Karen Kraus Phillips – VP and Director of IR Terry Cavanaugh – President and CEO Phil Garcia – EVP and CFO George Lucore – EVP, Field Operations Mike Zavasky – EVP, Insurance Operations

Michael Phillips – Stifel Nicolaus Dan Schlemmer – FPK Ron Bobman – Capital Returns

Thank you Dale and good morning everyone. We appreciate all you joining us today.

On today's call, management will discuss our fourth quarter and year-end 2008 results. Joining me are Terry Cavanaugh, President and CEO; Executive Vice President and Chief Financial Officer, Phil Garcia; Jim Tanous, Executive Vice President, Secretary and General Counsel; Mike Zavasky, Executive Vice President, Insurance Operations; and George Lucore, Executive Vice President, Field Operations.

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 these exhibits, you can find these in the Investor Relations section of our Web site at ErieInsurance.com.

We also filed 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 Risk Factors in our latest 10-K filing with the SEC filed February 26, 2008, and in the related press release and 8-K. In this call, we will discuss some non-GAAP measures.

You can find a reconciliation of those measures to GAAP measures in the press release and in the supplement posted on our investor Web site 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 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 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, Terry Cavanaugh, Terry?

Thank you, Karen. Good morning and thank you for joining us.

I'll begin with a brief discussion of our fourth quarter and full year results and give you an idea where we are headed in 2009. Then I’ll turn it over to Phil to review the financial results for the quarter and the full year.

We are all keenly aware of the economic challenges facing our country, our families and our businesses. The volatility in the credit, investment and real estate markets has taken its toll, and as of yet they don't appear to be stabilizing.

Our fourth quarter 2008 results bear that out as we experienced a net loss for the quarter of $0.12 per share. The investment portfolios of Erie Indemnity Company, Erie Insurance Exchange and Erie Family Life were exposed to considerable realized losses for the quarter.

A significant portion of these losses, particularly in the Exchange and the Indemnity Company, were part of our proactive tax management strategy. We expect to see considerable cash inflows from 2008 tax refunds this year as a result of this strategy.

Nonetheless, the realized capital losses we incurred in Indemnity and Erie Family Life significantly affected our financial results, both net income and operating income. Our operating income for the quarter was $0.29, far below the $0.69 we saw at the close of the fourth quarter in 2007.

Additional losses from our equity of earnings from Erie Family Life of $0.07 and the losses from our limited partnerships of $0.18 also contributed to the decline. As a result of being well capitalized, the balance sheet at [ph] Indemnity and the Exchange withstood the impacts and remain strong.

By the end of the year, Erie Indemnity Company’s shareholder equity was nearly $800 million. The exchange policyholder surplus was over $4 billion at December 31, 2008 giving us a very strong 0.85 to 1.0 ratio of total direct written premiums to surplus.

As you can see from the financial information we released, Erie Family Life has not fared as well. Impairments have been substantial for EFL.

Despite these challenges we are committed to the Life company. As evidenced by the fact that the Exchange’s substantial surplus is available, if needed, to directly support EFL’s capital position in order to maintain its AM Best rating of A Excellent.

Considering difficult trading conditions, we are conservatively managing our balance sheets to increase liquidity. By year end, available cash at the Indemnity Company was nearly doubled from the 2007 levels.

The strong capitalization of the Erie Indemnity Company allowed our Board of Directors to increase the dividend to shareholders, an announcement we made in December. The Board increased the regular quarterly cash dividend from $0.44 to $0.45 on each Class A share and from $66 to $67.50 on each Class B share, a 2.3% increase for each class.

This is the 75th consecutive year Erie Indemnity Company has paid dividend. At our December Board meeting, we set the management fee of 25% for 2009.

On the operation side, we continued to see positive results. We were clearly able to attract and retain customers during the year, surpassing the milestone of 4 million total policies in force.

Customer loyalty is stronger than it was a year ago with retention climbing at 90.6% by year end. Personal lines led the way, particularly private passenger auto, our largest line of business.

Commercial lines is a more difficult marketplace, which continue to be very competitive in most of our markets and across all products. PIF growth outpaced the decline in average written premium for the quarter and full year.

We ended 2008 in positive territory with total direct written premium up slightly, outperforming the industry. For 2009, we will be taking rate where warranted versus giving up rate.

The rate movement is expected to add $36 million to revenue in 2009 versus a negative number for 2008. Of course, persistent economic conditions may have an adverse effect on revenue growth given the anticipated declines in exposure growth.

We have plans in place to offset that. Among these are product and service enhancements, continued development of existing agencies and new agency appointments.

But the challenge is ever present. As I said on our last call, out of turmoil comes opportunity, and I believe Erie’s sharp focus on executing in our core disciplines will afford us a real advantage.

Underwriting discipline for example is key in this environment, and we hold firmly to that principle. Conning projects a sharp decline in the insurance industry’s year-end 2008 underwriting margin for the combined ratio of 106.3.

Erie Property and Casualty Group ended the year with an 89.6 adjusted statutory combined ratio. Indemnity’s GAAP combined ratio was 93.6, producing an underwriting profit of $13.3 million for the company.

Moving on to 2009, last quarter I talked about our areas of focus going into this year, profitable revenue growth, better focus on execution and agency management. Our energy is squarely in these areas.

Let me touch on each briefly. Momentum in PIF growth continued in early 2009, a good sign that our pricing, product and service value proposition is appealing to consumers even in this tough economy.

It also tells me that our agents are effectively marketing Erie’s value proposition. Our approach to grow business in our existing territories has plenty of traction.

With the organizational changes we made in 2008, we are beginning to realize the benefits of a more tightly aligned structure. We are being vigilant about where we are spending our money with most of that spend invested in information technology for agents, employees and customers.

An example of that is our Erie Agents Online initiative. We are developing a greater Internet presence for our agents that leverages Erie’s online features and functionality.

It's another way to reach customers and prospects, while sharing our knowledge and technology with our agents. As part of our agency management strategy, in addition to our traditional approach of appointing new agencies, we are projecting adding 127 agents in ’09.

We are working with our top-performing agencies to open new storefronts. We are also developing plans that will support value creation in our existing agencies.

By helping our agents to grow and remain profitable, we are securing Erie’s revenue base. Before I turn the call over to Phil, I would like to update you on our search for a new CFO.

We are winding down our search and have had the benefit of an excellent field of candidates. I believe we will have our final selection by early to mid April.

As all of you know, Phil is leaving us at the end of March and I would like to take the opportunity to recognize him for his more than 28 years of service to the company and for his support to me throughout this transition period. Phil, thank you very much.

I've enjoyed working with you. Now he will take us through the financial results one last time.

Thanks, Terry. Good morning everyone.

The company sustained a net loss per share, diluted, of $0.12 in the fourth quarter 2008 as the upheaval in the financial markets produce realized capital losses on investments. Primary contributor to the net loss for the quarter was capital losses from the sale and impairment of bonds, preferred and common stock, of $32.8 million before tax or $0.41 per share after tax.

Net operating income for the quarter was $0.29 per share, down from $0.69 per share in the fourth quarter of ’07. Our net operating income includes results of earnings from our limited partnership investments and our 21.6% equity stake in the earnings of Erie Family Life.

Losses from our limited partnerships were $14.6 million before tax or $0.18 per share after tax compared to earnings of $0.14 per share after tax in the fourth quarter of 2007. Our equity and losses of EFL was $3.7 million or $0.07 per share compared to break even in ‘07.

I’ll discuss both of these items in more detail when I discuss our investment operations. Looking at our management operations for the fourth quarter ‘08, you’ll see that the management fee revenue was flat compared to a year ago.

The fee rate for both quarters was 25% of our direct written premiums at the Property and Casualty Group, which increased 0.6% during the fourth quarter of ’08 compared to the same period in 2007. Rate reductions during the quarter, which decreased direct written premiums by $4.8 million were offset by policies in force growth of 2.9% during the quarter.

Private passenger auto policies grew year over year by 2% with retention rates on the line hitting 91.8%. Homeowners policies in force grew 2.9% with a retention of 91.1%.

These growth rates are encouraging considering market conditions, but top line growth has been difficult and should remain so with the headwinds of a very difficult economy. Income from management operations was affected by an increase in non-commission operating costs, up 17.1% in the fourth quarter 2008 to $66 million from $56.4 million in the fourth quarter 2007.

Fourth quarter of 2007 was influenced by an adjustment of $5.2 million for inter-company expense allocations, which decreased the cost of management operations of the company. Of that amount, $3 million was related to personnel costs and $2.2 million was related to other operating costs.

Excluding this 2007 adjustment, the increase in non-commission expenses in the fourth quarter of 2008 would have been 7.2%. Our sales and policy issue costs rose about $3.9 million, primarily as a result of increased spending in our agent co-op marketing program of $3.2 million.

Also included in all other operating costs was an increase of $3.6 million due to additional technology spending. As a result, gross margins for management operations were 12.1% compared to 15.5% a year ago.

Our underwriting operations in the fourth quarter performed well in what is traditionally our highest combined ratio quarter, capping a year of tremendous underwriting profitability for the Erie Insurance Group. Our GAAP combined ratio for the quarter was 89.0% resulting in a $5.7 million of underwriting income for the quarter, up from $4.9 million for the fourth quarter of ‘07.

The Property and Casualty Group’s adjusted statutory combined ratio for the fourth quarter of ‘08 was 89.1 compared to 89.9 for the same period in 2007. For the year, the Property and Casualty Group had an adjusted statutory combined ratio of 89.6 for 2008 compared to an extraordinary performance in 2007 of 83.8, which included very low catastrophe losses of only 1.7 points and reserve redundancies of 5.3 points.

Our fourth quarter 2008 result included 0.8 points of catastrophe losses, we also saw a 3.4 points of improvement in the development of prior accident year loss reserves excluding our salvage and subrogation recoveries. This improvement is related to better frequency trends and slightly better severity trends in automobile bodily injury claims and on underinsured motorist bodily injury.

Now let's take a look at our investment operations for the quarter. Continued disruption in the financial markets, including dramatic dislocations in the credit and real estate markets had a significant impact on our results from investment operations during the fourth quarter of ‘08.

Revenue from investment operations was a net loss of $40.3 million for the fourth quarter ‘08 compared to net revenue of $12.4 million for the same period a year ago. The impact these net losses had on the company’s net income and net operating income for the quarter were significant and a continuation of what we experienced in the third quarter of 2008.

As I mentioned earlier, we sold or impaired $32.8 million in bonds and common and preferred stock investments. Of that amount $25.1 million resulted from the sales of securities to proactively realize capital loss carryback benefits, thereby generating substantial current-year federal income tax refunds.

Our fixed maturity impairments for the fourth quarter were $6.3 million while equity impairments were $1.4 million for the quarter. Pricing on a large portion of our fixed income and preferred securities were driven by distressed sellers and liquidation sales prices not indicative of clearing prices in a functioning and orderly market.

We believe for the majority of the securities we hold these price declines will eventually be reversed as rational buyers and sellers return to the markets. Equity in losses from limited partnerships amounted to $14.6 million for the fourth quarter compared to $12.8 million during the fourth quarter of 2007, again this dramatic shift is the result of severe economic and financial market conditions.

The largest share of the fourth quarter loss came from our real estate partnerships, which lost $12.2 million. Our private equity partnerships generated losses, $3.4 million, while mezzanine partnerships earned $1 million during the fourth quarter of ‘08.

The company's 21.6% share in the earnings of EFL resulted in a loss of $3.7 million for the fourth quarter 2008 compared to a loss of $171,000 in the fourth quarter of 2007. As a result of the upheaval in the financial markets, EFL recognized net realized losses on investments of $13.2 million and losses on limited partnership investments of $2.5 million during the fourth quarter of ‘08.

Our share of these losses combined was $3.4 million in the quarter. In addition, EFL was enabled to record some deferred tax assets in the quarter as it was limited to the amount of recoverable federal income tax.

The deferred tax assets not recoverable reported for the fourth quarter 2008 on the books of EFL was $16.9 million. Net investment income for the fourth quarter 2008 decreased by 13.3% to $10.8 million from $12.5 million in the fourth quarter 2007.

The decrease can be attributable to lower invested asset balances as a result of the company's share repurchase activity in prior periods. Treasury stock balances increased by $102 million at December 31, 2008 from a year ago.

And during the fourth quarter of 2008, the company repurchased 93,620 shares of its outstanding class A common stock at a cost of $3.4 million or $35.88 per share. Now I would like to discuss the capital and the liquidity positions of the company, the Exchange and EFL at December 31, 2008.

Despite the losses we’ve incurred on investments, the Erie Indemnity Company’s balance sheet continues to be extremely strong with almost $800 million in capital. The company's equity includes a charge of about $90 million after deferred taxes to reflect the funding status of the company's pension plan which had an actuarial loss for the year.

This is recorded to other comprehensive income in accordance with FAS 158. This charge amounts to about $1.56 per share in GAAP book equity.

This actuarial loss reflects the effects of adopting a lower discount rate for plan liabilities as well as the difference between the expected and actual 2008 return on plan assets. It is important to note that although the company records the entire obligation for the pension plan on its books, generally about 50% of the ongoing cost of the plan’s benefits is paid by the Exchange and EFL.

As you can see from our 10-K disclosure, the pension plan remains well funded. The Erie Insurance Exchange incurred substantial realized capital losses for the fourth quarter 2008 of $451 million and for the full year 2008 of over $1 billion.

A substantial part of the losses were generated through the sale of securities to proactively realize capital loss carryback benefits, thereby generating substantial current-year federal income tax refunds of about $215 million. The strategy will continue into 2009 as the Exchange incurred substantial capital gains taxes in 2007 that are available for refund.

The surplus position of the Exchange remains very strong with total surplus of over $4 billion, and as Terry mentioned, a premiums to surplus ratio of 0.85 to 1.0, one of the strongest ratios in the industry. The surplus position does not take into account about $70 million of deferred tax assets that are not realizable within one year, which makes them non-admitted assets under statutory accounting rules.

The capital of EFL has been negatively impacted by the financial crisis and the effects on its bond and preferred stock portfolios. As Terry mentioned earlier, Exchange’s substantial surplus is available if needed to assist EFL in maintaining its A Excellent rating from AM Best.

EFL’s GAAP equity reflects declines of $102 million in its $1 billion portfolio of investment-grade corporate bonds. All of these bonds are currently performing in line with anticipated or contractual cash flows.

As I said earlier, these security valuations reflect the extreme credit markets we are currently seeing. It’s also important to mention that EFL has never issued variable annuities or variable universal life products.

Consequently, EFL does not have the obligations around the guarantee and returns on those products that other life insurers are currently struggling with. As I mentioned in our third quarter 2008 call, the Erie group of companies continues to maintain a very liquid position as a response to the illiquid conditions in certain parts of the capital markets and our low potential needs for liquidity in our businesses.

Today our cash position across the group exceeds $325 million. In addition, we have in place undrawn bank lines of a $175 million to meet any additional liquidity needs.

And as I mentioned earlier, we are expecting significant federal tax refunds as a result of our tax planning strategies. Before I turn the call back over to Karen, I would like to make some personal comments.

I'm extremely grateful for the wonderful opportunity I have had for the past 28 years to serve this great company. The people of the Erie have been tremendously supportive of me all these years, and I truly believe they are the best team in this business anywhere.

I also want to say how I have enjoyed interacting with all of our investors and analysts over these many years. Thank you again for the honor to have served with all of you.

Karen?

Thanks, Phil. Dale, we can open the call for questions now.

Thank you, good morning everybody.

Good morning, Michael.

Good morning.

I want to start out on the investment side. I usually don't hit on that, so I thought I would start with that this time.

It might be helpful if you could just spend a second or two kind of going through a little of the history of kind of why we are in some of the alternative investments that we are in, just as a bit of a backdrop. And then kind of segue into that, the question really is how committed are you to staying in those, I guess particularly the private equity?

That's obviously quite lumpy.

Okay. So we have in the portfolio you are referring to, the alternative investments, you’re talking about the Exchange or Indemnity?

Well, I guess both – if it makes a difference for your answer in terms in terms of historical. But obviously, I’m just looking at the Indemnity now in terms of the lumpiness with your earnings.

All right. With respect to the Exchange, as you know, we have been fairly aggressive investors.

On our portfolio in the Exchange we match off our insurance liabilities with very conservative investment-grade corporate bonds and munis. We then invest the surplus of the Exchange, which is substantial.

Generally about half the surplus is invested in common stocks and the other half is invested in alternative assets. There are three portfolios within the alterative assets.

There’s mezzanine, which we view as part of our high yield investment portfolio. There is private equity, which we view as a play on the common stock portfolio of the Exchange.

And then we also have the real estate. We are not direct real estate investors, so about half that portfolio of alternative assets is invested in real estate around the world with partners that are experts in real estate.

So, that’s the strategy at the Exchange. The same sort of strategy exists at Erie Indemnity Company.

We have about $300 million there, about half of that portfolio is real estate investments.

Okay. That's helpful.

It sounds like just from that the commitment to stay this way is – you’ve seen a lot of companies –

Yes. It’s a fairly illiquid portfolio.

There is a secondary market. But I think, based upon what you heard about our balance sheets and our liquidity, we think there is – we’ve made some good investments, and we will continue to monitor it on a quarter by quarter basis.

I'm not asking for – because of the capital issues at all, because I don't think they’re (inaudible). It's just a matter of what it does to the earnings on a quarterly basis.

Right. Yes, it's pretty illiquid, and there's a secondary market for it, but you can imagine that it's not real efficient right now.

Thanks. I appreciate that.

Just back to the – I guess the traditional stuff. Can you talk about how much of your – the mix of your business in personal lines has changed from, if at all from your single auto accounts to kind of the package auto/home?

How is that changing over time? And is it going the way you want it to?

I might turn it over to some guys that have a broader or a longer-term perspective than I do, and from that, I know, George or Mike, do you have a sense of that in terms of whether –

I would say that at least 80% of our accounts are dual accounts at this point. We have the orphan auto policy – this is George Lucore by the way – accounts that we have would generally be the sons and daughters of policyholders that don’t have the opportunity for supporting other lines of coverage.

But we have a strong series of discounts that support multi-lining with Erie Insurance, including of course multi-cost discounted on our (inaudible) life insurance policy discounts. I don't have the exact figure.

I can get back to you with the exact figure. But I feel safe to tell you that it's probably 80% are multi-policy holders, and that's very much in line with our target.

And we don't see a big change in that.

No, we don't see any changes at all.

All right.

Part of the reason I was asking is, are there auto-only policies that maybe you’re losing because of the more competitive environment in the auto that you don’t lose because of the package? You’re pretty competitive in homeowners.

Well, our rate – our retention of personal – private passenger auto actually increased this year to over 91%. So, it’s quite the contrary.

We’re holding on to more private passenger automobile.

All right. Good.

Just a kind of high level here – the shopping behavior in personal auto – I'm sticking with that too. There’s sense of there’s more shopping because of tightening the budgets around, and have you seen that in your markets?

And do you see a kind of a sense of that how that might be different for the different segments of auto, so kind of either the standard preferred versus the non-standard kind of thing?

Well, we've – this is George Lucore once again. We read the same studies that I think everyone does, and of course with the increased incidence of online shopping and the ease of that means of comparing prices and the shifting demographics, we do understand and recognize there is an increased opportunity for online price comparison.

And we of course though make it easy to compare our prices online for those who are seeking an alternative options. But our retention, as noted, is continuing to increase along – across the entire spectrum, and we don’t see that deteriorating at any point soon.

As a matter of fact, as I mentioned in my prepared remarks, application growth is up from January, so we think we are actually benefiting in some regards with regard to this economy.

George, you said that applications were up this year so far 12%, is that correct?

Okay. Thanks.

I will hop off for now. Thanks to everybody, and Phil, hopefully I will see you again before we say our final good-byes.

Thanks, Michael.

Thank you.

Thanks, Michael.

Hi, good morning.

Good morning, Dan.

Question on the cost of the management operations, that it said sort of a big increase year over year, but there was a specific adjustment. And then really just keying on the comment in the release.

It said non-commission expenses would have increased sort of 7.2% on an apples to apples basis, and it talks a little bit about – in here about just changes in compensation. I just wonder if you can comment – and I mean, that sounded a little bit high to me.

And I don’t know if there is something unusual going on in the year over year comps outside of that one adjustment, or you know I guess just current economy, I sort of would have guessed at a lower number.

You are talking about – so after adjusting the year to year comparisons, we are at about seven and change.

Yes.

Then we pointed out that there's two areas that really drove that level up. The market share expense, that's really our co-op advertising campaign we have with our agents.

We put about another $3 million into that over and above the prior year in the fourth quarter of ’08. And then we have some additional technology spend of $3.6 million, that’s what’s really driving the number.

Salaries and wages and benefits were really kind of flat for the quarter, Dan, adjusted for that adjustment in the fourth quarter of 2007.

Okay. And sort of I guess in that – sort of staying on the theme of general economic drivers – new car sales, I think we are all seeing the numbers are horrible, and I'm just wondering if you can comment on – as the Detroit sells fewer new cars, how that flows through your book over time.

Presumably, a new car is more expensive to insure, and that probably drives fee income down. Or that’s sort of what people would expect a priority.

And then also on underwriting income and competitive position, do you have a sense that you are better or worse off with people maintaining their older cars longer versus buying a new car, and how that flows through on your – both your competitive position and on the underwriting side.

I think you asked about six questions there.

Yes, I'm sorry about that. The question's really – the question really boils down to what’s –

I'll try to respond to this. If I don't – my point was, if I don't get (inaudible) there, don't take it (inaudible) repeat it.

Clearly, and as I mentioned again in my prepared remarks, we are concerned about what we call the exposure growth or lack thereof both in terms of personal product lines and commercial product lines. And to your example of obviously somebody who would normally buy a car every four years now, because of the economy, is not doing that, is clearly a concern of ours.

We are not seeing that dramatically. You have two examples there – one, they are not buying it, and they also may drop coverage because now they own the car.

We are not seeing that, and as a matter of fact as we indicated, we are getting more new customers. So, again on a policy basis, our exposure is growing.

And to date, I can’t say that we are seeing any change in exposure mix based upon the value of the automobile. One your second question, I guess about underwriting profitability, again, another concern as it relates to again auto, homeowners, and the commercial business.

And clearly in an economy like this, either people are either reluctantly starting to do some things that they would normally not do in terms of changing maintenance patterns, etc. – and there is a watch for that.

But again, we’ve not seen that in any sort of our numbers yet to date in terms of either frequency or severity in our claims counts.

And I guess, in terms of competitive position, is there any sense that Erie is better than the competition on this segment versus that segment? And as you have fewer new cars and more older cars, that just the price issue is going to benefit Erie or work to Erie's detriment?

Not to date. The blending of characteristics and rating plans at Erie as well as our competitors is really quite broad now.

So those lines blur a little bit. But we have, like, 58 different touch points in our rating system, and we feel that’s a very good and wide spectrum to be able to respond to the majority of the driving public out there.

And to date, we’ve not really seen – as a matter of fact, I believe our value proposition based (inaudible) the capital and the Exchange is managed – our capital structure, we are again at an advantage based upon what we can do as opposed to a disadvantage.

Very helpful. I think you got all six of the questions.

So, thanks very much.

Thanks, Dan.

Hi, good morning. Thanks a lot.

Hi, Ron.

Hi, Ron.

Right. You are talking about the alternative assets, which is our limited partnership investments in both private equity, mezzanine, and real estate.

Generally, there is a quarter lag, so what we have in our year-end financial statement is the reports from those managers really for the third quarter. That’s just generally accepted in the industry in this investment class.

We get, as you said the source of the information is from the actual managers who are now subject to fair value accounting and audits of fair value accounting. Now, their audits aren’t done till year end, and again since there is a quarter lag, those audits will be done now and will be reflected in our first quarter numbers.

But they are subject to the fair value accounting and taking a hard look at their marks on all the investments that they have in the funds.

And it sounds like – a couple of sort of follow-up questions, you don't use much in the way of sort of discretion or forward-looking sort of trend analysis. You largely sort of rely upon their – as the manager – their direction as to what, in this case, the 09/30 [ph] value was on these assets.

Well, we do trend analysis, and we have some ideas and trends – from that trend analysis of where the returns are going. But we can’t record those in our financial statements.

We rely on what they tell us. We do some independent reviews of our managers during the year and we did that again this year to make sure they’re doing – giving us values under the new fair market value accounting rules.

So, we’ve done that again this year, we did it last year. So there’s a lot of due diligence around this portfolio as far as we’re concerned.

And I would say that while we had a good process last year, we have a better process this year. There was more rigor around it, and we are watching this class closely.

And one – as I approach Dan Schlemmer’s question count – the real estate portion, which I think you ballparked it at about half of the alternatives. Is that mostly – what sort a level in the capital structure?

Is it sort of the equity type investments in real estate, predominantly? Is it the senior debt mortgages that these managers are investing in?

Or is some mix?

It’s primarily equity, and it’s across all real estate classes. So we have office, we have warehouse, we have residential, we have multi-family, and it’s global.

Got you.

So, it’s everywhere. And it’s all equity investments pretty much.

Okay. Thanks a lot, and continued good luck.

Thanks, Ron.

Hi, thanks. I only had five last time, so I need to get back to six – just to make it fair.

This is a random one, and I will admit it. It’s probably for George – but anybody else – is there a – how much value is there in zip code rating plus-four?

A lot of people talk about it. I don't know if that it's kind of the way that the market is these days.

Is there really value in that? If there is, where you guys with that?

Well, that's probably a question for Mike Zavasky. We’ll let the underwriter answer that one.

There is value in zip code rating plus four, but there is greater value beyond zip code rating. And we are looking heavily at greater pricing sophistication levels that go well beyond zip code rating plus four.

So, I wouldn’t dismiss it, but I would say that it is only part way to where we intend to go.

Can you describe what you mean by that? The greater than – what does that mean?

There is a lot more that can be done beyond just geographic characteristics and is more into the usage of the vehicles and more into other characteristics of demographic information.

Okay. Fair enough.

Thank you, guys.

Thanks, Michael.

Thanks, Dale. For those of you who also may have been listening on the webcast, apparently we had some issues with sound via our vendor.

The webcast has been recorded. The call has been recorded, and it will be archived.

So you can be assured of that. It will be archived around 12.30 PM Eastern Time today on ErieInsurance.com.

And as always if you have any questions, give me call at 814-870-4665. And thanks again for joining us and make it a great day.