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, 1999

                                 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                          (I.R.S. Employer
  incorporation or organization)                            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 29, 1999.

                                       1

<PAGE>


                             INDEX

               ERIE FAMILY LIFE INSURANCE COMPANY


PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

        Statements of Financial Position--June 30, 1999 and December 31, 1998

        Statements of Operations--three and six months ended June 30, 1999
        and 1998

        Statements of Comprehensive Income--three and six months ended
        June 30, 1999 and 1998

        Statements of Cash Flows--six months ended June 30, 1999 and 1998

        Notes to Financial Statements

Item 2. Management's Discussion and Analysis of Financial Condition and
        Results of Operations


PART II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K


SIGNATURES

                                       2
<PAGE>


Part I.  FINANCIAL INFORMATION

                       ERIE FAMILY LIFE INSURANCE COMPANY
                        STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>

                                                                         June 30,           December 31,
                                                                          1999                 1998
                                                                     --------------       ---------------
                                                                       (Unaudited)
<S>                                                                  <C>                  <C>

ASSETS
Invested Assets:
   Fixed Maturities available-for-sale, at fair
     value (amortized cost of $638,733,440
     and $576,475,130, respectively)                                 $  636,785,293       $   605,523,237
   Equity Securities, at fair value
     (cost of $135,420,824 and $124,609,940,
    respectively)                                                       150,463,356           135,793,710
   Real Estate                                                            1,500,015             1,541,445
   Policy Loans                                                           6,322,957             6,013,130
   Real Estate Mortgage Loans                                            10,062,729            10,070,394
   Other Invested Assets                                                 18,024,942            15,940,561
                                                                     --------------       ---------------

       Total Invested Assets                                         $  823,159,292       $   774,882,477

   Cash and cash equivalents                                                884,124            44,808,427
   Premiums Receivable from Policyholders                                 3,816,006             3,830,625
   Reinsurance Recoverable                                                  150,060               568,521
   Other Receivables                                                        188,837               355,067
   Accrued Investment Income                                             10,919,693            10,282,002
   Deferred Policy Acquisition Costs                                     74,415,571            70,916,261
   Reserve Credit for Reinsurance Ceded                                   6,387,866             5,994,390
   Federal Income Tax Recoverable                                           864,538                     0
   Other Assets                                                           7,179,128             5,967,858
                                                                     --------------       ---------------

       Total Assets                                                  $  927,965,115       $   917,605,628
                                                                     ==============       ===============
<FN>
See notes to financial statements.
</FN>
</TABLE>

                                       3
<PAGE>


                       ERIE FAMILY LIFE INSURANCE COMPANY
                        STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>



                                                                        June 30,            December 31,
                                                                          1999                 1998
                                                                     --------------       ---------------
                                                                      (Unaudited)
<S>                                                                  <C>                  <C>

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
   Policy Liabilities and Accruals:
     Future Life Policy Benefits                                     $   67,253,960       $   64,539,220
     Policy and Contract Claims                                           1,195,333            1,801,030
     Annuity Deposits                                                   547,069,459          524,122,492
     Universal Life Deposits                                             87,924,419           81,354,026
     Supplementary Contracts Not
       including Life Contingencies                                         567,097              607,094
   Other Policyholder Funds                                               5,670,418            8,166,371
   Federal Income Taxes Payable                                                   0              612,272
   Deferred Income Taxes                                                 22,749,082           31,252,214
   Reinsurance Premium Due                                                  326,484              301,487
   Accounts Payable and Accrued Expenses                                  4,614,554            4,215,186
   Note Payable to Erie Indemnity Company                                15,000,000           15,000,000
   Due to Affiliate                                                       1,539,622            1,686,227
   Dividends Payable                                                      3,118,504            1,417,500
                                                                     --------------       --------------

       Total Liabilities                                             $  757,028,932       $  735,075,119
                                                                     --------------       --------------

Shareholders' Equity:
   Common Stock, $.40 Par Value Per Share;
     Authorized 15,000,000 Shares; 9,450,000
     Shares Issued And Outstanding                                   $    3,780,000       $    3,780,000
   Additional Paid-In Capital                                               630,000              630,000
   Accumulated Other Comprehensive Income                                 8,494,788           26,171,727
   Retained Earnings                                                    158,031,395          151,948,782
                                                                     --------------       --------------

       Total Shareholders' Equity                                    $  170,936,183       $  182,530,509
                                                                     --------------       --------------

       Total Liabilities and Shareholders' Equity                    $  927,965,115       $  917,605,628
                                                                     ==============       ==============

<FN>
See notes to financial statements.
</FN>
</TABLE>

                                       4
<PAGE>


                       ERIE FAMILY LIFE INSURANCE COMPANY
                      STATEMENTS OF OPERATIONS (Unaudited)
<TABLE>
<CAPTION>

                                                                    Three Months Ended                    Six Months Ended
                                                                            June 30                           June 30
                                                            ---------------------------------      --------------------------------
<S>                                                         <C>              <C>                   <C>               <C>
                                                                   1999             1998                 1999             1998
Revenues:
   Policy:
   Life Premiums, net of premiums ceded of
     $763,000, $971,074, $1,495,821 and
     $1,742,307, respectively                               $    10,350,242  $      9,251,146      $     19,571,141  $   17,614,278
   Group Premiums                                                   627,586           582,074             1,250,197       1,200,120
                                                            ---------------  ----------------      ----------------  --------------
       Total Policy Revenue                                 $    10,977,828  $      9,833,220      $     20,821,338  $   18,814,398
   Investment Income, Net of Expenses of
     $459,471, $368,822, $867,952 and
     $726,803, respectively                                      13,929,662        12,995,512            27,299,855      25,785,740
   Net Realized Gains on Investment                               1,825,792           866,108             2,650,641       2,702,270
   Other Income                                                     135,443           225,625               372,736         389,533
                                                            ---------------  ----------------      ----------------  --------------
       Total Revenues                                       $    26,868,725  $     23,920,465      $     51,144,570  $   47,691,941
                                                            ---------------  ----------------      ----------------  --------------

Benefits and Expenses:
   Death Benefits, net of reinsurance recoveries
     of $134,979, $53,384, $760,874 and
     $568,735, respectively                                       2,670,125         1,760,225             5,231,367       3,238,370
   Interest on Annuity Deposits                                   8,033,420         7,319,108            15,336,842      14,813,290
   Interest on Universal Life Deposits                            1,254,473         1,151,303             2,528,592       2,237,366
   Surrender and Other Benefits                                     261,749           299,884               544,498         565,681
   Increase in Future  Life  Policy  Benefits,  net of
     the  increase  in reserve credit for reinsurance
     ceded of $222,448, $192,838, $393,476 and $444,423,
     respectively                                                 1,163,242         1,139,514             2,321,263       2,072,345
   Amortization of Deferred Policy Acquisition Costs              1,409,685         1,350,161             3,003,551       2,645,951
   Commissions, net of reinsurance reimbursements
     of $201,710, $414,936, $416,316 and $624,246,
     respectively                                                   535,292           273,310             1,067,828         570,151
   General Expenses                                               1,796,814         1,665,434             3,533,163       3,115,807
   Taxes, Licenses and Fees                                         404,696           343,987               805,582        (200,999)
                                                            ---------------  ----------------      ----------------  --------------
       Total Benefits and Expenses                          $    17,529,496  $     15,302,926      $     34,372,686  $   29,057,962
                                                            ---------------  ----------------      ----------------  --------------

Income From Operations                                      $     9,339,229  $      8,617,539      $     16,771,884  $   18,633,979
Provision for Federal Income Taxes:
   Current                                                        2,691,183         2,078,993             4,996,399       4,712,636
   Deferred                                                         769,357           974,200             1,015,117       1,859,188
                                                            ---------------  ----------------      ----------------  --------------
       Total Provision for Federal Income Taxes                   3,460,540         3,053,193             6,011,516       6,571,824
                                                            ---------------  ----------------      ----------------  --------------

Net Income                                                  $     5,878,689  $      5,564,346      $     10,760,368  $   12,062,155
                                                            ===============  ================      ================  ==============

Net Income Per Share                                        $          0.62  $           0.59      $           1.14  $         1.28
                                                            ===============  ================      ================  ==============

Dividends Declared Per Share                                $          0.33  $           0.30      $           0.50  $         0.45
                                                            ===============  ================      ================  ==============
<FN>
See notes to financial statements.
</FN>
</TABLE>
                                       5
<PAGE>


                       ERIE FAMILY LIFE INSURANCE COMPANY
                 STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
<TABLE>
<CAPTION>

                                                                   Three Months Ended                         Six Months Ended
                                                                        June 30                                  June 30
                                                            ---------------------------------      --------------------------------
<S>                                                         <C>              <C>                   <C>               <C>
                                                                    1999            1998                   1999             1998

Net Income                                                  $     5,878,689  $      5,564,346      $     10,760,368  $   12,062,155
                                                            ---------------  ----------------      ----------------  --------------
Unrealized (Losses) Gains on Securities:
   Unrealized Holding (Losses) Gains Arising
     During Period                                              (14,649,852)        4,423,513           (24,544,547)      9,730,630
   Less:  Reclassification Adjustment for Gains
     Included in Net Income                                      (1,825,792)         (866,108)           (2,650,641)     (2,702,270)
                                                            ---------------  ----------------      ----------------  --------------
     Net Unrealized Holding (Losses) Gains
       Arising During Period                                $   (16,475,644) $      3,557,405      $    (27,195,188) $    7,028,360
                                                            ---------------  ----------------      ----------------  --------------

Income Tax Benefit (Expense) Related to
   Unrealized (Losses) Gains                                      5,766,409        (1,245,092)            9,518,249      (2,459,926)
                                                            ---------------  ----------------      ----------------  --------------

Other Comprehensive (Loss) Income, Net of Tax               $   (10,709,235) $      2,312,313      $    (17,676,939) $    4,568,434
                                                            ---------------  ----------------      ----------------  --------------

Comprehensive (Loss) Income                                 $    (4,830,546) $      7,876,659      $     (6,916,571) $   16,630,589
                                                            ===============  ================      ================  ==============


<FN>
See notes to financial statements.
</FN>
</TABLE>

                                       6
<PAGE>


                       ERIE FAMILY LIFE INSURANCE COMPANY
                      STATEMENTS OF CASH FLOWS (Unaudited)
<TABLE>
<CAPTION>

                                                                                  Six Months Ended              Six Months Ended
                                                                                   June 30, 1999                  June 30, 1998
                                                                                  -----------------            -----------------
<S>                                                                               <C>                          <C>
Cash flows from operating activities:
Net income                                                                        $      10,760,368            $      12,062,155
Adjustments to reconcile net income to net cash
   provided by operating activities:
     Net amortization of bond and mortgage premium                                          140,546                      296,516
     Amortization of deferred policy acquisition costs                                    3,003,551                    2,645,951
     Real estate depreciation                                                                41,430                       41,430
     Deferred federal income taxes                                                        1,015,117                    1,859,188
     Realized gains on investments                                                       (2,650,641)                  (2,702,270)
Decrease in premiums receivable                                                              14,619                       76,816
Decrease (increase) in other receivables                                                    166,230                      (13,366)
Increase in accrued investment income                                                      (637,691)                    (290,125)
Policy acquisition costs deferred                                                        (6,502,861)                  (5,458,613)
Increase in other assets                                                                 (1,211,270)                  (1,617,462)
Decrease (increase) in reinsurance recoverables
   and reserve credits                                                                       24,985                     (179,990)
Increase in future policy benefits and claims                                             2,109,043                    1,546,044
Decrease in other policyholder funds                                                     (2,495,953)                  (2,929,902)
Increase (decrease) in reinsurance premium due                                               24,997                     (213,731)
Decrease in federal income tax payable                                                   (1,476,810)                    (778,861)
Increase in accounts payable and due to affiliate                                           252,771                      766,556
                                                                             ----------------------       ----------------------
       Net cash provided by operating activities                             $            2,578,431       $            5,110,336
                                                                             ----------------------       ----------------------

Cash flows from investing activities:
Purchase of investments:
   Fixed maturities                                                          $         (115,055,239)      $         (102,188,874)
   Equity securities                                                                    (36,301,753)                 (15,978,933)
   Mortgage loans                                                                           (66,286)                           0
   Other invested assets                                                                 (3,409,377)                  (9,579,849)
Sales/maturities of investments:
   Fixed maturities                                                                      58,515,103                   49,554,055
   Equity securities                                                                     22,282,604                   28,009,764
   Other invested assets                                                                  1,267,298                      429,621
Principal payments received on mortgage loans                                                74,132                       68,747
Loans made to policyholders                                                                (718,905)                    (749,872)
Payments received on policy loans                                                           409,078                      292,445
                                                                             ----------------------       ----------------------
       Net cash used in investing activities                                 $          (73,003,345)      $          (50,142,896)
                                                                             ----------------------       ----------------------

Cash flows from financing activities:
   Increase in annuity and supplementary contracts                           $           22,906,970       $           16,641,637
   Increase in universal life deposits                                                    6,570,393                    6,267,120
   Dividends paid to shareholders                                                        (2,976,752)                  (2,693,252)
                                                                             ----------------------       ----------------------
       Net cash provided by financing activities                             $           26,500,611       $           20,215,505
                                                                             ----------------------       ----------------------
Net decrease in cash and cash equivalents                                               (43,924,303)                 (24,817,055)
Cash and cash equivalents at beginning of year                                           44,808,427                   42,287,398
                                                                             ----------------------       ----------------------
Cash and cash equivalents at end of quarter                                  $              884,124       $           17,470,343
                                                                             ======================       ======================

Supplemental  disclosures of cash flow information:  Cash paid during the period
for:
   Income taxes                                                              $            6,325,208       $            5,360,000
   Interest                                                                                 483,750                      483,750

<FN>
See notes to financial statements.
</FN>
</TABLE>
                                       7
<PAGE>


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


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,  1999  are not
necessarily  indicative  of the results that may be expected for the year ending
December 31, 1999. 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, 1998.


NOTE B -- INVESTMENTS

Management  considers all fixed  maturities  and  marketable  equity  securities
available-for-sale. Marketable equity securities consist primarily of common and
non-redeemable  preferred stocks while fixed maturities  consist of bonds, notes
and redeemable preferred stock. 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.   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.

The following is a summary of available-for-sale securities:
<TABLE>
<CAPTION>
                                                                             Gross              Gross
                                                      Amortized           Unrealized          Unrealized           Estimated
(In Thousands)                                           Cost                Gains              Losses            Fair Value
<S>                                                   <C>                 <C>                  <C>               <C>

June 30, 1999
Fixed Maturities:
U.S. Treasuries and Government
   Agencies                                           $   15,607          $      485           $      15         $   16,077
States and Political Subdivisions                          2,056                  80                   0              2,136
Special Revenue                                           11,046                 449                   0             11,495
Public Utilities                                          62,327               1,317               1,051             62,593
U.S. Banks, Trusts and Insurance
   Companies                                             111,456               2,042               3,111            110,387
U.S. Industrial and Miscellaneous                        383,355               4,723               5,412            382,666
Foreign Governments-Agency                                 2,990                   0                 146              2,844
Foreign Banks, Trusts and Insurance
   Companies                                               5,989                   0                 200              5,789
Foreign Industrial and Miscellaneous                      38,907                 533               1,450             37,990
                                                      ----------          ----------           ---------         ----------
     Total Bonds                                      $  633,733          $    9,629           $  11,385         $  631,977
Redeemable Preferred Stock                                 5,000                   0                 192              4,808
                                                      ----------          ----------           ---------         ----------
     Total Fixed Maturities                           $  638,733          $    9,629           $  11,577         $  636,785
                                                      ----------          ----------           ---------         ----------

Equity Securities:
Common Stock                                          $   60,102          $   20,302           $   5,291         $   75,113
Non-Redeemable Preferred Stock                            75,319               1,684               1,653             75,350
                                                      ----------          ----------           ---------         ----------
     Total Equity Securities                          $  135,421          $   21,986           $   6,944         $  150,463
                                                      ----------          ----------           ---------         ----------
       Total Available-for-Sale Securities            $  774,154          $   31,615           $  18,521         $  787,248
                                                      ==========          ==========           =========         ==========
</TABLE>

                                       8

<PAGE>


NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (Continued)

If management  determines that any declines in market value of these investments
are other than temporary,  the securities will be written-down to the realizable
value of the investment and the write down reflected in income.  If a bond is in
default of  interest  payments  and it is  determined  that  liquidation  of the
security would be in the Company's  best interest,  the security will be sold to
return the proceeds to income producing assets.

At June 30, 1999, the amortized  cost of the Company's five largest  investments
in corporate debt securities  totaled $35.5 million,  none of which individually
exceeded $8.0 million. These investments had a market value of $35.7 million.

Real estate  investments are carried on the statements of financial  position at
cost, less allowances for depreciation and possible losses.  Commercial mortgage
loans  on real  estate  are  carried  at their  unpaid  balances,  adjusted  for
amortization  of premium or discount,  less allowances for possible loan losses.
Policy loans are carried at their unpaid balances.

The fair values of the Company's  investments  in real estate,  mortgage  loans,
policy loans, and other invested assets, approximate the values presented in the
financial statements.

                                       9
<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
         RESULTS OF OPERATION

The following  discussion and analysis  should be read in  conjunction  with the
financial  statements  and related  notes found on pages 3 through 9, since they
contain  important  information  that is helpful  in  evaluating  the  Company's
operating results and financial condition.


OVERVIEW

Net income  increased  5.6% to  $5,878,689,  or $0.62 per  share,  in the second
quarter of 1999 from  $5,564,346  or $0.59 per share,  in the second  quarter of
1998. A  $1,144,608,  or 11.6%  increase in total policy  revenue and a $959,684
increase in realized gains on investments in the second quarter of 1999 were the
primary  reasons for this increase in net income.  Net income for the six months
ended June 30, 1999 decreased 10.8% to $10,760,368, or $1.14 per share, compared
to  $12,062,155 or $1.28 per share for the same period in 1998. A 61.5% increase
in death claims in the first six months of 1999, combined with a $954,000 refund
from the Pennsylvania Life and Health Guaranty  Association in the first quarter
of 1998, accounted for this decline in earnings.


REVENUES

Analysis of Policy Revenue

Total policy revenue increased $1,144,608 or 11.6%, to $10,977,828 in the second
quarter of 1999.  Premiums on traditional life insurance policies increased 8.3%
to $8,125,039 for the quarter ended June 30, 1999.  Annuity  products  generated
deposits of  $16,835,092  in the second  quarter of 1999 compared to $12,825,768
generated in the second quarter of 1998, an increase of $4,009,324, or 31.3%. Of
this amount,  ordinary  annuity  deposits  increased  $4,768,417,  or 55.5%,  to
$13,367,107  for the  quarter  ended  June 30,  1999.  Universal  life  products
generated  premiums and  deposits of  $5,565,697  in the second  quarter of 1999
compared to  $5,175,254  produced in the second  quarter of 1999, an increase of
7.5%. Total policy revenue increased $2,006,940 or 10.7%, to $20,821,338 for the
six months ended June 30, 1999.

Analysis of Investment-related Income

Net investment income increased $934,150,  or 7.2% in the second quarter of 1999
due to increased levels of investment from cash flows generated by the Company's
operations  and by cash from annuity and universal  life  deposits.  For the six
months ended June 30, 1999, net investment income increased $1,514,115, or 5.9%,
to $27,299,855.

During the second quarter of 1999 and 1998,  the Company  generated net realized
gains of  $1,825,792  and  $866,108,  respectively,  from the sale of equity and
fixed maturity investments.

Total investments of the Company were $823,159,292 at June 30, 1999, an increase
of $48,276,815, or 6.2%, over the December 31, 1998 levels.


BENEFITS AND EXPENSES

Analysis of Policy-related Benefits and Expenses

Death  benefits  on life  insurance  policies  increased  $909,900  or  51.7% to
$2,670,125  in the  second  quarter of 1999.  For the six months  ended June 30,
1999, death benefits on life insurance policies increased $1,992,997,  or 61.5%,
to  $5,231,367.  Mortality  experience is best viewed over the long term,  since
short-term  fluctuations can significantly  influence  quarterly results without
impacting long-term  profitability.  The Company's mortality experience has been
good over the past several years and management  believes that its  underwriting
philosophy and practices are sound.

                                       10
<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
         RESULTS OF OPERATION (Continued)

Interest on deposits held by the Company for Policyholders  increased  $817,482,
or 9.7%, to $9,287,893 in the second quarter of 1999.  Interest on deposits held
by the Company  increased  $814,778,  or 4.8%, for the six months ended June 30,
1999.  The  increase in  interest on deposits in the second  quarter of 1999 was
caused by the 9.2% increase in annuity and universal life deposits in the second
quarter of 1999 when  compared to the same  period in 1998.  The  interest  rate
currently  credited on universal life deposits  ranges from 6.00% to 6.75% while
the rate currently credited on annuity deposits ranges from 5.00% to 5.75%.

Analysis of Other Expenses

During the second  quarter of 1999  commission  expense  increased  $261,982  to
$535,292. A portion of this increase is the result of an increase in premiums of
11.6% and an  increase  in  promotional  incentive  costs to  agents  due to the
Company's  participation in the "Caribbean  Classic" contest.  This contest runs
from June 1998 to August 1999.  Direct  commission costs include new and renewal
commissions,  production  bonuses  and  Company  contest  awards.  These  direct
commission  expenses are reduced by  commissions  received from  reinsurers  and
commission expenses capitalized as part of the deferred policy acquisition costs
(DAC).  Commissions  received  from  reinsurers  totaled  $201,709 in the second
quarter of 1999 and $414,936 in the second  quarter of 1998.  Commission  costs,
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. These
costs are being amortized over the premium paying period of the related policies
in  proportion  to the  ratio  of  the  annual  premium  revenue  to  the  total
anticipated premium revenue.

General  expenses  increased to $131,380,  or 7.9%,  to $1,796,814 in the second
quarter  of 1999.  For the six  months  ended June 30,  1999,  general  expenses
increased $417,356, or 13.4%, to $3,533,163. Personnel costs included in general
expenses  increased  $392,484 for the six months  ended June 30, 1999,  due to a
9.0% increase in the number of employees plus normal  merit-based salary growth.
General  expenses,  other than personnel  costs,  increased 29.0% for the second
quarter  of  1999  due  to  consulting  fees  paid  related  to the  new  policy
administration system, Cyberlife.

Erie  Indemnity  Company is a 21.6%  shareholder  of Erie Family Life  Insurance
Company and the  management  company for the Erie  Insurance  Exchange.  Certain
operating  expenses  of the  Company  are  paid by Erie  Indemnity  Company  and
reimbursed  monthly  by the  Company.  Additionally,  a  portion  of the  common
overhead expenses of the Erie Insurance Group are allocated to Erie Family Life.
These expenses comprise the majority of the Company's general expenses.

General expenses include wages and salaries,  Employee benefits, data processing
expenses,  occupancy  expenses  and  other  office  and  general  administrative
expenses of the Company. Certain general expenses of the Company are deferred as
policy  acquisition  costs.  Medical  inspection  and exam fees  related  to new
business  production,  wages,  salaries  and Employee  benefits of  underwriting
personnel, and bonuses paid to branch sales Employees for the production of life
and annuity business, are all deferred. Deferred acquisition costs are amortized
over the premium  paying  period of the related  policies in  proportion  to the
ratio of the annual premium revenue to the total anticipated premium revenue.

Taxes,  licenses  and fees  increased  $60,709 in the second  quarter of 1999 to
$404,696 and  increased  $1,006,581 in the first six months of 1999 to $805,582.
This year to date increase was the result of a $954,000  refund due the Company,
in the first quarter of 1998, from the  Pennsylvania  Life and Health  Insurance
Guaranty Association which reduced the 1998 expense.

                                       11
<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
         RESULTS OF OPERATION (Continued)

FINANCIAL CONDITION

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.  On June 30, 1999, there
was no  material  difference  between the  carrying  value and fair value of the
Company's  investment-type  policies.  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.

Investments

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

The Company's  invested  assets are liquid in order to meet  commitments  to our
Policyholders.  At June 30, 1999, the Company's  investment portfolio consisting
of cash,  marketable  short-term  investments,  investment  grade bonds,  common
stock, and preferred stock, totaled $779.6 million or 84.0% of total assets.

Included in the fixed maturity  category are high-quality  bonds with a carrying
value of  $628,287,603  that are rated at  investment  grade levels  (Baa/BBB or
better).   Included  in  this   investment-grade   category   are  $335  million
characterized as the "highest" quality or "Class 1" securities as defined by the
National Association of Insurance  Commissioners  (NAIC).  Generally,  the fixed
maturity  securities  in the Company's  portfolio  are rated by external  rating
agencies.  If not  externally  rated,  they are rated by the  Company on a basis
consistent with the basis used by the rating agencies.

As with the fixed maturity  portfolio,  the Company's  preferred stock portfolio
provides a source of highly predictable  current income that is very competitive
with high-grade bonds.  These securities are well diversified within each market
sector.  The preferred stocks are of a high-quality (all of the $80.1 million of
preferred  stock are rated  "highest" or "high"  quality as defined by the NAIC)
and  extremely  marketable.  There  are no  preferred  stocks  in the  Company's
portfolio  rated  in  the  "low,"  "lowest,"  or "in or  near  default"  quality
categories  established by the NAIC. Common stock provides capital  appreciation
potential within the portfolio.  Common stock investments  inherently provide no
assurance of producing  income since dividends are not  guaranteed.  As with all
investments,  the continuing value of common stock is subject to change based on
the underlying value of the issuer.  Common stocks also are subject to valuation
fluctuations driven by investment market conditions.


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  and  deposits  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   from  operations  are  life
insurance   premiums  and  investment  income.  The  net  positive cash  flow is

                                       12
<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
         RESULTS OF OPERATION (Continued)

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,  1999 was  $2,578,431
compared to  $5,110,336  for the six months ended June 30, 1998.  The  Company's
liquidity  position  remains strong as invested assets  increased by $48 million
during the first six months of 1999 to $823 million at June 30, 1999.

Annuity  and  universal  life  deposits,  which do not  appear as revenue on the
financial statements, provide cash. 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  $19,825,121  in the second quarter of
1999 and $17,049,670 in the second quarter of 1998.

The  Company's  current  commitments  for  expenditures  as of June 30, 1999 are
primarily for policy death benefits, policy surrenders and withdrawals,  general
operating expenses,  federal income taxes, and dividends to shareholders.  These
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  enable the
Company  to meet any  foreseeable  cash  requirements.  As an added  measure  of
liquidity, the Company has in place a $10 million line of credit with a bank. At
June 30, 1999, there were no borrowings on this line of credit.

Dividends  declared to shareholders  totaled $3,118,504 in the second quarter of
1999.

The Company's 1998 year-end Risk Based Capital Analysis as reflected in its 1998
statutory  annual  statement shows total adjusted  capital of  $107,639,503  and
authorized  control level risk based capital of  $19,737,569.  These results are
indicative of the strong capital position of the Company.


YEAR 2000 READINESS DISCLOSURE

Erie Family Life  Insurance  Company is dependent on electronic  processing  and
information   systems  to  conduct  business.   Like  all  companies  with  such
dependencies,  the Company is continually  faced with significant  decisions and
technology  challenges.  Among  these  challenges  is the  so-called  "Year 2000
Issue," the inability of many computer systems to recognize dates beginning with
the year 2000 and beyond. The Year 2000 Issue is perhaps more pervasive than any
previous risk management  issue faced by businesses of all types. To effectively
manage  the risks  associated  with the Year 2000  Issue,  management  has taken
measures designed to reduce exposure to business interruption.

The effect of the Year 2000 Issue cannot be measured  exactly with certainty and
any  forecasts  about  the  effect  of  the  Year  2000  Issue  and  remediation
projections  are necessarily  forward-looking  statements and are subject to the
risks and uncertainties noted on page 15.

Company's State of Readiness

Exposure to systems failure is a risk faced by the Company every day. Unlike the
every day risks,  the date  change to the Year 2000 is  predictable.  Efforts to
mitigate the Company's  exposure through effective  identification,  remediation
and contingency planning at the Company are organized and being conducted on all
major business processes to minimize the risks.

To assure that the Company  effectively  addresses this risk,  management has in
place  a  structure  that  provides  oversight  of  Year  2000  risk  management
activities.  Oversight by Executive and Senior  Management is being  facilitated
through  a  dedicated  project  office. This office, (the "Y2K Office") works in

                                       13
<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
         RESULTS OF OPERATION (Continued)

consultation with each business area to assure  consistency and adequacy of risk
management  activities  and  to  collect  companywide  project  status  and cost
information.

Each key business  process is being evaluated to assure that underlying  systems
and  components  exposed  to  potential  Year  2000  failure  are  appropriately
identified  and  addressed.   Underlying  system  components   include  internal
operating systems (hardware and software),  infrastructure  elements,  including
non-information  technology components and systems,  communications  systems and
devices, internally developed mainframe applications, personal computer hardware
and software, external parties and providers and peripheral devices.

Each  of the  underlying  components  supporting  key  business  processes  were
identified and mission critical business processes were prioritized during 1998.
Priority was assigned  based on the relative  importance of the component to the
business process and based on the importance of the business process relative to
other business processes.

Efforts to remediate  non-compliant internal components began in January of 1999
and continued  throughout  the second  quarter of 1999. It is estimated that the
total effort for all remediation,  including  application  reviews  conducted in
1998,  will  amount  to  approximately  1,000  hours.  Less  than  150  hours of
remediation effort remains to be completed during the second half of 1999.

As individual components were re-coded,  component  functionality was tested. To
supplement  component  testing and to provide a greater degree of assurance that
business  functions  will be  uninterrupted,  full systems Year 2000  simulation
testing  is being  conducted  in the  second and third  quarters  of 1999.  Full
systems  testing  entails  simultaneous  testing  of the  underlying  components
necessary to support key business processes.  Where possible and practical, this
effort  incorporates key third parties with whom we are coordinating our testing
efforts.

As testing is nearing completion,  each business area is consulting with the Y2K
Office to develop  contingency  plans to address the possibility of component or
business process  failures.  Contingency  plans were developed during the second
quarter of 1999.  Testing and facilitation of the plans will be conducted during
the third quarter.

Cost to Address Year 2000 Issues

Based upon known  factors and the measures  taken to date,  management  does not
anticipate  significant  total  costs in order to address  the Year 2000  Issue.
Costs incurred  include  personnel costs (to re-code and test internal  systems,
test external party interfaces,  develop  contingency plans and replace software
and  hardware  devices  that are not Year 2000  compliant)  consulting  fees and
personal computer software and hardware  replacement costs. Costs that have been
incurred to date have been charged to operations as incurred.  Estimates of both
the cost  incurred to date and future  costs are not  material to the  financial
position and results of operations of the Company.

Risk of the Company's Year 2000 Issues

The proper  functioning of the Company's  computer  systems and  applications is
critical  to  the  continued   operations  of  the  Company.  By  systematically
addressing the Year 2000 Issue,  the costs and  uncertainty  associated  with it
have been reduced significantly.  Management believes that all critical business
process  systems and  applications  will be Year 2000 compliant  sufficiently in
advance  of  January  1, 2000 and,  therefore,  will not  adversely  affect  the
operations of the Company.

It is possible that certain key external parties will certify their systems as
year 2000 compliant when in fact they are not.  The inability of the Company to
respond to uncontrollable circumstances is always a concern.  For

                                       14
<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
         RESULTS OF OPERATION (Continued)

example,  if numerous key third parties are unable to support the  operations of
the Company,  operations could be adversely  affected.  The Company,  as part of
overall risk  management,  is preparing  contingency  plans during the last nine
months  of 1999 in  response  to the  possibility  of key third  party  failure.
Management  does not anticipate  these scenarios as having a greater than remote
possibility of occurrence.

Company's Contingency Plans if a Vendor or the Company fail to Address Year
2000 Issues

The risk described above will be addressed  through  contingency  planning.  The
level of contingency  planning will be commensurate with the relative importance
of the external  party to the  operations  of the Company and the relative  risk
that  the  party  will  be  unable  to  operate  satisfactorily  in  2000.  Such
contingency  plans are being developed and will be finalized during the last six
months of 1999.



The statements herein are forward-looking  statements  containing the beliefs of
management that involve risks and  uncertainties.  These risks and uncertainties
include,  but are not limited to, human or mechanical  errors in correcting Year
2000 issues; incorrect or improper (intentional or otherwise) representations by
third parties as to their  compliance  or  remediation  efforts;  the failure of
third parties to follow through on their  remediation  efforts and the inability
to  identify  and/or  locate  processing  chips  that are  subject  to Year 2000
problems.




        ***********************************




"Safe Harbor"  Statement Under the Private  Securities  Litigation Reform Act of
1995:  Statements  contained herein expressing the beliefs of management such as
those  contained  in the  "Benefits  and  Expenses - Analysis of  Policy-related
Benefits  and  Expenses",  the  "Financial  Condition  -  Investments"  and  the
"Liquidity and Capital  Resources"  sections  hereof,  and the other  statements
which are not  historical  facts  contained  in this report are forward  looking
statements that involve risks and  uncertainties.  These risks and uncertainties
include but are not limited to: legislative,  judicial,  and regulatory changes,
the impact of competitive products and pricing, product development,  geographic
spread  of  risk,  catastrophic  events,  better  (or  worse)  mortality  rates,
securities markets fluctuations and technological difficulties and advancements.




                                       15

<PAGE>


Item 6.  Exhibits and Reports on Form 8-K

Exhibit 27 - Financial Data Schedule

All other exhibits for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore, have been omitted.

The Company did not file any reports on Form 8-K during the  three-month  period
ended June 30, 1999.


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 29, 1999
                                                    \s\ Stephen A. Milne
                                          (Stephen A. Milne, President & CEO)


                                                    \s\ Philip A. Garcia
                             (Philip A. Garcia, Executive Vice President & CFO)