Erie Indemnity (ERIE) 8-K Erie Indemnity Company Reports First Quarter 2007 Results

Exhibit 99.2

ERIE INDEMNITY COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

(dollars in thousands, except per share data)

	Three		Three
	months		months
	ended		ended
	March 31,		March 31,
	2007		2006
	(Unaudited)
Operating revenue
Management fee revenue – net	$	216,020	$	220,102
Premiums earned		51,974		54,026
Service agreement revenue		7,418		7,592
Total operating revenue		275,412		281,720
Operating expenses
Cost of management operations		179,886		183,154
Losses and loss adjustment expenses incurred		32,234		30,053
Policy acquisition and other underwriting expenses		11,995		14,501
Total operating expenses		224,115		227,708
Investment income – unaffiliated
Investment income, net of expenses		13,978		15,000
Net realized gains on investments		1,890		784
Equity in earnings of limited partnerships		12,518		4,142
Total investment income – unaffiliated		28,386		19,926
Income before income taxes and equity in earnings of Erie Family Life Insurance Company		79,683		73,938
Provision for income taxes		24,592		25,077
Equity in earnings of Erie Family Life Insurance Company, net of tax		1,270		605
Net income	$	56,361	$	49,466
Net income per share:
Class A common stock – basic	$	0.97	$	0.81
Class A common stock – diluted		0.88		0.73
Class B common stock – basic and diluted		149.01		121.08
Weighted average shares outstanding:
Class A common stock – basic		57,691,289		60,630,395
Class A common stock – diluted		63,906,458		67,505,125
Class B common stock – basic and diluted		2,573		2,833
Dividends declared per share:
Class A common stock	$	0.40	$	0.36
Class B common stock		60.00		54.00

1

ERIE INDEMNITY COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS — SEGMENT BASIS

(amounts in thousands, except per share data)

	Three		Three
	months		months
	ended		ended
	March 31,		March 31,
	2007		2006
	(Unaudited)
Management Operations
Management fee revenue	$	228,645	$	232,935
Service agreement revenue		7,418		7,592
Total revenue from management operations		236,063		240,527
Cost of management operations		190,385		193,825
Income from management operations		45,678		46,702
Insurance Underwriting Operations
Premiums earned		51,974		54,026
Losses and loss adjustment expenses incurred		32,234		30,053
Policy acquisition and other underwriting expenses		14,121		16,663
Total losses and expenses		46,355		46,716
Underwriting gain		5,619		7,310
Investment Operations
Investment income, net of expenses		13,978		15,000
Net realized gains on investments		1,890		784
Equity in earnings of limited partnerships		12,518		4,142
Equity in earnings of Erie Family Life Insurance Company		1,366		651
Net revenue from investment operations		29,752		20,577
Income before income taxes		81,049		74,589
Provision for income taxes		24,688		25,123
Net income	$	56,361	$	49,466
Net income per share – Class A basic	$	0.97	$	0.81
Net income per share – Class A diluted		0.88		0.73
Net income per share – Class B basic and diluted		149.01		121.08
Weighted average shares outstanding - Class A diluted		63,906		67,505

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

2

ERIE INDEMNITY COMPANY

RECONCILIATION OF OPERATING INCOME TO NET INCOME

Definition on Non-GAAP and Operating Measures

We believe that investors’ understanding of our performance is enhanced by the disclosure of the following non-GAAP financial measure. Our 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.

We use operating income to evaluate the results of operations. It reveals trends in our 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. We believe it is useful for investors to evaluate these components separately and in the aggregate when reviewing our performance. 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 and does not reflect our overall profitability.

The following table reconciles operating income and net income for the periods ended March 31, 2007 and 2006:

	Three			Three
	months ended			months ended
	March 31,			March 31,
	2007			2006
	(Unaudited)			(Unaudited)
(in thousands, except per share data)
Operating income	$	55,133		$	48,956
Net realized gains on investments		1,890			784
Income tax expense on realized gains		(662	)		(274	)
Realized gains, net of income taxes		1,228			510
Net income	$	56,361		$	49,466
	Three months			Three months
	ended			ended
	March 31,			March 31,
		2007			2006
	(Unaudited)			(Unaudited)
Per Class A Share – Diluted
Operating income	$	0.86		$	0.72
Net realized gains on investments		0.03			0.01
Income tax expense on realized gains		(0.01	)		0.00
Realized gains, net of income taxes		0.02			0.01
Net income	$	0.88		$	0.73

3

ERIE INDEMNITY COMPANY

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(amounts in thousands, except per share data)

	March 31,		December 31,
	2007		2006
	(Unaudited)
ASSETS
Investments
Fixed maturities	$	836,323	$	836,738
Equity securities
Preferred stock		138,478		133,401
Common stock		116,492		117,246
Other invested assets		254,086		235,672
Total investments		1,345,379		1,323,057
Cash and cash equivalents		10,578		60,241
Equity in Erie Family Life Insurance Company		59,033		57,162
Premiums receivable from policyholders		242,280		247,187
Receivables from affiliates		1,183,818		1,220,058
Other assets		139,257		131,656
Total assets	$	2,980,345	$	3,039,361
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Unpaid losses and loss adjustment expenses	$	1,048,909	$	1,073,570
Unearned premiums		418,949		424,282
Other liabilities		331,264		379,661
Total liabilities		1,799,122		1,877,513
Total shareholders’ equity		1,181,223		1,161,848
Total liabilities and shareholders’ equity	$	2,980,345	$	3,039,361
Book value per share	$	18.55	$	18.17
Shares outstanding		63,669		63,952

4

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

	Three			Three
	months ended			months ended
	March 31,			March 31,
	2007			2006
(dollars in thousands)
Property and Casualty Group Insurance Underwriting Operations (SAP Basis)
Direct underwriting results
Direct written premium	$	918,178		$	942,768
Premiums earned		942,157			983,829
Loss and loss adjustment expenses incurred		572,327			522,490
Policy acquisition and other underwriting expenses		257,102			301,474
Total losses and expenses		829,429			823,964
Direct underwriting income		112,728			159,865
Nonaffiliated reinsurance underwriting results
Assumed voluntary-less ceded retrocessions		(2,898	)		689
Assumed involuntary		(1,364	)		(10,295	)
Less: Ceded		7,815			7,199
Nonaffiliated reinsurance underwriting loss		(12,077	)		(16,805	)
Net Underwriting Gain (SAP Basis)	$	100,651		$	143,060
Erie Indemnity Insurance Underwriting Operations (SAP to GAAP Basis)
Percent of pool assumed by the Indemnity Company		5.50	%		5.50	%
Indemnity preliminary underwriting gain (SAP Basis)	$	5,536		$	7,868
Excess-of-loss changes to recoveries under the agreement		0			(145	)
SAP to GAAP adjustments		83			(413	)
Indemnity Underwriting Gain before tax (GAAP Basis)	$	5,619		$	7,310
Property & Casualty Group (SAP Basis)
Net basis
Loss and LAE ratio		62.3	%		54.9	%
Underwriting ratio		27.1			31.7
Policyholder dividends ratio		0.2			(0.1	)
Statutory combined ratio		89.6			86.5
Adjusted combined ratio, excluding profit component		85.5			82.3
Direct business
Loss ratio points from prior accident year reserve development –redundancy		(10.3	)		(7.9	)
Loss ratio points from salvage and subrogation recoveries collected		(3.1	)		(3.1	)
Total loss ratio points from prior accident years		(13.4	)		(11.0	)
Loss ratio points from catastrophes		0.5			0.6
Erie Indemnity Company
GAAP combined ratio		89.2			86.5
GAAP loss ratio points from catastrophes		0.5			0.6

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		Three
	months ended		months ended
	March 31,		March 31,
	2007		2006
(in thousands)
Statutory Accounting Basis	(Unaudited)
Premiums earned	$	889,551	$	928,408
Losses, loss adjustment expenses and
underwriting expenses		794,427		793,147
Net underwriting gain		95,124		135,261
Total investment income		136,646		126,006
Income before income taxes		231,770		261,267
Federal income tax expense		71,992		89,020
Net income	$	159,778	$	172,247

	As of		As of
	March 31,		December 31,
	2007		2006
(in thousands)
Statutory Accounting Basis	(Unaudited)
Cash and invested assets	$	8,655,560	$	8,494,655
Other assets		1,024,599		1,021,489
Total assets	$	9,680,159	$	9,516,144
Claims and unearned premium reserves	$	4,931,575	$	4,993,365
Other liabilities		495,048		435,683
Total liabilities		5,426,623		5,429,048
Policyholders’ surplus		4,253,536		4,087,096
Total liabilities and policyholders’ surplus	$	9,680,159	$	9,516,144

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Management fee revenue by major lines of business – Segment basis:

	Three months			Three months
	ended			ended
	March 31,			March 31,			%
	2007			2006			Change
(in thousands)
Private passenger auto	$	108,676		$	111,055			-2.1	%
Commercial auto		20,792			21,198			-1.9
Homeowners		37,093			36,656			1.2
Commercial multi-peril		28,764			29,436			-2.3
Workers’ compensation		22,976			24,316			-5.5
All other lines of business		11,244			10,674			5.3
		229,545			233,335			-1.6	%
Change in allowance for management fee returned on cancelled policies		(900	)		(400	)
Management fee revenue, net of allowance	$	228,645		$	232,935			-1.8	%
Management fee rate		25.00	%		24.75	%

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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
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
09/30/2006		1,636,947		(0.9	)		1,373,763		1.4			298,361		4.6			3,309,071		0.5
12/31/2006		1,633,882		(0.4	)		1,377,965		1.8			301,497		5.2			3,313,344		1.0
03/31/2007		1,635,714		0.0			1,384,856		2.1			305,591		5.4			3,326,161		1.3

			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
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
09/30/2006		119,555		0.8			217,763		2.3			54,379		(4.4	)		92,687		2.9			484,384		1.2
12/31/2006		119,801		0.9			218,542		2.4			53,923		(4.1	)		92,687		2.7			484,953		1.3
03/31/2007		119,907		1.1			219,300		2.3			53,498		(3.2	)		92,857		2.8			485,562		1.5

			12-mth.
	Total All		growth
Date	lines		rate
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
09/30/2006		3,793,455		0.6
12/31/2006		3,798,297		1.0
03/31/2007		3,811,723		1.3

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
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
09/30/2006		90.5			87.8			89.2			86.0			85.8			86.7			89.2
12/31/2006		90.8			87.7			89.4			86.0			85.7			87.1			89.5
03/31/2007		91.0			88.0			89.7			86.1			86.2			87.2			89.7

CML* = Commercial

9

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

	Private		12-mth.					12-mth.			All other		12-mth.					12-mth.
	passenger		percent					percent			personal		percent			Total Personal		percent
Date	auto		change			Homeowners		change			lines		change			lines		change
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	)
09/30/2006		1,122		(4.8	)		530		(2.9	)		348		0.3			806		(4.7	)
12/31/2006		1,110		(5.5	)		526		(3.1	)		349		0.3			797		(5.2	)
03/31/2007		1,100		(5.3	)		524		(2.8	)		349		0.0			791		(4.9	)

			12-mth.					12-mth.					12-mth.			Total		12-mth.
			percent					percent			All other		percent			CML*		percent
Date	CML* auto		change			Workers’ Comp.		change			CML* lines		change			lines		change
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	)
09/30/2006		2,705		(3.0	)		6,047		(0.9	)		1,669		(1.5	)		2,416		(3.0	)
12/31/2006		2,687		(3.4	)		5,985		(3.7	)		1,657		(2.8	)		2,393		(4.3	)
03/31/2007		2,664		(4.1	)		5,914		(5.7	)		1,641		(4.0	)		2,365		(5.4	)

			12-mth.
	Total All		percent
Date	lines		change
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	)
09/30/2006		1,011		(4.2	)
12/31/2006		1,001		(4.8	)
03/31/2007		991		(5.1	)

CML* = Commercial

10

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

	Three Months Ended												��	Three Months Ended
	March 31, 2007													March 31, 2006
				Prior Year**						Current							Prior Year**						Current
				Reserve						Accident							Reserve						Accident
				Development						Year							Development						Year
	Calendar*			Deficiency			Catastrophe			Excluding				Calendar*			Deficiency			Catastrophe			Excluding
	Year			(Redundancy)			Losses			Catastrophes				Year			(Redundancy)			Losses			Catastrophes
Private Passenger Auto		83.8	%		-14.4	%		0.0	%		98.2	%			83.8	%		-8.3	%		0.0	%		92.1	%
Homeowners		78.1	%		-9.1	%		0.5	%		86.7	%			70.0	%		-9.0	%		0.3	%		78.7	%
Other Personal Lines		78.9	%		-5.9	%		0.0	%		84.8	%			70.8	%		0.9	%		0.0	%		69.9	%
Total Personal		81.8	%		-12.6	%		0.5	%		93.9	%			79.5	%***		-8.1	%		0.4	%		87.2	%
Commercial Multi-Peril		93.7	%		-1.0	%		0.0	%		94.7	%			77.5	%		0.0	%		0.2	%		77.3	%
Commercial Auto		77.9	%		-12.3	%		0.0	%		90.2	%			74.0	%		-1.9	%		0.0	%		75.9	%
Workers’ Compensation		102.8	%		0.5	%		0.0	%		102.3	%			58.5	%		-19.4	%		0.0	%		77.9	%
Other Commercial Lines		45.4	%		-24.8	%		0.0	%		70.2	%			55.6	%		-21.0	%		0.0	%		76.6	%
Total Commercial		88.7	%		-5.2	%		0.0	%		93.9	%			69.6	%***		-7.5	%		0.2	%		76.9	%
Grand Total – Direct Business Only		84.0	%		-10.3	%		0.5	%		93.8	%			76.4	%***		-7.9	%		0.6	%		83.7	%
*The calendar year combined ratio represents the adjusted statutory combined ratio, which removes the profit component of the management fee earned by the Company.
**The prior accident year reserve development does not include the effects of salvage and subrogation recoveries.
*** Calendar year combined ratios in the first quarter of 2006 are shown exclusive of the write off of eCommerce assets. Including these in underwriting expenses would have contributed 4.0 points to the combined ratio calculations.

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