Scott Beilharz - Vice President of Investor Relations Terrence Cavanaugh - President and Chief Executive Officer Timothy NeCastro - President and Chief Executive Officer of Designate Gregory Gutting - Executive Vice President and Chief Financial Officer Sean McLaughlin - Executive Vice President and General Counsel

Q -

Good morning and welcome to the Erie Indemnity Company Second Quarter 2016 Earnings Conference Call. I would like to introduce your host for today's conference, Mr. Scott Beilharz, Vice President of Investor Relations.

Thank you, Christine, and welcome everyone. We appreciate you joining us for today's discussion about the 2016 second quarter results. Joining me today are Terry Cavanaugh, President and Chief Executive Officer; Tim NeCastro, President and Chief Executive Officer Designate; Greg Gutting, Executive Vice President and Chief Financial Officer; and Sean McLaughlin, Executive Vice President 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. We will start the call today with opening remarks from Terry, Tim and Greg 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 July 28, 2016 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 and thanks for joining us. Once again Erie has delivered another strong quarter. Net income was $61 million resulting in earnings per share of a $1.17 compared to a $1.7 in the second quarter of last year. Additionally, our operating margin continues to improve increasing 2.8 points to 20.2% in the quarter compared to the same period last year. These solid results reinforce our performance for the first half of the year and speak to the service commitment of our dedicated agents and employees. And now before Greg provides more detail around our results. I’d like to introduce Erie’s next President and CEO, Tim NeCastro. As you know, Tim was chosen by Erie’s Board of Directors to become my successor and we made that announcement in early June. I'm pleased to say that Tim will officially take on the role of CEO on Monday, August 1. I will continue in my role as President to be available to Tim and the Erie to the remainder of 2016. Tim is a 20-year member of the Erie family and has served on the senior leadership team here since 1997. He's held the positions of Controller, Senior Vice President of Customer Service and most recently Senior Vice President of the West region. With that experience, Tim brings financial, sales, and service acumen to the top job. He has excelled as a leader here and he understands the culture and core values that make us distinctive in the industry. For the past two months, Tim and I've been working closely together to ensure a smooth transition and I'm confident that under Tim's leadership Erie will be in very good hands. Congratulations and welcome Tim. With that, I'd like to turn the call over to Tim for a few comments.

Thank you, Terry, and good morning, everyone. Let me start by echoing Terry's remarks that Erie is in a great place. During his tenure, Terry has been a relentless advocate for hiring and developing talent and challenging us to think smarter as evident in our strong balance sheet and our operating results. We continue to be with this robust organization today largely as a result of the knowledge and guidance Terry has provided over the past eight years. As a leadership at Erie transitions we won't lose sight of the gains we’ve made under Terry's direction. Certainly we’ll continue to change and evolve that our success on many fronts suggests a sustained and engaged effort. As CEO my focus will be on three key areas. First, we will fortify our core strength by improving our products and services and by developing new offerings enabling us to capitalize on a changing world. Second, we will continue to be responsible stewards of Erie’s strong balance sheet. And third, we will further engage our dedicated agents and employees challenging them to deliver on our service promise in ways that continue to distinguish us in the marketplace. Throughout 2016, our advanced programs already underway has focus on innovation and I'll dedicate resources to other opportunities that will position Erie for the future. I’ll also be working to shape Erie’s Executive team going forward. Earlier this week Greg Gutting was appointed Chief Financial Officer. Greg brings solid experience and strong financial expertise to the position and I have great confidence in Greg's ability to lead our financial team. With that I’d like to congratulate him and officially welcome him as a member of Erie’s executive team. Congratulations, Greg.

Thank you, Tim. I look forward to working with you and the executive team. And now I'll report on Erie’s second quarter results. As you saw on the earnings release yesterday Erie had a solid second quarter. Net income per diluted share was up from a $1.07 in the second quarter of last year to $1.17 this year. This improvement was generated by both increased revenue from operations and careful expense management. Revenue from operations grew by $22 million in the quarter representing a 5.5% increase in the topline compared to the same period last year and is consistent with the 5.8% increase in the direct and assumed written premiums of the Exchange. We continue to generate increases in both policies in force and average premium per policy in all our major product lines supporting this growth. Turning to our quarterly expenses, commission related expenses increased $12 million or 5.4% compared to the second quarter of 2015. The increase was driven primarily by the 5.8% increase in direct and assumed written premiums of the exchange and higher agent incentive costs related to profitable growth. Partially offsetting the commission expense increase was the 5.2% decrease in non-commission related expenses. During the second quarter of 2016 non-commission related expenses totaled $102 million down from a $108 million last year as a result of our commitment to prudent expense management. This $6 million savings resulted primarily from lower information technology, professional fees and personnel related costs and lower credit card processing fees. For the quarter net revenue from operations before taxes totaled $86 million up $16 million for over 22% compared to the second quarter of 2015. Similar to the first quarter of this year we are pleased that revenue growth once again outpaced expense growth, significantly improving our operating margin from 17.4% in the second quarter of last year to 20.2% in the second quarter of this year. Turning to Indemnity’s investment results. The second quarter saw investment income decreased by $8 million compared to last year's second quarter. The decrease is attributable to a decrease in returns from our limited partnership investments. Again, be mindful that this portion of our portfolio is in run-off and we expect more limited and inconsistent earnings from this asset class. Finally, our continued growth and profitability has enabled us to pay $34 million in dividends to our shareholders in the second quarter of this year. Now, I’ll turn the call back over to Terry.

Thank you, Greg and congratulations. Before we take your questions, I want to share a few updates with you. We recently opened an innovation lab for our best and brightest. This collaborative space offers our talented employees a stimulating environment that encourages creative and innovative thinking. It’s indicative on our commitment to developing new products and services that will resonate with our customers and reflect the emerging opportunities in the marketplace. In the year’s to come, I'm confident; Tim will be sharing some of the exciting developments that will come from the team's efforts in the innovation lab. Under Tim’s leadership, I know Erie will continue to encourage new and different thinking. We will continue to promote and test new ideas and technology pushing ourselves knowing that as technology gets smarter, we have to get smarter. Finally, Erie continues to earn third-party recognition for our performance and results. Last month, A.M. Best reaffirmed our A+ Superior rating for the property and casualty group. We were also recognized by J.D. Power and Associates in three separate studies. We are in the top spot in the auto insurance shopping study for the fourth year in a row. We were highest in customer satisfaction for the mid-Atlantic region and the auto insurance satisfaction study and we moved up a notch time for third place in the property claims study. Together, these recognitions affirm our ongoing commitment to being above all in service. And once again we have been listed among the Fortune 500 companies. It's another acknowledgement that our value proposition continues to resonate with the marketplace. I think I can speak for both Tim and myself when I tell you it's an exciting time to be leading this organization. Erie is in a good place. We are growing and profitable. We have a deep bench of talent, proven financial strength, strong agency relationships, and an unwavering commitment to service. All position Erie well for a sound prosperous future. It has been my privilege to lead this great organization over the last eight years. I want to thank my fellow team members at Erie, our dedicated and talented agents, and our customers for the confidence they have placed in me and the wisdom they have imparted to me. Coming out of Notre Dame 41 years ago, I would have never imagined the career I have experienced. I am grateful to all. I'm looking forward to the next chapter in my professional and personal journey. Thank you. And now, we will open up the call for questions.

Thank you. [Operator Instructions] : : End of Q&A

Okay. There are no questions. 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 feel free to call me at Erie code 814-870-7312. Thank you.

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