##### 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 June 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

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 July 15, 2002.

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TABLE OF CONTENTS



|           |                                                                                               |  |  |  |  |  |  | 
|---------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|           | PART I. FINANCIAL INFORMATION                                                                
|           | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|           | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|           | PART II. OTHER INFORMATION                                                                   
|           | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                     
|SIGNATURES



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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  June 30, 2002 and December 31, 2001                
|                                         
|                                          | Statements of Operations  Three and six months ended June 30, 2002 and 2001          
|                                         
|                                          | Statements of Comprehensive Income  Three and six months ended June 30, 2002 and 2001
|                                         
|                                          | Statements of Cash Flows  Six months ended June 30, 2002 and 2001                    
|                                         
|                                          | Notes to Financial Statements  June 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                           

PART II. OTHER INFORMATION

|                                          |  | 
|----------------------------------------- |  | 
|Item 6.  Exhibits and Reports on Form 8-K
|                                         
|SIGNATURES                                |  | 

2



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##### Table of Contents






PART I. FINANCIAL INFORMATION

ERIE FAMILY LIFE INSURANCE COMPANY
STATEMENTS OF FINANCIAL POSITION

|                 |                                                                                        |                       |   |                        |           |              |   |         |           | 
|---------------- | -------------------------------------------------------------------------------------- | --------------------- | - | ---------------------- | --------- | ------------ | - | ------- | --------- | 
|                 |                                                                                        |                       |   | (Dollars in thousands)
|                 |                                                                                        |                       |   | June 30,               |           | December 31,
|                 |                                                                                        |                       |   | 2002                   |           | 2001        
|                 |                                                                                        |                       |   |                        |           |             
|                 |                                                                                        |                       |   | (Unaudited)            |           |              |   |        
|ASSETS           |                                                                                        |                       |   |                        |           |              |   |        
|Invested Assets: |                                                                                        |                       |   |                        |           |              |   |        
|                 | Fixed Maturities at fair value (amortized cost
of $849,614 and $718,500, respectively) |                       | $ | 863,478                |           |              | $ | 730,270 |          
|                 | Equity Securities at fair value
(cost of $92,183 and $86,758, respectively)            |                       |   | 101,561                |           |              |   | 103,675 |          
|                 | Limited Partnerships
(cost of $16,879 and $18,691, respectively)                       |                       |   | 16,651                 |           |              |   | 18,249  |          
|                 | Real Estate                                                                            |                       |   | 1,251                  |           |              |   | 1,293   |          
|                 | Policy Loans                                                                           |                       |   | 9,306                  |           |              |   | 8,879   |          
|                 | Real Estate Mortgage Loans                                                             |                       |   | 7,268                  |           |              |   | 7,357   |          
|                 |                                                                                        |                       |   |                        |           |              |   |         |          
|                 |                                                                                        | Total Invested Assets |   | $                      | 999,515   |              |   | $       | 869,723   | 
|                 | Cash and Cash Equivalents                                                              |                       |   | 49,841                 |           |              |   | 110,503 |          
|                 | Premiums Receivable from Policyholders                                                 |                       |   | 5,516                  |           |              |   | 5,089   |          
|                 | Reinsurance Recoverable                                                                |                       |   | 365                    |           |              |   | 1,775   |          
|                 | Other Receivables                                                                      |                       |   | 736                    |           |              |   | 374     |          
|                 | Accrued Investment Income                                                              |                       |   | 12,575                 |           |              |   | 11,520  |          
|                 | Deferred Policy Acquisition Costs                                                      |                       |   | 97,886                 |           |              |   | 92,015  |          
|                 | Reserve Credit for Reinsurance Ceded                                                   |                       |   | 12,877                 |           |              |   | 12,120  |          
|                 | Prepaid Federal Income Taxes                                                           |                       |   | 0                      |           |              |   | 8,508   |          
|                 | Other Assets                                                                           |                       |   | 13,017                 |           |              |   | 8,856   |          
|                 |                                                                                        |                       |   |                        |           |              |   |         |          
|                 |                                                                                        | Total Assets          |   | $                      | 1,192,328 |              |   | $       | 1,120,483 | 
|                 |                                                                                        |                       |   |                        |           |              |   |         |          

See notes to financial statements.

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ERIE FAMILY LIFE INSURANCE COMPANY
STATEMENTS OF FINANCIAL POSITION

|                                     |                                                                                                               |                             |                              |                                            |         |                        |           |              |         |     |           | 
|------------------------------------ | ------------------------------------------------------------------------------------------------------------- | --------------------------- | ---------------------------- | ------------------------------------------ | ------- | ---------------------- | --------- | ------------ | ------- | --- | --------- | 
|                                     |                                                                                                               |                             |                              |                                            |         | (Dollars in thousands)
|                                     |                                                                                                               |                             |                              |                                            |         | June 30,               |           | December 31,
|                                     |                                                                                                               |                             |                              |                                            |         | 2002                   |           | 2001        
|                                     |                                                                                                               |                             |                              |                                            |         |                        |           |             
|                                     |                                                                                                               |                             |                              |                                            |         | (Unaudited)            |           |              |         |    
|LIABILITIES AND SHAREHOLDERS EQUITY |                                                                                                               |                             |                              |                                            |         |                        |           |             
|Liabilities:                         |                                                                                                               |                             |                              |                                            |         |                        |           |             
|                                     | Policy Liabilities and Accruals:                                                                              |                             |                              |                                            |         |                        |           |              |        
|                                     |                                                                                                               | Future Life Policy Benefits |                              | $                                          | 91,135  |                        |           | $            | 85,673  |    
|                                     |                                                                                                               | Policy and Contract Claims  |                              |                                            | 2,081   |                        |           |              | 1,950   |    
|                                     |                                                                                                               | Annuity Deposits            |                              |                                            | 696,240 |                        |           |              | 636,850 |    
|                                     |                                                                                                               | Universal Life Deposits     |                              |                                            | 128,656 |                        |           |              | 121,560 |    
|                                     |                                                                                                               | Supplementary Contracts Not |                              |                                            |         |                        |           |              |         |    
|                                     |                                                                                                               |                             | Including Life Contingencies |                                            |         | 640                    |           |              |         | 605 |          
|                                     | Other Policyholder Funds                                                                                      |                             |                              | 10,254                                     |         |                        |           | 7,974        |        
|                                     | Federal Income Taxes Payable                                                                                  |                             |                              | 30                                         |         |                        |           | 0            |        
|                                     | Deferred Income Taxes                                                                                         |                             |                              | 28,046                                     |         |                        |           | 31,807       |        
|                                     | Reinsurance Premium Due                                                                                       |                             |                              | 511                                        |         |                        |           | 1,741        |        
|                                     | Accounts Payable and Accrued Expenses                                                                         |                             |                              | 11,725                                     |         |                        |           | 7,412        |        
|                                     | Note Payable to Erie Indemnity Company                                                                        |                             |                              | 15,000                                     |         |                        |           | 15,000       |        
|                                     | Due to Affiliates                                                                                             |                             |                              | 2,244                                      |         |                        |           | 2,309        |        
|                                     | Dividends Payable                                                                                             |                             |                              | 3,969                                      |         |                        |           | 1,843        |        
|                                     |                                                                                                               |                             |                              |                                            |         |                        |           |              |         |    
|                                     |                                                                                                               |                             |                              | Total Liabilities                          |         | $                      | 990,531   |              |         | $   | 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                                                                        |                             |                              | 14,959                                     |         |                        |           | 18,359       |        
|                                     | Retained Earnings                                                                                             |                             |                              | 182,428                                    |         |                        |           | 182,990      |        
|                                     |                                                                                                               |                             |                              |                                            |         |                        |           |              |         |    
|                                     |                                                                                                               |                             |                              | Total Shareholders Equity                 |         | $                      | 201,797   |              |         | $   | 205,759   | 
|                                     |                                                                                                               |                             |                              |                                            |         |                        |           |              |         |    
|                                     |                                                                                                               |                             |                              | Total Liabilities and Shareholders Equity |         | $                      | 1,192,328 |              |         | $   | 1,120,483 | 
|                                     |                                                                                                               |                             |                              |                                            |         |                        |           |              |         |    

See notes to financial statements.

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ERIE FAMILY LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS (Unaudited)


|                                            |                                                   |                                        |       |                                               |        |                  |       |        |        |      |       |        |        |   |        |        |        | 
|------------------------------------------- | ------------------------------------------------- | -------------------------------------- | ----- | --------------------------------------------- | ------ | ---------------- | ----- | ------ | ------ | ---- | ----- | ------ | ------ | - | ------ | ------ | ------ | 
|                                            |                                                   |                                        |       | (Dollars in thousands, except per share data)
|                                            |                                                   |                                        |       | Three Months Ended                            |        | Six Months Ended
|                                            |                                                   |                                        |       | June 30                                       |        | June 30         
|                                            |                                                   |                                        |       |                                               |        |                 
|                                            |                                                   |                                        |       | 2002                                          |        | 2001             |       | 2002   |        | 2001
|Revenues:                                   |                                                   |                                        |       |                                               |        |                  |       |        |        |      |       |        |        |   |        |       
|                                            | Policy Revenue:                                   |                                        |       |                                               |        |                  |       |        |        |      |       |        |        |   |        |        |       
|                                            | Life Premiums                                     |                                        | $     | 12,772                                        |        |                  | $     | 11,213 |        |      | $     | 24,351 |        |   | $      | 21,528 |       
|                                            | Group and Other Premiums                          |                                        |       | 746                                           |        |                  |       | 648    |        |      |       | 1,497  |        |   |        | 1,329  |       
|                                            |                                                   |                                        |       |                                               |        |                  |       |        |        |      |       |        |        |   |        |        |       
|                                            |                                                   | Total Policy Revenue                   |       | $                                             | 13,518 |                  |       | $      | 11,861 |      |       | $      | 25,848 |   |        | $      | 22,857 | 
|                                            | Investment Income                                 |                                        |       | 16,998                                        |        |                  |       | 15,865 |        |      |       | 31,508 |        |   |        | 30,574 |       
|                                            | Equity in Earnings of Limited Partnerships        |                                        |       | 2,513                                         |        |                  |       | 1,767  |        |      |       | 3,582  |        |   |        | 802    |       
|                                            | Net Realized Losses on Investments                |                                        |       | (7,698                                        | )      |                  |       | (1,067 | )      |      |       | (5,644 | )      |   |        | (473   | )     
|                                            | Other Income                                      |                                        |       | 177                                           |        |                  |       | 178    |        |      |       | 420    |        |   |        | 370    |       
|                                            |                                                   |                                        |       |                                               |        |                  |       |        |        |      |       |        |        |   |        |        |       
|                                            |                                                   | Total Revenues                         |       | $                                             | 25,508 |                  |       | $      | 28,604 |      |       | $      | 55,714 |   |        | $      | 54,130 | 
|                                            |                                                   |                                        |       |                                               |        |                  |       |        |        |      |       |        |        |   |        |        |       
|Benefits and Expenses:                      |                                                   |                                        |       |                                               |        |                  |       |        |        |      |       |        |        |   |        |       
|                                            | Death Benefits                                    |                                        | $     | 3,928                                         |        |                  | $     | 1,956  |        |      | $     | 7,428  |        |   | $      | 5,284  |       
|                                            | Interest on Annuity Deposits                      |                                        |       | 9,416                                         |        |                  |       | 8,789  |        |      |       | 18,958 |        |   |        | 17,146 |       
|                                            | Interest on Universal Life Deposits               |                                        |       | 1,836                                         |        |                  |       | 1,677  |        |      |       | 3,598  |        |   |        | 3,332  |       
|                                            | Surrender and Other Benefits                      |                                        |       | 298                                           |        |                  |       | 330    |        |      |       | 565    |        |   |        | 467    |       
|                                            | Increase in Future Life Policy Benefits           |                                        |       | 2,141                                         |        |                  |       | 1,449  |        |      |       | 4,706  |        |   |        | 3,137  |       
|                                            | Amortization of Deferred Policy Acquisition Costs |                                        |       | 2,410                                         |        |                  |       | 2,192  |        |      |       | 4,021  |        |   |        | 3,838  |       
|                                            | Commissions                                       |                                        |       | 518                                           |        |                  |       | 318    |        |      |       | 1,463  |        |   |        | 911    |       
|                                            | General Expenses                                  |                                        |       | 2,809                                         |        |                  |       | 2,724  |        |      |       | 5,504  |        |   |        | 5,067  |       
|                                            | Taxes, Licenses and Fees                          |                                        |       | 614                                           |        |                  |       | 527    |        |      |       | 1,227  |        |   |        | 1,045  |       
|                                            |                                                   |                                        |       |                                               |        |                  |       |        |        |      |       |        |        |   |        |        |       
|                                            |                                                   | Total Benefits and Expenses            |       | $                                             | 23,970 |                  |       | $      | 19,962 |      |       | $      | 47,470 |   |        | $      | 40,227 | 
|                                            |                                                   |                                        |       |                                               |        |                  |       |        |        |      |       |        |        |   |        |        |       
|Income Before Income Taxes                  |                                                   | $                                      | 1,538 |                                               |        | $                | 8,642 |        |        | $    | 8,244 |        |        | $ | 13,903 |       
|Provision for Federal Income Tax (Benefit): |                                                   |                                        |       |                                               |        |                  |       |        |        |      |       |        |        |   |        |       
|                                            | Current                                           |                                        |       | 2,936                                         |        |                  |       | 2,627  |        |      |       | 4,782  |        |   |        | 4,533  |       
|                                            | Deferred                                          |                                        |       | (2,404                                        | )      |                  |       | 358    |        |      |       | (1,930 | )      |   |        | 272    |       
|                                            |                                                   |                                        |       |                                               |        |                  |       |        |        |      |       |        |        |   |        |        |       
|                                            |                                                   | Total Provision for Federal Income Tax |       |                                               | 532    |                  |       |        | 2,985  |      |       |        | 2,852  |   |        |        | 4,805  | 
|                                            |                                                   |                                        |       |                                               |        |                  |       |        |        |      |       |        |        |   |        |        |       
|Net Income                                  |                                                   | $                                      | 1,006 |                                               |        | $                | 5,657 |        |        | $    | 5,392 |        |        | $ | 9,098  |       
|                                            |                                                   |                                        |       |                                               |        |                  |       |        |        |      |       |        |        |   |        |        |       
|Net Income Per Share                        |                                                   | $                                      | 0.11  |                                               |        | $                | 0.60  |        |        | $    | 0.57  |        |        | $ | 0.96   |       
|                                            |                                                   |                                        |       |                                               |        |                  |       |        |        |      |       |        |        |   |        |        |       
|Dividends Declared Per Share                |                                                   | $                                      | 0.42  |                                               |        | $                | 0.39  |        |        | $    | 0.63  |        |        | $ | 0.585  |       
|                                            |                                                   |                                        |       |                                               |        |                  |       |        |        |      |       |        |        |   |        |        |       

See notes to financial statements.

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ERIE FAMILY LIFE INSURANCE
COMPANYSTATEMENTS OF COMPREHENSIVE INCOME (Unaudited)


|                                                                  |                                                         |                                                             |        |                        |        |                  |       |       |       |      |        |         |        |   |        |        |        | 
|----------------------------------------------------------------- | ------------------------------------------------------- | ----------------------------------------------------------- | ------ | ---------------------- | ------ | ---------------- | ----- | ----- | ----- | ---- | ------ | ------- | ------ | - | ------ | ------ | ------ | 
|                                                                  |                                                         |                                                             |        | (Amounts in thousands)
|                                                                  |                                                         |                                                             |        | Three Months Ended     |        | Six Months Ended
|                                                                  |                                                         |                                                             |        | June 30                |        | June 30         
|                                                                  |                                                         |                                                             |        |                        |        |                 
|                                                                  |                                                         |                                                             |        | 2002                   |        | 2001             |       | 2002  |       | 2001
|Net Income                                                        |                                                         | $                                                           | 1,006  |                        |        | $                | 5,657 |       |       | $    | 5,392  |         |        | $ | 9,098  |       
|                                                                  |                                                         |                                                             |        |                        |        |                  |       |       |       |      |        |         |        |   |        |       
|Unrealized Gains (Losses) on Securities:                          |                                                         |                                                             |        |                        |        |                  |       |       |       |      |        |         |        |   |        |       
|                                                                  | Unrealized Holding Gains (Losses) Arising
During Period |                                                             |        | 3,007                  |        |                  |       | 1,452 |       |      |        | (10,875 | )      |   |        | 10,808 |       
|                                                                  | Plus: Losses Included in Net Income                     |                                                             |        | 7,698                  |        |                  |       | 1,067 |       |      |        | 5,644   |        |   |        | 473    |       
|                                                                  |                                                         |                                                             |        |                        |        |                  |       |       |       |      |        |         |        |   |        |       
|                                                                  |                                                         | Net Unrealized Holding Gains (Losses)
Arising During Period |        | $                      | 10,705 |                  |       | $     | 2,519 |      |        | $       | (5,231 | ) |        | $      | 11,281 | 
|                                                                  |                                                         |                                                             |        |                        |        |                  |       |       |       |      |        |         |        |   |        |       
|Income Tax (Expense) Benefit Related to
Unrealized Gains (Losses) |                                                         |                                                             | (3,747 | )                      |        |                  | (881  | )     |       |      | 1,831  |         |        |   | (3,948 | )     
|                                                                  |                                                         |                                                             |        |                        |        |                  |       |       |       |      |        |         |        |   |        |       
|Unrealized Appreciation (Deprecation) of
Investments, Net of Tax  |                                                         | $                                                           | 6,958  |                        |        | $                | 1,638 |       |       | $    | (3,400 | )       |        | $ | 7,333  |       
|                                                                  |                                                         |                                                             |        |                        |        |                  |       |       |       |      |        |         |        |   |        |       
|Comprehensive Income                                              |                                                         | $                                                           | 7,964  |                        |        | $                | 7,295 |       |       | $    | 1,992  |         |        | $ | 16,431 |       
|                                                                  |                                                         |                                                             |        |                        |        |                  |       |       |       |      |        |         |        |   |        |       

See notes to financial statements.

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ERIE FAMILY LIFE INSURANCE
COMPANYSTATEMENTS OF CASH FLOWS (Unaudited)

|                                                                                  |                                      |                                                          |                                           |          |                        |          |                  |         |       |        |  
|--------------------------------------------------------------------------------- | ------------------------------------ | -------------------------------------------------------- | ----------------------------------------- | -------- | ---------------------- | -------- | ---------------- | ------- | ----- | ------ | -
|                                                                                  |                                      |                                                          |                                           |          | (Dollars in thousands)
|                                                                                  |                                      |                                                          |                                           |          | Six Months Ended       |          | Six Months Ended
|                                                                                  |                                      |                                                          |                                           |          | June 30, 2002          |          | June 30, 2001   
|                                                                                  |                                      |                                                          |                                           |          |                        |          |                 
|Cash flows from operating activities:                                             |                                      |                                                          |                                           |          |                        |          |                  |        
|Net income                                                                        |                                      | $                                                        | 5,392                                     |          |                        | $        | 9,098            |        
|Adjustments to reconcile net income to net cash
provided by operating activities: |                                      |                                                          |                                           |          |                        |          |                  |        
|                                                                                  |                                      | Net amortization of bond and mortgage
(discount) premium |                                           |          | (138                   | )        |                  |         | 94    |       
|                                                                                  |                                      | Amortization of deferred policy acquisition costs        |                                           |          | 4,021                  |          |                  |         | 3,838 |       
|                                                                                  |                                      | Real estate depreciation                                 |                                           |          | 41                     |          |                  |         | 41    |       
|                                                                                  |                                      | Software amortization                                    |                                           |          | 125                    |          |                  |         | 125   |       
|                                                                                  |                                      | Deferred federal income tax (benefit) expense            |                                           |          | (1,930                 | )        |                  |         | 272   |       
|                                                                                  |                                      | Realized losses on investments                           |                                           |          | 5,644                  |          |                  |         | 473   |       
|                                                                                  |                                      | Equity in earnings of limited partnerships               |                                           |          | (3,582                 | )        |                  |         | (802  | )     
|Increase in premiums receivable                                                   |                                      |                                                          | (426                                      | )        |                        |          | (146             | )      
|Increase in other receivables                                                     |                                      |                                                          | (362                                      | )        |                        |          | (82              | )      
|Increase in accrued investment income                                             |                                      |                                                          | (1,056                                    | )        |                        |          | (315             | )      
|Increase in policy acquisition costs deferred                                     |                                      |                                                          | (9,892                                    | )        |                        |          | (6,501           | )      
|Increase in other assets                                                          |                                      |                                                          | (4,286                                    | )        |                        |          | (547             | )      
|Decrease (increase) in reinsurance recoverables
and reserve credits               |                                      |                                                          | 653                                       |          |                        |          | (772             | )      
|Decrease (increase) in prepaid federal income taxes                               |                                      |                                                          | 8,538                                     |          |                        |          | (115             | )      
|Increase in future policy benefits and claims                                     |                                      |                                                          | 5,593                                     |          |                        |          | 3,265            |        
|Increase in other Policyholder funds                                              |                                      |                                                          | 2,281                                     |          |                        |          | 559              |        
|Decrease in reinsurance premium due                                               |                                      |                                                          | (1,231                                    | )        |                        |          | (179             | )      
|Increase (decrease) in accounts payable and due to affiliates                     |                                      |                                                          | 4,248                                     |          |                        |          | (502             | )      
|                                                                                  |                                      |                                                          |                                           |          |                        |          |                  |        
|                                                                                  |                                      |                                                          | Net cash provided by operating activities |          | $                      | 13,633   |                  |         | $     | 7,804  |  
|                                                                                  |                                      |                                                          |                                           |          |                        |          |                  |        
|Cash flows from investing activities:                                             |                                      |                                                          |                                           |          |                        |          |                  |        
|Purchase of investments:                                                          |                                      |                                                          |                                           |          |                        |          |                  |        
|                                                                                  | Fixed maturities                     |                                                          | $                                         | (275,561 | )                      |          | $                | (87,905 | )    
|                                                                                  | Equity securities                    |                                                          |                                           | (20,817  | )                      |          |                  | (9,531  | )    
|                                                                                  | Limited partnerships                 |                                                          |                                           | (5,499   | )                      |          |                  | (2,608  | )    
|Sales/maturities of investments:                                                  |                                      |                                                          |                                           |          |                        |          |                  |        
|                                                                                  | Sales of fixed maturities            |                                                          |                                           | 72,764   |                        |          |                  | 52,436  |      
|                                                                                  | Calls/maturities of fixed maturities |                                                          |                                           | 66,108   |                        |          |                  | 32,086  |      
|                                                                                  | Equity securities                    |                                                          |                                           | 16,712   |                        |          |                  | 8,643   |      
|                                                                                  | Limited partnerships                 |                                                          |                                           | 9,643    |                        |          |                  | 853     |      
|Principal payments received on mortgage loans                                     |                                      |                                                          | 90                                        |          |                        |          | 853              |        
|Loans made to Policyholders                                                       |                                      |                                                          | (991                                      | )        |                        |          | (1,095           | )      
|Payments received on policy loans                                                 |                                      |                                                          | 562                                       |          |                        |          | 491              |        
|                                                                                  |                                      |                                                          |                                           |          |                        |          |                  |        
|                                                                                  |                                      |                                                          | Net cash used in investing activities     |          | $                      | (136,989 | )                |         | $     | (5,777 | )
|                                                                                  |                                      |                                                          |                                           |          |                        |          |                  |        

See notes to financial statements.

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ERIE FAMILY LIFE INSURANCE
COMPANYSTATEMENTS OF CASH FLOWS (Unaudited) (Continued)

|                                                              |              |                                           |         |                        |        |                  |         |       |        | 
|------------------------------------------------------------- | ------------ | ----------------------------------------- | ------- | ---------------------- | ------ | ---------------- | ------- | ----- | ------ | 
|                                                              |              |                                           |         | (Dollars in thousands)
|                                                              |              |                                           |         | Six Months Ended       |        | Six Months Ended
|                                                              |              |                                           |         | June 30, 2002          |        | June 30, 2001   
|                                                              |              |                                           |         |                        |        |                 
|Cash flows from financing activities:                         |              |                                           |         |                        |        |                  |         |      
|Annuity and supplementary
contract deposits and interest      |              | $                                         | 81,704  |                        |        | $                | 46,977  |      
|Annuity and supplementary
contract surrenders and withdrawals |              |                                           | (22,279 | )                      |        |                  | (26,971 | )    
|Universal life deposits and interest                          |              |                                           | 9,422   |                        |        |                  | 9,480   |      
|Universal life surrenders                                     |              |                                           | (2,326  | )                      |        |                  | (2,365  | )    
|Dividends paid to Shareholders                                |              |                                           | (3,827  | )                      |        |                  | (3,544  | )    
|                                                              |              |                                           |         |                        |        |                  |         |      
|                                                              |              | Net cash provided by financing activities |         | $                      | 62,694 |                  |         | $     | 23,577 | 
|                                                              |              |                                           |         |                        |        |                  |         |      
|Net (decrease) increase in cash and cash equivalents          |              |                                           | (60,662 | )                      |        |                  | 25,604  |      
|Cash and cash equivalents at beginning of year                |              |                                           | 110,503 |                        |        |                  | 17,955  |      
|                                                              |              |                                           |         |                        |        |                  |         |      
|Cash and cash equivalents at end of quarter                   |              | $                                         | 49,841  |                        |        | $                | 43,559  |      
|                                                              |              |                                           |         |                        |        |                  |         |      
|Supplemental disclosures of cash flow information:            |              |                                           |         |                        |        |                  |         |      
|Cash paid (refunded) during the year for:                     |              |                                           |         |                        |        |                  |         |      
|                                                              | Interest     |                                           | $       | 588                    |        |                  | $       | 588   |       
|                                                              | Income taxes |                                           |         | (3,755                 | )      |                  |         | 4,648 |       

See notes to financial statements.

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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 six-month period
ended June 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

Management considers all fixed maturities and marketable equity securities
available-for-sale. Marketable equity securities consist primarily of
common and non-redeemable preferred stock while fixed maturities consist of
bonds and notes. 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
|                  |                                            |                        |   |           |         |            |   |            |        |           
|June 30, 2002     |                                            |                        |   |           |         |            |   |            |        |            |   |       |        |  |   |        
|Fixed Maturities: |                                            |                        |   |           |         |            |   |            |        |            |   |       |        |  |   |        
|Bonds:            |                                            |                        |   |           |         |            |   |            |        |            |   |       |        |  |   |        
|                  | U.S. Treasuries and Government
Agencies    |                        | $ | 48,222    |         |            | $ | 1,149      |        |            | $ | 6     |        |  | $ | 49,365  |        
|                  | Public Utilities                           |                        |   | 82,457    |         |            |   | 1,884      |        |            |   | 853   |        |  |   | 83,488  |        
|                  | U.S. Banks, Trusts and Insurance
Companies |                        |   | 173,138   |         |            |   | 6,672      |        |            |   | 456   |        |  |   | 179,354 |        
|                  | U.S. Industrial and Miscellaneous          |                        |   | 468,914   |         |            |   | 13,006     |        |            |   | 7,625 |        |  |   | 474,295 |        
|                  | Foreign                                    |                        |   | 76,883    |         |            |   | 2,094      |        |            |   | 2,001 |        |  |   | 76,976  |        
|                  |                                            |                        |   |           |         |            |   |            |        |            |   |       |        |  |   |         |        
|                  |                                            | Total Fixed Maturities |   | $         | 849,614 |            |   | $          | 24,805 |            |   | $     | 10,941 |  |   | $       | 863,478 | 
|                  |                                            |                        |   |           |         |            |   |            |        |            |   |       |        |  |   |         |        

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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 |                         | $                                   | 982     |           |         | $          | 0      |            |        | $          | 52    |       |        | $ | 930     |        
|                                | U.S. Industrial and Miscellaneous          |                         |                                     | 24,126  |           |         |            | 9,641  |            |        |            | 1,315 |       |        |   | 32,452  |        
|                                | Public Utilities                           |                         |                                     | 416     |           |         |            | 0      |            |        |            | 178   |       |        |   | 238     |        
|                                | Foreign                                    |                         |                                     | 1,257   |           |         |            | 340    |            |        |            | 571   |       |        |   | 1,026   |        
|Non-redeemable Preferred Stock: |                                            |                         |                                     |         |           |         |            |        |            |        |            |       |       |        |   |        
|                                | U.S. Banks, Trusts and Insurance
Companies |                         |                                     | 7,410   |           |         |            | 232    |            |        |            | 0     |       |        |   | 7,642   |        
|                                | U.S. Industrial and Miscellaneous          |                         |                                     | 15,429  |           |         |            | 760    |            |        |            | 0     |       |        |   | 16,189  |        
|                                | Foreign                                    |                         |                                     | 42,563  |           |         |            | 1,438  |            |        |            | 917   |       |        |   | 43,084  |        
|                                |                                            |                         |                                     |         |           |         |            |        |            |        |            |       |       |        |   |         |        
|                                |                                            | Total Equity Securities |                                     | $       | 92,183    |         |            | $      | 12,411     |        |            | $     | 3,033 |        |   | $       | 101,561 |        
|                                |                                            |                         |                                     |         |           |         |            |        |            |        |            |       |       |        |   |         |        
|                                |                                            |                         | Total Available-for-Sale
Securities |         | $         | 941,797 |            |        | $          | 37,216 |            |       | $     | 13,974 |   |         | $       | 965,039 | 
|                                |                                            |                         |                                     |         |           |         |            |        |            |        |            |       |       |        |   |         |        
|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
COMPANYNOTES 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. Such write-downs 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 gains on investments as reported on the
Statements of Operations are included below. The securities written down
during 2002 were in the telecommunication industry segment. The securities
written down during 2001 were in the transportation industry segment.

|                                   |                      |   |                    |       |                  |   |        |       |      |   |        |       |  |   |      |       | 
|---------------------------------- | -------------------- | - | ------------------ | ----- | ---------------- | - | ------ | ----- | ---- | - | ------ | ----- |  | - | ---- | ----- | 
|                                   |                      |   | Three Months Ended |       | Six Months Ended
|                                   |                      |   | June 30            |       | June 30         
|                                   |                      |   |                    |       |                 
|                                   |                      |   | 2002               |       | 2001             |   | 2002   |       | 2001
|Realized gains:                    |                      |   |                    |       |                  |   |        |       |      |   |        |       |  |   |      |      
|                                   | Fixed maturities     |   | $                  | 2,658 |                  |   | $      | 1,475 |      |   | $      | 3,626 |  |   | $    | 1,800 | 
|                                   | Equity securities    |   |                    | 2,229 |                  |   |        | 119   |      |   |        | 3,331 |  |   |      | 608   | 
|                                   | Limited partnerships |   |                    | 453   |                  |   |        | 0     |      |   |        | 453   |  |   |      | 0     | 
|                                   | Other                |   |                    | 45    |                  |   |        | 25    |      |   |        | 45    |  |   |      | 32    | 
|                                   |                      |   |                    |       |                  |   |        |       |      |   |        |       |  |   |      |      
|                                   | Total gains          |   | $                  | 5,385 |                  |   | $      | 1,619 |      |   | $      | 7,455 |  |   | $    | 2,440 | 
|                                   |                      |   |                    |       |                  |   |        |       |      |   |        |       |  |   |      |      
|Realized losses:                   |                      |   |                    |       |                  |   |        |       |      |   |        |       |  |   |      |      
|                                   | Fixed maturities     |   | $                  | 400   |                  |   | $      | 1,038 |      |   | $      | 409   |  |   | $    | 1,041 | 
|                                   | Equity securities    |   |                    | 2,005 |                  |   |        | 63    |      |   |        | 2,012 |  |   |      | 253   | 
|                                   | Limited partnerships |   |                    | 1,703 |                  |   |        | 0     |      |   |        | 1,703 |  |   |      | 0     | 
|                                   | Other                |   |                    | 0     |                  |   |        | 35    |      |   |        | 0     |  |   |      | 69    | 
|                                   |                      |   |                    |       |                  |   |        |       |      |   |        |       |  |   |      |      
|                                   | Total losses         |   | $                  | 4,108 |                  |   | $      | 1,136 |      |   | $      | 4,124 |  |   | $    | 1,363 | 
|                                   |                      |   |                    |       |                  |   |        |       |      |   |        |       |  |   |      |      
|Impairment charges:                |                      |   |                    |       |                  |   |        |       |      |   |        |       |  |   |      |      
|                                   | Fixed maturities     |   | $                  | 8,975 |                  |   | $      | 1,550 |      |   | $      | 8,975 |  |   | $    | 1,550 | 
|                                   |                      |   |                    |       |                  |   |        |       |      |   |        |       |  |   |      |      
|Net realized losses on investments |                      | $ | (7,698             | )     |                  | $ | (1,067 | )     |      | $ | (5,644 | )     |  | $ | (473 | )    
|                                   |                      |   |                    |       |                  |   |        |       |      |   |        |       |  |   |      |      

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. The Company maintains control over
the securities. The borrower of the securities is not permitted to sell or
replace the security on loan. A fee is paid to the Company by the borrower.
Revenue received for the six months ended June 30, 2002 and 2001, related to
this program totaled $46 and $34, respectively. Collateral, comprised of
cash and government securities, that exceeds the market value of the loaned
securities, is maintained by the lending agent. The Company has an
indemnification agreement with 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 $27.1 million and $40.5 million and
secured collateral of $28.0 million and $41.5 million at June 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 June 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)

During the fourth quarter 2001, the Company sold its private equity limited
partnerships to the Erie Insurance Exchange, recognizing a gain of $1,144 at
the time of sale based on the September 30, 2001 financial statements
provided by the limited partnerships. During the second quarter of 2002,
actual valuation data was received from these partnerships and the sales
price of the partnerships was adjusted to the actual value of the partnership
at the date of sale (December 31, 2001). This resulted in the recognition of
$1,250 of net realized losses during the quarter.

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

|               |  |                    |       |                  |  |      |       |      |  |   |       |  |  |   |     | 
|-------------- |  | ------------------ | ----- | ---------------- |  | ---- | ----- | ---- |  | - | ----- |  |  | - | --- | 
|               |  | Three Months Ended |       | Six Months Ended
|               |  | June 30            |       | June 30         
|               |  |                    |       |                 
|               |  | 2002               |       | 2001             |  | 2002 |       | 2001
|Fixed Income   |  | $                  | 116   |                  |  | $    | 40    |      |  | $ | 169   |  |  | $ | 45  | 
|Real Estate    |  |                    | 2,397 |                  |  |      | 292   |      |  |   | 3,413 |  |  |   | 559 | 
|Private Equity |  |                    | 0     |                  |  |      | 1,435 |      |  |   | 0     |  |  |   | 198 | 
|               |  |                    |       |                  |  |      |       |      |  |   |       |  |  |   |     | 
|               |  | $                  | 2,513 |                  |  | $    | 1,767 |      |  | $ | 3,582 |  |  | $ | 802 | 
|               |  |                    |       |                  |  |      |       |      |  |   |       |  |  |   |     | 

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 $542,904 at June 30, 2002.

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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 settlements, 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 June 30, 2002, the
carrying value of structured settlements totaled $153,336 while the estimated
fair value of these contracts totaled $157,869.

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.

NOTE E  SEGMENT INFORMATION

The Companys portfolio of traditional insurance includes permanent life,
endowment and term policies, including whole life. The Group and Other
category presented in the table below includes group life insurance and
disability income products. The Corporate category includes investment
income earned from surplus not specifically attached 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 line. The loss recorded in the annuity segment for
the three and six months ended June 30, 2002 is a direct result of the
impairment charges recognized on fixed maturities during the second quarter
of 2002.

|                                          |                            |                |        |       |        |           |       |       |       |           |        |         |        |   |       |     |       |   |       |       |       |   |        |       |        | 
|----------------------------------------- | -------------------------- | -------------- | ------ | ----- | ------ | --------- | ----- | ----- | ----- | --------- | ------ | ------- | ------ | - | ----- | --- | ----- | - | ----- | ----- | ----- | - | ------ | ----- | ------ | 
|Three Months Ended                        |                            |                |        |       |        | Universal |       |       |       |           |        | Group & |        |   |       |     |       |   |       |      
|June 30, 2002                             |                            | Traditional    |        | Life  |        | Annuities |       | Other |       | Corporate |        | Total  
|                                          |                            |                |        |       |        |           |       |       |       |           |        |        
|Total policy revenue, net of
reinsurance  |                            | $              | 9,680  |       |        | $         | 3,092 |       |       | $         | 1      |         |        | $ | 745   |     |       | $ | 0     |       |       | $ | 13,518 |      
|Total investment-related
and other income |                            |                | 1,015  |       |        |           | 1,329 |       |       |           | 7,012  |         |        |   | 28    |     |       |   | 2,606 |       |       |   | 11,990 |      
|                                          |                            |                |        |       |        |           |       |       |       |           |        |         |        |   |       |     |       |   |       |       |       |   |        |      
|                                          |                            | Total revenues |        | $     | 10,695 |           |       | $     | 4,421 |           |        | $       | 7,013  |   |       | $   | 773   |   |       | $     | 2,606 |   |        | $     | 25,508 | 
|                                          |                            |                |        |       |        |           |       |       |       |           |        |         |        |   |       |     |       |   |       |       |       |   |        |      
|Less: Total benefits and
expenses         |                            |                | 9,034  |       |        |           | 3,829 |       |       |           | 10,579 |         |        |   | 528   |     |       |   | 0     |       |       |   | 23,970 |      
|                                          |                            |                |        |       |        |           |       |       |       |           |        |         |        |   |       |     |       |   |       |       |       |   |        |      
|                                          | Income (loss) before taxes |                | $      | 1,661 |        |           | $     | 592   |       |           | $      | (3,566  | )      |   | $     | 245 |       |   | $     | 2,606 |       |   | $      | 1,538 |       
|                                          |                            |                |        |       |        |           |       |       |       |           |        |         |        |   |       |     |       |   |       |       |       |   |        |      
|Six Months Ended                          |                            |                |        |       |        |           |       |       |       |           |        |         |        |   |       |     |       |   |       |      
|June 30, 2002                             |                            |                |        |       |        |           |       |       |       |           |        |        
|                                          |                            |                |        |       |        |           |       |       |       |           |        |        
|Total policy revenue, net of
reinsurance  |                            | $              | 18,272 |       |        | $         | 6,079 |       |       | $         | 2      |         |        | $ | 1,495 |     |       | $ | 0     |       |       | $ | 25,848 |      
|Total investment-related
and other income |                            |                | 2,597  |       |        |           | 3,396 |       |       |           | 17,798 |         |        |   | 72    |     |       |   | 6,003 |       |       |   | 29,866 |      
|                                          |                            |                |        |       |        |           |       |       |       |           |        |         |        |   |       |     |       |   |       |       |       |   |        |      
|                                          |                            | Total revenues |        | $     | 20,869 |           |       | $     | 9,475 |           |        | $       | 17,800 |   |       | $   | 1,567 |   |       | $     | 6,003 |   |        | $     | 55,714 | 
|                                          |                            |                |        |       |        |           |       |       |       |           |        |         |        |   |       |     |       |   |       |       |       |   |        |      
|Less: Total benefits and
expenses         |                            |                | 17,607 |       |        |           | 7,842 |       |       |           | 20,647 |         |        |   | 1,374 |     |       |   | 0     |       |       |   | 47,470 |      
|                                          |                            |                |        |       |        |           |       |       |       |           |        |         |        |   |       |     |       |   |       |       |       |   |        |      
|                                          | Income (loss) before taxes |                | $      | 3,262 |        |           | $     | 1,633 |       |           | $      | (2,847  | )      |   | $     | 193 |       |   | $     | 6,003 |       |   | $      | 8,244 |       
|                                          |                            |                |        |       |        |           |       |       |       |           |        |         |        |   |       |     |       |   |       |       |       |   |        |      

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

NOTE E  SEGMENT INFORMATION (Continued)

|                                          |                            |                |        |           |        |           |       |         |       |           |        |       |        |   |       |     |       |   |       |       |       |   |        |        |        | 
|----------------------------------------- | -------------------------- | -------------- | ------ | --------- | ------ | --------- | ----- | ------- | ----- | --------- | ------ | ----- | ------ | - | ----- | --- | ----- | - | ----- | ----- | ----- | - | ------ | ------ | ------ | 
|Three Months Ended                        |                            |                |        | Universal |        |           |       | Group & |       |           |        |       |        |   |       |    
|June 30, 2001                             |                            | Traditional    |        | Life      |        | Annuities |       | Other   |       | Corporate |        | Total
|                                          |                            |                |        |           |        |           |       |         |       |           |        |      
|Total policy revenue, net of
reinsurance  |                            | $              | 8,559  |           |        | $         | 2,654 |         |       | $         | 7      |       |        | $ | 641   |     |       | $ | 0     |       |       | $ | 11,861 |       
|Total investment-related
and other income |                            |                | 1,590  |           |        |           | 1,934 |         |       |           | 10,540 |       |        |   | 39    |     |       |   | 2,640 |       |       |   | 16,743 |       
|                                          |                            |                |        |           |        |           |       |         |       |           |        |       |        |   |       |     |       |   |       |       |       |   |        |       
|                                          |                            | Total revenues |        | $         | 10,149 |           |       | $       | 4,588 |           |        | $     | 10,547 |   |       | $   | 680   |   |       | $     | 2,640 |   |        | $      | 28,604 | 
|                                          |                            |                |        |           |        |           |       |         |       |           |        |       |        |   |       |     |       |   |       |       |       |   |        |       
|Less: Total benefits and
expenses         |                            |                | 6,551  |           |        |           | 3,380 |         |       |           | 9,312  |       |        |   | 719   |     |       |   | 0     |       |       |   | 19,962 |       
|                                          |                            |                |        |           |        |           |       |         |       |           |        |       |        |   |       |     |       |   |       |       |       |   |        |       
|                                          | Income (loss) before taxes |                | $      | 3,598     |        |           | $     | 1,208   |       |           | $      | 1,235 |        |   | $     | (39 | )     |   | $     | 2,640 |       |   | $      | 8,642  |       
|                                          |                            |                |        |           |        |           |       |         |       |           |        |       |        |   |       |     |       |   |       |       |       |   |        |       
|                                         
|                                         
|Six Months Ended                          |                            |                |        |           |        |           |       |         |       |           |        |       |        |   |       |     |       |   |       |      
|June 30, 2001                             |                            |                |        |           |        |           |       |         |       |           |        |      
|                                          |                            |                |        |           |        |           |       |         |       |           |        |      
|Total policy revenue, net of
reinsurance  |                            | $              | 16,193 |           |        | $         | 5,335 |         |       | $         | 8      |       |        | $ | 1,321 |     |       | $ | 0     |       |       | $ | 22,857 |       
|Total investment-related
and other income |                            |                | 3,209  |           |        |           | 3,879 |         |       |           | 21,235 |       |        |   | 78    |     |       |   | 2,872 |       |       |   | 31,273 |       
|                                          |                            |                |        |           |        |           |       |         |       |           |        |       |        |   |       |     |       |   |       |       |       |   |        |       
|                                          |                            | Total revenues |        | $         | 19,402 |           |       | $       | 9,214 |           |        | $     | 21,243 |   |       | $   | 1,399 |   |       | $     | 2,872 |   |        | $      | 54,130 | 
|                                          |                            |                |        |           |        |           |       |         |       |           |        |       |        |   |       |     |       |   |       |       |       |   |        |       
|Less: Total benefits and
expenses         |                            |                | 13,779 |           |        |           | 7,482 |         |       |           | 18,142 |       |        |   | 824   |     |       |   | 0     |       |       |   | 40,227 |       
|                                          |                            |                |        |           |        |           |       |         |       |           |        |       |        |   |       |     |       |   |       |       |       |   |        |       
|                                          | Income before taxes        |                | $      | 5,623     |        |           | $     | 1,732   |       |           | $      | 3,101 |        |   | $     | 575 |       |   | $     | 2,872 |       |   | $      | 13,903 |       
|                                          |                            |                |        |           |        |           |       |         |       |           |        |       |        |   |       |     |       |   |       |       |       |   |        |       

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
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 and
$200 per life for group 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.

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##### Table of Contents



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

NOTE F  REINSURANCE (Continued)

Policy revenues, benefits and expenses reflected in the Statements of
Operations have been reduced by the following amounts due to reinsurance
cessions:

|                                        |  |                    |       |                  |  |      |       |      |  |   |       |  |  |   |       | 
|--------------------------------------- |  | ------------------ | ----- | ---------------- |  | ---- | ----- | ---- |  | - | ----- |  |  | - | ----- | 
|                                        |  | Three Months Ended |       | Six Months Ended
|                                        |  | June 30            |       | June 30         
|                                        |  |                    |       |                 
|                                        |  | 2002               |       | 2001             |  | 2002 |       | 2001
|                                        |  |                    |       |                  |  |      |       |     
|Policy revenue                          |  | $                  | 2,706 |                  |  | $    | 1,976 |      |  | $ | 4,331 |  |  | $ | 3,422 | 
|Death benefits                          |  |                    | 300   |                  |  |      | 224   |      |  |   | 665   |  |  |   | 766   | 
|Increase in future life policy benefits |  |                    | 777   |                  |  |      | 676   |      |  |   | 757   |  |  |   | 1,024 | 
|Commissions                             |  |                    | 1,732 |                  |  |      | 828   |      |  |   | 2,482 |  |  |   | 1,677 | 

NOTE G  COMMITMENTS

The Company has outstanding commitments to invest up to $5.4 million in
limited partnerships at June 30, 2002. These commitments will be funded as
required through the end of the respective investment periods, which
typically span 3 to 5 years and expire through 2005. At June 30, 2002, all
of the commitments relate to limited partnerships that invest in real estate
activities.

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 $97,414 at June 30, 2002.

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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 15,
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 $1,005,734, or $.11 per share, in the second quarter of
2002, compared to $5,657,782, or $.60 per share, for the second quarter of
2001. Increases in policy revenue were offset by realized capital losses on
investments due to impairment charges taken by the Company in addition to
increases in death benefits in the second quarter. For the six months ended
June 30, 2002 net income decreased to $5,391,588, or $.57 per share, compared
to $9,098,425, or $.96 per share for the same period in 2001. An increase of
$5,170,167 in realized losses on investments 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) totaled $6,009,359, or $.64 per share, in the second
quarter 2002 compared to $6,351,615, or $.67 per share, for the same period in
2001, a decrease of 5.4%. For the six months ended June 30, 2002 operating
income decreased 3.7% to $9,059,985, or $.96 per share, from $9,406,214, or
$1.00 per share during the six months ended June 30, 2001. Contributing to
this decrease for the six-month period was a $2,143,909 increase in net death
benefits paid on life insurance policies.

REVENUES

Analysis of Policy Revenue

Total policy revenue increased $1,657,784, or 14.0%, to $13,518,325 in the
second quarter of 2002, from $11,860,541 during the same period in 2001.
Contributing to this growth was an increase in direct premiums on traditional life
insurance policies of 17.8% to $11,556,905 for the quarter ended June 30, 2002.
Total policies in force on traditional life insurance products
increased 6.2%
to 178,563 at June 30, 2002, compared to 168,156 at June 30, 2001. Total
policy revenue increased $2,990,133, or 13.1%, to $25,847,451 for the six
months ended June 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 $3,349,758 and
$1,475,413 to total life premiums for the three months ended June 30, 2002 and
2001.

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

Analysis of Investment-related Income

Net investment income increased $1,132,963, or 7.1%, to $16,998,189 in the
second quarter of 2002 from $15,865,226 for the same period in 2001. For
the six months ended June 30, 2002, net investment income increased
$933,937, or 3.1%, to $31,507,917. A decline in yields from the fixed
income portfolio of the Company in the first quarter of 2002, due to lower
interest rates, resulted in slower growth in investment income.

Net realized losses on investments were $7,697,884 in the second quarter of
2002, compared to $1,067,436 in the second quarter of 2001, an increase of
$6,630,448. These losses were primarily the result of $8,974,830 in impairment
charges on fixed maturity investments. Included in the 2002 realized losses
are $4,839,260 of impairment charges relating to securities of the WorldCom
Group. In addition to the impairment charges, a $1,250,075 loss adjustment
reflecting the actual market value of the limited partnerships sold to the Erie
Insurance Exchange in December, 2001 is included in the second quarter 2002
results. For the six months ended June 30, 2002, net realized losses were
$5,643,688, compared to $473,521 in 2001.

The Company recorded earnings in limited partnerships of $2,512,604 in the
second quarter of 2002, compared to $1,767,075 during the same period in 2001.
The year-to-date earnings in limited partnerships increased to $3,581,747 in
2002 from $802,197 in 2001. The 2002 increase in earnings is the result of a
more stable income stream generated from these investments in 2002, which is
characteristic of the types of limited partnerships now owned by the Company
compared to those owned a year ago.

BENEFITS AND EXPENSES

Analysis of Policy-related Benefits and Expenses

Net death benefits on life insurance policies increased $1,971,704 in the
second quarter of 2002 to $3,927,885. For the six months ended June 30, 2002,
death benefits on life insurance policies increased $2,143,909, or 40.1%, to
$7,428,069. 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 $785,107, or 7.5%, to
$11,251,992 in the second quarter of 2002 from $10,466,885 in the second
quarter of 2001. 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 June 30, 2002, when compared to the twelve month period ended June
30, 2001. In 2001, the interest rate credited on annuity deposits ranged from
5.0% to 6.25% and the rate credited on universal life deposits ranged from 6.0%
to 6.75%. During the first quarter of 2002, interest rates were lowered on
both annuity and universal life deposits in response to decreasing new money
investment yields. For 2002, the new interest rate credited on annuity
deposits ranged from 4.75% to 5.5% and the new rate credited on universal life
deposits ranged from 5.5% to 6.25%.

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. The increase
in future life policy benefits totaled $2,140,681 in the second quarter of
2002, compared to $1,448,884 in the second quarter of 2001, an increase of
47.8%.

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

Analysis of Other Expenses

Total operating expenses, excluding taxes, licenses and fees, increased
$284,535, or 9.4%, to $3,327,285 for the second quarter 2002, compared to
$3,042,750 for the same period in 2001. Certain operating expenses of the
Company are paid by the Erie Indemnity Company, the management Company of the
Erie Insurance Exchange, 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, a component of total operating 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 3.1%, to $2,809,247 for the quarter
ended June 30, 2002. For the six months ended June 30, 2002, net general
expenses increased 8.6%, to $5,503,953. Expenses relating to an increase 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 $149,000 in 2002 and will continue to be incurred as the project
develops.

Another component of total operating expenses is commissions to independent
Agents. Direct commission costs include 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 second
quarter of 2002, net commission expense increased $199,544 to $518,038,
compared to $318,494 for the second quarter of 2001. For the six months ended
June 30, 2002, commission expense increased $551,094 to $1,462,527. Renewal
commissions, very little of which is eligible for the DAC, are up $188,000 in
2002.

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.

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

The Companys invested assets are sufficiently liquid to meet commitments to
our Policyholders. At June 30, 2002, the Companys investment portfolio
consisting of cash, investment grade bonds, common stock and preferred stock,
totaled slightly more than $1 billion or 84.0% 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 no
impairments recognized in the second quarters of 2002 or 2001 related to equity
security investments.

For fixed maturity investments, the Company individually analyzes all positions
whose market value 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 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. As previously discussed in the Analysis
of Investment  related Income section, the total impairments of $8,974,830
recognized in the second quarter of 2002 related to 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
and price 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.

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

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 six months ended June 30, 2002 was
$13,633,062 compared to $7,803,741 for the six months ended June 30, 2001. The
Companys liquidity position remains strong as invested assets and cash and
cash equivalents increased by more than $69 million during the six months of
2002 to $1.05 billion.

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 $34,825,450
in the second quarter of 2002 and $19,290,029 in the second 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 9.4% for the quarter ended June 30, 2002, compared to the
same period last year.

The Companys current commitments for expenditures as of June 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 June 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 June 30, 2002 and 2001, there were no borrowings on
this line of credit.

FACTORS THAT MAY AFFECT FUTURE RESULTS

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.

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

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 may
have possible exclusions that would arise from future potential terrorist
actions.

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. There have been no
material changes in such risks or the Companys periodic reviews of asset and
liability positions during the six months ended June 30, 2002. 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.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of
1995:Certain forward-looking statements contained herein involve risks and
uncertainties. Many factors could cause future results to differ materially
from those discussed. Examples of such factors include but are not limited to:
better (or worse) mortality rates, terrorist actions, changes in insurance
regulations or legislation that disadvantage the Company in the marketplace and
recession, economic conditions or stock market changes affecting pricing or
demand for insurance products or ability to generate investment income and
returns. Growth and profitability have been, and will be, potentially
materially affected by these and other factors.

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PART II. OTHER INFORMATION




ITEM 6. EXHIBITS AND REPORTS ON
FORM 8-K

The Company did not file any reports on Form 8-K during the three-month period
ended June 30, 2002.

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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: July 23, 2002 |  | /s/ Jeffrey A. Ludrof                             
|                    |  |                                                   
|                    |  | (Jeffrey A. Ludrof, President & CEO)              
|                   
|                    |  | /s/ Philip A. Garcia                              
|                    |  |                                                   
|                    |  | (Philip A. Garcia, Executive Vice President & CFO)

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