2023 Annual Report

We navigated the new era of hybrid work, and all the benefits-anddrawbacks-that come along with it.

And the pace of technology and changing consumer behaviors heightened the sense of urgency to modernize our platforms and introduce new digital capabilities.

But when a company has been in business for close to a century like we have, enduring challenges and adapting to change is nothing new. In fact, it's what we do best.

Rather than treating the challenges as setbacks, we're responding by sharpening our focus. We're honing our ability to work faster and smarter. We're taking measures aimed at balancing growth and profitability.

And with our next century in view, we're transforming in ways that will keep us at the top of the competition while staying true to the business model that's been our rock for 99 years.

It will likely come as no surprise that a sizable portion of our focus over the past year has been on our financial performance. We're certainly feeling the effects of the economic and environmental pressures impacting our industry. However, we remain confident in our financial standing, reflected in the highlights for both Indemnity and the Exchange on page 9.

We ended 2022 with an elevated combined ratio for the Exchange, driven by inflation, supply chain issues and labor shortages. Those challenges persisted throughout 2023 and were compounded by higher than usual weather- related claims. Along with Agents, our Claims, Catastrophe and First Notice of Loss teams worked tirelessly to respond to the high volume of claims over the past year-close to 70,000-as a result of severe weather. In comparison, we had roughly 50,000 weather-related claims in 2022.

These factors contributed to a combined ratio of 119.1 percent at year-end, compared to 116.1 percent at the end of 2022. We did, however, see improvement in the fourth quarter with a combined ratio of 111.4 percent compared to 124.9 percent in 2022. And while the surplus decreased nearly 8 percent for the year, it continues to stand at a solid $9.3 billion, an increase of over $200 million from the third quarter.

Like the rest of the industry, we've responded to market conditions through rate increases, but we're doing so with a deliberate approach. We're also reinforcing our focus on tightened underwriting standards and partnering with our agencies on individualized profitability action plans where appropriate. This multi-pronged approach is aimed at improving the combined ratio over time.

The rate increases across the industry have led Customers to shop for more affordable rates. This has worked in our favor in terms of year-over-year growth in direct written premium, which reached a 20-year high in 2023. That growth of 17 percent at year-end is further supported by a strong retention rate of 91.2 percent for personal and commercial lines combined, which is among the highest in the industry.

It's important to note that with growth comes the potential for increased losses. So in 2024, we're keeping a close eye on that growth and will make strategic decisions, as necessary, to further support profitability.

For Indemnity, operating income ended at approximately $520 million, up over $144 million compared to 2022. Investment income rebounded from the prior year, totaling almost $29 million, compared to a gain of just over $600,000 at year-end 2022. That positive operating and investment income led to very favorable earnings per share of $8.53.

As always, and especially in today's tough economic landscape, we're committed to being responsible stewards of your company. The efforts underway to modernize legacy platforms will help to reduce expenses in the long term, but significant investments are needed to get there. So we're looking at other ways to reduce expenses-including being strategic about hiring and reskilling, and identifying processes conducive to automation.

ourfuture

More than three years ago, we developed a strategy aimed at embracing technology in ways that enhance the human touch. This means introducing greater digital capabilities while doubling down on our most valuable asset-our independent agency force.

During and after the pandemic, it became clear that modernization was the key to so many aspects of our business and our success. Everything we want to achieve over the next decade-from innovative products to more robust services to expanding our geographic footprint-hinges on having the most contemporary technology in place.

That's why in 2023, we made modernization one of our top priorities, and I'm proud to say we've made considerable progress in that journey.

Several legacy platforms were successfully migrated to the cloud, a technology infrastructure that is more stable, secure and efficient. Perhaps the most notable

"We now understand where the claim is with the client when they call us. The system lets us see everything, and we don't need to search for an adjuster or make a phone call."

Agency principal Bill Eber of Eber & Associates, Inc. in Pittsburgh said enhancements to Online Account and Claim Status are helping his team spend less time tracking down information and more time on the moments that matter for Customers.

cloud conversion was our Erie Claim Center platform-which is now seeing a 75 percent reduction in system outage time and significantly reduced costs.

In the second half of the year, we launched

a refreshed Workers' Compensation platform. The refresh introduces full policy servicing capabilities; Online Account for our commercial Customers; and a new billing platform that allows Customers the ability to manage their automatic payments.

Our Claim Status portal is a valuable tool that puts important claims information at the fingertips of Agents and Customers. In 2023, 75 different enhancements were made to the platform to improve the user interface and make the information provided by the tool more robust. Nearly 100 percent of auto claims handlers and more than 70 percent of property claims handlers are using the tool to share important updates with Agents and Customers, helping claims get settled faster and more efficiently.

Several enhancements to Online Account and our mobile app make it easier for Customers to request roadside assistance, file a glass claim or pay their bill. We currently have more than 1.2 million subscribers to our Online Account platform and nearly half a million mobile app downloads.

These modernization efforts are continuing into 2024 and beyond-and as you can imagine, it's an immense amount of work. We've embraced agile ways of working as an organization, and restructured our teams and portfolios to prioritize initiatives, speed up the delivery of critical capabilities and monitor and measure progress. The goal of this transformation is to ultimately work faster, improve our speed to market and deliver the capabilities demanded by today's marketplace.

Yet another example of innovation is our work to invest in promising startup companies through Erie Strategic Ventures, a venture capital arm of Indemnity formed in 2022.

We recently invested in three startups: Wagmo, which offers tech-enabled pet wellness and insurance; Roots Automation, which leverages artificial intelligence to automate manual and time-consuming insurance processes; and Trust & Will, an online digital estate-­planning platform.

The Erie Strategic Ventures fund focuses on investing in the personal and commercial insurance value chain. Our initial target investments are adjacencies that have potential to deliver value to our company, our Agents and our Policyholders. In addition to capital, these startup companies also benefit from ERIE's industry expertise.

We will continue to identify innovative startups to add to our portfolio and help bring innovative products and services to market.

ourimpact

Just as technology and the marketplace are evolving, so is our Customer base. The U.S. Census Bureau projects that people of color will comprise the majority of the population by 2044. So from a business perspective, making sure we have a diverse base of Customers, Employees and Agents will help us grow market share.

We continue to focus on maintaining an inclusive working environment, fostering the diversity of thought and experience that drives innovation and cultural understanding to help us win and retain new Customers.

Over the past year, we continued to build the activation of our longtime commitment to diversity, equity and inclusion (DEI). A central driver of this work is our DEI Task Force launched in 2022. Working closely with our Business Resource Groups, the task force is making measurable progress in broadening our talent pool and increasing the diversity of our agency force and customer base.

The task force is also working to increase our spend with diverse suppliers, many of whom are small businesses. This expands our supply chain and offers potential cost savings through

6 competition for our dollars, with the added benefit of supporting small business owners and the communities where they operate.

6

Like these DEI efforts, our support for inclusive, vibrant and sustainable communities also makes good business sense.

We remain committed to the downtown revitalization efforts in Erie, Pennsylvania, where we've been headquartered for 99 years. The work underway to make our city a vibrant place to live and work will help us attract and retain quality talent. And through giving and other impact investments, we are helping to improve the overall quality of life across our footprint.

In 2023, the Erie Insurance Giving Network's Investing In Our Future grant program provided more than $500,000 in grant investments to support Erie nonprofits working to strengthen out- of-school programs and early childhood education.

We also leveraged business tax credit programs in Pennsylvania to provide more than $2 million to support community improvement in distressed neighborhoods, including affordable housing programs, community services, crime prevention, education and job training.

Erie Insurance is also an investor in a social impact opportunity zone fund and has committed $20.5 million to help fund companies and development projects in underserved communities across our territory. Through the fund, ERIE has so far invested in social impact projects in Baltimore, Pittsburgh, Washington, D.C., and Lima, Ohio.

ourpeople

The pandemic fundamentally changed the ways we live, work and do business. And for us, 2023 was the first full year of living in this new world.

After working in a variety of hybrid arrangements when we returned Employees to our offices

in 2022, we learned that we needed a more consistent approach to how and where we work. A novel program announced in September gives hybrid Employees-roughly 60 percent of our workforce-a bank of 52 remote work days each year to use when they choose. On days they are not using a remote bank day, they work on-site in our offices.

This approach balances flexibility and personal choice with a more consistently engaging work environment. And it's helping us preserve the distinct relationship aspects of our business and the vibrant workplaces that support collaboration, creativity and Employee development.

As I mentioned earlier, 2023 was a banner year for hiring after the labor challenges of the previous two years started to level out.

Staffing has stabilized in our Claims division, where we experienced some of the biggest talent challenges. And we've developed an advance to identify and respond to needs in real time.

We also recruited the largest-ever Future Focus Inteprogram class with 115 interns from 50 colleges and universities-creating a valuable pipeline for new and diverse talent.

ourlegacy

Company founder H.O. Hirt was once asked how The ERIE could stand up to the tough industry competition. His response: "We are the competition."

I never had the privilege of meeting H.O. personally, but I've been fortunate to work with members of his family who continue to be actively involved in the company and help us carry on his legacy. And I'd like to think H.O. would have the same confidence in this company today that he did all those decades ago.

I think he'd approve of the actions we're taking to keep our financials strong in a challenging economy. I think he'd appreciate our commitment to working more efficiently, and I think he'd be on board with our efforts to expand our technological capabilities while preserving the human touch that sets us apart.

Most important, I think he'd be proud of how we continue to be a haven of stability for our Customers, Agents and Employees. In a world marked by uncertainty and, all too often, a lack of humanity, the attributes that make us distinctive are more valuable than ever. As we approach our 100th year in business, we are steadfast in our commitment to keeping it that way.

Thank you for your continued support and trust in us to preserve the strong legacy our founders built and to

bring it to life in new ways in our next century of service.

Tim NeCastro

President and CEO

149new ERIE

appointed.

agencies $1.2 million

awarded to 10 nonprofits to boost neighborhood improvement and community advancement programs

as part of Pennsylvania's Neighborhood Assistance Program tax credit.

1,914 trees

77,353

job applications received, a 117% increase from 2022.

1,913

in Investing In Our Future funds awarded since the program's launch in 2021. These competitive grants are intended to strengthen the connections between academic achievement and the out-of-school programming offered by the nonprofit recipients.

planted

through Community Canopy, an environmental stewardship initiative that invited Employees to plant a sapling, provided by ERIE, at their homes.

7 tons

new hires, bringing our total workforce to 6,556.

86%

of Employees agreed that ERIE is a great place to work in

an all-Employee engagement survey conducted in June.

28 Employees earned

a university degree using ERIE's tuition reimbursement program. Education supports ERIE's commitment to talent mobility; 705 Employees changed roles or were promoted in 2023.

of unwanted Employee electronics kept from landfills through company- sponsored recycling.

$677,347

in Employee donations to qualifying nonprofits matched by ERIE.