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2Q 2009 Highlights
-- Net income per share-diluted was $0.57 per share in the second quarter
2009 compared to $0.71 per share in the second quarter of 2008.
-- Net operating income per share (excluding net realized gains or losses
on investments and related taxes) decreased to $0.56 per share in the
second quarter of 2009 from $0.87 per share for the same period one year
ago.
-- Losses from limited partnership investments were $0.30 per share,
after tax, for the second quarter of 2009 compared to earnings of
$0.13 per share, after tax, from the second quarter 2008.
-- Gross margins from management operations increased to 22.5 percent in
the second quarter of 2009 compared to 19.1 percent in the second
quarter of 2008.
-- GAAP combined ratios of the insurance underwriting operations increased
to 96.6 percent in the second quarter of 2009 from 93.7 percent in the
second quarter of 2008.
-- Losses from investment operations were $14.3 million for the second
quarter of 2009, compared to gains of $7.9 million for the second
quarter of 2008.
--------------------------------------------------------------------------------------------------------------
Erie Indemnity Company (Nasdaq: ERIE | Quote | Chart | News | PowerRating) announced today second-quarter 2009 earnings of $32.7 million, or $0.57 per diluted share, down 20.8% from the second quarter of 2008. Operating income (excluding net realized gains or losses on investments and related taxes) decreased to $32.1 million or $0.56 per share in the second quarter of 2009 from $50.6 million or $0.87 per share for the same period one year ago. The decline in operating income is attributable to losses before income tax from limited partnership investments of $26.8 million in the second quarter of 2009 compared to income before income tax from limited partnerships of $11.3 million recorded in the second quarter of 2008.
Details of Second Quarter 2009 Segment Results:
Segment Results
---------------
(in millions) 2Q'09 2Q'08
----- -----
Management Operations $60.3 $50.4
Insurance Underwriting Operations 1.7 3.2
Investment Operations (14.3) 7.9
------ ---
Income before income taxes $47.7 $61.5
----- -----
Provision for income taxes 15.0 20.2
---- ----
Net Income $32.7 $41.3
---------- ----- -----
Management operations
Pre-tax income from management operations increased to $60.3 million in the second quarter of 2009 from $50.4 million in the second quarter of 2008.
Gross margins from management operations increased to 22.5 percent in the second quarter of 2009 compared to 19.1 percent in the second quarter of 2008. Management fee revenue increased 1.5 percent for the quarter ended June 30, 2009. Direct written premiums of the Property and Casualty Group, upon which the management fee is calculated, increased 1.4 percent in the second quarter of 2009, compared to the second quarter of 2008, reflecting an increase in policies in force offset by reductions in average premium.
Policies in force grew 3.4 percent to nearly 4.1 million at June 30, 2009. Growth in policies in force is the result of continuing improvements in policyholder retention and increases in new policies sold. The policyholder retention ratio increased to 90.8 percent at June 30, 2009, compared to 90.6 percent at December 31, 2008, and 90.4 percent at June 30, 2008. The year-over-year average premium per policy decreased 2.5 percent to $936 at June 30, 2009 compared to $960 at June 30, 2008.
The cost of management operations decreased 2.4 percent to $208.1 million in the second quarter of 2009 from $213.1 million for the same period in 2008. Commission costs, the largest component of the cost of management operations, decreased to $143.4 million, or 3.6 percent, in the second quarter 2009 from $148.8 million in the second quarter of 2008. Second quarter cost of management operations, excluding commission costs, increased 0.6 percent to $64.7 million from $64.3 million.
Insurance underwriting operations
Insurance underwriting operations generated income before income tax of $1.7 million in the second quarter of 2009 compared to income of $3.2 million generated for the same period in 2008. GAAP combined ratios of the insurance underwriting operations increased to 96.6 percent in the second quarter of 2009 from 93.7 percent in the second quarter of 2008.
-- The loss and loss adjustment expense ratio related to current accident
year, excluding catastrophe losses, was 66.0 percent in the second
quarter of 2009, which was 0.3 points lower than the second quarter of
2008.
-- Development of prior accident year loss reserves improved the combined
ratio by 0.3 points in the second quarter of 2009 compared to 3.9 points
for the second quarter of 2008.
-- Catastrophe losses contributed 1.6 points and 3.0 points to the GAAP
combined ratio in the second quarters of 2009 and 2008, respectively.
Investment operations
Investment operations generated losses before income tax of $14.3 million for the second quarter of 2009, compared to gains before income tax of $7.9 million for the second quarter of 2008.
-- Net investment income, which includes primarily interest and dividends
on the Company's bonds and stocks, decreased by 16.7 percent to
$9.5 million for the quarter ended June 30, 2009, from $11.5 million for
the same period in 2008, due to the decrease in our investment
portfolio, resulting from the sale of some non-redeemable preferred
stock investments in 2008 and 2009.
-- Net impairment losses recognized in earnings totaled $2.5 million and
$12.4 million in the second quarters of 2009 and 2008, respectively.
-- Equity in losses of limited partnerships totaled $26.8 million in the
second quarter of 2009 compared to earnings of $11.3 million in the
second quarter of 2008. Our year to date June 30, 2009, limited
partnership investment losses primarily include limited
partnerships' financial results for the fourth quarter of 2008 and
the first quarter of 2009, and reflect the volatility in the market
conditions experienced during those periods.
-- Equity in earnings of Erie Family Life Insurance Company was $2.0
million in the second quarter of 2009, compared to losses of $0.6
million in the second quarter of 2008, primarily due to lower impairment
charges recognized on investments in the second quarter of 2009.
Six Month 2009 Summary
Erie Indemnity net income was $43.9 million or $0.76 per share-diluted for the first six months of 2009 compared to $71.3 million or $1.22 per share-diluted for the six months ending June 30, 2008.
According to A.M. Best Company, Erie Insurance Group, based in Erie, Pennsylvania, is the 16(th) largest automobile insurer in the United States based on direct premiums written and the 18(th) largest property/casualty insurer in the United States based on total lines net premium written. The Group, rated A+ (Superior) by A.M. Best Company, has over 4.0 million policies in force and operates in 11 states and the District of Columbia.
Erie Insurance earned J.D. Power and Associates' award for "Highest in Customer Satisfaction with the Auto Insurance Shopping Experience." This recognition is based on the results of the 2009 Insurance Shopping Study, which evaluates the experience of customers purchasing a new auto insurance policy. Erie Insurance has also been recognized on the list of Ward's 50 Group of top performing insurance companies The Ward's 50 award analyzes the financial performance of 3,000 property and casualty companies and 800 life-health insurance companies and recognizes the top performers for achieving outstanding financial results in safety and consistency over a five-year period (2004-2008).
"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995: Certain statements contained herein are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are not in the present or past tense and can generally be identified by the use of words such as "anticipate," "believe," "estimate," "expect," "intend," "likely," "plan," "project," "seek," "should," "target," "will," and other expressions that indicate future trends and events. Forward-looking statements 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 such statements are discussions relating to management fee revenue, cost of management operations, underwriting, premium and investment income volumes, and agency appointments. Such 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 that could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements are the following: factors affecting the property/casualty and life insurance industries generally, including price competition, legislative and regulatory developments, government regulation of the insurance industry including approval of rate increases, the size, frequency and severity of claims, natural disasters, exposure to environmental claims, fluctuations in interest rates, inflation and general business conditions; the geographic concentration of our business as a result of being a regional company; the accuracy of our pricing and loss reserving methodologies; changes in driving habits; our ability to maintain our business operations including our information technology system; our dependence on the independent agency system; the quality and liquidity of our investment portfolio; our dependence on our relationship with Erie Insurance Exchange; and the other risks and uncertainties discussed or indicated in all documents filed by the Company with the Securities and Exchange Commission. A forward-looking statement speaks only as of the date on which it is made and reflects the Company's analysis only as of that date. The Company undertakes 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.
News releases and more information about Erie Insurance Group are available at http://www.erieinsurance.com.
Erie Indemnity Company
Consolidated Statements of Operations
(dollars in thousands, except per share data)
Three months ended Six months ended
June 30, June 30,
2009 2008 2009 2008
---- ---- ---- ----
(unaudited) (unaudited)
Operating revenue
Management fee
revenue, net $245,412 $241,646 $462,517 $458,617
Premiums earned 52,110 51,736 103,860 103,662
Service agreement
revenue 8,604 7,748 17,182 15,139
---------------------- ------- ------- ------- -------
Total operating
revenue 306,126 301,130 583,559 577,418
---------------------- ------- ------- ------- -------
Operating expenses
Cost of management
operations 196,609 201,338 379,236 382,456
Losses and loss
adjustment expenses
incurred 35,084 33,823 78,088 67,583
Policy acquisition
and other
underwriting expenses 12,381 12,281 24,910 24,281
---------------------- ------- ------- ------- -------
Total operating
expenses 244,074 247,442 482,234 474,320
---------------------- ------- ------- ------- -------
Investment (loss)
income - unaffiliated
Investment income,
net of expenses 9,548 11,467 22,060 23,139
Realized gains
(losses)
on investments 3,467 (1,818) (367) (14,443)
Total other-than-
temporary impairment
losses on securities (2,544) (12,449) (7,152) (24,403)
Portion of losses
recognized in other
comprehensive
income 0 0 0 0
--- --- --- ---
Net impairment
losses recognized
in earnings (2,544) (12,449) (7,152) (24,403)
Equity in (losses)
earnings of
limited partnerships (26,798) 11,275 (54,829) 19,253
---------------------- ------- ------ ------- ------
Total investment
(loss) income -
unaffiliated (16,327) 8,475 (40,288) 3,546
----------------------- ------- ----- ------- -----
Income before income
taxes and equity in
earnings (losses) of
Erie Family
Life Insurance 45,725 62,163 61,037 106,644
Provision for
income taxes 14,855 20,288 17,478 34,539
Equity in earnings
(losses) of Erie
Family Life Insurance,
net of tax 1,864 (560) 304 (813)
----- ---- --- ----
Net income $32,734 $41,315 $43,863 $71,292
======= ======= ======= =======
Net income per share:
Class A common
stock - basic $0.63 $0.80 $0.85 $1.36
===== ===== ===== =====
Class A common
stock - diluted 0.57 0.71 0.76 1.22
==== ==== ==== ====
Class B common
stock - basic
and diluted 93.19 116.10 127.98 200.67
===== ====== ====== ======
Weighted average shares
outstanding:
Class A common
stock - basic 51,240,693 51,754,896 51,255,385 52,291,387
========== ========== ========== ==========
Class A common
stock - diluted 57,390,302 57,898,022 57,404,994 58,434,513
========== ========== ========== ==========
Class B common
stock - basic
and diluted 2,551 2,551 2,551 2,551
===== ===== ===== =====
Dividends declared per share:
Class A
common stock $0.45 $0.44 $0.90 $0.88
===== ===== ===== =====
Class B
common stock 67.50 66.00 135.00 132.00
===== ===== ====== ======
Erie Indemnity Company
Consolidated Statements of Operations - Segment Basis
(amounts in thousands, except per share data)
Three months ended Six months ended
June 30, June 30,
2009 2008 2009 2008
---- ---- ---- ----
(unaudited) (unaudited)
Management operations
Management fee revenue $259,771 $255,809 $489,541 $485,408
Service agreement revenue 8,604 7,748 17,182 15,139
------------------------- ------- ------- ------- -------
Total revenue from
management operations 268,375 263,557 506,723 500,547
Cost of management
operations 208,093 213,114 401,367 404,774
------------------- ------- ------- ------- -------
Income from management
operations 60,282 50,443 105,356 95,773
---------------- ------ ------ ------- ------
Insurance underwriting
operations
Premiums earned 52,110 51,736 103,860 103,662
--------------- ------ ------ ------- -------
Losses and loss adjustment
expenses incurred 35,084 33,823 78,088 67,583
Policy acquisition and other
underwriting expenses 15,256 14,668 29,804 28,754
----------------------------- ------ ------ ------ ------
Total losses and expenses 50,340 48,491 107,892 96,337
---------------------------- ------ ------ ------- ------
Underwriting income (loss) 1,770 3,245 (4,032) 7,325
----------------------------- ----- ----- ------ -----
Investment operations
Investment income,
net of expenses 9,548 11,467 22,060 23,139
Realized gains (losses)
on investments 3,467 (1,818) (367) (14,443)
Net impairment losses
recognized in earnings (2,544) (12,449) (7,152) (24,403)
Equity in (losses) earnings
of limited partnerships (26,798) 11,275 (54,829) 19,253
Equity in earnings (losses)
of Erie Family Life Insurance 2,005 (602) 327 (874)
----------------------------- ----- ---- --- ----
Net (loss) revenue
from investment operations (14,322) 7,873 (39,961) 2,672
-------------------------- ------- ----- ------- -----
Income before income taxes 47,730 61,561 61,363 105,770
Provision for income taxes 14,996 20,246 17,500 34,478
------------- ------- ------- ------- -------
Net income $32,734 $41,315 $43,863 $71,292
============= ======= ======= ======= =======
Net income per share -
Class A basic $0.63 $0.80 $0.85 $1.36
========================== ===== ===== ===== =====
Net income per share -
Class A diluted 0.57 0.71 0.76 1.22
========================== ==== ==== ==== ====
Net income per share -
Class B basic and diluted 93.19 116.10 127.98 200.67
========================== ===== ====== ====== ======
Weighted average shares
outstanding -
Class A diluted 57,390 57,898 57,405 58,435
=============================== ====== ====== ====== ======
Amounts presented on a segment basis are gross of
intercompany/intersegment items.
Erie Indemnity Company
Reconciliation of Operating
Income to Net Income
Definition of non-GAAP and operating measures
---------------------------------------------
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 impairment losses and related federal income taxes. We
elected the fair value measurement option for our common stock
portfolio effective January 1, 2008. As such, changes in value
related to common stocks are reported in earnings. These unrealized
gains or losses are included in the net realized losses/gains on
investments on the Consolidated Statements of Operations that is
used to calculate operating income. 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. Equity in earnings or losses of limited partnerships includes
the respective investment's realized capital gains and losses, as well
as unrealized gains and losses.
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 including impairment losses. Realized
capital gains and losses including impairment losses, may vary
significantly between periods and are generally driven by business
decisions and economic developments such as capital market conditions,
the timing of which is unrelated to our management services and 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 June 30, 2009 and 2008:
Three months ended Six months ended
(in thousands, except per share data) June 30, June 30,
2009 2008 2009 2008
---- ---- ---- ----
(Unaudited) (Unaudited)
Operating income $32,134 $50,589 $48,750 $96,542
Net realized gains (losses) and
impairments on investments 923 (14,267) (7,519) (38,846)
Income tax (expense) benefit (323) 4,993 2,632 13,596
---- ----- ----- ------
Realized gains (losses) and
impairments, net of income
taxes 600 (9,274) (4,887) (25,250)
--- ------ ------ -------
Net income $32,734 $41,315 $43,863 $71,292
======= ======= ======= =======
Three months ended Six months ended
June 30, June 30,
Per Class A share - diluted: 2009 2008 2009 2008
---- ---- ---- ----
(Unaudited) (Unaudited)
Operating income $0.56 $0.87 $0.85 $1.65
Net realized gains (losses) and
impairments on investments 0.02 (0.25) (0.13) (0.66)
Income tax (expense)
benefit (0.01) 0.09 0.04 0.23
----- ---- ---- ----
Realized gains (losses) and
impairments, net of income
taxes 0.01 (0.16) (0.09) (0.43)
---- ----- ----- -----
Net income $0.57 $0.71 $0.76 $1.22
===== ===== ===== =====
Erie Indemnity Company
Consolidated Statements of Financial Position
(amounts in thousands, except per share data)
June 30, December 31,
2009 2008
---- ----
(unaudited)
Assets
Investments
Available-for-sale
securities, at fair value:
Fixed maturities $601,971 $563,429
Equity securities 46,491 55,281
Trading securities,
at fair value 36,125 33,338
Other invested assets 255,876 300,391
------- -------
Total investments 940,463 952,439
Cash and cash equivalents 26,417 61,073
Equity in Erie Family
Life Insurance 57,476 29,236
Premiums receivable
from policyholders 257,049 244,760
Receivables from affiliates 1,144,086 1,130,610
Other assets 210,237 195,268
------- -------
Total assets $2,635,728 $2,613,386
========== ==========
Liabilities and shareholders' equity
Liabilities
Unpaid losses and loss
adjustment expenses $979,869 $965,081
Unearned premiums 442,579 424,370
Other liabilities 384,164 432,060
------- -------
Total liabilities 1,806,612 1,821,511
Total shareholders' equity 829,116 791,875
------- -------
Total liabilities and
shareholders' equity $2,635,728 $2,613,386
========== ==========
Book value per share $14.45 $13.79
====== ======
Shares outstanding 57,363 57,405
====== ======
Erie Indemnity Company
Reconciliation of Property and Casualty Group to
Indemnity Results
(dollars in thousands) Three months ended Six months ended
June 30, June 30,
2009 2008 2009 2008
-------------------------- ---- ---- ---- ----
Property and Casualty Group insurance underwriting operations (SAP basis)
Direct underwriting results
Direct written
premium $1,044,285 $1,030,036 $1,965,364 $1,948,432
---------- ---------- ---------- ----------
Premiums earned 966,493 962,466 1,905,187 1,900,286
------- ------- --------- ---------
Loss and loss adjustment
expenses incurred 626,620 602,238 1,405,465 1,205,628
Policy acquisition and
other underwriting
expenses 294,777 284,255 556,577 539,118
------- ------- ------- -------
Total losses and
expenses 921,397 886,493 1,962,042 1,744,746
------- ------- --------- ---------
Direct underwriting
income (loss) 45,096 75,973 (56,855) 155,540
------ ------ ------- -------
Nonaffiliated reinsurance underwriting results
Assumed voluntary-less
ceded retrocessions 800 (555) (36) (345)
Assumed involuntary 3,066 (1,614) 3,177 (2,405)
Less: Ceded 7,266 9,253 21,437 18,296
----- ----- ------ ------
Nonaffiliated
reinsurance
underwriting
income (3,400) (11,422) (18,296) (21,046)
------- ------- -------- --------
Net underwriting
income (loss)
(SAP basis) $41,696 $64,551 ($75,151) $134,494
======= ======= ======== ========
--------------------------
Erie Indemnity insurance underwriting operations (SAP to GAAP basis)
Percent of pool assumed
by the Indemnity Company 5.50% 5.50% 5.50% 5.50%
---- ---- ---- ----
Indemnity preliminary
underwriting income
(loss) (SAP basis) $2,293 $3,550 ($4,133) $7,397
SAP to GAAP adjustments (523) (305) 101 (72)
---- ---- --- ---
Indemnity underwriting
income (loss) before
tax (GAAP basis) $1,770 $3,245 ($4,032) $7,325
====== ====== ======= ======
--------------------------
Property & Casualty Group (SAP basis)
Net basis
---------
Loss and LAE ratio 65.2% 63.8% 74.7% 64.7%
Underwriting ratio 28.0 27.4 28.0 27.3
Policyholder dividends
ratio 0.0 0.0 0.0 0.1
--- --- --- ---
Statutory combined ratio 93.2 91.2 102.7 92.1
---- ---- ----- ----
Adjusted combined ratio,
excluding profit
component 88.2 87.0 98.2 88.0
Direct business
---------------
Loss ratio points from
prior accident year reserve
development - (redundancy)
deficiency (0.3) (3.9) 1.9 (4.6)
Loss ratio points from
prior accident years from
salvage and subrogation
recoveries collected (1.6) (1.6) (2.4) (2.4)
---- ---- ---- ----
Total loss ratio points
from prior accident
years (1.9) (5.5) (0.5) (7.0)
---- ---- ---- ----
Loss ratio points from
catastrophes 1.5 2.9 4.6 2.3
Erie Indemnity Company
GAAP combined ratio 96.6 93.7 103.9 92.9
GAAP loss ratio points
from catastrophes 1.6 3.0 4.6 2.3
------------------------- --- --- --- ---
SAP basis represents statutory accounting principles as codified by the
National Association of Insurance Commissioners (NAIC).
Selected financial data of Erie Insurance Exchange:
---------------------------------------------------
The selected financial data below is derived from the Erie Insurance
Exchange's financial statements prepared in accordance with Statutory
Accounting Principles. In our opinion, 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.
(dollars in thousands) Three months ended Six months ended
Statutory accounting basis June 30, June 30,
2009 2008 2009 2008
---- ---- ---- ----
(unaudited) (unaudited)
Premiums earned $913,464 $905,050 $1,797,715 $1,792,542
Losses, loss
adjustment expenses
and underwriting
expenses 874,063 844,022 1,868,722 1,665,440
Net underwriting
income (loss) 39,401 61,028 (71,007) 127,102
Total investment
income (loss) 283 (54,492) (191,408) (24,263)
--- ------- -------- -------
Income (loss)
before income taxes 39,684 6,536 (262,415) 102,839
Federal income tax
expense (benefit) 5,656 52,564 (47,564) 113,364
----- ------ ------- -------
Net income (loss) $34,028 ($46,028) ($214,851) ($10,525)
======= ======== ========= ========
(dollars in thousands)
Statutory accounting As of As of
basis June 30, December 31,
2009 2008
---- ----
(unaudited)
Cash and invested
assets $7,785,784 $7,595,727
Other assets 1,388,664 1,552,902
--------- ---------
Total assets $9,174,448 $9,148,629
========== ==========
Loss, loss adjustment expense
and unearned
premium reserves $4,917,441 $4,768,240
Other liabilities 341,763 334,399
------- -------
Total liabilities 5,259,204 5,102,639
--------- ---------
Policyholders'
surplus 3,915,244 4,045,990
--------- ---------
Total liabilities
and policyholders'
surplus $9,174,448 $9,148,629
========== ==========
Management fee revenue by major lines of business - Segment basis:
------------------------------------------------------------------
Three months ended Six months ended
(dollars in June 30, % June 30, %
thousands) 2009 2008 Change 2009 2008 Change
---- ---- ------ ---- ---- ------
Private passenger
auto $122,966 $120,804 1.8% $233,337 $230,054 1.4%
Homeowners 55,304 51,756 6.9 94,986 89,540 6.1
Commercial
multi-peril 30,005 29,950 0.2 59,022 58,694 0.6
Commercial
auto 21,003 21,638 -2.9 40,753 42,355 -3.8
Workers
compensation 17,138 19,490 -12.1 36,047 40,704 -11.4
All other
lines
of business 14,655 13,871 5.7 27,196 25,761 5.6
------ ------ --- ------ ------ ---
261,071 257,509 1.4 491,341 487,108 0.9
Change in
allowance for
management fee
returned on
cancelled
policies (1,300) (1,700) (1,800) (1,700)
------ ------ ------ ------
Management
fee revenue,
net of
allowance $259,771 $255,809 1.5% $489,541 $485,408 0.9%
======== ======== === ======== ======== ===
Management
fee rate 25.00% 25.00% 25.00% 25.00%
===== ===== ===== =====
Growth rates of policies in force for Property and Casualty Group
insurance operations by major lines of business:
-----------------------------------------------------------------
Private 12-mth. 12-mth.
Passenger growth growth
Date Auto rate Homeowners rate
---- ---- ---- ---------- ----
06/30/2007 1,644,561 0.4% 1,398,034 2.3%
09/30/2007 1,649,801 0.8 1,408,114 2.5
12/31/2007 1,651,234 1.1 1,413,712 2.6
03/31/2008 1,655,869 1.2 1,420,250 2.6
06/30/2008 1,667,446 1.4 1,433,504 2.5
09/30/2008 1,677,151 1.7 1,446,779 2.7
12/31/2008 1,683,526 2.0 1,454,797 2.9
03/31/2009 1,694,583 2.3 1,466,227 3.2
06/30/2009 1,709,580 2.5 1,483,763 3.5
12-mth. Total 12-mth.
All Other growth Personal growth
Date Personal Lines rate Lines rate
---- -------------- ---- ----- ----
06/30/2007 311,761 5.9% 3,354,356 1.7%
09/30/2007 316,786 6.2 3,374,701 2.0
12/31/2007 321,431 6.6 3,386,377 2.2
03/31/2008 325,926 6.7 3,402,045 2.3
06/30/2008 332,922 6.8 3,433,872 2.4
09/30/2008 340,566 7.5 3,464,496 2.7
12/31/2008 346,953 7.9 3,485,276 2.9
03/31/2009 353,470 8.5 3,514,280 3.3
06/30/2009 362,582 8.9 3,555,925 3.6
12-mth. 12-mth.
growth CML* growth
Date CML* Auto rate Multi-Peril rate
---- --------- ---- ----------- ----
06/30/2007 121,587 1.8% 223,670 3.0%
09/30/2007 122,154 2.2 226,302 3.9
12/31/2007 122,558 2.3 228,214 4.4
03/31/2008 122,882 2.5 229,577 4.7
06/30/2008 123,955 1.9 234,393 4.8
09/30/2008 124,418 1.9 236,994 4.7
12/31/2008 124,205 1.3 237,228 3.9
03/31/2009 123,747 0.7 236,804 3.1
06/30/2009 124,917 0.8 240,970 2.8
12-mth. 12-mth.
Workers growth All Other growth
Date Comp. rate CML* Lines rate
---- ----- ---- ---------- ----
06/30/2007 53,955 (1.7)% 94,612 3.3%
09/30/2007 54,341 (0.1) 96,167 3.8
12/31/2007 54,720 1.5 96,464 4.1
03/31/2008 54,927 2.7 96,511 3.9
06/30/2008 55,801 3.4 97,745 3.3
09/30/2008 56,381 3.8 98,786 2.7
12/31/2008 56,704 3.6 98,796 2.4
03/31/2009 56,661 3.2 98,622 2.2
06/30/2009 57,549 3.1 99,973 2.3
Total 12-mth.
CML* growth
Date Lines rate
---- ----- ----
06/30/2007 493,824 2.2%
09/30/2007 498,964 3.0
12/31/2007 501,956 3.5
03/31/2008 503,897 3.8
06/30/2008 511,894 3.7
09/30/2008 516,579 3.5
12/31/2008 516,933 3.0
03/31/2009 515,834 2.4
06/30/2009 523,409 2.2
12-mth.
Total growth
Date All Lines rate
---- --------- ----
06/30/2007 3,848,180 1.8%
09/30/2007 3,873,665 2.1
12/31/2007 3,888,333 2.4
03/31/2008 3,905,942 2.5
06/30/2008 3,945,766 2.5
09/30/2008 3,981,075 2.8
12/31/2008 4,002,209 2.9
03/31/2009 4,030,114 3.2
06/30/2009 4,079,334 3.4
CML* = Commercial
Policy retention trends for Property and Casualty Group insurance
operations by major lines of business:
-----------------------------------------------------------------
Private CML* All Total
Passenger CML* Home- Multi- Workers Other All
Date Auto Auto owners Peril Comp. Lines Lines
---- ---- ----- ------ ------ ----- ----- -----
06/30/2007 91.1% 88.1% 89.9% 86.0% 86.3% 87.6% 89.9%
09/30/2007 91.3 88.2 90.1 86.1 86.8 87.5 90.0
12/31/2007 91.5 88.2 90.3 86.0 86.8 87.8 90.2
03/31/2008 91.6 88.4 90.5 86.5 87.6 87.9 90.4
06/30/2008 91.6 87.9 90.7 86.2 87.5 88.1 90.4
09/30/2008 91.7 87.8 91.0 86.0 87.2 88.2 90.5
12/31/2008 91.8 87.6 91.1 85.6 86.6 88.5 90.6
03/31/2009 91.9 87.5 91.4 85.7 86.3 88.8 90.8
06/30/2009 91.9 87.3 91.6 85.2 85.7 89.1 90.8
CML* = Commercial
Average premium per policy trends for Property and Casualty Group
insurance operations by major lines of business:
-----------------------------------------------------------------
Private 12-mth. 12-mth.
Passenger percent Home- percent
Date Auto change owners change
---- ---- ------ ------ ------
06/30/2007 $1,094 (4.0)% $520 (2.8)%
09/30/2007 1,093 (2.6) 519 (2.1)
12/31/2007 1,092 (1.6) 518 (1.5)
03/31/2008 1,091 (0.8) 518 (1.1)
06/30/2008 1,088 (0.5) 514 (1.2)
09/30/2008 1,086 (0.6) 511 (1.5)
12/31/2008 1,085 (0.6) 511 (1.4)
03/31/2009 1,081 (0.9) 512 (1.2)
06/30/2009 1,076 (1.1) 516 0.4
All Other 12-mth. Total 12-mth.
Personal percent Personal percent
Date Lines change Lines change
---- ----- ------ ----- ------
06/30/2007 $351 0.9% $786 (3.9)%
09/30/2007 352 1.1 783 (2.9)
12/31/2007 353 1.1 782 (1.9)
03/31/2008 354 1.4 781 (1.3)
06/30/2008 353 0.6 777 (1.1)
09/30/2008 354 0.6 774 (1.1)
12/31/2008 356 0.8 773 (1.2)
03/31/2009 358 1.1 771 (1.3)
06/30/2009 359 1.7 769 (1.0)
12-mth. 12-mth.
percent Workers percent
Date CML* Auto change Comp. change
---- --------- ------ ----- ------
06/30/2007 $2,627 (3.8)% $5,901 (3.9)%
09/30/2007 2,600 (3.9) 5,780 (4.4)
12/31/2007 2,577 (4.1) 5,602 (6.4)
03/31/2008 2,568 (3.6) 5,453 (7.8)
06/30/2008 2,530 (3.7) 5,236 (11.3)
09/30/2008 2,514 (3.3) 5,067 (12.3)
12/31/2008 2,505 (2.8) 4,951 (11.6)
03/31/2009 2,483 (3.3) 4,792 (12.1)
06/30/2009 2,439 (3.6) 4,555 (13.0)
All Other 12-mth. Total 12-mth.
CML* percent CML* percent
Date Lines change Lines change
---- ----- ------ ----- ------
06/30/2007 $1,616 (3.6)% $2,333 (4.5)%
09/30/2007 1,592 (4.6) 2,295 (5.0)
12/31/2007 1,581 (4.6) 2,262 (5.5)
03/31/2008 1,576 (4.0) 2,240 (5.3)
06/30/2008 1,546 (4.3) 2,187 (6.3)
09/30/2008 1,536 (3.5) 2,157 (6.0)
12/31/2008 1,533 (3.0) 2,141 (5.3)
03/31/2009 1,537 (2.5) 2,122 (5.3)
06/30/2009 1,511 (2.3) 2,067 (5.5)
12-mth.
Total percent
Date All Lines change
---- --------- ------
06/30/2007 $984 (4.1)%
09/30/2007 978 (3.3)
12/31/2007 973 (2.8)
03/31/2008 969 (2.2)
06/30/2008 960 (2.4)
09/30/2008 953 (2.6)
12/31/2008 949 (2.5)
03/31/2009 944 (2.6)
06/30/2009 936 (2.5)
CML* = Commercial
Property & Casualty Group Adjusted
Combined Ratio by Major Lines of
Business (SAP Basis) - Direct Business
Three Months ended June 30, 2009
--------------------------------
Prior Year** Current
Reserve Accident
Development Year
Calendar* Deficiency Catastrophe Excluding
Year (Redundancy) Losses Catastrophes
---- ------------ ------ ------------
Private passenger
auto 89.0% 0.7% -1.9% 90.2%
Homeowners 97.9% 1.0% 8.4% 88.5%
Other personal lines 75.6% -4.6% 3.0% 77.2%
Total personal lines 90.8% 0.5% 1.2% 89.1%
Commercial multi-peril 96.1% 4.4% 6.6% 85.1%
Commercial auto 85.7% 2.9% -1.1% 83.9%
Workers compensation 70.3% -18.8% 0.0% 89.1%
Other commercial lines 61.9% -5.9% 0.7% 67.1%
Total commercial
lines 84.5% -2.3% 2.4% 84.4%
Grand total -
direct business only 89.1% -0.3% 1.5% 87.9%
Three Months ended June 30, 2008
--------------------------------
Prior Year** Current
Reserve Accident
Development Year
Calendar* Deficiency Catastrophe Excluding
Year (Redundancy) Losses Catastrophes
---- ------------ ------ ------------
Private passenger
auto 83.6% -2.5% 0.9% 85.2%
Homeowners 88.2% -9.5% 10.3% 87.4%
Other personal lines 98.7% 9.1% 2.9% 86.7%
Total personal
lines 85.5% -4.0% 3.6% 85.9%
Commercial multi-peril 74.1% -17.4% 2.6% 88.9%
Commercial auto 94.4% 4.3% 1.3% 88.8%
Workers compensation 115.6% 6.3% 0.0% 109.3%
Other commercial lines 63.9% 1.3% 0.4% 62.2%
Total commercial
lines 90.1% -3.7% 1.4% 92.4%
Grand total -
direct business only 86.9% -3.9% 2.9% 87.9%
Six Months Ended June 30, 2009
------------------------------
Prior Year** Current
Reserve Accident
Development Year
Calendar* Deficiency Catastrophe Excluding
Year (Redundancy) Losses Catastrophes
---- ------------ ------ ------------
Private passenger
auto 95.5% 3.0% 0.8% 91.7%
Homeowners 113.8% 3.2% 16.2% 94.4%
Other personal lines 82.2% -5.5% 5.3% 82.4%
Total personal
lines 99.9% 2.6% 5.3% 92.0%
Commercial multi-peril 112.9% 11.7% 6.1% 95.1%
Commercial auto 75.0% -8.5% 1.8% 81.7%
Workers compensation 88.8% -4.3% 0.0% 93.1%
Other commercial lines 53.5% -17.4% 0.6% 70.3%
Total commercial
lines 92.0% 0.0% 3.0% 89.0%
Grand total -
direct business only 97.7% 1.9% 4.6% 91.2%
Six Months Ended June 30, 2008
------------------------------
Prior Year** Current
Reserve Accident
Development Year
Calendar* Deficiency Catastrophe Excluding
Year (Redundancy) Losses Catastrophes
---- ------------ ------ ------------
Private passenger
auto 84.3% -6.8% 0.6% 90.5%
Homeowners 89.2% -5.4% 8.1% 86.5%
Other personal lines 79.3% -3.8% 3.1% 80.0%
Total personal
lines 85.4% -6.3% 2.8% 88.9%
Commercial multi-peril 91.6% -2.1% 2.4% 91.3%
Commercial auto 78.6% -9.8% 0.7% 87.7%
Workers compensation 103.0% 5.6% 0.0% 97.4%
Other commercial lines 90.4% 23.2% 0.4% 66.8%
Total commercial
lines 90.9% -0.5% 1.2% 90.2%
Grand total -
direct business only 87.1% -4.6% 2.3% 89.4%
* 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.
SOURCE Erie Indemnity Company
http://www.erieinsurance.com
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