ERIE - Earnings call transcript Q2 2020

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Operator

Good morning, and welcome to the Erie Indemnity Company’s Second Quarter 2020 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.

You may proceed.

Scott Beilharz

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

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

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

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

Timothy NeCastro

everyone in time for thank and your today interest And Scott. Thanks, Erie’s you results. quarter second your

financials, business, and talk more about mind on we of a as are want couple topics a importantly, Before that our I quarterly us, touch to people. of certainly for top as

the First, pandemic.

great who quickly, and opened day of healthcare every remain have As at states and to up all professionals deliver the spread courage workers, coronavirus and with caring. the grateful us essential Erie

spread taken on help to taken and regarding we’ve and work system of protect the our the in healthcare the employees our impact communities. disease the been have its stem of actions Some remote

that employees hundred of are majority they’re Erie’s the remain workers who functions footprint. of our few Together XX,XXX systems, delivering facilities teams, throughout essential on we other While and can network wherever to site. only construction than be a and and These licensed data with service trying processing employees working, critical our remotely, on are XX-state more maintaining and consistently times. employees, our onsite cash handling Erie continue our have work these the X,XXX performed throughout promise agents,

responded in to forward away many pandemic the one $X.X the her dividends As local made and one actually Wisconsin. shared This dividend Erie [note Erie. help with she to comment for customers, X% my they efforts. bill X,XXX that I it relief a smile decision and financial and in ray of Most more especially than support who the overall with who’s and you customer dividend on our for day with us which relief wanted from check, our commercial customers. $XXX $XXX doing million donate giving also a her and hard in of business a That who about their May, average their affirming flowery, Not only neighbors told did it personal the customers pandemic pantry she’s thanking of hit with from all by brighter. face, wrote, it food a the cards, addressed checks an our million going I my customer pay would like said in a seem crisis, to that’s to greeting but sunshine. those financial for dividend includes customers country, check] looks may meaningful on bring That and dividend policyholder in included grocery rate our agents. We for automobile [ph] share mailed weekly made policies. emails, reduction million letters helping to difference with $XX,

efforts, social our This on media. help, community in work stepped in too, frontline and than workers more Erie with charities big money relief in X,XXX need. have million agents bolstering businesses to they support $X be responders, give important and first agents hear reflected local ways our was funding it, up stories nearly Our from in

and a in caring grow employees in work agents deep belief day right things, as do and doing in the community and service customers. our all serve and Our every we share both business our the we and our

Thank the happening to as race want Erie, organization Those our we as Before all with financials, that employment you continuing. occurring racism we to I rule, and employees well communities you. within simply, respect. of environment believe discrimination We conversation around do kind create believe across tolerate stand. within in of perspectives other racism. change workplace not are or and into or in treat across people was our in is our of mutual the me communities. It’s move our any Put golden positive our know in address important us to where Erie promoting we conversation, to of we At deserves. we force. we dialogue and country respect a we the dignity It’s in broaden each and that the strive and committed agency forms that with

on move quarter in the second to year results. the Let’s financial

$XX quarter pandemic confident the a albeit rest in or diluted to second slower grow, support the of ability and share combined quarter. and industry, and impact to customers, as COVID-XX financial you second agents the of saw in reflected the pace filed crisis. of As results normal. related we the to response, our in property/casualty continue Indemnity our Like our the our am adapt in Erie current July I reported release, $X.XX press net of for XX, million our income per

world with remain screening industry-wide our and have adjusted key in working, and agents experienced. few talk reduction a a sales on this to from miles deeper way minutes our new on productions growth. Greg? of Our provides help team territory to country rebound once focused the below our of extremely position stemming review as of remains again relatively levels across Greg more overall, And I’ll continue are fear after our mild and in normal our Losses has driven. tumultuous a the our financials. initiatives about despite our financial our solid progress

Gregory Gutting

exchange, Tim. and a Thank all With shareholders. like everyone. written is direct time the quarter faced insurance years second the for you for call. premium year. our X.X% growth we’ve operations challenges, we a quarter challenges the Indemnity to on things of the surplus relevant driven almost outside was premium, our pandemic. and service delivery billion, grew Erie’s part the and $X.X work of for Thanks, focus over superior prior Through today’s earnings to customers strong these products Erie operations, from combined billion discussion, the our including renewal substantially the policyholder financial of the environment and taking superior $X.X which our performance markets to X% delivery manage, climbed of our many in employees; of to for improved financial during growth experienced Starting the XX a second quarter exchange’s the morning, Throughout previous today be ratio up for the control, quarter. of superior in with most quarter, by consistent XX.X% agents; second Good

Indemnity’s of share, XXXX. to quarter, Now, net share shifting diluted the million compared second $XX $X.XX or $X.XX second Indemnity. or In diluted in per $XX income quarter to million per was the

for quarter or $X.XX second $XXX first of per $X.XX the issuance the For a increased this half decrease months of $XXX X.X% million half was in quarter compared operating year, $X of million or renewal services year. to the first $X of of quarter first million management income compared policy X Indemnity or from or also Indemnity’s diluted the revenue first to Operating X% of share fee XXXX, income and quarter second net the the the million in compared the $X million share of income of to diluted of to compared XXXX, in X.X% second per last XXXX. months X saw XXXX. decreased XXXX, in or second XXXX.

of Indemnity $XXX,XXX to months XXXX fee first to first increased million periods X% administrative of the million half XXXX, in compared in of to allocated half XXXX. the or saw same revenue and X in $X.X quarter first of an Management services increase the $XX the second XXXX. For compared the

the second in remote second costs, to XXXX. of increased due Turning costs $X assumed hardware-and-software charitable advertising million to renewal employees. commission the exchange. first compensation to the to primarily pandemic. awards first capabilities services, affiliate costs and same in support was Sales periods in and both in increased the second in Non-commission increased policy the the in compared expense by our the the $XX increased and agent periods driven Also program agent $X technology costs resulting operations response increases by XXXX COVID-XX the of were professional primarily activity driven to in million written premiums growth giving quarter XXXX. commissions the by million increases by improved and for a for million, driven million, the in $X quarter fees $X by The and XXXX. of new XXXX issuance increased of for lower primarily in to Information X% contributing by direct claims increased Indemnity’s XXXX X months X compared cost support to for months from to the incentive profitability work quarter of

months, increases non-commission of our million, months categories stock the increased nearly vacation and increase by million during personnel the expense increased decreased For in incentive the advertising canceling expense employees million, Administrative in COVID-XX from expenses postponing X $X costs accruals to million, $X price in XXXX, and of $X All of due record the by due a X a strong little we first period long-term quarter shareholders our and Both to COVID-XX solid and X in the first stemming before Thank first costs, decrease to an of our million. expenses technology in on the In driven in plan $X underwriting a X costs the compared you sales performance first expenses totaled $XX over I for sheet. pandemic. the months policy first saw nearly $XX of to smaller in in Indemnity vacations company’s first were processing the non-commission to costs enabled want $X taxes second measured by closing, X the again balance XXXX quarter time and and pandemic. of And to million million diligently your continue the second approach $X and volatility million related XXXX, from driven expense brought increase of in a maintain of to us same nearly other primarily of months X in Income months to by investments for XXXX. XXXX. capital has market months reiterate management pay the today. take impacted dividends. the that XXXX a or

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

Timothy NeCastro

Thanks, Greg.

With as which investment position, contraction for remains Erie operations, capabilities and equipped the is financial our competitive economic strong continues. in critical well service continued in position, our our

execute on customers Our teams for initiatives that continue this a will and to beyond. year and agents positive make our difference

of launch planned the with August multi-peril for business] come in most product [re-secure streamlined One deliveries called this the commercial the year will significant the of [ph].

addition to to claim and coverages, services will issue and Point we term sell Erie for support. Customers protection, come life Erie options the a to product a introduce for agent’s new empower next to auto the and believe that easy new with Life competitive provides within the have will policy In endorsement, sell, insurance Family platform agents that management product will an whole life month, of occur insurance life Sale a a of risk to understand product policy. will or will efficiencies personal instant agents our an more product our more customers. recording new package easy agents. workflow with auto benefit of Starting complement create valuable which to will personal

out, to in states. product Erie customers to refresh Lock We Rate roll continue more

long-term stronger positive. were qualifying rate provides XX, were with results to even product, As refresh reduce new they’ve where this business. of change. position new agents insurance Early support to a our Lock customers, along Rate rates agents and in in their the Erie renewal ability overall, competitive XX% states in June an made for competitive more auto offered. until lock create both auto is This states up Applications plans the were offering X which to

sum directly that evolve our the to offerings are, even by One customers in can to to was service to XX ensure in ways million Erie we transactions, customers of that eligible the accounts in X is hour. this recently, ePay. more take by bank months on we’ve than as the first reflects made will claims is claims a Currently, through change we payments payments more want the grow. our service. for hit And where customers’ they We also expect receive as in to with they the XX,XXX just recognize ePay. more to That than enhancement need claims day, and We delivers through many which meet that greater continue in continue And seen, now than milestone service we $XXX option. ePay. of This offer recent X insurers one little minutes. importance paid

we since I our earned to want accolades Before close, a Erie few first call. share quarter by

year. up spots XXX, XXX to total based fiscal on from XXX Fortune the from list XXXX X the largest moved American XXXX Erie in First, the revenue of corporations

position for commitment and prestigious among this ranking years, strong group the to speaks XX financial service. to our past Our Erie’s

affirm Superior rating AM A+ the least property/casualty strength than the of Erie retained the more financial for Erie row. at rating Additionally, in rating has an numbers XX Best, years insurance A+ agency, of a for credit group.

AM Erie’s operational from balance sheet ratings Best and performance. reflect strong Our

In also addition A Company. affirmed to profile the Life favorable The appropriate and of Family risk enterprise Erie Insurance Excellent agency risk business management.

[to earned share very our team’s data-driven and Loss call the customer that more Excellence safe. First decision interest industry. from center during creating hard The awards Of service. areas, makes respected work be a care closing, certifications care associated adaptability times. is for.] and with bring unusual superior I a Notice of hard of these continued of the customer Both one holds Loss BenchmarkPortal. couldn’t of commitment pleased our at these for Erie our work, teams First times care In to customer agents these making. take commitment also BenchmarkPortal be to Please with and in for collaboration This of reflects Of for It to stronger your are certification you Notice us [ph] I’m Erie. from their trifecta most Center the Thank support proud certification Lastly, team stay and Erie. all difference and in Erie and service team of and

Operator

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

You now may disconnect.

Erie Indemnity (ERIE) 2 Aug 202020 Q2 Earnings call transcript