Erie Indemnity (ERIE) Misses Q4 EPS by 15c, Revenues Miss

Erie Indemnity (NASDAQ: ERIE) reported Q4 EPS of $1.14, $0.15 worse than the analyst estimate of $1.29. Revenue for the quarter came in at $596.74 million versus the consensus estimate of $601.17 million.

Operating income before taxes decreased $6.1 million, or 8.1 percent, in the fourth quarter of 2019 compared to the fourth quarter of 2018.

• Management fee revenue - policy issuance and renewal services increased $16.9 million, or 4.1 percent, in the fourth quarter of 2019 compared to the fourth quarter of 2018.
• Management fee revenue allocated to administrative services increased $0.9 million, or 6.5 percent in the fourth quarter of 2019 compared to the fourth quarter of 2018.
• Cost of operations - policy issuance and renewal services
  • Commissions increased $10.1 million in the fourth quarter of 2019 compared to the fourth quarter of 2018 as a result of the 4.1 percent increase in direct and affiliated assumed premiums written by the Exchange.
  • Non-commission expense increased $13.2 million in the fourth quarter of 2019 compared to the fourth quarter of 2018. Underwriting and policy processing costs increased $1.8 million primarily due to increased underwriting report costs and other policy acquisition costs. Information technology costs increased $6.0 million primarily due to increased professional fees and hardware and software costs. Administrative and other expenses increased $5.0 million primarily due to increased personnel costs and several multi-year commitments made to support community development initiatives.
• The administrative services reimbursement revenue and corresponding cost of operations increased both total operating revenue and total operating expenses by $150.7 million and $147.7 million in the fourth quarter of 2019 and 2018, respectively, but had no net impact on operating income.

Income from investments before taxes totaled $6.9 million in the fourth quarter of 2019 compared to $5.0 million in the fourth quarter of 2018. Net realized gains on investments were $0.6 million in the fourth quarter of 2019 compared net realized losses of $1.5 million in the fourth quarter of 2018. Net investment income was $8.2 million in the fourth quarter of 2019 compared to $8.6 million in the fourth quarter of 2018.

For earnings history and earnings-related data on Erie Indemnity (ERIE) click here.

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