Creating shareholder value Looking ahead The strength of Indemnity’s balance sheet was further enhanced at the end of 2010 with the  sale of its three wholly owned property and casualty insurance subsidiaries to the Exchange.  From an enterprise view, this transaction—along with the pending sale of Indemnity’s  minority ownership interest in Erie Family Life Insurance Company to the Exchange—aligns  all insurance operations with the Exchange. It returns Indemnity to its original role as a  management company. For Indemnity, this removes underwriting volatility from its portfolio and creates liquidity,  enabling management to better utilize capital to create value for you, our Shareholders. It also  centralizes underwriting risk and its supporting capital within the Exchange, providing greater  capital management  fl exibility to enhance service and product offerings. As a result, in December, our Board of Directors extended the Company’s stock repurchase  program and approved $150 million in repurchase authority. The Board also approved a 7.3  percent increase in the regular quarterly cash dividend, taking it from $0.48 per share to $0.515  per share on each Class A share and from $72.00 to $77.25 on each Class B share. Our Board  also maintained the management fee rate at 25 percent for 2011. Our focus on successful execution leads to pro fi table growth and long-term shareholder  value creation. Through our capital management approach, we strengthen shareholder value  with consistent dividend increases and share repurchases. In 2010, ERIE Shareholders saw a  73 percent increase in total shareholder return based on dividends and increased share price. Our accomplishments in 2010 were guided by our vision—achieving preeminence in execution,  service and operating results. I believe you’ll agree from what’s illustrated here that we are executing well on that vision.  There are multiple challenges and sometimes solutions aren’t readily apparent, and yes, we’ll  make mistakes as we build an agile, learning organization—one that is accountable and  effective. Our results af fi rm that we’re on the right path. The ERIE team is demonstrating a competitive spirit in every aspect of our business. They’re  embracing accountability, and I am con fi dent that they are focused fully on achieving our  goals. They continue to deliver for all ERIE stakeholders—Customers, Agents, Employees and  our Shareholders. Thank you for your continued con fi dence in ERIE as your partner, employer, insurance  company and valued investment. Terrence W. Cavanaugh President & Chief Executive Of fi cer * Erie Insurance received the highest numerical score for the auto insurance shopping experience in the proprietary J.D. Power and Associates  2009-2010 Insurance Shopping Studies, SM  and the 2008 Insurance New Buyer Study. SM  2010 Study based on 6,394 total responses, measuring  20 providers and measuring the opinions of consumers shopping for a new auto insurance policy. Proprietary study results are based on  experiences and perceptions of members surveyed in February and March 2010. Your experiences may vary.  jdpower.com 5