Press Release - NOVEMBER 05, 2010

A.M. Best Comments on Ratings of Erie Insurance Group and Erie Family Life Insurance Company


CONTACTS:
 
Kenneth Tappen—P/C
Senior Financial Analyst
(908) 439-2200, ext. 5248
kenneth.tappen@ambest.com

Raj Shah—L/H
Assistant Vice President
(908) 439-2200, ext. 5409
raj.shah@ambest.com

Rachelle Morrow
Senior Manager, Public Relations
(908) 439-2200, ext. 5378
rachelle.morrow@ambest.com

Jim Peavy
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644
james.peavy@ambest.com

FOR IMMEDIATE RELEASE

OLDWICK, N.J. - NOVEMBER 05, 2010
A.M. Best Co. has commented that the financial strength rating (FSR) of A+ (Superior) and issuer credit ratings (ICR) of "aa-" of Erie Insurance Group (Erie) and its members are unchanged following the announcement that Erie Indemnity Company (Erie Indemnity) [NASDAQ: ERIE] has entered into a definitive agreement with Erie Insurance Exchange (the Exchange) for the sale of Erie Indemnity's three wholly owned property/casualty subsidiaries—Erie Insurance Company, Erie Insurance Company of New York (Rochester, NY) and Erie Insurance Property & Casualty Company—to the Exchange for an aggregate purchase price equal to the subsidiaries' GAAP book value as of December 31, 2010.

Additionally, A.M. Best has commented that the FSR of A (Excellent) and ICR of "a" of Erie's life affiliate, Erie Family Life Insurance Company (Erie Family Life), is unchanged following the announcement of Erie Indemnity entering into a definitive agreement for the sale of its 21.6% ownership interest in Erie Family Life to the Exchange for a per share purchase price equal to 95% of Erie Family Life's GAAP book value per share as of March 31, 2011. All companies are domiciled in Erie, PA, except where specified. (See below for a detailed list of the companies.)

The sale of the property/casualty subsidiaries is scheduled to close by December 31, 2010, and the sale of Erie Indemnity's equity interest in Erie Family Life is scheduled to close by March 31, 2011. Both transactions are subject to regulatory approval.

Under the new structure, all property/casualty and life operations will be owned by the Exchange, and Erie Indemnity will continue to function as the management company.

Following the completion of the sale, A.M. Best will withdraw the ICR of "a+" of Erie Indemnity due to it no longer owning any risk-bearing insurance entities.

The FSR of A+ (Superior) and ICRs of "aa-" are unchanged for Erie Insurance Group and its following property/casualty members:

- Erie Insurance Exchange

- Erie Insurance Company

- Erie Insurance Company of New York

- Erie Insurance Property & Casualty Company

- Flagship City Insurance Company


The principal methodology used in determining these ratings is Best's Credit Rating Methodology - Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best's rating process and highlights the different rating criteria employed. Additional key criteria utilized include: "Risk Management and the Rating Process for Insurance Companies"; "Understanding BCAR for Property/Casualty Insurers"; "Rating Members of Insurance Groups"; and "A.M. Best's Ratings & the Treatment of Debt." Methodologies can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers.

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