Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2019 | Feb. 21, 2020 | Jun. 30, 2019 | |
Entity Information [Line Items] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
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 Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
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 | ||
Public Float | $ 6.3 | ||
Entity Central Index Key | 0000922621 | ||
Document Period End Date | Dec. 31, 2019 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Class A Common Stock | |||
Entity Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 46,189,068 | ||
Class B Common Stock | |||
Entity Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 2,542 |
STATEMENTS OF OPERATIONS
STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Operating revenue | |||
Operating revenue | $ 2,477,298 | $ 2,382,212 | $ 1,691,774 |
Operating expenses | |||
Operating expenses | 2,119,959 | 2,037,869 | 1,401,522 |
Operating income | 357,339 | 344,343 | 290,252 |
Investment income | |||
Net investment income | 33,399 | 30,209 | 24,639 |
Net realized investment gains (losses) | 6,103 | (2,010) | 1,334 |
Net impairment losses recognized in earnings | (195) | (1,581) | |
Net impairment losses recognized in earnings | (182) | ||
Equity in earnings (losses) of limited partnerships | 660 | (822) | 2,801 |
Total investment income | 39,967 | 25,796 | 28,592 |
Interest expense, net | 856 | 2,460 | 1,238 |
Other income (expense) | 255 | 3,641 | (1,911) |
Income before income taxes | 396,705 | 371,320 | 315,695 |
Income tax expense | 79,884 | 83,096 | 118,696 |
Net income | $ 316,821 | $ 288,224 | $ 196,999 |
Class A Common Stock | |||
Net income per share | |||
Common stock - basic (in dollars per share) | $ 6.80 | $ 6.19 | $ 4.23 |
Common stock - diluted (in dollars per share) | $ 6.06 | $ 5.51 | $ 3.76 |
Weighted average shares outstanding – Basic | |||
Common stock - basic (in shares) | 46,188,836 | 46,188,637 | 46,186,831 |
Weighted average shares outstanding – Diluted | |||
Common stock - diluted (in shares) | 52,319,860 | 52,315,213 | 52,337,463 |
Class B Common Stock | |||
Net income per share | |||
Common stock - basic (in dollars per share) | $ 1,020 | $ 928 | $ 635 |
Common stock - diluted (in dollars per share) | $ 1,020 | $ 928 | $ 634 |
Weighted average shares outstanding – Basic | |||
Common stock - basic (in shares) | 2,542 | 2,542 | 2,542 |
Weighted average shares outstanding – Diluted | |||
Common stock - diluted (in shares) | 2,542 | 2,542 | 2,542 |
Management fee revenue - policy issuance and renewal services, net | |||
Operating revenue | |||
Operating revenue | $ 1,810,457 | $ 1,719,567 | $ 1,662,625 |
Operating expenses | |||
Operating expenses | 1,537,949 | 1,457,533 | 1,401,522 |
Management fee revenue - administrative services, net | |||
Operating revenue | |||
Operating revenue | 57,204 | 53,632 | 0 |
Administrative services reimbursement revenue | |||
Operating revenue | |||
Operating revenue | 582,010 | 580,336 | 0 |
Operating expenses | |||
Operating expenses | 582,010 | 580,336 | 0 |
Service agreement revenue | |||
Operating revenue | |||
Operating revenue | $ 27,627 | $ 28,677 | $ 29,149 |
STATEMENTS OF COMPREHENSIVE INC
STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 316,821 | $ 288,224 | $ 196,999 |
Other comprehensive income (loss), net of tax | |||
Change in unrealized holding gains (losses) on available-for-sale securities | 11,718 | (9,937) | (190) |
Pension and other postretirement plans | 1,698 | 35,712 | (8,105) |
Total other comprehensive income (loss), net of tax | 13,416 | 25,775 | (8,295) |
Comprehensive income | $ 330,237 | $ 313,999 | $ 188,704 |
STATEMENTS OF FINANCIAL POSITIO
STATEMENTS OF FINANCIAL POSITION - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 336,739 | $ 266,417 |
Available-for-sale securities | 32,810 | 402,339 |
Equity securities | 2,381 | 0 |
Receivables from Erie Insurance Exchange and affiliates | 468,636 | 449,873 |
Prepaid expenses and other current assets | 44,943 | 36,892 |
Federal income taxes recoverable | 462 | 8,162 |
Accrued investment income | 5,433 | 5,263 |
Total current assets | 891,404 | 1,168,946 |
Available-for-sale securities | 697,891 | 346,184 |
Equity securities | 64,752 | 11,853 |
Limited partnership investments | 26,775 | 34,821 |
Fixed assets, net | 221,379 | 130,832 |
Deferred income taxes, net | 17,186 | 24,101 |
Other assets | 96,853 | 61,590 |
Total assets | 2,016,240 | 1,778,327 |
Current liabilities: | ||
Commissions payable | 262,963 | 241,573 |
Agent bonuses | 96,053 | 103,462 |
Accounts payable and accrued liabilities | 134,957 | 111,291 |
Dividends payable | 44,940 | 41,910 |
Contract liability | 35,938 | 33,854 |
Deferred executive compensation | 10,882 | 13,107 |
Current portion of long-term borrowings | 1,979 | 1,870 |
Total current liabilities | 587,712 | 547,067 |
Defined benefit pension plans | 145,659 | 116,866 |
Contract liability | 18,435 | 17,873 |
Deferred executive compensation | 13,734 | 13,075 |
Long-term borrowings | 95,842 | 97,860 |
Other long-term liabilities | 21,605 | 11,914 |
Total liabilities | 882,987 | 804,655 |
Shareholders' equity | ||
Additional paid-in-capital | 16,483 | 16,459 |
Accumulated other comprehensive loss | (116,868) | (130,284) |
Retained earnings | 2,377,558 | 2,231,417 |
Total contributed capital and retained earnings | 2,279,343 | 2,119,762 |
Treasury stock, at cost; 22,110,132 shares held | (1,158,910) | (1,157,625) |
Deferred compensation | 12,820 | 11,535 |
Total shareholders' equity | 1,133,253 | 973,672 |
Total liabilities and shareholders' equity | 2,016,240 | 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 | Dec. 31, 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 - 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 | |
Balance, end of year at Dec. 31, 2016 | $ 816,910 | $ 1,992 | $ 178 | $ 16,300 | $ (121,381) | $ 2,065,911 | $ (1,155,846) | $ 9,756 | |||||
Increase (Decrease) in Shareholders' Equity | |||||||||||||
Net income | 196,999 | 196,999 | |||||||||||
Other comprehensive (loss) income | (8,295) | (8,295) | |||||||||||
Dividends declared: | $ (147,225) | $ (1,215) | $ (147,225) | $ (1,215) | |||||||||
Net purchase of treasury stock | [1] | 170 | 170 | 0 | |||||||||
Deferred compensation | 0 | (1,177) | 1,177 | ||||||||||
Rabbi trust distribution | [2] | 0 | 1,355 | (1,355) | |||||||||
AOCI reclassification | [3] | 0 | (26,383) | 26,383 | |||||||||
Balance, end of year 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 | 288,224 | 288,224 | |||||||||||
Other comprehensive (loss) income | 25,775 | 25,775 | |||||||||||
Dividends declared: | (157,964) | (1,304) | (157,964) | (1,304) | |||||||||
Net purchase of treasury stock | [1] | (11) | (11) | 0 | |||||||||
Deferred compensation | 0 | (2,566) | 2,566 | ||||||||||
Rabbi trust distribution | [2] | 0 | 609 | (609) | |||||||||
Balance, end of year 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 | 316,821 | 316,821 | |||||||||||
Other comprehensive (loss) income | 13,416 | 13,416 | |||||||||||
Dividends declared: | $ (169,283) | $ (1,397) | $ (169,283) | $ (1,397) | |||||||||
Net purchase of treasury stock | [1] | 24 | 24 | 0 | |||||||||
Deferred compensation | 0 | (2,208) | 2,208 | ||||||||||
Rabbi trust distribution | [2] | 0 | 923 | (923) | |||||||||
Balance, end of year at Dec. 31, 2019 | $ 1,133,253 | $ 1,992 | $ 178 | $ 16,483 | $ (116,868) | $ 2,377,558 | $ (1,158,910) | $ 12,820 | |||||
[1] | Net purchases of treasury stock in 2017, 2018 and 2019 includes 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, "Incentive and Deferred Compensation Plans". | ||||||||||||
[2] | Distributions of our Class A shares were made from the rabbi trust to a retired director and an incentive compensation deferral plan participant in both 2019 and 2018 and to a retired director in 2017. See Note 11, "Incentive and Deferred Compensation Plans". | ||||||||||||
[3] | A one-time adjustment was made in 2017 to reclassify stranded tax effects of the components of accumulated other comprehensive income ("AOCI") (loss) resulting from enactment of Tax Cuts and Jobs Act ("TCJA") from AOCI (loss) to retained earnings. See Note 2, "Significant Accounting Policies". |
STATEMENTS OF SHAREHOLDERS' E_2
STATEMENTS OF SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Class A Common Stock | |||
Dividends declared (in dollars per share) | $ 3.665 | $ 3.42 | $ 3.1875 |
Class B Common Stock | |||
Dividends declared (in dollars per share) | $ 549.75 | $ 513 | $ 478.125 |
STATEMENTS OF CASH FLOWS
STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Cash flows from operating activities | |||
Management fee received | $ 1,845,075 | $ 1,751,247 | $ 1,627,558 |
Administrative services reimbursements received | 588,255 | 574,698 | 0 |
Service agreement fee received | 27,627 | 28,677 | 29,149 |
Net investment income received | 34,511 | 37,489 | 31,281 |
Limited partnership distributions | 1,931 | 7,173 | 5,128 |
Decrease in reimbursements collected from affiliates | 0 | 0 | (4,720) |
Commissions paid to agents | (895,563) | (853,758) | (800,627) |
Agents bonuses paid | (115,795) | (134,314) | (122,743) |
Salaries and wages paid | (186,460) | (182,537) | (171,547) |
Pension contributions and employee benefits paid | (42,728) | (115,525) | (89,981) |
General operating expenses paid | (236,128) | (208,036) | (199,084) |
Administrative services expenses paid | (582,528) | (580,338) | 0 |
Income taxes paid | (72,817) | (58,814) | (106,250) |
Interest paid | (853) | (2,377) | (1,038) |
Net cash provided by operating activities | 364,527 | 263,585 | 197,126 |
Purchase of investments: | |||
Available-for-sale securities | (956,818) | (392,895) | |
Available-for-sale securities | (391,181) | ||
Equity securities | (66,760) | (4,087) | |
Limited partnerships | (48) | (243) | (410) |
Other investments | (1,032) | 0 | 0 |
Proceeds from investments: | |||
Available-for-sale securities sales | 687,347 | 235,323 | |
Available-for-sale securities sales | 144,317 | ||
Available-for-sale securities maturities/calls | 303,798 | 134,396 | 194,980 |
Equity securities | 16,109 | 4,162 | |
Limited partnerships | 3,722 | 3,387 | 10,768 |
Purchase of fixed assets | (102,039) | (56,297) | (28,927) |
Proceeds from disposal of fixed assets | 777 | 6,014 | 0 |
Loans to agents | (17,611) | (42,594) | (9,153) |
Collections on agent loans | 7,921 | 6,436 | 4,943 |
Repayment of note receivable from Erie Family Life Insurance | 0 | 25,000 | 0 |
Net cash used in investing activities | (124,634) | (81,398) | (74,663) |
Cash flows from financing activities | |||
Dividends paid to shareholders | (167,651) | (156,474) | (145,765) |
Net (payments) proceeds from long-term borrowings | (1,920) | 24,983 | 49,951 |
Net cash used in financing activities | (169,571) | (131,491) | (95,814) |
Net increase in cash and cash equivalents | 70,322 | 50,696 | 26,649 |
Cash and cash equivalents, beginning of year | 266,417 | 215,721 | 189,072 |
Cash and cash equivalents, end of year | 336,739 | 266,417 | 215,721 |
Supplemental disclosure of noncash transactions | |||
Transfer of investments from limited partnerships to equity securities | 3,310 | 0 | 0 |
Liability incurred to purchase fixed assets | 6,800 | 8,453 | 0 |
Operating lease assets obtained in exchange for new operating lease liabilities | $ 35,483 | $ 0 | $ 0 |
Nature of Operations
Nature of Operations | 12 Months Ended |
Dec. 31, 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. Agent compensation comprised approximately 67% of our 2019 policy issuance and renewal expenses. The underwriting services we provide include underwriting and policy processing and comprised approximately 10% of our 2019 policy issuance and renewal expenses. The remaining services we provide include customer service and administrative support. We also provide information technology services that support all the functions listed above that comprised approximately 11% of our 2019 policy issuance and renewal expenses. 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 | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies Basis of presentation The accompanying financial statements have been prepared in conformity with U.S. generally accepted accounting principles ("GAAP"). 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 We adopted Accounting Standards Codification ("ASC") 842, "Leases" 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. We adopted ASC 606, "Revenue from Contracts with Customers" on January 1, 2018, using the modified retrospective method applied to all contracts. The comparative information for periods preceding January 1, 2018 has not been restated and continues to be reported under the accounting standards in effect for those periods. Under ASC 606, we determined that we have two performance obligations under the subscriber’s agreement. The first performance obligation is providing policy issuance and renewal services. The second performance obligation is acting as the attorney-in-fact on behalf of the Exchange, as well as the service provider for its insurance subsidiaries, with respect to all administrative services. Upon adoption of ASC 606, the management fee earned per the subscriber’s agreement, currently 25% of all direct and affiliated assumed premiums written by the Exchange, is allocated between the two performance obligations. Prior to the adoption of ASC 606, the entire management fee was allocated to the policy issuance and renewal services. Additionally, the expenses we incur and related reimbursements we receive related to the administrative services are presented gross in our Statement of Operations effective January 1, 2018. On January 1, 2018, we established a contract liability of $48.5 million representing the portion of revenue not yet earned related to the administrative services to be provided in subsequent years. We recorded a related deferred tax asset of $10.2 million and a cumulative effect adjustment that reduced retained earnings by $38.3 million . The adoption of ASC 606 changed the presentation of our Statement of Cash Flows, but had no net impact to our cash flows. In 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2018-02, "Income Statement-Reporting Comprehensive Income-Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income" , which permits entities to reclassify from accumulated other comprehensive income to retained earnings tax effects stranded in accumulated other comprehensive income as a result of tax reform. We elected to early adopt this guidance effective December 31, 2017 using a portfolio method, which resulted in a decrease of $26.4 million in accumulated other comprehensive income and a corresponding increase in retained earnings. Recently issued accounting standards In August 2018, the FASB issued 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 interim and annual reporting periods beginning after December 15, 2019. 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 adopted this guidance on a prospective basis on January 1, 2020 and there was no 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 related to available-for-sale debt securities to be recognized through an allowance for credit losses. New disclosures are also required upon adoption of this guidance. ASU 2016-13 is effective for interim and annual reporting periods beginning after December 15, 2019. Our financial assets subject to this guidance include our receivable from Erie Insurance Exchange, agent loans, and investments. We do not expect a significant credit loss exposure for our receivable from Erie Insurance Exchange given the financial strength of the Exchange and the lack of any historical credit loss. As the majority of our agent loans are senior secured and have experienced only insignificant default amounts, we have historically not recorded an allowance for credit losses related to our agent loans. Upon adoption of this guidance on January 1, 2020, we established allowances for both the receivable from Erie Insurance Exchange and agent loans and recognized an immaterial cumulative effect adjustment. 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 securities will continue to be monitored for credit losses, which will 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. Cash and cash equivalents – Cash, money market accounts and other short-term, highly liquid investments with a maturity of three months or less at the date of purchase, are considered cash and cash equivalents. Investments Available-for-sale securities – Fixed maturity debt securities and redeemable preferred stock are classified as available-for-sale and reported at fair value with unrealized investment gains and losses, net of income taxes, recognized in other comprehensive income (loss). Available-for-sale securities with a remaining maturity of 12 months or less and any security that we intend to sell as of the reporting date are classified as current assets. Available-for-sale securities are evaluated monthly for other-than-temporary impairment loss. For securities that have experienced a decline in fair value below amortized cost and that we intend to sell, or for which it is more likely than not we will be required to sell the security before recovery of its amortized cost, an other-than-temporary impairment is recognized in earnings. Securities that have experienced a decline in fair value and that we do not intend to sell, and that we will not be required to sell before recovery, are evaluated to determine if the decline in fair value is other-than-temporary. Some factors considered in this evaluation include the extent and duration to which fair value is less than cost, historical operating performance and financial condition of the issuer, short and long-term prospects of the issuer and its industry based upon analysts' recommendations, specific events that occurred affecting the issuer, including a ratings downgrade, near term liquidity position of the issuer and compliance with financial covenants. If a decline is deemed to be other-than-temporary, an assessment is made to determine the amount of the total impairment related to a credit loss and that related to all other factors. Consideration is given to all available information relevant to the collectability of the security in this determination. When the entire amortized cost basis of the security will not be recovered, a credit loss exists. For securities with credit impairments that we did not intend to sell, the credit portion of the loss would be recorded through net income and the non-credit portion of the impairment would be recorded in other comprehensive income. Currently, we have the intent to sell all of our securities that have been determined to have a credit-related impairment. As a result, the entire amount of any impairment is recognized in earnings. Equity securities – Non-redeemable preferred and common stocks are classified as equity securities and reported at fair value with changes in fair value recognized in net realized investment gains (losses). Prior to January 1, 2018, equity securities were classified as available-for-sale and changes in fair value were recognized in other comprehensive income. Securities that we intend to sell as of the reporting date are classified as current assets. Realized gains and losses and investment income – Realized gains and losses on sales of available-for-sale and equity securities are recognized in income based upon the specific identification method and reported as net realized investment gains (losses). Interest income is recognized as earned and includes amortization of premium and accretion of discount. Income is recognized based on the constant effective yield method, which includes periodically updated prepayment assumptions obtained from third party data sources on our prepaying securities. The effective yield for prepaying securities is recalculated on a retrospective basis. Dividend income is recognized at the ex-dividend date. Both interest and dividend income are reported as net investment income. Limited partnership investments – Limited partnership investments primarily include U.S. and foreign private equity investments and are recorded using the equity method of accounting. The partnerships record assets on their balance sheet at fair value. While we perform various procedures in review of the general partners' valuations, we rely on the general partners' financial statements as the best available information to record our share of the partnership unrealized gains and losses resulting from valuation changes. Due to the availability of financial statements provided by the general partner, our share of limited partnership results is generally recorded on a quarter lag within equity in earnings (losses) of limited partnerships. Cash contributions made to and distributions received from the partnerships are recorded in the period in which the transaction occurs. We have made no new limited partnership commitments since 2006, and the balance of limited partnership investments is expected to continue to decrease over time as additional distributions are received. Deferred taxes Deferred tax assets and liabilities are recorded for temporary differences between the tax basis of assets and liabilities and the reported amounts in the financial statements, using the statutory tax rates in effect for the year in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date under the law. The need for valuation allowances on deferred tax assets are estimated based upon our assessment of the realizability of such amounts. Fixed assets Fixed assets are stated at cost less accumulated depreciation and amortization. Fixed assets are primarily comprised of software, which includes internally used capitalized software and development costs, as well as equipment, buildings and building improvements, and leasehold improvements. Assets in use are depreciated using the straight-line method over the estimated useful life except for leasehold improvements, which are depreciated over the shorter of their economic useful life or the lease term. Software is depreciated over periods ranging from 3 - 7 years , equipment is depreciated over 3 - 10 years , and buildings and building improvements are depreciated over 20 - 45 years . We review long-lived assets for impairment whenever events or changes indicate that the carrying value may not be recoverable. Under these circumstances, if the fair value were less than the carrying amount of the asset, we would recognize a loss for the difference. We capitalize applicable interest charges incurred during the construction period of significant long-term building projects as part of the historical cost of the asset. 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. Effective January 1, 2019, 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. Agent bonus estimates Our more significant agent bonus plan is based upon an individual agency's property and casualty underwriting profitability and also includes a component for growth in agency property and casualty premiums if the agency's underwriting profitability targets for the book of business are met. The estimate for this agent bonus plan is based upon the performance over 36 months , and is modeled on a monthly basis using actual underwriting results for the two prior years and current year-to-date actual results and forecasted results for the remainder of the year. Our second agent bonus plan is based on an agency's one -year underwriting profitability and uses a similar model but considers actual and forecasted results for a calendar year only. At December 31 of each year, we use actual data available and record an accrual based upon the expected payment amount. These costs are included in cost of operations - policy issuance and renewal services. Recognition of management fee revenue We earn management fees from the Exchange under the subscriber’s agreement for services provided. Pursuant to the subscriber’s agreement, we may retain up to 25% of all direct and affiliated assumed premiums written by the Exchange. The management fee rate is set at least annually by our Board of Directors. The management fee revenue is calculated by multiplying the management fee rate by the direct and affiliated assumed premiums written by the Exchange. Upon adoption of ASC 606 beginning January 1, 2018, we determined we have two performance obligations under the subscriber’s agreement. The first performance obligation is to provide policy issuance and renewal services. The second performance obligation is acting as the attorney-in-fact with respect to the administrative services. Beginning January 1, 2018, our management fee revenue is allocated to these two performance obligations. Prior to the adoption of ASC 606, the entire management fee was allocated to the policy issuance and renewal services. Management fee revenue allocated to the policy issuance and renewal services is recognized at the time of policy issuance or renewal, because it is at the time of policy issuance or renewal when the economic benefit of the service we provide (the substantially completed policy issuance or renewal service) and the control of the promised asset (the executed insurance policy) transfers to the customer. Management fee revenue allocated to the second performance obligation relates to us acting as the attorney-in-fact on behalf of the Exchange, as well as the service provider for its insurance subsidiaries, with respect to the administrative services and is recognized over a four -year period representing the time over which the economic benefit of the services provided (i.e. management of the administrative services) transfers to the customer. Administrative services 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 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. 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. Common overhead expenses and certain service department costs incurred by us on behalf of the Exchange and its insurance subsidiaries are reimbursed by the proper entity based upon appropriate utilization statistics (employee count, square footage, vehicle count, project hours, etc.) specifically measured to accomplish proportional allocations, which we believe are reasonable. Prior to the adoption of ASC 606, we recorded the reimbursements we receive for the administrative services expenses as receivables from the Exchange and its subsidiaries with a corresponding reduction to our expenses. Total cash settlements for the Exchange and its subsidiaries were $522.3 million in 2017 . Upon adoption of ASC 606 on January 1, 2018, the expenses we incur and related reimbursements we receive for administrative services are presented gross in our Statement of Operations. Reimbursements are settled on a monthly basis. 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. Recognition of service agreement revenue Service agreement revenue consists of service charges we collect from policyholders for providing multiple payment plans on policies written by the Exchange. Service charges, which are flat dollar charges for each installment billed beyond the first installment, are recognized as revenue when bills are rendered to the policyholder. Service agreement revenue also includes late payment and policy reinstatement fees, which are also recognized as revenue when bills are rendered to the policyholder. |
Revenue
Revenue | 12 Months Ended |
Dec. 31, 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 account for management fee revenue in accordance with ASC 606, which we adopted in 2018. See Note 2, "Significant Accounting Policies". 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 from affiliates 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. The amount of management fee revenue we receive can vary due to the potential of mid-term cancellations. 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 for the years ended December 31: (in thousands) 2019 2018 2017 Management fee revenue - policy issuance and renewal services, net $ 1,810,457 $ 1,719,567 $ 1,662,625 Management fee revenue - administrative services, net 57,204 53,632 — Administrative services reimbursement revenue 582,010 580,336 — Total administrative services $ 639,214 $ 633,968 $ — |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 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 13, "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. See Note 11, "Incentive and Deferred Compensation Plans". In 2017, we recorded a one-time net non-cash tax expense of $10.1 million as a result of the enactment of the Tax Cuts and Jobs Act ("TCJA"). See Note 12, "Income Taxes". This resulted in a reduction in Class A basic earnings per share of $0.22 and diluted earnings per share of $0.19 , and a reduction in Class B basic earnings per share of $33 and diluted earnings per share of $32 . 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: (dollars in thousands, except per share data) For the years ended December 31, 2019 2018 2017 Allocated net income (numerator) Weighted shares (denominator) Per- share amount 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 $ 314,227 46,188,836 $ 6.80 $ 285,864 46,188,637 $ 6.19 $ 195,386 46,186,831 $ 4.23 Dilutive effect of stock-based awards 0 30,224 — 0 25,776 — 0 49,832 — Assumed conversion of Class B shares 2,594 6,100,800 — 2,360 6,100,800 — 1,613 6,100,800 — Class A – Diluted EPS: Income available to Class A stockholders on Class A equivalent shares $ 316,821 52,319,860 $ 6.06 $ 288,224 52,315,213 $ 5.51 $ 196,999 52,337,463 $ 3.76 Class B – Basic EPS: Income available to Class B stockholders $ 2,594 2,542 $ 1,020 $ 2,360 2,542 $ 928 $ 1,613 2,542 $ 635 Class B – Diluted EPS: Income available to Class B stockholders $ 2,593 2,542 $ 1,020 $ 2,359 2,542 $ 928 $ 1,613 2,542 $ 634 |
Fair Value
Fair Value | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value | 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. 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 securities are valued using an exchange traded price provided by the pricing service. Pricing service valuations for Level 2 securities 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. Although virtually all of our prices are obtained from third party sources, we also perform internal pricing reviews, including evaluating the methodology and inputs used to ensure that we determine the proper classification level of the financial instrument and reviewing securities with price changes that vary significantly from current market conditions or independent third party price sources. Price variances are investigated and corroborated by market data and transaction volumes. We have reviewed the pricing methodologies of our pricing service as well as other observable inputs and believe that the prices adequately consider market activity in determining fair value. 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. 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 as of: December 31, 2019 Fair value measurements using: (in thousands) Total Level 1 Level 2 Level 3 Available-for-sale securities: Corporate debt securities (1) $ 454,880 $ 2,683 $ 443,873 $ 8,324 Residential mortgage-backed securities (1) 125,343 0 125,343 0 Commercial mortgage-backed securities (1) 67,541 0 64,220 3,321 Collateralized debt obligations (1) 77,856 0 77,856 0 Other debt securities 5,081 0 5,081 0 Total available-for-sale securities 730,701 2,683 716,373 11,645 Equity securities - nonredeemable preferred and common stock (1) Financial services sector 53,513 14,927 38,586 0 Utilities sector 6,818 3,190 3,628 0 Communications sector 3,433 3,433 0 0 Energy sector 1,881 0 1,881 0 Other sectors 1,488 0 1,488 0 Total equity securities 67,133 21,550 45,583 0 Total $ 797,834 $ 24,233 $ 761,956 $ 11,645 December 31, 2018 Fair value measurements using: (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 2018, we began selling off our municipal bonds as part of a portfolio rebalancing and invested proceeds in short-term U.S. Treasuries. In 2019, proceeds from sales and maturities of the remaining municipal bond portfolio and short-term U.S. Treasuries were reinvested in corporate debt, structured securities and preferred stock. (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. The following table presents our fair value measurements on a recurring basis by pricing source as of: December 31, 2019 (in thousands) Total Level 1 Level 2 Level 3 Available-for-sale securities: Pricing services $ 730,551 $ 2,683 $ 716,373 $ 11,495 Internal modeling 150 0 0 150 Total available-for-sale securities 730,701 2,683 716,373 11,645 Equity securities priced using pricing services 67,133 21,550 45,583 0 Total $ 797,834 $ 24,233 $ 761,956 $ 11,645 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 December 31, 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 $1.3 million at December 31, 2019 and $12.6 million at December 31, 2018. The weighted average is calculated based on estimated fair value. December 31, 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 $ 8,048 Syndicated loan model Market residual yield (1) -489 - +566 +76 Decrease Commercial mortgage-backed securities 2,143 Relative value pricing model Credit spread (2) +49 - +53 +51 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 – Year-to-Date Change: (in thousands) Beginning balance at December 31, 2018 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 December 31, 2019 Available-for-sale securities: Corporate debt securities $ 12,577 $ 10 $ 146 $ 2,020 $ (7,415 ) $ 11,542 $ (10,556 ) $ 8,324 Residential mortgage-backed securities 0 4 15 921 (32 ) 0 (908 ) 0 Commercial mortgage-backed securities 0 (9 ) (21 ) 478 (1,068 ) 7,281 (3,340 ) 3,321 Collateralized debt obligations 0 0 1 2,300 0 0 (2,301 ) 0 Total Level 3 available-for-sale securities $ 12,577 $ 5 $ 141 $ 5,719 $ (8,515 ) $ 18,823 $ (17,105 ) $ 11,645 Level 3 Assets – Year-to-Date Change: (in thousands) Beginning balance at December 31, 2017 Included in (1) Included in other comprehensive income Purchases Sales Transfers into Level 3 (2) Transfers out of Level 3 (2) Ending balance at December 31, 2018 Available-for-sale securities: Corporate debt securities $ 7,879 $ 6 $ (312 ) $ 5,550 $ (2,854 ) $ 18,232 $ (15,924 ) $ 12,577 Collateralized debt obligations 2,200 0 10 905 0 0 (3,115 ) 0 Total Level 3 available-for-sale securities $ 10,079 $ 6 $ (302 ) $ 6,455 $ (2,854 ) $ 18,232 $ (19,039 ) $ 12,577 (1) These amounts are reported as net investment income and net realized investment gains (losses) for 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 (loss) related to Level 3 securities held at the reporting date is as follows for the years ended December 31: (in thousands) 2019 2018 2017 Available-for-sale securities: Corporate debt securities $ 38 $ (554 ) $ — Commercial mortgage-backed securities 30 — — Net unrealized gains (losses) on Level 3 securities held at reporting date $ 68 $ (554 ) $ — Financial instruments not carried at fair value The following table presents the carrying values and fair values of financial instruments categorized as Level 3 in the fair value hierarchy that are recorded at carrying value as of: December 31, 2019 December 31, 2018 (in thousands) Carrying Value Fair Value Carrying Value Fair Value Agent loans $ 67,696 $ 71,602 $ 58,006 $ 54,110 Long-term borrowings 98,080 101,888 99,730 94,057 |
Investments
Investments | 12 Months Ended |
Dec. 31, 2019 | |
Investments [Abstract] | |
Investments | Investments Available-for-sale securities See Note 5, "Fair Value" for additional fair value disclosures. The following tables summarize the cost and fair value of our available-for-sale securities as of: December 31, 2019 (in thousands) Amortized cost Gross unrealized gains Gross unrealized losses Estimated fair value Corporate debt securities (1) $ 450,295 $ 6,289 $ 1,704 $ 454,880 Residential mortgage-backed securities (1) 124,337 1,056 50 125,343 Commercial mortgage-backed securities (1) 67,210 479 148 67,541 Collateralized debt obligations (1) 78,059 44 247 77,856 Other debt securities 5,049 71 39 5,081 Total available-for-sale securities $ 724,950 $ 7,939 $ 2,188 $ 730,701 December 31, 2018 (in thousands) Amortized cost Gross unrealized gains Gross unrealized losses Estimated fair value 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 2018, we began selling off our municipal bonds as part of a portfolio rebalancing and invested proceeds in short-term U.S. Treasuries. In 2019, proceeds from sales and maturities of the remaining municipal bond portfolio and short-term U.S. Treasuries were reinvested in corporate debt, structured securities and preferred stock. The amortized cost and estimated fair value of available-for-sale securities at December 31, 2019 , are shown below by remaining contractual term to maturity. 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. December 31, 2019 Amortized Estimated (in thousands) cost fair value Due in one year or less $ 32,613 $ 32,655 Due after one year through five years 336,377 339,033 Due after five years through ten years 120,716 122,068 Due after ten years 235,244 236,945 Total available-for-sale securities $ 724,950 $ 730,701 The below securities have been evaluated and determined to be temporary impairments for which we expect to recover our entire principal plus interest. The following tables present available-for-sale securities based on length of time in a gross unrealized loss position as of: December 31, 2019 Less than 12 months 12 months or longer Total Fair Unrealized Fair Unrealized Fair Unrealized No. of (dollars in thousands) value losses value losses value losses holdings Corporate debt securities $ 25,804 $ 342 $ 15,699 $ 1,362 $ 41,503 $ 1,704 158 Residential mortgage-backed securities 16,712 50 0 0 16,712 50 7 Commercial mortgage-backed securities 21,981 147 372 1 22,353 148 30 Collateralized debt obligations 20,889 33 41,010 214 61,899 247 49 Other debt securities 2,350 39 0 0 2,350 39 2 Total available-for-sale securities $ 87,736 $ 611 $ 57,081 $ 1,577 $ 144,817 $ 2,188 246 Quality breakdown of available-for-sale securities: Investment grade $ 76,315 $ 287 $ 46,390 $ 218 $ 122,705 $ 505 100 Non-investment grade 11,421 324 10,691 1,359 22,112 1,683 146 Total available-for-sale securities $ 87,736 $ 611 $ 57,081 $ 1,577 $ 144,817 $ 2,188 246 December 31, 2018 Less than 12 months 12 months or longer Total Fair Unrealized Fair Unrealized Fair Unrealized No. of (dollars in thousands) value losses value losses value losses holdings 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 Net investment income Investment income, net of expenses, was generated from the following portfolios for the years ended December 31: (in thousands) 2019 2018 2017 Available-for-sale securities (1) $ 22,496 $ 24,978 $ 23,669 Equity securities 1,418 628 — Cash equivalents and other 10,546 5,628 2,486 Total investment income 34,460 31,234 26,155 Less: investment expenses 1,061 1,025 1,516 Investment income, net of expenses $ 33,399 $ 30,209 $ 24,639 (1) Includes interest earned on note receivable from EFL of $1.6 million in 2018 and $ 1.7 million in 2017. The note was repaid in full in 2018. Realized investment gains (losses) Realized gains (losses) on investments were as follows for the years ended December 31: (in thousands) 2019 2018 2017 Available-for-sale securities: Gross realized gains $ 6,258 $ 1,892 $ 2,996 Gross realized losses (1,639 ) (3,189 ) (1,756 ) Net realized gains (losses) on available-for-sale securities 4,619 (1,297 ) 1,240 Equity securities 1,484 (819 ) — Miscellaneous 0 106 94 Net realized investment gains (losses) $ 6,103 $ (2,010 ) $ 1,334 The portion of net unrealized gains and losses recognized during the reporting period related to equity securities held at the reporting date is calculated as follows for the years ended December 31: (in thousands) 2019 2018 2017 Equity securities: (1) Net gains (losses) recognized during the period $ 1,484 $ (819 ) $ — Less: net gains (losses) recognized on securities sold 360 (86 ) — Net unrealized gains (losses) recognized on securities held at reporting date $ 1,124 $ (733 ) $ — (1) Effective January 1, 2018, changes in unrealized gains and losses on equity securities are included in net realized investment gains (losses). Other-than-temporary impairments on available-for-sale securities recognized in earnings were $0.2 million , $1.6 million and $0.2 million for the years ended December 31, 2019, 2018 and 2017, respectively. We have the intent to sell all credit-impaired available-for-sale securities; therefore, the entire amount of the impairment charges were included in earnings and no impairments were recognized in other comprehensive income (loss). See also Note 2, "Significant Accounting Policies". |
Fixed Assets
Fixed Assets | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Fixed Assets | Fixed Assets The following table summarizes our fixed assets by category at December 31: (in thousands) 2019 2018 Land, buildings, and building improvements $ 5,068 $ — Leasehold improvements 1,313 617 Software 191,709 163,735 Equipment 14,546 15,075 Furniture, fixtures, and equipment 1,934 — Projects in progress 22,992 10,392 Construction in progress 122,801 66,088 Total fixed assets, gross 360,363 255,907 Less: Accumulated depreciation and amortization (138,984 ) (125,075 ) Fixed assets, net $ 221,379 $ 130,832 In 2018, we sold the field offices we owned to the Exchange at the current independent appraised value in order to align the ownership interest of these facilities with the functions being performed at these locations, which are claims-related activities. We recognized a gain on the sale of $3.4 million , which is included in "Other income (expense)". See Note 15, "Related Party". The increase in land, buildings, and building improvements in 2019 resulted from the purchase of additional office space from a third party. Software increased primarily related to mainframe software licenses and investments in data technology, as well as internally developed software projects completed and placed in production related to providing personal lines new product processing capabilities. Projects in progress include certain computer software and software developments costs for internal use that are not yet subject to amortization. Construction in progress includes a new office building that will serve as part of our principal headquarters. Capitalized interest included in construction in progress was $3.4 million and $2.1 million at December 31, 2019 and 2018, respectively. The building is expected to be completed in 2020 and is financed using a senior secured draw term loan credit facility. See Note 9, "Borrowing Arrangements". Depreciation and amortization of fixed assets totaled $16.8 million , $13.4 million and $14.8 million for the years ended December 31, 2019 , 2018 and 2017 , respectively, and is included in cost of operations - policy issuance and renewal services. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Leases | Leases The following table summarizes our lease assets and liabilities at December 31: (in thousands) 2019 2018 Operating lease assets $ 22,401 $ — Operating lease liabilities - current $ 11,289 $ — Operating lease liabilities - long-term 10,665 — Total operating lease liabilities $ 21,954 $ — We currently have leases for real estate, technology equipment, copiers, and vehicles. Our largest operating lease asset at December 31, 2019 of $11.7 million is for home office space leased from the Exchange. 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. See Note 15, "Related Party". Operating lease costs for the year ended 2019 totaled $14.0 million . Of this amount, the Exchange and its subsidiaries reimbursed us $6.0 million for the year ended 2019, which represents the allocated share of lease costs supporting administrative services activities. |
Borrowing Arrangements
Borrowing Arrangements | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Borrowing Arrangements | Borrowing Arrangements Bank Line of Credit As of December 31, 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 December 31, 2019 , a total of $99.1 million remains available under the facility due to $0.9 million outstanding letters of credit, which reduces the availability for letters of credit to $24.1 million . We had no borrowings outstanding on our line of credit as of December 31, 2019 . Investments with a fair value of $110.1 million were pledged as collateral on the line at December 31, 2019 . The securities pledged as collateral have no trading restrictions and are reported as available-for-sale securities and cash and cash equivalents as of December 31, 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 December 31, 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 to 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 $112.4 million were pledged as collateral for the facility and are reported as available-for-sale securities and cash and cash equivalents as of December 31, 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 December 31, 2019 . The remaining unpaid balance from the Credit Facility is reported at carrying value, net of unamortized loan origination and commitment fees as long-term borrowings. 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 2020 $ 1,979 2021 2,019 2022 2,109 2023 2,226 2024 2,302 Thereafter 87,445 |
Postretirement Benefits
Postretirement Benefits | 12 Months Ended |
Dec. 31, 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 ("SERP") for certain members of executive and senior management. The pension plans provide benefits to covered individuals satisfying certain age and service requirements. The defined benefit pension plan and SERP each provide benefits through a final average earnings formula. 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 59% 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. For our funded pension plan, amounts are settled in cash for the portion of pension costs allocated to the Exchange and its subsidiaries. For our unfunded plans, we pay the obligations when due and amounts are settled in cash between entities when there is a payout. Cost of pension plans Pension plan cost includes the following components: (in thousands) 2019 2018 2017 Service cost for benefits earned $ 33,854 $ 38,052 $ 31,106 Interest cost on benefit obligation 39,306 35,382 34,275 Expected return on plan assets (47,484 ) (51,260 ) (41,267 ) Prior service cost amortization 1,394 1,353 871 Net actuarial loss amortization 5,113 12,809 9,301 Settlement cost (1) — — 302 Pension plan cost (2) $ 32,183 $ 36,336 $ 34,588 (1) The final SERP benefit for two former executives was settled with lump sum payments in 2017. (2) Pension plan costs represent the total cost before reimbursements to Indemnity from the Exchange and its subsidiaries. Actuarial assumptions The following table describes the assumptions at December 31 used to measure the year-end obligations and the net periodic benefit costs for the subsequent year: 2019 2018 2017 2016 Employee pension plan: Discount rate 3.59 % 4.47 % 3.73 % 4.24 % Expected return on assets 6.00 6.75 6.75 7.00 Compensation increases (1) 3.21 3.32 3.32 3.32 SERP: Discount rate – pre-retirement/post-retirement 3.59/3.09 4.47/3.97 3.73/3.23 4.24/3.74 Rate of compensation increase 5.00 5.00 5.00 5.00 (1) The rate of compensation increase for the employee plan is age-graded. An equivalent single compensation increase rate of 3.21% in 2019 and 3.32% in 2018 and 2017 would produce similar results. The economic assumptions that have the most impact on the postretirement benefits expense are the discount rate and the long-term rate of return on plan assets. The discount rate assumption used to determine the benefit obligation for all periods presented was based upon a yield curve developed from corporate bond yield information. The pension plan's expected long-term rate of return represents the average rate of return to be earned on plan assets over the period the benefits included in the benefit obligation are to be paid. To determine the expected long-term rate of return assumption, we utilized models based upon rigorous historical analysis and forward-looking views of the financial markets based upon key factors such as historical returns for the asset class' applicable indices, the correlations of the asset classes under various market conditions and consensus views on future real economic growth and inflation. The expected future return for each asset class is then combined by considering correlations between asset classes and the volatilities of each asset class to produce a reasonable range of asset return results within which our expected long-term rate of return assumption falls. Funding policy/funded status In 2018, we made accelerated pension contributions totaling $80 million . Following our 2018 contributions, we would not expect to make a subsequent contribution until the sum of the target normal costs for plan years beginning on and after December 31, 2017 exceeds $80 million , or earlier if a contribution is necessary to fund the plan to 100% . At that time, our funding policy will again generally be to contribute an amount equal to the greater of the target normal cost for the plan year, or the amount necessary to fund the plan to 100% . Additional contributions may be necessary or desirable due to future plan changes, our particular business or investment strategy, or pending law changes. The following table sets forth the funded status of the pension plans and the amounts recognized in the Statements of Financial Position at December 31: (in thousands) 2019 2018 Funded status at end of year $ (146,842 ) $ (118,596 ) Pension liabilities – due within one year (1) $ (1,183 ) $ (1,730 ) Pension liabilities – due after one year (145,659 ) (116,866 ) Net amount recognized $ (146,842 ) $ (118,596 ) (1) The current portion of pension liabilities is included in accounts payable and accrued liabilities. Benefit obligations Benefit obligations are described in the following tables. Accumulated and projected benefit obligations represent the obligations of a pension plan for past service as of the measurement date. The accumulated benefit obligation is the present value of pension benefits earned as of the measurement date based on employee service and compensation prior to that date. It differs from the projected benefit obligation in that the accumulated benefit obligation includes no assumptions to reflect expected future compensation. The following table sets forth a reconciliation of beginning and ending balances of the projected benefit obligation, as well as the accumulated benefit obligation at December 31: (in thousands) 2019 2018 Projected benefit obligation, beginning of year $ 886,165 $ 951,666 Service cost for benefits earned 33,854 38,052 Interest cost on benefit obligation 39,306 35,382 Plan amendments 452 3,007 Actuarial loss (gain) 138,144 (123,910 ) Benefits paid (43,454 ) (18,032 ) Projected benefit obligation, end of year $ 1,054,467 $ 886,165 Accumulated benefit obligation, end of year $ 858,209 $ 727,340 Projected benefit obligations increased $168.3 million at December 31, 2019 compared to December 31, 2018 due primarily to actuarial losses resulting from the lower discount rate discount rate used to measure the future benefit obligations. The discount rate decreased to 3.59% in 2019 from 4.47% in 2018. The increase in benefits paid of $25.4 million in 2019 compared to 2018 was primarily due to a pension plan amendment offering a one-time lump sum payment to former vested employees. Both the defined benefit plan and the SERP had projected benefit obligations in excess of plan assets at December 31: (in thousands) Projected Benefit Obligation in Excess of Plan Assets 2019 2018 Projected benefit obligation $ 1,054,467 $ 886,165 Plan assets 907,625 767,569 The SERP had accumulated benefit obligations in excess of plan assets at December 31: (in thousands) Accumulated Benefit Obligation in Excess of Plan Assets 2019 2018 Accumulated benefit obligation $ 23,411 $ 18,908 Plan assets — — Pension assets The following table sets forth a reconciliation of beginning and ending balances of the fair value of plan assets at December 31: (in thousands) 2019 2018 Fair value of plan assets, beginning of year $ 767,569 $ 743,900 Actual gain (loss) on plan assets 182,002 (38,360 ) Employer contributions 1,508 80,061 Benefits paid (43,454 ) (18,032 ) Fair value of plan assets, end of year $ 907,625 $ 767,569 Accumulated other comprehensive loss Net actuarial loss and prior service cost included in accumulated other comprehensive loss that were not yet recognized as components of net benefit costs were as follows: (in thousands) 2019 2018 Net actuarial loss $ 142,678 $ 144,165 Prior service cost 10,913 11,855 Net amount not yet recognized $ 153,591 $ 156,020 Other comprehensive income Amounts recognized in other comprehensive income for pension plans were as follows: (in thousands) 2019 2018 Net actuarial loss (gain) arising during the year $ 3,626 $ (34,290 ) Amortization of net actuarial loss (5,113 ) (12,809 ) Amortization of prior service cost (1,394 ) (1,353 ) Amendments (1) 452 3,007 Total recognized in other comprehensive income $ (2,429 ) $ (45,445 ) (1) In 2019, there was one new SERP participant. In 2018, there were five new SERP participants. Asset allocation The employee pension plan utilizes a return seeking and a liability asset matching allocation strategy. It is based upon the understanding that 1) equity investments are expected to outperform debt investments over the long-term, 2) the potential volatility of short-term returns from equities is acceptable in exchange for the larger expected long-term returns, and 3) a portfolio structured across investment styles and markets (both domestic and foreign) reduces volatility. As a result, the employee pension plan's investment portfolio utilizes a broadly diversified asset allocation across domestic and foreign equity and debt markets. The investment portfolio is composed of commingled pools that are dedicated exclusively to the management of employee benefit plan assets. The target and actual asset allocations for the portfolio are as follows for the years ended December 31: Target asset allocation Target asset allocation Actual asset allocation Actual asset allocation Asset allocation: 2019 2018 2019 2018 Equity securities: U.S. equity securities 27 % (1) 25 % 28 % 24 % Non-U.S. equity securities 18 (2) 16 18 14 Total equity securities 45 41 46 38 Debt securities 54 (3) 58 53 61 Other 1 (4) 1 1 1 Total 100 % 100 % 100 % 100 % (1) U.S. equity securities – 22% seek to achieve excess returns relative to the Russell 2000 Index. The remaining 78% of the allocation to U.S. equity securities are comprised of equity index funds that track the S&P 500. (2) Non-U.S. equity securities – 11% are allocated to international small cap investments, while another 20% are allocated to international emerging market investments. The remaining 69% of the Non-U.S. equity securities are allocated to investments seeking to achieve excess returns relative to an international market index. (3) Debt securities – 33% are allocated to long U.S. Treasury Strips, 67% are allocated to U.S. corporate bonds with an emphasis on long duration bonds rated A or better. (4) Institutional money market fund. The following tables present fair value measurements for the pension plan assets by major category and level of input as of: December 31, 2019 Fair value measurements of plan assets using: (in thousands) Total Level 1 Level 2 Level 3 Equity securities: U.S. equity securities $ 248,585 $ 0 $ 248,585 $ 0 Non-U.S. equity securities 165,752 0 165,752 0 Total equity securities 414,337 0 414,337 0 Debt securities 482,497 0 482,497 0 Other 10,791 10,791 0 0 Total $ 907,625 $ 10,791 $ 896,834 $ 0 December 31, 2018 Fair value measurements of plan assets using: (in thousands) Total Level 1 Level 2 Level 3 Equity securities: U.S. equity securities $ 182,495 $ 0 $ 182,495 $ 0 Non-U.S. equity securities 110,942 0 110,942 0 Total equity securities 293,437 0 293,437 0 Debt securities 464,613 0 464,613 0 Other 9,519 9,519 0 0 Total $ 767,569 $ 9,519 $ 758,050 $ 0 Estimates of fair values of the pension plan assets are obtained primarily from the trustee and custodian of our pension plan. Our Level 1 category includes a money market mutual fund for which the fair value is determined using an exchange traded price provided by the trustee and custodian. Our Level 2 category includes commingled pools. Estimates of fair values for securities held by our commingled pools are obtained primarily from the trustee and custodian. Trustee and custodian valuation methodologies for Level 2 securities include multiple verifiable, observable inputs including benchmark yields, reported trades, broker/dealer quotes, issuers spreads, two-sided markets, benchmark securities, bids, offers, and reference data. Estimated future benefit payments The following table sets forth amounts of benefits expected to be paid over the next 10 years from our pension plans as of: (in thousands) Year ending December 31, Expected future benefit payments 2020 $ 23,788 2021 25,903 2022 29,031 2023 32,497 2024 35,722 2025 - 2029 229,518 Employee savings plan All full-time and regular part-time employees are eligible to participate in a traditional qualified 401(k) or a Roth 401(k) savings plan. We match 100% of the participant contributions up to 3% of compensation and 50% of participant contributions over 3% and up to 5% of compensation. Matching contributions paid to the plan were $14.9 million in 2019 , $13.9 million in 2018 , and $12.8 million in 2017 . In 2018, we made an additional discretionary employer contribution of $5.4 million , as a way of sharing the tax savings realized from the lower corporate income tax rate that became effective January 1, 2018 with our employees. The Exchange and its subsidiaries reimbursed us for approximately 59% of the matching and discretionary contributions. Employees are permitted to invest the employer-matching contributions in our Class A common stock. Employees, other than executive and senior officers, may sell the shares at any time without restriction, provided they are in compliance with applicable insider trading laws; sales by executive and senior officers are subject to additional pre-clearance restrictions imposed by our insider trading policies. The plan acquires shares in the open market necessary to meet the obligations of the plan. Plan participants held 0.2 million shares of our Class A common stock at December 31, 2019 and 2018 |
Incentive and Deferred Compensa
Incentive and Deferred Compensation Plans | 12 Months Ended |
Dec. 31, 2019 | |
Compensation Related Costs [Abstract] | |
Incentive and Deferred Compensation Plans | Incentive and Deferred Compensation Plans We have two incentive plans and two deferred compensation plans for our executives, senior vice presidents and other selected officers, and two deferred compensation plans for our outside directors. Annual incentive plan Our annual incentive plan ("AIP") is a bonus plan that pays cash to our executives, senior vice presidents and other selected officers annually. Participants can elect to defer up to 100% of the award under either the deferred compensation plan or the incentive compensation deferral plan. If the funding qualifier is met, plan participants are eligible to receive the incentive based upon attainment of corporate and individual performance measures, which can include various financial measures. The measures are established at the beginning of each year by the Executive Compensation and Development Committee of our Board of Directors ("ECDC"), with ultimate approval by the full Board of Directors. The corporate performance measures included the growth in direct written premium and statutory combined ratio of the Exchange and its property and casualty subsidiaries for all periods presented. Long-term incentive plan Our long-term incentive plan ("LTIP") is a performance based incentive plan designed to reward executives, senior vice presidents and other selected officers who can have a significant impact on our long-term performance and to further align the interests of such employees with those of our shareholders. The LTIP permits grants of performance shares or units, or phantom shares to be satisfied with shares of our Class A common stock or cash payment as determined by the ECDC. Participants can elect to defer up to 100% of the award under the incentive compensation deferral plan. The ECDC determines the form of the award to be granted at the beginning of each performance period, which is generally a three -year period. The number of shares of the Company's common stock authorized for grant under the LTIP is 1.5 million shares, with no one person able to receive more than 250,000 shares or the equivalent of $5 million during any one performance period. We repurchase our Class A common stock on the open market to settle stock awards under the plan. We do not issue new shares of common stock to settle stock awards. LTIP awards are considered vested at the end of each applicable performance period. The LTIP provides the recipient the right to earn performance shares or units, or phantom stock based on the level of achievement of performance goals as defined by us. Performance measures and a peer group of property and casualty companies to be used for comparison are determined by the ECDC. The performance measures for all periods presented were the reported growth in direct written premium and statutory combined ratio of the Exchange and its property and casualty subsidiaries and return on invested assets over a three -year performance period as compared to the results of the peer group over the same period. Because the award is based upon a comparison to results of a peer group over a three -year period, the award accrual is based upon estimates of probable results for the remaining performance period. This estimate is subject to variability if our results or the results of the peer group are substantially different than the results we project. The fair value of LTIP awards is measured at each reporting date at the current share price of our Class A common stock. A liability is recorded and compensation expense is recognized ratably over the performance period. At December 31, 2019 , the plan awards for the 2017-2019 performance period, which will be granted as a cash award were fully vested. Distributions will be made in 2020 once peer group financial information becomes available. The estimated plan award based upon the peer group information as of September 30, 2019 is $7.8 million . At December 31, 2018 , the awards paid in cash for the 2016-2018 performance period were fully vested and resulted in an $8.2 million payment to participants in June 2019 . At December 31, 2017 , the awards paid in cash for the 2015-2017 performance period were fully vested and resulted in a $8.3 million payment to plan participants in June 2018 . At December 31, 2016 , the awards for the 2014-2016 performance period were fully vested. Participants had the option of receiving either cash or stock for the 2014-2016 awards. The cash award of $4.7 million was paid in June 2017 and the stock award of 46,884 shares with an average share price of $122.40 and a market value of $5.7 million were purchased for plan participants in June 2017 . The ECDC has determined that the plan awards for the 2018-2020 and 2019-2021 performance periods will be paid in cash. The Exchange and its subsidiaries reimburse us for compensation costs of employees performing administrative services. Earned compensation costs are allocated to these entities and reimbursed to us in cash once the payout is made. The total compensation cost charged to operations related to these LTIP awards was $7.3 million in 2019 , $6.3 million in 2018 , and $10.3 million in 2017 . The related tax benefits recognized in income were $1.5 million in 2019 , $1.3 million in 2018 , and $3.6 million in 2017 . The Exchange and its subsidiaries reimburse us for approximately 47% of the annual compensation cost of these plans. At December 31, 2019 , there was $4.9 million of total unrecognized compensation cost for non-vested LTIP awards related to open performance periods. Unrecognized compensation is expected to be recognized over a period of two years . Deferred compensation plan Our deferred compensation plan allows executives, senior vice presidents and other selected officers to elect to defer receipt of a portion of their compensation and AIP cash awards until a later date. Employer 401(k) matching contributions that are in excess of the annual contribution or compensation limits are also credited to the participant accounts for those who elected to defer receipt of some portion of their base salary. Participants select hypothetical investment funds for their deferrals which are credited with the hypothetical returns generated. Incentive compensation deferral plan We have an unfunded, non-qualified incentive compensation deferral plan for participants of the AIP and LTIP. Participants can elect to defer up to 100% of their annual AIP award and/or up to 100% of their LTIP award for each performance period. Deferred awards will be credited to a deferred stock account as credits denominated in Class A shares of the Company stock until retirement or other separation from service from the Company. Participants are 100% vested at date of deferral. The shares are held in a rabbi trust, which was established to hold the shares earned under both the incentive compensation deferral plan and the deferred stock compensation plan for outside directors. The rabbi trust is classified and accounted for as equity in a manner consistent with the accounting for treasury stock. Dividends received on the shares in the rabbi trust are used to purchase additional shares. Vested share credits will be paid to participants from the rabbi trust upon separation from service in approximate equal annual installments of Class A shares for a period of three years . In 2019 , the rabbi trust purchased 4,387 shares of our common stock in the open market at an average price of $176.34 for $0.8 million to satisfy the liability for the 2018 AIP awards deferred under the incentive compensation deferral plan. In 2018 , the rabbi trust purchased 12,005 shares of our common stock in the open market at an average price of $119.28 for $1.4 million to satisfy the liability for the 2017 AIP awards deferred under the incentive compensation deferral plan. The total compensation charged to operations related to these deferred AIP awards was $0.5 million in 2019 , $0.7 million in 2018 , and $1.4 million in 2017 . The Exchange and its subsidiaries reimbursed us for approximately 42% of the annual compensation cost of this plan. Deferred compensation plans for outside directors We have a deferred compensation plan for our outside directors that allows participants to defer receipt of a portion of their annual compensation until a later date. Participants select hypothetical investment funds for their deferrals which are credited with the hypothetical returns generated. We also have a deferred stock compensation plan for our outside directors to further align the interests of directors with those of our shareholders that provides for a portion of the directors' annual compensation in shares of our Class A common stock. Each director vests in the grant 25% every three months over the course of a year. Dividends paid by us are credited to each director's account which vest immediately. We do not issue new shares of common stock to directors. Our practice is to repurchase shares of our Class A common stock in the open market to satisfy these awards, which are held in the rabbi trust. The rabbi trust purchased 7,370 shares of our common stock on the open market at an average price of $194.62 for $1.4 million in 2019 , 9,285 shares at an average price of $122.19 for $1.1 million in 2018 , and 9,663 shares at an average price of $121.85 for $1.2 million in 2017 to satisfy the liability of the stock compensation plan for outside directors. The shares are distributed to the outside director from the rabbi trust upon ending board service. The total compensation charged to operations related to these awards totaled $1.1 million , $0.8 million and $0.9 million in 2019 , 2018 and 2017 , respectively. The following table sets forth a reconciliation of beginning and ending balances of our deferred executive compensation liability as of December 31 : (in thousands) 2019 2018 2017 Deferred executive compensation, beginning of the year $ 26,182 $ 30,057 $ 32,908 Annual incentive plan awards 2,745 4,751 6,118 Long-term incentive plan awards 7,267 6,331 10,931 Employer match and hypothetical earnings on deferred compensation 2,700 1,484 2,664 Total plan awards and earnings 12,712 12,566 19,713 Total plan awards paid (12,852 ) (14,482 ) (20,621 ) Compensation deferred 1,579 1,928 680 Distributions from the deferred compensation plans (797 ) (1,321 ) (853 ) Forfeitures (1) — — (593 ) Funding of rabbi trust for deferred stock compensation plan for outside directors (1,434 ) (1,165 ) (1,177 ) Funding of rabbi trust for incentive compensation deferral plan (2) (774 ) (1,401 ) — Deferred executive compensation, end of the year $ 24,616 $ 26,182 $ 30,057 (1) Forfeitures are the result of plan participants who separated from service with the Company. (2) The incentive compensation deferral plan was effective beginning January 1, 2017. Funding of the rabbi trust for plan payments began in 2018. Equity compensation plan We also have an equity compensation plan ("ECP") which is designed to reward key employees, as determined by the ECDC or the chief executive officer, who can have a significant impact on our long-term performance and to further align the interests of such employees with those of our shareholders. The ECP permits grants of restricted shares, restricted share units and other share based awards, to be satisfied with shares of our Class A common stock or cash. The ECDC determines the form of the award to be granted at the beginning of each performance period. The number of shares of the Company's Class A common stock authorized for grant under the ECP is 100,000 shares, with no one person able to receive more than 5,000 shares in a calendar year. We do not issue new shares of common stock to satisfy plan awards. Share awards are settled through the repurchase of our Class A common stock on the open market. Restricted share awards may be entitled to receive dividends payable during the performance period, or, if subject to performance goals, to receive dividend equivalents payable upon vesting. Dividend equivalents may provide for the crediting of interest or hypothetical reinvestment experience payable after expiration of the performance period. Vesting conditions are determined at the time the award is granted and may include continuation of employment for a specific period, satisfaction of performance goals and the defined performance period, and the satisfaction of any other terms and conditions as determined to be appropriate. The plan is to remain in effect until December 31, 2022, unless earlier amended or terminated by our Board of Directors. To date, all awards have been satisfied with shares of our Class A common stock. In 2019 , we purchased 3,246 Class A shares with an average share price of $132.35 and a market value of $0.4 million to satisfy the liability for the 2016 plan year. In 2018 , we purchased 5,830 Class A shares with an average share price of $117.39 and a market value of $0.7 million to satisfy the liability for the 2015 plan year and remainder of 2014 plan year awards. In 2017 , we purchased 3,785 shares with an average share price of $111.55 and a market value of $0.4 million to satisfy the liability for a portion of the 2014 plan award. The total compensation charged to operations related to these ECP awards was $0.5 million in 2019 , $0.4 million in 2018 , and $0.2 million in 2017 . The Exchange and its subsidiaries reimburse us for earned compensation costs of employees performing administrative services, which can fluctuate each year based on the plan participants. The Exchange and its subsidiaries reimbursed us for approximately 49% , 68% , and 38% of the awards paid in 2019 , 2018 , and 2017 respectively. Unearned compensation expense of $0.4 million is expected to be recognized over a period of three years . |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The provision for income taxes consists of the following for the years ended December 31: (in thousands) 2019 2018 2017 Current income tax expense $ 76,535 $ 84,454 $ 81,689 Deferred income tax expense (benefit) 3,349 (1,358 ) 26,912 Other income tax expense — — 10,095 Income tax expense $ 79,884 $ 83,096 $ 118,696 Other income tax expense for 2017 was impacted by the re-measurement of our deferred tax assets and liabilities due to the enactment of the Tax Cuts and Jobs Act ("TCJA") which reduced the corporate tax rate from 35% to 21% effective January 1, 2018. The current and deferred income tax expense (benefit) for 2019 and 2018 is measured at the statutory rate of 21% , and 35% for 2017. A reconciliation of the provision for income taxes, with amounts determined by applying the statutory federal income tax rate to pre-tax income, is as follows for the years ended December 31: (in thousands) 2019 2018 2017 Income tax at statutory rate $ 83,308 $ 77,977 $ 110,493 Change in tax rate (1) — — 10,095 Tax-exempt interest (123 ) (1,305 ) (2,278 ) (Decrease) increase in unrecognized tax benefits (3,088 ) 3,088 — Other, net (213 ) 3,336 386 Income tax expense $ 79,884 $ 83,096 $ 118,696 (1) The change in tax rate represents the tax effect of the re-measurement of deferred tax assets and liabilities due to the enactment of the TCJA. The statutory rate for the years ended December 31, 2019 and 2018 is 21% , and 35% for the year ended December 31, 2017. Temporary differences and carry-forwards, which give rise to deferred tax assets and liabilities, are as follows for the years ended December 31: (in thousands) 2019 2018 Deferred tax assets: Pension and other postretirement benefits $ 25,720 $ 20,124 Other employee benefits 11,835 12,237 Deferred revenue 3,755 3,524 Allowance for management fee returned on cancelled policies 3,421 3,292 Unrealized losses on investments 0 2,030 Other 1,663 1,246 Total deferred tax assets 46,394 42,453 Deferred tax liabilities: Depreciation 19,454 13,015 Prepaid expenses 4,890 1,376 Limited partnerships 2,632 2,534 Unrealized gains on investments 1,549 0 Commissions 545 1,270 Other 138 157 Total deferred tax liabilities 29,208 18,352 Net deferred tax asset $ 17,186 $ 24,101 If we determine that any of our deferred tax assets will not result in future tax benefits, a valuation allowance must be established for the portion of the assets that are not expected to be realized. We had no valuation allowance recorded at December 31, 2019 or 2018. A reconciliation of unrecognized tax benefits for the years ended December 31 is as follows: (in thousands) 2019 2018 2017 Balance at the beginning of the year $ 3,088 $ 0 $ — Additions for current year tax positions — 7,719 — Reductions for current year tax positions — (4,631 ) — Additions for prior year tax positions 4,631 — 2,337 Reductions for prior year tax positions (7,719 ) — (2,337 ) Balance at the end of the year $ 0 $ 3,088 $ 0 The uncertain tax position including $3.1 million of tax expense and $0.9 million of interest expense recorded in 2018 was settled during 2019. This settlement reduced our effective tax rate by 1.0% in 2019. The amounts recorded in 2018 resulted from the difference in measuring the tax liability at the previous tax rate and the current enacted tax rate. The recording of the uncertain tax position and related interest expense increased our 2018 effective tax rate by 1.0% . In 2017, we had an uncertain tax position of $2.3 million and related interest expense recorded was $0.1 million . As a related temporary tax difference was recognized, there was no impact to our results of operations or financial position. Tax years ending December 31, 2018 , 2017 and 2016 remain open to IRS examination. We are not currently under IRS audit, nor have we been notified of an upcoming IRS audit. We are the attorney-in-fact for the subscribers (policyholders) at the Exchange, a reciprocal insurance exchange. In that capacity, we provide all services and facilities necessary to conduct the Exchange's insurance business. Indemnity and the Exchange together constitute a single insurance business. Consequently, we are not subject to state corporate income or franchise taxes in states where the Exchange conducts its business and the states collect premium tax in lieu of corporate income or franchise tax, as a result of the Exchange's remittance of premium taxes in those states. |
Capital Stock
Capital Stock | 12 Months Ended |
Dec. 31, 2019 | |
Class of Stock Disclosures [Abstract] | |
Capital Stock | Capital Stock Class A and B common stock We have two classes of common stock: Class A which has a dividend preference and Class B which has voting power and a conversion right. Each share of Class A common stock outstanding at the time of the declaration of any dividend upon shares of Class B common stock shall be entitled to a dividend payable at the same time, at the same record date, and in an amount at least equal to 2/3 of 1.0% of any dividend declared on each share of Class B common stock. We may declare and pay a dividend in respect to Class A common stock without any requirement that any dividend be declared and paid in respect to Class B common stock. Sole shareholder voting power is vested in Class B common stock except insofar as any applicable law shall permit Class A common shareholders to vote as a class in regards to any changes in the rights, preferences, and privileges attaching to Class A 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 in 2019 , 2018 or 2017 . Stock repurchases Our Board of Directors authorized a stock repurchase program effective January 1, 1999 allowing the repurchase of our outstanding Class A nonvoting common stock. In 2011 , our Board of Directors approved a continuation of the current stock repurchase program for a total of $150 million , with no time limitation. Treasury shares are recorded in the Statements of Financial Position at total cost based upon trade date. There were no shares repurchased under this program during 2019 , 2018 or 2017 . We had approximately $17.8 million of repurchase authority remaining under this program at December 31, 2019 , based upon trade date. We made stock repurchases in 2019 , 2018 , and 2017 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 12 Months Ended |
Dec. 31, 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 for the year ended December 31: (in thousands) 2019 2018 2017 Before Tax Income Tax (1) Net Before Tax Income Tax (1) Net Before Tax Income Tax (1) Net Investment securities: AOCI (loss), beginning of year $ (9,169 ) $ (1,926 ) $ (7,243 ) $ 3,410 $ 716 $ 2,694 $ 3,954 $ 1,384 $ 2,570 OCI (loss) before reclassifications - pre TCJA (1) — — — — — — (648 ) (227 ) (421 ) OCI (loss) before reclassifications - post TCJA (1) 19,257 4,044 15,213 (15,372 ) (3,228 ) (12,144 ) 1,162 243 919 Realized investment (gains) losses (4,619 ) (970 ) (3,649 ) 1,297 272 1,025 (1,240 ) (434 ) (806 ) Impairment losses 195 41 154 1,581 332 1,249 182 64 118 Cumulative effect of adopting ASU 2016-01 (2) — — — (85 ) (18 ) (67 ) — — — OCI (loss) 14,833 3,115 11,718 (12,579 ) (2,642 ) (9,937 ) (544 ) (354 ) (190 ) Reclassification adjustment (3) — — — — — — — (314 ) 314 AOCI (loss), end of year $ 5,664 $ 1,189 $ 4,475 $ (9,169 ) $ (1,926 ) $ (7,243 ) $ 3,410 $ 716 $ 2,694 Pension and other postretirement plans: AOCI (loss), beginning of year $ (155,749 ) $ (32,708 ) $ (123,041 ) $ (200,954 ) $ (42,201 ) $ (158,753 ) $ (190,695 ) $ (66,744 ) $ (123,951 ) OCI (loss) before reclassifications (4,085 ) (858 ) (3,227 ) 31,401 6,594 24,807 (20,314 ) (7,111 ) (13,203 ) Amortization of prior service costs (4) 1,394 293 1,101 1,353 284 1,069 871 306 565 Amortization of net actuarial loss (4) 4,840 1,016 3,824 12,451 2,615 9,836 8,882 3,109 5,773 Settlement loss (4) — — — — — — 302 106 196 Impact of change in tax rate (5) — — — — — — — 1,436 (1,436 ) OCI (loss) 2,149 451 1,698 45,205 9,493 35,712 (10,259 ) (2,154 ) (8,105 ) Reclassification adjustment (3) — — — — — — — 26,697 (26,697 ) AOCI (loss), end of year $ (153,600 ) $ (32,257 ) $ (121,343 ) $ (155,749 ) $ (32,708 ) $ (123,041 ) $ (200,954 ) $ (42,201 ) $ (158,753 ) Total AOCI (loss), beginning of year $ (164,918 ) $ (34,634 ) $ (130,284 ) $ (197,544 ) $ (41,485 ) $ (156,059 ) $ (186,741 ) $ (65,360 ) $ (121,381 ) Investment securities 14,833 3,115 11,718 (12,579 ) (2,642 ) (9,937 ) (544 ) (354 ) (190 ) Pension and other postretirement plans 2,149 451 1,698 45,205 9,493 35,712 (10,259 ) (2,154 ) (8,105 ) OCI (loss) 16,982 3,566 13,416 32,626 6,851 25,775 (10,803 ) (2,508 ) (8,295 ) Reclassification adjustment (3) — — — — — — — 26,383 (26,383 ) AOCI (loss), end of year $ (147,936 ) $ (31,068 ) $ (116,868 ) $ (164,918 ) $ (34,634 ) $ (130,284 ) $ (197,544 ) $ (41,485 ) $ (156,059 ) (1) Deferred taxes related to unrealized gains and losses for the period from December 23, 2017 through December 31, 2019 were recognized at the 21% corporate rate following enactment of the TCJA. Prior to enactment, they were recognized at the 35% corporate rate. (2) A reclassification of unrealized losses of equity securities from AOCI (loss) to retained earnings was required at January 1, 2018 as a result of new accounting guidance. (3) A one-time adjustment was made in 2017 to reclassify stranded tax effects of the components of AOCI (loss) resulting from enactment of TCJA from AOCI (loss) to retained earnings. See Note 2, "Significant Accounting Policies". (4) These components of AOCI (loss) are included in the computation of net periodic pension cost. See Note 10, "Postretirement Benefits", for additional information. (5) Deferred taxes related to the December 31, 2017 portion of the pension and other postretirement component recognized in AOCI (loss) of $10.3 million were recognized at the 21% corporate rate following the enactment of the TCJA. |
Related Party
Related Party | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related Party | Related Party Management fee A management fee is charged to the Exchange for services we provide under the subscriber's agreement with subscribers at the Exchange. The fee is a percentage of direct and affiliated assumed premiums written by the Exchange. This percentage rate is determined at least annually by our Board of Directors but cannot exceed 25% . The effective management fee rate charged the Exchange was 25% in 2019 , 2018 and 2017 . The Board of Directors elected to maintain the fee at 25% beginning January 1, 2020. There is no provision in the subscriber's agreement for termination of our appointment as attorney-in-fact by the subscribers at the Exchange and the appointment is not affected by a policyholder's disability or incapacity. Insurance holding company system Most states have enacted legislation that regulates insurance holding company systems, defined as two or more affiliated persons, one or more of which is an insurer. The Exchange has the following wholly owned property and casualty subsidiaries: Erie Insurance Company, Erie Insurance Company of New York, Erie Insurance Property & Casualty Company and Flagship City Insurance Company, and a wholly owned life insurance company, Erie Family Life Insurance Company. Indemnity and the Exchange, and its wholly owned subsidiaries, meet the definition of an insurance holding company system. All transactions within a holding company system affecting the member insurers of the holding company system must be fair and reasonable and any charges or fees for services performed must be reasonable. Approval by the applicable insurance commissioner is required prior to the consummation of transactions affecting the members within a holding company system. Office leases We lease the home office from the Exchange. See Note 8, "Leases". Lease expense totaled $6.1 million , $6.0 million , and $5.9 million in 2019 , 2018 , and 2017 , respectively. Operating expenses, including utilities, cleaning, repairs, real estate taxes, and property insurance, totaled $16.7 million , $13.5 million , and $12.2 million in 2019 , 2018 , and 2017 , respectively. The Exchange and its subsidiaries reimburse us for rent costs and related operating expenses of shared facilities used to perform administrative services, which are allocated based upon usage or square footage occupied. Reimbursements related to the use of this space totaled $4.2 million , $3.9 million , and $4.0 million in 2019 , 2018 , and 2017 , respectively. We also had a lease commitment with EFL for a field office until 2018. Annual rentals paid to EFL under this lease totaled $0.4 million in both 2018 and 2017 . We previously owned three field offices for which rental costs of shared facilities were allocated based upon usage or square footage occupied. In 2018, we sold the three field offices to the Exchange. See Note 7, "Fixed Assets". Notes receivable from EFL We previously held a $25 million surplus note issued to us by EFL that was payable on demand on or after December 31, 2018. In 2018, EFL, with the appropriate approval from the Pennsylvania Insurance Commissioner, satisfied its obligation and repaid the surplus note. EFL paid related interest to us of $1.6 million and $1.7 million in 2018 and 2017 , respectively. |
Concentrations of Credit Risk
Concentrations of Credit Risk | 12 Months Ended |
Dec. 31, 2019 | |
Risks and Uncertainties [Abstract] | |
Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments that could potentially expose us to concentrations of credit risk include our 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 $468.6 million and $449.9 million at December 31, 2019 and 2018 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 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 our financial condition, results of operations, or cash flows. |
Supplementary Data on Cash Flow
Supplementary Data on Cash Flows | 12 Months Ended |
Dec. 31, 2019 | |
Supplemental Cash Flow Information [Abstract] | |
Supplementary Data on Cash Flows | Supplementary Data on Cash Flows A reconciliation of net income to net cash provided by operating activities as presented in the Statements of Cash Flows is as follows for the years ended December 31: (in thousands) 2019 2018 2017 Cash flows from operating activities: Net income $ 316,821 $ 288,224 $ 196,999 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 16,813 13,368 14,831 Deferred income tax expense (benefit) 3,349 (1,358 ) 26,912 Other income tax expense (1) — — 10,095 Lease amortization expense 13,959 — — Realized (gains) losses and impairments on investments (5,908 ) 3,591 (1,152 ) Equity in (earnings) losses of limited partnerships (660 ) 822 (2,801 ) Loss (gain) on disposal of fixed assets 75 (3,047 ) 98 Net amortization of bond premium 1,203 5,601 7,038 Decrease in deferred compensation (1,541 ) (3,886 ) (2,681 ) Limited partnership distributions 1,931 7,173 5,128 Increase in receivables from affiliates (19,505 ) (30,804 ) (39,788 ) (Increase) decrease in accrued investment income (170 ) 1,590 (516 ) Decrease (increase) in federal income taxes recoverable 7,700 21,738 (24,640 ) Decrease (increase) in prepaid pension 28,798 (47,335 ) (27,265 ) Increase in prepaid expenses and other assets (11,338 ) (727 ) (7,636 ) (Decrease) increase in accounts payable and accrued expenses (3,627 ) 11,039 17,183 Increase in commissions payable 21,390 13,449 17,565 (Decrease) increase in accrued agent bonuses (7,409 ) (19,066 ) 7,756 Increase in contract liability 2,646 3,213 — Net cash provided by operating activities $ 364,527 $ 263,585 $ 197,126 (1) Other income tax expense for 2017 was impacted by the re-measurement of our deferred tax assets and liabilities due to the enactment of the TCJA on December 22, 2017, which reduced the corporate tax rate from 35% to 21% effective January 1, 2018. |
Quarterly Results of Operations
Quarterly Results of Operations (unaudited) | 12 Months Ended |
Dec. 31, 2019 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Results of Operations (unaudited) | Quarterly Results of Operations (unaudited) Year ended December 31, 2019 (in thousands, except per share data) First quarter Second quarter Third quarter Fourth quarter Year Operating revenue $ 594,106 $ 647,710 $ 638,742 $ 596,740 $ 2,477,298 Operating expenses 507,984 551,100 532,835 528,040 2,119,959 Investment income 9,795 9,652 13,606 6,914 39,967 Interest expense and other (income), net 402 224 11 (36 ) 601 Income before income taxes 95,515 106,038 119,502 75,650 396,705 Net income $ 75,311 $ 87,754 $ 94,169 $ 59,587 $ 316,821 Earnings per share (1) Net income per share Class A common stock – basic $ 1.62 $ 1.88 $ 2.02 $ 1.28 $ 6.80 Class A common stock – diluted $ 1.44 $ 1.68 $ 1.80 $ 1.14 $ 6.06 Class B common stock – basic and diluted $ 243 $ 283 $ 303 $ 192 $ 1,020 (1) The cumulative sum of quarterly basic and diluted net income per share amounts may not equal total basic and diluted net income per share for the year due to differences in weighted average shares and equivalent shares outstanding for each of the periods presented. Year ended December 31, 2018 (in thousands, except per share data) First quarter Second quarter Third quarter Fourth quarter Year Operating revenue $ 572,160 $ 621,458 $ 612,126 $ 576,468 $ 2,382,212 Operating expenses 494,593 526,135 515,431 501,710 2,037,869 Investment income 6,163 6,207 8,431 4,995 25,796 Interest expense and other (income), net (1) 509 544 655 (2,889 ) (1,181 ) Income before income taxes 83,221 100,986 104,471 82,642 371,320 Net income $ 65,758 $ 79,706 $ 80,446 $ 62,314 $ 288,224 Earnings per share (2) Net income per share Class A common stock – basic $ 1.41 $ 1.71 $ 1.73 $ 1.34 $ 6.19 Class A common stock – diluted $ 1.26 $ 1.52 $ 1.54 $ 1.19 $ 5.51 Class B common stock – basic and diluted $ 212 $ 257 $ 259 $ 201 $ 928 (1) The decrease in interest expense and other (income), net in the fourth quarter is driven by the $3.4 million gain recognized on the sale of the field offices we owned to Exchange. See Note 7, "Fixed Assets". (2) The cumulative sum of quarterly basic and diluted net income per share amounts may not equal total basic and diluted net income per share for the year due to differences in weighted average shares and equivalent shares outstanding for each of the periods presented. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 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) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Basis of presentation | Basis of presentation The accompanying financial statements have been prepared in conformity with U.S. generally accepted accounting principles ("GAAP"). |
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. |
Recent accounting standards | Recently adopted accounting standards We adopted Accounting Standards Codification ("ASC") 842, "Leases" 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. We adopted ASC 606, "Revenue from Contracts with Customers" on January 1, 2018, using the modified retrospective method applied to all contracts. The comparative information for periods preceding January 1, 2018 has not been restated and continues to be reported under the accounting standards in effect for those periods. Under ASC 606, we determined that we have two performance obligations under the subscriber’s agreement. The first performance obligation is providing policy issuance and renewal services. The second performance obligation is acting as the attorney-in-fact on behalf of the Exchange, as well as the service provider for its insurance subsidiaries, with respect to all administrative services. Upon adoption of ASC 606, the management fee earned per the subscriber’s agreement, currently 25% of all direct and affiliated assumed premiums written by the Exchange, is allocated between the two performance obligations. Prior to the adoption of ASC 606, the entire management fee was allocated to the policy issuance and renewal services. Additionally, the expenses we incur and related reimbursements we receive related to the administrative services are presented gross in our Statement of Operations effective January 1, 2018. On January 1, 2018, we established a contract liability of $48.5 million representing the portion of revenue not yet earned related to the administrative services to be provided in subsequent years. We recorded a related deferred tax asset of $10.2 million and a cumulative effect adjustment that reduced retained earnings by $38.3 million . The adoption of ASC 606 changed the presentation of our Statement of Cash Flows, but had no net impact to our cash flows. In 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2018-02, "Income Statement-Reporting Comprehensive Income-Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income" , which permits entities to reclassify from accumulated other comprehensive income to retained earnings tax effects stranded in accumulated other comprehensive income as a result of tax reform. We elected to early adopt this guidance effective December 31, 2017 using a portfolio method, which resulted in a decrease of $26.4 million in accumulated other comprehensive income and a corresponding increase in retained earnings. Recently issued accounting standards In August 2018, the FASB issued 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 interim and annual reporting periods beginning after December 15, 2019. 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 adopted this guidance on a prospective basis on January 1, 2020 and there was no 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 related to available-for-sale debt securities to be recognized through an allowance for credit losses. New disclosures are also required upon adoption of this guidance. ASU 2016-13 is effective for interim and annual reporting periods beginning after December 15, 2019. Our financial assets subject to this guidance include our receivable from Erie Insurance Exchange, agent loans, and investments. We do not expect a significant credit loss exposure for our receivable from Erie Insurance Exchange given the financial strength of the Exchange and the lack of any historical credit loss. As the majority of our agent loans are senior secured and have experienced only insignificant default amounts, we have historically not recorded an allowance for credit losses related to our agent loans. Upon adoption of this guidance on January 1, 2020, we established allowances for both the receivable from Erie Insurance Exchange and agent loans and recognized an immaterial cumulative effect adjustment. 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 securities will continue to be monitored for credit losses, which will 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. |
Cash and cash equivalents | Cash and cash equivalents – Cash, money market accounts and other short-term, highly liquid investments with a maturity of three months or less at the date of purchase, are considered cash and cash equivalents. |
Investments | Investments Available-for-sale securities – Fixed maturity debt securities and redeemable preferred stock are classified as available-for-sale and reported at fair value with unrealized investment gains and losses, net of income taxes, recognized in other comprehensive income (loss). Available-for-sale securities with a remaining maturity of 12 months or less and any security that we intend to sell as of the reporting date are classified as current assets. Available-for-sale securities are evaluated monthly for other-than-temporary impairment loss. For securities that have experienced a decline in fair value below amortized cost and that we intend to sell, or for which it is more likely than not we will be required to sell the security before recovery of its amortized cost, an other-than-temporary impairment is recognized in earnings. Securities that have experienced a decline in fair value and that we do not intend to sell, and that we will not be required to sell before recovery, are evaluated to determine if the decline in fair value is other-than-temporary. Some factors considered in this evaluation include the extent and duration to which fair value is less than cost, historical operating performance and financial condition of the issuer, short and long-term prospects of the issuer and its industry based upon analysts' recommendations, specific events that occurred affecting the issuer, including a ratings downgrade, near term liquidity position of the issuer and compliance with financial covenants. If a decline is deemed to be other-than-temporary, an assessment is made to determine the amount of the total impairment related to a credit loss and that related to all other factors. Consideration is given to all available information relevant to the collectability of the security in this determination. When the entire amortized cost basis of the security will not be recovered, a credit loss exists. For securities with credit impairments that we did not intend to sell, the credit portion of the loss would be recorded through net income and the non-credit portion of the impairment would be recorded in other comprehensive income. Currently, we have the intent to sell all of our securities that have been determined to have a credit-related impairment. As a result, the entire amount of any impairment is recognized in earnings. Equity securities – Non-redeemable preferred and common stocks are classified as equity securities and reported at fair value with changes in fair value recognized in net realized investment gains (losses). Prior to January 1, 2018, equity securities were classified as available-for-sale and changes in fair value were recognized in other comprehensive income. Securities that we intend to sell as of the reporting date are classified as current assets. Realized gains and losses and investment income – Realized gains and losses on sales of available-for-sale and equity securities are recognized in income based upon the specific identification method and reported as net realized investment gains (losses). Interest income is recognized as earned and includes amortization of premium and accretion of discount. Income is recognized based on the constant effective yield method, which includes periodically updated prepayment assumptions obtained from third party data sources on our prepaying securities. The effective yield for prepaying securities is recalculated on a retrospective basis. Dividend income is recognized at the ex-dividend date. Both interest and dividend income are reported as net investment income. |
Limited partnership investments | Limited partnership investments – Limited partnership investments primarily include U.S. and foreign private equity investments and are recorded using the equity method of accounting. The partnerships record assets on their balance sheet at fair value. While we perform various procedures in review of the general partners' valuations, we rely on the general partners' financial statements as the best available information to record our share of the partnership unrealized gains and losses resulting from valuation changes. Due to the availability of financial statements provided by the general partner, our share of limited partnership results is generally recorded on a quarter lag within equity in earnings (losses) of limited partnerships. Cash contributions made to and distributions received from the partnerships are recorded in the period in which the transaction occurs. We have made no new limited partnership commitments since 2006, and the balance of limited partnership investments is expected to continue to decrease over time as additional distributions are received. |
Deferred taxes | Deferred taxes Deferred tax assets and liabilities are recorded for temporary differences between the tax basis of assets and liabilities and the reported amounts in the financial statements, using the statutory tax rates in effect for the year in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date under the law. The need for valuation allowances on deferred tax assets are estimated based upon our assessment of the realizability of such amounts. |
Fixed assets | Fixed assets Fixed assets are stated at cost less accumulated depreciation and amortization. Fixed assets are primarily comprised of software, which includes internally used capitalized software and development costs, as well as equipment, buildings and building improvements, and leasehold improvements. Assets in use are depreciated using the straight-line method over the estimated useful life except for leasehold improvements, which are depreciated over the shorter of their economic useful life or the lease term. Software is depreciated over periods ranging from 3 - 7 years , equipment is depreciated over 3 - 10 years , and buildings and building improvements are depreciated over 20 - 45 years . We review long-lived assets for impairment whenever events or changes indicate that the carrying value may not be recoverable. Under these circumstances, if the fair value were less than the carrying amount of the asset, we would recognize a loss for the difference. We capitalize applicable interest charges incurred during the construction period of significant long-term building projects as part of the historical cost of the asset. |
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. Effective January 1, 2019, 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. |
Agent bonus estimates | Agent bonus estimates Our more significant agent bonus plan is based upon an individual agency's property and casualty underwriting profitability and also includes a component for growth in agency property and casualty premiums if the agency's underwriting profitability targets for the book of business are met. The estimate for this agent bonus plan is based upon the performance over 36 months , and is modeled on a monthly basis using actual underwriting results for the two prior years and current year-to-date actual results and forecasted results for the remainder of the year. Our second agent bonus plan is based on an agency's one -year underwriting profitability and uses a similar model but considers actual and forecasted results for a calendar year only. At December 31 of each year, we use actual data available and record an accrual based upon the expected payment amount. These costs are included in cost of operations - policy issuance and renewal services. |
Recognition of management fee and service agreement revenue | Recognition of management fee revenue We earn management fees from the Exchange under the subscriber’s agreement for services provided. Pursuant to the subscriber’s agreement, we may retain up to 25% of all direct and affiliated assumed premiums written by the Exchange. The management fee rate is set at least annually by our Board of Directors. The management fee revenue is calculated by multiplying the management fee rate by the direct and affiliated assumed premiums written by the Exchange. Upon adoption of ASC 606 beginning January 1, 2018, we determined we have two performance obligations under the subscriber’s agreement. The first performance obligation is to provide policy issuance and renewal services. The second performance obligation is acting as the attorney-in-fact with respect to the administrative services. Beginning January 1, 2018, our management fee revenue is allocated to these two performance obligations. Prior to the adoption of ASC 606, the entire management fee was allocated to the policy issuance and renewal services. Management fee revenue allocated to the policy issuance and renewal services is recognized at the time of policy issuance or renewal, because it is at the time of policy issuance or renewal when the economic benefit of the service we provide (the substantially completed policy issuance or renewal service) and the control of the promised asset (the executed insurance policy) transfers to the customer. Management fee revenue allocated to the second performance obligation relates to us acting as the attorney-in-fact on behalf of the Exchange, as well as the service provider for its insurance subsidiaries, with respect to the administrative services and is recognized over a four Recognition of service agreement revenue Service agreement revenue consists of service charges we collect from policyholders for providing multiple payment plans on policies written by the Exchange. Service charges, which are flat dollar charges for each installment billed beyond the first installment, are recognized as revenue when bills are rendered to the policyholder. Service agreement revenue also includes late payment and policy reinstatement fees, which are also recognized as revenue when bills are rendered to the policyholder. |
Administrative services | Administrative services 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 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. 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. Common overhead expenses and certain service department costs incurred by us on behalf of the Exchange and its insurance subsidiaries are reimbursed by the proper entity based upon appropriate utilization statistics (employee count, square footage, vehicle count, project hours, etc.) specifically measured to accomplish proportional allocations, which we believe are reasonable. Prior to the adoption of ASC 606, we recorded the reimbursements we receive for the administrative services expenses as receivables from the Exchange and its subsidiaries with a corresponding reduction to our expenses. Total cash settlements for the Exchange and its subsidiaries were $522.3 million in 2017 . Upon adoption of ASC 606 on January 1, 2018, the expenses we incur and related reimbursements we receive for administrative services are presented gross in our Statement of Operations. Reimbursements are settled on a monthly basis. 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. |
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 13, "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. See Note 11, "Incentive and Deferred Compensation Plans". |
Fair value of financial instruments | 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. 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 securities are valued using an exchange traded price provided by the pricing service. Pricing service valuations for Level 2 securities 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. Although virtually all of our prices are obtained from third party sources, we also perform internal pricing reviews, including evaluating the methodology and inputs used to ensure that we determine the proper classification level of the financial instrument and reviewing securities with price changes that vary significantly from current market conditions or independent third party price sources. Price variances are investigated and corroborated by market data and transaction volumes. We have reviewed the pricing methodologies of our pricing service as well as other observable inputs and believe that the prices adequately consider market activity in determining fair value. 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. 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 of financial instruments, transfers between levels | We review the fair value hierarchy classifications each reporting period. Transfers between hierarchy levels may occur due to changes in available market observable inputs. |
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 our financial condition, results of operations, or cash flows. |
Revenue (Tables)
Revenue (Tables) | 12 Months Ended |
Dec. 31, 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 for the years ended December 31: (in thousands) 2019 2018 2017 Management fee revenue - policy issuance and renewal services, net $ 1,810,457 $ 1,719,567 $ 1,662,625 Management fee revenue - administrative services, net 57,204 53,632 — Administrative services reimbursement revenue 582,010 580,336 — Total administrative services $ 639,214 $ 633,968 $ — |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 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: (dollars in thousands, except per share data) For the years ended December 31, 2019 2018 2017 Allocated net income (numerator) Weighted shares (denominator) Per- share amount 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 $ 314,227 46,188,836 $ 6.80 $ 285,864 46,188,637 $ 6.19 $ 195,386 46,186,831 $ 4.23 Dilutive effect of stock-based awards 0 30,224 — 0 25,776 — 0 49,832 — Assumed conversion of Class B shares 2,594 6,100,800 — 2,360 6,100,800 — 1,613 6,100,800 — Class A – Diluted EPS: Income available to Class A stockholders on Class A equivalent shares $ 316,821 52,319,860 $ 6.06 $ 288,224 52,315,213 $ 5.51 $ 196,999 52,337,463 $ 3.76 Class B – Basic EPS: Income available to Class B stockholders $ 2,594 2,542 $ 1,020 $ 2,360 2,542 $ 928 $ 1,613 2,542 $ 635 Class B – Diluted EPS: Income available to Class B stockholders $ 2,593 2,542 $ 1,020 $ 2,359 2,542 $ 928 $ 1,613 2,542 $ 634 |
Fair Value (Tables)
Fair Value (Tables) | 12 Months Ended |
Dec. 31, 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 as of: December 31, 2019 Fair value measurements using: (in thousands) Total Level 1 Level 2 Level 3 Available-for-sale securities: Corporate debt securities (1) $ 454,880 $ 2,683 $ 443,873 $ 8,324 Residential mortgage-backed securities (1) 125,343 0 125,343 0 Commercial mortgage-backed securities (1) 67,541 0 64,220 3,321 Collateralized debt obligations (1) 77,856 0 77,856 0 Other debt securities 5,081 0 5,081 0 Total available-for-sale securities 730,701 2,683 716,373 11,645 Equity securities - nonredeemable preferred and common stock (1) Financial services sector 53,513 14,927 38,586 0 Utilities sector 6,818 3,190 3,628 0 Communications sector 3,433 3,433 0 0 Energy sector 1,881 0 1,881 0 Other sectors 1,488 0 1,488 0 Total equity securities 67,133 21,550 45,583 0 Total $ 797,834 $ 24,233 $ 761,956 $ 11,645 December 31, 2018 Fair value measurements using: (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 2018, we began selling off our municipal bonds as part of a portfolio rebalancing and invested proceeds in short-term U.S. Treasuries. In 2019, proceeds from sales and maturities of the remaining municipal bond portfolio and short-term U.S. Treasuries were reinvested in corporate debt, structured securities and preferred stock. (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. |
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 as of: December 31, 2019 (in thousands) Total Level 1 Level 2 Level 3 Available-for-sale securities: Pricing services $ 730,551 $ 2,683 $ 716,373 $ 11,495 Internal modeling 150 0 0 150 Total available-for-sale securities 730,701 2,683 716,373 11,645 Equity securities priced using pricing services 67,133 21,550 45,583 0 Total $ 797,834 $ 24,233 $ 761,956 $ 11,645 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 December 31, 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 $1.3 million at December 31, 2019 and $12.6 million at December 31, 2018. The weighted average is calculated based on estimated fair value. December 31, 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 $ 8,048 Syndicated loan model Market residual yield (1) -489 - +566 +76 Decrease Commercial mortgage-backed securities 2,143 Relative value pricing model Credit spread (2) +49 - +53 +51 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 and Change in Unrealized Gains or Losses in OCI Related to Level 3 Securities | Level 3 Assets – Year-to-Date Change: (in thousands) Beginning balance at December 31, 2018 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 December 31, 2019 Available-for-sale securities: Corporate debt securities $ 12,577 $ 10 $ 146 $ 2,020 $ (7,415 ) $ 11,542 $ (10,556 ) $ 8,324 Residential mortgage-backed securities 0 4 15 921 (32 ) 0 (908 ) 0 Commercial mortgage-backed securities 0 (9 ) (21 ) 478 (1,068 ) 7,281 (3,340 ) 3,321 Collateralized debt obligations 0 0 1 2,300 0 0 (2,301 ) 0 Total Level 3 available-for-sale securities $ 12,577 $ 5 $ 141 $ 5,719 $ (8,515 ) $ 18,823 $ (17,105 ) $ 11,645 Level 3 Assets – Year-to-Date Change: (in thousands) Beginning balance at December 31, 2017 Included in (1) Included in other comprehensive income Purchases Sales Transfers into Level 3 (2) Transfers out of Level 3 (2) Ending balance at December 31, 2018 Available-for-sale securities: Corporate debt securities $ 7,879 $ 6 $ (312 ) $ 5,550 $ (2,854 ) $ 18,232 $ (15,924 ) $ 12,577 Collateralized debt obligations 2,200 0 10 905 0 0 (3,115 ) 0 Total Level 3 available-for-sale securities $ 10,079 $ 6 $ (302 ) $ 6,455 $ (2,854 ) $ 18,232 $ (19,039 ) $ 12,577 (1) These amounts are reported as net investment income and net realized investment gains (losses) for 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 (loss) related to Level 3 securities held at the reporting date is as follows for the years ended December 31: (in thousands) 2019 2018 2017 Available-for-sale securities: Corporate debt securities $ 38 $ (554 ) $ — Commercial mortgage-backed securities 30 — — Net unrealized gains (losses) on Level 3 securities held at reporting date $ 68 $ (554 ) $ — |
Schedule of Financial Instruments Not Carried at Fair Value | The following table presents the carrying values and fair values of financial instruments categorized as Level 3 in the fair value hierarchy that are recorded at carrying value as of: December 31, 2019 December 31, 2018 (in thousands) Carrying Value Fair Value Carrying Value Fair Value Agent loans $ 67,696 $ 71,602 $ 58,006 $ 54,110 Long-term borrowings 98,080 101,888 99,730 94,057 |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Dec. 31, 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 as of: December 31, 2019 (in thousands) Amortized cost Gross unrealized gains Gross unrealized losses Estimated fair value Corporate debt securities (1) $ 450,295 $ 6,289 $ 1,704 $ 454,880 Residential mortgage-backed securities (1) 124,337 1,056 50 125,343 Commercial mortgage-backed securities (1) 67,210 479 148 67,541 Collateralized debt obligations (1) 78,059 44 247 77,856 Other debt securities 5,049 71 39 5,081 Total available-for-sale securities $ 724,950 $ 7,939 $ 2,188 $ 730,701 December 31, 2018 (in thousands) Amortized cost Gross unrealized gains Gross unrealized losses Estimated fair value 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 2018, we began selling off our municipal bonds as part of a portfolio rebalancing and invested proceeds in short-term U.S. Treasuries. In 2019, proceeds from sales and maturities of the remaining municipal bond portfolio and short-term U.S. Treasuries were reinvested in corporate debt, structured securities and preferred stock. |
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 December 31, 2019 , are shown below by remaining contractual term to maturity. 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. December 31, 2019 Amortized Estimated (in thousands) cost fair value Due in one year or less $ 32,613 $ 32,655 Due after one year through five years 336,377 339,033 Due after five years through ten years 120,716 122,068 Due after ten years 235,244 236,945 Total available-for-sale securities $ 724,950 $ 730,701 |
Schedule of Available-For-Sale Securities in a Gross Unrealized Loss Position by Length of Time | The below securities have been evaluated and determined to be temporary impairments for which we expect to recover our entire principal plus interest. The following tables present available-for-sale securities based on length of time in a gross unrealized loss position as of: December 31, 2019 Less than 12 months 12 months or longer Total Fair Unrealized Fair Unrealized Fair Unrealized No. of (dollars in thousands) value losses value losses value losses holdings Corporate debt securities $ 25,804 $ 342 $ 15,699 $ 1,362 $ 41,503 $ 1,704 158 Residential mortgage-backed securities 16,712 50 0 0 16,712 50 7 Commercial mortgage-backed securities 21,981 147 372 1 22,353 148 30 Collateralized debt obligations 20,889 33 41,010 214 61,899 247 49 Other debt securities 2,350 39 0 0 2,350 39 2 Total available-for-sale securities $ 87,736 $ 611 $ 57,081 $ 1,577 $ 144,817 $ 2,188 246 Quality breakdown of available-for-sale securities: Investment grade $ 76,315 $ 287 $ 46,390 $ 218 $ 122,705 $ 505 100 Non-investment grade 11,421 324 10,691 1,359 22,112 1,683 146 Total available-for-sale securities $ 87,736 $ 611 $ 57,081 $ 1,577 $ 144,817 $ 2,188 246 December 31, 2018 Less than 12 months 12 months or longer Total Fair Unrealized Fair Unrealized Fair Unrealized No. of (dollars in thousands) value losses value losses value losses holdings 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 |
Schedule of Investment Income, Net of Expenses, from Portfolios | Investment income, net of expenses, was generated from the following portfolios for the years ended December 31: (in thousands) 2019 2018 2017 Available-for-sale securities (1) $ 22,496 $ 24,978 $ 23,669 Equity securities 1,418 628 — Cash equivalents and other 10,546 5,628 2,486 Total investment income 34,460 31,234 26,155 Less: investment expenses 1,061 1,025 1,516 Investment income, net of expenses $ 33,399 $ 30,209 $ 24,639 (1) Includes interest earned on note receivable from EFL of $1.6 million in 2018 and $ 1.7 million in 2017. The note was repaid in full in 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 for the years ended December 31: (in thousands) 2019 2018 2017 Available-for-sale securities: Gross realized gains $ 6,258 $ 1,892 $ 2,996 Gross realized losses (1,639 ) (3,189 ) (1,756 ) Net realized gains (losses) on available-for-sale securities 4,619 (1,297 ) 1,240 Equity securities 1,484 (819 ) — Miscellaneous 0 106 94 Net realized investment gains (losses) $ 6,103 $ (2,010 ) $ 1,334 The portion of net unrealized gains and losses recognized during the reporting period related to equity securities held at the reporting date is calculated as follows for the years ended December 31: (in thousands) 2019 2018 2017 Equity securities: (1) Net gains (losses) recognized during the period $ 1,484 $ (819 ) $ — Less: net gains (losses) recognized on securities sold 360 (86 ) — Net unrealized gains (losses) recognized on securities held at reporting date $ 1,124 $ (733 ) $ — (1) Effective January 1, 2018, changes in unrealized gains and losses on equity securities are included in net realized investment gains (losses). |
Fixed Assets (Tables)
Fixed Assets (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Fixed Assets by Category | The following table summarizes our fixed assets by category at December 31: (in thousands) 2019 2018 Land, buildings, and building improvements $ 5,068 $ — Leasehold improvements 1,313 617 Software 191,709 163,735 Equipment 14,546 15,075 Furniture, fixtures, and equipment 1,934 — Projects in progress 22,992 10,392 Construction in progress 122,801 66,088 Total fixed assets, gross 360,363 255,907 Less: Accumulated depreciation and amortization (138,984 ) (125,075 ) Fixed assets, net $ 221,379 $ 130,832 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Schedule of Lease Assets and Liabilities Recorded in Statement of Financial Position | The following table summarizes our lease assets and liabilities at December 31: (in thousands) 2019 2018 Operating lease assets $ 22,401 $ — Operating lease liabilities - current $ 11,289 $ — Operating lease liabilities - long-term 10,665 — Total operating lease liabilities $ 21,954 $ — |
Borrowing Arrangements (Tables)
Borrowing Arrangements (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Future Principal Payments | The following table sets forth future principal payments: (in thousands) Year Principal payments 2020 $ 1,979 2021 2,019 2022 2,109 2023 2,226 2024 2,302 Thereafter 87,445 |
Postretirement Benefits (Tables
Postretirement Benefits (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Retirement Benefits [Abstract] | |
Schedule of Cost of Pension Plans | Pension plan cost includes the following components: (in thousands) 2019 2018 2017 Service cost for benefits earned $ 33,854 $ 38,052 $ 31,106 Interest cost on benefit obligation 39,306 35,382 34,275 Expected return on plan assets (47,484 ) (51,260 ) (41,267 ) Prior service cost amortization 1,394 1,353 871 Net actuarial loss amortization 5,113 12,809 9,301 Settlement cost (1) — — 302 Pension plan cost (2) $ 32,183 $ 36,336 $ 34,588 (1) The final SERP benefit for two former executives was settled with lump sum payments in 2017. (2) Pension plan costs represent the total cost before reimbursements to Indemnity from the Exchange and its subsidiaries. |
Schedule of Actuarial Assumptions Used to Measure the Year-End Obligations and Net Periodic Benefit Costs for the Subsequent Year | The following table describes the assumptions at December 31 used to measure the year-end obligations and the net periodic benefit costs for the subsequent year: 2019 2018 2017 2016 Employee pension plan: Discount rate 3.59 % 4.47 % 3.73 % 4.24 % Expected return on assets 6.00 6.75 6.75 7.00 Compensation increases (1) 3.21 3.32 3.32 3.32 SERP: Discount rate – pre-retirement/post-retirement 3.59/3.09 4.47/3.97 3.73/3.23 4.24/3.74 Rate of compensation increase 5.00 5.00 5.00 5.00 (1) The rate of compensation increase for the employee plan is age-graded. An equivalent single compensation increase rate of 3.21% in 2019 and 3.32% in 2018 and 2017 would produce similar results. |
Schedule of Funded Status of Pension Plans and Amounts Recognized in the Statements of Financial Position | The following table sets forth the funded status of the pension plans and the amounts recognized in the Statements of Financial Position at December 31: (in thousands) 2019 2018 Funded status at end of year $ (146,842 ) $ (118,596 ) Pension liabilities – due within one year (1) $ (1,183 ) $ (1,730 ) Pension liabilities – due after one year (145,659 ) (116,866 ) Net amount recognized $ (146,842 ) $ (118,596 ) (1) The current portion of pension liabilities is included in accounts payable and accrued liabilities. |
Schedule of Reconciliation of Beginning and Ending Balances of the Projected Benefit Obligation, as well as the Accumulated Benefit Obligation | The following table sets forth a reconciliation of beginning and ending balances of the projected benefit obligation, as well as the accumulated benefit obligation at December 31: (in thousands) 2019 2018 Projected benefit obligation, beginning of year $ 886,165 $ 951,666 Service cost for benefits earned 33,854 38,052 Interest cost on benefit obligation 39,306 35,382 Plan amendments 452 3,007 Actuarial loss (gain) 138,144 (123,910 ) Benefits paid (43,454 ) (18,032 ) Projected benefit obligation, end of year $ 1,054,467 $ 886,165 Accumulated benefit obligation, end of year $ 858,209 $ 727,340 |
Schedule of Defined Benefit Pension Plans with Projected Benefit Obligations in Excess of Plan Assets | Both the defined benefit plan and the SERP had projected benefit obligations in excess of plan assets at December 31: (in thousands) Projected Benefit Obligation in Excess of Plan Assets 2019 2018 Projected benefit obligation $ 1,054,467 $ 886,165 Plan assets 907,625 767,569 |
Schedule of Defined Benefit Pension Plans with Accumulated Benefit Obligations in Excess of Plan Assets | The SERP had accumulated benefit obligations in excess of plan assets at December 31: (in thousands) Accumulated Benefit Obligation in Excess of Plan Assets 2019 2018 Accumulated benefit obligation $ 23,411 $ 18,908 Plan assets — — |
Schedule of Reconciliation of Beginning and Ending Balances of the Fair Value of Plan Assets | The following table sets forth a reconciliation of beginning and ending balances of the fair value of plan assets at December 31: (in thousands) 2019 2018 Fair value of plan assets, beginning of year $ 767,569 $ 743,900 Actual gain (loss) on plan assets 182,002 (38,360 ) Employer contributions 1,508 80,061 Benefits paid (43,454 ) (18,032 ) Fair value of plan assets, end of year $ 907,625 $ 767,569 |
Schedule of Amounts Included in Accumulated Other Comprehensive Loss that were Not Yet Recognized as Components of Net Benefit Costs | Net actuarial loss and prior service cost included in accumulated other comprehensive loss that were not yet recognized as components of net benefit costs were as follows: (in thousands) 2019 2018 Net actuarial loss $ 142,678 $ 144,165 Prior service cost 10,913 11,855 Net amount not yet recognized $ 153,591 $ 156,020 |
Schedule of Amounts Recognized in Other Comprehensive Income for Pension Plans | Amounts recognized in other comprehensive income for pension plans were as follows: (in thousands) 2019 2018 Net actuarial loss (gain) arising during the year $ 3,626 $ (34,290 ) Amortization of net actuarial loss (5,113 ) (12,809 ) Amortization of prior service cost (1,394 ) (1,353 ) Amendments (1) 452 3,007 Total recognized in other comprehensive income $ (2,429 ) $ (45,445 ) (1) In 2019, there was one new SERP participant. In 2018, there were five new SERP participants. |
Schedule of Target and Actual Asset Allocations for the Portfolio | The target and actual asset allocations for the portfolio are as follows for the years ended December 31: Target asset allocation Target asset allocation Actual asset allocation Actual asset allocation Asset allocation: 2019 2018 2019 2018 Equity securities: U.S. equity securities 27 % (1) 25 % 28 % 24 % Non-U.S. equity securities 18 (2) 16 18 14 Total equity securities 45 41 46 38 Debt securities 54 (3) 58 53 61 Other 1 (4) 1 1 1 Total 100 % 100 % 100 % 100 % (1) U.S. equity securities – 22% seek to achieve excess returns relative to the Russell 2000 Index. The remaining 78% of the allocation to U.S. equity securities are comprised of equity index funds that track the S&P 500. (2) Non-U.S. equity securities – 11% are allocated to international small cap investments, while another 20% are allocated to international emerging market investments. The remaining 69% of the Non-U.S. equity securities are allocated to investments seeking to achieve excess returns relative to an international market index. (3) Debt securities – 33% are allocated to long U.S. Treasury Strips, 67% are allocated to U.S. corporate bonds with an emphasis on long duration bonds rated A or better. (4) Institutional money market fund. |
Schedule of Fair Value Measurements of Pension Plan Assets by Major Category and Level of Input | The following tables present fair value measurements for the pension plan assets by major category and level of input as of: December 31, 2019 Fair value measurements of plan assets using: (in thousands) Total Level 1 Level 2 Level 3 Equity securities: U.S. equity securities $ 248,585 $ 0 $ 248,585 $ 0 Non-U.S. equity securities 165,752 0 165,752 0 Total equity securities 414,337 0 414,337 0 Debt securities 482,497 0 482,497 0 Other 10,791 10,791 0 0 Total $ 907,625 $ 10,791 $ 896,834 $ 0 December 31, 2018 Fair value measurements of plan assets using: (in thousands) Total Level 1 Level 2 Level 3 Equity securities: U.S. equity securities $ 182,495 $ 0 $ 182,495 $ 0 Non-U.S. equity securities 110,942 0 110,942 0 Total equity securities 293,437 0 293,437 0 Debt securities 464,613 0 464,613 0 Other 9,519 9,519 0 0 Total $ 767,569 $ 9,519 $ 758,050 $ 0 |
Schedule of Benefits Expected to be Paid Over the Next 10 Years from Pension Plans | The following table sets forth amounts of benefits expected to be paid over the next 10 years from our pension plans as of: (in thousands) Year ending December 31, Expected future benefit payments 2020 $ 23,788 2021 25,903 2022 29,031 2023 32,497 2024 35,722 2025 - 2029 229,518 |
Incentive and Deferred Compen_2
Incentive and Deferred Compensation Plans (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Compensation Related Costs [Abstract] | |
Schedule of Deferred Executive Compensation Liability | The following table sets forth a reconciliation of beginning and ending balances of our deferred executive compensation liability as of December 31 : (in thousands) 2019 2018 2017 Deferred executive compensation, beginning of the year $ 26,182 $ 30,057 $ 32,908 Annual incentive plan awards 2,745 4,751 6,118 Long-term incentive plan awards 7,267 6,331 10,931 Employer match and hypothetical earnings on deferred compensation 2,700 1,484 2,664 Total plan awards and earnings 12,712 12,566 19,713 Total plan awards paid (12,852 ) (14,482 ) (20,621 ) Compensation deferred 1,579 1,928 680 Distributions from the deferred compensation plans (797 ) (1,321 ) (853 ) Forfeitures (1) — — (593 ) Funding of rabbi trust for deferred stock compensation plan for outside directors (1,434 ) (1,165 ) (1,177 ) Funding of rabbi trust for incentive compensation deferral plan (2) (774 ) (1,401 ) — Deferred executive compensation, end of the year $ 24,616 $ 26,182 $ 30,057 (1) Forfeitures are the result of plan participants who separated from service with the Company. (2) The incentive compensation deferral plan was effective beginning January 1, 2017. Funding of the rabbi trust for plan payments began in 2018. |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of Provision for Income Taxes | The provision for income taxes consists of the following for the years ended December 31: (in thousands) 2019 2018 2017 Current income tax expense $ 76,535 $ 84,454 $ 81,689 Deferred income tax expense (benefit) 3,349 (1,358 ) 26,912 Other income tax expense — — 10,095 Income tax expense $ 79,884 $ 83,096 $ 118,696 |
Schedule of Reconciliation of the Provision for Income Taxes, with Amounts Determined by Applying the Statutory Federal Income Tax Rate to Pre-Tax Income | A reconciliation of the provision for income taxes, with amounts determined by applying the statutory federal income tax rate to pre-tax income, is as follows for the years ended December 31: (in thousands) 2019 2018 2017 Income tax at statutory rate $ 83,308 $ 77,977 $ 110,493 Change in tax rate (1) — — 10,095 Tax-exempt interest (123 ) (1,305 ) (2,278 ) (Decrease) increase in unrecognized tax benefits (3,088 ) 3,088 — Other, net (213 ) 3,336 386 Income tax expense $ 79,884 $ 83,096 $ 118,696 (1) The change in tax rate represents the tax effect of the re-measurement of deferred tax assets and liabilities due to the enactment of the TCJA. |
Schedule of Temporary Differences and Carry-Forwards, which Give Rise to Deferred Tax Assets and Liabilities | Temporary differences and carry-forwards, which give rise to deferred tax assets and liabilities, are as follows for the years ended December 31: (in thousands) 2019 2018 Deferred tax assets: Pension and other postretirement benefits $ 25,720 $ 20,124 Other employee benefits 11,835 12,237 Deferred revenue 3,755 3,524 Allowance for management fee returned on cancelled policies 3,421 3,292 Unrealized losses on investments 0 2,030 Other 1,663 1,246 Total deferred tax assets 46,394 42,453 Deferred tax liabilities: Depreciation 19,454 13,015 Prepaid expenses 4,890 1,376 Limited partnerships 2,632 2,534 Unrealized gains on investments 1,549 0 Commissions 545 1,270 Other 138 157 Total deferred tax liabilities 29,208 18,352 Net deferred tax asset $ 17,186 $ 24,101 |
Schedule of Unrecognized Tax Benefits Roll Forward | A reconciliation of unrecognized tax benefits for the years ended December 31 is as follows: (in thousands) 2019 2018 2017 Balance at the beginning of the year $ 3,088 $ 0 $ — Additions for current year tax positions — 7,719 — Reductions for current year tax positions — (4,631 ) — Additions for prior year tax positions 4,631 — 2,337 Reductions for prior year tax positions (7,719 ) — (2,337 ) Balance at the end of the year $ 0 $ 3,088 $ 0 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 12 Months Ended |
Dec. 31, 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 for the year ended December 31: (in thousands) 2019 2018 2017 Before Tax Income Tax (1) Net Before Tax Income Tax (1) Net Before Tax Income Tax (1) Net Investment securities: AOCI (loss), beginning of year $ (9,169 ) $ (1,926 ) $ (7,243 ) $ 3,410 $ 716 $ 2,694 $ 3,954 $ 1,384 $ 2,570 OCI (loss) before reclassifications - pre TCJA (1) — — — — — — (648 ) (227 ) (421 ) OCI (loss) before reclassifications - post TCJA (1) 19,257 4,044 15,213 (15,372 ) (3,228 ) (12,144 ) 1,162 243 919 Realized investment (gains) losses (4,619 ) (970 ) (3,649 ) 1,297 272 1,025 (1,240 ) (434 ) (806 ) Impairment losses 195 41 154 1,581 332 1,249 182 64 118 Cumulative effect of adopting ASU 2016-01 (2) — — — (85 ) (18 ) (67 ) — — — OCI (loss) 14,833 3,115 11,718 (12,579 ) (2,642 ) (9,937 ) (544 ) (354 ) (190 ) Reclassification adjustment (3) — — — — — — — (314 ) 314 AOCI (loss), end of year $ 5,664 $ 1,189 $ 4,475 $ (9,169 ) $ (1,926 ) $ (7,243 ) $ 3,410 $ 716 $ 2,694 Pension and other postretirement plans: AOCI (loss), beginning of year $ (155,749 ) $ (32,708 ) $ (123,041 ) $ (200,954 ) $ (42,201 ) $ (158,753 ) $ (190,695 ) $ (66,744 ) $ (123,951 ) OCI (loss) before reclassifications (4,085 ) (858 ) (3,227 ) 31,401 6,594 24,807 (20,314 ) (7,111 ) (13,203 ) Amortization of prior service costs (4) 1,394 293 1,101 1,353 284 1,069 871 306 565 Amortization of net actuarial loss (4) 4,840 1,016 3,824 12,451 2,615 9,836 8,882 3,109 5,773 Settlement loss (4) — — — — — — 302 106 196 Impact of change in tax rate (5) — — — — — — — 1,436 (1,436 ) OCI (loss) 2,149 451 1,698 45,205 9,493 35,712 (10,259 ) (2,154 ) (8,105 ) Reclassification adjustment (3) — — — — — — — 26,697 (26,697 ) AOCI (loss), end of year $ (153,600 ) $ (32,257 ) $ (121,343 ) $ (155,749 ) $ (32,708 ) $ (123,041 ) $ (200,954 ) $ (42,201 ) $ (158,753 ) Total AOCI (loss), beginning of year $ (164,918 ) $ (34,634 ) $ (130,284 ) $ (197,544 ) $ (41,485 ) $ (156,059 ) $ (186,741 ) $ (65,360 ) $ (121,381 ) Investment securities 14,833 3,115 11,718 (12,579 ) (2,642 ) (9,937 ) (544 ) (354 ) (190 ) Pension and other postretirement plans 2,149 451 1,698 45,205 9,493 35,712 (10,259 ) (2,154 ) (8,105 ) OCI (loss) 16,982 3,566 13,416 32,626 6,851 25,775 (10,803 ) (2,508 ) (8,295 ) Reclassification adjustment (3) — — — — — — — 26,383 (26,383 ) AOCI (loss), end of year $ (147,936 ) $ (31,068 ) $ (116,868 ) $ (164,918 ) $ (34,634 ) $ (130,284 ) $ (197,544 ) $ (41,485 ) $ (156,059 ) (1) Deferred taxes related to unrealized gains and losses for the period from December 23, 2017 through December 31, 2019 were recognized at the 21% corporate rate following enactment of the TCJA. Prior to enactment, they were recognized at the 35% corporate rate. (2) A reclassification of unrealized losses of equity securities from AOCI (loss) to retained earnings was required at January 1, 2018 as a result of new accounting guidance. (3) A one-time adjustment was made in 2017 to reclassify stranded tax effects of the components of AOCI (loss) resulting from enactment of TCJA from AOCI (loss) to retained earnings. See Note 2, "Significant Accounting Policies". (4) These components of AOCI (loss) are included in the computation of net periodic pension cost. See Note 10, "Postretirement Benefits", for additional information. (5) Deferred taxes related to the December 31, 2017 portion of the pension and other postretirement component recognized in AOCI (loss) of $10.3 million were recognized at the 21% corporate rate following the enactment of the TCJA. |
Supplementary Data on Cash Fl_2
Supplementary Data on Cash Flows (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Supplemental Cash Flow Information [Abstract] | |
Schedule of Reconciliation of Net Income to Net Cash Provided by Operating Activities as Presented in the Statements of Cash Flows | A reconciliation of net income to net cash provided by operating activities as presented in the Statements of Cash Flows is as follows for the years ended December 31: (in thousands) 2019 2018 2017 Cash flows from operating activities: Net income $ 316,821 $ 288,224 $ 196,999 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 16,813 13,368 14,831 Deferred income tax expense (benefit) 3,349 (1,358 ) 26,912 Other income tax expense (1) — — 10,095 Lease amortization expense 13,959 — — Realized (gains) losses and impairments on investments (5,908 ) 3,591 (1,152 ) Equity in (earnings) losses of limited partnerships (660 ) 822 (2,801 ) Loss (gain) on disposal of fixed assets 75 (3,047 ) 98 Net amortization of bond premium 1,203 5,601 7,038 Decrease in deferred compensation (1,541 ) (3,886 ) (2,681 ) Limited partnership distributions 1,931 7,173 5,128 Increase in receivables from affiliates (19,505 ) (30,804 ) (39,788 ) (Increase) decrease in accrued investment income (170 ) 1,590 (516 ) Decrease (increase) in federal income taxes recoverable 7,700 21,738 (24,640 ) Decrease (increase) in prepaid pension 28,798 (47,335 ) (27,265 ) Increase in prepaid expenses and other assets (11,338 ) (727 ) (7,636 ) (Decrease) increase in accounts payable and accrued expenses (3,627 ) 11,039 17,183 Increase in commissions payable 21,390 13,449 17,565 (Decrease) increase in accrued agent bonuses (7,409 ) (19,066 ) 7,756 Increase in contract liability 2,646 3,213 — Net cash provided by operating activities $ 364,527 $ 263,585 $ 197,126 (1) Other income tax expense for 2017 was impacted by the re-measurement of our deferred tax assets and liabilities due to the enactment of the TCJA on December 22, 2017, which reduced the corporate tax rate from 35% to 21% effective January 1, 2018. |
Quarterly Results of Operatio_2
Quarterly Results of Operations (unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of Quarterly Results of Operations (Unaudited) | Year ended December 31, 2019 (in thousands, except per share data) First quarter Second quarter Third quarter Fourth quarter Year Operating revenue $ 594,106 $ 647,710 $ 638,742 $ 596,740 $ 2,477,298 Operating expenses 507,984 551,100 532,835 528,040 2,119,959 Investment income 9,795 9,652 13,606 6,914 39,967 Interest expense and other (income), net 402 224 11 (36 ) 601 Income before income taxes 95,515 106,038 119,502 75,650 396,705 Net income $ 75,311 $ 87,754 $ 94,169 $ 59,587 $ 316,821 Earnings per share (1) Net income per share Class A common stock – basic $ 1.62 $ 1.88 $ 2.02 $ 1.28 $ 6.80 Class A common stock – diluted $ 1.44 $ 1.68 $ 1.80 $ 1.14 $ 6.06 Class B common stock – basic and diluted $ 243 $ 283 $ 303 $ 192 $ 1,020 (1) The cumulative sum of quarterly basic and diluted net income per share amounts may not equal total basic and diluted net income per share for the year due to differences in weighted average shares and equivalent shares outstanding for each of the periods presented. Year ended December 31, 2018 (in thousands, except per share data) First quarter Second quarter Third quarter Fourth quarter Year Operating revenue $ 572,160 $ 621,458 $ 612,126 $ 576,468 $ 2,382,212 Operating expenses 494,593 526,135 515,431 501,710 2,037,869 Investment income 6,163 6,207 8,431 4,995 25,796 Interest expense and other (income), net (1) 509 544 655 (2,889 ) (1,181 ) Income before income taxes 83,221 100,986 104,471 82,642 371,320 Net income $ 65,758 $ 79,706 $ 80,446 $ 62,314 $ 288,224 Earnings per share (2) Net income per share Class A common stock – basic $ 1.41 $ 1.71 $ 1.73 $ 1.34 $ 6.19 Class A common stock – diluted $ 1.26 $ 1.52 $ 1.54 $ 1.19 $ 5.51 Class B common stock – basic and diluted $ 212 $ 257 $ 259 $ 201 $ 928 (1) The decrease in interest expense and other (income), net in the fourth quarter is driven by the $3.4 million gain recognized on the sale of the field offices we owned to Exchange. See Note 7, "Fixed Assets". (2) The cumulative sum of quarterly basic and diluted net income per share amounts may not equal total basic and diluted net income per share for the year due to differences in weighted average shares and equivalent shares outstanding for each of the periods presented. |
Nature of Operations (Details)
Nature of Operations (Details) | 12 Months Ended |
Dec. 31, 2019Obligations | |
Revenue, Performance Obligation [Abstract] | |
Performance obligations under subscriber's agreement | 2 |
Agent compensation expense | |
Nature of expense as a percentage of total policy issuance and renewal expenses | |
Nature of expense as a percentage of total policy issuance and renewal expenses (percentage) | 67.00% |
Underwriting and policy processing expense | |
Nature of expense as a percentage of total policy issuance and renewal expenses | |
Nature of expense as a percentage of total policy issuance and renewal expenses (percentage) | 10.00% |
Information technology expense | |
Nature of expense as a percentage of total policy issuance and renewal expenses | |
Nature of expense as a percentage of total policy issuance and renewal expenses (percentage) | 11.00% |
Significant Accounting Polici_3
Significant Accounting Policies - Recently Adopted Accounting Standards (Details) $ in Thousands | 12 Months Ended | |||||
Dec. 31, 2019USD ($)Obligations | Dec. 31, 2017USD ($) | Jan. 01, 2019USD ($) | Dec. 31, 2018USD ($) | Jan. 01, 2018USD ($) | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Performance obligations under subscriber's agreement | Obligations | 2 | |||||
Indemnity's management fee rate as a percent of direct and affiliated assumed written premiums of the Exchange (percentage) | 25.00% | |||||
Deferred tax asset | $ 17,186 | $ 24,101 | ||||
Cumulative effect adjustment due to ASC 606 | $ 2,377,558 | $ 2,231,417 | ||||
Cumulative effect adjustment due to ASU 2018-02 | [1] | $ 0 | ||||
Accounting Standards Update 2016-02 | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Operating lease assets | $ 32,700 | |||||
Operating lease liability | $ 32,100 | |||||
Accounting Standards Update 2014-09 | Adjustments due to ASC 606 | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Contract liability | $ 48,500 | |||||
Deferred tax asset | 10,200 | |||||
Cumulative effect adjustment due to ASC 606 | $ (38,300) | |||||
Accounting Standards Update 2018-02 | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Cumulative effect adjustment due to ASU 2018-02 | $ 26,400 | |||||
[1] | A one-time adjustment was made in 2017 to reclassify stranded tax effects of the components of accumulated other comprehensive income ("AOCI") (loss) resulting from enactment of Tax Cuts and Jobs Act ("TCJA") from AOCI (loss) to retained earnings. See Note 2, "Significant Accounting Policies". |
Significant Accounting Polici_4
Significant Accounting Policies - Additional Information (Details) $ in Millions | 12 Months Ended | |
Dec. 31, 2019Obligations | Dec. 31, 2017USD ($) | |
Revenue, Performance Obligation [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 | Obligations | 2 | |
Administrative services | ||
Cash settlements | $ | $ 522.3 | |
Primary agent bonus | ||
Agent bonus estimates | ||
Performance period for agent bonuses | 36 months | |
Period of prior year actual underwriting data used to estimate agent bonuses (in years) | 2 years | |
Secondary agent bonus | ||
Agent bonus estimates | ||
Performance period for agent bonuses | 1 year | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-01-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Period of time over which management fee revenue allocated to administrative services will be recognized (in years) | 4 years | |
Software | Minimum | ||
Fixed assets | ||
Estimated useful life | 3 years | |
Software | Maximum | ||
Fixed assets | ||
Estimated useful life | 7 years | |
Equipment | Minimum | ||
Fixed assets | ||
Estimated useful life | 3 years | |
Equipment | Maximum | ||
Fixed assets | ||
Estimated useful life | 10 years | |
Buildings and building improvements | Minimum | ||
Fixed assets | ||
Estimated useful life | 20 years | |
Buildings and building improvements | Maximum | ||
Fixed assets | ||
Estimated useful life | 45 years |
Revenue - Narrative (Details)
Revenue - Narrative (Details) | 12 Months Ended |
Dec. 31, 2019Obligations | |
Revenue, Performance Obligation [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 | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disaggregation of revenue by performance obligation | |||||||||||
Operating revenue | $ 596,740 | $ 638,742 | $ 647,710 | $ 594,106 | $ 576,468 | $ 612,126 | $ 621,458 | $ 572,160 | $ 2,477,298 | $ 2,382,212 | $ 1,691,774 |
Management fee revenue - policy issuance and renewal services, net | |||||||||||
Disaggregation of revenue by performance obligation | |||||||||||
Operating revenue | 1,810,457 | 1,719,567 | 1,662,625 | ||||||||
Management fee revenue - policy issuance and renewal services, net | Transferred at point in time | |||||||||||
Disaggregation of revenue by performance obligation | |||||||||||
Operating revenue | 1,810,457 | 1,719,567 | 1,662,625 | ||||||||
Management fee revenue - administrative services, net | |||||||||||
Disaggregation of revenue by performance obligation | |||||||||||
Operating revenue | 57,204 | 53,632 | 0 | ||||||||
Management fee revenue - administrative services, net | Transferred over time | |||||||||||
Disaggregation of revenue by performance obligation | |||||||||||
Operating revenue | 57,204 | 53,632 | 0 | ||||||||
Administrative services reimbursement revenue | |||||||||||
Disaggregation of revenue by performance obligation | |||||||||||
Operating revenue | 582,010 | 580,336 | 0 | ||||||||
Administrative services reimbursement revenue | Transferred over time | |||||||||||
Disaggregation of revenue by performance obligation | |||||||||||
Operating revenue | 582,010 | 580,336 | 0 | ||||||||
Administrative services | Transferred over time | |||||||||||
Disaggregation of revenue by performance obligation | |||||||||||
Operating revenue | $ 639,214 | $ 633,968 | $ 0 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Effect of Tax Cuts and Jobs Act of 2017 | |||||||||||
Increase in income tax expense | $ 0 | $ 0 | $ 10,095 | ||||||||
Class A Common Stock | |||||||||||
Income available to stockholders (Basic EPS:) | |||||||||||
Allocated net income (numerator) | $ 314,227 | $ 285,864 | $ 195,386 | ||||||||
Weighted shares (denominator) (in shares) | 46,188,836 | 46,188,637 | 46,186,831 | ||||||||
Per- share amount (in dollars per share) | $ 1.28 | $ 2.02 | $ 1.88 | $ 1.62 | $ 1.34 | $ 1.73 | $ 1.71 | $ 1.41 | $ 6.80 | $ 6.19 | $ 4.23 |
Dilutive effect of stock-based awards | |||||||||||
Allocated net income (numerator) | $ 0 | $ 0 | $ 0 | ||||||||
Weighted shares (denominator) (in shares) | 30,224 | 25,776 | 49,832 | ||||||||
Assumed conversion of Class B shares | |||||||||||
Allocated net income (numerator) | $ 2,594 | $ 2,360 | $ 1,613 | ||||||||
Weighted shares (denominator) (in shares) | 6,100,800 | 6,100,800 | 6,100,800 | ||||||||
Income available to stockholders on equivalent shares (Diluted EPS:) | |||||||||||
Allocated net income (numerator) | $ 316,821 | $ 288,224 | $ 196,999 | ||||||||
Weighted shares (denominator) (in shares) | 52,319,860 | 52,315,213 | 52,337,463 | ||||||||
Per- share amount (in dollars per share) | $ 1.14 | 1.80 | 1.68 | 1.44 | $ 1.19 | 1.54 | 1.52 | 1.26 | $ 6.06 | $ 5.51 | $ 3.76 |
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% | 2400.00% | |||||||
Income available to stockholders (Basic EPS:) | |||||||||||
Allocated net income (numerator) | $ 2,594 | $ 2,360 | $ 1,613 | ||||||||
Weighted shares (denominator) (in shares) | 2,542 | 2,542 | 2,542 | ||||||||
Per- share amount (in dollars per share) | $ 192 | 303 | 283 | 243 | $ 201 | 259 | 257 | 212 | $ 1,020 | $ 928 | $ 635 |
Income available to stockholders on equivalent shares (Diluted EPS:) | |||||||||||
Allocated net income (numerator) | $ 2,593 | $ 2,359 | $ 1,613 | ||||||||
Weighted shares (denominator) (in shares) | 2,542 | 2,542 | 2,542 | ||||||||
Per- share amount (in dollars per share) | $ 192 | $ 303 | $ 283 | $ 243 | $ 201 | $ 259 | $ 257 | $ 212 | $ 1,020 | $ 928 | $ 634 |
Tax Cuts and Jobs Act of 2017 | |||||||||||
Effect of Tax Cuts and Jobs Act of 2017 | |||||||||||
Increase in income tax expense | $ 10,100 | ||||||||||
Tax Cuts and Jobs Act of 2017 | Class A Common Stock | |||||||||||
Effect of Tax Cuts and Jobs Act of 2017 | |||||||||||
Impact on basic EPS (in dollars per share) | $ 0.22 | ||||||||||
Impact on diluted EPS (in dollars per share) | 0.19 | ||||||||||
Tax Cuts and Jobs Act of 2017 | Class B Common Stock | |||||||||||
Effect of Tax Cuts and Jobs Act of 2017 | |||||||||||
Impact on basic EPS (in dollars per share) | 33 | ||||||||||
Impact on diluted EPS (in dollars per share) | $ 32 |
Fair Value - Fair Value Measure
Fair Value - Fair Value Measurements on a Recurring Basis by Asset Class and Level of Input (Details) $ in Thousands | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($)fund |
Fair value measurements on a recurring basis by asset class and level of input | ||
Available-for-sale securities | $ 730,701 | |
Total | 797,834 | |
U.S. Treasury | ||
Fair value measurements on a recurring basis by asset class and level of input | ||
Available-for-sale securities | $ 208,412 | |
States and political subdivisions | ||
Fair value measurements on a recurring basis by asset class and level of input | ||
Available-for-sale securities | 159,023 | |
Corporate debt securities | ||
Fair value measurements on a recurring basis by asset class and level of input | ||
Available-for-sale securities | 454,880 | 249,947 |
Residential mortgage-backed securities | ||
Fair value measurements on a recurring basis by asset class and level of input | ||
Available-for-sale securities | 125,343 | 4,609 |
Commercial mortgage-backed securities | ||
Fair value measurements on a recurring basis by asset class and level of input | ||
Available-for-sale securities | 67,541 | 46,515 |
Collateralized debt obligations | ||
Fair value measurements on a recurring basis by asset class and level of input | ||
Available-for-sale securities | 77,856 | 64,239 |
Other debt securities | ||
Fair value measurements on a recurring basis by asset class and level of input | ||
Available-for-sale securities | 5,081 | 15,778 |
Available-for-sale securities | ||
Fair value measurements on a recurring basis by asset class and level of input | ||
Available-for-sale securities | 730,701 | 748,523 |
Level 1 | ||
Fair value measurements on a recurring basis by asset class and level of input | ||
Total | 24,233 | |
Level 1 | Available-for-sale securities | ||
Fair value measurements on a recurring basis by asset class and level of input | ||
Available-for-sale securities | 2,683 | |
Level 2 | ||
Fair value measurements on a recurring basis by asset class and level of input | ||
Total | 761,956 | |
Level 2 | Available-for-sale securities | ||
Fair value measurements on a recurring basis by asset class and level of input | ||
Available-for-sale securities | 716,373 | |
Level 3 | ||
Fair value measurements on a recurring basis by asset class and level of input | ||
Total | 11,645 | |
Level 3 | Available-for-sale securities | ||
Fair value measurements on a recurring basis by asset class and level of input | ||
Available-for-sale securities | 11,645 | |
Fair Value, Measurements, Recurring Basis | ||
Fair value measurements on a recurring basis by asset class and level of input | ||
Available-for-sale securities | 730,701 | |
Total | 797,834 | 763,582 |
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 | 208,412 | |
Fair Value, Measurements, Recurring Basis | States and political subdivisions | ||
Fair value measurements on a recurring basis by asset class and level of input | ||
Available-for-sale securities | 159,023 | |
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 | 454,880 | 249,947 |
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 | 125,343 | 4,609 |
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 | 67,541 | 46,515 |
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 | 77,856 | 64,239 |
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 | 5,081 | 15,778 |
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 | 748,523 | |
Fair Value, Measurements, Recurring Basis | Equity securities | ||
Fair value measurements on a recurring basis by asset class and level of input | ||
Equity securities | 67,133 | 11,853 |
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 | 53,513 | $ 11,853 |
Fair Value, Measurements, Recurring Basis | Nonredeemable preferred stock | Utilities sector | ||
Fair value measurements on a recurring basis by asset class and level of input | ||
Equity securities | 6,818 | |
Fair Value, Measurements, Recurring Basis | Nonredeemable preferred stock | Energy sector | ||
Fair value measurements on a recurring basis by asset class and level of input | ||
Equity securities | 1,881 | |
Fair Value, Measurements, Recurring Basis | Nonredeemable preferred stock | Other sectors | ||
Fair value measurements on a recurring basis by asset class and level of input | ||
Equity securities | 1,488 | |
Fair Value, Measurements, Recurring Basis | Nonredeemable preferred and common stock | Communications sector | ||
Fair value measurements on a recurring basis by asset class and level of input | ||
Equity securities | 3,433 | |
Fair Value, Measurements, Recurring Basis | Real estate | ||
Fair value measurements on a recurring basis by asset class and level of input | ||
Number of real estate funds reported under the fair value option | fund | 1 | |
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 | 2,683 | |
Total | 24,233 | $ 1,809 |
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 | |
Fair Value, Measurements, Recurring Basis | Level 1 | States and political subdivisions | ||
Fair value measurements on a recurring basis by asset class and level of input | ||
Available-for-sale securities | 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 | 2,683 | 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 | |
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 | 21,550 | 1,809 |
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 | 14,927 | 1,809 |
Fair Value, Measurements, Recurring Basis | Level 1 | Nonredeemable preferred stock | Utilities sector | ||
Fair value measurements on a recurring basis by asset class and level of input | ||
Equity securities | 3,190 | |
Fair Value, Measurements, Recurring Basis | Level 1 | Nonredeemable preferred stock | Energy sector | ||
Fair value measurements on a recurring basis by asset class and level of input | ||
Equity securities | 0 | |
Fair Value, Measurements, Recurring Basis | Level 1 | Nonredeemable preferred stock | Other sectors | ||
Fair value measurements on a recurring basis by asset class and level of input | ||
Equity securities | 0 | |
Fair Value, Measurements, Recurring Basis | Level 1 | Nonredeemable preferred and common stock | Communications sector | ||
Fair value measurements on a recurring basis by asset class and level of input | ||
Equity securities | 3,433 | |
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 | 716,373 | |
Total | 761,956 | 745,990 |
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 | 208,412 | |
Fair Value, Measurements, Recurring Basis | Level 2 | States and political subdivisions | ||
Fair value measurements on a recurring basis by asset class and level of input | ||
Available-for-sale securities | 159,023 | |
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 | 443,873 | 237,370 |
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 | 125,343 | 4,609 |
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 | 64,220 | 46,515 |
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 | 77,856 | 64,239 |
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 | 5,081 | 15,778 |
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 | 735,946 | |
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 | 45,583 | 10,044 |
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 | 38,586 | 10,044 |
Fair Value, Measurements, Recurring Basis | Level 2 | Nonredeemable preferred stock | Utilities sector | ||
Fair value measurements on a recurring basis by asset class and level of input | ||
Equity securities | 3,628 | |
Fair Value, Measurements, Recurring Basis | Level 2 | Nonredeemable preferred stock | Energy sector | ||
Fair value measurements on a recurring basis by asset class and level of input | ||
Equity securities | 1,881 | |
Fair Value, Measurements, Recurring Basis | Level 2 | Nonredeemable preferred stock | Other sectors | ||
Fair value measurements on a recurring basis by asset class and level of input | ||
Equity securities | 1,488 | |
Fair Value, Measurements, Recurring Basis | Level 2 | Nonredeemable preferred and common stock | Communications sector | ||
Fair value measurements on a recurring basis by asset class and level of input | ||
Equity securities | 0 | |
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 | 11,645 | |
Total | 11,645 | 12,577 |
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 | |
Fair Value, Measurements, Recurring Basis | Level 3 | States and political subdivisions | ||
Fair value measurements on a recurring basis by asset class and level of input | ||
Available-for-sale securities | 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 | 8,324 | 12,577 |
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 | 3,321 | 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 | 12,577 | |
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 | Level 3 | Nonredeemable preferred stock | Utilities sector | ||
Fair value measurements on a recurring basis by asset class and level of input | ||
Equity securities | 0 | |
Fair Value, Measurements, Recurring Basis | Level 3 | Nonredeemable preferred stock | Energy sector | ||
Fair value measurements on a recurring basis by asset class and level of input | ||
Equity securities | 0 | |
Fair Value, Measurements, Recurring Basis | Level 3 | Nonredeemable preferred stock | Other sectors | ||
Fair value measurements on a recurring basis by asset class and level of input | ||
Equity securities | 0 | |
Fair Value, Measurements, Recurring Basis | Level 3 | Nonredeemable preferred and common stock | Communications sector | ||
Fair value measurements on a recurring basis by asset class and level of input | ||
Equity securities | $ 0 | |
Fair Value, Measurements, Recurring Basis | Fair Value Measured at Net Asset Value Per Share | Real estate | ||
Fair value measurements on a recurring basis by asset class and level of input | ||
Other limited partnership investments | $ 3,206 |
Fair Value - Fair Value Measu_2
Fair Value - Fair Value Measurements on a Recurring Basis by Pricing Source (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Fair value by pricing source | ||
Available-for-sale securities | $ 730,701 | |
Total | 797,834 | |
Level 1 | ||
Fair value by pricing source | ||
Total | 24,233 | |
Level 2 | ||
Fair value by pricing source | ||
Total | 761,956 | |
Level 3 | ||
Fair value by pricing source | ||
Total | 11,645 | |
Fair Value, Measurements, Recurring Basis | ||
Fair value by pricing source | ||
Available-for-sale securities | 730,701 | |
Total | 797,834 | $ 763,582 |
Fair Value, Measurements, Recurring Basis | Pricing services | ||
Fair value by pricing source | ||
Available-for-sale securities | 730,551 | |
Equity securities priced using pricing services | 67,133 | |
Fair Value, Measurements, Recurring Basis | 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 | 2,683 | |
Total | 24,233 | 1,809 |
Fair Value, Measurements, Recurring Basis | Level 1 | Pricing services | ||
Fair value by pricing source | ||
Available-for-sale securities | 2,683 | |
Equity securities priced using pricing services | 21,550 | |
Fair Value, Measurements, Recurring Basis | Level 1 | 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 | 716,373 | |
Total | 761,956 | 745,990 |
Fair Value, Measurements, Recurring Basis | Level 2 | Pricing services | ||
Fair value by pricing source | ||
Available-for-sale securities | 716,373 | |
Equity securities priced using pricing services | 45,583 | |
Fair Value, Measurements, Recurring Basis | Level 2 | 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 | 11,645 | |
Total | 11,645 | $ 12,577 |
Fair Value, Measurements, Recurring Basis | Level 3 | Pricing services | ||
Fair value by pricing source | ||
Available-for-sale securities | 11,495 | |
Equity securities priced using pricing services | 0 | |
Fair Value, Measurements, Recurring Basis | Level 3 | 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 | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) |
Level 3 | Available-for-sale securities | |||
Fair value measurements on a recurring basis, valuation techniques | |||
Fair value, measurement with unobservable inputs | $ 11,645 | $ 12,577 | $ 10,079 |
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 | $ 3,321 | 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) | (0.0489) | ||
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) | 0.0049 | ||
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) | 0.0566 | ||
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) | 0.0053 | ||
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) | 0.0076 | ||
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) | 0.0051 | ||
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, Non-Binding Broker Quote | Level 3 | Available-for-sale securities | |||
Fair value measurements on a recurring basis, valuation techniques | |||
Fair value, measurement with unobservable inputs | 1,300 | $ 12,600 | |
Fair Value, Measurements, Recurring Basis | Valuation Technique, Syndicated Loan Model | 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 | 8,048 | ||
Fair Value, Measurements, Recurring Basis | Valuation Technique, Relative Value Pricing Model | 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 | $ 2,143 |
Fair Value - Level 3 Assets (De
Fair Value - Level 3 Assets (Details) - Level 3 - Available-for-sale securities - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Roll forward of level 3 fair value measurements on a recurring basis | ||
Beginning balance | $ 12,577 | $ 10,079 |
Included in earnings | 5 | 6 |
Included in other comprehensive income | 141 | (302) |
Purchases | 5,719 | 6,455 |
Sales | (8,515) | (2,854) |
Transfers into Level 3 | 18,823 | 18,232 |
Transfers out of Level 3 | (17,105) | (19,039) |
Ending balance | 11,645 | 12,577 |
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 | 68 | (554) |
Corporate debt securities | ||
Roll forward of level 3 fair value measurements on a recurring basis | ||
Beginning balance | 12,577 | 7,879 |
Included in earnings | 10 | 6 |
Included in other comprehensive income | 146 | (312) |
Purchases | 2,020 | 5,550 |
Sales | (7,415) | (2,854) |
Transfers into Level 3 | 11,542 | 18,232 |
Transfers out of Level 3 | (10,556) | (15,924) |
Ending balance | 8,324 | 12,577 |
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 | 38 | (554) |
Residential mortgage-backed securities | ||
Roll forward of level 3 fair value measurements on a recurring basis | ||
Beginning balance | 0 | |
Included in earnings | 4 | |
Included in other comprehensive income | 15 | |
Purchases | 921 | |
Sales | (32) | |
Transfers into Level 3 | 0 | |
Transfers out of Level 3 | (908) | |
Ending balance | 0 | 0 |
Commercial mortgage-backed securities | ||
Roll forward of level 3 fair value measurements on a recurring basis | ||
Beginning balance | 0 | |
Included in earnings | (9) | |
Included in other comprehensive income | (21) | |
Purchases | 478 | |
Sales | (1,068) | |
Transfers into Level 3 | 7,281 | |
Transfers out of Level 3 | (3,340) | |
Ending balance | 3,321 | 0 |
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 | 30 | 0 |
Collateralized debt obligations | ||
Roll forward of level 3 fair value measurements on a recurring basis | ||
Beginning balance | 0 | 2,200 |
Included in earnings | 0 | 0 |
Included in other comprehensive income | 1 | 10 |
Purchases | 2,300 | 905 |
Sales | 0 | 0 |
Transfers into Level 3 | 0 | 0 |
Transfers out of Level 3 | (2,301) | (3,115) |
Ending balance | $ 0 | $ 0 |
Fair Value - Financial Instrume
Fair Value - Financial Instruments Not Carried at Fair Value (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Carrying Value | ||
Carrying values and fair value measurements of financial instruments not carried at fair value | ||
Agent loans | $ 67,696 | $ 58,006 |
Long-term borrowings | 98,080 | 99,730 |
Fair Value | ||
Carrying values and fair value measurements of financial instruments not carried at fair value | ||
Agent loans | 71,602 | 54,110 |
Long-term borrowings | $ 101,888 | $ 94,057 |
Investments - Cost and Fair Val
Investments - Cost and Fair Value of Available-For-Sale Securities (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Available-for-sale securities | ||
Amortized cost | $ 724,950 | |
Estimated fair value | 730,701 | |
U.S. Treasury | ||
Available-for-sale securities | ||
Amortized cost | $ 208,610 | |
Gross unrealized gains | 18 | |
Gross unrealized losses | 216 | |
Estimated fair value | 208,412 | |
States and political subdivisions | ||
Available-for-sale securities | ||
Amortized cost | 157,003 | |
Gross unrealized gains | 2,020 | |
Gross unrealized losses | 0 | |
Estimated fair value | 159,023 | |
Corporate debt securities | ||
Available-for-sale securities | ||
Amortized cost | 450,295 | 259,362 |
Gross unrealized gains | 6,289 | 139 |
Gross unrealized losses | 1,704 | 9,554 |
Estimated fair value | 454,880 | 249,947 |
Residential mortgage-backed securities | ||
Available-for-sale securities | ||
Amortized cost | 124,337 | 4,603 |
Gross unrealized gains | 1,056 | 38 |
Gross unrealized losses | 50 | 32 |
Estimated fair value | 125,343 | 4,609 |
Commercial mortgage-backed securities | ||
Available-for-sale securities | ||
Amortized cost | 67,210 | 47,022 |
Gross unrealized gains | 479 | 80 |
Gross unrealized losses | 148 | 587 |
Estimated fair value | 67,541 | 46,515 |
Collateralized debt obligations | ||
Available-for-sale securities | ||
Amortized cost | 78,059 | 65,039 |
Gross unrealized gains | 44 | 30 |
Gross unrealized losses | 247 | 830 |
Estimated fair value | 77,856 | 64,239 |
Other debt securities | ||
Available-for-sale securities | ||
Amortized cost | 5,049 | 15,756 |
Gross unrealized gains | 71 | 33 |
Gross unrealized losses | 39 | 11 |
Estimated fair value | 5,081 | 15,778 |
Available-for-sale securities | ||
Available-for-sale securities | ||
Amortized cost | 724,950 | 757,395 |
Gross unrealized gains | 7,939 | 2,358 |
Gross unrealized losses | 2,188 | 11,230 |
Estimated fair value | $ 730,701 | $ 748,523 |
Investments - Amortized Cost an
Investments - Amortized Cost and Estimated Fair Value of Available-For-Sale Securities by Contractual Maturity (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Amortized cost | |
Due in one year or less | $ 32,613 |
Due after one year through five years | 336,377 |
Due after five years through ten years | 120,716 |
Due after ten years | 235,244 |
Amortized cost | 724,950 |
Estimated fair value | |
Due in one year or less | 32,655 |
Due after one year through five years | 339,033 |
Due after five years through ten years | 122,068 |
Due after ten years | 236,945 |
Estimated fair value | $ 730,701 |
Investments - Available-For-Sal
Investments - Available-For-Sale Securities in a Gross Unrealized Loss Position (Details) $ in Thousands | Dec. 31, 2019USD ($)Holdings | Dec. 31, 2018USD ($)Holdings |
Investment grade | ||
Fair value | ||
Less than 12 months | $ 76,315 | $ 242,821 |
12 months or longer | 46,390 | 98,118 |
Total | 122,705 | 340,939 |
Unrealized losses | ||
Less than 12 months | 287 | 1,295 |
12 months or longer | 218 | 1,641 |
Total | $ 505 | $ 2,936 |
No. of holdings | Holdings | 100 | 147 |
Non-investment grade | ||
Fair value | ||
Less than 12 months | $ 11,421 | $ 125,813 |
12 months or longer | 10,691 | 19,987 |
Total | 22,112 | 145,800 |
Unrealized losses | ||
Less than 12 months | 324 | 6,608 |
12 months or longer | 1,359 | 1,686 |
Total | $ 1,683 | $ 8,294 |
No. of holdings | Holdings | 146 | 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 | $ 25,804 | $ 157,300 |
12 months or longer | 15,699 | 86,586 |
Total | 41,503 | 243,886 |
Unrealized losses | ||
Less than 12 months | 342 | 6,866 |
12 months or longer | 1,362 | 2,688 |
Total | $ 1,704 | $ 9,554 |
No. of holdings | Holdings | 158 | 635 |
Residential mortgage-backed securities | ||
Fair value | ||
Less than 12 months | $ 16,712 | $ 777 |
12 months or longer | 0 | 1,618 |
Total | 16,712 | 2,395 |
Unrealized losses | ||
Less than 12 months | 50 | 6 |
12 months or longer | 0 | 26 |
Total | $ 50 | $ 32 |
No. of holdings | Holdings | 7 | 3 |
Commercial mortgage-backed securities | ||
Fair value | ||
Less than 12 months | $ 21,981 | $ 17,624 |
12 months or longer | 372 | 16,997 |
Total | 22,353 | 34,621 |
Unrealized losses | ||
Less than 12 months | 147 | 175 |
12 months or longer | 1 | 412 |
Total | $ 148 | $ 587 |
No. of holdings | Holdings | 30 | 30 |
Collateralized debt obligations | ||
Fair value | ||
Less than 12 months | $ 20,889 | $ 55,246 |
12 months or longer | 41,010 | 1,248 |
Total | 61,899 | 56,494 |
Unrealized losses | ||
Less than 12 months | 33 | 826 |
12 months or longer | 214 | 4 |
Total | $ 247 | $ 830 |
No. of holdings | Holdings | 49 | 39 |
Other debt securities | ||
Fair value | ||
Less than 12 months | $ 2,350 | $ 8,213 |
12 months or longer | 0 | 0 |
Total | 2,350 | 8,213 |
Unrealized losses | ||
Less than 12 months | 39 | 11 |
12 months or longer | 0 | 0 |
Total | $ 39 | $ 11 |
No. of holdings | Holdings | 2 | 7 |
Available-for-sale securities | ||
Fair value | ||
Less than 12 months | $ 87,736 | $ 368,634 |
12 months or longer | 57,081 | 118,105 |
Total | 144,817 | 486,739 |
Unrealized losses | ||
Less than 12 months | 611 | 7,903 |
12 months or longer | 1,577 | 3,327 |
Total | $ 2,188 | $ 11,230 |
No. of holdings | Holdings | 246 | 721 |
Investments - Net Investment In
Investments - Net Investment Income (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Investment income from portfolios | |||
Total investment income | $ 34,460 | $ 31,234 | $ 26,155 |
Less: investment expenses | 1,061 | 1,025 | 1,516 |
Investment income, net of expenses | 33,399 | 30,209 | 24,639 |
Available-for-sale securities | |||
Investment income from portfolios | |||
Total investment income | 22,496 | 24,978 | |
Available-for-sale securities | |||
Investment income from portfolios | |||
Total investment income | 23,669 | ||
Equity securities | |||
Investment income from portfolios | |||
Total investment income | 1,418 | 628 | |
Cash equivalents and other | |||
Investment income from portfolios | |||
Total investment income | $ 10,546 | 5,628 | 2,486 |
Erie Family Life Insurance Company (EFL) | |||
Investment income from portfolios | |||
Note receivable from EFL, interest income recognized by Indemnity | $ 1,600 | $ 1,700 |
Investments - Realized Investme
Investments - Realized Investment Gains (Losses) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Net realized investment gains (losses) | |||
Net realized investment gains (losses) | $ 6,103 | $ (2,010) | $ 1,334 |
Available-for-sale securities | |||
Available-for-sale securities: | |||
Gross realized gains | 6,258 | 1,892 | |
Gross realized losses | (1,639) | (3,189) | |
Net realized gains (losses) on available-for-sale securities | 4,619 | (1,297) | |
Available-for-sale securities | |||
Available-for-sale securities: | |||
Gross realized gains | 2,996 | ||
Gross realized losses | (1,756) | ||
Net realized gains (losses) on available-for-sale securities | 1,240 | ||
Equity securities | |||
Equity securities | |||
Equity securities | 1,484 | (819) | |
Miscellaneous | |||
Net realized investment gains (losses) | |||
Miscellaneous | $ 0 | $ 106 | $ 94 |
Investments - Portion of Net Un
Investments - Portion of Net Unrealized Gains and Losses Recognized During Reporting Period and Impairments (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Other-than-temporary impairments on available-for-sale securities | |||
Other-than-temporary impairments on available-for-sale securities recognized in earnings | $ 195,000 | $ 1,581,000 | |
Other-than-temporary impairments on available-for-sale securities recognized in earnings | $ 182,000 | ||
Other-than-temporary impairments on available-for-sale securities recognized in other comprehensive income | 0 | 0 | $ 0 |
Equity securities | |||
Equity securities: | |||
Net gains (losses) recognized during the period | 1,484,000 | (819,000) | |
Less: net gains (losses) recognized on securities sold | 360,000 | (86,000) | |
Net unrealized gains (losses) recognized on securities held at reporting date | $ 1,124,000 | $ (733,000) |
Fixed Assets (Details)
Fixed Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Fixed assets | ||||
Total fixed assets, gross | $ 255,907 | $ 360,363 | $ 255,907 | |
Less: Accumulated depreciation and amortization | (125,075) | (138,984) | (125,075) | |
Fixed assets, net | 130,832 | 221,379 | 130,832 | |
Gain on sale of field offices | 3,400 | 3,400 | ||
Depreciation and amortization expense | 16,800 | 13,400 | $ 14,800 | |
Land, buildings, and building improvements | ||||
Fixed assets | ||||
Tangible fixed assets, gross | 0 | 5,068 | 0 | |
Leasehold improvements | ||||
Fixed assets | ||||
Tangible fixed assets, gross | 617 | 1,313 | 617 | |
Software | ||||
Fixed assets | ||||
Software | 163,735 | 191,709 | 163,735 | |
Equipment | ||||
Fixed assets | ||||
Tangible fixed assets, gross | 15,075 | 14,546 | 15,075 | |
Furniture, fixtures, and equipment | ||||
Fixed assets | ||||
Tangible fixed assets, gross | 0 | 1,934 | 0 | |
Projects in progress | ||||
Fixed assets | ||||
Projects in progress | 10,392 | 22,992 | 10,392 | |
Construction in progress | ||||
Fixed assets | ||||
Tangible fixed assets, gross | 66,088 | 122,801 | 66,088 | |
Capitalized interest included in construction in progress | $ 2,100 | $ 3,400 | $ 2,100 |
Leases - Lease Assets and Liabi
Leases - Lease Assets and Liabilities Recorded in Statement of Financial Position (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Other assets | ||
Assets And Liabilities Lessee [Line Items] | ||
Operating lease assets | $ 22,401 | $ 0 |
Accounts payable and accrued liabilities | ||
Assets And Liabilities Lessee [Line Items] | ||
Operating lease liabilities - current | 11,289 | 0 |
Other long-term liabilities | ||
Assets And Liabilities Lessee [Line Items] | ||
Operating lease liabilities - long-term | 10,665 | 0 |
Total liabilities | ||
Assets And Liabilities Lessee [Line Items] | ||
Total operating lease liabilities | $ 21,954 | $ 0 |
Leases - Narrative (Details)
Leases - Narrative (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Lessee, Lease, Description [Line Items] | |
Operating lease costs | $ 14 |
Erie Insurance Exchange | |
Lessee, Lease, Description [Line Items] | |
Operating lease costs, amount reimbursed from Exchange and its subsidiaries | 6 |
Erie Insurance Exchange | Office Space | |
Lessee, Lease, Description [Line Items] | |
Operating lease assets | $ 11.7 |
Borrowing Arrangements - Bank L
Borrowing Arrangements - Bank Line of Credit (Details) - Revolving Line of Credit | Dec. 31, 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 sublimit under the bank revolving line of credit | 900,000 |
Available amount of letters of credit sublimit 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 | $ 110,100,000 |
Borrowing Arrangements - Term L
Borrowing Arrangements - Term Loan Credit Facility (Details) - Secured Debt - USD ($) | 12 Months Ended | |
Dec. 31, 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 (percentage) | 4.35% | |
Repayment period of credit facility | 28 years | |
Fair value of investments pledged as collateral on the credit facility | $ 112,400,000 |
Borrowing Arrangements - Annual
Borrowing Arrangements - Annual Principal Payments (Details) - Secured Debt $ in Thousands | Dec. 31, 2019USD ($) |
Debt Instrument [Line Items] | |
Principal payments due in 2020 | $ 1,979 |
Principal payments due in 2021 | 2,019 |
Principal payments due in 2022 | 2,109 |
Principal payments due in 2023 | 2,226 |
Principal payments due in 2024 | 2,302 |
Thereafter | $ 87,445 |
Postretirement Benefits - Cost
Postretirement Benefits - Cost of Pension Plans (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($)participant | |
Cost of pension plans: | |||
Service cost for benefits earned | $ 33,854 | $ 38,052 | $ 31,106 |
Interest cost on benefit obligation | 39,306 | 35,382 | 34,275 |
Expected return on plan assets | (47,484) | (51,260) | (41,267) |
Prior service cost amortization | 1,394 | 1,353 | 871 |
Net actuarial loss amortization | 5,113 | 12,809 | 9,301 |
Settlement cost | 0 | 0 | 302 |
Pension plan cost | $ 32,183 | $ 36,336 | $ 34,588 |
Erie Insurance Exchange (EIE) | |||
Postretirement benefits | |||
Postretirement annual benefit expense reimbursed to Indemnity from the Exchange and its subsidiaries (as a percent) | 59.00% | ||
Nonqualified Plan | Supplemental employee retirement plan (SERP) | Unfunded plan | |||
Cost of pension plans: | |||
Number of former plan participants resulting in charges recognized as settlements | participant | 2 |
Postretirement Benefits - Actua
Postretirement Benefits - Actuarial Assumptions (Details) | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Actuarial assumptions used to determine benefit obligations: | ||||
Discount rate (percentage) | 3.59% | 4.47% | ||
Employee pension plan | Qualified Plan | Funded Plan | ||||
Actuarial assumptions used to determine benefit obligations: | ||||
Discount rate (percentage) | 3.59% | 4.47% | 3.73% | 4.24% |
Compensation increases (percentage) | 3.21% | 3.32% | 3.32% | 3.32% |
Actuarial assumptions used to determine net periodic benefit cost: | ||||
Discount rate (percentage) | 4.47% | 3.73% | 4.24% | |
Expected return on assets (percentage) | 6.00% | 6.75% | 6.75% | 7.00% |
Rate of compensation increase (percentage) | 3.32% | 3.32% | 3.32% | |
Supplemental employee retirement plan (SERP) | Nonqualified Plan | Unfunded plan | ||||
Actuarial assumptions used to determine benefit obligations: | ||||
Pre-retirement discount rate (percentage) | 3.59% | 4.47% | 3.73% | 4.24% |
Post-retirement discount rate (percentage) | 3.09% | 3.97% | 3.23% | 3.74% |
Compensation increases (percentage) | 5.00% | 5.00% | 5.00% | 5.00% |
Actuarial assumptions used to determine net periodic benefit cost: | ||||
Pre-retirement discount rate (percentage) | 4.47% | 3.73% | 4.24% | |
Post-retirement discount rate (percentage) | 3.97% | 3.23% | 3.74% | |
Rate of compensation increase (percentage) | 5.00% | 5.00% | 5.00% |
Postretirement Benefits - Fundi
Postretirement Benefits - Funding Policy/Funded Status (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Postretirement benefits | ||
Employer contributions during fiscal year | $ 1,508 | $ 80,061 |
Net amount recognized in the Statements of Financial Position: | ||
Funded status at end of year | (146,842) | (118,596) |
Pension liabilities – due within one year | (1,183) | (1,730) |
Pension liabilities – due after one year | (145,659) | (116,866) |
Net amount recognized | $ (146,842) | (118,596) |
Employee pension plan | Qualified Plan | Funded Plan | ||
Postretirement benefits | ||
Employer contributions during fiscal year | $ 80,000 | |
Funding target (as a percentage of the funding target liability) | 100.00% | |
Employee pension plan | Qualified Plan | Funded Plan | Minimum | ||
Postretirement benefits | ||
Minimum target normal cost threshold necessary for future pension funding | $ 80,000 |
Postretirement Benefits - Benef
Postretirement Benefits - Benefit Obligations (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Projected benefit obligation: | |||
Projected benefit obligation, beginning of year | $ 886,165 | $ 951,666 | |
Service cost for benefits earned | 33,854 | 38,052 | $ 31,106 |
Interest cost on benefit obligation | 39,306 | 35,382 | 34,275 |
Plan amendments | 452 | 3,007 | |
Actuarial loss (gain) | 138,144 | (123,910) | |
Benefits paid | (43,454) | (18,032) | |
Projected benefit obligation, end of year | 1,054,467 | 886,165 | $ 951,666 |
Accumulated benefit obligation, end of year | 858,209 | $ 727,340 | |
Projected benefit obligations increase | $ 168,300 | ||
Discount rate used to measure future benefit obligations (percentage) | 3.59% | 4.47% | |
Increase in benefits paid due to offering a one-time lump sum payment to former vested employees | $ 25,400 |
Postretirement Benefits - Proje
Postretirement Benefits - Projected and Accumulated Benefit Obligation (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Projected Benefit Obligation in Excess of Plan Assets | ||
Projected benefit obligation | $ 1,054,467 | $ 886,165 |
Plan assets | 907,625 | 767,569 |
Supplemental employee retirement plan (SERP) | Nonqualified Plan | Unfunded plan | ||
Accumulated Benefit Obligation in Excess of Plan Assets | ||
Accumulated benefit obligation | 23,411 | 18,908 |
Plan assets | $ 0 | $ 0 |
Postretirement Benefits - Pensi
Postretirement Benefits - Pension Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Fair value of plan assets: | ||
Fair value of plan assets, beginning of year | $ 767,569 | $ 743,900 |
Actual gain (loss) on plan assets | 182,002 | (38,360) |
Employer contributions | 1,508 | 80,061 |
Benefits paid | (43,454) | (18,032) |
Fair value of plan assets, end of year | $ 907,625 | $ 767,569 |
Postretirement Benefits - Accum
Postretirement Benefits - Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Amounts included in accumulated other comprehensive loss | ||
Net actuarial loss | $ 142,678 | $ 144,165 |
Prior service cost | 10,913 | 11,855 |
Net amount not yet recognized | $ 153,591 | $ 156,020 |
Postretirement Benefits - Other
Postretirement Benefits - Other Comprehensive Income (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019USD ($)participant | Dec. 31, 2018USD ($)participant | |
Amounts recognized in other comprehensive income for pension plans: | ||
Net actuarial loss (gain) arising during the year | $ 3,626 | $ (34,290) |
Amortization of net actuarial loss | (5,113) | (12,809) |
Amortization of prior service cost | (1,394) | (1,353) |
Amendments | 452 | 3,007 |
Total recognized in other comprehensive income | $ (2,429) | $ (45,445) |
Supplemental employee retirement plan (SERP) | Nonqualified Plan | Unfunded plan | ||
Amounts recognized in other comprehensive income for pension plans: | ||
Number of new plan participants resulting in charges recognized as amendments | participant | 1 | 5 |
Postretirement Benefits - Asset
Postretirement Benefits - Asset Allocation (Details) - Employee pension plan - Qualified Plan - Funded Plan | Dec. 31, 2019 | Dec. 31, 2018 |
Target asset allocation for the portfolio: | ||
Total plan assets (as a percent) | 100.00% | 100.00% |
Actual asset allocation for the portfolio: | ||
Total plan assets (as a percent) | 100.00% | 100.00% |
Total equity securities | ||
Target asset allocation for the portfolio: | ||
Total plan assets (as a percent) | 45.00% | 41.00% |
Actual asset allocation for the portfolio: | ||
Total plan assets (as a percent) | 46.00% | 38.00% |
U.S. equity securities | ||
Target asset allocation for the portfolio: | ||
Total plan assets (as a percent) | 27.00% | 25.00% |
Actual asset allocation for the portfolio: | ||
Total plan assets (as a percent) | 28.00% | 24.00% |
U.S. small capitalization core equity | ||
Target asset allocation for the portfolio: | ||
Total plan assets (as a percent) | 22.00% | |
U.S. equity index | ||
Target asset allocation for the portfolio: | ||
Total plan assets (as a percent) | 78.00% | |
Non-U.S. equity securities | ||
Target asset allocation for the portfolio: | ||
Total plan assets (as a percent) | 18.00% | 16.00% |
Actual asset allocation for the portfolio: | ||
Total plan assets (as a percent) | 18.00% | 14.00% |
International small capitalization risk controlled equity | ||
Target asset allocation for the portfolio: | ||
Total plan assets (as a percent) | 11.00% | |
International emerging markets equity | ||
Target asset allocation for the portfolio: | ||
Total plan assets (as a percent) | 20.00% | |
International risk controlled equity | ||
Target asset allocation for the portfolio: | ||
Total plan assets (as a percent) | 69.00% | |
Debt securities | ||
Target asset allocation for the portfolio: | ||
Total plan assets (as a percent) | 54.00% | 58.00% |
Actual asset allocation for the portfolio: | ||
Total plan assets (as a percent) | 53.00% | 61.00% |
U.S. Treasury Strips | ||
Target asset allocation for the portfolio: | ||
Total plan assets (as a percent) | 33.00% | |
U.S. corporate bonds with an emphasis on long duration bonds rated A or better | ||
Target asset allocation for the portfolio: | ||
Total plan assets (as a percent) | 67.00% | |
Other | ||
Target asset allocation for the portfolio: | ||
Total plan assets (as a percent) | 1.00% | 1.00% |
Actual asset allocation for the portfolio: | ||
Total plan assets (as a percent) | 1.00% | 1.00% |
Postretirement Benefits - Fair
Postretirement Benefits - Fair Value Measurement for Pension Plan Assets by Major Category and Level of Input (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Fair value measurements of pension plan assets: | |||
Total | $ 907,625 | $ 767,569 | $ 743,900 |
Employee pension plan | Qualified Plan | Funded Plan | |||
Fair value measurements of pension plan assets: | |||
Total | 907,625 | 767,569 | |
Employee pension plan | Qualified Plan | Funded Plan | Level 1 | |||
Fair value measurements of pension plan assets: | |||
Total | 10,791 | 9,519 | |
Employee pension plan | Qualified Plan | Funded Plan | Level 2 | |||
Fair value measurements of pension plan assets: | |||
Total | 896,834 | 758,050 | |
Employee pension plan | Qualified Plan | Funded Plan | Level 3 | |||
Fair value measurements of pension plan assets: | |||
Total | 0 | 0 | |
Employee pension plan | Qualified Plan | Funded Plan | Total equity securities | |||
Fair value measurements of pension plan assets: | |||
Total | 414,337 | 293,437 | |
Employee pension plan | Qualified Plan | Funded Plan | Total equity securities | Level 1 | |||
Fair value measurements of pension plan assets: | |||
Total | 0 | 0 | |
Employee pension plan | Qualified Plan | Funded Plan | Total equity securities | Level 2 | |||
Fair value measurements of pension plan assets: | |||
Total | 414,337 | 293,437 | |
Employee pension plan | Qualified Plan | Funded Plan | Total equity securities | Level 3 | |||
Fair value measurements of pension plan assets: | |||
Total | 0 | 0 | |
Employee pension plan | Qualified Plan | Funded Plan | U.S. equity securities | |||
Fair value measurements of pension plan assets: | |||
Total | 248,585 | 182,495 | |
Employee pension plan | Qualified Plan | Funded Plan | U.S. equity securities | Level 1 | |||
Fair value measurements of pension plan assets: | |||
Total | 0 | 0 | |
Employee pension plan | Qualified Plan | Funded Plan | U.S. equity securities | Level 2 | |||
Fair value measurements of pension plan assets: | |||
Total | 248,585 | 182,495 | |
Employee pension plan | Qualified Plan | Funded Plan | U.S. equity securities | Level 3 | |||
Fair value measurements of pension plan assets: | |||
Total | 0 | 0 | |
Employee pension plan | Qualified Plan | Funded Plan | Non-U.S. equity securities | |||
Fair value measurements of pension plan assets: | |||
Total | 165,752 | 110,942 | |
Employee pension plan | Qualified Plan | Funded Plan | Non-U.S. equity securities | Level 1 | |||
Fair value measurements of pension plan assets: | |||
Total | 0 | 0 | |
Employee pension plan | Qualified Plan | Funded Plan | Non-U.S. equity securities | Level 2 | |||
Fair value measurements of pension plan assets: | |||
Total | 165,752 | 110,942 | |
Employee pension plan | Qualified Plan | Funded Plan | Non-U.S. equity securities | Level 3 | |||
Fair value measurements of pension plan assets: | |||
Total | 0 | 0 | |
Employee pension plan | Qualified Plan | Funded Plan | Debt securities | |||
Fair value measurements of pension plan assets: | |||
Total | 482,497 | 464,613 | |
Employee pension plan | Qualified Plan | Funded Plan | Debt securities | Level 1 | |||
Fair value measurements of pension plan assets: | |||
Total | 0 | 0 | |
Employee pension plan | Qualified Plan | Funded Plan | Debt securities | Level 2 | |||
Fair value measurements of pension plan assets: | |||
Total | 482,497 | 464,613 | |
Employee pension plan | Qualified Plan | Funded Plan | Debt securities | Level 3 | |||
Fair value measurements of pension plan assets: | |||
Total | 0 | 0 | |
Employee pension plan | Qualified Plan | Funded Plan | Other | |||
Fair value measurements of pension plan assets: | |||
Total | 10,791 | 9,519 | |
Employee pension plan | Qualified Plan | Funded Plan | Other | Level 1 | |||
Fair value measurements of pension plan assets: | |||
Total | 10,791 | 9,519 | |
Employee pension plan | Qualified Plan | Funded Plan | Other | Level 2 | |||
Fair value measurements of pension plan assets: | |||
Total | 0 | 0 | |
Employee pension plan | Qualified Plan | Funded Plan | Other | Level 3 | |||
Fair value measurements of pension plan assets: | |||
Total | $ 0 | $ 0 |
Postretirement Benefits - Estim
Postretirement Benefits - Estimated Future Benefit Payments (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Benefits expected to be paid over the next 10 years from pension plans: | |
2020 | $ 23,788 |
2021 | 25,903 |
2022 | 29,031 |
2023 | 32,497 |
2024 | 35,722 |
2025-2029 | $ 229,518 |
Postretirement Benefits - Emplo
Postretirement Benefits - Employee Savings Plan (Details) - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Employee savings plan | |||
Employer matching contribution paid to the plan | $ 14.9 | $ 13.9 | $ 12.8 |
Employer discretionary contribution amount | $ 5.4 | ||
Class A common stock held by plan participants (in shares) | 0.2 | 0.2 | |
100% employer matching contribution | |||
Employee savings plan | |||
Percentage of employer matching contribution of employee contributions (as a percent) | 100.00% | ||
100% employer matching contribution | Maximum | |||
Employee savings plan | |||
Percentage of eligible employee compensation, matched by employer (as a percent) | 3.00% | ||
50% employer matching contribution | |||
Employee savings plan | |||
Percentage of employer matching contribution of employee contributions (as a percent) | 50.00% | ||
50% employer matching contribution | Maximum | |||
Employee savings plan | |||
Percentage of eligible employee compensation, matched by employer (as a percent) | 5.00% | ||
50% employer matching contribution | Minimum | |||
Employee savings plan | |||
Percentage of eligible employee compensation, matched by employer (as a percent) | 3.00% | ||
Erie Insurance Exchange (EIE) | |||
Employee savings plan | |||
Matching contributions reimbursed to Indemnity from the Exchange and its subsidiaries (as a percent) | 59.00% |
Incentive and Deferred Compen_3
Incentive and Deferred Compensation Plans - Narrative (Details) | 1 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($)$ / sharesshares | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($)Plans$ / sharesshares | Dec. 31, 2018USD ($)$ / sharesshares | Dec. 31, 2017USD ($)$ / sharesshares | |
Incentive and deferred compensation plans | |||||||
Number of incentive plans for executives, senior vice presidents and other selected officers | Plans | 2 | ||||||
Number of deferred compensation plans for executives, senior vice presidents and other selected officers | Plans | 2 | ||||||
Number of deferred compensation plans for outside directors | Plans | 2 | ||||||
Annual incentive plan awards | |||||||
Incentive and deferred compensation plans | |||||||
Maximum percentage of employee compensation that can be deferred (percentage) | 100.00% | ||||||
Long-term incentive plan awards | |||||||
Incentive and deferred compensation plans | |||||||
Maximum percentage of employee compensation that can be deferred (percentage) | 100.00% | ||||||
Vesting period of performance and/or service condition(s) | 3 years | ||||||
Maximum dollar amount which may be received by any single participant during any specified period | $ 5,000,000 | ||||||
Compensation cost related to share-based compensation plan awards | 7,300,000 | $ 6,300,000 | $ 10,300,000 | ||||
Tax benefits recognized in income related to award expense | 1,500,000 | 1,300,000 | 3,600,000 | ||||
Total unrecognized compensation cost related to share-based compensation plan awards pertaining to open performance periods | $ 4,900,000 | ||||||
Expected period of recognition related to unrecognized compensation cost | 2 years | ||||||
Long-term incentive plan awards | Class A Common Stock | |||||||
Incentive and deferred compensation plans | |||||||
Maximum number of shares authorized for grant (in shares) | shares | 1,500,000 | ||||||
Maximum number of shares which may be received by any single participant during any specified period (in shares) | shares | 250,000 | ||||||
Long-term incentive plan awards | Performance Period Long-Term Incentive Plan 2017-2019 | |||||||
Incentive and deferred compensation plans | |||||||
Compensation cost related to share-based compensation plan awards | $ 7,800,000 | ||||||
Long-term incentive plan awards | Performance Period Long Term Incentive Plan 2016-2018 | |||||||
Incentive and deferred compensation plans | |||||||
Compensation cost related to share-based compensation plan awards | $ 8,200,000 | ||||||
Long-term incentive plan awards | Performance Period Long-Term Incentive Plan 2015-2017 | |||||||
Incentive and deferred compensation plans | |||||||
Compensation cost related to share-based compensation plan awards | $ 8,300,000 | ||||||
Long-term incentive plan awards | Performance Period Long Term Incentive Plan 2014-2016 | |||||||
Incentive and deferred compensation plans | |||||||
Compensation cost related to share-based compensation plan awards | $ 4,700,000 | ||||||
Long-term incentive plan awards | Performance Period Long Term Incentive Plan 2014-2016 | Class A Common Stock | |||||||
Incentive and deferred compensation plans | |||||||
Average price per share for shares purchased (in dollars per share) | $ / shares | $ 122.40 | ||||||
Total cost of shares purchased for share-based compensation awards | $ 5,700,000 | ||||||
Long-term incentive plan awards | Performance Period Long Term Incentive Plan 2014-2016 | Class A Common Stock | Performance shares | |||||||
Incentive and deferred compensation plans | |||||||
Shares purchased for share-based compensation awards (in shares) | shares | 46,884 | ||||||
Incentive compensation deferral plan | |||||||
Incentive and deferred compensation plans | |||||||
Compensation cost related to share-based compensation plan awards | $ 500,000 | $ 700,000 | 1,400,000 | ||||
Incentive compensation deferral plan | Class A Common Stock | |||||||
Incentive and deferred compensation plans | |||||||
Average price per share for shares purchased (in dollars per share) | $ / shares | $ 176.34 | $ 119.28 | |||||
Total cost of shares purchased for share-based compensation awards | $ 800,000 | $ 1,400,000 | |||||
Vesting percent of the grant in Class A common stock (percentage) | 100.00% | ||||||
Payment period for vested share credits | 3 years | ||||||
Incentive compensation deferral plan | Class A Common Stock | Performance shares | |||||||
Incentive and deferred compensation plans | |||||||
Shares purchased for share-based compensation awards (in shares) | shares | 4,387 | 12,005 | |||||
Stock compensation plan for outside directors | |||||||
Incentive and deferred compensation plans | |||||||
Compensation cost related to share-based compensation plan awards | $ 1,100,000 | $ 800,000 | $ 900,000 | ||||
Stock compensation plan for outside directors | Class A Common Stock | |||||||
Incentive and deferred compensation plans | |||||||
Average price per share for shares purchased (in dollars per share) | $ / shares | $ 194.62 | $ 122.19 | $ 121.85 | ||||
Total cost of shares purchased for share-based compensation awards | $ 1,400,000 | $ 1,100,000 | $ 1,200,000 | ||||
Stock compensation plan for outside directors | Class A Common Stock | Performance shares | |||||||
Incentive and deferred compensation plans | |||||||
Shares purchased for share-based compensation awards (in shares) | shares | 7,370 | 9,285 | 9,663 | ||||
Stock compensation plan for outside directors | Three Month Vesting Period | Class A Common Stock | |||||||
Incentive and deferred compensation plans | |||||||
Vesting period of performance and/or service condition(s) | 3 months | ||||||
Vesting percent of the grant in Class A common stock (percentage) | 25.00% | ||||||
Equity compensation plan | |||||||
Incentive and deferred compensation plans | |||||||
Compensation cost related to share-based compensation plan awards | $ 500,000 | $ 400,000 | $ 200,000 | ||||
Total unrecognized compensation cost related to share-based compensation plan awards pertaining to open performance periods | $ 400,000 | ||||||
Expected period of recognition related to unrecognized compensation cost | 3 years | ||||||
Equity compensation plan | Class A Common Stock | |||||||
Incentive and deferred compensation plans | |||||||
Maximum number of shares authorized for grant (in shares) | shares | 100,000 | ||||||
Maximum number of shares which may be received by any single participant during any specified period (in shares) | shares | 5,000 | ||||||
Equity compensation plan | Performance Period Equity Compensation Plan 2016 | Class A Common Stock | |||||||
Incentive and deferred compensation plans | |||||||
Average price per share for shares purchased (in dollars per share) | $ / shares | $ 132.35 | ||||||
Total cost of shares purchased for share-based compensation awards | $ 400,000 | ||||||
Equity compensation plan | Performance Period Equity Compensation Plan 2016 | Class A Common Stock | Performance shares | |||||||
Incentive and deferred compensation plans | |||||||
Shares purchased for share-based compensation awards (in shares) | shares | 3,246 | ||||||
Equity compensation plan | Performance Period Equity Compensation Plan 2014-2015 | Class A Common Stock | |||||||
Incentive and deferred compensation plans | |||||||
Average price per share for shares purchased (in dollars per share) | $ / shares | $ 117.39 | ||||||
Total cost of shares purchased for share-based compensation awards | $ 700,000 | ||||||
Equity compensation plan | Performance Period Equity Compensation Plan 2014-2015 | Class A Common Stock | Performance shares | |||||||
Incentive and deferred compensation plans | |||||||
Shares purchased for share-based compensation awards (in shares) | shares | 5,830 | ||||||
Equity compensation plan | Performance Period Equity Compensation Plan 2014 | Class A Common Stock | |||||||
Incentive and deferred compensation plans | |||||||
Average price per share for shares purchased (in dollars per share) | $ / shares | $ 111.55 | ||||||
Total cost of shares purchased for share-based compensation awards | $ 400,000 | ||||||
Equity compensation plan | Performance Period Equity Compensation Plan 2014 | Class A Common Stock | Performance shares | |||||||
Incentive and deferred compensation plans | |||||||
Shares purchased for share-based compensation awards (in shares) | shares | 3,785 | ||||||
Erie Insurance Exchange (EIE) | Long-term incentive plan awards | |||||||
Incentive and deferred compensation plans | |||||||
Incentive plan compensation cost reimbursed to Indemnity from the Exchange and its subsidiaries (as a percent) | 47.00% | ||||||
Erie Insurance Exchange (EIE) | Incentive compensation deferral plan | |||||||
Incentive and deferred compensation plans | |||||||
Incentive plan compensation cost reimbursed to Indemnity from the Exchange and its subsidiaries (as a percent) | 42.00% | ||||||
Erie Insurance Exchange (EIE) | Equity compensation plan | |||||||
Incentive and deferred compensation plans | |||||||
Incentive plan compensation cost reimbursed to Indemnity from the Exchange and its subsidiaries (as a percent) | 49.00% | 68.00% | 38.00% |
Incentive and Deferred Compen_4
Incentive and Deferred Compensation Plans - Table (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Deferred executive compensation liability | |||
Deferred executive compensation, beginning of the year | $ 26,182 | $ 30,057 | $ 32,908 |
Total plan awards and earnings | 12,712 | 12,566 | 19,713 |
Total plan awards paid | (12,852) | (14,482) | (20,621) |
Deferred executive compensation, end of the year | 24,616 | 26,182 | 30,057 |
Annual incentive plan awards | |||
Deferred executive compensation liability | |||
Annual incentive plan awards | 2,745 | 4,751 | 6,118 |
Long-term incentive plan awards | |||
Deferred executive compensation liability | |||
Long-term incentive plan awards | 7,267 | 6,331 | 10,931 |
Forfeitures | 0 | 0 | (593) |
Deferred compensation plans and stock compensation plan for outside directors | |||
Deferred executive compensation liability | |||
Employer match and hypothetical earnings on deferred compensation | 2,700 | 1,484 | 2,664 |
Compensation deferred | 1,579 | 1,928 | 680 |
Distributions from the deferred compensation plans | (797) | (1,321) | (853) |
Stock compensation plan for outside directors | |||
Deferred executive compensation liability | |||
Funding of rabbi trust | (1,434) | (1,165) | (1,177) |
Incentive compensation deferral plan | |||
Deferred executive compensation liability | |||
Funding of rabbi trust | $ (774) | $ (1,401) | $ 0 |
Income Taxes - Provision for In
Income Taxes - Provision for Income Tax (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Schedule of provision for income taxes | |||
Current income tax expense | $ 76,535 | $ 84,454 | $ 81,689 |
Deferred income tax expense (benefit) | 3,349 | (1,358) | 26,912 |
Other income tax expense | 0 | 0 | 10,095 |
Income tax expense | $ 79,884 | $ 83,096 | $ 118,696 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Provision for Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Reconciliation of the provision for income taxes, with amounts determined by applying the statutory federal income tax rate to pre-tax income | |||
Income tax at statutory rate | $ 83,308 | $ 77,977 | $ 110,493 |
Change in tax rate | 0 | 0 | 10,095 |
Tax-exempt interest | (123) | (1,305) | (2,278) |
(Decrease) increase in unrecognized tax benefits | (3,088) | 3,088 | 0 |
Other, net | (213) | 3,336 | 386 |
Income tax expense | $ 79,884 | $ 83,096 | $ 118,696 |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred tax assets: | ||
Pension and other postretirement benefits | $ 25,720 | $ 20,124 |
Other employee benefits | 11,835 | 12,237 |
Deferred revenue | 3,755 | 3,524 |
Allowance for management fee returned on cancelled policies | 3,421 | 3,292 |
Unrealized losses on investments | 0 | 2,030 |
Other | 1,663 | 1,246 |
Total deferred tax assets | 46,394 | 42,453 |
Deferred tax liabilities: | ||
Depreciation | 19,454 | 13,015 |
Prepaid expenses | 4,890 | 1,376 |
Limited partnerships | 2,632 | 2,534 |
Unrealized gains on investments | 1,549 | 0 |
Commissions | 545 | 1,270 |
Other | 138 | 157 |
Total deferred tax liabilities | 29,208 | 18,352 |
Net deferred tax asset | $ 17,186 | $ 24,101 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||
Deferred tax asset valuation allowance | $ 0 | $ 0 | |
Tax expense related to uncertain tax positions | $ (3,088,000) | 3,088,000 | $ 0 |
Interest expense related to uncertain tax positions | $ 900,000 | 100,000 | |
Uncertain tax position, impact of settlement on effective tax rate (percent) | (1.00%) | ||
Effective income tax rate change as a result of tax law change (percent) | 1.00% | ||
Current liability for uncertain tax position | $ 2,300,000 |
Income Taxes - Unrecognized Tax
Income Taxes - Unrecognized Tax Benefit (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Reconciliation of unrecognized tax benefits | |||
Balance at the beginning of the year | $ 3,088 | $ 0 | $ 0 |
Additions for current year tax positions | 0 | 7,719 | 0 |
Reductions for current year tax positions | 0 | (4,631) | 0 |
Additions for prior year tax positions | 4,631 | 0 | 2,337 |
Reductions for prior year tax positions | (7,719) | 0 | (2,337) |
Balance at the end of the year | $ 0 | $ 3,088 | $ 0 |
Capital Stock - Class A and B C
Capital Stock - Class A and B Common Stock (Details) | 12 Months Ended | ||
Dec. 31, 2019classshares | Dec. 31, 2018shares | Dec. 31, 2017shares | |
Common stock | |||
Number of classes of common stock | class | 2 | ||
Class A Common Stock | |||
Common stock | |||
Minimum multiplier for dividend payable on Class A common stock per dividend declared on Class B common stock (as a percent) | 0.67% | ||
Class B Common Stock | |||
Common stock | |||
Percentage of dividend declared on Class B common stock used to determine dividend payable on Class A common stock (as a percent) | 0.67% | ||
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) | shares | 0 | 0 | 0 |
Capital Stock - Stock Repurchas
Capital Stock - Stock Repurchases (Details) - Class A Common Stock - Stock repurchase program - USD ($) | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Oct. 31, 2011 | |
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 | 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 | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | ||
Accumulated other comprehensive income (loss), before tax | ||||
Amortization of prior service costs | $ 1,394 | $ 1,353 | ||
Amortization of net actuarial loss | 5,113 | 12,809 | ||
Pension and other postretirement plans, OCI (loss) | $ 10,300 | |||
Accumulated other comprehensive income (loss), net of tax | ||||
AOCI (loss), beginning of year | (130,284) | |||
Investment securities, OCI (loss) | 11,718 | (9,937) | (190) | |
Pension and other postretirement plans, OCI (loss) | 1,698 | 35,712 | (8,105) | |
Reclassification adjustment | [1] | 0 | ||
OCI (loss) | 13,416 | 25,775 | (8,295) | |
AOCI (loss), end of year | (116,868) | (130,284) | ||
Investment securities: | ||||
Accumulated other comprehensive income (loss), before tax | ||||
AOCI (loss), beginning of year | (9,169) | 3,410 | 3,954 | |
OCI (loss) before reclassifications - pre TCJA | (648) | |||
OCI (loss) before reclassifications - post TCJA | 19,257 | (15,372) | 1,162 | |
Realized investment (gains) losses | (4,619) | 1,297 | (1,240) | |
Impairment losses | 195 | 1,581 | 182 | |
Cumulative effect of adopting ASU 2016-01, before tax | (85) | |||
Investment securities, OCI (loss) | 14,833 | (12,579) | (544) | |
AOCI (loss), end of year | 5,664 | (9,169) | 3,410 | |
Accumulated other comprehensive income (loss), tax | ||||
AOCI (loss), beginning of year | (1,926) | 716 | 1,384 | |
OCI (loss) before reclassifications - pre TCJA | (227) | |||
OCI (loss) before reclassifications - post TCJA | 4,044 | (3,228) | 243 | |
Realized investment (gains) losses | (970) | 272 | (434) | |
Impairment losses | 41 | 332 | 64 | |
Cumulative tax effect of adopting ASU 2016-01 | (18) | |||
Investment securities, OCI (loss) | 3,115 | (2,642) | (354) | |
Reclassification adjustment | (314) | |||
AOCI (loss), end of year | 1,189 | (1,926) | 716 | |
Accumulated other comprehensive income (loss), net of tax | ||||
AOCI (loss), beginning of year | (7,243) | 2,694 | 2,570 | |
OCI (loss) before reclassifications - pre TCJA | (421) | |||
OCI (loss) before reclassifications - post TCJA | 15,213 | (12,144) | 919 | |
Realized investment (gains) losses | (3,649) | 1,025 | (806) | |
Impairment losses | 154 | 1,249 | 118 | |
Cumulative effect of adopting ASU 2016-01, net of tax | (67) | |||
Investment securities, OCI (loss) | 11,718 | (9,937) | (190) | |
Reclassification adjustment | 314 | |||
AOCI (loss), end of year | 4,475 | (7,243) | 2,694 | |
Pension and other postretirement plans: | ||||
Accumulated other comprehensive income (loss), before tax | ||||
AOCI (loss), beginning of year | (155,749) | (200,954) | (190,695) | |
OCI (loss) before reclassifications | (4,085) | 31,401 | (20,314) | |
Amortization of prior service costs | 1,394 | 1,353 | 871 | |
Amortization of net actuarial loss | 4,840 | 12,451 | 8,882 | |
Settlement loss | 302 | |||
Pension and other postretirement plans, OCI (loss) | 2,149 | 45,205 | (10,259) | |
AOCI (loss), end of year | (153,600) | (155,749) | (200,954) | |
Accumulated other comprehensive income (loss), tax | ||||
AOCI (loss), beginning of year | (32,708) | (42,201) | (66,744) | |
OCI (loss) before reclassifications | (858) | 6,594 | (7,111) | |
Amortization of prior service costs | 293 | 284 | 306 | |
Amortization of net actuarial loss | 1,016 | 2,615 | 3,109 | |
Settlement loss | 106 | |||
Impact of change in tax rate | 1,436 | |||
Pension and other postretirement plans, OCI (loss) | 451 | 9,493 | (2,154) | |
Reclassification adjustment | 26,697 | |||
AOCI (loss), end of year | (32,257) | (32,708) | (42,201) | |
Accumulated other comprehensive income (loss), net of tax | ||||
AOCI (loss), beginning of year | (123,041) | (158,753) | (123,951) | |
OCI (loss) before reclassifications | (3,227) | 24,807 | (13,203) | |
Amortization of prior service costs | 1,101 | 1,069 | 565 | |
Amortization of net actuarial loss | 3,824 | 9,836 | 5,773 | |
Settlement loss | 196 | |||
Impact of change in tax rate | (1,436) | |||
Pension and other postretirement plans, OCI (loss) | 1,698 | 35,712 | (8,105) | |
Reclassification adjustment | (26,697) | |||
AOCI (loss), end of year | (121,343) | (123,041) | (158,753) | |
Total | ||||
Accumulated other comprehensive income (loss), before tax | ||||
AOCI (loss), beginning of year | (164,918) | (197,544) | (186,741) | |
Investment securities, OCI (loss) | 14,833 | (12,579) | (544) | |
Pension and other postretirement plans, OCI (loss) | 2,149 | 45,205 | (10,259) | |
OCI (loss) | 16,982 | 32,626 | (10,803) | |
AOCI (loss), end of year | (147,936) | (164,918) | (197,544) | |
Accumulated other comprehensive income (loss), tax | ||||
AOCI (loss), beginning of year | (34,634) | (41,485) | (65,360) | |
Investment securities, OCI (loss) | 3,115 | (2,642) | (354) | |
Pension and other postretirement plans, OCI (loss) | 451 | 9,493 | (2,154) | |
Reclassification adjustment | 26,383 | |||
OCI (loss) | 3,566 | 6,851 | (2,508) | |
AOCI (loss), end of year | (31,068) | (34,634) | (41,485) | |
Accumulated other comprehensive income (loss), net of tax | ||||
AOCI (loss), beginning of year | (130,284) | (156,059) | (121,381) | |
Investment securities, OCI (loss) | 11,718 | (9,937) | (190) | |
Pension and other postretirement plans, OCI (loss) | 1,698 | 35,712 | (8,105) | |
Reclassification adjustment | [1] | (26,383) | ||
OCI (loss) | 13,416 | 25,775 | (8,295) | |
AOCI (loss), end of year | $ (116,868) | $ (130,284) | $ (156,059) | |
[1] | A one-time adjustment was made in 2017 to reclassify stranded tax effects of the components of accumulated other comprehensive income ("AOCI") (loss) resulting from enactment of Tax Cuts and Jobs Act ("TCJA") from AOCI (loss) to retained earnings. See Note 2, "Significant Accounting Policies". |
Related Party (Details)
Related Party (Details) $ in Millions | 12 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019USD ($)InsurersAffiliates | Dec. 31, 2018USD ($)Offices | Dec. 31, 2017USD ($) | |
Related party transactions | ||||
Indemnity's management fee rate as a percent of direct and affiliated assumed written premiums of the Exchange (percentage) | 25.00% | |||
Minimum number of affiliates to be classified as an insurance holding company system | Affiliates | 2 | |||
Minimum number of insurer affiliates to be classified as an insurance holding company system | Insurers | 1 | |||
Erie Insurance Exchange (EIE) | ||||
Related party transactions | ||||
Indemnity's management fee rate as a percent of direct and affiliated assumed written premiums of the Exchange (percentage) | 25.00% | 25.00% | 25.00% | |
Lease expense on office space leased from Exchange | $ 6.1 | $ 6 | $ 5.9 | |
Operating expenses on office space leased from Exchange | 16.7 | 13.5 | 12.2 | |
Reimbursements from the Exchange for lease costs and related operating expenses | $ 4.2 | $ 3.9 | 4 | |
Number of field office facilities leased from the Exchange | Offices | 3 | |||
Erie Insurance Exchange (EIE) | Forecast [Member] | ||||
Related party transactions | ||||
Indemnity's management fee rate as a percent of direct and affiliated assumed written premiums of the Exchange (percentage) | 25.00% | |||
Erie Family Life Insurance Company (EFL) | ||||
Related party transactions | ||||
Annual rentals paid to EFL | $ 0.4 | 0.4 | ||
Note receivable from EFL | 25 | |||
Note receivable from EFL, interest income recognized by Indemnity | $ 1.6 | $ 1.7 |
Concentrations of Credit Risk (
Concentrations of Credit Risk (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Concentrations of credit risk from unsecured receivables | ||
Receivables from Erie Insurance Exchange and its affiliates | $ 468,636 | $ 449,873 |
Supplementary Data on Cash Fl_3
Supplementary Data on Cash Flows (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Cash flows from operating activities: | |||||||||||
Net income | $ 59,587 | $ 94,169 | $ 87,754 | $ 75,311 | $ 62,314 | $ 80,446 | $ 79,706 | $ 65,758 | $ 316,821 | $ 288,224 | $ 196,999 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 16,813 | 13,368 | 14,831 | ||||||||
Deferred income tax expense (benefit) | 3,349 | (1,358) | 26,912 | ||||||||
Other income tax expense | 0 | 0 | 10,095 | ||||||||
Lease amortization expense | 13,959 | 0 | 0 | ||||||||
Realized (gains) losses and impairments on investments | (5,908) | 3,591 | (1,152) | ||||||||
Equity in (earnings) losses of limited partnerships | (660) | 822 | (2,801) | ||||||||
Loss (gain) on disposal of fixed assets | 75 | (3,047) | 98 | ||||||||
Net amortization of bond premium | 1,203 | 5,601 | 7,038 | ||||||||
Decrease in deferred compensation | (1,541) | (3,886) | (2,681) | ||||||||
Limited partnership distributions | 1,931 | 7,173 | 5,128 | ||||||||
Increase in receivables from affiliates | (19,505) | (30,804) | (39,788) | ||||||||
(Increase) decrease in accrued investment income | (170) | 1,590 | (516) | ||||||||
Decrease (increase) in federal income taxes recoverable | 7,700 | 21,738 | (24,640) | ||||||||
Decrease (increase) in prepaid pension | 28,798 | (47,335) | (27,265) | ||||||||
Increase in prepaid expenses and other assets | (11,338) | (727) | (7,636) | ||||||||
(Decrease) increase in accounts payable and accrued expenses | (3,627) | 11,039 | 17,183 | ||||||||
Increase in commissions payable | 21,390 | 13,449 | 17,565 | ||||||||
(Decrease) increase in accrued agent bonuses | (7,409) | (19,066) | 7,756 | ||||||||
Increase in contract liability | 2,646 | 3,213 | 0 | ||||||||
Net cash provided by operating activities | $ 364,527 | $ 263,585 | $ 197,126 |
Quarterly Results of Operatio_3
Quarterly Results of Operations (unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Quarterly Results of Operations (unaudited) | |||||||||||
Operating revenue | $ 596,740 | $ 638,742 | $ 647,710 | $ 594,106 | $ 576,468 | $ 612,126 | $ 621,458 | $ 572,160 | $ 2,477,298 | $ 2,382,212 | $ 1,691,774 |
Operating expenses | 528,040 | 532,835 | 551,100 | 507,984 | 501,710 | 515,431 | 526,135 | 494,593 | 2,119,959 | 2,037,869 | 1,401,522 |
Investment income | 6,914 | 13,606 | 9,652 | 9,795 | 4,995 | 8,431 | 6,207 | 6,163 | 39,967 | 25,796 | 28,592 |
Interest expense and other (income), net | (36) | 11 | 224 | 402 | (2,889) | 655 | 544 | 509 | 601 | (1,181) | |
Income before income taxes | 75,650 | 119,502 | 106,038 | 95,515 | 82,642 | 104,471 | 100,986 | 83,221 | 396,705 | 371,320 | 315,695 |
Net income | $ 59,587 | $ 94,169 | $ 87,754 | $ 75,311 | 62,314 | $ 80,446 | $ 79,706 | $ 65,758 | $ 316,821 | 288,224 | $ 196,999 |
Net income per share | |||||||||||
Gain on sale of field offices | $ 3,400 | $ 3,400 | |||||||||
Class A Common Stock | |||||||||||
Net income per share | |||||||||||
Common stock - basic (in dollars per share) | $ 1.28 | $ 2.02 | $ 1.88 | $ 1.62 | $ 1.34 | $ 1.73 | $ 1.71 | $ 1.41 | $ 6.80 | $ 6.19 | $ 4.23 |
Common stock - diluted (in dollars per share) | 1.14 | 1.80 | 1.68 | 1.44 | 1.19 | 1.54 | 1.52 | 1.26 | 6.06 | 5.51 | 3.76 |
Class B Common Stock | |||||||||||
Net income per share | |||||||||||
Common stock - basic (in dollars per share) | 192 | 303 | 283 | 243 | 201 | 259 | 257 | 212 | 1,020 | 928 | 635 |
Common stock - diluted (in dollars per share) | $ 192 | $ 303 | $ 283 | $ 243 | $ 201 | $ 259 | $ 257 | $ 212 | $ 1,020 | $ 928 | $ 634 |
Uncategorized Items - erie10-k1
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. See Note 2, "Significant Accounting Policies". |