Adjustments for Non-Cash Items (USD, thousands)

Stock-Based Compensation (USD, thousands)

Changes in Working Capital (USD, thousands)

Capital Expenditures (CapEx) (USD, thousands)

Proceeds from / Repayments of Debt (USD, thousands)

Share Repurchases (USD, thousands)

Dividend Payments (USD, thousands)

Net Change in Cash (USD, thousands)

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Total Revenue (USD, thousands)

Cost of Goods Sold (COGS) (USD, thousands)

Selling, General, and Administrative Expenses (USD, thousands)

Research and Development (R&D) (USD, thousands)

Depreciation and Amortization (D&A) (USD, thousands)

Interest Expense (USD, thousands)

Operating Income (EBIT) (USD, thousands)

Net Income (USD, thousands)

Earnings Per Share (EPS) - Basic (USD)

Earnings Per Share (EPS) - Diluted (USD)

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Management fee revenue - policy issuance and renewal services (USD, thousands)

Management fee revenue - administrative services (USD, thousands)

Administrative services reimbursement revenue (USD, thousands)

Service agreement revenue (USD, thousands)

Total operating revenue (USD, thousands)

Cost of operations - policy issuance and renewal services (USD, thousands)

Cost of operations - administrative services (USD, thousands)

Total operating expenses (USD, thousands)

Operating income (USD, thousands)

Net investment income (USD, thousands)

Net realized and unrealized investment gains (losses) (USD, thousands)

Net impairment losses recognized in earnings (USD, thousands)

Total investment income (USD, thousands)

Other income (USD, thousands)

Income before income taxes (USD, thousands)

Income tax expense (USD, thousands)

Net income (USD, thousands)

bee4810dd879a171fcbc52b0616efe203d0de84f5c52801fb05a5ecc0516fa93

The **impairment losses spiked in Q4 2023** primarily due to **higher current expected credit losses** and **increased impairments on available-for-sale securities**. Specifically, the losses included an increase of **$7.3 million** in current expected credit losses on loans receivable related to real estate development projects, along with **$2.4 million** in impairment losses from available-for-sale securities. These factors contrast sharply with the much lower impairment losses in Q4 2022, which were largely confined to minimal losses on available-for-sale securities.  **[0000922621-24-000006_erie-20231231.htm:50]** 

Why did impairment losses spike in Q4 2023?

The shift to **positive investment gains in Q4 2023** was driven primarily by **market value adjustments in the preferred stock portfolio**, which generated gains. This contrasted with the previous year's losses that were largely due to **disposals of equity securities, available-for-sale securities, and unfavorable market value adjustments on equity securities** in Q4 2022.  **[0000922621-24-000005_ex-99112312023.htm:1]** 

What caused the shift to positive investment gains in Q4 2023?

The **operating income surge in Q2 2024** was driven by several factors. **Higher management fee revenue**—notably, a **$127.5 million (20.1%)** increase in revenue from policy issuance and renewal services and **$1.4 million (9.0%)** more from administrative services—played a major role.  **[20240725NE67959:0]** **[0000922621-24-000018_ex-99106302024.htm:0]** **[0000922621-24-000019_erie-20240630.htm:32]**  In addition, **growth in direct written premiums** (up **20%**) contributed significantly to this revenue boost.  **[ERIE_3394752_2]**  There was also a **moderate increase in operating expenses**—mainly from higher commissions and non-commission costs—that did not outpace revenue growth, aiding overall profitability.  **[20240725NE67959:0]** **[0000922621-24-000018_ex-99106302024.htm:0]** **[0000922621-24-000018_ex-99106302024.htm:1]**  Finally, **improved investment income**, which rose by **18.9%** to **$13,827 thousand**, further supported the increase in operating income.  **[20240725NE67959:0]** **[0000922621-24-000018_ex-99106302024.htm:0]** **[0000922621-24-000019_erie-20240630.htm:32]** 

What factors drove the operating income surge in Q2 2024?

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The sharp jump in Q3 2024 operating cash flow was primarily driven by a **significant increase in management fees received (+$362,578 thousand)**, along with **lower outflows due to reduced pension and employee benefits (-$60,800 thousand)** and **decreased incentive compensation paid to agents (-$24,669 thousand)**. These positive drivers, however, were partially offset by **increased cash paid for agent commissions (+$178,483 thousand)** and **higher income taxes paid (+$55,509 thousand)**.  **[0000922621-24-000023_erie-20240930.htm:47]** **[0000922621-24-000023_erie-20240930.htm:6]** 

What drove the sharp jump in operating cash flow in Q3 2024?

The increase was driven by a combination of factors. **Operating activities** led the way, generating **$417.8 million** compared to **$232.8 million** in the previous period, largely because of a **$362.6 million** rise in management fees, along with lower pension and employee benefit outlays (a **$60.8 million** decrease) and reduced incentive compensation (**$24.7 million** less). In addition, changes in **investing activities**—including a greater outflow for available-for-sale securities purchases—and adjustments in **financing activities** such as a slight rise in dividend payments all contributed to an overall **net increase of $77.2 million** in cash, cash equivalents, and restricted cash for the period.  **[0000922621-24-000023_erie-20240930.htm:47]** 

What contributed to the significant increase in ending cash balances in Q3 2024?

Investing cash outflows widened significantly in Q3 2024 primarily because the company increased its purchases of available-for-sale securities and extended more loans to agents and others. These additional outflows were only partially offset by higher proceeds from securities sales, maturities, and calls, contributing to a net increase in cash outflows during that period.  **[0000922621-24-000023_erie-20240930.htm:47]** 

Why did investing cash outflows widen so much in Q3 2024?

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Cash and cash equivalents fell sharply in Q3 2023 because the company experienced a decline in net cash provided by operating activities—primarily due to higher payments for agent commissions, pensions, and employee benefits—while simultaneously increasing cash outlays in investing activities for fixed asset and equity security purchases. Additionally, the level of cash used in financing activities was lower compared to the previous period, where a significant term loan repayment occurred. These combined factors led to a substantial reduction in cash balances as of September 30, 2023.  **[0000922621-23-000021_ex-99209302023.htm:1]** **[0000922621-23-000022_erie-20230930.htm:3]** **[0000922621-23-000022_erie-20230930.htm:40]** 

Why did cash and cash equivalents fall so sharply in Q3 2023?

The significant drop in total liabilities by Q1 2023 was primarily driven by a reduction in current liabilities. In particular, **agent bonuses** were reduced drastically from **$95,166 thousand** to **$20,565 thousand**, resulting in a reduction of **$74,601 thousand**. Additionally, **deferred executive compensation** decreased by **$4,691 thousand** from **$12,036 thousand** to **$7,345 thousand**. Although there was a slight increase of **$2,298 thousand** in the liability for **defined benefit pension plans** and a reduction of **$3,964 thousand** in other long-term liabilities, the overall decrease was mainly due to the changes in current liabilities.  **[0000922621-23-000011_erie-20230331.htm:3]** **[0000922621-23-000010_ex-99203312023.htm:0]** **[0000922621-23-000011_erie-20230331.htm:30]** 

What caused total liabilities to drop significantly by Q1 2023?

The increase in available‐for‐sale securities in Q1 2023 was driven by several factors. **Market value adjustments** due to fluctuations increased the estimated fair value, while significant **purchases of $47,594 thousand** and **sales of $42,715 thousand** also played a role. Additionally, there were changes in **unrealized holding gains of $10,494 thousand** and adjustments related to the **credit loss allowance**, all contributing to the jump in fair value for Q1 2023.  **[0000922621-23-000011_erie-20230331.htm:15]** **[0000922621-23-000007_erie-20221231.htm:78]** **[0000922621-23-000011_erie-20230331.htm:31]** **[0000922621-23-000011_erie-20230331.htm:5]** **[0000922621-23-000011_erie-20230331.htm:2]** 

Why did available‐for‐sale securities jump in Q1 2023?

In Q3 2023, the defined benefit pension plan value appeared primarily because of a **$95 million contribution** during the quarter, which resulted in a **net benefit asset of $65.2 million** being recognized on the company's Statement of Financial Position as of September 30, 2023.  **[0000922621-23-000022_erie-20230930.htm:19]**  Additionally, this change was influenced by adjustments in pension cost components, such as **lower pension costs** and an **increase in the discount rate**, which supported the overall shift in the pension plan's reported value.  **[0000922621-23-000022_erie-20230930.htm:19]** 

What led to the appearance of a defined benefit pension plan value in Q3 2023?

Deferred income taxes emerged in Q1 2023 due to timing differences between book and tax reporting. Specifically, the increase in the deferred tax balance—from **$14,075 thousand** at the end of Q4 2022 to **$16,081 thousand** in Q1 2023—indicates adjustments related to factors such as depreciation, pension benefits, unrealized gains or losses on investments, and other temporary differences. However, the documents do not provide a detailed breakdown of the specific factors impacting this change.  **[0000922621-23-000010_ex-99203312023.htm:0]** **[0000922621-23-000011_erie-20230331.htm:3]** 

Why did deferred income taxes emerge in Q1 2023?

665eac4724ddfe2548f53cf434019305b0606b59e3b01b0be5f75c4980671fe3

Erie Indemnity Co (ERIE)

Financials