Erie Indemnity Reports Third Quarter 2024 Results
Net Income per Diluted Share was
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3Q and Nine Months 2024 |
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(in thousands) |
3Q'24 |
3Q'23 |
2024 |
2023 |
|
Operating income |
$ 180,125 |
$ 148,471 |
$ 509,145 |
$ 393,172 |
|
Investment income |
19,549 |
12,302 |
48,455 |
19,197 |
|
Other income |
1,168 |
3,001 |
7,871 |
9,643 |
|
Income before income taxes |
200,842 |
163,774 |
565,471 |
422,012 |
|
Income tax expense |
41,012 |
32,734 |
117,186 |
86,879 |
|
Net income |
$ 159,830 |
$ 131,040 |
$ 448,285 |
$ 335,133 |
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3Q 2024 Highlights |
Operating income before taxes increased
- Management fee revenue - policy issuance and renewal services increased
$120.1 million , or 18.5 percent, in the third quarter of 2024 compared to the third quarter of 2023. - Management fee revenue - administrative services increased
$1.0 million , or 6.2 percent, in the third quarter of 2024 compared to the third quarter of 2023. -
Cost of operations - policy issuance and renewal services
- Commissions increased
$66.3 million in the third quarter of 2024 compared to the third quarter of 2023, primarily driven by the growth in direct and affiliated assumed written premium and, to a lesser extent, an increase in agent incentive compensation related to the profitability component. - Non-commission expense increased
$23.3 million in the third quarter of 2024 compared to the third quarter of 2023. Underwriting and policy processing expense increased$5.1 million primarily due to increased underwriting report and personnel costs. Information technology costs increased$3.6 million primarily due to an increase in hardware and software costs and personnel costs, partially offset by a decrease in professional fees. Sales and advertising expense increased$4.4 million primarily due to increased costs from community development initiatives and agent-related costs. Administrative and other costs increased$7.6 million primarily due to increased personnel costs.
- Commissions increased
Income from investments before taxes totaled
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Nine Months 2024 Highlights |
Operating income before taxes increased
- Management fee revenue - policy issuance and renewal services increased
$355.3 million , or 19.3 percent, in the first nine months of 2024 compared to the first nine months of 2023. - Management fee revenue - administrative services increased
$4.2 million , or 8.9 percent, in the first nine months of 2024 compared to the first nine months of 2023. -
Cost of operations - policy issuance and renewal services
- Commissions increased
$202.1 million in the first nine months of 2024 compared to the first nine months of 2023, primarily driven by the growth in direct and affiliated assumed written premium and, to a lesser extent, an increase in agent incentive compensation related to the profitability component. - Non-commission expense increased
$41.7 million in the first nine months of 2024 compared to the first nine months of 2023. Underwriting and policy processing expense increased$13.7 million primarily due to increased underwriting report and personnel costs. Information technology costs decreased$3.9 million primarily due to a decrease in professional fees, partially offset by an increase in hardware and software costs. Sales and advertising expense increased$9.6 million primarily due to increased agent-related costs and costs from community development initiatives. Customer service costs increased$6.7 million primarily due to increased personnel costs and credit card processing fees. Administrative and other costs increased$15.6 million primarily due to increased personnel costs, professional fees and charitable contributions.
- Commissions increased
Income from investments before taxes totaled
Webcast Information
Indemnity has scheduled a pre-recorded audio broadcast on the Web for 10:00 AM ET on
According to A.M. Best Company, Erie Insurance Group, based in Erie,
News releases and more information are available on
"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
- 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 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 and economic or social inflation;
- 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 or data security breaches, including cyber attacks;
- 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.
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Statements of Operations (dollars in thousands, except per share data) |
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Three months ended |
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Nine months ended |
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2024 |
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2023 |
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2024 |
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2023 |
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(Unaudited) |
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(Unaudited) |
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Operating revenue |
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Management fee revenue - policy issuance and renewal services |
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$ 769,162 |
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$ 649,049 |
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$ 2,195,734 |
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$ 1,840,478 |
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Management fee revenue - administrative services |
|
17,154 |
|
16,151 |
|
51,139 |
|
46,976 |
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Administrative services reimbursement revenue |
|
206,754 |
|
187,118 |
|
604,349 |
|
544,411 |
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Service agreement revenue |
|
6,816 |
|
6,620 |
|
19,803 |
|
19,408 |
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Total operating revenue |
|
999,886 |
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858,938 |
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2,871,025 |
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2,451,273 |
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Operating expenses |
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Cost of operations - policy issuance and renewal services |
|
613,007 |
|
523,349 |
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1,757,531 |
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1,513,690 |
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Cost of operations - administrative services |
|
206,754 |
|
187,118 |
|
604,349 |
|
544,411 |
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Total operating expenses |
|
819,761 |
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710,467 |
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2,361,880 |
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2,058,101 |
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Operating income |
|
180,125 |
|
148,471 |
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509,145 |
|
393,172 |
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Investment income |
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Net investment income |
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17,322 |
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14,642 |
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49,235 |
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30,360 |
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Net realized and unrealized investment gains (losses) |
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2,925 |
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(2,227) |
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2,983 |
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(9,246) |
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Net impairment losses recognized in earnings |
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(698) |
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(113) |
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(3,763) |
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(1,917) |
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Total investment income |
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19,549 |
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12,302 |
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48,455 |
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19,197 |
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Other income |
|
1,168 |
|
3,001 |
|
7,871 |
|
9,643 |
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Income before income taxes |
|
200,842 |
|
163,774 |
|
565,471 |
|
422,012 |
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Income tax expense |
|
41,012 |
|
32,734 |
|
117,186 |
|
86,879 |
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Net income |
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$ 159,830 |
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$ 131,040 |
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$ 448,285 |
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$ 335,133 |
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Net income per share |
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Class A common stock – basic |
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$ 3.43 |
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$ 2.81 |
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$ 9.63 |
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$ 7.20 |
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Class A common stock – diluted |
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$ 3.06 |
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$ 2.51 |
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$ 8.57 |
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$ 6.41 |
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Class B common stock – basic and diluted |
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$ 515 |
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$ 422 |
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$ 1,444 |
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$ 1,079 |
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Weighted average shares outstanding – Basic |
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Class A common stock |
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46,189,059 |
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46,189,037 |
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46,189,038 |
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46,188,962 |
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Class B common stock |
|
2,542 |
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2,542 |
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2,542 |
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2,542 |
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Weighted average shares outstanding – Diluted |
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Class A common stock |
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52,306,514 |
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52,299,369 |
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52,301,001 |
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52,298,655 |
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Class B common stock |
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2,542 |
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2,542 |
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2,542 |
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2,542 |
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Dividends declared per share |
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Class A common stock |
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$ 1.275 |
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$ 1.19 |
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$ 3.825 |
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$ 3.57 |
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Class B common stock |
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$ 191.25 |
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$ 178.50 |
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$ 573.75 |
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$ 535.50 |
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Statements of Financial Position (in thousands) |
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(Unaudited) |
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Assets |
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Current assets: |
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Cash and cash equivalents (includes restricted cash of |
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$ 221,213 |
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$ 144,055 |
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Available-for-sale securities |
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48,575 |
|
82,017 |
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Receivables from Erie Insurance Exchange and affiliates, net |
|
736,973 |
|
625,338 |
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Prepaid expenses and other current assets, net |
|
80,141 |
|
69,321 |
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Accrued investment income |
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10,456 |
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9,458 |
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Total current assets |
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1,097,358 |
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930,189 |
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Available-for-sale securities, net |
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1,000,282 |
|
879,224 |
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Available-for-sale securities lent |
|
8,135 |
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0 |
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Equity securities |
|
85,346 |
|
84,253 |
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Fixed assets, net |
|
480,707 |
|
442,610 |
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Agent loans, net |
|
79,829 |
|
58,434 |
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Defined benefit pension plan |
|
64,172 |
|
34,320 |
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Other assets, net |
|
48,318 |
|
42,934 |
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Total assets |
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$ 2,864,147 |
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$ 2,471,964 |
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Liabilities and shareholders' equity |
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Current liabilities: |
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Commissions payable |
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$ 426,341 |
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$ 353,709 |
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Agent incentive compensation |
|
60,073 |
|
68,077 |
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Accounts payable and accrued liabilities |
|
194,649 |
|
175,622 |
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Dividends payable |
|
59,377 |
|
59,377 |
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Contract liability |
|
42,754 |
|
41,210 |
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Deferred executive compensation |
|
15,836 |
|
10,982 |
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Securities lending payable |
|
7,905 |
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0 |
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Total current liabilities |
|
806,935 |
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708,977 |
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Defined benefit pension plan |
|
27,757 |
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26,260 |
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Contract liability |
|
21,220 |
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19,910 |
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Deferred executive compensation |
|
24,010 |
|
20,936 |
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Deferred income taxes, net |
|
12,777 |
|
11,481 |
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Other long-term liabilities |
|
23,493 |
|
21,565 |
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Total liabilities |
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916,192 |
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809,129 |
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Shareholders' equity |
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1,947,955 |
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1,662,835 |
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Total liabilities and shareholders' equity |
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$ 2,864,147 |
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$ 2,471,964 |
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