ERIE - Earnings call transcript Q2 2018

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Operator

Good morning, and welcome to the Erie Indemnity Company's Second Quarter 2018 Earnings Conference Call. I'd like to introduce your host for today's call, Scott Beilharz, Vice President of Investor Relations.

Scott Beilharz

Thank you, Sandra, and welcome, everyone. We appreciate you joining us for today's discussion about our 2018 second quarter results.

Joining me today are Tim NeCastro, President and Chief Executive Officer; Greg Gutting, Executive Vice President and Chief Financial Officer; and Sean McLaughlin, Executive Vice President and General Counsel.

financial and issued Investor are of website, and the afternoon Relations release our close market available erieinsurance.com. earnings supplement yesterday were after section Our within the

materially today's like the risks reflect current and those and and on views from These risks remind would assumptions, remarks events. company's I uncertainties future uncertainties. results are begin, contain forward-looking These these we everyone Before to in may unexpected that remarks. remarks discussion about subject may that known differ to described cause based to

recorded Company. For p.m. time. these on July reproduced information may of the will property XX-Q to written safe rebroadcast in consent other A may call the any website call in on Erie and filing our important factors Erie being Tim. I'll press be XXXX, today Form XX, differences, be prior harbor recording over that by cause related Eastern is our dated the replay please party Indemnity With This XX:XX the see Company. that, without the of now SEC, and with turn available the It Indemnity release. statements or after is

Timothy NeCastro

these very the with $X.XX or for the we pleased months and our Thank join for million XXXX. the had you income morning, per share for reported the time our We're taking $XXX second ahead. to In year. Good Scott. of strong first net first six confident Thanks, yesterday, filed months us of everyone. Indemnity Erie direction of today. results all a half quarter XX-Q in

operation share Exchange, a financial the into the I'd we few insurance manage. for highlights further to like the gets Greg Before details,

X% on in outpaced decade, Exchange in premium XXXX. the an of to compared half almost assumed to growth XXXX. repeat For track industry, XXXX premiums the the grew and the first past has accomplishment Direct is

reflecting Erie's increased responded for increase our the for this position. financial year healthy a across million, That industry year time activity up much slightly operational X.X% comes Conning's to the we've surplus to storm Policyholder For of is and $X.X is comparison, at forecast growth. territory. same

compared the for Second but saw of the was months reported quarter storms the year. combined in months in XXX.X frequent, second winter Property the year. we The XXX.X first for the and three Casualty three reported quarter, ratio to smaller slightly storms the the for down first of this Group from were scale

mid-year year-to-date Our at XXXX. XXX.XX to result is compared XX.X

the our and Our and employees wind and meet agents of communities snow, to hail up storms. customers needs of the aftermath stepped in

and adjusters we in cat to team, these joined the handling on claims local sure efforts and with past ground to our of critical their dedicated few thank of I'd and time dedication human customers' our into like to it customers work make so over strategic to they team do invest I'll need. that that I'll employees process, to agents strengthen the claims progress compete compassion making about we're the initiatives huge to The more to future. to to our now, the in now months. But difference customers. in a continuing and our a We're few also to our the employees touch Our needed for the brings ability turn minutes. our is had care making expedite people Greg. talk throughout recovery

Gregory Gutting

Tim. Thanks,

of in the XXXX, second $XX of diluted income net with seeing the as are our was well as share pleased and our per service the very or are we or agents mentioned, $X.XX per second quarter $X.XX with commitment XXXX. million financial to to dedicated this reflect year. $XX Starting Tim diluted quarter compared strategy. of They the deliver As results we our our million on employees share

income in $XXX quarter to first income XX.X% increases and the for XXXX in to million $X.XX agent quarter six compared increases million customer by the periods. and total XXXX months the same in million operating six or Management force months months in of costs, the by in second increased customer written Commissions first million of costs offset lower assumed increased the $XX quarter increased costs. last quarter compared technology the the increased keep services six million periods million in the and an to operations or slightly the by fluctuate but the processing last driven in first same in in compared $XX mind revenue and operating six the to the these as driven growth. the in the both The outpace premium quarter-to-quarter In six to XXXX, in per year, and from services the $XXX growth costs premium second to written the industry. XXXX the of six to Information share related premiums driven expenses and as last first and year. first $X service compared by of to compared underwriting X% XXXX the in of costs issuance non-commission driven renewal Exchange, will XXXX, second million first per half increase total and the decreased increases increased slightly in months year by underwriting the compared administrative policy in $XXX,XXX costs. the the half the this average increase losses policy the half operating expenses second continues net year resulting driven of $XX second Exchange period same income and by renewal second of the $XXX,XXX in or XXXX. XXXX diluted in periods and quarter costs to XXXX, XXXX, the policy in investment assumed million processing $X half an of direct both in by Exchange's months net by same we less profitable service in XXXX. primarily policy quarter XXXX operating of the impairments For policy area. in share million in realized on in income $XX both The increase second outpaced continue revenue of and first compared of compared the $XX per this in Indemnity's of the issuance growth months first and decreased first Total the months in or XXXX, compared costs the X.X% of incentive was fee $XX in million will first second to the Non-commission were of premiums six XX% direct from decreases increased compared XXXX the in XXXX in and to to period and XXXX, The in of of first invest cost and in XXXX. investment. policies of expenses diluted to and quarter in $X.XX quarter

approach income this due which tax management sheet. just the and million became capital in over tax million effective Xst a second XXXX in of of year. lower decreased rate six compared the expense Finally, $ the to measured of income to quarter XXXX diligently months to XX%, X take Indemnity's a first January maintain strong We and $XX balance

$XX pay call our the enabled us turn I'll With of our of shareholders six months performance first the over to has dividends in amount strong to Tim. that, back million. XXXX, For the

Timothy NeCastro

Greg. Thanks,

Erie the in include: workforce Erie's and improving we're areas accelerate sources platforms a exploring continued and for future. of where the strong success new about talked changing backdrop provide sustain These focus; past enhancing areas four results future. management, Our revenue solid experience, On in preparing the a and to the market. data directing our investments our of strategic areas for I calls, resources

to all We fronts. progress make continue across

our in service, months. me $X it data we've million Let major completely years strategic us few system ClaimCenter, fully out management our we ERIE these platforms with XX to is claims. enabled not three system to past was a deploy successfully retired. significant former XXXX. We're in claims improving call operational in ERIE a After first taken in began investment over and handle ClaimCenter already has and late steps

commercial the same-store more sales, development most with ability our our a the business who policy move agents, to protection drive online system, application continue a and our that edition while write account, to new the For for to expand a is quote recent efforts capabilities also improving of our supports customers.

Erie and sensors customers are of have We are to telematics promising. early write about can home through Roost that in leak directly youthful severe enabling losses underway and cards up homes. growth protected are seeing X% businesses Both directly stalled premium XXX shared Last technology plans for March, nearly for by playing XX%. new The almost or the to homeowners a deck stop temperature you problem up are quarter, sensors Installed strong easier. more nearly fueled and program of they ability changes smartphone drivers. size and I our piloting or and Premium detect to new results potentially homeowners commercial smart Since retention faster occurred. linked a strong a leaks a notify in damage with or water lines and devices have and app. costly is is their growth with our that -- agents' commercial linked is

app, West X,XXX in, in customers registered Virginia. our launched days Additionally, this third-party and smartphone recognition respected driving motorists. highly we have than gain even encouraging continues from to safer our Ohio Erie for telematics among behaviors youthful pilot At more XX firms.

J.D. in XXXX ranked Study. earned J.D. has Power U.S. of very some marks sixth Annual the the for any first Erie I'm honor say the award region share year, a that Erie from Study this awards Auto company. boasts accomplishments. recent agency in me Auto top second past represent years. XX from region consecutive Insurance Erie six that firm's Power's time Shopping year. Midwest fourth pleased J.D. our Insurance honors the Erie in from a over now the winning won the most Let also This Atlantic Power, to this

as the strong XX A.M. has consecutive XX financial sheet A.M. as Group, for recognition A one management. Exchange Excellent risk Superior years to A and addition years. operating has is enterprise Best just rating business performance, J.D. rating for the balance an appropriate from Erie and affirmed profile our Erie Erie healthy Casualty well In Insurance strength A+ more a counting. and Family the of companies and rating reflects Best to favorable Power, rating Life. retain for XX an Property or of at Erie's least

insurers Just of rating. property-casualty U.S. XX% earned A+ the

Erie Finally, named for with X,XXX was than built. more property-casualty the employees Erie XXXX. which appearance the Insurance It's insurers deep along agencies, honors last list work nearly These towards and since top-performing Erie's for firm on XX reflect XXXX. XXth Group and week, was foundation commitment the on X,XXX

search University as I nearly General XX in served allows Pennsylvania notice Before Thank in now, acumen I us distinguished of the today, States Counsel, today's over to Vice judge role of process McLaughlin. shared Georgetown the has Executive the decision executive end the to the This Sean Western Scott. from of Center. the at We're XXXX. time He our completed court graduate We Chief August joined legal for participation back early it week, Georgetown organization and District Pennsylvanian past end Erie's comments transition Court appreciate tenure University in thoughtful is team President for Sean my federal your his and carrier and on of Sean. that a XXXX on the to immediately. I'll as want Sean we'll And his of deeply before call. an and a five part Counsel. grateful Erie wisdom Erie He following retire turn you, shared Erie's Judge recognize General bench. His and of for begin assuming United years. as Law years Federal Court the over District the and Sean District

Scott Beilharz

for at our and today. XXXX direct you, thank website, everyone, erieinsurance.com. be results of on recording please in Once me our questions (XXX) Thank again, will XXX-XXXX. quarter regarding A you, posted Tim., tuning second any call to this

Timothy NeCastro

Thank you, everybody.

Operator

for and may disconnect. you participating concluded conference. you have program, Everyone, thank has day. the gentlemen, in and Ladies This today's a all great

Erie Indemnity (ERIE) 27 Jul 182018 Q2 Earnings call transcript