Cybersecurity Incident and System Outage Response and Recovery
Erie Indemnity experienced a significant cybersecurity event on June 7, leading to a proactive network outage and system shutdown to contain the threat.
Independent cybersecurity specialists conducted a thorough forensic investigation, confirming no breach of sensitive data occurred.
The recovery process was complex and phased, taking approximately one month to restore most systems by July 7, 2025.
Management emphasized that their cybersecurity protocols are aligned with industry best practices, but acknowledged no organization is immune to such attacks.
The incident prompted Erie to implement additional cybersecurity measures and learnings to strengthen future protections.
Despite the disruption, the company maintained service levels and assured no material impact on financial statements.
Average premium per policy increased by 11.9%, with policies in-force growth of 1.7% and a strong policy retention ratio of 89.7%.
Erie Insurance Exchange's direct and assumed written premiums grew by 9.2% in Q2 2025 and 11.4% in the first half of 2025 compared to the prior year.
Excluding catastrophe losses and prior accident year reserve development, the direct current year non-catastrophe loss ratio was 94.6% in Q2 and 95.1% year-to-date 2025.
Indemnity net income was $175 million or $3.34 per diluted share in Q2 2025, up from $164 million or $3.13 per diluted share in Q2 2024.
Investment income totaled nearly $20 million in Q2 2025, up from $14 million in Q2 2024; year-to-date investment income was $39 million versus $29 million last year.
Management fee revenue increased 8.3% in Q2 to $824 million and nearly 11% year-to-date to $1.6 billion.
Non-commission expenses increased 6.1% in Q2 and 7.7% year-to-date, driven by higher IT, sales, advertising, and personnel costs.
Operating income increased nearly 5% in Q2 to almost $200 million and 7% year-to-date to $350 million, driven by higher management fee revenue.
Policyholder surplus slightly decreased from $9.3 billion at December 2024 to $9.2 billion at June 2025.
The Exchange's combined ratio was 116.9% in Q2 2025, slightly higher than 115.9% in Q2 2024, driven by catastrophic weather events contributing 20.7 points versus 16.2 points previously.
Total cost of operations increased 9.1% in Q2 and 11.5% year-to-date, with commission expenses rising over 10% in Q2 and 13.1% year-to-date.
Year-to-date combined ratio was 112.6% in 2025 compared to 111.1% in 2024, with catastrophe losses increasing to 18.5 points from 12.7 points.
Year-to-date Indemnity net income was $313 million or $5.99 per diluted share, compared to $289 million or $5.52 per diluted share last year.
Dafinchi