Scott Beilharz - Investor Relations Terrence Cavanaugh - President and Chief Executive Officer Marcia Dall - Executive Vice President and Chief Financial Officer Rick Burt - Executive Vice President, Products George Dufala - Executive Vice President, Services Robert Ingram - Executive Vice President and Chief Information Officer John Kearns - Executive Vice President, Sales and Marketing James Tanous - Executive Vice President, Secretary and General Counsel

Good day and welcome to the Erie Indemnity Company third quarter 2012 earnings conference call. I'd like to introduce your host for today, Scott Beilharz.

Thank you and welcome everyone. We appreciate all of you joining us. On today's call, management will discuss our third quarter 2012 results and other matters related to the company's third quarter operations. Joining me today are Terry Cavanaugh, President and CEO; Marcia Dall, Executive Vice President and Chief Financial Officer; Rick Burt, Executive Vice President, Products; Chip Dufala, Executive Vice President, Services; Bob Ingram, Executive Vice President, Information Technology; John Kearns, Executive Vice President, Sales and Marketing; and Jim Tanous, Executive Vice President, Secretary and General Counsel. Our earnings release and financial supplements were issued yesterday afternoon, and are currently available on our website erieinsurance.com. We will hear brief remarks from Terry and Marcia, and then open the call for Q&A. Before we begin, let me remind everyone that today's discussion may contain forward-looking statements. These forward-looking statements reflect the company's current views about future events and are based on assumptions subject to known and unknown risks and uncertainties. These risks and uncertainties may cause results to differ materially from those anticipated as described in those statements. For information on important factors that may cause such differences, please see the Safe Harbor statements in our latest 10-Q filing with the SEC dated November 1, 2012, and in the related press release. Also in this call, we may discuss non-GAAP measures. A reconciliation to the GAAP based results can be found in the 10-Q. This call is being recorded and the recording is the property of Erie Indemnity Company. It is not intended for reproduction or rebroadcast by any other party without the prior written consent of Erie Indemnity Company. A replay will be available on our website today after 12:30 p.m. Eastern Time. Your participation on this call will constitute consent to the recording, publication, webcast, broadcast, and use of your name, voice and comments by Erie Indemnity. If you do not agree with these terms, please disconnect at this time. With that, I will now turn the call over to Terry.

Thank you, Scott, and good morning, everyone. On today's call I'll provide some perspective on our results for the quarter, and then turn the call over to Marcia to discuss the financial results in more detail. Before we discuss third quarter results, I want to talk about the severe weather we have experienced this past week. While insurance related losses of the exchange do not affect Indemnity's results, it is important we address this topic. Erie's number one priority is our customers and in times of need, our customers depend on us more than ever. I am pleased that agents are mobilized in our community and are taking care of our customers. We will do everything we can to resolve claims quickly. I'd like to thank our employees and agents for their hard work and helping our customers during this difficult time. Regarding the third quarter, Indemnity had strong gains in both net income and earnings per share, driven primarily by strong topline growth and positive year-over-year investment results. Combined, these led to an Indemnity net income per share diluted for the quarter of $0.96 compared to $0.87 last year. Direct written premium of the exchange grew 8.6% in the quarter, driving Indemnity's management fee revenue. Our agents continue to be successful and selling Erie's value proposition to both new and existing customers. The commitment by our agents combined with our strong portfolio of product and services has helped drive new policy growth, while maintaining a 90.8% policy retention rate. Higher average premium per policy in all of our major lines of business has also contributed to the increase in revenue. Investments we are making in the business from new systems to support our agent's ability to quote and bind to new marketing programs are beginning to take hold and contribute to our strong topline growth. During the third quarter, our new web-enable coding system for auto was fully deployed in seven states, and pilots were launched in three more. Feedback has been positive, as we continue to work with our agents to make the system more effective. This month we also began to rollout a new marketing portal. The portal will further enhance Erie's agent's ability to interact with existing customers, improve cost selling opportunities and share information in a more efficient manner. A substantial number of agents are jointly marketing and advertising with us, and significantly more are using sources like social media, email, local events and targeted mail to effectively connect with prospects and customers. In September, we introduce a new Hispanic advertising campaign to support our bilingual agent's efforts, to build awareness among this important and growing consumer segment. The investments we're making will help Erie agents grow their businesses and successfully differentiate themselves and Erie in the marketplace. Our agents' confidence in Erie and their commitment to grow with us has led to advances in market share in every state in which we do business. Before I carry over to Marcia, I'd like to recognize some changes in our leadership team. After nearly 35 year career with Erie, Mike. Zavasky, Executive Vice President of Insurance Operations will be retiring at the end of 2012. Since Mike joined Erie in 1977, he always served the company with a commitment to excellence. On a personal note, Mike has provided me with a great appreciation with Erie's culture and the values that have made our organization what it is today. We wish Mike all the best in his retirement. With the retirement of Mike, Rick Burt has been promoted to Executive Vice President for our product lines, personnel, commercial and life. Rick came to Erie in 2011 as our Chief Actuary. Rick has over 27 years of experience in the property and casualty industry including serving as a partner of Deloitte Consulting and holding leadership positions with the global insurance broker. As I mentioned last quarter, Bob Ingram joined Erie as our new Chief Information Officer in August. Bob is a season executive and leader with a proven track record of IT success in the insurance industry. Bob joined us from the Hartford where he was most recently Senior Vice President and CIO for commercial lines. As a member of our executive team, he'll be a key player in helping build our technology capabilities. Both individuals bring strong leaderships and have the experience needed to execute on our strategic initiatives. With that, I'll now the turn the call over to Marcia to review the financials for the quarter.

Thank you, Terry, and good morning, everyone. Net income was $51 million, compared to $47 million in the third quarter of 2011. On a per share diluted basis, net income was $0.96 per share in the current quarter, compared to $0.87 per share in the prior year quarter. In our management operations, income before taxes was $66 million, compared to $62 million in the third quarter 2011. Management fee revenue was $305 million, up 8.8% year-over-year and consistent with the 8.6% increase in direct written premiums of the property and casualty group. This result was driven by policy growth of 3.4% and a 4.1% increase in year-over-year average premium per policy. We continue to maintain our strong customer retention, while taking rate increases where appropriate, to more precisely price of risk. Renewal premiums increased 7.5% over the prior year, driven by a 3.7% increase in average premium per policy and a strong retention ratio of 90.8%. As Terry discussed, our agents have generated significantly higher levels of new business premiums, in both personal and commercial lines, relative to the same period in 2011. New business premiums increased nearly 18%, compared to a year ago driven by a 10% in new policies and an increase of nearly 8% in average premium per policy. Cost of management operations was $247 million or 9.5% higher than the prior year quarter. Non-commission expenses increased $9 million or 12.2% over the prior year quarter, driven by higher levels of acquisition related cost, information technology and personnel cost. For third quarter 2012 gross margin for management operations was 20.9% compared to 21.7% in the third quarter of 2011. Now, turning to the results of our investment operation. Indemnity recorded profit before taxes of $12 million in this investment operation, compared to $5 million in the prior year quarter. The increase in investment results over the prior year was driven primarily by net realized gains on investments of $2 million in the current quarter, compared to losses of $6 million in the third quarter of 2011. Now let's look at our results for the first nine months of 2012. Indemnity's net income totaled $130 million, compared to $143 million for the same period last year. On a per share diluted basis, net income was $2.43 per share, compared to $2.59 per share for the prior year. The decrease in net income was primarily from lower investment income driven by a reduction in limited partnership income and a slight decrease in management margin. In our management operations, income before taxes was $171 million for the first nine months of 2012, compared to $174 million last year. The gross margin for management operations was 18.8% for the first nine months of 2012, compared to 20.7% for the prior year period. In our investment operations, Indemnity recorded a profit before taxes of $26 million for the first nine months of 2012, compared to profit before taxes of $38 million for the same period in 2011. Regarding our share repurchases, during the third quarter, the company repurchased approximately 161,000 shares of our outstanding Class A common stock, at a total cost of $11 million. For the year through October 17, 2012, our Class A shares repurchased under the program totaled approximately $796,000 at a total cost of $57 million. As of October 17, 2012, we have approximately $80 million remaining in our repurchase program.

Before we get to your questions, I'd like to mention two reorganizations that company received recently. In September, Erie received the Best Practices of Excellence Award from the Independent Insurance Agents and Brokers of America. This is an annual award presented to companies that have made imaginative, outstanding and unique contributions to best practices that enhance the Independent Agency System. Erie earned the reorganization for its commitment to enhancing agent training programs. In October, J.D. Power and Associates released their 2012 Auto Claims Satisfaction Study. This particular study focuses on the interaction insurers have with customers throughout the claims experience. I am very pleased with the Erie's strong performance this year, placing in the highest satisfaction tier. Erie takes great pride in being above all in service and it showed as Erie's significantly improved its score over the past 12 months, tied for second out of 27 eligible auto insurers. We are very proud to receive these reorganizations and I'd like thank our employees and agents who work so hard on behalf of our customers. And now, I'll turn the call back over to the operator to open the line for questions.

(Operator Instructions) Our first question comes from Adam Klauber of William Blair. Adam Klauber - William Blair: Couple of different questions, as far as rate, it looks like in the third quarter, your personal lines be at average rate of 3% and commercial lines of 6%, as we think about next year. Could you give us any clues on the direction or the trend in both areas on rate basis?

We don't forecast for publication. What we think our rate capabilities will be in any quarter, let alone 2013. Clearly, we look at our own cost in terms of loss activity as well as other costs and then look at what the exposure is, and then try to underwrite to that and so again, we leave it up to the future quarters to determine how quickly and how well we do from that standpoint. Adam Klauber - William Blair: From system's standpoint you've been rolling out some new systems and that's also been impacting your cost. Could you talk about what other systems and sort of the timing of those rollouts would be?

We continue to work on our two main agency facing systems, which would be our personal lines, DS-Pro system, as well as we call it C-Lion which is our commercial line systems. As well as, obviously, we have a lot of other things going on. We have a billing system that's very evident to our agents as well as our customers. All of those continue to be in a state of build out at various stages. I would suggest that billing system is in a stabilized mode. We finalize all of our customers on to that platform this quarter. As like all technology, we continue to find ways to improve the interface and the way it looks to customers. Our DS-pro system has been very effective and is being received very well by our producers. That is on a very strong track to being delivered in terms of, I call it is first complete phase in 2013. And then C-Lion remains a fairly early entry into your ability to create a more effective platform for our commercial lines business. And then lastly, we doesn't get a lot of players, we've got a very substantial and very effective life platform that is being very well received and is very, very streamline and been well received by both customers and agents. Adam Klauber - William Blair: And then, as far as Hurricane Sandy, the Indemnity does not have direct exposure, but exchange clear has significant exposure. Could you give us some details on the reinsurance coverage that could help protect exchange from the losses on the Hurricane?

Again, we have that spelled out in the finance information. We have a substantial program that is in place to protect us from very substantial balance sheet event. Our cash flow points at $350 million, and then it goes on top of that to about $800 million, and we have co-insurance participation there. But we think we are in a strong position to respond to this. We've got a great balance sheet. We have a very liquid balance sheet. And our book of business is made up of a lot of small risks, and our focus right now is making sure that those customers and those agents who are taking care of effectively. We were mobilized well before the storm hit land. We have been in the market before the storm actually hit, and we are receiving great commentary in terms of our ability to respond to those customers' needs.

(Operator Instructions) Our next question comes from Samir Khare of Capital Returns Management. Samir Khare - Capital Returns Management: I was hoping to find out, can you give us an idea of the claims that have come in so far from Hurricane Sandy, specifically the amount of claims that have come in within homeowners, auto and commercial. And if you could give us a split by phase, that would be great?

It's much too early to give you to specific numbers, but I think it is typical of what our book of business is in our market share. Obviously, large slug of it is coming into the homeowners' line. We have some, obviously, commercial, multi-peril in terms of our commercial book. On a smaller scale, our private passenger automobile book obviously have been affected as our commercial book. Geographically, it's important to remember that we don't do any business in New Jersey, Connecticut and have lesser exposure in our New York State, downstate. And again, this is taking the pattern of a pretty much the other storms that we've had throughout our history, a lot of smaller claims based upon the make-up of our book of business. Samir Khare - Capital Returns Management: And then I think we're about 2.5 days out from after the storm and perhaps looking at historical claims activity that you guys have had during other storms. Can you give us some idea as to what percentage of ultimate claims do you think has come in so far?

No, it's still too early to do that and in the past we have not done that. So we're not going to start doing that now.

I'm showing no further questions at this time. I'd like to turn the conference back over to Mr. Scott Beilharz for any closing remarks.

Giving there are no more questions, thanks again for joining us. A recording of this call will be posted on our website erieinsurance.com after 12:30 p.m. Eastern Time today. If you have any questions, please call me at 814-870-7312. Thank you.

Thank you everybody.

Ladies and gentlemen, this does conclude today's conference. You may all disconnect, and have a wonderful day.