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Erie Indemnity Hikes Dividend 7% Amid Ongoing Growth

Erie Indemnity Company (ERIE) is one of the nation’s largest providers of homeowners, automobile, property, and casualty insurance with nearly six million policies in force across 12 states and the District of Columbia.

The company’s geographic footprint includes Wisconsin, Illinois, Indiana, Ohio, Kentucky, Tennessee, West Virginia, Virginia, North Carolina, Maryland, Pennsylvania, New York, and the District of Columbia. The company has a strong presence in Pennsylvania where it has its headquarters and seven field offices.

ERIE generates revenue from management fees charged to the Erie Insurance Exchange—a reciprocal exchange—for sales, underwriting, and policy issuance services. In 2019, the company generated about $357 million in operating income and $317 million in net income along with a 30.1% return on equity, returning $6.06 per share in dividends.

Limited COVID-19 Impact

Erie Indemnity’s revenue rose 2.3% to $653.5 million during the third quarter with $1.71 in GAAP earnings per share, although operating income before taxes fell 9.1% to $9.7 million amid higher costs. While these figures still beat consensus estimates, the company warned that the Exchange experienced declines in new business premium in the second quarter.

The company’s balance sheet remains strong with $216.4 million in cash and cash equivalents and $1.25 billion in shareholders’ equity.

The company increased its quarterly dividend by 7% to $1.035, which represents a 1.86% forward yield. The dividend is payable on January 20, 2021 to shareholders who are on record as of January 5, 2021.

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