|
ERIE INDEMNITY COMPANY
|
|
|
(Exact name of registrant as specified in its charter)
|
|
|
Pennsylvania
|
|
25-0466020
|
|
|
(State or other jurisdiction of
|
|
(IRS Employer
|
|
|
incorporation or organization)
|
|
Identification No.)
|
|
|
100 Erie Insurance Place,
|
Erie,
|
Pennsylvania
|
|
16530
|
|
|
(Address of principal executive offices)
|
|
(Zip Code)
|
|
|
814
|
870-2000
|
|
|
(Registrant’s telephone number, including area code)
|
|
|
Not applicable
|
|
|
(Former name, former address and former fiscal year, if changed since last report)
|
|
Class A common stock,
|
stated value $0.0292 per share
|
|
ERIE
|
|
NASDAQ Stock Market, LLC
|
(Title of each class)
|
|
(Trading Symbol)
|
|
(Name of each exchange on which registered)
|
Large accelerated filer
|
☒
|
|
Accelerated filer
|
☐
|
|
Non-accelerated filer
|
☐
|
|
|
|
|
|
|
|
|
|
|
Smaller reporting company
|
☐
|
|
Emerging growth company
|
☐
|
|
|
|
|
ITEM 1.
|
FINANCIAL STATEMENTS
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Operating revenue
|
|
|
|
|
|
|
|
|
|
||||||
Management fee revenue - policy issuance and renewal services, net
|
$
|
474,427
|
|
|
$
|
451,361
|
|
|
$
|
1,385,923
|
|
|
$
|
1,311,911
|
|
Management fee revenue - administrative services, net
|
14,430
|
|
|
13,521
|
|
|
42,576
|
|
|
39,894
|
|
||||
Administrative services reimbursement revenue
|
142,730
|
|
|
140,172
|
|
|
431,305
|
|
|
432,642
|
|
||||
Service agreement revenue
|
7,155
|
|
|
7,072
|
|
|
20,754
|
|
|
21,297
|
|
||||
Total operating revenue
|
638,742
|
|
|
612,126
|
|
|
1,880,558
|
|
|
1,805,744
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating expenses
|
|
|
|
|
|
|
|
||||||||
Cost of operations - policy issuance and renewal services
|
390,105
|
|
|
375,259
|
|
|
1,160,614
|
|
|
1,103,517
|
|
||||
Cost of operations - administrative services
|
142,730
|
|
|
140,172
|
|
|
431,305
|
|
|
432,642
|
|
||||
Total operating expenses
|
532,835
|
|
|
515,431
|
|
|
1,591,919
|
|
|
1,536,159
|
|
||||
Operating income
|
105,907
|
|
|
96,695
|
|
|
288,639
|
|
|
269,585
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Investment income
|
|
|
|
|
|
|
|
||||||||
Net investment income
|
8,652
|
|
|
7,659
|
|
|
25,199
|
|
|
21,583
|
|
||||
Net realized investment gains (losses)
|
1,696
|
|
|
0
|
|
|
5,501
|
|
|
(497
|
)
|
||||
Net impairment losses recognized in earnings
|
(31
|
)
|
|
0
|
|
|
(193
|
)
|
|
(646
|
)
|
||||
Equity in earnings of limited partnerships
|
3,289
|
|
|
772
|
|
|
2,546
|
|
|
361
|
|
||||
Total investment income
|
13,606
|
|
|
8,431
|
|
|
33,053
|
|
|
20,801
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Interest expense, net
|
111
|
|
|
709
|
|
|
832
|
|
|
1,864
|
|
||||
Other income
|
100
|
|
|
54
|
|
|
195
|
|
|
156
|
|
||||
Income before income taxes
|
119,502
|
|
|
104,471
|
|
|
321,055
|
|
|
288,678
|
|
||||
Income tax expense
|
25,333
|
|
|
24,025
|
|
|
63,821
|
|
|
62,768
|
|
||||
Net income
|
$
|
94,169
|
|
|
$
|
80,446
|
|
|
$
|
257,234
|
|
|
$
|
225,910
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Net income per share
|
|
|
|
|
|
|
|
|
|
||||||
Class A common stock – basic
|
$
|
2.02
|
|
|
$
|
1.73
|
|
|
$
|
5.52
|
|
|
$
|
4.85
|
|
Class A common stock – diluted
|
$
|
1.80
|
|
|
$
|
1.54
|
|
|
$
|
4.92
|
|
|
$
|
4.32
|
|
Class B common stock – basic
|
$
|
303
|
|
|
$
|
259
|
|
|
$
|
829
|
|
|
$
|
728
|
|
Class B common stock – diluted
|
$
|
303
|
|
|
$
|
259
|
|
|
$
|
828
|
|
|
$
|
727
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding – Basic
|
|
|
|
|
|
|
|
|
|
||||||
Class A common stock
|
46,189,006
|
|
|
46,188,941
|
|
|
46,188,767
|
|
|
46,188,522
|
|
||||
Class B common stock
|
2,542
|
|
|
2,542
|
|
|
2,542
|
|
|
2,542
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding – Diluted
|
|
|
|
|
|
|
|
|
|
||||||
Class A common stock
|
52,325,125
|
|
|
52,317,438
|
|
|
52,317,275
|
|
|
52,313,642
|
|
||||
Class B common stock
|
2,542
|
|
|
2,542
|
|
|
2,542
|
|
|
2,542
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Dividends declared per share
|
|
|
|
|
|
|
|
|
|
||||||
Class A common stock
|
$
|
0.90
|
|
|
$
|
0.84
|
|
|
$
|
2.70
|
|
|
$
|
2.52
|
|
Class B common stock
|
$
|
135.00
|
|
|
$
|
126.00
|
|
|
$
|
405.00
|
|
|
$
|
378.00
|
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net income
|
$
|
94,169
|
|
|
$
|
80,446
|
|
|
$
|
257,234
|
|
|
$
|
225,910
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income (loss), net of tax
|
|
|
|
|
|
|
|
|
|
||||||
Change in unrealized holding gains (losses) on available-for-sale securities
|
2,330
|
|
|
(492
|
)
|
|
10,387
|
|
|
(6,470
|
)
|
||||
Amortization of prior service costs and net actuarial loss on pension and other postretirement plans
|
1,231
|
|
|
0
|
|
|
3,694
|
|
|
0
|
|
||||
Total other comprehensive income (loss), net of tax
|
3,561
|
|
|
(492
|
)
|
|
14,081
|
|
|
(6,470
|
)
|
||||
Comprehensive income
|
$
|
97,730
|
|
|
$
|
79,954
|
|
|
$
|
271,315
|
|
|
$
|
219,440
|
|
|
|
September 30,
|
|
December 31,
|
||||
|
|
2019
|
|
2018
|
||||
Assets
|
|
(Unaudited)
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
344,872
|
|
|
$
|
266,417
|
|
Available-for-sale securities
|
|
32,984
|
|
|
402,339
|
|
||
Receivables from Erie Insurance Exchange and affiliates
|
|
497,985
|
|
|
449,873
|
|
||
Prepaid expenses and other current assets
|
|
47,712
|
|
|
36,892
|
|
||
Federal income taxes recoverable
|
|
6,075
|
|
|
8,162
|
|
||
Accrued investment income
|
|
5,267
|
|
|
5,263
|
|
||
Total current assets
|
|
934,895
|
|
|
1,168,946
|
|
||
|
|
|
|
|
||||
Available-for-sale securities
|
|
647,649
|
|
|
346,184
|
|
||
Equity securities
|
|
55,052
|
|
|
11,853
|
|
||
Limited partnership investments
|
|
32,171
|
|
|
34,821
|
|
||
Fixed assets, net
|
|
194,170
|
|
|
130,832
|
|
||
Deferred income taxes, net
|
|
15,505
|
|
|
24,101
|
|
||
Other assets
|
|
95,138
|
|
|
61,590
|
|
||
Total assets
|
|
$
|
1,974,580
|
|
|
$
|
1,778,327
|
|
|
|
|
|
|
||||
Liabilities and shareholders' equity
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Commissions payable
|
|
$
|
272,932
|
|
|
$
|
241,573
|
|
Agent bonuses
|
|
73,921
|
|
|
103,462
|
|
||
Accounts payable and accrued liabilities
|
|
131,453
|
|
|
111,291
|
|
||
Dividends payable
|
|
41,913
|
|
|
41,910
|
|
||
Contract liability
|
|
36,318
|
|
|
33,854
|
|
||
Deferred executive compensation
|
|
10,328
|
|
|
13,107
|
|
||
Current portion of long-term borrowings
|
|
1,959
|
|
|
1,870
|
|
||
Total current liabilities
|
|
568,824
|
|
|
547,067
|
|
||
|
|
|
|
|
||||
Defined benefit pension plans
|
|
136,078
|
|
|
116,866
|
|
||
Long-term borrowings
|
|
96,346
|
|
|
97,860
|
|
||
Contract liability
|
|
18,648
|
|
|
17,873
|
|
||
Deferred executive compensation
|
|
13,017
|
|
|
13,075
|
|
||
Other long-term liabilities
|
|
22,396
|
|
|
11,914
|
|
||
Total liabilities
|
|
855,309
|
|
|
804,655
|
|
||
|
|
|
|
|
||||
Shareholders’ equity
|
|
|
|
|
||||
Class A common stock, stated value $0.0292 per share; 74,996,930 shares authorized; 68,299,200 shares issued; 46,189,068 shares outstanding
|
|
1,992
|
|
|
1,992
|
|
||
Class B common stock, convertible at a rate of 2,400 Class A shares for one Class B share, stated value $70 per share; 3,070 shares authorized; 2,542 shares issued and outstanding
|
|
178
|
|
|
178
|
|
||
Additional paid-in-capital
|
|
16,483
|
|
|
16,459
|
|
||
Accumulated other comprehensive loss
|
|
(116,203
|
)
|
|
(130,284
|
)
|
||
Retained earnings
|
|
2,362,911
|
|
|
2,231,417
|
|
||
Total contributed capital and retained earnings
|
|
2,265,361
|
|
|
2,119,762
|
|
||
Treasury stock, at cost; 22,110,132 shares held
|
|
(1,158,620
|
)
|
|
(1,157,625
|
)
|
||
Deferred compensation
|
|
12,530
|
|
|
11,535
|
|
||
Total shareholders’ equity
|
|
1,119,271
|
|
|
973,672
|
|
||
Total liabilities and shareholders’ equity
|
|
$
|
1,974,580
|
|
|
$
|
1,778,327
|
|
|
Class A common stock
|
Class B common stock
|
Additional paid-in-capital
|
Accumulated other comprehensive income (loss)
|
Retained earnings
|
Treasury stock
|
Deferred compensation
|
Total shareholders' equity
|
||||||||||||||||
Balance, December 31, 2018
|
$
|
1,992
|
|
$
|
178
|
|
$
|
16,459
|
|
$
|
(130,284
|
)
|
$
|
2,231,417
|
|
$
|
(1,157,625
|
)
|
$
|
11,535
|
|
$
|
973,672
|
|
Net income
|
|
|
|
|
75,311
|
|
|
|
75,311
|
|
||||||||||||||
Other comprehensive income
|
|
|
|
6,710
|
|
|
|
|
6,710
|
|
||||||||||||||
Dividends declared:
|
|
|
|
|
|
|
|
|
||||||||||||||||
Class A $0.90 per share
|
|
|
|
|
(41,570
|
)
|
|
|
(41,570
|
)
|
||||||||||||||
Class B $135.00 per share
|
|
|
|
|
(343
|
)
|
|
|
(343
|
)
|
||||||||||||||
Net purchase of treasury stock (1)
|
|
|
24
|
|
|
|
0
|
|
|
24
|
|
|||||||||||||
Deferred compensation
|
|
|
|
|
|
(1,154
|
)
|
1,154
|
|
0
|
|
|||||||||||||
Balance, March 31, 2019
|
$
|
1,992
|
|
$
|
178
|
|
$
|
16,483
|
|
$
|
(123,574
|
)
|
$
|
2,264,815
|
|
$
|
(1,158,779
|
)
|
$
|
12,689
|
|
$
|
1,013,804
|
|
Net income
|
|
|
|
|
87,754
|
|
|
|
87,754
|
|
||||||||||||||
Other comprehensive income
|
|
|
|
3,810
|
|
|
|
|
3,810
|
|
||||||||||||||
Dividends declared:
|
|
|
|
|
|
|
|
|
||||||||||||||||
Class A $0.90 per share
|
|
|
|
|
(41,570
|
)
|
|
|
(41,570
|
)
|
||||||||||||||
Class B $135.00 per share
|
|
|
|
|
(344
|
)
|
|
|
(344
|
)
|
||||||||||||||
Net purchase of treasury stock (1)
|
|
|
0
|
|
|
|
0
|
|
|
0
|
|
|||||||||||||
Deferred compensation
|
|
|
|
|
|
(443
|
)
|
443
|
|
0
|
|
|||||||||||||
Rabbi trust distribution (2)
|
|
|
|
|
|
922
|
|
(922
|
)
|
0
|
|
|||||||||||||
Balance, June 30, 2019
|
$
|
1,992
|
|
$
|
178
|
|
$
|
16,483
|
|
$
|
(119,764
|
)
|
$
|
2,310,655
|
|
$
|
(1,158,300
|
)
|
$
|
12,210
|
|
$
|
1,063,454
|
|
Net income
|
|
|
|
|
94,169
|
|
|
|
94,169
|
|
||||||||||||||
Other comprehensive income
|
|
|
|
3,561
|
|
|
|
|
3,561
|
|
||||||||||||||
Dividends declared:
|
|
|
|
|
|
|
|
|
||||||||||||||||
Class A $0.90 per share
|
|
|
|
|
(41,570
|
)
|
|
|
(41,570
|
)
|
||||||||||||||
Class B $135.00 per share
|
|
|
|
|
(343
|
)
|
|
|
(343
|
)
|
||||||||||||||
Net purchase of treasury stock (1)
|
|
|
0
|
|
|
|
0
|
|
|
0
|
|
|||||||||||||
Deferred compensation
|
|
|
|
|
|
(320
|
)
|
320
|
|
0
|
|
|||||||||||||
Balance, September 30, 2019
|
$
|
1,992
|
|
$
|
178
|
|
$
|
16,483
|
|
$
|
(116,203
|
)
|
$
|
2,362,911
|
|
$
|
(1,158,620
|
)
|
$
|
12,530
|
|
$
|
1,119,271
|
|
|
Class A common stock
|
Class B common stock
|
Additional paid-in-capital
|
Accumulated other comprehensive income (loss)
|
Retained earnings
|
Treasury stock
|
Deferred compensation
|
Total shareholders' equity
|
||||||||||||||||
Balance, December 31, 2017
|
$
|
1,992
|
|
$
|
178
|
|
$
|
16,470
|
|
$
|
(156,059
|
)
|
$
|
2,140,853
|
|
$
|
(1,155,668
|
)
|
$
|
9,578
|
|
$
|
857,344
|
|
Cumulative effect adjustments (1)
|
|
|
|
|
(38,392
|
)
|
|
|
(38,392
|
)
|
||||||||||||||
Net income
|
|
|
|
|
65,758
|
|
|
|
65,758
|
|
||||||||||||||
Other comprehensive loss
|
|
|
|
(5,427
|
)
|
|
|
|
(5,427
|
)
|
||||||||||||||
Dividends declared:
|
|
|
|
|
|
|
|
|
||||||||||||||||
Class A $0.84 per share
|
|
|
|
|
(38,799
|
)
|
|
|
(38,799
|
)
|
||||||||||||||
Class B $126.00 per share
|
|
|
|
|
(320
|
)
|
|
|
(320
|
)
|
||||||||||||||
Net purchase of treasury stock (2)
|
|
|
(9
|
)
|
|
|
0
|
|
|
(9
|
)
|
|||||||||||||
Deferred compensation
|
|
|
|
|
|
(1,663
|
)
|
1,663
|
|
0
|
|
|||||||||||||
Balance, March 31, 2018
|
$
|
1,992
|
|
$
|
178
|
|
$
|
16,461
|
|
$
|
(161,486
|
)
|
$
|
2,129,100
|
|
$
|
(1,157,331
|
)
|
$
|
11,241
|
|
$
|
840,155
|
|
Net income
|
|
|
|
|
79,706
|
|
|
|
79,706
|
|
||||||||||||||
Other comprehensive loss
|
|
|
|
(551
|
)
|
|
|
|
(551
|
)
|
||||||||||||||
Dividends declared:
|
|
|
|
|
|
|
|
|
||||||||||||||||
Class A $0.84 per share
|
|
|
|
|
(38,799
|
)
|
|
|
(38,799
|
)
|
||||||||||||||
Class B $126.00 per share
|
|
|
|
|
(321
|
)
|
|
|
(321
|
)
|
||||||||||||||
Net purchase of treasury stock (2)
|
|
|
(2
|
)
|
|
|
0
|
|
|
(2
|
)
|
|||||||||||||
Deferred compensation
|
|
|
|
|
|
(276
|
)
|
276
|
|
0
|
|
|||||||||||||
Rabbi trust distribution (3)
|
|
|
|
|
|
608
|
|
(608
|
)
|
0
|
|
|||||||||||||
Balance, June 30, 2018
|
$
|
1,992
|
|
$
|
178
|
|
$
|
16,459
|
|
$
|
(162,037
|
)
|
$
|
2,169,686
|
|
$
|
(1,156,999
|
)
|
$
|
10,909
|
|
$
|
880,188
|
|
Net income
|
|
|
|
|
80,446
|
|
|
|
80,446
|
|
||||||||||||||
Other comprehensive loss
|
|
|
|
(492
|
)
|
|
|
|
(492
|
)
|
||||||||||||||
Dividends declared:
|
|
|
|
|
|
|
|
|
||||||||||||||||
Class A $0.84 per share
|
|
|
|
|
(38,799
|
)
|
|
|
(38,799
|
)
|
||||||||||||||
Class B $126.00 per share
|
|
|
|
|
(320
|
)
|
|
|
(320
|
)
|
||||||||||||||
Net purchase of treasury stock (2)
|
|
|
0
|
|
|
|
0
|
|
|
0
|
|
|||||||||||||
Deferred compensation
|
|
|
|
|
|
(311
|
)
|
311
|
|
0
|
|
|||||||||||||
Balance, September 30, 2018
|
$
|
1,992
|
|
$
|
178
|
|
$
|
16,459
|
|
$
|
(162,529
|
)
|
$
|
2,211,013
|
|
$
|
(1,157,310
|
)
|
$
|
11,220
|
|
$
|
921,023
|
|
|
|
Nine months ended
|
||||||
|
|
September 30,
|
||||||
|
|
2019
|
|
2018
|
||||
Cash flows from operating activities
|
|
|
|
|
||||
Management fee received
|
|
$
|
1,387,877
|
|
|
$
|
1,309,769
|
|
Administrative services reimbursements received
|
|
420,697
|
|
|
428,071
|
|
||
Service agreement fee received
|
|
20,754
|
|
|
21,297
|
|
||
Net investment income received
|
|
25,461
|
|
|
26,625
|
|
||
Limited partnership distributions
|
|
1,596
|
|
|
6,008
|
|
||
Commissions paid to agents
|
|
(669,618
|
)
|
|
(639,574
|
)
|
||
Agents bonuses paid
|
|
(112,262
|
)
|
|
(130,657
|
)
|
||
Salaries and wages paid
|
|
(138,279
|
)
|
|
(136,868
|
)
|
||
Pension contributions and employee benefits paid
|
|
(31,926
|
)
|
|
(106,718
|
)
|
||
General operating expenses paid
|
|
(179,799
|
)
|
|
(144,759
|
)
|
||
Administrative services expenses paid
|
|
(424,919
|
)
|
|
(427,852
|
)
|
||
Income taxes paid
|
|
(60,863
|
)
|
|
(29,208
|
)
|
||
Interest paid
|
|
(853
|
)
|
|
(1,820
|
)
|
||
Net cash provided by operating activities
|
|
237,866
|
|
|
174,314
|
|
||
|
|
|
|
|
||||
Cash flows from investing activities
|
|
|
|
|
||||
Purchase of investments:
|
|
|
|
|
||||
Available-for-sale securities
|
|
(852,886
|
)
|
|
(194,773
|
)
|
||
Equity securities
|
|
(46,536
|
)
|
|
(4,087
|
)
|
||
Limited partnerships
|
|
(20
|
)
|
|
(217
|
)
|
||
Other investments
|
|
(252
|
)
|
|
—
|
|
||
Proceeds from investments:
|
|
|
|
|
||||
Available-for-sale securities sales
|
|
655,519
|
|
|
125,913
|
|
||
Available-for-sale securities maturities/calls
|
|
282,846
|
|
|
98,922
|
|
||
Equity securities
|
|
4,505
|
|
|
4,159
|
|
||
Limited partnerships
|
|
3,600
|
|
|
3,046
|
|
||
Purchase of fixed assets
|
|
(68,363
|
)
|
|
(48,667
|
)
|
||
Agent loan distributions
|
|
(16,458
|
)
|
|
(41,767
|
)
|
||
Agent loan repayments
|
|
5,804
|
|
|
4,496
|
|
||
Net cash used in investing activities
|
|
(32,241
|
)
|
|
(52,975
|
)
|
||
|
|
|
|
|
||||
Cash flows from financing activities
|
|
|
|
|
||||
Dividends paid to shareholders
|
|
(125,737
|
)
|
|
(117,355
|
)
|
||
Net (payments) proceeds from long-term borrowings
|
|
(1,433
|
)
|
|
24,983
|
|
||
Net cash used in financing activities
|
|
(127,170
|
)
|
|
(92,372
|
)
|
||
|
|
|
|
|
||||
Net increase in cash and cash equivalents
|
|
78,455
|
|
|
28,967
|
|
||
Cash and cash equivalents, beginning of period
|
|
266,417
|
|
|
215,721
|
|
||
Cash and cash equivalents, end of period
|
|
$
|
344,872
|
|
|
$
|
244,688
|
|
|
|
|
|
|
||||
Supplemental disclosure of noncash transactions
|
|
|
|
|
||||
Operating lease assets obtained in exchange for new operating lease liabilities
|
|
$
|
33,678
|
|
|
$
|
—
|
|
Liability incurred to purchase fixed assets
|
|
$
|
8,286
|
|
|
$
|
—
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||
(in thousands)
|
2019
|
2018
|
|
2019
|
2018
|
||||||||
Management fee revenue - policy issuance and renewal services, net
|
$
|
474,427
|
|
$
|
451,361
|
|
|
$
|
1,385,923
|
|
$
|
1,311,911
|
|
|
|
|
|
|
|
||||||||
Management fee revenue - administrative services, net
|
14,430
|
|
13,521
|
|
|
42,576
|
|
39,894
|
|
||||
Administrative services reimbursement revenue
|
142,730
|
|
140,172
|
|
|
431,305
|
|
432,642
|
|
||||
Total administrative services
|
$
|
157,160
|
|
$
|
153,693
|
|
|
$
|
473,881
|
|
$
|
472,536
|
|
|
|
Three months ended September 30,
|
||||||||||||||||||||
|
|
2019
|
|
2018
|
||||||||||||||||||
(dollars in thousands, except per share data)
|
|
Allocated net income (numerator)
|
|
Weighted shares (denominator)
|
|
Per-share amount
|
|
Allocated net income (numerator)
|
|
Weighted shares (denominator)
|
|
Per-share amount
|
||||||||||
Class A – Basic EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income available to Class A stockholders
|
|
$
|
93,398
|
|
|
46,189,006
|
|
|
$
|
2.02
|
|
|
$
|
79,787
|
|
|
46,188,941
|
|
|
$
|
1.73
|
|
Dilutive effect of stock-based awards
|
|
0
|
|
|
35,319
|
|
|
—
|
|
|
0
|
|
|
27,697
|
|
|
—
|
|
||||
Assumed conversion of Class B shares
|
|
771
|
|
|
6,100,800
|
|
|
—
|
|
|
659
|
|
|
6,100,800
|
|
|
—
|
|
||||
Class A – Diluted EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income available to Class A stockholders on Class A equivalent shares
|
|
$
|
94,169
|
|
|
52,325,125
|
|
|
$
|
1.80
|
|
|
$
|
80,446
|
|
|
52,317,438
|
|
|
$
|
1.54
|
|
Class B – Basic EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income available to Class B stockholders
|
|
$
|
771
|
|
|
2,542
|
|
|
$
|
303
|
|
|
$
|
659
|
|
|
2,542
|
|
|
$
|
259
|
|
Class B – Diluted EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income available to Class B stockholders
|
|
$
|
770
|
|
|
2,542
|
|
|
$
|
303
|
|
|
$
|
658
|
|
|
2,542
|
|
|
$
|
259
|
|
|
|
Nine months ended September 30,
|
||||||||||||||||||||
|
|
2019
|
|
2018
|
||||||||||||||||||
(dollars in thousands, except per share data)
|
|
Allocated net income (numerator)
|
|
Weighted shares (denominator)
|
|
Per-share amount
|
|
Allocated net income (numerator)
|
|
Weighted shares (denominator)
|
|
Per-share amount
|
||||||||||
Class A – Basic EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income available to Class A stockholders
|
|
$
|
255,128
|
|
|
46,188,767
|
|
|
$
|
5.52
|
|
|
$
|
224,060
|
|
|
46,188,522
|
|
|
$
|
4.85
|
|
Dilutive effect of stock-based awards
|
|
0
|
|
|
27,708
|
|
|
—
|
|
|
0
|
|
|
24,320
|
|
|
—
|
|
||||
Assumed conversion of Class B shares
|
|
2,106
|
|
|
6,100,800
|
|
|
—
|
|
|
1,850
|
|
|
6,100,800
|
|
|
—
|
|
||||
Class A – Diluted EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income available to Class A stockholders on Class A equivalent shares
|
|
$
|
257,234
|
|
|
52,317,275
|
|
|
$
|
4.92
|
|
|
$
|
225,910
|
|
|
52,313,642
|
|
|
$
|
4.32
|
|
Class B – Basic EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income available to Class B stockholders
|
|
$
|
2,106
|
|
|
2,542
|
|
|
$
|
829
|
|
|
$
|
1,850
|
|
|
2,542
|
|
|
$
|
728
|
|
Class B – Diluted EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income available to Class B stockholders
|
|
$
|
2,105
|
|
|
2,542
|
|
|
$
|
828
|
|
|
$
|
1,849
|
|
|
2,542
|
|
|
$
|
727
|
|
•
|
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.
|
|
|
September 30, 2019
|
||||||||||||||
(in thousands)
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
||||||||
Corporate debt securities (1)
|
|
$
|
434,206
|
|
|
$
|
3,214
|
|
|
$
|
423,934
|
|
|
$
|
7,058
|
|
Residential mortgage-backed securities(1)
|
|
107,235
|
|
|
0
|
|
|
107,235
|
|
|
0
|
|
||||
Commercial mortgage-backed securities(1)
|
|
63,182
|
|
|
0
|
|
|
58,475
|
|
|
4,707
|
|
||||
Collateralized debt obligations
|
|
70,818
|
|
|
0
|
|
|
68,518
|
|
|
2,300
|
|
||||
Other debt securities
|
|
5,192
|
|
|
0
|
|
|
5,192
|
|
|
0
|
|
||||
Total available-for-sale securities
|
|
680,633
|
|
|
3,214
|
|
|
663,354
|
|
|
14,065
|
|
||||
Equity securities - nonredeemable preferred stock:(1)
|
|
|
|
|
|
|
|
|
||||||||
Financial services sector
|
|
47,753
|
|
|
25,003
|
|
|
22,750
|
|
|
0
|
|
||||
Industrial sector
|
|
2,842
|
|
|
0
|
|
|
2,842
|
|
|
0
|
|
||||
Utilities sector
|
|
2,571
|
|
|
521
|
|
|
2,050
|
|
|
0
|
|
||||
Energy sector
|
|
1,886
|
|
|
0
|
|
|
1,886
|
|
|
0
|
|
||||
Total equity securities
|
|
55,052
|
|
|
25,524
|
|
|
29,528
|
|
|
0
|
|
||||
Total
|
|
$
|
735,685
|
|
|
$
|
28,738
|
|
|
$
|
692,882
|
|
|
$
|
14,065
|
|
|
|
December 31, 2018
|
||||||||||||||
(in thousands)
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury (1)
|
|
$
|
208,412
|
|
|
$
|
0
|
|
|
$
|
208,412
|
|
|
$
|
0
|
|
States & political subdivisions (1)
|
|
159,023
|
|
|
0
|
|
|
159,023
|
|
|
0
|
|
||||
Corporate debt securities
|
|
249,947
|
|
|
0
|
|
|
237,370
|
|
|
12,577
|
|
||||
Residential mortgage-backed securities
|
|
4,609
|
|
|
0
|
|
|
4,609
|
|
|
0
|
|
||||
Commercial mortgage-backed securities
|
|
46,515
|
|
|
0
|
|
|
46,515
|
|
|
0
|
|
||||
Collateralized debt obligations
|
|
64,239
|
|
|
0
|
|
|
64,239
|
|
|
0
|
|
||||
Other debt securities
|
|
15,778
|
|
|
0
|
|
|
15,778
|
|
|
0
|
|
||||
Total available-for-sale securities
|
|
748,523
|
|
|
0
|
|
|
735,946
|
|
|
12,577
|
|
||||
Equity securities - nonredeemable preferred stock:
|
|
|
|
|
|
|
|
|
||||||||
Financial services sector
|
|
11,853
|
|
|
1,809
|
|
|
10,044
|
|
|
0
|
|
||||
Total equity securities
|
|
11,853
|
|
|
1,809
|
|
|
10,044
|
|
|
0
|
|
||||
Other limited partnership investments (2)
|
|
3,206
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total
|
|
$
|
763,582
|
|
|
$
|
1,809
|
|
|
$
|
745,990
|
|
|
$
|
12,577
|
|
(1)
|
In the fourth quarter of 2018, we began selling off our municipal bonds as part of a portfolio rebalancing and invested proceeds in short-term U.S. Treasuries. In 2019, proceeds from selling off the remaining municipal bond portfolio and short-term U.S. Treasuries were reinvested in corporate debt, structured and equity securities.
|
(2)
|
The limited partnership investment measured at fair value represents one real estate fund included on the balance sheet as a limited partnership investment reported under the fair value option using the net asset value (NAV) practical expedient, which is not required to be categorized in the fair value hierarchy. The fair value of this investment is based on our proportionate share of the NAV from the most recent partners' capital statements received from the general partner, which is generally one quarter prior to our balance sheet date. We consider observable market data and perform a review validating the appropriateness of the NAV at each balance sheet date. Liquidation of this fund was completed in January 2019 and a final distribution totaling $3.2 million was received. There were no unfunded commitments related to the investment at December 31, 2018. During the year ended December 31, 2018, no contributions were made and distributions totaling $1.2 million were received from this investment.
|
|
|
September 30, 2019
|
||||||||||||||
(in thousands)
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Available-for-sale securities priced using:
|
|
|
|
|
|
|
|
|
||||||||
Pricing services
|
|
$
|
677,683
|
|
|
$
|
3,214
|
|
|
$
|
662,854
|
|
|
$
|
11,615
|
|
Market comparables/broker quotes
|
|
2,800
|
|
|
0
|
|
|
500
|
|
|
2,300
|
|
||||
Internal modeling
|
|
150
|
|
|
0
|
|
|
0
|
|
|
150
|
|
||||
Total available-for-sale securities
|
|
680,633
|
|
|
3,214
|
|
|
663,354
|
|
|
14,065
|
|
||||
Equity securities priced using pricing services
|
|
55,052
|
|
|
25,524
|
|
|
29,528
|
|
|
0
|
|
||||
Total
|
|
$
|
735,685
|
|
|
$
|
28,738
|
|
|
$
|
692,882
|
|
|
$
|
14,065
|
|
|
|
September 30, 2019
|
|||||||
(dollars in thousands)
|
|
Fair
value
|
Valuation techniques
|
Unobservable input
|
Range
(basis points) |
Weighted
average (basis points) |
Impact of increase in input on estimated fair value
|
||
|
|
|
|
|
|
|
|
||
Corporate debt securities - bank loans
|
|
$
|
6,827
|
|
Syndicated loan model
|
Market residual yield (1)
|
-536 - +1290
|
+87
|
Decrease
|
Commercial mortgage-backed securities
|
|
4,707
|
|
Relative value pricing model
|
Credit spread (2)
|
+35 - +83
|
+57
|
Decrease
|
(1)
|
Values for bank loans classified as Level 3 are determined by our pricing vendor based on model yield curves adjusted for observable inputs. The market residual yield represents a net adjustment to the model yield curve for unobservable input factors.
|
(2)
|
Values for commercial mortgage-backed securities classified as Level 3 include adjustments to the base spread over the appropriate U.S. Treasury yield assuming no prepayments until penalty provisions have expired.
|
(in thousands) |
|
Beginning balance at June 30, 2019
|
|
Included in earnings(1)
|
|
Included
in other comprehensive income |
|
Purchases
|
|
Sales
|
|
Transfers into Level 3(2)
|
|
Transfers out of Level 3(2)
|
|
Ending balance at September 30, 2019
|
||||||||||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Corporate debt securities
|
|
$
|
6,373
|
|
|
$
|
16
|
|
|
$
|
(92
|
)
|
|
$
|
549
|
|
|
$
|
(507
|
)
|
|
$
|
1,850
|
|
|
$
|
(1,131
|
)
|
|
$
|
7,058
|
|
Commercial mortgage-backed securities
|
|
2,551
|
|
|
(6
|
)
|
|
2
|
|
|
0
|
|
|
(3
|
)
|
|
2,846
|
|
|
(683
|
)
|
|
4,707
|
|
||||||||
Collateralized debt obligations
|
|
0
|
|
|
0
|
|
|
0
|
|
|
2,300
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
2,300
|
|
||||||||
Total Level 3 available-for-sale securities
|
|
$
|
8,924
|
|
|
$
|
10
|
|
|
$
|
(90
|
)
|
|
$
|
2,849
|
|
|
$
|
(510
|
)
|
|
$
|
4,696
|
|
|
$
|
(1,814
|
)
|
|
$
|
14,065
|
|
(in thousands)
|
|
Beginning balance at December 31, 2018
|
|
Included in earnings(1)
|
|
Included
in other
comprehensive
income
|
|
Purchases
|
|
Sales
|
|
Transfers into Level 3(2)
|
|
Transfers out of Level 3(2)
|
|
Ending balance at September 30, 2019
|
||||||||||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Corporate debt securities
|
|
$
|
12,577
|
|
|
$
|
7
|
|
|
$
|
199
|
|
|
$
|
1,283
|
|
|
$
|
(6,779
|
)
|
|
$
|
9,244
|
|
|
$
|
(9,473
|
)
|
|
$
|
7,058
|
|
Residential mortgage-backed securities
|
|
0
|
|
|
4
|
|
|
15
|
|
|
921
|
|
|
(32
|
)
|
|
0
|
|
|
(908
|
)
|
|
0
|
|
||||||||
Commercial mortgage-backed securities
|
|
0
|
|
|
7
|
|
|
(6
|
)
|
|
478
|
|
|
(1,068
|
)
|
|
6,103
|
|
|
(807
|
)
|
|
4,707
|
|
||||||||
Collateralized debt obligations
|
|
0
|
|
|
0
|
|
|
0
|
|
|
2,300
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
2,300
|
|
||||||||
Total Level 3 available-for-sale securities
|
|
$
|
12,577
|
|
|
$
|
18
|
|
|
$
|
208
|
|
|
$
|
4,982
|
|
|
$
|
(7,879
|
)
|
|
$
|
15,347
|
|
|
$
|
(11,188
|
)
|
|
$
|
14,065
|
|
(in thousands) |
|
Beginning balance at June 30, 2018
|
|
Included in earnings(1)
|
|
Included
in other comprehensive income |
|
Purchases
|
|
Sales
|
|
Transfers into Level 3(2)
|
|
Transfers out of Level 3(2)
|
|
Ending balance at September 30, 2018
|
||||||||||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Corporate debt securities
|
|
$
|
11,120
|
|
|
$
|
3
|
|
|
$
|
71
|
|
|
$
|
1,539
|
|
|
$
|
(1,416
|
)
|
|
$
|
2,735
|
|
|
$
|
(5,782
|
)
|
|
$
|
8,270
|
|
Other debt securities
|
|
0
|
|
|
0
|
|
|
0
|
|
|
905
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
905
|
|
||||||||
Total Level 3 available-for-sale securities
|
|
$
|
11,120
|
|
|
$
|
3
|
|
|
$
|
71
|
|
|
$
|
2,444
|
|
|
$
|
(1,416
|
)
|
|
$
|
2,735
|
|
|
$
|
(5,782
|
)
|
|
$
|
9,175
|
|
(in thousands)
|
|
Beginning balance at December 31, 2017
|
|
Included in earnings(1)
|
|
Included
in other
comprehensive
income
|
|
Purchases
|
|
Sales
|
|
Transfers into Level 3(2)
|
|
Transfers out of Level 3(2)
|
|
Ending balance at September 30, 2018
|
||||||||||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Corporate debt securities
|
|
$
|
7,879
|
|
|
$
|
4
|
|
|
$
|
23
|
|
|
$
|
4,586
|
|
|
$
|
(2,381
|
)
|
|
$
|
10,517
|
|
|
$
|
(12,358
|
)
|
|
$
|
8,270
|
|
Collateralized debt obligations
|
|
2,200
|
|
|
0
|
|
|
7
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(2,207
|
)
|
|
0
|
|
||||||||
Other debt securities
|
|
0
|
|
|
0
|
|
|
0
|
|
|
905
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
905
|
|
||||||||
Total Level 3 available-for-sale securities
|
|
$
|
10,079
|
|
|
$
|
4
|
|
|
$
|
30
|
|
|
$
|
5,491
|
|
|
$
|
(2,381
|
)
|
|
$
|
10,517
|
|
|
$
|
(14,565
|
)
|
|
$
|
9,175
|
|
(1)
|
These amounts are reported in the Statements of Operations as net investment income and net realized investment gains (losses) for the each of the periods presented above.
|
(2)
|
Transfers into and/or (out) of Level 3 are primarily attributable to the availability of market observable information and the re-evaluation of the observability of pricing inputs.
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
(in thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
||||||||
Corporate debt securities
|
$
|
(100
|
)
|
|
$
|
66
|
|
|
$
|
112
|
|
|
$
|
38
|
|
Commercial mortgage-backed securities
|
7
|
|
|
—
|
|
|
132
|
|
|
—
|
|
||||
Other debt securities
|
—
|
|
|
0
|
|
|
—
|
|
|
0
|
|
||||
Net unrealized (losses) gains on Level 3 securities held at reporting date
|
$
|
(93
|
)
|
|
$
|
66
|
|
|
$
|
244
|
|
|
$
|
38
|
|
|
|
September 30, 2019
|
|
December 31, 2018
|
||||||||||||
(in thousands)
|
|
Carrying value
|
|
Fair value
|
|
Carrying value
|
|
Fair value
|
||||||||
Agent loans
|
|
$
|
68,660
|
|
|
$
|
69,194
|
|
|
$
|
58,006
|
|
|
$
|
54,110
|
|
Long-term borrowings
|
|
98,568
|
|
|
107,169
|
|
|
99,730
|
|
|
94,057
|
|
|
|
September 30, 2019
|
||||||||||||||
(in thousands)
|
|
Amortized
cost
|
|
Gross unrealized gains
|
|
Gross unrealized losses
|
|
Estimated fair value
|
||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
||||||||
Corporate debt securities (1)
|
|
$
|
431,800
|
|
|
$
|
4,437
|
|
|
$
|
2,031
|
|
|
$
|
434,206
|
|
Residential mortgage-backed securities(1)
|
|
106,401
|
|
|
889
|
|
|
55
|
|
|
107,235
|
|
||||
Commercial mortgage-backed securities(1)
|
|
61,940
|
|
|
1,263
|
|
|
21
|
|
|
63,182
|
|
||||
Collateralized debt obligations
|
|
71,087
|
|
|
20
|
|
|
289
|
|
|
70,818
|
|
||||
Other debt securities
|
|
5,108
|
|
|
92
|
|
|
8
|
|
|
5,192
|
|
||||
Total available-for-sale securities
|
|
$
|
676,336
|
|
|
$
|
6,701
|
|
|
$
|
2,404
|
|
|
$
|
680,633
|
|
|
|
December 31, 2018
|
||||||||||||||
(in thousands)
|
|
Amortized
cost
|
|
Gross unrealized gains
|
|
Gross unrealized losses
|
|
Estimated fair value
|
||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury (1)
|
|
$
|
208,610
|
|
|
$
|
18
|
|
|
$
|
216
|
|
|
$
|
208,412
|
|
States & political subdivisions (1)
|
|
157,003
|
|
|
2,020
|
|
|
0
|
|
|
159,023
|
|
||||
Corporate debt securities
|
|
259,362
|
|
|
139
|
|
|
9,554
|
|
|
249,947
|
|
||||
Residential mortgage-backed securities
|
|
4,603
|
|
|
38
|
|
|
32
|
|
|
4,609
|
|
||||
Commercial mortgage-backed securities
|
|
47,022
|
|
|
80
|
|
|
587
|
|
|
46,515
|
|
||||
Collateralized debt obligations
|
|
65,039
|
|
|
30
|
|
|
830
|
|
|
64,239
|
|
||||
Other debt securities
|
|
15,756
|
|
|
33
|
|
|
11
|
|
|
15,778
|
|
||||
Total available-for-sale securities
|
|
$
|
757,395
|
|
|
$
|
2,358
|
|
|
$
|
11,230
|
|
|
$
|
748,523
|
|
(1)
|
In the fourth quarter of 2018, we began selling off our municipal bonds as part of a portfolio rebalancing and invested proceeds in short-term U.S. Treasuries. In 2019, proceeds from selling off the remaining municipal bond portfolio and short-term U.S. Treasuries were reinvested in corporate debt, structured, and equity securities.
|
|
|
September 30, 2019
|
||||||
|
|
Amortized
|
|
Estimated
|
||||
(in thousands)
|
|
cost
|
|
fair value
|
||||
Due in one year or less
|
|
$
|
32,875
|
|
|
$
|
32,842
|
|
Due after one year through five years
|
|
307,299
|
|
|
308,682
|
|
||
Due after five years through ten years
|
|
128,109
|
|
|
129,071
|
|
||
Due after ten years
|
|
208,053
|
|
|
210,038
|
|
||
Total available-for-sale securities
|
|
$
|
676,336
|
|
|
$
|
680,633
|
|
|
|
September 30, 2019
|
|||||||||||||||||||||||||
|
|
Less than 12 months
|
|
12 months or longer
|
|
Total
|
|||||||||||||||||||||
(dollars in thousands)
|
|
Fair
value
|
|
Unrealized losses
|
|
Fair
value
|
|
Unrealized losses
|
|
Fair
value
|
|
Unrealized losses
|
|
No. of holdings
|
|||||||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Corporate debt securities
|
|
$
|
39,871
|
|
|
$
|
852
|
|
|
$
|
30,518
|
|
|
$
|
1,179
|
|
|
$
|
70,389
|
|
|
$
|
2,031
|
|
|
229
|
|
Residential mortgage-backed securities
|
|
20,440
|
|
|
55
|
|
|
0
|
|
|
0
|
|
|
20,440
|
|
|
55
|
|
|
7
|
|
||||||
Commercial mortgage-backed securities
|
|
7,325
|
|
|
19
|
|
|
538
|
|
|
2
|
|
|
7,863
|
|
|
21
|
|
|
10
|
|
||||||
Collateralized debt obligations
|
|
39,202
|
|
|
84
|
|
|
25,284
|
|
|
205
|
|
|
64,486
|
|
|
289
|
|
|
47
|
|
||||||
Other debt securities
|
|
1,581
|
|
|
8
|
|
|
0
|
|
|
0
|
|
|
1,581
|
|
|
8
|
|
|
1
|
|
||||||
Total available-for-sale securities
|
|
$
|
108,419
|
|
|
$
|
1,018
|
|
|
$
|
56,340
|
|
|
$
|
1,386
|
|
|
$
|
164,759
|
|
|
$
|
2,404
|
|
|
294
|
|
Quality breakdown of available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Investment grade
|
|
$
|
80,157
|
|
|
$
|
176
|
|
|
$
|
46,355
|
|
|
$
|
255
|
|
|
$
|
126,512
|
|
|
$
|
431
|
|
|
85
|
|
Non-investment grade
|
|
28,262
|
|
|
842
|
|
|
9,985
|
|
|
1,131
|
|
|
38,247
|
|
|
1,973
|
|
|
209
|
|
||||||
Total available-for-sale securities
|
|
$
|
108,419
|
|
|
$
|
1,018
|
|
|
$
|
56,340
|
|
|
$
|
1,386
|
|
|
$
|
164,759
|
|
|
$
|
2,404
|
|
|
294
|
|
|
|
December 31, 2018
|
|||||||||||||||||||||||||
|
|
Less than 12 months
|
|
12 months or longer
|
|
Total
|
|||||||||||||||||||||
(dollars in thousands)
|
|
Fair
value
|
|
Unrealized
losses
|
|
Fair
value
|
|
Unrealized
losses
|
|
Fair
value
|
|
Unrealized
losses
|
|
No. of
holdings
|
|||||||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
U.S. Treasury
|
|
$
|
129,474
|
|
|
$
|
19
|
|
|
$
|
11,656
|
|
|
$
|
197
|
|
|
$
|
141,130
|
|
|
$
|
216
|
|
|
7
|
|
Corporate debt securities
|
|
157,300
|
|
|
6,866
|
|
|
86,586
|
|
|
2,688
|
|
|
243,886
|
|
|
9,554
|
|
|
635
|
|
||||||
Residential mortgage-backed securities
|
|
777
|
|
|
6
|
|
|
1,618
|
|
|
26
|
|
|
2,395
|
|
|
32
|
|
|
3
|
|
||||||
Commercial mortgage-backed securities
|
|
17,624
|
|
|
175
|
|
|
16,997
|
|
|
412
|
|
|
34,621
|
|
|
587
|
|
|
30
|
|
||||||
Collateralized debt obligations
|
|
55,246
|
|
|
826
|
|
|
1,248
|
|
|
4
|
|
|
56,494
|
|
|
830
|
|
|
39
|
|
||||||
Other debt securities
|
|
8,213
|
|
|
11
|
|
|
0
|
|
|
0
|
|
|
8,213
|
|
|
11
|
|
|
7
|
|
||||||
Total available-for-sale securities
|
|
$
|
368,634
|
|
|
$
|
7,903
|
|
|
$
|
118,105
|
|
|
$
|
3,327
|
|
|
$
|
486,739
|
|
|
$
|
11,230
|
|
|
721
|
|
Quality breakdown of available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Investment grade
|
|
$
|
242,821
|
|
|
$
|
1,295
|
|
|
$
|
98,118
|
|
|
$
|
1,641
|
|
|
$
|
340,939
|
|
|
$
|
2,936
|
|
|
147
|
|
Non-investment grade
|
|
125,813
|
|
|
6,608
|
|
|
19,987
|
|
|
1,686
|
|
|
145,800
|
|
|
8,294
|
|
|
574
|
|
||||||
Total available-for-sale securities
|
|
$
|
368,634
|
|
|
$
|
7,903
|
|
|
$
|
118,105
|
|
|
$
|
3,327
|
|
|
$
|
486,739
|
|
|
$
|
11,230
|
|
|
721
|
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Fixed maturities (1)
|
|
$
|
5,449
|
|
|
$
|
6,243
|
|
|
$
|
17,098
|
|
|
$
|
18,616
|
|
Equity securities
|
|
452
|
|
|
203
|
|
|
734
|
|
|
487
|
|
||||
Cash equivalents and other
|
|
2,900
|
|
|
1,484
|
|
|
8,025
|
|
|
3,518
|
|
||||
Total investment income
|
|
8,801
|
|
|
7,930
|
|
|
25,857
|
|
|
22,621
|
|
||||
Less: investment expenses
|
|
149
|
|
|
271
|
|
|
658
|
|
|
1,038
|
|
||||
Investment income, net of expenses
|
|
$
|
8,652
|
|
|
$
|
7,659
|
|
|
$
|
25,199
|
|
|
$
|
21,583
|
|
(1)
|
Includes interest earned on note receivable from Erie Family Life Insurance Company of $0.4 million and $1.3 million for the three and nine months ended September 30, 2018, respectively. The note was repaid in full in December 2018.
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
|
||||||
Gross realized gains
|
|
$
|
1,320
|
|
|
$
|
525
|
|
|
$
|
5,640
|
|
|
$
|
1,100
|
|
Gross realized losses
|
|
(248
|
)
|
|
(526
|
)
|
|
(1,411
|
)
|
|
(1,512
|
)
|
||||
Net realized gains (losses) on available-for-sale securities
|
|
1,072
|
|
|
(1
|
)
|
|
4,229
|
|
|
(412
|
)
|
||||
Equity securities
|
|
624
|
|
|
(1
|
)
|
|
1,272
|
|
|
(189
|
)
|
||||
Miscellaneous
|
|
0
|
|
|
2
|
|
|
0
|
|
|
104
|
|
||||
Net realized investment gains (losses)
|
|
$
|
1,696
|
|
|
$
|
0
|
|
|
$
|
5,501
|
|
|
$
|
(497
|
)
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Equity securities:
|
|
|
|
|
|
|
|
|
||||||||
Net gains (losses) recognized during the period
|
|
$
|
624
|
|
|
$
|
(1
|
)
|
|
$
|
1,272
|
|
|
$
|
(189
|
)
|
Less: net gains (losses) recognized on securities sold
|
|
47
|
|
|
(52
|
)
|
|
47
|
|
|
(86
|
)
|
||||
Net unrealized gains (losses) recognized on securities held at reporting date
|
|
$
|
577
|
|
|
$
|
51
|
|
|
$
|
1,225
|
|
|
$
|
(103
|
)
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Equity in earnings of limited partnerships - equity method
|
|
$
|
3,289
|
|
|
$
|
645
|
|
|
$
|
2,546
|
|
|
$
|
624
|
|
Change in fair value of limited partnerships - fair value option
|
|
0
|
|
|
127
|
|
|
0
|
|
|
(263
|
)
|
||||
Equity in earnings of limited partnerships
|
|
$
|
3,289
|
|
|
$
|
772
|
|
|
$
|
2,546
|
|
|
$
|
361
|
|
(in thousands)
|
|
September 30, 2019
|
|
December 31, 2018
|
||||
Private equity
|
|
$
|
29,938
|
|
|
$
|
28,271
|
|
Mezzanine debt
|
|
900
|
|
|
1,152
|
|
||
Real estate
|
|
1,333
|
|
|
2,192
|
|
||
Real estate - fair value option
|
|
0
|
|
|
3,206
|
|
||
Total limited partnership investments
|
|
$
|
32,171
|
|
|
$
|
34,821
|
|
|
|
|
|
|
|
(in thousands)
|
|
September 30, 2019
|
|
December 31, 2018
|
||||
Operating lease assets
|
|
$
|
23,841
|
|
|
$
|
—
|
|
|
|
|
|
|
||||
Operating lease liabilities - current
|
|
$
|
11,366
|
|
|
$
|
—
|
|
Operating lease liabilities - long-term
|
|
12,129
|
|
|
—
|
|
||
Total operating lease liabilities
|
|
$
|
23,495
|
|
|
$
|
—
|
|
(in thousands)
|
|
|
|
Year
|
|
Principal payments
|
|
2019
|
$
|
512
|
|
2020
|
|
1,980
|
|
2021
|
|
2,020
|
|
2022
|
|
2,110
|
|
2023
|
|
2,227
|
|
Thereafter
|
|
89,719
|
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Service cost for benefits earned
|
|
$
|
8,463
|
|
|
$
|
9,513
|
|
|
$
|
25,390
|
|
|
$
|
28,539
|
|
Interest cost on benefits obligation
|
|
9,827
|
|
|
8,845
|
|
|
29,480
|
|
|
26,536
|
|
||||
Expected return on plan assets
|
|
(11,872
|
)
|
|
(12,815
|
)
|
|
(35,614
|
)
|
|
(38,444
|
)
|
||||
Prior service cost amortization
|
|
349
|
|
|
339
|
|
|
1,046
|
|
|
1,015
|
|
||||
Net actuarial loss amortization
|
|
1,279
|
|
|
3,202
|
|
|
3,835
|
|
|
9,606
|
|
||||
Pension plan cost (1)
|
|
$
|
8,046
|
|
|
$
|
9,084
|
|
|
$
|
24,137
|
|
|
$
|
27,252
|
|
(1)
|
The components of pension plan costs other than the service cost component are included in the line item "Other income" in the Statements of Operations after reimbursements from the Exchange and its subsidiaries.
|
|
|
Three months ended
|
|
Three months ended
|
||||||||||||||||
|
|
September 30, 2019
|
|
September 30, 2018
|
||||||||||||||||
(in thousands)
|
|
Before Tax
|
Income Tax
|
Net
|
|
Before Tax
|
Income Tax
|
Net
|
||||||||||||
Investment securities:
|
|
|
|
|
|
|
|
|
||||||||||||
AOCI (loss), beginning of period
|
|
$
|
1,030
|
|
$
|
216
|
|
$
|
814
|
|
|
$
|
(4,157
|
)
|
$
|
(873
|
)
|
$
|
(3,284
|
)
|
OCI (loss) before reclassifications
|
|
3,991
|
|
838
|
|
3,153
|
|
|
(624
|
)
|
(131
|
)
|
(493
|
)
|
||||||
Realized investment (gains) losses
|
|
(1,072
|
)
|
(225
|
)
|
(847
|
)
|
|
1
|
|
0
|
|
1
|
|
||||||
Impairment losses
|
|
31
|
|
7
|
|
24
|
|
|
0
|
|
0
|
|
0
|
|
||||||
OCI (loss)
|
|
2,950
|
|
620
|
|
2,330
|
|
|
(623
|
)
|
(131
|
)
|
(492
|
)
|
||||||
AOCI (loss), end of period
|
|
$
|
3,980
|
|
$
|
836
|
|
$
|
3,144
|
|
|
$
|
(4,780
|
)
|
$
|
(1,004
|
)
|
$
|
(3,776
|
)
|
|
|
|
|
|
|
|
|
|
||||||||||||
Pension and other postretirement plans:
|
|
|
|
|
|
|
|
|
||||||||||||
AOCI (loss), beginning of period
|
|
$
|
(152,632
|
)
|
$
|
(32,054
|
)
|
$
|
(120,578
|
)
|
|
$
|
(200,954
|
)
|
$
|
(42,201
|
)
|
$
|
(158,753
|
)
|
Amortization of prior service costs (1)
|
|
349
|
|
74
|
|
275
|
|
|
0
|
|
0
|
|
0
|
|
||||||
Amortization of net actuarial loss (1)
|
|
1,210
|
|
254
|
|
956
|
|
|
0
|
|
0
|
|
0
|
|
||||||
OCI
|
|
1,559
|
|
328
|
|
1,231
|
|
|
0
|
|
0
|
|
0
|
|
||||||
AOCI (loss), end of period
|
|
$
|
(151,073
|
)
|
$
|
(31,726
|
)
|
$
|
(119,347
|
)
|
|
$
|
(200,954
|
)
|
$
|
(42,201
|
)
|
$
|
(158,753
|
)
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total
|
|
|
|
|
|
|
|
|
||||||||||||
AOCI (loss), beginning of period
|
|
$
|
(151,602
|
)
|
$
|
(31,838
|
)
|
$
|
(119,764
|
)
|
|
$
|
(205,111
|
)
|
$
|
(43,074
|
)
|
$
|
(162,037
|
)
|
Investment securities
|
|
2,950
|
|
620
|
|
2,330
|
|
|
(623
|
)
|
(131
|
)
|
(492
|
)
|
||||||
Pension and other postretirement plans
|
|
1,559
|
|
328
|
|
1,231
|
|
|
0
|
|
0
|
|
0
|
|
||||||
OCI (loss)
|
|
4,509
|
|
948
|
|
3,561
|
|
|
(623
|
)
|
(131
|
)
|
(492
|
)
|
||||||
AOCI (loss), end of period
|
|
$
|
(147,093
|
)
|
$
|
(30,890
|
)
|
$
|
(116,203
|
)
|
|
$
|
(205,734
|
)
|
$
|
(43,205
|
)
|
$
|
(162,529
|
)
|
|
|
Nine months ended
|
|
Nine months ended
|
||||||||||||||||
|
|
September 30, 2019
|
|
September 30, 2018
|
||||||||||||||||
(in thousands)
|
|
Before Tax
|
Income Tax
|
Net
|
|
Before Tax
|
Income Tax
|
Net
|
||||||||||||
Investment securities:
|
|
|
|
|
|
|
|
|
||||||||||||
AOCI (loss), beginning of period
|
|
$
|
(9,169
|
)
|
$
|
(1,926
|
)
|
$
|
(7,243
|
)
|
|
$
|
3,410
|
|
$
|
716
|
|
$
|
2,694
|
|
OCI (loss) before reclassifications
|
|
17,185
|
|
3,609
|
|
13,576
|
|
|
(9,163
|
)
|
(1,924
|
)
|
(7,239
|
)
|
||||||
Realized investment (gains) losses
|
|
(4,229
|
)
|
(888
|
)
|
(3,341
|
)
|
|
412
|
|
86
|
|
326
|
|
||||||
Impairment losses
|
|
193
|
|
41
|
|
152
|
|
|
646
|
|
136
|
|
510
|
|
||||||
Cumulative effect of adopting ASU 2016-01 (2)
|
|
—
|
|
—
|
|
—
|
|
|
(85
|
)
|
(18
|
)
|
(67
|
)
|
||||||
OCI (loss)
|
|
13,149
|
|
2,762
|
|
10,387
|
|
|
(8,190
|
)
|
(1,720
|
)
|
(6,470
|
)
|
||||||
AOCI (loss), end of period
|
|
$
|
3,980
|
|
$
|
836
|
|
$
|
3,144
|
|
|
$
|
(4,780
|
)
|
$
|
(1,004
|
)
|
$
|
(3,776
|
)
|
|
|
|
|
|
|
|
|
|
||||||||||||
Pension and other postretirement plans:
|
|
|
|
|
|
|
|
|
||||||||||||
AOCI (loss), beginning of period
|
|
$
|
(155,749
|
)
|
$
|
(32,708
|
)
|
$
|
(123,041
|
)
|
|
$
|
(200,954
|
)
|
$
|
(42,201
|
)
|
$
|
(158,753
|
)
|
Amortization of prior service costs (1)
|
|
1,046
|
|
220
|
|
826
|
|
|
0
|
|
0
|
|
0
|
|
||||||
Amortization of net actuarial loss (1)
|
|
3,630
|
|
762
|
|
2,868
|
|
|
0
|
|
0
|
|
0
|
|
||||||
OCI
|
|
4,676
|
|
982
|
|
3,694
|
|
|
0
|
|
0
|
|
0
|
|
||||||
AOCI (loss), end of period
|
|
$
|
(151,073
|
)
|
$
|
(31,726
|
)
|
$
|
(119,347
|
)
|
|
$
|
(200,954
|
)
|
$
|
(42,201
|
)
|
$
|
(158,753
|
)
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total
|
|
|
|
|
|
|
|
|
||||||||||||
AOCI (loss), beginning of period
|
|
$
|
(164,918
|
)
|
$
|
(34,634
|
)
|
$
|
(130,284
|
)
|
|
$
|
(197,544
|
)
|
$
|
(41,485
|
)
|
$
|
(156,059
|
)
|
Investment securities
|
|
13,149
|
|
2,762
|
|
10,387
|
|
|
(8,190
|
)
|
(1,720
|
)
|
(6,470
|
)
|
||||||
Pension and other postretirement plans
|
|
4,676
|
|
982
|
|
3,694
|
|
|
0
|
|
0
|
|
0
|
|
||||||
OCI (loss)
|
|
17,825
|
|
3,744
|
|
14,081
|
|
|
(8,190
|
)
|
(1,720
|
)
|
(6,470
|
)
|
||||||
AOCI (loss), end of period
|
|
$
|
(147,093
|
)
|
$
|
(30,890
|
)
|
$
|
(116,203
|
)
|
|
$
|
(205,734
|
)
|
$
|
(43,205
|
)
|
$
|
(162,529
|
)
|
(1)
|
Effective January 1, 2019, amounts reclassified from AOCI related to amortization of prior service costs and net actuarial loss were recorded during interim periods. Prior to 2019, amounts reclassified for these items were recorded on an annual basis. These components are included in the computation of net periodic pension cost. See Note 9, "Postretirement Benefits", for additional information.
|
(2)
|
ASU 2016-01 required a reclassification of unrealized losses of equity securities from AOCI to retained earnings at January 1, 2018.
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
dependence upon our relationship with the Exchange and the management fee under the agreement with the subscribers at the Exchange;
|
•
|
dependence upon our relationship with the Exchange and the growth of the Exchange, including:
|
◦
|
general business and economic conditions;
|
◦
|
factors affecting insurance industry competition;
|
◦
|
dependence upon the independent agency system; and
|
◦
|
ability to maintain our reputation for customer service;
|
•
|
dependence upon our relationship with the Exchange and the financial condition of the Exchange, including:
|
◦
|
the Exchange's ability to maintain acceptable financial strength ratings;
|
◦
|
factors affecting the quality and liquidity of the Exchange's investment portfolio;
|
◦
|
changes in government regulation of the insurance industry;
|
◦
|
emerging claims and coverage issues in the industry; and
|
◦
|
severe weather conditions or other catastrophic losses, including terrorism;
|
•
|
costs of providing policy issuance and renewal services to the Exchange under the subscriber's agreement;
|
•
|
credit risk from the Exchange;
|
•
|
ability to attract and retain talented management and employees;
|
•
|
ability to ensure system availability and effectively manage technology initiatives;
|
•
|
difficulties with technology or data security breaches, including cyber attacks;
|
•
|
ability to maintain uninterrupted business operations;
|
•
|
factors affecting the quality and liquidity of our investment portfolio;
|
•
|
our ability to meet liquidity needs and access capital; and
|
•
|
outcome of pending and potential litigation.
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||||||||||
(dollars in thousands, except per share data)
|
|
2019
|
|
2018
|
|
% Change
|
|
2019
|
|
2018
|
|
% Change
|
||||||||||||
|
|
(Unaudited)
|
|
|
|
|
(Unaudited)
|
|
|
|
||||||||||||||
Operating income
|
|
$
|
105,907
|
|
|
$
|
96,695
|
|
|
9.5
|
|
%
|
|
$
|
288,639
|
|
|
$
|
269,585
|
|
|
7.1
|
|
%
|
Total investment income
|
|
13,606
|
|
|
8,431
|
|
|
61.4
|
|
|
|
33,053
|
|
|
20,801
|
|
|
58.9
|
|
|
||||
Interest expense, net
|
|
111
|
|
|
709
|
|
|
(84.3
|
)
|
|
|
832
|
|
|
1,864
|
|
|
(55.4
|
)
|
|
||||
Other income
|
|
100
|
|
|
54
|
|
|
86.1
|
|
|
|
195
|
|
|
156
|
|
|
25.2
|
|
|
||||
Income before income taxes
|
|
119,502
|
|
|
104,471
|
|
|
14.4
|
|
|
|
321,055
|
|
|
288,678
|
|
|
11.2
|
|
|
||||
Income tax expense
|
|
25,333
|
|
|
24,025
|
|
|
5.4
|
|
|
|
63,821
|
|
|
62,768
|
|
|
1.7
|
|
|
||||
Net income
|
|
$
|
94,169
|
|
|
$
|
80,446
|
|
|
17.1
|
|
%
|
|
$
|
257,234
|
|
|
$
|
225,910
|
|
|
13.9
|
|
%
|
Net income per share - diluted
|
|
$
|
1.80
|
|
|
$
|
1.54
|
|
|
17.0
|
|
%
|
|
$
|
4.92
|
|
|
$
|
4.32
|
|
|
13.9
|
|
%
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||||||
(dollars in thousands)
|
2019
|
2018
|
% Change
|
|
2019
|
2018
|
% Change
|
||||||||||||
|
(Unaudited)
|
|
|
|
(Unaudited)
|
|
|
||||||||||||
Policy issuance and renewal services
|
|
|
|
|
|
|
|
|
|
||||||||||
Direct and affiliated assumed premiums written by the Exchange
|
$
|
1,960,441
|
|
$
|
1,863,927
|
|
5.2
|
|
%
|
|
$
|
5,738,554
|
|
$
|
5,434,720
|
|
5.6
|
|
%
|
Management fee rate
|
24.2
|
%
|
24.2
|
%
|
|
|
|
24.2
|
%
|
24.2
|
%
|
|
|
||||||
Management fee revenue
|
474,427
|
|
451,070
|
|
5.2
|
|
|
|
1,388,730
|
|
1,315,202
|
|
5.6
|
|
|
||||
Change in allowance for management fee returned on cancelled policies (1)
|
0
|
|
291
|
|
NM
|
|
|
|
(2,807
|
)
|
(3,291
|
)
|
14.7
|
|
|
||||
Management fee revenue - policy issuance and renewal services, net
|
$
|
474,427
|
|
$
|
451,361
|
|
5.1
|
|
%
|
|
$
|
1,385,923
|
|
$
|
1,311,911
|
|
5.6
|
|
%
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Administrative services
|
|
|
|
|
|
|
|
|
|
||||||||||
Direct and affiliated assumed premiums written by the Exchange
|
$
|
1,960,441
|
|
$
|
1,863,927
|
|
5.2
|
|
%
|
|
$
|
5,738,554
|
|
$
|
5,434,720
|
|
5.6
|
|
%
|
Management fee rate
|
0.8
|
%
|
0.8
|
%
|
|
|
|
0.8
|
%
|
0.8
|
%
|
|
|
||||||
Management fee revenue
|
15,683
|
|
14,912
|
|
5.2
|
|
|
|
45,908
|
|
43,478
|
|
5.6
|
|
|
||||
Change in contract liability (2)
|
(1,241
|
)
|
(1,374
|
)
|
9.6
|
|
|
|
(3,293
|
)
|
(3,539
|
)
|
6.9
|
|
|
||||
Change in allowance for management fee returned on cancelled policies (1)
|
(12
|
)
|
(17
|
)
|
33.6
|
|
|
|
(39
|
)
|
(45
|
)
|
14.6
|
|
|
||||
Management fee revenue - administrative services, net
|
14,430
|
|
13,521
|
|
6.7
|
|
|
|
42,576
|
|
39,894
|
|
6.7
|
|
|
||||
Administrative services reimbursement revenue
|
142,730
|
|
140,172
|
|
1.8
|
|
|
|
431,305
|
|
432,642
|
|
(0.3
|
)
|
|
||||
Total revenue from administrative services
|
$
|
157,160
|
|
$
|
153,693
|
|
2.3
|
|
%
|
|
$
|
473,881
|
|
$
|
472,536
|
|
0.3
|
|
%
|
(1)
|
Management fees are returned to the Exchange when policies are cancelled mid-term and unearned premiums are refunded. We record an estimated allowance for management fees returned on mid-term policy cancellations. This estimated allowance has been allocated between the two performance obligations consistent with the revenue allocation proportion.
|
(2)
|
Management fee revenue - administrative services is recognized over time as the services are performed. See Part I, Item 1. "Financial Statements - Note 3, Revenue, of Notes to Financial Statements" contained within this report.
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
|||||||||||||||
(dollars in thousands)
|
2019
|
2018
|
% Change
|
|
2019
|
2018
|
% Change
|
|||||||||||
|
(Unaudited)
|
|
|
|
(Unaudited)
|
|
|
|||||||||||
Management fee revenue - policy issuance and renewal services, net
|
$
|
474,427
|
|
$
|
451,361
|
|
5.1
|
%
|
|
$
|
1,385,923
|
|
$
|
1,311,911
|
|
5.6
|
|
%
|
Service agreement revenue
|
7,155
|
|
7,072
|
|
1.2
|
|
|
20,754
|
|
21,297
|
|
(2.5
|
)
|
|
||||
|
481,582
|
|
458,433
|
|
5.0
|
|
|
1,406,677
|
|
1,333,208
|
|
5.5
|
|
|
||||
Cost of policy issuance and renewal services
|
390,105
|
|
375,259
|
|
4.0
|
|
|
1,160,614
|
|
1,103,517
|
|
5.2
|
|
|
||||
Operating income - policy issuance and renewal services
|
$
|
91,477
|
|
$
|
83,174
|
|
10.0
|
%
|
|
$
|
246,063
|
|
$
|
229,691
|
|
7.1
|
|
%
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||||||
(dollars in thousands)
|
2019
|
2018
|
% Change
|
|
2019
|
2018
|
% Change
|
||||||||||||
|
(Unaudited)
|
|
|
|
(Unaudited)
|
|
|
||||||||||||
Commissions:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total commissions
|
$
|
266,983
|
|
$
|
256,770
|
|
4.0
|
|
%
|
|
$
|
783,221
|
|
$
|
752,437
|
|
4.1
|
|
%
|
Non-commission expense: (1)
|
|
|
|
|
|
|
|
|
|
||||||||||
Underwriting and policy processing
|
$
|
37,497
|
|
$
|
35,645
|
|
5.2
|
|
%
|
|
$
|
115,942
|
|
$
|
112,052
|
|
3.5
|
|
%
|
Information technology
|
41,891
|
|
36,467
|
|
14.9
|
|
|
|
121,885
|
|
104,797
|
|
16.3
|
|
|
||||
Sales and advertising
|
12,501
|
|
13,226
|
|
(5.5
|
)
|
|
|
37,703
|
|
40,979
|
|
(8.0
|
)
|
|
||||
Customer service
|
8,006
|
|
7,041
|
|
13.7
|
|
|
|
24,342
|
|
21,822
|
|
11.5
|
|
|
||||
Administrative and other
|
23,227
|
|
26,110
|
|
(11.0
|
)
|
|
|
77,521
|
|
71,430
|
|
8.5
|
|
|
||||
Total non-commission expense
|
123,122
|
|
118,489
|
|
3.9
|
|
|
|
377,393
|
|
351,080
|
|
7.5
|
|
|
||||
Total cost of policy issuance and renewal services
|
$
|
390,105
|
|
$
|
375,259
|
|
4.0
|
|
%
|
|
$
|
1,160,614
|
|
$
|
1,103,517
|
|
5.2
|
|
%
|
(1)
|
2018 amounts have been reclassified between categories to conform to the current period presentation.
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||||||
(dollars in thousands)
|
2019
|
2018
|
% Change
|
|
2019
|
2018
|
% Change
|
||||||||||||
|
(Unaudited)
|
|
|
|
(Unaudited)
|
|
|
||||||||||||
Management fee revenue - administrative services, net
|
$
|
14,430
|
|
$
|
13,521
|
|
6.7
|
|
%
|
|
$
|
42,576
|
|
$
|
39,894
|
|
6.7
|
|
%
|
Administrative services reimbursement revenue
|
142,730
|
|
140,172
|
|
1.8
|
|
|
|
431,305
|
|
432,642
|
|
(0.3
|
)
|
|
||||
Total revenue allocated to administrative services
|
157,160
|
|
153,693
|
|
2.3
|
|
|
|
473,881
|
|
472,536
|
|
0.3
|
|
|
||||
Administrative services expenses
|
|
|
|
|
|
|
|
|
|
||||||||||
Claims handling services
|
124,566
|
|
122,205
|
|
1.9
|
|
|
|
376,061
|
|
377,854
|
|
(0.5
|
)
|
|
||||
Investment management services
|
8,088
|
|
7,834
|
|
3.3
|
|
|
|
25,273
|
|
24,607
|
|
2.7
|
|
|
||||
Life management services
|
10,076
|
|
10,133
|
|
(0.6
|
)
|
|
|
29,971
|
|
30,181
|
|
(0.7
|
)
|
|
||||
Operating income - administrative services
|
$
|
14,430
|
|
$
|
13,521
|
|
6.7
|
|
%
|
|
$
|
42,576
|
|
$
|
39,894
|
|
6.7
|
|
%
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||||||
(dollars in thousands)
|
|
2019
|
2018
|
|
% Change
|
|
2019
|
2018
|
|
% Change
|
||||||||||
|
|
(Unaudited)
|
|
|
|
|
(Unaudited)
|
|
|
|
||||||||||
Net investment income
|
|
$
|
8,652
|
|
$
|
7,659
|
|
|
13.0
|
%
|
|
$
|
25,199
|
|
$
|
21,583
|
|
|
16.8
|
%
|
Net realized investment gains (losses)
|
|
1,696
|
|
0
|
|
|
NM
|
|
|
5,501
|
|
(497
|
)
|
|
NM
|
|
||||
Net impairment losses recognized in earnings
|
|
(31
|
)
|
0
|
|
|
NM
|
|
|
(193
|
)
|
(646
|
)
|
|
70.1
|
|
||||
Equity in earnings of limited partnerships
|
|
3,289
|
|
772
|
|
|
NM
|
|
|
2,546
|
|
361
|
|
|
NM
|
|
||||
Total investment income
|
|
$
|
13,606
|
|
$
|
8,431
|
|
|
61.4
|
%
|
|
$
|
33,053
|
|
$
|
20,801
|
|
|
58.9
|
%
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Securities sold:
|
|
(Unaudited)
|
|
(Unaudited)
|
||||||||||||
Fixed maturities
|
|
$
|
1,072
|
|
|
$
|
(1
|
)
|
|
$
|
4,229
|
|
|
$
|
(412
|
)
|
Equity securities
|
|
(37
|
)
|
|
(52
|
)
|
|
(37
|
)
|
|
(111
|
)
|
||||
Equity securities change in fair value (1)
|
|
661
|
|
|
51
|
|
|
1,309
|
|
|
(78
|
)
|
||||
Miscellaneous
|
|
0
|
|
|
2
|
|
|
0
|
|
|
104
|
|
||||
Net realized investment gains (losses) (2)
|
|
$
|
1,696
|
|
|
$
|
0
|
|
|
$
|
5,501
|
|
|
$
|
(497
|
)
|
(1)
|
The fair value of our equity portfolio is based upon exchange traded prices provided by a nationally recognized pricing service.
|
(2)
|
See Part I, Item 1. "Financial Statements - Note 6, Investments, of Notes to Financial Statements" contained within this report for additional disclosures regarding net realized investment gains (losses).
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
(Unaudited)
|
|
(Unaudited)
|
||||||||||||
Private equity
|
|
$
|
3,273
|
|
|
$
|
639
|
|
|
$
|
2,265
|
|
|
$
|
705
|
|
Mezzanine debt
|
|
(65
|
)
|
|
125
|
|
|
(121
|
)
|
|
230
|
|
||||
Real estate
|
|
81
|
|
|
8
|
|
|
402
|
|
|
(574
|
)
|
||||
Equity in earnings of limited partnerships
|
|
$
|
3,289
|
|
|
$
|
772
|
|
|
$
|
2,546
|
|
|
$
|
361
|
|
(dollars in thousands)
|
|
September 30, 2019
|
|
% to total
|
|
December 31, 2018
|
|
% to total
|
||||||
|
|
(Unaudited)
|
|
|
|
|
|
|
||||||
Fixed maturities
|
|
$
|
680,633
|
|
|
81
|
%
|
|
$
|
748,523
|
|
|
88
|
%
|
Nonredeemable preferred stock
|
|
55,052
|
|
|
7
|
|
|
11,853
|
|
|
1
|
|
||
Limited partnerships:
|
|
|
|
|
|
|
|
|
||||||
Private equity
|
|
29,938
|
|
|
4
|
|
|
28,271
|
|
|
3
|
|
||
Mezzanine debt
|
|
900
|
|
|
0
|
|
|
1,152
|
|
|
0
|
|
||
Real estate
|
|
1,333
|
|
|
0
|
|
|
5,398
|
|
|
1
|
|
||
Other investments (1)
|
|
69,307
|
|
|
8
|
|
|
58,394
|
|
|
7
|
|
||
Total investments
|
|
$
|
837,163
|
|
|
100
|
%
|
|
$
|
853,591
|
|
|
100
|
%
|
(1)
|
Other investments primarily include agent loans. Agent loans are included with other assets in the Statements of Financial Position.
|
|
|
September 30, 2019
|
||||||||||||||||||||||
(in thousands)
|
|
(Unaudited)
|
||||||||||||||||||||||
Industry Sector
|
|
AAA
|
|
AA
|
|
A
|
|
BBB
|
|
Non- investment
grade
|
|
Fair
value
|
||||||||||||
Basic materials
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
3,207
|
|
|
$
|
3,062
|
|
|
$
|
7,456
|
|
|
$
|
13,725
|
|
Communications
|
|
0
|
|
|
5,018
|
|
|
8,407
|
|
|
8,693
|
|
|
20,485
|
|
|
42,603
|
|
||||||
Consumer
|
|
0
|
|
|
3,121
|
|
|
10,321
|
|
|
47,259
|
|
|
31,724
|
|
|
92,425
|
|
||||||
Diversified
|
|
0
|
|
|
0
|
|
|
0
|
|
|
1,055
|
|
|
461
|
|
|
1,516
|
|
||||||
Energy
|
|
0
|
|
|
0
|
|
|
4,577
|
|
|
17,577
|
|
|
9,305
|
|
|
31,459
|
|
||||||
Financial
|
|
0
|
|
|
4,320
|
|
|
60,758
|
|
|
87,481
|
|
|
10,114
|
|
|
162,673
|
|
||||||
Industrial
|
|
0
|
|
|
0
|
|
|
9,269
|
|
|
13,349
|
|
|
14,808
|
|
|
37,426
|
|
||||||
Structured securities (2)
|
|
93,166
|
|
|
138,054
|
|
|
14,056
|
|
|
1,151
|
|
|
0
|
|
|
246,427
|
|
||||||
Technology
|
|
0
|
|
|
3,022
|
|
|
8,229
|
|
|
12,772
|
|
|
7,349
|
|
|
31,372
|
|
||||||
Utilities
|
|
0
|
|
|
0
|
|
|
2,745
|
|
|
12,303
|
|
|
5,959
|
|
|
21,007
|
|
||||||
Total
|
|
$
|
93,166
|
|
|
$
|
153,535
|
|
|
$
|
121,569
|
|
|
$
|
204,702
|
|
|
$
|
107,661
|
|
|
$
|
680,633
|
|
(1)
|
Ratings are supplied by S&P, Moody’s, and Fitch. The table is based upon the lowest rating for each security.
|
(2)
|
Structured securities include residential mortgage-backed securities, commercial mortgage-backed securities, collateralized debt obligations, and asset-backed securities.
|
(in thousands)
|
|
September 30, 2019
|
|
December 31, 2018
|
||||
|
|
(Unaudited)
|
|
|
||||
Energy
|
|
$
|
1,886
|
|
|
$
|
—
|
|
Financial
|
|
47,753
|
|
|
11,853
|
|
||
Industrial
|
|
2,842
|
|
|
—
|
|
||
Utilities
|
|
2,571
|
|
|
—
|
|
||
Total
|
|
$
|
55,052
|
|
|
$
|
11,853
|
|
|
|
|
(in thousands)
|
|
2019
|
|
2018
|
||||
|
|
(Unaudited)
|
||||||
Net cash provided by operating activities
|
|
$
|
237,866
|
|
|
$
|
174,314
|
|
Net cash used in investing activities
|
|
(32,241
|
)
|
|
(52,975
|
)
|
||
Net cash used in financing activities
|
|
(127,170
|
)
|
|
(92,372
|
)
|
||
Net increase in cash and cash equivalents
|
|
$
|
78,455
|
|
|
$
|
28,967
|
|
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*
|
|
|
|
|
|
31.1*
|
|
|
|
|
|
31.2*
|
|
|
|
|
|
32*
|
|
|
|
|
|
101.INS*
|
|
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
|
|
|
101.SCH*
|
|
Inline XBRL Taxonomy Extension Schema Document.
|
|
|
|
101.CAL*
|
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
101.DEF*
|
|
Inline XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
|
101.LAB*
|
|
Inline XBRL Taxonomy Extension Label Linkbase Document.
|
|
|
|
101.PRE*
|
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
|
|
104*
|
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
|
|
|
|
Erie Indemnity Company
|
|
|
|
|
(Registrant)
|
|
|
|
|
|
|
|
|
|
|
|
Date:
|
October 24, 2019
|
By:
|
/s/ Timothy G. NeCastro
|
|
|
|
|
Timothy G. NeCastro, President & CEO
|
|
|
|
|
|
|
|
|
By:
|
/s/ Gregory J. Gutting
|
|
|
|
|
Gregory J. Gutting, Executive Vice President & CFO
|
|
1.
|
A new paragraph shall be added to Section 7.4 of the Plan and such new paragraph shall read as follows:
|
(a)
|
Such former Participant shall re-enter the Plan effective as of his date of reemployment as a Covered Employee, and his Service and Credited Service (for purposes of determining eligibility for early and disability retirement benefits only) earned during his prior period of Plan participation shall be reinstated on such date;
|
(b)
|
The Credited Service earned during such former Participant’s prior period of Plan participation, and which had been reflected in the lump sum paid to the former Participant, shall not be recognized for purposes of computing the amount of any benefit under the Plan;
|
(c)
|
The Compensation earned during such former Participant’s prior period of Plan participation, and which had been reflected in the lump sum paid to the former Participant, shall not be recognized for purposes of computing the amount of any benefit under the Plan; and
|
(d)
|
Such former Participant may not repay to the Plan all or any portion of the lump sum previously paid from the Plan to the former Participant.
|
2.
|
Section 7.8(a) of the Plan is amended and restated in its entirety to read as follows:
|
(a)
|
Notwithstanding any provision of the Plan to the contrary, if the actuarial equivalent present value of any retirement benefit, deferred vested pension or survivor benefit does not exceed $5,000 such benefit shall be paid as soon as practicable in a lump sum equal to such present value. Except as otherwise provided in Section 7.13, no lump sum payments shall be made if the actuarial equivalent present value of the benefit is in excess of this threshold.
|
3.
|
Article VII of the Plan is amended by adding a new section to the end thereof to read as follows:
|
7.13
|
2019 Lump Sum Payment Option Window. During the limited period defined herein, a Qualifying Participant (as defined below) may elect to receive his retirement benefit or deferred vested pension under the conditions set forth in this Section 7.13.
|
(a)
|
Definitions. For purposes of this Section 7.13, the terms set forth below shall have the meanings set forth below.
|
(i)
|
The term “Lump Sum Payment Option Window” shall mean the special election period during which a Qualifying Participant may elect to receive payment or commence to receive payment of his retirement benefit or deferred vested pension, even if such Qualifying Participant has not satisfied the eligibility conditions that would otherwise be required to commence payment of his retirement benefit or deferred vested pension (determined without regard to this Section 7.13). The Lump Sum Payment Option Window shall begin on September 17, 2019 and shall end on October 22, 2019.
|
(ii)
|
The term “Qualifying Participant” shall mean a Participant who satisfies each of the following:
|
(A)
|
has terminated employment with the Company and all Affiliates, for any reason other than death, on or before the Window Determination Date, and who has not re-entered employment as an employee of the Company or an Affiliate;
|
(B)
|
has not experienced an Annuity Starting Date or an actual or otherwise required beginning date under Section 7.10(b) of the Plan prior to the Window Election Commencement Date;
|
(C)
|
whose lump sum payment determined under the provisions of Section 7.8 is greater than $5,000;
|
(D)
|
whose retirement benefit or deferred vested pension can reasonably be determined based on data available to the Administrator; and
|
(E)
|
can be located by the Administrator after a diligent search.
|
(F)
|
Notwithstanding the foregoing, the term “Qualifying Participant” shall exclude:
|
(1)
|
any Participant who is not eligible for a retirement benefit or deferred vested pension benefit under the Plan;
|
(2)
|
any Participant for whom the Administrator has been provided with documentation evidencing that such Participant’s retirement benefit or deferred vested pension is subject to a qualified domestic relations order as defined in Section 414(p) of the Code or to a pending domestic relations order, temporary restraining order, or other lien (including the order of a court or other state authority assigning any portion of the Participant’s benefit to an alternate payee for which the Plan has not received a domestic relations order) at any time before the Window Election Commencement Date;
|
(3)
|
any alternate payee under a qualified domestic relations order;
|
(4)
|
any surviving Spouse or other designated Beneficiary who is eligible for a survivor benefit or a death benefit pursuant to any section of the Plan; and
|
(5)
|
any Participant whose participation in the Lump Sum Payment Option Window would administratively be impracticable, as the Administrator may advise the Company.
|
(iii)
|
The term “Special Benefit Election” shall mean the written election made by a Qualifying Participant, in accordance with such rules and procedures as the Administrator may apply to the Lump Sum Payment Option Window, to receive or commence to receive his retirement benefit or deferred vested pension pursuant to the Lump Sum Payment Option Window. For a Special Benefit Election to be valid, the Special Benefit Election for any married Participant must satisfy the requirements for spousal consent, if otherwise applicable under Section 7.6, the completed Special Benefit Election form must be signed and dated on or before October 22, 2019 and such election form must be received by the Administrator or its delegate within an
|
(iv)
|
The term “Window Determination Date” shall mean December 31, 2018.
|
(b)
|
Window Election Commencement Date. Notwithstanding any provision of the Plan to the contrary, any Qualifying Participant who makes a valid Special Benefit Election (as determined by the Administrator) shall receive distribution of his retirement benefit or deferred vested pension in the form of a lump sum or annuity (calculated as set forth below) effective as of December 1, 2019 (the “Window Election Commencement Date”), although the actual payment may be delayed to later in December, 2019 for administrative purposes.
|
(c)
|
Lump Sum Payment Determination. For any Qualifying Participant who makes a valid Special Benefit Election and elects to receive payment of his retirement benefit or deferred vested pension in the form of a lump sum, the lump sum payment shall be determined as follows:
|
(i)
|
Participants Otherwise Eligible for Immediate Commencement. With respect to a Qualifying Participant who is eligible for immediate commencement of payment as of the Window Election Commencement Date under the provisions of the Plan other than this Section 7.13, the lump sum payment shall be the greater of the actuarial equivalent present values of the following amounts, each determined by using the applicable interest rate promulgated by the Secretary of the Treasury under Section 417(e)(3)(C) of the Code for November 2018 and the mortality assumptions prescribed by the Secretary of the Treasury pursuant to Section 417(e)(3)(B) of the Code:
|
(A)
|
the Qualifying Participant’s retirement benefit or deferred vested pension under the Plan, payable in the form of a single life annuity as of his Normal Retirement Date; and
|
(B)
|
the Qualifying Participant’s retirement benefit or deferred vested pension under the Plan, payable in the form of a single life annuity as of the Window Election Commencement Date.
|
(ii)
|
Participants Not Otherwise Eligible for Immediate Commencement. With respect to a Qualifying Participant who is not eligible for immediate commencement of payment as of the Window Election Commencement Date under the provisions of the Plan other than this Section 7.13, the lump sum payment shall be the actuarial equivalent present value of the Qualifying Participant’s retirement benefit or deferred vested pension under the Plan, payable in the form of a single life annuity as of his Normal Retirement Date, determined by using the applicable interest rate promulgated by the Secretary of the Treasury under Section 417(e)(3)(C) of the Code for November 2018 and the mortality assumptions prescribed by the Secretary of the Treasury pursuant to Section 417(e)(3)(B) of the Code.
|
(d)
|
Immediate Annuity Payment. For any Qualifying Participant who makes a valid Special Benefit Election and elects to receive payment of his retirement benefit or deferred vested pension in a form other than a lump sum payment, the Qualifying Participant shall be entitled to elect payment in an immediately commencing annuity in the following optional forms and determined in accordance with the following provisions:
|
(A)
|
Forms. The optional forms from which the Qualifying Participant may elect payment of his immediately commencing annuity shall be all of the annuity payment forms that would otherwise have been available to such Qualifying
|
(B)
|
Early Reduction and Actuarial Factors. To the extent otherwise applicable under the Plan, actuarial factors for determining the reduction of the Qualifying Participant’s pension due to early commencement, and for determining actuarial equivalent benefits between available forms of annuity, shall be the factors that would have applied if the Qualifying Participant had made a valid election to commence payment of his retirement benefit or deferred vested pension under the Plan, with a benefit commencement date of the Window Election Commencement Date, and had elected the same form of immediately commencing annuity elected by the Qualifying Participant in his Special Benefit Election (all determined without regard to this Section 7.13).
|
(ii)
|
Participants Not Otherwise Eligible for Immediate Commencement. With respect to a Qualifying Participant who is not eligible for immediate commencement of payment as of the Window Election Commencement Date under the provisions of the Plan other than this Section 7.13, such Qualifying Participant’s retirement benefit or deferred vested pension shall be payable in one of the following optional annuity forms as the Qualifying Participant may elect, and the following early reduction factors and actuarial factors shall apply in the determination of such payment:
|
(A)
|
Forms. The optional forms from which the Qualifying Participant may elect payment of his immediately commencing annuity shall be the Automatic Surviving Spouse’s Pension described in Section 7.5 of the Plan, the 75% Joint and Survivor Option described in Section 7.7 with his Spouse as Beneficiary (provided, for both such options, the Qualifying Participant is married to a Spouse as of the Window Election Commencement Date) and the single life annuity described in Section 7.3 of the Plan.
|
(B)
|
Early Reduction and Actuarial Factors. Actuarial factors for determining the reduction to be applied to the Qualifying Participant’s retirement benefit or deferred vested pension at Normal Retirement Date to reflect early commencement, and for determining actuarial equivalent benefits between available forms of annuity, shall be based on the applicable interest rate promulgated by the Secretary of the Treasury
|
(e)
|
Form and Validity of Elections. All Special Benefit Elections must be made in writing on a form and in a manner provided by the Administrator, and mailed to the Administrator or its designee, as set forth on such form, on or before October 22, 2019. The Administrator shall have the authority to determine the validity and sufficiency of any Special Benefit Election made during the Lump Sum Payment Option Window. Notwithstanding the foregoing, any Special Benefit Election made by a Qualifying Participant on or before October 22, 2019, as set forth herein, may be revoked by the Qualifying Participant on or before November 30, 2019, in the form and manner provided by the Administrator.
|
(f)
|
Death After Valid Election and Before Commencement. Subject to the provisions of Article VIII, in the event a Qualifying Participant who has made a valid Special Benefit Election dies before the Window Election Commencement Date, the Qualifying Participant’s surviving Spouse, or in the absence of a surviving Spouse the Qualifying Participant’s estate, shall be paid the lump sum for which such Qualifying Participant was otherwise eligible under this Section 7.13. Such payment shall be made as soon as administratively practicable following the Window Election Commencement Date.
|
(g)
|
Administration. The Administrator shall have the authority to make and enforce all such rules and procedures as it deems necessary or proper for the administration of the Lump Sum Payment Option Window.
|
|
|
ERIE INDEMNITY COMPANY
|
|
|
|
ATTEST:
|
|
|
|
|
|
/s/ Amy Chapman
|
|
By: /s/ Gregory J. Gutting
|
|
|
|
|
|
Title: EVP & Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
Date:
|
October 24, 2019
|
|
|
|
|
|
|
/s/ Timothy G. NeCastro
|
|
|
Timothy G. NeCastro
|
|
|
President & CEO
|
Date:
|
October 24, 2019
|
|
|
|
|
|
|
/s/ Gregory J. Gutting
|
|
|
Gregory J. Gutting
|
|
|
Executive Vice President & CFO
|
(1)
|
The Quarterly Report on Form 10-Q of the Company for the quarterly period ended September 30, 2019 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Timothy G. NeCastro
|
|
Timothy G. NeCastro
|
|
President & CEO
|
|
|
|
/s/ Gregory J. Gutting
|
|
Gregory J. Gutting
|
|
Executive Vice President & CFO
|
|
|
|
|
|
October 24, 2019
|
|