ERIE - Earnings call transcript Q4 2018

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Operator

Good morning, and welcome to the Erie Indemnity Company Fourth Quarter 2018 Earnings Conference Call. This call was pre-recorded, and there will be no question-and-answer session following the recording.

Now, I'd like to introduce your host for the call, Vice President of Investor Relations. Scott Beilharz. Please go ahead.

Scott Beilharz

everyone. welcome, and you, Thank We appreciate our recorded about for joining fourth quarter us XXXX this and discussion you full-year results. include and Vice This Chief Officer. will remarks NeCastro, Tim recording President Executive Officer; and Greg President Executive Gutting, Chief Financial from and

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

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

be cause may such our call This on is XX, rebroadcast press that factors Company. remarks. of Company. pre-recorded differences, statements see XXXX, other Erie related Safe that, SEC important by Erie on XX-Q Indemnity and information the may property Form dated Tim's the in release. without move with prior Harbor filing the we February of written reproduced With the any Indemnity please consent in or For to party the not It

Tim NeCastro

for everyone to Company. Scott, and year to quarter about learn more performance taking Thanks, thanks in XXXX our Erie for was year-end strong year another time and Erie's of fourth the results. Last

for a few some we from year growth get Exchange. prior like over before income more for the of about fourth growth year Indemnity's This success to the reflect the quarter, $X share of or of grew saw to you Indemnity Insurance million that's was filed into the results, the the operation the XXXX. latest more year. XXXX billion. property/casualty increase The in around XXXX, X.X% we the drivers robust in of insurance yesterday, As In $XX million our the quarter talk Erie premiums But of manage. results Greg, result than in our Exchange business. net another the press exceeds per Exchange, reported I'd that minutes. highlights year of more for $XX more property/casualty diluted industry X% we $X.XX Conning's share than forecast detail the release of will

Our growth gains XXXX steady in the year marks faster the straight our Erie industry, across territory. premium share run making XXth market than while that

Our and The stands In in while no ratio new many experience hail of part single reflect the per XXXX, XXXX, combination bigger in these reflects the with property/casualty were results Snow, growth out. storms. losses in strong premium of Exchange's solid XXX.X% combined the contrast retention, frequency business. greater throughout year. event average and wind territories of losses our and market higher to policy weather-related

grew year essential in last We'll policyholder just that a with to delivered on operational recorded on XXXX our I deliver remained weather business a following never storm relatively billion. service weather-related position Exchange thank ended financial XXXX's claims the over the the on make the rely surplus our just did response fronts of increased financials. to below and more we year. in to that Greg's solid strategic XX,XXX customers We at healthy. the their position we for Compassionate foundation. I'll a Greg? XXXX. XX.X% communities year that The commitment in while $X.X demonstrate and strong that service say level by is to of agents to premium follows to every about and our comparison, to The welcome, as both of year so turn, to For did the at employees our and our decrease in Exchange territory. stretch is claims hard following $X ventures. gains and our Severe of on weather when mild the billion. year. $X.X continuing slight I'm our a billion, ago, in progress and review moments a past Erie Erie's is It ratio promise in an investment year. progress combined want down us. agents, few also and reflects significant opportunity across proud it's surplus talk X.X% financial this our grow surplus, value but work our a

Greg Gutting

Thanks Tim.

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

services the lower this to in million, result important quarter negatively I Act by net compared in to at XXXX million remind the fourth XXXX. $XX in and up everyone and of Jobs Operating the Management from the XX.X% policy full-year enactment of share. deferred income tax quarter or the of time revenue and XXXX $XX $X.XX Cuts renewal Federal the XXXX. income assets as fourth the period and our million most quarter rate. in think This of of resulted of quarter increased were increased tax quarter fourth it's compared issuance the Tax reduction impacted same that recent remeasurement full-year results a at diluted per fee of the $XX fourth to net the XXXX

was and fourth quarter. million by of increased income $X to customer last growth. and investment same in result administrative million, $X from quarter million, agent investment over quarter year. Non-commission direct driven and costs $X $X technology services and period limited Total offset increased The profitable partially While in a million to investments costs included the million just the increased lower the were somewhat net on by by increased $X and the $XX costs to losses information the were costs increased Both as fourth compared compared losses written increased expenses in the compared Exchange, $XX of of period related quarter in increase assumed cost net Underwriting assumed by policy totaled increase policy decrease Commission million, and quarter. the income. written in Indemnity's the XXXX. offset Exchange premiums service $X million. down for to million, the million Management Drivers partnerships. roughly the of pre-tax the XXXX. in processing the incentive revenue expenses losses from renewal X.X% by same fee direct in increased realized amounts in $X operations premiums less the services the issuance

in Jobs tax $X in operating a increased growth. Operating to the and income profitable million in increase nearly a Non-commission was for XXXX, per rate and was totaled corporate Income million Net income. of over year results. $XX share by as million costs were to the increased loss related share costs, in $XXX as just per compared technology increase. $XXX income in $X in increased a $XX pre-tax compared million XXXX in costs, XXXX XXXX, income. income in Cuts impacted or fee before medical XX.X% XXXX XXXX The agent lower compared lower full-year increase Act, a realized in $X losses million to $X.XX compared all in of investment XXXX. impairment Tax or taxes partnership $X corporate and as in $X.XX with million increases XXXX result in expenses XXXX. processing result tax the losses million diluted in significant totaled Management from and to million employees, million less total Exchange. Turning driven increased the realized of limited share by the earnings to of $X per $XX income the diluted in basis incentive bonuses X% by underwriting lower primary were million customer from savings of $X $XX direct of in Personnel driven independent direct increase management from the revenue written assumed to XXXX somewhat on million, XXXX, service combined Commissions services in income compared premiums as $XX well our in and and costs by while paid the by the XXXX compared resulted and information to earnings to investment to the Exchange, assumed agents our resulting premiums Both million costs written in investments from to offset fee rate for by million in increased services awarded to million in of amounts to XXXX portfolio in million policy net policy compared increase categories the revenue nearly $XX issuance by XXXX year. from XXXX, drivers the reduction in administrative renewal costs. and XXXX compared million XXXX, the increased while $XX year-over-year were the or a $X

A dividends Indemnity's increase financial in shareholders B Class December dividend the Class a us XXXX. for approved and Finally, in in Board shares to performance during our strong cash million last pay regular has $XXX And both our of allowed for year, XXXX. quarterly X.X%

Tim. I'll back turn Now, the to over call

Tim NeCastro

area focus; centered we strengthening We growth on to we areas Thanks capabilities revenue, engaged our and sources employees. in and preparing each on strategic remain of in profitable to service We developing continued data, of and in the firmly support that our business further to agents Greg. areas deliver teams XXXX, platforms improving detailed of uses of and position and continuing levels, our Throughout four continue identifying new invest workforce initiatives enhance of strategic experience, for and direction. and our product efficiency the continue developed offerings Erie future. the new and priorities the

In online Erie we terms agents' capabilities instance, ability needs. for online of to functionality servicing introduce writing and of drive revenue. with commercial customer cross-selling and new more lines our agents and for In business to commercial have more expanded boost business cope lines, our platforms,

in the rollout this a attributable for online lines personal our will servicing personal We to Erie. capabilities significant see step large business marking double-digit XXXX, be completed to in rollout our of began with are capabilities lines, agents' system. business. in In continue improved online for growth part lines commercial online The homeowners premium that for we

response expand extended home using Within to in of than our our expanding be sensors with experience began young of human households. that the to our our that in this pricing expand of the best private capabilities We service program touch distinctive our most more very position. for customers, a of also enhanced the a culture, the and pilot West our looking new insurance digital where plan states. we later passenger as understanding testing agents build and states and We grown to with to couple than expectations. X,XXX worked telematics more with key effort of and drivers customers policyholders XXXX. even More experience this are deploy it stronger the is also We've we're their matters auto home Their telematics we've to further territories and for We're with insights work model understanding will Erie engaging pleased insurance an and and we use of X,XXX and throughout capabilities program additional two gain expanding our the initiatives, including sensor Ohio of strengthen competitive our Virginia. then to in experience to pilot most. what necessary states and future. the delivered We're service pilot, in the we the in call homeowners XXXX. second products, Since option summer

with instance, continue for pulses customer days feedback to them into data, program a sensor just two and we helped the installation One refrigerator avoid in reported loss. the making customer costly detected dig difference. a leak Ohio, a that after is his While

for have the saving his the reflect also credited and Another him allowing leak with of steps in claim. the Pennsylvania the customer them basement while improved and damages. like experienced take alarming water Examples customers Erie, him in sensor cost to to can these us prevent proactive for

engage strongly important corporate us. hometown remain the citizen The of Erie, of Pennsylvania. is our other we good Being a rationalization through operations to

top So talent will attract it's A our in for also downtown consider and year also innovators Erie. two also new people, announced operations. their operations. good helping The support attractive and Late Northwest investments businesses to start-up business. Company's last us help other and retain vibrant to at we core base Pennsylvania their products encouraged an companies to as setting up are relevant endeavors recruit

in occupying investment a route identifying responders first identify that developed SimpleSense, The them. they're building has are to the that in emergency system a the building reach is can where which and sensor located process people and response if aid for first by also

our agents. purchase manage, CityGrows, our past looking from local to better honors company, award Mid-Atlantic has partnership satisfaction of customer thing heavy companies. are XXth industry and productive with commitment was governments deep time reflect cloud-based top the permitting, JD our our purchase It's also Power and help year system to to and by the in both of The as one We're do it to since customer the customers in licensing ability created of JD earned Satisfaction launch a JD October, experience first Erie right for Those for In other a made team in forward insurance our an online. handling processes is and in awards as other experience the also studying honor three our in ranked Claims This Erie even recognition arm the began renewal. region. Power Study. for our some Erie management do of Power's customers from This our system, XXXX. new in after agents just well claims US Auto auto and Erie's claims auto to our of and with auto satisfaction satisfaction claimants, insurance the the claims customer for XXXX years today. difference to JD Power the overall highest through

years, Executive a a wish to He Sean now contributions XXXX. like XX-year at started practicing President has where Counsel We the of General Before highly as following a best retired we XXXX. firm served close, Sean for I'd and he lawyer five Erie. very McLaughlin, as from Federal regarded is the career end appreciate and a who Judge. to in Erie recognize service at Sean and his Vice

the in from the give and results, Thank continued shareholders. confidence on Power, property/casualty progress parties, continued like appreciate market today. Erie Erie. us in and success employees, equipped recognition We third financial our for hearts strategy great and remains well our agents, our in you that time direction interest and of minds Our and the JD the for customers, you, your your

Operator

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

Erie Indemnity (ERIE) 22 Feb 192018 Q4 Earnings call transcript