ERIE - Earnings call transcript Q3 2020

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Operator

Good morning and welcome to the Erie Indemnity Company Third 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 today’s 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 third 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 are section financial erieinsurance.com. the and the after market issued within available website, and release afternoon supplement

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

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

Tim NeCastro

work. third hard more than you Thanks, time of learn the all in since COVID-XX about months quarter seven we to It's the and Scott. Erie's way of for XXXX. believe live to it's performance more And to thanks taking been the changed

our in economy our in the by the and navigating very Erie us respect. to at challenging new are territory standing remain grateful system and to of good all of They're this over and our essential All more who deserving keeping services. those providing classroom. appreciation teachers, recently And virtually and healthcare

employees premium and way impressed presented using to for and even our for as that pandemic. to fever our those I past proactive the more with have minutes. in innovation, for very facing to maintain able home, reached And to continually carriers service. our new out mentioned are industry, quarter, than XX-state have announced offices to to weren't it's tools all a working competitive to outpace about which a learn That and with customer before now environment. maintain demand security stability now pandemic also have high of a like of production, new hone overall you We're digital them the evident while working. through growth cross-training profitable our in our employees underwriting our the and is our able areas XX-year been of continues record track Along employees, agents way adapting care. growth, their capabilities with was essential pitch. the more our protection And in digital virtual last comfortable a is are across necessarily capabilities. Even If to few focus necessity. new some proud perform report who able working, our XX% been echo footprint. not of our of by wavered. with to delivering while demands and and Here of productivity their continues how duties agents to continue course, to continuing from workforce of Erie workforce licensed this to production, I'm I'm our on We're XX,XXX something employees X,XXX at significant and to Erie, of trademark been reductions work the few nearly our adapt competitors months, we've the well challenges over both

powerful. They service human that's communities. embrace number that who agents thing the employees is And our who lack dedication importance delivering but absence has forefront, the customers their our Erie are had can't represent human from the the that with are brought digital screen independent become promise of to local the to pandemic competition. it something agents touch. along the many human found our behind they day, even and one renewed placed customers crave, the the something sets to and it people our who offer that that the Erie And has a carriers touch While be also every touch our on more apart the in us

on move third financial quarter results. Let's our to

a As after for our in diluted income you press quarter. $XX saw market closed Erie million share net filed of Indemnity the release yesterday, the reported per or $X.XX

agility the As industry Conning the at forecasted growth challenging X.X% environment of a several to months. growth year. this while this the and are for sales we on we competitive over I focused and testament profitable Once growth despite team force, has and who retention industry past XXXX, currently work the our earlier, noted premium remained face hard year, stand X% premium of for the is we again, and agency outpacing and

in minutes year review side, of miles we're below nationally Greg's of from terms globally. financials, driven. I'll some the financial progress the events more in initiatives and relatively despite claim unprecedented a our solid the change of losses On in levels. reduction weather remains industry-wide This Overall, remained an position our few stems after summer talk products normal uneventful territory, experiencing as as on about and a well key Greg? across

Greg Gutting

through Tim delivered in time of will I quarter the employees and that exchange. and duty to be continually third key NASDAQ about Thanks on even a stakeholders, have spoke our I provided stock a Indemnity shareholders. of our safe This part in call. provide Erie for even Good regarding everyone. environment for financial a Erie pandemic. work to a when products quarter, time to major uncertainty. Erie celebrating I morning, financials performance best-in-class the for we Thank the XX a yet strong month, for again, Tim. agents, taking examples superior address you earnings you say each our our area I for spoke performance milestone, years Last facing immense you global reached the delivering our has to Company’s proudly can amazing that today

the the but growth are company, not investment only Thank We of have Erie. you achieved, continued our for your our we and that for in for well. as shareholders proud success

prior from a you with surplus over which business share operations our driven for new XX.X%. quarter almost premium third we combined XX% the premium, the growth with in to $XX policyholder billion year, the to I'd Now direct ratio for the by Exchange's substantially grew manage, X% with written was Starting climbed previous quarter strong results. the quarter billion, growth Exchange, in of up The insurance third quarter. the $X.X like

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

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

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

both to costs, included Exchange, increased costs underwriting costs. increases higher a the and investment as and the $XX operations, to primarily and months, vacation well assumed million, the costs; quarter of quarter increased increases XXXX. were in totaled Information administrative personnel the of the of driven of million quarter quarter third in months costs result nine improved for And decrease COVID-XX awards due combined price little the quarter XXXX driven to direct primarily the to before in award XXXX, $XX technology for the were The premiums increases incentive costs million from company less by nine The investments driven driven XXXX, as over Increases the lower higher quarter $X non-commissioned Exchange’s XXXX, the administrative lower ratio vacation nine the the expense resulting in in accruals this the months as XXXX, third increased and and year-to-date and the first took agent of first increased Increased in third in third also stock Thank of as personnel report XXXX personnel of incentive million increased in finally increase the and this cost in costs expense $X first Non-commission results in professional Indemnity’s commissions to and stock your million to third ratio other costs months categories increased $XX increased costs. in to COVID-XX impact Year-to-date closing, periods Underwriting XXXX. fees. in volatility awards underwriting despite $XXX by uncertainty third on and by same the in Indemnity company personnel a million driven pandemic. all pandemic quarter company and the million by and a in the COVID-XX million compensation strong of an driven of plan expenses Income profitability, in hardware million nearly increases other saw to the the professional third and taxes growth fees, technology increases increase results, million. pandemic. pay the price were of compared the third costs $X and processing In by personnel of in claims and you deliver and for $XX financial an financial expenses has year, Underwriting in by software again quarter which continues as due months us report to $XX due today. to lower Turning dividend by $X costs as time your of well policy shareholders in first combined plan primarily exchanges written nearly markets. first XXXX. $X for in XXXX. nine pandemic, million million, nine both the $X to and in the incentive compared automobile from expenses year. increased enabled due by costs. processing by the the million, to in personnel in our due due our created policy increased accruals in $X compared the employees

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

Tim NeCastro

Thank you, Greg.

earlier, As on I key an touched have of this even amazing our environment. executing on several adapted job initiatives doing been teams in

that Just the on last products to services way our quarter, with in our new work progress we've will we the improve agents some customers. and significant provide service and

in that a month, members tool of with changes most payment XX,XXX construction, or and task highly and accordingly. customers Erie agents and the in the cards, step quickly app, mobile status in with get new notable first touch their collaborated than the with employees a more can tool of the insurance team their information design access One downloads. Throughout This the resulted tested this they mobile market. feedback claim, had In September. A agent. every apps billing it view agent and and customers. activity, Using ID user-friendly the release check implemented of the bringing gaining policy was force gathered traction a of on app a customers, of app their both make is to the

remaining Erie‘s reimagined late been issue for policies product and Turning less new updates solution application August, bind into single the legacy in were nine Secure Tennessee Secure Agents to will business of of multi-peril, November. agencies quote XX% and and in month, product Earlier rollout Erie in Seven the Agents of Agents than more States first than Carolina, in commercial started time. the product this powerful one quoted business. four tab in access turnaround product. the introduced month, and first state in North this can Erie's QAS commercial new system. delivered the on Erie Virginia. standalone West or more for new Ohio, the policy single in goal quote was be quoting a minutes, our we across exceeding interface Pennsylvania States streamline the just have service product

the the whole a for during about can This statement. done We and product to new life that can XX up just it get straightforward out to life customers also This new Erie be ones. product without insurance instant and for issued a minutes life agents avenue insurance is issue physician August. need rolled it application opens express a process. auto in insurance, five medical product conversations bound in quoted and be and light for an loved themselves simple for those to or for critical exam start a their makes protection quote

refresh business. for they've insurance with even to Erie now our agents rates eight offered a States. rollout competitive being in Rate Lock Our ability Lock customers the agents continues until and and an rate competitive both qualifying stronger auto lock more auto made to overall along reduction in change. is position refreshed This a Erie new renewal and their by support Rate long-term provides to product creates

coverage. are equipment justice Erie new Home the matters has issues Homes XX% reflect the to XX% on the us is pleased on pursuing offer service diversity, Lock access offered. also is and greater up us existing our incentive positive. force in most public and this employees, States, We're more breakdown the taking that diversity coverages, bumbled inclusion, way urgency are report through our customer on to prompted while have the to where reported than Erie we're on than at on teams reflect production in results protector taken what And and to Pandemic leading Erie. customers in to industry Secure giving in and have racial our Applications XXX,XXX legacy more that complete. line in new consciousness quarter, our to Secure product Rate and early than conversion inequity these underground of social equity both One promoting also and base. how including action we're for a August. creates agency As home prompted more second introduced efficiencies policies greater agents policies is Converting

agents forgiveness, more the and reminder been relevant important diversity plan had a the program is. current the participate growing the the year across climate Although step diverse team things share and in is meeting program, or unique in to the agencies develop our local making, marketing we how business as focused agencies every in the on than within forward seeing customer physical country serves their abilities, it does important approving and get program. focused up more. is activities, work a of To that we're aspects have community sexual LGBTQ rich It didn't this began base receive customer. If starting to take agency they're agency great long if efforts the our with this networking We for are race, proud mention of needs on hiring the successful. the orientation, or program age, agents financial one I'm that this socioeconomic and they strong to through additional marketing and Ohio, diversity, where looking efforts, initiatives focused using a just status, eager with weeks is for gender, to and these announcement, to funding It's staff. ensure support fund community. support approved, of in to that of the all potential program for ethnicity, our two I'm force do loan board. on to the that workforce on

recognitions few third-party and to a close, we I want Before share accolades.

best renters, income policy America's magazine and purpose. be our President so XX combine First Forbes’ of his recognitions magazine. also a Erie a several fixed congratulate named offer to Officer. out President a service recognized Manager Also investments. to and its in named Newsweek was permanent noting has product Ron alternative one month humanly in policy comprehensive income in life and We to this homeowners, who as and our that possible pleased insurance, recently to Senior America's perfect And all equity top we bundles instrumental is XXXX with in term new companies. insurance policyholders variety do These To near renter's background life in and been at was awards of base insurance. brings his Erie's Investments endorsements. cost. are lowest has provide renter's and among list his earn only customer extensive five finding both Portfolio of I'd most pick Investment investment the our served categories, been portfolios. to Money Habursky, with that with enduring Ron appointed of Senior possible like to were that auto, for to Erie for on nod I'm companies and building inaugural announce and carriers few commitment fixed as role our years protection perfect Chief near Vice and portfolio state of service Vice Ron best Erie honored

of move like shareholders. for to am support and dedication our for continued grateful I'd we agents and employees and resiliency quarter the As into the trust this, anniversary, and of say the final our I how our XX of

continue While you well. to loved you. all for ones of and we continued pride hope you to company uncertain strength I and and interest in all is your continues times, a stability Erie, stay Thank point for the hope this your demonstrate distinction of for face I me and

Operator

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

Erie Indemnity (ERIE) 30 Oct 202020 Q3 Earnings call transcript