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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
(NO FEE REQUIRED)
For the fiscal year ended December 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
[NO FEE REQUIRED]
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 (I.R.S. Employer
of incorporation or organization) Identification No.)
100 Erie Insurance Place, Erie, Pennsylvania 16530
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (814) 870-2000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Class A Common Stock, stated value $.0292 per share
Class B Common Stock, stated value $70 per share
(Title of class)
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 X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Aggregate market value of voting stock of non-affiliates: There is no active
market for the Class B voting stock and no Class B voting stock has been sold in
the last year upon which a price could be established.
Indicate the number of shares outstanding of each of the Registrant's classes of
common stock, as of the latest practicable date: 63,813,523 Class A shares and
3,070 Class B shares of Common Stock outstanding on February 28, 2002.
DOCUMENTS INCORPORATED BY REFERENCE:
1. Portions of the Registrant's Annual Report to Shareholders for the fiscal
year ended December 31, 2001 (the "Annual Report") are incorporated by
reference into Parts I, II and IV of this Form 10-K Report.
2. Portions of the Registrant's Proxy Statement relating to the Annual Meeting
of Shareholders to be held April 30, 2002 are incorporated by reference
into Parts I and III of this Form 10-K Report.
1
INDEX
PART ITEM NUMBER AND CAPTION PAGE
----- ----------------------- ----
I Item 1. Business 3
I Item 2. Properties 14
I Item 3. Legal Proceedings 14
I Item 4. Submission of Matters to a
Vote of Security Holders 14
II Item 5. Market for Registrant's Common Stock
and Related Shareholder Matters 15
II Item 6. Selected Consolidated Financial Data 15
II Item 7. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 16
II Item 7a. Quantitative and Qualitative Disclosure
about Market Risk 16
II Item 8. Financial Statements and Supplementary
Data 16
II Item 9. Changes In and Disagreements With
Accountants on Accounting and Financial
Disclosures 16
III Item 10. Directors and Executive Officers
of the Registrant 17
III Item 11. Executive Compensation 23
III Item 12. Security Ownership of Certain
Beneficial Owners and Management 23
III Item 13. Certain Relationships and Related
Transactions 23
IV Item 14. Exhibits, Financial Statement Schedules
and Reports on Form 8-K 24
2
PART I
Item 1. Business
Erie Indemnity Company (the "Company") is a Pennsylvania
corporation formed in 1925 to be the attorney-in-fact for Erie Insurance
Exchange (the "Exchange"), a Pennsylvania-domiciled reciprocal insurance
exchange. The Company's principal business activity consists of management of
the affairs of the Exchange with fees from the Exchange accounting for
approximately 78% of the Company's consolidated revenues. The Company also
participates in the property/casualty insurance business through its three
wholly owned subsidiaries, Erie Insurance Company ("Erie Insurance Co."), Erie
Insurance Company of New York ("Erie NY") and Erie Insurance Property and
Casualty Company ("Erie P&C") and through its management of the Flagship City
Insurance Company ("Flagship"), a subsidiary of the Exchange. The Company and
Exchange also own a 21.6% and 53.5% common stock interest, respectively, in Erie
Family Life Insurance Company ("EFL"), an affiliated life insurance company.
Together with the Exchange, the Company and its subsidiaries and affiliates
operate collectively under the name Erie Insurance Group("The ERIE").
The ERIE is a regional insurance group that underwrites a broad
line of personal and commercial coverages. Insurance products are marketed
primarily in the Mid-Atlantic and Northeast regions through approximately 7,400
independent agents comprising approximately 1,600 insurance agencies. The
property/casualty insurers managed by the Company are licensed to do business in
sixteen states and in the District of Columbia and at December 31, 2001,
operated in eleven states and the District of Columbia. Branch offices are
maintained throughout the eleven contiguous states in which the Company does
business.
As of December 31, 2001, the Company had 3,668 full-time
employees, of which 1,808 provide claims specific services exclusively for the
property/casualty insurance companies of The ERIE and 125 perform general
services exclusively for EFL. Both the Exchange and EFL reimburse the Company
monthly for the cost of these services. None of the Company's employees is
covered by a collective bargaining agreement. The Company believes that its
relationship with its employees is good.
Erie P&C, Flagship, Erie Insurance Co. and Erie NY participate in
an intercompany pooling agreement with the Exchange. Under the pooling agreement
all property/casualty reinsurance business of the Group is ceded to the
Exchange. The pooling agreement provides for the Exchange to assume all premiums
and losses, including related asset and liability amounts, from all
property/casualty affiliates of The ERIE. This pooling agreement further
provides for Erie Insurance Co. and Erie NY to share proportionately through
retrocession in the results of all of The ERIE's non-affiliated
property/casualty insurance operations. Erie Insurance Co.'s and Erie NY's
proportionate share of the reinsurance pool are 5.0 percent and 0.5 percent,
respectively. An excess of loss reinsurance agreement between the Exchange, Erie
Insurance Co. and Erie NY limits the amount of sustained ultimate net losses in
any applicable accident year for the Erie Insurance Co. and Erie NY. The excess
of loss reinsurance agreement is excluded from the pooling arrangement.
Information About Business Segments
Reference is made to Note 15 of the "Notes to the Consolidated
Financial Statements" included in the Annual Report, page 46 for information as
to total revenue and net income attributable to the two business segments
(management operations and property/casualty insurance operations) in which the
Company is engaged.
3
Management Operations
For services performed in its role as attorney-in-fact for the
Policyholders of the Exchange, the Company charges the Exchange a management fee
calculated as a percentage of the affiliated assumed (Erie Insurance Co., Erie
NY, Erie P&C and Flagship) and direct premiums written by the Exchange. The
management fee is compensation for: (a) acting as attorney-in-fact for the
Exchange, (b) managing the business and affairs of the Exchange, and (c) paying
certain general administrative expenses not part of the settlement of losses or
the management of investments.
The Company's Board of Directors may change the management fee at
its discretion. However, the maximum fee level which can be charged the
Exchange, is limited by the agreement between the Exchange and the Company (or
its property/casualty affiliates), to 25 percent of the affiliated assumed and
direct written premium. The Board considers several factors in determining the
management fee rate, including the relative financial position of the Exchange
and the Company and the long-term capital needs of the Exchange to ensure its
continued growth, competitiveness, and superior financial strength, which
ultimately benefits The ERIE. The management fee rate charged the Exchange was
25 percent from 1999 to 2001. In December 2001, the Board voted to maintain the
25 percent management fee rate for all of 2002.
All premiums collected, less the management fee paid to the
Company, are retained by the Exchange for the purpose of paying losses, loss
adjustment expenses, investment expenses and other miscellaneous expenses
including insurance-related taxes, licenses and fees, certain information
technology costs covered under a technology cost-sharing agreement, and for
other purposes that are to the benefit of the policyholders.
The Company receives a service agreement fee from the Exchange as
compensation for the management and administration of voluntary assumed
reinsurance business from non-affiliated insurers. The fee of 7% of voluntary
reinsurance premiums assumed from non-affiliated insurers is compensation for
accounting, underwriting and operating expenses in connection with the
administration of this business.
The Company also receives service charges from the Exchange for
fees collected from policyholders for providing extended payment terms on
policies written by the insurers managed by the Company. These charges, as well
as the service agreement fee described above are included in service agreement
revenue in the Consolidated Statements of Operations.
4
Property/Casualty Insurance Operations
Industry
One of the distinguishing features of the property/casualty
insurance industry in general is that its products are priced before its costs
are known, as premium rates are generally determined before losses are reported.
Current prices must be established from forecasts of the ultimate costs expected
to arise from exposures underwritten during the coverage period when the rates
are applied. This unique pricing environment affects the financial statements
primarily through the loss reserves. Changes in statutory, "regulatory" and case
law can significantly affect the liabilities associated with known risks after
the insurance contract is in place. Property/casualty insurance companies'
ability to increase prices in response to declines in profitability are limited
by the large number of competitors and the similarity of products offered, as
well as regulatory constraints.
The profitability of the property/casualty insurance business can
be influenced by many external factors some of which include rate competition,
the severity and frequency of claims, terrorist actions, natural disasters,
state regulation of premium rates, and other areas of competition, defaults of
reinsurers, investment market conditions, general business conditions, court
decisions that define and may expand the extent of coverage and the amount of
compensation due for injuries and losses.
Inflation also can affect the loss costs of property/casualty
insurers and, as a consequence, insurance rates. Insurance premiums are
established before losses and loss adjustment expenses and the extent to which
inflation may impact such expenses, are known. Consequently, in establishing
premium rates, the Company attempts to anticipate the potential impact of
inflation.
Lines of Business
The property/casualty insurers managed by the Company underwrite a
broad range of insurance for risks. In 2001, personal lines comprised 71.8% of
direct and affiliated assumed premium revenue while commercial lines constituted
the remaining 28.2%. The core products in the personal lines are private
passenger automobile (75.2%) and homeowners (22.3%) while the core commercial
lines consist principally of multi-peril (37.0%), automobile (30.3%) and
workers' compensation (29.2%).
See "Selected Segment Information" contained on page 28 of the
Annual Report for the distribution of direct premiums written by The ERIE.
Reinsurance
Reference is made to Note 12 of the "Notes to Consolidated Financial
Statements" contained in the Annual Report for the year ended December 31, 2001,
page 44 through 45 incorporated herein by reference, for a complete discussion
of reinsurance transactions.
5
Combined Ratios
The combined ratio is a standard industry measurement of the
results of property/casualty insurance underwriting operations. The statutory
combined ratio is the sum of the ratio of incurred losses and loss adjustment
expenses to net premiums earned ("loss ratio"), the ratio of underwriting
expenses incurred to net premiums written ("expense ratio") and, the ratio of
dividends to policyholders to net premiums earned ("dividend ratio"). The
generally accepted accounting principles ("GAAP") combined ratio is calculated
in the same manner except that it is based on GAAP reported amounts and the
denominator for each component is net premiums earned. A combined ratio under
100% generally indicates an underwriting profit; a combined ratio over 100%
generally indicates an underwriting loss before contemplation of the time value
of money. Investment income, federal income taxes and other non-underwriting
income or expense are not reflected in the combined ratio. The profitability of
The ERIE is a function of income and expense from both its underwriting and
investment operations.
The ratios shown in the table below for the Company's
property/casualty insurance subsidiaries Erie Insurance Co. and Erie NY, are
prepared in accordance with GAAP and with the National Association of Insurance
Commissioners (NAIC) Codified Statutory Accounting Practices ("SAP"). The NAIC
Codified SAP contain a provision allowing for prescribed or permitted accounting
practices to be determined by each states' insurance commissioner. Accordingly,
such discretion will continue to allow prescribed or permitted accounting
practices that may differ from state to state.
Combined Ratios
Year Ended December 31,
2001 2000 1999
------ ------ ------
GAAP Combined Ratio 114.9% 108.4% 103.0%
===== ===== =====
Statutory operating ratios:
Loss ratio 84.5 80.1 74.6
Expense and dividend ratio 30.1 28.2 28.2
----- ----- -----
Statutory Combined Ratio 114.6% 108.3% 102.8%
===== ===== =====
Increased loss severity in the Company's private passenger automobile
and workers' compensation lines of business, combined with unaffiliated assumed
voluntary reinsurance losses from the September 11th terrorists attack on the
World Trade Center, contributed to the increased loss ratio in 2001 compared to
2000. The 2001 expense and dividend ratio increased in 2001 partly as a result
of the Company's share of expenses related to the eCommerce initiative, which
totaled $1,314,734.
Seasonal Factors
The Company's management fee is earned when premiums are written.
Historically, due to policy renewal and sales patterns, writings are strongest
in the second and third quarters of the calendar year. While loss and loss
adjustment expenses are not entirely predictable, historically such costs have
been greater during the third and fourth quarters, influenced by the weather in
the geographic regions where the Company and affiliated property/casualty
insurers operate.
Financial Condition-Investments
The Company's investment strategy takes a long-term perspective
emphasizing investment quality, diversification and investment returns providing
6
for liquidity to meet the short and long-term commitments of the Company.
Investments are managed on a total return approach that focuses on current
income and capital appreciation. The Company's investment portfolio, at market
value, increased to $840,967,085 at December 31, 2001, which represents 43.4% of
total assets. Investment income reflected on the Consolidated Statements of
Operations is affected by shifts in the types of investments in the portfolio,
changes in interest rates and other factors. Net investment income, was
$49,883,896 in 2001 compared to $48,400,343 in 2000, and $43,344,356 in 1999.
The Company reviews the investment portfolio to evaluate positions
that might incur other-than-temporary declines in value. For all investment
holdings, general economic conditions and/or conditions specifically affecting
the underlying issuer or its industry are considered in evaluating impairment in
value. In addition to specific factors, the primary factors considered in the
Company's review of investment valuation are the length of time the market value
is below cost and the amount the market value is below cost.
If the Company's policy for determining the recognition of
impaired positions were different, the Company's Consolidated Statements of
Financial Position and results of operations could be significantly impacted.
Management believes its investment valuation philosophy and accounting practices
result in appropriate and timely measurement of value and recognition of
impairment.
Included in investments is a 21.6% common stock interest in EFL of
$44,683,170 at December 31, 2001, which is accounted for under the equity method
of accounting. EFL, which was organized in 1967 as a Pennsylvania-domiciled life
insurance company, has an A.M. Best and Company Inc. ("A.M. Best") rating of A+
(Superior). EFL is primarily engaged in the business of underwriting and selling
non-participating individual and group life insurance policies, including
universal life and individual and group annuity products in ten states and the
District of Columbia.
Reference is made to the Financial Condition section of the
"Management Discussion and Analysis" contained in the Annual Report for the year
ended December 31, 2001 pages 20 through 22 incorporated herein by reference,
for a complete discussion of investments.
Financial Ratings
Insurance companies are rated by rating agencies to provide
insurance consumers and investors with meaningful information on specific
insurance companies. Higher ratings generally indicate financial stability and a
strong ability to pay claims. The ratings are generally based upon factors
relevant to policyholders and are not directed toward return to investors.
The Exchange, Flagship, Erie Insurance Co., Erie P&C and Erie NY
all have current ratings of A++ (Superior) from A.M. Best with respect to their
financial strength and claims-paying ability. In evaluating an insurer's
financial and operating performance, A.M. Best reviews the insurer's
profitability, leverage and liquidity as well as the insurer's book of business,
the adequacy and soundness of its reinsurance, the quality and estimated market
value of its assets, the adequacy of its loss reserves and the experience and
competency of its management. Management believes that this A.M. Best rating of
A++ (Superior) is an important factor in marketing The ERIE's property/casualty
insurance to its agents and customers.
Competition
The property/casualty markets in which the Company operates are
highly competitive. Property/casualty insurers generally compete on the basis of
customer service, price, brand recognition, coverages offered, claim handling
ability, financial stability and geographic coverage. In addition, because the
7
insurance products of The ERIE are marketed exclusively through independent
insurance agents, these agents have the opportunity to represent more than one
company. The ERIE, thus, potentially faces competition within its appointed
agencies should it fail to deliver excellence in product, price, service and
relationships.
Market competition bears directly on the price charged for
insurance products and services provided within the insurance regulatory
framework. Growth is driven by a company's ability to provide insurance services
at a price that is reasonable and acceptable to the customer. In addition, the
marketplace is affected by available capacity of the insurance industry. Surplus
expands and contracts primarily in conjunction with profit levels generated by
the industry. Growth is the product of a company's ability to retain existing
customers and to attract new customers as well as movement in the average
premium per policy charged by the Company. Firming pricing in 2001 and a return
to "hard market" conditions, particularly for commercial and personal insurance,
have allowed the property/casualty subsidiaries and affiliates to raise prices
or maintain current prices to gain competitive advantage in the insurance
marketplace.
The Company, in managing the property/casualty insurers of The
ERIE, has followed several strategies which the management of the Company
believes will result in underwriting performance which exceeds those of the
property/casualty industry in general. First, the Company employs an
underwriting philosophy and product mix targeted to produce an Erie Insurance
Group-wide underwriting profit, i.e., a combined ratio of less than 100% on a
long-term basis, through careful risk selection, adequate pricing and prompt
fair claims settlement practices. The careful selection of risks allows for
lower claims frequency and loss severity, thereby enabling insurance to be
offered at favorable prices. The Company, as well as the property/casualty
industry, experienced increased loss severity in private passenger automobile
and in commercial lines in 2001. This caused the loss and loss adjustment
expense to outpace premiums earned. The firming of auto pricing in the second
half of 2001 along with deteriorating loss cost trends have allowed the company
to begin raising auto insurance prices to mitigate underwriting losses. All
policies issued by the Group are for a one-year term. Therefore the impact of
the rate increases will take at least one year before the full impact is
recognized in the underwriting results of the Company.
Second, management focuses on consistently providing superior
service to policyholders and agents in both underwriting and claims handling.
The ERIE's ability to provide superior customer service is reflected in the
Group policy retention and new policy growth rates. Continued improvement in new
policy growth drove the gains experienced in the Group's direct written premium.
Policies in force increased 8.5% to 3,109,583 from 2,865,553 in 2000 and 6.5% in
2000 from 2,689,849 in 1999. Policy retention (the percentage of existing
policyholders who renew their policies) remained excellent at 90.9%, 91.0% and
90.5% for the years ended December 31, 2001, 2000 and 1999, respectively, for
all lines of business combined. See "Selected Segment Information" contained on
page 28 of the Annual Report for policy in force counts and retention rates for
The ERIE.
Third, the Company maintains a business model designed to provide
the advantages of localized marketing and claims servicing with the economies of
scale from centralized accounting, administrative, underwriting, investment,
information management and other support services.
Finally, a careful agent selection process exists in which The
ERIE seeks to be the lead company with its agents in order to enhance the agency
relationship and the likelihood of receiving the most desirable underwriting
opportunities from its agents. The Company has ongoing, direct communications
with its agency force. Agents have a number of company sponsored venues designed
to promote sharing of ideas, concerns and suggestions with the senior management
of the ERIE with the goal of improving communications and service. These efforts
8
have resulted in outstanding agency penetration and the ability to sustain
long-term agency partnerships.
Reserves
Loss reserves are established to account for the estimated
ultimate costs of loss and loss adjustment expenses for claims that have been
reported but not yet settled and claims that have been incurred but not yet
reported. The estimated loss reserve for reported claims is based primarily upon
a case-by-case evaluation of the type of risk involved and knowledge of the
circumstances surrounding each claim and the insurance policy provisions
relating to the type of loss. Estimates of reserves for unreported claims and
loss settlement expenses are determined on the basis of historical information
by line of business as adjusted to current conditions. Inflation is implicitly
provided for in the reserving function through analysis of costs, trends and
reviews of historical reserving results.
The process of estimating the liability for unpaid losses and loss
adjustment expenses is inherently judgmental and can be influenced by factors
subject to variation. Possible sources of variation include claim frequency and
severity, changing rates of inflation as well as changes in other economic
conditions, judicial trends and legislative changes. It is unlikely that future
losses and loss adjustment expenses will develop exactly as projected. The
Company continually refines reserves as experience develops and new information
becomes known. The Company reflects adjustments to reserves in the results of
operations in the periods in which the estimates are changed. With the exception
of reserves relating to certain workers' compensation cases, which have been
discounted at 2.5% in 2001 and 2000, loss reserves are not discounted.
For a reconciliation of beginning and ending property/casualty
unpaid losses and loss adjustment expense reserves for each of the last three
years, see Note 9 of the "Notes to Consolidated Financial Statements" contained
in the Annual Report page 43.
9
The following table sets forth the development of the Company's
net reserves for unpaid losses and loss adjustment expenses from 1994 through
2001. The table has been computed on a statutory basis without reflecting the
estimated salvage and subrogation to be recovered on these losses in the future
(See following discussion in "Financial Regulation" section).
Year Ended December 31,
--------------------------------------------------------------------------------------
2001 2000 1999 1998 1997 1996 1995 1994
------ ------ ------ ------ ------ ------ ------ -------
(in millions)
Reserve for unpaid
losses and loss
adjustment expense $122.3 $105.7 $ 98.1 $ 94.4 $ 92.5 $ 87.7 $ 82.0 $ 71.3
======
Development of
liability as of:
One year later 111.9 104.4 93.7 90.2 88.5 79.7 67.0
-----
Two years later 106.4 95.5 89.7 88.7 81.5 67.3
-----
Three years later 97.2 90.4 88.2 82.8 71.1
----
Four years later 90.9 87.6 83.3 72.2
----
Five years later 88.1 82.4 73.5
----
Six years later 83.5 72.4
----
Seven years later 73.5
Cumulative
(Deficiency) excess ( 6.2) ( 8.3) ( 2.8) 1.6 ( 0.4) ( 1.5) ( 2.2)
====== ====== ======= ===== ======= ====== ======
Cumulative amount of liability
paid through:
One year later $ 41.2 $ 38.9 $ 33.6 $ 31.3 $ 32.6 $ 29.3 $ 22.1
====== ====== ====== ====== ====== ====== ======
Two years later $ 59.2 $ 52.4 $ 48.3 $ 48.7 $ 44.7 $ 36.2
====== ====== ====== ====== ====== ======
Three years later $ 63.9 $ 59.2 $ 57.8 $ 53.9 $ 44.7
====== ====== ====== ====== ======
Four years later $ 65.5 $ 63.5 $ 59.4 $ 49.8
====== ====== ====== ======
Five years later $ 67.4 $ 62.5 $ 53.2
====== ====== ======
Six years later $ 64.8 $ 55.0
======== ======
Seven years later $ 56.5
======
The top line shows the estimated liability that was recorded at
the end of each of the indicated years for all current and prior year unpaid
losses and loss expenses. The upper portion of the table shows re-estimations of
the original recorded reserve as of the end of each successive year. The
estimate is increased or decreased as payments are made and more information
becomes known about the development of remaining unpaid claims. The lower
portion of the table shows the cumulative amount paid in succeeding years for
losses incurred prior to the Statement of Financial Position date. The
cumulative deficiency or redundancy represents the aggregate amount by which
original estimates of reserves as of that year-end have changed in subsequent
years. An excess in reserves means that reserves established in prior years
exceeded actual losses and loss adjustment expenses or were reevaluated at less
than the originally reserved amount. A deficiency in reserves means that the
reserves established in prior years were less than actual losses and loss
adjustment expenses or were reevaluated at more than the originally reserved
amount.
Included in the 2001 unpaid losses and loss adjustment expenses
reserve of $122,333,970 are the Company's share of estimated incurred losses of
the Erie Insurance Group's reinsurance business stemming from the September 11th
attack on the World Trade Center. The portion of reinsurance losses recorded by
the Company through its property/casualty subsidiaries net of recoveries from
the excess of loss agreement with the Exchange was $5,839,445, or $0.06 per
share after taxes. The property/casualty insurers are exposed to both direct and
reinsurance losses arising from possible future terrorist actions.
10
Adverse development on loss reserves established for the year ended
December 31, 1999 was the result of an increase in loss severity experienced by
the Company on its direct business and additional losses on its voluntary
assumed reinsurance business related to the December 1999 European windstorms.
Government Regulation
The property/casualty insurers managed by the Company are subject
to supervision and regulation in the states in which they transact business. The
primary purpose of such supervision and regulation is the protection of
policyholders. The extent of such regulation varies, but generally derives from
state statutes which delegate regulatory, supervisory and administrative
authority to state insurance departments. Accordingly, the authority of the
state insurance departments includes the establishment of standards of solvency
which must be met and maintained by insurers, the licensing to do business of
insurers and agents, the nature of the limitations on investments, the approval
of premium rates for property/casualty insurance, the provisions which insurers
must make for current losses and future liabilities, the deposit of securities
for the benefit of policyholders, the approval of policy forms, notice
requirements for the cancellation of policies and the approval of certain
changes in control. In addition, many states have enacted variations of
competitive rate-making laws which allow insurers to set certain premium rates
for certain classes of insurance without having to obtain the prior approval of
the state insurance department. State insurance departments also conduct
periodic examinations of the affairs of insurance companies and require the
filing of annual and other reports relating to the financial condition of
insurance companies.
The Company's property/casualty insurance subsidiaries may be
required, under the solvency or guaranty laws of the various states in which
they are licensed, to pay assessments to fund policyholder losses or liabilities
of insolvent insurance companies. Depending on state law, insurers can be
assessed an amount that is generally equal to between 1% and 2% of premiums
written for the relevant lines of insurance in that state each year to pay the
claims of an insolvent insurer. Certain states permit these assessments, or a
portion thereof, to be recorded as an offset to future premium taxes. The
property/casualty insurers managed by the Company have made accruals for their
portion of assessments related to such insolvencies based upon the most current
information furnished by the guaranty associations. Reference is made to Note 2
of the "Notes to Consolidated Financial Statements" contained in the Annual
Report for the year ended December 31, 2001, pages 35 through 36 incorporated
herein by reference, for a complete discussion of guaranty association
assessment accruals and their related offsetting tax credits.
The Company's property/casualty insurers are also required to
participate in various involuntary insurance programs for automobile insurance,
as well as other property and casualty lines, in states in which such companies
operate. These involuntary programs provide various insurance coverages to
individuals or other entities that otherwise are unable to purchase such
coverage in the voluntary market. These programs include joint underwriting
associations, assigned risk plans, fair access to insurance requirements
("FAIR") plans, reinsurance facilities and windstorm plans. Legislation
establishing these programs generally provides for participation in proportion
to voluntary writings of related lines of business in that state. Generally,
state law requires participation in such programs as a condition to doing
business in that state. The loss ratio on insurance written under involuntary
programs has traditionally been greater than the loss ratio on insurance in the
voluntary market; however, the impact of these involuntary programs on the
property/casualty insurers managed by the Company has been immaterial.
Pennsylvania regulations limit the amount of dividends EFL can pay
its shareholders and limit the amount of dividends the Erie Insurance Co. and
11
Erie Insurance Property and Casualty Company can pay to the Company, while New
York state regulates the amount of dividends Erie NY can pay to the Erie
Insurance Co. The limitations are fully described and reference is made herein
to Note 13 of the "Notes to Consolidated Financial Statements" contained in
pages 45 through 46 in the Annual Report for the year ended December 31, 2001,
incorporated by reference.
Financial Regulation
The Company's property/casualty insurance subsidiaries are
required to file financial statements prepared using SAP with state regulatory
authorities. The adjustments necessary to reconcile the Company's
property/casualty insurance subsidiaries' net income and shareholders' equity
prepared in accordance with SAP to net income and shareholders' equity prepared
in accordance with GAAP are as follows:
Net Income
-----------------------
Year Ended
December 31,
-----------------------
2001 2000
--------- ---------
(in thousands)
SAP amounts.......................... ($ 4,929) $ 5,091
Adjustments:
Deferred policy acquisition
costs............................. 3,816 1,798
Deferred income taxes.............. 1,392 32
Federal alternative minimum
tax credit recoverable............ 0 188
Salvage and subrogation............ 312 221
Incurred premium adjustment........ ( 1,816) ( 798)
Other.............................. 83 10
-------- --------
GAAP amounts......................... ($ 1,142) $ 6,542
======== ========
Shareholders' Equity
--------------------------------
As of December 31,
--------------------------------
2001 2000 1999
--------- --------- --------
(in thousands)
SAP amounts.......................... $ 92,128 $ 89,637 $ 81,709
Adjustments:
Deferred policy acquisition
costs............................. 17,018 13,202 11,405
Diffrence between GAAP and
SAP deferred income taxes....... ( 354) 3,569 3,350
Salvage and subrogation............ 3,661 3,349 3,128
Statutory reserves................. 0 865 2,656
Incurred premium adjustment........ ( 14,018) ( 12,202) ( 11,405)
Unrealized gains net of
deferred taxes.................... 4,722 2,331 38
Other.............................. 223 7 ( 3)
-------- -------- -------
GAAP amounts......................... $103,380 $100,758 $ 90,878
======== ======== ========
Effective January 1, 2001, the NAIC adopted the Codification of
Statutory Accounting Practices (Codification) as the NAIC-supported basis of
accounting. Codification resulted in changes to the Company's statutory-basis
financial statements, the most significant of which was the recording of
statutory deferred taxes for certain of the Company's property/casualty
insurance subsidiaries. The total cumulative adjustment increased the surplus of
the Company's property/casualty insurance subsidiaries by $4.5 million as of
January 1, 2001.
12
The NAIC has adopted risk-based capital ("RBC") standards that require
insurance companies to calculate and, report statutory capital and surplus needs
based on a formula measuring underwriting, investment and other business risks
inherent in an individual company's operations. These RBC standards have not
affected the operation of the Company as each of the property/casualty insurance
subsidiaries and affiliates has statutory capital and surplus in excess of RBC
requirements.
"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of
1995: Certain forward-looking statements contained herein involve risks and
uncertainties. Many factors could cause future results to differ materially from
those discussed. Examples of such factors include variations in catastrophe
losses due to changes in weather patterns, other natural causes or terrorist
actions; changes in insurance regulations or legislation that disadvantage the
members of the Group in the marketplace and recession; economic conditions or
stock market changes affecting pricing or demand for insurance products or
ability to generate investment income and returns. Growth and profitability have
been and will be potentially materially affected by these and other factors.
13
Item 2. Properties
The Company and its subsidiaries, the Exchange and its subsidiary,
Flagship, and EFL share a corporate home office complex in Erie, Pennsylvania
which contains 549,786 square feet and is owned by the Exchange. At December 31,
2001 in addition to the Erie branch office, the Company also operated 22
additional field offices in 11 states. Of these sites, 17 provide both agency
support and claims services and are referred to as "Branch Offices", while the
remaining 5 provide only claims services and are considered "Claims Offices".
The Company owns three of its field offices. Three field offices
are owned by and leased from the Exchange. The annual rent expense incurred by
the Company for the field offices and home office complex totaled $10,842,301 in
2001. One office is owned by and leased from EFL at an annual rental in 2001 of
$311,760. The remaining 14 offices are leased from various unaffiliated parties
at an aggregate annual rental in 2001 of approximately $1,815,000. Total rent
and operating expenses for all office space occupied by the Company in 2001 was
$18,938,140, of which $11,984,989, or approximately 63%, was reimbursed for
office space used by it's affiliates.
Item 3. Legal Proceedings
Information concerning the legal proceedings of the Company is
incorporated by reference to the section "Legal Proceedings" in the Company's
definitive Proxy Statement with respect to the Company's Annual Meeting of
Shareholders to be held on April 30, 2002 to be filed with the Securities and
Exchange Commission within 120 days of December 31, 2001 (the "Proxy
Statement").
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the
fourth quarter of 2001.
14
PART II
Item 5. Market for Registrant's Common Stock and Related Shareholder Matters
Reference is made to "Market Price of and Dividends on the Common
Stock and Related Shareholder Matters" on page 48 of the Annual Report for the
year ended December 31, 2001, incorporated herein by reference, for information
regarding the high and low sales prices for the Company's stock and additional
information regarding such stock of the Company.
As of February 28, 2002, there were approximately 1,093 beneficial
shareholders of record of the Company's Class A non-voting common stock and 29
beneficial shareholders of record of the Company's Class B voting common stock.
Of the 63,813,523 shares of the Company's Class A common stock
outstanding as of February 28, 2002, approximately 22,824,839 shares are freely
transferable without restriction or further registration under the Securities
Act of 1933 (the Act), as amended unless purchased by affiliates of the Company
as that terms is defined in Rule 144 under the Act. The 40,988,684 remaining
outstanding shares of Class A common stock (the Restricted Shares) are held by
the Company's directors, executive officers and their affiliates and are
restricted securities that are eligible to be sold publicly pursuant to an
effective registration statement under the Act or in accordance with the
applicable exemption, including Rule 144, from the registration requirements
under the Act. The Company is unable to estimate the amount of Restricted Shares
that may be sold under Rule 144 since this amount will depend in part on the
price for the Class A common stock, the personal circumstances of the sellers
and other factors. Sales of a substantial number of Restricted Shares in the
public market, or the availability of such shares, could adversely affect the
price of the Class A common stock.
In general, under Rule 144 as currently in effect, a person (or
persons whose shares are aggregated for purposes of Rule 144) who beneficially
has owned Restricted Shares for at least two years, including affiliates of the
Company, is entitled to sell within any three-month period a number of shares
that does not exceed the greater of: (1) one percent of the number of shares of
Class A common stock then outstanding, or (2) the average weekly trading volume
of the Class A common stock in The NASDAQ Stock MarketSM during the four
calendar weeks preceding the date on which notice of sale is filed with the SEC.
Sales under Rule 144 are also subject to certain manner of sale provisions,
notice requirements and the availability of current public information about the
Company. However, a person (or persons whose shares are aggregated for purposes
of Rule 144) who is deemed not to have been an affiliate of the Company at any
time during the 90 days preceding a sale, and who beneficially has owned the
Restricted Shares for at least three years at the time of sale, would be
entitled to sell such shares under Rule 144(k) without regard to the aforesaid
limitations.
Item 6. Selected Consolidated Financial Data
Reference is made to "Selected Consolidated Financial Data" on
page 15 of the Annual Report for the year ended December 31, 2001, incorporated
herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Reference is made to "Management's Discussion and Analysis of
Financial Condition and Results of Operations" on pages 16 through 26 of the
Annual Report for the year ended December 31, 2001, incorporated herein by
reference.
15
Item 7a. Quantitative and Qualitative Disclosure about Market Risk
Reference is made to "Management's Discussion and Analysis of
Financial Condition and Results of Operations" on pages 22 through 23 of the
Annual Report for the year ended December 31, 2001, incorporated herein by
reference.
Item 8. Financial Statements and Supplementary Data
Reference is made to the "Consolidated Financial Statements"
included on pages 29 through 33 and to the "Quarterly Results of Operations"
contained in the "Notes to Consolidated Financial Statements" on page 47 of the
Annual Report for the year ended December 31, 2001, incorporated herein by
reference.
Item 9. Changes In and Disagreements With Accountants on Accounting and
Financial Disclosures
None.
16
PART III
Item 10. Directors and Executive Officers of the Registrant
Erie Insurance Group President and CEO, Stephen A. Milne, retired
from the Company effective January 18, 2002. Jan R. Van Gorder, Senior Executive
Vice President, Secretary and General Counsel, is acting President and CEO until
a new President and CEO is selected. Mr. Milne remains on the Board of Directors
of the Company and the Erie Indemnity Company, the principal management company
of the Erie Insurance Group.
Directors are elected to one year terms at the Company's annual
meeting of Shareholders.
(a) Certain information as to the Directors of the Company is as follows:
Age Present Principal Position with Erie
as of Indemnity Company and Other Material
Name 12/31/01 Positions Held During the Last Five Years
- -----------------------------------------------------------------------------------------------------------------------------------
Samuel P. Black, III 59 Director since 1997. President, Treasurer and Secretary,
1,3,4,6 Samuel P. Black & Associates, Inc.--insurance agency;
Director--the Company, Erie Insurance Company, Flagship City
Insurance Company, Erie Insurance Property & Casualty
Company and Erie Family Life Insurance Company.
J. Ralph Borneman, Jr. 63 Director since 1992. President and Chief Executive Officer,
3,4 Body-Borneman Associates, Inc., insurance agency. President,
Body-Borneman, Ltd. and Body-Borneman, Inc., insurance
agencies. Director--the Company, Erie Insurance Company,
Erie Family Life Insurance Company, Erie Insurance Company
of New York and National Penn Bancshares.
Patricia Garrison-Corbin 54 Director since 2000. President, P.G. Corbin & Company 1987 -
2,4,5C Present. Director--the Company, Erie Insurance Company and
Erie Family Life Insurance Company.
Susan Hirt Hagen 1,6C 66 Director since 1980. Managing Partner, Hagen, Herr &
Peppin, Group Relations Consultants since 1990; Director--the
Company, Erie Insurance Company and Erie Family Life
Insurance Company, since 1980.
1 Member of Executive Committee
2 Member of Audit Committee
3 Member of Executive Compensation Committee
4 Member of Nominating Committee
5 Member of Investment Committee
6 Member of Charitable Giving Committee
C Committee Chairperson
17
Age Present Principal Position with Erie
as of Indemnity Company and Other Material
Name 12/31/01 Positions Held During the Last Five Years
- ------------------------------------------------------------------------------------------------------------------------------------
F. William Hirt 1C,6 76 Director since 1965. Chairman of the Board of the Company,
Erie Insurance Company, Erie Family Life Insurance Company,
Erie Insurance Property & Casualty Company and Flagship City
Insurance Company since September 1993; Chairman of the
Board of Erie Insurance Company of New York since April
1994. Chairman of the Executive Committee of the Company and
the Erie Family Life Insurance Company since November 1990;
Interim President and Chief Executive Officer of the
Company, Erie Family Life Insurance Company, Erie Insurance
Company, Erie Insurance Property & Casualty Company,
Flagship City Insurance Company and Erie Insurance Company
of New York from January 1, 1996 to February 12, 1996;
Chairman of the Board, Chief Executive Officer and Chairman
of the Executive Committee of the Company, Erie Family Life
Insurance Company and Erie Insurance Company for more than
five years prior thereto; Director--the Company, Erie
Insurance Company, Flagship City Insurance Company, Erie
Family Life Insurance Company, Erie Insurance Property &
Casualty Company and Erie Insurance Company of New York.
Samuel P. Katz 2,3 52 Director since 2000. Chief Executive Officer, Greater
Philadelphia First, July 2000 - Present; Managing Partner,
Wynnefield Capital Advisors, Inc., 1997 - Present;
President, Entersport Capital Advisors, Inc., President 1997
- Present; Partner, Stafford Capital Partners, L.P. 1994 -
1997; Director - the Company, Erie Insurance Company and
Erie Family Life Insurance Company.
Claude C. Lilly, III 2 55 Director since 2000. Professor and Dean, University of North
Carolina, Charlotte 1997 - Present; Professor, Florida State
University 1978 - 1997; Director-- the Company, Erie
Insurance Company and Erie Family Life Insurance Company.
1 Member of Executive Committee
2 Member of Audit Committee
3 Member of Executive Compensation Committee
6 Member of Charitable Giving Committee
C Committee Chairperson
18
Age Present Principal Position with Erie
as of Indemnity Company and Other Material
Name 12/31/01 Positions Held During the Last Five Years
- ------------------------------------------------------------------------------------------------------------------------------------
Stephen A. Milne 1,5 53 Director since 1996. Retired President and Chief Executive
Officer of the Company, Erie Insurance Company, Erie Family
Life Insurance Company, Flagship City Insurance Company,
Erie Insurance Property & Casualty Company and Erie
Insurance Company of New York 1996 - January 18, 2002;
Executive Vice President of the Company, Erie Insurance
Company, Flagship City Insurance Company, Erie Insurance
Property & Casualty Company and Erie Insurance Company of
New York 1994 - 1996. Director--the Company, Erie Insurance
Company, Erie Family Life Insurance Company, Erie Insurance
Company of New York, Flagship City Insurance Company and
Erie Insurance Property & Casualty Company.
Henry N. Nassau 1,5 47 Director since 2000. General Counsel, Internet Capital Group
1999 - Present; Partner, Dechert, Price & Rhoades 1987 -
1999; Director-- the Company, Erie Insurance Company and
Erie Family Life Insurance Company.
John M. Petersen 1,4C 73 Director since 1979. Retired; President and Chief Executive
Officer of the Company, Erie Family Life Insurance Company,
Erie Insurance Company, Flagship City Insurance Company and
Erie Insurance Property & Casualty Company 1993 - 1995 and
Erie Insurance Company of New York 1994 - 1995;
Director--the Company, Erie Insurance Company, Flagship City
Insurance Company, Erie Family Life Insurance Company, Erie
Insurance Property & Casualty Company, Erie Insurance
Company of New York, and Spectrum Control.
1 Member of Executive Committee
4 Member of Nominating Committee
5 Member of Investment Committee
C Committee Chairperson
19
Age Present Principal Position with Erie
as of Indemnity Company and Other Material
Name 12/31/01 Positions Held During the Last Five Years
- ------------------------------------------------------------------------------------------------------------------------------------
Jan R. Van Gorder 1 54 Director since 1990. Acting President and Chief Executive
Officer of the Company, Erie Insurance Company, Erie Family
Life Insurance Company, Flagship City Insurance Company,
Erie Insurance Property and Casualty Company and Erie
Insurance Company of New York since January 19, 2002. Senior
Executive Vice President, Secretary and General Counsel of
the Company, Erie Family Life Insurance Company and Erie
Insurance Company since 1990 and of Flagship City Insurance
Company and Erie Insurance Property & Casualty Company since
1992 and 1993, respectively and of Erie Insurance Company of
New York since 1994. Director--the Company, Erie Insurance
Company, Flagship City Insurance Company, Erie Insurance
Property & Casualty Company, Erie Insurance Company of New
York and Erie Family Life Insurance Company.
Robert C. Wilburn 2C,3C,4,5 58 Director since 1999. President and Chief Executive Officer,
The Gettysburg National Battlefield Museum Foundation since
2001; Distinguished Service Professor, Carnegie Mellon
University since 1999; Retired, President and Chief
Executive Officer, Colonial Williamsburg Foundation, 1992 -
1999; Director - the Company, Erie Insurance Company and
Erie Family Life Insurance Company.
1 Member of Executive Committee
2 Member of Audit Committee
3 Member of Executive Compensation Committee
4 Member of Nominating Committee
5 Member of Investment Committee
C Committee Chairperson
20
(b) Certain information as to the executive officers of the Company is as follows:
Age Principal Occupation for Past
as of Five Years and Positions with
Name 12/31/01 Erie Insurance Group
- ------------------------------------------------------------------------------------------------------------------------------------
Acting President & Chief
Executive Officer
- ------------------------
Jan R. Van Gorder, Esq. 54 Acting President and Chief Executive Officer since January
19, 2002. Senior Executive Vice President, Secretary and
General Counsel of the Company, EFL and Erie Insurance Co.
since 1990, and of Flagship and Erie P&C since 1992 and
1993, respectively, and of Erie NY since April 1994.
Executive Vice Presidents
- -------------------------
Philip A. Garcia 45 Executive Vice President and Chief Financial Officer since
1997; Senior Vice President and Controller 1993 - 1997.
Director, the Erie NY, Flagship and Erie P&C.
Jeffrey A. Ludrof 42 Executive Vice President - Insurance Operations of the
Company, Erie Insurance Co., Flagship, Erie P&C, and Erie NY
since 1999; Senior Vice President 1994 - 1999; Regional Vice
President 1993 - 1994. Director Erie NY, Flagship and Erie
P&C.
21
Age Principal Occupation for Past
as of Five Years and Positions with
Name 12/31/01 Erie Insurance Group
- ------------------------------------------------------------------------------------------------------------------------------------
Senior Vice Presidents
- ----------------------
Eugene C. Connell 47 Senior Vice President since 1990.
Michael J. Krahe 48 Senior Vice President since 1999; Vice President 1994 - 1999.
George R. Lucore 51 Senior Vice President since 1995; Regional Vice President
1993 - 1995.
Thomas B. Morgan 38 Senior Vice President since October 2001; Assistant Vice
President and Branch Manager 1997 - October 2001;
Independent Insurance Agent 1988 - 1997.
Timothy G. NeCastro 41 Senior Vice President and Controller since 1997; Department
Manager - Internal Audit November 1996 - 1997.
James R. Roehm 53 Senior Vice President since 1991.
John P. Sommerwerck 51 Senior Vice President and Chief Information Officer since
May 2000
Barry P. Stiles 52 Senior Vice President since 1999; Vice President 1993 - 1999.
Michael S. Zavasky 49 Senior Vice President since 1998; Vice President and
Managing Director of Reinsurance 1990 - 1998.
Douglas F. Ziegler 51 Senior Vice President, Treasurer and Chief Investment
Officer since 1993.
Regional Vice Presidents
- -----------------------
George D. Dufala 30 Regional Vice President since April 2000; Assistant Vice
President 1993 - April 2000.
Douglas N. Fitzgerald 45 Regional Vice President since 1993.
Terry L. Hamman 47 Regional Vice President since 1995; Assistant Vice President
1993 - 1995.
Eric D. Root 33 Regional Vice President since April 2000; Branch manager
1996 - April 2000.
22
Item 11. Executive Compensation
The answer to this item is incorporated by reference to the
Company's definitive Proxy Statement relating to the Annual Meeting of
Shareholders to be held on April 30, 2002, except for the Performance Graph,
which has not been incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The answer to this item is incorporated by reference to the
Company's definitive Proxy Statement relating to the Annual Meeting of
Shareholders to be held on April 30, 2002 to be filed with the Securities and
Exchange Commission within 120 days of December 31, 2001.
Item 13. Certain Relationships and Related Transactions
Since the formation of the Company and the Exchange in 1925, the
Company, as the attorney-in-fact appointed by the policyholders of the Exchange,
has managed the property/casualty insurance operations of the Exchange. The
Company's operations are interrelated with the operations of the Exchange, and
the Company's results of operations are largely dependent on the success of the
Exchange.
Reference is made to Note 10 of the "Notes to Consolidated
Financial Statements" on pages 43 through 44 of the Annual Report for the year
ended December 31, 2001, incorporated herein by reference, for a complete
discussion of related party transactions.
Information with respect to certain relationships with Company
directors is incorporated by reference to the Company's definitive Proxy
Statement relating to the Annual Meeting of Shareholders to be held on April 30,
2002 to be filed with the Securities and Exchange Commission within 120 days of
December 31, 2001.
23
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) Financial statements, financial statement schedules and exhibits
filed:
(1) Consolidated Financial Statements
Page*
----
Erie Indemnity Company and Subsidiaries:
Independent Auditors' Report on the
Consolidated Financial Statements............................. 29
Consolidated Statements of Operations
for the three years ended
December 31, 2001, 2000 and 1999.............................. 30
Consolidated Statements of Financial
Position as of December 31, 2001
and 2000 ................................................... 31
Consolidated Statements of Cash Flows
for the three years ended
December 31, 2001, 2000 and 1999.............................. 32
Consolidated Statements of Shareholders'
Equity for the three years ended
December 31, 2001, 2000 and 1999.............................. 33
Notes to Consolidated Financial Statements...................... 34
(2) Financial Statement Schedules
Page
----
Erie Indemnity Company and Subsidiaries:
Report of Independent Auditors on Schedules.................... 31
Schedule I. Summary of Investments - Other
than Investments in Related
Parties.......................................... 32
Schedule IV. Reinsurance...................................... 33
Schedule VI. Supplemental Information
Concerning Property/Casualty
Insurance Operations............................. 34
All other schedules have been omitted since they are not required, not
applicable or the information is included in the financial statements or notes
thereto.
* Refers to the respective page of Erie Indemnity Company's 2001 Annual Report
to Shareholders. The "Consolidated Financial Statements" and "Notes to
Consolidated Financial Statements and Auditors' Report" thereon on pages 29 to
47 are incorporated by reference. With the exception of the portions of such
Annual Report specifically incorporated by reference in this Item and Items 1,
5, 6, 7, 7a and 8, such Annual Report shall not be deemed filed as part of this
Form 10-K Report or otherwise subject to the liabilities of Section 18 of the
Securities Exchange Act of 1934.
24
(3) Exhibits
Exhibit
Number Description of Exhibit
- ------- ----------------------
3.1* Articles of Incorporation of Registrant
3.2** Amended and Restated By-laws of Registrant
3.3## Amended and Restated By-laws of Registrant
dated March 9, 1999
4A* Form of Registrant's Class A Common
Stock certificate
4B* Form of Registrant's Class B Common
Stock certificate
10.1*** Retirement Plan for Employees of Erie
Insurance Group, effective as of
December 31, 1989
10.2*** Restatement of Supplemental Retirement
Plan for Certain Members of the Erie
Insurance Group Retirement Plan for
Employees, effective as of January 1,
1990
10.3*** Deferred Compensation Plan of
Registrant
10.4*** Retirement Plan for Outside Directors
of Registrant, effective as of
January 1, 1991
10.5*** Employee Savings Plan of Erie Insurance
Group, effective as of April 1, 1992
10.6*** Amendment to Employee Savings Plan of
Erie Insurance Group
10.7*** Supplemental 401(k) Plan of Erie Insurance
Group effective as of January 1, 1994
10.8*** Service Agreement dated January 1, 1989
between Registrant and Erie Insurance
Company
10.9*** Service Agreement dated June 21, 1993
between Registrant and Erie Insurance
Property & Casualty Company
10.10*** Service Agreement dated June 21, 1993
between Registrant and Flagship City
Insurance Company
10.11*** Reinsurance Pooling Agreement dated
January 1, 1992 between Erie Insurance
Company and Erie Insurance Exchange
25
Exhibit
Number Description of Exhibit
- ------- ----------------------
10.12*** Form of Subscriber's Agreement whereby
policyholders of Erie Insurance Exchange
appoint Registrant as their
Attorney-in-Fact
10.13* Stock Redemption Plan of Registrant dated
December 14, 1989
10.14* Stock Purchase Agreement dated December 20,
1991, between Registrant and Erie Insurance
Exchange relating to the capital stock of
Erie Insurance Company
10.15** Property Catastrophe Excess of Loss
Reinsurance Agreement dated January 1,
1994 between Erie Insurance Exchange
and Erie Insurance Co.
10.16**** Stock Redemption Plan of Registrant as
restated December 12, 1995
10.17**** Property Catastrophe Excess of Loss
Reinsurance Agreement dated January 1, 1995
between Erie Insurance Exchange and Erie
Insurance Company of New York
10.18**** Service Agreement dated January 1, 1995
between Registrant and Erie Insurance
Company of New York
10.19***** Consulting Agreement for Investing Services
dated January 2, 1996 between Erie Indemnity
Company and John M. Petersen
10.20***** Agreement dated April 29, 1994 between Erie
Indemnity Company and Thomas M. Sider
10.21****** Aggregate Excess of Loss Reinsurance Agreement effective
January 1, 1997 between Erie Insurance Exchange, by and
through its Attorney-in-Fact, Erie Indemnity Company and Erie
Insurance Company and its wholly-owned subsidiary Erie
Insurance Company of New York
10.22# 1997 Annual Incentive Plan of Erie Indemnity
Company
10.23# Erie Indemnity Company Long-Term Incentive Plan
10.24# Employment Agreement dated December 16, 1997 by
and between Erie Indemnity Company and Stephen A.
Milne
10.25# Employment Agreement dated December 16, 1997 by
and between Erie Indemnity Company and Jan R. Van
Gorder
26
Exhibit
Number Description of Exhibit
- ------- ----------------------
10.26# Employment Agreement dated December 16, 1997 by
and between Erie Indemnity Company and Philip A.
Garcia
10.27# Employment Agreement effective December 16, 1997
by and between Erie Indemnity Company and John J.
Brinling, Jr.
10.28### Employment Agreement effective June 30, 1999 by
and between Erie Indemnity Company and Jeffrey A.
Ludrof
10.29### Employment Agreement effective December 15, 1999
By and between Erie Indemnity Company and
Douglas F. Ziegler
10.30### Addendum to Employment Agreement effective December
15, 1999 by and between Erie Indemnity Company
and Stephen A. Milne
10.31### Addendum to Employment Agreement effective December
15, 1999 by and between Erie Indemnity Company
and Jan R. Van Gorder
10.32### Addendum to Employment Agreement effective December
15, 1999 by and between Erie Indemnity Company
and Philip A. Garcia
10.33### Addendum to Employment Agreement effective December
15, 1999 by and between Erie Indemnity Company
and John J. Brinling, Jr.
10.34### Addendum to Employment Agreement effective December
15, 1999 by and between Erie Indemnity Company
and Jeffrey A. Ludrof
10.35& Addendum to Employment Agreement effective December
15, 2000 by and between Erie Indemnity Company
and Stephen A. Milne
10.36& Addendum to Employment Agreement effective December
15, 2000 by and between Erie Indemnity Company
and Jan R. Van Gorder
10.37& Addendum to Employment Agreement effective December
15, 2000 by and between Erie Indemnity Company
and Philip A. Garcia
10.38& Addendum to Employment Agreement effective December
15, 2000 by and between Erie Indemnity Company
and John J. Brinling, Jr.
10.39& Addendum to Employment Agreement effective December
15, 2000 by and between Erie Indemnity Company
and Jeffrey A. Ludrof
10.40& Addendum to Employment Agreement effective December
15, 2000 by and between Erie Indemnity Company
and Douglas F. Ziegler
27
Exhibit
Number Description of Exhibit
- ------- ----------------------
10.41&& Cost Sharing Agreement for Information Technology
Development dated March 14, 2001 between Registrant
and member companies of the Erie Insurance Group.
10.42 Addendum to Employment Agreement effective December
12, 2001 by and between Erie Indemnity Company
and Stephen A. Milne
10.43 Addendum to Employment Agreement effective December
12, 2001 by and between Erie Indemnity Company
and Jan R. Van Gorder
10.44 Addendum to Employment Agreement effective December
12, 2001 by and between Erie Indemnity Company
and Philip A. Garcia
10.45 Addendum to Employment Agreement effective December
12, 2001 by and between Erie Indemnity Company
and John J. Brinling, Jr.
10.46 Addendum to Employment Agreement effective December
12, 2001 by and between Erie Indemnity Company
and Jeffrey A. Ludrof
10.47 Addendum to Employment Agreement effective December
12, 2001 by and between Erie Indemnity Company
and Douglas F. Ziegler
10.48 Summary of termination benefits provided under
the Employment Agreement effective January 18,
2002 by and between Erie Indemnity Company and
Stephen A. Milne.
11 Statement re computation of per share
earnings
13 2001 Annual Report to Shareholders.
Reference is made to the Annual Report
furnished to the Commission, herewith.
21 Subsidiaries of Registrant
99.1## Report of the Special Committee to the
Board of Directors
- ----------------------------------
* Such exhibit is incorporated by reference to th e like numbered
exhibit in Registrant's Form 10 Registration Statement Number 0-24000
filed with the Securities and Exchange Commission on May 2, 1994.
** Such exhibit is incorporated by reference to the like numbered
exhibit in Registrant's Form 10/A Registration Statement Number
0-24000 filed with the Securities and Exchange Commission on August
3, 1994.
*** Such exhibit is incorporated by reference to the like titled but
renumbered exhibit in Registrant's Form 10 Registration Statement
Number 0-24000 filed with the Securities and Exchange Commission on
May 2, 1994.
**** Such exhibit is incorporated by reference to the like titled exhibit
in the Registrant's Form 10-K annual report for the year ended
December 31, 1995 that was filed with the Commission on March 25,
1996.
28
***** Such exhibit is incorporated by reference to the like titled exhibit
in the Registrant's Form 10-K/A amended annual report for the year
ended December 31, 1995 that was filed with the Commission on April
25, 1996.
****** Such exhibit is incorporated by reference to the like titled exhibit
in the Registrant's Form 10-K annual report for the year ended
December 31, 1996 that was filed with the Commission on March 21,
1997.
# Such exhibit is incorporated by reference to the like titled exhibit
in the Registrant's Form 10-K annual report for the year ended
December 31, 1997 that was filed with the Commission on March 25,
1998.
## Such exhibit is incorporated by reference to the like titled exhibit
in the Registrant's Form 10-K annual report for the year ended
December 31, 1998 that was filed with the Commission on March 30,
1999.
### Such exhibit is incorporated by reference to the like titled exhibit
in the Registrant's Form 10-K annual report for the year ended
December 31, 1999 that was filed with the Commission on March 23,
2000.
& Such exhibit is incorporated by reference to the like titled exhibit
in the Registrant's Form 10-K annual report for the year ended
December 31, 2000 that was filed with the Commission on March 23,
2001.
&& Such exhibit is incorporated by reference to the like titled exhibit
in the Registrant's Form 10-Q quarterly report for the quarter ended
June 30, 2001 that was filed with the Commission on July 17, 2001.
(b) Reports on Form 8-K:
On December 12, 2001 the Company filed a report on Form 8-K,
reporting under Item 5, that the Company would recognize charges for
realized capital losses related to the sale of certain impaired
securities, as well as, realized charges for other-than-temporary
impairments of equity and debt securities held in the Company's
available-for-sale investment portfolios.
29
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Date: March 5, 2002 ERIE INDEMNITY COMPANY
(Registrant)
Principal Officers
/s/ Jan R. Van Gorder
Jan R. Van Gorder, Acting President and CEO,
Executive Vice President, Secretary & General Counsel
/s/ Philip A. Garcia
Philip A. Garcia, Executive Vice President & CFO
/s/ Timothy G. NeCastro
Timothy G. NeCastro, Senior Vice President & Controller
Board of Directors
/s/ Samuel P. Black, III /s/ Claude C. Lilly, III
Samuel P. Black, III Claude C. Lilly, III
/s/ J. Ralph Borneman, Jr. /s/ Stephen A. Milne
J. Ralph Borneman, Jr. Stephen A. Milne
Patricia Garrison-Corbin /s/ Henry N. Nassau
Henry N. Nassau
/s/ Susan Hirt Hagen /s/ John M. Petersen
Susan Hirt Hagen John M. Petersen
/s/ F. William Hirt /s/ Jan R. Van Gorder
F. William Hirt Jan R. Van Gorder
/s/ Samuel P. Katz /s/ Robert C. Wilburn
Samuel P. Katz Robert C. Wilburn
30
INDEPENDENT AUDITORS' REPORT
To The Board of Directors and Shareholders
Erie Indemnity Company
We have audited the consolidated statements of financial position of Erie
Indemnity Company and subsidiaries (Company) as of December 31, 2001 and 2000
and the related consolidated statements of operations, shareholders' equity and
cash flows for each of the three years in the period ended December 31, 2001, as
contained in the 2001 annual report, incorporated by reference in the annual
report on Form 10-K for the year ended December 31, 2001. In connection with our
audits of the financial statements, we also have audited the financial statement
schedules, as listed in the accompanying index. These financial statements and
financial statement schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and financial statement schedules based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Erie Indemnity
Company and subsidiaries as of December 31, 2001 and 2000, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 2001 in conformity with accounting principles generally
accepted in the United States of America. Also in our opinion, the related
financial statement schedules, when considered in relation to the basic
financial statements taken as a whole, present fairly, in all material respects,
the information set forth therein.
/s/ Malin, Bergquist & Company, LLP
Malin, Bergquist & Company, LLP
Erie, Pennsylvania
February 7, 2002
31
SCHEDULE I - SUMMARY OF INVESTMENTS OTHER THAN INVESTMENTS IN RELATED PARTIES
DECEMBER 31, 2001
Amount at which
Cost or Shown in the
Amortized Fair Statement of
Type of Investment Cost Value Financial Position
- -----------------------------------------------------------------------------------------------------
(In Thousands)
Available-for-sale securities:
Fixed maturities:
U.S. treasuries & government agencies $ 11,211 $ 11,713 $ 11,713
States and political subdivisions 42,392 44,121 44,121
Special revenues 110,267 113,418 113,418
Public utilities 25,150 26,270 26,270
U.S. industrial and miscellaneous 311,757 319,308 319,308
Foreign 26,634 27,476 27,476
Redeemable Preferred Stocks 16,012 17,567 17,567
Equity securities:
Common stock:
U.S. banks, trusts and insurance companies 3,284 4,082 4,082
U.S. industrial and miscellaneous 28,718 59,709 59,709
Foreign 0 0 0
Non-redeemable preferred stock:
Public utilities 2,370 2,379 2,379
U.S. banks, trusts and insurance companies 14,685 15,565 15,565
U.S. industrial and miscellaneous 91,185 91,647 91,647
Foreign 19,485 20,416 20,416
------------- ------------- -------------
Total available-for-sale securities: $ 703,150 $ 753,671 $ 753,671
------------- ------------- -------------
Real estate mortgage loans $ 5,700 $ 5,700 $ 5,700
Limited partnerships 79,668 81,596 81,596
------------- ------------- -------------
Total investments $ 788,518 $ 840,967 $ 840,967
============= ============= =============
32
SCHEDULE IV - REINSURANCE
Percentage
Ceded to Assumed of amount
Other from Other Net Assumed
Direct Companies Companies Amount to Net
------------- ------------- ------------- ------------- -------------
December 31,2001
Premiums for the year
Property and Liability Insurance $ 432,306,939 $ 439,697,934 $ 145,039,248 $ 137,648,253 105.6%
December 31,2000
Premiums for the year
Property and Liability Insurance $ 377,569,981 $ 382,394,388 $ 129,281,124 $ 124,456,717 103.9%
December 31,1999
Premiums for the year
Property and Liability Insurance $ 351,227,872 $ 356,608,390 $ 122,604,391 $ 117,223,873 104.6%
33
SCHEDULE VI - SUPPLMENTAL INFORMATION CONCERNING PROPERTY/CASUALTY INSURANCE OPERATIONS
Deferred
Policy Reserves for Discount, if Net
Acquisition Unpaid Loss & any deducted Unearned Earned Investment
Costs LAE Expenses from reserves* Premiums Premiums Income
-----------------------------------------------------------------------------------
(In thousands)
@ 12/31/01
Consolidated P&C Entities $ 17,018 $ 557,278 $ 2,390 $ 311,969 $ 137,648 $ 17,071
Unconsolidated P&C Entities 0 0 0 0 0 0
Proportionate share of
registrant & subsidiaries 0 0 0 0 0 0
Total $ 17,018 $ 557,278 $ 2,390 $ 311,969 $ 137,648 $ 17,071
@ 12/31/00
Consolidated P&C Entities $ 13,202 $ 477,879 $ 1,509 $ 263,855 $ 123,708 $ 18,381
Unconsolidated P&C Entities 0 0 0 0 0 0
Proportionate share of
registrant & subsidiaries 0 0 0 0 0 0
Total $ 13,202 $ 477,879 $ 1,509 $ 263,855 $ 123,708 $ 18,381
@ 12/31/99
Consolidated P&C Entities $ 11,405 $ 432,895 $ 1,377 $ 237,452 $ 117,224 $ 16,765
Unconsolidated P&C Entities 0 0 0 0 0 0
Proportionate share of
registrant & subsidiaries 0 0 0 0 0 0
Total $ 11,405 $ 432,895 $ 1,377 $ 237,452 $ 117,224 $ 16,765
34
SCHEDULE VI - SUPPLMENTAL INFORMATION CONCERNING PROPERTY/CASUALTY INSURANCE OPERATIONS (CONTINUED)
Loss and Losses Adjustment Expenses Amortization
Incurred Related to of Deferred Net
(1) (2) Policy Loss & LAE Premiums
Current Year Prior Years Acquisition Costs Paid Written
----------------------------------------------------------------------------------------
@ 12/31/01
Consolidated P&C Entities $ 11,258 $ 6,160 $ 24,276 $ 100,840 $ 146,936
Unconsolidated P&C Entities 0 0 0 0 0
Proportionate share of
registrant & subsidiaries 0 0 0 0 0
Total $ 11,258 $ 6,160 $ 24,276 $ 100,840 $ 146,936
@ 12/31/00
Consolidated P&C Entities $ 93,416 $ 6,148 $ 22,793 $ 92,236 $ 128,044
Unconsolidated P&C Entities 0 0 0 0 0
Proportionate share of
registrant & subsidiaries 0 0 0 0 0
Total $ 93,416 $ 6,148 $ 22,793 $ 92,236 $ 128,044
@ 12/31/99
Consolidated P&C Entities $ 88,422 $ (703 ) $ 22,507 $ 84,192 $ 118,426
Unconsolidated P&C Entities 0 0 0 0 0
Proportionate share of
registrant & subsidiaries 0 0 0 0 0
Total $ 88,422 $ (703 ) $ 22,507 $ 84,192 $ 118,426
* Workers compensation reserves were discounted at 2.5% in 2001, 2000 and 1999.
35
EXHIBIT INDEX
(Pursuant to Item 601 of Regulation S-K)
Sequentially
Exhibit Numbered
Number Description of Exhibit Page
- ------ ---------------------- --------------
3.1* Articles of Incorporation of Registrant
3.2** Amended and Restated By-laws of Registrant
3.3## Amended and Restated By-laws of Registrant
dated March 9, 1999
4A* Form of Registrant's Class A Common
Stock certificate
4B* Form of Registrant's Class B Common
Stock certificate
10.1*** Retirement Plan for Employees of Erie
Insurance Group, effective as of
December 31, 1989
10.2*** Restatement of Supplemental Retirement
Plan for Certain Members of the Erie
Insurance Group Retirement Plan for
Employees, effective as of January 1,
1990
10.3*** Deferred Compensation Plan of
Registrant
10.4*** Retirement Plan for Outside Directors
of Registrant, effective as of
January 1, 1991
10.5*** Employee Savings Plan of Erie Insurance
Group, effective as of April 1, 1992
10.6*** Amendment to Employee Savings Plan of
Erie Insurance Group
10.7*** Supplemental 401(k) Plan of Erie Insurance
Group effective as of January 1, 1994
10.8*** Service Agreement dated January 1, 1989
between Registrant and Erie Insurance
Company
10.9*** Service Agreement dated June 21, 1993
between Registrant and Erie Insurance
Property & Casualty Company
10.10*** Service Agreement dated June 21, 1993
between Registrant and Flagship City
Insurance Company
10.11*** Reinsurance Pooling Agreement dated
January 1, 1992 between Erie Insurance
Company and Erie Insurance Exchange
36
Sequentially
Exhibit Numbered
Number Description of Exhibit Page
- ------ ---------------------- ------------
10.12*** Form of Subscriber's Agreement whereby
policyholders of Erie Insurance Exchange
appoint Registrant as their
Attorney-in-Fact
10.13* Stock Redemption Plan of Registrant dated
December 14, 1989
10.14* Stock Purchase Agreement dated December 20,
1991, between Registrant and Erie Insurance
Exchange relating to the capital stock of
Erie Insurance Company
10.15** Property Catastrophe Excess of Loss
Reinsurance Agreement dated January 1,
1994 between Erie Insurance Exchange
and Erie Insurance Co.
10.16**** Stock Redemption Plan of Registrant
restated as of December 12, 1995
10.17**** Property Catastrophe Excess of Loss
Reinsurance Agreement dated January 1, 1995
between Erie Insurance Exchange and Erie
Insurance Company of New York
10.18**** Service Agreement dated January 1, 1995
between Registrant and Erie Insurance
Company of New York
10.19***** Consulting Agreement for Investing Services
dated January 2, 1996 between Erie Indemnity
Company and John M. Petersen
10.20***** Agreement dated April 29, 1994 between Erie
Indemnity Company and Thomas M. Sider
10.21****** Aggregate Excess of Loss Reinsurance Agreement
effective January 1, 1997 between Erie Insurance
Exchange, by through its Attorney-in-Fact, Erie
Indemnity Company and Erie Insurance Company and
its wholly-owned subsidiary Erie Insurance
Company of New York
10.22# 1997 Annual Incentive Plan of Erie Indemnity
Company
10.23# Erie Indemnity Company Long-Term Incentive Plan
10.24# Employment Agreement dated December 16, 1997 by
and between Erie Indemnity Company and Stephen A.
Milne
10.25# Employment Agreement dated December 16, 1997 by
and between Erie Indemnity Company and Jan R. Van
Gorder
37
Sequentially
Exhibit Numbered
Number Description of Exhibit Page
- ------ ---------------------- ------------
10.26# Employment Agreement dated December 16, 1997 by
and between Erie Indemnity Company and Philip A.
Garcia
10.27# Employment Agreement effective December 16, 1997
by and between Erie Indemnity Company and John J.
Brinling, Jr.
10.28### Employment Agreement effective June 30, 1999 by
and between Erie Indemnity Company and Jeffrey A.
Ludrof
10.29### Employment Agreement effective December 15, 1999
By and between Erie Indemnity Company and
Douglas F. Ziegler
10.30### Addendum to Employment Agreement effective December
15, 1999 by and between Erie Indemnity Company
and Stephen A. Milne
10.31### Addendum to Employment Agreement effective December
15, 1999 by and between Erie Indemnity Company
and Jan R. Van Gorder
10.32### Addendum to Employment Agreement effective December
15, 1999 by and between Erie Indemnity Company
and Philip A. Garcia
10.33### Addendum to Employment Agreement effective December
15, 1999 by and between Erie Indemnity Company
and John J. Brinling, Jr.
10.34### Addendum to Employment Agreement effective December
15, 1999 by and between Erie Indemnity Company
and Jeffrey A. Ludrof
10.35& Addendum to Employment Agreement effective December
15, 2000 by and between Erie Indemnity Company
and Stephen A. Milne
10.36& Addendum to Employment Agreement effective December
15, 2000 by and between Erie Indemnity Company
and Jan R. Van Gorder
10.37& Addendum to Employment Agreement effective December
15, 2000 by and between Erie Indemnity Company
and Philip A. Garcia
10.38& Addendum to Employment Agreement effective December
15, 2000 by and between Erie Indemnity Company
and John J. Brinling, Jr.
10.39& Addendum to Employment Agreement effective December
15, 2000 by and between Erie Indemnity Company
and Jeffrey A. Ludrof
10.40& Addendum to Employment Agreement effective December
15, 2000 by and between Erie Indemnity Company
and Douglas F. Ziegler
38
Sequentially
Exhibit Numbered
Number Description of Exhibit Page
- ------ ---------------------- ------------
10.41&& Cost Sharing Agreement for Information Technology
Development dated March 14, 2001 between
Registrant and member companies of the Erie
Insurance Group.
10.42 Addendum to Employment Agreement effective December
12, 2001 by and between Erie Indemnity Company
and Stephen A. Milne 41
10.43 Addendum to Employment Agreement effective December
12, 2001 by and between Erie Indemnity Company
and Jan R. Van Gorder 42
10.44 Addendum to Employment Agreement effective December
12, 2001 by and between Erie Indemnity Company
and Philip A. Garcia 43
10.45 Addendum to Employment Agreement effective December
12, 2001 by and between Erie Indemnity Company
and John J. Brinling, Jr. 44
10.46 Addendum to Employment Agreement effective December
12, 2001 by and between Erie Indemnity Company
and Jeffrey A. Ludrof 45
10.47 Addendum to Employment Agreement effective December
12, 2001 by and between Erie Indemnity Company
and Douglas F. Ziegler 46
10.48 Summary of termination benefits provided under the
Employment Agreement effective January 18, 2002 by
and between Erie Indemnity Company and Stephen A.
Milne. 47
11 Statement re computation of per share
earnings 48
13 2001 Annual Report to Shareholders.
Reference is made to the Annual Report
furnished to the Commission, herewith. 49
21 Subsidiaries of Registrant 98
99.1## Report of the Special Committee to the
Board of Directors
- ----------------------------------------
* Such exhibit is incorporated by reference to the like numbered
exhibit in Registrant's Form 10 Registration Statement Number 0-24000
filed with the Securities and Exchange Commission on May 2, 1994.
** Such exhibit is incorporated by reference to the like numbered
exhibit in Registrant's Form 10/A Registration Statement Number
0-24000 filed with the Securities and Exchange Commission on August
3, 1994.
*** Such exhibit is incorporated by reference to the like titled but
renumbered exhibit in Registrant's Form 10 Registration Statement
Number 0-24000 filed with the Securities and Exchange Commission on
May 2, 1994.
**** Such exhibit is incorporated by reference to the like titled exhibit
in the Registrant's Form 10-K annual report for the year ended
December 31, 1995 that was filed with the Commission on March 25,
1996.
***** Such exhibit is incorporated by reference to the like titled exhibit
in the Registrant's Form 10-K/A amended annual report for the year
ended December 31, 1995 that was filed with the Commission on April
25, 1996.
39
****** Such exhibit is incorporated by reference to the like titled exhibit
in the Registrant's Form 10-K annual report for the year ended
December 31, 1996 that was filed with the Commission on March 21,
1997.
# Such exhibit is incorporated by reference to the like titled exhibit
in the Registrant's Form 10-K annual report for the year ended
December 31, 1997 that was filed with the Commission on March 25,
1998.
## Such exhibit is incorporated by reference to the like titled exhibit
in the Registrant's Form 10-K annual report for the year ended
December 31, 1998 that was filed with the Commission on March 30,
1999.
### Such exhibit is incorporated by reference to the like titled exhibit
in the Registrant's Form 10-K annual report for the year ended
December 31, 1999 that was filed with the Commission on March 23,
2000.
& Such exhibit is incorporated by reference to the like titled exhibit
in the Registrant's Form 10-K annual report for the year ended
December 31, 2000 that was filed with the Commission on March 23,
2001.
&& Such exhibit is incorporated by reference to the like titled exhibit
in the Registrant's Form 10-Q quarterly report for the quarter ended
June 30, 2001 that was filed with the Commission on July 17, 2001.
40