Erie Indemnity Company (Form: 8-K)

Erie, Pa., May 2, 2007 — Erie Indemnity Company (NASDAQ: ERIE) today announced financial results for the first quarter 2007.

•

Net income was $56.4 million for the first quarter of 2007, a 13.9 percent increase from $49.5 million for the same period in 2006. Net income per share-diluted increased to $0.88 per share, compared to $0.73 per share in the comparable quarter in 2006.

•

Net operating income per share (excluding net realized gains or losses on investments and related taxes) increased by 18.9 percent to $0.86 per share in the first quarter of 2007, from $0.72 per share, for the same period one year ago.

•

Management fee revenue decreased 1.8 percent to $228.6 million, from $232.9 million for the same period one year ago. A decline in the cost of management operations allowed margins to remain steady with 2006 at 19.4 percent in the first quarter of 2007.

•

The GAAP combined ratio was 89.2 in the first quarter of 2007 compared to 86.5 in the first quarter of 2006.

•

The policy retention ratio increased to 89.7 percent at March 31, 2007, compared to 89.5 percent at December 31, 2006 and 88.8 percent at March 31, 2006.

•

Net revenue from investment operations increased to $29.8 million from $20.6 million for the first quarters of 2007 and 2006, respectively, primarily driven by earnings on our limited partnership investments.

•

The 2007 annualized effective tax rate of 32.7 percent was offset by positive estimates of IRS examination settlements and adjustments to deferred taxes during the quarter offset somewhat by interest expense on uncertain tax positions.

“Our Company’s financial performance was favorable in the first quarter, driven by a variety of positive factors and trends,” said Jeffrey A. Ludrof, president and chief executive officer. “Our investment operations delivered strong results, and the momentum we gained in growing our policies in force in the latter part of 2006 continued at an even stronger rate in the first three months of 2007. Accelerated sales by ERIE agents increased our policies in force by nearly 13,500 policies, and more policyholders are choosing to stay with ERIE, with our retention rate improving to 89.7 percent. Our performance continues to position us well in what we expect will continue to be an increasingly competitive environment.”

Management fee revenue decreased 1.8 percent for the quarter ended March 31, 2007. Direct written premiums of the Property and Casualty Group, upon which management fee revenue is calculated, decreased 2.6 percent to $918.2 million in the first quarter 2007, from $942.8 million in the first quarter of 2006. The decline in direct written premiums of the Property and Casualty Group reflects the impact of rate reductions and changes in risk characteristics of policyholders and coverages provided. The increase to the management fee rate in 2007 to 25 percent, from 24.75 percent in 2006, offset some of the decline in direct written premiums. This higher management fee rate in 2007 increased management fee revenue by $2.3 million, or $0.02 per share-diluted for the quarter ended March 31, 2007.

Other factors impacting direct written premiums of the Property and Casualty Group during the first quarter of 2007 include:

•

Year-over-year policies in force grew 1.3 percent, or 50,223 policies, to 3,811,723 at March 31, 2007, compared to year-over-year growth of 2,988 policies in the first quarter of 2006.

•

The year-over-year policy retention rate for the Property and Casualty Group improved again to 89.7 percent at March 31, 2007, compared to 88.8 percent at March 31, 2006.

•

New policies in force increased 3.7 percent from March 31, 2006 levels and renewal policies in force increased 1.0 percent.

•

The year-over-year average premium per policy on new business in the first quarter of 2007 of $843 was 3.3 percent less than the $872 in the first quarter of 2006.

•

The year-over-year average premium per policy on renewal business declined 5.2 percent to $1,011 in the first quarter of 2007.

The Property and Casualty Group has been implementing rate reductions to be more price competitive, which resulted in a $34 million decrease in written premiums in the first quarter of 2007. An additional $45 million in rate reductions are forecast for the remainder of the year. The most significant rate reductions have been in the Group’s largest line of business, private passenger auto.

In addition to rate reductions, the Company continues to expand its agency force to support its growth goals. Through the first quarter of 2007 the Company appointed 66 new agencies. Consolidations and terminations within ERIE’s agency force resulted in a net increase of 38 producing agencies during the first quarter, bringing our total of producing agencies to 1,832 at March 31, 2007. The Company expects to meet its goal of 200 new agency appointments during 2007. In 2006, the Company appointed 139 new agencies.

The cost of management operations decreased 1.8 percent to $190.4 million in the first quarter of 2007, from $193.8 million for the same period in 2006. Commission costs, the largest component of the cost of management operations, decreased 2.4 percent to $130.8 million from $134.1 million in the first quarter 2006. Normal commissions decreased 2.0 percent, and our estimate for agent bonus awards decreased 4.9 percent primarily due to a reduction in the profitability component of the award. There were $1.5 million in additional commission costs in the first quarter of 2007, from the new $50 per policy private passenger auto bonus.

First quarter costs of management operations, excluding commissions, decreased 0.3 percent to $59.5 million in 2007 from $59.7 million in 2006. Personnel costs, the second largest component of the cost of management operations, totaled $33.9 million for the first quarter 2007 versus $35.6 million in the same period in 2006, a decrease of 4.8 percent. The Company’s normal salary expense increased $1.2 million driven by 6 percent higher average pay rates offset by slightly lower personnel count. Normal salary expenses were offset by a $2.4 million decrease in expense for management incentive plans, due to a reduction in the estimates for the management incentive plan payouts which was attributable to lower than targeted Property and Casualty Group premium production. The Company’s employee benefit expenses decreased $0.7 million. Health and vision benefit expenses increased $0.1 million in the first quarter of 2007. Pension and retiree health benefit expenses decreased $0.9 million due to a higher discount rate assumption for the pension plans and the curtailment of the retiree health plan in 2006. All other operating costs increased 16.2 percent driven by increased professional fees.

The Company’s insurance underwriting operations generated gains of $5.6 million and $7.3 million in the first quarters of 2007 and 2006, respectively. The GAAP combined ratio for the Company was 89.2 percent in the first quarter 2007 compared to 86.5 percent for the same period in 2006.

•

Earned premiums of the Property and Casualty Group declined $41 million reflecting the trend of rate decreases.

•

Development of prior accident year loss reserves continued to be favorable in the first quarter 2007, improving the loss ratio 10.3 points, or $5.4 million, compared to an improvement of 7.9 points for the first quarter of 2006.

•

The majority of this positive development resulted from favorable re-estimates of reserves on prior accident quarters for automobile bodily injury and uninsured/underinsured motorist bodily injury. Improvements in accident quarter loss ratios in these lines were a result of improved frequency and severity trends.

•

Offsetting this favorable development was a strengthening of reserves for certain workers compensation claims of which our share was $0.4 million, or 0.8 GAAP combined ratio points.

•

The Company recognized certain adjusting and other liabilities of $1.4 million or 2.4 combined ratio points for estimated employee salaries and benefits of the Exchange that were not fully considered in the reserve.

In 2006, the favorable development of the first quarter resulted primarily from the personal auto, homeowners and workers’ compensation lines of business. Severity trends improved in the first quarter of 2006 compared to those anticipated based on historical patterns.

The Company’s share of catastrophe losses amounted to $0.3 million in each of the first quarters of 2007 and 2006. These catastrophe losses contributed 0.5 points and 0.6 points to the GAAP combined ratio in the first quarters of 2007 and 2006, respectively. Underwriting losses are seasonally higher in the second and fourth quarters and as a consequence, the Company’s combined ratio generally increases as the year progresses. In the first quarter of 2007, our share of the reduction to incurred but not reported reserves related to seasonality adjustments was $3.3 million, compared to $2.3 million in the first quarter of 2006.

Net revenue from investment operations increased 44.6 percent in the first quarter of 2007 to $29.8 million compared to $20.6 million in the first quarter of 2006.

Equity in earnings of limited partnerships contributed significantly to the improved investment performance, increasing to $12.5 million in the first quarter of 2007 from $4.1 million in the first quarter of 2006. Optimal market conditions resulted in a higher return on capital on mezzanine debt and private equity partnership investments by some of our more seasoned limited partnerships and appreciation of commercial properties owned by our real estate limited partnerships.

Net investment income, which includes primarily interest and dividends on the Company’s fixed maturity and equity security portfolios, decreased by 6.8 percent to $14.0 million for the quarter ended March 31, 2007, from $15.0 million for the same period in 2006 as a result of lower invested asset balances due to share repurchase activity.

Net realized gains on investments were $1.9 million in the first quarter of 2007 compared to $0.8 million in 2006. Net realized gains on investments generally pertain to gains and losses on bonds, preferred stocks and common stocks. Impairment charges of $0.7 million and $2.0 million were recorded on fixed maturity and equity securities during the first quarters of 2007 and 2006, respectively.

The Company’s provision for income taxes was positively affected by adjustments of $2.5 million from IRS audits and adjustments to deferred taxes. These adjustments were offset by $0.8 million of interest on uncertain tax positions from adoption of FIN 48 during the quarter. As a consequence, the effective income tax rate for the quarter was 30.5 percent down from the more normalized 33 percent.

As part of our capital management plan, the Company repurchased 282,539 shares of our Class A common stock at a cost of $15.1 million during the first quarter of 2007, or $53.34 per share.

Erie Indemnity Company provides management services to the member companies of the Erie Insurance Group, which includes the Erie Insurance Exchange, Flagship City Insurance Company, Erie Insurance Company, Erie Insurance Property and Casualty Company, Erie Insurance Company of New York and Erie Family Life Insurance Company.

According to A.M. Best Company, Erie Insurance Group, based in Erie, Pennsylvania, is the 15^th largest automobile insurer in the United States based on direct premiums written and the 22^nd largest property/casualty insurer in the United States based on total lines net premium written. The Group, rated A+ (Superior) by A.M. Best Company, has almost 3.8 million policies in force and operates in 11 states and the District of Columbia. Erie Insurance Group ranked 463 on the FORTUNE 500 and Erie Indemnity Company is included in Forbes Magazine’s PLATINUM 400 list of the best-managed companies in America.

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

“Safe Harbor” Statement Under the Private Securities Litigation Reform Act of 1995: Certain forward-looking statements contained herein involve risks and uncertainties. These statements include certain discussions relating to management fee revenue, cost of management operations, underwriting, premium and investment income volume, business strategies, profitability and business relationships and the Company’s other business activities during 2007 and beyond. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “contemplate,” “estimate,” “project,” “predict,” “potential” and similar expressions. These forward-looking statements reflect the Company’s current views about future events, are based on assumptions and are subject to known and unknown risks and uncertainties that may cause results to differ materially from those anticipated in those statements. Many of the factors that will determine future events or achievements are beyond our ability to control or predict.


	Three		Three
	months		months
	ended		ended
	March 31,		March 31,
	2007		2006
	(Unaudited)
Operating revenue
Management fee revenue – net	$	216,020	$	220,102
Premiums earned		51,974		54,026
Service agreement revenue		7,418		7,592

Total operating revenue		275,412		281,720

Operating expenses
Cost of management operations		179,886		183,154
Losses and loss adjustment expenses incurred		32,234		30,053
Policy acquisition and other underwriting expenses		11,995		14,501

Total operating expenses		224,115		227,708

Investment income – unaffiliated
Investment income, net of expenses		13,978		15,000
Net realized gains on investments		1,890		784
Equity in earnings of limited partnerships		12,518		4,142

Total investment income – unaffiliated		28,386		19,926

Income before income taxes and equity in earnings of Erie Family Life Insurance Company		79,683		73,938
Provision for income taxes		24,592		25,077
Equity in earnings of Erie Family Life Insurance Company, net of tax		1,270		605

Net income	$	56,361	$	49,466

Net income per share:
Class A common stock – basic	$	0.97	$	0.81

Class A common stock – diluted		0.88		0.73

Class B common stock – basic and diluted		149.01		121.08

Weighted average shares outstanding:
Class A common stock – basic		57,691,289		60,630,395

Class A common stock – diluted		63,906,458		67,505,125

Class B common stock – basic and diluted		2,573		2,833

Dividends declared per share:
Class A common stock	$	0.40	$	0.36

Class B common stock		60.00		54.00


	Three		Three
	months		months
	ended		ended
	March 31,		March 31,
	2007		2006
	(Unaudited)
Management Operations
Management fee revenue	$	228,645	$	232,935
Service agreement revenue		7,418		7,592

Total revenue from management operations		236,063		240,527
Cost of management operations		190,385		193,825

Income from management operations		45,678		46,702

Insurance Underwriting Operations
Premiums earned		51,974		54,026

Losses and loss adjustment expenses incurred		32,234		30,053
Policy acquisition and other underwriting expenses		14,121		16,663

Total losses and expenses		46,355		46,716

Underwriting gain		5,619		7,310

Investment Operations
Investment income, net of expenses		13,978		15,000
Net realized gains on investments		1,890		784
Equity in earnings of limited partnerships		12,518		4,142
Equity in earnings of Erie Family Life Insurance Company		1,366		651

Net revenue from investment operations		29,752		20,577

Income before income taxes		81,049		74,589
Provision for income taxes		24,688		25,123

Net income	$	56,361	$	49,466

Net income per share – Class A basic	$	0.97	$	0.81

Net income per share – Class A diluted		0.88		0.73

Net income per share – Class B basic and diluted		149.01		121.08

Weighted average shares outstanding - Class A diluted		63,906		67,505

Amounts presented on a segment basis are gross of intercompany/intersegment items

We believe that investors’ understanding of our performance is enhanced by the disclosure of the following non-GAAP financial measure. Our method of calculating this measure may differ from those used by other companies and therefore comparability may be limited.

Operating income is net income excluding realized capital gains and losses and related federal income taxes. Equity in earnings or losses of Erie Family Life Insurance Company and equity in earnings or losses of limited partnerships are not excluded from the calculation of operating income. Both of these categories include the respective investment’s realized capital gains and losses, as well as unrealized gains and losses, as these investments are accounted for under the equity method.

Net income is the GAAP measure that is most directly comparable to operating income.

We use operating income to evaluate the results of operations. It reveals trends in our management services, insurance underwriting and investment operations that may be obscured by the net effects of realized capital gains and losses. Realized capital gains and losses may vary significantly between periods and are generally driven by business decisions and economic developments such as capital market condition, the timing of which is unrelated to management services and the insurance underwriting processes. We believe it is useful for investors to evaluate these components separately and in the aggregate when reviewing our performance. We are aware that the price to earnings multiple commonly used by investors as a forward-looking valuation technique uses operating income as the denominator. Operating income should not be considered as a substitute for net income and does not reflect our overall profitability.

The following table reconciles operating income and net income for the periods ended March 31, 2007 and 2006:


	Three			Three
	months ended			months ended
	March 31,			March 31,
	2007			2006
	(Unaudited)			(Unaudited)
(in thousands, except per share data)
Operating income	$	55,133		$	48,956
Net realized gains on investments		1,890			784
Income tax expense on realized gains		(662	)		(274	)

Realized gains, net of income taxes		1,228			510

Net income	$	56,361		$	49,466

	Three months			Three months
	ended			ended
	March 31,			March 31,
		2007			2006
	(Unaudited)			(Unaudited)

Per Class A Share – Diluted
Operating income	$	0.86		$	0.72
Net realized gains on investments		0.03			0.01
Income tax expense on realized gains		(0.01	)		0.00

Realized gains, net of income taxes		0.02			0.01

Net income	$	0.88		$	0.73


	March 31,		December 31,
	2007		2006
	(Unaudited)
ASSETS
Investments
Fixed maturities	$	836,323	$	836,738
Equity securities
Preferred stock		138,478		133,401
Common stock		116,492		117,246
Other invested assets		254,086		235,672

Total investments		1,345,379		1,323,057
Cash and cash equivalents		10,578		60,241
Equity in Erie Family Life Insurance Company		59,033		57,162
Premiums receivable from policyholders		242,280		247,187
Receivables from affiliates		1,183,818		1,220,058
Other assets		139,257		131,656

Total assets	$	2,980,345	$	3,039,361

LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Unpaid losses and loss adjustment expenses	$	1,048,909	$	1,073,570
Unearned premiums		418,949		424,282
Other liabilities		331,264		379,661

Total liabilities		1,799,122		1,877,513
Total shareholders’ equity		1,181,223		1,161,848

Total liabilities and shareholders’ equity	$	2,980,345	$	3,039,361

Book value per share	$	18.55	$	18.17

Shares outstanding		63,669		63,952

ERIE INDEMNITY COMPANY
RECONCILIATION OF PROPERTY AND CASUALTY GROUP TO INDEMNITY RESULTS


	Three			Three
	months ended			months ended
	March 31,			March 31,
	2007			2006
(dollars in thousands)
Property and Casualty Group Insurance Underwriting Operations (SAP Basis)
Direct underwriting results
Direct written premium	$	918,178		$	942,768

Premiums earned		942,157			983,829

Loss and loss adjustment expenses incurred		572,327			522,490
Policy acquisition and other underwriting expenses		257,102			301,474

Total losses and expenses		829,429			823,964

Direct underwriting income		112,728			159,865

Nonaffiliated reinsurance underwriting results
Assumed voluntary-less ceded retrocessions		(2,898	)		689
Assumed involuntary		(1,364	)		(10,295	)
Less: Ceded		7,815			7,199

Nonaffiliated reinsurance underwriting loss		(12,077	)		(16,805	)


Net Underwriting Gain (SAP Basis)	$	100,651		$	143,060


Erie Indemnity Insurance Underwriting Operations (SAP to GAAP Basis)
Percent of pool assumed by the Indemnity Company		5.50	%		5.50	%

Indemnity preliminary underwriting gain (SAP Basis)	$	5,536		$	7,868
Excess-of-loss changes to recoveries under the agreement		0			(145	)
SAP to GAAP adjustments		83			(413	)

Indemnity Underwriting Gain before tax (GAAP Basis)	$	5,619		$	7,310

Property & Casualty Group (SAP Basis)
Net basis
Loss and LAE ratio		62.3	%		54.9	%
Underwriting ratio		27.1			31.7
Policyholder dividends ratio		0.2			(0.1	)

Statutory combined ratio		89.6			86.5

Adjusted combined ratio, excluding profit component		85.5			82.3
Direct business
Loss ratio points from prior accident year reserve development –redundancy		(10.3	)		(7.9	)
Loss ratio points from salvage and subrogation recoveries collected		(3.1	)		(3.1	)

Total loss ratio points from prior accident years		(13.4	)		(11.0	)

Loss ratio points from catastrophes		0.5			0.6
Erie Indemnity Company
GAAP combined ratio		89.2			86.5
GAAP loss ratio points from catastrophes		0.5			0.6

SAP Basis represents statutory accounting principles as codified by the National Association of Insurance Commissioners (NAIC)

The selected financial data below is derived from the Erie Insurance Exchange’s financial statements prepared in accordance with Statutory Accounting Principles. In the opinion of management, all adjustments consisting only of normal recurring accruals, considered necessary for a fair presentation have been included. The financial data set forth below is only a summary.


	Three		Three
	months ended		months ended
	March 31,		March 31,
	2007		2006
(in thousands)
Statutory Accounting Basis	(Unaudited)
Premiums earned	$	889,551	$	928,408
Losses, loss adjustment expenses and
underwriting expenses		794,427		793,147

Net underwriting gain		95,124		135,261
Total investment income		136,646		126,006

Income before income taxes		231,770		261,267
Federal income tax expense		71,992		89,020

Net income	$	159,778	$	172,247


	As of		As of
	March 31,		December 31,
	2007		2006
(in thousands)
Statutory Accounting Basis	(Unaudited)
Cash and invested assets	$	8,655,560	$	8,494,655
Other assets		1,024,599		1,021,489

Total assets	$	9,680,159	$	9,516,144

Claims and unearned premium reserves	$	4,931,575	$	4,993,365
Other liabilities		495,048		435,683

Total liabilities		5,426,623		5,429,048

Policyholders’ surplus		4,253,536		4,087,096

Total liabilities and policyholders’ surplus	$	9,680,159	$	9,516,144


	Three months			Three months
	ended			ended
	March 31,			March 31,			%
	2007			2006			Change
(in thousands)
Private passenger auto	$	108,676		$	111,055			-2.1	%
Commercial auto		20,792			21,198			-1.9
Homeowners		37,093			36,656			1.2
Commercial multi-peril		28,764			29,436			-2.3
Workers’ compensation		22,976			24,316			-5.5
All other lines of business		11,244			10,674			5.3

		229,545			233,335			-1.6	%
Change in allowance for management fee returned on cancelled policies		(900	)		(400	)

Management fee revenue, net of allowance	$	228,645		$	232,935			-1.8	%

Management fee rate		25.00	%		24.75	%

Growth rates of policies in force for Property and Casualty Group insurance operations by major lines of business:


	Private		12-mth.					12-mth.					12-mth.			Total		12-mth.
	passenger		growth					growth			All other		growth			Personal		growth
Date	auto		rate			Homeowners		rate			personal lines		rate			lines		rate
03/31/2005		1,661,955		(1.0	)%		1,343,803		0.6	%		279,927		1.4	%		3,285,685		(0.1	)%

06/30/2005		1,658,278		(1.7	)		1,350,491		0.2			282,670		1.5			3,291,439		(0.6	)

09/30/2005		1,651,629		(1.8	)		1,354,487		0.3			285,134		2.3			3,291,250		(0.6	)

12/31/2005		1,640,563		(1.8	)		1,353,912		0.5			286,604		2.7			3,281,079		(0.5	)

03/31/2006		1,636,048		(1.6	)		1,356,885		1.0			289,964		3.6			3,282,897		(0.1	)

06/30/2006		1,637,472		(1.3	)		1,366,633		1.2			294,409		4.2			3,298,514		0.2

09/30/2006		1,636,947		(0.9	)		1,373,763		1.4			298,361		4.6			3,309,071		0.5

12/31/2006		1,633,882		(0.4	)		1,377,965		1.8			301,497		5.2			3,313,344		1.0

03/31/2007		1,635,714		0.0			1,384,856		2.1			305,591		5.4			3,326,161		1.3


			12-mth.			CML*		12-mth.					12-mth.					12-mth.			Total		12-mth.
	CML*		growth			multi-		growth			Workers’		growth			All other		growth			CML*		growth
Date	auto		rate			peril		rate			comp.		rate			*CML lines**		rate			lines		rate
03/31/2005		117,382		1.4	%		209,619		1.3	%		57,949		(5.6	)%		87,877		1.8	%		472,827		0.5	%

06/30/2005		118,445		1.2			212,100		1.1			57,398		(5.5	)		88,981		2.1			476,924		0.5

09/30/2005		118,555		1.3			212,939		1.4			56,877		(5.0	)		90,074		2.4			478,445		0.7

12/31/2005		118,728		1.2			213,347		1.8			56,218		(4.6	)		90,227		2.7			478,520		1.0

03/31/2006		118,587		1.0			214,461		2.3			55,254		(4.7	)		90,301		2.8			478,603		1.2

06/30/2006		119,471		0.9			217,134		2.4			54,871		(4.4	)		91,568		2.9			483,044		1.3

09/30/2006		119,555		0.8			217,763		2.3			54,379		(4.4	)		92,687		2.9			484,384		1.2

12/31/2006		119,801		0.9			218,542		2.4			53,923		(4.1	)		92,687		2.7			484,953		1.3

03/31/2007		119,907		1.1			219,300		2.3			53,498		(3.2	)		92,857		2.8			485,562		1.5

Policy retention trends for Property and Casualty Group insurance operations by major lines of business:


	Private									CML*
	passenger			CML*						multi-			Workers’			All other
Date	auto			auto			Homeowners			peril			comp.			lines			Total All lines
03/31/2005		89.9	%		88.2	%		87.6	%		85.5	%		85.9	%		85.5	%		88.3	%

06/30/2005		89.8			87.8			87.8			85.0			85.8			85.5			88.3

09/30/2005		89.9			88.0			88.0			85.1			86.0			85.6			88.4

12/31/2005		90.0			87.9			88.2			85.4			86.2			86.0			88.6

03/31/2006		90.1			88.0			88.6			85.9			86.0			86.2			88.8

06/30/2006		90.3			87.7			88.9			85.9			85.9			86.5			89.0

09/30/2006		90.5			87.8			89.2			86.0			85.8			86.7			89.2

12/31/2006		90.8			87.7			89.4			86.0			85.7			87.1			89.5

03/31/2007		91.0			88.0			89.7			86.1			86.2			87.2			89.7

Average premium per policy trends for Property and Casualty insurance operations by major lines of business:


	Private		12-mth.					12-mth.			All other		12-mth.					12-mth.
	passenger		percent					percent			personal		percent			Total Personal		percent
Date	auto		change			Homeowners		change			lines		change			lines		change
03/31/2005	$	1,193		4.3	%	$	552		13.8	%	$	347		8.4	%	$	858		6.3	%

06/30/2005		1,186		2.4			549		7.6			346		5.5			851		3.3

09/30/2005		1,179		0.3			546		2.8			347		3.3			846		0.6

12/31/2005		1,174		(1.3	)		543		(0.5	)		348		0.3			841		(1.6	)

03/31/2006		1,161		(2.7	)		539		(2.4	)		349		0.6			832		(3.0	)

06/30/2006		1,140		(3.9	)		535		(2.6	)		348		0.6			818		(3.9	)

09/30/2006		1,122		(4.8	)		530		(2.9	)		348		0.3			806		(4.7	)

12/31/2006		1,110		(5.5	)		526		(3.1	)		349		0.3			797		(5.2	)

03/31/2007		1,100		(5.3	)		524		(2.8	)		349		0.0			791		(4.9	)


			12-mth.					12-mth.					12-mth.			Total		12-mth.
			percent					percent			All other		percent			CML*		percent
Date	*CML auto**		change			Workers’ Comp.		change			*CML lines**		change			lines		change
03/31/2005	$	2,799		3.1	%	$	6,004		13.6	%	$	1,720		6.2	%	$	2,513		6.2	%

06/30/2005		2,780		1.2			6,102		12.2			1,708		3.8			2,503		4.2

09/30/2005		2,789		0.8			6,104		8.2			1,694		1.2			2,490		1.9

12/31/2005		2,781		(0.3	)		6,212		6.7			1,705		(0.1	)		2,501		0.6

03/31/2006		2,778		(0.8	)		6,270		4.4			1,710		(0.6	)		2,501		(0.5	)

06/30/2006		2,730		(1.8	)		6,143		0.7			1,676		(1.9	)		2,444		(2.4	)

09/30/2006		2,705		(3.0	)		6,047		(0.9	)		1,669		(1.5	)		2,416		(3.0	)

12/31/2006		2,687		(3.4	)		5,985		(3.7	)		1,657		(2.8	)		2,393		(4.3	)

03/31/2007		2,664		(4.1	)		5,914		(5.7	)		1,641		(4.0	)		2,365		(5.4	)

PROPERTY & CASUALTY GROUP ADJUSTED COMBINED RATIO BY
MAJOR LINES OF BUSINESS (SAP BASIS) – DIRECT BUSINESS


	Three Months Ended												Three Months Ended
	March 31, 2007												March 31, 2006
				Prior Year**						Current						Prior Year**						Current
				Reserve						Accident						Reserve						Accident
				Development						Year						Development						Year
	Calendar*			Deficiency			Catastrophe			Excluding			Calendar*			Deficiency			Catastrophe			Excluding
	Year			(Redundancy)			Losses			Catastrophes			Year			(Redundancy)			Losses			Catastrophes

Private Passenger Auto		83.8	%		-14.4	%		0.0	%		98.2	%		83.8	%		-8.3	%		0.0	%		92.1	%
Homeowners		78.1	%		-9.1	%		0.5	%		86.7	%		70.0	%		-9.0	%		0.3	%		78.7	%
Other Personal Lines		78.9	%		-5.9	%		0.0	%		84.8	%		70.8	%		0.9	%		0.0	%		69.9	%
Total Personal		81.8	%		-12.6	%		0.5	%		93.9	%		79.5	%***		-8.1	%		0.4	%		87.2	%
Commercial Multi-Peril		93.7	%		-1.0	%		0.0	%		94.7	%		77.5	%		0.0	%		0.2	%		77.3	%
Commercial Auto		77.9	%		-12.3	%		0.0	%		90.2	%		74.0	%		-1.9	%		0.0	%		75.9	%
Workers’ Compensation		102.8	%		0.5	%		0.0	%		102.3	%		58.5	%		-19.4	%		0.0	%		77.9	%
Other Commercial Lines		45.4	%		-24.8	%		0.0	%		70.2	%		55.6	%		-21.0	%		0.0	%		76.6	%
Total Commercial		88.7	%		-5.2	%		0.0	%		93.9	%		69.6	%***		-7.5	%		0.2	%		76.9	%
Grand Total – Direct Business Only		84.0	%		-10.3	%		0.5	%		93.8	%		76.4	%***		-7.9	%		0.6	%		83.7	%
*The calendar year combined ratio represents the adjusted statutory combined ratio, which removes the profit component of the management fee earned by the Company.
**The prior accident year reserve development does not include the effects of salvage and subrogation recoveries.
*** Calendar year combined ratios in the first quarter of 2006 are shown exclusive of the write off of eCommerce assets. Including these in underwriting expenses would have contributed 4.0 points to the combined ratio calculations.


Pennsylvania	0-24000	25-0466020
_____________________ (State or other jurisdiction	_____________ (Commission	______________ (I.R.S. Employer
of incorporation)	File Number)	Identification No.)

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


	Erie Indemnity Company

May 2, 2007	By:	Philip A. Garcia

		Name: Philip A. Garcia
		Title: Executive Vice President & CFO


Exhibit No.		Description

99.1		Press Release Text
99.2		Financial Information


Date of Report (Date of Earliest Event Reported):		May 2, 2007


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


			12-mth.
	Total All		growth
Date	lines		rate
03/31/2005		3,758,512		(0.1	)%

06/30/2005		3,768,363		(0.5	)

09/30/2005		3,769,695		(0.5	)

12/31/2005		3,759,599		(0.3	)

03/31/2006		3,761,500		0.1

06/30/2006		3,781,558		0.4

09/30/2006		3,793,455		0.6

12/31/2006		3,798,297		1.0

03/31/2007		3,811,723		1.3