Scott Beilharz - VP, Capital Management and IR Terry Cavanaugh - President and CEO Marcia Dall - EVP and CFO Sean McLaughlin - EVP, Secretary and General Counsel.

Good morning and welcome to the Erie Indemnity Company’s Third Quarter 2014 Earnings Conference Call. I’d like to introduce your host for today’s conference, Scott Beilharz, Vice President of Investor Relations. Please go ahead..

Thank you, Daniel and welcome everyone. We appreciate you joining us for today’s discussion about our third quarter 2014 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 Web site erieinsurance.com. As we typically do, we'll start the call today with the openings remarks from Terry and Marcia, and then we’ll open the call for your questions.

Before we begin, I’d 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 latest 10-Q filing with the SEC, dated October 30, 2014, 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 latest Form 10-Q. 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 Terry..

Thank you, Scott and good morning everyone. As you can see in our earnings release we continue to achieve solid results in the third quarter. We generated net income per share of $0.90 in the third quarter which was up $0.03 from the prior year. For the year net income per share was up $0.30 to $2.71.

This year-over-year improvement reflects strong growth in management margin, as well as our investment operations. For the Exchange, direct written premium continues to outpace Koning's 2014 industry projection of 4.5%, increasing almost 9% for the third quarter and 8.5% for the year.

We are very pleased with this growth in direct written premium resulting from increases in both policies in force and average premium per policy, along with a strong retention rate of 90.5%.

When we talk about strong quarterly results like these, it’s important to remember that these results weren’t the outcome of some near-term action rather the seeds to these results were planted quarters if not years ago and took careful attention to be realized.

We also know that the road to success is paid with loyal agents, strong customer retention and providing products that consumers want and need.

Therefore, we will continue to focus our investments on these interwoven priorities, helping our agents to be successful, finding new ways to provide exceptional service and delivering products that customers need in a manner in which they want.

It should come as no surprise to those of you who have followed Erie for some time that it all starts with attracting and retaining a loyal agency force. Without question, our agents are crucial to the sustained success of our Company as they are the face of Erie in the communities we serve.

One way we are supporting our agents and helping them be successful is by investing in targeted marketing initiatives to increase brand awareness and the places they call home. And our efforts are working. According to our recent J.D.

Power study Erie’s brand awareness has increased 25% over the past three years, thanks impart for our Go Local marketing initiative. We are also laying the ground work for their success through technology and ongoing platform enhancements.

We have had great success over the past few years with a rollout of our personalized web-based coding system, and enhancements to our commercial system and our life system. .

With that I will now ask Marcia to provide you with more details on our financial performance. .

Thank you Terry and good morning everyone. As Terry mentioned net income for Erie Indemnity was $0.90 per diluted share in the current quarter compared to $0.87 per diluted share in the prior year quarter, reflecting increased revenue from management operation.

In our management operations income before taxes was $62 million up $2 million or 1% over the prior year quarter.

Revenue from our management operations grew $29 million to $370 million, this represents an 8.5% increase over the prior year period and is consistent with the nearly 9% increase in direct written premium of the property and casualty group. Cost of management operations grew $27 million or 10% to $308 million.

Commission expense grew $21 million or 11.5%. Commission growth outpaced direct written premium growth primarily due to a projected increase from agent incentive cost. Non-commission expenses increased $6 million or 7% over the prior year quarter.

The increase in expenses is attributable to increased cost associated with technology, underwriting and policy processing cost. These increases were partially offset by decreased pension cost and a decrease in the employee incentive plan cost related to underwriting performance.

Income from investment operations decreased 23% to $8 million in the third quarter of 2014 compared to $10 million in the third quarter of 2013, primarily due to a decrease in limited partnership income. We are pleased with our results for the first nine months of 2014. Indemnity’s net income on a year-to-date basis is up $15 million to $142 million.

On a per share basis, net income is up $0.30 per share to $2.71. In our management operations income before taxes grew $20 million over 11% to $188 million. The gross margin from management operations for the first nine months of 2014 was 17.5% compared to 17.1% for 2013.

Revenue from our management operations grew $82 million to $1.1 billion an increase of more than 8% reflecting strong growth in property and casualty premium. For the year premium per policy grew 4%, in addition on strong policyholder retention and the increase in new policies resulted in policy growth of 4.5%.

Cost of management operations grew $62 million to $882 million up 7.7%. Commission expense grew $49 million to $587 million. Similar to the quarter Commission growth was higher than direct written premium growth in the first nine months of 2014, primarily due to an increase in agent incentive cost.

Non-commission expenses increased $30 million up 4.5% over the prior year period. Our non-commission expenses for the first nine months of the year benefited from a decrease in employee incentive plan cost and pension cost. Indemnity’s income from investment operations grew $1 million to $26 million for the first nine months of 2014.

And our continued commitment to provide shareholder value we paid dividends to shareholders of $89 million for the first nine months of 2014. Now I will turn the call back over to Terry. .

Thank you, Marcia. Now before we take your questions I am really proud to announce two industry recognitions we recently received. In August Erie was once again recognized by J.D. Power & Associates receiving the top ranking for highest and customer satisfaction with small business commercial insurance.

Eire Indemnity was also named in the Barron’s 400 Index which collects the most fundamentally sound and attractively priced stock from all corners of the market. Only 6% of the publically traded companies are included on that list affirming the strength of our capital management strategy.

Finally I want to give you a quick update on our expansion into the Kentucky market. Thanks to the hard work and dedication of our employees, we expect to begin writing personal auto, home insurance, personal excess, life annuity products in Kentucky in the fourth quarter of 2014.

And now I will turn the call back over to the operator to open the line for your question. .

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Thank you. (Operator Instructions) And I am not showing any questions at this time..

Alright, if there will be no questions. I would like to thank everyone for their time and interest this morning. As we approach the end of 2014 and look ahead, I believe we are well positioned for continued long-term growth and value creation. Thanks in large part on our unwavering commitment to exceeding the expectations of our customer. Thank you..

Thanks again for joining us. A recording of this call will be posted on our Web site erieinsurance.com after 12:30 P.M. 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 on today’s conference. This does conclude today’s program. You may all disconnect. Everyone, have a great day. .

Thank you very much..