Erie Indemnity (ERIE) 8-K Erie Indemnity Company Reports Fourth Quarter and Full Year 2004 Results

Exhibit No. 99.2
ERIE INDEMNITY COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share data)

	Three		Three			Twelve		Twelve
	Months		months			months		months
	ended		ended			ended		ended
	Dec. 31		Dec. 31			Dec. 31		Dec. 31
	2004		2003			2004		2003
OPERATING REVENUE:
Management fee revenue-net	$	208,549	$	195,284		$	893,087	$	830,069
Premiums earned		53,626		50,833			208,202		191,592
Service agreement revenue		5,649		7,113			21,855		27,127
Total operating revenue		267,824		253,230			1,123,144		1,048,788
OPERATING EXPENSES:
Cost of management operations		162,891		149,351			684,491		616,382
Losses and loss expenses incurred		40,579		37,397			153,220		152,984
Policy acquisition and other underwriting expenses		11,300		18,810			47,205		51,112
Total operating expenses		214,770		205,558			884,916		820,478
Investment income — Unaffiliated
Investment income, net of expenses		15,940		15,283			60,988		58,298
Net realized gains on investments		11,734		4,630			18,476		10,445
Equity in earnings (losses) of limited
partnerships		2,889		(566	)		8,655		(2,000	)
Total investment income — unaffiliated		30,563		19,347			88,119		66,743
Income before income taxes and equity in earnings of Erie Family
Life Insurance Co.		83,617		67,019			326,347		295,053
Provision for income taxes		23,275		26,130			105,140		102,237
Equity in earnings of Erie Family Life Insurance Company, net of tax		978		2,241			5,206		6,909
Net income	$	61,320	$	43,130		$	226,413	$	199,725
Net income per share — basic
Class A common stock	$	0.96	$	0.67		$	3.54	$	3.09
Class B common stock	$	146.36	$	102.36		$	539.88	$	474.19
Net income per share — diluted	$	0.87	$	0.61		$	3.21	$	2.81
Weighted average shares outstanding
Basic:
Class A common stock		63,046,985		64,089,906			63,508,873		64,075,506
Class B common stock		2,876		2,878			2,877		2,884
Diluted shares		69,984,804		71,094,167			70,492,292		71,094,167
DIVIDENDS DECLARED
Class A non-voting common	$	0.325	$	0.215		$	0.970	$	0.785
Class B common		48.75		32.25			145.50		117.75

1

ERIE INDEMNITY COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS — SEGMENT BASIS

(Amounts in thousands, except per share data)

	Three			Three			Twelve			Twelve
	months			months			months			months
	ended Dec. 31			ended Dec. 31			ended Dec. 31			ended Dec. 31
	2004			2003			2004			2003
MANAGEMENT OPERATIONS
Management fee revenue	$	220,687		$	206,651		$	945,066		$	878,380
Service agreement revenue		5,649			7,113			21,855			27,127
Total revenue from management operations		226,336			213,764			966,921			905,507
Cost of management operations		172,372			158,044			724,329			652,256
Income from management operations		53,964			55,720			242,592			253,251
INSURANCE UNDERWRITING OPERATIONS
Premiums earned		53,626			50,833			208,202			191,592
Losses and loss adjustment expenses incurred		40,579			37,397			153,220			152,984
Policy acquisition and other underwriting expenses		13,956			21,484			59,346			63,549
Total losses and expenses		54,535			58,881			212,566			216,533
Underwriting gain (loss)		(909	)		(8,048	)		(4,364	)		(24,941	)
INVESTMENT OPERATIONS
Net investment income		15,940			15,283			60,988			58,298
Net realized gains on investments		11,734			4,630			18,476			10,445
Equity in earnings (losses) of limited
partnerships		2,889			(566	)		8,655			(2,000	)
Equity in earnings of Erie Family Life Insurance Company		1,053			2,410			5,598			7,429
Net revenue from investment operations		31,616			21,757			93,717			74,172
Income before income taxes		84,671			69,429			331,945			302,482
Provision for income taxes		23,351			26,299			105,532			102,757
Net income	$	61,320		$	43,130		$	226,413		$	199,725
						��
Net income per share – Class A basic	$	0.96		$	0.67		$	3.54		$	3.09
Net income per share – Class B basic	$	146.36		$	102.36		$	539.88		$	474.19
Net income per share — diluted	$	0.87		$	0.61		$	3.21		$	2.81
WEIGHTED AVERAGE SHARES OUTSTANDING — DILUTED		69,985			71,094			70,492			71,094

Amounts presented on a segment basis are presented gross of intercompany/intersegment items

2

ERIE INDEMNITY COMPANY

RECONCILIATION OF OPERATING INCOME TO NET INCOME

(Amounts in thousands, except per share data)

Definition of Non-GAAP and Operating Measures

Operating income, a non-GAAP measure, is income excluding realized capital gains and losses, after tax. Realized capital gains and losses which are included in the Company’s equity in earnings of Erie Family Life Insurance Company and equity in earnings of limited partnerships are not excluded from net income to compute operating income. Net income is the GAAP measure that is most directly comparable to operating income. The Company’s method of calculating this measure may differ from those used by other companies and therefore comparability may be limited.

The Company uses operating income to evaluate their results of operations. It reveals trends in the Company’s management services, insurance underwriting and investment operations that may be obscured by the net effects of realized capital gains and losses. These items may vary significantly between periods and are generally driven by business decisions and economic developments such as capital market conditions, the timing of which is unrelated to management services and insurance underwriting processes of the Company. The Company believes operating income is useful for investors to evaluate these components separately and in the aggregate when reviewing the Company’s performance. The Company is aware that the price to earnings multiple commonly used by investors as a forward-looking valuation technique uses operating income as the denominator. Operating income should not be considered as a substitute for net income and does not reflect the overall profitability of the Company’s business.

The following table reconciles operating income and net income for the three and twelve months ended December 31, 2004 and 2003.

	Three months			Three months ended			Twelve months ended			Twelve months ended
	ended Dec. 31			Dec. 31			Dec. 31			Dec. 31
(in thousands)	(unaudited)			(unaudited)			(unaudited)			(unaudited)
	2004			2003			2004			2003
Operating income	$	53,693		$	40,121		$	214,404		$	192,936
Net realized gains on investments		11,734			4,630			18,476			10,445
Income tax expense on realized gains		(4,107	)		(1,621	)		(6,467	)		(3,656	)
Realized gains net of income tax expense		7,627			3,009			12,009			6,789
Net income	$	61,320		$	43,130		$	226,413		$	199,725
	Per share			Per share			Per share			Per share
	Information-diluted			Information-diluted			Information-diluted			Information-diluted
	Three months			Three months			Twelve months			Twelve months
	ended Dec. 31			ended Dec. 31			ended Dec. 31			ended Dec. 31
(in thousands)	(unaudited)			(unaudited)			(unaudited)			(unaudited)
		2004			2003			2004			2003
Operating income	$	0.76		$	0.56		$	3.04		$	2.71
Net realized gains on investments		0.17			0.07			0.26			0.15
Income tax expense on realized gains		(0.06	)		(0.02	)		(0.09	)		(0.05	)
Realized gains net of income tax expense		0.11			0.05			0.17			0.10
Net income	$	0.87		$	0.61		$	3.21		$	2.81

3

ERIE INDEMNITY COMPANY

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Amounts in thousands, except per share data)

	December 31		December 31
	2004		2003
ASSETS
Investments
Fixed maturities	$	974,512	$	879,361
Equity securities
Preferred stock		143,851		148,952
Common stock		58,843		40,451
Other invested assets		135,508		116,400
Total investments		1,312,714		1,185,164
Cash and cash equivalents		50,061		87,192
Equity in Erie Family Life Insurance Company		58,728		56,072
Premiums receivable from policyholders		275,721		266,957
Receivables from affiliates		1,145,238		1,024,146
Other assets		137,282		135,076
Total assets		2,979,744		2,754,607
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Unpaid losses and loss adjustment expenses		943,034		845,536
Unearned premiums		472,553		449,606
Other liabilities		297,276		295,295
Total liabilities		1,712,863		1,590,437
Total shareholders’ equity		1,266,881		1,164,170
Total liabilities and shareholders’ equity	$	2,979,744	$	2,754,607
Book value per share	$	18.14	$	16.40
Shares outstanding		69,852		70,997

4

Selected financial data of Erie Insurance Exchange:

The selected financial data below is derived from the Erie Insurance Exchange’s financial statements prepared in accordance with Statutory Accounting Principles. In the opinion of management, all adjustments consisting only of normal recurring accruals, considered necessary for a fair presentation have been included. The financial data set forth below is only a summary.

	Three months		Three months ended			Twelve months ended		Twelve months ended
	ended Dec. 31		Dec. 31			Dec. 31		Dec. 31
(In thousands)	2004		2003			2004		2003
Statutory Accounting Basis
Premiums earned	$	930,526	$	870,654		$	3,672,486	$	3,372,308
Losses and loss adjustment expenses		671,462		656,112			2,502,313		2,772,940
Insurance underwriting and other expenses		251,620		226,757			1,041,843		983,354
Net underwriting gain (loss)		7,444		(12,215	)		128,330		(383,986	)
Net investment income		80,209		60,364			282,388		232,677
Net realized gains		86,355		579,941			162,905		734,848
Federal income tax expense (benefit)		61,099		201,645			180,824		142,106
Net income (loss)	$	112,909	$	426,445		$	392,799	$	441,433
	As of		As of
(In thousands)	Dec. 31,		Dec. 31,
Statutory Accounting Basis		2004		2003
Cash and invested assets	$	7,199,447	$	7,024,796
Other assets		1,070,315		1,020,830
Total assets		8,269,762		8,045,626
Claims and unearned premium reserves		4,973,136		4,616,687
Other liabilities		492,568		999,854
Total liabilities		5,465,704		5,616,541
Policyholders’ surplus		2,804,058		2,429,085
Total liabilities and policyholders surplus	$	8,269,762	$	8,045,626

5

ERIE INDEMNITY COMPANY
RECONCILIATION OF PROPERTY AND CASUALTY GROUP TO INDEMNITY RESULTS

	Three months			Three months ended			Twelve months ended			Twelve months ended
	ended Dec. 31			Dec. 31			Dec. 31			Dec. 30
(Dollars in thousands)	2004			2003			2004			2003
Underwriting results of the Property and Casualty Group-(SAP Basis)
Direct underwriting results
Direct written premiums	$	912,859		$	862,296		$	3,997,330		$	3,672,419
Premiums earned		977,254			894,327			3,877,844			3,460,792
Loss and loss adjustment expense incurred		712,609			662,777			2,623,731			2,808,678
Policy acquisition and other underwriting expenses		263,340			235,459			1,105,028			1,023,177
Direct underwriting income (loss)		1,305			(3,909	)		149,085			(371,063	)
Nonaffiliated reinsurance underwriting results-net
Assumed voluntary-less ceded retrocessions		12,857			20,102			22,731			28,337
Assumed involuntary		(11,888	)		(23,140	)		(26,748	)		(30,164	)
Ceded reinsurance		(3,866	)		7,189			20,521			30,761
Nonaffiliated reinsurance underwriting income (loss)		4,835			(10,227	)		(24,538	)		(32,588	)
Net Underwriting Income (Loss) (SAP Basis)		6,140			(14,136	)		124,547			(403,651	)
ERIE INDEMNITY INSURANCE UNDERWRITING OPERATIONS
Percent of pool assumed by the Indemnity Company		5.50	%		5.50	%		5.50	%		5.50	%
Indemnity preliminary underwriting income (loss)		338			(777	)		6,850			(22,201	)
Excess-of-loss premiums ceded to the Exchange		(1,104	)		(230	)		(3,628	)		(2,530	)
Reinsurance (charges) recoveries under excess-of-loss		(1,652	)		(735	)		(7,740	)		6,461
SAP to GAAP adjustments		1,509			(6,305	)		154			(6,671	)
Indemnity Underwriting Income (Loss) – GAAP Basis		(909	)		(8,047	)		(4,364	)		(24,941	)
Net Property & Casualty Group (SAP Basis)
Loss and LAE Ratio		72.4			75.5			68.4			82.1
Underwriting ratio		28.0			26.3			26.8			26.9
Policyholder Dividends ratio		0.3			0.3			0.4			0.5
Statutory combined ratio		100.7			102.1			95.6			109.5
Adjusted combined ratio, excluding profit component		95.4			96.4			90.1			103.3
Loss ratio points from catastrophes		0.9			1.7			1.9			5.3
Loss ratio points from prior accident year reserve development-(redundancy) deficiency		0.9			(2.5	)		(3.0	)		0.1
Erie Indemnity Company
GAAP combined ratio		101.7			115.8			102.1			113.0
GAAP loss ratio points from catastrophes		0.9			1.7			1.9			5.2

SAP Basis represents statutory accounting principles as codified by the National Association of Insurance Commissioners (NAIC)

6Management fee revenue by line of business:

	Three months		Three months ended						Twelve months ended			Twelve months ended
	ended Dec. 31		Dec. 31						Dec. 31			Dec. 31
	(in thousands)		(in thousands)			%			(in thousands)			(in thousands)			%
	2004		2003			Change			2004			2003			Change
Private passenger auto	$	109,137	$	106,408			2.6	%	$	471,809		$	450,228			4.8	%
Commercial auto		17,692		16,906			4.6			77,648			74,022			4.9
Homeowners		42,241		37,706			12.0			174,856			148,197			18.0
Commercial multi-peril		23,535		21,797			8.0			103,837			96,370			7.7
Workers’ compensation		17,071		15,790			8.1			81,390			77,134			5.5
All other lines of business		9,411		8,344			12.8			39,626			35,429			11.8
		219,087		206,951			5.9	%		949,166			881,380			7.7	%
Allowance for management fee returned on cancelled policies		1,600		(300	)					(4,100	)		(3,000	)
Total management fee revenue	$	220,687	$	206,651			6.8	%	$	945,066		$	878,380			7.6	%

7

Growth rates of policies in force for Property and Casualty Group insurance operations:

	Private		12-mth.					12-mth.			All other		12-mth.			Total		12-mth.
	passenger		growth					growth			personal lines		growth			Personal		growth
Date	auto		rate			Homeowners		rate			of business		rate			lines		rate
12/31/02		1,591,161		11.1	%		1,230,895		14.4	%		249,544		16.0	%		3,071,600		12.8	%
03/31/03		1,623,439		10.5			1,263,118		14.3			257,327		15.9			3,143,874		12.4
06/30/03		1,650,225		9.1			1,293,575		12.8			264,423		14.0			3,208,223		11.0
09/30/03		1,666,285		7.2			1,316,775		10.6			269,640		12.2			3,252,700		9.0
12/31/03		1,672,621		5.1			1,327,842		7.9			272,547		9.2			3,273,010		6.6
03/31/04		1,678,496		3.4			1,335,763		5.8			275,970		7.2			3,290,229		4.7
06/30/04		1,686,524		2.2			1,347,409		4.2			278,547		5.3			3,312,480		3.3
09/30/04		1,682,561		1.0			1,350,899		2.6			278,707		3.4			3,312,167		1.9
12/31/04		1,670,804		(0.1	)		1,347,671		1.5			278,974		2.4			3,297,449		0.8

Growth rates of policies in force for Property and Casualty Group insurance operations:

			12-mth.			CML*		12-mth.					12-mth.			All other		12-mth.			Total		12-mth.
	CML*		growth			multi-		growth			Workers'		growth			CML* lines		growth			CML*		growth
Date	auto		rate			peril		rate			comp.		rate			of business		rate			lines		rate
12/31/02		108,069		12.5	%		190,787		14.8	%		58,930		13.3	%		79,772		11.5	%		437,558		13.4	%
03/31/03		109,963		11.2			194,911		13.8			60,104		12.7			81,356		10.9			446,334		12.4
06/30/03		112,911		10.2			201,614		12.2			61,932		11.4			83,826		10.5			460,283		11.3
09/30/03		114,339		8.5			205,127		10.5			62,396		8.8			85,789		9.8			467,651		9.7
12/31/03		115,171		6.6			206,533		8.3			62,282		5.7			86,409		8.3			470,395		7.5
03/31/04		115,760		5.3			206,937		6.2			61,378		2.1			86,344		6.1			470,419		5.4
06/30/04		117,060		3.7			209,795		4.1			60,735		(1.9	)		87,172		4.0			474,762		3.1
09/30/04		117,090		2.4			210,012		2.4			59,863		(4.1	)		87,921		2.5			474,886		1.5
12/31/04		117,287		1.8			209,623		1.5			58,931		(5.4	)		87815		1.6			473,656		0.7

Growth rates of policies in force for Property and Casualty Group insurance operations:

			12-mth.
	Total all		growth
Date	lines		rate
12/31/02		3,509,208		12.8	%
03/31/03		3,590,208		12.4
06/30/03		3,668,506		11.0
09/30/03		3,720,351		9.0
12/31/03		3,743,405		6.7
03/31/04		3,760,648		4.7
06/30/04		3,787,242		3.2
09/30/04		3,787,053		1.8
12/31/04		3,771,105		0.7

*CML = Commercial

8

Policy retention trends for Property and Casualty Group insurance operations:

	Private									CML*						All other
	passenger			CML*						multi-			Workers'			lines of
Date	auto			auto			Homeowners			peril			comp.			business			Total
12/31/02		92.6	%		91.0	%		90.5	%		88.7	%		89.4	%		88.5	%		91.2	%
03/31/03		92.5			91.3			90.6			89.1			90.2			88.5			91.2
06/30/03		92.2			91.1			90.5			88.4			89.4			88.4			90.0
09/30/03		91.9			90.4			90.1			88.0			88.9			88.4			90.6
12/31/03		91.6			89.8			89.5			87.5			88.1			88.2			90.2
03/31/04		91.2			89.7			89.0			87.6			88.1			87.5			89.8
06/30/04		90.7			89.0			88.4			86.7			86.7			86.8			89.2
09/30/04		90.3			88.5			87.9			86.0			86.2			86.0			88.7
12/31/04		90.0			88.3			87.6			85.3			85.8			84.9			88.4

*CML = Commercial

9

ERIE INDEMNITY COMPANY

PROPERTY & CASUALTY GROUP ADJUSTED COMBINED RATIO BY
MAJOR LINES OF BUSINESS (SAP BASIS)

	Quarter to date			Quarter to date			Year to date			Year to date
	Dec. 31			Dec. 31			Dec. 31			Dec. 31
	2004			2003			2004			2003
Private passenger auto		103.9	%		98.6	%		94.8	%		100.1	%
Home protector		61.3	%		62.5	%		73.1	%		101.0	%
Other personal lines		80.4	%		74.3	%		79.3	%		90.8	%
Total personal		92.1	%		89.3	%		89.0	%		100.1	%
Commercial multi-peril		81.5	%		144.1	%		78.8	%		122.6	%
Commercial auto		94.5	%		91.0	%		91.0	%		97.1	%
Workers’ compensation		142.3	%		87.9	%		109.9	%		112.7	%
Other commercial lines		59.3	%		44.9	%		71.4	%		70.1	%
Total commercial		101.7	%		106.9	%		91.0	%		111.7	%
Grand total-direct business only		94.9	%		94.4	%		89.6	%		103.4	%

10