Item 1. FINANCIAL STATEMENTS

ERIE INDEMNITY COMPANY

STATEMENTS OF OPERATIONS (UNAUDITED)

(dollars in thousands, except per share data)

			Three months ended September 30,												Nine months ended September 30,
			2024						2023						2024						2023
Operating revenue
Management fee revenue - policy issuance and renewal services			$	769,162					$	649,049					$	2,195,734					$	1,840,478
Management fee revenue - administrative services			17,154						16,151						51,139						46,976
Administrative services reimbursement revenue			206,754						187,118						604,349						544,411
Service agreement revenue			6,816						6,620						19,803						19,408
Total operating revenue			999,886						858,938						2,871,025						2,451,273
Operating expenses
Cost of operations - policy issuance and renewal services			613,007						523,349						1,757,531						1,513,690
Cost of operations - administrative services			206,754						187,118						604,349						544,411
Total operating expenses			819,761						710,467						2,361,880						2,058,101
Operating income			180,125						148,471						509,145						393,172
Investment income
Net investment income			17,322						14,642						49,235						30,360
Net realized and unrealized investment gains (losses)			2,925						(2,227)						2,983						(9,246)
Net impairment losses recognized in earnings			(698)						(113)						(3,763)						(1,917)
Total 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
Net income per share
Class A common stock – basic			$	3.43					$	2.81					$	9.63					$	7.20
Class A common stock – diluted			$	3.06					$	2.51					$	8.57					$	6.41
Class B common stock – basic and diluted			$	515					$	422					$	1,444					$	1,079
Weighted average shares outstanding – Basic
Class A common stock			46,189,059						46,189,037						46,189,038						46,188,962
Class B common stock			2,542						2,542						2,542						2,542
Weighted average shares outstanding – Diluted
Class A common stock			52,306,514						52,299,369						52,301,001						52,298,655
Class B common stock			2,542						2,542						2,542						2,542
Dividends declared per share
Class A common stock			$	1.275					$	1.19					$	3.825					$	3.57
Class B common stock			$	191.25					$	178.50					$	573.75					$	535.50

See accompanying notes to Financial Statements. See Note 11, "Accumulated Other Comprehensive Income (Loss)", for amounts reclassified out of accumulated other comprehensive income (loss) into the Statements of Operations.

ERIE INDEMNITY COMPANY

STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(in thousands)

			Three months ended September 30,												Nine months ended September 30,
			2024						2023						2024						2023
Net income			$	159,830					$	131,040					$	448,285					$	335,133
Other comprehensive income (loss), net of tax
Change in unrealized holding gains (losses) on available-for-sale securities			20,227						(5,902)						21,014						2,846
Pension and other postretirement plans			(1,538)						(2,742)						(6,048)						(8,226)
Total other comprehensive income (loss), net of tax			18,689						(8,644)						14,966						(5,380)
Comprehensive income			$	178,519					$	122,396					$	463,251					$	329,753

See accompanying notes to Financial Statements. See Note 11, "Accumulated Other Comprehensive Income (Loss)", for amounts reclassified out of accumulated other comprehensive income (loss) into the Statements of Operations.

ERIE INDEMNITY COMPANY

STATEMENTS OF FINANCIAL POSITION

(dollars in thousands, except per share data)

			September 30,						December 31,
			2024						2023
Assets			(Unaudited)
Current assets:
Cash and cash equivalents (includes restricted cash of $23,547 and $12,542, respectively)			$	221,213					$	144,055
Available-for-sale securities			48,575						82,017
Receivables from Erie Insurance Exchange and affiliates, net			736,973						625,338
Prepaid expenses and other current assets, net			80,141						69,321
Accrued investment income			10,456						9,458
Total current assets			1,097,358						930,189
Available-for-sale securities, net			1,000,282						879,224
Available-for-sale securities lent			8,135						0
Equity securities			85,346						84,253
Fixed assets, net			480,707						442,610
Agent loans, net			79,829						58,434
Defined benefit pension plan			64,172						34,320
Other assets, net			48,318						42,934
Total assets			$	2,864,147					$	2,471,964
Liabilities and shareholders' equity
Current liabilities:
Commissions payable			$	426,341					$	353,709
Agent incentive compensation			60,073						68,077
Accounts payable and accrued liabilities			194,649						175,622
Dividends payable			59,377						59,377
Contract liability			42,754						41,210
Deferred executive compensation			15,836						10,982
Securities lending payable			7,905						0
Total current liabilities			806,935						708,977
Defined benefit pension plan			27,757						26,260
Contract liability			21,220						19,910
Deferred executive compensation			24,010						20,936
Deferred income taxes, net			12,777						11,481
Other long-term liabilities			23,493						21,565
Total liabilities			916,192						809,129
Shareholders’ equity
Class A common stock, stated value $0.0292 per share; 74,996,930 shares authorized; 68,299,200 shares issued; 46,189,068 shares outstanding			1,992						1,992
Class B common stock, convertible at a rate of 2,400 Class A shares for one Class B share, stated value $70 per share; 3,070 shares authorized; 2,542 shares issued and outstanding			178						178
Additional paid-in-capital			16,466						16,466
Accumulated other comprehensive income (loss)			1,566						(13,400)
Retained earnings			3,073,843						2,803,689
Total contributed capital and retained earnings			3,094,045						2,808,925
Treasury stock, at cost; 22,110,132 shares held			(1,168,719)						(1,169,165)
Deferred compensation			22,629						23,075
Total shareholders’ equity			1,947,955						1,662,835
Total liabilities and shareholders’ equity			$	2,864,147					$	2,471,964

See accompanying notes to Financial Statements.

ERIE INDEMNITY COMPANY

STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)

Three and nine months ended September 30, 2024

(dollars in thousands, except per share data)

			Class A common stock			Class B common stock			Additional paid-in-capital			Accumulated other comprehensive (loss) income			Retained earnings			Treasury stock			Deferred compensation			Total shareholders' equity
Balance, December 31, 2023			$	1,992		$	178		$	16,466		$	(13,400)		$	2,803,689		$	(1,169,165)		$	23,075		$	1,662,835
Net income															124,552									124,552
Other comprehensive loss												(1,830)												(1,830)
Dividends declared:
Class A $1.275 per share															(58,891)									(58,891)
Class B $191.25 per share															(486)									(486)
Net purchase of treasury stock (1)									0									0						0
Deferred compensation																		(861)			861			0
Rabbi trust distribution (2)																		709			(709)			0
Balance, March 31, 2024			$	1,992		$	178		$	16,466		$	(15,230)		$	2,868,864		$	(1,169,317)		$	23,227		$	1,726,180
Net income															163,903									163,903
Other comprehensive loss												(1,893)												(1,893)
Dividends declared:
Class A $1.275 per share															(58,891)									(58,891)
Class B $191.25 per share															(486)									(486)
Net purchase of treasury stock (1)									0									0						0
Deferred compensation																		(518)			518			0
Rabbi trust distribution (2)																		1,538			(1,538)			0
Balance, June 30, 2024			$	1,992		$	178		$	16,466		$	(17,123)		$	2,973,390		$	(1,168,297)		$	22,207		$	1,828,813
Net income															159,830									159,830
Other comprehensive income												18,689												18,689
Dividends declared:
Class A $1.275 per share															(58,891)									(58,891)
Class B $191.25 per share															(486)									(486)
Net purchase of treasury stock (1)									0									0						0
Deferred compensation																		(422)			422			0
Balance, September 30, 2024			$	1,992		$	178		$	16,466		$	1,566		$	3,073,843		$	(1,168,719)		$	22,629		$	1,947,955

*(1)*Net purchase of treasury stock in 2024 includes the repurchase of our Class A common stock in the open market that were subsequently distributed to satisfy stock-based compensation awards.

*(2)*Distributions of our Class A shares were made from the rabbi trust to five incentive compensation deferral plan participants in 2024.

ERIE INDEMNITY COMPANY

STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)

Three and nine months ended September 30, 2023

(dollars in thousands, except per share data)

			Class A common stock			Class B common stock			Additional paid-in-capital			Accumulated other comprehensive (loss) income			Retained earnings			Treasury stock			Deferred compensation			Total shareholders' equity
Balance, December 31, 2022			$	1,992		$	178		$	16,481		$	(7,414)		$	2,583,261		$	(1,168,949)		$	22,859		$	1,448,408
Net income															86,241									86,241
Other comprehensive income												7,752												7,752
Dividends declared:
Class A $1.19 per share															(54,965)									(54,965)
Class B $178.50 per share															(454)									(454)
Net purchase of treasury stock (1)									(15)									0						(15)
Deferred compensation																		(822)			822			0
Rabbi trust distribution (2)																		416			(416)			0
Balance, March 31, 2023			$	1,992		$	178		$	16,466		$	338		$	2,614,083		$	(1,169,355)		$	23,265		$	1,486,967
Net income															117,852									117,852
Other comprehensive loss												(4,488)												(4,488)
Dividends declared:
Class A $1.19 per share															(54,965)									(54,965)
Class B $178.50 per share															(454)									(454)
Net purchase of treasury stock (1)									0									0						0
Deferred compensation																		(621)			621			0
Rabbi trust distribution (2)																		1,596			(1,596)			0
Balance, June 30, 2023			$	1,992		$	178		$	16,466		$	(4,150)		$	2,676,516		$	(1,168,380)		$	22,290		$	1,544,912
Net income															131,040									131,040
Other comprehensive loss												(8,644)												(8,644)
Dividends declared:
Class A $1.19 per share															(54,965)									(54,965)
Class B $178.50 per share															(454)									(454)
Net purchase of treasury stock (1)									0									0						0
Deferred compensation																		(381)			381			0
Balance, September 30, 2023			$	1,992		$	178		$	16,466		$	(12,794)		$	2,752,137		$	(1,168,761)		$	22,671		$	1,611,889

*(1)*Net purchase of treasury stock in 2023 includes the repurchase of our Class A common stock in the open market that were subsequently distributed to satisfy stock-based compensation awards.

*(2)*Distributions of our Class A shares were made from the rabbi trust to five incentive compensation deferral plan participants in 2023.

See accompanying notes to Financial Statements.

ERIE INDEMNITY COMPANY

STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

						Nine months ended September 30,
						2024						2023
Cash flows from operating activities
Management fee received						$	2,162,259					$	1,799,681
Administrative services reimbursements received						557,361						538,943
Service agreement revenue received						19,804						19,367
Net investment income received						49,047						42,579
Commissions paid to agents						(1,067,993)						(889,510)
Incentive compensation paid to agents						(88,299)						(112,968)
Salaries and wages paid						(189,088)						(178,176)
Pension contribution and employee benefits paid						(90,217)						(150,992)
General operating expenses paid						(229,675)						(226,949)
Administrative services expenses paid						(581,527)						(540,834)
Income taxes paid						(123,881)						(68,372)
Net cash provided by operating activities						417,791						232,769
Cash flows from investing activities
Purchase of investments:
Available-for-sale securities						(373,381)						(206,616)
Equity securities						(25,665)						(26,195)
Other investments						(7,000)						(7)
Proceeds from investments:
Available-for-sale securities sales						156,357						126,361
Available-for-sale securities maturities/calls						152,174						55,772
Equity securities						29,953						14,919
Other investments						0						853
Purchase of fixed assets						(78,202)						(72,101)
Loans to agents and others						(32,317)						(5,473)
Collections on agent loans						7,675						6,757
Net cash used in investing activities						(170,406)						(105,730)
Cash flows from financing activities
Dividends paid to shareholders						(178,132)						(166,256)
Net changes in cash collateral for securities lent						7,905						—
Net cash used in financing activities						(170,227)						(166,256)
Net increase (decrease) in cash, cash equivalents and restricted cash						77,158						(39,217)
Cash, cash equivalents and restricted cash beginning of period						144,055						142,090
Cash, cash equivalents and restricted cash end of period						$	221,213					$	102,873
Supplemental disclosure of noncash transactions
Liability incurred to purchase fixed assets						$	10,792					$	—
Operating lease assets obtained in exchange for lease liabilities						$	7,106					$	7,674

See accompanying notes to Financial Statements.

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Note 1. Nature of Operations

Erie Indemnity Company ("Indemnity", "we", "us", "our") is a publicly held Pennsylvania business corporation that has since its incorporation in 1925 served as the attorney-in-fact for the subscribers (policyholders) at the Erie Insurance Exchange ("Exchange"). The Exchange, which also commenced business in 1925, is a Pennsylvania-domiciled reciprocal insurer that writes property and casualty insurance.

Our primary function as attorney-in-fact is to perform policy issuance and renewal services on behalf of the subscribers at the Exchange. We also act as attorney-in-fact on behalf of the subscribers at the Exchange with respect to all claims handling and investment management services, as well as the service provider for all claims handling, life insurance and investment management services for the Exchange's insurance subsidiaries, collectively referred to as "administrative services". Acting as attorney-in-fact in these two capacities is done in accordance with a subscriber's agreement (a limited power of attorney) executed individually by each subscriber (policyholder), which appoints Indemnity as each subscriber's attorney-in-fact to transact certain business on their behalf. In accordance with the subscriber's agreement for acting as attorney-in-fact in these two capacities, we retain a management fee calculated as a percentage of the direct and affiliated assumed premiums written by the Exchange.

The policy issuance and renewal services we provide on behalf of the subscribers at the Exchange are related to the sales, underwriting and issuance of policies. The sales related services we provide include agent compensation and certain sales and advertising support services. Agent compensation includes scheduled commissions to agents based upon premiums written as well as incentive compensation, which is earned by achieving targeted measures. The underwriting services we provide include underwriting and policy processing. The remaining services we provide include customer service and administrative support. We also provide information technology services that support all the functions listed above. Included in these expenses are allocations of costs for departments that support these policy issuance and renewal functions.

Consistent with its legal structure as a reciprocal insurer, the Exchange does not have any employees or officers. Therefore, it enters into contractual relationships by and through the subscribers' attorney-in-fact. Indemnity serves as the attorney-in-fact on behalf of the subscribers at the Exchange with respect to its administrative services as enumerated in the subscriber's agreement. The Exchange's insurance subsidiaries also utilize Indemnity for these services in accordance with the service agreements between each of the subsidiaries and Indemnity. Claims handling services include costs incurred in the claims process, including the adjustment, investigation, defense, recording and payment functions. Life insurance management services include costs incurred in the management and processing of life insurance business. Investment management services are related to investment trading activity, accounting and all other functions attributable to the investment of funds. Included in these expenses are allocations of costs for departments that support these administrative functions. The subscriber's agreement and service agreements provide for reimbursement of amounts incurred for these services to Indemnity. Reimbursements are settled at cost. State insurance regulations require that intercompany service agreements and any material amendments be approved in advance by the state insurance department.

Our results of operations are tied to the growth and financial condition of the Exchange. If any events occurred that impaired the Exchange’s ability to grow or sustain its financial condition, including but not limited to reduced financial strength ratings, disruption in the independent agency relationships, significant catastrophe losses or products not meeting customer demands, the Exchange could find it more difficult to retain its existing business and attract new business. A decline in the business of the Exchange almost certainly could have as a consequence a decline in the total premiums paid and a correspondingly adverse effect on the amount of the management fees we receive. We also have an exposure to a concentration of credit risk related to the unsecured receivables due from the Exchange for net management fee and other reimbursements. See Note 12, "Concentrations of Credit Risk".

Note 2. Significant Accounting Policies

Basis of presentation

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. For further information, refer to the financial statements and footnotes included in our Form 10-K for the year ended December 31, 2023 as filed with the Securities and Exchange Commission ("SEC") on February 26, 2024.

Use of estimates

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Recently issued accounting standards and disclosure rules

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures", which requires entities to disclose significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported period of profit or loss, and requires entities with a single reporting segment to provide all disclosures required by Topic 280. The amendments in this ASU are required to be adopted for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The update is required to be applied retrospectively to prior periods presented in the financial statements, based on the significant segment expense categories identified and disclosed in the period of adoption. This will have no impact on our financial statements. We are currently evaluating the impact of adoption on our disclosures.

In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures", which requires entities to disclose specific categories in an effective tax rate reconciliation, additional information for reconciling items that meet a quantitative threshold, and certain information about income taxes paid. The amendments in this ASU are required to be adopted for fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments can be applied on either a prospective or retrospective basis. This will have no impact on our financial statements. We are currently evaluating the impact of adoption on our disclosures.

In March 2024, the SEC adopted final rules under SEC Release No. 33-11275, "The Enhancement and Standardization of Climate-Related Disclosures for Investors", requiring registrants to disclose certain climate-related information in registration statements and annual reports. The final rules include disclosure of climate-related risks that are reasonably likely to have a material impact on a registrant’s business, results of operations or financial condition. Disclosures related to significant effects of severe weather events and other natural conditions and amounts related to carbon offsets and renewable energy credits or certificates are required in the financial statements in certain circumstances. Disclosure requirements will phase in for fiscal years beginning in 2025 and be applied prospectively upon adoption. On April 4, 2024, the SEC determined to voluntarily stay the final rules pending ongoing litigation. We are currently evaluating the impact of adoption on our disclosures.

Other assets

Other assets primarily include limited partnership investments, other loans receivable, held-to-maturity securities, operating lease assets and other long-term prepaid assets. Limited partnership investments are recorded using the equity method of accounting. Other loans receivable include loans issued to fund real estate development projects supporting revitalization efforts in our community. The loans are carried at unpaid principal balance, including any paid-in-kind interest capitalized as additional principal, if applicable, net of a current expected credit loss allowance. Any current portion of other loans receivable is recorded in prepaid expenses and other current assets. Held-to-maturity securities are carried at amortized cost, net of a current expected credit loss allowance. The allowances are calculated using the estimated value of, and priority rights to, collateral in the event of default or external loss rates based on comparable losses, and considers current market conditions and forecasted information. Changes to the allowances are recognized in earnings as adjustments to net impairment recoveries (losses) or other income (expense) depending on the nature of the asset. Interest on other loans receivable and held-to-maturity securities is recorded primarily in investment income as earned.

Securities lending

Beginning in May 2024 we entered into securities lending transactions, managed by a third-party banking institution, whereby securities are loaned to unaffiliated financial institutions for short periods of time. The securities lending activity is accounted for as a secured borrowing and therefore the securities loaned, primarily available-for-sale securities, are carried as invested assets on our Statement of Financial Position, while the obligation to return the cash collateral is recorded as a current liability. The cash collateral received at the inception of the loan is reinvested and the related income is recognized in net investment income. Noncash collateral is not recorded in the Statements of Financial Position, as we do not have the right to sell, repledge, or otherwise reinvest the noncash collateral.

The collateral is required to equal a minimum of 102% of the estimated fair value of the securities loaned, and maintained at a level greater than or equal to 100% for the duration of the loan. We monitor the ratio of the collateral held to the estimated fair value of the securities loaned on a daily basis and obtain additional collateral as necessary. A securities lending transaction may be terminated at any time by the borrower or the lender. If terminated, we would repay our securities lending obligations from the sale of reinvested collateral or the proceeds of sales from our investment portfolio, which includes liquid securities.

Note 3. Revenue

The majority of our revenue is derived from the subscriber’s agreement between us and the subscribers (policyholders) at the Exchange. In accordance with the subscriber’s agreement, we retain a management fee calculated as a percentage, not to exceed 25%, of all direct and affiliated assumed written premiums of the Exchange. We allocate a portion of our management fee revenue, currently 25% of the direct and affiliated assumed written premiums of the Exchange, between the two performance obligations we have under the subscriber’s agreement. The first performance obligation is to provide policy issuance and renewal services to the subscribers (policyholders) at the Exchange, and the second is to act as attorney-in-fact on behalf of the subscribers at the Exchange, as well as the service provider for the Exchange's insurance subsidiaries, with respect to all administrative services.

The transaction price, including management fee revenue and administrative services reimbursement revenue, includes variable consideration and is allocated based on the estimated standalone selling prices developed using industry information and other available information for similar services. A constraining estimate of variable consideration exists related to the potential for management fees to be returned if a policy were to be cancelled mid-term. Management fees are returned to the Exchange when policyholders cancel their insurance coverage mid-term and premiums are refunded to them. The constraining estimate is determined using the expected value method, based on both historical and current information. The estimated transaction price, as reduced by the constraint, reflects consideration expected for performance of our services. We update the transaction price and the related allocation at least annually based upon the most recent information available or more frequently if there have been significant changes in any components considered in the transaction price.

The first performance obligation is to provide policy issuance and renewal services that result in executed insurance policies between the Exchange or one of its insurance subsidiaries and the subscriber (policyholder). The subscriber (policyholder) receives economic benefits when substantially all the policy issuance or renewal services are complete and an insurance policy is issued or renewed by the Exchange or one of its insurance subsidiaries. It is at the time of policy issuance or renewal that the allocated portion of revenue is recognized.

Consistent with its legal structure as a reciprocal insurer, the Exchange does not have any employees or officers. Therefore, it enters into contractual relationships by and through the subscribers' attorney-in-fact. Indemnity serves as the attorney-in-fact on behalf of the subscribers at the Exchange with respect to its administrative services as enumerated in the subscriber's agreement. The Exchange's insurance subsidiaries also utilize Indemnity for these services in accordance with the service agreements between each of the subsidiaries and Indemnity. Collectively, these services represent a second performance obligation under the subscriber’s agreement and the service agreements. The revenue allocated to this performance obligation is recognized over a four-year period representing the time over which these services are provided. The portion of revenue not yet earned is recorded as a contract liability in the Statements of Financial Position. During the three and nine months ended September 30, 2024, we recognized revenue of $8.7 million and $35.6 million, respectively, that was included in the contract liability balance as of December 31, 2023. During the three and nine months ended September 30, 2023, we recognized revenue of $7.7 million and $31.5 million, respectively, that was included in the contract liability balance as of December 31, 2022. The administrative services expenses we incur and the related reimbursements we receive are recorded gross in the Statements of Operations.

Indemnity records a receivable from the Exchange for management fee revenue when the premium is written or assumed from affiliates by the Exchange. Indemnity collects the management fee from the Exchange when the Exchange collects the premiums from the subscribers (policyholders). As the Exchange issues policies with annual terms only, cash collections generally occur within one year.

The following table disaggregates revenue by our two performance obligations:

			Three months ended September 30,												Nine months ended September 30,
(in thousands)			2024			2023												2024			2023
Management fee revenue - policy issuance and renewal services			$	769,162		$	649,049											$	2,195,734		$	1,840,478
Management fee revenue - administrative services			17,154			16,151												51,139			46,976
Administrative services reimbursement revenue			206,754			187,118												604,349			544,411
Total revenue from administrative services			$	223,908		$	203,269											$	655,488		$	591,387

Note 4. Earnings Per Share

Class A and Class B basic earnings per share and Class B diluted earnings per share are calculated under the two-class method. The two-class method allocates earnings to each class of stock based upon its dividend rights. Class B shares are convertible into Class A shares at a conversion ratio of 2,400 to 1. See Note 10, "Capital Stock".

Class A diluted earnings per share is calculated under the if-converted method, which reflects the conversion of Class B shares to Class A shares. Diluted earnings per share calculations include the dilutive effect of assumed issuance of stock-based awards under compensation plans that have the option to be paid in stock using the treasury stock method.

A reconciliation of the numerators and denominators used in the basic and diluted per-share computations is presented as follows for each class of common stock:

						Three months ended September 30,
						2024																		2023
(dollars in thousands, except per share data)						Allocated net income (numerator)						Weighted shares (denominator)						Per-share amount						Allocated net income (numerator)						Weighted shares (denominator)						Per-share amount
Class A – Basic EPS:
Income available to Class A stockholders						$	158,521					46,189,059						$	3.43					$	129,967					46,189,037						$	2.81
Dilutive effect of stock-based awards						0						16,655						—						0						9,532						—
Assumed conversion of Class B shares						1,309						6,100,800						—						1,073						6,100,800						—
Class A – Diluted EPS:
Income available to Class A stockholders on Class A equivalent shares						$	159,830					52,306,514						$	3.06					$	131,040					52,299,369						$	2.51
Class B – Basic EPS:
Income available to Class B stockholders						$	1,309					2,542						$	515					$	1,073					2,542						$	422
Class B – Diluted EPS:
Income available to Class B stockholders						$	1,309					2,542						$	515					$	1,073					2,542						$	422
						Nine months ended September 30,
						2024																		2023
(dollars in thousands, except per share data)						Allocated net income (numerator)						Weighted shares (denominator)						Per-share amount						Allocated net income (numerator)						Weighted shares (denominator)						Per-share amount
Class A – Basic EPS:
Income available to Class A stockholders						$	444,614					46,189,038						$	9.63					$	332,389					46,188,962						$	7.20
Dilutive effect of stock-based awards						0						11,163						—						0						8,893						—
Assumed conversion of Class B shares						3,671						6,100,800						—						2,744						6,100,800						—
Class A – Diluted EPS:
Income available to Class A stockholders on Class A equivalent shares						$	448,285					52,301,001						$	8.57					$	335,133					52,298,655						$	6.41
Class B – Basic EPS:
Income available to Class B stockholders						$	3,671					2,542						$	1,444					$	2,744					2,542						$	1,079
Class B – Diluted EPS:
Income available to Class B stockholders						$	3,670					2,542						$	1,444					$	2,744					2,542						$	1,079

Note 5. Fair Value

Financial instruments carried at fair value

Our available-for-sale and equity securities are recorded at fair value, which is the price that would be received to sell the asset in an orderly transaction between willing market participants as of the measurement date.

Valuation techniques used to derive the fair value of our available-for-sale and equity securities are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources. Unobservable inputs reflect our own assumptions regarding fair market value for these securities. Financial instruments are categorized based upon the following characteristics or inputs to the valuation techniques:

• Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date.

• Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

• Level 3 – Unobservable inputs for the asset or liability.

Estimates of fair values for our investment portfolio are obtained primarily from a nationally recognized pricing service. Our Level 1 securities are valued using an exchange traded price provided by the pricing service. Pricing service valuations for Level 2 securities include multiple verifiable, observable inputs including benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data. Pricing service valuations for Level 3 securities are based upon proprietary models and are used when observable inputs are not available or in illiquid markets.

Although virtually all of our prices are obtained from third party sources, we also perform internal pricing reviews, including evaluating the methodology and inputs used to ensure that we determine the proper classification level of the financial instrument and reviewing securities with price changes that vary significantly from current market conditions or independent price sources. Price variances are investigated and corroborated by market data and transaction volumes. We have reviewed the pricing methodologies of our pricing service as well as other observable inputs and believe that the prices adequately consider market activity in determining fair value.

In limited circumstances we adjust the price received from the pricing service when, in our judgment, a better reflection of fair value is available based upon corroborating information and our knowledge and monitoring of market conditions such as a disparity in price of comparable securities and/or non-binding broker quotes. In other circumstances, certain securities are internally priced because prices are not provided by the pricing service.

When a price from the pricing service is not available, values are determined by obtaining broker/dealer quotes and/or market comparables. When available, we obtain multiple quotes for the same security. The ultimate value for these securities is determined based upon our best estimate of fair value using corroborating market information. As of September 30, 2024, nearly all of our available-for-sale and equity securities were priced using a third party pricing service.

The following tables present our fair value measurements on a recurring basis by asset class and level of input as of:

						September 30, 2024
(in thousands)						Total						Level 1						Level 2						Level 3
Available-for-sale securities:
Corporate debt securities (1)						$	648,513					$	0					$	644,872					$	3,641
Collateralized debt obligations						110,272						0						110,272						0
Commercial mortgage-backed securities						137,355						0						121,595						15,760
Residential mortgage-backed securities						135,175						0						135,175						0
Other debt securities						25,677						0						25,677						0
Total available-for-sale securities						1,056,992						0						1,037,591						19,401
Equity securities:
Financial services sector						71,759						1,025						67,249						3,485
Utilities sector						5,705						0						5,705						0
Energy sector						1,571						0						1,571						0
Consumer sector						4,337						57						2,780						1,500
Technology sector						1,974						0						0						1,974
Total equity securities						85,346						1,082						77,305						6,959
Total						$	1,142,338					$	1,082					$	1,114,896					$	26,360

*(1)*This includes $8.1 million of securities lent under a securities lending agreement.

						December 31, 2023
(in thousands)						Total						Level 1						Level 2						Level 3
Available-for-sale securities:
Corporate debt securities						$	588,688					$	0					$	584,182					$	4,506
Collateralized debt obligations						112,468						0						112,468						0
Commercial mortgage-backed securities						102,720						0						91,726						10,994
Residential mortgage-backed securities						140,055						0						138,521						1,534
Other debt securities						17,310						0						17,310						0
Total available-for-sale securities						961,241						0						944,207						17,034
Equity securities:
Financial services sector						69,900						816						63,750						5,334
Utilities sector						5,810						0						5,810						0
Energy sector						3,901						0						3,901						0
Consumer sector						3,915						0						2,415						1,500
Technology sector						500						0						0						500
Industrial sector						180						0						180						0
Communications sector						47						47						0						0
Total equity securities						84,253						863						76,056						7,334
Total						$	1,045,494					$	863					$	1,020,263					$	24,368

We review the fair value hierarchy classifications each reporting period. Transfers between hierarchy levels may occur due to changes in available market observable inputs.

Level 3 Assets – 2024 Quarterly Change:

(in thousands)						Beginning balance at June 30, 2024						Included in earnings(1)						Included in other comprehensive income (loss)						Purchases						Sales						Transfers into Level 3(2)						Transfers out of Level 3(2)						Ending balance at September 30, 2024
Available-for-sale securities:
Corporate debt securities						$	8,543					$	(166)					$	45					$	865					$	(392)					$	1,142					$	(6,396)					$	3,641
Commercial mortgage-backed securities						25,220						(408)						670						1,102						(28)						1,312						(12,108)						15,760
Total available-for-sale securities						33,763						(574)						715						1,967						(420)						2,454						(18,504)						19,401
Equity securities						8,498						517						—						0						0						0						(2,056)						6,959
Total Level 3 securities						$	42,261					$	(57)					$	715					$	1,967					$	(420)					$	2,454					$	(20,560)					$	26,360

Level 3 Assets – 2024 Year-to-Date Change:

(in thousands)						Beginning balance at December 31, 2023						Included in earnings(1)						Included in other comprehensive income (loss)						Purchases						Sales						Transfers into Level 3(2)						Transfers out of Level 3(2)						Ending balance at September 30, 2024
Available-for-sale securities:
Corporate debt securities						$	4,506					$	(141)					$	66					$	5,704					$	(1,215)					$	4,966					$	(10,245)					$	3,641
Commercial mortgage-backed securities						10,994						(1,077)						889						2,907						(33)						18,960						(16,880)						15,760
Residential mortgage- backed securities						1,534						(5)						(24)						0						(40)						0						(1,465)						0
Total available-for-sale securities						17,034						(1,223)						931						8,611						(1,288)						23,926						(28,590)						19,401
Equity securities						7,334						664						—						2,019						(84)						544						(3,518)						6,959
Total Level 3 securities						$	24,368					$	(559)					$	931					$	10,630					$	(1,372)					$	24,470					$	(32,108)					$	26,360

Level 3 Assets – 2023 Quarterly Change:

(in thousands)						Beginning balance at June 30, 2023						Included in earnings(1)						Included in other comprehensive income (loss)						Purchases						Sales						Transfers into Level 3(2)						Transfers out of Level 3(2)						Ending balance at September 30, 2023
Available-for-sale securities:
Corporate debt securities						$	5,123					$	10					$	123					$	1,661					$	(511)					$	730					$	(3,031)					$	4,105
Commercial mortgage-backed securities						6,533						(182)						(56)						0						(366)						1,478						0						7,407
Residential mortgage- backed securities						12						0						0						0						(7)						0						0						5
Total available-for-sale securities						11,668						(172)						67						1,661						(884)						2,208						(3,031)						11,517
Equity securities						4,730						33						—						1,000						0						0						(1,807)						3,956
Total Level 3 securities						$	16,398					$	(139)					$	67					$	2,661					$	(884)					$	2,208					$	(4,838)					$	15,473

Level 3 Assets – 2023 Year-to-Date Change:

(in thousands)						Beginning balance at December 31, 2022						Included in earnings(1)						Included in other comprehensive income (loss)						Purchases						Sales						Transfers into Level 3(2)						Transfers out of Level 3(2)						Ending balance at September 30, 2023
Available-for-sale securities:
Corporate debt securities						$	3,686					$	(4)					$	245					$	3,193					$	(1,256)					$	3,883					$	(5,642)					$	4,105
Commercial mortgage-backed securities						10,910						(542)						44						1,455						(551)						1,944						(5,853)						7,407
Residential mortgage-backed securities						4,184						(5)						96						0						(115)						33						(4,188)						5
Total available-for-sale securities						18,780						(551)						385						4,648						(1,922)						5,860						(15,683)						11,517
Equity securities						3,779						26						—						1,958						0						0						(1,807)						3,956
Total Level 3 securities						$	22,559					$	(525)					$	385					$	6,606					$	(1,922)					$	5,860					$	(17,490)					$	15,473

*(1)*These amounts are reported as net investment income and net realized and unrealized investment gains (losses) for each of the periods presented above.

*(2)*Transfers into and/or (out) of Level 3 are primarily attributable to the availability of market observable information and the re-evaluation of the observability of pricing inputs.

Financial instruments not carried at fair value

The following table presents the carrying values and fair values of financial instruments categorized as Level 3 in the fair value hierarchy that are recorded at carrying value as of:

						September 30, 2024												December 31, 2023
(in thousands)						Carrying value						Fair value						Carrying value						Fair value
Agent loans, net						$	91,636					$	87,797					$	67,787					$	66,445
Other loans receivable, net (1)						10,938						10,938						10,713						10,713
Held-to-maturity securities, net (2)						4,833						4,833						—						—

(1) The current and long-term portions of other loans receivable are included in the line items "Prepaid expenses and other current assets, net" and "Other assets, net", respectively, in the Statements of Financial Position.

(2) Held-to-maturity securities are included in the line item "Other assets, net" in the Statement of Financial Position.

Note 6. Investments

Fixed maturity securities

See Note 5, "Fair Value" for additional fair value disclosures. The following tables summarize the amortized cost and estimated fair value, net of credit loss allowance, of our fixed maturity securities as of:

						September 30, 2024
(in thousands)						Amortized cost						Gross unrealized gains						Gross unrealized losses						Estimated fair value
Available-for-sale securities:
Corporate debt securities (1)						$	643,288					$	11,730					$	6,505					$	648,513
Collateralized debt obligations						110,641						247						616						110,272
Commercial mortgage-backed securities						136,370						3,555						2,570						137,355
Residential mortgage-backed securities						145,864						292						10,981						135,175
Other debt securities						25,542						573						438						25,677
Total available-for-sale securities, net						1,061,705						16,397						21,110						1,056,992
Held-to-maturity securities - states & political subdivisions						4,833						0						0						4,833
Total fixed maturity securities, net						$	1,066,538					$	16,397					$	21,110					$	1,061,825

*(1)*This includes an estimated fair value of $8.1 million of securities lent under a securities lending agreement.

						December 31, 2023
(in thousands)						Amortized cost						Gross unrealized gains						Gross unrealized losses						Estimated fair value
Available-for-sale securities:
Corporate debt securities						$	600,639					$	4,594					$	16,545					$	588,688
Collateralized debt obligations						114,400						156						2,088						112,468
Commercial mortgage-backed securities						106,019						1,410						4,709						102,720
Residential mortgage-backed securities						153,633						69						13,647						140,055
Other debt securities						17,862						136						688						17,310
Total available-for-sale securities, net						$	992,553					$	6,365					$	37,677					$	961,241

The amortized cost and estimated fair value of available-for-sale and held-to-maturity securities at September 30, 2024 are shown below by remaining contractual term to maturity. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

						September 30, 2024
						Amortized						Estimated
(in thousands)						cost						fair value
Available-for-sale securities:
Due in one year or less						$	49,077					$	48,447
Due after one year through five years						453,677						456,863
Due after five years through ten years						186,695						188,732
Due after ten years						372,256						362,950
Total available-for-sale securities, net (1) (2)						1,061,705						1,056,992
Held-to-maturity securities - due after ten years						4,833						4,833
Total fixed maturity securities, net						$	1,066,538					$	1,061,825

*(1)*The contractual maturities of our available-for-sale securities are included in the table. However, given our intent to sell certain impaired securities, these securities are classified as current assets in our Statement of Financial Position at September 30, 2024.

*(2)*This includes an estimated fair value of $8.1 million of securities lent under a securities lending agreement.

The below securities have been evaluated for credit impairment using criteria described within Note 2, "Significant Accounting Policies, of Notes to Financial Statements" included in our Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the SEC on February 26, 2024. The gross unrealized losses are primarily attributable to changes in interest rates and are not deemed to be credit-related. We do not have the intent to sell these securities and it is more likely than not that we would not be required to sell these securities before the anticipated recovery of the amortized cost basis.

The following tables present available-for-sale securities based on length of time in a gross unrealized loss position as of:

						September 30, 2024
						Less than 12 months												12 months or longer												Total
(dollars in thousands)						Fair value						Unrealized losses						Fair value						Unrealized losses						Fair value						Unrealized losses						No. of holdings
Corporate debt securities						$	56,346					$	377					$	170,974					$	6,128					$	227,320					$	6,505					496
Collateralized debt obligations						39,689						57						19,694						559						59,383						616						102
Commercial mortgage-backed securities						6,367						48						25,992						2,522						32,359						2,570						85
Residential mortgage-backed securities						18,780						82						97,271						10,899						116,051						10,981						152
Other debt securities						1,439						14						5,473						424						6,912						438						29
Total available-for-sale securities						$	122,621					$	578					$	319,404					$	20,532					$	442,025					$	21,110					864
Quality breakdown of available-for-sale securities:
Investment grade						$	100,964					$	248					$	288,847					$	18,369					$	389,811					$	18,617					486
Non-investment grade						21,657						330						30,557						2,163						52,214						2,493						378
Total available-for-sale securities						$	122,621					$	578					$	319,404					$	20,532					$	442,025					$	21,110					864

						December 31, 2023
						Less than 12 months												12 months or longer												Total
(dollars in thousands)						Fair value						Unrealized losses						Fair value						Unrealized losses						Fair value						Unrealized losses						No. of holdings
Corporate debt securities						$	50,853					$	546					$	338,322					$	15,999					$	389,175					$	16,545					590
Collateralized debt obligations						3,911						15						87,005						2,073						90,916						2,088						142
Commercial mortgage-backed securities						9,148						157						30,145						4,552						39,293						4,709						108
Residential mortgage-backed securities						30,271						297						101,761						13,350						132,032						13,647						164
Other debt securities						2,084						62						7,475						626						9,559						688						32
Total available-for-sale securities						$	96,267					$	1,077					$	564,708					$	36,600					$	660,975					$	37,677					1,036
Quality breakdown of available-for-sale securities:
Investment grade						$	87,774					$	807					$	517,090					$	32,511					$	604,864					$	33,318					651
Non-investment grade						8,493						270						47,618						4,089						56,111						4,359						385
Total available-for-sale securities						$	96,267					$	1,077					$	564,708					$	36,600					$	660,975					$	37,677					1,036

Credit loss allowances

The following tables present a roll-forward of the allowances for credit losses on fixed maturity securities and financing receivables:

						Three months ended September 30, 2024
(in thousands)						Available-for-sale securities						Held-to-maturity securities						Other loans receivable						Agent loans
Balance, beginning of period						$	503					$	2,167					$	11,438					$	957
Provision and recoveries						158						0						474						354
Sales/collections and write-offs						(231)						0						0						0
Balance, end of period						$	430					$	2,167					$	11,912					$	1,311

						Nine months ended September 30, 2024
(in thousands)						Available-for-sale securities						Held-to-maturity securities						Other loans receivable						Agent loans
Balance, beginning of period						$	597					$	0					$	11,081					$	957
Provision and recoveries						401						2,167						831						354
Sales/collections and write-offs						(568)						0						0						0
Balance, end of period						$	430					$	2,167					$	11,912					$	1,311

						Three months ended September 30, 2023
(in thousands)						Available-for-sale securities						Held-to-maturity securities						Other loans receivable						Agent loans
Balance, beginning of period						$	370					$	—					$	3,736					$	957
Provision and recoveries						55						—						2						0
Sales/collections and write-offs						(72)						—						0						0
Balance, end of period						$	353					$	—					$	3,738					$	957

						Nine months ended September 30, 2023
(in thousands)						Available-for-sale securities						Held-to-maturity securities						Other loans receivable						Agent loans
Balance, beginning of period						$	249					$	—					$	3,775					$	957
Provision and recoveries						278						—						61						0
Sales/collections and write-offs						(174)						—						(98)						0
Balance, end of period						$	353					$	—					$	3,738					$	957

Net investment income

Investment income (loss), net of expenses, was generated from the following portfolios:

						Three months ended September 30,												Nine months ended September 30,
(in thousands)						2024						2023						2024						2023
Available-for-sale securities						$	12,891					$	11,037					$	36,611					$	31,404
Equity securities						1,119						1,161						3,536						3,260
Limited partnerships (1)						(127)						(13)						134						(10,725)
Cash equivalents and other						4,010						2,687						10,347						6,714
Total investment income						17,893						14,872						50,628						30,653
Less: investment expenses						571						230						1,393						293
Net investment income						$	17,322					$	14,642					$	49,235					$	30,360

*(1)*Limited partnership (losses) income include both realized gains (losses) and unrealized valuation changes. Our limited partnership investments are included in the line item "Other assets" in the Statements of Financial Position. We have made no new significant limited partnership commitments since 2006, and the balance of limited partnership investments is expected to decline over time as additional distributions are received.

Net realized and unrealized investment gains (losses)

Realized and unrealized gains (losses) on investments were as follows:

						Three months ended September 30,												Nine months ended September 30,
(in thousands)						2024						2023						2024						2023
Available-for-sale securities:
Gross realized gains						$	1,457					$	213					$	2,144					$	519
Gross realized losses						(1,315)						(2,693)						(4,639)						(6,714)
Net realized gains (losses) on available-for-sale securities						142						(2,480)						(2,495)						(6,195)
Equity securities						2,782						244						5,477						(3,060)
Miscellaneous						1						9						1						9
Net realized and unrealized investment gains (losses)						$	2,925					$	(2,227)					$	2,983					$	(9,246)

The portion of net unrealized gains (losses) recognized during the reporting period related to equity securities held at the reporting date is calculated as follows:

						Three months ended September 30,												Nine months ended September 30,
(in thousands)						2024						2023						2024						2023
Equity securities:
Net gains (losses) recognized during the period						$	2,782					$	244					$	5,477					$	(3,060)
Less: net gains (losses) recognized on securities sold						146						91						883						(2,636)
Net unrealized gains (losses) recognized on securities held at reporting date						$	2,636					$	153					$	4,594					$	(424)

Net impairment losses recognized in earnings

Impairments on investments were as follows:

						Three months ended September 30,												Nine months ended September 30,
(in thousands)						2024						2023						2024						2023
Available-for-sale securities:
Intent to sell						$	(1)					$	(58)					$	(299)					$	(1,639)
Credit impaired						(158)						(55)						(401)						(278)
Total available-for-sale securities						(159)						(113)						(700)						(1,917)
Expected credit losses:
Held-to-maturity securities						0						—						(2,167)						—
Agent loans						(354)						0						(354)						0
Other loans receivable						(185)						0						(542)						0
Net impairment losses recognized in earnings						$	(698)					$	(113)					$	(3,763)					$	(1,917)

Securities lending transactions

As of September 30, 2024, the fair value of loaned securities, comprised of corporate debt securities, was $8.1 million and the related collateral received was $8.4 million. We received cash collateral of $7.9 million, which was reinvested in cash equivalents and is included with "Cash and cash equivalents" in our Statement of Financial Position. We also received $0.5 million of non-cash collateral that we are not permitted to sell or repledge, and there are no securities lending transactions that extend beyond one year from the reporting date.

If we have to return cash collateral on short notice, we may have difficulty selling investments in a timely manner, be forced to sell them for less than we otherwise would have been able to realize, or both. In addition, in the event of such forced sale, for securities in an unrealized loss position, realized losses would be incurred on securities sold and impairments would be incurred, if there is a need to sell securities prior to recovery, which may negatively impact our financial condition.

Note 7. Bank Line of Credit

We have access to a $100 million bank revolving line of credit with a $25 million letter of credit sublimit that expires on October 29, 2026. As of September 30, 2024, a total of $99.2 million remains available under the facility due to $0.8 million outstanding letters of credit, which reduce the availability for letters of credit to $24.2 million. We had no borrowings outstanding on our line of credit as of September 30, 2024. Investments with a fair value of $120.2 million were pledged as collateral on the line of credit at September 30, 2024. These investments have no trading restrictions and are reported as available-for-sale securities and cash and cash equivalents on our Statement of Financial Position as of September 30, 2024. The bank requires compliance with certain covenants, which include leverage ratios and debt restrictions. We are in compliance with all covenants at September 30, 2024.

Note 8. Postretirement Benefits

Pension plans

Our pension plans consist of a noncontributory defined benefit pension plan covering substantially all employees and an unfunded supplemental employee retirement plan ("SERP") for certain members of executive and senior management. The pension plan provides benefits to covered individuals satisfying certain age and service requirements. The defined benefit pension plan and SERP each provide benefits through a final average earnings formula.

Although we are the sponsor of these postretirement plans and record the funded status of these plans, there are reimbursements between us and the Exchange and its subsidiaries for their allocated share of pension income or cost. These reimbursements represent pension benefits for employees performing administrative services and an allocated share of plan (income) cost for employees in departments that support the administrative functions. For the nine months ended September 30, 2024, we reimbursed the Exchange and its subsidiaries for approximately 61% of the annual defined benefit pension income, and the Exchange and its subsidiaries reimbursed us for approximately 34% of the annual SERP cost. For our funded pension plan, amounts are settled in cash for the portion of pension (income) cost allocated to the Exchange and its subsidiaries. For our unfunded SERP, we pay the obligations when due and amounts are settled in cash between entities when there is a payout.

Our defined benefit pension plan funding policy is generally to contribute an amount equal to the greater of the target normal cost for the plan year, or the amount necessary to fund the plan to 100%. Accordingly, we made a $33 million contribution in January 2024. The funded pension plan net benefit asset is presented separately from the unfunded plan as a non-current asset on our Statements of Financial Position.

Pension plan cost (income) includes the following components:

						Three months ended September 30,												Nine months ended September 30,
(in thousands)						2024						2023						2024						2023
Service cost for benefits earned						$	8,628					$	7,190					$	25,920					$	21,572
Interest cost on benefit obligation						13,195						12,548						39,503						37,644
Expected return on plan assets						(20,199)						(17,217)						(60,595)						(51,652)
Prior service cost amortization						413						362						1,199						1,085
Net actuarial gain amortization						(1,695)						(3,833)						(5,180)						(11,498)
Settlement gain (1)						(59)						—						(1,338)						—
Pension plan cost (income) (2)						$	283					$	(950)					$	(491)					$	(2,849)

*(1)*Settlement accounting was required due to lump sum payments made under the SERP to four former officers in 2024.

*(2)*Pension plan cost (income) represents total plan cost (income) before reimbursements between Indemnity and the Exchange and its subsidiaries. The components of pension plan cost (income) other than the service cost components are included in the line item "Other income" in the Statements of Operations, net of reimbursements between Indemnity and the Exchange and its subsidiaries.

Note 9. Income Taxes

Income tax expense is provided on an interim basis based upon our estimate of the annual effective income tax rate, adjusted each quarter for discrete items. For the three months ended September 30, 2024 and 2023, our effective tax rate was 20.4% and 20.0%, respectively. For the nine months ended September 30, 2024 and 2023, our effective tax rate was 20.7% and 20.6%, respectively.

Note 10. Capital Stock

Class A and B common stock

Holders of Class B shares may, at their option, convert their shares into Class A shares at the rate of 2,400 Class A shares per Class B share. There were no shares of Class B common stock converted into Class A common stock during the nine months ended September 30, 2024 and the year ended December 31, 2023. There is no provision for conversion of Class A shares into Class B shares, and Class B shares surrendered for conversion cannot be reissued.

Stock repurchases

In 2011, our Board of Directors approved a continuation of the current stock repurchase program of $150 million, with no time limitation. There were no shares repurchased under this program during the nine months ended September 30, 2024 and the year ended December 31, 2023. We had approximately $17.8 million of repurchase authority remaining under this program at September 30, 2024.

Note 11. Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income ("AOCI") (loss) by component, including amounts reclassified to other comprehensive income ("OCI") (loss) and the related line item in the Statements of Operations where net income is presented, are as follows:

						Three months ended												Three months ended
						September 30, 2024												September 30, 2023
(in thousands)						Before Tax			Income Tax			Net						Before Tax			Income Tax			Net
Investment securities:
AOCI (loss), beginning of period						$	(30,405)		$	(6,385)		$	(24,020)					$	(55,497)		$	(11,654)		$	(43,843)
OCI (loss) before reclassifications						25,586			5,373			20,213						(10,064)			(2,114)			(7,950)
Realized investment (gains) losses						(142)			(30)			(112)						2,480			521			1,959
Impairment losses						159			33			126						113			24			89
OCI (loss)						25,603			5,376			20,227						(7,471)			(1,569)			(5,902)
AOCI (loss), end of period						$	(4,802)		$	(1,009)		$	(3,793)					$	(62,968)		$	(13,223)		$	(49,745)
Pension and other postretirement plans:
AOCI, beginning of period						$	8,730		$	1,833		$	6,897					$	50,244		$	10,551		$	39,693
OCI (loss) before reclassifications						(606)			(127)			(479)						—			—			—
Amortization of prior service costs						413			87			326						362			76			286
Amortization of net actuarial gain						(1,695)			(356)			(1,339)						(3,833)			(805)			(3,028)
Settlement gain						(59)			(13)			(46)						—			—			—
OCI (loss)						(1,947)			(409)			(1,538)						(3,471)			(729)			(2,742)
AOCI, end of period						$	6,783		$	1,424		$	5,359					$	46,773		$	9,822		$	36,951
Total
AOCI (loss), beginning of period						$	(21,675)		$	(4,552)		$	(17,123)					$	(5,253)		$	(1,103)		$	(4,150)
Investment securities						25,603			5,376			20,227						(7,471)			(1,569)			(5,902)
Pension and other postretirement plans						(1,947)			(409)			(1,538)						(3,471)			(729)			(2,742)
OCI (loss)						23,656			4,967			18,689						(10,942)			(2,298)			(8,644)
AOCI (loss), end of period						$	1,981		$	415		$	1,566					$	(16,195)		$	(3,401)		$	(12,794)
						Nine months ended												Nine months ended
						September 30, 2024												September 30, 2023
(in thousands)						Before Tax			Income Tax			Net						Before Tax			Income Tax			Net
Investment securities:
AOCI (loss), beginning of period						$	(31,402)		$	(6,595)		$	(24,807)					$	(66,571)		$	(13,980)		$	(52,591)
OCI (loss) before reclassifications						23,405			4,915			18,490						(4,509)			(947)			(3,562)
Realized investment losses						2,495			524			1,971						6,195			1,301			4,894
Impairment losses						700			147			553						1,917			403			1,514
OCI						26,600			5,586			21,014						3,603			757			2,846
AOCI (loss), end of period						$	(4,802)		$	(1,009)		$	(3,793)					$	(62,968)		$	(13,223)		$	(49,745)
Pension and other postretirement plans:
AOCI, beginning of period						$	14,439		$	3,032		$	11,407					$	57,186		$	12,009		$	45,177
OCI (loss) before reclassifications						(2,337)			(491)			(1,846)						—			—			—
Amortization of prior service costs						1,199			252			947						1,085			228			857
Amortization of net actuarial gain						(5,180)			(1,088)			(4,092)						(11,498)			(2,415)			(9,083)
Settlement gain						(1,338)			(281)			(1,057)						—			—			—
OCI (loss)						(7,656)			(1,608)			(6,048)						(10,413)			(2,187)			(8,226)
AOCI, end of period						$	6,783		$	1,424		$	5,359					$	46,773		$	9,822		$	36,951
Total
AOCI (loss), beginning of period						$	(16,963)		$	(3,563)		$	(13,400)					$	(9,385)		$	(1,971)		$	(7,414)
Investment securities						26,600			5,586			21,014						3,603			757			2,846
Pension and other postretirement plans						(7,656)			(1,608)			(6,048)						(10,413)			(2,187)			(8,226)
OCI (loss)						18,944			3,978			14,966						(6,810)			(1,430)			(5,380)
AOCI (loss), end of period						$	1,981		$	415		$	1,566					$	(16,195)		$	(3,401)		$	(12,794)

Note 12. Concentrations of Credit Risk

Financial instruments could potentially expose us to concentrations of credit risk, including our unsecured receivables from the Exchange. The majority of our revenue and receivables are from the Exchange and its affiliates. See also Note 1, "Nature of Operations". Net management fee amounts and other reimbursements due from the Exchange and its affiliates were $737.0 million and $625.3 million at September 30, 2024 and December 31, 2023, respectively, which includes a current expected credit loss allowance of $0.6 million in both periods.

Note 13. Commitments and Contingencies

We have an agreement with a bank for an agent loan participation program. The maximum amount of loans to be funded through this program is $150 million. We have committed to fund a minimum of 30% of each loan executed through this program. As of September 30, 2024, outstanding loans executed under this agreement totaled $110.3 million, of which our portion of the loans is $41.5 million. Additionally, we have agreed to guarantee a portion of the funding provided by the other participants in the program in the event of default. As of September 30, 2024, our maximum potential amount of future payments on the guaranteed portion is $13.2 million. All loan payments under the participation program are current as of September 30, 2024.

We also have contingent obligations for guarantees related to certain real estate development projects supporting revitalization efforts in our community. As of September 30, 2024, our maximum potential obligation related to guarantees is $10.2 million.

We are involved in litigation arising in the ordinary course of conducting business. In accordance with current accounting standards for loss contingencies and based upon information currently known to us, we establish reserves for litigation when it is probable that a loss associated with a claim or proceeding has been incurred and the amount of the loss or range of loss can be reasonably estimated. When no amount within the range of loss is a better estimate than any other amount, we accrue the minimum amount of the estimable loss. To the extent that such litigation against us may have an exposure to a loss in excess of the amount we have accrued, we believe that such excess would not be material to our financial condition, results of operations or cash flows. Legal fees are expensed as incurred. We believe that our accruals for legal proceedings are appropriate and, individually and in the aggregate, are not expected to be material to our financial condition, results of operations or cash flows.

We review all litigation on an ongoing basis when making accrual and disclosure decisions. For certain legal proceedings, we cannot reasonably estimate losses or a range of loss, if any, particularly for proceedings that are in their early stages of development or where the plaintiffs seek indeterminate damages. Various factors, including, but not limited to, the outcome of potentially lengthy discovery and the resolution of important factual questions, may need to be determined before probability can be established or before a loss or range of loss can be reasonably estimated. If the loss contingency in question is not both probable and reasonably estimable, we do not establish an accrual and the matter will continue to be monitored for any developments that would make the loss contingency both probable and reasonably estimable. In the event that a legal proceeding results in a substantial judgment against, or settlement by, us, there can be no assurance that any resulting liability or financial commitment would not have a material adverse effect on our financial condition, results of operations or cash flows.

Note 14. Subsequent Events

No items were identified in this period subsequent to the financial statement date that required adjustment or additional disclosure.