On this page of StockholderLetter.com we present the latest annual shareholder letter from ERIE INDEMNITY CO — ticker symbol ERIE. Reading current and past ERIE letters to shareholders can bring important insights into the investment thesis.
ERIE
INDEMNITY
COMPANY
ANNUAL
REPORT

Our Founding Purpose
To provide our Policyholders with
as near perfect protection,
as near perfect service as is
humanly possible, and to do so
at the lowest possible cost.
toour
shareholders
Tim NeCastro, President and CEO
We navigated the new era of hybrid work,
and all the benefits   and drawbacks   that
come along with it.
Every year brings a mix of successes and
challenges, advancements and setbacks,
highs and lows. And 2023 had more of
these contrasts than any in recent memory.
It was a year of record growth for Erie
Insurance Exchange, the primary insurer we
manage, which reached $10 billion in premium
and is approaching 7 million policies in force.
And net income for Erie Indemnity Company
reached an all-time high of more than $446
million, jumping nearly 50 percent over 2022.
It was also a record year for hiring and
applications received, with our workforce
surpassing 6,500 Employees.
And the pace of technology and changing
consumer behaviors heightened the sense
of urgency to modernize our platforms and
introduce new digital capabilities.
But when a company has been in business
for close to a century like we have, enduring
challenges and adapting to change is nothing
new. In fact, it   s what we do best.
Rather than treating the challenges as setbacks,
we   re responding by sharpening our focus.
We   re honing our ability to work faster and
smarter. We   re taking measures aimed at
balancing growth and profitability.
These high points, however, came during a
year that was also underscored by significant
challenges and change.
The tumultuous economy and increased activity
from Mother Nature drove the Exchange   s
combined ratio up and policyholder surplus down.
2
And with our next century in view, we   re
transforming in ways that will keep us at the
top of the competition while staying true to the
business model that   s been our rock for 99 years.
our financials
It will likely come as no surprise that a sizable
portion of our focus over the past year has
been on our financial performance. We   re
certainly feeling the effects of the economic and
environmental pressures impacting our industry.
However, we remain confident in our financial
standing, reflected in the highlights for both
Indemnity and the Exchange on page 9.
The rate increases across the industry have led
Customers to shop for more affordable rates. This has
worked in our favor in terms of year-over-year growth
in direct written premium, which reached a 20-year
high in 2023. That growth of 17 percent at year-end
is further supported by a strong retention rate of 91.2
percent for personal and commercial lines combined,
which is among the highest in the industry.
We ended 2022 with an elevated combined
ratio for the Exchange, driven by inflation,
supply chain issues and labor shortages. Those
challenges persisted throughout 2023 and were
compounded by higher than usual weatherrelated claims. Along with Agents, our Claims,
Catastrophe and First Notice of Loss teams
worked tirelessly to respond to the high volume
of claims over the past year   close to 70,000   as
a result of severe weather. In comparison, we had
roughly 50,000 weather-related claims in 2022.
It   s important to note that with growth comes the
potential for increased losses. So in 2024, we   re
keeping a close eye on that growth and will make
strategic decisions, as necessary, to further support
profitability.
These factors contributed to a combined ratio
of 119.1 percent at year-end, compared to 116.1
percent at the end of 2022. We did, however,
see improvement in the fourth quarter with a
combined ratio of 111.4 percent compared to 124.9
percent in 2022. And while the surplus decreased
nearly 8 percent for the year, it continues to stand
at a solid $9.3 billion, an increase of over $200
million from the third quarter.
Like the rest of the industry, we   ve responded
to market conditions through rate increases,
but we   re doing so with a deliberate approach.
We   re also reinforcing our focus on tightened
underwriting standards and partnering with our
agencies on individualized profitability action plans
where appropriate. This multi-pronged approach is
aimed at improving the combined ratio over time.
For Indemnity, operating income ended at
approximately $520 million, up over $144 million
compared to 2022. Investment income rebounded
from the prior year, totaling almost $29 million,
compared to a gain of just over $600,000 at year-end
2022. That positive operating and investment income
led to very favorable earnings per share of $8.53.
As always, and especially in today   s tough economic
landscape, we   re committed to being responsible
stewards of your company. The efforts underway
to modernize legacy platforms will help to reduce
expenses in the long term, but significant investments
are needed to get there. So we   re looking at other
ways to reduce expenses   including being strategic
about hiring and reskilling, and identifying processes
conducive to automation.
   Although the storm event was not wonderful,
the service I received has been. Based on my
experience, my neighbor switched both her
auto and homeowners policy to ERIE.   
A Customer shared their experience filing a property claim after a
hailstorm hit central Illinois at the end of June. Weather-related
claims were up 41 percent in 2023 compared to the previous year.
3
 • shareholder letter icon 3/22/2024 Letter Continued (Full PDF)
 • stockholder letter icon 3/24/2023 ERIE Stockholder Letter
 • stockholder letter icon More "Insurance Brokers" Category Stockholder Letters
 • Benford's Law Stocks icon ERIE Benford's Law Stock Score = 95


ERIE Shareholder/Stockholder Letter Transcript:

ERIE
INDEMNITY
COMPANY
ANNUAL
REPORT


Our Founding Purpose
To provide our Policyholders with
as near perfect protection,
as near perfect service as is
humanly possible, and to do so
at the lowest possible cost.

toour
shareholders
Tim NeCastro, President and CEO
We navigated the new era of hybrid work,
and all the benefits   and drawbacks   that
come along with it.
Every year brings a mix of successes and
challenges, advancements and setbacks,
highs and lows. And 2023 had more of
these contrasts than any in recent memory.
It was a year of record growth for Erie
Insurance Exchange, the primary insurer we
manage, which reached $10 billion in premium
and is approaching 7 million policies in force.
And net income for Erie Indemnity Company
reached an all-time high of more than $446
million, jumping nearly 50 percent over 2022.
It was also a record year for hiring and
applications received, with our workforce
surpassing 6,500 Employees.
And the pace of technology and changing
consumer behaviors heightened the sense
of urgency to modernize our platforms and
introduce new digital capabilities.
But when a company has been in business
for close to a century like we have, enduring
challenges and adapting to change is nothing
new. In fact, it   s what we do best.
Rather than treating the challenges as setbacks,
we   re responding by sharpening our focus.
We   re honing our ability to work faster and
smarter. We   re taking measures aimed at
balancing growth and profitability.
These high points, however, came during a
year that was also underscored by significant
challenges and change.
The tumultuous economy and increased activity
from Mother Nature drove the Exchange   s
combined ratio up and policyholder surplus down.
2
And with our next century in view, we   re
transforming in ways that will keep us at the
top of the competition while staying true to the
business model that   s been our rock for 99 years.

our financials
It will likely come as no surprise that a sizable
portion of our focus over the past year has
been on our financial performance. We   re
certainly feeling the effects of the economic and
environmental pressures impacting our industry.
However, we remain confident in our financial
standing, reflected in the highlights for both
Indemnity and the Exchange on page 9.
The rate increases across the industry have led
Customers to shop for more affordable rates. This has
worked in our favor in terms of year-over-year growth
in direct written premium, which reached a 20-year
high in 2023. That growth of 17 percent at year-end
is further supported by a strong retention rate of 91.2
percent for personal and commercial lines combined,
which is among the highest in the industry.
We ended 2022 with an elevated combined
ratio for the Exchange, driven by inflation,
supply chain issues and labor shortages. Those
challenges persisted throughout 2023 and were
compounded by higher than usual weatherrelated claims. Along with Agents, our Claims,
Catastrophe and First Notice of Loss teams
worked tirelessly to respond to the high volume
of claims over the past year   close to 70,000   as
a result of severe weather. In comparison, we had
roughly 50,000 weather-related claims in 2022.
It   s important to note that with growth comes the
potential for increased losses. So in 2024, we   re
keeping a close eye on that growth and will make
strategic decisions, as necessary, to further support
profitability.
These factors contributed to a combined ratio
of 119.1 percent at year-end, compared to 116.1
percent at the end of 2022. We did, however,
see improvement in the fourth quarter with a
combined ratio of 111.4 percent compared to 124.9
percent in 2022. And while the surplus decreased
nearly 8 percent for the year, it continues to stand
at a solid $9.3 billion, an increase of over $200
million from the third quarter.
Like the rest of the industry, we   ve responded
to market conditions through rate increases,
but we   re doing so with a deliberate approach.
We   re also reinforcing our focus on tightened
underwriting standards and partnering with our
agencies on individualized profitability action plans
where appropriate. This multi-pronged approach is
aimed at improving the combined ratio over time.
For Indemnity, operating income ended at
approximately $520 million, up over $144 million
compared to 2022. Investment income rebounded
from the prior year, totaling almost $29 million,
compared to a gain of just over $600,000 at year-end
2022. That positive operating and investment income
led to very favorable earnings per share of $8.53.
As always, and especially in today   s tough economic
landscape, we   re committed to being responsible
stewards of your company. The efforts underway
to modernize legacy platforms will help to reduce
expenses in the long term, but significant investments
are needed to get there. So we   re looking at other
ways to reduce expenses   including being strategic
about hiring and reskilling, and identifying processes
conducive to automation.
   Although the storm event was not wonderful,
the service I received has been. Based on my
experience, my neighbor switched both her
auto and homeowners policy to ERIE.   
A Customer shared their experience filing a property claim after a
hailstorm hit central Illinois at the end of June. Weather-related
claims were up 41 percent in 2023 compared to the previous year.
3



shareholder letter icon 3/22/2024 Letter Continued (Full PDF)
 

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