Erie Indemnity Co (ERIE) 2007 Q4 法說會逐字稿

Hello and welcome to the Erie Indemnity Company fourth quarter 2007 earnings conference. At the request of Erie Indemnity, this conference is being recorded for instant replay purposes. At this time all participants are in a listen-only mode. Following prepared remarks by management we will open the call for questions and answers.

Now I would like to introduce your host for today's conference call, Karen Kraus Phillips, Vice President and Manager of Corporate Communications and Investor Relations.

Thank you, Anthony, and good morning. Joining me for today's call are John Brinling, President and CEO; Executive Vice President and Chief Financial Officer, Phil Garcia; and Jim Tanous, Executive Vice President and Secretary and General Counsel.

Today's prepared remarks will be approximately 30 minutes. Following those remarks we will open the call for questions.

We issued our earnings release and additional supplements yesterday afternoon. If you need a copy of the press release or any of the exhibits you can find these in the Investor Relations section on our website at erieinsurance.com. We also filed form Form 10-K with the SEC.

On today's call the management of Erie Indemnity Company will share important information about current and future initiatives being undertaken at the Company. As a result, certain forward-looking statements may be incorporated into their comments. These forward-looking statements reflect the Company's current views about future events and are based on assumptions subject to known and unknown risks and uncertainties. These risks and uncertainties may cause results to differ materially from those anticipated as described in those statements. Many of the factors that will determine future events or achievements are beyond our ability to control or predict. For information on important factors that may cause such differences, please see the Safe Harbor statements in the latest 10-K filing with the SEC dated February 27, 2008, and in the related press release and 8-K.

In this call we will discuss some non-GAAP measures. You can find the reconciliation of those measures to GAAP measures in the press release and in the supplement posted on our investor website at erieinsurance.com

This call is being recorded, and the recording is the property of Erie Indemnity Company. It is not intended for reproduction or rebroadcast by any other party without the prior consent of Erie Indemnity Company. A replay will be available on our website this afternoon at 12:30 Eastern time. Your participation on this call will constitute consent to the recording, publication, webcast, broadcast and use of your name, voice and comments by Erie Indemnity. If you do not agree with these terms, please disconnect at this time.

And now I'll turn the call over to Erie's President and CEO, John Brinling. John?

Thank you, Karen. Good morning everyone. Today Phil and I will cover the fourth quarter and full year 2007 results. We'll touch on the management changes we announced yesterday and where we see the business headed in 2008. We'll also give you an update on the CEO search, so, let's get started.

Erie Indemnity turned in solid results in the fourth quarter, capping off the year with net operating income of $40.9 million, or $0.69 per share. Our net income result was negatively affected by impairments of our securities, which Phil will discuss later in the call.

Our revenue from management operations increased by more than 10% and our underwriting operations produced a nearly $5 million underwriting profit, a significant improvement over fourth quarter 2006 results.

The fourth quarter of 2007 GAAP combined ratio for Indemnity's Property and Casualty subsidiaries was 90.5, down nearly 10 points from the 2006 fourth quarter as a result of lower catastrophe losses and better loss development in the fourth quarter of 2007.

Net investment income for the quarter was down considerably, due in part to our share repurchase activity, which has decreased the funds available for investing.

The performance of our limited partnership portfolio turns in a comparable result for the same quarter last year, which was quite strong. And as I said, we had a $16.8 million of investment impairments during the quarter, which contributed to a $12.7 million realized loss for the quarter. Phil will give you more detail on these and other factors affecting our investment results.

We ended the year with net operating income of $216 million. Net operating income per share was up $3.48, up 11.9% from 2006. The primary drivers of this result were strong underwriting and investment operations performance. A higher management fee rate in 2007, 25% compared to 24.75% in 2006, also contributed to the results in our management operations. During the fourth quarter of 2007, our Board of Directors set the management fee at 25% for 2008.

Our capital management strategy is designed to increase total shareholder return. In 2007, we repurchased 4.5 million shares of our Class A, non-voting common stock, totaling $236.7 million. And in September of 2007 the Board approved a continuation of our stock repurchase program. At the end of 2007 we had approximately $92 million of outstanding repurchase authority remaining under the program that runs through December 31, 2008.

At the December meetings the Board increased the quarterly dividend to $0.44 from $0.40 for Class A shares, and $66 from $60 for Class B shares, marking the 74th consecutive year we've paid dividends to our shareholders.

We anticipate this soft market currently affecting insurance pricing will continue into 2008. However, we're already seeing some evidence that some companies have recognized that underwriting profitability is deteriorating and rate increases may be warranted.

During 2007, insurers have shown real discipline in their pricing strategies and did not opt for significant rate cuts. In fact, several large, multi-line companies have increased rates in Personal lines marginally in many markets. We've maintained our underwriting discipline and we've taken what we believe are disciplined rate reductions. We'll continue this approach in 2008, but we'll also raise rates in some lines and markets when additional rate need is indicated.

In 2007, we grew policies by 2.4% on a year-over-year basis, ending the year with nearly 3.9 million policies in force. New written premium expanded by 9% to $401 million. In addition to our improved competitive position, we attribute this growth in part to our new agency appointments, particularly those appointments made in 2005 and 2006. We expect this effect to continue in 2008 as our new agents become more proficient and we begin to see the results from those appointed in 2007.

The Private Passenger Auto incentive we put in place in July, 2006, has also added to this increase in new policy growth.

By the end of 2007 we appointed 214 new agencies. Of those, 70% were startup agencies. Working with startups allows us to build agency loyalty at the onset and insure the agency understands and commits to Erie's service philosophy. Our plan calls for appointing another 140 agencies in 2008.

We're also preparing to recruit agencies in our 12th state, Minnesota. Recruitment will begin there in 2009 and we'll expect writing business will be -- excuse me -- we'll begin writing business by the fourth quarter of that year.

Of course, we're also seeing positive production from some of our long-term agents who are capitalizing -- excuse me -- on our competitive rates and our mutual commitment to superior service to win new business and retain current policyholders.

In addition to agent appointments, we also launched an all-lines agent incentive contest in October of 2007 that will run through September, 2008.

We ended the year with a retention ratio of 90.2, up from 89.5 at yearend 2006. This marks the best retention ratio for Erie in more than four years, since the third quarter of 2003. Premium growth during the soft market cycle has been a challenge for most insurers.

An equally significant challenge for us during the fourth quarter and coming into 2008 is our Life Company's transition to business process outsourcing. As you know, Erie Indemnity owns 21.6% of Erie Family Life and the Exchange owns 78.4%.

The challenges have been most evidenced to our agents who have worked hard to minimize a negative impact to our Life policyholders, many of whom are Property and Casualty policyholders as well. The primary [pain] point is the level of service provided to our agents from our outsourcing partners Call Center. We're just not meeting service expectations. Working together we've attempted to correct the problems, but systemic issues at their operation have limited our effectiveness.

Therefore, we've decided to re-establish the Life Call Center at our Home Office in Erie to insure our superior service reputation. Bringing the Call Center back in-house will have no material impact on Erie Indemnity Company's results in 2008 or beyond.

As I said at the onset, I'd like to take a few minutes to review some management changes at the Company.

Tom Morgan, Executive Vice President of Insurance Operations, has resigned his position with the Company to pursue other opportunities. Tom has been with Erie as an employee and an independent agent for a total of 24 years. I appreciate his dedicated service and wish him much luck in the future.

With Tom's departure we decided to restructure Insurance Operations, which makes up nearly 75% of Erie's total operations. We're dividing this area under the leadership of two long-time Erie family members, Mike Zavasky, currently Senior Vice President of our Strategy Management office, and George Lucore, who will rejoin the Company after a brief hiatus. George retired after 34 years with Erie in the spring of 2006 from his position as Senior Vice President of the Agency Division. Both men have a long tenure and broad experience with the Company's Property and Casualty Insurance operations. I'm very pleased to welcome them to our Executive Management Team.

We also announced in yesterday's earning release that two incumbent Directors, Kaj Ahlmann and John Baily, had advised us that they do not intend to stand for reelection to the Board at our annual shareholders' meeting on April 22nd. They will finish out their current term, continuing in their respective roles. Kaj serves as Strategy Committee chair and John as Audit Committee chair. Kaj and John have served the Company well in their years on the Board. It's been a pleasure working with them and I know they'll continue to be strong advocates for Erie. It is the Board's intention to announce the 2008 slate of Directors for election on or about Monday, March 10th.

I also want to give you a brief update on our search for a new CEO. The Board Search Committee is actively interviewing candidates to narrow the field and make a final selection. While no specific timeframe has been established, given the progress, I'd expect a new CEO to be onboard around midyear.

Now, I'll turn the call over to Phil to provide details of our financial results and Phil will open the call for your questions. Phil?

Thanks, John, and thanks to all of you for joining us on today's call. First, I'll provide you with some highlights of the fourth quarter and I'll talk in detail about certain aspects of our investment portfolios and those of the Erie Insurance Exchange, and then I will briefly discuss our full-year results.

As we highlighted in our earnings release, our net income in the fourth quarter of '07 was affected by net realized losses on investments, which included $16.8 million of impairments of securities, as well as some tax adjustments that resulted in a higher effective tax rate. As a result, net income was $32.6 million for the fourth quarter of '07, down from $45.5 million for the same period in '06. Our net income per share diluted decreased to $0.55 per share, compared to $0.71 per share last year. However, we matched the strong fourth quarter 2006 net operating income per share of $0.69 per share.

I'll take a few moments to explain more of the details behind our fourth quarter results, starting with the Management Operations segment.

Our management fee revenue increased 1.1% in the fourth quarter of 2007, primarily because our management fee rate was set at 25% in 2007 compared to 24.75% in 2006. Our management fee revenue, as you know, is based on our direct written premium, which decreased 0.5% in the fourth quarter of '07 compared to the fourth quarter of '06. The decrease was largely a result of premium rate decreases that are designed to enhance our competitive position.

The total cost to Management Operations decreased 0.6% to $189.2 million in the fourth quarter of '07 from $190.3 million in the fourth quarter of '06. Our commission costs increased 1.7% to $132.8 million from $130.6 million in the fourth quarter of '06. The fourth quarter costs to Management Operations, excluding our commission costs, decreased 5.6% to $56.4 million in 2007 from $59.8 million in '06. The decrease was due to an adjustment of $4 million to intercompany expenses allocated to affiliates, which reduced the cost to Management Operations. Somewhat offsetting this reduction was $2.7 million of additional Professional fees and software-related expenses in the fourth quarter of '07.

Moving on to our underwriting performance, our GAAP combined ratio was 90.5% in the fourth quarter of '07 compared to 100 in the same period of '06.

The Insurance Underwriting operations generated gains of $4.9 million in the fourth quarter of '07, compared to an underwriting breakeven in the fourth quarter of '06.

Our Property and Casualty Group's adjusted statutory combined ratio was 89.9 in the fourth quarter of '07 compared to 99.8 in the fourth quarter of '06.

We experienced relatively low catastrophe levels of $0.5 million, or 0.9 points in the fourth quarter of 2007, compared to $2.6 million, or 4.9 points, in the fourth quarter of 2006.

The fourth quarter of 2007 also included some reserve strengthening to the pre-1986 catastrophe injury liability reserve as a result of changes we made to our mortality assumption for these claimants.

Finally, some highlights of our fourth quarter investment operations.

Our net revenue from investment operations decreased to $12.4 million in the fourth quarter of '07, compared to $30.7 million in the same period of '06. Our net investment income decreased 11.5% to $12.5 million in the fourth quarter of '07, which was influenced by our share repurchase activity during the year.

Equity and earnings of limited partnerships totaled $12.8 million in the fourth quarter of '07, compared to $12.7 million in the fourth quarter of '06, as our partners continued to deliver strong returns from these investments.

Included in our net realized losses on investments are impairment charges of $16.8 million, and $1.4 million in the fourth quarters of '07 and '06, respectively. Common stock impairments made up $7 million of this charge, while Preferred Stock impairments totaled $6.3 million, and Fixed Maturity impairments totaled $3.5 million for the quarter.

Beginning in 2008, we've adopted an accounting change that will affect how we account for certain assets in our investment portfolio. As you can see from our 10-K, we adopted the Fair Value Option for our common stock portfolio under FAS-159, effective January 1, 2008. This portfolio is currently accounted for as an available for-sale portfolio where changes and fair value are reflected in shareholders' equity.

After January 1, 2008, changes in the fair value of the common stock portfolio will be reflected in the consolidated statements of operations as realized gains and losses. The unrealized gains of our common stock at January 1, 2008 will be included as a cumulative effect adjustment.

As a result, retained earnings will increase by $11.2 million at January 1, 2008, with a corresponding decrease in accumulated other comprehensive income.

As we noted in our press release, our fourth quarter of 2007 provision for income taxes was increased by $1.3 million for adjustments made for the tax basis and the sale of certain limited partnership investments, which increased our deferred taxes.

I'd now like to spend a few moments discussing our investment portfolio and the portfolio of the Erie Insurance Exchange, and we refer you to our disclosures in our 10-K on page 46 and our Investor Supplement where we provide details of portions of the Exchange's portfolio so you can follow along on the Supplemental disclosures we have provided for your use.

With the ongoing turmoil in the credit markets, I wanted to provide some perspective and more specifics regarding our structured debt and our Municipal Bond portfolios, and those portfolios at the Exchange.

The Company has just over $35 million, or about 5%, of its Fixed Income portfolio invested in structured asset-backed products that carry an average rating of A-plus. The Company believes that none of these securities have direct exposure to the subprime residential mortgage market. The market value of the portfolio is about 93% of amortized costs and the Company impaired $1.8 million related to four of its structured product holdings during 2009.

The Exchange's structured debt portfolio of $431 million, recorded on a statutory accounting basis, represents less than 10% of their total bond portfolio. The market value of that portfolio is about 95% of amortized costs at December 31, 2007. The Exchange has impaired four securities in this portfolio in the third and fourth quarters of 2007 that had exposure to subprime collateral, for a total impairment charge of $16.9 million.

We value these securities using pricing services from independent third-party services and brokers and we've obtained additional third-party views of our market values.

In addition, we're monitoring our Municipal Bond portfolio in light of the current difficulties being encountered by the Bond insurers. It's important to comment that our investment philosophy with respect to MUNI Bonds is to focus primarily on the quality of the underlying security and to not rely on the Bond insurance.

The Company's Municipal Bond portfolio accounts for $249.4 million, or 35.5% of the total Fixed Maturity portfolio of the Company. Of the total Municipal Bond portfolio, $199.1 million, or 79.8%, are insured. The Company's Municipal Bond portfolio is highly rated and includes all investment grade holdings. The overall credit quality of the Municipal Bond portfolio is rated AAA, while the overall credit quality of the Municipal Bond portfolio giving no effect to insurance is A-plus. The market value of the portfolio, which is important to note, is 101% of the amortized costs and the Company has not impaired any of these investments.

The Exchange's Municipal Bond portfolio accounts for $1.2 billion on a statutory accounting basis, or 28% of its total bond portfolio. When measured on a fair value basis, $781 million, or 62%, of the Municipal Bond portfolio are insured. The overall credit quality of this MUNI Bond portfolio is rated AA-plus, while the overall credit quality of the MUNI Bond portfolio, giving no effect to insurance, is rated AA-minus. The market value of the portfolio is 102% of amortized costs and the Exchange has not impaired any of these investments.

During the fourth quarter of 2007, the Exchange recorded $93.1 million in impairment charges related to its bonds and common and preferred stock.

And finally, during the fourth quarter, as part of our share repurchase program, the Company repurchased about 321,000 shares of our Class A common stock at a cost of $16.9 million.

Now, I'd like to take a few moments to briefly provide some detail on our full-year results.

Our net income was, as John said, $212.9 million for the full year ended December 31, 2007, a 4.4% increase from the $204 million in '06. Our net income per share diluted increased to $3.43 per share from $3.13 per share in 2006. And our net operating income per share increased 11.9% to $3.48 in 2007 compared to $3.12 in '06.

Our management fee revenue increased 0.4% as our direct written premiums for the Property and Casualty Group decreased 0.5% in 2007. Our direct written premiums were down slightly as a result of rate reductions implemented to be more price competitive for potential new policyholders and to improve our retention of existing policyholders. The effect of these rate actions resulted in a net decrease in our direct written premiums of $85.9 million in 2007.

Our cost to Management Operations increased 1.8%, almost $800 million at December 31, 2007 from $785.7 million for the year 2006. Our commission costs increased 0.6% to $557.4 million in 2007, due largely to agent incentives as our scheduled commissions remained flat for the year. The $50 Private Passenger Auto bonus resulted in a commission increase of about $3.1 million in 2007.

Our non-commission costs increased 4.6% to $242.2 million in 2007, driven by personnel and other operating costs.

Obviously, keeping our costs low helps us keep our products competitive. Our operating expense ratio keeps us competitive with all Personal lines writers, including companies who write direct. Our combined Property and Casualty operating expense for the Property and Casualty Group was 31.8 for 2007. That compares very favorably to the estimated industry operating expense ratio of 39.1.

Our Insurance Underwriting operations generated about $25 million in gains for the year ended December 31, '07, compared to $13.4 million in '06. And the Property and Casualty Group's adjusted statutory combined ratio improved to 83.8 in '07 from 89.4 in '06.

Our catastrophe losses for '07 were $3.6 million, compared to $8.5 million in '06.

Our GAAP combined ratio improved to 88.1 from 93.7 in 2006 due to severity trend improvements resulting in reserve redundancies.

The Company's 5.5% share of the Property and Casualty Group's positive favorable development of prior accident year losses, after removing the effects of salvage and subrogation recoveries, was $11 million in '07 and $4 million in '06.

Finally, our investment operations, we reported net realized losses on investments of $5.2 million in '07, primarily due to impairment charges of $22.5 million, offset somewhat by gains on the sales of our common stocks of $14.3 million.

Our equity in earnings of limited partnerships increased 42.9% in '07 as a result of market value appreciation from our private equity partnerships and market value appreciation and earnings from our real estate limited partnerships.

Finally, in 2007 we had a record year for share repurchase activity. We have purchased almost 4.5 million shares for over $236.6 million in '07.

Now, we'll open the line for questions.

Anthony?

(OPERATOR INSTRUCTIONS) And we will take our first question from Michael Phillips with Stifel Nicolaus.

Good morning, everybody.

Hi, Michael.

Good morning. A couple of questions. First one kind of more just a high-level strategy question and then a couple of numbers questions after that.

The first question, if you think about your growth strategy, how do you -- how do you prioritize the two prongs of this, of one, the putting new agents versus kind of going after the current agency base and helping them grow? When you think about those two things, does one stand out more than the other in your strategy, or are they even? What are your thoughts there?

Well, Mike -- this is John Brinling. I would say that if it was divided it would be about 50/50 because we are focusing on appointing new agents. As you saw, we anticipate putting 214 on this year. But, certainly, with the large base of existing agents and insurance in force, we want to get more business from those existing agents and we're focusing on them as well. So, it's a two-pronged approach.

Okay, that's understandable. Thanks. The more detailed questions, I think last quarter you said overall plans for '08, and interims of rate action and you thought for '08 it would be about neutral on a consolidated basis. I guess updates on that and if you can give details on specific lines that would be helpful.

Well, overall -- this is Phil, Michael -- in the third quarter we reported about a $4 million increase, which is really flat for the year, from rate actions. And if you read the disclosure in the 'K' now, we're down to a minus nine, so that's about a $14, $13 million swing, but, still flat for the year for 2008. And pretty much 2008 -- our rate filings have pretty much been made for 2008, and so, there's no other actions that we're going to be taking rate wise that are really going to have a big influence on the 2008 numbers.

If I look at some of your disclosures in the 'K', it looks like -- and maybe I read this wrong -- but it looks like it's still kind of coming down, but I couldn't tell what year, what your thoughts were there on, say, Auto and Home.

Well, basically they're all flat rate wise across every line of business. Comp is flat, Auto is flat, Home is flat, so for 2008 we're not going to get any rate. Now, that's better than 2007 where the number, as we disclosed, was a minus 85. So, relative to '07, '08 is a good rate year. We're going to get $80 million more in premium.

Okay, thanks. The accelerated bonuses that you paid to the newly recruited agents, can you describe, what is that for? You're paying a bonus for them to sign up with you? Since they're new, there's no experience yet. Is that what that is?

Well, Mike -- excuse me -- we are one of the few independent agency companies that will help an agent start from scratch. And to do that, until they get a book of business established, they've got to eat. So, our bonus structure is essentially to subsidize them to get up and running until they can -- until they have a book of business and renewals that can support them.

So, it really is to get them up and running and we've found that to be a very effective approach. The agents that we've brought up that way have been very loyal over the years, have been -- have stuck with us and so, we think it's a good investment.

Okay. And then, finally, any guidance on the tax rate going forward and the growth in non-commission expenses for '08?

Yes, our tax rate -- we had some adjustments during the quarter, so you want to use a tax rate of about 32.7, 32.8 for our effective tax rate going forward.

Expenses last year, we gave you guidance on expenses. At the end of the first quarter we plan to do that again. You saw that our non-commission operating expenses for the year grew about 5. If you want to use that number -- you want to use a number north of that until we give you more specific guidance in the first quarter.

I'm sorry, north of the 4?

North of the 5. Yes, I think it was 4.6, right?

4.6, yes.

That's pretty low, so if I were to give you a number today, which I'm not going to, I would give you a little guidance and say you should be north of 4.6 in your forecast.

Okay, that's helpful. Thanks everybody. I appreciate it.

(OPERATOR INSTRUCTIONS) And Dan Schlemmer with FPK has our next question.

Yes, I was hoping you could give a little bit more background on the average development. It sounded like it's coming from really old claims, but I'm just curious. How many claims are we talking about and what's driving the change there on such old claims?

Yes, they're really old claims, Dan. You haven't been on -- this is again Phil -- you haven't been on too many of our calls, but this is something we've disclosed frequently the last year or two. So, we have about 100 claims. Most of them relate to -- they're mostly Auto claims -- there are some Workers' Comp claims -- that relate to pre -- (inaudible) Pennsylvania prior to 1986, where basically we have unlimited liability on these claims. It's about 100 claims.

Last year we took a hard look at the healthcare costs inflation assumption we were using to reserve these claims and we adjusted it upward, and so, in the fourth quarter you see that we had some adverse development on those.

This year we took a hard look at this yearend at the mortality assumption we're using. Again, these are severely impaired people, mostly paraplegics or quadriplegics. The life expectancy of people that have those sorts of injuries are subject to some variation, so we took a hard look at the mortality assumption that we were assuming for these 100 claimants and we adjusted it upward.

So, what that means is we adjusted their lives -- their expected life expectancy upward, and the effects of that are washing through our financial statements in the fourth quarter.

Okay, great! Thank you. Then, did you disclose, or can you tell us what the adverse or favorable development during the quarter was, excluding that specific piece?

That was almost all of it.

Okay. So, essentially flat, excluding that?

Yes.

Okay. Separately, the retention ratio, the increase in retention ratio, I'm just curious if you can maybe expand on that a little bit. I guess I'm -- have you historically seen a pattern to that retention ratio as part of -- as part of the pricing cycle, or do you attribute it to any -- to something specifically -- I guess what is your view on where that -- what's driving the, what, 89.5 up to 90.2 from '06 to '07? Obviously, it's somewhat forward-looking, do you have a view?

Well, we think that it's reflective of two things, Dan. Obviously, one is a reflection of our competitiveness, our improved position with respect to other competitors, and so price has a piece of it. In terms of a pattern, it's been steadily improving since about the middle of '06 and it goes back to '05. The numbers I'm looking at right now in terms of Private Passenger have improved steadily over the quarters. So, that's part of it.

The second part is we're getting very high marks, for example, with J.D. Power in terms of our service, so, it's not just price, it's people having the experience with our Company and enjoying the way their claim was handled and staying with us.

So, we target retention and improvement in retention. We recognize that every policy we don't lose is one less we have to replace.

Great! Thank you.

And we'll now go to Mr. Michael Phillips with Stifel Nicolaus with our next question.

I'm back, sorry. I have two more for you. I left this out earlier. What can you share with what you're seeing with competitive rate changes (inaudible) after markets?

Well, as I mentioned in my remarks, Mike, for the most part they're flat. There have been some indications from some of the larger, particularly, direct writers, that they intend to start taking some rate to avoid underwriting losses, but we haven't seen anything dramatic yet. We've seen some indication that they're starting to go up. They certainly have reduced the rate of decline and, in most cases, flat or going up.

Okay, that's helpful. And any details you can share on what you're seeing in the loss trends in Homeowners' specifically?

I don't have that information with me right now.

Can I call you back?

Yes.

Okay.

Michael, we'll get that for you.

Okay, thanks, Phil. That's all I have.

And it does appear we have no further questions at this time. I would now like to turn the conference back over to you for any additional or closing remarks.

Well, before we end the call today, I'd like to take a moment to acknowledge Bill Hirt, our former Chairman of the Board, who passed away in July. Bill was a truly great man and leader. He dedicated much of his life to insuring Erie's success. Bill exemplified our founding value, the golden rule, treating everyone with kindness, respect and dignity. His perspectives and excellent business sense helped build Erie into the Company it is today. We truly miss him and are forever grateful to him.

Thanks again for joining us on today's call. We look forward to seeing many of you at our annual Shareholders' meeting on April 22nd.

And just a reminder that the recording of the call will be posted on our website at erieinsurance.com after 12:30 PM Eastern time today. And if you have any questions at all, as always, please call me at 814-870-4665. Thanks again, and make it a great day.

That does conclude our conference for today. We appreciate your attendance and please have a wonderful day.