Q2 2024 Erie Indemnity Co Earnings Call - Pre-Recorded

Good morning and welcome to the Erie Indemnity Company second quarter 2024 earnings conference call.

Operator: 2nd quarter, 2024, Ernie's conference call.

Operator: Order 2024 Earnings Conference Call. This call is prerecorded, 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.

Operator: This call is pre-recorded, and there will be no question in the answer session following the recording. Now, I'd like to introduce your host for the call by present Investor Relations.

Scott Beilharz: Scott Beilharz. Thank you, Scott Beilharz and Julie Pelkowski, Executive Vice President and Chief Financial Officer.

Scott W. Beilharz: Thank you and welcome everyone. We appreciate you joining us for this recorded discussion about our second quarter results. This recording will include remarks from Tim NeCastro, President and Chief Executive Officer, and Julie Pelkowski, Executive Vice President and Chief Financial Officer. Our earnings release and financial supplement were issued yesterday afternoon after the market closed and are available in the investor relations section of our website erieinsurance.com.

Speaker Change: Thank you and welcome everyone. We appreciate you joining us for this recorded discussion about our second quarter results.

Speaker Change: This recording will include remarks from Tim NeCastro, President and Chief Executive Officer, and Julie Pelkowski, Executive Vice President and Chief Financial Officer.

Operator: Our recording is released and financial supplement where she gets her day after the market closed and are available with the Investor Relations section of our website, earinsurance.com. Before we begin, I would like to remind everyone that today's discussion contains four looks and remarks that reflect the company's current view about future events. These remarks are based on assumptions, something to know, and unexpected risks and uncertainties. These risks and uncertainties may cause us to differ materially from those described in these remarks.

Speaker Change: 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.

Scott W. Beilharz: 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 and are based on assumptions, subject to known and unexpected risks and uncertainties. These risks and uncertainties may cause our 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 filed yesterday and in the related press release.

Speaker Change: Before we begin, I would like to remind everyone that today's discussion may contain forward-looking remarks that reflect the company's current view about future events. These remarks are based on assumptions subject to known and unexpected risks and uncertainties.

Speaker Change: 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 10Q filing with the SEC filed yesterday and in the related press release.

Operator: For information on important factors that may cause this differences, please see the state part of the statements that are formed. Thank you, following with the FBCF out yesterday and in the related press release.

Scott W. Beilharz: This pre-recorded call is the property of Erie Indemnity; it may not be reproduced or rebroadcast by any other party without the prior written consent of Erie Indemnity Company. With that, we will move on to Tim's remarks.

Operator: This pre-recorded call is the property of your identity company. It may not be reproduced or rebroadcast by any other party without the prior written consent of your identity company.

Speaker Change: This recorded call is a property of Erie Indemnity Company.

Speaker Change: It may not be reproduced or rebroadcast by any other party without the prior written consent of Erie Indemnity Company.

Timothy NeCastro: With that, we will move on to Timothy Marks. Thanks, Scott, and thanks to all of you for taking time to learn more about your performance in the second quarter of 2024. As we reach the halfway point of our 99th year in business, I'm excited to share that we also reached a significant milestone for area insurance exchange: 7 million policies in force. Our last milestone of 6 million policies and force was reached in 2021, and adding 1 million policies to our book of business in just three years is no small feat. To give you a sense of scale, it took our company more than 60 years to reach our first million and just three to get from 6 to 7 million.

Timothy Gerard NeCastro: Thanks, Scott, and thanks to all of you for taking time to learn more about Erie's performance in the second quarter of 2024. As we reach the halfway point of our 99th year in business, I'm excited to share that we also reached a significant milestone for Erie Insurance, seven million policies in force. Our last milestone of six million policies in force was reached in 2021, and adding one million policies to our book of business in just three years is no small feat. To give you a sense of scale, it took our company more than 60 years to reach our first million, and just three years to get from six to seven million.

Speaker Change: With that, we will move on to Tim DeMarks. Tim?

Timothy Gerard NeCastro: Thanks, Scott. And thanks to all of you for taking time to learn more about Erie's performance in the second quarter of 2024.

Timothy Gerard NeCastro: As we reach the halfway point of our 99th year in business, I'm excited to share that we also reached a significant milestone for Erie Insurance Exchange.

Tim NeCastro: 7 million policies in force.

Tim NeCastro: Our last milestone of six million policies in force was reached in 2021, and adding one million policies to our book of business in just three years is no small feat. To give you a sense of scale, it took our company more than 60 years to reach our first million, in just three.

Timothy Gerard NeCastro: So this recent milestone is no doubt a testament to our hardworking agency force and dedicated sales and underwriting team. Our impressive growth and customer retention rates, which stand at just over 91% for personal and commercial lines combined, underscore the strong value proposition we offer. Putting service above all else is always our top priority, and customers notice. That's why we hold true to the principles that have shaped our success for almost 100 years while continuously adapting for what's ahead.

Timothy NeCastro: So this recent milestone is no doubt a testament to our hard-working agency force and dedicated sales and underwriting teams. Our impressive growth and customer retention, which stands at just over 91% for personal and commercial lines in mind, underscores the strong value proposition we offer. Putting service above all else is always our top priority, and customers notice. That's why we hold true to the principles that have shaped our success for almost 100 years while continuously adapting for what's ahead.

Tim NeCastro: to get from six to seven million. So this recent milestone is no doubt a testament to our hardworking agency force and dedicated sales and underwriting teams.

Tim NeCastro: Our impressive growth and customer retention, which stands at just over 91% for personal and commercial lines combined, underscore the strong value proposition we offer.

Tim NeCastro: Putting service above all else is always our top priority and customers notice. That's why we hold true to the principles that have shaped our success for almost 100 years while continuously adapting for what's ahead.

Timothy NeCastro: I'm also pleased to share the Erie Rank number 376 on the 2024 Fortune 500 list of largest American corporations. We moved up 38 spots from last year's ranking of 414. The 2024 list marks our 21st year in the Fortune 500 alongside some of the most well-known and successful companies in the country.

Timothy Gerard NeCastro: I'm also pleased to share that Erie ranked number 376 on the 2024 Fortune 500 list of largest American corporations; we moved up 38 spots from last year's ranking of 414. The 2024 list marks our 21st year on the Fortune 500 alongside some of the most well-known and successful companies in the country. Here to share some insights into our financial performance for the second quarter is Chief Financial Officer, Julie Pelkowski.

Tim NeCastro: I'm also pleased to share that Erie ranked number 376 on the 2024 Fortune 500 list of largest American corporations.

Tim NeCastro: We moved up 38 spots from last year's ranking of 414. The 2024 list marks our 21st year in the Fortune 500 alongside some of the most well-known and successful companies in the country.

Timothy NeCastro: Here's some insights into our financial performance for the second quarter.

Julie Pelkowski: His chief financial officer, Julie Polkowski. Julie.

Tim NeCastro: Here to share some insights into our financial performance for the second quarter is Chief Financial Officer Julie Pelkowski. Julie.

Julie Pelkowski: Thank you, Tim.

Julie Marie Pelkowski: Thank you, Tim, and good morning, everyone. Erie Insurance Exchange, the insurance operations we manage, continued to experience strong growth in the second quarter of 2024, driven by steady new policy growth and solid retention, as Tim just mentioned. In addition, incremental improvements continue to be realized from our more significant rate increases. These increases have had the most impact when addressing our profitability challenge. With these efforts, the exchange's direct written premiums grew 20% in the second quarter of 2024 compared to the second quarter of 2023, with year-to-date growth through June 2024 at that similar 20% level. From a seasonality perspective, we generally see higher weather losses in the first half of the year.

Julie Pelkowski: Good morning, everyone. Here's an insurance exchange. The insurance operations we manage continued to experience strong growth in the second quarter of 2024, driven by steady new policy growth and followed retention and Tim just months. In addition, incremental improvements continue to be realized from our more significant rate increases. These increases have had the most impact when addressing our profitability challenge. With these efforts, the changes director and premium grew 20% in the second quarter of 2024, compared to the second quarter of 2023, with year-to-date growth through June 2024 at that similar 20% level. From a seasonality perspective, we generally see higher weather losses in the first half of the year.

Julie Marie Pelkowski: Thank you, Tim, and good morning, everyone.

Julie Marie Pelkowski: Erie Insurance Exchange, the insurance operations we manage, continue to experience strong growth in the second quarter of 2024, driven by steady new policy growth and solid retention, as Tim just mentioned.

Speaker Change: In addition, incremental improvements continue to be realized from our more significant rate increases. These increases have had the most impact when addressing our profitability challenge.

Julie Marie Pelkowski: With these efforts, the exchange's direct written premiums grew 20% in the second quarter of 2024 compared to the second quarter of 2023, with year-to-date growth through June 2024 at that similar 20% level.

Julie Marie Pelkowski: From a seasonality perspective, we generally see higher weather losses in the first half of the year.

Julie Pelkowski: We saw this trend hold true as the exchange's combined ratio was 115.9 in the second quarter of 2024, compared to 118.9 in the second quarter of 2023, with catastrophic weather events contributing 16.2 points and 16.9 points in those same respective periods. Worth noting is the more significant improvement in our year-to-date combined ratio of 111.1 in 2024, compared to 120.8 in the first six months of 2023. In these first six months, catastrophic weather events contributed 12.7 points versus 15.7 points in the same period of 2023. We did experience an improvement in our non-catastrophe loss ratio in the first six months of 2024, compared to 2023, of 72.2 points versus 73.8 points respectively.

Julie Marie Pelkowski: We saw this trend hold true as the exchanges combined ratio was 115.9 in the second quarter of 2024 compared to 118.9 in the second quarter of 2023, with catastrophic weather events contributing 16.2 points and 16.9 points in those same respective periods. Worth noting is the more significant improvement in our year-to-date combined ratio of 111.1 in 2024 compared to 120.8 in the first six months of 2023. In these first six months, catastrophic weather events contributed 12.7 points versus 15.7 points in the same period of 2023.

Julie Marie Pelkowski: We saw this trend hold true as the exchanges combined ratio was 115.9 in the second quarter of 2024.

Julie Marie Pelkowski: compared to 118.9 in the second quarter of 2023.

Julie Marie Pelkowski: with catastrophic weather events contributing 16.2 points and 16.9 points in those same respective periods.

Julie Marie Pelkowski: Worth noting is the more significant improvement in our year-to-date combined ratio of 111.1 in 2024 compared to 120.8 in the first six months of 2023.

Julie Marie Pelkowski: In these first six months, catastrophic weather events contributed 12.7 points vs. 15.7 points in the same period of 2023.

Julie Marie Pelkowski: We did experience an improvement in our non-catastrophe loss ratio in the first six months of 2024 compared to 2023 of 72.2 points versus 73.8 points, respectively. Additionally, in 2023, higher severity drove adverse development on prior accident years, increasing the combined ratio by 2.9 points. In 2024, moderating severity trends resulted in favorable development on prior accident years, improving the combined ratio by two points.

Julie Marie Pelkowski: We did experience an improvement in our non-catastrophe loss ratio in the first six months of 2024 compared to 2023 of 72.2 points versus 73.8 points, respectively.

Julie Pelkowski: Additionally, in 2023, higher severity drove adverse development on prior accident years, increasing the combined ratio by 2.9 points. In 2024, moderating severity trends resulted in favorable development on prior accident years, improving the combined ratio by 2 points.

Julie Marie Pelkowski: Additionally, in 2023, higher severity drove adverse development on prior accident years, increasing the combined ratio by 2.9 points.

Julie Marie Pelkowski: In 2024, moderating severity trends resulted in favorable development on prior accident years, improving the combined ratio by two points.

Julie Pelkowski: In summary, our rate increases are having the desired impact, and with lower weather events and moderating severity in the first half of 2024, we have seen a profitability improvement compared to the same period in 2023. Our policyholders' surplus dropped slightly from 9.5 billion in March 2024, although we maintained a strong surplus position consistent with our December 2023 level of 9.3 billion as of June 2024. Justing to the results for indemnity, net income was $164 million, or $3.13 per diluted share, in the second quarter of 2024, compared to $118 million, or $2.25 per diluted share, in the second quarter of 2023.

Julie Marie Pelkowski: In summary, our rate increases are having the desired impact, and with lower weather events and moderating severity in the first half of 2024, we have seen a profitability improvement compared to the same period in 2023. Our policyholder surplus dropped slightly from $9.5 billion in March 2024, although we maintained a strong surplus position consistent with our December 2023 level of $9.3 billion as of June 2024. Fitting to the results for Indemnity, net income was $164 million, or $3.13 per diluted share, in the second quarter of 2024, compared to $118 million, or $2.25 per diluted share, in the second quarter of 2023.

Julie Marie Pelkowski: In summary, our rate increases are having the desired impact, and with lower weather events and moderating severity in the first half of 2024, we have seen a profitability improvement compared to the same period in 2023.

Julie Marie Pelkowski: Our policyholder surplus dropped slightly from $9.5 billion in March 2024, although we maintained a strong surplus position consistent with our December 2023 level of $9.3 billion as of June 2024.

Julie Marie Pelkowski: Fitting to the results for Indemnity, net income was $164 million, or $3.13 per diluted share, in the second quarter of 2024, compared to $118 million, or $2.25 per diluted share, in the second quarter of 2023.

Julie Pelkowski: Year-to-date indemnity net income was $289 million or $5.52 per diluted share compared to $204 million or $3.90 per diluted share at this time last year. Operating income increased in the second quarter nearly 42% to over 190 million compared to the second quarter of 2023, bringing our year-to-date 2024 operating income to $329 million, which was an increase of almost 35% compared to the first half of 2023. The main driver of these increases continues to be higher management fee revenue, resulting from the exchange's significant direct written premium growth. Management fee revenue from policy issuance and renewal services increased 20.1% to nearly 761 million in the second quarter of 2024, compared to the second quarter of 2023, and nearly 20% to 1.4 billion in the first half of the year compared to this time last year.

Julie Marie Pelkowski: Year-to-date Indemnity Net Income was $289 million, or $5.52 per diluted share, compared to $204 million, or $3.90 per diluted share, at this time last year. Operating income increased in the second quarter by nearly 42% to over $190 million compared to the second quarter of 2023, bringing our near-to-date 2024 operating income to $329 million, which was an increase of almost 35% compared The main driver of these increases continues to be higher management fee revenue resulting from the exchange's significant direct written premium growth.

Julie Marie Pelkowski: Year-to-date Indemnity Net Income was $289 million, or $5.52 per diluted share, compared to $204 million, or $3.90 per diluted share at this time last year.

Julie Marie Pelkowski: Operating income increased in the second quarter nearly 42% to over $190 million.

Julie Marie Pelkowski: compared to the second quarter of 2023.

Julie Marie Pelkowski: bringing our year-to-date 2024 Operating Income.

Julie Marie Pelkowski: to $329 million, which was an increase of almost 35% compared to the first half of 2023.

Julie Marie Pelkowski: The main driver of these increases continues to be higher management fee revenue resulting from the exchange's significant direct written premium growth.

Julie Marie Pelkowski: Management fee revenue from policy issuance and renewal services increased 20.1% to nearly $761 million in the second quarter of 2024 compared to the second quarter of 2023, and nearly 20% to $1.4 billion in the first half of the year compared to this time last year. Total cost of operations from policy issuance and renewal services increased $73 million, or 14%, in the second quarter of 2024 compared to the same period in 2023.

Julie Marie Pelkowski: Management Fee Revenue from Policy Issuance and Renewal Services

Julie Marie Pelkowski: increased 20.1 percent.

Julie Marie Pelkowski: to nearly $761 million in the second quarter of 2024 compared to the second quarter of 2023.

Julie Marie Pelkowski: and nearly 20%

Julie Marie Pelkowski: to $1.4 billion in the first half of the year compared to this time last year.

Julie Pelkowski: Total cost of operations from policy issuance and renewal services increased 73 million, or 14%, for the second quarter of 2024, compared to the same period in 2023. The first half of 2024 saw an increase of 154 million or 16% when compared with the first half of 2023. Commission expenses continue to be the largest driver, increasing almost 69 million or roughly 20% compared to the second quarter of 2023, and nearly 136 million or almost 21% in the first half of 2024 compared to the same respective period of 2023, again related to the substantial growth in the direct written premiums of the exchange.

Julie Marie Pelkowski: Total cost of operations from policy issuance and renewal services increased $73 million or 14% for the second quarter of 2024 compared to the same period in 2023.

Julie Marie Pelkowski: The first half of 2024 saw an increase of $154 million, or 16%, when compared with the first half of 2023. Commission expenses continue to be the largest driver, increasing almost 69 million, or roughly 20%, compared to the second quarter of 2023, and nearly 136 million, or almost 21%, in the first half of 2024, compared to the same respective period of 2023, again related to the substantial growth in the direct written premiums of the exchange.

Julie Marie Pelkowski: The first half of 2024 saw an increase of $154 million, or 16%, when compared with the first half of 2023.

Julie Marie Pelkowski: Commission expenses continue to be the largest driver, increasing almost $69 million, or roughly 20%,

Julie Marie Pelkowski: compared to the second quarter of 2023.

Julie Marie Pelkowski: and nearly $136 million, or almost 21%, in the first half of 2024 compared to the same respective period of 2023, again related to the substantial growth in the direct written premiums of the exchange.

Julie Pelkowski: Non-commission expenses for the second quarter grew just over 4 million, or 2.4%. This was driven mainly by production costs such as underwriting reports and customer service costs, partially offset by lower information and technology spend compared to the second quarter of 2023. Year-to-date 2024 non-commissioned expenses increased just over 18 million, or almost 6%, compared to the first half of 2023. This was driven by underwriting and policy processing expenses, as well as administrators and sales and advertising expenses. Technology spend was lower in the first half of 2024 compared to 2023, partially offsetting these increases due to higher capitalized labor in 2024.

Julie Marie Pelkowski: Non-commissioned expenses for the second quarter grew just over $4 million, or 2.4%. This was driven mainly by production costs, such as underwriting reports and customer service costs, partially offset by lower information and technology spend compared to the second quarter of 2023. Year-to-date 2024 non-commissioned expenses increased just over $18 million, or almost 6%, compared to the first half of 2023. This is driven by underwriting and policy processing expenses, as well as administrative and sales and advertising expenses.

Speaker Change: Non-commissioned expenses for the second quarter grew just over $4 million, or 2.4%. This was driven mainly by production costs, such as underwriting reports and customer service costs, partially offset by lower information and technology spend compared to the second quarter of 2023.

Speaker Change: Year-to-date 2024 non-commissioned expenses increased just over $18 million, or almost 6%, compared to the first half of 2023.

Speaker Change: This was driven by underwriting and policy processing expenses, as well as administrative and sales and advertising expenses.

Julie Marie Pelkowski: Technology spend was lower in the first half of 2024 compared to 2023, partially offsetting these increases due to higher capitalized labor in 2024. Income from investments totaled almost $14 million compared to earnings of nearly $12 million in the second quarter of 2023. Net investment income was just over $16 million in the second quarter, compared to almost $14 million in the same period last year. Total investment income in the first half of 2024 was $29 million, compared to $7 million in the first half of 2023.

Speaker Change: Technology spend was lower in the first half of 2024 compared to 2023, partially offsetting these increases due to higher capitalized labor in 2024.

Julie Pelkowski: Income from investment totaled almost 14 million, compared to earnings of nearly 12 million in the second quarter of 2023. Net investment income was just over 16 million in the second quarter compared to almost 14 million in the same period last year. Total investment income in the first half of 2024 was 29 million compared to 7 million in the first half of 2023. Net investment income for the first half of 2024 drove most of this improvement, contributing 32 million compared to 16 million last year, mainly due to a loss generated some limited partnerships in 2023 of almost 11 million.

Speaker Change: Income from investments totaled almost $14 million compared to earnings of nearly $12 million in the second quarter of 2023.

Speaker Change: Net investment income was just over $16 million in the second quarter, compared to almost $14 million in the same period last year.

Speaker Change: Total investment income in the first half of 2024 was $29 million, compared to $7 million in the first half of 2023.

Julie Marie Pelkowski: Net investment income for the first half of 2024 drove most of this improvement, contributing $32 million compared to $16 million last year, mainly due to a loss generated from limited partnerships in 2023 of almost $11 million. Additionally, we generated NetRealize gains in 2024, while in 2023 we experienced a NetRealize loss. As always, we take a measured approach to capital management, and we maintain a strong balance sheet. And for the first six months of 2024, our financial performance has enabled us to pay our shareholders over $118 million in cash. With that, I'll turn the call back over to Tim.

Speaker Change: Net investment income for the first half of 2024 drove most of this improvement, contributing $32 million compared to $16 million last year, mainly due to a loss generated from limited partnerships in 2023 of almost $11 million.

Julie Pelkowski: Additionally, we generated net-realized gains in 2024, while in 2023 we experienced net-realized losses.

Speaker Change: Additionally, we generated net realized gains in 2024, while in 2023 we experienced net realized losses.

Julie Pelkowski: As always, we take a measured approach to capital management, and we maintain a strong balance sheet. And for the first six months of 2024, our financial performance has enabled us to pay our shareholders over 118 million in debt.

Speaker Change: As always, we take a measured approach to capital management, and we maintain a strong balance sheet. And for the first six months of 2024, our financial performance has enabled us to pay our shareholders over $118 million in dividends.

Timothy NeCastro: With that, I'll turn the call back over to Tim. Tim?

Timothy Gerard NeCastro: Thanks, Julie. Earlier in the call, I talked about our longstanding commitment to being above all in service. That means treating customers with care and compassion and handling their needs quickly and effectively. It also means giving them the ability to interact with us in the ways they prefer.

Timothy NeCastro: Thanks, Julie. Earlier in the call, I talked about our long-standing pandemic of being above all of the service. That means treating customers with care and compassion and healing their needs quickly and effectively. It also means giving them the ability to interact with us in the ways they prefer. To do that, we need to equip our agents with the tools, resources, and capabilities to ensure customers have a positive experience. Much of the work we've been doing for the first six months of 2024 has been focused on just that. We've made several enhancements to our customer and agent-facing platforms, and it made significant progress in our technology modernization variant.

Speaker Change: With that, I'll turn the call back over to Tim. Tim?

Timothy Gerard NeCastro: Thanks, Julie. Earlier in the call, I talked about our longstanding commitment to being above all in service. That means treating customers with care and compassion and handling their needs quickly and effectively. It also means giving them the ability to interact with us in the ways they prefer.

Timothy Gerard NeCastro: To do that, we need to equip our agents with the tools, resources, and capabilities to ensure customers have a positive experience. Much of the work we've been doing over the first six months of 2024 has been focused on just that. We've made several enhancements to our customer and agent-facing platforms and have made significant progress in our technology modernization journey. One example of an enhancement is the added ability for agents to set up car rentals for policyholders during the first notice of loss process.

Speaker Change: To do that, we need to equip our agents with the tools, resources, and capabilities to ensure customers have a positive experience.

Speaker Change: Much of the work we've been doing over the first six months of 2024 has been focused on just that. We've made several enhancements to our customer and agent-facing platforms, and have made significant progress in our technology modernization journey.

Timothy NeCastro: One example of an enhancement is the added ability for agents to set up car rentals for policyholders during the first notice of loss process. Now, customers don't need to make a separate call to set your rental and streamline the process for our agents and first notice of loss teams. Since rolling out to all states in June, agents have set up nearly 2,000 rentals, and they rated the ease of effort to do so at 9 out of 10. We also continue to modernize our legacy technology platforms, having successfully migrated for additional applications to the cloud in the first half of the year.

Speaker Change: One example of an enhancement is the added ability for agents to set up car rentals for policyholders during the First Notice of Loss process. Now, customers don't need to make a separate call to secure a rental, and it streamlines the process for our agents and First Notice of Loss teams.

Timothy Gerard NeCastro: Now, customers don't need to make a separate call to secure a rental, and it streamlines the process for our agents and first owners of loss. Since rolling out to all states in June, agents have set up nearly 2,000 rentals, and they rated the ease of effort to do so a 9 out of 10.

Speaker Change: Since rolling out to all states in June , agents have set up nearly 2,000 rentals and they rated the ease of effort to do so a 9 out of 10.

Timothy Gerard NeCastro: We also continue to modernize our legacy technology platforms, having successfully migrated four additional applications to the cloud in the first half of the year. In addition, we recently decommissioned an outdated platform for data disaster recovery and moved to a new environment. This has resulted in notable improvements in replication and recovery times and reduced costs. Much more work is ongoing in our efforts to migrate to more modern platforms, reduce expenses, and continuously improve the experience and satisfaction of our customers and agents.

Speaker Change: We also continue to modernize our legacy technology platforms, having successfully migrated four additional applications to the cloud in the first half of the year.

Timothy NeCastro: In addition, we recently decommissioned an outdated platform for data disaster recovery and moved to a new environment. This was resulted in a notable improvements in replication and recovery times and reduced costs. Much more work is ongoing than our efforts to migrate to more modern platforms, reduce expenses, and continuously improve the experience and satisfaction of our customers and agents. At the same time, we're looking at leveraging the emerging technologies and capabilities related to artificial intelligence. We recently established an AI center of excellence dedicated to scoring potential AI use cases across the enterprise, targeting implementation where appropriate based on our business and operational strategies.

Speaker Change: In addition, we recently decommissioned an outdated platform for data disaster recovery and moved to a new environment. This has resulted in notable improvements in replication and recovery times, and reduced costs.

Speaker Change: Much more work is ongoing in our efforts to migrate to more modern platforms, reduce expenses, and continuously improve the experience and satisfaction of our customers and agents.

Timothy Gerard NeCastro: At the same time, we're looking at leveraging emerging technologies and capabilities related to artificial intelligence. We recently established an AI Center of Excellence dedicated to exploring potential AI use cases across the enterprise, targeting implementation where appropriate based on our business and operational strategies. More than 20 use cases are currently being explored, with many more in the queue. AI has a lot of potential benefits, particularly in improving efficiency and reducing expenses.

Speaker Change: At the same time, we're looking at leveraging the emerging technologies and capabilities related to artificial intelligence.

Speaker Change: We recently established an AI Center of Excellence dedicated to exploring potential AI use cases across the enterprise, targeting implementation where appropriate, based on our business and operational strategies. More than 20 use cases are currently being explored, with many more in the queue.

Timothy NeCastro: More than 20 use cases are currently being explored, with many more in the queue. We know AI has a lot of potential benefits, particularly in improving efficiency and reducing expenses. But we're taking a measured approach to ensure we're harnessing the power of AI responsibly and in the best interest of Eerie and our stakeholders. And most importantly, to use it in a way that enhances our ability to provide the human touch rather than to replace it. Investing in technology is critical to our future.

Speaker Change: We know AI has a lot of potential benefits, particularly in improving efficiency and reducing expenses, but we are taking a measured approach to ensure we're harnessing the power of AI responsibly and in the best interest of Erie and our stakeholders.

Timothy Gerard NeCastro: But we are taking a measured approach to ensure we're harnessing the power of AI responsibly and in the best interest of Erie and our stakeholders, and, most importantly, to use it in a way that enhances our ability to provide a human touch rather than replaces it. Investing in technology is critical to our future.

Speaker Change: And most importantly, to use it in a way that enhances our ability to provide a human touch rather than to replace it.

Timothy NeCastro: We also understand that investing in our communities is important. In April, Eerie Insurance awarded 24 grants, totaling nearly $900,000 for nonprofits to help provide and expand educational programs to school-age children as part of Pennsylvania's Educational Improvement Tax Credit program. And in June, we announced a $1 million gift to the United Way of Erie County to help launch the organization's community schools model at Erie High School. With this funding from Eerie and other community partners, United Way will hire community school directors for Eerie High School and provide inside the school support that includes health, mental health, vision, and dental care, clothing, and personal hygiene items, and expanded learning and enrichment programs. I'm also pleased to share that through our charity challenge golf events in Eerie and Elantone, Pennsylvania, we've now raised more than $2 million for nonprofits in those communities since 2010.

Timothy Gerard NeCastro: We also understand that investing in our communities is important. In April, Erie Insurance awarded 24 grants totaling nearly $900,000 to non-profits to help provide and expand educational programs to school-aged children as part of Pennsylvania's Educational Improvement Tax Credit Program. And in June, we announced a $1 million gift to the United Way of Erie County to help launch the organization's Community Schools Model at Erie High School. With this funding from Erie and other community partners, United Way will hire community school directors for Erie High School and provide inside-the-school support that includes health, mental health, vision, and dental care, clothing and personal hygiene items, and expanded learning and enrichment programs.

Speaker Change: Investing in technology is critical to our future. We also understand that investing in our communities is important.

Speaker Change: In April , Erie Insurance awarded 24 grants totaling nearly $900,000 for nonprofits to help provide and expand educational programs to school-age children as part of Pennsylvania's Educational Improvement Tax Credit Program.

Speaker Change: In June , we announced a $1 million gift to the United Way of Erie County to help launch the organization's Community Schools Model at Erie High School.

Speaker Change: With this funding from Erie and other community partners, United Way will hire community school directors for Erie High School and provide inside the school support that includes health, mental health, vision and dental care, clothing and personal hygiene items, and expanded learning and enrichment programs.

Timothy Gerard NeCastro: I'm also pleased to share that through our Charity Challenge Golf Events in Erie and Allentown, Pennsylvania, we've now raised more than $2 million for nonprofits in those communities since 2010. This year's tournaments alone raised nearly $200,000 for 40 charities in the Erie and Allentown areas.

Speaker Change: I'm also pleased to share that through our Charity Challenge golf events in Erie and Allentown, Pennsylvania, we've now raised more than $2 million for nonprofits in those communities since 2010.

Timothy NeCastro: This year's tournament alone raised nearly $200,000 for 40 charities in the area in Elantown areas. As I close our call for the second quarter, I'd like to thank our employees and agents for their tireless dedication to the area and our commitment to being above all in service. I'm confident in our strength and stability; I may continue to external pressures, and I'm proud of the massive amount of work that's underway to move us into the future. Thank you, as always, to our shareholders for your trust and support. And thanks to all of you for your interest in Eerie.

Speaker Change: This year's tournaments alone raised nearly $200,000 for 40 charities in the Erie and Allentown areas.

Timothy Gerard NeCastro: As I close our call for the second quarter, I'd like to thank our employees and agents for their tireless dedication to Erie and our commitment to being above all in service. I'm confident in our strength and stability amid continued external pressures, and I'm proud of the massive amount of work that's underway to move us into the future. Thank you, as always, to our shareholders for your trust and support and thanks to all of you for your interest in Erie. This concludes today's conference call. Thank you for participating. You may now disconnect.

Speaker Change: As I close out our call for the second quarter, I'd like to thank our employees and agents for their tireless dedication to Erie and our commitment to being above all in service.

Speaker Change: I'm confident in our strength and stability amid continued external pressures, and I'm proud of the massive amount of work that's underway to move us into the future.

Speaker Change: Thank you, as always, to our shareholders for your trust and support, and thanks to all of you for your interest in Erie.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect. Thank you so much for joining us today.

Speaker Change: This concludes today's conference call. Thank you for participating. You may now disconnect.

Operator: This film was made possible in part by the support of Patrons ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? and Scott Beilharz.

Speaker Change: [inaudible]

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Speaker Change: Thank you for watching!