Erie Indemnity 8K Reports Full Year and Fourth Quarter 2014 Results | ERIE 26 Feb 15

Exhibit 99.2

Erie Indemnity Company

Consolidated Statements of Operations

(dollars in millions, except per share data)



	Three months ended December 31,						Twelve months ended December 31,
	2014			2013			2014			2013
Revenues	(Unaudited)
Premiums earned	$	1,382		$	1,267		$	5,344		$	4,898
Net investment income	111			106			446			422
Net realized investment gains	89			270			193			771
Net impairment losses recognized in earnings	(3		)	(3		)	(4		)	(13		)
Equity in earnings of limited partnerships	2			49			113			161
Other income	8			8			32			32
Total revenues	1,589			1,697			6,124			6,271
Benefits and expenses
Insurance losses and loss expenses	863			896			3,958			3,467
Policy acquisition and underwriting expenses	349			331			1,336			1,237
Total benefits and expenses	1,212			1,227			5,294			4,704

Income from operations before income taxes and noncontrolling interest	377			470			830			1,567
Provision for income taxes	124			156			257			519
Net income	$	253		$	314		$	573		$	1,048

Less: Net income attributable to noncontrolling interest in consolidated entity – Exchange	227			278			405			885

Net income attributable to Indemnity	$	26		$	36		$	168		$	163


Earnings Per Share
Net income attributable to Indemnity per share
Class A common stock – basic	$	0.54		$	0.75		$	3.59		$	3.46
Class A common stock – diluted	$	0.48		$	0.67		$	3.18		$	3.08
Class B common stock – basic	$	81		$	113		$	539		$	520
Class B common stock – diluted	$	81		$	113		$	538		$	519

Weighted average shares outstanding attributable to Indemnity – Basic
Class A common stock	46,189,068			46,520,232			46,247,876			46,660,651
Class B common stock	2,542			2,542			2,542			2,542

Weighted average shares outstanding attributable to Indemnity – Diluted
Class A common stock	52,601,010			52,715,338			52,616,234			52,855,757
Class B common stock	2,542			2,542			2,542			2,542

Dividends declared per share
Class A common stock	$	0.6810		$	0.6350		$	2.5860		$	2.4125
Class B common stock	$	102.1500		$	95.2500		$	387.9000		$	361.8750

Erie Indemnity Company

Results of the Erie Insurance Group's Operations by Interest (Unaudited)

(in millions)



	Indemnity shareholder interest					Noncontrolling interest (Exchange)						Eliminations of related party transactions						Erie Insurance Group
	Three months ended December 31,					Three months ended December 31,						Three months ended December 31,						Three months ended December 31,
	2014			2013		2014			2013			2014			2013			2014			2013
Management operations:
Management fee revenue, net	$	329		$	301	$	—		$	—		$	(329	)	$	(301	)	$	—		$	—
Service agreement revenue	8			8		—			—			—			—			8			8
Total revenue from management operations	337			309		—			—			(329		)	(301		)	8			8
Cost of management operations	302			268		—			—			(302		)	(268		)	—			—
Income from management operations before taxes	35			41		—			—			(27		)	(33		)	8			8
Property and casualty insurance operations:
Net premiums earned	—			—		1,361			1,247			—			—			1,361			1,247
Losses and loss expenses	—			—		843			870			(2		)	(1		)	841			869
Policy acquisition and underwriting expenses	—			—		370			355			(31		)	(36		)	339			319
Income from property and casualty insurance operations before taxes	—			—		148			22			33			37			181			59
Life insurance operations: ⁽¹⁾
Total revenue	—			—		48			53			(1		)	0			47			53
Total benefits and expenses	—			—		32			39			0			0			32			39
Income from life insurance operations before taxes	—			—		16			14			(1		)	0			15			14
Investment operations: ⁽¹⁾
Net investment income	4			4		87			82			(5		)	(4		)	86			82
Net realized gains on investments	0			0		88			261			—			—			88			261
Net impairment losses recognized in earnings	0			0		(3		)	(3		)	—			—			(3		)	(3		)
Equity in (losses) earnings of limited partnerships	(2		)	9		4			40			—			—			2			49
Income from investment operations before taxes	2			13		176			380			(5		)	(4		)	173			389
Income from operations before income taxes and noncontrolling interest	37			54		340			416			—			—			377			470
Provision for income taxes	11			18		113			138			—			—			124			156
Net income	$	26		$	36	$	227		$	278		$	—		$	—		$	253		$	314

(1) Earnings on life insurance related invested assets are integral to the evaluation of the life insurance operations because of the long duration of life products. On that basis, for presentation purposes, the life insurance operations in the table above include life insurance related investment results.

Erie Indemnity Company

Results of the Erie Insurance Group's Operations by Interest

(in millions)



	Indemnity shareholder interest				Noncontrolling interest (Exchange)						Eliminations of related party transactions						Erie Insurance Group
	Twelve months ended December 31,				Twelve months ended December 31,						Twelve months ended December 31,						Twelve months ended December 31,
	2014		2013		2014			2013			2014			2013			2014			2013
Management operations:
Management fee revenue, net	$	1,376	$	1,266	$	—		$	—		$	(1,376	)	$	(1,266	)	$	—		$	—
Service agreement revenue	31		31		—			—			—			—			31			31
Total revenue from management operations	1,407		1,297		—			—			(1,376		)	(1,266		)	31			31
Cost of management operations	1,184		1,088		—			—			(1,184		)	(1,088		)	—			—
Income from management operations before taxes	223		209		—			—			(192		)	(178		)	31			31
Property and casualty insurance operations:
Net premiums earned	—		—		5,260			4,820			—			—			5,260			4,820
Losses and loss expenses	—		—		3,859			3,365			(6		)	(5		)	3,853			3,360
Policy acquisition and underwriting expenses	—		—		1,502			1,387			(204		)	(187		)	1,298			1,200
(Loss) income from property and casualty insurance operations before taxes	—		—		(101		)	68			210			192			109			260
Life insurance operations: ⁽¹⁾
Total revenue	—		—		192			192			(2		)	(2		)	190			190
Total benefits and expenses	—		—		143			144			0			0			143			144
Income from life insurance operations before taxes	—		—		49			48			(2		)	(2		)	47			46
Investment operations: ⁽¹⁾
Net investment income	16		15		350			325			(16		)	(12		)	350			328
Net realized gains on investments	1		1		183			753			—			—			184			754
Net impairment losses recognized in earnings	0		0		(3		)	(12		)	—			—			(3		)	(12		)
Equity in earnings of limited partnerships	11		22		101			138			—			—			112			160
Income from investment operations before taxes	28		38		631			1,204			(16		)	(12		)	643			1,230
Income from operations before income taxes and noncontrolling interest	251		247		579			1,320			—			—			830			1,567
Provision for income taxes	83		84		174			435			—			—			257			519
Net income	$	168	$	163	$	405		$	885		$	—		$	—		$	573		$	1,048

Erie Indemnity Company

Reconciliation of Operating Income to Net Income

Reconciliation of operating income to net income

We disclose operating income, a non-GAAP financial measure, to enhance our investors’ understanding of our performance related to the Indemnity shareholder interest. Our method of calculating this measure may differ from those used by other companies, and therefore comparability may be limited.

Indemnity defines operating income as net income excluding realized capital gains and losses, impairment losses and related federal income taxes.

Indemnity uses operating income to evaluate the results of its operations. It reveals trends that may be obscured by the net effects of realized capital gains and losses including impairment losses. Realized capital gains and losses, including impairment losses, may vary significantly between periods and are generally driven by business decisions and economic developments such as capital market conditions which are not related to our ongoing operations. We are aware that the price to earnings multiple commonly used by investors as a forward-looking valuation technique uses operating income as the denominator. Operating income should not be considered as a substitute for net income prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and does not reflect Indemnity’s overall profitability.

The following table reconciles operating income and net income for the Indemnity shareholder interest:



	Indemnity Shareholder Interest
	Three months ended December 31,				Twelve months ended December 31,
(in millions, except per share data)	2014		2013		2014			2013
	(Unaudited)
Operating income attributable to Indemnity	$	26	$	36	$	167		$	162
Net realized gains and impairments on investments	0		0		1			1
Income tax expense	0		0		0			0
Realized gains and impairments, net of income taxes	0		0		1			1
Net income attributable to Indemnity	$	26	$	36	$	168		$	163

Per Indemnity Class A common share-diluted:
Operating income attributable to Indemnity	$	0.48	$	0.67	$	3.17		$	3.07
Net realized gains and impairments on investments	0.00		0.00		0.02			0.01
Income tax expense	0.00		0.00		(0.01		)	0.00
Realized gains and impairments, net of income taxes	0.00		0.00		0.01			0.01
Net income attributable to Indemnity	$	0.48	$	0.67	$	3.18		$	3.08

Erie Indemnity Company

Consolidated Statements of Financial Position

(in millions)



	December 31, 2014		December 31, 2013

Assets
Investments – Indemnity
Available-for-sale securities, at fair value:
Fixed maturities	$	564	$	526
Equity securities	25		50
Limited partnerships	113		146
Other invested assets	1		1
Investments – Exchange
Available-for-sale securities, at fair value:
Fixed maturities	9,007		8,162
Equity securities	850		819
Trading securities, at fair value	3,223		3,202
Limited partnerships	866		940
Other invested assets	20		20
Total investments	14,669		13,866

Cash and cash equivalents (Exchange portion of $422 and $403, respectively)	514		452
Premiums receivable from policyholders – Exchange	1,281		1,167
Reinsurance recoverable – Exchange	161		172
Deferred income taxes – Indemnity	37		2
Deferred acquisition costs – Exchange	595		566
Other assets (Exchange portion of $374 and $337, respectively)	501		451
Total assets	$	17,758	$	16,676

Liabilities and shareholders’ equity
Liabilities
Indemnity liabilities
Other liabilities	$	611	$	476
Exchange liabilities
Losses and loss expense reserves	3,853		3,747
Life policy and deposit contract reserves	1,812		1,758
Unearned premiums	2,834		2,598
Deferred income taxes	490		450
Other liabilities	175		97
Total liabilities	9,775		9,126

Indemnity's shareholders’ equity	703		734

Noncontrolling interest in consolidated entity – Exchange	7,280		6,816
Total equity	7,983		7,550
Total liabilities, shareholders’ equity and noncontrolling interest	$	17,758	$	16,676

Erie Indemnity (ERIE) 8-KErie Indemnity Reports Full Year and Fourth Quarter 2014 Results