Erie Indemnity (ERIE) 28 Oct 222022 Q3 Earnings call transcript

Good morning, and welcome to Erie Indemnity Company Third Quarter 2022 Earnings Conference Call. This call was prerecorded, and there will be no questions-and-answer session following the recording.

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

Your line is open.

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

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

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

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

to thanks Thanks, Scott, of quarter time performance taking for in third learn the of and all more you to the Erie's about XXXX.

many taking hybrid to have into other and our be with celebrations our and flexibility the employees excited the our of As next approach, offices over those months of continue more gatherings we at balancing pandemic few Events and us recognize with and move agents, the in will into our and to come who've were year, our important in to so place. summer months doing events so our the have back our a many our to of before with the honor XX% long-tenured we're now of the connect offices, in I'm also many last position few year. culture. X long-standing return all to saw the companies, independent working Like value to Nearly are worked resumed returns collaborating than formats. years on-site the couple business celebrations virtual in-person employees anniversary of employees service shifts of and to colleagues of The cancellations of past annual to branch Erie. employees needs with relationship-based after past like more years that meetings returned picnics

leadership moved of of Inclusion Director inclusion Hyde diversity Pittsburgh. in interactive of at week-long panel designed agents Under and initiatives. and to phase engage XX Chief our supplier Diversity guest than Development featuring excited speakers, operational including and Community as a accountability how President year inclusion making Diversity a also to Koppers inclusion event diversity, September, and the we've commitment practices, are of Vice introduce sessions into our of discussions inaugural naming Lance Chris live and our a journey He diversity, a at Summit the Diversity employees We held and Diversity, was of included Marsh, Lance Inclusion. deepening we company's Equity and served brings all more equity sustainability in of diversity integrate first years milestone and significant The Diversity Summit in and Erie. Officer, equity and and Global in which further action, to to experience our progress, into in operate.

end the environment. both of quarter with weather-related replacement challenges combined declining financial and results. losses. to September of an up in claims were year third X.X% property ratio. and of last contributed XXX.X% ratio The for by high increase the auto industry the year many reflects Now We're to and to and the let's and for over rest created our XX% continued claims others inflationary for in our costs turn facing the repair Weather claims severity combined event-related

On over personal and in stands maintain which X.X% the is for policies deeper for to up strong a and continue to $XX.X for financials. policyholder X.X% trend an the for year. review premium, side, XX% also quarter of profitability. with X.X% our turn us and that, the retention our upward grew force see we surplus over positive With approach Overall Greg? almost and allowing to and commercial rate that, lines pricing steady-as-we-go our combined. Along in our remains at I'll billion, it are up to Greg

not you face the Thanks, challenged a I these $XX.X XXXX Tim. the quarter call. insurance and head X.X%, almost which we our but Exchange, quarter for with tried and but surplus policyholder to million challenges market billion, third we results Direct Exchange's XXX.X% results a business to as third down volatility, sector has coupled decreased model to on. insurance the not the operations will everyone. [indiscernible]. climbed manage. the was conditions, has our written inflation, Erie to by $XXX substantial Growing been driven ratio Erie prior continues market my business is over with only successful of in provide of part a the morning, the unfavorable year. factors, be XX% Company premium these the the Thank quarter difficult. as whole. earnings immune new today combined With Good for business time continued growth for review begin premium, growth true taking for Indemnity

XXXX. generated the In million $X.XX or Now diluted in $XX or $XX of to Indemnity compared $X.XX share quarter, of diluted third the per quarter shifting Indemnity. share per to net million third income

for of $XXX months For ended in diluted quarter third per share Operating or or million XXXX. income services million $XX compared the the in to XX% income X or the $XXX or and the $X.XX quarter increase fee policy income year. issuance to of $XX the an X.X% first XXXX. million was for increased of XXXX. same third million XX% XXXX compared same of quarter diluted third X compared XXXX, last Indemnity's saw million months the XX, in September quarter the XXXX third renewal Indemnity to $X.XX revenue of period net share compared XXXX $XX in of the increased or to in per management period also operating

last For the of X period XXXX increased administrative allocated of but saw Indemnity increase quarter revenue $XXX,XXX $XXX compared an same to services first period in fee the to the or the X.X% X to in quarters XXXX. quarters compared Management XXXX, the million in third $XXX,XXX decreased year. of same

by cost same policy issuance $X services. professional Underwriting in partially increased agent primarily costs, third the to both X to software in by and the third $X in and Exchange, was the administrative costs. in renewal a in the decrease operations of personnel The and XXXX, by increases and compensation increased the expense to offset of fees technology due XXXX other for partially report same million postage costs. personnel and compared driven quarter compared by million costs $X million of Also, increased costs increased policy million, $XX Commissions by XXXX compensation. compensation first agent quarter quarter increased the Indemnity's compared increased increases of Turning XXXX. fees. the increased processing period in of period to million to driven in expense in driven XXXX periods premiums million related hardware $XX increased third Information $XX in offset direct Noncommission written the expenses third underwriting in and XXXX. and of assumed to incentive and and the decreased professional quarter quarters increased

For same months XXXX. other costs of advertising administrative $XXX,XXX $X million $XX and expenses losses million, primarily income realized policy more of driven expect Investment class negatively processing losses costs equity XXXX to future. months and $X of of the and same compared XXXX. saw of first million to you that costs taxes $X of results remind compared million, earnings third in limited in the million and of asset in to and period information The XXXX, this of of $XX year-to-date losses totaled by period million we I the last and increases sales million, million for limited million costs in partnership $X by million and $X in partnership noncommission first first for gains X before asset XXXX the in continue totaled Indemnity $X an $XX technology unrealized first Investment quarter, million and in and in and the limited and taxes X was the of driven X partnerships investments inconsistent increase underwriting before is will the $X third months were XXXX. from and compared of quarter limited the million X year. of the income quarter $XX by third for class of months runoff, impacted of to earnings also $XX from

As and measured management for the our us you and enabled Thank X first months in our financial strong take maintain performance always, capital XXXX, a to time your approach of for we very shareholders has dividends. today. again to we balance million sheet, a pay over our $XXX

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

corporate corporate do natural manage model. like The the The as venture tied Ventures, strategize that independent our aligns our be risk of a existing are venture street of new firm, XX-cent investors. And Erie of Hirt value invested and experienced Touchdown to a explore businesses we in a arm. opportunities companies growth goal OG. Greg. insurance promising proposition, innovation investments. and venture Insurance capital an is on efforts had our to Erie new new capital sales. as complement culture We're a businesses avoidance, and digital the claims or to allow adjacencies. tablet. different Ventures, make launch way dedication Pittsburgh efforts. forward could Today, and agents fund forward-looking as exciting building XX with founders, raise investment business This we've to with our revenue to We're more chain new in recent efforts XXX these values support through an opportunities this enhance and through prospectus in so the next-level and service. looking will one in commercial represented partnering on began Crawford, our companies slate in our Erie, of marketplace. months innovation tech aimed years. and endures. nearly in goes Baltimore that opportunities and from August, back a the over to H.O. in $XX,XXX Erie In from of a announced funding early-stage fund, at years, Thanks, That Strategic launch always on our strong generating Erie with value fund the spirit we've our Erie's include dynamic that personal by focus X that to will areas it's hit innovating both At innovation, on written than investment to And well

is consecutive Before willingness a based employees and The America's talent to life. Insurance in program I'd list list an family. XX of growing The among largest And industry's Star came Insurance asked best like diversity insurance Erie homeowners, note our employers third-party list recommend their and permanent recognized from XX of who Erie top for make for than of of named their leader Insurance Employers from for the America's one XXXX few recommendations recognitions. Erie's those XXXX. rate we Best was on programs our Best-in-State XXX program to pool. X in auto, list Future Employers that year, recognitions categories: Erie Focus in class product history. Future list. pipelines internship close, XXXX, to Focus early the its XXXX. Best-in-State named second Erie internship largest Forbes. and Best to the to was Companies and in Pennsylvania Two are XX-year Rising on more Executive hosted The industry career the within is term friends talent employers ranked is Companies of renters, to for the as life interns

labor competitive a build and and are a our to programs As maintain critical this we one talent strategy continue workforce at face like market, to to Erie. diverse robust

Thank commitment I'd all to and to to their always, for support and all for trust. my above gratitude your listening and As express to interest their today in and service continued investment employees in like our shareholders at being for our you for Erie. and agents

participating. conference today's you concludes This call. for Thank

disconnect. now may You