ANNUAL REPORT 2012 OUR RESULTS Dear Shareholder: SHAREHOLDERS’ LETTER 2 Indemnity finished the year with net income per share of $2.99. This represents a 3 percent decrease in  Class A earnings per share from 2011 primarily due to lower investment results. The strength of our overall balance sheet and financial performance allowed us to return $229 million  in dividends to our shareholders, including a special dividend of $2.00 per Class A share. Additionally,  Indemnity continued to maintain an active share repurchase program. In 2012, we repurchased 1 million  Class A shares at a total cost of $69 million. Indemnity’s income from management operations was $205 million in 2012, reflecting strong top line  growth, strategic investments for our future, and ongoing cost management. All major product lines benefited from strong retention and from double digit premium growth from new  business. The property/casualty operations of the Exchange generated over $4.6 billion of direct written  premium – the highest in our history. This represents the fifth consecutive year of growth, with an  increase of more than 8 percent over 2011. Indemnity’s management operations generated revenue of $1.2 billion in 2012 – a  healthy increase of more than 8 percent over 2011. The primary drivers of this growth were a 13 percent  increase in new policies and a 4 percent increase in average premium per policy for the Exchange. Our  strong relationship with our independent Agents and our Customers contributed to an enviable customer  retention rate of 90.9 percent. Indemnity is a dedicated management company with two segments – management  and investment operations. Indemnity’s primary source of revenue is the fee we earn  from the Erie Insurance Exchange for providing management services. In 2012, the  management fee rate was 25 percent of the Exchange’s direct and assumed written  premium – and the rate will remain at 25 percent for 2013. At ERIE, we still adhere to that strong foundation and approach. Learning from the past, operating in the  present, and planning for the future remains our blueprint. From it, we’re growing an organization that  stands strong, competitive and profitable. As a history teacher and businessman, he had a deep appreciation for the lessons of the past and how these  shape future decisions. As an entrepreneur, he made the most of a great market opportunity during his  time – the mass production of the automobile. And as a visionary, he recognized that a business model  centered on service would never go out of style. Along the way, he forged genuine relationships with  Customers, Agents, Employees – and Investors – who helped his business take root. Every good leader knows the value of learning from the past, operating in the present, and planning for  the future. ERIE co-founder H.O. Hirt set just such an example.