ERIE - Earnings call transcript Q1 2020

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Operator

Good morning and welcome to the Erie Indemnity Company's First Quarter 2020 Earnings Conference Call. This call was prerecorded, 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.

Scott Beilharz

Thank you and welcome, everyone. We appreciate you joining us for this recorded discussion about our 2020 first quarter results. remarks Greg NeCastro, and Gutting, Officer. include Executive and Chief will and Officer; Executive recording from President Tim Chief Financial This Vice President

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

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

call on in the SEC, with information differences, without the factors It Company. statements by press the the such release. May XX-K may cause please safe any prior XXXX, X, or related Indemnity filing For This dated the other see Erie written and reproduced that not prerecorded in Erie property of important Company. may harbor our rebroadcast of Indemnity party Form is be consent

we to will on Tim's move remarks. that, With

Tim NeCastro

we to ones thanks staying These the XXXX. we all lot a first us, last impacting hope how months of of deeply you your time to for And how and another. with live, learn performance more quarter Scott. Thanks, work, I and have demanded you in are connect taking how healthy about loved Erie's of few and safe. from all one we

to the day responders we and deliveries, our other and frontlines, first on appreciation providers, food, serving by sure pandemic. and to the thoughts the I want Our are sincere making the to job extend with necessities. prayers have affected on everyone the and every workers healthcare those

to also the make I XX,XXX to agents family. license express and who the Erie up gratitude our nearly employees my X,XXX want

care quickly Every an team industry, ways our agents of and adapted to customers. customer our As and us day conversations customers. with have and our members of serving all new have working challenging adapted, essential of

the of Some of not actions which care no business loved level built. piece are are they facing in customers loss times. more potential employees ones. are give quarter. situations or have our about the performance and also of like but we're lost before complex a Others and empathy, into only require that mind to and I'd agents for these we our first relief Erie's some high showing, longer how the uncertain working These doing that get will talk

or commercial customers, start that divided claims Next significant in auto week, relief territory The dividends immediate a due and to driven premium. $X,XXX. policy million X% policyholder we'll seen financial period we've about $XXX is providing This of both annual average our premiums XX% relief. directives. roughly a represents mailing decline our stay-at-home two-month insurance and auto annual insurance over The auto auto personal customers' to across per their of premium the the immediate miles auto in reflects personal

auto dividend provides state is to X%, insurance reduction rate overall personal individual rate impact which $XX. the in dividend that and an commercial customer. addition announced by in customers vary The reductions average and the eligible So will month. we last of so The is

affirming a their the believe long-standing in we're in million meaningful this. team Through the the are care providing QX. and and be customers. reductions state protection total on working efforts and $XXX We've for being customer of and in needs. both different more a following with reductions and relief one, support. immediate These on customers combined agents will state, lot that few We actions makes multipronged received our a well the who a implemented our are our These individual most of meets approach quarter customers as payments by customer feedback offering effective billing states flexibility build this third dividends sustained one as with of in rate

"My A budget. felt my be long-time an monthly, almost uncertainty." and wrote, customer plan appreciate Pennsylvania I during my which concerns. was helped payment to He would XX customer and time from to have easier customer their rep shared very I of been years, efforts Erie me for change of understanding values this

available to We're end with field giving and our charitable communities office recently of the local our package footprint. territories, serve. leading in, established almost partner comprehensive of a impacted We In has to we support charitable since helping support Our Erie, additional providing Erie the in relief fund hometown to by for to throughout amount to agents organizations provided All March. also $X.X where doesn't our residents a support our across the works nonprofit million customers. funding increased Pennsylvania, financial of our our pandemic.

feeding and too, ways stepped Our agents employees responders restaurants. with local in have first workers big in up healthcare partnership and

their those and businesses to while purchased have give on also Some frontlines, cards gift the community. to supporting

donated like have Many facemasks. much and supplies, cash needed

extra and While claims of across our rewarded. the in number and offices our footprint. employees critical These our serve is of employees now performing be the majority customers should to limited of operations, our continue work our are the field, to believe essential level to remote, workforce we teams are commitment that reporting

biweekly providing for are an extra these to in $XXX compensation employees. up We

commission agents interest-free commissions those Erie our and maintain Lastly, April, revenue earned in program. to fill protection May, gap agency provides to to loan through our between earned in assistance program March, we June. extended The and the have an help

XX-year being long-term immediate our in by all to communities to and service. These employees, actions and customers, support above our agents, guided are commitment

that strong in to are key I'll to about more of financials. to us when talk Greg? that allows foundation support the it's our following needed a Greg's the fortunate offer progress and minutes, response have most. a on the financial review few We pandemic very initiatives

Greg Gutting

financial results everyone happy for quarter for first time to Erie your you Good be I Indemnity today Tim. morning you Company. Thanks, with and the today. sharing thank am

pandemic. the unprecedented like that I'd you I Before we these in many the Tim I you times Erie in These shareholders financial our which are earlier COVID-XX responding want exchange Erie in are it is earned. continue this and as service ways mantra the difficult of Insurance such in above Company, our obvious. in all because the begin, to well-positioned assure shared and to support that to strength agents, we and mission our on times, comment of are both with is of Indemnity the employees customers, time. to

its XX, April of on of July. A April because the cents annual meeting shareholders again approved Also dividend the paid of held In Indemnity Erie Class Directors fact, in on to XX, be per XX-and-half message quarterly Board share continued XXth state Pennsylvania. meeting held outstanding a in very results current place and than order strength were past. this of had the home financial in meeting the years feel year's We virtually, The superior financial the although same. different Company

the XXXX. X.X%. the our Starting exchange, with first manage, turn operations to for quarter the let's growth focus results direct we quarter insurance premium first was written for Now the

exchange's the the the was down surplus at ratio $X.X The in XX%. While due at of unrealized portfolio. billion, remains policyholder for losses from combined to XXXX, investment strong quarter billion the end $X.X

the or million, first XXXX. XXXX Now Operating shifting $X.XX first the quarter to income in of diluted or net per to $XX diluted was per compared million, quarter $XX income share, total share Indemnity, $X.XX operating first or of quarter expenses. to in revenue growth $XXX,XXX first quarter short total of just in XXXX, decreased of in as fell growth the X.X% XXXX, the operating the compared

X.X% last Management management XXXX. and compared increased million to fee first million, X% of million services increased the to quarter revenue first policy quarter $XX revenue XXXX, first for to $XX of to Indemnity's the in period services fee in issuance the XXXX, quarter nearly compared to or allocated administrative same or year. renewal million, the $XXX $X of

a of of and and commissions written renewal policy policy underwriting in first million first the issuance the to first to quarter to first primarily Turning compared Underwriting to direct increase report operations expense This by Non-commission services, of in exchange. increased XXXX. quarter of result of increased quarter XXXX, cost increased X.X% related $X $X cost. to personnel quarter in the XXXX. XXXX, compared the expense assumed due was $X processing and the costs increased the premiums million the Indemnity's million,

to Information in price a in expenses in fees plan XXXX, of primarily primarily by decrease cost decreased company professional quarter million, $X technology driven quarter due and due stock Administrative the personnel incentive costs. long-term costs increased of the other the $X increase XXXX. increased and in an to million, first to the decrease a compared first

XXXX, of Net of realized Losses the quarter XXXX, compared losses value market XXXX. from to to the driven of first quarter equity $X in compared significant the million pandemic. from in the million first the XXXX. were to by million nearly of first $XX decreases due income The COVID-XX first realized of of volatility, net were in in fair million $XX quarter of gains quarter taxes securities investments before resulting totaled the losses financial in $X.X

losses impairment last pandemics quarter to $X almost in were XXXX, of also million of financial the the first losses on million in of $X first quarter quarter COVID-XX XXXX limited first impact partnerships the by Losses were of markets. $X year. driven from the of Net the million in compared

I want I mentioned reiterate closing, what earlier. to In

We will agents XXXX are and nearly positioned remain our Indemnity employees all-in-service. our to Through above footprint, XX,XXX times. handle Erie well trying over across these

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

Tim NeCastro

benefit position, experienced as in now become initial change or surprise many since expected, has of just to States reported, of have favor the uncertainty. much when Greg COVID-XX a We directed anything to working being the the past we March Greg. financial home. but the with lot rhythm was came Thanks presented of in at challenges strong We've stay Erie. at and accustomed that us United have our our unlike of

we weeks, can XX% March, week workforce how and the we've remote we Within shown Over one to grew several in our XX%. just well from adapt. past respond

Ours service our well have essential customers. And operations agents continued we our and to is an industry. and

as seeing impacts on pandemic. are result business our the of a We

XXXX rest insurance challenges. shore top delivering auto pressure the to the in Starting the competitive of on with expect in the the we casualty premium on growth economic like market. to position our property, plans line, We're up due industry

continue initiatives to invest to agent's Erie. also support growth key our in We with

talk and of those early about more a efforts in some I'll results moment.

always, protect As strong financial our we'll that in our make to continue foundation. and decisions disciplined we spending be

The financial piece losses. impacted picture other our by our is COVID-XX of

interruption our business for with expand partners impacts coverage Some of Association, and made related monitor to that to the workers our Casualty scope are the working to the of states continue American the insurance efforts COVID-XX have Insurance and provide to make the moves losses, their those and of compensation like industry we closely have decisions. sure lawmakers and model regulators Property understanding complete

We all feeling owners. customers now. daily the commercial challenges pain the small Our they they're understand and agents face business our are and

promise additional consider through a and can protection unprecedented be to We the and help environment. and this I'm customers and critical industry our we of there employees, and are this support our our proud we for together agents can what Erie so policy. to really coming doing in continue that is every foundation financial we to team, and that time. for It difficult quickly service retain new our adapting strong with

to of the enhancing our addition new customers. and existing about products support opportunities some we're financial In I create talked earlier, for to serving processes

in For date, a exercised of applicants exam. the is life the offer. To insurance many time, have limited life customers X,XXX Life, Family insurance person past coverage an a Erie or without offering operation requirement paramedical

a no reimbursement being longer with can customers balances at now additional closes. we're be coverage, This business providing card enhancement Insurance our is no added Home cost. for For that if ErieSecure used gift

state to gain applications We'll customers Online last expanded Erie's capacity our late a on complex recently In over also for needs. for more giving changes on capability introduced next. capabilities were customer start our In Account our February, customer online. in volume. more service platform be and helped us January, so XX% in digital the active we We increase Lock capabilities to of in customers, focus expansion team more alone, of this to agents premium This less product Pennsylvania which for up that a providing made self complex be additional requests strong care continues builds our largest can refresh Erie auto Pennsylvania. year, Rate March taking has

Ohio, auto quoting our to competitive their started we steady pursue change. Rate adhere they've pricing Lock West made a in help Rate while Virginia to underwriting a Tennessee, Refresh provides a discipline. qualifying rate offers lock pricing with more until philosophy in customers the positive ability new agents initial and rate and to Lock Refresh business our The Agents response. insurance recently

Additional year. same states throughout will gain the the benefit

create auto mentioned even position coupled an earlier, insurance We're for support confident that both will and agents the business. rate new with reductions Refresh renewal our I stronger the long-term competitive to

experience in commercial deliver agents lines on Additionally, and insurance. new and customers products track and to for life we an remain enhanced both

streamlined lines, In and multi-peril commercial working products a creating our agents. commercial coverages starting towards for Erie new The of the include product new we're delivery efficiencies in and employ platform will September.

the the customers, backed commercial are understand when needed. right to package our service product that will an For and there provide for risk by a easy mind support of and peace management, protections protection,

most on Family is Life product financial a and easy protect process fits at they budgets. similar being ones to a to written a strong well making price lines, opportunity and fast, will for Term process loved progress transactional personal in Life that have an customers point a

aren't these and changed live for hasn't in dampen along marked month, normal spirit. a is celebration our of aspects in done many a so work. on What with plans it hold. our history, And This events gatherings, pandemic are we times. but the anniversary, we general, significant has how milestone flights family Last Erie though other and Erie's XXth

I've workforce. seen weeks. in these We've several past happen over amazing our more doubled Erie than remote things

an has facing our extremely of team care customer compassion shown level for Our hardships. high customers

this necessary all the I together. right often, to and our through to get the shareholders. I our our continue our customers employees ourselves do this I believe and We're continue this customers, across to truly agents, it. say we'll our for because we and it, our claims employees, serve work Our and say communities in thing together, Erie, challenge

for interest continued Thank Take in Erie. stay care, safe. and your you

Operator

gentlemen, and for conference this Ladies you Thank participating. concludes call. today's

may now You disconnect.

Erie Indemnity (ERIE) 8 May 202020 Q1 Earnings call transcript