Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Jul. 12, 2019 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2019 | |
Document Transition Report | false | |
Entity File Number | 0-24000 | |
Entry Registrant Name | ERIE INDEMNITY COMPANY | |
Entity Incorporation, State or Country Code | PA | |
Entity Tax Identification Number | 25-0466020 | |
Entity Address, Address Line One | 100 Erie Insurance Place, | |
Entity Address, City or Town | Erie, | |
Entity Address, State or Province | PA | |
Entity Address, Postal Zip Code | 16530 | |
City Area Code | 814 | |
Local Phone Number | 870-2000 | |
Title of 12(b) Security | Class A common stock, | |
Trading Symbol | ERIE | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0000922621 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q2 | |
Current Fiscal Year End Date | --12-31 | |
Class A common stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 46,189,068 | |
Class B common stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 2,542 |
STATEMENTS OF OPERATIONS (UNAUD
STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Operating revenue | ||||
Operating revenue | $ 647,710 | $ 621,458 | $ 1,241,816 | $ 1,193,618 |
Operating expenses | ||||
Operating expenses | 551,100 | 526,135 | 1,059,084 | 1,020,728 |
Operating income | 96,610 | 95,323 | 182,732 | 172,890 |
Investment income | ||||
Net investment income | 8,030 | 7,104 | 16,547 | 13,924 |
Net realized investment gains (losses) | 1,302 | (32) | 3,805 | (497) |
Net impairment losses recognized in earnings | (84) | (646) | (162) | (646) |
Equity in earnings (losses) of limited partnerships | 404 | (219) | (743) | (411) |
Total investment income | 9,652 | 6,207 | 19,447 | 12,370 |
Interest expense, net | 272 | 602 | 721 | 1,155 |
Other income | 48 | 58 | 95 | 102 |
Income before income taxes | 106,038 | 100,986 | 201,553 | 184,207 |
Income tax expense | 18,284 | 21,280 | 38,488 | 38,743 |
Net income | $ 87,754 | $ 79,706 | $ 163,065 | $ 145,464 |
Class A common stock | ||||
Net income per share | ||||
Common stock - basic (in dollars per share) | $ 1.88 | $ 1.71 | $ 3.50 | $ 3.12 |
Common stock - diluted (in dollars per share) | $ 1.68 | $ 1.52 | $ 3.12 | $ 2.78 |
Weighted average shares outstanding – Basic | ||||
Common stock - basic (in shares) | 46,188,994 | 46,188,705 | 46,188,668 | 46,188,309 |
Weighted average shares outstanding – Diluted | ||||
Common stock - diluted (in shares) | 52,314,700 | 52,312,849 | 52,313,371 | 52,311,741 |
Dividends declared per share | ||||
Common stock (in dollars per share) | $ 0.90 | $ 0.84 | $ 1.80 | $ 1.68 |
Class B common stock | ||||
Net income per share | ||||
Common stock - basic (in dollars per share) | 283 | 257 | 525 | 469 |
Common stock - diluted (in dollars per share) | $ 283 | $ 257 | $ 525 | $ 468 |
Weighted average shares outstanding – Basic | ||||
Common stock - basic (in shares) | 2,542 | 2,542 | 2,542 | 2,542 |
Weighted average shares outstanding – Diluted | ||||
Common stock - diluted (in shares) | 2,542 | 2,542 | 2,542 | 2,542 |
Dividends declared per share | ||||
Common stock (in dollars per share) | $ 135 | $ 126 | $ 270 | $ 252 |
Management fee revenue - policy issuance and renewal services, net | ||||
Operating revenue | ||||
Operating revenue | $ 480,513 | $ 454,572 | $ 911,496 | $ 860,550 |
Operating expenses | ||||
Operating expenses | 405,005 | 379,628 | 770,509 | 728,258 |
Management fee revenue - administrative services, net | ||||
Operating revenue | ||||
Operating revenue | 14,195 | 13,299 | 28,146 | 26,373 |
Administrative services reimbursement revenue | ||||
Operating revenue | ||||
Operating revenue | 146,095 | 146,507 | 288,575 | 292,470 |
Operating expenses | ||||
Operating expenses | 146,095 | 146,507 | 288,575 | 292,470 |
Service agreement revenue | ||||
Operating revenue | ||||
Operating revenue | $ 6,907 | $ 7,080 | $ 13,599 | $ 14,225 |
STATEMENTS OF COMPREHENSIVE INC
STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 87,754 | $ 79,706 | $ 163,065 | $ 145,464 |
Other comprehensive income (loss), net of tax | ||||
Change in unrealized holding gains (losses) on available-for-sale securities | 2,579 | (551) | 8,057 | (5,978) |
Amortization of prior service costs and net actuarial loss on pension and other postretirement plans | 1,231 | 0 | 2,463 | 0 |
Total other comprehensive income (loss), net of tax | 3,810 | (551) | 10,520 | (5,978) |
Comprehensive income | $ 91,564 | $ 79,155 | $ 173,585 | $ 139,486 |
STATEMENTS OF FINANCIAL POSITIO
STATEMENTS OF FINANCIAL POSITION - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 338,262 | $ 266,417 |
Available-for-sale securities | 61,210 | 402,339 |
Receivables from Erie Insurance Exchange and affiliates | 483,319 | 449,873 |
Prepaid expenses and other current assets | 42,300 | 36,892 |
Federal income taxes recoverable | 7,791 | 8,162 |
Accrued investment income | 4,365 | 5,263 |
Total current assets | 937,247 | 1,168,946 |
Available-for-sale securities | 627,898 | 346,184 |
Equity securities | 12,445 | 11,853 |
Limited partnership investments | 30,344 | 34,821 |
Fixed assets, net | 173,055 | 130,832 |
Deferred income taxes, net | 19,090 | 24,101 |
Other assets | 89,568 | 61,590 |
Total assets | 1,889,647 | 1,778,327 |
Current liabilities: | ||
Commissions payable | 267,403 | 241,573 |
Agent bonuses | 51,357 | 103,462 |
Accounts payable and accrued liabilities | 124,794 | 111,291 |
Dividends payable | 41,913 | 41,910 |
Contract liability | 35,374 | 33,854 |
Deferred executive compensation | 12,605 | 13,107 |
Current portion of long-term borrowings | 1,914 | 1,870 |
Total current liabilities | 535,360 | 547,067 |
Defined benefit pension plans | 129,674 | 116,866 |
Long-term borrowings | 96,860 | 97,860 |
Contract liability | 18,339 | 17,873 |
Deferred executive compensation | 13,199 | 13,075 |
Other long-term liabilities | 32,761 | 11,914 |
Total liabilities | 826,193 | 804,655 |
Shareholders’ equity | ||
Additional paid-in-capital | 16,483 | 16,459 |
Accumulated other comprehensive loss | (119,764) | (130,284) |
Retained earnings | 2,310,655 | 2,231,417 |
Total contributed capital and retained earnings | 2,209,544 | 2,119,762 |
Treasury stock, at cost; 22,110,132 shares held | (1,158,300) | (1,157,625) |
Deferred compensation | 12,210 | 11,535 |
Total shareholders’ equity | 1,063,454 | 973,672 |
Total liabilities and shareholders’ equity | 1,889,647 | 1,778,327 |
Class A common stock | ||
Shareholders’ equity | ||
Common stock | 1,992 | 1,992 |
Class B common stock | ||
Shareholders’ equity | ||
Common stock | $ 178 | $ 178 |
STATEMENTS OF FINANCIAL POSIT_2
STATEMENTS OF FINANCIAL POSITION (Parenthetical) - $ / shares | Jun. 30, 2019 | Dec. 31, 2018 |
Treasury stock (in shares) | 22,110,132 | 22,110,132 |
Class A common stock | ||
Common stock, stated value per share (in dollars per share) | $ 0.0292 | $ 0.0292 |
Common stock, authorized (in shares) | 74,996,930 | 74,996,930 |
Common stock, issued (in shares) | 68,299,200 | 68,299,200 |
Common stock, outstanding (in shares) | 46,189,068 | 46,189,068 |
Class B common stock | ||
Common stock, stated value per share (in dollars per share) | $ 70 | $ 70 |
Common stock, authorized (in shares) | 3,070 | 3,070 |
Common stock, issued (in shares) | 2,542 | 2,542 |
Common stock, outstanding (in shares) | 2,542 | 2,542 |
Ratio for converting shares of Class B common stock into shares of Class A common stock (as a percent) | 2400.00% | 2400.00% |
STATEMENTS OF SHAREHOLDERS' EQU
STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED) - USD ($) $ in Thousands | Total | Class A common stock | Class B common stock | Common stockClass A common stock | Common stockClass B common stock | Additional paid-in-capital | Accumulated other comprehensive income (loss) | Retained earnings | Retained earningsClass A common stock | Retained earningsClass B common stock | Treasury stock | Deferred compensation | |
Beginning balance at Dec. 31, 2017 | $ 857,344 | $ 1,992 | $ 178 | $ 16,470 | $ (156,059) | $ 2,140,853 | $ (1,155,668) | $ 9,578 | |||||
Increase (decrease) in shareholders' equity | |||||||||||||
Net income | 65,758 | 65,758 | |||||||||||
Other comprehensive income (loss) | (5,427) | (5,427) | |||||||||||
Dividends declared: | $ (38,799) | $ (320) | $ (38,799) | $ (320) | |||||||||
Net purchase of treasury stock | [1] | (9) | (9) | 0 | |||||||||
Deferred compensation | 0 | (1,663) | 1,663 | ||||||||||
Ending balance at Mar. 31, 2018 | 840,155 | 1,992 | 178 | 16,461 | (161,486) | 2,129,100 | (1,157,331) | 11,241 | |||||
Beginning balance at Dec. 31, 2017 | 857,344 | 1,992 | 178 | 16,470 | (156,059) | 2,140,853 | (1,155,668) | 9,578 | |||||
Increase (decrease) in shareholders' equity | |||||||||||||
Net income | 145,464 | ||||||||||||
Other comprehensive income (loss) | (5,978) | (5,978) | |||||||||||
Ending balance at Jun. 30, 2018 | 880,188 | 1,992 | 178 | 16,459 | (162,037) | 2,169,686 | (1,156,999) | 10,909 | |||||
Beginning balance at Mar. 31, 2018 | 840,155 | 1,992 | 178 | 16,461 | (161,486) | 2,129,100 | (1,157,331) | 11,241 | |||||
Increase (decrease) in shareholders' equity | |||||||||||||
Net income | 79,706 | 79,706 | |||||||||||
Other comprehensive income (loss) | (551) | (551) | |||||||||||
Dividends declared: | (38,799) | (321) | (38,799) | (321) | |||||||||
Net purchase of treasury stock | [1] | (2) | (2) | 0 | |||||||||
Deferred compensation | 0 | (276) | 276 | ||||||||||
Rabbi trust distribution | [2] | 0 | 608 | (608) | |||||||||
Ending balance at Jun. 30, 2018 | 880,188 | 1,992 | 178 | 16,459 | (162,037) | 2,169,686 | (1,156,999) | 10,909 | |||||
Beginning balance at Dec. 31, 2018 | 973,672 | 1,992 | 178 | 16,459 | (130,284) | 2,231,417 | (1,157,625) | 11,535 | |||||
Increase (decrease) in shareholders' equity | |||||||||||||
Net income | 75,311 | 75,311 | |||||||||||
Other comprehensive income (loss) | 6,710 | 6,710 | |||||||||||
Dividends declared: | (41,570) | (343) | (41,570) | (343) | |||||||||
Net purchase of treasury stock | [1] | 24 | 24 | 0 | |||||||||
Deferred compensation | 0 | (1,154) | 1,154 | ||||||||||
Ending balance at Mar. 31, 2019 | 1,013,804 | 1,992 | 178 | 16,483 | (123,574) | 2,264,815 | (1,158,779) | 12,689 | |||||
Beginning balance at Dec. 31, 2018 | 973,672 | 1,992 | 178 | 16,459 | (130,284) | 2,231,417 | (1,157,625) | 11,535 | |||||
Increase (decrease) in shareholders' equity | |||||||||||||
Net income | 163,065 | ||||||||||||
Other comprehensive income (loss) | 10,520 | 10,520 | |||||||||||
Ending balance at Jun. 30, 2019 | 1,063,454 | 1,992 | 178 | 16,483 | (119,764) | 2,310,655 | (1,158,300) | 12,210 | |||||
Beginning balance at Mar. 31, 2019 | 1,013,804 | 1,992 | 178 | 16,483 | (123,574) | 2,264,815 | (1,158,779) | 12,689 | |||||
Increase (decrease) in shareholders' equity | |||||||||||||
Net income | 87,754 | 87,754 | |||||||||||
Other comprehensive income (loss) | 3,810 | 3,810 | |||||||||||
Dividends declared: | $ (41,570) | $ (344) | $ (41,570) | $ (344) | |||||||||
Net purchase of treasury stock | [1] | 0 | 0 | 0 | |||||||||
Deferred compensation | 0 | (443) | 443 | ||||||||||
Rabbi trust distribution | [2] | 0 | 922 | (922) | |||||||||
Ending balance at Jun. 30, 2019 | $ 1,063,454 | $ 1,992 | $ 178 | $ 16,483 | $ (119,764) | $ 2,310,655 | $ (1,158,300) | $ 12,210 | |||||
[1] | Net purchases of treasury stock in 2019 and 2018 include the repurchase of our Class A common stock in the open market that were subsequently distributed to satisfy stock based compensation awards. See Note 11, "Capital Stock", for additional information on treasury stock transactions. | ||||||||||||
[2] | Distributions of our Class A shares were made from the rabbi trust to retired directors in 2019 and 2018. |
STATEMENTS OF SHAREHOLDERS' E_2
STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED) (Parenthetical) - $ / shares | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Class A common stock | ||||||
Dividends declared (in dollars per share) | $ 0.90 | $ 0.90 | $ 0.84 | $ 0.84 | $ 1.80 | $ 1.68 |
Class B common stock | ||||||
Dividends declared (in dollars per share) | $ 135 | $ 135 | $ 126 | $ 126 | $ 270 | $ 252 |
STATEMENTS OF CASH FLOWS (UNAUD
STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Cash flows from operating activities | ||
Management fee received | $ 902,958 | $ 859,694 |
Administrative services reimbursements received | 296,390 | 298,056 |
Service agreement fee received | 13,599 | 14,225 |
Net investment income received | 16,799 | 17,279 |
Limited partnership distributions | 1,292 | 3,037 |
Commissions paid to agents | (434,599) | (413,880) |
Agents bonuses paid | (108,540) | (126,594) |
Salaries and wages paid | (101,765) | (102,601) |
Pension contributions and employee benefits paid | (22,085) | (99,334) |
General operating expenses paid | (117,915) | (111,381) |
Administrative services expenses paid | (291,136) | (295,635) |
Income taxes paid | (39,863) | (208) |
Interest paid | (719) | (1,065) |
Net cash provided by operating activities | 114,416 | 41,593 |
Purchase of investments: | ||
Available-for-sale securities | (615,384) | (114,848) |
Equity securities | 0 | (1,035) |
Limited partnerships | (9) | (215) |
Other investments | (124) | 0 |
Proceeds from investments: | ||
Available-for-sale securities sales | 430,596 | 76,387 |
Available-for-sale securities maturities/calls | 261,902 | 69,674 |
Equity securities | 0 | 1,157 |
Limited partnerships | 2,450 | 2,682 |
Purchase of fixed assets | (34,260) | (18,121) |
Distributions on agent loans | (6,947) | (24,440) |
Collections on agent loans | 3,991 | 3,106 |
Net cash provided by (used in) investing activities | 42,215 | (5,653) |
Cash flows from financing activities | ||
Dividends paid to shareholders | (83,824) | (78,235) |
Net (payments) proceeds from long-term borrowings | (962) | 24,986 |
Net cash used in financing activities | (84,786) | (53,249) |
Net increase (decrease) in cash and cash equivalents | 71,845 | (17,309) |
Cash and cash equivalents, beginning of period | 266,417 | 215,721 |
Cash and cash equivalents, end of period | 338,262 | $ 198,412 |
Supplemental disclosure of noncash transactions | ||
Operating lease assets obtained in exchange for new operating lease liabilities | 33,136 | |
Liability incurred to purchase fixed assets | $ 14,980 |
Nature of Operations
Nature of Operations | 6 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Operations | Nature of Operations Erie Indemnity Company ("Indemnity", "we", "us", "our") is a publicly held Pennsylvania business corporation that has since its incorporation in 1925 served as the attorney-in-fact for the subscribers (policyholders) at the Erie Insurance Exchange ("Exchange"). The Exchange, which also commenced business in 1925, is a Pennsylvania-domiciled reciprocal insurer that writes property and casualty insurance. Our primary function as attorney-in-fact is to perform policy issuance and renewal services on behalf of the subscribers at the Exchange. We also act as attorney-in-fact on behalf of the Exchange with respect to all claims handling and investment management services, as well as the service provider for all claims handling, life insurance, and investment management services for its insurance subsidiaries, collectively referred to as "administrative services". Acting as attorney-in-fact in these two capacities is done in accordance with a subscriber's agreement (a limited power of attorney) executed individually by each subscriber (policyholder), which appoints us as their common attorney-in-fact to transact certain business on their behalf. Pursuant to the subscriber's agreement for acting as attorney-in-fact in these two capacities, we earn a management fee calculated as a percentage of the direct and affiliated assumed premiums written by the Exchange. The policy issuance and renewal services we provide to the Exchange are related to the sales, underwriting and issuance of policies. The sales related services we provide include agent compensation and certain sales and advertising support services. Agent compensation includes scheduled commissions to agents based upon premiums written as well as additional commissions and bonuses to agents, which are earned by achieving targeted measures. The underwriting services we provide include underwriting and policy processing. The remaining services we provide include customer service and administrative support. We also provide information technology services that support all the functions listed above. Included in these expenses are allocations of costs for departments that support these policy issuance and renewal functions. By virtue of its legal structure as a reciprocal insurer, the Exchange does not have any employees or officers. Therefore, it enters into contractual relationships by and through an attorney-in-fact. Indemnity serves as the attorney-in-fact on behalf of the Exchange with respect to its administrative services. The Exchange's insurance subsidiaries also utilize Indemnity for these services in accordance with the service agreements between each of the subsidiaries and Indemnity. Claims handling services include costs incurred in the claims process, including the adjustment, investigation, defense, recording and payment functions. Life insurance management services include costs incurred in the management and processing of life insurance business. Investment management services are related to investment trading activity, accounting and all other functions attributable to the investment of funds. Included in these expenses are allocations of costs for departments that support these administrative functions. The amounts incurred for these services are reimbursed to Indemnity at cost in accordance with the subscriber's agreement and the service agreements. State insurance regulations require that intercompany service agreements and any material amendments be approved in advance by the state insurance department. |
Significant Accounting Policies
Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies Basis of presentation The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019 . For further information, refer to the financial statements and footnotes included in our Form 10-K for the year ended December 31, 2018 as filed with the Securities and Exchange Commission on February 21, 2019 . Use of estimates The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Recently adopted accounting standards In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Codification ("ASC") 842, "Leases" , which requires lessees to recognize assets and liabilities arising from operating leases on the Statements of Financial Position and to disclose certain information about leasing arrangements. We adopted ASC 842 on January 1, 2019 using the optional transition method, which permits entities to apply the new guidance prospectively with certain practical expedients available. We elected the package of practical expedients which among other things allowed us to carry forward the historical lease classifications. We did not elect the hindsight practical expedient in determining the lease term for existing leases. The adoption of the new standard resulted in the recognition of operating lease assets of $32.7 million and operating lease liabilities of $32.1 million on the Statement of Financial Position at January 1, 2019. The adoption of this standard did not have a material impact on our Statement of Operations and had no impact on our net cash flows. Recently issued accounting standards In August 2018, the FASB issued Accounting Standards Update ("ASU") 2018-15, "Intangibles-Goodwill and Other Internal-Use Software" , which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. ASU 2018-15 is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. The amendments under ASU 2018-15 may be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption and early adoption is permitted. We plan to adopt this guidance on a prospective basis and do not expect a material impact on our financial statements or disclosures. In June 2016, the FASB issued ASU 2016-13, "Financial Instruments-Credit Losses" , which requires financial assets measured at amortized cost to be presented at the net amount expected to be collected through the use of a new forward-looking expected loss model and credit losses relating to available-for-sale debt securities to be recognized through an allowance for credit losses. ASU 2016-13 is effective for interim and annual reporting periods beginning after December 15, 2019. Early adoption for interim and annual periods beginning after December 15, 2018 is permitted. We have evaluated the impact of this guidance on our financial assets. Our investments are not measured at amortized cost, and therefore do not require the use of a new expected loss model. Our available-for-sale debt securities will continue to be monitored for credit losses which would be limited to the amount by which the fair value is below amortized cost and reflected as an allowance for credit losses rather than a reduction of the carrying value of the asset. Our receivables from Erie Insurance Exchange and affiliates are unlikely to have a significant credit loss exposure given the financial strength of the Exchange as demonstrated by its strong surplus position, industry ratings, and historical experience of no credit losses. We currently do not record an allowance for credit losses related to our agent loans as historical default amounts have been insignificant and the majority of the loans are senior secured. Accordingly, when we establish an allowance related to agent loans upon adoption of this guidance, we do not expect it to be material. Our cash equivalents include money market mutual funds comprised of U.S. government securities, therefore a corresponding allowance, if any, would be expected to be immaterial. As a result of our evaluation, we do not expect a material impact on our financial statements. Other assets Other assets include agent loans, operating lease assets and other long-term prepaid assets. Agent loans are carried at unpaid principal balance with interest recorded in investment income as earned. It is our policy to charge the loans that are in default directly to expense. We do not record an allowance for credit losses on these loans, as the majority of the loans are senior secured and historically have had insignificant default amounts. The determination of whether an arrangement is a lease, and the related lease classification, is made at inception of a contract. Our leases are classified as operating leases. Operating lease assets and liabilities are recorded at inception based on the present value of the future minimum lease payments over the lease term at commencement date. When an implicit rate for the lease is not available, we use our incremental borrowing rate based on the information available at commencement date to determine the present value of future payments. Lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Most of our lease contracts contain lease and non-lease components. Non-lease components are expensed as incurred. Operating lease assets are included in other assets, and the current and noncurrent portions of the operating lease liabilities are included in accounts payable and accrued expenses and other long-term liabilities, respectively, in the Statement of Financial Position. |
Revenue
Revenue | 6 Months Ended |
Jun. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Revenue The majority of our revenue is derived from the subscriber’s agreement between us and the subscribers (policyholders) at the Exchange. Pursuant to the subscriber’s agreement, we earn a management fee calculated as a percentage, not to exceed 25% , of all direct and affiliated assumed written premiums of the Exchange. We allocate a portion of our management fee revenue, currently 25% of the direct and affiliated assumed written premiums of the Exchange, between the two performance obligations we have under the subscriber’s agreement. The first performance obligation is to provide policy issuance and renewal services to the subscribers (policyholders) at the Exchange, and the second is to act as attorney-in-fact on behalf of the Exchange, as well as the service provider for its insurance subsidiaries, with respect to all administrative services. The transaction price, including management fee revenue and administrative service reimbursement revenue, is allocated based on the estimated standalone selling prices developed using industry information and other available information for similar services. We update the transaction price allocation annually based upon the most recent information available. There was no material change to the allocation in 2019. The first performance obligation is to provide policy issuance and renewal services that result in executed insurance policies between the Exchange or one of its insurance subsidiaries and the subscriber (policyholder). Our customer, the subscriber (policyholder), receives economic benefits when substantially all the policy issuance or renewal services are complete and an insurance policy is issued or renewed by the Exchange or one of its insurance subsidiaries. It is at the time of policy issuance or renewal that the allocated portion of revenue is recognized. The Exchange, by virtue of its legal structure as a reciprocal insurer, does not have any employees or officers. Therefore, it enters into contractual relationships by and through an attorney-in-fact. Indemnity serves as the attorney-in-fact on behalf of the Exchange with respect to its administrative services in accordance with the subscriber's agreement. The Exchange's insurance subsidiaries also utilize Indemnity for these services in accordance with the service agreements between each of the subsidiaries and Indemnity. Collectively, these services represent a second performance obligation under the subscriber’s agreement and the service agreements. The revenue allocated to this performance obligation is recognized over time as these services are provided. The portion of revenue not yet earned is recorded as a contract liability in the Statements of Financial Position. The administrative services expenses we incur and the related reimbursements we receive are recorded gross in the Statements of Operations. Indemnity records a receivable from the Exchange for management fee revenue when the premium is written or assumed by the Exchange. Indemnity collects the management fee from the Exchange when the Exchange collects the premiums from the subscribers (policyholders). As the Exchange issues policies with annual terms only, cash collections generally occur within one year. A constraining estimate exists around the management fee received as consideration related to the potential for management fee to be returned if a policy were to be cancelled mid-term. Management fees are returned to the Exchange when policyholders cancel their insurance coverage mid-term and unearned premiums are refunded to them. We maintain an estimated allowance to reduce the management fee to its estimated net realizable value to account for the potential of mid-term policy cancellations based on historical cancellation rates. This estimated allowance has been allocated between the two performance obligations consistent with the revenue allocation proportions. The following table disaggregates revenue by our two performance obligations: Three months ended June 30, Six months ended June 30, (in thousands) 2019 2018 2019 2018 Management fee revenue - policy issuance and renewal services, net $ 480,513 $ 454,572 $ 911,496 $ 860,550 Management fee revenue - administrative services, net 14,195 13,299 28,146 26,373 Administrative services reimbursement revenue 146,095 146,507 288,575 292,470 Total administrative services $ 160,290 $ 159,806 $ 316,721 $ 318,843 |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Class A and Class B basic earnings per share and Class B diluted earnings per share are calculated under the two-class method. The two-class method allocates earnings to each class of stock based upon its dividend rights. Class B shares are convertible into Class A shares at a conversion ratio of 2,400 to 1. See Note 11, "Capital Stock". Class A diluted earnings per share are calculated under the if-converted method, which reflects the conversion of Class B shares to Class A shares. Diluted earnings per share calculations include the dilutive effect of assumed issuance of stock-based awards under compensation plans that have the option to be paid in stock using the treasury stock method. A reconciliation of the numerators and denominators used in the basic and diluted per-share computations is presented as follows for each class of common stock: Three months ended June 30, 2019 2018 (dollars in thousands, except per share data) Allocated net income (numerator) Weighted shares (denominator) Per-share amount Allocated net income (numerator) Weighted shares (denominator) Per-share amount Class A – Basic EPS: Income available to Class A stockholders $ 87,036 46,188,994 $ 1.88 $ 79,053 46,188,705 $ 1.71 Dilutive effect of stock-based awards 0 24,906 — 0 23,344 — Assumed conversion of Class B shares 718 6,100,800 — 653 6,100,800 — Class A – Diluted EPS: Income available to Class A stockholders on Class A equivalent shares $ 87,754 52,314,700 $ 1.68 $ 79,706 52,312,849 $ 1.52 Class B – Basic EPS: Income available to Class B stockholders $ 718 2,542 $ 283 $ 653 2,542 $ 257 Class B – Diluted EPS: Income available to Class B stockholders $ 718 2,542 $ 283 $ 653 2,542 $ 257 Six months ended June 30, 2019 2018 (dollars in thousands, except per share data) Allocated net income (numerator) Weighted shares (denominator) Per-share amount Allocated net income (numerator) Weighted shares (denominator) Per-share amount Class A – Basic EPS: Income available to Class A stockholders $ 161,730 46,188,668 $ 3.50 $ 144,273 46,188,309 $ 3.12 Dilutive effect of stock-based awards 0 23,903 — 0 22,632 — Assumed conversion of Class B shares 1,335 6,100,800 — 1,191 6,100,800 — Class A – Diluted EPS: Income available to Class A stockholders on Class A equivalent shares $ 163,065 52,313,371 $ 3.12 $ 145,464 52,311,741 $ 2.78 Class B – Basic EPS: Income available to Class B stockholders $ 1,335 2,542 $ 525 $ 1,191 2,542 $ 469 Class B – Diluted EPS: Income available to Class B stockholders $ 1,335 2,542 $ 525 $ 1,191 2,542 $ 468 |
Fair Value
Fair Value | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value | Fair Value Financial instruments carried at fair value Our available-for-sale debt securities and equity securities are recorded at fair value, which is the price that would be received to sell the asset in an orderly transaction between willing market participants as of the measurement date. Valuation techniques used to derive the fair value of our available-for-sale debt securities and equity securities are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources. Unobservable inputs reflect our own assumptions regarding fair market value for these securities. Although virtually all of our prices are obtained from third party sources, we also perform an internal pricing review on outliers. The outlier review includes securities with price changes that vary from current market conditions or independent third party price sources. Financial instruments are categorized based upon the following characteristics or inputs to the valuation techniques: • Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date. • Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. • Level 3 – Unobservable inputs for the asset or liability. Estimates of fair values for our investment portfolio are obtained primarily from a nationally recognized pricing service. Our Level 1 category includes those securities valued using an exchange traded price provided by the pricing service. The methodologies used by the pricing service that support a Level 2 classification of a financial instrument include multiple verifiable, observable inputs including benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data. Pricing service valuations for Level 3 securities are based upon proprietary models and are used when observable inputs are not available or in illiquid markets. In limited circumstances we adjust the price received from the pricing service when, in our judgment, a better reflection of fair value is available based upon corroborating information and our knowledge and monitoring of market conditions such as a disparity in price of comparable securities and/or non-binding broker quotes. In other circumstances, certain securities are internally priced because prices are not provided by the pricing service. We perform continuous reviews of the prices obtained from the pricing service. This includes evaluating the methodology and inputs used by the pricing service to ensure that we determine the proper classification level of the financial instrument. Price variances, including large periodic changes, are investigated and corroborated by market data. We have reviewed the pricing methodologies of our pricing service as well as other observable inputs, such as market data, and transaction volumes and believe that the prices adequately consider market activity in determining fair value. When a price from the pricing service is not available, values are determined by obtaining broker/dealer quotes and/or market comparables. When available, we obtain multiple quotes for the same security. The ultimate value for these securities is determined based upon our best estimate of fair value using corroborating market information. Our evaluation includes the consideration of benchmark yields, reported trades, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data. The following tables present our fair value measurements on a recurring basis by asset class and level of input: At June 30, 2019 (in thousands) Total Level 1 Level 2 Level 3 Available-for-sale securities: U.S. Treasury (1) $ 151,094 $ 0 $ 151,094 $ 0 States & political subdivisions (1) 3,360 0 3,360 0 Corporate debt securities (1) 356,656 0 350,283 6,373 Residential mortgage-backed securities 66,186 0 66,186 0 Commercial mortgage-backed securities 46,142 0 43,591 2,551 Collateralized debt obligations 57,345 0 57,345 0 Other debt securities 8,325 0 8,325 0 Total available-for-sale securities 689,108 0 680,184 8,924 Equity securities: Nonredeemable preferred stock - financial services sector 12,445 2,003 10,442 0 Total equity securities 12,445 2,003 10,442 0 Total $ 701,553 $ 2,003 $ 690,626 $ 8,924 At December 31, 2018 (in thousands) Total Level 1 Level 2 Level 3 Available-for-sale securities: U.S. Treasury (1) $ 208,412 $ 0 $ 208,412 $ 0 States & political subdivisions (1) 159,023 0 159,023 0 Corporate debt securities 249,947 0 237,370 12,577 Residential mortgage-backed securities 4,609 0 4,609 0 Commercial mortgage-backed securities 46,515 0 46,515 0 Collateralized debt obligations 64,239 0 64,239 0 Other debt securities 15,778 0 15,778 0 Total available-for-sale securities 748,523 0 735,946 12,577 Equity securities: Nonredeemable preferred stock - financial services sector 11,853 1,809 10,044 0 Total equity securities 11,853 1,809 10,044 0 Other limited partnership investments (2) 3,206 — — — Total $ 763,582 $ 1,809 $ 745,990 $ 12,577 (1) In the fourth quarter of 2018, we began selling off our municipal bonds as part of a portfolio rebalancing. We have currently invested proceeds from these sales primarily in U.S. Treasuries and corporate debt securities. (2) The limited partnership investment measured at fair value represents one real estate fund included on the balance sheet as a limited partnership investment reported under the fair value option using the net asset value (NAV) practical expedient, which is not required to be categorized in the fair value hierarchy. The fair value of this investment is based on our proportionate share of the NAV from the most recent partners' capital statements received from the general partner, which is generally one quarter prior to our balance sheet date. We consider observable market data and perform a review validating the appropriateness of the NAV at each balance sheet date. Liquidation of this fund was completed in January 2019 and a final distribution totaling $3.2 million was received. There were no unfunded commitments related to the investment at December 31, 2018 . During the year ended December 31, 2018 , no contributions were made and distributions totaling $1.2 million were received from this investment. The following table presents our fair value measurements on a recurring basis by pricing source: At June 30, 2019 (in thousands) Total Level 1 Level 2 Level 3 Available-for-sale securities: Priced via pricing services $ 688,958 $ 0 $ 680,184 $ 8,774 Priced via internal modeling 150 0 0 150 Total available-for-sale securities 689,108 0 680,184 8,924 Equity securities priced via pricing services 12,445 2,003 10,442 0 Total $ 701,553 $ 2,003 $ 690,626 $ 8,924 Quantitative and Qualitative Disclosures about Unobservable Inputs The following table presents quantitative information about the significant unobservable inputs utilized in the fair value measurements of Level 3 assets. Level 3 securities where cost is the best estimate of fair value totaled $0.2 million at June 30, 2019 and are excluded from the table below. When a non-binding broker quote was the only input available, the security was classified within Level 3. The quantitative detail of the unobservable inputs is neither provided nor reasonably available to us and therefore has not been included in the table below. These investments totaled $0.8 million at June 30, 2019 and $12.6 million at December 31, 2018 . The weighted average is calculated based on estimated fair value. At June 30, 2019 (dollars in thousands) Fair value Valuation techniques Unobservable input Range Weighted Impact of increase in input on estimated fair value Corporate debt securities - bank loans $ 6,093 Syndicated loan model Market residual yield (1) -130 - +730 +54 Decrease Commercial mortgage-backed securities 1,866 Relative value pricing model Credit spread (2) +44 - +52 +48 Decrease (1) Values for bank loans classified as Level 3 are determined by our pricing vendor based on model yield curves adjusted for observable inputs. The market residual yield represents a net adjustment to the model yield curve for unobservable input factors. (2) Values for commercial mortgage-backed securities classified as Level 3 include adjustments to the base spread over the appropriate U.S. Treasury yield assuming no prepayments until penalty provisions have expired. We review the fair value hierarchy classifications each reporting period. Transfers between hierarchy levels may occur due to changes in available market observable inputs. Level 3 Assets – 2019 Quarterly Change: Beginning balance at March 31, 2019 Included in earnings (1) Included Purchases Sales Transfers into Level 3 (2) Transfers out of Level 3 (2) Ending balance at June 30, 2019 Available-for-sale securities: Corporate debt securities $ 11,523 $ (20 ) $ 23 $ 0 $ (5,841 ) $ 2,581 $ (1,893 ) $ 6,373 Residential mortgage-backed securities 915 4 15 0 (26 ) 0 (908 ) 0 Commercial mortgage-backed securities 1,182 15 (8 ) 0 (1,065 ) 2,551 (124 ) 2,551 Total Level 3 available-for-sale securities $ 13,620 $ (1 ) $ 30 $ 0 $ (6,932 ) $ 5,132 $ (2,925 ) $ 8,924 Level 3 Assets – 2019 Year-to-Date Change: (in thousands) Beginning balance at December 31, 2018 Included in earnings (1) Included comprehensive income Purchases Sales Transfers into Level 3 (2) Transfers out of Level 3 (2) Ending balance at June 30, 2019 Available-for-sale securities: Corporate debt securities $ 12,577 $ (9 ) $ 291 $ 734 $ (6,272 ) $ 7,394 $ (8,342 ) $ 6,373 Residential mortgage-backed securities 0 4 15 921 (32 ) 0 (908 ) 0 Commercial mortgage-backed securities 0 13 (8 ) 478 (1,065 ) 3,257 (124 ) 2,551 Total Level 3 available-for-sale securities $ 12,577 $ 8 $ 298 $ 2,133 $ (7,369 ) $ 10,651 $ (9,374 ) $ 8,924 Level 3 Assets – 2018 Quarterly Change: Beginning balance at March 31, 2018 Included in earnings (1) Included Purchases Sales Transfers into Level 3 (2) Transfers out of Level 3 (2) Ending balance at June 30, 2018 Available-for-sale securities: Corporate debt securities $ 6,309 $ 10 $ (53 ) $ 3,047 $ (472 ) $ 5,370 $ (3,091 ) $ 11,120 Total Level 3 available-for-sale securities $ 6,309 $ 10 $ (53 ) $ 3,047 $ (472 ) $ 5,370 $ (3,091 ) $ 11,120 Level 3 Assets – 2018 Year-to-Date Change: (in thousands) Beginning balance at December 31, 2017 Included in earnings (1) Included in other comprehensive income Purchases Sales Transfers into Level 3 (2) Transfers out of Level 3 (2) Ending balance at June 30, 2018 Available-for-sale securities: Corporate debt securities $ 7,879 $ 1 $ (48 ) $ 3,047 $ (965 ) $ 7,782 $ (6,576 ) $ 11,120 Collateralized debt obligations 2,200 0 7 0 0 0 (2,207 ) 0 Total Level 3 available-for-sale securities $ 10,079 $ 1 $ (41 ) $ 3,047 $ (965 ) $ 7,782 $ (8,783 ) $ 11,120 (1) These amounts are reported in the Statements of Operations as net investment income and net realized investment gains (losses) for the each of the periods presented above. (2) Transfers into and/or (out) of Level 3 are primarily attributable to the availability of market observable information and the re-evaluation of the observability of pricing inputs. The change in unrealized gains or losses included in other comprehensive income related to Level 3 securities held at the reporting date is as follows: Three months ended June 30, Six months ended June 30, (in thousands) 2019 2018 2019 2018 Available-for-sale securities: Corporate debt securities $ (18 ) $ (53 ) $ 158 $ (28 ) Commercial mortgage-backed securities 29 — 26 — Net unrealized gains (losses) on Level 3 securities held at reporting date $ 11 $ (53 ) $ 184 $ (28 ) Financial instruments disclosed, but not carried at fair value The following table presents the carrying values and fair value measurements, which are categorized as Level 3 in the fair value hierarchy, of financial instruments disclosed, but not carried at fair value: At June 30, 2019 At December 31, 2018 (in thousands) Carrying value Fair value Carrying value Fair value Agent loans $ 60,962 $ 61,321 $ 58,006 $ 54,110 Long-term borrowings 99,038 100,129 99,730 94,057 |
Investments
Investments | 6 Months Ended |
Jun. 30, 2019 | |
Investments [Abstract] | |
Investments | Investments Available-for-sale securities The following tables summarize the cost and fair value of our available-for-sale securities. See also Note 5, "Fair Value" for additional fair value disclosures. At June 30, 2019 (in thousands) Amortized cost Gross unrealized gains Gross unrealized losses Estimated fair value Available-for-sale securities: U.S. Treasury (1) $ 150,171 $ 923 $ 0 $ 151,094 States & political subdivisions (1) 3,354 6 0 3,360 Corporate debt securities (1) 356,899 1,706 1,949 356,656 Residential mortgage-backed securities 65,910 297 21 66,186 Commercial mortgage-backed securities 45,527 625 10 46,142 Collateralized debt obligations 57,710 16 381 57,345 Other debt securities 8,209 116 0 8,325 Total available-for-sale securities $ 687,780 $ 3,689 $ 2,361 $ 689,108 At December 31, 2018 (in thousands) Amortized cost Gross unrealized gains Gross unrealized losses Estimated fair value Available-for-sale securities: U.S. Treasury (1) $ 208,610 $ 18 $ 216 $ 208,412 States & political subdivisions (1) 157,003 2,020 0 159,023 Corporate debt securities 259,362 139 9,554 249,947 Residential mortgage-backed securities 4,603 38 32 4,609 Commercial mortgage-backed securities 47,022 80 587 46,515 Collateralized debt obligations 65,039 30 830 64,239 Other debt securities 15,756 33 11 15,778 Total available-for-sale securities $ 757,395 $ 2,358 $ 11,230 $ 748,523 (1) In the fourth quarter of 2018, we began selling off our municipal bonds as part of a portfolio rebalancing. We have currently invested proceeds from these sales primarily in U.S. Treasuries and corporate debt securities. The amortized cost and estimated fair value of available-for-sale securities at June 30, 2019 are shown below by remaining contractual term to maturity. Mortgage-backed securities are allocated based upon stated maturity dates. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. At June 30, 2019 Amortized Estimated (in thousands) cost fair value Due in one year or less $ 62,962 $ 63,031 Due after one year through five years 358,056 358,508 Due after five years through ten years 127,215 127,364 Due after ten years 139,547 140,205 Total available-for-sale securities $ 687,780 $ 689,108 Available-for-sale securities in a gross unrealized loss position are as follows. Data is provided by length of time for securities in a gross unrealized loss position. At June 30, 2019 Less than 12 months 12 months or longer Total (dollars in thousands) Fair value Unrealized losses Fair value Unrealized losses Fair value Unrealized losses No. of holdings Available-for-sale securities: Corporate debt securities 104,809 844 58,666 1,105 163,475 1,949 334 Residential mortgage-backed securities 15,710 21 0 0 15,710 21 2 Commercial mortgage-backed securities 6,965 6 547 4 7,512 10 7 Collateralized debt obligations 40,402 165 14,842 216 55,244 381 41 Total available-for-sale securities $ 167,886 $ 1,036 $ 74,055 $ 1,325 $ 241,941 $ 2,361 384 Quality breakdown of available-for-sale securities: Investment grade $ 136,432 $ 296 $ 59,023 $ 354 $ 195,455 $ 650 111 Non-investment grade 31,454 740 15,032 971 46,486 1,711 273 Total available-for-sale securities $ 167,886 $ 1,036 $ 74,055 $ 1,325 $ 241,941 $ 2,361 384 At December 31, 2018 Less than 12 months 12 months or longer Total (dollars in thousands) Fair value Unrealized losses Fair value Unrealized losses Fair value Unrealized losses No. of holdings Available-for-sale securities: U.S. Treasury $ 129,474 $ 19 $ 11,656 $ 197 $ 141,130 $ 216 7 Corporate debt securities 157,300 6,866 86,586 2,688 243,886 9,554 635 Residential mortgage-backed securities 777 6 1,618 26 2,395 32 3 Commercial mortgage-backed securities 17,624 175 16,997 412 34,621 587 30 Collateralized debt obligations 55,246 826 1,248 4 56,494 830 39 Other debt securities 8,213 11 0 0 8,213 11 7 Total available-for-sale securities $ 368,634 $ 7,903 $ 118,105 $ 3,327 $ 486,739 $ 11,230 721 Quality breakdown of available-for-sale securities: Investment grade $ 242,821 $ 1,295 $ 98,118 $ 1,641 $ 340,939 $ 2,936 147 Non-investment grade 125,813 6,608 19,987 1,686 145,800 8,294 574 Total available-for-sale securities $ 368,634 $ 7,903 $ 118,105 $ 3,327 $ 486,739 $ 11,230 721 The above securities have been evaluated and determined to be temporary impairments for which we expect to recover our entire principal plus interest. The primary components of this analysis include a general review of market conditions and financial performance of the issuer along with the extent and duration at which fair value is less than cost. Any securities that we intend to sell or will more likely than not be required to sell before recovery are included in other-than-temporary impairments, which are recognized in earnings. Net investment income Investment income, net of expenses, was generated from the following portfolios: Three months ended June 30, Six months ended June 30, (in thousands) 2019 2018 2019 2018 Fixed maturities (1) $ 5,488 $ 6,263 $ 11,649 $ 12,373 Equity securities 141 142 282 284 Cash equivalents and other 2,660 1,026 5,125 2,034 Total investment income 8,289 7,431 17,056 14,691 Less: investment expenses 259 327 509 767 Investment income, net of expenses $ 8,030 $ 7,104 $ 16,547 $ 13,924 (1) Includes interest earned on note receivable from Erie Family Life Insurance Company of $0.4 million and $0.8 million for the three and six months ended June 30, 2018 , respectively. The note was repaid in full in December 2018. Realized investment gains (losses) Realized gains (losses) on investments were as follows: Three months ended June 30, Six months ended June 30, (in thousands) 2019 2018 2019 2018 Available-for-sale securities: Gross realized gains $ 2,062 $ 235 $ 4,320 $ 575 Gross realized losses (823 ) (301 ) (1,163 ) (986 ) Net realized gains (losses) on available-for-sale securities 1,239 (66 ) 3,157 (411 ) Equity securities 63 (68 ) 648 (188 ) Miscellaneous 0 102 0 102 Net realized investment gains (losses) $ 1,302 $ (32 ) $ 3,805 $ (497 ) The portion of net unrealized gains and losses recognized during the reporting period, related to equity securities still held at the reporting date, is calculated as follows: Three months ended June 30, Six months ended June 30, (in thousands) 2019 2018 2019 2018 Equity securities: Net gains (losses) recognized during the period $ 63 $ (68 ) $ 648 $ (188 ) Less: net losses recognized on securities sold 0 0 0 (34 ) Net unrealized gains (losses) recognized on securities held at reporting date $ 63 $ (68 ) $ 648 $ (154 ) Other-than-temporary impairments on available-for-sale securities recognized in earnings were $0.1 million and $0.6 million for the quarters ended June 30, 2019 and 2018 , respectively, and $0.2 million and $0.6 million for the six months ended June 30, 2019 and 2018 , respectively. We have the intent to sell all credit-impaired available-for-sale debt securities; therefore, the entire amount of the impairment charges were included in earnings and no impairments were recognized in other comprehensive income. Limited partnerships The majority of our limited partnership holdings are considered investment companies where the general partners record assets at fair value. These limited partnerships are recorded using the equity method of accounting and are generally reported on a one-quarter lag; therefore, our year-to-date limited partnership results through June 30, 2019 are comprised of partnership financial results for the fourth quarter of 2018 and first quarter of 2019 . Given the lag in reporting, our limited partnership results do not reflect the market conditions of the second quarter of 2019 . Cash contributions made to and distributions received from the partnerships are recorded in the period in which the transaction occurs. At December 31, 2018 we also owned one real estate limited partnership that did not meet the criteria of an investment company. This partnership prepared audited financial statements on a cost basis. We elected to report this limited partnership under the fair value option, which was based on the NAV from our partner's capital statement reflecting the general partner's estimate of fair value for the fund's underlying assets. Fair value provides consistency in the evaluation and financial reporting for these limited partnerships and limited partnerships accounted for under the equity method. This real estate limited partnership was fully liquidated in January 2019. Equity in earnings (losses) of limited partnerships by method of accounting were as follows: Three months ended June 30, Six months ended June 30, (in thousands) 2019 2018 2019 2018 Equity in earnings (losses) of limited partnerships - equity method $ 404 $ (216 ) $ (743 ) $ (21 ) Change in fair value of limited partnerships - fair value option 0 (3 ) 0 (390 ) Equity in earnings (losses) of limited partnerships $ 404 $ (219 ) $ (743 ) $ (411 ) The following table summarizes limited partnership investments by sector: (in thousands) At June 30, 2019 At December 31, 2018 Private equity $ 26,793 $ 28,271 Mezzanine debt 1,053 1,152 Real estate 2,498 2,192 Real estate - fair value option 0 3,206 Total limited partnership investments $ 30,344 $ 34,821 See also Note 14, "Commitments and Contingencies" for investment commitments related to limited partnerships. |
Leases
Leases | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Leases | Leases Lease assets and liabilities recorded on our Statement of Financial Position were as follows: (in thousands) June 30, 2019 Operating lease assets $ 26,587 Operating lease liabilities - current $ 11,736 Operating lease liabilities - long-term 14,539 Total operating lease liabilities $ 26,275 We currently have leases for real estate, technology equipment, copiers, and vehicles. Our largest operating lease asset at June 30, 2019 of $14.7 million is for office space leased from the Exchange, including the home office. Under this lease, rent is based on rental rates of like property and all operating expenses are the responsibility of the tenant (Indemnity). The lease agreement expires December 31, 2021. Operating lease costs for the three and six months ended June 30, 2019 were $3.6 million and $7.2 million , respectively. Of this amount, the Exchange and its subsidiaries reimbursed us $1.6 million and $3.1 million for the three and six months ended June 30, 2019 , respectively, which represents the allocated share of lease costs supporting administrative services activities. |
Borrowing Arrangements
Borrowing Arrangements | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Borrowing Arrangements | Borrowing Arrangements Bank line of credit As of June 30, 2019 , we have access to a $100 million bank revolving line of credit with a $25 million letter of credit sublimit that expires on October 30, 2023 . As of June 30, 2019 , a total of $99.1 million remains available under the facility due to $0.9 million outstanding letters of credit, which reduce the availability for letters of credit to $24.1 million . We had no borrowings outstanding on our line of credit as of June 30, 2019 . Investments with a fair value of $109.3 million were pledged as collateral on the line at June 30, 2019 . The investments pledged as collateral have no trading restrictions and are reported as cash and cash equivalents and available-for-sale securities in the Statements of Financial Position as of June 30, 2019 . The banks require compliance with certain covenants, which include leverage ratios and debt restrictions, for our line of credit. We are in compliance with all covenants at June 30, 2019 . Term loan credit facility In 2016, we entered into a credit agreement for a $100 million senior secured draw term loan credit facility ("Credit Facility") for the acquisition of real property and construction of an office building that will serve as part of our principal headquarters. On January 1, 2019, the Credit Facility converted to a fully-amortized term loan with monthly payments of principal and interest at a fixed rate of 4.35% over a period of 28 years . Investments with a fair value of $108.6 million were pledged as collateral for the facility and are reported as cash and cash equivalents and available-for-sale securities in the Statements of Financial Position as of June 30, 2019 . The bank requires compliance with certain covenants, which include leverage ratios, debt restrictions and minimum net worth, for our Credit Facility. We are in compliance with all covenants at June 30, 2019 . The remaining unpaid balance from the Credit Facility is reported at carrying value on our Statements of Financial Position, net of unamortized loan origination and commitment fees. See Note 5, "Fair Value" for the estimated fair value of these borrowings. Annual principal payments The following table sets forth future principal payments: (in thousands) Year Principal payments 2019 $ 946 2020 1,955 2021 2,042 2022 2,132 2023 2,227 Thereafter 89,737 |
Postretirement Benefits
Postretirement Benefits | 6 Months Ended |
Jun. 30, 2019 | |
Retirement Benefits [Abstract] | |
Postretirement Benefits | Postretirement Benefits Pension plans Our pension plans consist of a noncontributory defined benefit pension plan covering substantially all employees and an unfunded supplemental employee retirement plan for certain members of executive and senior management. Although we are the sponsor of these postretirement plans and record the funded status of these plans, the Exchange and its subsidiaries reimburse us for approximately 58% of the annual benefit expense of these plans, which represents pension benefits for employees performing administrative services and their allocated share of costs for employees in departments that support the administrative functions. The cost of our pension plans are as follows: Three months ended June 30, Six months ended June 30, (in thousands) 2019 2018 2019 2018 Service cost for benefits earned $ 8,464 $ 9,513 $ 16,927 $ 19,026 Interest cost on benefits obligation 9,826 8,845 19,653 17,691 Expected return on plan assets (11,871 ) (12,814 ) (23,742 ) (25,629 ) Prior service cost amortization 348 338 697 676 Net actuarial loss amortization 1,278 3,202 2,556 6,404 Pension plan cost (1) $ 8,045 $ 9,084 $ 16,091 $ 18,168 (1) The components of pension plan costs other than the service cost component are included in the line item "Other income" in the Statements of Operations after reimbursements from the Exchange and its subsidiaries. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Income tax expense is provided on an interim basis based upon our estimate of the annual effective income tax rate, adjusted each quarter for discrete items. For the three months ended June 30, 2019 and 2018 , our effective tax rate was 17.2% and 21.1% , respectively, and for the six months ended June 30, 2019 and 2018 , our effective tax rate was 19.1% and 21.0% , respectively. Impacting our effective tax rate in the three and six months ended June 30, 2019, was the settlement of an uncertain tax position. An income tax benefit of $4.1 million was recorded in June 2019, including $1.0 million of related interest expense, which reduced our effective tax rate by 3.8% and 2.0% in the three and six months ended June 30, 2019, respectively. |
Capital Stock
Capital Stock | 6 Months Ended |
Jun. 30, 2019 | |
Class of Stock Disclosures [Abstract] | |
Capital Stock | Capital Stock Class A and B common stock Holders of Class B shares may, at their option, convert their shares into Class A shares at the rate of 2,400 Class A shares per Class B share. There were no shares of Class B common stock converted into Class A common stock during the six months ended June 30, 2019 and the year ended December 31, 2018 . There is no provision for conversion of Class A shares to Class B shares, and Class B shares surrendered for conversion cannot be reissued. Stock repurchases In 2011 , our Board of Directors approved a continuation of the current stock repurchase program of $150 million , with no time limitation. There were no shares repurchased under this program during the six months ended June 30, 2019 and the year ended December 31, 2018 . We had approximately $17.8 million of repurchase authority remaining under this program at June 30, 2019 . During the six months ended June 30, 2019 , we purchased 11,964 shares of our outstanding Class A nonvoting common stock outside of our publicly announced share repurchase program at a total cost of $2.0 million . Of this amount, we purchased 3,246 shares for $0.4 million , or $132.35 per share, for stock-based awards in conjunction with our equity compensation plan, for which the shares were delivered to plan participants in January 2019. We purchased 4,465 shares for $0.9 million , or $190.59 per share, to fund the rabbi trust for the outside director deferred stock compensation plan. The shares were transferred to the rabbi trust in February and May 2019. The remaining 4,253 shares were purchased at a total cost of $0.7 million , or $175.64 per share, to fund the rabbi trust for the incentive compensation deferral plan. The shares were transferred to the rabbi trust in February, March and May 2019. During the year ended December 31, 2018 , we purchased 27,120 shares of our outstanding Class A nonvoting common stock outside of our publicly announced share repurchase program at a total cost of $3.2 million . Of this amount, we purchased 5,830 shares for $0.7 million , or $117.39 per share, for stock-based awards in conjunction with our equity compensation plan. We purchased 9,285 shares for $1.1 million , or $122.19 per share, to fund the rabbi trust for the outside director deferred stock compensation plan. The remaining 12,005 shares were purchased at a total cost of $1.4 million , or $119.28 per share, to fund the rabbi trust for the incentive compensation deferral plan. These shares were delivered in 2018. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 6 Months Ended |
Jun. 30, 2019 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) Changes in accumulated other comprehensive income ("AOCI") (loss) by component, including amounts reclassified to other comprehensive income ("OCI") (loss) and the related line item in the Statements of Operations where net income is presented, are as follows: Three months ended Three months ended June 30, 2019 June 30, 2018 (in thousands) Before Tax Income Tax Net Before Tax Income Tax Net Investment securities: AOCI (loss), beginning of period $ (2,235 ) $ (470 ) $ (1,765 ) $ (3,460 ) $ (727 ) $ (2,733 ) OCI (loss) before reclassifications 4,420 928 3,492 (1,409 ) (296 ) (1,113 ) Realized investment (gains) losses (1,239 ) (260 ) (979 ) 66 14 52 Impairment losses 84 18 66 646 136 510 OCI (loss) 3,265 686 2,579 (697 ) (146 ) (551 ) AOCI (loss), end of period $ 1,030 $ 216 $ 814 $ (4,157 ) $ (873 ) $ (3,284 ) Pension and other postretirement plans: AOCI (loss), beginning of period $ (154,190 ) $ (32,381 ) $ (121,809 ) $ (200,954 ) $ (42,201 ) $ (158,753 ) Amortization of prior service costs (1) 348 73 275 0 0 0 Amortization of net actuarial loss (1) 1,210 254 956 0 0 0 OCI 1,558 327 1,231 0 0 0 AOCI (loss), end of period $ (152,632 ) $ (32,054 ) $ (120,578 ) $ (200,954 ) $ (42,201 ) $ (158,753 ) Total AOCI (loss), beginning of period $ (156,425 ) $ (32,851 ) $ (123,574 ) $ (204,414 ) $ (42,928 ) $ (161,486 ) Investment securities 3,265 686 2,579 (697 ) (146 ) (551 ) Pension and other postretirement plans 1,558 327 1,231 0 0 0 OCI (loss) 4,823 1,013 3,810 (697 ) (146 ) (551 ) AOCI (loss), end of period $ (151,602 ) $ (31,838 ) $ (119,764 ) $ (205,111 ) $ (43,074 ) $ (162,037 ) Six months ended Six months ended June 30, 2019 June 30, 2018 (in thousands) Before Tax Income Tax Net Before Tax Income Tax Net Investment securities: AOCI (loss), beginning of period $ (9,169 ) $ (1,926 ) $ (7,243 ) $ 3,410 $ 716 $ 2,694 OCI (loss) before reclassifications 13,194 2,771 10,423 (8,539 ) (1,793 ) (6,746 ) Realized investment (gains) losses (3,157 ) (663 ) (2,494 ) 411 86 325 Impairment losses 162 34 128 646 136 510 Cumulative effect of adopting ASU 2016-01 (2) — — — (85 ) (18 ) (67 ) OCI (loss) 10,199 2,142 8,057 (7,567 ) (1,589 ) (5,978 ) AOCI (loss), end of period $ 1,030 $ 216 $ 814 $ (4,157 ) $ (873 ) $ (3,284 ) Pension and other postretirement plans: AOCI (loss), beginning of period $ (155,749 ) $ (32,708 ) $ (123,041 ) $ (200,954 ) $ (42,201 ) $ (158,753 ) Amortization of prior service costs (1) 697 146 551 0 0 0 Amortization of net actuarial loss (1) 2,420 508 1,912 0 0 0 OCI 3,117 654 2,463 0 0 0 AOCI (loss), end of period $ (152,632 ) $ (32,054 ) $ (120,578 ) $ (200,954 ) $ (42,201 ) $ (158,753 ) Total AOCI (loss), beginning of period $ (164,918 ) $ (34,634 ) $ (130,284 ) $ (197,544 ) $ (41,485 ) $ (156,059 ) Investment securities 10,199 2,142 8,057 (7,567 ) (1,589 ) (5,978 ) Pension and other postretirement plans 3,117 654 2,463 0 0 0 OCI (loss) 13,316 2,796 10,520 (7,567 ) (1,589 ) (5,978 ) AOCI (loss), end of period $ (151,602 ) $ (31,838 ) $ (119,764 ) $ (205,111 ) $ (43,074 ) $ (162,037 ) (1) Effective January 1, 2019, amounts reclassified from AOCI related to amortization of prior service costs and net actuarial loss were recorded during interim periods. Prior to 2019, amounts reclassified for these items were recorded on an annual basis. These components are included in the computation of net periodic pension cost. See Note 9, "Postretirement Benefits", for additional information. (2) ASU 2016-01 required a reclassification of unrealized losses of equity securities from AOCI to retained earnings at January 1, 2018. |
Concentrations of Credit Risk
Concentrations of Credit Risk | 6 Months Ended |
Jun. 30, 2019 | |
Risks and Uncertainties [Abstract] | |
Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments could potentially expose us to concentrations of credit risk, including unsecured receivables from the Exchange. A large majority of our revenue and receivables are from the Exchange and its affiliates. See also Note 1, "Nature of Operations". Management fee amounts and other reimbursements due from the Exchange and its affiliates were $483.3 million and $449.9 million at June 30, 2019 and December 31, 2018 , respectively. Given the financial strength of the Exchange and historical experience of no credit losses, we believe it is unlikely these receivables would have a significant credit loss exposure. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies We have contractual commitments to invest up to $9.9 million related to our limited partnership investments at June 30, 2019 . These commitments are split among private equity securities of $4.4 million and mezzanine debt securities of $5.5 million . These commitments will be funded as required by the limited partnership agreements. We are involved in litigation arising in the ordinary course of conducting business. In accordance with current accounting standards for loss contingencies and based upon information currently known to us, we establish reserves for litigation when it is probable that a loss associated with a claim or proceeding has been incurred and the amount of the loss or range of loss can be reasonably estimated. When no amount within the range of loss is a better estimate than any other amount, we accrue the minimum amount of the estimable loss. To the extent that such litigation against us may have an exposure to a loss in excess of the amount we have accrued, we believe that such excess would not be material to our financial condition, results of operations, or cash flows. Legal fees are expensed as incurred. We believe that our accruals for legal proceedings are appropriate and, individually and in the aggregate, are not expected to be material to our financial condition, results of operations, or cash flows. We review all litigation on an ongoing basis when making accrual and disclosure decisions. For certain legal proceedings, we cannot reasonably estimate losses or a range of loss, if any, particularly for proceedings that are in their early stages of development or where the plaintiffs seek indeterminate damages. Various factors, including, but not limited to, the outcome of potentially lengthy discovery and the resolution of important factual questions, may need to be determined before probability can be established or before a loss or range of loss can be reasonably estimated. If the loss contingency in question is not both probable and reasonably estimable, we do not establish an accrual and the matter will continue to be monitored for any developments that would make the loss contingency both probable and reasonably estimable. In the event that a legal proceeding results in a substantial judgment against, or settlement by, us, there can be no assurance that any resulting liability or financial commitment would not have a material adverse effect on the financial condition, results of operations, or cash flows. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events No items were identified in this period subsequent to the financial statement date that required adjustment or additional disclosure. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of presentation | Basis of presentation The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019 . For further information, refer to the financial statements and footnotes included in our Form 10-K for the year ended December 31, 2018 as filed with the Securities and Exchange Commission on February 21, 2019 . |
Use of estimates | Use of estimates The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Recently adopted and issued accounting standards | Recently adopted accounting standards In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Codification ("ASC") 842, "Leases" , which requires lessees to recognize assets and liabilities arising from operating leases on the Statements of Financial Position and to disclose certain information about leasing arrangements. We adopted ASC 842 on January 1, 2019 using the optional transition method, which permits entities to apply the new guidance prospectively with certain practical expedients available. We elected the package of practical expedients which among other things allowed us to carry forward the historical lease classifications. We did not elect the hindsight practical expedient in determining the lease term for existing leases. The adoption of the new standard resulted in the recognition of operating lease assets of $32.7 million and operating lease liabilities of $32.1 million on the Statement of Financial Position at January 1, 2019. The adoption of this standard did not have a material impact on our Statement of Operations and had no impact on our net cash flows. Recently issued accounting standards In August 2018, the FASB issued Accounting Standards Update ("ASU") 2018-15, "Intangibles-Goodwill and Other Internal-Use Software" , which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. ASU 2018-15 is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. The amendments under ASU 2018-15 may be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption and early adoption is permitted. We plan to adopt this guidance on a prospective basis and do not expect a material impact on our financial statements or disclosures. In June 2016, the FASB issued ASU 2016-13, "Financial Instruments-Credit Losses" , which requires financial assets measured at amortized cost to be presented at the net amount expected to be collected through the use of a new forward-looking expected loss model and credit losses relating to available-for-sale debt securities to be recognized through an allowance for credit losses. ASU 2016-13 is effective for interim and annual reporting periods beginning after December 15, 2019. Early adoption for interim and annual periods beginning after December 15, 2018 is permitted. We have evaluated the impact of this guidance on our financial assets. Our investments are not measured at amortized cost, and therefore do not require the use of a new expected loss model. Our available-for-sale debt securities will continue to be monitored for credit losses which would be limited to the amount by which the fair value is below amortized cost and reflected as an allowance for credit losses rather than a reduction of the carrying value of the asset. Our receivables from Erie Insurance Exchange and affiliates are unlikely to have a significant credit loss exposure given the financial strength of the Exchange as demonstrated by its strong surplus position, industry ratings, and historical experience of no credit losses. We currently do not record an allowance for credit losses related to our agent loans as historical default amounts have been insignificant and the majority of the loans are senior secured. Accordingly, when we establish an allowance related to agent loans upon adoption of this guidance, we do not expect it to be material. Our cash equivalents include money market mutual funds comprised of U.S. government securities, therefore a corresponding allowance, if any, would be expected to be immaterial. As a result of our evaluation, we do not expect a material impact on our financial statements. |
Other assets | Other assets Other assets include agent loans, operating lease assets and other long-term prepaid assets. Agent loans are carried at unpaid principal balance with interest recorded in investment income as earned. It is our policy to charge the loans that are in default directly to expense. We do not record an allowance for credit losses on these loans, as the majority of the loans are senior secured and historically have had insignificant default amounts. The determination of whether an arrangement is a lease, and the related lease classification, is made at inception of a contract. Our leases are classified as operating leases. Operating lease assets and liabilities are recorded at inception based on the present value of the future minimum lease payments over the lease term at commencement date. When an implicit rate for the lease is not available, we use our incremental borrowing rate based on the information available at commencement date to determine the present value of future payments. Lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Most of our lease contracts contain lease and non-lease components. Non-lease components are expensed as incurred. Operating lease assets are included in other assets, and the current and noncurrent portions of the operating lease liabilities are included in accounts payable and accrued expenses and other long-term liabilities, respectively, in the Statement of Financial Position. |
Earnings per share | Class A and Class B basic earnings per share and Class B diluted earnings per share are calculated under the two-class method. The two-class method allocates earnings to each class of stock based upon its dividend rights. Class B shares are convertible into Class A shares at a conversion ratio of 2,400 to 1. See Note 11, "Capital Stock". Class A diluted earnings per share are calculated under the if-converted method, which reflects the conversion of Class B shares to Class A shares. Diluted earnings per share calculations include the dilutive effect of assumed issuance of stock-based awards under compensation plans that have the option to be paid in stock using the treasury stock method. |
Fair value of financial instruments | Financial instruments carried at fair value Our available-for-sale debt securities and equity securities are recorded at fair value, which is the price that would be received to sell the asset in an orderly transaction between willing market participants as of the measurement date. Valuation techniques used to derive the fair value of our available-for-sale debt securities and equity securities are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources. Unobservable inputs reflect our own assumptions regarding fair market value for these securities. Although virtually all of our prices are obtained from third party sources, we also perform an internal pricing review on outliers. The outlier review includes securities with price changes that vary from current market conditions or independent third party price sources. Financial instruments are categorized based upon the following characteristics or inputs to the valuation techniques: • Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date. • Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. • Level 3 – Unobservable inputs for the asset or liability. Estimates of fair values for our investment portfolio are obtained primarily from a nationally recognized pricing service. Our Level 1 category includes those securities valued using an exchange traded price provided by the pricing service. The methodologies used by the pricing service that support a Level 2 classification of a financial instrument include multiple verifiable, observable inputs including benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data. Pricing service valuations for Level 3 securities are based upon proprietary models and are used when observable inputs are not available or in illiquid markets. In limited circumstances we adjust the price received from the pricing service when, in our judgment, a better reflection of fair value is available based upon corroborating information and our knowledge and monitoring of market conditions such as a disparity in price of comparable securities and/or non-binding broker quotes. In other circumstances, certain securities are internally priced because prices are not provided by the pricing service. We perform continuous reviews of the prices obtained from the pricing service. This includes evaluating the methodology and inputs used by the pricing service to ensure that we determine the proper classification level of the financial instrument. Price variances, including large periodic changes, are investigated and corroborated by market data. We have reviewed the pricing methodologies of our pricing service as well as other observable inputs, such as market data, and transaction volumes and believe that the prices adequately consider market activity in determining fair value. When a price from the pricing service is not available, values are determined by obtaining broker/dealer quotes and/or market comparables. When available, we obtain multiple quotes for the same security. The ultimate value for these securities is determined based upon our best estimate of fair value using corroborating market information. Our evaluation includes the consideration of benchmark yields, reported trades, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data. |
Fair value hierarchy classification | We review the fair value hierarchy classifications each reporting period. Transfers between hierarchy levels may occur due to changes in available market observable inputs. |
Limited partnerships | Limited partnerships The majority of our limited partnership holdings are considered investment companies where the general partners record assets at fair value. These limited partnerships are recorded using the equity method of accounting and are generally reported on a one-quarter lag; therefore, our year-to-date limited partnership results through June 30, 2019 are comprised of partnership financial results for the fourth quarter of 2018 and first quarter of 2019 . Given the lag in reporting, our limited partnership results do not reflect the market conditions of the second quarter of 2019 . Cash contributions made to and distributions received from the partnerships are recorded in the period in which the transaction occurs. At December 31, 2018 we also owned one real estate limited partnership that did not meet the criteria of an investment company. This partnership prepared audited financial statements on a cost basis. We elected to report this limited partnership under the fair value option, which was based on the NAV from our partner's capital statement reflecting the general partner's estimate of fair value for the fund's underlying assets. Fair value provides consistency in the evaluation and financial reporting for these limited partnerships and limited partnerships accounted for under the equity method. This real estate limited partnership was fully liquidated in January 2019. |
Commitments and contingencies | We are involved in litigation arising in the ordinary course of conducting business. In accordance with current accounting standards for loss contingencies and based upon information currently known to us, we establish reserves for litigation when it is probable that a loss associated with a claim or proceeding has been incurred and the amount of the loss or range of loss can be reasonably estimated. When no amount within the range of loss is a better estimate than any other amount, we accrue the minimum amount of the estimable loss. To the extent that such litigation against us may have an exposure to a loss in excess of the amount we have accrued, we believe that such excess would not be material to our financial condition, results of operations, or cash flows. Legal fees are expensed as incurred. We believe that our accruals for legal proceedings are appropriate and, individually and in the aggregate, are not expected to be material to our financial condition, results of operations, or cash flows. We review all litigation on an ongoing basis when making accrual and disclosure decisions. For certain legal proceedings, we cannot reasonably estimate losses or a range of loss, if any, particularly for proceedings that are in their early stages of development or where the plaintiffs seek indeterminate damages. Various factors, including, but not limited to, the outcome of potentially lengthy discovery and the resolution of important factual questions, may need to be determined before probability can be established or before a loss or range of loss can be reasonably estimated. If the loss contingency in question is not both probable and reasonably estimable, we do not establish an accrual and the matter will continue to be monitored for any developments that would make the loss contingency both probable and reasonably estimable. In the event that a legal proceeding results in a substantial judgment against, or settlement by, us, there can be no assurance that any resulting liability or financial commitment would not have a material adverse effect on the financial condition, results of operations, or cash flows. |
Revenue (Tables)
Revenue (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue by Performance Obligation | The following table disaggregates revenue by our two performance obligations: Three months ended June 30, Six months ended June 30, (in thousands) 2019 2018 2019 2018 Management fee revenue - policy issuance and renewal services, net $ 480,513 $ 454,572 $ 911,496 $ 860,550 Management fee revenue - administrative services, net 14,195 13,299 28,146 26,373 Administrative services reimbursement revenue 146,095 146,507 288,575 292,470 Total administrative services $ 160,290 $ 159,806 $ 316,721 $ 318,843 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of Reconciliation of the Numerators and Denominators Used in the Basic and Diluted Per-Share Computations | A reconciliation of the numerators and denominators used in the basic and diluted per-share computations is presented as follows for each class of common stock: Three months ended June 30, 2019 2018 (dollars in thousands, except per share data) Allocated net income (numerator) Weighted shares (denominator) Per-share amount Allocated net income (numerator) Weighted shares (denominator) Per-share amount Class A – Basic EPS: Income available to Class A stockholders $ 87,036 46,188,994 $ 1.88 $ 79,053 46,188,705 $ 1.71 Dilutive effect of stock-based awards 0 24,906 — 0 23,344 — Assumed conversion of Class B shares 718 6,100,800 — 653 6,100,800 — Class A – Diluted EPS: Income available to Class A stockholders on Class A equivalent shares $ 87,754 52,314,700 $ 1.68 $ 79,706 52,312,849 $ 1.52 Class B – Basic EPS: Income available to Class B stockholders $ 718 2,542 $ 283 $ 653 2,542 $ 257 Class B – Diluted EPS: Income available to Class B stockholders $ 718 2,542 $ 283 $ 653 2,542 $ 257 Six months ended June 30, 2019 2018 (dollars in thousands, except per share data) Allocated net income (numerator) Weighted shares (denominator) Per-share amount Allocated net income (numerator) Weighted shares (denominator) Per-share amount Class A – Basic EPS: Income available to Class A stockholders $ 161,730 46,188,668 $ 3.50 $ 144,273 46,188,309 $ 3.12 Dilutive effect of stock-based awards 0 23,903 — 0 22,632 — Assumed conversion of Class B shares 1,335 6,100,800 — 1,191 6,100,800 — Class A – Diluted EPS: Income available to Class A stockholders on Class A equivalent shares $ 163,065 52,313,371 $ 3.12 $ 145,464 52,311,741 $ 2.78 Class B – Basic EPS: Income available to Class B stockholders $ 1,335 2,542 $ 525 $ 1,191 2,542 $ 469 Class B – Diluted EPS: Income available to Class B stockholders $ 1,335 2,542 $ 525 $ 1,191 2,542 $ 468 |
Fair Value (Tables)
Fair Value (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value Measurements on a Recurring Basis by Asset Class and Level of Input | The following tables present our fair value measurements on a recurring basis by asset class and level of input: At June 30, 2019 (in thousands) Total Level 1 Level 2 Level 3 Available-for-sale securities: U.S. Treasury (1) $ 151,094 $ 0 $ 151,094 $ 0 States & political subdivisions (1) 3,360 0 3,360 0 Corporate debt securities (1) 356,656 0 350,283 6,373 Residential mortgage-backed securities 66,186 0 66,186 0 Commercial mortgage-backed securities 46,142 0 43,591 2,551 Collateralized debt obligations 57,345 0 57,345 0 Other debt securities 8,325 0 8,325 0 Total available-for-sale securities 689,108 0 680,184 8,924 Equity securities: Nonredeemable preferred stock - financial services sector 12,445 2,003 10,442 0 Total equity securities 12,445 2,003 10,442 0 Total $ 701,553 $ 2,003 $ 690,626 $ 8,924 At December 31, 2018 (in thousands) Total Level 1 Level 2 Level 3 Available-for-sale securities: U.S. Treasury (1) $ 208,412 $ 0 $ 208,412 $ 0 States & political subdivisions (1) 159,023 0 159,023 0 Corporate debt securities 249,947 0 237,370 12,577 Residential mortgage-backed securities 4,609 0 4,609 0 Commercial mortgage-backed securities 46,515 0 46,515 0 Collateralized debt obligations 64,239 0 64,239 0 Other debt securities 15,778 0 15,778 0 Total available-for-sale securities 748,523 0 735,946 12,577 Equity securities: Nonredeemable preferred stock - financial services sector 11,853 1,809 10,044 0 Total equity securities 11,853 1,809 10,044 0 Other limited partnership investments (2) 3,206 — — — Total $ 763,582 $ 1,809 $ 745,990 $ 12,577 (1) In the fourth quarter of 2018, we began selling off our municipal bonds as part of a portfolio rebalancing. We have currently invested proceeds from these sales primarily in U.S. Treasuries and corporate debt securities. (2) The limited partnership investment measured at fair value represents one real estate fund included on the balance sheet as a limited partnership investment reported under the fair value option using the net asset value (NAV) practical expedient, which is not required to be categorized in the fair value hierarchy. The fair value of this investment is based on our proportionate share of the NAV from the most recent partners' capital statements received from the general partner, which is generally one quarter prior to our balance sheet date. We consider observable market data and perform a review validating the appropriateness of the NAV at each balance sheet date. Liquidation of this fund was completed in January 2019 and a final distribution totaling $3.2 million was received. There were no unfunded commitments related to the investment at December 31, 2018 . During the year ended December 31, 2018 , no contributions were made and distributions totaling $1.2 million were received from this investment. |
Schedule of Fair Value Measurements on a Recurring Basis by Pricing Source and Quantitative and Qualitative Disclosures about Unobservable Inputs | The following table presents our fair value measurements on a recurring basis by pricing source: At June 30, 2019 (in thousands) Total Level 1 Level 2 Level 3 Available-for-sale securities: Priced via pricing services $ 688,958 $ 0 $ 680,184 $ 8,774 Priced via internal modeling 150 0 0 150 Total available-for-sale securities 689,108 0 680,184 8,924 Equity securities priced via pricing services 12,445 2,003 10,442 0 Total $ 701,553 $ 2,003 $ 690,626 $ 8,924 Quantitative and Qualitative Disclosures about Unobservable Inputs The following table presents quantitative information about the significant unobservable inputs utilized in the fair value measurements of Level 3 assets. Level 3 securities where cost is the best estimate of fair value totaled $0.2 million at June 30, 2019 and are excluded from the table below. When a non-binding broker quote was the only input available, the security was classified within Level 3. The quantitative detail of the unobservable inputs is neither provided nor reasonably available to us and therefore has not been included in the table below. These investments totaled $0.8 million at June 30, 2019 and $12.6 million at December 31, 2018 . The weighted average is calculated based on estimated fair value. At June 30, 2019 (dollars in thousands) Fair value Valuation techniques Unobservable input Range Weighted Impact of increase in input on estimated fair value Corporate debt securities - bank loans $ 6,093 Syndicated loan model Market residual yield (1) -130 - +730 +54 Decrease Commercial mortgage-backed securities 1,866 Relative value pricing model Credit spread (2) +44 - +52 +48 Decrease (1) Values for bank loans classified as Level 3 are determined by our pricing vendor based on model yield curves adjusted for observable inputs. The market residual yield represents a net adjustment to the model yield curve for unobservable input factors. (2) Values for commercial mortgage-backed securities classified as Level 3 include adjustments to the base spread over the appropriate U.S. Treasury yield assuming no prepayments until penalty provisions have expired. |
Schedule of Roll Forward of Level 3 Fair Value Measurements on a Recurring Basis | Level 3 Assets – 2019 Quarterly Change: Beginning balance at March 31, 2019 Included in earnings (1) Included Purchases Sales Transfers into Level 3 (2) Transfers out of Level 3 (2) Ending balance at June 30, 2019 Available-for-sale securities: Corporate debt securities $ 11,523 $ (20 ) $ 23 $ 0 $ (5,841 ) $ 2,581 $ (1,893 ) $ 6,373 Residential mortgage-backed securities 915 4 15 0 (26 ) 0 (908 ) 0 Commercial mortgage-backed securities 1,182 15 (8 ) 0 (1,065 ) 2,551 (124 ) 2,551 Total Level 3 available-for-sale securities $ 13,620 $ (1 ) $ 30 $ 0 $ (6,932 ) $ 5,132 $ (2,925 ) $ 8,924 Level 3 Assets – 2019 Year-to-Date Change: (in thousands) Beginning balance at December 31, 2018 Included in earnings (1) Included comprehensive income Purchases Sales Transfers into Level 3 (2) Transfers out of Level 3 (2) Ending balance at June 30, 2019 Available-for-sale securities: Corporate debt securities $ 12,577 $ (9 ) $ 291 $ 734 $ (6,272 ) $ 7,394 $ (8,342 ) $ 6,373 Residential mortgage-backed securities 0 4 15 921 (32 ) 0 (908 ) 0 Commercial mortgage-backed securities 0 13 (8 ) 478 (1,065 ) 3,257 (124 ) 2,551 Total Level 3 available-for-sale securities $ 12,577 $ 8 $ 298 $ 2,133 $ (7,369 ) $ 10,651 $ (9,374 ) $ 8,924 Level 3 Assets – 2018 Quarterly Change: Beginning balance at March 31, 2018 Included in earnings (1) Included Purchases Sales Transfers into Level 3 (2) Transfers out of Level 3 (2) Ending balance at June 30, 2018 Available-for-sale securities: Corporate debt securities $ 6,309 $ 10 $ (53 ) $ 3,047 $ (472 ) $ 5,370 $ (3,091 ) $ 11,120 Total Level 3 available-for-sale securities $ 6,309 $ 10 $ (53 ) $ 3,047 $ (472 ) $ 5,370 $ (3,091 ) $ 11,120 Level 3 Assets – 2018 Year-to-Date Change: (in thousands) Beginning balance at December 31, 2017 Included in earnings (1) Included in other comprehensive income Purchases Sales Transfers into Level 3 (2) Transfers out of Level 3 (2) Ending balance at June 30, 2018 Available-for-sale securities: Corporate debt securities $ 7,879 $ 1 $ (48 ) $ 3,047 $ (965 ) $ 7,782 $ (6,576 ) $ 11,120 Collateralized debt obligations 2,200 0 7 0 0 0 (2,207 ) 0 Total Level 3 available-for-sale securities $ 10,079 $ 1 $ (41 ) $ 3,047 $ (965 ) $ 7,782 $ (8,783 ) $ 11,120 (1) These amounts are reported in the Statements of Operations as net investment income and net realized investment gains (losses) for the each of the periods presented above. (2) Transfers into and/or (out) of Level 3 are primarily attributable to the availability of market observable information and the re-evaluation of the observability of pricing inputs. The change in unrealized gains or losses included in other comprehensive income related to Level 3 securities held at the reporting date is as follows: Three months ended June 30, Six months ended June 30, (in thousands) 2019 2018 2019 2018 Available-for-sale securities: Corporate debt securities $ (18 ) $ (53 ) $ 158 $ (28 ) Commercial mortgage-backed securities 29 — 26 — Net unrealized gains (losses) on Level 3 securities held at reporting date $ 11 $ (53 ) $ 184 $ (28 ) |
Schedule of Financial Instruments Disclosed But Not Carried at Fair Value | The following table presents the carrying values and fair value measurements, which are categorized as Level 3 in the fair value hierarchy, of financial instruments disclosed, but not carried at fair value: At June 30, 2019 At December 31, 2018 (in thousands) Carrying value Fair value Carrying value Fair value Agent loans $ 60,962 $ 61,321 $ 58,006 $ 54,110 Long-term borrowings 99,038 100,129 99,730 94,057 |
Investments (Tables)
Investments (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Investments [Abstract] | |
Schedule of Reconciliation of Cost to Fair Value of Available-For-Sale Securities | The following tables summarize the cost and fair value of our available-for-sale securities. See also Note 5, "Fair Value" for additional fair value disclosures. At June 30, 2019 (in thousands) Amortized cost Gross unrealized gains Gross unrealized losses Estimated fair value Available-for-sale securities: U.S. Treasury (1) $ 150,171 $ 923 $ 0 $ 151,094 States & political subdivisions (1) 3,354 6 0 3,360 Corporate debt securities (1) 356,899 1,706 1,949 356,656 Residential mortgage-backed securities 65,910 297 21 66,186 Commercial mortgage-backed securities 45,527 625 10 46,142 Collateralized debt obligations 57,710 16 381 57,345 Other debt securities 8,209 116 0 8,325 Total available-for-sale securities $ 687,780 $ 3,689 $ 2,361 $ 689,108 At December 31, 2018 (in thousands) Amortized cost Gross unrealized gains Gross unrealized losses Estimated fair value Available-for-sale securities: U.S. Treasury (1) $ 208,610 $ 18 $ 216 $ 208,412 States & political subdivisions (1) 157,003 2,020 0 159,023 Corporate debt securities 259,362 139 9,554 249,947 Residential mortgage-backed securities 4,603 38 32 4,609 Commercial mortgage-backed securities 47,022 80 587 46,515 Collateralized debt obligations 65,039 30 830 64,239 Other debt securities 15,756 33 11 15,778 Total available-for-sale securities $ 757,395 $ 2,358 $ 11,230 $ 748,523 (1) In the fourth quarter of 2018, we began selling off our municipal bonds as part of a portfolio rebalancing. We have currently invested proceeds from these sales primarily in U.S. Treasuries and corporate debt securities. |
Schedule of Amortized Cost and Estimated Fair Value of Available-For-Sale Securities by Remaining Contractual Term to Maturity | The amortized cost and estimated fair value of available-for-sale securities at June 30, 2019 are shown below by remaining contractual term to maturity. Mortgage-backed securities are allocated based upon stated maturity dates. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. At June 30, 2019 Amortized Estimated (in thousands) cost fair value Due in one year or less $ 62,962 $ 63,031 Due after one year through five years 358,056 358,508 Due after five years through ten years 127,215 127,364 Due after ten years 139,547 140,205 Total available-for-sale securities $ 687,780 $ 689,108 |
Schedule of Available-For-Sale Securities in a Gross Unrealized Loss Position by Length of Time | Available-for-sale securities in a gross unrealized loss position are as follows. Data is provided by length of time for securities in a gross unrealized loss position. At June 30, 2019 Less than 12 months 12 months or longer Total (dollars in thousands) Fair value Unrealized losses Fair value Unrealized losses Fair value Unrealized losses No. of holdings Available-for-sale securities: Corporate debt securities 104,809 844 58,666 1,105 163,475 1,949 334 Residential mortgage-backed securities 15,710 21 0 0 15,710 21 2 Commercial mortgage-backed securities 6,965 6 547 4 7,512 10 7 Collateralized debt obligations 40,402 165 14,842 216 55,244 381 41 Total available-for-sale securities $ 167,886 $ 1,036 $ 74,055 $ 1,325 $ 241,941 $ 2,361 384 Quality breakdown of available-for-sale securities: Investment grade $ 136,432 $ 296 $ 59,023 $ 354 $ 195,455 $ 650 111 Non-investment grade 31,454 740 15,032 971 46,486 1,711 273 Total available-for-sale securities $ 167,886 $ 1,036 $ 74,055 $ 1,325 $ 241,941 $ 2,361 384 At December 31, 2018 Less than 12 months 12 months or longer Total (dollars in thousands) Fair value Unrealized losses Fair value Unrealized losses Fair value Unrealized losses No. of holdings Available-for-sale securities: U.S. Treasury $ 129,474 $ 19 $ 11,656 $ 197 $ 141,130 $ 216 7 Corporate debt securities 157,300 6,866 86,586 2,688 243,886 9,554 635 Residential mortgage-backed securities 777 6 1,618 26 2,395 32 3 Commercial mortgage-backed securities 17,624 175 16,997 412 34,621 587 30 Collateralized debt obligations 55,246 826 1,248 4 56,494 830 39 Other debt securities 8,213 11 0 0 8,213 11 7 Total available-for-sale securities $ 368,634 $ 7,903 $ 118,105 $ 3,327 $ 486,739 $ 11,230 721 Quality breakdown of available-for-sale securities: Investment grade $ 242,821 $ 1,295 $ 98,118 $ 1,641 $ 340,939 $ 2,936 147 Non-investment grade 125,813 6,608 19,987 1,686 145,800 8,294 574 Total available-for-sale securities $ 368,634 $ 7,903 $ 118,105 $ 3,327 $ 486,739 $ 11,230 721 The above securities have been evaluated and determined to be temporary impairments for which we expect to recover our entire principal plus interest. The primary components of this analysis include a general review of market conditions and financial performance of the issuer along with the extent and duration at which fair value is less than cost. Any securities that we intend to sell or will more likely than not be required to sell before recovery are included in other-than-temporary impairments, which are recognized in earnings. |
Schedule of Investment Income, Net of Expenses, from Portfolios | Investment income, net of expenses, was generated from the following portfolios: Three months ended June 30, Six months ended June 30, (in thousands) 2019 2018 2019 2018 Fixed maturities (1) $ 5,488 $ 6,263 $ 11,649 $ 12,373 Equity securities 141 142 282 284 Cash equivalents and other 2,660 1,026 5,125 2,034 Total investment income 8,289 7,431 17,056 14,691 Less: investment expenses 259 327 509 767 Investment income, net of expenses $ 8,030 $ 7,104 $ 16,547 $ 13,924 (1) Includes interest earned on note receivable from Erie Family Life Insurance Company of $0.4 million and $0.8 million for the three and six months ended June 30, 2018 , respectively. The note was repaid in full in December 2018. |
Schedule of Realized Gains and Losses on Investments and Net Unrealized Gains and Losses Recognized during the Reporting Period Related to Equity Securities Held at the Reporting Date | Realized gains (losses) on investments were as follows: Three months ended June 30, Six months ended June 30, (in thousands) 2019 2018 2019 2018 Available-for-sale securities: Gross realized gains $ 2,062 $ 235 $ 4,320 $ 575 Gross realized losses (823 ) (301 ) (1,163 ) (986 ) Net realized gains (losses) on available-for-sale securities 1,239 (66 ) 3,157 (411 ) Equity securities 63 (68 ) 648 (188 ) Miscellaneous 0 102 0 102 Net realized investment gains (losses) $ 1,302 $ (32 ) $ 3,805 $ (497 ) The portion of net unrealized gains and losses recognized during the reporting period, related to equity securities still held at the reporting date, is calculated as follows: Three months ended June 30, Six months ended June 30, (in thousands) 2019 2018 2019 2018 Equity securities: Net gains (losses) recognized during the period $ 63 $ (68 ) $ 648 $ (188 ) Less: net losses recognized on securities sold 0 0 0 (34 ) Net unrealized gains (losses) recognized on securities held at reporting date $ 63 $ (68 ) $ 648 $ (154 ) |
Schedule of Limited Partnership Results, Generally Reported on a One Quarter Lag | Equity in earnings (losses) of limited partnerships by method of accounting were as follows: Three months ended June 30, Six months ended June 30, (in thousands) 2019 2018 2019 2018 Equity in earnings (losses) of limited partnerships - equity method $ 404 $ (216 ) $ (743 ) $ (21 ) Change in fair value of limited partnerships - fair value option 0 (3 ) 0 (390 ) Equity in earnings (losses) of limited partnerships $ 404 $ (219 ) $ (743 ) $ (411 ) The following table summarizes limited partnership investments by sector: (in thousands) At June 30, 2019 At December 31, 2018 Private equity $ 26,793 $ 28,271 Mezzanine debt 1,053 1,152 Real estate 2,498 2,192 Real estate - fair value option 0 3,206 Total limited partnership investments $ 30,344 $ 34,821 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Schedule of Lease Assets and Liabilities Recorded in Statement of Financial Position | Lease assets and liabilities recorded on our Statement of Financial Position were as follows: (in thousands) June 30, 2019 Operating lease assets $ 26,587 Operating lease liabilities - current $ 11,736 Operating lease liabilities - long-term 14,539 Total operating lease liabilities $ 26,275 |
Borrowing Arrangements (Tables)
Borrowing Arrangements (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Future Principal Payments | The following table sets forth future principal payments: (in thousands) Year Principal payments 2019 $ 946 2020 1,955 2021 2,042 2022 2,132 2023 2,227 Thereafter 89,737 |
Postretirement Benefits (Tables
Postretirement Benefits (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Retirement Benefits [Abstract] | |
Schedule of Cost of Pension Plans | The cost of our pension plans are as follows: Three months ended June 30, Six months ended June 30, (in thousands) 2019 2018 2019 2018 Service cost for benefits earned $ 8,464 $ 9,513 $ 16,927 $ 19,026 Interest cost on benefits obligation 9,826 8,845 19,653 17,691 Expected return on plan assets (11,871 ) (12,814 ) (23,742 ) (25,629 ) Prior service cost amortization 348 338 697 676 Net actuarial loss amortization 1,278 3,202 2,556 6,404 Pension plan cost (1) $ 8,045 $ 9,084 $ 16,091 $ 18,168 (1) The components of pension plan costs other than the service cost component are included in the line item "Other income" in the Statements of Operations after reimbursements from the Exchange and its subsidiaries. |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Schedule of Changes in Accumulated Other Comprehensive Income (Loss) by Component, Including Amounts Reclassified to Other Comprehensive Income (Loss) and the Related Line Item in the Statements of Operations Where Net Income is Presented | Changes in accumulated other comprehensive income ("AOCI") (loss) by component, including amounts reclassified to other comprehensive income ("OCI") (loss) and the related line item in the Statements of Operations where net income is presented, are as follows: Three months ended Three months ended June 30, 2019 June 30, 2018 (in thousands) Before Tax Income Tax Net Before Tax Income Tax Net Investment securities: AOCI (loss), beginning of period $ (2,235 ) $ (470 ) $ (1,765 ) $ (3,460 ) $ (727 ) $ (2,733 ) OCI (loss) before reclassifications 4,420 928 3,492 (1,409 ) (296 ) (1,113 ) Realized investment (gains) losses (1,239 ) (260 ) (979 ) 66 14 52 Impairment losses 84 18 66 646 136 510 OCI (loss) 3,265 686 2,579 (697 ) (146 ) (551 ) AOCI (loss), end of period $ 1,030 $ 216 $ 814 $ (4,157 ) $ (873 ) $ (3,284 ) Pension and other postretirement plans: AOCI (loss), beginning of period $ (154,190 ) $ (32,381 ) $ (121,809 ) $ (200,954 ) $ (42,201 ) $ (158,753 ) Amortization of prior service costs (1) 348 73 275 0 0 0 Amortization of net actuarial loss (1) 1,210 254 956 0 0 0 OCI 1,558 327 1,231 0 0 0 AOCI (loss), end of period $ (152,632 ) $ (32,054 ) $ (120,578 ) $ (200,954 ) $ (42,201 ) $ (158,753 ) Total AOCI (loss), beginning of period $ (156,425 ) $ (32,851 ) $ (123,574 ) $ (204,414 ) $ (42,928 ) $ (161,486 ) Investment securities 3,265 686 2,579 (697 ) (146 ) (551 ) Pension and other postretirement plans 1,558 327 1,231 0 0 0 OCI (loss) 4,823 1,013 3,810 (697 ) (146 ) (551 ) AOCI (loss), end of period $ (151,602 ) $ (31,838 ) $ (119,764 ) $ (205,111 ) $ (43,074 ) $ (162,037 ) Six months ended Six months ended June 30, 2019 June 30, 2018 (in thousands) Before Tax Income Tax Net Before Tax Income Tax Net Investment securities: AOCI (loss), beginning of period $ (9,169 ) $ (1,926 ) $ (7,243 ) $ 3,410 $ 716 $ 2,694 OCI (loss) before reclassifications 13,194 2,771 10,423 (8,539 ) (1,793 ) (6,746 ) Realized investment (gains) losses (3,157 ) (663 ) (2,494 ) 411 86 325 Impairment losses 162 34 128 646 136 510 Cumulative effect of adopting ASU 2016-01 (2) — — — (85 ) (18 ) (67 ) OCI (loss) 10,199 2,142 8,057 (7,567 ) (1,589 ) (5,978 ) AOCI (loss), end of period $ 1,030 $ 216 $ 814 $ (4,157 ) $ (873 ) $ (3,284 ) Pension and other postretirement plans: AOCI (loss), beginning of period $ (155,749 ) $ (32,708 ) $ (123,041 ) $ (200,954 ) $ (42,201 ) $ (158,753 ) Amortization of prior service costs (1) 697 146 551 0 0 0 Amortization of net actuarial loss (1) 2,420 508 1,912 0 0 0 OCI 3,117 654 2,463 0 0 0 AOCI (loss), end of period $ (152,632 ) $ (32,054 ) $ (120,578 ) $ (200,954 ) $ (42,201 ) $ (158,753 ) Total AOCI (loss), beginning of period $ (164,918 ) $ (34,634 ) $ (130,284 ) $ (197,544 ) $ (41,485 ) $ (156,059 ) Investment securities 10,199 2,142 8,057 (7,567 ) (1,589 ) (5,978 ) Pension and other postretirement plans 3,117 654 2,463 0 0 0 OCI (loss) 13,316 2,796 10,520 (7,567 ) (1,589 ) (5,978 ) AOCI (loss), end of period $ (151,602 ) $ (31,838 ) $ (119,764 ) $ (205,111 ) $ (43,074 ) $ (162,037 ) (1) Effective January 1, 2019, amounts reclassified from AOCI related to amortization of prior service costs and net actuarial loss were recorded during interim periods. Prior to 2019, amounts reclassified for these items were recorded on an annual basis. These components are included in the computation of net periodic pension cost. See Note 9, "Postretirement Benefits", for additional information. (2) ASU 2016-01 required a reclassification of unrealized losses of equity securities from AOCI to retained earnings at January 1, 2018. |
Nature of Operations (Details)
Nature of Operations (Details) | 6 Months Ended |
Jun. 30, 2019Obligations | |
Revenue, Performance Obligation [Abstract] | |
Performance obligations under subscriber's agreement | 2 |
Significant Accounting Polici_3
Significant Accounting Policies (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Jan. 01, 2019 |
Leases [Abstract] | ||
Operating lease assets | $ 26,587 | $ 32,700 |
Operating lease liabilities | $ 26,275 | $ 32,100 |
Revenue - Narrative (Details)
Revenue - Narrative (Details) | 6 Months Ended |
Jun. 30, 2019Obligations | |
Revenue from Contract with Customer [Abstract] | |
Indemnity's management fee rate as a percent of direct and affiliated assumed written premiums of the Exchange (percentage) | 25.00% |
Performance obligations under subscriber's agreement | 2 |
Revenue - Disaggregation of Rev
Revenue - Disaggregation of Revenues By Performance Obligations (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Disaggregation of revenue by performance obligation | ||||
Operating revenue | $ 647,710 | $ 621,458 | $ 1,241,816 | $ 1,193,618 |
Management fee revenue - policy issuance and renewal services, net | ||||
Disaggregation of revenue by performance obligation | ||||
Operating revenue | 480,513 | 454,572 | 911,496 | 860,550 |
Management fee revenue - policy issuance and renewal services, net | Transferred at point in time | ||||
Disaggregation of revenue by performance obligation | ||||
Operating revenue | 480,513 | 454,572 | 911,496 | 860,550 |
Management fee revenue - administrative services, net | ||||
Disaggregation of revenue by performance obligation | ||||
Operating revenue | 14,195 | 13,299 | 28,146 | 26,373 |
Management fee revenue - administrative services, net | Transferred over time | ||||
Disaggregation of revenue by performance obligation | ||||
Operating revenue | 14,195 | 13,299 | 28,146 | 26,373 |
Administrative services reimbursement revenue | ||||
Disaggregation of revenue by performance obligation | ||||
Operating revenue | 146,095 | 146,507 | 288,575 | 292,470 |
Administrative services reimbursement revenue | Transferred over time | ||||
Disaggregation of revenue by performance obligation | ||||
Operating revenue | 146,095 | 146,507 | 288,575 | 292,470 |
Administrative services | Transferred over time | ||||
Disaggregation of revenue by performance obligation | ||||
Operating revenue | $ 160,290 | $ 159,806 | $ 316,721 | $ 318,843 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Class A common stock | |||||
Income available to stockholders (Basic EPS:) | |||||
Allocated net income (numerator) (in dollars) | $ 87,036 | $ 79,053 | $ 161,730 | $ 144,273 | |
Weighted shares (denominator) (in shares) | 46,188,994 | 46,188,705 | 46,188,668 | 46,188,309 | |
Per-share amount (in dollars per share) | $ 1.88 | $ 1.71 | $ 3.50 | $ 3.12 | |
Dilutive effect of stock-based awards | |||||
Allocated net income (numerator) (in dollars) | $ 0 | $ 0 | $ 0 | $ 0 | |
Weighted shares (denominator) (in shares) | 24,906 | 23,344 | 23,903 | 22,632 | |
Assumed conversion of Class B shares | |||||
Allocated net income (numerator) (in dollars) | $ 718 | $ 653 | $ 1,335 | $ 1,191 | |
Weighted shares (denominator) (in shares) | 6,100,800 | 6,100,800 | 6,100,800 | 6,100,800 | |
Income available to stockholders on equivalent shares (Diluted EPS:) | |||||
Allocated net income (numerator) (in dollars) | $ 87,754 | $ 79,706 | $ 163,065 | $ 145,464 | |
Weighted shares (denominator) (in shares) | 52,314,700 | 52,312,849 | 52,313,371 | 52,311,741 | |
Per-share amount (in dollars per share) | $ 1.68 | $ 1.52 | $ 3.12 | $ 2.78 | |
Class B common stock | |||||
Reconciliation of the numerators and denominators used in the basic and diluted per-share computations | |||||
Ratio for converting shares of Class B common stock into shares of Class A common stock (as a percent) | 2400.00% | 2400.00% | 2400.00% | ||
Income available to stockholders (Basic EPS:) | |||||
Allocated net income (numerator) (in dollars) | $ 718 | $ 653 | $ 1,335 | $ 1,191 | |
Weighted shares (denominator) (in shares) | 2,542 | 2,542 | 2,542 | 2,542 | |
Per-share amount (in dollars per share) | $ 283 | $ 257 | $ 525 | $ 469 | |
Income available to stockholders on equivalent shares (Diluted EPS:) | |||||
Allocated net income (numerator) (in dollars) | $ 718 | $ 653 | $ 1,335 | $ 1,191 | |
Weighted shares (denominator) (in shares) | 2,542 | 2,542 | 2,542 | 2,542 | |
Per-share amount (in dollars per share) | $ 283 | $ 257 | $ 525 | $ 468 |
Fair Value - Fair Value Measure
Fair Value - Fair Value Measurements on a Recurring Basis by Asset Class and Level of Input (Details) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Dec. 31, 2018USD ($)fund | |
Fair value measurements on a recurring basis by asset class and level of input | |||
Available-for-sale securities | $ 689,108,000 | ||
Equity securities | 12,445,000 | $ 11,853,000 | |
Other limited partnership investments | |||
Distributions received from the funds | 2,450,000 | $ 2,682,000 | |
Contributions made to the funds | 9,000 | $ 215,000 | |
U.S. Treasury | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Available-for-sale securities | 151,094,000 | 208,412,000 | |
States & political subdivisions | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Available-for-sale securities | 3,360,000 | 159,023,000 | |
Corporate debt securities | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Available-for-sale securities | 356,656,000 | 249,947,000 | |
Residential mortgage-backed securities | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Available-for-sale securities | 66,186,000 | 4,609,000 | |
Commercial mortgage-backed securities | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Available-for-sale securities | 46,142,000 | 46,515,000 | |
Collateralized debt obligations | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Available-for-sale securities | 57,345,000 | 64,239,000 | |
Other debt securities | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Available-for-sale securities | 8,325,000 | 15,778,000 | |
Available-for-sale securities | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Available-for-sale securities | 689,108,000 | 748,523,000 | |
Fair Value, Measurements, Recurring Basis | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Available-for-sale securities | 689,108,000 | ||
Total | 701,553,000 | 763,582,000 | |
Fair Value, Measurements, Recurring Basis | U.S. Treasury | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Available-for-sale securities | 151,094,000 | 208,412,000 | |
Fair Value, Measurements, Recurring Basis | States & political subdivisions | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Available-for-sale securities | 3,360,000 | 159,023,000 | |
Fair Value, Measurements, Recurring Basis | Corporate debt securities | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Available-for-sale securities | 356,656,000 | 249,947,000 | |
Fair Value, Measurements, Recurring Basis | Residential mortgage-backed securities | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Available-for-sale securities | 66,186,000 | 4,609,000 | |
Fair Value, Measurements, Recurring Basis | Commercial mortgage-backed securities | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Available-for-sale securities | 46,142,000 | 46,515,000 | |
Fair Value, Measurements, Recurring Basis | Collateralized debt obligations | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Available-for-sale securities | 57,345,000 | 64,239,000 | |
Fair Value, Measurements, Recurring Basis | Other debt securities | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Available-for-sale securities | 8,325,000 | 15,778,000 | |
Fair Value, Measurements, Recurring Basis | Available-for-sale securities | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Available-for-sale securities | 689,108,000 | 748,523,000 | |
Fair Value, Measurements, Recurring Basis | Equity securities | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Equity securities | 12,445,000 | 11,853,000 | |
Fair Value, Measurements, Recurring Basis | Nonredeemable preferred stock | Financial Services Sector | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Equity securities | 12,445,000 | $ 11,853,000 | |
Fair Value, Measurements, Recurring Basis | Real estate | |||
Other limited partnership investments | |||
Number of real estate funds reported under the fair value option | fund | 1 | ||
Distributions received from the funds | 3,200,000 | $ 1,200,000 | |
Contributions made to the funds | 0 | ||
Fair Value, Measurements, Recurring Basis | Level 1 | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Available-for-sale securities | 0 | ||
Total | 2,003,000 | 1,809,000 | |
Fair Value, Measurements, Recurring Basis | Level 1 | U.S. Treasury | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Available-for-sale securities | 0 | 0 | |
Fair Value, Measurements, Recurring Basis | Level 1 | States & political subdivisions | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Available-for-sale securities | 0 | 0 | |
Fair Value, Measurements, Recurring Basis | Level 1 | Corporate debt securities | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Available-for-sale securities | 0 | 0 | |
Fair Value, Measurements, Recurring Basis | Level 1 | Residential mortgage-backed securities | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Available-for-sale securities | 0 | 0 | |
Fair Value, Measurements, Recurring Basis | Level 1 | Commercial mortgage-backed securities | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Available-for-sale securities | 0 | 0 | |
Fair Value, Measurements, Recurring Basis | Level 1 | Collateralized debt obligations | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Available-for-sale securities | 0 | 0 | |
Fair Value, Measurements, Recurring Basis | Level 1 | Other debt securities | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Available-for-sale securities | 0 | 0 | |
Fair Value, Measurements, Recurring Basis | Level 1 | Available-for-sale securities | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Available-for-sale securities | 0 | 0 | |
Fair Value, Measurements, Recurring Basis | Level 1 | Equity securities | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Equity securities | 2,003,000 | 1,809,000 | |
Fair Value, Measurements, Recurring Basis | Level 1 | Nonredeemable preferred stock | Financial Services Sector | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Equity securities | 2,003,000 | 1,809,000 | |
Fair Value, Measurements, Recurring Basis | Level 2 | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Available-for-sale securities | 680,184,000 | ||
Total | 690,626,000 | 745,990,000 | |
Fair Value, Measurements, Recurring Basis | Level 2 | U.S. Treasury | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Available-for-sale securities | 151,094,000 | 208,412,000 | |
Fair Value, Measurements, Recurring Basis | Level 2 | States & political subdivisions | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Available-for-sale securities | 3,360,000 | 159,023,000 | |
Fair Value, Measurements, Recurring Basis | Level 2 | Corporate debt securities | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Available-for-sale securities | 350,283,000 | 237,370,000 | |
Fair Value, Measurements, Recurring Basis | Level 2 | Residential mortgage-backed securities | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Available-for-sale securities | 66,186,000 | 4,609,000 | |
Fair Value, Measurements, Recurring Basis | Level 2 | Commercial mortgage-backed securities | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Available-for-sale securities | 43,591,000 | 46,515,000 | |
Fair Value, Measurements, Recurring Basis | Level 2 | Collateralized debt obligations | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Available-for-sale securities | 57,345,000 | 64,239,000 | |
Fair Value, Measurements, Recurring Basis | Level 2 | Other debt securities | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Available-for-sale securities | 8,325,000 | 15,778,000 | |
Fair Value, Measurements, Recurring Basis | Level 2 | Available-for-sale securities | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Available-for-sale securities | 680,184,000 | 735,946,000 | |
Fair Value, Measurements, Recurring Basis | Level 2 | Equity securities | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Equity securities | 10,442,000 | 10,044,000 | |
Fair Value, Measurements, Recurring Basis | Level 2 | Nonredeemable preferred stock | Financial Services Sector | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Equity securities | 10,442,000 | 10,044,000 | |
Fair Value, Measurements, Recurring Basis | Level 3 | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Available-for-sale securities | 8,924,000 | ||
Total | 8,924,000 | 12,577,000 | |
Fair Value, Measurements, Recurring Basis | Level 3 | U.S. Treasury | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Available-for-sale securities | 0 | 0 | |
Fair Value, Measurements, Recurring Basis | Level 3 | States & political subdivisions | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Available-for-sale securities | 0 | 0 | |
Fair Value, Measurements, Recurring Basis | Level 3 | Corporate debt securities | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Available-for-sale securities | 6,373,000 | 12,577,000 | |
Fair Value, Measurements, Recurring Basis | Level 3 | Residential mortgage-backed securities | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Available-for-sale securities | 0 | 0 | |
Fair Value, Measurements, Recurring Basis | Level 3 | Commercial mortgage-backed securities | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Available-for-sale securities | 2,551,000 | 0 | |
Fair Value, Measurements, Recurring Basis | Level 3 | Collateralized debt obligations | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Available-for-sale securities | 0 | 0 | |
Fair Value, Measurements, Recurring Basis | Level 3 | Other debt securities | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Available-for-sale securities | 0 | 0 | |
Fair Value, Measurements, Recurring Basis | Level 3 | Available-for-sale securities | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Available-for-sale securities | 8,924,000 | 12,577,000 | |
Fair Value, Measurements, Recurring Basis | Level 3 | Equity securities | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Equity securities | 0 | 0 | |
Fair Value, Measurements, Recurring Basis | Level 3 | Nonredeemable preferred stock | Financial Services Sector | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Equity securities | $ 0 | 0 | |
Fair Value, Measurements, Recurring Basis | Fair value option using net asset value (NAV) | Real estate | |||
Fair value measurements on a recurring basis by asset class and level of input | |||
Other limited partnership investments | $ 3,206,000 |
Fair Value - Fair Value Measu_2
Fair Value - Fair Value Measurements on a Recurring Basis by Pricing Source (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Fair value by pricing source | ||
Available-for-sale securities | $ 689,108 | |
Equity securities priced via pricing services | 12,445 | $ 11,853 |
Fair Value, Measurements, Recurring Basis | ||
Fair value by pricing source | ||
Available-for-sale securities | 689,108 | |
Total | 701,553 | 763,582 |
Fair Value, Measurements, Recurring Basis | Priced via pricing services | ||
Fair value by pricing source | ||
Available-for-sale securities | 688,958 | |
Equity securities priced via pricing services | 12,445 | |
Fair Value, Measurements, Recurring Basis | Priced via internal modeling | ||
Fair value by pricing source | ||
Available-for-sale securities | 150 | |
Fair Value, Measurements, Recurring Basis | Level 1 | ||
Fair value by pricing source | ||
Available-for-sale securities | 0 | |
Total | 2,003 | 1,809 |
Fair Value, Measurements, Recurring Basis | Level 1 | Priced via pricing services | ||
Fair value by pricing source | ||
Available-for-sale securities | 0 | |
Equity securities priced via pricing services | 2,003 | |
Fair Value, Measurements, Recurring Basis | Level 1 | Priced via internal modeling | ||
Fair value by pricing source | ||
Available-for-sale securities | 0 | |
Fair Value, Measurements, Recurring Basis | Level 2 | ||
Fair value by pricing source | ||
Available-for-sale securities | 680,184 | |
Total | 690,626 | 745,990 |
Fair Value, Measurements, Recurring Basis | Level 2 | Priced via pricing services | ||
Fair value by pricing source | ||
Available-for-sale securities | 680,184 | |
Equity securities priced via pricing services | 10,442 | |
Fair Value, Measurements, Recurring Basis | Level 2 | Priced via internal modeling | ||
Fair value by pricing source | ||
Available-for-sale securities | 0 | |
Fair Value, Measurements, Recurring Basis | Level 3 | ||
Fair value by pricing source | ||
Available-for-sale securities | 8,924 | |
Total | 8,924 | $ 12,577 |
Fair Value, Measurements, Recurring Basis | Level 3 | Priced via pricing services | ||
Fair value by pricing source | ||
Available-for-sale securities | 8,774 | |
Equity securities priced via pricing services | 0 | |
Fair Value, Measurements, Recurring Basis | Level 3 | Priced via internal modeling | ||
Fair value by pricing source | ||
Available-for-sale securities | $ 150 |
Fair Value - Quantitative and Q
Fair Value - Quantitative and Qualitative Disclosures about Unobservable Inputs (Details) $ in Thousands | Jun. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Dec. 31, 2017USD ($) |
Level 3 | Available-for-sale securities | ||||||
Fair value measurements on a recurring basis, valuation techniques | ||||||
Fair value, measurement with unobservable inputs | $ 8,924 | $ 13,620 | $ 12,577 | $ 11,120 | $ 6,309 | $ 10,079 |
Level 3 | Corporate debt securities - bank loans | Available-for-sale securities | ||||||
Fair value measurements on a recurring basis, valuation techniques | ||||||
Fair value, measurement with unobservable inputs | 6,373 | 11,523 | 12,577 | $ 11,120 | $ 6,309 | $ 7,879 |
Level 3 | Commercial mortgage-backed securities | Available-for-sale securities | ||||||
Fair value measurements on a recurring basis, valuation techniques | ||||||
Fair value, measurement with unobservable inputs | $ 2,551 | $ 1,182 | 0 | |||
Minimum | Valuation Technique, Syndicated Loan Model | Corporate debt securities - bank loans | ||||||
Fair value measurements on a recurring basis, valuation techniques | ||||||
Debt instrument, measurement input (percent) | (0.013) | |||||
Minimum | Valuation Technique, Relative Value Pricing Model | Commercial mortgage-backed securities | ||||||
Fair value measurements on a recurring basis, valuation techniques | ||||||
Debt instrument, measurement input (percent) | 0.0044 | |||||
Maximum | Valuation Technique, Syndicated Loan Model | Corporate debt securities - bank loans | ||||||
Fair value measurements on a recurring basis, valuation techniques | ||||||
Debt instrument, measurement input (percent) | 0.073 | |||||
Maximum | Valuation Technique, Relative Value Pricing Model | Commercial mortgage-backed securities | ||||||
Fair value measurements on a recurring basis, valuation techniques | ||||||
Debt instrument, measurement input (percent) | 0.0052 | |||||
Weighted Average | Valuation Technique, Syndicated Loan Model | Corporate debt securities - bank loans | ||||||
Fair value measurements on a recurring basis, valuation techniques | ||||||
Debt instrument, measurement input (percent) | 0.0054 | |||||
Weighted Average | Valuation Technique, Relative Value Pricing Model | Commercial mortgage-backed securities | ||||||
Fair value measurements on a recurring basis, valuation techniques | ||||||
Debt instrument, measurement input (percent) | 0.0048 | |||||
Fair Value, Measurements, Recurring Basis | Level 3 | Available-for-sale securities | ||||||
Fair value measurements on a recurring basis, valuation techniques | ||||||
Fair value, measurement with unobservable inputs | $ 800 | $ 12,600 | ||||
Fair Value, Measurements, Recurring Basis | Valuation, Held At Cost | Level 3 | Available-for-sale securities | ||||||
Fair value measurements on a recurring basis, valuation techniques | ||||||
Fair value, measurement with unobservable inputs | 200 | |||||
Fair Value, Measurements, Recurring Basis | Valuation Technique, Syndicated Loan Model | Level 3 | Corporate debt securities - bank loans | ||||||
Fair value measurements on a recurring basis, valuation techniques | ||||||
Fair value, measurement with unobservable inputs | 6,093 | |||||
Fair Value, Measurements, Recurring Basis | Valuation Technique, Relative Value Pricing Model | Level 3 | Commercial mortgage-backed securities | ||||||
Fair value measurements on a recurring basis, valuation techniques | ||||||
Fair value, measurement with unobservable inputs | $ 1,866 |
Fair Value - Level 3 Assets (De
Fair Value - Level 3 Assets (Details) - Level 3 - Available-for-sale securities - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Roll forward of level 3 fair value measurements on a recurring basis | ||||
Beginning balance | $ 13,620 | $ 6,309 | $ 12,577 | $ 10,079 |
Included in earnings | (1) | 10 | 8 | 1 |
Included in other comprehensive income | 30 | (53) | 298 | (41) |
Purchases | 0 | 3,047 | 2,133 | 3,047 |
Sales | (6,932) | (472) | (7,369) | (965) |
Transfers into Level 3 | 5,132 | 5,370 | 10,651 | 7,782 |
Transfers out of Level 3 | (2,925) | (3,091) | (9,374) | (8,783) |
Ending balance | 8,924 | 11,120 | 8,924 | 11,120 |
Change in unrealized gains or losses included in other comprehensive income related to Level 3 securities held at the reporting date | ||||
Change in unrealized gains or losses included in other comprehensive income related to Level 3 securities | 11 | (53) | 184 | (28) |
Corporate debt securities | ||||
Roll forward of level 3 fair value measurements on a recurring basis | ||||
Beginning balance | 11,523 | 6,309 | 12,577 | 7,879 |
Included in earnings | (20) | 10 | (9) | 1 |
Included in other comprehensive income | 23 | (53) | 291 | (48) |
Purchases | 0 | 3,047 | 734 | 3,047 |
Sales | (5,841) | (472) | (6,272) | (965) |
Transfers into Level 3 | 2,581 | 5,370 | 7,394 | 7,782 |
Transfers out of Level 3 | (1,893) | (3,091) | (8,342) | (6,576) |
Ending balance | 6,373 | 11,120 | 6,373 | 11,120 |
Change in unrealized gains or losses included in other comprehensive income related to Level 3 securities held at the reporting date | ||||
Change in unrealized gains or losses included in other comprehensive income related to Level 3 securities | (18) | (53) | 158 | (28) |
Residential mortgage-backed securities | ||||
Roll forward of level 3 fair value measurements on a recurring basis | ||||
Beginning balance | 915 | 0 | ||
Included in earnings | 4 | 4 | ||
Included in other comprehensive income | 15 | 15 | ||
Purchases | 0 | 921 | ||
Sales | (26) | (32) | ||
Transfers into Level 3 | 0 | 0 | ||
Transfers out of Level 3 | (908) | (908) | ||
Ending balance | 0 | 0 | ||
Commercial mortgage-backed securities | ||||
Roll forward of level 3 fair value measurements on a recurring basis | ||||
Beginning balance | 1,182 | 0 | ||
Included in earnings | 15 | 13 | ||
Included in other comprehensive income | (8) | (8) | ||
Purchases | 0 | 478 | ||
Sales | (1,065) | (1,065) | ||
Transfers into Level 3 | 2,551 | 3,257 | ||
Transfers out of Level 3 | (124) | (124) | ||
Ending balance | 2,551 | 2,551 | ||
Change in unrealized gains or losses included in other comprehensive income related to Level 3 securities held at the reporting date | ||||
Change in unrealized gains or losses included in other comprehensive income related to Level 3 securities | $ 29 | $ 26 | ||
Collateralized debt obligations | ||||
Roll forward of level 3 fair value measurements on a recurring basis | ||||
Beginning balance | 2,200 | |||
Included in earnings | 0 | |||
Included in other comprehensive income | 7 | |||
Purchases | 0 | |||
Sales | 0 | |||
Transfers into Level 3 | 0 | |||
Transfers out of Level 3 | (2,207) | |||
Ending balance | $ 0 | $ 0 |
Fair Value - Financial Instrume
Fair Value - Financial Instruments Disclosed but Not Carried at Fair Value (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Carrying value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Agent loans | $ 60,962 | $ 58,006 |
Long-term borrowings | 99,038 | 99,730 |
Fair value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Agent loans | 61,321 | 54,110 |
Long-term borrowings | $ 100,129 | $ 94,057 |
Investments - Cost to Fair Valu
Investments - Cost to Fair Value of Available-For-Sale Securities (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Available-for-sale securities | ||
Amortized cost | $ 687,780 | |
Estimated fair value | 689,108 | |
U.S. Treasury | ||
Available-for-sale securities | ||
Amortized cost | 150,171 | $ 208,610 |
Gross unrealized gains | 923 | 18 |
Gross unrealized losses | 0 | 216 |
Estimated fair value | 151,094 | 208,412 |
States & political subdivisions | ||
Available-for-sale securities | ||
Amortized cost | 3,354 | 157,003 |
Gross unrealized gains | 6 | 2,020 |
Gross unrealized losses | 0 | 0 |
Estimated fair value | 3,360 | 159,023 |
Corporate debt securities | ||
Available-for-sale securities | ||
Amortized cost | 356,899 | 259,362 |
Gross unrealized gains | 1,706 | 139 |
Gross unrealized losses | 1,949 | 9,554 |
Estimated fair value | 356,656 | 249,947 |
Residential mortgage-backed securities | ||
Available-for-sale securities | ||
Amortized cost | 65,910 | 4,603 |
Gross unrealized gains | 297 | 38 |
Gross unrealized losses | 21 | 32 |
Estimated fair value | 66,186 | 4,609 |
Commercial mortgage-backed securities | ||
Available-for-sale securities | ||
Amortized cost | 45,527 | 47,022 |
Gross unrealized gains | 625 | 80 |
Gross unrealized losses | 10 | 587 |
Estimated fair value | 46,142 | 46,515 |
Collateralized debt obligations | ||
Available-for-sale securities | ||
Amortized cost | 57,710 | 65,039 |
Gross unrealized gains | 16 | 30 |
Gross unrealized losses | 381 | 830 |
Estimated fair value | 57,345 | 64,239 |
Other debt securities | ||
Available-for-sale securities | ||
Amortized cost | 8,209 | 15,756 |
Gross unrealized gains | 116 | 33 |
Gross unrealized losses | 0 | 11 |
Estimated fair value | 8,325 | 15,778 |
Available-for-sale securities | ||
Available-for-sale securities | ||
Amortized cost | 687,780 | 757,395 |
Gross unrealized gains | 3,689 | 2,358 |
Gross unrealized losses | 2,361 | 11,230 |
Estimated fair value | $ 689,108 | $ 748,523 |
Investments - Amortized Cost an
Investments - Amortized Cost and Estimated Fair Value of Available-For-Sale Securities by Contractual Maturity (Details) $ in Thousands | Jun. 30, 2019USD ($) |
Amortized cost | |
Due in one year or less | $ 62,962 |
Due after one year through five years | 358,056 |
Due after five years through ten years | 127,215 |
Due after ten years | 139,547 |
Amortized cost | 687,780 |
Estimated fair value | |
Due in one year or less | 63,031 |
Due after one year through five years | 358,508 |
Due after five years through ten years | 127,364 |
Due after ten years | 140,205 |
Estimated fair value | $ 689,108 |
Investments - Available-For-Sal
Investments - Available-For-Sale Securities in a Gross Unrealized Loss Position (Details) $ in Thousands | Jun. 30, 2019USD ($)Holdings | Dec. 31, 2018USD ($)Holdings |
Investment grade | ||
Fair value | ||
Less than 12 months | $ 136,432 | $ 242,821 |
12 months or longer | 59,023 | 98,118 |
Total | 195,455 | 340,939 |
Unrealized losses | ||
Less than 12 months | 296 | 1,295 |
12 months or longer | 354 | 1,641 |
Total | $ 650 | $ 2,936 |
No. of holdings | Holdings | 111 | 147 |
Non-investment grade | ||
Fair value | ||
Less than 12 months | $ 31,454 | $ 125,813 |
12 months or longer | 15,032 | 19,987 |
Total | 46,486 | 145,800 |
Unrealized losses | ||
Less than 12 months | 740 | 6,608 |
12 months or longer | 971 | 1,686 |
Total | $ 1,711 | $ 8,294 |
No. of holdings | Holdings | 273 | 574 |
U.S. Treasury | ||
Fair value | ||
Less than 12 months | $ 129,474 | |
12 months or longer | 11,656 | |
Total | 141,130 | |
Unrealized losses | ||
Less than 12 months | 19 | |
12 months or longer | 197 | |
Total | $ 216 | |
No. of holdings | Holdings | 7 | |
Corporate debt securities | ||
Fair value | ||
Less than 12 months | $ 104,809 | $ 157,300 |
12 months or longer | 58,666 | 86,586 |
Total | 163,475 | 243,886 |
Unrealized losses | ||
Less than 12 months | 844 | 6,866 |
12 months or longer | 1,105 | 2,688 |
Total | $ 1,949 | $ 9,554 |
No. of holdings | Holdings | 334 | 635 |
Residential mortgage-backed securities | ||
Fair value | ||
Less than 12 months | $ 15,710 | $ 777 |
12 months or longer | 0 | 1,618 |
Total | 15,710 | 2,395 |
Unrealized losses | ||
Less than 12 months | 21 | 6 |
12 months or longer | 0 | 26 |
Total | $ 21 | $ 32 |
No. of holdings | Holdings | 2 | 3 |
Commercial mortgage-backed securities | ||
Fair value | ||
Less than 12 months | $ 6,965 | $ 17,624 |
12 months or longer | 547 | 16,997 |
Total | 7,512 | 34,621 |
Unrealized losses | ||
Less than 12 months | 6 | 175 |
12 months or longer | 4 | 412 |
Total | $ 10 | $ 587 |
No. of holdings | Holdings | 7 | 30 |
Collateralized debt obligations | ||
Fair value | ||
Less than 12 months | $ 40,402 | $ 55,246 |
12 months or longer | 14,842 | 1,248 |
Total | 55,244 | 56,494 |
Unrealized losses | ||
Less than 12 months | 165 | 826 |
12 months or longer | 216 | 4 |
Total | $ 381 | $ 830 |
No. of holdings | Holdings | 41 | 39 |
Other debt securities | ||
Fair value | ||
Less than 12 months | $ 8,213 | |
12 months or longer | 0 | |
Total | 8,213 | |
Unrealized losses | ||
Less than 12 months | 11 | |
12 months or longer | 0 | |
Total | $ 11 | |
No. of holdings | Holdings | 7 | |
Available-for-sale securities | ||
Fair value | ||
Less than 12 months | $ 167,886 | $ 368,634 |
12 months or longer | 74,055 | 118,105 |
Total | 241,941 | 486,739 |
Unrealized losses | ||
Less than 12 months | 1,036 | 7,903 |
12 months or longer | 1,325 | 3,327 |
Total | $ 2,361 | $ 11,230 |
No. of holdings | Holdings | 384 | 721 |
Investments - Net Investment In
Investments - Net Investment Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Investment income from portfolios | ||||
Total investment income | $ 8,289 | $ 7,431 | $ 17,056 | $ 14,691 |
Less: investment expenses | 259 | 327 | 509 | 767 |
Investment income, net of expenses | 8,030 | 7,104 | 16,547 | 13,924 |
Fixed maturities | ||||
Investment income from portfolios | ||||
Total investment income | 5,488 | 6,263 | 11,649 | 12,373 |
Equity securities | ||||
Investment income from portfolios | ||||
Total investment income | 141 | 142 | 282 | 284 |
Cash equivalents and other | ||||
Investment income from portfolios | ||||
Total investment income | $ 2,660 | 1,026 | $ 5,125 | 2,034 |
Erie Family Life Insurance Company | ||||
Investment income from portfolios | ||||
Note receivable from EFL, interest income recognized by Indemnity | $ 400 | $ 800 |
Investments - Realized Investme
Investments - Realized Investment Gains (Losses) and Impairments (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Net realized investment gains (losses) | ||||
Net realized investment gains (losses) | $ 1,302,000 | $ (32,000) | $ 3,805,000 | $ (497,000) |
Other-than-temporary impairments on available-for-sale securities | ||||
Other-than-temporary impairments on available-for-sale securities recognized in earnings | 84,000 | 646,000 | 162,000 | 646,000 |
Other-than-temporary impairments on available-for-sale securities recognized in other comprehensive income | 0 | 0 | 0 | 0 |
Available-for-sale securities | ||||
Available-for-sale securities: | ||||
Gross realized gains | 2,062,000 | 235,000 | 4,320,000 | 575,000 |
Gross realized losses | (823,000) | (301,000) | (1,163,000) | (986,000) |
Net realized gains (losses) on available-for-sale securities | 1,239,000 | (66,000) | 3,157,000 | (411,000) |
Equity securities | ||||
Equity securities | ||||
Equity securities | 63,000 | (68,000) | 648,000 | (188,000) |
Miscellaneous | ||||
Net realized investment gains (losses) | ||||
Miscellaneous | $ 0 | $ 102,000 | $ 0 | $ 102,000 |
Investments - Portion of Net Un
Investments - Portion of Net Unrealized Gains and Losses Recognized During the Reporting Period Related To Equity Securities (Details) - Equity securities - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Equity securities: | ||||
Net gains (losses) recognized during the period | $ 63 | $ (68) | $ 648 | $ (188) |
Less: net losses recognized on securities sold | 0 | 0 | 0 | (34) |
Net unrealized gains (losses) recognized on securities held at reporting date | $ 63 | $ (68) | $ 648 | $ (154) |
Investments - Equity in Earning
Investments - Equity in Earnings (Losses) of Limited Partnerships by Method of Accounting (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Dec. 31, 2018fund | |
Investments in limited partnerships | |||||
Equity in earnings (losses) of limited partnerships | $ 404 | $ (219) | $ (743) | $ (411) | |
Equity method of accounting | |||||
Investments in limited partnerships | |||||
Equity in earnings (losses) of limited partnerships | 404 | (216) | (743) | (21) | |
Fair value option | |||||
Investments in limited partnerships | |||||
Number of real estate limited partnerships that do not meet the criteria of an investment company | fund | 1 | ||||
Equity in earnings (losses) of limited partnerships | $ 0 | $ (3) | $ 0 | $ (390) |
Investments - Limited Partnersh
Investments - Limited Partnership Investments by Sector (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Investments in limited partnerships | ||
Asset recorded | $ 30,344 | $ 34,821 |
Private equity | ||
Investments in limited partnerships | ||
Asset recorded | 26,793 | 28,271 |
Mezzanine debt | ||
Investments in limited partnerships | ||
Asset recorded | 1,053 | 1,152 |
Real estate | ||
Investments in limited partnerships | ||
Asset recorded | 2,498 | 2,192 |
Fair value option | Real estate | ||
Investments in limited partnerships | ||
Asset recorded | $ 0 | $ 3,206 |
Leases (Details)
Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2019 | Jan. 01, 2019 | |
Lessee, Lease, Description [Line Items] | |||
Operating lease assets | $ 26,587 | $ 26,587 | $ 32,700 |
Operating lease liabilities - current | 11,736 | 11,736 | |
Operating lease liabilities - long-term | 14,539 | 14,539 | |
Total operating lease liabilities | 26,275 | 26,275 | $ 32,100 |
Operating lease costs | 3,600 | 7,200 | |
Erie Insurance Exchange | |||
Lessee, Lease, Description [Line Items] | |||
Operating lease costs, amount reimbursed from Exchange and its subsidiaries | 1,600 | 3,100 | |
Erie Insurance Exchange | Office Space | |||
Lessee, Lease, Description [Line Items] | |||
Operating lease assets | $ 14,700 | $ 14,700 |
Borrowing Arrangements - Bank L
Borrowing Arrangements - Bank Line of Credit (Details) - Revolving line of credit | Jun. 30, 2019USD ($) |
Bank line of credit | |
Maximum borrowing capacity under the bank revolving line of credit | $ 100,000,000 |
Maximum letter of credit sublimit under the bank revolving line of credit | 25,000,000 |
Available borrowing capacity under the bank revolving line of credit, due to outstanding letters of credit | 99,100,000 |
Outstanding amount of letters of credit under the bank revolving line of credit | 900,000 |
Available amount of letters of credit under the bank revolving line of credit | 24,100,000 |
Borrowings outstanding under the bank revolving line of credit | 0 |
Fair value of investments pledged as collateral on the bank revolving line of credit | $ 109,300,000 |
Borrowing Arrangements - Term L
Borrowing Arrangements - Term Loan Credit Facility (Details) - Secured debt - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Dec. 31, 2016 | |
Term loan credit facility | ||
Amount of senior secured draw term loan credit facility | $ 100,000,000 | |
Fixed interest rate of credit facility (as a percent) | 4.35% | |
Repayment period of credit facility (in years) | 28 years | |
Fair value of investments pledged as collateral on the credit facility | $ 108,600,000 |
Borrowing Arrangements - Annual
Borrowing Arrangements - Annual Principal Payments (Details) - Secured debt $ in Thousands | Jun. 30, 2019USD ($) |
Future principal payments: | |
2019 | $ 946 |
2020 | 1,955 |
2021 | 2,042 |
2022 | 2,132 |
2023 | 2,227 |
Thereafter | $ 89,737 |
Postretirement Benefits (Detail
Postretirement Benefits (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Cost of pension plans: | ||||
Service cost for benefits earned | $ 8,464 | $ 9,513 | $ 16,927 | $ 19,026 |
Interest cost on benefits obligation | 9,826 | 8,845 | 19,653 | 17,691 |
Expected return on plan assets | (11,871) | (12,814) | (23,742) | (25,629) |
Prior service cost amortization | 348 | 338 | 697 | 676 |
Net actuarial loss amortization | 1,278 | 3,202 | 2,556 | 6,404 |
Pension plan cost | $ 8,045 | $ 9,084 | $ 16,091 | $ 18,168 |
Erie Insurance Exchange | ||||
Postretirement Benefits | ||||
Postretirement annual benefit expense reimbursed to Indemnity from the Exchange and its subsidiaries (as a percent) | 58.00% |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |||||
Effective income tax rate (as a percent) | 17.20% | 21.10% | 19.10% | 21.00% | |
Income tax benefit from tax settlement | $ 4.1 | ||||
Income tax benefit, related interest expense from tax settlement | $ 1 | ||||
Effective income tax rate, decrease from tax settlement (as a percent) | 3.80% | 2.00% |
Capital Stock - Class A and B C
Capital Stock - Class A and B Common Stock (Details) - Class B common stock - shares | 6 Months Ended | 12 Months Ended |
Jun. 30, 2019 | Dec. 31, 2018 | |
Common Stock | ||
Ratio for converting shares of Class B common stock into shares of Class A common stock (as a percent) | 2400.00% | 2400.00% |
Class B common stock shares converted into Class A common stock shares (in shares) | 0 | 0 |
Capital Stock - Stock Repurchas
Capital Stock - Stock Repurchases (Details) - Class A common stock - USD ($) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2011 | |
Shares purchased outside of stock repurchase program | |||
Total cost of shares purchased outside of publicly announced stock repurchase program | $ 2,000,000 | $ 3,200,000 | |
Performance shares | |||
Shares purchased outside of stock repurchase program | |||
Shares purchased outside of publicly announced stock repurchase program for share-based compensation awards (in shares) | 11,964 | 27,120 | |
Equity compensation plan | |||
Shares purchased outside of stock repurchase program | |||
Total cost of shares purchased outside of publicly announced stock repurchase program | $ 400,000 | $ 700,000 | |
Average price per share for shares purchased (in dollars per share) | $ 132.35 | $ 117.39 | |
Equity compensation plan | Performance shares | |||
Shares purchased outside of stock repurchase program | |||
Shares purchased outside of publicly announced stock repurchase program for share-based compensation awards (in shares) | 3,246 | 5,830 | |
Stock compensation plan for outside directors | |||
Shares purchased outside of stock repurchase program | |||
Total cost of shares purchased outside of publicly announced stock repurchase program | $ 900,000 | $ 1,100,000 | |
Average price per share for shares purchased (in dollars per share) | $ 190.59 | $ 122.19 | |
Stock compensation plan for outside directors | Performance shares | |||
Shares purchased outside of stock repurchase program | |||
Shares purchased outside of publicly announced stock repurchase program for share-based compensation awards (in shares) | 4,465 | 9,285 | |
Incentive compensation deferral plan | |||
Shares purchased outside of stock repurchase program | |||
Total cost of shares purchased outside of publicly announced stock repurchase program | $ 700,000 | $ 1,400,000 | |
Average price per share for shares purchased (in dollars per share) | $ 175.64 | $ 119.28 | |
Incentive compensation deferral plan | Performance shares | |||
Shares purchased outside of stock repurchase program | |||
Shares purchased outside of publicly announced stock repurchase program for share-based compensation awards (in shares) | 4,253 | 12,005 | |
Stock repurchase program | |||
Stock repurchases | |||
Amount of authorized stock repurchases approved for continuation under the current program | $ 150,000,000 | ||
Shares repurchased under stock repurchase program (in shares) | 0 | 0 | |
Approximate amount of repurchase authority remaining under the current stock repurchase program | $ 17,800,000 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Accumulated other comprehensive income (loss), net of tax | ||||||
AOCI (loss), beginning of period | $ (130,284) | $ (130,284) | ||||
Investment securities, OCI (loss) | $ 2,579 | $ (551) | 8,057 | $ (5,978) | ||
Pension and other postretirement plans, OCI (loss) | 1,231 | 0 | 2,463 | 0 | ||
OCI (loss) | 3,810 | 6,710 | (551) | $ (5,427) | 10,520 | (5,978) |
AOCI (loss), end of period | (119,764) | (119,764) | ||||
Investment securities: | ||||||
Accumulated other comprehensive income (loss), before tax | ||||||
AOCI (loss), beginning of period | (2,235) | (9,169) | (3,460) | 3,410 | (9,169) | 3,410 |
OCI (loss) before reclassifications | 4,420 | (1,409) | 13,194 | (8,539) | ||
Realized investment (gains) losses | (1,239) | 66 | (3,157) | 411 | ||
Impairment losses | 84 | 646 | 162 | 646 | ||
Cumulative effect of adopting ASU 2016-01 | (85) | |||||
Investment securities, OCI (loss) | 3,265 | (697) | 10,199 | (7,567) | ||
AOCI (loss), end of period | 1,030 | (2,235) | (4,157) | (3,460) | 1,030 | (4,157) |
Accumulated other comprehensive income (loss), tax | ||||||
AOCI (loss), beginning of period | (470) | (1,926) | (727) | 716 | (1,926) | 716 |
OCI (loss) before reclassifications | 928 | (296) | 2,771 | (1,793) | ||
Realized investment (gains) losses | (260) | 14 | (663) | 86 | ||
Impairment losses | 18 | 136 | 34 | 136 | ||
Cumulative effect of adopting ASU 2016-01 | (18) | |||||
Investment securities, OCI (loss) | 686 | (146) | 2,142 | (1,589) | ||
AOCI (loss), end of period | 216 | (470) | (873) | (727) | 216 | (873) |
Accumulated other comprehensive income (loss), net of tax | ||||||
AOCI (loss), beginning of period | (1,765) | (7,243) | (2,733) | 2,694 | (7,243) | 2,694 |
OCI (loss) before reclassifications | 3,492 | (1,113) | 10,423 | (6,746) | ||
Realized investment (gains) losses | (979) | 52 | (2,494) | 325 | ||
Impairment losses | 66 | 510 | 128 | 510 | ||
Cumulative effect of adopting ASU 2016-01 | (67) | |||||
Investment securities, OCI (loss) | 2,579 | (551) | 8,057 | (5,978) | ||
AOCI (loss), end of period | 814 | (1,765) | (3,284) | (2,733) | 814 | (3,284) |
Pension and other postretirement plans: | ||||||
Accumulated other comprehensive income (loss), before tax | ||||||
AOCI (loss), beginning of period | (154,190) | (155,749) | (200,954) | (200,954) | (155,749) | (200,954) |
Amortization of prior service costs | 348 | 0 | 697 | 0 | ||
Amortization of net actuarial loss | 1,210 | 0 | 2,420 | 0 | ||
Pension and other postretirement plans, OCI (loss) | 1,558 | 0 | 3,117 | 0 | ||
AOCI (loss), end of period | (152,632) | (154,190) | (200,954) | (200,954) | (152,632) | (200,954) |
Accumulated other comprehensive income (loss), tax | ||||||
AOCI (loss), beginning of period | (32,381) | (32,708) | (42,201) | (42,201) | (32,708) | (42,201) |
Amortization of prior service costs | 73 | 0 | 146 | 0 | ||
Amortization of net actuarial loss | 254 | 0 | 508 | 0 | ||
Pension and other postretirement plans, OCI (loss) | 327 | 0 | 654 | 0 | ||
AOCI (loss), end of period | (32,054) | (32,381) | (42,201) | (42,201) | (32,054) | (42,201) |
Accumulated other comprehensive income (loss), net of tax | ||||||
AOCI (loss), beginning of period | (121,809) | (123,041) | (158,753) | (158,753) | (123,041) | (158,753) |
Amortization of prior service costs | 275 | 0 | 551 | 0 | ||
Amortization of net actuarial loss | 956 | 0 | 1,912 | 0 | ||
Pension and other postretirement plans, OCI (loss) | 1,231 | 0 | 2,463 | 0 | ||
AOCI (loss), end of period | (120,578) | (121,809) | (158,753) | (158,753) | (120,578) | (158,753) |
Total | ||||||
Accumulated other comprehensive income (loss), before tax | ||||||
AOCI (loss), beginning of period | (156,425) | (164,918) | (204,414) | (197,544) | (164,918) | (197,544) |
Investment securities, OCI (loss) | 3,265 | (697) | 10,199 | (7,567) | ||
Pension and other postretirement plans, OCI (loss) | 1,558 | 0 | 3,117 | 0 | ||
OCI (loss) | 4,823 | (697) | 13,316 | (7,567) | ||
AOCI (loss), end of period | (151,602) | (156,425) | (205,111) | (204,414) | (151,602) | (205,111) |
Accumulated other comprehensive income (loss), tax | ||||||
AOCI (loss), beginning of period | (32,851) | (34,634) | (42,928) | (41,485) | (34,634) | (41,485) |
Investment securities, OCI (loss) | 686 | (146) | 2,142 | (1,589) | ||
Pension and other postretirement plans, OCI (loss) | 327 | 0 | 654 | 0 | ||
OCI (loss) | 1,013 | (146) | 2,796 | (1,589) | ||
AOCI (loss), end of period | (31,838) | (32,851) | (43,074) | (42,928) | (31,838) | (43,074) |
Accumulated other comprehensive income (loss), net of tax | ||||||
AOCI (loss), beginning of period | (123,574) | (130,284) | (161,486) | (156,059) | (130,284) | (156,059) |
Investment securities, OCI (loss) | 2,579 | (551) | 8,057 | (5,978) | ||
Pension and other postretirement plans, OCI (loss) | 1,231 | 0 | 2,463 | 0 | ||
OCI (loss) | 3,810 | 6,710 | (551) | (5,427) | 10,520 | (5,978) |
AOCI (loss), end of period | $ (119,764) | $ (123,574) | $ (162,037) | $ (161,486) | $ (119,764) | $ (162,037) |
Concentrations of Credit Risk (
Concentrations of Credit Risk (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Concentrations of credit risk from unsecured receivables | ||
Receivables from Erie Insurance Exchange and its affiliates | $ 483,319 | $ 449,873 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | Jun. 30, 2019USD ($) |
Contractual commitments | |
Represents the entity's maximum contractual commitments to invest in its limited partnership investments | $ 9.9 |
Private equity | |
Contractual commitments | |
Represents the entity's maximum contractual commitments to invest in its limited partnership investments | 4.4 |
Mezzanine debt | |
Contractual commitments | |
Represents the entity's maximum contractual commitments to invest in its limited partnership investments | $ 5.5 |
Uncategorized Items - erie10-q0
Label | Element | Value | [1] |
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (38,392,000) | |
Retained Earnings [Member] | |||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (38,392,000) | |
[1] | Cumulative effect adjustments are primarily related to the implementation of new revenue recognition guidance effective January 1, 2018. |