Good morning, and welcome to the Erie Indemnity Company Fourth Quarter 2018 Earnings Conference Call. This call was pre-recorded, and there will be no question-and-answer session following the recording. Now, I'd like to introduce your host for the call, Vice President of Investor Relations. Scott Beilharz. Please go ahead.

Thank you, and welcome, everyone. We appreciate you joining us for this recorded discussion about our 2018 fourth quarter and full-year results. This recording will include remarks from Tim NeCastro, President and Chief Executive Officer; and Greg Gutting, Executive Vice President and Chief Financial Officer. 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 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 February 21, 2019, and in the related press release. This pre-recorded call 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. With that, we move on to Tim's remarks.

Thanks, Scott, and thanks to everyone for taking time to learn more about Erie's performance in the fourth quarter of 2018 and our year-end results. Last year was another strong year for Erie Company. As you saw in our press release filed yesterday, we reported net income of $62 million or $1.19 per diluted share for the quarter, that's $30 million more than the fourth quarter of 2017. Greg, will talk more about the drivers of that increase in a few minutes. But before we get into more detail around Indemnity's results, I'd like to share some highlights from the year for Erie Insurance Exchange, the insurance operation we manage. The results of the Indemnity reflect the success of the Exchange. 2018 was another year of robust growth in our property/casualty business. In 2018, the Exchange grew property/casualty premiums 7% over the prior year to more than $7 billion. This result exceeds Conning's latest industry growth forecast of 5.6% for the year. Our 2018 premium growth marks the 11th straight year that Erie run faster than the industry, while making steady gains in market share across our territory. Our property/casualty results reflect the solid combination and strong retention, higher average premium per policy and growth in new business. In contrast to 2017, weather-related losses were bigger part of the Exchange's experience in 2018, while no single event stands out. Snow, wind and hail losses market in many of our territories with greater frequency throughout the year. The combined ratio of 103.1% reflects these storms. For comparison, the Exchange recorded a combined ratio of 96.2% a year ago, following a stretch relatively mild weather across our territory. Severe weather is never welcome, but at Erie it's an opportunity to demonstrate our value to our agents, our customers and the communities that rely on us. I'm proud to say that we did just that in our response to 71,000 weather-related claims in 2018. Compassionate service is essential in our business and so is the strong financial foundation. We'll position to deliver on both fronts just as we did last year. The Exchange ended the year with policyholder surplus $8.6 billion, 2.3% below 2017's $8.8 billion. The slight decrease reflects the increased level of storm claims and a down investment year. It also follows a year of significant gains in the surplus, in 2017 when surplus grew by over $1 billion. Erie's operational and financial position remained healthy. I want to thank our employees and agents for their commitment and hard work this past year. We delivered on our promise to service at every turn, while continuing to grow premium and make solid progress on our strategic ventures. I'll talk more about that progress in a few moments following Greg's review of the financials. Greg?

Thanks Tim. As Tim mentioned, we are very pleased with Indemnity's financial results for 2018. They reflect the dedicated service of our agents and our employees, as well as our commitment to deliver on our strategy. Starting with the fourth quarter of 2018, net income was $62 million or $1.19 per diluted share compared to $32 million or $0.61 per diluted share in the fourth quarter of 2017. I think it's important at this time to remind everyone that the 2017 fourth quarter and full-year results were negatively impacted by the enactment of the Federal Tax Cuts and Jobs Act as a result of the remeasurement of our net deferred tax assets at the lower tax rate. This resulted in the reduction of 2017 fourth quarter and full-year net income of $10 million or $0.19 per diluted share. Operating income in the most recent quarter increased $16 million, up 27.5% compared to the fourth quarter of 2017. Management fee revenue from policy issuance and renewal services increased $14 million in the fourth quarter of 2018 compared to the same period in 2017. While Management fee revenue from administrative services totaled $14 million in the quarter. Both amounts were driven by the 6.7% increase in the direct and assumed premiums written by the Exchange in the fourth quarter. Indemnity's cost of operations for policy issuance and renewal services increased $11 million compared to the same period in 2017. Commission expenses increased $4 million, as a result of the increase in the direct and assumed premiums written by the Exchange, somewhat offset by lower agent incentive costs related to less profitable growth. Non-commission expenses increased $7 million in the quarter compared to the fourth quarter of last year. Underwriting and policy processing costs increased $3 million, information technology costs increased just over…

Thanks Greg. We remain firmly in position for continued profitable growth and we continue to invest in areas that support our strategic direction. Throughout 2018, we engaged our teams on initiatives centered on four areas of strategic focus; strengthening our business platforms and uses of data, continuing to enhance the Erie experience, identifying and developing new sources of revenue, and preparing the workforce of the future. We further developed and detailed priorities in each area and continue to deliver new capabilities improving service levels, product offerings and the efficiency of our agents and employees. In terms of our platforms, our agents have new online capabilities for writing business with Erie and servicing customer needs. In commercial lines, for instance, we expanded agents' ability to cope more lines of business online and introduce functionality to drive more cross-selling and boost commercial revenue. We continue to see double-digit premium growth in commercial lines that are in large part attributable to this online system. In personal lines, we began the rollout of our online capabilities for servicing homeowners business. The rollout will be completed in 2019, marking a significant step for improved online capabilities for our agents' personal lines business with Erie. We also delivered new and enhanced products, including a second option for homeowners insurance that will further strengthen our competitive position. Within our Erie experience initiatives, we began to work necessary to expand our distinctive service culture, what we call the service model of the future. We're engaging our customers, our agents and policyholders throughout this effort to gain our insights and build an even stronger understanding of their experience and expectations. Their understanding is key as we worked with a couple of best digital capabilities with the human touch where it matters most. We've also extended pilot testing the capabilities…

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