Erie Indemnity (ERIE) 8-K Results of Operations and Financial Condition

Exhibit 99.2

ERIE INDEMNITY COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share data)

	Three			Three		Six		Six
	months			months		months		months
	ended			ended		ended		ended
	June 30			June 30		June 30		June 30
	2006			2005		2006		2005
	(Unaudited)			(Unaudited)		(Unaudited)		(Unaudited)
Operating Revenue:
Management fee revenue-net	$	237,233		$	240,390	$	457,334	$	458,126
Premiums earned		53,825			54,166		107,852		107,814
Service agreement revenue		6,506			5,359		14,098		10,146
Total operating revenue		297,564			299,915		579,284		576,086
Operating Expenses:
Cost of management operations		189,939			187,232		373,093		355,172
Losses and loss adjustment expenses incurred		38,635			33,785		68,688		66,462
Policy acquisition and other underwriting expenses		12,079			12,356		26,580		24,200
Total operating expenses		240,653			233,373		468,361		445,834
Investment Income – Unaffiliated:
Investment income, net of expenses		14,603			15,934		29,603		30,402
Net realized (losses) gains on investments		(632	)		9,196		152		14,693
Equity in earnings of limited
partnerships		14,058			20,645		18,200		22,756
Total investment income — unaffiliated		28,029			45,775		47,955		67,851
Income before income taxes and equity in earnings of Erie Family Life Insurance Company		84,940			112,317		158,878		198,103
Provision for income taxes		30,015			37,581		55,092		66,310
Equity in earnings of Erie Family Life Insurance Company, net of tax		1,330			1,432		1,935		2,146
Net income	$	56,255		$	76,168	$	105,721	$	133,939
Net income per share — basic
Class A common stock	$	0.95		$	1.21	$	1.76	$	2.12
Class B common stock		144.90			183.89		265.30		322.67
Net income per share — diluted		0.86			1.10		1.59		1.92
Weighted average shares outstanding
Basic:
Class A common stock		59,063,615			62,618,604		59,842,796		62,771,739
Class B common stock		2,670			2,843		2,751		2,847
Diluted shares		65,554,096			69,525,438		66,527,677		69,688,173
Dividends declared per share
Class A common stock	$	0.36		$	0.325	$	0.72	$	0.65
Class B common stock		54.00			48.75		108.00		97.50

1

ERIE INDEMNITY COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS — SEGMENT BASIS

(Amounts in thousands, except per share data)

	Three			Three		Six		Six
	months			months		months		months
	ended			ended		ended		ended
	June 30			June 30		June 30		June 30
	2006			2005		2006		2005
	(Unaudited)			(Unaudited)		(Unaudited)		(Unaudited)
MANAGEMENT OPERATIONS
Management fee revenue	$	251,104		$	254,381	$	484,039	$	484,790
Service agreement revenue		6,506			5,359		14,098		10,146
Total revenue from management operations		257,610			259,740		498,137		494,936
Cost of management operations		201,028			198,129		394,854		375,844
Income from management operations		56,582			61,611		103,283		119,092
INSURANCE UNDERWRITING OPERATIONS
Premiums earned		53,825			54,166		107,852		107,814
Losses and loss adjustment expenses incurred		38,635			33,786		68,688		66,462
Policy acquisition and other underwriting expenses		14,861			15,450		31,524		30,192
Total losses and expenses		53,496			49,236		100,212		96,654
Underwriting gain		329			4,930		7,640		11,160
INVESTMENT OPERATIONS
Net investment income		14,603			15,934		29,603		30,402
Net realized (losses) gains on investments		(632	)		9,196		152		14,693
Equity in earnings of limited
partnerships		14,058			20,645		18,200		22,756
Equity in earnings of Erie Family Life Insurance Company		1,430			1,541		2,081		2,308
Net revenue from investment operations		29,459			47,316		50,036		70,159
Income before income taxes		86,370			113,857		160,959		200,411
Provision for income taxes		30,115			37,689		55,238		66,472
Net income	$	56,255		$	76,168	$	105,721	$	133,939
Net income per share – Class A basic	$	0.95		$	1.21	$	1.76	$	2.12
Net income per share – Class B basic		144.90			183.89		265.30		322.67
Net income per share — diluted		0.86			1.10		1.59		1.92
WEIGHTED AVERAGE SHARES OUTSTANDING — DILUTED		65,554			69,525		66,528		69,688

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

2

ERIE INDEMNITY COMPANY

RECONCILIATION OF OPERATING INCOME TO NET INCOME

Definition on Non-GAAP and Operating Measures

Management believes that investors’ understanding of the Company’s performance is enhanced by the disclosure of the following non-GAAP financial measure. The Company’s method of calculating this measure may differ from those used by other companies and therefore comparability may be limited.

Operating incomeis net income excluding realized capital gains and losses and related federal income taxes. Equity in earnings or losses of Erie Family Life Insurance Company and equity in earnings or losses of limited partnerships are not excluded from the calculation of operating income. Both of these categories include the respective investment’s realized capital gains and losses, as well as unrealized gains and losses, as these investments are accounted for under the equity method.

Net income is the GAAP measure that is most directly comparable to operating income.

The Company uses operating income to evaluate the 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. Realized capital gains and losses may vary significantly between periods and are generally driven by business decisions and economic developments such as capital market condition, the timing of which is unrelated to management services and the insurance underwriting processes of the Company. The Company believes it 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 periods ended June 30, 2006 and 2005:

	Three months			Three months			Six months			Six months
	ended			ended			ended			ended
	June 30			June 30			June 30			June 30
	2006			2005			2006			2005
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
(in thousands, except per share data)
Operating income	$	56,666		$	70,191		$	105,622		$	124,389
Net realized (losses) gains on investments		(632	)		9,196			152			14,693
Income tax benefit (expense) on realized (losses) gains		221			(3,219	)		(53	)		(5,143	)
Realized (losses) gains, net of income tax benefit (expense)		(411	)		5,977			99			9,550
Net income	$	56,255		$	76,168		$	105,721		$	133,939
	Three months			Three months			Six months			Six months
	Ended			ended			ended			ended
	June 30			June 30			June 30			June 30
		2006			2005			2006			2005
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Per Share Information – Diluted
Operating income	$	0.87		$	1.01		$	1.59		$	1.79
Net realized (losses) gains on investments		(0.01	)		0.13			0.00			0.21
Income tax benefit (expense) on realized (losses) gains		0.00			(0.04	)		0.00			(0.08	)
Realized (losses) gains, net of income tax benefit (expense)		(0.01	)		0.09			0.00			0.13
Net income	$	0.86		$	1.10		$	1.59		$	1.92

3

ERIE INDEMNITY COMPANY

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Amounts in thousands, except per share data)

	June 30		December 31
	2006		2005
	(Unaudited)
ASSETS
Investments
Fixed maturities	$	792,352	$	972,210
Equity securities
Preferred stock		137,667		170,773
Common stock		103,117		95,561
Other invested assets		203,616		158,044
Total investments		1,236,752		1,396,588
Cash and cash equivalents		15,711		31,666
Equity in Erie Family Life Insurance Company		51,267		55,843
Premiums receivable from policyholders		263,199		267,632
Receivables from affiliates		1,172,051		1,176,419
Other assets		170,867		173,113
Total assets	$	2,909,847	$	3,101,261
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Unpaid losses and loss adjustment expenses	$	1,016,943	$	1,019,459
Unearned premiums		449,092		454,409
Other liabilities		320,265		348,791
Total liabilities		1,786,300		1,822,659
Total shareholders’ equity		1,123,547		1,278,602
Total liabilities and shareholders’ equity	$	2,909,847	$	3,101,261
Book value per share	$	17.47	$	18.81
Shares outstanding		64,298		67,962

4

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

	Three months			Three months			Six months			Six months
	ended			ended			ended			ended
	June 30			June 30			June 30			June 30
	2006			2005			2006			2005
(Dollars in thousands)
Property and Casualty Group Insurance Underwriting Operations (SAP Basis)	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Direct underwriting results
Direct written premium	$	1,019,005		$	1,066,447		$	1,961,773		$	2,038,273
Premiums earned		988,196			1,012,644			1,972,025			2,003,927
Loss and loss adjustment expenses incurred		703,672			604,506			1,226,162			1,178,558
Policy acquisition and other underwriting expenses		283,868			293,506			585,342			564,119
Total losses and expenses		987,540			898,012			1,811,504			1,742,677
Direct underwriting income		656			114,632			160,521			261,250
Nonaffiliated reinsurance underwriting results
Assumed voluntary-less ceded retrocessions		4,455			5,518			5,144			1,899
Assumed involuntary		17,366			(5,383	)		7,071			(13,172	)
Ceded		2,412			8,177			9,610			12,024
Nonaffiliated reinsurance underwriting gain (loss)		19,409			(8,042	)		2,605			(23,297	)
Net Underwriting Gain (SAP Basis)	$	20,065		$	106,590		$	163,126		$	237,953
Erie Indemnity Insurance Underwriting Operations (SAP to GAAP Basis)
Percent of pool assumed by the Indemnity Company		5.50	%		5.50	%		5.50	%		5.50	%
Indemnity preliminary underwriting gain (SAP basis)	$	1,104		$	5,862		$	8,972		$	13,088
Excess-of-loss premiums ceded to the Exchange		0			(844	)		0			(1,687	)
Excess-of-loss changes to (charges) recoveries under the agreement		(392	)		166			(538	)		(173	)
SAP to GAAP adjustments		(383	)		(254	)		(794	)		(68	)
Indemnity Underwriting Gain before tax- (GAAP Basis)	$	329		$	4,930		$	7,640		$	11,160
Net Property & Casualty Group (SAP Basis)
Loss and LAE Ratio		69.9	%		60.6	%		62.5	%		60.1	%
Underwriting ratio		27.0			26.9			29.2			26.7
Policyholder dividends ratio		0.3			0.4			0.1			0.6
Statutory combined ratio		97.2			87.9			91.8			87.4
Adjusted combined ratio, excluding profit component		92.3			82.6			87.2			82.0
Loss ratio points from prior accident year reserve development – deficiency (redundancy)		0.3			(2.3	)		(3.9	)		(3.8	)
Loss ratio points from salvage and subrogation recoveries collected		(1.6	)		(1.4	)		(2.3	)		(2.2	)
Total loss ratio point impact from prior accident years		(1.3	)		(3.7	)		(6.2	)		(6.0	)
Loss ratio points from catastrophes		5.8			0.4			3.2			0.5
Erie Indemnity Company
GAAP combined ratio		99.4			90.9			92.9			89.7
GAAP loss ratio points from catastrophes		5.9			0.4			3.3			0.5

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

5Selected 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		Six months		Six months
	ended		ended		ended		ended
	June 30		June 30		June 30		June 30
	2006		2005		2006		2005
(In thousands)
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Statutory Accounting Basis
Premiums earned	$	940,026	$	957,895	$	1,868,434	$	1,890,689
Losses and loss adjustment expenses		656,954		580,315		1,166,819		1,134,309
Insurance underwriting and other expenses		263,705		276,248		546,987		529,875
Total underwriting operations expenses		920,659		856,563		1,713,806		1,664,184
Net underwriting gain		19,367		101,332		154,628		226,505
Total investment income		77,160		395,589		203,169		551,823
Net income before federal income tax		96,527		496,921		357,797		778,328
Federal income tax expense		31,602		163,957		120,625		252,155
Net income	$	64,925	$	332,964	$	237,172	$	526,173

(In thousands)
	As of		As of
	June 30		December 31
	2006		2005
Statutory Accounting Basis
	(Unaudited)
Cash and invested assets	$	8,171,760	$	7,917,615
Other assets		1,175,144		1,152,648
Total assets	$	9,346,904	$	9,070,263
Claims and unearned premium reserves	$	5,060,930	$	5,058,764
Other liabilities		589,878		629,749
Total liabilities		5,650,808		5,688,513
Policyholders’ surplus		3,696,096		3,381,750
Total liabilities and policyholders’ surplus	$	9,346,904	$	9,070,263

6

Management fee revenue by major lines of business (Segment basis):

	Three months			Three months						Six months			Six months
	ended			ended						ended			ended
	June 30			June 30			%			June 30			June 30			%
	2006			2005			Change			2006			2005			Change
(Dollars in thousands)
Private passenger auto	$	117,381		$	120,285			-2.4	%	$	228,436		$	233,143			-2.0	%
Commercial auto		21,910			21,808			0.5			43,108			42,319			1.9
Homeowners		50,558			48,621			4.0			87,213			84,718			2.9
Commercial multi-peril		29,561			29,309			0.9			58,998			56,932			3.6
Workers’ compensation		20,620			22,015			-6.3			44,935			46,008			-2.3
All other lines of business		12,174			11,243			8.3			22,849			20,970			9.0
		252,204			253,281			-0.4	%		485,539			484,090			0.3	%
Change in allowance for management fee returned on cancelled policies		(1,100	)		1,100						(1,500	)		700
Management fee revenue, after changes in allowance	$	251,104		$	254,381			-1.3	%	$	484,039		$	484,790			-0.2	%
Management fee rate		24.75	%		23.75	%		4.2	%		24.75	%		23.75	%		4.2	%

7

Growth rates of policies in force for Property and Casualty Group insurance operations by major lines of business:

	Private		12-mth.					12-mth.					12-mth.			Total		12-mth.
	passenger		growth					growth			All other		growth			Personal		growth
Date	auto		rate			Homeowners		rate			personal lines		rate			lines		rate
06/30/2004		1,686,524		2.2	%		1,347,409		4.2	%		278,547		5.3	%		3,312,480		3.3	%
09/30/2004		1,682,561		1.0			1,350,899		2.6			278,707		3.4			3,312,167		1.9
12/31/2004		1,670,804		(0.1	)		1,347,671		1.5			278,974		2.4			3,297,449		0.8
03/31/2005		1,661,955		(1.0	)		1,343,803		0.6			279,927		1.4			3,285,685		(0.1	)
06/30/2005		1,658,278		(1.7	)		1,350,491		0.2			282,670		1.5			3,291,439		(0.6	)
09/30/2005		1,651,629		(1.8	)		1,354,487		0.3			285,134		2.3			3,291,250		(0.6	)
12/31/2005		1,640,563		(1.8	)		1,353,912		0.5			286,604		2.7			3,281,079		(0.5	)
03/31/2006		1,636,048		(1.6	)		1,356,885		1.0			289,964		3.6			3,282,897		(0.1	)
06/30/2006		1,637,472		(1.3	)		1,366,633		1.2			294,409		4.2			3,298,514		0.2

			12-mth.			CML*		12-mth.					12-mth.					12-mth.			Total		12-mth.
	CML*		growth			multi-		growth			Workers'		growth			All other		growth			CML*		growth
Date	auto		rate			peril		rate			comp.		rate			CML* lines		rate			lines		rate
06/30/2004		117,060		3.7	%		209,795		4.1	%		60,735		(1.9	)%		87,172		4.0	%		474,762		3.1	%
09/30/2004		117,090		2.4			210,012		2.4			59,863		(4.1	)		87,921		2.5			474,886		1.5
12/31/2004		117,287		1.8			209,623		1.5			58,931		(5.4	)		87,815		1.6			473,656		0.7
03/31/2005		117,382		1.4			209,619		1.3			57,949		(5.6	)		87,877		1.8			472,827		0.5
06/30/2005		118,445		1.2			212,100		1.1			57,398		(5.5	)		88,981		2.1			476,924		0.5
09/30/2005		118,555		1.3			212,939		1.4			56,877		(5.0	)		90,074		2.4			478,445		0.7
12/31/2005		118,728		1.2			213,347		1.8			56,218		(4.6	)		90,227		2.7			478,520		1.0
03/31/2006		118,587		1.0			214,461		2.3			55,254		(4.7	)		90,301		2.8			478,603		1.2
06/30/2006		119,471		0.9			217,134		2.4			54,871		(4.4	)		91,568		2.9			483,044		1.3

			12-mth.
	Total All		growth
Date	Lines		rate
06/30/2004		3,787,242		3.2	%
09/30/2004		3,787,053		1.8
12/31/2004		3,771,105		0.7
03/31/2005		3,758,512		(0.1	)
06/30/2005		3,768,363		(0.5	)
09/30/2005		3,769,695		(0.5	)
12/31/2005		3,759,599		(0.3	)
03/31/2006		3,761,500		0.1
06/30/2006		3,781,558		0.4

CML* = Commercial

8

Policy retention trends for Property and Casualty Group insurance operations by major lines of business:

	Private									CML*
	passenger			CML*						multi-			Workers'			All other
Date	auto			auto			Homeowners			peril			comp.			lines			Total All lines
06/30/2004		90.7	%		89.0	%		88.4	%		86.7	%		86.7	%		86.8	%		89.2	%
09/30/2004		90.3			88.5			87.9			86.0			86.2			86.0			88.7
12/31/2004		90.0			88.3			87.6			85.3			85.8			85.8			88.4
03/31/2005		89.9			88.2			87.6			85.5			85.9			85.5			88.3
06/30/2005		89.8			87.8			87.8			85.0			85.8			85.5			88.3
09/30/2005		89.9			88.0			88.0			85.1			86.0			85.6			88.4
12/31/2005		90.0			87.9			88.2			85.4			86.2			86.0			88.6
03/31/2006		90.1			88.0			88.6			85.9			86.0			86.2			88.8
06/30/2006		90.3			87.7			88.9			85.9			85.9			86.5			89.0

CML* = Commercial

9

Average premium per policy for Property and Casualty insurance operations by major lines of business:

	Private		12-mth.					12-mth.			All other		12-mth.					12-mth.
	passenger		growth					growth			personal		growth			Total Personal		growth
Date	auto		rate			Homeowners		rate			lines		rate			lines		rate
06/30/2004	$	1,158		7.4	%	$	510		19.4	%	$	328		13.9	%	$	824		9.9	%
09/30/2004		1,175		6.6			531		18.8			336		12.0			841		9.2
12/31/2004		1,190		6.1			546		17.4			347		11.9			855		8.5
03/31/2005		1,193		4.3			552		13.8			347		8.4			858		6.3
06/30/2005		1,186		2.4			549		7.6			346		5.5			851		3.3
09/30/2005		1,179		0.3			546		2.8			347		3.3			846		0.6
12/31/2005		1,174		(1.3	)		543		(0.5	)		348		0.3			841		(1.6	)
03/31/2006		1,161		(2.7	)		539		(2.4	)		349		0.6			832		(3.0	)
06/30/2006		1,140		(3.9	)		535		(2.6	)		348		0.6			818		(3.9	)

			12-mth.					12-mth.					12-mth.			Total		12-mth.
			growth					growth			All other		growth			CML*		growth
Date	CML* auto		rate			Workers’ Comp.		rate			CML* lines		rate			lines		rate
06/30/2004	$	2,746		5.3	%	$	5,438		10.1	%	$	1,646		6.1	%	$	2,403		6.0	%
09/30/2004		2,766		4.5			5,641		10.6			1,674		6.0			2,443		5.8
12/31/2004		2,790		4.2			5,820		12.8			1,706		7.6			2,487		6.9
03/31/2005		2,799		3.1			6,004		13.6			1,720		6.2			2,513		6.2
06/30/2005		2,780		1.2			6,102		12.2			1,708		3.8			2,503		4.2
09/30/2005		2,789		0.8			6,104		8.2			1,694		1.2			2,490		1.9
12/31/2005		2,781		(0.3	)		6,212		6.7			1,705		(0.1	)		2,501		0.6
03/31/2006		2,778		(0.8	)		6,270		4.4			1,710		(0.6	)		2,501		(0.5	)
06/30/2006		2,730		(1.8	)		6,143		0.7			1,676		(1.9	)		2,444		(2.4	)

			12-mth.
	Total All		growth
Date	lines		rate
06/30/2004	$	1,022		8.7	%
09/30/2004		1,042		8.1
12/31/2004		1,060		8.1
03/31/2005		1,066		6.4
06/30/2005		1,061		3.8
09/30/2005		1,055		1.2
12/31/2005		1,052		(0.8	)
03/31/2006		1,044		(2.1	)
06/30/2006		1,026		(3.3	)

CML* = Commercial

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

	Three months			Three months ended			Six months			Six months
	ended			June 30			ended			ended
	June 30			2005			June 30			June 30
		2006			—			2006			2005
Private passenger auto		96.0	%		90.2	%		91.8	%		89.5	%
Homeowners		102.0	%		68.3	%		87.3	%		67.8	%
Other personal lines		94.3	%		51.0	%		84.3	%		62.2	%
Total personal		97.6	%		83.1	%		90.3	%		82.8	%
Commercial multi-peril		93.1	%		73.9	%		87.3	%		66.8	%
Commercial auto		79.3	%		80.6	%		78.6	%		80.4	%
Workers’ compensation		94.0	%		98.6	%		77.8	%		90.6	%
Other commercial lines		90.3	%		45.6	%		75.1	%		57.3	%
Total commercial		89.4	%		81.3	%		81.4	%		76.9	%
Grand total-direct business only•		95.1	%		82.6	%		87.6	%		81.1	%

• The adjusted statutory combined ratio removes the profit component of the management fee earned by the Company.

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