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Erie Indemnity Company (ERIE)
NASDAQ:ERIE
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Erie Indemnity Company
(NASDAQ:ERIE)
Rating:72Outperform
Price Target:―
Positive Factors
Growth
Erie's growth continued to normalize but remains above average.
Technology Investments
Investments in technology efficiency have led to a rise in the policy issuance margin, with technology expected to continue driving down expenses.
Negative Factors
Margins
The margin came in modestly down year-over-year due to investments in technology and higher agent commissions.
Erie Indemnity Company (ERIE) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$16.24B
Dividend Yield1.51%
Average Volume (3M)142.94K
Price to Earnings (P/E)29.9
Beta (1Y)0.30
Revenue Growth15.05%
EPS Growth26.80%
CountryUS
Employees6,715
SectorFinancial
Sector Strength81
IndustryInsurance - Brokers
Share Statistics
EPS (TTM)2.65
Shares Outstanding46,189,068
10 Day Avg. Volume115,600
30 Day Avg. Volume142,942
Financial Highlights & Ratios
PEG Ratio13.19
Price to Book (P/B)9.13
Price to Sales (P/S)0.00
P/FCF Ratio32.69
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusModerate Buy
Number of Analyst Covering1
Erie Indemnity Company Business Overview & Revenue Model
Company DescriptionErie Indemnity Company operates as a managing attorney-in-fact for the subscribers at the Erie Insurance Exchange in the United States. The company provides sales, underwriting, policy issuance, and renewal services for the policyholders on behalf of the Erie Insurance Exchange. It also offers sales related services, including agent compensation, and sales and advertising support services; and underwriting services comprise underwriting and policy processing; and other services consist of customer services and administrative support services, as well as information technology services. Erie Indemnity Company was incorporated in 1925 and is based in Erie, Pennsylvania.
How the Company Makes MoneyErie Indemnity Company makes money primarily through its role as the management company for the Erie Insurance Exchange. It earns revenue by providing sales, underwriting, and administrative services to the Exchange, for which it receives management fees. These fees are calculated as a percentage of the direct written premiums of the policies sold by the Exchange. The company also benefits from investment income generated from its portfolio of investments. Additionally, Erie Indemnity Company may form strategic partnerships or enter into reinsurance agreements to optimize its financial performance and manage risk effectively.
Erie Indemnity Company Earnings Call Summary
Earnings Call Date:Apr 24, 2025
(Q1-2025)
| % Change Since: -13.53%|
Next Earnings Date:Jul 24, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted Erie's significant premium growth, increased income, and successful launch of Business Auto 2.0, alongside the celebration of its 100th anniversary. However, it also faced challenges with increased catastrophe losses and rising expenses, leading to underwriting losses and a slight decrease in policyholder surplus.Q1-2025 Updates
Positive Updates
Centennial Celebration and Community Contributions
Erie Insurance marked its 100th anniversary, celebrating with community contributions totaling nearly $0.5 million to various nonprofits.
Strong Premium Growth
Direct and assumed written premiums grew by nearly 14% in the first quarter of 2025 compared to the prior year. Average premium per policy increased by 13.2%.
Increased Net Income and Operating Income
Net income rose to $138.4 million in Q1 2025 from $124.6 million in Q1 2024, while operating income increased 9% to more than $151 million.
Management Fee Revenue Growth
Management fee revenue from policy issuance and renewal services increased over 13% to $755 million in Q1 2025.
Investment Income Growth
Investment income in Q1 2025 was $19.5 million, up from $15 million in Q1 2024, driven by a $4 million growth in net investment income.
Business Auto 2.0 Rollout
Business Auto 2.0 was successfully rolled out to several states, enhancing the business auto product and customer experience.
Negative Updates
Slight Decrease in Policy Retention
Policy retention ratio decreased slightly to 89.9%, attributed to significant rate actions.
Increased Catastrophe Losses
A significant catastrophe loss in March contributed 13 points to the Exchange's total Q1 catastrophe losses of over 16 points, leading to an increase in the combined ratio to 108.1%.
Underwriting Losses
Despite investment returns, the underwriting losses led to a slight decrease in policyholder surplus from $9.3 billion at December 2024 to $9.2 billion at March 2025.
Rising Expenses
Total cost of operations increased by 14%, with commissions growing by 16% and non-commission expenses rising due to technology investments and personnel costs.
Company Guidance
In the first quarter of 2025, Erie Indemnity Company experienced significant financial developments. Direct and assumed written premiums grew nearly 14% year-over-year, driven by rate increases in 2023 and 2024, with the average premium per policy rising by 13.2%. Policies in force increased by 3.2%, but the policy retention ratio slightly decreased to 89.9%. Catastrophe losses, especially from a significant March event, contributed 13 points to the Exchange's total first-quarter catastrophe losses of over 16 points, leading to a combined ratio of 108.1%, up from 106% in the same quarter of 2024. The company's net income was $138.4 million, or $2.65 per diluted share, compared to $124.6 million, or $2.38 per diluted share, in the previous year. Operating income rose by 9% to over $151 million, and management fee revenue increased by over 13% to $755 million. Investment income improved, reaching $19.5 million compared to $15 million in the first quarter of 2024, while dividends paid to shareholders amounted to almost $64 million.Erie Indemnity Company Financial Statement Overview
Summary
Erie Indemnity Company displays a commendable financial position with consistent revenue growth, excellent profitability, and a strong balance sheet free from debt. The cash flow generation is solid, enhancing the company's financial flexibility and resilience. The company is well-positioned to manage industry challenges with its strong financial fundamentals.Income Statement
Erie Indemnity Company demonstrates consistent revenue growth with a TTM increase of 2.8% from the previous year. The company maintains a strong gross profit margin of 51.1% and a net profit margin of 18.5% in the TTM. EBIT and EBITDA margins are stable, indicating efficient management of expenses. The company shows resilience with improved profitability metrics.85
Very Positive
Balance Sheet
The balance sheet is robust with a high equity ratio of 69.6%, indicating financial stability. The absence of debt and a strong return on equity of 29.7% in the TTM highlight efficient equity utilization and low financial risk. The company maintains a solid asset base and liquidity position.90
Very Positive
Cash Flow
The cash flow statement shows healthy free cash flow growth of 4.9% in the TTM. The operating cash flow to net income ratio is favorable at 1.05, indicating strong cash generation from operations. The free cash flow to net income ratio supports the company's ability to generate cash relative to net earnings.82
Very Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 3.32B | 3.86B | 3.27B | 2.84B | 2.70B | 2.57B | Gross Profit |
| 1.70B | 3.80B | 520.26M | 376.85M | 385.43M | 371.02M | EBIT |
| 711.72M | 757.28M | 520.26M | 378.46M | -286.12M | -266.72M | EBITDA |
| 525.14M | 821.19M | 600.23M | 430.18M | 318.10M | 338.16M | Net Income Common Stockholders |
| 614.18M | 600.31M | 446.06M | 298.57M | 297.86M | 293.30M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 313.36M | 343.00M | 226.07M | 166.36M | 222.10M | 178.94M | Total Assets |
| 2.97B | 2.89B | 2.47B | 2.24B | 2.24B | 2.12B | Total Debt |
| 0.00 | 0.00 | 112.25M | 122.50M | 93.83M | 95.86M | Net Debt |
| -260.38M | -298.40M | -131.51M | -19.59M | -89.87M | -65.38M | Total Liabilities |
| 900.88M | 901.36M | 809.13M | 791.05M | 899.58M | 929.07M | Stockholders Equity |
| 2.07B | 1.99B | 1.66B | 1.45B | 1.34B | 1.19B |
| Cash Flow | Free Cash Flow | ||||
| 510.10M | 486.40M | 288.56M | 298.95M | 253.99M | 287.07M | Operating Cash Flow |
| 642.17M | 611.25M | 381.20M | 366.15M | 402.79M | 342.60M | Investing Cash Flow |
| -297.67M | -226.91M | -157.56M | -106.92M | -185.49M | -243.22M | Financing Cash Flow |
| -228.99M | -230.00M | -221.68M | -300.84M | -194.84M | -274.87M |
Erie Indemnity Company Technical Analysis
Negative
353.41
Price Trends
387.65
Negative
396.31
Negative
429.97
Negative
Market Momentum
-9.07
Negative
40.16
Neutral
21.55
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ERIE, the sentiment is Negative. The current price of 353.41 is below the 20-day moving average (MA) of 359.60, below the 50-day MA of 387.65, and below the 200-day MA of 429.97, indicating a bearish trend. The MACD of -9.07 indicates Negative momentum. The RSI at 40.16 is Neutral, neither overbought nor oversold. The STOCH value of 21.55 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ERIE.
Erie Indemnity Company Risk Analysis
Erie Indemnity Company disclosed 11 risk factors in its most recent earnings report. Erie Indemnity Company reported the most risks in the “Production” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Erie Indemnity Company Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $31.76B | 30.89 | 16.18% | 0.51% | 12.57% | 10.52% | |
74 Outperform | $86.57B | 52.00 | 9.27% | 0.72% | 14.07% | 31.44% | |
73 Outperform | $113.00B | 28.13 | 30.51% | 1.42% | 7.56% | 3.39% | |
72 Outperform | $16.24B | 29.92 | 32.38% | 1.51% | 15.05% | 26.80% | |
69 Neutral | $76.99B | 30.38 | 74.17% | 0.76% | 19.57% | -8.09% | |
65 Neutral | $30.64B | ― | -0.60% | 1.15% | 2.42% | -103.64% | |
64 Neutral | $12.67B | 9.74 | 7.58% | 17015.08% | 12.21% | -6.96% |
* Financial Sector Average
Performance Comparison
ERIE
Erie Indemnity Company
353.41
-19.73
-5.29%
AON
Aon
365.06
87.39
31.47%
AJG
Arthur J Gallagher & Co
342.75
96.48
39.18%
BRO
Brown & Brown
112.08
24.98
28.68%
MMC
Marsh & Mclennan Companies
231.53
30.50
15.17%
WTW
Willis Towers Watson
312.65
64.98
26.24%
Erie Indemnity Company Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Erie Indemnity Appoints New Executive Vice Presidents
Neutral
Dec 17, 2024
Erie Indemnity Company has announced the appointment of Cody Cook as Executive Vice President, Claims, and Sarah Shine as Executive Vice President, Experience and Customer Service, effective January 1, 2025. Both executives have long-standing careers within the company, with Cook having joined in 2003 and Shine in 2000, each holding various senior positions. Their appointments indicate a strategic continuation of leadership within the company aimed at strengthening its operational and customer service capabilities.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.