Erie Indemnity Company

Good morning and welcome to Erie M. Demina T Company fourth quarter and year end 2021 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 Baila-Hartz. You may begin, sir.

Thank you and welcome everyone. We appreciate you joining us for this recorded discussion about our 2021 fourth quarter and year-end results. This recording will include remarks from Tim McCastro, 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, 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 these differences, please see the Safe Harbor Statement in our Form 10-K filing with the SEC dated February 24, 2022, and the related press release. This pre-recorded call is the property of your indemnity company. It may not be reproduced or rebroadcast by any other party without the prior written consent of your indemnity company. With that, we'll move on to Tim's remarks. Tim?

Thanks, Scott. And thanks to all of you for taking the time to learn more about Erie's performance in the fourth quarter of 2021 and our year-end results. After working through the daunting challenges of 2020, We entered 2021 with a sense of hope for a return to normalcy and answers to the unknown. The pandemic, however, has persisted far longer than we could have imagined, and the challenges and uncertainties related to it have continued and evolved as well. Against that backdrop, our performance in 2021 reflects its share of accomplishments, milestones, and points of pride, among them reaching 6 million policies in force for Erie Insurance Exchange, This can be credited in large part to our hardworking agency force and dedicated sales and underwriting teams. Our steady-as-you-go approach to pricing and commitment to long-term profitability has helped us surpass this milestone and positions us for continued growth as we move towards 7 million policies in force and a century of service. The year also brought a significant moment in the company's history, the dedication of our new seven-storey office building. The Thomas B. Hagen Building, named, of course, for our chairman of the board, is a symbol of pride and hope, both for Erie, the company, and Erie, the city. It provides us ample space and an inspiring environment for new, safe ways to come together when we begin returning more employees to our offices. We're no longer predicting a date for that return. However, the logistical plans are complete to bring employees back when it's considered safe to do so. Our transition will reflect the nature of how we work and do business has changed during the pandemic. Wherever possible, employees will have greater flexibility, balanced with the personal face-to-face interactions that have shaped our service culture for 97 years. We're looking forward to pioneering what's next with and for our workforce, and in a way that's right for Erie and for our employees. Before I share some additional updates and achievements from this past year, Let's turn to our fourth quarter and year-end financial results. Despite the unique challenges faced over the past year in the industry, the country, and the world, we're in a strong place financially and well-positioned for success as we move into 2022. As reported in our press release filed after the market closed yesterday, Erie Indemnity reported net income of $55 million, or $1.05 per diluted share, for the fourth quarter, Compared to the fourth quarter of 2020, that was a decrease of approximately $8 million. During the first half of the year, insurance losses remained at lower than normal levels due to relatively mild spring and continued reduction in driving due to the pandemic. However, that shifted in the second half of 2021 as driving returned to nearly pre-pandemic level and supply chain issues led to dramatically increased costs for automobile parts and building supplies. More weather-related losses in the third quarter were then compounded by the catastrophic tornadoes in Kentucky, Tennessee, Illinois, Indiana, and Ohio in December. These factors contributed to a year-end combined ratio of 103.9 compared to 93.7 at the end of 2020. Growth in our investment portfolio enabled us to grow policyholder surplus for the exchange to $11.7 billion. up a little over $1 billion for the year. It's worth noting that just over the past five years, surplus has grown by $4 billion. Now with that, I'll pass it to Greg for a deeper view of the financials. Greg? Thank you, Tim.