EXHIBIT 99.1
STATEMENTS OF OPERATIONS
AND FINANCIAL POSITION AND OTHER INFORMATION
WILL FOLLOW
ERIE INDEMNITY COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
Three months ended June 30, Six months endedd June30,
(unaudited) (unaudited)
2003 2002 2003 2002
---------------------------- ---------------------------
OPERATING REVENUE:
Management Fee Revenue $ 232,737 $ 206,575 $ 439,983 $ 384,827
Premiums Earned 47,219 40,434 92,401 77,653
Service Agreement Revenue 6,863 7,776 13,347 15,118
---------- ---------- ---------- ----------
Total operating revenue $ 286,819 $ 254,785 $ 545,731 $ 477,598
---------- ---------- ---------- ----------
OPERATING EXPENSES:
Cost of Management Operations $ 170,087 $ 147,504 $ 324,460 $ 276,296
Losses and Loss Expenses Incurred 39,364 34,050 76,864 63,387
Policy Acquisition and Other Underwriting Expenses 14,135 12,430 27,487 23,927
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Total operating expenses $ 223,586 $ 193,984 $ 428,811 $ 363,610
---------- ---------- ---------- ----------
OTHER INCOME AND EXPENSES:
Investment income, net of expenses $ 14,219 $ 14,133 $ 28,538 $ 26,837
Realized Gains (Losses) on Investments 3,376 (5,801) 3,969 (4,581)
Equity in (Losses) Earnings of Limited Partnerships (1,420) 2,221 (2,746) 307
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Total other income and expenses $ 16,175 $ 10,553 $ 29,761 $ 22,563
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Income before income taxes and equity in earnings of
Erie Family Life Insurance Company $ 79,408 $ 71,354 $ 146,681 $ 136,551
Less: Provision for Income Taxes 26,522 23,730 48,982 45,441
Equity in Earnings of Erie Family Life Insurance
Company, net of tax 1,572 202 2,659 917
---------- ---------- ---------- ----------
Net income $ 54,458 $ 47,826 $ 100,358 $ 92,027
========== ========== ========== ==========
Net income per share $ 0.77 $ 0.67 $ 1.41 $ 1.29
========== ========== ========== ==========
Weighted average shares outstanding 70,997 71,144 70,997 71,162
========== ========== ========== ==========
DIVIDENDS DECLARED
Class A non-voting common $ 0.19 $ 0.17 $ 0.38 $ 0.34
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Class B common $ 28.50 $ 25.50 $ 57.00 $ 51.00
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8
Erie Indemnity Company
CONSOLIDATED STATEMENTS OF OPERATIONS - SEGMENT BASIS
(Amounts in thousands, except per share data)
Three months ended June 30 Six months ended June 30
(unaudited) (unaudited)
2003 2002 2003 2002
-------------------------- ------------------------
MANAGEMENT OPERATIONS
Management fee revenue $ 232,737 $ 206,575 $ 439,983 $ 384,827
Service agreement revenue 6,863 7,776 13,347 15,118
---------- ---------- ---------- ----------
Total revenue from management operations 239,600 214,351 $ 453,330 $ 399,945
Cost of management operations 170,087 147,504 324,460 276,296
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Income from management operations $ 69,513 $ 66,847 $ 128,870 $ 123,649
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INSURANCE UNDERWRITING OPERATIONS
Premiums earned $ 47,219 $ 40,434 $ 92,401 $ 77,653
---------- ---------- ---------- ----------
Losses and loss adjustment expenses incurred 39,364 34,050 $ 76,864 $ 63,387
Policy acquisition and other underwriting expenses 14,135 12,430 27,487 23,927
---------- ---------- ---------- ----------
Total losses and expenses $ 53,499 $ 46,480 $ 104,351 $ 87,314
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Underwriting loss $ (6,280) $ (6,046) $ (11,950) $ (9,661)
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INVESTMENT OPERATIONS
Net investment income $ 14,219 $ 14,133 $ 28,538 $ 26,837
Net realized gains (losses) on investments 3,376 (5,801) 3,969 (4,581)
Equity in (losses) earnings of limited partnerships (1,420) 2,221 (2,745) 307
Equity in earnings of Erie Family Life Insurance Company 1,690 218 2,859 986
---------- ---------- ---------- ----------
Net revenue from investment operations $ 17,865 $ 10,771 $ 32,621 $ 23,549
Income before income taxes $ 81,098 $ 71,572 $ 149,541 $ 137,537
Provision for income taxes 26,640 23,746 49,183 45,510
---------- ---------- ---------- ----------
Net income $ 54,458 $ 47,826 $ 100,358 $ 92,027
========== ========== ========== ==========
Net income per share $ 0.77 $ 0.67 $ 1.41 $ 1.29
========== ========== ========== ==========
Net income excluding net realized gains (losses) and
related taxes $ 52,264 $ 51,596 $ 97,778 $ 95,005
========== ========== ========== ==========
WEIGHTED AVERAGE SHARES OUTSTANDING 70,997 71,143 70,997 71,162
========== ========== ========== ==========
Erie Indemnity Company
CONSOLIDATED STATEMENTS OF OPERATIONS - SEGMENT BASIS - Continued
(Dollars in thousands)
The table below reconciles the Company's GAAP-basis net income to net income
excluding net realized gains or losses and related income taxes. Management
believes this measure assists the financial statement reader in interpreting and
evaluating the financial results of the Company by removing the effects of gain
or losses from investment sales, which could significantly impact the Company's
financial results from one period to another based on the timing of investment
sales and resulting gains or losses, which may or may not be recurring.
Three months ended June 30 Six months ended June 30
(unaudited) (unaudited)
2003 2002 2003 2002
--------------------------- -------------------------
Net income $ 54,458 $ 47,826 $ 100,358 $ 92,027
Net realized gains (losses) on investments 3,376 (5,801) 3,969 (4,581)
Income tax (expense) benefit on realized gains (losses) (1,182) 2,031 (1,389) 1,603
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Realized gains (losses) net of income tax (expense)
benefit 2,194 (3,770) 2,580 (2,978)
---------- ---------- ---------- ----------
Net income excluding net realized gains (losses) and
related taxes $ 52,264 $ 51,596 $ 97,778 $ 95,005
========== ========== ========== ==========
9
Erie Indemnity Company
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Amounts in thousands, except per share data)
June 30 December 31
2003 2002
(unaudited)
------------ -----------
ASSETS
Investments
Fixed maturities $ 784,566 $ 708,068
Equity securities
Preferred stock 155,796 157,563
Common stock 40,774 36,515
Other invested assets 106,437 96,613
----------- -----------
Total investments $ 1,087,573 $ 998,759
Cash and cash equivalents $ 139,820 $ 85,712
Equity in Erie Family Life Insurance Company 59,434 48,545
Premiums receivable from policyholders 268,074 239,704
Receivables from affiliates 928,412 829,049
Other assets 168,024 155,907
----------- -----------
Total assets $ 2,651,337 $ 2,357,676
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LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Unpaid losses and loss adjustment expenses $ 780,837 $ 717,015
Unearned premiums 439,214 393,091
Other liabilities 330,123 260,198
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Total liabilities $ 1,550,174 $ 1,370,304
Total shareholders' equity $ 1,101,163 $ 987,372
----------- -----------
Total liabilities and shareholders' equity $ 2,651,337 $ 2,357,676
=========== ===========
Book value per share $15.51 $13.91
Shares outstanding 70,997 70,997
10
Erie Indemnity Company
Segment Information
Management fee revenue by line of business:
Three months ended June 30 % Six months ended June 30 %
2003 2002 Change 2003 2002 Change
(In thousands) ------------------------------------------------------------------------------------
Private passenger auto $ 117,549 $ 107,330 9.5% $ 222,755 $ 201,844 10.4%
Commercial auto 20,110 17,718 13.5 39,107 34,185 14.4
Homeowners 39,718 33,541 18.4 67,530 56,313 19.9
Commercial multi-peril 26,392 24,036 9.8 51,445 45,372 13.4
Workers' compensation 20,247 17,674 14.6 42,628 35,778 19.1
All other lines of business 9,721 6,276 54.9 17,918 11,335 58.1
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Total $ 233,737 $ 206,575 13.1% $ 441,383 $ 384,827 14.7%
Allowance for management
fee returned on cancelled
policies 1,000 0 0.0 1,400 0 0.0
---------------------------------------------------------------------------------
Total management fee revenue $ 232,737 $ 206,575 12.7% $ 439,983 $ 384,827 14.3%
=================================================================================
Growth rate of policies in force for Property and Casualty Group insurance operations:
All other
Private 12-mth. 12-mth. lines of 12-mth. Total 12-mth.
passenger growth growth personal growth Personal growth
Date auto rate Homeowners rate business rate Lines rate
- ------------------------------------------------------------------------------------------------------
12/31/2001 1,432,747 7.1% 1,075,816 9.0% 215,134 11.5% 2,723,697 8.2%
03/31/2002 1,469,617 8.3 1,104,806 10.1 222,061 12.2 2,796,484 9.3
06/30/2002 1,512,335 9.4 1,146,639 11.4 231,951 13.4 2,890,925 10.5
09/30/2002 1,554,425 10.4 1,190,651 13.1 240,410 14.4 2,985,486 11.8
12/31/2002 1,591,161 11.1 1,230,895 14.4 249,544 16.0 3,071,600 12.8
03/31/2003 1,623,429 10.5 1,263,118 14.3 257,327 15.9 3,143,874 12.4
06/30/2003 1,650,225 9.1 1,293,575 12.8 264,423 14.0 3,208,223 11.0
All other
12-mth. CML* 12-mth. 12-mth. lines of 12-mth. Total 12-mth.
CML* growth multi- growth Workers' growth commercial growth Commercial growth
auto rate peril rate comp. rate business rate Lines rate
- ----------------------------------------------------------------------------------------------------------------------------
12/31/2001 96,100 9.7% 166,214 11.6% 52,033 10.3% 71,539 9.9% 385,886 10.7%
03/31/2002 98,926 10.7 171,283 12.5 53,320 10.8 73,392 10.7 396,921 11.5
06/30/2002 102,447 11.6 179,761 13.9 55,607 11.9 75,884 11.7 413,699 12.6
09/30/2002 105,353 11.8 185,608 14.4 57,375 12.5 78,131 11.5 426,467 13.0
12/31/2002 108,069 12.5 190,787 14.8 58,930 13.3 79,772 11.5 437,558 13.4
03/31/2003 109,963 11.2 194,911 13.8 60,104 12.7 81,356 10.9 446,334 12.4
06/30/2003 112,911 10.2 201,614 12.2 61,932 11.4 83,826 10.5 460,283 11.3
12-mth.
Total growth
Date All lines rate
- -------------------------------
12/31/2001 3,109,583 8.5%
03/31/2002 3,193,405 9.6
06/30/2002 3,304,624 10.8
09/30/2002 3,411,953 11.9
12/31/2002 3,509,158 12.8
03/31/2003 3,590,208 12.4
06/30/2003 3,668,506 11.0
*CML = Commercial
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Policy retention trends for Property and Casualty Group insurance operations:
Private All other
passenger CML* CML* Workers' lines of
Date auto auto Homeowners multi-peril comp. business Total
- -------------------------------------------------------------------------------------------------------------------
12/31/2001 92.2% 90.5% 90.2% 88.0% 88.4% 88.2% 90.9%
03/31/2002 92.3 90.9 90.2 88.8 89.3 88.1 90.9
06/30/2002 92.4 91.1 90.4 89.0 89.5 88.3 91.0
09/30/2002 92.5 90.8 90.5 88.7 89.5 88.2 91.1
12/31/2002 92.6 91.0 90.5 88.7 89.4 88.5 91.2
03/31/2003 92.5 91.3 90.6 89.1 90.2 88.5 91.2
06/30/2003 92.2 91.1 90.5 88.4 89.4 88.4 91.0
*CML = Commercial
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 ended Six months ended
-------------------------- --------------------------
(In thousands) June 30, June 30, June 30, June 30,
Statutory Accounting Basis 2003 2002 2003 2002
-------------------------- --------------------------
(unaudited) (unaudited)
Premiums earned $ 832,147 $ 719,877 $ 1,634,794 $ 1,386,306
-------------------------- --------------------------
Losses and loss adjustment expenses $ 643,028 $ 601,741 $ 1,322,883 $ 1,117,656
Insurance underwriting and other expenses 266,195 246,679 508,865 466,009
-------------------------- --------------------------
Net underwriting loss $ (77,076) $ (128,543) $ (196,954) $ (197,359)
-------------------------- --------------------------
Net investment income 57,110 60,256 111,175 113,999
Net realized gains (losses) 111,569 (71,998) 78,214 (74,834)
Federal income tax benefit (5,151) (25,809) (46,681) (36,184)
-------------------------- --------------------------
Net loss $ 96,754 $ (114,476) $ 39,116 $ (122,010)
========================== ==========================
As of
(In thousands) June 30, December 31,
Statutory Accounting Basis 2003 2002
------------ ------------
(unaudited)
Cash and invested assets $ 6,585,491 $ 5,967,051
Total assets 7,633,674 7,007,803
=========== ===========
Claims and unearned premium reserves 4,316,262 3,962,218
Total liabilities 5,342,289 4,892,032
=========== ===========
Policyholders' surplus $ 2,291,385 $ 2,115,771
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