##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 For the quarter ended June 30, 2005
 Commission
file number 2-39458
 ERIE FAMILY LIFE INSURANCE COMPANY
  PENNSYLVANIA
    
    25-1186315(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 100 Erie Insurance Place, Erie, Pennsylvania
    
    16530(Address of principal executive offices)
    
    (Zip code)
 (814) 870-2000
 
 þ o
 o þ




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PART I. FINANCIAL INFORMATIONItem 1.
    
    Financial Statements (Unaudited)Statements of
Financial Position  June 30, 2005 and December 31, 2004Statements of
Operations  Three and six months ended June 30, 2005 and 2004Statements of
Comprehensive Income  Three and six months ended June 30, 2005 and 2004Statements of Cash
Flows  Six months ended June 30, 2005 and 2004Notes to Financial
Statements  June 30, 2005Item 2.
    
    Management's Discussion and Analysis of Financial Condition and Results of OperationsItem 3.
    
    Quantitative and Qualitative Disclosures About Market RiskItem 4.
    
    Controls and ProceduresPART II. OTHER INFORMATIONItem 1.
    
    Legal ProceedingsItem 4.
    
    Submission of Matters to a Vote of Security HoldersItem 5.
    
    Other InformationItem 6.
    
    ExhibitsSIGNATURESExhibit 31.1Exhibit 31.2Exhibit 32
  2




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PART I. FINANCIAL INFORMATION
 
    (Dollars in thousands)June 30
    
    December 312005
    
    2004ASSETS
    
    (Unaudited)INVESTMENTSFixed maturities at fair value (amortized cost
of $1,349,532 and $1,297,913, respectively)
    
    $
    1,418,431
    
    
    $
    1,366,898Equity securities at fair value
(cost of $69,890 and $59,426, respectively)
    
    
    77,176
    
    
    
    66,375Limited partnerships
(cost of $16,211 and $15,234, respectively)
    
    
    17,441
    
    
    
    15,467Real estate mortgage loans
    
    
    6,029
    
    
    
    6,124Real estate
    
    
    1,003
    
    
    
    1,044Policy loans
    
    
    11,021
    
    
    
    10,671Total investments
    
    
    1,531,101
    
    
    
    1,466,579Cash and cash equivalents
    
    
    229
    
    
    
    22,446Premiums receivable from policyholders
    
    
    7,915
    
    
    
    7,876Reinsurance recoverable
    
    
    2,302
    
    
    
    2,527Other receivables
    
    
    723
    
    
    
    319Accrued investment income
    
    
    16,665
    
    
    
    16,031Deferred policy acquisition costs
    
    
    114,657
    
    
    
    111,409Reserve credit for reinsurance ceded
    
    
    32,849
    
    
    
    29,420Securities lending collateral
    
    
    72,385
    
    
    
    0Prepaid federal income taxes
    
    
    739
    
    
    
    789Other assets
    
    
    4,934
    
    
    
    4,044Total assets
    
    $
    1,784,499
    
    
    $
    1,661,440
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(Dollars in thousands)June 30
    
    December 312005
    
    2004LIABILITIES AND SHAREHOLDERS EQUITY
    
    (Unaudited)LIABILITIESPolicy Liabilities and Accruals:Future life and accident and health policy benefits
    
    $
    132,766
    
    
    $
    124,016Policy and contract claims
    
    
    5,575
    
    
    
    3,153Annuity deposits
    
    
    1,010,791
    
    
    
    984,870Universal life deposits
    
    
    169,960
    
    
    
    163,489Supplementary contracts not
including life contingencies
    
    
    700
    
    
    
    702Other policyholder funds
    
    
    6,463
    
    
    
    6,048Deferred income taxes
    
    
    48,186
    
    
    
    48,066Reinsurance premium due
    
    
    1,588
    
    
    
    2,581Securities lending collateral
    
    
    72,385
    
    
    
    0Accounts payable and accrued expenses
    
    
    11,794
    
    
    
    10,581Notes payable to Erie Indemnity Company
    
    
    40,000
    
    
    
    40,000Due to affiliates
    
    
    4,682
    
    
    
    4,327Dividends payable
    
    
    2,079
    
    
    
    2,079Total liabilities
    
    
    1,506,969
    
    
    
    1,389,912SHAREHOLDERS EQUITYCommon stock, $.40 par value per share;
authorized 15,000,000 shares; 9,450,000
shares issued and outstanding
    
    
    3,780
    
    
    
    3,780Additional paid-in capital
    
    

    630
    
    
    
    630Accumulated other comprehensive income
    
    
    39,334
    
    
    
    39,252Retained earnings
    
    
    233,786
    
    
    
    227,866Total shareholders equity
    
    
    277,530
    
    
    
    271,528Total liabilities and shareholders equity
    
    $
    1,784,499
    
    
    $
    1,661,440
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Three Months Ended
    
    Six Months EndedJune 30
    
    June 302005
    
    2004
    
    2005
    
    2004(Dollars in thousands, except per share data)REVENUESNet Policy Revenue:Life premiums
    
    $
    14,680
    
    
    $
    13,789
    
    
    $
    28,181
    
    
    $
    26,901Group life and other premiums
    
    
    874
    
    
    
    836
    
    
    
    1,781
    
    
    
    1,703Total net policy revenue
    
    
    15,554
    
    
    
    14,625
    
    
    
    29,962
    
    
    
    28,604Net investment income
    
    
    21,443
    
    
    
    20,464
    
    
    
    41,749
    
    
    
    39,937Net realized gains on investments
    
    
    1,514
    
    
    
    5,556
    
    
    
    161
    
    
    
    8,404Equity in earnings of limited partnerships
    
    
    3,085
    
    
    
    712
    
    
    
    3,688
    
    
    
    867Other income
    
    
    191
    
    
    
    238
    
    
    
    369
    
    
    
    556Total revenues
    
    
    41,787
    
    
    
    41,595
    
    
    
    75,929
    
    
    
    78,368BENEFITS AND EXPENSESDeath benefits
    
    
    6,622
    
    
    
    3,479
    
    
    
    10,052
    
    
    
    8,383Interest on annuity deposits
    
    
    11,323
    
    
    
    11,136
    
    
    
    22,350
    
    
    
    22,046Interest on universal life deposits
    
    
    1,922
    
    
    
    1,751
    
    
    
    3,717
    
    
    
    3,487Interest on surplus notes and other
affiliate interest
    
    
    712
    
    
    
    712
    
    
    
    1,424
    
    
    
    1,430Surrender and other benefits
    
    
    345
    
    
    
    295
    
    
    
    683
    
    
    
    615Increase in future life policy benefits
    
    
    2,161
    
    
    
    1,784
    
    
    
    5,321
    
    
    
    4,031Amortization of deferred policy
acquisition costs
    
    
    1,922
    
    
    
    (3,592
    )
    
    
    4,176
    
    
    
    (3,365
    )Commissions
    
    
    406
    
    
    
    1,043
    
    
    
    806
    
    
    
    1,585General expenses
    
    
    5,407
    
    
    
    4,097
    
    
    
    10,018
    
    
    
    7,975Taxes, licenses and fees
    
    
    921
    
    
    
    1,023
    
    
    
    1,877
    
    
    
    1,857Total benefits and expenses
    
    
    31,741
    
    
    
    21,728
    
    
    
    60,424
    
    
    
    48,044Income before income taxes
    
    
    10,046
    
    
    
    19,867
    
    
    
    15,505
    
    
    
    30,324Provision for income taxes
    
    
    3,516
    
    
    
    6,620
    
    
    
    5,427
    
    
    
    10,559Net income
    
    $
    6,530
    
    
    $
    13,247
    
    
    $
    10,078
    
    
    $
    19,765Net income per share
    
    $
    0.69
    
    
    $
    1.40
    
    
    $
    1.07
    
    
    $
    2.09Dividends declared per share
    
    $
    0.22
    
    
    $
    0.22
    
    
    $
    0.44
    
    
    $
    0.44
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Three
Months Ended 
June 30
    

Six
Months Ended
June 302005
    
    2004
    
    2005
    
    2004(Dollars in thousands)Net income
    
    $
    6,530
    
    
    $
    13,247
    
    
    $
    10,078
    
    
    $
    19,765Unrealized gains (losses) on securities:Unrealized holding gains (losses) arising
during period, net of offsets to shadow
deferred acquisition costs
    
    
    23,233
    
    
    
    (57,315
    )
    
    
    287
    
    
    
    (31,442
    )Less: gains included in net income
    
    
    (1,514
    )
    
    
    (5,556
    )
    
    
    (161
    )
    
    
    (8,404
    )Net unrealized holding gains (losses)
arising during period, net of offsets to
shadow deferred acquisition costs
    
    
    21,719
    
    
    
    (62,871
    )
    
    
    126
    
    
    
    (39,846
    )Income tax (expense) benefit related to
unrealized gains (losses)
    
    
    (7,601
    )
    
    
    22,005
    
    
    
    (44
    )
    
    
    13,946Unrealized appreciation (depreciation) of
investments, net of taxes
    
    
    14,118
    
    
    
    (40,866
    )
    
    
    82
    
    
    
    (25,900
    )Comprehensive income (loss)
    
    $
    20,648
    
    
    
    ($27,619
    )
    
    $
    10,160
    
    
    
    ($6,135
    )
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Six Months Ended June 302005
    
    2004(Dollars in thousands)CASH FLOWS FROM OPERATING ACTIVITIESPremiums collected
    
    $
    28,942
    
    
    $
    23,277Net investment income received
    
    
    41,906
    
    
    
    40,323Miscellaneous income
    
    
    369
    
    
    
    556Benefits to policyholders
    
    
    (35,177
    )
    
    
    (34,654
    )Commissions paid to agents
    
    
    (3,555
    )
    
    
    (3,252
    )Salaries and wages paid
    
    
    (8,291
    )
    
    
    (6,501
    )General operating expenses paid
    
    
    (5,606
    )
    
    
    (5,667
    )Taxes, licenses and fees paid
    
    
    (2,242
    )
    
    
    (2,024
    )Interest paid
    
    
    (1,424
    )
    
    
    (1,425
    )Income taxes paid
    
    
    (5,300
    )
    
    
    (5,382
    )Net cash provided by operating activities
    
    
    9,622
    
    
    
    5,251CASH FLOWS FROM INVESTING ACTIVITIESPurchase of investments:Fixed maturities
    
    
    (174,120
    )
    
    
    (166,147
    )Equity securities
    
    
    (10,464
    )
    
    
    (3,529
    )Limited partnerships
    
    
    (5,092
    )
    
    
    (810
    )Sales/maturities of investments:Sales of fixed maturities
    
    
    84,096
    
    
    
    116,770Calls/maturities of fixed maturities
    
    
    39,178
    
    
    
    14,954Limited partnerships
    
    
    6,586
    
    
    
    890Increase (decrease) in collateral from securities lending
    
    
    72,385
    
    
    
    (21,664
    )(Investment) redemption of securities lending collateral
    
    
    (72,385
    )
    
    
    21,664Net mortgage loans
    
    
    95
    
    
    
    89Net policy loans
    
    
    (350
    )
    
    
    (420
    )Net cash used in investing activities
    
    
    (60,071
    )
    
    
    (38,203
    )CASH FLOWS FROM FINANCING ACTIVITIESAnnuity and supplementary
contract deposits and interest
    
    
    63,437
    
    
    
    66,254Annuity and supplementary
contract surrenders and withdrawals
    
    
    (37,518
    )
    
    
    (35,761
    )Universal life deposits and interest
    
    
    9,970
    
    
    
    9,891Universal life surrenders
    
    
    (3,499
    )
    
    
    (3,256
    )Dividends paid to shareholders
    
    
    (4,158
    )
    
    
    (4,064
    )Net cash provided by financing activities
    
    
    28,232
    
    
    
    33,064Net (decrease) increase in cash and cash equivalents
    
    
    (22,217
    )
    
    
    112Cash and cash equivalents at beginning of period
    
    
    22,446
    
    
    
    26,173Cash and cash equivalents at end of period
    
    $
    229
    
    
    $
    26,285
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Accounting Changes and Error Corrections Accounting Changes
 The Meaning of Other-Than-Temporary Impairment and Its Application to Certain
Investments Implementation Guidance for the Application of
Paragraph 16 of EITF Issue No. 03-1 The Meaning of Other-Than-Temporary
Impairment and its Application to Certain Investments
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Gross
    
    GrossAmortized
    
    Unrealized
    
    Unrealized
    
    EstimatedJune 30, 2005
    
    Cost
    
    Gains
    
    Losses
    
    Fair ValueFixed maturitiesBonds:U.S. treasuries and government agencies
    
    $
    58,038
    
    
    $
    1,166
    
    
    $
    197
    
    
    $
    59,007Special revenue
    
    
    2,000
    
    
    
    0
    
    
    
    0
    
    
    
    2,000Public utilities
    
    
    176,023
    
    
    
    11,379
    
    
    
    49
    
    
    
    187,353U.S. banks, trusts and insurance companies
    
    
    223,112
    
    
    
    11,624
    
    
    
    404
    
    
    
    234,332U.S. industrial and miscellaneous
    
    
    562,911
    
    
    
    32,580
    
    
    
    2,171
    
    
    
    593,320Mortgage-backed securities
    
    
    152,224
    
    
    
    3,681
    
    
    
    628
    
    
    
    155,277Asset-backed securities
    
    
    14,649
    
    
    
    396
    
    
    
    19
    
    
    
    15,026Foreign
    
    
    158,425
    
    
    
    11,853
    
    
    
    354
    
    
    
    169,924Total bonds
    
    
    1,347,382
    
    
    
    72,679
    
    
    
    3,822
    
    
    
    1,416,239Redeemable preferred stock
    
    
    2,150
    
    
    
    42
    
    
    
    0
    
    
    
    2,192Total fixed maturities
    
    
    1,349,532
    
    
    
    72,721
    
    
    
    3,822
    
    
    
    1,418,431Equity securitiesNonredeemable preferred stock:U.S. banks, trusts and insurance companies
    
    
    29,908
    
    
    
    1,842
    
    
    
    0
    
    
    
    31,750U.S. industrial and miscellaneous
    
    
    18,802
    
    
    
    2,139
    
    
    
    0
    
    
    
    20,941Foreign
    
    
    21,180
    
    
    
    3,305
    
    
    
    0
    
    
    
    24,485Total equity securities
    
    
    69,890
    
    
    
    7,286
    
    
    
    0
    
    
    
    77,176Total fixed maturities and equity securities
    
    $
    1,419,422
    
    
    $
    80,007
    
    
    $
    3,822
    
    
    $
    1,495,607
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Gross
    
    GrossAmortized
    
    Unrealized
    
    Unrealized
    
    EstimatedDecember 31, 2004
    
    Cost
    
    Gains
    
    Losses
    
    Fair ValueFixed maturitiesBonds:U.S. treasuries and government agencies
    
    $
    60,126
    
    
    $
    1,048
    
    
    $
    98
    
    
    $
    61,076Public utilities
    
    
    160,516
    
    
    
    11,313
    
    
    
    219
    
    
    
    171,610U.S. banks, trusts and insurance companies
    
    
    193,461
    
    
    
    9,148
    
    
    
    709
    
    
    
    201,900U.S. industrial and miscellaneous
    
    
    566,633
    
    
    
    34,721
    
    
    
    976
    
    
    
    600,378Mortgage-backed securities
    
    
    157,289
    
    
    
    3,713
    
    
    
    609
    
    
    
    160,393Asset-backed securities
    
    
    10,946
    
    
    
    348
    
    
    
    77
    
    
    
    11,217Foreign
    
    
    141,926
    
    
    
    12,080
    
    
    
    686
    
    
    
    153,320Total bonds
    
    
    1,290,897
    
    
    
    72,371
    
    
    
    3,374
    
    
    
    1,359,894Redeemable preferred stock
    
    
    7,016
    
    
    
    94
    

    
    
    106
    
    
    
    7,004Total fixed maturities
    
    
    1,297,913
    
    
    
    72,465
    
    
    
    3,480
    
    
    
    1,366,898Equity securitiesNonredeemable preferred stock:U.S. banks, trusts and insurance companies
    
    
    19,909
    
    
    
    2,078
    
    
    
    2
    
    
    
    21,985U.S. industrial and miscellaneous
    
    
    18,801
    
    
    
    1,873
    
    
    
    0
    
    
    
    20,674Foreign
    
    
    20,716
    
    
    
    3,000
    
    
    
    0
    
    
    
    23,716Total equity securities
    
    
    59,426
    
    
    
    6,951
    
    
    
    2
    
    
    
    66,375Total fixed maturities and equity securities
    
    $
    1,357,339
    
    
    $
    79,416
    
    
    $
    3,482
    
    
    $
    1,433,273
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Less than 12 months
    
    12 months or longer
    
    TotalFair
    
    Unrealized
    
    Fair
    
    Unrealized
    
    Fair
    
    UnrealizedValue
    
    Losses
    
    Value
    
    Losses
    
    Value
    
    LossesFixed maturitiesBonds:U.S. treasuries and government agencies
    
    $
    21,335
    
    
    $
    173
    
    
    $
    1,975
    
    
    $
    24
    
    
    $
    23,310
    
    
    $
    197Public utilities
    
    
    9,988
    
    
    
    10
    
    
    
    7,700
    
    
    
    39
    
    
    
    17,688
    
    
    
    49U.S. banks, trusts and insurance
companies
    
    
    16,316
    
    
    
    142
    
    
    
    13,700
    
    
    
    262
    
    
    
    30,016
    
    
    
    404U.S. industrial and miscellaneous
    
    
    53,403
    
    
    
    1,582
    
    
    
    22,933
    
    
    
    589
    
    
    
    76,336
    
    
    
    2,171Mortgage-backed securities
    
    
    36,989
    
    
    
    433
    
    
    
    14,923
    
    
    
    195
    
    
    
    51,912
    
    
    
    628Asset-backed securities
    
    
    2,973
    
    
    
    19
    
    
    
    0
    
    
    
    0
    
    
    
    2,973
    
    
    
    19Foreign
    
    
    6,916
    
    
    
    80
    
    
    
    13,580
    
    
    
    274
    
    
    
    20,496
    
    
    
    354Total fixed maturities
    
    $
    147,920
    
    
    $
    2,439
    
    
    $
    74,811
    
    
    $
    1,383
    
    
    $
    222,731
    
    
    $
    3,822
 U.S. Treasury Obligations and Government Agencies
 Corporate
Bonds (public utilities, U.S. banks, trust and insurance companies,
U.S. industrial,
miscellaneous and foreign)
 Mortgage-Backed Securities
 12




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Three Months Ended
    
    Six Months EndedJune 30
    
    June 302005
    
    2004
    
    2005
    
    2004Fixed maturities:Gross realized gains
    
    $
    1,941
    
    
    $
    5,744
    
    
    $
    3,025
    
    
    $
    8,674Gross realized losses
    
    
    (430
    )
    
    
    (220
    )
    
    
    (2,871
    )
    
    
    (313
    )Net realized gains
    
    
    1,511
    
    
    
    5,524
    
    
    
    154
    
    
    
    8,361Equity securities:Gross realized gains
    
    
    5
    
    
    
    32
    
    
    
    11
    
    
    
    43Gross realized losses
    
    
    (2
    )
    
    
    0
    
    
    
    (4
    )
    
    
    0Net realized gains
    
    
    3
    
    
    
    32
    
    
    
    7
    
    
    
    43Net realized gains on investments
    
    $
    1,514
    
    
    $
    5,556
    
    
    $
    161
    
    
    $
    8,404
    Three Months Ended
    
    Six Months EndedJune 30
    
    June 302005
    
    2004
    
    2005
    
    2004Mezzanine debt
    
    $
    557
    
    
    $
    15
    
    
    $
    557
    
    
    $
    35Real estate
    
    
    2,528
    
    
    
    697
    
    
    
    3,131
    
    
    
    832$
    3,085
    
    
    $
    712
    
    
    $
    3,688
    
    
    $
    867
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Accounting and Reporting by Insurance
Enterprises
 Accounting and Reporting by Insurance Enterprises for Certain
Long-Duration Contracts and for Realized Gains and Losses from the Sale of Investments
     14




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GroupThree Months Ended
    
    Traditional
    
    Universal
    
    Fixed
    
    Life &
    
    CorporateJune 30, 2005
    
    Life
    
    Life
    
    Annuities
    
    Other
    
    Account
    
    TotalTotal policy revenue, net of
reinsurance
    
    $
    11,166
    
    
    $
    3,514
    
    
    $
    1
    
    
    $
    873
    
    
    $
    0
    
    
    $
    15,554Net investment and other
income
    
    
    1,852
    
    
    
    2,465
    
    
    
    14,933
    
    
    
    58
    
    
    
    5,411
    
    
    
    24,719Net realized gains on
investments
    
    
    130
    
    
    
    163
    
    
    
    1,050
    
    
    
    4
    
    
    
    167
    
    
    
    1,514Total revenues
    
    
    13,148
    
    
    
    6,142
    
    
    
    15,984
    
    
    
    935
    
    
    
    5,578
    
    
    
    41,787Less: Total benefits and
expenses
    
    
    13,094
    
    
    
    4,858
    
    
    
    13,127
    
    
    
    584
    
    
    
    78
    
    
    
    31,741Income before taxes
    
    $
    54
    
    
    $
    1,284
    
    
    $
    2,857
    
    
    $
    351
    
    
    $
    5,500
    
    
    $
    10,046
 GroupSix Months Ended
    
    Traditional
    
    Universal
    
    Fixed
    
    Life &
    
    CorporateJune 30, 2005
    
    Life
    
    Life
    
    Annuities
    
    Other
    
    Account
    
    TotalTotal policy revenue, net of
reinsurance
    
    $
    21,161
    
    
    $
    7,021
    
    
    $
    1
    
    
    $
    1,779
    
    
    $
    0
    
    
    $
    29,962Net investment and other
income
    
    
    3,597
    
    
    
    4,769
    
    
    
    29,101
    
    
    
    115
    
    
    
    8,224
    
    
    
    45,806Net realized gains on
investments
    
    
    13
    
    
    
    17
    
    
    
    107
    
    
    
    0
    
    
    
    24
    
    
    
    161Total revenues
    
    
    24,771
    
    
    
    11,807
    
    
    
    29,209
    
    
    
    1,894
    
    
    
    8,248
    
    
    
    75,929Less: Total benefits and
expenses
    
    
    23,228
    
    
    
    9,509
    
    
    
    26,258
    
    
    
    1,274
    
    
    
    155
    
    
    
    60,424Income before taxes
    
    $
    1,543
    
    
    $
    2,298
    
    
    $
    2,951
    
    
    $
    620
    
    
    $
    8,093
    
    
    $
    15,505
 15




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##### Table of Contents



GroupThree Months Ended
    
    Traditional
    
    Universal
    
    Fixed
    
    Life &
    
    CorporateJune 30, 2004
    
    Life
    
    Life
    
    Annuities
    
    Other
    
    Account
    
    TotalTotal policy revenue, net of
reinsurance
    
    $
    10,313
    
    
    $
    3,476
    
    
    $
    1
    
    
    $
    835
    
    
    $
    0
    
    
    $
    14,625Net investment and other
income
    
    
    1,753
    
    
    
    2,343
    
    
    
    14,311
    
    
    
    49
    
    
    
    2,958
    
    
    
    21,414Net realized gains on
investments
    
    
    476
    
    
    
    581
    
    
    
    3,876
    
    
    
    13
    
    
    
    610
    
    
    
    5,556Total revenues
    
    
    12,542
    
    
    
    6,400
    
    
    
    18,188
    
    
    
    897
    
    
    
    3,568
    
    
    
    41,595Less: Total benefits and
expenses
    
    
    9,631
    
    
    
    (        1,726
    )
    
    
    13,293
    
    
    
    452
    
    
    
    78
    
    
    
    21,728Income before taxes
    
    $
    2,911
    
    
    $
    8,126
    
    
    $
    4,895
    
    
    $
    445
    
    
    $
    3,490
    
    
    $
    19,867
 GroupSix Months Ended
    
    Traditional
    
    Universal
    
    Fixed
    
    Life &
    
    CorporateJune 30, 2004
    
    Life
    
    Life
    
    Annuities
    
    Other
    
    Account
    
    TotalTotal policy revenue, net of
reinsurance
    
    $
    19,957
    
    
    $
    6,944
    
    
    $
    1
    
    
    $
    1,702
    
    
    $
    0
    
    
    $
    28,604Net investment and other
income
    
    
    3,422
    
    
    
    4,596
    
    
    
    28,036
    
    
    
    94
    
    
    
    5,212
    
    
    
    41,360Net realized gains on
investments
    
    
    719
    
    
    
    876
    
    
    
    5,862
    
    
    
    20
    
    
    
    927
    
    
    
    8,404Total revenues
    
    
    24,098
    
    
    
    12,416
    
    
    
    33,899
    
    
    
    1,816
    
    
    
    6,139
    
    
    
    78,368Less: Total benefits and
expenses
    
    
    19,988
    
    
    
    1,151
    
    
    
    25,806
    
    
    
    943
    
    
    
    156
    
    
    
    48,044Income before taxes
    
    $
    4,110
    
    
    $
    11,265
    
    
    $
    8,093
    
    
    $
    873
    
    
    $
    5,983
    
    
    $
    30,324
      16




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Three Months Ended
    
    Six Months EndedJune 30
    
    June 302005
    
    2004
    
    2005
    
    2004Direct policy revenue
    
    $
    21,889
    
    
    $
    19,651
    
    
    $
    41,175
    
    
    $
    37,674Policy revenue ceded
    
    
    (6,335
    )
    
    
    (5,026
    )
    
    
    (11,213
    )
    
    
    (9,070
    )Net policy revenue
    
    $
    15,554
    
    
    $
    14,625
    
    
    $
    29,962
    
    
    $
    28,604Death benefits
    
    $
    8,864
    
    
    $
    4,420
    
    
    $
    13,923
    
    
    $
    11,046Reinsurance recoveries
    
    
    (2,242
    )
    
    
    (941
    )
    
    
    (3,871
    )
    
    
    (2,663
    )Net death benefits
    
    $
    6,622
    
    
    $
    3,479
    
    
    $
    10,052
    
    
    $
    8,383Increase in future life policy benefits
    
    $
    4,519
    
    
    $
    3,766
    
    
    $
    8,750
    
    
    $
    7,464Reinsurance reserve credits
    
    
    (2,358
    )
    
    
    (1,982
    )
    
    
    (3,429
    )
    
    
    (3,433
    )Net increases in future life policy
benefits
    
    $
    2,161
    
    
    $
    1,784
    
    
    $
    5,321
    
    
    $
    4,031Commissions
    
    $
    2,664
    
    
    $
    2,945
    
    
    $
    4,827
    
    
    $
    5,108Reinsurance commission
allowance
    
    
    (2,258
    )
    
    
    (1,902
    )
    
    
    (4,021
    )
    
    
    (3,523
    )Net commissions
    
    $
    406
    
    
    $
    1,043
    
    
    $
    806
    
    
    $
    1,585
  17




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Six Months Ended June 302005
    
    2004CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    10,078
    
    
    $
    19,765Adjustments to reconcile net income to net cash
provided by operating activities:Amortization of deferred policy acquisition costs
    
    
    4,176
    
    
    
    (3,365
    )Other amortization
    
    
    528
    
    
    
    528Deferred federal income tax expense
    
    
    77
    
    
    
    4,410Realized gains on investments
    
    
    (161
    )
    
    
    (8,404
    )Equity in earnings of limited partnerships
    
    
    (3,688
    )
    
    
    (867
    )(Increase) decrease in premium and other receivables
    
    
    (443
    )
    
    
    176Increase in accrued investment income
    
    
    (634
    )
    
    
    (369
    )Policy acquisition costs deferred
    
    
    (7,329
    )
    
    
    (7,316
    )Decrease (increase) in other assets
    
    
    3
    
    
    
    (104
    )Increase in reinsurance recoverables and reserve credits
    
    
    (3,204
    )
    
    
    (2,057
    )Decrease in prepaid federal income taxes
    
    
    50
    
    
    
    767Increase in future policy benefits and claims
    
    
    11,172
    
    
    
    6,834Increase (decrease) in other policyholder funds
    
    
    415
    
    
    
    (4,946
    )Decrease in reinsurance premium due
    
    
    (993
    )
    
    
    (548
    )(Decrease) increase in accounts payable and due to affiliates
    
    
    (425
    )
    
    
    747Net cash provided by operating activities
    
    $
    9,622
    
    
    $
    5,251
 18




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19




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF FINANCIAL
OPERATIONS
  CRITICAL ACCOUNTING ESTIMATES
 Valuation of Limited Partnership Investments
   20




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF FINANCIAL
OPERATIONS
 FINANCIAL OVERVIEW
  REVENUES
 Analysis of Policy Revenue
  Analysis of Investment-related Income
    21




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF FINANCIAL
OPERATIONS
 
 Two year period endedJune 30, 2005Erie Family Life Insurance Company indices:Fixed maturities
    
    
    4.73
    %Preferred stock
    
    
    7.72Market indices:Lehman Brothers U.S. Aggregate
    
    
    3.51
    %
 BENEFITS AND EXPENSES
 Analysis of Policy-related Benefits and Expenses
    22




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
FINANCIAL OPERATIONS
 Analysis of Other Expenses
    FINANCIAL CONDITION
 Investments
   23




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##### Table of Contents



TEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF FINANCIAL
OPERATIONS
    Reserve Liabilities
  LIQUIDITY AND CAPITAL RESOURCES
 
 24




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TEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF FINANCIAL
OPERATIONS
    
 25




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF FINANCIAL
OPERATIONS
 FACTORS THAT MAY AFFECT FUTURE RESULTS
 Products with Interest Rate Guarantees
   Initial
    
    
    
    
    
    CurrentGuaranteed
    
    Policy
    
    Guaranteed
    
    DepositInterest Rate
    
    Years
    
    Interest Rate
    
    Liabilities(in thousands)4.5%
    
    
    1 - 5
    
    
    
    4.5
    %
    
    $
    250,2134.5
    
    
    6 -10
    
    
    
    4.0
    
    
    
    114,0454.5
    
    Over 10
    
    
    3.5
    
    
    
    194,6673.0
    
    All Years
    
    
    3.0
    
    
    
    32,9251.5
    
    All Years
    
    
    1.5
    
    
    
    46,170
   Market Conditions for Competing Products
  26




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF FINANCIAL
OPERATIONS
 Reinsurance
  Implementation of New Valuation System
  Introduction of ErieConnection ®
 Connection
 27




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##### Table of Contents



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995:
 28




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##### Table of Contents



ITEM 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
       29




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##### Table of Contents



ITEM 4. CONTROLS AND PROCEDURES
 Changes in Internal Control Over Financial Reporting
  30




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ITEM I. LEGAL PROCEEDINGS
       31




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##### Table of Contents



ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
   Kaj Ahlmann
    
    Susan Hirt HagenJohn T. Baily
    
    C. Scott HartzJ. Ralph Borneman, Jr.
    
    F. William HirtWilson C. Cooney
    
    Claude C. Lilly, IIIPatricia Garrison-Corbin
    
    Jeffrey A. LudrofJohn R. Graham
    
    Robert C. WilburnJonathan Hirt Hagen
 
 ITEM 5. OTHER INFORMATION
   
 ITEM 6. EXHIBITS
 Exhibits
 ExhibitNumber
    
    Description of Exhibit31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
200231.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200232
    
    Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 32




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Erie Family Life Insurance Company(Registrant)Date: August 15, 2005
    
    /s/ Jeffrey A. Ludrof(Jeffrey A. Ludrof, President & CEO)/s/ Philip A. Garcia(Philip A. Garcia, Executive Vice President & CFO)
 33