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Erie Indemnity, the managing company for Erie Insurance Group’s reciprocal insurance company, reported $47 million third-quarter profit.
Profit is down 13 percent compared to one year ago. The third-quarter 2010 net income result included $7 million related to the operations sold to Erie Insurance Exchange, Erie Insurance Group’s reciprocal insurance company.
Erie Indemnity earned $62 million pre-tax from management operations, up 7 percent from last year. Its pre-tax investment operations income came in at $5 million, down from $20 million one year ago.
Erie Indemnity is a publicly traded company and part of Erie Insurance Group. It provides management services for sales, underwriting, and issuance of policies of Erie Insurance Exchange.
Additionally, Erie Insurance Group reported third-quarter net loss of $180 million, down sharply from last year when the company reported $275 million profit for the quarter. The company’s result was hurt by a big fall in investment operations and insurance loss expenses.
The 10-Q quarterly report shows Erie Insurance Group suffered a $274 million loss from investment operations, in contrast to last year when it reported $343 million profit from investment operations.
Erie Insurance Group’s property/casualty operations had a net loss of $80 million for the quarter, down from $12 million profit one year ago. Net premiums earned rose to $1.05 billion for the quarter, up from $990 million last year. But p/c insurance losses and loss expenses rose to $823 million for the quarter, up from $690 million last year.
The company saw its catastrophe losses rise. The statutory combined ratio for Erie Insurance Exchange totaled 105.4 percent, which includes 16.5 points, or $174 million, of catastrophe-related losses.
“This has been one of the most active catastrophe years of our company’s history,” Erie Insurance Group CEO Terrence Cavanaugh said during the company’s earnings call last Friday, Nov. 4.
He said the company continues to grow premium despite the tough economic environment. “Our strong customer retention, now at 90.8 percent, and improved pricing are driving the result,” CEO Cavanaugh said.
In personal lines, private passenger auto new business premiums increased slightly compared to a decrease a year earlier. The result in the current quarter was due to an increase in the average premium per policy, he added. He said new personal auto policies in force declined year-over-year. Private passenger auto renewal premium increased as well.
The company also saw premium increases in homeowners in both new and renewal business. Strong retention and increase in average premium per policy drove this result, CEO Cavanaugh said.
He said the company is generating revenue growth in the commercial business as well, driven by increases in rate, market share and a continued positive trend in workers’ comp audit premiums.