Erie Indemnity Company (ERIE) on Q1 2021 Results - Earnings Call Transcript
Operator: …following the recording. Now I would like to introduce your, Vice President of Investor Relations, Scott Beilharz.
Scott Beilharz: Thank you, and welcome, everyone. We appreciate you joining us for the recorded discussion about our 2021 First Quarter Results. This recording includes 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 erieinsurance.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 may cause these differences, please see the Safe Harbor statements in our Form 10-Q filing with the SEC, dated April 29, 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.
Tim NeCastro: Thanks, Scott, and good morning, everyone. I hope that you and your loved ones are staying safe and healthy. Last week, we held our annual meeting with shareholders, which was conducted virtually for the second time in the company’s 96-year history. That’s something we never expected to do more than once after shifting formats in 2020 due to the pandemic. COVID-19 has affected our lives for much longer than any of us anticipated, but we are hopeful that brighter days are ahead and some semblance of a return to normal activity is not too far in the offing. That normalcy includes our efforts to begin returning more employees to the workplace in line with safety considerations and productivity advantages. Turning to our first quarter, I’m pleased to report that even after the most tumultuous year, we delivered solid financial results and are well-positioned to continue that strong performance again in 2021. As you saw in our press release filed after the market closed yesterday Erie Indemnity reported net income of $74 million or $1.41 per diluted share for the first quarter. This is compared to a net income of $59 million or $1.13 per diluted share in the first quarter of 2020. In the first three months of 2021, we grew premium by 1.7%. This increase was largely driven by strong retention and growth in total policies in force by 2.8%. The continued impact of the pandemic on driving behaviors and puce of your weather events and our footprint contributed to an outstanding first quarter combined ratio of 87.3%. Well, this positions us well going into the rest of the year. It’s important to note that we expect combined ratio will normalize as the economy recovers and driving returns to more historic levels. Now I’ll turn the call over to Greg to expand our first quarter results. Greg?
Greg Gutting: Thanks, Tim. Good morning, everyone, and thank you for taking the time to be a part of Erie Indemnity’s first quarter 2021 earnings call. I am excited to share with you our financial performance for the quarter. As Tim mentioned, last week we held our 2021 annual shareholders meeting. Although this year’s meeting was again held in a virtual setting, we established a connection with our shareholders by sharing the many ways we maintained our human touch and a year the challenge that objective immensely. And today, I look forward to connecting with you and sharing our success during the first quarter. Starting with the Exchange, the insurance operations we manage, direct written premium growth for the first quarter was 1.7%, new business premiums increased 19.7% in the first quarter of 2021, compared to the same period in 2020, while the average premium per policy on new and renewal policies decreased 1.5% driven by the rate reductions on personal and commercial auto policies that began in the third quarter of 2020. Exchange’s combined ratio for the quarter was 87.3% and policy holder surplus remains very strong at $11.3 billion, up from $10.7 billion at the end of 2020.
Tim NeCastro: Thanks, Greg. As our financial results confirmed, we’re off to a strong start again this year. On our last call, I talked about the many advancements made in 2020 to bolster our competitive position with a substantial focus on augmenting Erie’s distinctive human touch to greater digital capabilities. In the first three months of 2021, that momentum continued. Online account launched in 2019 gives customers flexibility to do business with us in ways that are most convenient for them.
Operator: Thank you, ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.
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