10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from___to___

Commission file number 0-24000

ERIE INDEMNITY COMPANY

(Exact name of registrant as specified in its charter)

Pennsylvania	25-0466020
(State or other jurisdiction of	(IRS Employer
incorporation or organization)	Identification No.)

100 Erie Insurance Place,	Erie,	Pennsylvania	16530
(Address of principal executive offices)			(Zip Code)

814	870-2000
(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Class A common stock,	stated value $0.0292 per share	ERIE	NASDAQ Stock Market, LLC
(Title of each class)		(Trading Symbol)	(Name of each exchange on which registered)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.  See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	☒	Accelerated filer	☐	Non-accelerated filer	☐
Smaller reporting company	☐	Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ 

The number of shares outstanding of the registrant’s Class A Common Stock as of the latest practicable date was 46,189,068 at July 23, 2021.

The number of shares outstanding of the registrant’s Class B Common Stock as of the latest practicable date was 2,542 at July 23, 2021.

PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Statements of Operations – Three and six months ended June 30, 2021 and 2020
	Statements of Comprehensive Income – Three and six months ended June 30, 2021 and 2020
	Statements of Financial Position – June 30, 2021 and December 31, 2020
	Statements of Shareholders' Equity – Three and six months ended June 30, 2021 and 2020
	Statements of Cash Flows – Six months ended June 30, 2021 and 2020
	Notes to Financial Statements – June 30, 2021
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3.	Quantitative and Qualitative Disclosures About Market Risk
Item 4.	Controls and Procedures
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings
Item 1A.	Risk Factors
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds
Item 6.	Exhibits
	SIGNATURES

2

PART I. FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

ERIE INDEMNITY COMPANY

STATEMENTS OF OPERATIONS (UNAUDITED)

(dollars in thousands, except per share data)

	Three months ended				Six months ended
	June 30,				June 30,
	2021		2020		2021		2020
Operating revenue
Management fee revenue - policy issuance and renewal services	$	502,271	$	483,795	$	957,989	$	927,545
Management fee revenue - administrative services	14,667		14,813		29,514		29,584
Administrative services reimbursement revenue	157,190		151,965		310,723		303,519
Service agreement revenue	5,902		6,446		11,981		13,108
Total operating revenue	680,030		657,019		1,310,207		1,273,756
Operating expenses
Cost of operations - policy issuance and renewal services	437,775		413,865		838,324		793,357
Cost of operations - administrative services	157,190		151,965		310,723		303,519
Total operating expenses	594,965		565,830		1,149,047		1,096,876
Operating income	85,065		91,189		161,160		176,880
Investment income
Net investment income	13,650		5,044		30,747		9,708
Net realized investment gains (losses)	2,769		6,526		3,573		(4,280)
Net impairment (losses) recoveries recognized in earnings	(1)		(17)		86		(3,070)
Total investment income	16,418		11,553		34,406		2,358
Interest expense, net	1,039		2		2,048		5
Other expense	548		258		1,067		624
Income before income taxes	99,896		102,482		192,451		178,609
Income tax expense	20,867		20,505		39,856		37,306
Net income	$	79,029	$	81,977	$	152,595	$	141,303
Net income per share
Class A common stock – basic	$	1.70	$	1.76	$	3.28	$	3.03
Class A common stock – diluted	$	1.51	$	1.57	$	2.92	$	2.70
Class B common stock – basic and diluted	$	255	$	264	$	491	$	455
Weighted average shares outstanding – Basic
Class A common stock	46,188,289		46,187,808		46,188,573		46,188,299
Class B common stock	2,542		2,542		2,542		2,542
Weighted average shares outstanding – Diluted
Class A common stock	52,302,370		52,302,981		52,309,163		52,313,667
Class B common stock	2,542		2,542		2,542		2,542
Dividends declared per share
Class A common stock	$	1.035	$	0.965	$	2.070	$	1.930
Class B common stock	$	155.25	$	144.75	$	310.50	$	289.50

See accompanying notes to Financial Statements. See Note 11, "Accumulated Other Comprehensive Income (Loss)", for amounts reclassified out of accumulated other comprehensive income (loss) into the Statements of Operations. 

3

ERIE INDEMNITY COMPANY

STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(in thousands)

	Three months ended				Six months ended
	June 30,				June 30,
	2021		2020		2021		2020
Net income	$	79,029	$	81,977	$	152,595	$	141,303
Other comprehensive income (loss), net of tax
Change in unrealized holding gains (losses) on available-for-sale securities	2,676		37,451		(6,076)		5,215
Amortization of prior service costs and net actuarial loss on pension and other postretirement plans	3,463		2,660		6,926		5,320
Total other comprehensive income, net of tax	6,139		40,111		850		10,535
Comprehensive income	$	85,168	$	122,088	$	153,445	$	151,838

See accompanying notes to Financial Statements. See Note 11, "Accumulated Other Comprehensive Income (Loss)", for amounts reclassified out of accumulated other comprehensive income (loss) into the Statements of Operations.

4

ERIE INDEMNITY COMPANY

STATEMENTS OF FINANCIAL POSITION

(dollars in thousands, except per share data)

	June 30,		December 31,
	2021		2020
Assets	(Unaudited)
Current assets:
Cash and cash equivalents	$	156,038	$	161,240
Available-for-sale securities	20,856		17,697
Equity securities	207		19
Receivables from Erie Insurance Exchange and affiliates, net	504,013		494,637
Prepaid expenses and other current assets	59,574		52,561
Accrued investment income	6,121		6,146
Total current assets	746,809		732,300
Available-for-sale securities, net	915,942		910,539
Equity securities	93,798		94,071
Fixed assets, net	280,402		265,341
Agent loans, net	60,070		62,449
Deferred income taxes, net	17,971		12,341
Other assets	48,652		40,081
Total assets	$	2,163,644	$	2,117,122
Liabilities and shareholders' equity
Current liabilities:
Commissions payable	$	284,234	$	262,338
Agent bonuses	62,694		110,158
Accounts payable and accrued liabilities	150,346		150,706
Dividends payable	48,200		48,200
Contract liability	35,742		36,917
Deferred executive compensation	8,581		17,319
Current portion of long-term borrowings	2,064		2,031
Total current liabilities	591,861		627,669
Defined benefit pension plans	184,111		164,346
Long-term borrowings	92,795		93,833
Contract liability	18,135		18,878
Deferred executive compensation	13,773		14,904
Other long-term liabilities	17,867		9,444
Total liabilities	918,542		929,074
Shareholders’ equity
Class A common stock, stated value $0.0292 per share; 74,996,930 shares authorized; 68,299,200 shares issued; 46,189,068 shares outstanding	1,992		1,992
Class B common stock, convertible at a rate of 2,400 Class A shares for one Class B share, stated value $70 per share; 3,070 shares authorized; 2,542 shares issued and outstanding	178		178
Additional paid-in-capital	16,496		16,487
Accumulated other comprehensive loss	(77,293)		(78,143)
Retained earnings	2,449,819		2,393,624
Total contributed capital and retained earnings	2,391,192		2,334,138
Treasury stock, at cost; 22,110,132 shares held	(1,167,211)		(1,163,670)
Deferred compensation	21,121		17,580
Total shareholders’ equity	1,245,102		1,188,048
Total liabilities and shareholders’ equity	$	2,163,644	$	2,117,122

See accompanying notes to Financial Statements. 

5

ERIE INDEMNITY COMPANY

STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)

Three and six months ended June 30, 2021 and 2020

(dollars in thousands, except per share data)

	Class A common stock		Class B common stock		Additional paid-in-capital		Accumulated other comprehensive (loss) income		Retained earnings		Treasury stock		Deferred compensation		Total shareholders' equity
Balance, December 31, 2020	$	1,992	$	178	$	16,487	$	(78,143)	$	2,393,624	$	(1,163,670)	$	17,580	$	1,188,048
Net income									73,566						73,566
Other comprehensive loss							(5,289)								(5,289)
Dividends declared:
Class A $1.035 per share									(47,806)						(47,806)
Class B $155.25 per share									(395)						(395)
Net purchase of treasury stock (1)					9						0				9
Deferred compensation											(846)		846		0
Rabbi trust distribution (2)											876		(876)		0
Balance, March 31, 2021	$	1,992	$	178	$	16,496	$	(83,432)	$	2,418,989	$	(1,163,640)	$	17,550	$	1,208,133
Net income									79,029						79,029
Other comprehensive income							6,139								6,139
Dividends declared:
Class A $1.035 per share									(47,805)						(47,805)
Class B $155.25 per share									(394)						(394)
Net purchase of treasury stock (1)					0						0				0
Deferred compensation											(3,668)		3,668		0
Rabbi trust distribution (2)											97		(97)		0
Balance, June 30, 2021	$	1,992	$	178	$	16,496	$	(77,293)	$	2,449,819	$	(1,167,211)	$	21,121	$	1,245,102

	Class A common stock		Class B common stock		Additional paid-in-capital		Accumulated other comprehensive (loss) income		Retained earnings		Treasury stock		Deferred compensation		Total shareholders' equity
Balance, December 31, 2019	$	1,992	$	178	$	16,483	$	(116,868)	$	2,377,558	$	(1,158,910)	$	12,820	$	1,133,253
Cumulative effect adjustment (3)									(1,075)						(1,075)
Net income									59,326						59,326
Other comprehensive loss							(29,576)								(29,576)
Dividends declared:
Class A $0.965 per share									(44,572)						(44,572)
Class B $144.75 per share									(368)						(368)
Net purchase of treasury stock (1)					4						0				4
Deferred compensation											(772)		772		0
Balance, March 31, 2020	$	1,992	$	178	$	16,487	$	(146,444)	$	2,390,869	$	(1,159,682)	$	13,592	$	1,116,992
Net income									81,977						81,977
Other comprehensive income							40,111								40,111
Dividends declared:
Class A $0.965 per share									(44,573)						(44,573)
Class B $144.75 per share									(368)						(368)
Net purchase of treasury stock (1)					0						0				0
Deferred compensation											(3,568)		3,568		0
Rabbi trust distribution (2)											704		(704)		0
Balance, June 30, 2020	$	1,992	$	178	$	16,487	$	(106,333)	$	2,427,905	$	(1,162,546)	$	16,456	$	1,194,139

(1)Net purchases of treasury stock in 2021 and 2020 include the repurchase of our Class A common stock in the open market that were subsequently distributed to satisfy stock based compensation awards.

(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 2021 and to a retired director in 2020.

(3)The cumulative effect adjustment is related to the implementation of credit loss allowance accounting guidance effective January 1, 2020.

See accompanying notes to Financial Statements.

6

ERIE INDEMNITY COMPANY

STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

	Six months ended
	June 30,
	2021		2020
Cash flows from operating activities
Management fee received	$	985,317	$	937,962
Administrative services reimbursements received	301,509		279,689
Service agreement fee received	11,981		13,108
Net investment income received	18,735		18,749
Commissions paid to agents	(464,550)		(448,622)
Agents bonuses paid	(115,678)		(100,185)
Salaries and wages paid	(113,452)		(100,360)
Employee benefits paid	(16,567)		(15,962)
General operating expenses paid	(126,373)		(133,422)
Administrative services expenses paid	(310,617)		(298,046)
Income taxes paid	(40,503)		(25,625)
Interest paid	(2,082)		(4)
Net cash provided by operating activities	127,720		127,282
Cash flows from investing activities
Purchase of investments:
Available-for-sale securities	(168,671)		(198,192)
Equity securities	(28,408)		(44,407)
Other investments	(605)		(622)
Proceeds from investments:
Available-for-sale securities sales	59,203		68,977
Available-for-sale securities maturities/calls	99,788		58,722
Equity securities	29,856		35,684
Other investments	869		577
Purchase of fixed assets	(28,197)		(37,426)
Loans to agents	(2,930)		(2,313)
Collections on agent loans	3,584		3,577
Net cash used in investing activities	(35,511)		(115,423)
Cash flows from financing activities
Dividends paid to shareholders	(96,400)		(89,881)
Net payments on long-term borrowings	(1,011)		(979)
Net cash used in financing activities	(97,411)		(90,860)
Net decrease in cash and cash equivalents	(5,202)		(79,001)
Cash and cash equivalents, beginning of period	161,240		336,739
Cash and cash equivalents, end of period	$	156,038	$	257,738
Supplemental disclosure of noncash transactions
Transfer of investments from limited partnerships to equity securities	$	0	$	4,188
Operating lease assets obtained in exchange for new operating lease liabilities	$	977	$	3,440
Liability incurred to purchase fixed assets	$	13,024	$	814

See accompanying notes to Financial Statements.

7

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Note 1.  Nature of Operations

Erie Indemnity Company ("Indemnity", "we", "us", "our") is a publicly held Pennsylvania business corporation that has since its incorporation in 1925 served as the attorney-in-fact for the subscribers (policyholders) at the Erie Insurance Exchange ("Exchange").  The Exchange, which also commenced business in 1925, is a Pennsylvania-domiciled reciprocal insurer that writes property and casualty insurance.

Our primary function as attorney-in-fact is to perform policy issuance and renewal services on behalf of the subscribers at the Exchange. We also act as attorney-in-fact on behalf of the Exchange with respect to all claims handling and investment management services, as well as the service provider for all claims handling, life insurance, and investment management services for its insurance subsidiaries, collectively referred to as "administrative services". Acting as attorney-in-fact in these two capacities is done in accordance with a subscriber's agreement (a limited power of attorney) executed individually by each subscriber (policyholder), which appoints us as their common attorney-in-fact to transact certain business on their behalf.  Pursuant to the subscriber's agreement for acting as attorney-in-fact in these two capacities, we earn a management fee calculated as a percentage of the direct and affiliated assumed premiums written by the Exchange.

The policy issuance and renewal services we provide to the Exchange are related to the sales, underwriting and issuance of policies. The sales related services we provide include agent compensation and certain sales and advertising support services. Agent compensation includes scheduled commissions to agents based upon premiums written as well as additional commissions and bonuses to agents, which are earned by achieving targeted measures. The underwriting services we provide include underwriting and policy processing. The remaining services we provide include customer service and administrative support. We also provide information technology services that support all the functions listed above. Included in these expenses are allocations of costs for departments that support these policy issuance and renewal functions.

By virtue of its legal structure as a reciprocal insurer, the Exchange does not have any employees or officers. Therefore, it enters into contractual relationships by and through an attorney-in-fact. Indemnity serves as the attorney-in-fact on behalf of the Exchange with respect to its administrative services. The Exchange's insurance subsidiaries also utilize Indemnity for these services in accordance with the service agreements between each of the subsidiaries and Indemnity. Claims handling services include costs incurred in the claims process, including the adjustment, investigation, defense, recording and payment functions. Life insurance management services include costs incurred in the management and processing of life insurance business. Investment management services are related to investment trading activity, accounting and all other functions attributable to the investment of funds. Included in these expenses are allocations of costs for departments that support these administrative functions. The amounts incurred for these services are reimbursed to Indemnity at cost in accordance with the subscriber's agreement and the service agreements. State insurance regulations require that intercompany service agreements and any material amendments be approved in advance by the state insurance department.

Our results of operations are tied to the growth and financial condition of the Exchange. If any events occurred that impaired the Exchange’s ability to grow or sustain its financial condition, including but not limited to reduced financial strength ratings, disruption in the independent agency relationships, significant catastrophe losses, or products not meeting customer demands, the Exchange could find it more difficult to retain its existing business and attract new business. A decline in the business of the Exchange almost certainly would have as a consequence a decline in the total premiums paid and a correspondingly adverse effect on the amount of the management fees we receive. We also have an exposure to a concentration of credit risk related to the unsecured receivables due from the Exchange for its management fee and cost reimbursements. See Note 12, "Concentrations of Credit Risk".

Coronavirus ("COVID-19") pandemic

In March 2020, the outbreak of the coronavirus ("COVID-19") was declared a global pandemic. The uncertainty resulting from COVID-19 continues to evolve and the pandemic’s ultimate impact and duration remain uncertain at this time. We are unable to predict the duration or extent of the business disruption or the financial impact given the ongoing development of the pandemic and its impacts on the economy and financial markets.

8

Note 2.  Significant Accounting Policies

Basis of presentation

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. For further information, refer to the financial statements and footnotes included in our Form 10-K for the year ended December 31, 2020 as filed with the Securities and Exchange Commission on February 25, 2021.

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.

Reclassifications

Certain amounts previously reported have been reclassified for comparative purposes to conform to the current period’s presentation. "Federal income taxes recoverable" is now included in "Prepaid expenses and other current assets" in the Statements of Financial Position. “Equity in earnings (losses) of limited partnerships” is now included in “Net investment income” in the Statements of Operations. The reclassifications had no effect on previously reported net income.

9

Note 3.  Revenue

The majority of our revenue is derived from the subscriber’s agreement between us and the subscribers (policyholders) at the Exchange. Pursuant to the subscriber’s agreement, we earn a management fee calculated as a percentage, not to exceed 25%, of all direct and affiliated assumed written premiums of the Exchange. We allocate a portion of our management fee revenue, currently 25% of the direct and affiliated assumed written premiums of the Exchange, between the two performance obligations we have under the subscriber’s agreement. The first performance obligation is to provide policy issuance and renewal services to the subscribers (policyholders) at the Exchange, and the second is to act as attorney-in-fact on behalf of the Exchange, as well as the service provider for its insurance subsidiaries, with respect to all administrative services.

The transaction price, including management fee revenue and administrative service reimbursement revenue, includes variable consideration and is allocated based on the estimated standalone selling prices developed using industry information and other available information for similar services. A constraining estimate of variable consideration exists related to the potential for management fees to be returned if a policy were to be cancelled mid-term. Management fees are returned to the Exchange when policyholders cancel their insurance coverage mid-term and premiums are refunded to them. The constraining estimate is determined using the expected value method, based on both historical and current information. The estimated transaction price, as reduced by the constraint, reflects consideration expected for performance of our services. We update the transaction price and the related allocation at least annually based upon the most recent information available or more frequently if there have been significant changes in any components considered in the transaction price.

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). 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 a four-year period representing the time over which these services are provided. The portion of revenue not yet earned is recorded as a contract liability in the Statements of Financial Position. During the three and six months ending June 30, 2021, we recognized revenue of $10.6 million and $23.9 million, respectively, that was included in the contract liabilities balance as of December 31, 2020. During the three and six months ending June 30, 2020, we recognized revenue of $10.3 million and $23.4 million, respectively, that was included in the contract liabilities balance as of December 31, 2019. The administrative services expenses we incur and the related reimbursements we receive are recorded gross in the Statements of Operations.

Indemnity records a receivable from the Exchange for management fee revenue when the premium is written or assumed by the Exchange. Indemnity collects the management fee from the Exchange when the Exchange collects the premiums from the subscribers (policyholders). As the Exchange issues policies with annual terms only, cash collections generally occur within one year.

The following table disaggregates revenue by our two performance obligations:

	Three months ended June 30,				Six months ended June 30,
(in thousands)	2021		2020		2021		2020
Management fee revenue - policy issuance and renewal services	$	502,271	$	483,795	$	957,989	$	927,545
Management fee revenue - administrative services	14,667		14,813		29,514		29,584
Administrative services reimbursement revenue	157,190		151,965		310,723		303,519
Total administrative services	$	171,857	$	166,778	$	340,237	$	333,103

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Note 4.  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 10, "Capital Stock".

Class A diluted earnings per share are calculated under the if-converted method, which reflects the conversion of Class B shares to Class A shares. Diluted earnings per share calculations include the dilutive effect of assumed issuance of stock-based awards under compensation plans that have the option to be paid in stock using the treasury stock method.

A reconciliation of the numerators and denominators used in the basic and diluted per-share computations is presented as follows for each class of common stock: 

	Three months ended June 30,
	2021					2020
(dollars in thousands, except per share data)	Allocated net income (numerator)		Weighted shares (denominator)	Per-share amount		Allocated net income (numerator)		Weighted shares (denominator)	Per-share amount
Class A – Basic EPS:
Income available to Class A stockholders	$	78,382	46,188,289	$	1.70	$	81,306	46,187,808	$	1.76
Dilutive effect of stock-based awards	0		13,281	—		0		14,373	—
Assumed conversion of Class B shares	647		6,100,800	—		671		6,100,800	—
Class A – Diluted EPS:
Income available to Class A stockholders on Class A equivalent shares	$	79,029	52,302,370	$	1.51	$	81,977	52,302,981	$	1.57
Class B – Basic and diluted EPS:
Income available to Class B stockholders	$	647	2,542	$	255	$	671	2,542	$	264
	Six months ended June 30,
	2021					2020
(dollars in thousands, except per share data)	Allocated net income (numerator)		Weighted shares (denominator)	Per-share amount		Allocated net income (numerator)		Weighted shares (denominator)	Per-share amount
Class A – Basic EPS:
Income available to Class A stockholders	$	151,346	46,188,573	$	3.28	$	140,146	46,188,299	$	3.03
Dilutive effect of stock-based awards	0		19,790	—		0		24,568	—
Assumed conversion of Class B shares	1,249		6,100,800	—		1,157		6,100,800	—
Class A – Diluted EPS:
Income available to Class A stockholders on Class A equivalent shares	$	152,595	52,309,163	$	2.92	$	141,303	52,313,667	$	2.70
Class B – Basic and diluted EPS:
Income available to Class B stockholders	$	1,249	2,542	$	491	$	1,157	2,542	$	455

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Note 5. Fair Value

Financial instruments carried at fair value

Our available-for-sale 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 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 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. As of June 30, 2021, nearly all of our available-for-sale and equity securities were priced using a third party pricing service.

12

The following tables present our fair value measurements on a recurring basis by asset class and level of input as of: 

	June 30, 2021
(in thousands)	Total		Level 1		Level 2		Level 3
Available-for-sale securities:
Corporate debt securities	$	564,689	$	2,461	$	556,150	$	6,078
Collateralized debt obligations	115,442		0		114,692		750
Commercial mortgage-backed securities	112,292		0		95,159		17,133
Residential mortgage-backed securities	93,652		0		90,611		3,041
Other debt securities	29,332		0		26,788		2,544
U.S. Treasury	21,391		0		21,391		0
Total available-for-sale securities	936,798		2,461		904,791		29,546
Equity securities - nonredeemable preferred and common stock:
Financial services sector	75,212		20,628		53,584		1,000
Utilities sector	10,470		3,594		6,876		0
Energy sector	2,952		957		1,995		0
Consumer sector	2,295		607		1,688		0
Communications sector	2,161		1,123		1,038		0
Industrial sector	915		915		0		0
Total equity securities	94,005		27,824		65,181		1,000
Total	$	1,030,803	$	30,285	$	969,972	$	30,546

	December 31, 2020
(in thousands)	Total		Level 1		Level 2		Level 3
Available-for-sale securities:
Corporate debt securities	$	566,425	$	1,281	$	559,319	$	5,825
Collateralized debt obligations	110,447		0		110,447		0
Commercial mortgage-backed securities	120,201		0		100,739		19,462
Residential mortgage-backed securities	112,179		0		111,242		937
Other debt securities	18,984		0		18,984		0
Total available-for-sale securities	928,236		1,281		900,731		26,224
Equity securities - nonredeemable preferred and common stock:
Financial services sector	76,575		24,981		51,594		0
Utilities sector	8,742		3,957		4,785		0
Energy sector	2,206		676		1,530		0
Consumer sector	3,068		576		2,492		0
Communications sector	2,699		2,699		0		0
Industrial sector	800		800		0		0
Total equity securities	94,090		33,689		60,401		0
Total	$	1,022,326	$	34,970	$	961,132	$	26,224

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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 – 2021 Quarterly Change:

(in thousands)	Beginning balance at March 31, 2021		Included in earnings(1)		Included in other comprehensive income		Purchases		Sales		Transfers into Level 3(2)		Transfers out of Level 3(2)		Ending balance at June 30, 2021
Available-for-sale securities:
Corporate debt securities	$	5,460	$	14	$	37	$	1,476	$	(303)	$	1,347	$	(1,953)	$	6,078
Collateralized debt obligations	0		0		0		750		0		0		0		750
Commercial mortgage-backed securities	16,241		(102)		(10)		579		(961)		2,624		(1,238)		17,133
Residential mortgage-backed securities	473		(3)		1		0		(224)		3,030		(236)		3,041
Other debt securities	521		0		(4)		2,060		(33)		0		0		2,544
Total available-for-sale securities	22,695		(91)		24		4,865		(1,521)		7,001		(3,427)		29,546
Nonredeemable preferred stock	1,090		5		0		1,000		0		0		(1,095)		1,000
Total Level 3 securities	$	23,785	$	(86)	$	24	$	5,865	$	(1,521)	$	7,001	$	(4,522)	$	30,546

Level 3 Assets – 2021 Year-to-Date Change:

(in thousands)	Beginning balance at December 31, 2020		Included in earnings(1)		Included in other comprehensive income		Purchases		Sales		Transfers into Level 3(2)		Transfers out of Level 3(2)		Ending balance at June 30, 2021
Available-for-sale securities:
Corporate debt securities	$	5,825	$	20	$	79	$	2,258	$	(673)	$	2,549	$	(3,980)	$	6,078
Collateralized debt obligations	0		0		0		750		0		0		0		750
Commercial mortgage-backed securities	19,462		(197)		(447)		2,844		(966)		3,854		(7,417)		17,133
Residential mortgage-backed securities	937		(6)		0		0		(476)		3,030		(444)		3,041
Other debt securities	0		0		(2)		2,588		(42)		0		0		2,544
Total available-for-sale securities	26,224		(183)		(370)		8,440		(2,157)		9,433		(11,841)		29,546
Nonredeemable preferred stock	0		5		0		1,000		0		1,090		(1,095)		1,000
Total Level 3 securities	$	26,224	$	(178)	$	(370)	$	9,440	$	(2,157)	$	10,523	$	(12,936)	$	30,546

Level 3 Assets – 2020 Quarterly Change:

(in thousands)	Beginning balance at March 31, 2020		Included in earnings(1)		Included in other comprehensive income		Purchases		Sales		Transfers into Level 3(2)		Transfers out of Level 3(2)		Ending balance at June 30, 2020
Available-for-sale securities:
Corporate debt securities	$	12,056	$	(2)	$	867	$	783	$	(115)	$	1,142	$	(9,815)	$	4,916
Collateralized debt obligations	0		0		12		247		0		0		0		259
Commercial mortgage-backed securities	7,383		(34)		268		6,891		(201)		4,334		(575)		18,066
Total available-for-sale securities	19,439		(36)		1,147		7,921		(316)		5,476		(10,390)		23,241
Nonredeemable preferred stock	0		(25)		0		820		0		0		0		795
Total Level 3 securities	$	19,439	$	(61)	$	1,147	$	8,741	$	(316)	$	5,476	$	(10,390)	$	24,036

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Level 3 Assets – 2020 Year-to-Date Change:

(in thousands)	Beginning balance at December 31, 2019		Included in earnings(1)		Included in other comprehensive income		Purchases		Sales		Transfers into Level 3(2)		Transfers out of Level 3(2)		Ending balance at June 30, 2020
Available-for-sale securities:
Corporate debt securities	$	8,324	$	5	$	(511)	$	2,501	$	(542)	$	8,037	$	(12,898)	$	4,916
Collateralized debt obligations	0		0		12		247		0		0		0		259
Commercial mortgage-backed securities	3,321		(42)		120		7,203		(287)		8,891		(1,140)		18,066
Total available-for-sale securities	11,645		(37)		(379)		9,951		(829)		16,928		(14,038)		23,241
Nonredeemable preferred stock	0		(25)		0		820		0		0		0		795
Total Level 3 securities	$	11,645	$	(62)	$	(379)	$	10,771	$	(829)	$	16,928	$	(14,038)	$	24,036

(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.

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:

	June 30, 2021				December 31, 2020
(in thousands)	Carrying value		Fair value		Carrying value		Fair value
Agent loans (1)	$	68,558	$	72,593	$	69,212	$	73,854
Long-term borrowings (2)	95,103		103,036		96,113		113,054

(1)The discount rate used to calculate fair value at June 30, 2021 is reflective of a decrease in the BB+ financial yield curve.

(2)The discount rate used to calculate fair value at June 30, 2021 is reflective of an increase in U.S. Treasury bond yields.

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Note 6.  Investments

Available-for-sale securities

See Note 5, "Fair Value" for additional fair value disclosures. The following tables summarize the cost and fair value, net of credit loss allowance, of our available-for-sale securities as of:

	June 30, 2021
(in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Corporate debt securities	$	548,975	$	16,666	$	952	$	564,689
Collateralized debt obligations	115,087		574		219		115,442
Commercial mortgage-backed securities	109,277		3,378		363		112,292
Residential mortgage-backed securities	92,142		1,811		301		93,652
Other debt securities	28,905		462		35		29,332
U.S. Treasury	20,648		743		0		21,391
Total available-for-sale securities, net	$	915,034	$	23,634	$	1,870	$	936,798

	December 31, 2020
(in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Corporate debt securities	$	546,096	$	21,843	$	1,514	$	566,425
Collateralized debt obligations	110,121		657		331		110,447
Commercial mortgage-backed securities	115,346		5,090		235		120,201
Residential mortgage-backed securities	108,840		3,373		34		112,179
Other debt securities	18,387		606		9		18,984
Total available-for-sale securities, net	$	898,790	$	31,569	$	2,123	$	928,236

The amortized cost and estimated fair value of available-for-sale securities at June 30, 2021 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.

	June 30, 2021
	Amortized		Estimated
(in thousands)	cost		fair value
Due in one year or less	$	20,580	$	20,856
Due after one year through five years	429,579		442,409
Due after five years through ten years	194,317		197,441
Due after ten years	270,558		276,092
Total available-for-sale securities	$	915,034	$	936,798

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The below securities have been evaluated and determined to be temporary declines in fair value 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:

	June 30, 2021
	Less than 12 months				12 months or longer				Total
(dollars in thousands)	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses		No. of holdings
Corporate debt securities	$	80,035	$	584	$	8,703	$	368	$	88,738	$	952	289
Collateralized debt obligations	45,288		148		16,642		71		61,930		219		73
Commercial mortgage-backed securities	9,240		329		476		34		9,716		363		21
Residential mortgage-backed securities	29,064		301		0		0		29,064		301		46
Other debt securities	5,606		35		0		0		5,606		35		7
Total available-for-sale securities	$	169,233	$	1,397	$	25,821	$	473	$	195,054	$	1,870	436
Quality breakdown of available-for-sale securities:
Investment grade	$	140,765	$	1,212	$	17,262	$	107	$	158,027	$	1,319	174
Non-investment grade	28,468		185		8,559		366		37,027		551		262
Total available-for-sale securities	$	169,233	$	1,397	$	25,821	$	473	$	195,054	$	1,870	436

	December 31, 2020
	Less than 12 months				12 months or longer				Total
(dollars in thousands)	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses		No. of holdings
Corporate debt securities	$	39,693	$	644	$	7,952	$	870	$	47,645	$	1,514	257
Collateralized debt obligations	50,036		232		10,899		99		60,935		331		65
Commercial mortgage-backed securities	16,582		235		0		0		16,582		235		31
Residential mortgage-backed securities	8,163		34		0		0		8,163		34		13
Other debt securities	1,019		9		0		0		1,019		9		4
Total available-for-sale securities	$	115,493	$	1,154	$	18,851	$	969	$	134,344	$	2,123	370
Quality breakdown of available-for-sale securities:
Investment grade	$	86,807	$	561	$	10,899	$	99	$	97,706	$	660	119
Non-investment grade	28,686		593		7,952		870		36,638		1,463		251
Total available-for-sale securities	$	115,493	$	1,154	$	18,851	$	969	$	134,344	$	2,123	370

Credit loss allowance on investments

As of June 30, 2021 and December 31, 2020, the current expected credit loss allowance on agent loans was $1.1 million in both periods. The current expected credit loss on available-for-sale securities was less than $0.1 million at June 30, 2021, and $0.2 million at December 31, 2020.

Net investment income

Investment income (loss), net of expenses, was generated from the following portfolios:

	Three months ended June 30,				Six months ended June 30,
(in thousands)	2021		2020		2021		2020
Available-for-sale securities	$	5,790	$	5,670	$	11,987	$	11,458
Equity securities	1,116		901		2,318		1,757
Limited partnerships (1)	6,151		(2,329)		15,197		(6,034)
Cash equivalents and other	935		1,115		1,912		3,089
Total investment income	13,992		5,357		31,414		10,270
Less: investment expenses	342		313		667		562
Investment income, net of expenses	$	13,650	$	5,044	$	30,747	$	9,708

(1)Equity in earnings (losses) of limited partnerships includes both realized gains (losses) and unrealized valuation changes. Our limited partnership investments are included in the line item "Other assets" in the Statements of Financial Position. We have made no new limited partnership commitments since 2006, and the balance of limited partnership investments is expected to decline over time as additional distributions are received.

17

Realized investment gains (losses)

Realized gains (losses) on investments were as follows:

	Three months ended June 30,				Six months ended June 30,
(in thousands)	2021		2020		2021		2020
Available-for-sale securities:
Gross realized gains	$	1,075	$	1,721	$	2,998	$	2,795
Gross realized losses	(678)		(1,366)		(1,118)		(1,825)
Net realized gains on available-for-sale securities	397		355		1,880		970
Equity securities (1)	2,371		6,170		1,692		(5,252)
Miscellaneous	1		1		1		2
Net realized investment gains (losses)	$	2,769	$	6,526	$	3,573	$	(4,280)

(1)While our investment portfolio was negatively impacted in the first quarter of 2020 primarily due to the financial market volatility resulting from the COVID-19 pandemic, market conditions partially recovered in the second quarter of 2020, resulting in significant gains in the three months ended June 30, 2020.

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:

	Three months ended June 30,				Six months ended June 30,
(in thousands)	2021		2020		2021		2020
Equity securities:
Net gains (losses) recognized during the period (1)	$	2,371	$	6,170	$	1,692	$	(5,252)
Less: net gains (losses) recognized on securities sold	128		1,357		(293)		(2,157)
Net unrealized gains (losses) recognized on securities held at reporting date	$	2,243	$	4,813	$	1,985	$	(3,095)

(1)While our investment portfolio was negatively impacted in the first quarter of 2020 primarily due to the financial market volatility resulting from the COVID-19 pandemic, market conditions partially recovered in the second quarter of 2020, resulting in significant gains in the three months ended June 30, 2020.

Net impairment (losses) recoveries recognized in earnings

Impairments on available-for-sale securities and agent loans were as follows:

	Three months ended June 30,				Six months ended June 30,
(in thousands)	2021		2020		2021		2020
Available-for-sale securities:
Intent to sell	$	—	$	—	$	—	$	(2,242)
Credit (impaired) recovered	(1)		(17)		86		(658)
Total available-for-sale securities	(1)		(17)		86		(2,900)
Agent loans - expected credit losses	—		—		—		(170)
Net impairment (losses) recoveries recognized in earnings	$	(1)	$	(17)	$	86	$	(3,070)

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Note 7.  Borrowing Arrangements

Bank line of credit

As of June 30, 2021, we have access to a $100 million bank revolving line of credit with a $25 million letter of credit sublimit that expires on October 30, 2023. As of June 30, 2021, a total of $99.1 million remains available under the facility due to $0.9 million outstanding letters of credit, which reduce the availability for letters of credit to $24.1 million.  We had no borrowings outstanding on our line of credit as of June 30, 2021.  Investments with a fair value of $123.4 million were pledged as collateral on the line at June 30, 2021. The investments pledged as collateral have no trading restrictions and are reported as available-for-sale securities and cash and cash equivalents as of June 30, 2021. The banks require compliance with certain covenants, which include leverage ratios and debt restrictions, for our line of credit.  We are in compliance with all covenants at June 30, 2021.

Term loan credit facility

In 2016, we entered into a credit agreement for a $100 million senior secured draw term loan credit facility ("Credit Facility") for the acquisition of real property and construction of an office building that will serve as part of our principal headquarters. On January 1, 2019, the Credit Facility converted to a fully-amortized term loan with monthly payments of principal and interest at a fixed rate of 4.35% over a period of 28 years. Investments with a fair value of $122.6 million were pledged as collateral for the facility and are reported as available-for-sale securities and cash and cash equivalents as of June 30, 2021. The bank requires compliance with certain covenants, which include leverage ratios, debt restrictions and minimum net worth, for our Credit Facility. We are in compliance with all covenants at June 30, 2021.

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 on our Statements of Financial Position. 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
2021	$	1,021
2022		2,109
2023		2,226
2024		2,302
2025		2,449
Thereafter		84,996

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Note 8.  Postretirement Benefits

Pension plans

Our pension plans consist of a noncontributory defined benefit pension plan covering substantially all employees and an unfunded supplemental employee retirement plan for certain members of executive and senior management. Although we are the sponsor of these postretirement plans and record the funded status of these plans, the Exchange and its subsidiaries reimburse us for approximately 58% of the annual benefit expense of these plans, which represents pension benefits for employees performing administrative services and their allocated share of costs for employees in departments that support the administrative functions.

The cost of our pension plans are as follows:

	Three months ended June 30,				Six months ended June 30,
(in thousands)	2021		2020		2021		2020
Service cost for benefits earned	$	13,260	$	10,874	$	26,520	$	21,747
Interest cost on benefits obligation	9,206		9,394		18,412		18,789
Expected return on plan assets	(12,568)		(12,353)		(25,137)		(24,706)
Prior service cost amortization	357		335		714		671
Net actuarial loss amortization	4,026		3,031		8,053		6,062
Pension plan cost (1)	$	14,281	$	11,281	$	28,562	$	22,563

(1)The components of pension plan costs other than the service cost component are included in the line item "Other expense" in the Statements of Operations after reimbursements from the Exchange and its subsidiaries.

Note 9.  Income Taxes

Income tax expense is provided on an interim basis based upon our estimate of the annual effective income tax rate, adjusted each quarter for discrete items. For the three months ended June 30, 2021 and 2020, our effective tax rate was 20.9% and 20.0%, respectively, and for the six months ended June 30, 2021 and 2020, our effective tax rate was 20.7% and 20.9%, respectively. Impacting our effective tax rate in the second quarter of 2020 was the reversal of a valuation allowance generated in the first quarter of 2020 by the financial market volatility resulting from the COVID-19 pandemic, which decreased our effective tax rate by 0.9%.

Note 10.  Capital Stock

Class A and B common stock

Holders of Class B shares may, at their option, convert their shares into Class A shares at the rate of 2,400 Class A shares per Class B share.  There were no shares of Class B common stock converted into Class A common stock during the six months ended June 30, 2021 and the year ended December 31, 2020. There is no provision for conversion of Class A shares to Class B shares, and Class B shares surrendered for conversion cannot be reissued.

Stock repurchases

In 2011, our Board of Directors approved a continuation of the current stock repurchase program of $150 million, with no time limitation.  There were no shares repurchased under this program during the six months ended June 30, 2021 and the year ended December 31, 2020. We had approximately $17.8 million of repurchase authority remaining under this program at June 30, 2021.

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Note 11.  Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income ("AOCI") (loss) by component, including amounts reclassified to other comprehensive income ("OCI") (loss) and the related line item in the Statements of Operations where net income is presented, are as follows:

	Three months ended						Three months ended
	June 30, 2021						June 30, 2020
(in thousands)	Before Tax		Income Tax		Net		Before Tax		Income Tax		Net
Investment securities:
AOCI (loss), beginning of period (1)	$	18,306	$	3,845	$	14,461	$	(27,761)	$	0	$	(27,761)
OCI before reclassifications (1)	3,783		795		2,988		40,364		2,646		37,718
Realized investment gains	(397)		(84)		(313)		(355)		(75)		(280)
Impairment losses	1		0		1		17		4		13
OCI	3,387		711		2,676		40,026		2,575		37,451
AOCI, end of period (1)	$	21,693	$	4,556	$	17,137	$	12,265	$	2,575	$	9,690
Pension and other postretirement plans:
AOCI (loss), beginning of period	$	(123,917)	$	(26,024)	$	(97,893)	$	(150,233)	$	(31,550)	$	(118,683)
Amortization of prior service costs	357		75		282		336		70		266
Amortization of net actuarial loss	4,027		846		3,181		3,031		637		2,394
OCI	4,384		921		3,463		3,367		707		2,660
AOCI (loss), end of period	$	(119,533)	$	(25,103)	$	(94,430)	$	(146,866)	$	(30,843)	$	(116,023)
Total
AOCI (loss), beginning of period	$	(105,611)	$	(22,179)	$	(83,432)	$	(177,994)	$	(31,550)	$	(146,444)
Investment securities	3,387		711		2,676		40,026		2,575		37,451
Pension and other postretirement plans	4,384		921		3,463		3,367		707		2,660
OCI	7,771		1,632		6,139		43,393		3,282		40,111
AOCI (loss), end of period	$	(97,840)	$	(20,547)	$	(77,293)	$	(134,601)	$	(28,268)	$	(106,333)
	Six months ended						Six months ended
	June 30, 2021						June 30, 2020
(in thousands)	Before Tax		Income Tax		Net		Before Tax		Income Tax		Net
Investment securities:
AOCI, beginning of period	$	29,384	$	6,171	$	23,213	$	5,664	$	1,189	$	4,475
OCI (loss) before reclassifications	(5,725)		(1,202)		(4,523)		4,671		981		3,690
Realized investment gains	(1,880)		(395)		(1,485)		(970)		(204)		(766)
Impairment (recoveries) losses	(86)		(18)		(68)		2,900		609		2,291
OCI (loss)	(7,691)		(1,615)		(6,076)		6,601		1,386		5,215
AOCI, end of period	$	21,693	$	4,556	$	17,137	$	12,265	$	2,575	$	9,690
Pension and other postretirement plans:
AOCI (loss), beginning of period	$	(128,300)	$	(26,944)	$	(101,356)	$	(153,600)	$	(32,257)	$	(121,343)
Amortization of prior service costs	714		150		564		672		141		531
Amortization of net actuarial loss	8,053		1,691		6,362		6,062		1,273		4,789
OCI	8,767		1,841		6,926		6,734		1,414		5,320
AOCI (loss), end of period	$	(119,533)	$	(25,103)	$	(94,430)	$	(146,866)	$	(30,843)	$	(116,023)
Total
AOCI (loss), beginning of period	$	(98,916)	$	(20,773)	$	(78,143)	$	(147,936)	$	(31,068)	$	(116,868)
Investment securities	(7,691)		(1,615)		(6,076)		6,601		1,386		5,215
Pension and other postretirement plans	8,767		1,841		6,926		6,734		1,414		5,320
OCI	1,076		226		850		13,335		2,800		10,535
AOCI (loss), end of period	$	(97,840)	$	(20,547)	$	(77,293)	$	(134,601)	$	(28,268)	$	(106,333)

(1)As of June 30, 2020, the valuation allowance that was recognized on the deferred tax asset primarily related to unrealized losses on our investments at March 31, 2020 was fully released.

21

Note 12. Concentrations of Credit Risk

Financial instruments could potentially expose us to concentrations of credit risk, including unsecured receivables from the Exchange. A large majority of our revenue and receivables are from the Exchange and its affiliates. See also Note 1, "Nature of Operations". Net management fee amounts and other reimbursements due from the Exchange and its affiliates were $504.0 million and $494.6 million at June 30, 2021 and December 31, 2020, respectively, which includes a current expected credit loss allowance of $0.6 million in both periods.

Note 13.  Commitments and Contingencies

In 2020, we entered into an agreement with a bank for the establishment of a loan participation program for agent loans. The maximum amount of loans to be funded through this program is $100 million. We have committed to fund a minimum of 30% of each loan executed through this program. As of June 30, 2021, the total loans executed under this agreement totaled $22.5 million, of which our portion of the loans is $8.7 million. Additionally, we have agreed to guarantee a portion of the funding provided by the other participants in the program in the event of default. As of June 30, 2021, our maximum potential amount of future payments on the guaranteed portion is $2.6 million. All loan payments under the participation program are current as of June 30, 2021.

We are involved in litigation arising in the ordinary course of conducting business.  In accordance with current accounting standards for loss contingencies and based upon information currently known to us, we establish reserves for litigation when it is probable that a loss associated with a claim or proceeding has been incurred and the amount of the loss or range of loss can be reasonably estimated.  When no amount within the range of loss is a better estimate than any other amount, we accrue the minimum amount of the estimable loss.  To the extent that such litigation against us may have an exposure to a loss in excess of the amount we have accrued, we believe that such excess would not be material to our financial condition, results of operations, or cash flows.  Legal fees are expensed as incurred.  We believe that our accruals for legal proceedings are appropriate and, individually and in the aggregate, are not expected to be material to our financial condition, results of operations, or cash flows.

We review all litigation on an ongoing basis when making accrual and disclosure decisions.  For certain legal proceedings, we cannot reasonably estimate losses or a range of loss, if any, particularly for proceedings that are in their early stages of development or where the plaintiffs seek indeterminate damages.  Various factors, including, but not limited to, the outcome of potentially lengthy discovery and the resolution of important factual questions, may need to be determined before probability can be established or before a loss or range of loss can be reasonably estimated.  If the loss contingency in question is not both probable and reasonably estimable, we do not establish an accrual and the matter will continue to be monitored for any developments that would make the loss contingency both probable and reasonably estimable.  In the event that a legal proceeding results in a substantial judgment against, or settlement by, us, there can be no assurance that any resulting liability or financial commitment would not have a material adverse effect on the financial condition, results of operations, or cash flows.

Note 14.  Subsequent Events

No items were identified in this period subsequent to the financial statement date that required adjustment or additional disclosure.

22

ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of financial condition and results of operations highlights significant factors influencing Erie Indemnity Company ("Indemnity", "we", "us", "our").  This discussion should be read in conjunction with the historical financial statements and the related notes thereto included in Part I, Item 1. "Financial Statements" of this Quarterly Report on Form 10-Q, and with Item 7. "Management’s Discussion and Analysis of Financial Condition and Results of Operations" for the year ended December 31, 2020, as contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 25, 2021.

INDEX

	Page Number
Cautionary Statement Regarding Forward-Looking Information	23
Operating Overview	24
Results of Operations	27
Financial Condition	33
Liquidity and Capital Resources	35
Critical Accounting Estimates	37

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995:

Statements contained herein that are not historical fact are forward-looking statements and, as such, are subject to risks and uncertainties that could cause actual events and results to differ, perhaps materially, from those discussed herein.  Forward-looking statements relate to future trends, events or results and include, without limitation, statements and assumptions on which such statements are based that are related to our plans, strategies, objectives, expectations, intentions, and adequacy of resources.  Examples of forward-looking statements are discussions relating to premium and investment income, expenses, operating results, and compliance with contractual and regulatory requirements.  Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict.  Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements.  Among the risks and uncertainties, in addition to those set forth in our filings with the Securities and Exchange Commission, that could cause actual results and future events to differ from those set forth or contemplated in the forward-looking statements include the following:

•dependence upon our relationship with the Erie Insurance Exchange ("Exchange") and the management fee under the agreement with the subscribers at the Exchange;

•dependence upon our relationship with the Exchange and the growth of the Exchange, including:

◦general business and economic conditions;

◦factors affecting insurance industry competition;

◦dependence upon the independent agency system; and

◦ability to maintain our reputation for customer service;

•dependence upon our relationship with the Exchange and the financial condition of the Exchange, including:

◦the Exchange's ability to maintain acceptable financial strength ratings;

◦factors affecting the quality and liquidity of the Exchange's investment portfolio;

◦changes in government regulation of the insurance industry;

◦litigation and regulatory actions;

◦emerging claims and coverage issues in the industry; and

◦severe weather conditions or other catastrophic losses, including terrorism;

•potential impacts of the COVID-19 pandemic on the growth and financial condition of the Exchange;

•costs of providing policy issuance and renewal services to the Exchange under the subscriber's agreement;

•ability to attract and retain talented management and employees;

•ability to ensure system availability and effectively manage technology initiatives;

•difficulties with technology or data security breaches, including cyber attacks;

•ability to maintain uninterrupted business operations;

•outcome of pending and potential litigation;

•potential impacts of the COVID-19 pandemic on our operations, the business operations of our customers and/or independent agents, or our third-party vendor operations;

23

•factors affecting the quality and liquidity of our investment portfolio; and

•our ability to meet liquidity needs and access capital.

A forward-looking statement speaks only as of the date on which it is made and reflects our analysis only as of that date.  We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changes in assumptions, or otherwise.

OPERATING OVERVIEW

Overview

We serve as the attorney-in-fact for the subscribers (policyholders) at the Exchange, a 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, as well as the service provider for its insurance subsidiaries, with respect to all administrative services.

The Exchange is a reciprocal insurance exchange, which is an unincorporated association of individuals, partnerships and corporations that agree to insure one another. Each applicant for insurance to the Exchange signs a subscriber's agreement, which contains an appointment of Indemnity as their attorney-in-fact to transact the business of the Exchange 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.

Our earnings are primarily driven by the management fee revenue generated for the services we provide to 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 generally comprises approximately two-thirds of our policy issuance and renewal expenses. The underwriting services we provide include underwriting and policy processing. The remaining services we provide include customer service and administrative support. We also provide information technology services that support all the functions listed above. Included in these expenses are allocations of costs for departments that support these policy issuance and renewal functions.

By virtue of its legal structure as a reciprocal insurer, the Exchange does not have any employees or officers. Therefore, it enters into contractual relationships by and through an attorney-in-fact. Indemnity serves as the attorney-in-fact on behalf of the Exchange with respect to its administrative services. The Exchange's insurance subsidiaries also utilize Indemnity for these services in accordance with the service agreements between each of the subsidiaries and Indemnity. Claims handling services include costs incurred in the claims process, including the adjustment, investigation, defense, recording and payment functions. Life insurance management services include costs incurred in the management and processing of life insurance business. Investment management services are related to investment trading activity, accounting and all other functions attributable to the investment of funds. Included in these expenses are allocations of costs for departments that support these administrative functions. The amounts incurred for these services are reimbursed to Indemnity at cost in accordance with the subscriber's agreement and the service agreements. State insurance regulations require that intercompany service agreements and any material amendments be approved in advance by the state insurance department.

Our results of operations are tied to the growth and financial condition of the Exchange as the Exchange is our sole customer, and our earnings are largely generated from management fees based on the direct and affiliated assumed premiums written by the Exchange. The Exchange generates revenue by insuring preferred and standard risks, with personal lines comprising 71% of the 2020 direct and affiliated assumed written premiums and commercial lines comprising the remaining 29%.  The principal personal lines products are private passenger automobile and homeowners.  The principal commercial lines products are commercial multi-peril, commercial automobile and workers compensation.

24

Coronavirus ("COVID-19") pandemic

In March 2020, the outbreak of the coronavirus ("COVID-19") was declared a global pandemic. The uncertainty resulting from the COVID-19 pandemic continues to evolve and the pandemic’s ultimate impact and duration remain uncertain at this time.

The impact the COVID-19 pandemic has on the premiums written by the Exchange, our sole customer, affects our management fee revenue. The uncertainty of the ongoing impacts of the COVID-19 pandemic will likely continue until such time as the spread of the virus is contained. In response to reduced driving conditions in 2020 resulting from the COVID-19 pandemic, the Exchange implemented $200 million in personal and commercial auto rate reductions, which became effective in the third quarter of 2020. These rate reductions resulted in a decrease to Exchange's written premiums of approximately $55 million and $110 million for the three and six months ended June 30, 2021, respectively, and a corresponding decrease in our management fee revenue of approximately $14 million and $28 million for the three and six months ending June 30, 2021, respectively. There may also be other market and/or regulatory pressures that could impact the Exchange’s operations. While financial markets remained generally strong in the first half of 2021, we could experience future losses and/or impairments to the portfolio if future development of the pandemic impacts market conditions. Additionally, we continued to incur increased agent incentive costs as claim frequency, while increasing in 2021, remains lower than pre-pandemic levels resulting in improved agent profitability the first half of 2021. We have provided additional disclosure of these impacted areas throughout our Management’s Discussion and Analysis that follows. A broader discussion of the potential future impacts has also been disclosed in Financial Condition and Liquidity and Capital Resources contained within this report, as well as Part I. Item 1A. "Risk Factors" related to COVID-19 as included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 as filed with the Securities and Exchange Commission on February 25, 2021.

We have a dedicated internal committee comprised of management from various finance disciplines reviewing our risk positions and emerging trends on an ongoing basis as circumstances are evolving. The committee is reviewing risk scenarios and performing stress tests, including the review of cash flow trends, liquidity requirements and other forms of risk quantification. This provides tools for management, as well as our Risk Committee of the Board of Directors, to assess risks and prioritize key issues.

While we were not required to close our physical locations under the state mandated closure of nonessential services, out of concern for the health and safety of our employees, over 90% of our workforce has been working remote since March 2020. We have had no significant interruption to our core business processes or systems to date. We have had no significant changes to our financial close or reporting processes or related internal controls, nor do we anticipate any significant future challenges at this time. We have a dedicated team responsible for the development and implementation of a return to office plan. Some employees began returning to our offices in July 2021. Additional employees will return to our offices in phases, assuming the pandemic does not worsen.

25

Financial Overview

	Three months ended June 30,						Six months ended June 30,
(dollars in thousands, except per share data)	2021		2020		% Change		2021		2020		% Change
	(Unaudited)						(Unaudited)
Operating income	$	85,065	$	91,189	(6.7)	%	$	161,160	$	176,880	(8.9)	%
Total investment income	16,418		11,553		42.1		34,406		2,358		NM
Interest expense, net	1,039		2		NM		2,048		5		NM
Other expense	548		258		NM		1,067		624		71.0
Income before income taxes	99,896		102,482		(2.5)		192,451		178,609		7.8
Income tax expense	20,867		20,505		1.8		39,856		37,306		6.8
Net income	$	79,029	$	81,977	(3.6)	%	$	152,595	$	141,303	8.0	%
Net income per share – diluted	$	1.51	$	1.57	(3.6)	%	$	2.92	$	2.70	8.0	%

NM = not meaningful

Operating income decreased in both the second quarter and six months ended June 30, 2021, compared to the same periods in 2020, as growth in operating expenses outpaced the growth in operating revenues. Management fee revenue for policy issuance and renewal services increased 3.8% to $502.3 million in the second quarter of 2021 and 3.3% to $958.0 million for the six months ended June 30, 2021, respectively. Management fee revenue is based upon the management fee rate we charge, and the direct and affiliated assumed premiums written by the Exchange. The management fee rate was 25% for both 2021 and 2020. The direct and affiliated assumed premiums written by the Exchange increased 3.4% to $2.1 billion in the second quarter of 2021 and increased 2.6% to $3.9 billion for the six months ended June 30, 2021 compared to the same periods in 2020.

Cost of operations for policy issuance and renewal services increased 5.8% to $437.8 million and 5.7% to $838.3 million in the second quarter and six months ended June 30, 2021, compared to the same periods in 2020, due to higher commissions driven by direct and affiliated assumed written premium growth, personnel costs and technology investments.

Management fee revenue for administrative services decreased 1.0% to $14.7 million and 0.2% to $29.5 million in the second quarter and six months ended June 30, 2021, compared to the same periods in 2020. The administrative services reimbursement revenue and corresponding cost of operations increased both total operating revenue and total operating expenses by $157.2 million in the second quarter of 2021 and $310.7 million for the six months ended June 30, 2021, but had no net impact on operating income.

Total investment income increased $4.9 million and $32.0 million in the second quarter and six months ended June 30, 2021, compared to the same periods in 2020. The results from both periods were primarily due to increases in net investment income. Investment results in 2020 were impacted by the significant financial market volatility resulting from the COVID-19 pandemic.

General Conditions and Trends Affecting Our Business

Economic conditions

Unfavorable changes in economic conditions, including declining consumer confidence, inflation, high unemployment, and the threat of recession, among others, may lead the Exchange’s customers to modify coverage, not renew policies, or even cancel policies, which could adversely affect the premium revenue of the Exchange, and consequently our management fee.  As the COVID-19 pandemic continues to evolve, the extent and duration of the impacts to economic conditions remain uncertain. See Financial Condition and Liquidity and Capital Resources contained within this report, as well as Part I. Item 1A. "Risk Factors" related to COVID-19 included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 as filed with the Securities and Exchange Commission on February 25, 2021 for a discussion of the potential impacts of the COVID-19 pandemic on our operations.

Financial market volatility

Our portfolio of fixed maturity and equity security investments is subject to market volatility especially in periods of instability in the worldwide financial markets. Over time, net investment income could also be impacted by volatility and by the general level of interest rates, which impact reinvested cash flow from the portfolio and business operations. Depending upon market conditions, which are unpredictable and remain uncertain, considerable fluctuation could exist in the fair value of our investment portfolio and reported total investment income, which could have an adverse impact on our financial condition, results of operations, and cash flows. Significant volatility was seen in the global financial markets at the onset of the COVID-19 pandemic and pandemic related events may create future volatility. The extent of the impact on our invested assets cannot be estimated with a high degree of certainty at this time given the ongoing developments of this pandemic and the related impacts on the financial markets.

26

RESULTS OF OPERATIONS 

Management fee revenue

We have two performance obligations in the subscriber’s agreement, providing policy issuance and renewal services and acting as attorney-in-fact for the Exchange, as well as the service provider for its insurance subsidiaries, with respect to all administrative services. We earn management fees for acting as the attorney-in-fact for the subscribers at the Exchange in these two capacities, and allocate our revenues between our performance obligations.

The management fee is calculated by multiplying all direct and affiliated assumed premiums written by the Exchange by the management fee rate, which is determined by our Board of Directors at least annually.  The management fee rate was set at 25%, the maximum rate, for both 2021 and 2020.  Changes in the management fee rate can affect our revenue and net income significantly. The transaction price, including management fee revenue and administrative service reimbursement revenue, includes variable consideration and 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 and the related allocation at least annually based upon the most recent information available or more frequently if there have been significant changes in any components considered in the transaction price. Our current transaction price allocation review resulted in a minor change in the allocation percentages between the two performance obligations. The change in allocation will not have a material impact on our financial statements.

The following table presents the allocation and disaggregation of revenue for our two performance obligations: 

	Three months ended June 30,								Six months ended June 30,
(dollars in thousands)	2021			2020			% Change		2021			2020			% Change
	(Unaudited)								(Unaudited)
Policy issuance and renewal services
Direct and affiliated assumed premiums written by the Exchange	$	2,070,557		$	2,002,753		3.4	%	$	3,948,739		$	3,850,431		2.6	%
Management fee rate	24.3		%	24.2		%			24.3		%	24.2		%
Management fee revenue	503,146			484,666			3.8		959,544			931,804			3.0
Change in estimate for management fee returned on cancelled policies (1)	(875)			(871)			(0.4)		(1,555)			(4,259)			63.5
Management fee revenue - policy issuance and renewal services	$	502,271		$	483,795		3.8	%	$	957,989		$	927,545		3.3	%
Administrative services
Direct and affiliated assumed premiums written by the Exchange	$	2,070,557		$	2,002,753		3.4	%	$	3,948,739		$	3,850,431		2.6	%
Management fee rate	0.7		%	0.8		%			0.7		%	0.8		%
Management fee revenue	14,494			16,022			(9.5)		27,641			30,803			(10.3)
Change in contract liability (2)	168			(1,184)			NM		1,875			(1,183)			NM
Change in estimate for management fee returned on cancelled policies (1)	5			(25)			NM		(2)			(36)			95.8
Management fee revenue - administrative services	14,667			14,813			(1.0)		29,514			29,584			(0.2)
Administrative services reimbursement revenue	157,190			151,965			3.4		310,723			303,519			2.4
Total revenue from administrative services	$	171,857		$	166,778		3.0	%	$	340,237		$	333,103		2.1	%

NM = not meaningful

(1)A constraining estimate of variable consideration exists related to the potential for management fees to be returned if a policy were to be cancelled mid-term. Management fees are returned to the Exchange when policies are cancelled mid-term and unearned premiums are refunded. 

(2)Management fee revenue - administrative services is recognized over time as the services are provided. See Part I, Item 1. "Financial Statements - Note 3, Revenue, of Notes to Financial Statements" contained within this report.

27

Direct and affiliated assumed premiums written by the Exchange

Direct and affiliated assumed premiums include premiums written directly by the Exchange and premiums assumed from its wholly owned property and casualty subsidiaries. Direct and affiliated assumed premiums written by the Exchange increased 3.4% to $2.1 billion in the second quarter of 2021 compared to the second quarter of 2020, primarily driven by increases in homeowners and commercial multi-peril premiums written.  Year-over-year policies in force for all lines of business increased 3.6% in the second quarter of 2021 compared to 1.1% in the second quarter of 2020.  The year-over-year average premium per policy for all lines of business decreased 1.5% at June 30, 2021 compared to an increase of 2.2% at June 30, 2020. The year-over-year average premium per policy at June 30, 2021 was impacted by the rate reductions for our personal and commercial auto policies that became effective in the third quarter of 2020.

Premiums generated from new business increased 38.4% to $263 million in the second quarter of 2021. While year-over-year average premium per policy on new business decreased 2.7% at June 30, 2021, new business policies written increased 33.4 % in the second quarter of 2021. Premiums generated from new business decreased 18.6% to $190 million in the second quarter of 2020. Year-over-year average premium per policy on new business decreased 0.4% at June 30, 2020 and new business policies written decreased 12.7% in the second quarter of 2020, primarily due to the shelter-at-home orders and mandatory business closures resulting from the COVID-19 pandemic. Premiums generated from renewal business decreased 0.3% to $1.8 billion in the second quarter of 2021 compared to the second quarter of 2020.  Underlying the trend in renewal business premiums was a decrease in year-over-year average premium per policy of 1.2% at June 30, 2021, driven by the rate reductions for our personal and commercial auto policies that became effective in the third quarter of 2020, compared to an increase of 2.5% at June 30, 2020. 

Personal lines – Total personal lines premiums written increased 2.0% to $1.5 billion in the second quarter of 2021, compared to 0.7% in the second quarter of 2020. While total personal lines year-over-year average premium per policy decreased 2.1% at June 30, 2021, total personal lines policies in force increased 3.6% in the second quarter of 2021.

Commercial lines – Total commercial lines premiums written increased 6.8% to $619 million in the second quarter of 2021, compared to a decrease of 0.1% in the second quarter of 2020, driven by a 3.4% increase in total commercial lines policies in force and a 0.1% increase in total commercial lines year-over-year average premium per policy.

Future trends-premium revenue – Through a careful agency selection process, the Exchange plans to continue its effort to expand the size of its agency force to increase market penetration in existing operating territories to contribute to future growth.

Changes in premium levels attributable to the growth in policies in force and rate changes directly affect the profitability of the Exchange and have a direct bearing on our management fee. Future premiums could be impacted by changes resulting from the COVID-19 pandemic, including potential regulatory changes and inflationary trends, among others. Longer-term, increased driving activity may result in future rate increases due to higher claims frequencies and severity. See also Part I. Item 1A. "Risk Factors" related to COVID-19 included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 as filed with the Securities and Exchange Commission on February 25, 2021.

28

Policy issuance and renewal services

	Three months ended June 30,						Six months ended June 30,
(dollars in thousands)	2021		2020		% Change		2021		2020		% Change
	(Unaudited)						(Unaudited)
Management fee revenue - policy issuance and renewal services	$	502,271	$	483,795	3.8	%	$	957,989	$	927,545	3.3	%
Service agreement revenue	5,902		6,446		(8.4)		11,981		13,108		(8.6)
	508,173		490,241		3.7		969,970		940,653		3.1
Cost of policy issuance and renewal services	437,775		413,865		5.8		838,324		793,357		5.7
Operating income - policy issuance and renewal services	$	70,398	$	76,376	(7.8)	%	$	131,646	$	147,296	(10.6)	%

Policy issuance and renewal services

The management fee revenue allocated for providing policy issuance and renewal services was 24.3% and 24.2% of the direct and affiliated assumed premiums written by the Exchange for both the three and six months ended June 30, 2021 and 2020, respectively.  This portion of the management fee is recognized as revenue when the policy is issued or renewed because it is at that time that the services we provide are substantially complete and the executed insurance policy is transferred to the customer.  The increase in management fee revenue for policy issuance and renewal services was driven by the increase in the direct and affiliated assumed premiums written by the Exchange discussed previously.

Service agreement revenue

Service agreement revenue includes service charges we collect from subscribers/policyholders for providing extended payment terms on policies written and assumed by the Exchange, and late payment and policy reinstatement fees.  The service charges are fixed dollar amounts per billed installment.  The decrease in service agreement revenue reflects the continued shift to payment plans that do not incur service charges or offer a premium discount for certain payment methods.

Cost of policy issuance and renewal services

	Three months ended June 30,						Six months ended June 30,
(dollars in thousands)	2021		2020		% Change		2021		2020		% Change
	(Unaudited)						(Unaudited)
Commissions:
Total commissions	$	293,220	$	278,478	5.3	%	$	554,601	$	530,474	4.5	%
Non-commission expense:
Underwriting and policy processing	$	43,181	$	39,891	8.2	%	$	83,769	$	81,243	3.1	%
Information technology	46,076		43,155		6.8		92,481		85,313		8.4
Sales and advertising	14,590		15,770		(7.5)		25,533		27,245		(6.3)
Customer service	9,131		8,631		5.8		17,929		17,210		4.2
Administrative and other	31,577		27,940		13.0		64,011		51,872		23.4
Total non-commission expense	144,555		135,387		6.8		283,723		262,883		7.9
Total cost of policy issuance and renewal services	$	437,775	$	413,865	5.8	%	$	838,324	$	793,357	5.7	%

Commissions – Commissions increased $14.7 million in the second quarter of 2021 and $24.1 million for the six months ended June 30, 2021 compared to the same periods in 2020, primarily driven by the growth in direct and affiliated assumed written premium, primarily in lines of business that pay a higher commission rate. To a lesser extent, there was also an increase in agent incentive compensation for the second quarter and six months ended June 30, 2021 compared to the second quarter and six months ending June 30, 2020. The estimated agent incentive payouts at June 30, 2021 are based on actual underwriting results for the two prior years and current year-to-date actual results and forecasted results for the remainder of 2021. Lower claims frequency and related loss expense since the onset of the COVID-19 pandemic impacted agent compensation related to the profitability component in all periods.

29

Non-commission expense – Non-commission expense increased $9.2 million in the second quarter of 2021 compared to the second quarter of 2020. Underwriting and policy processing expense increased $3.3 million primarily due to increased personnel costs and underwriting report costs. Information technology costs increased $2.9 million primarily due to increased hardware and software costs as well as increased personnel costs. Administrative and other costs increased $3.6 million primarily driven by increased building and equipment depreciation and professional fees compared to the same period in 2020. Personnel costs in all expense categories for the second quarter of 2021 were impacted by higher medical costs compared to the prior year as the COVID-19 pandemic reduced elective procedures in 2020.

Non-commission expense increased $20.8 million in the six months ended June 30, 2021 compared to the same period of 2020. Underwriting and policy processing expense increased $2.5 million primarily due to increased underwriting report costs and personnel costs. Information technology costs increased $7.2 million primarily due to increased hardware and software costs and personnel costs. Administrative and other costs increased $12.1 million primarily driven by increased personnel costs and professional fees compared to the same period in 2020. Personnel costs in all expense categories were impacted by higher pension costs and higher medical costs compared to the prior year as the COVID-19 pandemic reduced elective procedures in 2020.

Administrative services

	Three months ended June 30,						Six months ended June 30,
(dollars in thousands)	2021		2020		% Change		2021		2020		% Change
	(Unaudited)						(Unaudited)
Management fee revenue - administrative services	$	14,667	$	14,813	(1.0)	%	$	29,514	$	29,584	(0.2)	%
Administrative services reimbursement revenue	157,190		151,965		3.4		310,723		303,519		2.4
Total revenue allocated to administrative services	171,857		166,778		3.0		340,237		333,103		2.1
Administrative services expenses
Claims handling services	135,192		131,474		2.8		267,662		263,777		1.5
Investment management services	9,689		8,353		16.0		19,403		17,410		11.5
Life management services	12,309		12,138		1.4		23,658		22,332		5.9
Operating income - administrative services	$	14,667	$	14,813	(1.0)	%	$	29,514	$	29,584	(0.2)	%

Administrative services

The management fee revenue allocated to administrative services was 0.7% and 0.8% of the direct and affiliated assumed premiums written by the Exchange for both the three and six months ended June 30, 2021 and 2020, respectively. This portion of the management fee is recognized as revenue over a four-year period representing the time over which the services are provided. We also report reimbursed costs as revenues, which are recognized monthly as services are provided. The administrative services expenses we incur and the related reimbursements we receive are recorded gross in the Statements of Operations.

Cost of 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. The amounts incurred for these services are reimbursed to Indemnity at cost in accordance with the subscriber's agreement and the service agreements.  We record these reimbursements due from the Exchange and its insurance subsidiaries as a receivable.

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Total investment income

A summary of the results of our investment operations is as follows:

	Three months ended June 30,						Six months ended June 30,
(dollars in thousands)	2021		2020		% Change		2021		2020		% Change
	(Unaudited)						(Unaudited)
Net investment income	$	13,650	$	5,044	NM		$	30,747	$	9,708	NM
Net realized investment gains (losses)	2,769		6,526		(57.6)	%	3,573		(4,280)		NM
Net impairment (losses) recoveries recognized in earnings	(1)		(17)		NM		86		(3,070)		NM
Total investment income	$	16,418	$	11,553	42.1	%	$	34,406	$	2,358	NM

NM = not meaningful

Net investment income

Net investment income includes interest and dividends on our fixed maturity and equity security portfolios and the results of our limited partnership investments, net of investment expenses. Net investment income increased $8.6 million in the second quarter of 2021 and $21.0 million for the six months ended June 30, 2021, compared to the same periods in 2020. The results from both periods were primarily due to equity in earnings of limited partnerships of $6.2 million and $15.2 million for the three and six months ended June 30, 2021, respectively, compared to equity in losses of limited partnerships of $2.3 million and $6.0 million, respectively, for the same periods in 2020. We have made no new limited partnership commitments since 2006, and the balance of limited partnership investments is expected to decline over time as additional distributions are received.

Net realized investment gains (losses)

A breakdown of our net realized investment gains (losses) is as follows: 

	Three months ended June 30,				Six months ended June 30,
(in thousands)	2021		2020		2021		2020
Securities sold:	(Unaudited)				(Unaudited)
Available-for-sale securities	$	397	$	355	$	1,880	$	970
Equity securities	392		(1,840)		899		(2,528)
Equity securities change in fair value	1,979		8,010		793		(2,724)
Miscellaneous	1		1		1		2
Net realized investment gains (losses)	$	2,769	$	6,526	$	3,573	$	(4,280)

Net realized gains during the second quarter of 2021 were primarily driven by market value adjustments on equity securities while net realized gains for the six months ended June 30, 2021 were primarily due to disposals of available-for-sale securities. Net realized gains during the second quarter of 2020 were primarily driven by increases in the fair value of equity securities while net realized losses for the six months ended June 30, 2020 were driven by the significant financial market volatility resulting from the COVID-19 pandemic.

Net impairment (losses) recoveries recognized in earnings

Net impairment losses during the second quarter of 2021 and net impairment recoveries for the six months ended June 30, 2021 were on credit impaired available-for-sale securities. Net impairment losses in 2020 were primarily due to the COVID-19 pandemic's impact on financial markets on our available-for-sale securities.

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Financial condition of Erie Insurance Exchange

Serving in the capacity of attorney-in-fact for the Exchange, we are dependent on the growth and financial condition of the Exchange, who is our sole customer. The strength of the Exchange and its wholly owned subsidiaries is rated annually by A.M. Best Company through assessing its financial stability and ability to pay claims. The ratings are generally based upon factors relevant to policyholders and are not directed toward return to investors. The Exchange and each of its property and casualty subsidiaries are rated A+ "Superior", the second highest financial strength rating, which is assigned to companies that have achieved superior overall performance when compared to the standards established by A.M. Best and have a superior ability to meet obligations to policyholders over the long term. On July 27, 2021, the outlook for the financial strength rating was affirmed as stable. As of December 31, 2020, only approximately 12% of insurance groups, in which the Exchange is included, are rated A+ or higher.

The financial statements of the Exchange are prepared in accordance with statutory accounting principles prescribed by the Commonwealth of Pennsylvania. Financial statements prepared under statutory accounting principles focus on the solvency of the insurer and generally provide a more conservative approach than under U.S. generally accepted accounting principles. Statutory direct written premiums of the Exchange and its wholly owned property and casualty subsidiaries grew 2.6% to $3.9 billion in the first six months of 2021 compared to the first six months of 2020. These premiums, along with investment income, are the major sources of cash that support the operations of the Exchange. Policyholders’ surplus determined under statutory accounting principles was $11.7 billion at June 30, 2021, $10.7 billion at December 31, 2020, and $9.4 billion at June 30, 2020. The Exchange and its wholly owned property and casualty subsidiaries' year-over-year policy retention ratio continues to be high at 89.9% at June 30, 2021, December 31, 2020 and June 30, 2020.

We have prepared our financial statements considering the financial strength of the Exchange based on its A.M. Best rating and strong level of surplus. We are monitoring risks related to the COVID-19 pandemic on an ongoing basis and believe that the Exchange falls within defined risk tolerances. However, see Part I. Item 1A. "Risk Factors" related to COVID-19 included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 as filed with the Securities and Exchange Commission on February 25, 2021 for possible outcomes that could impact that determination.

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FINANCIAL CONDITION

Investments

Our investment portfolio is managed with the objective of maximizing after-tax returns on a risk-adjusted basis. The following table presents the carrying value of our investments as of: 

(dollars in thousands)	June 30, 2021		% to total		December 31, 2020		% to total
	(Unaudited)
Fixed maturities	$	936,798	83	%	$	928,236	84	%
Equity securities:
Preferred stock	93,798		8		94,071		9
Common stock	207		0		19		0
Agent loans (1)	68,558		6		69,212		6
Other investments	28,845		3		14,325		1
Total investments	$	1,128,206	100	%	$	1,105,863	100	%

(1)The current portion of agent loans is included with prepaid expenses and other current assets in the Statements of Financial Position.

Fixed maturities

Under our investment strategy, we maintain a fixed maturity portfolio that is of high quality and well diversified within each market sector.  This investment strategy also achieves a balanced maturity schedule. Our fixed maturity portfolio is managed with the goal of achieving reasonable returns while limiting exposure to risk. 

Fixed maturities are carried at fair value with unrealized gains and losses, net of deferred taxes, included in shareholders’ equity. Net unrealized gains on fixed maturities, net of deferred taxes, totaled $17.2 million at June 30, 2021, compared to net unrealized gains of $23.3 million at December 31, 2020.

The following table presents a breakdown of the fair value of our fixed maturity portfolio by industry sector and rating as of:

(in thousands)	June 30, 2021 (1)
	AAA		AA		A		BBB		Non- investment grade		Fair value
	(Unaudited)
Basic materials	$	0	$	0	$	3,225	$	2,125	$	9,248	$	14,598
Communications	0		8,792		8,511		17,656		17,837		52,796
Consumer	0		3,198		21,798		66,610		44,033		135,639
Diversified	0		0		0		1,045		624		1,669
Energy	0		4,176		7,881		19,251		11,952		43,260
Financial	0		1,019		64,308		115,182		15,604		196,113
Industrial	0		0		10,061		16,524		22,583		49,168
Structured securities (2)	165,284		132,377		35,852		17,204		0		350,717
Technology	5,230		0		7,864		22,275		12,438		47,807
U.S. Treasury	0		21,391		0		0		0		21,391
Utilities	0		0		3,843		16,307		3,490		23,640
Total	$	170,514	$	170,953	$	163,343	$	294,179	$	137,809	$	936,798

(1)Ratings are supplied by S&P, Moody’s, and Fitch.  The table is based upon the lowest rating for each security.

(2)Structured securities include residential and commercial mortgage-backed securities, collateralized debt obligations, and asset-backed securities.

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Equity securities

Equity securities consist of nonredeemable preferred and common stock and are carried at fair value in the Statements of Financial Position with all changes in unrealized gains and losses reflected in the Statements of Operations.

The following table presents an analysis of the fair value of our nonredeemable preferred and common stock securities by sector as of:

(in thousands)	June 30, 2021				December 31, 2020
	Preferred stock		Common stock		Preferred stock		Common stock
	(Unaudited)
Communications	$	2,161	$	0	$	2,699	$	0
Consumer	2,295		0		3,068		0
Energy	2,745		207		2,187		19
Financial services	75,212		0		76,575		0
Industrial	915		0		800		0
Utilities	10,470		0		8,742		0
Total	$	93,798	$	207	$	94,071	$	19

34

LIQUIDITY AND CAPITAL RESOURCES

We continue to monitor the sufficiency of our liquidity and capital resources given the potential impact of the COVID-19 pandemic. We did not see a significant impact on our sources or uses of cash in the first half of 2021. However, we may experience future reductions in our management fee revenue if the Exchange’s premium growth is constrained. Also, future disruptions in the markets could occur which may affect our liquidity position. If our normal operating and investing cash activities were to become insufficient to meet future funding requirements, we believe we have sufficient access to liquidity through our cash position, liquid marketable securities and our $100 million line of credit that does not expire until October 2023. See broader discussions of potential risks to our operations in the Operating Overview contained within this report and Part I. Item 1A. "Risk Factors" related to COVID-19 included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 as filed with the Securities and Exchange Commission on February 25, 2021.

Sources and Uses of Cash

Liquidity is a measure of a company’s ability to generate sufficient cash flows to meet the short- and long-term cash requirements of its business operations and growth needs.  Our liquidity requirements have been met primarily by funds generated from management fee revenue and income from investments.  Cash provided from these sources is used primarily to fund the costs of our management operations including commissions, salaries and wages, pension plans, share repurchases, dividends to shareholders, and the purchase and development of information technology.  We expect that our operating cash needs will be met by funds generated from operations.

Volatility in the financial markets presents challenges to us as we do occasionally access our investment portfolio as a source of cash.  Some of our fixed income investments, despite being publicly traded, may be illiquid.  Volatility in these markets could impair our ability to sell certain fixed income securities or cause such securities to sell at deep discounts. We believe we have sufficient liquidity to meet our needs from sources other than the liquidation of securities, even if market volatility persists throughout 2021 and beyond.

Cash flow activities

The following table provides condensed cash flow information for the six months ended June 30:

(in thousands)	2021		2020
	(Unaudited)		(Unaudited)
Net cash provided by operating activities	$	127,720	$	127,282
Net cash used in investing activities	(35,511)		(115,423)
Net cash used in financing activities	(97,411)		(90,860)
Net decrease in cash and cash equivalents	$	(5,202)	$	(79,001)

Net cash provided by operating activities was $127.7 million in the first six months of 2021, compared to $127.3 million in the first six months of 2020. Increased cash provided by operating activities in the six months of 2021 was primarily due to an increase in management fees received driven by growth in direct and affiliated assumed premiums written by the Exchange of $47.4 million and an increase in administrative service reimbursements received of $21.8 million. Partially offsetting the increase in cash provided by operating activities was an increase in cash paid for agent commissions and agent bonuses of $15.9 million and $15.5 million, respectively, due to higher scheduled commission driven by premium growth, and increases in income taxes and salaries and wages paid of $14.9 million and $13.1 million, respectively, in the first six months of 2021 compared to the same period in 2020.

Net cash used in investing activities was $35.5 million in the first six months of 2021, compared to $115.4 million in the same period in 2020. In the first half of 2021, net cash used in investing activities was primarily driven by fixed asset purchases, as purchases of investments were offset by proceeds from sales and and maturities/calls of investments. Net cash used in investing activities in the first half of 2020 was primarily due to purchases of available-for-sale securities exceeding the proceeds generated from investment sales and maturities/calls of available-for-sale securities.

Net cash used in financing activities totaled $97.4 million in the first half of 2021, compared to $90.9 million in the first half of 2020. The increase in cash used in the first half of 2021, compared to the same period in 2020, was due to dividends paid to shareholders. We increased both our Class A and Class B shareholder regular quarterly dividends by 7.3% for 2021, compared to 2020.  There are no regulatory restrictions on the payment of dividends to our shareholders.

35

There were no repurchases of our Class A nonvoting common stock in the first six months of 2021 and 2020 in conjunction with our stock repurchase program. In 2011, our Board of Directors approved a continuation of the current stock repurchase program of $150 million with no time limitation.  This repurchase authority includes, and is not in addition to, any unspent amounts remaining under the prior authorization.  We had approximately $17.8 million of repurchase authority remaining under this program at June 30, 2021, based upon trade date.

During the six months ended June 30, 2021, we purchased 23,558 shares of our outstanding Class A nonvoting common stock outside of our publicly announced share repurchase program at a total cost of $4.7 million. Of this amount, we purchased 978 shares for $0.2 million, or $242.01 per share, for stock-based awards in conjunction with our equity compensation plan. We purchased 2,603 shares for $0.6 million, or $227.05 per share, to fund the rabbi trust for the outside director deferred stock compensation plan. The remaining 19,977 shares were purchased at a total cost of $3.9 million, or $196.35 per share, to fund the rabbi trust for the incentive compensation deferral plan. All shares were delivered as of June 30, 2021.

During the six months ended June 30, 2020, we purchased 26,410 shares of our outstanding Class A nonvoting common stock outside of our publicly announced share repurchase program at a total cost of $4.6 million. Of this amount, we purchased 1,787 shares for $0.3 million, or $165.82 per share, for stock-based awards in conjunction with our equity compensation plan. We purchased 3,216 shares for $0.5 million, or $162.53 per share, to fund the rabbi trust for the outside director deferred stock compensation plan. The remaining 21,407 shares were purchased at a total cost of $3.8 million, or $178.34 per share, to fund the rabbi trust for the incentive compensation deferral plan. All shares were delivered as of June 30, 2020.

Capital Outlook

We regularly prepare forecasts evaluating the current and future cash requirements for both normal and extreme risk events, including the current COVID-19 pandemic.  Should an extreme risk event result in a cash requirement exceeding normal cash flows, we have the ability to meet our future funding requirements through various alternatives available to us.

Outside of our normal operating and investing cash activities, future funding requirements could be met through: 1) cash and cash equivalents, which total approximately $156.0 million at June 30, 2021, 2) a $100 million bank revolving line of credit, and 3) liquidation of unpledged assets held in our investment portfolio, including preferred stock and investment grade bonds, which totaled approximately $655.7 million at June 30, 2021.  Volatility in the financial markets could impair our ability to sell certain fixed income securities or cause such securities to sell at deep discounts.  Additionally, we have the ability to curtail or modify discretionary cash outlays such as those related to shareholder dividends and share repurchase activities.

As of June 30, 2021, we have access to a $100 million bank revolving line of credit with a $25 million letter of credit sublimit that expires on October 30, 2023. As of June 30, 2021, a total of $99.1 million remains available under the facility due to $0.9 million outstanding letters of credit, which reduce the availability for letters of credit to $24.1 million.  We had no borrowings outstanding on our line of credit as of June 30, 2021. Investments with a fair value of $123.4 million were pledged as collateral on the line at June 30, 2021. The investments pledged as collateral have no trading restrictions and are reported as available-for-sale securities and cash and cash equivalents in the Statements of Financial Position.  The banks require compliance with certain covenants, which include leverage ratios and debt restrictions.  We were in compliance with our bank covenants at June 30, 2021.

Off-Balance Sheet Arrangements and Contractual Obligations

Off-balance sheet arrangements include those with unconsolidated entities that may have a material current or future effect on our financial condition or results of operations, including material variable interests in unconsolidated entities that conduct certain activities. We have no material off-balance sheet obligations. As of June 30, 2021, there were no material changes to our future contractual obligations as previously reported in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 as filed with the Securities and Exchange Commission on February 25, 2021.

36

CRITICAL ACCOUNTING ESTIMATES

We make estimates and assumptions that have a significant effect on the amounts and disclosures reported in the financial statements.  The most significant estimates relate to investment valuation and retirement benefit plans for employees.  While management believes its estimates are appropriate, the ultimate amounts may differ from estimates provided.  Our most critical accounting estimates are described in Item 7. "Management’s Discussion and Analysis of Financial Condition and Results of Operations" for the year ended December 31, 2020 of our Annual Report on Form 10-K as filed with the Securities and Exchange Commission on February 25, 2021.  See Part I, Item 1. "Financial Statements - Note 5, Fair Value, of Notes to Financial Statements" contained within this report for additional information on our valuation of investments.

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our exposure to market risk is primarily related to fluctuations in prices and interest rates. Quantitative and qualitative disclosures about market risk resulting from changes in prices, interest rates, and other risk exposures for the year ended December 31, 2020 are included in Item 7A. "Quantitative and Qualitative Disclosures About Market Risk", of our Annual Report on Form 10-K as filed with the Securities and Exchange Commission on February 25, 2021.

Significant volatility was seen in the global financial markets at the onset of the COVID-19 pandemic and pandemic related events may create future volatility; however, there have been no material changes that impact our portfolio or reshape our periodic investment reviews of asset allocations during the six months ended June 30, 2021. For a recent discussion of conditions surrounding our investment portfolio, see the "Operating Overview", "Results of Operations", and "Financial Condition" discussions contained in Part I, Item 2. "Management’s Discussion and Analysis of Financial Condition and Results of Operations" contained within this report.

ITEM 4.    CONTROLS AND PROCEDURES

We carried out an evaluation, with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (pursuant to Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report.  Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective.

Our management evaluated, with the participation of the Chief Executive Officer and Chief Financial Officer, any change in our internal control over financial reporting and determined there has been no change in our internal control over financial reporting during the six months ended June 30, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

37

PART II. OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

As disclosed in our prior periodic reports, all material litigation pending against the Company has been concluded.  There is currently no substantive disclosure for this item.

ITEM 1A.    RISK FACTORS

There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 as filed with the Securities and Exchange Commission on February 25, 2021.

ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

In 2011, our Board of Directors approved a continuation of the current stock repurchase program, authorizing repurchases for a total of $150 million with no time limitation.  This repurchase authority included, and was not in addition to, any unspent amounts remaining under the prior authorization. There were no repurchases of our Class A common stock under this program during the six months ending June 30, 2021. We had approximately $17.8 million of repurchase authority remaining under this program at June 30, 2021.

During the quarter ending June 30, 2021, we purchased 19,038 shares of our outstanding Class A nonvoting common stock outside of our publicly announced share repurchase program at a total cost of $3.6 million. We purchased 189 shares for $40 thousand, or $212.89 per share, in May 2021 and 17,403 shares for $3.3 million, or $190.74 per share, in June 2021 to fund the rabbi trust for the incentive compensation deferral plan. The shares were transferred to the rabbi trust in May and June 2021. The remaining 1,446 shares were purchased in May 2021 at a total cost of $0.3 million, or $212.89 per share, to fund the rabbi trust for the outside director deferred stock compensation plan. The shares were transferred to the rabbi trust in May 2021.

38

ITEM 6.    EXHIBITS

Exhibit
Number	Description of Exhibit
31.1*	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32*	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*	Inline XBRL Taxonomy Extension Schema Document.
101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104*	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

* Filed herewith.

39

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			Erie Indemnity Company
			(Registrant)
Date:	July 29, 2021	By:	/s/ Timothy G. NeCastro
			Timothy G. NeCastro, President & CEO
		By:	/s/ Gregory J. Gutting
			Gregory J. Gutting, Executive Vice President & CFO

40

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Timothy G. NeCastro, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Erie Indemnity Company;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected or is reasonably likely to materially affect the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	July 29, 2021
		/s/ Timothy G. NeCastro
		Timothy G. NeCastro
		President & CEO

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Gregory J. Gutting, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Erie Indemnity Company;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected or is reasonably likely to materially affect the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	July 29, 2021
		/s/ Gregory J. Gutting
		Gregory J. Gutting
		Executive Vice President & CFO

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

We, Timothy G. NeCastro, Chief Executive Officer of the Erie Indemnity Company (the "Company"), and Gregory J. Gutting, Chief Financial Officer of the Company, certify, pursuant to § 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. § 1350, that:

(1)The Quarterly Report on Form 10-Q of the Company for the quarterly period ended June 30, 2021 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Timothy G. NeCastro

Timothy G. NeCastro

President & CEO

/s/ Gregory J. Gutting

Gregory J. Gutting

Executive Vice President & CFO

July 29, 2021

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Cover Page - shares	6 Months Ended
	Jun. 30, 2021	Jul. 23, 2021
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2021
Document Transition Report	false
Entity File Number	0-24000
Entry Registrant Name	ERIE INDEMNITY COMPANY
Entity Incorporation, State or Country Code	PA
Entity Tax Identification Number	25-0466020
Entity Address, Address Line One	100 Erie Insurance Place,
Entity Address, City or Town	Erie,
Entity Address, State or Province	PA
Entity Address, Postal Zip Code	16530
City Area Code	814
Local Phone Number	870-2000
Title of 12(b) Security	Class A common stock,
Trading Symbol	ERIE
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Central Index Key	0000922621
Amendment Flag	false
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Class A common stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		46,189,068
Class B common stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		2,542

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STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Operating revenue
Operating revenue	$ 680,030	$ 657,019	$ 1,310,207	$ 1,273,756
Operating expenses
Operating expenses	594,965	565,830	1,149,047	1,096,876
Operating income	85,065	91,189	161,160	176,880
Investment income
Net investment income	13,650	5,044	30,747	9,708
Net realized investment gains (losses)	2,769	6,526	3,573	(4,280)
Net impairment (losses) recoveries recognized in earnings	(1)	(17)	86	(3,070)
Total investment income	16,418	11,553	34,406	2,358
Interest expense, net	1,039	2	2,048	5
Other expense	548	258	1,067	624
Income before income taxes	99,896	102,482	192,451	178,609
Income tax expense	20,867	20,505	39,856	37,306
Net income	$ 79,029	$ 81,977	$ 152,595	$ 141,303
Earnings per share - Basic and diluted:
Common stock - diluted (in dollars per share)			$ 491
Weighted average shares outstanding – Diluted
Common stock - diluted (in shares)			2,542
Class A common stock
Earnings per share - Basic and diluted:
Common stock - basic (in dollars per share)	$ 1.70	$ 1.76	$ 3.28	$ 3.03
Common stock - diluted (in dollars per share)	$ 1.51	$ 1.57	$ 2.92	$ 2.70
Weighted average shares outstanding – Basic
Common stock - basic (in shares)	46,188,289	46,187,808	46,188,573	46,188,299
Weighted average shares outstanding – Diluted
Common stock - diluted (in shares)	52,302,370	52,302,981	52,309,163	52,313,667
Dividends declared per share
Common stock (in dollars per share)	$ 1.035	$ 0.965	$ 2.070	$ 1.930
Class B common stock
Earnings per share - Basic and diluted:
Common stock - basic (in dollars per share)	255	264	491	455
Common stock - diluted (in dollars per share)	$ 255	$ 264	$ 491	$ 455
Weighted average shares outstanding – Basic
Common stock - basic (in shares)	2,542	2,542	2,542	2,542
Weighted average shares outstanding – Diluted
Common stock - diluted (in shares)	2,542	2,542	2,542	2,542
Dividends declared per share
Common stock (in dollars per share)	$ 155.25	$ 144.75	$ 310.50	$ 289.50
Management fee revenue - policy issuance and renewal services
Operating revenue
Operating revenue	$ 502,271	$ 483,795	$ 957,989	$ 927,545
Operating expenses
Operating expenses	437,775	413,865	838,324	793,357
Management fee revenue - administrative services
Operating revenue
Operating revenue	14,667	14,813	29,514	29,584
Administrative services reimbursement revenue
Operating revenue
Operating revenue	157,190	151,965	310,723	303,519
Operating expenses
Operating expenses	157,190	151,965	310,723	303,519
Service agreement revenue
Operating revenue
Operating revenue	$ 5,902	$ 6,446	$ 11,981	$ 13,108

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STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Statement of Comprehensive Income [Abstract]
Net income	$ 79,029	$ 81,977	$ 152,595	$ 141,303
Other comprehensive income (loss), net of tax
Change in unrealized holding gains (losses) on available-for-sale securities	2,676	37,451	(6,076)	5,215
Amortization of prior service costs and net actuarial loss on pension and other postretirement plans	3,463	2,660	6,926	5,320
Total other comprehensive income, net of tax	6,139	40,111	850	10,535
Comprehensive income	$ 85,168	$ 122,088	$ 153,445	$ 151,838

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STATEMENTS OF FINANCIAL POSITION - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Current assets:
Cash and cash equivalents	$ 156,038	$ 161,240
Available-for-sale securities	20,856	17,697
Equity securities	207	19
Receivables from Erie Insurance Exchange and affiliates, net	504,013	494,637
Prepaid expenses and other current assets	59,574	52,561
Accrued investment income	6,121	6,146
Total current assets	746,809	732,300
Available-for-sale securities, net	915,942	910,539
Equity securities	93,798	94,071
Fixed assets, net	280,402	265,341
Agent loans, net	60,070	62,449
Deferred income taxes, net	17,971	12,341
Other assets	48,652	40,081
Total assets	2,163,644	2,117,122
Current liabilities:
Commissions payable	284,234	262,338
Agent bonuses	62,694	110,158
Accounts payable and accrued liabilities	150,346	150,706
Dividends payable	48,200	48,200
Contract liability	35,742	36,917
Deferred executive compensation	8,581	17,319
Current portion of long-term borrowings	2,064	2,031
Total current liabilities	591,861	627,669
Defined benefit pension plans	184,111	164,346
Long-term borrowings	92,795	93,833
Contract liability	18,135	18,878
Deferred executive compensation	13,773	14,904
Other long-term liabilities	17,867	9,444
Total liabilities	918,542	929,074
Shareholders’ equity
Additional paid-in-capital	16,496	16,487
Accumulated other comprehensive loss	(77,293)	(78,143)
Retained earnings	2,449,819	2,393,624
Total contributed capital and retained earnings	2,391,192	2,334,138
Treasury stock, at cost; 22,110,132 shares held	(1,167,211)	(1,163,670)
Deferred compensation	21,121	17,580
Total shareholders’ equity	1,245,102	1,188,048
Total liabilities and shareholders’ equity	2,163,644	2,117,122
Class A common stock
Shareholders’ equity
Common stock	1,992	1,992
Class B common stock
Shareholders’ equity
Common stock	$ 178	$ 178

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STATEMENTS OF FINANCIAL POSITION (Parenthetical)	Jun. 30, 2021 $ / shares shares	Dec. 31, 2020 $ / shares shares
Treasury stock (in shares)	22,110,132	22,110,132
Class A common stock
Common stock, stated value per share (in dollars per share) | $ / shares	$ 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) | $ / shares	$ 70	$ 70
Common stock, authorized (in shares)	3,070	3,070
Ratio for converting shares of Class B common stock into shares of Class A common stock	2,400	2,400
Shares issued (in shares)	2,542	2,542
Shares outstanding (in shares)	2,542	2,542

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STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED) - USD ($) $ in Thousands		Total	Cumulative effect adjustment	[1]	Class A common stock	Class B common stock	Common stock Class A common stock	Common stock Class B common stock	Additional paid-in-capital	Accumulated other comprehensive (loss) income	Retained earnings	Retained earnings Cumulative effect adjustment	[1]	Retained earnings Class A common stock	Retained earnings Class B common stock	Treasury stock	Deferred compensation
Beginning balance at Dec. 31, 2019		$ 1,133,253	$ (1,075)				$ 1,992	$ 178	$ 16,483	$ (116,868)	$ 2,377,558	$ (1,075)				$ (1,158,910)	$ 12,820
Increase (decrease) in shareholders' equity
Accounting standards update		us-gaap:AccountingStandardsUpdate201613Member
Net income		$ 59,326									59,326
Other comprehensive (loss) income		(29,576)								(29,576)
Dividends declared:					$ (44,572)	$ (368)								$ (44,572)	$ (368)
Net purchase of treasury stock	[2]	4							4							0
Deferred compensation		0														(772)	772
Ending balance at Mar. 31, 2020		1,116,992					1,992	178	16,487	(146,444)	2,390,869					(1,159,682)	13,592
Beginning balance at Dec. 31, 2019		1,133,253	$ (1,075)				1,992	178	16,483	(116,868)	2,377,558	$ (1,075)				(1,158,910)	12,820
Increase (decrease) in shareholders' equity
Net income		141,303
Other comprehensive (loss) income		10,535								10,535
Ending balance at Jun. 30, 2020		1,194,139					1,992	178	16,487	(106,333)	2,427,905					(1,162,546)	16,456
Beginning balance at Mar. 31, 2020		1,116,992					1,992	178	16,487	(146,444)	2,390,869					(1,159,682)	13,592
Increase (decrease) in shareholders' equity
Net income		81,977									81,977
Other comprehensive (loss) income		40,111								40,111
Dividends declared:					(44,573)	(368)								(44,573)	(368)
Net purchase of treasury stock	[2]	0							0							0
Deferred compensation		0														(3,568)	3,568
Rabbi trust distribution	[3]	0														704	(704)
Ending balance at Jun. 30, 2020		1,194,139					1,992	178	16,487	(106,333)	2,427,905					(1,162,546)	16,456
Beginning balance at Dec. 31, 2020		1,188,048					1,992	178	16,487	(78,143)	2,393,624					(1,163,670)	17,580
Increase (decrease) in shareholders' equity
Net income		73,566									73,566
Other comprehensive (loss) income		(5,289)								(5,289)
Dividends declared:					(47,806)	(395)								(47,806)	(395)
Net purchase of treasury stock	[2]	9							9							0
Deferred compensation		0														(846)	846
Rabbi trust distribution	[3]	0														876	(876)
Ending balance at Mar. 31, 2021		1,208,133					1,992	178	16,496	(83,432)	2,418,989					(1,163,640)	17,550
Beginning balance at Dec. 31, 2020		1,188,048					1,992	178	16,487	(78,143)	2,393,624					(1,163,670)	17,580
Increase (decrease) in shareholders' equity
Net income		152,595
Other comprehensive (loss) income		850								850
Ending balance at Jun. 30, 2021		1,245,102					1,992	178	16,496	(77,293)	2,449,819					(1,167,211)	21,121
Beginning balance at Mar. 31, 2021		1,208,133					1,992	178	16,496	(83,432)	2,418,989					(1,163,640)	17,550
Increase (decrease) in shareholders' equity
Net income		79,029									79,029
Other comprehensive (loss) income		6,139								6,139
Dividends declared:					$ (47,805)	$ (394)								$ (47,805)	$ (394)
Net purchase of treasury stock	[2]	0							0							0
Deferred compensation		0														(3,668)	3,668
Rabbi trust distribution	[3]	0														97	(97)
Ending balance at Jun. 30, 2021		$ 1,245,102					$ 1,992	$ 178	$ 16,496	$ (77,293)	$ 2,449,819					$ (1,167,211)	$ 21,121

[1] The cumulative effect adjustment is related to the implementation of credit loss allowance accounting guidance effective January 1, 2020.

[2] Net purchases of treasury stock in 2021 and 2020 include the repurchase of our Class A common stock in the open market that were subsequently distributed to satisfy stock based compensation awards.

[3] Distributions of our Class A shares were made from the rabbi trust to a retired director and an incentive compensation deferral plan participant in 2021 and to a retired director in 2020.

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STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED) (Parenthetical) - $ / shares	3 Months Ended				6 Months Ended
	Jun. 30, 2021	Mar. 31, 2021	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2021	Jun. 30, 2020
Class A common stock
Dividends declared (in dollars per share)	$ 1.035	$ 1.035	$ 0.965	$ 0.965	$ 2.070	$ 1.930
Class B common stock
Dividends declared (in dollars per share)	$ 155.25	$ 155.25	$ 144.75	$ 144.75	$ 310.50	$ 289.50

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STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Cash flows from operating activities
Management fee received	$ 985,317	$ 937,962
Administrative services reimbursements received	301,509	279,689
Service agreement fee received	11,981	13,108
Net investment income received	18,735	18,749
Commissions paid to agents	(464,550)	(448,622)
Agents bonuses paid	(115,678)	(100,185)
Salaries and wages paid	(113,452)	(100,360)
Employee benefits paid	(16,567)	(15,962)
General operating expenses paid	(126,373)	(133,422)
Administrative services expenses paid	(310,617)	(298,046)
Income taxes paid	(40,503)	(25,625)
Interest paid	(2,082)	(4)
Net cash provided by operating activities	127,720	127,282
Purchase of investments:
Available-for-sale securities	(168,671)	(198,192)
Equity securities	(28,408)	(44,407)
Other investments	(605)	(622)
Proceeds from investments:
Available-for-sale securities sales	59,203	68,977
Available-for-sale securities maturities/calls	99,788	58,722
Equity securities	29,856	35,684
Other investments	869	577
Purchase of fixed assets	(28,197)	(37,426)
Loans to agents	(2,930)	(2,313)
Collections on agent loans	3,584	3,577
Net cash used in investing activities	(35,511)	(115,423)
Cash flows from financing activities
Dividends paid to shareholders	(96,400)	(89,881)
Net payments on long-term borrowings	(1,011)	(979)
Net cash used in financing activities	(97,411)	(90,860)
Net decrease in cash and cash equivalents	(5,202)	(79,001)
Cash and cash equivalents, beginning of period	161,240	336,739
Cash and cash equivalents, end of period	156,038	257,738
Supplemental disclosure of noncash transactions
Transfer of investments from limited partnerships to equity securities	0	4,188
Operating lease assets obtained in exchange for new operating lease liabilities	977	3,440
Liability incurred to purchase fixed assets	$ 13,024	$ 814

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Nature of Operations

6 Months Ended

Jun. 30, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of Operations

Nature of Operations

Erie Indemnity Company ("Indemnity", "we", "us", "our") is a publicly held Pennsylvania business corporation that has since its incorporation in 1925 served as the attorney-in-fact for the subscribers (policyholders) at the Erie Insurance Exchange ("Exchange").  The Exchange, which also commenced business in 1925, is a Pennsylvania-domiciled reciprocal insurer that writes property and casualty insurance.

Our primary function as attorney-in-fact is to perform policy issuance and renewal services on behalf of the subscribers at the Exchange. We also act as attorney-in-fact on behalf of the Exchange with respect to all claims handling and investment management services, as well as the service provider for all claims handling, life insurance, and investment management services for its insurance subsidiaries, collectively referred to as "administrative services". Acting as attorney-in-fact in these two capacities is done in accordance with a subscriber's agreement (a limited power of attorney) executed individually by each subscriber (policyholder), which appoints us as their common attorney-in-fact to transact certain business on their behalf.  Pursuant to the subscriber's agreement for acting as attorney-in-fact in these two capacities, we earn a management fee calculated as a percentage of the direct and affiliated assumed premiums written by the Exchange.

The policy issuance and renewal services we provide to the Exchange are related to the sales, underwriting and issuance of policies. The sales related services we provide include agent compensation and certain sales and advertising support services. Agent compensation includes scheduled commissions to agents based upon premiums written as well as additional commissions and bonuses to agents, which are earned by achieving targeted measures. The underwriting services we provide include underwriting and policy processing. The remaining services we provide include customer service and administrative support. We also provide information technology services that support all the functions listed above. Included in these expenses are allocations of costs for departments that support these policy issuance and renewal functions.

By virtue of its legal structure as a reciprocal insurer, the Exchange does not have any employees or officers. Therefore, it enters into contractual relationships by and through an attorney-in-fact. Indemnity serves as the attorney-in-fact on behalf of the Exchange with respect to its administrative services. The Exchange's insurance subsidiaries also utilize Indemnity for these services in accordance with the service agreements between each of the subsidiaries and Indemnity. Claims handling services include costs incurred in the claims process, including the adjustment, investigation, defense, recording and payment functions. Life insurance management services include costs incurred in the management and processing of life insurance business. Investment management services are related to investment trading activity, accounting and all other functions attributable to the investment of funds. Included in these expenses are allocations of costs for departments that support these administrative functions. The amounts incurred for these services are reimbursed to Indemnity at cost in accordance with the subscriber's agreement and the service agreements. State insurance regulations require that intercompany service agreements and any material amendments be approved in advance by the state insurance department.

Our results of operations are tied to the growth and financial condition of the Exchange. If any events occurred that impaired the Exchange’s ability to grow or sustain its financial condition, including but not limited to reduced financial strength ratings, disruption in the independent agency relationships, significant catastrophe losses, or products not meeting customer demands, the Exchange could find it more difficult to retain its existing business and attract new business. A decline in the business of the Exchange almost certainly would have as a consequence a decline in the total premiums paid and a correspondingly adverse effect on the amount of the management fees we receive. We also have an exposure to a concentration of credit risk related to the unsecured receivables due from the Exchange for its management fee and cost reimbursements. See Note 12, "Concentrations of Credit Risk".

Coronavirus ("COVID-19") pandemic

In March 2020, the outbreak of the coronavirus ("COVID-19") was declared a global pandemic. The uncertainty resulting from COVID-19 continues to evolve and the pandemic’s ultimate impact and duration remain uncertain at this time. We are unable to predict the duration or extent of the business disruption or the financial impact given the ongoing development of the pandemic and its impacts on the economy and financial markets.

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Significant Accounting Policies

6 Months Ended

Jun. 30, 2021

Accounting Policies [Abstract]

Significant Accounting Policies

Significant Accounting Policies

Basis of presentation

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. For further information, refer to the financial statements and footnotes included in our Form 10-K for the year ended December 31, 2020 as filed with the Securities and Exchange Commission on February 25, 2021.

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.

Reclassifications

Certain amounts previously reported have been reclassified for comparative purposes to conform to the current period’s presentation. "Federal income taxes recoverable" is now included in "Prepaid expenses and other current assets" in the Statements of Financial Position. “Equity in earnings (losses) of limited partnerships” is now included in “Net investment income” in the Statements of Operations. The reclassifications had no effect on previously reported net income.

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Revenue

6 Months Ended

Jun. 30, 2021

Revenue from Contract with Customer [Abstract]

Revenue

Revenue

The majority of our revenue is derived from the subscriber’s agreement between us and the subscribers (policyholders) at the Exchange. Pursuant to the subscriber’s agreement, we earn a management fee calculated as a percentage, not to exceed 25%, of all direct and affiliated assumed written premiums of the Exchange. We allocate a portion of our management fee revenue, currently 25% of the direct and affiliated assumed written premiums of the Exchange, between the two performance obligations we have under the subscriber’s agreement. The first performance obligation is to provide policy issuance and renewal services to the subscribers (policyholders) at the Exchange, and the second is to act as attorney-in-fact on behalf of the Exchange, as well as the service provider for its insurance subsidiaries, with respect to all administrative services.

The transaction price, including management fee revenue and administrative service reimbursement revenue, includes variable consideration and is allocated based on the estimated standalone selling prices developed using industry information and other available information for similar services. A constraining estimate of variable consideration exists related to the potential for management fees to be returned if a policy were to be cancelled mid-term. Management fees are returned to the Exchange when policyholders cancel their insurance coverage mid-term and premiums are refunded to them. The constraining estimate is determined using the expected value method, based on both historical and current information. The estimated transaction price, as reduced by the constraint, reflects consideration expected for performance of our services. We update the transaction price and the related allocation at least annually based upon the most recent information available or more frequently if there have been significant changes in any components considered in the transaction price.

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). 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 a four-year period representing the time over which these services are provided. The portion of revenue not yet earned is recorded as a contract liability in the Statements of Financial Position. During the three and six months ending June 30, 2021, we recognized revenue of $10.6 million and $23.9 million, respectively, that was included in the contract liabilities balance as of December 31, 2020. During the three and six months ending June 30, 2020, we recognized revenue of $10.3 million and $23.4 million, respectively, that was included in the contract liabilities balance as of December 31, 2019. The administrative services expenses we incur and the related reimbursements we receive are recorded gross in the Statements of Operations.

Indemnity records a receivable from the Exchange for management fee revenue when the premium is written or assumed by the Exchange. Indemnity collects the management fee from the Exchange when the Exchange collects the premiums from the subscribers (policyholders). As the Exchange issues policies with annual terms only, cash collections generally occur within one year.

The following table disaggregates revenue by our two performance obligations:

	Three months ended June 30,				Six months ended June 30,
(in thousands)	2021		2020		2021		2020
Management fee revenue - policy issuance and renewal services	$	502,271	$	483,795	$	957,989	$	927,545
Management fee revenue - administrative services	14,667		14,813		29,514		29,584
Administrative services reimbursement revenue	157,190		151,965		310,723		303,519
Total administrative services	$	171,857	$	166,778	$	340,237	$	333,103

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Earnings Per Share

6 Months Ended

Jun. 30, 2021

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 10, "Capital Stock".

Class A diluted earnings per share are calculated under the if-converted method, which reflects the conversion of Class B shares to Class A shares. Diluted earnings per share calculations include the dilutive effect of assumed issuance of stock-based awards under compensation plans that have the option to be paid in stock using the treasury stock method.

A reconciliation of the numerators and denominators used in the basic and diluted per-share computations is presented as follows for each class of common stock: 

	Three months ended June 30,
	2021					2020
(dollars in thousands, except per share data)	Allocated net income (numerator)		Weighted shares (denominator)	Per-share amount		Allocated net income (numerator)		Weighted shares (denominator)	Per-share amount
Class A – Basic EPS:
Income available to Class A stockholders	$	78,382	46,188,289	$	1.70	$	81,306	46,187,808	$	1.76
Dilutive effect of stock-based awards	0		13,281	—		0		14,373	—
Assumed conversion of Class B shares	647		6,100,800	—		671		6,100,800	—
Class A – Diluted EPS:
Income available to Class A stockholders on Class A equivalent shares	$	79,029	52,302,370	$	1.51	$	81,977	52,302,981	$	1.57
Class B – Basic and diluted EPS:
Income available to Class B stockholders	$	647	2,542	$	255	$	671	2,542	$	264
	Six months ended June 30,
	2021					2020
(dollars in thousands, except per share data)	Allocated net income (numerator)		Weighted shares (denominator)	Per-share amount		Allocated net income (numerator)		Weighted shares (denominator)	Per-share amount
Class A – Basic EPS:
Income available to Class A stockholders	$	151,346	46,188,573	$	3.28	$	140,146	46,188,299	$	3.03
Dilutive effect of stock-based awards	0		19,790	—		0		24,568	—
Assumed conversion of Class B shares	1,249		6,100,800	—		1,157		6,100,800	—
Class A – Diluted EPS:
Income available to Class A stockholders on Class A equivalent shares	$	152,595	52,309,163	$	2.92	$	141,303	52,313,667	$	2.70
Class B – Basic and diluted EPS:
Income available to Class B stockholders	$	1,249	2,542	$	491	$	1,157	2,542	$	455

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Fair Value

6 Months Ended

Jun. 30, 2021

Fair Value Disclosures [Abstract]

Fair Value

Fair Value

Financial instruments carried at fair value

Our available-for-sale 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 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 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. As of June 30, 2021, nearly all of our available-for-sale and equity securities were priced using a third party pricing service.

The following tables present our fair value measurements on a recurring basis by asset class and level of input as of: 

	June 30, 2021
(in thousands)	Total		Level 1		Level 2		Level 3
Available-for-sale securities:
Corporate debt securities	$	564,689	$	2,461	$	556,150	$	6,078
Collateralized debt obligations	115,442		0		114,692		750
Commercial mortgage-backed securities	112,292		0		95,159		17,133
Residential mortgage-backed securities	93,652		0		90,611		3,041
Other debt securities	29,332		0		26,788		2,544
U.S. Treasury	21,391		0		21,391		0
Total available-for-sale securities	936,798		2,461		904,791		29,546
Equity securities - nonredeemable preferred and common stock:
Financial services sector	75,212		20,628		53,584		1,000
Utilities sector	10,470		3,594		6,876		0
Energy sector	2,952		957		1,995		0
Consumer sector	2,295		607		1,688		0
Communications sector	2,161		1,123		1,038		0
Industrial sector	915		915		0		0
Total equity securities	94,005		27,824		65,181		1,000
Total	$	1,030,803	$	30,285	$	969,972	$	30,546

	December 31, 2020
(in thousands)	Total		Level 1		Level 2		Level 3
Available-for-sale securities:
Corporate debt securities	$	566,425	$	1,281	$	559,319	$	5,825
Collateralized debt obligations	110,447		0		110,447		0
Commercial mortgage-backed securities	120,201		0		100,739		19,462
Residential mortgage-backed securities	112,179		0		111,242		937
Other debt securities	18,984		0		18,984		0
Total available-for-sale securities	928,236		1,281		900,731		26,224
Equity securities - nonredeemable preferred and common stock:
Financial services sector	76,575		24,981		51,594		0
Utilities sector	8,742		3,957		4,785		0
Energy sector	2,206		676		1,530		0
Consumer sector	3,068		576		2,492		0
Communications sector	2,699		2,699		0		0
Industrial sector	800		800		0		0
Total equity securities	94,090		33,689		60,401		0
Total	$	1,022,326	$	34,970	$	961,132	$	26,224

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 – 2021 Quarterly Change:

(in thousands)	Beginning balance at March 31, 2021		Included in earnings(1)		Included in other comprehensive income		Purchases		Sales		Transfers into Level 3(2)		Transfers out of Level 3(2)		Ending balance at June 30, 2021
Available-for-sale securities:
Corporate debt securities	$	5,460	$	14	$	37	$	1,476	$	(303)	$	1,347	$	(1,953)	$	6,078
Collateralized debt obligations	0		0		0		750		0		0		0		750
Commercial mortgage-backed securities	16,241		(102)		(10)		579		(961)		2,624		(1,238)		17,133
Residential mortgage-backed securities	473		(3)		1		0		(224)		3,030		(236)		3,041
Other debt securities	521		0		(4)		2,060		(33)		0		0		2,544
Total available-for-sale securities	22,695		(91)		24		4,865		(1,521)		7,001		(3,427)		29,546
Nonredeemable preferred stock	1,090		5		0		1,000		0		0		(1,095)		1,000
Total Level 3 securities	$	23,785	$	(86)	$	24	$	5,865	$	(1,521)	$	7,001	$	(4,522)	$	30,546

Level 3 Assets – 2021 Year-to-Date Change:

(in thousands)	Beginning balance at December 31, 2020		Included in earnings(1)		Included in other comprehensive income		Purchases		Sales		Transfers into Level 3(2)		Transfers out of Level 3(2)		Ending balance at June 30, 2021
Available-for-sale securities:
Corporate debt securities	$	5,825	$	20	$	79	$	2,258	$	(673)	$	2,549	$	(3,980)	$	6,078
Collateralized debt obligations	0		0		0		750		0		0		0		750
Commercial mortgage-backed securities	19,462		(197)		(447)		2,844		(966)		3,854		(7,417)		17,133
Residential mortgage-backed securities	937		(6)		0		0		(476)		3,030		(444)		3,041
Other debt securities	0		0		(2)		2,588		(42)		0		0		2,544
Total available-for-sale securities	26,224		(183)		(370)		8,440		(2,157)		9,433		(11,841)		29,546
Nonredeemable preferred stock	0		5		0		1,000		0		1,090		(1,095)		1,000
Total Level 3 securities	$	26,224	$	(178)	$	(370)	$	9,440	$	(2,157)	$	10,523	$	(12,936)	$	30,546

Level 3 Assets – 2020 Quarterly Change:

(in thousands)	Beginning balance at March 31, 2020		Included in earnings(1)		Included in other comprehensive income		Purchases		Sales		Transfers into Level 3(2)		Transfers out of Level 3(2)		Ending balance at June 30, 2020
Available-for-sale securities:
Corporate debt securities	$	12,056	$	(2)	$	867	$	783	$	(115)	$	1,142	$	(9,815)	$	4,916
Collateralized debt obligations	0		0		12		247		0		0		0		259
Commercial mortgage-backed securities	7,383		(34)		268		6,891		(201)		4,334		(575)		18,066
Total available-for-sale securities	19,439		(36)		1,147		7,921		(316)		5,476		(10,390)		23,241
Nonredeemable preferred stock	0		(25)		0		820		0		0		0		795
Total Level 3 securities	$	19,439	$	(61)	$	1,147	$	8,741	$	(316)	$	5,476	$	(10,390)	$	24,036

Level 3 Assets – 2020 Year-to-Date Change:

(in thousands)	Beginning balance at December 31, 2019		Included in earnings(1)		Included in other comprehensive income		Purchases		Sales		Transfers into Level 3(2)		Transfers out of Level 3(2)		Ending balance at June 30, 2020
Available-for-sale securities:
Corporate debt securities	$	8,324	$	5	$	(511)	$	2,501	$	(542)	$	8,037	$	(12,898)	$	4,916
Collateralized debt obligations	0		0		12		247		0		0		0		259
Commercial mortgage-backed securities	3,321		(42)		120		7,203		(287)		8,891		(1,140)		18,066
Total available-for-sale securities	11,645		(37)		(379)		9,951		(829)		16,928		(14,038)		23,241
Nonredeemable preferred stock	0		(25)		0		820		0		0		0		795
Total Level 3 securities	$	11,645	$	(62)	$	(379)	$	10,771	$	(829)	$	16,928	$	(14,038)	$	24,036

(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.

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:

	June 30, 2021				December 31, 2020
(in thousands)	Carrying value		Fair value		Carrying value		Fair value
Agent loans (1)	$	68,558	$	72,593	$	69,212	$	73,854
Long-term borrowings (2)	95,103		103,036		96,113		113,054

(1)The discount rate used to calculate fair value at June 30, 2021 is reflective of a decrease in the BB+ financial yield curve.

(2)The discount rate used to calculate fair value at June 30, 2021 is reflective of an increase in U.S. Treasury bond yields.

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Investments

6 Months Ended

Jun. 30, 2021

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, net of credit loss allowance, of our available-for-sale securities as of:

	June 30, 2021
(in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Corporate debt securities	$	548,975	$	16,666	$	952	$	564,689
Collateralized debt obligations	115,087		574		219		115,442
Commercial mortgage-backed securities	109,277		3,378		363		112,292
Residential mortgage-backed securities	92,142		1,811		301		93,652
Other debt securities	28,905		462		35		29,332
U.S. Treasury	20,648		743		0		21,391
Total available-for-sale securities, net	$	915,034	$	23,634	$	1,870	$	936,798

	December 31, 2020
(in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Corporate debt securities	$	546,096	$	21,843	$	1,514	$	566,425
Collateralized debt obligations	110,121		657		331		110,447
Commercial mortgage-backed securities	115,346		5,090		235		120,201
Residential mortgage-backed securities	108,840		3,373		34		112,179
Other debt securities	18,387		606		9		18,984
Total available-for-sale securities, net	$	898,790	$	31,569	$	2,123	$	928,236

The amortized cost and estimated fair value of available-for-sale securities at June 30, 2021 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.

	June 30, 2021
	Amortized		Estimated
(in thousands)	cost		fair value
Due in one year or less	$	20,580	$	20,856
Due after one year through five years	429,579		442,409
Due after five years through ten years	194,317		197,441
Due after ten years	270,558		276,092
Total available-for-sale securities	$	915,034	$	936,798

The below securities have been evaluated and determined to be temporary declines in fair value 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:

	June 30, 2021
	Less than 12 months				12 months or longer				Total
(dollars in thousands)	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses		No. of holdings
Corporate debt securities	$	80,035	$	584	$	8,703	$	368	$	88,738	$	952	289
Collateralized debt obligations	45,288		148		16,642		71		61,930		219		73
Commercial mortgage-backed securities	9,240		329		476		34		9,716		363		21
Residential mortgage-backed securities	29,064		301		0		0		29,064		301		46
Other debt securities	5,606		35		0		0		5,606		35		7
Total available-for-sale securities	$	169,233	$	1,397	$	25,821	$	473	$	195,054	$	1,870	436
Quality breakdown of available-for-sale securities:
Investment grade	$	140,765	$	1,212	$	17,262	$	107	$	158,027	$	1,319	174
Non-investment grade	28,468		185		8,559		366		37,027		551		262
Total available-for-sale securities	$	169,233	$	1,397	$	25,821	$	473	$	195,054	$	1,870	436

	December 31, 2020
	Less than 12 months				12 months or longer				Total
(dollars in thousands)	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses		No. of holdings
Corporate debt securities	$	39,693	$	644	$	7,952	$	870	$	47,645	$	1,514	257
Collateralized debt obligations	50,036		232		10,899		99		60,935		331		65
Commercial mortgage-backed securities	16,582		235		0		0		16,582		235		31
Residential mortgage-backed securities	8,163		34		0		0		8,163		34		13
Other debt securities	1,019		9		0		0		1,019		9		4
Total available-for-sale securities	$	115,493	$	1,154	$	18,851	$	969	$	134,344	$	2,123	370
Quality breakdown of available-for-sale securities:
Investment grade	$	86,807	$	561	$	10,899	$	99	$	97,706	$	660	119
Non-investment grade	28,686		593		7,952		870		36,638		1,463		251
Total available-for-sale securities	$	115,493	$	1,154	$	18,851	$	969	$	134,344	$	2,123	370

Credit loss allowance on investments

As of June 30, 2021 and December 31, 2020, the current expected credit loss allowance on agent loans was $1.1 million in both periods. The current expected credit loss on available-for-sale securities was less than $0.1 million at June 30, 2021, and $0.2 million at December 31, 2020.

Net investment income

Investment income (loss), net of expenses, was generated from the following portfolios:

	Three months ended June 30,				Six months ended June 30,
(in thousands)	2021		2020		2021		2020
Available-for-sale securities	$	5,790	$	5,670	$	11,987	$	11,458
Equity securities	1,116		901		2,318		1,757
Limited partnerships (1)	6,151		(2,329)		15,197		(6,034)
Cash equivalents and other	935		1,115		1,912		3,089
Total investment income	13,992		5,357		31,414		10,270
Less: investment expenses	342		313		667		562
Investment income, net of expenses	$	13,650	$	5,044	$	30,747	$	9,708

(1)Equity in earnings (losses) of limited partnerships includes both realized gains (losses) and unrealized valuation changes. Our limited partnership investments are included in the line item "Other assets" in the Statements of Financial Position. We have made no new limited partnership commitments since 2006, and the balance of limited partnership investments is expected to decline over time as additional distributions are received.

Realized investment gains (losses)

Realized gains (losses) on investments were as follows:

	Three months ended June 30,				Six months ended June 30,
(in thousands)	2021		2020		2021		2020
Available-for-sale securities:
Gross realized gains	$	1,075	$	1,721	$	2,998	$	2,795
Gross realized losses	(678)		(1,366)		(1,118)		(1,825)
Net realized gains on available-for-sale securities	397		355		1,880		970
Equity securities (1)	2,371		6,170		1,692		(5,252)
Miscellaneous	1		1		1		2
Net realized investment gains (losses)	$	2,769	$	6,526	$	3,573	$	(4,280)

(1)While our investment portfolio was negatively impacted in the first quarter of 2020 primarily due to the financial market volatility resulting from the COVID-19 pandemic, market conditions partially recovered in the second quarter of 2020, resulting in significant gains in the three months ended June 30, 2020.

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:

	Three months ended June 30,				Six months ended June 30,
(in thousands)	2021		2020		2021		2020
Equity securities:
Net gains (losses) recognized during the period (1)	$	2,371	$	6,170	$	1,692	$	(5,252)
Less: net gains (losses) recognized on securities sold	128		1,357		(293)		(2,157)
Net unrealized gains (losses) recognized on securities held at reporting date	$	2,243	$	4,813	$	1,985	$	(3,095)

(1)While our investment portfolio was negatively impacted in the first quarter of 2020 primarily due to the financial market volatility resulting from the COVID-19 pandemic, market conditions partially recovered in the second quarter of 2020, resulting in significant gains in the three months ended June 30, 2020.

Net impairment (losses) recoveries recognized in earnings

Impairments on available-for-sale securities and agent loans were as follows:

	Three months ended June 30,				Six months ended June 30,
(in thousands)	2021		2020		2021		2020
Available-for-sale securities:
Intent to sell	$	—	$	—	$	—	$	(2,242)
Credit (impaired) recovered	(1)		(17)		86		(658)
Total available-for-sale securities	(1)		(17)		86		(2,900)
Agent loans - expected credit losses	—		—		—		(170)
Net impairment (losses) recoveries recognized in earnings	$	(1)	$	(17)	$	86	$	(3,070)

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Borrowing Arrangements

6 Months Ended

Jun. 30, 2021

Debt Disclosure [Abstract]

Borrowing Arrangements

Borrowing Arrangements

Bank line of credit

As of June 30, 2021, we have access to a $100 million bank revolving line of credit with a $25 million letter of credit sublimit that expires on October 30, 2023. As of June 30, 2021, a total of $99.1 million remains available under the facility due to $0.9 million outstanding letters of credit, which reduce the availability for letters of credit to $24.1 million.  We had no borrowings outstanding on our line of credit as of June 30, 2021.  Investments with a fair value of $123.4 million were pledged as collateral on the line at June 30, 2021. The investments pledged as collateral have no trading restrictions and are reported as available-for-sale securities and cash and cash equivalents as of June 30, 2021. The banks require compliance with certain covenants, which include leverage ratios and debt restrictions, for our line of credit.  We are in compliance with all covenants at June 30, 2021.

Term loan credit facility

In 2016, we entered into a credit agreement for a $100 million senior secured draw term loan credit facility ("Credit Facility") for the acquisition of real property and construction of an office building that will serve as part of our principal headquarters. On January 1, 2019, the Credit Facility converted to a fully-amortized term loan with monthly payments of principal and interest at a fixed rate of 4.35% over a period of 28 years. Investments with a fair value of $122.6 million were pledged as collateral for the facility and are reported as available-for-sale securities and cash and cash equivalents as of June 30, 2021. The bank requires compliance with certain covenants, which include leverage ratios, debt restrictions and minimum net worth, for our Credit Facility. We are in compliance with all covenants at June 30, 2021.

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 on our Statements of Financial Position. 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
2021	$	1,021
2022		2,109
2023		2,226
2024		2,302
2025		2,449
Thereafter		84,996

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Postretirement Benefits

6 Months Ended

Jun. 30, 2021

Retirement Benefits [Abstract]

Postretirement Benefits

Postretirement Benefits

Pension plans

Our pension plans consist of a noncontributory defined benefit pension plan covering substantially all employees and an unfunded supplemental employee retirement plan for certain members of executive and senior management. Although we are the sponsor of these postretirement plans and record the funded status of these plans, the Exchange and its subsidiaries reimburse us for approximately 58% of the annual benefit expense of these plans, which represents pension benefits for employees performing administrative services and their allocated share of costs for employees in departments that support the administrative functions.

The cost of our pension plans are as follows:

	Three months ended June 30,				Six months ended June 30,
(in thousands)	2021		2020		2021		2020
Service cost for benefits earned	$	13,260	$	10,874	$	26,520	$	21,747
Interest cost on benefits obligation	9,206		9,394		18,412		18,789
Expected return on plan assets	(12,568)		(12,353)		(25,137)		(24,706)
Prior service cost amortization	357		335		714		671
Net actuarial loss amortization	4,026		3,031		8,053		6,062
Pension plan cost (1)	$	14,281	$	11,281	$	28,562	$	22,563

(1)The components of pension plan costs other than the service cost component are included in the line item "Other expense" in the Statements of Operations after reimbursements from the Exchange and its subsidiaries.

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Income Taxes

6 Months Ended

Jun. 30, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Income tax expense is provided on an interim basis based upon our estimate of the annual effective income tax rate, adjusted each quarter for discrete items. For the three months ended June 30, 2021 and 2020, our effective tax rate was 20.9% and 20.0%, respectively, and for the six months ended June 30, 2021 and 2020, our effective tax rate was 20.7% and 20.9%, respectively. Impacting our effective tax rate in the second quarter of 2020 was the reversal of a valuation allowance generated in the first quarter of 2020 by the financial market volatility resulting from the COVID-19 pandemic, which decreased our effective tax rate by 0.9%.

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Capital Stock

6 Months Ended

Jun. 30, 2021

Class of Stock Disclosures [Abstract]

Capital Stock

Capital Stock

Class A and B common stock

Holders of Class B shares may, at their option, convert their shares into Class A shares at the rate of 2,400 Class A shares per Class B share.  There were no shares of Class B common stock converted into Class A common stock during the six months ended June 30, 2021 and the year ended December 31, 2020. There is no provision for conversion of Class A shares to Class B shares, and Class B shares surrendered for conversion cannot be reissued.

Stock repurchases

In 2011, our Board of Directors approved a continuation of the current stock repurchase program of $150 million, with no time limitation.  There were no shares repurchased under this program during the six months ended June 30, 2021 and the year ended December 31, 2020. We had approximately $17.8 million of repurchase authority remaining under this program at June 30, 2021.

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Accumulated Other Comprehensive Income (Loss)

6 Months Ended

Jun. 30, 2021

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Accumulated Other Comprehensive Income (Loss)

Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income ("AOCI") (loss) by component, including amounts reclassified to other comprehensive income ("OCI") (loss) and the related line item in the Statements of Operations where net income is presented, are as follows:

	Three months ended						Three months ended
	June 30, 2021						June 30, 2020
(in thousands)	Before Tax		Income Tax		Net		Before Tax		Income Tax		Net
Investment securities:
AOCI (loss), beginning of period (1)	$	18,306	$	3,845	$	14,461	$	(27,761)	$	0	$	(27,761)
OCI before reclassifications (1)	3,783		795		2,988		40,364		2,646		37,718
Realized investment gains	(397)		(84)		(313)		(355)		(75)		(280)
Impairment losses	1		0		1		17		4		13
OCI	3,387		711		2,676		40,026		2,575		37,451
AOCI, end of period (1)	$	21,693	$	4,556	$	17,137	$	12,265	$	2,575	$	9,690
Pension and other postretirement plans:
AOCI (loss), beginning of period	$	(123,917)	$	(26,024)	$	(97,893)	$	(150,233)	$	(31,550)	$	(118,683)
Amortization of prior service costs	357		75		282		336		70		266
Amortization of net actuarial loss	4,027		846		3,181		3,031		637		2,394
OCI	4,384		921		3,463		3,367		707		2,660
AOCI (loss), end of period	$	(119,533)	$	(25,103)	$	(94,430)	$	(146,866)	$	(30,843)	$	(116,023)
Total
AOCI (loss), beginning of period	$	(105,611)	$	(22,179)	$	(83,432)	$	(177,994)	$	(31,550)	$	(146,444)
Investment securities	3,387		711		2,676		40,026		2,575		37,451
Pension and other postretirement plans	4,384		921		3,463		3,367		707		2,660
OCI	7,771		1,632		6,139		43,393		3,282		40,111
AOCI (loss), end of period	$	(97,840)	$	(20,547)	$	(77,293)	$	(134,601)	$	(28,268)	$	(106,333)
	Six months ended						Six months ended
	June 30, 2021						June 30, 2020
(in thousands)	Before Tax		Income Tax		Net		Before Tax		Income Tax		Net
Investment securities:
AOCI, beginning of period	$	29,384	$	6,171	$	23,213	$	5,664	$	1,189	$	4,475
OCI (loss) before reclassifications	(5,725)		(1,202)		(4,523)		4,671		981		3,690
Realized investment gains	(1,880)		(395)		(1,485)		(970)		(204)		(766)
Impairment (recoveries) losses	(86)		(18)		(68)		2,900		609		2,291
OCI (loss)	(7,691)		(1,615)		(6,076)		6,601		1,386		5,215
AOCI, end of period	$	21,693	$	4,556	$	17,137	$	12,265	$	2,575	$	9,690
Pension and other postretirement plans:
AOCI (loss), beginning of period	$	(128,300)	$	(26,944)	$	(101,356)	$	(153,600)	$	(32,257)	$	(121,343)
Amortization of prior service costs	714		150		564		672		141		531
Amortization of net actuarial loss	8,053		1,691		6,362		6,062		1,273		4,789
OCI	8,767		1,841		6,926		6,734		1,414		5,320
AOCI (loss), end of period	$	(119,533)	$	(25,103)	$	(94,430)	$	(146,866)	$	(30,843)	$	(116,023)
Total
AOCI (loss), beginning of period	$	(98,916)	$	(20,773)	$	(78,143)	$	(147,936)	$	(31,068)	$	(116,868)
Investment securities	(7,691)		(1,615)		(6,076)		6,601		1,386		5,215
Pension and other postretirement plans	8,767		1,841		6,926		6,734		1,414		5,320
OCI	1,076		226		850		13,335		2,800		10,535
AOCI (loss), end of period	$	(97,840)	$	(20,547)	$	(77,293)	$	(134,601)	$	(28,268)	$	(106,333)

(1)As of June 30, 2020, the valuation allowance that was recognized on the deferred tax asset primarily related to unrealized losses on our investments at March 31, 2020 was fully released.

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Concentrations of Credit Risk	6 Months Ended
	Jun. 30, 2021
Risks and Uncertainties [Abstract]
Concentrations of Credit Risk	Concentrations of Credit RiskFinancial instruments could potentially expose us to concentrations of credit risk, including unsecured receivables from the Exchange. A large majority of our revenue and receivables are from the Exchange and its affiliates. See also Note 1, "Nature of Operations". Net management fee amounts and other reimbursements due from the Exchange and its affiliates were $504.0 million and $494.6 million at June 30, 2021 and December 31, 2020, respectively, which includes a current expected credit loss allowance of $0.6 million in both periods.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2021

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

In 2020, we entered into an agreement with a bank for the establishment of a loan participation program for agent loans. The maximum amount of loans to be funded through this program is $100 million. We have committed to fund a minimum of 30% of each loan executed through this program. As of June 30, 2021, the total loans executed under this agreement totaled $22.5 million, of which our portion of the loans is $8.7 million. Additionally, we have agreed to guarantee a portion of the funding provided by the other participants in the program in the event of default. As of June 30, 2021, our maximum potential amount of future payments on the guaranteed portion is $2.6 million. All loan payments under the participation program are current as of June 30, 2021.

We are involved in litigation arising in the ordinary course of conducting business.  In accordance with current accounting standards for loss contingencies and based upon information currently known to us, we establish reserves for litigation when it is probable that a loss associated with a claim or proceeding has been incurred and the amount of the loss or range of loss can be reasonably estimated.  When no amount within the range of loss is a better estimate than any other amount, we accrue the minimum amount of the estimable loss.  To the extent that such litigation against us may have an exposure to a loss in excess of the amount we have accrued, we believe that such excess would not be material to our financial condition, results of operations, or cash flows.  Legal fees are expensed as incurred.  We believe that our accruals for legal proceedings are appropriate and, individually and in the aggregate, are not expected to be material to our financial condition, results of operations, or cash flows.

We review all litigation on an ongoing basis when making accrual and disclosure decisions.  For certain legal proceedings, we cannot reasonably estimate losses or a range of loss, if any, particularly for proceedings that are in their early stages of development or where the plaintiffs seek indeterminate damages.  Various factors, including, but not limited to, the outcome of potentially lengthy discovery and the resolution of important factual questions, may need to be determined before probability can be established or before a loss or range of loss can be reasonably estimated.  If the loss contingency in question is not both probable and reasonably estimable, we do not establish an accrual and the matter will continue to be monitored for any developments that would make the loss contingency both probable and reasonably estimable.  In the event that a legal proceeding results in a substantial judgment against, or settlement by, us, there can be no assurance that any resulting liability or financial commitment would not have a material adverse effect on the financial condition, results of operations, or cash flows.

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Subsequent Events	6 Months Ended
	Jun. 30, 2021
Subsequent Events [Abstract]
Subsequent Events	Subsequent EventsNo items were identified in this period subsequent to the financial statement date that required adjustment or additional disclosure.

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Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2021

Accounting Policies [Abstract]

Basis of presentation

Basis of presentation

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. For further information, refer to the financial statements and footnotes included in our Form 10-K for the year ended December 31, 2020 as filed with the Securities and Exchange Commission on February 25, 2021.

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.

Reclassifications

ReclassificationsCertain amounts previously reported have been reclassified for comparative purposes to conform to the current period’s presentation. "Federal income taxes recoverable" is now included in "Prepaid expenses and other current assets" in the Statements of Financial Position. “Equity in earnings (losses) of limited partnerships” is now included in “Net investment income” in the Statements of Operations. The reclassifications had no effect on previously reported net income.

Revenue

The majority of our revenue is derived from the subscriber’s agreement between us and the subscribers (policyholders) at the Exchange. Pursuant to the subscriber’s agreement, we earn a management fee calculated as a percentage, not to exceed 25%, of all direct and affiliated assumed written premiums of the Exchange. We allocate a portion of our management fee revenue, currently 25% of the direct and affiliated assumed written premiums of the Exchange, between the two performance obligations we have under the subscriber’s agreement. The first performance obligation is to provide policy issuance and renewal services to the subscribers (policyholders) at the Exchange, and the second is to act as attorney-in-fact on behalf of the Exchange, as well as the service provider for its insurance subsidiaries, with respect to all administrative services.

The transaction price, including management fee revenue and administrative service reimbursement revenue, includes variable consideration and is allocated based on the estimated standalone selling prices developed using industry information and other available information for similar services. A constraining estimate of variable consideration exists related to the potential for management fees to be returned if a policy were to be cancelled mid-term. Management fees are returned to the Exchange when policyholders cancel their insurance coverage mid-term and premiums are refunded to them. The constraining estimate is determined using the expected value method, based on both historical and current information. The estimated transaction price, as reduced by the constraint, reflects consideration expected for performance of our services. We update the transaction price and the related allocation at least annually based upon the most recent information available or more frequently if there have been significant changes in any components considered in the transaction price.

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). 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 a four-year period representing the time over which these services are provided. The portion of revenue not yet earned is recorded as a contract liability in the Statements of Financial Position.The administrative services expenses we incur and the related reimbursements we receive are recorded gross in the Statements of Operations. Indemnity records a receivable from the Exchange for management fee revenue when the premium is written or assumed by the Exchange. Indemnity collects the management fee from the Exchange when the Exchange collects the premiums from the subscribers (policyholders). As the Exchange issues policies with annual terms only, cash collections generally occur within one year.

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 10, "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.

Financial instruments carried at fair value

Financial instruments carried at fair value

Our available-for-sale 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 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 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. As of June 30, 2021, nearly all of our available-for-sale and equity securities were priced using a third party pricing service.

Fair value of financial statements, 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 the financial condition, results of operations, or cash flows.

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Revenue (Tables)

6 Months Ended

Jun. 30, 2021

Revenue from Contract with Customer [Abstract]

Schedule of Disaggregation of Revenue by Performance Obligation

The following table disaggregates revenue by our two performance obligations:

	Three months ended June 30,				Six months ended June 30,
(in thousands)	2021		2020		2021		2020
Management fee revenue - policy issuance and renewal services	$	502,271	$	483,795	$	957,989	$	927,545
Management fee revenue - administrative services	14,667		14,813		29,514		29,584
Administrative services reimbursement revenue	157,190		151,965		310,723		303,519
Total administrative services	$	171,857	$	166,778	$	340,237	$	333,103

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Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2021

Earnings Per Share [Abstract]

Schedule of Reconciliation of the Numerators and Denominators Used in the Basic and Diluted Per-Share Computations

A reconciliation of the numerators and denominators used in the basic and diluted per-share computations is presented as follows for each class of common stock: 

	Three months ended June 30,
	2021					2020
(dollars in thousands, except per share data)	Allocated net income (numerator)		Weighted shares (denominator)	Per-share amount		Allocated net income (numerator)		Weighted shares (denominator)	Per-share amount
Class A – Basic EPS:
Income available to Class A stockholders	$	78,382	46,188,289	$	1.70	$	81,306	46,187,808	$	1.76
Dilutive effect of stock-based awards	0		13,281	—		0		14,373	—
Assumed conversion of Class B shares	647		6,100,800	—		671		6,100,800	—
Class A – Diluted EPS:
Income available to Class A stockholders on Class A equivalent shares	$	79,029	52,302,370	$	1.51	$	81,977	52,302,981	$	1.57
Class B – Basic and diluted EPS:
Income available to Class B stockholders	$	647	2,542	$	255	$	671	2,542	$	264
	Six months ended June 30,
	2021					2020
(dollars in thousands, except per share data)	Allocated net income (numerator)		Weighted shares (denominator)	Per-share amount		Allocated net income (numerator)		Weighted shares (denominator)	Per-share amount
Class A – Basic EPS:
Income available to Class A stockholders	$	151,346	46,188,573	$	3.28	$	140,146	46,188,299	$	3.03
Dilutive effect of stock-based awards	0		19,790	—		0		24,568	—
Assumed conversion of Class B shares	1,249		6,100,800	—		1,157		6,100,800	—
Class A – Diluted EPS:
Income available to Class A stockholders on Class A equivalent shares	$	152,595	52,309,163	$	2.92	$	141,303	52,313,667	$	2.70
Class B – Basic and diluted EPS:
Income available to Class B stockholders	$	1,249	2,542	$	491	$	1,157	2,542	$	455

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Fair Value (Tables)

6 Months Ended

Jun. 30, 2021

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: 

	June 30, 2021
(in thousands)	Total		Level 1		Level 2		Level 3
Available-for-sale securities:
Corporate debt securities	$	564,689	$	2,461	$	556,150	$	6,078
Collateralized debt obligations	115,442		0		114,692		750
Commercial mortgage-backed securities	112,292		0		95,159		17,133
Residential mortgage-backed securities	93,652		0		90,611		3,041
Other debt securities	29,332		0		26,788		2,544
U.S. Treasury	21,391		0		21,391		0
Total available-for-sale securities	936,798		2,461		904,791		29,546
Equity securities - nonredeemable preferred and common stock:
Financial services sector	75,212		20,628		53,584		1,000
Utilities sector	10,470		3,594		6,876		0
Energy sector	2,952		957		1,995		0
Consumer sector	2,295		607		1,688		0
Communications sector	2,161		1,123		1,038		0
Industrial sector	915		915		0		0
Total equity securities	94,005		27,824		65,181		1,000
Total	$	1,030,803	$	30,285	$	969,972	$	30,546

	December 31, 2020
(in thousands)	Total		Level 1		Level 2		Level 3
Available-for-sale securities:
Corporate debt securities	$	566,425	$	1,281	$	559,319	$	5,825
Collateralized debt obligations	110,447		0		110,447		0
Commercial mortgage-backed securities	120,201		0		100,739		19,462
Residential mortgage-backed securities	112,179		0		111,242		937
Other debt securities	18,984		0		18,984		0
Total available-for-sale securities	928,236		1,281		900,731		26,224
Equity securities - nonredeemable preferred and common stock:
Financial services sector	76,575		24,981		51,594		0
Utilities sector	8,742		3,957		4,785		0
Energy sector	2,206		676		1,530		0
Consumer sector	3,068		576		2,492		0
Communications sector	2,699		2,699		0		0
Industrial sector	800		800		0		0
Total equity securities	94,090		33,689		60,401		0
Total	$	1,022,326	$	34,970	$	961,132	$	26,224

Schedule of Roll Forward of Level 3 Fair Value Measurements on a Recurring Basis

Level 3 Assets – 2021 Quarterly Change:

(in thousands)	Beginning balance at March 31, 2021		Included in earnings(1)		Included in other comprehensive income		Purchases		Sales		Transfers into Level 3(2)		Transfers out of Level 3(2)		Ending balance at June 30, 2021
Available-for-sale securities:
Corporate debt securities	$	5,460	$	14	$	37	$	1,476	$	(303)	$	1,347	$	(1,953)	$	6,078
Collateralized debt obligations	0		0		0		750		0		0		0		750
Commercial mortgage-backed securities	16,241		(102)		(10)		579		(961)		2,624		(1,238)		17,133
Residential mortgage-backed securities	473		(3)		1		0		(224)		3,030		(236)		3,041
Other debt securities	521		0		(4)		2,060		(33)		0		0		2,544
Total available-for-sale securities	22,695		(91)		24		4,865		(1,521)		7,001		(3,427)		29,546
Nonredeemable preferred stock	1,090		5		0		1,000		0		0		(1,095)		1,000
Total Level 3 securities	$	23,785	$	(86)	$	24	$	5,865	$	(1,521)	$	7,001	$	(4,522)	$	30,546

Level 3 Assets – 2021 Year-to-Date Change:

(in thousands)	Beginning balance at December 31, 2020		Included in earnings(1)		Included in other comprehensive income		Purchases		Sales		Transfers into Level 3(2)		Transfers out of Level 3(2)		Ending balance at June 30, 2021
Available-for-sale securities:
Corporate debt securities	$	5,825	$	20	$	79	$	2,258	$	(673)	$	2,549	$	(3,980)	$	6,078
Collateralized debt obligations	0		0		0		750		0		0		0		750
Commercial mortgage-backed securities	19,462		(197)		(447)		2,844		(966)		3,854		(7,417)		17,133
Residential mortgage-backed securities	937		(6)		0		0		(476)		3,030		(444)		3,041
Other debt securities	0		0		(2)		2,588		(42)		0		0		2,544
Total available-for-sale securities	26,224		(183)		(370)		8,440		(2,157)		9,433		(11,841)		29,546
Nonredeemable preferred stock	0		5		0		1,000		0		1,090		(1,095)		1,000
Total Level 3 securities	$	26,224	$	(178)	$	(370)	$	9,440	$	(2,157)	$	10,523	$	(12,936)	$	30,546

Level 3 Assets – 2020 Quarterly Change:

(in thousands)	Beginning balance at March 31, 2020		Included in earnings(1)		Included in other comprehensive income		Purchases		Sales		Transfers into Level 3(2)		Transfers out of Level 3(2)		Ending balance at June 30, 2020
Available-for-sale securities:
Corporate debt securities	$	12,056	$	(2)	$	867	$	783	$	(115)	$	1,142	$	(9,815)	$	4,916
Collateralized debt obligations	0		0		12		247		0		0		0		259
Commercial mortgage-backed securities	7,383		(34)		268		6,891		(201)		4,334		(575)		18,066
Total available-for-sale securities	19,439		(36)		1,147		7,921		(316)		5,476		(10,390)		23,241
Nonredeemable preferred stock	0		(25)		0		820		0		0		0		795
Total Level 3 securities	$	19,439	$	(61)	$	1,147	$	8,741	$	(316)	$	5,476	$	(10,390)	$	24,036

Level 3 Assets – 2020 Year-to-Date Change:

(in thousands)	Beginning balance at December 31, 2019		Included in earnings(1)		Included in other comprehensive income		Purchases		Sales		Transfers into Level 3(2)		Transfers out of Level 3(2)		Ending balance at June 30, 2020
Available-for-sale securities:
Corporate debt securities	$	8,324	$	5	$	(511)	$	2,501	$	(542)	$	8,037	$	(12,898)	$	4,916
Collateralized debt obligations	0		0		12		247		0		0		0		259
Commercial mortgage-backed securities	3,321		(42)		120		7,203		(287)		8,891		(1,140)		18,066
Total available-for-sale securities	11,645		(37)		(379)		9,951		(829)		16,928		(14,038)		23,241
Nonredeemable preferred stock	0		(25)		0		820		0		0		0		795
Total Level 3 securities	$	11,645	$	(62)	$	(379)	$	10,771	$	(829)	$	16,928	$	(14,038)	$	24,036

(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.

Schedule of Fair Value Disclosure of Asset and Liability Not Measured 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:

	June 30, 2021				December 31, 2020
(in thousands)	Carrying value		Fair value		Carrying value		Fair value
Agent loans (1)	$	68,558	$	72,593	$	69,212	$	73,854
Long-term borrowings (2)	95,103		103,036		96,113		113,054

(1)The discount rate used to calculate fair value at June 30, 2021 is reflective of a decrease in the BB+ financial yield curve.

(2)The discount rate used to calculate fair value at June 30, 2021 is reflective of an increase in U.S. Treasury bond yields.

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Investments (Tables)

6 Months Ended

Jun. 30, 2021

Investments [Abstract]

Schedule of Reconciliation of Cost to Fair Value, Net of Credit Loss Allowance, of Available-For-Sale Securities

The following tables summarize the cost and fair value, net of credit loss allowance, of our available-for-sale securities as of:

	June 30, 2021
(in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Corporate debt securities	$	548,975	$	16,666	$	952	$	564,689
Collateralized debt obligations	115,087		574		219		115,442
Commercial mortgage-backed securities	109,277		3,378		363		112,292
Residential mortgage-backed securities	92,142		1,811		301		93,652
Other debt securities	28,905		462		35		29,332
U.S. Treasury	20,648		743		0		21,391
Total available-for-sale securities, net	$	915,034	$	23,634	$	1,870	$	936,798

	December 31, 2020
(in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Corporate debt securities	$	546,096	$	21,843	$	1,514	$	566,425
Collateralized debt obligations	110,121		657		331		110,447
Commercial mortgage-backed securities	115,346		5,090		235		120,201
Residential mortgage-backed securities	108,840		3,373		34		112,179
Other debt securities	18,387		606		9		18,984
Total available-for-sale securities, net	$	898,790	$	31,569	$	2,123	$	928,236

Schedule of Amortized Cost and Estimated Fair Value of Available-For-Sale Securities by Remaining Contractual Term to Maturity

The amortized cost and estimated fair value of available-for-sale securities at June 30, 2021 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.

	June 30, 2021
	Amortized		Estimated
(in thousands)	cost		fair value
Due in one year or less	$	20,580	$	20,856
Due after one year through five years	429,579		442,409
Due after five years through ten years	194,317		197,441
Due after ten years	270,558		276,092
Total available-for-sale securities	$	915,034	$	936,798

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 declines in fair value 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:

	June 30, 2021
	Less than 12 months				12 months or longer				Total
(dollars in thousands)	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses		No. of holdings
Corporate debt securities	$	80,035	$	584	$	8,703	$	368	$	88,738	$	952	289
Collateralized debt obligations	45,288		148		16,642		71		61,930		219		73
Commercial mortgage-backed securities	9,240		329		476		34		9,716		363		21
Residential mortgage-backed securities	29,064		301		0		0		29,064		301		46
Other debt securities	5,606		35		0		0		5,606		35		7
Total available-for-sale securities	$	169,233	$	1,397	$	25,821	$	473	$	195,054	$	1,870	436
Quality breakdown of available-for-sale securities:
Investment grade	$	140,765	$	1,212	$	17,262	$	107	$	158,027	$	1,319	174
Non-investment grade	28,468		185		8,559		366		37,027		551		262
Total available-for-sale securities	$	169,233	$	1,397	$	25,821	$	473	$	195,054	$	1,870	436

	December 31, 2020
	Less than 12 months				12 months or longer				Total
(dollars in thousands)	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses		No. of holdings
Corporate debt securities	$	39,693	$	644	$	7,952	$	870	$	47,645	$	1,514	257
Collateralized debt obligations	50,036		232		10,899		99		60,935		331		65
Commercial mortgage-backed securities	16,582		235		0		0		16,582		235		31
Residential mortgage-backed securities	8,163		34		0		0		8,163		34		13
Other debt securities	1,019		9		0		0		1,019		9		4
Total available-for-sale securities	$	115,493	$	1,154	$	18,851	$	969	$	134,344	$	2,123	370
Quality breakdown of available-for-sale securities:
Investment grade	$	86,807	$	561	$	10,899	$	99	$	97,706	$	660	119
Non-investment grade	28,686		593		7,952		870		36,638		1,463		251
Total available-for-sale securities	$	115,493	$	1,154	$	18,851	$	969	$	134,344	$	2,123	370

Schedule of Investment Income, Net of Expenses, from Portfolios

Investment income (loss), net of expenses, was generated from the following portfolios:

	Three months ended June 30,				Six months ended June 30,
(in thousands)	2021		2020		2021		2020
Available-for-sale securities	$	5,790	$	5,670	$	11,987	$	11,458
Equity securities	1,116		901		2,318		1,757
Limited partnerships (1)	6,151		(2,329)		15,197		(6,034)
Cash equivalents and other	935		1,115		1,912		3,089
Total investment income	13,992		5,357		31,414		10,270
Less: investment expenses	342		313		667		562
Investment income, net of expenses	$	13,650	$	5,044	$	30,747	$	9,708

(1)Equity in earnings (losses) of limited partnerships includes both realized gains (losses) and unrealized valuation changes. Our limited partnership investments are included in the line item "Other assets" in the Statements of Financial Position. We have made no new limited partnership commitments since 2006, and the balance of limited partnership investments is expected to decline over time as additional distributions are received.

Schedule of Realized Gains and Losses on Investments and Net Unrealized Gains and Losses Recognized during the Reporting Period Related to Equity Securities Held at the Reporting Date

Realized gains (losses) on investments were as follows:

	Three months ended June 30,				Six months ended June 30,
(in thousands)	2021		2020		2021		2020
Available-for-sale securities:
Gross realized gains	$	1,075	$	1,721	$	2,998	$	2,795
Gross realized losses	(678)		(1,366)		(1,118)		(1,825)
Net realized gains on available-for-sale securities	397		355		1,880		970
Equity securities (1)	2,371		6,170		1,692		(5,252)
Miscellaneous	1		1		1		2
Net realized investment gains (losses)	$	2,769	$	6,526	$	3,573	$	(4,280)

(1)While our investment portfolio was negatively impacted in the first quarter of 2020 primarily due to the financial market volatility resulting from the COVID-19 pandemic, market conditions partially recovered in the second quarter of 2020, resulting in significant gains in the three months ended June 30, 2020.

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:

	Three months ended June 30,				Six months ended June 30,
(in thousands)	2021		2020		2021		2020
Equity securities:
Net gains (losses) recognized during the period (1)	$	2,371	$	6,170	$	1,692	$	(5,252)
Less: net gains (losses) recognized on securities sold	128		1,357		(293)		(2,157)
Net unrealized gains (losses) recognized on securities held at reporting date	$	2,243	$	4,813	$	1,985	$	(3,095)

(1)While our investment portfolio was negatively impacted in the first quarter of 2020 primarily due to the financial market volatility resulting from the COVID-19 pandemic, market conditions partially recovered in the second quarter of 2020, resulting in significant gains in the three months ended June 30, 2020.

Schedule of Impairments on Available-For-Sale Securities and Agent Loans

Impairments on available-for-sale securities and agent loans were as follows:

	Three months ended June 30,				Six months ended June 30,
(in thousands)	2021		2020		2021		2020
Available-for-sale securities:
Intent to sell	$	—	$	—	$	—	$	(2,242)
Credit (impaired) recovered	(1)		(17)		86		(658)
Total available-for-sale securities	(1)		(17)		86		(2,900)
Agent loans - expected credit losses	—		—		—		(170)
Net impairment (losses) recoveries recognized in earnings	$	(1)	$	(17)	$	86	$	(3,070)

Schedule of Impairments on Available-For-Sale Securities and Agent Loans

Impairments on available-for-sale securities and agent loans were as follows:

	Three months ended June 30,				Six months ended June 30,
(in thousands)	2021		2020		2021		2020
Available-for-sale securities:
Intent to sell	$	—	$	—	$	—	$	(2,242)
Credit (impaired) recovered	(1)		(17)		86		(658)
Total available-for-sale securities	(1)		(17)		86		(2,900)
Agent loans - expected credit losses	—		—		—		(170)
Net impairment (losses) recoveries recognized in earnings	$	(1)	$	(17)	$	86	$	(3,070)

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Borrowing Arrangements (Tables)

6 Months Ended

Jun. 30, 2021

Debt Disclosure [Abstract]

Schedule of Future Principal Payments

The following table sets forth future principal payments:

(in thousands)
Year		Principal payments
2021	$	1,021
2022		2,109
2023		2,226
2024		2,302
2025		2,449
Thereafter		84,996

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Postretirement Benefits (Tables)

6 Months Ended

Jun. 30, 2021

Retirement Benefits [Abstract]

Schedule of Cost of Pension Plans

The cost of our pension plans are as follows:

	Three months ended June 30,				Six months ended June 30,
(in thousands)	2021		2020		2021		2020
Service cost for benefits earned	$	13,260	$	10,874	$	26,520	$	21,747
Interest cost on benefits obligation	9,206		9,394		18,412		18,789
Expected return on plan assets	(12,568)		(12,353)		(25,137)		(24,706)
Prior service cost amortization	357		335		714		671
Net actuarial loss amortization	4,026		3,031		8,053		6,062
Pension plan cost (1)	$	14,281	$	11,281	$	28,562	$	22,563

(1)The components of pension plan costs other than the service cost component are included in the line item "Other expense" in the Statements of Operations after reimbursements from the Exchange and its subsidiaries.

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Accumulated Other Comprehensive Income (Loss) (Tables)

6 Months Ended

Jun. 30, 2021

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Schedule of Changes in Accumulated Other Comprehensive Income (Loss) by Component, Including Amounts Reclassified to Other Comprehensive Income (Loss) and the Related Line Item in the Statements of Operations Where Net Income is Presented

Changes in accumulated other comprehensive income ("AOCI") (loss) by component, including amounts reclassified to other comprehensive income ("OCI") (loss) and the related line item in the Statements of Operations where net income is presented, are as follows:

	Three months ended						Three months ended
	June 30, 2021						June 30, 2020
(in thousands)	Before Tax		Income Tax		Net		Before Tax		Income Tax		Net
Investment securities:
AOCI (loss), beginning of period (1)	$	18,306	$	3,845	$	14,461	$	(27,761)	$	0	$	(27,761)
OCI before reclassifications (1)	3,783		795		2,988		40,364		2,646		37,718
Realized investment gains	(397)		(84)		(313)		(355)		(75)		(280)
Impairment losses	1		0		1		17		4		13
OCI	3,387		711		2,676		40,026		2,575		37,451
AOCI, end of period (1)	$	21,693	$	4,556	$	17,137	$	12,265	$	2,575	$	9,690
Pension and other postretirement plans:
AOCI (loss), beginning of period	$	(123,917)	$	(26,024)	$	(97,893)	$	(150,233)	$	(31,550)	$	(118,683)
Amortization of prior service costs	357		75		282		336		70		266
Amortization of net actuarial loss	4,027		846		3,181		3,031		637		2,394
OCI	4,384		921		3,463		3,367		707		2,660
AOCI (loss), end of period	$	(119,533)	$	(25,103)	$	(94,430)	$	(146,866)	$	(30,843)	$	(116,023)
Total
AOCI (loss), beginning of period	$	(105,611)	$	(22,179)	$	(83,432)	$	(177,994)	$	(31,550)	$	(146,444)
Investment securities	3,387		711		2,676		40,026		2,575		37,451
Pension and other postretirement plans	4,384		921		3,463		3,367		707		2,660
OCI	7,771		1,632		6,139		43,393		3,282		40,111
AOCI (loss), end of period	$	(97,840)	$	(20,547)	$	(77,293)	$	(134,601)	$	(28,268)	$	(106,333)
	Six months ended						Six months ended
	June 30, 2021						June 30, 2020
(in thousands)	Before Tax		Income Tax		Net		Before Tax		Income Tax		Net
Investment securities:
AOCI, beginning of period	$	29,384	$	6,171	$	23,213	$	5,664	$	1,189	$	4,475
OCI (loss) before reclassifications	(5,725)		(1,202)		(4,523)		4,671		981		3,690
Realized investment gains	(1,880)		(395)		(1,485)		(970)		(204)		(766)
Impairment (recoveries) losses	(86)		(18)		(68)		2,900		609		2,291
OCI (loss)	(7,691)		(1,615)		(6,076)		6,601		1,386		5,215
AOCI, end of period	$	21,693	$	4,556	$	17,137	$	12,265	$	2,575	$	9,690
Pension and other postretirement plans:
AOCI (loss), beginning of period	$	(128,300)	$	(26,944)	$	(101,356)	$	(153,600)	$	(32,257)	$	(121,343)
Amortization of prior service costs	714		150		564		672		141		531
Amortization of net actuarial loss	8,053		1,691		6,362		6,062		1,273		4,789
OCI	8,767		1,841		6,926		6,734		1,414		5,320
AOCI (loss), end of period	$	(119,533)	$	(25,103)	$	(94,430)	$	(146,866)	$	(30,843)	$	(116,023)
Total
AOCI (loss), beginning of period	$	(98,916)	$	(20,773)	$	(78,143)	$	(147,936)	$	(31,068)	$	(116,868)
Investment securities	(7,691)		(1,615)		(6,076)		6,601		1,386		5,215
Pension and other postretirement plans	8,767		1,841		6,926		6,734		1,414		5,320
OCI	1,076		226		850		13,335		2,800		10,535
AOCI (loss), end of period	$	(97,840)	$	(20,547)	$	(77,293)	$	(134,601)	$	(28,268)	$	(106,333)

(1)As of June 30, 2020, the valuation allowance that was recognized on the deferred tax asset primarily related to unrealized losses on our investments at March 31, 2020 was fully released.

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Nature of Operations (Details)	6 Months Ended
	Jun. 30, 2021 obligation
Revenue, Performance Obligation [Abstract]
Performance obligations under subscriber's agreement	2

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Revenue - Narrative (Details) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021 USD ($)	Jun. 30, 2020 USD ($)	Jun. 30, 2021 USD ($) obligation	Jun. 30, 2020 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
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 | obligation			2
Revenue recognized | $	$ 10.6	$ 10.3	$ 23.9	$ 23.4
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-07-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Performance obligation, satisfaction period	4 years		4 years

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Revenue - Disaggregation of Revenues By Performance Obligations (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Disaggregation of revenue by performance obligation
Revenue	$ 680,030	$ 657,019	$ 1,310,207	$ 1,273,756
Management fee revenue - policy issuance and renewal services
Disaggregation of revenue by performance obligation
Revenue	502,271	483,795	957,989	927,545
Management fee revenue - policy issuance and renewal services | Transferred at point in time
Disaggregation of revenue by performance obligation
Revenue	502,271	483,795	957,989	927,545
Administrative services | Transferred over time
Disaggregation of revenue by performance obligation
Revenue	171,857	166,778	340,237	333,103
Management fee revenue - administrative services
Disaggregation of revenue by performance obligation
Revenue	14,667	14,813	29,514	29,584
Management fee revenue - administrative services | Transferred over time
Disaggregation of revenue by performance obligation
Revenue	14,667	14,813	29,514	29,584
Administrative services reimbursement revenue
Disaggregation of revenue by performance obligation
Revenue	157,190	151,965	310,723	303,519
Administrative services reimbursement revenue | Transferred over time
Disaggregation of revenue by performance obligation
Revenue	$ 157,190	$ 151,965	$ 310,723	$ 303,519

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Earnings Per Share - Narrative (Details)	Jun. 30, 2021	Dec. 31, 2020
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	2,400	2,400

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Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Income available to stockholders on equivalent shares (Diluted EPS:)
Allocated net income (numerator)			$ 1,249
Weighted shares (denominator)			2,542
Per-share amount (in dollars per share)			$ 491
Class A common stock
Income available to stockholders (Basic EPS:)
Allocated net income (numerator)	$ 78,382	$ 81,306	$ 151,346	$ 140,146
Weighted shares (denominator)	46,188,289	46,187,808	46,188,573	46,188,299
Per-share amount (in dollars per share)	$ 1.70	$ 1.76	$ 3.28	$ 3.03
Dilutive effect of stock-based awards
Allocated net income (numerator)	$ 0	$ 0	$ 0	$ 0
Weighted shares (denominator)	13,281	14,373	19,790	24,568
Assumed conversion of Class B shares
Allocated net income (numerator)	$ 647	$ 671	$ 1,249	$ 1,157
Weighted shares (denominator)	6,100,800	6,100,800	6,100,800	6,100,800
Income available to stockholders on equivalent shares (Diluted EPS:)
Allocated net income (numerator)	$ 79,029	$ 81,977	$ 152,595	$ 141,303
Weighted shares (denominator)	52,302,370	52,302,981	52,309,163	52,313,667
Per-share amount (in dollars per share)	$ 1.51	$ 1.57	$ 2.92	$ 2.70
Class B common stock
Income available to stockholders (Basic EPS:)
Allocated net income (numerator)	$ 647	$ 671	$ 1,249	$ 1,157
Weighted shares (denominator)	2,542	2,542	2,542	2,542
Per-share amount (in dollars per share)	$ 255	$ 264	$ 491	$ 455
Income available to stockholders on equivalent shares (Diluted EPS:)
Allocated net income (numerator)	$ 647	$ 671		$ 1,157
Weighted shares (denominator)	2,542	2,542	2,542	2,542
Per-share amount (in dollars per share)	$ 255	$ 264	$ 491	$ 455

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Fair Value - Fair Value Measurements on a Recurring Basis by Asset Class and Level of Input (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities	$ 936,798	$ 928,236
Corporate debt securities
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities	564,689	566,425
Collateralized debt obligations
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities	115,442	110,447
Commercial mortgage-backed securities
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities	112,292	120,201
Residential mortgage-backed securities
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities	93,652	112,179
Other debt securities
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities	29,332	18,984
U.S. Treasury
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities	21,391
Fair Value, Measurements, Recurring Basis
Fair value measurements on a recurring basis by asset class and level of input
Total	1,030,803	1,022,326
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	936,798	928,236
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	564,689	566,425
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	115,442	110,447
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	112,292	120,201
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	93,652	112,179
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	29,332	18,984
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	21,391
Fair Value, Measurements, Recurring Basis | Equity securities
Fair value measurements on a recurring basis by asset class and level of input
Equity securities	94,005	94,090
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	75,212	76,575
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	10,470	8,742
Fair Value, Measurements, Recurring Basis | Nonredeemable preferred stock | Consumer sector
Fair value measurements on a recurring basis by asset class and level of input
Equity securities	2,295	3,068
Fair Value, Measurements, Recurring Basis | Nonredeemable preferred stock | Communications sector
Fair value measurements on a recurring basis by asset class and level of input
Equity securities	2,161	2,699
Fair Value, Measurements, Recurring Basis | Nonredeemable preferred stock | Industrial sector
Fair value measurements on a recurring basis by asset class and level of input
Equity securities	915	800
Fair Value, Measurements, Recurring Basis | Nonredeemable preferred and common stock | Energy sector
Fair value measurements on a recurring basis by asset class and level of input
Equity securities	2,952	2,206
Fair Value, Measurements, Recurring Basis | Level 1
Fair value measurements on a recurring basis by asset class and level of input
Total	30,285	34,970
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	2,461	1,281
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	2,461	1,281
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 | 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 | 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 | 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 | 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 | Equity securities
Fair value measurements on a recurring basis by asset class and level of input
Equity securities	27,824	33,689
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	20,628	24,981
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	3,594	3,957
Fair Value, Measurements, Recurring Basis | Level 1 | Nonredeemable preferred stock | Consumer sector
Fair value measurements on a recurring basis by asset class and level of input
Equity securities	607	576
Fair Value, Measurements, Recurring Basis | Level 1 | Nonredeemable preferred stock | Communications sector
Fair value measurements on a recurring basis by asset class and level of input
Equity securities	1,123	2,699
Fair Value, Measurements, Recurring Basis | Level 1 | Nonredeemable preferred stock | Industrial sector
Fair value measurements on a recurring basis by asset class and level of input
Equity securities	915	800
Fair Value, Measurements, Recurring Basis | Level 1 | Nonredeemable preferred and common stock | Energy sector
Fair value measurements on a recurring basis by asset class and level of input
Equity securities	957	676
Fair Value, Measurements, Recurring Basis | Level 2
Fair value measurements on a recurring basis by asset class and level of input
Total	969,972	961,132
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	904,791	900,731
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	556,150	559,319
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	114,692	110,447
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	95,159	100,739
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	90,611	111,242
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	26,788	18,984
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	21,391
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	65,181	60,401
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	53,584	51,594
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	6,876	4,785
Fair Value, Measurements, Recurring Basis | Level 2 | Nonredeemable preferred stock | Consumer sector
Fair value measurements on a recurring basis by asset class and level of input
Equity securities	1,688	2,492
Fair Value, Measurements, Recurring Basis | Level 2 | Nonredeemable preferred stock | Communications sector
Fair value measurements on a recurring basis by asset class and level of input
Equity securities	1,038	0
Fair Value, Measurements, Recurring Basis | Level 2 | Nonredeemable preferred stock | Industrial 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 2 | Nonredeemable preferred and common stock | Energy sector
Fair value measurements on a recurring basis by asset class and level of input
Equity securities	1,995	1,530
Fair Value, Measurements, Recurring Basis | Level 3
Fair value measurements on a recurring basis by asset class and level of input
Total	30,546	26,224
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	29,546	26,224
Fair Value, Measurements, Recurring Basis | Level 3 | Corporate debt securities
Fair value measurements on a recurring basis by asset class and level of input
Available-for-sale securities	6,078	5,825
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	750	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	17,133	19,462
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	3,041	937
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	2,544	0
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 | Equity securities
Fair value measurements on a recurring basis by asset class and level of input
Equity securities	1,000	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	1,000	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	0
Fair Value, Measurements, Recurring Basis | Level 3 | Nonredeemable preferred stock | Consumer 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 | Communications 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 | Industrial 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 and common stock | Energy sector
Fair value measurements on a recurring basis by asset class and level of input
Equity securities	$ 0	$ 0

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Fair Value - Level 3 Assets (Details) - Level 3 - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Roll forward of level 3 fair value measurements on a recurring basis
Beginning balance	$ 23,785	$ 19,439	$ 26,224	$ 11,645
Included in earnings	(86)	(61)	(178)	(62)
Included in other comprehensive income	24	1,147	(370)	(379)
Purchases	5,865	8,741	9,440	10,771
Sales	(1,521)	(316)	(2,157)	(829)
Transfers into Level 3	7,001	5,476	10,523	16,928
Transfers out of Level 3	(4,522)	(10,390)	(12,936)	(14,038)
Ending balance	30,546	24,036	30,546	24,036
Available-for-sale securities
Roll forward of level 3 fair value measurements on a recurring basis
Beginning balance	22,695	19,439	26,224	11,645
Included in earnings	(91)	(36)	(183)	(37)
Included in other comprehensive income	24	1,147	(370)	(379)
Purchases	4,865	7,921	8,440	9,951
Sales	(1,521)	(316)	(2,157)	(829)
Transfers into Level 3	7,001	5,476	9,433	16,928
Transfers out of Level 3	(3,427)	(10,390)	(11,841)	(14,038)
Ending balance	29,546	23,241	29,546	23,241
Corporate debt securities | Available-for-sale securities
Roll forward of level 3 fair value measurements on a recurring basis
Beginning balance	5,460	12,056	5,825	8,324
Included in earnings	14	(2)	20	5
Included in other comprehensive income	37	867	79	(511)
Purchases	1,476	783	2,258	2,501
Sales	(303)	(115)	(673)	(542)
Transfers into Level 3	1,347	1,142	2,549	8,037
Transfers out of Level 3	(1,953)	(9,815)	(3,980)	(12,898)
Ending balance	6,078	4,916	6,078	4,916
Collateralized debt obligations | Available-for-sale securities
Roll forward of level 3 fair value measurements on a recurring basis
Beginning balance	0	0	0	0
Included in earnings	0	0	0	0
Included in other comprehensive income	0	12	0	12
Purchases	750	247	750	247
Sales	0	0	0	0
Transfers into Level 3	0	0	0	0
Transfers out of Level 3	0	0	0	0
Ending balance	750	259	750	259
Commercial mortgage-backed securities | Available-for-sale securities
Roll forward of level 3 fair value measurements on a recurring basis
Beginning balance	16,241	7,383	19,462	3,321
Included in earnings	(102)	(34)	(197)	(42)
Included in other comprehensive income	(10)	268	(447)	120
Purchases	579	6,891	2,844	7,203
Sales	(961)	(201)	(966)	(287)
Transfers into Level 3	2,624	4,334	3,854	8,891
Transfers out of Level 3	(1,238)	(575)	(7,417)	(1,140)
Ending balance	17,133	18,066	17,133	18,066
Residential mortgage-backed securities | Available-for-sale securities
Roll forward of level 3 fair value measurements on a recurring basis
Beginning balance	473		937
Included in earnings	(3)		(6)
Included in other comprehensive income	1		0
Purchases	0		0
Sales	(224)		(476)
Transfers into Level 3	3,030		3,030
Transfers out of Level 3	(236)		(444)
Ending balance	3,041		3,041
Other debt securities | Available-for-sale securities
Roll forward of level 3 fair value measurements on a recurring basis
Beginning balance	521		0
Included in earnings	0		0
Included in other comprehensive income	(4)		(2)
Purchases	2,060		2,588
Sales	(33)		(42)
Transfers into Level 3	0		0
Transfers out of Level 3	0		0
Ending balance	2,544		2,544
Nonredeemable preferred stock | Nonredeemable preferred stock
Roll forward of level 3 fair value measurements on a recurring basis
Beginning balance	1,090	0	0	0
Included in earnings	5	(25)	5	(25)
Included in other comprehensive income	0	0	0	0
Purchases	1,000	820	1,000	820
Sales	0	0	0	0
Transfers into Level 3	0	0	1,090	0
Transfers out of Level 3	(1,095)	0	(1,095)	0
Ending balance	$ 1,000	$ 795	$ 1,000	$ 795

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Fair Value - Financial Instruments Not Carried at Fair Value (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Carrying value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Agent loans	$ 68,558	$ 69,212
Long-term borrowings	95,103	96,113
Level 3 | Fair value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Agent loans	72,593	73,854
Long-term borrowings	$ 103,036	$ 113,054

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Investments - Cost and Fair Value, Net of Credit Loss Allowance, of Available-For-Sale Securities (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Available-for-sale securities
Amortized cost	$ 915,034	$ 898,790
Gross unrealized gains	23,634	31,569
Gross unrealized losses	1,870	2,123
Estimated fair value	936,798	928,236
Corporate debt securities
Available-for-sale securities
Amortized cost	548,975	546,096
Gross unrealized gains	16,666	21,843
Gross unrealized losses	952	1,514
Estimated fair value	564,689	566,425
Collateralized debt obligations
Available-for-sale securities
Amortized cost	115,087	110,121
Gross unrealized gains	574	657
Gross unrealized losses	219	331
Estimated fair value	115,442	110,447
Commercial mortgage-backed securities
Available-for-sale securities
Amortized cost	109,277	115,346
Gross unrealized gains	3,378	5,090
Gross unrealized losses	363	235
Estimated fair value	112,292	120,201
Residential mortgage-backed securities
Available-for-sale securities
Amortized cost	92,142	108,840
Gross unrealized gains	1,811	3,373
Gross unrealized losses	301	34
Estimated fair value	93,652	112,179
Other debt securities
Available-for-sale securities
Amortized cost	28,905	18,387
Gross unrealized gains	462	606
Gross unrealized losses	35	9
Estimated fair value	29,332	$ 18,984
U.S. Treasury
Available-for-sale securities
Amortized cost	20,648
Gross unrealized gains	743
Gross unrealized losses	0
Estimated fair value	$ 21,391

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Investments - Amortized Cost and Estimated Fair Value of Available-For-Sale Securities by Contractual Maturity (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Amortized cost
Due in one year or less	$ 20,580
Due after one year through five years	429,579
Due after five years through ten years	194,317
Due after ten years	270,558
Amortized cost	915,034	$ 898,790
Estimated fair value
Due in one year or less	20,856
Due after one year through five years	442,409
Due after five years through ten years	197,441
Due after ten years	276,092
Estimated fair value	$ 936,798	$ 928,236

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Investments - Available-For-Sale Securities in a Gross Unrealized Loss Position (Details) $ in Thousands	Jun. 30, 2021 USD ($) holding	Dec. 31, 2020 USD ($) holding
Investment grade
Fair value
Less than 12 months	$ 140,765	$ 86,807
12 months or longer	17,262	10,899
Total	158,027	97,706
Unrealized losses
Less than 12 months	1,212	561
12 months or longer	107	99
Total	$ 1,319	$ 660
No. of holdings | holding	174	119
Non-investment grade
Fair value
Less than 12 months	$ 28,468	$ 28,686
12 months or longer	8,559	7,952
Total	37,027	36,638
Unrealized losses
Less than 12 months	185	593
12 months or longer	366	870
Total	$ 551	$ 1,463
No. of holdings | holding	262	251
Available-for-sale securities
Fair value
Less than 12 months	$ 169,233	$ 115,493
12 months or longer	25,821	18,851
Total	195,054	134,344
Unrealized losses
Less than 12 months	1,397	1,154
12 months or longer	473	969
Total	$ 1,870	$ 2,123
No. of holdings | holding	436	370
Corporate debt securities
Fair value
Less than 12 months	$ 80,035	$ 39,693
12 months or longer	8,703	7,952
Total	88,738	47,645
Unrealized losses
Less than 12 months	584	644
12 months or longer	368	870
Total	$ 952	$ 1,514
No. of holdings | holding	289	257
Collateralized debt obligations
Fair value
Less than 12 months	$ 45,288	$ 50,036
12 months or longer	16,642	10,899
Total	61,930	60,935
Unrealized losses
Less than 12 months	148	232
12 months or longer	71	99
Total	$ 219	$ 331
No. of holdings | holding	73	65
Commercial mortgage-backed securities
Fair value
Less than 12 months	$ 9,240	$ 16,582
12 months or longer	476	0
Total	9,716	16,582
Unrealized losses
Less than 12 months	329	235
12 months or longer	34	0
Total	$ 363	$ 235
No. of holdings | holding	21	31
Residential mortgage-backed securities
Fair value
Less than 12 months	$ 29,064	$ 8,163
12 months or longer	0	0
Total	29,064	8,163
Unrealized losses
Less than 12 months	301	34
12 months or longer	0	0
Total	$ 301	$ 34
No. of holdings | holding	46	13
Other debt securities
Fair value
Less than 12 months	$ 5,606	$ 1,019
12 months or longer	0	0
Total	5,606	1,019
Unrealized losses
Less than 12 months	35	9
12 months or longer	0	0
Total	$ 35	$ 9
No. of holdings | holding	7	4

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Investments - Credit Loss Allowance on Investments (Details) - USD ($) $ in Millions	Jun. 30, 2021	Dec. 31, 2020
Investments [Abstract]
Agent loans, allowance for credit loss	$ 1.1	$ 1.1
Available-for-sale securities, allowance for credit loss	$ 0.1	$ 0.2

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Investments - Net Investment Income (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Investment income from portfolios
Equity in earnings (losses) of limited partnerships	$ 6,151	$ (2,329)	$ 15,197	$ (6,034)
Total investment income	13,992	5,357	31,414	10,270
Less: investment expenses	342	313	667	562
Net investment income	13,650	5,044	30,747	9,708
Available-for-sale securities
Investment income from portfolios
Available-for-sale, equity securities, cash equivalents, and other	5,790	5,670	11,987	11,458
Equity securities
Investment income from portfolios
Available-for-sale, equity securities, cash equivalents, and other	1,116	901	2,318	1,757
Cash equivalents and other
Investment income from portfolios
Available-for-sale, equity securities, cash equivalents, and other	$ 935	$ 1,115	$ 1,912	$ 3,089

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Investments - Realized Investment Gains (Losses) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Available-for-sale securities:
Gross realized gains	$ 1,075	$ 1,721	$ 2,998	$ 2,795
Gross realized losses	(678)	(1,366)	(1,118)	(1,825)
Net realized gains on available-for-sale securities	397	355	1,880	970
Equity securities:
Equity securities	2,371	6,170	1,692	(5,252)
Miscellaneous:
Miscellaneous	1	1	1	2
Net realized investment gains (losses)	$ 2,769	$ 6,526	$ 3,573	$ (4,280)

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Investments - Portion of Net Unrealized Gains and Losses Recognized During the Reporting Period Related To Equity Securities (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Equity securities:
Net gains (losses) recognized during the period	$ 2,371	$ 6,170	$ 1,692	$ (5,252)
Less: net gains (losses) recognized on securities sold	128	1,357	(293)	(2,157)
Net unrealized gains (losses) recognized on securities held at reporting date	$ 2,243	$ 4,813	$ 1,985	$ (3,095)

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Investments - Impairments on Available-For-Sale Securities and Agent Loans (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Available-for-sale securities:
Intent to sell	$ 0	$ 0	$ 0	$ (2,242)
Credit (impaired) recovered	(1)	(17)	86	(658)
Total available-for-sale securities	(1)	(17)	86	(2,900)
Agent loans - expected credit losses	0	0	0	(170)
Net impairment (losses) recoveries recognized in earnings	$ (1)	$ (17)	$ 86	$ (3,070)

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Borrowing Arrangements - Bank Line of Credit (Details) - Revolving line of credit	Jun. 30, 2021 USD ($)
Bank line of credit
Maximum borrowing capacity under the bank revolving line of credit	$ 100,000,000
Maximum letter of credit sublimit under the bank revolving line of credit	25,000,000
Available borrowing capacity under the bank revolving line of credit, due to outstanding letters of credit	99,100,000
Outstanding amount of letters of credit under the bank revolving line of credit	900,000
Available amount of letters of credit under the bank revolving line of credit	24,100,000
Borrowings outstanding under the bank revolving line of credit	0
Fair value of investments pledged as collateral on the bank revolving line of credit	$ 123,400,000

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Borrowing Arrangements - Term Loan Credit Facility (Details) - Secured debt - USD ($)	Jan. 01, 2019	Jun. 30, 2021	Dec. 31, 2016
Term loan credit facility
Amount of senior secured draw term loan credit facility			$ 100,000,000
Fixed interest rate of credit facility (as a percent)	4.35%
Repayment period of credit facility	28 years
Fair value of investments pledged as collateral on the credit facility		$ 122,600,000

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Borrowing Arrangements - Annual Principal Payments (Details) - Secured debt $ in Thousands	Jun. 30, 2021 USD ($)
Future principal payments:
2021	$ 1,021
2022	2,109
2023	2,226
2024	2,302
2025	2,449
Thereafter	$ 84,996

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Postretirement Benefits (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Cost of pension plans:
Service cost for benefits earned	$ 13,260	$ 10,874	$ 26,520	$ 21,747
Interest cost on benefits obligation	9,206	9,394	18,412	18,789
Expected return on plan assets	(12,568)	(12,353)	(25,137)	(24,706)
Prior service cost amortization	357	335	714	671
Net actuarial loss amortization	4,026	3,031	8,053	6,062
Pension plan cost	$ 14,281	$ 11,281	$ 28,562	$ 22,563
Erie Insurance Exchange
Postretirement Benefits
Postretirement annual benefit expense reimbursed to Indemnity from the Exchange and its subsidiaries (as a percent)			58.00%

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Income Taxes (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Income Tax Disclosure [Abstract]
Effective income tax rate (as a percent)	20.90%	20.00%	20.70%	20.90%
Effective tax rate (percent)		0.90%

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Capital Stock - Class A and B Common Stock (Details) - Class B common stock	6 Months Ended	12 Months Ended
	Jun. 30, 2021 shares	Dec. 31, 2020 shares
Common Stock
Ratio for converting shares of Class B common stock into shares of Class A common stock	2,400	2,400
Class B common stock shares converted into Class A common stock shares (in shares)	0	0

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Capital Stock - Stock Repurchases (Details) - Class A common stock - Stock repurchase program - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2021	Dec. 31, 2020	Dec. 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
Approximate amount of repurchase authority remaining under the current stock repurchase program	$ 17,800,000

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Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2021	Mar. 31, 2021	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2021	Jun. 30, 2020
Accumulated other comprehensive income (loss), net of tax
AOCI (loss), beginning of period		$ (78,143)			$ (78,143)
Change in unrealized holding gains (losses) on available-for-sale securities	$ 2,676		$ 37,451		(6,076)	$ 5,215
Pension and other postretirement plans, OCI	3,463		2,660		6,926	5,320
Total other comprehensive income, net of tax	6,139	(5,289)	40,111	$ (29,576)	850	10,535
AOCI (loss), end of period	(77,293)				(77,293)
Investment securities:
Accumulated other comprehensive income (loss), before tax
AOCI (loss), beginning of period	18,306	29,384	(27,761)	5,664	29,384	5,664
OCI (loss) before reclassifications	3,783		40,364		(5,725)	4,671
Realized investment gains	(397)		(355)		(1,880)	(970)
Impairment losses	1		17		(86)	2,900
Investment securities, OCI (loss)	3,387		40,026		(7,691)	6,601
AOCI (loss), end of period	21,693	18,306	12,265	(27,761)	21,693	12,265
Accumulated other comprehensive income (loss), tax
AOCI (loss), beginning of period	3,845	6,171	0	1,189	6,171	1,189
OCI (loss) before reclassifications	795		2,646		(1,202)	981
Realized investment gains	(84)		(75)		(395)	(204)
Impairment losses	0		4		(18)	609
Investment securities, OCI (loss)	711		2,575		(1,615)	1,386
AOCI (loss), end of period	4,556	3,845	2,575	0	4,556	2,575
Accumulated other comprehensive income (loss), net of tax
AOCI (loss), beginning of period	14,461	23,213	(27,761)	4,475	23,213	4,475
OCI (loss) before reclassifications	2,988		37,718		(4,523)	3,690
Realized investment gains	(313)		(280)		(1,485)	(766)
Impairment losses	1		13		(68)	2,291
Change in unrealized holding gains (losses) on available-for-sale securities	2,676		37,451		(6,076)	5,215
AOCI (loss), end of period	17,137	14,461	9,690	(27,761)	17,137	9,690
Pension and other postretirement plans:
Accumulated other comprehensive income (loss), before tax
AOCI (loss), beginning of period	(123,917)	(128,300)	(150,233)	(153,600)	(128,300)	(153,600)
Amortization of prior service costs	357		336		714	672
Amortization of net actuarial loss	4,027		3,031		8,053	6,062
Pension and other postretirement plans, OCI	4,384		3,367		8,767	6,734
AOCI (loss), end of period	(119,533)	(123,917)	(146,866)	(150,233)	(119,533)	(146,866)
Accumulated other comprehensive income (loss), tax
AOCI (loss), beginning of period	(26,024)	(26,944)	(31,550)	(32,257)	(26,944)	(32,257)
Amortization of prior service costs	75		70		150	141
Amortization of net actuarial loss	846		637		1,691	1,273
Pension and other postretirement plans, OCI	921		707		1,841	1,414
AOCI (loss), end of period	(25,103)	(26,024)	(30,843)	(31,550)	(25,103)	(30,843)
Accumulated other comprehensive income (loss), net of tax
AOCI (loss), beginning of period	(97,893)	(101,356)	(118,683)	(121,343)	(101,356)	(121,343)
Amortization of prior service costs	282		266		564	531
Amortization of net actuarial loss	3,181		2,394		6,362	4,789
Pension and other postretirement plans, OCI	3,463		2,660		6,926	5,320
AOCI (loss), end of period	(94,430)	(97,893)	(116,023)	(118,683)	(94,430)	(116,023)
Total
Accumulated other comprehensive income (loss), before tax
AOCI (loss), beginning of period	(105,611)	(98,916)	(177,994)	(147,936)	(98,916)	(147,936)
Investment securities, OCI (loss)	3,387		40,026		(7,691)	6,601
Pension and other postretirement plans, OCI	4,384		3,367		8,767	6,734
OCI	7,771		43,393		1,076	13,335
AOCI (loss), end of period	(97,840)	(105,611)	(134,601)	(177,994)	(97,840)	(134,601)
Accumulated other comprehensive income (loss), tax
AOCI (loss), beginning of period	(22,179)	(20,773)	(31,550)	(31,068)	(20,773)	(31,068)
Investment securities, OCI (loss)	711		2,575		(1,615)	1,386
Pension and other postretirement plans, OCI	921		707		1,841	1,414
OCI	1,632		3,282		226	2,800
AOCI (loss), end of period	(20,547)	(22,179)	(28,268)	(31,550)	(20,547)	(28,268)
Accumulated other comprehensive income (loss), net of tax
AOCI (loss), beginning of period	(83,432)	(78,143)	(146,444)	(116,868)	(78,143)	(116,868)
Change in unrealized holding gains (losses) on available-for-sale securities	2,676		37,451		(6,076)	5,215
Pension and other postretirement plans, OCI	3,463		2,660		6,926	5,320
Total other comprehensive income, net of tax	6,139	(5,289)	40,111	(29,576)	850	10,535
AOCI (loss), end of period	$ (77,293)	$ (83,432)	$ (106,333)	$ (146,444)	$ (77,293)	$ (106,333)

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Concentrations of Credit Risk (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Concentration Risk [Line Items]
Receivables from Erie Insurance Exchange and affiliates, net	$ 504,013	$ 494,637
Erie Insurance Exchange
Concentration Risk [Line Items]
Current expected credit loss allowance	$ 600	$ 600

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Commitments and Contingencies (Details) - Loan Purchase Commitments - USD ($)	12 Months Ended
	Dec. 31, 2020	Jun. 30, 2021
Other Commitments [Line Items]
Minimum funding percentage of each loan	30.00%
Participation amount in loan program		$ 8,700,000
Loan program, guaranteed amount		2,600,000
Third-Party Bank
Other Commitments [Line Items]
Amount of loan participation program		$ 22,500,000
Third-Party Bank | Maximum
Other Commitments [Line Items]
Amount of loan participation program	$ 100,000,000