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 March 31, 1997

                                      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 May 7, 1997.



                                       1

<PAGE>



                                      INDEX

                       ERIE FAMILY LIFE INSURANCE COMPANY


PART I. FINANCIAL INFORMATION

Item 1.        Financial Statements (Unaudited)

        Statements of Financial Position--March 31, 1997 and December 31, 1996

        Statements of Operations--Three months ended March 31, 1997 and 1996

        Statements of Cash Flows--three months ended March 31, 1997 and 1996

        Notes to Financial Statements--March 31, 1997

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


PART II. OTHER INFORMATION

Item 4.        Submission of Matters to a Vote of Security Holders
Item 6.        Exhibits and Reports on Form 8-K

SIGNATURES


                                       2

<PAGE>



Part I.  Financial Information
                                            STATEMENTS OF FINANCIAL POSITION

<TABLE>
<CAPTION>

                                                                         March 31,                 December 31,
ASSETS                                                                      1997                       1996
                                                                        ------------               -------------
                                                                        (Unaudited)
<S>                                                                  <C>                          <C>

Investments:
      Fixed Maturities, at fair value
        (amortized cost of $517,460,314
        and $509,627,188, respectively)                              $         507,964,694        $         515,529,699
      Equity Securities, at fair value
        (cost of $114,354,692 and $111,463,042,
        respectively)                                                          119,227,509                  116,552,145
      Real Estate                                                                1,688,729                    1,710,329
      Policy Loans                                                               4,526,490                    4,381,657
      Mortgage Loans on Real Estate                                              9,671,235                    8,955,760
      Other Invested Assets                                                      6,878,474                    6,787,226
                                                                     ---------------------        ---------------------

        Total Investments                                            $         649,957,131        $         653,916,816

Cash, including short-term investments of
   $10,495,839 and $7,789,063, respectively                                     10,702,339                    6,284,102
Premiums Receivable                                                              2,857,216                    2,974,305
Reinsurance Recoverable                                                             56,882                      212,583
Other Receivables                                                                  284,990                      567,216
Accrued Investment Income                                                       11,642,051                    9,792,095
Deferred Policy Acquisition Costs                                               60,092,338                   58,026,428
Reserve Credit For Reinsurance Ceded                                             4,335,771                    4,199,907
Other Assets                                                                     2,148,863                    4,677,208
                                                                     ---------------------        ---------------------

        Total Assets                                                 $         742,077,581        $         740,650,660
                                                                     ---------------------        ---------------------
</TABLE>


See notes to financial statements.


                                       3

<PAGE>



                        STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>

                                                                          March 31,                   December 31,
LIABILITIES AND SHAREHOLDERS' EQUITY                                         1997                         1996
                                                                         ------------                 -------------
                                                                         (Unaudited)
<S>                                                                  <C>                          <C>

Liabilities:
      Policy Liabilities and Accruals:
        Future Life Policy Benefits                                  $          55,994,502        $          54,033,860
        Policy and Contract Claims                                               1,807,639                    1,703,105
        Annuity Deposits                                                       462,019,558                  450,570,003
        Universal Life Deposits                                                 60,133,118                   56,856,590
        Supplementary Contracts Not
          Including Life Contingencies                                             835,953                      839,258
      Other Policyholder Funds                                                   3,525,664                    5,763,271
      Current Federal Income Tax                                                 1,065,456                      686,353
      Deferred Federal Income Tax                                               10,670,624                   15,614,492
      Reinsurance Premium Due                                                      196,054                      203,198
      Accounts Payable and Accrued Liabilities                                   3,184,961                    4,519,782
      Note Payable to Affiliate                                                 15,000,000                   15,000,000
      Due to Affiliate                                                             761,870                    1,049,007
      Dividends Payable                                                          1,275,752                    1,181,252
                                                                     ---------------------        ---------------------

        Total Liabilities                                            $         616,471,151        $         608,020,171
                                                                     ---------------------        ---------------------

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
      Net Unrealized Appreciation (Depreciation) on
        Investment Securities, net of
        Deferred Tax (Benefit) Expense of ($1,617,981)
        and $3,847,065 respectively                                             (3,004,822)                   7,144,549
      Retained Earnings                                                        124,201,252                  121,075,940 
                                                                     ---------------------        ----------------------

        Net Shareholders' Equity                                     $         125,606,430        $         132,630,489
                                                                     ---------------------        ---------------------

        Total Liabilities and Shareholders'
          Equity                                                     $         742,077,581        $         740,650,660
                                                                     ---------------------        ---------------------


</TABLE>

See notes to financial statements.


                                       

<PAGE>



                      STATEMENTS OF OPERATIONS (Unaudited)
<TABLE>
<CAPTION>

                                                                Three Months Ended          Three Months Ended
                                                                   March 31, 1997              March 31, 1996
                                                               --------------------        -------------------- 
<S>                                                             <C>                          <C>

Revenues:
  Policy:
  Life Premiums, net of premiums ceded of
    $711,207 and $697,905, respectively                         $      7,923,783             $     6,660,979
  Group                                                                  544,242                     506,523
                                                                ----------------             ---------------
Total Policy Revenues                                           $      8,468,025             $     7,167,502

Investment Income, Net of Expenses of
  $337,222 and $350,266, respectively                                 12,401,283                  11,273,287
Realized Gain on Investment                                              621,782                      10,322
Other Income                                                             140,299                     136,492
                                                                ----------------             ---------------
    Total Revenues                                              $     21,631,389             $    18,587,603
                                                                ----------------             ---------------

Benefits and Expenses:
  Death Benefits, net of reinsurance recoveries
   of $6,654and $344,663, respectively                                 2,431,425                   2,964,877
  Interest on Annuity Deposits                                         6,848,225                   6,414,959
  Interest on Universal Life Deposits                                    902,349                     741,120
  Surrender and Other Benefits                                           286,768                     282,425
  Increase in Liability for Future Life Policy Benefits,
    net of the increase in reserve credit for reinsurance
    ceded of $135,864 and $127,456, respectively                       1,824,778                     889,986
  Amortization of Deferred Policy
    Acquisition Costs                                                    804,311                     624,807
  Commissions                                                            238,470                     483,579
  General Expenses                                                     1,422,590                   1,607,656
  Taxes, Licenses and Fees                                               286,455                     353,497
                                                                ----------------             ---------------
    Total Benefits and Expenses                                 $     15,045,371             $    14,362,906
                                                                ----------------             ---------------

Income From Operations                                                 6,586,018                   4,224,697

Federal Income Tax
  Current                                                              1,663,776                   1,012,431
  Deferred                                                               521,178                     533,460
                                                                ----------------             ---------------
    Total Federal Income Tax                                           2,184,954                   1,545,891
                                                                ----------------             ---------------

Net Income                                                      $      4,401,064             $     2,678,806
                                                                ----------------             ---------------


Net Income Per Share                                            $           0.47             $          0.28
                                                                ----------------             ---------------


Dividends Declared Per Share                                    $          0.135             $         0.125
                                                                ----------------             ---------------
</TABLE>



                                       5

<PAGE>



                      Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>

                                                                           Three Months Ended           Three Months Ended
                                                                               March 31, 1997               March 31, 1996
                                                                           --------------------         ------------------
<S>                                                                        <C>                          <C>

Cash flows from operating activities:
Net income                                                                 $        4,401,064           $       2,678,806
Adjustments to reconcile net income to net cash
  provided by operating activities:
    Net amortization of bond and mortgage
      premium and discount                                                            318,308                      70,710
    Amortization of deferred policy acquisition
      costs                                                                           804,311                     624,807
    Real Estate Depreciation                                                           21,600                      21,600
    Deferred federal income taxes                                                     521,178                     533,460
    Realized gains on investments                                                    (621,782)                    (10,322)
    Decrease in other assets                                                        2,528,345                     594,908
    Decrease in other receivables                                                     282,226                      34,814
    Decrease in premium receivable                                                    117,089                     277,120
    (Increase) decrease in reinsurance recoverable
      and reserve credits                                                              19,837                    (279,964)
    Increase in accrued investment income                                          (1,849,956)                 (1,123,561)
    Increase in deferred policy acquisition
      costs                                                                        (2,870,221)                 (2,312,675)
    Increase in future policy benefits and claims                                   2,065,176                   1,709,351
    Decrease in other policyholder funds                                           (2,237,607)                 (1,385,610)
    Decrease in reinsurance premium due                                                (7,144)                   (186,402)
    Decrease in accounts payable and accrued
      liabilities and due to affiliate                                             (1,621,958)                 (1,014,961)
    Increase in Federal income taxes currently payable                                379,103                     249,440
                                                                           ------------------           -----------------
        Net cash provided by operating
          activities                                                                2,249,569                     481,521
                                                                           ------------------           -----------------

Cash flows from investing activities:
    Fixed Maturity Securities:
    Available-for-Sale:
      Maturities                                                           $        7,680,529           $       7,829,826
      Sales                                                                                 0                   6,955,210
      Purchases                                                                   (17,547,090)                (60,639,862)
    Equity Securities:
      Sales                                                                         6,336,822                   4,609,846
      Purchases                                                                    (6,891,650)                 (9,549,400)
    Loans made to policyholders                                                      (320,749)                   (299,911)
    Payments received on policy loans                                                 175,916                     177,741
    Purchase of other invested assets                                                (125,026)                 (2,172,889)
    Sale of other invested assets                                                      33,778                      54,096
    Principal payments received on mortgage
      loans                                                                            32,413                     949,830
    Purchase of mortgage loans                                                       (747,801)                          0
                                                                           ------------------           -----------------
        Net cash used in investing activities                                     (11,372,858)                (52,085,513)
                                                                           ------------------           -----------------
</TABLE>



                                       6

<PAGE>



                 Statements of Cash Flows--Continued (Unaudited)
<TABLE>
<CAPTION>

                                                                           Three Months Ended           Three Months Ended
                                                                               March 31, 1997               March 31, 1996
                                                                           --------------------         ------------------
<S>                                                                        <C>                          <C>

Cash flows from financing activities:
    Increase in annuity and supplementary
      contract deposits                                                            11,446,250                  14,904,985
    Increase in Universal Life Deposits                                             3,276,528                   2,702,067
    Dividends paid to shareholders                                                 (1,181,252)                 (1,071,000)
                                                                           ------------------           -----------------
        Net cash provided by financing
          activities                                                       $       13,541,526           $      16,536,052
                                                                           ------------------           -----------------
Net increase (decrease) in cash and
   short-term cash investments                                                      4,418,237                 (35,067,940)
   Cash and short-term cash investments at
   beginning of year                                                                6,284,102                  34,847,347
                                                                           ------------------           -----------------
   Cash and short-term cash investments at
   end of quarter                                                          $       10,702,339           $        (220,593)
                                                                           ------------------           -----------------


Supplemental  disclosures  of cash flow  information:
  Cash paid during the year for:
    Interest                                                               $                0           $               0
    Income taxes                                                                    1,223,896                     762,992
</TABLE>

                                       7

<PAGE>



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 three  month  period  ended  March 31,  1997 are not
necessarily  indicative  of the results  that may be expected for the year ended
December 31, 1997. 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, 1996.

NOTE B -- RECLASSIFICATIONS

Certain amounts as previously  reported have been reclassified to conform to the
current year's presentation.

NOTE C -- INVESTMENTS

The total  invested  assets  of the  Company  consist  of  investments  in fixed
maturities,  preferred  stock,  common stock,  real estate,  mortgage and policy
loans and other  invested  assets.  At March 31, 1997,  78.2% of total  invested
assets were invested in fixed  maturities.  Preferred  stocks represent 16.9% or
$109.7  million  and  common  stocks  represent  1.5% or $9.5  million  of total
invested assets at March 31, 1997,  while real estate and mortgage loans make up
only 1.7% of total invested  assets.  Mortgage loan and real estate  investments
have the potential for higher  returns but also carry more risk,  including less
liquidity  and  greater  uncertainty  of  rate  of  return.  Consequently  these
investments have been kept to a minimum.

The Company's fixed maturities at March 31, 1997 consist of investments in bonds
of $517 million. It is the Company's objective that the fixed maturity portfolio
be of very high  quality and well  diversified  within each market  sector.  The
portfolio  is  conservatively  managed  with  the goal of  achieving  reasonable
returns while limiting exposure to risk. At March 31, 1997 the carrying value of
fixed maturities was  $507,964,694,  or 78.2% of total invested assets. At March
31, 1997, the amortized cost, carrying/ market value, gross unrealized gains and
gross unrealized losses for fixed maturities were as follows:

                           Fixed Maturities at 3-31-97
<TABLE>
<CAPTION>

                                                                         Carrying/                Gross                Gross
                                                  Amortized                Market              Unrealized           Unrealized
                                                     Cost                  Value                   Gains               Losses
<S>                                           <C>                   <C>                   <C>                     <C>

U.S. Treasuries & Agency                      $        45,666,716   $        44,965,298   $           489,215     $      1,190,633
Foreign Governments                                     2,986,500             2,889,210                     0               97,290
States & Political Subdivisions                         4,671,998             4,933,116               261,117                    0
Special Revenue                                         4,375,000             4,532,699               157,699                    0
Public Utilities                                       90,940,280            88,661,114             1,371,839            3,651,004
U.S. Industrial & Miscellaneous                       361,757,752           354,661,297             3,549,613           10,646,068
Foreign Industrial & Miscellaneous                      7,062,068             7,321,960               259,892                    0
                                              -------------------   -------------------   -------------------     ----------------
Total Fixed Maturities                        $       517,460,314   $       507,964,694   $         6,089,375     $     15,584,995

</TABLE>

                                       8

<PAGE>



NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (Continued)

The  bond  investments  included  in the  fixed  maturity  category  consist  of
high-quality, marketable securities, all of which, are rated at investment grade
levels (Baa/BBB or better).  Included in this investment-grade category are $312
million  of  bonds  characterized  as of 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.

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 reflected in the income  statement.  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 March 31, 1997,  the Company's  five largest  investments  in corporate  debt
securities  totaled  $32,610,429,  none  of  which  individually  exceeded  $7.9
million. These investments had a market value of $32.0 million.

In  compliance  with  "Accounting  for  Certain  Investments  in Debt and Equity
Securities  (FAS  115)," the Company has  classified  all of its fixed  maturity
portfolio as  available-for-sale  at March 31, 1997.  Management  believes  that
having all fixed  maturities  classified as  available-for-sale  securities will
allow the Company to meet its liquidity  needs and provide  greater  flexibility
for its investment managers to restructure the Company's investments in response
to changes in market conditions or strategic direction. Securities classified as
available-for-sale  are carried at market value with unrealized gains and losses
included in shareholders' equity.

Equity  securities  consist of common and preferred  stocks which are carried on
the  balance  sheet at  current  market  value.  At March 31,  1997,  common and
preferred  stock held by the  Company  had a cost of  $114,354,692  and a market
value of  $119,227,509,  representing an unrealized gain of $4,872,817.  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  and  support  the  investment  return  provided  to  Policyholders.  The
preferred  stocks are of very  high-quality and extremely  marketable,  96.5% or
$105.8  million of which are of the "highest" or "high"  quality,  as defined by
the NAIC.  The remaining  $3.8 million of preferred  stocks have a "medium" NAIC
rating.  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.

                                       9

<PAGE>



NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (Continued)

                           Equity Securities, 3-31-97
<TABLE>
<CAPTION>

                                                                                          Gross                   Gross
                                                                     Market             Unrealized             Unrealized
                                                Cost                  Value               Gains                   Losses
<S>                                       <C>                   <C>                     <C>                   <C>

Common Stock
  Industrial & Miscellaneous              $         9,451,656   $         9,499,195     $       511,486       $       463,948
Preferred Stocks
  Public Utilities                                  4,000,000             3,920,000                   0                80,000
  U.S. Banks, Trusts &
    Insurance                                      77,562,165            81,031,585           4,109,020               639,600
  Foreign Banks, Trusts &
    Insurance                                       3,000,000             3,240,000             240,000                     0
  Industrial & Miscellaneous                       16,440,871            17,696,729           1,255,858                     0
  Foreign Industrial &
    Miscellaneous                                   3,900,000             3,840,000                   0                60,000
                                          -------------------   -------------------     ---------------       ---------------
Total Equity Securities                   $       114,354,692   $       119,227,509     $     6,116,364       $     1,243,548

</TABLE>

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 book values presented
in the financial statements.

At March 31, 1997, the Company did not own any derivatives.




                                       10

<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 10, since they
contain  important  information  that is helpful  in  evaluating  the  Company's
operating results and financial condition.

OVERVIEW

Erie  Family  Life  Insurance  Company  (the  Company)  is  incorporated  in the
Commonwealth of Pennsylvania.  The Company is primarily  engaged in the business
of underwriting and selling nonparticipating individual and group life insurance
policies,  including  universal life, and annuity products.  The Company markets
its products through independent Agents and is licensed in eleven states and the
District of Columbia in the Eastern U.S. and is subject to the  supervision  and
regulation  of the  states in which it does  business.  A large  portion  of the
Company's business is written in Pennsylvania.

Net income  increased to $4,401,064,  or $.47 per share, in the first quarter of
1997 from  $2,678,806  or $.28 per  share,  in the  first  quarter  of 1996,  an
increase of 64%.  Increases in  non-recurring  realized  capital  gains,  policy
revenues and investment  income were the primary reasons for the increase in net
income.  Non-recurring  realized capital gains increased $611,460 to $621,782 in
the first quarter of 1997.  Operating  results  remained  strong as total policy
revenue grew by 18% to $8,468,025 in the current period.  Investment  income net
of  expenses  grew by 10%  from  $11,273,287  in the  first  quarter  of 1996 to
$12,401,283 in the first quarter of 1997.

REVENUES, BENEFITS, AND EXPENSES

Policy  Revenues.  Total policy  revenues  increased  18.1% to $8,468,025 in the
first quarter of 1997 from $7,167,502 in the first quarter of 1996.  Included in
these  totals are first year life  policy  revenues of  $1,887,123  in the first
quarter of 1997 and  $1,530,731  in the first  quarter of 1996,  an  increase of
23.3%.  Some of the  growth in first  year  policy  revenues  was due to premium
received in December  1996,  but not placed until 1997,  for the Erie  Insurance
Group agent travel incentive program, "California Dreamin".

Group policy  revenues  increased  from $506,523 in the first quarter of 1996 to
$544,242 in the first quarter of 1997.

Deposits.  First  year and  single  universal  life and  annuity  deposits  were
$14,599,707 in the first quarter of 1997 and $16,196,925 in the first quarter of
1996,  representing a decrease of 9.9%. Included in these amounts are structured
settlement  annuities  sold  to  the  Erie  Insurance  Group   property/casualty
affiliate  companies  which totaled  $5,363,165 in the first quarter of 1997 and
$4,856,312 in the first quarter of 1996.

Net Investment  Income.  Net investment  income in the first quarter of 1997 was
$12,401,283 compared to $11,273,287 in the first quarter of 1996, an increase of
10%.  Fueling  the  growth in  investment  income was the  Company's  cash flows
generated from annuity and universal life deposits and operating income.

Realized  Gain on  Investment.  During the first  quarter of 1997,  the  Company
generated realized gains on investments of $621,782. During the first quarter of
1996, the Company had realized  gains on  investments of $10,322.  These amounts
consisted of gains from the sale of securities.

                                       11

<PAGE>



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

Death Benefits.  Net death benefits on life insurance  policies decreased 18% in
the first quarter of 1997 to $2,431,425,  compared to  $2,964,877,  for the same
period in 1996. Death benefit  experience must be analyzed for long-term trends,
rather than over short  periods  where  unusual  fluctuations  may influence the
results.  This is particularly  true for a company the size of Erie Family Life,
which is growing rapidly.  The Company's mortality experience has been good over
the past several years and the Company believes that its underwriting philosophy
and practices are sound.

Interest on Annuity and Universal  Life  Deposits.  Interest on deposits held by
the Company for  Policyholders  rose 8% from  $7,156,079 in the first quarter of
1996 to $7,750,574  in the first  quarter of 1997.  This increase was due to the
$66 million in deposits made by Policyholders  during the 12-month period ending
March 31, 1997. At March 31, 1997,  annuity deposits accruing interest were $463
million and universal life deposits accruing  interest were $60 million.  During
the first  quarter  of 1997,  the  interest  rate  credited  on  universal  life
increased  while the interest rate  credited on annuity  deposits  dropped.  The
current  interest  rate  credited on universal  life deposits is in the 6.25% to
7.25% range while the rate credited on annuity deposits is in the 5.00% to 6.25%
range.

Commissions.  Commissions decreased $245,109 to $238,470 in the first quarter of
1997. Most of this commission decrease was due to the commission expense related
to the Erie Insurance Group travel incentive program,  "California Dreamin'", in
1996. The  commission  costs,  which vary with and are primarily  related to the
production of new business, have been deferred.  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.

Commission  reimbursements  from ceded reinsurance  contracts have been deducted
from the gross commission expense. These reimbursements represent the first- and
second-year  commissions  paid on policies that were reinsured under a number of
different reinsurance  agreements.  These reimbursements totaled $208,261 in the
first quarter of 1997 and $202,818 in the first quarter of 1996.

General Expenses.  General expenses amount to $1,422,590 in the first quarter of
1997  compared to  $1,607,656  for the same period in 1996.  The majority of the
decrease in general expenses was due to a reduction in data processing  expense.
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.

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 Company general expenses. Erie Indemnity
Company is a 21.6  percent  shareholder  of Erie Family Life  Insurance  Company
stock and the management company for the Erie Insurance Exchange.

Taxes,  Licenses,  and Fees.  Taxes,  licenses  and fees  decreased  $67,042  to
$286,455  in the  first  quarter  of  1997.  This  decrease  was  caused  by the
recognition   of  premium  tax  credits  now  available  for  annuity   guaranty
assessments paid in prior years.

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


Federal  Income  Tax.  Federal  Income Tax in the  second  quarter  amounted  to
$2,184,954  compared to  $1,545,891  for the same period in 1996.  The Company's
effective  federal income tax rates in 1997 and 1996 differ primarily due to the
recognition of, or limitations on, capital losses.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity is a measure of an entity'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,  annuity and
universal  life deposits 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 first quarter of 1997 was $2,249,568, compared to $481,521 for the first
quarter of 1996.

Premium  from the sale of new  policies  combined  with the  premium on existing
policies accounted for approximately 39.1% of total revenue in the first quarter
of 1997  and  38.6%  for the same  period  in 1996.  Investment  income,  net of
expenses, generated 57.3% of total revenue in 1997 and 60.6% in 1996.

Annuity  and  universal  life  deposits,  which do not  appear as revenue on the
financial  statements,  also  generate  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  $19,318,567 in the
first quarter of 1997 and $20,995,699 in the first quarter of 1996.

The Company's  current  commitments  for  expenditures as of March 31, 1997, 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,  its liquid assets and marketable  securities and its line of credit
with PNC Bank will enable the Company to meet any foreseeable cash requirements.
At March 31,  1997,  the  Company's  line of credit  with PNC Bank  totaled  $10
million, none of which was outstanding.

The amount of dividends Erie Family Life, a Pennsylvania-domiciled life insurer,
can pay to its  shareholders  without  the prior  approval  of the  Pennsylvania
Insurance  Commissioner  is limited by statute to not more than the  greater of:
(a) 10 percent of its statutory surplus as regards  policyholders as reported on
its last annual  statement,  or (b) the net income of the insurer as reported on
its last annual statement, not including any pro rata distributions of any class
of the insurer's own securities.  Accordingly, the maximum dividend payout which
may be  made  in  1997  without  prior  Pennsylvania  Commissioner  approval  is
$10,516,000.



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


The Company's 1996 year-end Risk Based Capital Analysis as reflected in its 1996
statutory  annual  statement  shows total adjusted  capital of  $83,833,559  and
authorized  control  level risk  based  capital of  $11,835,459.  These  results
demonstrate a strong capital position for the Company.

FINANCIAL CONDITION

RESERVE LIABILITIES

The Company's primary commitment is its obligation to meet the payment of future
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 March 31, 1997, 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
because the underlying policy reserves are generally also of a long-term nature.

INVESTMENTS

The Company's  investment  strategies and portfolios are structured to match the
features of the life  insurance and annuity  products  sold by the Company.  The
Company's   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  prudently  managed on a total return
approach that focuses on current income and capital appreciation.

The Company's invested assets are also exceptionally liquid in order to meet the
short and long-term  commitments  to our  Policyholders.  At March 31, 1997, the
Company's investment portfolio of cash and money market investments,  investment
grade bonds,  common stocks,  and preferred  stocks,  all of which are extremely
marketable, totaled $629 million or 85% of total assets. These resources provide
the liquidity the Company requires to meet the unforeseen demands on its funds.


"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 "Note C to the Financial  Statements",  the "Revenue Benefits
and Expenses - Death  Benefits",  the "Liquidity and Capital  Resources" and the
"Investments" 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)  morbidity  rates,   fluctuations  of
securities markets, and technological difficulties and advancements.

                                       14

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Item 4.  Submission of Matter to a Vote of Security Holders

On April 29, 1997, the Registrant held its Annual Meeting of Shareholders:

A.   The following Directors were elected at the Annual Meeting of Shareholders
     for a one-year term and until a successor is elected and qualified:

                                          Peter B. Bartlett
                                          Samuel P. Black, III
                                          J. Ralph Borneman, Jr.
                                          Patricia A. Goldman
                                          Susan Hirt Hagen
                                          Thomas B. Hagen
                                          F. William Hirt
                                          Dr. Irvin H. Kochel
                                          Edmund J. Mehl
                                          Stephen A. Milne
                                          John M. Petersen
                                          Seth E. Schofield
                                          Jan R. Van Gorder, Esq.
                                          Harry H. Weil, Esq.

B.   The  following  other  matters  were  voted  upon  at the  meeting  and the
     following  number of  affirmative  votes  were cast  with  respect  to such
     matters:

     (1)   The ratification of the firm of Brown, Schwab, Bergquist & Company as
           independent  public  accountants to examine the financial  statements
           and  perform  the annual  audit of the  Company  for the year  ending
           December 31, 1997 was ratified.  This ratification received 8,854,112
           affirmative votes, 2,034 negative votes with no abstentions.

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
ending March 31, 1997.











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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        May 7, 1997                     /s/ Stephen A. Milne    
                                      (Stephen A. Milne, President & CEO)

                                           /s/ Thomas M. Sider
                               (Thomas M. Sider, Executive Vice President & CFO)


                                       16

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