ERIE - Earnings call 4 2022 | Erie Indemnity Company

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Scott Beilharz

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

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

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

please that For important filing related with yesterday in may press see filed XX-K the SEC in cause our information Form safe factors these and on the release. statements harbor differences, the

the any This Erie Tim's risk be reproduced not Company. It prerecorded may prior that, With call is Company. remarks. the rebroadcast Indemnity the other by we'll property consent to without of of Erie Indemnity on party or move Tim?

Timothy NeCastro

to of year-end more our fourth thanks and Scott, to in of time quarter for results. learn Thanks, Erie's the performance all you and taking XXXX about

economic name in supply shortages in on challenges. and minutes. labor As substantial a have which just issues we'll Inflation, cover more at all you're we historic find chain to aware, of bottom line, pressure ourselves put detail the few our challenges few of a a time

through Fortunately, is financial XX withstand helping climate. our current and to years the perseverance adapt us stability of

ability offices. helped welcome to hires working our ways of employees year. us the we new adapt also past Our new over and Throughout to transition XXXX, has to returned

people a either years we've We introduced been more for a the and as experience of flexibility been that collaborate learning the in-person connect. shifted the to greater also how height began X gatherings virtual during canceled resuming have where and format or than pandemic. in It's

a employees dedicated with that hybrid flexible splitting and work. both office rooms the remote new majority meeting now person spaces our and in of are in-office in equipped mixture experience between supports been and The their Many virtually. time in of employees of technology And working neighborhoods, format, participating Erie workspaces. have now of a are

for an handling returns to world feedback are learn way. of choice the the us sure significantly so of today's to that we're We'll brand. continue talent service why continues. ways and tight remains of X past years, employer our these Erie maintaining the ensure over and these the in making It's to adapt while employee and is changed has new critical the important to to talent culture, traditions work distinctive and competition That's that clear relationships gathering working right to market

Before past some and I quarter let's to year-end fourth share from financial results. additional updates the year, our turn

in XXX.X% mentioned for feeling impact I was of current earlier, As we Erie Exchange notably XXX.X% the for are the XXXX. ratio to compared economic XXXX climate, the which Insurance combined most for

frequency quarter, more and index higher The creating levels slightly claims we December. losses. see are the extreme like up costs are through and events consumer weather pre-pandemic owner saw below in to storms XX.X% hurricanes fourth was property up higher-than-usual price remain Auto While we industry severity. continue repair X.X%

of Like underwriting hard to In a the with challenges we're will responded along strict which and reviews. the industry, our more we've expense market, doing shop. with this customers these measured know adhering to rest economic management, profitability we increases, continued through agency guidelines rate approach

also they price a attractive more demand a for value looking be may superior customers While proposition.

see we're that something that pleased Erie offers, our to and numbers. in That's growth reflected

combined. policies growth for for growth deeper X.X% premium remains review premium lines personal are pass past X.X% impressive as of and strong Greg? I'll our Our top in an rate XX.X%. that, new Greg financials. strong With at retention line and was it climbed the increased to XX% commercial year business a up Overall, this and force over

Gregory Gutting

Tim. Thanks,

compels us steep severity claims a to quickly Because this agile, Exchange, have still policyholders the beginning at and rise loss more adapted perform of driven agents. inflation. related cost, to we in in costs the insurance unprecedented to of alluded for this Tim as discussion, continues to As claim become manage, operations the see way to our by that we

We have rate look policy also we've into taken a deeper and a approach our underwriting, structures. taken to diligent more

these of efforts line in are a to growth. putting we us seeing All financial position are already top deliver results as improved

direct for per driven Exchange quarter retention. written the fourth the average increased increase an in and XX.X%, was policy premium The growth premium policy by

of For increase in the to an combined XX.X%, new increased in Exchange the policy by The X.X% XXXX. direct of policy increase saw increase premium written year, of written direct new retention. an premiums compared strong driven was and with growth X.X%

$XXX for in indemnity. share of in fourth or We million results per Turning $X.XX quarter $XX to XXXX. year compared per XXXX. $X.XX $X.XX million over nearly diluted fourth quarter XXXX in million the or or compared $X.XX per net XX.X% Operating fourth in income the diluted diluted was to $XXX or the XXXX $XX Net million fourth share the or of diluted income compared total share the quarter increased per to to share was of quarter income million XXXX. $XX

in XXXX. policy fourth or income XXXX, total to $XX $XXX almost year million over XXXX. operating compared of From increased for million or fee the million and Indemnity services in a increase an of XX.X% and to to XXXX revenue compared quarter Management perspective, of fourth XX.X% renewal year $XX or total compared quarter from X.X% the issuance experienced the

cost over and the driven premiums same to policy in quarter periods of and in both were of for total total the in quarter from total the year the The fourth million $XXX renewal compared for Exchange. by million The XXXX and increased the and the fourth direct issuance XXXX. operations written increases increases services assumed year $XX

and $XX an increase affiliated assumed increase to year both commission were Commission expenses increased the fees, in and fourth grew by premiums. driven $XX total fourth the in for quarter the the quarter year the Similar direct the management written while million million. total expense

to noncommission Turning expenses. our

the costs driven fourth increase and in and fourth quarter, was XXXX. fourth advertising and For increase of other million and to costs, costs. over increases quarter the processing Indemnity technology of information costs, administrative compared sales The policy saw quarter by an underwriting $XX

compared policy increased technology processing and personnel $XX costs report due Underwriting For the $X to million costs and $XX total costs. as as million, software XXXX. hardware underwriting grew grew increased well as costs by year to costs personnel by XXXX, noncommission well driven costs. million expense as Information

advertising and nearly to other advertising $XX increased And increased Sales administrative costs million increased related driven costs. costs agent-related and million compensation personnel by expenses professional and finally, increased fees. due $X to and

decrease of Indemnity's in by income $XXX,XXX. partnership the quarter driven from pretax The quarter limited fourth to was investments a This represents losses totaled investments. million fourth roughly decrease compared $XX XXXX. of

portfolio to recorded to in pretax attributable limited recorded year XXXX. earnings in partnerships $XXX,XXX, over of The $XX XXXX large total a million $XX of just from to of is unlimited income million Indemnity's compared $XX with in our compared partnership XXXX. decrease investments decrease million losses

to $XX and to incurred will more gains unrealized $X limited in and also we losses from future. XXXX. I class expect and XXXX in of partnership in this and realized you Indemnity compared million continue inconsistent asset remind classes that earnings runoff, the recorded million in asset limited the

our Finally, the for Class in in Board XXXX, Also Class year, shareholders paid million. XXXX. of and B December A shares dividend increase regular our both last dividends $XXX in for quarterly approved of amount in X.X% cash we the a

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

Timothy NeCastro

an part been speed heightened years. and become but has X vital Thank also business. has to isn't of the certainly we do it's new to how how focus technology connects, of the not over Technology only This you, integral our past but workforce Greg. us,

and we're in technology, with modernize the capabilities in of essence of smarter and our engaging Erie's strategic faster, assets: independent and focused overall goals digital success get because means of our effectiveness greater our nimble. while to key also And strategy to work and ensure lines, investment time that of pace tracking unique our done. means acceleration strategy. working agility objectives is business to being we're force. our hitting one continue most This model agency setting results the It working on and

and modernize to more initiatives reductions. this This recent cold legacy quoting to flow with major to market ]. will only Erie run a approach shorter agent. through combined services called products capture process, new an times launch quoting to for Not to [ accelerated routing with agile lead pilot allow was also more more bring projects agent prospects streamlined This personal and expense online a for a digital new aims program and but interaction and quickly, platforms will used us

meet which is It competition, where from they the about. exactly strategy with customers brings are, technology to the the what is differentiates Erie together our that human touch

agencies Following pilot, more the we expect expand program throughout the to XXXX. to

We to existing also and continue enhanced new to invest in customers. serve ways our our

more is digital a self-service experience. than increase the services digital last popular account for X customers More team were an of year, XXXX. used than by acts tool and handled chat Our million by platform, customer conversations feature of households, services a have more now become XXX% XX,XXX as over than online which

in Coverage, policies within been showing average of recent footprint products and in roll Suite on covers piloted states in nearly protecting has protects combined early against tool was XX businesses X. so X rated to Water coverage, Based water than added now are Cyber customers customers out early more the half the far, our data, Business attacks, X damage. an second also XX,XXX to types XXXX Extended results. which customers; X.X the promising new XX,XXX The states and off which in cyber survey of against certain launched of of ErieSecure XXXX year,

we and have technology input, services best in these alongside place. done, products, our and agency priority with always unparalleled. their refining place sure they the processes force we've relationship recognizing successes have our independent We As we're their a business developing The seeking on products is and making high agents. very and new

a second when among independent is Independent recognized Study have U.S. J.D. in highest insurance XXXX recently was These Erie in in the lines in highest satisfaction. were agents the casualty the This rated Satisfaction year released October. efforts Power insurers Erie property ranked Agent row personal

we our Our creation a will to XXX and trust and as century. distribution nearly independent build second that our success on we been has continue driver for of move agent of into collaboration key years, model

our been that announced some last Before I want executive have we call. to since our to close, team acknowledge do changes

Chief As truly and this valuable of Greg Vice he missed. Greg extremely an April. and partnership the his will the offers Gutting, is financial we shared expertise at end both be President for voice will publicly Executive His call, perspective in our Erie. be been on of in gained and a institutional wise Officer, November, nearly retiring familiar career Financial XX-year and team, member the in executive he's

leadership Senior and Financial role Officer will May Enterprise Julie Senior succeed Vice to Greg Executive leadership & XXXX and have joined taking positioned President our Touche Pelkowski Chief an for as our Prior various career that exceptional as finance year, as began Julie and Julie's roles internal auditor before Controller. last X. to strongly XXXX moving in currently Julie She within served future. in us become with President years on her Vice of serves into the Vice Deloitte Erie President on division. of Office. leadership

was Corporate both welcome that, and Sean business team, and Resources and development, leadership position career team. Resources asset And we held Services Erie of X. executive Human acquisition Sean a is prior His training Sean's Vice knowledge Finally, our XX-year of community support Senior Since executive our includes led to to our corporate functions deep Human as and of in talent Sean Officer. President. outreach. his promoted the Human President Executive organization on Resources to tremendous roles, expertise Dugan. XXXX, January and to Vice Corporate the has he

our above all for listening today. employees interest Thank you our like agents and dedication your for and Erie. thank their all continued shareholders As and continued of in and our to you, I'd for always, commitment, support in for to service trust all their

Operator

the for Thank this Ladies you concludes program. participation. your and gentlemen,

You may now disconnect.

Erie Indemnity (ERIE) 2 Mar 232022 Q4 Earnings call transcript