Erie Indemnity (ERIE) 8-K Erie Indemnity Reports First Quarter 2012 Results

Exhibit 99.2

ERIE INDEMNITY COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(dollars in millions, except per share data)

	Three		Three
	months		months
	ended		ended
	March 31,		March 31,
Revenues	2012		2011
Premiums earned	$	1,087	$	1,030
Net investment income		108		105
Net realized investment gains		296		149
Net impairment losses recognized in earnings		0		0
Equity in earnings of limited partnerships		21		72
Other income		8		9
Total revenues		1,520		1,365
Benefits and expenses
Insurance losses and loss expenses		716		706
Policy acquisition and underwriting expenses		270		247
Total benefits and expenses		986		953
Income from operations before income taxes
and noncontrolling interest		534		412
Provision for income taxes		180		138
Net income		354		274
Less: Net income attributable to noncontrolling
interest in consolidated entity – Exchange		318		230
Net income attributable to Indemnity	$	36	$	44
Earnings Per Share
Net income attributable to Indemnity per share
Class A common stock – basic	$	0.76	$	0.88
Class A common stock – diluted	$	0.67	$	0.78
Class B common stock – basic and diluted	$	113.56	$	126.48
Weighted average shares outstanding attributable to
Indemnity – Basic
Class A common stock		47,749,799		49,789,056
Class B common stock		2,545		2,546
Weighted average shares outstanding attributable to
Indemnity – Diluted
Class A common stock		53,930,044		55,968,838
Class B common stock		2,545		2,546
Dividends declared per share
Class A common stock	$	0.5525	$	0.515
Class B common stock	$	82.875	$	77.25

ERIE INDEMNITY COMPANY

RESULTS OF THE ERIE INSURANCE GROUP’S OPERATIONS BY INTEREST (Unaudited)
(in millions)

															Eliminations of
															related party
	Indemnity			shareholder interest				Noncontrolling interest (Exchange)							transactions						Erie Insurance Group
				Three months ended							Three months ended				Three months ended						Three months ended
				March 31,							March 31,				March 31,						March 31,
	Percent			2012		2011		Percent			2012		2011		2012			2011			2012		2011
Management operations:
Management fee revenue, net		100.0	%	$	269	$	251				$	—	$	—	$	(269	)	$	(251	)	$	—	$	—
Service agreement revenue		100.0	%		7		8					—		—		—			—			7		8
Total revenue from management operations					276		259					—		—		(269	)		(251	)		7		8
Cost of management operations		100.0	%		230		211					—		—		(230	)		(211	)		—		—
Income from management operations before taxes					46		48					—		—		(39	)		(40	)		7		8
Property and casualty insurance operations:
Net premiums earned					—		—		100.0	%		1,069		1,014		—			—			1,069		1,014
Losses and loss expenses					—		—		100.0	%		692		683		(1	)		(1	)		691		682
Policy acquisition and other underwriting expenses					—		—		100.0	%		302		282		(41	)		(42	)		261		240
Income from property and casualty insurance operations before taxes					—		—					75		49		42			43			117		92
Life insurance operations: (1) (2)
Total revenue		21.6%(2)			—		10		78.4%(2)			43		34		0			0			43		44
Total benefits and expenses		21.6%(2)			—		7		78.4%(2)			34		24		0			0			34		31
Income from life insurance operations before taxes					—		3					9		10		0			0			9		13
Investment operations:
Net investment income					4		4					83		81		(3	)		(3	)		84		82
Net realized gains on investments					3		1					293		144		—			—			296		145
Net impairment losses recognized in earnings					0		0					0		0		—			—			0		0
Equity in earnings of limited partnerships					1		11					20		61		—			—			21		72
Income from investment operations before taxes					8		16					396		286		(3	)		(3	)		401		299
Income from operations before income taxes and noncontrolling interest					54		67					480		345		—			—			534		412
Provision for income taxes					18		23					162		115		-			-			180		138
Net income				$	36	$	44				$	318	$	230	$	-		$	-		$	354	$	274

(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.

(2) Prior to and through March 31, 2011, Indemnity retained a 21.6% ownership interest in EFL, which accrued to the Indemnity shareholder interest, and the Exchange retained a 78.4% ownership interest in EFL, which accrued to the interest of the subscribers (policyholders) of the Exchange, or noncontrolling interest. Due to the sale of Indemnity’s 21.6% ownership interest in EFL to the Exchange on March 31, 2011, 100% of EFL’s life insurance results accrue to the interest of the subscribers (policyholders) of the Exchange, or noncontrolling interest, after March 31, 2011.

1

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 Indemnity shareholder interest:

	Indemnity
	Shareholder interest
	Three months ended
	March 31,
(in millions, except per share data)	2012			2011
	(unaudited)
Operating income attributable to Indemnity	$	34		$	43
Net realized gains and impairments on investments		3			1
Income tax expense		(1	)		0
Realized gains and impairments, net of income taxes		2			1
Net income attributable to Indemnity	$	36		$	44
Per Indemnity Class A common share–diluted:
Operating income attributable to Indemnity	$	0.64		$	0.77
Net realized gains and impairments on investments		0.05			0.02
Income tax expense		(0.02	)		(0.01	)
Realized gains and impairments, net of income taxes		0.03			0.01
Net income attributable to Indemnity	$	0.67		$	0.78

2

ERIE INDEMNITY COMPANY

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(in millions)

	March 31,		December 31,
	2012		2011
	(Unaudited)
Assets
Investments-Indemnity
Available-for-sale securities, at fair value:
Fixed maturities	$	494	$	548
Equity securities		26		25
Trading securities, at fair value		29		27
Limited partnerships		204		208
Other invested assets		1		1
Investments-Exchange
Available-for-sale securities, at fair value:
Fixed maturities		7,483		7,292
Equity securities		621		564
Trading securities, at fair value		2,596		2,308
Limited partnerships		1,087		1,082
Other invested assets		19		19
Total investments		12,560		12,074
Cash and cash equivalents (Exchange portion of $171 and $174, respectively)		199		185
Premiums receivable from policyholders — Exchange		1,000		976
Reinsurance recoverable — Exchange		167		166
Deferred income taxes — Indemnity		18		19
Deferred acquisition costs — Exchange		482		487
Other assets (Exchange portion of $291 and $322, respectively)		406		441
Total assets	$	14,832	$	14,348
Liabilities and shareholders’ equity
Liabilities
Indemnity liabilities
Other liabilities		418		455
Exchange liabilities
Losses and loss expense reserves		3,451		3,499
Life policy and deposit contract reserves		1,689		1,671
Unearned premiums		2,196		2,178
Deferred income taxes		279		147
Other liabilities		123		105
Total liabilities		8,156		8,055
Indemnity’s shareholders’ equity		776		781
Noncontrolling interest in consolidated entity – Exchange		5,900		5,512
Total equity		6,676		6,293
Total liabilities, shareholders’ equity and noncontrolling interest	$	14,832	$	14,348

3