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Investments (Tables)

12 Months Ended

Dec. 31, 2012

Schedule of reconciliation of cost to fair value of available-for-sale securities



	Erie Insurance Group
	December 31, 2011
(in millions)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Indemnity
Available-for-sale securities:
States & political subdivisions	$	208	$	13	$	0	$	221
Corporate debt securities	303		1		1		303
Commercial mortgage-backed securities (CMBS)	13		0		0		13
Collateralized debt obligations (CDO)	4		0		0		4
Other debt securities	7		0		0		7
Total fixed maturities	535		14		1		548
Nonredeemable preferred stock	24		1		0		25
Total available-for-sale securities – Indemnity	$	559	$	15	$	1	$	573
Exchange
Available-for-sale securities:
U.S. government & agencies	$	16	$	1	$	0	$	17
States & political subdivisions	1,289		91		1		1,379
Foreign government securities	15		0		0		15
Corporate debt securities	5,144		386		31		5,499
Residential mortgage-backed securities (RMBS)	178		11		0		189
Commercial mortgage-backed securities (CMBS)	62		4		0		66
Collateralized debt obligations (CDO)	66		4		5		65
Other debt securities	59		3		0		62
Total fixed maturities	6,829		500		37		7,292
Nonredeemable preferred stock	531		45		12		564
Total available-for-sale securities – Exchange	$	7,360	$	545	$	49	$	7,856
Total available-for-sale securities – Erie Insurance Group	$	7,919	$	560	$	50	$	8,429



	Erie Insurance Group
	December 31, 2012
(in millions)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Indemnity
Available-for-sale securities:
States & political subdivisions	$	172	$	13	$	0	$	185
Corporate debt securities	259		2		0		261
Commercial mortgage-backed securities (CMBS)	3		0		0		3
Collateralized debt obligations (CDO)	3		0		0		3
Total fixed maturities	437		15		0		452
Nonredeemable preferred stock	28		2		1		29
Common stock	26		0		0		26
Total available-for-sale securities – Indemnity	$	491	$	17	$	1	$	507
Exchange
Available-for-sale securities:
U.S. government & agencies	$	190	$	2	$	1	$	191
States & political subdivisions	1,218		103		0		1,321
Foreign government securities	15		1		0		16
Corporate debt securities	5,211		569		3		5,777
Residential mortgage-backed securities (RMBS)	226		6		1		231
Commercial mortgage-backed securities (CMBS)	62		5		0		67
Collateralized debt obligations (CDO)	43		6		0		49
Other debt securities	51		4		0		55
Total fixed maturities	7,016		696		5		7,707
Nonredeemable preferred stock	555		77		1		631
Common stock	316		0		2		314
Total available-for-sale securities – Exchange	$	7,887	$	773	$	8	$	8,652
Total available-for-sale securities – Erie Insurance Group	$	8,378	$	790	$	9	$	9,159

Schedule of amortized cost and estimated fair value of fixed maturities by remaining contractual term to maturity



	Erie Insurance Group
	December 31, 2012
(in millions)	Amortized		Estimated
	cost		fair value
Indemnity
Due in one year or less	$	116	$	116
Due after one year through five years	222		227
Due after five years through ten years	38		41
Due after ten years	61		68
Total fixed maturities – Indemnity	$	437	$	452
Exchange
Due in one year or less	$	512	$	524
Due after one year through five years	2,302		2,486
Due after five years through ten years	2,816		3,161
Due after ten years	1,386		1,536
Total fixed maturities – Exchange	$	7,016	$	7,707
Total fixed maturities – Erie Insurance Group	$	7,453	$	8,159

Schedule of available-for-sale securities in a gross unrealized loss position by length of time securities were in a gross unrealized loss position



	Erie Insurance Group
	December 31, 2011
(dollars in millions)	Less than 12 months				12 months or longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized		No. of
Indemnity	value		losses		value		losses		value		losses		holdings
Available-for-sale securities:
Corporate debt securities	$	220	$	1	$	0	$	0	$	220	$	1	41
Commercial mortgage-backed securities (CMBS)	4		0		9		0		13		0		3
Other debt securities	5		0		2		0		7		0		2
Total fixed maturities – Indemnity	229		1		11		0		240		1		46
Nonredeemable preferred stock	4		0		3		0		7		0		3
Total available-for-sale securities – Indemnity	$	233	$	1	$	14	$	0	$	247	$	1	49
Quality breakdown of fixed maturities:
Investment grade	$	229	$	1	$	11	$	0	$	240	$	1	46
Non-investment grade	0		0		0		0		0		0		0
Total fixed maturities – Indemnity	$	229	$	1	$	11	$	0	$	240	$	1	46
Exchange
Available-for-sale securities:
States & political subdivisions	$	7	$	0	$	6	$	1	$	13	$	1	3
Corporate debt securities	635		27		50		4		685		31		108
Residential mortgage-backed securities (RMBS)	7		0		0		0		7		0		4
Commercial mortgage-backed securities (CMBS)	5		0		0		0		5		0		1
Collateralized debt obligations (CDO)	0		0		32		5		32		5		6
Other debt securities	9		0		0		0		9		0		2
Total fixed maturities – Exchange	663		27		88		10		751		37		124
Nonredeemable preferred stock	168		11		34		1		202		12		27
Total available-for-sale securities – Exchange	$	831	$	38	$	122	$	11	$	953	$	49	151
Quality breakdown of fixed maturities:
Investment grade	$	625	$	26	$	79	$	9	$	704	$	35	109
Non-investment grade	38		1		9		1		47		2		15
Total fixed maturities – Exchange	$	663	$	27	$	88	$	10	$	751	$	37	124



	Erie Insurance Group
	December 31, 2012
(dollars in millions)	Less than 12 months				12 months or longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized		No. of
Indemnity	value		losses		value		losses		value		losses		holdings
Available-for-sale securities:
Corporate debt securities	$	59	$	0	$	0	$	0	$	59	$	0	12
Commercial mortgage-backed securities (CMBS)	0		0		3		0		3		0		1
Total fixed maturities – Indemnity	59		0		3		0		62		0		13
Nonredeemable preferred stock	7		0		3		1		10		1		4
Common stock	26		0		0		0		26		0		2
Total available-for-sale securities – Indemnity	$	92	$	0	$	6	$	1	$	98	$	1	19
Quality breakdown of fixed maturities:
Investment grade	$	55	$	0	$	3	$	0	$	58	$	0	12
Non-investment grade	4		0		0		0		4		0		1
Total fixed maturities – Indemnity	$	59	$	0	$	3	$	0	$	62	$	0	13
Exchange
Available-for-sale securities:
U.S. government & agencies	$	80	$	1	$	0	$	0	$	80	$	1	7
States & political subdivisions	23		0		0		0		23		0		11
Corporate debt securities	152		3		9		0		161		3		31
Residential mortgage-backed securities (RMBS)	56		1		0		0		56		1		9
Collateralized debt obligations (CDO)	0		0		21		0		21		0		1
Other debt securities	5		0		0		0		5		0		2
Total fixed maturities – Exchange	316		5		30		0		346		5		61
Nonredeemable preferred stock	64		0		18		1		82		1		13
Common stock	314		2		0		0		314		2		3
Total available-for-sale securities – Exchange	$	694	$	7	$	48	$	1	$	742	$	8	77
Quality breakdown of fixed maturities:
Investment grade	$	296	$	4	$	24	$	0	$	320	$	4	53
Non-investment grade	20		1		6		0		26		1		8
Total fixed maturities – Exchange	$	316	$	5	$	30	$	0	$	346	$	5	61

Schedule of investment income, net of expenses, from portfolios



	Erie Insurance Group
(in millions)	Years ended December 31,
	2012		2011		2010
Indemnity
Fixed maturities	$	13	$	14	$	33
Equity securities	3		2		4
Cash equivalents and other	1		1		1
Total investment income	17		17		38
Less: investment expenses	1		1		1
Investment income, net of expenses – Indemnity	$	16	$	16	$	37
Exchange
Fixed maturities	$	350	$	364	$	350
Equity securities	102		86		72
Cash equivalents and other	2		0		2
Total investment income	454		450		424
Less: investment expenses	32		33		28
Investment income, net of expenses – Exchange	$	422	$	417	$	396
Investment income, net of expenses – Erie Insurance Group	$	438	$	433	$	433

Schedule of realized gains (losses) on investments



(in millions)	Erie Insurance Group
	Years ended December 31,
Indemnity	2012			2011			2010
Available-for-sale securities:
Fixed maturities:
Gross realized gains	$	0		$	2		$	6
Gross realized losses	0			0			(1		)
Net realized gains	0			2			5
Equity securities:
Gross realized gains	0			3			1
Gross realized losses	0			0			0
Net realized gains	0			3			1
Trading securities:
Common stock:
Gross realized gains	9			2			6
Gross realized losses	(1		)	(1		)	(1		)
Valuation adjustments	(3		)	(3		)	0
Net realized gains (losses)	5			(2		)	5
Limited partnerships:
Gross realized gains	0			0			0
Gross realized losses	0			0			(12		)
Net realized (losses)	0			0			(12		)
Net realized investment gains (losses) – Indemnity	$	5		$	3		$	(1	)
Exchange
Available-for-sale securities:
Fixed maturities:
Gross realized gains	$	78		$	77		$	49
Gross realized losses	(20		)	(29		)	(24		)
Net realized gains	58			48			25
Equity securities:
Gross realized gains	17			28			14
Gross realized losses	(8		)	(1		)	(3		)
Net realized gains	9			27			11
Trading securities:
Common stock:
Gross realized gains	213			271			205
Gross realized losses	(88		)	(106		)	(135		)
Valuation adjustments	221			(247		)	254
Net realized gains (losses)	346			(82		)	324
Limited partnerships:
Gross realized gains	0			0			0
Gross realized losses	0			0			(46		)
Net realized (losses)	0			0			(46		)
Net realized investment gains (losses) – Exchange	$	413		$	(7	)	$	314
Net realized investment gains (losses) – Erie Insurance Group	$	418		$	(4	)	$	313

Schedule of components of other-than-temporary impairments on investments



(in millions)	Erie Insurance Group
	Years ended December 31
	2012		2011			2010
Indemnity
Fixed maturities	$	0	$	0		$	(1	)
Equity securities	0		0			0
Total other-than-temporary impairments	0		0			(1		)
Portion recognized in other comprehensive income	0		0			0
Net impairment losses recognized in earnings – Indemnity	$	0	$	0		$	(1	)
Exchange
Fixed maturities	$	0	$	0		$	(4	)
Equity securities	0		(2		)	(1		)
Total other-than-temporary impairments	0		(2		)	(5		)
Portion recognized in other comprehensive income	0		0			0
Net impairment losses recognized in earnings – Exchange	$	0	$	(2	)	$	(5	)
Net impairment losses recognized in earnings – Erie Insurance Group	$	0	$	(2	)	$	(6	)

Schedule of limited partnership results, generally reported on a one-quarter lag



	Erie Insurance Group
	As of and for the year ended December 31, 2011
(dollars in millions) Investment percentage in limited partnerships	Number of partnerships	Asset recorded		Income (loss) recognized due to valuation adjustments by the partnerships			Income (1oss) recorded
Indemnity
Private equity:
Less than 10%	26	$	73	$	2		$	5
Greater than or equal to 10% but less than 50%	3	9		0			3
Greater than 50%	0	0		0			0
Total private equity	29	82		2			8
Mezzanine debt:
Less than 10%	11	22		0			6
Greater than or equal to 10% but less than 50%	3	12		1			1
Greater than 50%	1	1		(1		)	0
Total mezzanine debt	15	35		0			7
Real estate:
Less than 10%	12	62		5			(1		)
Greater than or equal to 10% but less than 50%	3	18		1			0
Greater than 50%	3	11		3			1
Total real estate	18	91		9			0
Total limited partnerships – Indemnity	62	$	208	$	11		$	15
Exchange
Private equity:
Less than 10%	41	$	452	$	13		$	30
Greater than or equal to 10% but less than 50%	3	43		(1		)	12
Greater than 50%	0	0		0			0
Total private equity	44	495		12			42
Mezzanine debt:
Less than 10%	17	133		(9		)	26
Greater than or equal to 10% but less than 50%	3	33		3			3
Greater than 50%	3	35		(2		)	3
Total mezzanine debt	23	201		(8		)	32
Real estate:
Less than 10%	25	284		31			(1		)
Greater than or equal to 10% but less than 50%	5	59		3			0
Greater than 50%	3	43		2			10
Total real estate	33	386		36			9
Total limited partnerships – Exchange	100	$	1,082	$	40		$	83
Total limited partnerships – Erie Insurance Group		$	1,290	$	51		$	98



	Erie Insurance Group
	As of and for the year ended December 31, 2012
(dollars in millions) Investment percentage in limited partnerships	Number of partnerships	Asset recorded		Income (loss) recognized due to valuation adjustments by the partnerships			Income (1oss) recorded
Indemnity
Private equity:
Less than 10%	26	$	60	$	(3	)	$	6
Greater than or equal to 10% but less than 50%	3	13		4			0
Greater than 50%	0	0		0			0
Total private equity	29	73		1			6
Mezzanine debt:
Less than 10%	11	18		(2		)	5
Greater than or equal to 10% but less than 50%	3	9		0			2
Greater than 50%	1	0		1			(1		)
Total mezzanine debt	15	27		(1		)	6
Real estate:
Less than 10%	12	55		4			(3		)
Greater than or equal to 10% but less than 50%	3	16		(1		)	1
Greater than 50%	3	9		2			0
Total real estate	18	80		5			(2		)
Total limited partnerships – Indemnity	62	$	180	$	5		$	10
Exchange
Private equity:
Less than 10%	42	$	424	$	22		$	24
Greater than or equal to 10% but less than 50%	3	58		16			(1		)
Greater than 50%	0	0		0			0
Total private equity	45	482		38			23
Mezzanine debt:
Less than 10%	18	132		(5		)	29
Greater than or equal to 10% but less than 50%	4	27		1			4
Greater than 50%	3	37		(2		)	5
Total mezzanine debt	25	196		(6		)	38
Real estate:
Less than 10%	22	274		(7		)	26
Greater than or equal to 10% but less than 50%	5	52		(4		)	3
Greater than 50%	3	33		6			(1		)
Total real estate	30	359		(5		)	28
Total limited partnerships – Exchange	100	$	1,037	$	27		$	89
Total limited partnerships – Erie Insurance Group		$	1,217	$	32		$	99

- Definition

Tabular disclosure of equity method investments in common stock. The disclosure may include: (a) the name of each investee or group of investments for which combined disclosure is appropriate, (2) the percentage ownership of common stock, (3) the difference, if any, between the carrying amount of an investment and the value of the underlying equity in the net assets and the accounting treatment of difference, if any, and (4) the aggregate value of each identified investment based on its quoted market price, if available.

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- Definition

Tabular disclosure of investment income derived from investments in debt and equity securities consisting of interest income earned from investments in debt securities and on cash and cash equivalents, dividend income from investments in equity securities, and income or expense derived from the amortization of investment related discounts or premiums, respectively. This item does not include realized or unrealized gains or losses on the sale or holding of investments in debt and equity securities required to be included in earnings for the period or for other than temporary losses related to investments in debt and equity securities which are included in realized losses in the period recognized.

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- Definition

Tabular disclosure of the amount of other than temporary impairment (OTTI) related to credit losses recognized in earnings including: (a) the beginning balance of the amount related to credit losses on debt securities held by the investor at the beginning of the period for which a portion of an OTTI was recognized in other comprehensive income; (b) additions for the amount related to the credit loss for which an OTTI was not previously recognized; (c) reductions for securities sold during the period (realized); (d) reductions for securities for which the amount previously recognized in other comprehensive income was recognized in earnings because the investor intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis; (e) additional increases to the amount related to the credit loss for which an OTTI was previously recognized when the investor does not intend to sell the security and it is not more likely than not that the investor will be required to sell the security before recovery of its amortized cost basis; (f) reductions for increases in cash flows expected to be collected that are recognized over the remaining life of the security; and (g) the ending balance of the amount related to credit losses on debt securities held by the entity at the end of the period for which a portion of an OTTI was recognized in other comprehensive income.

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