10:09 AM EDT, 10/18/2024 (MT Newswires) -- Erie Indemnity ( ERIE ) shares face a potential downside risk of 35% to 55% amid concerns about the sustainability of its 25% management fee collected on Erie Insurance Exchange-written premiums, short seller Spruce Point Capital Management said Friday.

"Given the recent deterioration of the Exchange's financial performance... we believe it is increasingly likely that Erie's management fee will decline for the first time in decades which could reset earnings expectations by approximately 20% and slow premium growth at the Exchange over the coming years," Spruce Point said.

Spruce Point added that aside from the possibility of an impending management fee cut, it has other concerns with the company, such as AM Best's revision of its outlook for Erie Insurance Group's members to negative from stable in August.

The company didn't immediately respond to a request for comment from MT Newswires.

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