AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 4/6 · 18/10/2026
Moat69
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 3/4 · The subscriber-appointed role and the Exchange's lack of employees or officers demonstrate an embedded operational position. They support organizational switching friction without proving legal exclusivity or irreplaceability.
durability · 3/4 · Service since 1925 and continued fee-generating operations in 2026 demonstrate persistence. Undisclosed replacement provisions and dependence on one insurance group prevent an exceptional assessment.
customer dependency · 3/4 · The Exchange depends on Indemnity for contractual relationships and administrative operations. This dependency does not extend to captive policyholders: agencies also sell competing products.
erosion resilience · 2/4 · Management fee revenue and operating income continued growing into 2026, but 2025 retention and personal policy counts fell. Technological competition is a prospective risk, rather than evidence of realized disruption.
Pricing power50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 2/4 · Exchange rate increases and higher average premiums show realized pricing outcomes, indirectly benefiting Indemnity. Personal average premium rose 9.4% in 2025 while policies declined 1.5%; commercial average premium and policy counts both grew in second-quarter 2026. These results support pricing ability with mixed demand effects, rather than demonstrated unconstrained pricing power.
retention · 2/4 · Reported year-over-year retention of 88.4% demonstrates repeat demand but declined from 90.4%. Falling personal policy counts and growing commercial policy counts provide mixed supporting evidence. This measures underlying insurance demand, not a direct Indemnity customer-renewal rate.
margin resilience · 2/4 · Operating income increased in 2023–2025 and first-half 2026. However, 2025 operating income grew more slowly than management fee revenue, and second-quarter 2026 policy-service costs grew faster than associated revenues. Administrative reimbursement limits exposure to those costs, but policy-service margins remain exposed. These results do not independently establish a moat.
contractual freedom · 2/4 · A management fee-setting process and continuing fee allocations demonstrate some discretion, but fee reasonableness requirements constrain it. Underlying insurance prices face competition, regulatory limitations and rate-lock delays. The allocation changes do not establish an increase in the total management fee rate.
Predictability100
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 100.00
- Revenue growth volatility (pp)
- 4.07
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 1.96
Financial strength—
Missing required inputs: debtFcfGrade, netDebtEbitGrade, interestCoverageGrade. Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- currentRatioGrade
- 41.45
- Current ratio (x)
- 1.27
Capital allocation—
Missing required inputs: operatingReturn, dilution, sbcRevenue. Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- cashConversionGrade
- 83.82
Management50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Profits covered declared dividends while equity accumulated, and first-half 2026 weighted-average share counts were essentially stable. The $100 million charitable contribution and substantial renovation and service commitments require scrutiny; their economic returns are not supplied. Missing cash-flow evidence limits a stronger conclusion.
incentive alignment · 2/4 · An existing director stock compensation plan with actual vesting terms and open-market funding provides some equity alignment. One-year vesting offers limited long-term evidence, and executive performance metrics and beneficial ownership are absent.
execution · 2/4 · Revenue and operating income growth through 2025 and first-half 2026 demonstrate continued execution. Declining 2025 retention and personal policy counts temper that result. This assessment uses operating outcomes as indirect evidence of management execution, without attributing all premium-driven growth to management skill.
governance · 2/4 · Related-party fee reasonableness requirements provide a constraint, but the board may prioritize Exchange subscribers and Class A shares are nonvoting. These are mixed structural facts, not evidence of misconduct. Missing ownership and director relationship disclosures prevent a stronger assessment.
Evidence
BUSINESS General 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").
Item 1, Business — attorney-in-fact service since incorporation in 1925 · Filed 23/02/2026
Consistent with its legal structure as a reciprocal insurer, the Exchange does not have any employees or officers.
Notes to financial statements — Exchange has no employees or officers · Filed 30/07/2026
Therefore, it enters into contractual relationships by and through the subscribers' attorney-in-fact.
Notes to financial statements — contractual relationships through attorney-in-fact · Filed 30/07/2026
Indemnity serves as the attorney-in-fact on behalf of the subscribers at the Exchange with respect to its administrative services as enumerated in the subscriber's agreement.
Notes to financial statements — subscriber agreement and administrative role · Filed 30/07/2026
10.1 Form of Subscriber’s Agreement whereby policyholders of Erie Insurance Exchange appoint Registrant as their Attorney-in-Fact.
Exhibit index — subscriber appointment of attorney-in-fact · Filed 23/02/2026
30 Table of Contents Policy issuance and renewal services Three months ended June 30, Six months ended June 30, (dollars in thousands) 2026 2025 % Change 2026 2025 % Change (Unaudited) (Unaudited) Management fee revenue - policy issuance and renewal services $ 862,879 $ 823,853 4.7 % $ 1,649,278 $ 1,578,902 4.5 % Service agreement revenue 5,744 5,304 8.3 11,685 11,736 (0.4) 868,623 829,157 4.8 1,660,963 1,590,638 4.4 Cost of operations - policy issuance and renewal services 684,119 648,280 5.5 1,329,147 1,276,030 4.2 Operating income - policy issuance and renewal services $ 184,504 $ 180,877 2.0 % $ 331,816 $ 314,608 5.5 % Policy issuance and renewal services The management fee revenue allocated for providing policy issuance and renewal services was 24.41% of the direct and affiliated assumed premiums written by the Exchange for the three and six month periods ended June 30, 2026 and 24.37% for the same periods in 2025.
MD&A — policy issuance and renewal results and management fee allocations · Filed 30/07/2026
Administrative services Three months ended June 30, Six months ended June 30, (dollars in thousands) 2026 2025 % Change 2026 2025 % Change (Unaudited) (Unaudited) Management fee revenue - administrative services $ 19,619 $ 18,296 7.2 % $ 39,094 $ 35,941 8.8 % Administrative services reimbursement revenue 201,554 212,644 (5.2) 401,650 422,917 (5.0) Total revenue allocated to administrative services 221,173 230,940 (4.2) 440,744 458,858 (3.9) Administrative services expenses Claims handling services 175,239 186,461 (6.0) 350,263 372,460 (6.0) Investment management services 9,721 9,305 4.5 17,139 17,038 0.6 Life management services 16,594 16,878 (1.7) 34,248 33,419 2.5 Operating income - administrative services $ 19,619 $ 18,296 7.2 % $ 39,094 $ 35,941 8.8 % Administrative services The management fee revenue allocated to administrative services was 0.59% of the direct and affiliated assumed premiums written by the Exchange for the three and six month periods ended June 30, 2026 and 0.63% for the same periods in 2025.
MD&A — administrative fee allocations, reimbursements and operating income · Filed 30/07/2026
The Exchange and its wholly owned property and casualty insurance subsidiaries' year-over-year policy retention ratio continues to be high at 88.4% at December 31, 2025 and 90.4% at December 31, 2024.
MD&A — 2025 and 2024 policy retention ratios · Filed 23/02/2026
Personal lines – Total personal lines premiums written increased 8.3% to $9.2 billion in 2025, from $8.5 billion in 2024, driven by a 9.4% increase in total personal lines year-over-year average premium per policy, partially offset by a 1.5% decrease in total personal lines policies in force.
MD&A — personal lines premium growth and declining policies in force · Filed 23/02/2026
These agencies are not obligated to sell only the Exchange's insurance products, and generally also sell products of the Exchange's competitors.
Risk factors — agencies also sell competing insurance products · Filed 23/02/2026
A decline in the business of the Exchange almost certainly could have as a consequence a decline in the total premiums paid and a correspondingly adverse effect on the amount of the management fee revenue we receive.
Notes to financial statements — Exchange decline would affect management fees · Filed 30/07/2026
Innovations, including the use of artificial intelligence and machine learning to support underwriting or other decisions, by competitors or other market participants may increase the level of competition in the industry.
Competition — potential competitive impact of technological innovation · Filed 23/02/2026
In 2022 through 2024, the Exchange implemented rate increases primarily in response to inflation-driven severity trends in order to restore rate adequacy.
MD&A — 2022–2024 rate increases responding to inflation-driven severity · Filed 23/02/2026
As these cumulative rate actions have been recognized into earned premium, the Exchange implemented more moderate rate increases in 2025, reflecting alignment between pricing and underlying loss costs while continuing to monitor loss trends.
MD&A — more moderate 2025 rate increases and management's rate-adequacy explanation · Filed 23/02/2026
Commercial lines – Total commercial lines premiums written increased 8.3% to $1.0 billion in the second quarter of 2026, compared to the second quarter of 2025, driven by a 5.9% increase in total commercial lines year-over-year average premium per policy and a 2.1% increase in total commercial lines policies in force.
MD&A — second-quarter 2026 commercial premium and policy-count growth · Filed 30/07/2026
The following table presents our management operations segment revenue, significant segment expenses regularly provided to the CODM, and net income for the years ended December 31: (in thousands) 2025 2024 2023 Management fee revenue $ 3,205,864 $ 2,962,429 $ 2,505,742 Administrative services reimbursement revenue 836,639 806,336 737,139 Service agreement revenue 24,755 26,350 26,059 Total operating revenue 4,067,258 3,795,115 3,268,940 Commissions 1,777,043 1,601,401 1,348,530 Underwriting and policy processing 204,245 199,485 181,003 Information technology 239,789 215,488 216,746 Sales and advertising 66,475 66,480 58,905 Customer service 46,538 43,045 34,391 Administrative and other 179,345 186,425 171,970 Cost of operations - policy issuance and renewal services 2,513,435 2,312,324 2,011,545 Cost of operations - administrative services 836,639 806,336 737,139 Total operating expenses (1) 3,350,074 3,118,660 2,748,684 Operating income 717,184 676,455 520,256 Total investment income 84,861 69,260 28,968 Other income 8,558 11,564 12,712 Contribution to charitable foundation (100,000) — — Income tax expense 151,268 156,965 115,875 Net income $ 559,335 $ 600,314 $ 446,061 (1) See Note 8, "Fixed Assets", for management operations segment depreciation and amortization expense included primarily in "Total operating expenses", as reported on our Consolidated Statements of Operations.
Note 4, Segment Information — 2023–2025 revenue, expenses and operating income · Filed 23/02/2026
FINANCIAL STATEMENTS ERIE INDEMNITY COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (dollars in thousands, except per share data) Three months ended June 30, Six months ended June 30, 2026 2025 2026 2025 Operating revenue Management fee revenue - policy issuance and renewal services $ 862,879 $ 823,853 $ 1,649,278 $ 1,578,902 Management fee revenue - administrative services 19,619 18,296 39,094 35,941 Administrative services reimbursement revenue 201,554 212,644 401,650 422,917 Service agreement revenue 5,744 5,304 11,685 11,736 Total operating revenue 1,089,796 1,060,097 2,101,707 2,049,496 Operating expenses Cost of operations - policy issuance and renewal services 684,119 648,280 1,329,147 1,276,030 Cost of operations - administrative services 201,554 212,644 401,650 422,917 Total operating expenses 885,673 860,924 1,730,797 1,698,947 Operating income 204,123 199,173 370,910 350,549 Investment income Net investment income 22,587 20,030 46,147 39,978 Net realized and unrealized investment gains (losses) 557 479 (208) 981 Net impairment losses recognized in earnings (591) (909) (1,267) (1,823) Total investment income 22,553 19,600 44,672 39,136 Other income 1,401 1,974 2,821 5,808 Income before income taxes 228,077 220,747 418,403 395,493 Income tax expense 47,783 46,062 87,635 82,391 Net income $ 180,294 $ 174,685 $ 330,768 $ 313,102 Net income per share Class A common stock – basic $ 3.87 $ 3.75 $ 7.10 $ 6.72 Class A common stock – diluted $ 3.45 $ 3.34 $ 6.32 $ 5.99 Class B common stock – basic and diluted $ 581 $ 563 $ 1,065 $ 1,008 Weighted average shares outstanding – Basic Class A common stock 46,189,033 46,189,063 46,188,942 46,188,984 Class B common stock 2,542 2,542 2,542 2,542 Weighted average shares outstanding – Diluted Class A common stock 52,298,697 52,304,407 52,299,440 52,304,397 Class B common stock 2,542 2,542 2,542 2,542 Dividends declared per share Class A common stock $ 1.4625 $ 1.365 $ 2.925 $ 2.73 Class B common stock $ 219.375 $ 204.75 $ 438.75 $ 409.50 See accompanying notes to Consolidated Financial Statements.
Consolidated statements of operations — first-half 2026 results, dividends and share counts · Filed 30/07/2026
The process of setting the management fee rate includes, but is not limited to, the evaluation of current year operating results compared to both prior year and industry estimated results for both Indemnity and the Exchange, and consideration of several factors for both entities including, but not limited to: their relative financial strength and capital position; projected revenue, expense and earnings for the subsequent year; future capital needs; as well as competitive position.
Business — factors considered in setting the management fee rate · Filed 23/02/2026
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.
Related-party agreements — fair and reasonable transaction and fee requirements · Filed 23/02/2026
Market competition bears directly on the price charged for insurance products and services subject to regulatory limitations.
Competition — insurance pricing affected by competition and regulation · Filed 23/02/2026
Furthermore, the Exchange writes certain personal auto policies with a rate locking feature, which generally extends the amount of time it takes for premium rate actions to be recognized related to these policies.
MD&A — personal auto rate-lock feature delays pricing changes · Filed 23/02/2026
42 Table of Contents ERIE INDEMNITY COMPANY CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY Years ended December 31, 2025, 2024 and 2023 (dollars in thousands, except per share data) Class A common stock Class B common stock Additional paid-in-capital Accumulated other comprehensive loss Retained earnings Treasury stock Deferred compensation Total shareholders' equity Balance, December 31, 2022 $ 1,992 $ 178 $ 16,481 $ (7,414) $ 2,583,261 $ (1,168,949) $ 22,859 $ 1,448,408 Net income 446,061 446,061 Other comprehensive loss (5,986) (5,986) Dividends declared: Class A $4.845 per share (223,786) (223,786) Class B $726.75 per share (1,847) (1,847) Net purchase of treasury stock (1) (15) 0 (15) Deferred compensation (2,228) 2,228 0 Rabbi trust distribution (2) 2,012 (2,012) 0 Balance, December 31, 2023 $ 1,992 $ 178 $ 16,466 $ (13,400) $ 2,803,689 $ (1,169,165) $ 23,075 $ 1,662,835 Net income 600,314 600,314 Other comprehensive loss (34,191) (34,191) Dividends declared: Class A $5.19 per share (239,721) (239,721) Class B $778.50 per share (1,979) (1,979) Net purchase of treasury stock (1) 0 0 0 Deferred compensation (2,156) 2,156 0 Rabbi trust distribution (2) 2,247 (2,247) 0 Balance, December 31, 2024 $ 1,992 $ 178 $ 16,466 $ (47,591) $ 3,162,303 $ (1,169,074) $ 22,984 $ 1,987,258 Net income 559,335 559,335 Other comprehensive loss (4,430) (4,430) Dividends declared: Class A $5.5575 per share (256,696) (256,696) Class B $833.625 per share (2,119) (2,119) Net purchase of treasury stock (1) 26 26 Deferred compensation (2,514) 2,514 0 Rabbi trust distribution (2) 574 (574) 0 Balance, December 31, 2025 $ 1,992 $ 178 $ 16,492 $ (52,021) $ 3,462,823 $ (1,171,014) $ 24,924 $ 2,283,374 (1) Net purchases of treasury stock in 2023, 2024 and 2025 include the purchase of our Class A common stock in the open market that were subsequently distributed to satisfy stock-based compensation awards.
Consolidated statements of shareholders' equity — earnings, dividends and equity accumulation · Filed 23/02/2026
Net income in 2025 was reduced by $80.6 million, reflecting the after-tax impact of a $100 million charitable contribution made to the Erie Insurance Foundation.
MD&A — charitable contribution and after-tax earnings impact · Filed 23/02/2026
Remaining commitments related to the underlying contracts total $77.5 million at December 31, 2025, of which the majority is due in the next 12 months.
Financial condition — remaining headquarters renovation commitments · Filed 23/02/2026
•Other commitments – We have commitments for approximately $473 million which include agreements for various services, including information technology, support and maintenance obligations, operating leases for equipment, vehicles, and real estate, and other obligations in the ordinary course of business.
Financial condition — service, technology, lease and other commitments · Filed 23/02/2026
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 payment of a portion of the directors' annual compensation in shares of our Class A common stock.
Note 11 — adopted outside-director deferred stock compensation plan · Filed 23/02/2026
Each director vests in the grant 25% every three months over the course of a year.
Note 11 — quarterly vesting over one year · Filed 23/02/2026
We purchase shares of our Class A common stock in the open market to satisfy these awards, which are then held in the rabbi trust.
Note 11 — open-market purchases to satisfy director stock awards · Filed 23/02/2026
Thus, our Board of Directors may be required to make decisions or take actions that may benefit subscribers at the Exchange and the overall health of the Exchange.
Related-party board oversight — decisions may benefit Exchange subscribers · Filed 23/02/2026
The following table provides information regarding our Class A nonvoting common stock share repurchases during the quarter ending June 30, 2026: (dollars in thousands, except per share data) Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced program Dollar value of shares that may yet be purchased under the program April 1-30, 2026 (1) 1,290 $ 233.19 — $ 17,754 May 1-31, 2026 — — — 17,754 June 1-30, 2026 (2) 1,908 228.65 — 17,754 Total 3,198 230.48 — (1)Represents shares purchased on the open market to fund the rabbi trust for both the outside director deferred stock compensation plan (1,076 shares at an average price of $233.19 per share) and the incentive compensation deferral plan (214 shares at an average price of $233.19 per share).
Issuer purchases — Class A nonvoting stock and compensation-related purchases · Filed 30/07/2026
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information with respect to security ownership of certain beneficial owners and management and securities authorized for issuance under equity compensation plans, is incorporated by reference to the information statement on Schedule 14C to be filed with the Securities and Exchange Commission no later than 120 days after December 31, 2025.
Item 12 — ownership information incorporated from a subsequent information statement · Filed 23/02/2026
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE Information with respect to certain relationships with our outside directors is incorporated by reference to the information statement on Schedule 14C to be filed with the Securities and Exchange Commission no later than 120 days after December 31, 2025.
Item 13 — director relationship information incorporated from a subsequent information statement · Filed 23/02/2026
