Indemnity Supplemental Information (Tables)

9 Months Ended

Sep. 30, 2012

Condensed financial statements

Schedule of Consolidating Statement of Financial Position

	Erie Insurance Group
	September 30, 2012
(in millions)	Indemnity	Exchange	Reclassifications		Erie
	shareholder	noncontrolling	and		Insurance
Assets	interest	interest	eliminations		Group
Investments
Available-for-sale securities, at fair value:
Fixed maturities	$   547	$  7,623	$     –		$  8,170
Equity securities	29	624	–		653
Trading securities, at fair value	30	2,639	–		2,669
Limited partnerships	195	1,083	–		1,278
Other invested assets	1	20	–		21
Total investments	802	11,989	–		12,791
Cash and cash equivalents	12	392	–		404
Premiums receivable from policyholders	–	1,100	–		1,100
Reinsurance recoverable	–	165	–		165
Deferred income taxes	16	–	–		16
Deferred acquisition costs	–	505	–		505
Other assets	115	448	–		563
Receivables from the Exchange and other affiliates	286	–	(286	)	–
Note receivable from EFL	25	–	(25	)	–
Total assets	$1,256	$14,599	$(311	)	$15,544
Liabilities
Losses and loss expense reserves	$       –	$  3,598	$     –		$  3,598
Life policy and deposit contract reserves	–	1,721	–		1,721
Unearned premiums	–	2,420	–		2,420
Deferred income taxes	–	367	–		367
Other liabilities	474	432	(311	)	595
Total liabilities	474	8,538	(311	)	8,701
Shareholders’ equity and noncontrolling interest
Total Indemnity shareholders’ equity	782	–	–		782
Noncontrolling interest in consolidated entity – Exchange	–	6,061	–		6,061
Total equity	782	6,061	–		6,843
Total liabilities, shareholders’ equity and noncontrolling interest	$1,256	$14,599	$(311	)	$15,544

Consolidating Statement of Financial Position

	Erie Insurance Group
	December 31, 2011
(in millions)	Indemnity	Exchange	Reclassifications		Erie
	shareholder	noncontrolling	and		Insurance
Assets	interest	interest	eliminations		Group
Investments
Available-for-sale securities, at fair value:
Fixed maturities	$   548	$  7,292	$     –		$  7,840
Equity securities	25	564	–		589
Trading securities, at fair value	27	2,308	–		2,335
Limited partnerships	208	1,082	–		1,290
Other invested assets	1	19	–		20
Total investments	809	11,265	–		12,074
Cash and cash equivalents	11	174	–		185
Premiums receivable from policyholders	–	976	–		976
Reinsurance recoverable	–	166	–		166
Deferred income taxes	19	–	–		19
Deferred acquisition costs	–	487	–		487
Other assets	119	322	–		441
Receivables from the Exchange and other affiliates	254	–	(254	)	–
Note receivable from EFL	25	–	(25	)	–
Total assets	$1,237	$13,390	$(279	)	$14,348
Liabilities
Losses and loss expense reserves	$       –	$  3,499	$     –		$  3,499
Life policy and deposit contract reserves	–	1,671	–		1,671
Unearned premiums	–	2,178	–		2,178
Deferred income taxes	–	147	–		147
Other liabilities	456	383	(279	)	560
Total liabilities	456	7,878	(279	)	8,055
Shareholders’ equity and noncontrolling interest
Total Indemnity shareholders’ equity	781	–	–		781
Noncontrolling interest in consolidated entity – Exchange	–	5,512	–		5,512
Total equity	781	5,512	–		6,293
Total liabilities, shareholders’ equity and noncontrolling interest	$1,237	$13,390	$(279	)	$14,348

Indemnity

Condensed financial statements

Schedule of Income attributable to Indemnity shareholder interest

	Indemnity Shareholder Interest
(in millions)			Three months ended			Nine months ended
			September 30,			September 30,
	Percent		2012	2011		2012	2011
Management operations:
Management fee revenue, net	100.0%		$305	$280		$882	$816
Service agreement revenue	100.0%		8	8		23	25
Total revenue from management operations			313	288		905	841
Cost of management operations	100.0%		247	226		734	667
Income from management operations before taxes			66	62		171	174
Life insurance operations: (1) (2)
Total revenue	21.6%	(2)	–	–		–	10
Total benefits and expenses	21.6%	(2)	–	–		–	7
Income from life insurance operations before taxes			–	–		–	3
Investment operations:
Net investment income			4	4		12	12
Net realized gains (losses) on investments			2	(6	)	4	1
Net impairment losses recognized in earnings			0	0		0	0
Equity in earnings of limited partnerships			6	7		10	25
Income from investment operations before taxes			12	5		26	38
Income from operations before income taxes			78	67		197	215
Provision for income taxes			27	20		67	72
Net income			$  51	$  47		$130	$143

(1)

Earnings on life insurance related invested assets are integral to the evaluation of the life insurance operations because of the long duration of life products. On that basis, for presentation purposes, the life insurance operations in the table above include life insurance related investment results. However, the life insurance investment results are included in the investment operations segment discussion in Note 5. “Segment Information”.

(2)

Prior to and through March 31, 2011, Indemnity retained a 21.6% ownership interest in EFL, which accrued to the Indemnity shareholder interest, and the Exchange retained a 78.4% ownership interest in EFL, which accrued to the interest of the subscribers (policyholders) of the Exchange, or noncontrolling interest. Due to the sale of Indemnity’s 21.6% ownership interest in EFL to the Exchange on March 31, 2011, 100% of EFL’s life insurance results accrue to the interest of the subscribers (policyholders) of the Exchange, or noncontrolling interest, after March 31, 2011.

Schedule of Indemnity's components of direct cash flows as included in the Consolidated Statements of Cash Flows

	Indemnity Shareholder Interest
(in millions)	Nine months ended September 30,
	2012		2011
Management fee received	$ 851		$ 791
Service agreement fee received	23		25
Net investment income received	19		17
Limited partnership distributions	11		14
Decrease in reimbursements collected from affiliates	(2	)	(13	)
Commissions and bonuses paid to agents	(470	)	(450	)
Salaries and wages paid	(99	)	(95	)
Pension contribution and employee benefits paid	(36	)	(32	)
General operating expenses paid	(99	)	(93	)
Income taxes paid	(54	)	(51	)
Net cash provided by operating activities	144		113
Net cash used in investing activities	(8	)	(180	)
Net cash used in financing activities	(135	)	(209	)
Net increase (decrease) in cash and cash equivalents	1		(276	)
Cash and cash equivalents at beginning of period	11		310
Cash and cash equivalents at end of period	$  12		$   34