Scott Beilharz – Vice President-Investor Relations Tim NeCastro – President and Chief Executive Officer Greg Gutting – Executive Vice President and Chief Financial Officer

Good morning, and welcome to the Erie Indemnity Company’s First Quarter 2018 Earnings Conference Call. I'd like to introduce your host for today's call, Scott Beilharz, Vice President of Investor Relations.

Thank you, Bruce, and welcome, everyone. We appreciate you joining us for today's discussion about our 2018 first quarter results. Joining me today are Tim NeCastro, President and Chief Executive Officer; 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 remarks from Tim and Greg, and then we'll 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 these differences, please see the Safe Harbor statements in our Form 10-Q filing with the SEC, dated April 26, 2018, and in the related press release. This call is being recorded, and the recording is the property of the 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 p.m., Eastern Time. Your participation in 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'll now turn the call over to Tim.

Thank you, Scott, and good morning, everyone. On Tuesday we held our annual meeting with shareholders here at our home office in Erie, Pennsylvania, just days after the 93rd anniversary of Erie starting the auto insurance business. The positive energy and feedback at the shareholder meeting made it clear to me that the ongoing efforts of our dedicated employees and exceptional agents are paying up. Erie has built an enviable reputation for performance in the industry and our first quarter results for 2018 confirm that we are well positioned for continued success. In the first three months of this year, we recorded outstanding growth of 7% in the direct and assumed premiums written by the Exchange. With that result Erie is again outpacing industry growth rates. Additionally at the end of the quarter, policyholder surplus is a robust $8.8 billion. Our strong surplus levels support our competitive position and ensure that we can service our customers needs handling everything from the smallest fender bender to major storms like the challenging weather events we experienced in the first quarter. Winter snowstorms in the first three months of 2018, including multiple nor'easter events in March played a significant role in our results. The reported combined ratio for the property casualty group was 105.6 in the quarter and that's over a 5% increase when compared to the first quarter of 2017. In true Erie fashion, our dedicated claims employees, catastrophe adjusters and agents responded to over 27,000 storm related claims throughout our footprint in the first three months of this year. Over 150 additional claims handlers were brought in to assist local teams in managing the heavy volume. Our claims team and our agents responded quickly and with care and I'd like to publicly thank them for their efforts. They truly exemplify our motto to be above all in service. Now, before I turn the call over to Greg for the details around our financial results, I’d like to share some changes to our Board of Directors. First, I'd like to recognize recently retired board member Richard Stover who has contributions to Erie over the past eight years. Dick joined our board in 2010 serving on a number of committees during his tenure including the audit, executive and strategy committees. He also led the investment committee as Chair until the time of his retirement. We at Erie thank Dick for his years of service and wish him well. I'm also pleased to report that our shareholders elected a new director at Tuesday’s Annual Meeting Salvatore Correnti. Sal was a director of builders insurance and of the Oil Casualty Investment Corporation. He is also an adjunct professor at Towson University in Maryland. He previously served as Chief Executive Officer of Conning Holdings, Conning Asset Management and was Non-Executive Vice Chair of the Board of Conning Holdings Corporation. Givens Sal’s extensive experience in investments Sal has been appointed to serve as Chairman of our Investment Committee. Welcome to the board Sal. And, now I'll turn the call over to Greg.

Thanks, Tim. Net income in the first quarter of 2018 was $66 million or $1.26 per diluted share compared to $48 million or $0.91 per diluted share in the first quarter of 2017. Operating income increased $10.6 million or 15.9% in the first quarter of 2018 compared to the first quarter of 2017 as the growth in total operating revenue outpaced the growth in total operating expenses. I’ll remind you that beginning January 01, of this year we adopted new FASB guidance on revenue recognition. Under the new guidance, a small portion of the management fee is allocated to Indemnity acting as the attorney-in-fact with respect to all claims handling and Investment Management Services for the exchange, which we collectively refer to as administrative services. Under the previous guidance, all of the management fee was allocated to the policy issuance and renewal services. The revenue allocated to the Administrative Services is recognized over the typical claim settlement period. Additionally, under the new guidance the administrative services expenses and related reimbursements are reported gross on the income statement. Previously, these expenses and related reimbursements were presented net on the financial statements. As you saw on our first quarter financials, the adoption of this guidance did not have a material impact on our financial condition, earnings or earnings per share and had no impact on our cash flows. The new revenue recognition guidance caused an increase in both total operating revenue and total operating expenses of $146 million but had minimal impact on our operating income. Indemnity's management fee revenue for policy issuance and renewal services increased $14 million or 3.6% in the first quarter of 2018 compared to the same period in 2017. While management fee revenue allocated to administrative services was $13 million for the first quarter of 2018. No management fee revenue was allocated to administrative services in the first quarter of 2017. As Tim just mentioned, the Exchange’s top line continues to grow at a rate outpacing industry forecasts. For the first quarter 2018 growth in management fee revenue was driven by the 7% increase in the direct and assumed premiums written by the Exchange as both policies in force and average premium per policy increased year-over-year. Indemnity's cost of operations for policy issuance and renewal services increased 4.9% in the fist quarter of 2018 compared to the first quarter of 2017. Agent commissions increased $13.6 million driven by the 7% increase in the direct and assumed premiums written by the Exchange. In non-commission expenses increased $2.6 million in the quarter compared to the same period in 2017 driven by increases in underwriting and policy processing costs. Additionally, personnel costs in all expense categories were impacted by special bonuses of approximately $4.8 million paid to employees in the quarter. Income from investments before taxes totaled $6.2 million in the first quarter of 2018 compared to $6.6 million in the first quarter of 2017. The decrease was driven by net realized losses on investments during the first quarter of this year, compared to net realized gains in 2017. Finally, the enactment of the Federal Tax Cuts and Jobs Act resulted in a decrease in income tax expense of $11.4 million in the first quarter of 2018 due to the lower tax rate of 21%. And as our strong balance sheet and disciplined approach to capital management continues to create value for our shareholders we paid $39 million in dividends in the first quarter of 2018. Now I’ll turn the call back over to Tim.

Thanks, Greg. Our strong first quarter results demonstrate that we continue to deliver value for our shareholders in 2018. As Greg pointed out, we realized a significant tax benefit in the first quarter from the enactment of the new Federal Tax Law. Our executive council decided to share some of that benefit with our employees in a way that helps them now and invests in their future. Last month, we paid a cash bonus to our full and part-time employees. And in May, we'll be making a retirement contribution to them as well. Our employees drive our success and it's their commitment and effort that helps maintain a strong and valued service reputation. As we move forward into the year, we know that new and improved products and platforms, customer service capabilities and evolving workforce needs will play a critical roles in the future of our business. That's why we continue to look at these areas of focus closely. We're especially excited about our recent partnership with Roost Telematics. Last month, we expanded our initial pilot further throughout our footprint. Our pilot involves Smart Home sensors that can help prevent disaster or mitigate damages by detecting a leak in the basement or severe temperature changes that can lead to frozen pipes and more extensive damage. We're also beginning to pilot the use of telematics for youthful drivers by tracking driver behavior throughout the use or through the use of a smartphone app will monitor behavior and reward teens for safe driving habits and avoiding dangerous activities such as texting while behind the wheel. These are just two examples of the kind of innovative approaches we are taking to deliver value to our customers while meeting their evolving needs. Additionally, we will continue to build on existing product offerings. Later this year, we’ll expand our successful custom collection suite of commercial products bringing tailored coverages to the growing market of breweries, wineries and distilleries. We continue to invest in infrastructure, strengthening our platforms and data capabilities and equip employees and agents with more contemporary and efficient tools allowing greater focus on customer service and providing with a human touch that Erie is known for. One of the most visible investments is in our commercial online quote and application system to bring greater functionality to our agents. Agents use the system now to quote workers' compensation, commercial auto and our commercial package policy. Our business umbrella policy will be added to the platform this year supporting agent’s ability to write a comprehensive suite of commercial products with a single data entry. As we think about our future workforce, we are looking at the work of our own employees, as well as the challenges our agents face in building their teams. We're committed to helping our agent partners identify their upcoming needs and support their efforts as they too prepare for a changing marketplace. Our strong reputation for customer satisfaction is affirmed time and again by J.D. Power. Earlier this month, the firm released the results of its 2018 Property Claims Satisfaction Study. Erie ranked third in the highest satisfaction category achieving best-in-class scores for two of the top five factors. We also learned this week that we took first place in J.D. Power’s auto insurance purchase experience. This is the sixth consecutive year that Erie has finished first in the study of the insurance shopping experience. These results are a testament to the consistent superior service of Erie employees and agents. And while we're very pleased with these third-party recognitions, we also see them as learning opportunities. What are we doing right and how can we do it even better. As leaders, employees and agents we continue to push ourselves to answer and deliver on these questions, this solid work ethic is just one more aspect of the commitment among the Erie family that makes us successful day-after-day and year-after-year. And now if there are any questions we're happy to take them.

[Operator Instructions] And I'm showing no questions. : :

Thank you, Bruce. A recording of today’s call will be posted on our website, erieinsurance.com. Thank you for joining us today and have a great day.

Thanks, everybody.

Ladies and gentlemen, thanks for your participation in today’s conference. This does conclude the program. And you may all disconnect. Everyone have a great day.