Good morning and welcome to the Erie Indemnity Company Third 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 third quarter 2016 results. Joining me today are Tim NeCastro, 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. Before we hear from Tim and Greg, 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 October 27, 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 Web site 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 Tim.

Thank you, Scott and good morning everyone. It is my pleasure to be with you today and to share our results and to briefly introduce our new leadership team. Let me start by acknowledging that as approach the end of 2016 Erie is in a very good place. Indemnity reported solid gains and net income for both the third quarter and year-to-date resulting in earnings per share of $3.14 for the first nine months of 2016 compared to $2.75 for the same period in 2015. The 6.1% year-to-date increase in the direct and assumed written premiums of the exchange drove our strong topline growth and we continue to outpace Conning's industry forecast of 3.6% for 2016. Furthermore our operating margins continue to grow as we manage expenses wisely. Given the backdrop of a solid financial performance, I'm very excited to share with you some decisions regarding Erie's new Executive Council. Experienced Erie leaders are being promoted to oversee our sales, products, claims and customer service operations. Doug Smith who currently serves as Interim Executive Vice President of Product, Sales and Marketing has been named Executive Vice President of Sales and Products. Lorianne Feltz currently Senior Vice President of Customer Service will take on the extended role of Executive Vice President of Claims and Customer Service. Both Doug and Lorianne have substantial tenure and knowledge of the Erie. They are well prepared and committed to lead these areas critical to Erie's mission and our success. Additionally I've asked Sherri Silver, Senior Vice President of Strategic Marketing to join our Executive Council. In addition to our marketing expertise, Sherri's proven financial and analytical acumen, as well as her insight and strategic abilities operate great value to our team. Doug, Lorianne and Sherri round out our Executive Council whose members also include Greg…

Thank you, Tim. Our third quarter results reinforce the strong position we continue to experience in 2016. As Tim said earlier, careful expense management helped revenue growth outpace expense growth in both the third quarter and first nine months of 2016, driving solid gains in net income. In the third quarter, net income was $57 million or $1.09 per diluted share compared to $50 million or $0.94 per diluted share in the third quarter of 2015. For the first nine months of 2016, net income was $165 million or $3.14 per diluted share compared to $145 million or $2.75 for the same period in 2015. The third quarter operating revenue increased $22 million or 5.5% over last year's third quarter. For the first nine months of 2016, operating revenue increased $68 million or 5.9%, compared to the first nine months of 2015. Growth in both the quarter and the year is consistent with the increase in the direct and assumed written premiums of the exchange as policies in force and average premium per policy continue to grow in all major product lines. Operating expenses grew $8 million and $23 million for the quarter and nine months when compared to the same period last year. In the third quarter, commissions increased $9 million compared to the third quarter of 2015 bringing the total commission increase for the first nine months to $36 million compared to the same period last year. The increase in both the quarter and the year was driven by an increase in the direct and assumed written premiums of the exchange. Non-commission expense decreased $1 million and $13 million in the third quarter and nine months of the year compared to the same period in 2015. We are pleased with these results and we continue to exercise prudent…

Thank you, Greg. We had a great year so far delivering on our enduring promise of best-in-class service. And with our executive management team in place, we'll continue to address operational challenges and to capitalize on market opportunities. At the same time we recognize the market and industry challenges are changes are inevitable. Innovation is no longer a buzzword it's a business imperative. We'll respond by emphasizing our distinctive service and by investing in a technology and tools necessary to remain competitive. Now we'll be happy to take your questions.

[Operator Instructions] Our first question is from the line of Amit Kumar of Macquarie Capital. Your line is open.

Thanks and good morning and thanks for taking my questions. Just a few questions I guess to begin with. Number one, going back to Hurricane Matthew, do you have an early read, what the impact might be on your results from Hurricane Matthew?

Yes, we are seeing losses coming and we are expecting to incur between $15 million and $20 million on the property/casualty side.

$15 million to $20 million, okay, that's helpful. Number two, going back to the discussion on the claim system and you talked about the platform being expanded as you head into 2017, is there a way to put maybe some sort of loss ratio impact - in expense ratio or loss ratio impact from the new claim system, is it possible to quantify the impact on results from this system?

While there will be a little bit of an incremental cost on the property/casualty operations, the vast majority of its capitalized and you'll see that amortized over probably a seven year period. So there is a slight uptick, although, we've done some all of those things that have actually made us more efficient. So that you are not see it it's currently I believe at 27.5. So this will be part of the claims, but it would be minimal on the whole overall claims adjusting expense ratio which is right around 10.

And in terms of the loss ratio impact, my sense it's - if it's optimizing the process there might be some sort of an improvement in loss ratio or am I overreaching on that thought process?

Yes, that's part of the trade off here as the investment in technology is going to help us improve our efficiency and it should neutralize the investment we're making in the system.

Okay. That's helpful. Then moving on to broader marketplace and many companies if you look at The Hartford earlier today on their conference call or if you go back to Travelers and some others they've talked about the loss cost trends in personal auto worsening maybe from a economy et cetera. Could you first of all just talked about the loss cost trend in your personal auto book? What sort of frequency and severity numbers you are seeing in that? And then I'll come back with a follow-up on that.

So we are seeing the frequency go up and little bit on the severity, we're seeing the same trends that the rest of the industry is seeing.

Go ahead.

I'd say we attribute that really too. Certainly we're seeing an increase in the number of miles driven. We're at conference of the Insurance Institute last week and they commented on the report with distracted driving and they really prove, but clearly it's easy to see if you drive up down the highways today.

That's a fair point. In terms of that trend, is there any sort of pricing initiative in place to address that trend. You know, a lot of peers are talking about putting in a new rate filings and chasing rate more aggressively. I guess it’s a two-part question. Number one, do you anticipate to pursue any rate action? And I guess number two, if not do you expect to market share benefit because other companies are right-sizing their operation?

I would say, we’ve always priced responsively for the marketplace in our experience in the market. We take a longer term view. So we would tend to have more moderate rate actions probably in the competition and we don't have any plans for dramatic rate increases in the organization. And while our losses are running a little harder than normal right now they are moderating.

Got it. That's actually good to know. The other question I had was sort of fishing gears. Commercial auto is another hotspot for some of the other companies. Can you talk about your trends in that market and is that book comparable to the other larger players or is there a difference in that book?

So we are seeing some of the similar trends, now they are not quite as dramatic as the first line of site but we’re seeing a little bit of that as well.

We think some of that is influenced by the type of business that’s in commercial auto and some of the other markets where we tend to focus on automobile fleets, we’re not in the larger vehicle markets and so I think our experience is little more moderate but it’s running comparable to our personal lines automobile experience.

Got it. That’s helpful. The last question I guess is obvious your targets are different than some of the other companies based on the structure et cetera. How should we think about sort of an overall target combined ratio, what you might be looking at in your internal plans. Can you sort of just broadly talk about that on an overall basis and maybe also if possible delve deeper into personal home owners and on the commercial side. What are some of the internal targets you’re trying to achieve based on the economy as well as the depressed interest rate climate. Thanks.

So we take a long-term approach to things and so we’ve a targeted a rate of return that we’re trying to get but we don’t necessarily need to get that each and every year related to every one of our product lines. So I don’t know that we really share our targeted combined ratio but you can see over the year's kind of where we fall in and it’s been fairly stable. The years that have been outliers either positive or negative have been the result of increased or decreased catastrophic losses.

I can comment that what influences, what we’re thinking about in terms of that combined ratio clearly has to encompass a lot of different constituents. So our agent's competitiveness in the marketplace, we’re contemplating relationships with our policyholders and retention of those policyholders as well. So we really don't publish a targeted combined ratio.

Okay, that's helpful. Thanks for the answers and good luck for the future.

[Operator Instructions] That concludes our Q&A session for today. I’d like to turn the call back over to Mr. Scott Beilharz for any further remarks.

Thanks again for joining us today. As a reminder a recording of this call will be posted on our Web site erieinsurance.com after 12:30 PM Eastern Time today. If you have any questions, please 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 and you may all disconnect. Everyone have a great day.