Erie Indemnity Company

Good morning and welcome to the Erie Indemnity Company fourth quarter and year end 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 Byhars. Please go ahead.

Scott Byhars Thank you and welcome everyone. We appreciate you joining us for this recorded discussion about our 2020 fourth quarter and year end results. This recording will include remarks from Tim DeCastro, President and Chief Executive Officer, and Greg Dudding, 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, erinsurance.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. These remarks are based on assumptions subject to known and unexpected risks and uncertainties. These risks and uncertainties may cause results to differ materially from those described in these remarks. For information on important factors that may cause such differences, please see the Safe Harbor Statements in our Form 10-K filing with the SEC, dated February 25th, 2021, and in the related press release. This prerecorded call is the property of Erie Indemnity Company. It may not be reproduced or rebroadcast by any other party without the prior written consent of Erie Indemnity Company. With that, we move on to Tim's remarks.

Thanks, Scott, and thanks to all of you for taking time to learn more about Erie's performance in the fourth quarter of 2020 and our year-end results. I hope you and your families are staying healthy and safe and are ready to move forward positively in 2021. Last year was unlike any other. It demanded a lot from us as individuals and as a company, and it deeply impacted how we live, how we work, and how we connect with one another. The culture of the Erie has been an incredible asset in helping us get through this together, and I'd like to extend my sincere appreciation to the nearly 6,000 employees and 13,000 licensed agents who make up our Erie family. They adapted seamlessly to the new ways of serving our customers and keeping our business thriving over the course of this uncertain and often challenging year, In March, as the threat of the pandemic became more clear, we equipped more than 95% of our employees to work from home in a matter of days. This was to keep them safe and to reduce the risk of exposure to the small number of dedicated employees whose roles require them to be in the office. I've received countless messages from members of the Erie family expressing appreciation for the actions we've taken over the past year to keep their well-being a priority. In April, we provided $400 million in financial relief for our personal and commercial automobile customers, including $200 million in policy over dividends and an overall 5% rate reduction for those policies. After the $2.5 million dividend checks were distributed, we heard from thousands of customers who responded with greeting cards, letters, and emails thanking Erie and our agents. To support communities across our geographic footprint, we provided an additional $2.5 million to agents and branch offices to support charitable work in local communities. Our agents and employees stepped up in big ways to help feed frontline workers and first responders, support local businesses, and give money to charities in need. This important work was reflected in nearly 2,000 stories shared on social media. The safety and well-being of our customers, agents, employees, and communities has been at the forefront of everything we've done in response to the pandemic. While it's not how any of us expected to spend our 95th year, this balanced and intentional approach reflects just how committed we are to our longstanding principles of service and doing the right thing. Let's move on to our fourth quarter and year-end financial results. As reported in our press release filed after the market closed yesterday, Erie Indemnity reported net income of $63 million, or $1.20 per diluted share, for the fourth quarter. Compared to the fourth quarter of 2019, that was an increase of $3 million. Greg will talk in more detail about the financial performance of Erie Indemnity Company in a few minutes, but first, I'd like to share some highlights for the year for the Erie Insurance Exchange, the insurance operations that we manage, recognizing that a healthy exchange is an integral part of Indemnity's success. Policyholder surplus of the exchange grew to $10.7 billion, up almost $1.3 billion for the year, reflecting a disciplined approach to underwriting and a sharpened focus on investments. Over the past 10 years, the exchange's surplus has more than doubled. This surplus allowed us to provide the policyholder dividend to our automobile customers that I mentioned earlier. In 2020, the exchange grew property and casualty premium 2% over 2019 to $7.6 billion. Rate reductions led to lower average premium for policy, but total policies grew by a solid 2.1%. On the claims side, our territory saw fewer catastrophic events in 2020 compared to 2019. This, along with an industry-wide reduction in miles driven due to the pandemic, led to below normal losses and a combined ratio of 93.7 compared to 105 at the end of 2019. Despite the challenges faced over the past year in the industry, the country, and the world, we are in a strong place financially and well-positioned for a successful 2021. This reflects the dedication and adaptability of the agency force and our teams in sales, marketing, underwriting, and products, who ensure that growth and production continue through the challenges. And of course, it underscores the strength of Erie's value proposition of protection and service demonstrated by our claims and customer service personnel, who stepped up to serve our customers in new and meaningful ways. I'll highlight some of the progress and accomplishments from 2020 in a few minutes after Greg provides a deeper review of our financials. Greg?