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ERIE INDEMNITY COMPANY
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Pennsylvania
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25-0466020
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(State or other jurisdiction
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(I.R.S. Employer
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of incorporation or organization)
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Identification No.)
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100 Erie Insurance Place, Erie, Pennsylvania
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16530
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(Address of principal executive offices)
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(Zip code)
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(814) 870-2000
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Class A common stock, stated value $0.0292 per share, listed on the NASDAQ Stock Market, LLC
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(Title of each class)
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(Name of each exchange on which registered)
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Large Accelerated Filer
X
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Accelerated Filer
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Non-Accelerated Filer
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Smaller Reporting Company
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(Do not check if a smaller reporting company)
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PART
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ITEM NUMBER AND CAPTION
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PAGE
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•
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Interest rate risk
- the risk of adverse changes in the value of fixed income securities as a result of increases in market interest rates. A sustained low interest rate environment would pressure our net investment income.
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•
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Investment credit risk
- the risk that the value of certain investments may decrease due to the deterioration in financial condition of, or the liquidity available to, one or more issuers of those securities or, in the case of asset-backed securities, due to the deterioration of the loans or other assets that underlie the securities, which, in each case, also includes the risk of permanent loss.
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•
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Sector/Concentration risk
- the risk that the portfolio may be too heavily concentrated in the securities of one or more issuers, sectors, or industries. Events or developments that have a negative impact on any particular industry, group of related industries, or geographic region may have a greater adverse effect on our investment portfolio to the extent that the portfolio is concentrated within those issuers, sectors, or industries.
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•
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Liquidity risk
- the risk that we will not be able to convert investment securities into cash on favorable terms and on a timely basis, or that we will not be able to sell them at all, when desired. Disruptions in the financial markets or a lack of buyers for the specific securities that we are trying to sell, could prevent us from liquidating securities or cause a reduction in prices to levels that are not acceptable to us.
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Number of
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Field office ownership:
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field offices
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Erie Indemnity Company
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3
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Erie Insurance Exchange
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3
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Erie Family Life Insurance Company
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1
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Unaffiliated parties
(1)
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18
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25
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2015
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2014
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Stock sales price
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Cash dividend declared
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Stock sales price
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Cash dividend declared
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Quarter ended
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High
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Low
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Class A
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Class B
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High
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Low
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Class A
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Class B
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March 31
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$
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93.01
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$
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84.11
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$
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0.681
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$
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102.15
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$
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74.57
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$
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66.63
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$
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0.635
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$
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95.25
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June 30
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87.15
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80.02
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0.681
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102.15
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76.71
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68.72
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0.635
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95.25
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September 30
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87.82
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79.79
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0.681
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102.15
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78.48
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72.63
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0.635
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95.25
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December 31
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100.56
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81.37
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0.730
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109.50
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93.35
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75.72
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0.681
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102.15
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Total
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$
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2.773
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$
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415.95
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$
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2.586
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$
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387.90
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2010
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2011
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2012
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2013
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2014
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2015
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Erie Indemnity Company Class A common stock
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$
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100
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(1)
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$
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123
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$
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116
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$
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126
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$
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160
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$
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175
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Standard & Poor's 500 Stock Index
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100
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(1)
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102
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118
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156
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177
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180
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Standard & Poor's Supercomposite Insurance Industry Group Index
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100
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(1)
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93
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111
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161
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175
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181
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(1)
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Assumes $100 invested at the close of trading, on the last trading day preceding the first day of the fifth preceding fiscal year, in our Class A common stock, the Standard & Poor’s 500 Stock Index, and the Standard & Poor’s Supercomposite Insurance Industry Group Index.
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(in thousands, except per share data)
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Years Ended December 31,
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2015
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2014
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2013
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2012
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2011
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Operating Data:
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Operating revenue
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$
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1,505,508
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$
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1,407,119
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$
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1,297,331
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$
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1,188,430
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$
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1,099,836
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Operating expenses
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1,272,967
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1,184,272
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1,087,995
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983,420
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892,101
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Investment income
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33,708
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28,417
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37,278
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36,204
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46,999
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Income before income taxes
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266,249
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251,264
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246,614
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241,214
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254,734
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Net income
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174,678
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167,505
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162,611
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160,145
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169,503
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Per Share Data:
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Net income per Class A share – diluted
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$
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3.33
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$
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3.18
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$
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3.08
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$
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2.99
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$
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3.08
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Book value per share – Class A common and equivalent B shares
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14.72
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13.45
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13.96
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12.11
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14.48
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Dividends declared per Class A share
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2.773
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2.586
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2.4125
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4.25
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2.0975
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Dividends declared per Class B share
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415.95
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387.90
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361.875
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637.50
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314.625
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Financial Position Data:
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Investments
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$
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688,476
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$
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702,387
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$
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721,728
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$
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687,525
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$
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808,500
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Receivables from Erie Insurance Exchange and affiliates
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348,055
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335,220
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300,442
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280,787
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254,098
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Total assets
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1,407,296
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1,319,198
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1,213,042
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1,160,153
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1,237,277
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Total equity
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769,503
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703,134
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733,982
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641,870
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781,325
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Page Number
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•
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dependence upon our relationship with the Exchange and the management fee under the agreement with the subscribers at the Exchange;
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costs of providing services to the Exchange under the subscriber’s agreement;
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credit risk from the Exchange;
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dependence upon our relationship with the Exchange and the growth of the Exchange, including:
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◦
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general business and economic conditions;
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◦
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factors affecting insurance industry competition;
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◦
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dependence upon the independent agency system; and
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◦
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ability to maintain our reputation for customer service;
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•
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dependence upon our relationship with the Exchange and the financial condition of the Exchange, including:
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◦
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the Exchange’s ability to maintain acceptable financial strength ratings;
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◦
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factors affecting the quality and liquidity of the Exchange’s investment portfolio;
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◦
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changes in government regulation of the insurance industry;
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◦
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emerging claims and coverage issues in the industry; and
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◦
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severe weather conditions or other catastrophic losses, including terrorism;
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•
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ability to attract and retain talented management and employees;
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•
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ability to maintain uninterrupted business operations;
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•
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factors affecting the quality and liquidity of our investment portfolio;
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•
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our ability to meet liquidity needs and access capital; and
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•
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outcome of pending and potential litigation.
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Years ended December 31,
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(dollars in thousands, except per share data)
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2015
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%
Change
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2014
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%
Change
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2013
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Total operating revenue
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$
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1,505,508
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7.0
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%
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$
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1,407,119
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8.5
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%
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$
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1,297,331
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Total operating expenses
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1,272,967
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7.5
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1,184,272
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8.8
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1,087,995
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Net revenue from operations
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232,541
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4.3
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222,847
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6.5
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209,336
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Total investment income
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33,708
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18.6
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28,417
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(23.8
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)
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37,278
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Income before income taxes
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266,249
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6.0
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251,264
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1.9
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246,614
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Income tax expense
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91,571
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9.3
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83,759
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(0.3
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)
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84,003
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Net income
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$
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174,678
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4.3
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%
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$
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167,505
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3.0
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%
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$
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162,611
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Net income per share - diluted
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$
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3.33
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4.5
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%
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$
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3.18
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3.5
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%
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$
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3.08
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•
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An active market is one in which transactions for the assets being valued occur with sufficient frequency and volume to provide reliable pricing information.
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An inactive (illiquid) market is one in which there are few and infrequent transactions, where the prices are not current, price quotations vary substantially, and/or there is little information publicly available for the asset being valued.
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Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date.
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Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
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Level 3 – Unobservable inputs for the asset or liability.
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the extent and duration for which fair value is less than cost;
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•
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historical operating performance and financial condition of the issuer;
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short- and long-term prospects of the issuer and its industry based upon analysts’ recommendations;
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•
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specific events that occurred affecting the issuer, including rating downgrades;
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•
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intent to sell or more likely than not we would be required to sell (debt securities); and
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•
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ability and intent to retain the investment for a period of time sufficient to allow for a recovery in value (equity securities).
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Years ended December 31,
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(dollars in thousands)
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2015
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%
Change
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2014
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%
Change
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2013
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Direct and assumed premiums written by the Exchange
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$
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5,914,045
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7.3
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%
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$
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5,513,962
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8.6
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%
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$
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5,076,003
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Management fee rate
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25
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%
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25
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%
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25
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%
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Management fee revenue, gross
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1,478,511
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7.3
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1,378,490
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8.6
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1,269,001
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Change in allowance for management fee returned on cancelled policies
(1)
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(3,000
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)
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NM
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(2,300
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)
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NM
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(2,600
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)
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Management fee revenue, net of allowance
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$
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1,475,511
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7.2
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%
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$
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1,376,190
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8.7
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%
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$
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1,266,401
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Years ended December 31,
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(dollars in thousands)
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2015
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%
Change
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2014
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%
Change
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2013
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||||||||
Commissions:
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Total commissions
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$
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847,880
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8.3
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%
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$
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783,017
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10.3
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%
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$
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710,058
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Non-commission expense:
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Underwriting and policy processing
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$
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134,837
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6.4
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$
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126,779
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5.8
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|
$
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119,777
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Information technology
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123,362
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|
|
1.9
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|
|
121,094
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|
|
12.5
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|
|
107,605
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Sales and advertising
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64,403
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|
|
6.7
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|
|
60,334
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|
|
2.1
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|
|
59,079
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|
|||
Customer service
|
|
29,325
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|
|
10.6
|
|
|
26,522
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|
|
18.4
|
|
|
22,397
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|
|||
Administrative and other
|
|
73,160
|
|
|
10.0
|
|
|
66,526
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|
|
(3.7
|
)
|
|
69,079
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|
|||
Total non-commission expense
|
|
425,087
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|
|
5.9
|
|
|
401,255
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|
|
6.2
|
|
|
377,937
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|
|||
Total cost of management operations
|
|
$
|
1,272,967
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|
|
7.5
|
%
|
|
$
|
1,184,272
|
|
|
8.8
|
%
|
|
$
|
1,087,995
|
|
(dollars in thousands)
|
|
2015
|
|
%
Change
|
|
2014
|
|
%
Change
|
|
2013
|
||||||||
Net investment income
|
|
$
|
17,791
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|
|
7.6
|
%
|
|
$
|
16,536
|
|
|
10.0
|
%
|
|
$
|
15,027
|
|
Net realized investment gains
|
|
492
|
|
|
(53.4
|
)
|
|
1,057
|
|
|
11.8
|
|
|
945
|
|
|||
Net impairment losses recognized in earnings
|
|
(1,558
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)
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|
NM
|
|
|
(105
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)
|
|
NM
|
|
|
(388
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)
|
|||
Equity in earnings of limited partnerships
|
|
16,983
|
|
|
55.4
|
|
|
10,929
|
|
|
(49.6
|
)
|
|
21,694
|
|
|||
Total investment income
|
|
$
|
33,708
|
|
|
18.6
|
%
|
|
$
|
28,417
|
|
|
(23.8
|
)%
|
|
$
|
37,278
|
|
(in thousands)
|
|
2015
|
|
2014
|
|
2013
|
||||||
Securities sold:
|
|
|
|
|
|
|
||||||
Fixed maturities
|
|
$
|
(193
|
)
|
|
$
|
120
|
|
|
$
|
847
|
|
Equity securities
|
|
685
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|
|
937
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|
|
98
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|
|||
Total net realized gains
(1)
|
|
$
|
492
|
|
|
$
|
1,057
|
|
|
$
|
945
|
|
(1)
|
See Part II, Item 8. "Financial Statements and Supplementary Data – Note 5, Investments, of Notes to Financial Statements" contained within this report for additional disclosures regarding net realized investment gains (losses).
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(in thousands)
|
|
2015
|
|
2014
|
|
2013
|
||||||
Private equity
|
|
$
|
12,169
|
|
|
$
|
4,060
|
|
|
$
|
6,377
|
|
Mezzanine debt
|
|
1,788
|
|
|
1,882
|
|
|
2,761
|
|
|||
Real estate
|
|
3,026
|
|
|
4,987
|
|
|
12,556
|
|
|||
Total equity in earnings of limited partnerships
|
|
$
|
16,983
|
|
|
$
|
10,929
|
|
|
$
|
21,694
|
|
|
|
Carrying value at December 31,
|
||||||||||||
(dollars in thousands)
|
|
2015
|
|
% to
total
|
|
2014
|
|
% to
total
|
||||||
Fixed maturities
|
|
$
|
587,209
|
|
|
85
|
%
|
|
$
|
564,540
|
|
|
80
|
%
|
Equity securities:
|
|
|
|
|
|
|
|
|
||||||
Preferred stock
|
|
0
|
|
|
0
|
|
|
12,541
|
|
|
2
|
|
||
Common stock
|
|
12,732
|
|
|
2
|
|
|
12,689
|
|
|
2
|
|
||
Limited partnerships:
|
|
|
|
|
|
|
|
|
||||||
Private equity
|
|
48,397
|
|
|
7
|
|
|
51,379
|
|
|
7
|
|
||
Mezzanine debt
|
|
12,701
|
|
|
2
|
|
|
13,978
|
|
|
2
|
|
||
Real estate
|
|
27,437
|
|
|
4
|
|
|
47,260
|
|
|
7
|
|
||
Real estate mortgage loans
|
|
333
|
|
|
0
|
|
|
490
|
|
|
0
|
|
||
Total investments
|
|
$
|
688,809
|
|
|
100
|
%
|
|
$
|
702,877
|
|
|
100
|
%
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
Non-investment
|
|
Fair
|
||||||||||||
Industry Sector
|
|
AAA
|
|
AA
|
|
A
|
|
BBB
|
|
grade
|
|
value
|
||||||||||||
Indemnity
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic materials
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
1,965
|
|
|
$
|
3,016
|
|
|
$
|
2,901
|
|
|
$
|
7,882
|
|
Communications
|
|
0
|
|
|
0
|
|
|
2,008
|
|
|
18,584
|
|
|
12,473
|
|
|
33,065
|
|
||||||
Consumer
|
|
0
|
|
|
0
|
|
|
7,126
|
|
|
22,638
|
|
|
36,139
|
|
|
65,903
|
|
||||||
Diversified
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
235
|
|
|
235
|
|
||||||
Energy
|
|
0
|
|
|
0
|
|
|
3,565
|
|
|
7,739
|
|
|
3,657
|
|
|
14,961
|
|
||||||
Financial
|
|
0
|
|
|
2,102
|
|
|
27,599
|
|
|
46,801
|
|
|
12,297
|
|
|
88,799
|
|
||||||
Government-municipal
|
|
112,329
|
|
|
102,046
|
|
|
16,430
|
|
|
1,042
|
|
|
0
|
|
|
231,847
|
|
||||||
Industrial
|
|
0
|
|
|
0
|
|
|
617
|
|
|
5,130
|
|
|
10,785
|
|
|
16,532
|
|
||||||
Structured securities
(2)
|
|
32,366
|
|
|
35,961
|
|
|
18,021
|
|
|
16,191
|
|
|
2,490
|
|
|
105,029
|
|
||||||
Technology
|
|
0
|
|
|
0
|
|
|
2,305
|
|
|
2,298
|
|
|
5,863
|
|
|
10,466
|
|
||||||
Utilities
|
|
0
|
|
|
0
|
|
|
8,169
|
|
|
3,002
|
|
|
1,319
|
|
|
12,490
|
|
||||||
Total
|
|
$
|
144,695
|
|
|
$
|
140,109
|
|
|
$
|
87,805
|
|
|
$
|
126,441
|
|
|
$
|
88,159
|
|
|
$
|
587,209
|
|
(in thousands)
|
|
2015
|
|
2014
|
||||||||||||
Industry sector
|
|
Preferred
stock
|
|
Common
stock
|
|
Preferred
stock
|
|
Common
stock
|
||||||||
Communications
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
1,251
|
|
|
$
|
0
|
|
Financial
|
|
0
|
|
|
0
|
|
|
6,964
|
|
|
0
|
|
||||
Funds
(1)
|
|
0
|
|
|
12,732
|
|
|
0
|
|
|
12,689
|
|
||||
Utilities
|
|
0
|
|
|
0
|
|
|
4,326
|
|
|
0
|
|
||||
Total
|
|
$
|
0
|
|
|
$
|
12,732
|
|
|
$
|
12,541
|
|
|
$
|
12,689
|
|
|
|
|
(in thousands)
|
|
2015
|
|
2014
|
|
2013
|
||||||
Net cash provided by operating activities
|
|
$
|
217,378
|
|
|
$
|
186,013
|
|
|
$
|
218,008
|
|
Net cash provided by (used in) investing activities
|
|
622
|
|
|
(5,097
|
)
|
|
(65,232
|
)
|
|||
Net cash used in financing activities
|
|
(126,858
|
)
|
|
(138,218
|
)
|
|
(115,339
|
)
|
|||
Net increase in cash
|
|
$
|
91,142
|
|
|
$
|
42,698
|
|
|
$
|
37,437
|
|
(
in thousands)
|
|
Payments due by period
|
||||||||||||||||||
|
|
Total
|
|
2016
|
|
2017-2018
|
|
2019-2020
|
|
2021 and thereafter
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Limited partnership commitments
(1)
|
|
$
|
19,108
|
|
|
$
|
19,108
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Pension contribution
(2)
|
|
17,357
|
|
|
17,357
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||
Other commitments
(3)
|
|
52,353
|
|
|
28,333
|
|
|
21,306
|
|
|
2,714
|
|
|
0
|
|
|||||
Operating leases – vehicles
|
|
17,243
|
|
|
5,163
|
|
|
8,983
|
|
|
3,097
|
|
|
0
|
|
|||||
Operating leases – real estate
(4)
|
|
7,710
|
|
|
2,607
|
|
|
3,488
|
|
|
1,463
|
|
|
152
|
|
|||||
Operating leases – computer equipment
|
|
2,307
|
|
|
1,587
|
|
|
720
|
|
|
0
|
|
|
0
|
|
|||||
Gross contractual obligations
|
|
116,078
|
|
|
74,155
|
|
|
34,497
|
|
|
7,274
|
|
|
152
|
|
|||||
Estimated reimbursements from affiliates
|
|
50,712
|
|
|
22,163
|
|
|
23,202
|
|
|
5,244
|
|
|
103
|
|
|||||
Net contractual obligations
|
|
$
|
65,366
|
|
|
$
|
51,992
|
|
|
$
|
11,295
|
|
|
$
|
2,030
|
|
|
$
|
49
|
|
(1)
|
Limited partnership commitments will be funded as required for capital contributions at any time prior to the agreement expiration date. The commitment amounts are presented using the expiration date as the factor by which to age when the amounts are due. At
December 31, 2015
, our total commitment to fund limited partnerships that invest in private equity securities was
$7.3 million
, mezzanine debt was
$8.2 million
, and real estate activities was
$3.6 million
.
|
(2)
|
The pension contribution for
2016
was estimated in accordance with the Pension Protection Act of 2006. Contributions anticipated in future years depend upon certain factors that cannot be reasonably predicted. Any contributions required in future years will be an amount equal to the greater of the target normal cost for the plan year or the amount necessary to fund the plan to 100% plus interest to the date the contribution is made. The obligations for our unfunded benefit plans, including the Supplemental Employee Retirement Plan (SERP) for our executive and senior management, are not included in gross contractual obligations. The recorded accumulated benefit obligation for this plan at
December 31, 2015
is
$10.5 million
. We expect to have sufficient cash flows from operations to meet the future benefit payments as these become due.
|
(3)
|
Other commitments include various agreements for services, including such things as computer software, telephones, copiers, and maintenance.
|
(4)
|
Operating leases – real estate are for
18
of our
25
field offices and
two
operating leases are for office space and a warehouse facility.
|
(dollars in thousands)
|
|
2015
|
|
Percent of
total assets |
|
2014
|
|
Percent of
total assets |
||||||
Receivables from the Exchange and other affiliates (management fees, costs and reimbursements)
|
|
$
|
348,055
|
|
|
24.7
|
%
|
|
$
|
335,220
|
|
|
25.4
|
%
|
Note receivable from EFL
|
|
25,000
|
|
|
1.8
|
|
|
25,000
|
|
|
1.9
|
|
||
Total intercompany receivables
|
|
$
|
373,055
|
|
|
26.5
|
%
|
|
$
|
360,220
|
|
|
27.3
|
%
|
(dollars in thousands)
|
|
At December 31,
|
||||||
|
|
2015
|
|
2014
|
||||
Fair value of fixed maturity portfolio
|
|
$
|
587,209
|
|
|
$
|
564,540
|
|
Fair value assuming 100-basis point rise in interest rates
|
|
$
|
571,167
|
|
|
$
|
552,230
|
|
Effective duration (as a percentage)
|
|
2.5
|
|
|
2.6
|
|
|
|
|
||
(in thousands)
|
|
|
||
Fixed maturities:
|
|
December 31, 2014
|
||
2015
|
|
$
|
62,563
|
|
2016
|
|
110,845
|
|
|
2017
|
|
62,239
|
|
|
2018
|
|
28,617
|
|
|
2019
|
|
32,721
|
|
|
Thereafter
|
|
233,100
|
|
|
Total
(1)
|
|
$
|
530,085
|
|
Fair value
|
|
$
|
564,540
|
|
(dollars in thousands)
|
|
Amortized cost
|
|
Fair value
|
|
Percent of total
|
|||||
AAA, AA, A
|
|
$
|
363,088
|
|
|
$
|
372,609
|
|
|
63
|
%
|
BBB
|
|
127,489
|
|
|
126,441
|
|
|
22
|
|
||
Total investment grade
|
|
490,577
|
|
|
499,050
|
|
|
85
|
|
||
BB
|
|
35,145
|
|
|
34,765
|
|
|
6
|
|
||
B
|
|
43,350
|
|
|
42,311
|
|
|
7
|
|
||
CCC, CC, C, and below
|
|
12,900
|
|
|
11,083
|
|
|
2
|
|
||
Total non-investment grade
|
|
91,395
|
|
|
88,159
|
|
|
15
|
|
||
Total
|
|
$
|
581,972
|
|
|
$
|
587,209
|
|
|
100
|
%
|
|
|
2015
|
|
2014
|
|
2013
|
||||||
Operating revenue
|
|
|
|
|
|
|
||||||
Management fee revenue, net
|
|
$
|
1,475,511
|
|
|
$
|
1,376,190
|
|
|
$
|
1,266,401
|
|
Service agreement revenue
|
|
29,997
|
|
|
30,929
|
|
|
30,930
|
|
|||
Total operating revenue
|
|
1,505,508
|
|
|
1,407,119
|
|
|
1,297,331
|
|
|||
|
|
|
|
|
|
|
||||||
Operating expenses
|
|
|
|
|
|
|
||||||
Commissions
|
|
847,880
|
|
|
783,017
|
|
|
710,058
|
|
|||
Salaries and employee benefits
|
|
226,713
|
|
|
206,690
|
|
|
207,559
|
|
|||
All other operating expenses
|
|
198,374
|
|
|
194,565
|
|
|
170,378
|
|
|||
Total operating expenses
|
|
1,272,967
|
|
|
1,184,272
|
|
|
1,087,995
|
|
|||
Net revenue from operations
|
|
232,541
|
|
|
222,847
|
|
|
209,336
|
|
|||
|
|
|
|
|
|
|
||||||
Investment income
|
|
|
|
|
|
|
||||||
Net investment income
|
|
17,791
|
|
|
16,536
|
|
|
15,027
|
|
|||
Net realized investment gains
|
|
492
|
|
|
1,057
|
|
|
945
|
|
|||
Net impairment losses recognized in earnings
|
|
(1,558
|
)
|
|
(105
|
)
|
|
(388
|
)
|
|||
Equity in earnings of limited partnerships
|
|
16,983
|
|
|
10,929
|
|
|
21,694
|
|
|||
Total investment income
|
|
33,708
|
|
|
28,417
|
|
|
37,278
|
|
|||
Income before income taxes
|
|
266,249
|
|
|
251,264
|
|
|
246,614
|
|
|||
Income tax expense
|
|
91,571
|
|
|
83,759
|
|
|
84,003
|
|
|||
Net income
|
|
$
|
174,678
|
|
|
$
|
167,505
|
|
|
$
|
162,611
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
Earnings Per Share
|
|
|
|
|
|
|
||||||
Net income per share
|
|
|
|
|
|
|
||||||
Class A common stock – basic
|
|
$
|
3.75
|
|
|
$
|
3.59
|
|
|
$
|
3.46
|
|
Class A common stock – diluted
|
|
$
|
3.33
|
|
|
$
|
3.18
|
|
|
$
|
3.08
|
|
Class B common stock – basic
|
|
$
|
563
|
|
|
$
|
539
|
|
|
$
|
520
|
|
Class B common stock – diluted
|
|
$
|
562
|
|
|
$
|
538
|
|
|
$
|
519
|
|
|
|
|
|
|
|
|
||||||
Weighted average shares outstanding – Basic
|
|
|
|
|
|
|
||||||
Class A common stock
|
|
46,186,671
|
|
|
46,247,876
|
|
|
46,660,651
|
|
|||
Class B common stock
|
|
2,542
|
|
|
2,542
|
|
|
2,542
|
|
|||
|
|
|
|
|
|
|
||||||
Weighted average shares outstanding – Diluted
|
|
|
|
|
|
|
||||||
Class A common stock
|
|
52,498,811
|
|
|
52,616,234
|
|
|
52,855,757
|
|
|||
Class B common stock
|
|
2,542
|
|
|
2,542
|
|
|
2,542
|
|
|
|
2015
|
|
2014
|
|
2013
|
||||||
Net income
|
|
$
|
174,678
|
|
|
$
|
167,505
|
|
|
$
|
162,611
|
|
|
|
|
|
|
|
|
||||||
Other comprehensive (loss) income, net of tax
|
|
|
|
|
|
|
|
|
|
|||
Change in unrealized holding (losses) gains on available-for-sale securities
|
|
(4,280
|
)
|
|
823
|
|
|
(7,341
|
)
|
|||
Pension and other postretirement plans
|
|
25,117
|
|
|
(59,425
|
)
|
|
81,433
|
|
|||
Total other comprehensive income (loss), net of tax
|
|
20,837
|
|
|
(58,602
|
)
|
|
74,092
|
|
|||
Comprehensive income
|
|
$
|
195,515
|
|
|
$
|
108,903
|
|
|
$
|
236,703
|
|
|
|
2015
|
|
2014
|
||||
Assets
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
182,889
|
|
|
$
|
91,747
|
|
Available-for-sale securities
|
|
62,067
|
|
|
63,278
|
|
||
Receivables from Erie Insurance Exchange and affiliates
|
|
348,055
|
|
|
335,220
|
|
||
Prepaid expenses and other current assets
|
|
24,697
|
|
|
26,020
|
|
||
Federal income taxes recoverable
|
|
11,947
|
|
|
11,448
|
|
||
Accrued investment income
|
|
5,491
|
|
|
5,538
|
|
||
Total current assets
|
|
635,146
|
|
|
533,251
|
|
||
|
|
|
|
|
||||
Available-for-sale securities
|
|
537,874
|
|
|
526,492
|
|
||
Limited partnership investments
|
|
88,535
|
|
|
112,617
|
|
||
Fixed assets, net
|
|
59,087
|
|
|
62,991
|
|
||
Deferred income taxes, net
|
|
40,686
|
|
|
37,321
|
|
||
Note receivable from Erie Family Life Insurance Company
|
|
25,000
|
|
|
25,000
|
|
||
Other assets
|
|
20,968
|
|
|
21,526
|
|
||
Total assets
|
|
$
|
1,407,296
|
|
|
$
|
1,319,198
|
|
|
|
|
|
|
||||
Liabilities and shareholders' equity
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Commissions payable
|
|
$
|
195,542
|
|
|
$
|
189,918
|
|
Agent bonuses
|
|
106,752
|
|
|
88,228
|
|
||
Accrued expenses and other current liabilities
|
|
42,006
|
|
|
39,560
|
|
||
Accounts payable
|
|
46,526
|
|
|
35,844
|
|
||
Dividends payable
|
|
33,996
|
|
|
31,714
|
|
||
Deferred executive compensation
|
|
20,877
|
|
|
14,891
|
|
||
Total current liabilities
|
|
445,699
|
|
|
400,155
|
|
||
|
|
|
|
|
||||
Defined benefit pension plans
|
|
172,700
|
|
|
188,820
|
|
||
Employee benefit obligations
|
|
1,234
|
|
|
1,889
|
|
||
Deferred executive compensation
|
|
16,580
|
|
|
24,087
|
|
||
Other long-term liabilities
|
|
1,580
|
|
|
1,113
|
|
||
Total liabilities
|
|
637,793
|
|
|
616,064
|
|
||
|
|
|
|
|
||||
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
|
|
16,311
|
|
|
16,317
|
|
||
Accumulated other comprehensive loss
|
|
(96,864
|
)
|
|
(117,701
|
)
|
||
Retained earnings
|
|
1,993,976
|
|
|
1,948,438
|
|
||
Total contributed capital and retained earnings
|
|
1,915,593
|
|
|
1,849,224
|
|
||
Treasury stock, at cost; 22,110,132 shares held
|
|
(1,155,108
|
)
|
|
(1,146,090
|
)
|
||
Deferred compensation
|
|
9,018
|
|
|
—
|
|
||
Total shareholders’ equity
|
|
769,503
|
|
|
703,134
|
|
||
Total liabilities and shareholders’ equity
|
|
$
|
1,407,296
|
|
|
$
|
1,319,198
|
|
|
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, 2012
|
$
|
1,992
|
|
$
|
178
|
|
$
|
16,346
|
|
$
|
(133,191
|
)
|
$
|
1,852,180
|
|
$
|
(1,095,635
|
)
|
$
|
—
|
|
$
|
641,870
|
|
Net income
|
|
|
|
|
162,611
|
|
|
|
162,611
|
|
||||||||||||||
Other comprehensive income
|
|
|
|
74,092
|
|
|
|
|
74,092
|
|
||||||||||||||
Dividends declared:
|
|
|
|
|
|
|
|
|
||||||||||||||||
Class A $2.4125 per share
|
|
|
|
|
(112,443
|
)
|
|
|
(112,443
|
)
|
||||||||||||||
Class B $361.875 per share
|
|
|
|
|
(920
|
)
|
|
|
(920
|
)
|
||||||||||||||
Net purchase of treasury stock
|
|
|
19
|
|
|
|
(31,248
|
)
|
|
(31,229
|
)
|
|||||||||||||
Balance, December 31, 2013
|
$
|
1,992
|
|
$
|
178
|
|
$
|
16,365
|
|
$
|
(59,099
|
)
|
$
|
1,901,428
|
|
$
|
(1,126,883
|
)
|
$
|
—
|
|
$
|
733,981
|
|
Net income
|
|
|
|
|
167,505
|
|
|
|
167,505
|
|
||||||||||||||
Other comprehensive loss
|
|
|
|
(58,602
|
)
|
|
|
|
(58,602
|
)
|
||||||||||||||
Dividends declared:
|
|
|
|
|
|
|
|
|
||||||||||||||||
Class A $2.586 per share
|
|
|
|
|
(119,509
|
)
|
|
|
(119,509
|
)
|
||||||||||||||
Class B $387.90 per share
|
|
|
|
|
(986
|
)
|
|
|
(986
|
)
|
||||||||||||||
Net purchase of treasury stock
|
|
|
(48
|
)
|
|
|
(19,207
|
)
|
|
(19,255
|
)
|
|||||||||||||
Balance, December 31, 2014
|
$
|
1,992
|
|
$
|
178
|
|
$
|
16,317
|
|
$
|
(117,701
|
)
|
$
|
1,948,438
|
|
$
|
(1,146,090
|
)
|
$
|
—
|
|
$
|
703,134
|
|
Net income
|
|
|
|
|
174,678
|
|
|
|
174,678
|
|
||||||||||||||
Other comprehensive income
|
|
|
|
20,837
|
|
|
|
|
20,837
|
|
||||||||||||||
Dividends declared:
|
|
|
|
|
|
|
|
|
||||||||||||||||
Class A $2.773 per share
|
|
|
|
|
(128,082
|
)
|
|
|
(128,082
|
)
|
||||||||||||||
Class B $415.95 per share
|
|
|
|
|
(1,058
|
)
|
|
|
(1,058
|
)
|
||||||||||||||
Net purchase of treasury stock
(1)
|
|
|
(6
|
)
|
|
|
0
|
|
|
(6
|
)
|
|||||||||||||
Deferred compensation
|
|
|
|
|
|
(9,018
|
)
|
9,018
|
|
0
|
|
|||||||||||||
Balance, December 31, 2015
|
$
|
1,992
|
|
$
|
178
|
|
$
|
16,311
|
|
$
|
(96,864
|
)
|
$
|
1,993,976
|
|
$
|
(1,155,108
|
)
|
$
|
9,018
|
|
$
|
769,503
|
|
|
|
2015
|
|
2014
|
|
2013
|
||||||
Cash flows from operating activities
|
|
|
|
|
|
|
||||||
Management fee received
|
|
$
|
1,454,902
|
|
|
$
|
1,348,885
|
|
|
$
|
1,240,311
|
|
Service agreement fee received
|
|
29,997
|
|
|
30,929
|
|
|
30,930
|
|
|||
Net investment income received
|
|
25,999
|
|
|
22,846
|
|
|
21,517
|
|
|||
Limited partnership distributions
|
|
14,112
|
|
|
15,327
|
|
|
27,050
|
|
|||
Increase (decrease) in reimbursements collected from affiliates
|
|
7,775
|
|
|
(7,472
|
)
|
|
6,435
|
|
|||
Commissions paid to agents
|
|
(725,714
|
)
|
|
(665,154
|
)
|
|
(617,086
|
)
|
|||
Agents bonuses paid
|
|
(96,749
|
)
|
|
(83,436
|
)
|
|
(64,597
|
)
|
|||
Salaries and wages paid
|
|
(155,303
|
)
|
|
(153,459
|
)
|
|
(147,059
|
)
|
|||
Pension contribution and employee benefits paid
|
|
(40,993
|
)
|
|
(48,516
|
)
|
|
(40,844
|
)
|
|||
General operating expenses paid
|
|
(190,301
|
)
|
|
(178,452
|
)
|
|
(152,456
|
)
|
|||
Income taxes paid
|
|
(106,347
|
)
|
|
(95,485
|
)
|
|
(86,193
|
)
|
|||
Net cash provided by operating activities
|
|
217,378
|
|
|
186,013
|
|
|
218,008
|
|
|||
|
|
|
|
|
|
|
||||||
Cash flows from investing activities
|
|
|
|
|
|
|
||||||
Purchase of investments:
|
|
|
|
|
|
|
||||||
Available-for-sale securities
|
|
(228,308
|
)
|
|
(250,789
|
)
|
|
(242,676
|
)
|
|||
Limited partnerships
|
|
(928
|
)
|
|
(1,123
|
)
|
|
(2,907
|
)
|
|||
Proceeds from investments:
|
|
|
|
|
|
|
||||||
Available-for-sale securities
|
|
214,991
|
|
|
236,080
|
|
|
159,524
|
|
|||
Limited partnerships
|
|
26,735
|
|
|
28,613
|
|
|
29,054
|
|
|||
Net purchase of fixed assets
|
|
(12,556
|
)
|
|
(19,473
|
)
|
|
(10,750
|
)
|
|||
Net collections on agent loans
|
|
688
|
|
|
1,595
|
|
|
2,523
|
|
|||
Net cash provided by (used in) investing activities
|
|
622
|
|
|
(5,097
|
)
|
|
(65,232
|
)
|
|||
|
|
|
|
|
|
|
||||||
Cash flows from financing activities
|
|
|
|
|
|
|
||||||
Purchase of treasury stock
|
|
0
|
|
|
(19,692
|
)
|
|
(31,721
|
)
|
|||
Dividends paid to shareholders
|
|
(126,858
|
)
|
|
(118,526
|
)
|
|
(83,618
|
)
|
|||
Net cash used in financing activities
|
|
(126,858
|
)
|
|
(138,218
|
)
|
|
(115,339
|
)
|
|||
|
|
|
|
|
|
|
||||||
Net increase in cash and cash equivalents
|
|
91,142
|
|
|
42,698
|
|
|
37,437
|
|
|||
Cash and cash equivalents, beginning of year
|
|
91,747
|
|
|
49,049
|
|
|
11,612
|
|
|||
Cash and cash equivalents, end of year
|
|
$
|
182,889
|
|
|
$
|
91,747
|
|
|
$
|
49,049
|
|
•
|
Indemnity's management fee revenues are included on the face of the Statements of Operations. The Noncontrolling Interest - Exchange revenues and expenses are no longer included in the Statements of Operations, Statements of Comprehensive Income or Statements of Cash Flows.
|
•
|
The assets and liabilities of the Noncontrolling Interest - Exchange are not included on the Statements of Financial Position. The assets and liabilities of Indemnity are presented on a classified basis, which distinguishes between current and noncurrent on the Statements of Financial Position.
|
•
|
There is
no
cumulative effect to Indemnity's shareholders’ equity. The noncontrolling interest in total equity that represented the amount of the Exchange’s subscribers’ equity was presented separately from Indemnity's shareholders’ equity.
|
•
|
the extent and duration to which fair value is less than cost;
|
•
|
historical operating performance and financial condition of the issuer;
|
•
|
short and long-term prospects of the issuer and its industry based upon analysts’ recommendations;
|
•
|
specific events that occurred affecting the issuer, including a ratings downgrade;
|
•
|
near term liquidity position of the issuer; and
|
•
|
compliance with financial covenants.
|
(dollars in thousands, except per share data)
|
|
|
|
|
|
|
|
For the years ended December 31,
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
2015
|
|
2014
|
|
2013
|
|||||||||||||||||||||||||||
|
|
Allocated net income (numerator)
|
|
Weighted shares (denominator)
|
|
Per- share amount
|
|
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
|
|
$
|
173,248
|
|
|
46,186,671
|
|
|
$
|
3.75
|
|
|
$
|
166,134
|
|
|
46,247,876
|
|
|
$
|
3.59
|
|
|
$
|
161,290
|
|
|
46,660,651
|
|
|
$
|
3.46
|
|
Dilutive effect of stock-based awards
|
|
0
|
|
|
211,340
|
|
|
—
|
|
|
0
|
|
|
267,558
|
|
|
—
|
|
|
0
|
|
|
94,306
|
|
|
—
|
|
||||||
Assumed conversion of Class B shares
|
|
1,430
|
|
|
6,100,800
|
|
|
—
|
|
|
1,371
|
|
|
6,100,800
|
|
|
—
|
|
|
1,321
|
|
|
6,100,800
|
|
|
—
|
|
||||||
Class A – Diluted EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Income available to Class A stockholders on Class A equivalent shares
|
|
$
|
174,678
|
|
|
52,498,811
|
|
|
$
|
3.33
|
|
|
$
|
167,505
|
|
|
52,616,234
|
|
|
$
|
3.18
|
|
|
$
|
162,611
|
|
|
52,855,757
|
|
|
$
|
3.08
|
|
Class B – Basic EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Income available to Class B stockholders
|
|
$
|
1,430
|
|
|
2,542
|
|
|
$
|
563
|
|
|
$
|
1,371
|
|
|
2,542
|
|
|
$
|
539
|
|
|
$
|
1,321
|
|
|
2,542
|
|
|
$
|
520
|
|
Class B – Diluted EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Income available to Class B stockholders
|
|
$
|
1,429
|
|
|
2,542
|
|
|
$
|
562
|
|
|
$
|
1,369
|
|
|
2,542
|
|
|
$
|
538
|
|
|
$
|
1,320
|
|
|
2,542
|
|
|
$
|
519
|
|
•
|
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.
|
|
|
At December 31, 2015
|
||||||||||||||
|
|
Fair value measurements using:
|
||||||||||||||
(in thousands)
|
|
Total
|
|
Quoted prices in
active markets for
identical assets
Level 1
|
|
Observable
inputs
Level 2
|
|
Unobservable
inputs
Level 3
|
||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
||||||||
States & political subdivisions
|
|
$
|
231,847
|
|
|
$
|
0
|
|
|
$
|
231,847
|
|
|
$
|
0
|
|
Corporate debt securities
|
|
250,333
|
|
|
0
|
|
|
250,264
|
|
|
69
|
|
||||
Residential mortgage-backed securities
|
|
13,513
|
|
|
0
|
|
|
13,513
|
|
|
0
|
|
||||
Commercial mortgage-backed securities
|
|
37,571
|
|
|
0
|
|
|
37,571
|
|
|
0
|
|
||||
Collateralized debt obligations
|
|
51,745
|
|
|
0
|
|
|
43,168
|
|
|
8,577
|
|
||||
Other debt securities
|
|
2,200
|
|
|
0
|
|
|
2,200
|
|
|
0
|
|
||||
Total fixed maturities
|
|
587,209
|
|
|
0
|
|
|
578,563
|
|
|
8,646
|
|
||||
Common stock
|
|
12,732
|
|
|
12,732
|
|
|
0
|
|
|
0
|
|
||||
Total available-for-sale securities
|
|
599,941
|
|
|
12,732
|
|
|
578,563
|
|
|
8,646
|
|
||||
Other investments
(1)
|
|
4,526
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total
|
|
$
|
604,467
|
|
|
$
|
12,732
|
|
|
$
|
578,563
|
|
|
$
|
8,646
|
|
|
|
At December 31, 2014
|
||||||||||||||
|
|
Fair value measurements using:
|
||||||||||||||
(in thousands)
|
|
Total
|
|
Quoted prices in
active markets for
identical assets
Level 1
|
|
Observable
inputs
Level 2
|
|
Unobservable
inputs
Level 3
|
||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
||||||||
States & political subdivisions
|
|
$
|
231,134
|
|
|
$
|
0
|
|
|
$
|
231,134
|
|
|
$
|
0
|
|
Corporate debt securities
|
|
234,040
|
|
|
0
|
|
|
234,040
|
|
|
0
|
|
||||
Residential mortgage-backed securities
|
|
8,375
|
|
|
0
|
|
|
8,375
|
|
|
0
|
|
||||
Commercial mortgage-backed securities
|
|
51,255
|
|
|
0
|
|
|
51,255
|
|
|
0
|
|
||||
Collateralized debt obligations
|
|
32,932
|
|
|
0
|
|
|
32,932
|
|
|
0
|
|
||||
Other debt securities
|
|
6,804
|
|
|
0
|
|
|
6,804
|
|
|
0
|
|
||||
Total fixed maturities
|
|
564,540
|
|
|
0
|
|
|
564,540
|
|
|
0
|
|
||||
Nonredeemable preferred stock
|
|
12,541
|
|
|
2,068
|
|
|
10,473
|
|
|
0
|
|
||||
Common stock
|
|
12,689
|
|
|
12,689
|
|
|
0
|
|
|
0
|
|
||||
Total available-for-sale securities
|
|
589,770
|
|
|
14,757
|
|
|
575,013
|
|
|
0
|
|
||||
Other investments
(1)
|
|
7,583
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total
|
|
$
|
597,353
|
|
|
$
|
14,757
|
|
|
$
|
575,013
|
|
|
$
|
0
|
|
(in thousands)
|
|
Beginning balance at December 31, 2014
|
|
Included
in
earnings
(1)
|
|
Included
in other
comprehensive
income
|
|
Purchases
|
|
Sales
|
|
Transfers
in and (out)
of
Level 3
|
|
Ending balance at December 31, 2015
|
||||||||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Corporate debt securities
|
|
$
|
0
|
|
|
$
|
(1
|
)
|
|
$
|
(59
|
)
|
|
$
|
180
|
|
|
$
|
0
|
|
|
$
|
(51
|
)
|
|
$
|
69
|
|
Collateralized debt obligations
|
|
0
|
|
|
3
|
|
|
(7
|
)
|
|
8,581
|
|
|
0
|
|
|
0
|
|
|
8,577
|
|
|||||||
Total fixed maturities
|
|
0
|
|
|
2
|
|
|
(66
|
)
|
|
8,761
|
|
|
0
|
|
|
(51
|
)
|
|
8,646
|
|
|||||||
Total available-for-sale securities
|
|
0
|
|
|
2
|
|
|
(66
|
)
|
|
8,761
|
|
|
0
|
|
|
(51
|
)
|
|
8,646
|
|
|||||||
Total Level 3 assets
|
|
$
|
0
|
|
|
$
|
2
|
|
|
$
|
(66
|
)
|
|
$
|
8,761
|
|
|
$
|
0
|
|
|
$
|
(51
|
)
|
|
$
|
8,646
|
|
(in thousands)
|
|
Beginning balance at December 31, 2013
|
|
Included
in
earnings
(1)
|
|
Included
in other
comprehensive
income
|
|
Purchases
|
|
Sales
|
|
Transfers
in and (out)
of
Level 3
|
|
Ending balance at December 31, 2014
|
||||||||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Corporate debt securities
|
|
$
|
1,054
|
|
|
$
|
0
|
|
|
$
|
(28
|
)
|
|
$
|
0
|
|
|
$
|
(85
|
)
|
|
$
|
(941
|
)
|
|
$
|
0
|
|
Commercial mortgage-backed securities
|
|
0
|
|
|
1
|
|
|
9
|
|
|
2,976
|
|
|
0
|
|
|
(2,986
|
)
|
|
0
|
|
|||||||
Collateralized debt obligations
|
|
378
|
|
|
(47
|
)
|
|
(40
|
)
|
|
0
|
|
|
(291
|
)
|
|
0
|
|
|
0
|
|
|||||||
Total fixed maturities
|
|
1,432
|
|
|
(46
|
)
|
|
(59
|
)
|
|
2,976
|
|
|
(376
|
)
|
|
(3,927
|
)
|
|
0
|
|
|||||||
Total available-for-sale securities
|
|
1,432
|
|
|
(46
|
)
|
|
(59
|
)
|
|
2,976
|
|
|
(376
|
)
|
|
(3,927
|
)
|
|
0
|
|
|||||||
Total Level 3 assets
|
|
$
|
1,432
|
|
|
$
|
(46
|
)
|
|
$
|
(59
|
)
|
|
$
|
2,976
|
|
|
$
|
(376
|
)
|
|
$
|
(3,927
|
)
|
|
$
|
0
|
|
(in thousands)
|
|
At December 31, 2015
|
||||||||||||||
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Fixed maturities:
|
|
|
|
|
|
|
|
|
||||||||
Priced via pricing services
|
|
$
|
578,516
|
|
|
$
|
0
|
|
|
$
|
578,516
|
|
|
$
|
0
|
|
Priced via market comparables/broker quotes
|
|
8,693
|
|
|
0
|
|
|
47
|
|
|
8,646
|
|
||||
Total fixed maturities
|
|
587,209
|
|
|
0
|
|
|
578,563
|
|
|
8,646
|
|
||||
Common stock:
|
|
|
|
|
|
|
|
|
||||||||
Priced via pricing services
|
|
12,732
|
|
|
12,732
|
|
|
0
|
|
|
0
|
|
||||
Total common stock
|
|
12,732
|
|
|
12,732
|
|
|
0
|
|
|
0
|
|
||||
Other investments:
|
|
|
|
|
|
|
|
|
||||||||
Priced via unobservable inputs
(1)
|
|
4,526
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total other investments
|
|
4,526
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total
|
|
$
|
604,467
|
|
|
$
|
12,732
|
|
|
$
|
578,563
|
|
|
$
|
8,646
|
|
(1)
|
Other investments measured at fair value represent real estate funds included on the balance sheet as limited partnership investments that are reported under the fair value option using the net asset value practical expedient. These amounts are not required to be categorized in the fair value hierarchy. The fair value of these investments is based on the net asset value (NAV) information provided by the general partner.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2015
|
||||||||||||||
(in thousands)
|
|
Amortized cost
|
|
Gross unrealized gains
|
|
Gross unrealized losses
|
|
Estimated fair value
|
||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
||||||||
States & political subdivisions
|
|
$
|
221,093
|
|
|
$
|
10,761
|
|
|
$
|
7
|
|
|
$
|
231,847
|
|
Corporate debt securities
|
|
254,464
|
|
|
281
|
|
|
4,412
|
|
|
250,333
|
|
||||
Residential mortgage-backed securities
|
|
13,639
|
|
|
4
|
|
|
130
|
|
|
13,513
|
|
||||
Commercial mortgage-backed securities
|
|
38,630
|
|
|
30
|
|
|
1,089
|
|
|
37,571
|
|
||||
Collateralized debt obligations
|
|
51,905
|
|
|
61
|
|
|
221
|
|
|
51,745
|
|
||||
Other debt securities
|
|
2,241
|
|
|
0
|
|
|
41
|
|
|
2,200
|
|
||||
Total fixed maturities
|
|
581,972
|
|
|
11,137
|
|
|
5,900
|
|
|
587,209
|
|
||||
Common stock
|
|
12,865
|
|
|
0
|
|
|
133
|
|
|
12,732
|
|
||||
Total available-for-sale securities
|
|
$
|
594,837
|
|
|
$
|
11,137
|
|
|
$
|
6,033
|
|
|
$
|
599,941
|
|
|
|
At December 31, 2014
|
||||||||||||||
(in thousands)
|
|
Amortized cost
|
|
Gross unrealized gains
|
|
Gross unrealized losses
|
|
Estimated fair value
|
||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
||||||||
States & political subdivisions
|
|
$
|
219,550
|
|
|
$
|
11,609
|
|
|
$
|
25
|
|
|
$
|
231,134
|
|
Corporate debt securities
|
|
235,613
|
|
|
1,491
|
|
|
3,064
|
|
|
234,040
|
|
||||
Residential mortgage-backed securities
|
|
8,379
|
|
|
15
|
|
|
19
|
|
|
8,375
|
|
||||
Commercial mortgage-backed securities
|
|
51,647
|
|
|
63
|
|
|
455
|
|
|
51,255
|
|
||||
Collateralized debt obligations
|
|
32,964
|
|
|
40
|
|
|
72
|
|
|
32,932
|
|
||||
Other debt securities
|
|
6,832
|
|
|
0
|
|
|
28
|
|
|
6,804
|
|
||||
Total fixed maturities
|
|
554,985
|
|
|
13,218
|
|
|
3,663
|
|
|
564,540
|
|
||||
Nonredeemable preferred stock
|
|
11,375
|
|
|
1,166
|
|
|
0
|
|
|
12,541
|
|
||||
Common stock
|
|
12,865
|
|
|
0
|
|
|
176
|
|
|
12,689
|
|
||||
Total available-for-sale securities
|
|
$
|
579,225
|
|
|
$
|
14,384
|
|
|
$
|
3,839
|
|
|
$
|
589,770
|
|
|
|
At December 31, 2015
|
||||||
(in thousands)
|
|
Amortized
|
|
Estimated
|
||||
|
|
cost
|
|
fair value
|
||||
Due in one year or less
|
|
$
|
62,113
|
|
|
$
|
62,067
|
|
Due after one year through five years
|
|
267,468
|
|
|
265,917
|
|
||
Due after five years through ten years
|
|
163,827
|
|
|
168,918
|
|
||
Due after ten years
|
|
88,564
|
|
|
90,307
|
|
||
Total fixed maturities
|
|
$
|
581,972
|
|
|
$
|
587,209
|
|
|
|
At December 31, 2015
|
|||||||||||||||||||||||||
(dollars in thousands)
|
|
Less than 12 months
|
|
12 months or longer
|
|
Total
|
|||||||||||||||||||||
|
|
Fair
|
|
Unrealized
|
|
Fair
|
|
Unrealized
|
|
Fair
|
|
Unrealized
|
|
No. of
|
|||||||||||||
|
|
value
|
|
losses
|
|
value
|
|
losses
|
|
value
|
|
losses
|
|
holdings
|
|||||||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
States & political subdivisions
|
|
$
|
5,867
|
|
|
$
|
7
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
5,867
|
|
|
$
|
7
|
|
|
3
|
|
Corporate debt securities
|
|
172,831
|
|
|
2,447
|
|
|
19,086
|
|
|
1,965
|
|
|
191,917
|
|
|
4,412
|
|
|
349
|
|
||||||
Residential mortgage-backed securities
|
|
9,827
|
|
|
84
|
|
|
936
|
|
|
46
|
|
|
10,763
|
|
|
130
|
|
|
9
|
|
||||||
Commercial mortgage-backed securities
|
|
13,081
|
|
|
68
|
|
|
19,081
|
|
|
1,021
|
|
|
32,162
|
|
|
1,089
|
|
|
24
|
|
||||||
Collateralized debt obligations
|
|
27,981
|
|
|
103
|
|
|
9,174
|
|
|
118
|
|
|
37,155
|
|
|
221
|
|
|
19
|
|
||||||
Other debt securities
|
|
1,960
|
|
|
40
|
|
|
241
|
|
|
1
|
|
|
2,201
|
|
|
41
|
|
|
2
|
|
||||||
Total fixed maturities
|
|
231,547
|
|
|
2,749
|
|
|
48,518
|
|
|
3,151
|
|
|
280,065
|
|
|
5,900
|
|
|
406
|
|
||||||
Common stock
|
|
12,732
|
|
|
133
|
|
|
0
|
|
|
0
|
|
|
12,732
|
|
|
133
|
|
|
1
|
|
||||||
Total available-for-sale securities
|
|
$
|
244,279
|
|
|
$
|
2,882
|
|
|
$
|
48,518
|
|
|
$
|
3,151
|
|
|
$
|
292,797
|
|
|
$
|
6,033
|
|
|
407
|
|
Quality breakdown of fixed maturities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Investment grade
|
|
$
|
174,723
|
|
|
$
|
1,296
|
|
|
$
|
38,369
|
|
|
$
|
1,256
|
|
|
$
|
213,092
|
|
|
$
|
2,552
|
|
|
105
|
|
Non-investment grade
|
|
56,824
|
|
|
1,453
|
|
|
10,149
|
|
|
1,895
|
|
|
66,973
|
|
|
3,348
|
|
|
301
|
|
||||||
Total fixed maturities
|
|
$
|
231,547
|
|
|
$
|
2,749
|
|
|
$
|
48,518
|
|
|
$
|
3,151
|
|
|
$
|
280,065
|
|
|
$
|
5,900
|
|
|
406
|
|
|
|
At December 31, 2014
|
|||||||||||||||||||||||||
(dollars in thousands)
|
|
Less than 12 months
|
|
12 months or longer
|
|
Total
|
|||||||||||||||||||||
|
|
Fair
|
|
Unrealized
|
|
Fair
|
|
Unrealized
|
|
Fair
|
|
Unrealized
|
|
No. of
|
|||||||||||||
|
|
value
|
|
losses
|
|
value
|
|
losses
|
|
value
|
|
losses
|
|
holdings
|
|||||||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
States & political subdivisions
|
|
$
|
6,251
|
|
|
$
|
10
|
|
|
$
|
2,378
|
|
|
$
|
15
|
|
|
$
|
8,629
|
|
|
$
|
25
|
|
|
4
|
|
Corporate debt securities
|
|
120,850
|
|
|
3,064
|
|
|
0
|
|
|
0
|
|
|
120,850
|
|
|
3,064
|
|
|
250
|
|
||||||
Residential mortgage-backed securities
|
|
5,702
|
|
|
19
|
|
|
0
|
|
|
0
|
|
|
5,702
|
|
|
19
|
|
|
4
|
|
||||||
Commercial mortgage-backed securities
|
|
40,865
|
|
|
455
|
|
|
0
|
|
|
0
|
|
|
40,865
|
|
|
455
|
|
|
24
|
|
||||||
Collateralized debt obligations
|
|
20,985
|
|
|
72
|
|
|
0
|
|
|
0
|
|
|
20,985
|
|
|
72
|
|
|
9
|
|
||||||
Other debt securities
|
|
6,805
|
|
|
28
|
|
|
0
|
|
|
0
|
|
|
6,805
|
|
|
28
|
|
|
3
|
|
||||||
Total fixed maturities
|
|
201,458
|
|
|
3,648
|
|
|
2,378
|
|
|
15
|
|
|
203,836
|
|
|
3,663
|
|
|
294
|
|
||||||
Common stock
|
|
0
|
|
|
0
|
|
|
12,689
|
|
|
176
|
|
|
12,689
|
|
|
176
|
|
|
1
|
|
||||||
Total available-for-sale securities
|
|
$
|
201,458
|
|
|
$
|
3,648
|
|
|
$
|
15,067
|
|
|
$
|
191
|
|
|
$
|
216,525
|
|
|
$
|
3,839
|
|
|
295
|
|
Quality breakdown of fixed maturities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Investment grade
|
|
$
|
145,364
|
|
|
$
|
949
|
|
|
$
|
2,378
|
|
|
$
|
15
|
|
|
$
|
147,742
|
|
|
$
|
964
|
|
|
58
|
|
Non-investment grade
|
|
56,094
|
|
|
2,699
|
|
|
0
|
|
|
0
|
|
|
56,094
|
|
|
2,699
|
|
|
236
|
|
||||||
Total fixed maturities
|
|
$
|
201,458
|
|
|
$
|
3,648
|
|
|
$
|
2,378
|
|
|
$
|
15
|
|
|
$
|
203,836
|
|
|
$
|
3,663
|
|
|
294
|
|
(in thousands)
|
|
2015
|
|
2014
|
|
2013
|
||||||
Fixed maturities
|
|
$
|
16,457
|
|
|
$
|
14,173
|
|
|
$
|
11,945
|
|
Equity securities
|
|
1,045
|
|
|
1,550
|
|
|
2,126
|
|
|||
Cash equivalents and other
|
|
1,174
|
|
|
1,207
|
|
|
1,439
|
|
|||
Total investment income
|
|
18,676
|
|
|
16,930
|
|
|
15,510
|
|
|||
Less: investment expenses
|
|
885
|
|
|
394
|
|
|
483
|
|
|||
Investment income, net of expenses
|
|
$
|
17,791
|
|
|
$
|
16,536
|
|
|
$
|
15,027
|
|
(in thousands)
|
|
2015
|
|
2014
|
|
2013
|
||||||
Available-for-sale securities:
|
|
|
|
|
|
|
||||||
Fixed maturities:
|
|
|
|
|
|
|
||||||
Gross realized gains
|
|
$
|
1,571
|
|
|
$
|
453
|
|
|
$
|
890
|
|
Gross realized losses
|
|
(1,764
|
)
|
|
(333
|
)
|
|
(43
|
)
|
|||
Net realized (losses) gains
|
|
(193
|
)
|
|
120
|
|
|
847
|
|
|||
Equity securities:
|
|
|
|
|
|
|
|
|
||||
Gross realized gains
|
|
759
|
|
|
1,132
|
|
|
391
|
|
|||
Gross realized losses
|
|
(74
|
)
|
|
(195
|
)
|
|
(293
|
)
|
|||
Net realized gains
|
|
685
|
|
|
937
|
|
|
98
|
|
|||
Net realized investment gains
|
|
$
|
492
|
|
|
$
|
1,057
|
|
|
$
|
945
|
|
(in thousands)
|
|
2015
|
|
2014
|
|
2013
|
||||||
Fixed maturities
|
|
$
|
(1,558
|
)
|
|
$
|
(105
|
)
|
|
$
|
(388
|
)
|
Total other-than-temporary impairments
|
|
(1,558
|
)
|
|
(105
|
)
|
|
(388
|
)
|
|||
Portion recognized in other comprehensive income
|
|
0
|
|
|
0
|
|
|
0
|
|
|||
Net impairment losses recognized in earnings
|
|
$
|
(1,558
|
)
|
|
$
|
(105
|
)
|
|
$
|
(388
|
)
|
(in thousands)
|
|
2015
|
|
2014
|
|
2013
|
||||||
Equity in earnings of limited partnerships accounted for under the equity method
|
|
$
|
16,545
|
|
|
$
|
8,517
|
|
|
$
|
20,488
|
|
Change in fair value of limited partnerships accounted for under the fair value option
|
|
438
|
|
|
2,412
|
|
|
1,206
|
|
|||
Equity in earnings of limited partnerships
|
|
$
|
16,983
|
|
|
$
|
10,929
|
|
|
$
|
21,694
|
|
(in thousands)
|
|
2015
|
|
2014
|
||||
Private equity
|
|
$
|
48,397
|
|
|
$
|
51,379
|
|
Mezzanine debt
|
|
12,701
|
|
|
13,978
|
|
||
Real estate
|
|
22,911
|
|
|
39,677
|
|
||
Real estate - fair value option
|
|
4,526
|
|
|
7,583
|
|
||
Total limited partnerships
|
|
$
|
88,535
|
|
|
$
|
112,617
|
|
|
|
|
|
|
|
(in thousands)
|
|
Years ended December 31,
|
||||||||||
|
|
2015
|
|
2014
|
|
2013
|
||||||
Gross carrying amount
|
|
$
|
81,007
|
|
|
$
|
67,820
|
|
|
$
|
58,408
|
|
Accumulated amortization
|
|
(34,210
|
)
|
|
(25,210
|
)
|
|
(17,804
|
)
|
|||
Net carrying amount
|
|
$
|
46,797
|
|
|
$
|
42,610
|
|
|
$
|
40,604
|
|
|
|
|
|
|
|
|
||||||
Amortization expense
|
|
$
|
9,000
|
|
|
$
|
7,406
|
|
|
$
|
6,909
|
|
(1)
|
Pension plan costs represent the total cost before reimbursements to Indemnity from the Exchange and EFL.
|
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
||||
Employee pension plan:
|
|
|
|
|
|
|
|
|
|
||||
Discount rate
|
|
4.57
|
%
|
|
4.17
|
%
|
|
5.11
|
%
|
|
4.19
|
%
|
|
Expected return on assets
|
|
7.00
|
|
|
7.00
|
|
|
7.50
|
|
|
7.50
|
|
|
Compensation increases
(1)
|
|
3.32
|
|
|
3.32
|
|
|
4.15
|
|
|
4.15
|
|
|
SERP:
|
|
|
|
|
|
|
|
|
|
|
|||
Discount rate – pre-retirement/post-retirement
|
|
4.57/4.07
|
|
|
4.17/3.67
|
|
|
5.11/4.61
|
|
|
4.19/3.69
|
|
|
Rate of compensation increase
|
|
5.00
|
|
|
5.00
|
|
|
6.00
|
|
|
6.00
|
|
|
(1)
|
The rate of compensation increase for the employee plan is age-graded. An equivalent single compensation increase rate of
3.32%
in
2015
and
2014
, and
4.15%
in
2013
would produce similar results.
|
(1)
|
The charges recognized as amendments were the result of factoring in the prior service cost for
four
new plan participants in
2014
.
|
|
|
|
|
||||||||||
|
|
Target asset
allocation
|
|
Target asset
allocation
|
|
Actual asset
allocation
|
|
Actual asset
allocation
|
|
||||
Asset allocation:
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
||||
Equity securities:
|
|
|
|
|
|
|
|
|
|
||||
U.S. equity securities
|
|
35
|
%
|
(1)
|
35
|
%
|
|
36
|
%
|
|
37
|
%
|
|
Non-U.S. equity securities
|
|
20
|
|
(2)
|
20
|
|
|
20
|
|
|
19
|
|
|
Total equity securities
|
|
55
|
|
|
55
|
|
|
56
|
|
|
56
|
|
|
Debt securities
|
|
44
|
|
(3)
|
44
|
|
|
43
|
|
|
43
|
|
|
Other
|
|
1
|
|
(4)
|
1
|
|
|
1
|
|
|
1
|
|
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
(1)
|
U.S. equity securities
–
22%
seek to achieve excess returns relative to the Russell 2000 Index, while
30%
seek to achieve excess returns relative to the S&P 500. The remaining
48%
of the allocation to U.S. equity securities are comprised of equity index funds that track the S&P 500.
|
(2)
|
Non-U.S. equity securities
–
11%
are allocated to international small cap investments, while another
11%
are allocated to international emerging market investments. The remaining
78%
of the Non-U.S. equity securities are allocated to investments seeking to achieve excess returns relative to an international market index.
|
(3)
|
Debt securities
–
44%
are allocated to long U.S. Treasury Strips,
44%
are allocated to U.S. corporate bonds with an emphasis on long duration bonds rated A or better, while the remaining
12%
are allocated to floating rate high income leverage loans.
|
(4)
|
Institutional money market fund.
|
|
|
|
|
||||||||||||||
|
|
At December 31, 2015
|
|
||||||||||||||
|
|
Fair value measurements of plan assets using:
|
|
||||||||||||||
(in thousands)
|
|
Total
|
|
Quoted prices in
active markets for
identical assets
Level 1
|
|
Significant
observable
inputs
Level 2
|
|
Significant
unobservable
inputs
Level 3
|
|
||||||||
Equity securities:
|
|
|
|
|
|
|
|
|
|
||||||||
U.S. equity securities
|
|
$
|
201,021
|
|
|
$
|
0
|
|
|
$
|
201,021
|
|
|
$
|
0
|
|
|
Non-U.S. equity securities
|
|
107,945
|
|
|
0
|
|
|
107,945
|
|
|
0
|
|
|
||||
Total equity securities
|
|
308,966
|
|
|
0
|
|
|
308,966
|
|
|
0
|
|
|
||||
Debt securities
|
|
236,619
|
|
|
0
|
|
|
236,619
|
|
|
0
|
|
|
||||
Other
|
|
5,906
|
|
|
5,906
|
|
|
0
|
|
|
0
|
|
|
||||
Total
|
|
$
|
551,491
|
|
|
$
|
5,906
|
|
|
$
|
545,585
|
|
|
$
|
0
|
|
|
|
|
|
|
||||||||||||||
|
|
At December 31, 2014
|
|
||||||||||||||
|
|
Fair value measurements of plan assets using:
|
|
||||||||||||||
(in thousands)
|
|
Total
|
|
Quoted prices in
active markets for
identical assets
Level 1
|
|
Significant
observable
inputs
Level 2
|
|
Significant
unobservable
inputs
Level 3
|
|
||||||||
Equity securities:
|
|
|
|
|
|
|
|
|
|
||||||||
U.S. equity securities
|
|
$
|
202,036
|
|
|
$
|
0
|
|
|
$
|
202,036
|
|
|
$
|
0
|
|
|
Non-U.S. equity securities
|
|
106,025
|
|
|
0
|
|
|
106,025
|
|
|
0
|
|
|
||||
Total equity securities
|
|
308,061
|
|
|
0
|
|
|
308,061
|
|
|
0
|
|
|
||||
Debt securities
|
|
236,402
|
|
|
0
|
|
|
236,402
|
|
|
0
|
|
|
||||
Other
|
|
3,325
|
|
|
3,325
|
|
|
0
|
|
|
0
|
|
|
||||
Total
|
|
$
|
547,788
|
|
|
$
|
3,325
|
|
|
$
|
544,463
|
|
|
$
|
0
|
|
|
(in thousands)
|
|
|
||||||||||
|
|
2015
|
|
2014
|
|
2013
|
||||||
Current income tax expense
|
|
$
|
106,155
|
|
|
$
|
87,064
|
|
|
$
|
89,005
|
|
Deferred income tax benefit
|
|
(14,584
|
)
|
|
(3,305
|
)
|
|
(5,002
|
)
|
|||
Income tax expense
|
|
$
|
91,571
|
|
|
$
|
83,759
|
|
|
$
|
84,003
|
|
(in thousands)
|
|
|
||||||||
|
|
2015
|
2014
|
2013
|
||||||
Investment securities:
|
|
|
|
|
||||||
Accumulated other comprehensive income, beginning of the year
|
|
$
|
6,807
|
|
$
|
5,984
|
|
$
|
13,325
|
|
Other comprehensive (loss) income before reclassifications, net of tax benefit (expense) of $2,678, $(633), and $3,852, respectively
|
|
(4,973
|
)
|
1,175
|
|
(7,153
|
)
|
|||
Realized investment gains, net of tax benefit of $172, $226 and $236, respectively
|
|
(320
|
)
|
(420
|
)
|
(440
|
)
|
|||
Impairment losses, net of tax expense of $(545), $(37), and $(136), respectively
|
|
1,013
|
|
68
|
|
252
|
|
|||
Other comprehensive (loss) income, net of tax
|
|
(4,280
|
)
|
823
|
|
(7,341
|
)
|
|||
Accumulated other comprehensive income, end of the year
|
|
$
|
2,527
|
|
$
|
6,807
|
|
$
|
5,984
|
|
|
|
|
|
|
||||||
Pension and other postretirement plans:
|
|
|
|
|
||||||
Accumulated other comprehensive loss, beginning of the year
|
|
$
|
(124,508
|
)
|
$
|
(65,083
|
)
|
$
|
(146,516
|
)
|
Other comprehensive income (loss) before reclassifications, net of tax (expense) benefit of $(8,433), $34,378, and $(38,352), respectively
|
|
15,661
|
|
(63,845
|
)
|
71,226
|
|
|||
Amortization of prior service costs, net of tax expense of $234, $248, and $278, respectively
(1)
|
|
434
|
|
461
|
|
517
|
|
|||
Amortization of net actuarial loss, net of tax expense of $4,858, $2,131, and $5,218, respectively
(1)
|
|
9,022
|
|
3,959
|
|
9,690
|
|
|||
Other comprehensive income (loss), net of tax
|
|
25,117
|
|
(59,425
|
)
|
81,433
|
|
|||
Accumulated other comprehensive loss, end of the year
|
|
$
|
(99,391
|
)
|
$
|
(124,508
|
)
|
$
|
(65,083
|
)
|
|
|
|
|
|
||||||
Total
|
|
|
|
|
||||||
Accumulated other comprehensive loss, beginning of the year
|
|
$
|
(117,701
|
)
|
$
|
(59,099
|
)
|
$
|
(133,191
|
)
|
Investment securities
|
|
(4,280
|
)
|
823
|
|
(7,341
|
)
|
|||
Pension and other postretirement plans
|
|
25,117
|
|
(59,425
|
)
|
81,433
|
|
|||
Other comprehensive income, net of tax
|
|
20,837
|
|
(58,602
|
)
|
74,092
|
|
|||
Accumulated other comprehensive loss, end of the year
|
|
$
|
(96,864
|
)
|
$
|
(117,701
|
)
|
$
|
(59,099
|
)
|
(1)
|
These components of accumulated other comprehensive income (loss) are included in the computation of net periodic pension cost. See Note 8, "Postretirement Benefits", for additional information.
|
(in thousands)
|
|
2015
|
|
2014
|
||||
Erie Insurance Exchange
|
|
$
|
406,246
|
|
|
$
|
378,496
|
|
Erie Family Life Insurance
|
|
35,761
|
|
|
37,159
|
|
||
Total cash settlements
|
|
$
|
442,007
|
|
|
$
|
415,655
|
|
(in thousands)
|
|
|
||||||||||
|
|
2015
|
|
2014
|
|
2013
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
174,678
|
|
|
$
|
167,505
|
|
|
$
|
162,611
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
||||||
Depreciation and amortization
|
|
16,461
|
|
|
15,656
|
|
|
14,998
|
|
|||
Deferred income tax benefit
|
|
(14,584
|
)
|
|
(3,305
|
)
|
|
(5,002
|
)
|
|||
Realized losses (gains) and impairments on investments
|
|
1,066
|
|
|
(952
|
)
|
|
(557
|
)
|
|||
Equity in earnings of limited partnerships
|
|
(16,983
|
)
|
|
(10,929
|
)
|
|
(21,694
|
)
|
|||
Net amortization of bond premium
|
|
8,160
|
|
|
7,225
|
|
|
6,864
|
|
|||
(Decrease) increase in deferred compensation
|
|
(1,526
|
)
|
|
6,149
|
|
|
6,762
|
|
|||
Limited partnership distributions
|
|
14,112
|
|
|
15,327
|
|
|
27,050
|
|
|||
Increase in receivables from affiliates
|
|
(12,835
|
)
|
|
(34,778
|
)
|
|
(19,655
|
)
|
|||
Decrease (increase) in accrued investment income
|
|
47
|
|
|
(915
|
)
|
|
(374
|
)
|
|||
(Increase) decrease in federal income taxes recoverable
|
|
(499
|
)
|
|
(8,421
|
)
|
|
2,812
|
|
|||
Decrease in prepaid pension
|
|
20,307
|
|
|
557
|
|
|
17,842
|
|
|||
Decrease (increase) in prepaid expenses and other assets
|
|
1,193
|
|
|
(1,747
|
)
|
|
(5,831
|
)
|
|||
Increase in accounts payable and accrued expenses
|
|
3,633
|
|
|
1,753
|
|
|
4,910
|
|
|||
Increase in commissions payable
|
|
5,624
|
|
|
20,596
|
|
|
10,508
|
|
|||
Increase in accrued agent bonuses
|
|
18,524
|
|
|
12,292
|
|
|
16,764
|
|
|||
Net cash provided by operating activities
|
|
$
|
217,378
|
|
|
$
|
186,013
|
|
|
$
|
218,008
|
|
|
|
Year ended December 31, 2015
|
||||||||||||||||||
(in thousands, except per share data)
|
|
First
quarter
|
|
Second
quarter
|
|
Third
quarter
|
|
Fourth
quarter
|
|
Year
|
||||||||||
Operating revenue
|
|
$
|
350,831
|
|
|
$
|
401,660
|
|
|
$
|
396,637
|
|
|
$
|
356,380
|
|
|
$
|
1,505,508
|
|
Operating expenses
|
|
298,401
|
|
|
331,677
|
|
|
328,348
|
|
|
314,541
|
|
|
1,272,967
|
|
|||||
Investment income
|
|
6,539
|
|
|
15,705
|
|
|
7,220
|
|
|
4,244
|
|
|
33,708
|
|
|||||
Income before income taxes
|
|
58,969
|
|
|
85,688
|
|
|
75,509
|
|
|
46,083
|
|
|
266,249
|
|
|||||
Net income
|
|
$
|
38,833
|
|
|
$
|
56,150
|
|
|
$
|
49,562
|
|
|
$
|
30,133
|
|
|
$
|
174,678
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings per share
(1)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income per share
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Class A common stock – basic
|
|
$
|
0.83
|
|
|
$
|
1.21
|
|
|
$
|
1.06
|
|
|
$
|
0.65
|
|
|
$
|
3.75
|
|
Class A common stock – diluted
|
|
$
|
0.74
|
|
|
$
|
1.07
|
|
|
$
|
0.94
|
|
|
$
|
0.57
|
|
|
$
|
3.33
|
|
Class B common stock – basic
|
|
$
|
125
|
|
|
$
|
181
|
|
|
$
|
160
|
|
|
$
|
97
|
|
|
$
|
563
|
|
Class B common stock – diluted
|
|
$
|
125
|
|
|
$
|
180
|
|
|
$
|
159
|
|
|
$
|
97
|
|
|
$
|
562
|
|
(
1)
|
The cumulative sum of quarterly basic and diluted net income per share amounts may not equal total basic and diluted net income per share for the year due to differences in weighted average shares and equivalent shares outstanding for each of the periods presented.
|
|
|
Year ended December 31, 2014
|
||||||||||||||||||
(in thousands, except per share data)
|
|
First
quarter
|
|
Second
quarter
|
|
Third
quarter
|
|
Fourth
quarter
|
|
Year
|
||||||||||
Operating revenue
|
|
$
|
326,247
|
|
|
$
|
373,978
|
|
|
$
|
369,638
|
|
|
$
|
337,256
|
|
|
$
|
1,407,119
|
|
Operating expenses
|
|
267,819
|
|
|
306,060
|
|
|
308,550
|
|
|
301,843
|
|
|
1,184,272
|
|
|||||
Investment income
|
|
11,599
|
|
|
6,872
|
|
|
7,604
|
|
|
2,342
|
|
|
28,417
|
|
|||||
Income before income taxes
|
|
70,027
|
|
|
74,790
|
|
|
68,692
|
|
|
37,755
|
|
|
$
|
251,264
|
|
||||
Net income
|
|
$
|
46,262
|
|
|
$
|
49,047
|
|
|
$
|
46,900
|
|
|
$
|
25,296
|
|
|
$
|
167,505
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings per share
(1)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income per share
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Class A common stock – basic
|
|
$
|
0.99
|
|
|
$
|
1.05
|
|
|
$
|
1.01
|
|
|
$
|
0.54
|
|
|
$
|
3.59
|
|
Class A common stock –
diluted
|
|
$
|
0.88
|
|
|
$
|
0.94
|
|
|
$
|
0.90
|
|
|
$
|
0.48
|
|
|
$
|
3.18
|
|
Class B common stock – basic
|
|
$
|
149
|
|
|
$
|
158
|
|
|
$
|
151
|
|
|
$
|
81
|
|
|
$
|
539
|
|
Class B common stock – diluted
|
|
$
|
149
|
|
|
$
|
158
|
|
|
$
|
151
|
|
|
$
|
81
|
|
|
$
|
538
|
|
(
1)
|
The cumulative sum of quarterly basic and diluted net income per share amounts may not equal total basic and diluted net income per share for the year due to differences in weighted average shares and equivalent shares outstanding for each of the periods presented.
|
/s/ Terrence W. Cavanaugh
|
|
/s/ Gregory J. Gutting
|
|
/s/ Julie M. Pelkowski
|
|
Terrence W. Cavanaugh
|
|
Gregory J. Gutting
|
|
Julie M. Pelkowski
|
|
President and
|
|
Interim Executive Vice President
|
|
Interim Vice President
|
|
Chief Executive Officer
|
|
and Chief Financial Officer
|
|
and Controller
|
|
February 25, 2016
|
|
February 25, 2016
|
|
February 25, 2016
|
|
Name
|
|
Age as of 12/31/2015
|
|
Principal Occupation and Positions for Past Five Years
|
|
|
|
|
|
President & Chief Executive Officer:
|
|
|
|
|
Terrence W. Cavanaugh
|
|
62
|
|
President and Chief Executive Officer of Erie Indemnity Company since July 29, 2008; Director, Erie Indemnity Company, Erie Family Life Insurance Company ("EFL"), Erie Insurance Company ("EIC"), Flagship City Insurance Company ("Flagship"), Erie Insurance Company of New York ("ENY") and Erie Insurance Property and Casualty Company ("EPC").
|
Executive Vice Presidents:
|
|
|
|
|
Gregory J. Gutting
|
|
52
|
|
Interim Executive Vice President and Chief Financial Officer since October 12, 2015; Senior Vice President and Controller since March 2009; Director, EFL, EIC, Flagship, ENY and EPC.
|
|
|
|
|
|
George D. Dufala
|
|
44
|
|
Executive Vice President – Services since September 1, 2010; Director, EFL, EIC, Flagship, ENY and EPC.
|
|
|
|
|
|
Robert C. Ingram, III
|
|
57
|
|
Executive Vice President and Chief Information Officer since August 13, 2012; Senior Vice President and Chief Information Officer (for Commercial Lines, Hartford Investment Management Company and Enterprise Risk Management), The Hartford Financial Services Group, February 2011 through August 2012; Senior Vice President and Chief Information Officer, Commercial and Consumer Markets, The Hartford Financial Services Group, August 2009 through February 2011; Director, EFL, EIC, Flagship, ENY and EPC.
|
|
|
|
|
|
John F. Kearns
|
|
56
|
|
Executive Vice President – Sales & Marketing since September 1, 2010; Director, EFL, EIC, Flagship, ENY and EPC.
|
|
|
|
|
|
Sean J. McLaughlin
|
|
60
|
|
Executive Vice President, Secretary and General Counsel since August 26, 2013; Chief Judge, United States District Court for the Western District of Pennsylvania, April 2013 through August 2013; United States District Judge for the Western District of Pennsylvania, October 1994 through April 2013; Director, EFL, EIC, Flagship, ENY and EPC.
|
•
|
Report of Independent Registered Public Accounting Firm on the Effectiveness of Internal Control over Financial Reporting
|
•
|
Report of Independent Registered Public Accounting Firm on the Financial Statements
|
•
|
Statements of Operations for the three years ended
December 31, 2015
,
2014
and
2013
|
•
|
Statements of Comprehensive Income for the three years ended
December 31, 2015
,
2014
and
2013
|
•
|
Statements of Financial Position as of
December 31, 2015
and
2014
|
•
|
Statements of Shareholders’ Equity for the three years ended
December 31, 2015
,
2014
and
2013
|
•
|
Statements of Cash Flows for the three years ended
December 31, 2015
,
2014
and
2013
|
•
|
Notes to Financial Statements
|
February 25, 2016
|
ERIE INDEMNITY COMPANY
|
|
|
(Registrant)
|
|
|
|
|
By:
|
/s/ Terrence W. Cavanaugh
|
|
|
Terrence W. Cavanaugh, President and CEO
|
|
|
(Principal Executive Officer)
|
|
February 25, 2016
|
/s/ Terrence W. Cavanaugh
|
|
||
|
Terrence W. Cavanaugh, President and CEO
|
|
||
|
(Principal Executive Officer)
|
|
||
|
|
|
|
|
|
|
/s/ Gregory J. Gutting
|
|
|
|
Gregory J. Gutting, Interim Executive Vice President and CFO
|
|
||
|
(Principal Financial Officer)
|
|
||
|
|
|
||
|
/s/ Julie M. Pelkowski
|
|
||
|
Julie M. Pelkowski, Interim Vice President and Controller
|
|
||
|
(Principal Accounting Officer)
|
|
/s/ J. Ralph Borneman, Jr.
|
|
/s/ Thomas W. Palmer
|
J. Ralph Borneman, Jr.
|
|
Thomas W. Palmer
|
|
|
|
/s/ Terrence W. Cavanaugh
|
|
/s/ Martin P. Sheffield
|
Terrence W. Cavanaugh
|
|
Martin P. Sheffield
|
|
|
|
/s/ Jonathan Hirt Hagen
|
|
/s/ Richard L. Stover
|
Jonathan Hirt Hagen
|
|
Richard L. Stover
|
|
|
|
/s/ Thomas B. Hagen
|
|
/s/ Elizabeth Hirt Vorsheck
|
Thomas B. Hagen, Chairman
|
|
Elizabeth Hirt Vorsheck
|
|
|
|
/s/ C. Scott Hartz
|
|
/s/ Robert C. Wilburn
|
C. Scott Hartz
|
|
Robert C. Wilburn
|
|
|
|
/s/ Claude C. Lilly, III
|
|
|
Claude C. Lilly, III
|
|
|
Exhibit
|
|
|
Number
|
|
Description of Exhibit
|
|
|
|
3.1
|
|
Articles of Incorporation of Registrant. Such exhibit is incorporated by reference to the like numbered exhibit in the Registrant’s Form 10 Registration Statement Number 0-24000 filed with the Commission on May 2, 1994.
|
|
|
|
3.1A
|
|
Amendment to the Articles of Incorporation of Registrant effective May 2, 1996. Such exhibit is incorporated by reference to the like numbered exhibit in the Registrant’s Form 10-Q that was filed with the Commission on July 29, 2010.
|
|
|
|
3.1B
|
|
Amendment to the Articles of Incorporation of Registrant effective May 4, 2001. Such exhibit is incorporated by reference to the like numbered exhibit in the Registrant’s Form 10-Q that was filed with the Commission on July 29, 2010.
|
|
|
|
3.1C
|
|
Amendment to the Articles of Incorporation of Registrant effective May 10, 2007. Such exhibit is incorporated by reference to the like numbered exhibit in the Registrant’s Form 10-Q that was filed with the Commission on July 29, 2010.
|
|
|
|
3.7
|
|
Erie Indemnity Company Amended and Restated Bylaws effective May 5, 2009. Such exhibit is incorporated by reference to the like titled exhibit in the Registrant’s Form 8-K that was filed with the Commission on May 11, 2009.
|
|
|
|
3.8
|
|
Amended and Restated Articles of Incorporation of Registrant dated April 19, 2011. Such exhibit is incorporated by reference to the like titled exhibit in the Registrant’s Form 10-Q that was filed with the Commission on August 2, 2011.
|
|
|
|
10.12
|
|
Form of Subscriber’s Agreement whereby policyholders of Erie Insurance Exchange appoint Registrant as their Attorney-in-Fact. Such exhibit is incorporated by reference to the like titled but renumbered exhibit in the Registrant’s Form 10-Q that was filed with the Securities and Exchange Commission on November 6, 2002.
|
|
|
|
10.129
|
|
Lease Agreement between Erie Insurance Exchange and Erie Indemnity Company dated January 1, 2011. Such exhibit is incorporated by reference to the like titled exhibit in the Registrant’s Form 10-K that was filed with the Commission on February 24, 2011.
|
|
|
|
10.145
|
|
Erie Indemnity Company Equity Compensation Plan (incorporated by reference to Appendix A to the Registrant's Information Statement for the 2013 Annual Meeting of Shareholders filed with the Commission on March 18, 2013).
|
|
|
|
10.146
|
|
Amended and Restated Credit Agreement among JPMorgan Chase Bank, National Association, as Administrative Agent; the Lenders named therein; and Erie Indemnity Company, dated October 25, 2013. Such exhibit is incorporated by reference to the like titled exhibit in the Registrant's Form 8-K that was filed with the Commission on October 30, 2013.
|
|
|
|
10.147
|
|
Second Amended and Restated Credit Agreement among PNC Bank, National Association, as Administrative Agent; the Lenders named therein; and Erie Insurance Exchange, dated October 25, 2013. Such exhibit is incorporated by reference to the like titled exhibit in the Registrant's Form 8-K that was filed with the Commission on October 30, 2013.
|
|
|
|
10.152
|
|
Erie Indemnity Company Annual Incentive Plan (As Amended and Restated Effective as of January 1, 2014). Such exhibit is incorporated by reference to Appendix A to the Registrant's Information Statement for the 2014 Annual Meeting of Shareholders filed with the Commission on March 14, 2014.
|
|
|
|
10.153
|
|
Erie Indemnity Company Long-Term Incentive Plan (As Amended and Restated Effective as of January 1, 2014). Such exhibit is incorporated by reference to Appendix B to the Registrant's Information Statement for the 2014 Annual Meeting of Shareholders filed with the Commission on March 14, 2014.
|
|
|
|
10.154
|
|
First Amendment to Erie Indemnity Company Equity Compensation Plan effective January 1, 2014, dated March 10, 2014. Such exhibit is incorporated by reference to the like titled exhibit in the Registrant’s Form 10-Q that was filed with the Commission on May 1, 2014.
|
|
|
|
10.156
|
|
Form of Indemnification Agreement by and between Erie Indemnity Company and each Director and Executive Officer of Erie Indemnity Company. Such exhibit is incorporated by reference to the like titled exhibit in the Registrant’s Form 10-K that was filed with the Commission on February 26, 2009.
|
Exhibit
|
|
|
Number
|
|
Description of Exhibit
|
|
|
|
10.157
|
|
First Amendment to Erie Indemnity Company Long-Term Incentive Plan (As Amended and Restated Effective as of January 1, 2014), dated March 25, 2015. Such exhibit is incorporated by reference to the like titled exhibit in the Registrant’s Form 10-Q that was filed with the Commission on April 30, 2015.
|
|
|
|
10.158*
|
|
Erie Indemnity Company Deferred Compensation Plan for Outside Directors (As Amended and Restated as of July 29, 2015), dated October 20, 2015.
|
|
|
|
10.159*
|
|
Erie Indemnity Company Deferred Stock Plan for Outside Directors (As of July 29, 2015), dated October 20, 2015.
|
|
|
|
10.160
|
|
First Amendment to Amended and Restated Credit Agreement among JPMorgan Chase Bank, National Association, as Administrative Agent; the Lenders named therein; and Erie Indemnity Company, dated October 28, 2015. Such exhibit is incorporated by reference to the like titled exhibit in the Registrant’s Form 10-Q that was filed with the Commission on October 29, 2015.
|
|
|
|
10.161
|
|
First Amendment to Second Amended and Restated Credit Agreement among PNC Bank, National Association, as Administrative Agent; the Lenders named therein; and Erie Insurance Exchange, dated October 28, 2015. Such exhibit is incorporated by reference to the like titled exhibit in the Registrant’s Form 10-Q that was filed with the Commission on October 29, 2015.
|
|
|
|
10.162*
|
|
Erie Insurance Group Retirement Plan for Employees (As Amended and Restated Effective December 31, 2014), dated December 18, 2015.
|
|
|
|
10.163*
|
|
Erie Insurance Group Employee Savings Plan (As Amended and Restated Effective as of January 1, 2015), dated December 18, 2015.
|
|
|
|
10.164
|
|
Agreement between Erie Indemnity Company and Marcia A. Dall, dated December 20, 2015. Such exhibit is incorporated by reference to the like titled exhibit in the Registrant's Form 8-K that was filed with the Commission on December 22, 2015.
|
|
|
|
14.2
|
|
Code of Ethics for Senior Financial Officers. Such exhibit is incorporated by reference to the like titled exhibit in the Registrant’s Form 8-K that was filed with the Commission on April 25, 2012.
|
|
|
|
14.3*
|
|
Code of Conduct, effective January 1, 2016.
|
|
|
|
23*
|
|
Consent of Independent Registered Public Accounting Firm.
|
|
|
|
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*
|
|
XBRL Instance Document.
|
|
|
|
101.SCH*
|
|
XBRL Taxonomy Extension Schema Document.
|
|
|
|
101.CAL*
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
101.DEF*
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
|
101.LAB*
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
|
|
101.PRE*
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
2.1
|
“
Administrator
” shall mean the person or committee, appointed by the Board, who shall be responsible for the administrative functions assigned to it under the Plan.
|
2.2
|
“
Beneficiary
” shall mean the individual(s) or trust(s) selected by a Participant to receive payment of amounts credited under the Plan in the event of the Participant’s death, as evidenced by the most recent, properly completed and executed, Beneficiary designation which the Participant has delivered to the Administrator prior to the Participant’s death. A Participant may make a single Beneficiary designation to govern the distribution of the Participant’s entire interest under the Plan (including the total balance of all accounts maintained under both Appendix A and Appendix B) that shall apply in the event of the Participant’s death before commencement of payments. Furthermore, the Participant may make a single, but separate, Beneficiary designation to govern the distribution of any remaining interest under the Plan (including the total balance of all accounts maintained under both Appendix A and Appendix B) that shall apply in the event of the Participant’s death after payments have commenced but before all scheduled payments have been made. A Participant may change either or both of these Beneficiary designations at any time by delivering a new designation of Beneficiary to the Administrator on such form or forms as may be satisfactory to the Administrator. A new designation of Beneficiary shall be effective upon receipt by the Administrator of the completed and executed designation. As of such effective date, the new designation shall divest any Beneficiary named in a prior designation in that interest indicated in the prior designation. If no effective Beneficiary designation is in effect on the death of the Participant, or if all designated Beneficiaries have predeceased the Participant, any payments to be made under the Plan on account of the Participant’s death shall be paid to the estate of the Participant.
|
2.3
|
“
Board
” shall mean the Board of Directors of the Erie Indemnity Company.
|
2.4
|
“
Board Compensation
” shall mean the remuneration, expressed in terms of a cash amount, earned by a Director for service on the Board including, without limitation, a retainer, meeting fees and chairperson’s fees.
|
2.5
|
“
Code
” shall mean the Internal Revenue Code of 1986, as amended.
|
2.6
|
“
Committee
” shall mean the Executive Compensation and Development Committee of the Board or its successor, as designated by the Board.
|
2.7
|
“
Company
” shall mean the Erie Indemnity Company, a Pennsylvania business corporation.
|
2.8
|
“
Deferred Compensation Account
” shall mean such account as defined in Appendix A and/or Appendix B, as applicable. A Participant’s Deferred Compensation Account shall at all times be 100% vested and nonforfeitable.
|
2.9
|
“Deferred Stock Plan” shall mean the Erie Indemnity Company Deferred Stock Plan for Outside Directors, as amended and in effect on the date of determination.
|
2.10
|
“
Director
” shall mean a member of the Board.
|
2.11
|
“
Employee
” shall mean a person engaged in performing services for the Company, or its affiliates or subsidiaries, as an exempt or non-exempt full-time employee, as defined by the Company’s Corporate Personnel Manual, as in existence at the time of determination, and not as an independent contractor.
|
2.12
|
“
Outside Director
” shall mean a Director who is not an Employee or officer of the Company, its affiliates or subsidiaries.
|
2.13
|
“
Participant”
shall mean each Outside Director who participates in the Plan in accordance with the terms and conditions of the Plan.
|
2.14
|
“
Plan”
shall mean the Erie Indemnity Company Deferred Compensation Plan for Outside Directors, as set forth in the provisions of the Basic Plan Document, Appendix A, Appendix B, and including any amendments, appendices and exhibits to these documents.
|
2.15
|
“
Retirement Plan Transfer Account
” shall mean such account as defined in Appendix B. Effective on and after December 6, 2011, each Participant’s Retirement Plan Transfer Account shall be 100% vested and nonforfeitable.
|
2.16
|
“
Total Deferred Cash Account”
shall mean such account as defined in Appendix B.
|
3.1.
|
GENERAL ADMINISTRATION
|
3.2.
|
CLAIMS PROCEDURE
|
3.3.
|
CLAIMS REVIEW
|
a)
|
The date on which the notice of denial of claim was received by the Claimant;
|
b)
|
The date on which the Claimant’s request was filed with the Administrator; provided, however, that the date on which the Claimant’s request for review was in fact filed with the Administrator shall control in the event that the date of the actual filing is later than the date stated by the Claimant pursuant to this paragraph (b);
|
c)
|
The specific portions of the claim denial which the Claimant requests the Administrator to review;
|
d)
|
A statement by the Claimant setting forth the basis upon which he believes the Administrator should reverse its previous denial of his
|
e)
|
Whether the Claimant desires a hearing on the claim; and
|
f)
|
Any written material (included as exhibits) which the Claimant desires the Administrator to examine in its consideration of his position as stated pursuant to paragraph (d) above.
|
5.1.
|
GENERAL CONTRACTUAL OBLIGATION
|
5.2.
|
SPENDTHRIFT PROVISIONS
|
5.3.
|
NO SPOUSAL RIGHTS
|
5.4.
|
INCAPACITY OF RECIPIENT
|
5.5.
|
INFORMATION FURNISHED BY PARTICIPANTS AND BENEFICIARIES
|
5.6.
|
OVERPAYMENTS
|
5.7.
|
UNCLAIMED BENEFIT
|
5.8.
|
ELECTIONS, APPLICATIONS, NOTICES
|
5.9.
|
COUNTERPARTS
|
5.10.
|
SEVERABILITY
|
5.11.
|
GOVERNING LAW
|
5.12.
|
HEADINGS
|
2.1
|
“
Administrator”
is a term that is defined in Article Two of the Basic Plan Document.
|
2.2
|
“
Amendment Form
” shall mean the Amendment Form described in Section 6.3.
|
2.3
|
“
Beneficiary
” is a term that is defined in Article Two of the Basic Plan Document.
|
2.4
|
“
Board
” is a term that is defined in Article Two of the Basic Plan Document.
|
2.5
|
“
Board Compensation
” is a term that is defined in Article Two of the Basic Plan Document.
|
2.6
|
“
Committee
” is a term that is defined in Article Two of the Basic Plan Document.
|
2.7
|
“
Company
” is a term that is defined in Article Two of the Basic Plan Document.
|
2.8
|
“
Deferred Compensation Account
” shall mean the bookkeeping account described in Section 4.2.
|
2.9
|
“
Deferred Stock Plan
” is a term that is defined in Article Two of the Basic Plan Document.
|
2.10
|
“
Director
” is a term that is defined in Article Two of the Basic Plan Document.
|
2.11
|
“
Election Form
” shall mean the Participation Election Form described in Section 3.2.
|
2.12
|
“
Employee
” is a term that is defined in Article Two of the Basic Plan Document.
|
2.13
|
“
Hypothetical Interest
” shall mean the gains and losses credited to a Participant’s Deferred Compensation Account and/or Retirement Plan Transfer Account in accordance with Article Five.
|
2.14
|
“
Outside Director
” is a term that is defined in Article Two of the Basic Plan Document.
|
2.15
|
“
Participant
” shall mean each Outside Director who participated in the Plan in accordance with the terms and conditions of this Appendix A. Participant shall also include a former Outside Director who had become a Participant during his period of active Board service and on whose behalf the Administrator is maintaining a Deferred Compensation Account pursuant to the terms of this Appendix A.
|
2.16
|
“
Plan
” is a term that is defined in Article Two of the Basic Plan Document.
|
2.17
|
“
Valuation Date
” shall mean the close of business as of each business day.
|
a)
|
The method by which amounts credited to the Participant’s Deferred Compensation Account are to be paid;
|
b)
|
The date, following the Participant’s official termination of service on the Board, as of which payment of amounts credited to the Participant’s Deferred Compensation Account is to occur (in the event of a lump sum distribution) or commence (in the event of distribution in installments); and
|
c)
|
The Beneficiary to whom payments of amounts credited to the Participant’s Deferred Compensation Account will be made in the event of the Participant’s death.
|
a)
|
A Participant (and any Outside Director first electing to participate in the Plan) may have designated on such form or forms satisfactory to the Administrator, that portion of his future deferred compensation and, separately, that portion of any existing Deferred Compensation Account maintained on his behalf which were to be credited with Hypothetical Interest in reference to each of the hypothetical investment funds that were offered by the Administrator, in the discretion of the Administrator. Such designations specified, in 1% increments, the percentages to be credited in reference to each of the hypothetical investment funds offered. Such designations may remain in effect until the Participant submits a new designation within such times and in accordance with such means as are designated by the Administrator. New designations are made as to (i) future deferred compensation and/or (ii) any existing Deferred Compensation Account. All new designations are effective as of a given date specified by the Administrator. In the event a Participant fails to make an effective designation under this paragraph (a), the Administrator, acting in its discretion, shall make such designation on behalf of the Participant.
|
b)
|
In accepting participation in the Plan, a Participant agreed on behalf of himself and his Beneficiary to assume all risk in connection with any decrease in value of the hypothetical investment funds in reference to which Hypothetical Interest is credited to the Participant’s Deferred Compensation Account. The Company and the Administrator shall not be liable to any Participant or Beneficiary for the under-performance of any hypothetical investment fund offered under the Plan.
|
c)
|
The Administrator may, in its discretion, offer additional hypothetical investment funds to Participants and may cease to offer any such fund at such time as it deems appropriate. In the event the Administrator decides to discontinue offering a hypothetical investment fund under the Plan, those Participants on whose behalf Hypothetical Interest is then being credited on the basis of the discontinued hypothetical investment fund may be required, at the discretion of the Administrator, to have affected amounts consolidated with (or “mapped” to) a replacement hypothetical investment fund selected by the Administrator or may be required to designate, from such selection of hypothetical funds as may be offered by the Administrator, a hypothetical fund or funds as a replacement for the hypothetical investment fund being discontinued. Any such designation by a Participant shall be made in accordance with paragraph (a) above. Hypothetical Interest credited on behalf of any
|
d)
|
Notwithstanding any provision of the Plan to the contrary, the eligibility of a Participant to make any designation under this Section 5.2 shall not be construed as to provide any Participant or any other person with a beneficial ownership interest in any assets of the Company or an affiliated company or subsidiary. Title to and beneficial ownership of any assets which the Company may earmark to pay the contingent deferred compensation hereunder shall at all times remain in the Company, affiliated company or subsidiary. The Participant, his Beneficiary and any heirs, successors or assigns shall not have any legal or equitable right, interest or control over or any property interest whatsoever in any specific assets of the Company or any affiliated company or subsidiary on account of having an interest under the Plan. Any and all of the Company’s assets, and any life insurance policies, annuity contracts or the proceeds therefrom which may be acquired by the Company shall be, and remain, the general unpledged, unrestricted assets of the Company. In no event shall the Company be required to purchase any specific shares or interest in any investment fund.
|
a)
|
A Participant may elect any one of the following methods of payment for the amounts represented by his Deferred Compensation Account:
|
(i)
|
A lump sum distribution;
|
(ii)
|
Payment in approximately equal annual installments for a period not to exceed 10 years; or
|
(iii)
|
Payment in approximately equal monthly installments for a period not to
exceed 10 years. |
b)
|
In the event the Participant dies before receiving the entire distribution to which he is entitled under the Plan, the provisions of Section 6.4 shall apply.
|
a)
|
Such request of additional deferral or alternative method of payment shall be subject to the Administrator's power, to be exercised at the Administrator’s discretion, to direct that payment of the amount represented by the Participant’s Deferred Compensation Account will occur or commence, or will be paid under a method, in accordance with the Participant’s election(s) on a previously delivered Amendment Form or on the Participant’s Election Form; and
|
b)
|
In no event shall any requested additional deferral or alternative method of payment become effective unless the Amendment Form evidencing such request is submitted to, and approved by, the Administrator at least twelve months prior to the date payment of the amount represented by the Deferred Compensation Account would otherwise have occurred or commenced under the Election Form or Amendment Form in effect on the date the Participant requests the additional deferral or alternative method of payment.
|
2.1
|
“
Administrator
” is a term that is defined in Article Two of the Basic Plan Document.
|
2.2
|
“
Affiliate
” shall mean any organization which, together with the Company, is a member of a controlled group of corporations under Sections 414(b), 414(c) and 1563(a) of the Code, applying an 80% test for purposes of Section 1563(a).
|
2.3
|
“
Amendment Form
” shall mean the Amendment Form described in Section 7.6. An Amendment Form may be in paper and/or electronic form, as designated by the Administrator.
|
2.4
|
“
Beneficiary
” is a term that is defined in Article Two of the Basic Plan Document.
|
2.5
|
“
Board”
is a term that is defined in Article Two of the Basic Plan Document.
|
2.6
|
“
Board Compensation
” is a term that is defined in Article Two of the Basic Plan Document.
|
2.7
|
“
Committee
” is a term that is defined in Article Two of the Basic Plan Document.
|
2.8
|
“
Company
” is a term that is defined in Article Two of the Basic Plan Document.
|
2.9
|
“
Deferred Compensation Account
” shall mean the bookkeeping account described in Section 4.2.
|
2.10
|
“
Deferred Stock Plan
” is a term that is defined in Article Two of the Basic Plan Document.
|
2.11
|
“
Director
” is a term that is defined in Article Two of the Basic Plan Document.
|
2.12
|
“
Election Form”
shall mean the Participation Election Form described in Section 3.2. An Election Form may be in paper and/or electronic form, as designated by the Administrator.
|
2.13
|
“
Employee
” is a term that is defined in Article Two of the Basic Plan Document.
|
2.14
|
“
Hypothetical Interest
” shall mean the gains and losses credited to a Participant’s Deferred Compensation Account and/or Retirement Plan Transfer Account in accordance with Article Six.
|
2.15
|
“
Outside Director
” is a term that is defined in Article Two of the Basic Plan Document.
|
2.16
|
“
Participant
” shall mean each Outside Director who participates in the Plan in accordance with the terms and conditions of this Appendix B. Participant shall also include a former Outside Director who had become a Participant during his period of active Board service and on whose behalf the Administrator is maintaining a Total Deferred Cash Account pursuant to the terms of this Appendix B.
|
2.17
|
“
Plan
” is a term that is defined in Article Two of the Basic Plan Document.
|
2.18
|
“
Retirement Plan
” shall mean the Erie Indemnity Company Retirement Plan for Outside Directors, effective as of January 1, 1991 and as amended thereafter.
|
2.19
|
“
Retirement Plan Transfer Account
” shall mean the bookkeeping account described in Section 5.3.
|
2.20
|
“
Retirement Plan Transfer Credit
” shall mean the contribution credit determined under Section 5.2.
|
2.21
|
“
Separation from Board Service
” shall mean the complete cessation of services as a member of the Board and of the board of directors of any Affiliate.
|
2.22
|
“
Total Deferred Cash Account
” shall mean the sum of the amounts credited under any Deferred Compensation Account and any Retirement Plan Transfer Account maintained on behalf of a Participant.
|
2.23
|
“
Valuation Date”
shall mean the close of business as of each business day.
|
a)
|
The percentage of Board Compensation to be deferred for the calendar year to which the election applies;
|
b)
|
The method by which amounts credited to the Participant’s Total Deferred Cash Account are to be paid;
|
c)
|
The date, following the Participant’s Separation from Board Service, as of which payment of amounts credited to the Participant’s Total Deferred Cash Account is to occur (in the event of a lump sum distribution) or commence (in the event of a distribution in installments);
|
d)
|
The Beneficiary to whom payments of amounts credited to the Participant’s Total Deferred Cash Account will be made in the event of the Participant’s death; and
|
e)
|
The investment designation described in Section 6.2.
|
a)
|
Initial Deferral Election.
A Participant who is an Outside Director may elect to defer Board Compensation for a given calendar year by delivering a properly completed and executed Election Form to the Administrator as provided in Section 3.2(a). Such Election Form shall state, in 10% increments from 0% to 100%, the percentage of Board Compensation the Outside Director chooses to defer that is attributable to services performed after the election is delivered. Except as provided in paragraphs (c) and (d) below, such deferral election shall be irrevocable as of the date the election is delivered to the Administrator, as applicable to such future Board Compensation attributable to the calendar year to which the election applies. Such deferral election shall automatically terminate as to all Board Compensation after such calendar year.
|
b)
|
Subsequent Deferral Elections.
With respect to any calendar years beginning after the year an Outside Director first becomes a Participant under Section 3.1, the Participant may elect to defer Board Compensation attributable to services performed in such year by delivering a properly completed and executed Election Form to the Administrator by the end of the calendar year which immediately precedes the calendar year for which the election is to be effective. Such Election Form shall state, in 10% increments from 0% to 100%, the percentage of Board Compensation the Outside Director chooses to defer that is attributable to services performed in the calendar year for which the election is to be effective. Except as provided in paragraphs (c) or (d) below, such deferral election shall be irrevocable as of the December 31 of the calendar year that immediately precedes the calendar year to which the election applies. Such deferral election shall automatically terminate as to all Board Compensation attributable to services after such calendar year.
|
c)
|
If a Participant makes a withdrawal due to an unforeseeable emergency under Section 7.5, all remaining deferrals of Board Compensation under the Plan for the calendar year in which such withdrawal is made shall be cancelled. Such Participant shall not be permitted to make any further deferral of Board Compensation until the Participant again satisfies the procedures set forth in paragraph (b) above.
|
d)
|
Participant deferrals of Board Compensation under the Plan shall be cancelled in such other events or conditions as the Commissioner of Internal Revenue may prescribe in generally applicable guidance published in the Internal Revenue Bulletin which the Administrator, in its discretion, chooses to apply under the Plan; provided, however, that a Participant shall have no direct or indirect election to the application of such events or conditions to his individual circumstances.
|
a)
|
The Company has recorded a contribution credit under the Plan on behalf of each Outside Director who satisfied the criteria set forth in paragraph (b) of this Section 5.1. Such contribution credit is referred to herein as the Retirement Plan Transfer Credit, was recorded as of December 31, 1997 and, except as provided in Section 6.1(b), was equal to the amount individually determined under Section 5.2.
|
b)
|
An Outside Director was entitled to a Retirement Plan Transfer Credit if:
|
(i)
|
The Outside Director was an Outside Director on May 1, 1997; and
|
(ii)
|
During the period beginning June 17, 1997 and ending August 1, 1997, the Outside Director elected to have the Retirement Plan Transfer Credit recorded on his behalf under the Plan in lieu of any continuing interest under the Retirement Plan.
|
a)
|
The Retirement Plan Transfer Credit with respect to an Outside Director who satisfied the criteria set forth in Section 5.1 was the actuarial present value (as defined in subparagraph (i) below) of the retirement benefit accrued by the Outside Director under the Retirement Plan as of May 1, 1997.
|
(i)
|
For purposes of this Section 5.2(a), “actuarial present value” shall mean the single sum value of a retirement benefit, determined as of May 1, 1997, by using the 1983 Group Annuity Mortality Table (50% male/50% female) and an interest rate of seven percent.
|
b)
|
Effective December 6, 2011, the Company recorded a contribution credit under the Plan on behalf of each Outside Director on whose behalf an interest was then being maintained under the Retirement Plan. Such contribution credit shall be referred herein as the Retirement Plan Transfer Credit and shall be equal to the amount determined under subparagraph (i) below.
|
(i)
|
The Retirement Plan Transfer Credit described in paragraph (b) was equal to the actuarial present value of the contingent retirement benefit interest that would have accrued on behalf of the Outside Director under the Retirement Plan if December 6, 2011 were to be such Director’s date of Retirement under the Retirement Plan. For this purpose, “actuarial present value” shall mean the single lump sum value, determined as of December 6, 2011, by using the 2011 mortality table under IRS Notice 2008-85 for purposes of determining minimum present value under Section 417(e)(3) of the Code and an interest rate equal to the average of the Moody’s Aa corporate bond rates for October 2011.
|
a)
|
A Retirement Plan Transfer Account has been established for each Outside Director described in Section 5.1(b) or Section 5.2(b). The Retirement Plan Transfer Credit and Hypothetical Interest earned on such Retirement Plan Transfer Credit shall be recorded in this Retirement Plan Transfer Account. A Participant’s Retirement Plan Transfer Account shall be kept only for bookkeeping and accounting purposes and no Company funds shall be transferred or designated to this account. Notwithstanding any provision of the Plan to the contrary and effective December 6, 2011, a Participant’s interest in his Retirement Plan Transfer Account became 100% vested and nonforfeitable.
|
b)
|
Notwithstanding the provisions of Article Seven, but subject to the terms of Section 7.7, the Company shall pay a Participant who is an Outside Director described in Section 5.2(b), the amounts represented by the balance credited to the Participant’s Retirement Plan Transfer Account in the form of approximately equal quarterly installments for a period of 5 years, commencing as of the first day of the calendar quarter next following the Participant’s Separation from Board Service.
|
a)
|
The Total Deferred Cash Account maintained on behalf of a Participant under this Appendix B will be credited with Hypothetical Interest. The Hypothetical Interest shall be credited as of each Valuation Date on the amount credited to the Participant’s
|
b)
|
Notwithstanding any provision of this Article Six to the contrary:
|
(i)
|
The Retirement Plan Transfer Credit, determined under Section 5.2 and recorded as of December 31, 1997 on behalf of an Outside Director described in Section 5.1(b), was increased with Hypothetical Interest for the period beginning on May 1, 1997 and ending on December 31, 1997; and
|
(ii)
|
For purposes of subparagraph (i) above, “Hypothetical Interest” was in reference to the interest, compounded on a daily basis, at the rate or rates in effect during the period beginning on May 1, 1997 and ending December 31, 1997, as declared by the Board of Directors of Erie Family Life Insurance Company on the Erie Family Life Insurance Company deposit administration group annuity contract held by the trustee of the Erie Insurance Group Employee Savings Plan.
|
a)
|
A Participant (and any Outside Director first electing to participate in the Plan) may designate, within such times and in accordance with such means as are designated by the Administrator, that portion of his future deferred compensation under Section 4.1 and, separately, that portion of any existing Total Deferred Cash Account maintained on his behalf which shall be credited with Hypothetical Interest in reference to each of the hypothetical investment funds that may be offered by the Administrator, in the discretion of the Administrator. Such designations may specify, in 1% increments, the percentages to be credited in reference to each of the hypothetical investment funds offered. Such designations may remain in effect until the Participant submits a new designation within such time and in accordance with such means as are designated by the Administrator. New designations may be made as to (i) future deferrals of Board Compensation and/or (ii) any existing Total Deferred Cash Account, provided that separate designations as to the crediting of a Deferred Compensation Account and a Retirement Plan Transfer Account shall not be available. All new designations shall be effective as of a given date specified by the Administrator. In the event a Participant fails to make an effective designation under this paragraph (a), the Administrator, acting in its discretion, shall make such designation on behalf of the Participant.
|
b)
|
In accepting participation in the Plan, a Participant agrees on behalf of himself and his Beneficiary to assume all risk in connection with any decrease in value of the hypothetical investment funds in reference to which Hypothetical Interest is credited to the Participant’s Total Deferred Cash Account. The Company, the Affiliates and the Administrator shall not be liable to any Participant or Beneficiary for the under-performance of any hypothetical investment fund offered under the Plan.
|
c)
|
The Administrator may, in its discretion, offer additional hypothetical investment funds to Participants and may cease to offer any such fund at such time as it deems appropriate. In the event the Administrator decides to discontinue offering a hypothetical investment fund under the Plan, those Participants on whose behalf Hypothetical Interest is then being credited on the basis of the discontinued hypothetical investment fund may be required, at the discretion of the Administrator, to have affected amounts consolidated with (or “mapped” to) a replacement hypothetical investment fund selected by the Administrator or may be required to designate, from such selection of hypothetical funds as may be offered by the Administrator, a hypothetical fund or funds as a replacement for the hypothetical investment fund being discontinued. Any such designation by a Participant shall be made in accordance with paragraph (a) above. Hypothetical Interest credited on behalf of any Participant who is affected by the discontinuation of a hypothetical investment fund but who fails to make any replacement designation offered in this paragraph (c) shall mirror, to the extent of the Participant’s interest in such discontinued fund, such hypothetical investment fund or funds as the Administrator may choose in its discretion. Any changes under this paragraph (c) shall take effect at such times and under such rules as shall be established by the Administrator.
|
d)
|
Notwithstanding any provision of the Plan to the contrary, the eligibility of a Participant to make any designation under this Section 6.2 shall not be construed as to provide any Participant or any other person with a beneficial ownership interest in any assets of the Company or an Affiliate. Title to and beneficial ownership of any assets which the Company or an Affiliate may earmark to pay the contingent deferred compensation hereunder shall at all times remain in the Company or Affiliate. The Participant, his Beneficiary and any heirs, successors or assigns shall not have any legal or equitable right, interest or control over or any property interest whatsoever in any specific assets of the Company or any Affiliate or related entity on account of having an interest under the Plan. Any and all of the Company’s assets, and any life insurance policies, annuity contracts or the proceeds therefrom which may be acquired by the Company shall be, and remain, the general unpledged, unrestricted assets of the Company. In no event shall the Company or any Affiliate be required to purchase any specific shares or interest in any investment fund.
|
a)
|
A Participant may elect any one of the following methods of payment for the amounts represented by his Total Deferred Cash Account:
|
(i)
|
A lump sum distribution;
|
(ii)
|
Payment in approximately equal annual installments for a period not to exceed 10 years; or
|
(iii)
|
Payment in approximately equal monthly installments for a period not to exceed 10 years.
|
b)
|
A Participant may elect to have the amount represented by his Total Deferred Cash Account distributed to him (or, in the case of an installment distribution, commence to be distributed to him) as of the month next following the month of the Participant’s Separation from Board Service or as of any later month that follows his Separation from Board Service. Except as provided in Sections 7.3, 7.4 or 7.5, no distribution shall commence before or after such elected distribution date; provided, however, that if the Company makes a distribution within the permitted distribution period (as
|
c)
|
In the event the Participant dies before receiving the entire distribution to which he is entitled under the Plan, the provisions of Section 7.7 shall apply.
|
a)
|
The Participant needs to avoid a violation of an applicable federal, state, local, or foreign ethics law or conflicts of interest law.
|
b)
|
The Participant incurs state, local, or foreign tax obligations arising from participation in the Plan that apply to a Plan interest before such interest is otherwise payable from the Plan.
|
c)
|
The Plan is terminated and liquidated in accordance with generally applicable guidance prescribed by the Commissioner of Internal Revenue and published in the Internal Revenue Bulletin.
|
d)
|
Such other events or conditions as the Commissioner of Internal Revenue may prescribe in generally applicable guidance published in the Internal Revenue Bulletin which the Administrator, in its discretion, chooses to apply under the Plan; provided, however, that a Participant shall have no direct or indirect election as to the application of such events or conditions to his individual circumstances.
|
a)
|
The Administrator reasonably anticipates that making scheduled Plan payments will violate federal securities laws or other applicable law; provided that the scheduled payments are then made at the earliest date at which the Administrator reasonably contemplates that making the scheduled payments will not cause such a violation.
|
b)
|
Such other events or conditions as the Commissioner of Internal Revenue may prescribe in generally applicable guidance published in the Internal Revenue Bulletin which the Administrator, in its discretion, chooses to apply under the Plan; provided, however, that a Participant shall have no direct or indirect election as to the application of such events or conditions to his individual circumstances.
|
a)
|
Such election shall not be effective until 12 months after it is submitted to the Administrator;
|
b)
|
Such election shall require that the payment with respect to which the election is made shall be delayed for a period of not less than five years from the date payment would have been made (or commence) absent the elected change; and
|
c)
|
If the election pertains to a delay in the payment of a Total Deferred Cash Account from a specific year and month that the Participant previously elected in his Election Form or a subsequent Amendment Form (or to which the Participant has defaulted under Section 7.1) such election cannot be made less than 12 months before the date the payment was otherwise scheduled to be made (or commence).
|
2.1
|
“
Administrator
” shall mean the person or committee, appointed by the Board, who shall be responsible for the administrative functions assigned to it under the Plan.
|
2.2
|
“
Beneficiary
” shall mean the individual(s) or trust(s) selected by a Participant to receive payment of amounts credited under the Plan in the event of the Participant’s death, as evidenced by the most recent, properly completed and executed, Beneficiary designation which the Participant has delivered to the Administrator prior to the Participant’s death. A Participant may make a single Beneficiary designation to govern the distribution of the Participant’s entire interest under the Plan (including the total balance of all accounts maintained under both Appendix A and Appendix B) that shall apply in the event of the Participant’s death before commencement of payments. Furthermore, the Participant may make a single, but separate, Beneficiary designation to govern the distribution of any remaining interest under the Plan (including the total balance of all accounts maintained under both Appendix A and Appendix B) that shall apply in the event of the Participant’s death after payments have commenced but before all scheduled payments have been made. A Participant may change either or both of these Beneficiary designations at any time by delivering a new designation of Beneficiary to the Administrator on such form or forms as may be satisfactory to the Administrator. A new designation of Beneficiary shall be effective upon receipt by the Administrator of the completed and executed designation. As of such effective date, the new designation shall divest any Beneficiary named in a prior designation in that interest indicated in the prior designation. If no effective Beneficiary designation is in effect on the death of the Participant, or if all designated Beneficiaries have predeceased the Participant, any payments to be made under the Plan on account of the Participant’s death shall be paid to the estate of the Participant.
|
2.3
|
“
Board
” shall mean the Board of Directors of the Erie Indemnity Company.
|
2.4
|
“
Code
” shall mean the Internal Revenue Code of 1986, as amended.
|
2.5
|
“
Committee
” shall mean the Executive Compensation and Development Committee of the Board or its successor, as designated by the Board.
|
2.6
|
“
Common Stock
” shall mean the Class A common stock of the Company.
|
2.7
|
“
Company
” shall mean the Erie Indemnity Company, a Pennsylvania business corporation.
|
2.8
|
“
Deferred Compensation Plan
” shall mean the Erie Indemnity Company Deferred Compensation Plan, as amended and in effect on the date of determination.
|
2.9
|
“
Deferred Stock Account
” shall mean such account as defined in Appendix A and/or Appendix B, as applicable.
|
2.10
|
“
Director
” shall mean a member of the Board.
|
2.11
|
“
Employee
” shall mean a person engaged in performing services for the Company, or its affiliates or subsidiaries, as an exempt or non-exempt full-time employee, as defined by the Company’s Corporate Personnel Manual, as in existence at the time of determination, and not as an independent contractor.
|
2.12
|
“
Outside Director
” shall mean a Director who is not an Employee or officer of the Company, its affiliates or subsidiaries.
|
2.13
|
“
Participant”
shall mean each Outside Director who participates in the Plan in accordance with the terms and conditions of the Plan.
|
2.14
|
“
Plan”
shall mean the Erie Indemnity Company Deferred Stock Plan for Outside Directors, as set forth in the provisions of the Basic Plan Document, Appendix A, Appendix B, and including any amendments, appendices and exhibits to these documents.
|
2.15
|
“
Vested
” shall mean, as of any given date, the portion of the Deferred Stock Account maintained on behalf of a Participant which is then 100% vested and nonforfeitable, as determined under Appendix A and/or Appendix B, as applicable.
|
3.1.
|
GENERAL ADMINISTRATION
|
3.2.
|
CLAIMS PROCEDURE
|
3.3.
|
CLAIMS REVIEW
|
a)
|
The date on which the notice of denial of claim was received by the Claimant;
|
b)
|
The date on which the Claimant’s request was filed with the Administrator; provided, however, that the date on which the Claimant’s request for review was in fact filed with the Administrator shall control in the event that the date of the actual filing is later than the date stated by the Claimant pursuant to this paragraph (b);
|
c)
|
The specific portions of the claim denial which the Claimant requests the Administrator to review;
|
d)
|
A statement by the Claimant setting forth the basis upon which he believes the Administrator should reverse its previous denial of his claim for benefits and accept his claim as made;
|
e)
|
Whether the Claimant desires a hearing on the claim; and
|
f)
|
Any written material (included as exhibits) which the Claimant desires the Administrator to examine in its consideration of his position as
|
5.1.
|
GENERAL CONTRACTUAL OBLIGATION
|
a)
|
It is the intent of this Plan, and each Participant understands, that eligibility and participation in this Plan does not grant any Participant or Beneficiary any interest in any asset of the Company or any affiliated company. The Company’s obligation to pay to the Participant or Beneficiary the amounts credited hereunder is a general contract obligation and shall be satisfied from the general assets of the Company. Nothing contained in the Plan shall constitute a guaranty by the Company, any affiliated company, or any other entity or person that the assets of the Company will be sufficient to pay amounts determined in accordance with the Plan. The obligation of the Company under the Plan shall be merely that of an unfunded and unsecured promise of the Company to pay amounts in the future.
|
b)
|
The Company intends to enter into a trust agreement with a trustee to establish a grantor trust fund and to transfer assets thereto, subject to the claims of creditors of the Company. The time, manner, and amount of any such asset transfer shall at all times be in the sole discretion of the Company. The assets of such trust fund shall be used to pay some or all of the amounts credited under the Plan and may be used, at the sole discretion of the Company, to pay administrative expenses of the Plan and the trust. Payments by the trustee from such trust fund to or on behalf of a Participant or Beneficiary shall discharge, to the extent thereof, the Company’s obligation to make payments of amounts credited under the Plan from other assets.
|
c)
|
In each case in which amounts represented by the balances credited to a Participant’s Vested Deferred Stock Account have been distributed to the Participant, Beneficiary, or other person entitled to receipt thereof and which purports to cover in full the benefits hereunder, such Participant, Beneficiary or other person shall have no further right or interest in the other assets of the Company on account of participation in the Plan. Notwithstanding a Participant’s entitlement to Vested amounts under the terms of the Plan, the status of the Participant, or any person claiming by or through the Participant, is that of an unsecured general creditor to the extent of his entire interest under the Plan as herein described.
|
5.2.
|
SPENDTHRIFT PROVISIONS
|
5.3.
|
NO SPOUSAL RIGHTS
|
5.4.
|
INCAPACITY OF RECIPIENT
|
5.5.
|
INFORMATION FURNISHED BY PARTICIPANTS AND BENEFICIARIES
|
5.6.
|
OVERPAYMENTS
|
5.7.
|
UNCLAIMED BENEFIT
|
5.8.
|
ELECTIONS, APPLICATIONS, NOTICES
|
5.9.
|
COUNTERPARTS
|
5.10.
|
SEVERABILITY
|
5.11.
|
GOVERNING LAW
|
5.12.
|
HEADINGS
|
5.13.
|
CONSTRUCTION
|
2.1
|
“
Administrator”
is a term that is defined in Article Two of the Basic Plan Document.
|
2.2
|
“
Amendment Form
” shall mean the Amendment Form described in Section 5.3.
|
2.3
|
“
Annual Share Credit
” shall mean the Share Credit addition determined under Section 4.2.
|
2.4
|
“
Beneficiary
” is a term that is defined in Article Two of the Basic Plan Document.
|
2.5
|
“
Board
” is a term that is defined in Article Two of the Basic Plan Document.
|
2.6
|
“
Board Tenure Year
” shall mean the period which, in reference to any given calendar year, begins on the date of the Company’s annual shareholder meeting held in such year and ends on the day before the Company’s annual shareholder meeting held in the immediately following calendar year.
|
2.7
|
“
Committee
” is a term that is defined in Article Two of the Basic Plan Document.
|
2.8
|
“
Common Stock
” is a term that is defined in Article Two of the Basic Plan Document.
|
2.9
|
“
Company
” is a term that is defined in Article Two of the Basic Plan Document.
|
2.10
|
“
Deferred Stock Account
” shall mean the bookkeeping account described in Article Four.
|
2.11
|
“
Director
” is a term that is defined in Article Two of the Basic Plan Document.
|
2.12
|
“
Dividend Equivalent Credit
” shall mean the Share Credit addition determined under Section 4.3.
|
2.13
|
“
Election Form
” shall mean the Participation Election Form described in Section 3.2.
|
2.14
|
“
Employee
” is a term that is defined in Article Two of the Basic Plan Document.
|
2.15
|
“
Outside Director
” is a term that is defined in Article Two of the Basic Plan Document.
|
2.16
|
“
Participant
” shall mean each Outside Director who participated in the Plan in accordance with the terms and conditions of this Appendix A. Participant shall also include a former Outside Director who had become a Participant during his period of active Board service and on whose behalf the Administrator is maintaining a Deferred Stock Account pursuant to the terms of this Appendix A.
|
2.17
|
“
Plan
” is a term that is defined in Article Two of the Basic Plan Document.
|
2.18
|
“
Share Credit
” shall mean the separate, identifiable units accumulated within a Participant’s Deferred Stock Account attributable to Annual Share Credits and Dividend Equivalent Credits.
|
2.19
|
“
Share Credit Allocation Date
” shall mean, with respect to any Board Tenure Year, the business day next following the first day of such Board Tenure Year; provided, however, that in reference to any individual who became an Outside Director on any day other than the first day of a given Board Tenure year, the Share Credit Allocation Date relative to such year shall mean the business day next following the day on which the individual became an Outside Director.
|
2.20
|
“
Vested
” shall mean, as of any given date, the portion of the Deferred Stock Account maintained on behalf of a Participant which is then 100% vested and nonforfeitable, as determined under Article Four.
|
2.21
|
“
Year of Board Service
” shall mean each Board Tenure Year during which a Director has served on the Board, including, for Directors on the Board as of May 1, 1997, all Years of Board Service prior to the adoption of the Deferred Compensation Plan.
|
a)
|
The method by which amounts credited to the Participant’s Deferred Stock Account are to be paid;
|
b)
|
The date, following the Participant’s official termination of service on the Board, as of which payment of amounts credited to the Participant’s Deferred Stock Account is to occur (in the event of a lump sum distribution) or commence (in the event of distribution in installments); and
|
c)
|
The Beneficiary to whom payments of amounts credited to the Participant’s Deferred Stock Account will be made in the event of the Participant’s death.
|
Date of Retirement or
Termination of Board Service |
Vested Percentage in that Year’s Annual Share Credit
|
|
|
Before last day of third full month of given Board Tenure Year
|
0%
|
After last day of third full month of given Board Tenure Year but before last day of sixth full month of given Board Tenure Year
|
25%
|
After last day of sixth full month of given Board Tenure Year but before last day of ninth full month of given Board Tenure Year
|
50%
|
After last day of ninth full month of given Board Tenure Year but before the earlier of (i) the twelfth full month of given Board Tenure Year or (ii) the date on which begins the immediately following Board Tenure Year.
|
75%
|
On or after the earlier of (i) the twelfth full month of given Board Tenure Year or (ii) the date on which begins the immediately following Board Tenure Year.
|
100%
|
(i)
|
The dividend payable by the Company on one share of Common Stock for such quarterly period; and
|
(ii)
|
The number of accumulated Share Credits credited to the Participant’s Deferred Stock Account as of the Common Stock dividend record date applicable to such quarterly period.
|
b)
|
The dividend credit determined in paragraph (a) above will immediately be converted into a Share Credit by dividing such cash dividend credit by the closing price of Common Stock on the date on which the dividend is paid on Common Stock for such quarterly period.
|
a)
|
A Participant may elect one of the following methods of payment for the amounts represented by his Vested Deferred Stock Account:
|
(ii)
|
Payments in approximately equal annual installments for a period not to exceed 10 years.
|
b)
|
In the event the Participant dies before receiving the entire distribution to which he is entitled under the Plan, the provisions of Section 5.4 shall apply.
|
a)
|
Such request of additional deferral or alternative method of payment shall be subject to the Administrator's power, to be exercised at the Administrator’s discretion, to direct that payment of the amount represented by the Participant’s Vested Deferred Stock Account will occur or commence, or will be paid under a method, in accordance with the Participant’s election(s) on a previously delivered Amendment Form or on the Participant’s Election Form; and
|
b)
|
In no event shall any requested additional deferral or alternative method of payment become effective unless the Amendment Form evidencing such request is submitted to, and approved by, the Administrator at least twelve months prior to the date payment of the amount represented by the Vested Deferred Stock Account would otherwise have occurred or commenced under the Election Form or Amendment Form in effect on the date the Participant requests the additional deferral or alternative method of payment.
|
a)
|
In the event of a Participant’s death, the amount represented by the Participant’s Vested Deferred Stock Account (or, if the Participant had begun payment prior to death, the remaining balance of such account) shall be paid by the Company to the Participant’s Beneficiary or Beneficiaries as soon as practicable in the form of a lump sum.
|
b)
|
Payment of the distributable amount represented by the deceased Participant’s Vested Deferred Stock Account will be made in shares of Common Stock equal to the number of full Share Credits credited to such account as of the payment date, with fractional Share Credits payable in cash.
|
2.1
|
“
Administrator
” is a term that is defined in Article Two of the Basic Plan Document.
|
2.2
|
“
Affiliate
” shall mean any organization which, together with the Company, is a member of a controlled group of corporations under Sections 414(b), 414(c) and 1563(a) of the Code, applying an 80% test for purposes of Section 1563(a).
|
2.3
|
“
Amendment Form
” shall mean the Amendment Form described in Section 5.5. An Amendment Form may be in paper and/or electronic form, as designated by the Administrator.
|
2.4
|
“
Annual Share Credit
” shall mean the Share Credit addition determined under Section 4.2.
|
2.5
|
“
Beneficiary
” is a term that is defined in Article Two of the Basic Plan Document.
|
2.6
|
“
Board”
is a term that is defined in Article Two of the Basic Plan Document.
|
2.7
|
“
Board Tenure Year
” shall mean the period which, in reference to any given calendar year, begins on the date of the Company’s annual shareholder meeting held in such year and ends on the day before the Company’s annual shareholder meeting held in the immediately following calendar year.
|
2.8
|
“
Committee
” is a term that is defined in Article Two of the Basic Plan Document.
|
2.9
|
“
Common Stock
” is a term that is defined in Article Two of the Basic Plan Document.
|
2.10
|
“
Company
” is a term that is defined in Article Two of the Basic Plan Document.
|
2.11
|
“
Deferred Stock Account
” shall mean the bookkeeping account described in Article Four.
|
2.12
|
“
Director
” is a term that is defined in Article Two of the Basic Plan Document.
|
2.13
|
“
Dividend Equivalent Credit
” shall mean the Share Credit addition determined under Section 4.3.
|
2.14
|
“
Election Form”
shall mean the Participation Election Form described in Section 3.2. An Election Form may be in paper and/or electronic form, as designated by the Administrator.
|
2.15
|
“
Employee
” is a term that is defined in Article Two of the Basic Plan Document.
|
2.16
|
“
Outside Director
” is a term that is defined in Article Two of the Basic Plan Document.
|
2.17
|
“
Participant
” shall mean each Outside Director who participates in the Plan in accordance with the terms and conditions of this Appendix B. Participant shall also include a former Outside Director who had become a Participant during his period of active Board service and on whose behalf the Administrator is maintaining a Deferred Stock Account pursuant to the terms of this Appendix B.
|
2.18
|
“
Plan
” is a term that is defined in Article Two of the Basic Plan Document.
|
2.19
|
“
Separation from Board Service
” shall mean the complete cessation of services as a member of the Board and of the board of directors of any Affiliate.
|
2.20
|
“
Share Credit
” shall mean the separate, identifiable units accumulated within a Participant’s Deferred Stock Account attributable to Annual Share Credits and Dividend Equivalent Credits.
|
2.21
|
“
Share Credit Allocation Date
” shall mean, with respect to any Board Tenure Year, the business day next following the first day of such Board Tenure Year; provided, however, that in reference to any individual who becomes an Outside Director on any day other than the first day of a given Board Tenure year, the Share Credit Allocation Date relative to such year shall mean the business day next following the day on which the individual becomes an Outside Director.
|
2.22
|
“
Vested
” shall mean, as of any given date, the portion of the Deferred Stock Account maintained on behalf of a Participant which is then 100% vested and nonforfeitable, as determined under Article Four.
|
2.23
|
“
Year of Board Service
” shall mean each Board Tenure Year during which a Director has served on the Board, including, for Directors on the Board as of May 1, 1997, all Years of Board Service prior to the adoption of the Deferred Compensation Plan.
|
a)
|
The method by which amounts credited to the Participant’s Deferred Stock Account are to be paid;
|
b)
|
The date, following the Participant’s Separation from Board Service, as of which payment of amounts credited to the Participant’s Deferred Stock Account is to occur (in the event of a lump sum distribution) or commence (in the event of distribution in installments);
|
c)
|
The Beneficiary to whom payments of amounts credited to the Participant’s Deferred Stock Account will be made in the event of the Participant’s death; and
|
Date of Retirement or
Termination of Board Service |
Vested Percentage in that Year’s Annual Share Credit
|
|
|
Before last day of third full month of given Board Tenure Year
|
0%
|
After last day of third full month of given Board Tenure Year but before last day of sixth full month of given Board Tenure Year
|
25%
|
After last day of sixth full month of given Board Tenure Year but before last day of ninth full month of given Board Tenure Year
|
50%
|
After last day of ninth full month of given Board Tenure Year but before the earlier of (i) the twelfth full month of given Board Tenure Year or (ii) the date on which begins the immediately following Board Tenure Year.
|
75%
|
On or after the earlier of (i) the twelfth full month of given Board Tenure Year or (ii) the date on which begins the immediately following Board Tenure Year.
|
100%
|
a)
|
A dividend credit is determined, expressed in cash, equal to the product of:
|
(i)
|
The dividend payable by the Company on one share of Common Stock for such quarterly period; and
|
(ii)
|
The number of accumulated Share Credits credited to the Participant’s Deferred Stock Account as of the Common Stock dividend record date applicable to such quarterly period.
|
b)
|
The dividend credit determined in paragraph (a) above will immediately be converted into a Share Credit by dividing such cash dividend credit by the closing price of Common Stock on the date on which the dividend is paid on Common Stock for such quarterly period.
|
a)
|
A Participant may elect one of the following methods of payment for the amounts represented by his Vested Deferred Stock Account:
|
(ii)
|
Payments in approximately equal annual installments for a period not to exceed 10 years.
|
b)
|
Except as provided in Sections 5.3 or 5.4 no distribution shall commence before or after such elected distribution date; provided, however, that if the Company makes a distribution within the permitted distribution period (as defined below) and the actual date of distribution is not within the direct or indirect control of the Participant, such distribution shall be treated as having been made on such elected distribution date. The “permitted distribution period” for this purpose shall begin on the thirtieth day before the Participant’s elected distribution date and shall end on the later of (i) the last day of the calendar year that includes the Participant’s elected distribution date, and (ii) the fifteenth day of the third month following the Participant’s elected distribution date.
|
c)
|
In the event the Participant dies before receiving the entire distribution to which he is entitled under the Plan, the provisions of Section 5.6 shall apply.
|
a)
|
The Participant needs to avoid a violation of an applicable federal, state, local, or foreign ethics law or conflicts of interest law.
|
b)
|
The Participant incurs state, local, or foreign tax obligations arising from participation in the Plan that apply to a Plan interest before such interest is otherwise payable from the Plan.
|
c)
|
The Plan is terminated and liquidated in accordance with generally applicable guidance prescribed by the Commissioner of Internal Revenue and published in the Internal Revenue Bulletin.
|
d)
|
Such other events or conditions as the Commissioner of Internal Revenue may prescribe in generally applicable guidance published in the Internal Revenue Bulletin
|
a)
|
The Administrator reasonably anticipates that making scheduled Plan payments will violate federal securities laws or other applicable law; provided that the scheduled payments are then made at the earliest date at which the Administrator reasonably contemplates that making the scheduled payments will not cause such a violation.
|
b)
|
Such other events or conditions as the Commissioner of Internal Revenue may prescribe in generally applicable guidance published in the Internal Revenue Bulletin which the Administrator, in its discretion, chooses to apply under the Plan; provided, however, that a Participant shall have no direct or indirect election as to the application of such events or conditions to his individual circumstances.
|
a)
|
Such election shall not be effective until 12 months after it is submitted to the Administrator;
|
b)
|
Such election shall require that the payment with respect to which the election is made shall be delayed for a period of not less than five years
|
c)
|
If the election pertains to a delay in the payment of a Vested Deferred Stock Account from a specific year and month that the Participant previously elected in his Election Form or a subsequent Amendment Form (or to which the Participant has defaulted under Section 5.1) such election cannot be made less than 12 months before the date the payment was otherwise scheduled to be made (or commence).
|
a)
|
In the event of a Participant’s death, the amount represented by the Participant’s Vested Deferred Stock Account (or, if the Participant began payment prior to death, the remaining balance of such account) shall be paid by the Company to the Participant’s Beneficiary in the form of a lump sum during the month next following the month of the Participant’s death. Except as provided in Sections 5.3 or 5.4, no payment to a Beneficiary under this Section 5.6 shall be made before or after such identified payment date; provided, however, that if the Company makes a payment within the permitted payment period (as defined below) and the actual date of payment is not within the direct or indirect control of the Beneficiary, such payment shall be treated as having been made on such identified payment date. The “permitted payment period” for this purpose shall begin on the day of the Participant’s death and shall end on the later of (a) the last day of the calendar year that includes the identified payment date, and (b) the fifteenth day of the third month following the identified payment date.
|
b)
|
Payment of the distributable amount represented by the deceased Participant’s Vested Deferred Stock Account will be made in shares of Common Stock equal to the number of full Share Credits credited to such account as of the payment date, with fractional Share Credits payable in cash.
|
3.9
|
Exhaustion of Administrative Remedies 16
|
3.10
|
Deadline to File Civil Action 17
|
11
|
Waiver of Participation
17
|
2.1
|
“Accrued Pension” shall mean a pension amount determined with respect to a Participant in accordance with Section 6.2(a) of the Plan using the date of determination for the date of early retirement.
|
2.2
|
“Actuary” shall mean the actuary or firm of actuaries chosen by, but independent of the Company, who is, or in the case of a firm one or more of whose members is, an enrolled actuary under the provisions of Section 3042 of the Employee Retirement Income Security Act of 1974.
|
2.3
|
“Administrator” shall mean the administrative committee described in Article III of the Plan.
|
2.4
|
“Affiliate” means any other employer which, together with the Company, is a member of a controlled group of corporations or of a commonly controlled trade or business (as defined in Code Sections 414(b) and (c) and as modified, where appropriate, by Code Section 415(h)) or of an affiliated service group (as defined in Code Section 414(m)) or other organization described in Code Section 414(o). Each such Affiliate shall be treated as an Affiliate only during such period as it is or was an Affiliate as defined above.
|
2.5
|
“Anniversary Date” shall mean any December 31 occurring after the Effective Date.
|
2.6
|
“Annuity Starting Date” shall mean the first day of the first period for which an amount is received as an annuity (whether by reason of retirement or other termination of employment) or, in the case of a benefit not payable as an annuity, the first day on which all events have occurred which entitle the Participant, or other distributee, to such benefit. A Participant whose benefit is suspended under any provision of the Plan shall not be deemed to have reached a new Annuity Starting Date when such benefit again becomes payable. The Annuity Starting Date for benefits accrued after an earlier Annuity Starting Date shall be determined in accordance with Treasury Regulations. The Annuity Starting Date for a benefit payable under Section 7.10 shall be the applicable date described therein.
|
2.7
|
“Beneficiary” shall mean any person who, by reason of a designation made by a Participant under Plan procedures or by operation of the Plan, is or will be entitled to receive any amount or benefit hereunder upon the death of the Participant. Any attempt to designate a person as Beneficiary hereunder orally, or by means other than that permitted under the Plan, shall be void and have no effect.
|
2.8
|
“Board of Directors” or “Board” shall mean the Board of Directors of the Company.
|
2.9
|
“Code” shall mean the Internal Revenue Code of 1986, as amended.
|
2.10
|
“Company” shall mean Erie Indemnity Company, a corporation organized and existing under the laws of Pennsylvania.
|
2.11
|
“Compensation” for any period shall mean the rate of base salary of a Covered Employee from the Employers during the period. For this purpose, “base salary” shall exclude Form W-2 income in the form of overtime compensation, bonuses, commissions, deferred compensation plan payments or severance pay under any severance benefit plan, but shall include Form W-2 income paid as a lump sum in lieu of merit increase and compensation excluded from Form W-2 income because of salary reduction agreements in connection with plans described in Section 125, 132(f)(4) or 401(k) of the Code, or resulting from deferred compensation contracts for the period in question. Compensation shall exclude any differential wage payments made on behalf of a Covered Employee who is on military leave. Effective for each Plan Year beginning on and after December 31, 1989, in no event shall the amount of Compensation taken into account under the Plan exceed the adjusted annual limitation permitted under Section 401(a)(17) of the Code for such Plan Year. Such adjusted annual limitation shall be, for each Plan Year beginning on and after December 31, 2001, $200,000 (as adjusted for cost-of-living increases in accordance with Section 401(a)(17)(B) of the Code). For purposes of determining benefit accruals in any given Plan Year beginning after December 31, 2001, the annual compensation limitation for any determination period after December 31, 1993 and before December 31, 2001, shall be $200,000.
|
2.12
|
“Covered Employee” shall mean any Employee of an Employer, excluding:
|
(a)
|
any such Employee whose employment is governed by the terms of a collective bargaining agreement under which retirement benefits were the subject of good faith bargaining,
|
(b)
|
any such Employee who has voluntarily waived participation in the Plan, and
|
(c)
|
any such Employee who is compensated on an hourly basis.
|
2.13
|
“Credited Service” shall mean a Participant’s service determined in accordance with Article IV hereof for the purpose of calculating the amount of benefit earned under the Plan.
|
2.14
|
“Date of Hire” shall mean the date on which an Employee first commences employment or reemployment and works at least one Hour of Service for an Employer or an Affiliate.
|
2.15
|
“Date of Severance” shall mean the earliest to occur of the following dates:
|
(a)
|
date of retirement,
|
(b)
|
date of voluntary employment termination,
|
(c)
|
date of discharge by an Employer unless he is subsequently reemployed and given pay back to the date of discharge,
|
(d)
|
date of death,
|
(e)
|
the first anniversary of a date of absence from active employment for any other reason; provided, however, that a later Date of Severance shall apply with respect to a leave of absence which, under Employer policy, provides for a later Date of Severance and, provided further, that the second anniversary of a date of absence from active employment shall be used for an Employee who is absent by reason of a Maternity or Paternity Absence which commenced on or after December 31, 1985, or who is absent by reason of Total and Permanent Disability.
|
2.16
|
“Earliest Retirement Age” shall mean the earliest date on which, under the Plan, the Participant could elect to receive retirement benefits in accordance with Section 5.1 or 5.2 hereof.
|
2.17
|
“Effective Date” shall mean December 31, 1946.
|
2.18
|
“Employee” shall mean any common-law employee of an Employer or an Affiliate; provided, however, that for purposes of Section 2.22; “Employee” shall include any self-employed individual performing services for an Employer or Affiliate who is treated as an employee under Section 401(c)(1) of the Code.
|
2.19
|
“Employer(s)” shall mean the Company, Erie Family Life Insurance Company, Erie Insurance Exchange, Erie Insurance Company, EI Holding Corp., EI Service Corp., Erie Insurance Company of New York, Erie Insurance Property & Casualty Company, Flagship City Insurance Company and any other Affiliate which may adopt this Plan.
|
2.20
|
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.
|
2.21
|
“Final Average Earnings” shall mean 1/36th of the Participant’s aggregate Compensation during the thirty-six consecutive calendar months as a Covered Employee which produces the greatest aggregate Compensation out of the one hundred twenty calendar month period as a Covered Employee ending on the earlier of the date on which the Participant retires or terminates employment with the Employers or the date on which the Participant is no longer considered a Covered Employee. In the event a Participant does not have thirty-six consecutive calendar months of Compensation as a Covered Employee (i) months in which the Participant is not a Covered Employee and months in which the Participant has no Compensation will be excluded for purposes of determining consecutive months for the thirty-six and one hundred twenty month periods and (ii) with respect to a Participant with fewer than thirty-six total calendar months of Compensation as a Covered Employee, Final Average Earnings will be determined as the average monthly Compensation over the Participant’s entire period of employment as a Covered Employee.
|
2.22
|
“Highly Compensated” shall mean any Employee who is a more than five percent (5%) owner of an Employer or earned $110,000 or more in Test Compensation from the Employer in the calendar year that begins in the twelve month period that precedes the current Plan Year (the “lookback year”); provided, however, that such $110,000 figure shall be adjusted for cost of living at the same time and in the same manner as determined under Code Section 415(d).
|
2.23
|
“Hour of Service” shall include the following:
|
(a)
|
each hour for which an Employee is directly or indirectly paid or entitled to payment from an Employer or an Affiliate as an Employee for the performance of duties during an applicable computation period (these hours must be credited to the Employee in the computation period during which the duties were performed and not when paid, if different); and
|
(b)
|
each hour for which back pay, irrespective of mitigation of damages, has been awarded or agreed to by an Employer or an Affiliate (these hours must be credited in the computation period or periods to which the award or agreement pertains rather than that in which the payment, award or agreement was made); and
|
(c)
|
each hour for which an Employee is directly or indirectly paid or entitled to payment from an Employer or an Affiliate for reasons, such as vacation, sickness or disability, other than for the performance of duties (these hours shall be calculated and credited pursuant to Section 2530.200b-2 of the Department of Labor regulations which are incorporated herein by reference).
|
2.24
|
“Leased Employee” shall mean any person (other than an Employee of an Employer) who pursuant to an agreement between the Employer and any other person (“leasing organization”) has performed services for the Employer (or for the Employer and related persons determined in accordance with Section 414(n)(6) of the Code) on a substantially full-time basis for a period of at least one year and such services are performed under primary direction or control by the recipient. Except as provided below, any person satisfying the foregoing criteria shall be treated as an Employee. Contributions or benefits provided a Leased Employee by the leasing organization which are attributable to services performed for the Employer shall be treated as provided by the Employer.
|
2.25
|
“Maternity or Paternity Absence” shall mean an absence from work by an Employee for any period:
|
(a)
|
by reason of pregnancy of the Employee,
|
(b)
|
by reason of the birth of a child of the Employee,
|
(c)
|
by reason of the placement of a child with the Employee in connection with the adoption of such child by such Employee, or
|
(d)
|
for purposes of caring for such child for a period immediately following such birth or placement.
|
2.26
|
“Normal Retirement Age” of a Participant shall be age 65.
|
2.27
|
“Normal Retirement Date” of a Participant shall be the first day of the month next following the month in which his sixty-fifth birthday occurs.
|
2.28
|
“Participant” shall mean any Covered Employee and any former Covered Employee who is entitled to, or who is receiving, a retirement benefit or deferred vested pension under the Plan.
|
2.29
|
“Period of Severance” shall mean the period of time between an Employee’s Date of Severance and the date as of which he performs his first Hour of Service following reemployment.
|
2.30
|
“Plan” or “Pension Plan” shall mean this “Erie Insurance Group Retirement Plan for Employees” as herein set forth with all amendments, modifications, appendices, and supplements hereafter made.
|
2.31
|
“Plan Year” shall mean any period of 12 consecutive calendar months next preceding an Anniversary Date of the Plan.
|
2.32
|
“Service” shall mean an Employee’s service determined in accordance with Article IV hereof for the purposes of meeting the eligibility requirements for a benefit under the Plan.
|
2.33
|
“Social Security Covered Compensation” shall mean, for any Plan Year, the average (without indexing) of the Social Security taxable wage bases in effect for each calendar year during the 35-year period ending with the last day of the calendar year in which the Participant attains (or will attain) Social Security Retirement Age (as such term is defined in Section 10.1(a)(iv) hereof). In determining a Participant’s Social Security Covered Compensation for a Plan Year, the Social Security taxable wage base for the current Plan Year and any subsequent Plan Year shall be assumed to be the same as in effect for the Plan Year for which the determination is being made. A Participant’s Social Security Covered Compensation shall be automatically adjusted for each Plan Year in accordance with these provisions, up to and including the Plan Year in which the Participant attains Social Security Retirement Age.
|
2.34
|
“Spouse” shall mean, with respect to any Participant, the person to whom the Participant is married at a given determination date, as determined under applicable law.
|
2.35
|
“Test Compensation” shall mean, for any Plan Year, an Employee’s compensation, reported under Sections 6041 and 6051 of the Code on Form W‑2, as paid by the Company or other Employer for the calendar year ending with or within such Plan Year, including any amounts contributed pursuant to a salary reduction election on behalf of a Covered Employee to a plan described in Sections 125, 132(f), 402(e)(3), 402(h)(1)(B), 403(b), or 457(b) of the Code for the period in question. Effective January 1, 2009, Test Compensation shall include any differential wage payments, as defined in Section 3401(h) of the Code, that are paid by an Employer during a period of qualified military service as defined in Section 414(u) of the Code. Test Compensation in any given year shall not exceed the adjusted annual limitation in effect for such year (as set forth in Section 2.11), provided that such limitation shall not be applied in determining the status of an Employee as a Highly Compensated Employee or Key Employee. To the extent permitted under regulations and other guidance promulgated by the Internal Revenue Service, the Company may elect to determine Test Compensation on a basis other than that provided above.
|
(a)
|
Regular Pay After Severance from Employment. The payment for services rendered during the Participant’s regular working hours, or for services outside of the Participant’s regular working hours such as overtime or shift differential, commissions, bonuses or other similar payments that would have been paid had the Participant not incurred a severance from employment.
|
(b)
|
Leave Cash Outs and Deferred Compensation. Payments of unused accrued bona fide sick, vacation or other leave provided the Participant would have been able to use the leave if employment had continued, or payments from a nonqualified unfunded deferred compensation plan, provided the payment would have been paid had the Participant not incurred a severance from employment and such payment would have been includible in gross income had such payment been made.
|
(c)
|
Post-Severance from Employment Salary Continuation Payments. If the Employer continues to provide remuneration to a Participant due to the Participant’s disability or to a Participant who is not performing services because of qualified military service, as defined in Code Section 414(u), in an amount that is not in excess of that which would have been payable to the Participant as compensation had the Participant not entered qualified military service, such amounts will be included in Test Compensation for purposes of this Section.
|
2.36
|
“Total and Permanent Disability” shall mean permanent incapacity resulting in the Participant being unable to engage in any gainful employment or occupation by reason of any medically demonstrable physical or mental condition, excluding, however, (a) incapacity contracted, suffered or incurred while the Participant was engaged in or which resulted from having engaged in a felonious enterprise; and (b) incapacity contracted, suffered or incurred in the employment of other than an Employer, including self-employment.
|
2.37
|
“Trust Agreement” shall mean the trust agreement between the Company and a Trustee as provided in Section 9.1, together with all amendments, modifications and supplements, thereto.
|
2.38
|
“Trustee” shall mean the Trustee or Trustees designated under a Trust Agreement including any successor or successors.
|
2.39
|
“Trust Fund” or “Fund” shall mean the retirement plan trust fund established by the Company in accordance with Article IX.
|
3.1
|
Pension Administrator
|
3.2
|
Powers
|
(a)
|
To make and enforce such rules and regulations as it deems necessary or proper for the efficient administration of the Plan, including the modification of the claims procedure under Section 3.8 in accordance with any regulations issued under Section 503 of ERISA.
|
(b)
|
To interpret the Plan.
|
(c)
|
To decide all questions concerning the Plan and the eligibility of any person to participate in the Plan, his period of participation and/or service under the Plan, his date of birth, his eligibility to accrue a benefit under the Plan and to receive a distribution from the Plan.
|
(d)
|
To compute the amount of benefits which will be payable to any Participant or other person in accordance with the provisions of the Plan, and to determine the identity of the person or persons to whom such benefits will be paid.
|
(e)
|
To authorize the payment of Plan benefits and to direct cessation of benefit payments.
|
(f)
|
To appoint one or more investment managers to manage the investment and reinvestment of the Fund and to enter into management contracts on behalf of the Company with respect to such appointments. Unless and until the Administrator appoints an investment manager with respect to all or a specific portion of the Fund, the Trustee shall have exclusive authority to manage and control all or such portion of the Fund.
|
(g)
|
To appoint, employ or engage such other agents, counsel accountants, consultants and actuaries as may be required to assist in administering the Plan.
|
(h)
|
To establish procedures to determine whether a domestic relations order is a qualified domestic relations order within the meaning of Section 414(p) of the Code, to determine under such procedures whether a domestic relations order is a qualified domestic relations order and whether a putative alternate payee otherwise qualifies for benefits hereunder, to inform the parties to the order as to the effect of the order, and to direct the Trustee to hold in escrow or pay any amounts so directed to be held or paid by the order.
|
(i)
|
To determine whether the Plan has incurred a partial termination.
|
(j)
|
To obtain from the Employers, Employees, Participants, Spouses and Beneficiaries such information as shall be necessary for the proper administration of the Plan.
|
(k)
|
To perform all reporting and disclosure requirements imposed upon the Plan by ERISA, the Code or any other lawful authority.
|
(l)
|
To take such steps as it, in its discretion, considers necessary and/or appropriate to remedy any inequity under the Plan that results from incorrect information received or communicated or as the consequence of administrative error including, but not limited to, recouping benefit overpayments.
|
(m)
|
To correct any defect, reconcile any inconsistency or supply any omission under the Plan.
|
(n)
|
To delegate its powers and duties to others in accordance with Section 3.3.
|
(o)
|
To exercise such other authority and responsibility as is specifically assigned to it under the terms of the Plan or the provisions of the Administrator’s charter and to perform any other acts necessary to the performance of its powers and duties.
|
3.3
|
Delegation of Duties
|
3.4
|
Administrator as Named Fiduciary
|
3.5
|
Conclusiveness of Various Documents
|
3.6
|
Actions to be Uniform
|
3.7
|
Liability and Indemnification
|
3.8
|
Claims Review Procedure
|
(a)
|
Original Claim
. In the event a claim of any Participant, Beneficiary, alternate payee, or other person (hereinafter referred to in this Section as the “Claimant”) for a benefit is partially or completely denied, the Administrator shall give, within ninety (90) days after receipt of the claim (or if special circumstances, made known to the Claimant, require an extension of time for processing the claim, within one hundred eighty (180) days after receipt of the claim), written notice of such denial to the Claimant. Such notice shall set forth, in a manner calculated to be understood by the Claimant, the specific reason or reasons for the denial (with reference to pertinent Plan provisions upon which the denial is based); an explanation of additional material or information, if any, necessary for the Claimant to perfect the claim; a statement of why the material or information is necessary; on and after January 1, 2002, a statement of the Claimant’s right to bring a civil action under Section 502(a) of ERISA; and an explanation of the Plan’s claims review procedure, including the time limits applicable to such procedure.
|
(b)
|
Review of Denied Claim
.
|
(i)
|
A Claimant whose claim is partially or completely denied shall have the right to request a full and fair review of the denial by a written request delivered to the Administrator within sixty (60) days of receipt of the written notice of claim denial, or within such longer time as the Administrator, under uniform rules, determines. In such review, the Claimant or his duly authorized representative shall have the right to review, upon request and free of charge, all documents, records or other information relevant to the claim and to submit any written comments, documents, or records relating to the claim to the Administrator.
|
(ii)
|
The Administrator, within sixty (60) days after the request for review, or in special circumstances, such as where the Administrator in its sole discretion holds a hearing, within one hundred twenty (120) days of the request for review, will submit its decision in writing. Such decision shall take into account all comments, documents, records and other information properly submitted by the Claimant, whether or not such information was considered in the original claim determination. The decision on review will be binding on all parties, will be written in a manner calculated to be understood by the Claimant, will contain specific reasons for the decision and specific references to the pertinent Plan provisions upon which the decision is based, will indicate that the Claimant may review, upon request and free of charge, all documents, records or other information relevant to the claim and on and after January 1, 2002, will contain a statement of the Claimant’s right to bring a civil action under Section 502(a) of ERISA.
|
(iii)
|
If a Claimant fails to file a claim or request for review in the manner and in accordance with the time limitations specified herein, such claim or request for review shall be waived, and the Claimant shall thereafter be barred from again asserting such claim.
|
(c)
|
Determination by the Administrator Conclusive.
The Administrator’s determination of factual matter relating to Participants, Beneficiaries and alternate payees including, without limitation, a Participant’s Credited Service, Service and any other factual matters, shall be conclusive. The Administrator and the Company and its respective officers and directors shall be entitled to rely upon all tables, valuations, certificates and reports furnished by an actuary, any accountant for the Plan, the Trustee or any investment managers and upon opinions given by any legal counsel for the Plan insofar as such reliance is consistent with ERISA. The actuary, the Trustee and other service providers may act and rely upon all information reported to them by the Administrator and/or the Company and need not inquire into the accuracy thereof nor shall be charged with any notice to the contrary.
|
3.9
|
Exhaustion of Administrative Remedies.
The exhaustion of the claims review procedure is mandatory for resolving every claim and dispute arising under the Plan. As to such claims and disputes: |
(a)
|
No claimant shall be permitted to commence any civil action to recover Plan benefits or to enforce or clarify rights under the Plan under Section 502 or Section 510 of ERISA or under any other provision of law, whether or not statutory, until the claims review procedure set forth herein has been exhausted in its entirety; and
|
(b)
|
In any such civil action all explicit and all implicit determinations by the Administrator (including, but not limited to, determinations as to whether the claim, or a request for a review of a denied claim, was timely filed) shall be afforded the maximum deference permitted by law.
|
3.10
|
Deadline to File Civil Action
.
No civil action to recover Plan benefits or to enforce or clarify rights under the Plan under Section 502 or Section 510 of ERISA or under any other provision of law, whether or not statutory, may be brought by any claimant on any matter pertaining to the Plan unless the civil action is commenced in the proper forum before the earlier of: |
(a)
|
Thirty months after the claimant knew or reasonably should have known of the principal facts on which the claim is based; or
|
(b)
|
Eighteen months after the claimant has exhausted the claims review procedure.
|
3.11
|
Waiver of Participation
|
4.1
|
Service
|
4.2
|
Credited Service
|
4.3
|
Loss and Reinstatement of Service
|
(a)
|
five years, or
|
(b)
|
the Participant’s forfeited Service (including any periods of Service previously reinstated under the provisions of this Section 4.3 or its predecessor).
|
4.4
|
Transfer To Other Employment
|
4.5
|
Transfer From Other Employment
|
5.1
|
Normal Retirement
|
5.2
|
Early Retirement
|
5.3
|
Disability Retirement
|
5.4
|
Vesting
|
6.1
|
Normal Retirement Pension
|
(a)
|
equals 1.0% of the Participant’s Final Average Earnings not in excess of Social Security Covered Compensation;
|
(b)
|
equals 1.5% of the Participant’s Final Average Earnings in excess of Social Security Covered Compensation; and
|
(c)
|
equals the Participant’s Credited Service not in excess of 30 years.
|
6.2
|
Early Retirement Pension
|
(a)
|
A deferred pension, commencing as of the Participant’s Normal Retirement Date, equal to the amount of pension, determined under Section 6.1, to which he is entitled based upon his Credited Service and Final Average Earnings as of his date of early retirement and the level of Social Security Covered Compensation in effect on such date.
|
(b)
|
An immediate pension, commencing as of any month following the month in which such Participant retires early, determined as provided in (a) above, but reduced by 1/4 of 1 percent for each complete calendar month up to 60 such months and by 3/8ths of 1 percent for each complete calendar month in excess of 60 months, by which his early retirement pension commencement date precedes his Normal Retirement Date.
|
6.3
|
Disability Retirement Pension
|
(a)
|
Service and Credited Service are granted for each calendar year (and part thereof) during which he continues to be subject to a Total and Permanent Disability, and
|
(b)
|
his Compensation continues unchanged from the calendar year including his date of disability to the calendar year including his Normal Retirement Age or later disability retirement date, and
|
(c)
|
his Social Security Covered Compensation is based on the level in effect at the time he becomes disabled.
|
6.4
|
Deferred Pension Upon Termination of Service
|
Years of Service
|
Vesting Percentage
|
Less than 5
|
0%
|
5 or more
|
100%
|
6.5
|
Increase in Pension for Certain Retired Participants
|
(a)
|
Notwithstanding the foregoing provisions of this Article VI and effective for Plan payments made on or after January 1, 1996, the monthly pension payable to a Qualified Pensioner (or to the Beneficiary of a Qualified Pensioner) shall be increased by the greater of five percent (5%) or twenty dollars ($20.00). For purposes of this subsection (a), a “Qualified Pensioner” means a Participant who retired under the normal retirement, early retirement, or disability retirement provisions of the Plan prior to January 1, 1994.
|
(b)
|
Notwithstanding the foregoing provisions of this Article VI and effective for Plan payments made on or after January 1, 1999, the monthly pension payable to a Qualified Pensioner (or to the Beneficiary of a Qualified Pensioner) shall be increased by the greater of four percent (4%) or fifteen dollars ($15.00). For purposes of this subsection (b), a “Qualified Pensioner” means a Participant who retired under the normal retirement, early retirement, or disability retirement provisions of the Plan and commenced Plan payment prior to January 1, 1997.
|
6.6
|
Offset of Accruals by Plan Distributions
|
6.7
|
Non-Duplication of Benefits
|
(a)
|
There shall be no duplication of any retirement benefit or deferred vested pension benefit payable under this Plan, and any pension or retirement benefit payable under any other qualified defined benefit pension, retirement, or similar plan to which an Employer or predecessor Employer of the particular Participant has contributed, based upon the same period of service. Unless such other benefits are clearly intended to be in addition to benefits under this Plan, the Administrator shall make or cause to be made appropriate adjustments in the retirement benefit or deferred vested pension benefit payable under this Plan in respect to any Participant to carry out the provisions of this paragraph.
|
(b)
|
No benefit shall be payable to any Participant under more than one Section of the Plan for the same period of time.
|
7.1
|
Normal and Early Retirement Pensions
|
(a)
|
Any normal or early retirement pension shall be payable to a retired Participant who has applied therefor in accordance with the rules established by the Administrator, commencing as of the later of the Participant’s Normal Retirement Date or the first day of the month next following the date as of which the Participant makes proper application to commence retirement payments. A Participant who is eligible for an early retirement pension may elect payment prior to Normal Retirement Date and receive a reduced pension under the provisions of Section 6.2. Subject to Sections 7.10(b) and 11.12, a Participant who fails to elect such payment as provided in this Section 7.1 will be deemed to have made an election to defer distribution.
|
(b)
|
Subject to Sections 7.8 and 7.10, a normal or early retirement pension shall be payable monthly for the remaining life of such retired Participant. The last payment to the retired Participant under this form shall be for the month in which the death of such retired Participant occurs. However, if the retired Participant duly accepted the Automatic Surviving Spouse’s Pension as set forth in Section 7.5 or elected an optional form of pension in Section 7.7 and is receiving his retirement pension pursuant to such election, then any pension payments to him and his surviving Spouse or Beneficiary shall be as set forth in Section 7.5 or 7.7, whichever applicable.
|
7.2
|
Disability Retirement Pension
|
7.3
|
Deferred Vested Pension
|
7.4
|
Reemployment of a Retired Participant
|
7.5
|
Automatic Surviving Spouse’s Pension
|
7.6
|
Requirement for Spouse Consent
|
(a)
|
because there is no Spouse or because the Spouse cannot be located,
|
(b)
|
because the Participant is legally separated from the Spouse,
|
(c)
|
because the Participant has been abandoned by his Spouse (within the meaning of local law) and such Participant has a court order to that effect, or
|
(d)
|
because of such other circumstances as the Secretary of the Treasury may by regulations prescribe.
|
7.7
|
Optional Forms of Pensions
|
(a)
|
Option A
:
10-Year Certain and Life Option
- A reduced monthly retirement income is payable to the Participant during his remaining lifetime, and upon his death prior to receiving payment for a period equivalent to 120 months, monthly payments of the same reduced amount will be made to his Beneficiary until the number of monthly payments made to the Beneficiary, when added to the number of monthly payments made to the Participant, is equivalent to 120 monthly payments.
|
(b)
|
Option B
:
15-year Certain and Life Option
- A reduced monthly retirement income is payable to the Participant during his remaining lifetime, and upon his death prior to receiving payment for a period equivalent to 180 months, monthly payments of the same reduced amount will be made to his Beneficiary until the number of monthly payments made to the Beneficiary, when added to the number of monthly payments made to the Participant, is equivalent to 180 monthly payments.
|
(c)
|
Option C
:
50% Joint and Survivor Option
- a reduced monthly retirement income is payable to the Participant for his remaining lifetime, and upon his death, monthly income of 50% of such reduced monthly income previously paid to the Participant shall be paid to his Beneficiary for as long thereafter as that person shall live.
|
(d)
|
Option D:
75% Joint and Survivor Option
- effective for Plan Years beginning after December 31, 2007, a reduced monthly retirement income is payable to the Participant for his remaining lifetime, and upon his death, monthly income of 75% of such reduced monthly income previously paid to the Participant shall be paid to his Beneficiary for as long thereafter as that person shall live.
|
(e)
|
Option E
:
100% Joint and Survivor Option
- a reduced monthly retirement income is payable to the Participant for his remaining lifetime, and upon his death, monthly income of 100% of such reduced monthly income previously paid to the Participant shall be paid to his Beneficiary for as long thereafter as that person shall live.
|
(f)
|
Option F
:
Joint and Survivor Pop-Up Option
- a reduced monthly retirement income is payable to the Participant for his remaining lifetime, and upon his death, monthly income of either 50% or 100% (as elected by the Participant) of such reduced monthly income previously paid to the Participant shall be paid to the Participant’s Spouse for as long thereafter as such Spouse shall live; provided, however, that in the event the Spouse of the Participant predeceases the Participant and such Spouse’s death occurs within 60 months of the Participant’s Annuity Starting Date, the provisions of Section 7.12 shall apply. Notwithstanding any provision of the Plan to the contrary (i) the Joint and Survivor Pop-Up Option shall be available only with respect to a Participant who has retired under the normal retirement provisions of Section 5.1 or the early retirement provisions of Section 5.2, and (ii) actuarial equivalence of a benefit payable under the Joint and Survivor Pop-Up Option shall be determined under Section 11.6; provided, however, that in the event an annuity contract is purchased from an insurance company with respect to such benefit, actuarial equivalence shall thereafter be determined by reference to the specific annuity contract which will be purchased by the Plan to provide the monthly retirement income payable under this form of payment.
|
7.8
|
Payment of Small Pension
|
(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. No lump sum payments shall be made if the actuarial equivalent present value of the benefit is in excess of this threshold.
|
(b)
|
Effective for any distribution to a Participant under this Section 7.8 on and after March 28, 2005, the lump sum payment described above shall be made on the conditions that the Participant is alive as of the applicable Annuity Starting Date and, except as otherwise provided in this subsection (b), that the Participant affirmatively elects payment in cash or as a Direct Rollover (as defined in Section 7.11). No further election or consent shall be required or permitted with respect to such distribution. Effective for any distribution to a Participant under this Section 7.8 on and after February 1, 2006, if the Participant fails to affirmatively elect payment in cash or as a Direct Rollover within the 60-day period following the Administrator’s distribution of the Direct Rollover explanation and election, as applicable to a benefit with an actuarial equivalent present value in excess of $1,000, the Administrator shall direct distribution of the lump sum payment in the form of a Direct Rollover to an individual retirement plan or annuity selected by the Administrator. If the actuarial equivalent present value of the retirement benefit or deferred vested pension does not exceed $1,000 as of the applicable Annuity Starting Date and the Participant fails to make a cash/Direct Rollover election within such 60-day period, the Plan shall pay such benefit in the form of an actuarial equivalent cash lump sum as soon as practicable following the expiration of such 60-day period.
|
(c)
|
The actuarial equivalent present value of a retirement benefit, deferred vested pension or survivor benefit shall be calculated and paid on the basis of the “applicable mortality table”, as defined in Section 417(e)(3)(B) of the Code, and the “applicable interest rate”, as defined in Section 417(e)(3)(C) of the Code, for the second calendar month preceding the month in which the distribution is payable (and, for Plan Years beginning before December 31, 2012, reflecting the phase-in applicable under Section 417(e)(3)(D) of the Code); provided, however, that in the event the Alternative Present Value (as hereinafter defined) of the applicable benefit is a larger amount, such larger amount shall be paid (provided such Alternative Present Value calculation does not exceed $5,000). For purposes of this Section 7.8, the “Alternative Present Value” of a retirement benefit, deferred vested pension or survivor benefit shall be based on the Accrued Pension earned by the Participant at the earlier of his termination of employment, or December 30, 1995, determined by using the UP-1984 mortality table (reflecting a one-year setback for Participants and a two-year setback for Beneficiaries) and a 6% interest rate.
|
(d)
|
The provisions of this Section 7.8 shall likewise apply to any Participant who terminates his employment with an Employer and all Affiliates prior to his completion of such period of Service as is required for a deferred vested pension under the Plan. In such case the terminated Participant shall be deemed to receive a lump sum distribution of the actuarial equivalent present value of his entire vested pension as of his date of termination of employment. Subject to Section 7.9 hereof, a Participant who receives a distribution (or deemed distribution) under this Section 7.8 shall lose his Credited Service (and Service, in the case of a deemed distribution) under the Plan, shall forfeit his nonvested Accrued Pension and shall no longer be considered a Participant hereunder after such date of distribution (or deemed distribution).
|
7.9
|
Repayment of Cashout on Reemployment
|
7.10
|
Delay in Commencement of Pension Payments
|
(a)
|
Unless the Participant otherwise elects, payment of any pension under the provisions of this Article VII shall commence as of a date that is no later than 60 days after the later of the close of the Plan Year during which a Participant: (i) attains his Normal Retirement Age or, (ii) terminates his employment with an Employer and Affiliates. A Participant who has terminated employment with an Employer and Affiliates may not affirmatively elect to defer payment of any retirement or deferred vested benefit beyond the Participant’s Normal Retirement Date; provided, however, that a Participant who is receiving benefits under a long-term disability benefit contract or plan to which an Employer or Affiliate has
|
(b)
|
Notwithstanding any inconsistent provision of the Plan and effective January 1, 2003, all distributions under the Plan shall be made in accordance with Code Section 401(a)(9), including the incidental death benefit requirement of Code Section 401(a)(9)(G), and Sections 1.401(a)(9)-1 through 1.401(a)(9)-9 of the Income Tax Regulations. Specifically, distribution of the Participant’s interest shall:
|
(ii)
|
commence not later than the Required Beginning Date with distribution to the Participant made over the life of the Participant or joint lives of the Participant and a designated Beneficiary or a period not longer than the life of the Participant or joint lives of the Participant and a designated Beneficiary.
|
(c)
|
In the event that a Participant dies prior to the date that distribution commences:
|
(i)
|
any portion of the Participant’s interest that is not payable to a designated Beneficiary shall be distributed not later than the end of the calendar year which includes the fifth anniversary of the date of the Participant’s death; and
|
(ii)
|
any portion of the Participant’s interest that is payable to a designated Beneficiary shall be distributed in accordance with subsection (i) above or over the life of the designated Beneficiary (or over a period not extending beyond the life expectancy of the Beneficiary), commencing not later than the end of the calendar year following the calendar year of the Participant’s death or, if the Beneficiary is the Participant’s surviving Spouse, commencing not later than the last day of the later of the calendar year in which the Participant would have attained age 70½ or the calendar year following the calendar year which includes the date of the Participant’s death.
|
(d)
|
In the event that a Participant dies after distribution of his interest has begun, but prior to distribution of his entire interest, the remaining portion of such interest
|
7.11
|
Direct Rollover of Eligible Rollover Distributions.
|
(a)
|
The term “Distributee” shall mean an Employee or former Employee. In addition, such an individual’s surviving Spouse or such an individual’s Spouse or former Spouse who is an alternate payee within the meaning of Section 414(p)(8) of the Code are Distributees with respect to the interest of the Spouse or former Spouse. With respect to distributions made on or after December 31, 2009, a Distributee shall also include an Employee’s or former Employee’s Beneficiary who is not the Employee’s or former Employee’s Spouse.
|
(b)
|
The term “Eligible Rollover Distribution” shall mean any distribution of all or any portion of the balance to the credit of the Distributee other than: (i) any distribution that is one of a series of substantially equal periodic payments made for the life (or life expectancy) of the Distributee or the joint lives (or joint life expectancies) of the Distributee and his Beneficiary, or for a specified period of ten years or more; (ii) any distribution to the extent such distribution is required under Section 401(a)(9) of the Code; and, (iii) any portion of a hardship withdrawal. In addition, a portion of a distribution shall not fail to be an Eligible Rollover Distribution merely because the portion consists of after-tax employee contributions which are not includible in gross income. However, such portion may be paid only to an individual retirement account or annuity described in Section 408(a) or (b) of the Code, respectively, or (for distributions on and after January 1, 2008) to a Roth IRA described in Section 408A of the Code, to a qualified trust defined in Section 401(a) of the Code, or to an annuity contract described in Section 403(b) of the Code provided such account, annuity, IRA, trust or annuity contract agrees to separately account for amounts so transferred, including separately accounting for the portion of such distribution which is includible in gross income and the portion of such distribution which is not so includible.
|
(c)
|
The term “Eligible Retirement Plan” shall mean an individual retirement account described in Section 408(a) of the Code, an individual retirement annuity described in Section 408(b) of the Code, an annuity described in Section 403(a) of the Code, an annuity described in Section 403(b) of the Code, an eligible plan under Section 457(b) of the Code which is maintained by a state or a political subdivision of a state and which agrees to separately account for amounts transferred, a qualified trust described in Section 401(a) of the Code, and for periods on and after January 1, 2008, a Roth IRA under Section 408A of the Code, that accepts the Distributee’s Eligible Rollover Distribution. However, in the case of an Eligible Rollover Distribution: (i) that includes after-tax employee contributions, an Eligible Retirement Plan is an individual retirement account or annuity described in Section 408(a) or (b) of the Code, or a qualified defined contribution plan or annuity described in Section 401(a) or 403(a) of the Code that agrees to separately account for such Eligible Rollover Distributions, including separately accounting for the portion of such distribution which is includible in gross income and the portion of such distribution which is not so includible, (ii) that includes a Designated Roth Account, an Eligible Retirement Plan is an individual retirement plan described in Section 408A of the Code or a qualified defined contribution plan described in Section 401(a) of the Code that agrees to separately account for such Eligible Rollover Distribution, including separately accounting for the portion of such distribution which is includible in gross income and the potion of such distribution which is not so includible, and (iii) that is made on behalf of a Distributee who is not the Employee’s or former Employee’s Spouse, an Eligible Retirement Plan shall mean an individual retirement account described in Section 408(a) of the Code or an individual retirement annuity described in Section 408(b) of the Code established for the purpose of receiving a distribution on behalf of a Beneficiary, which will be treated as an inherited IRA pursuant to Section 402(c)(11) of the Code.
|
(d)
|
The term “Direct Rollover” shall mean a payment by the Plan to the Eligible Retirement Plan specified by the Distributee.
|
7.12
|
Change to Pension Payments in Connection with Qualifying Event.
|
(a)
|
In the event an Eligible Retiree (as hereinafter defined) experiences a Qualifying Event (as hereinafter defined), the provisions of this Section 7.12 shall apply, provided that the Eligible Retiree furnishes the Administrator with reasonable notice of the Qualifying Event within 120 days of the Qualifying Event and provides such further information applicable hereunder as the Administrator may reasonably require. For purposes of this Section:
|
(i)
|
“Eligible Retiree” shall mean a Participant who has retired under the normal retirement provisions of Section 5.1 or the early retirement provisions of Section 5.2 and who, as of his Annuity Starting Date, was either:
|
(A)
|
legally married and commencing receipt of his retirement income in the form of an Automatic Surviving Spouse’s Pension (as defined in Section 7.5), under the 100% Joint and Survivor Option (with his Spouse as Beneficiary thereunder) or under the Joint and Survivor Pop-Up Option; or
|
(B)
|
unmarried and commencing receipt of his retirement income in the normal form of benefit provided under Section 7.1 (a life annuity).
|
(ii)
|
“Qualifying Event” shall mean an event described in (A), (B) or (C) below:
|
(A)
|
The Spouse of an Eligible Retiree who is receiving retirement income under the Joint and Survivor Pop-Up Option under Section 7.7(e) predeceases the Eligible Retiree and such Spouse’s death occurs within 60 months of the Eligible Retiree’s Annuity Starting Date;
|
(B)
|
The marital status of an Eligible Retiree who is receiving retirement income under any of the forms of payment described in subparagraph (a)(i)(A) of this Section 7.12 changes within 120 months of his Annuity Starting Date due to the Eligible Retiree’s divorce, marital dissolution, or legal separation; or
|
(C)
|
The marital status of an Eligible Retiree who is described under subparagraph (a)(i)(B) of this Section 7.12 changes and within 120 months of his Annuity Starting Date due to the Eligible Retiree’s marriage.
|
(iii)
|
“Qualifying Event Election Period” shall mean the 90-day period beginning on the date on which the Eligible Retiree timely notifies the Administrator of a Qualifying Event, as provided in Section 7.12(a) above.
|
(iv)
|
The determination of an Eligible Retiree’s marital status and the determination of whether a divorce, marital dissolution or legal separation has occurred shall be made on the basis of the laws of the Commonwealth of Pennsylvania unless preempted by federal law.
|
(b)
|
In the event of the occurrence of a Qualifying Event described in subparagraphs (a)(ii)(A) or (a)(ii)(B) of this Section 7.12, and contingent upon the Eligible Retiree’s timely notification to the Administrator, the retirement income payable to the affected Eligible Retiree shall revert to the normal form of benefit provided under Section 7.1 (a life annuity) as of the first day of the month following the expiration of the Qualifying Event Election Period; provided, however, that:
|
(i)
|
The amount of such monthly life annuity shall be the actuarial equivalent of the Eligible Retiree’s benefit, determined as of the time of calculation hereunder, under the form of payment in effect as of his Annuity Starting Date; provided, however, that such monthly amount shall not exceed the amount of the monthly life annuity which the Eligible Retiree was entitled to as of his Annuity Starting Date; and
|
(ii)
|
In the case of a Qualifying Event described in subparagraph (a)(ii)(B) of this Section 7.12, the Spouse or ex-Spouse of the Eligible Retiree, as part of the division of marital property (or other determination which is not subject to modification under state law), expressly waives all interest in the Eligible Retiree’s pension under the Plan and such waiver is incorporated into a document which satisfies the formal requirements of a “Qualified Domestic Relations Order” as defined in Section 414(p) of the Code; and
|
(iii)
|
In the case of a Qualifying Event described in subparagraph (a)(ii)(B) of this Section 7.12, the Spouse or ex-Spouse of the Eligible Retiree shall secure such proof of insurability as the Administrator may require, in its discretion.
|
(c)
|
In the case of any Qualifying Event described in subparagraph (a)(ii)(C) of this Section 7.12 and contingent upon the Eligible Retiree’s timely notification to the Administrator, the affected Eligible Retiree shall be permitted to elect, within the Qualifying Event Election Period, to receive his future retirement income from the Plan in one of the forms of payment described in paragraphs (c), (d), or (e) of Section 7.7 (a 50% or 100% Joint and Survivor Option or a 50% or 100% Joint and Survivor Pop-Up Option) with his Spouse as Beneficiary thereunder; provided, however, that:
|
(i)
|
Payments under any elected form of payment shall commence as of the first day of the month next following the month in which the Eligible Retiree makes full and complete application to the Administrator in accordance with rules established by the Administrator (such commencement date referred to herein as the “Adjusted Commencement Date”); and
|
(ii)
|
Payments under any elected form of payment shall be the actuarial equivalent of the Eligible Retiree’s benefit, determined as of the time of calculation hereunder, under the form of payment in effect as of his Annuity Starting Date; provided, however, that such monthly amount shall not exceed the amount of the monthly benefit under the elected form of payment which the Eligible Retiree was entitled to as of his Annuity Starting Date; and
|
(iii)
|
The Eligible Retiree shall secure such proof of insurability of the Eligible Retiree and/or the Eligible Retiree’s Spouse as the Administrator may require, in its discretion; and
|
(iv)
|
The provisions of Sections 7.5 and 7.6 hereof shall apply with respect to any Eligible Retiree who is married as of the Adjusted Commencement Date and, for purposes of such Sections and Section 7.7, the Adjusted Commencement Date shall be deemed the Annuity Starting Date for the elected form of payment described in this Section 7.12(c); and
|
(v)
|
In no event shall more than one election be made under this Section 7.12(c) by an Eligible Retiree with respect to any single Qualifying Event nor shall this Section 7.12 be applicable more than twice with respect to any Eligible Retiree, Section 7.12(c), irrespective of the number of Qualifying Events affecting such Eligible Retiree; and
|
(vi)
|
A Participant’s status as an Eligible Retiree must be independently satisfied with respect to each Qualifying Event (substituting, where applicable, the Adjusted Commencement Date for the Annuity Starting Date under Section 7.12(a)(i)).
|
8.1
|
Death Prior to Retirement or Severance
|
8.2
|
Death Prior to Commencement of Early or Disability Pensions
|
8.3
|
Death Prior to Commencement of Vested Pensions
|
(a)
|
in the case of a Participant who dies after the date on which the Participant attained his Earliest Retirement Age as though such Participant had retired on the day before the Participant’s date of death, with an immediate benefit determined under the provisions of Section 6.2(a) and payable under the Automatic Surviving Spouse’s Pension in Section 7.5 of the Plan, or
|
(b)
|
in the case of a Participant who dies on or before the date on which the Participant would have attained his Earliest Retirement Age, as though such Participant had:
|
(i)
|
separated from Service on his Date of Severance,
|
(ii)
|
survived to his Earliest Retirement Age,
|
(iii)
|
retired with an immediate benefit determined under the provisions of Section 6.4 and payable under the Automatic Surviving Spouse’s Option in Section 7.5 of the Plan at the Earliest Retirement Age, and
|
(iv)
|
died on the day after the day on which such Participant would have attained the Earliest Retirement Age.
|
8.4
|
Effect of Valid Joint and Survivor Election
|
8.5
|
Death on or After Annuity Starting Date
|
8.6
|
Death Benefit for Vested Participants Who Terminated After September 1, 1974 and Prior to August 23, 1984
|
(a)
|
completed at least one Hour of Service under the Plan after September 1, 1974, and
|
(b)
|
survives to his Annuity Starting Date.
|
9.1
|
Trust Fund
|
(a)
|
The Company has executed a Trust Agreement with a Trustee under the terms of which a Trust Fund will be established for the purpose of receiving and holding contributions made by the Company as well as interest and other income on investments of such funds, and for the purpose of paying the pensions and other benefits provided by the Plan and paying any expenses incident to the operation of the Plan or Trust Fund as otherwise provided herein. The Trustee is to manage and operate the Trust Fund and to receive, hold, invest and reinvest the funds of the Trust.
|
(b)
|
The Company may modify the Trust Agreement as provided therein to accomplish the purpose of the Plan. The Administrator may remove any Trustee and may select any successor trustee. Pensions under the Plan may alternatively be provided through the purchase of annuity contracts issued by an insurance company. In lieu of a Trust Agreement and Trust Fund, the Company may utilize a contract or contracts of insurance for the purpose of receiving and holding contributions made by the Company and for the purpose of paying pensions and other benefits provided by the Plan, and in such event the references hereunder to “Trust Agreement”, “Trustee” and “Trust Fund” shall be deemed to be references to “Insurance Contract”, “Insurance Carrier” and “Insured Fund” respectively.
|
(c)
|
The Administrator may select an independent investment manager to invest any portion of the Trust Fund in each of the various funds. Such investment manager shall be either registered as an investment manager under the Investment Adviser’s Act of 1940, a bank, a mutual fund, or an insurance company, and as required by the Administrator, shall acknowledge in writing that he is a fiduciary with respect to the Plan.
|
(d)
|
The Administrator shall perform such duties relating to the operation of the Trust Fund as it deems appropriate and shall perform the duties specified in this Section 9.1.
The Administrator shall have the following responsibilities: |
(i)
|
to appoint and remove Trustees;
|
(ii)
|
to appoint investment managers;
|
(iii)
|
to select investment funds or other investments under the Plan;
|
(iv)
|
to allocate the duties and procedures for the Trustee and investment managers;
|
(v)
|
to establish an investment philosophy and goals for each of the investment managers;
|
(vi)
|
to monitor the Trustee with respect to servicing the Trust Fund in a fiduciary capacity; and
|
(vii)
|
to monitor the investment managers including, without limitation, their investment philosophies, goals, and rates of return.
|
9.2
|
Irrevocability
|
9.3
|
Contributions by the Company
|
9.4
|
Contributions By Participants
|
9.5
|
Benefits Payable Only From Trust Fund
|
9.6
|
Plan Expenses
|
10.1
|
Maximum Limitation Under Section 415(b) of the Code (Effective January 1, 2008)
|
(a)
|
In no event shall the annual benefit accrued, distributed or otherwise payable to any Participant exceed the Section 415 limit described in subsection (b). To the extent necessary to comply with Section 411(b) of the Code, if the benefit the Participant would otherwise accrue in a limitation year would produce an annual benefit in excess of the Section 415 limit described in subsection (b), the benefit will be limited (or the rate of accrual reduced) to a benefit that does not exceed such limit.
|
(b)
|
The Section 415 limit is the lesser of (i) and (ii) below:
|
(i)
|
The dollar limitation set forth in Section 415(b)(1)(A) of the Code, or
|
(ii)
|
100% of the Participant’s average annual Test Compensation for the three consecutive calendar years (or, if his period of employment is less than three years, for his entire period of employment) as a Participant during which he received the greatest aggregate Test Compensation.
|
(c)
|
In no event shall the limitations in subsection (b) be less than $10,000 if the Participant has not at any time participated in a defined contribution plan maintained by the Employer.
|
(d)
|
For purposes of the maximum limitation of this Article, all qualified defined benefit plans (whether or not terminated) maintained by an Employer or any Affiliate shall be treated as a single plan. For purposes of applying the limitations of Section 415, the terms “Employer” and “Affiliate” shall be construed in light of Sections 414(b) and 414(c) of the Code, as modified by Section 415(h) of the Code.
|
(e)
|
The dollar limitation described in paragraph (b)(i) above shall be increased by the cost of living adjustment factor prescribed by the Secretary of the Treasury under Section 415(d) of the Code. Such adjustment factor shall be applied to Participants and to such items as the Secretary of the Treasury shall prescribe.
|
(f)
|
If the benefit payable to a Participant commences prior to age 62, the dollar limitation specified under paragraph (b)(i) above as adjusted by subsection (e) shall be the lesser of: (A) the dollar limitation specified under paragraph (b)(i) above as adjusted by subsection (e) multiplied by the ratio of the annual amount of the straight life annuity commencing at his Annuity Starting Date, over the annual amount of the straight life annuity commencing at age 62 (both determined without regard to the limitations of Section 415 of the Code), or (B) such limit, after the application of an actuarially equivalent reduction from age 62 to his age as of his Annuity Starting Date, using a 5% interest rate assumption and the applicable mortality table under Section 417(e)(3)(B) of the Code. No adjustment shall be made to reflect the probability of a Participant’s death after the Annuity Starting Date and before age 62.
|
(g)
|
If the benefit payable to a Participant commences after age 65, the dollar limitation specified under paragraph (b)(i) above as adjusted by subsection (e) shall be the lesser of : (A) the dollar limitation specified under paragraph (b)(i) above as adjusted by subsection (e) multiplied by the ratio of the annual amount of the immediately commencing straight life annuity payable to the Participant (ignoring accruals after age 65) using the actuarial adjustments in Section 11.6 over the annual amount of the straight life annuity that would have been payable at age 65, or (B) the dollar limitation specified under paragraph (b)(i) above as adjusted by subsection (e) actuarially increased using a 5% interest rate assumption and the applicable mortality table under Section 417(e)(3)(B) of the Code. The probability of the Participant dying after age 65 and before the age at which the payment of benefits would commence shall not be taken into account in increasing the dollar limitation under this subsection (g).
|
(h)
|
The annual benefit is a retirement benefit under the Plan which is payable annually in the form of a single life annuity.
|
(i)
|
If the benefit payable to a Participant is not in the normal form of payment nor in the form of a qualified joint and survivor annuity, and it is not payable in a form to which Section 417(e)(3) of the Code applies, then the maximum annual amount determined under subsection (b) above shall be adjusted such that it is the greater of:
|
(A)
|
the actuarially equivalent straight life annuity commencing at the same Annuity Starting Date as the form of benefit payable to the Participant using the Plan’s factors for determining actuarial equivalence, and
|
(B)
|
the actuarially equivalent straight life annuity commencing at the same Annuity Starting Date as the form of benefit payable to the Participant using an interest rate of 5% and the applicable mortality table under Section 417(e)(3)(B) of the Code.
|
(ii)
|
If the benefit is payable in a form to which Code Section 417(e)(3) applies, the actuarially equivalent straight life annuity benefit shall be the greatest of:
|
(A)
|
the annual amount of the straight life annuity commencing at the Annuity Starting Date that has the same actuarial present value as the particular form of benefit payable, computed using the Plan’s factors for determining actuarial equivalence;
|
(B)
|
the annual amount of the straight life annuity commencing at the Annuity Starting Date that has the same actuarial present value as the particular form of benefit payable, computed using a 5.5% interest assumption and the applicable mortality table under Section 417(e)(3)(B) of the Code; or
|
(C)
|
the annual amount of the straight life annuity commencing at the Annuity Starting Date that has the same actuarial present value as the particular form of benefit payable, computed using the
|
(iii)
|
Notwithstanding the foregoing, for a benefit that has an Annuity Starting Date in 2004 or 2005, the actuarially equivalent straight life annuity benefit shall be the greater of:
|
(A)
|
the annual amount of the straight life annuity commencing at the Annuity Starting Date that has the same actuarial present value as the particular form of benefit payable, computed using the Plan’s actuarial equivalence factors; or
|
(B)
|
the annual amount of the straight life annuity commencing at the Annuity Starting Date that has the same actuarial present value as the particular form of benefit payable, computed using a 5.5% interest assumption and the applicable mortality table for the distribution under Treasury Regulation Section 1.417(e)-1(d)(2).
|
(i)
|
If the Participant has completed less than 10 years of Plan participation, the dollar limitation determined under paragraph (b)(i) above shall be adjusted by multiplying such amount by a fraction, the numerator of which is the Participant’s number of years of Plan participation (or parts thereof) and the denominator of which is 10.
|
(j)
|
If the Participant has completed less than 10 years of Credited Service, the maximum amount determined under paragraph (b)(ii) and subsection (c) (without regard to paragraph (b)(i) above) shall be adjusted by multiplying such amount by a fraction, the numerator of which is the Participant’s number of years of Credited Service (or parts thereof) and the denominator of which is 10.
|
(k)
|
In no event shall the provisions of subsection (i) or subsection (j) above reduce the limitations in subsection (b) to an amount less than one tenth of such limitations, determined without regard to the provisions of subsection (i) and (j).
|
(l)
|
For purposes of applying the benefit limitations set forth herein, the “limitation year” shall be the calendar year.
|
10.2
|
Limitations Based on Funding Status
|
(a)
|
Limitations Applicable If the Plan’s Adjusted Funding Target Attainment Percentage Is Less Than 80 Percent, But Not Less Than 60 Percent
. Notwithstanding any other provisions of the Plan, if the Plan’s adjusted funding target attainment percentage for a Plan Year is less than 80 percent (or would be less than 80 percent to the extent described in Section 10.2(a)(ii) below) but is not less than 60 percent, then the limitations set forth in this subsection (a) apply.
|
(i)
|
50 Percent Limitation on Single Sum Payments, Other Accelerated Forms of Distribution, and Other Prohibited Payments
. A Participant or Beneficiary is not permitted to elect, and the Plan shall not pay, a single sum payment or other optional form of benefit that includes a prohibited payment with an annuity starting date on or after the applicable Section 436 measurement date, and the Plan shall not make any payment for the purchase of an irrevocable commitment from an insurer to pay benefits or any other payment or transfer that is a prohibited payment, unless the present value of the portion of the benefit that is being paid in a prohibited payment does not exceed the lesser of:
|
(b)
|
Limitations Applicable If the Plan’s Adjusted Funding Target Attainment Percentage Is Less Than 60 Percent
. Notwithstanding any other provisions of the Plan, if the Plan’s adjusted funding target attainment percentage for a Plan Year is less than 60 percent (or would be less than 60 percent to the extent described in Section 10.2(b)(ii) below), then the limitations in this subsection (b) apply.
|
(i)
|
Single Sums, Other Accelerated Forms of Distribution, and Other Prohibited Payments Not Permitted
. A Participant or Beneficiary is not permitted to elect, and the Plan shall not pay, a single sum payment or other optional form of benefit that includes a prohibited payment with an annuity starting date on or after the applicable Section 436 measurement date, and the Plan shall not make any payment for the purchase of an irrevocable commitment from an insurer to pay benefits or any other payment or transfer that is a prohibited payment. The limitation set forth in this Section 10.2(b)(i) does not apply to any payment of a benefit which under Section 411(a)(11) of the Code may be immediately distributed without the consent of the Participant.
|
(ii)
|
Shutdown Benefits and Other Unpredictable Contingent Event Benefits Not Permitted to Be Paid
. An unpredictable contingent event benefit with respect to an unpredictable contingent event occurring during a Plan Year shall not be paid if the adjusted funding target attainment percentage for the Plan Year is:
|
(A)
|
Less than 60 percent; or
|
(B)
|
60 percent or more, but would be less than 60 percent if the adjusted funding target attainment percentage were redetermined applying an actuarial assumption that the likelihood of occurrence of the unpredictable contingent event during the Plan Year is 100 percent.
|
(iii)
|
Benefit Accruals Frozen
. Benefit accruals under the Plan shall cease as of the applicable Section 436 measurement date. In addition, if the Plan is required to cease benefit accruals under this Section 10.2(b)(iii), then the Plan is not permitted to be amended in a manner that would increase the
|
(c)
|
Limitations Applicable If the Plan Sponsor Is In Bankruptcy
.
|
(i)
|
Resumption of Prohibited Payments
. If a limitation on prohibited payments under Section 10.2(a)(i), Section 10.2(b)(i) or Section 10.2(c) applied to the Plan as of a Section 436 measurement date, but that limit no longer applies to the Plan as of a later Section 436 measurement date, then that limitation does not apply to benefits with annuity starting dates that are on or after that later Section 436 measurement date.
|
(e)
|
Notice Requirement
. The Administrator shall provide a written notice in accordance with Section 101(j) of ERISA to Participants and Beneficiaries within 30 days after certain specified dates if the Plan has become subject to a limitation described in Section 10.2(a)(i), Section 10.2(b) or Section 10.2(c).
|
(f)
|
Methods to Avoid or Terminate Benefit Limitations
. The Company may apply methods prescribed under Section 436(b)(2), (c)(2), (e)(2), and (f) of the Code and Treasury Regulations Section 1.436-1(f) to avoid or terminate the application of the limitations set forth in Sections 10.2(a), (b) and (c) for a Plan Year. In general, the methods the Company may use to avoid or terminate one or more of the benefit limitations under Sections 10.2(a), (b) and (c) for a Plan Year include employer contributions and elections to increase the amount of Plan assets which are taken into account in determining the adjusted funding target attainment percentage, making an employer contribution that is specifically designated as a current year contribution that is made to avoid or terminate application of certain of the benefit limitations, or providing security to the Plan.
|
(g)
|
Special Rules
.
|
(i)
|
Rules of Operation for Periods Prior to and After Certification of Plan’s Adjusted Funding Target Attainment Percentage
.
|
(A)
|
In General
. Section 436(h) of the Code and Treasury Regulations Section 1.436-1(h) set forth a series of presumptions that apply (1) before the Plan’s enrolled actuary issues a certification of the Plan’s adjusted funding target attainment percentage for the Plan Year and (2) if the Plan’s enrolled actuary does not issue a certification of the Plan’s adjusted funding target attainment percentage for the Plan Year before the first day of the 10th month of the Plan Year (or if the Plan’s enrolled actuary issues a range certification for the Plan Year pursuant to Treasury Regulations Section 1.436-1(h)(4)(ii) but does not issue a certification of the specific adjusted funding target
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(A)
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Payments Under Social Security Leveling Options
. For purposes of determining whether the limitations under Section 10.2(a)(i) or Section 10.2((b)(i) apply to payments under a social security leveling option, within the meaning of Section 436(j)(3)(C)(i) of the
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(B)
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Limitation on Benefit Accruals
. For purposes of determining whether the accrual limitation under Section 10.2(b)(iii) applies to the Plan, the adjusted funding target attainment percentage for a Plan Year shall be determined in accordance with the “Special Rule for Certain Years” under Section 436(j)(3) of the Code (except as provided under Section 203(b) of the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010, if applicable).
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(h)
|
Definitions
. The definitions in the following Treasury Regulations apply for purposes of Sections 10.2(a) through (g): Section 1.436-1(j)(1) defining adjusted funding target attainment percentage; Section 1.436-1(j)(2) defining annuity starting date; Section 1.436-1(j)(6) defining prohibited payment; Section 1.436-1(j)(8) defining Section 436 measurement date; and section 1.436-1(j)(9) defining an unpredictable contingent event and an unpredictable contingent event benefit.
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11.1
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Plan Non-Contractual
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11.2
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Non-Alienation of Retirement Rights or Benefits
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(a)
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Except as provided in Section 11.2(b) or 11.2(c), no benefit payable under the Plan shall be subject in any manner to anticipation, sale, transfer, assignment, pledge, encumbrance, security interest or charge, and any action by way of anticipating, alienating, selling, transferring, assigning, pledging, encumbering, charging or granting a security interest in the same shall be void and of no effect; nor shall any such benefit be in any manner liable for or subject to the debts, contracts, liabilities, engagements or torts of the person entitled to such benefit.
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(b)
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Section 11.2(a) shall not apply to the creation, assignment, or recognition of a right to any benefit payable pursuant to a qualified domestic relations order as defined in Section 414(p) of the Code. The Administrator shall establish reasonable procedures to determine the status of domestic relations orders and to administer distributions under such orders which are deemed to be qualified domestic relations orders. Such procedures shall be in writing shall comply with the provisions of Section 414(p) of the Code and shall be incorporated into this plan document. To the extent that, because of a qualified domestic relations order, more than one individual is to be treated as a surviving Spouse, the total amount payable from the Plan as a result of the death of a Participant shall not exceed the amount that would be payable from the Plan if there were only one surviving Spouse.
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(c)
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Notwithstanding the provisions of Section 11.2(a), the Plan may offset any portion of the Accrued Pension of a Participant or the Participant’s Beneficiary against a claim of the Plan arising:
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(i)
|
as a result of the Participant’s or Beneficiary’s conviction of a crime involving the Plan; or
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(ii)
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with regard to the Participant’s or Beneficiary’s violation of ERISA’s fiduciary provisions upon:
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(A)
|
the entry of any civil judgment, consent order, or decree against the Participant or Beneficiary; or
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(B)
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the execution of any settlement agreement between the Participant or Beneficiary and the Department of Labor or Pension Benefit Guaranty Corporation.
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11.3
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Payment of Pension to Others
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11.4
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Prohibition Against Reversion
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11.5
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Merger, Transfer of Assets or Liabilities
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11.6
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Actuarial Equivalence
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11.7
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Change of Vesting Schedule
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(a)
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60 days after the amendment is adopted;
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(b)
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60 days after the amendment becomes effective; or
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(c)
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60 days after the Participant is issued written notice of the amendment by the Administrator.
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11.8
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Controlled Group
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11.9
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Severability
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11.10
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Employer Records
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11.11
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Application of Plan Provisions
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11.12
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Missing Participants and Beneficiaries.
Notwithstanding Section 7.10, if a Participant who has left employment with the Company and Affiliates (or a surviving Spouse or Beneficiary who is eligible for a death benefit or survivor benefit) has failed to file an application for benefits within 120 days after attainment of the Participant’s Normal Retirement Date, the Administrator shall treat the Participant’s retirement benefit and vested Accrued Pension (or the surviving Spouse’s or Beneficiary’s death benefit or survivor benefit) as forfeited; provided, however, that such retirement benefit, Accrued Pension, death benefit or survivor benefit shall be reinstated retroactive to the commencement date set forth below upon the subsequent filing of a completed application with the Administrator and shall commence within ninety (90) days after such application is filed. For purposes of this Section 11.12, the commencement date shall be the later of: |
(a)
|
the Participant’s Normal Retirement Date; and
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(b)
|
the date on which the Participant terminated employment with the Employer and Affiliates.
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11.13
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IRC 414(u) Compliance Provision
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(a)
|
As provided by Section 414(u) of the Code, “qualified military service” means service in the uniformed services (as defined in Chapter 54 of Title 38, United Stated Code) by an individual if the individual is qualified under such chapter to reemployment rights with the Company or an Affiliate following such military service.
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(b)
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“USERRA” means the Uniformed Services Employment and Reemployment Rights Act of 1994 as amended.
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(c)
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If an individual returns to employment with the Company or an Affiliate following a period of qualified military service under circumstances such that the individual has reemployment rights under USERRA, and the individual reports for said reemployment within the time frame required by USERRA, the following provisions shall apply:
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(i)
|
The qualified military service shall be recognized as Credited Service and Service to the same extent as it would have been if the individual had remained continuously employed with the Company or an Affiliate rather than leaving active employment to go into qualified military service.
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(ii)
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Compensation shall be determined by the Company consistent with the requirements of USERRA, and shall reflect the Company’s best estimate of the earnings the individual would have received but for the qualified military service.
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(d)
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If a Participant fails to return to employment with the Company or an Affiliate on account of the Participant’s death in qualified military service on or after January 1, 2007, the surviving Spouse of such Participant shall be eligible to receive any death benefit provided under the Plan as if the Participant had returned to employment as a Covered Employee immediately prior to his death and then terminated employment on account of his death.
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(e)
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If a Participant fails to return to employment with the Company or an Affiliate on account of either the Participant’s incurring a disability in qualified military service or the Participant’s death in qualified military service, the Participant (or the surviving Spouse of the Participant, in the event of the Participant’s death) shall be eligible for a benefit under the Plan determined by using the Credited Service the Participant would have had hereunder had the Participant returned to employment as a Covered Employee immediately prior to his date of disability or death and then terminated employment on the date of his disability or death.
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(f)
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The foregoing provisions are intended to provide the benefits required by USERRA and the Heroes Earnings Assistance and Relief Tax Act of 2008, and are not intended to provide any other benefits. This section shall be construed consistently with said intent.
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12.1
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Amendment and Termination of the Plan
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(a)
|
to reduce or discontinue payments to the Plan;
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(b)
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to terminate the Plan;
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(c)
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to amend the Plan, retroactively or otherwise, in such manner as it may deem necessary or advisable in order to qualify the Plan and any trust established in conjunction therewith under the provisions of Sections 401(a) and 501(a) of the Code, or any similar Code provisions from time to time in effect;
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(d)
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to amend the Plan in any other respect, provided, however, that no such amendment shall forfeit or diminish the interest of any Participant in the Trust Fund to the extent that such interest has become vested in such Participant, except as may be permitted under the Code or ERISA.
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12.2
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Administration of the Plan in Case of Termination
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12.3
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Internal Revenue Service Limitations
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(a)
|
Except in such cases where the circumstances described in subsection (b) apply, the annual payments under the Plan to any one (1) of the twenty-five (25) highest paid Highly Compensated Employees (and Highly Compensated former Employees), ranked by Test Compensation, shall not exceed the sum of:
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(i)
|
those payments that would be made on behalf of such Employee under a single life annuity that is the Actuarial Equivalent of the sum of the Employee’s Accrued Pension and the Employee’s Other Benefits (as defined in subsection (c) below) under the Plan; and
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(ii)
|
those payments the Employee is entitled to receive under a social security supplement.
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(b)
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The provisions of subsection (a) above shall not apply if:
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(i)
|
after payment of all such benefits to an Employee described in subsection (a), the value of Plan assets equals or exceeds 110% of the value of current liabilities (as defined in Code Section 412(l)(7) under the Plan;
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(ii)
|
the value of all such benefits to an Employee described in subsection (a) above is less than one percent of the value of current liabilities under the Plan prior to the payment of all such benefits to such Employee; or
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(iii)
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the value of all such benefits to an Employee described in subsection (a) does not exceed $5,000 or such other amount as may be prescribed under Section 411(a)(11)(A) of the Code as the maximum amount that may be paid out without the Participant’s consent.
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(c)
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For purposes of this Section 12.3, “Other Benefits” shall include any loan in excess of the amounts set forth in Code Section 72(p)(2)(A), any periodic income, any withdrawal values payable to a living Employee and any death benefits not provided for by insurance on the Employee’s life. “Other Benefits” for this purpose shall not include any social security supplements.
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13.1
|
General
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13.2
|
Definitions Relating to Top-Heavy Provisions
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(a)
|
“Key Employee” means any Employee (including any deceased Employee) who at any time during the Plan Year that includes the determination date was an officer of the Employer having annual Test Compensation greater than $130,000 (as adjusted under Section 416(i)(1) of the Code for Plan Years beginning after December 31, 2002), a five percent (5%) owner of the Employer, or a one percent (1%) owner of the Employer having annual Test Compensation of more than $150,000 (as adjusted under Section 416(i)(1) of the Code for Plan Years beginning after December 31, 2002). The determination of who is a key employee will be made in accordance with Section 416(i)(1) of the Code and the applicable regulations and other guidance of general applicability issued thereunder.
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(b)
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“Determination Date” means, with respect to any Plan Year, the last day of the immediately preceding Plan Year.
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(c)
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“Top-Heavy Plan” means a plan where, as of the Determination Date, the present value of the cumulative accrued benefits (including any part of any accrued benefit distributed in the five-year period ending on the Determination Date) under the Plan for Key Employees exceeds sixty percent (60%) of the present value of the cumulative accrued benefits (including any part of any accrued benefit distributed in the five-year period ending on the Determination Date) under the Plan for all Employees. The present values of accrued benefits and the amounts of account balances of an Employee as of the Determination Date shall be increased by the distributions made with respect to the Employee under the Plan and any plan aggregated with the Plan under Section 416(g)(2) of the Code during the one-year period ending on the Determination Date. The preceding sentence shall also apply to distributions under a terminated plan which, had it not been terminated, would have been aggregated with the Plan under Section 416(g)(2)(A)(i) of the Code. In the case of a distribution made for a reason other than severance from employment, death or disability, this
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(i)
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If this Plan is in a Required Aggregation Group, each Plan of an Employer required to be in such group will be a Top-Heavy Plan if such group is a Top-Heavy Group.
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(ii)
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If this Plan is in a Permissive Aggregation Group which is not a Top-Heavy Group, no Plan of an Employer in such group will be a Top-Heavy Plan.
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(d)
|
“Required Aggregation Group” means:
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(i)
|
each plan of an Employer in which a Key Employee is a participant (regardless of whether the plan has terminated), and
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(ii)
|
each other plan of an Employer which enables a plan in which a Key Employee is a participant to meet the requirements of Internal Revenue Code Sections 401(a)(4) or 410.
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(e)
|
“Permissive Aggregation Group” means any plan of an Employer which is not part of the Required Aggregation Group, but is treated as if it were at the option of the Company, provided such group continues to meet the requirements of Internal Revenue Code Sections 401(a)(4) and 410.
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(f)
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“Top-Heavy Group” means any Required or Permissive Aggregation Group, if as of the Determination Date, the sum of the present value of cumulative accrued benefits for Key Employees under all defined benefit plans included in such Group and the aggregate of the accounts of Key Employees under all defined contribution plans included in such Group exceeds sixty percent (60%) of the similar sum determined for all Employees.
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(g)
|
“Present Value of Accrued Benefits” shall be determined as of the most recent valuation date within a twelve-month period ending on the Determination Date, but for the purposes of determining whether this Plan is a Top-Heavy Plan, shall not include:
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(i)
|
Any rollover contribution initiated by the Employee.
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(ii)
|
Any accrued benefit or account attributable to an Employee who is not a Key Employee, but who was a Key Employee in any prior Plan Year. To the extent that a Key Employee is deemed to be a Key Employee if he meets the definition of Key Employee within any of the four (4) preceding Plan Years, this provision shall apply following the end of such period of time.
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(iii)
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Any accrued benefit or account attributable to any individual who has not performed any services for an Employer at any time during the five-year period ending on the Determination Date.
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(h)
|
“Valuation Date” means December 31.
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(i)
|
“Non-Key Employee” means any Employee who is not a Key Employee.
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13.3
|
Top-Heavy Plan Vesting Requirements
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(a)
|
For any Plan Year in which the Plan is a Top-Heavy Plan, the following vesting schedule will apply to benefits derived from Employer contributions. The nonforfeitable interest in a Participant’s accrued benefit will be determined as follows:
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Years of Service
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Nonforfeitable Percentage of
Accrued Benefit
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0 but less than 2
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0%
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2 but less than 3
|
20%
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3 but less than 4
|
40%
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4 but less than 5
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60%
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5 or more
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100%
|
(b)
|
If the vesting schedule under the Plan shifts in or out of the above schedule due to determination of whether or not the Plan is a Top-Heavy Plan, such shift shall be an amendment to the vesting schedule and Section 11.7 shall apply.
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13.4
|
Top-Heavy Plan Minimum Benefit Requirements
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(a)
|
For any Plan Year in which the Plan is determined to be a Top-Heavy Plan, each Non-Key Employee Participant who has completed a year of service will accrue a minimum annual benefit (derived from Employer contributions and expressed as a life annuity beginning at Normal Retirement Age and determined without regard to any Social Security contribution or benefit).
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(b)
|
Such accrual of a minimum annual benefit will be the lesser of:
|
(i)
|
Two percent (2%) of the Participant’s highest average compensation for the five consecutive years during which the Participant had the greatest compensation from the Employer multiplied by the years of service as defined in (c) below, or
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(ii)
|
Twenty percent (20%) times the Participant’s highest average compensation for the five consecutive years during which the Participant had the greatest compensation from an Employer.
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(c)
|
(i) For the purpose of the accrual of minimum annual benefit, year of service shall mean a year of Credited Service as defined in Article IV, but will exclude years when the Plan was not a Top-Heavy Plan for any Plan Year ending during such year of Credited Service, as well as years of Credited Service in a Plan Year beginning before December 31, 1984. Notwithstanding the above, each Non-Key Employee Participant who has completed 1,000 Hours of Service in a year in which the Plan is a Top-Heavy Plan shall be entitled to the minimum annual benefit regardless of the level of such Non-Key Employee’s compensation.
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(ii)
|
The compensation required to be taken into account for purposes of this Section 13.4 is Test Compensation; provided, however, that such compensation shall not exceed the adjusted annual limitation in effect for the given year (as set forth in Section 2.11) and compensation in years after the close of the last Plan Year in which the Plan is a Top-Heavy Plan shall be disregarded.
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(d)
|
Notwithstanding any other provision of the Plan, an Employee shall be a Participant for the purposes of this Section 13.4, and a Participant shall be entitled to an accrual under this Section 13.4, even if he would not otherwise be entitled to receive an accrual or would have received a lesser accrual for the year because the Non-Key Employee Participant is not employed on a specified date.
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(e)
|
If the annual retirement pension payable under the Plan to a Participant who has accrued a minimum annual benefit under this Article XIII commences at a date other than at Normal Retirement Age, such Participant shall receive at least an amount that is the actuarial equivalent of the minimum annual benefit commencing at Normal Retirement Age as provided under this Section 13.4 using a five percent (5%) interest rate assumption for such determination. If the annual retirement pension payable to a Participant who has accrued a minimum annual benefit under this Article XIII is in a form other than a single life annuity, such Participant shall receive an amount that is not less than the minimum annual benefit as otherwise provided in this Section 13.4 adjusted to be the actuarial equivalent of a single life annuity commencing at the same age using the provisions of Section 11.6 of the Plan for such determination.
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(f)
|
In the case of Employees covered under both this Plan and any other plan maintained by an Employer, this Plan will provide the top heavy minimum benefit which shall be offset by the benefit, if any, provided under such other plans.
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13.5
|
Limited Application of this Article.
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14.1
|
Jurisdiction
|
1.1
|
“Administrator” or “Plan Administrator” means the administrative committee described in Article Nine.
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1.2
|
“Affiliate” means any other employer which, together with the Company, is a member of a controlled group of corporations or of a commonly controlled trade or business (as defined in Code Sections 414(b) and (c) and as modified, where appropriate, by Code Section 415(h)) or of an affiliated service group (as defined in Code Section 414(m)) or other organization described in Code Section 414(o). Each such Affiliate shall be treated as an Affiliate only during such period as it is or was an Affiliate as defined above.
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1.3
|
“Beneficiary” means any person who, by reason of a designation made by a Participant under Plan procedures or by operation of the Plan, is or will be entitled to receive any amount or benefit hereunder upon the death of such Participant. Any attempt to designate a person as Beneficiary hereunder orally, or by means other than that permitted under the Plan shall be void and have no effect.
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1.4
|
“Board” means the Board of Directors of the Company.
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1.5
|
“Catch-Up Contribution” means, with respect to a given Participant, the total amount of the Participant’s Tax Deferred Catch-Up Contributions and the Participant’s Roth Catch-Up Contributions.
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1.6
|
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
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1.7
|
“Company” means Erie Indemnity Company, a corporation organized and existing under the laws of Pennsylvania.
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1.8
|
“Compensation” for any period means the rate of base salary or the wages paid by an Employer to an Employee during the period. For this purpose, the “rate of base salary or the wages paid” shall exclude Form W-2 income in the form of overtime compensation, bonuses, commissions, deferred compensation plan payments or severance pay under any severance benefit plan, but shall include Form W-2 income paid as a lump sum in lieu of merit increase and compensation excluded from Form W-2 income because of salary reduction agreements in connection with plans described in Sections 125, 132(f)(4) or 401(k) of the Code or resulting from deferred compensation contracts for the Plan Year in question. For Plan Years beginning on and after January 1, 2015, the “rate of base salary or the wages paid” shall include an amount, determined under the Company’s vacation conversion program, that is paid to the Employee as Form W-2
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1.9
|
“Covered Employee” means any Employee of an Employer, excluding any such Employee whose employment is governed by the terms of a collective bargaining agreement under which retirement benefits were the subject of good faith bargaining.
|
1.10
|
“Elective Deferral” means, with respect to a given Participant, the total amount of the Participant’s Tax Deferred Contributions and the Participant’s Roth Elective Deferrals.
|
1.11
|
“Eligible Applicant” means a Participant who is actively employed with the Company or an Affiliate; provided, however, that for purposes of Sections 7.1 through 7.6, an Eligible Applicant shall also include a Participant who is on a disability leave of absence.
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1.12
|
“Employee” means any common-law employee of an Employer or an Affiliate; provided, however, that for purposes of Section 1.17 “Employee” shall include any self-employed individual performing services for an Employer or Affiliate who is treated as an employee under Section 401(c)(1) of the Code.
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1.13
|
“Employer(s)” means the Company, Erie Family Life Insurance Company, Erie Insurance Exchange, Erie Insurance Company, EI Holding Corp., EI Service Corp., Erie Insurance Company of New York, Erie Insurance Property & Casualty Company, Flagship City Insurance Company and any other Affiliate which may adopt this Plan.
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1.14
|
“Erie Indemnity Stock” means the Class A common stock of the Company which is a qualifying employer security within the meaning of Section 407(d)(5) of ERISA.
|
1.15
|
“Erie Indemnity Stock Fund” means the investment fund described in Section 5.4.
|
1.16
|
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
|
1.17
|
“Highly Compensated” means any Employee who is a more than five percent (5%) owner of an Employer or earned $110,000 or more in Test Compensation from the Employer in the lookback year; provided, however, that such $110,000 figure shall be adjusted for cost of living at the same time and in the same manner as determined under Code Section 415(d).
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1.18
|
“Hour of Service” shall include the following:
|
(a)
|
Each hour for which an Employee is directly or indirectly paid or entitled to payment from an Employer or an Affiliate as an Employee for the performance of duties during an applicable computation period (these hours must be credited to the Employee in the computation period during which the duties were performed and not when paid, if different); and
|
(b)
|
Each hour for which back pay, irrespective of mitigation of damages, has been awarded or agreed to by an Employer or an Affiliate (these hours must be credited in the computation period or periods to which the award or agreement pertains rather than that in which the payment, award or agreement was made); and
|
(c)
|
Each hour for which an Employee is directly or indirectly paid or entitled to payment from an Employer or an Affiliate for reasons, such as vacation, sickness or disability, other than for the performance of duties (these hours shall be calculated and credited pursuant to Section 2530.200b-2 of the Department of Labor regulations which are incorporated herein by reference).
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1.19
|
“Interactive Electronic Communication” means a communication between a Participant or Beneficiary and the person or entity designated by the Administrator to perform recordkeeping and other administrative services on behalf of the Plan pursuant to a system maintained by such person or entity and communicated to each Participant and Beneficiary whereby each such individual may make elections and exercise options as described herein with respect to all or a portion of his Total Account through the use of such system and a personal identification number. If a Participant or Beneficiary (i) consents to participate in Interactive Electronic Communication procedures adopted by the Administrator and (ii) acknowledges that actions taken by him through the use of his personal identification number pursuant to the Interactive Electronic Communication procedure constitute his signature for purposes of initiating transactions such as investment option changes, and increases, decreases, and suspensions of Elective Deferrals, the Participant or Beneficiary, as the case may be, will be deemed to have given his written consent and authorization to any such action resulting from the use of the Interactive Electronic Communication system by the Participant or Beneficiary.
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1.20
|
“Leased Employee” means any person (other than an Employee of an Employer) who pursuant to an agreement between the Employer and any other person (“leasing organization”) has performed services for the Employer (or for the Employer and related persons determined in accordance with
|
1.21
|
“Normal Retirement Date” means the first day of the month next following the month in which the Participant attains age 65 (his “Normal Retirement Age”).
|
1.22
|
“Notice” means, unless otherwise specifically provided herein, (i) written notice on an appropriate form provided by the Administrator that is, at the discretion of the Administrator, properly completed and executed by the party giving such notice and which is delivered by hand or by mail to the Administrator or to such party designated by the terms of the Plan or by the Administrator to receive the notice, or (ii) notice provided by Interactive Electronic Communication to or from to the person or entity designated by the Administrator to perform recordkeeping and other administrative services on behalf of the Plan. The form of Notice satisfactory in any given circumstance under the Plan shall be determined by the Administrator, in its discretion, and shall be applied uniformly to all Participants and Beneficiaries. Notice to any party as provided herein shall be deemed to be given when it is actually received (either physically or by Interactive Electronic Communication, as the case may be) by the party to whom such Notice is given.
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1.23
|
“Participant” means any Covered Employee who participates in the Plan as provided in Section 3.1 (an “active” Participant) or Section 4.1, and further, shall include any current or former Covered Employee who has suspended his Elective Deferrals or has terminated or retired if such individual has a vested Total Account balance maintained on his behalf under the Plan.
|
1.24
|
“Plan” means this Erie Insurance Group Employee Savings Plan as herein set forth with all amendments, modifications and supplements hereafter made.
|
1.25
|
“Plan Year” means the calendar year.
|
1.26
|
“Qualified Domestic Relations Order” or “QDRO” means any judgment, decree or order (including approval of a property settlement agreement) which is made pursuant to a State Domestic Relations Law (including a community property law) and which:
|
(a)
|
relates to provision of child support, alimony payments, or marital property rights of a Spouse, former Spouse, child or other dependent of a Participant;
|
(b)
|
recognizes or creates an alternate payee’s right to, or assigns to an alternate payee the right to receive all or a portion of the benefits payable with respect to a Participant under this Plan; and
|
(c)
|
clearly specifies:
|
(i)
|
name and last known address of the Participant and of each alternate payee;
|
(ii)
|
the amount, percentage, or manner in which such could be determined, of the Participant’s benefits to be paid to such alternate payee by the Plan;
|
(iii)
|
the number of payments or time periods the QDRO covers; and
|
(iv)
|
each plan to which the QDRO applies.
|
1.27
|
“Rollover Contribution” means the Rollover Contribution or Roth Rollover Contribution made by a Covered Employee pursuant to Section 4.1.
|
1.28
|
“Roth Catch-Up Contribution” means, effective with respect to pay periods ending on or after January 1, 2007, or such later date as the Administrator shall determine, that portion of the Employer contribution made pursuant to Section 3.3 that is, at the election of the Participant, includible in the Participant’s gross income at the time the contribution is made.
|
1.29
|
“Roth Elective Deferral” means, effective with respect to pay periods ending on or after January 1, 2007, or such later date as the Administrator shall determine, the Employer contribution made pursuant to a Participant’s election under Section 3.1(a) to contribute a stated percentage, from one percent (1%) to one hundred percent (100%) of his future Compensation in lieu of receiving such amount directly in cash and to have such amount contributed to a Designated Roth Account maintained on his behalf under the Plan. A Roth Elective Deferral shall be includible in the Participant’s gross income at the time of deferral and shall be irrevocably designated as a Roth Elective Deferral by the Participant in his election.
|
1.30
|
“Roth Rollover Contribution” means that portion of a Covered Employee’s Rollover Contribution that is attributable to a designated Roth account under an eligible retirement plan.
|
1.31
|
“Safe Harbor Matching Contribution” means the Employer contribution made pursuant to Section 3.4.
|
1.32
|
“Spousal Consent” means a written consent given by a Participant’s Spouse to a Participant’s designation of a specified Beneficiary or Beneficiaries (including the designation of any class of Beneficiaries or any contingent Beneficiaries) under Section 11.6(a). Any Spousal Consent shall be effective only with respect to such Spouse. Such consent shall be duly witnessed by a Plan
|
1.33
|
“Spouse” means, with respect to any Participant, the person to whom the Participant is married at a given determination date, as determined under applicable law.
|
1.34
|
“Tax Deferred Catch-Up Contribution” means that portion of the Employer contribution made pursuant to Section 3.3 that is, at the election of the Participant, not includible in the Participant’s gross income at the time the contribution is made.
|
1.35
|
“Tax Deferred Contribution” means the Employer contribution made pursuant to a Participant’s election under Section 3.1(a) to reduce his future taxable Compensation by a stated percentage, from one percent (1%) to one hundred percent (100%), in lieu of receiving such amount directly in cash and to have such amount contributed to a Tax Deferred Account maintained on his behalf under the Plan. Effective on and after March 1, 2013, a Tax Deferred Contribution may also mean the automatic Employer contribution made pursuant to Section 2.1(b). A Tax Deferred Contribution shall not be includable in the Participant’s gross income at the time of deferral.
|
1.36
|
“Test Compensation” means, for any Plan Year, an Employee’s compensation, reported under Sections 6041 and 6051 of the Code on Form W-2, as paid by an Employer or an Affiliate for the calendar year ending with or within such Plan Year, including any amounts contributed pursuant to a salary reduction election on behalf of a Covered Employee to a plan described in Sections 125, 132(f)(4), 402(e)(3), 402(h)(1)(B), 403(b), or 457(b) of the Code for the period in question. Test Compensation shall include any differential wage payments, as defined in Section 3401(h) of the Code, that are paid by an Employer during a period of qualified military service as defined in Section 414(u) of the Code. Test Compensation in any given year shall not exceed the adjusted annual limitation in effect for such year (as set forth in Section 1.8), provided that such limitation shall not be applied in determining the status of an Employee as a Highly Compensated Employee. To the extent permitted under regulations and other guidance promulgated by the Internal Revenue Service, the Company may elect to determine Test Compensation on a basis other than that provided above.
|
1.37
|
“Total Account” means the total amounts held under the Plan for a Participant, consisting of the following accounts:
|
(a)
|
“Designated Roth Account” the portion of the Participant’s Total Account consisting of Roth Elective Deferrals plus (minus) any investment earnings (losses) on such contributions and less any distributions or withdrawals made from this account in accordance with Articles Six and Seven, respectively.
|
(b)
|
“Employer Account” the portion of the Participant’s Total Account consisting of employer matching contributions made under the Plan with respect to Plan Years beginning before January 1, 2001, plus (minus) any investment earnings (losses) on such contributions and less any distributions or withdrawals made from this account in accordance with Articles Six and Seven, respectively.
|
(c)
|
“Rollover Account” the portion of the Participant’s Total Account consisting of Rollover Contributions other than that portion of any Rollover Contribution that is attributable to a Roth Rollover Contribution plus (minus) any investment earnings (losses) on such contributions and less any distributions or withdrawals made from this account in accordance with Articles Six and Seven, respectively.
|
(d)
|
“Roth Catch-Up Account” the portion of the Participant’s Total Account consisting of Roth Catch-Up Contributions plus (minus) any investment earnings (losses) on such contributions and less any distributions or withdrawals made from this account in accordance with Article Six and Seven, respectively.
|
(e)
|
“Roth Rollover Account” the portion of the Participant’s Total Account consisting of Roth Rollover Contributions plus (minus) any investment earnings (losses) on such contributions and less any distributions or withdrawals made from this account in accordance with Article Six and Seven, respectively.
|
(f)
|
“Safe Harbor Matching Account” the portion of the Participant’s Total Account consisting of Safe Harbor Matching Contributions, plus (minus) any investment earnings (losses) on such contributions and less any distributions made from this account in accordance with Article Six.
|
(g)
|
“Tax Deferred Account” the portion of the Participant’s Total Account consisting of Tax Deferred Contributions plus (minus) any investment earnings (losses) on such contributions and less any distributions or withdrawals made from this account in accordance with Articles Six and Seven, respectively.
|
(h)
|
“Tax Deferred Catch-Up Account” the portion of the Participant’s Total Account consisting of Tax Deferred Catch-Up Contributions plus (minus) any investment earnings (losses) on such contributions and less any distributions or withdrawals made from this account in accordance with Article Six and Seven, respectively.
|
(i)
|
“Roth In-Plan Conversion Account”, effective on and after January 1, 2016, the portion of the Participant’s Total Account consisting of amounts converted pursuant to Section 3.9 plus (minus) any investment earnings (losses) on such amounts and less any distributions or withdrawals made from this account in accordance with Articles Six and Seven respectively.
|
1.38
|
“Trust Agreement” means the Trust Agreement between the Company and a Trustee as provided in Section 8.1, together with all amendments, modifications and supplements thereto.
|
1.39
|
“Trust Fund” means the fund established under the terms of the Trust Agreement for the purpose of holding and investing the assets of the Plan. The Trust Fund shall consist of such investment funds or vehicles as the Administrator may, in its discretion, designate from time to time and may include such investments as may be selected by a Participant or Beneficiary under a self-directed “open option” arrangement authorized by the Administrator.
|
1.40
|
“Trustee” means the Trustee or Trustees acting as such under the Trust Agreement, including any successor or successors.
|
1.41
|
“Valuation Date” means the close of business as of each business day.
|
1.42
|
“Year of Eligibility Service” means an “Eligibility Computation Period” in which an Employee completes at least 1,000 Hours of Service.
|
2.1
|
Participation
|
(a)
|
Any Employee shall be eligible to participate in the Plan on the first day of a pay period, provided he is a Covered Employee and is actively employed by an Employer on such date and, provided further, that he makes proper application for participation within a reasonable time prior to the start of such pay period by furnishing Notice in accordance with procedures established by the Administrator and communicated to Covered Employees.
|
(b)
|
A Covered Employee who is hired on or after March 1, 2013 and who does not make an affirmative election to participate in the Plan pursuant to paragraph (a) above within the 30-day period following notice of his eligibility shall be enrolled automatically to participate in the Plan effective as of the beginning of the first pay period following the expiration of such 30-day period. Such automatic enrollment shall be at the rate of five percent (5%) of Compensation and shall remain in effect during such Participant’s period of employment until such time as the Participant affirmatively acts to change such percentage. The Administrator shall comply with the notice requirements of Section 414(w)(4) of the Code and may establish additional procedures, in its discretion, to administer the automatic enrollment of Covered Employees. For all purposes hereunder, contributions made pursuant to automatic enrollment hereunder shall be treated as Tax Deferred Contributions.
|
(c)
|
Notwithstanding the foregoing, any Covered Employee who is compensated on an hourly basis and who is classified by an Employer as other than a regular hourly employee shall be eligible to participate in the Plan on the first day of a pay period coincident with or next following the January 1 or July 1 on which (or which next follows the date) such Employee completes each of the following requirements, provided the Covered Employee remains a Covered Employee as of such January 1 or July 1:
|
(i)
|
Attains 21 years of age; and
|
(ii)
|
Completes one Year of Eligibility Service.
|
2.2
|
Rehired Employees
|
2.3
|
Employment Transfers
|
(a)
|
Upon the transfer of a Covered Employee to other employment with an Employer or Affiliate whereby he ceases to be a Covered Employee hereunder, such individual’s ability to have Elective Deferrals made to the Plan on his behalf (and to receive Safe Harbor Matching Contributions) with respect to Compensation earned on and after this date of transfer shall cease and such Participant shall be considered an “inactive” Participant under the Plan.
|
(b)
|
Upon the transfer of an individual from other employment with an Employer or Affiliate such that the individual becomes a Covered Employee hereunder, such individual shall be eligible to participate in the Plan as provided in Section 2.1 hereof and, except for individuals who transfer to the employment classification described in Section 2.1(c), the automatic enrollment provisions of Section 2.1(b) shall apply following such transfer.
|
3.1
|
Elective Deferrals
|
(a)
|
Each Covered Employee who is eligible to participate in the Plan and who has elected to become a Participant (in accordance with Section 2.1(a)) may, at the time of making application to become a Participant, elect to make Elective Deferrals in a fixed, whole percentage, from one percent (1%) to one hundred percent (100%) of Compensation otherwise payable to such Covered Employee in future pay periods. Such election shall be made in accordance with procedures adopted by the Administrator and communicated to Participants.
|
(b)
|
Effective for each Plan Year beginning on and after January 1, 2015, a Covered Employee may make an annual, one-time election to convert a portion of the vacation accrued on his behalf into cash and/or an Elective Deferral. Such Covered Employee election shall be given effect provided that such election is made in a manner satisfactory to the Administrator during the election period described in subparagraph (i) below, the Covered Employee satisfies the eligibility requirements of subparagraph (ii) below, and, provided further, that the total amount of vacation accrual converted into cash and/or an Elective Deferral for any given Plan Year shall not exceed the maximum vacation conversion amount described in subparagraph (iii) below. Any payment in cash or Elective Deferral to the Plan pursuant to an election under this Section 3.1(b) shall be made at the time or times provided in subparagraph (iv) below.
|
(i)
|
A Covered Employee must make the election under this Section 3.1(b) during an election period established by the Company. Such election period shall begin and end in the calendar year that precedes the beginning of the Plan Year for which the election is being made. Such election shall state the number of accrued vacation hours the Covered Employee wishes to convert during such Plan Year, subject to the limitations of subparagraph (iii) below, and his choice of conversion medium (cash, Elective Deferral, or both as delineated on the basis of hours or other reasonable criteria established by the Company). A Covered Employee may not change or discontinue his election after the election period for such Plan Year ends. Any election under this Section 3.1(b) shall be made in such manner provided by the Company and communicated to Covered Employees.
|
(ii)
|
Notwithstanding subparagraph (i) above, a Covered Employee’s election to convert an amount of vacation accrual into cash and/or an Elective Deferral shall be given effect only if the Covered Employee has used a minimum allotment of his accrued vacation during the Plan Year for which the election has been made, as determined under the Company’s vacation conversion program as of the Vacation Conversion Date applicable to such Covered Employee, as determined under subparagraph (iv) below. The Company, in its sole discretion, shall determine whether a Covered Employee has used a minimum allotment of accrued vacation as of any given time.
|
(iii)
|
Any Covered Employee who chooses to convert accrued vacation under this Section 3.1(b) shall designate, in his election under subparagraph (i) above, to convert an amount not less than one hour of accrued vacation and not more than such amount permitted under the Company’s vacation conversion program.
|
(iv)
|
The conversion of accrued vacation into a cash payment and/or an Elective Deferral on behalf of a Covered Employee who satisfies the terms of this Section 3.1(b) shall occur as of the Vacation Conversion Date applicable to the Covered Employee. For purposes hereof, the “Vacation Conversion Date” applicable to a Covered Employee means the June 1 or October 1 of the Plan Year for which the election has been made and which next follows the date the Covered Employee has used a minimum allotment of accrued vacation as described in subparagraph (ii). For any given Plan Year, there shall not exceed one Vacation Conversion Date applicable to a given Covered Employee. The amount of accrued vacation that is actually converted into a cash payment and/or an Elective Deferral on behalf of a Covered Employee as of a Vacation Conversion Date shall not exceed the amount of accrued vacation credited to such Covered Employee as of the Vacation Conversion Date applicable to such Covered Employee. To the extent that a Covered Employee who makes an election under this Section 3.1(b) terminates employment with an Employer before the Vacation Conversion Date applicable to the Covered Employee or fails to use a minimum allotment of accrued vacation as of the October 1 of the Plan Year for which the election has been made, the Covered Employee’s entire election under this Section 3.1(b) shall
|
(c)
|
Elective Deferrals constitute Employer contributions under the Plan and are intended to qualify as elective contributions under Sections 401(k) and 402A of the Code. Elective Deferrals may be made only with respect to an amount which the Participant could otherwise elect to receive in cash and which is not currently available to the Participant as of the date an election specified in this Section 3.1 is made. In the event a Participant has no Compensation for any payroll period, no Elective Deferral may be made for such period.”
|
3.2
|
Dollar Limitation on Elective Deferrals
|
(a)
|
Any provision of this Plan to the contrary notwithstanding, no Employer shall be permitted, during any calendar year, to make, with respect to such calendar year, Elective Deferrals on behalf of a Participant under the Plan (when combined with the Participant’s elective deferrals under any other plans, contracts, or arrangements) that will exceed the limitation in affect for such year under Section 402(g)(1) of the Code, as adjusted in accordance with Section 402(g)(4) of the Code. Make-up contributions on account of qualified military service under Section 414(u) of the Code shall not be recognized as elective deferrals for purposes of this section.
|
(b)
|
In the event any amount of Elective Deferrals for a calendar year exceeds the limitation applicable under this Section 3.2 for such calendar year, such excess amount (hereafter described for purposes of this Section, as “Excess Deferrals”), as adjusted for any income or loss allocable thereto in accordance with regulations, shall to the extent possible be distributed to such Participant, as provided in subparagraphs (i), (ii), (iii) and (iv) below:
|
(i)
|
At a date not later than the March 1st of the calendar year immediately following the calendar year to which such Excess Deferrals are attributable, any Participant to whom this Section 3.2 applies may notify, in writing, the Administrator by submitting a form as may be provided by the Administrator which shall specify the amount of the Participant’s Excess Deferrals for the given calendar year and shall contain a certified statement by the Participant indicating that if such amount is not distributed, such Excess Deferrals will exceed the limit imposed on the Participant by Section 402(g) of the Code for the year in which the Elective Deferrals occurred.
|
(ii)
|
At a date not later than the April 15 of the calendar year immediately following the calendar year to which such Excess Deferrals are attributable, the Plan may distribute to the Participant the amount of the Excess Deferrals allocated to the Plan as adjusted for any income or loss allocable to such excess. Any Excess Deferrals distributed pursuant to this subparagraph that have not previously been included in income are to be included in the gross income of the Participant for the year to which such Excess Deferrals relate. Any income that is allocable to Excess Deferrals (as determined in accordance with rules promulgated by the Secretary of the Treasury or his delegate) that is distributed pursuant to this subparagraph is to be included in the gross income of the Participant for the year in which such amount is distributed. In making a distribution as permitted under this Section, the Administrator shall first allocate the Excess Deferral to any Roth Elective Deferrals for such year and shall allocate the Excess Deferral to Tax Deferred Contributions only to the extent the Excess Deferral exceeds such Roth Elective Deferrals. The Administrator shall designate the distribution as that consisting of Excess Deferrals within the meaning of Section 402(g)(1) of the Code. Any distribution of less than the entire amount of Excess Deferrals plus income or loss attributable to such deferral contributions shall be treated as a pro rata distribution of such excess deferral contributions and income/loss. No corrective distribution under this Section shall be recognized for purposes of determining whether the minimum distribution requirements of Section 401(a)(9) of the Code are satisfied with respect to any Participant.
|
(iii)
|
Any distribution in accordance with this Section 3.2 shall be made without regard to any notice or consent otherwise required under Sections 411(a)(11) or 417 of the Code.
|
3.3
|
Catch-Up Contributions
|
(a)
|
A Participant who is a Covered Employee and who is age 50 or older at any time during a given Plan Year shall be eligible to elect to make a Tax Deferred Catch-Up Contribution for such Plan Year or, for Plan Years beginning on and after January 1, 2007, a Roth Catch-Up Contribution for such Plan Year. Such election shall be made, and may be changed prospectively, in accordance with procedures adopted by the Administrator and communicated to Covered Employees.
|
(b)
|
A Catch-Up Contribution is an Employer contribution that is actually made on behalf of a Participant described in Section 3.3(a) whose Elective Deferrals for the give Plan Year are otherwise limited as provided in Section 3.2. and that is in an amount that does not exceed the dollar limit under Section 414(v)(2)(B)(i) of the Code, as adjusted in
|
3.4
|
Safe Harbor Matching Contributions
|
(a)
|
The Employer shall contribute an amount to the Trust Fund equal to the sum of those amounts individually determined with respect to each Participant, as follows:
|
(i)
|
One hundred percent (100%) of the Elective Deferrals made with respect to the Participant during such pay period which do not exceed three percent (3%) of the Participant’s Compensation during such pay period; and
|
(ii)
|
Fifty percent (50%) of the Elective Deferrals made with respect to the Participant during such pay period which exceed three percent (3%), but do not exceed five percent (5%), of the Participant’s Compensation during such pay period.
|
(b)
|
Effective with respect to each Plan Year in which the provisions of Section 3.4 are applicable, the Administrator shall provide Notice during the “Safe Harbor Notice Period” (as hereinafter defined) to each Covered Employee who is eligible to participate in the Plan during such Plan Year. Such Notice shall describe the following:
|
(i)
|
The formula used to determine the Safe Harbor Matching Contribution to be made on behalf of such Employee for such Plan Year;
|
(ii)
|
Any requirements that such Employee must satisfy to become entitled to receive such contributions;
|
(iii)
|
The type and amount of Compensation that may be deferred under the Plan as Elective Deferrals and Catch-Up Contributions;
|
(iv)
|
The procedures for making or changing an election to make Elective Deferrals and Catch-Up Contributions, including the periods available for making or changing such elections;
|
(v)
|
The withdrawal and vesting provisions applicable to contributions under the Plan; and
|
(vi)
|
A means by which Covered Employees may easily obtain additional information about the Plan.
|
(c)
|
The Employer elects to treat the Plan as automatically satisfying the nondiscrimination in amount of employer contribution requirements of Section 401(a)(4) of the Code. Notwithstanding any provision of this Section 3.4 to the contrary, the Employer reserves the right to suspend future Safe Harbor Matching Contributions at any time provided that the procedures for implementing such suspension are consistent with Section 1.401(k)-3(g) of the Income Tax Regulations.
|
3.5
|
Source of Employer Contributions
|
(a)
|
The Employer shall make all contributions to the Plan without regard to current or accumulated net profits. Notwithstanding the foregoing, for purposes of Sections 401(a)(27) and 401(k) of the Code, the Plan shall continue to be considered a profit sharing plan. Effective January 1, 2007, this Plan is also intended to be a qualified Roth contribution program under Section 402A of the Code. All Employer contributions shall be made in cash and shall be conditioned on the deductibility of the contribution.
|
(b)
|
Any provision of the Plan to the contrary notwithstanding, the total Employer contribution made with respect to any Plan Year, when added to any other contributions made by the Employer to a plan qualified under Section 401(a) of the Code, shall not exceed such amount which is deductible for such Plan Year pursuant to Sections 404(a)(3) or 404(a)(7) of the Code. In any event, all contributions for a Plan Year shall be paid within the regular or extended time for filing the Employer’s federal income tax return for the fiscal year which includes the Plan Year end.
|
3.6
|
Investment of Employer Contributions
|
3.7
|
Recovery of Contributions
|
(a)
|
prohibit the return of a contribution to an Employer or a Participant within one year after payment if such contribution was made by a mistake of fact; or
|
(b)
|
prohibit the return of a contribution that is determined to be nondeductible (to the extent disallowed as a deduction);
|
3.8
|
Other Provisions Relating to Employer Contributions
|
(a)
|
Except as otherwise provided in accordance with procedures adopted by the Administrator and communicated to applicable Participants, a Participant may as of any time:
|
(i)
|
suspend the Elective Deferrals and/or Catch-Up Contributions being made on his behalf;
|
(ii)
|
increase or decrease the rate of Elective Deferrals and/or Catch-Up Contributions made on his behalf or have such contributions resumed after a period of suspension;
|
(iii)
|
change the allocation of the Elective Deferrals made on his behalf from Tax Deferred Contributions to Roth Elective Deferrals, or vice versa; or
|
(iv)
|
change the allocation of the Catch-Up Contributions made on his behalf from Tax Deferred Catch-Up Contributions to Roth Catch-Up Contributions, or vice versa.
|
(b)
|
In the event Safe Harbor Matching Contributions have been made with respect to Elective Deferrals that are subsequently determined to fail to meet the annual dollar limitation specified in Section 3.2(a) (and if such Excess Deferrals are distributed pursuant to Section 3.2(b)), such Safe Harbor Matching Contributions (and any income or loss attributable thereto determined in accordance with regulations) shall be forfeited and applied to reduce future Safe Harbor Matching Contributions.
|
3.9
|
Roth In-Plan Conversions
|
4.1
|
Rollover Contributions
|
(a)
|
Under such rules and procedures as the Administrator may establish, any Covered Employee may make a cash Rollover Contribution to this Plan of all or a portion of the amount received by the Covered Employee in the form of an eligible rollover distribution from an eligible retirement plan (as such terms are defined in Section 6.4); provided, however, that the Plan shall not accept (i) a rollover of after-tax employee contributions; (ii) a rollover from an individual retirement account or annuity that is other than a conduit IRA, as determined by the Administrator, or (iii) a rollover from such other source, and/or under such circumstances, as the Administrator, in its discretion, shall determine to be ineligible. Effective January 1, 2007, that portion of a Rollover Contribution that is attributable to a designated Roth account under an eligible retirement plan shall be accepted provided it meets the other requirements of this section and is made as a direct rollover to a Roth Rollover Account hereunder. Such Roth Rollover Contribution shall be subject to separate accounting, including accounting for the amount of such contribution not includable in income. Any portion of a Rollover Contribution that is not a Roth Rollover Contribution and that is accepted by the Administrator shall be allocated to a Rollover Account established on behalf of the Covered Employee. No Rollover Contribution may be made to the Plan unless the Covered Employee had demonstrated to the Administrator’s satisfaction that the contribution satisfies the conditions for tax-free rollover treatment under the applicable provisions of the Code.
|
(b)
|
In the event the Administrator has reasonably concluded that an amount may be accepted by the Plan as a Rollover Contribution under Section 4.1(a) but later determines that all or a portion of such amount fails to satisfy the provisions of Section 4.1(a), the Administrator shall cause such ineligible amount and related investment earnings to be distributed to the Covered Employee (or, if applicable, Beneficiary) as soon as administratively feasible.
|
4.2
|
Vesting of Rollover Contributions
|
5.1
|
Establishment of Participant Accounts
|
(a)
|
There shall be established and maintained for each Participant a Total Account. A Total Account may consist of the following accounts:
|
(i)
|
a Tax Deferred Account;
|
(ii)
|
a Safe Harbor Matching Account;
|
(iii)
|
an Employer Account;
|
(iv)
|
a Rollover Account;
|
(v)
|
a Tax Deferred Catch-Up Account;
|
(vi)
|
a Designated Roth Account;
|
(vii)
|
a Roth Catch-Up Account;
|
(viii)
|
a Roth Rollover Account; and
|
(ix)
|
for periods on and after January 1, 2016, one or more Roth In-Plan Conversion Accounts
|
(b)
|
Within each of the accounts listed in Section 5.1(a) that are applicable to a given Participant, separate records shall be kept of the portion, if any, of each account invested in each investment fund or vehicle then offered under the Plan. The Administrator may adopt rules, consistent with income tax regulations, that designate certain accounts as constituting a separate contract for purposes of Section 72 of the Code.
|
5.2
|
Valuation Date Adjustments
|
5.3
|
Investment Elections
|
(a)
|
When a Covered Employee submits his application to become a Participant, he shall give Notice regarding the investment of contributions to be made on his behalf under the Plan. Such Notice shall be provided to the Administrator or its designee within such time and in accordance with such means as are designated by the Administrator and communicated to Participants and Covered Employees. Subject to such procedural rules as may be established by the Administrator from time-to-time, such Notice shall specify, in 1%
|
(b)
|
Each Participant and Beneficiary shall have the opportunity to change the manner in which the Total Account maintained on his behalf under the Plan is invested. Such opportunity shall be exercised by giving Notice to the Administrator or its designee within such time and in accordance with such means as are designated by the Administrator and communicated to Participants, Covered Employees and affected Beneficiaries. Subject to such procedural rules as may be established by the Administrator from time‑to‑time, such Notice shall specify, in a whole dollar amount or in 1% increments from 0% to 100%, the dollar amount, or percentage, of the Total Account maintained on behalf of the Participant or Beneficiary which is to be invested in each investment option then made available. Except as may otherwise be set forth in the Trust Agreement, such Notice shall be effective as of the Valuation Date on which the Notice is received by the Trustee or as of the next following Valuation Date, in accordance with procedures established by the Administrator and communicated to Participants, Covered Employees and affected Beneficiaries. Notwithstanding any
|
(c)
|
Any investment elections or changes in elections under this Section 5.3 may be limited or delayed by the Administrator or Trustee, if, in the judgment of such party, giving immediate effect to such elections would adversely affect the Total Account balances of a significant number of Participants.
|
(d)
|
In the event a Participant’s, Covered Employee’s or Beneficiary’s investment election under the Plan is incomplete, the Participant, Covered Employee or Beneficiary will be deemed to have chosen to invest in such default fund as is set forth in the Trust Agreement or as otherwise determined by the Administrator.
|
(e)
|
Any investment election or deemed investment election under the Plan shall remain in effect until changed by an election under this Section. Notwithstanding any provision of this Article Five to the contrary, the Administrator, in its discretion, may offer such investment options to Participants and Beneficiaries as it deems appropriate and may cease to offer any such options as it deems appropriate. In the event the Administrator decides to discontinue offering an investment option under the Plan, those Participants on whose behalf Total Accounts are being maintained that are invested in the discontinued investment option may be required, at the discretion of the Administrator, to have affected amounts consolidated with (or “mapped” to) a replacement investment option selected by the Administrator or may be provided an opportunity to designate, from such selection of investment options as may be offered by the Administrator, an investment option or options as a replacement for the investment option being discontinued. Any such designation by a Participant shall be made in accordance with paragraph (b) above. If a Participant who is affected by the discontinuation of an investment option fails to make any replacement designation offered in this paragraph (e), the Participant’s interest in such discontinued fund, shall be consolidated with (or “mapped” to) such replacement investment option selected by the Administrator, in its discretion. Any changes under this paragraph (e) shall take effect as of such times and under such rules as shall be established by the Administrator.
|
(f)
|
Each Participant, Covered Employee and Beneficiary is solely responsible for the selection of his investment option. The Trustee, the Administrator, the Employer, and the directors, officers, supervisors and other employees of the Employer are not empowered
|
(g)
|
The Plan is intended to constitute a plan described in Section 404(c) of ERISA and Title 29 of the Code of Federal Regulations Section 2550.404c-1. As a consequence, Plan fiduciaries shall be relieved of liability for any losses resulting from any investment election by a Participant and/or Beneficiary to the fullest extent permitted by law.
|
5.4
|
Erie Indemnity Stock Fund
|
(a)
|
The Administrator shall make available under the Plan an investment fund which shall consist exclusively of Erie Indemnity Stock; provided, however, that in the discretion of the Trustee, within guidelines set by the Administrator, a portion of such fund may be held in short-term interest-bearing investments or cash pending purchase of Erie Indemnity Stock and to provide sufficient liquidity for exchanges out of the fund, withdrawals and loans. Such investment fund shall be referred to as the “Erie Indemnity Stock Fund.” Except as otherwise provided in this Section 5.4, a Participant shall be permitted to invest all or a portion of the Safe Harbor Matching Contributions, made on his behalf in the Erie Indemnity Stock Fund in accordance with the provisions of Section 5.3. A Participant shall not be permitted to invest any portion of the Elective Deferrals or Catch-Up Contributions made on his behalf in the Erie Indemnity Stock Fund nor shall any Participant or Covered Employee be permitted to invest any portion of a Rollover Contribution in the Erie Indemnity Stock Fund. No Participant, Covered Employee or Beneficiary may transfer any portion of the Total Account maintained on his behalf to the Erie Indemnity Stock Fund. For purposes of implementing Participant investment elections under Section 5.3, or a Participant’s or Beneficiary’s distribution election under Section 6.3, the Trustee may, in its discretion, purchase or sell Erie Indemnity Stock on the open market or by privately-negotiated transaction; provided however, that any such purchase or sale shall be made only in exchange for fair market value as determined by the Trustee and, provided further that, no commission shall be charged to or paid by the Plan with respect to any purchase or sale of Erie Indemnity Stock between the Plan and a party in interest (as defined in Section 3(14) of ERISA). Any distributions, dividends or other income received by the Trustee with respect to the Erie Indemnity Stock Fund shall be reinvested by the Trustee in the Erie Indemnity Stock Fund.
|
(b)
|
The restrictions contained in this paragraph (b) shall apply to that portion of the Employer Accounts and/or Safe Harbor Matching Accounts maintained on behalf of Participants or Beneficiaries which are invested in the Erie Indemnity Stock Fund and, if
|
(i)
|
No Participant or Beneficiary shall, on the basis of material nonpublic information with respect to the Company or its affiliates, make an election permitted by that Section or those Articles if (1) such election would result in an exchange into or out of, loans from, withdrawals from, or an increase or decrease in the amount of contributions to the Erie Indemnity Stock Fund, and (2) the transaction resulting from such election is prohibited by Rule 10b‑5.
|
(ii)
|
No officer shall make an election permitted by that Section or those Articles if such election would result in a transaction involving the Erie Indemnity Stock Fund which is not an exempt transaction pursuant to Rule 16b‑3.
|
(c)
|
Notwithstanding anything in this Article Five to the contrary, Participants and Beneficiaries shall have the right, and be notified of such right, to diversify the portions of their Total Account which are invested in the Erie Indemnity Stock Fund, as required under Section 401(a)(35) of the Code and Section 101(m) of ERISA. Any limitations established by the Administrator related to contributions and/or transfers into or out of the Erie Indemnity Stock Fund shall comply with the divestiture requirements of Section 401(a)(35) of the Code and related guidance.
|
5.5
|
Temporary Suspension of Certain Administrative Activities
|
6.1
|
Vesting
|
6.2
|
Distributions Upon Retirement or Other Termination of Employment
|
(a)
|
Subject to the provisions of paragraph (b) below, upon the termination of a Participant’s employment with the Company and Affiliates for any reason, the Participant (or, if the Participant is deceased, his Beneficiary) shall be paid the entire vested Total Account maintained on behalf of the Participant as provided in subparagraph (i), (ii) or (iii) below:
|
(i)
|
If the vested Total Account exceeds $3,500 as of the determination date chosen by the Administrator or its designee, the Participant (or Beneficiary) may elect, in such manner as provided by the Administrator or its designee, to either take or commence an immediate distribution of such vested Total Account in a form permitted under Section 6.3 or to defer receipt of the same until a later date, but not beyond the end of the calendar year in which the Participant attains age 70-1/2 and not beyond such other required commencement date under Section 401(a)(9) of the Code. The failure of any terminated Participant (or terminated Participant’s Beneficiary) to make an election with respect to a vested Total Account in excess of the $3,500 threshold shall be deemed an election by the Participant (or Beneficiary) to defer receipt of such vested Total Account. A Participant or Beneficiary who elects (or is deemed to have elected) to defer receipt of the vested Total Account may request a distribution of the vested Total Account in a form permitted under Section 6.3 at a subsequent date permitted under Section 401(a)(9) of the Code. Pending distribution of his Total Account, such Participant or Beneficiary shall be permitted to change the manner in which such Total Account is invested in accordance with Section 5.3(b).
|
(ii)
|
If the vested Total Account does not exceed $3,500 as of the determination date chosen by the Administrator or its designee, such vested Total Account shall be paid in a lump sum to the Participant (or Beneficiary) on the conditions that the Participant (or Beneficiary) is alive as of the applicable payment date and, except as otherwise provided in this subparagraph (ii), that the Participant (or Beneficiary) affirmatively elects payment in cash or as a direct rollover. If the vested Total Account maintained on behalf of the Participant (or Beneficiary) does not exceed $1,000 as of the applicable determination date and the Participant (or Beneficiary) fails to make an affirmative election to receive cash or make a direct rollover within 60 days of being apprised of his distribution options, the Plan shall pay such vested Total Account to the Participant (or Beneficiary) as a lump sum in cash.
|
(iii)
|
For purposes of this Section 6.2(a), the value of a vested Total Account shall be determined with regard to that portion, if any, that is attributable to a Rollover Contribution (and earnings allocated thereon).
|
(b)
|
The Administrator or its designee shall notify a Participant or Beneficiary of his election right under Section 6.2(a) and, in the case of a Participant who may defer payment of the vested portion of his Total Account in accordance with Section 6.2(a), of his right to defer payment and, for Plan Years beginning after December 31, 2006, a description of the consequences of a failure to defer payment. Such notification shall be provided to the Participant or Beneficiary not less than 30 days and not more than 90 days before payment is made; provided, however, that a Participant or Beneficiary may affirmatively elect to be paid the vested Total Account being maintained on his behalf within 30 days after the Participant or Beneficiary received the notice described in this Section 6.2(b).
|
(c)
|
A Participant who returns to employment with the Employer on a full or part-time basis prior to distribution of his vested Total Account under paragraph (a) shall be deemed to have cancelled his distribution election as of his date of reemployment.
|
(d)
|
All payments made pursuant to this Article Six shall be based on the Participant’s vested Total Account balance on the Valuation Date as of which payment is made. Payment shall be made from the accounts comprising the Participant’s (or Beneficiary’s) Total Account and from the investment funds in which such Total Account is invested in such order of priority as the Administrator, pursuant to a uniform and nondiscriminatory policy, shall direct.
|
6.3
|
Payment of Amounts Distributed
|
(a)
|
Distributions to a Participant or Beneficiary may be paid in the form of:
|
(i)
|
a lump sum;
|
(ii)
|
monthly, quarterly or annual installments that will provide a fixed amount per pay period; or
|
(iii)
|
monthly, quarterly or annual installments that will provide substantially equal payments over a fixed period that is not in excess of the lesser of fifteen (15) years or the recipient’s life expectancy, as determined by the Administrator as of the date the payments begin.
|
(b)
|
A distributee who is receiving payment in the form of a lump sum shall elect to have that portion of his Employer Account and Safe Harbor Matching Account which is invested in the Erie Indemnity Stock Fund paid either (i) in whole units of Erie Indemnity Stock (with fractional units being distributed in cash) or (ii) in cash. The election of a Participant or Beneficiary under this Section 6.3(b) shall be made in connection with the Participant’s or Beneficiary’s lumps sum election under Section 6.2. In the event distribution is made in the form of installments or is made in the form of a lump sum, but such lump sum is paid in the absence of a Participant’s or Beneficiary’s distribution election, that portion of an Employer Account and Safe Harbor Matching Account which is invested in the Erie Indemnity Stock Fund at the time of distribution shall be paid in cash.
|
(c)
|
Notwithstanding any inconsistent provision of the Plan, all distributions under the Plan shall be made in accordance with Code Section 401(a)(9), including the incidental death benefit requirement of Code Section 401(a)(9)(G), and Treasury Regulations Sections 1.401(a)(9)-1 through 1.401(a)(9)-9. Specifically, distribution of the Participant’s interest shall:
|
(ii)
|
commence not later than the required beginning date with distribution to the Participant made over the life of the Participant or joint lives of the Participant and a designated Beneficiary or a period not longer than the life of the Participant or joint lives of the Participant and a designated Beneficiary.
|
(ii)
|
occurs the fifth anniversary of the Plan Year in which the Participant commenced participant in the Plan; or
|
(iii)
|
the Participant terminated employment with the Company and Affiliates.
|
(d)
|
In the event that a Participant dies prior to the date that distribution commences:
|
(i)
|
any portion of the Participant’s interest that is not payable to a designated Beneficiary shall be distributed not later than the end of the calendar year which includes the fifth anniversary of the date of the Participant’s death; and
|
(ii)
|
any portion of the Participant’s interest that is payable to a designated Beneficiary shall be distributed in accordance with subparagraph (i) above or over the life of the designated Beneficiary (or over a period not extending beyond the life expectancy of the Beneficiary), commencing not later than the end of the calendar year following the calendar year of the Participant’s death or, if the Beneficiary is the Participant’s surviving Spouse, commencing not later than the last day of the later of the calendar year in which the Participant would have attained age 70½, or the calendar year following the calendar year which includes the date of the Participant’s death.
|
(e)
|
In the event a Participant dies after distribution of his interest has begun, but prior to distribution of his entire interest, the remaining portion of such interest shall be distributed, at the election of the Participant’s Beneficiary, in a lump sum or in a method that is at least as rapid as the method being used at the date of the Participant’s death.
|
(f)
|
Notwithstanding Sections 6.3(c), (d) or (e) of the Plan, a Participant or Beneficiary who would have been required to receive required minimum distributions for 2009 but for the enactment of Section 401(a)(9)(H) of the Code (“2009 RMDs”), and who would have satisfied that requirement by receiving distributions that are (i) equal to the 2009 RMDs or (ii) one or more payments in a series of substantially equal distributions (that include the 2009 RMDs) made at least annually and expected to last for the life (or life expectancy) of the Participant, the joint lives (or life expectancy) of the Participant and the Participant’s Beneficiary, or for a period of at least 10 years (“Extended 2009 RMDs”), will receive those distributions for 2009 unless the Participant or Beneficiary chooses not to receive such distributions. Participants and Beneficiaries described in the preceding sentence will be given the opportunity to elect to stop receiving the distributions described in the preceding sentence.
|
6.4
|
Direct Rollovers
|
(a)
|
A distributee may elect, subject to provisions adopted by the Administrator which shall be consistent with income tax regulations, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover. The Administrator shall notify a distributee of his right to elect a direct rollover; such notice shall be furnished to the distributee between 30 days and 180 days prior to the date as of which the distributee is to receive a distribution from the Plan,
|
(b)
|
Definitions.
|
(i)
|
Eligible Rollover Distribution: An eligible rollover distribution is any distribution of all or any portion of the balance to the credit of the distributee other than (A) any distribution that is one of a series of substantially equal periodic payments made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and his designated Beneficiary, or for a specified period of ten (10) years or more; (B) any distribution to the extent such distribution is required under Code Section 401(a)(9); and (C) any portion of a hardship withdrawal. In addition, a portion of a distribution shall not fail to be an eligible rollover distribution merely because the portion consists of after-tax employee contributions which are not includible in gross income. However, such portion may be paid only to an individual retirement account or annuity described in Code Sections 408(a) or (b), respectively, or (for distributions on and after January 1, 2008) to a Roth IRA described in Section 408A of the Code, to a qualified trust defined in Section 401(a) of the Code, or to an annuity contract described in Section 403(b) of the Code provided such account, annuity, IRA, trust or annuity contract agrees to separately account for amounts so transferred, including separately accounting for the portion of such distribution which is includible in gross income and the portion of such distribution which is not so includible.
|
(ii)
|
Eligible Retirement Plan: An eligible retirement plan is an individual retirement account described in Code Section 408(a), an individual retirement annuity described in Code Section 408(b), an annuity described in Code Section 403(a), an annuity contract described in Code Section 403(b), an eligible plan under Code Section 457(b) which is maintained by a state or a political subdivision of a state, and which agrees to separately account for amounts transferred, a qualified trust described in Code Section 401(a), and for periods on and after January 1, 2008, a Roth IRA under Code Section 408A, that accepts the distributee’s eligible rollover distribution. However, in the case of an eligible rollover distribution: (A) that includes after-tax employee contributions, an eligible retirement plan is an individual retirement account or annuity described in Code Section 408(a) or (b), or a qualified defined contribution plan described in Code Sections 401(a) or 403(a) that agrees to separately account for such eligible rollover distributions, including separately accounting for the portion of such distribution which is includible in gross income and the portion of such distribution which is not so includible, (B) that includes a Designated Roth Account, an eligible retirement plan is an individual retirement plan described in Code Section 408A or a
|
(iii)
|
Distributee: A distributee includes an Employee or former Employee. In addition, the Employee’s or former Employee’s surviving Spouse and the Employee’s or former Employee’s Spouse or former Spouse who is the alternate payee under a qualified domestic relations order, as defined in Code Section 414(p), are distributees with regard to the interest of the Spouse or former Spouse. With respect to distributions made on or after July 1, 2007, a distributee shall also include an Employee’s Beneficiary who is not the Employee’s Spouse.
|
(iv)
|
Direct Rollover: A direct rollover is a payment by the Plan to the eligible retirement plan specified by the distributee.
|
7.1
|
Withdrawals Generally
|
7.2
|
Hardship Withdrawal
|
(a)
|
payments necessary to prevent the eviction of the Eligible Applicant from, or foreclosure of the mortgage on, his principal residence;
|
(b)
|
expenses for medical care described in Code Section 213(d) incurred by the Eligible Applicant, his Spouse, his children, or his dependents as defined in Code Section 152, or necessary for these persons to obtain medical care described in Section 213(d) of the Code;
|
(c)
|
costs directly related to the purchase of an Eligible Applicant’s principal residence;
|
(d)
|
payment of tuition, related educational fees and room and board expenses, for the next 12 months of post-secondary education for the Eligible Applicant, his Spouse, his children, or his dependents (as defined in Code Section 152 without regard to Code Sections 152(b)(1), (b)(2), and (d)(1)(B)); or
|
(e)
|
payments for burial or funeral expenses for the Eligible Applicant’s deceased parent, his Spouse, his children, or his dependents as defined in Code Section 152, without regard to Code Section 152(d)(1)(B) of the Code; or
|
(f)
|
expenses for the repair of damage to the Eligible Applicant’s principal residence that would qualify for a casualty deduction under Code Section 165 (determined without regard to whether the loss exceeds 10% of adjusted gross income).
|
7.3
|
Safe Harbor Distribution
|
(a)
|
the distribution is not in excess of the amount of the immediate and heavy financial need of the Eligible Applicant including any amounts necessary to pay any federal, state or local income taxes or penalties reasonably anticipated to result from such distribution;
|
(b)
|
the Eligible Applicant has obtained all other forms of distribution and nontaxable loans currently available from all plans maintained by an Employer; and
|
(c)
|
the Eligible Applicant is suspended from making Elective Deferrals to the Plan until the first day of the pay period occurring six full months after the effective date of the withdrawal.
|
7.4
|
Hardship Withdrawal Priority
|
(a)
|
A hardship withdrawal pursuant to Section 7.2 shall be made from the Total Account maintained on behalf of an Eligible Applicant in the order of priority set forth in this Section 7.4. That portion of a Eligible Applicant’s Total Account which is of a lower priority shall be withdrawn only after those portions of the Total Account which are of higher priority have been completely withdrawn:
|
(i)
|
Designated Roth Account (excluding earnings);
|
(ii)
|
Roth Catch-Up Account (excluding earnings);
|
(iii)
|
Roth Rollover Account;
|
(iv)
|
Roth In-Plan Conversion Account (to the extent not otherwise restricted)
|
(v)
|
Rollover Account;
|
(vi)
|
Employer Account;
|
(vii)
|
Tax-Deferred Account (excluding earnings); and
|
(viii)
|
Tax-Deferred Catch-Up Account (excluding earnings).
|
(b)
|
Subsequent to the determination under paragraph (a), withdrawals shall be made out of those investment options in which the applicable account is invested according to the withdrawal hierarchy designated by the Administrator and communicated to Participants.
|
7.5
|
Modifications to Hardship Withdrawal Standards
|
7.6
|
In-Service Withdrawals for Reasons Other than Hardship
|
(a)
|
Subject to the provisions of paragraphs (c) through (f) below, an Eligible Applicant on whose behalf a Rollover Account or Roth Rollover Account is maintained may elect to withdraw all or a portion of such accounts without regard to whether the Eligible Applicant has attained a given age or completed a given period of service with the Company or other Employer. For purposes of this Section 7.6, the portion of a Roth In-Plan Conversion Account that is attributable to a Rollover Contribution shall be considered a Rollover Account.
|
(b)
|
Subject to the provisions of paragraph (c) through (f) below, an Eligible Applicant who has attained age 59-1/2 may elect to withdraw all or a portion of the Total Account maintained on his behalf.
|
(c)
|
A withdrawal under this Section 7.6 shall be effective as of the date set forth in the Eligible Applicant’s application for withdrawal, as approved by the Plan Administrator. The Administrator shall endeavor to cause the payment of the withdrawal to be made on, or as soon as practicable following, such effective date.
|
(i)
|
The amount available for withdrawal will be based on the balance(s) of the Eligible Applicant’s applicable accounts or sub-accounts on the Valuation Date as of which the payment of the withdrawal is made.
|
(ii)
|
Withdrawals shall be made from the applicable accounts and sub-accounts maintained under the Plan on behalf of the Eligible Applicant in such order as the
|
(iii)
|
Withdrawals shall be made from the investment funds maintained under the Plan in such order as the Administrator, pursuant to a uniform and nondiscriminatory policy, shall direct and communicate to Eligible Applicants.
|
(iv)
|
Withdrawals may be paid in the form of a cash payment and/or as a direct rollover at the election of the Eligible Applicant. However, to the extent all or a portion of the applicable account(s) of an Eligible Applicant subject to the withdrawal election are invested in the Erie Indemnity Stock Fund, the Eligible Applicant may elect to receive the withdrawal either (A) in whole units of Erie Indemnity Stock (with fractional units distributed in cash) or (B) in cash.
|
(v)
|
The minimum amount of withdrawal under this Section 7.6 shall be the lesser of (A) $500 and (B) the balance(s) of the applicable account(s) of the Eligible Applicant from which a withdrawal is requested under paragraphs (a) and/or (b) above.
|
(d)
|
Notice shall be provided to an Eligible Applicant in connection with any withdrawal and such Notice shall be consistent with rules promulgated by the Secretary of the Treasury or his delegate.
|
(e)
|
The Administrator, in its discretion, may provide that a reasonable administrative fee be charged to an Eligible Applicant who elects a withdrawal under this Section 7.6. Any such administrative fee shall be pursuant to a uniform and nondiscriminatory policy that is communicated to Eligible Applicants.
|
(f)
|
The Company shall have full discretionary authority to modify the provisions of this Section 7.6 provided that any modification shall be evidenced by a writing approved by the Administrator, shall be consistently applied to all pending and future applications as of the date of the modification and shall not operate so as to reduce or eliminate any benefit protected under Section 411(d)(6) of the Code that has accrued as of the date of such modification.
|
(a)
|
Amount of Loan. At the time the loan is made, the principal amount of the loan, when added to all other outstanding loans of the Participant from the Plan and any other qualified plan of an Employer and Affiliates, shall not exceed the lesser of:
|
(i)
|
$50,000, as reduced by the excess, if any, of the Eligible Applicant’s highest outstanding loan balance from the Plan during the one-year period ending on the day before the date such new loan is secured over the outstanding balance of loans from the Plan on the date such loan is made; or
|
(ii)
|
one-half of the current value of the Total Account maintained on behalf of the Eligible Applicant under the Plan.
|
(b)
|
Application for Loan. The Eligible Applicant must give the Administrator adequate written notice, as determined by the Administrator, of the requested amount and desired time for receiving a loan.
|
(c)
|
Length of Loan. The Eligible Applicant and the Administrator shall arrange for the repayment of a Plan loan. The period of repayment shall not exceed five years from the date the loan is made. All repayment schedules (whether by payroll withholding or otherwise) shall commence as of the next administratively feasible pay period following the disbursement of the loan and shall provide for substantially level amortization of principal and interest. An Eligible Applicant who is on a military leave of absence may elect to extend the term of the loan by the length of such absence. In all other cases, an Eligible Applicant who is on a leave of absence or who terminates employment with the Company and Affiliates must make principal and interest payments in the amount and on such dates as otherwise due. In the event such payments are not made the maturity of the loan shall be accelerated and the outstanding principal amount of the loan, together with all accrued interest, shall be deemed immediately due and distributable at such date or dates as
|
(d)
|
Prepayment. The Eligible Applicant shall be permitted to repay the loan in total as of any date prior to maturity without penalty.
|
(e)
|
Note. The loan shall be evidenced by a promissory note executed by the Eligible Applicant and delivered to the Administrator. The Eligible Applicant will agree to execute any other documents (e.g., payroll withholding forms) that may be necessary or appropriate to effect the loan.
|
(f)
|
Interest. All loans shall be considered investments of the Trust and interest shall be charged on the loan at the rate set by the Administrator as of the loan effective date. Such rate, applicable to loans effective in a given calendar quarter, shall be the prime lending rate as determined by the Administrator as of the last business day of the previous calendar quarter, plus 100 basis points, provided that such interest rate may be limited in accordance with law during a period of qualifying military service.
|
(g)
|
Security. Subject to the extent required under regulations promulgated by the Secretary of Labor or his delegate, a Plan loan shall be secured by an assignment of the Eligible Applicant’s right, title and interest in that portion of his Total Account under the Plan as shall adequately secure the loan, provided such security shall not exceed one-half of the current value of the Eligible Applicant’s vested Total Account. The Administrator may also require such additional collateral as may be deemed necessary to adequately secure repayment of the loan.
|
(h)
|
Default. The Administrator shall take reasonable steps to secure repayment of any loan granted hereunder in accordance with its terms; however, when the Administrator declares a loan to an Eligible Applicant to be in default, the outstanding balance of the loan, together with unpaid, accrued interest, shall be deemed a lien against the Total Account maintained on behalf of the Eligible Applicant. The Administrator shall take such reasonable steps as it shall deem necessary or appropriate to eliminate the default before causing an offset distribution to be made with respect to the Eligible Applicant for the purpose of fully amortizing the loan outstanding; however, should the loan remain in default after these administrative procedures are taken, the Administrator will consider the entire amount of the loan outstanding (including all accrued interest to date) as a distribution as of the first date, on or following the administrative procedures, on which the Eligible Applicant has a distributable event and will process the Total Account of the Eligible Applicant accordingly.
|
(j)
|
Other Terms and Conditions
.
The Administrator shall fix such other terms and conditions of the loan as it deems necessary to comply with legal requirements, to maintain the qualification of the Plan and Trust Fund under Code Section 401(a), to exempt the loan transaction from the prohibited transaction rules of under Code Section 4975, or to prevent
|
(k)
|
No Prohibited Transactions
.
No loan shall be made unless such loan is exempt from the tax imposed on prohibited transactions by Code Section 4975 or would be exempt from such tax (if the Eligible Participant were a disqualified person as defined in Section 4975(e)(2) of the Code) by reason of Code Section 4975(d)(1).
|
8.1
|
Trust Agreement
|
8.2
|
Appointment of Independent Accountants
|
8.3
|
Appointment of Investment Manager
|
8.4
|
Role of Administrator in Operation of the Trust Fund
The Administrator shall perform such duties relating to the operation of the Trust Fund as it deems appropriate and shall perform the duties specified in this Section 8.4. |
(a)
|
to appoint and remove Trustees;
|
(b)
|
to appoint investment and fund managers;
|
(c)
|
to allocate the duties and procedures for the Trustee and investment fund managers;
|
(d)
|
to select investment funds or other investments to offer under the Plan;
|
(e)
|
to establish an investment philosophy and goals for each of the investment and fund managers;
|
(f)
|
to monitor the Trustee with respect to servicing the Trust Fund in a fiduciary capacity; and
|
(g)
|
to monitor the investment and fund managers including, without limitation, their investment philosophies, goals, and rates of return.
|
8.5
|
Voting of Erie Indemnity Stock
|
(a)
|
Each Participant or Beneficiary who has an Employer Account or Safe Harbor Matching Account maintained under the Plan on his behalf with an investment in the Erie Indemnity Stock Fund shall have the powers and responsibilities set forth in this Section 8.5.
|
(b)
|
Prior to each meeting of the Class A shareholders of the Company during which a vote of Class A shares is to be taken, the Company shall cause to be sent to each person described in Section 8.5(a), a copy of the proxy solicitation material for such meeting, together with a form requesting confidential voting instructions for the voting of Erie Indemnity Stock held in the Erie Indemnity Stock Fund in proportion to the number of shares or units of the Erie Indemnity Stock Fund held in such person’s Employer Account. Upon receipt of such a person’s instructions, the Trustee shall then vote in person, or by proxy, such Erie Indemnity Stock as so instructed.
|
(c)
|
Instructions received from the persons described in Section 8.5(a) by the Trustee regarding the voting of Erie Indemnity Stock held in the Erie Indemnity Stock Fund shall be held in strictest confidence and shall not be divulged to any other person, including directors, officers or employees of the Company, or any Affiliate, except as otherwise required by law.
|
(d)
|
Except as otherwise set forth in the Trust Agreement, the Trustee shall vote Erie Indemnity Stock which represents those shares or units of the Erie Indemnity Stock Fund for which the Trustee does not receive affirmative direction from Participants and Beneficiaries in the same proportion as the Trustee votes those shares of Erie Indemnity Stock held in the Erie Indemnity Stock Fund for which it has received voting instructions.
|
9.1
|
The Administrator
|
9.2
|
Powers of Administrator
|
(a)
|
To make and enforce such rules and regulations as it deems necessary or proper for the efficient administration of the Plan, including the modification of the claims procedure under Article Ten in accordance with any regulations issued under Section 503 of ERISA.
|
(b)
|
To interpret the Plan.
|
(c)
|
To decide all questions concerning the Plan and the eligibility of any person to participate in the Plan, his period of participation and/or service under the Plan, his date of birth, the value of the Total Account, or any part thereof, maintained on behalf of the person and the rights of any person to receive a distribution from the Plan and the amount of such distribution.
|
(d)
|
To determine the character and amount of Tax Deferred Contributions, Roth Elective Deferrals, Tax Deferred Catch-Up Contributions, Roth Catch-Up Contributions and Safe Harbor Matching Contributions to be made on behalf of any Participant in accordance with the provisions of the Plan.
|
(e)
|
To identify the proper payee of any portion of a Total Account, to authorize the payment of Plan benefits and to direct cessation of benefit payments.
|
(f)
|
To appoint, employ or engage such other agents, counsel, accountants, consultants and actuaries as may be required to assist in administering the Plan.
|
(g)
|
To establish procedures to determine whether a domestic relations order is a qualified domestic relations order within the meaning of Section 414(p) of the Code, to determine under such procedures whether a domestic relations order is a qualified domestic relations order and whether a putative alternate payee otherwise qualifies for benefits hereunder, to inform the parties to the order as to the effect of the order, and to direct the Trustee to hold in escrow or pay any amounts so directed to be held or paid by the order.
|
(h)
|
To obtain from the Employers, Employees, Participants, Spouses and Beneficiaries such information as shall be necessary for the proper administration of the Plan.
|
(i)
|
To perform all reporting and disclosure requirements imposed upon the Plan by ERISA, the Code or any other lawful authority.
|
(j)
|
To ensure that procedures are established which are sufficient to safeguard the confidentiality of information relating to the purchase, holding, and sale of Erie Indemnity Stock held in the Erie Indemnity Stock Fund and the exercise of shareholder rights with respect to Erie Indemnity Stock held in the Erie Indemnity Stock Fund and to ensure such procedures are being followed.
|
(k)
|
To appoint and remove an independent fiduciary for the purpose of carrying out activities relating to any situations which the Administrator determines involves an unreasonable potential for undue Employer influence with regard to the direct or indirect exercise of shareholder rights with respect to Erie Indemnity Stock holdings in the Erie Indemnity Stock Fund.
|
(l)
|
To take such steps as it, in its discretion, considers necessary and/or appropriate to remedy an inequity under the Plan that results from incorrect information received or communicated or as the consequence of administrative error including, but not limited to, recouping benefit overpayments.
|
(m)
|
To correct any defect, reconcile any inconsistency or supply any omission under the Plan.
|
(n)
|
To delegate its powers and duties to others in accordance with Section 9.3.
|
(o)
|
To exercise such other authority and responsibility as is specifically assigned to it under the terms of the Plan or the provisions of the Administrator’s charter and to perform any other acts necessary to the performance of its powers and duties.
|
(p)
|
To determine if and when Participants and Beneficiaries must be notified of any temporary suspension, limitation or restriction of their ability to execute various transactions under the Plan (including any notice required by Section 101(i) of ERISA) and to determine the content and method of distribution of any such notification.
|
9.3
|
Delegation of Duties
|
9.4
|
Conclusiveness of Various Documents
|
9.5
|
Actions to be Uniform
|
9.6
|
Liability and Indemnification
|
10.1
|
Claims Review Procedure
|
10.2
|
Original Claim
In the event a claim of any Participant, Beneficiary, alternate payee, or other person (hereinafter referred to in this Section as the “Claimant”) for a benefit is partially or completely denied, the Administrator shall give, within ninety (90) days after receipt of the claim (or if special circumstances, made known to the Claimant, require an extension of time for processing the claim, within one hundred eighty (180) days after receipt of the claim), written notice of such denial to the Claimant. Such notice shall set forth, in a manner calculated to be understood by the Claimant, the specific reason or reasons for the denial (with reference to pertinent Plan provisions upon which the denial is based); an explanation of additional material or information, if any, necessary for the Claimant to perfect the claim; a statement of why the material or information is necessary; a statement of the Claimant’s right to bring a civil action under Section 502(a) of ERISA; and an explanation of the Plan’s claims review procedure, including the time limits applicable to such procedure |
10.3
|
Review of Denied Claim
|
10.4
|
Determination by the Administrator Conclusive
The Administrator’s determination of factual matters relating to Participants, Beneficiaries and alternate payees shall be conclusive. The Administrator and the Company and its respective officers and directors shall be entitled to rely upon all tables, valuations, certificates and reports furnished by any accountant for the Plan, the Trustee or any investment managers and upon opinions given by any legal counsel for the Plan insofar as such reliance is consistent with ERISA. The Trustee and other service providers may act and rely upon all information reported to them by the Administrator and/or the Company and need not inquire into the accuracy thereof nor shall be charged with any notice to the contrary. |
10.5
|
Exhaustion of Administrative Remedies.
The exhaustion of the claims review procedure is mandatory for resolving every claim and dispute arising under the Plan. As to such claims and disputes: |
(a)
|
No claimant shall be permitted to commence any civil action to recover Plan benefits or to enforce or clarify rights under the Plan under Section 502 or Section 510 of ERISA or under any other provision of law, whether or not statutory, until the claims review procedure set forth herein has been exhausted in its entirety; and
|
(b)
|
In any such civil action all explicit and all implicit determinations by the Administrator (including, but not limited to, determinations as to whether the claim, or a request for a review of a denied claim, was timely filed) shall be afforded the maximum deference permitted by law.
|
10.6
|
Deadline to File Civil Action.
No civil action to recover Plan benefits or to enforce or clarify rights under the Plan under Section 502 or Section 510 of ERISA or under any other provision of law, whether or not statutory, may be brought by any claimant on any matter pertaining to the Plan unless the civil action is commenced in the proper forum before the earlier of: |
(a)
|
Thirty months after the claimant knew or reasonably should have known of the principal facts on which the claim is based; or
|
(b)
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Eighteen months after the claimant has exhausted the claims review procedure.
|
11.1
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Non-Alienation of Benefits
|
(a)
|
Except as provided in Section 11.1(b) or 11.1(c), no benefit payable under the Plan shall be subject in any manner to anticipation, sale, transfer, assignment, pledge, encumbrance, security interest or charge, and any action by way of anticipating, alienating, selling, transferring, assigning, pledging, encumbering, charging or granting a security interest in the same shall be void and of no effect; nor shall any such benefit be in any manner liable for or subject to the debts, contracts, liabilities, engagements or torts of the person entitled to such benefit.
|
(b)
|
Section 11.1(a) shall not apply to the creation, assignment, or recognition of a right to any benefit payable pursuant to a Qualified Domestic Relations Order. The Administrator shall establish reasonable procedures to determine the status of domestic relations orders and to administer distributions under such orders which are deemed to be Qualified Domestic Relations Orders. Such procedures shall be in writing and shall comply with the provisions of Section 414(p) of the Code. To the extent that, because of a Qualified Domestic Relations Order, more than one individual is to be treated as a surviving Spouse, the total amount payable from the Plan as a result of the death of a Participant shall not exceed the amount that would be payable from the Plan if there were only one surviving Spouse.
|
(c)
|
Notwithstanding the provisions of Section 11.1(a), the Plan may offset any portion of the Total Account maintained on behalf of a Participant or Beneficiary against a claim of the Plan arising:
|
(i)
|
as a result of the Participant’s or Beneficiary’s conviction of a crime involving the Plan; or
|
(ii)
|
with regard to the Participant’s or Beneficiary’s violation of ERISA’s fiduciary provisions upon:
|
(A)
|
the entry of any civil judgment, consent order, or decree against the Participant or Beneficiary; or
|
(B)
|
the execution of any settlement agreement between the Participant and the Department of Labor or Pension Benefit Guaranty Corporation.
|
11.2
|
Risk to Participants and Source of Payments
|
11.3
|
Expenses
|
11.4
|
Rights of Participants
|
11.5
|
Statement of Accounts
|
11.6
|
Designation of Beneficiary
|
(a)
|
Each Participant shall give Notice regarding the designation of a Beneficiary or Beneficiaries who shall receive payment of the Participant’s interest under the Plan in the event of his death. Such Notice shall be provided to the Administrator or its designee within such time and in accordance with such means as are designated by the Administrator and communicated to Participants. If the Participant is married, the Participant’s Beneficiary must be his Spouse (in accordance with Code Section 401(a)(11)(B)(iii)) unless Spousal Consent requirements are satisfied. In the event a Participant dies and there is no properly designated Beneficiary then living, the interest of the Participant under the Plan shall be paid in a lump sum to his surviving Spouse, or, if there is no surviving Spouse, to his estate or other successor, all as the Administrator may determine.
|
(b)
|
A Beneficiary entitled to a payment of all or a portion of a Participant’s Total Account due to the death of the Participant may disclaim his interest therein subject to the following requirements. To be eligible to disclaim, a Beneficiary must be a natural person, must not have received a distribution of all or any portion of said Total Account at the time such disclaimer is executed and delivered, and must have attained at least age twenty-one (21) years as of the date of the Participant’s death. Any disclaimer must be in writing and must be executed personally by the Beneficiary before a notary public. A disclaimer shall state that the Beneficiary’s entire interest is disclaimed or shall specify what portion thereof is disclaimed. To be effective, an original executed copy of the disclaimer must be both executed and actually delivered to the Administrator after the date of the Participant’s death but not later than one hundred eighty (180) days after the date of the Participant’s death. A disclaimer shall be irrevocable when delivered to the Administrator. A disclaimer shall be considered to be delivered to the Administrator only when actually received by the Administrator. The Administrator shall be the sole judge of the content, interpretation and validity of a purported disclaimer. Upon the filing of a valid disclaimer, the Beneficiary shall be considered not to have survived the Participant as to the interest disclaimed. A disclaimer by a Beneficiary shall not be considered to be a transfer of an interest or an assignment or alienation of benefits in violation of Section 11.1 hereof. No other form of attempted disclaimer shall be recognized by the Administrator.
|
11.7
|
Payment to Incompetents
|
11.8
|
Authority to Determine Payee
|
11.9
|
Severability
|
11.10
|
Employer Records
|
11.11
|
Limitation on Contributions
|
(a)
|
In no event shall the total annual additions on behalf of a Participant under this Plan and under any other defined contribution plan or plans maintained by the Employer with respect to any limitation year exceed the lesser of $40,000 (or such dollar figure, as increased in accordance with Section 415(d) of the Code for years up to and including the given limitation year) or 100% of the Test Compensation, paid to the Participant by an Employer within such limitation year. All amounts contributed to any defined contribution plan maintained by an Employer or an Affiliate (taking into account Section 415(h) of the Code) other than any rollover contribution and any salary reduction contribution to a simplified employee pension shall be aggregated with contributions made by an Employer under this Plan in computing any Employee’s total annual additions limitation. For purposes hereof, the limitation year shall be the calendar year.
|
(i)
|
Employer contributions under this Plan and under any other defined contribution plan maintained by an Employer or Affiliate;
|
(ii)
|
Reallocated forfeitures under any defined contribution plan maintained by an Employer or Affiliate;
|
(iii)
|
After-tax contributions under any other defined contribution plan maintained by an Employer or Affiliate; and
|
(iv)
|
Amounts allocated to an individual medical account, as defined in Section 415(1)(2) of the Code, as part of a pension or annuity plan and amounts derived from contributions paid or accrued which are attributable to post-retirement medical benefits described in Section 419A(d) of the Code, under a welfare benefit fund (as defined in Section 419(e) of the Code) maintained by an Employer or Affiliate.
|
(b)
|
In the event that a Participant’s total annual additions for any limitation year exceed the limitations of Section 11.11(a) because of a reasonable error in estimating the Participant’s Compensation, a reasonable error in determining the amount of Elective Deferrals that a Participant may make within the limitations of paragraph (a) above or due to such other facts and circumstances as the Commissioner of Internal Revenue finds justifiable, the excess amount shall be eliminated and/or the error corrected in a manner prescribed under the IRS Employee Plans Compliance Resolution System.
|
(c)
|
Notwithstanding anything herein to the contrary, in no event shall Test Compensation, for purposes of this Section 11.11, include severance pay. However, the following types of remuneration, if includible for purposes of Test Compensation as described in paragraph (a) above, shall be taken into account only if paid by the later of the date that is 2-1/2 months after the date of severance from employment with an Employer or the end of the limitation year that includes the date of severance from employment with the Employer, if the amounts would have been included in compensation had they been paid before the severance from employment date:
|
(i)
|
The payment for services rendered during the Participant’s regular working hours, or for services outside of the Participant’s regular working hours such as overtime or shift differential, commissions, bonuses or other similar payments that would have been paid had the Participant not incurred a severance from employment.
|
(ii)
|
Payments of unused accrued bona fide sick, vacation or other leave provided the Participant would have been able to use the leave if employment had continued, or payments from a nonqualified unfunded deferred compensation plan, provided the payment would have been paid had the Participant not incurred a severance from employment and such payment would have been includible in gross income had such payment been made.
|
(iii)
|
If the Employer continues to provide remuneration to a Participant due to the Participant’s disability or to a Participant who is not performing services because of qualified military service, as defined in Code Section 414(u), in an amount that is not in excess of that which would have been payable to the Participant as compensation had the Participant not entered qualified military service, such amounts will be included in Test Compensation for purposes of this Section.
|
(d)
|
The sole purpose of this Section is to comply with the formal requirements of Section 415(c) of the Code and the terms of this Section shall be interpreted, applied and if and to the extent necessary, shall be deemed modified so as to satisfy solely the minimum requirements of Section 415(c) of the Code and the regulations promulgated with respect thereto.
|
11.12
|
IRC 414(u) Compliance Provision
|
(a)
|
As provided by Section 414(u) of the Code, “qualified military service” means service in the uniformed services (as defined in Chapter 43 of Title 38, United States Code) by an individual if he is qualified under such chapter to reemployment rights with the Company or an Affiliate following such military service.
|
(b)
|
“USERRA” means the Uniformed Services Employment and Reemployment Rights Act of 1994, as amended.
|
(c)
|
If an individual returns to employment with the Company or an Affiliate following a period of qualified military service under circumstances such that he has reemployment rights under USERRA, and the individual reports for said reemployment within the time frame required by USERRA, the following provisions apply:
|
(i)
|
The Employee may elect to have “make up” Elective Deferrals made on his behalf following his period of qualified military service to the extent he could have made Elective Deferrals had he remained a Covered Employee under the Plan during his qualified military service. To the extent such “make up” Elective Deferrals are made by the Employee within such period as provided by law, such contributions shall be matched under this Plan according to the same conditions and at the same rate as the Elective Deferrals would have been matched had they actually been made during the period of qualified military service.
|
(ii)
|
The period of qualified military service shall be recognized for purposes of determining Years of Eligibility Service under the Plan to the same extent it would have been had the Employee remained continuously employed with the Company
|
(iii)
|
Compensation and Test Compensation shall be determined for the individual during the period of qualified military service. The amount of Compensation and Test Compensation shall be determined by the Company consistent with the requirements of the USERRA, and shall reflect the Company’s best estimate of the earnings the individual would have received but for the qualified military service.
|
(iv)
|
Notwithstanding the foregoing, investment earnings or losses applicable to any contributions hereunder shall be credited only with respect to periods following the actual deposit of such contributions.
|
(d)
|
The Plan shall comply with the provisions of the Heroes Earnings Assistance and Relief Tax Act of 2008 (the “HEART Act”), which amended certain provisions of USERRA.
|
(i)
|
If a Participant dies while performing qualified military service and such death occurs on or after January 1, 2007, the Participant’s Beneficiary shall receive the same benefits under the Plan as if the Participant had returned to employment as a Covered Employee immediately prior to his death and then terminated employment on account of his death.
|
(ii)
|
A Participant performing qualified military service on or after March 1, 2009 for a period of at least 30 days and who has not incurred a severance from employment may elect to withdraw in cash all or a portion of his Tax Deferred Account. Such a Participant shall be suspended from making Elective Deferrals to the Plan until the first day of the pay period occurring six full months after the effective date of the withdrawal.
|
(iii)
|
Effective March 1, 2011, a Participant who is called to qualified military service for a period in excess of 179 days, or for an indefinite period, and who has not incurred a severance from employment, may elect to withdraw in cash all or a portion of his Tax Deferred Account.
|
(iv)
|
A withdrawal under this Section 11.12(d) must be effective during a Participant’s period of qualified military service and before the Participant has otherwise incurred a severance from employment with the Employer and Affiliates.
|
(v)
|
The provisions of Sections 7.6(c) through 7.6(f) shall apply to the withdrawals under this Section 11.12(d), substituting “Participant” for “Eligible Applicant” thereunder.
|
(e)
|
The foregoing provisions are intended to provide the benefits required by USERRA and the HEART Act, and are not intended to provide any other benefits. This Section shall be construed consistent with said intent.
|
11.13
|
Governing Law
|
12.1
|
Right to Amend
|
(a)
|
increase the duties or liabilities of the Trustee without its written consent; or
|
(b)
|
impermissibly divest a Participant of any portion of his Total Account hereunder that has accrued to him prior to the effective date of such amendment; or
|
(c)
|
cause or permit any portion of the Trust Fund to be converted to or become the property of the Company; or
|
(d)
|
cause any portion of the Trust Fund to be used for purposes other than the exclusive benefit of the Participants or their Beneficiaries;
|
12.2
|
Right to Terminate
|
(a)
|
Although it is the expectation of the Company that it will continue the Plan as a permanent retirement program for the benefit of the Employees eligible hereunder, the Company reserves the right at any time, by action of its Board, at its sole discretion, to terminate the
|
(b)
|
Notwithstanding anything to the contrary contained herein, Trustee’s fees and other expenses incident to the operation and management of the Plan incurred after the termination of the Plan may, at the discretion of the Company, be paid from assets of the Trust Fund that are not part of any Participant’s Total Account.
|
(c)
|
In the event of the termination of the Plan in whole or in part or in the event of the complete discontinuance of Employer contributions under the Plan, each affected Participant’s interest in the Trust Fund shall become 100% vested and shall be nonforfeitable.
|
12.3
|
Merger, Transfer of Assets or Liabilities
|
13.1
|
Top Heavy Provisions Inapplicable
|
Exhibit 14.3
Exhibit 14.3
ERIEs Code of Conduct
January 2016
Simple sense mixed common with just plain decency.
-H.O. Hirt
Erie Insurance Above all in SERVICE-since 1925
To provide our Policyholders with as near perfect protection, as near perfect service as is humanly possible, and to do so at the lowest possible cost
Founder H.O. Hirt
Table of Contents
Introduction 2
Messages from ERIE 4
What are my responsibilities under our Code? 6
What happens if someone violates our Code? 7
What will happen after I make a report? 8
We are above all when we put our Customers first 9
We are above all when we contribute to a positive work environment 11
We support a safe workplace 14
We are above all when we earn business the right way 14
We dont bribe 15
We use good judgment when exchanging gifts and entertainment 16
We are above all when we demonstrate professionalism and integrity 17
We participate in political activity lawfully and ethically 18
We keep ERIEs computer network secure 19
We protect ERIEs assets 21
We safeguard the confidential information of ERIE 22
We are above all when we operate with truth and transparency 24
We safeguard our intellectual property 24
We do not trade or provide inside information 25
We create and maintain records responsibly 26
We communicate responsibly 27
We use social media responsibly 27
We are above all when we act in the best interest of our community 29
We demonstrate social responsibility 29
We are above all when we do the right thing 30
Key Contacts 30 1
Introduction
Why do we have a Code?
At Erie Insurance, we believe in doing the right thing.
Its clear in our Founding Purpose and mission: To provide Policyholders with as near perfect protection, as near perfect service as is humanly possible and to do so at the lowest possible cost. We prioritize ethical business conduct, accountability, respectful treatment and teamwork.
We have a Code of Conduct because it provides a roadmap to help us make sure we act not only in compliance with laws and regulations but also in the spirit of our purpose and values. Our Code will help us clearly understand how to deliver on our promise to do the right thing.
How does the Code apply to me?
If you work for, or on behalf of ERIE, we expect you to understand and follow our Code. Our Code applies to all Employees, including officers, and the Board of Directors. We expect everyone associated with ERIE to demonstrate ethical behavior that is consistent with our Code. This includes our Agents, contractors, vendors and others with whom we do business.
Our Code does not address every legal or ethical situation, but it helps guide us by supporting our good judgement when we have questions. When we have more specific questions about laws or policies, we can consult additional resources.
These include:
Employee Handbook
Policies, procedures and manuals available on the company intranet
Online compliance courses 2
Ethical Decision Making - Four Pillars
Be above all. consider each of these statements in the decisions you make and the actions you take.
This action is legal.
This action is ethical.
This action is in line with our Code and company policies.
This action upholds ERIEs reputation.
Call ERIE Ethicsline 866.469.5708 or visit erieinsurance.alertline.com Anonymous Reporting 24/7
Messages from ERIE
When H.O. Hirt called it our purpose to provide Policyholders with as near perfect protection as possible, he was thinking about the protection that an insurance policy offers individuals and families.
But wed like to think he was also anticipating resources like this Code of Conduct, which helps protect against unethical conduct that could damage our business or reputation.
Just as we provide our Customers with near perfect service, we want to also be near perfect in decisions and actions that have legal, ethical or professional consequences. The Code is one way we equip our Employees, Agents, contractors and vendors with the information and resources they need to meet this very important commitment.
- Tom Hagen, Chairman
The organization of our Code of Conduct follows the principles in Our Founding Purpose.
This is no accident.
Just like Purpose, the Code makes a clear and bold statement about who we are and how we work. It provides clear guidelines so that we reach our business goals with a common understanding of the behavior thats legally and ethically acceptable.
Finally, because human beings sometimes make mistakes, the Code includes a list of key contacts that can assist with decisions, answer your questions or listen to your concerns.
ERIE Employees want to do the right thing. When you have questions about whats right, our Code is the best place to start.
- Terry Cavanaugh, Chief Executive Officer 4
Call ERIE Ethicsline 866.469.5708 or visit erieinsurance.alertline.com Anonymous Reporting 24/7
When you face an ethical decision in business, Founder H.O. Hirts guidance that simple common sense, mixed with just plain decency still rings true.
But its possible youll face a situation where your choices have ethical or legal consequencesand the right choice may not seem simple or clear.
If this happens, take personal responsibility for finding the right answer. But, know that the responsibility for determining the right choice is not yours alone. Speak up, ask questions. Talk to your supervisor or manager. Check the Code of Conduct, the Employee Handbook, or company policies and procedures.
Still not sure? Reach out to me or any Employee in Compliance.
Or, use the ERIE Ethicsline, where you can report an issue or request guidance, anonymously, if you choose, 24 hours a day, 7 days a week. In order to do whats right, it helps to know whats rightand trust that ERIE is committed to being above all, not just in service, but in all business conduct, every day.
- Theresa Gamble, Director of Compliance 5
What are my responsibilities under our Code?
We are all expected to be above all when it comes to our Code.
This means reading our Code, taking time to understand it and asking questions if they arise. Depending on your role in the Company, you may have different responsibilities under the Code. For example:
Employee Responsibilities
Obey all laws, rules, regulations and court orders.
Know and follow our Code and company policies.
Conduct business truthfully and fairly.
Demonstrate professional behavior at all times.
Exhibit responsible financial management.
Follow our travel and expense policies and guidelines.
Never use a business relationship or company asset for personal gain.
Report violations of our Code and company policies.
Ask questions. If a situation does not meet all Four Pillars of Ethical Decision Making, you should report a potential violation of our Code.
Notify a member of management in the Compliance Department if you become aware of or are convicted of a felony.
Leader Responsibilities
Demonstrate a commitment to compliance with all laws, rules,
regulations and court orders.
Establish and sustain procedures in your area of work that are
consistent with our Code.
Lead by example.
Listen to Employees ethical concerns.
Guide Employees through the Four Pillars of Ethical Decision
Making described in the previous section.
Instruct Employees on their options on how to report concerns.
Never influence a subordinate to behave or act in a way that is not in
line with our Code or company policies.
Establish and follow controls in your area that protect company assets.
Protect Employees from retaliation for reporting concerns.
Follow the Anti-Retaliation Policy.
Demonstrate accountability.
Notify a member of management in the Compliance Department
if you or an Employee who reports to you become aware of or are
convicted of a felony.
Remember that federal law regulates the participation in the insurance industry of individuals who have been convicted of some types
of felony charges. To support ERIEs compliance with federal law, Employees must disclose if they have been convicted of a felony.
Call ERIE Ethicsline 866.469.5708 or visit erieinsurance.alertline.com Anonymous Reporting 24/7
What happens if someone violates our Code?
Accountability is one of our core valuesand consequences are a key part of holding each other accountable. A violation of our Code of Conduct will result in corrective action, up to and including termination of employment.
SPEAK UP
What do we mean by speak up?
Speaking up means looking out for our Company and for our Customers. It means being responsible for recognizing illegal, unethical, unsafe or unprofessional behavior, as well as violations of our Code or Company policies.
If we supervise Employeesit also means promoting a culture which encourages Employees to ask questions and report concerns.
When we speak upwe maintain a high standard of conduct and an ethical work place.
When should I speak up?
Speak up when something does not feel right. Trust yourself if something doesnt seem right or ethical, dont do it and dont tolerate itinstead, seek help. Employee reports can help us identify issues early, when its still possible to prevent damage to our business and reputation.
How do I speak up?
ERIE has established several different ways you can speak up if you have a comment, question or need to report misconduct.
To speak up, contact:
Your immediate supervisor or any ERIE leader
Any person listed under Key Contacts
ERIE Ethicsline
You may choose to remain anonymous when reporting. To enable anonymous reporting, ERIE has established ERIE Ethicsline, a service provided by an independent third party, which includes a telephone hotline and a website where Employees can report any concerns.
7
What will happen after I make a report?
ERIE will take your report seriously and you will not be retaliated against for making an honest report. ERIE will not discipline, discriminate or retaliate against anyone who reports a concern in good faith, or who cooperates in any investigation or inquiry regarding such conduct whether or not such information is proven to be correct. ERIE will also do everything possible to protect the confidentiality of individuals who make a report or participate in an investigation. Typically, ERIE will only share information about individual reports with those who need to know it to carry out the investigation. If we discover misconduct, ERIE takes corrective action, such as disciplinary actionup to and including termination of employment for individuals responsible.
What happens if the company becomes the subject of an investigation?
Occasionally, ERIE business practices may be subject to investigation. If and when this happens, our goal is to maintain a positive working relationship with regulators, auditors and other entities.
Take time to respectfully participate with other Employees who are coordinating these investigations.
Respond honestly and completely to authorized requests for information, documents and data.
8
Call ERIE Ethicsline 866.469.5708 or visit erieinsurance.alertline.com Anonymous Reporting 24/7
We are above all when we put our Customers first.
We protect the privacy of our Customers.
The business of insurance, by its nature, requires us to collect information about our Customers that is not publicly knownand it is critical to our reputation and trustworthiness that we protect it. This means that we understand the rules and safeguards in place to protect all nonpublic, personally identifiable information concerning an individual or his or her transactions with us, including policies about disclosing this information to others.
DID YOU KNOW?
There are times when it is okay for an Employee to access and disclose personal information. There are other times when it is not.
Make sure:
You have verified the Customers identity.
The transaction is in the scope of your job.
The information is secure during the transaction.
The disclosure is of the type permitted under ERIEs policies.
If these conditions exist, you can release the information. If you have questions, contact your supervisor.
BE ABOVE ALL
Carefully protect all personal information that is in your care.
Access personal information only if you are authorized to do so, and if you need to use the information to do your job.
Know when you can share personal data and when you cantnever give someone information if you are not sure that you should be sharing it.
If you use data as part of your job, remember that you are responsible for its accuracy, integrity and security. This includes not only protecting it, but managing it in accordance with ERIEs record retention policy and schedule.
Report any loss or breach of personal information to your supervisor, the Privacy Officer, to Compliance, or the ERIE Ethicsline as soon as possible.
9
We strive to deliver near perfect service & handle claims fairly.
We treat our Customers and claimants respectfully and fairly every step of the way, from marketing to sales and service, to the underwriting and rating of each policy. We settle claims fairly, promptly and in good faith.
BE ABOVE ALL
Make sure your actions show that ERIE gives priority to the interest of the Customer.
Always treat the Customer fairly, and go above and beyond when providing service.
Understand and follow corporate policies, laws, and regulations that apply to the work you do.
Consider only the factors you are legally permitted to consider when evaluating or underwriting a risk.
Use ERIEs underwriting guidelines and rules consistently.
Follow claims handling policy and procedural manuals and consult with a claim supervisor if you are not sure how to proceed.
We are committed to supporting the independent Agent as the face of ERIE in the community.
Our Agents are a reflection of ERIE. Fostering relationships with trustworthy and dependable Agents enables us to provide near perfect service.
DID YOU KNOW?
ERIE sells insurance exclusively through independent Agents. By entering into agency agreements, our Agents agree to follow ERIE business practices and all laws and regulations that apply to them as independent Agents.
BE ABOVE ALL
If you work directly with our Agents, be sure to communicate and demonstrate ERIEs standards for doing business legally and ethically.
The actions of our Agents reflect on our reputation. If you observe or suspect misconduct of an Agent, notify Compliance.
10
Call ERIE Ethicsline 866.469.5708 or visit erieinsurance.alertline.com Anonymous Reporting 24/7
We are above all when we contribute to a positive work environment.
We value the diversity of experiences and perspectives.
At ERIE, we define diversity as all of the ways, visible, or invisible, that each of us is unique. Our inclusive environment makes it possible for all Employees to make the most of opportunity, take ownership of performance, and realize their full potential. We prohibit and do not tolerate discrimination in our workplace. We employ qualified people on the basis of their ability to do their job.
DID YOU KNOW?
The law is designed to protect individuals from discrimination based on certain characteristics. Some examples of characteristics protected by law include: age, ancestry, citizenship, color, disability, gender identity, genetic information, military status, marital status, national origin, race, religion, sex, and sexual orientation. We also do not discriminate against women who are pregnant or breastfeeding.
BE ABOVE ALL
Make employment-based decisionssuch as recruiting, hiring, firing, or promotionon the basis of the individuals qualifications, performance and capabilities to succeed in the job.
Never treat any individual differently or make employment-based decisions on the basis of characteristics protected by the law.
Rememberdiversity includes all the ways that we are different including different perspectives or working styles. We expect you to be able to work collaboratively with a wide variety of individuals.
11
We treat one another respectfully and prohibit harassment.
At ERIE, we treat one another with dignity and respect. In a culture of dignity and respect, people can work together as members of a team and do better work. ERIE strictly prohibits harassment and will not tolerate disrespectful behavior or remarks.
DID YOU KNOW?
When people hear the word harassment, they often think first of sexual harassment. But the term harassment actually refers to any conduct that is unwelcome or personally offensive to another individual. This includes threats or acts of violence, bullying, and intimidation.
BE ABOVE ALL
Always treat your colleagues with respecteven when there are business pressures or differences of opinion.
Never act in a way that could threaten, bully or intimidate others.
Observe the highest standards of professionalism at all times in person and online.
Speak up if you see someone being harassed or believe you are being harassed
- to the offender, if you feel comfortable doing so,
- or to your supervisor,
- or the Code of Conduct Key Contacts.
If someone tells you that your behavior is offensive or unwelcome, take it seriouslyapologize and stop the behavior.
12
KNOWING WHAT IS RIGHT AND DOING SOMETHING ABOUT IT
Recently, when I was at lunch, I overheard a coworker telling jokes that involved racial stereotypes. Some people were laughing, but the jokes made me uncomfortableand I could tell, looking around the room, that others seemed to feel the same way.
I wasnt surprised others looked uncomfortable as well. A few of us are in the same work group and our supervisor had discussed our Company policy against harassment at our last department meeting. I felt the right thing to do would be to alert my supervisor about the jokes. My supervisor thanked me for speaking up and assured me they would appropriately address the situation.
Call ERIE Ethicsline 866.469.5708 or
visit erieinsurance.alertline.com Anonymous Reporting 24/7
We support a safe workplace.
At ERIE we are committed to providing a safe and healthy work environment. We strive to maintain a workplace free of unsafe conditions, unsafe acts, violence or threats of violence.
BE ABOVE ALL
If someone makes a threat or you believe someone may be
considering a violent action, report it immediately.
Never bring weapons into ERIE buildings, and follow the state specific rules in the Employee Handbook regarding weapons in vehicles and parking lots.
Always have your ID badge on and visible when you are at work.
Always sign in and escort visitors, and make sure they have an ID badge.
When you use your access card to enter an ERIE building, dont allow people you dont know to tailgate in after you if they do not have their ID badge.
Always take appropriate precautions when encountering workplace hazards.
Never report to work under the influence of illegal drugs or alcohol.
If you are at a company event use good judgement if alcohol is being served.
If you see something, say something.
Call Security at Home Office ext. 2700.
Never operate vehicles or equipment while using mobile electronic devices.
Always report workplace hazards and accidents, including security incidents.
We are above all when we earn business the right way.
We compete fairly.
We win business based on our commitment to be Above all in Service®. We make sure that our actions are ethical and in compliance with antitrust and unfair practice laws.
DID YOU KNOW?
Antitrust and unfair competition laws are intended to protect consumers from corporate practices that might limit the free market and restrict their access to competitive products at competitive prices. Refer to the Antitrust Policy in the Employee Handbook for a more detailed list of guidelines to avoid violations.
14
Call ERIE Ethicsline 866.469.5708 or visit erieinsurance.alertline.com Anonymous Reporting 24/7
BE ABOVE ALL
Know how antitrust and competition laws apply to your job requirements.
Do not discuss any confidential ERIE information with competitors or with others and do not discuss competitors confidential information.
Do not collect information about competitors through illegal means, such as theft, spying, bribery or breach of a confidentiality agreement or contractual agreement.
Be careful about your conversations when attending trade association meetings where you may have contact with competitors. Stick to discussing general business practices and not ERIE-specific confidential company information.
When doing research or requesting information from competitors for business purposes, identify yourself as an ERIE Employee.
Any requests by you to connect with another person or entity online for business purposes must not be misleading, deceptive or misrepresent a relationship with, or connection to, ERIE.
We dont bribe.
At ERIE we conduct business fairly and do not give anyone anything of value in an attempt to gain an unfair business advantage. We prohibit bribery and kickbacks anywhere we do business. We expect the same of our Agents or third parties who work on our behalf. Bribery and kickbacks arent just wrongtheyre often illegal, and failure to comply with our Code can carry significant fines or even criminal charges for individuals and for ERIE.
DID YOU KNOW?
Most laws define a bribe or kickback as any kind of money, fee, commission, credit, gift, gratuity, travel benefits, entertainment or compensation that is provided, with the hopes of improperly obtaining business or receiving favorable treatment from a government official.
15
BE ABOVE ALL
Never promise or give someone something that has value to them in an attempt to secure an unfair business advantage.
Decline offers of discounts on personal products or services from third parties who may be making the offer with the hope of receiving favorable treatment from you, or from ERIE in a future transaction.
Remember that ERIE will be held liable for the actions of our Agents and third partiesso monitor their work carefully.
Record all payments and transactions accuratelynever try to conceal the true nature of an expense.
We use good judgment when exchanging gifts and entertainment.
At ERIE, we follow corporate policies and procedures and only give or receive gifts and entertainment when we know that doing so will not compromise our ability to make objective business decisions.
DID YOU KNOW?
Prizes can also be considered gifts under our policyfor instance, a prize to attend a golf tournament held by a vendor. Even though a prize is won rather than given, consider the source of the prize and also consider the sponsors of the event where the prize is offered. If accepting the prize could cause a reasonable person to question your judgment then you should not accept it.
BE ABOVE ALL
Be mindful that any gifts or entertainment given or received from business contacts should be nominal in value and not given frequently.
Never give or accept cash or cash equivalents, such as gift certificates or gift cards.
Seek approval from your supervisor before you accept a gift that has more than a nominal value.
Remember that if a reasonable observer could question a particular gift or instance of entertainment, you should also question it, and seek advice from Compliance or Human Resources before accepting.
Avoid situations that could reflect poorly on ERIE, such as giving or receiving inappropriate gifts or forms of entertainment.
Be sensitive to the gift policies of Customers and business partners, and do not offer anything that might violate their policies.
16
Call ERIE Ethicsline 866.469.5708 or visit erieinsurance.alertline.com Anonymous Reporting 24/7
We are above all when we demonstrate professionalism and integrity.
We recognize and manage conflicts of interest.
A conflict of interest arises when our personal interests interfere, or even appear to interfere, with the Companys interests. To protect ERIE and preserve our reputation for fairness and professionalism, we must avoid conflicts of interest and disclose anything that could look like a conflict. While having a conflict of interest is not necessarily a violation of our Code, a failure to disclose a potential conflict is always a violation.
DID YOU KNOW?
A conflict can occur on or off the job. For example, a conflict could occur during the course of a second job, an outside activity, a financial investment or endeavor, or any interest that could influence your work and work-related decisions. A conflict of interest can also come from the actions of family members, if their actions or involvements could affect your business decisions.
BE ABOVE ALL
Understand how to identify a conflict of interest.
Update your conflict of interest form if something changes.
Avoid interests, activities or relationships that interfere with ERIEs Customers and/or shareholders best interests or with your ability to be fair and unbiased.
Never work for a competitor while you are an ERIE Employee.
Never process or service your own policy or claim, or the policy or claim of a family member or friend.
Discuss any potential conflicts of interest with your supervisor, Compliance or Human Resources, as soon as possible. For example, you should discuss the following:
- having a beneficial ownership interest in a competitor company, ERIE vendor or supplier.
- having a financial interest in an independent insurance agency.
- giving, receiving or accepting gifts from anyone who may influence your decision or judgment on work-related matters.
17
We participate in political activity lawfully and ethically.
To protect our interests and the interests of the insurance industry, ERIE participates in government relations and political action work. In doing this, ERIE observes all lobbying laws and regulations that apply to corporate political activity. We also encourage Employees to participate in the political process in compliance with corporate policies.
Select Employees are invited, but not required, to contribute funds to ERIEs Political Action Committees.
DID YOU KNOW?
Our nonpartisan political action committees serve as important vehicles to advocate for the insurance industry. Select ERIE Employees in the Law Division are designated to speak on behalf of ERIE regarding our position on pending legislation. Other ERIE Employees should not speak on behalf of ERIE in this regard.
BE ABOVE ALL
If you participate in personal political activities, do not use ERIEs assetsfinancial or otherwiseto support your work, and do not solicit contributions from fellow Employees.
Avoid making statements on political issues that could appear to be speaking for ERIE, such as mentioning ERIEs name or your job title.
If you participate in corporate political activity on ERIEs behalf, know and follow the laws and regulations that govern this process.
If you have questions, contact Government Relations.
18
Call ERIE Ethicsline 866.469.5708 or visit erieinsurance.alertline.com Anonymous Reporting 24/7
We keep ERIEs computer network secure.
Our computers and networks contain critical business information. Just one mistake can result in serious consequencesfor ERIE, our Customers or our Employees. We are all responsible for following ERIE safeguards to protect this important information at all times.
DID YOU KNOW?
If you work remotely or need to access ERIE systems from non-ERIE facilities or take information offsite, you have a responsibility to secure and protect it. Follow these guidelines:
When accessing or sending confidential information, use ERIEapproved access or delivery methods and ensure you are connected to a secure network.
Do not store confidential information on your laptop or portable electronic device (e.g., smartphones, PDAs, flash drives) without properly protecting it.
Do not store ERIE information on your home computer.
Do not leave laptops unattended or check them as luggage.
If you must work in a public place, such as an airport or coffee shop, be aware of your surroundings. Others may be looking over your shoulder when you are working on your laptop. Also, dont have conversations about confidential information where someone else may hear.
BE ABOVE ALL
Follow all corporate policies and procedures when using ERIEs computers, mobile devices and networks.
Never share passwords or other login informationeven with your coworkers or assistants.
Ensure your screen is locked whether you leave your workstation for a few minutes or a few hours.
Do not use ERIEs computer network for illegal activities or to create, discuss or send inappropriate sexually explicit or otherwise offensive material.
While limited personal use of ERIEs computer network is allowed, make sure that your use does not disrupt service to our Customers, or interfere with your ability to do your work or the work of others. Limited personal use does not include use for a personal business. Any use for personal gain is not permitted.
Remember that ERIE may monitor your computer and network use, and may have access to any information that you create, transmit or store.
19
KNOWING WHAT IS RIGHT
AND DOING SOMETHING
ABOUT IT
I am an Employee in a technical position. Recently, I was asked by my business project sponsor to run a system upgrade in a production environment without first running the upgrade in a test environment to save time on the project. Although I was uncomfortable challenging my sponsor, and I knew that the project was on a tight timeline, I decided to tell my supervisor that I did not feel right about proceeding without the test because I knew that this could put ERIEs information systems at risk. My supervisor stepped in and explained to the sponsor the need for the testing period, even if it slowed down the project.
Call ERIE Ethicsline 866.469.5708 or
visit erieinsurance.alertline.com Anonymous Reporting 24/7
We protect ERIEs assets.
At ERIE, our shareholders and Customers depend on us to use our assets responsibly. We all play a role in helping to protect ERIE assets from theft, loss and misuse. This includes everything from correctly reporting business expenses to protecting access to ERIEs buildings and equipment.
DID YOU KNOW?
Our assets include more than just physical property. ERIE assets include our reputation, money, checks, records and documents, data and information, intellectual property, buildings and grounds, company vehicles, office equipment, furniture, supplies and our computer network.
BE ABOVE ALL
Use ERIEs assets thoughtfully and responsibly.
Do not use ERIE assets or resources for personal gain.
Report all expenses accurately and timely.
Obtain appropriate approvals for all contracts or purchases.
If you are a senior financial officer, follow the Code of Ethics written for your position.
21
We safeguard the confidential information of ERIE.
At ERIE, we are responsible for protecting all confidential information, whether it belongs to ERIE, our Customers, or any third party.
DID YOU KNOW?
We come across confidential information all the time in the course of our work. Some examples of confidential information include:
strategic goals or plans
technology
policy enhancements
processing and billing improvements
pricing
rate filings
non-public financial condition
forecasts and projections
geographic expansion plans
potential mergers and acquisitions
marketing and sales activities
proprietary information about our Agents, Customers, Employees, suppliers, vendors and competitors
information regarding the details of our business arrangements with third parties
BE ABOVE ALL
Recognize confidential information so that you can treat it properly.
Do not access or share confidential information unless you are authorized or have permission to do so.
Be careful not to lose, misplace or leave behind confidential information.
Never use ERIEs confidential information for your own gain or share it with others for their personal gain.
If you ever have doubts about whether information is confidential, treat it as confidential information and handle it accordingly.
Remember that your obligation to protect confidential information continues even if you no longer work for ERIE.
There is an expectation, repeated often by our founder, that all representatives of ERIE conduct themselves according to the Golden Rule, treating others as you would like to be treated. 22
KNOWING WHAT IS RIGHT
AND DOING SOMETHING
ABOUT IT
I am an ERIE Employee who negotiates contracts for third-party services. One of our longtime vendors recently asked me to disclose the details of a recent vendor comparison between ERIE and a competitor. Although I really value my relationship with this vendor, I also know that sharing this information would be a violation of our Code. I told my contact that I could not share confidential information, and I also shared his request and my response with my supervisor and the Law Division.
Call ERIE Ethicsline 866.469.5708 or
visit erieinsurance.alertline.com Anonymous Reporting 24/7
We are above all when we operate with truth and transparency.
We demonstrate transparency in our financial statements.
At ERIE, we maintain accurate and complete accounts and have internal controls in place to ensure that we provide timely, accurate and clear financial statements. If we find discrepancies, we investigate and work quickly to resolve them.
BE ABOVE ALL
Be accurate and follow all corporate policies and internal control procedures when recording assets, liabilities, revenues and expenses.
Never intentionally falsify an asset record or misrepresent the facts of a transaction.
Exercise good judgment and follow corporate guidelines when preparing or approving expense reports.
Report any concerns about financial reporting immediately to the Code Key Contacts, or to the ERIE Ethicsline.
We safeguard our intellectual property.
We value the knowledge and intellectual contribution of our Employees. Our intellectual property is critical to our success as a companywe must safeguard it at all times. We also protect the intellectual property of third parties.
DID YOU KNOW?
Intellectual property is made up of assets each of us create and contribute in our daily work. For the most part, these assets are intangiblemeaning, not physical objects, but ideas, concepts, or rights. Here are some examples of intellectual property that we might come across through our work for ERIE:
Trademarks and service marks are ways ERIE, and other companies, identify their products to make them stand out in the market. Some examples include: our ERIE® service mark, the cupola logo and product or service brand names.
Copyrights are the rights we have to reproduce, distribute and display the written, graphic and audiovisual works that we create, such as policy forms and marketing materials.
24
Call ERIE Ethicsline 866.469.5708 or visit erieinsurance.alertline.com Anonymous Reporting 24/7
Trade secrets and proprietary information are information that ERIE classifies as confidential and restricted. Some examples include underwriting guidelines, claims handling procedures, investment plans, strategic plans, Customer lists, custom software and computer coding designs. See our Information Classification Policy for additional information.
Patents are federally-granted rights that prevent others from using company products and processes.
BE ABOVE ALL
Understand how to identify intellectual property and how to protect it.
Be mindful of copyrights that belong to othersdont copy, download, distribute, use or display materials that may be subject to copyright without permission of the copyright owner.
Contact the Law Division with any questions or guidance on recognizing when something is ERIEs intellectual property; how to use ERIEs intellectual property or if you think ERIEs intellectual property (or someone elses) has been misused.
We do not trade or provide inside information.
We comply with all laws and corporate policies that prohibit us from trading in ERIEs securities based on inside information that we learn of through the course of our job. This includes information about ERIE as well as information about our Customers, business partners or any other third parties.
DID YOU KNOW?
Insider trading is the purchase or sale of a publicly traded security by someone who has material nonpublic information about the company issuing the security. For example, material information might include news of an expansion, a new strategic direction for a company, or a change in corporate leadership. 25
BE ABOVE ALL
Never use material nonpublic information for your own financial gain.
Never provide a tip and pass on material nonpublic information to another person.
If you are giving a presentation to an outside group, make sure the details of the presentation do not disclose confidential or restricted ERIE information.
If you have any questions about whether a securities transaction is appropriate, given your role at ERIE, talk to the Law Division before you make the trade.
We create and maintain records responsibly.
We are careful to create records that clearly and accurately reflect our intentions, actions and decisions. We maintain records responsibly, in line with the law and ERIEs records retention schedule.
DID YOU KNOW?
There may be times when ERIE needs to hold onto records because of potential litigation or investigation. When there is a legal hold in place, records must be retainedeven if their retention period has expired.
If you have received a legal hold email notice from the Law Division, or if you have heard about the possibility of litigation or an investigation, you must hold onto all records that may be relatedregardless of your opinion about the information contained in those records.
Do not destroy or discard anything that may be related to the legal hold until the hold is released.
BE ABOVE ALL
Exercise good judgment when creating any professional communicationrecognizing that any email or message may be read in the future by someone without the benefit of context.
Keep records for the appropriate period of time under ERIEs records retention schedule.
Follow instructions to hold records and cease any normal record destruction when ordered to do so by a legal hold, or if you learn that the records may be relevant to a case or claim.
26
Call ERIE Ethicsline 866.469.5708 or visit erieinsurance.alertline.com Anonymous Reporting 24/7
We communicate responsibly.
Our shareholders and Customers rely on us to be truthful and to uphold our values and Founding Purpose. Only certain individuals within ERIE have permission to speak on ERIEs behalf. This includes being honest, clear and accurate when we communicate to the public and the media about ERIE and our business.
BE ABOVE ALL
If you receive an inquiry from the public, including the media, contact Strategic Marketing/Media Relations.
If you receive an inquiry from a regulator or government agency, contact Government Relations or Compliance.
Do not share internal ERIE information online or on social media, as this may result in an unintended public disclosure.
We use social media responsibly.
We must exercise good judgment when using social media, no matter whether our use is for business or personal reasons.
BE ABOVE ALL
Social media is a generally public forum, and posts and comments might be viewed or read by anyone. Regardless of the context, you are personally responsible and accountable for your communications in social media.
Never disclose confidential information about ERIE or any of our Customers or business partners while using social media.
Never post anything that is vulgar, obscene, threatening, intimidating, harassing or discriminatory, including comments or images that are based on age, ancestry, citizenship, color, disability, gender identity, genetic information, marital status, military status, national origin, race, religion, sex, sexual orientation, or any other protected class, status or characteristic.
Statements or advertisements about ERIE and its products or services or ERIEs competitors must be truthful and may not be misleading or deceptive. Use social media for business purposes only if you have approval or are permitted to as described in ERIEs social media policies.
When using social media for personal reasons, be clear that your views are your own views and not ERIEs view.
27
KNOWING WHAT IS RIGHT
AND DOING SOMETHING
ABOUT IT
I work in the Claims Department at ERIE. Last night at home, when I was on a discussion board I like to visit, I saw someone was complaining about ERIEs Customer Service. The writer was really negative and all of his points were wrong! As much as I wanted to join in the conversation to try to fix the problem or set the record straight, I realized that best thing for me to do would be to allow someone at ERIE who is authorized to handle the situation address it. I contacted Customer Service and they said they would handle it from here by following our social media protocols.
Call ERIE Ethicsline 866.469.5708 or
visit erieinsurance.alertline.com Anonymous Reporting 24/7
We are above all when we act in the best interest of our community.
We treat the environment with care.
We take care of our environment by supporting sustainable actions in the workplace. We comply with all environmental regulations that apply to our business.
DID YOU KNOW?
The goal of our EcoErie initiative is to make a positive impact on ERIEs future by implementing and promoting sustainable actions today.
BE ABOVE ALL
Recognize the importance of sustainable actions and share in ERIEs strategic initiatives to make a positive impact on the environment.
Report any actions or behaviors that may be harmful to the environment.
We demonstrate social responsibility.
We support the communities where we live and work. Throughout our history, Employees have continued Founder H.O. Hirts tradition of giving generously. We are committed to helping those in need by assisting disaster victims, building homes for the homeless, developing partnerships with educational, arts, environmental, safety and other organizations, and participating in numerous volunteer activities that benefit those less fortunate.
BE ABOVE ALL
Consider supporting our communities and those in need through the Erie Insurance Giving Network.
Look for ways to know whats right and do something about it for instance, by participating in one of the community events sponsored by ERIE.
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We are above all when we do the right thing.
Sometimes, the right thing is informing others when you become aware of potential violations of the law, unethical behavior, or actions that are not consistent with this Code, or not in line with company policies and procedures. Report these things, even if you are not certain of what you have observed, to your supervisor, any ERIE leader, or one of the resources listed to the right.
30
Call ERIE Ethicsline 866.469.5708 or visit erieinsurance.alertline.com Anonymous Reporting 24/7
KEY CONTACTS
Theresa Gamble
Director, Compliance
Theresa.Gamble@erieinsurance.com
814-870-2800
Jim Stoik
Vice President, Internal Audit
James.Stoik@erieinsurance.com
814-870-4862
Dionne Wallace Oakley
Senior Vice President, Human Resources
Dionne.WallaceOakley@erieinsurance.com
814-870-6965
Gary Veshecco
Senior Vice President, Law
Gary.Veshecco@erieinsurance.com
814-870-2159
Sean McLaughlin
Executive Vice President, Secretary and General Counsel
Sean.Mclaughlin@erieinsurance.com
814-870-2224
ERIE Ethicsline
Erieinsurance.alertline.com
1-866-469-5708
OFP99 1/16
(1)
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Registration Statement (Form S-8 No. 333-188244) pertaining to the Erie Indemnity Company Equity Compensation Plan,
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(2)
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Registration Statement (Form S-8 No. 333-148705) pertaining to the Erie Indemnity Company 2004 Long-Term Incentive Plan, Erie Indemnity Company 1997 Long-Term Incentive Plan, and Erie Indemnity Company Deferred Compensation Plan for Outside Directors,
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(3)
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Registration Statement (Form S-8 No. 333-82062) pertaining to the Erie Indemnity Company Long-Term Incentive Plan,
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(4)
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Registration Statement (Form S-8 No. 333-53318) pertaining to the Erie Indemnity Company Long-Term Incentive Plan
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Date:
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February 25, 2016
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/s/ Terrence W. Cavanaugh
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Terrence W. Cavanaugh
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President & CEO
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Date:
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February 25, 2016
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/s/ Gregory J. Gutting
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Gregory J. Gutting
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Interim Executive Vice President & CFO
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(1)
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The
Annual
Report on Form
10-K
of the Company for the
annual
period ended
December 31, 2015
(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
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ Terrence W. Cavanaugh
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Terrence W. Cavanaugh
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President & CEO
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/s/ Gregory J. Gutting
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Gregory J. Gutting
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Interim Executive Vice President & CFO
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February 25, 2016
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