Erie Indemnity sees $20M in tax expense as a result of new tax law
Erie Indemnity expects to record a one-time noncash tax expense of approximately $20M as a result of the enactment of the Tax Cuts and Jobs Act on December 22. The expense is the result of re-measuring the net deferred tax assets at the newly enacted corporate income tax rate of 21%versus the 35% rate at which the net deferred tax benefits were originally recorded. This will be partially offset by the recognition of a current tax benefit of approximately $11M related to the acceleration of pension contributions. The net impact to fourth quarter 2017 earnings is an additional tax expense of approximately $9M or 17c per share. Beginning in 2018, the company expects its effective corporate income tax rate to decline to approximately 21% from approximately 34% as a result of the enactment of the TCJA.