Erie, Pa. - May 2, 2019 - Erie Indemnity Company (NASDAQ: ERIE) today announced financial results for the quarter ending March 31, 2019. Net income was $75.3 million, or $1.44 per diluted share, in the first quarter of 2019, compared to $65.8 million, or $1.26 per diluted share, in the first quarter of 2018.
1Q 2019
(dollars in thousands)
1Q'19
1Q'18
Operating income
$
86,122
$
77,567
Investment income
9,795
6,163
Interest expense and other income, net
402
509
Income before income taxes
95,515
83,221
Income tax expense
20,204
17,463
Net income
$
75,311
$
65,758
1Q 2019 HIGHLIGHTS
Operating income before taxes increased $8.6 million, or 11.0 percent, in the first quarter of 2019 compared to the first quarter of 2018, as the growth in total operating revenue outpaced the growth in total operating expenses.
Management fee revenue - policy issuance and renewal services increased $25.0 million, or 6.2 percent, to $431.0 million in the first quarter of 2019 compared to the first quarter of 2018.
Management fee revenue - administrative services increased $0.9 million, or 6.7 percent, to $14.0 million in the first quarter of 2019 compared to the first quarter of 2018.
Cost of operations - policy issuance and renewal services
Commissions increased $8.9 million in the first quarter of 2019 compared to the first quarter of 2018, as a result of the 6.0 percent increase in direct and affiliated assumed premiums written by the Exchange, slightly offset by lower agent incentive costs related to less profitable growth, compared to the first quarter of 2018.
Non-commission expense increased $8.0 million in the first quarter of 2019 compared to the first quarter of 2018.Information technology costs increased $5.5 million primarily due to increased professional fees.Sales and advertising costs decreased $2.0 million primarily due to decreased personnel costs and agent-related costs.Administrative and other expenses increased $4.3 million primarily driven by an increase in long-term incentive plan cost due to an increase in the company stock price during the first quarter of 2019 compared to a decrease in the company stock price during the first quarter of 2018.Personnel costs in all expense categories in the first quarter of 2018 were impacted by additional bonuses awarded to all employees as a result of tax savings realized from the lower corporate income tax rate.
The administrative services reimbursement revenue and corresponding cost of operations increased both total operating revenue and total operating expenses by $142.5 million in the first quarter of 2019, but had no net impact on operating income.
Income from investments before taxes totaled $9.8 million in the first quarter of 2019 compared to $6.2 million in the first quarter of 2018. Net realized gains were $2.5 million in the first quarter of 2019 compared to net realized losses of $0.5 million in the first quarter of 2018. Net investment income was $8.5 million in the first quarter of 2019 compared to $6.8 million in the first quarter of 2018.
Erie Indemnity Reports First Quarter 2019 Results
