Erie Indemnity quarterly profit jumps on higher fees, investment income
Oct 31 (Reuters) -Property and casualty insurer Erie Indemnity ERIE.O reported a 22% jump in its third-quarter profit on Thursday, helped by strong growth in investment income and fees, sending its shares up 2% after the bell.
Hopes of a soft landing for the U.S. economy have kept demand for insurance services intact across various sectors despite higher prices for some policies including auto and property.
The company's management fee revenue from policy issuance and renewal services jumped 18.5% to $769.2 million in the third quarter.
Indemnity's earnings are primarily driven by management fee revenue generated for the services it provides.
Erie, Pennsylvania-based Indemnity's net investment income also rose to $17.3 million in the quarter from $14.6 million a year ago.
Insurers' investment portfolio tends to be heavily weighted towards bonds, which give better returns in a high interest rate environment.
They also allocate a certain portion of their investment portfolio towards equity securities.
A string of encouraging economic data and the Federal Reserve's rate cut in September have further confirmed the resilience of the U.S. economy. That has boosted stock markets and helped companies fetch higher returns on their equity investments.
Indemnity's net income rose to $159.8 million, or $3.06 per share, in the three months ended Sept. 30, compared with $131 million, or $2.51 per share, a year ago.
Indemnity's stock has risen 34% so far this year, compared with the 22% jump in the benchmark S&P 500 index .SPX.
Last month, the company was included in the S&P 500.
Reporting by Arasu Kannagi Basil and Prakhar Srivastava in Bengaluru; Editing by Shailesh Kuber and Maju Samuel
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