The Misfits: Erie Indemnity Company (ERIE)

Insurance is all about mitigating risk through diversification. Erie has used that strategy to great success, but many individual investors don't get it right.

Microcosm of London, Lloyds subscription room, multiple artists, 1809, engraving.

Risk may not always be front of mind in investing, but when the market starts to decline, investors seem to become acutely aware of it. The moment risk starts coming into play, people start thinking about diversification strategies and how to mitigate the risk in their portfolios.

I don’t know about you, but when I think about risk, insurance comes to mind. Not just because of people wanting recession insurance in their portfolio, but because insurance companies can be such a valuable part of ones portfolio.

What’s more, a multitude of business models can thrive in insurance.

Case and point: Erie Indemnity Company (NASDAQ: ERIE).

Erie isn’t the first choice for anyone in the insurance name-association game. It’s hard to be front of mind when you are the 12th or 13th largest property & casualty insurers in the US. Despite it’s modest size and unique corporate structure, it has been one of the many insurance companies that’s delivered superior returns to its investors.

Let’s dig into the guts of this unique insurance company and why Erie is an example of how investors often screw up their diversification strategies.

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