,053		210,038
Total available-for-sale securities	$	676,336	$	680,633

The following table presents available-for-sale securities based on length of time in a gross unrealized loss position as of:

	September 30, 2019
	Less than 12 months				12 months or longer				Total
(dollars in thousands)	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair  value		Unrealized losses		No. of holdings
Available-for-sale securities:
Corporate debt securities	$	39,871	$	852	$	30,518	$	1,179	$	70,389	$	2,031	229
Residential mortgage-backed securities	20,440		55		0		0		20,440		55		7
Commercial mortgage-backed securities	7,325		19		538		2		7,863		21		10
Collateralized debt obligations	39,202		84		25,284		205		64,486		289		47
Other debt securities	1,581		8		0		0		1,581		8		1
Total available-for-sale securities	$	108,419	$	1,018	$	56,340	$	1,386	$	164,759	$	2,404	294
Quality breakdown of available-for-sale securities:
Investment grade	$	80,157	$	176	$	46,355	$	255	$	126,512	$	431	85
Non-investment grade	28,262		842		9,985		1,131		38,247		1,973		209
Total available-for-sale securities	$	108,419	$	1,018	$	56,340	$	1,386	$	164,759	$	2,404	294

	December 31, 2018
	Less than 12 months				12 months or longer				Total
(dollars in thousands)	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses		No. of holdings
Available-for-sale securities:
U.S. Treasury	$	129,474	$	19	$	11,656	$	197	$	141,130	$	216	7
Corporate debt securities	157,300		6,866		86,586		2,688		243,886		9,554		635
Residential mortgage-backed securities	777		6		1,618		26		2,395		32		3
Commercial mortgage-backed securities	17,624		175		16,997		412		34,621		587		30
Collateralized debt obligations	55,246		826		1,248		4		56,494		830		39
Other debt securities	8,213		11		0		0		8,213		11		7
Total available-for-sale securities	$	368,634	$	7,903	$	118,105	$	3,327	$	486,739	$	11,230	721
Quality breakdown of available-for-sale securities:
Investment grade	$	242,821	$	1,295	$	98,118	$	1,641	$	340,939	$	2,936	147
Non-investment grade	125,813		6,608		19,987		1,686		145,800		8,294		574
Total available-for-sale securities	$	368,634	$	7,903	$	118,105	$	3,327	$	486,739	$	11,230	721

The above securities have been evaluated and determined to be temporary impairments for which we expect to recover our entire principal plus interest.  The primary components of this analysis include a general review of market conditions and financial performance of the issuer along with the extent and duration at which fair value is less than cost.  Any securities that we intend to sell or will more likely than not be required to sell before recovery are included in other-than-temporary impairments, which are recognized in earnings.

Net investment income

Investment income, net of expenses, was generated from the following portfolios:

	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2019		2018		2019		2018
Fixed maturities (1)	$	5,449	$	6,243	$	17,098	$	18,616
Equity securities	452		203		734		487
Cash equivalents and other	2,900		1,484		8,025		3,518
Total investment income	8,801		7,930		25,857		22,621
Less: investment expenses	149		271		658		1,038
Investment income, net of expenses	$	8,652	$	7,659	$	25,199	$	21,583

(1) Includes interest earned on note receivable from Erie Family Life Insurance Company of $0.4 million and $1.3 million for the three and nine months ended September 30, 2018, respectively. The note was repaid in full in December 2018.

Realized investment gains (losses)

Realized gains (losses) on investments were as follows:

	Three months ended September 30,						Nine months ended September 30,
(in thousands)	2019			2018			2019			2018
Available-for-sale securities:
Gross realized gains	$	1,320		$	525		$	5,640		$	1,100
Gross realized losses	(248		)	(526		)	(1,411		)	(1,512		)
Net realized gains (losses) on available-for-sale securities	1,072			(1		)	4,229			(412		)
Equity securities	624			(1		)	1,272			(189		)
Miscellaneous	0			2			0			104
Net realized investment gains (losses)	$	1,696		$	0		$	5,501		$	(497	)

The portion of net unrealized gains and losses recognized during the reporting period, related to equity securities still held at the reporting date, is calculated as follows:

	Three months ended September 30,					Nine months ended September 30,
(in thousands)	2019		2018			2019		2018
Equity securities:
Net gains (losses) recognized during the period	$	624	$	(1	)	$	1,272	$	(189	)
Less: net gains (losses) recognized on securities sold	47		(52		)	47		(86		)
Net unrealized gains (losses) recognized on securities held at reporting date	$	577	$	51		$	1,225	$	(103	)

Other-than-temporary impairments on available-for-sale securities recognized in earnings were $31 thousand for the quarter ended September 30, 2019 and there were no impairment losses for the quarter ended September 30, 2018. For the nine months ended September 30, 2019 and 2018, other-than-temporary impairments on available-for-sale securities recognized in earnings were $0.2 million and $0.6 million, respectively. We have the intent to sell all credit-impaired available-for-sale securities; therefore, the entire amount of the impairment charges were included in earnings and no impairments were recognized in other comprehensive income. 

Limited partnerships

The majority of our limited partnership holdings are considered investment companies where the general partners record assets at fair value. These limited partnerships are recorded using the equity method of accounting and are generally reported on a one-quarter lag; therefore, our year-to-date limited partnership results through September 30, 2019 are comprised of partnership financial results for the fourth quarter of 2018 and first two quarters of 2019.  Given the lag in reporting, our limited partnership results do not reflect the market conditions of the third quarter of 2019. Cash contributions made to and distributions received from the partnerships are recorded in the period in which the transaction occurs. At December 31, 2018 we also owned one real estate limited partnership that did not meet the criteria of an investment company. This partnership prepared audited financial statements on a cost basis. We elected to report this limited partnership under the fair value option, which was based on the NAV from our partner's capital statement reflecting the general partner's estimate of fair value for the fund's underlying assets. Fair value provides consistency in the evaluation and financial reporting for these limited partnerships and limited partnerships accounted for under the equity method. This real estate limited partnership was fully liquidated in January 2019.

Equity in earnings of limited partnerships by method of accounting were as follows:

	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2019		2018		2019		2018
Equity in earnings of limited partnerships - equity method	$	3,289	$	645	$	2,546	$	624
Change in fair value of limited partnerships - fair value option	0		127		0		(263		)
Equity in earnings of limited partnerships	$	3,289	$	772	$	2,546	$	361

The following table summarizes limited partnership investments by sector as of:

(in thousands)	September 30, 2019		December 31, 2018
Private equity	$	29,938	$	28,271
Mezzanine debt	900		1,152
Real estate	1,333		2,192
Real estate - fair value option	0		3,206
Total limited partnership investments	$	32,171	$	34,821

See also Note 14, "Commitments and Contingencies" for investment commitments related to limited partnerships.

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Nature of Operations

9 Months Ended

Sep. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of Operations

Nature of Operations

Erie Indemnity Company ("Indemnity", "we", "us", "our") is a publicly held Pennsylvania business corporation that has since its incorporation in 1925 served as the attorney-in-fact for the subscribers (policyholders) at the Erie Insurance Exchange ("Exchange").  The Exchange, which also commenced business in 1925, is a Pennsylvania-domiciled reciprocal insurer that writes property and casualty insurance.

Our primary function as attorney-in-fact is to perform policy issuance and renewal services on behalf of the subscribers at the Exchange. We also act as attorney-in-fact on behalf of the Exchange with respect to all claims handling and investment management services, as well as the service provider for all claims handling, life insurance, and investment management services for its insurance subsidiaries, collectively referred to as "administrative services". Acting as attorney-in-fact in these two capacities is done in accordance with a subscriber's agreement (a limited power of attorney) executed individually by each subscriber (policyholder), which appoints us as their common attorney-in-fact to transact certain business on their behalf.  Pursuant to the subscriber's agreement for acting as attorney-in-fact in these two capacities, we earn a management fee calculated as a percentage of the direct and affiliated assumed premiums written by the Exchange.

The policy issuance and renewal services we provide to the Exchange are related to the sales, underwriting and issuance of policies. The sales related services we provide include agent compensation and certain sales and advertising support services. Agent compensation includes scheduled commissions to agents based upon premiums written as well as additional commissions and bonuses to agents, which are earned by achieving targeted measures. The underwriting services we provide include underwriting and policy processing. The remaining services we provide include customer service and administrative support. We also provide information technology services that support all the functions listed above. Included in these expenses are allocations of costs for departments that support these policy issuance and renewal functions.

By virtue of its legal structure as a reciprocal insurer, the Exchange does not have any employees or officers. Therefore, it enters into contractual relationships by and through an attorney-in-fact. Indemnity serves as the attorney-in-fact on behalf of the Exchange with respect to its administrative services. The Exchange's insurance subsidiaries also utilize Indemnity for these services in accordance with the service agreements between each of the subsidiaries and Indemnity. Claims handling services include costs incurred in the claims process, including the adjustment, investigation, defense, recording and payment functions. Life insurance management services include costs incurred in the management and processing of life insurance business. Investment management services are related to investment trading activity, accounting and all other functions attributable to the investment of funds. Included in these expenses are allocations of costs for departments that support these administrative functions. The amounts incurred for these services are reimbursed to Indemnity at cost in accordance with the subscriber's agreement and the service agreements. State insurance regulations require that intercompany service agreements and any material amendments be approved in advance by the state insurance department.

Our results of operations are tied to the growth and financial condition of the Exchange. If any events occurred that impaired the Exchange’s ability to grow or sustain its financial condition, including but not limited to reduced financial strength ratings, disruption in the independent agency relationships, significant catastrophe losses, or products not meeting customer demands, the Exchange could find it more difficult to retain its existing business and attract new business. A decline in the business of the Exchange almost certainly would have as a consequence a decline in the total premiums paid and a correspondingly adverse effect on the amount of the management fees we receive. We also have an exposure to a concentration of credit risk related to the unsecured receivables due from the Exchange for its management fee and cost reimbursements. See Note 13, "Concentrations of Credit Risk".

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2019	Oct. 11, 2019
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2019
Document Transition Report	false
Entity File Number	0-24000
Entry Registrant Name	ERIE INDEMNITY COMPANY
Entity Incorporation, State or Country Code	PA
Entity Tax Identification Number	25-0466020
Entity Address, Address Line One	100 Erie Insurance Place,
Entity Address, City or Town	Erie,
Entity Address, State or Province	PA
Entity Address, Postal Zip Code	16530
City Area Code	814
Local Phone Number	870-2000
Title of 12(b) Security	Class A common stock,
Trading Symbol	ERIE
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Central Index Key	0000922621
Amendment Flag	false
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Class A common stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		46,189,068
Class B common stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		2,542

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Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Class A common stock
Income available to stockholders (Basic EPS:)
Allocated net income (numerator) (in dollars)	$ 93,398	$ 79,787	$ 255,128	$ 224,060
Weighted shares (denominator) (in shares)	46,189,006	46,188,941	46,188,767	46,188,522
Per-share amount (in dollars per share)	$ 2.02	$ 1.73	$ 5.52	$ 4.85
Dilutive effect of stock-based awards
Allocated net income (numerator) (in dollars)	$ 0	$ 0	$ 0	$ 0
Weighted shares (denominator) (in shares)	35,319	27,697	27,708	24,320
Assumed conversion of Class B shares
Allocated net income (numerator) (in dollars)	$ 771	$ 659	$ 2,106	$ 1,850
Weighted shares (denominator) (in shares)	6,100,800	6,100,800	6,100,800	6,100,800
Income available to stockholders on equivalent shares (Diluted EPS:)
Allocated net income (numerator) (in dollars)	$ 94,169	$ 80,446	$ 257,234	$ 225,910
Weighted shares (denominator) (in shares)	52,325,125	52,317,438	52,317,275	52,313,642
Per-share amount (in dollars per share)	$ 1.80	$ 1.54	$ 4.92	$ 4.32
Class B common stock
Reconciliation of the numerators and denominators used in the basic and diluted per-share computations
Ratio for converting shares of Class B common stock into shares of Class A common stock (as a percent)	2400.00%		2400.00%		2400.00%
Income available to stockholders (Basic EPS:)
Allocated net income (numerator) (in dollars)	$ 771	$ 659	$ 2,106	$ 1,850
Weighted shares (denominator) (in shares)	2,542	2,542	2,542	2,542
Per-share amount (in dollars per share)	$ 303	$ 259	$ 829	$ 728
Income available to stockholders on equivalent shares (Diluted EPS:)
Allocated net income (numerator) (in dollars)	$ 770	$ 658	$ 2,105	$ 1,849
Weighted shares (denominator) (in shares)	2,542	2,542	2,542	2,542
Per-share amount (in dollars per share)	$ 303	$ 259	$ 828	$ 727

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STATEMENTS OF FINANCIAL POSITION (Parenthetical) - $ / shares	Sep. 30, 2019	Dec. 31, 2018
Treasury stock (in shares)	22,110,132	22,110,132
Class A common stock
Common stock, stated value per share (in dollars per share)	$ 0.0292	$ 0.0292
Common stock, authorized (in shares)	74,996,930	74,996,930
Common stock, issued (in shares)	68,299,200	68,299,200
Common stock, outstanding (in shares)	46,189,068	46,189,068
Class B common stock
Common stock, stated value per share (in dollars per share)	$ 70	$ 70
Common stock, authorized (in shares)	3,070	3,070
Common stock, issued (in shares)	2,542	2,542
Common stock, outstanding (in shares)	2,542	2,542
Ratio for converting shares of Class B common stock into shares of Class A common stock (as a percent)	2400.00%	2400.00%

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Nature of Operations (Details)	9 Months Ended
	Sep. 30, 2019 Obligations
Revenue, Performance Obligation [Abstract]
Performance obligations under subscriber's agreement	2

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Label	Element	Value
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	$ (38,392,000)
Retained Earnings [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	$ (38,392,000)

[1] Cumulative effect adjustments are primarily related to the implementation of new revenue recognition guidance effective January 1, 2018.

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Borrowing Arrangements - Bank Line of Credit (Details) - Revolving line of credit	Sep. 30, 2019 USD ($)
Bank line of credit
Maximum borrowing capacity under the bank revolving line of credit	$ 100,000,000
Maximum letter of credit sublimit under the bank revolving line of credit	25,000,000
Available borrowing capacity under the bank revolving line of credit, due to outstanding letters of credit	99,100,000
Outstanding amount of letters of credit under the bank revolving line of credit	900,000
Available amount of letters of credit under the bank revolving line of credit	24,100,000
Borrowings outstanding under the bank revolving line of credit	0
Fair value of investments pledged as collateral on the bank revolving line of credit	$ 109,800,000

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Income Taxes (Details) - USD ($) $ in Millions	1 Months Ended	3 Months Ended		9 Months Ended
	Jun. 30, 2019	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Income Tax Disclosure [Abstract]
Effective income tax rate (as a percent)		21.20%	23.00%	19.90%	21.70%
Income tax benefit from tax settlement	$ 4.1
Income tax benefit, related interest expense from tax settlement	$ 1.0
Effective income tax rate, decrease from tax settlement (as a percent)				1.30%