|
ERIE INDEMNITY COMPANY
|
|
|
(Exact name of registrant as specified in its charter)
|
|
|
PENNSYLVANIA
|
|
25-0466020
|
|
|
(State or other jurisdiction of
|
|
(I.R.S. Employer
|
|
|
incorporation or organization)
|
|
Identification No.)
|
|
|
100 Erie Insurance Place, Erie, Pennsylvania
|
|
16530
|
|
|
(Address of principal executive offices)
|
|
(Zip Code)
|
|
|
|
|
|
|
|
(814) 870-2000
|
|
|
(Registrant’s telephone number, including area code)
|
|
|
Not applicable
|
|
|
(Former name, former address and former fiscal year, if changed since last report)
|
|
ITEM 1.
|
FINANCIAL STATEMENTS
|
|
|
Three months ended
|
||||||
|
|
March 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Operating revenue
|
|
|
|
|
||||
Management fee revenue, net
|
|
$
|
367,458
|
|
|
$
|
343,234
|
|
Service agreement revenue
|
|
7,270
|
|
|
7,597
|
|
||
Total operating revenue
|
|
374,728
|
|
|
350,831
|
|
||
|
|
|
|
|
||||
Operating expenses
|
|
|
|
|
||||
Commissions
|
|
208,714
|
|
|
193,717
|
|
||
Salaries and employee benefits
|
|
53,289
|
|
|
55,019
|
|
||
All other operating expenses
|
|
45,060
|
|
|
49,665
|
|
||
Total operating expenses
|
|
307,063
|
|
|
298,401
|
|
||
Net revenue from operations
|
|
67,665
|
|
|
52,430
|
|
||
|
|
|
|
|
||||
Investment income
|
|
|
|
|
||||
Net investment income
|
|
4,662
|
|
|
4,541
|
|
||
Net realized investment losses
|
|
(1,088
|
)
|
|
(240
|
)
|
||
Net impairment losses recognized in earnings
|
|
(345
|
)
|
|
(120
|
)
|
||
Equity in (losses) earnings of limited partnerships
|
|
(670
|
)
|
|
2,358
|
|
||
Total investment income
|
|
2,559
|
|
|
6,539
|
|
||
Income before income taxes
|
|
70,224
|
|
|
58,969
|
|
||
Income tax expense
|
|
24,329
|
|
|
20,136
|
|
||
Net income
|
|
$
|
45,895
|
|
|
$
|
38,833
|
|
|
|
|
|
|
||||
|
|
|
|
|
||||
Earnings Per Share
|
|
|
|
|
||||
Net income per share
|
|
|
|
|
||||
Class A common stock – basic
|
|
$
|
0.99
|
|
|
$
|
0.83
|
|
Class A common stock – diluted
|
|
$
|
0.87
|
|
|
$
|
0.74
|
|
Class B common stock – basic and diluted
|
|
$
|
148
|
|
|
$
|
125
|
|
|
|
|
|
|
||||
Weighted average shares outstanding – Basic
|
|
|
|
|
||||
Class A common stock
|
|
46,189,068
|
|
|
46,189,068
|
|
||
Class B common stock
|
|
2,542
|
|
|
2,542
|
|
||
|
|
|
|
|
||||
Weighted average shares outstanding – Diluted
|
|
|
|
|
||||
Class A common stock
|
|
52,523,927
|
|
|
52,634,752
|
|
||
Class B common stock
|
|
2,542
|
|
|
2,542
|
|
||
|
|
|
|
|
||||
Dividends declared per share
|
|
|
|
|
||||
Class A common stock
|
|
$
|
0.730
|
|
|
$
|
0.681
|
|
Class B common stock
|
|
$
|
109.500
|
|
|
$
|
102.150
|
|
|
|
Three months ended
|
||||||
|
|
March 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Net income
|
|
$
|
45,895
|
|
|
$
|
38,833
|
|
|
|
|
|
|
||||
Other comprehensive income, net of tax
|
|
|
|
|
||||
Change in unrealized holding gains on available-for-sale securities
|
|
3,465
|
|
|
100
|
|
||
|
|
|
|
|
||||
Comprehensive income
|
|
$
|
49,360
|
|
|
$
|
38,933
|
|
|
|
March 31,
|
|
December 31,
|
||||
|
|
2016
|
|
2015
|
||||
Assets
|
|
(Unaudited)
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
105,282
|
|
|
$
|
182,889
|
|
Available-for-sale securities
|
|
54,285
|
|
|
62,067
|
|
||
Trading securities
|
|
2,955
|
|
|
—
|
|
||
Receivables from Erie Insurance Exchange and affiliates
|
|
352,451
|
|
|
348,055
|
|
||
Prepaid expenses and other current assets
|
|
37,164
|
|
|
24,697
|
|
||
Federal income taxes recoverable
|
|
0
|
|
|
11,947
|
|
||
Accrued investment income
|
|
5,832
|
|
|
5,491
|
|
||
Total current assets
|
|
557,969
|
|
|
635,146
|
|
||
|
|
|
|
|
||||
Available-for-sale securities
|
|
560,928
|
|
|
537,874
|
|
||
Limited partnership investments
|
|
82,912
|
|
|
88,535
|
|
||
Fixed assets, net
|
|
58,918
|
|
|
59,087
|
|
||
Deferred income taxes, net
|
|
35,250
|
|
|
40,686
|
|
||
Note receivable from Erie Family Life Insurance Company
|
|
25,000
|
|
|
25,000
|
|
||
Other assets
|
|
19,647
|
|
|
20,968
|
|
||
Total assets
|
|
$
|
1,340,624
|
|
|
$
|
1,407,296
|
|
|
|
|
|
|
||||
Liabilities and shareholders' equity
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Commissions payable
|
|
$
|
202,816
|
|
|
$
|
195,542
|
|
Agent bonuses
|
|
31,940
|
|
|
106,752
|
|
||
Accounts payable and accrued liabilities
|
|
79,333
|
|
|
88,532
|
|
||
Dividends payable
|
|
33,996
|
|
|
33,996
|
|
||
Deferred executive compensation
|
|
15,132
|
|
|
20,877
|
|
||
Federal income taxes payable
|
|
8,541
|
|
|
0
|
|
||
Total current liabilities
|
|
371,758
|
|
|
445,699
|
|
||
|
|
|
|
|
||||
Defined benefit pension plans
|
|
162,981
|
|
|
172,700
|
|
||
Employee benefit obligations
|
|
1,072
|
|
|
1,234
|
|
||
Deferred executive compensation
|
|
18,446
|
|
|
16,580
|
|
||
Other long-term liabilities
|
|
1,500
|
|
|
1,580
|
|
||
Total liabilities
|
|
555,757
|
|
|
637,793
|
|
||
|
|
|
|
|
||||
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
|
|
|
16,311
|
|
||
Accumulated other comprehensive loss
|
|
(93,399
|
)
|
|
(96,864
|
)
|
||
Retained earnings
|
|
2,005,875
|
|
|
1,993,976
|
|
||
Total contributed capital and retained earnings
|
|
1,930,957
|
|
|
1,915,593
|
|
||
Treasury stock, at cost; 22,110,132 shares held
|
|
(1,155,108
|
)
|
|
(1,155,108
|
)
|
||
Deferred compensation
|
|
9,018
|
|
|
9,018
|
|
||
Total shareholders’ equity
|
|
784,867
|
|
|
769,503
|
|
||
Total liabilities and shareholders’ equity
|
|
$
|
1,340,624
|
|
|
$
|
1,407,296
|
|
|
|
Three months ended
|
||||||
|
|
March 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Cash flows from operating activities
|
|
|
|
|
||||
Management fee received
|
|
$
|
363,848
|
|
|
$
|
341,806
|
|
Service agreement fee received
|
|
7,270
|
|
|
7,597
|
|
||
Net investment income received
|
|
6,182
|
|
|
6,374
|
|
||
Limited partnership distributions
|
|
1,127
|
|
|
4,954
|
|
||
Decrease in reimbursements collected from affiliates
|
|
(785
|
)
|
|
(412
|
)
|
||
Commissions paid to agents
|
|
(172,625
|
)
|
|
(169,821
|
)
|
||
Agents bonuses paid
|
|
(103,933
|
)
|
|
(79,483
|
)
|
||
Salaries and wages paid
|
|
(45,732
|
)
|
|
(42,486
|
)
|
||
Pension contribution and employee benefits paid
|
|
(24,636
|
)
|
|
(22,056
|
)
|
||
General operating expenses paid
|
|
(52,220
|
)
|
|
(61,715
|
)
|
||
Income taxes paid
|
|
(258
|
)
|
|
(9
|
)
|
||
Net cash used in operating activities
|
|
(21,762
|
)
|
|
(15,251
|
)
|
||
|
|
|
|
|
||||
Cash flows from investing activities
|
|
|
|
|
||||
Purchase of investments:
|
|
|
|
|
||||
Available-for-sale securities
|
|
(67,557
|
)
|
|
(30,725
|
)
|
||
Limited partnerships
|
|
(103
|
)
|
|
(89
|
)
|
||
Proceeds from investments:
|
|
|
|
|
||||
Available-for-sale securities
|
|
46,507
|
|
|
37,554
|
|
||
Limited partnerships
|
|
1,792
|
|
|
9,157
|
|
||
Net purchase of fixed assets
|
|
(3,496
|
)
|
|
(2,428
|
)
|
||
Net collections (distributions) on agent loans
|
|
1,008
|
|
|
(644
|
)
|
||
Net cash (used in) provided by investing activities
|
|
(21,849
|
)
|
|
12,825
|
|
||
|
|
|
|
|
||||
Cash flows from financing activities
|
|
|
|
|
||||
Dividends paid to shareholders
|
|
(33,996
|
)
|
|
(31,714
|
)
|
||
Net cash used in financing activities
|
|
(33,996
|
)
|
|
(31,714
|
)
|
||
|
|
|
|
|
||||
Net decrease in cash and cash equivalents
|
|
(77,607
|
)
|
|
(34,140
|
)
|
||
Cash and cash equivalents, beginning of period
|
|
182,889
|
|
|
91,747
|
|
||
Cash and cash equivalents, end of period
|
|
$
|
105,282
|
|
|
$
|
57,607
|
|
(dollars in thousands, except per share data)
|
|
Three months ended March 31,
|
||||||||||||||||||||
|
|
2016
|
|
2015
|
||||||||||||||||||
|
|
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
|
|
$
|
45,520
|
|
|
46,189,068
|
|
|
$
|
0.99
|
|
|
$
|
38,515
|
|
|
46,189,068
|
|
|
$
|
0.83
|
|
Dilutive effect of stock-based awards
|
|
0
|
|
|
234,059
|
|
|
—
|
|
|
0
|
|
|
344,884
|
|
|
—
|
|
||||
Assumed conversion of Class B shares
|
|
375
|
|
|
6,100,800
|
|
|
—
|
|
|
318
|
|
|
6,100,800
|
|
|
—
|
|
||||
Class A – Diluted EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income available to Class A stockholders on Class A equivalent shares
|
|
$
|
45,895
|
|
|
52,523,927
|
|
|
$
|
0.87
|
|
|
$
|
38,833
|
|
|
52,634,752
|
|
|
$
|
0.74
|
|
Class B – Basic and diluted EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income available to Class B stockholders
|
|
$
|
375
|
|
|
2,542
|
|
|
$
|
148
|
|
|
$
|
318
|
|
|
2,542
|
|
|
$
|
125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
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 March 31, 2016
|
||||||||||||||
|
|
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
|
|
$
|
242,524
|
|
|
$
|
0
|
|
|
$
|
242,524
|
|
|
$
|
0
|
|
Corporate debt securities
|
|
256,498
|
|
|
0
|
|
|
251,677
|
|
|
4,821
|
|
||||
Residential mortgage-backed securities
|
|
14,875
|
|
|
0
|
|
|
14,875
|
|
|
0
|
|
||||
Commercial mortgage-backed securities
|
|
35,596
|
|
|
0
|
|
|
35,596
|
|
|
0
|
|
||||
Collateralized debt obligations
|
|
54,770
|
|
|
0
|
|
|
42,733
|
|
|
12,037
|
|
||||
Other debt securities
|
|
2,018
|
|
|
0
|
|
|
2,018
|
|
|
0
|
|
||||
Total fixed maturities
|
|
606,281
|
|
|
0
|
|
|
589,423
|
|
|
16,858
|
|
||||
Common stock
|
|
8,932
|
|
|
8,932
|
|
|
0
|
|
|
0
|
|
||||
Total available-for-sale securities
|
|
615,213
|
|
|
8,932
|
|
|
589,423
|
|
|
16,858
|
|
||||
Trading securities:
|
|
|
|
|
|
|
|
|
||||||||
Common stock
|
|
2,955
|
|
|
2,955
|
|
|
0
|
|
|
0
|
|
||||
Other investments
(1)
|
|
4,302
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total
|
|
$
|
622,470
|
|
|
$
|
11,887
|
|
|
$
|
589,423
|
|
|
$
|
16,858
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||
(in thousands)
|
|
Beginning balance at December 31, 2015
|
|
Included in
earnings
(1)
|
|
Included
in other comprehensive
income
|
|
Purchases
|
|
Sales
|
|
Transfers
in and (out) of
Level 3
|
|
Ending balance at March 31, 2016
|
||||||||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Corporate debt securities
|
|
$
|
69
|
|
|
$
|
15
|
|
|
$
|
27
|
|
|
$
|
3,539
|
|
|
$
|
(55
|
)
|
|
$
|
1,226
|
|
|
$
|
4,821
|
|
Collateralized debt obligations
|
|
8,577
|
|
|
4
|
|
|
(12
|
)
|
|
3,522
|
|
|
(54
|
)
|
|
0
|
|
|
12,037
|
|
|||||||
Total fixed maturities
|
|
8,646
|
|
|
19
|
|
|
15
|
|
|
7,061
|
|
|
(109
|
)
|
|
1,226
|
|
|
16,858
|
|
|||||||
Total available-for-sale securities
|
|
8,646
|
|
|
19
|
|
|
15
|
|
|
7,061
|
|
|
(109
|
)
|
|
1,226
|
|
|
16,858
|
|
|||||||
Total Level 3 assets
|
|
$
|
8,646
|
|
|
$
|
19
|
|
|
$
|
15
|
|
|
$
|
7,061
|
|
|
$
|
(109
|
)
|
|
$
|
1,226
|
|
|
$
|
16,858
|
|
(1)
|
These amounts are reported in the Statement of Operations as net investment income and net realized investment losses for the
three months
ended
March 31, 2016
on Level 3 securities.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||
(in thousands)
|
|
Beginning balance at December 31, 2014
|
|
Included in
earnings
|
|
Included
in other
comprehensive
income
|
|
Purchases
|
|
Sales
|
|
Transfers
in and (out) of
Level 3
|
|
Ending balance at March 31, 2015
|
||||||||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Corporate debt securities
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
110
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
110
|
|
Total fixed maturities
|
|
0
|
|
|
0
|
|
|
0
|
|
|
110
|
|
|
0
|
|
|
0
|
|
|
110
|
|
|||||||
Total available-for-sale securities
|
|
0
|
|
|
0
|
|
|
0
|
|
|
110
|
|
|
0
|
|
|
0
|
|
|
110
|
|
|||||||
Total Level 3 assets
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
110
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
110
|
|
(in thousands)
|
|
At March 31, 2016
|
||||||||||||||
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Fixed maturities:
|
|
|
|
|
|
|
|
|
||||||||
Priced via pricing services
|
|
$
|
594,244
|
|
|
$
|
0
|
|
|
$
|
589,423
|
|
|
$
|
4,821
|
|
Priced via market comparables/broker quotes
|
|
12,037
|
|
|
0
|
|
|
0
|
|
|
12,037
|
|
||||
Total fixed maturities
|
|
606,281
|
|
|
0
|
|
|
589,423
|
|
|
16,858
|
|
||||
Common stock:
|
|
|
|
|
|
|
|
|
||||||||
Priced via pricing services
|
|
11,887
|
|
|
11,887
|
|
|
0
|
|
|
0
|
|
||||
Total common stock
|
|
11,887
|
|
|
11,887
|
|
|
0
|
|
|
0
|
|
||||
Other investments:
|
|
|
|
|
|
|
|
|
||||||||
Priced via unobservable inputs
(1)
|
|
4,302
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total other investments
|
|
4,302
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total
|
|
$
|
622,470
|
|
|
$
|
11,887
|
|
|
$
|
589,423
|
|
|
$
|
16,858
|
|
(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 March 31, 2016
|
||||||||||||||
(in thousands)
|
|
Amortized
cost
|
|
Gross unrealized gains
|
|
Gross unrealized losses
|
|
Estimated fair value
|
||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
||||||||
States & political subdivisions
|
|
$
|
230,147
|
|
|
$
|
12,384
|
|
|
$
|
7
|
|
|
$
|
242,524
|
|
Corporate debt securities
|
|
257,320
|
|
|
1,302
|
|
|
2,124
|
|
|
256,498
|
|
||||
Residential mortgage-backed securities
|
|
14,974
|
|
|
27
|
|
|
126
|
|
|
14,875
|
|
||||
Commercial mortgage-backed securities
|
|
36,623
|
|
|
121
|
|
|
1,148
|
|
|
35,596
|
|
||||
Collateralized debt obligations
|
|
55,123
|
|
|
61
|
|
|
414
|
|
|
54,770
|
|
||||
Other debt securities
|
|
2,068
|
|
|
0
|
|
|
50
|
|
|
2,018
|
|
||||
Total fixed maturities
|
|
596,255
|
|
|
13,895
|
|
|
3,869
|
|
|
606,281
|
|
||||
Common stock
|
|
8,948
|
|
|
0
|
|
|
16
|
|
|
8,932
|
|
||||
Total available-for-sale securities
|
|
$
|
605,203
|
|
|
$
|
13,895
|
|
|
$
|
3,885
|
|
|
$
|
615,213
|
|
|
|
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 March 31, 2016
|
||||||
(in thousands)
|
|
Amortized
|
|
Estimated
|
||||
|
|
cost
|
|
fair value
|
||||
Due in one year or less
|
|
$
|
53,995
|
|
|
$
|
53,962
|
|
Due after one year through five years
|
|
275,900
|
|
|
277,046
|
|
||
Due after five years through ten years
|
|
174,612
|
|
|
181,441
|
|
||
Due after ten years
|
|
91,748
|
|
|
93,832
|
|
||
Total fixed maturities
|
|
$
|
596,255
|
|
|
$
|
606,281
|
|
|
|
At March 31, 2016
|
|||||||||||||||||||||||||
(dollars in thousands)
|
|
Less than 12 months
|
|
12 months or longer
|
|
Total
|
|||||||||||||||||||||
|
|
Fair
value
|
|
Unrealized losses
|
|
Fair
value
|
|
Unrealized losses
|
|
Fair
value
|
|
Unrealized losses
|
|
No. of holdings
|
|||||||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
States & political subdivisions
|
|
$
|
6,938
|
|
|
$
|
7
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
6,938
|
|
|
$
|
7
|
|
|
3
|
|
Corporate debt securities
|
|
83,699
|
|
|
1,331
|
|
|
30,239
|
|
|
793
|
|
|
113,938
|
|
|
2,124
|
|
|
251
|
|
||||||
Residential mortgage-backed securities
|
|
5,333
|
|
|
12
|
|
|
2,886
|
|
|
114
|
|
|
8,219
|
|
|
126
|
|
|
7
|
|
||||||
Commercial mortgage-backed securities
|
|
9,321
|
|
|
77
|
|
|
17,371
|
|
|
1,071
|
|
|
26,692
|
|
|
1,148
|
|
|
22
|
|
||||||
Collateralized debt obligations
|
|
27,289
|
|
|
281
|
|
|
8,279
|
|
|
133
|
|
|
35,568
|
|
|
414
|
|
|
19
|
|
||||||
Other debt securities
|
|
1,950
|
|
|
50
|
|
|
68
|
|
|
0
|
|
|
2,018
|
|
|
50
|
|
|
2
|
|
||||||
Total fixed maturities
|
|
134,530
|
|
|
1,758
|
|
|
58,843
|
|
|
2,111
|
|
|
193,373
|
|
|
3,869
|
|
|
304
|
|
||||||
Common stock
|
|
0
|
|
|
0
|
|
|
8,932
|
|
|
16
|
|
|
8,932
|
|
|
16
|
|
|
1
|
|
||||||
Total available-for-sale securities
|
|
$
|
134,530
|
|
|
$
|
1,758
|
|
|
$
|
67,775
|
|
|
$
|
2,127
|
|
|
$
|
202,305
|
|
|
$
|
3,885
|
|
|
305
|
|
Quality breakdown of fixed maturities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Investment grade
|
|
$
|
92,506
|
|
|
$
|
556
|
|
|
$
|
46,471
|
|
|
$
|
1,423
|
|
|
$
|
138,977
|
|
|
$
|
1,979
|
|
|
76
|
|
Non-investment grade
|
|
42,024
|
|
|
1,202
|
|
|
12,372
|
|
|
688
|
|
|
54,396
|
|
|
1,890
|
|
|
228
|
|
||||||
Total fixed maturities
|
|
$
|
134,530
|
|
|
$
|
1,758
|
|
|
$
|
58,843
|
|
|
$
|
2,111
|
|
|
$
|
193,373
|
|
|
$
|
3,869
|
|
|
304
|
|
|
|
At December 31, 2015
|
|||||||||||||||||||||||||
(dollars in thousands)
|
|
Less than 12 months
|
|
12 months or longer
|
|
Total
|
|||||||||||||||||||||
|
|
Fair
value
|
|
Unrealized
losses
|
|
Fair
value
|
|
Unrealized
losses
|
|
Fair
value
|
|
Unrealized
losses
|
|
No. of
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
|
|
(in thousands)
|
|
Three months ended March 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Fixed maturities
|
|
$
|
4,526
|
|
|
$
|
4,079
|
|
Equity securities
|
|
35
|
|
|
260
|
|
||
Cash equivalents and other
|
|
324
|
|
|
294
|
|
||
Total investment income
|
|
4,885
|
|
|
4,633
|
|
||
Less: investment expenses
|
|
223
|
|
|
92
|
|
||
Net investment income
|
|
$
|
4,662
|
|
|
$
|
4,541
|
|
(in thousands)
|
|
Three months ended March 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Available-for-sale securities:
|
|
|
|
|
|
|
||
Fixed maturities:
|
|
|
|
|
|
|
||
Gross realized gains
|
|
$
|
134
|
|
|
$
|
31
|
|
Gross realized losses
|
|
(1,583
|
)
|
|
(271
|
)
|
||
Net realized losses
|
|
(1,449
|
)
|
|
(240
|
)
|
||
Equity securities:
|
|
|
|
|
|
|
||
Gross realized gains
|
|
0
|
|
|
0
|
|
||
Gross realized losses
|
|
(34
|
)
|
|
0
|
|
||
Net realized losses
|
|
(34
|
)
|
|
0
|
|
||
Trading securities:
|
|
|
|
|
|
|
||
Common stock:
|
|
|
|
|
|
|
||
Gross realized gains
|
|
0
|
|
|
0
|
|
||
Gross realized losses
|
|
0
|
|
|
0
|
|
||
Increases in fair value
(1)
|
|
395
|
|
|
0
|
|
||
Net realized gains
|
|
395
|
|
|
0
|
|
||
Net realized investment losses
|
|
$
|
(1,088
|
)
|
|
$
|
(240
|
)
|
(1)
|
The fair value of our common stocks is determined based upon exchange traded prices provided by a nationally recognized pricing service.
|
(in thousands)
|
|
Three months ended March 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Fixed maturities
|
|
$
|
(345
|
)
|
|
$
|
(120
|
)
|
Total other-than-temporary impairments
|
|
(345
|
)
|
|
(120
|
)
|
||
Portion recognized in other comprehensive income
|
|
0
|
|
|
0
|
|
||
Net impairment losses recognized in earnings
|
|
$
|
(345
|
)
|
|
$
|
(120
|
)
|
(in thousands)
|
|
Three months ended March 31,
|
||||||
|
|
2016
|
|
2015
|
||||
|
|
|
|
|
||||
Equity in (losses) earnings of limited partnerships accounted for under the equity method
|
|
$
|
(716
|
)
|
|
$
|
2,612
|
|
Change in fair value of limited partnerships accounted for under the fair value option
|
|
46
|
|
|
(254
|
)
|
||
Equity in (losses) earnings of limited partnerships
|
|
$
|
(670
|
)
|
|
$
|
2,358
|
|
(in thousands)
|
|
At March 31, 2016
|
|
At December 31, 2015
|
||||
Private equity
|
|
$
|
43,286
|
|
|
$
|
48,397
|
|
Mezzanine debt
|
|
12,611
|
|
|
12,701
|
|
||
Real estate
|
|
22,713
|
|
|
22,911
|
|
||
Real estate - fair value option
|
|
4,302
|
|
|
4,526
|
|
||
Total limited partnerships
|
|
$
|
82,912
|
|
|
$
|
88,535
|
|
|
|
|
|
|
|
(in thousands)
|
|
Three months ended March 31,
|
||||
|
|
2016
|
|
2015
|
||
Service cost for benefits earned
|
|
7,050
|
|
|
7,608
|
|
Interest cost on benefits obligation
|
|
8,281
|
|
|
7,689
|
|
Expected return on plan assets
|
|
(9,880
|
)
|
|
(8,980
|
)
|
Prior service cost amortization
|
|
174
|
|
|
167
|
|
Net actuarial loss amortization
|
|
2,028
|
|
|
3,508
|
|
Pension plan cost
(1)
|
|
7,653
|
|
|
9,992
|
|
(1)
|
Pension plan costs represent the total cost before reimbursements from the Exchange and EFL.
|
(in thousands)
|
|
Three months ended March 31,
|
|||||
|
|
2016
|
2015
|
||||
Investment securities:
|
|
|
|
||||
Accumulated other comprehensive income, beginning of the period
|
|
$
|
2,527
|
|
$
|
6,807
|
|
Other comprehensive income (loss) before reclassifications, net of tax (expense) benefit of $(1,226) and $72, respectively
|
|
2,277
|
|
(134
|
)
|
||
Reclassifications:
|
|
|
|
||||
Realized investment losses, net of tax expense of $519 and $84, respectively
|
|
964
|
|
156
|
|
||
Impairment losses, net of tax expense of $121 and $42, respectively
|
|
224
|
|
78
|
|
||
Other comprehensive income, net of tax
|
|
3,465
|
|
100
|
|
||
Accumulated other comprehensive income, end of the period
|
|
$
|
5,992
|
|
$
|
6,907
|
|
|
|
|
|
||||
Pension and other postretirement plans
(1)
:
|
|
|
|
||||
Accumulated other comprehensive loss, beginning of the period
|
|
$
|
(99,391
|
)
|
$
|
(124,508
|
)
|
Other comprehensive income (loss) before reclassifications, net of tax
|
|
0
|
|
0
|
|
||
Reclassifications:
|
|
|
|
||||
Amortization of prior service costs, net of tax
|
|
0
|
|
0
|
|
||
Amortization of net actuarial loss, net of tax
|
|
0
|
|
0
|
|
||
Other comprehensive income (loss), net of tax
|
|
0
|
|
0
|
|
||
Accumulated other comprehensive loss, end of the period
|
|
$
|
(99,391
|
)
|
$
|
(124,508
|
)
|
|
|
|
|
||||
Total
|
|
|
|
||||
Accumulated other comprehensive loss, beginning of the period
|
|
$
|
(96,864
|
)
|
$
|
(117,701
|
)
|
Investment securities
|
|
3,465
|
|
100
|
|
||
Pension and other postretirement plans
|
|
0
|
|
0
|
|
||
Other comprehensive income, net of tax
|
|
3,465
|
|
100
|
|
||
Accumulated other comprehensive loss, end of the period
|
|
$
|
(93,399
|
)
|
$
|
(117,601
|
)
|
(1)
|
There are no comprehensive income items or amounts reclassified out of accumulated other comprehensive loss related to postretirement plan items during interim periods.
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
dependence upon our relationship with the Erie Insurance Exchange ("Exchange") and the management fee under the agreement with the subscribers at the Exchange;
|
•
|
costs of providing services to the Exchange under the subscriber’s agreement;
|
•
|
credit risk from the Exchange;
|
•
|
dependence upon our relationship with the Exchange and the growth of the Exchange, including:
|
◦
|
general business and economic conditions;
|
◦
|
factors affecting insurance industry competition;
|
◦
|
dependence upon the independent agency system; and
|
◦
|
ability to maintain our reputation for customer service;
|
•
|
dependence upon our relationship with the Exchange and the financial condition of the Exchange, including:
|
◦
|
the Exchange’s ability to maintain acceptable financial strength ratings;
|
◦
|
factors affecting the quality and liquidity of the Exchange’s investment portfolio;
|
◦
|
changes in government regulation of the insurance industry;
|
◦
|
emerging claims and coverage issues in the industry; and
|
◦
|
severe weather conditions or other catastrophic losses, including terrorism;
|
•
|
ability to attract and retain talented management and employees;
|
•
|
ability to maintain uninterrupted business operations;
|
•
|
factors affecting the quality and liquidity of our investment portfolio;
|
•
|
our ability to meet liquidity needs and access capital; and
|
•
|
outcome of pending and potential litigation.
|
|
|
Three months ended March 31,
|
||||||||||
(dollars in thousands, except per share data)
|
|
2016
|
|
2015
|
|
% Change
|
||||||
|
|
(Unaudited)
|
|
|
|
|||||||
Total operating revenue
|
|
$
|
374,728
|
|
|
$
|
350,831
|
|
|
6.8
|
|
%
|
Total operating expenses
|
|
307,063
|
|
|
298,401
|
|
|
2.9
|
|
|
||
Net revenue from operations
|
|
67,665
|
|
|
52,430
|
|
|
29.1
|
|
|
||
Total investment income
|
|
2,559
|
|
|
6,539
|
|
|
(60.9
|
)
|
|
||
Income before income taxes
|
|
70,224
|
|
|
58,969
|
|
|
19.1
|
|
|
||
Income tax expense
|
|
24,329
|
|
|
20,136
|
|
|
20.8
|
|
|
||
Net income
|
|
$
|
45,895
|
|
|
$
|
38,833
|
|
|
18.2
|
|
%
|
Net income per share - diluted
|
|
$
|
0.87
|
|
|
$
|
0.74
|
|
|
18.4
|
|
%
|
(in thousands, except per share data)
|
|
Three months ended March 31,
|
||||||
|
|
2016
|
|
2015
|
||||
|
|
(Unaudited)
|
||||||
Operating income
|
|
$
|
46,827
|
|
|
$
|
39,067
|
|
Net realized losses and impairments on investments
|
|
(1,433
|
)
|
|
(360
|
)
|
||
Income tax benefit
|
|
501
|
|
|
126
|
|
||
Realized losses and impairments, net of income taxes
|
|
(932
|
)
|
|
(234
|
)
|
||
Net income
|
|
$
|
45,895
|
|
|
$
|
38,833
|
|
|
|
|
|
|
||||
Per Class A common share-diluted:
|
|
|
|
|
||||
Operating income
|
|
$
|
0.89
|
|
|
$
|
0.74
|
|
Net realized losses and impairments on investments
|
|
(0.03
|
)
|
|
0.00
|
|
||
Income tax benefit
|
|
0.01
|
|
|
0.00
|
|
||
Realized losses and impairments, net of income taxes
|
|
(0.02
|
)
|
|
0.00
|
|
||
Net income
|
|
$
|
0.87
|
|
|
$
|
0.74
|
|
|
|
Three months ended March 31,
|
||||||||||
(dollars in thousands)
|
|
2016
|
|
2015
|
|
% Change
|
||||||
|
|
(Unaudited)
|
|
|
|
|||||||
Management fee revenue, net
|
|
$
|
367,458
|
|
|
$
|
343,234
|
|
|
7.1
|
|
%
|
Service agreement revenue
|
|
7,270
|
|
|
7,597
|
|
|
(4.3
|
)
|
|
||
Total operating revenue
|
|
374,728
|
|
|
350,831
|
|
|
6.8
|
|
|
||
Total operating expenses
|
|
307,063
|
|
|
298,401
|
|
|
2.9
|
|
|
||
Net revenue from operations
|
|
$
|
67,665
|
|
|
$
|
52,430
|
|
|
29.1
|
|
%
|
Gross margin
|
|
18.1
|
%
|
|
14.9
|
%
|
|
3.2
|
|
pts.
|
|
|
Three months ended March 31,
|
|||||||||
(dollars in thousands)
|
|
2016
|
|
2015
|
|
% Change
|
|||||
|
|
(Unaudited)
|
|
|
|
||||||
Direct and assumed premiums written by the Exchange
|
|
$
|
1,474,632
|
|
|
$
|
1,377,338
|
|
|
7.1
|
%
|
Management fee rate
|
|
25
|
%
|
|
25
|
%
|
|
|
|
||
Management fee revenue, gross
|
|
368,658
|
|
|
344,334
|
|
|
7.1
|
|
||
Change in allowance for management fee returned on cancelled policies
(1)
|
|
(1,200
|
)
|
|
(1,100
|
)
|
|
NM
|
|
||
Management fee revenue, net of allowance
|
|
$
|
367,458
|
|
|
$
|
343,234
|
|
|
7.1
|
%
|
(1)
|
Management fees are returned to the Exchange when policies are cancelled mid-term and unearned premiums are refunded. We record an estimated allowance for management fees returned on mid-term policy cancellations.
|
|
|
Three months ended March 31,
|
|||||||||
(in thousands)
|
|
2016
|
|
2015
|
|
% Change
|
|||||
|
|
(Unaudited)
|
|
|
|||||||
Commissions:
|
|
|
|
|
|
|
|||||
Total commissions
|
|
$
|
208,714
|
|
|
$
|
193,717
|
|
|
7.7
|
%
|
Non-commission expense:
|
|
|
|
|
|
|
|||||
Underwriting and policy processing
|
|
$
|
33,488
|
|
|
$
|
32,493
|
|
|
3.1
|
%
|
Information technology
|
|
28,384
|
|
|
33,122
|
|
|
(14.3
|
)
|
||
Sales and advertising
|
|
14,449
|
|
|
14,509
|
|
|
(0.4
|
)
|
||
Customer service
|
|
7,029
|
|
|
6,988
|
|
|
0.6
|
|
||
Administrative and other
|
|
14,999
|
|
|
17,572
|
|
|
(14.6
|
)
|
||
Total non-commission expense
|
|
98,349
|
|
|
104,684
|
|
|
(6.1
|
)
|
||
Total cost of management operations
|
|
$
|
307,063
|
|
|
$
|
298,401
|
|
|
2.9
|
%
|
(in thousands)
|
|
Three months ended March 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
% Change
|
||||||
|
|
(Unaudited)
|
|
|
|
|
||||||
Net investment income
|
|
$
|
4,662
|
|
|
$
|
4,541
|
|
|
2.7
|
|
%
|
Net realized investment losses
|
|
(1,088
|
)
|
|
(240
|
)
|
|
NM
|
|
|
||
Net impairment losses recognized in earnings
|
|
(345
|
)
|
|
(120
|
)
|
|
NM
|
|
|
||
Equity in (losses) earnings of limited partnerships
|
|
(670
|
)
|
|
2,358
|
|
|
NM
|
|
|
||
Total investment income
|
|
$
|
2,559
|
|
|
$
|
6,539
|
|
|
(60.9
|
)
|
%
|
(in thousands)
|
|
Three months ended March 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Securities sold:
|
|
(Unaudited)
|
||||||
Fixed maturities
|
|
$
|
(1,449
|
)
|
|
$
|
(240
|
)
|
Equity securities
|
|
(34
|
)
|
|
0
|
|
||
Common stock equity securities
|
|
0
|
|
|
0
|
|
||
Common stock increases in fair value
(1)
|
|
395
|
|
|
0
|
|
||
Net realized investment losses
(2)
|
|
$
|
(1,088
|
)
|
|
$
|
(240
|
)
|
(1)
|
The fair value of our common stocks is determined based upon exchange traded prices provided by a nationally recognized pricing service.
|
(2)
|
See Part I, Item 1. "Financial Statements - Note 5, Investments, of Notes to Financial Statements" contained within this report for additional disclosures regarding net realized investment gains (losses.)
|
(in thousands)
|
|
Three months ended March 31,
|
||||||
|
|
2016
|
|
2015
|
||||
|
|
(Unaudited)
|
||||||
Private equity
|
|
$
|
(1,309
|
)
|
|
$
|
253
|
|
Mezzanine debt
|
|
(217
|
)
|
|
787
|
|
||
Real estate
|
|
856
|
|
|
1,318
|
|
||
Total equity in (losses) earnings of limited partnerships
|
|
$
|
(670
|
)
|
|
$
|
2,358
|
|
|
|
Carrying value at
|
|
|
|
Carrying value at
|
|
|
||||||
(dollars in thousands)
|
|
March 31, 2016
|
|
% to total
|
|
December 31, 2015
|
|
% to total
|
||||||
|
|
(Unaudited)
|
|
|
|
|
|
|
||||||
Fixed maturities
|
|
$
|
606,281
|
|
|
86
|
%
|
|
$
|
587,209
|
|
|
85
|
%
|
Common stock
|
|
11,887
|
|
|
2
|
|
|
12,732
|
|
|
2
|
|
||
Limited partnerships:
|
|
|
|
|
|
|
|
|
||||||
Private equity
|
|
43,286
|
|
|
6
|
|
|
48,397
|
|
|
7
|
|
||
Mezzanine debt
|
|
12,611
|
|
|
2
|
|
|
12,701
|
|
|
2
|
|
||
Real estate
|
|
27,015
|
|
|
4
|
|
|
27,437
|
|
|
4
|
|
||
Real estate mortgage loans
|
|
292
|
|
|
0
|
|
|
333
|
|
|
0
|
|
||
Total investments
|
|
$
|
701,372
|
|
|
100
|
%
|
|
$
|
688,809
|
|
|
100
|
%
|
|
|
At March 31, 2016
|
||||||||||||||||||||||
(in thousands)
|
|
(Unaudited)
|
||||||||||||||||||||||
Industry Sector
|
|
AAA
|
|
AA
|
|
A
|
|
BBB
|
|
Non- investment
grade
|
|
Fair
value
|
||||||||||||
Basic materials
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
2,019
|
|
|
$
|
3,025
|
|
|
$
|
4,620
|
|
|
$
|
9,664
|
|
Communications
|
|
0
|
|
|
0
|
|
|
2,028
|
|
|
18,620
|
|
|
14,377
|
|
|
35,025
|
|
||||||
Consumer
|
|
0
|
|
|
0
|
|
|
4,164
|
|
|
24,878
|
|
|
43,803
|
|
|
72,845
|
|
||||||
Diversified
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
497
|
|
|
497
|
|
||||||
Energy
|
|
0
|
|
|
0
|
|
|
2,492
|
|
|
5,020
|
|
|
8,172
|
|
|
15,684
|
|
||||||
Financial
|
|
0
|
|
|
2,088
|
|
|
22,477
|
|
|
45,221
|
|
|
14,957
|
|
|
84,743
|
|
||||||
Government-municipal
|
|
113,302
|
|
|
111,807
|
|
|
16,373
|
|
|
1,042
|
|
|
0
|
|
|
242,524
|
|
||||||
Industrial
|
|
0
|
|
|
0
|
|
|
607
|
|
|
2,319
|
|
|
13,291
|
|
|
16,217
|
|
||||||
Structured securities
(2)
|
|
38,101
|
|
|
33,970
|
|
|
14,534
|
|
|
18,331
|
|
|
2,322
|
|
|
107,258
|
|
||||||
Technology
|
|
0
|
|
|
0
|
|
|
2,305
|
|
|
2,335
|
|
|
7,963
|
|
|
12,603
|
|
||||||
Utilities
|
|
0
|
|
|
0
|
|
|
5,181
|
|
|
3,012
|
|
|
1,028
|
|
|
9,221
|
|
||||||
Total
|
|
$
|
151,403
|
|
|
$
|
147,865
|
|
|
$
|
72,180
|
|
|
$
|
123,803
|
|
|
$
|
111,030
|
|
|
$
|
606,281
|
|
(1)
|
Ratings are supplied by S&P, Moody’s, and Fitch. The table is based upon the lowest rating for each security.
|
(2)
|
Structured securities include residential mortgage-backed securities, commercial mortgage-backed securities, collateralized debt obligations, and asset-backed securities.
|
|
|
Fair value at:
|
||||||||
(in thousands)
|
|
March 31, 2016
|
|
December 31, 2015
|
||||||
Industry sector
|
|
|
(Unaudited)
|
|||||||
Communications
|
|
|
$
|
2,955
|
|
|
|
$
|
0
|
|
Funds
(1)
|
|
|
8,932
|
|
|
|
12,732
|
|
||
Total
|
|
|
$
|
11,887
|
|
|
|
$
|
12,732
|
|
(1)
|
Includes exchange traded funds with underlying holdings of fixed maturity securities. These securities meet the criteria of a common stock under U.S. GAAP, and are included on the balance sheet as available-for-sale equity securities.
|
|
|
|
(in thousands)
|
|
2016
|
|
2015
|
||||
|
|
(Unaudited)
|
||||||
Net cash used in operating activities
|
|
$
|
(21,762
|
)
|
|
$
|
(15,251
|
)
|
Net cash (used in) provided by investing activities
|
|
(21,849
|
)
|
|
12,825
|
|
||
Net cash used in financing activities
|
|
(33,996
|
)
|
|
(31,714
|
)
|
||
Net decrease in cash and cash equivalents
|
|
$
|
(77,607
|
)
|
|
$
|
(34,140
|
)
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
ITEM 6.
|
EXHIBITS
|
Exhibit
|
|
|
Number
|
|
Description of Exhibit
|
|
|
|
10.1
|
|
Agreement between Erie Indemnity Company and Richard F. Burt, Jr. dated February 16, 2016. 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 February 19, 2016.
|
|
|
|
10.2*
|
|
First Amendment to Erie Indemnity Company Deferred Stock Plan for Outside Directors (As Amended and Restated as of July 29, 2015), dated March 31, 2016.
|
|
|
|
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.
|
|
|
|
Erie Indemnity Company
|
|
|
|
|
(Registrant)
|
|
|
|
|
|
|
|
|
|
|
|
Date:
|
April 28, 2016
|
By:
|
/s/ Terrence W. Cavanaugh
|
|
|
|
|
Terrence W. Cavanaugh, President & CEO
|
|
|
|
|
|
|
|
|
By:
|
/s/ Gregory J. Gutting
|
|
|
|
|
Gregory J. Gutting, Interim Executive Vice President & CFO
|
|
4.6
|
AD HOC SHARE CREDIT
|
Date:
|
April 28, 2016
|
|
|
|
|
|
|
/s/ Terrence W. Cavanaugh
|
|
|
Terrence W. Cavanaugh
|
|
|
President & CEO
|
Date:
|
April 28, 2016
|
|
|
|
|
|
|
/s/ Gregory J. Gutting
|
|
|
Gregory J. Gutting
|
|
|
Interim Executive Vice President & CFO
|
(1)
|
The
Quarterly
Report on Form
10-Q
of the Company for the
quarterly
period ended
March 31, 2016
(the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Terrence W. Cavanaugh
|
|
Terrence W. Cavanaugh
|
|
President & CEO
|
|
|
|
/s/ Gregory J. Gutting
|
|
Gregory J. Gutting
|
|
Interim Executive Vice President & CFO
|
|
|
|
|
|
April 28, 2016
|
|