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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 September 30, 2025

☐ 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 October 24, 2025.

The number of shares outstanding of the registrant’s Class B Common Stock as of the latest practicable date was 2,542 at October 24, 2025.

Table of Contents


PART I.			FINANCIAL INFORMATION

Item 1.			Financial Statements (Unaudited)

			Consolidated Statements of Operations – Three and nine months ended Se ptember 30, 2025 and 2024

			Consolidated Statements of Comprehensive Income – Three and nine months ended September 30, 2025 and 2024

			Consolidated Statements of Financial Position – September 30, 2025 and December 31, 2024

			Consolidated Statements of Shareholders' Equity – Three and nine months ended September 30. 2025 and 2024

			Consolidated Statements of Cash Flows – N ine months ended September 30, 2025 and 2024

			Notes to Consolidated Financial Statements – September 30, 2025

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

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ERIE INDEMNITY COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(dollars in thousands, except per share data)


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024
Operating revenue
Management fee revenue - policy issuance and renewal services	$	825,275	$	769,162	$	2,404,177	$	2,195,734
Management fee revenue - administrative services	18,831		17,154		54,772		51,139
Administrative services reimbursement revenue	215,694		206,754		638,611		604,349
Service agreement revenue	6,939		6,816		18,675		19,803
Total operating revenue	1,066,739		999,886		3,116,235		2,871,025

Operating expenses
Cost of operations - policy issuance and renewal services	642,124		613,007		1,918,154		1,757,531
Cost of operations - administrative services	215,694		206,754		638,611		604,349

Total operating expenses	857,818		819,761		2,556,765		2,361,880
Operating income	208,921		180,125		559,470		509,145

Investment income
Net investment income	21,033		17,322		61,011		49,235
Net realized and unrealized investment gains	1,331		2,925		2,312		2,983
Net impairment losses recognized in earnings	(810)		(698)		(2,633)		(3,763)

Total investment income	21,554		19,549		60,690		48,455


Other income	2,286		1,168		8,094		7,871
Income before income taxes	232,761		200,842		628,254		565,471
Income tax expense	49,908		41,012		132,299		117,186
Net income	$	182,853	$	159,830	$	495,955	$	448,285


Net income per share
Class A common stock – basic	$	3.93	$	3.43	$	10.65	$	9.63
Class A common stock – diluted	$	3.50	$	3.06	$	9.48	$	8.57
Class B common stock – basic and diluted	$	589	$	515	$	1,597	$	1,444


Weighted average shares outstanding – Basic
Class A common stock	46,189,068		46,189,059		46,189,012		46,189,038
Class B common stock	2,542		2,542		2,542		2,542

Weighted average shares outstanding – Diluted
Class A common stock	52,305,599		52,306,514		52,304,797		52,301,001
Class B common stock	2,542		2,542		2,542		2,542

Dividends declared per share
Class A common stock	$	1.365	$	1.275	$	4.095	$	3.825
Class B common stock	$	204.75	$	191.25	$	614.25	$	573.75

See accompanying notes to Consolidated Financial Statements. See Note 12, "Accumulated Other Comprehensive Income (Loss)", for amounts reclassified out of accumulated other comprehensive income (loss) into the Consolidated Statements of Operations.

Table of Contents

ERIE INDEMNITY COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(in thousands)


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024
Net income	$	182,853	$	159,830	$	495,955	$	448,285

Other comprehensive income, net of tax
Change in unrealized holding gains on available-for-sale securities	6,105		20,227		18,144		21,014
Pension and other postretirement plans	(1,056)		(1,538)		(1,800)		(6,048)
Total other comprehensive income, net of tax	5,049		18,689		16,344		14,966
Comprehensive income	$	187,902	$	178,519	$	512,299	$	463,251

Table of Contents

ERIE INDEMNITY COMPANY

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(dollars in thousands, except per share data)


	September 30,		December 31,
	2025		2024
Assets	(Unaudited)
Current assets:
Cash and cash equivalents (includes restricted cash of $28,000 and $23,559, respectively)	$	568,551	$	298,397
Available-for-sale securities	59,833		44,604
Available-for-sale securities lent	4,318		0
Receivables from Erie Insurance Exchange and affiliates, net	780,473		707,060
Prepaid expenses and other current assets, net	73,779		83,902

Accrued investment income	10,937		11,069
Total current assets	1,497,891		1,145,032

Available-for-sale securities, net	970,160		991,726
Equity securities	54,378		85,891
Available-for-sale and equity securities lent	51,836		7,285

Fixed assets, net	557,607		513,494
Agent loans, net	94,740		80,597

Defined benefit pension plan	51,819		21,311

Other assets, net	45,897		43,278
Total assets	$	3,324,328	$	2,888,614

Liabilities and shareholders' equity
Current liabilities:
Commissions payable	$	425,310	$	408,309
Agent incentive compensation	99,717		75,458
Accounts payable and accrued liabilities	199,995		190,028
Dividends payable	63,569		63,569
Contract liability	47,949		42,761
Deferred executive compensation	6,700		14,874
Securities lending payable	54,325		7,513



Total current liabilities	897,565		802,512

Defined benefit pension plan	31,065		28,070

Contract liability	23,361		21,170
Deferred executive compensation	20,798		19,721
Deferred income taxes, net	19,776		6,418
Other long-term liabilities	22,885		23,465
Total liabilities	1,015,450		901,356

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	16,494		16,466
Accumulated other comprehensive loss	(31,247)		(47,591)
Retained earnings	3,467,551		3,162,303

Total contributed capital and retained earnings	3,454,968		3,133,348
Treasury stock, at cost; 22,110,132 shares held	(1,170,699)		(1,169,074)
Deferred compensation	24,609		22,984
Total shareholders’ equity	2,308,878		1,987,258
Total liabilities and shareholders’ equity	$	3,324,328	$	2,888,614

See accompanying notes to Consolidated Financial Statements.

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ERIE INDEMNITY COMPANY

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)

Three and nine months ended September 30, 2025 and 2024

(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, 2024	$	1,992	$	178	$	16,466	$	(47,591)	$	3,162,303	$	(1,169,074)	$	22,984	$	1,987,258

Net income									138,417						138,417
Other comprehensive income							5,217								5,217
Dividends declared:
Class A $1.365 per share									(63,048)						(63,048)
Class B $204.75 per share									(521)						(521)
Net purchase of treasury stock (1)					28						0				28
Deferred compensation											(869)		869		0
Rabbi trust distribution (2)											407		(407)		0
Balance, March 31, 2025	$	1,992	$	178	$	16,494	$	(42,374)	$	3,237,151	$	(1,169,536)	$	23,446	$	2,067,351
Net income									174,685						174,685
Other comprehensive income							6,078								6,078
Dividends declared:
Class A $1.365 per share									(63,048)						(63,048)
Class B $204.75 per share									(521)						(521)
Net purchase of treasury stock (1)					0						0				0
Deferred compensation											(963)		963		0
Rabbi trust distribution (2)											167		(167)		0
Balance, June 30, 2025	$	1,992	$	178	$	16,494	$	(36,296)	$	3,348,267	$	(1,170,332)	$	24,242	$	2,184,545
Net income									182,853						182,853
Other comprehensive income							5,049								5,049
Dividends declared:
Class A $1.365 per share									(63,048)						(63,048)
Class B $204.75 per share									(521)						(521)

Deferred compensation											(367)		367		0

Balance, September 30, 2025	$	1,992	$	178	$	16,494	$	(31,247)	$	3,467,551	$	(1,170,699)	$	24,609	$	2,308,878

(1)Net purchases of treasury stock in 2025 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 three incentive compensation deferral plan participants in 2025.

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	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, 2023	$	1,992	$	178	$	16,466	$	(13,400)	$	2,803,689	$	(1,169,165)	$	23,075	$	1,662,835

Net income									124,552						124,552
Other comprehensive loss							(1,830)								(1,830)
Dividends declared:
Class A $1.275 per share									(58,891)						(58,891)
Class B $191.25 per share									(486)						(486)
Net purchase of treasury stock (1)					0						0				0
Deferred compensation											(861)		861		0
Rabbi trust distribution (2)											709		(709)		0
Balance, March 31, 2024	$	1,992	$	178	$	16,466	$	(15,230)	$	2,868,864	$	(1,169,317)	$	23,227	$	1,726,180
Net income									163,903						163,903
Other comprehensive loss							(1,893)								(1,893)
Dividends declared:
Class A $1.275 per share									(58,891)						(58,891)
Class B $191.25 per share									(486)						(486)
Net purchase of treasury stock (1)					0						0				0
Deferred compensation											(518)		518		0
Rabbi trust distribution (2)											1,538		(1,538)		0
Balance, June 30, 2024	$	1,992	$	178	$	16,466	$	(17,123)	$	2,973,390	$	(1,168,297)	$	22,207	$	1,828,813
Net income									159,830						159,830
Other comprehensive income							18,689								18,689
Dividends declared:
Class A $1.275 per share									(58,891)						(58,891)
Class B $191.25 per share									(486)						(486)
Net purchase of treasury stock (1)					0						0				0
Deferred compensation											(422)		422		0

Balance, September 30, 2024	$	1,992	$	178	$	16,466	$	1,566	$	3,073,843	$	(1,168,719)	$	22,629	$	1,947,955

(1)Net purchases of treasury stock in 2024 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 five incentive compensation deferral plan participants in 2024.

See accompanying notes to Consolidated Financial Statements.

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ERIE INDEMNITY COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)


	Nine months ended September 30,
	2025		2024
Cash flows from operating activities
Management fee received	$	2,418,043	$	2,162,259
Administrative services reimbursements received	609,462		557,361
Service agreement revenue received	18,671		19,804
Net investment income received	59,253		49,047

Commissions paid to agents	(1,230,933)		(1,067,993)
Incentive compensation paid to agents	(89,926)		(88,299)
Salaries and wages paid	(200,461)		(189,088)
Pension contribution and employee benefits paid	(96,557)		(90,217)
General operating expenses paid	(236,538)		(229,675)
Administrative services expenses paid	(631,913)		(581,527)
Income taxes paid	(104,001)		(123,881)

Net cash provided by operating activities	515,100		417,791

Cash flows from investing activities
Purchase of investments:
Available-for-sale securities	(221,616)		(373,381)
Equity securities	(15,767)		(25,665)

Other investments	—		(7,000)
Proceeds from investments:
Available-for-sale securities sales	78,021		156,357
Available-for-sale securities maturities/calls	135,335		152,174
Equity securities	29,289		29,953

Other investments	3		—
Purchase of fixed assets	(84,925)		(78,202)

Loans to agents and others	(30,746)		(32,317)
Collections on agent and other loans	9,354		7,675
Net cash used in investing activities	(101,052)		(170,406)

Cash flows from financing activities


Dividends paid to shareholders	(190,706)		(178,132)




Net changes in cash collateral for securities lent	46,812		7,905
Net cash used in financing activities	(143,894)		(170,227)

Net increase in cash, cash equivalents and restricted cash	270,154		77,158
Cash, cash equivalents and restricted cash, beginning of period	298,397		144,055
Cash, cash equivalents and restricted cash, end of period	$	568,551	$	221,213

Supplemental disclosure of noncash transactions
Liability incurred to purchase fixed assets	$	24,259	$	10,792
Operating lease assets obtained in exchange for lease liabilities	$	2,962	$	7,106

Receipt of donated equipment	$	1,967	$	—

See accompanying notes to Consolidated Financial Statements.

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NOTES TO CONSOLIDATED 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 subscribers at 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 the Exchange's 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 Indemnity as each subscriber's attorney-in-fact to transact certain business on their behalf. In accordance with the subscriber's agreement for acting as attorney-in-fact in these two capacities, we retain 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 on behalf of the subscribers at 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 incentive compensation, which is 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.

Consistent with 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 the subscribers' attorney-in-fact. Indemnity serves as the attorney-in-fact on behalf of the subscribers at the Exchange with respect to its administrative services as enumerated in the subscriber's agreement. 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 subscriber's agreement and service agreements provide for reimbursement of amounts incurred for these services to Indemnity. Reimbursements are settled at cost. 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 a significant downgrade in 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 could 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 net management fee and other reimbursements. See Note 13, "Concentrations of Credit Risk".

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Note 2. Significant Accounting Policies

Basis of presentation

The accompanying unaudited consolidated 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, and include the accounts of Indemnity and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated. 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 nine months ended September 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025. For further information, refer to the consolidated financial statements and footnotes included in our Form 10-K for the year ended December 31, 2024 as filed with the Securities and Exchange Commission ("SEC") on February 27, 2025.

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.

Recently issued accounting standards

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures", which requires entities to disclose specific categories in an effective tax rate reconciliation, additional information for reconciling items that meet a quantitative threshold, and certain information about income taxes paid. The amendments in this ASU are required to be adopted for fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments can be applied on either a prospective or retrospective basis. We plan to adopt the standard in our consolidated financial statements for the year ending December 31, 2025, and we expect the standard will impact certain of our income tax disclosures.

In November 2024, the FASB issued ASU 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses", which requires entities to disclose disaggregated information about certain income statement expense line items. The amendments in this ASU are required to be adopted for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments can be applied on either a prospective or retrospective basis. This will have no impact on our consolidated financial statements, and we are currently evaluating the impact of adoption on our disclosures.

In July 2025, the FASB issued ASU 2025-05, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets", which provides a practical expedient when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under "Revenue from Contracts with Customers (Topic 606)". Under the practical expedient, entities may assume that current conditions as of the balance sheet date do not change for the remaining life of the asset. The amendments in this ASU are required to be adopted for fiscal years beginning after December 15, 2025, and interim periods within those fiscal years. Early adoption is permitted. An entity that elects the practical expedient should apply the amendments on a prospective basis. We do not expect the standard will have a material impact on our consolidated financial statements and disclosures.

In September 2025, the FASB issued ASU 2025-06, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software", which removes all references to prescriptive and sequential software development project stages and requires an entity to start capitalizing software costs when management has authorized and committed to funding the software project and it is probable that the project will be completed and the software will be used to perform the function intended. The amendments in this ASU are required to be adopted for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years. Early adoption is permitted. The amendments can be applied on a prospective, modified or retrospective basis. We are currently evaluating the impact of adoption on our consolidated financial statements and disclosures.

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Note 3. Revenue

The majority of our revenue is derived from the subscriber’s agreement between us and the subscribers (policyholders) at the Exchange. In accordance with the subscriber’s agreement, we retain 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 subscribers at the Exchange, as well as the service provider for the Exchange's insurance subsidiaries, with respect to all administrative services.

The transaction price, including management fee revenue and administrative services 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.

Consistent with 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 the subscribers' attorney-in-fact. Indemnity serves as the attorney-in-fact on behalf of the subscribers at the Exchange with respect to its administrative services as enumerated in the subscriber's agreement. 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 Consolidated Statements of Financial Position. During the three and nine months ended September 30, 2025, we recognized revenue of $9.0 million and $36.7 million, respectively, that was included in the contract liability balance as of December 31, 2024. During the three and nine months ended September 30, 2024, we recognized revenue of $8.7 million and $35.6 million, respectively, that was included in the contract liability balance as of December 31, 2023. The administrative services expenses we incur and the related reimbursements we receive are recorded gross in the Consolidated Statements of Operations.

Indemnity records a receivable from the Exchange for management fee revenue when the premium is written or assumed from affiliates 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 almost exclusively with annual terms, cash collections generally occur within one year.

The following table disaggregates revenue by our two performance obligations:


	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2025		2024		2025		2024
Management fee revenue - policy issuance and renewal services	$	825,275	$	769,162	$	2,404,177	$	2,195,734

Management fee revenue - administrative services	18,831		17,154		54,772		51,139
Administrative services reimbursement revenue	215,694		206,754		638,611		604,349
Total revenue from administrative services	$	234,525	$	223,908	$	693,383	$	655,488

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Note 4. Segment Information

We have one reportable segment: management operations. All segment revenue is derived in the United States, the majority of which is from the subscriber’s agreement between us and the subscribers (policyholders) at the Exchange, our sole customer, as further described in Note 3, "Revenue". Our chief operating decision maker ("CODM") is our Executive Council, which includes our Chief Executive Officer ("CEO"), Chief Financial Officer, executive vice presidents and certain senior vice presidents reporting directly to the CEO as applicable. The CODM assesses performance for the management operations segment and decides how to allocate resources based on net income, as reported in our Consolidated Statements of Operations. Net income is used to monitor budget versus actual results. Total assets as reported in our Consolidated Statements of Financial Position, all of which are located in the United States, are reviewed by the CODM for purposes of decision making. The accounting policies of our management operations segment are the same as those described in Note 2, "Significant Accounting Policies, of Notes to Consolidated Financial Statements" included in our Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the SEC on February 27, 2025.

The following table presents our management operations segment revenue, significant segment expenses regularly provided to the CODM and net income:


	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2025		2024		2025		2024
Management fee revenue	$	844,106	$	786,316	$	2,458,949	$	2,246,873
Administrative services reimbursement revenue	215,694		206,754		638,611		604,349
Service agreement revenue	6,939		6,816		18,675		19,803
Total operating revenue	1,066,739		999,886		3,116,235		2,871,025

Commissions	461,513		420,516		1,361,815		1,216,227
Underwriting and policy processing	53,097		51,449		156,264		150,350
Information technology	56,294		54,825		178,748		158,914
Sales and advertising	14,342		18,725		51,498		52,886
Customer service	12,176		11,300		35,253		31,726
Administrative and other	44,702		56,192		134,576		147,428
Cost of operations - policy issuance and renewal services	642,124		613,007		1,918,154		1,757,531
Cost of operations - administrative services	215,694		206,754		638,611		604,349
Total operating expenses (1)	857,818		819,761		2,556,765		2,361,880
Operating income	208,921		180,125		559,470		509,145

Total investment income	21,554		19,549		60,690		48,455

Other income	2,286		1,168		8,094		7,871
Income tax expense	49,908		41,012		132,299		117,186
Net income	$	182,853	$	159,830	$	495,955	$	448,285

(1) Management operations segment depreciation and amortization expense included in "Total operating expenses" as reported on our Consolidated Statements of Operations totaled $18.4 million and $14.4 million in the third quarter of 2025 and 2024, respectively, and $50.3 million and $41.5 million for the nine months ended September 30, 2025 and 2024, respectively. The Exchange and its insurance subsidiaries reimbursed us approximately 30% and 28% for the nine months ended September 30, 2025 and 2024, respectively, for depreciation and amortization expense on assets supporting administrative services. See our Consolidated Statements of Cash Flows for segment expenditures on fixed asset additions.

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Note 5. 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 11, "Capital Stock".

Class A diluted earnings per share is 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 September 30,
	2025					2024
(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	$	181,356	46,189,068	$	3.93	$	158,521	46,189,059	$	3.43
Dilutive effect of stock-based awards	0		15,731	—		0		16,655	—
Assumed conversion of Class B shares	1,497		6,100,800	—		1,309		6,100,800	—
Class A – Diluted EPS:
Income available to Class A stockholders on Class A equivalent shares	$	182,853	52,305,599	$	3.50	$	159,830	52,306,514	$	3.06
Class B – Basic EPS:
Income available to Class B stockholders	$	1,497	2,542	$	589	$	1,309	2,542	$	515
Class B – Diluted EPS:
Income available to Class B stockholders	$	1,497	2,542	$	589	$	1,309	2,542	$	515

	Nine months ended September 30,
	2025					2024
(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	$	491,894	46,189,012	$	10.65	$	444,614	46,189,038	$	9.63
Dilutive effect of stock-based awards	0		14,985	—		0		11,163	—
Assumed conversion of Class B shares	4,061		6,100,800	—		3,671		6,100,800	—
Class A – Diluted EPS:
Income available to Class A stockholders on Class A equivalent shares	$	495,955	52,304,797	$	9.48	$	448,285	52,301,001	$	8.57
Class B – Basic EPS:
Income available to Class B stockholders	$	4,061	2,542	$	1,597	$	3,671	2,542	$	1,444
Class B – Diluted EPS:
Income available to Class B stockholders	$	4,060	2,542	$	1,597	$	3,670	2,542	$	1,444

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Note 6. 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 September 30, 2025, nearly all of our available-for-sale and equity securities were priced using a third party pricing service.

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


	September 30, 2025
(in thousands)	Total		Level 1		Level 2		Level 3
Available-for-sale securities:




Corporate debt securities	$	673,086	$	0	$	670,031	$	3,055
Collateralized debt obligations	90,551		0		90,551		0
Commercial mortgage-backed securities	122,211		0		104,445		17,766
Residential mortgage-backed securities	141,166		0		139,882		1,284
Other debt securities	31,449		0		31,449		0
U.S. Treasury	7,370		0		7,370		0
Total available-for-sale securities (1)	1,065,833		0		1,043,728		22,105
Equity securities:
Financial services sector	60,425		2,122		52,798		5,505
Utilities sector	3,534		0		3,534		0
Energy sector	1,988		0		1,988		0
Consumer sector	4,558		0		1,397		3,161
Technology sector	3,224		0		0		3,224

Communications sector	963		0		963		0
Total equity securities (2)	74,692		2,122		60,680		11,890

Total	$	1,140,525	$	2,122	$	1,104,408	$	33,995

(1)This includes $35.9 million of securities lent under a securities lending agreement.

(2)This includes $20.3 million of securities lent under a securities lending agreement.


	December 31, 2024
(in thousands)	Total		Level 1		Level 2		Level 3
Available-for-sale securities:




Corporate debt securities	$	643,943	$	0	$	637,675	$	6,268
Collateralized debt obligations	114,127		0		114,127		0
Commercial mortgage-backed securities	124,982		0		100,893		24,089
Residential mortgage-backed securities	133,812		0		133,812		0
Other debt securities	26,751		0		26,751		0

Total available-for-sale securities (1)	1,043,615		0		1,013,258		30,357
Equity securities:
Financial services sector	69,930		1,052		65,378		3,500
Utilities sector	5,629		0		5,629		0
Energy sector	4,117		0		4,117		0
Consumer sector	3,341		54		1,787		1,500
Technology sector	1,974		0		0		1,974

Communications sector	900		0		900		0
Total equity securities	85,891		1,106		77,811		6,974
Total	$	1,129,506	$	1,106	$	1,091,069	$	37,331

(1) This includes $7.3 million of securities lent under a securities lending agreement.

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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 – 2025 Quarterly Change:



(in thousands)	Beginning balance at June 30, 2025		Included in earnings(1)		Included in other comprehensive income (loss)		Purchases		Sales		Transfers into Level 3(2)		Transfers out of Level 3(2)		Ending balance at September 30, 2025
Available-for-sale securities:
Corporate debt securities	$	6,176	$	21	$	45	$	0	$	(1,252)	$	1,139	$	(3,074)	$	3,055

Commercial mortgage-backed securities	16,434		(226)		99		0		(347)		5,331		(3,525)		17,766
Residential mortgage- backed securities	0		0		0		0		0		1,284		0		1,284

Total available-for-sale securities	22,610		(205)		144		0		(1,599)		7,754		(6,599)		22,105
Equity securities	10,640		0		—		1,250		0		0		0		11,890
Total Level 3 securities	$	33,250	$	(205)	$	144	$	1,250	$	(1,599)	$	7,754	$	(6,599)	$	33,995

Level 3 Assets – 2025 Year-to-Date Change:


(in thousands)	Beginning balance at December 31, 2024		Included in earnings(1)		Included in other comprehensive income (loss)		Purchases		Sales		Transfers into Level 3(2)		Transfers out of Level 3(2)		Ending balance at September 30, 2025
Available-for-sale securities:
Corporate debt securities	$	6,268	$	51	$	12	$	3,085	$	(2,044)	$	4,615	$	(8,932)	$	3,055
Collateralized debt obligations	0		(4)		0		700		(696)		0		0		0
Commercial mortgage-backed securities	24,089		(848)		503		1,997		(2,734)		16,403		(21,644)		17,766
Residential mortgage-backed securities	0		0		0		0		(18)		2,207		(905)		1,284

Total available-for-sale securities	30,357		(801)		515		5,782		(5,492)		23,225		(31,481)		22,105
Equity securities	6,974		646		—		4,750		0		18		(498)		11,890
Total Level 3 securities	$	37,331	$	(155)	$	515	$	10,532	$	(5,492)	$	23,243	$	(31,979)	$	33,995

Level 3 Assets – 2024 Quarterly Change:



(in thousands)	Beginning balance at June 30, 2024		Included in earnings(1)		Included in other comprehensive income (loss)		Purchases		Sales		Transfers into Level 3(2)		Transfers out of Level 3(2)		Ending balance at September 30, 2024
Available-for-sale securities:
Corporate debt securities	$	8,543	$	(166)	$	45	$	865	$	(392)	$	1,142	$	(6,396)	$	3,641

Commercial mortgage-backed securities	25,220		(408)		670		1,102		(28)		1,312		(12,108)		15,760


Total available-for-sale securities	33,763		(574)		715		1,967		(420)		2,454		(18,504)		19,401
Equity securities	8,498		517		—		0		0		0		(2,056)		6,959
Total Level 3 securities	$	42,261	$	(57)	$	715	$	1,967	$	(420)	$	2,454	$	(20,560)	$	26,360

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Level 3 Assets – 2024 Year-to-Date Change:


(in thousands)	Beginning balance at December 31, 2023		Included in earnings(1)		Included in other comprehensive income (loss)		Purchases		Sales		Transfers into Level 3(2)		Transfers out of Level 3(2)		Ending balance at September 30, 2024
Available-for-sale securities:
Corporate debt securities	$	4,506	$	(141)	$	66	$	5,704	$	(1,215)	$	4,966	$	(10,245)	$	3,641

Commercial mortgage-backed securities	10,994		(1,077)		889		2,907		(33)		18,960		(16,880)		15,760
Residential mortgage-backed securities	1,534		(5)		(24)		0		(40)		0		(1,465)		0

Total available-for-sale securities	17,034		(1,223)		931		8,611		(1,288)		23,926		(28,590)		19,401
Equity securities	7,334		664		—		2,019		(84)		544		(3,518)		6,959
Total Level 3 securities	$	24,368	$	(559)	$	931	$	10,630	$	(1,372)	$	24,470	$	(32,108)	$	26,360

(1)These amounts are reported as net investment income and net realized and unrealized 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:


	September 30, 2025				December 31, 2024
(in thousands)	Carrying value		Fair value		Carrying value		Fair value
Agent loans, net (1)	$	109,131	$	104,110	$	92,731	$	90,713
Other loans receivable, net (2)	16,069		13,187		11,555		11,555


Held-to-maturity securities, net (3)	4,833		4,876		4,833		4,934

(1) The current portion of agent loans is included in the line item "Prepaid expenses and other current assets, net" in the Consolidated Statements of Financial Position.

(2) The current and long-term portions of other loans receivable are included in the line items "Prepaid expenses and other current assets, net" and "Other assets, net", respectively, in the Consolidated Statements of Financial Position.

(3) Held-to-maturity securities are included in the line item "Other assets, net" in the Consolidated Statements of Financial Position.

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Note 7. Investments

Fixed maturity securities

See Note 6, "Fair Value" for additional fair value disclosures. The following tables summarize the amortized cost and estimated fair value, net of credit loss allowance, of our fixed maturity securities as of:


	September 30, 2025
(in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value




Available-for-sale securities:
Corporate debt securities	$	663,602	$	12,714	$	3,230	$	673,086
Collateralized debt obligations	90,481		238		168		90,551
Commercial mortgage-backed securities	121,053		2,868		1,710		122,211
Residential mortgage-backed securities	151,730		736		11,300		141,166
Other debt securities	31,091		622		264		31,449
U.S. Treasury	7,259		120		9		7,370
Total available-for-sale securities, net (1)	1,065,216		17,298		16,681		1,065,833

Held-to-maturity securities - states & political subdivisions	4,833		43		0		4,876

Total fixed maturity securities, net	$	1,070,049	$	17,341	$	16,681	$	1,070,709

(1)This includes an estimated fair value of $35.9 million of securities lent under a securities lending agreement.


	December 31, 2024
(in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Available-for-sale securities:




Corporate debt securities	$	647,861	$	4,767	$	8,685	$	643,943
Collateralized debt obligations	114,142		372		387		114,127
Commercial mortgage-backed securities	126,509		1,458		2,985		124,982
Residential mortgage-backed securities	150,212		62		16,462		133,812
Other debt securities	27,232		147		628		26,751

Total available-for-sale securities, net (1)	1,065,956		6,806		29,147		1,043,615
Held-to-maturity securities - states & political subdivisions	4,833		101		0		4,934
Total fixed maturity securities, net	$	1,070,789	$	6,907	$	29,147	$	1,048,549

(1)This includes an estimated fair value of $7.3 million of securities lent under a securities lending agreement.

The amortized cost and estimated fair value of available-for-sale and held-to-maturity securities at September 30, 2025 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.


	September 30, 2025
	Amortized		Estimated
(in thousands)	cost		fair value
Available-for-sale securities:
Due in one year or less	$	63,952	$	63,710
Due after one year through five years	460,087		465,927
Due after five years through ten years	136,215		138,111
Due after ten years	404,962		398,085
Total available-for-sale securities, net (1) (2)	1,065,216		1,065,833

Held-to-maturity securities - due after ten years	4,833		4,876

Total fixed maturity securities, net	$	1,070,049	$	1,070,709

(1)The contractual maturities of our available-for-sale securities are included in the table. However, given our intent to sell certain impaired securities, these securities are classified as current assets in our Consolidated Statement of Financial Position at September 30, 2025.

(2)This includes an estimated fair value of $35.9 million of securities lent under a securities lending agreement.

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The below securities have been evaluated for credit impairment using criteria described within Note 2, "Significant Accounting Policies, of Notes to Consolidated Financial Statements" included in our Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the SEC on February 27, 2025. The gross unrealized losses are primarily attributable to changes in interest rates and are not deemed to be credit-related. We do not have the intent to sell these securities and it is more likely than not that we would not be required to sell these securities before the anticipated recovery of the amortized cost basis.

The following tables present available-for-sale securities based on length of time in a gross unrealized loss position as of:


	September 30, 2025
	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	$	23,443	$	817	$	107,364	$	2,413	$	130,807	$	3,230	358
Collateralized debt obligations	25,562		69		5,396		99		30,958		168		54
Commercial mortgage-backed securities	4,833		55		19,434		1,655		24,267		1,710		66
Residential mortgage-backed securities	17,132		248		88,556		11,052		105,688		11,300		144
Other debt securities	1,681		25		3,770		239		5,451		264		24
U.S. Treasury	1,469		9		0		0		1,469		9		1
Total available-for-sale securities	$	74,120	$	1,223	$	224,520	$	15,458	$	298,640	$	16,681	647
Quality breakdown of available-for-sale securities:
Investment grade	$	53,947	$	408	$	204,399	$	14,379	$	258,346	$	14,787	344
Non-investment grade	20,173		815		20,121		1,079		40,294		1,894		303
Total available-for-sale securities	$	74,120	$	1,223	$	224,520	$	15,458	$	298,640	$	16,681	647


	December 31, 2024
	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	$	197,619	$	2,486	$	156,059	$	6,199	$	353,678	$	8,685	567
Collateralized debt obligations	33,686		71		11,762		316		45,448		387		77
Commercial mortgage-backed securities	28,333		407		24,966		2,578		53,299		2,985		131
Residential mortgage-backed securities	38,003		1,289		90,209		15,173		128,212		16,462		169
Other debt securities	11,663		150		5,045		478		16,708		628		42

Total available-for-sale securities	$	309,304	$	4,403	$	288,041	$	24,744	$	597,345	$	29,147	986
Quality breakdown of available-for-sale securities:
Investment grade	$	280,332	$	3,701	$	260,480	$	22,664	$	540,812	$	26,365	616
Non-investment grade	28,972		702		27,561		2,080		56,533		2,782		370
Total available-for-sale securities	$	309,304	$	4,403	$	288,041	$	24,744	$	597,345	$	29,147	986

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Credit loss allowances

The following tables present a roll-forward of the allowances for credit losses on investments:


	Three months ended September 30, 2025
(in thousands)	Available-for-sale securities		Held-to-maturity securities		Other loans receivable		Agent loans
Balance, beginning of period	$	881	$	2,167	$	13,038	$	1,476
Provision and recoveries	417		0		218		111
Sales/collections and write-offs	(64)		0		(25)		0
Balance, end of period	$	1,234	$	2,167	$	13,231	$	1,587


	Nine months ended September 30, 2025
(in thousands)	Available-for-sale securities		Held-to-maturity securities		Other loans receivable		Agent loans
Balance, beginning of period	$	513	$	2,167	$	12,198	$	1,312
Provision and recoveries	1,086		0		1,058		275
Sales/collections and write-offs	(365)		0		(25)		0
Balance, end of period	$	1,234	$	2,167	$	13,231	$	1,587



	Three months ended September 30, 2024
(in thousands)	Available-for-sale securities		Held-to-maturity securities		Other loans receivable		Agent loans
Balance, beginning of period	$	503	$	2,167	$	11,438	$	957
Provision and recoveries	158		0		474		354
Sales/collections and write-offs	(231)		0		0		0
Balance, end of period	$	430	$	2,167	$	11,912	$	1,311



	Nine months ended September 30, 2024
(in thousands)	Available-for-sale securities		Held-to-maturity securities		Other loans receivable		Agent loans
Balance, beginning of period	$	597	$	0	$	11,081	$	957
Provision and recoveries	401		2,167		831		354
Sales/collections and write-offs	(568)		0		0		0
Balance, end of period	$	430	$	2,167	$	11,912	$	1,311

Net investment income

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


	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2025		2024		2025		2024
Available-for-sale securities	$	14,068	$	12,891	$	41,881	$	36,611
Equity securities	1,220		1,119		3,533		3,536
Limited partnerships (1)	114		(127)		1,269		134
Agent loans (2)	1,633		1,070		4,634		2,891
Cash equivalents and other (2)	4,606		2,940		11,502		7,456
Total investment income	21,641		17,893		62,819		50,628
Less: investment expenses	608		571		1,808		1,393
Net investment income	$	21,033	$	17,322	$	61,011	$	49,235

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

(2)2024 amounts have been reclassified to conform to the current period presentation.

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Net realized and unrealized investment gains

Realized and unrealized gains (losses) on investments were as follows:


	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2025		2024		2025		2024
Available-for-sale securities:
Gross realized gains	$	908	$	1,457	$	1,588	$	2,144
Gross realized losses	(337)		(1,315)		(1,710)		(4,639)
Net realized gains (losses) on available-for-sale securities	571		142		(122)		(2,495)
Equity securities	760		2,782		2,429		5,477
Miscellaneous	0		1		5		1
Net realized and unrealized investment gains	$	1,331	$	2,925	$	2,312	$	2,983

The portion of net unrealized gains recognized during the reporting period related to equity securities held at the reporting date is calculated as follows:


	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2025		2024		2025		2024
Equity securities:
Net gains recognized during the period	$	760	$	2,782	$	2,429	$	5,477
Less: net gains recognized on securities sold	66		146		340		883
Net unrealized gains recognized on securities held at reporting date	$	694	$	2,636	$	2,089	$	4,594

Net impairment losses recognized in earnings

Impairments on investments were as follows:


	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2025		2024		2025		2024
Available-for-sale securities:
Intent to sell	$	(78)	$	(1)	$	(495)	$	(299)
Credit impaired	(417)		(158)		(1,086)		(401)
Total available-for-sale securities	(495)		(159)		(1,581)		(700)
Expected credit losses:
Held-to-maturity securities	0		0		0		(2,167)
Agent loans	(111)		(354)		(275)		(354)
Other loans receivable	(204)		(185)		(777)		(542)
Net impairment losses recognized in earnings	$	(810)	$	(698)	$	(2,633)	$	(3,763)

Securities lending transactions

As of September 30, 2025, the estimated fair value of loaned securities was $56.2 million, comprised of $35.9 million and $20.3 million of available-for-sale and equity securities, respectively. The related cash collateral received was $54.3 million, which was reinvested in cash equivalents and is included with "Cash and cash equivalents" in our Consolidated Statement of Financial Position. We also received $3.6 million of non-cash collateral that we are not permitted to sell or repledge, and there are no securities lending transactions that extend beyond one year from the reporting date.

If we have to return cash collateral on short notice, we may have difficulty selling investments in a timely manner, be forced to sell them for less than we otherwise would have been able to realize, or both. In addition, in the event of such forced sale, for securities in an unrealized loss position, realized losses would be incurred on securities sold and impairments would be incurred, if there is a need to sell securities prior to recovery, which may negatively impact our financial condition.

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Note 8. Bank Line of Credit

We have access to a $100 million bank revolving line of credit with a $25 million letter of credit sublimit that expires on November 1, 2029. As of September 30, 2025, a total of $99.2 million remains available under the facility due to $0.8 million outstanding letters of credit, which reduce the availability for letters of credit to $24.2 million. We had no borrowings outstanding on our line of credit as of September 30, 2025. Investments with a fair value of $121.0 million were pledged as collateral on the line of credit at September 30, 2025. These investments have no trading restrictions and are reported as available-for-sale securities and cash and cash equivalents on our Consolidated Statement of Financial Position as of September 30, 2025. The bank requires compliance with certain covenants, which include leverage ratios and debt restrictions. We are in compliance with all covenants at September 30, 2025.

Note 9. 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 ("SERP") for certain members of executive and senior management. The pension plan provides benefits to covered individuals satisfying certain age and service requirements. The defined benefit pension plan and SERP each provide benefits through a final average earnings formula.

Although we are the sponsor of these postretirement plans and record the funded status of these plans, there are reimbursements between us and the Exchange and its insurance subsidiaries for their allocated share of pension income or cost. These reimbursements represent pension benefits for employees performing administrative services and an allocated share of plan (income) cost for employees in departments that support the administrative functions. For the nine months ended September 30, 2025, the Exchange and its insurance subsidiaries reimbursed us for approximately 62% of the annual defined benefit pension cost and 35% of the annual SERP cost. For our funded pension plan, amounts are settled in cash for the portion of pension (income) cost allocated to the Exchange and its insurance subsidiaries. For our unfunded SERP, we pay the obligations when due and amounts are settled in cash between entities when there is a payout.

Our defined benefit pension plan funding policy is generally to contribute an amount equal to the greater of the target normal cost for the plan year, or the amount necessary to fund the plan to 100%. Accordingly, we made a $39 million contribution in January 2025. The funded pension plan is presented separately from the unfunded plan as a non-current asset on the Consolidated Statements of Financial Position.

Pension plan cost (income) includes the following components:


	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2025		2024		2025		2024
Service cost for benefits earned	$	8,866	$	8,628	$	26,590	$	25,920
Interest cost on benefit obligation	14,688		13,195		44,039		39,503
Expected return on plan assets	(20,069)		(20,199)		(60,207)		(60,595)
Prior service cost amortization	422		413		1,266		1,199
Net actuarial gain amortization	(633)		(1,695)		(1,942)		(5,180)
Settlement gain (1)	(62)		(59)		(539)		(1,338)
Pension plan cost (income) (2)	$	3,212	$	283	$	9,207	$	(491)

(1)Settlement accounting was required due to lump sum payments made under the SERP to former officers in 2025 and 2024.

(2)Pension plan cost (income) represents total plan cost (income) before reimbursements between Indemnity and the Exchange and its insurance subsidiaries. The components of pension plan cost (income) other than the service cost components are included in the line item "Other income" in the Consolidated Statements of Operations, net of reimbursements between Indemnity and the Exchange and its insurance subsidiaries.

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Note 10. 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 September 30, 2025 and 2024, our effective tax rate was 21.4% and 20.4%, respectively. For the nine months ended September 30, 2025 and 2024, our effective tax rate was 21.1% and 20.7% respectively.

New tax legislation, referred to as the One Big Beautiful Bill Act ("OBBBA"), was signed into law on July 4, 2025. The OBBBA includes changes to the timing of tax deductions for depreciation and software development expenditures. The impact of the OBBBA is reflected in our income tax provisions and effective tax rate for the quarter ended September 30, 2025.

Note 11. 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 nine months ended September 30, 2025 and the year ended December 31, 2024. There is no provision for conversion of Class A shares into 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 nine months ended September 30, 2025 and the year ended December 31, 2024. We had approximately $17.8 million of repurchase authority remaining under this program at September 30, 2025.

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Note 12. 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 Consolidated Statements of Operations where net income is presented, are as follows:


	Three months ended						Three months ended
	September 30, 2025						September 30, 2024
(in thousands)	Before Tax		Income Tax		Net		Before Tax		Income Tax		Net
Investment securities:
AOCI (loss), beginning of period	$	(7,202)	$	(1,513)	$	(5,689)	$	(30,405)	$	(6,385)	$	(24,020)
OCI before reclassifications	7,803		1,638		6,165		25,586		5,373		20,213
Realized investment gains	(571)		(120)		(451)		(142)		(30)		(112)
Impairment losses	495		104		391		159		33		126

OCI	7,727		1,622		6,105		25,603		5,376		20,227
AOCI (loss), end of period	$	525	$	109	$	416	$	(4,802)	$	(1,009)	$	(3,793)

Pension and other postretirement plans:
AOCI (loss), beginning of period	$	(38,744)	$	(8,137)	$	(30,607)	$	8,730	$	1,833	$	6,897
OCI (loss) before reclassifications	(1,063)		(223)		(840)		(606)		(127)		(479)
Amortization of prior service costs	422		89		333		413		87		326
Amortization of net actuarial gain	(633)		(133)		(500)		(1,695)		(356)		(1,339)
Settlement gain	(62)		(13)		(49)		(59)		(13)		(46)
OCI (loss)	(1,336)		(280)		(1,056)		(1,947)		(409)		(1,538)
AOCI (loss), end of period	$	(40,080)	$	(8,417)	$	(31,663)	$	6,783	$	1,424	$	5,359

Total
AOCI (loss), beginning of period	$	(45,946)	$	(9,650)	$	(36,296)	$	(21,675)	$	(4,552)	$	(17,123)
Investment securities	7,727		1,622		6,105		25,603		5,376		20,227
Pension and other postretirement plans	(1,336)		(280)		(1,056)		(1,947)		(409)		(1,538)
OCI	6,391		1,342		5,049		23,656		4,967		18,689
AOCI (loss), end of period	$	(39,555)	$	(8,308)	$	(31,247)	$	1,981	$	415	$	1,566


	Nine months ended						Nine months ended
	September 30, 2025						September 30, 2024
(in thousands)	Before Tax		Income Tax		Net		Before Tax		Income Tax		Net
Investment securities:
AOCI (loss), beginning of period	$	(22,442)	$	(4,714)	$	(17,728)	$	(31,402)	$	(6,595)	$	(24,807)
OCI before reclassifications	21,264		4,465		16,799		23,405		4,915		18,490
Realized investment losses	122		26		96		2,495		524		1,971
Impairment losses	1,581		332		1,249		700		147		553

OCI	22,967		4,823		18,144		26,600		5,586		21,014
AOCI (loss), end of period	$	525	$	109	$	416	$	(4,802)	$	(1,009)	$	(3,793)

Pension and other postretirement plans:
AOCI (loss), beginning of period	$	(37,802)	$	(7,939)	$	(29,863)	$	14,439	$	3,032	$	11,407
OCI (loss) before reclassifications	(1,063)		(223)		(840)		(2,337)		(491)		(1,846)
Amortization of prior service costs	1,266		266		1,000		1,199		252		947
Amortization of net actuarial gain	(1,942)		(408)		(1,534)		(5,180)		(1,088)		(4,092)
Settlement gain	(539)		(113)		(426)		(1,338)		(281)		(1,057)
OCI (loss)	(2,278)		(478)		(1,800)		(7,656)		(1,608)		(6,048)
AOCI (loss), end of period	$	(40,080)	$	(8,417)	$	(31,663)	$	6,783	$	1,424	$	5,359

Total
AOCI (loss), beginning of period	$	(60,244)	$	(12,653)	$	(47,591)	$	(16,963)	$	(3,563)	$	(13,400)
Investment securities	22,967		4,823		18,144		26,600		5,586		21,014
Pension and other postretirement plans	(2,278)		(478)		(1,800)		(7,656)		(1,608)		(6,048)
OCI	20,689		4,345		16,344		18,944		3,978		14,966
AOCI (loss), end of period	$	(39,555)	$	(8,308)	$	(31,247)	$	1,981	$	415	$	1,566

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Note 13. Concentrations of Credit Risk

Financial instruments could potentially expose us to concentrations of credit risk, including our unsecured receivables from the Exchange. The 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 $780.5 million and $707.1 million at September 30, 2025 and December 31, 2024, respectively, which includes a current expected credit loss allowance of $0.7 million in both periods.

Note 14. Commitments and Contingencies

We have an agreement with a bank for an agent loan participation program. The maximum amount of loans to be funded through this program is $150 million. We have committed to fund a minimum of 30% of each loan executed through this program. As of September 30, 2025, outstanding loans executed under this agreement totaled $136.3 million, of which our portion of the loans is $52.7 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 September 30, 2025, our maximum potential amount of future payments on the guaranteed portion is $16.2 million. All loan payments under the participation program are current as of September 30, 2025.

We also have contingent obligations for guarantees related to certain real estate development projects supporting revitalization efforts in our community. As of September 30, 2025, our maximum potential obligation related to guarantees is $4.0 million.

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 consolidated 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 consolidated 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 our consolidated financial condition, results of operations or cash flows.

Note 15. Subsequent Events

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

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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 consolidated 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, 2024, as contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 27, 2025.

INDEX


			Page Number
Cautionary Statement Regarding Forward-Looking Information			26

Recent Accounting Standards			27
Operating Overview			27
Results of Operations			30




Financial Condition			36



Liquidity and Capital Resources			37

Critical Accounting Estimates			39

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 impacting the timing of premium rates charged for policies;

◦factors affecting insurance industry competition, including technological innovations;

◦dependence upon the independent agency system; and

◦ability to maintain our brand, including 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;

◦emergence of significant unexpected events, including pandemics, economic or social inflation, and changes in tariff policies;

◦emerging claims and coverage issues in the industry; and

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

•costs of providing policy issuance and renewal services to the subscribers at 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, data or network security breaches, including cyber attacks;

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•ability to maintain uninterrupted business operations;

•compliance with complex and evolving laws and regulations and outcome of pending and potential litigation;

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

•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.

RECENT ACCOUNTING STANDARDS

See Part I, Item 1. "Financial Statements - Note 2, Significant Accounting Policies, of Notes to Consolidated Financial Statements" contained within this report for a discussion of recently issued accounting standards, and the impact on our consolidated financial statements if known.

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 subscribers at the Exchange, as well as the service provider for the Exchange's 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 (a subscriber) 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. In accordance with the subscriber’s agreement for acting as attorney-in-fact in these two capacities, we retain 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 on behalf of the subscribers at the Exchange. The policy issuance and renewal services we provide 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 incentive compensation, which is 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.

Consistent with 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 the subscribers' attorney-in-fact. Indemnity serves as the attorney-in-fact on behalf of the subscribers at the Exchange with respect to its administrative services as enumerated in the subscriber's agreement. 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. In 2024, approximately 70% of the administrative services expenses were entirely attributable to the respective administrative functions (claims handling, life insurance management and investment management), while the remaining 30% of these expenses were allocations of costs for departments that support these administrative functions. The expenses we incur and related reimbursements we receive for administrative services are presented gross in our Consolidated Statements of Operations. The subscriber's agreement and service agreements provide for reimbursement of amounts incurred for these services to Indemnity. Reimbursements are settled at cost on a monthly basis. 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

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the Exchange. The Exchange generates revenue by insuring preferred and standard risks, with personal lines comprising 71% of the 2024 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.

Information security incident

On June 7, 2025, we identified unusual network activity, which we determined to be the result of an information security incident. Upon learning of this activity, we activated our incident response protocols and took immediate action to respond to the situation to safeguard our systems and data, including collaboration with law enforcement and leading cybersecurity experts. After a thorough forensics investigation conducted by independent cybersecurity specialists, there was no evidence that any sensitive personal information, financial records or legally protected data was breached by the threat actor during this incident. We resumed full business operations as of July 7, 2025, with key services and systems safely and securely restored.

Between the outset of the incident and return to full business operations, we incurred certain disruptions to our business operations, primarily related to the ability to process premium activity for the Exchange, which impacts our management fee revenue. Additionally, we have incurred and will continue to incur certain expenses related to the information security incident, including expenses to respond to, remediate and investigate this matter. We have cybersecurity insurance that we expect will cover a portion of lost income due to business interruption and related expenses. The full impact has not yet been determined, but is not expected to be material to our consolidated financial condition, results of operations or cash flows.

Financial Overview


	Three months ended September 30,						Nine months ended September 30,
(dollars in thousands, except per share data)	2025		2024		% Change		2025		2024		% Change
	(Unaudited)						(Unaudited)


Operating income	$	208,921	$	180,125	16.0	%	$	559,470	$	509,145	9.9	%
Total investment income	21,554		19,549		10.3		60,690		48,455		25.2

Other income	2,286		1,168		95.7		8,094		7,871		2.8
Income before income taxes	232,761		200,842		15.9		628,254		565,471		11.1
Income tax expense	49,908		41,012		21.7		132,299		117,186		12.9
Net income	$	182,853	$	159,830	14.4	%	$	495,955	$	448,285	10.6	%
Net income per share – diluted	$	3.50	$	3.06	14.4	%	$	9.48	$	8.57	10.6	%

Operating income increased in both the third quarter and nine months ended September 30, 2025, compared to the same periods in 2024, as growth in operating revenue outpaced the growth in operating expenses. Management fee revenue for policy issuance and renewal services increased 7.3% to $825.3 million in the third quarter of 2025 and 9.5% to $2.4 billion for the nine months ended September 30, 2025. 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 2025 and 2024. The direct and affiliated assumed premiums written by the Exchange increased 7.6% to $3.4 billion in the third quarter of 2025 and 10.1% to $9.9 billion for the nine months ended September 30, 2025, compared to the same periods in 2024.

Cost of operations for policy issuance and renewal services increased 4.7% to $642.1 million in the third quarter of 2025 and 9.1% to $1.9 billion for the nine months ended September 30, 2025, compared to the same periods in 2024, primarily due to higher scheduled commissions driven by direct and affiliated assumed written premium growth and increased agent incentive compensation due to improved profitability. Cost of operations for policy issuance and renewal services in the third quarter of 2025 were partially offset by decreased personnel costs related to incentive compensation.

Management fee revenue for administrative services increased 9.8% to $18.8 million in the third quarter of 2025 and 7.1% to $54.8 million for the nine months ended September 30, 2025, compared to the same periods in 2024. The administrative services reimbursement revenue and corresponding cost of operations increased both total operating revenue and total operating expenses by $215.7 million in the third quarter of 2025 and $638.6 million for the nine months ended September 30, 2025, but had no net impact on operating income.

Total investment income increased $2.0 million in the third quarter of 2025 and $12.2 million for the nine months ended September 30, 2025, compared to the same periods in 2024. The results from both periods were primarily due to an increase in net investment income.

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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 revenue. Elevated inflation, supply chain disruptions or changes in tariff policies could impact the Exchange's operations and our management fees. In particular, unanticipated increased inflation costs including medical cost inflation, building material cost inflation, auto repair and replacement cost inflation and social inflation may impact adequacy of estimated loss reserves and future premium rates of the Exchange. If any of these items impacted the financial condition or operations of the Exchange, it could have an impact on our financial results. For a discussion of the potential impacts to our operations or those of the Exchange, see Financial Condition and Liquidity and Capital Resources contained within this report, as well as Part I. Item 1A. "Risk Factors" included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 and Part II. Item 1A. "Risk Factors" included in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2025 as filed with the Securities and Exchange Commission on February 27, 2025 and August 7, 2025, respectively.

Financial market volatility

Our portfolio of available-for-sale and equity security investments is subject to market volatility, especially in periods of instability in the worldwide financial markets. Net investment income is impacted by the general level of interest rates, which impact reinvested cash flow from the portfolio and business operations. Depending upon market conditions, considerable fluctuation could occur in the fair value of our investment portfolio and reported total investment income, which could have an adverse impact on our consolidated financial condition, results of operations and cash flows. Various ongoing geopolitical events, the uncertain tariff, inflationary and interest rate environment and a potential economic slowdown could have a significant impact on the global financial markets with the potential for future losses and/or impairments on our investment portfolio.

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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 subscribers at the Exchange, as well as the service provider for the Exchange's insurance subsidiaries with respect to all administrative services. We retain 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% for both 2025 and 2024. Changes in the management fee rate can affect our revenue and net income significantly. The transaction price, including management fee revenue and administrative services 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 between the two performance obligations in 2025 compared to 2024, which did not have a material impact on our consolidated financial statements.

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


	Three months ended September 30,								Nine months ended September 30,
(dollars in thousands)	2025			2024			% Change		2025			2024			% Change
	(Unaudited)								(Unaudited)
Policy issuance and renewal services
Direct and affiliated assumed premiums written by the Exchange	$	3,402,438		$	3,162,302		7.6	%	$	9,947,314		$	9,038,508		10.1	%
Management fee rate	24.37		%	24.40		%			24.37		%	24.40		%
Management fee revenue	829,174			771,602			7.5		2,424,160			2,205,396			9.9
Change in estimate for management fee returned on cancelled policies (1)	(3,899)			(2,440)			(59.8)		(19,983)			(9,662)			NM
Management fee revenue - policy issuance and renewal services	$	825,275		$	769,162		7.3	%	$	2,404,177		$	2,195,734		9.5	%

Administrative services
Direct and affiliated assumed premiums written by the Exchange	$	3,402,438		$	3,162,302		7.6	%	$	9,947,314		$	9,038,508		10.1	%
Management fee rate	0.63		%	0.60		%			0.63		%	0.60		%
Management fee revenue	21,435			18,974			13.0		62,668			54,231			15.6
Change in contract liability (2)	(2,510)			(1,796)			(39.8)		(7,694)			(3,045)			NM
Change in estimate for management fee returned on cancelled policies (1)	(94)			(24)			NM		(202)			(47)			NM

Management fee revenue - administrative services	18,831			17,154			9.8		54,772			51,139			7.1
Administrative services reimbursement revenue	215,694			206,754			4.3		638,611			604,349			5.7
Total revenue from administrative services	$	234,525		$	223,908		4.7	%	$	693,383		$	655,488		5.8	%

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 Consolidated Financial Statements" contained within this report.

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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 7.6% to $3.4 billion in the third quarter of 2025 compared to the third quarter of 2024, primarily driven by increased personal lines and commercial multi-peril premiums written. Year-over-year policies in force for all lines of business increased 0.2% in the third quarter of 2025 compared to 6.0% in the third quarter of 2024. The year-over-year average premium per policy for all lines of business increased 10.7% at September 30, 2025 compared to 12.8% at September 30, 2024.

Premiums generated from new business decreased 20.5% to $351 million in the third quarter of 2025 compared to the same period in 2024, primarily driven by decreased premiums written in the personal auto, commercial multi-peril and homeowners lines. Contributing to this change was a 24.1% decrease in new business policies written, partially offset by a 8.5% increase in year-over-year average premium per policy on new business at September 30, 2025. Premiums generated from new business increased 9.5% to $441 million in the third quarter of 2024 compared to the same period in 2023, primarily driven by increased premiums written in the commercial multi-peril and homeowners lines. Contributing to this change was a 15.9% increase in year-over-year average premium per policy on new business, somewhat offset by a 4.0% decrease in new business policies written in the third quarter of 2024.

Premiums generated from renewal business increased 12.1% to $3.1 billion in the third quarter of 2025 compared to the third quarter of 2024 and increased 20.0% to $2.7 billion in the third quarter of 2024 compared to the third quarter of 2023. Underlying the trend in renewal business premiums in both periods was an 11.3% increase in year-over-year average premium per policy at September 30, 2025, and 12.3% at September 30, 2024, as well as an increase in year-over-year policies in force of 4.1% and 5.7% in the third quarters of 2025 and 2024, respectively.

Personal lines – Total personal lines premiums written increased 7.1% to $2.5 billion in the third quarter of 2025, compared to 20.1% in the third quarter of 2024, driven by a 11.1% increase in total personal lines year-over-year average premium per policy, slightly offset by a 0.2% decrease in total personal lines policies in force.

Commercial lines – Total commercial lines premiums written increased 8.9% to $902 million in the third quarter of 2025, compared to 13.9% in the third quarter of 2024, driven by a 7.9% increase in total commercial lines year-over-year average premium per policy and a 3.0% increase in total commercial lines policies in force.

Future trends-premium revenue – Through a careful agency selection and monitoring process, the Exchange plans to continue efforts to utilize its agency force to increase market penetration in existing operating territories to contribute to future growth.

Premium levels impacted by changes in policies in force and rate actions affect the profitability of the Exchange and have a direct bearing on our management fee revenue. Future rate actions could be impacted by potential changes in regulation, inflationary trends and tariff policies, among others. As the Exchange writes policies almost exclusively with annual terms, premium rate actions take 12 months to be fully recognized in written premiums, or longer for policies with a rate locking feature. See also Part I. Item 1A. "Risk Factors" included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 and Part II. Item 1A. "Risk Factors" included in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2025 as filed with the Securities and Exchange Commission on February 27, 2025 and August 7, 2025, respectively.

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Policy issuance and renewal services


	Three months ended September 30,						Nine months ended September 30,
(dollars in thousands)	2025		2024		% Change		2025		2024		% Change
	(Unaudited)						(Unaudited)
Management fee revenue - policy issuance and renewal services	$	825,275	$	769,162	7.3	%	$	2,404,177	$	2,195,734	9.5	%
Service agreement revenue	6,939		6,816		1.8		18,675		19,803		(5.7)
	832,214		775,978		7.2		2,422,852		2,215,537		9.4
Cost of operations - policy issuance and renewal services	642,124		613,007		4.7		1,918,154		1,757,531		9.1
Operating income - policy issuance and renewal services	$	190,090	$	162,971	16.6	%	$	504,698	$	458,006	10.2	%

Policy issuance and renewal services

The management fee revenue allocated for providing policy issuance and renewal services was 24.37% and 24.40% of the direct and affiliated assumed premiums written by the Exchange for both the three and nine month periods ended September 30, 2025 and 2024, 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 primarily consists of service charges we collect from subscribers (policyholders) for providing multiple payment plans on policies written by the Exchange and its property and casualty subsidiaries and also includes late payment and policy reinstatement fees. The service charges are fixed dollar amounts per billed installment. Service agreement revenue also includes fees received from the Exchange for the use of shared office space.

Cost of policy issuance and renewal services


	Three months ended September 30,						Nine months ended September 30,
(dollars in thousands)	2025		2024		% Change		2025		2024		% Change
	(Unaudited)						(Unaudited)
Commissions:
Total commissions	$	461,513	$	420,516	9.7	%	$	1,361,815	$	1,216,227	12.0	%
Non-commission expense:
Underwriting and policy processing	$	53,097	$	51,449	3.2	%	$	156,264	$	150,350	3.9	%
Information technology	56,294		54,825		2.7		178,748		158,914		12.5
Sales and advertising	14,342		18,725		(23.4)		51,498		52,886		(2.6)
Customer service	12,176		11,300		7.8		35,253		31,726		11.1
Administrative and other	44,702		56,192		(20.4)		134,576		147,428		(8.7)
Total non-commission expense	180,611		192,491		(6.2)		556,339		541,304		2.8
Total cost of operations - policy issuance and renewal services	$	642,124	$	613,007	4.7	%	$	1,918,154	$	1,757,531	9.1	%

Commissions – Commissions increased $41.0 million in the third quarter of 2025 and $145.6 million for the nine months ended September 30, 2025, compared to the same periods in 2024, primarily driven by the growth in direct and affiliated assumed written premium and, to a lesser extent, an increase in agent incentive compensation. The estimated agent incentive payouts at September 30, 2025 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 2025. The profitability component of agent incentive compensation increased due to improved actual and forecasted loss ratios for the three-year period ended 2025 compared to the three-year period ended 2024.

Non-commission expense – Non-commission expense decreased $11.9 million in the third quarter of 2025 compared to the third quarter of 2024. Underwriting and policy processing expense increased $1.6 million primarily due to increased postage costs, partially offset by a decrease in underwriting report costs. Sales and advertising expense decreased $4.4 million primarily due to decreased agent-related costs and costs from community development initiatives. Administrative and other costs decreased $11.5 million primarily due to decreases in personnel costs and professional fees.

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Non-commission expense increased $15.0 million for the nine months ended September 30, 2025 compared to the same period in 2024. Underwriting and policy processing expense increased $5.9 million primarily due to increased postage and personnel costs. Information technology costs increased $19.8 million primarily due to an increase in personnel costs and hardware and software costs. Customer service costs increased $3.5 million primarily due to increased personnel costs and credit card processing fees. Administrative and other costs decreased $12.9 million primarily due to decreased personnel costs.

Personnel costs in both the third quarter and nine months ended September 30, 2025 were impacted by decreased incentive compensation compared to 2024. Decreases in incentive plan costs in both periods were primarily driven by lower performance metrics compared to 2024 and a decrease in company stock price during the third quarter and nine months ended September 30, 2025 compared to an increase during the respective periods in 2024. Personnel costs in all expense categories for the nine months ended September 30, 2025 were also impacted by increased healthcare costs compared to 2024.

Administrative services


	Three months ended September 30,						Nine months ended September 30,
(dollars in thousands)	2025		2024		% Change		2025		2024		% Change
	(Unaudited)						(Unaudited)
Management fee revenue - administrative services	$	18,831	$	17,154	9.8	%	$	54,772	$	51,139	7.1	%
Administrative services reimbursement revenue	215,694		206,754		4.3		638,611		604,349		5.7
Total revenue allocated to administrative services	234,525		223,908		4.7		693,383		655,488		5.8
Administrative services expenses
Claims handling services	189,947		179,526		5.8		562,407		511,813		9.9
Investment management services	7,560		9,718		(22.2)		24,598		27,363		(10.1)
Life management services	18,187		17,510		3.9		51,606		65,173		(20.8)
Operating income - administrative services	$	18,831	$	17,154	9.8	%	$	54,772	$	51,139	7.1	%

Administrative services

The management fee revenue allocated to administrative services was 0.63% and 0.60% of the direct and affiliated assumed premiums written by the Exchange for both the three and nine month periods ended September 30, 2025 and 2024, 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 Consolidated Statements of Operations.

Cost of administrative services

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Total investment income

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


	Three months ended September 30,						Nine months ended September 30,
	2025		2024		% Change		2025		2024		% Change
(dollars in thousands)	(Unaudited)						(Unaudited)
Net investment income	$	21,033	$	17,322	21.4	%	$	61,011	$	49,235	23.9	%
Net realized and unrealized investment gains	1,331		2,925		(54.5)		2,312		2,983		(22.5)
Net impairment losses recognized in earnings	(810)		(698)		(16.1)		(2,633)		(3,763)		30.0
Total investment income	$	21,554	$	19,549	10.3	%	$	60,690	$	48,455	25.2	%

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 $3.7 million in the third quarter of 2025 and $11.8 million for the nine months ended September 30, 2025, compared to the same periods in 2024. The increase in both periods was primarily due to an increase in bond and cash and cash equivalent income driven by higher average holdings and bond yields, an increase in agent loan interest income, and higher equity in earnings of limited partnerships. Net investment income included limited partnership earnings of $0.1 million in the third quarter of 2025, compared to losses of $0.1 million for the same period in 2024, and $1.3 million of limited partnership earnings for the nine months ended September 30, 2025, compared to $0.1 million for the same period in 2024.

Net realized and unrealized investment gains

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


	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2025		2024		2025		2024
Securities sold:	(Unaudited)				(Unaudited)
Available-for-sale securities	$	571	$	142	$	(122)	$	(2,495)
Equity securities	66		146		340		883
Change in fair value on remaining equity securities	694		2,636		2,089		4,594
Miscellaneous	0		1		5		1
Net realized and unrealized investment gains	$	1,331	$	2,925	$	2,312	$	2,983

Net realized and unrealized gains of $1.3 million during the third quarter of 2025 and $2.3 million for the nine months ended September 30, 2025 were primarily due to market value adjustments on equity securities and net gains on disposals of securities. Net realized and unrealized gains of $2.9 million during the third quarter of 2024 were primarily due to market value adjustments on equity securities. Net realized and unrealized gains of $3.0 million for the nine months ended September 30, 2024 were primarily due to market value adjustments on equity securities, partially offset by losses on disposals of available-for-sale securities.

Net impairment losses recognized in earnings

Net impairment losses during the three and nine months ended September 30, 2025 and 2024 included both credit-related and intent to sell impairments on available-for-sale securities as well as current expected credit losses on agent loans and other loans receivable. The nine months ended September 30, 2024 also included current expected credit losses on held-to-maturity securities.

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Financial Condition of Erie Insurance Exchange

Serving in the capacity of attorney-in-fact for the subscribers at 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 AM Best 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. On September 5, 2025, the Exchange and each of its property and casualty insurance subsidiaries were downgraded from A+ "Superior" to A "Excellent" and our financial strength rating was revised from negative to stable. The A "Excellent" rating is the third highest financial strength rating assigned to companies that have achieved excellent overall performance when compared to the standards established by AM Best and have an excellent ability to meet obligations to policyholders over the long term. While the Exchange's policyholder surplus continues to be classified in AM Best's strongest category, the downgrade was primarily driven by the Exchange’s large underwriting losses in each of the last three years, driven by elevated weather-related events and increased severity in the auto and homeowners’ segments. The stable financial strength rating reflects the expectation that the Exchange's profitability initiatives will accelerate and stabilize operating results over the near term. Furthermore, the stable outlook reflects the strongest level of balance sheet strength as assessed by AM Best.

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 insurance subsidiaries grew 10.1% to $9.9 billion in the first nine months of 2025 compared to the first nine months of 2024. 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 $9.6 billion and $9.3 billion at September 30, 2025 and December 31, 2024, respectively. The Exchange and its wholly owned property and casualty insurance subsidiaries' year-over-year policy retention ratio continues to be high at 89.1% at September 30, 2025 and 90.4% at December 31, 2024.

We have prepared our consolidated financial statements considering the financial strength of the Exchange based on its AM Best rating and strong level of surplus. See Part I. Item 1A. "Risk Factors" included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 and Part II. Item 1A. "Risk Factors" included in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2025 as filed with the Securities and Exchange Commission on February 27, 2025 and August 7, 2025, respectively 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)	September 30, 2025		% to total		December 31, 2024		% to total
	(Unaudited)
Available-for-sale securities (1)	$	1,065,833	83	%	$	1,043,615	83	%
Equity securities (2)	74,692		6		85,891		7
Agent loans (3)	109,131		8		92,731		7
Other investments (4)	35,794		3		29,610		3
Total investments	$	1,285,450	100	%	$	1,251,847	100	%

(1)This includes $35.9 million and $7.3 million of securities lent under a securities lending agreement as of September 30, 2025 and December 31, 2024, respectively.

(2)This includes $20.3 million of securities lent under a securities lending agreement as of September 30, 2025.

(3)The current portion of agent loans is included in the line item "Prepaid expenses and other current assets, net" in the Consolidated Statements of Financial Position.

(4)The current and long-term portions of other investments are included in the line items "Prepaid expenses and other current assets, net" and "Other assets, net", respectively in the Consolidated Statements of Financial Position.

Available-for-sale securities

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

Available-for-sale securities are carried at fair value with unrealized gains and losses, net of deferred taxes, included in shareholders’ equity. Net unrealized gains on available-for-sale securities, net of deferred taxes, totaled $0.5 million at September 30, 2025, compared to unrealized losses of $17.6 million at December 31, 2024.

The following table presents a breakdown of the fair value of our available-for-sale portfolio by industry sector and rating as of:


(in thousands)	September 30, 2025 (1)
	AAA		AA		A		BBB		Non- investment grade		Fair value
	(Unaudited)
Basic materials	$	0	$	0	$	2,514	$	0	$	8,077	$	10,591
Communications	0		5,057		13,633		10,800		13,395		42,885
Consumer	0		4,031		38,405		55,894		37,265		135,595
Diversified	0		0		0		0		900		900
Energy	0		899		5,864		23,836		15,052		45,651
Financial	0		2,248		118,543		138,265		15,555		274,611





Industrial	0		0		7,817		20,770		30,175		58,762
Structured securities (2)	161,736		180,921		20,534		15,310		1,253

ERIE INDEMNITY CO 10-Q