##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q



|[X] |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|--- |  | ---------------------------------------------------------------------------------------

For the quarterly period ended September 30, 2002

OR



|[   ] |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|----- |  | ----------------------------------------------------------------------------------------

For the transition period from _____ to _____

Commission file number 2-39458

ERIE FAMILY LIFE INSURANCE COMPANY

(Exact name of registrant as specified in its charter)


|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|PENNSYLVANIA                                                   |  | 25-1186315                          
|                                                               |  |                                     
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification No.)
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               |  |                                     
|                                                              
|                                                              
|                                                              
|                                                              
|100 Erie Insurance Place, Erie, Pennsylvania                   |  | 16530                               
|                                                               |  |                                     
|(Address of principal executive offices)                       |  | (Zip Code)                          

Registrants telephone number, including area code (814) 870-2000

|                                                                                                |  | 
|----------------------------------------------------------------------------------------------- |  | 
|Not applicable
Former name, former address and former fiscal year, if changed since last report |  | 

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

| |  |     |  |   |  |    |  | 
| |  | --- |  | - |  | -- |  | 
| |  | Yes |  | X |  | No |  | 

Indicate the number of shares outstanding of each of the Registrants classes
of common stock, as of the latest practicable date: 9,450,000 shares of Common
Stock outstanding on October 15, 2002.

1



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TABLE OF CONTENTS



|                               |                                                                                               |  |  |  |  |  |  | 
|------------------------------ | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION 
|                               | STATEMENTS OF FINANCIAL POSITION                                                             
|                               | STATEMENTS OF OPERATIONS (Unaudited)                                                         
|                               | STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)                                               
|                               | STATEMENTS OF CASH FLOWS (Unaudited)                                                         
|                               | NOTES TO FINANCIAL STATEMENTS (UNAUDITED)                                                    
|                               | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                               | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|                               | ITEM 4. CONTROLS AND PROCEDURES                                                              
|PART II. OTHER INFORMATION    
|                               | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                     
|SIGNATURES                    
|CERTIFICATIONS                
|Exhibit 3(ii)                 
|Exhibit 99.1 CEO Certification
|Exhibit 99.2                  



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##### Table of Contents



INDEX

ERIE FAMILY LIFE INSURANCE COMPANY

|                                                                                              |                                                                                             
|--------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------
|PART I. FINANCIAL INFORMATION                                                                
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 1. Financial Statements (Unaudited)                                                     
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              | Statements of Financial Position  September 30, 2002 and December 31, 2001                 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              | Statements of Operations  Three and nine months ended September 30, 2002 and 2001          
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              | Statements of Comprehensive Income  Three and nine months ended September 30, 2002 and 2001
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              | Statements of Cash Flows  Nine months ended September 30, 2002 and 2001                    
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              | Notes to Financial Statements  September 30, 2002                                          
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 3. Quantitative and Qualitative Disclosures About Market Risk                           
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 4. Controls and Procedures                                                              
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|PART II. OTHER INFORMATION                                                                   
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 6. Exhibits and Reports on Form 8-K                                                     
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|SIGNATURES                                                                                   
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|OFFICER CERTIFICATIONS                                                                       

2



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##### Table of Contents






PART I. FINANCIAL INFORMATION




ERIE FAMILY LIFE INSURANCE COMPANY
STATEMENTS OF FINANCIAL POSITION

|                 |                                                                                        |                       |   |                        |           |              |   |         |           | 
|---------------- | -------------------------------------------------------------------------------------- | --------------------- | - | ---------------------- | --------- | ------------ | - | ------- | --------- | 
|                 |                                                                                        |                       |   | (Dollars in thousands)
|                 |                                                                                        |                       |   | September 30,          |           | December 31,
|ASSETS           |                                                                                        | 2002                  |   | 2001                  
|                 |                                                                                        |                       |   |                       
|                 |                                                                                        |                       |   | (Unaudited)            |           |              |   |        
|Invested Assets: |                                                                                        |                       |   |                        |           |              |   |        
|                
|                
|                
|                
|                 | Fixed Maturities at fair value (amortized cost
of $881,621 and $718,500, respectively) |                       | $ | 924,777                |           |              | $ | 730,270 |          
|                
|                
|                
|                
|                 | Equity Securities at fair value
(cost of $88,251 and $86,758, respectively)            |                       |   | 93,292                 |           |              |   | 103,675 |          
|                
|                
|                
|                
|                 | Limited Partnerships
(cost of $15,944 and $18,691, respectively)                       |                       |   | 15,674                 |           |              |   | 18,249  |          
|                
|                
|                
|                
|                 | Real Estate                                                                            |                       |   | 1,231                  |           |              |   | 1,293   |          
|                
|                
|                
|                
|                 | Policy Loans                                                                           |                       |   | 9,351                  |           |              |   | 8,879   |          
|                
|                
|                
|                
|                 | Real Estate Mortgage Loans                                                             |                       |   | 7,222                  |           |              |   | 7,357   |          
|                 |                                                                                        |                       |   |                        |           |              |   |         |          
|                 |                                                                                        | Total Invested Assets |   | $                      | 1,051,547 |              |   | $       | 869,723   | 
|                
|                
|                
|                
|                 | Cash and Cash Equivalents                                                              |                       |   | 61,797                 |           |              |   | 110,503 |          
|                
|                
|                
|                
|                 | Premiums Receivable from Policyholders                                                 |                       |   | 5,567                  |           |              |   | 5,089   |          
|                
|                
|                
|                
|                 | Reinsurance Recoverable                                                                |                       |   | 2,279                  |           |              |   | 1,775   |          
|                
|                
|                
|                
|                 | Other Receivables                                                                      |                       |   | 1,672                  |           |              |   | 374     |          
|                
|                
|                
|                
|                 | Accrued Investment Income                                                              |                       |   | 16,640                 |           |              |   | 11,520  |          
|                
|                
|                
|                
|                 | Deferred Policy Acquisition Costs                                                      |                       |   | 102,296                |           |              |   | 92,015  |          
|                
|                
|                
|                
|                 | Reserve Credit for Reinsurance Ceded                                                   |                       |   | 13,899                 |           |              |   | 12,120  |          
|                
|                
|                
|                
|                 | Prepaid Federal Income Taxes                                                           |                       |   | 2,993                  |           |              |   | 8,508   |          
|                
|                
|                
|                
|                 | Other Assets                                                                           |                       |   | 8,242                  |           |              |   | 8,856   |          
|                 |                                                                                        |                       |   |                        |           |              |   |         |          
|                 |                                                                                        | Total Assets          |   | $                      | 1,266,932 |              |   | $       | 1,120,483 | 
|                 |                                                                                        |                       |   |                        |           |              |   |         |          

See notes to financial statements.

3



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##### Table of Contents



ERIE FAMILY LIFE INSURANCE COMPANY
STATEMENTS OF FINANCIAL POSITION

|                                     |                                                                                                               |                                                          |                                            |         |                        |           |              |         |         |           | 
|------------------------------------ | ------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------- | ------------------------------------------ | ------- | ---------------------- | --------- | ------------ | ------- | ------- | --------- | 
|                                     |                                                                                                               |                                                          |                                            |         | (Dollars in thousands)
|                                     |                                                                                                               |                                                          |                                            |         | September 30,          |           | December 31,
|LIABILITIES AND SHAREHOLDERS' EQUITY |                                                                                                               | 2002                                                     |                                            | 2001   
|                                     |                                                                                                               |                                                          |                                            |        
|                                     |                                                                                                               |                                                          |                                            |         | (Unaudited)            |           |              |         |        
|Liabilities:                         |                                                                                                               |                                                          |                                            |         |                        |           |              |        
|                                    
|                                    
|                                    
|                                    
|                                     | Policy Liabilities and Accruals:                                                                              |                                                          |                                            |         |                        |           |              |         |        
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                                               | Future Policy Benefits                                   |                                            | $       | 94,486                 |           |              | $       | 85,673  |          
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                                               | Policy and Contract Claims                               |                                            |         | 4,329                  |           |              |         | 1,950   |          
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                                               | Annuity Deposits                                         |                                            |         | 735,751                |           |              |         | 636,850 |          
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                                               | Universal Life Deposits                                  |                                            |         | 132,541                |           |              |         | 121,560 |          
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                                               | Supplementary Contracts Not
Including Life Contingencies |                                            |         | 623                    |           |              |         | 605     |          
|                                    
|                                    
|                                    
|                                    
|                                     | Other Policyholder Funds                                                                                      |                                                          |                                            | 15,537  |                        |           |              | 7,974   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Deferred Income Taxes                                                                                         |                                                          |                                            | 36,733  |                        |           |              | 31,807  |        
|                                    
|                                    
|                                    
|                                    
|                                     | Reinsurance Premium Due                                                                                       |                                                          |                                            | 267     |                        |           |              | 1,741   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Accounts Payable and Accrued Expenses                                                                         |                                                          |                                            | 9,478   |                        |           |              | 7,412   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Note Payable to Erie Indemnity Company                                                                        |                                                          |                                            | 15,000  |                        |           |              | 15,000  |        
|                                    
|                                    
|                                    
|                                    
|                                     | Due to Affiliates                                                                                             |                                                          |                                            | 1,722   |                        |           |              | 2,309   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Dividends Payable                                                                                             |                                                          |                                            | 3,969   |                        |           |              | 1,843   |        
|                                     |                                                                                                               |                                                          |                                            |         |                        |           |              |         |         |          
|                                     |                                                                                                               |                                                          | Total Liabilities                          |         | $                      | 1,050,436 |              |         | $       | 914,724   | 
|                                     |                                                                                                               |                                                          |                                            |         |                        |           |              |         |         |          
|Shareholders Equity:                |                                                                                                               |                                                          |                                            |         |                        |           |              |        
|                                    
|                                    
|                                    
|                                    
|                                     | Common Stock, $.40 Par Value Per Share;
Authorized 15,000,000 Shares; 9,450,000
Shares Issued and Outstanding |                                                          | $                                          | 3,780   |                        |           | $            | 3,780   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Additional Paid-In Capital                                                                                    |                                                          |                                            | 630     |                        |           |              | 630     |        
|                                    
|                                    
|                                    
|                                    
|                                     | Accumulated Other Comprehensive Income                                                                        |                                                          |                                            | 31,152  |                        |           |              | 18,359  |        
|                                    
|                                    
|                                    
|                                    
|                                     | Retained Earnings                                                                                             |                                                          |                                            | 180,934 |                        |           |              | 182,990 |        
|                                     |                                                                                                               |                                                          |                                            |         |                        |           |              |         |         |          
|                                     |                                                                                                               |                                                          | Total Shareholders Equity                 |         | $                      | 216,496   |              |         | $       | 205,759   | 
|                                     |                                                                                                               |                                                          |                                            |         |                        |           |              |         |         |          
|                                     |                                                                                                               |                                                          | Total Liabilities and Shareholders Equity |         | $                      | 1,266,932 |              |         | $       | 1,120,483 | 
|                                     |                                                                                                               |                                                          |                                            |         |                        |           |              |         |         |          

See notes to financial statements.

4



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##### Table of Contents






ERIE FAMILY LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS (Unaudited)

|                                            |                                                   |                                        |      |                                               |        |                   |       |        |        |      |       |         |        |   |        |        |        | 
|------------------------------------------- | ------------------------------------------------- | -------------------------------------- | ---- | --------------------------------------------- | ------ | ----------------- | ----- | ------ | ------ | ---- | ----- | ------- | ------ | - | ------ | ------ | ------ | 
|                                            |                                                   |                                        |      | (Dollars in thousands, except per share data)
|                                            |                                                   |                                        |      | Three Months Ended                            |        | Nine Months Ended
|                                            |                                                   |                                        |      | September 30                                  |        | September 30     
|                                            |                                                   |                                        |      |                                               |        |                  
|                                            |                                                   |                                        |      | 2002                                          |        | 2001              |       | 2002   |        | 2001
|Revenues:                                   |                                                   |                                        |      |                                               |        |                   |       |        |        |      |       |         |        |   |        |       
|                                           
|                                           
|                                           
|                                           
|                                            | Policy Revenue:                                   |                                        |      |                                               |        |                   |       |        |        |      |       |         |        |   |        |        |       
|                                           
|                                           
|                                           
|                                           
|                                            | Life Premiums                                     |                                        | $    | 11,532                                        |        |                   | $     | 10,573 |        |      | $     | 35,879  |        |   | $      | 32,101 |       
|                                           
|                                           
|                                           
|                                           
|                                            | Group and Other Premiums                          |                                        |      | 779                                           |        |                   |       | 722    |        |      |       | 2,279   |        |   |        | 2,051  |       
|                                            |                                                   |                                        |      |                                               |        |                   |       |        |        |      |       |         |        |   |        |        |       
|                                            |                                                   | Total Policy Revenue                   |      | $                                             | 12,311 |                   |       | $      | 11,295 |      |       | $       | 38,158 |   |        | $      | 34,152 | 
|                                           
|                                           
|                                           
|                                           
|                                            | Investment Income                                 |                                        |      | 16,517                                        |        |                   |       | 14,744 |        |      |       | 48,025  |        |   |        | 45,318 |       
|                                           
|                                           
|                                           
|                                           
|                                            | Equity in Earnings of Limited Partnerships        |                                        |      | 151                                           |        |                   |       | 614    |        |      |       | 3,733   |        |   |        | 1,416  |       
|                                           
|                                           
|                                           
|                                           
|                                            | Net Realized Losses on Investments                |                                        |      | (5,235                                        | )      |                   |       | (2,034 | )      |      |       | (10,878 | )      |   |        | (2,507 | )     
|                                           
|                                           
|                                           
|                                           
|                                            | Other Income                                      |                                        |      | 139                                           |        |                   |       | 317    |        |      |       | 560     |        |   |        | 687    |       
|                                            |                                                   |                                        |      |                                               |        |                   |       |        |        |      |       |         |        |   |        |        |       
|                                            |                                                   | Total Revenues                         |      | $                                             | 23,883 |                   |       | $      | 24,936 |      |       | $       | 79,598 |   |        | $      | 79,066 | 
|                                            |                                                   |                                        |      |                                               |        |                   |       |        |        |      |       |         |        |   |        |        |       
|Benefits and Expenses:                      |                                                   |                                        |      |                                               |        |                   |       |        |        |      |       |         |        |   |        |       
|                                           
|                                           
|                                           
|                                           
|                                            | Death Benefits                                    |                                        | $    | 3,758                                         |        |                   | $     | 4,022  |        |      | $     | 11,186  |        |   | $      | 9,306  |       
|                                           
|                                           
|                                           
|                                           
|                                            | Interest on Annuity Deposits                      |                                        |      | 10,050                                        |        |                   |       | 9,172  |        |      |       | 29,007  |        |   |        | 26,319 |       
|                                           
|                                           
|                                           
|                                           
|                                            | Interest on Universal Life Deposits               |                                        |      | 1,823                                         |        |                   |       | 1,695  |        |      |       | 5,422   |        |   |        | 5,028  |       
|                                           
|                                           
|                                           
|                                           
|                                            | Surrender and Other Benefits                      |                                        |      | 304                                           |        |                   |       | 268    |        |      |       | 871     |        |   |        | 733    |       
|                                           
|                                           
|                                           
|                                           
|                                            | Increase in Future Life Policy Benefits           |                                        |      | 2,328                                         |        |                   |       | 1,245  |        |      |       | 7,034   |        |   |        | 4,382  |       
|                                           
|                                           
|                                           
|                                           
|                                            | Amortization of Deferred Policy Acquisition Costs |                                        |      | 1,233                                         |        |                   |       | 1,610  |        |      |       | 5,254   |        |   |        | 5,448  |       
|                                           
|                                           
|                                           
|                                           
|                                            | Commissions                                       |                                        |      | 1,008                                         |        |                   |       | 707    |        |      |       | 2,470   |        |   |        | 1,618  |       
|                                           
|                                           
|                                           
|                                           
|                                            | General Expenses                                  |                                        |      | 2,007                                         |        |                   |       | 1,854  |        |      |       | 7,511   |        |   |        | 6,921  |       
|                                           
|                                           
|                                           
|                                           
|                                            | Taxes, Licenses and Fees                          |                                        |      | 622                                           |        |                   |       | 502    |        |      |       | 1,849   |        |   |        | 1,547  |       
|                                            |                                                   |                                        |      |                                               |        |                   |       |        |        |      |       |         |        |   |        |        |       
|                                            |                                                   | Total Benefits and Expenses            |      | $                                             | 23,133 |                   |       | $      | 21,075 |      |       | $       | 70,604 |   |        | $      | 61,302 | 
|                                            |                                                   |                                        |      |                                               |        |                   |       |        |        |      |       |         |        |   |        |        |       
|Income Before Income Taxes                  |                                                   | $                                      | 750  |                                               |        | $                 | 3,861 |        |        | $    | 8,994 |         |        | $ | 17,764 |       
|                                           
|                                           
|                                           
|                                           
|Provision for Federal Income Tax (Benefit): |                                                   |                                        |      |                                               |        |                   |       |        |        |      |       |         |        |   |        |       
|                                           
|                                           
|                                           
|                                           
|                                            | Current                                           |                                        |      | 292                                           |        |                   |       | 3,107  |        |      |       | 5,075   |        |   |        | 7,640  |       
|                                           
|                                           
|                                           
|                                           
|                                            | Deferred                                          |                                        |      | (32                                           | )      |                   |       | (1,765 | )      |      |       | (1,963  | )      |   |        | (1,493 | )     
|                                            |                                                   |                                        |      |                                               |        |                   |       |        |        |      |       |         |        |   |        |        |       
|                                            |                                                   | Total Provision for Federal Income Tax |      |                                               | 260    |                   |       |        | 1,342  |      |       |         | 3,112  |   |        |        | 6,147  | 
|                                            |                                                   |                                        |      |                                               |        |                   |       |        |        |      |       |         |        |   |        |        |       
|Net Income                                  |                                                   | $                                      | 490  |                                               |        | $                 | 2,519 |        |        | $    | 5,882 |         |        | $ | 11,617 |       
|                                            |                                                   |                                        |      |                                               |        |                   |       |        |        |      |       |         |        |   |        |        |       
|Net Income Per Share                        |                                                   | $                                      | 0.05 |                                               |        | $                 | 0.27  |        |        | $    | 0.62  |         |        | $ | 1.23   |       
|                                            |                                                   |                                        |      |                                               |        |                   |       |        |        |      |       |         |        |   |        |        |       
|Dividends Declared Per Share                |                                                   | $                                      | 0.21 |                                               |        | $                 | 0.195 |        |        | $    | 0.84  |         |        | $ | 0.78   |       
|                                            |                                                   |                                        |      |                                               |        |                   |       |        |        |      |       |         |        |   |        |        |       

See notes to financial statements.

5



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##### Table of Contents






ERIE FAMILY LIFE INSURANCE COMPANY
STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

|                                                   |                                                |                                                    |        |                        |        |                   |       |       |       |      |        |        |        |   |        |        |        | 
|-------------------------------------------------- | ---------------------------------------------- | -------------------------------------------------- | ------ | ---------------------- | ------ | ----------------- | ----- | ----- | ----- | ---- | ------ | ------ | ------ | - | ------ | ------ | ------ | 
|                                                   |                                                |                                                    |        | (Amounts in thousands)
|                                                   |                                                |                                                    |        | Three Months Ended     |        | Nine Months Ended
|                                                   |                                                |                                                    |        | September 30           |        | September 30     
|                                                   |                                                |                                                    |        |                        |        |                  
|                                                   |                                                |                                                    |        | 2002                   |        | 2001              |       | 2002  |       | 2001
|                                                  
|Net Income                                         |                                                | $                                                  | 490    |                        |        | $                 | 2,519 |       |       | $    | 5,882  |        |        | $ | 11,617 |       
|                                                   |                                                |                                                    |        |                        |        |                   |       |       |       |      |        |        |        |   |        |       
|Unrealized Gains on Securities:                    |                                                |                                                    |        |                        |        |                   |       |       |       |      |        |        |        |   |        |       
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Unrealized Holding Gains Arising
During Period |                                                    |        | 19,677                 |        |                   |       | 3,103 |       |      |        | 8,804  |        |   |        | 13,911 |       
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Plus: Losses Included in Net Income            |                                                    |        | 5,235                  |        |                   |       | 2,034 |       |      |        | 10,878 |        |   |        | 2,507  |       
|                                                   |                                                |                                                    |        |                        |        |                   |       |       |       |      |        |        |        |   |        |       
|                                                   |                                                | Net Unrealized Holding Gains
Arising During Period |        | $                      | 24,912 |                   |       | $     | 5,137 |      |        | $      | 19,682 |   |        | $      | 16,418 | 
|                                                   |                                                |                                                    |        |                        |        |                   |       |       |       |      |        |        |        |   |        |       
|Income Tax Expense Related to
Unrealized Gains     |                                                |                                                    | 8,719  |                        |        |                   | 1,802 |       |       |      | 6,889  |        |        |   | 5,750  |       
|                                                   |                                                |                                                    |        |                        |        |                   |       |       |       |      |        |        |        |   |        |       
|Unrealized Appreciation of
Investments, Net of Tax |                                                | $                                                  | 16,193 |                        |        | $                 | 3,335 |       |       | $    | 12,793 |        |        | $ | 10,668 |       
|                                                   |                                                |                                                    |        |                        |        |                   |       |       |       |      |        |        |        |   |        |       
|Comprehensive Income                               |                                                | $                                                  | 16,683 |                        |        | $                 | 5,854 |       |       | $    | 18,675 |        |        | $ | 22,285 |       
|                                                   |                                                |                                                    |        |                        |        |                   |       |       |       |      |        |        |        |   |        |       

See notes to financial statements.

6



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##### Table of Contents






ERIE FAMILY LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOWS (Unaudited)

|                                                                                  |  |                                      |                                                          |                                           |         |                        |         |                    |         |        |        |  
|--------------------------------------------------------------------------------- |  | ------------------------------------ | -------------------------------------------------------- | ----------------------------------------- | ------- | ---------------------- | ------- | ------------------ | ------- | ------ | ------ | -
|                                                                                  |  |                                      |                                                          |                                           |         | (Dollars in thousands)
|                                                                                  |  |                                      |                                                          |                                           |         | Nine Months Ended      |         | Nine Months Ended 
|                                                                                  |  |                                      |                                                          |                                           |         | September 30, 2002     |         | September 30, 2001
|                                                                                  |  |                                      |                                                          |                                           |         |                        |         |                   
|Cash flows from operating activities:                                             |  |                                      |                                                          |                                           |         |                        |         |                   
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Net income                                                                        |  | $                                    | 5,882                                                    |                                           |         | $                      | 11,617  |                   
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Adjustments to reconcile net income to net cash
provided by operating activities: |  |                                      |                                                          |                                           |         |                        |         |                   
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |  |                                      | Net amortization of bond and mortgage
(discount) premium |                                           |         | (19                    | )       |                    |         | 175    |       
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |  |                                      | Amortization of deferred policy acquisition costs        |                                           |         | 5,254                  |         |                    |         | 5,448  |       
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |  |                                      | Real estate depreciation                                 |                                           |         | 62                     |         |                    |         | 62     |       
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |  |                                      | Software amortization                                    |                                           |         | 187                    |         |                    |         | 187    |       
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |  |                                      | Deferred federal income tax benefit                      |                                           |         | (1,963                 | )       |                    |         | (1,493 | )     
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |  |                                      | Realized losses on investments                           |                                           |         | 10,878                 |         |                    |         | 2,507  |       
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |  |                                      | Equity in earnings of limited partnerships               |                                           |         | (3,733                 | )       |                    |         | (1,416 | )     
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Increase in premiums receivable                                                   |  |                                      | (478                                                     | )                                         |         |                        | (156    | )                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Increase in other receivables                                                     |  |                                      | (1,298                                                   | )                                         |         |                        | (54     | )                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Increase in accrued investment income                                             |  |                                      | (5,120                                                   | )                                         |         |                        | (3,009  | )                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Increase in policy acquisition costs deferred                                     |  |                                      | (15,535                                                  | )                                         |         |                        | (10,062 | )                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Decrease in other assets                                                          |  |                                      | 427                                                      |                                           |         |                        | 86      |                   
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Increase in reinsurance recoverables
and reserve credits                          |  |                                      | (2,284                                                   | )                                         |         |                        | (1,810  | )                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Decrease in prepaid federal income taxes                                          |  |                                      | 5,516                                                    |                                           |         |                        | 2,955   |                   
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Increase in future policy benefits and claims                                     |  |                                      | 11,192                                                   |                                           |         |                        | 6,775   |                   
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Increase in other Policyholder funds                                              |  |                                      | 7,564                                                    |                                           |         |                        | 1,541   |                   
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Decrease in reinsurance premium due                                               |  |                                      | (1,474                                                   | )                                         |         |                        | (268    | )                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Increase in accounts payable and due to affiliates                                |  |                                      | 1,478                                                    |                                           |         |                        | 4,723   |                   
|                                                                                  |  |                                      |                                                          |                                           |         |                        |         |                   
|                                                                                  |  |                                      |                                                          | Net cash provided by operating activities |         | $                      | 16,536  |                    |         | $      | 17,808 |  
|                                                                                  |  |                                      |                                                          |                                           |         |                        |         |                   
|Cash flows from investing activities:                                             |  |                                      |                                                          |                                           |         |                        |         |                   
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Purchase of investments:                                                          |  |                                      |                                                          |                                           |         |                        |         |                   
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |  | Fixed maturities                     |                                                          | ($                                        | 368,994 | )                      |         | ($                 | 203,681 | )     
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |  | Equity securities                    |                                                          |                                           | (23,781 | )                      |         |                    | (15,952 | )     
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |  | Limited partnerships                 |                                                          |                                           | (5,599  | )                      |         |                    | (5,118  | )     
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Sales/maturities of investments:                                                  |  |                                      |                                                          |                                           |         |                        |         |                   
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |  | Sales of fixed maturities            |                                                          |                                           | 104,038 |                        |         |                    | 142,135 |       
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |  | Calls/maturities of fixed maturities |                                                          |                                           | 90,746  |                        |         |                    | 48,624  |       
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |  | Equity securities                    |                                                          |                                           | 23,767  |                        |         |                    | 21,180  |       
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |  | Limited partnerships                 |                                                          |                                           | 10,829  |                        |         |                    | 3,507   |       
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Principal payments received on mortgage loans                                     |  |                                      | 135                                                      |                                           |         |                        | 883     |                   
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Loans made to Policyholders                                                       |  |                                      | (1,489                                                   | )                                         |         |                        | (1,579  | )                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Payments received on policy loans                                                 |  |                                      | 1,016                                                    |                                           |         |                        | 812     |                   
|                                                                                  |  |                                      |                                                          |                                           |         |                        |         |                   
|                                                                                  |  |                                      |                                                          | Net cash used in investing activities     |         | ($                     | 169,332 | )                  |         | ($     | 9,189  | )
|                                                                                  |  |                                      |                                                          |                                           |         |                        |         |                   

See notes to financial statements.

7



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##### Table of Contents



ERIE FAMILY LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOWS (Unaudited) (Continued)

|                                                              |              |                                           |         |                        |         |                    |         |       |        | 
|------------------------------------------------------------- | ------------ | ----------------------------------------- | ------- | ---------------------- | ------- | ------------------ | ------- | ----- | ------ | 
|                                                              |              |                                           |         | (Dollars in thousands)
|                                                              |              |                                           |         | Nine Months Ended      |         | Nine Months Ended 
|                                                              |              |                                           |         | September 30, 2002     |         | September 30, 2001
|                                                              |              |                                           |         |                        |         |                   
|Cash flows from financing activities:                         |              |                                           |         |                        |         |                    |         |      
|                                                             
|                                                             
|                                                             
|                                                             
|Annuity and supplementary
contract deposits and interest      |              | $                                         | 133,726 |                        |         | $                  | 71,321  |      
|                                                             
|                                                             
|                                                             
|                                                             
|Annuity and supplementary
contract surrenders and withdrawals |              |                                           | (34,807 | )                      |         |                    | (40,205 | )    
|                                                             
|                                                             
|                                                             
|                                                             
|Universal life deposits and interest                          |              |                                           | 14,451  |                        |         |                    | 14,114  |      
|                                                             
|                                                             
|                                                             
|                                                             
|Universal life surrenders                                     |              |                                           | (3,468  | )                      |         |                    | (3,499  | )    
|                                                             
|                                                             
|                                                             
|                                                             
|Dividends paid to Shareholders                                |              |                                           | (5,812  | )                      |         |                    | (5,387  | )    
|                                                              |              |                                           |         |                        |         |                    |         |      
|                                                              |              | Net cash provided by financing activities |         | $                      | 104,090 |                    |         | $     | 36,344 | 
|                                                              |              |                                           |         |                        |         |                    |         |      
|Net (decrease) increase in cash and cash equivalents          |              |                                           | (48,706 | )                      |         |                    | 44,963  |      
|                                                             
|                                                             
|                                                             
|                                                             
|Cash and cash equivalents at beginning of year                |              |                                           | 110,503 |                        |         |                    | 17,955  |      
|                                                              |              |                                           |         |                        |         |                    |         |      
|Cash and cash equivalents at end of quarter                   |              | $                                         | 61,797  |                        |         | $                  | 62,918  |      
|                                                              |              |                                           |         |                        |         |                    |         |      
|Supplemental disclosures of cash flow information:            |              |                                           |         |                        |         |                    |         |      
|                                                             
|                                                             
|                                                             
|                                                             
|Cash paid (refunded) during the year for:                     |              |                                           |         |                        |         |                    |         |      
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Interest     |                                           | $       | 640                    |         |                    | $       | 640   |       
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Income taxes |                                           |         | (441                   | )       |                    |         | 4,685 |       

See notes to financial statements.

8



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##### Table of Contents






ERIE FAMILY LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
All dollar amounts are in thousands

NOTE A  BASIS OF PRESENTATION

The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01
of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the nine-month
period ended September 30, 2002 are not necessarily indicative of the
results that may be expected for the year ending December 31, 2002. For
further information, refer to the financial statements and footnotes thereto
included in the Companys annual report on Form 10-K for the year ended
December 31, 2001.

NOTE B  RECLASSIFICATION

Certain amounts, as previously reported in the 2001 financial statements,
have been reclassified to conform to the current years financial statement
presentation.

NOTE C  INVESTMENTS

Marketable equity securities consist primarily of common and non-redeemable
preferred stock while fixed maturities consist of bonds, notes and
redeemable preferred stock. Management considers all fixed maturities and
marketable equity securities available-for-sale. Management determines the
appropriate classification of fixed maturities at the time of purchase and
reevaluates such designation as of each statement of financial position
date. Available-for-sale securities are stated at fair value, with the
unrealized gains and losses, net of tax, reported as a separate component of
Shareholders equity.

The following is a summary of available-for-sale securities:

|                   |                                            |                                  |   |           |         |            |   |            |        |            |   |        |        |  |   |         |         | 
|------------------ | ------------------------------------------ | -------------------------------- | - | --------- | ------- | ---------- | - | ---------- | ------ | ---------- | - | ------ | ------ |  | - | ------- | ------- | 
|                   |                                            |                                  |   |           |         |            |   | Gross      |        | Gross      |   |        |        | 
|                   |                                            |                                  |   | Amortized |         | Unrealized |   | Unrealized |        | Estimated 
|                   |                                            |                                  |   | Cost      |         | Gains      |   | Losses     |        | Fair Value
|                   |                                            |                                  |   |           |         |            |   |            |        |           
|September 30, 2002 |                                            |                                  |   |           |         |            |   |            |        |            |   |        |        |  |   |        
|                  
|                  
|                  
|                  
|Fixed Maturities:  |                                            |                                  |   |           |         |            |   |            |        |            |   |        |        |  |   |        
|                  
|                  
|                  
|                  
|Bonds:             |                                            |                                  |   |           |         |            |   |            |        |            |   |        |        |  |   |        
|                  
|                  
|                  
|                  
|                   | U.S. Treasuries and Government
Agencies    |                                  | $ | 53,440    |         |            | $ | 3,389      |        |            | $ | 0      |        |  | $ | 56,829  |        
|                  
|                  
|                  
|                  
|                   | Public Utilities                           |                                  |   | 94,554    |         |            |   | 4,686      |        |            |   | 1,092  |        |  |   | 98,148  |        
|                  
|                  
|                  
|                  
|                   | U.S. Banks, Trusts and Insurance
Companies |                                  |   | 178,047   |         |            |   | 14,279     |        |            |   | 597    |        |  |   | 191,729 |        
|                  
|                  
|                  
|                  
|                   | U.S. Industrial and Miscellaneous          |                                  |   | 468,304   |         |            |   | 33,100     |        |            |   | 12,394 |        |  |   | 489,010 |        
|                  
|                  
|                  
|                  
|                   | Foreign                                    |                                  |   | 78,445    |         |            |   | 4,239      |        |            |   | 2,726  |        |  |   | 79,958  |        
|                   |                                            |                                  |   |           |         |            |   |            |        |            |   |        |        |  |   |         |        
|                   |                                            | Total Bonds                      |   | $         | 872,790 |            |   | $          | 59,693 |            |   | $      | 16,809 |  |   | $       | 915,674 | 
|                  
|                  
|                  
|                  
|                   |                                            | Total Redeemable Preferred Stock |   | $         | 8,831   |            |   | $          | 272    |            |   | $      | 0      |  |   | $       | 9,103   | 
|                   |                                            |                                  |   |           |         |            |   |            |        |            |   |        |        |  |   |         |        
|                   |                                            | Total Fixed Maturities           |   | $         | 881,621 |            |   | $          | 59,965 |            |   | $      | 16,809 |  |   | $       | 924,777 | 
|                   |                                            |                                  |   |           |         |            |   |            |        |            |   |        |        |  |   |         |        

9



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##### Table of Contents



ERIE FAMILY LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (Continued)

NOTE C  INVESTMENTS (Continued)

|                                |                                            |                         |                                     |         |           |         |            |        |            |        |            |       |       |        |   |         |         |           | 
|------------------------------- | ------------------------------------------ | ----------------------- | ----------------------------------- | ------- | --------- | ------- | ---------- | ------ | ---------- | ------ | ---------- | ----- | ----- | ------ | - | ------- | ------- | --------- | 
|                                |                                            |                         |                                     |         |           |         |            |        | Gross      |        | Gross      |       |       |        |  
|                                |                                            |                         |                                     |         | Amortized |         | Unrealized |        | Unrealized |        | Estimated 
|                                |                                            |                         |                                     |         | Cost      |         | Gains      |        | Losses     |        | Fair Value
|                                |                                            |                         |                                     |         |           |         |            |        |            |        |           
|Equity Securities:              |                                            |                         |                                     |         |           |         |            |        |            |        |            |       |       |        |   |        
|                               
|                               
|                               
|                               
|Common Stock:                   |                                            |                         |                                     |         |           |         |            |        |            |        |            |       |       |        |   |        
|                               
|                               
|                               
|                               
|                                | U.S. Banks, Trusts and Insurance
Companies |                         | $                                   | 1,042   |           |         | $          | 28     |            |        | $          | 313   |       |        | $ | 757     |        
|                               
|                               
|                               
|                               
|                                | U.S. Industrial and Miscellaneous          |                         |                                     | 23,588  |           |         |            | 6,286  |            |        |            | 2,915 |       |        |   | 26,959  |        
|                               
|                               
|                               
|                               
|                                | Public Utilities                           |                         |                                     | 417     |           |         |            | 0      |            |        |            | 208   |       |        |   | 209     |        
|                               
|                               
|                               
|                               
|                                | Foreign                                    |                         |                                     | 1,257   |           |         |            | 233    |            |        |            | 559   |       |        |   | 931     |        
|                               
|                               
|                               
|                               
|Non-redeemable Preferred Stock: |                                            |                         |                                     |         |           |         |            |        |            |        |            |       |       |        |   |        
|                               
|                               
|                               
|                               
|                                | U.S. Banks, Trusts and Insurance
Companies |                         |                                     | 7,411   |           |         |            | 169    |            |        |            | 0     |       |        |   | 7,580   |        
|                               
|                               
|                               
|                               
|                                | U.S. Industrial and Miscellaneous          |                         |                                     | 11,872  |           |         |            | 865    |            |        |            | 59    |       |        |   | 12,678  |        
|                               
|                               
|                               
|                               
|                                | Foreign                                    |                         |                                     | 42,664  |           |         |            | 2,154  |            |        |            | 640   |       |        |   | 44,178  |        
|                                |                                            |                         |                                     |         |           |         |            |        |            |        |            |       |       |        |   |         |        
|                                |                                            | Total Equity Securities |                                     | $       | 88,251    |         |            | $      | 9,735      |        |            | $     | 4,694 |        |   | $       | 93,292  |          
|                                |                                            |                         |                                     |         |           |         |            |        |            |        |            |       |       |        |   |         |        
|                                |                                            |                         | Total Available-for-Sale
Securities |         | $         | 969,872 |            |        | $          | 69,700 |            |       | $     | 21,503 |   |         | $       | 1,018,069 | 
|                                |                                            |                         |                                     |         |           |         |            |        |            |        |            |       |       |        |   |         |        
|December 31, 2001               |                                            |                         |                                     |         |           |         |            |        |            |        |            |       |       |        |   |        
|                               
|                               
|                               
|                               
|Fixed Maturities:               |                                            |                         |                                     |         |           |         |            |        |            |        |            |       |       |        |   |        
|                               
|                               
|                               
|                               
|Bonds:                          |                                            |                         |                                     |         |           |         |            |        |            |        |            |       |       |        |   |        
|                               
|                               
|                               
|                               
|                                | U.S. Treasuries and Government
Agencies    |                         | $                                   | 26,239  |           |         | $          | 423    |            |        | $          | 139   |       |        | $ | 26,523  |        
|                               
|                               
|                               
|                               
|                                | Special Revenue                            |                         |                                     | 8,028   |           |         |            | 352    |            |        |            | 0     |       |        |   | 8,380   |        
|                               
|                               
|                               
|                               
|                                | Public Utilities                           |                         |                                     | 71,906  |           |         |            | 1,803  |            |        |            | 925   |       |        |   | 72,784  |        
|                               
|                               
|                               
|                               
|                                | U.S. Banks, Trusts and Insurance
Companies |                         |                                     | 136,259 |           |         |            | 3,425  |            |        |            | 583   |       |        |   | 139,101 |        
|                               
|                               
|                               
|                               
|                                | U.S. Industrial and Miscellaneous          |                         |                                     | 419,325 |           |         |            | 9,354  |            |        |            | 3,500 |       |        |   | 425,179 |        
|                               
|                               
|                               
|                               
|                                | Foreign                                    |                         |                                     | 56,743  |           |         |            | 1,794  |            |        |            | 234   |       |        |   | 58,303  |        
|                                |                                            |                         |                                     |         |           |         |            |        |            |        |            |       |       |        |   |         |        
|                                |                                            | Total Fixed Maturities  |                                     | $       | 718,500   |         |            | $      | 17,151     |        |            | $     | 5,381 |        |   | $       | 730,270 |          
|                                |                                            |                         |                                     |         |           |         |            |        |            |        |            |       |       |        |   |         |        
|Equity Securities:              |                                            |                         |                                     |         |           |         |            |        |            |        |            |       |       |        |   |        
|                               
|                               
|                               
|                               
|Common Stock:                   |                                            |                         |                                     |         |           |         |            |        |            |        |            |       |       |        |   |        
|                               
|                               
|                               
|                               
|                                | U.S. Banks, Trusts and Insurance
Companies |                         | $                                   | 5,332   |           |         | $          | 809    |            |        | $          | 17    |       |        | $ | 6,124   |        
|                               
|                               
|                               
|                               
|                                | U.S. Industrial and Miscellaneous          |                         |                                     | 30,605  |           |         |            | 15,996 |            |        |            | 413   |       |        |   | 46,188  |        
|                               
|                               
|                               
|                               
|                                | Public Utilities                           |                         |                                     | 417     |           |         |            | 0      |            |        |            | 57    |       |        |   | 360     |        
|                               
|                               
|                               
|                               
|Non-redeemable Preferred Stock: |                                            |                         |                                     |         |           |         |            |        |            |        |            |       |       |        |   |        
|                               
|                               
|                               
|                               
|                                | U.S. Industrial and Miscellaneous          |                         |                                     | 8,603   |           |         |            | 712    |            |        |            | 0     |       |        |   | 9,315   |        
|                               
|                               
|                               
|                               
|                                | Foreign                                    |                         |                                     | 41,801  |           |         |            | 1,306  |            |        |            | 1,419 |       |        |   | 41,688  |        
|                                |                                            |                         |                                     |         |           |         |            |        |            |        |            |       |       |        |   |         |        
|                                |                                            | Total Equity Securities |                                     | $       | 86,758    |         |            | $      | 18,823     |        |            | $     | 1,906 |        |   | $       | 103,675 |          
|                                |                                            |                         |                                     |         |           |         |            |        |            |        |            |       |       |        |   |         |        
|                                |                                            |                         | Total Available-for-Sale
Securities |         | $         | 805,258 |            |        | $          | 35,974 |            |       | $     | 7,287  |   |         | $       | 833,945   | 
|                                |                                            |                         |                                     |         |           |         |            |        |            |        |            |       |       |        |   |         |        

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ERIE FAMILY LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (Continued)

NOTE C  INVESTMENTS (Continued)

Realized gains and losses on the sales of investments are recognized in
income on the specific identification method. Investments that have
declined in value below cost and for which the decline is considered to be
other-than-temporary by management are written down to estimated realizable
value. The impairments are made on an individual security basis and are
recorded as a component of net realized gains (losses) on investments in the
Statements of Operations.

The components of net realized losses on investments as reported on the
Statements of Operations are included below. The securities written down
during 2002 were in the telecommunication and energy industry segments. The
securities written down during 2001 were in the technology and transportation
industry segments.

|                                   |                       |                             |       |                    |       |                   |       |        |       |      |        |         |        |    |       |        |       |  
|---------------------------------- | --------------------- | --------------------------- | ----- | ------------------ | ----- | ----------------- | ----- | ------ | ----- | ---- | ------ | ------- | ------ | -- | ----- | ------ | ----- | -
|                                   |                       |                             |       | Three Months Ended |       | Nine Months Ended
|                                   |                       |                             |       | September 30       |       | September 30     
|                                   |                       |                             |       |                    |       |                  
|                                   |                       |                             |       | 2002               |       | 2001              |       | 2002   |       | 2001
|                                   |                       |                             |       |                    |       |                   |       |        |       |     
|Fixed maturities:                  |                       |                             |       |                    |       |                   |       |        |       |      |        |         |        |    |       |       
|                                  
|                                  
|                                  
|                                  
|                                   | Gross realized gains  |                             | $     | 2,755              |       |                   | $     | 2,534  |       |      | $      | 6,427   |        |    | $     | 4,334  |      
|                                  
|                                  
|                                  
|                                  
|                                   | Gross realized losses |                             |       | (61                | )     |                   |       | (1,140 | )     |      |        | (471    | )      |    |       | (2,180 | )    
|                                  
|                                  
|                                  
|                                  
|                                   | Impairment charge     |                             |       | (8,089             | )     |                   |       | (193   | )     |      |        | (17,063 | )      |    |       | (1,744 | )    
|                                   |                       |                             |       |                    |       |                   |       |        |       |      |        |         |        |    |       |       
|                                   |                       | Net realized (losses) gains |       | ($                 | 5,395 | )                 |       | $      | 1,201 |      |        | ($      | 11,107 | )  |       | $      | 410   |  
|                                   |                       |                             |       |                    |       |                   |       |        |       |      |        |         |        |    |       |       
|Equity securities:                 |                       |                             |       |                    |       |                   |       |        |       |      |        |         |        |    |       |       
|                                  
|                                  
|                                  
|                                  
|                                   | Gross realized gains  |                             | $     | 535                |       |                   | $     | 970    |       |      | $      | 3,866   |        |    | $     | 1,609  |      
|                                  
|                                  
|                                  
|                                  
|                                   | Gross realized losses |                             |       | (190               | )     |                   |       | (215   | )     |      |        | (2,202  | )      |    |       | (536   | )    
|                                  
|                                  
|                                  
|                                  
|                                   | Impairment charge     |                             |       | (185               | )     |                   |       | (3,990 | )     |      |        | (185    | )      |    |       | (3,990 | )    
|                                   |                       |                             |       |                    |       |                   |       |        |       |      |        |         |        |    |       |       
|                                   |                       | Net realized (losses) gains |       | $                  | 160   |                   |       | ($     | 3,235 | )    |        | $       | 1,479  |    |       | ($     | 2,917 | )
|                                   |                       |                             |       |                    |       |                   |       |        |       |      |        |         |        |    |       |       
|Limited partnerships:              |                       |                             |       |                    |       |                   |       |        |       |      |        |         |        |    |       |       
|                                  
|                                  
|                                  
|                                  
|                                   | Gross realized gains  |                             | $     | 0                  |       |                   | $     | 0      |       |      | $      | 453     |        |    | $     | 0      |      
|                                  
|                                  
|                                  
|                                  
|                                   | Gross realized losses |                             |       | 0                  |       |                   |       | 0      |       |      |        | (1,703  | )      |    |       | 0      |      
|                                   |                       |                             |       |                    |       |                   |       |        |       |      |        |         |        |    |       |       
|                                   |                       | Net realized losses         |       | $                  | 0     |                   |       | $      | 0     |      |        | ($      | 1,250  | )  |       | $      | 0     |  
|                                   |                       |                             |       |                    |       |                   |       |        |       |      |        |         |        |    |       |       
|Net realized losses on investments |                       | ($                          | 5,235 | )                  |       | ($                | 2,034 | )      |       | ($   | 10,878 | )       |        | ($ | 2,507 | )     
|                                   |                       |                             |       |                    |       |                   |       |        |       |      |        |         |        |    |       |       

The Company participates in a securities lending program whereby certain
securities from its portfolio are loaned to other institutions for short
periods of time through a lending agent. A fee is paid to the Company by
the borrower. Collateral, comprised of cash and government securities, that
exceeds the market value of the loaned securities, is maintained by the
lending agent in the event a borrower becomes insolvent or fails to return
securities. The Company had loaned securities with a market value of $47.8
million and $34.2 million and secured collateral of $49.2 million and $35.3
million at September 30, 2002 and 2001, respectively. The Company maintains
the loaned securities on its Statements of Financial Position as part of its
invested assets.

Limited partnerships at September 30, 2002 include U.S. and foreign real
estate and fixed income investments. These partnerships are recorded using
the equity method, which approximates the Companys share of the carrying
value of the partnership. The Company has not guaranteed any of the
partnership liabilities.

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ERIE FAMILY LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (Continued)

NOTE C  INVESTMENTS (Continued)

The components of equity in earnings of limited partnerships as reported on the
Statements of Operations are as follows:

|               |  |                    |      |                   |  |   |      |   |  |   |       |  |  |   |       | 
|-------------- |  | ------------------ | ---- | ----------------- |  | - | ---- | - |  | - | ----- |  |  | - | ----- | 
|               |  | Three Months Ended |      | Nine Months Ended
|               |  | September 30       |      | September 30     
|               |  |                    |      |                  
|               |  |                    | 2002 |                   |  |   | 2001 |   |  |   | 2002  |  |  |   | 2001  | 
|              
|              
|              
|              
|              
|Fixed Income   |  | $                  | 38   |                   |  | $ | 225  |   |  | $ | 207   |  |  | $ | 270   | 
|              
|              
|              
|              
|Real Estate    |  |                    | 113  |                   |  |   | 569  |   |  |   | 3,526 |  |  |   | 1,128 | 
|              
|              
|              
|              
|Private Equity |  |                    | 0    |                   |  |   | (180 | ) |  |   | 0     |  |  |   | 18    | 
|               |  |                    |      |                   |  |   |      |   |  |   |       |  |  |   |       | 
|               |  | $                  | 151  |                   |  | $ | 614  |   |  | $ | 3,733 |  |  | $ | 1,416 | 
|               |  |                    |      |                   |  |   |      |   |  |   |       |  |  |   |       | 

NOTE D  FAIR VALUE OF FINANCIAL INSTRUMENTS

Estimated fair values of financial instruments have been determined using
available market information and appropriate valuation methodologies. However,
considerable judgment is required in developing the estimates of fair value.
Accordingly, these estimates are not necessarily indicative of the amounts that
could be realized in a current market exchange. Certain financial instruments,
including insurance contracts other than financial guarantees and investment
contracts, are exempt from fair value disclosure requirements. The following
methods and assumptions were used by the Company in estimating the fair value
of each class of financial instrument for which it is practicable to estimate
that value:

Cash and cash equivalents:The carrying amounts approximate their fair value.

Fixed maturities and equity securities:Fair values were based on quoted market
prices, where available, or dealer quotations.

Limited partnerships:Fair values of the fixed income limited partnerships were
provided to the Company by the partnership. Real estate limited partnership
fair values approximate carrying value.

Policy loans and real estate mortgage loans:For policy loans and real estate
mortgage loans, carrying value is representative of estimated fair value.

Trading assets and trading liabilities:The carrying value of these assets and
liabilities arising in the ordinary course of business approximates their fair
values.

Annuity deposits:Included in this category are annuity deposit contracts. The
Company retains the right to change interest rates subject to a one year
guaranteed interest rate and a minimum interest rate provided in the policy.
As a result, the carrying value of these contracts approximates their fair
value. These annuity deposits totaled $579,649 at September 30, 2002 (See
Products with Interest Rate Guarantees included in Factors That May Affect
Future Results section).

12



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ERIE FAMILY LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (Continued)

NOTE D  FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Annuity deposits include structured settlement contracts that the Policyholder
cannot surrender at any time and for which the interest rate is fixed for the
duration of the contract. Fair values of these contracts were estimated using
discounted projected cash flows based upon interest rates currently being
offered for similar contracts with the same remaining maturities. At September
30, 2002, the carrying value of structured settlements totaled $156,102 while
the estimated fair value of these contracts totaled $196,739.

Universal life deposits:The Company retains the right to change interest rates
on its universal life deposits subject to a minimum interest rate provided in
the policy. As a result, the carrying value of these contracts approximates
their fair value. Fixed income securities, with similar maturities and
sufficient rates of return to produce the target profit margins, have been
purchased to match these liabilities.

NOTE E  SEGMENT INFORMATION

The Companys Traditional Life insurance segment includes permanent life,
endowment life, term life and whole life policies. The Universal Life
segment includes all fixed universal life products sold by the Company.
Variable universal life products are not sold by the Company. The Fixed
Annuities segment includes fixed ordinary deferred annuities, tax advantaged
deferred annuities, annuities in pay-out and structured settlements.
Neither variable nor equity indexed annuity products are sold by the
Company. The Group Life and Other segment presented in the table below
includes group life insurance and disability income products. The Corporate
Account segment includes investment income earned from surplus not
specifically allocable to any one product type. Investment related income
is allocated based on the assumption that the fixed maturities and preferred
stock portfolios support the insurance product segments and the common stock
and limited partnership investments support the corporate account. The loss
recorded in the Fixed Annuities segment for the three and nine months ended
September 30, 2002 is a direct result of the impairment charges recognized
on fixed maturity investments during 2002.

|                                          |                            |                |       |           |       |           |       |        |       |           |        |       |       |   |     |       |     |   |     |     |     |   |        |     |        | 
|----------------------------------------- | -------------------------- | -------------- | ----- | --------- | ----- | --------- | ----- | ------ | ----- | --------- | ------ | ----- | ----- | - | --- | ----- | --- | - | --- | --- | --- | - | ------ | --- | ------ | 
|                                          |                            |                |       |           |       |           |       |        |       |           |        |       |       |   |     | Group |     |   |     |     |     |   |        |    
|Three Months Ended                        |                            | Traditional    |       | Universal |       | Fixed     |       | Life & |       | Corporate |        |       |       |  
|September 30, 2002                        |                            | Life           |       | Life      |       | Annuities |       | Other  |       | Account   |        | Total
|                                          |                            |                |       |           |       |           |       |        |       |           |        |      
|Total policy revenue, net of
reinsurance  |                            | $              | 8,483 |           |       | $         | 3,044 |        |       | $         | 0      |       |       | $ | 784 |       |     | $ | 0   |     |     | $ | 12,311 |    
|                                         
|                                         
|                                         
|                                         
|Total investment-related
and other income |                            |                | 1,142 |           |       |           | 1,460 |        |       |           | 8,295  |       |       |   | 30  |       |     |   | 645 |     |     |   | 11,572 |    
|                                          |                            |                |       |           |       |           |       |        |       |           |        |       |       |   |     |       |     |   |     |     |     |   |        |    
|                                          |                            | Total revenues |       | $         | 9,625 |           |       | $      | 4,504 |           |        | $     | 8,295 |   |     | $     | 814 |   |     | $   | 645 |   |        | $   | 23,883 | 
|                                          |                            |                |       |           |       |           |       |        |       |           |        |       |       |   |     |       |     |   |     |     |     |   |        |    
|Less: Total benefits and
expenses         |                            |                | 6,987 |           |       |           | 3,937 |        |       |           | 11,764 |       |       |   | 445 |       |     |   | 0   |     |     |   | 23,133 |    
|                                          |                            |                |       |           |       |           |       |        |       |           |        |       |       |   |     |       |     |   |     |     |     |   |        |    
|                                          | Income (loss) before taxes |                | $     | 2,638     |       |           | $     | 567    |       |           | ($     | 3,469 | )     |   | $   | 369   |     |   | $   | 645 |     |   | $      | 750 |       
|                                          |                            |                |       |           |       |           |       |        |       |           |        |       |       |   |     |       |     |   |     |     |     |   |        |    

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ERIE FAMILY LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (Continued)

NOTE E  SEGMENT INFORMATION (Continued)

|                                          |                            |                |        |           |        |           |        |        |        |           |        |       |        |   |       |       |       |   |        |       |       |   |        |        |        | 
|----------------------------------------- | -------------------------- | -------------- | ------ | --------- | ------ | --------- | ------ | ------ | ------ | --------- | ------ | ----- | ------ | - | ----- | ----- | ----- | - | ------ | ----- | ----- | - | ------ | ------ | ------ | 
|                                          |                            |                |        |           |        |           |        |        |        |           |        |       |        |   |       | Group |       |   |        |       |       |   |        |       
|Nine Months Ended                         |                            | Traditional    |        | Universal |        | Fixed     |        | Life & |        | Corporate |        |       |        |  
|September 30, 2002                        |                            | Life           |        | Life      |        | Annuities |        | Other  |        | Account   |        | Total
|                                          |                            |                |        |           |        |           |        |        |        |           |        |      
|Total policy revenue, net of
reinsurance  |                            | $              | 26,755 |           |        | $         | 9,123  |        |        | $         | 2      |       |        | $ | 2,278 |       |       | $ | 0      |       |       | $ | 38,158 |       
|                                         
|                                         
|                                         
|                                         
|Total investment-related
and other income |                            |                | 3,739  |           |        |           | 4,856  |        |        |           | 26,093 |       |        |   | 104   |       |       |   | 6,648  |       |       |   | 41,440 |       
|                                          |                            |                |        |           |        |           |        |        |        |           |        |       |        |   |       |       |       |   |        |       |       |   |        |       
|                                          |                            | Total revenues |        | $         | 30,494 |           |        | $      | 13,979 |           |        | $     | 26,095 |   |       | $     | 2,382 |   |        | $     | 6,648 |   |        | $      | 79,598 | 
|                                          |                            |                |        |           |        |           |        |        |        |           |        |       |        |   |       |       |       |   |        |       |       |   |        |       
|Less: Total benefits and
expenses         |                            |                | 24,594 |           |        |           | 11,779 |        |        |           | 32,411 |       |        |   | 1,820 |       |       |   | 0      |       |       |   | 70,604 |       
|                                          |                            |                |        |           |        |           |        |        |        |           |        |       |        |   |       |       |       |   |        |       |       |   |        |       
|                                          | Income (loss) before taxes |                | $      | 5,900     |        |           | $      | 2,200  |        |           | ($     | 6,316 | )      |   | $     | 562   |       |   | $      | 6,648 |       |   | $      | 8,994  |       
|                                          |                            |                |        |           |        |           |        |        |        |           |        |       |        |   |       |       |       |   |        |       |       |   |        |       
|Three Months Ended
September 30, 2001     |                            |                |        |           |        |           |        |        |        |           |        |       |        |   |       |       |       |   |        |       |       |   |        |       
|Total policy revenue, net of
reinsurance  |                            | $              | 7,779  |           |        | $         | 2,795  |        |        | $         | 0      |       |        | $ | 721   |       |       | $ | 0      |       |       | $ | 11,295 |       
|                                         
|                                         
|                                         
|                                         
|Total investment-related
and other income |                            |                | 1,842  |           |        |           | 2,353  |        |        |           | 12,106 |       |        |   | 46    |       |       |   | (2,706 | )     |       |   | 13,641 |       
|                                          |                            |                |        |           |        |           |        |        |        |           |        |       |        |   |       |       |       |   |        |       |       |   |        |       
|                                          |                            | Total revenues |        | $         | 9,621  |           |        | $      | 5,148  |           |        | $     | 12,106 |   |       | $     | 767   |   |        | ($    | 2,706 | ) |        | $      | 24,936 | 
|                                          |                            |                |        |           |        |           |        |        |        |           |        |       |        |   |       |       |       |   |        |       |       |   |        |       
|Less: Total benefits and
expenses         |                            |                | 6,468  |           |        |           | 3,444  |        |        |           | 10,248 |       |        |   | 915   |       |       |   | 0      |       |       |   | 21,075 |       
|                                          |                            |                |        |           |        |           |        |        |        |           |        |       |        |   |       |       |       |   |        |       |       |   |        |       
|                                          | Income (loss) before taxes |                | $      | 3,153     |        |           | $      | 1,704  |        |           | $      | 1,858 |        |   | ($    | 148   | )     |   | ($     | 2,706 | )     |   | $      | 3,861  |       
|                                          |                            |                |        |           |        |           |        |        |        |           |        |       |        |   |       |       |       |   |        |       |       |   |        |       
|Nine Months Ended
September 30, 2001      |                            |                |        |           |        |           |        |        |        |           |        |       |        |   |       |       |       |   |        |       |       |   |        |       
|Total policy revenue, net of
reinsurance  |                            | $              | 23,971 |           |        | $         | 8,130  |        |        | $         | 2      |       |        | $ | 2,049 |       |       | $ | 0      |       |       | $ | 34,152 |       
|                                         
|                                         
|                                         
|                                         
|Total investment-related
and other income |                            |                | 5,051  |           |        |           | 6,232  |        |        |           | 33,341 |       |        |   | 124   |       |       |   | 166    |       |       |   | 44,914 |       
|                                          |                            |                |        |           |        |           |        |        |        |           |        |       |        |   |       |       |       |   |        |       |       |   |        |       
|                                          |                            | Total revenues |        | $         | 29,022 |           |        | $      | 14,362 |           |        | $     | 33,343 |   |       | $     | 2,173 |   |        | $     | 166   |   |        | $      | 79,066 | 
|                                          |                            |                |        |           |        |           |        |        |        |           |        |       |        |   |       |       |       |   |        |       |       |   |        |       
|Less: Total benefits and
expenses         |                            |                | 20,247 |           |        |           | 10,926 |        |        |           | 28,390 |       |        |   | 1,739 |       |       |   | 0      |       |       |   | 61,302 |       
|                                          |                            |                |        |           |        |           |        |        |        |           |        |       |        |   |       |       |       |   |        |       |       |   |        |       
|                                          | Income before taxes        |                | $      | 8,775     |        |           | $      | 3,436  |        |           | $      | 4,953 |        |   | $     | 434   |       |   | $      | 166   |       |   | $      | 17,764 |       
|                                          |                            |                |        |           |        |           |        |        |        |           |        |       |        |   |       |       |       |   |        |       |       |   |        |       

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##### Table of Contents



ERIE FAMILY LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (Continued)

NOTE F  REINSURANCE

The Company has entered into various reinsurance treaties for the purpose of
ceding the excess of life insurance over Company established retention
limits. Reinsurance contracts do not relieve the Company from its primary
obligations to Policyholders. Failure of reinsurers to honor their
obligations could result in losses to the Company. The Company evaluates
the financial condition of its
reinsurers and monitors concentrations of credit risk to minimize its
exposure to significant losses from reinsurer insolvencies. The Company
considers all of its reinsurance assets to be collectible, therefore, no
allowance has been established for uncollectible amounts.

Generally, the Companys retention limit is $300 per life for individual
coverage. For its disability income product, the Company also has a 50%
coinsurance agreement with its reinsurer. In 2001, the Company introduced
two new products, ERIE Flagship Term2 and ERIE Target Term. These products
are reinsured 50% and 90%, respectively, with unaffiliated reinsurers,
subject to the Companys $300 retention limit.

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##### Table of Contents



ERIE FAMILY LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (Continued)

NOTE F  REINSURANCE (Continued)

The effect of ceded reinsurance in the Statements of Operations is as
follows:

|                       |                                                      |                            |   |                    |        |                   |   |        |        |       |   |         |        |  |   |        |        | 
|---------------------- | ---------------------------------------------------- | -------------------------- | - | ------------------ | ------ | ----------------- | - | ------ | ------ | ----- | - | ------- | ------ |  | - | ------ | ------ | 
|                       |                                                      |                            |   | Three Months Ended |        | Nine Months Ended
|                       |                                                      |                            |   | September 30       |        | September 30     
|                       |                                                      |                            |   |                    |        |                  
|                       |                                                      |                            |   | 2002               |        | 2001              |   | 2002   |        | 2001 
|                       |                                                      |                            |   | Gross              |        | Gross             |   | Gross  |        | Gross
|                       |                                                      |                            |   |                    |        |                   |   |        |        |      
|Revenues:              |                                                      |                            |   |                    |        |                   |   |        |        |       |   |         |        |  |   |       
|                      
|                      
|                      
|                      
|                       | Policy revenue                                       |                            | $ | 15,568             |        |                   | $ | 13,248 |        |       | $ | 45,840  |        |  | $ | 39,564 |       
|                      
|                      
|                      
|                      
|                       | Policy revenue ceded                                 |                            |   | 3,257              |        |                   |   | 1,953  |        |       |   | 7,682   |        |  |   | 5,412  |       
|                       |                                                      |                            |   |                    |        |                   |   |        |        |       |   |         |        |  |   |       
|                       | Net policy revenue                                   |                            |   | 12,311             |        |                   |   | 11,295 |        |       |   | 38,158  |        |  |   | 34,152 |       
|                      
|                      
|                      
|                      
|                      
|                       | Investment income                                    |                            |   | 16,517             |        |                   |   | 14,744 |        |       |   | 48,025  |        |  |   | 45,318 |       
|                      
|                      
|                      
|                      
|                       | Equity in earnings of limited
partnerships           |                            |   | 151                |        |                   |   | 614    |        |       |   | 3,733   |        |  |   | 1,416  |       
|                      
|                      
|                      
|                      
|                       | Net realized losses on investments                   |                            |   | (5,235             | )      |                   |   | (2,034 | )      |       |   | (10,878 | )      |  |   | (2,507 | )     
|                      
|                      
|                      
|                      
|                       | Other income                                         |                            |   | 139                |        |                   |   | 317    |        |       |   | 560     |        |  |   | 687    |       
|                       |                                                      |                            |   |                    |        |                   |   |        |        |       |   |         |        |  |   |       
|                       |                                                      | Total revenues             |   | $                  | 23,883 |                   |   | $      | 24,936 |       |   | $       | 79,598 |  |   | $      | 79,066 | 
|                      
|                      
|                      
|                      
|                      
|Benefits and expenses: |                                                      |                            |   |                    |        |                   |   |        |        |       |   |         |        |  |   |       
|                      
|                      
|                      
|                      
|                       | Death benefits                                       |                            | $ | 5,988              |        |                   | $ | 4,791  |        |       | $ | 14,085  |        |  | $ | 10,841 |       
|                      
|                      
|                      
|                      
|                       | Reinsurance recoveries                               |                            |   | 2,230              |        |                   |   | 769    |        |       |   | 2,899   |        |  |   | 1,535  |       
|                       |                                                      |                            |   |                    |        |                   |   |        |        |       |   |         |        |  |   |       
|                       | Net death benefits                                   |                            |   | 3,758              |        |                   |   | 4,022  |        |       |   | 11,186  |        |  |   | 9,306  |       
|                      
|                      
|                      
|                      
|                      
|                       | Interest on deposits and
other Policyholder benefits |                            |   | 12,177             |        |                   |   | 11,135 |        |       |   | 35,300  |        |  |   | 32,080 |       
|                      
|                       | Increases in future life policy benefits             |                            |   | 3,350              |        |                   |   | 1,771  |        |       |   | 8,813   |        |  |   | 5,932  |       
|                      
|                      
|                      
|                      
|                       | Reinsurance reserve credits                          |                            |   | 1,022              |        |                   |   | 526    |        |       |   | 1,779   |        |  |   | 1,550  |       
|                       |                                                      |                            |   |                    |        |                   |   |        |        |       |   |         |        |  |   |       
|                       | Net increases in future life policy
benefits         |                            |   | 2,328              |        |                   |   | 1,245  |        |       |   | 7,034   |        |  |   | 4,382  |       
|                      
|                      
|                      
|                      
|                      
|                       | Amortization of deferred policy
acquisition costs    |                            |   | 1,233              |        |                   |   | 1,610  |        |       |   | 5,254   |        |  |   | 5,448  |       
|                      
|                      
|                      
|                      
|                      
|                       | Commissions                                          |                            |   | 3,007              |        |                   |   | 1,693  |        |       |   | 6,951   |        |  |   | 4,281  |       
|                      
|                      
|                      
|                      
|                       | Reinsurance commission allowances                    |                            |   | 1,999              |        |                   |   | 986    |        |       |   | 4,481   |        |  |   | 2,663  |       
|                       |                                                      |                            |   |                    |        |                   |   |        |        |       |   |         |        |  |   |       
|                       | Net commissions                                      |                            |   | 1,008              |        |                   |   | 707    |        |       |   | 2,470   |        |  |   | 1,618  |       
|                      
|                      
|                      
|                      
|                      
|                       | General expenses, taxes, licenses
and fees           |                            |   | 2,629              |        |                   |   | 2,356  |        |       |   | 9,360   |        |  |   | 8,468  |       
|                       |                                                      |                            |   |                    |        |                   |   |        |        |       |   |         |        |  |   |       
|                       |                                                      | Total expenses             |   | $                  | 23,133 |                   |   | $      | 21,075 |       |   | $       | 70,604 |  |   | $      | 61,302 | 
|                       |                                                      |                            |   |                    |        |                   |   |        |        |       |   |         |        |  |   |       
|                       |                                                      | Income before income taxes |   | $                  | 750    |                   |   | $      | 3,861  |       |   | $       | 8,994  |  |   | $      | 17,764 | 
|                       |                                                      |                            |   |                    |        |                   |   |        |        |       |   |         |        |  |   |       

16



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##### Table of Contents



ERIE FAMILY LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (Continued)

NOTE G  COMMITMENTS

The Company has outstanding commitments to invest up to $5.4 million in real
estate limited partnerships at September 30, 2002. These commitments will be
funded as required through the end of the respective investment periods, which
typically span 3 to 5 years.

NOTE H  STATUTORY INFORMATION

The minimum statutory capital and surplus requirements under Pennsylvania law
for stock life insurance companies (Section 386 of the PA Insurance Code)
amounts to $1,650. The Companys total statutory capital and surplus well
exceeded these minimum requirements, totaling $83,102 at September 30, 2002.

17



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##### Table of Contents






ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the
historical financial information and related notes found on pages 3 through 17,
herein, and Managements Discussion and Analysis of Financial Condition and
Results of Operations contained in our Annual Report on Form 10-K for the year
ended December 31, 2001 as filed with the Securities and Exchange Commission on
March 15, 2002.

FINANCIAL OVERVIEW

Net income decreased to $490,329, or $.05 per share, in the third quarter of
2002, compared to $2,519,073, or $.27 per share, for the third quarter of 2001.
Steady premium growth and an increase in net investment income were offset by
realized capital losses on investments due to impairment charges taken by the
Company in the third quarter of 2002. For the nine months ended September 30,
2002 net income decreased to $5,881,917, or $.62 per share, compared to
$11,617,498, or $1.23 per share for the same period in 2001. An increase of
$8,371,263 in realized losses on investments, resulting from impairment charges
taken by the Company, was the principal reason for the year-to-date decline in
earnings.

Operating income (net income, excluding net realized capital losses and related
federal income taxes) increased slightly to $3,892,870, or $.41 per share, in
the third quarter 2002 compared to $3,840,901, or $.41 per share, for the same
period in 2001. For the nine months ended September 30, 2002 operating income
decreased to $12,952,856, or $1.37 per share, from $13,247,115, or $1.40 per
share during the same period in 2001. Contributing to this decrease for the
nine-month period was a $1,879,994 increase in net death benefits paid on life
insurance policies and a $2,688,524 increase in interest paid on annuity
deposits.

REVENUES

Analysis of Policy Revenue

Total policy revenue increased $1,016,198, or 9.0%, to $12,310,701 in the third
quarter of 2002, from $11,294,503 during the same period in 2001. Contributing
to this growth was an increase in net premiums on traditional life insurance
policies of 10.0% to $8,760,628 for the quarter ended September 30, 2002.
Total policies in force on traditional life insurance products increased 7.8%
to 182,974 at September 30, 2002, compared to 169,674 at September 30, 2001.
Total policy revenue increased $4,006,330, or 11.7%, to $38,158,152 for the
nine months ended September 30, 2002.

In the third quarter of 2001 the Company rolled out its two newest traditional
life insurance products  ERIE Target Term and ERIE Flagship Term2. The ERIE
Target Term product has a minimum face amount of $100,000 and offers rate
guarantees for 10 years on all plans. Under the reinsurance treaty for this
new product, the reinsurer assumes 90% of all insurance up to $3,000,000 (the
Companys retention limit is $300,000) and assumes all insurance above that
amount. The ERIE Flagship Term2, now Erie Family Lifes most comprehensive
term insurance plan for individuals desiring substantial coverage, also offers
a minimum face amount of $100,000 and replaced the ERIE Flagship Term product
for new policy sales after October 1, 2001. Under the reinsurance treaty for
this product, the reinsurer assumes 50% of all insurance up to $600,000 (the
Companys retention limit is $300,000) and assumes all insurance above that
amount. The ERIE Flagship Term, ERIE Flagship Term2 and ERIE Target Term
products, before consideration of reinsurance ceded, contributed $3,728,068 and
$1,596,169 to total life premiums for the three months ended September 30, 2002
and 2001, respectively.

18



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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Analysis of Investment-related Income

Net investment income increased $1,772,838, or 12.0%, to $16,516,894 in the
third quarter of 2002 from $14,744,056 for the same period in 2001. For the
nine months ended September 30, 2002, net investment income increased
$2,706,776, or 6.0%, to $48,024,812 from $45,318,036 for the same period in
2001. The increase in net investment income for the third quarter of 2002 and
the nine-month period ended September 30, 2002 compared to similar periods in
2001 is related to larger invested balances in 2002, compared to 2001 partially
offset by lower yields in 2002 due to lower interest rates.

Net realized losses on investments were $5,234,679 in the third quarter of
2002, compared to $2,033,582 in the third quarter of 2001, an increase of
$3,201,097. Net realized losses for the third quarters of 2002 and 2001
included $8,273,272 and $4,183,465 of impairment charges, respectively. The
third quarter 2002 impairment charges were from investments primarily in the
energy sector.

Net realized losses for the nine month-period ended September 30, 2002 and 2001
were $10,878,367 and $2,507,104, respectively. Net realized losses for the
nine-month period ended September 30, 2002 and 2001 included impairment charges
of $17,248,102 and $5,733,465, respectively. The impairment charges in the
nine-month period ended September 30, 2002 were in the telecommunications and
energy sectors.

The Company recorded earnings in limited partnerships of $151,224 in the third
quarter of 2002, compared to $613,970 during the same period in 2001. The
year-to-date earnings in limited partnerships increased to $3,732,971 in 2002
from $1,416,167 in 2001. The 2001 year-to-date increase in partnership
earnings relates to higher income recognized from real estate partnerships.

BENEFITS AND EXPENSES

Analysis of Policy-related Benefits and Expenses

Net death benefits on life insurance policies decreased slightly in the third
quarter of 2002 to $3,757,811 from $4,021,727 for the same period in 2001. For
the nine months ended September 30, 2002, net death benefits on life insurance
policies increased $1,879,994, or 20.2%, to $11,185,880. Random fluctuations
in death benefits incurred can be expected when mortality results are measured
over a short time period due to the small number of claims involved. These
short-term fluctuations can influence quarterly or annual results without
impacting long-term profitability. Management believes that its underwriting
philosophy and practices are sound.

Interest expense incurred on deposits increased $1,004,808, or 9.2%, to
$11,872,700 in the third quarter of 2002 from $10,867,892 in the third quarter
of 2001. For the nine months ended September 30, 2002, interest expense on
deposits increased $3,082,157, or 9.8%, to $34,428,612. This increase is
primarily the result of an increase in new annuity deposits and a decrease in
annuity surrenders during the twelve-month period ended September 30, 2002,
when compared to the
twelve-month period ended September 30, 2001. The interest rates credited on
annuity and universal life deposits in 2002 and 2001 were at the following
rates:

|                                       |  |          |              |                |  |  |              |  
|-------------------------------------- |  | -------- | ------------ | -------------- |  |  | ------------ | -
|                                       |  | Annuity  |              | Universal Life
|                                       |  | Deposits |              | Deposits      
|                                       |  |          |              |               
|January 1, 2001  February 19, 2002    |  |          | 5.00% - 6.25 | %              |  |  | 6.00% - 6.75 | %
|                                      
|                                      
|                                      
|                                      
|February 20, 2002  September 30, 2002 |  |          | 4.75% - 5.50 | %              |  |  | 5.50% - 6.25 | %

19



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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

In response to decreasing new money investment yields, the Board of Directors
has approved, effective October 8, 2002, a decrease in the current credited
interest rates. The new credited interest rates for the fourth quarter 2002
are:

|              |  |                |              |  
|------------- |  | -------------- | ------------ | -
|Annuity       |  | Universal Life
|Deposits      |  | Deposits      
|              |  |               
|4.50% - 5.00% |  |                | 5.25% - 6.00 | %

The liability for future life policy benefits is computed considering various
factors such as anticipated mortality, future investment yields, withdrawals
and anticipated credit for reinsurance. Future life policy benefits totaled
$2,327,751 in the third quarter of 2002, compared to $1,245,242 in the third
quarter of 2001. For the nine months ended September 30, 2002, the increase in
future life policy benefits totaled $7,033,534, compared to $4,382,375 in 2001.
With the success of the newest traditional life insurance products, ERIE
Target Term and ERIE Flagship Term2, the Companys life insurance in force at
September 30, 2002 has grown to $21.1 billion, compared to $17.4 billion at
September 30, 2001, thus increasing the required reserves.

Amortization of deferred policy acquisition costs decreased 23.4% to $1,232,702
in the third quarter of 2002. For the nine months ended September 30, 2002,
the amortization of deferred policy acquisition costs decreased 3.6% to
$5,254,064. For the twelve months ended December 31, 2001, amortization
totaled $5,818,062.

Analysis of Other Expenses

Commissions and general expenses increased $453,048, or 17.7%, to $3,014,434
for the third quarter 2002, compared to $2,561,386 for the same period in 2001,
due primarily to an increase in commissions. Certain expenses of the Company
are paid by the Erie Indemnity Company, and reimbursed monthly by the Company.
Additionally, a portion of the Erie Insurance Group common overhead expenses
attributable to the Company are also reimbursed monthly. These expenses
comprise the majority of the Companys general expenses.

General expenses include wages and salaries, employee benefits, data processing
expenses, occupancy expenses and other office and general administrative
expenses of the Company. Certain general expenses of the Company, related to
the acquisition and underwriting of new policies, are deferred as policy
acquisition costs (DAC). Medical inspection and exam fees related to new
business production, wages, salaries and employee benefits of underwriting
personnel, and salaries, employee benefits and bonuses paid to branch sales
employees for the production of life and annuity business, are all deferred.

General expenses, net of DAC, increased 8.2% to $2,006,889 for the quarter
ended September 30, 2002. For the nine months ended September 30, 2002, net
general expenses increased 8.5%, to $7,510,842. Expenses impacted by increases
in Company staffing levels, including salaries, benefits and office equipment,
contributed to this year-to-date increase. In addition, in 2002, the Company
is being allocated a portion of the expenses relating to the Erie Insurance
Groups eCommerce program
launched in June 2001. These expenses totaled approximately $177,000 in 2002
and will continue to be incurred as the project develops.

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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)

Commissions to independent Agents include direct commission costs on new and
renewal commissions, production bonuses and promotional incentives to Agents.
These direct commission expenses are reported on the Statements of Operations
net of commissions received from reinsurers. The reported expense is also
affected by the amount of commission expenses capitalized as DAC. Commissions,
which vary with and are related primarily to the production of new business,
have been deferred and are capitalized as DAC. Most first-year and incentive
commissions and some second-year commissions qualify for deferral as DAC. For
the third quarter of 2002, net commission expense increased $300,652 to
$1,007,545, compared to $706,893 for the third quarter of 2001. For the nine
months ended September 30, 2002, net commission expense increased $851,747 to
$2,470,073. This increase can be attributed to the growth in annuity sales.
Annuity production bonuses, not all of which have been capitalized as
commissions in the DAC, have increased $632,504 to $904,151 in 2002 from
$271,647 for the nine months ended September 30, 2001.

Promotional incentive expenses for the quarter and nine months ended September
30, 2002 were $300,000 and $900,000, respectively and related entirely to a
2002 sales incentive contest for the Companys independent Agents.

FINANCIAL CONDITION

Investments

The Companys investment strategies are designed and portfolios are structured
to match the features of the life insurance and annuity products sold by the
Company. Annuities and life insurance
policies are long-term products, therefore, the Companys investment strategy
takes a long-term perspective emphasizing investment quality, diversification,
and superior investment returns. The
Companys investments are managed on a total return approach that focuses on
current income and
capital appreciation.

The Companys invested assets are sufficiently liquid to meet commitments to
our Policyholders. At September 30, 2002, the Companys investment portfolio
consisting of cash, investment grade bonds, common stock and preferred stock,
totaled more than $1.0 billion or 83% of total assets. These resources provide
the liquidity the Company requires to meet known and unforeseen demands on its
funds.

The Company reviews the investment portfolio to evaluate positions that might
incur other-than-temporary declines in value. For all investment holdings, general economic
conditions and/or conditions specifically affecting the underlying issuer or
its industry are considered in evaluating impairment in value. In addition to
specific factors, the primary factors considered in the Companys review of
investment valuation are the length of time the market value is below cost and
the amount the market value is below cost.

For common equity securities where the decline in market value is more than 20%
below cost for a period exceeding six months, there is a strong indication of
other-than-temporary impairment. Under these circumstances the Company
considers market conditions, industry characteristics and the fundamental
operating results of the issuer before deciding whether to sell the investment
at a loss, to recognize an impairment charge to operations or to do neither.
For common equity securities that have declined more than 20% below cost for a
period exceeding twelve months, the position is presumed impaired and is either
sold or recognized as impaired in the Statements of Operations. There were
$184,763 of impairments recognized in the third quarter of 2002 related to
equity security investments.

For fixed maturity investments, the Company individually analyzes all positions
whose market values have declined more than 20% below cost. The Company
considers market conditions, industry
characteristics and the fundamental operating results of the issuer to
determine if the decline is due

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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

to changes in interest rates, changes relating to a decline in credit quality,
or other issues affecting the investment. Positions that have incurred market
price decline of over 20% for a period greater
than six months where the creditworthiness of the issuer or other factors
indicate a decline that is other-than-temporary are either sold or recognized
as impaired and reflected as a charge to the Companys operations. Of the
$8,273,272 third quarter 2002 impairments previously discussed in the
Analysis of Investment  related income section, $8,088,509 are related to
impairments of fixed maturity investments.

If the Companys policy for determining the recognition of impaired positions
were different, the Companys Statements of Financial Position and Results of
Operations could be significantly impacted. Management believes its investment
valuation philosophy and accounting practices result in appropriate and timely
measurement of value and recognition of impairment.

The Companys investments are subject to certain risks, including interest rate
price risk and credit risk. The Company monitors exposure to interest rate risk
through periodic reviews of asset and liability positions. Estimates of cash flows and the impact of interest rate fluctuations relating
to the investment portfolio are monitored regularly. The Companys portfolio
of marketable equity securities, which is carried on the Statements of
Financial Position at estimated fair value, has exposure to price risk, the
risk of potential loss in estimated fair value resulting from an adverse change
in prices. The Companys objective is to earn competitive relative returns by
investing in a diverse portfolio of high-quality, liquid securities.
Portfolio characteristics are analyzed regularly and market risk is actively
managed through a variety of techniques. Portfolio holdings are diversified
across industries and concentrations in any one company or industry are limited
by parameters established by Company management and the Board of Directors.

Reserve Liabilities

The Companys primary commitment is its obligation to meet the payment of
future policy benefits
under the terms of its life insurance and annuity contracts. To meet these
future obligations, the Company establishes life insurance reserves based upon
the type of policy, the age of the insured, and the number of years the policy
has been in force. The Company also establishes annuity and universal life
reserves based on the amount of Policyholder deposits (less applicable policy
charges) plus interest earned on those deposits. These life insurance and
annuity reserves are supported primarily by the Companys long-term,
fixed-income investments, as the underlying policy reserves are generally also
of a long-term nature.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity is a measure of the Companys ability to secure enough cash to meet
its contractual obligations and operating needs. Generally, insurance premiums
are collected prior to claims and benefit disbursements and these funds are
invested to provide necessary cash flows in future years. The Companys major
sources of cash are life insurance premiums and investment income. The net
positive cash flow is used to fund Company commitments and to build the
investment portfolio, thereby increasing future investment returns. Net cash
provided by operating activities for the nine months ended September 30, 2002
was $16,535,988 compared to $17,807,509 for the nine months ended September 30,
2001. The Companys liquidity position remains strong as invested
assets and cash and cash equivalents increased by more than $133 million during
the nine months of 2002 to $1.11 billion.

22



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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)

Annuity and universal life deposits, which do not appear as revenue on the
financial statements, are a source of funds. These deposits do not involve a
mortality or morbidity risk and are accounted for using
methods applicable to comparable interest-bearing obligations of other types
of financial institutions.
This method of accounting records deposits as a liability rather than as a
revenue. Annuity and universal life deposits were $45,177,923 in the third
quarter of 2002 and $18,019,868 in the third quarter of 2001. The increased
volatility in the equity markets has continued to help increase annuity sales
as well as stem the flow of annuity surrenders. Surrenders on annuities
decreased 8.2% for the quarter ended September 30, 2002, compared to the same
period last year.

The Companys current commitments for expenditures as of September 30, 2002 are
primarily for policy death benefits, policy surrenders and withdrawals, general
operating expenses, federal income taxes, and dividends to Shareholders. In
addition, the Company has outstanding commitments to invest up to $5.4 million
in its real estate limited partnerships at September 30, 2002. All Company
commitments are met by cash flows from policy revenue, annuity and universal
life deposits and investment income. Management believes its cash flow from
operations and its liquid assets and marketable securities will also enable the
Company to meet any foreseeable cash requirements. As
an added measure of liquidity, the Company has arranged for a $10 million line
of credit with a commercial bank. At September 30, 2002 and 2001, there were
no borrowings on this line of credit.

FACTORS THAT MAY AFFECT FUTURE RESULTS

Products with Interest Rate Guarantees

Several of the Companys annuity and universal life products offer guaranteed
interest rates to Policyholders. In response to the current interest rate
environment, the Company has recently reduced the credited interest rates to
historically low levels. Certain products are now within 25 basis points of
the minimum interest rates guaranteed under these policies. If the interest
rates on fixed income securities continue to drop, the interest rates available
in the marketplace may be insufficient to produce our current target profit
margins or in extreme situations, could produce negative profit margins on
annuity and universal life deposits. This would affect new policy issuance and
new money received on existing contracts as follows:

New policy sales could be suspended on policies with guaranteed interest rates
above current market rates until new policy forms with lower guaranteed rates
could be filed and approved by the various states in which the Company
operates. The Company is developing new universal life and deferred annuity
products with lower interest rate guarantees.

We have some limited ability in the Companys current universal life and
annuity policy contracts to restrict new deposits on existing contracts. New
deposits are limited under the terms of the Companys universal life and
annuity contracts as follows:



| |  |  | Universal life products provide for planned premium amounts.
Additional unplanned premium payments may be made at any time during the
insureds life and before the end of the payment period. The amounts of
such payments must be acceptable to the Company and be within IRS
guidelines.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Flexible premium deferred annuity contracts allow the Company to
limit deposits to a maximum of $25,000 per year.                                                                                                                                                                          

23



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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Additional reserves on universal life and annuity policies would be required
for new deposits or account balances where the guaranteed interest rate on the
policy exceeded the rate the Company could earn on its investments. The
current coupon yield on fixed maturities matched against our universal life and
annuity products at September 30, 2002 is 7.09%.

Interest Rate Environment

The Companys deposit-type products compete with a wide variety of investment
options. Among other factors affecting the investment decisions of
Policyholders and potential Policyholders are general investment market
conditions, particularly the market interest rate environment. Changes
in interest rates affect pricing and the relative attractiveness of
interest-sensitive investment
options, which bears directly on the ability of the Company to attract new
Policyholders and retain existing holders of annuity, universal life and
certain permanent life insurance products.

Terrorist Actions

The Company is exposed to direct losses arising from possible future terrorist
actions. Additionally, current and future proposed federal measures might
affect the way the life insurance industry handles losses from potential future
terrorist actions. These measures may include the establishment of a federal
reinsurance program for losses from terrorist actions and possible changes to
the tax laws governing the taxation of insurance companies.

The Companys substantial portfolio of equity and fixed income investments
could also be affected by
potential future terrorist actions which may affect the level of economic
activity as well as investor confidence in the U.S. securities markets.




ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Companys exposure to market risk is primarily related to fluctuations in
prices and interest rates. Quantitative and qualitative disclosures about
market risk resulting from changes in prices and interest rates are included in
Item 7A. in the Companys 2001 Annual Report on Form 10-K. The risks
associated with interest rate guarantees on our universal life and annuity
products are discussed in Factors That May Affect Future Results on page 23.
The information contained in the Investments section of Managements Discussion
and Analysis of Financial Condition and Results of Operations is incorporated
herein by reference.

The Company also has exposure to credit risk through its portfolios of fixed
maturity securities, mortgage loans and to a lesser extent short-term
investments. This risk is defined as the potential loss in market value
resulting from adverse changes in the borrowers ability to repay the debt.
The Companys objective is to earn competitive returns by investing in a
diversified portfolio of securities. The Company manages this risk by
performing up front underwriting analysis and regular reviews by its investment
staff. The fixed maturity investments are also maintained between minimum and
maximum percentages of invested assets.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of
1995:Certain forward-looking statements contained herein involve risks and
uncertainties. These statements include certain discussions relating to
underwriting, premium and investment income volume, business strategies,
profitability and business relationships and the Companys other business
activities during 2002 and beyond. In some cases, you can identify
forward-looking statements by terms such as may, will, should, could,
would, expect, plan, intend, anticipate, believe, estimate,
project, predict, potential and similar expressions. These
forward-looking statements reflect the Companys current views about future
events, are based on assumptions and are subject to known and unknown risks and
uncertainties that may cause results to differ materially from those
anticipated in those statements. Many of the factors that will determine
future events or achievements are beyond our ability to control or predict.

24



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##### Table of Contents






ITEM 4. CONTROLS AND PROCEDURES

Within 90 days prior to the date of filing of this report, the Company carried
out an evaluation, under the supervision and with the participation of the
Companys management, including its Chief Executive Officer and its Chief
Financial Officer, of the design and operation of the Companys disclosure
controls and procedures. Based on this evaluation, the Companys Chief
Executive Officer and Chief Financial Officer concluded that the Companys
disclosure controls and procedures are effective for gathering, analyzing and
disclosing the information the Company is required to disclose in the reports
it files under the Securities Exchange Act of 1934, within the time periods
specified in the SECs rules and forms. There have been no significant changes
in the Companys internal controls or in other factors that could significantly
affect internal controls subsequent to the date of this evaluation.

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##### Table of Contents






PART II. OTHER INFORMATION




ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

Exhibits

|        |  |                                                                                                                       
|------- |  | ----------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                       
|Number  |  | Description of Exhibit                                                                                                
|        |  |                                                                                                                       
|3(ii)   |  | Amended and Restated By-laws of Registrant dated September 9, 2002                                                    
|       
|       
|       
|       
|99.1    |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the SarbanesOxley Act of 2002
|       
|       
|       
|       
|99.2    |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the SarbanesOxley Act of 2002

Reports on Form 8-K

On July 24, 2002, the Company filed a report on Form 8-K, reporting under Item
7 that the Companys Board of Directors held a special meeting on July 23,
2002. At the meeting, the Board voted to increase the number of directors from
12 to 13; elected Jeffrey A. Ludrof, the Companys President and Chief
Executive Officer, to the Board; and accepted the resignation of Stephen A.
Milne, the retired President and Chief Executive Officer of the Company.

On September 13, 2002, the Company filed a report on Form 8-K, reporting under
Item 4 that the Companys Audit Committee selected Ernst & Young, LLP to be the
Companys independent auditors for the fiscal year ending December 31, 2003.
Malin, Bergquist & Company, LLP, the Companys current independent auditors
will continue on as the Companys independent auditors for the fiscal year
ending December 31, 2002. As mentioned in the Form 8-K, there were no
disagreements with Malin, Bergquist & Company on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure during the Companys two most recent fiscal years and throughout the
date of the Form 8-K filing.

26



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##### Table of Contents






SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|                       |  |                                                                       
|---------------------- |  | ----------------------------------------------------------------------
|                       |  | Erie Family Life Insurance Company
(Registrant)                       
|                      
|Date: November 6, 2002 |  | /s/ Jeffrey A. Ludrof(Jeffrey A. Ludrof, President & CEO)             
|                      
|                       |  | /s/ Philip A. Garcia(Philip A. Garcia, Executive Vice President & CFO)

27



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##### Table of Contents






CERTIFICATIONS

I, Jeffrey A. Ludrof, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Erie Family
Life Insurance Company;                                                                                                                                                                                                                                     
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the
periods presented in this quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and have:                                                                                                        



| | a) |  | designed such disclosure controls and procedures to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the
Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrants auditors and
the audit committee of registrants board of directors:
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or
operation of internal controls which could adversely affect the
registrants ability to record, process, summarize and report
financial data and have identified for the registrants
auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves
management or other employees who have a significant role in
the registrants internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in
this quarterly report whether there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: November 6, 2002



| | /s/ Jeffrey A. Ludrof

Jeffrey A. Ludrof, President & CEO
| | ---------------------------------------------------------

28



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##### Table of Contents



CERTIFICATIONS

I, Philip A. Garcia, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Erie Family
Life Insurance Company;                                                                                                                                                                                                                                     
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the
periods presented in this quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and have:                                                                                                        



| | a) |  | designed such disclosure controls and procedures to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the
Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrants auditors and
the audit committee of registrants board of directors:
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or
operation of internal controls which could adversely affect the
registrants ability to record, process, summarize and report
financial data and have identified for the registrants
auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves
management or other employees who have a significant role in
the registrants internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in
this quarterly report whether there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: November 6, 2002



| | /s/ Philip A. Garcia

Philip A. Garcia, Executive Vice President & CFO
| | ----------------------------------------------------------------------

29