Erie Indemnity Company reported higher net income and earnings per share for the second quarter and first six months of 2003 compared to the same periods in 2002. Management fee revenue increased 12.7% for the quarter due to strong renewal premium growth for the Erie Insurance Group. However, the cost of management operations also rose 15.3% for the quarter. While insurance underwriting losses increased compared to 2002, investment operations realized gains contributed to improved net revenue. The company is taking actions to improve underwriting profitability, such as exiting unprofitable assumed reinsurance business.

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information Erie Indemnity Company
2nd Quarter Report 2003
Erie Indemnity Company
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2. June 30, 2003. The property and casualty
All amounts are in thousands, except per share
direct written premiums of the Erie
data and average premium per policy.
Insurance Group, upon which management
to our fee revenue is calculated, grew 17.9 percent
shareholders to $973,905 in the second quarter of 2003
from $826,300 for the second quarter 2002.
Increases in average premium per policy,
Net income per share increased 14.1
as well as continuing favorable policy
percent to $.77 per share for the second
retention rates, were both contributing
quarter 2003 compared to $.67 per share
factors in the growth of the Erie Insurance
for the same period in 2002. For the quarter
Group’s direct written premiums. Partially
ended June 30, 2003, net income increased
offsetting the increase in management
to $54,458 from $47,826 for the same
fee revenue was a reduction in the
period one year ago. Improvements in
management fee rate to 24 percent in 2003
management operations were driven by
from 25 percent in 2002.
continued strong renewal premium growth.
Insurance underwriting losses increased in Direct written premiums of the Erie
the second quarter of 2003 compared to Insurance Group grew 22.1 percent on a
the second quarter of 2002 as recoveries rolling twelve-month basis. The average
under the excess of loss reinsurance treaty premium per policy increased 10.0 percent
with the Erie Insurance Exchange decreased. to $940 for the twelve months ended
Realized gains on investments were largely June 30, 2003 from $855 for the same
responsible for the improvement in net period in 2002. Also contributing to the
revenue from investment operations. For annualized premium growth were policies
the six months ended June 30, 2003, net in force growing at an annualized rate of
income increased to $100,358, or $1.41 per 11.0 percent to 3,700 at June 30, 2003, from
share, from $92,027, or $1.29 per share, for 3,300 at June 30, 2002. Policy retention
the same period in 2002. was 91.0 percent and 91.1 percent for the
twelve months ended June 30, 2003 and
Net income (excluding net realized gains
2002, respectively, for all lines of business
or losses and related federal income taxes)
combined.
increased to $52,264 for the quarter ended
June 30, 2003, from $51,596 for the same Service agreement revenue decreased 11.7
period one year ago. For the six months percent to $6,863 for the second quarter of
ended June 30, 2003 and 2002, net income 2003. Service agreement revenue includes
(excluding net realized gains or losses and service fees earned by the Company for the
related federal income taxes) was $97,778 management of non-affiliated assumed
and $95,005, respectively. reinsurance written by the Erie Insurance
Exchange. Fees earned were $1,929 in the
management second quarter of 2003 versus $2,974 in
operations
2002. During the 2003 renewal season, the
Exchange reduced its aggregate exposure
in assumed reinsurance by non-renewing
Management fee revenue increased 12.7 unprofitable business. Non-affiliated
percent to $232,737 for the quarter ended
2
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3. assumed reinsurance business written by 2002. Personnel costs, including salaries,
the Exchange was $32,157 in the second Employee benefits and payroll taxes,
quarter of 2003 versus $42,479 in the increased 8.6 percent to $26,011 for the three
second quarter of 2002. Additionally, the months ended June 30, 2003, compared to
fee charged by the Company to the Erie $23,958 for the same period in 2002.
Insurance Exchange for the management
Also included in the cost of management
and administration of reinsurance from
operations are amounts related to
non-affiliated insurers was reduced from 7.0
information technology hardware and
percent to 6.0 percent beginning in 2003.
infrastructure from the property and
Also, included in service agreement revenue
casualty companies of the Erie Insurance
are service charges the Company collects
Group eCommerce initiative launched in
from Policyholders for providing extended
June 2001. Company expenses totaled
payment plans on policies written by the
$105 and $604 in the second quarters of
property and casualty companies of the
2003 and 2002, respectively. For the first
Erie Insurance Group. The service charge
half of 2003, these costs totaled $220. These
revenue for the second quarter of 2003 was
costs will continue to be incurred in future
$4,934, compared to $4,802 for the quarter
periods as the program develops.
ended June 30, 2002. For the year, service
agreement revenue decreased by $1,771 to For the six months ended June 30, 2003, the
$13,347. cost of management operations increased
17.4 percent to $324,460 from $276,296 at
The cost of management operations
June 30, 2002.
increased 15.3 percent for the second
quarter of 2003 to $170,087 from $147,504 Income from the Company’s management
for the same period in 2002. Commission operations rose 4.0 percent to $69,513 for
costs totaled $125,325 for the second the second quarter of 2003 compared to
quarter of 2003, a 17.8 percent increase $66,847 for the second quarter of 2002.
over the $106,422 for the second quarter of For the six months ended June 30, 2003,
2002. Commission costs include scheduled income from management operations
commissions, contingency awards, increased to $128,870 from $123,649 for the
accelerated commissions and promotional same period in 2002.
incentives earned by independent Agents.
The gross margins from management
Scheduled commissions, including Agent
operations were 29.0 percent and 31.2
contingency awards, increased 17.9 percent
percent in the second quarters of 2003 and
to $122,726 for the quarter ended June 30,
2002, respectively. If the management fee
2003. Charges incurred for accelerated
and service fee rates, which are currently
commissions above normal scheduled rate
24 percent and 6 percent, respectively, had
commissions increased $247 to $2,599 for
remained consistent with the 2002 rates of
the quarter ended June 30, 2003.
25 percent and 7 percent, respectively, gross
Other operating costs, excluding margin for the second quarter 2003 would
commissions, increased 9.0 percent in the have been 31.9. Gross margins were 28.4
second quarter of 2003 to $44,762 from percent and 30.9 percent for the first six
$41,082 recorded in the same period of months of 2003 and 2002, respectively.
4
3

4. insurance Underwriting results are net of premiums
underwriting paid and recoveries recorded under
the excess of loss agreement with the
operations Erie Insurance Exchange. There were no
premium payments made in the second
Insurance underwriting operations of the quarter of 2003 or 2002. The premium paid
Company’s property and casualty insurance to the Exchange for the agreement totaled
subsidiaries, Erie Insurance Company and $1,150 and $883 during the six months
Erie Insurance Company of New York, which ended June 30, 2003 and 2002, respectively.
together assume a 5.5 percent share of the During the second quarter of 2003, $1,800
underwriting results of the Erie Insurance in reinsurance recoveries under this
Group under an intercompany reinsurance agreement recorded in the first quarter of
pooling agreement, reported underwriting 2003 were released as a result of improved
losses of $6,280 and $6,046 for the second underwriting results for the Erie Insurance
quarters of 2003 and 2002, respectively. Group during the second quarter of 2003.
Recoveries of $918 were recorded in the
The Company’s property and casualty
second quarter of 2002. No cash payments
insurance subsidiaries’ share of the Erie
have been made between companies in
Insurance Group’s direct business generated
2003 or 2002 for recoveries under this
net underwriting losses of $4,191 and
agreement since related losses are reserved
$6,701 during the second quarters of 2003
but not yet paid.
and 2002, respectively. The improvement in
direct underwriting losses were partly the Included in the Company’s policy acquisition
result of reduced catastrophe losses totaling and other underwriting expenses are
$2,102 in the second quarter of 2003 the property and casualty insurance
compared to $3,474 in the second quarter subsidiaries’ share of eCommerce initiative
of 2002. For the six months ended June expenses covered under a technology
30, 2003 and 2002, direct net underwriting cost sharing agreement totaling $756 and
losses from the Company’s property and $1,025 for the quarters ended June 30, 2003
casualty insurance subsidiaries were $11,161 and 2002, respectively. For the six months
and $10,502, respectively. Catastrophe losses ended June 30, 2003, these eCommerce
were $3,155 and $3,948 for the first half of costs totaled $1,542. These shared costs will
2003 and 2002, respectively. continue to be incurred in future periods as
the program develops.
The Company’s property and casualty
insurance subsidiaries’ share of the
investment
unaffiliated assumed voluntary reinsurance
operations
business generated net underwriting losses
of $320 and $217 for the three months
ended June 30, 2003 and 2002, respectively. Net revenue from investment operations
Net underwriting gains from unaffiliated for the second quarter of 2003 increased to
assumed voluntary reinsurance business $17,865 from $10,771 in the second quarter
was $588 and $129 for the six months of 2002. This increase was principally the
ended June 30, 2003 and 2002, respectively. result of a reduction in impairment charges
5 6

5. in the second quarter of 2003 compared assumed voluntary reinsurance business
to the second quarter of 2002. For the six as of December 31, 2003; suspending new
months ended June 30, 2003, net revenue Agent appointments as of August 15, 2003,
from investment operations was $32,621 through the remainder of the year; and
compared to $23,549 for the same period relaxing the timeframe for the Group’s entry
in 2002. into Minnesota. These actions allow the
Company to redeploy resources in support
Net investment income increased slightly
of its strategies to improve underwriting
to $14,219 for the quarter ended June 30,
profitability.
2003, from $14,133 for the same period
in 2002. Net investment income totaled We are pleased with the strong
$28,538 and $26,837 for the first half of performance of the Company in the second
2003 and 2002, respectively. quarter and for the year. Our intense focus
on underwriting profitability reflects
The Company realized net gains on
our long-term view in managing our
investments of $3,376 in the second quarter
property/casualty business. Throughout
of 2003 compared to realized losses of
our history, that focus has benefited both
$5,801 in the second quarter of 2002.
the Policyholders of the Exchange and the
Impairment charges totaling $10,693 in
shareholders of Erie Indemnity.
the second quarter of 2002 related to fixed
maturities and nonredeemable preferred
stock investments. Realized gains on
investments totaled $3,969 for the first six
months of 2003 compared to realized losses Jeffrey A. Ludrof
of $4,581 for the same period one year ago. President and Chief Executive Officer
Equity in losses of limited partnerships were “Safe Harbor” Statement Under the Private
$1,420 for the three months ended June Securities Litigation Reform Act of 1995: Certain
30, 2003 compared to earnings of $2,221 forward-looking statements contained herein
involve risks and uncertainties. These statements
for the same period one year ago. For the
include certain discussions relating to management
six months ended June 30, 2003, equity in fee revenue, cost of management operations,
losses of limited partnerships totaled $2,745 underwriting, premium and investment income
compared to earnings of $307 for the same volume, business strategies, profitability and business
relationships and the Company’s other business
period in 2002.
activities during 2003 and beyond. In some cases, you
can identify forward-looking statements by terms such
The Company is in the process of refining
as “may,”“will,”“should,”“could,”“would,”“expect,”“plan,”
their focus on underwriting profitability,
“intend,”“anticipate,”“believe,”“estimate,”“project,”
concentrating on initiatives that will “predict,”“potential” and similar expressions. These
achieve a reported combined ratio for forward-looking statements reflect the Company’s
current views about future events, are based on
the property and casualty insurance
assumptions and are subject to known and unknown
companies of the Erie Insurance Group
risks and uncertainties that may cause results to differ
more in line with historical results. As part materially from those anticipated in those statements.
of this process, the Company is taking Many of the factors that will determine future events
or achievements are beyond our ability to control or
several immediate actions in support of its
predict.
underwriting profitability goals: exiting the
7 8

6. Consolidated statements of operations—
segment basis
(Amounts in thousands, except per share data)
Three months ended June 30 Six months ended June 30
(unaudited) (unaudited)
2003 2002 2003 2002
Management operations
Management fee revenue $ 232,737 $ 206,575 $ 439,983 $ 384,827
Service agreement revenue 6,863 7,776 13,347 15,118
Total revenue from management operations $ 239,600 $ 214,351 $ 453,330 $ 399,945
Cost of management operations 170,087 147,504 324,460 276,296
Income from management operations $ 69,513 $ 66,847 $ 128,870 $ 123,649
Insurance underwriting operations
Premiums earned $ 47,219 $ 40,434 $ 92,401 $ 77,653
Losses and loss adjustment expenses incurred $ 39,364 $ 34,050 $ 76,864 $ 63,387
Policy acquisition and other underwriting expenses 14,135 12,430 27,487 23,927
Total losses and expenses $ 53,499 $ 46,480 $ 104,351 $ 87,314
Underwriting loss $ (6,280) $ (6,046) $ (11,950) $ (9,661)
Investment operations
Net investment income $ 14,219 $ 14,133 $ 28,538 $ 26,837
Net realized gains (losses) on investments 3,376 (5,801) 3,969 (4,581)
Equity in (losses) earnings of limited partnerships (1,420) 2,221 (2,745) 307
Equity in earnings of Erie Family Life
Insurance Company 1,690 218 2,859 986
Net revenue from investment operations $ 17,865 $ 10,771 $ 32,621 $ 23,549
Income before income taxes $ 81,098 $ 71,572 $ 149,541 $ 137,537
Provision for income taxes 26,640 23,746 49,183 45,510
Net income $ 54,458 $ 47,826 $ 100,358 $ 92,027
Net income per share $ 0.77 $ 0.67 $ 1.41 $ 1.29
Net income excluding net realized gains
(losses) and related taxes $ 52,264 $ 51,596 $ 97,778 $ 95,005
Weighted average shares outstanding 70,997 71,144 70,997 71,162
Dividends declared
Class A non-voting common $ 0.19 $ 0.17 $ 0.38 $ 0.34
Class B common $ 28.50 $ 25.50 $ 57.00 $ 51.00
NOTES: (1) The Consolidated Statements of Operations and Exchange Commission on Form 10-Q. Shareholders may
Comprehensive Income have been prepared from accounts obtain a copy of the Form 10-Q report without charge by
without audit. (2) Net income for the period ended June 30, writing to the Chief Financial Officer, Erie Indemnity Company,
2003, is not necessarily indicative of the results that may 100 Erie Insurance Place, Erie, Pennsylvania, 16530 or by
be expected for the year ending December 31, 2003. (3) The visiting the Company’s website at www.erieinsurance.com.
Company submits a quarterly report to the Securities and
9 10

7. Reconciliation of net income to net income
excluding net realized gains and
related income taxes
The table below reconciles the Company’s GAAP-basis than-temporary impairment charges, which could
net income to net income excluding net realized gains significantly impact the Company’s financial results
or losses and related income taxes. Management from one period to another based on the timing of
believes this measure assists the financial statement investment sales and resulting gains or losses, which
reader in interpreting and evaluating the financial may or may not be recurring and the impact of
results of the Company by removing the effects of impairment charges.
gains and losses from investment sales and other-
(Dollars in thousands)
Three months ended June 30 Six months ended June 30
(unaudited) (unaudited)
2003 2002 2003 2002
Net income $ 54,458 $ 47,826 $ 100,358 $ 92,027
Net realized gains (losses) on investments 3,376 (5,801) 3,969 (4,581)
Income tax (expense) benefit on realized gains (losses) (1,182) 2,031 (1,389) 1,603
Realized gains (losses) net of income tax
(expense) benefit 2,194 (3,770) 2,580 (2,978)
Net income excluding net realized gains (losses)
and related taxes $ 52,264 $ 51,596 $ 97,778 $ 95,005
Consolidated statements
of comprehensive income
(Dollars in thousands)
Three months ended June 30 Six months ended June 30
(unaudited) (unaudited)
2003 2002 2003 2002
Net income $ 54,458 $ 47,826 $ 100,358 $ 92,027
Unrealized holding gains (losses) arising during period,
net of reclassification adjustment for gains included
in net income, net of tax 28,191 (3,114) 37,946 (9,936)
Comprehensive income $ 82,649 $ 44,712 $ 138,304 $ 82,091
11 12

8. Consolidated statements
of financial position
(Amounts in thousands, except per share data)
December 31
June 30
2003 2002
(unaudited)
Assets
Investments
Fixed maturities $ 784,566 $ 708,068
Equity securities
Preferred stock 155,796 157,563
Common stock 40,774 36,515
Other invested assets 106,437 96,613
Total investments $ 1,087,573 $ 998,759
Cash and cash equivalents $ 139,820 $ 85,712
Equity in Erie Family Life Insurance Company 59,434 48,545
Premiums receivable from Policyholders 268,074 239,704
Receivables from affiliates 928,412 829,049
Other assets 168,024 155,907
Total assets $ 2,651,337 $ 2,357,676
Liabilities and shareholders’ equity
Liabilities
Unpaid losses and loss adjustment expenses $ 780,837 $ 717,015
Unearned premiums 439,214 393,091
Other liabilities 330,123 260,198
Total liabilities $ 1,550,174 $ 1,370,304
Total shareholders’ equity $ 1,101,163 $ 987,372
Total liabilities and shareholders’ equity $ 2,651,337 $ 2,357,676
Book value per share $ 15.51 $ 13.91
Shares outstanding 70,997 70,997
13 14