Scott Beilharz – VP, Investor Relations Terry Cavanaugh – President and CEO Marcia Dall – EVP and CFO

Good morning and welcome to the Erie Indemnity Company’s First Quarter 2015 Earnings Conference Call. I would like to introduce your host for today’s call, Scott Beilharz, Vice President of Investor Relations. Please go ahead, sir.

Thank you, Ashley, and welcome everyone. We appreciate you joining us for today’s discussion about first quarter 2015 results. Joining me today are Terry Cavanaugh, President and Chief Executive Officer; Marcia Dall, Executive Vice President and Chief Financial Officer; and Sean McLaughlin, Executive Vice President, Secretary and General Counsel. 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. As we typically do, we’ll start the call today with opening remarks from Terry and Marcia and then we will open the call for your questions. 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-Q filing with the SEC dated April 30, 2015 and in the related press release. Also during this call, we may discuss non-GAAP measures. A reconciliation to the GAAP-based results can be found in our Form 10-Q that was filed with the SEC yesterday. This call is being recorded and recording 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. A replay will be available on our website today after 12:30 PM Eastern Time. Your participation on this call constitutes your consent to recording, its publication, webcast and broadcast and the 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. Good morning everyone. Today, I’ll talk about our first quarter results. Marcia will then go over the financials and I’ll finish with some recent recognition we received. We will then take your questions. As you saw on our press release, our net income of $0.74 per share was down from $0.88 last year. Our results were primarily driven by the following four factors: Strong management fee revenue growth, higher agent incentives, technology expenses, and lower income from limited partnership investments. I will touch upon the first three and then Marcia will provide more details on the financials. Let me begin with revenue growth. In the first quarter of 2015, we saw an increase in the direct written premium for the property and casualty group of 7.7% compared to last year. We achieved a significant milestone in the first quarter of 2015. We now have over 5 million policies in force. And the average premium from our 2,200 agencies has grown to over $2.5 million. Let me highlight two areas that are helping drive this growth. First enhancing the agent and customer experience is a critical component of growth and we’re continuing to make it a priority whether we are supporting our agents with their presence in the digital marketplace or helping our customers by providing better access to their policies, bills and ID cards. We are making it easier for our agents and customers to do business with us. Second, over the long-term, we view our geographic expansion strategy as another avenue for growth. Late last year, we added Kentucky to our footprint. With personal lines and life up and running, we are encouraged by the early results and are on track to rollout commercial lines in early 2016. From a cost perspective, there were two primary drivers that caused our expense growth to be higher than our revenue growth: Agent incentive costs and our investment in technology. It is important to keep in mind agent compensation represents two-thirds of our operating expenses. The most significant piece is the base commission, which tracks with direct written premium growth. The next largest portion is the agent incentives related to profitable growth. Obviously weather, mix of business, and agency overall performance are all contributors, and can vary quarter-to-quarter causing variability in agent incentives related to profitability. In the first quarter of 2015, we accrued higher projected agent incentive costs than one year ago because there was less severe weather related to loses experienced by the property and casualty group compared to the same timeframe last year. The second biggest driver of expense growth relates to technology enablement. As you know, we’ve consciously been investing in technology that makes it easier for our agents to do business with us and technology that makes it easier for our customers to interact with us. Our technology related expenses for the quarter were $5 million higher than the first quarter of 2014, which reflects incremental investments directly related to this strategy. An example of this strategy is our focus on development of a mobile application that can be accessed on a smartphone, tablet or traditional PC. One of these applications that has been developed is a new business quoting app that significantly improves our real time agent lead generation capability. This capability will be employed within the year. A second example is the technology investment we made to implement our enhanced motorcycle product on our personal lines web quote, bind and issue platform. This product rolled out in early March in Kentucky and will be offered more broadly in the months to come. Finally in personal lines, we continue to enhance our personal lines web quote, bind and issue platform with an automated underwriting review tool that increases the speed, quality, and consistency of the underwriting process. We remain committed to proved investment in technology that provides value to our agents and customers and supports our long-term success. I will now ask Marcia to elaborate on our first quarter. Marcia?

Thank you, Terry, and good morning everyone. As Terry mentioned, our earnings per share on a diluted basis decreased $0.14 per share to $0.74 in the first quarter, compared to the same period last year. While we continue to deliver strong top line growth, net income decreased due to a reduction in management operating pre-tax income and lower earnings from our alternative investment portfolio. Management operating pre-tax income decreased 10% for the quarter to $53 million compared to the first quarter of 2014. Revenue from management operations grew $25 million to $351million in the first quarter. Indemnities top-line growth of 7.5% was driven by 7.7% growth in the direct written premium of the Property and Casualty Group. Direct written premium benefited from both solid increases and policies in force and average premium per policy on all of our major product lines. Furthermore, we saw consistent growth in both personal lines and commercial lines with personal lines growing 6.6% and commercial lines growing 10.1%. Indemnities strong top line growth was offset by higher agent compensation and ongoing strategic technology investments. Commission expenses increased $20 million, or 11.2% in the first quarter, compared to last year. This increase resulted from based commission growth, consistent with our growth in direct written premium, and also an increase in projected agent incentive costs related to underwriting profitability for the Property and Casualty Group. As a reminder, the first quarter of 2014 saw significant weather related events resulting in a statutory combined ratio for the Property and Casualty Group of 108%. Our first quarter 2015 combined ratio of a 103% was significantly lower than the first quarter of last year due to improved current accident year trends and no major weather-related events. Therefore, the projected profitability based agent bonuses where higher compared to the prior year quarter. Non-commission expenses increased $10 million, or 11.7% in first quarter, compared to last year. As Terry mentioned, the biggest driver here relates to our investment in technology. Technology cost increased $5 million, which included $3 million to consulting and contract labor, and $1 million each of cost related to employees, and hardware and software. As Terry mentioned, this necessary investment in technology allows us to remain competitive and positions us for future profitable growth. Indemnity’s investment income of $6 million in the first quarter of this year is down from $11 million in the first quarter of 2014. The primary driver of this decrease is a decline in our alternative investment portfolio earnings, as expected, based on the continued runoff of this portfolio. Finally, we paid $31.7 million in dividends to our shareholders in the first quarter of 2015. Now I’ll turn call the back over to Terry.

Thank you, Marcia. We understand that you, as investors, may not be pleased with our quarter-over-quarter drop in earnings. Our business model can result in variability of earnings quarter-to-quarter. However, we remain committed to creating shareholder value for the year and over the long-term. Last month we held our annual shareholder meeting. I’m pleased to announce that all 12 members of our Board of Directors were elected to serve another year. I would like to thank our directors for their continued guidance and commitment to Erie and thank our shareholders for their continued support. And now I’d like to highlight our recent recognitions. February results of the 2015 J.D. Power Property Claim Satisfaction study, which measures customer satisfaction across the Property Claims experience was released. I’m proud to report that Erie continues to rank in the high satisfaction tier. In March, Erie was listed among four of the Americas’ best employers list, we were ranked 72nd on the list of 500, and fourth out of 25 insurance companies ranked. And just this week, it was announced that Erie earned first place in the J.D. Power Insurance Shopping Study for the third time in a row, and the six times since 2007. We continue to score high in all three of the shopping study factors: Price, distribution channel and policy offerings. The high standards and dedication of our agents and employees to deliver the best possible product and to be above all in service is acknowledged, with every recognition we receive. Thank you. Now I’ll turn the call over to the operator for questions.

Again, we thank you for your participation. And we look forward to talking to you next quarter.

Thanks again for joining us. A recording of this call will be posted on our website erieinsurance.com after 12:30 PM Eastern Time today. If you have any questions please call me at area code 814-870-7312. Thank you.

Ladies and gentlemen, thank you for participating in today’s conference. This concludes today's program. You may all disconnect. Everyone have a wonderful day.